Power Lunch - Zuckerberg Vs. The White House, Powerhouse Road Trip: Syracuse 8/27/24

Episode Date: August 27, 2024

Facebook CEO Mark Zuckerberg claims the Biden Administration pressured the platform to remove Covid-19 content during the pandemic. We’ll get the key details, including the White House’s response.Plus, our Powerhouse Road Trip continues. Today we’re moving north from Miami to Syracuse, NY. We’ll explain why that region is bracing for a huge boost in housing demand. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon, everyone. Welcome to Power Launch alongside Contessa Brewer. Good to have you here. Contessa. I am Tyler Matheson coming up a major C-suite turning sour on Harris. Mark Zuckerberg says the White House pressured Facebook to remove some COVID-19 content coming at a bad time for the presidential hopeful as she pitches herself to the business world. Plus our powerhouse road trip continues. Today we move north from Miami to Syracuse, New York. We'll explain why that area is bracing for a huge boost in houses. demand. But first, a check on the markets with the Dow sitting around but a little bit below record territory after yesterday's record highs, down 14 points, 41,224. S&P 500 moving in the other direction, higher by about a quarter of a percent and NASDAQ by a third of 1%. Some specific movers we're watching right now, Paramount falling after losing a buyout bid, those shares off five and a half percent. We have more on that in three stock lunch in just a moment. And are the restaurant stock, Kava falling six, I know, excuse me, 8%, about about 5.4% after filings emerged

at several major shareholders and insiders are selling some of their hold. Could Morgan Stanley spark a new sort of war, naming Coke, its top pick replacing Pepsi? You're seeing Coca-Cola up 18% over a year, Pepsi down 2% the same time frame, and there you're seeing the diversion in those two soft drinks. Yes. And finally, Lumen Technologies falling more than 11%. Cairsdale Capital shorting the stock in a report stating, AI, ain't going to fix this. That's not even correct. That's not even proper grammar. Not proper grammar, she said. All right, let's start with some new headlines out of the Fed,

and Steve Leesman has that news for us. Hi, Steve. Hey, Tabi, we get a clue for who might have been advocating for a rate cut back in July with the minutes of the discount rate meeting, minutes just released by the Federal Reserve, and what we found is that what they reported is that the directors of the Federal Reserve banks of Chicago and New York both advocated for a cut in the discount rate by a quarter point that often presages and shows the desire of the actual president of the bank of what to do. Now, just so you know since that actual meeting of the Federal Reserve, separate from the discount rate, but the actual rate setting meeting, the minutes showed, quote, several observed

that the recent progress on inflation and increased the unemployment rate had provided a plausible case for reducing the target range, 25 basis points at this meeting, or that they could have supported such a decision. It would appear that Chicago and New York, that's Austin Gulsby, and John Williams, were among the two who might have been advocating for that. Since then, well, the Fed chair has come out in Jackson Hole and said, you know what, we're probably going to be cutting rates in September or so, a little less interesting. but now we know who in July, we could perhaps surmise who in July was advocating for cuts back then. Tyler?

All right, Steve, thank you very much. Steve Leesman reporting. Thank you for that update. Appreciate it. All right. In addition to anything related to the Fed, earnings remain a key market factor. Investors are waiting, of course, on Nvidia's results, which could make or break the rally. Let's bring in Malcolm Etheridge, CIC wealth executive vice president and a CNBC contributor.

Malcolm, welcome. Good to have you with us. All roads lead to invidia here, one way or another. Can the market move forward if invidia doesn't? Yeah, Tyler, I think it's important for investors to keep that in mind, that the markets can continue to roll on, and the markets can continue to roll on with the AI theme in mind. If you just consider the fact that last year, Microsoft was sort of the be-all-end-all

as far as the conversation around AI was concerned, and it went from being the company that we consider to be the end-all. AI leader to being one of the companies that we consider to being the leader. So, Nvidia could absolutely come out, blow it out of the water with earnings, give us great guidance going into the next quarter. The shares still sell off, and I think investors have to keep in mind that that's not necessarily indicative of the broader AI story starting to slow down. Semiconductor business is volatile.

Let's just put it bluntly. I mean, it can, and the stocks, they can move up and down a lot. Well, not only is it volatile, it's meant to be cyclical, which is, I think, another thing that investors in names like Nvidia seem to have forgotten because we've been talking about this company and trading it similar to a lot of the growthier names that have staying power, where typically your chip stocks have about a three-year run where things are powered. There's the upgrade cycle, right? New technologies come out that require newer, better, and different chips. And NVIDIA's narrative with AI behind it has gone on for quite some time, but we're still talking about as if, you know, it's still early innings here. And so I think it's really important to keep in mind that we could see something like one

of the hyperscalers or a few of them, you know, Amazon, Microsoft, Google, and name a few, to develop their own chips in-house that make them suddenly less relying on names like Nvidia, but then also a company like an AMD, for example, their first direct competitor, to create a chip that is similarly capable of running all of the. those different models simultaneously for half the cost, let's say, and that suddenly changed the narrative around NVIDIA. So we should keep in mind to your point that chips are always cyclicals, and they always have that lull that comes after the boom. Well, as we wait for a bated breath for NVIDIA's earnings, let's talk about rates and which stocks are likely to be, or sectors,

are likely to be beneficiaries of the two or maybe three rate cuts that now the markets are pricing in. Yeah, so I think that the market has seemingly capitulated around the idea that the Russell 2000 is going to be the biggest winner the moment we get that first cut, right? Small caps, if you just think about it, are usually directly impacted by borrowing to invest in things like growth. And so if you consider maybe a third of the Russell 2000 companies are not profitable, they don't generate the kind of cash flow needed to directly invest in those operations themselves.

They have to borrow to grow. So it does make complete sense that the first few rate cuts are going to go directly to small caps, and that's going to be the thing to drive like an IWM, for example. A lot of attention, Malcolm, on artificial intelligence stocks. But you like quite a few of these computer security stocks. Tell us which ones and why. Yeah, so, Tyler, I actually just put out a note making the case for why I think that mass consolidation is coming to the cybersecurity industry in 2020.

And one of the big reasons for that is that there's a tailwind at the backs of these companies mandated by the Securities and Exchange Commission. Anytime we have these massive outages, they now have to be reported to shareholders. But separately from that, AI is also making those attacks even more sophisticated and even easier to create, which means that cybersecurity is now a non-discretionary line item in these companies' budgets. And so I expect for CrowdStrakes' earnings report to show us George Kurtz during their earnings report to come out and tell us something along the lines of that outage is behind

them now. They're moving on and the rest of the cybersecurity industry to be lifted by that high tide that comes from a snapback in CrowdStrikes share price. Okay, Malcolm, thank you so much for joining us and sharing your perspective. Appreciate your time. Let's get right to today's three stock lunch and here with our trades, David Bonson, CIO at the Bonson Group. First up, you've got NVIDIA earnings. We've talked a bit about that on deck tomorrow. The shares up more than a percent today ahead of results. What's your trade on NVIDIA? Well, we've been a sell for a long time in the sense that we just believe the valuation issue is insurmountable. If the company executes perfectly for years to come, which, of course, they will not. The stock is overpriced. And it's a 1999

Cisco lesson for me, a little bit of PTSD. I think Tyler remembers that era well, and I will say that Nvidia seems to me to be Cisco of the next generation. Very interesting. I mean, I think of the stock that I associate with the late 1990s is CMGI. It just went up and up and up. But Nvidia is a real business. I don't know that CMGI ever really was.

Invidia is a real business. You're not biased, but you're not biased, but you're, portfolio management style is what? To chase dividend growers or what? It is to pursue dividend growers and to hold companies that have the free cash flow that is sustainable and growing and then they are distributing more and more of that to the owners of the business over time. And so it is a bias, but it's embedded in our philosophy of investment. In a company like Nvidia generates plenty enough free cash flow that they could be more than a 0.4% dividend payer. But I think you're exactly right, Tyler. CMGI is not the analogy I'd make to NVIDIA. Invita is a wildly successful company.

So was Cisco. For 25 years, Cisco has grown earnings and revenues and everything else. It's just that the stock never got back to what it was in the bubble. It's a peer valuation problem. Let's move on to another super hot stock, and that would be Eli Lilly. What do you say here and why? 117 times earnings on a drug company. It's pretty rich. They also are at a yield that's less than half a percent. But unlike InVIDIA, Lilly does have a history of being a great dividend grower.

Now they're generating more cash flow than they've ever generated off of this wildly successful weight loss drug. And they're paying out 20 percent of earnings and dividend. It just boggles my mind. They're not growing the dividend. The yield is too low. Look, they're a victim of their own success. The stock's tripled in the last year and a half. So it's been a great thing to own.

But no, we don't believe it can become the robust dividend grower that we like to own. Finally, we have shares of Paramount Global falling because of the buyout drama coming to an end here. Look at those shares off 5.5%. Edgar Bronfman, Jr., walking away from the bidding war, which all but confirms that Skydance Media will be the next owner of the company. How are you trading Paramount? Wouldn't touch it with a 10-foot pole. Watch the documentary on this drama someday, but don't buy the stock.

David Broughton, thank you so much for being with us today. All right, coming up, NFL owners meeting on whether to allow private equity to invest in its teams, what it could mean for the owners and the league overall when we return. The other leagues allow it, the NFL coming to the party. Welcome back, everybody. NFL team owners meeting today to vote on whether to allow select private equity firms to invest up to 10% of a team stake. In other words, own up to 10% of a team. CNBC's senior sports reporter, Mike Ozan, has more. Mike, why is the NFL, has it been so hesitant to do this when other leagues have been doing it? And why the change now? Well, the NFL wants to be sure that these private equity firms are

comfortable with being silent partners and with putting their money in as long-term investment. Because these PE firms are coming in. They're not going to have any say in how the teams are run. And as you know, because they're limited to 10% ownership or because of other covenants that will be written in it. Now, they're limited partners. So that's it. Which, as you know, is not normally how PE firms operate. And the other thing is, how can they guarantee long-term partnership? I mean, environments change. how PE funds are putting together their own investments changes. So is this going to look like a contract?

Like you're signing up to be our investor for X number of years? That's right. They're going to be long-term investors. And these PE firms, all four of these groups, have good track records of investing in sports assets. So you're looking at a Carlisle Group, Ares, Arctos, all of these. One of the groups is a consortium of funds. The NFL wants to get this done because as team values have risen so high, for instance, if a team sells for $6 billion, you may have to raise $3.2 billion from limited partners. If you can get under this, possibly $500 million from a private equity fund, it really helps expedite the deal.

What does it do for valuations? When you look at the way that PE has gone into all of the other leagues, what has it done when those teams are valued? Well, typically in the past, PE firms have bid higher multiples of revenue than most limited partners won. That's subsided. They've come back down to the norm. What the owners want is the owners want to use these monies besides when teams are sold for LP money. They want to take the money in and use it for, say, renovating their stadium, putting in more luxury suites, adding, you know, fancy club seats, restaurants, because stadium money, You're not sharing with the other teams.

That's yours to keep. That's yours. And that really drives the pecking order of team values. How were these particular funds chosen? Was it because of their track record investing in other sports? Yeah, I think that was a big part of it. I think another part of it was the NFL feels very secure about the fund's assets themselves, that these funds do not have problems, looking at the track records.

And I think, quite frankly, some of its personal discussions, how comfortable the NFL finance committee and the commissioner feel with these fund managers. The vote is going to happen, we think, this afternoon in Minnesota, where these team owners are meeting. Is there any sticking point? Is there any chance that what we expect to happen doesn't? I would put it at less than 1%, actually. If you were a betting person. If I was a betting person, actually, yeah, I would go all in on this happening. 12 billion dollars committed capital. And then what's next? Like if it's 10% this year, can you force, a next round where the NFL gets back together and says, you know what, this worked out,

let's raise the stakes? Absolutely. I think maybe within five years, you mentioned 30 percent in the other sports leagues, I could see the NFL approaching that. So let me just see if I can cut to the chase here. The main way an NFL owner makes a lot of money is by buying the franchise and then reselling it at a multiple of what they paid, right? I mean, that's how sports owners generally make their most money.

I think that for many years that was the case, but that's begun to change. These teams themselves now are very profitable businesses because ever since you put in the salary cap, you're limiting to what the players can make. So the players now get about 49% of revenue. So all of these NFL teams are very profitable businesses. It's just a question of how profitable. But in this particular case, the point I was trying to drive at was the idea that by allowing investments from private equity, you are opening up vast new reservoirs of capital to invest in these teams.

Absolutely. And that's a, that's, that's, that's, that's, that's, that's, that's, that's, that's, why to your point, I think there's a very, very tiny chance that this is not going to happen. Mike, great to see you. Thank you. All right. So with NFL season, getting ready to kick off teams across the league are ramping up cybersecurity to protect themselves against growing cyber threats and ransomware to make sure that

they're ready. The Cleveland Browns are teaming up with binary defense in an effort to prevent cyber and physical threats by predicting them ahead of time. Joining us now to discuss as David Kennedy, co-founder and chief hacking officer of binary defense and Brandon Covert, vice president of information technology with the Cleveland Browns. It's good to talk to both of you today. So Brandon, let me begin with you. What are you seeing when it comes to attempts to invade your systems? Yeah, just like many other businesses, we have constant threats to our network, to our data, and things like ransomware attacks, issues like business email compromise or financial fraud, wire fraud, that are attempting to get access to our systems.

there's also proprietary football information that it kind of help us in strategy and game preparation that we're constantly looking to protect and fan data and credit cards and biometrics or something that we are really trying to protect with our services and the NFL and binary defense. I mean, clearly there is such an incredible intersection between the data that a team has in and the opportunities to exploit that data, even in the sports betting world, which I cover so thoroughly, you can see how threat actors could get in and use that data to their advantage where sports betting goes. So, David, when you're looking at preventing the intrusions, does it differ at all from the way that cybersecurity firms are trying to protect other corporations? Thanks, Contessa. It does a little bit.

When you look at what capabilities we have in the private sector now, we have the same capabilities as law enforcement typically does around intelligence gathering purposes. So, you know, each industry is uniquely different. If you look at water treatment facilities and critical infrastructure, your biggest attacks can be coming from nation states, right? To Brandon's point, you know, they're in the hospitality industry as well as another of others, entertainment and sports betting, sports booking. Those are all unique industry protocols that we have to take into consideration when we're trying to prevent or thwart attacks. and try to figure out what the methods, the capabilities, the advancements they have in that. And, you know, just with the 12 billion fund, PE funds that are potentially coming out, there's a lot of excitement around all of these different professional sports.

And then, you know, these attackers and adversaries know that these organizations have lots of money, which is opportunistic for ransomware. So, you know, there are differences based on how they're doing things, and the capabilities continue to get better. So we definitely have to build defenses against that to make sure that they're all protected. Brandon, how often have the Brown's defenses been tested by bad actors in this case? And have you ever been the subject of a ransomware attack? Yeah, we're constantly monitoring and getting alerted to threats.

One of the things binary defense does for us is really become the first line of defense. If something is detected in our environment, they're first to see it sometimes before we are. So when you say constantly, are you saying it? every day? Are you saying a couple of times a week? What? Yeah, every day. I mean, there's attacks. They may not necessarily be targeted specifically at us, but coming at us from our firewalls, external fishing attempts, things that maybe an attacker isn't necessarily targeting the Brown specifically, but anybody that may fall victim to a compromise or any sort of fishing scam. I'm curious, the NFL had a news conference last week where it was talking about the new rules

for gambling, that players and refs and coaches were all going to have to go for this training in person. In conjunction with that, the NFL also said it has seen a massive increase in threats made against players, coaches, and refs and the way that they were planning to enforce and defend against their staff. I'm curious, if your counterintensity. intelligence team can monitor for potential disruptions, like streaking on the field, could you also disrupt some of those threats of physical violence against these players as a backlash to, I presume

a lot of it has to do with people losing their gambling bets? Yeah, absolutely. I mean, when you look at counterintelligence, not just the cyber warfare slash, you know, threat actors that were going after, we're also looking at physical threats to the facility of the stadium, to players, to any organization that we're actively monitoring. And what ends up happening is you have essentially different thresholds around when we start to home in and kind of dive down deep into a potential threat that's happening. People say things all the time, but you can definitely create opportunistic patterns around people that are becoming more obsessive, that start to go more outlandish or direct threats.

And we obviously escalate those. Combining things like artificial intelligence and machine learning to pull all this data in and actualize those so that human analysts can go through and sit through this data very quickly is a big thing that only, you know, the NSA and other, you know, government agencies were capable of doing 20 years ago has really flipped the switch in the private sector so that, you know, we can provide defenses physically and both on the cyber front in both areas to try to protect. And we've had a number of instances where we've, you know, not specifically with the Browns, but just in general, we've provided, provided information that has led to arrest, has led

to preemptive ways of stopping specific physical threats. You know, we had a natural location, a retail location that was going to be hit from a specific attacker. And they were testing police response times. We were able to get a hold of that as well ahead of time and to notify police officers before they were actually robbed. So, you know, there's a lot of things that we're doing out there to protect these companies. All right. David Kennedy, thanks for the insight. Brandon Covert.

Good luck to you this season. Don't miss CNBC's second annual game plan summit. September 10th in Los Angeles. The event brings together leaders and visionaries from the sports and entertainment world. I'll be there. I hope to see you there as well. And you can learn more or register, scan the QR code on the screen, or go to cnbc events.com slash.

A lot of cool people will be there. I mean, game plan. That's what I'm saying. You're going to be there. Thank you, Tyler. You're among the cool. All right, Nvidia earnings are on deck tomorrow. Big deal.

Pressure is on. Shares having a bottle run since briefly becoming the world's most valuable company. If the bears are right, and we heard from one earlier, how can you protect yourself as a holder of NVIDIA? The market navigator is up after a quick break. Be right back. I love that swoo. Listen to those swoosh.

Can you get enough of those swooshes, Dom? Wush. Welcome back to Power Lunch, everybody. Hotly anticipated. Invidia earnings are on deck. There's a lot riding on these results. But what happens if the bears are right, Dom Choo, is here to break it down and with a special...

That's why there's a portfolio insurance in the options market these days, Tyler. So, Nvidia does report, as we know, after the closing bell tomorrow. It's a stock that's had a tremendous run, 180% in just the last year or so. But what if those earnings and the outlook are less than what investors in Wall Street

are hoping for? Tony Zhang is the chief strategist over at Options Play. He's with us live today. And Tony, we talked about portfolio insurance and puts and calls are the basics of options. options. We're talking put options or downside protection. Take us through your trade on Nvidia tomorrow. Yeah, that's exactly right. This is a trade that allows you to participate in terms of upside, but provide a little bit of downside protection going into earnings tomorrow.

That's by going out to the September 20th expiration, buying the 124 puts, but at the same time selling the 110 puts against that. Earlier today, you can pay about $4.66 debit for that put vertical spread. What that allows you to do is actually reduce the amount of risk that it takes to buy that downside protection by selling that 110 put down, which costs you only about 3.5% of the stock's value. And what that means is that if, let's say, Nvidia does report far better than expected earnings and the stock jumps another 10, 15% like it has done in the past previous quarters, you're only giving up 3.5% of that upside. So if the stock, let's say, rises 10% On earnings tomorrow, you're giving up 3.5% of that, so you're netting about 6.5%.

But this is a trade that's going to give you downside of about 14% to the downside. So if we see AI, if we see demand slow down a little bit or outlook for Nvidia coming a little softer than what investors are expecting, we might see a bit of a decline in terms of Nvidia to the downside on earnings. This will buy you some protection to the downside. Let me ask you a couple of questions here. I suspect that a lot of people who do this would be sophisticated traders who may well be executing their trades on their own at their desks at home. But if I were to call my broker and say, I want to do what Tony just told me to do, what do I say to him or her? Is there a name for this trade? Or what do I tell them quickly?

I want to buy these and sell these. What is it? What do I tell them? Yeah, it's a long put vertical or a bare put spread that you could usually go by. in terms of the name structure. But like I said, what you're doing is you're buying the September 124 puts and you're selling the September 110 puts at the same time. So it's the same expiration.

You're buying the higher strike price, selling that lower strike price. Net net, you're going to pay about $4.60 earlier today for that. You can tell your broker that and they'll be able to execute that trade on your behalf. All right, Tony, thank you very much for that. Now, Tyler, so in essence, what we're talking about is you want to buy the downside protection that will protect you for anything below, $124 in price. But what you're going to do to make that insurance a little bit cheaper is to sell the 110

below this level to make it cheaper to buy that portfolio insurance. But if you own the stock, you still get the upside. What did he say the name for it is? Bear put spread. Bear put spread. There you go. There you go. Tom Chu.

Thanks. All right. Coming up, our powerhouse road trip continues. We're going to leave Miami and go just sort of thematically about as far away from Miami as you can get. We're going to Syracuse, known for the university's orange mascot, but the real estate market there has been red hot. Power Lunch will be right back. It gets more snow in Syracuse than any city in the continental U.S. Yes. All right, welcome back to Power Lunch. We continue our Powerhouse road trip,

taking a look at real estate markets across the country. Our next stop is Syracuse, New York. According to Zillow, Syracuse is tied for second to last in inventory, and that means higher prices and prices are going up 14% in the past year to a median price. It is still modest by many Metro standards of $240,000. Average time on the market is only six days. That's tied for the fastest in the nation. If you list your house, you're going to sell it, man. Our next guest says a new semiconductor factory could only make things tighter.

Chip Hodgekins. He's owner of the Hodgkins Homes team of Hunt real estate. real estate. Chip, welcome. Good to have you with us. Thank you. Tell us about, I mean, you have no inventory. You got nothing to sell, right? We listed at Seoul. We used to have the inventories of about 45 to 60 in our, just on our team. We now have about five to eight listings right now. Yeah, I'm looking at from 2021 to now, central New York information, homes for sale have fallen from more than 1,200 to well under 800. So that tells you that the market is tight as a drum as the cliche goes.

So people are selling above list there, I assume? We listed a house for 535, and we just sold it for 614 in two days. Wow. So it's literally 20% over list price. But it's the correct list price. We aren't underpricing it. We're listing at the correct list price. And the market just bids it up.

We're having multiple offers. That's awesome. Okay. So there's a new Micron facility coming, part of the CHIP's investment. Already you have the university, which, at least when I went to school there, was the largest employer in town. Plus, carrier is up there and these other big industries and big jobs. When Micron comes, what happens to the housing market? So right now we build between 310 to 350 on average new construction homes.

We need to be building 2,500 new construction homes. And so that's how fast this. We're going to see 40,000 new employees coming. That's because the supply chain, that's medical, that's hospitality. We're going to see an increase of the estimate is we're seeing an increase of 34,000 new ERVs. visits, that means new x-ray technicians, more MRI technicians, people to change the beds, people to, so that's the growth that we're going to be seeing happening in the Syracuse market just from medical and then hospitality. And what's happening with the town surrounding

Syracuse proper in terms of infrastructure and having the roads, the septic and all of that ready to go if builders are ready to invest in new housing? So what's interesting is up until 2020, the census has always had a decrease. For 90 years, we've had a decreasing population. So we can handle the increase in population as far as the infrastructure, the roads and the sewers and the water supply. We can actually handle that. We're really looking forward to it. The roads are being redone right now. The New York State just put a half of billion dollars into our roads because of this increase that's happening. Sounds like Syracuse would be a very, very good place to invest in real estate right now with jobs coming because housing usually follows

jobs. I want to go to your listing and I want to contrast that listing with what we had yesterday out of the Miami market, a similarly priced piece of property, about a million or a little more. it had, as I recall, about 1,600 or 1,700 square feet. This listing, price $1,075,000, 5 bedrooms, 5,700 square feet. Your money goes a long way in Syracuse. With a swimming pool, no neighbors behind you. Your money goes a very long way in Syracuse. Absolutely.

And this house also has what? It has a gym. It's got to finish basement. It's got an outdoor deck that you can use at least two weeks a year. Right? So the fun thing about Syracuse is we have more snow plows per capita than any other city in the United States. So we do get snow. But we use it.

We have a lot of fun outdoors here. No, I don't remember that. I spent four lovely winters in Syracuse. I don't remember any of it being fun, at least not on the outside. The inside, yes, for sure. Hey, it's great to see you so much, Chip. Thank you for joining us. Thanks for having me.

Let's get to Kate. Right now, Syracuse is like. Contessa is never allowed to talk about our city again. In the summer, it's beautiful. Kate Rogers, news update. I, Kandesik, Ukrainian president of Vlomir Zelenskyy said today during a news conference that the war with Russia would eventually end in dialogue, but Kiev needs to be in a strong position, and that he would present a plan to end the war to President Biden and his potential

successors, in addition to the recent incursion into Russian territory, Zelensky said he's also exploring other economic and diplomatic strategies. Supermarket chains Stop and Shop announced it will stop selling cigarettes and all other tobacco products this month. Stop and Shop has more than 350 locations primarily in the Northeast and joins other major chains that have also stopped selling tobacco. And Joshua Kushner and his wife, Carly Klaus, reportedly just paid almost $30 million for the iconic Malibu home known as the Wave House, that's according to the Wall Street Journal, which says the 50s era a mid-century modern home was first listed for $49.5 million last June.

The house was designed by famed L.A. architect Harry Gesner and was once owned by British rock star Rod Stewart. Looks beautiful, guys. Back over to you. Thank you, Kate. Appreciate that. Remember, you can always hear us on the podcast. Be sure to follow and listen to Power Lunch wherever you go. And we'll be right back. Welcome back. Let's get a quick power check on the positive side of the S&P. You've got Insulate Corp, receiving FDA clearance for its new. type 2 diabetes pump. And there you're seeing the stock on the move there up.

It looks like more than 7.5%. And then on the negative side, you've got two builders leading declines. Martin Marietta and Vulcan. As home prices hit a record high, Martin Marietta is down almost 4%. That is your power check. Let's get over to the bond market meantime. Rick Santelli, tracking the action. Rick.

Hey, Tyler. You know, it's been a pretty exciting day all in all. We started out with much improvement in consumer confidence. Then at 10 o'clock Eastern, we get some not so good news. We had the 30th consecutive negative read on Richmond Fed Service Index. Then a very solid two-year note auction. Look at the intraday of two-year. The way after the 8.30 data came out, we moved up a little bit,

but 10 o'clock data with its mixed bag, and we can certainly see yields started to reverse. If you put a two-day chart up, and this is really, important. We were above yesterday's high yields in all maturities earlier this morning. Then the short maturity started to give it up very quickly. We're now within the thick of yesterday's range for two. But look at tens. Right now they're basically at their low yields of the session, which is still right on top of an equine yesterday's high yield of the session. That's important because we've seen some rather dramatic de-inverting of the yield curve. The yield curve chart there

starts around the third week in June when it was at minus 50. Two months later, here we are getting ever closer to unchanged zero and potentially steepening the curve. Think about it this way. The Fed's putting out the big carrot of an easing cycle. If you were a buyer of U.S. debt, what debt would you be more aggressive buying? Short maturities? Like a two-year note.

Tyler, back to you. All right, Rick, thank you very much. And still ahead, Facebook CEO, claiming the white. White House pressured the platform to censor some COVID-related content. We'll get the details when power lunch returns. Welcome back. Mark Zuckerberg says the White House pressured the company to censor COVID-19 content rather. Julia Borson joins us with more. Was this during the pandemic then? Yes, that's right. So Mark Zuckerberg, just writing in a letter that just was posted late last night into the House Judiciary Committee that the Biden administration pressured meta to censored COVID-19.

related content on Facebook. Writing quote in 2021 senior officials from the Biden administration, including the White House, repeatedly pressured our teams for months to censor certain COVID-19 content, including humor and satire. Ultimately, it was our decision whether or not to take down content. Going on to say, I believe the government pressure was wrong. Now, this letter follows the committee's report that came out in May on the topic, and the report and the committee asked META for a comment.

The White House responding to Mehta's comments saying we believe tech companies and other private actors should take into account the effects their actions have on the American people while making independent choices about the information they present. Now, the executive branch's ability to influence content moderation has been at the center of Supreme Court cases. Now, in June, the court threw out a lawsuit seeking to limit the government's ability to communicate with social media companies about content moderation. And then in July, the Supreme Court kicked two cases challenging Florida and Texas laws, challenging social media moderation back to those lower courts, warning them to consider the boundaries imposed by the Constitution against government interference with private speech. Now, Tyler and Contessa, social platforms have such massive reach, maybe many people would argue such massive power. The question of when and whether it's appropriate for the government to weigh in will certainly

always be a contentious issue. How is this different or is it different from an ancient time when someone in the White House, a chief of staff, maybe the president, would call the president of NBC News or Tom Brokaw or Walter Cronkite to complain about a story? Well, because that was a news organization creating that story. What's so different about meta and about Facebook or Instagram, for instance, is that they are platforms. They are platforms where every day. individuals make posts, which are protected by free speech and the First Amendment. The other thing to consider here is that these platforms are also protected by Section 230. Now, this is a clause that says that these technology platforms are not to be held liable for the content that ordinary people

post on their platforms. So that's why if someone post something that could incite violence on the platform, META wants to take it down, but they are not held liable. if something bad happens because of the content posted on their platform, and that's all because of Section 2-3. I guess it goes to a very interesting argument. I mean, I take your point, and I think it's an absolutely valid one, that Facebook is not a news organization. But it is a communication organization.

It is a platform, and it is, in a sense, a publisher or republisher of content. That's exactly what this debate about Section 230 reform is all about Tyler, Because a lot of people would like to see these platforms be held responsible for the content that they allow people, individuals protected by the First Amendment, to share on this platform. And even the companies themselves have said that they're open to some sort of Section 230 reform. Though if they could be sued every time there was something that was potentially dangerous posted, then that would be a very expensive situation. But that's the thing. These are open platforms. And Mark Zuckerberg would like them not like them not to be necessarily the ultimate source of news.

because this is news mostly posted by individuals. Julia, thank you. Appreciate it. Still to come, the number of crypto millionaires nearly doubling in the past year, and we'll dive into that next. Welcome back. Bitcoin soaring more than 100% over the past year. That rally helped to create a staggering 84,000 new crypto millionaires in the same amount of time.

Robert Frank joins us with more on this. Hi, Robert. Contessa, good to see. Well, the number of crypto millionaires, as you say, doubling over the past year to 172,000 of them. The rise of Bitcoin ETFs helping to add over 84,000 new crypto millionaires. That's according to a new report from Henley and Partners and New World Wealth. There are now 325 crypto-centimillionaires. That's worth 100 million or more.

And 28 crypto billionaires. The richest man in crypto is still Xinjiang Zhao, or better known as CZ, the co-founder of Binance, his net worth up more than $10.5 billion this year after he pled guilty to money laundering last year and paid that $50 million fine. He is now worth over $33 billion. The total market cap of crypto estimated at about $2.3 trillion, that's still below the $3 trillion estimated at that peak in 2021. So it's kind of been a three-year round trip of wealth for many investors, Black Rock's Bitcoin ETF, passed a $20 billion mark back in May with ETFs from Fidelity and Franklin Templeton also growing up.

For more on the rise of crypto millionaires, go to cnbc.com slash inside wealth. You can read all about how the wealthy are making, spending, and investing their money. Guys? It's fascinating. Next up, then the next assignment is, how many millionaires did TikTok create? Thank you, Robert. Thank you for watching Power Lunch. And closing bell starts right now.