Power Lunch - Stocks Rally, Apple’s Big Event 9/9/24

Episode Date: September 9, 2024

Stocks are rallying following Wall Street’s worst week of the year, betting that a likely Fed rate cut later this month will bolster the economy. We’ll track all of the market action for you. Plus, Apple is wrapping up it’s latest product event at its headquarters in Cupertino, CA where it unveiled new versions of the iPhone, AirPods and Apple Watch. We’ll tell you all you need to know.  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. Welcome to Power Launch alongside Kelly Evans. I'm Tyler Matheson. Glad to be back with you. Stocks are rebounding after last week's big sell-off. And we're watching Apple's product event because so far no one has been able to come up with a great AI gadget. Apple could be the first. We'll see. And it ties into the question markets are asking. Was last week sell-off about a weak economy or the undoing of some of the AI hype? And we have Sarat Setti of DCLA here to help break it down. But first, welcome back to you. Thank you very much. And I've had a very busy three weeks, as you know,

dropped off our son at Indiana University. There's a little souvenir. You're an honorary Hoosier. Is this a pillow for you to cry on? My wife, Joe, has not stopped crying. I don't believe since. It's a big, and there might have been another reason for you being out last week a little bit. Somebody have a birthday?

I did have a birthday last week. Happy birthday. Yeah, thank you very. The big 4-0. Yeah, I like, it's good to be home. Big Market Week as well. NASDAQ has 2%. Yes, I feel like I missed a lot.

Worst week of the year, Sarat. And so not a great way for, but Apple's looking okay so far today as we kick things off. I mean, the market is doing better without Apple. That's something we were always looking to see. Can the market go ahead without the FAP 7? And can you get that resilience that we need? Otherwise, does the big boys bring everything down? And today you're seeing that, and we need a little bit of bounce back.

I mean, you got to the little extreme oversold last Friday, and really now it's all about FET, right? Where are we in terms of the economic? I mean, CPI, inflation kind of right now has been put to bed, but you never know that could come back. And then you get the other fear, right, of deflation. So I think that's where the market's looking at. You're kind of in the quiet period for earnings, so you don't have much of that, the Apple Catalyst today. Yeah.

And then you go into, you know, election world, right? I mean, tomorrow the debate, then you have other things going on in terms of the world. So. Well, I like what you, how you said it there. You know, can the market kind of move on past the heaviness that we're seeing kind of up at the top? Let's get out to Steve Kovac, in fact, for more on this Apple event. Steve, is it not still, are they still going strong? Yeah, still going strong here, Kelly.

And getting some more details on that Apple Intelligence, we're all including something really important here called Visual Intelligence. This is going to be an exclusive feature for the iPhone 16 lineup. That means if you have the iPhone 15 Pro, even though if you get Apple Intelligence on last year's phone, you're not going to get this feature. And this is very similar, Kelly, to what we've seen. seen from META and some other AI companies where you can point your camera at something in the real world. You'll get a lot of information about it.

The demo that Apple gave here was you point your camera at a restaurant and it can give you things like the menu there, lets you make a reservation, things of that nature. We've seen META do this, for example, with those rayband glasses that have the camera built in and can identify stuff in the real world. Open AI, by the way, is working on similar technology. And this is also important, Kelly, because it's going to be such an exclusive feature, to the iPhone 16 line. And that's something I've been looking for going into this.

What can Apple do for this new lineup that convinces people to upgrade beyond the Apple intelligence features that we already know about? And then speaking of Apple intelligence, just a few more little nuggets of details here about what that rollout will look like. The company saying that other countries,

that English dominant countries, like Australia and Canada, that those versions of English will be coming soon. And then also, some detail in China. They say Chinese and Spanish Apple intelligence will be coming next year, though no specific dates for that. That, again, is really important as we try to gauge what this Apple intelligence rollout looks like and when it's coming to the most important markets, including China. That's the stuff we got so far now. And then, like I told you,

last hour, Kelly, there's new AirPods with the hearing aid feature, and then the 10th edition of the Apple Watch, not much there to talk about other than just a nicer screen basically going on there. Quickly, Steve, on the hearing aids, is that one option for AirPods? In other words, you can buy the ones that have that embedded or not, or is that now just a feature we can expect in all of them? That's only on the AirPods Pro for now. Right now, the so-called regular AirPods, the base model, that won't have that hearing aid feature,

but the base model is gaining if you pay an extra 50 bucks, the noise cancellation feature that used to only be on the pros. So I would not be surprised, Kelly, if that technology eventually trickles down to the base model. But for now, it's only going to be on the pro. All right. $549 for the max as well. Steve, thank you, Steve Kovac. Yeah. All righty. So the question on investors' minds is whether Apple is going to be able to do what many tech companies have not been able to do yet, and that is to successfully work artificial intelligence into a mainstream gadget. Joining us now to discuss that, along with Sarat, is Tom Forte, managing director and senior consumer internet analyst at Maximum.

group. Tom, welcome. Good to have you with us. You have a hold on this company. You also see 5 to 10 percent EPS growth, which is hardly a growth stock kind of number. Do you see anything in this announcement today from Apple that would change either your rating on the stock or the growth rate of the earnings? Yeah, so what would give me more excited, Tyler, is basically a rollout of Apple intelligence in Europe, which is about 25 percent of their revenue. And in China, which is about 19% of revenue. So I think the overriding challenge for Apple today is to introduce new hardware to the consumer, tell them to rush to the Apple store or elsewhere later this month to pick it up, and then wait for Apple intelligence, wait for the software. And for consumers

outside the U.S., outside Australia, outside of Canada, it's going to be a long wait. So that's what it would take for me to get more bullish on the stock right now. So in other words, people are being encouraged to go get the device, but the device isn't, shall we say, camera ready yet? Or ready for prime time. However you want to think about it. Yes. So basically, I think it's very interesting here that Apple is promoting its hardware, but they're also promoting some very exciting software for the next lineup of iPhones. But consumers are going to have to wait, and I think that could pose some problems as far as their sales over the next three to six months. Do you see it that way, Sarat? I want it.

I want it now and they're not going to get it now? I mean, I would be a little suspect in the sense of if you've got the hardware now, why not wait until it's proven? I mean, one of the things about Apple is whenever they download the new software, there's a glitch here and there, and they always say, don't do the first one, wait for the second one. So that could be something, but you never know you're going to Christmas season, and people could be ordering it now. And I guess the question I always have with Apple is when people say,

you have 5 to 10 percent earnings growth. how much of that is based on stock buybacks versus how much of that is really earnings growth and revenue growth. We know the revenue has been flatlined, but does the E really grow without the denominator actually getting lower? And in some ways, Tom, do you care? You know, in one way or the other, if they can make that number go higher, are they, you know, can we talk to Barton Crockett, he has a 260 price target last hour. It's not because he's super bullish. He just kind of sees that slow increase over time. Yeah, I think you care to the extent that, you know, it's important. in that they generate a ton of free cash flow. They're returning it in this form of dividends and

buying back shares. But when you look at their revenue growth and when you look at their EPS growth, we're looking for mid single digits in the out year. And that's with a very successful AI-inspired upgrade cycle for the iPhone. So I think there's a lot of success already built in the stock as reflected to a high 20s multiple with some pretty modest EPS growth. Tom, you don't sound excited about this company. What would get you excited? As excited as, for example, you are apparently about a company called the LoveSack company on which you have a buy. So the good news for LoveSac is the Fed's starting to cut interest rates. And to the extent that you might see an improvement in the furniture category, which is the primary category for LoveSac, you can see renewed strength in their sales.

And they're already taking very significant share. What we haven't talked about is going on today is also Huawei's product launch. and it looks like they have a trifold smartphone that's already garnered 3 million free orders. So as far as what would get me more excited, other than just a pullback to make the valuation more interesting, is something that has me more excited about sales trends in China, again, 19% of revenue or a solution for the EU, 25% of revenue as it pertains to Apple Intelligence. I have to say, guys and Kel, that when I travel lucky enough to travel this summer to Europe, up to Italy. There were a lot of people there who had neither an iPhone or a Samsung phone. They had Huawei phones. Wow. And they were cool. And Huawei has its event tonight. You saw Deirdre last hour. It's a trifold phone and all of that. Yeah. They were very cool form and function

phones that you would be happy to carry around. Of course, in the United States, you can't. No, no. And I think one of the things to watch for is China. The data coming out of China is that their consumer slowing down really fast. And meanwhile, you have... have Apple raising prices. Apple doesn't even have top five market share as it is. As it. So how does that happen? Look at how far they've fallen. And I think that's going to be the hard thing to do just in terms of if Apple's really relying on global growth. In U.S., yes, we are all attached to it. I mean, I don't know, it's high 80% here, but the rest of the world is the issue. Tom, at the risk of extending this, they're going to jump me here. But does Apple need

a different form of phone like the Huawei phone, like one of the Samsung's, which is a foldable phone. It's a very expensive phone. There are people who love it. There are people who hate it. Do they need a new form beyond just a new function? So I definitely think AI is going to inspire that core Apple consumer to buy a next generation Apple device. And I fully anticipate that Apple will have foldable phones. Published reports suggest it may not be until, late 2025 or into 2026. So I expect there to be a flip iPhone just not for a while. Interesting. I don't know. I've heard of it. This is like when you would hear about stories, the Apple car project that was always going to come, going to come, and then never came.

I feel like that way about the folding phone with the iPhone. I hear, you hear about it and you hear about it and it never comes. Yeah. Well, we shall see. But 2025. Tom, thank you very much. Tom is with the Maxim Group. He's a managing director and he loves LoveSack. Which I think they just, we were talking to the CEO. Very comfortable. Let's turn now to the chips, which are at the center of the AI craze. The SMH Vanek semi-ETF is off more than 20% from its recent highs. Do you call it a bare market?

If we're still at the beginning of the AI boom, then why are the chips doing so and what can get them going again? Sima Modi has those details. A lot of attention, Sima, lately, about how utilities are outperforming the chips here to date. Sort of diversifying the trade, right, Kelly? Yeah, the generative AI trade, certainly losing momentum over the. the past one month. If you look at names like Nvidia, AMD, Broadcom, these are the big players, right, that specialize

in the software and hardware to power the hyperscalers with their AI models. You'll see those stocks are down about 22% or more from their respective highs. And then there's the AI server names like Super Micro, Dell, HP Enterprise, also under pressure, as are the high memory bandwidth names like Micron, which is down, down about 45% from its 52-week high.

Mizzouho's Jordan Klein, writing to Cloin, clients that by side interest in semiconductor stocks has soured as of late. Sentiment is not holding up and that interest is growing in software stocks. Now speaking of software, those names listed under the ticker IGV is holding up a lot better than chips over the past two months, driven in part by Adobe, which is set to report earnings later this week. You'll see shares have outperformed. The sell side, though, still very bullish on chip giant Nvidia.

Today, Morgan Stanley reiterating its overweight rating, analyst Joseph Moore says, gross-marked. margin concerns are overstated. He says the bigger risk is macro and a potential impact on capital spending. But to really get the Gen AI trade back in action, Goldman's technology team says the market needs clarity on three things. Invidia's 2026 financials, further evidence that AI models can be monetized and that costs can be absorbed. Guys? Yeah, I think it's obvious, sir. I mean, I don't know where you come down on this, that the excitement and all of the, I mean, the upside of, if you want to call it a bubble, whatever you want to call it this year, I mean, we are are past that point now. And the only question is, is it just a sideways correction? Does it,

is there more to come for some of these more exposed names? Completely. I mean, you've already discounted really good earnings for the next two or three years. And Invidia was very clear and said, look, the Blackwell chip needs to perform the way it's done. It's having issues in production. And then there's a demand. I mean, for years, the biggest thing that we have to always watch as investors for semiconductors is double ordering. Exactly. And it's did, did meta and Apple and Google, order too many. Over order. Because just in case they wouldn't get what they needed,

and then all of a sudden, when they all pull back together and say, oh, we don't really need these, and you read articles about the chips being in China and the rest of the world. So, yes, it's a phenomenal chip, and yes, we do own InVIDIA, but I do think you have to own it in size moderation. It has done everything we've asked it to do. Now it really needs to have that growth of the next leg,

and maybe some of the capital that's come out. I mean, it's already down 20% of its peak. I think it's down more than four. 30%. Yeah, it was like over 130. I mean, 2020, the stock was down 50%. So you have to hold these stocks in your portfolio, but it's part of a diversified portfolio or not the, hey, this is the stocks I've owned for the last 10 years. I'm all in, putting all my chips on it. And it's okay to own it. And that's the one thing that people say, well, you're saying not to own it. I'm not saying not to own it. But be prepared that the rest of the market could be up and you could be down

significantly just because you've already had that built in already. Absolutely. Sirot, thanks. And Seema, thanks as well. up bulls getting what they asked for. The Fed set to cut interest rates, but now a pronounced slowdown in the labor market and signs of consumer fatigue are intensifying fears that it will be too little too late. Power lunch will be right back. We're going to talk Fed and more. Welcome back. First, we saw the phones. Now we've got the pricing on the new iPhone 16, I think it is. Let's get to Steve Kovac. Steve. Yeah, Kelly, we're up to 16. Can you believe it? Anyway, the news here is that The prices for these new iPhone 16 phones, they are staying the same.

The iPhone 16, the base model, that's going to start at $7.99, and the plus, that's the one with the larger screen, is going to be $6.99. Going into this, there's just some talk about whether or not they would raise prices here, kind of using artificial intelligence as an excuse to do so. They have not done that, although they are still going over the pro phones, so there's always a chance of a price increase there. But also, something we rarely hear Apple talk about is the value here talking about the ability to trade in your phones and working with carrier partners. All that stuff we typically hear from T-Mobile and Verizon and all those other carriers. Now Apple kind of talking about how well the phone keeps up its value and gets software updates throughout the life of the phone as well. So kind of an interesting little theme break out there. But we're still waiting for the pricing on those top two phones, the Pro and the Pro Max, which were just announced.

so far, Kelly. Yeah, indeed. All right, Steve, thank you very much. Stock's jumping after last week's sell off. Let's bring in Mike Santoli now for more on the market move today. What's happening and why, Mike? Well, Tyler, I think, you know, on the way to a soft landing, it would be very weird if we didn't start to doubt in a pretty profound way, whether, in fact, we were going to get a soft economic landing because you do have these mixed economic messages that I think the market's been trying to sort out for some time now. It's been a very decisive defensive tilt within the markets. But unlike in the first half of this year, the market playing defense now is going with traditional non-cyclical defensive stocks like utilities and staples and healthcare to a degree,

as opposed to hiding in the magnificent seven mega-cap growth stocks because they really did surrender leadership. They broke stride. Their premium on their growth rates is diminishing relative to the average stock. So here we are. I think the first week of September did seem to pull forward a little bit of this expected seasonal weakness and maybe had a concentrated growth scale. our nature to it. Today, we've really no news. I feel like we're just kind of unclenching a little bit from those concerns, no incremental bad economic news, maybe a rethink on that jobs number on Friday, which sort of pleased nobody in the moment, but maybe wasn't necessarily so bad. I think you can come down on the side of with inflation and real GDP growth, both in the two to three percent

annualized channel right now. That kind of says soft landingish, but of course we're going to get jitters on the way to that first rate cut in next week, because nobody's convinced of it in advance, especially at 20 times forward earnings on the S&P. All right, Mike, thanks very much. Mike Santoli. Stocks also try to regain some of last week's losses. We're just over a week away from the next Fed decision.

What do markets want to see between now and Fed Day? Let's ask Megan Shue. She's head of investment strategy with Wilmington Trust. And Megan, I think to Mike's point about, you know, the case for a soft landing can still be made, is still intact. I even see on CBC.com an article about how the vibe session is over, and it's almost as if the broader public is coming around to the idea that, you know, the economic outlook might still be okay. Do you think that's the case, even as we're hearing about, you know,

companies struggling, losing lower income shoppers and that kind of thing? Yes, Kelly. Well, I think all of the points that you're making are really important, and we are definitely in a period of some mixed economic data, which, depending on how you want to at it, you can take almost any economic data release over the past few weeks and find something that sort of can anchor you to your prior position. That's how mixed it's been. And I think the labor market report is a perfect example of that. But we are really trying to keep our eyes wide open to everything we're seeing at the consumer. The consumer is definitely struggling in certain parts. And we're seeing lower income consumers start to pull back a little bit more.

That doesn't mean that we're headed to a recession necessarily, but it's something to watch. The labor market data as well has been mixed where new entrants to the labor force is a key reason for some of the perceived weakness, but we're also very aware that many of the economic data points that we're looking at are not necessarily leading indicators. They often start to deteriorate after a recession. But when we look at it in the totality of the economic data, we still see a solid overall consumer businesses that continue to hire and continue to spend. And if you have those two things, and it's very unlikely that you just fall into a recession on your own accord. So we are still

expecting a soft landing. That said, if we look at the market in what's doing the best here in September, as opposed to maybe back in June or July, utilities are now doing quite well. Some of even real estate's been doing okay. And tech's gains look a little bit less exciting. So, you know, when we talk a few months ago, you know, I know you guys have been bull. on tech and momentum and kind of sticking with the bullish parts of the market. Do you rotate now and get defensive or do you just say, no, this is a buy the dips opportunity? I think you rotate, but I don't think you necessarily have to get defensive. And we've actually been seeing a rotation, not necessarily over the last week, but a rotation into small cap, which is not at all defensive.

And we are still overweight to U.S. large cap as well as U.S. small cap, but we're very focused on diversifying. We still want to maintain, if you're looking at just sectors, we still want to still want to maintain a decent exposure to the tech sector. But we're also finding opportunities in Staples, in real estate, in some of those other parts of the market that have been a little bit more left behind. But if you look at valuations relative to a five or 10 year history, given the recent weakness in tech, tech's not looking all that expensive anymore. And you have financials, you have utilities which are starting to creep up towards and above

their five and 10 year multiple average. So different parts of the market becoming a little bit more interesting, but some of the defensive and some of the lead behinds have actually really increased and had some nice catch up here. Sorrett, why don't you react to what Megan just said and pose her a question by way of reaction? Yeah. So my question to you is when you look at kind of earnings going forward, where do you see margins improving in what sector?

Because I think that's going to drive where the market's going to lead. And given that, you know, CPI, we're seeing input prices come down, where do you guys see the biggest opportunity? And also the other side is where do you want to be scared, you know, stay away from? So great points. And I think if we're looking at earnings compared to the first quarter where you had the biggest four tech companies growing earnings by something like 125%, the rest of the market, basically flat, we're looking at a much more even distribution of earnings. going forward, still expecting tech to do well. So I think you get some margin growth there. But other areas financials look interesting as you get a

steepening of the yield curve and the ability for more buybacks, other parts of the market that I think you really have to look across sectors. And this is where we're not focused so much on the pricing power of a particular sector, but really those companies within a sector. And so maintaining a focus on higher quality. companies and those companies that have the ability to maintain or even maybe expand slightly

margins in a disinflationary environment because throughout, I think the nature of your question is getting at in a disinflation environment, it can be a very challenging time for companies to grow earnings. So you really have to find those companies, whether it's within fast casual dining or other areas of consumer discretionary, those companies that have that pricing power, that brand power and can still command those earnings. All right, Megan, thanks very much. So I button it off here. I guess a quick question would be recession or no recession?

Slow down. It's not linear. Look, the reason we're having these conversations is because you're seeing pockets of negativity, whether it's in sales, whether it's in margins, whether it's the lower end consumer. So I don't think we're heading down to a recession. We're heading down to a slowdown, but it doesn't... Slow down, but not a hard stop. Not a hard landing as we see.

I mean, capital markets are still active. If you look at spreads, especially corporate spreads, they're not, they haven't widened, even given what we've had so far. Look at what's going on in terms of just the high-end consumer. They're still spending. So what you have seen is the two-year rate come down. Significantly. You've basically seen a discounting of what the Fed's going to do. 25 or 50 next week.

What should they do? I think it's all about messaging. I mean, it doesn't matter which one they do. It's going to be, hey, we are ahead of this as opposed to, oh, my God, we are reacting. If you do 25 and we are reacting, it's going to be just as bad as doing 50 and saying we're there. So I think that's kind of where we're going to watch where the market goes. And the other things I think that's interesting is as rates come down, you're seeing two things happen, right? The markets have done so well you've got people reallocating out of equities.

Because if your equity exposure is X and now you're over X, what am I going to do? Secondly, before, it didn't matter because rates were still pretty high. Now you're saying, do I want to capture the rates going out two to five years? And so that's going to make you move money out of equities into fixed income. In addition, if you still want equity exposure, you're going to move into utilities and reeds. So you've got a whole bunch of things going on there with dividend stocks going up. Now, I'm going to say dividend stocks that are increasing over time. Not, hey, here's my Verizon AT&T dividend that's not going to increase.

I want dividend. Dividend growers. Yeah, got to leave it there. Surrott's stocks soaring on Wall Street. bond yields. Close to the flat line. It could be the fat line to Rick Santelli, Chicago, with the details. Yes, Tyler, indeed, very close to the flat line, short maturity, slightly higher and yield, and the longer maturity slightly lower. Is 3% the new 2% New York Fed? They're one-year inflation outlook. Everybody seems to be ignoring it because we've come down

so much in inflation. I understand that. But look at the chart. We're flatlining at 3%. That's a five-year chart. And the Fed's targets, too. Which means at some point, if it bumps up a little bit and they do ease, they're going to have some issues to deal with. And everybody points to the 10-year break-even. There it is for a five-year chart. And in mid-22, when we had 9% inflation, it was hovering around 3%. But the real issue is, just like Fed Fund futures, the break-even is market following. It isn't market-leading. And should inflation ramp up, 10-year-note yields would ramp up. will widen that spread. Finally, speaking of spreads, it's positively positive. Two tens, spread

remains positive. It was briefly positive on Wednesday, on Friday, and there it sits right now, about three basis points positive. That chart goes back to June of 2022. And I think it's important to monitor this because there could potentially be a lot more action here, especially if you're one of the people that subscribe to the notion of stagflation. Slowing economy, stubborn inflation, rates, just think how much it costs to insure your car, insure your house. The price of houses. And one more thing, soft landing. Everybody's talking about a soft landing. But if you want to buy a house or insure a house or insure a car or look at your electric bill, maybe soft landing needs to be modified a bit. Tyler, back to you. All right, Rick, thank you very much.

Coming up in markets bouncing back from Friday's losses. But should you trust the gains, we'll discuss in today's market. Navigator, that's next. Welcome back to Power Lunch. Stacks are off session highs, but still pretty nicely across the board. 1% for the Dow, 441, nearly that for the S&P up at 9 tenths. And the NASDAQ down up 7-10s, making up for some of the last week's to climb. It's an interesting move here. The NASDAQ specifically is what we're going to focus on here because at least one trader doesn't believe that this kind of snapback rally that we're seeing today is really going to have legs at all. So he's looking at the futures side of things to play the other side of the trade, which is the downside.

So joining us now is Jeff Kilberg, the founder and CEO of KKM Financial. He's also a CNBC contributor. And Jeff, let's start off really quickly with what the trade is. We've kind of teased it by saying you don't believe the bounce, you think there's downside, and you're using the futures market to play it. What's the trade? Well, Dom, you hear all the time about buying the dip. I want to sell the rip, so you're absolutely right.

I want to utilize eMini Nasdaq September futures, and I want to be a seller here at 18,700. looking for a drop down to 18,400. But Dom, I'm being mindful if we do see a continuation of this bounce. I'm going to be stopped up just 100 handles higher in the E-Mini NASDAQ contract at 18,800. So I'm risking two grand, Dom, to make $6,000 risk-reward 3 to 1 ratio. Now, what exactly has got you a bit more pessimistic about why you think this move is to the downside coming up here? What has changed or what has not changed about the fundamental market picture?

I would not necessarily have pessimism, Dom. What I have is the opportunity to look and see what's been profiting. If you look at the Mag 7 specifically, up about 30% collectively year to date, the QQQ is the NASDAQ 100, up about 10%. So after last week, which was the toughest week we have seen for the NASDAQ 100, down about 6%. That was the worst week since January of 2022. I think we're going to revisit lower as you're seeing the tech stocks, the AI darlings being

utilized as an ATM. So what do people do? What do portfolio managers do? when you see uncertainty in distress, you take profits where you can. So that's why I think the move continues to be lower because volatility will persist in the NASDAQ 100. All right. So that's going to be the point on this whole thing. Do you feel as though there is going to be a certain specific set of stocks?

Is it going to be the Mag 7 that really drives the downside? Well, I think we have to look at Nvidia. We have to look at Nvidia and even meta to a certain extent. But Nvidia coming down from 140, it went down and kissed 90. And now it's in no man's land. So I think until we see all the profit taking, all the recalibration, all this rotation trade work its way through, which we may not, Dom, for the month of September, even up until the election with uncertainty as a hangover. I think you have to be considered. And why I want to use futures is you can use one E-Mini NASDAQ 100 future.

That hedges out $375,000 of tech exposure. So retail and institutional investors love to use futures as a power tool, not only to hedge and mitigate risk to the downside, but also to speculate. So that's why I want to use futures specifically to come. kind of capitalized on a potential move down. I'm not, nothing catastrophic here, Dom. I'm looking for a 3 to 5% pullback arrow and retest those August 5th lows. Plenty of people talking about that

this afternoon. Jeff, thanks. Dom, thanks as well. We appreciate it. Ty. All right, thanks very much. CNBC all over the sports business, the business, whether it's billion dollar leagues like the NBA and the NFL or those on the upswing, like the WNBA. After the break, we'll speak to the WNBA

Commissioner Kathy Engelberg. Welcome back. Welcome back to Power Lunch. I'm Simam Modi with your CNBC News Update. The State Department pushing Israel today to urgently conclude an investigation into the death of a Turkish-American citizen in the occupied West Bank last week. Local news agencies reported she was a recent University of Washington and Seattle graduate who was shot by Israeli troops during a protest. The military says it is looking into the reports. The FBI says Americans lost more than $5.6 billion in crypto scams in 2023. That's an increase of 45 percent from the military.

the year before. The FBI says even though transactions are easily traceable, often the money is quickly sent overseas, making it difficult to recover. According to the agency, people over the age of 60 were more likely to fall victim to a crypto scam. An oil giant Shell, Chevron, and Exxon are evacuating personnel from their offshore facilities in the Gulf of Mexico as tropical storm Francine churns through the region. The National Hurricane Center says the storm is currently moving through the Gulf and is expected to become the fourth hurricane of the Atlantic season by Wednesday. Tyler, back to you. All right. Thank you very much. Seema. Meantime, green arrows across the screen for the markets today. Things also looking up for the WNBA.

Attendance, TV viewership, merch sales, all soaring for the league this season in large part thanks to the arrival of Caitlin Clark, but not just Caitlin. Increased attention comes increased scrutiny, of course. There have been some controversies surrounding a rivalry between Clark and another young star, Angel Reese. Their fan bases have been very active online, debating which players should win rookie of the year. But at times, what could be an exciting rivalry has brought up sensitive issues, including race.

Kathy Engelberg is the commissioner of the WNBA. She's also a CNBC-24 changemaker, Sarat Sethi, also with us. Kathy, welcome back. Good to have you here. It's great to be here. You were last with us right at the start of the season, right after the draft, which was extraordinarily exciting. The season has lived up to expert.

expectations by almost every metric? Absolutely lived up to expectations. Exceeded them much more so as quickly as we thought coming off that historic draft, these rookies have put on quite a season, and it's not just Caitlin and Angel, Rakea Jackson, and other rookies are killing it this year. And then our veterans have really stepped up. Asia Wilson's having a historic season for the Aces and Brianna Stewart in New York.

So, yeah, and you mentioned all the revenue drivers. We also signed a historic media deal since I was here last. A long-term media deal, which was important for the stability of the league. And as people have been calling us a growth stock, we have a lot of upside down. How much of the Olympics help or hurt you? Well, we do take an Olympic break, but because we had such great momentum going in, including to our All-Star game, our most viewed All-Star game ever. So coming off of that, the U.S. women won the gold medal,

but it was a highly competitive game against France, where there were several WMBA players. So we have now about 17 percent of our players born outside the United States. So we're kind of globalizing our player population like the NBA and other sports have. So I think it was a good thing to raise. I mean, I was in Paris. The vibe in that arena for those games was unbelievable. France, Belgium, obviously, the U.S. France.

France being in both gold medal games, men and women was so exciting because you had the hometown crowd there as well. So I think it was a creative to global basketball. It wasn't just the women's basketball. It was women's volleyball. a lot of women's sports is taking off, it seems to me. Yeah, it's the confluence of a lot of positive elements, and it's a lot of capital coming into women's sports. We raised capital two and a half years ago

when nobody really was thinking about investing in women's sports. And now it's, we're getting calls, many calls from people, private equity, everybody who wants to invest in women's sports. Let's go to that question, which raises some sensitivities of rivalries between players in the case of Angel Reese, who's just had to shut it down

because of a wrist injury, Caitlin Clark, who's continuing to play, rivalry that goes back to their college days, presumably, where I guess some trash talking entered in. But now it seems on some social media channels to have taken a darker turn, a more menacing turn, where race has been introduced into the conversation, where sexuality is sometimes introduced into the conversation. How do you try and stay ahead of that, try and tamp it down or act as a league when two of your most visible players are involved,

not personally it would seem, but their fan bases are involved in saying some very uncharitable things about the other. Well, the one thing that's great about the league right now, we do sit at this intersection of culture and sport and fashion and music. Like the WMBA players are really looked at now as kind of cultural icons. True. And when you have that, you have a lot of attention on you. There's no more apathy. Everybody cares. It is a little that bird magic moment, if you recall, from 1979, when those two rookies

came in from a big college rivalry, one white, one black. And so we have that moment with these two. But the one thing I know about sports, you need rivalry. That's what makes people watch. They want to watch games of consequence between rivals. They don't want everybody being nice to one another. So social media is different today than it was in 1979 when it didn't exist. But, you know, I always tell the players, you know, I was told a long time ago,

if someone's typing something in and you wouldn't ask their advice, ignore it. So it's a balance, but certainly from a marketing dollars, but corporate partners are stepping up to endorse these players, much more so than they were five years ago because they see the benefit of having women and diverse women representing their brand. I agree. Rivalries are good. Manning and Brady, the prime one among them.

If the economy turns sour, how does it affect your business? Yeah, in sports, a lot of the corporate. corporate partnership dollars or discretionary dollars. That's why it's important to lock in and do scenario planning around locking into longer term deals, whether it's a media deal like we just locked in for 11 years, having that revenue stream fixed for at least that period of time is good in every economic outcome. But it's scenario planning. Certainly corporations who have discretionary dollars who put it towards sports,

and we know they go to men's sports before they go to women's sports. So we do do scenario planning around that, Tyler. I just mentioned throughout my dad was at a Clark game, I guess, last week, and he was talking to the fans. There are people who have season tickets driving from 90 minutes away, staying at the Omni there and kind of putting all those dollars

into the ecosystem to catch the phenom. It's one last question for you. What surprised you the most for this season? If you were sitting when you were a couple months ago, what was different than you thought would happen right now? I think the tens of millions of new fans we brought in and their reaction to the physicality of the game

or to the rivalry. So, I mean, it's all good again. I think maybe I didn't realize maybe there was apathy before and now based on the emails I get after every game and they care about the officiating now they care about rivalry they care about everything I get thousands of emails every week and I wasn't getting that before so that's probably the biggest surprise that's great Kathy thanks very much good to have you back great to be here play off soon yep we have some pricing on the iPhone pro let's get out to Steve

Kovac for those details Steve the big reveal the big reveal same pricing as last year Kelly it's 999 for the base level pro the smaller regular one, and then the max, the one with the larger screen, that's going to start at $11.99, $1,200, let's just call it, same price as it was last year. Basically saying Apple here that, you know, you're going to get all these AI features for the same prices before, and also talking up a lot, more so than they typically do about the value of trade-ins. You can get up to $1,000 bucks if you trade in your phone from last year, and things like that. But then on the Apple intelligence front, that's, of course, whatever is watching for more so than the hardware.

We didn't learn too much more today, guys. It's mostly a rehash of the features that we heard about way back in June. A little more clarity, though, on when this stuff is going to launch, including finally some confirmation about new languages, including Chinese, which is a hugely important one for obvious reasons. They're trying to as a massive market for Apple, and then Spanish as well, and then some other versions of English beyond U.S. English, like Australia and Canada, also coming in the coming months.

But this is still going to be a slow rollout. We don't have specific dates other than Apple intelligence is launching later this year. So we're still going to have to wait and see a little bit longer to see what everything's going to launch and kind of gauge what that means for iPhone sales moving forward. And those Apple shares almost turned positive last hour, Steve, but they're now towards session lows. More typical, more in keeping with tradition down about 1.3%. Yep, sell the news. Out in Cooper Tino.

It's time for today's three-stock lunch. And here with our trades is Jay Woods. chief global strategist at Freedom Capital Markets. Jay, welcome to you. And let's start with shares of Palantir, which is getting added to the S&P 500. They're up 13% today on this enthusiasm. What's your take? Yeah, it got a nice pop in this inclusion.

We've been waiting for this for a while. I wouldn't chase it right now, usually when they get included. You get that initial pop. It holds for three or four days and then it fades. But this is a stock over the long term. I would buy on any pullback. If you're looking long term, then just buy it now. put it away. That story with Microsoft, when they were, their AI software is being included into

their Azure program. That to me was the catalyst to get it on its next leg. And I think the story over the long term, they've righted the ship. And it looks like it's going to go, you know, another 10, 15 percent in the next six months. It's doubled year to date. Sirot, would also be a buyer? I wouldn't buy it now, but I would hold it. And I would vote it on a pullback. I mean, I think they're in their very sweet spot in terms of their software, in terms of where their customers are. So this is any pullback. on this stock I would buy. Well, let's talk about an epic corporate story. Dell also enjoying a bounce higher as it also gets added to the S&P 500 from Hero to Zero. Back again, your trade on Dell,

Jay. Yeah, Michael Dell's back. Congrats to him and the company for being added to the S&P 500. Not as big of a pop as a palant here. That stock has been more under pressure with some of these big AI plays like in Nvidia and Broadcom. And, you know, it was up 133%. This dip, I think, was extreme. Their last quarter was a solid quarter. The guide was good. So I would use any weakness, as we've seen over the last few weeks, to buy the stock. And I will put a stop at that August 5th low just in case there's more smoke where there's fire on this sell-up. But I believe Dell over the long term is positioned for growth. It got a little out over its skis. And I think anything under this 110 level is a good opportunity to buy. That's right. I'll take the other side.

I think the stocks run too far. It's up 50% over a year. It's a good company, but I do think the space, the sector. There's a lot of money coming out of the sector as well. It's done everything you'd wanted to do. I think there are other opportunities out there. There you go. Some dissension. A market is joined. Indeed. Let's get to Norfolk Southern, whose CEO is under investigation for alleged misconduct. Jay, how do you handle this one? Yeah, well, the stock is actually up today on that news. There's an activist investor that's been involved. In fact, back in May, Ankora added three board seats, and they tried to oust the CEO. So this story is going to get a lot of headlines. But let's look at the bigger picture.

The rails have been kind of on a road to nowhere since 2022. Yes, it's up a 7% year-to-date, outperforming Union Pacific and CSX. But for me, this is a show-me story. He's got to get above 260. Maybe the new CEO, if there is one, could do that. But right now I would chew-choo-choo-choo-choo-choo-to-st stay on the sideline with this one. Che-ch-choo-choo-chose to stay on the sideline. Sirrat, can you top that?

I don't know if I could top that, but I would also stay on the sidelines. It's not very interesting story to me. I think given where we are with the economy, given where the slowdown of the economy, you're seeing logistic companies all kind of saying things are slowing down. You've got some issues with management. Stock's not cheap. So I just wait for a better entry point. All right.

Thank you. Thank you, Jay. Jay Woods. Appreciate it. Well, the increase in wildfires has created a need to better protect infrastructure elements like power lines. And we're going to hear from some startups trying to help with that when we return. Welcome back to Power Lunch, thousands of homes. Being evacuated in California and Nevada,

as record heat is fueling the line fire, which started at the base of the San Bernardino Mountains last week. It's quadrupled in size just since Saturday morning. As always, utility companies are on the front lines of these fires working to protect power lines that serve millions of customers. As the frequency of the fires increases, so, too, does the technology going into that job. Diana Oleg has the details in her continuing series on Climate Startup.

and she's here. Hi, Dai. Hey, Ty, that's right. Yeah, and it's not just fire, usually in the West, but the increased severity of storms across the nation, bringing down trees and power lines. That has power companies looking for new ways to protect their infrastructure. Big surprise, AI is now taking a lead in that space. The U.S. has five and a half million miles of power lines on more than a quarter billion poles surrounded by even more trees.

Keeping a human eye on all of it is impossible. Enter new software companies like Pano AI, Satellitics, and California-based AI Dash. They're tapping high-tech to lower risk. What we primarily do is monitor these infrastructure assets at scale using satellite and AI. Utility companies are often required by local governments to scan 100% of their lines and address any issues before fire season. This entire exercise of maintaining trees along power line is a $10 billion annual spent in U.S. alone. AI Dash not only sees the problems, but integrates weather data with detailed vegetation data to gauge risk levels throughout the fire season and address them.

And it's not just fire. They do the same for extreme wind and precipitation events. The most important thing for us is the grid reliability. National Grid, which services customers in much of the Northeast, is both a client and investor. It claims to have seen a 30% reduction in outages and a 55% reduction in the duration of outages since using AI Dash.

Their differentiator was they built an end-to-end platform, a workflow platform designed for utility engineers to actually do predictive analytics, deploy the crews on the ground. In addition to national grid partners, AI Dash is backed by Duke Energy, Edison International, Shell Ventures, Light Rock, and SE Ventures. Total B.C. funding so far, $91.5 million. As part of the green transition, more and more industries and residences are moving to electric power. That means the grid needs not just more capacity, but more reliability. National Grid alone says over the next five years, it'll spend $75 billion

in its jurisdictions to upgrade both. When you see the people, or the groups that have put money in here. These are real heavy, call them power players, because that's what this is. That tells you this is a vitally important thing for them. Right, and exactly. I was struck by their funding at $95 million because, you know, we've done dozens and dozens

of these clean starts, and there are anywhere from $10 to $50 million in backing. You see close to $100 million and the big names behind it, it tells you just how important this information is because we see the extreme fire, we see the extreme weather events, and this is all of our. power. So if you saw one of the investors, Edison, now in California, the liability falls on a lot of the

utilities. And their stock prices are hurt. Look at PG&E. Look at Edison. Edison has actually come back. So they want to make sure that they have enough information to be reliable for the safety of everybody so that you don't have these lawsuits that are just overhanging. And it's almost impossible than to be an equity investor. I mean, then maybe other states should follow suit. Why not incentivize the utility to make these investments to avoid these outcomes? Oh, they're already doing it. They don't need the because they know it's hitting their bottom line so much that we're seeing, as you see, the investors and the people using the clients go across energy companies across the U.S. Yeah.

All right, Dye, thank you very much. Appreciate it. And meanwhile, Disney's dispute with DirecTV continues with the satellite provider, now filing a complaint with the FCC. They're accusing Disney of failing to negotiate in good faith and engaging in anti-competitive behavior. Direct TV says Disney has imposed unreasonable conditions for a new distribution agreement, including unlawful demands for bundling channels. And a statement to Reuters, Disney responded,

quote, we continue to negotiate with DirecTV to restore access to our content as quickly as possible. 11 million DirecTV subscribers remain without access to Disney networks like ESPN. Disney plays hardball on these kinds of things. Very much so. Again, take it from a perspective of Disney. Your stock, it's flat for the year,

but it's down about 25% from probably March. So all forces looking at IGAR, point, what's going on with your business, you're seeing theme park slowing down, now this is the media side, where are you going to do? So they're going to play hard ball. Is Monday Night Football on ESPN? Or is that years past? Yes, it is. So tonight would be the first moment that one of those customers really feel the loss of this channel. So that's the Jets playing tonight too. So it'll be interesting just to see what pushing out. That in itself is an interesting thing. Where's Brian? Where is the Jets fan? There is over there.

Surat, thanks for being with us. Thank you. Thank you for watching.