Power Lunch - Stocks on pace for losing week 12/13/24

Episode Date: December 13, 2024

Stocks are lower across the board, with the Dow on pace for its 7th negative day in a row. That would be its longest daily losing streak since February 2020. The Nasdaq did hit an all-time high earlier in today's session, but it's now on track for back-to-back daily losses, just like the S&P 500. We’ll cover all the angles for you. 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 Launch alongside Kelly Evans. I'm Tyler Matheson. All the major averages are lower today. The down on pace for its seventh straight losing session, which hasn't happened since February of 2020. The NASDAQ, however, has been holding up better, breaking $20,000 for the first time this week. Back down below it now, 19,906. The 10-year rising as import prices came in higher than expecting, expected leading to inflation concerns. You know, it kind of gotten away from me that this. Dow was down this many days in a row. I think it got away from everybody because we've been talking about all of these standout performers like Broadcom, like the NASDAQ crossing above 20,000 this week for the first time. Meantime, the blue ships, a little more struggle. And United Health, among those that have been suffering lately in the wake of that terrible shooting last week. That's actually a big reason why. Plus the big story everyone is talking about now, and it's drones.

It's become a sport here in New Jersey now to spot them in post videos last night. After everything that's happened the past couple weeks, last night, the activity was so busy in our skies. I talked with Representative Josh Gottheimer about this last hour. He called on the FBI to act and to reveal more about what's going on. And now Maryland Governor Larry Hogan is saying he personally saw dozens of large drones above his house last night. And he's also calling on the federal government, Tyler, to immediately address the issue. Well, I think it's not just the gummies that these people are taking, folks. I mean, there really are these objects in the sky. And some of the things, it's not.

them are not the little, you know, package delivery drones. They're sizable. There's lots of them. It's happening in New Jersey. I've heard reports of New York now, Maryland, obviously. So what seemed like kind of a niche issue, even just a week ago, is now an issue where you say it's really time for the officials to get up there and tell us what they know, what they think they can find out about this, why this is taking place.

Fascinating stuff. We start, though, with some potentially major changes to the U.S. banking system under the incoming Trump administration. Now, Wall Street Journal reporting that President-elect Trump's team is looking to shrink bank regulation, including possibly eliminating the FDIC or folding it into another government agency. Its functions would not be eliminated, could be combined, as I mentioned, into another agency such as Treasury. For more on what this would mean, let's bring in Sheila Bear, former chair of the FDIC, and our own Aymann Javers is in Washington. Amid, let me start with you. Where did this chatter begin?

in, and as I understand it, it is the people who have been vetting people who are asking those for financial positions, and they are asking people, what could we do to streamline the regulatory apparatus, the FDIC, Comptroller of the Currency, etc. Yeah, that's exactly it, Tyler. The Wall Street Journal has done some great reporting here, and what they've picked up on is the questions that Treasury, incoming Trump-affiliated Treasury people, and also this new Doge organization, the Department of Government. efficiency under Elon Musk and Vivek Ramaswami are asking people who are being interviewed for some of these bank regulatory jobs in the Trump administration what they think about how to streamline

the alphabet soup of bank regulators and how they can achieve efficiencies there. So the question I'm left with in my mind, Tyler, is how much of this is about sort of re-scrambling the alphabet soup and how much of it is really about lowering regulation overall. And I think, you know, if you talk about bank supervision and the, you know, regulation on banks that's been going on for nearly a century now. Some of that could be concerning to people in the industry if you're talking about eliminating regulations altogether. But if you're talking about just sort of streamlining the bureaucracy here and making things more efficient and saving the government some money, that might go over pretty well in the industry, even though a lot of industry players kind of like having their

own regulator. They kind of like being able to play the regulators off of each other as they so often do in D.C. Sheila, I assume you think this is a bad idea. Why would it be a bad idea? I understand why it could be a bad idea to eliminate the FDIC, but why would it be such a bad idea to fold it into the Treasury Department or within some other agency? Yeah, so I guess why is that a good idea? The FGIC has got a perfect record of protecting insured deposits,

been doing it for 90 years. It's been a stabilizing force during the great financial crisis when I was chair, some 14 years ago, debasasas were coming into banks because people had a lot of confidence in the FDIC. So it's not broke. Don't fix it. I'm a former Treasury official, too. I love Treasury. I was Assistant Secretary for Financial Institutions with oversight of bank policy during the Debbie Bush administration. So I have some perspective on this from both agencies. And first of all, I don't think Treasury wants it, at least not the current administration. But also, it's not, FDIC insurance is backed by bank premiums. It's not taxpayer dollars, which is what the finance

piece that Treasury deals with. They don't have expertise in resolving failed banks. And then the brand. I mean, why create that confusion? People know the FDIC brand. You go into the bank, you see it there. It's comforting. It's reassuring. Why change the brand? Why shift it to another entity that's guaranteeing this deposits when it has been working very well? So, no, I think it's, and it It doesn't happen anyway. It's just be a waste of time. Congress isn't going to do that. I would be very surprised if Congress approved legislation to do that. Sheila, I'm glad you're here today because I've actually been thinking a lot about this. I believe there was a bank in Oklahoma that failed in the past couple of months where some of the depositors were wiped out. And a lot of people in the industry

feel it's unfair because obviously if Chase failed, they're going to make all those depositors whole. But if this Oklahoma bank fails, well, then they don't. And so we have this two-tiered system right now. So I'm sort of like, you know what? Then put it in the Treasury. And at least we all know, at the end of the day, this is taxpayer money that's going to come to bail these banks out. And unfortunately, probably cause more bank problems in the meantime. Yeah, so I think those are two different issues. So I don't think I support expanding deposit insurance guarantees for transaction accounts. I think there's a very uneven playing field between the smaller banks that do not have this implied government too big to fail status and the very big one.

So the answer to that is to expand deposit insurance coverage. The problem, your flagging killing doesn't have anything to do with that isn't sold by moving it into Treasury. You still have to change the deposit insurance rules where the Treasury is guaranteeing it or the FDIC is guaranteeing it. You still have to change the deposit insurance rules. And if they're suggesting now that taxpayers with our $36 trillion of national debt, if that's the idea to move into Treasury so taxpayers will now provide this guarantee versus bank premiums, which is what's been going on for 90 years, then I think that's a really bad idea. So, yeah, expand deposit insurance coverage, but keep the banks paying for it and keep it separate with the sole focus just on protecting those depositors. Consumers have a lot of confidence in the FDIC. It's not broken. Don't fix it. Could you still do that then and say, okay, we leave the structure of it intact. But I think one of the things they're trying to look at is, do you need, you know, what 12, whatever the number is different agencies?

Or can a lot of this just kind of be done if there was one office of blah, blah, blah, blah, that was in charge of a lot of it? Yeah. Yeah. So these are, look, this is. been debated for a long time. And my, I think we do need some regulatory streamlining. We have, yeah, we have too many regulators. I had made some suggestions in my book that was, was published. I got it back there some time ago. So yeah. But, you know, I think that deals, there's no duplication of deposit insurance. The FDIC does that. Nobody else does that. Where you have arguable duplication and overlap is with the supervisory, the regulatory functions. So there have been passed proposals to take the FDIC's supervents.

advisory authority, the feds, the OCC, and combine them all into some kind of new agencies. I think that's that proposal has some downsides, too. But that's when people have been talking about this in the past. That's what they're talking about, not getting rid of the FDIC. And so that I think that's, you know, but I will tell you, this thing's been debated forever for decades. It never goes anywhere. At the end of the day, industry just won't put their muscle into it.

Hank Paulson had some great proposals during the, when I worked with him during the administration went absolutely nowhere. That's where most of these go. So they want to spend their wheels on it, you know, fine, but I just think we've got bigger problems to worry about than this. What, Amon, do you think the industry's reaction would be as opposed to the powers that be in Washington? What would the industry's reaction to this kind of proposal be? You know, I think slow walking things in Washington is a high art, right? I mean, you know, if the industry thinks, you know, what we've got is pretty good and we don't want a radical change. I think, you know, you could see industry saying a whole lot of things about, yeah, let's participate, we'll get

on board with this, and let's have, you know, 97 meetings and 27 breakout sessions and all the rest, and it never goes anywhere. Sheila puts her finger exactly on the issue here, which is this Doge unit, whatever it is, it's not a government agency. It doesn't have any authority on its own. It's going to need Congress to actually put in place any of these recommendations, and every one of these things that they're going to go after has a constituency, on Capitol Hill that views this as their turf and they are not going to want to see that change, that's going to be a big problem for Elon and Vivek, especially if you look at things like, you know, why do we have an SEC and a separate commodities regulator over across the street, right?

There's a real question as to why that was done historically. It's largely because the CFTC, the commodities regulator, is overseen by the Agriculture Committee's up on Capitol Hill. The ag guys want access to Wall Street money to raise money when they they campaign. And so they're never going to let go in the agriculture committees of the CFTC as a thing, even if you might say, hey, it would make sense to combine the CFTC and the SEC. There's a political reason, a turf war reason in Washington, why that's structured that way. And that's the problem they're going to run into again and again and again. So they better have thought all that out as they approach these things. And I assume the SEC reports into a completely

different committee apparatus, maybe the finance committee. I'm not sure which. So, so Sheila, I mean, I don't mean to invoke the sometimes inflammatory term the deep state. But what Amon is kind of pointing to is in a sense the idea that if the powers that reside in Washington don't want something to change, they mobilize and they cause it not to change, even if change is a good thing. Just sort of talk me through that. And even if they're saying they want it to change. Even if they say it, they can still slow walk it. So let's be clear.

I want to do something about the national debt. I'm hoping Doge can be successful. So I think you need to also ask, is this a good idea? Is this worth doing? Because sometimes industry resistance makes sense. Deposit insurance has worked well. Banks like to brag about it. People leave their deposits in the banks.

But that helps Main Street depositors, too. I know these very rich guys that are debating all of this now, who are advising Mr. Trump, maybe they don't understand that somebody with a deposit of less than $250,000 needs some comfort that that's protected, but they do. So that's working fine. Leave it alone. There are probably good reasons why the industry might resist it.

On these larger issues, yeah, I mean, why aren't we looking at health care, you know, our cost are double what other developed countries are paying? There is so much in terms of where you really have the big drivers of our fiscal unsustainability, these bank regulators are self-funded for the most part. They don't have anything to do with the deficits. So I think, yeah, change is Washington resist change, constituencies resist change. That is a problem. But on this issue, I think the core question is, is this even a good idea? Is it worth it? And I don't think it is. You're not going to save any money. It's not perfect, but it's working pretty well. Mr. Trump can immediately put on in his own people at the FDIC and the OCC, SEC, SEC, C.

He can immediately put him as a leadership if he wants to change policy direction. So why bother with this? I'm really not understanding that. Interesting. Sheila, on that note, we will leave it. Amma Javvers, thank you as well. Good to see you both again. Thank you.

Now to shares of Broadcom soaring on the fourth quarter beat. They're up 23% this afternoon now. They tripled their AI revenue year on year. The surge pushing its market cap above the trillion dollar mark for the first time ever. We'll dig into the rally for AVGO. the rest of the tech trade when we return. Welcome back to PowerLunge. Broadcom is the top stock in the S&P by a wide margin today.

It's up 23% after giving a positive outlook at its earnings report last night on its positioning in the AI chip space. Its forecast was so rosy and results so strong that Bernstein's Stacey Razgon wrote, maybe time for Broadcom CEO Hock 10 to get his own leather jacket. A reference to Nvidia's CEO, Jensen Wong, and his famous look. Elsewhere in tech, Apple snapped its nine-day streak, of record highs yesterday. Stock taking a bit of a breather again today on its recent run to try to

get towards a $4 trillion market cap, three and three quarters as we speak. What does it all mean for the tech trade? Our next guest is still bullish and thinks there's plenty of upside left. Deepwater asset management managing partner Gene Munster is here along with our own Steve Kovac, who's on set with us. So Gene, kick things off. What do you think we learned this week? Kelly, I think we learned a lot. I think we learned a lot in terms of the sustainability of the AI infrastructure trade. Of course, broad. Com focuses on custom silicon, which is different than Nvidia's GPUs, but the storyline that this is going to run out,

that AI infrastructure is going to dramatically slow next year, essentially a strong data point that this is going to be growing faster for longer and just want to quickly put some numbers around that, is that if you take Broadcom's 2027 guidance, which it's remarkable that they're stretching out that far, but 2027 guidance, it basically implies about 60% annual growth. Right now, investors are expecting Nvidia to grow in 2026, 26 at around 21%. And so I think that that's one piece that we learned this week.

The second is that the pace of AI innovation continues to be rapid, of course, with Google coming out with Gemini 2.0. And so this is a big week for AI. Steve, would you differentiate for us between Invidia on the one hand and Broadcom on the other and why people have become so currently excited with Broadcom? The numbers, the earnings, the report this week, good. Right. Not kick ass, right? Well, there was also this report earlier in the week that Brockcom's working with Apple now to help them do some artificial intelligence ships.

So it's a different, yes, to your point, Nvidia makes those GPUs. They're more expensive. But Broadcom has become this player that companies go to Google, by the way, is using Broadcom to make their artificial intelligence ships as well. Now reportedly Apple is getting in on that as well. That makes it really exciting. And these are, of course, the ones that run into servers for training their AI models. What's really interesting about Apple, at least what we've learned so far, what they've publicly disclosed so far.

They've been using these alternative chips to train their Apple intelligence stuff. They've been using chips from Amazon. They've been using chips from Google, which, by the way, like I said, Broadcom has a hand in helping make those. What they haven't been doing is running out there like Microsoft and meta have been doing and Google to some extent, buying up gobs and gobs and gobs of Nvidia chips and putting them in a server farm somewhere and training their AI models. They've been renting these other

alternative chips. That doesn't mean they're not using Nvidia, but it does mean at least what they publicly disclosed. They're looking at these alternatives, and it's pretty impressive. They've been able to do this and launch Apple Intelligence in the way they have without spending as much as some of the rivals have. Although, Gene, I wonder

if that is because it's not as high stakes for them. I mean, in a way, the Apple intelligence features on phone don't seem quite as, you know, I mean, and they're still using chat GPT to power series searches, which goes back to that company's usage of Nvidia chips. Do you think we're going to be in this land grab, this arms race of continuing to build bigger and bigger data centers for the next few years' time, or do you think we're starting to pivot? And is that what's helping Broadcom? We're not even started. I think on the land grab and the data center side, the Broadcom

guidance, I think, just reinforces that this still is going to continue. And you go down the list of companies, liquid companies like VIRTIV and what their expectations are. I do want to mention something. Steve brings up a good point about Apple and what they're spending on the infrastructure. I just want to put on the record that there's something new that came up on my checklist after Brockcom last night related to Apple as I think about their next earnings call. And that's how much they're spending on CapEx. So Apple's going to spend about $10 billion this year. The rest of mega cap is going to spend on about $55 billion. But they've now talked about custom doing buying custom silicon from Traneum and Amazon. They've talked about, or not they haven't talked about,

but as you mentioned, it's inferred that they're going to be doing something here with Brogcom. It feels like Apple wants to bring more of their AI destiny back into their hands. Even though it's consumer, it's not as industrial strength as what some of these other companies are doing, I think that's a really important shift that I'm noting here, and I wonder what that's going to do to CAPEX. Reaction, Steve? Yeah, and I think, but to your point, so Apple Intelligence just put out their biggest update yet so far with ChatGBTGPT on there. None of this matters what we're talking about unless it moves iPhones and gets people upgrading. And again, we look at all the estimates for what this quarter is the biggest quarter every year, of course, the holiday season for Apple.

It's their fiscal Q1. And we're not seeing much evidence that it is driving sales so far. Maybe that changes this week and people start running out there to get ChatGBT on their phone. I've been using it since this new update launched. Not super impressive. And also, there's a lot of mistakes. Keep in mind, this is still a beta product, and it's not exactly convincing people to run out there and use it.

BBC just a few hours ago put out a story saying that the summaries of Apple Intelligence put out some fake news about Luigi Mangione, the alleged shooter in the case saying that he shot himself. And it was summarizing a BBC notification about him. So you can see it's not perfect yet. You can see it's not there yet. It is really interesting how, again, how Apple is able to still get this off the ground and still able to do it with just dramatically less cap-ex. We're going to see Microsoft, you know, $20 billion, at least a quarter.

And then let's not sleep on XAI, which just had another huge fundraise, $6 billion, top of what it raised earlier this year, to just really step on the gas out there in Memphis, Tennessee, and build their data center. So, Gene, bottom line us here. Let's play, would you rather. Would you rather Apple or would you rather Broadcom? I'll take Apple over Broadcom. I still think that what, you know, Steve talked about, the growth rates really quick.

The street's now looking for 3% iPhone growth in fiscal 25. That's down from 5% a couple months ago. So analysts' expectations have been declining. I think that's a layup that they beat that 3%. If they do, I think Apple stock goes higher. All right. Gene Munster, Steve Kovac. Thanks very much.

Have good weekend, gentlemen. And shares of FedEx have had a roller coaster gear, but remain on pace to close out to 2024 with double-digit gains. And investors expect the stock to keep delivering in 25. We'll explore that one with our market navigator next. There we go. Welcome back to Power Lunch, everybody. Quick check on the markets right now. The industrials down by a little bit, about 1 tenth of 1%.

The S&P 500 is basically flat, as you see there. NASDAQ composite up about 1 tenth of 1% at 9%. 19-926, up 23 points. In the meantime, FedEx has taken investors on quite a ride these past few months with some pretty big swings. Our next guest is keeping an eye on the stock and is here to tell us where he thinks the delivery giant is headed next, especially with its quarterly report right around the corner. Joining us now is Mike Co, chief strategist at openinterest.pro. Mike, welcome. Good to have you with us.

What has FedEx typically done around earnings and how does that inform any trading strategy that you're following right now? Well, you know, this is a company that, you know, historically probably moved 7 to 8 percent each time they reported. But over the last four quarters, the moves have been considerably sharper than that. It has averaged about a 12.5 percent move on average over the last four reported quarters. And I think that is one of the reasons why right now the options market is implying a move of about $28 higher or lower by the end of next week.

So about 10 percent of the current stock price. Now, I would say that the sentiment has also deteriorated a little bit going into that earnings number. So yesterday we saw nearly double the average daily put volume. And if we take a look at the prices of upside calls relative to the downside puts, we've seen that those calls have kind of deteriorated a little bit, indicating that sort of bearish sentiment, if you will. And today we are seeing, once again, put volume outpacing the call volume just a bit. So, you know, as I take a look at this, I think one of the things that you could do,

trying to take advantage of that elevated short-term options premium going into the event is trade a downside put calendar. So this isn't a sharply bearish bet. It's a modestly bearish bet. I was looking at the 260 strike, so selling the December 260 puts to collect that elevated premium and then going out to March the 21st expiration and buying the 260 puts there. And the idea is that on a standstill basis, you'll probably make a little bit of money If it drifts down to that 260 level, you would make some money bearing in mind that 260 is where the stock fell to actually the last time that they reported earnings. So, you know, 15 times earnings, it's not hugely expensive relative to the market, but it is a cyclical. It is, you know, typically trading at a material discount to the S&P.

You said that the options action that you've been watching recently is suggesting a little bit more of a bearish tilt. Is the activity heavier than normal, roughly normal? How would you characterize it? Yeah, so I think yesterday we saw about double, actually, the average daily put volume. So it traded over 11,000 put contracts. 11,000 doesn't sound like a big number, but every put contract represents 100 shares. So that's really over 1.1 million shares in bearish bets, if you think about it that way, times the $280 stock price, you know, you're talking about a quarter of a billion dollars

in notional exposure to the downside, and that was indeed above average. So just so we leave the viewer with a clarity here, go back very quickly over what your trade is. It was a 260 put. I'm sorry? It was a 260-put calendar. So buying the March 260 puts and then selling the near-dated December 260 puts against it. The idea being that if the stock drifts to that lower strike, which is where the stock fell to, you're going to capitalize on the decay of that near-dated option, but still have some bearish exposure. And by the way, that longer-dated 260 put will capture the next quarterly report, which they're going to be giving in the third week of March. Mike Co., one of the few people who can make me understand

options. Mike, thank you. As always, appreciate it. And Kelly, back to you. You and me both, Ty Banks. Ahead on Power Lunch, campaign donations have always played a pivotal role in Washington's political machine, maybe more so now than ever. We'll follow the money for you for the incoming administration when we return. Welcome back to Power Lunch. We've got some news for you. Open AI releasing never-before-seen messages from Elon Musk as they fight back against that billionaire's legal assault on the company.

Steve Kovac is back to bring us the very latest, Steve. Yeah. And so this is Open AI responding to that motion from Elon Musk a couple weeks ago saying at the beginning of a blog post they just published, quote, you can't sue your way to AGI. That's a message to Elon Musk. Now, Open AI responding in this blog post, Elon Musk's recent motion to, force Open AI to abandon its plans to turn into a for-profit company. Open AI releasing those never-before-seen emails and other messages from Musk, which the startup

says shows he wanted a for-profit structure years ago before he walked away from the company. Also, a legal filing is expected to go through any minute now to Musk's motion that he submitted to the court as well. These emails contradict many of the allegations in Musk's recent motions showing Musk as far back as 2015 tried to convince OpenAI to turn into a for-profit company. Let me give you some examples. There's a lot here. Email from Elon Musk to Open AI CEO Sam Altman back in November of 2015, quote, probably better to have a standard C-Corp with a parallel nonprofit, end quote. Also a July 2017 email from Musk to Open AI co-founders Greg Brockman and Ilya Sutskevar

at 3am with a New York Times article about China pushing for artificial intelligence. Musk responded to that saying, quote, maybe another reason to change course, end quote. Open AI says that started conversations about the structure of a for-profit opening eye, and by September of 2017, Open AI says Musk created a public benefit court for Open AI and wanted full control of it. Musk took one more shot at this whole thing, though, proposed in January of 2018 folding Open AI into Tesla. Open AI turned him down on that proposal, and Musk left the company the following month. And then in October 2022, there's a text message here with Chavon Zillis, another plaintiff in the lawsuit who was a board member of opening at the time. She was acting as a sort of liaison between Musk and opening eye.

By the way, she has at least two children with Elon Musk. She told Altman in text messages that Musk was upset at opening eyes $20 billion evaluation. Altman and Zillis both said in those text messages that Musk had rejected equity in opening eye, and Altman said he'd offer Musk another chance to take some. Several months later, though, that didn't happen, and Musk announced he's launching XAI. We know how that's been going over the last year or so. This is going to play out in court, guys. There's a hearing scheduled right now for January 14th, though I will note the last time there's a hearing schedule for the two sides to meet. Musk pulled his lawsuit kind of at the last minute.

So the hearing would be the week before the inauguration, basically. So what is the essence of what these new messages are trying to reveal about Elon Musk's relationship with OpenAI? Yeah, basically saying from very early days of Open AI, even before opening I became. in public. They were kind of kicking around this idea that to do what we want to do to make this artificial general intelligence product, we're going to need enormous amounts of cash. Something they, you know, we talk about this every day now. They were talking about this nine, eight, nine years ago about how much cash this would take. And Elon Musk said, okay, maybe we need to rethink the structure, maybe this a cap profit company, et cetera.

And it sounds like these messages, once he left Open AI and opening I did do that cap profit structure, got that huge investment from Microsoft, attracted a $20 billion. valuation, he was upset and felt left out. Because he had not taken part in it. He had not, well, he took part in it, and they even offered, according to these text messages, they had even offered him equity saying, look, we'll give you the equity, you know, you did contribute, you did help start this company, et cetera, we'll give you the money. Now that they should, and was he saying at the time, that they should never have gone this route,

that they should have. No, that's what they're trying to show here. They're saying he was thinking about, exactly. What he's saying now is, how dare you guys abandon your nonprofit structure? This is a breach of contract. You have this inappropriate relationship with Microsoft. And Open AI now is responding saying, look, he's been agreeing with us on becoming a for profit company for the better part of a decade.

That is going to be the response. We're about to agree. So now he's against it because he has his own competitor in the business. That's the implication. That is the implications. You know, he does have XAI now. They have a $50 billion valuation already. A lot of Saudi money has gone into that.

They've raised $11 billion. so far just this year, and they built that massive computing cluster out there in Memphis, Tennessee, and we're expecting sooner than later a sort of consumer version of their artificial intelligence product. Right now you can access it if you subscribe to X. But yeah. What does Musk say is the reason he left the company? A lot of reasons. But, you know, it was basically over what he says and versus what actually happened is kind of up for a debate, but basically it was over running the company. And according to these emails, he wanted full control. war to spit it into Tesla, which of course, he's the CEO of.

All right, Steve, thank you. Complicated story. It's not over. Yeah, complicated story. And, well, yeah, there's a lot of moving parts in that. Let's get to Bertha Kuhm's for a CNBC News Update. Bertha. Hi, Tyler. Here's your news update.

Israeli troops were ordered today to prepare to stay through the winter on a strategic peak inside the buffer zone between Israel and Syria. Now, Israel says it's action in actions. in Syria are temporary and defensive. Meantime, UN Secretary General Antonio Gutierrez said Thursday that Israel is violating Syria's sovereignty and territorial integrity. Marine veteran Daniel Penny, who was acquitted this week in the chokehold death of Jordan Neely on a New York City subway, will be the guest of vice president-elect J.D. Vance at this

weekend's Army-Navy football game. Vance, who also served in the Marines, called Penny a good guy. who never should have been charged with a crime. And egg prices may soon approach record highs. Market analysts point to the spread of bird flu, reducing egg supply, along with strong consumer demand during the holiday season. According to Consumer Price Index data,

the average retail price of eggs in the U.S. has risen nearly 40% since November 2023, up 8% in the last month alone. Tyler? All right. Thank you very much for the Cooms. The 10-year yield slightly higher today as investors look ahead to next week's Fed decision. We'll drill down on the bond market with none other than Rick Santelli after the break.

Welcome back to power launch. As President-elect Trump has assembled his new administration, the cabinet nominees, advisors, and ambassadors in aims many of them familiar to CNBC viewers like you, wealthy people who in many cases donated a lot of money to Republican causes in the recent election. Megan Kinsella joining us now from Washington with more. And we should point out, of course, Megan, that there's nothing strange about large donors getting appointments to cabinet positions or ambassadorships. That's right, Tyler. This is sort of an extension and a multiplication of what we've seen in the past. So we analyzed the latest FEC filings and found 10 appointees to the next Trump administration that each donated at least a million dollars to Republicans this election cycle alone. Elon Musk led the way with $277 million donated all through Super PACs.

And while he is an outlier, we then found five of Trump's picks for cabinet positions and four future ambassadors that also spent heavily for Republicans. Linda McMahon, Trump's pick for Education Secretary. She spent 24 million. Howard Lutnik, potential future commerce secretary, almost 14 million. And Scott Bessent, potential future Treasury Secretary, spent almost $3 million in the last two years. So together, these top 10 donated at least three. $359 million in this cycle, a staggering amount really even in this sort of post-citizens

United era of big money politics that were in. And for comparison, we did not find any political appointees in the Biden or the Obama administrations that donated more than a million dollars in one cycle. And even in Trump's first term, we found just two. That was Linda McMahon again and Betsy DeVos, who led the education department. And you might say, well, wealthy donors are often rewarded with ambassadorships. And that is true. But Trump's biggest donor among ambassadors that we found was Warren Stevens.

He's headed to the UK. He spent more than $25 million for Republicans this cycle. And for comparison, Biden's biggest donor among ambassadors also went to the UK, but she spent just about $646,000. So more people spending guys dramatically more money than we're used to seeing in an administration like this. What explains it? I think it's a reflection of a couple of things.

One, it's a reflection of who's going to be running this government, that it's a government of billionaires and centi-millionaires and businessmen rather than career politicians. When they're staffing positions, if you've spent your career in Congress or in another government agency, you generally don't have tens of millions to spend in an election like this. And then I would say it's also a reflection of just sort of this era that we're in, post-citizens United, that Supreme Court ruling from back in 2010 that sort of lifted the caps on political donations. Now we couldn't even compare this, for example, to the Bush administration because it was just such different era then. Now both parties raise so much money, often more than a billion dollars

per campaign, and we're seeing that reflected among all donors, and now this time, many of them filling the administration as well. All right, Megan, thank you very much. Megan Cassella, reporting. Let's get a quick check on the markets with the Dow lower today. The NASDAQ has turned positive, though. It's actually up 24. The S&P's up a point. And this with rising yields. Yields are rising, the 10-year in particular, on data this morning showing more inflation in the import data. Ted Telly is here from Chicago with more. And we're up, what, about 25 basis points in the past week, Rick, on the tenure? Oh, absolutely.

You nailed it. And we will slowly get to that. But first, you really brought up something important. This week was about inflationary pressures, have not abated. In many cases, they've gotten a bit warmer. When it comes to import-export prices, it gets a little murky. There's a lot of moving parts. The strong dollar plays into it.

But I picked one in particular. This is year-over-year import prices going back about a year, and you can see that we have definitely moved higher up 1.3% today. The low that you see there on that chart happened to be in 23, I mean, when it was down over 6%. So we really have moved higher. And if you look at the two-year, and this is just today, we see how the yields have moved higher, and there wasn't any real dynamics other than import exports. board prices and the equity markets really moving higher on the NASDAQ is a good accomplishment

because the NASDAQ, of course, pays quite a bit of attention to interest rates. Kelly talked about 25 basis points. Well, look at the week to date in tens. If you look at that at 439, we're up right now, just shy at 25 base points, 25 and a half, two years up 13, a baker's dozen on the week, which means if you do the calculation, where you have some major steepness going on with regard to the 2s 10s spread. Look at a year-to-date of 10s. And I find this really interesting.

You know, is the high yield that was made at the end of April around 470? That could be in the crosshairs. There's a bit of momentum going on in these markets since the end of September. And finally, back to that 2s-10 spread. Right now, it's hovering at 16. It closed last week at 4. It's up a dozen on the week. And nothing epitomizes.

Morializes underscores the nervousness regarding pricing pressures better than a widening 210 spread. Kelly, back to you. Least the three-month tenure has turned positive, Rick, right? Yes, that's exactly right. I mean, we'll take it. Any positive sloping yield curves? Help might help the banks. Good sign for the economy.

Rick, thank you. And remember, you can always hear us on our podcast. If you just follow and listen to Power Lunch on any platform you choose, we'll be right back after this. Welcome back. Andrew Whitty, the CEO of United Health Group, making his first public comments since the murder of his colleague, the head of United Health Care, Brian Thompson. And a piece published in the New York Times, Woody expressing his grief and his condolences to Thompson's family and also said he's having trouble making sense of the anger and threats directed at the company's employees. He also acknowledges the U.S. health insurance system is flawed and in need of reform, saying we know the health system does not work as well as it should, and United Health Group's mission is to help make it work. work better. He adds that there is a need to better explain what insurance covers and why. The op-ed published a week after Thompson was shot while he was on his way to his company's

Investor Day in New York. There's a tremendous amount of frustration, I think, and anger with how medical payments are processed. I know from speaking to physicians that they are truly frustrated and vexed by how they have to devote so many of their resources, hire people whose job solely is to be a go between their offices and insurers and payers. No one would design the system that we have today, and I believe that's a point that Mr. Whitty himself makes in his op-ed. Oh, absolutely. Even on Capitol Hill, we've seen this bill now to perhaps try to split the PBMs off of some of the insurers,

which would directly affect United. So whether or not that's directly a result of this or not, but the public outcry that has been witnessed, those United Health shares, Tyler, as you mentioned earlier, are down 13% or so in recent days. So there's a lot of pressure on this company. Absolutely. And I wonder maybe we'll hear more from the CEO and from others, but from all accounts and reports, employees at the company are terrified.

There are executives wondering if they should quit, wondering if they should stay involved there and in other parts of the health insurance space as well. All righty. As we head to break a check on the Dow off the worst levels of the day, but still lower. That would be the seventh straight down day. and we haven't had seven in a row like that in, I think, a couple of years, if I'm a member four years. We'll be right back. Whoopi Goldberg is looking to bring more attention to women's sports.

The popular actress and talk show host has founded a new TV network dedicated to women's sports coverage. CNBC's Alex Sherman joins us now with more. Tyler, it's a venture that Whoopi Goldberg has been thinking about for decades, but really has only seriously got traction about it over the past couple years. And we've seen the immense growth in the popularity of women's sports. And so now she has a partner, a media company called Jungo TV, and she's launching an international venture all about women's sports. She already has a handful of rights about a whole variety of sports,

both domestically and internationally. And I asked her, you know, what is it that you hope to accomplish long term with this venture. Take a listen. I wanted to go way past my lifetime. I wanted to be as well known as an ABC, NBC, CBS

L.M.N.P. That doesn't matter. Because we have something that we are specific about. Not just women's help, but who designs all the clothes? Who does this? Why are we talking about this?

What's your mental health like? It's all. It's not just for women, but it's women-centric. So the idea is to start small in the U.S. It's right now only available on Vizio's free TV network called Watch TV Plus. It's sort of a small start for something that she hopes will grow into something much larger. And in fact, her partner in this, George Chung, told me that even in the next few months, they expect to be on a lot more smart TV platforms.

This is going to be a free service. So unlike ESPN, which is always been part of your cable bundle, this will be advertising driven and won't cost anyone anything to watch. You know, last night, folks, I was home, and there were a lot of sports options on. And you know what I chose? I chose to watch parts of the Notre Dame, Connecticut women's basketball game. That shows you how much more interesting women's sports,

to me, have become as a kind of omnivore of sports content. It's partly the Caitlin Clark phenomenon. It's partly that the competition is good. And you can sense the hunger in the players out there in college sports for sure. We're watching women's basketball at the college level. I don't know about you, Kel, but I'm watching a lot more women's sports. I thought you might say my dad watches a lot of the volleyball. Yeah, Alex.

Don't you think, Alex, there's a lot more of this to come? It's unbelievable. I mean, it really is a marked jump in enthusiasm, particularly in big-time college basketball. pointed out. I mean, that atmosphere is just like a man's atmosphere at this point. Yeah. And the truth is the NFL game was really bad. Thanks for watching Power Lunch, everybody. Closing bell starts right now.