Power Lunch - Stocks Fall, Hurricane Milton Heads Toward Florida 10/7/24

Episode Date: October 7, 2024

Stocks are starting the week with losses. But the bull market has cleared a lot of hurdles, with one big one on the horizon: the election. We’ll discuss. Plus, weighing on investor sentiment are downgrades of 3 major tech companies: Apple, Amazon and Netflix. We’ll trade each of them for you. And, another major hurricane is barreling toward Florida. Milton is now a Category 5 storm, and expected to make landfall in days. We’ll speak to the USAA CEO.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon, everybody, and welcome to Power Lunch alongside Kelly Evans. It's good to be back. I'm Tyler Matheson. Thank you very much. Stocks are starting the week with losses, but the bull market has cleared a lot of hurdles with a big one on the horizon. That would be the election, I suppose. And even this week, we do get the CPI on Thursday, and today we're seeing some nervousness. As we moved throughout the session, as we mentioned, it's the one-year anniversary of the attack on Israel. That's kind of got some people concerned if there's going to be a possible response. Oil is higher. And even the details about Hurricane Milton as it heads towards Florida. Well, that is a big and expanding story. And it appears as though it's got Tampa St. Pete right in its sights. You know, and we have close friends who moved there.

Our former neighbors, God bless them. They're staying there. All the flights are already booked. You know, people who haven't gotten out already aren't quite sure what to do. The highways are at a standstill. Yeah. And they're looking at obviously a second storm on back of the Helene a week or so ago, which didn't do a tremendous amount of damage, relatively speaking, in Florida.

But enough. And as the governor said, you know, when you have debris already, it makes this one more dangerous because there's more in a matter that's going to be flying around. And obviously, the water damage could be significant as well. Yeah. So, by the way, also weighing on sentiment today are downgrades of three major tech companies. That's got the NASDAQ under some pressure. Apple, Amazon, and Microsoft. I'm sorry, Apple, Amazon, and Netflix, although Microsoft is well, Ty. Yeah.

These downgrades, I mean, obviously it has not been a great month for technology, but September is usually a bad month. We're going to talk a little bit in a minute here with Mike Santoli and Tom Lee. September is usually not a particularly good month for stocks, but this has not been terribly bad by any way at all. No, although now September was far better than the recent Septembers we've had. October's off to a little bit of a different start, something people are keeping in mind. All right, we talked about the hurricane, so let's move on and talk a little bit more about the markets,

as stocks are, as we pointed out, a little bit under pressure today. Higher rates, rising oil prices, weighing on Wall Street. Still the S&P 500 hovering near record levels, a couple of percentage points away from all-time highs. I think the NASDAQ 3 percentage points away. Bull market story still intact as Wall Street has largely avoided the seasonal weakness, as we were mentioning of August and September, but a number of threats are looming, including, of course, the election four weeks away. Our next guest is looking past the headwinds and focusing on three.

tailwinds, including a dovish Fed, China's late stimulus push, and lots of cash on the sidelines. Let's bring in first CNBC contributor Tom Lee, co-founder and head of research with FundStrat and our very own Mike Santoli joining us as well. Tom, let me start with you. It was in April on this program that you said you thought the S&P 500 could close at 5,700, maybe even higher. Well, lookie here, look where it is today, right about 5,700. So the maybe higher part, is still a part of your formula? Yes, I think it's part of the formula because, you know, bull markets are supported by strong fundamentals, and this is a case where not only has the economy survived extremely high interest

rates, but the Fed is beginning to cut rates. And an economy that has sort of been languishing has been China, and now we have some stimulus and what looks like some bazooka policies that is supposed. supporting that region, and we have a lot of cash on the sidelines. So I think that this is a formula for stocks to do pretty well the next three to 12 months. And that's why we think that we would be well beyond $5,700 before your end. Well, so Mike, Tom says tail wins, overpower, headwinds here. Yes, although I think you do have some offsets.

And I think that even though that August and September, the advertised season of week, didn't really show up in the terms of sustained downside. It did become a less rewarding market, right? You had more downside moves from that August 1st level than you had upside, at least during those two months. So I do think that reflects the fact that we have priced in a pretty decent scenario here. We're 21 times forward earnings on the S&P 500. I think a soft landing is pretty much what's underpinning that idea.

That said, it's hard for the market to get into too much trouble when the Fed is easing into a resilient economy. And even though we're having to worry about maybe less. Fed easing than we thought Thursday before we got this jobs report. I think that's a better formula. Economy holds up better. The only reason you'd worry about it is if you think the strong Friday jobs number was a head fake. And all of a sudden it really was not representative of the economy being strong.

And yet yields are higher and yet oils higher. We're benefiting from those things starting at very low points, under $70 crude and then, you know, three, six on the 10 year as a low recently. And so therefore, the big violent vertical moves we've had in those areas have not really. really upended anything except maybe the housing stocks. But I do think, you know, you have to be aware that we're two years into a bull market. That's often where it kind of flattened out, becomes a little bit less aggressive on the upside. As our guest last week said, the third year is the hardest one often. It has tended to be. Yeah. Tom, do you want to build on that and address what you should do as small caps here, which they've been so, actually, that's probably the one area we've

seen the most weakness since the Fed hiked rates? Yeah, small caps, I mean, they're within a few percentage points of an all-time high and Mark Newton, our head of technical strategy, thinks we are still in an up move for small caps that just started recently. But yes, it's been disappointing. I think it's been especially disappointing because China and small caps historically are fairly highly correlated. And so we are seeing risk-gone appetite increasing in some places. But I think it's just a matter of time. I think part of this is between now and and the next month, which is around election day, there's a lot for investors to digest. It's including oil prices and the VIX is elevated.

I think these are things that are hard for someone to say today, between now and early November, I want to be buying risk outright. So I think small caps still have good fundamentals. Earnings growth is accelerating. The median PE is 11 times, which is almost seven turns lower than the S&P. So I think there's still the case to be made that small caps are. Starting a multi-year gain, it's just been very choppy. As you look at oil, what would an interruption of Iranian oil supplies, which is really only

3%, as I understand it, of global output, what would an interruption of Iranian oil mean? Maybe not in economic terms, because it might not mean very much, but what it could mean psychologically to the market? Well, you know, markets don't like uncertainty. And, you know, oil is spiking not because of demand, but because of like what you're pointing out, Tyler, the risk of a disruption. And, you know, oil can move up quite a lot before it actually triggers the level of burden that causes a recession.

That number is probably closer to $200 today. But it would be no fun for any consumer to see oil at 120 and gas prices more than double. So it's something that I think would be very painful for consumers just to see oil surge, and even if it's temporary. Mike, final thought? I was just going to say, in terms of small caps, I think they've kind of lost any claim on having some special foresight as to what the overall real economy is going to be doing. It seems like it's a prove-it story. When earnings come through, if the earnings breadth comes through, then that probably will be rewarded. But, you know, Russell 2000 is in aggregate, like $3 trillion of market cap.

That's what Nvidia is. And Nvidia is up 3.5% today. And that's actually acting as ballast on this market, which would be a lot weaker. So I don't know if there's anything special about small caps we have to worry about because the broader S&P 500 has done very well. And Tom, I don't know if I need to ask you for like a specific price target on Nvidia at this point. But that was the market leadership until the summer when it broke down. What do we need from it at this point?

Well, I mean, Nvidia is still at the center of the entire transformation that's coming with AI, and Nvidia continues to be one of the leading companies. So, you know, from a long-term investor perspective, I think anyone should look at Nvidia's congestion and consolidation as opportunities to add if they don't have exposure. And then I think for anyone else, it's just a time to be patient, because, of course, stocks don't just go straight up. What's another pick in your portfolio that you would like to leave our viewers with, Tom? Sector or name?

Yeah, I think, and Michael's kind of mentioned this, but I think one area that if someone has a lot of tech, I think the thing that sort of has a corollary benefit to a lot of things happening with Fed cutting is industrials and financials. So I think if we're looking at market breadth, I think things like XLS, and XLI or regional banks like KRE make a lot of sense because they're going to be meaningful beneficiaries of a soft planning economy with a Fed cutting interest rates. Interesting perspectives there. Tom Lee, thank you very much. Mike Santoli, always great to see it. Good to have you in the house.

Appreciate it. And that 10-year yield getting back above 4% today for the first time since early August. It's pushing up mortgage rates as well. It's continuing this big climb we've seen since the Fed cut rates a few weeks ago. Rick Santelli has the latest from Chicago. Rick? Yeah, and it's not only basically flying in the face of Fed strategy and dot plots. Every session, other than the handoff from last month to the first day of October, has seen a higher yield fourth consecutive session and not only a higher yield close,

but every Treasury has traded above the previous day's high yield for the fourth consecutive session in a row. And if you look at twos and tens on one chart, at the beginning of the month, this is a month to date chart. We're in the 360s on a two year where it stands right now up a half a dozen basis points, and it briefly did trade over 4%. Ten year is over 4%. It started out the beginning of the month in the 370s. Now, if we look at the 2s 10 spread, which is combining those two charts, I mean, it seems logical that we've given up some of the steepening. But the speed of this, now this is a two-week chart. We've gone from a 27-month wide on the 25th of September at 23 basis points positive to a brief negative inverted trade earlier today under zero.

Now, it's come back several basis points, but that really does underscore how the market is pushed back against the Fed. And it really highlights that the Fed controls basically overnight funds and a giant microphone, but the rest of the market has its own life. And speaking of that, we'll have threes, tens, and 30-year auctions all starting tomorrow. And finally, tens minus boons, our tenure versus the Eurozone tens, is the widest it's been in over two months, which underscores the speed of the market moving rates up, even though the Fed and the ECB, of course, moved rates down. Kelly, back to you. All right. Rick, thank you very much. Rick Santelli. Coming up, another major hurricane is set to make landfall this week.

Milton could cause the largest evacuation in Florida since Irma in 2017, and thus after Hurricane Helene was already expected to have caused as much as $250 billion worth of damage. This week's storm could drive those costs much higher. Plus the other storm brewing is America's national debt. Both Trump and Harris' economic plans will cost trillions, but one has a steeper price tag than the other. We have more on all of this when Power Lunch returns. Welcome back to Power Lunch, everybody. Hurricane Milton intensifying grandly as it approaches Florida. Now a Category 5 storm with winds of up to 175 miles an hour expected to make landfall sometime early Wednesday.

NBC News is Dana Griffin is in Naples, Florida for us. Hi, Dana. Hey, Tyler, we're here in Naples, Florida. This is Naples, Florida. This is Naples, behind me. It's empty. We saw swimmers in the ocean just moments ago, and we've seen several tourists showing up taking the look at this beach before Milton makes landfall. Right now, we're hearing that winds are at 175 miles per hour as Milton has increased to a cat five just over a short period of time. Expected to make landfall on Wednesday. Right now, you've got several airports, including Orlando, Tampa, St. Peak Clearwater that are suspending operations starting tomorrow. You've got people who are already being told to evacuate up and down the coast. And one of the

major concerns here is the debris. There is so much debris left behind from Hurricane Helene less than two weeks ago that even the governor is asking people to step in, pitch in any way they can. Listen to what he said earlier today. We had a lot of debris left from Hurricane Helene on Florida's Gulf Coast. That creates a huge hazard if you have a major hurricane hit in that area this week. We may have lost IFB there. but I'm just going to keep talking in case you guys can still hear us. So right now, this is an all-hands-on-deck moment. They are asking people to pitch in, take that debris that may be in their neighborhoods,

because that debris could be dangerous projectiles if that wind whips and sends it flying. So that's going to be a major concern. Also, storm surge. We're already getting rain right now. This is not even part of Hurricane Milton. So this is very concerning because you're going to have an already saturated ground. And if you get that storm surge coming in, you could have catastrophic. flooding. So people are told to pay attention. Prepare now. Get the necessities you need and prepare

to evacuate when called upon because this is a life-threatening storm and they are asking people to take it seriously. Tyler, Kelly. All right, Dana, thank you very much. We appreciate your report there. Our next guest runs a major financial services company providing insurance exclusively to members of the military to veterans and their families. They already received 74,000 claims from Helene. They're now preparing for a back-to-back storm. with Milton expected to hit Tampa Bay on Wednesday. Wayne Peacock is president and CEO of USAA. Wayne, it's great to have you here. Welcome. Kelly, great to be back with you. So if we weren't going to talk about Milton, we would be talking right now about how to process claims from Helene

and how to help these communities. I have to imagine you have a significant amount of exposure in Appalachia, no? We do really from Tampa all the way up. We've got, as you saw it on your note, There are 75,000 claims. I spent Thursday and Friday in Georgia and in Tampa kind of walk in the ground talking to members, surveying the damage. We've got mobile units spread out through the southeast today that are serving our members. We're trying to get into Boone, North Carolina, right now to be able to serve up there as well. And, you know, this is all hands on deck before Milton.

This puts a tremendous, you know, additional pressure both on our operations. But more importantly, on all of our members who are in the path of this storm, And this will be a very dangerous storm. There's no doubt about it. Compare the number of members you have in the states that were hit by Helene, which include Florida, but largely Georgia, North Carolina's compared with what you may face in the case of Hurricane Milton, which looks like if it stays on its current course, is largely going to cut a swath across north central Florida. Yeah, so I think that's probably the applicable area to, to, to,

look at is that swath across. And we have a fairly, you know, sizable amount of concentration there. I think we have a manageable amount, but we've got a tremendous number, you know, hundreds of thousands of our members who are in the path of the storm. That's the way we think about it. Tyler is how many folks are in that path, you know, whether they've got a homeowner, you know, situation with us where their cars or their rental properties, really trying to make sure all of them stay safe and that we're there to respond, you know, once the storm passes. Wayne, one of the biggest concerns has been the amount, the cost of property insurance in the first place, which is only going to go up after this, if you're not dropped from policies altogether or trying to find new ones.

So, you know, and then, of course, if it's flood and that's a separate insurance policy as well that most people don't have, are you going to be able to continue to provide coverage and at what cost in many of these areas going forward? Yeah, Kelly, I think, first of all, I think we need to understand that there are going to be so many underinsured or not insured at all homeowners. North because of the rising water claims from Helene. This will be much more of a wind event, you know, obviously as we come through at a Cat 5 or a Cat 4 or 3 as it hits the Florida coast. We're a membership organization. We work hard every day to serve as many of our military families as possible.

We're committed to staying in these markets. We're continued to take risk in a smart way. Control the amount of risk. We don't serve anywhere near as many people in Florida as I would like to today. But we're trying to be very thoughtful about serving as many. as we can while we manage the risk of the association going forward. But no doubt the industry will again look at this event and ask and answer questions about how much risk they want to take and how they adjust policies and coverage. And I think the message will be that availability is going to be compromised.

Prices are going to continue to rise, especially in the homeowners market. Forgive me for not knowing this, Wayne, but give me the sort of insurance 101 lesson. a standard homeowner's policy would protect against what kind of damage in a hurricane scenario and what kind of damage would it not protect against typically? Well, the easy things that will not cover water damage that comes from the water rising up from the bay or the Gulf here in a Florida application, right? It's going to cover wind damage. And then depending on where you are in Florida and how you have your coverage set up,

there may be a policy that doesn't include wind, from hurricanes and a separate policy that would cover that. And there's layered coverage because of kind of the difficulty of that market over the years. So you could have three or four policies on your home today, FEMA flood, excess flood, your standard homeowners insurance, and then a wind policy on top of that. So the most important thing for homeowners

is to really read and understand your coverage and either call directly if you're dealing with someone like USAA or call your agent if you're with someone who is an agent-based carrier and make sure you truly understand your coverages so that when the storm hits and passes, you understand your rights and what's available to you. One of the things that has been debated over the most recent weeks is how quickly either the federal government or commercial insurers can get money in a sizable chunk into the hands of the people who are affected. How quickly can you get meaningful dollars

into people's hands to help them with day-to-day expenses and to help them rebuild and recover. So, Tyler, I'll tell you last week I stood in the backyard in Augusta, Georgia, at a total loss where a very large oak tree literally crushed the house. That member has their financial payment coming to them now. In fact, that was Thursday when I was there, I presume it's in their account today. So that is a streamlined settlement that we work hard to deal with or to address so that we can get money in their hands. And this is complete policy limits that we've paid out. In other cases, those additional living expenses,

we're getting checks into members' hands, and then we'll go through the process of determining the exact value associated with the claim more broadly and settle that. But we're working very diligently to get money in the hands of our members as quickly as possible. And there's a large percentage of our Haleen members who already have a payment from USAA as we sit here on Monday afternoon.

All right, Wayne, thank you very much, and I must say your advertising, which I see on the NFL games and college football. It's always very good. I really appreciate it. Thanks, Tyler. Let's everyone be safe out there and continue to pray for everyone who's in the path of the storm. This is going to be a really difficult one as Milton comes ashore. As do we all. Thank you very much, Wayne Peacock of USAA. Still to come, we will talk about the trade around one company that makes a product with some high insurance premiums of its own. Why one trader says this stock has hit the end of the road. Market Navigator is next. And as we head to the break, a quick check on the down.

Near session, lows. We'll be right back. It's down four-fifths of a percent at 41.986. Welcome back to Power Lunch, where we're seeing more pressure across the markets. As we head into the afternoon hours of the trading session here, Dom Dow's down about 358. Lows of the session right now, Kelly. So it's interesting here. So today's market navigator.

is going to focus a little bit on shares of Ferrari, which was that mystery chart, by the way. It's up more than 30% so far this year-to-date period. But one of our traders thinks that's getting close to the red line, so to speak, if you'll forgive the pun, Kelly. So joining us now is Tony Zhang, the chief strategist over at Options Play. He's also a CNBC contributor. Tony, thank you very much for being with us today. The Ferrari stock story has been amazing. Ultra premium, great brand defense, performance, obviously with the cars.

But why has it hit the skids as of late? If you look at the chart, just in the last couple of weeks, we've seen a little bit of slowing momentum there. Yeah, that's exactly right. This is a stock that broke out above the $400 range back in August or so. It tried to form a base around $460 and continue moving higher from here. But instead, what we're starting to see here over the past couple of days are cracks starting to show. We broke below that $460 support level. I think we're likely to head back towards where we broke out, which is around that $460.

410 level here to the downside over the coming weeks. And this is really kind of the setup that we're currently looking at right now because we've been talking about the fact that valuations on Ferrari has been challenging to get around. However, it's been managing to, it's managed to sustain that valuation for quite some time, but we're starting to see some cracks show recently. All right. So then, Tony, it's not a name we talk about a lot, but it's certainly the price action that's interested you. How exactly do you play what you think is that slowing momentum or downside in that trade? Yeah. So I think. I think the best way to do this is using a put debit spread.

And right now I'm going out to the November expiration. I'm looking at buying the 460, 440 put vertical. What that means is I'm buying the 460 puts, and I'm selling the 440 puts around that. And that's straddling around the 450 current price of Ferrari. And earlier today, you can pay about $9.50 for this $20-wide debit spread. And what's really interesting about this type of in-the-money debit spread where you're straddling the current price of the stock is that right now, I'm actually, I'm actually. actually paying less than the time value of this particular spread. And what that means is that I have

positive time decay. Usually when you're buying options, you have to pay time decay. But in this particular case, I actually have time decay working in my favor. So I only need the stock to move down about $10 or so to make my maximum 100% gain back on my investment. You know, it's interesting. Kelly, Tyler and I were kind of looking at this trade earlier on today. In essence, what you're doing is your short Ferrari stock from 460 lower, and you would cover that short at 440, given the structure of this trade for that particular move. Why do you target 440 on the downside and not even more? I am actually targeting more to the downside. That's just the structure of the occupants trade. Once we get down to 440 or so, I'm likely going to roll this trade down

further and buy more downside exposure. But this is just to start establishing initial bearish position It's a bit of an exploratory trade in terms of whether or not we are going to see that acceleration here to the downside. This allows me to do so with the least amount of risk. This is a $460 stock. I'm paying about $9.50 for this. That means I'm risking about 2% of the stock's value to take this initial trade. And if it does start to accelerate to the downside, that's when I'll look looking to buy some more downside as well. Tony, thanks for joining us to explain that, Tony Zhang. Domit reminds me of your report recently when we had Aston Martin shares down sharply.

A lot of the European car makers, Ferrari has been an exception to that story, which is generally one of kind of pressure on sales, disruption from EVs and so forth. But Ferrari's been a stalwart. Now, to his point, though, we should keep an eye on it. Well, and it's not just that, too, if you take a look at some of those, Ferrari's that pure play name on this, right? Many of these luxury European brands all fall within family umbrellas like Volkswagen Porsche, you know, if you have Mercedes and others. So this kind of move here with Ferrari is going to be interesting to see play out because it is that pure play. play on the ultra high end. It was spun out from Stalantis, was it not? It was a pretty big move. Anyone who held on to this for the spin out was doing much better than if they were stuck in pure play Stalantis these days, that's for sure.

Dom, thanks very much. Dom Choo. Ty? All righty, still to come, Wall Street taking on big tech, some big downgrades today. And we'll wrap the headlines and get you some actionable advice in today's three stock lunch. Twos stocks. We'll be right back. Welcome back, everybody. Time for today's three stock lunch. We're going to dive into three of the big. tech downgrades today with Apple, Amazon, and Netflix, all losing some support on Wall Street, joining us today on set with his trades, Jay Woods, Chief Global Strategist for Freedom Capital Partners. The first stock, Jay, is going to be Apple, shares are down more than one and a half

percent. Analyst over at Jeffries downgraded it to a hold from a buy rating stating that expectations are too high for that iPhone 16. What say you? Yeah, I think that's understandable. The expectations are through the roof about this being the next big. breakthrough but you gotta look at Apple more as a utility play in the technology space than the next big thing they created the next big thing and then they find the next big thing and they make it better and that's what they're gonna do with Apple intelligence it's just great enough that they already took the AI name where we're gonna call AI Apple Intelligence I'm seeing it in the commercials already yeah but um it's hitting on all other cylinders we focus so much on the

iPhone which is 51% of their sales but the services continue to chug along and grow and grow and And what they do is they innovate products that we need. Like Apple pay. Now I can't go without paying Apple pay. Just boop and it's done. My earbuds. I can't talk on the phone without my earbuds. So Apple, over the long term, it's a strong hold.

Technically, it could pull back here to that 200-day moving average and be a strong buy. It's only off all-time highs by 5%. It's consolidating. I think any dip here is a good long-term buy, but I understand the hold rating. So it's a hold right now for you. You get that. If it came down, how far would you start? So what are they moving average?

Anything around the 200 level, I think is a good opportunity. It's a good time to buy it. Up from 223. It's like a hold it, not trade at stock, as Jim Kramer's always saying. Which might be true of all of these say. I'm going to see what you think, because that's Apple, but we also have Amazon, which just got a, I think, a downgrade today. The shares are down 3%.

Wells Fargo moved it to equal weight, reduce the price target by 40 bucks. The shares are down 3%. The analysts say they're positive revision stories on pause as they face multiple headwinds. And the strength coming from AWS is. is not enough to lift the company. You worried about the retail aspect of this? Yeah, well, the retail aspect is what, it is another utility stock.

It's one that you buy and you put away. So we're getting boring names, but the recommendations, I get it. But if it's so boring that you buy and put away, then why is it down 3% today? Well, because it has 74 buys and five holds and someone downgraded it. So that's a big story.

I mean, we don't see it too often. But when you think of Amazon, it's another fabric of our life. You know, how many Amazon packages do you have a day at your house, guys? Yeah. But no, the AWS, that is the growth. And what the problem and the concern is is the KAPX spending that they continue to put into it. So right now, it is in a holding pattern in a sense that what is this spend going to lead to? We saw it with META. Meta got hurt when on earnings because they were spending too much money and we weren't seeing results. And look at it now. Exactly. And what investors want to see is where is this AI spend going to go? How is it going to help us going forward? So that is, on a pause, then you look at it technically.

Oh my gosh, this thing just finally came back to its highs from 2021, 2022, and breaking out. So I like it from a risk-reward setup, but it could stay here and stall for another quarter before it takes off. It's up 19% near-to-date. What's the S&P 500 up? 19% near-to-date. So right now it's slow and steady. It's not going to leapfrog and take us much higher right now. But the end of the year, after the election in December, I think these two stocks are what takes this market higher.

Wow. And third, we've got another stock that is really a part of the fabric of a lot of people's lives, and that is Netflix. The stock is falling around 2%. Barclay's just lowered its rating to underweight. The firm says the growth algorithm is getting more complex. However, analysts over at Piper Sandler upgrading Netflix to overweight, saying that the company has multiple levers to pull and remains the clear leader in the streaming space. people would dispute that one, I don't think. No, and as the father, three Gen Z years, they can't live without their Netflix.

But what happened? The password crackdown worked. You look at where this was at its lows. It's up 340. It's up 345% from its lows. One of the greatest buying opportunities in the last five years. Yeah, you would be amazed. And what did it just do?

It just made all-time high. So it finally got back to where it was. And now it's consolidating. Every earnings period, you do see moves in this stock, so you have to be careful. uh... but the password crackdown the ad categories they're huge in that biggest demographic that is living off of mom and dad is starting to move out of the house and guess what they're going to do

they're going to pay now which which you know mom and dad they only pay for a no free version we're not looking for any ads but uh... you know i think the growth the usual growth will continue to you know be there but will it have the run that just went on i find that hard to believe i i would hold it here and wait to buy in any weakness I wouldn't enter the name or add to it at this point. Any of the Mag 7 you don't basically like to own for having me. That includes Tesla.

That includes Microsoft, Invidia. Yeah. Invidia, I think, is, you know, look at who all their, you know, customers are. They're the other magnificent seven stocks. Tesla little too volatile for me. It's one of those stocks. We'll see what Elon Musk unveils this week. That's going to be epic.

I'm sure he's going to entertain. And that Robotaxe, Autonomous Driving could be the story of the week. but Tesla's flat. That's the one I would avoid out of those. Microsoft, Google, Meta, meta making all-time new highs today. It's off to the races. I think these are names that you have to buy, but the next big thing, the next catalyst, to take them much higher after the run they've been on, we'll see them stall for a little while, and that's okay. All right, Jay, thanks. That's okay. Fantastic. Appreciate it, man. All right, turning to another tech mega cap under pressure, a judge ordering Google to open its

app store to more competitors. Deirder Bosa has the details. Hey, Dee. Hey, Tyler, that's right. So Google shares, they're currently taking a leg lower now as part of the Epic Games lawsuit against Google. A judge, as Tyler says, has ordered Google to open up its app store to more competition. The injunction outlines changes, including making Android apps available from rival sources. The judge said at an earlier hearing that he would establish a three-person compliance and technical committee to implement and monitor the changes. is now a reminder, Epic's lawsuit filed in 2020. It accuses Google of monopolizing how customers access apps on Android devices and how they pay for in-app transactions.

So it surrounds this whole idea of a walled garden. And guys, this comes out of another potential catalyst tomorrow, a legal one. We're expecting to hear initial remedies recommended by the DOJ in the search case, which Google loss. So certainly the antitrust pressure continues to keep pressure on Google shares. All right, Deidre, thank you very much. Deidre Bosa. morning. Speaking of the Mag 7 there, let's get to Julia Borsden now for the CNBC News Update.

Julia? The Georgia Supreme Court reinstated a restrictive abortion ban in the state today. The state's high court halted a ruling from last week that found Georgia's law on abortions unconstitutional. Georgia's measure prohibits most abortions beyond six weeks of pregnancy, often before women realize they're pregnant. Today's decision allows the restrictions to stay in place during the appeals process. The U.S. imposed new sanctions on the U. on the fundraising network for the militant group Hamas today on the one-year mark of Hamas's surprise attack on Israel. The Treasury Department says it is cutting off funding from what it calls a sham charity accused of financially supporting Hamas, as well as a Hamas-controlled financial

institution in Gaza and three Hamas members in Europe. And a singing Joker hit a wrong note with moviegoers. Warner Brothers Joker sequel took in just $40 million at the box office in his opening weekend. That's according to Comscore. That's short of the the already modest projections, it would gross between $50 and $60 million. The first movie, the 2019 hit Joker, opened with nearly $100 million and went on to top $1 billion at the worldwide box office. Kelly, back over to you. Julia, thank you very much. As we had to break, the Dow is sitting around session lows down nearly 400 points.

Power lunch will have more on the other side. Welcome back. Have you run over a pothole lately? Who hasn't? But what if we could fill these road wreckers with, something that actually helps in the battle to slow climate change. Diana Oleg has details in her continuing series on climate startups, Diana. Well, Kelly, potholes are usually filled with asphalt, right? That smelly, tarry material made of some type of gravel and a petroleum-based substance

that binds it all together. Now, one startup is helping to make a cleaner petroleum-free asphalt, which starts, interestingly enough, with natural gas. Natural gas is a cleaner fuel than oil, but it still emits harmful carbon dioxide when burned. Natural gas is made of carbon and hydrogen. Now companies like Monolith and Seattle-based startup, modern hydrogen, are using new technologies to create a cleaner hydrogen, which is also resulting in another useful byproduct. Modern hydrogen produces clean hydrogen without needing renewable power.

We do this by splitting natural gas into hydrogen and solid carbon. Clients put the modern hydrogen system where they would normally, use their natural gas, but the system first separates the gas into solid carbon and clean hydrogen. The client then uses that emission-free hydrogen fuel and a portion of it is also used to power the system. As for that leftover carbon, modern hydrogen actually has a second business. It sells it to asphalt makers. Using carbon instead of the usual petroleum makes the asphalt stronger, cheaper, and greener. There's this $100 billion per year market. that wants to buy the solid carbon and puts it into asphalt.

And that just helps the whole economics of this decarbonization play. This is also one of the cheaper ways for modern hydrogen's industrial clients who are pressured by investors and regulators to decarbonize. Decarbonization isn't free. So we're always looking for the least cost, least risk way of doing that. This technology is probably a medium expense to low expense. And that's what we're trying to figure out with the technology. Modern hydrogen is backed by Gates Frontier at One Ventures, National Grid Partners, Murrah Group, and Iron Gray.

Total funding so far, $100 million. Modern hydrogen now has systems in the U.S. and Canada, and its asphalt is filling potholds in six states as well as Canada. Pan says he's looking to expand next into Japan and eventually go global. Back to you guys. How does it compare in price with conventional asphalt, number one, And number two, if I'm understanding it correctly, what has happened, what happens here in this process is that solid carbon precipitates out of the process and is collected in some kind of bin or trough or whatever. Exactly. And then what modern hydrogen does is it takes that solid carbon and it sells it to asphalt makers. And so it creates a much cleaner asphalt. Now, they're testing it. They've tested it so far in the Pacific Northwest and in Texas.

But they want to take it to colder weather areas to see if it works there as well. actually bringing it to you in New York and New Jersey, they're testing it on Long Island, which I don't know if you knew this, but New York uses about 19 million tons per year of asphalt. And as for whether it's cheaper or not, you know, the company says that the upfront cost of putting the entire system at a place where there's natural gas is high, but because the systems work over time, decarbonizes at a much cheaper rate than other technologies, it will offset that higher cost over time. Well, 19 million tons of asphalt has not gone into the Cross Bronx Expressway just yet.

Let me say that. Diana Oleg, thank you very much. Appreciate it. All right, markets are around session lows. We'll talk about that a little bit more next. And as we head to break, CNBC celebrates Hispanic heritage. Here is Peloton, Vice President of Fitness programming Robin Arzone, sharing her very interesting story. My mom is a Cuban refugee.

I'm first-gen born in the United States. And I think about the times when my parents were teaching themselves English, when they were showing up in spaces, when maybe they were not only uninvited, but unexpected. Resiliency lives in my DNA. And I'm really honored to be able to take up space and look in environments and ask who is underrepresented and how can we bring them in. All right, welcome back to Power Lunch. Stocks are sliding throughout the session, and particularly in the past hour or thereabouts. Now the Dow down almost 500 points at 41, 859. 1% declines for all of those major indexes that you see right in front of you.

Wasn't that way an hour or so ago. There are a couple stocks, however, moving higher. Invidia is up about 3%. Yes, almost 3%. The company hosting a three-day summit in Washington starting today. it's up 25% over the past month. That move has pushed its market cap back up above $3 trillion and past Microsoft into second place behind just Apple. Pfizer hired by 2%, the activist investor Starboard value bought a billion dollars worth of the shares and approached two former Pfizer

executives to assist in its efforts to turn around the company. And Generac, higher by 8%, as often happens around major storms, the expectation is this will increase demand for, Generators, Generac, CEO will be on Mad Money tonight with Jim Kramer. Jay Woods is back with us. What are you looking, if anything, to buy on a day like today? Yeah, we're getting a little jittery right now because of news possibly in Israel breaking. And we saw this just last Tuesday. You know, Monday we were making new highs in the S&P 500.

And then Tuesday, we lived through it live. I was on the floor of the New York Stock Exchange as the Iron Dome, the defense system in Israel, was actually being tested. thankfully it passed that test and then we focused back on economic data so as someone a former market maker you look for opportunities like this you don't wish this upon anybody but we

tend to overreact we tend to get fearful we saw it on August 5th with the Vicks spiking to 65 and I remember I was on with Contessa Brewer that morning and you know this was an opportunity and I said we would also have after shocks in this market and this is what we're seeing it is October people tend to get jittery

more bottoms are formed in October than any other month And right now, people are just going to go to the sideline. And look at how the VIX has been performing. That's 18% higher today and one week higher by 36%. And if you zoom back out for that last couple of months, you can see what you're talking about with the initial spike. And then we've had a couple of these aftershocks. Anything in particular you're looking at?

I mean, do you look at a thing like energy and now say, or do you look elsewhere and just stick with? Well, energy is going to be where we're going to look. We're watching the XLE, Exxon Mobil, Occidental Petroleum looks very good on a chart. and it looks like it's starting to make a move. These would be safer plays and, you know, risk averse. Otherwise, you look at some of those stocks we just talked about on the last segment, the apples, the Amazon, the Netflix of the world, that nothing has changed for them fundamentally.

So you want to take an advantage of a down draft and probably step in and start to allocate some cash there. These are opportunities. Jay, got to leave it there. Thanks for coming back and joining us. Thank you for watching, Power.