Power Lunch - Stocks rally after Trump’s Treasury pick 11/25/24

Episode Date: November 25, 2024

A broad market rally pushed the Dow, S&P 500 and Russell 2000 to new records. Investors bet President-elect Donald Trump’s choice for Treasury secretary, Scott Bessent, would help guide the economy without sparking inflation. We’ll cover all of 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.

Welcome to Power Lunch, everybody. Alongside Kelly Evans. I'm Tyler Matheson. Glad you could join us today. We are joined for the full hour by Ken Squire, President of 13D Monitor. Ken, welcome. Good to have you with us. Back to you in just a moment. The Dow and S&P 500 hitting record highs right out of the gate this morning, off those levels right now. The Dow getting as high as 44,800 as the rally just keeps on going. You know what's not going, and I don't know if we can show it. Bitcoin and gold. Oh, how they are breaking hearts today, not participating, sitting this one out. Well, it's been a nice little run for those two. United Health and newcomer Sherwin Williams are among the biggest contributors to the Dow. Sherwin Williams are known for its pates, but also in other areas as well. Also contributing to the rally is the president-elects pick of Scott Bessett for Treasury Secretary. I'll have more on this in a moment. He's seen as, I don't know if we should say he's seen as less hawkish on tariffs.

I mean, he got the job and partly to advocate for that strategy. What's interesting here is that Mr. Bessent has back in history, A connection to George Soros. Yes. And that was viewed as a possible disqualification. Correct. But he obviously overcame that. Yes.

And Target shares are rebounding today. The stock's still down 16% in a week following its earnings. But at least one analyst is hoping for a turnaround. We'll trade this one in three-stock lunch coming up. Target really taking it on the chin. Some people saying, well, it's as simple as this. They don't have as good a product mix. They're not as good merchants as the Walmart people are.

And they're not as prominent in online sales. I'm a little surprised to see a few. 5%? Can you got any thoughts on the 5% rebound rally in target this morning? Because that corner was pretty shocking. I agree with what Tyler said. I mean, effectively, they just can't beat Walmart. Every time they miss earnings, they have an excuse, whether it's port strikes or weather or supply side. And the bottom line is Walmart has a better product and better e-commerce. And they've got the 360. You know, they've got the groceries. They've got the price advantage. They've got the app. You know, they've got it all. I don't mean to put everything into your lane quite this

way. But remind me, has their best? an activist involvement in Target, or could they be, anytime you see a stock drop 20% like that, you have to think Elliott's around the corner. So there was a big activist in Target, Bill Ackman many, many years ago, and he lost the proxy fight. Did he?

And, you know, the stock got creamed. It was like the first special purpose vehicle that he did. He raised a lot of money, and it wasn't his best investment. Oh, wow, that's so interesting. So they have had maybe because that was such a high profile incidents. Now, I don't know if other firms were. would seek to... It's so hard, like, it's so hard for, like, mega-cap retail or large-cap retail to really get an activist involved.

Why is that? It's just, it's hard to pull the right levers. It's ultimately a mixed story. It's, it's harder to turn around a bigger company. Retail has always been an area. There are a lot of activists having me good at. I mean, look at bedbath and beyond and coals and things like that. It's just, it's very hard to do activism at these big retail stores.

There's always these rumors that activists will come in and swoop up, Nordstrom? Well, Ryan Cohn, who's at GameStop has a position in Nordstrom and is trying, but it has a dual share class and it's not easy to just come and do. GameStop and Nordstrom. They just don't seem to

fit together. I'm sorry. Different clientele. It's so funny because GameStop and the other, Chewy, the other stocks he's been involved in where you kind of kind of motivate the masses to get involved. And then you think Nordstrom, and it's kind of the antithesis of what he would stand for. And I don't know, maybe that's part of the point. All right. Let's move on just now. Though this morning's record rally, losing some steam this afternoon, markets are pleased with the nomination of Scott Bissent as Treasury Secretary. Let's bring in Megan Kassella now. Megan, what specifically do the markets find to like about this nominee?

Tyler, I think there's a couple things at play here. Besson appears to best represent the combination of traits that Trump was looking for in his Treasury Secretary. He's someone with a deep familiarity of financial markets and with ties to Wall Street, but he also has a deep commitment to Trump's economic agenda, including on tariffs. So for markets, they see someone who has experienced an investment strategy and who also might temper some of Trump's more extreme policy impulses. So take tariffs as an example. Besson has argued that Trump's threats are a maximalist negotiating position, maybe not an endgame.

He did put out an op-ed during his interview process sort of celebrating tariffs. That came out amid fears that he wasn't protectionist enough. But even then, he was calling for using them strategically. That's the same language that Biden and the Democrats use on tariffs. Now, on the debt and deficits, Besson is deeply worried about the deficit. He said it's why he got involved in the Trump campaign in the first place, but he believes the U.S. can grow its way out of debt. So he says he'll push for tax cuts to spur what he calls an economic lalapalooza.

And there are valid questions still about how he thinks about the fed's independence. Bessent initially called for Trump to appoint a shadow Fed chair to challenge Jay Powell. He later did soften that stance, but he still said that Trump should appoint someone early and criticized the bank for its half-point rate cut just before the election. So you guys can see some balance here in some of these policy areas in Bessent between what Trump wants and what Wall Street most wants to see. That's the card he's playing. That's, I think, why markets are pretty happy today, guys.

All right, thank you very much. We appreciate that. Yeah, we have Mike Santoli as well to talk more about what he's calling the, well, Mike, maybe you should set this up for us so people don't go away. What did they just say? You have a funny little term for this market rally. Some people are calling it the Bessent rally. You think it's the Mullet rally. Okay, explain.

Well, I would say that they can coexist, Kelly. Mullet, meaning the hairstyle, meaning the sort of, you know, business up front, part of the. in the back. And this has struck me over the last few weeks, not really today as much, but the last few weeks at how the core of the market, the S&P 500, if you're an index investor, everything's very neat and tidy. The market has been kind of extending this uptrend it's been in. It's been rotating rationally around higher growth expectations. Sycicals are leading. The minute it got a little bit overheated right after the election, a few days later, it started to cool off in this really measured fashion. So it just continues to color between the lines

and really not really do any missteps along the way. Now, alongside that, you've had this burst of high-risk, high-reward action in things like, obviously, crypto. Everything's happening, drafting behind Bitcoin in this realm. But crypto-related equities, leveraged ETFs, leveraged long ETFs that amplify the upside, record inflows, record volumes. Options in things like micro-strategy, flying. The old kind of boom-bust stocks from 2021, a lot of those former. unprofitable tech stocks are really running like ARC invest and and you know baskets like that. What does it mean? I think what it means is after the election, there was this massive tension

released. The big cap quality parts of the market had already been elevated to some degree. And there's a sort of open-ended you can believe whatever you want about what the future holds for things like crypto and risk-taking. And it's just sort of interesting how that muscle memory kicked back in. I'm not saying it's hyper-speculative and topy and we're already back to craziness like early 2021, but it's running along those same tracks right now. So we have a case here, Ken, where it seems like animal spirits have been unleashed. Yeah, I think partly because we know who the next president's going to be. We know for the most part the cabinet.

We know what the House and the Senate are going to look like, and I think there's less uncertainty in the markets. I mean, when you talk about the breadth of this... How soon before this terrible Biden economy that it becomes the great Trump, economy? Well, I don't think that can happen overnight. You know, there has to be, there has to be, you know, cutting taxes is not something that works right away. Tarras are not something that works right away if they work at all, so we have to see how long it goes. But to talk just one thing about the breadth of this rally that people are talking about, and the small caps, the smid caps for the

first time in the last three months have outperformed the S&P by 500 basis points. Wow. But I think that the next part of the breadth should be growth and rotation to value. Over the last 90 years, there's only been two periods when on a 10-year rolling basis, growth is outperformed value. That's been during the Great Depression and the Internet boom. It's happened other than right now. Right now, which has been the case for some years. For some years. And when, when, so as a result, we have the Russell 1,000 growth, have 79% premium with the Russell 1,000 value.

And when this has happened since 1995 over the last, you know, over the next, five years of value stocks have outperformed growth stocks by 12% annually. I think people are always afraid of being burned on that because they've been waiting for some time. And, you know, they say if you torture the data long enough, it'll confess to anything. So, you know, maybe directionally this is something interesting to look at. But to your point, since July, and this is something Stephanie Link and others have pointed out, the Mag 7X Tesla have basically been slightly negative. Since that period of time, the equal weight S&P is up nicely.

So there is some kind of rotation. I don't know if we call it value, but something like that going on. Yeah, absolutely. Mike, you have a final thought here, Mike Santoli? Yeah, I mean, obviously the scene was set for something like that. One of the pendulum swings back toward value, back toward equal weight, back toward small caps. The one thing I would caution, though, if you look back to those periods when finally those trends reversed, and it looks really dramatic on a chart on a relative basis, it's because growth stocks collapsed,

not because value stocks did wonderfully in absolute dollar terms. And similarly with small versus large in the early 2000s, small held its value because it had underperformed for a long time. but it only looks great on a relative basis because the S&P 500 got cut in half. All right. Mike Santoli, thank you very much. Appreciate it. How should investors position ahead of the short trading week? Well, we're already kind of in it as the markets touch new record highs.

Jeff Kilberg has some thoughts. He's KKM Financials founder and CEO and a CNBC contributor. Jeff, come at us. Where are you most in line with the market and where are you most out of consensus? Well, first, the guy, give you a little hat tip to producers. It's no mystery, Kelly, that I am the first guest on after the most. bullet rally because I had an unbelievable mullet back in the day, but my dad made me cut it before I played football for Coach Holts in our name. But when you talk about what Centaulay as well

as Ken, we're talking about, this constant debate between growth and value in timelines, I think it's really been interesting. We've seen fits and starts. And here we are today with a new record high in the all S&P 500, above 600 in the SPY, above 6,000. We talked about this a week or two ago. The air is very thin above 6,000. So I think this is actually going to be healthy. I know we're in a Thanksgiving week where volumes will be a little bit lighter, but I think this rotation trade, I think it's just getting going. I think it makes a ton of sense as you see profit taking. This isn't catastrophic, but when you look at the top 10 holding still at 35 percent, those top 10 holes, the S&P 500 have to be reset, not back to its 50-year average down at 21 percent, but I think it makes a ton of sense with the profit taking. And that's why you're seeing the video.

Even meta is down today. And that's interesting to me because you're seeing some of the blue chip name get bought off of. that profit taking. The money's not going out of the market, Kelly. We've had three consecutive record weeks of inflows, of equity inflows in the U.S. equities. I just think it's going to continue to rotate. What do you think about this rotation? Are you heartened by that? I am. I mean, as the manager of the Essential 40 ETF, you know that some of these names that we love and own. We actually own them, tie, in an equal-weighted manner. So if you look at some of the unloved names, look at a CME group, which should do well if we continue to see

Treasury yields oscillate, but there's also an IBM. There's a waste management. The only time you hear waste management tie is when you talk about the Phoenix Open and how many cocktails they're selling at the Phoenix Open for waste management. But I think if you also look at energy, which has kind of been perplexing all year, I think if you look at a leader like Exxon, I think I want to own these blue chip tangible names. So we're adding to these positions. We own all four in the essential 40 ETF, ticker ESN. But I think you're going to continue to see this rotation amplified as we go into Q4 because people are getting a little bit concerned about how NVIDIA has been, had back-to-back 200 plus years. So that's where you're going to see profit-taking.

Don't exit the position, but bring it back down to an equal way. You still want to own these name, but it has to rebounds at some point. Maybe we can show a five-day chart or so of NVIDIA, which was initially pretty much positive after earnings, but then, Ken, has it something of a soft patch. But I wanted to go back to something you said a moment ago. We were kind of talking about tariffs and tax cuts and how these things all take time. But I'm seeing a little bit of this kind of thought going out there now that what if next year is a worse year than people anticipate? Because look, at the end of the day, cutting money from the government is a austerity that in the short term is a problem for growth. Tariffs, the uncertainty around that. The Fed may not be able to cut

rates that much more. So because inflation is still sticky. I mean, you could all of a sudden paint a picture in three or six months time where things don't look all that great. When you say a worse way, you mean the stock market? Both. Maybe, you know, maybe the market now is kind of pricing in all this euphoria, but what if the reality when we turn the corner into 2025 is much different. Well, if we remember back to 2016 through 2020, Donald Trump did whatever he could to keep the market up. He judged himself more than I think any other president on how the market was doing. But there were a lot of times he would send a tweet out about tariffs and we'd be down several handles, like without hesitation. And he wouldn't come out and correct that immediately.

I'm hoping, despite his partnership with Elon Musk is tweeting is a little less frequent this term than maybe he learned something from last term. Jeff, what do you think about that? I mean, again, just to go back to, okay, it's jip. And by the way, everyone here knows when a new CEO takes over a company, what do they want to do? They want to crash the stock price. So by the end of the term, they look like they're doing really well. You don't want to come in with the stocks at all. You want to come in, crash the thing, and then maybe by the end of it, you go, all right, now we've righted the ship.

Well, and I think that optimism since the election certainly is represented in the market. But I think the one catalyst, which could reset and revalue the marketplace specific to equities is interest rates. The Fed's lost control of the long end of the curve. And I think when you continue to see them reissue, we were excited to see Scott Bassett come in because that's where yields are dropping today, a big drop, by the way. But I think at the end of the day, the bond holders and the bond buyers, they're going to dictate and determine where those yields go on the long end of the curve. And I do see with all this issuance, I think you're going to see yields move higher. And that's going to keep a lid, in my opinion, short term for the next month, two or three. Because these policies that you talked about, the new Trump trade, these policies, there's a lag effect.

Nothing is going to be implemented on January 21st. So that's where I think the market has to digest what's real, what's not. What was marketing during the campaign and what's going to be tangible and actually be implemented in the next year or two? All right. Gentlemen, we'll leave it there. What do we think? I have a great picture of a mullet, Kelly. I will send that to you.

I thought you were literally about to turn around and be like, because I have one. I thought we've been hiding this from us this whole time. Jeff, thank you very much, Jeff Kilberg. Kennell stay with us. All righty. As President-elect Trump finishes building out his team, experts are trying to anticipate, what key issues the administration could face. One that has been sort of on the back burner so far is cybersecurity.

The growing power of AI combined with global unrest and conflict, not to mention crypto, could open the door to more cyber threats. We'll discuss that next. Welcome back to Power Lunch, everybody. Some new headlines crossing about Starbucks, the coffee maker dealing now with the fallout of a ransomware attack on its software supplier, which is disrupting the company's ability to pay baristas and manage their schedules. Our next guest warns that ransomware attacks could get worse next year.

David Kennedy, we're welcoming back, founder and CEO of trusted SEC and information security consulting firm Ken Squire still with us. Mr. Kennedy, welcome. What do you make of this attack on a software supplier to Starbucks? This certainly fits with your thesis that we're going to see more and more ransomware attacks. Where are they coming from? Who are the likely perpetrators here if you had to hazard a guess? That's right. Unfortunately, this is a third-party company called Blue Yonder, who's a subsidiary of Panasonic. They provide supply chain software management to some of the largest distribution companies in the world, Walmart, you name it.

They're kind of integrated into everybody. And they experienced a massive ransomware attack last week, and they're still down as of today. Rumors are that they're looking to pay the ransom and try to recover, which would mean that they are not able to recover from their backups. it's probably a pretty substantial and significant breach to where they're not able to recover. And so you see these what we call supply chain attacks where you're targeting software that is used as kind of the core critical infrastructure of a lot of these large companies. And it's what we call one to many. So they're able to impact hundreds, if not thousands of customers all across the world, creating this opportunistic pain point that these companies really just have to pay the ransom

to recover back. And that's what we see from a lot of these larger organized crime groups that are more sophisticated in nature, they may only pull off two, three, four of these really large heist, but there's so many of these different groups that it seems like it's happening every day, but they're going for the bigger targets, they're going for the larger organizations, the ones that can be a one-to-many supply chain attack that cause massive auditors or issues with these big companies like Starbucks so that they can get massive payouts. You acknowledge that many of these companies are going ahead and paying these ransom requests.

As Ken points out, they are often paid in cryptocurrency, Is crypto, would ransomware attacks be as severe and as numerous today, were it not for crypto? If you had to do it another way? Not at all. Unfortunately, you know, when you look at what the FBI used to do to go after these groups is they track a lot of the money through money laundering and things like that, which a lot of that ability has gone away with cryptocurrency, the ease of payments, the ability to go and make those payments. And for that to be kind of essentially funneled to different accounts, becomes very hard for these groups to go and do. and also no real governance or ability to recover those funds has made it a very opportunistic way for these ransomware groups to facilitate those payments. I'm not against cryptocurrency in any way,

shape, or form, but it definitely has facilitated these groups to be able to get these types of payouts. You know, in millions and millions of dollars you saw, you know, you know, Caesar's paid $14 million. You know, you have these larger ransomware payments of $25 to $30 to $40 million being paid out. That probably would not have been occurring in any way, shape, or form had it been from the birth of cryptocurrency. David, is this right? This was in the Wall Street Journal today where Amazon's head of cybersecurity said they are identifying 750 million cyber attack attempts per day up from 100 million just six months ago. What's behind that? They're making so much money out there right now. You look at, I mean, you look at the demographics of what we're dealing with, right? You have nation states.

So, you know, reportedly all the V-telecom companies, Verizon, AT&T, T-Mobile. I think T-Mobile's had six or seven different data breaches over the past few years. But the more larger one where China was able to infiltrate the telecom infrastructure of AT&T and Verizon and record millions of calls and had massive access to call recordings of sensitive private communications between governors and senators, White House officials. They hacked apparently Trump and Vance phones that modern eaves drop on conversations from that side. So you have nation state demographics that are very successful with these hacks. But then the ransomware groups, they're making so much money that this is an interesting field. It's a bubbling field, you know, just like IT, AI, ML, you know,

cybersecurity is a bubbling field. And the crimeware side of the organized crime side, ransomware, it pays out. It pays out a lot of money. These folks can make a lot of money, you know, partnering with these other groups and getting more sophisticated cyberweapons. And, you know, you see this type of elevation occurring all across the board. And there doesn't seem to be any slowness of it. And if you knock out one or two of these groups, you know, five more come in their place. And so it's a really massive problem we're dealing with from the cybersecurity front today. I know Ken has a question for you, David.

Yeah, David, in the same article that Kelly just mentioned, it mentioned that Amazon has, I think, sightlines, so to speak, to 25% of the ISPs in the world and that they're working with government a little bit better now to help fight cyber attacks. How important is it going forward, especially in the Trump administration, for them to work with these large companies like Amazon

to help work as a team to fight cybercrime? It's extremely critical for these organizations to communicate, to talk to one another, and to have larger organizations do more. As you know, a lot of companies have moved to more cloud predominance across their infrastructure, so they're using AWS or Amazon Web Services, they're using Microsoft Azure. They're leveraging Google Cloud.

And so these companies have, you know, really a sense of having to try to protect these other organizations that are in their tenants, as well as the companies themselves that have to secure themselves, and as well as the government that has historically not done a very good job of protecting its own infrastructure, you know, collaboration makes a big deal. If you look at, you know, SIS of the cybersecurity infrastructure security agency, you know, they're tasked with protecting a lot of the critical infrastructure, whereas over 85% of critical infrastructure is private sector owned and usually on pretty legacy systems.

It's never been more important today for that collaboration to occur both on the private sector and public sector to really try to come up with a really good strategy on protecting its organizations that it protects, you know, in those clouds infrastructures, but also across the board. Let me ask you for a quick answer here. There are those who hypothesized that a second Trump administration will have better relations with Putin than another administration might. If that comes to pass, will cyber crime from Russia decline materially, or is it not going to do that? So cyber is very much used as a bargaining chip. I think what we'll actually see as a little bit of an elevation initially as a bargaining chip for saying, well, hey, you know, we'll also throw this on

the table work. We'll die down a little bit on the cyber efforts on both sides, by the way. You know, you know, our cyber folks, you know, on the NSA and everybody else are continuously launching attacks to other nation states. It's always used as a bargaining chip. China has been very, very active over the past year going after our critical infrastructure. So these are all bargaining ships that will be played and used in negotiations, you know, for Ukraine, in negotiations as we start to talk about tariffs and other areas. If you look at the most famous one in 2015 with Obama, you know, we had a kind of a ceasefire on cyber for a few years. and that was used to essentially retool China and now they're actively going after us in a much heavier state now.

I think we will see a reduction in that as a bargaining ship in the future for sure, especially as their negotiations occur for Ukraine in other areas. So it comes into all kinds of negotiations in ways we might not have anticipated. David Kennedy, thank you very much. David Kennedy of trusted SEC.

Coming up, a new addition to the S&P. Texas Pacific Land is getting added with the name up 219% this year. Are there any other mid-cap energy plays worth watching? We'll explore that. that in Market Navigator next. Welcome back to Power Lunch. We had a strong rally this morning that has moderated somewhat.

Dom, we were up, I mean, how much on the- Over 500? Over 500 for the Dow, and then we were up roughly, I'd say 51 points for the S&P 500. Wow. So still green across the board, still 9-10s rally for the Dow, the S&P, up by 12. But we're looking at some broadening out. Yeah, and one of those big sectors for that broadening out trade has been the energy sector, right? One of those value sectors overall.

So Wall Street does at least appear to be pleased with President-elect Trump's pick for Treasury Secretary, head front manager Scott Besson. He's an advocate for that so-called 333-target, a plan to cut the deficit by 3% by 2028, achieve 3% economic growth, and then add 3 million new barrels of oil per day to production. So what could that mean for some of the oil giants, perhaps like Halliburton? Our next guest is here to share that strategy. Joining me now is Mike Coe, the chief strategist over at openinterest.pro. So, Mike, we talk about the energy trade often because it is part of this so-called Trump trade.

What exactly is attractive to you about oil field services and specifically Halliburton and why this trade? Well, I mean, if we take a look at, you know, Scott Besson's sort of plan, that 333 that you were just talking about, that that's a pretty material increase in U.S. production. Now, I would just quickly point out that, you know, we're already at the highest production that we've ever seen in the United States. I mean, we're producing well more than 20 million barrels a day equivalent right now with the largest producer on the planet. And, of course, if oil prices continue to stagnate or go lower, it's hard to see how the industry is really going to want to basically get aggressive to increase production under those circumstances. But if you do, if you are going to see an increase of about 15 percent or so, then obviously that's going to increase demand for oil field services. Halliburton is, as you point out, one of the largest.

I mean, in the United States, we've got Slumberjay is number one, Halliburton's number two. Halliburton has more exposure to, you know, North American land oil services specifically. And obviously, you'd need to see some big increases there to achieve best and subjectives. Okay, so what exactly then is the trade? If we're looking at this particular oil site, you know, this whole construct for it, what exactly do you do with this particular action? Yeah, so one of the things we've obviously seen is that right after the election, the whole space got quite a big pop.

So if you take a look at where names like Halliburton were trading just prior to the election and where they are now, we've obviously seen a little bit of a rally. So I think the idea here is that if you're going to try to make a bullish bet, you probably don't want to take immediate exposure at this level. So I was looking at buying a longer dated call, such as an at-the-money call going out as far as April, let's say. That would be a 32-strike call. And then, because I doubt a whole lot more is going to happen between now and the inauguration,

looking at selling some near-dated premium against it to help offset the decay. So you could, for example, sell a December 30-34 strangle. That would be selling the downside puts at the 30 strike and then selling the upside calls. Now, that would mean that, of course, you have some risk of being put the stock. That is that you would own the stock at 30. But, you know, that's getting closer to where the stock was pre-election rather than where it is trading right now. So this is a way where you can essentially get some upside exposure, offset some of that. decay and if you are put the stock, you're going to own it at the pre-election price rather than the higher

price where it's currently trading. All right. Mike Coe with the trade there on Halliburton Oil Services. Thank you very much. We'll see you soon, sir. Thank you. Interesting way of cheapening this thing up was to sell that strangle, right? Exactly. So you collect the premium and it's better if the stock doesn't move at all up or down. You get to keep that premium to offset whatever happens. And you look at the chart and kind of the $35 range is really the sweet spot for this. So not one of those has you massively bullish, and also to the point, as we've seen with oil prices, if you increase production, you could end up getting a lot of downward pressure on the price. So there's a real balancing act for a lot of these energy players. Just not short term. Maybe longer term, yes,

but so that option strategy is an interesting way to play. Indeed, it's like a seesaw. There you go. Dom, thanks very much. Tyler. All right, thank you. Coming up, regulatory scrutiny might not be easing up on Google. We'll trade that name and others in a turbo charge, free stock lunch. Welcome back. I'm Simamodi with your CNBC News Up. State, Special Counsel Jack Smith, filing to drop his federal election interference case against President-elect Donald Trump. The Justice Department has a long-standing policy that bars prosecution of a sitting president.

The classified documents filing, however, does not seek to drop charges against Trump's two co-defendants, his valet and the Mar-a-Lago property manager. The California brothers convicted in the high-profile 1989 murder of their parents are appearing virtually this afternoon in court. A judge is hearing arguments to determine if a resentencing hearing for Eric and Lyle Menendez should remain on the calendar. Their attorneys want the judge to consider new evidence of their father's sexual abuse. And Formula One announcing today it approved the entry of General Motors as a new team on the grid.

It ends a year's long saga that saw the Justice Department launch an antitrust probe into the sport. The team will use Ferrari engines for the first two years until GM's catalog builds its own engine for competition by the 2028 season. Tyler, I'll send it back to you. Very interesting, big race in Las Vegas this past weekend. Time now for a deluxe three-stock lunch. We'll get the stories on three stocks making headlines today, then get the trade on each one. Today, we're joined by David Traynor.

He's the CEO of New Constructs. First up, David, is Alphabet. Closing arguments today in the Department of Justice's case to break up Google's so-called monopoly on search. Amon Javers has a little bit on that story for us. Hi, Amin. Hey there, Tyler, where closing arguments have closed here in the Eastern District of Virginia and Alexandria of Virginia. Take a look at the Google lawyers leaving the courthouse just a short time ago.

They were pretty confident as they came out of the courtroom today. You see some smiles all around there. Google lawyers dismissing the DOJ's case saying in a conference call with reporters afterward that it was just a lot of rhetoric from the Department of Justice today. Here's a couple of the points that I want to flag for you that each side made. On the Department of Justice side in their closing arguments, they said that all but one of Google's live witnesses are paid by Google. And they said that the witnesses they've called, obviously, not on the Google payroll. They said that the last look provision inside these auctions in which Google gets to look at the price and decide if it wants to bid at the very end, gives Google an unfair informational advantage. And they said that the court should draw a negative inference from Google's destruction of internal communications.

You know, there's 24-hour expiring chats and shifting a lot of the conversation in that direction. They said that's an indication that there might be more negative information out there that we can't put our hands on. As for Google's closing arguments, they said, look, prices are falling in this market. Quality is going up. Publishers are making more money, so what's the problem here? They said the rest of the industry is growing faster than Google, that its share is going up, but not as fast as the size of the industry is going up. And then they went back to history. Both sides sort of debating this point a little bit,

looking at the big antitrust cases of the past, going back to Standard Oil at the beginning of the 20th century, AT&T, and Microsoft arguing that those guys had historically had much higher market shares before they were broken up by the government saying, if you want to compare us to them, this case doesn't meet that standard. So a fascinating set of arguments here today, guys, they expect that the judge will make a decision by, the end of the year here. Back over to you. Very interesting. Amen Jevers. Thank you very much. David,

let's get a quick train, buy, sell, or hold? We're a hold on Google. We think this is not the end of sort of the regulatory warfare. It feels like forever now that the regulators have been out after Google. Don't get me wrong, it's one of the best businesses of all time, super high returnal capital. It's at 46% now, and we know Google's been a great innovator. But the valuation here doesn't really leave much upside left. And so we think, given the regulatory overhang, it's better for folks to stay on the sidelines with Google. All right, fine. Let's move to Target then with Oppenheimer naming the stock a top pick, arguing it's too attractive to ignore at current levels. Remember, the shares cratered last week after its biggest earnings miss in two years. Courtney Reagan is here with the rundown. Courtney?

Hi, Kelly. So after a long winning streak during the pandemic, Target began to put up some inconsistent results quarter after quarter, several quarters, including this most recently reported one, from a series of its own mess steps and not really a reflection of the broader consumer. So the retailers had trouble matching inventory with demand in some cases, ordering too much of the wrong stuff post-pandemic and then having to slash prices to move it, to then making a series of costly moves this past quarter in order to bring merchandise in early or in different ways than originally planned to circumnavigate what ended up to be a short-lived port strike, but it cost them.

Plus, shoppers have been more discerning after pandemic buying when buying more discretionary items, which is where Target's core categories really lie. But Oppenheimer's repast Perrick is betting on its ability to turn it around. He's adding Target back to the top pick list. And Parique thinks the worst is behind Target, that the stock has it all priced in, all that negative plus some, in fact. He likes what he sees in the stores for holiday, and he thinks the retailer can hit its guidance.

He believes in management's ability to get back to sales growth. I don't know if David agrees. David Traynor, your bat. What do you think? Thank you, Court. I do agree. I do agree. And one of the things we like most about Target is that the executive compensation is aligned with return on the vested capital. It's always a really good thing when we see executives making sure that they only get paid when shareholders are getting paid. That's way better than what we see from adjusted EBITDA on these other executive performance metrics that are much worse. I'm very much in agreement with Repesh. I think the stock looks really cheap here. They've got great, intelligent merchandising. They've been very dynamic. I think Target's got a lot upside left. All right. Let's get a thought from you, Ken.

I agree that it's very important to align executive compensation with shareholders, but I will channel what Carl Icon says on that topic and that if the Yankees hired me tomorrow and paid me a dollar salary and a million dollars for each home run I hit, I still wouldn't hit any home runs because I can't hit Major League pitching, meaning executive competence is more important to focus on than executive compensation. All righty. Final name is EQT. Morgan Stanley hiking its price target, citing bullishness for net gas prices. Pippa Stevens has the story.

Here, hi, Pipa. Hey, Tyler. Well, EQT is one of the few bright spots in the energy sector today with Morgan Stanley, also saying they expect the gas thriller to reduce net debt from $13.7 billion today to $7.2 billion by the end of next year, meaning the company could resume buybacks in 2025. Now, EQT has also fully reversed prior gas curtailments, and today announced a $3.5 billion midstream joint venture with Blackstone that will see the alternative asset manager take minority stakes in some of EQT's pipelines. But the biggest driver of the stock today is perhaps the jump in Nat Gas, which is on pace for its highest settle in more than a year on forecast for colder temperatures as well as a record amount of gas flow to LNG facilities.

Bank of America is saying today that winter is now the key price driver for Nat gas and that despite price weakness, demand is at an all-time high and reduced production should support prices into next year. Tyler. Yeah, thank you, Pippa. You cannot postpone winter, David. What do you think here? We're bullish on a lot of energy stocks, but not EQT. They've destroyed a lot of capital here in the last few years. It's been really aggressive with acquisitions, paying top prices.

So free cash flow has really suffered. That said, we're more whole than we are sell because, look, if they can put this sort of fully vertically integrated natural gas production into place, that could be a good thing. So being bullish in the energy sector, we can't say they're not going to do it, but we wouldn't be aggressive about buying the stock here because we think it's plenty of. expensive and management, to the prior point, management has not shown great capital allocation success up to this point. So even if they were paid on RIC, I don't know if it would be a good thing. David, thank you so much for your perspectives today. David, Traynor, we appreciate it. Thank you.

Now, thrift shopping has helped reduce waste by giving clothing a second life, but can the same be done with furniture? We'll find out next. Welcome back, everybody. Companies like Poshmark, Deepop, and Thread Up are thriving in online thrifting, giving used clothing a second life. But what would be the impact if the same thing were done for furniture? Diana Oleg has the details in her continuing series on climate-related startups. Diana. Well, Tyler, furniture waste contributes to carbon emissions. We know that. In the U.S. alone, we throw out roughly 12 million tons of furniture every year, leaving it to rot in a landfill. And most of it is less than 15 years old. Recycling furniture can be difficult, mostly because selling and moving

it is such a pain. But what if it wasn't? Charlene O'Brien Price bought her dining room table, TV console, and headboard from Apt Deco, a community-based online platform where people can buy and sell their furniture. The world is kind of on fire, literally. And so anything that I can do to reduce my own footprint in the world is what I'm trying to do in all aspects of my life. The New York-based startup provides pickup and delivery for the items, which sets it apart from competitors like Craigslist or Facebook Marketplace. Appdeco also works with major retailers like West Elm and Pottery Barn to sell floor models or resell items that have been returned. By extending the lifecycle of furniture overall, it's just better for the environment, whether it be less wood being chopped out of forests to just the supply chain associated with producing that furniture. While the furniture sells at as much as a 50% discount to new, the service comes at a price. We earn a percentage that ranges from 15% to as high as 60%, depending on the product, the brand, the condition and a lot of different variations that go into it.

The company operates everywhere in the U.S. except Alaska and Hawaii. Investors say its carrier network across so many markets makes its expansion potential very attractive. Contributing to the circular economy through their logistics business is a great example of the type of. of climate adaptation companies that we see as having longevity in the next phase of climate tech. In addition to initialize capital, App Deco is backed by Comcast Ventures, Y Combinator, Hearst Lab, Great Oaks Venture Capital, and Soma Capital. Total funding so far, $14.5 million. And in the 10 years since its launch, App Deco, CEO says the company has offset over 19 million pounds of carbon dioxide. from the environment. That's equivalent to around 6.5 million cars off the road. Back to you guys.

Hardest part is just getting someone to get it out so big and heavy. It's not just a little sweater. You can just throw in a box. Diana, thank you very much. Diana Oleg. Bond yields are down sharply today on the longer end, that is. But that inversion. Well, look, look 426. We've continued to move lower down almost 15 basis points on this Besson Rally now. Rick Santelli has more after a break. Welcome back to Power Lunch. rally here with stocks. Actually, we're heading back towards session highs right now with the Dow up 415 points. That's in part on optimism about Scott Bessent being named as Treasury Secretary. And that pick is contributing to perhaps even bigger moves in the bond market.

The 10-year yield down 15 basis points. Rick Santelli has more in Chicago. Rick? You know, there's an old adage. Markets only go where they feel comfortable, meaning that obviously the pick for Treasury Secretary had an influence on the market. And it had an influence in 10s right around 4.5% which is natural resistance. So it didn't mind getting pushed. Big moves. Right now with 2 years down about 11 base points, of 10 years down about 14. Look at the intraday of 2s. You could see at 1 o'clock Eastern. The rally continued to push yields down. Really strong demand at a two-year note auction. If you look at two days in a row on twos, you could see the right side is so much lower. Building momentum to the downside of the market gives a lot of the selling

back in one session. And if you look at twos and tens on the same chart since early July, which is where the tens were comping until we started to see yields reverse, you could see that the tenure was a bit more aggressive, and that really does go a long way to explain the next chart. We are now on the 2's 10 spread in negative territory as Kelly's been talking about dealing with basically a loss

of 15 basis points. Now the question is, where are long rates going to grab again once the news of the day passes through? Tyler, back to you. Mr. Santelli, thank you very much. Remember, you can always hear us on our podcast. Be sure to follow and listen to Power Lunch wherever you go. I mean wherever you go.

If you're in Target, you should be listening to the podcast. Wherever. Now I can begin. Welcome back. It's time for a quick power check. Bath and Body Works popping. After beating on earnings, good news following a rough year, still down 16%. Wow. Macy's, meanwhile, is falling after delaying its third quarter results,

and this is a head scratcher. The company discovered an employee had intentionally made incorrect accounting entries resulted in some massive problems for them going into earnings. The shares are down 2.5%. Wow. And Morgan Stanley upgrading Robin Hood to overweight from equal weight. The firm saying, Hood is the biggest beneficiary of the election results, primarily because it can now participate more aggressively in crypto. A new crypto era may be a dawning. Which sort of relatedly brings us to Kosovo's, which stock is plunging on the failure of its late-stage drug study. This drug was aimed at treating patients with mild to moderate Alzheimer's.

And CNBC reporting that Intel and the Commerce Department are close to finalizing a roughly $8 billion grant to support a manufacturing expansion. In recent quarters, Intel has looked to raise cash by selling off assets and faced a possible takeover bid from Qualcomm. Which brings us to some final deep thoughts from Ken Squire, Ken. Thank you. We talk a lot today about the broadening of the market rally and the rotation from large cap to Smith. cap and growth to value, which is really encouraging. I think that the rotation, in order to be a full rotation, we need to start seeing inflows not only come into index funds, but come into stocks and actively traded funds. A billion dollars goes into the Russell 3,000.

300 million of that is allocated to the top 10 stocks. The bottom thousand stocks get 5 million spread over the thousand. You sound like David Einhorn over here. A third of the Russell 3,000 gets a half a percent of the allocation. We've got to leave it there. Ken, thank you so much for being with us today. And thank you for joining us as well.