Power Lunch - Winning Streak In Jeopardy, The Other Jackson Hole Conference 8/20/24

Episode Date: August 20, 2024

Stocks are slightly lower, jeopardizing 8-day winning streaks for both the Nasdaq and S&P 500. But the real test for markets comes later this week when Fed Chair Powell speaks in Jackson Hole, WY. We���ll discuss.Plus, there’s another big financial conference in Jackson Hole this week. The crypto community is holding a big event at the Four Seasons there. We’ll dive into the biggest issues on the agenda. 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 John Ford and stocks are slightly lower right now. It's jeopardizing the continuation of an eight-day winning streak for both the NASDAQ and the S&P 500. But the real test for this market rally is going to come later this week when we hear from Fed Chair Jay Powell in Jackson Hole. Friday 10 a.m. looking forward to that. And there's another big financial conference in Jackson Hole this week, the crypto community holding its big event at the four seasons there. We'll discuss the big issues on their agenda, but also, How did Wyoming become the center of their financial world for this week at least? First, let's get a check on the markets, though. As you can see, stocks are lower.

Boeing dragging the Dow is the tenure of the new CEO is starting with more issues. The Dow is down 2 tenths of a percent. The S&P and NASDAQ, the Russell, by the way, is down more than 1% as well. Keep an eye on that. Back to Boeing, it had to pause test flights of a 7-7-X fleet after an inspection showed damage to a part. The FAA also ordering inspections to the 787 Dreamliner. the shares are down 4%. On the other hand, Netflix near all-time highs

as its upfronts showed positive momentum for ad sales. Let's begin with the broader market as stocks pulled back following an eighth session rally. It comes ahead, as we said, of Jay Powell's comments at Jackson Hole, which are expected to signal what the Fed's going to do in September. And for more on what could continue or derail this rally, let's bring in Mike Santoli.

Mike, unusual. A little bit, John. Yeah, a lot of things actually have been unusual in the past three weeks or so in terms of, you know, the pace and angle of the decline into August 5th. And then the recovery, both being broad and very rapid. In fact, that today's high, the S&P 500 was up just about 10% from the intraday low two weeks earlier. So it shows you that we snap back in a hurry. I think there was an assessment that the growth scare after that jobs report was overstated.

We had a bit of a positioning shock with the unwind of carry trades, whatever we want to call it. Now, though, we are back to a point where we have to have to. ask, you know, are we back to the highest? Valuations have been reset pretty close to where they were before, and what is it going to take out of either Powell or the economic numbers to sustain any uptrend? Now, the longer-term trends were never disturbed. That's not an issue. But take a look since the end of the last quarter at the NASDAQ 100 relative to the Russell 2000. Small caps finally have gotten their day in the last month or so. And it shows you the NASDAQ 100, the big growth stocks, have actually lagged on the way up here. There's more room to

regain pace and semiconductors and things like that toward the highs. But are we seeing a little bit more of a defensive shift? Final note, two-year treasury yield has lifted almost not at all off those lows of a couple of weeks ago. Bond market is telling the Fed it's time. A huge spread between the two-year yield and the Fed funds rate, dollar very weak today too. So that seems to be the signal of the market as it kind of sets its feet ahead of Jackson Hall. Mike, there seems to be a hope for a lot of cutting. I mean, initially, just September, but now some signal of more than that. But I can't figure out why the Fed would want to do that here. They don't. I don't think that they actually wish to do that. I actually don't even think that investors,

if they're honest about what it would take, would want to see a really aggressive pace of cutting. I think what you're seeing in terms of the pricing of the Fed Fund's futures is that when we know that the next move is down and it's probably soon, the direction of surprise is down even more and faster, to being, you know, steady or higher. So I do think that's what you're seeing in the Fed Fund's futures, but slow and steady, deliberate easing, I think, has always been an element of the bullish case, not the bearish one. Michael, thank you very much, Mike Santoli.

The major averages are down today, but as Mike mentioned, it's just the first negative date for the Dow in six. So is the recent rally sustainable into the fall, or should we expect more declines? Let's ask David Zervo. He's chief market strategist at Jeffreys, a CNBC contributor as well. He's out at the DNC in Chicago.

Dave, I don't know if there's anything there that kind of changes your view on the world. I think there's a lot out here, Kelly. I think it's a big shift for us to start thinking about what the Harris agenda is. We've seen little bits of it come out on the economic side over the last few weeks and a few more significant ones in the last week or so. And we're all trying to digest that. I think trying to understand what the idea of price gouging and stopping price. gouging is we're trying to understand her tax policies how she's thinking about

monetary policy and most importantly regulation which we haven't got a lot of clues on so I'm eager to get as much information as I can to help our clients navigate the next you know 80 90 days of figuring out or I guess 80 days now of what what the selection risk really means for our portfolios it's a tricky time and that may be you know that may be it Kelly that this is more of the volatility that we're seeing is just people getting a little nervous around what's going to happen November 5th. Sure. I mean, I always think of you as able to kind of distill all of that churn into a very simple training strategy, one that often can sustain itself for years at a time.

But to leave that as a bit of a tease, in the meantime I wanted to ask you about the rather prosaic issue of corporate tax rates. I mean, if she goes to 28%, as is rumored, if Gensler's Treasury Secretary, is there anything in that that would dramatically affect stock performance one way or the other? I certainly think so. I think Gensler's Treasury Secretary is a big deal. deal. I think the regulation side, as we've argued in our notes to our clients, is the biggest difference between a Trump win and a Harris win, deregulation versus either re-regulation, more regulation, or even status quo. So to me, that's really where the market's going to key off of. And if I go back to 2017, 18, and 19, and I think about what Trump policies really drove

the economic landscape, I just come back to regulation as being a big driver of almost everything that happened. I don't think tariffs really played that big of a role. I don't think fiscal was as important as people thought it was going to be. We didn't see big rises in the debt to GDP ratio. We didn't see all that inflation from tariffs that everybody thought was going to happen. In fact, inflation was stable to lower those years. So I really think that the market keyed off of deregulation, and the market will once again do that on a Trump win. And what we've got to learn from the Harris administration is, and the economic advisors that she has, is that, is that are we actually maybe preparing for even more regulation under a Harris win than what we had under Biden?

I did think it was interesting that we didn't hear the word Bidenomics much in the first. I don't think I heard it once, actually, yesterday at the DNC. So there is a distancing, and we've really got to figure out what, you know, you got to help me come up with the right word for what Harrisonomics is, because that doesn't sound very good. But we need to understand what that is. And I'm beginning to think it's really not Bidenomics. Well, David, we're also in a very different overall economic environment than in the 20 teens, aren't we? We're not in a low-rate environment in the same way.

During the Trump administration, there was a lot of spending and not bringing in as much revenue perhaps meant something different than it would now. I mean, should investors really be thinking of the next four years in terms of how we looked at these things in the last decade, or are the demands and challenges just, is just very different. You know, John, I think that's a really important point, particularly on the rate side. We didn't have the interest expense on the debt. I mean, that's a significant part of the expenditure now, and that wasn't an expenditure under the Trump administration. Although rates were rising, they were peaking at two and a half, not five and a quarter,

and they were back down to one in three quarters by 2019. So I don't think you're right to say there were lots of differences on the budgetary side that we need to think about. But rates are coming down, as we all know, and they're likely to continue to come down in the next administration, whichever one that is. But again, I don't, I really step back and I look at both a Harris presidency and a Trump presidency, and I think both of these administrations will be reasonably profligate when it comes to fiscal policy. I don't think they're big cutters of spending in any way, shape, or form. maybe one's a little bit more of a tax increase than another. But, you know, fiscal profligacy is probably here to stay.

And I think trade policies will largely be the same under both. I don't think it's very genuine to say that the Biden administration or a Harris administration would be that different on trade than what Trump is proposing. I think that's a different tact of achieving it. It's exactly right, David. Absolutely. I think my question to you would be, will the market permit that profligacy? because if each administration added $7 trillion to the debt now,

where I forget the number 120% of GDP, that we're already spending a third, we'd have to cut spending by a third to balance the budget to keep the debt pile from growing. And if the market's okay with this, and you would know better than anybody, if investors shrug this off, then fine, it can all keep going. Is there going to be a point at which they don't?

You know, I think we all kind of look back on those Reinhart and Rogoff kind of trigger numbers that everybody was excited about years ago and they never really happened. We've seen the Japanese take their debt to GDP ratio to something like 250%. And now the Bank of Japan owns 55, 60% of the entire government bond market in Japan. I think with the advent of QE,

with the advent of monetary policy, the outlet isn't really going to be rates or problems with debt and debt sustainability. It'll come back to the currency and whether people trust your currency. And what we've seen with the yen weakening and some of the volatility in the end maybe people questioning the debt sustainability long term in Japan and their demographics.

And that may be an issue for the U.S. dollar in the long run. I don't think that's today's issue. And I actually don't even think that's the issue for the next few years. David, how do you feel? Maybe even longer. How do you feel about the prospect of a less independent Fed? Great question. Been thinking about it a lot.

My off-the-cuff answer to you is, and you'll remember some of my comments from shows gone by, I don't think we have an independent Fed. I've always said that. I've always harkened back to the Bill Dudley article of 2019 trying to argue that the Fed should be raising rates when they were cutting rates in order to create a recession to make sure that Donald Trump was likely to lose the election, and that would be consistent with the dual mandate. I thought that was one of the most egregious political moves of any ex-or-currented Fed employees.

that I've seen in my career, but it was consistent with what I believe that there is a lot of political, there is a political underbelly to the Fed. And it's a bit ugly. Nobody likes to talk about it. Nobody likes when I talk about it. So I try not to talk about it, but you brought it up. I think the bottom line is, is when the Trump folks are talking about a less independent Fed, they're actually talking about something that is there to begin with. They're just bringing it to the forefront. see where their proposals go. I don't think he's talking about something as aggressive as what the Bank of England and the UK Treasury used to have, which was a vote in the UK Treasury on the rate side of the equation, which by the way served the British economy pretty well for a very long time.

It's only recently they've had independence. I wouldn't get too bent out of shape about it. But I think understanding what I try to do with our clients at Jeffries has help them understand that the Fed's independence, as much as well as we're going to be. we like to think about it in a pure sense, it's not pure. And there are lots of reasons why political decision-making enter in to what happens around that FOMC table. And it's not something that gets talked about, not something that's advertised, but it's there. And maybe it's just healthy to have that discussion. I think Larry Summers even brought that up a while back. At the same time, in 2019, they ultimately ended up cutting rates. And what Dudley said, listen,

we all know they're a political entity in that they want to be perceived well, they want to have good relationships. There might be some level of, you know, truly trying to generate one outcome or the other, but they all get employed if the Fed is well respected and they're perceived to be doing a good job. I almost feel like the biggest benefit of an independent Fed is quite simply the value we all place on, and the academia and the financial markets, they all place, you know, this major premium on a successful Fed. And so Dudley might have said that, but that's not what they ended up doing at the time. No, no, and I ended up cutting my hair on TV on July 31st when they did cut, so I was happy about that. Look, I think Larry Summers actually probably said it right, and it's not often that I agree

with Larry, but I liked his thinking on Fed independence when he kind of went off the rails on this a while back. He said, you don't really want one government agency moving against another government agency. You don't want to be stimulating here and removing accommodation on the other side. So some coordination, some thinking about what is the overall goal in government policies in general, what are we trying to achieve here and trying to do that in a somewhat benevolent way? Now you'll never be able to do that because politics is not a benevolent. But I'm going to argue that there is some role for thinking about coordinating somewhat. You might even go a step further.

You might go a step further and say it might have benefited the Biden administration that the Fed was tightening so that they could enact the fiscal plans they wanted to enact. And you know what I'm saying? Like that type of coordination is almost more nefarious. Well, actually, you know, one could argue that if the Fed were tighter earlier and inflation didn't go up as much, that might have benefited because the Biden administration and now Harris, because of the legacy, are suffering from the fact that we've had a cumulative rise in the CPI of close to 20 percent under this administration, which is three times what it was under Obama,

one, two, and Trump won. So, again, there's lots of ways to kind of go back and think about it. I guess what I'm, I'm going to answer John's question very simply by saying, I don't get worried as much as many people might in the market about hearing that the Fed's independence is going to be somewhat reduced or questioned or brought to the forefront in a discussion. I think it's already there in the underbelly and maybe bringing it to the forefront is actually a healthy thing. But that's going to probably not play well with lots of my ex-fed colleagues. That said, I just think it is there so we can talk about it. I don't want to see. What I really don't want to see, and that's why I said I kind of like the Larry Summers version of this,

more than the Bill Dudley version of this. What I don't want to see is kind of the Arthur Burns style or even Lyndon Johnson style moves that took place with their respective Fed chairs. which were muscling the Fed to do something in the short term that was negative for anchoring long-run inflation expectations in order to benefit the short-run economic outcome for political purposes. That's what we would like to avoid at all costs. Because the anchoring of long-run inflation expectations is still the number one goal. And whether that has a group of people inside of the administration helping think about how to do that,

I'm not averse to that. I just think that's the goal. let's make sure we stick to the goalposts and hit that goal. And we've done it. And kudos to Jay for having been one of the best at making sure that inflation expectations stayed anchored during one of the greatest inflation shocks of our careers. Relatively anchored. But we'll save that for another time.

Dave, thank you. We really, really appreciate it playing along as we talk about all of these various topics, joining us from the DNC as well. Dave Zervos. Well, bond yields falling today along with stocks, the bond market also very patiently waiting to hear from Chair Powell at Jackson Hole. Let's get to Rick Santelli in Chicago, also in Chicago for more. Rick.

Yes, John, boy, I'll tell you, nothing like a dog whistle issue. All you have to do is say, is the Fed independent? What about the independents of the Fed and everybody's hair lights on fire? What isn't lighting on fire are yields to the upside. Look at the intraday of tens. And remember, at 830 Eastern, Philly Fed non-manufacturing was release. It was horrible. Minus 25.1. The worst month over month changed since these of 2020. And look at the way the market dropped. Now, if you add in yesterday's market,

which had a low yield of 385, the minute that Philly Fed non-manufacturing pushed the yields below yesterday's, everything accelerated. As a matter of fact, right now, every maturity from two's out the 30s is trading under yesterday's low yields. So it's a momentum trade at the moment. And if you open the chart up to June, you could clearly see that we are very close in tens, any kind of a close under about 379-ish, would make it a lowest yield close going all the way back to the summer of 22. So we, excuse me, summer of 23. So we really want to pay close attention to current levels are slightly lower. Finally, the dollar index is running into trouble, obviously following rates lower.

But the pound versus the dollar, it's hovering at a 13-month high, and it underscores pretty much every currency around the globe is doing better than the dollar. In this particular case, it looks like the amount of easing the Bank of England may do will outpace the amount of easing by the end of the year that the Fed will do at least what's priced into the markets. Kelly, John, back to you. All right, Rick, thanks. And from bonds and currencies back to stock, we're also very close to break even on the S&P and the Dow. the moment. Still to come when you hear Jackson Hole, you think of the Fed. But there's another summit there this year. It's focused on crypto. We'll go there live next. The Fed isn't the only group meeting in Jackson Hole this week. A big crypto summit is taking place out at the four seasons.

And our Tanaya McKeel is live in Jackson. I love these dueling Jackson Hole summits. Tanaya, it's just so wonderful. What's the big issue being discussed where you are? Welcome. Thank you, Kelly. Definitely the future of crypto. I'll tell you one thing. We're definitely going to be hearing about in just a little bit is the Wyoming stable token. So the state is creating its own stable coin. Of course, that's the type of cryptocurrency that's supposed to keep parity with its underlying asset. In this case, that would be the U.S. dollar. And the goal is to give individuals and businesses a faster and cheaper way to transact while creating a new revenue stream for the state. So I'm told this is a response to the lack of action by the Federal Reserve,

at least in part, in implementing a central bank digital currency, also known as a CBDC. So the The commission on the Wyoming Stable Token here is leading this and hoping that it's going to eventually become sort of the model for a digitized dollar at the federal level. It's interesting right now though because crypto investing has become, as you know, more institutionalized than ever with Bitcoin and Ether ETFs. And the industry, I think, is having a little bit of an existential crisis because aside from Bitcoin's isolated success this year, in large part, thanks to ETFs, the rest of crypto hasn't really come back to life yet.

seeing that everything rally that the space is so conditioned to see right after the big Bitcoin rally. And crypto, of course, was always supposed to be used for it more than speculating on asset prices. So Wyoming, which is so proud of its history of pushing the boundaries of financial innovation, it created the LLC and has passed about 30 pieces of crypto legislation since 2019 to encourage investors and businesses here, is very eager to push this space into its next phase of growth. All right. Tanaya, thanks. For more on the other conference taking place in Jackson Hole

and to explain just how Wyoming became a main crypto hub in the U.S., let's bring in Caitlin Long, the founder and CEO of Custodia Bank and a fundamental proponent of crypto in the state. It's good to see you, Caitlin. So I feel like crypto is in a very different place than it was two or three years ago because this idea that the dollar is going down the tubes and that instability would cause people to run from it just doesn't seem to hold as much as it did back then. Do you disagree?

Definitely agree. The two ecosystems need to coexist, and I believe will coexist for quite some time. So why should I care if I'm not a person who's invested in crypto already? If I don't have a dog in the fight, why should I care as a participant in the economy? not going to buy stuff with crypto anytime soon. It doesn't feel like. So what's in it for me? Well, in the U.S., you might not be buying much with crypto anytime soon, but that's not true about the rest of the world. Bitcoin is different things to different people. And the most important aspect of Bitcoin is that no one controls it. It's just code maintained by engineers in an

open source decentralized manner. And it cannot be diluted by the arbitrary whims of a control P at a central bank. So we've had a lot of conversation lately about AI. The metaverse has kind of faded away. Web 3, which crypto is a part of, has faded away too. It's sort of competing, I think, crypto is for the zeitgeist here. If I shouldn't care in the U.S., why should I, as an investor, look at it beyond a space for speculation and some risk?

Well, in the U.S., that is primarily what it is right now. I'll concede that. It is about an investment. And especially that's true with the ETFs, with the wirehouses now, starting to offer the Bitcoin and ether ETFs, which is just a wrapper around the actual underlying asset. But again, it is also a payment system. It's so interesting as someone who's been in Bitcoin for this entire since 2012, so have been through three cycles. Bitcoin became different things. In the beginning, it was a payment system.

And it has evolved in the U.S. because of transaction costs to be a high-value transfer system, which is what makes it an investment. And, of course, because it cannot be diluted, it is digital gold. That's probably the best analogy. So bringing it all together, what can Wyoming do as a petri dish for crypto that other places can't? Well, Wyoming's done a lot of things. The first and most important thing it did was to define the legal status of it as property and to define the rights and obligations of parties to a transaction involving it so that if there is dispute about a transaction, a judge in the court system knows how to address that. It sounds boring, but it's foundational. And like so many of the other things that Tenaa mentioned that Wyoming has done in its past, creating the LLC, giving women the right to vote, that went nationwide.

And the same thing is happening here. Wyoming's laws are going nationwide, especially when we're seeing such anti-crypto policy coming out of those in control in Washington, D.C. right now. Okay. Well, that might change, though. We'll see Caitlin Long, custodia bank founder and CEO. Thanks for joining us. Thank you.

And after the break, a day late and a dollar short, a longtime dollar bull is turning bearish will help you navigate the currency. markets next. Welcome back to Power Lunch. The Dow briefly turned positive just a moment ago. Could have been on some headlines from the Fed within the past half hour or so talking about the potential for rate cuts. Nevertheless, couldn't hold those gains still looking to break an eight-day win streak for the NASDAQ and the S&P. And ahead of the Fed summit in Jackson Hole,

where we're here from the chair on Friday, one technician is looking at the chart patterns for the U.S. dollar and is seeing enough evidence to switch his view from Dollar Bull to Dollar Bear. Joining us now is Tom Fitzpatrick, managing director of global market insights for RJ O'Brien, and he's a CNBC pro contributor. Tom, it's good to have you. Do tell, change of heart here. Absolutely, Kelly, and thanks for having me. I think certainly over the course of the last year, the dollar has held in reasonably well.

It hasn't done an awful lot, but as a consequence of being kind of the best house on a bad street. But we're beginning to see signs both technically and in terms of the backdrop, that that consolidation may be ending. We've broken below this 102 level on the dollar index, which we looked at as very important, taking us out of the 12-month consolidation. And we're at very low levels of volatility in FX markets, which is normally a precursor after a consolidation towards a trending move. And the reason we think that trending move could be to the downside, there are a couple of things. As the same goes, history doesn't people that does rhyme. And we look at periods in particular in 1990, 2000. and 2007, as periods that have similarities to today, 1990 was very much Japan, the Nika

getting to 40,000 collapsing, Dolly and getting to 116 collapsing, Bank of Japan was hiking, Fed was easing, 2000 was fed, holding rates very high, real rates very high at the dot-com bubble, and 2007 ultimately became the financial crisis, but was a period where the Fed was behind the curve, equity markets wobbled a little bit in the summer, and then U.S. yields began to come down quite significant. significantly. And during that period, that was the breakout in terms of the dollar. And we saw, as we came out of the summer of all of those years, in fact, we saw the dollar begin to weaken and overall saw the dollar in its lose about 10% plus over the following four to six months. And we seem to be getting set up to something similar again. Right. And I think that in the

short term, at least, that would be a boost for corporate profits, potentially for stock prices, for commodity prices, for gold. I mean, you know, there's a lot of ramifications. but when I look at your long-term chart, I notice that every time we've had one of these moves, the next long, years-long trend is there doesn't seem to follow a pattern. Sometimes it was down. Sometimes it was up. I don't know if you have a feel for what we might be looking at, you know, here and then at this juncture. So correctly, as you point out, you know, you go back over history.

And obviously, the dollar index is an imperfect index. It's made up mainly of European currencies, and it's got 58% the euro. But when you look at a long-term chart, you see that, It means reverts a lot because FX is a relative trade. And we've seen the levels we see today on many times in the past. And therefore, while, yes, it absolutely seems to be a clear signal about what we would see over the course of the next four to six months. It's by no means a suggestion that we're going into, you know, as has often been talked

about recently, this significant multi-year decline in terms of the US dollar. Sure. that that could happen, but I think we have to see a lot more developments, both in terms of relative economics and policy and interest rates and interest rate differentials, far larger than maybe anything at this point at least that's been suggested, to start thinking of some very big structural move. Absolutely. Well, for now, at least about a 10% move lower is what you think could be in the cards here, and we'll keep an eye on that. It's been a while since we've been consistently kind of in the 90s. Tom, thanks. We appreciate it. Tom Fitzpatrick.

with R.J. O'Brien. And we'll get some insights into China's grim economic situation as those continue to emerge. Youth unemployment above 17%. That's story when Power Lunch returns. Welcome back to Power Lunch. Shares of Chinese electric vehicle makers are falling today as the EU announces changes in tariffs on EVs made in China. Eunice Yun is live in Beijing for us. Eunice. Thanks, John. Well, that's because the most meaningful reduction is for Tesla. The EU revised its tariffs on China-made EVs as part of a draft finding of its investigation

into whether or not the Chinese government subsidizes the EV industry. So for Tesla, that tariff drops from 20.8% to 9%, but the rest are largely the same as attentive assessment in July. So companies now have 10 days to request here. hearings as well as to comment. And then you can expect negotiations between the Europeans and the Chinese up until October 30th when the trading block, the EU trading block, is going to vote on those confirmed tariffs. So the duty applies for five years and then can be renewed. So far, there hasn't been any official response from the Chinese government, but the state broadcaster,

CCTV, tonight was accusing the EU of going its own way on this decision. Chinese business groups that are full of state-backed firms say that they firmly oppose what they call this unfair ruling and they deny that the Chinese EV industry benefits from state subsidies and Electro Mechanics Association argues that this decision will, quote, backfire and deter Chinese investment into the EU because Chinese companies, they say, will be too nervous about the risks of investing there. Okay, what about youth unemployment there? It had been a 20 plus percent number out, and then I believe China sort of revised the calculation, but still 17 percent.

It isn't great. No, no. So last summer, the Chinese government saw youth unemployment here hit 21.3 percent. That was a record. Then the government decided to suspend the number. They said that it was because they wanted to put in place a new calculation, a method, that would take out the people who would. going to school. So this new number has now dropped after being suspended for about six months. And instead, it's been creeping up. So in June, it was 13.2%. Now it's 17.1%. The authorities say that

this is because it's graduation season. But a lot of folks have been talking about how this number is still going up, even though the government has been changing the calculation. John? It's amazing. I mean, you think if they're going to mess with it, you might just just make it lower. No, Eunice, thank you very much for bringing that to us. It is a glimpse into kind of the much bigger story there, for sure. Eunice, Yunn, staying up quite late for us in Beijing. Let's get to Kate Rogers now for a CNBC news update. Hi, Kate.

Hi, Kelly. Robert F. Kennedy Jr.'s running mate suggested the independent campaign could join forces with a Republican nominee Donald Trump. Nicole Shanahan made the comment in a new interview released today. She said the campaign is also considering remaining in the contest to try to win more than 5% of the popular vote in a bid to establish a viable third-party alternative. U.S. health officials say the number of babies born fell in 2023 from the year before, hitting a new low. The decline resumes a decades-long fall in the U.S. birth rate after a slight uptick during the early years of the COVID-19 pandemic.

There were 3.6 million reported births last year down 2% from 2022. And Alex Cooper reportedly struck a multi-million dollar deal to move her popular. podcast, call her daddy, and her entire unwell podcast network from Spotify to Sirius XM. That means Sirius would replace Spotify as Cooper's distribution and advertising partner. The change will begin rolling out in 2025. And according to Variety, that deal could be worth up to $125 million. Kelly, back over to you. Wow. Kate, thank you very much. Kate Rogers.

Meantime data shows Eli Lilly's weight loss drug also slashes diabetes risk. You'd think that would be expected, but you should see the moves and stocks because of this. We'll trade that and other names in three stock lunch after this. Welcome back to Power Lunch. Time for a deluxe three stock lunch. We'll get the stories on three stocks in the news, then get trading advice on each. Our trader today is Victoria Green, CNBC contributor and CIO at G-square private wealth. First up, Lowe's. Let's turn to Melissa Repco for more. Hi, John. Shares of Lowe's are down slightly this afternoon after the home improvement retailer reported mixed results and cut its full year forecast. The company beat

Wall Street's expectations on earnings, but missed on revenue and it warns sales will get weaker in the back half of the year. CEO Marvin Ellison told me today that low housing turnover and high mortgage rates have hurt demand, saying inflation remains high and big ticket purchases are being delayed as customers sit back and wait for interest rates to fall. But he added that the company has not seen a dramatic shift one way or another in overall consumer sentiment. Despite a tougher backdrop, Lowe's has a few factors that may help it in the future. About 90% of its customers are homeowners and they're in better financial shape because of sharp home equity gains. U.S. housing stock is aging, millennials are forming households, and baby boomers are choosing

to age in place, driving demand for repairs and projects. And Lowe's is also attracting more business from contractors and other home professionals. Those pros tend to be steadier shoppers and bigger spenders, John. Right. Thanks, Melissa. Victoria, can you buy Lowe's here? No, it's a sell for me. Look, the numbers weren't that good at all. They also tend to slow down on the second half of the year, regardless of what the consumer's doing, because people aren't remodeling their homes as much. People aren't moving as much. If you think about over the holidays, November, December is not the time that people remodel their homes or that people pick up and start to move. The problem is that people aren't spending. It's not just about the home ownership market.

It's about that DIY, and it got pulled forward during COVID. So everybody remodeled, everybody was repainting, everybody was redoing cabinets and flooring and the whole DIY boom. It pulled all of that revenue forward, 2019, 2020, 2020. 2021. Now they're done with the DIY and that's what's killing them. Yes, they're trying to grow their pro market share, but that's only about 20, 25 percent of their revenues and they're just stuck. The only thing that's working is in growing is their hardline segment, which is the gardening and the patio furniture and things that people are still spending money on. I don't think you're in a trough here yet. It's not just about the consumer. It's about what the consumer is spending on,

and they are not spending on big ticket items. Well, let's see if they're spending it on big ticket weight loss drugs. Eli Lilly is up 3% today and Angelica Peoples is here with that story. Angelica. Hey Kelly, that's right. Lily's saying that weight loss, it's weight loss drug, cut the risk of diabetes by 94%. This three-year studies showing the drug can help people with high blood sugar or prediabetes and stop them from getting worse. And one in three Americans have pre-diabetes. There aren't any drugs to treat it. So this could open up another way to use Trezepotide. Remember, that's the active ingredient in the obesity drug Zep bound and diabetes drug Mound Jaro.

Not only do you lose weight, but that when you do on this medicine, it converts to health benefit. This is our fourth study this year that does such a thing. Here now we have pre-diabetes, not turning into diabetes. Last month, we had congestive heart failure, reduction of 38% in the risk of death, hospitalization, or other complications of heart failure. In April, we had sleep apnea. Rick's telling us the company plans to talk to regulators about next steps. The study also showing that people kept the weight off for three years. That could help support long-term use of the drug.

Remember, Lily's trying to convince people that this drug is worth paying for over the long run. And this is another way to do that, Kelly. Indeed, it would be. Angelica, thanks. Let's see if Victoria thinks that makes the stock a buy here after all of the gains we've already had. Absolutely. I think it's a buy here.

It's easily a thousand dollar stock. I think you would have wanted to buy it at 800. You'll want to buy it at 900, and I still think you want to buy it even if it hits a thousand. Look, if you get pre-diabetic and you get insured for that, and so not only is it treating diabetes, but it's reducing the risk of diabetes, CEO said you're eating about 800 less calories. Obviously, that helps with the weight loss. They're keeping the weight off. You get into diabetes, heart-related issues.

It's a huge market share in pushing more internationally. For me, this is a generational long-term hold. You want exposure to the GLP-1 medicine. Right now, lately is number one in that space. down. All right. And finally, Amher Sports jumping 9% today. Brandon Gomez joins us now with that story. Yeah, hey, John. It's one retailer bucking the trend, at least in China, reporting strong revenue up 16% for Q2. The company that owns brands like Wilson's sporting goods and Arcteric outdoor apparel, raising guidance for the year, now projecting revenue growth between 15 to 17%

prior guidance was around the mid-teens. Worth noting, though, Q3 guidance did come in weaker than expected, so investors should keep alert as they continue to follow this company. Clearly, though, focused on that raise this morning as the stock pops. Look, it's been a disappointment since its debut back in February, challenges in wholesale, especially in the U.S., with sales reliant on companies like Dick's sporting goods, where pre-orders have been soft. CEO of the company's Arcteric brand on the call this morning, saying it's early innings, and Amher's sports portfolio is far from reaching penetration potential in all regions, really talking about growth in the America's there because China, well, it's been a bright spot for the company, outperforming other

brands like Nike overseas, which reported double-digit declines and foot traffic. Well, Amur reported revenue growth of 53% year-over-year in that market. So John definitely wanted to keep on the radar. Okay, Brandon, thanks. Victoria. Should investors play ball with Amher Sports? I like it. It's a small stock, $7 billion market cap, but I think it's a potential flyer on a new up-and-coming brand.

Could it be the next Canada goose? Could it be the next hot thing? They have some new brands. They love their heritage brands. They've got a really good foothold on the DTC market. I think it's fantastic what they're doing in China. They're hitting young, female, and wealthy and luxury in China. They're one of the only ones growing in China.

For me, it's a little aggressive, might be volatile, could see this retesting the 17 highs. For me, it's a buy. Wilson. All right. Victoria Green, thank you. You know, I appreciate it. We got to spice things up. You could always hear us on our podcast for more content like this.

Follow and listen to Power Lunch wherever you go on any platform. And we'll be right back. Welcome back. Two minutes left in the show. Several more stories you need to know. Let's get right to it. Disney agreeing to allow a wrongful death lawsuit in Florida to be decided in court, reversing course after early arguing the case belongs in arbitration because the man involved

signed up for a Disney Plus streaming trial in 2019. The man filed the lawsuit when his wife died last year from an allergic reaction after a meal in the Disney Spring shopping complex in Orlando. Disney says it is now waiving its right to arbitration so the matter can proceed in court. Wait, so what did him, what did the subscription? to Disney Plus have to do with it? Apparently, there was a clause in signing up for the trial that said any issues related to the company needed to be decided in arbitration, which seems crazy to me.

Interesting. Meanwhile, Harley Davidson is dropping some of its DEI, diversity, equity, and inclusion efforts after facing backlash online. In a statement on X, the motorcycle giant says it stopped consulting the human rights campaign's metric for treatment of LGBTQ-plus employees, and sponsorship decisions will focus on retaining its loyal riding community. I don't understand why companies start policies if they don't really believe in them. Like, either stand behind what your policy is or don't sign up for it in the first place.

Right. Well, they often think they should, especially in this case. And then now that pendulum has swung in many ways the other way, they're going back. They're being targeted as well by people who say, do you really believe this? And many of them are saying, we're backing down. Well, we'll see what they believe. Well, the $13 billion, Elon Musk borrowed to buy Twitter has turned into the worst merger finance deal since the financial crisis. according to data from Pitchbook, LCD. The Twitter loans have been stuck on the balance sheets of banks longer than every similar

unsold deal since 2008. Morgan Stanley, B of A, and other banks say they haven't been able to unload the debt because of X's weak financial performance. It's affecting what bankers are earning because this is kind of on their books, so to speak. And in this case, as well, they got frustrated or concerned or with the value of the loans after his comments about advertisers and, you know, go, what, ever go F yourself. It was a sign of, you know, perhaps this business model isn't going to pan out in the very near term. Now it's suing the advertisers. See if that works. Thanks for watching

Power Lunch. Tune into overtime today when Oswatra's the motor and Dean evaluation weighs in on everything going too far too fast, perhaps. See you then. Closing bell starts now.