Power Lunch - Strike & Shutdown, Robinhood CEO, and Power House Road Trip 9/29/23

Episode Date: September 29, 2023

We’ve got the latest on the UAW strike and the government shutdown. Plus, an exclusive interview with Robinhood CEO Vlad Tenev on the future of the fintech company. And we conclude our Power House Road Trip with a look at the most expensive housing market in the country, San Jose, California. 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 alongside Kelly Evans. I'm Dominic Chu. Coming up here, strikes, shutdowns, and stocks. What the labor unrest and the Washington wrangling mean for your stocks and your money. Stocks are falling the session lows at this point as a last chance to avoid a shutdown, get shot down. Plus, as many people head to theaters to see a movie about meme man. We'll talk to a man who was at the center of it. Robin Hood's CEO Vlad Tenev will join us later on this hour, how his client base has changed since the Game Stop Trading Frenzy, Kelly. Yes, first let's get a check on the markets, though, where these are, Dom, correct me if I'm wrong,

fresh session lows. It's down 223 points now, only two-thirds of 1%. And the S&P's only down a half a percent. The NASDAX down less than that, just a tenth of one percent as they look to close out what's been a really tough quarter. The last trading day, of course, on the major averages now giving up some more ground

on those shutdown headlines. Nike still higher today, although down 18 percent this year. earnings last night were better than expected. Sales were short, though, of what analysts were looking for. U.S. sales, its biggest market, down 2%. Still some optimism about improving profit margins and the earlier inventory declines, leading investors to buy today. Nike shares up 7%. All right. And we have Sarath-Sat-Ti joining us on set for the entire hour to help take us through all of this from a portfolio manager's perspective. But we have to start with the two

big issues hanging over the markets right now. Strikes and the shutdown. Phil LeBow is covering the auto worker's strike. Emily Wilkins is in Washington, D.C., following the negotiations over the government shutdown. So, Phil, let's start with you with the latest on the auto side of things. Dom, it's not good. And we're hearing from frustrated executives at Ford. We just heard from Jim Farley. You'll hear more in just a little bit. GM is equally frustrated. That's because we're seeing an expansion in UAW strikes. At a time when they don't believe, they're not is being done by the UAW in terms of negotiations. Here's the expanded strikes. Two more final assembly plants. One by Ford, it's the one that is owned by Ford, the Chicago Assembly Plant.

Then you've got the GM-Lansing Delta Township Final Assembly Plan. Some of the models that'll be shut down, they're not being made now, Ford Explorer, Chevy Traverse, Buick Enclave. You add these shutdowns with the final assembly plants that were put on strike a couple of weeks ago. you now have 22% of the Big Three's U.S. production, U.S. production from the Big Three that is now effectively shut down. Here's Jim Farley from Ford talking about his frustration. A bad deal would threaten now mid-size and much more expensive larger vehicles like Escape and Explorer. We'd have to choose to cut future investments in those products, restructure and reduce our headcount throughout the company, including UAW workers. What's really frustrating is that

I believe we could have reached a compromise on paying benefits, but so far the UAW is holding the deal hostage over battery plants. Take a look at shares of Ford and GM. We should point out that now there are essentially 25,000 big three UAW members who are now on strike at 43 facilities, including five final assembly plants here in the U.S. Meanwhile, General Motors issuing a statement saying that it made a comprehensive counteroffer to the UAW on the 21st last week, still waiting to hear about that comprehensive counteroffer. They're talking, but it doesn't look like they're doing enough of the talking, or at least they don't believe they're getting enough back from the UAW.

Meanwhile, Stalantis was exempted from the discussions or the new wave of strikes that were announced today. The UAW, Sean Fain said during his Facebook live presentation that there is progress being made with Stalantis. But keep in mind, guys, we heard this about Ford last week. There's progress being made. Changes a week later. They now have, they've got another strike that has hit them. And the frustration, I cannot put it into words, just how infuriated members of Ford's management team are. They just did a briefing, guys, and they basically said, look, is this premeditated?

Is this a case where the UAW is going to say, we've decided we're going to be keeping calling these strikes, and yeah, we'll negotiate, but we're not really negotiating. That's the tone that came through during that briefing with executives just a few minutes ago. Wow, absolutely. Phil, stick around. We're not done yet. Let's get over to Capitol Hill as the effort to avoid the shutdown seemingly has failed,

Emily Wilkins. What's the latest? Well, Kelly, if there is a 95% chance we were going into a shutdown this morning, I'd say that that chances around 99.99%. The House voted today on their stopgap measure. This is one that McCarthy was trying to get all Republicans on board with, but that did not happen. 21 Republicans joined with Democrats in sinking the measure, and this means that McCarthy is going to have to find a bipartisan path forward. He cannot end a shutdown without appealing to House Democrats.

Now, that bipartisan bill that we're talking about, that could come out of the Senate, Remember, they are working on a plan that would keep the government funded for 45 days. It would also include currently at least some aid to Ukraine about $4.5 billion. But it wouldn't include any border security provisions. And that is what McCarthy says needs to be in that Senate bill for him to bring it to the House floor. And senators are listening. You have a group of them that met yesterday trying to talk about what, if any, border provisions, could get the support for both Democrats and Republicans.

One thing McCarthy mentioned today is that you could potentially reinstate policies that you saw under both the Trump and the Biden era, slightly different policies, but they boil down to those wanting to come into the U.S. seeking asylum, would need to wait in Mexico or other countries until they get that approval. But at this point, the Senate bill isn't going to pass until Monday at this point. And House, we don't really know what the next step is here. Republicans will be meeting a little bit later this afternoon to huddle and figure. out where the things stand. But at this point, it is clear that the Republican plan is all but dead. And now it's just a question to see where the Senate goes. Emily, okay, let's say a shutdown happens hypothetically. What does that mean for government? Okay, so here it is. Then what does it mean for government workers in essential areas? So for all government workers, all two million of them

plus another million or so members of the military, it means they're not going to get paid for as long this shutdown lasts? Now, that could be a week, that could be two weeks, that could be a month, we don't know at this point. And if you're an essential worker, you're gonna have to keep working and showing up for work. And the number of workers, it's up to each agency to kind of deem what things they will do,

what things they won't do. You'll see certain services continue, people will get social security checks, Medicare and Medicaid will continue, but you might not have a jobs report next Friday because those who collect that economic data are not considered essential. And then of course, there's a question

government contractors. There's a number of them out there. Some will be able to continue working with pay, but others either won't be paid for the duration of the shutdown or they won't be paid at all. It's a big question. There's a lot of uncertainty here in D.C. And I think the biggest question at this point is how long does a shutdown last? The longer it goes, the worst things tend to be not just for workers, but for the economy. All right, Emily, thank you very much. And Phil, we've kept you around because one of the biggest pain points and certainly the pressure point last time 10 years ago was that TSA workers should still work during a shutdown, maybe get paid later. But if they don't, it could cause major problems at airports. Is that right?

Not just TSA workers. What do you do about air traffic control operators? You know, this has the potential to really bring traffic down at airports dramatically. And we've seen this in the past. We saw it in 2019. We saw it about, what, about a decade ago. That's the bottom line. You are asking people to continue working without being paid. And what we've seen in the past is some will do that, but a lot of people will be like, why am I going in? I'm not getting paid? Yeah, you know, and you can't blame them. I mean, that's the frustration that the people who work for the federal government have if there is a shutdown. Right. And Phil, is there anything else that you would add in terms of the fallout, the broader impact if this does kick off this weekend and then

drag on for maybe more than a couple of days or weeks? I think if it goes on for, let's say, more than five or six days, then you're going to start to see a lot of the problems that we've seen in the past when there have been government shutdowns. And you start to see traffic slowing down, especially at the busier hubs or TSA agents not showing up for their jobs because they're not being paid. They think there's a real potential for that. All right, Phil, thank you. We appreciate it. We'll let you go. A very busy day. Philabo covering that for us. What do all of these strikes and now the shutdown mean for the markets? For that, we turn to Sarat SETI, as Dom said. He's our guest host for the hour.

Welcome to you. Managing partner and portfolio manager at DCLA and a CNBC contributor. Ron Insana is also here with us, CNBC senior analyst and commentator. He's chief market strategist at Dynasty Financial Partners. Who wants it? Sarat, what do you think? What do you think? I mean, I think in this short term, it's a wait and see.

But as this extends, you've got a lot of headwinds going on. I mean, think about the people who aren't getting paid and if they have student loans, right? Oil prices are higher. Do I really need to drive to work? Saving rates are going down. You kind of hit the top. So all that starts building on each other. So you kind of get the multiplier effect going in reverse.

And then the feds kind of look at this and say, what data do we really use anymore? Because it's not really representative of what's going on in the economy. Do you think November's out the window at this point? Like there's no, and it's interesting, if one of the last reports they get was the PCE this morning showing cooling core inflation, it feels like that's just going to add to this idea of better safe than sorry and wait. Yeah, and then if demand starts slowing down because of something like this, I think you're going to have that kind of naturally fall into place. But the question then will be, you know, if the Fed even starts hinting of, hey, we're going the other side.

Really? Cuts? The markets would hate that because now they're saying the Fed seeing something we don't really see. So you're kind of stuck in a quandary. So maybe the best bet is don't do anything. And we should add, by the way, the Fed itself is not part of the blackout. So any data that comes from them like industrial production or Fed Speaker, this, that whole apparatus keeps running.

So, Ron, that's a good point because if you take a look at what's happening right now with regard to the overall pace and the overall kind of macro backdrop, this is very much about an economy that is maybe still on solid-ish footing. It's certainly not growing at a hyper pace. Maybe these strikes and shutdown issues will tap the brakes further on the economy. So what does it all mean about whether or not the economy? the markets are going to hold up relatively well, given the fact that this might actually be, in some perverse way, a good thing for interest rate policy in the future.

Yeah, I'm not so sure about that, given what New York Fed Chair, John Williams said today, or President John Williams said today, saying hire for longer. My good friend, Dan Niles, stole my thunder a couple days ago. I was going to write a piece about having gone Goldilocks three months ago and now facing more than three bears. He used that yesterday, I believe, on CNBC. That's pretty good. Look, we have more than three bears.

We have a shutdown. We have strikes. We have the Fed staying higher for longer. Diane Swank, economist noted earlier this morning that with net exports being revised upward, we could see third quarter growth near 5%. So that's not going to push the Fed to lower interest rates, even if we have a government shutdown. There's just now so many variables, so many, you know, at least near-term negatives that

we're still in the window in which, from a seasonal perspective, stocks are typically quite week. So I don't see that changing in the next couple of weeks. We're going to need resolution to a lot of these problems before we can make any, you know, clear-eyed statements about where we go from here. Quick shout out to Nancy Lazar, Ron, who was talking about the three bears before they have kind of started to materialize here. So there's been a sense that, you know, Q4 to quote Goldman might be a pothole. But if you had to say the market today selling off on the government shutdown, you know, is that a buying opportunity at some point? You know, when you see rates having backed up as much as they have. Is that a buying opportunity? Or do you still wait it out on the sidelines?

Well, I mean, we haven't really been, you know, talking about the sidelines for a while. We've been talking about owning quality. We've been talking about owning short duration treasuries and the like over these last many months. I think a buying opportunity will emerge at some juncture. And maybe it's going to be, you know, a quasi-crisis-induced moment in the month of October. For whatever reason, you know, there's still a lot of other, you know, geopolitical risks out there. there are a whole host of things. October is typically a month to a bottom, at least from a seasonal perspective. And maybe the Fed's not going to stay higher for longer if something emerges that is that's kind of spooky. I think it's a tough call here. This is not the easiest environment

in which to make, I think, blanket statements about the economy, the direction of stocks or interest rates. So, you know, I'm cautious, you know, looking for a window in which you might want to get, you know, long. But I think it's, whether it's Nancy, whether it's Dan or whether it's myself. I mean, and you can count however many number of bears you want. There are a handful out there that are, I think, are getting in the way of even a tradable balance, at least for the next several weeks. And there's also the risk, by the way, of a downgrade from Moody's if the government shuts down. That's just something else to throw on top of the pile. All right. So, Surat, the times that we've had government shutdown issues loom and linger over the past decade and a half,

have come in ultra-low interest rate environments where rates were not threatening to go higher or have gone as high as they have in a short amount of time. Does that then make this government shutdown showdown worse in terms of a possible market impact than the ones that we have seen numerous times for continuing resolutions over the course of the last decade? I think if the shutdown goes longer than a few days, it could be because one of the things people will do is move out of equities into bonds. because you actually have another alternative now. But that then lowers interest rates. Right.

Hopefully. Probably cheap rates, though, right, Sir? Yeah, probably on the short term, but then that kind of plays around with your inwarded yield curve as well. But you could get, and you get Algos coming in, take money off the table pretty quickly and just say, hey, and to Ron's point,

that's a good buying opportunity because fundamentals are still strong. And if you look at kind of across the market, they are going to be some really good opportunities. There are opportunities today, especially when you look at how bifurcated the market is by itself with seven stocks leading, you know, the whole S&P this year.

So if you're fully invested, I wouldn't panic at this point, but if you're cash on the side, I think you're going to see some potentially good opportunities the next couple weeks. All right. We'll talk more about that in a bit. Ron, thank you very much. We really appreciate it today. Ron and Sana Sarat is sticking around for the hour.

Still to come, Robin Hood's CEO, Vlad Tenev, is about to join us with that stock up 20% this year, but nowhere near the levels right after its IPO a couple years back. And a power check as we had to break, Walgreens, the second best stock in the S&P on reports the company is close to naming a new CEO while Carnival the worst. Reporting results, investors seem to be focusing on that weak fourth quarter guidance as worries grow about the economy. We'll be right back. Welcome back to Power Lunch. Markets are trying to end the quarter on a high note, but with all the headwinds from the shutdown to rising bond yields,

interest in alternative assets like gold is growing. Our next guest has a great pulse on the retail investor. Here for a Power Lunch exclusive is Vlad Tenev, Robin Hood's founder and CEO, joining us from Robin Hood headquarters in Menlo Park, California with our very own Kate Rooney. Kate? Hi, Kelly. Thank you so much. And Bland, thanks so much for having us. It's great to see you in person. Thanks for coming down here. Always a pleasure. So Robin Hood is coming up on a 10-year anniversary. This company, a lot has changed in the time that you founded this company, especially in the last two years. The macro backdrop has changed.

Retail traders have slowed down significantly. This company really was built on the foundation of individual traders, that's dried up in a lot of ways. How should investors think about the next 10 years for Robin Hood? And what's your game plan when really the market has changed so drastically? Well, we've always had the long-term vision, not just of being a trading app, but being the best place for customers to manage their finances holistically. And during COVID, we went through a period of exceptional growth. and we were known in the press and media for individual trading.

But if you look at the products and the opportunity, I think Robin Hood is just very much in the beginning. There's a gigantic financial services industry that's waiting to be disrupted beyond just investing and trading. You're seeing that with our entry into products like retirement, where we're offering a 1% match, 3% match on contributions, if you're a gold, if you're a gold customer, along with 4.9% APY on uninvested cash. So these products both have allowed us to adapt to the new environment and give customers

incredible value in a high-rate environment, while also moving Robin Hood along on our long-term journey of actually being the best place to hold all of your assets and all of your cash. Is that going to drive shareholder value? is below 10 bucks it was trading not that long ago above 40. How are you thinking about recapturing some of that growth? And is financial services enough of an opportunity in terms of margins and just getting back to really the heyday of Robin Hood? We think about when you went public. Yeah. I mean, obviously interest rates have had an effect on the overall valuation picture, not just for Robin Hood, but for FinTech and growth stocks in general. And what's exciting for me

is that we're very much at the beginning of the journey here. I mean, Robin Hood is still only in the US, and we're doing, we have ambitious plans to be all over the world and expand internationally as a software company, not as a brick and mortar institution. We want to build these deep relationships with customers and have them trust us with their retirement savings. And our retirement product just crossed

a billion in assets. Of course, that's pretty incredible growth in just a few months. But if you look at how big the retirement industry is in the U.S., there's tens of trillions of assets there. So as we look towards the future, we think we've barely gotten started. I think that Robin Hood has much, much more growth left to do. So Kelly's got a question for you, Vlad. Kate, thank you. And Vlad, yes, it's Kelly here. And appreciate, you know, kind of going from being the meme stock platform to helping people save for retirement is probably a service society. So thank you. But my question is about credit cards. What are your plans in this realm?

How big and important a business line could this be? And do you worry about getting into the business at the peak of the cycle? We're very excited about credit cards. We think that that's an industry and a market that is waiting to be disrupted as well. If you look at the space right now, If you are a high net worth individual, someone with millions of dollars in your bank account, you actually have access to great credit, great rewards, great perks, excellent quality cards, but for the vast majority of people, those services are inaccessible. So we were proud to have acquired a company X1 with a very, very motivated team, excellent product people. and I think the DNA is right for us to partner together

and deliver a great Robin Hood credit card for customers. So I'm excited to show that to you guys when it's live, but I think we've got something very special in the works. And, Vlad, it's Dom here. One of the things that you look at in terms of Robin Hood's vision, I guess, that you have for it, is to become more all-encompassing with regard to financial services for all of the clients that you have out there.

Is there going to be perhaps a focus on trying not to lose focus if you're going to branch out into all these different types of platforms and different types of offerings? I still think of Robin Hood in some ways in terms of crypto. We've seen that fall off quite a bit. What exactly then does keep the focus at Robin Hood in place? I think it's really two things. So when you think about a Robin Hood product, I think our unique differentiators in the market are our use of technology. which allows us to dramatically lower the cost that we offer to customers for our services

and the focus on customer experience. You know, Robin Hood was the first financial product to win an Apple Design Award and really introduced the idea that user-centric user experience and design had a place in the financial services industry. And you've seen that in our stock trading products, you've seen kind of that thread in crypto,

you're seeing it with retirement. You know, retirement before Robin Hood, it was inconceivable to get a built-in match in an IRA product. You only heard about those types of things for 401Ks. And with credit cards expanding internationally and other products like advisory, I think Robin Hood's perhaps the best positioned company in our space to take advantage of the tailwind of technology

and user experience to deliver great products. to customers. And, Vlad, we've seen this boom in options trading among retail investors. That's an area that you're moving into. What impact do you expect that to have? And when will you have the options and derivatives side going and up to speed? I just wonder what you're seeing in terms of the appetite for derivatives and options, which also kind of signifies risk-taking on the retail trading side.

I wonder how you think about how you're positioning there and then what that says about the individual trader. The big part of our offering is serving active traders. So, of course, we're serving individual investors and novice investors with our stock trading and retirement offerings. But if you look at kind of the value of low costs and zero fee per contract options trades, that's very unique in the market. And so you have all these people that are extremely sophisticated and are,

employing these hedging strategies for whom paying 65 cents a contract at, you know, a brick and mortar brokerage house competitor is unpalatable. You know, if it's 65 cents a contract and you're trading even 100 contracts, that's, you know, a significant amount of money. That's $65 for that trade. So being able to save that, I think, has led to Robin Hood in a relatively short amount of time being one of the largest options brokers and options trade. platforms out there. So serving our active traders is definitely an important group and it's really where we can test out some of the, we can push the frontiers of innovation in investing and trading. You can kind of see that more recently with 24-hour market. Robin Hood became the first

brokerage to offer 24-hour trading of individual named stocks in the U.S. So we've expanded that offering now we're up to close to a hundred stocks and you know we'd like for our active traders to actually make it clear that if you're not using Robinhood you would actually be at a disadvantage because you wouldn't be able to manage your risk as effectively on another platform things happen after hours and to be able to respond to them and effectively manage your risk is a huge differentiator that you just won't be able to find on other platforms big boost living on the west coast having to trade East Coast Hours. And last quick one, you have not seen dumb money. Is that right? I have not seen dumb money yet. You have plans yet? You're going to see it at some point?

I'm very busy actually doing work here, so it's hard to find time to see movies. I'm sure I'll see it at some point. Yeah, and hopefully some of it's true. Fair enough. Well, leave it there, Vlad. Dom and Kelly, I'll send it back to you. Thanks. All right, Vlad, Tenniff. Thank you very much at Robin Hood and our own Kate Rooney for sure. Great interview for sure. Coming up on the show, we'll get the latest on the bond market after a key measure shows inflation is actually easing, perhaps. Plus the Ryder Cup starts, a new bidder emerges for the PGA tour, and Surratt is here, of course. Three good reasons to talk about golf. We'll be right back after this. Welcome back the 10-year Treasury yield pulling back from those 15-year highs today after the core

PCE, the Fed's favorite gauge of inflation, showing some signs of easing. How significant And is it? Let's ask Rick Santelli. Hi, Rick. Hi, Kelly. You know, I've been reading all the articles and listening to all the Fed speak. And granted, if you look at month-over-month, PCE core deflator, it was up 110. So you could extrapolate that and you could draw some very optimistic lower inflation conclusions. But I still am looking at this chart, okay? This is a 10-year chart of the year over year number, which for the first time since CEP of 21 is now below 4% at 3.9. And I understand the 1 10th month over month, but I still look at this chart and I see that we're nowhere near 2%, and I still don't think there's any guarantees we're going to get

anywhere near 2%. So I look at that chart and say we've made progress. And now many are going to look at that and the light bulb's going to go on. Hold higher for longer to see if we can bring that chart to where it was pre-COVID. But I still have questions whether we can. And when I know that it's a core number, I think, as we discussed this morning, that many things flow in from other parts like energy into the rest of the economy that will be included in core. Now, look at a two-day attention, pointed out 468 yesterday, highest since 2007. But we have reversed. And there's a lot of technicians that think we put in a short-term top here. I would 10 to agree. Same for Boones. Yesterday, boons had a level just shy at 3%. That's the highest since 2011.

Now, let's look overseas a little farther. Let's look at the JGBs. Does anybody out there realize that they closed today at the 10-year highest leal? They were actually at three quarters of 1%. But yet that still didn't help the yen. You would think like the dollar getting strong as our rates continue to go up. But the dollar yen is still hovering right around that 149 and change. It gets much above 150, you'll be looking at the weakest yen in 33 years. Kelly, back to you. Wow, weakening currency, rising interest rates. I hope Japan's not once again a template for the rest of us. Rick, thank you, and let's get over to Courtney Reagan now for the CNBC News Update. Courtney? Hi, Kelly. Well, police in Pakistan, seniorly 60 people were killed today in suicide bombings at two mosques, who are worshippers

were celebrating the birthday of the Prophet Muhammad. No group has claimed responsibility for the attacks, but the bombings took place in two provinces. that have been the target of Islamic militants in recent years. President Biden honored the outgoing Joint Chiefs of Staff Chairman Mark Millie and a ceremony today. Melly took a veiled shot at former President Donald Trump during his own speech, saying troops do not want to take an oath to, quote, a wannabe dictator. The comment came just days after Trump suggested on social media, Millie should be put to death.

The Navy is about to start randomly testing its special forces, including Navy SEALs for steroids and other performance-enhancing drugs. The Navy Command said today four units will be randomly selected each month, and 15% of each will be tested starting in November. The Army said it will soon follow suit, but it hasn't set a start date yet. Kelly, back over here. All right, Courtney, thank you very much. Still to come on Power Lunch, the final stop on our real estate tour across the country. Today we visit the most expensive market in America, oh yes, San Jose.

And we've picked up a hitchhiker. We'll find out what a million dollars buys in the heart of Silicon Valley is he, I thought they were going to have Sarat. And we've got two hitchhikers. We've got Dom and Sarat. We're all heading out to Silicon Valley next on Power Lunch. Welcome back. It's the final day of our powerhouse road trip.

Getting an in-depth look at what's happening in different housing markets around the country, including it especially these days, just how far a million-dollar budget really goes. Yesterday, we were in Albuquerque. A million bucks goes pretty far there. Today, we're heading out to San Jose where not so much. It's number 37 of the top 100 metro areas by size. And, you know, our hiker, Dom Chu is along for the ride. Prices are up more than 5%, nearly 5% from last year with a median, median home price of nearly

$1.5 million, according to Zillow. Here to tell us more is Anna Fine of Coldwell Banker. Anna, it's good to have you here. Welcome. Hi, Kelly. Thank you for having me. How my understanding, correct me if I'm wrong, was that the market out there actually had a tougher maybe 2022, but has since rebal, or firmed up somewhat. Is that right? Or has it been strong all along? That is correct. We had a little bit of a downturn end of 2022 as the rates continue to rise.

But starting this year, it seems like we are back where we were. And it looks like buyers just got used to the new rate. And we are back at super competitive market and a strong seller's market. So now, okay, let's talk about strong sell. So a million and a half dollars and an 8% mortgage equals what per month exactly? How are people really financing or affording these homes? So I have to mention that our market is unique in many aspects, but one of the unique aspect of our buyers here is that they are highly stimulated by the stock market. So if stock market is performing well, we have more buyers, and they are able to afford high monthly payments. So primarily we do see people put 20% or more towards down payment.

We do see a lot of cash buyers as well. So people can still afford. I guess most of the buyers are in tech industry and their income tend to be higher. So it is still an option for them. So when you look at the houses being sold, is there a difference that you're seeing when interest are really low where people were saying this is going to be contingent on a mortgage versus not? And when you look at the mortgages, are they taking out fixed rates or are these much more variable now?

People are taking fixed rates or it actually varies. I don't see any specific tendency. As I said, we are not as much stimulated by the interest rate as more of us, you know, what is a stock market doing. But what I've noticed, the biggest difference is, yes, the market is still competitive and we see multiple offers, but it is not as much as we saw before the interest rate increase. So before the interest rate increase, we saw 20 offers on one home, non-contingent. Today we see in two to five offers. And most of the times contingencies are waived fully, including mortgage contingency in our market.

Anna, it's Dom here. The reason why I'm hitchhiking is because I'm a northern California native. I was born and raised in the Bay Area. but when I was growing up, it looked a lot different than it does right now. So please take us through what the quote-unquote million-dollar home looks like in San Jose, California today. So $1 million is not going to buy you much here. It will be very tough to find a single family home for $1 million. This home, for example, that we see in right now was sold for 1.64.

This is a pretty average home, 1,300 square foot. It was built in 60s, pretty standard, nothing special. It is not a luxury home. It is very modest average family home. So, yeah, a million dollar probably will get you a modest town home. How many bathrooms? 1.7 million dollars for 1,300 square feet. Three bedrooms and two baths.

Is this the top, Anna? Can it ever go up from here? This has got to be it. I know people have been calling a top for maybe 40 years, but this has really got to be it. Well, I have to say, we still saw prices increase. So this home was sold in May, and since then, we still saw a little bit of price increase, even when the rates continue to rise. The demand remains very, very strong, and we have a lot of people who want to live here. All right. Anna Fine, a Coldwell banker with a state of play in the Bay Area, really. estate market. Thank you very much for wrapping up our road trip across America. Thank you. Thank you for having me. All right, Kelly, we've got a lot to talk about here. Boy, don't we. Coming up on the show, we'll look back at all of the housing markets we hit this week and where you can get the most bang for your buck in this high-rate environment. It's all coming up after the break. Keep it right here. All right, welcome back, everybody. Now that we've been around the country on our powerhouse road show,

talking to realtors about their local markets, let's recap what we learned about what the money really gets you in real estate these days. Our first stop was, was Poughkeepsie, New York, one of the hottest housing markets in the country. Their $750,000 bought us. Remember this? This was a beautiful property. 3,100 square feet, dom, four bedrooms, two and a half baths. Seemed like pretty enticing. Then we headed out to Dayton, Ohio, got away from the tri-state area, your money goes a little

bit further. 1.2 million granted a bigger budget, but also twice the house. 6,000 square feet, five-bed, four bath. Tyler really liked the saltwater pool, by the way. A little different as we headed down to Duff. The fourth largest market in the country where almost a million bucks only gets you a townhome. Three bed, three and a half bath. Very nice. updated. I think it was an Airbnb sale, 2,300 square feet. And right in downtown Dallas. All right. So in Albuquerque, New Mexico, we saw a $1.4 million house,

3,600 square feet, four bedrooms, four baths. But compared to our Dallas town home, This one was 2.5 in terms of the acre lot that we saw sitting on. So that's big. And we just heard our last stop was in San Jose, the most expensive housing market in the country right now. For $1.64 million, you get three bedrooms, two baths, and a lowly 1,300 square feet. Two bathrooms. 1,300 square feet. Yeah.

All right, let's compare apples to apples. Here is the price per square foot for these five houses. Our realtors showed us. You can see Dayton, Poughkeepsie, roughly even $230, $236 a square foot. Dallas and Albuquerque, surprisingly even. But remember, the lot size in Albuquerque had a lot to do with that. Those were upwards of almost $400 a square foot. And out in San Jose, forget it.

Surat, $1,200 a square foot. Which one would you rather? As a value investor? I'm not sure you want to go to San Jose. Yeah, well, that actually wraps in with what you think about. Do you ever really think Google's going to deflate? I mean, it's hard to fathom. I mean, look, we just have to go back to whenever you get these crises, right?

In 1999, when everybody thought the tech stocks were going to come down, financial. And you're sustaining these at, like you said, almost 8% interest rates. So there are a couple of things to watch for here. I think, you know, maybe you get the isolated bubbles like San Jose, but the rest of the country, when you get all these arms coming off. Adjustable mortgages. When people finance in the last three years at two and a half, to three and a half percent. It's triple what that is. So your monthly payment is going to be,

you know, almost triple at that point. And then you're going to reset at that point. And depending of where we're on the economy, I mean, you know, to your point about credit cards, we're kind of at the tail end there, where are jobs going to go from here? So I think you're going to have to watch and see kind of what does credit look like? And then who's going to be lending? Yeah. Because if the regional banks are pulling back in terms of lending, where the mortgage is going to come from? Those are all very objective ways to look at it. But, you know, when I was growing up, about in the Bay Area in California, the prevailing conventional wisdom was you went out there, you paid the cost of living, you paid the higher relative taxes for the lifestyle and the weather,

so to speak. I mean, I say that tongue and cheek, but you kind of get the point, right? It's flooding here. It's a great part of the country. It's beautiful. The weather's relatively nice and everything else. But now you've gotten to a point where some people may be making a choice. even Target, you know, three of those nine metro areas where there are closing stores due to retail theft, Seattle, that metropolitan area, Portland and San Francisco. So there are choices being made at some point down the line by people about whether or not it's still worth it to live in a place like California, right, Surat? Absolutely, and what does that tell you about the long-term kind of prospects for real estate in some of these areas? because you start getting more sellers than buyers over time, that's just going to put downward trend on housing prices.

So you have to be very careful. And new homes getting built. People want to do that. During COVID, especially COVID, you saw the big migration down south. That's not stopping, right? People are still moving to Florida. They're moving to taxes are important. Your state, you know, almost like New York City, 14%.

So over time, and if interest rates stay where they are or even higher than the 2.5%. I think you just have to be careful that when you look at a home, You're not just saying I'm doing this for investment purposes only. For sure. For sure. Nice to hang your hat. Yeah. All right, coming up, guys, on the show, we'll get the Bo's CEOs read on the potential customer slowdown that we're seeing out there.

Power lunch is back after this break. Today is the last trading day before the fourth quarter when consumer electronics companies need shoppers to open their wallets. Today, John Ford brings us up close and personal with CEOs whose company's products eliminate as much buzz as they create. and this name has been synonymous with audio files for a lot of years. It sure has, Dom. Lila Snyder is the CEO of Bose, known for its speakers and headphones. The company is going to be 60 years old next year. And Snyder has been retooling the company for the post-COVID digital era,

updating the supply chain, speeding up product development. Snyder, a mechanical engineer, is used to getting under the hood and making changes. We grew up in a house where we tinkered with things, we fixed things. you know, my sister and I would learn from my dad how to do all of those things. And it was a natural curiosity and interest in how things work and a love of math and science that kind of came all together to become engineer. My sister is a mechanical engineer and so am I. Oh, nice. So what were you fixing? What was your dad most interested in tinkering with that he also shared with you? A lot of cars. We definitely knew how to do all the basic maintenance on your car I can do.

and, you know, a lot of car restoration and, you know, but also fixing the washing machine and, you know, putting new siding on the house and sort of anything that needed done was part of what we learned how to do as kids. And now, Bose is continuing its expansion from noise-canceling headphones into earbuds with new spatial audio technology that places instruments in virtual space around you, surrounding you if you're stationary, or staying ahead of you if you're moving. To compete with Apple, Google, Amazon, and others, Snyder says Bose has to move fast. How do we increase the rate and pace of getting innovation out of our labs and into the hands of customers? And I think you're seeing that from us, right? Just a year ago, we launched our Quiet Comfort Earbuds 2, and we're here 12 months later talking about a new product in the earbuds space that replaces that one and brings new and exciting technology.

And so that pace of change and the pace of bringing, new innovation to the market is a real focus. As she just unveiled new products in New York this month, Q4's the test with questions about the consumer's spending power. Lala told me Bose's high-end consumer has been holding up, though. Those earbuds are in the $250 to $300 range with Apple's AirPods, so we'll see. It's not a shock. A staple of, they are that give her credit to be able to survive in this competitive marketplace,

you know, no small feat. Interesting company, too, in that its own by. by MIT. The company is? The company is owned by the Massachusetts Institute of Technology. No kidding. Wow. For all the different things they've incubated, didn't think Bose was one they hung on to. John Ford, thank you very much for that interview. All right. There's still time left in the show, and we are going to use it to talk golf. That's coming up next in closing time. I'll just see myself now. The Ryder Cup getting underway this morning, and the U.S. is digging itself a huge hole, to say the very least. And in other news, Endeavor Group, Fenway Sports are reportedly

considering a bid for the PGA, which would prevent it from having to merge with the controversial Saudi-backed live golf tour. We'll bring in Sarat, one of our contributor golfers here in this group. What do we think about the headlines? Is golf in a good place right now? In the Ryder Cup, it's going to be tough. I mean, that's tough. The last time we won on European soil was 1993. So I think we've got a big hole.

But listen, we've seen things happen. We've got one and a half points. It'll be interesting to see. Singles play is where we are really strong. So I think, you know, don't count it out, but it's going to be a long health. You've got to have to tune into NBC, NBC Sports Golf Channel, Peacock for all of this because we're the ones showing the Ryder Cup. And there's going to be nothing else to do this weekend because we're all going to be stuck here with the flooding that's going on.

Lots of sports to watch, though. Yes, indeed. Actually, speaking of which, let's take one more look at the Taylor Swift effect. Maybe we should call it the new Taylor rule, hmm? Seat geek reporting a 26% surge in the average resale ticket price for Sunday night's game. between the Jets and Chiefs, and you can guess why. Why, of course. On reports that Taylor will attend the game.

The only thing New York fans have to be excited is. I mean, the biggest media market in the U.S., probably the world, and Taylor Swift and the Chiefs and the Jets are all converging. By the way, it is a Sunday night football game on NBC, Chiefs and Jets prime time. The ratings are going to be through the rule. Do you think? You're probably right, but it's so absurd. I don't know.

I'm waiting for more of the products that come from this like the Heinz ketchup with yeah yeah there you go thanks for watching power lunch closing bell starts right now have