Power Lunch - The Record Rally Rolls On 7/16/24

Episode Date: July 16, 2024

The record market rally is rolling on today, but with some different leadership. The Russell 2000 index is up more than 2%, while the Dow is within 100 points of 41K. We’ll break it all down.Plus, TD Cowen is analyzing the impact that former President Trump’s running mate, JD Vance, could have on policy and the economy in a new note. We’ll speak to the analyst behind the call. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunge alongside Kelly Evans. I'm John Ford, and the record rally rolling on today, though the leadership looks a little different. Today it's a Russell 2000 up more than 2.5%. The Dow starting a new highs getting within, let's see, about 150 points almost of Dow 41,000. That's a quick rise. The S&P only slightly higher, though, and the NASDAQ has been lower for most of the session. Recall they've both massively outperformed the Dow so far this year. The S&P is still up 18.5% nearly 23% for the NASDAQ, despite today's decline. and of the handful of Dow stocks that are lower, Microsoft, Apple, and Intel are among them. The tech names, in other words. So what's been leading the Dow to these new heights? Well, Goldman, following through after earnings, the 2% gain today, Katz showing some momentum up 4% and 10% in the past week. Boeing and Home Depot also contributing.

But the biggest contributor to the Dow's record rally is UnitedHealth. It's adding more than 150 points on its own after reporting results this morning. And for more on that, Let's get to our Bertha Coombs. John, United Health, seeing its best day's performance in a year after second quarter results beat on the top and bottom line, posting nearly $100 billion in revenue more than $4 billion in profits, driven by growth in commercial insurance membership and strength in Optumrx, the company's pharmacy benefits unit. CEO Andrew Whittie saying that the PBM has brought on a record number of clients this year.

Now, the first quarter hack on change health systems is still being felt. Health now sees a 60 to 70 cent negative impact per share. That's up 30 cents from what they forecast in the first quarter. It also saw a higher than expected medical cost ratio. Call out the MCR of 85.1 percent, the percentage of each premium dollar that is spent on medical care, attributing that in part to the suspension of reviews during the outage. Executives say that's being addressed, and beyond that, they say, payments and claims are back to normal, which votes well for competitors. You can see they're getting a lift today as well.

Back to you. Indeed. Bertha, thank you. And now our next guest recently switched his overall market outlook from Barish to Neutral. So what's driving his outlook in which sectors still have opportunity? Joining us now to discuss his thoughts.

The CNBC contributor Greg Branch, he's the founder of managing partner of Branch Global Capital Advisors. Greg, that CPI report, part of what turned you around here or continues to have you around at least at neutral? Yeah, I think that was the final piece, John. When you look back at my thesis throughout the year, really rested on three things. The first was that the core growth for the last 16 and 18 months had been in a narrow band of 30 to 40 basis points. And while we had some headfakes of 20 basis points for a month or two, we never broke out of that ban. And that doesn't get us to a sustainable 2%. But when we saw the number from May at 0%, and then that followed with a 10%. 10 basis points hike, 10 basis points increase in core, you had some belief or you had some

conviction that we were in a new paradigm, a new step down. That was supported by the fact that unemployment, which had also been one of the challenges in changing my view, where it was in that stubborn 3.6, 3.7% range. Well, for the last three months, it's ticked up, and now we sit at 4.1, a very short distance from what the Fed said it needs to get the sustainable 2%, And lastly, occurring coincidentally was the first time that we saw a real break in the housing component with only 20 basis points. That was the lowest we'd seen in three years. All of those things occurring at the same time, I think makes it really hard and made it really hard a few weeks ago to continue with a bearish posture. So if you're underinvested here, what are the sectors where you should be putting money in?

So I think that depends on whether or not you think this is a sustainable rotation, John. I don't yet have that conviction. And so our exposure and where we're targeting our exposure continues to be the same as when we were forced to widen back in December when the Fed full pivoted. And for us, that means one of two things. That means either focusing on the names that are driven by these generational secular tailwinds of AI and cloud. And there you're going to have to come to grips with whether or not valuation is extended or whether these names will grow into the valuation. Our personal view is that the multiple isn't going to really matter when the economy starts to slow, and there's some of the few names putting up 20% plus earnings growth.

The other area that we like to focus on and when we're looking for more names is where we have a structural imbalance in supply and demand. When you look at some of the metals and minerals and materials used for the clean energy transition, for the transition to EVs, the lithium, aluminums, copper's gotten all of the attention, But, you know, there are other names and other materials in there where we think that there's some value, particularly if we're going to have a small cap rally, which is what has caused some of the drag in the sector, as many of these are down market cap. Greg, I don't know if this is quite a newsletter. So this, you've changed your market view. I don't know, I guess we can't say it's, this is like a huge development.

This is big. So this is, a lot of this is because of the CPI and the set. So, but you're not worried that this is end of the business cycle? You know, watch out for the, you know, more labor market slowdown. This is big news. Well, this is not the end of all concerns, Kelly. But I always said that that thesis was very data-driven. And when all of the data, you're basing that thesis on pivots, you have to reconsider your view.

Now, will I have a concern come fall, winter? Probably because we are entering the down part of the cycle. And I'll have to look and see if my view of 2025, matches, exceeds, or as far short of consensus, if I'm right and line. Yeah, let me just back up for a second. Because I remember when you were often in the minority who were saying the Fed may be needed not only to hold rates, but even to hike them, and that you were concerned that inflation was going to remain. And there's a lot of viewers, by the way, and a lot of investors who have shared that point of view. But do you think,

intellectually speaking, that view, we have to put that away now that you, there's no real case to be made for a hawkish Fed at this point? For right now, yes. You know, I've You know, I've long resisted the notion that the terminal rate was in. My original prediction back in 2022, actually, was 6%. We came close, but I think the terminal rate's in for now, barring some external shock. Wow. Greg, I'm looking at what's unusual today in the movement. The KRE Regional Bank Index is up 3.8% at the moment.

The KBE 3.5 at a time when the Russell is, also up, what was it? Close to 3%. So we're talking about the Dow and the nice boost that United Health and Boeing are giving it. But really, that small stock rally, that small cap rally that we saw on Thursday, maybe having a bit of an echo that it's not alone today. What does that mean to you? Well, I think that that's typical when you think about a rate cut rally, Judd. You know, the small caps and down market caps are those that are most susceptible to, financial duress in a high interest rate environment. And so what I think you're seeing is a relief rally in some of those companies that are the least well positioned to endure a much higher for a much

longer environment. And so I think that you're seeing a bit of hope. I mean, part of this is gain-taking as well. There's been a massive run here since our low of 4,100 in October. So I think it's a little bit of both. We'll see if this can sustain itself over the next few months to give us confidence that this is a permanent rotation. Yeah, wondering if it's one affirming the other. Greg Branch, thank you, Branch, global capital, advisors, founder and managing partner. Big development. Still to come, TD Cowan, breaking down the impact Trump's running mate J.D. Vance could have on policy in a new note. We'll speak with the analyst behind that call. But first, as we head to break, let's get a quick power check on the markets. Match Group on the positive side today, up 7% on news that the

activist investor Starboard has now acquired a 6.5% stake. They're calling for the online dating company to improve growth and profitability or to otherwise consider going private. On the negative side, Charles Schwab at narrowly topped earnings expectations, but net interest margin missed, and the shares are down 9%. Power Lunch will be right back. Welcome back to Power Lunch. It's an unlikely matchup, but, or maybe it's not, Trump's running mate Ohio Senator J.D. Vance agrees with a high-profile while Biden appointed regulator FTC chair, Lena Kahn, saying earlier this year she's doing, quote, a pretty good job on tech antitrust. T.D. Cowan noting today the Veep Hove Bowl has raised concerns about the effect large tech

platforms could have on democracy and workers. Going on to say, should Trump be reelected, Vance could have a major impact on tech policies and regulation, especially given his time at Peter Teal's VC firm in the 2010s. Let's bring in the analyst behind the no TD Cowan's Paul Galant. Paul, it's great to have you here. So the Biden administration, we've been doing kind of a little bit of going back in the history books, the Biden administration, other than maybe the AT&T deal for time. No, anyway, there was not much that they were trying to stop.

Why do we really think that a new administration would be more proactive, more like Lena Kahn, and trying to block many deals from happening? Yeah, I think going into yesterday and say before yesterday, we felt pretty good about what a Trump victory would mean for the tech sector, mostly deregulation. But if you listen to what Senator Vance has said over the past couple of years, including where he used to work, which is Silicon Valley, trying to fund companies that challenge the big tech companies. I think if Vance is the biggest voice in Trump's era and tech policy, that's going to shift our view a bit toward being more cautious in what Washington means for

the biggest tech companies over the next few years. But only in the area of big tech? Big tech is the biggest difference, I think. And the reason is here's how I would explain it. I think a re-elected President Trump would want to let the biggest tech companies dominate Gen A.I. for the next 10 years because Gen A.I. is helping drive the stock market higher. And I think President Trump views the stock market as his daily report got on how he's doing. I think J.D. Vance looks at AI as an opportunity to disrupt the biggest tech companies. And so if Vance wins that debate within the White House, that's a very different set of policies the next few years than what I expected.

Well, in a way, Paul, this doesn't surprise me because first time around, President Trump thrived in unpredictability, right? And in challenging traditional power structures, it's not like he seemed to be a big fan of Mark Zuckerberg or necessarily what Google was doing. So doesn't this provide a potential Trump administration the second time around? with optionality on what it's going to do and keep some of these Silicon Valley Titans on their toes. Yeah, I think that's right. I think the way I think about Vance as kind of intellectual support for a lot of Trump's instincts toward big tech. And, you know, Vance spoke at a conference a couple of months ago, and he said, look, he's not sure exactly where Trump's going to land on a lot of tech policies, but he did specifically call out Google and meta as companies that are basically in the way of Trump's agenda.

and he seemed to support that. So if he is given, Vance is given the tech portfolio within the White House, and he has sort of day-to-day focus on it in a way that a president really cannot, that could be a problem for these guys. What I mean specifically is if he, if Vance is allowed to basically pick the people who run the FTC and the DOJ antitrust division and the Commerce Department, which all run tech policy, there's actually an analogy to the Clinton days. Back in the Clinton days, Clinton handed off telecom policy to BP Gore.

or picked the head of the FCC and influenced him in a very anti-incumbent direction. So if that's the analogy that Trump has for Vance and he lets Vance run tech, that's a different outcome that I was expecting a few days ago. But I would draw a distinction between, it seems like former President Trump wanted to have more of an impact on how some of these big tech companies operate, the types of decisions they make about what content gets out there, but not so much restrict their M&A. A lot of these libertarian-leading voices in Silicon Valley that are backing former President Trump right now

would very much like these big tech companies to be able to buy their startups, no? Yeah, that's the big divide in Silicon Valley. You're right. There's venture capitalists who want to fund companies that exit to the big tech companies, and they're venture capitalists who want to build companies that challenge the big tech companies. And if you look at what J.D. Vance has said he wants these companies to rise up and challenge big tech, not just get bought by them. And that's really, as you said, fundamentally different from where the other side of Silicon Valley is.

You know, just a comment on that. I think we all recognize sort of innovation when we see it. If any of those small startups had been TikTok, they would have successfully done so. Unfortunately, a lot of them aren't. And so they have a hard time kind of piercing through the big tech. What? You don't think so for it? Oh, no, I'm just looking at it. If it were me, I would have a whole debate hour with John on all of my crazy ideas.

So, Paul, I'll just direct this one to you for it. Even in some say it's self-serving, that J.D. Vance just wants to do well by the small startups that his firm and his friends would be funding. Do you think the American public really see it that way that big tech is really blocking innovation? I doubt the American public is that deeply sophisticated on it. But if you look at some of the polls, depending on how you ask the question, there's a decent amount of skepticism, certainly directionally. I think it is very fair to say that over the past five, seven years, the American public has become a little bit more concerned with the power of the big tech companies and they support regulation. You know,

Does that mean antitrust, privacy, 230 repeal? Who knows? But I think there is a decent amount of public support driven by Trump himself when he was president against the tech companies that was not there in, let's say, the mid-2010s when Obama was president. Yeah, I think there's widespread recognition of kind of the speech issue, but also that some of the innovators who have been successful, again, I'll cite TikTok, show that there's room for someone new to come into the room and do things a different way. We're all wondering what maybe that next killer product is. Paul, for now, thanks, we appreciate it. Paul Gala.

Well, Little Tech is what insiders are increasingly calling Vance's alignment to some tech firms. Our dear Drobosa is here with today's tech check. Dee, what are you hearing? Well, it's early, but it's mixed. One insider at a well-known startup incubated here tells me that Vance is the silver lining for Little Tech if Biden loses the election. Another person at a mega-cap brushed off his selection telling me that Trump has said worse and Biden is actually trying to break out big tech. Little tech essentially means a startup ecosystem,

younger companies that have to compete with a trillion-dollar market cap incumbents, so any optimism that another Trump administration would be friendlier or at least less hostile to the tech industry deserves another look, as your last guest was also saying. As do any of the deals that will undergo regulatory scrutiny, like Google's $23 billion bid for cybersecurity startup whiz,

which one analyst yesterday called just the tip of the iceberg in a massive, cycle for big tech for 2025 if Trump wins. Now, whether Vance actually keeps his anti-Big Tech stance in a Trump administration, that's certainly an open question. But in the meantime, it could help to rally support among more Silicon Valley leaders, especially those aligned with little tech. His ties go back to Peter Thiel, one of the first major tech figures to throw his support behind Trump in the 2016 election. More recently, Vance has been close to VC David Sachs and a growing circle of tech elites that have been switching camps ahead of the election. Mark Andreessen, Ben Horowitz,

they're also planning to donate to Trump's re-election, CNBC is hearing. Keep in mind, though, guys, and you hit on this in the last conversation. Anti-Big Tech and anti-M&A are two very different things. If support is, in fact, building among the VC community, as it looks to be, they still want exits, and they may ultimately prefer returns and liquidity to the politics of it all. Money speaks, put simply. Oh, yeah. I mean, they don't care about politics. It's all about returns and equity. In Silicon Valley, you know, returns and exits are the religion and politics is just a means to an end. So there's only so much you can harass your Mark Zuckerberg's and your Jeff Bezos's. Like, you can harass the billionaires and make them into the bad guys. But as soon as you stop the exits from happening, the startup ecosystem eats itself.

Well, it depends on how greedy the VCs are, right? You take it. potential deal like Wix, WIS, and Google, right? Whiz could get a $23 billion valuation, according to reports, but could that company IPO and be even bigger in the public markets, right? That depends. And then they're kind of talking out of both sides of their mouth if they agree for WIS to be acquired by a Google, which Vance has railed on for years versus growing on its own, right?

It would only make Google more powerful. Are VCs ever greedy? Are they just ambitious? We live ambitiously here. I was going to say you had a great articulation of that. And Derger, real quickly, on the AI thing, where is this? There's been a lot of early talk about what the AI policy would be. Is it going to be hands off or hands-on because of these speech issues that we're discussing?

So early indications is that it would probably be more hands-off because any kind of AI regulation could hurt the startup community and maybe benefit the incumbents. And that's what you're seeing so far, right? you see the mega cap getting even bigger, leading the way in terms of generative AI, Microsoft, Amazon, Google. Although, to your point, Kelly, I know you're talking about TikTok, the fact that an open AI is able to exist and become, what is it, a more than $80 billion valuation company is an indication that the environment isn't bad. Startups can succeed here without that regulation. All right. Deirdre for now, thanks. We appreciate it.

Deirdreboza. We've got breaking news now. Let's get to Steve Kovac. Steve. Hey there, John. Yeah, Carlos Watson, the CEO and co-founder of Aussie media, has been found guilty on all three counts in his fraud trial. Let me just break this down for you. There's a charge of securities fraud found guilty, wire fraud found guilty, and aggravated identity theft also guilty. And we should note the DOJ says this has a mandatory two-year minimum prison sentence, that is, up to 37 years. And this trial has been going on for the last few days. We know Watson was the co-founder of Aussie media and faced allegations of misrepresenting how much money the company had as he was pitching investors. And of course, that thing the New York Times broke a couple years ago about one of the co-founders impersonating a Google executive on a call with potential investors as well. We see him walking out of court here. John, I'll send things back over to you.

All right. Steve Kovac. Thank you. Further ahead on the show, the San Francisco Fix, mayoral candidate Mark Ferrell, sharing his plans to revitalize the Bay Area. We'll dive into the details when Power Lunch returns. Don't go anywhere. Welcome back to Power Lunch. The Dow soaring today to new highs. It's up almost 700 points or 1.6%.

But the S&P is only up 21, and the NASDAQ is lagging behind. Let's get out to Chicago for a look at how bonds are trading amid all of this. And Rick, after the UK tenure went below 4%. I'm seeing more chatter about whether ours could follow suit. Yeah, no, it's very interesting. Today, despite the fact that we had super strong retail sales, extremely strong revisions to last month's retail sales, but yet we see the equity markets really running pretty good, especially as you pointed out the Dow. Shouldn't we be looking at good news as bad news? Well, if you look at the yield curve, I think we get some explanations.

If you look at a two-year today since 8 Eastern, what you see is yields keep moving higher. But as you move down the curve, look at tens, the right side is lower. You go to 30s long as maturity. It's well lower. It's down eight and a half basis points on the day, two years virtually unchanged. What's going on? Well, we're reversing some of that political trade on the long end that's focusing on debt deficits and what happens with tax policy and spending.

And the short end? The short end and two-year note looked at strong retail sales and said, aha, maybe this throws a fly in the ointment with the September easing. that's built in. But no matter how you slice it, we continue to see that there's a lot of parts of the economy that are bucking the generalized notion that the economy is slowing. John Ford, back to you. All right. We'll keep watching it. Rick, thanks. Now, let's get to Julia Borson for a CNBC News update, Julie. John, just moments after jury found New Jersey Senator Bob Menendez guilty in his federal

bribery trial, his fellow Democrat Chuck Schumer demanded his resignation. The Senate majority Party leader called on Menendez to, quote, do what is right for his constituents, the Senate, and our country, end quote. Menendez did not answer questions about whether he would step down as he left court today, but he did pledge to appeal the verdict. Authorities evacuated 300 homes this afternoon in the Southern Illinois City of Nashville, warning of the imminent risk of a dam failure. A flash flood warning is in place this hour for the city. It comes after heavy rain fell across the St. Louis region earlier this morning. And six people, including two Vietnamese Americans, were found dead today in a luxury hotel in downtown Bangkok. An officer said they were found foaming at the mouth in a sign of a potential poisoning, according to the Associated Press. Authorities say the victims had blocked several rooms at the hotel under seven names.

They're still looking for the seventh person. John, back over to you. Wow. Okay. Thank you. As pressure for Biden, now to step aside began mounting in the days following the presidential debate, a handful of mega donors through an extra lifeline to his campaign. But is the confidence still there, especially after Trump's recent gains? Power Lunch will explore it. We'll come right back. Welcome back to Power Lunch.

Second quarter fundraising numbers are in for the presidential campaigns, and we did see some reaction in the last few days of the quarter to the debate on June 27th. Megan Kisela looking at those numbers for us, Megan? Hey, John, so his pressure was mounting for Biden to step aside after his debate performance in late June. at least a few big donors were opening their wallets to support him. So new FEC filings for the second quarter show former Google CEO, Eric Schmidt, was among a group of wealthy donors giving money to Biden between that debate on June 27th and the end of the month.

Schmidt gave a quarter million dollars. The businessman Amos Haasteader gave $150,000. Designer Vera Wang gave $100,000, as did real estate developer, Erb Simon. And his niece, Debra Simon, as well as Jill Glazer, whose husband Avrim owns the Tampa Bay Buccaneers, both gave the maximum donation of almost $930,000 in that same period. But the second quarter filings mostly reflected the momentum behind Donald Trump in this race. He outraged Biden for the quarter of $331 million to $264 million. And PAC's backing Trump also saw a boost.

Miriam Adelson gave $5 million to the Preserve America PAC. And the newly formed America PAC just launched with million-dollar donations from Palantir co-founder Joe Lonsdale, Sequoias Doug Leone and PayPal co-founder Ken Howrie. Now, Elon Musk is expected to support Trump through that pack, potentially with $45 million per month, according to the Wall Street Journal. But the records show he had not donated before the end of June. Now, this comes as many in the tech world are moving toward Trump. We can also confirm today that Mark Andreessen and Ben Horowitz are both expected to donate to

Trump this election. So you can really see this shift here among the group that historically had been closer to Democrats. Guys. Can you give us any context, Megan, around the $45 million a month some, which reportedly is also going towards a lot of grassroots get out the vote efforts that we've traditionally seen Democrats excel at? Absolutely. And $45 million, though, is still a huge amount of money any way you slice it. For comparison, the campaigns sometimes bring in $80 to $100 million for the month themselves. So to get almost half of that or more than half of that from one donation would be humongous. Now, as you said, if it gets spread out among down

ballot. Obviously, there are many more races to fund there, hundreds of House races and a number in the Senate as well. So there's a lot of places for that money to go, but there's no underestimating just what it could do. What I think Republicans are really hoping for here is that that pack and some others are going to start to fund a really strong ground game for the Trump campaign. That's opening new field offices, get out the vote efforts, canvassing, going door to door. That's something crucial for the Trump campaign because so far they haven't been that interested in that. They've said they hadn't needed it. But it's where the Biden campaign has seen their biggest advantage.

It's how they thought they would win. So if we see them more on par there, that'll make a big difference. That's very interesting. Megan, thank you, Megan Kisela. For more on this, let's welcome in Don Peebles. He's chair and CEO of the People's Corporation. And Donna, I have to hand it to you. We were talking before they said, well, you know, what does he think about Biden?

He's a Democrat. And I said, is he? Or can you clear it up for us? Democrat, Republican, does it depend on the candidate? Which of these two? You know, just talk to us what's going through your mind as you watch this. play out? Well, look, I'm a lifelong registered Democrat. Okay. And I've always reported the Democratic principles. However, I voted for the person. And I think that Joe Biden has, you know,

let us down, frankly, he was supposed to be a transitional president and chose to be more than a transitional president and trying to hold on to office. But I don't think this is going to be about the presidential election anymore. I think that Donald Trump is poised to win it. I've said this now for a couple of months. And if circumstances continue, especially after the assassination attempt on his life, I believe that he is poised to be president. These cases are getting dismissed. I wouldn't be surprised if the New York cases get overturned soon. And I think he's poised to be president. And now what's going to happen is there's a battle for control of the U.S. Senate. Don, what do you make of these libertarian-leaning Silicon Valley investors who seem to be

rallying behind Donald Trump at this moment. I'm not going to say it's Silicon Valley in general, because there are a lot of people in Silicon Valley besides libertarian-leaning Silicon Valley investors. But at the same time that J.D. Vance has wanted to limit the influence of big tech. There's an ecosystem here that gets affected in lots of different ways by policy. How do you think this turns out? What did Churchill say?

If you're young and not a liberal, you have no heart. And if you mature and you're not a conservative, you have no brain. What's happened is Silicon Valley is maturing. And they're supporting people who are supportive of their agenda economically overall. And there is no comparison to this president that we have now versus a Donald Trump presidency. And the markets are showing that as well today. I think the markets are reacting to the fact that he is highly likely to be president. and J.D. Vance makes a big, big boost for him and a super smart decision, which if things go the way they think,

I think you'll see a Republican in the White House for the next 12 years, sort of like Reagan and then George Herbert Walker Bush. Well, I don't know if you consider yourself young or old, but tell me what you think the impact on real estate is from that likelihood that you just outlined. Well, I think that the, I think it will be a very positive impact on real estate because the regulatory environment right now is. is what's creating a tremendous amount of stress in the real estate industry, especially the commercial real estate industry, because it's forcing banks to make bad decisions right now. The banks right now should be sticking with their customers.

They should be helping their borrowers work through these challenges and the regulatory environment should be more relaxed. Interest rates need to go down. That's hurt the industry quite a bit. I think under a Trump presidency will see that. And so I think overall tax policy also will incentivize investments, especially in urban centers. There's been really no,

effort to incentivize through tax policy, reinvestments in commercial real estate and some of the core markets like New York, San Francisco, and others. Local state levels that have been, but not at the federal level. There's been a lack of leadership in terms of economic growth for our country in terms of businesses and small entrepreneurs and mid-sized entrepreneurs. Yeah, or in other words, kind of directing government funds for that purpose, which is one area that the parties really now seem to align. You mentioned the Senate. Why do you think it's going to be so significant in the area to watch now. And is there anything that the Democrats could do to change your mind about their prospects? No, I think the Democrat, I don't think the Democrats would be

able to attract a replacement to Biden because it's almost inevitable that Trump would be elected president. If you think about what's happening now, Joe Biden's approval numbers are at the level of Jimmy Carter. And frankly, Joe Biden doesn't even have a skill set right now that Jimmy Carter had. And then you've got Donald Trump, who is basically say he's Reagan. And, and, you're you've got his economic policies. He's been president once. And you've got an economic environment that's conducive to him. I think that with this migrant crisis, Joe Biden's policies on immigration have put New York City in such a bad place that New York State is definitely in play in terms of the electoral college. And if that's in play, what it tells you is that you're going to have

circumstances where some of these swing states and some of these states that have been more moderate Democrats, they have some risk that these Senate candidates will lose. And I think that that is a likely possibility. I don't think the Democrats have a chance now at the House. So they might as well write it off and spend their money trying to control one chamber. But I think that ultimately, when we turn around and the next morning after the election, you'll see Trump's president, you'll see a Republican-controlled Senate, and you'll see a Republican-controlled House of Representatives in a much more pro-business type of environment. And in fact, where I think the Democrats have lost two of their core constituencies.

They've let American Jewish voters down. We've been a big core constituent of theirs with the way they've handled Israel. And that's also an American issue. And our best ally in the Middle East is Israel. And then secondly, they've let African Americans down continuously and economically, educational policies and others. And this migrant crisis has turned the tie against Democratic candidates in major cities around the country, and I think you'll see it in New York State.

So I'm curious, and that's why I wanted to start out by saying, you are a Democrat, right? Because I listen to this and I think, okay, well, it sounds like the party that you support is not maybe with you anymore in the areas that you think are significant. We don't have to delve further into that, but I guess I would just say, as we see people starting to line up with big dollars behind the presumed winner, as you seem to agree, the Trump administration would be here. Would you join that either with dollars or support and other? other ways and hope that maybe, listen, could you have an spotted HUD secretary?

I don't know. You've got some thoughts. What do you think? Well, I mean, first of all, I think the Democratic Party has been hijacked by the far left. And I think at the rate we're going, the Democratic Party is going to be in a position where it's going to have to change quickly and or it will become the minority party. I've known Donald Trump for a long time. And I have been an admirer of his success. I mean, I think it's been inspirational. I think he has been unfairly targeted with these lawsuits and prosecutions and the like. I think he's been unfairly vilified and a vilification of him.

And so I want him to succeed as president because if he succeeds, America succeeds. I don't think that he is going to hurt our country. I think he'll help it. I think he will do things to move African-American entrepreneurs forward. which is something that needs to be done. And I certainly want to work with him to make him successful and would encourage other Democrats to do the same thing once he's elected president.

All right. Don thinks it's November, what is Election Day, November 5th or something? You know, he thinks it's November 6th and now we can all just move on. Appreciate your sharing your thoughts, Don. Don, good to see you today. Good to see you, Geller. Thank you. Don Peoples.

Still ahead, CNBC, getting an exclusive look into a mayoral candidate's vision to revitalize the city by the Bay. we'll get a live report when Power Lunch returns. Welcome back to Power Lunch. We're just getting some comments from Fed Governor Kugler speaking at a conference in Washington. She says it's likely appropriate to begin easing policy later this year if the economy evolves as expected. Something she says is bolstered by the continued rebalancing in the labor market. She goes on to say if the labor market cools too much and unemployment continues to increase,

it would be appropriate for the Fed to cut sooner rather than later. But she added if inflation progress stalls, the Fed should hold rates steady for a little longer, As mentioned, the 10-year yield was moving lower a little bit earlier in the session, still hovering below about 4.2%. Meanwhile, San Francisco has been one of the city's slowest to bounce back from the pandemic. Nearly 37% of its office space is vacant, a record high, according to real estate firm, CBRE. But now one mayoral candidate is unveiling plans for a revitalized downtown. Our Kate Rogers got a first-hand look.

Kate? Hey there, Kelly. Leading mayoral candidate, Mark Farrell, is re-envisioning downtown San Francisco. and that means getting workers back in the office. He gave CNBC a first look at proposals that include tax incentives for businesses that relocate downtown and those that get workers in the office four days a week. Farrell says his project is akin to other anchor projects you see in New York City like Hudson Yards with retail, mixed-use buildings, offices, and more.

Now, this comes as data from Cushman and Wakefield showed that just last week, San Francisco office vacancies are out of record. As you mentioned, your 35 percent. While Manhattan stands at just under 24 percent, Farrell, plan includes cutting that number in half by the end of a first term. Right now, if you come downtown, the issue is, is the lack of people. It's a shell of what it used to be. And so part of tax incentives needs to make sure that employers are making sure their employees come back to work multiple days a week in the office to create that vibrancy that will really bring the future of downtown forward. Now another piece of the plan, a downtown park, which you can see right now on the Embarcadero.

That's right in our backyard here at CNBC. He also has aggressive tax increment financing and then local incentives for faster production of housing and conversion of commercial buildings to residential housing in places like Union Square, which you may remember has lost anchor stores like Macy's and malls. Back over to you guys. Yeah, Kate, I spent a bit of time out in the Bay Area and some in San Francisco. What strikes me about the state of it today versus, say, 20 years ago, is how much they've invested in office downtown, seemingly to the exclusion of residents.

and affordable residential. And so when something like this happens, that's why there aren't people around. The neighborhoods in San Francisco where there's residential actually look pretty healthy, but not downtown. Yeah, exactly, John. And that's also a part of this proposal. He wants to work with housing and zoning,

which, as you know, from having spent time here notoriously difficult with a lot of red tape in the Bay Area to change some of the height requirements for buildings that are residential, so that they can convert more of that potential office space or empty retail, for example, into housing. And he says get, you know, tens of thousands of new residential units and residents here in downtown. Fascinating. Kate Rogers, thank you.

Well, coming up, we will check the charts on some key names that are making moves. It's time for technical support. That's next. Welcome back to Power Lunch. Let's get some technical support. Our chart is today is Jay Woods. He is the chief global strategist at Freedom Capital Markets. And first up, I shares Russell 2000 ETF up 12% in the last month.

The Russell doing quite nicely today as well. It is and it has some room to run. What we want to do is we want to put this in perspective. So what I have here is a four-year weekly chart. And what did it do last week? We go back to 2022 and it broke above this level at 212 and it's continuing its run today to 225. This is strong action. You have a long-rounded base.

We've been waiting for this to happen a while. But when the Russell moves, as we remember back to last October 27th to December 23rd, It goes quickly. It joins the party. It finally catches up. It announces to everyone we're here. It was 27% here. And then we've gone sideways.

We've consolidated. And what's happened? We get to the third quarter. People are rotating out of the mega cap, some of their big winners. They're pausing. And where are they going? They're going into the Russell, I think, 244, which is the old, all-time high, is the next stop for this over the next six to 10 weeks. That would be about a 27% gain from this bottom to that top.

And we may pause there, but it's finally going to join that all-time high list. And then we'll see where it goes from there. With the Fed lowering rates, good chance it breaks it. We'll see. All right. Sounds like Tom Lee's not alone. Next up, S&P Regional Bank, ETF, KRE. It is up nearly 4% today.

Yeah. And this is one of the largest segments of the IWM, which is, you know, the S&P, or the Russell 2000. So what have we seen? Let's go back three years. It's broken a major downtrend with this move over the last few days. It moved on a gap. We like to see gaps. And in continuation, the banks are reporting earnings now.

PNC's up. And that PNC didn't just necessarily crush it, but the momentum is there. And when you see trends like this change, all of a sudden, if you want to bring it into even a more narrow range of the last year, this is a major breakout. The trend is changing. We are now going up. We have a lot to reverse. What you want to watch in the regional banks is this fifth. area where we're trading at now.

That was the old support before it broke down during the regional banking crisis last March. Breaks that, we got a clear run to 65, which is here. And then if not, all-time highs, we're talking just under 80. And it can happen quickly. There's momentum. Momentum begets momentum. So I think I like the regional banks to continue the upward pace from here. All right.

Silicon Valley Bank in the rearview mirror. And finally, we're taking a look at Bank of America. That firm topping Q2 estimates on better than expected. investment banking. Yeah, we like Bank America here. Bank America, if you look again, three years, it was going down for a long way. And if you want to back this thing out, this has a lot to reverse. It has never, never gotten back above its pre-financial crisis highs at $55. But before we get there, let's look at what it's doing. It had a nice up trend, but before that, it broke out. And what we want to do is just show that line of resistance.

And we had a breakout. It ran up. It came back in. Now I'm getting a little too many lines, but it broke this level. It consolidated where old resistance became support, and it took a leg higher, and it's continuing that leg today. The momentum is there. The earnings are there. A Fed easing is there.

So I think a $50 target over the next four to six weeks, very possible. And then if we get past that 50, 55 all-time highs. When you look at Goldman, when you look at JP Morgan, all-time highs. So I think Bank America is going to follow in their footsteps, and it's been a long time coming. So it's good to see this stock,

technically make this leg higher. Yeah, especially Goldman and Bank of America. It's not 2023 anymore. Exactly. Well, be sure to follow and listen to Kelly Evans. No, hey, anywhere you go. Power Lunch podcast. We can download that on any platform.

We're back with the Dow up more than 700 points now on this monster run. Stay with us. Welcome back, a pretty strong market day to say the least. The Dow's up more than 700 points now, 1.8%. the S&P trailing that but still higher. And the Russells are up sharply, John, but I was going to say the NASDAQ is the one that is lacking. Yeah, I mean, we're not used to talking about 700 point days on the Dow.

And grounded with Dow near 41,000, that's not as big a percentage as it used to be. Still considerable. And a contrast to Thursday when we saw the Russell outperforming everything else kind of slumping. Now, in large part, thanks to the banks, we see a lot of action across the board. Earnings. Also, we have lower yields. The 10-year has been kind of slumping and kind of getting that 4% target back as a possibility here. And that's a big, when Greg Branch gave up his hawkish position, he turned bullish. Oh, man. Well, you got to see how this all ends. And that means closing bell overtime at 4 p.m. We'll see you then. John. Thanks so much. And closing bell starts right now.