Power Lunch - The Future of Big Tech, Crypto & the Fed 11/06/24

Episode Date: November 6, 2024

CNBC’s Tyler Mathisen and Kelly Evans take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. ���Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon, everybody, and welcome to Power Lunch alongside Kelly Evans. I'm Tyler Matheson, and we have, yes, a huge, and I do mean huge rally on Wall Street following Donald Trump's election victory. All three averages at record highs over the next hour. We will look at stocks and sectors making big moves and asking whether this is a one-day rally or if there is more to come. This seems to me to be a factor of two things. Number one, the idea that the Trump administration will be business-friendly, deregulatory, And number two, the relief that people feel that there was a resolution. There is an outcome.

The certainty. This is the kind of uncertainty they didn't want. Usually they like that. Dow's up 1,500 points at this hour. It's outperforming the SEP, the NASDAQ. The Russell's were up about 4-5% last check. Incredible. We'll continue to run through some of the biggest movers,

including crypto, with Bitcoin soaring to a new record and getting back up to 75 and then some this afternoon. So it's picking up some more momentum. We'll talk about what exactly the crypto community is looking for or things will happen. under President Trump. And we have a Fed decision just to make it even richer this week coming tomorrow as yields have soared since the last meeting, which was a 50 basis point cut. We start with the huge rally on Wall Street. The major average is all hitting records after Donald Trump is elected president now for a second time. Is this just a one-day rally or sustainable for the long run? Marianne Bartels is chief investment strategist at sanctuary wealth, and Bob Bizani is our

senior markets correspondent. Marianne, what do you have? How do you answer that question? Is this a short-term reaction or something that might be more enduring? I think this is something more enduring. We think the market was actually positioned to rally. We were getting buy signals prior to the election. And we've really been looking for the market to trade up near 6,000 by the end of the year. In fact, we introduced a 6,000 target in the first quarter of this year. year. I'm really liking the action that I'm seeing and the breakouts that I'm seeing. I think this is setting up a market that will do very well in 2025. And I think, you know, extended tax cuts can help hit the bottom line of corporate earnings. And I think that's another reason why you're actually

seeing the markets rally so strongly that this is going to be a positive impact on earnings. What do high and rising bond yields tell you, Marianne, and what do they portend, if anything, for equities? So I know that, you know, Trump being elected is an inflation trade. We are getting the backup in yields. But I also think that's part of having a stronger economy. But when I really look at yields, I think they're rallying within a downtrend. So I think they can rally, particularly the two-year, I do think we can get a little bit higher. And I think we can rally into the end of the year.

In fact, seasonally, we tend to see rates rise as we go into the end of the year as businesses need capital. But as we go into next year, I actually think we're going to actually see interest rates come down. And that will be another reason why equities can rally and why PEP multiples might actually expand. Bob, let me turn to you to maybe kind of highlight some of the notable movers. We've talked a lot about what's breaking out today, but obviously clean area, the clean energy and other areas are under a significant amount of pressure as well. Yeah, this is kind of like the ultimate stock market fireworks display here. I mean, look what you have here.

You have promises of lower taxes. You have promises of less regulation. You have the Fed cutting rates. You've got a strong economy and you've got earnings that are already strong going into this. My heavens, you can't write a better scenario for the stock market. I think the question for me is the stocks guy is, can this translate? into real earnings growth on top of what we already are seeing. In the case of banks, I think the answer is yes.

Here, we've got higher rates, generally good for banks. We have less regulation promises out there. We have some merger deals like Capital One Discover that might go through. So yes, in the case of banks, I think it can help earnings. Can it help elsewhere? Well, we've got tariff promises out there. That potentially could help things like the steel industry, and we're seeing steel stocks respond.

So yes, there are areas where earnings growth definitely can occur as a result of this agenda. But Tyler brought up a great point. This higher rates thing is a problem. There's something that doesn't gel here with tax cuts and promises to fix the deficit, with, you know, what we have 50% of spending is on Medicare, Social Security, and defense. Something doesn't quite gel in that story, and I think that's what we're going to be examining. Tyler's got the right point here.

Marianne, let me turn to the question of Bitcoin, which is up heavily today, or strongly, I should say, 75,000. Where do you see it going and what's the propellant? So it's really hard to put a valuation on Bitcoin. So we really rely on the technicals. And we've had a significant breakout in Bitcoin. And I think it's targeting in the near term up towards 100,000. And what a lot of people may not be aware of is that Bitcoin has actually been the best performing asset class. It broke out in the first quarter of this year and consolidated and only recently broke out again. I think you're going to be hearing a lot about crypto and a lot about Bitcoin in the coming weeks, months and quarters.

Marianne, on that point, I had some friends texting me last night and saying, oh, I shouldn't have sold my Dogecoin and I shouldn't have sold my Bitcoin. But they think, you know, fundamentally, you know, it's what that you described it as an asset class, they still worry or think about it as more of just sort of a silly kind of empty or perhaps even share. kind of kind of thing. So how do you kind of, and maybe we're past that point, but these are people who now wish they had held on to it, but we're just kind of looking for the fundamental justification to do so. Well, Kelly, I would first tell them it's not too late. They can get back in. Can't do shoulda could or woulda. Bitcoin itself is really being treated as a currency,

as an asset, a store of value. All the other cryptos really are, most of them are a form of technology. They're really not a currency. And I think, you know, if we can get some clarity and regulation and, importantly, some education around what crypto is, you're going to see investors much more comfortable adding a portion of the crypto market to their portfolio. But this is really a demographic move. If you talk to young investors, they already have significant exposure to the crypto market. But if you talk to the baby boomers, many of them don't even have exposure. So I think there's a big demographic divide within this space. But I've been very bullish to space, and I stay very bullish the space. Bob, is there an M&A boom right over the horizon?

My heavens, you could sure see it today. I mean, look what was going on here in some of these in some of these deals. I mentioned Capital One and Discover. But even elsewhere, you know, you've got Nippon Steel and U.S. Steel. They were up today, and that was contested by not only the Biden administration, but even Donald Trump said that he was opposed to it, and U.S. still is up today. Now, again, some of this is on the tariff play here, but yes, absolutely. And Lena Kahn is one of the least-like women on Wall Street, people on Wall Street. The other one is Gary Gensler, and Tyler, I think you are going to see there is a

is dozens of lawsuits against the SEC for overreaching on regulations right now. And one way that people are enthusiastic is they're hopeful that the new SEC regime is going to let a lot of this sort of go away by simply not fighting some of these lawsuits. And I think you're going to see a lot of discussion about that in the weeks and months to come. That would be very interesting to observe to see what happens there. Marianne Bartels, thank you. Bob Pisani. Always great to see you, sir. Pleasure. And let's turn to the action in the bond markets now.

And what an action it is, the 10-year yield nearing 450, about 445. The 30-year was up about 20 basis points last night, and the 10-year is up 80 basis points since the day before the last Fed decision when they delivered that jumbo-ray cut. Rick Santelli is talking to traders on the floor. He's here with some more buzz and discussion, Rick. Yeah, absolutely. And, you know, as you look at an intraday of 30-year bond yields,

which you just were describing how they've soared. We had a terrific bond auction today, primarily because soaring yields are a good concession, many investors jumped into the fray. Another thing going on today, the distance between U.S. and European rates is widening out. It's over 200 basis points, and that means something for debt and deficits. Let's go talk to Chem. Jim? Rick, good to see you?

I'm sure you saw the results of the auction, and you saw a four-digit increase in the Dow Jones Industrial Average. What are your thoughts today? Well, we've been talking about the steeper for some time, right? Here it is. And why are those things happening? It's not just Trump. There is structural inflationary pressures at work here, right? We are rebalancing. What, you don't think your house insurance, your car insurance can be going down anytime soon? The reality is Trump is selling what the world wants, which is populism. We want a rebalancing of inequality. And if that's going to happen, that's structurally inflationary, right? Tariffs, we may need them, right? Immigration policy, we may need it.

But that's inflationary, and that is what the curve steepener is all about. The problem is once that gets going, once that longer end starts going up, you have bigger structural issues. And inflation can be really entrenched. It can cause a real... Now, I can't disagree with any of that. But even at a 460-ish 30-year bond yield, do you really think that the market's petrified of a huge bottom inflation? I would have thought we'd get a whole lot more than 18 or 20 basis points for that fear factor, truly. Yeah, I think people are doubtful of what is coming, right?

How could they be doubtful of what's coming? We're up 1,400 points in the Dow. You know, the only thing that combats debt and deficits, growth, growth, growth. And it certainly looks like somebody out there thinks that earnings are going to be better down the road. Yeah, earnings can be better down the road for a while, right? You run a higher bondier policy. You know, everybody says Trump pays a strong dollar. If you have a strong dollar, what does that do to the price of your imports?

Yeah, I mean, your imports go, you know. cheaper, right? We buy a lot of imports. Look at the trade deficits. We're not importing as much, and we're putting up boundaries so we don't import. If you raise tariffs enough, right, it's going to counterbalance that. At the end of the day, look, we're in a structuring inflation rate period. The Fed is stimulating at the same time. That's bullish of assets for the time. Now, the Fed's balance sheets roughly $7 trillion, right? Right.

Okay. Many think housing's a huge problem, and it is. And how do you make housing lesser problem? You get long-term rates down, right? I don't think that the Fed could do that without using QE. Right, so QE's coming. You better prepare for it. A $7 trillion balance sheet, and we are having an economy that's cooking in Greece. We have job growth that's still pretty good. If they use it now, we're not in recession, what happens when things get bad?

They'll keep doing it. Look at what happened in Japan. We're not Japan. I want to be clear, but we are going to use QE because we have to. We might not be surrounded by water, but we're surrounded by debt, okay? And I will tell you, there is an answer here. I think the Fed should overeat. If the Fed over eases, they can make adjustable rate mortgages like five-year look better because I don't think that they can do anything with long rates.

In the short term, it'll look good. We'll export inflation along the way. We can do that. That is an America First policy at the end of the day. We will run things very hot, though. And at the end of the day... And while we're talking about it on this big political day, and I think you're a wonderful guy, you're the smartest volatility guy I've ever talked to,

don't you think when people say America First that that's patriotic versus, you know, People want to make this an evil dynamic. What's wrong with, you know, when people have families, they think of their family first? No, it's a great question. Look, America first is important, but at the end of the day, if we are going to be the biggest, strongest economy in the world, we also need to be a good steward of the global economy. Yeah, see, that's where we disagree. At the end of the day, you need to do both, right?

I don't think we have to be, these things don't have to be diametrically opposed. We can meet in the middle. We could be nicer globally, but I certainly don't want to be overly welcoming it. Look at how China repaid us. I can agree 100% with that. It needs to be a balanced policy. I agree. And we have had no balance. I think everybody is in their own corner, right? We need to come together and do both. We need to do what's best for America. All right. You've heard it from the Sibo. We need a kumbaya moment. Jim? Amen. Let's start it right here. Back to Kelly and Tyler.

Thank you both. Really appreciate it. Another big vote set for tomorrow. The Fed's decision on interest rates. How will a Trump presidency impact its policy going forward? We'll ask a member of our Mock Fed panel next. Power Lunch. We'll be right back. Welcome back. Even as we're digesting results of Tuesday's presidential election, the Federal Reserve is beginning. It's a two-day meeting in Washington. The consensus is for the Fed to cut by another quarter point. The majority of our mock Fed panel agrees with six out of the seven members voting to cut by a quarter, Don Peebles wants another jumbo, a half-point cut. If he would vote for that, if he were part of the Fed anyway. Our next guest is on the quarter side, joining us to discuss as Julia Coronado. She's the

founder and president of macro policy perspectives. Great to see with Julia. And how do the election results and the market reaction to the results with bond yields and stocks doing what they are, factor into the decision this week? Yeah. So I think in the near term, the Fed is going to want to be as steady a hand as possible. They've already signaled a 25 basis point cut. It's fully priced by markets just execute and say less rather than more. I think that'll be the strategy. You know, bigger picture, they're going to be mulling through. They're going to be. of you awaiting signals on the mix of policies and the timing of those policies. Of course, what can be done at the executive branch level through immigration and tariffs can happen

well before any fiscal impulse. And so the timing of that is going to matter to the Fed's decision in the state of the economy. The market reaction also has mixed signals for the Fed, of course, because higher real rates certainly could be a headwind to the economy. But on the other hand, we could have an additional tailwind from a, you know, enthusiastic stock market. So, you know, the Fed is always, when it comes to financial conditions, you take their time, see what persists. This is a one-day move. What shakes out over the next few weeks?

Why are long-term yields rising or longer-term yields rising when the Fed's yields are falling? What is that telling you? What is one saying versus what the other is saying? I think the way I read long-term yields is that we're building in more term premium. If you look at there is some more inflation, but inflation that comes from tariffs tends to be demand-destructive, so it doesn't necessarily leave a long-term footprint on inflation. But what we do have is a reshaping of the global order, the global economic order through trade wars, through shifting national security alignments.

And that just means a riskier world and more term premium in longer term rates. You know, a lot of Trump's policy proposals would be deficit expanding. If he doesn't ultimately get that sweep with control of the house, he could implement some of those big deficit expanding policies, and that gives the market more supply that it's going to have to digest. So those rising yields are really reflecting the possibility of a riskier, more uncertain world, right? Yes.

I think that's up in your assessment. It's interesting you say that, though, Julia, because the drop in gold prices has people thinking the exact opposite today. And after all, the three wars that are happening right now, all broke out under Biden's term. Right. But, I mean, I think we don't know what's going to happen with those wars. The Middle East still is fraught with conflict that's going to be red-hot,

even with a Trump administration. China and Taiwan is a whole new uncertainty. The future of Europe, the security of Europe now. I mean, we have to cast that in a different light. So, you know, rather than focusing on sort of the near-term timing of these things in a bigger sense, this Pax Americana era is sort of well and truly behind us now. And it's just a world of multiple competing pulls of power. And that's just a riskier backdrop.

What happens to Jay Powell? I think Chair Powell will stick around through his full term. I mean, I think ultimately we know Trump would like to have more of a voice in setting monetary policy. But he's not going to want a royal markets any more than they already are in terms of, you know, he likes low rates. He's not getting them right now. but if you disrupt the Fed structure, that might actually backfire and cause even more uncertainty. So I think Chair Powell probably serves out his term. And then, you know, then President Trump will have an opportunity to put in his own Fed chair.

The vice chair of supervision is another question. Will Michael Barr stay through his term? Will he leave? that could give Trump an opportunity to reshape regulatory policy, which seems to be more of a near-term priority for them? Do you think it's a low possibility that Chair Powell would offer to resign so that the president could accelerate that moment at which he gets to put his own person in place? I think Chair Powell's term doesn't end until 2026.

Yeah, no, I do not expect Chair Powell to offer to resign. That is just not the way the Fed is structured or operates. One of the secret sauce of the U.S., you know, the dollars status is reserve currency and the U.S. financial stability has been this kind of overlapping, you know, 10 years of the Fed, even handed through shifts in administrations. It is not a political position overtly. It's meant to be a more medium-term view. And, you know, the economy is doing just fine.

There's not a problem to be solved. Trump is going to inherit an economy that's soft landed and is moving along just fine. Yeah, yeah. All right. Julia, thank you. Appreciate it. Macro policy perspective, president. We thank you for your wisdom.

Still to come, we'll dive a little deeper into the Fed decision. Our options trader will cover some potential hedges to the Fed's policy. Market Navigator is next. Welcome back to Power Lunch and take a look at markets. The Russells, which aren't even on there, are up four and a half percent today. The Dow's up at almost three and a half percent or 1,500 points. The S&P, the NASDAQ, better than 2 percent gains as well. Dom, what do we pick from in this cornucopia of things for Navigator?

What a great word, by the way, and especially for Thanksgiving coming up. Exactly. So let's talk about the election because it's largely behind us, largely. It's not completely, right? But traders are now turning to what's happening today. The Fed's two-day interest rate policy meeting kicks off today, and it concludes with a rate decision tomorrow afternoon. Our next guest says that regardless of what the Fed does on the short-term rate side of things,

longer-dated Treasury notes and bonds should be a key focus. So joining us now is Mike Co, the chief strategist over at openinterest.pro. Mike, thank you very much for being here with us. When we talk about using options to trade instruments around this, we're looking at maybe ETFs and the options on them. You're looking specifically at the longer-dated bond ETF, ticker TLT. What's the trade and why? Yeah, so TLT, first of all, you won't be alone if you're trading this thing.

I mean, it traded close to $1.2 million contracts so far today. That's pretty much the busiest day that we've seen in this contract for over the course of the last 12 months. So as much activity as we could possibly see. The busiest contract are the 90 strike puts. These ones happen to be expiring just November regular way. so we were seeing a lot of volume in those. Buyers were paying about a dollar a contract. And of course, if you buy puts on TLT,

you're betting that the long bond goes down, which is another way of saying that you're betting that the long rates are going to go higher. And really two things are going to propel that, right? So higher inflation expectations over the long term would propel long term rates. Also higher growth expectations over the long term would propel higher rates.

And it is possible for the Fed to control longer rates. Of course, they'd have to do that with their balance sheet. When we think about Fed policy, we're usually thinking at the short end of the curve. I heard Sam Carson at the Sebo talking to Rick about this only just a few minutes ago on the network. But, I mean, basically the gist of this is that net of higher asset prices, growth and inflationary pressures, long rates could go higher. All right. So if that's the case, you're betting on downside price action for this long-term bond ETF. When you're playing the downside of things, typically you want to be long-down downside.

protection or to profit when things go lower, that to me screams buying a put option or the right but not obligation to sell. Yeah, that's exactly right. And that's, that was what the most active traders were doing today. They were buying the 90 strike puts. They were paying about a dollar contract for that. Consider that that's essentially an at the money put and TLT moved more than two bucks just today. I mean, there is a lot of duration, of course, in TLT. It's a long-dated Treasury bond ETF after all, and that, of course, means that its sensitivity to long rates is going to be quite high, and we're seeing that. So that's one way that people could speculate that, you know, rates could continue to steepen. That is that the long end will go up, even as,

even as the short end comes down. And what about the risk reward on that kind of a trade? In this case here, you're buying an option, you're buying premium up, so it says that maybe the most you can lose is what you've paid for the option, and what's the upside? Yeah, so the, I mean, the worst case loss in this case is only a dollar a contract, so that's $100 because each contract represents 100 shares of the underlying. It's a little more than 1% of the value of TLT right here. You know, in theory, TLT can fall quite sharply if rates really rose. I mean, we did see TLT fall from the absolute lows in long-term rates when 10 years were less than 1%. TLT actually fell more than 50%. We're not expecting that here because, of course, rates are all

at a much, much higher level. But, you know, it does demonstrate when you see a 20 basis point move in the long rates that you could see a 2% move or more in TLT to the downside. So it doesn't take a huge move in those long-dated rates to get TLT moving lower by a good amount. All right. So long-term bonds and focus, Mikeco, openinterest.pro. Thank you very much. We'll see you soon, sir. I'm going to be thinking about that trade now as we watch those yields. Well, and not just that. I mean, the amount of activity that you're seeing, not just in the the bond market, but in the ETFs that track it, that's crazy, given the context of the election that we've just seen and what it could tell us about the future policy of America.

Indeed, Dom, thanks so much. As always, Dom Chu. Tyler. Thanks, folks. ahead on power lunch, we will trade the Trump Redway in today's three-stock lunch, and as we head to break, a quick power check. On the positive side of the S&P, you've got Discover financial services climbing with other financials on the thought, among other things, that its merger with Capital One is more likely to be approved now, up 18 percent. Negative size? Super Micro down 22% after a financial upgrade heightened investor concerns. We will be right back. Time for today's three-stock lunch with President-elect Donald Trump poised to return to the White House. We look at the potential winners and losers under his second term as president. First up, we have gold hitting a three-week low today here with our trades.

Boris Schlossberg, manager director of FX strategy at BK asset management. Boris, what do you think of gold, which has been on a run? Yeah, gold is having a corrective day today, natural, yields are up, dollar is strong, so gold is correcting. But I think longer term, and especially against the Trump presidency, gold should be a very, very interesting asset going forward. I mean, I think some of the things that people forget is, although the dollar is rallying now, Trump is really a modern-day mercantilist.

And if you remember back 2016-2018, dollar actually dropped 10%. That's very, very favorable for gold when dollar declines. More importantly, Trump really loves low yields and an expansionary fiscal policy. And both of those policy measures are going to be very favorable for gold as well. So I think gold is well on its way to eventually hitting 3,000, whatever pullbacks we have are going to be opportunities to buy the dip. It's a new BTFD trade. It might also be the rare example, Boris, of something that's going down today, even though

you think it would still go up. Whereas many other people are saying stick with the winners and kind of stick with the losers as well, kind of stay away from them. So let's see how the next two fit in. I'm curious. For instance, Exxon, I mean, this is considered a Trump trade, you know, sort of, but there's also, if he's friendlier for drilling and that lowers the oil price, you obviously could see that being a headwind. The shares are up 2%. What do you do here? Well, you know, Exxon to me, and you're right, I mean, it's an expensive stock right now, but long term, the thing that's really interesting about Exxon is they have this massive find in Guyana that's going to be on track to produce a million barrels per day.

It's a very attractive asset find because it's outside of all the geopolitical hot zones, and it's going to just be a money machine for them very much going forward. So to me, looser regulatory requirements, you know, great source of a product. All of that both is very, very well for them. And I think long term is just simply going to be a very solid stock to hold against this kind of regulatory environment. Our final name today is in the consumer staples sector. It is General Mills. The stock is down over 2 percent today.

Staples widely seen as a loser in a second Trump presidency. Why don't you explain why that is and what your trade is on General Mills, particularly if Robert F. Kennedy Jr. has some important role in food and drug supervision. Exactly. You know, one name, Bobby Kennedy. Because, you know, he's clearly, Trump has clearly said that he's going to tap him for some sort of a position in his cabinet. most likely something to be like a food or a drug czar. Now, the conventional trade is to say, well, it's going to be the pharmaceuticals are going to get hurt.

But Kennedy's position on vaccines is not that he wants to ban them. He just simply doesn't want to mandate them. That means the vaccine makers are still, I think, going to be quite all right as far as production goes. On the other hand, he's really very much against seed oils, which are shown to be very, very, very dangerous over a long-term basis for the health of Americans. In American, let's be honest, packaged foods in America are really garbage food. And General Mills is pretty much at the forefront. You know, it has very much a target on them

as far as the type of products that they're selling. So there is potential here for some regulatory oversight, on top of which the whole sector has been very stagnant, really has not been growing, has underperformed the S&P significantly. And all of that, I think, combines for perhaps investors to go just say bye-bye to the stock for the time. So when you're talking about seed oils, you're talking about sunflower seed oils, flaxseed oil, those kinds of things? Right. And I forgot the palm oil. All of them. Everything except olive oil.

Olive oil is in. Lard is in and oil is out. I cook with it all the time. But yes, that's the way to go. Natural is best. For Schlesberg, thanks very much. Avoid the cereals. Thanks guys. Up next, Amazon, meta, Apple, and Alphabet are all undergoing antitrust suits by either the DOJ or FTC. Those investigations started under Trump, continued under Biden. Will they continue under a new DOJ? We will discuss that next.

Welcome back to Power Lunch. I'm Courtney Reagan. This is your CNBC News Update. Justice Department officials are evaluating how to wind down the two federal criminal cases against Donald Trump before his return to the Oval Office. Sources tell NBC News it will be up to special counsel, Jack Smith, to decide how to end the classified documents in January 6th cases against Trump. Both of the cases were mired in legal issues.

issues that were likely to be appealed to the Supreme Court. The move is in compliance with the agency's longstanding policy that a sitting president can't be prosecuted. The first openly trans lawmaker in Montana won re-election in the State House of Representatives. The victory came after Zoe Zephyr was censured and barred from the House floor for almost two years, following a passionate argument against a ban on gender affirming care for transgender youth. Her win allows her to return to floor debate. And Hurricane Raphael is now a Category 3 storm. The National Hurricane Center says it is now about 85 miles south of Savannah.

Forecasters warn it could bring life-threatening storm surges, powerful winds, and flash floods to the western coast of Cuba. Kelly, back over to you. Courtney, thank you and welcome back. Great to see you, Courtney Reagan. The NASDAQ composite is gaining more than 2% today, which practically makes it a laggard, but it is hitting an all-time high. We're seeing a somewhat muted reaction across the biggest tech stocks, mostly higher with the exception of meta. Let's turn to Steve Kovak now for more on the issues facing them in the Trump administration. I was reminded in that earlier, we could see that a lot of these investigations did start under the Trump

previous. That's exactly right. And I think that's kind of getting lost in this conversation today around mergers and acquisitions and antitrust and what all that might look like under the next Trump administration. So look, the four big government antitrust cases against Amazon, Apple, Alphabet and Meta, like you said, all began under Trump's first administration. And it wasn't for most part until Biden administration that those lawsuits were ready. Let me give you a recap of these cases here, the FTC versus Amazon. on accusing Amazon a stifling competition and blocking out lower prices. Then there's the DOJ versus Alphabet on search. We all know Alphabet lost that case. And the DOJ is now considering a breakup of Google. Still waiting for the judge to decide on that, though. And there's a second Alphabet case against its digital advertising business,

waiting for a ruling on that. And then this spring, we got the DOJ antitrust case against Apple, which is focusing on an alleged monopoly on the high end of the smartphone market and policies around the app store, other things. And then the FTC versus meta, this lawsuit actually came out at the end of the first trip administration. It's gone through a bunch of appeals and so forth, still being worked out, but it's still alive and well. Now, outside of those cases, the FTC is investigating Microsoft's investment in OpenAI, and in January, ordered those two companies to provide information related

to the investigation. FTC at the same time is looking at Alphabet and Amazon's investment in OpenAIs rival Anthropic. As for Trump, of course, he's been seen as a big, tech critic for many years now. At the same time, his future vice president, J.D. Vance, has praised the strict regulatory regime under Joe Biden. Trump has also said he recently spoke with CEOs of some of those companies, that includes Alphabet's CEO Sundarpa Chai and Apple CEO Tim Cook. Washington Post also reported Amazon CEO Andy Jassy recently spoke with Trump as well. And today, Andy Jassy, Sundarpa Chai, Mark Zuckerberg, and Satya Nadella all posted their congratulations to Trump's win on their respective social media platforms.

What to look for next, though? It really comes down to who gets appointed to run antitrust at the DOJ and to replace Selena Khan as chair of the FTC. So pay attention to those picks. That will give us at least some indication how these cases will progress. How influential might Elon Musk be in shaping the Trump administration's approach to? We know he's not a fan of Mark Zuckerberg. Is that why Met us down today?

Some people are speculating, who knows, but yes, that could be part of it. We know who is not. We know that Musk is not a fan. And at various times, we've heard Trump praise these people and admonished them at the same time. We know there's definitely a contentious relationship with Musk and Zuckerberg. There have been some contention between Apple CEO Tim Cook and Musk over when Apple pulled its advertising off of X. Numerous issues, everyone's involved at the same time. Musk was out there today on X. thanking basically all these CEOs who were congratulating Trump today and you know American flag emojis and things like that so

He's at least projecting happiness that these CEOs have it feels like the Trump relationship with Silicon Valley is I hesitate to use this word a little better than it was four years ago eight years ago fair Yeah, I think that's fair to say and look at what happened During the first Trump presidency after his election after his inauguration We had just like For example, Alphabet, they had a big town hall meeting. A lot of people were upset, and they kind of talked about that kind of stuff.

We saw these very, like, outward projections of anti-Trumpism, let's just call it. We saw that less from Apple during that first term. We saw Apple see Tim Cook kind of take a back step and work more behind the scenes, not being so front and forward-facing about how he was dealing with Trump. And by the way, that kind of worked out for him because he got some relief on the tariff front there as those were getting. implemented back in 2019. All right, Steve, thank you very much. Steve Kovat. And Bitcoin rallying on Donald Trump's victory.

But why does the crypto market see his return as such a boon? We will break that down next. Welcome back to Power Lunch, everybody. It's not just the stock market that is surging to record highs. Bitcoin also hitting an all-time high after Donald Trump was elected president. Let's talk more about what's driving the crypto trade. Michael Busella is managing partner of Neo-classic capital. And McKenzie Sagalos is a technology reporter for Cesarlo.

NBC.com. McKenzie, let's start with you. What does the crypto community think Donald Trump will do for them in a second term? And he was no friend of crypto some years ago. That's true. And he had this complete about face. And so in the last six months, he's been making a whole lot of promises to the sector. And the big one here is that he plans to fire SEC chair Gary Gensler.

Now, he can't do that all together, but he can unseat him from that chairman seat. And that's why you're seeing stocks like Coinbase and Robert Hunt, an absolute tear today. Coinbase is up 30%. Its CEO, Brian Armstrong, is $1.6 billion richer today. And that's because they've been fighting the SEC for over a year now. That's why they put $75 million into a pro-cropto pack called Fairshake, which is one of the top spenders this cycle. Meanwhile, you have Robin Hood. Now, they received a Wells notice from the SEC. Their stock is up 20 percent because, hey, they haven't been sued yet. And perhaps with a change of leadership at the top of the SEC, that lawsuit might not come to fruition. Another big big big.

promise from Trump on the campaign trail was that he'd be a big backer of the Bitcoin mining industry. And that's why you're seeing stocks up more than 20%. I'm looking at 22% up for riot, clean spark. These are guys who've been meeting with Trump behind closed doors in Mar-Lago and also in Nashville talking to him about how he plans to invest a lot of money in building out a more robust energy and transmission infrastructure. These are very big promises. These guys suck up a lot of power. Yeah. Yeah. And so that kind of build out would be hugely instrumental to their business. And what about this idea of creating a national sort of crypto reserve? What would the purpose of that be? And obviously it would be, I guess, good

for crypto. Yeah. So in July, Donald Trump talked about this idea of a national crypto stockpile, which is not quite the same thing as a strategic reserve, but what it would do is the $15 billion worth of Bitcoin that the government has amassed from these seizures as part of, you know, criminal sting operations. It would keep that. And then anytime they have future operations, it would hold onto that. And so suddenly you have all of this Bitcoin being taken out of the supply because as of now,

the U.S. Marshal's Service will auction them off periodically. And when governments do that, like Germany did this summer, it auctioned off hundreds of billions of dollars worth of Bitcoin. That was a boon to the price. Or not a boon.

It did the exact opposite. You're selling it. Mike Busella, how are you placing your bets for the next couple of months, years now? I think the knee-jerk reaction, higher, about 8, 9%,

was roughly priced in. actually, it's pricing pretty well by the options market. So there's no surprise there. But I think I generally, as a rule of thumb, trust markets, not politicians. So I'm very happy the way that Trump kind of got behind the industry. But I think more than anything else, perception matters more than most, both policy perception, perception of support. And then broadly speaking outside of the future president, Trump, we have a lot of support

from Congress now. I believe only four states in the United States of America, so four to 50 states without a pro-crypto representation in Congress. And so I think all of that comes together as a very near-term bull case for crypto. I think either way, the outcome of the election in either direction, I personally was a large buyer of crypto leading into the election because it was a derisking agent. I think medium term, longer-term monetary policy matters a lot more. And I think either way, we're headed for larger deficits.

We're headed for larger liquidity cycles. And so from my perspective, go on. Well, I wanted you to finish a thought, Michael, but I just wanted to say on that note about larger deficits, there are some who think of this. is now a turning point and that while not going away that they start getting smaller on the margin. And if that's true, and depending on the dynamics, could you actually see crypto kind of lose a little bit of its steam here? I think they won't, I think they won't grow at the pace they've been growing, but I don't see them shrinking anytime soon. And so I think, again, either way,

we're in a position where the next two cycles, so-called next eight years, we're in a very good position for liquidity cycles for crypto. And again, it's just, like, Like any investment, if the opportunity remains the same and the risks decrease by half or more, you should be investing in that asset. That's kind of the way that I see this working out. McKenzie, where is Congress on crypto? And what's the, we don't know the final composition of the House yet. We do sort of know what the Senate's going to be in. This can be a GOP controlled Senate, under a new leader, by the way, I would suspect. I don't think McConnell is running. But what will Congress be doing here? Well, it's really tremendous. And,

Mike was speaking about this, a lot of the crypto pack money that got involved proved enormously effective, 330 pro-crypto representatives on Capitol Hill. And of the 58 races where you had this kind of pack money get involved, they've won every race so far. Not not. Now, not every race has been called yet, but it's just proven the efficacy of this, you know, crypto voting block. They raised, you know, between companies and individual donors from the crypto sector, they raised more than $245 million poured that into a mix of. House and Senate races because really that's where you're going to get the laws that will decide, you know, how much the industry can do. Fit 21, which is a market infrastructure bill,

would be a game changer in terms of getting institutions comfortable with jumping into investing in the crypto scheme. And Mike, I was just curious. Go ahead. And then you can you can mention Doge quickly in passing if you think it's worth a mention. And that was, that might have been part of the basket that I purchased heading into the election. I would say, yeah, I mean, the interesting, the nice part beyond the presidency is it's much more of a bipartisan issue, or I say a bipartisan effort in the House and Senate. So 247 candidates in the House were elected that were pro-Crypto. We have, I believe it's 15 in the Senate. And so it's across the table. I think there's parties on both sides that want to push this initiative

forward. And I think high level, this blows the hinges off of crypto capital market. So think more IPOs in the crypto space, more M&A, more capital activity, more ETFs, or ETF offerings, derivative offerings. That creates this massive, massive flywheel for the crypto capital market system where liquidity builds upon itself. And so, you know, I think across the U.S., you're going to see infos into listed products. You're going to see, obviously, we're seeing it on the board of Terra Wolf. You're seeing it across the board. Our firm invests quite a bit overseas in Asia. And a lot of those regulators take note from what's happening in the U.S. And so if the perception is that the U.S. is becoming more crypto-friendly, that will have a global

They're playing our song. Michael Bacela, McKenzie Seagalus. Thank you very much and thank you for watching Power Lunch.