Power Lunch - Watch This, Who’s The Best Boss 12/26/23

Episode Date: December 26, 2023

If you didn’t get the new Apple watch for Christmas, you may not be able to get one for a while. A ban on importing it just took effect, with no relief from the White House. We’ll get the latest details.Plus, we’ll examine the best CEOs of 2023, and also which executives are on the hot seat heading into next year. We’ll ask leadership expert Jeff Sonnenfeld for his personal picks. 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. On the show coming up, if you didn't get the new Apple Watch for Christmas, you may not be able to get one for quite some time. A ban on all importing of that Apple Watch taking effect today with no relief from the White House inside. Plus, the best CEOs of 2023 and who is on the hot seat heading into next year. We asked leadership expert Jeff Sonnenfeld for his picks, and some of his answers may surprise you. Before that, though, let's get a check on the markets as we try. try to keep up this long winning streak dating back to late October when we're basically talking about a Fed pivot. Really powered equities higher for eight weeks in a row now and continuing today with the NASDAQ up four-tenths of a percent. Over 15,000. I think I saw the Russell's Dom. We're at like a 20-month high. The S&P, the Dow, adding about another third or fourth of a percent. And we're just about one and a half percent away from record highs than the S&P 500 overall. Well, Bristol Myers is spending $4.1 billion to buy Ray's bio. That's stock. is soaring more than double 100%. Raised bio is developing cancer

treatments. Other biotech names are also rallying today on the wave of this M&A in the sector, Kelly, because we just got a huge deal from Bristol Myers just at the end of last week. Exactly. This is something we'll be talking about a lot more about whether or not there's going to be a wave of biotech mergers

coming up because of something like this. Yeah, Bristol did cruna therapeutics. That was about a $14 billion deal last week. Yes, 14 billion. But a lot of people also are focused on the fact that the XBI ETF is up 40% now in just the past couple of months, so a huge run-up in that space. I mean, here's the thing. If the XBI is running up, Kelly, it means the smaller ones are doing some of the heavy lifting. It's an equal-weight ETF. So it's not just because it's

not just, so if you look at the IBB, which is the NASDAQ biotech ETF, those are tilted more towards like the bigger mega-cap type names, but the XBI is equal weight. So if that, if that's outperforming, it means all those smaller names are starting to kind of pick up a little steam as well. And that'll get investors excited again. But let's begin this shall we, with the trio of tech topics. Starting with that ban on importing the Apple Watch into the U.S. Steve Kovac joins us now with that story. Steve, what is the very latest race?

Yeah, this is a crazy story. So Biden administration over the weekend did not give Apple what it wanted for Christmas. The U.S. Trade Representative Office ended up not vetoing the International Trade Commission decision to ban Apple Watch sales here in the U.S. by the deadline yesterday. Ban is now in full effect starting today. And this all stems from a patent dispute of. of the blood oxygen sensor technology brought against Apple by this tech company called Massimo.

Now, Apple says it is working to make changes to the Apple Watch so it doesn't violate those Massimo patents and it hopes to start selling again soon. Also, just a few hours ago, filed an appeal asking for a stay on the ban until customs and border control can determine if patents are violated. That's supposed to happen by January 12th. But in the meantime, you cannot buy an Apple Watch.

They're banned from selling the two latest models that just launched in September. That's the Series 9 and Ultra 2 here in the United States. The Apple Watch SE, that's the cheaper model that doesn't have that blood oxygen sensor. You can still go out and buy that. And third-party stores like Best Buy or Amazon and so forth, they can still sell their remaining inventory, but Apple cannot sell anything from its stores. Now look for the revenue impact here.

Morgan Stanley analyst last week, estimating less than 2% of Apple revenue will be affected by this ban, assuming it lasts through the entire March. quarter, and Apple is going to miss about $135 million in sales for each week the ban continues. Now, that may not sound like a lot at Apple's scale of sales, but every little bit counts right now as Apple struggles to return to its topline sales growth again after those four straight quarters of declining sales guys. So I've been reading a little bit about this saga with Massimo, and it goes back a decade that there's been an errantilly at the journalist had some great coverage of this, of this Apple

effect where, you know, they are companies who develop promising technology. Apple reaches out to find more about it. And show me everything. To quote the article, they say that's often the kiss of death. Right. So they've cited a couple of different companies, a live core and what have you. But in Masimo's case, according to the CEO, Apple not only hired their chief, I think, a couple of their executives. A couple of their, one of their CMOs. They also hired 30 different people over the years. They basically took what Massimo had. They could have acquired the company and maybe avoided what has now become ongoing lawsuits that are culminating in what we're seeing this. Yeah, and we see a lot of smaller hardware companies complain about these exact practices.

Apple, in this case, we've seen Amazon get accused of doing this exact same thing. But yeah, I mean, this is going to be interesting to see how it plays out. Apple's kind of trying these last-ditch legal attempts to stop it and ban it or slow down the process. Not working so far. It hasn't worked all year. It's not working now. It is banned. And so what do they do?

They have to fix their Apple watches, so it goes around. around these patents, that could be done on the software level. There are a lot of people saying, no, that's not going to be enough. It's going to have to be done on a hardware fix. And so in the meantime, they just can't sell the watches here until they can prove that they don't violate these patents. There are plenty of folks out there who don't wear wearables now, but would wear wearables in the future, hands down. If you could see things like blood pressure monitoring, glucose monitoring, blood oxygen monitoring, all of those health-related apps that go along with it to maintain kind of like this,

lifestyle around health. Is this a key for Apple going forward because of these watches? Because they could be that contact point, literally and figuratively. You mean specifically the O2 or just in general? No, just in general. Anything health-wise, because that's what's going to propel. That's what makes this ecosystem very, very steep. And that's also part of the argument they're making here in these court filings and appeals and everything they've been filing. They quote medical professionals saying, you know, this could be a health hazard, but, you know, it can have a negative of impact on public health in a way because of all this monitor technology. And to your point, blood pressure are some ideas they're kicking around. Glucose and insulin monitoring is another

thing they're kicking around. Those are probably further off, but this is all a big piece of the puzzle. How does it end? I don't know. People aren't going to run out and buy these Massimo watches necessarily, but you can also see if Apple can't work around these patents. You can see a future where they have to cut some kind of licensing deal for this technology. We've seen Apple do this with Qualcomm. We've seen them do it with Broadcom when they fail to create their own technology, they have to pay these license. And this has been going back and forth even today. Massimo is saying that the ITC's decision on Apple's watch import banmarks a significant moment for the U.S. as a defender of innovation and a protector of inventors' rights. So a lot of other companies have folded earlier than

hitting this juncture in fighting with Apple over the years. But it sounds like they're saying. It went right to the top and Apple still couldn't win it. So it looks like they're going to have to make some changes to the watch. All right. We'll move along to our next topic now. talk some Intel, Steve, because they're getting billions of dollars to build a new chip factory. Let's get to Christina Parts of Nevelas. She's got the details at the NASDAQ, and we'll start there. Christina. Well, Intel's getting some help from Israel to the tune of $3.2 billion, and that's driving Intel stock higher right now and actually to lead the S&P 500. So Intel previously confirmed it would spend roughly $25 billion on expanding an advanced chip facility in Israel, and it's

already started construction. But the new operations, which focus on advanced chip technology, will now get government help. And so that's helping propel the stock forward. It also represents one of many expansion initiatives for Intel. Last year, Intel said it would invest up to $100 billion to potentially build the world's largest chip-making complex in Ohio. Intel has also planned to build two plants in Germany, all with the aim of reestablishing Intel's manufacturing chip leadership.

So according to the trend force, Intel finally cracked the top 10 foundries by revenue. The top three spots are held by Taiwan. semi-Samsum Global Foundries, and then Intel comes in at number nine. And it's easiest for our viewers right now to think of Intel as two companies, a chip designer that competes with AMD and then a chip manufacturer, a business is still growing, that aims to compete with TSM Global Foundry Samsung. The Foundry business, like I said, is growing and it generated roughly $311 million in revenue in Q3, smaller amount, but that's up 300% year over year. And Intel promises to break out its Foundry Financial separately, so it's really operating as its own business in Q2 of next year,

but no plans just yet to spin it off. And even though the company, and this is a contentious point for a lot of investors, has had a long history of manufacturing delays, it claims, it claims it's on track to deliver its promises and timelines of five new chip processes in four years, although some analysts are still skeptical Intel can actually follow through. Hmm, all right. Steve Kovac, what do you think? I've seen this game before with Intel. You might remember the mobile era where they said, look, we're going to, you know, they missed the mobile wave. And they said, they had a chance to be in the iPhone, by the way.

You know, we're going to figure it out, figure it out, figure it out. They never did it. And we saw the same thing with computer chips, Apple ditching them. Now they're saying the foundry, doesn't mean they're not going to do it. And to Christina's point, they've hit some milestones. But it's always, you're prudent to have a little bit of skepticism with the claims Intel makes. And the way the stocks run up. Yeah.

And it's not just that. Christina, one of the things that we want to look at is whether or not there's a shift at all. There's a rebalancing with regard to semiconductors because there's been so much attention that's been paid to artificial intelligence related headlines, artificial intelligence related business lines. Is there something to be said that some of those perhaps moves have not run their course, but maybe are due for a bit of a slowdown and that we could see other fundamental drivers in chips in 2024? for? Well, see, the chip cycle is so different. They operate each in their own ecosystem. So for Intel, the driver, you know, you had the PC recovery. So to your point, that's helping drive Qualcomm and Intel higher this year. The second point where AI still plays a role for Intel is that this inferencing that's happening on servers, so that's the second part of the large language

model, that's something that Intel is working on and trying to capitalize. And then the third point is the foundry business. And that's an area, too, that's the, that if this AI bubble, you know, falls down over the next year or so. The valuations come down, then that's an area where Intel can continue to grow, where it promises it's going to grow and why we've seen some of the stock climb higher this year. 92%. Look at that. And that's the reason why we want to bring it up, Kelly, Steve, is because our last topic is about Open AI's valuation, right?

According to reports, the company is in talks to raise money, at a valuation of at least $100 billion, that would make it the second. most valuable U.S. startup behind only Elon Musk's SpaceX. Open AI released chat GPT only about a year ago, and now it's being valued at $100 billion, which is more than many other very well-established tech techs out there, right? Yeah, just for some context, Dom, when Uber on its IPO day, it was a $70 billion company. So, I mean, this is massive, but nothing's more Silicon Valley than a very low-revenue company getting these massive sky-high valuations. $100 billion, sure, why not?

If someone's willing to invest at that valuation, that's what they're going to do. I will point out, though, there's a tender offer expected next month in January, led by another investor group Tiger Global. That's going to be at an $86 billion valuation. So you've got to wonder what the employees are feeling, hey, we got this $100 billion round coming. Why are we getting in on this $86 billion deal? The big question is, what did they do with this money?

Okay, we're going to raise. We're at $100 billion valuation. Sam Altman, the CEO of opening, I kind of tweeted some nebulous things, but basically chips, servers, the stuff is expensive to run. They need money. They always need more money. This is Silicon Valley, raise, raise, raise, higher valuation as long as you can chase it. And that's what they're doing.

And by the way, their competitors doing the same thing. Anthropic, probably one of the top private companies right behind Open AI. I think they're going for a $15 billion valuation. So what's the latest with Open AI? The company has been strangely quiet. Ever since, it's near breakup and the entire soap opera that nearly consumed it took place. Right now, business as usual, there's an investigation going on into all that drama that we went through a couple months ago about the firing of Sam Altman, the rehiring, and so on and so forth. They're going to work through that.

So we do know Microsoft gets a non-voting observer role on the board. Who that is, we still need to wait. But this investigation, they hired a big white shoe law firm to look into this. Find out what happened, what really happened, maybe. and then move forward. Maybe that means a new structure at the company. I don't know how a nonprofit could be valid $100 billion. But I love how they're doing $100 billion fund raise while lawyers investigate whether they need a new structure at the company.

It's also crazy because all of this, it's the if you build it, they will come on. It's field of dreams all over you and for technology. And Christina, you talked about the AI applications and how they're going to impact what's going to happen with the entire semiconductor business. But there's also a case to be made that many of these companies are going to use some of the capital that they can raise. so that they can become less dependent on certain established microchip and server and data center type companies out there. Is there a concern right now that the competition is going to heat up not just among the established semiconductor names, but now they're going to be competing possibly against some of these well-funded startups as well. Of course, you'd be silly not to be concerned about the competition in the near future for Nvidia,

given so many companies, Amazon, meta, Google are all creating their own chips. to OpenAI's point, Sam Altman has gone on Twitter before and complained about the shortage of GPUs, even though they do have, you know, tens of thousands of these actual chips in their use. So there's two reasons why you probably expect some of the money to go towards building their own chips. The first one has to do with the shortage. The second one has to do with the eye-watering cost that, again, Sam Altman has said on Twitter that these chips are so expensive. And if Open AI, if putting in a query to chat GPT costs four cents every query according to Bernstein, that adds up, right?

And especially for a company that ChatGPT, the half of their business is technically almost free. And then the other half is way more expensive and for developers. And the prices are coming down for that side of the business. So all of this leads to OpenAI possibly investing a lot more in chips. And this does lead to competition for the likes of Nvidia and AMD. but that could be years out. Years. All right. Thank you both Christina Partsenevelis and Steve Kovac. We appreciate your time today. Still to come, markets are higher once again, but could the ninth straight up week be finishing yet? We haven't had a streak like that in 20 years. Our next guest warns a correction could be right around the corner, though.

We'll discuss. And Amazon has been one of the stocks driving the markets higher of 20% this quarter and 80% this year. Our trader will look at Amazon and some other high flyers later on. Welcome back. Markets are near record highs, but our next guest ain't buying it. He expects a 20% correction in Q1 and says a Fed hike is more likely than a Fed cut to start the year. Greg Branch is the CNBC contributor and founder and managing partner at Veritas Financial. Greg, listen, I give you, you're sticking with it. You're not throwing in the towel. Why not?

What gives you such conviction as the stocks just continue to rip higher? Well, Kelly, I have to see the underlying data change. And so while certainly the Fed's posture changed, which was a surprise not only to me, but I think the vast majority of Bulls will say that that posture change was a surprise as well. The underlying data really hasn't. And so, yes, back in October or back in late September, what kicked off this rally is that we saw core growth of CPI go down to 20 basis points. And we saw the jobs number go down to 150,000. And what some of us warned at the time, was that you couldn't extrapolate a new paradigm for that. And that's exactly what happened. We saw core bounce back to the bandwidth that it's been in for the last 16 months of 30 basis points. We saw jobs number bounce back to 199,000. We saw unemployment retrenched to 3.7%. And so when you look at these key numbers, we've been in a holding pattern for the vast majority of 14 months. And so while the year over year number continues to decline, the month over month number hasn't seen much disinflation at all. And as we get to those...

I mean, look, we just got some negative PPI ratings. Right. And remember, it's not goods that we're worried about, right? It's the services that we're worried about. And so that gets us to the other number, which is the unemployment number, and we're still at historically low claims. And so I don't see anything that is moving us from 3.7 to what the Fed indicated, what they need for a 2% baseline inflation, which is about 4.4%, particularly if they're going to ease in posture, if not policy. And while those numbers remain the same and the base effect becomes less favorable, what we're going to start to see is that year-over-year number is going to start to appear

as though inflation is retrenching, and it very well may be. And so until some of that underlying data changes, I just can't change the outlook that it's more likely that they raise minimally, but that they raise before they cut. Greg, it also doesn't mean that people should just not. invest or not be in the market because they're scared of what could be or what could happen or anything else. Is there any way that investors put a shopping list together for what to buy or what to sell based upon this kind of an outlook? It has to stand a reason that people

still have to be invested in this kind of market. Yeah, I have my own shopping list, in fact. And so you're exactly right. And what I've failed to mention is I don't see a specific catalyst necessarily in the first month or two of the year. So I do believe that this rally will continue to run, even if ever so slowly, until the items that I've mentioned become more apparent. And while we are running, I think the key thing to do is look at three areas. The first is those with very strong secular tailwinds, even though they may seem a bit expensive. We see generational tailwinds in AI. We see generational tailwinds in cloud, and the names there are clear, the Amazon's Microsoft's, Googles of the world.

The second category are things that participate in those same strong tailwinds, but haven't participated to the degree that that first category is. And cybersecurity is a great name there, Palo Alto, Z-Scaler, CrowdStrike. They are essential to whatever is going to be the future of AI and cloud, essential to both of those ecosystems. You know, you see a lot of these companies up 100%, but that's probably not the magnitude that will see them at a year from now or two years from now.

And then the last is those categories of things that have to catch up that have not participated, even though we saw a lot of that catch up happened in December. So financials, for example, as a sector, trading at a forward multiple of 14.5 times less than the S&P, had a so-so year of barely up double digits. But if you believe, as I do, that yields will return to levels that we saw a month or two ago, the net interest margin environment becomes more favorable. We see the M&A environment becoming more favorable. If you don't believe like I do that the yields will return and then we'll get cuts,

check out the income generator, something like utilities, which also hasn't participated. Yeah, no, absolutely. Listen, when we need to come, we need like a survey of hawks on the street, Greg, and you might be number of, there's still a lot out there, but you're up there at the top. Anyway, thank you for joining us again. It's good to check in with you. We appreciate your time today. Greg Branch with Veritas Financial.

All right, coming up on the show, uranium goes nuclear. A renaissance for nuclear power is driving big momentum behind uranium-related stocks, making them some of the best assets of 2023. We will discuss if they can carry some of that momentum into 2024 when Power Lunch returns after this break. Welcome back to Power Lunch. Lots of activity in the energy markets today. Oil up more than 3%.

Let's bring in Pippa Stevens now for the details on that big energy trade. So it is a thin trading day, of course, a thin trading week. Oil is having a notable move today. Dennis Kisler at BOK Financial said it is all about expectations that there could be growing tensions in the Red Sea and what does that ultimately mean for oil supply and the sense that, you know, maybe next year things will look a little bit more undersupplied than prior expectations. And it's now approaching the 200-day moving average of 77-67, so an important level to watch there. Nat gas, though, going in the other direction. Now this contract does expire tomorrow. So especially thin trading, but as you can see, down about 2% now earlier, it was down.

more than 5%. And as it so often does with gnat gas, this does come back to weather expectations. Heating demand days are going down, temperatures are warm throughout much of the country, and are expected to be warm for the end of the year. So not a lot of demand there. We also have supply, which is very high because in places like the Permian, there's associated gas production. And so if producers are still pumping oil out of the ground, there's a higher percentage of gnat gas coming out as well. And that now accounts for about 15% of total domestic supply. So the market is very well supplied, demand, not so much there. Yeah, what's been going on, again, overseas.

You try to read the headlines, and there's more people trying to explain whether, like, the Houthis, well, no, was there an attack? No, this was an MSC ship, and this was in the Red Sea, and they rejected warning calls. We're only trying, you know, so this activity is not calming down at all. Yeah, there's a lot of different headlines,

a lot of different players here, and it can be very hard to understand just how it will impact the markets. John Kildoff earlier today of Again, Capital, said that he thinks that W. will go below 70 next year because he said that, you know, Iran's not going to, you know, a target or anyone that's backed by Iran is not going to target tankers since they want to send oil over to China. So they're going to think, you know, longer term, who are we benefiting here? Like, who do we want to still have our oil? And so, you know, you look on a more granular level who are they targeting. So there are a lot of different geopolitical elements at play here. And I think there's just this sense that you don't necessarily want to be short. You don't necessarily want to be under discounting what could potentially escalate and what could potentially have. $75 crude for all of this going on is still not that bullish. Okay, quickly, uranium stocks.

Why is this, I get more tweets about uranium than anything else. Anything else. Uranium Twitter is very active. But, yeah. It's also very niche. Oh, you know what? Not as much anymore, maybe. Yeah, Kelly and I are big on uranium Twitter.

So what's happening here is that we've seen a massive increase in spot prices. They're up more than 80%. They're now well above where they were, you know, before the Fukushima disaster in 2011. So they gained 80%. And basically the market is saying that even just to continue at the current levels of operations, nuclear reactors are going to need new supply, and uranium production is not coming online to match the demand. And so next year the forecasts are 175 million pounds of demand, only 140 or so million pounds of supply. And new reactors are being built.

The U.S. just announced a COP 28 alongside 20 other nations. They want a triple nuclear capacity by 2050. So a lot of momentum here and very few ways to actually. actually gain exposure to this market, which is why the URNM and URA are seeing a lot of activity. All right. Here's what I would say. Get on board. I know.

All right. I will think about it. I will think about whether or not there's a way to play uranium. My portfolio. Pippa, thank you. Pippa Stevens. Coming up, who's looking sweet in the C-suite? Jeff Sondonfeld joins us with his list of best-performing CEOs for 2023 and who he thinks is

on the hot seat for 2024. Power lunch is back in two. Welcome back to Power Lunch. CEOs have had a lot of challenges to navigate this year. Inflation, cost cuts. How about rising interest rates? But our next guest has found three winners of the year, but is also placing a few on the hot seat for 2024.

Let's bring in Jeff Sonnenfeld, senior associate dean for leadership studies at the Yale School of Management. He's also a CNBC contributor. Jeff, Jeff, welcome, and we'll waste no time. Let's start. We'll go in reverse order lead up to your number one reveal. Your number three is actually CBS. is Karen Lynch? Karen Lynch has done remarkably well.

Revengers are up about 20%. The big breakthrough is she's got a $350 billion company. She runs the largest company run by any woman, but she's run it extremely well. There was a little bit of a transitioner. She took over from a Larry Merleau, very well-respected predecessor a few years earlier, but she had to integrate the Aetna insurance business

with the CVS business. It's done a remarkable job there. been a leader in healthcare and getting rid of cigarettes in the store, seeing themselves as health promotion. But the biggest thing of all is the revolutionary new approach that she's taken to cost plus on bringing real transparency that's been needed into the cost of drugs. I think people are still unraveling and figuring it out right now, but there's been regulatory pressure that she's gotten in front of instead of being pushed to sort of try to catch up to it all, she's shown an ability to, I think, to race ahead.

And that's a remarkable model on many fronts. Jeff, what is the thing that Karen Lynch has to work through the most in 2024? What's the biggest hurdle she has to overcome in the coming year? You know, I was hoping you wouldn't ask me that annoying question, Dominic, because it's a very good one. And this is true of her competitors as well, especially Walgreens. As any of us know that we go into those pharmacies, those pharmacists and their deputies are working with. too hard. The hours are excessive. They're exhausting. And we worry just about the day. I don't know of any mistakes that are happening, any tragedies, but we're really on the edge of it. These people

are, I think, really need to try to figure out the better workforce management scheduling and finding more pharmacists. Let's move on, Jeff, then, to our number two, Pat Gelsinger. Intel shares, we were just talking today about how they've done. It's been pretty strong. But he certainly has his challenge is still cut out? Well, you know, the challenge is the stock is up like 80%. As he came in, he had a lot of cleanup to do the first two years. And he's been very candid about opportunities they missed. They missed his predecessor in investing, of course, in cell phones and mobile chips and on other fronts. What he has done, in addition to that stock is up and his impact on the personal computer chips, the sales are

rebounding from last year, is he's been investing fantastically in new specialized AI chips. NVIDIA, which is done very well, and I don't want to get Jim Kramer mad at me, very impressive leadership, but they've had a much more generalized

chip. What he's coming up with is highly specialized ones, and he's this meteor lake, and a whole bunch of things that he's coming up with this Ultra, that is AI enabled feature that I think it's going to take a lot of share away, but also what he's done is shown great, great patriotism

by this $100 billion investment in manufacturing in the U.S. and not just in his backyard in Silicon Valley, but, of course, in Arizona and New Mexico, Oregon, especially Ohio, that's going to reduce our reliance on Taiwan and other Asian chip makers. And this is pretty remarkable, working closely with the government. And so I think he's really been exceptional on many fronts of performance.

And he was an intel guy who came back in after a couple of years of great performance and other tech companies. But they're really lucky to get Pat Gelsinger back in there, a very spiritual and principled person, too, speaking of this time of year, a day after Christmas. Sure. And this idea that you could maybe see a little bit of a rebalancing, if you will, about the media coverage and the headline shifting away from some of the, you know, you know, Jensen Huang and Lisa Sue narratives back towards Pat Gellon.

and Intel. Let's stick with technology because the number one out there right now, Professor, is Mark Benioff, as you kind of pointed out before. What exactly makes Mark stand out in your list as opposed to many of the other CEOs that could be on this list as well? Well, if you just think about where we were this time last year, we had Dan Loeb of third point. We had Paul Singer of Elliott, Starboard Value Act, Inclusive Capital, all coming after him as he stepped back in because they had a co-CEO position, didn't work out so well. They had an acquisition that wasn't ideal under that co-CEO, and I've never been a big fan of that co-CEO model.

And Mark, as he's taken command, has brought them right back to life. The stock has doubled from the past year. I don't own it. I wish I did. I've been screaming that he would pull this off. My family's furious of me for not buying, but I didn't want to be conflicted. But his revenues grown by 12 percent, they're up to about 30 billion profit margins of have doubled EPS, Salesforce is really one of the biggest winners of the AI boom.

Their Einstein GPT AI solution, which works into the cloud, is quite effective because he's already got 20% of Fortune 500s. And that's, you know, on top of that, he's made it all linear. He's had a very successful reorganization without a revolution. But he also hasn't traded off the importance of standing by his values, that he's a big believer and social impact. And both the company has a lot of pro bono work and a lot of, I think there are, I don't know, some 70,000 nonprofits that get support that gratis from Salesforce. But then he also has just done a lot. It's almost 300,000 acres that he's in Hawaii, he's given away to help

homeless and food insecure folks and other key fronts, which has been remarkable. And of course, they built a hospital for kids. It's, it's, so he, he's a, he's a living proof that doing well is not antithetical in doing good. All right. And, and we want to, of course, feature the other side of the spectrum as well. The CEO that you think is in the hot seat right now. Well, I don't want to get in a hot seat with your old friend, given her, you know, I think affinity back for CNBC and NBC and all the, the, the great family

brands that she was once a part of his great marketing, but Linda Yaccarino, at X Twitter, it's embarrassing that her troubles are just growing larger since she's been there. The valuation has plummeted by about $19 billion, or $2,19 billion, which is about half of what it was when she got there. She's lost 200 advertisers. That's about $100 million in revenue right there. I sat there at Andrew Ross-Arkins' event, and I'm sure some of you saw firsthand as well, where her chair, Elon Musk, told him to go F themselves to the advertisers.

When people about promotion of hate speech and misinformation on the Israeli Hamas conflict and other hate speech as NewsGuard and other organizations have brought out some of the pairing of companies advertising on Twitter with hate speech, he's either sued them, threatened to sue them. And Yacarino, it doesn't seem to have any influence over if she's really not functioning as CEO, she shouldn't be paid and be there as CEO, because she's clearly not pulling her weight. And even the rebranding, everybody admits it seemed to catch her by surprise. I mean, the idea of X, I mean, how many Xs do we know from X-rays to Xbox to, you know, to X-Finnity, as we should mention back to the family here, to, you know, X is the symbol

that represents the unknown in mathematics. How is X a good idea? I think the only thing she has going for her is the incumbent person. competitors that her wannabe rivals at threads. Of course, the Facebook really, you know, blew that one. And Mastodon, Blue Sky and others, they over-promoted what they could do. So that's the best thing she is going for. Certainly a robust and somewhat controversial list for sure. Professor Sondonfell, thank you very much, sir. Have a happy new year. We'll see you soon.

Thank you. Same to you, Donna. All right. Coming up on the show, through the roof, Home Price is posting their biggest jump of 2023 for the month of October, despite rates remaining relatively high, we'll get the key data points coming up when Power Lynch returns after this break. Welcome back to Power Lunch. The yield on the 10-year note is sitting right around 3.9 percent, 3.88 right now. That's more than 100 basis points, one full percentage point from the recent high that we saw above. That drop in yields is still working its way through the housing market. Let's get out to Diana Ollick for the latest numbers on housing. Diana. And that number,

would not have had an effect on the data we got this morning on home prices, which nationally rose 4.8% in October year over year, that on the S&P CoreLogic Case Schiller Home Price Index. And that's a jump from the 4% annual increase in September. It marks the strongest annual gain this year. That strength in home prices came despite a sharp rise in mortgage interest rates in October. The average rate on the 30-year fixed loan crossed 8% on the 19th, according to Mortgage News Daily. That was the highest level in more than two decades. rates, as Dom said, dropped steadily through November and more sharply in December, with the 30-year fixed rate now hovering around 6.7%.

With rates now much lower, home prices really have nowhere to go but up in the coming year, especially given still very low inventory. Going local among the top 20 cities, Detroit reported the largest year-over-year gain in home prices at 8.1%. San Diego followed at 7.2% and then New York at 7.1%. Home prices in Portland, Oregon, fell 0.6%. That was the only city in the index showing lower prices in October versus the year before. Now, home prices are 1% higher now than the peak in 2022, and they have recovered all the losses recorded in the second half of last year.

Dom? You know, I thought it was interesting that these home price increases, Diana, were happening really even before the real decline of mortgage rates happened. And so we can maybe assume there's, there's more to come when we get the November and even the December data. Yeah, absolutely. As I said, nowhere to go but up. Because I was actually watching on this report very closely because it was October and because we crossed over 8% on the 30-year fix, I thought, well, maybe we'll see some kind of weakness in home prices, even if there is still a gain.

It might be a smaller gain. But it actually just kept getting bigger and bigger. And that's why we expect to see prices continue to rise. The question's going to be in the spring. Will we get sellers to get off the fence and put their homes on the market? more inventory would mean less competition might mean prices easing a little bit. We'll see. All right, Diana, thank you for now. We appreciate it. Diana Oleg. Still ahead, room to run. Our CNBC Pro screener is now out with a list of stocks beating the S&P 500 this year that analysts also think have even more upside in 2024.

There's a preview. We'll trade a few of these names and a fresh three-stock lunch right after this. Welcome back. Time for today's three-stock lunch. And as we enter the final trading week of the year, we want to look at some of the out-performance. of 2020 that could have more room to run in 2024. In order to get the names, we use the CNBC Pro stock screening tool and use the following criteria. These stocks are in the S&P 500. They're also up 25% or more, which means beating the index overall this year. At least half of the analysts that cover it rated a buy rating and consensus price targets offering upside of at least 15% or more. It gave us just a handful of picks. But let's get a trader's take on some of these names. We can't feature all of them. So joining us for more is Victoria Green,

chief investment officer at G-squared private wealth, Victoria. The first stock on our list is Amazon. It's already up over 80% this year. And yet the Wall Street consensus is there's way more room to run. Absolutely. Tons of room to run. You got to go like Dixie Chicks, wide open spaces, room to run. This stock, it looks great to me because, one, ADWS should continue to accelerate. So we're looking at better margin, that's about a 40% margin business. Number two is the growth of their advertising business. That's a little sneaky, but I think over the next decade,

you could see advertising really come into play as a huge benefit to them on revenues. And then they have their other things they're playing. And third party sellers are doing great. Core retail is wonderful. Their logistics business helps them manage costs so effectively they handle about 80% of their own inventory now. I look at the stock.

I see a lot to love, a lot of upside, a lot of consolidation and in some of their operations this year, that to me, I see AWS, as a huge driver for them and still a buy. The next one might be more surprising to people, Victoria, because MGM pops up on this list. It's actually up 32% year to date. Would you stick with it?

Absolutely. MGM to me is a buy. They're coming off a horrible year. They have the cybersecurity hack that was about an $80 to $100 million drag. They had two unions that almost struck, and they had to do negotiations and get those labor contracts renewed. But for me, the stock is now on the upswing. If we avoid the recession, you're seeing great travel,

great room booking. I think there were 95% occupancy in October. And they're well positioned on the sports betting and eye gaming market. And that's a huge potential market. You have two states still on the sideline for gambling, huge states like California and Texas that may come in over the next five to 10 years. But it's also about what they're doing to generate more revenue. They switch their blackjack tables from three to two to six to five. That's a 1.5 payout to a 1.5 payout to a 1.2 payout. All these little things they're doing generating more revenue. All right, Victoria, the final name is also in discretionary. It's travel, and it's Delta, the largest airline by revenue and also market cap.

That stock is already of 24% this year. Victoria, do you still agree it's a top pick for 2024? I don't. I'm sorry. I can't get behind airlines. I'm kind of like Warren Buffett on that. She did it down a kitty hawk. But it's just look, they're just, I don't see them typing back to 51 or 48.

They've had a nice run up here. Take your profits. They have rising labor costs with that new labor. contract, fuel costs, always a headwind. Some of this travel is starting to ebb back. So they have had this expanding margin because of their pricing power. And now they're seeing that a road as travelers are a little bit picky. And they rely on their premium travelers. They relied on the uptick and travel. They saw internationally, they got a huge boost from that. I see those returning to trends and just really hard for them to continue this growth rate in 24. So I'm taking

my profit and run. All right. Victoria Green, G-square. Thank you very much. Happy New Year. Happy New Year's. So many more headlines to get to. So little time left will power through as many as we can in closing time right after this. Welcome back. Three minutes left in the show. Several stories to get through. So let's get right to it.

Starting with while many corporate executives spend the holiday season praising employees, one is taking a page a bit out of the Grinch that's told Christmas. And a note first reported by Business Insider, Wayfair CEO warned workers they shouldn't shy away from working longer hours or blending work in life together. as he says winning requires hard work. The company did report record revenue in its latest quarter. The interesting part about this is whether or not you think there's any kind of a productivity gain to be had by giving this kind of a pep talk to your employees over the holiday season.

I kind of like it. It's bold. I mean, a company can set its own culture. If this is the culture they want, then go for it. Then we'll see whether employees want to. They have any retention. Maybe it's a bold market kind of indicator. There you go.

All right, well, Aquaman in the Lost Kingdom took in just $28 million. the domestic box office this past weekend. The fourth lowest debut in the history of the DC extended universe or DCEU. That's less than half of what the original Aquaman film took in during its 2018 debut weekend. We've heard a lot of this, Kelly, with the Marvel Cinematic Universe over at Disney, about whether or not there is this saturation effect where there are just too many superhero blockbusters out there, and it dilutes the effect of all of them. Indeed, there is, and indeed it's time to come up with something fresh.

Unfortunately, that's also very expensive. There you go. Some folks reportedly skipping their weight loss meds like Ozempic and Wee Govy this holiday season. Among the reasons are wanting to consume more food without postmeal discomfort and saving money by cutting back on doses. I think that this is an interesting optionality story because if I want to suppress my appetite and get rid of those urges, I take the Ozempic and Wiggovi and Manjaro. And if I don't want to have those, I can just go off the pills. Do you remember how I've heard stories of people who undo their gastric surgery when they go like on a cruise? This is easier. You can just skip a week.

Yes, exactly. All right. Well, it is the season for texting. Mobile providers say Christmas Day sees more texting between Americans than any other day of the year. The second busiest day is New Year's Day. Team Mobile says 92 million messages were sent on its network during New Year's 2023. It maybe is a way to avoid calling or FaceTiming them. Is that what this is?

Or it's just that kind of loose network thing you do. Mine, I didn't get that many messages this year, which is that's fine. It is. It's fine. Excuse me. It's fine by me as well. Every time I pull out the phone, all the kids want to play with that anyway. So I'm just like, good luck. Everything old is new again, people. The perm is making. You know this already if you look around town. Teenage boys and their curly hair. Actor Timothy Shalamee is getting a lot of credit slash blame for being at the forefront of this trend. While a lot of parents are hoping, this will prove only temporary. Are you a curly hair kind of gal? If my sons try to wear the long curly hair, I will literally go in the middle of the night and cut it off and shave their. The girls go. for it. What about you? I'm okay without. Thanks guys for watching Power Lunch. Closing bell starts right now.