Power Lunch - Stocks Rally Into The Weekend 4/26/24

Episode Date: April 26, 2024

Stocks are rebounding today, continuing the turnaround that began late yesterday morning. The Nasdaq is the outperformer today, boosted by strong earnings from Microsoft & Alphabet. We’ll dive into that and much more. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right, welcome to Power Lunch, everybody, alongside Contessa Brewer. Good to be with her. Good to be with you. I'm Tyler Matheson. Stock's rebounding, continuing the turnaround that started late morning yesterday. The NASDAQ, the outperformer today, up more than 2% boosted by earnings from Microsoft and especially Google. Alphabet, up more than 10% today. As you see right there, we'll have more on those results coming. And what we're seeing here is that today's gain is really pushing Alphabet into the $2 billion market cap club, along with Microsoft, Apple, and NVIDIA. With today's gains, all the major averages set to end this week with gains. The NASDAQ up more than 4%. And look, you can see that big drop yesterday morning. And then that steady rebound yesterday and into today's session. We'll keep our eye on that, Tyler. All right. Let's start with the number that's helping to clear the way for this rally. After yesterday's potentially worrying GDP report, the markets seem to like what they saw in this morning's PCE. that's an inflation number.

Steve Leesman joins us now with a little bit more. What did they like and what you started to explain this in the last hour to me? And I'd love to hear you continue. What's the difference between PCE and CPI and all these other different inflation numbers? And why does the Fed like PCE? All right, I'll start there, Tyler. The CPI is the consumer price index. The PCE is the personal consumption index, essentially the deflator they use for figuring out

the real spending and real income numbers in the economy. And some of the differences are housing is less weighted in the PCE. There's other elements, for example, from the wholesale price index, like some of the service indicators that feed into the PCE. The Fed just thinks it's overall a better indicator of inflation. But I think, you know, you asked what the markets saw. It's also what they didn't see. Markets dodged a bullet this morning, Tyler.

They were saved by just a couple hundreds of a point. We'll show you that in the second. where we learned that the higher than expected inflation for the first quarter, that surprised markets yesterday was more concentrated in January than it was in February and March. Here's the data. We were up 0.32 in March right about in line with consensus. February revised just a little bit, one basis point, and January 5 basis points and 0.5% for the month. That was the big number.

The market took relief that the March number was not 04, and that January. We knew January was bad was that that month was actually the worst month. It was a little further in the rearview mirror. Just because it was bad doesn't mean that it was good. The headline year over year change went the wrong way. And progress on the core, you can see clearly there, it has stalled. So there wasn't much change in the outlook. The already diminished outlook for Fed rate cuts, better on the betters on the June cut still look likely to lose.

And it's going to take a strong downdraft in inflation over the next couple months for July to come true. Most hopes for a cut now residing in September. If you add in now, the beat on consumer spending, better spending, sticky inflation, now you have this growing course of those who say the Fed may not get a window to cut it all this year or maybe just once and may not need to cut since the current rates do not, at least in the numbers we're seeing now, Tyler, appear to be weighing much on the consumer or growth in aggregate. Obviously, some people are feeling the pinch of those higher rates out there. You know, the markets really do, the people don't say that the market seems.

to have stepped over these inflation numbers. It seems to have stepped over the fact that bond yields have risen back up a good bit, even though they're down just a bit today. You know, Tyler, I like the idea of stepping over. What exactly you're talking about that they're stepping over? I think I know what you're talking about. And I think that's true. Look, it is fascinating to me. I set this whole week up on Friday. I said, folks, there's going to be an amazing and interesting tension this week between the inflation numbers, which could be to the high side and the growth numbers and the earnings numbers. And these things seem to be balancing out, Tyler, I think we're going to finish the week in the positive, but you have this push me,

pull you've had for a very long time now. And it looks like just barely the growth and the earnings numbers are trumping the negative on the side here of fewer rate cuts and a little bit higher inflation. Yeah, seems to be that way that the market is comfortable with what it's getting in data that it's seeing. Steve Leaseman, have a great weekend. You too, thanks. All right, let's turn back to the markets now, which are rebounding following yesterday's sizable sell-off. Here with more on today's action and how to position now is Tom Heulik. He's the CEO of Strategy Asset Managers. Tom, am I right here that the market seems

to have sort of played past some of the data that might be otherwise worrisome? Higher interest rates, fewer interest rate cuts this year, inflation that is proving harder to get down to that 2% level, even though it seems sort of quiescent in the 2.3, 2.5 area? Well, thank you for having me. You're welcome. One of the things that we look at as an active manager are kind of the signals that some of the earnings reports that are coming out right now, take, for instance, Microsoft and Google and meta, they had strong earnings reports, and we cover most of those magnificent seven

stocks, but the data that we see on the economic side is still quite strong. You know, the economy's doing well. We see the labor market still being pretty tight. Inflation numbers are sticky around the 3%. But we see a strong market going right ahead of us. Even here and being more specific about it, you had personal spending rising 0.8% more than what we saw for the wages of a rise of 0.5%. But the personal savings rate fell pretty significantly here. What does that tell you about where, consumers are putting their money and where there might be investment opportunity. You know, contest, we're telling our clients right now to be wise with where they have their money. For example, we counseled our clients as an active manager would on taking advantage of savings rates being at 5%.

However, as you know, interest rates will eventually start to come down and we have to find smarter places to move your money. For example, on the active management side, we will counsel our clients into going into the technology sectors, maybe the healthcare sectors, the industrial sectors, any of the sectors that really have pricing power right now. But we do, we do, you know, try to take the, take our clients into areas of strength. Maybe a couple of your larger holdings. Well, the ones that are in the most customer accounts. I would say that some of our larger holdings would include something like a Google, a Microsoft

on the technology side. We like intuitive surgical. which is a robot surgery. Ticker symbol ISRG, right. That's another strong one for us. We like Constellation Energy brands, which is a nuclear power plant company. Why do you like that? Energy is important.

I mean, it used to be a dirty word, but if you see all the data centers that we have out there sucking up all the energy, we've got to find alternative sources to feed the supply that's in these data centers. Constellation Energy is one of those companies that can help out. The theme that runs through Constellation Energy, Intuitive, Surgical, and of course the big guys,

Meta, Microsoft, Amazon that you own, is the exposure and the way that they will capture the potential of artificial intelligence. It's the big theme right now. AI is so important. If you don't incorporate AI into your company, you're going to be left behind. AI is going to drive earnings efficiencies for all companies, especially companies in the industrial sector like a CEG, or maybe even intuitive surgical, taking advantage of the health care opportunities they're there to make surgeries more efficient. But is that a question now that

portfolio managers and financial advisors are going to have to be able to explain to clients now is, okay, so you like consumer goods or you like this particular biopharmaceutical services company, but here's how AI plays into the future of their business. Are they going to have to understand the potential for these companies to grow based on AI? I think just as we adapted to using a cell phone years ago or just evolved in the technology sector, AI has been transformative. It's allowed companies to become, as I said, more efficient.

But if you look at the advantages of using this type of technology down the road, we need to continue to lead as the United States, be an innovator in these areas, as an AI spending in the United States alone is about seven times more than any other country in the world at this point. That's a really staggering figure because we want to be first. We want to be leaders out there. And AI is going to shape our technology and innovation out there.

Talk to us a little bit about meta, if you would. We had our stock draft last year. I'm sure you know about it. But it was the first choice. It was the first pick off the board yesterday. had been a little bit critical of META based on, I guess, a forward forecast and the idea that they're going to have to do a lot of capital spending associated with AI. I see capital spending as a good thing.

It means they're investing in their business. It may not help them next quarter or the next couple of quarters, but in the long run, you want companies to be investing in the technologies that they think are going to benefit them. I agree. I think the capital expenditure item for META was necessary. I think that Zuckerberg saw things in the future to remain competitive. We have, first of all, we own Facebook. We have clients from Facebook.

We have former clients that were at Facebook. We've owned this stock for a long time. We believe in the direction of AI, and that just shows that capital expenditure that meta did was necessary to remain competitive. Tom, thank you very much. Appreciate it. Thank you, Tom Hewlett. Thank you, Contessa.

Nice to see you. Bond yields, a big factor in this. stock market moves that we have seen recently pulling back to today following the PCE report and after hitting five-month highs yesterday and contributing to the stock sell-off. For more on the economy and the bond market, let's go to Chicago and Rick Santelli. Hi, Rick. Hi, Contessa, and indeed, thank you. A lot of big numbers yesterday, GDP, some of the pricing mechanisms within,

and of course today's income spending and inflationary numbers. And we have Jerome Snyder, the big guy at Pimco. What do you see in the numbers yesterday and today, Jerome? Obviously, from a headline perspective, GDP yesterday was amiss just being in a 1.5% range. But overall, when we see the growth of the economy, it's still being stimulated by the remains of fiscal spending. The impulse is still from savings, although they're declining from the consumer. And ultimately, that probably warrants a little bit higher rates for longer, as the Fed's going to probably continue to contend next week, as we begin to see them, begin to recalibrate to this higher inflation regime as supported by recent data, including this morning.

Yes, this meeting comes quick Tuesday and Wednesday. Now, I am hearing more of a refrain of stagflation and base case of maybe no rate cuts that doesn't go along with yours. See if you can diffuse that in a short paragraph. Yeah, and simply we have to be reminiscent that the Fed is going to recalibrate to the data. And at PIMCO, we think that those cuts are likely at the latter half of this year. And maybe potentially get pushed into 2025. The rate cuts are going to be a lot less. But ultimately, what we've seen over the recent days is that,

Re-ields have moved higher. And as the yields move higher, the opportunity set, specifically across the yield curve has recalibated to really get closer to what we are at money market rate. So said differently, the yield curve has become increasingly more attractive for investors as the... And that seems to go along with my sources. My sources are looking at the markets in general and saying there's an asymmetric feeling among investors, meaning when you have slower growth, even though there's decent growth, and you have sticky inflation, that the amount of movement in equities to the downside or rates to the upside has been less than expected. They're thinking when you start getting better data on inflation, the move's going to be much larger. Your thoughts? Simply, I would actually urge investors not to overthink the situation right now. They simply need to break their bond to Teebles that they've been in. They've been at the very front of the yield curve. They need to be thinking about what the new environment for higher rates, and specifically, their movement in yield has done. A 6 to 8% type of return in

fixed income is actually pretty attractive right now, especially when you consider the asymmetry, which you just alluded to. Potential for risk recalibrating, it's potentially there, but we also take what has been given to us, which is the recalibration, the higher growth. The more I'm listening to you, Jerome, the more I'm hearing sources tell me that the best trade is a steepity yield curve, and it sounds like that goes along with your plan. That short rates most likely are going to be slowly moving lower. There might be a token cut out there or two, but the long end might bring religion of things like spending and debt and supply. Right. We have to think about the shape of the Oath curve in terms of premiums to own longer maturities. And investors should simply

command more premium. It's not necessarily there for 10 years and beyond. Almost out of time. You think term premium is going to expand again like it did pretty much towards the end of last summer? It's very likely. But in the interim, let's stay at the focus of the front of the yield curve, just beyond T-bills, find very good ways to diversify portfolios. Excellent. Jerome, it's always a pleasure to talk to you. Thank you for joining me in Chicago, the CBOE. Contextual. What's up? Back to you. So informative. Thank you, Rick. I head on Power Lunch, Biden versus business.

Lawsuits against the Biden administration piling up as it ratchets up regulation across the board. We'll discuss. Plus, we're halfway through the big tech earnings season. Check out shares of Alphabet now surging on a Q1 beat and the announcement that it will pay dividend to the shareholders for the first time ever. It's up almost 10%. We dive into it when Power Lunch returns. Halfway through the big tech earning season, Meta, Alphabet, and Microsoft all posting beats on the top and bottom lines this week. The one common theme here, capital expenditures.

Meta's intense spending sent the stock plummeting Wednesday. And while Alphabet got a bump after introducing its first ever dividend, the Google parent and Microsoft are both preparing to spend to build out their AI businesses. Steve Kovac joins us now to break it down and look ahead to Amazon next week. and we have Apple next week. This cap-x spending, though, it seems to be, I mean, it's the common thread among all of these big tech companies reporting earnings. And in some ways, to me, it resembles some of the gambling companies, small little startup companies that I say, they look, we've got to go all in if we want first mover status.

Yeah, and that's exactly what Mark Zuckerberg said on the medical. That kind of freaked out investors and sent shares down was because he said, we got to spend so much money in order to build out these AI capabilities we want to do. And, oh, by the way, we're not entirely sure how we're going to monetize it. Right now, we're going to do the same play that we did with, like, stories and reels, get the users addicted to it, using it every day, and then we'll stuff ads in there. That didn't seem to be enough to placate investors. There was a little bit of a different narrative over at Alphabet and at Microsoft last night.

Microsoft had a really interesting answer to this CapEx problem. They were saying, we're going to be flexible. We're looking at demand. Right now, demand is outstripping the supply of AI capabilities. we can. We're going to spend oodles and oodles of cash on this stuff. Let me ask what that means. When they say that demand is outstripping supply, does that mean companies are going to them and saying, here's how we think AI could help us? And Google says, oh, yeah, we don't quite have the application ready to put that in, but we could invest

and build it. Sort of. It's mostly happening in the cloud. So, especially with Open AI, because of that relationship between Microsoft and Open AI, when people go to Open AI and use their technology for their own apps, for their own services, for their own chatbots. So much of that is running on the Microsoft Azure Cloud. Next week, we're going to get a different story from both Amazon. Amazon will probably be talking about CAPX and building out there. In fact, they announced it yesterday probably didn't get ahead of the negative reaction that Meta had, but they are also being very aggressive with their buildout.

Apple is a completely different story. We still don't know where they fit into this AI picture. We know they spend a ton on CAPX, how much of that's going to AI. how much of that's going to other projects. And then, you know, from the consumer-facing side, what do they have coming up for artificial intelligence? But in the near term, everyone's going to be looking for Apple. It's not even going to be an AI question.

It could be what's going on in China. We've gotten so much data this week about how iPhone sales have just plummeted in China. And it was down 13% in the December quarter. It's looking bad this quarter. We already see analysts trimming their estimates for the June quarter. So the question is, what catalyst can reinvigorate things there? What kind of product can they bring in?

We'll find out June 10th at WWC. We spoke last hour about Alphabet and Microsoft with subscription models for their AI products. ChatGPT has a similar thing. Is it inevitable that Meta, and I don't know it well enough, does Meta have anything that has a subscription attached to it? Not in the same way. They're doing some stuff in the EU because of the regulations. Is it inevitable that they will have some product for which they will charge a subscription? Because, again, it is enormously expensive to run this stuff.

But right now, they're not talking about that. They're talking about let's... That's a way to monetize it, I suppose. Let's increase engagement and then advertising. Google, by the way, saying the same thing. Let's increase engagement in AI search, which we're already seen... They said we're already seeing evidence of that. AI search, okay, great.

More engagement means more chances for ads. And I do want to talk about Nvidia. I know it's not next week, but it is part of the Mag 7. All this CAPX that we're hearing about, just consider that just cash going right to to Nvidia. That's all... Not all, but a lot of it is Nvidia. And so all this talk that we hear about, you know, people nervous about how much is being spent on CAPEX, the bill.

at-a-I, just fantastic news for Nvidia. I think Nvidia is up, you know, 4 or 5 percent today just on all that. And we have to wait until the 22nd of May. That's an eternity. I want it now. Patience is a virtue. Patience is not our virtue, but it is a virtue. Steve, thanks.

Thanks, guys. All righty. Next week is National Small Business Week. Please join our free. No subscription required. free virtual small business playbook event. That's Thursday, May 2nd. Experts are going to examine the future small business in America. You're going to meet some entrepreneurs who will share stories and strategies of overcoming obstacles to achieve success and how you can do it too. You can scan the QR code to register or visit CNBC Events.com slash SBP. We will be right back.

Federal Trade Commission today accusing top Amazon executives of using encrypted messaging apps to delete what could have been evidence in the agency's case. Kate Rooney has the latest from San Francisco. Hi, Kate. Hey there, Tyler. So in a new motion file today, the FTC says for years that Amazon top executives, including founder and former CEO, Jeff Bezos, discussed sensitive business matters, including antitrust over the signal encrypted messaging app instead of email. turned on the app's disappearing message feature, which irrevocably destroys messages, even after Amazon was on notice that the FTC was investigating its conduct, rather. They do claim that this interferes with the ability to investigate possible antitrust violations. The court is now looking for more information about what Amazon executives told employees about how and when to use this app and then the message retention policies.

Amazon, for its part, calling the claims baseless and says that Amazon voluntarily discreet, and disclosed employees' limited signal use to the FTC years ago and thoroughly collected conversations from its employees' phones also says FTC has a complete picture of Amazon's decision-making in this case, including 1.7 million documents. The FTC first opened this investigation into Amazon. Back in 2019, it was the same year. Amazon executives did start using the encrypted app after Jeff Bezos. The founder said that his phone had been hacked and that the National Enquirer was looking to publish intimate photos of Bezos and his now fiancé, Lauren Sanchez. This is not the first time, guys.

Excuse me, federal agencies have complained about these apps. The DOJ alleged that Google encouraged employees to use encrypted apps and then delete the history. The FBI has also voiced concerns over Wall Street using Signal and other encrypted apps, guys. I don't know the law here, but my assumption is that unless and until you are alerted by counsel or law enforcement, to retain communications. There's no obligation on a company or an individual's part to do so. That's right. And the FTC first opened this case in 2019 and did say, you know, as the plaintiffs here, they said that they knew that discovery would be part of this and that they were obligated to hold on to those messages. But this signal and encrypted apps, you know, telegrams,

as another example, are increasingly common. I would say in Silicon Valley among tech companies. And that auto-delete retention is really getting. on the wrong side of regulators, they've been frustrated time and time again when a variety of cases, not just Amazon, that they are not able to get what could amount to evidence. But there are big implications if Amazon were found to have tampered with potential evidence, deleted evidence, and there are, you know, down the road, it could end up with potential DOJ implications. All right, Kate, thank you very much. Kate Rooney, we appreciate it. Let's get to Sima Modi now for a CNBC News Update. Hi, Sima.

Contessa, the U.S. announcing the purchase today of $6 billion worth of weapons for Ukraine, the Biden administration says the purchase will include vehicles, interceptors for air defense systems, and counter-drone systems. Earlier this week, the president signed a bill into law providing billions of dollars to help Ukraine in its war with Russia after it had been stalled for a half a year. King Charles will resume his public duties next week for the first time since his cancer diagnosis almost three months ago.

Buckingham, announced today that his medical team is very encouraged by the 75-year-old King's recovery but did not disclose further details. It comes as his daughter-in-law, Kay Middleton, is being treated for cancer. Pope Francis, the victim of an artificial intelligence deepfake, will participate in a G7 summit on AI in Italy. The Pope warned against the, quote, perverse dangers of AI earlier this year and sent a call for global regulations. The June meeting will bring together world leaders from the U.S., Britain, France, Italy, Canada, and Japan. So Contessa, even the Pope weighing in on AI. Well, if you are the victim of being a deep fake, it would tend to prompt

you in that direction. You kind of have to. Yeah, Seema, thanks. A head on Power Lunch. We're ending the week with a bang. Thumb, bum, dum, deluxe earnings edition of three stock lunch will get the story and the trades on Snap, ExxonMobil, and Colgate Palm Olive. I can't promise I will sing the actual song, but it sure is in my head when we return. All right, I believe we have a news update coming to us from Julia Borson. Is that where we're going right now? Oh, all right. I guess we're not doing that right now. So bear with me. I misheard. Deluxe three stock launch. Even better. Deluxe three stock launch. We got three key movers making headlines today. So we're going to give you the story and the trade on each. Our trader today is Ava Ados of ER shares.

but let's first go to Julia Borsden for the story on SNAP. The stock shooting up more than 20. Here's where I got confused. We are going to Julia Borsten first, but we just weren't supposed to introduce her first. But here you are, Julia. We're all set. Take it away.

Here I am and look at that stock chart. That counts as a news update. Tyler, that stock is up 27% on better than expected results and guidance. And for the first time, Snap gave full year expense outlook, which showed moderating expense growth this year. Now, all of this driving a number of upgrades and positive analyst notes, HSBC saying that it's upgrading Snap to buy and raising its price target due to, quote, the broad-based recovery and global advertising demand and pricing with the social media industry

proving a main beneficiary. I spoke to Evan Spiegel, the CEO of Snap earlier today on Money Movers about advertising demand. Take a listen. businesses are using digital advertising to really efficiently drive more demand. And I think, you know, overall, the economy has remained healthy. The consumer has remained confident and still spending. So I think net net, you know, it's a constructive backdrop for the advertising business. Spiegel also stressed me that all of the company's investments in AI improvements to their ad tools and also to content recommendations, it's all paying off. You can find my whole interview with Spiegel on CNBC.

dot com. Guys, back over to you. That's awesome. Thank you, Julia. Ava, what's your trade on Snap? I agree. It's a buy. I'll explain why we haven't owned it for many years and why I like it now. We haven't owned it because they were struggling with monetization, just like WhatsApp is. So it's very easy to monetize reels, Instagram Reels or TikTok, but very hard to monetize messaging. And that's the category Snapchat was targeting.

So now I like it because it looks like there are new advertising strategies. is becoming more and more efficient. And I also like the fact that they are, before today's pop, they were down 88% since their COVID-19 highs. That's a big drop. I also like the fact that the revenues have gone from $1 billion to $4 billion in five years. That's $4.X. It's a great number.

I don't like the fact that they're still not profitable. I think they have to start getting economies of scale. We'll see if a TikTok ban ever happens. and if that ends up helping Snapchat. I want to mention also that back in 2020, India banned TikTok, and that doubled the user base of Snapchat in India. I'm not sure we're going to see that now, though,

because Instagram Reels was just getting launched back then, and we didn't have YouTube shorts back then. So we'll see how that plays. Just real quickly, you're a buy, but would you buy here at this level when it's up 27% on the day? Great question. I think, no, I would wait for a good entry point, I think. And also, it's a, it's a macroeconomic discussion when GDP is, is, GDP growth is coming down and inflation is still sticky. Do you want to be in such a high growth company, such a speculative growth company? So I would wait to get into it in a few weeks if I see a better entry point or even in a few months. All right, Eva. Let's move on to ExxonMobil.

The stock is under pressure after a mixed quarter, shares down 3%. Pippa Stevens has the story here. Hi, Pippa. Hey, Tyler. Well, a mixed quarter for Exxon, missing earnings estimates, although revenue did beat expectations. Net profit came in at $8.2 billion, down 28% a year over year. Now, the miss largely thanks to weak natural gas prices, which fell 30% during the first three months of the year, as well as not as strong refining margins. Still, though, CFRA's Stuart Glickman telling me the quarter was all in all not bad. and that nobody was expecting the same blockbuster results from the last year.

Now, some of today's stock reaction could simply be sell the news, especially after the stock hit a record high earlier this month. Now, one very bright spot during the quarter was Exxon's Guyana operation, where production grew at higher than expected levels, reaching more than 600,000 barrels of oil equivalent per day. Earlier today, CEO Darren Woods telling CNBC, Guyana will, quote, go down as one of the best deep water developments in the history of the industry, which is why Chevron also wants in through its proposed acquisition

of Hess, Exxon's partner in Guyana. The two oil giants are locked in a dispute over whether Exxon has a right of first refusal. What's saying it's not a play for Hess, but rather protecting the value Exxon's created in Guyana. Meantime, Chevron CEO Mike Worth telling CNBC they are very confident in Hess's interpretation of that joint operating agreement. Guys? But thank you. Ava. What's your trade on Exxon Mobil here? It's a sell. I do like the sector and the category. I do like oil in this market with

tensions in the Middle East, but I don't like the company. Their chemical sales came down. Their P.E. is 1.5 times their peers. The total enterprise value to revenue is double their peers, so they're a relatively high price. And I think they're a much better competitive companies in this category that I would choose, such as Phillips 66. That's a great company. They are better enterprise, relatively speaking. And they're also targeting the green energy market, which is a high growth market with high margins, especially when it comes to the SAF Sustainable Aviation Fuel category. So it's a sell, I would sell Exxon and buy Phillips 66. That's why we love Ava. She says things like, I just don't like the company. You say it clearly. We love that.

Good for you. All right. Final name is Colgate Palm Olive. We'll find out what she thinks here. Stock rising today after beating on earnings. Dom Chu has the news. All right, so there's a reason why the shares of Colgate, Paul Mollav hit a record high today. They hit the earnings trifecta, profit beat, revenue beat, and forecast raise. The performance in this most recent quarter ended was driven in large part by sales growth in all of its key operating divisions if you even strip out the effects of acquisitions. That's also known as organic growth. So the company known for not only its namesake toothpaste and dish soap brands, but also speedstick deodorant,

Fabuloso Cleaners. Also, a brand that my family knows very well, which is Hills Pet Foods, which, by the way, now makes up 22% of all of Colgate, Paul, and all of the sole sales, we've got two dogs that both devour this stuff. Now, across the overall company, you saw both growth in unit volumes, also pricing as well, with the notable exception being continued volume softness in the China market. Now, the key for many consumer staples companies and their investors as whether they're able to withstand inflationary pressures and still be able to get consumers to pay higher prices for their products. That looks like it is the case for Colgate Paul Molliv, hence the record high. They all send things back over now. So Dom Chu, the consumer

likes it. Does Ava Otos, the investor like it? Eva? I think it's a hold. I like it in this market, given the macroeconomic conditions we just mentioned. I think in a couple of weeks, investors will be happy to own it. It's a slow and steady company to put in in perspective. The S&P went up 300% since 2008. No, this company went up 300% since 2008 when the S&P more than doubled that, 660%. So it's not going to make you rich, but it's a great defensive play in this market. Eva, it's great to see you. Thank you for your perspective. All righty, coming up, Regulation Nation tensions between business groups and regulators increasingly playing out in court. We'll discuss that when we return.

Earlier this week, the Chamber of Commerce sued the Federal Trade Commission over its non-compete ban, and that's just one of the many lawsuits business groups have filed against the Biden administration. Megan Kisela joins us now to explain why we're seeing a surge in legal action against the administration. Hi, Megan. Hey, Contessa. So banking and business groups tell us they're pushing back against what they see as regulatory overreach. Now, if you compare this to previous administrations, the chiefs, Chamber of Commerce filed 15 lawsuits against the Obama administration in its first term, and then just three against Trump. But they expect to file at least 22 lawsuits against Biden

by the end of this term. They're not alone either. The American Bankers Association has signed on to four lawsuits against Biden bank regulators in the last 18 months or so after not suing any regulators for roughly a decade before that. Now, these suits come as total regulation has increased under Biden, according to one metric from George Mason University. And while the Chamber views litigation as a last resort, they say they're choosing to sue when they see agencies acting outside the limits of their authority. We went from a time where we would argue about a particular regulation to a period where the concern is about the direction as a whole and the sustainability of the system.

Now, the White House says it is fully confident that agencies are acting within their authorities, and they say their goal is to help workers and families. But the White House says it is fully confident that agencies are acting within their authorities. And they say their goal is to help workers and families. But the business group say that when every administration can simply rewrite the rules the way they want to, it amounts to regulatory whiplash and nobody benefits. Guys. Megan, thank you very much. All righty. Now, a news alert on the Justice Department's case against Google, again, the intersection of government and business.

Amen. Tyler, that's right. Google has now filed a motion for summary judgment in the antitrust case against its ad tech business that was brought by the Department of Justice. this filing just within the past hour here. And what Google is essentially doing is making four arguments that suggest the government simply has failed to prove its case. They're asking the judge now to throw out the case. We'll see whether the judge agrees with the arguments. There are basically four arguments here.

One is that the market definition that the Department of Justice is using is essentially a made-up definition that actually excludes a lot of Google's competitors and would make Google look better if they use a different definition. also that the percentage of market is actually lower than the threshold required by this particular court. They're saying that this basically will turn private companies into public utilities if this approach to antitrust is taken. And they're saying in terms of the way the government calculates damages to the government here, they say that calculation is essentially bogus because the government did not buy services directly from Google. So we'll see whether those arguments hold water with the judge in this case.

might get a ruling here maybe by the summer. The case is expected to go to trial in September, so presumably before then. The judge has a couple of options, Tyler. She can throw out the entire case. She could modify and limit and restrict the case. We'll see what she does here, but this is Google's bid to get the whole thing thrown out of court. Back in the way. Amen, thanks very much, Amon Javers. Meantime, shares of paramount lower for the second straight day amid reports it's making progress towards a merger with Skydance Media. We'll get the latest details on that and more when we return on PowerLunch.

Welcome back to Power Lunch, everybody. Paramount Global and SkyDance Media are reportedly making progress now on a deal that would merge the media companies and buy out the controlling shareholder of Paramount, Sherry Redstone. But Matrix Asset Advisors, which owns a significant portion of Paramount shares on behalf of its clients, is slamming Skydance's bid to be. merge and has written a new letter to Paramount's board stating their belief that a deal would not be in shareholders' best interests. A new article is out on CNBC.com that addresses one key hurdle that may be standing in the way of completing the deal. And joining us now to discuss that story is

Alex Sherman. No, we're not going to go to Alex Sherman because we don't have him yet. We're going to take a break. And if we find him, just like yesterday we had Kenny the Jet Smith. He was missing, but we found them. We'll get Alex Sherman. We'll watch. As I promise you, welcome back to Power Lunch. We have Alex Sherman now to talk a little bit more about Paramount and the potential deal there. And Paramount's Bob Backish, the CEO there, might be removed as CEO. What can you tell us, Alex? So I alluded to this in a story I wrote yesterday from CNBC.com that Paramount Global has a big

carriage negotiation coming up with charter communications. It's sort of the last major hurdle to valuating the company if it, in fact, moves forward with a deal to merge with Skydance Media. And these two companies aren't exclusive talks. The problem is that Bob Backish, who has privately bashed this deal, saying that it is not a good deal for all shareholders that really only benefits national amusements, which is Sherry Redstone's company. He's in charge of this negotiation with Charter. And I think Sherry Redstone, who was, of course, on the board at Paramount Global and is the controlling shareholder, has been getting increasingly frustrated with Backish. And now with Backish in charge of this deal, she may want to make a move before the carriage negotiation happens to put leadership in place that she trusts more. Well, if she is the, quote, controlling shareholder, wouldn't it be within her right to make such a move and remove Backish who is opposing the deal?

it would be, but there's several awkward scenarios that go along with this. One, that deadline with Charter is April 30th. So you would be making a change potentially if this effect does go through, and I'm not sure it will. You'd be making a change way down the road in that negotiation by suddenly pulling the leader of the company. Also, the special committee of Paramount Global is supposed to evaluate all options, not just Skydance. One of those options is a standalone go-forward. strategy with Bob Backish at the hell. So if you're suddenly making a change at the CEO, you're now saying to the special committee,

hey, look, one of these kind of paths forward that you have as a negotiating tool to try to get the best deal for Paramount Global, we're basically taking that off the table if we're going to make a CEO change and not replace him with anyone. So look, this is a thorny, sticky situation at this point. And then you have Matrix Asset Advisors writing another letter saying, you are not. acting in the interest of all and all is in all caps shareholders here and they they really lay it down on the line throwing down the gauntlet about sherry redstone being the the beneficiary nobody else and they're saying no no you need you also need to look not only at this stand-alone

option but at this um apollo sony option as well yeah so if there are if there are three options it's one Skydance, exclusive talks, ends May 3rd, Skydance wants an extension on that to be determined. Two, this Apollo deal, Apollo has offered a full takeout of Paramount Global, which would, in fact, benefit all shareholders, at least in the near term, because at least all of the shareholders would get a premium on a deal. Or three, stand alone, move forward with Bob Backish, and trust the plan ahead. So if you remove Bob Backish, you sort of eliminate Route 3, that's one potential negotiating path. the table. So now you've got two. Jerry Redstone wants to do this Skydance deal. She's wanted to do it for months. So if she gets her way, it kind of won't matter because Bob Backish was going to be out as CEO and David Ellison was going to be in if the Skydance deal is done. So if that's the path we're on

and that deal gets done, it's just sort of an order of operations thing here. Backish is out now rather than later. Skydance also is backed by KKR and Redbird. Is Redbird the one that has a relationship with Jeff Zucker? And Jeff Schell. That Jeff Shell, the former NBC CEO, would be the president of the new company if, in fact, that deal gets agreed to. All right, let's move on to Kenny Smith, who yesterday on our air talked a good bit about the Warner Brothers Discovery Future. He chose it as his stock, saying that if WBD gets the NBA rights, which are subject to negotiation right now, that's going to power Warner Brothers

Let's play it. Let's listen to Kenny. I'm going with the Warner Brother Discovery. For this reason, once they get the NBA contract again, their stock is going to rise. And they also think about it. They have the best show in television inside the NBA. They need that stock will go up. You cannot negate the fact that once they get the NBA license, once again, they will skyrocket.

I do not dispute Kenny's view that inside the NBA is a great television show with great chemistry, but I do wonder whether just getting the NBA rights is going to be enough to power that stock. We've got about 25 seconds. Right. Look, they already have the NBA rights and that stock has been pummeled. So, yeah, it's an overhang on the stock. But the question is, how much do they have to pay to renew those NBA rights is going to be

more, which isn't good news for shareholders? So we'll see. We'll see if the benefit of getting the NBA rights. rights to benefit the cable networks is a big enough deal. Got to leave it there. Thanks, Alex. Appreciate it. Thank you for watching Power Lunch.

Closing bells start right now.