Power Lunch - Your Money, Your Vote + Consumer Concerns 11/7/23

Episode Date: November 7, 2023

We’re just 52 weeks away from the next presidential election. We’ll take a hard look at the economic issues which matter most to voters, and could determine the winner in 2024.Plus, new data points are emerging and painting a potentially troubling picture of the holiday shopping season. We’ll look at some of those under-the-radar indicators. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon, everybody, and welcome to Power Lunch alongside Kelly Evans. I'm Tyler Matheson. Coming up, we are 52 weeks now away from next year's presidential election. We're going to look at the economic issues that matter most to voters and could determine the winter. Winter, it almost always comes down to the economy. Plus, consumer concerns, new data pointing to emerging and painting a potentially troubling picture of the holiday shopping season, and we will take a look at some of these under the radar numbers. Tell it. First, let's get a check, though, on the markets, which started in the red, have turned into the green. And if the NASDAQ closes higher today and it's got some room up 1%, it would be eight straight up sessions. It's getting a boost today from software names. Data Dog posting better than expected results and raising its outlook. Other software names rising in sympathy. Data Dog surging almost 30% today for a 40% year-to-date gain. Snow up 10, Mondo, up 12, Atlassian up almost 4%. Chips also rising. Intel up 2%. as it's close to officially getting government funding as part of the CHIPS Act.

You can see those shares up 2% and 46% year-to-date now. There's also a few other reasons the stock is higher today, and some signs it may finally be turning a corner. Christina Partsenevelas has that story. Christina? Well, thanks, Kelly. Well, the Commerce Department hasn't made any final decisions about CHPS Act funding just yet, but allocation or money to Intel should not come as a surprise to investors, given what, the press around Intel's $43 billion promise. to build on American soil.

The fact that CEO Pat Galsinger is very optimistic each time he talks about the Chipsack and the public visit from the president at the plant in Ohio, which I was at maybe about a year ago. That same enthusiasm was also seen from companies like Woolspeed and to a certain degree,

Micron and TSM, which could indicate that maybe these companies they're so optimistic because they've received positive signals from the Commerce Department, maybe behind closed doors. But the Chipsack funding is largely considered pricing.

into the stock. So today's bump also has a lot to do with Gelsinger's visit to Taiwan, his second actually this year. He said in an Intel Innovation Day over there, he said their most advanced chips, the 18A, will move to test production stages by Q1 of next year. This is important. Why? Because it's important to its foundry business at Intel. They plan to make these more advanced chips, not only for Intel, but also for outside customers like Erickson. Intel has already signed on three customers, but as I tried to ask, tried to ask, try to get the names, but they're very hush-hush on those customers because those same customers most likely use competitor TSM, so they don't want any conflict of interest. Intel's goal, though,

is to catch up to TSM as a chip manufacturer. But recall, just last month, Morris Chang, the founder of TSM told the Chinese paper it's ucd.money, said that Intel isn't a threat and will remain in TSM's shadow. But Intel's foundry business is part of Gelsinger's turnaround plan, Starting Q1 of next year, Intel will even start reporting it as a completely separate unit with its own profit and losses. And to come to full circle, Kelly, the biggest beneficiary of the Chips Act funding is going to be that foundry business because they're building American chips on American soil. I'm surprised that this wasn't already priced. I mean, Intel shows have risen a lot this year on kind of the knowledge that a lot of this funding was coming, no? Precisely.

That's what I'm saying is priced in. And you saw the reaction. Wall Street Journal reported it yesterday after hours. The stock went up about 1%. And then you saw it come down early this morning before 930. It was up maybe a half a percent. And then you saw these headlines with more details about the more advanced chips, the 18A for Intel. And that added a little bit more positivity, I can say, to this 2% rise

that we're seeing in Intel's price today. But for the actual Chipsack funding, we're still waiting. We're waiting to find out when they're going to make this big announcement on who's going to be the first company to get some money. Indeed. Christina, thank you so much. We appreciate it. Christina, parts and nevertheless reporting. All right, now let's move to China and some very mixed data on trade. Exports falling there by more than 6% year over year in October, which was more than expected. But China's imports rose by 3% versus the period a year ago.

This comes as China's President Xi is expected to meet with President Biden in San Francisco next week. Here with more on that in the state of China's economy is Sean Ryan, managing director of China Market Research Group. He joins us from China. Sean, always good to see you. I want to get to the export and import numbers in just a minute, but I want to go broader and more macro. You think that the economy is going to beat expectations in 2024

with a 5% of greater growth rate in China, going to beat this year, 5.3, 5.4%. But you also say that wealthy consumer confidence is dying and real estate is collapsing. If those two things are true, how can you be confident that the economy is going to grow at the rate you say it is? It's great to be here, Ty. Yeah, it's sort of a mixed bag in China right now economically,

and investors need to be very cautious. So the economy is bad still. It's bad since we spoke last June, but it's not as bad as people think. Importantly, what we're starting to see is multinationals are starting to invest in China again. I just met with an iconic German brand, And they told me, Sean, 2003, we did not invest in China. We invested in India.

But 2024 is the name of China. And the reason is because we don't think we're going to be able to see the growth in India, in Vietnam, in the United States, or anywhere that we can get into China. So I'm cautiously optimistic for 2024, Thai, because in the last four to six weeks, I'm seeing more, more multinational companies are planning to invest in China in 2024, I think defying a lot of market expectations. And that's off of a really bad year where FDA has already dropped 8% this year. That's why I'm cautiously optimistic.

Well, that's what I'm curious about. If FDA is off 8% this year and you say, or my notes report that you say, that multinationals are scared of China, worrying about getting arrested or complaining about difficulty in getting visas, how do you think multinationals are going to be a comeback story in 2024? Yeah. So what's happened is when I talk with multinationals over the last. two months, a lot are scared to actually come to China. I was supposed to kick off a meeting with one of my clients in December who canceled coming into China because they're scared about being arrested

or they're scared about being able to secure a visa. I think there's a lot of sensationalism. The Wall Street Journal has misreported that foreign executives are being arbitrarily detained. China's really safe. Let me be really clear, tie. It's safer to walk the street of Beijing or Shanghai at night than it is New York City or San Francisco. So fears of people coming are sensationalized, but they're still there. But that's more from the American side. So when you talk to the Europeans, you talk to the South Koreans, you talk to the Japanese multinationals, they're planning to make a big comeback into China investing in 2024. But it's the American companies that are shying because of the U.S. China political tension, which is just getting worse and worse, as you and I have

talked about, the Chinese feel that Biden is looking to contain Chinese. China's economic growth. You've seen in the last two, three weeks, Biden has implemented more sanctions and more limits on American investment into China's technology sector and venture capital and is preventing technology companies like Intel or Navidia from selling their top chips into the China market. So it's kind of a mixed bag. On the one hand, multinationals are coming back into the China, but on the other hand,

there's still a lot of fears, and that's why real estate is bad, and that's why wealthy consumer income is dropping and their confidence is really bad. So I expect, you know, in the next couple weeks, the sales of Gucci, Louis Vuitton, Porsche, the companies they're selling to China's wealthy are going to hit a wall. And so investors need to be very cautious about that. Very mixed bag. It's not easy to forecast what's happening right now. There were, you know, some Japanese nationals were detained in China. There were some people who worked at WPP, people who worked at the Minsk Group. It seems as though it's not just a made-up story, by the way, Wall Street Journal, Sean, but that there are people who were genuinely concerned about

being foreign nationals doing business in China. Well, you know, it is made up because I'm glad you brought up WPP. WPP actually hasn't even protected their employees because a large part of that actually has nothing to do with spying or national security, but pure corruption. It's well known in advertising businesses here that if a company pays, say, $100 million to WPP, they should be allocating that advertising budget to where they get the best return on investment for advertising. But what happens is a lot of the executives would get a kickback. So if you get a $100 million, the executives would get a $1 million or $2 million dollar kickback. So they weren't actually putting the advertising in the most effective means.

They were getting wherever they could get a big commission. So I mean, don't you think that if they're breaking the law and they're misusing client money that they should be investigated and go to jail if they are found guilty. That would happen in the United States too. Going back to 2020, the U.S. warned citizens of arbitrary detention in China due to what they said was arbitrary enforcement of local laws for purposes other than maintaining law and order. Yeah, look, look, like I said, I'm American. I love the United States. Kelly, you know, I have talked. Maybe I'll run for Senate one day, but I just don't trust anything under Blinken's State Department. You know, they put a lot of things saying China's scary, China's not.

It's 3 a.m. right now where I am. I'm happy to go outside, live stream with you and show you how safe it is right now. So China's perfectly safe for foreigners. July of 2020, what I read. Obviously, Sean, we're not really talking about street level threats here. We're talking about something of a different quality and magnitude. But let me, since you just mentioned Secretary Blinken and you said, I don't believe anything that comes out of the Blinken State Department, you must have extremely loved.

expectations for next week's meeting between Joe Biden and Premier Xi, President Xi? I have very low expectations. I think it's great that Biden and Xi will meet. I'm a big believer in discussions, you know, like the United States and NATO should be talking with Putin and Zelensky. You know, there should be talks between Hamas and Netanyahu in Israel. I think it's important that people talk. You're never going to be able to solve problems, ease tension if you're just yelling at each other or launching sanctions or launching war. So I think it's a very good signal if she and Biden can actually meet that might lower down the temperature, but I don't expect anything meaningful to come from this. She is still quite angry at the United States. And like

I said, Biden has added more restrictions on venture capital investment, private equity investment into China from the United States in the last couple of weeks. And that's why wealthy consumers here are so depressed because they're the ones who are dealing more with international trade. And so I don't expect any great revelations or any, you know, detent coming from this meeting next week, Ty. Sean, always great to hear from you. Always provocative. We appreciate your perspective.

Sean Ryan. Thanks. Now the import export data out of China also impacting oil markets today as crude drops 4.5% now to about a two and a half month. Lopipa Stevens is here with the full story. Big move today. Yes. And so we have to look at the import, export.

data on an individual basis. So starting with the import data from China, it was about crude oil imports were about 13.5% higher year over year and also higher month over month. There was very strong demand at the beginning of October during the golden week holiday. We saw travel about 70% higher than last year and also above pre-pandemic levels in China. So that's the good side. However, exports actually slowed at a faster than expected rate, which points to weak demand in the rest of the world. So China has been importing a lot to then refine it and export products. order to take advantage of the different price between the price of oil itself and the elevated

price of products. But now the product demand is slowing in other parts of the world, those exports are now tapering. And so that's the fear here that if they're signaling their exports are down, it means that there's not as much demand in the rest of the world. So that is definitely having an impact today. But, you know, oil is down 4% at the lowest since July, also falling below 200-day moving average for the first time since July. So it's not just that. It's also the factors that are impacting the rest of the market, stronger dollar, the comments from Kashgari and whether or not the Fed is done with its hiking cycle, higher for longer, all of those things. But definitely seeing an impact and now more than reversing any gains we saw after the Israel

and Gaza war began. What are your sources telling you about whether this sort of decline in oil prices is an enduring one, in other words, that there is a new equilibrium price or whether it is a temporary decline? I think what we've seen since Russia's invasion is that there've been a lot of knee-jerk reactions in the oil market. So every time we get a new output cut from OPEC or a new threat to infrastructure or in specific oil-producing region, we see this knee-jerk reaction. And so far, those things have yet to materialize. Of course, oil went up to 130 after Russia's invasion of Ukraine, but it since has come down.

Their exports are still strong. And so that narrative has not really played out. So I think increasingly, people, our traders are saying it's market participants who are not looking at. at oil fundamentals who are maybe not as much in the know, who are the ones that are driving these reactions, particularly given that money had been on the sidelines for such a long time. So I think kind of what we've seen now is that we get these knee-jerk reactions, but that the fundamental levels are probably in that $75 to $85 region. Interesting.

All right. Thanks, Pippa Stevens. As always, coming up the tech checklist. Does WeWork have a next act after filing for bankruptcy plus surge pricing for Uber and OpenAI, opening a store or recover all of this when power lunch returns. Welcome back is the WeWork saga finally coming to an end or could it be a fresh beginning? They filed for Chapter 11 bankruptcy to reorganize the business, including cutting leases. Stock, of course, has fallen almost 99.8% since listing in October 2021.

It was a $47 billion valuation at one point. Now it has just about a $44 million market cap. Dear Jabosa takes us inside that collapse. in today's tech check. Dear Job, I don't know. I don't know if it's over yet. I don't think it is. We'll get into that.

But I mean, just as stunning, you outlined it. Stunning rise and fall that was really indicative of venture capital throughout the 2010s in a ZERP era, a policy of zero interest rates. When everyone just clamored to get in from SoftBank to JPMorgan to even in traditional VCs like benchmark, and they were willing to sustain billions and billions of dollars of losses while it reached that peak of $47 billion, it would crash down to be worth less than $3 billion. And then what I think is just as stunning, guys, is that it was able to go public through a SPAC

at a valuation of $9 billion. So in that way, the losses bled over not just to the institutional investors and the VCs, but to the ordinary investors who are going to be wiped out in this bankruptcy. As for what happens next, it's interesting because when you go back to the early days of WeWork, and I covered the company very close. closely. They really had a sense of community and they were doing something different. It all got out of hand through Newman and stopping in the billions and billions of dollars in growth at all cost mentality. But if you strip it away and you don't try to say that this is a technology

company, which it never was, and you try to operate it like a great real estate company, you use the bankruptcy to renegotiate or end leases. That could be an interesting proposition. And one that, you know, Adam Newman himself may even be thinking about. According to that statement, He released, what do he said? He said, with the right strategy and team, a reorganization will enable we work to emerge successfully. So, I don't know, guys, chapter 11, there may be more, maybe another chapter. I think of Billy Joel's back, back, back, back, back, gack, gack. You ought to know by now.

But nobody seemed to know by now. I mean, where does this money go, Dee? Does it go to money heaven? A lot of it. Some of the debt is going to be rolled over into equity, and there's going to be sort of a frenzy as to what happens to it now. but it's not going to be anywhere close to the more than, what is it, more than $16 billion, at least that has been put into this thing over the years. Did I see a comment from Adam Newman about all this years where he said it's hard to watch

from the sidelines and they need something like, it almost sounded to me like the kind of comment where he said, you know, if only the right person were back at the helm. And we've seen it before. We've seen, we've seen founders go back. And that was, you know, think of the time that he was sort of thrown out. out of WeWork. That's when a lot of startup, and some of the founders of the most disruptive companies, you think of Travis Kalanick, were pushed out or, you know, maybe deservedly so. I don't know. But, you know, they wanted an adult in the room. They wanted the operators,

and it turns out at least in the case of WeWork that the operators weren't very good at managing this either. And so, yeah, that statement from Adam was pretty telling. He said that maybe with the right strategy and team, it could emerge successfully. Right. Let's move on to Uber, which has a story all its own. Gross bookings more than $35 billion in the third quarter. That's a big win there, Deirdre. It is.

And you know what, Tyler, I harp a lot, and I have for years, on Uber's different measures of profitability. First, it was unit economics, and then it was adjusted EBITDA. But you know what? This is a quarter which really relied on the fundamental business operations. And guess what? It was profitable on a net income gap basis. So credit where credit is due, that's a very interesting thing. And that could actually pave the way for it to be included in the S&P 500.

All right. Let's move on, shall we, to the kind of fascinating chapter here. Speaking of new starts or fresh beginnings or I don't know what, OpenAI is launching custom versions of chat dbt that can be tailored to specific apps, kind of like iOS or the Android platform. Gerja, what do we know about this? Yeah, I think you summed it up really well. And that is what has made Apple's iOS and Google's Android so successful into these walled gardens, these ecosystems. That's essentially what OpenAI tried to do yesterday at this developer event that some are saying, you know, reminded them of the old Apple iPhone events.

This is new technology that's available right now. And it really got a lot of people excited. So what an app store looks like for an OpenAI or a chat GPT, it's where you can find different GPs as they're calling it. These are third-party, basically, smaller models that companies put into an app like store that people can use right away. And it's so interesting. You've seen all these examples on Twitter today, even, of people experimenting, you know, with them and showing what they can do. So in this way, it sort of gives us more applications, more use cases for chat GPT and potentially puts them in more competition with the AI bot platforms, like the one that meta is building or character AI, which a lot of, you know, young people are spending a lot of. lot of time on. All right. There we have it. Any other questions? No. The gambit.

Deirdre, thank you very much. We appreciate it today. Deirdre Bosa with Tech Check. All righty further ahead. Some cracks forming in the consumer ahead of this holiday season, whether it's fears around spending or companies slowing down hiring. We will discuss that. Plus, speaking of spending, lots of people adopted pets during COVID. But as inflation climbs. Those four-legged friends are costing them an arm and a leg in some cases. That story when Power Lunch returns. Welcome back to Power Lunch, everybody. Stocks are once again higher today, 68 points on the Dow right now. Let's get to the bond market, however. Eels there falling. Rick Santelli in Chicago. Hi, Rick. Hi, Tyler. Indeed, if you had me blindfolded and only showed me

the NASDAQ, which of course is leading the percentage move on the equity side up over 1%. I would have guessed it probably was lower interest rates. Look at a 24-hour chart of two-year and three-year notes together. Short maturities. We had a rather successful beginning of 112 billion of supply with today's 48 billion three-year note auction. Look at the way the yields. In middle of the chart was the first low on that 24-hour chart. Look how it accelerated when we traded lower than that, but the real catalyst was the long end. Here is a two-day chart of tens on the far left side of the chart for basically the lows yesterday. You see what happened when we traded below them. A very simple technical feature. Investors always like to jump on those new extremes. And if you look at what's

going on in Europe, well, the patterns between our tenure and their tenure on a year-to-date chart are almost identical. Believe me, conventional wisdom is that yields are moving down. And for the moment, they seem to be correct. But there's a couple things you better pay attention to. Obviously, one is debt. The second is the difference between U.S. and European yields. 200 basis points as you see on that five-year chart has been the latest extremes. The issue is that that particular chart looks more like a bottom than a top, which means that 10-year yields may outperform. If that's true, we want to pay very close attention if we get out of close above four and three quarters before we close below four and a half.

Kelly, back to you. Great data points. Rick, thank you very much. Over to Kate Rudney now for or a CNBC News Update. Kate? Hi, Kelly. Good afternoon. A Capitol Police spokesperson says a man arrested near Senate office buildings today had a rifle. Capital police say they arrested the man around one this afternoon in a park across from Union Station. They say they have no reason to believe there is an ongoing threat right now. The House will vote again today on two GOP resolutions to censure Michigan Representative Rashida Talib.

She's facing backlash for controversial remarks she made in response to the Israel-Hamas war, as well as for her participation in a rally. Talib, who is the sole Palestinian-American in Congress, has defended her comments and actions. An historic hangar in Orange County, California is on fire right now. Firefighters are waiting for it to fully collapse so they can safely go in and attack the flames, the mostly wooden landmark at the Tustin Air Base,

once housed blimps used in World War II, and it has been featured in TV shows and films, including Austin Powers and Star Trek. Kelly, back over to you. Wow, Kate, thank you very much, Kate Rooney. Still to come on Power Lunch, it's Election Day. And while there are a few key races to watch this year, the countdown is officially on for 2024. 52 weeks to go until the presidential election and voters seem more torn and divided than ever before.

We'll discuss what to expect in the year ahead and the fallout for markets when we return. Welcome back to Power Lunch. Today marks 52 weeks until the 2024 presidential election. The economy always an important. issue. And to get a read on what some voters are thinking ahead of that, we released a CNBC Generation Lab poll today called Money and Youth in the USA. It measures the opinions of 18 to 34-year-olds on the economy, and the results show widespread anxiety about their future well-being. Half-surveyed said inflation is having a very negative impact on their finances.

Mortgage prices and health care costs are also weighing on young voters. What does this tell us about the next election and the policy themes that will emerge going into that? is a professor at the University of Virginia and director of the University Center for Politics. It's great to see you. Welcome. Thank you for joining us on Power Lunch. Thank you so much.

It's maybe early and maybe it's not because, I mean, how far are we from the first, you know, we're just like a couple months and this whole election cycle is going to be in really high gear. And what do you think the main drivers are going to be in terms of where voters are going to lay their bets? Well, it's a year away, essentially.

I suppose voting starts some places in September. But nonetheless, the economy, Biden must hope, should improve. And if it does, Democratic chances will improve. If it doesn't, then Republican chances will be pretty good. Of course, that will partly depend on who's the Republican nominee. But the perceptions of the economy and the reality of the economy don't seem to be aligning. I mean, there's very strong GDP growth in the U.S. economy right now. inflation has fallen a lot, and yet the perception is that the economy is stalled, that inflation,

while it is still higher than obviously the Fed would like, that inflation is still a nagging concern here. Well, that's all true. But the studies on how voters interpret the economy have stressed for many years that inflation is usually the number one concern. It's not the only concern, but the average person doesn't want to. relate to the GDP. The average person has a job. Most people in their family have a job. So the unemployment rate is less important than the particulars that you all have focused on,

like mortgage rates and the cost of health care. And what they see in the price of goods and services when they go to the store or get their car repaired, that's where the economy is failing younger people and middle class people who don't have a lot of extra cash. Yeah, the young people certainly express that with respect to inflation, as one might expect. They are the people who are just beginning their careers and may not have the kind of cushions. I want to turn to a study that you at the Center for Politics put together. It is a poll, and some of the findings in it absolutely floored me, among them, that a staggering majority of both Biden and Trump supporters believe that electing officials from the opposite party would result in lasting harm to the United

States, about two in five of Trump supporters and one in three Biden supporters expressed the idea that succeeding from the U.S. was a reasonable approach to take. And that democracy, while they favored it, a third of Trump supporters and a quarter of Biden supporters somewhat agree that democracy is no longer viable. Yeah, it upset us, too. I can guarantee you secession in particular, but violence of any sort in our system. While we have always had some, and it's true, we've had points in American history like the Civil War when it took over the system. But by and large, our disagreements have been peaceful. And we're seeing the two sides polarized going to the ends of the spectrum, drifting apart and willing to consider these horrible

alternatives. And it's a warning to us to lower our voices, to do something about our rhetoric, that is use a milder word instead of a stronger word. And a lot of this is up to the candidates. They have to lead the way. And if you have a candidate as party nominee who's using extreme language and is heating people up rather than cooling people down, we've got an even bigger problem ahead. Yeah, it's always interesting to see the partisan divide. And at the same time, that a lot of Obama voters, not a lot, but there were Obama voters who voted for Trump, who then voted for Biden. I mean, we still get these swing voters in every election, and we'll see this time around as well. I'm just, Larry, thinking through a little bit of the investment

implications here, and I think the bond market has really thrust itself onto the main stage. You know, no one's going to run on a campaign of cutting entitlements, but what shape will that narrative or discussion take in maybe the one, two, five years to come, do you think? Well, you hope it's on the table for discussion. Whenever it is, parties tend to use it simply to score political points instead of to deal with the problem. That's one problem that never seems to get solved. Immigration is another because the parties would rather have it as an issue than to solve

it and take it off the table. And I always hope, and my hope is forlorn, but I always hope that a second-term president will decide to devote the term to long-term problems and will bring other people on board, at least a portion of the other party, still waiting, but still hoping. But I'm in my 70. One of the candidates who wins next year is going to be a second-term president. It's just unclear which one. One of them will have the opportunity.

If both get there and get the nominations, which I am not 100% certain is going to happen. I'll tell you that. You know, the upcoming election a year from now is important, but what is really important, Larry, is that a week ago, my son, Max, sent in his application to the University of Virginia. We've known each other 50 years, so I can tell you that as a friend. Well, you know, just send it to me, you know, I have a magic way with it. I'll send it to Sabato. Let me ask you. They always listen to me if you don't believe that.

Oh, I know. I want to ask you, in tonight's elections, is there any one or two that we should be looking for? I know Bashir in Kentucky, the gubernatorial race there. He's well liked, but Kentucky, it's not going to be a bellwether. Kentucky's not going to vote Democrat next year. That's for sure. And it's good to have elections that aren't bellwethers for the next year. You don't want everything to be partisan and predictable.

Look, Bashir's problem is simply that Donald Trump carried it by between 25 and 26 percentage points. If he does win the second term, it's at least a small miracle. He's been leading the polls, but we all know how accurate polling is these days. So if you can win that second term, it does suggest that people in at least one state are willing to consider the individuals, the characters, the issues, rather than putting everything in a national context. All right, Larry, good as always to see you. Really a pleasure. Enjoyed it. Thank you. Thanks, my friend.

And be sure to tune in to NBC tomorrow night for the next Republican presidential debate. Lester Holden, Kristen Welk of NBC News, will be moderating. That begins at 8 p.m. Eastern. Very much looking forward to it. All righty, coming up, consumer cracks. New data flashing warning signals about this holiday shopping season. We will drill down on the details when Power Lunch continues. Welcome back.

New reports suggest that some cracks are forming in the consumer right as we head into the holiday. Two-thirds of U.S. consumers are worried about being financially stressed this holiday season, according to Bank of America. Gen Z and Millennials, They are especially concerned. How about that? Meantime, new data from Apollo show that retailers are hiring less this holiday season,

which is generally done in October. Just 135,000 workers were hired this year compared with 141,000 last year, 209,000 the year prior. And finally, FedEx encouraging pilots at its cargo airline to take jobs at regional passenger carriers for the holidays because, well, there isn't enough shipping demand

to fill everyone's plane flying. buying schedules. Frank Holland is here with more details for us. How bad is it, Frank? Tyler, it's bad. It's terrible. No. At least compared to the pandemic. You got to remember during the pandemic, we were all locked down. Just a record. Unbelievable surge and demand for goods. People wanted to buy things. And obviously, that's changed pretty dramatically. So you got to remember, just last week, we got a fresh read on the global shipping market at the Evolve Summit. I spoke to FedEx CEO, Raj Hubermanian. He told us, basically, when it comes to the industrial market, it's soft right now. And even when

when it comes to consumer goods, it's pretty soft, even as we head into the holiday season. He laid out a pretty clear picture. I want to come back to that FedEx Pilots offer. Eye popping, right? I mean, I'm going to show the numbers right now, but really eye popping. So I'm looking at it. Has this ever happened before? You know what?

I don't know if this has ever happened before, but I also want to amend something to tell I'm not correcting, just amending. It's not for the holidays. They're actually advising these pilots just to go take jobs. Go take jobs. Oh, does this mean that they're laying them off, or are they saying take side gigs? No, leave FedEx and go over to PSA. So FedEx and PSA, PSA is a wholly owned subsidy of American Airlines.

So American and FedEx, they have a very close relationship. I want to show the graphic right now of the offer from PSA Airlines. It's a regional commuter airline, again, fully owned by American Airlines. So you get a $250,000 signing bonus, eye popping, obviously. $175,000 paid in your first paycheck. There's obviously some terms in here, but this is the general offer, 12 days off per month and also longevity credit for vacation, retirement, et cetera, which is important. You've got almost half a million dollars just for walking in the door to be a pilot over there.

Why is this gift sitting out there for the offing? Well, here's the thing. At FedEx, they told us over a year ago, they're cutting flights, they're cutting worker hours. Ross Supermanian, remember famously right here on CNBC saying he saw a global economic slowdown. Since then, they've been pretty dramatically cutting their flights, cutting their worker hours. So none of this is a surprise. Also, another story you and I were talking about, UPS pilots, taking. early retirement from UPS, almost 200 of them.

Actually, a few more than UPS originally planned, but taking those early retirement offers, they're getting a similar offer from PSA Airlines. So there's obviously two sides of this story. Demand for passenger flights up, demand for consumer goods down. I also want to show you the statement from the pilots union very quickly. I'm only going to read part of it. They say, we do not consider this an acceptable offer for FedEx pilots, and our pilot membership reacted accordingly in messages that we've received.

And they say, if FedEx is comfortable with pilots leaving, they should instruct their bargainers to make proposals to entice pilots who are otherwise waiting to retire, similar to UPS. Full circle, if you want to get a good picture of the demand picture when it comes to goods. Why isn't the union happy about it? So is it because if they leave...

Doesn't that say how lucrative the jobs are at those two companies? So if the pilots leave FedEx to go to a regional airline, they get a half million dollars right off the bat, almost in all these perks? But is the union basically saying they would get more if they stayed at FedEx and maybe reach full retirement there? Is that why they think this is a raw deal? These are jobs with great compensations.

great benefits. FedEx is, of course, you know, a top-notch company to work for. This is a commuter airline. It's just a different schedule. It's a different lifestyle. PSA Airlines has hubs in, I believe their main hubs in Charlotte, but they have also hubs in Philadelphia, a couple other cities around the country. It's just simply a different job. Are the pilots at PSA represented by the same union as those at FedEx? I do not believe they're represented by the same union. That might be why the people, the heads of the FedEx Union don't want them to do that. Amazing sign of the time.

Right. Leave the package carrier and go to the domestic airline, you know, where everybody's traveling. Fully owned subsidiary of American Airlines. So it's not just a, you know, a regional carrier. It is part of the American Airlines family, which is obviously a very big company. But you were mentioning, how bad is it? Okay. So we got some numbers out of China about imports. Imports were actually up 3%. But we look at imports from the U.S. It was down almost 4%. So basically, just less things coming in and out of the U.S. for FedEx, for UPS, the UPS, the UPS, the UPS is still there. their home market, their core market. So just a general slowdown. But remember, it's off extreme highs due to a global event that disrupted everything. Yeah, amazing.

Frank, thank you so much for that reporting. Good to see you afternoon. I'll be back here tomorrow morning. I'll be very soon. We'll see you then. Frank Holland. Still ahead, pet regret. With the cost of everything from their food to medicine now surging,

are some pet owners starting to get buyers remorse. We'll ask an industry insider when we return. All right, welcome back to power lunch. This one is for all the pet lovers out there. Strong demand has led to soaring prices in pet land. And Rover is an online marketplace for pet care. The company matches pet owners with pet care providers who offer services including boarding and in-home pet sitting and dog walking and training and the whole thing. Joining us now is Aaron Easterly CEO and co-founder of Rover.

Welcome, Aaron. I'm curious. Is this kind of a subscriber? model? In other words, do I sign up and then pay per service, or do I just, like, as in the case of Uber, do I just say, hey, I need a pet walker three times today at my address in Jersey City? Well, first, thanks for having me, Tyler. Rover is the world's largest pet marketplace for pet services. We're generally a transactional model. So people will go to Rover and find an animal lover in their neighborhood when they're leaving town or they need a walker. We have some offering

that almost function as a subscription, but we're mostly transactional. So, and as you point out, you're international. I was amazed that you're not, it's not just a U.S. company. You're all through Europe. Name some of the countries. France, UK, Spain, Italy. We're in eight countries in Western Europe. What does it cost if I, if I have a dog, right?

Let's say I have two dogs, and I need dog walking twice a day for five days. and I want you to spend a little time with my dog because I'm going to be away. What does it cost? For dog walking, you know, $20, $25 per walk is typical drop-in visits, maybe a little bit less. For overnight services, $35, $40, maybe more the norm. And how do you vet the providers whom you hire to do these services in pet care? In North America, all of our service providers go through a background. They have to fill out a profile.

They go through a human and technical review before they're approved to appear on the website. That process includes some made references. In Europe, we actually do identity verification and go through a similar process as well. Mostly Rover as pet lovers. People do Rover in addition to their primary income. So we attract people who love animals and would love to spend time with animals. For most people, it's not primary income. I see.

What is, so we've talked about how much prices have gone up, Aaron, and how much more they can go up at this point, especially when a lot of pet owners, Gen Z, millennials, face some budget pressures with those student loan payments restarting and just in the surveys that we've been talking about on CNBC all day long. Are you sensing any kind of tension out there about, you know, how much more people can pay for their pets? For our business, we're actually seeing record customer economic. So for the customers we acquired this year, they're performing at the best levels we've ever seen. And that was on top of last year's record, which is on top of the prior year's record. So we're just seeing an up-and-up trajectory in terms of the spending and the customer economics. That being said, in the broader

pet industry, we have seen some people talk about people being a little bit more frugal, but our business, we're actually seeing record levels of spend. there's also not just one marketplace where you can find dog sitting. There's been others. And it's fairly easy, I would have to imagine, for disruptors to try to come in on that turf. How do you maintain your market share and grow it at a time like this? And especially in an era of higher interest rates may make it a little more difficult to invest and expand. Well, we're fortunate in the sense that we're self-funded.

We have a lot of cash in the bank, but we're also producing a good amount of cash. We had a step function change in our profitability. So when we look to expand, we're not dependent upon loans. We're not dependent upon new funding coming in. So that makes it easy. Our business has powerful network effects for the last 12 and a half years. We've been building a marketplace that makes extensive use of data science. So as we have more bookings come in, we get more data.

We can do a better job of matching you with a perfect sitter. And as we match you with someone better, you're more likely to use Rover and more likely to come back and more likely to recommend Rover to a friend. And those powerful network effects are pretty defensible and create the competitive advantage for us. All right. Aaron, thanks for joining us today. Appreciate it.

Thank you. Rover shares up 21% and more than doubled so far this year. Coming up, a tasty investment. Delivery startup wonder, getting a big cash infusion from a global food giant will bring you the details next. Welcome back. The latest venture from serial retail entrepreneur Mark Lurie is called Wonder. Is it still a food delivery company?

It's not quite a DoorDash or Uber Eats. CNBC.com retail reporter, Melissa Rep, goes here with more. Some of us, Tyler and I, were fortunate enough to see those vans back when they, before they shut down that line of business. Yes, exactly. So what's now? So now they've pivoted to a different strategy. One is that they have brick and mortar locations.

By the end of the year, they'll have 10 of them that are still doing delivery rather than the trucks where they were cooking meals outside of suburban households. But the other piece, and this is where they're getting the money from Nestle for, of a $100 million investment will go towards a B-to-B push. So they have proprietary kitchen technology, so think really fancy ovens. And they're going to be selling those to hospitals, hotels, even cruise lines, or colleges. And Nestle is going to help them on the manufacturing side with making some of those prepared ingredients that it will sell as part of that package deal.

What's buying Blue Apron? So Wonder has already announced that it struck a deal with Blue Apron. Really? That's a separate piece of it where it's trying to basically get more parts of meals. So on the one hand, you can order delivery from Wonder, but you can also soon, if the deal closes, which it's on track to do, get a meal kit, exactly. And I spoke to Mark Lurie, the CEO and founder of Wonder, and he was saying the idea is they want to become the super app of Mealtime. So offer different options, and people can do whatever fits within their budget, whatever fits within their flavor palette. kind of miniaturizing all these different restaurants into one tiny kitchen, simplifying the process.

And also they cease some opportunity here because of the labor shortage. What they've heard from Nestle is that a lot of these hotels and airports don't have people to cook in the kitchen. And so if you can simplify things into one oven, make it possible to make a steak, sauteed pasta with the push of a button, potentially there's market there. So it's equipment and meals that they will be providing in this B2B thing. Melissa, we've got to leave it there. You made me hungry. Thanks for watching Paranoi everybody.