Transcripts For CNBC Power 20240704

First a check in on the market the dow lower by nearly 300 points moved low er perhaps by the fitc rating plus, some street talk around discover financial the company ceo resigning. That stock down more than 10 . Also, good news, bad news. The good, Warren Buffett adding a stake in the stock bad, home Builder Sentiment dropping sharply with rates over 7 . We begin with the warning from fitch the firm saying it may be forced to downgrade dozens of banks, big ones, including jp morgan chase, coming after recently downgrading the United States credit rating. For market reaction, lets bring in doug butler, director of research at Rockland Trust what has got fitchy feeling so well, i could rhyme but i wont. Ill also not go there. But again, fitch downgrading the banks, very core lair to what they just did. Its their really negative on the government and theyre taking this as a broad swath theyre saying the Banking Industry as a whole and greater problems which is why they would hit jp morgan kchase and every bank dow the line every bank from large regionals all the way up to jp morgan would get hit. And thats one of the reasons why its spooked the markets a bit, feeling like this is a problem. But again, if the issues facing the bank, real estate problem, deposits, those are things that concerns have been baked in i do feel fitch is late to the party. But, you know, the Market Sentiment today, well, if theres any additional challenges, then it will be a problem. I suppose you could say, you could argue if youre going to downgrade the u. S. Government debt, therefore you need to downgrade Everything Else that is lower on the credit scale just by almost definitionally. But i guess the key question for investors is do you feel, do you personally feel that the banks that were talking about here, some of the big ones, are in any sense on sand as opposed to concrete and cement . Should we be worried about them . I dont think you should be worried at all i think almost theres very few banks out there that are on shaky ground the banks that went under were on pretty shaky ground there are probably theres probably a another couple banks out there that will get hit, that will run into some problems forced into a merger or Something Like that over the next year, especially if they take a dramatic downturn yeah, do i feel like bank of america, wells fargo, jp morgan the biggest banks are at great peril, no. Theyre downgrading everything because theyre making a case that financials are as a whole greater risk i think its tied into that u. S. Government call. If thats true, doug, the banks are selling off, youre not worried about them, you dont think theyre standing on sand, is there opportunity to pick up shares of jp morgan on sale well, we were slightly aware already were owners of jp morgan. Slightly overweight where our targets are to begin with, but were not adding to it today so were not diving in with both feet but if we think there will be opportunities that youll see in the bank sector over the coming we ere on the side of being cautious about entering the bank space until you have greater clarity on how hard the possession will be we have seen a lot of recovery so you get youre talking about how the economy is going to land. It would seem that banking problems arent going to be the precipitating event that either causes a recession or hardens up what otherwise might be a softish kind of recession but the real concern here would be consumers and consumer habits. I think thats our big concern. Its why we sort of feel that todays market drop is a bit of a blip in the marketplace. Versus a longterm trend youre seeing a strong consumer. I think most rallies continue until the consumer feels uncomfortable. I think back to the last the Great Recession in 2007 08. That was driven by a banking crisis right. If theres a recession this time around, my sense is its not going be driven by a banking crisis no. Theyre never like the last one. But i think the economy still seems like its going along pretty well. Now who knows what will happen when Student Loans start getting repaid and all of that starts happening again. Credit cards ticked up but again, you know theres ample opportunities out there in the market, especially if youre really focussed on staying ahead of the game. Doug, we thank you for your time today as always, good to see you, sir. Doug butler. Thank you you bet. Well, on the consumer front, some mixed signals coming this morning. Retail sales coming in stronger than expected. Significantly seeing near 2 boost in Online Shopping home depot beating estimate. But the Home Improvement retailer reported a pullback on big ticket spending. With us to discuss the state of the consumer, former macy ceo and also with us, senior u. S. Economist with bank of america thank you both for being here. I was really interested and intrigued to see the retail Sales Numbers today. Got me wondering what the fed is thinking is it possible we could see a reacceleration of inflation this was a remarkable report. We were above consensus based on what we were seeing in our internal data. The retail sales report came in Even Stronger than we were expecting. You have to put that in the context of what was essentially zero inflation in july in the corresponding categories so were looking at growth in Consumer Spending, around 1 in those categories in july which sets up a very, very well for Third Quarter gdp. Yes, from the feds perspective, certainly want to be vigilant. They want to keep an eye on where inflation is going on a forwardlooking basis and that probably means they continue to push back against the timing and pace of rate cuts that the markets are pricing right now. Help us sort of square what we heard from the government retail sales and what we heard from home depot today. Certainly better than expected results nearly across the board. We talked how there is caution with Consumer Spending when it coming to more discretionary categories, bigticket items whats going on with the consumer is the consumer strong or not or just depend on the category . Well, courtney, over the last year or two, we have been talking about how the consumers savings account has been draining from the stimulus packages presented to them over the last couple of years that in itself would have been a big issue. However, we have now gotten to a different place where we have wage growth and people feeling secure about their jobs. And that is whats encouraging them to spend. So, i think were in a much better place today than i thought we would be several months ago particularly with that wage growth number. And i think thats what were seeing as far as home depots comments, you said it. I mean, they beat expectations i think youre going to see a lot of retailers meet or exceed expectations but in many cases the expectations have been moderate. Many cases the Top Line Sales are forecast to be negative to last year. And their inventory is in better shape, so theyll be able to manage their earnings around expectations. Terry, youll be delighted to hear that myson who is applyin to colleges just applied to the university of arizona where its the lundgren secenter for retai. Tyler, ill give him a personal escort. Thats what im looking for. No question im a personal recruiter to this campus all right ill take care of that. Let me ask you and terry the same question, aditya. A lot of people these look at the Consumer Behavior are concerned about the resumption of student loan payments how concerned are you, aditya . How concerned are you, terry aditya you go first. Sure. We see that as a modest head wind spending no more than that. A lot of folks that have large amounts of Student Loans have also graduate degrees. Theyre a little older they probably have a significant savings. Some people have already started to prepare for the resumption of repayment based on the fact that its been so much in the news over the last few month. So from a forwardlooking bases, the 12month onramp as well, we think its a modest head wind that plays out over several quarters, but we dont think it is a factor that could potentially break this very constructive dynamic were seeing. Constructive dynamic. Do you see it that same way . How big a concern is it . I think aditya said it right. He has great insights, by the way, on this subject so i agree and i also believe that in general, you know, while Consumer Debt is high, what i look at is dlingtsy rates. Theyre actually at a 20year low. People are paying off their debts. They are winding down those high interest, high credit card debts. I think this is going to not be a major problem for us as we look forward terterry, well hear from so of the big retailer, target and walmart. Shares have gone opposite directions target is down 20 walmart is up 5 based on what we heard today from retail sales and some of the commentary from home depot what do you expect that well hear from these two big heavy weights . Well, i think youll hear that first of all, target pointed out their challenges in their last quarter my guess is that theyre carving through those and setting themselves up for future improved performance down the road i would be surprised come this quickly in this quarter. On the other hand, walmart has been performing. Keep in mind, you know this, tyler and courtney, but a substantial amount of their business i think is over 50 now is food and grocery related. And there still is inflation in those categories so you dont need unit growth to grow you need maintaining unit growth or maintaining units volume from the prior year and getting your growth quiet with inflationary pricing. Not true on the other side of the business, but the fact is that they have less dependence on that than target. Thats why youll see two different stories there. All right folks, thank you very much terry, aditya, thank you for your time. Appreciate it. Thanks. Coming up, those retail sales depend on consumers desire and ability to spend. Which more and more relies on credit in part buy now, pay later with consumers already holding a record amount of debt and student loan payments as we just mentioned set to resume, will shoppers keep spending on those buy now, pay later plans plus, the global chips rate, the u. S. Facing more and more competition for ai chips i almost said ai chips there, courtney, like the sauce but not just china saudi arabia, buying more than 3,000 nvidia semis more on that when we come back my cpa told me i wouldnt qualify for the erc tax refund, so i called innovation refunds. Their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your Small Business qualifies. You cant buy great conversations or moments that matter, but you can invest in them. At t. Rowe price our strategic investing approach can help you build the future you imagine. T. Rowe price, invest with confidence. Welcome back data out today shows retail spending is bert than expected as credit debt balloons and these loan payments come due, some are forecasting an impact that could impact the buy now pay later but our latest guest doesnt agree. I was pulling through some old notes from other firms, trying to average out what the loan payments might be when they resume on the low end Something Like 210 from wells fargo per month on the high end, maybe 460 bucks. Why dont you think that would affect spending . Agree with those numbers. Those are the same numbers we got. We dont say it wont impact what we say today in our survey about 300 users of buy now pay later is that the impact will be lower than what people think obviously there will be an impact but it will be much more muted than a lot of people are thinking if you just look at our survey, about 50 of buy now pay later users, firm, square, afterpay, et, have Student Loans the other 50 dont on average, the impact to the industry is just short of 2 so its actually not that much if you take people who have the Student Loans, healthier financially otherwise . Thats a great question i think thats the answer. Theres a clear link between having student loan and Household Income so what we found out is that student loan, people who have Student Loans have higher incomes. About 10,000 college educated. You know it intuitively, but seeing in a survey makes sense 80,000 on average people with Student Loans versus 69s or 70 very interesting link between more buy now and pay later apps and higher income. I was going to ask you, i dont understand that then why are you needing to use buy now pay later if you have a higher income . Its relatively higher. Thinking about the average Household Income, buy now pay later user in our survey is 80,000 with Student Loans 69 without Student Loans. Its still kind of not sort of the if youre making 150 or 200,000 a year youre not going to use buy now, pay later. On average, on an average basis, theyre little better off with noneducated Student Loans. You think that fact will blunt the impact of the resumption of payments on the economy . Partially well, it has to there has to be some impact. But i think the fear factor is much bigger than what well see. People were worried i was talking to the management of a firm they know that this is coming. Theres investors and management are concerned about it down the road in the fall so im fascinated in general by these companies and these products, buy now, pay later, because many of them if you sort of follow the rules, you are more or less getting free money, paying them off and there is no interest and so are people using these instead of credit cards, in addition to credit cards what has consumers learned what the product works and what it enables them to buy . In terms of is it a replacement for credit cards yes theres two cohorts people that use it at the very low end, right, they dont have access to credit but theres also we have done surveys and research in the past that theres also kind of steady pays the bill users. At the end of the month, we get someone else is paying your bill for you. Its all over the place. A lot of people shop online using affirm a lot of people use afterpay when they shop in stores by the way, what firm has done and other guys have done, they tightened the credit because of what happened. You have less of the lower cohorts and more of the its a mixed bag. I know retailers like it because it often increases the transaction value. Correct. At really not much cost to the retailer. And thats the biggest opportunity here that people are missing. This is my personal view this is a huge conversion mechanism, right sure. So retailers love it. What do you mean by that . Converting means the retailer has the choice making a sale or not making a sale turns out having buy more pay later button increases the odds of selling the product so im willing as a retailer to take a 5 merchant discount rate in order to sell the product thats a great trade by the way, credit cards interchange is not that much lower. Were talking the difference is maybe 1 to 2 points between buy now pay later and credit cards acceptance, but its free advertise not free advertising but sort of like a conversion mechanism to lure people to buy more online. It increases demand. Which of these buy now Pay Later Companies do you think is best positioned . Affirm is the rollsroyce they figured out how to get big breadth of the products, services paying four higher ticket items. Peloton a lot of us were buying during covid thats how they started. Afterpay is doing a good job, too. Its part of square or block part of the bigger comprehensive offering affirm is the pure play, rollsroyce of buy now pay later and they would be the frontrunner here for the next three to five years. Interesting companies thank you very much for joining us today on power lunch. Further ahead, going behind the scenes on the strike the union and the studios in hollywood met tset to meet afte weeks of silence those details when power lunch returns. So you know all you need for recovery. And you are . Im an investor. In invesco qqq, a fund that gives me access to. Nasdaq 100 innovations like. Wearable training optimization tech. Uh, how long are you. Im done. Im okay. fan 1 there ya go thats what im talkin about josh allen is this your plan to watch the game today . hero fan uh, yea. I have to watch my neighbors nfl sunday ticket. josh allen its not your best plan. But you know what is . Myplan from verizon. Switch now and theyll give you nfl sunday ticket from youtubetv, on them. hero fan this plan is amazing josh allen another amazing plan, backing away from here very slowly. fan 1 that was josh allen. fan 2 mmhm. vo for a limited time get nfl sunday ticket from youtubetv on us. A 449 value. Plus, get a free Samsung Galaxy z flip5. Only on verizon. My cpa told me i wouldnt qualify for the erc tax refund, so i called innovation refunds. Their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your Small Business qualifies. I did have hearing aids from another company. I was just frustrated. I almost gave up. With miracle ear its all about service. Theyre personable. Theyre friendly. Im very happy with them. We provide you with a free lifetime of aftercare. Meaning free checkups, cleanings, and adjustments. I see someone new. Someone happy. Its really made a difference. Call miracle ear at 1800miracle and schedule your free, no obligation hearing evaluation today. Welcome back, everybody. On this volatile day for stocks. Lets check in on the bond market Rick Santelli tracking the action hey, rick. Hi, tyler what a fascinating day short maturity yields are lower. Long maturity yields are toying with history 8 30 eastern, retail sales, up. 7 of 1 . As you look at that chart, something should jump out at you. Its that even though this was the best in six months outside of january, where it was much stronger 2. 8, it kind of fits with precovid maybe a little bit stronger. It certainly doesnt feel like the markets and Interest Rates should have rocketed the way they did maybe its the following charts. Now here is import and export prices they had precipitous drops six consecutive months lower for both that doesnt add up. Why did Interest Rates pop on that maybe that explains why we have come back down the short maturities, yields are lower. Now look at how 10z and 30s move on the number the way they spiked you have as high as 426 on a 10year, 435 on a 30year. Why are these significant . They are super significant lets open the charts up towards the third week in october of last year. And the answer should jump out at you 4. 25 is the current highyear close for ten. Intraday we took it out. Its all about the close 30year bonds didnt quite get up to theirs. 438 is their number. Both on the 24th of october. Twoyear note yields did the same thing in march and they failed to close above that level, even though they took it out intraday these are hugely important technical aspects of the marketplace to pay very close attention to courtney, back to you. Thank you very much, Rick Santelli oil falling 2 today Pippa Stevens has the numbers. Energy in focus here today as the sector. Yeah. So oil is under pressure thanks to the data out f o china. A sluggish economic china and fears around whether or not the Central Banks surprise rate cut will actually do enough to boost their economy. And of course china is the Worlds Largest crude importer certainly something to watch there. But today did want to look at the refiners because bank of america downgraded the group to neutral, saying they think the risk reward is skewed towards the risk side looking forward. They have been very bullish on the industry back in march of 2022 they said it was the golden age for the refiners and since then, they have outperformed both the Energy Sector and s p 500 as well so they do think the firm does think that the urgent earnings picture has been structurally reset and is now higher going forward. But given the outperformance over the last year, now is the time to lighten your exposure. More of an evaluation call . Yeah, exactly they basically left for dead because the longterm case for the refiners has always been under question given that there have been calls for forever about peak oil coming. I think in the last year, particularly with the invasion use case around oil longer term has been reset so that has drawn interest in refiners we have seen a lot of capacity come offline, covid, fire out of philadelphia refinery that was never replaced bank of america is saying time to pback. Thank you appreciate it. Now to Bertha Coombs for a cnbc update. Hey, tyler. Theres concern across maui about the chemical contamination from the fires the state Health Department cautioning people that the ash and dust from burned buildings might carry toxic chemicals such as asbestos and lead many of the buildings in lahaina were built in the 1970s before those chemicals were phased out of construction. Meantime, speaking at an event in milwaukee, President Biden said moments ago that he will travel to hawaii as soon as he can the white house says its an active discussions about a trip. He faced criticism from some republicans about not speaking much publicly in the initial aftermath of the fires. And another soccer superstar heads to saudi arabia. They have acquired neymar from paris. Transfer fee, 98 million. Might as well just round it up to 100 million. Thats not even his salary. Thats incredible those numbers are i dont understand that. Thats the transfer fee. They can write those really big checks oil prices are what they are. One report is he makes 200 million a year from playing for this saudi team. Wow. Thank you thank you ahead on power lunch, semihuge rally well speak to the ceo coming up next my cpa told me i wouldnt qualify for the erc tax refund, so i called innovation refunds. Their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your Small Business qualifies. Hows the chicken . The prawns are delicious. Oh, i have a shellfish allergy. One prawn. Very good. Did i say chicken wrong . Tired of people not listening to what you want . Its truffle season ah thats okay. Never enough truffles. How much are they . Its a lot. Oh okay im good, that its like a priceless piece of art. Enjoy. Or when they sell you what they want . Yeah. The more we understand you, the better we can help you. Thats what u. S. Bank is for. Huge relief. Yeah. My cpa told me i wouldnt qualify for the erc tax refund, so i called innovation refunds. Their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your Small Business qualifies. Every businesst step to see if thats why comcast business de is launching theal. Mobile made free event. With our business internet, new and existing customers can get one year of unlimited mobile for free. Its our best internet. Powered by the next generation 10g network and with 99. 9 reliability. Plus one line of free mobile for an entire year. Its the mobile made free eventhappening now. Get started for just 49. 99 a month. Plus, ask how to get one free line of unlimited mobile. Comcast business, powering possibilities. Welcome back to power lunch. The nvidia invasion spreading around the globe well, once again nvidia is among the top winners on the nasdaq 100, up about 8. 5 on the week on the notion that Everyone Wants to get their hands on its chips. China isnt the only country front running nvidia chip orders no, the Financial Times reports that saudi arabia alone purchased more than 3,000 nvidia h 100 chips as the nation develops own generative ai models china, ua and microsoft, google, all wanted nvidia gpu chips. Imagine how hard for the smaller firms to scale up the ai models. Global race to accelerate ai capables put a major strain on the gpu chip supply chain and could limit the nearterm upside for nvidia cant get the parts, cant sell the chips. Supply will be the primary determinant for its Data Center Revenue at least through 2024. But, wall street, of course, continues to pump up its name. Today wells fargo, ubs all raised their price target. You can see on your screen, well above 500 bucks ahead of nvidia earnings out next wednesday. Keep in mind, there has been recent stock fluctuations with nvidia down 5 on nont, so it shows investors are nervous this ai phenomenon will cool. Its still too early to get off the train. Consider it nvidia has that first mover advantage, for now at least. They are the name in the category so far as i can tell. Christina, stick around far couple minutes as we are joined by our next guest, runs a Company Caught the middle of the race to secure ai chip may be a bit of an under the radar name shares up around 4 right now today. And more than 150 this year a lot of ceos would like that kind of performance. The Company Still reporting a loss for the quarter costs remain high and margins a little lower than expectation or hopes. The ceo and cofounder of navitas semiconductor. Welcome. Good to have you with us the report is very, very favorable on the top line. Your revenues, i think more than doubled compared with a comparable quarter a year ago. Anyone would love to see that. But, obviously what people would love to see even more is profitability. When do you expect to see that yeah. Well, thank you for having me, tyler. And its great to be on this show were on a great track towards profitability. Were in a steep growth curve right now having completed a few quarters, each quarter doubling from the prior year. 35 up from the prior quarter. We predict profitability in the next 18 months or so were in a great position to deliver exactly that these chips are powering virtually all modern electronics with clean energy, Energy Saving technology what is the impediment from where you are today and reaching profitability in se 18 months. Whats holding you back . Is it because your costs are high or that the margins arent where they need to be . What is it as you sit there as the ceo and you go, how am i going to get there, whats holding me back . Its really early days, early innings on capitalizing on this huge opportunity to displace silicon, 22 billion market today, towering all modern electronics, evs, data centers, powering home appliances, powering virtually all forms of electronics. Theyre being displaced by next Generation Technology we make. As we ramp our revenues, our costs are right in line, our expenses are right where we want them to be to not only deliver profitability but deliver leadership and bring that back to a u. S. Based semiconductor. We feel good about your position in the high growth, high investment period to deliver on. Im curious about your business in china. It says your mobile growth has continued there, but so many other companies both in your sector as well as others are struggling with chinas recovery thats been a little more choppy than hoped, i should say what are you seeing in china and how you making sure that market continues to work for you . Yeah. Our technology i prefer to it, it has the benefit of both worlds its both an enabling new technology and new markets, electric vehicle, energy storage, solar inverters but displacement technology. Were going into existing markets like charging your phone and laptop, instead of using silicon, were tags charging the laptop or phone up to three times faster with half the size and weight as we do that, the market could be flat or declining and we can still deliver Significant Growth as were converting those existing silicon designs over to this new Generation Technology. People will love that fastercharging evs and phones and so forth christina, youre still here, arent you yeah. I want to piggy back just off of what courtney asked in regards to china your front End Manufacturing is 100 outsourced to taiwan semiconduct ertz they have ten in taiwan, two in china. Are you concerned at all about how much or how reliant you and other Companies Nvidia are reliant on one name . It is true they are the larger supplier to the whole Semiconductor Industry but our chips are 100 manufactured in the u. S. We have multiple options coming to us. Factories originally built to make silicon now want to upgrade factories. So we have many options and plan to diversify into all of these different regions to serve the u. S. Global needs outside of taiwan, outside of china we have a very nice diversification strategy coming. But that diversification strategy is a ways out you said youre still at the early stages of building the plant here in the u. S. Its obviously not cheap we know whats going on with on semi i feel like is this something that maybe is really not in the near term or at least not in the next few years for you its actually surprisingly quick. Thats the benefit of this technology we can retro fit older existing fab in our case, we can actually retro fit older silicon factories, in about 12 to 18 months some of those efforts are already under way. It will be a lot faster than you might expect. Gene, thank you we appreciate your time today. Thank you so much, tyler. And christina, thank you as well. Courtney still ahead, deal or no deal Hollywood Studios offering the Writers Guild a new deal in a push to end their strike, reportedly planning to meet at the negotiating table to discuss terms. Well get all the details when power lunch returns. Weve got your back, road warriors. Because we know youre picking up the pace, steering life at 10 and 2. Youre hitting the road. And were helping you get there with confidence. So skip the counter without missing a beat. Choose any car in the aisle. And be the boss of you. Go national. Go like a pro. Pano ai chooses tmobile for business for 5g solutions. Because tmobile helps pano ai innovate, so they can stop the spread of wildfires. Nows the time to see what americas largest 5g network can do for your business. Your record label is taking off. But so is your sound engineer. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. 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Welcome back hollywoods studio set to meet with the wga to discuss the most cent deal offer. Some Industry Leaders are pushing hard for a settlement. This is a script writing itself, julia. Whats going on . Im hearing optimism. I have been talking to a number senior Media Industry executives theyre telling me they are optimistic about progress after what they see as a productive meeting that happened between the amtp and the wga on friday sources telling me that the east coast leadership of the wga has flown out to los angeles for meetings this week, meetings in which theyll respond to the amptp pay increases and around overall pay and particularly streaming compensation the studios reportedly reassured screen writers they will not replace them with ai tools and offered minimum staffing requirements for the first time. And they even reportedly broke sharing specific streaming data. There is talk that the increases in streaming royalties that were won by the Directors Guild could be used as a template for these talks. And then eventually whatever eventually writers deal does come could be used as a template for the Screen Actors Guild which is also out on strike. All of this comes as the Screen Actors Guild strike tops one month and that Guild Announces lit no longer allow actors to work on indy, nonamptp contracts in the u. S the strikes have already cost the u. S. Economy an estimated 4 billion costs will grow to 5 billion in the next month and rise faster if workers are laid off and entertainmentrelated businesses really start to shutter here now sources tell me if things arent resolved, specifically with actors or close to it resolved with actors guild by labor day, will we start to see many more movies pushed from the fall release skchedule to sprin or later in the year im hearing there could be massive damage to the movie industry if films are moved out of the schedule. That could train people once again they dont have to go out to movies to see to be watching content and feels like we have seen that surge in movie going this summer they dont want to unlearn those patterns. As you schooled me, julia, most of the movies that would be set for release this fall or winter have really post production and are all but done. So why would they hold them thats right. Why would they hold them back sit because they cant the actors cant go on promotional tours to promote the movies or what exactly exactly. So if you think about the role that Margot Robbie played in promoting barbie she was out there, doing interviews, she was a huge part of the awareness of the movie. And studios really rely on actors to promote their films. So if you have a film, say, like the dune sequel, go ahead and release that film without timothy out there to promote it or decide to hold back to the fall these are the types of conversations the studios are really going to be having intensely about which films they want to release without the promotion stars, which ones they can get away with not having an extra promotion and which ones theyre better off waiting and having that promotional engine for movie stars and maybe holding off and releasing films later. These are tough conversations. When you think of a big star, a big brand, when is it worth it, when it is not what are people doing who work on production sets . What are people doing to make ends meet . Taking jobs as waiters or construction or what well, the one thing i would say is that the picketing is going on so writers and actors, they are picketing. People who are working on production sets are trying to find jobs in reality tv, in documentaries, in those areas where there is still shoots. Reality tv is the key thing there. Anything related to sports or news or the like obviously those businesses are still on going and i talked to a number of people who are either starting to take jobs driving for uber or to pick up odd jobs here and there. So definitely hearing about a lot of people here in l. A. Who are looking for temporary work, hoping that this is resolved fairly soon. Yeah. That was what i was starting to wonder, julia. Obviously they held out for so long, but at some point some members of these associations, these unions, probably cant just continue forever and ever without any income do they pressure the leaders, hey, you have to come to a resolution yes, we want things better bewe also need some work. Yeah. Absolutely they want to make sure theyre getting the gains that will really influence not just how they get paid but also how the generation of writers after them get paid or generation of actors after them but especially the writers its been over 100 day we hit the 100 day mark last week okay, we want to get back to work obviously the studios, they have been saving on costs they want to make sure they dont have an empty broadcast tv schedule and have to push their films out even longer. So i think theres a sense especially for the Writers Guild strike going on for so long now that theyre really ready to get back to work the Screen Actors Guild they have been on strike 31, 32 days now. So thats obviously not as long. And the question is if we can get a resolution, writers and studios, how does that push the Screen Actors Guild to come to a similar compromise. Julia, thanks great to see you as always julia boorstin. Shares of discover financial sinking on news the ceo is stepping down immediately. Now be a time to buy it on the dip . We will trade discover and other moves of the day and our famous three stock lunch. Power lunch will be right back im hearing different ways for me to screen for colon cancer. Its time to use my voice, ive got a choice, more than one answer. I sat down with my doc. We had a talk. Knew just what to say. I asked for cologuard and did it my way. Cologuard is a oneofa kind way to screen for colon cancer thats effective and noninvasive. Its for people 45 plus at average risk, not high risk. False positive and negative results may occur. Ask your provider for cologuard. I did it my way its time for todays threestock lunch. First up, dr horton shares higher today in addition to other Home Builders after Warren Buffetts Berkshire Hathaway revealed its position in the stock, betting on the u. S. Housing market dr horton up 40 last year was a nasty year for the Home Builders. Today with our trades is david trainer, new constructs ceo. Whats your take on new constructs i like them, especially if the home builder is focused on the lowerpriced half of the market in dr horton youre looking at a stock with great risk reward its one of the most Profitable Companies in the market. Its priced as if profits will permanently decline by 20 were seeing really good risk reward in terms of strong macro tailwinds, strong profitability and growth the chart has been up and to the right for most of the year. Next up, discover down 10 today. Opposite direction after the Company Announced the ceo will step down effectively immediately with john owen taking over as interim ceo should we pick up this stock on sale we think this is on sale. We think the bad news is priced in here. This is probably going to be forming a relative bottom. Another super strong profitability great track record company, 10 annual growth and profits over the last decade its trading as if its profits will permanently decline by 50 . The market is already pricing this business as if business will be cut in half. We think risk reward is really good here. Theyre historically had high ratings in customer service. Underwriting is strong we think the bad news is behind them and now is a good time to buy the dip. Lastly we have the ev maker lucid group, shares down as Tesla Unveils cheaper versions of its model x and s cars at 10,000 less than the regular models they do have less range. Can lucid stand up lucid isnt trying to stand up to tesla. Theyre at the super high end of the market at 139,000 average selling price. Theyre going after teslas target market. Where tesla has made its money is in the higher end of the market and struggled more in the lower end because theres so much more competition. Lucid has never made any money this is one of our original zombie stocks. It wasnt until lucid was able to raise 3 billion from saudi arabia that we took it off the list because the likelihood of running out of money like we think zombie stocks will is pretty low when you can raise money at 3 billion a clip its a bad business, losing a lot of money let them spend the money on neymar instead of the cars thats right. Thank you we appreciate it. We only have a few minutes left, but a bunch of stories we still want to talk about its closing time when power lunch returns we only have two minutes left in the show and a bunch of stories you need to know home Builder Sentiment dropping sharply. The latest nahb survey shows sentiment dropped 6 points in august, the first decline in seven months rates for a 30year top 7. 2 its crazy to see that with a seven handle. It is the Home Builders have had a rough run in 2022, a great run over the past year here comes a wall of worry, i would say in the form of those Interest Rates amazon says its pharmacy is introducing automatic coupons on insulin and other Diabetes Care products, making many insulin brands now available for as little as 35 a month. The key is Technology Developed by amazon that automatically applies manufactured sponsored. People did get the coupons but didnt know how to use them. This automates that process and does something policy makers have wanted for a long time. I think its fabulous with so Many Americans needing this life saving drug. Apparently gen z workers feel too committed to their jobs to take a vacation a survey found 58 of gen z workers planned to take time off in the next few months 35 say they feel guilty while theyre aware from work. This has not been a guilt that i have suffered ive suffered from many forms of guilt, but the guilt over taking the vacation ive earned has not been one. Thats good thats healthy im not gen z, but i have suffered that guilt. I still take the vacation. Thanks for watching power lunch. Dont you feel guilty either thank you so much. Welcome to closing bell. Im live from the New York Stock Exchange this hour begins with this increasingly edgy market, rates edging higher, china weakness worries and an economy here at home that might be too hot for comfort. Your score card looks red. The dow dragged all day. Energy and materials weighing heavily on Performance Today nvidia about the only thing going for the nasdaq the bounceback