Power Lunch - The EV Race, and Ryan Reynolds Wins! 2/13/23

Episode Date: February 13, 2023

We just got a big announcement from Ford, spending $3.5 billion on a new battery plant to help in its EV ambitions. We’ll speak with the CEO in an exclusive interview. Plus, we are crowning a new Stock Draft champion. Your 2022 winner: Ryan Reynolds! He’ll join us to collect his trophy, and to take a verbal victory lap with his co-captain Mark Douglas. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hi, everybody, and welcome to Power Lunch alongside Kelly Evans. I'm Tyler Matheson. Coming up, a big announcement from Ford on their EV ambitions. Ford spending $3.5 billion on a battery plant. The company's CEO about to join us for an exclusive interview. Plus, we are crowning a stock draft champion. And the winner, guys, he's winning in everything. Ryan Reynolds, thanks to his selection of Netflix, he cruised to a victory. Ford, by the way, was his other stock. So a lot of symbiotic this hour. He's going to join us to collect the trophy and take a verbal victory lap. First, though, let's get a check on the markets.

Talk about a victory lap. We're basically at session highs. The Dow's up 360 points right now. The NASDAQ up 1.6%. All right, let's head to the NASDAQ now and check in with Christina Ports and Avales for a look at today's movers. Christina. Thank you, Ty.

So all three indices, like you mentioned, Kelly, bouncing back from last week's losses. With the NASDAQ up the highest today, even though the 10-year treasury yield is still above 3.5%. And I can even mention the two-year, which follows very tightly with the Fed fund rate, that is about 4.5%. Investors are pretty much buying into the softer than expected CPI print that's coming out tomorrow, which could revive this equity rally that we saw at the start of the year, even if Fed chair, J. Powell, has literally brushed off any signs of easing monetary policy. So we're only a month and a half into the year, and Tesla, Warner Brothers, Align Technologies are all up over 50%, the biggest winners on the S&P 500 year to date,

although I'd like to say that Tesla's down about 1.5%, but that could just be some profit-taking. Microsoft, the top contributed to the Dow on the leader in the tech sector today, up over, what is it, 3.4% right now. That means its market cap is over $2 trillion again. And then we've got Illumina, the biggest winner on the NASDAG 100. shares are up almost. Look at that.

Over 8% recouping losses from its disappointing earnings that were out last week. Goldman Sachs says this, company is likely to generate the largest alpha, in other words, outperformance. Go Canada for Ryan Reynolds. All right, you got it. Christina, thanks very much. Investors will be watching a lot of key economic data due out this week, including the consumer price index, inflation measure, out tomorrow. That's on top of earnings with a consumer focus here.

And here now with more on what to expect and some important names to watch. Stephanie Link, chief investment strategists and portfolio manager at Hightower, as well, as a CNBC contributor. Stephanie, welcome, number one. Number two, we've got on the one hand economic data coming out, inflation numbers and so forth. On the other hand, we have earnings coming out. And the two, you know, they could be at war with each other. One will, obviously, the inflation numbers will affect interest rates.

The other is the real engine of stock price gains, and that's earnings. Talk us through it. Yeah, it's going to be a really busy week with both factors. As you mentioned, Tyler, obviously everybody's talking about the CPI number and the headline being 6.2% core at 5.5. I think what's going to be more important in the CPI is the breakdown between goods and services. Goods we know we are seeing disinflation in goods. And services, I think it's going to remain very strong. And of course, the services component is 73% of core CPI.

So it's a much bigger factor when you look through the details. But of course, we also get PPI. We also get retail sales, industrial production, housing data. So it's a really busy week. And you're right, think that's going to set the tone. And then we have to focus on earnings because basically that's more important in terms of how stocks, individual stocks move and react. What are you looking for in earnings this year? Are we in a kind of not an earnings recession, but maybe so? Yeah, I mean, I think expectations are for flat to up 2%. I actually think the numbers are too low, to be honest with you. I'm not saying.

saying we're going to grow double digits. But yeah, well, because I think the, well, number one, I think the supply chains actually get fixed, right? I think inflation is coming down in certain pockets, especially on the commodity side. Companies have pricing power to offset the higher inflation. And I think also what's not really taken into account is the weak dollar. The dollar is down about 10% from its high. And we know U.S. multinational companies have really been struggling with this. So that's going to go from a headwind to a tailwind. And so I think, look, the first half is going to be tough for this year, but I do think the second half will see a pickup. Interesting. Okay. And on that note, Stephanie, earnings this week, we've got lamb, deer,

Zoettis. I know you like Zoetis. I think you like all of these companies, if I'm not mistaken. So what do you think is the most important barometer? Well, I think they all have important pieces to them, right? So applied materials I watch because, yes, I own lamb research. It's three multiple turns higher, though, than lamb, which is why I like lamb. But these guys actually, I think, are going to hang in there pretty well because Foundry and Logic, Kelly, is about 70% of total revenue. That's held up better than expected as compared to memory, which is one of the reasons why Lamb is lagging applied materials. But I like both companies, and we'll hear a little bit more kind of about wafer fab equipment spend, because that's what these stocks react to. I don't

think it's going to be good. But if the stocks actually rally on the news, then you know a lot of bad news is already priced in. Deere, the biggest question really is just precision ag, farm its technology implemented into farming, and that has implications for recurring revenues to actually see an increase in recurring revenues. And I want to get a sense as to where we are in the North America ag cycle. I think it's more elongated because of this technology component. So I expect a very good quarter on Friday there. And there's a weddest, yes. I mean, it's a personal favorite with one dog, three cats.

I think animal health, the total addressable market is $43 billion. And I know I'm contributing to that. going to grow over the kegher of about 10% for the next decade. So I like what I see there. And what's important on Zouettes, actually, I think their organic growth is being held back because of the supply constraints as well. So as that eases, I think companion animal can grow double digits. And so the only problem with Zouettes, it's a little expensive on evaluation basis, but I do like it for the long term. Sure. I mean, this goes back a little bit to what we were saying in the past about this confusing market. You know, we have, we're wondering if we're even

in an earnings recession. We're wondering if CPI, you know, hot and cold. We're wondering where we're going with sort of the terminal fed funds right here. And what analogies would you draw from this year to the recent cycles that we've been through, if any? Oh, my gosh. I mean, this year is really hard. I mean, last year was really hard, right? But this year is really hard because you have so many cross currents.

I mean, as I mentioned earlier, I mean, like, we have so much data that's coming out this week. We know manufacturing is probably in a recession, although, interestingly enough, we're not hearing from it from companies. And on the same, and we have housing. We know housing is, on the same, on the flip side, you have strong jobs, right? And that's really fueling the fire and the engine for the economy. So a lot of cross current. I think it's a really good idea to be just a stock picker and focus on fundamentals. And that's why I brought to you three names that I'm focusing on.

Yeah, 1,000%. Stephanie, thanks. We appreciate it. Thank you. Stephanie Link. Let's turn to the skies now quickly becoming a danger zone for any unidentified flying objects, as they kind of should be. shooting down four sub-objects in nine days.

Amon Javers is here with the very latest end to discuss. Amen, what do we know at this hour? Well, Kelly, we just finished over at the White House, a press briefing. Unlike any press briefing I have ever seen at the White House, the White House press secretary began by saying that there is no indication of any alien or extraterrestrial involvement in any of these shootdowns. The fact that she even had to preface the briefing with that was kind of striking. And then we saw John Kirby, the National Security Council spokesman, take to the podium and explain that the United States still does not know what the three objects were that it shot down over the weekend.

Now, remember, there's been four shootdowns beginning with that Chinese surveillance balloon back on February 4th. That one, the United States is confident. They know what it was. These other three, though, are UFOs, unidentified flying objects. They simply don't know what they were, what they were doing, who sent them, and for what purpose. So at this point, there is a mystery here, and the White House is saying that it shot them down for security reasons, because they could get in the same altitude level where we have commercial flight, and that might present a safety risk.

So the White House saying they had to shoot those down. But at this point, they say they have not yet recovered the wreckage, so they don't know what it is exactly that they shot a real conundrum here, Kelly. What does your spidey sense tell you, Aeman? And one of the things that I've been thinking about over the weekend is, Were these kinds of unidentified phenomenon or objects, have they been a lot more prevalent than we have been told about, either because we weren't looking for them and are now, or because they weren't spotted, or because we just did, the government didn't bother to tell us

that they were there? I think it might be some of each of those, Tyler, and you got that sense listening to Kirby just now at the White House who's talking about how the Pentagon has changed the set on its radar to now look more carefully for these smaller, more slower moving objects. He said there could be a lot of reasons why objects could be at that altitude. For all sorts of legitimate reasons, you know, you can think about photography, weather, scientific analysis, all kinds of reasons why somebody would be flying an object at that altitude. But I think it also plays into this larger phenomenon of unidentified aerial phenomenon, as the Pentagon calls them.

We just had a report out from the Director of National Intelligence in January, the second such report saying now that there are 171 cases simply unidentified where American pilots have seen objects flying in the skies and don't know what they are. So it's clear that something is going on up there that the United States government doesn't fully understand. What that is, though, also seems to be just about anybody's guess right now. Yeah, fascinating. Really interesting. Amen Javers. Thank you. You bet. All righty, folks. Coming up, the public markets. have been kind to AI stocks this year, anything with those two letters soaring, basically. So how about in the private markets?

We'll talk to a venture capital investor about the pitches he's hearing and how we can separate the real innovators from those just trying to get in on the latest buzzword. Plus, we're about to speak to the CEO of Ford on his company's EV ambitions, investing $3.5 billion in a battery plant. Jim Farley coming up on Power Lunch. Stay with us. Welcome back to Power Lunch. The AI hype is taking off this year in the public markets.

The Global X Robotics and AIETF is up 17% so far this year. And our next guest also seeing an influx of AI pitches on the startup side. Adrian Mendoza is the founder and general partner of Mendoza Ventures. They're an early and growth stage venture fund with a heavy focus on AI. Adrian, welcome, have you always had this focus? Yeah, we actually started investing in AI in late 2015, 2016. And funny enough, this is the. second time we've seen this AI height cycle because we've seen trends happen in BC. They die out.

And really what's happened is with the kind of the lessening of excitement in Web3 and crypto, a lot of those dollars and attention have now gone back to AI. Yes. Which is really exciting to see this cycle happen again. And probably healthier maybe from a societal point view, except that we just spoke with the CEO of Tenable last hour who warned that maybe we let the cat out of the bag a little too quickly here. I mean, are you worried about there, maybe there should have been a few more usage guardrails in place before we kind of just unleashed the open AI experiment on the world? Well, part of the issue with AI is that it's all really about data and it's garbage in produces garbage out. Right. In our view as an investor, we really believe

data is the new currency. But it's really you have to take a step back in an investor. And when you hear the startup pitches about AI, it's really looking. looking at if you have good data to start with, then you're going to be able to have incredible results. Because data in the past is reporting data in the presence, is analytics, being able to predict data in the future, that's where the AI predictions are going to happen. And so we're still really kind of worried about where these good data sets

and training datasets are going to happen. And the nice thing of what we're seeing with generative AI like ChatGBT, GBT, is the excitement from the general public finally seeing what the power of it can do. So I heard a couple of phrases there that make my antenna go up. One was we're at sort of hype cycle 2.0 on AI. I believe that that's my paraphrase of what you said. And then you said garbage in, garbage out. So my antenna go up and I think, so how do I know? How do you know as an investor, which ones are real and which ones of the deals you look at and hear about are purely hype? How do you tell the difference? Which ones are garbage? Which ones are good? I love watching,

interviews. In 2019, there was a tech crunch interview with the CEO of OpenAI where when he asked his question about revenue models, his response was he was going to ask the AI to what profitable AI model would create revenue for him. And really, that's what we're seeing. You know, you called it completely right. This is AI hype cycle 2.0. And a lot of the investors that have learned from the first 1.0 have realized that the majority of these cycles really have not still been able to find really good references to how are AI companies going to make money. How are they going to be profitable? And there are companies out there, you know, one of our companies, Fiverity and Paxi data and SenseWata Canada, where they're looking for data insight,

but using data that exists from customers across the graph. What's the telltale for you, Fiverty? I see you're sporting one of their hoodies there or quarter zips or whatever. But what is the pinpoint that tells you this is one that really has a solution to a revenue issue, to a revenue to the revenue nut? This one does not. What is the telltale? Well, it all comes back to where are their data sources.

You know, every AI company to be successful needs training data. You know, chatGBT has billions of records from the web. But the problem with that is if you put in fake stories, then chat CBT on the other side will give you a fake answer. And so one of the things that we need to see when we were looking at these companies in due diligence is where they're getting their training data. In order to create statistical significance, AI algorithm needs at a minimum 10,000 data points per segment.

So when you're looking at things like state, you know, country, zip code, address, any qualities, you have to have enough data of statistical significance to be able to find a good prediction. And this is where we're seeing is when we dig into these companies that they're building their AI models without enough data set or have no proprietary, you know, the proprietary data where they can pull out. And that's the big, you know, red herring that we're still seeing because so much isn't there to be able to make,

you know, fantastic, you know, predictions from. Adrienne, can you give us any specific recommendations for our audience who goes, okay, this guy gets it? So what should and shouldn't I invest in as specific as you could be? Well, the key is use case. You know, when you have such a generic use case like OpenAI or ChatGAPT. Really for a lot of our companies like Vibirity, for example, they're looking at specific use case of how do they build AI models to solve fraud. SENSO in our case, a company out of Canada, using their models to predict who are the best mortgage customers to treat and take care of. And really the importance is how are they making money? What's their revenue? Because even now from 1.0,

We have yet to still solve the enterprise issue of what is that revenue model. Is it subscription based? It is consumption based. So pushing in from the investor's standpoint of where does revenue come from, how are they getting from one to five to ten million? Because I think we, as much as we want to ask the AI, how we're going to make profitability, in this market, we as investors are pushing on that forward. How are we going to make money?

How are we going to make self-sustaining companies? that not only make money, but also provide impact enough for customers and the world in general. All right. Adrian, thank you so much, Adrian Mendoza. We appreciate your time today. Talk to you again soon. All righty, still to come for announcing a $3.5 billion investment in a lithium battery plant. We're going to talk to the company's CEO live when we return. We'll be right back on Power Lunch. Welcome back, everybody, to Power Lunch. Time now for a check on the markets, which are all in the green. Stocks higher across the board, strong gains to start the week,

especially for the NASDAQ, up more than 1%, almost 1.5. Microsoft, the top stock in the Dow today, also contributing to the S&P 500 and those NASDAQ gains. It is up nearly 15% in just the past month. Kelly, could the AI we were just talking about have a little bit to do with that news? Or a lot, absolutely.

The big chip names also fueling today's tech takeoff, Nvidia, AMD, Intel, adding a couple percent. Oil, higher today, not a huge gain, but enough to send at commodity back above $80 a barrel. The oil market, like everything else, looking forward to tomorrow's CPI as an indication of future Fed policy. Meantam, let's go to Bertha Coombs now for a CNBC News update. Bertha? Hi, Tyler. Thanks very much. Here's what's happening at this hour. Teenage girl, a teenage girl across the United States are engulfed. In a growing wave of violence and trauma, according to new research released today by the CDC, nearly one in three high school girls say they seriously considered suicide in 2021,

up 60% from a decade ago. And almost 15% say they were forced to have sex. Camilla, the wife of Britain Kings Charles, has tested positive for COVID, according to Buckingham Palace, and has canceled all her public. engagements for the week. And also in England, a widower has created a heart-shaped woodland tribute to his late wife. Winston Howe started planting the meadow decades ago after his wife, Janet died. Isn't that lovely? Kelly, good for Valentine's Day. Thank you, Bertha. Ahead on Power Lunch, two major interviews in the second half of this program. First,

of Ford's CEO joining us to discuss the company's big EV investment, then, Speaking of Ford, that name along with Netflix leading to the mountain goats to victory in the 2022 stock draft. Actor Ryan Reynolds joins us live along with his partner, Mark Douglas. Looking forward to that in just a couple minutes' time. Stay with us. Welcome back Ford outlining its EV ambitions in the last hour. The company announcing a $3.5 billion investment in a lithium battery plant. The shares have moved higher. They're up 2.4% right now. And joining us to talk more about it is the company's CEO Jim Farley, along with our very own.

Phil LeBoe. Phil. You know, Kelly, I think Jim's not quite ready yet. So let me outline the parameters of this agreement between Ford and C-A-T-L and why it's getting a lot of attention. For Ford, this deal makes sense because it will be the fourth battery plant that it opens here in the United States. It'll be built in South Central Michigan, opens in 2026. And now I'm told Jim Farley is available. Jim, thank you for joining us today from Romulus, Michigan. Let's get to the elephant in the room. On paper, this makes sense. But you know, there's more than a few people given the tensions with China and the United States right now who are wondering if this plant is going to fly or if it'll face resistance in Washington.

Hi, Phil, and thanks for the opportunity. Look, this plant is a wholly owned subsidiary of Ford. We run the plant, and it's our investment. So, you know, that's as simple as it needs to be. And based on that, you know, whether it's Syfius Review, whatever, based on our investment, in our wholly owned subsidiary, we don't expect any issues. You'll be licensing the technology from CATL. Any concerns that maybe down the road, China has a change of heart about its companies licensing their technology or restricting their technology, even if you're under contract to use it here in the U.S.?

Yeah, I mean, there's always risk in business, but we feel really comfortable. You know, CATL is the largest battery manufacturer in the world. And they have a lot of experience with U.S. companies, companies around the world. So they're in all of our daily consumer products. So I don't expect any surprises based on their reputation, scale, and experience. Jim, this is for a plant that will be building lithium-iron phosphate batteries, which are about 15%, roughly speaking, lower price than the current batteries that you are using in your electric vehicles. How much will that be able to allow you to drive down the cost of production overall and, in theory, make it more easier to build lower price EVs down the road?

This is a really big deal, Phil. You know, we're scaling up to 600,000 units by the end of this year. And these batteries are less expensive, as you said, for the consumer. They're also better business for us, and they'll help us get to that 8% roadmap for. profitable EVs. You know, scaling EVs is great, but you have to make money on them. And the LFP technology is great for customers. It has, you know, about roughly twice the fast charge cycle capability, but it's also great for commercial customers, and it's really affordable. And we're going to be importing this spring, so we're going to be able to offer those

benefits to the customers now. Mr. Farley, it's Kelly here back in studio. Thanks again for joining us. Since this announcement last hour, the number one question we're getting is people asking why partner with the Chinese company. Was there not a U.S. alternative or a Panasonic available who could help you achieve these same goals? No, I mean, again, this plant is run and owned by Ford. It's a wholly owned subsidiary Ford, and it'll be run by our own people. So we don't really have any concerns at all. We're the number one employer in the U.S. and the technology very ubiquitous. You know, so I don't see there's any issue because it's a Ford plant.

Understood. Was there a U.S. option on the table, though? Because my question also goes to our supply chain. If the whole point of this act by Congress was to basically create and bolster the American supply chain for making these cars, was there not a viable alternative? No, there wasn't. LFP technology is very well developed. It's a global, the battery business.

This is a global business. And there were no alternatives, especially at this scale. I mean, these are 20, 30 gigawatt hours. It's a huge operation. And this is the only option. The IRA was intended to onshore projects just like this. If we didn't have the IRA, we wouldn't be having this conversation. It would be a very different conversation.

The economics dramatically changed for Ford. And that's why we're announcing this today in the US and in Michigan because of the IRA. Jim, speaking of the IRA and the EV tax credits, the way this partnership is set up right now and the manufacturing at this facility, currently half of the EV tax credit, about 3750, would not be eligible for the batteries coming out of this plant, in part because of sourcing of foreign materials. Do you think that changes by 26? How confident are you that you'll be able to get that full 3750 tax credit if that's the amount that's being offered at that time? But Phil, we're the only manufacturer who's going to bring NCM and LFP to consumers in the U.S. And build them here in the U.S. And because of that, we get the $7,500, the manufacturer gets a $7,500 tax credit. On the consumer side, as you said, you know, we will be, the customer will get a benefit. You've got to remember LFP is a technology is almost perfectly fit for commercial customers.

and Ford is 50% of that market, even larger in EVs. So for those customers, they will get $7,500, irregardless where the batteries are made or what raw materials. On the retail side, which is a smaller LFP audience, you know, they will qualify, whether it be $75,000, 3750 or $7,500, we don't know yet. We're working on that. We really want to bring all the raw materials and all the processing. here to the U.S., but that takes time. The good news is for commercial, they'll all get the $7,500. For retail, they'll qualify. It's just a matter of how much. Jim, you've already got a lot on your plate. You're investing $50 billion cumulatively through

2006. You're opening four battery plants. You're going to be increasing your global production annual sales to $2 million annually by the end of 2026. But last week we talked to J.B. Straubble, who runs Redwood Materials, a battery recycling firm, former number two at Tesla. And we asked him, based on what he sees in the EV industry, does more need to be done to get ready for the end of this decade? And he says, unequivocally, yes, more needs to be invested. Do you see Ford increasing its EV investments, let's say over the next couple of years, even further than what you've already outlined? Yes. I mean, we've made the capital allocation, but that's really the easy part.

The hard part is building these factories and scaling in production. J.B. would, know. It's one thing to build a plant. It's another thing to have batteries built in the kind of quality, which is our number one priority, you know, in the volumes we're talking about. We're scaling now F-150 and Machi and E-Transit, and, you know, scaling batteries is a new thing. And even after 120 years, we have a lot of experience of scaling more than almost anyone. I would say that, you know, he's right. We have a lot more to do. It's not just a cap allocation. It's actually the know-how. For example, we need to go to silicon carbideinirters. We need, you know, so that's silicon specifically for high energy, high temperature application.

So there'd be a lot more investments than what you've heard about. Battery production assembly capacity is just part of it. The real exciting part as well is going to be the insourcing, which we haven't done since the 20s, but the electric motors, the air inverters, and all of those chips are, going to be falling because they are a little bit closer to launch of the vehicles. Sure. So you hear a lot more from everyone. And of course, we have to invest in infrastructure.

Quickly, Jim, it's been a couple of weeks since you guys cut prices on your Mustang Maki. What's been the reaction in terms of reservations? Very positive. We've seen almost 100% increase in web traffic. The reservations are up dramatically. So I think we're in good shape. it did exactly what we had intended to do. And with the LFP announcement today, coming this spring for Maki,

we're going to be offering customers even more choice. So we're a really good shape for the demand. And of course, we didn't adjust prices on lightning or e-transit. They're both number one in their segments. Jim Farley, CEO of Ford Motor Company. Jim, thank you very much joining us today from Romulus. Kelly and Tyler, I'll send it back to you. Huge day for Ford in terms of this announcement of a three and a half billion.

dollar battery plant scheduled for South Central Michigan. Guys, back to you. Yeah, a lot more to be said about what that's going to mean for the area. Phil. We appreciate it very much. Thanks for bringing that to us. Our Phil Leboe with the CEO of Ford. Ford, by the way, one of the stocks in our winning stock draft team. It's the moment months in the making. Next will crown the champion of the 2022 stock draft. Ryan Reynolds and Mark Douglas of Team Mountain Goats. They will join not just those photos you see in person. They will join us live to claim their trophy. But, First as we head to break during February, we're celebrating Black Heritage through the stories of some of our teammates, contributors, and leaders in business. Here is CNBC's senior field producer Karen James Sloan.

My parents immigrated to the U.S. from Guyana, South America in 1967 to pursue a better life for their family. During that time, African American leaders like Martin Luther King and Malcolm X were helping to pave the way for all black people to have opportunities. My brother and I are first generation Americans and our parents instilled in us the importance of education, hard work, and to recognize the sacrifices of foundational black Americans that led the civil rights movement. Today, I pay it forward by mentoring young journalists of color. All right, welcome back to Power Lunch, everybody, with Super Bowl 57 now in the books. It's time to crown another champion for the 2022 CNBC stock draft. The Mountain Goats, led by co-captains Ryan Reynolds and Mark Douglas, are this year's champs. And it was nowhere near as close as the football game last night.

Getting a huge boost they did from Netflix, up 84% from last April. And we cut the contest off at Friday's close. Mountain goats edging out, fellow leaders, Terry Lundgren, Kevin O'Leary, Stephanie Link, and Kayla Kilbride. With the St. Peter's Peacocks, Delano Soporouro, David Robinson, and Candy Burris, and Tim Seymour rounding out the bottom of the standings ignominiously. All right, joining us now to collect their trophy, take a victory lap. Are the Mountain Goats themselves? Mountain CEO Mark Douglas.

He's here in studio with us. Welcome, Mark. Good to have you with us. Thank you. And Ryan Reynolds zooms in today. So congratulations on the win. Ryan, congratulations also on the addition to your family, which I read about. So it's a good win.

Now, you had two stocks you chose Ford and Netflix. Which one of you chose Netflix? Who gets the credit here? Well, Ryan called it out for sure. Yeah, Netflix, I'll take my digital victory lap here on Netflix. That was mine, you know, big believer in it. Can I just, can I use this word? It was a balzy call at the time.

I very much appreciate that. Thank you. You know, I think, but I think there was some wisdom to it. It was probably overvalued at its peak. but I do think it was way undervalued when we picked it last year. I mean, Netflix literally created the category, and it has power that I think very, very few other brands have. I mean, it is a gateway to storytelling,

and I think that the brand is creating real affinity out there. Well, speaking, I mean, maybe we'll ask you guys for more stock picks later or something, but we are talking about brands. We just had the Super Bowl. I mean, what do you think? Mark, what did you think about the ads? Is this thing of giant weight?

of money or is it is it worth it? Yeah, I mean, I think the theme was to bring back shows from like 10 or 20 years ago and then turned them in the ad. So I think it was pop triangles. Oh, yeah, yeah. They did it on Breaking Bad. And then you had, you know, John Travolta. The Travolta, yeah, it was. Yeah, singing and dancing. Yeah, I mean, so that was kind of the theme. I think Jennifer Lopez showing up in the ad for her husband, you know, for Dunkin' Donuts. it was all about bringing back the pass and like making it funny in the moment. It really worked, I think. Ryan, pop the balloon here a little bit.

I mean, do these things deliver the pun? What do you think culturally? What's the best way to reach people and get buzz really going these days? Is it still just like ads Super Bowl ads? You know, I think the Super Bowl is always going to have its place as sort of the apex animal in the ad game. You know, it's exciting. I get as excited for the ads as I do the actual game. You know, I think sometimes brands sort of, they can make a big impact, but sometimes they fail to sort of create a groundswell about the actual brand itself.

Like a lot of times you look at an ad and go, oh, I like the Jason Mamoa ad. And then at the same time, you'll think, okay, what was he? What was that for, though? So I think it's always a tricky balancing act. But I do think that just in the long run, 364 other days during the year, I think you want to be moving it a little bit more of an impressively, impressive speed culturally. I think, you know, these days we just move through the ads are, ads should be disposable, really. I mean, it's brands that need to last. So I think when ads can kind of be moving sort of in concert with culture, I think that they usually really resonate more.

But I love the Super Bowl for the ads. My favorite one was the T-Mobile spot with Bradley Cooper. I was just going to say that. It was just charming. It just felt like it wasn't pushing too hard, which I think is, is the one of the best attributes about that particular spot. but I'm also somebody who, you know, I appear in wireless ads for my own company, MintMobile. And, you know, I have also dragged my mother into a Mint Mobile commercial in the past. So for me, it just hit every, it just checked every single box.

I thought it was charming, too, actually. I was going to ask you about that because, I mean, it was very natural what they did on screen there. Well, that is Bradley and his mom in real life. I mean, that's just how they are. I've got to ask you about Mint. What are you going to do? What are you going to do with Mint? I mean, you have a really, your traffic goes over, as I understand, at T-Mobile's networks.

There have been stories at T-Mobile might be interested in acquiring it. What's going on? We have just our notes of the grindstone day in and day out. I mean, the Mint has experienced explosive growth for the last few years and continues to do that. And I think, you know, as somebody who's, you know, out there, you know, working day in and day out on the product, it's really carved out a space, not just in the zeitgeist, but I think people are really understanding that you don't need to spend $100 a month on your bloody wireless bill. You can actually get the exact same thing for a fraction of the price. And I think that's what's helped move the way it's moved.

And your ads are pretty good, I've got to say, you're mint ads. They stand out. I know exactly. You know, yeah, we embed our sort of ethos at the company in our ads too. We're not going to spend very much on our ads. They were going to pass that savings onto the customers. Yeah, you chose. But we have a lot fun with it.

Yeah, Ryan, I think he combs. Bradley looked like he rolled out a bed for that end. Yes, he did. Ryan combs his hair and preps. So, Martin is, the question, Mark, is can we get Ryan and you to make an appearance? April 20, what is it the stock draft this year? April 27. We hope you'll defend your victory.

I know you're not very busy, but make sure, okay, this is not going to be a one-and-done. We have to know if you really have it. Anyone can have a good year. Everyone in our audience watching has had a good year. Mark, can you put together two in a row? They, I think we can. A two-peat. Actually, I would probably repeat with the same stocks.

Not to tell the competition. I think they still have a lot of life in them. Very good. I like to say pick products not stocks. Really? Yeah, that's very true. Even Ryan, with all the different, you know, streaming opportunities out there? Absolutely. You know, I think there, no one does it quite like Netflix does. I mean, there's obviously room to grow there and there's a lot of work yet to do. But I mean, I think the bounce back that we saw this year is probably pretty indicative of their staying power. And, you know, I'm always very impressed by what they do over there.

Can we look at that trophy? Can we just zoom in on the trophy one time here? It's really glamorous. It's, it's, Oscar's got nothing on that, baby. I'm slightly afraid of it, right? All right. Gentlemen, thank you very much. Wait, wait, wait. Listen, Ryan, Ryan, I'm going to play my fellow mom of four card over here. Okay. I want to know, boy or girl?

I ain't telling. This ain't a birth announcement. We didn't make a birth announcement. We just posted a photo, and the media sort of did what it does after that. How's the little one doing? We're very excited. Look, we wouldn't do this four times if we didn't love it. Somebody else I know has done it four times, sitting right here.

I'm trying to ask him questions that will reveal a pronoun. All right, come on, Ryan. Like, how are they sleeping? How is Blake doing? Is she sleeping? Everybody's doing great. Everybody's actually doing fantastic. I mean, if we haven't figured it out by now, I think we'd be in deep trouble.

But, yeah, it's a zoo over here. I mean, this is like my office here. This is where I'll probably, actually, to be honest, I'll probably spend the rest of my life in here. Yeah. Congratulations. Congratulations to both of you. And thank you on all of the days, Ryan, seriously, thank you for taking the time out to be here and collect your trophy. My absolute pleasure. Thank you. Thank you, guys. Thank you as well. Thank you.

Come back. You're free to pick Ford and Netflix again. I have a few more. Thanks, guys. All right. Up next, we're going to head to the bond market to check on yields. Power Lunch will be right back. Welcome back to Power Lunch. Now let's get a good old-fashioned check on the bond. market from Rick Santelli out in Chicago, Rick, 371, I guess, now on the 10 year. Yes, 371 in 10s. So we're down, you know, a couple of basis points. But the point is that with tomorrow's big CPI, not only are 10 years near the high yields of the year, but many long-dated sovereigns across the globe, especially in Europe, are

joining us because tomorrow's a big day for all nations. They're going to be all observing what's going on in the U.S. inflationary front. So if you look at a year-to-date of our tens, you can clearly see. We're going into this with the highest yield since January 3rd. And if you open it up to mid-October, what's interesting is the high close, about the third week in October, was about 53 basis points higher than the yield is now. And that's important. When you look to what's going on in Boone's, Boone's close at the highest yields also since the third,

darn close to their the high yield at 244. They closed today right around 237, call it a six-week high. And finally, if you look at Gilts in the UK, third of one-month high yield closes well at 340. And the reason I'm bringing all this up is tomorrow is not only going to shape yield curves and potentially alter strategies of central banks here, but around the globe. That's how important tomorrow's 830 release of January CPI is. Back to you.

If that number is a surprise to the upside, that 830 release of CPI, it is steeper than anticipated, how would you expect the bond market to react? What will happen? Well, I think that it would make tomorrow's Treasury closes some of the most aggressive moves that we've seen. And even though we're 53 basis points below that 424, Tyler and tens, if tomorrow's number is hot, we could make up half that ground in one session. So it's going to be a biggie. was looking for that answer, my friend, and you delivered it. Beautiful. Thank you, my friend.

Rick Santelli. Up next, what's bothering Goldman's CEO, David Solomon? We'll leak that news to you after this short frame. Welcome back, everybody. Time for another story catching our eye this hour. Goldman Sachs CEO, David Solomon, telling partners media leaks, telling partners, partners at Goldman, that media leaks are damaging the company's reputation.

According to the Financial Times, Solomon spoke for an hour last week in a meeting of 400 Goldman partners. And in Florida, he also addressed the company's recent layoffs, cutting 3,200 jobs, saying he should have acted sooner. And perhaps the cuts could have been less severe if he had. I guess that's not quite the kind of solace that those partners were looking for. If I'd moved sooner, I could have saved some jobs. And strategic questions, hangover, you know, the whole Marcus issue. the consumer bank side, was that even the right direction to go in, questions about his own future at the bank?

And I think that the tension in the meeting probably reflects the tension that is felt about Golden. They're at a very difficult point right now, obviously, as we've talked about in the cycle. You know, it's very tough for capital markets when you don't have that buffer of wealth management that the Morgans of the world have invested in. They do. Certainly Chase does. Yeah.

Excuse me, J.B. Morgan, Chase, you mentioned them, and the investment banking business has been sort of in a quiet, in a quiet period there. All right, so we've got a 290 point gain on the Dow. The day is a good one after the Kansas City Chiefs beat the Eagles in the Super Bowl. At least it was worth watching. Yeah, it was a good finish. Well, if you were for Kansas City.

Exactly. Not if you were that defensive back on the Eagles. Right, exactly. All righty, folks. Thanks so much for watching Power Lunch. Glad you could join us on this Monday. Closing bell starts right now.