Power Lunch - Stocks waver as Wall Street tries to recover from big Tuesday sell-off 9/4/24

Episode Date: September 4, 2024

Stocks wobbled Wednesday as Wall Street attempted to recover from a lackluster start to September. While the so-called yield curve of the Treasury market returned to a normal state. We’ll tell you what it all means for you and your money. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch alongside, well, Kitty Corner from Kelly Evans. I am Brian Sullivan. Good news. Stocks are rebounding after yesterday's big declines. And by the way, Invidia, the most important stock in the world is slightly higher. Not a lot, but coming off the worst day, any stock has ever had in terms of market cap lost. $279 billion wiped out yesterday, knocking Nvidia's market cap down to a measly $2.6 trillion. We'll take the half point gain. But there are real concerns for DVD investors as the stock, Kelly, now down 20% from a recent high. You know what that means? In a bare market? Technically.

We'll talk to Santoli about this in just a moment. What's really a bare market, what really matters here on the economic side, this one's another interesting thing to keep in mind. Tews and tens have disinverted. They've returned to normal, so to speak. That inverted curve we've seen getting right side up. The first happened in August happening again today. after a sharp drop in job openings in the latest jolt support.

That's bad news. That was ahead of Friday's job support. That's what, well, we'll explain later. The beige book is also out Steve Leasman digging through those details, and we will have them shortly. All right, before the beige book, let's bring in Mike Santoli to make sense of NVIDIA and Jolt. So, Mike, we're asking you to do something nearly impossible,

but we know you are the man for this job, which is to combine NVIDIA, the AI stock, with the job opening and labor turnover, survey report, but I know you can do it. Well, I think those are alongside or catty corner to each other as opposed to intertwined. But I do think they are separate parallel sources of unease for this market. So we have this extreme sensitivity to any sign that the economy is stalling and not just slowing. At the same time, the market has been trying to wean itself off of over-reliance on the big mega-cap growth stocks, Nvidia being the prime mover there. Because those stocks are no longer quite

dominating earnings growth as they had before. But this rotation into other types of stocks have been complicated in the last couple days by the fact the economic numbers look like they're a little bit dice or at least they're consistent with the idea that some fear we might be slowing a little more than hope. That's the Jolt's data perhaps feeds into that. I think in general, this is what a soft landing or the path to a potential soft landing looks like, which is constant doubt that the soft landing is going to happen. And you have to test the premise against every incoming piece of data we got back above 21 times forward earnings for the S&P at the highs last week. We didn't quite take out the July highs. Rotation under the surface is quite defensive. If you look at consumer

discretionary versus consumer staples, Staples have had this big run against them. You look at dividend stocks against semis. You've seen those dividend stocks make a move. Does that mean that the economy is in trouble or just that we're kind of trying to stay on a balanced footing in case, in fact, the Fed's rate cuts in a couple of weeks are need to have rather than nice to have? I think that's the debate we're in right now. What do you think the main debate is amongst just macro market investors? Is it the Fed? Is it the economy? Is it where AI and Nvidia goes? I think it's essentially, I mean, almost all these things we talk about what the Treasury Yield curve means or doesn't mean. We talk about whether the Fed would be better to go 25 or 50 or whether, you know, any of that stuff

really comes down to is the economy going to keep growing or is it going to recession? All those, That's kind of like starts and ends every argument. So that still is the debate. And I think we still have to kind of monitor that. I think we still have a cushion. Credit markets seem like they're fine right now. The Fed has room to cut. We're still wages growing faster than inflation at the very moment.

So I don't think it's critical moment. But it's, again, the market was priced for some pretty good stuff. And you have to see if it comes through. And most importantly, we're sinking today, trying to hang on to some kind of rebound. But it's, you know, we've got a couple of hours to go. And we've got the beige book. and Brian could not be more excited. Let's bring in Steve Leesman for those latest details, Steve.

Hey, Kelly, yeah, the Fed's beige book, the collection of economic addictives from the 12 Federal Reserve. Banking districts say economic activity grew slightly in just three districts. It was flat to declining in nine districts. Overall, there is a dark tone to the beige book today. Employment levels, however, were steady. There were some reports of reduced hours and shifts, lower employment through attrition.

However, reports of layoffs remain rare, the Facebook says. Wage growth was modest good news for the Fed's inflation fighting. Non-labor input costs shows slight to moderate gains. Again, good inflation news, but consumer spending tick down in most districts. I haven't seen that in a while. Auto sales varied, but there were some declines reported, do specifically to higher interest rates that come with auto loans these days. Manufacturing activity declined in most districts,

So that's consumer spending and manufacturing. Most districts did report also softer home sales. The economy, however, was respected to remain stable or improve in the coming months. A little bit more unemployment here. Firms were feeling less pressure to increase wages, a greater availability of workers. And you saw some of that in this morning's general. Prices overall rose modestly. There were some increases in both freight and insurance costs.

Guys, we have the economy running. I don't know what you want to call it. two to three percent in the tracking surveys, but this doesn't sound like a two to three percent running economy from this base book. Kelly? And Steve, we often talk about how, if anything, it's kind of a lagging indicator. But this time around, I don't want to call it leading, but it seems a little bit at odd with a broader macro discussion. Yeah, I mean, I'm not on board with the basebook being a lagging indicator. I first learned about supply disruptions from the base book. It was right on the cutting edge. There are things that happen in the economy that

work their way up through this anecdotal process that really can help tell you what's going on. Sometimes it is lagging, but there's a lot of stuff in here. If you read it carefully and go through the anecdotes from each of the 12 Federal Reserve districts, it ends up being, there's some leading stuff in there that doesn't rise to the level and get into the data, but does help you with trends. So what we're seeing here, this consumer ticking down in all districts, manufacturing being weak in all districts. That's not really in the data, so to speak. One more question, Steve. Is there, is this, and is the discussion? broadly, you think, a stagflationary one or simply one of disinflation and a slowing economy?

I mean, I'm curious of what you picked up on. I don't see the stag yet. I still need to be convinced that there isn't growth going on. I'm not quite sure how and why this differs quite so markedly with some of the other consumer spending data we've had. I need to watch that carefully. And the flation part is going away. I mean, that's clear from this thing.

So there is no stagflation in this report. This speaks of weaker growth. And Kelly, this is the problem we've had all along. When stuff slows down to the area where it is the soft landing you were looking for, comes down from here to here or goes up from here to here, depending on what indicator you're looking at, how do you know that's where it stops? And that's where we level out.

And that's really the problem. Today, for example, we got a one-to-one ratio on the job vacancies to the unemployed. Wow. That's a good number. That's where you want to be. It's come down from two, which was way too hot a job market. But we don't know if it settles down at one here, or it goes lower and suggests more weakness or deterioration in the job market.

Yeah. We stick up Michael Sandel. You know, I feel like the beige book is like a Friday pop quiz, you know, that you get in midterm. And it doesn't really mean that much, but it kind of is an indicator of where the final test may be. And if this was a clue, a hint for the Federal Reserve, what would it be? Well, I think it just reinforces the idea that most people in the economy and most investors have moved beyond the inflation question earlier than the Fed has at least been willing to confess

that it has and is very much on slowdown watch and is essentially trying to gauge just exactly how deep that goes. So I think it more just feeds into the same mode we've been in for a while, probably will remain for some time. Look, we get growth scares along the way. Most of them don't really manifest as recessions, but eventually one will. Yeah, I think that's exactly the analysis. Let's bring in Jim Tierney to talk more about this.

He's the CIO of concentrated U.S. growth with Alliance Bernstein. Jim, you hear all this? What do you think about the market? I completely agree with some of the trends that we're seeing in terms of the consumer is weaker. When you go through second quarter earnings reports on the consumer side, yes, Walmart killed it, but Walmart was taking share of high-income consumers. I'm not sure that's a robust statement about what's going on. TJX, great numbers.

But again, consumers looking for value. You look at the negative side of reports, there were a whole bunch of them. My favorite is Lamb Weston sold fewer french fries. People are boycotting French fries. They can't go out. McDonald's had negative comms. Alta Beauty is seeing a lot of competition. All of it is painting a similar picture where the consumer is just holding on, not prospering here.

So I think the slowdown is real. Jim, I'm going to, I'm going to quote my good friend and colleague Steve Leesman and say, I've got to push back on that a little bit because for every retailer that is down and your points are well noted. Look, we got dollar tree, dollar general, 75 cent tree today, right? Same as the general. I can point to you one that's doing great. Best buy stock, multi-year nearly all-time highs. There are not, I can't figure out the consumer or the consumer stock market.

Because for every clothing store that's doing terribly, Abercrombie and Fitch is doing great. This has got to be to me one of the more confused, and I'd love to hear Steve's take on this, one of the more confusing consumer economies I've ever seen. I'm glad you mentioned that because when I look at a target, when I look at a Best Buy, when I look at a Dix, what I'm seeing is huge cost beats, not revenue beats. So that is companies that are executing, yeah, they're doing great. But it's not because the consumer is buying more stuff from it. It really has to do with margin gains.

Oh, Steve, let me quote Dean Mackey as I throw this to you. He's been correctly more optimistic about the economy for some time. So I try to always follow it closely. And he says, despite worries about the health of the consumer, real consumer spending continues to grow robustly. 3.8%, three month, three month annualized in July. 2.9 June fastest pace since March of 2023. He says some people are worried the saving rate is falling.

But household net worth is at a higher level now than any. point in the 70 years prior to COVID. So he would underpin Brian's point. Yeah, and that's what I was talking about when I said earlier that this description of the consumer in the Bayes book doesn't comport with the data, obviously if it seeps in. And I'll side with my colleague from, I think it's Michigan. I think ultimately we say where Brian is ultimately from, that when he says that it's a very confusing time to predict or even understand the consumer in the sense that the consumer has been down for the count, you know, more times than an opponent of Mike Tyson in the first round. And they keep getting back up. And when you have

employment levels like this with income now rising faster than inflation, the question you have is this. Does it take a shock or some mistake on the policy front to keep the American economy from at least potential growth of in the 2% range. I think it does, with the caveat being perhaps the mistake has already been made with the Fed staying too tight for too long. If that is not the case, I do think we can maintain decent growth here with the consumer continuing to spend, though maybe not as much as investors hope. And maybe some of that has to come from prices coming down and margins coming in.

But that's an investment equity story, not necessarily a macroeconomic economy. one. Mike Santoli, what would you layer into this? Well, I mean, I do agree that there are buffers. I mean, household indebtedness is not where you typically see it when you have real stress in the household sector at this point. The other thing from the stock market's point of view is direct consumer spending is a surprisingly small part of what feeds through to aggregate earnings.

It's kind of a business-to-business and a CAPEX and a technology-driven index. And so you can kind of get by with a muddle through type slowish growth. environment. So I still think that we have buffers that maybe we'll have to take advantage of, but it's not necessarily, you know, the wolf's at the door. Right. I do like Jim that you're coming at us with a couple of names that are not the name. You know, there's Nvidia. We talk about these names once in a while. I don't think we've ever talked about amfinal, at least not recently, Cooper companies. These are names that don't get any love or attention because they're not named V-Invidia. Why do you like them? The big tech companies sucked all the oxygen out of the room the last

18 months. Part of it was because of the spectacular earnings growth. But now the market's starting to broaden out. We're starting to see really robust earnings growth from a broader cross-section. Cooper is a great example. They sell contact lenses. They're taking market share from their competitors. People are moving more to dailies as opposed to monthlies, and that helps their business and what had been an inefficiency in terms of manufacturing because they were running at full capacity. They're starting to get some manufacturing gains. So we're seeing margin gains there. So a real under the radar story, if the economy is a little bit weaker, I really don't care. People are still going to wear their contacts if they need to. Amphanol is a sensor and connector

company. Stock really got beaten up yesterday on some fears that maybe they were losing some content in an invidia box. Even if that happens, Amphanol is way more than a data center story or an invidia story, a diversified business. We have more intelligence. We have more content, more sensors, more connectors in everything we're buying and will buy for the next 20 years. So a great story there that I think the market overreacted to one piece of data, and it presents an attractive opportunity right here. I love the new names, Jim Tierney, Mike Santoli, and Steve. It's across the lake. It's more. I've been migrating slowly toward Wisconsin. Or by the way, the musky you're biting. Come and fish with us any time. We'd love to have you up in the North Woods.

Steve Leisman, thank you. Be there. All right. After the break, Citigroup out warning that oil could fall to 60 bucks a barrel next year. Good news for gas, but maybe OPEC has something to say about this. All right, welcome back. Let's talk oil, energy, and geopolitics, because there are really two very different scenarios happening in the world right now. First, global risk is rising. Don't believe us? Let's lay it out. You got Israel and Gaza still raging, if not heating up. You got Ukraine punching Putin back, good, but they're striking oil targets inside Russia with the U.S. asked them not to do. China continues unprecedented military buildup and saber-rattling around Taiwan. In fact, you might have seen the video.

The other day, one of its naval ships intentionally ramming a Filipino Coast Guard ship. And rich with oil, Iran, now close to enriching enough uranium to theoretically complete a nuclear weapon. Oh, and in Turkey, some off-duty U.S. servicemen were violently assaulted by a gang on the streets in the middle of the day. In other words, the world is heating up, but yet oil is cooling off. Right now, oil is down, one and a half percent. It's $69.34. Now negative for the year. And if you're wondering, oil's fall really is for a variety of reasons that include

A disappointing recovery in China's economy, record U.S. production, overproduction from OPEC, at least. For now, the member Iraq, by the way, we're looking at you. And a big, bearish position from oil traders, betting that oil prices will fall even more. And that is not even the entire story, because now we have some new headlines around OPEC, suggesting the group could pause on its plan to add more barrels into the market. So let's dig more into oil and energy with our friend Dan Pickering founder and C.E. of Pickering Energy Partners. We had this all laid out yesterday.

You wake up to these headlines on OPEC, respectfully to my colleagues in the media. I'm not so sure OPEC's going to do anything particularly before the in-person December 1st meeting, which we will be at. How do you read the state of the oil market right now, Dan? Now, Brian, nice to see you. And the oil market's telling us we've got too much supply. And it's much more worried about the near-term. risks to demand than it is about the potential risks to supply. You laid out very well the

geopolitical tensions. Those things might result in a lack of supply. I think the market's telling us with this move below 70 that it's much more worried about the demand side and the risks of OPEC bringing back supply than it is all these geopolitical tensions. So I think the market's going to be fine, but it tests us every three, six months, and we're having a test right now. You know, it's interesting you say that, Dan, because we were talking about leading and lagging indicators with the beige book. And in a way, oil has almost been a leading indicator this year, even as we were getting excited all summer long, the stock markets up, we're talking about kind of consumer hanging in there. But oil demand has not been. And like Brian said, yes,

China is a piece of that story. Do we know what U.S. demand has been like? I filled up for 313 a gallon this morning in New Jersey. And I thought, if that cracks $2, imagine the psychological benefit that's going to have for consumers if this economy keeps chugging along. Yeah. U.S. demand's been mediocre. China demand's been mediocre. Remember that China was 800,000 barrels a day per year for a decade.

They're half that right now. The U.S. flattish from 2019. So prices go lower. Demand will go up in response to that. But, you know, I think the psychological impact of oil in the 60s is likely to keep OPEC off the market. I don't think you're going to get your $2.00 change. Fill up, Kelly, unfortunately. Come on. I'm counting on it. We're turning into what you guys know more than me, the winter blend, right? The prices come down. Let me ask you this, Dan. So Amrita Sen had said a while ago that, and we know from the ISM readings, we were reminded again yesterday, that we're in basically an industrial recession.

but the consumer has been chugging along and their TSA numbers show they're traveling, so they're using jet fuel, they're using car fuel. What is the percentage of U.S. oil demand? I don't mean this to be like a quiz, but that comes from big industry versus the consumer. When you say that demand is weak, is that because we're in a post-pandemic industrial reset, as opposed to a problem that is a broader economic one. Yeah, the split between consumption, Kelly, I was told there would be no math, but here it is. roughly 50-50 between industrial and consumer. Wow. And so they both matter.

I think that the consumer is much more price sensitive in the near term. You know, $20 for a fill-up goes a long way in other places. And so, you know, my expectation is that demand will be okay but not great for the next couple of years. If we have an economic problem, oil is going to have a problem as well. My expectation is we muddle along and supply and demand for oil muddles along. And price stays in this kind of $70 to $80 ban for the next couple years, which is going to be fine for the companies. But OPEC is the big challenge.

Yeah, listen, we had some political headlines out today. The Atlantic saying that the vice president Harris, presidential nominee Harris, is not going to endorse an EV mandate. That may be new news. that's Alex Thompson's Twitter account. Very good guy at the Atlantic. You know, we're seeing these EV mandates get pulled back, and I'm only bringing that up because it pertains to gasoline demand. And if gasoline demand remains fairly high, then oil production will remain fairly high.

Dan, very quickly, you're there in Houston. We'll be there in a week and a half. Look forward to seeing you, which is, will U.S. oil producers, all the shale producers out there, will they cut back on drilling at $69 versus $74, Or does that $5 marginal difference not mean, I think the technical term is squat? $5 won't make a difference. High 60s versus low 70s, it's the same number as it relates to upstream company spending. Take oil to the low 60s, behavior is going to change.

Take oil into the 50s, behavior changes a lot. This industry is focused on generating free cash flow. They will cut their spending to do that. So I think that this is normal volatility unless we go lower. If we go lower, the industry will react. All right. I remain somewhat skeptical that they, whose industry, you know, oh, you think OPEC's really going to react by taking barrels off, you know, maybe at the margin.

They're supposed to add barrels back on over the next year. That's the math. Dan was referring to the whole headline is, will they now pause that plan to add more barrels? Again, if they do, I don't believe it will be before the December 1st in-person meeting because all decisions have to be unanimous for OPEC unless this is a Saudi one-off on their own, which they, by the way, could and very well may do, but I don't. Then you get into the market share. War price versus market share.

By the way, Dan, Kelly's got like six vans to tote her family around, so she needs the price with a two handles. Just one very heavy one. Dan Pickering, thank you. We have big money coming out of big tax. Where is it all going, though? Market Navigator will tackle that question next. Welcome back to Power Lunch, and here's a look at the markets, which can't put together a rebound. They were trying this morning, but we've been in the red since about 1 p.m. Eastern, although only slightly, it wouldn't be too hard to flip back, but it would be continuing this trend so far in September to see these declines.

The S&P tech sector, 11% from the July highs now. The chip sector about 20% below. One big question is, where is all that money going? CNBC contributor Carter Worth, the founder and CEO of Worth charting, is with us live today, Carter to answer. If it's coming out of tech, it's going where exactly? Well, I suppose it can always just not go anywhere. It can stay in cash, and we know that certainly happens whenever a profit is taken, not immediately is always redeployed. But the thought was a lot of large-cap money going into small and mid-cap. And to some extent, that is the case.

But the more pronounced move, of course, is into defensive areas of the market. Utilities, yes, consumer staples, yes, reeds and so forth. But we can look at the current circumstance of money flow, where it is going, in two particular old-fashioned consumer staples, Kelly, Philip Morris, and Altria. Tobacco. You see here on the screen. These are year-to-date charts, right? I mean, that's a very straightforward, you know, the colors, the lines are straightforward.

forward, approachable. Those two big stocks up 35 percent. And one could say, well, but that's the sector overall, but they're double the performance of the sector. The sector, of course, is Costco, Proctor, Walmart, Coke. So those two big ones are doubling year to date the performance of their own brethren. Do you, and it, you know, they have so many issues to discuss from traditional tobacco products to some of the more innovative ones that are constantly under regulatory scrutiny. But when you look at those charts, what does it tell you about this continued performance of tobacco names? Yeah. So to my eye, look, those are very high dividend stocks relative to certainly Walmart or Costco or Procter or even Coke as recently as 6 and 7 percent yields.

And so I think you're looking at the face of fear, right? It's money saying, well, I don't want to be here or I'm concerned about perhaps my tech holdings, but I cannot come out. I'm mandated to be fully invested. And so it's finding a place to go. But is that a really bullish thing? Or is it, again, a fear-based behavior here is a comparative chart to show, of course, those two relative to tech. And tech is up only, what, 9%. They've tripled the performance of tech here today, which is to say, look, I don't think anyone's sitting around, at least I can't imagine, saying, this is the way to win the game over the next two to three years, being long tobacco. These are not growth businesses. They're basically bonds. And so,

it's when maybe to say one's out of ideas or one wants to be really defensive. Let's just park it here. Well, they're basically bonds. It's my big takeaway as we watch the performance of that asset class as well. It's so ironic people say social media is the new cigarettes, and now the money's gone from cigarettes into social media and to some extent now back. Carter, we appreciate it for now. We'll check back in soon.

Carter Worth, worth charting for Market Navigator. Coming up, a direct dispute with ESPN and Disney going dark for millions of DirecTV customers. We will speak with DirecTV's chief content officer about this whole drama next. And welcome back to Power Lunch. Let us hit the latest on the big fight between Disney and Direc TV, because 11 million or so of you Direc TV subscribers have lost access to ESPN, ABC, and more all since Sunday. This after the two could not reach a deal on pricing. And as the blackout enters its fourth day, Disney is claimed that DirecTV continues to, quote, misrepresent the facts.

around ongoing negotiations. So we heard from ESPN yesterday. Let's get the DirecTV side of the story directly with Rob Thune. He is the chief content officer for DirecTV working directly on the discussion with Disney. Julia Borset, of course, with us. And she will kick it off, Julia. Thanks so much, Brian. And Rob, thanks so much for joining us amid these negotiations and this standoff.

Now, just yesterday, ESPN chair Jimmy Patero told me that Disney is offering you flexibility, including the option for a sports-specific skinnier bundle. How do you respond to that? Yeah, well, I mean, we've seen this before with Disney's messaging, and it's a half-truth. They have offered us a skinny sports package to what Jimmy shared yesterday with a broadcast attachment. However, what they fail to mention is that they lace that and tie those rights

to minimum penetration requirements, which are basically contractual terms that force us to carry, the rest of their portfolio to certain levels. And with those minimum penetration requirements, those limit the scope and the reach of the product that we're trying to put forth in the marketplace. Ironically, that was not what they gave themselves in venue, and that came through pretty clearly

in Judge Garnett's ruling in the Fubo case. Yes, I mean, it sounds like you're very much interested in getting the same rights that Disney offered for the streaming sports service venue that was shut down and is now under appeal But it also, it sounds like Disney is willing to offer you those rights, though you're saying they're mandating a minimum penetration. Big picture here, though, taking a step back,

you're dealing in a world where we're seeing cord cutting and Disney's dealing in a world where they're seeing sports rights increase in terms of pricing. How do you see a compromise going forward? What kind of compromise could come out of this? Well, look, I think where we agree is that there's a vast market in between what's available to customers today with a direct consumer subscription package construct and the fat pay TV construct that we live with today.

We think there's a big market for us to participate in, but we need the rights and the rights to not be encumbered by these minimum penetration requirements so that we can make this available to more customers than what Disney's prescribing today. So we think there is a great market between us. They just have to give us more flexibility and the rights they've given us.

And they don't reflect what they were planning to give themselves. And that's what we're calling them out on. Kelly here, I read and I just was curious if you could confirm that people are getting a $20 rebate for this issue as it goes on. As customers call in, we are giving them a $20 rebate. So we're trying to give customers value back that they're losing with DirecTV currently being off with Walt Disney company's content. We do want to try to solve this as fast as possible, but both sides are at loggerheads over this packaging dispute. And, you know, counter to what they've said, they've said that they've given, we're fighting over the value and the rates. We're not fighting over the rates. We're agreed to on the rates.

What we're not agreed to is the flexibility and the number of genre packages that we're trying to put into marketplace. That's really what's at hand here. Well, Disney and ESPN, along with Dana Walden, Disney have issued this statement today saying that they are being flexible. They have offered multiple packages beyond just this sports package. And I have to wonder, given that there's so many other alternatives out there, yes, you're offering your customers $20, but they can switch not just to another pay TV provider, a traditional pay TV provider, but also to a streaming service like Hulu with Live TV or a YouTube TV where those prices may be, lower. Are you concerned about having a meaningful loss of subscribers right now? Look, yeah, we're not going into this thinking that we're not going to lose subscribers. I mean, I would say based on your comment, that was complete Pinocchio. They haven't offered

us multiple packages to the two. As of right now, they've put two on the table and both are limited by these minimum penetration requirements that really render what they're giving us fairly toothless in the marketplace. They are practicing in behavior that, you know, they are cornering the market for themselves. They're not wanting us to participate. And we saw that kind of behavior front and center in the Fubo case. And if you don't believe that, they put a mandate in a deal at the 11th hour that I've never seen before that required us to first have a clean slate where there was no reach back and liability for any claims against the Walt Disney company. Two, to change the venue of law from New York, which would have been the venue for our contracts

for decades, we believe. And then third, a provision where we couldn't bring any claims against them legally. So they clearly are concerned about that. Yeah, but so, Rob, you're saying they're cornering the market for themselves. Are you saying that because they want to be able to distribute or they were hoping to distribute a skinier sports bundle via venue? And they have this ESPN package in the works. But the reality is that you can find Disney and ESPN and all these channels on every single

pay TV distributor that there is. There's no, there's no doubt that these are incredibly widely distributed. So cornering the market for themselves is a little bit confusing to me. The question I have, though, is if you're looking for the flexibility around these bundles and the clock is ticking, given that you have Monday night football on ESPN on Monday night, how are you planning to get to a compromise here? Yeah, what I'm talking about in the cornering the market, by the way, is in these skinnier bundles. They were going to afford only themselves really any runway on the sports and broadcast package. And they gave us a flavor of entertainment that is laced with these minimum penetration requirements, which ironically is not what they gave to Charter, which they told us

firsthand. And they're not letting us participate in the kids and family package that we put on the table to them because they want to keep that for themselves. So that's kind of the behavior that I'm talking about. But of course we're concerned about this. We want to bring this issue to a head. we just need the Walt Disney company to let go of their singular, you know, control over the marketplace in some of these packages, and we want to participate more broadly than being governed by these onerous minimum penetration requirements. And we did, of course, a new kind of deal that Disney struck with Charter about a year ago. We'll have to see if that becomes a model for them and for you going forward.

Unfortunately, we're out of time, but thanks so much. Rob Thune, DirecTV, Chief Content Officer, for joining us, and we look forward to seeing how this is all resolved. Thank you. We hope we could get it resolved soon. All right, Julia, thank you for bringing that to us, our Julia Boreston. Now let's get over to Pippa Stevens for a CNBC News Update. Pippa. Hey, Kelly, an update now on the mass shooting at a high school in northern Georgia.

Police now say four people are dead and nine injured as a result of the shooting at Appalachie High School in Barrow County today. Authorities have confirmed a suspect is in custody. Meanwhile, police are stepping up patrols at Atlanta, area schools in response to the violence. And the White House says President Biden has been briefed. The U.S. government announced criminal charges this afternoon arising from a Russian effort to influence the 2024 election. Attorney General Merrick Garland also detailed sanctions and visa restrictions against the leaders of RT, the Russian state-sponsored English-speaking media channel.

And a victory in court today for Elon Musk's ex-platform. The company won an appeal to partially block a law requiring social media sites to publish their content moderation policies for combatant disinformation, harassment, hate speech, and extremism. X has argued the law violates free speech and forces sites to delete content the state finds objectionable. Kelly? Pippa, thank you very much. Pippa Stevens. And coming up, the Biden administration is reportedly ready to block Nippon Steele's takeover of U.S. Steel. That report has X shares of U.S. Steel down 21 percent today. We'll get a live report from D.C. when we return. Welcome back. Shares of U.S. Steel are plummeting 21% today as new reports emerge that President Biden may be preparing to block the deal with Japan's nip-on steel.

The company's CEO is warning of plant closures and job losses if the companies don't merge. That reflects the share move. Amon Jabbers joins us with more on what's becoming a very hot political topic. Amin, what do you know? Hey there, Kelly. The Washington Post is reporting that President Biden is set to block this merger. soon. Now, I reached out to a White House official this hour to confirm that, but the official will only say that the Committee on Foreign Investment in the United States, which is known as

Sipheus, hasn't transmitted a recommendation to Biden yet, and that is the next step in the process. Notice that the White House official did not deny the Washington Post report, so it may be that the presidential action is coming, but they're not quite ready to say that in public right now. Meanwhile, U.S. Steel CEO David Burrett told the Wall Street Journal today that the company may have to close plants if the U.S. government blocks a proposed takeover by the Japanese firm Nippon Steel. The threat to close a plant in the battleground state of Pennsylvania opens another political front in what is already a highly politicized takeover effort. The deal is opposed by both Donald Trump and Kamala Harris in an effort to reassure American politicians, though. Nippon Steel said today

that U.S. citizens will make up the majority of the members of the board of directors of the company. United Steelworkers Union leadership today denounce the comments by the U.S. Steel CEO, though, calling the company's leadership, quote, greedy and reckless. The union said the deal may enrich shareholders and management, but the merger sells out the future for workers, retirees, the communities, and jeopardizes our nation's ability to produce the melted, poured, and finished steel products that we need for our national defense and critical supply chain. So, Kelly, you can see there, the battle for the unions in this national election is what's reflected here in the battle over this takeover deal by Nippon's deal.

Right. And the interesting twist on all of it is you don't have the U.S. CEO saying, you know, block this. I want to save my company. He's saying, to save my company, this deal has to go through. Right. Yeah, he's saying they're going to bring $3 billion in new investment into the company. He doesn't have the cash to do that. And without that, it's going to hurt the workers. The union doesn't believe that. The union believes that the CEO, his view is colored by whatever payout he might get as a result of the deal. they think ultimately it's better for this company to remain American-owned and independent. Look, politics-wise, though, I mean, this is Pennsylvania.

It's a huge battleground state. You're going to see American politicians opposing this deal. We'll see if we get that block from Sipheus saying that this deal is a non-starter for national security reasons. But there is certainly a lot of politics going on in this deal. The timing now becomes just, it's making it a massive, massive issue. And in a different year, in a different season, it might already be. be a done deal. Who knows? Amen, thanks. Amen Javvers. All right. Meantime back to, of course, NVIDIA, losing a single day record, 279 billion in market cap in one day yesterday.

We're going to trade NVIDIA as part of your three-stock lunch. Thanks. Time for today's three-stock lunch here with our trades is James Demert. He is chief investment officer with Main Street Research. A little company James called NVIDIA that we want to just just throw onto your radar if we can. Stock's down a little bit today, but yesterday, $279 billion wipeouts off 23% from its June high. What's your take on a stock that some may be aware of? Hi, Brian.

This is a stock that investors have another chance to buy. They are eating the lunch and pretty much everybody else in the AI arms race. You know, for very specific reasons we've talked about before, they're early in the cycle of AI. They're the leader in market share by a long shot, AMD, in the far distance. Hyper-scalers are still spending money like crazy. And the thing, you know, the stock's trading it less than 35 times earnings and growing at 40 plus percent with a new product cycle coming in 2025. So, you know, the recent decline, which happened six weeks ago, that recovery was too fast. Stocks, you know, go through two things and corrections.

One is a decline. And also they have to go through time. So we're not surprised that stock's been choppy. And down here, again, this is where you want to add to the position if you don't own it. All right. You're the second person in the last couple hours who wants to pick up on the dip. What about Dollar Tree? Speaking of a dip, they're down 25%.

This is after already being under pressure and cutting the full year forecast. They're blaming increasing pressure on middle and higher income customers. But I don't know. As Brian said earlier, there's been some share moves to Natchian, Temu, Walmart, Amazon. What do you do with this stock? Yeah, I think everyone's eating their lunch. I mean, you know, they've missed here big on the earnings and the revenue. And what's really bearish to us is they've lowered guidance at the same time.

That's a triple play in the wrong direction. We'd be a seller here if we owned it. And, you know, the consumer discretionary sectors, as you both know, it's been a minefield. And Dollar General, you know, same thing. We'd stay away. Even at 13 times earnings, I don't think this is a piece. Wow, 13 times. Okay. All right. Finally, Iron Mountain, not only a wonderful town in Michigan's Upper Peninsula. Oh, here we go. Greenleafs, great wings, home of the world's largest Cornish mining

pumping engine. But it's also a record management company. IRM, the best performer, James, in the S&P over the last 90 days. Wow. What's the trade on Iron Mountain? Go Michigan. I mean, this company is a consistent grower, and it's a diversified data management company. So here you're getting a much more conservative business model, consistent earnings. They be on the top and the bottom again. So the stock is, you know, justifiably has done well. The only worry I have here and our team does is valuation. You know, it's trading at 59 times earnings. People are willing to pay a high multiple for that consistency. So here, we, you know, if we own it, we'd hold it. But I'm not so sure I'd buy into the people. James. Thank you.

Is that why the company's named Iron Mountain? I have no idea, but it's a cool town. Home of Iron Ore. Maybe someday else goes that iron ore. Thank you, James Demert. And thank you for watching Power Lunch.