Power Lunch - The Next Chip Leader, AI Hype, Risks to U.S. Banks & Morgan Stanley Layoffs 2/14/24

Episode Date: February 14, 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 Contessa Brewer, I am Tyler Matheson. Glad you could join us. Stocks reacting to the worst day in nearly a year. It's not as bad as yesterday. In fact, it's a lot better. Higher by 30 points on the Dow. And Contessa, the 10-year is moving as well. Yeah, it sure is. Well, it's pulling back a little bit. It had jumped to its highest level since December 1st. Yesterday, the stock sell-off was started by fears of higher for longer interest rates. And there you're seeing the yield. down by 0.05%, just barely, just a little bit. Coming up, we're going to hear from an analyst who says that possibility of rates staying high could pose problems for the banks. And we're watching Invidia, as we always do, as it briefly passed Alphabet to become the third largest company by total market value. There you see it. After Microsoft and Apple, Invidia at 1.802. I guess Alphabet has come back and reclaimed at 1.803.04. There you go. It's a dog fight there. Everyone knows about Nvidia.

Now it seems investors are trying to chase the next big thing in chips. Sending names like Arm and Super MicroSauring. Is this a sign that AI chip hype is getting too hypey? We'll discuss that. But let's start first with Mike Santoli in today's market reaction to yesterday's market reaction to the reaction to the reaction to the other reaction. Michael. That's what we do here, Tyler.

You're always just in this hall of mirrors figuring out what comes next based on what just happened. I would say the market never did really lose its wits, despite the jolt coming from the bond market and that CPI report yesterday. The pullback yesterday was definitely broad. In other words, 95% of all volume was to the downside. We haven't had a 3% pullback from a high. We still haven't. But the market did get its footing once the bond market calmed down. In fact, the S&P 500 is up about 1% from yesterday's intraday low, which is about 23 hours ago. Nothing much has changed about the overall trend. Some might say also that means the market still has. more to give back because we were pretty overbought. We have been up, you know, 22% over three months and change. So it seems as if perhaps we might have a little more reckoning if, in fact, the

inflation scare has any legs to it. I wouldn't really be that alarmed about the longer-term trend being damaged. Industrials back at their highs today just took all of yesterday's losses back. I mean the industrial sector and the credit market's been very calm. So it seems as if no macroeconomic shock, but the market definitely is a little more on alert. All right, Mike. Thanks very much and stick around as we bring in our next guest, who remains optimistic for the year and has a portfolio that he says is the most concentrated it has ever been with just 12 stocks in it. Well, those 12 stocks are doing well because the portfolio is up 20 percent so far this year. Peter Anderson is Chief Investment Officer with Anderson Capital Management.

Peter, why are you as concentrated as you are? And where are you concentrated? What sectors? Well, after all the COVID scares and the interest rate hikes and all that, I've always thought once the storm cleared, that the economy would be on a very favorable track. And that's why I am so confident. I think this year will produce tremendous returns in spite of all the concerns. You know, we still have the lingering concern about the Fed and the rate hikes or the rate cuts. but I still think if you pick good, solid companies, especially in this period of such hopefulness with artificial intelligence in other technologies, I think we're sailing very, very strong this year. What's your concern then?

I have only one concern, and that concern has to do with artificial intelligence. You know, I've probably done, dare I say, the deepest dive on the theoretical background of artificial intelligence for an investor. And what I have come up with is this. I think we are all so optimistic about what's going to be producing from artificial intelligence that we are setting ourselves up perhaps for a big disappointment. I think the computational capabilities are great. But in terms of mimicking the human brain, we are so far away from that. And I'm worried that some investors might wake up one morning and consider this an AI betrayal. Then why do my notes say, Peter, that there are two sector themes, AI and cyber, that make up 60%

of your portfolio? Exactly. Let me just finish this thought. So, AI on a track that it is, is very, very strong, but we have to temper our expectations. I'm very optimistic about artificial intelligence, but more in the capability of, say, high-speed computational capability, Tyler, not that it's going to mimic. our human brain. And that's where the discrepancy can come in. If people are too optimistic about how far this is going to take us, you know, you can't build enough ladders to bring you to the moon.

And sometimes that's what I think people are thinking of artificial intelligence. It's going to cure everything, and it certainly isn't. So that is the biggest fear this year, is adjusting our expectations, looking in the mirror and saying to ourselves, AI is great, but it is not the cure-all. And it does have cycles. We've seen from the 1950s, for instance, whenever there's a new technology, people think they're going to have the cure for artificial intelligence, and then they realize, ah, we're not at there yet, and then it starts to trade off. So that's where we are right now, I think, in a cycle, probably the most optimistic cycle

ever in artificial intelligence. All right, Peter, Mike Santoli, we have to leave it there because we've got some breaking news from Leslie Picker on Morgan Stanley. Gentlemen, thank you. Let's go to Leslie Picker now. Leslie. Hey, Tyler. Yeah, this is according to a first.

person familiar with the matter. Morgan Stanley plans to lay off a few hundred in its wealth management division. This comes kind of related to integration costs after they closed that E-trade merger last year. I'm told this will not affect financial advisors, FAs, or their teams. A few hundred represents less than one percent of this division. A lot of the layoffs will comprise home office, e-trade at-work business, those types of things, again, not to. financial advisors or those who are informing people what to do with their money. I'm told that those who are affected will be informed sometime this week, but a few hundred layoffs contributing to the layoffs we've seen kind of across Wall Street in the last few months as everyone

kind of figures out what this new environment entails and hire for longer. And in this specific case integrating an acquisition which closed last year and what the bank will look like moving forward. I'll send it back over to you. All right. Thanks very much. Leslie Picker reporting on layoffs at Morgan Stanley. Thank you. The economy appears to be strong. And even though we do get these headlines about job layoffs, unemployment generally remains low, expectations have pushed off a Fed rate cut until May, June. But bank stocks are really under pressure here. Some industry watchers say there are real risks ahead. Joining us to discuss this, Ibrahim Punawala,

the head of North American banks research at Bank of America Securities. Ibrahim, good to see you today. Where do you see risks, especially for the banks? Banks like we just heard from Leslie Morgan Stanley. So thanks for having me on. And when we think about just the broader banks sector you referenced earlier, let's just be clear, right?

A stronger U.S. economy is generally good for bank earnings, banks, stocks, or the medium to long term. The risk that we really see is if we get into a period where inflation turns out to be sticky, the Fed has to, instead of cut rates at some point this year, actually stay higher for longer, or potentially hike interest rates, all of those could lead to probably potential worse outcomes

for the macro economy and maybe lead to a hard landing. So that's the risk. It's a tail risk event, but it's not off the table, and that's something that you're watching for as markets recalibrate outlook for interest. rates in the real time. If that happens, what would be the specific consequences for banks? Are you looking at default, tightening credit situation? Give me a sense of what the specific consequences are. Sure. So I think the specific consequences would be if we do get into

hard landing, essentially if you get into a recession, you could see defaults across consumer, commercial pickup that leads to higher than expected credit losses. So you essentially see or old-fashioned credit cycle on the back of an economic recession, which wasn't quite the base case for us or for the markets, I think, coming into this year. Let's talk a little bit about one of the things I note, and that is that you say the market has treated stronger economic data as a negative for bank stocks. Why is that in that a bank would generally benefit, wouldn't it, if credit, if defaults and delinquencies declined in a stronger economy?

I would think a bad economy would show up in their loan book. So you're right, and it's ironical, right? I've grown up thinking about banks are a reflection of the economy they operate in. And I think what we're dealing with right now is there are two aspects to this. One, given the speed at which the Fed moved from zero to five percent initiated QT, there's a bit of a repricing lag between what we are seeing in terms of funding costs today. and over time some of the fixed-rated assets on bank balance sheet that will reprice and get kind of reflect where the market interest rates are. So it's a bit of a timing issue which creates a bit of a squeeze on net interest margins and revenue growth for the banks today.

And secondarily, I think there is a narrative, as we've seen over the last few weeks, around higher rates leading to concerns around commercial real estate sector and the repricing risk. And I say the narrative because fundamentally, if you talk to experts and we've spent a lot of time talking to internal. our teams and external experts. The CRA issues today are very acute in the CRA office space, but when you look through any other subsector across CRE, the issues are a little bit more less pronounced, and actually most of these sub-sectors are doing quite well. I don't know whether you cover Morgan Stanley,

but we just had that report from Leslie Picker about layoffs in a wealth management group, which I thought, and I think Wall Street believes, is the kryptonite in Morgan Stanley's portfolio, Wealth management has been their strength, recurring fee income, which means that they're less prone to swings in trading revenue or investment banking and so on and so forth. What is your reaction there?

I don't know whether you cover Morgan Stanley, but two layoffs in a bulwark part of Morgan Stanley wealth management. No, absolutely. We cover Morgan Stanley and actually we'll be hosting their head of wealth management, Jed Finn, at BFA's 32nd Financials Conference next week in Florida. We're looking forward to that discussion. In terms of the layoffs, your colleague announced, it's a few hundred on a base of 80,000 employees, give or take at Morgan Stanley.

So I don't think you're right. It is the crown jewel business. There's a lot of focus in terms of how the margins and that business evolve over the coming months and quarters. It is fiercely competitive. But I wouldn't read into too much in terms of the few hundred layoffs on an 80,000 employee base as it pertains to their focus in that business. Sounds reasonable to me. Before we let you go, I just want to get to which bank stocks you think are good right now.

Which do you like? Maybe we split it up into some major banks and some regional banks. Sure. So, I mean, in terms of the big banks, means we've liked Citigroup for a long time. And I think it's a bit of an idiosyncratic recovery restructuring story. We think Jane Fraser is doing a good job and turning around what was probably 20 years of mismanagement at that company. So we like Citigroup. I think the other bank in terms of the large-cap banks that we do think is turning a corner is Goldman Sachs Following keeping some of the issues that have dragged on the company tied to its consumer business behind

And if we do get a bit of an MNA cycle pick up an investment banking We like Goldman shares and I think management bandwidth will be focused on the right things going forward And in the regional banks means I think it's a We like regional banks where there is a little bit of an idiosyncratic self-help driver One name comes to mind is truest finance TFC where management is going through a very hard merger of equals but we're getting to a point where they have a plan in place in terms of cleaning things up tied to that merger executing on that strategy so TFC is another one name that we like another name

that I'd flag would be M&T bank MTB big commercially listed exposure but that's where I do think there's a disconnect between fundamentals at M&T and what the market is kind of putting all the banks in the same bucket. Ibrahim thank you very much we appreciate it Ibrahim Punawala. Thank you. All right. Further ahead on the program, we are looking for some semi-hidden gems. Obviously, all the attention tends to focus on Invidia,

but are there other names worth betting on in the chip area, or is it Invidia or nothing? First, most of that Invidia hype is based on AI, but this week's sell-off seems to be throwing some cold water on that craze. We will discuss it all next. Welcome back to Power Lunch, the NASDAQ 100. ETF, the triple Q's is one of the most widely held ETFs. It is up 40% over the past year, and the reason is simple, artificial intelligence. But we're seeing more signs that maybe the

hype is outpacing the reality, and let's talk about that with Deirda Bosa in today's tech check. Peter Anderson, a moment or so ago, said his biggest worry was that some of the dreams, the fevered dreams of the AI boosters may not be realized. Yeah, well, I'm not going to counter that. I'm actually probably just going to give you a few more examples. And I want to relate this to yesterday's sell-off as well, right? Because it was the first one we had seen in a while, and it is notable which names were actually resilient, suggesting, yes, that the Gen AI tailwinds may be stronger than the CPI headwinds. You had Microsoft meta, the chip winners, Nvidia, AMD, Broadcom. They all held up better than the broader markets. So the point being,

it could have been a lot worse without them. There was a lot riding on the promise of generative AI. You just saw the QQQ up 40% this year. And Tyler, you're correct in saying a lot of that is Gen AI. But it is not clear that it's delivery. I'm going to give you a few more examples. There was that journal article yesterday at Microsoft's co-pilot, kind of saying it was a bit of a dud, and that's a big deal for what B of A is calling the linchpin of the AI monetization theme. Another example, Brian Chesky on the Airbnb earnings call last night, he sort of downplayed the progress so far. He said it's still going to be this huge platform shift, but the interface is still stuck in the 2000s and the 2010s. Case and point.

none of your iPhone apps have fundamentally changed since the advent of generative AI. Question that I like to ask here in San Francisco often is name me a use case that isn't a chatbot. And, you know, a lot of folks struggle to do that. We're just not there quite yet. No doubt it's coming. But how quickly are we going to get there? Lastly, Tyler, I just want to mention the Databricks CEO, Ali Godsey, who works in this space. He is expecting a chip glut this year and the commoditization of a lot of these models,

these large language models that have seen billions and billions of dollars in investment. So a little bit of cold water there. Okay, but if that's cold water, is it cold water for the short term, Deirdre? I mean, like over the, you know, maybe this year, maybe this year and next year, but over the long term, shouldn't there be a lot of steam? Yeah, it's cold water for the, I don't know how long term, but the markets have priced in things happening in the next year or so, right? And we get Nvidia next week, and everyone's expecting, you know, again, a blowout forecast.

What we've seen from the chip makers and the chip designers so far is not all of these upward revision. So the key is what are the markets expecting, and they may be expecting it sooner than we're going to get it. And that's why I thought the Airbnb call last night was so refreshing because you didn't just have a CEO, say, we're using generative AI. We're going to put it in everything. He's going to change everything. He's saying we're not just going to stick a chat bond on something. We're going to think about this thoughtfully, and we're going to come out with an entirely new interface. And he didn't sort of promise when that's going to happen.

Although, you know, here's an interesting use case. We use this transcription service when we do interviews that, you know, sort of, it helps us keep notes. A new feature of Otter is that they go through and consolidate and condense and bullet point for you, the topics that you've covered so that you can easily find it. What an amazing, useful tool. It's like having a fantastic assistant right there beside you. I agree. And a lot of that is what co-pilot, you know, pitches. And, you know, I am on perplexity.

I'm on chat TBT for a lot of the day. But is it like an evolution or is it a revolution? There's just got to be more to it, maybe, and that's coming. Yeah, it's super, super helpful, no denying that. But is it like the huge platform shift that Sam Malman can raise $7 trillion on? I don't know. Maybe not there yet. So it can listen to my interview and transcribe it.

Yeah. And not only that, it goes back through and corrects it. But I think now the advances, we're all used to that. using that for a couple years. Now, the fact that it bullet points it for you and helps you organize the interview that you've done has been extremely helpful. You know, I'm not note, Kintas, I just want to say the thing that I'm excited for is your on-device AI, which NVIDIA released sort of a beta product this week. And that, I think, is interesting. You can go through all of your own notes, all of your past meetings. You can go through videos. It basically,

you know, tailors. It's an AI, large language model for all of your information. I think that would be really useful. Maybe that's the next step. Next up, what I want is the, you know, the thing that listens to your, it's listening to my conversations anyway. Remind me how I met this person in my ear. Yes, I like that. I like that. At a fundraiser, that's what I need. But then you've got to give them everything, all your data, all your conversations. They already have it. They already have it. Dear do it. Thank you. Coming up, a revolutionary, experimental new community backed by names like Lyft and Linar with one goal in mind. No cars. It is Don't near, near, near, garage band.

I love that. Welcome back to power lunch, Nat gas falling once again today, down 50% in the last three months. The winter when natural gas is supposed to rise. Pippa Stevens here with more on this decline. It is precipitous. Yeah, really, how low can we go type story at this point? But we did hear from EQT this morning. They had their conference call, and they are the largest producer of U.S.

Nat Gas because the Chesapeake Southwestern deal hasn't gone through yet. So EQT still is the largest. important thing to note here is that a lot of the producers are, of course, hedged. And so EQT said that for the first quarter, about more than 50% of their production is hedged with an average weighted floor price of 387. So that's more than double where we are right now on NAC gas. So it's important to remember that producers aren't exposed to these spot prices, which is why the stock isn't down as much as NAC gas. However, looking forward, they did have some interesting commentary. They actually don't see prices back in the $4 to $5 range. They see them more in the $2

dollar range. And so because of that, they, sorry, well, why? So they said that until we build out more infrastructure in the U.S., there's not going to be this big lift up, because it's great if you have a lot of gas, but if you can't move it, what's the point? And so until that happens, they see kind of, you know, more depressed prices. And so with that in mind, they did emphasize over and over again that they are a low-cost producer, and that in this type of environment, it's the marginal higher prices, higher cost producers that have to scale back on their production. So for the time being they don't have any plans to curb output. Now from that gas to the other gas, which is prices at the pump, those are ticking higher up about 20 cents in the last month.

Now we're 326 on the national average. That follows an uptick in the Arbob futures. They're up about 10% in the last month. I did catch up with Patrick DeHan from Gas Buddy earlier today, who said it's more of a question of how high can we go. We're no doubt, no doubt we're heading higher. So something to watch there. And that is because what? That is because what? Well, so one thing is that we're heading into a seasonly strong period. And so prices typically rise between 35 and 85 cents from the winter bottom. From February into the summer. Exactly, exactly, into the spring.

And so we still are up about 20 cents, so we still have quite a bit of room there. Also, refiners are in maintenance season right now. So utilization is about 80%. That's in line with historical norms, but they have curbs output. Another thing is, you know, the BP's whiting refinery. That's the largest one in the Midwest. That's been offline for some time. And so we could start to see a little bit of a squeeze on the product side.

Interesting. Pippa, thank you. Let's get to Bertha Coombs now for a CNBC news update. Bertha? Hey, Contessa. Israeli President Benjamin Netanyahu wrote on social media this afternoon that Israel will press ahead with an offensive against Hamas in the city of Rafa on the Gaza Strip. After allowing civilians to flee the U.N. has warned, meantime,

that an Israeli assault on the city of more than a million people could lead to a, quote, slaughter. A blood test may be able to detect several forms of dementia more than 10 years before the disease is diagnosed, according to new research published in the journal Nature Aging. Brain scans can currently detect abnormal levels of a protein associated with Alzheimer's before dementia sets in, but it's expensive and often not covered by insurance. And they're celebrating in Kansas City hundreds of thousands of fans gathering, gathering this afternoon for the Chief's Super Bowl victory parade. So far, no sightings of Taylor Swift,

but Patrick Mahomes did say that after a shirtless photo of him went viral earlier in the playoffs, he may have to show off his dad bought again during the parade. Well, that would certainly be worth it, I think. I mean, it's a little cold. I'm just saying. You know, maybe just keep the coat on. Hey, if Jason Kelsey can do it during their freezing game, Yeah, right. He was shirtless there and Travis having a good time as he seems to do.

All right, thank you, Bertha. After the break, the race to find the next Nvidia. We'll take a look at some other names that may be worth betting on in the chip space, but as we head to break, Nelson Peltz delivering some strong comments to Disney's Bob Iger. Here's what he had to say about the largely well-received Epic Games partnership. Mr. Peltz. Very little meat on the bone. on their announcements. The epic gains on a billion and a half dollars. What's the return? What are we getting a shareholder's nice announcement? I hope they don't have a long history in video games. That's very positive. Welcome back. As of late, we've seen a pretty strict hierarchy form in

the chip space. It seems either you're the AI leader or you're just a loser. And Nvidia is the leader. One of the biggest recent market success stories up six, 15,000 percent in 10 years. Do you know I just double-checked myself because I didn't want any clerical mistakes. Yes, of course. Now markets are looking for the next Nvidia. Christina Parts and Avelas joins us

with a look at some of the other chip high flyers. Hi, Christina. Hello. Yeah, especially after Lyft yesterday. But the split, as you mentioned, between the chip companies, is all the more obvious right now. You have, like you mentioned,

the AI leaders, Nvidia, Marvell, Broadcom, that have seen massive gains, especially towards the end of last year in the start of this year, While the more cyclical names, you know, you got analog, auto, industrial on semi-texas, global foundries most recently, they've been warning of weakness to come. Their guides have disappointed.

But investors are really bidding up other perceived AI plays in hopes of finding the next Nvidia. Let's take a look at Super Micro, for example. This stock is up, what, 194% year-to-old? Oh, look, 203% now. It's gone even higher. It makes high-performance servers, which can be customized for AI, and is actually, as we know, outperforming Nvidia this year alone, although it is considered overbought, if you look at its RSI. Arm is another one, up 78% since its earnings, which was February 5th, about two Mondays

ago. Arm makes the design for chips and servers and is considered a future AI play. So again, on that future momentum. And it has a small flow to, and this is important to note, because SoftBank owns roughly 90% of arm shares, so that means low liquidity will result in any short positions and options market creates more of a swing when you have low liquidity. And then other under the radar names. Monolithic power systems. Shares are up, what, 22%, yeah, over 22%, lattice, 25% I-Kor holdings, which makes fluids for semi-cap equipment, up 20% Allegro-microsystems, which makes power integrated circuits, up 19% month-a-date, also outperforming Invidia. Bottom line, not only are these stocks outperforming the broader market over recent periods, but are trading

above the historical average for the period because investors are hungry for AI. Anything. Anything. Anything. And many feel like they can't get into Nvidia given its current price. So let's just see the externals. And that's why we have Monolithic and all the other names. All right. Stay right here. Christina, we're going to take a deeper dive on the chip stocks, the role of AI. And to share some names he's watching, let's bring in Matt Bryson of Wedbush Securities. Matt, welcome. Good to have you with us. Give us three names in the chip world that aren't NVIDIA that you like? So I certainly like AMD, which Christine brought up.

I think they've set themselves up as the second source to NVIDA. AMD, AMD, exactly. And because they're just working off a lower revenue base, it's easier for them to grow off of that base. I like Taiwan Semi there. they are the supplier to all of the leading chip makers for AI. So whether you're talking Avago or Marvell or AMD or NVIDIA, that chip is getting fabbed by TSM.

And then lastly, I like Micron. One of the concerns around memory right now is there's too much high bandwidth memory or there will be too much high bandwidth memory. That's the memory that's used in conjunction with the Nvidia GPUs or AMD's GPUs. And if we're going to see this continued demand for AI, what you're actually seeing is more and more memory get stacked on the boards. So HBM should only grow faster than AI shipments in my view. Yeah, TSMC you brought up as a great point, too, especially as we talk about the competition from cloud players. are going to be creating their own in-house chips.

A lot of them do still have to use TSM to actually build it. So TSM can benefit not only from the AI GPUs, but the advanced packaging, and then eventually the in-house chips and as well all of the smartphone chips from Apple. So there's a huge, I guess, vast array of sources of revenue. But you didn't mention Intel. AMD has its new chip coming out, and then you have Gowdy with Intel. Why is that? I think the difference between AMD and Intel is AMD has traction, I believe.

at three of large US hyperscalers. If you look at spend on accelerators, it's really been Microsoft, Amazon, Google, meta, leading the way, and AMD has traction at a number of those. With Intel, I think their hope is to get into the inference market. So after we're done training the models and applications start to show up, that they'll get some traction at enterprises. But I think that's very much a to-be-determined thing, whereas with AMD, I think they've got design wins. And clearly, if you listen to release a suit, they are already rampant. Matt, do you think Nvidia is overbought? I think that AI is going to be a game-changing trend.

If I've concerns, at some point, whenever you've got shortages of chips like we have right now, eventually you sell through backlog and you see a bit of a pause. in revenue. But no, I think AI in the data center over time is going to continue to grow. Historically, these markets have had one or two dominant players, and Nvidia has 80% market share. So they've established themselves. They've got a moat with Kuda. Could there be a disappointment at some point? I don't think it's coming this quarter. I don't think it's coming next quarter. So no, I don't think it's overbought. All right. Up a triple over the past year. Matt Bryson, thank you.

Christina Ports on Nevelas. Thank you. Thank you. Good to have you here. Still ahead. Break out your walking shoes with builders who think a rental community with no parking spaces could actually be a real hit with tenants. Diana Ollick has those details. Diana. We'll contest that no parking spaces, no garages because no cars, but we'll tell you what tenants get in return. Coming up next on Powerlund. As more Americans work from home, they are changing the way they live, seeking war. social, walkable communities. But are they willing to give up their cars entirely on real estate

developers making a bet that in Tempe, Arizona, they will. That's where we find CNBC's senior real estate correspondent Diana Oleg. Hi, Diana. Hey, Contessa. Yeah, this new $170 million rental community has all the amenities, the fitness center, the dog park, the outdoor kitchens. Well, what it does not have is cars. Calde-Sac is the first community in the U.S. designed specifically for car-free living. Co-founder Ryan Johnson said it's what Americans want. In the U.S., we've been building the wrong kind of housing for 100 years. We've built sprawl and it's created car dependency, and it's made us lonelier, less healthy, and less happy.

And what people want is to live in walkable neighborhoods. Now, retail, restaurants, and close to 200 apartments in the first phase, no cars means no parking, no garages, no parking spaces, so more space for social areas. The complex is strategically located right next to the area's light rail system. All residents get a free pass. The first 200 also get a free electric e-bike and a partnership with lifts gets them discount rides. Now, those are the partners. Investors in cul-de-sac's $30 million series A include Linar, one of the nation's largest home builders, and Kostla Ventures and Founders Fund.

As part of the community, First Floor Studios are rented to small businesses, and some of the business owners actually live here as well. It's not as like affordable out here as it was a few years ago, you know. And having that opportunity to live and work where you are and just have it as one, that's perfect. Now walkable neighborhoods are of course all well and good when the weather is fine and lovely like it is now. But in Tempe, Arizona, in the summer, it can be well over 100 degrees for weeks at a time. So the summer will be the real test to see if this idea can go the distance. Back to you guys.

But it's interesting because it might be the first. first planned community to forbid cars or parking or whatever. But lots of people live without cars. I mean, look at New York City. So the advantage in New York City is that, yeah, you can go out and just walk to where you need to go and use mass transit. I mean, Phoenix is a car town. Tempe is a car town.

And it's not like that light rail gets used very much. Well, actually, it does seem to get used a lot by the people who live here. And that's the idea is it's a test run. Is Phoenix going to give up its cars forever? No, this is a city of sprawl. And some of the people I talked to said, you know, one guy said he actually moved out of Arizona because he couldn't stand being so car dependent and living in all that sprawl, move back, moved here because he liked this idea. So the idea is more that they're offering you other options because society is changing toward that shared transportation.

They're not anti-car. They're just anti-everybody having a car because in Arizona, it's something like there are eight parking spaces for every car. Do we need that? Probably not. What do you do when your friends come over? So when your friends come over, there is a parking lot that is next to the community where they can park so they can go to the restaurant that's here. They can also go to the stores that are here. But nobody here in the complex has a parking space, a garage. They don't waste that space.

And, you know, it's not like you can't own a car. You just keep it somewhere else. But the idea, again, is to depend on community transportation rather than using so many cars and so much gasoline and so many emissions. might I say. As you walk around the area, could you see yourself living there? In other words, are there sufficient dry cleaners or for me, the coffee shop, the liquor store, whatever it is, so that you could get by without having to go get in a car and go to a grocery or a target or whatever? Well, honestly, you'd have to walk out of the community for certain services like that. There is a grocery store in the community. But what I ask is, you know, people with kids.

Look, anybody who has kids, I had them. You are moober and duber. when they're from middle school up until they get a license in high school. So I think it would be hard for families to live in a community like this because they have to drive their kids to so many different places. So again, maybe this is more for young people. Maybe it's more for retirees who aren't so car dependent. It's an experiment. Is the whole country going to go this way?

Probably not. But it could work for a lot of people. Interesting. Diane Oleg, thanks very much. You know, if you've ever been to the villages, though, you see there, what they do is everybody's got their golf cart and they're using the golf paths and it's maybe not walkable, but it's. It's ridable in an electric, a little mini electric vehicle.

It's very interesting. It works there. It took a vacation to Bald Head Island in North Carolina. Same way. No cars, golf carts. You biked. You carted around. It was cool.

All right, still ahead. Love it or dump it. Our three-stock lunch, Trader, will tell us which names he has a crush on on Valentine's Day and which he's dissing. And during February, we are celebrating Black Heritage. Here's People's Corporation, founder and Chairman Don Beables sharing his story. Let's get to today's three-stock lunch. We're taking a look at three stocks making moves today. And this is Valentine's Day, so we're asking, should you love it or dump it?

Here with our trades is Adil Zamann. He's a partner with Wall Street Alliance Group. And Adil, great to have you. First up, we have IAC. The internet company is up after an earnings beat. City maintains its buy rating on a robust division, turnarounds and impressive financial performance. And boy, were they talking up a company that I cover and they're invested in?

MGM. Adil, love it or dump it? Great to be with you. Happy Valentine's Day. I would just dump this one. This is just too much of a complicated business model to understand. With the various businesses that this company owns, I think, investor, it's very difficult to capture investor interest. And in this environment, with the lofty valuations, when the market turns down, we feel this is a company that will get, these are the type of companies that will get hit.

And investors are, in our opinion, far better off creating their own portfolios as opposed to relying on IAC's portfolio of companies. So for us, this would be dump. This would be a dump. Let's go to Robin Hood, shares of hood up more than 10% today. After posting a surprise fourth quarter profit yesterday, the co-founder and CEO Vlad Tenev, weighing in on the impact of crypto on the results. Listen in. In Q4, total quarterly revenue was a little bit over 400. 70 million, of that 43 million was crypto revenue.

So it's important and we're a major player in the crypto market, but we're also a diversified business. We've added all sorts of other revenue streams from assets-based revenue, subscription revenue with Robin Hood Gold and all the other assets that we trade. All right, Adil, love it or leave it? Not convinced, Tyler. So for us, I'm afraid this is still a dumpet. You know, their business mode is very narrow.

They're targeting the younger generation. And where at one time, you know, this generation was driven by the COVID stimulus money and by meme stock frenzy. Now they are not that active on the platform. The company and their earnings were boasting about the monthly active users in the fourth quarter increasing to 10.9 million. Well, back in 2021, mid-2020, the monthly active users were about 21.3 million. So the trend is clearly against them. So for us, dump it. Okay, finally we have lift, Adil, the stock up about 30% after the ride hailing company

reported better than expected earnings in the fourth quarter. After two dumps, you're going to find me somebody to love. They're going to kill me. The lawyers will kill me for singing. Go ahead, Adel. Great voice, but this one, yes, we would love it. finally, you know, a stock that we would love. I think it's a great turnaround story.

We would get away from, you know, the fat finger glitch in the earnings report and focus more on thanking Taylor Swift and Beyonce because a fact of the matter is people are now going to concerts. They are going to eat out more. They are going for sporting events more. And when they do that, what do they have to do? They have to get more rides. And I think that with rate cuts, consumer discretionary spending in the service area is going to continue to increase.

Yeah. And we think there's a lot of positive tailwind with lift. So, yes, love it. Adil, thank you so much and for the generosity of, you know, just going along with me. Right. Right. Complementing you on your vocal stylings of Freddie Mercury. Nice to see you.

There you go. All right. Coming up, Mickey, Minnie and the gang are out on a new adventure. And this time it involves a fight for fair pay. We will give you the details on the character. characters plans to unionize. That's next. Well, we've got about two minutes left in the program. A couple more stories we want to share with you. Let's get right to it. The value of all Bitcoin in circulation rose above a trillion dollars today for the first time since late 2021.

It's still behind Microsoft, Apple, and V-Viti, I suppose. This comes as inflows to U.S. spot Bitcoin ETFs continue to support prices. Bitcoin is up more than 21 percent so far this year. Obviously, those sports. But ETFs caused a decline in Bitcoin earlier when they were green lighted, but now they have come back. Yeah, sentiment kind of turning around there. Well, the latest Apple Vision Pro review is in from Mark Zuckerberg. The META CEO said in an Instagram video yesterday, Meta's Quest 3 headset was better value and a better product, period, when compared to Apple's. Meta's Quest 3 also cost about 3,000 less than Apple's Vision Pro. But he did say he liked the high resolution of it.

He thought that was pretty good, but everything else. Well, he's not an unbiased source here. No, not at all. He says it wasn't even that comfortable. All right, let's move on to cast members at Disneyland in California. They have sought to organize with the United States primary stage actors' union. The Actors' Equity Association seeking to represent 1,700 employees in the characters and parades departments at the park. The union says it already has 30% of the necessary support.

Mickey, Minnie, Goofy, Dumbo. They'll all be card carrying union members. And apparently they chose that union. The union has its way. Yeah, the union works really well with Disney, apparently, and has a history of that. So see what happens there. We'll keep tabs on it. All right. Nice to be with you.

Nice to be with you. All righty. Thanks for watching, Powell. It's nice to be with you all, too.