♪ explore endless design possibilities. to find your personal style. endless hardie® siding colors. textures and styles. it's possible. with james hardie™. ♪ good afternoon, everyone. welcome to "power lunch." alongside kelly evans, i'm tyler mathis. d.c. drama continuing as the house remains in limbo. a vote for speaker ending a short time ago with jim jordan, a republican nominee, failing to get enough votes. and not by a little. meantime, president biden heads to israel for a high-stakes trip. plus, markets reacting to a stronger than expected retail sales number.

can the consumer hold up the economy? or will a strong economy give the fed cause to raise rates one more time? kelly? >> that is the question. let's get a check on markets, tyler. because we changed direction once again. perhaps because of that concern about another fed hike now. the dow is down 77. the s&p 11 both quarter percent drops. the nasdaq down under more pressure down half a percent. is it rates or the fact that the chips have been one of the weakest trades today. share of nvidia falling after the u.s. puts new trade restrictions on chips exported to china. it's specifically targets some of nvidia's most cutting edge products. those shares down 5% today. more on that in just a moment. and activists are getting more active. engaged capital built a stake in the company up 13%. down 33% for the year. wyndham hotels says it's rejecting a takeover offer from choice hotels. wyndham saying the deal involved significant business risks a nond in the best interest of

shareholders. wyndham shares up 8% while choice is down 5%. ohio's jim jordan fails to get enough votes to become the next speaker of the house. emily wilkins is live in washington covering it all for us second by second. emily? >> reporter: round one is done. jim jordan has 20 republicans who decided to vote for someone other than him. that is a far cry. really jordan can only afford to lose four republicans if he wants to be able to win the gavel. he still has a good bit of work to do. right now the house is in recess. they haven't yet called for a potential second vote yet on speaker, but a lot of concern seems to be coming for more moderate republicans. these are republicans, many of them, who either flipped seats and helped the republicans get their current majority. a lot to need to appeal to independents and a lot worry they'll struggle to do that with jordan in the speaker's chair.

he helped form the freedom caucus and pushed back against certifying the to 20 election for biden. for those 20 members who voted against, this really reminds a lot of folks of what happened in january with mccarthy when he had to go 15 rounds. that's absolutely something that republicans don't want to do right now. they want to be unified. they want to show they're all working together. and so now it's a question of whether jordan is able to get more support on a potential second or third ballot. and if not, if that means that either, a, another republican is going to step up and try and get 217, or b, republicans could start looking more seriously at getting powers to speaker pro tem patrick mchenry and allow him to be pass legislation, things like aid to israel, potential stopgap measure for funding the government, both of those things are expected to come up in the next month. and republicans really cannot go on too much longer without a speaker. >> if representative jordan fails to peel away enough -- he

seems to be peeling one by one, a number of votes or has in recent days. people who said on friday they were in con troe vert bli opposed to his candidacy, flipped over to support him. if he's not able to do it what about patrick mchenry? why doesn't he step up? he seems to be, at least, semiacceptable to most of the caucus? >> reporter: tyler, i think there's a sense that republicans they want to elect a speaker. they don't want to give powers to a temporary speaker. they want to actually put forward a candidate, be able to unite behind them. but you're absolutely right. there is discussion, i think growing discussion, about potentially giving patrick mchenry some longer-term powers just to be able to move some legislation. i've heard about 60 days, 09 days about giving him these powers for a temporary amount of time. but i think at this point we're a little off from that. i think the sentiment is that they want to see if jordan can get more members to flip. we've already heard from a

couple members who say, hey, the way i voted on the first ballot won't be the way i vote on the second ballot. you could see those numbers shift. i think just a lot of unanswered questions in d.c. right now and we'll definitely keep you informed when we have that second vote for speaker. >> sounds like sorting hat at hogwarts. emily, thank you very much. appreciate it. for more on the let's call it chaos in congress, and what happens next in the house speaker race, if there is no resolution today or over the next couple days, let's bring in kim wallace, head of washington policy at 22v research and brian schwartz. kim, let me start with you. i guess what stands out to me here is that this deliberative body is being ruled by what i would call the tyranny of the minority. it took place in january. and it is taking place again now. am i right or wrong? >> oh, tyler, i think you're right. i think the simple math proves

it out both in january and just half hour ago. this has been a building condition in the house of representatives republican conference, not just this year but i would say over the last four or five years. what's at stake in the eyes of many members is ideological control of the party via the house conference that's in the majority, not so much about fiscal policy or any other policy debates. >> how about that, brian? that's a very interesting point that this is all about ideological control more than it's about policy. >> that might be true, but it's still very much controlling the policy that is not getting done in congress. that's all accurate. but there's a pivot to this where every minute -- >> ideology is policy. >> every minute, every hour and everyday that this isn't solved, they don't pick a speaker, another minute and hour and day that israel, for instance, doesn't see any congressional aid passed and given down to them as they fight hamas. every minute this passes we

don't get things done with the budget to determine what cr will be be about spending bills or a spending bill. it's a problem. this lack of a decision of who will be the next speaker, whether it's jim jordan or somebody else, has really kneecaped washington and congress in particular. it's a problem. and it's a problem for policy in particular and in ideology at this point is true. >> kim, i tend to be circumspect about these things and think does it reflect the divide of the country. in other words, we elected a split congress. this is more split than ever. there's gridlock because people are split on what exactly needs to get done. it sounds like israel might be one of the few things that they can move forward on even with, for instance, mchenry in the leadership. >> kelly, i think that's right. and back to brian's point the request for supplemental war spending is going to come from the president. my suspicion is it comes after he returns from israel.

that gives the house four, maybe five days to figure out the speakership question. after that, you're going to have a joining of geopolitics and u.s. domestic politics in a way that becomes really the main story interestingly in a world full of macro risks. >> just dwell on that, kim, for one more second. does that extend beyond israel? ukraine aid was one of the main sticking points amongst the gop? >> yes, it does. that's why i said war spending and not just spending for israel. there is still in the minds of a lot of members on both sides of the aisle in congress and house and senate that the next supplemental comes through will carry money for israel and money for ukraine. working through that, for example, to split the vote for ukraine and israel, will take monumental legislative effort, the kinds of which we haven't seen on display in the house this year. >> brian, let's talk about the

president's trip to israel. i can see why he's doing it. are there risks? >> i mean, i think there's some risks in the context of maybe he's not directly in washington some of this chaos goes through. i think at the end of the day he's really been hammering home the need for the u.s. to be allied with israel. and i think that's really given him a boost and even some republican circles. and he has needed some form of a boost in the public polling. he's been struggling to get in some public polls versus donald trump, the republican front-runner right now. so, i think it's -- the trip is a boost to biden especially as congress in the house is fighting over who will be the next speaker. there's the president going forward -- >> functioning while congress is not. >> that's correct. through his administration. and meanwhile in the senate they're waiting to figure out what's going to happen with the house on a variety of points and policy initiatives. while the president and the administration are running through the gauntlet, go to israel and put a face, good face on for the administration.

>> you know, just want to point out that there's also implications for some of the biggest stocks in the market. some of the big tech stocks in particular if it's jordan or mchenry. in other words, not a strong majority leader in congress right now. >> yeah, you're right. gridlock sometimes can be helpful for the markets. investors can say this could be good. might not receive much regulation on companies and stocks. we reported yesterday that big tech may see reprieve from anti-trust if jim jordan becomes speaker. you can see some wiggle room in the markets in terms of things getting done right now particularly through the house. things are at a standstill at the moment. one other point i wanted to make, i was talking about the next round of voting for the speakership for jim jordan. you know, i don't think it's going to get much easier for him. the person i spoke to has been in the room trying to cobble together votes that says this is going two the next round, an uphill battle. the exact words for him to come on to get enough votes to become

speaker in the next round. >> he is for sure a polarizing person, not only in washington but in his own conference. >> that's right. he co-founded the house freedom caucus which is the most conservative element of the republican party, especially within the house. they have not been known to play ball with much of the rest of their party. so, that's where he's been coming from from all these years now a tricky spot to be the guy that will unite the conference as the house speak. >> we have to leave it there. kim wallace, thank you for being with us. brian schwartz, great to see you. another activist firm taking a stake in a company and pushing for changes. julia boorstin has the details in this market flash. hi, julia. >> hi. well, the market flash here is for frontier communications. that stock jumping on news that activist investment firm january that partners built a new position in this telecom company and calling for this provider to sell itself. the stock is up 2%, up as much

as 6% earlier. the news was announced today by the manager partner scott osfeld at the active passive investor summit today saying this is a depressed valuation and an attractive asset for wireless carriers and private equity owned assets in the sector as well as for infrastructure and private equity funds. that is the argument here. just for context here, this is frontier communications is the third largest fiber broadband provider in the u.s. shares now up 3%. back over to you. >> wow. so much activity all of a sudden. julia, thank you very much. back to the geopolitical space, the u.s. government tightens restrictions on what chips u.s. companies can export to china. it's having a big name -- big impact on nvidia. let's get to the nasdaq for more. shares are still down 5%. >> yeah, they are. but they've come back from earlier lows. let's talk about the commerce department. they want to cut back on china's ability to access ai chips.

the restrictions put in place last year weren't cutting it today they're expanding those controls to include even more advanced computing chips, close any loopholes through third party countries. companies that want to export ai chips to china and other em embargoed regions they have to notify the u.s. government before doing so. additional chip equipment will be restricted could impact names like kla and applied materials. kla down 2%. but the big news, a lot of people are focussing on today, nvidia. nvidia a-800 and h-800 ak row anymores for chips are now restricted. the stock, as you can see on your screen right now, making somewhat of a comeback from earlier lows. the stock is still down almost 5%. and the reason that comeback is because of a statement they issued saying they don't expect a near-term meaningful impact on their financial results. piper sandler agrees.

saying the impact is insignificant and zmand has primarily come from the united states. but it's important to keep in mind nvidia gets about to 20% of its data center from china. ma sue hoe flagged potential for 6% drag on nvidia's full year if we assume that at least 3.5 billion in ai sales go to china. equipment maker, they admitted the measures would hit, quote, our system sales in medium to long-term. there's that time frame that is a concern for a lot of investors. it's not just nvidia, intel makes china-only chips and a & d working with chinese hyperscalers. both at risk. weren't named specifically by the senior officials on the call, but they are at risk. that's why you're seeing their share price, for example, intel down 2%. ai chip exposure to china remains lower than nvidia. positive for those names. >> all right for now. christina, we appreciate it. again, those putting pressure on

the nasdaq today. coming up, the cloud was a centerpiece of big tech over the last decade. now ai could be ushering in a new era and an evolution into cloud 2.0. which companies will dominate? plus the consumer getting more and more complex every time we hear sign os f a crack, they're immediately sealed despite growing unrtnt rceaiy,etail sales coming up strong this morning. we have more when "power lunch" returns. this is american infrastructure. megawatts of power, rails and open road,

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welcome back to "power lunch." reports of another deal in the energy space. take a look at reuters reporting that chesapeake has explored buying southwestern energy whose shares are up 6% now. if the two companies merged, they would take over eqt as the largest nat gas focussed exploration company in the u.s. eqt coming off a nice year, its shares are up about 31%. chesapeake down . 5% on the news. hotter than expected retail sales data is pushing treasury higher, ten year back to the heist since the early october high. joining us now to talk about the fallout of that, let's bring in ubs head of asset allegation americas and michael farr cnbc contributor. welcome to both of you. jason, asset allocation is usually kind of a ho-hum business, you know maybe it's 61-39 instead of 60-40. but not these days. people are coming out with different ways they think

investors should position for this high-rate environment. where is your head at? >> we definitely have to reassess asset allocation. you think about the markets this year, we oscillated a lot with range trading and equities and treasuries a and soft landing. because things are moving so quickly, really taking a long-term strategy, you don't want to overreact any of this information. still have that standard core allocation of equity fixed income and alternate asset classes is still the right way to go. you don't want to overreact to this information. >> when you hear people who say the 60/40 portfolio is dead, you have to be 25, 25, 25 and include kcommodities or real assets or make the case for getting into private credit now which is interesting or howard marx says go all in on high yield, including with the defaults that he foresees. do you think all of that is an overreaction then? >> well, if we take the 60/40,

what works so well for many years is that bonds were fantastic asset class. high returns, low volatility and diversified with equities, a negative correlation. environment where elevation shocks, that negative correlation may not persist. so really what you need is other asset classes that can help diversify some of the equity exposure. we like different asset classes because these are long-term allocations, also not something you want to be too tactical on, we like it now versus other times. it's about building the long-term allocation. as you think about that, the macro environment is requiring us to think, we have to add different things to the portfolio. what worked before won't work in the macro environment going forward. >> michael, if i asked you a year, 16 months ago the following question, if interest rates on a 10-year note were at 4.86, pressing 5, would you ever have believed that stocks would be where they are at 4,400 or thereabouts? >> oh, no, tyler. no way.

and we would have yet one more example of far being wrong over the past 20 some odd years on cnbc. i've gotten some things right. you know, i think it's an important question because your expectations, right, go to kelly's previous conversation about asset allocation. your expectations where you think things are going to go can't matter. can't matter. it has to be really what your discipline tells you. and there are two guidelines for asset allocation. you can have one for a not for profit for instance and then you have fred and ethel in their 60s and we have to think about them for the long-term. so, the 60/40, you don't change that asset allocation just because one asset class does well or not. you build that because it's what fred and ethel need or it's what the institution needs and it's sticking with those disciplines over time because you can be so profoundly wrong about things like this that will protect you over the long term. >> let's get to the meat of the

matter here and that, michael, would be the kinds of stocks, feel free to name names, feel free to name sectors, that you think in the current environment have an edge. >> okay. i'm going to qualify one more time, tyler. short-term edge or long-term edge? if you're looking for a short-term edge you go with the big 7 and just buy them and pray the momentum continues. if you're looking as a more disciplined investor, long-term invest, then i think you look at the things that have gotten beaten up, really gotten killed that are down 20 and 30%. and i think you -- >> what are these, real estate, utilities what? >> well, i wouldn't go -- i don't think you have to go there. i think, for instance, you can look at disney, you can look at medtronic. any number of different industries whether it's health care. all of the consumer stocks have gotten killed. but i think that there are still value there. you're not going to see the pop,

i don't think, by the end of the fourth quarter. but, a few years from now to buy stocks with those kind of balance sheets, 30 and 40% off of their highs, i think you're happy there. >> jason, a parting comment. do you think this move in rates is behind us now? >> i think we're at a chop around in rates at these kind of levels until there's some conviction in the marketplace that growth is actually slowing. retail sales like we did today, that won't give confidence in that view. but also the fed will signal we're probably done. this may start to materialize at the november 1st. october data looks like it's slowing down that will provide some sort of reason for rates to go lower. we need to see signs of the economy slowing down for investors to want to step in and buy at these levels not fearful that rates will go much higher than they already are. >> absolutely. jason, thanks so much. jason dreho and michael farr we'll see you in a bit. further ahead, details around the largest government bitcoin seizure totaling more than $3 billion.

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retail sales mark. let's go to rick santelli in chicago for more. hey, rick. >> hi, tyler. indeed. it wasn't only the september reads that were much warmer than expected, positive revisions all along the data points for august as well. and if you look at the charts with a 2-year and 10-year on top of each other, you can clearly see once the 2-year saw those warm data points for the consumer, it was basically a 45 degree line up. why? well, potentially, as kelly has been talking about, maybe many are looking for the fed to be more active. that isn't personally my call. i think the market is most active all by itself. now, this is definitely something to pay attention to from a global standpoint. so, let's look at debt and global rates all moving up together. u.s., debt to gdp roughly 120%.

uk about 100%. this chart going back to august. look at both of those rate. now, let's pair 10s up with boons. the euro zone about 90% debt to gdp. now let's pair it off against jgb 224% debt to gdp. many pointing out, japan in many ways is going to end up ultimately allowing the market to breathe on interest rates. when that happens and everything is fungible globally, that could be a real catalyst for even higher rates. so we want to pay attention here. by the way, two years are now on pace for a new fresh high yield close going back to '06. so are 10s back to '07. 30 years 498 or higher. they're a little shy. tyler, kelly, back to you. >> thank you, rick. we appreciate it. rick santelli. now over to contessa brewer for a cnbc news update.

a senior hamas official told nbc news the group is willing to release all hostages in one hour if israel stops its bombing of gaza. the group is said to be holding as many as 200 civilians and just the past couple hours gaza officials said between 200 and 300 people were killed in strikes at a hospital. and u.n. officials said six were killed at a school serving as a shelter and gaza refugee camp. new mexico prosecutors may recharge actor alec baldwin with involuntary manslaughter in connection to the deadly 2021 shooting on the set of the film "rust." two sources familiar with the matter tell nbc news the case will go before a grand jury in mid november. authorities say the film's cinematographer died when his prop gunfired a live round of ammunition. casino workers walked off the job today in detroit. some 3,700 people including

dealers, valets and food and beverage staff are represented by five different unions including the uaw. they're asking for better pay and benefits after they accepted a modest 3% pay increase in the last contract in 2020 to help the casinos stay afloat during the covid-19 pandemic. and of course, the casinos in las vegas facing a threatened strike of their own. it's been authorized, kelly, but has not yet been called. >> wow. contessa, thank you very much. contessa brewer. still to come on "power lunch," with the emergence of the cloud, amazon dominated the early space. now ai is ushering in something new. cloud 2.0. has amazon already fallen behind? and if so, who's the leader? we'll discuss that next. ever since she was a little ki, all maría wanted to do was bak. i'm maría alvarez, owner of maría's cakes. and i'm axel, proud to be her state farm agent. her baking superpowers have brought

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ai, companies need the cloud to do even more, to create the text, the images, the videos. it's become famous for requiring massive computing powers and in this race for the so-called cloud 2.0, amazon still have the upper hand? joining us now to discuss hakeem, co-founder and ceo of builder.ai and daniel newman is ceo and principal at the full trom group. daniel, let me begin with you. is amazon faltering in cloud 2.0? and is someone catching up with them? >> tyler, i think there's a couple different ways of looking at this. when the llm craze took place, micro soft got out to a head start and google had an initial launch and it faltered a little bit and everyone deem nad microsoft would be the ultimate winner and google was in big trouble. matter of just a few months later we saw google get its groove back in the llm game.

i think we have some of that here with the nvidia aws race. nvidia has a big advantage on the developer side. but aws has a massive advantage in terms of data under management, number of enterprises depending on its workloads, already building on it. i don't necessarily seeing them fall off. i think weir seeing signs of competition make the next wave of innovation more interesting. >> he mentioned cuda. i need you to explain what cuda is for those who don't know and what advantage it confers on nvidia. and whether nvidia, which to my thinking is mostly a chip company, can make the pivot or has made the pivot into the kind ofstorage neighborhood that the cloud requires. i should point outthat amazon was a retailer that made the pivot into storage. and microsoft was a software

company that made the pivot into the cloud. >> so you know, i think obviously starting with the initial question, c uda is an architecture device. different way of building gpu. and gpu is what a lot of the generative technology is running on these days. you obviously have different sort of structures. nvidia has cuda cool toole kits around for a while so developers can build upon it. taking a step back, when you think about the world of ai and what's happening on the generative side and ai more broadly, you have to look at it as an iceberg. what we're seeing on the ai is up thor end of the iceberg. what's underneath is more than gpu compute. you have the connectivity between machines. you have data storage. you have normal sort of density of compute capabilities. and the 2.0 world, whilest the additional features around gpu

and do generative ai is important, what's also really important is to recognize that these hyperscalers have sort of really strong, critical mass of distributive compute globally, all the storage, all the connectivity that allows them to do more than just a generative piece. and they'll always go hand in hand. >> it's interesting because as tyler was saying, the companies that came to the rise of the cloud kind of did so backwards or by accident or then hurrying to catch up. a lot of people think startups i ask you because you have sort of one of them, but they can't really try to own cloud 2.0 even if they see the opportunity because the incumbents are simply too big, too aquiztive, to innovative, if you will and can too easily maintain their leadership instead of creding t new players. amazon came into cloud or

aws because of amazon..com volume of usage of compute. effectively amazon.com consumption in itself fortified the need for large scale infrastructure and same thing with microsoft and same thing with google. then to allow excess capacity -- what started off as excess capacity to be sold made sense. new folks coming in to build that volume of demand, and then the distributive infrastructure you need for cloud to be really prevalent globally, it's not a short order. and you know, it's a really expensive exercise. and, i know nvidia has its own sort of cloud environment, specifically designed for the upper end enterprise. i think it's hard to make that comparison is it ahead or behind of aws because ultimately nvidia is a chip manufacturer. it doesn't have critical massive cloud infrastructure. it's opening cloud

infrastructure for specialized use cases. that's a very different route to how the others got into the space. >> it's interesting. you kind of went at the question i asked there earlier about nvidia as a chip manufacturer that's moving into something else. so daniel, if i have $100,000 to invest here in cloud 2.0, how would you sliver it up as among the companies we have been talking about or others? >> yeah. so if i was an investor, i would be looking at where the market is going. i think nvidia got a little ahead of itself. i wrote an op-ed over three years ago that said nvidia would be the next trillion dollars market company. our intelligence is saying f 0% of the 2027 revenue opportunity for ai is going to be in the cloud. the companies that haven't benefitted as much but are still big and exciting names that people can get behind, investors, both large investors and personal investors, names like microsoft and google look

very strong. i also like the application layer because businesses running oracle, sap, salesforce, they have to implement generative capabilities into these apps at a low cost. this will drive productivity and efficiency into the business. so, i feel like the chip maker got the early credit especially nvidia. and the only other thing i would say is that i don't rule out amd and intel. they're making the big investments. they're going to come in late, but they're going to be able to take advantage of the margin compression. they'll be able to take advantage of a certain part of the market that maybe didn't get the attention from nvidia and they're building some really interesting technology that i've been able to see that i think is going to be exciting to the market in the near future. >> very interesting conversation. thank you very much. thank you as well. really helpful and i think you helped viewers there understand this new field better than perhaps they did before. thanks again, guys. >> thank you so much. and coming up, we'll get a preview of the new cnbc

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back. welcome back. for nearly a decade it was one

of the biggest mysteries in crypto. 50,000 bitcoins stolen from a site on the dark web which would one day be worth more than $3 billion. the case went unsolved until the man behind the crime made a critical error. now a new cnbc documentary provides a look into one of the biggest heists in history. eamon javers has the story. >> immy, how do you feel after this? do you feel like the judge was fair today? why did you steal the money, jimmy? ♪ >> reporter: a spectacular crime. >> this is going to be a huge case and there's a lot more money that we don't know about. >> reporter: in a small town. >> shocked. i was shocked. i was so surprised. >> reporter: a 28-year-old secret bitcoin billionaire. his private jets, wild parties and dark secret. >> just surreal feeling and jimmy there were no limits. >> reporter: this is the story of one of the biggest crypto heists of all time. >> he's living this party monster lifestyle, and with no visible means of support. >> right. >> reporter: with clues dating

back to the earliest days of bitcoin itself. in a story that reveals a dark truth about the hackers and coders who created crypto currency in the first place. huge amount of bitcoin is leaking out of the system and you have no idea where it's going. >> it's a huge question. >> reporter: and the man who could have gotten away with it, except for one phone call that led to an abrupt end to a nearly decade long manhunt. >> clark county 911. what is your name sir w. it's jimmy zhong, z-h-o-n-g. >> that's just a sneak peek in this documentary irs criminal investigation the agency that investigated the case takes us behind the scenes and shows us how they cracked the mystery here. we also get a detailed look into their interactions with zhong and a look into his bizarre life. you can check it all out on cnbc.com or look at the qr code in the right hand corner of your screen, you can scan that and get the link directly to the

documentary now, kelly. >> very good tease. now i -- >> i want to know what happened on that phone call. >> me, too. >> we're going to find a way -- >> i have to watch. >> you have to watch it. >> what drew you to the story in the first place sfl. >> classic tale of unpeeling the onion. the more we dove into it, the more we found all these intriguing little bits and pieces about how this story came together. it starts with that 911 call. this is in athens, georgia. a college town, not known for big-time crime and yet sitting right there in that bungalow off campus was a guy who had stolen $3 billion in crypto currency. a fascinating story how he thought it would change his life and in the end, it really didn't change his life the way he expected necessarily. our producer on this spent months and months on it and really did fine work in uncovering the exclusive body cam video and other details that really had never been seen

before. >> can you tell us where he is now? >> he is in prison now. he was sentenced to a year and a day. not to give away too many spoilers, but jimmy zhong started making that 911 call because somebody had stolen from him. but in the documentary, we reveal that those were stolen assets themselves. he was sitting on allegedly $3 billion worth of stolen crypto currency at the time he called the police to report a theft of much less than that. police got there, the big question is where did you get all this bitcoin from in the first place and that started to unravel the whole history. >> can you tell us how much the bitcoin was worth when he first stole it or do we have to watch to find out? >> you have to watch to find out. 50,000 bitcoins when he stole it back in 2012. so it was worth almost nothing compared to the $3 billion it ultimately ended up being worth. there's some real interesting comments online already on the youtube video that a lot of people here watching this and coming away very sympathetic to jimmy himself, the thief in this case. and very critical of the irs and

then some other people who say, you know the ir zx is just doing their job here. they have to go after cases like these. >> going to be fascinating. we'll watch. thank you very much. >> you bet. thank you. coming up, dollars, discounts, drugs. we'll get the trade on goldman sachs, dollar tree and johnson & johnson. there's a fresh three stock lunch on the other side of this break.

all right, everyone. time for today's three stock lunch. here with our trades, cnbc senior contributor michael farr, chief strategist at hightower advisers. up first, to johnson & johnson, topping quarterly earnings and revenue estimates, the company hiking its outlook as med tech pharmaceutical sales surge. the first results since the separation from its consumer held spinoff called kenvue. the stock down almost 2% today and has dropped about 12% this year. we're throwing you some red meat here, michael. what's your take on j&j? >> i'm very unfamiliar with this company, tyler. i've only talked to you about it 20 years, we go back. first, i can't wait to see this

"crypto 9/11." $3 billion and he got one year and one day? one year and one day for $3 billion. we need to talk about that later. johnson & johnson, okay, this was not an awful quarter. the numbers were okay. the talc liability is still hanging as a cloud above this stock. the pharma had outperformance. the oncology and immunology had outperformance. oncology, sadless, is a very robust area for any company in the pharma business. the devices were down a little bit, but i think, you know, at 15 times earnings and was down 13% year to date, 3% dividend, and growing earnings at 9% over the next five years, that's probably going to be higher than the s&p growing those earnings, and you're able to buy it at a discount on a p/e multiple to

the s&p 500. i like it. as you know, a aaa balance sheet i've owned for years and years. i would add at these levels. it's a buy. >> michael, they're going to kill me, kenvue, a quick line. do you want to own it, happy to own it, you're not worried about its underperformance real quickly? >> i think the spinoff was probably wise. i sold mine off. i'll take a look once i get a better sense of their financials for the longer term. >> all right. appreciate that. to goldman sachs then. they reported this morning, topping estimates on stronger than expected bond trading. the stock is trading somewhat under pressure, down 2% today. is that just the market? is this better than expected, all things considered? what would you do here? >> they beat a lowered estimate at goldman sachs, and i'm happy they're getting out of that consumer business. goldman has not had -- has not had a great year. they're down on the year about 10%, but you compare it to

citigroup or bank of america down 26%. not awful, right? not awful. right now goldman sachs is one times book value. one times book value. one of the things i've always said tongue-in-cheek but not really, sometimes the customerses make money at goldman sachs and sometimes they lose money but goldman sachs always makes money. i like this company for the long term. and when things are volatile, and they haven't been volatile -- when things are volatile, they make even more money. a tough time for banks, a raising interest rate environment, all of them under pressure. this one will be one of my buys. i would buy it here, not aggressively but i'm comfortable add to go it here. >> dollar tree, shares up more than 4%. the company getting an upgrade from the aforementioned goldman sachs to buy from neutral. what do you think of dollar tree? >> this is where i wish i could do a good joan rivers imitation

of the, oh, oh, yeah -- you know. she was so good at that. no is the answer to dollar tree. goldman likes it. they have four times debt to ebitda at dollar tree, and even though they've outperformed -- down 20% on the year -- dollar general is down 52% for the year. we've seen consumers spending and retail sales today were strong. at some point the consumer is running out of wallet. we've seen the credit card bills start to mount. this is low end consumer stuff. i don't like the debt. sales were up 9% and yet earnings are down 40%, so they're not able to pass the cost structure along, and with four times ebitda debt as those interest rates go up, that will really eat into margins and hurt those earnings going forward. i'm on the sidelines when it comes to dollar tree, absolutely. sell it. >> that's a yuck from michael

farr. >> the joan rivers' yuck. >> good to see you. >> nice to see you. it's closing time after the break. power e*trade's easy-to-use tools, like dynamic charting and risk-reward analysis help make trading feel effortless. and its customizable scans with social sentiment help you find and unlock opportunities in the market. e*trade from morgan stanley. with powerful, easy-to-use tools, power e*trade makes complex trading easier. react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity. e*trade from morgan stanley hi, i'm jason. i've lost 228 pounds on golo. ♪ changing your habits is the only way that gets you to lose the weight. and golo is the plan that's going to help you do that. just take the first step, go to golo.com.

this is american infrastructure, a prime target for cyberattacks. but the same ai-powered security that protects all of google also defends these services for everyone who lives here. ♪

businesses need 5g solutions today. that's why they choose t-mobile for business. mlb partners with t-mobile to not only enhance the fan experience, but to advance how the game is played. aaa relies on t-mobile's network to stay connected nationwide, so they can help get their members back on the road. and we're helping pano ai innovate, to stop the spread of wildfires. now's the time to see what america's largest 5g network can do for your business. welcome back. 90 seconds left. let's get through as many stories as we can, and we'll start with the lending tree survey finding 51% of american adults think they're better off

financially than their parents were at their age. the number is 57% for gen-z. >> they're feeling better? >> we're really teeing up the next story. >> this next story must apply to the other half of gen-z. according to red fin, 30% of home buyers under age 30 received money from their family top with the down payment giving rise to the term nepo-home buyers. nepotism, i guess, is the root there. >> it's unavoidable. this widens incoming wealth and equality. it's great to draw on the resource it is you have them. >> and one of the top cellists in the world, yo-yo ma's concert ticket fetching more than $2,200, similar in price to swift's "eras tour" show in argentina, nine times the price sold by the concert organizer. the yo yo ma film --

>> should i see it? i will say we always get our taylor swift news in here. i love the fact this is yo-yo ma coming in hot. >> i wonder who he'll be dating. >> they're both on the market. thanks for watching "power lunch." >> "closing bell" starts right now. welcome to "closing bell." i'm michael santoli in for scott wapner. this make or break hour begins with more evidence of a hot economy, scorching bond investors sending triesry yields to new highs and boosting cyclical stocks at the expense of stocks. a four-week high before again backing off around midday. the small cap russell 2000 is popping for a second day in a row. to our "talk of the tape." can good news of the economy