Power Lunch - (Work)Force To Be Reckoned With, Losing Spirit? 10/4/24

Episode Date: October 4, 2024

Port workers and their union reached a temporary agreement, ending the longshoreman strike -- for now. But the strike highlights the heightened tensions within America’s workforce. We’ll dive into that. Plus, Spirit Airlines is reportedly considering filing for bankruptcy. The company has lost nearly a third of its value. Could this have been avoided if regulators approved the JetBlue deal? We’ll discuss.  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, everybody, alongside Brian Sullivan. I'm Kelly Evans. Welcome. Workers are a force to be reckoned with, aren't they? The port strikers reaching a temporary verdict, but the strike highlighting the heightened tensions within America's workforce. Primarily, Brian, because first of all, they got what they were looking for round one. But this ain't over yet. They kicked it down. They wrote about three months time. They have room to yet negotiate for more. And after, if the labor market holds up the way it is doing today, they'll have even more leverage. But it ain't over. No. It's Spirit Airlines over. No. New reports. Spirit Airlines. lines may be filing for bankruptcy. The company having a hard landing right now, losing nearly a third

of its value. Could this have been prevented if the feds had not scuttled the JetBlue merger? And will this all end up with higher fares for you? I cannot wait for this discussion. Another decliner we're watching in the market today, because spirits down 27%. But Rivian is down big as well. The EV maker slashing production forecasts, missing Q3 delivery expectations. The shares, Brian, are down. They were down 8% at the lows down about 4.5%. It's a $10 stock. We've been talking about this. It was a show called Last Call, and we talked about EVs a lot, and I took a lot of grief because I took a rational position. People say, you hate EVVs. I owned one. I bought one. I know them. That's why you're critical. We'll see where this goes. By the way, a lot of lightly used rivians for sale on

Cars.com. At a dramatic discount to where they were selling. You could probably get some now in the high with a five handle and they sold for 95 new two years ago. We'll see. Yeah, not a good economics. lot to do. I can't wait for this Friday. It's going to be great. Power lunch out in Phoenix. All right. Let's start at the top, though, with the big macro market news today. The overall markets, look at that, they're in the green, all higher across the board after a much stronger than expected jobs number. Wages on the rise, unemployment ticking lower, restaurant, hotel, health care, social assistance. Those were the top four most added job categories. Manufacturing,

unfortunately, losing jobs again. But here's the question. If things are really, really this good with jobs, why are tensions within America's workforce still so high? Remember, the tentative deal with the port that Kelly just talked about? Well, that deal is tentative, and it expires January 15th, potentially reigniting the strike. Boeing workers, they're still on strike, hospitality workers in a number of states picketing or getting ready to, and even video game developers take two at EA still at odds with some union actors. And here's a RBI, Kelly, random but Oh, I see. I see what I did there.

According to the Economy Policy Institute, labor strike activity is up 280% year over year. And just anecdotally, and I posted this to X earlier today. I don't know about you, Kelly, but I'm older than you, so a certain age, I know many people who have recently lost their jobs,

and they cannot find a new one right now. And I know it's maybe just a regional thing here. No, no. Hiring is soft. We know that. And the Fed's beige book, it's self-confir. affirmed this in the last one. Absolutely. I thought it was a very pertinent question. But this, but this, survey says hiring is, pardon. Hi, mom. Yeah. It does suggest that hiring is still taking place in some

cases, but I wonder if there's a mismatch as we have kind of controversially began to talk about last hour, how much of the job gains are going to immigrant workers as workers who may not be picked up in your, for instance, sample group size. It's not the full picture of what's going on. If you look at the numbers and the headline is like great jobs number, here's the reality. or leisure and hospitality was the biggest gain. Exactly. Followed by health care and social assistance. That's great.

We need, and then government. We need more teachers. We need more nurses. You're doing God's work. We love you. But I think for that sort of middle-aged office worker, things are really, really, really. Well, you know what? We don't need my opinion.

We got two really smart people to bring in to talk about just this. Let's bring in LinkedIn, senior economist, Corey Kentanga, and the Balki Group's president and chief career strategist, Julie Bowke. This is going to be a great discussion because I tell you what, Corey, when I go on LinkedIn and I post a lot there, check it out. A lot of my friends are now popping up with that green banner that says open to work. And I get it. I've got a five-handle in my age. And this is kind of the time when things get a little bit tougher.

What job and hiring trends are we seeing from LinkedIn? So on LinkedIn, we are also seeing what you saw this week in the job openings and labor turnover. survey, hiring is slowing. So hiring's been slowing since May, and we've also seen in the jobs report that payroll number fall off since May. So it is the case that hiring is slowing. You know, what you're also seeing, though, in the job opening, state return over survey, is that layoffs are low, right? When people aren't leaving their jobs, even though hiring is slowing, that can add to payroll. So overall, in the economy, we are seeing a slowdown, a continued slowdown in hiring that's been going on for quite some time.

are. So there you go. Corey, where, so is it possible we could see a reacceleration with rate cuts in particular? That would be the hope. Small businesses, media businesses, all businesses feel they have a little bit more breathing room to expand and hire. That is certainly the hope. And the Fed did surprise us a little bit with a 50 basis point cut. A lot of folks, including me, were expecting a 25 basis point cut. So there was a bit of upside surprise there. However, typically and historically, Fed interest rate cuts don't have a huge. impact on the labor market in the first few months of when they're put in. It does take some time for those to filter and start to put a floor under the labor market.

So one of the big concerns about this job's report was that even though the Fed had cut rates, you know, it wasn't clear that there was a floor under the labor market. And now we're sort of wondering, okay, maybe there's a bit of a floor. So the labor market is walking a tight rope, but perhaps that tightrope has gone a little bit bigger today. So Julie, why do you think that we're having, I don't want to call it labor unrest? That's the wrong term. I think more importantly, it's probably labor flexing, right? Maybe because things are good. You've got certain political things in there as well. And the number of strikes over the last couple of years has been, I think, at least going back decades, unprecedented.

Yeah, employees, both union and non-union, are seeing and feeling the inequities in the market. They're seeing CEO pay rise to a misbeckonel. match of unbalanced that it's not been forever. And so CEO pay continues to rise and corporate profits are up 10% this month over the same month last year. So you've got these people who are doing the work and the union, the dock workers are a great example where they're saying, now wait a minute, where's ours? And so when you've got a labor market that is still relatively strong, it gives people really at all levels of feeling of leverage. At the very base, the job market is econ 101. You know, that class you slept through, all that applies to what we're seeing today. What we hear about are the unions who are collectively, but I'm seeing it in individuals that I'm

speaking with saying, yeah, I'm going to go in and ask for more. I'm feeling very confident in asking for more, and they're getting it. You know what? You said I slept through Econ 101. I have an acronym for that. You know what I call that, Julie, my friends? I say that's OBA. It's offensive, but accurate. By the way, American, yeah, Corey. We got Corey. laughing. You can use that, folks. OBA. It's offensive. I feel like there's no way Corey slept through Econ 101. Corey definitely did not. So Corey, again, because you guys at LinkedIn, you not only see a number of people that are looking for jobs, but you also see how long it's

taking them to get interviews, to get hired, things like that. Do you have any kind of a forecast of where it is going particularly in the office side, not leisure, not hospitality, not manufacturing, But, you know, office jobs, you know, 35 to 55-year-olds. Well, I will say first, I did not sleep through Econ 101 because I was teaching Econ 101. There you go. You had to learn it before you teach it. Anyway, go ahead. Exactly.

I wasn't able to sleep through that one. Although at times, you know, it can be a challenging course. So when we're thinking about where folks are struggling to find jobs, we can actually look on LinkedIn and see how much are they applying, right? Applying is a very sharp signal. about how desperate you are and how hard you're having to work to find a job. And so when we look at the amount of applies per applicant, there are a few industries that stand out. That's going to be tech, information and media. We all know about the tech session, big adjustments that's happened

in tech over the last few years, finance and professional services. And what are these all have in common? They are the sectors of the economy that were hit first and potentially hit hardest by interest rate hikes. There are going to be industries, you think, Julie, that are going to benefit from, now I should say lower rates because we talk about Fed rate cuts, but the bond market's actually raising rates today. Mortgage rates have gone up because the bond market is doing different things in the Federal Reserve. That said, is there some kind of correlation between rates that you see or macroeconomic factors and how the job market is doing? And by the way, also, can you get into Julie? Maybe what I'm seeing anecdotally is just regional. Maybe.

Maybe it's the New York, New Jersey region, because I'm told Nashville, Miami, those areas are red hot and can't find enough people. You know, yeah, you're always going to have those regional differences, but you also have profession and industry differences. And so when people say to me, well, how's the job market? I always say, well, it depends. What do you do? What do you look into do? What's your experience? And so we see great inequities across the different professions and industries.

So when you look at the government's occupational outlook, looked at the next 20 years and said, here are the 20 hottest professions. 17 out of 20 were either health care or technology-related. So even if we're in a tech session, that is something that will write itself. We're going through such a change in the job market right now that has about eight to 10 different factors that play into it, one of which is the generational differences cannot be ignored. So it's all still kind of leveling out. But one thing we can make, we can make no mistake about it. The top-down leadership, do as I say, is going out the door because people aren't putting up with it anymore.

They're feeling more powerful and they're feeling willing to ask. And if they don't get what they want, they're ready to exit. It's the roaring 20s. Thank you both, Corey Contanga and Julie Bakke. The jobs report meantime was top of mind for investors all week long. now that it's behind us. What's next earnings season? For more on that, we'll hear quarterly results from Pepsi Delta Tilray in a slew of bank earnings, JPMorgan, Wells, and BlackRock, and to talk more about what to expect. Dory Wiley is Commerce Street holding CEO, Dory. How important

is earnings season right now? Well, it's very important. We're coming into an election in November. Who knows what we'll have on October surprise. We had a 50 basis point rate cut, which is a big number. It should normally show some concern by the Fed, even though they tried to downplay it. So where do the earnings take us? And I think that's going to be very important going into next week, starting with the big banks. We used to talk about Alcoa kicking things off. We no longer do. We often talk about J.P. Morgan.

And Carter Worth was on here yesterday in Market Navigator saying he doesn't think it's trading well, and he's worried about, I'll say it not him, but the kickoff to earnings season this time around. Yeah, I don't expect a bad number for them. Jamie warned us in September, I think it was September 10th of, you know, lower numbers, and I think so did the others. But I think they've adjusted for that. I expect them to come in about $4 a share, maybe a little higher revenue than a year ago. But for every one of them, Taby Morgan, Wells, Fargo City and B of A, not Goldman Sachs and Morgan Stanley, but all of them, I think, will have lower earnings than what they had a year ago. on similar revenues.

The real question is, how does credit look and what's happening to the bank margins? Well, with a 50 basis point cut, we're not going to have a big effect on bank margins. I think the market has unrealistic expectations on that. We just need to see good, clear credit on them, get them through this earning season, and see what happens to the rest of the S&P 500 as we get moving. I know we love, we're CNBC, Dory. We love talking about JP Morgan and the big banks, Goldman Sachs, but you say a name like a Huntington Bank shares,

just kind of chugging along, doing their thing in that upper middle market is maybe a better type of company for investors to look at. Yeah, think about it for a minute. You know, if you have a rate cut, JP Morgan's very diversified, so they're going to have a smaller loan book as a percentage of assets since a Huntington

or even smaller community banks. So the lag effect is going to be better for them. The question is control of deposit pricing. JP Morgan has excellent. control. But some banks like Huntington, who has led deposit growth in its peer group, we're going to have more pricing control over their deposits than some of the others. So I can buy Huntington at the same P.E. multiple, forward P.E. multiple as J.P. Morgan. I got better growth prospects, better margin expansion prospects. And I get 190 basis points more yield.

Steve Steiner has been a fred to the program. Maybe we'll check in with him. I'll do you one better and say I heard the case think it was Sam Haskell saying for Esquire Bank and they fund commercial litigation. So it's almost like the more kind of niche that you get in away from the big banks, the more investors see potential here. What about big tech? What about the possibility that now as we lap the second year of the bull market, the third year could get tougher. Interest rates are backing up now and leadership might have to rotate. Well, historically, if you look at two and three year returns on the S&P with what are we pushing, 60% over two years, it actually tends to go into the third year, but at a lower number.

So I wouldn't be surprised, you know, after doing 20% so far, there's nine months. We've got a little bit more to go. Maybe it stays a little flat. Four P.E's a higher than five and 10-year averages. But I wouldn't be surprised with the earnings growth. And that's what we want to watch here in a quarter. As long as that earnings growth is still there and we're holding about 11%, 12% margin on S&P 500, there's no reason why we can't have another 10% growth in the S&P 500 next year.

This is sort of a layup for Brian while he's sitting here. But a couple of the names you think you might want to be looking to pick up on October. Our energy plays, energy transfer, Exxon, just walk us through what you think we might expect in that front in the next few weeks time. So this is a trade, right? Israel gets attacked. And for the first time, they don't really, we haven't been very helpful. to them, okay, without getting super political, maybe a little bit, but the administration's been pretty standoffish. Now, it wouldn't surprise me for Israel to strike back without our permission or without talking to us, and now they're going to hit them hard. They got 193

missiles hit them, so there's no reason for them after what they've been doing to Hezbollah to not only go after leadership, but go after these oil refineries. Now, I think the administration is going to try to tell them to delay, at least until after the election, before that happens. But that's what I'm looking for. I think when something like that happens, it's either going to be in October or after the election. I do think it's coming, either in a big way where it affects about a billion five barrels a million five barrels a day or at least three to 500,000 on smaller refineries, then I think that's a good pot for oil. I think there's a good case for more energy independence. And I'm looking for some dips before that

happens and I haven't seen it yet, so hopefully we'll see some. All right. If we get that, we know where your attention will be. For now, Dory, thanks for your time. Dory Wiley. You're welcome. All right, still to come, a decision that could come to haunt regulators, while ruling by a judge a few months ago to block a Spirit Airlines jet blue deal could hurt you, consumer. That's next. Welcome back to Power Lunch and check out Spirit Airlines. The shares are plunging 28% at $1.62 equity right now after a Wall Street Journal report that the budget carrier is exploring a potential bankruptcy filing. This comes less than a year after Spirits' potential merger with JetBlue was struck down by a federal district judge back in January, leaving many to ask

whether the government caused more harm to consumers by blocking the merger. Joining us to discuss as Heidi Heitkamp, a former Democratic senator from North Dakota and a CNBC contributor. Senator, it's great to see you again. Is this a whiff here? Well, you know, The interesting thing is the government and the judge didn't create the financial problems for Spirit. Spirit was already struggling. They were looking for a bailout. You have to question whether the government was right in saying basically, we're going to challenge the merger, which could have stabilized Spirit, could have stabilized the discount market. But the reality is that the Justice Department is going to be really aggressive right now on antitrust litigation.

And, you know, did they make a bad call? I don't know if they did. But let's acknowledge that the problems that Spirit has were really market-driven and they were of their own making. Sure. I mean, you'd think if you had market-driven problems, wouldn't it be nice if a better position competitor comes in, buys you, maybe keep? Do they fly in North Dakota?

Were they widely used amongst North Dakotaans spirit? They do not. They do not. We have a legion, which actually. does a robust business, especially in those seasonal flights to Orlando, seasonal flights to Arizona. And so we're grateful because they keep the prices down. And that's the whole idea about these what they call discount airlines, lower cost airlines. They really are significant in the marketplace as competitors.

And so when you lose one, consumers have to be worried. And I wonder if looking back, this was the right call to challenge the merger. The bottom line is that you can't sell tickets at lower than cost. That's not a formula for success. Yeah, the best flight. Most interesting flight I ever took, Senator, was to your home state at 64-240. I was the smallest guy on the plane. I'm not sure how we were going into Williston, have no idea how we actually got airborne,

but we did and landed safely. I'd love for you to stick around. By the way, you've got some breaking news on Biden, I think, coming up. I don't know if Senator could stick around. I'd love to get your comment because Biden did something that he's, Never done before. Should we go to that now? Well, yeah, good, because she's going to sit tight.

President Biden actually making his first ever appearance at the daily press briefing, talking about the pork strides as well as the economy, apparently. We got Senator Hyde Kemp to respond. Megan Kasseli here now to wrap the headlines. Megan. Hey, Brian, you're exactly right. He's never done this before. And Biden really came out to that press briefing.

To start off with what seemed like a victory lap on the porch strike, He was saying that the country had averted what could have been a major crisis with the poor strike, saying that if they hadn't reached an agreement, we could have had a, quote, real problem. He also was talking about saying he was determined there to avoid a crisis and was thanking his White House team for the work that they did to get that under control. Then he went on to speak about a few other topics, so I'll give you a few of those here. On the jobs report this morning, he said that exceeded his expectations, but said there is still more work to do to keep getting prices down to keep tackling inflation. Then he talked about the hurricane, Hurricane Helene. He said they'll have to deal with the unforeseen cost of that hurricane and that they'll probably,

he said, have to ask Congress for more money to deal with all the problems that came with that. And then on foreign policy, a lot of news here. He said the Israelis have not concluded what they're going to do in response to Iran's strike. So I've not figured out how they're going to respond to that. But he did say that a full quote here, if I were in their shoes, I'd be thinking about other alternatives other than striking oil. So he seems to be encouraging them away from doing that. He also said that sanctions on Iran are under consideration right now, including on oil,

but that everything is under consideration. So he wasn't making any commitments there, but that it is one tool that's obviously still in their policy toolbox. Brian, I'll toss it back to you, but those are the top headlines right there from President Biden for the first time ever coming out to speak to the press briefing. Well, I think respectfully, Megan, the top story, top headline is that President Biden spoke to the press briefing. I think first time ever. I think that alone was a big deal. Clearly, they put him out there so he could walk back what he kind of said yesterday in front of that helicopter, which led our show about maybe Israel is going to strike oil that sent the oil markets into a panic.

And they pushed him out there and said, you've got to kind of walk those comments back. Megan Kassella, thank you very much. Senator Heidi Hyde Kemp, who knows a thing or two about oil. I'm so glad you're here. I mean, perfect timing. Glad to see the president come out, you know, for first time. in ever in his term to do that to the showing some respect to the media, which is nice. Oil prices right now, Senator, they are down. They popped yesterday. So clearly the president

trying to walk that back. Well, actually, they're higher. What do you make of his comments on Israel, foreign policy, or anything else you might have just heard from Megan? You know, it's really interesting, like you know, Sully. We can talk about what's happening at the wellhead, how much oil is being produced. But we know that where, the consumers are going to feel that is they're going to feel it at the pump. And striking refineries and lowering the amount of supply into that chain globally will have an effect at the wellhead. And I think there is a lot of, there's a lot of concern geopolitically that this will escalate the conflict if, in fact, they hit the refineries. But it's going to have a dramatic

effect on consumers, maybe more so than shutting in a couple of wells or asking OPEC to ratchet back. And you know from your work in my state that there is a price point at which shale can't compete with OPEC nations. And so when we look at it, putting our supply in, making sure that we can refine our oil right here in this country, when people talk about oil security or energy security, guess what? We can't just focus on what's happening. At the wellhead, we have to focus on whether we're producing enough gasoline and products to keep our economy going. Yeah, well said there. Well said about the well head. Senator Heidi Heidcamp, the great, you see what I did there, Senator of the great state of North Dakota, which, yeah, that plane,

I think the wings were like, oh, as we took off as all the oil workers and me. Senator, thank you. All right, on deck. While our American stock markets keep rocking, some other countries, maybe ready or already are rocking more. We'll show you where next. All right, welcome back to Power Lunch, everybody. Again, we got a strong, jobs number this morning. We got markets moving higher again. If you're on the radio, the NASDAQ is up 144 points, 8 tenths of 1%. So there you go. Happy Friday, jobs are up, stocks are up. I'm up. All right. So even as our markets keep making records, your next guest says there are great opportunities in places that you might not yet be looking.

So let's kind of go around the world for some of these opportunities joining us now in our market navigator is Brian Stutland of Equity Armour Investments. Brian, good to chat with you again. Let's talk about China. Obviously, this giant fiscal just, you know, a punch in the gut, if you will, in a good way, I suppose. Send in those markets rocketing. Were you a buyer? Are you still a buyer, if you were? Well, I mean, I think when you look at it, obviously you look at ways to invest here from the United States, and FXI is the Chinese ETF, where you could kind of look at, you can kind of look places and certainly when you look at that ETF alone, it's up 50%.

It's almost made a 50% retracement from its highs in 2021 to the lows in 2022, right? And here now up almost 50% on the year itself, it's looking like it is actually breaking up to the upside that the stimulus that's going on in China is starting to reprop

things up and valuation starting to move higher. So this is an area that I would look at. There might be some resistance ahead. It obviously had such a huge plunge. And really, there's a big shift from the manufacturing sector and the belief around China to be a manufacturing nation, the one that's a domestic-driven economy. And that change, I don't know if investors are quite ready to embrace that.

So there's a little bit of caution behind some of this rise. Well, we've got it. For those of you who can't see the graphic, we've got a blue line going up and a giant orange line, I got Knicks colors going here, giant orange line across the top, which looks like its resistance at 35, 550. I mean, does it look like technically to you that if people are like, well, I'm going put some new money into China because I missed this run. Maybe this is the resistance.

Well, I thought you were actually going to mention Mets Nation, which had obviously a big win yesterday for all of New York. I can't do it because our floor director, Kareem, he's got Mets hat on, Mets' shoes, Mets underwear probably. Who knows? He's got the shoes. So I had to say NIC's not Mets because he's riding high right now, Brian. Yeah.

No, that orange line was a big area of resistance for the FXI, and it looks like it's actually today going to close above that area of resistance, which now is what, that becomes support, right? So the upside here for a stock like this is probably about $40. And so I think there is a little bit of an upside here. But again, people have to be willing to accept that China as a nation, it's going to need to change from a manufacturing nation to one that's domestic-driven economy, because really there's been so much geopolitical tension around what they do there and how they operate that it's going to be more difficult for them to sort of collaborate with other nations around the world. And I think other areas like India are actually becoming the

manufacturing nation of the world, whether it's in technology or actually physical goods themselves. Brian Stutland, thank you. And by the way, because we got a lot of fans in the New York area, look at this. Look at the Mets here, Kareen with a brand new hat. No, that's not new. I know that. I thought we're going to take a road trip to Milwaukee. Now we're going to Philly, I guess, anyway. And look at the shoes. It's got to be the shoes. There you go.

I'm on the bandwagon now. I love it. To be fair to Cream, he's been on the bandwagon for 20 painful years. Deservidly so. Longer than that. You're not that old. And he's the best. Gentlemen, thanks.

Brian and Kareem. Coming up, the Wolf of Wall Street. Energy infrastructure and Bitcoin mining player Tara Wolf is lower today, but the shares have nearly doubled this year. And the street sees a lot more upside ahead. We'll talk to the CEO next about the stock. and more when Power Lunch returns. Go Mex. Welcome back to Power Lunch. I'm Bertha Coombs, and here's your CNBC News Update at this hour.

The Drug Enforcement Agency issued a warning today that illegal online pharmacies are selling counterfeit pills made with a powerful opioid fentanyl and methamphetamine. The agency says they come from mostly foreign-based websites that are actually working with drug traffickers. Blue Origin set the launch window for. for an uncrewed verification flight of its newest vehicle on Monday at 8 a.m. Central, 9 Eastern. The new capsule is called the RSS Carmen Line, named for the internationally recognized boundary of space 62 miles above Earth. Blue Origin says it features technology upgrades to improve the vehicle's performance and reusability. And Patrick Ewing is making a comeback at Madison Square Garden.

The New York Knicks announced that he will become an ambassador to both the basketball and business operations. Teams' all-time leading scorer will work directly with head coach Tom Tibido and the Knicks' front office. The Knicks have not been to the NBA finals, Brian, since Patrick Union was there back in 1999. Ouch. Those are great. It was great. When there wasn't a fight, it was good basketball to be played in those days. John Stark's hanging on Alonzo Morning's ankle.

I'm dating myself. I'm going to have to broaden this out beyond New York sports later. I mentioned the Knicks. We do a Knicks story. I had no idea. Anyway, on meantime, let's get a quick check right now on Bitcoin. Bitcoin under a little bit of pressure lately, but it's up 2% today. Now, in spite of this, Wall Street, very bullish on the stock of your next guest.

The company's called Terowulf. It is a $1.5 billion market cap Bitcoin miner. The average target price of Wall Street analysts, a couple that cover it, seven bucks, implying more than 50% upside. Now, shares are down about 4% today. They mined 176 Bitcoin last month, but they're also a big part of the energy world, having just announced the sale today,

of a 25% stake in a nuclear-powered Bitcoin mining operation, and they're using the money to help build out a new AI facility. The founder's name is Paul Prager, also using his personal fortune to help build out the eastern shore community of Easton, Maryland, adding new restaurants and more to the historic town, which is actually where my family is from for a long, long time ago. So Paul, great to have you on Power Lunch.

First, explain, I love this because you kind of are at the intersection of Bitcoin, mining, and energy. Explain in sort of plain English for the audience. What does Tara Wolf do? We're an energy infrastructure shop. Thanks for having me, by the way. It's exciting to be here, especially when you're talking about the New York teams. You left out the Yanks.

We're an energy infrastructure shop. and we have always been looking for the highest value for our megawatts and energy infrastructure. There isn't a more flexible load out there than a Bitcoin mining facility, and so that is how we started. But now there's tremendous value and opportunity for our shareholders as we pivot into HPCAI. And so we have reserved our next, if you will, 250 to 500 megawatts to build out HPCAI facility. for customers. Okay, I would ask about HPCAI, but I don't know what HPCAI stands for. I'm guessing the AI is artificial intelligence. Right, high power compute, artificial intelligence. You know, it's what all the hypers are looking at right now, they're trying to capture energy infrastructure

and power. Our focus is in the co-location side of that business, where we'll look for people that have enterprise customers, and we could provide energy and facilities for them. So here's why I love having you on, Paul, because, and I think you could put it in plain English because energy is your world even before Terrowulf, which is this. You said 500 megawatts. A lot of people don't understand what that means. That is probably going to mean what? About, that's a couple hundred thousand homes worth of electricity. We're talking about three mile island coming back online. line, Amazon make nuclear deals. Can we do any of this stuff in a macro way without nuclear?

The answer is, I don't think so, but nuclear is going to take a real long time. I think the near-term solution are large gas-fired facilities and the acceleration to the extent possible with some of the renewables. But nuclear is going to take a real long time. I think we're looking it 10 years away, in terms of new generation for new, in terms of restarting the facilities, I mean, we have to see. It's a technology that we've lost for a little long, for a little bit of time, and that we have to bring back to the United States. Real quickly, Paul, why are you selling this one sort of project at a time when, is it in order to fund the bigger projects that you now see as more attractive? Yes, but it, you know, it, you know,

We were just a 25% interested in a joint venture. And in fact, we got a great return on the deal. It was 3.4 times. More importantly, we were selling at the time when our interests were most valuable before they go to nothing. I mean, we had three years left on a contract of 2 cent power, and then there was no residual value left. So we got a chance to get a great return on our investment,

take something, sell at a real premium, and then return it to our shareholders in the form of investment in our HPC AI business. Renewing our Bitcoin fleets, it's going to be 18.0.0. The most efficient fleet out there, low cost of operations. And we just have increased liquidity for growth. It's a great deal for our shop. Paul Prager, Tara Wolf, founder and CEO, sort of putting the energy demand into perspective. and Paul, we certainly appreciate it. Thank you. By the way, thank you for all you're doing down there

and for the good people of Easton. Paul, thank you very much. Hope you visit sometime. Oh, I like to. Chester Town is where my good family friends are. No, they're not. That's next door to Easton. I was just looking at it, about an hour away.

Yeah, it's all in the eastern shore, great people, rock hall. Hat tip to the Schles family. You can always catch our podcast if you want and more geography lessons. You can listen to Power Lodge on any podcast platform and we'll be right back after a break. 184.

Welcome back. Bond yields are moving higher on the back of today's jobs data. The two-year was up like 20 basis points. Let's get to Rick Santelli at the CBO for more. Rick, Steve and I were talking earlier. Is it a bull flattening, a bear flattening, and earth flattening? What do you make of it? Yeah, well, I'll tell you, a two-year no close to 356 last Friday, a 10 close at 375.

So the numbers are staggering. Listen, the flattening led by the short end. something to pay attention to. We've got up half the steepening. Jim Bianco, here you are. Thank you for coming to Chicago. You live in Chicago, but coming to the exchange. What did you think of today's numbers? They were just talking about the big moves and yields. You know, every way you cut it, the numbers were very, very good. You know, the job growth was good. The wages were strong. There was no birth, death model jobs that were created. So when you sum it all up, it was a very good report.

Part time has been the, you know, mantra of much of the job creation of late. was definitely some full time within this report. Yeah, there definitely was. You saw some full-time numbers, and that was very good as well. So when you sum it up, I understand the bond market move, because all of a sudden now, the 50 basis point cut we were looking for in November seems to have all disappeared, and now we're down to 25 basis points. Yeah, and bare flattening as we were just talking about. Now, the other thing now I think we need to merit some discussion is, how does this affect the Fed?

Okay, many believe that it should be a one and done now, or the market's view is 25 and 25 for the last couple of meetings. You know, before the number, I thought that the Fed was already going to be in a difficult situation because we had strikes. We got the port strike resolve, but we still have the Boeing strike. We've got flooding in North Carolina and South Carolina and Georgia that's going to be a big problem, and that the economic data was going to be very muddy as we go forward. And to err on the side of caution, they were probably looking at a 25 basis point cut anyway. now that you throw in this big number, it all but pretty much cements it. Now, real quickly, while we're still talking about this report, hours worked,

was to find a lower number than the 40, that 34.3, you have to go to March of 2020. That was last month. This month, 34.2. Now, that's March of 2020 to find a smaller work week. That does take a little of the positive zing off all the other metrics, does it not? Yeah, there's a bit of an offset there. You know, when hours work go down, you tend to see more. jobs when hours work go up, they tend to hire less people as well. So if hours work went down and you hired more people, if that rebounds next month, you might

see a depressant and a number of people that are employed. But it actually might make that wage numbers look better. Less hours than wages going up, that's pretty impressive. Yes, that does. And in the world that we live in, where we're worried about one-tenth on the wage numbers, it does matter. Okay, now next week, CPI and PPI, I've thought all along, if we continue to bump along between 2.5 and 3 percent, and we had a couple of odd months. that go higher, the Fed's going to be between a rock and a hard place. Yeah, they are. And if we're down to looking at monthly numbers, there is a residual

seasonality in the CPI number, the NPPI. Residual seasonality just means that the seasonal's affected. The seasonals are very positive now at the end of the year, so that could just skew the numbers higher and really put the Fed behind them. Now, make another quick prediction. Next week, not only we have CPI and PPI, we have threes, tens, and thirties. So we have the long-end auctions at a time where the 10-year is within spitting distance of 4%. It's going to refocus on the debt and deficits. Next week could be a big week for interest rates.

After the move this week, usually you'd get some kind of follow through one way or the other. Excellent. Jim, thanks for joining me today on the CBO. Brad? Or Brad. Brian and Kelly, back to you. I could be a Brad. Thank you very much.

You know, Rick Santell. All right, shares of EV maker Rivian. They're down from lowering its delivery estimates for the third quarter, blaming, quote, production disruption. That is part of our trade in your three-stock lunch. And as we head to break, CNBC celebrating Hispanic Heritage Month. You're a Starbucks chief supply and customer solutions officer, Arthur Valdez, sharing his story. I today, I'm very proud that I have that seat at the table as such an iconic brand like Starbucks and the importance of what it is for us as a community as we look to be the second largest

community and culture in the United States. me as an individual and those that have that seat at the table today within our heritage and within our Hispanic community, we have to continue to set that example and be that guide and that mentorship of what's to come. I'm very proud of that. Welcome back. We can't close things out here without three-stock lunch. We're going to highlight some of the other great stock stories today and get some actionable portfolio advice from Doug Butler. He's Rockland Trust SVP and Director of Research. Doug, it's great to have you along. Let's start with Rivian. Circle back to We mentioned it at the start of the show.

The shares are down 4.5%. They were down about eight earlier after they slash production forecast. Evies have had a host of issues, especially with tariffs, as we discussed yesterday. You've got Tesla discontinuing their lowest cost version. What do you do with the shares? We think you sell them. Look, it's a gorgeous car. We love the way it looks.

We love the way everybody who has one really likes them. But the stock itself, it is not a buy here. In fact, we do think it's a sell. Remember, a stock down 80% is a stock that was down 60 and then went down another 50. Implying what you think could be the K, $10 and $29 stock. I would just say for the drive, they got to have a feature to turn off the one pedal driving. I'm just, you got to be able to coast sometimes just throwing that out there. Anyway, up next, bank earnings, Doug, kicking off next week.

Is there one name you're watching more than other? And what is the trade? Look, we think we really like J.P. Morgan of all the big banks. We think that they came out and they pre-announced some concerns on net interest margins, but we think they sort of let the bad news lead, and we think actually 2025 they're going to have a great year for fee income. And we would buy the shares here, and we do own them. So we have Doug up against Carter Worth, and we'll see who prevails in this fight about which way. JPM goes in the near term, which brings us to FedEx.

The shares are down slightly today. Shipping stocks are in focus following the port strike. Should you be an owner of this one, Doug? This one, if you have it, you might as well hold on to it. It's down 13% or so in the last month. They've got a, it's a pretty messy. They reported a pretty messy quarter. We would sort of hold off on getting into this, but if you're already in and you have it,

we don't think now is the time to sell. We think, especially if the economy manages to, like, you know, completely soft land next year, they should have, they should really be back at the 300 level. But there's enough messiness within their production and with some of their freight volumes that we're not sure we'd get in just yet. All right. Too messy. That's what he says. Doug, thanks. Good to have you on today. Doug Butler. Hey, thanks for watching, Power Lunch. And thanks for having me. Tyler, be back on Monday. Yeah, we're looking forward to it. Do you want to issue a correction? It was Jeff Fangun.