Power Lunch - Wall Street heads for 3-week winning streak 9/27/24

Episode Date: September 27, 2024

The Dow climbed to a fresh record high today, as traders digested new data that pointed to further progress in lowering inflation. Wall Street was also headed for solid weekly gains. We’ll tell you all you need to know ahead of the weekend. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch alongside Kelly Evans. I'm Dominic Chu. Stocks are off their best levels of the day. The NASDAQ is slightly lower, but higher for the week. And with only one trading day left, the month of September, as well, I mean, you can kind of see there. It's been a pretty solid day and month for the overall markets, Kelly. We just have to point that out because this is a total break from what we've experienced for the last, what is it, five years now, down 6% on average. The end of September was supposed to be worse. He's right. I do have strong feelings about a lot of things. A lot of things anyway. And this month, meta is also up 8%. While Apple is down slightly, both had big events. Both introduced new devices.

So is it just about the products this reaction? Or is Mark Zuckerberg a better frontman now, while Tim Cook is quiet and more understated? They talk about the idea of evolutionary versus revolutionary. And for Apple, it was revolutionary under Steve Jobs and evolutionary under Tim Cook. But, you know, when you're a founder of a mega-cap tech company like Mark, Buckerberg, maybe there is some kind of, I don't know, disconnect between operators versus those who kind of dream the things up. He's got the mojo right now and investors like Mojo. Absolutely.

Stocks like it too. All right. And it's also been a great week for everything, China. Two big ETFs tracking Chinese stocks are soaring. The FXI is up 18%. And the K-Web, which does technology and internet names, is up 26% or so in a week for an ETF. That's massive. And it just speaks thematically to this idea that for a long time, remember, it wasn't so long ago that some of the pundits out there said China was quote unquote, uninvestable. Absolutely broken. And by the way, we're going to dive into China specifically here. But traders are looking to the whole ecosystem now to emerging markets. I'm hearing more optimism than I've heard on that in a long time.

Hope Springs Eternal, by the way, on that front, to Japan, to emerging Asia, to the whole, everything that wasn't working as a consequence. now they argue can potentially work. I mean, traders and then traders like David Tepper, who's buying, quote, unquote, everything. Absolutely. In China. In China. Speaking of which, the Biden administration's tariff hikes on Chinese imports are also going into effect today. There are 25% tariffs effectively now on Chinese steel and aluminum, 50% tariffs on solar cells from China, and the tariffs on Chinese EVs are quadrupling to 100%. It comes just a day after China announced a stimulus push where they plan to issue nearly $285 billion worth of sovereign debt. What impact will it all have on the global economy?

Let's ask Dennis Uncovic, partner at Meyer Uncovic and Scott, and Wardrick McNeil, he's senior policy analyst at Longview and a CNBC contributor. Welcome to you both. Dennis, I haven't had a chance to get your thoughts on this yet. What is the significance, major, minor? When you go back to 2009 or 10, the Chinese did something like this and put in about 400 billion dollars. Now they're talking about half that. The Chinese economy, as you know, Kelly, is much higher now. I think it was $17.5 trillion last year. I think that what the Chinese are doing is taking a first step, but not an ultimate step, that I think they need to deal with

their economy, because they still have a third of the economy in the tank because of their very bad real estate market. So, DeWartrick, we all know the, and Dennis has outlined them, in book form the many challenges the Chinese are facing right now. So when someone like David Tepper comes out with the kind of conviction he displayed and says to buy everything in China, and he says, I love when he says, I'm not that smart. I just listen to what they're saying and the conviction that they have behind it. And he believes and others believe that they really have that conviction right now. Do you believe that as well?

Well, Kelly, I hate to be the bear of bad news, but I think what we see here, and I don't want to underestimate this move. This was significant. What it speaks to me is an urgency of now, and I stress now, to put a floor under the economy, to try and reach that around 5%, as she calls it, GDP target for this year. But I don't want to go beyond that because I'm still not seeing what the long-term narrative for growth and what the growth engine really is. So I would personally be a little bit more cautious.

I do think that these recent moves are significant, don't want to downplay them. But I would say that these are urgency of now, not long-term, durable, sustainable moves to do what Dennis is talking about. And that's improved some of the structural issues that we see in the Chinese economy. Dennis, it's Dom. The structural issues are why that uninvestable kind of characterization came about. It came about at a time when the Chinese government, the Chinese Communist Party, the CCP, was having this massive crackdown on all the major tech companies under the assumption that they were getting too powerful, too big for their britches and they needed to be reined in. So how could you invest in a country or companies that had immense amounts of government oversight? That's still the play and that's still the case, right?

I am still very concerned about China. I'm concerned about the fact that as a forward investor and I work for a number of them who invest in China, there is so much government control now being put down upon so many of these companies that I'm not convinced that China has really changed the rules of the game. They're saying, we're having problems. Please help our economy grow at 5%. Please come and invest. but I'm, Mr. Tepper is certainly more smart than I am,

but I would be very reluctant to make a major investment in China today, understanding that they have significant underlying problems. Not that he wouldn't be aware of that. I mean, look, part of this is a valuation story, more than affixing the economy story. He was saying that there are stocks trading literally two or three times at a major discount. You know, they're growing still double digits.

And Peter Bukvar this week, Dennis, made a similar point. He said, in spite of Chinese leadership's efforts to the contrary, the middle class there is still emerging, and he believes, still going to be the biggest factor on the global stage for the next 10 or 15 years. Is there still significant pent-up consumer demand and should people invest accordingly? Callie, I think the answer is that consumer in China has not been buying anything for the last four years. The reason is that most of the middle class has their money, 80 to 90 percent, invested in real estate, basically, that they hold. That has been declining and declining and declining. And no matter what Xi Jinping sees to be doing, the Chinese consumer is saying, no, I'm going to continue to save my money.

I'm going to be, I'm going to step back and wait. And so what we saw this week from the Chinese, I think, was good. I mean, it showed the government is taking this seriously. But you're dealing with trillions of dollars worth of problems. And so if you're going to say, I'm going to put up 400 billion here and maybe that'll help, I'm still, I'm still not a buyer. All right, DeWardrick, I've mentioned. and Dennis has as well, and so is Kelly, the Chinese government and its role. Let's talk about our government in the U.S. and its role vis-a-vis the investment thesis in China. I want you to put

your government hat back on just for a brief moment and talk about the restrictions on exports, chips, AI, everything else that has caused so much friction between the U.S. and China. Does that then lead to a certain amount of that conflict or friction with regard to the upside for Chinese companies if the U.S. is becoming increasingly more, maybe antagonistic is the wrong word, but you get my point. Yeah, Don, listen, I think what we've seen in the Biden administration, certainly over the last couple of weeks here, is a continued attempt to put what they consider

to be protective measures in place to protect the U.S. economy, particularly some of the industries that they think could be harmed by flood of China. The phrase you hear around Washington now, Dom, is preventing a second China shock. Of course, talking about in the early 2000s when we saw the markets flooded with all sorts of goods that cost jobs in the heartland. And so the Biden administration, and I suspect whatever the next administration is, Dom, will continue to look at some of these tools to do preemptive protection around U.S. industries. Will that cause more attention with China? Absolutely. We're seeing China already announce investigations of their own to try and hit back at some of the things that they see as unfair trading practices.

But I suspect this will continue, Dom, it's what countries figure they have to do because they can't see another method of doing this. The WTO has not worked as it relates to some of these issues. And so states are taking the tariff tool as the one tool to try and protect their industry. That's an important macro point as well to make it the conclusion of this, that the WTO hasn't worked or hasn't delivered maybe what everyone had hoped. Gentlemen, we'll leave it there for now. Appreciate your time today. Dennis Uncovic, DeWordrick McNeil. All right.

Well, the question of whether stimulus will be enough to boost China's economy does lead to a similar issue now for the United States. So will tariffs be enough to uplift American manufacturing? Our next guest says, Band-Aid fixes will not suffice. You actually need innovation to power that kind of. of movement. Plus, sticking with that China theme, we'll trade some names that could benefit from a long-term China rally in today's three-stock lunch later on in the show. Power Lunch is back in two. Welcome back to Power Lunch. Former President Trump vowing to go after Google if he gets reelected. Let's bring in Amon Javvers with the details from Washington. Amen.

Hey, Kelly, this is now the second time this week that former President Trump has threatened a publicly traded company. Remember earlier in the week, the former president threatened John Deere if they moved some production to Mexico with 200% tariffs. Now the former president on his truth social media platform is threatening Google. Here's the post from the former president of the United States. He's upset about Google rankings and how Google displays stories about him. He says it has been determined that Google has illegally used a system of only revealing and displaying bad stories about Donald J. Trump. Some made up for this purpose, while at the same time revealing only good stories about who he calls Conrad Kamala Harris.

This is an illegal activity, and hopefully the Justice Department will criminally prosecute them for this blatant interference of elections, if not, and subject to the laws of our country. I will request their prosecution at maximum levels when I win the election and become president of the United States. So here you have a candidate for president of the United States, Kelly, unilaterally accusing a large publicly traded company of illegal behavior. It doesn't seem to be really any due process behind that decision to accuse them of a crime and then threatening. to put the Department of Justice on them once he's elected if they don't conform to what he wants, which is positive stories to be displayed in Google's search results. So the former president of the United States here certainly trying to work the refs in terms of media coverage of himself. We'll see if it has any impact.

Amon, would it, would it, trying to think back to J-law? I mean, is it a violation of free speech if they, if the platform is said to be defaming him by, now again, assuming there's anything to prove? maybe there isn't. Right. Well, I mean, you remember, conservatives have made the allegation for a long time that social media is biased against them and puts, you know, liberal content more visible in their search results than conservative content. And they've said that anything that social media companies do to censor and change results is inappropriate. Now here is the former president making the allegation that he wants them to change the results in his favor and so that the positive content is featured against him.

I mean, under the First Amendment, companies have the right to print and publish whatever they want so long as it's not defamatory. And of course, under libel law in this country, the history is it's really difficult to defame a public figure, such as a candidate for president of the United States. Those people are pretty much a free fire zone in terms of media publications to say whatever they want about them. So the tradition in the United States, Kelly, that there is an independent media, and we do have the ability to print and report what we want about presidential candidates. This presidential candidate, in this case, clearly doesn't like that from Google. All right. Amen Jabbers, thank you very much for that. And I will point out both

Aman and Kelly. We did reach out to Alphabet and Google for a comment. We have not heard back from them yet, but when we do hear back, we will bring those comments to you as soon as they happen. So meantime, politics to business. There doesn't seem to be much agreement between Vice President Kamala Harris and former President Donald Trump, except on the need to increase manufacturing capacity here in the U.S. So here's what the candidate said at separate events just earlier this week. We will invest in biomanufacturing and aerospace. Remain dominant in AI and quantum computing,

blockchain and other emerging technologies. Expand our lead in clean energy, innovation, and manufacturing But with the vision, I'm outlining today, not only will we stop our businesses from leaving for foreign lands, but under my leadership, we're going to take other countries' jobs. For years, they knock the word. The word tariff properly used is a beautiful word. One of the most beautiful words I've ever heard. It's music to my ears.

All right. And while Harris hasn't expressed the same support for the tariffs that the Biden administration did enact, new tariffs today on January. Chinese solar cells, semiconductors, and medical supplies. So the story keeps evolving. Our next guest says tariffs are not the answer. Again, not the answer, but that innovation is. So joining us now for more is Jake Lucerarian, the CEO of Gecko Robotics, which is, by the way, number 42 on CNBC's 2024-50 list of disruptive private companies that could be public someday. Jake, take us through your thesis and your explanation as to

why it's not just about manufacturing, but we have to progress beyond that. Well, big for having me on. Tariffs are obviously something that both candidates, VP Harris through the Biden administration, supported this, and obviously Trump has as well. But I think that what they do is they point to the problem. And everyone talks about terrorists, but the thing that isn't getting enough attention is how innovation needs to help revitalize manufacturing in the United States, robotics, AI, and automation are necessary to make us a country and a, create a dependency

that's not relied on foreign adversaries, but we can make our own things smarter here in the U.S. Jake, there's been no shortage of times and examples in the history of the United States that innovation has led to massive leaps forward in terms of our progress. economically, politically, geopolitically, and everything else. But there are some that argue that the environment today is not like that and that does not foster innovation like it has in the past. How do you respond to that and how do we get to a point where innovation matters again? Well, I think that what's incredible is, I wrote an article calling for a McCain moment in

manufacturing. In 2007, late Senator McCain went to Silicon Valley and implored venture capital entrepreneurs and the tech community to revitalize what he saw was a losing of the advantage on the defense and innovation side for the DoD. And that produced in 2019 to 2022, $33 billion of investment from venture capital, which is double the amount that that was previous into the defense sector. And now, tech sector thinks that defense is cool. And it's incredible. that doesn't exist right now in manufacturing. I was just at the Financial Times at the biggest mining summit,

and I was the only tech member of the tech community that focuses on robotics, AI, and automation. I think what it tells you is that we need more than ever a McCain-type moment in the manufacturing sector. Jake, you live in Pittsburgh or your headquartered in Pittsburgh, which is possibly going to be the deciding state for this election. There's a huge fight over U.S. Steel and whether it's a huge fight over U.S. Steel and whether it's should sell to Nippon Steel right now. What would you do to both create and preserve jobs in Pennsylvania? Yeah, well, I think that, you know, the past 50 years, 7 million manufacturing jobs have been lost in manufacturing. And I think that, you know, the rhetoric around needing

to revitalize manufacturing is so important. But it's important to also remember that talent and those that want to make things better and the best minds will typically go to the hardest problems. We have to show that manufacturing and to incentivize the sector of manufacturing as being a place where the most innovative things are happening. If you want to drive talent and cutting edge fields to give America the advantage in manufacturing, you must incentivize it. There needs to be collaboration between government, venture capital and startups to revitalize and begin to incorporate technologies that can give us an advantage that no other country has. And so that's what I, that's, I I'm going to stand right alongside whoever gets the nomination to become the president because this is a bipartisan topic.

It's a matter of national security more than anything. I think there's a lot of business leaders out there who would agree with you and that we have to get back to an environment where innovation matters again. Jake Lucerarian, thank you very much. We'll see you again soon, sir. Thank you. All right. And by the way, don't miss Jake at our CNBC AI Opportunity event in New York City on October 1st. You're going to hear from him and other industry leaders about how.

AI is changing their businesses for the longer term. Just scan that QR code on your screen or visit CNBCEvents.com slash evolve, Kelly. 250 employees he has. It's great to see. The need for innovation extends into the boardroom as well. Meta's successful product launched this week, overshadowing Apple for the first time. Many applauding Zuckerberg as a visionary founder shaking of tech, while some are criticizing Tim Cook for playing it too safe, although there is also strength and stability. What's better for an investor, an innovator or an operator? That discussion when Power Lunch return. Welcome back to Power Lunch. Take a look at the yield on the 10-year, just around 375 today. Down a bit after that PCI showed inflation showing this morning,

but it's just the second time since the Fed's rate cut that yields have actually fallen. For the most part, across the curve, they are higher. Rick Santelli, joining us now from Chicago. Hi, Rick. Hi, Kelly. Indeed. If we look at what's going on, you see the charts of twos and tens for the week, it really should jump out at us that both yields, especially tens, were significantly higher. We're hovering right above 380, as you see. But today's PCE numbers, weaker spending, weaker income, and everything was rather tame on the inflation front. You could argue core year over year was a little hotter, but the markets overlooked that. And if you consider what's going to, going on with the 2's 10 spread, just think about it. Before the rate cut, Kelly, that spread was at 4. It was at 4. And on Wednesday of this week, it closed at a 27-month wide at 23. Now, granted, it's given some back. It's hovering right around 1819 now. We settled last week at 15. But maybe FX is the big surprise of the week. Of course, the chart you're looking at there is a 16-month chart of the dollar versus the yuan. And indeed, it is at the 1.5.

lowest level going back to May of 23. And what's fascinating here is that all stimulus globally is fungible. So it doesn't surprise me that we may see all the equity markets around the globe start to do a little better. China is involved in a lot of aspects of the global economy. And the dollar index, if it closed under par and a half today, it did Tuesday, barely. It's hovering there today. If it does, technicians will go with that short. And as it sits now, we're hovering at a 14-month low close for the dollar index. Back to you, D. All right, dollars and yuan, the two biggest economies in the world and their currencies. Rick, stay right there, please, for us. Stocks are higher on that inflation data out this morning and set to finish a September

month on a high note, despite seasonal weakness. Let's bring in now Scott Clemens' chief investment strategist with Brown Brothers Harriman. Scott, the Rick report was interesting about the macro picture here. Just how does it set up now, given the currency and rates dynamics per meeting all across the globe and then coming rubber meets the road in a record high u s stock market so i think we're at that interesting turning point in which monetary policy is shifting and those turns tend to be accompanied by heightened volatility and heightened uncertainty the direction of interest rates is pretty well established the pace on the other hand is that push and pull between inflation and economic activity i think the reason we've seen the 10-year

yield rise over the past six seven eight trading sessions, really since the Fed meeting in mid-September, is the market narrative now is that the economy is actually in pretty decent shape. So yeah, the Fed can probably still lower interest rates, but in response to inflation, not in response to any kind of economic weakness. That doesn't mean that narrative will hold, but the push and pull of that narrative is really what's going to drive investor sentiment between now and probably the January, February, second or third Fed meeting from now. But that push and pull tug of war is playing out in a stock market that keeps going to going higher because it's emphasizing the positives here that the economy, as you said, is relatively

strong. The jobs market is weakening, but it's not weak. So what exactly then derails this whole process, or can we just expect the path of least resistance, Scott, to be to the upside? Yeah, Dom, I'm reminded of that old saying that the optimist believes that we live in the best of all possible worlds and the pessimist fears that he is right. So I'm cautioned by the idea that when things look too good to be true, that's probably a turning point in which people should pay a lot more attention. The thing that we're focused on very carefully is the health of the American consumer and household finances. That's 68% of the economic engine. Watch how quickly the job market softens. I don't expect a hard landing in jobs. Also watch burgeoning consumer debt,

close to $18 trillion, a personal savings rate despite yesterday's revision upward that is still close to decade low levels and a worrisome rise in credit card delinquencies. None of those things are determinative yet, but as we head into 2025, those are the things we're watching carefully to make sure that this economic narrative of a soft landing, to use the old cliche, will still continue to carry through. I take your point, Scott, but I just want to throw this question to Rick, which is what vote is the market casting? It seems to be casting the vote, not that we're worried about a slowdown, but that we're

worried, if anything, about a speed up, right? don't you think, or am I misinterpreting it? Well, not necessarily speed up, but you're not misinterpreting at all, is that the deterioration is much less in the economy than the Fed believes as it uses that as its main reason to start the easing cycle. And what's more, if we really consider that there's a huge segment of the economy, and Scott nailed it on every front. But lots of the population does not need credit.

So the Fed moving rates up and down, the upside, fueled consumption by many in the economy. Think about those that are close to retirement. They have good savings, but young people need credit. And what's going on with the easing here may not really be the salve for them, because as the yield curve steepens, traders are very convinced that inflation isn't going to be as tame, as cool as the Fed believes. There's going to be sticky aspects to it. So let's consider what we're looking at. We're looking at record debt and deficits. We're looking at the consumers who need credit are getting tapped out on their credit. And we see long-dated treasury yields.

If you think things like electricity in certain parts of the economy are going to be sticky from an inflation standpoint, then add 150 or 200 basis points to a two and a half to 3% inflation rate. And the long end is not going to cooperate with respect to the Fed moves. And much of that isn't going to benefit the biggest market that's hurting the economy and that may be housing. Okay, so last word. We have just a couple moments left here, Scott. Let's put a point on this. From a chief investment strategist standpoint, what's the outperformer going into 2025 and really quickly why? In a broad category, I like those consumer parts of the economy that have been left behind. This is not a specific stock recommendation. You highlighted Walgreens about five minutes ago, the single worst performing stock in the S&P 500. And a lot of those consumer companies fall into that category.

All right. Scott Clemens and Rick Santelli, thank you both very much. We'll see you again soon. Have a nice weekend. Thank you. Thank you. Still to come, style versus substance. Technology is one of the most competitive industries in the world. It moves at a rapid pace. And when it comes to business, it's not for the faint of heart. But in terms of leadership, especially in publicly traded firms, should investors value innovators dreaming up new products or an executive who keeps the operations running well? We'll debate all of that next. Welcome back. This week was a big one for Mark Zuckerberg and meta, unveiling some exciting new hardware. For the first time, probably ever, there's actually more hype around those meta products than around apples. And it seems Zuckerberg has been lying in wait to strike against Apple, even taking a subtle jab at cooking companies' highly polished product reveals. All this leading to the question, which is better for a company and for investors, innovators or operators? Here to discuss our own Steve Kovac, along with Deepwater Asset Management's, Dean Munster. Welcome to you both. Steve Furs, it's undeniable the buzz that Meta has right now.

And the stock performance this year today as well has been incredibly impressive. Yeah, and there are two aspects of this, right? There's the headsets and then there's the AI. I want to start with the headsets because it's been an interesting year for these face computers. Let's talk about we started the year Apple Vision Pro. Then a couple weeks ago, this Snapchat Spectacles. And then two days ago, was it two days ago? Two days ago, we have the Orion glasses from Meta. Two of those things are experiments. One of those things has turned out to be kind of a dud. But you didn't even mention the real sort of success, surprise, success of all this,

which is actually just the sunglasses, the low-tech meta-raybans. Now, those are cool. And those are the raybans. I know you're excited. You're all in on the raybans. I just keep hearing. I've never seen them. I've never worn them.

But I keep hearing from people on the West Coast that they're starting to see them. But what this tells us is, at least, we're talking about innovators versus product. Right. So the interesting thing you hear is it tells you direct. directionally, we're seeing so much more out of meta compared to... We know Apple is the same goal as meta, is to create glasses that look like my Barbie Parker's right now, and that can just display and replace your smartphone. No one has that.

Let's be clear. No one has that. But right now is meta, first of all, they were ahead because they launched first. And look at the content they have. They actually have people developing for these. They actually have games and stuff you can do. It's like a desert when you put on Applevision Pro. I think the development is not there, which tells you.

tells you that thing is just not selling to interest developers, whereas the meta headsets are. Gene, does that, I mean, jive with what you're seeing just from a product evaluator and portfolio manager's standpoint? I mean, we talk about innovators and operators. It's a different tool in the same kit, but which one is going to be better for shareholders at the end of the day? Well, I think Steve's setup was helpful, was spot on. I think it really just laid the lines that if you're going to think of this as a kind of a match between Apple and meta, from that perspective, is that there has been more momentum around meta and innovation. And to the higher level question, what's more important to an investor, an innovative CEO or an operator? And the answer is it's clearly an innovator. An innovator is more important. that doesn't mean that Tim Cook is not an innovator but just on that question just specifically innovator is much more important and I was and I think that what meta showed this week was pretty incremental to what they've shown us from a few months ago but I think that it really stuck out to me

is they're putting the they're putting the they're putting the their the hammer down that this AI wearables or face computers like Steve was talking about that this is going to be a big category and I I give them credit for doing that and give Zuckerberg credit. He's a founder and give him credit for just going after this. They spend $20 billion a year on reality labs. More than half of that. I think this is a surprise to investors. More than half of that spending is on AI glasses.

It's not on Quest and VR and MR. It's on these AI glasses. And so I think that innovation wins when it comes to tech. So in other words, Gene, are you casting your vote for Zuck and for META right now, contra Apple in the in the 2020? for culture of Tim Cook? When it comes to which one has more innovation in their blood, if you could somehow measure that,

Zuckerberg is more innovative. And I think that as far as casting the vote, I think that one's just, I'm going to be difficult here, Kelly. I apologize. It's just a hard question to answer, because if you look at the growth rate of meta over the past five years, I mean, they've grown their business by, I call it 68%.

Apple's grown by 42, but Apple stocks up 195% and meta's up 160. So I mean, these are both Class Act CEOs. No question about it, but I do believe. How much of that is buybacks on the Apple? Some of it's buybacks. Yeah, the revenue growth was slower off of a bigger base with Apple. But I think that it is true that meta's been more aggressive. When you score, it is. And one other piece that investors should keep mind too when we were scoring this and thinking about this on the innovation card, Apple did, Cook was behind the car. That was a big part of what you. his innovation bet was, and obviously they pivoted towards AI. And so it's not like they haven't been doing anything beyond Vision Pro. They've been doing a lot. It's just that you happen to see more from meta because those products get promoted more. You know, Steve, there wasn't that long ago that we were talking about this notion that Mark Zuckerberg gets punished every time he puts out something

visionary and needs to put CAPEX behind it. But it seems to me in this discussion, like that's the right way to go. And AI is such a different thing because it's so much more tangible than what Zucker was talking about two and three years ago, the Metaverse. No one understood what that is. That's largely gone from the conversation. He barely said it in his presentation the other day. He talked about steps towards that. But I also want to talk about the AI bit of it, too,

because it's really interesting to watch that presentation from Meta the other day and see how quickly they've been able to catch up to Open AI to Anthropic, basically on par, seemingly overnight. They've been this Lama model that they're giving away for free. Zuckerberg said, if it's not already, it's going to be very soon the most used chatbot out there, just by nature of stuffing it into the apps that 2 billion people are using every day. On top of that, they're actually shipping it.

Apple has yet to ship its artificial intelligence product. And even when it does ship its AI next month, it's not going to have everything they said it's going to have yet. And whereas meta, you can do it all right now. Basically, AI is revolutionary and not evolutionary. Steve Kovac, Gene Munster. Thank you both very much. discussion. We could do a master's thesis on this whole thing. All right, coming up on the show, guys, we're going to explore innovation in the AI space, speaking of, a nationwide teacher shortage has pushed

America's school resources to their brink. So districts are pumping billions of dollars into cutting edge artificial intelligence tools to fill in teaching staffing gaps and take the busy work off the plate of already stressed educators. We're going to get those details coming up next. Welcome back. Shares of Nvidia have moved lower throughout the session. took another leg down just now on reports China is telling companies to stay away from their chips. Sima Modi has the details. It's not the first time, Kelly, but Bloomberg is reporting that Beijing is pressuring Chinese companies to buy locally made AI chips over Nvidia's as part of this broader effort to go local and rely less

on American goods. It comes as domestic players, Huawei, and others are working on their own versions of AI chips, but have yet to come out with a version that competes with Nvidia. And in fact, what we've been seeing is that more Chinese companies and Chinese have been smuggling Nvidia chips from the U.S. back into China. We also have been discussing how Nvidia has been working on a customized chip that would appease the current U.S. export controls for the Chinese market. So interesting to see that now Beijing is trying to push back on these foreign chips coming into the country. We'll see how their local companies respond.

Kelly. The next iteration of antagonism between the U.S. and China. we talked about earlier. All right, Seema, thank you very much. When you think of AI in schools, you probably worry about students cheating. But a number of AI tools are actually helping students and their teachers. Julia Borson has more as part of her continuing series on the impact around AI. Julia.

Well, Dom, new generative AI tools are a game changer for teachers who are trying to do more with less. And AI is also powering the next generation of ed tech startups. With teacher shortages putting more demands on educators than ever, this year teachers are using new AI tools to help them do more with less. A leading AI startup magic school is used by 3 million educators across the country. While most of those teachers are using it for free, 5,500 schools pay for a premium version for about $5 per student per year. One of those subscribers, Green Dot, took us inside one of its 18. Los Angeles charter schools to show us how AI is helping teachers teach. James Fiddler is a green dot assistant principal.

After a trial period last year, his school just started paying for a full rollout of the software this semester. He showed us how his teachers used the platform's 70-plus tools for everything from grading and crafting lesson plans to building presentations with generative AI. All of these queries are being answered so quickly. How much time does this save for your teachers. Teachers are asked to do a lot to prepare. And so this gives teachers an opportunity to spend less time doing more. Magic School started rolling out 40 plus tools for students, including chatbots that teachers can customize based on each student. The teacher will decide the tools they want to launch to their student. They will customize them, make sure they work

the way they want, they're appropriate for the grade level. Then they'll test them in their own playground to make sure that they're appropriate for their students, and then they'll launch them to students. Magic School is one of the 67 AI education companies that have raised $518 million so far this year, according to Pitchbook, with $3.3 billion invested into AI education startups since 2020. One of them, GoodNotes, is an AI-powered digital note-taking platform. It helps students with things like spell check and math equations, but with new technology comes new concerns around a lack of human interaction in classrooms or the potential for AI to be used for cheating. Have you gotten pushback from parents or from students who are like, hey, why are you using AI instead of just teaching me yourself?

Yeah, so I wouldn't say from parents or students. I think our district is doing a great job of setting expectations about what AI use looks like. AI is here and it's here to stay. And so how do we adapt and adjust to that? It's not just the ed tech startups embracing AI. Coursera, whose stock is down by about half of the past year, has been focused on AI-powered study assistance and course translations. Of course, translation is so valuable. Kelly? One of the biggest applications right now, Julia, thanks very much, Julia Borson. Chinese stocks, meanwhile, seeing their biggest weekly jump in decades on the back of new stimulus measures,

will give you some ways to play it next. economic stimulus triggering a rally in Chinese stocks with the space seeing its biggest single week jump in more than 25 years. And that's the theme for today's three-stock lunch. Here with our picks, you can make to capitalize on all that's taken place. Michael Landsberg is CIO at Landsberg Bennett Private Wealth Management. Michael, it's great to have you here. Your first play might come to mind easily for folks. It's win.

I think it was one of the names Tepper mentioned as well. Is it too late to buy it? Not really, Kelly. I think the issue there is, 63% of their business is China. And so it is a China play, but you're getting U.S. management. What I also like about it is you're seeing those whales, those VIP gamblers. It's up 42% year over a year.

So they're starting to come back and spend some money. So I think it's a name that you can still own. It's nowhere near where it was a few years back when they first started into China. So you've got some room here. All right. So let's talk about luxury retail coming up next. They're on the rise, thanks to China stimulus, bringing us to your next China play, which is Hermes.

It anyways, the Asians, Chinese, all of their luxury brands, no matter where you go in the world to see that. Which is interesting, they only have 33 stores in mainland China, but about 47% of their global revenue is Asia X Japan. So they spend a lot of money, they spend a lot of money even on the road, and that's not in that number. Consistent double-digit growth on the sales side, they do pay a little bit of a dividend. It's a huge company. We think it's a great way to play that global brand, but the China emphasis now with more money. coming into the Chinese market. Yeah, this Eames hadn't come up,

and I like that you are zeroing in on it as one to watch. How about Maitwan? That's a Chinese food delivery giant, a stock that's also seen a surge. Some say they face risks on the consumer malaise. What do you say? They do. I mean, obviously, I think, you know,

PDD came out and said there's some issues with the consumer in China. Maitwan didn't see that. They actually had record metrics in terms of profitability in terms of sales. We like it because it's a, it's a staple. Yeah, food delivery. It's kind of also got like a Yelp component to it as well. It's done really well, kind of brought out to consumers as well as to hotels and its restaurants. It's a great story. But at the same time, it's kind of lower level story. It's not high end. It's a Chinese low level, which I think is a way to play as well. All right, Michael Landsberg. Have a great weekend. Thanks for joining us. And thank you all for watching Power Lunch. We hope you have a great weekend as well, Kelly. Get that swim practice. There you go.