Power Lunch - Stocks' struggles continue, Disney launches new ESPN App 8/21/25

Episode Date: August 21, 2025

Stocks continued to struggle. Walmart shares slid after reporting earnings before the bell and Disney launched its new ESPN direct-to-consumer app.   We break it all down here on Power Lunch.   Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch. I am Brian Sullivan. Call it Jackson Hold or maybe Jackson Fold, at least a little, because that's what some big name stocks are doing. The S&P 500, down for five days in a row, Big Tech. Been selling off a bit as well with less than 24 hours away from Federal Reserve Chairman Jerome Powell's. Big speech tomorrow in Wyoming. What are the key things for you to focus on now? And in the weeks and the months ahead, it is a big focus for you. Thanks for joining us, everybody. As Morgan said, markets down, but not down as much as they had been. And in fact, the Russell 2000, the smaller cap stocks, continues to outperform. It just turned higher. Well, we're going to get to that and the macro markets in minutes. But why don't we kick off the hour with a big new piece that has got some Nvidia investors a little bit on edge? The Financial Times out with a front page report today, claiming that China turned against Nvidia's AI chip, after what Beijing's bosses claimed were, quote, insulting remarks from Commerce Secretary Howard Lutnik. Now, the comments are actually over a month old. We should know because they were made to us in our interview with the Commerce Secretary in Pittsburgh on July 15th. Looking at Nvidia, getting a deal to be allowed to sell certain chips and do more business into China. That's coming from this administration. Is that a change of heart?

Well, it's funny because the Biden administration allowed China to buy these chips last year. So then we held it up, and then in the magnets deal with the Chinese, we told them that we would start to resell them. So remember, these are an older chip. Biden had had them available, and we rethought it. But now that Nvidia came out with their newest chip. You realize the newest chip is called the Blackwell. Then they have the H-200 and H-100. this is like the fourth one down.

So the fourth one down, we want to keep China using it. We want to keep having the Chinese use the American technology stack because they still rely upon it. And that's key. So we try to play that balance. We don't sell them our best stuff, not our second best stuff, not even our third best. I think fourth best is where we've come out that we're cool.

So China's leadership reportedly upset about that. And there is some concern that frustration in the communist party could come back to bite Nvidia or maybe it's investors. Let's broaden this all out and talk about it. Joining us out of discuss, CNBC's NASDAQ reporter, Christina Ports and Evelas, along with Bernstein's semiconductor analyst Stacey Razgon. First off, Christina, to you, it seems a little bit much to do about nothing, but they're upset. Do Nvidia investors have to be worried? Your interview was great, and they noticed it, so hats off to you, but a lot of this could be perceived as noise because we have for some time seen headlines that Beijing officials have

been pushing back telling large companies like Alibaba and Bight Dents to scale back their orders of H20s. These are chips specifically made for China or even to stop them altogether. Why? Because they want Chinese companies to rely on homegrown options, for example, like Huawei. So this is another example to get them riled up and show that they're, you know, really pushing back and Nvidia is not going to be, you know, the go-to anymore. Wallway should be the go-to. however, it seems like... What else would they buy? Huawei's Ascend chips, but they're not the same...

They're not as good. The performance is not as good when we're talking about computational power, but they're much cheaper and localized. And I know Stacey can get more into the details in terms of the nitty-gritty with that, but there's an argument to be made, and we can see it with DeepSeek, deep-seek large-language models,

an AI startup in China doing really well with Huawei chips and Nvidia chips. So it's an opportunity for them to crack the whip again, and so what does this mean for? for Chinese revenue for NVIDIA next one. And that's Stacey Razgon. That's it. First off, I mean, the interview is just over a month old.

So the story was a little bit vexing to me. But hey, let's talk about it because is there a risk in the numbers? I mean, would NVIDIA sell China fewer chips because they're, quote, insulted by those comments? Well, you have to remember right now in the numbers, China is zero, right? Like, people. He's, so we're clearly not using the latest Nvidia chip in that Zoom processor. You know, there's times when things freeze on the air and I'm like, is that me? Like, am I freezing? So we're going to try to get Stacey Raz gone back.

But to his point, it's a zero now. So you can be insulted. But if you want these chips, you're going to buy them. And China's, listen, they're a smart country. They're not going to think that we're going to give them the absolute best that we've got. No. Are they? No, no.

not going to think that. To Stacey's point, he was just talking about the revenue. So last quarter, China contributed $4.6 billion, which was still a little bit over almost 13% of total revenues. The assumption is that the H20 ban was put in this quarter and then lifted, so they weren't actually shipping chips to China. They just got their green light very recently. And the problem with that is how do you calculate that into total revenues going forward? And so that's the big question for earnings next Wednesday. You know, are these H20 chips that were sitting, you know, work in progress, are they going to be able to ship out very soon? Have they been shipping out? What's the quantity? So you have mixed results coming from various cell-side

research. Like, for example, Wedbush, I was just reading. He thinks that the contribution is going to be actually much smaller, whereas other people think it's going to be a tailwind in the next three quarters or so. So Stacey Razgon, I believe we have him back. He has upgraded his chips. I'm now thinking about a great 80s book and movies less than zero. Is this going to have a negative impact on a zero number for NVIDIA? Yeah, again, right now in the numbers, it is zero going for it. I don't think at least the sell side has broadly started to put China back yet. And like, even if they are free to sell, it would take some time to actually get into the numbers.

They have to ramp up the supply chain again. You're not going to see any of this quarter. It'd be very little next quarter. Maybe you get into the end of the year maybe. But it's not that much in the numbers. And, you know, the stock's been a little weaker recently. I'm not sure how much it is in expectations yet either. I think people are sort of just, it's a waiting game.

I'm sure, Stacey, you hear about it. And a lot of people may, if they don't subscribe to the Financial Times, are thinking, what are you talking about? Well, to cover the Financial Times, as much as you can have a cover these days on the internet, we get it, is basically this story about how Beijing is offended about those comments that we just showed. Yeah, you're rolling your eyes and I get it because I'm one, I kind of also wonder why the story is out.

The comments are a month old, but I'm sure you've heard about it. I've heard about it. And look, I think China has reasons to want to stimulate demand of their local parts. And frankly, I don't think they need to be insulted in order to go down that path. That's the path they're going down. The issues, the local parts are not as good. Frankly, they perform okay, like, because Nvidia's got one arm tied behind their back in terms of the thresholds to which they can ship in terms of performance. But Nvidia has ecosystem and software compatibility. The Chinese have basically built their whole AI infrastructure around NVIDIA. So regardless of what China says or suggests, at least where I take some solace is there is demand for the NVIDIA parts. They want to buy them. In fact, you know, you even mentioned Deepseek. There's been some rumors about Deepseek like R2 delay because they were trying to go to Huawei and it turns out it's actually not as easy to use to use those parts. They want to use NVIDIA. We'll see what they're allowed to do or not. But in terms of the actual numbers for VINI, I don't think there's much at least in the forward numbers

anyway. So anything they can get to Brian, you were saying that it is a month old, but it's a part of the narrative that Beijing has been pushing for quite some time that they are going to become self-sufficient. There was another article from the Niki. They're reporting saying that for example, Shanghai is promising to be 100% self-sufficient by 2027.

Beijing's 70% self-sufficient. So when you have all of these municipalities working together, perhaps it'll be a more cohesive movement. And, you know, out in the limelight and media us talking about it, it's showing that they're, you know, backing down from Nvidia, but behind closed doors, There are other reports saying that those purchases are still happening.

The H20s are so important because they provide such great computational power, even if they're the third or fourth tier version, as Howard Lutnik pointed out. I think Stacey Razgon, in your comments were you kind of implying, and I hope you know what I mean by the term locker room material, right? When two teams are playing and the one team is like, that team is soft, and then that team puts that up in the locker room so all the players get angry and they go out there and win the game. Do you think that's kind of what China is trying to do, stimulate that domestic thing by basically saying, they're insulting us, so we need to do better?

I mean, I don't know if they're saying that or not, right? But clearly they do want to do better. They want to be self-sufficient. We're not seeing this just on the AI side, right? We see this in analog. We're seeing it in semi-cap, right? There's a big push in China for self-sufficiency across the board because they have no choice, right? the U.S. has shown that we have the ability to squeeze them off, like if we want to,

because we control most of that IP. They have to be more self-sufficient. They have no choice, and it will take time, but they're going to put effort in regardless. It doesn't mean that the U.S. guys can't sell or that there won't be demand for the U.S. parts, so there clearly is. But China's going to do what they can. Before we go to, Christina, final comment from you, you're not taking down any Nvidia estimates or price targets on this story.

I don't have any China in my numbers right now. No, we can't, heart less than zero. There we go. But remember, Stacey Razgon, appreciate it. Thank you very much. Christina, we're wrapping up with this. I do want to remind our viewers of a big story that I think Christina Ports and Ivelas talked about a few months ago, which is, remember that whole story about smuggling Nvidia chips for Singapore?

In pregnancy bellies. Literally pregnancy bellies, big lobsters, lot, boxes, cars, whatever it took. You do wonder if China's still buying Nvidia chips. Just maybe not, you know, directly. I'm trying to be politically correct. Deny that it's landing in China. By the way, it wouldn't be Nvidia's fault at all. And then the argument is...

You sell it to somebody in Malaysia or Singapore. You don't know what they're going to do with it. Yes, but the argument is you can't do very much with these individual chips because you need the entire stack. You need the software. You need the servicing. However, you can do a little bit with just the chips if you're a startup, if you're a very small organization.

And we saw even with the deep seat guard, FT talking about using the Huawei chip for inference and the Nvidia chip for training shows that there is some compatibility going forward and I think that's the scary part for invidia the fact that Huawei is still being used on the important level inferencing which is to spit out answers to your questions your queries after it's been trained on a model where is deep seek right now where does it stop we got to go but where is deep seek so there's deep seek a version and V3 he would just put out today but the next R2 model was supposed to

come out there's some suppose there's all this rumors about timeline it's delayed all this because of the not getting the Nvidia chips and then the Huawei chips failing. So there's, you just need to know China is very advanced with a lot of their large language models, open source models. Many of them are coming from China, the ones that are

getting downloaded because they're open source. And so that is a threat to the United States when you have, you know, China showing such strength in AI. Well, it was an interesting FT story. Kind of caught me off guard honestly this morning. It was our interview with the Commerce Secretary. It was a month ago. But I

to say this segment was not the fourth best on this program, at least not yet. Oh, that's because I've been sitting here this whole time, right? First segment. Wow. Christina, I didn't say it wasn't. All right, we are just getting revved up on this Thursday and ahead. Retail route. Walmart shares set for their worst day since April tariffs.

They might be taken a toll. Plus, game on, ESPN launching its first ever all-in-one streaming service. But Alex Sherman says, we're not that big of a deal. Explain why. of NVIDIA, your trader lays out how to protect any money you have made on the stock. If you're in one of those nervous investor camps, we're back right after this. All right. Welcome back. Time for some more really important information for you, the investor, because we got our hands on some proprietary data from interactive brokers showing the most bought

stocks on its platform over the past week. And there are some big names on their, number one, Tesla, to Palantir. Oh, yeah, the aforementioned, Nvidia. You got United Health, widely beaten up at number four, Intel and AMD, five and six. Look at that. CoreWeave, you got Open Door, app open doors, but its own thing, by the way. Now, these are stocks and options that users of interactive brokers have been buying a lot of over the past week. So it's only a week, but it is some kind of tell perhaps on mood and markets.

Let's talk about that and more with Steve Sosnik, his chief strategist at Interactive Brokers. Did I set up that list well? Is that bonds or stocks and options? Well, the list is actually by stock activity. The option activity can vary by the names. Also, in terms of the most buying activity, it's a little bit different because those are the most active overall. Actually, the one with the most net buying was Palantir, followed by Corweave, followed by

NVIDIA and then UNH. You can see a pattern there. Okay, so yeah, so we're showing most, so we, again, let's go back to the graphic. We have most active stocks. Number two is Pallentere. That's active, but it was also the most bought. Yes. Yes. So the most bought was Pallantor. Next most bought was Corwave, which I think was number seven, stuff like that. So it's definitely, but the bottom line is the bigger the hit, the more they were coming in to buy it. And it was vindicated, let's say, in something like UNH where they'd been buying steadily for months, and then Warren Buffett certainly joined the party, and that was very good. But some of these other ones, you know, you do have to wonder when

trying to buy a dip morphs into trying to catch a falling knife. It becomes a little tricky. Okay. United Health, I think, you know that the old Sesame Street, one of these things, just doesn't belong here. United Health is different because that's been falling for eight, nine months. So let's kind of move them to the side for now. The other nine of the ten, I think, Steve, to your point, are it's still a buy-the-dip mentality for investors. Things go down. They come in Dubai. Very much so. And to a point where it's almost reflexive. And we could see, just if you look at the way we traded yesterday, we basically bounced like on cue at 11 o'clock in the morning. We were getting hit hard. 11 o'clock selling stops. And if you look at some charts,

it was right on the Bolliger band for the NASDAQ. I don't want to get too into the technical stuff. But it was exactly where one might have predicted it would bounce if you're using that particular technical indicator. And so it's just, it's become very reflexive to people. It worked on an intraday basis yesterday. If you held overnight, not so much. But so trading's all about timing. Yeah, there's a professor at Princeton. Burton-Malkele.

He was a professor. He wrote a book. Everybody, by the way, should read his book, a random walk down Wall Street. Should be required reading. He actually had an op-ed today in the New York Times saying the stock market's getting a little bit scary. So, or maybe it was yesterday, but either way, sound like when you made your catch-a-falling-knife comments, Steve, sounds like you might maybe not agree, but doesn't also sound like you're not disagreeing. I'm not disagreeing. And here's the problem. I've been asked a lot, is the bull market intact? And yes, I mean, the long-term trends have been in place for so long. It takes a lot to break a market like this.

On the other hand, it doesn't mean they go up all the time every single day being led by the most speculative stocks. And that, to me, is a bit concerning. You know, it's one thing if you're being led by the, which we had for much of it, being led by stocks that make a lot of money. But it's another thing entirely when these, when in some cases they're highly speculative, or have such extreme valuations that they're hard to maintain. I look at Walmart today, which is the class of the retail sector. On the other hand, they sport a 38 PE. There's no room for disappointment if you're that heavily valued. And that's where a lot of the risks are coming.

I'll tell you what, 38 PE would look pretty doggone nice on most of these tech companies. Absolutely. And I'm old enough and I was actually reporting at the NASDA. I mean, it's embarrassed to admit this kind of, but like I was at the NASDAQ when it opened. That was 98, 99. There was a lot of companies that made no profit, zero profit, and the stocks kept going up. You could make the bubble argument, but guess what? They probably kept going.

They eventually crashed. Yes. But they went up a lot longer than a lot of people thought they would. And in some ways, that's kind of the echo this week, which is one of the things that I think got a lot of institutional investors a bit off sides and why we were having a bit of a negative week. There was a report from MIT that says 95% of the companies, the end-use, user companies that have been making AI investments, have yet to see any real material benefit from that. And that in some ways was what kind of brought the internet bubble to a bit of an end.

A lot of it was at the end powered by the Y2K monetary impulse, and then they withdrew it, and that really brought it down. But in this case, but for the next couple of years, there was all, people had to implement the internet. All the great promise of the internet, I will stipulate, came true. It did. It just had to collapse and clean house before and quickly, lot of those stocks traded on what on hope okay some of these are some of these you don't have to name any names but are some of these popular stocks trading at least a little bit on hope absolutely and i think if to pick a to pick a sector i can't do specific names but think of all the money that's going into bitcoin treasury stocks and and other crypto treasury stocks where people are paying

a premium for exposure to something that they could go out and buy themselves either through an ATF or through futures or options or the actual coins themselves. So there is a lot of speculation out there. And I'll let people's imagination run wild, speculate themselves on what companies you might be referring to, Steve Sosnik. Thank you very much. Thanks, Brian. All right, so let's talk more about the Federal Reserve.

What does the bond market really want to hear from Jerome Powell at that big speech in Jackson Hole tomorrow morning? I don't know, but Rick Santell does. He's in Chicago with more in the bond report. Yeah, I'm not sure that the market wants to hear something specific from Jay Powell. I really think it's more the other way around. I think Jay Powell has a bigger issue trying to read the markets. And if we look at today, today was a big day.

Look at twos and tens on a 12-hour chart. At 945 Eastern, we had PMIs, and the PMIs were pretty good. The composite was solid, manufacturing, really Zoom, service sector doing pretty well. and you can see how the charts moved up and yield there. And it isn't only that. It's anticipation. And I guess this may answer part of your question. A hawkish tone is what kind of the markets expect

because they're riding up into the speech tomorrow, what, 10 o'clock Eastern. Now, if we look at twos and tens month to date, very telling chart. If we're above 433, we have a new high yield monthly close for tens. Right now, anything above 377's new high monthly close for twos were already. there and all that's going on, the dollar index just can't seem to get going strong, even though it's turned up just a bit. Brian, back to you. All right, Rick Saintele, Rick, thank you very much. All right, still ahead. We're going to go back to the aforementioned Walmart, raising its outlook, but the stock is falling. We'll find out why. Investors today largely rolling

back shares of Walmarts down now about 5%. After posting its first earnings miss, at least on some estimates in more than three years. Walmart also concerned about tariffs, ultimately rising, raising prices. But let's be clear, Walmart stock still up nearly 30% in the past year. So how much, if at all, do we read into this? Joining us now, Simeon Gutman, he has retail analyst at Morgan Stanley. Simian, was it the earnings or was it the guidance? Was it tariffs or something else? Thanks for having me, Brian. It was the earnings. We didn't get the level of profit growth that you would expect, given the level of sales growth. And I think the prior guess said it well. There isn't a lot of room for disappointment, high responsibility,

high expectations. And Walmart has coached the market that they can deliver both sales growth and profit in the same quarter. This time we call profit growth or flow through was a little bit underwhelming under expectations. There is a story beneath the story which we should talk about, but the headline number wasn't as good as it could have been. What is the story beneath the story then? So they're dealing with insurance claims. This is something that a lot of companies are dealing with higher liability claims, predominantly grocers too.

A lot of employees, the inflation that we've seen, this is almost post-COVID inflation, the magnitude of the incidents, that's been a true up. That's something they're accruing. If you look at the U.S. business, which is their flagship division, their biggest division by sales and by profit, the underlying profit growth or EBIT growth, the way we look at it, was actually quite healthy. It was up 8% if you exclude the liability. I'm not arguing you should exclude it. It's part of the ongoing part of the business, but it's a little bit of a catch-up. So if you're looking at the underlying level of profit,

8% in the U.S. growth on top of 4.6% comp, that's a pretty healthy outlook. That's a pretty healthy outcome. But big multiple, you have to take your lumps when they occur, and this wasn't pristine. Is insurance claim? Is that theft? No, this is a worker liability. This could be accidents. This could be other injuries that stem. Oh, worker disability claims hurt back, slipped and fell, whatever it might be. Yeah, it's a cost of doing business, and it seems to be going up for a lot of So it's interesting you mention that because if you're talking about it, Simeon, it means it's material enough for you to mention. How material of a problem is this for Walmart and maybe others? Well, we're talking 2% U.S. EBIT growth would have been closer to 8% just for this

quarter. If you look at it on an enterprise level, we're talking 0.6% of the, that would have been total around 6%. So it's a pretty big number in terms of dollars. The way it works, it's an accrual, and it's a catch-up. And once you catch up and you're accruing at that rate, it doesn't get you the following year. So in theory, it becomes, we call it a good guy, meaning the comparison in the following year. So they should be able to grow faster in subsequent quarters. That's pretty much the narrative.

Okay, so 2%, not a lot, but it might be that marginal number, enough to either say it's a miss or a make. So where does Walmart go from here? And what role ultimately are tariffs going to play at Walmart? So initially tariff, and that's the other part of the story, the U.S. gross margin was up about 20, 25 basis points in the second quarter. It had been running almost double that. So if you think about tariffs, Walmart seems to be absorbing more of it themselves than the market was. was expecting. The numbers are pretty clear. So that's the role. And I think Walmart is forward investing in a way leaning into price to drive more value at a time when the customer needs it most.

And I think that's another piece of the story, which Brian should drive faster future growth for them. So you ask where Walmart is going. The structural story, which is faster sales growth, faster profit growth, that should be intact. This quarter was a disappointment, a temporal disappointment. If you look at this period overall of faster growth, Walmart hasn't delivered that profit growth perfectly every quarter, but in totality they have. So structurally, the big getting bigger, Walmart growing faster, share gains continue. Okay. And briefly, we talked about Target a lot yesterday for many, many obvious reasons. Is Walmart picking up any target shoppers? The math is unequivocal. They have to be. Target is declining in sales. Walmart's growing in sales, and we're talking by 600-based-s-point difference in growth rate.

So one is putting dollars back, we call it a share donor, one is taking dollars. The customer overlap is there. It's not perfect, but it's there. So by math and given the size of both of these retailers, the answer is yes. Like it. Simian Gubman, really appreciate your views on Walmart. Obviously, critical company and critical index member. Simian, thank you very much.

Thanks, Brian. All right, you're welcome. Coming up, it is game on ESPN launching its first ever all-in-one streaming service. But ahead we'll talk about why it might actually end up costing ESPN customers. What's next? CryptoWatch is sponsored by Crypto.com. Crypto.com is America's premier crypto platform. It is a big day for Disney and ESPN.

They are launching a new app with access to all. ESPN content. But could this actually end up costing ESPN some customers, at least in the near term? Let's talk about that and more with CNBC Sport and Media Reporter, Alex Sherman. Part of your excellent weekly newsletter you wrote about this. I saw that you wrote, well, this could actually cost them customers. What did you mean by this? Yeah, it's a weird quirk about this particular streaming launch.

So Disney has had a sports streaming app for many years called ESPN. Plus that has been out in the market. Today they are launching ESPN, they're calling it, which is everything we've got. It's the entire streaming bundle, and it's $30 a month instead of the $12 a month version of ESPN Plus. Though if you bundle it with Disney Plus and Hulu, those get in for free for a year. So that bundle of ESPN Plus Disney Plus and Hulu has cost you about $18 a month. Okay. So those are your options.

ESPN Plus versus ESPN. Now, what's going to happen... There's a lot going on there, by the way. If you think that's confusing, wait until you're going to know. And we work in TV and we're not, you know, like we know this more than most people. And yet it's still semi-confusing. I called this the confusion era two weeks ago in the newsletter. That's good.

That's good. It's not just them. This is, right. But ESPN is sort of at the tip of the confusion because listen to what's going to happen here. over the next few months, if you're a cable customer, you will be able to authenticate and get this new ESPN app for free if you get ESPN in your cable bundle. That, by the way, that already applies to some cable subscribers.

So charter, direct TV. That's when you get the code. It says go to this website. You put in the six-letter number code. And you can use ESPN's direct-to-consumer app as of today. With that direct-to-consumer app, you get everything that ESPN Plus. had to offer. So if you were a cable customer that got ESPN and you also subscribe to ESPN Plus, you don't need to do that anymore because ESPN Plus now comes with ESPN, which is available

through authentication. So those are the customers that Disney may actually leave. I actually found out that the Sullivan household, and I'm embarrassed to admit this, but don't tell anybody, was paying for Hulu twice. Right. Because we had Hulu in a bundle. Yes. But then we also had it on our own. So you led me right where I was going. No, but I feel stupid saying that. You may feel stupid, but guess what? I think we're headed toward a time period where there are going to be millions of customers that are going to effectively be paying for ESPN Plus twice because they are going to have ESPN in their cable bundle and maybe many of those also subscribe to that Disney bundle of Disney Plus Plus Hulu plus

ESPN Plus for again for $80 a month. And those people will now get ESPN Plus access. good for Disney if somebody's paying two to three times. It does, but that's why they're the same pride. Right. I mean, Disney's not out in front. Here's, you know what? We brought you a steak with your steak, Mr. Sherman. Correct.

So I'm sure they would love it for you to pay it twice. They're not going to advertise that, but there is going to be some apathy and there's going to be, you know, some sort of intrinsic value to Disney among these double payers. I'm sure they're not going to be writing emails to customers saying, hey, by the way to pay it for twice. So you've got to be a time. We noticed that you were subscribed to the same thing twice. So what was today about?

Today was a big interview, Bob Iger, Jimmy Pitaro, head of ESPN, coming on CBS. Great interview with the squawk on the street team, terrific stuff. What was your main takeaway from that interview? This was an interesting launch of a streaming service, because in many ways it's as defensive as it is offensive. Today was about giving ESPN to people from an access standpoint in as many ways as possible. So there's some X millions of people out there.

that have wanted ESPN, that haven't been able to get it because they decided, I don't want to pay for the full cable bundle. So now for the first time ever, you can get ESPN outside of the cable bundle, but it's $30 a month. If you listen to what Bob Eiger said, and guess what, you can because we'll play it for you in just a second. He said, we're not even worried about the subscriber amount. We just want to give ESPN away to as many people as possible. Take a listen. We believe that ESPN should be measured as a whole and not just, look, we didn't break.

out individual channels at ESPN, as if for instance, we never did that. And yet there were many. This is an important component of ESPN and obviously critical in terms of its future. And we think it will have a positive impact. But we're also doing this for our shareholders and also for the fans, for both. And breaking out subs to me is irrelevant. So that last comment that breaking out subs is irrelevant. That's convenient if you're launching a program that's not going to get that many subs and analysts that I spoke to expect ESPN, this new ESPN, direct-to-consumer service, to maybe add 2 million subscribers this year, maybe three. It sounds like a lot.

By the end of 2026, Disney Plus added 10 million in its first 24 hours when it was launched back in 2019. So you're right, it's a lot, but it's not at the same level as some of these other streaming services that launch, but that's the point. This is not the same type of streaming service that launched five years ago. There's a reason it's not launching until 2025. And that's because ESPN has been so valuable to Disney within the cable bundle that they haven't wanted you to give any excuse to cancel cable. 2026.

Because it is 20. You scared me. It's 2025 right now, right? What year is it? It launches today. So I'm saying 2025. Now, you're right. Some of the authenticated subscribers may not get it until 2026.

Though, from what I'm told, if you're a YouTube TV customer or an Xfinity TV customer or a Cox TV customer, you won't be able to authenticate into ESPN today. will, most likely, by the end of the year. Plus, plus, plus. There's a reason this is called just ESPN and not ESPN plus. And that's because ESPN doesn't want this to be seen as an add-on service. As I said, it's as defensive as it is offensive. Stay in the cable bundle. We'll give it to you for free.

We don't want you canceling. But if you don't have cable, here's a way to get ESPN. That's what today's announcement is about. Confusion error. That's what you label. I like that. The confusion error. That's right.

If I say that and I don't give you credit, you can come at me. Must credit Sherman. Must credit Alex Sherman. Thank you. Good stuff. Thank you very much. And do not miss the latest CNBC sport video cast with the aforementioned Alex Sherman. He was joined by the Commissioner of the National Women's Soccer League.

Jessica Berman. Go to cnbc.com slash sport. Or if you're quick, use that QR code on the screen to check it out. All right. Now let's get to Christina Portsnevlos for a CNBC News update. Well, President Trump told conservative commentator Tand Snars that he will patrol the streets of D.C. tonight as his crackdown on crime in the nation's capital continues. The White House confirmed the president will leave the White House later today to thank law enforcement and National Guard troops

that he deployed in the city. The exact timing and location is still unclear. Israeli Prime Minister Benjamin Netanyahu said he initiated negotiations today for a ceasefire in Gaza and the release of all hostages being held by Hamas. Hamas said earlier this week it accepted a new ceasefire proposal by a he said, Arab mediators. The direction comes as Israel officials prepare a ground offensive to take over Gaza City. Netanyahu is expected to give final approval to the plans as early as today. And Apple is raising the price of its streaming service. The 30% bump will take Apple TV Plus from

$999 to $12.99 per month. The company says the hike will take place in the United States and select international markets. Apple said the increase comes as it expands its library of Apple originals. Like you said, Brian, plus, plus, plus. We just keep paying more. We could have done that in our last segment. I know. I was thinking that while I was listening to you guys. But Alex and I were, we were just too busy yelling at each other. At each other. Plus plus plus plus plus. Christina plus and Evellis. Thank you. Oh. Want to get yourself set up ahead of the Fed? Of course you do. I'm going to show you how next. It is all but certain the Federal Reserve will cut interest rates by a quarter point at its September 17th meeting.

We say that because the CME's Fed tool shows an 87% likelihood that it happens. But if you don't want to wait, let's talk about how to get ahead of the Fed. Joining us now in our Market Navigator series, Matt Powers, managing partner of Powers Advisory Group. Matt, thanks for joining us. How do we get ahead of the Fed? Yeah, thanks for having me. You know, on surface, it sounds massive on an absolute basis. There's $7.4 trillion in money market funds.

And we've been, we've seen more than a trillion point over the past 12 months alone. But relative to the S&P, it's about 14 to 15% of the market cap. So it's actually below the long-term average, which is 20%. So I don't see a wall of money suddenly rushing into equities like you hear about. Most of that shift, we've seen in the money market funds over the past couple of years. You know, it's fear-driven. It's not quote-unquote getting out of the market. It's just investors being comfortable with getting an acceptable risk-free yield while they can and knowing it won't last forever.

So like you said, cuts are coming. Our conversations with our clients have centered around where to shift funds as rates fall and, you know, when that risk-free yield kind of comes to a close. So we're focused on four key areas. So just to, you know, here we are to start. Reeked. They get a double tailwind when rates fall. I mean, borrowing's cheaper, property values rise. They also kind of serve as a fixed income or bond proxy.

but we like Prologis, $100 billion market cap, largest industrial reed in the world. Basically, the global landlord for e-commerce and supply chains. You know, think Amazon, FedEx, UPS, 4% yield, 11% annual dividend growth. American Tower, over 200,000 sell towers worldwide. It's the wireless backbone for 5G and data demand driving their cash flows, but over 3% yield and they've grown their dividend well, and they're both trading below their historical valuation levels. So then second, you look at your standard defensive dividend plays like Staples and Utilities,

Pepsi, Dividing King, yield is near record highs, valuations just above the lowest forward PE since 2012. So, you know, company's not broken. They're just out of favor. It creates a good long-term entry point. The next air energy on the utility side. So, you know, that's over 3% yield. They're the largest regulated utility in Florida and biggest wind and solar generator. But same as REITs.

Utilities in general. They have the bond proxy attribute. Last two, real quick. Third is small caps. They're the early cycle winners because they're sensitive to credit conditions when financing costs are out margins on smaller companies improve quickly. And we like the S&P small cap 600 ETF IJR because it holds only profitable small companies and it's higher quality in the Russell 2000. And then, of course, bonds, extend your duration, you know, capture better income, potential price appreciation, VCIT. We like corporates, you know, more upside than the short end.

So that's kind of where we're at. That's what we're looking at right now is we start to shift clients away from their money market funds. and, you know, hopes for better yield. Well, I do, I do love the real world solutions. A lot of, a lot of very good stuff there. Matt Powers, Powers Advisory Group. A little tight today. We've got to leave it there.

But great real world advice, Matt. Thank you very much. All right. Up next, your trader, sounding the warning on this mystery stock, you know, and heck, you probably own it. Talk about it. Coming up. Welcome back.

Let's get a power check on the most valuable public company in the world. InVidia, the only public company right now, worth more than four. trillion dollars and to say its earnings are highly anticipated would be an understatement. Ahead of them, UBS, getting a little more bullish. They just raised their NVIDIA price target today to $205 from $175. But your next guest says a little caution may be warranted. He says if you own NVIDIA, you may want to buy some put options. Now, in other words, a bet against the stock.

Joining Stadr explained, Scott Nation's president of Nations indexes, little insurance on Nvidia, Scott? That's exactly what I would call it because it's a short-term sell. And by that, I mean, Brian, I wouldn't sell it if it meant I incurred a big taxable gain. But it's only 5% from its all-time high. It's done well, as you mentioned, $4 trillion market cap. It's come too far too fast. It went from like $97 to $180 with no stops. And so I think the next couple of months are going to be defined by profit-taking as uncertainty regarding trade tariffs and trade policy really cause a problem for this company. They've just resumed exports after a pause because of tariffs. And so it's a great company, and it's done well, but that doesn't

mean it's to the moon. And so if I owned it, I would be thinking about insurance. If I didn't, I'd be thinking about defined risk ways to be bearish the stock. Wow. What amD, though, a different story. You're saying buy. Well, no, AMAT. Applied Materials is a buy. Yeah, absolutely. And if you want to be buying the companies that make the picks and shovels for the AI boom, then Applied Materials is the company.

Had a really tough time last week, disappointing outlook, both revenue and earnings. But only one of the issues that they cited is really fundamental. Many of the other issues are transitory. and so we can buy at about a 17% discount to where it was 30 days ago, a very reasonable forward PE of 17.5. I'm not much of a technician. One thing I do pay attention to is relative strength. Relative strength of 29 means AMAT is oversold.

And so we get to buy a great company that is really at the heart of the AI boom at a fair price. Yeah, Palantir. We talked about it on fast money last night. I'm hosting again. You never know him. We might talk about it tonight. And Julie Beale brought up that it was a hundred times sales. I mean, even for a company as hottest Palantir, is that too hot? It is too hot. And forward P.E. of over 200. It's just the poster child for the AI bubble. Scott Nations did not have time to get to the fourth GE-Vernova, but maybe we'll get you on soon. To talk more about it, Scott Nations. Nation's indexes. Thank you very much. Until to come, the hot. topic on CnBC.com today. All right, not quite done yet. Before we go, I want to highlight the most read story on CNBC right now, and that is President

Trump's half-billion-dollar fraud fine being overturned by a New York appeals court. If you have not read it, go check it out at cnbc.com. But bottom line, a judge threw out on more than $500 million civil business fraud penalty imposed on President Trump and other defendants, all in connection with a lawsuit by State Attorney General Leticia James. All right, before we go, let's hit the markets, and I see you on fast in two hours. Here are a few stocks hitting record highs right now.

Even on a sort of a mostly down day, the new highs are analog devices, pretty solid earnings there. Northrop Grumman, the defense contractor, request diagnostics, hitting a new record high for the third straight day in a row. All right, folks, thanks for watching, everybody. I'm going to see you on fast at 5 p.m. Eastern time. Closing bell starts now.