Power Lunch : CNBC : August 13, 2024 2:00pm-3:00pm EDT : Free Borrow & Streaming : Internet Archive (2024)

you get comfortable being uncomfortable. ♪♪ the enemy is always adapting... deepfake: hey handsome. ♪♪ [inner monologue] ...always iterating. ♪♪ ♪ t. good afternoon, everyone. welcome to "power lunch." alongside kelly evans, i'm tyler mathisen. we have a big show, including new jersey governor, phil murphy. right now stocks are higher across the board as the producer price index inflation measure there came in a little lighter than expected. signs of slowing inflation, that's good news. and we will get the cpi, the

consumer reading tomorrow. nasdaq up more than 2% right now, kelly. >> and the big corporate story of the day is the shakeup over at starbucks. the ceo is out, replaced by chipotle's brian nickel. you can see the huge reaction in starbucks shares having their best year in years of 21%, chip poet lay, going the other way. seems to be worth $20 billion in market cap. let's bring in kate rogers. >> hey, kelly and tyler. nickel is a proven leader with great track records at both chipotle and yum brands. investors clearly thrilled with the the news. he turned what was a major crisis around food safety at chipotle, amounted to a blip on the radar. never happened again after he took over in 2018. he also wisely launched rewards program and grew outdigital and drive through to great success. at taco bell, launched key new

menu items. most importantly, he talks about delighting the customer often. meaning it's worth it for them to come and spend at chipotle in this environment. it's premium does not discount and it is growing traffic right now which is an industry rarity. the stock has soared almost 800% under his leadership. now, the challenges at starbucks will be similar in some ways but different. first, its footprint, much larger and more global with more than 39,000 locations around the world. company owned and licensed. chipotle was on track to hit 7,000 on the next few years. starbucks, the china and u.s. businesses are under immense pressure from consumers fed up with higher prices, speed of service challenges and quality issues, but it is a premium well loved and respected brand with a public perception issue it's working to correct with new training for baristas, discounting and more. we'll see what nickel does there. definitely looking forward to seeing the nickel play book at starbucks, guys. >> what didn't work under the current ceo? >> there were a lot of channels,

tyler. i can't necessarily point to one thing. but i would say broadly under the umbrella, public perception is the value worth it? is it there? is it worth it for you to spend your time and money at starbucks? if orders were taking too long to come in, if products were out of stock, and also in some markets, particularly china, it was facing a lot of steep discounting. and deep discounting rather from a major competitor there undercutting it. mentioned a few times today that starbucks is a premium brand that has to also offer value in this environment. that's a really challenging dance to kind of walk. he was able to do it at chipotle. they don't discount and growing traffic. you don't see that, i so i think it remains to be seen how he can mirror that play book on a much larger scale at starbucks. the turn around plan is already under way. there will certainly be other changes to come, guys. >> thank you very much. for more on the ceo shakeups, let's bring in jeffrey sonnenfeld, cnbc contributor. jeff, welcome. good to see you.

>> tyler, good to see you. thank you. >> i think kate nailed it there. people are willing to pay a premium price for a premium experience. they seem to feel they're getting that at chipotle under nickel. they didn't seem to feel it quite the same way under narashimen at starbucks. >> i think, tyler, not only she nailed it, you nailed it with your question to her. that was a tough, friendly but hardball question you gave her at the close and she knocked it out of the park. she's exactly right, there's confusion and their image as a premier brand, but came in going for a value and trying to come out with ways of coming up with lower cost bundles. coming out with products that didn't match their image. these summer refresher berry drinks weren't the way to go. protein drinks that were not the right size. these gallon-sized vente drinks that people would like smaller

doses. but the big thing is kate said, was if you put a wrap around, there was communications, he's a very good guy. and he's used to the world of consumer products. much slower moving than the fast-pace of fast food. of casual dining. and set expectations about turn arounds that were happening on a slower, creekier schedule. he was moving into mobile, but his mobile was just for the people that are part of their pr frequent diner program, rewards program. wasn't for everybody. he was just rolling that mobile option out more widely and things were just unfortunately moving too slowly there. >> listen, there's also -- he came from pepsi, which is a culture where when you're not moving product, you discount it. you traditionally had coupons. you know, and he seems to have brought some of that ethos to starbucks. and that's not an ethos that is successful for the starbucks clientele that wants to feel more like that chipotle experience. they're walking in, going to get a great product, going to get a

really nice experience. the service is going to be excellent. it's going to be quick. i mean, this was -- he did not seem to bring what starbucks needed to be successful and this idea of discounting and using promos to drive traffic is very at odds with the culture there. >> no, that's exactly right. and kelly, i think that you covered a very important angle is this discounting, not only not consistent with the branding, it wasn't driving traffic. that was again a part of the problem. the employees weren't moving fast. you still had union -- some union issues. he -- i think accomplished great headway with the unions but still some frustrations there, some awkward positioning relative to the mid east. brian niccol knows the fast food business, not only as kate pointed out, he experienced the problems that chipotle had, of course, and food safety, but at yum brands, his boss back then, the head of yum brands, was

minimizing the food safety issue. they had e. coli and salmonella problems at taco bell. he wrote a book about it, the accidental ceo and bragged about stone walling the media. brian said, let's fix the supply chain and did the same thing, of course -- >> so let me interrupt. i want to get -- i'll tell you mine if you tell me yours. what is your single piece of advice for brian niccol as he begins this job? what does he have to concentrate on and get right? >> well, he has to not overpromise. i think right now the scale of this business is a lot smaller than what he had. you know, if you had 40,000 restaurants, roughly for starbucks around the world, here we have 3,500 mainly in the u.s. and only 100 international. as he wants to ramp up international, he has some experience there. but some of that experience was selling yum off to china, to

derisk china. are they going to do the same thing here? they're not really in -- so, some of the challenges with starbucks now in scale is he's -- it's huge. it's a lot bigger than where he was in chipotle. that will be a challenge both in scale and on international. his premium product making that the integrity of the food, the fresh ingredient. he made a marketing plan around that. his employee moral is soaring. you wonder how much higher can he go? he's approaching 70%. this is a fantastic place to work. it's quite a difference to others. so these are some issues. but he's been very good with training and operations. we shouldn't close without talking about what he's done in technology and innovation. last ceo summit, he actually showcased this incredible robot that creates these taco chips and also carves out the avocados. and the work that a lot of the

employees didn't want to do, it's expensive and they didn't enjoy it. he standardizes the product and helps him scale a lot. >> we want the robot in our homes. >> indeed. >> i'm going to give you my two theories. one is something you touched on earlier. i think they have to get the product mix better aligned with what their consumer wants. and i'm not sure it's berry-oriented energy drinks, number one. i think people are looking for coffee drinks and comfort and hot chocolates and so on and so forth. but i would say if i had one thing to say, concentrate on the store experience. the stores have to get cleaner, more efficient, faster, more welcoming, brighter. better. that's where he has to concentrate. >> that's where jim cramer hit his predecessor so hard on a surprisingly direct exchange on the show is you're exactly right. i think the speed and what was happening in the stores is really quite critical. it is a reminder, as we step

back a little bit, that tyler and kelly, we have seen this, the three of us before, that a single individual can make a huge difference. in this world of empowered work teams and self directed work groups and all the rest and group leadership is wonderful. the role symbolically and substantively are intertwined a single individual can have this huge of an impact. he has to watch out for is who is lurking in the background, howard schultz, the fourth time he's weighed in. howard schultz met with niccols last week. so this was not a surprise to somebody off the board that this was happening. a massive shareholder and of course he really built the brand, obviously. howard schultz is a genius. having somebody, as he's done to orin smith and jim donald and kevin johnson just did to the last man, is having somebody who takes their complaints public into either tweets or linkedin messaging is really not helpful.

so he's got to get howard on the same page with him. and it's a great board. but, some of the governance is coming from outside and surprisingly not the activists who i was all set to complain about. they had nothing to do with this other than raise legitimate issues. >> jeff, as always, thank you very much for your insights. we appreciate it. >> thank you. >> we'll see what happens to chipotle now. >> leaves a big hole at chipotle they have to fill. it's a tough one. >> indeed. still to come, two power players starting with new jersey governor phil murphy weighing in on the upcoming election. all this when "power lch tus.un" stay with us.

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governor tim walz and the democratic national convention in chicago is les than a week away. here to weigh in on the election, the economy, and more new jersey governor phil murphy, endorsed harris for president. he applauds the walz pick. governor, let's hear it from you directly. first time that we are hearing from you amidst this really crazy election season. what do they need to do right in order to solidify the gains that they made in the weeks that are to come, where we have the debate, it will get more policy driven, i imagine. everyone be pressing for more details what they would do in office. what do you think? >> good to be with you, kelly. first of all, more of the same. they had an extraordinary several weeks here. and they show no signs of letting up. you've got a convention next week in chicago. which if all goes well, i anticipate it will, we'll leave chicago next thursday night with a lot of wind in our sails. but they'll also have to remember, this is a marathon. three or four weeks does not

make a general election campaign. they'll have about 70 plus or minus days between chicago and election day. and they're going to have to earn it everyday. the good news is, i know them both. they are as qualified a duo as i could possibly imagine. everything from their political instincts to their life stories to their policy chops. whether it's a debate, whether it's a rally, whether it's holding up your life resume to scrutiny, we could not have a better duo leading our ticket. >> you're a governor, democratic governor, mr. walz is a democratic governor. what can you tell us about him personally maybe that we might not already know. >> hey, tyler. good to see you as well. >> good to see you. >> yeah. he's a very close friend. he succeeded me as chair of the democratic governor's association. he is the genuine -- people say this about other folks all the time. but he's almost to in a category

by himself as being one of the most genuine individuals i've ever been around. his life story, his demeanor, his ability to lead, his family story, his sense of humor, his commitment to our country. at every level, this guy is the real deal. kamala harris could not have made -- she had a number of great choices. she could not have made a better pick than tim walz. >> quite a few of them were governors, as you surely know. let me pivot to a decision i know you have to make in the next week or so, and that is a replacement for senator bob menendez who was convicted and has elected to resign. where are you in that process? when should we expect an announcement? i'm available, by the way, if you want to talk. >> me, too. >> kelly is available. >> listen. >> i love both of you. you just been added to the list. this is sooner than later. senator menendez said he's going to step down next tuesday, the 20th.

so i've got no news to make today. but this is only a matter of days at this point. and i promise folks, if nothing else, whoever it is will represent jersey values and do everything they can for that period that they're in washington representing our great state. but no news as it relates to names. but stay tuned. >> so, i don't know if this would be considered separate, related, what have you, more probably falls under the governor's jurisdiction. we're seeing more and more states and school systems look to ban or minimize cell phone usage during school hours. all of us in back to school mentality over here, would you ever consider doing the same kind of thing in new jersey? >> kelly, be open minded. we are the ultimate home rule state, as you likely know. so we have over 600 school districts. i was at an elementary school in newark, new jersey, this morning as a great example of that.

we already have districts makes making those decisions. we're in a position right now where we respect the local district decisions. we get a lot of input, especially -- not just educators and staff, but from parents and kids themselves. but we sort of right now are taking this on a case by case basis. and it depends on a number of things, including how old the kid is. as i say, input from parents and educators. so am i open minded to that? yes, i am. but so far we're sort of navigating it on a district by district basis. >> i know some parents actually want their kids to have the devices. god forbid in case of an energy or something. many, many others are hoping we -- jonathan hiet has done a lot to popularize and talk about getting technologies out of classrooms which is ironic because a lot of investments have been made to getting technology in the classrooms. i don't know about face on chrome books or that ship has sailed.

>> listen, you make very fair point. this is -- folks are trying to make this into a black and white reality. i would argue, and i think you are as well, this is much more nuanced. so we'll see. again, open minded. we know mental health challenges were already significant before the pandemic. it's now far more acute. i was the chair of the national governor's association and tackled mental health and strengthening among our youth. certainly devices are a part of that. we have to accept that reality and figure out what the best solution is. >> let's turn back quickly, if we might, governor, to local presidential politics. new jersey has been a blue state reliably in national elections. but obviously some of the governor's races have been quite close in recent years. do you think that new jersey is a safe state for the harris/walz ticket? >> i do. that does not mean that they should not take it seriously, as

i know they are. but i do. i feel quite comfortable in that assessment. again, that's different than putting your feet up and checking the box. but if they do the work they need to do -- and i know they will because they're both among other things really hard workers and they surrounded themselves with great teams -- this is going to go harris/walz in november. new jersey historically, and i suspect it will continue to, be a big fundraising state. my wife tammy and i, in fact, hosted what i believe was the last fundraiser that the bidens did in this cycle. and we have raised our hand and i know lots of our colleagues in the state will join us in doing everything we can to make sure this campaign is properly funded as well. >> governor, if you were his financial planner, tim walz, you know, what would you tell -- you know everyone -- when is the last time we had a public official who didn't own any

stocks, didn't have a 401(k)? it's one of the more fun twists of learning about his background, yeah. >> very cool. but, back in my banking days, i have a screaming buy on tim walz. i love the guy. and on kamala harris, i might add. it's just a great ticket and two great individuals who love our country. the other thing i think people have to remember, particularly in a context of a network like cnbc, this is a stark contrast between who wants volatility at the kitchen table? who wants volatility at the board room table? nobody does. you want to feel like the world is complicated enough already. you want to put the country into safe hands, hands that will respect institutions, and -- >> i take your point. but when i see what's going on geopolitically now, too, there's at least three different wars. islam -- everywhere you turn -- the volatility is also what's threatening this country's very existence. and i think that has to be

acknowledged as sort of who has the most experience and the best pair of hands to deal with that. it could end up being another presidentsy that wants to be defined by internal leadership and is going to be defined by how it responds to external events. >> yeah, no. you're making the point for me. the world is incredibly volatile. let's not add to that volatility by electing people who would make it even more uncertain. let's put this country into safe pairs of hands. >> governor murphy, as always, we appreciate your time. thank you for stopping by. phil murphy. >> thank you for having me. take care. >> you bet. and still to come, navigating the markets after last week's big drop and subsequent rebound, our trader gives her take on what to do or not do right now. the market navigator. magellen, columbus, they're next.

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than expected. that brings us right to a key technical level. let's welcome in jessica, director of investor research at stockbrokers.com. jessica, great to have you here. i know i said this before, i love the haircut. >> thank you, kelly. >> i'm trying to make a haircut reference. what's the key level that you are watching here and why? >> yeah. there's actually a couple. i like to start taking a step back, looking at more of a two to three-year chart with the spx weekly view. i'm looking at the 13, 26 and 40-weekly moving averages. represents 1, 2 and 3/4 worth of prices. that third quarter worth of prices at 5,100 was actually our support that we maintained last week. that's really great. this week, it's all about the one quarter worth of prices that 13 weekly moving average around 54.23, we're testing right this moment. i need to see that on friday in order to make that consistent. so i want to close above 54.23. the level i'm watching. >> youpt you want to close as we

move throughout the week on a weekly basis. what if we don't? >> yeah. well, then we run into an issue. that's where i like to switch to the daily view. narrow it down. really there's a gap down that happened and that's the next major area of resistance, but now it's support. we overcome that today. daily view, short-term momentum we'll see, bullish momentum that would signal. that gap-down is about 5383, to 5410. we're above that. if that's not maintained, then we'll have a downturn. my downturn is really caring about, thinking about the whole macro picture of where in this cycle we're talking about inflation and so on and so forth. the really big levels i'm watch rg the major high trends before we started into this fed rate hike cycle. that's the big, big concern. meaning if those aren't supported go to the next levels. 26 weekly, 40 weekly and if we don't stay above that higher high, then that can be a major, major issue for a downturn going

forward. lots of catalysts certainly. >> final question as we brace for what could happen to the downside. what if stocks have no problem with this and it's all in the past and we go skipping off to nice, continued gains here? >> yeah, absolutely. then we're expecting those higher highs. now, i definitely want to be cognizant of the nasdaq 100. that one is also has a much more room to go to get to that 13-weekly moving average. that is around 19275. there's moment that needs to be there. i don't see a rally without the nasdaq 100 or those mega-caps parti participating. however, the equal weight is really the gem stone i'm seeing here. the equal weight is actually leading rather than nasdaq 100, which is what we haven't seen before. it's now about the other 493 securities. the equal weight is actually finding support above that 13-weekly moving average, where as that is resistance for the mega-cap or the market cap weighted s&p 500.

that's good. as long as that's maintained, that's great. in order to see higher highs, on the market cap weighted s&p 500, i have to see higher highs on the equal weight. i want to see broader participation and see that breadth. it's there, it just needs to be maintained. >> i think you said big tech has to be part of it. doesn't have to be the leadership but part of that. really interesting. jess, good things. good to see you. there she goes. coming up, regional banks seem to always be a point of worry for investors. whether it's the impact from commercial real estate, rates, the overall economy, the kre, regional banking is holding strong over the past month. we'll check in with the ceo of valley bank when we return. ameritrade is now part of schwab. bringing you an elevated experience, tailor-made for trader minds. ♪♪ go deeper with thinkorswim: our award-wining trading platforms

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bring on the good stuff. welcome back to "power lunch." stocks are higher right now and yields are slightly lower. 385 on the 10-year, the 2-year at 394 or so after this morning's ppi data showed an increase of only a tenth on the headline. the core was flat.

tomorrow we get the data on consumer prices to see if this downdraft continues. all right. shares of new york community bank continuing their comeback from a sharp drop earlier this year. today, the stock is higher, six months it is down 25%. but today higher by 9%. as three investors exchange their preferred stock for common. shares of valley national bank have lost a quarter of their value this year, but have bounced back from lows earlier this summer, so what's ahead for regional banks as the economy may slow? and we expect to be heading into a lower interest rate environment. let's bring in valley bank ceo ira robins for one of his periodic visits. good to see you as always, ira. the stock market seems to be not in love right now. but that's the stock markets problem. maybe more than it is yours. walk me through the net interest income and margin numbers. why don't i just begin by nerding out and letting you do that.

>> yeah, great way to start. from a banking industry, it's the driver of all of our revenue. valley, 80% of the our revenue come from the net interest income. really it's effectively what we charge on our loans and paid back to our depositors. when we're in an inverted ed cus that's a real challenge for the banking industry. valley we saw significant decline in our net interest income and net interest margin throughout the inversion. but we actually seen inflection point for the last two quarters. the margins actually began to move up and increase, which is a real positive for us. not just for valley but for the entire industry. >> and if interest rates go lower as many people expect they will starting in september, or maybe already have, how much will that be helpful to you? >> huge tail wind for the entire industry, specifically for valley. when rates began to move, it wasn't just the inversion that created the pressure. we saw a lot of our depositors

money introtreasury products. some of the pressure we have seen where the depositors moved into some of the interest-bearing accounts dissipates and the margin then expands based on that as well. >> although, ira, i'm one of those people who have moved funds to shotgun more interest bearing. i'm not going to move it back. i'll still take upper 4s or 3s or take 2s instead of 0. i'll shift things around. i don't know if that's unwinding. >> yes. i don't think that's going to unwind to the massive degree. but it's the change and the shift that's going to slow down. up until the last quarter, we really continue to see a lot of people moving from non-interest bearing into some of the higher yielding accounts. that really stabilized and stopped. the fact that's not moving anymore and creating downward pressure on the margin is a tail wind just in itself. >> tell us about where you are

growing your loan business and where your loan business may be contracting. >> we're not going commercial real estate. that's probably evident. we see growth in the cni. we have been focussed on building our n-cni business for many years at valley. compound annual growth of 10% the last two to three years just in the cni business. the last quarter we grew 16% in the cni business. our belief is some of the portfolio begins to contract will be offset by cni. >> commercial and industrial? >> exactly. >> which of those two is growing faster, the c or the i? >> the c is growing more for us which is a positive. they come with deposits as well. from a relationship perspective, it's a more valued asset. that said, historically, c & i has a higher loss rate than what commercial real estate is.

that goes back to the unknowns when we think of the commercial real estate. there's this perspective that every single commercial real estate loan is exactly the same. it performs equally across geography and asset class. we have known from being in the business for almost 100 years that's not the case. you know, office loans are obviously performing poorly today. but you look at other asset classes, whether it be industrial, warehouse, retail and those are still doing really, really well. we look at different geographies, rents stabilized in new york city and that's a real challenge. look at multi-family and many other geographies, they're really doing well. we need to not look at the asset class and totality and say everything performs the exact same and really break it down into the individual buckets. >> all right. ie rarks thank you very much. as always, we appreciate your periodic visits and look forward to the next one. >> thank you. >> ira robins of valley. let's get to contessa brewer for the news update. the u.s. did not engage in any part of ukraine's surprising incursion into russian territory

last week. a spokesperson says the u.s. is focussed on supporting ukraine's mission in defending itself. ukraine claims its forces are holding the nearly 400 square miles of territory in the border region of kursk. >> earn es toe is 175 miles from pur puerto rico. it's the fifth named storm of what's expected to be a busy atlantic hurricane season. former representative george santos trial on fraud charges is moving forward. with jury selection scheduled to begin september 9th. that should last about a week, according to the judge presiding over the case. santos was expelled from congress last year following an ethics investigation. he's charged with conspiracy to commit offenses against the united states, wire fraud and aggravated identity theft. he's pled not guilty. kelly, i'll send it back to you.

>> thank you very much. still to come, we'll get the trade on two key headline movers of the day with starbucks up 22% and chipotle down 7. details when we return. why do couples choose a sleep number smart bed? can it keep me warm when i'm cold? wait, no, i'm always hot. sleep number does that. during our biggest sale of the year, save 50% on the sleep number limited edition smart bed and free delivery when you add any base.

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♪ time for today's three stock lunch. three big movers to talk about today. up for the challenge, will mcgood enough, director of investors at prime capital investor advisers. will, thank you for joining us. let's start with home depot which reported earnings, warns of sales and profit decline on weaker consumer spending, but the shares are positive. they initially dropped after the results, but higher as well after that softer ppi data, up nearly 2%. is the worst behind us for home depot? are you a buyer here? >> hey, kelly, hey, tyler. thanks for having me on. the ppi data came out with cautious and tepid outlook on guidance. i think they're a fed trade here. looking to see where rates go. rates go down, mortgage rates go down, maybe a boon towards housing. people may start spending more on renovations and investments in their house.

so i think home depot is just a good proxy for a rate trade here. >> well, let's move on a little bit to a stock we haven't mentioned at all this hour, and that would be starbucks. shares continuing to climb like a caffeinated ant this hour. it's a company announcing it has replaced its ceo with brian niccol, effective immediately. shares are up more than 20% today. your take here. >> yeah. you got to be under a rock today in the financial world to have not heard about this news. $25 billion cap swing between chipotle and starbucks on the management team news. just goes to show you the value of people or what the market perceives the value of a good management team to be. i'm actually a seller here. starbucks has been kind of dead money for the past five years. big range. it's traded in. going to kind of wait and see how niccol does. if we get to the top of the range, the 22, 22 highs for starbucks, becomes a little more interesting. but, to me, the range for the last five years, synonymous with

the bloat of the company. loyal fan base, lots of stores and take a wait and see approach here, but i sell the news today and wait for better opportunity to get in. >> all right. very interesting indeed. that brings us to chipotle, the news of the ceo shakeup causing those shares to tumble, down 9%, losing niccol. what would you do here? >> yeah. so i don't know if you can guess or not, i'm going to take the other side of this trade from what's going on today and actually be a buyer. i think chipotle is a good opportunity here. you have to think that the management team learned from niccol and will be equally as good. i'll give them the benefit of the doubt. it's been about 30% off the highs. rallying back. so it looks very interesting to me here. the only concern i have is are we at the peak burrito boom. cava small cap stock in the space. so, until you start to see some

change at the long-term trend, i would be accumulating shares and taking advantage of the dip here as an opportunity to accumulate even more. >> all right. he's loading up like a caffeinated ant was the phrase of that whole segment. will, thank you very much. we appreciate it. >> thanks for having me. for the past year following the emergence of ai, software has been the key focus for companies like google. but what is their hardware strategy as they look to implement this new technology? we will find out next in a very important interview. we'll be right back.

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company's made by google event along with the company senior vp for hardware. dee, it's all yours. >> reporter: tyler, thank you. that's right. rick, thank you so much. straight from the stage to our little studio here on google campus. tell me, what should we take away from this? what do we get today in what do we get in terms of gemini and google ai appl applications that we haven't seen before? >> thanks for having me, deidre. this was two really big things. first, we talk all about gemini and how we're trying to get it across our whole mobile ecosystem. the helpfulness. the other part was around announcing our new pixel lineup of phones. >> leaving pixels aside, you said at the top of the keynote, it's all about ai. >> that's right. >> what did we get that was different? how was it different than a few months ago? how should we think about these different ai offerings? >> at i.o. we announced project

astro, today we're talking about things that are going to ship in the next few weeks. we gave live demos of a lot of capabilities. we showed gemini live with people on stage. it's amazing. a new capability that allows you to have a true conversation with ai. it's awesome if you want to brainstorm something, if you want to learn something new and have someone you can talk with. the it's a great capability. >> first to market is an important point. to have it on device you are going to be ahead of apple in terms of that. let's talk about pickles. they make up less than 5% of the smartphone market globally. where does that need to be two years, five years from now to justify its existence? >> i think if you look at the global market there are so many billions of phones out there. if you narrow into the focus where pixel is shipping and the

market segment that we primarily operate in, which is premium, it's bigger than it appears. if you look at markets like japan, the u.k., places we've been, we're usually the number two or three player in those markets in terms of premium smartphone market share. >> do the rising capex costs for ai, has that changed the calculus for pixel? you may be the number two or three but globally small? >> certainly pixel is small. we have a huge reit with android. we go to market with all of our capabilities to blgs of people using android. that's why we're investing so much in our ai infrastructure. we have to serve all of the people using our apps and services. we have over six products who have 2 billion or more a month users. android side we have phones everywhere. we need to make sure our ai are

brought everywhere. >> they're available now. some are available to subscribing users in many cases. does this ultimately roll out to all android users, to all the different models in that universe? >> some of the advanced capabilities we showed, like gemini live and forthcoming research capabilities, those will be available for people on the advanced ai premium subscription and everything else is being available for anyone that uses android. >> and in the coming weeks, right? >> that's right. >> rick, thank you for being with us. >> you're welcome. thanks for having me, deidre. >> thank you both for joining us as we continue to tiptoe into this new world blessed by these ai inventions. you can always hear "power lunch" on the podcast. if you miss any of the show on tv, you can follow and listen on any platform you use and we'll be right back. power e*trade's easy-to-use tools, like dynamic charting and risk-reward analysis, help make trading feel effortless.

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what a day it is in the markets. look at the dow up 370 points. that's about .9 of 1%. nasdaq is up more than 2%. it is up 388 points at 17,171. nvidia up more than 6% continuing its snap back. it's up more than 10% this week and it's only tuesday. other hard-hit chips including super micro and intel are moving higher. energy the only sector lower today. oil peeked above $80 a barrel. west texas earlier today and yesterday has dipped back a little bit. >> the energy sector down a little bit now. a couple more minutes left in the show. elon musk's controversial interview with donald trump. didn't go off without a hitch. it took almost an hour plus going. musk said the delay were the

result of cyber attacks. there were 1.3 million listeners. they applauded the practice of firing employees who threaten to strike. i think it was the teamsters at the rnc. labor is finding itself -- >> little bit divine. universal music announcing an expanded agreement with meta platforms. the agreement covers all of meta's major platforms, facebook, instagram, messenger, and for the first time, whatsapp. the company, whatsapp with that? the company recently renewed its license with tiktok as well. that's universal did. remember last month umg's stock took a 23% decline in a single day after reporting weak streaming revenue. >> very big deal this one. they highlighted the whatsapp with that one. private message usages.

it covers all of the major platforms. so meanwhile, mcdonald's is throwing its weight in local elections. they have increased spending to lobby local and state officials to boost fast food wages for those efforts that they are undertaking, i should say. since the beginning of 2023 the fast food chain has given around $2 million to candidates' political campaigns. mcdonald's operators formed the california alliance of family-owned businesses pac. >> i have no idea what the effect is going to be, what the likelihood is going to be of this proposal that originated with former president trump to not tax tips. >> right. >> kamala harris has apparently bought into that idea. will workers at mcdonald's now say, hey, we'd rather get tip money than wage money? >> of course you respond to incentives that way. there are two aspects of it. there's the payroll tax and income tax. >> right. >> presumably a lot of this

income was not reported, might have skipped it that way. could there be something on the payroll front to skip that, too, to try and incentive advise that. >> yeah. what kind of hole does it blow in the payroll tax? what kind of hole does it blow into the budget? >> a lot of workers where there's tipping, restaurants make so little annual income that they wouldn't qualify. >> got to leave it there. thanks for watching ""power lunch."" >> welcome to "closing bell." i'm scott wapner. this make or break hour begins with the rebound in stocks which have gotten all of last monday's losses back and then some. it's been a remarkable turn around led by tech which has some wondering whether that trade is back now as well, along with the markets at large. we're going to ask our experts over the final stretch. let's check out the scorecard with 60 minutes in regulation. it's a strong day today. the nasdaq leading by 2 1/3%. s&p good for

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