Power Lunch - Walmart's Electronic Shelf Labels, Tesla's Q2 Deliveries & Trump's Hush Money Case Postponed 7/2/24

Episode Date: July 2, 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.

Welcome to Power Lunch alongside Kelly Evans. I am John Ford and Fed Chair Jay Powell laying out the case for the Fed's fight against inflation. A lot of progress made but still more to do. So what does that mean for stocks ahead of this month's Fed meeting? Plus Walmart and other stores are increasingly using digital price tags, making it easier to change and some say to raise prices. We'll dig into what it means for the stores and discuss the reaction from inflation-weary consumers. But first let's get a check on the markets, which are near session highs with a Dow up 44.

points after being in the red much of the day so far. The SMP up 18 now to 5493. The NASDA up two-thirds of a percent on top of yesterday's record close. And the big mover today is Tesla, up 8 percent again after yesterday's big move, 15 percent for the week now after reporting better than expected delivery numbers. Let's start there with Philabo and more details. Phil. And Kelly, those numbers coming in about 8,000 more than the fact set estimate, which was 436,000. Look at where Tesla actually report. what it actually reported for Q2, just under 444,000 vehicles delivered for the quarter. Even though better than expected, it is the second street quarter where year over a year there was a decline in deliveries, this time down 4.8 percent.

Production just over 410,000. Now the question is, can they hit the estimate of 1.82 million vehicles delivered this year, which would be flat with last year? Even Adam Jonas from Morgan Stanley out with a note today saying it's going to be challenging if they're going to do it in the second half of this year. And while Tesla doesn't break down its sales by region, we did get the numbers out of China, where they reported on the entire industry. And in June, Tesla's sales were down 24.2 percent. That talks to, or goes straight to the heart of the question of just how challenging the Chinese market is right now. For the quarter, Tesla is still ahead of BYD in terms of full EV sales worldwide. BYD's EV sales for the quarter.

$426,000. So not quite to the level of where Tesla was. Tesla remains king of the hill, if you will, in the second quarter. And as you take a look at shares over the last three months, we've talked about it before. The next two important dates, July 23rd, which is when they're going to be posting their earnings after the bell, and then the Robotaxy reveal on August 8th. That's really what people will be focused on, because I think people are hoping to get some sense of, okay, how much is this entire Robotaxy strategy truly flushed out, or is this going to be very high, okay, this is what we want to do without a whole lot of specificity? All right. Phil, please stay right there for more reaction to Tesla's delivery numbers and the

road ahead. Let's bring in Tim Higgins. He's business columnist at the Wall Street Journal, also a CNBC contributor and author of PowerPlay, Tesla, Elon Musk, and the Bet of the Century. also with us. George Giannuricus is an analyst at Canacord Genuity. George, these numbers, delivery numbers, are better than you expected. It looks like some of those big inventory numbers are being worked down here, but there's still questions about demand and supply from the Chinese makers out there. So what keeps this stock moving in this positive direction? Well, thanks for having me on. And we think the really important metric from a stock perspectives to watch year-over-year growth trends. If our numbers are right over the next couple of

quarters or next couple of years, the year-over-year growth in earnings and non-gap earnings and revenue likely bottomed in the first quarter. And if you pay attention to what the stock's done, it probably bottomed in the first quarter. And what gives us a little bit of conviction that they probably will hit that 1.8 number and likely grow into next year is that they promise to release new vehicles. We don't know what they'll look like towards the end of this year into early next year. So that gives us some confidence and hope that they can continue that growth trajectory over the next several quarters. Tim, how important is the premium end to Tatsu right now versus that low end where they're facing this challenge from Chinese makers? And I don't know

if they're going to have the same kind of help from the government, you know, either in the forms of tariffs or incentives to keep them moving vehicles versus this new challenger. Yeah, this is one of the challenges for Tesla right now that are kind of stuck in the middle. You look at the Chinese rivals and they're kind of biting at the low end of the market, appealing to people who are price sensitive. But then at the high end of the market, you're seeing new entrants out there from Lucid and in China itself from some of the local makers there. They're the hot new product to have in a market where early adopters or people want to have the newest thing. Tesla's lineup long in the tooth and kind of fight.

for that middle realm where it's not quite sure if how hot the market is. Phil, what would you add to that? What would be the next important data point to watch? Well, it's the robotaxy. I mean, this is the one that everybody is keying in on because people want to know if there is truly going to be the level of detail that will give them confidence to say, you know what, this strategy makes sense. On paper, what Elon Musk has said, whether you go back to the last earnings call or previously, on paper it makes 100% sense in terms of what he wants to do. But the reality is getting Robotaxi up and running and truly having an impact in terms of saying, okay, we have a fleet out there and it's X100,000 or however many vehicles and seeing some trajectory,

that's what people want to see. So August 8th is really what people are focusing on, Kelly, because if it's another case of, well, we think we're going to be able to get this, but we don't have a whole. whole lot of specificity. I think it's going to be a disappointment. Right, exactly. But George, for you, how important is that as well when a lot of people would say robotaxies a wonderful long-term aspiration? And yet in the near term, how tangible is it? Look, it's an incredibly important date like Phil alluded to. We'll see what exactly they talk about their long-term business model. But one key metric, key key metric that we're

focused on when they report earnings is FSD, full soft drive. driving take rates. They lowered the price of it significantly during the quarter. They gave a free one-month trial. And to the extent people believe in autonomy, which we do, it'll be really important to see how many people opted in and bought that software this quarter. That is the key to the near-term story in our opinion. Well, Tim, my question overall, and this includes Robotaxy, is what is the value of a Tesla you don't own and who bears the capital costs and maintenance costs of that Tesla you don't own? Because to me, and maybe this gets to the details, whatever they are of this Robotaxy strategy, that matters a whole lot. Yeah, Elon is painted kind of two possibilities,

two futures. The Tesla will own some of those vehicles, so it'll be like they have their own robot taxi fleet out there, but then also the potential for the consumer for you to own. own one of these vehicles and almost be like an Airbnb situation where you rent it out, you send your robot out into the world to earn its living. The challenge, however, is we haven't seen this technology really from Tesla yet. They haven't demonstrated the ability to deploy robots into the world to act as robot taxis. We've seen some companies in the world do it. Here in San Francisco, I can go outside my door and watch a Waymo go by on a regular basis, but we haven't seen Tesla do it, And that's going to be one of the key things here in August is where do these timelines for actually deploying real fully self-driving technology?

And Phil LeBoe, the economics here, I imagine, are difficult, right? Because what's the supply of robotaxi? If I'm going to take on the risk of putting a couple of robotaxies out there, how do I know my neighbor isn't going to do the same? And all of a sudden, I've got cars that I respected to earn me money sitting in the driveway. Great point. I mean, look, that's what we, that's the unknown here. How much, how big will Tesla's Robotaxy Fleet be? I mean, initially it's going to be small. Everybody knows that. And then how quickly will they allow people to put their vehicles into the Robotaxy Fleet?

And, you know, as Tim alluded to, they're taking this Airbnb model. Well, if everybody in my neighborhood is renting out to Airbnb, am I likely to do it as well? Probably not. It depends on where I am and what the demand is out there. These are all the things that are going to need to explained, and they're not going to be initially explained on August 8th. But over time, these are some of the hurdles that are going to have to be overcome. All right. Tim Higgins, George Gianniricus. Thank you. And Phil, stick around for a moment because we also heard from other auto companies today with their June sales numbers. And we're curious what impact, if any, we saw from that hack attack. Well, there is an impact. We've heard from dealers. And

when you talk with those who look at the overall sales trends within the industry, they say, Look, we think probably 100,000 to 140,000 vehicle sales were lost. And we say lost actually deferred. They're going to probably be made up in July. Let's start first off with GM. Quarterly sales, as expected, up fractionally under 1% versus the second quarter of last year. But they're EV sales, and I know it's a small number, but they are ramping production, so it's important. They're EV sales up 40% compared to last year.

In terms of June sales from the foreign automakers, we're talking about Honda. Toyota, Hyundai, Nissan. Generally speaking, it's what people were expecting, close to flat, maybe slightly positive, as it is slightly positive for Honda. And these guys, like all automakers, there was an impact, but you will likely see it made up when you look into July sales. So I had one person say to me, you know what the impact is going to be? It's on the reported numbers. Don't be surprised if the sales rate comes in at 15.5 million when it was actually closer to 16 million. By the way, CDK says that their full systems will be restored by July 4th. Here's the sales rate that we talked about.

The expectation is 15.8 to 16.1 million for June. And as you take a look at Toyota, Honda, and Hyundai, the incentives is what a lot of people are focused on. Not just for these guys, the industry-wide incentive, it keeps edging higher, now up to just over $2,600 per vehicle when a transaction takes place. Guys, back to you. All right, Phil, I think you just covered all the cars and all the business models for us there. Thanks. Well, the fallout from last week's debate continuing for President Biden, one Democratic representative

out today saying Biden should withdraw from the race. Emily Wilkins has more on that, and the Biden campaign response. Emily. Hey, John. Well, yeah, Congressman Lloyd Doggett. He's a Democrat from Texas, and he is publicly calling on Biden now to withdraw from the presidential race. He is the first sitting congressman to do so. He said in a statement today that Biden now has the chance to encourage the next generation of leaders.

And quote, unlike Trump, President Biden's first commitment has always been to our country, not himself. He says, I'm hopeful that he will make the painful and difficult decision to withdraw. I respectfully call on him to do so. Now, of course, multiple lawmakers have raised concerns in private about keeping Biden at the top of the ticket. But so far, Docket is the only one to really come out and be saying it publicly. Democratic congressional leaders have continued to back Biden. Senate Majority Leader Chuck Schumer just today reaffirmed his support of Biden at this event in New York. We've worked hard together for four years and delivered a lot for America and for Central New York.

I'm for Biden. Former Speaker Nancy Pelosi has also stood. by Biden, but told Andrea Mitchell this afternoon that it was a legitimate question over whether his debate performance was an episode or a condition. My recommendation is for him to have some interviews, a serious journalist, you're among them, a serious journalist, no holds barred, any questions fair, and just sit there and be Joe. It seems like the Biden campaign, like that suggestion, it was just reported that ABC News as George Stephanopoulos, will have an interview with Biden over the weekend. Of course, the Biden campaign has responded saying that Biden is going to stay the course, that he is going to be the one to go forward with his campaign, and that he has a number of folks who back him and support him.

So at this point, it will be interesting to see if other lawmakers do come forward with concerns. That pressure might lead to some sort of change in the Biden campaign. But at this point, guys, they are going forward with Biden running as the potential nominee. So we have about six weeks or so until the DNC in Chicago. And I have to imagine with that timeline, they're looking at and saying, okay, do we drag this out until then if there's going to be any change either to the top or the bottom of the ticket or try to do something right away to nip these concerns in the bud? It's a huge question right now. I mean, to be at this point in an election and to have this much concern over the leading candidate, it really hasn't been precedent at least in the last 50 years or so.

And so there's a huge question if Biden does step down. Of course, there are many people who could sort of come in. You heard Jim Clyburn also this afternoon speaking with Andrea Mitchell saying, hey, if Biden steps down, he supports him for now. But if he does, he thinks that Kamala Harris needs to be the one to step up. It's many other names that are being floated around at this point. But the fact of the matter is that six weeks is not a lot of time for candidates to potentially get out there to make their case to gear up their fundraising. And the longer this decision goes unmade, the more and more it's sort of going to lock Biden into being that nominee.

The context here, Emily to me, is interesting. Lloyd Doggett out of Texas, he himself is 77 years old. We heard from Nancy Pelosi. She's 84. Part of this is about down-ballot races, right? I mean, you'd expect in a lot of districts in Texas, this is going to be tight. anyway, and they probably don't want another factor weighing on the ballot. I mean, that is always the concern for the down-ballot candidates, right? So many folks, when they go to the ballot box, they don't really necessarily know their senator, their lawmaker, their local officials, but they do know that they like the Democrat or the

Republican at the top of the ticket, and they tend to vote the rest of the ticket as such. Now, of course, that doesn't always happen, and we are seeing in some places, some of these down-ballot candidates are pulling ahead of Biden. But at the same point, it is always a question who's at the top of the ticket. That is always a factor. All right. Emily, thank you. Well, the Fed chair weighing in on markets and inflation earlier on CNBC. We got more on that next.

But first, as we had to break, a quick power check on the positive side of the S&P, beyond Tesla is on semi. On the negative side, Lenar, city downgrading the name, citing a sluggish housing market. And that's your power check. We'll be right back. Welcome back to Power Lunch. Fed Chair Jerome Powell on CNBC earlier today, saying he sees progress on inflation, but also raining in rate cut expectations. Take a listen. We've made quite a bit of progress in bringing inflation back down to our target. While the labor market has remained strong and growth has continued, we want that process to continue.

I think the last reading and the one before inflation, the one before it to a lesser extent, do suggest that we are getting back on a disinflation. We want to be more confident that inflation is moving sustainably down toward 2% before we start the process of reducing how tight our policy is, of loosening policy. Our next guest says the Fed could be a caveat to the market, but still thinks the rally will go higher and has just revised his annual price target to 5751. Let's bring in Keith Fitzgerald, a Fitzgerald group principal. Keith, it's good to have you. So even with sort of hawkish-sounding Powell there. even with, and here's the thing is the market's going to continue to narrow up. It's going to be companies like Nvidia and Tesla and Apple and many of the great tech names we talk about all the time that lead the way.

Companies like Nike and Walgreens are going to get left behind this earnings season is going to be very telling. But still, path of least resistance is higher, Kelly. And why do you think that is? Why, I think what, that the path is higher or that they're going to get left behind? Well, both. Well, there's still a lot of money that needs to go to work. And structurally, we are very identical to two prior periods of significant growth in history, you know, where we had lots of innovation.

We had labor challenges to the 1950s and the 1990s. And so if we think about this like a beach party, everybody's just rolling onto the sand. They're starting to break out all the great food. People are smiling. Frisbees are starting to go around. But there's a long way to go before everybody gets sunburned. So it's a nice, good place to be. It doesn't feel like that, but history is often that way.

Yeah. But, Keith, what do you do with your gains at this point? Say you were right and you expected, you were listening to Keith Fitzgerald and you expected the S&P to reach these levels. Do you just stay completely invested, even in the S&P, say you're invested that way from here? Or do you redistribute those gains in some way that takes away some risk of the narrow market rally? That's a really good question. And my preference is the latter. You know, buy and hope is not an investment strategy, but buy and manage very much.

is. So taking profits, just like you harvest fruit from a tree and a ripe orchard, that's what you want to be doing now. So there's lots of great dividend stocks. There's great defense stocks. There's lots of undervalued health care out there. So you don't want to get off a winning horse mid-race, but my opinion is definitely you want to be thinking about how do I take some of that money off the table. What do I do with it? And where do I go next? So, Keith, let's talk about NVIDIA, which you were early and right on and said there's still more room to go and continue to say that. I don't know if you saw last hour we spoke with DeMonis Semmiglu over at MIT, Gerona Semmiglu over at MIT, who said he thinks the impact of this in terms of the economic

impact is actually going to be much smaller than people think. If that's right, yeah, yeah, I mean, you know, in measurable terms that it can replace some tasks, but really not, you know, the bulk of what comprises human economic activity. I think that's a very interesting observation. I disagree with it, and very respectfully so. This is a lot like saying that talking movie pictures, wouldn't replace silent pictures. AI is not just a technology, it's the greatest technology in recorded human history. And I think that every dollar you're spending on it now is returning

5, 6, 7 to the balance sheet. So we're going to be looking at $9, 10, $12, $15 a few years from now. So the question is not so much, is it coming or is it inevitable? The question is, what does that look like? So I would respectfully disagree. I'd push back on that pretty significantly. And I think that that's a very interesting, but not a viewpoint I agree with. What do you betting happen of the small and mid-caps here? That's an interesting question. We struggle with that because I think that quality matters. The problem we have in today's market is that many of the small caps that are really good,

solid companies are getting purchased before they ever go public. So the question is, you know, who's out and what? IonQ, for example, is quantum computing on the uptake? I think it's batting around right now in the low dollar ranges. So that's interesting. When quantum computing comes in, that's an example of a small cap that might make it, or caribou sciences, biosciences. That's another one gene editing is potentially four or five years from now.

Very, very valuable. Full disclosure, I own both of them. But I think you've got to pick your bets very carefully because the big caps are what the security, the balance sheets, the strength needed. And Keith, I should mention as well, you're still bullish on Tesla thinking this could be a $300 stock next year. Yes, I am. I think this stock is going to double or triple, maybe even more in the next few years. And again, we're early innings.

Anybody who's thinking about this just in terms of cars is very smart, but I would encourage them to broaden their horizons significantly. This is about power. This is about robotics. I think it perhaps is the best undervalued AI play on the planet right now. And love them or hate him, Musk knows what he's doing. All right. Keith, thank you. We appreciate it.

Always fun to check in. Keith Fitzgerald. Now I was going to check on the bond market, Rick Santelli, tracking the action, Rick. Hi, John. Yes, you know, I can't have. to make a comment about the chairman, of course, a wonderful interview that Sarah did with all the leading monetary policy people in the world, including Christine Lagardean, Chairman Paul. The word disinflationary came up so many times. Disinflationary, that's a monetary policy,

Fed phrase. They love it. It means less inflation. But average guy in the street, he's not interested in disinflation. He wants deflation, and there's a huge difference. One is less of inflation. The others are reversing and the compounding effects of inflation. Public's not going to be happy, but the Fed will be. If you look at interest rates, the last month has had some very important moves. If you look at the one month in the tens, and let's play a game here. Look at the left, look at the right side. You see the hump on the left, the hump on the right.

Now let's do that same one month, but let's put a two year. Now on the two year, you have the hump on the left. You have nothing on the right. Super significant. Now let's put the spread out there. Okay, here's a one month of the spread. The right side is breaking out. The curve is de-inverting, getting steeper,

minus 28, minus 29. Many sources and traders I talk to are now calling it the political trade of 2024 because one of the big issues is going to be tax cuts or no tax cuts, who has a bigger deficit, Biden or Trump, and I'm not weighing in on what the positives or negatives are, are, I'm just saying the more that becomes talked about, the more the curve's going to

de-invert and the steeper it's going to get. Kelly, back to you. All right. Rick, thank you. Rick Santelli. Further ahead is Peloton not done yet? The company struggling off to pull off a big refinance and narrowly avoiding bankruptcy. Oh, yes, Power Ludge will have details when we come back. Welcome back to Power Lunge. Stocks are higher near session highs right now with the Dow up 100 points and the NASDAQ up three quarters of 1% above 18,000 after yesterday's record close. Also check out NatGas. It's down 10% in a week, but a federal judge says the Biden administration cannot delay new LNG projects. Oh, it takes a turn. Pippa Stevens here to explain.

Yes, this is the latest in this saga. So essentially yesterday, a Louisiana judge overturned that decision by the Biden administration to pause new LNG export approvals. That was back in January. So 16 states brought this case saying that it was unfair. It hurt them economically and there was no basis for it. Now, just like that initial pause back in January, this latest move is not going to have any sort of immediate impact. Right now, the U.S. is the world's largest LNG exporter. And our exports are set to double by the end of this decade, thanks to projects that are already operational and those that are under construction. However, the Biden administration did get a lot of credit from climate activists for this move back in January.

and so it was a win in that sense, and the administration said they weren't disappointed. Now, moving over to oil, it did hit a two-month high earlier today on Middle East, and then also now growing on ease around Hurricane Barrel. It is the first storm to reach Category 5 this early in the Atlantic on record. Now, at present, its path is not set to hit any U.S. oil production or refining operations, but what it will impact is trade flows between the oil between Mexico and the U.S., the U.S. imports about 400,000 barrels of oil from Mexico each day. and Mexico imports about 1 million barrels of products.

So if you have this hurricane blowing through, you can't have those tankers traversing the area. Are they saying landfall for the hurricane at this point? So it already made landfall, and now it's still moving. And it's not supposed to hit, yeah, it's not supposed to hit the U.S. It has shifted a little bit in the sense that it might impact Corpus Christi in south of Texas by Sunday. But right now it's not forecast to hit the U.S. or any of our oil infrastructure.

Any chatter about how the Supreme Court decision, decision Chevron, I believe, might impact the U.S. as an energy producer. It sure seems to me like if regulators have less power to interpret what Congress says, there's more likelihood that energy producers might have a longer leash. I think it's really hard because in a lot of these cases, you get that federal top-down policy, but then a lot of the time it really comes down to the nitty-gritty, to the state and the local level. We've seen this again and again where things keep flip-flopping back and forth. And I think beyond just whether or not you think the U.S. should continue on the fossil fuel trajectory or move to more towards green energy, the flip-flopping of policy is what's really hard.

Energy has always required billions of dollars in upfront spending. It's very cap-ex intensive. And if you have these movements constantly shifting and the political headwinds moving, it makes developing these long-term projects fixing our grid, among other things, that much harder. All right, Pippa, thank you. Well, now let's get over to Sima Modi for our CNBC News Update. John, it's nice to see you this hour. As we enter the hottest time of the year, President Biden took steps today to issue the country's first ever rule on protecting American workers from extreme heat. The proposal is calling for employers to take several steps to manage the risks to an estimated 36 million workers, and they include requiring rest breaks, shade and water, as well as training to recognize heat-related illness. The man accused of stabbing author Salomon Rushdie rejected a plea deal today. Hadi Matar's lawyers say it would have shorted.

his state prison term while opening him up to a federal terrorism-related charge. Matar is accused of stabbing Rushdie more than a dozen times after attacking him on stage before a lecture in Western New York, Rushdie has a blinded eye. The Food and Drug Administration approved Eli Lilly's new Alzheimer's drug today. The pharmaceutical company said the drug, which is being sold under the name Kisunla, has been shown to modestly slow a decline in memory and thinking abilities in clinical trials. A one-year course of therapy will cost $32,000. the FDA granted full approval to a similar drug just last summer.

John and Kelly? All right, Seema, thanks. And coming up, consumers losing patience over inflation, whether it's diners calling out shrinkage at Chipotle or shoppers keeping a watchful eye on the price of eggs. But now the growing use of dynamic pricing across the consumer space could spark more outrage. We will discuss when Power Lunch return.

Welcome back to Power Lunch. Walmart becoming the latest retailer to announce plans to replace its physical in-store price stickers with electronic shelf labels in its aisles. While the digitized shelves will allow stores to provide more details to shoppers, it also gives the ability to change prices as often as every 10 seconds. Joining us now on set to break down this latest dynamic pricing trend is Phil Lempert, Supermarket Guru CEO, and our own Melissa Repco. Great to have both you guys.

So Phil, how much danger is there here if shoppers aren't reassured that they're not hiking prices? That's exactly the point. And short term, no danger. Walmart has already come out and said they're not going to do dynamic prices. They realize what happened when Wendy's talked about dynamic prices a few months ago, up in arms. People just hate that idea. And keep in mind that what Walmart is doing is they're trying to reduce their labor costs. Labor is the number one aspect for retailers. They've got to reduce those costs. But once they put this technology on the shelves, watch out. Now, the good news is we can get nutritional information. If Walmart's competitor across the street goes on sale, Walmart can lower

prices. But again, once that technology is in there, and that's my concern, they can raise prices. On a hot summer day, you know, I want a lot of ice cream. I want lemonade. They're running low. They can raise the price. Melissa, everybody loves dynamic prices when the price goes down and you get a deal. How much of this is about predictability, price stability from the consumer's point of view? Like Phil said, Walmart told me they have no plans for dynamic pricing, but there are some high-tech features here. And the feature really is blinking lights on these labels that allow a worker to more quickly replenish that shelf when they're, you know, putting diced tomatoes or when they're picking an online order, it also helps them find those items more quickly. So it goes to that labor cost. Now, of course, we've seen dynamic pricing in grocery stores.

People just don't think of it that way. When you see bread marked down toward the end of the day or strawberries that are toward the end of their life, you obviously. often see that sticker on the label saying, you know, 50% off or 20% off and people do enjoy that. The fear here, of course, is more of that surge pricing we've seen with Uber. And so it brings to mind kind of this panic about people seeing prices go up. And this is a time when people are hypersensitive about pricing. It's been a recurring issue. Everything is more expensive.

It's not just in their head. And we saw this even with Chipotle that people were filming and posting on TikTok. They were trying to get bigger portions from employees and feeling like they were getting less. Yeah, Wells Fargo then went and did a deep dive weighing. How many was 100 Chipotle? Yes. And it's worth noting that they had a lot of variation there because there was not consistency. So it kind of speaks to this perception versus reality gap that, yes, some companies are trying to cut back.

In some cases, we've seen shrink inflation. But in some cases, it's just because consumers are very sensitive. It feels inevitable that this is where we're going, Phil, as to digital prices and things like that. So regulators will probably get involved at some level to say, you know, put it to, safeguard, some kind of guardrails around the experience, but it's, it's, it doesn't I think it's something we should expect to see a lot more of? Yes, and I'm not sure that the guardrails really work. You know, when you really look at it, and from a retailer standpoint, the average supermarket makes about one and a half percent net profit a year. Now, keep in mind, you know, in the past year,

year and a half, they've been a little price gouging, so they've made a little bit more. But the reality is, it's a very low margin business. So if you can reduce your expenses, that's a good thing. question is what happens next? And also, what's the fallout? Melissa and I were talking before. You know, keep in mind that there are other retailers out there, Dollar General, grocery outlet. What they rely on are goods that are about close to expiration date that they could buy at cents on the dollar and really offer their customers. They should allow those prices to change day by day as that expiration thing draws closer. But they're not going to get the goods because, again,

And what Walmart or anybody else can do is it gets close to expiration date, they'll lower the prices. Got it. So that whole dollar general channel of distribution, they're going to be at risk. But this is about culture, isn't it, Melissa, because with stocks, with gasoline, with airline flights, we're used to dynamic price. We just expect it. Hey, I buy a ticket today. The price might go down. The price might go up.

Maybe I have to check and get a refund. Is it possible that we just end up accepting? a new norm. Price is moving on everything every day. You're right. I think that this is a bit of a boogeyman that people, and it's the same way that shrinkflation has become a household term, right? People associate these prices and they have a powerful feeling about them. But if you think about what T.J. Max does, it's dynamic pricing. They bring you last season's version of clothing for less because there's less demand. And so that's really a form of dynamic pricing, too. So I think if consumers see the upside and the downside, like Wendy said they were misconstrued, they really

just intended to lower prices to incentivize demand. So if people kind of see this play out, maybe they would become more comfortable with it over time. But food is different. Food is primal. Yeah. And when you screw around with the price of eggs, look at what happened with bird flu, with the price of eggs. People are panicking. So this is very primal.

So I agree with you when it comes to clothing, when it comes to the hard goods, when it comes to electronics. But don't mess with my food. Don't leave me hungry. Don't tell me my quarter pounder is an eighth pounder today for the same price. All right, Phil. Melissa, thank you. Supermarket guru founder, Phil Lempert. We have more reports now coming out about the future of Paramount.

Let's get right to Julia Borset in the newsroom for the latest. Julia? Well, Kelly, Paramark Global is reportedly in talks. It's LBET to buyers, including BET CEO, Scott Mills and private equity firm C.C. Capital Chief Chin Choo. Now, this is according to a Bloomberg report, and according to this report, this group is looking at an offer price of $1.6 to $1.7 billion. Now, BET has been on and off the block for years, including with this same group,

as well as with Byron Allen making an offer, Allen, or offering $3.5 billion last year for BET as well as VH1 combined. Now, all of those talks halted ahead of Paramount controlling Cheryl Der Sherry Redstone's deal talks with Skydance. Of course, those talks did fall through. last month on June 11th. And now these talks about buying just the BET asset restarted. All of this comes as Paramount Global works to cut costs and to drive towards profitability. We have reached out to Paramount Global and have not heard back yet. Back over to you. Julia, for now, thank you,

Julia Borsden. Still to come, new reports. Some EU countries are investigating antitrust concerns around NVIDIA. We'll get the details in tech check when we return. Welcome back to Power Lunch. NVIDIA is just the latest big tech company to attract the attention of European regulators. Dear Jibosa, looking at that in today's tech check, Deirdre. Hey, Kelly, so NVIDIA's rise to not just the largest chipmaker in the world, but largest tech company by market cap for a brief point. It was bound to track some regulatory attention. It has.

Reuters reporting the French antitrust authority is set to charge NVIDIA for anti-competitive practices. And they're not the only ones. In a regulatory filing last year, NVIDIA said regulators in the United States. the EU and China had also asked for information on its graphic cards. Now, like the broader EU DMA, which has already targeted Apple, Microsoft meta, NVIDIA could face as much as 10% of its global annual revenue for breaching rules. And here's the bottom line.

Invidia has become so successful, so dominant in the AI arms race that is no longer just a chip company that makes GPs, it is an ecosystem where its hardware works best on its KUDIS software, which are increasingly served by its own cloud infrastructure. It's also investing in smaller companies like Corrieve and others that in turn expand the Nvidia ecosystem around its products. Now, regulators are trying to figure out if that's fair competition or self-dealing, letting incumbents the big players leverage their market power, resources, inside information to gain unfair advantages or stifle competition.

It'll be interesting to see how this now plays out in Europe, guys. John Kelly, you well know that the European regulators have been more aggressive, tougher than their American counterparts. Mostly they've been regulating foreign companies, our big tech companies, but there are some interesting startups in the Gen. AI world coming out of Europe, like a Mistral that comes out of France.

All right. Deirdre, thanks. Not much of a cliffhanger, whether European regulators are going to regulate or not. Coming up, President Biden and Senator Bernie Sanders calling on Eli Lilly to cut the price of weight loss drugs. We'll trade that name and others in three-stock lunch. Welcome back.

Time for today's three-stock lunch. And Boris Schlossberg is our trader today. He's managing director of FX strategy with BK asset management. Also a CNBC contributor, Boris, welcome to you. Let's start with Eli Lilly today. President Biden and Senator Sanders have continued their push for lower drug prices. They are now citing the high cost of weight loss products in an op-ed. Should that dent the shares in your term potential?

Yeah, I think any kind of a pullback here is going to be a great buying opportunity. I mean, Eli Lilly is the leader in this space, Zepp out and Manjaro, have multi-year, multi-bagger investment opportunity because they're just such an incredible drug. I've been making an argument with you guys for a while, that GLP1 is a much bigger investment opportunity than GPT4 for the near term. And I think these drugs are here to stay. And, of course, the best way to play them is going to be Lilly. So any kind of a dip, I think is going to be great.

But in this case as well, I mean, look, it's doubled over the past year. You don't think it's too expensive? It's too expensive, of course, in the near term. but if you're looking five years forward where they're going to have this massive global scale. Remember, obesity is now a global problem, not just a U.S. problem. And the amount of revenue they're going to be able to generate off this product, I think, is going to be tremendous. So I think if you have a three to five year forecast going forward, a vision going forward, you'll be very, very well served in Lulie.

What do prices get capped? So if prices get capped, ironically enough, I think it may actually expand the market, right? So you have lower prices, maybe you're going to have more. more people are willing to take the drug because there's such a huge demand. They can't fill it from everything I see anecdotally. It's three to five to, you know, sometimes six-week wait on the pharmaceutical side to fill the drug. It's just, I think, a tremendous buying story.

And it's always with buying stories, you know, you get really, really big moves on the stock, and they're always underestimating the power of them, I think. Maybe dynamic pricing of GOP wants. No. Okay, up next, PayPal, getting an upgrade from Susquehanna to positive from neutral, citing valuation for the upgrade following the stock's recent decline. So Boris, what's your trade on PayPal? So this is a really interesting story because, yes, from a valuation point of view,

five-time cash flow, 13 times earnings, it looks kind of really good. But I think from a secular point of view, I am very, very cautious on the stock. PayPal has a lot of competition right now. It's number seven in China, very much at the bottom of the seller in the leading place where there's digital payments. And with Apple Cash coming out, I've seen the Apple Cash demo, very slick, the ability to be able to pay somebody out of messages, kind of very slick. I think it's very, very hard for these guys going to be to compete going

forward. And to me, in order to be able to get long on the stock, they're going to have to see actual customer growth instead of just financial engineering. And until that happens, I'd very much be a hold at this point. It's just a hold. Let's move on to Paramount, then, tons of news surrounding this one today. What's your trade on the stock trading currently a little over $10 a share? So I think this is a stock that's given every trader and a suitor of PTSD over the last couple of years, right? I mean, we just had so much drama and disappoints going back and forth. The problem, Paramount, I think, is a really interesting punt because it clearly has tremendous amount of assets,

but at the same time, all sorts of legal problems because of the arrest on family having near universal control or total control over the voting. So at this point, I think, you know, the story here that Barry Miller and IAC, Barry Diller, I'm sorry, and IAC may have an interest. If they could come to a deal, that certainly would give it a huge boost. The stock, I think, has a potential to be a $15 takeout stock. So there's a great punt. But at the same time, you have to very much walk into there with your eyes wide open. And if it doesn't work, it could be dead money going forward.

Dead money. The dreaded words. Boris, we hope not. Thank you for your time. It's good to see you today. Good to see you guys. Boris Lasburg. Major averages near session high as power lunch.

We'll be right back. Welcome back to Power Lunch. I'm Megan Casella in Washington, D.C., and we have breaking news out of the New York Supreme Court. They have postponed President Donald Trump's sentencing until September 18th at the earliest. This is in the Hush Money trial in Newark. The original sentencing had been set for next week, July 11th. It's been postponed now to September 18th. It's something that Trump's team had asked for in light of the Supreme Court decision yesterday. And the opposing team, Alvin Bragg, had not opposed that decision.

So that'll be September 18th at the earliest. John, back over to you. All right. you. Now let's check out shares of Peloton, just above 3.30, a share down 95% from four years ago, and it was a pandemic darling. CNBC retail reporter, Gabrielle Farnews, joins us now with an update on the company. Gabby. Thanks, John. So Peloton just pulled off a major refinancing of its debt. It got a new $1 billion syndicated term loan. It sold $350 million in convertible bonds, and then it also got a new $100 million revolver. And so what the company did with this is,

that used those funds to pay back some notes that was weighing down its balance sheet. And of course, investors were really eager to get out of those notes. They were raised in February of 2021. It was about a month after the stock had reached an all-time high of about $167. They had a conversion price of $239. Yikes. Obviously, that conversion option was now worthless, and those notes were unsecured. So in the event that Peloton would declare bankruptcy, which was starting to look like it, they would get nothing.

Were they, is Peloton that was or is close to bankruptcy? So when they had that 800 million that they needed to repay, they were because they were deeply in the red. They were going to have to repay that by November of 2025. So unless there was a dramatic change in sales patterns, you see nine consecutive quarters of drops. Wow. Wasn't looking good. Hardware company trying to be a services company. But you still use yours every now and then.

I know. They need to sell me a new one. Thanks for watching Power Lunch. Thank you. Closing bell starts now. Thank you.