Closing Bell - Closing Bell: Rally Rolls On, Marriott's CEO On Travel Spending & Solar Stocks Shine 7/28/22

Episode Date: July 28, 2022

Stocks rallying again despite a report showing GDP contracted for the second straight quarter. Marriott CEO Tony Capuano met with President Biden on the state of the economy and discussed why he still sees strong consumer spending on travel. Neuberger Berman Managing Director Holly Newman Kroft reveals how she is advising high net worth clients to invest outside of equities and fixed income during this economic downturn. Solar stocks soaring today. Sunnova CEO John Berger reacts to the Senate deal on clean energy funding and what that means for his industry. Susquehanna's Chris Rolland on how semi stocks will be impacted by the newly passed Chips Act, which now heads to President Biden's desk. And Tilray Brands CEO Irwin Simon discusses the cannabis company's big sales beat and the potential impact on his industry if Republicans win the midterm elections.

Stocks are proving resilient here after Wednesday's big rally. Major averages all higher, even in the face of a downbeat GDP print. The most important hour of trading starts now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Follow through from yesterday's Fed meeting. Stocks are higher. Bonds are also rallying. Lower treasury yields. The dollar's weaker. The S&P is up 1.25%.

You've got every sector higher right now except for communication services. Some of the media names are dragging down that sector. in particular Comcast, Charter, Meta, and Dish. Some earnings stories there to talk about. The Nasdaq's up 1 percent. So are small caps. So it's a nice broad rally. Check out some of today's big earnings movers. Plenty of red here. We hit Meta. It is pulling back sharply. Qualcomm, Comcast, Teladoc, all getting slammed as well, though Etsy is an earnings exception. It's up 10 percent. Coming up on today's show, we'll talk to the CEO of Marriott, who is currently meeting with President Biden and his advisors, discussing the state of the economy

in America. Plus, check out the solar stocks getting a huge lift today. On news that Senator Manchin has reached a deal on climate funding, we'll talk to the CEO of Sanova about what that money means for his business and his sector. The stock is soaring almost 30, the sun run almost 30 percent. Sanova up 24 percent. Let's get straight to the market. Stocks are moving higher, as mentioned, after Wednesday's big rally during the Fed News Conference. Holding strong even after new data showed a second straight quarterly decline in GDP. What does it all mean for investors?

Joining us now is Holly Newman-Croft, Managing Director at Neuberger Berman. Holly, what are you telling your clients about whether we're in recession right now? I'm telling my clients it doesn't matter if we're in a recession today. My clients, like your viewers, Sarah, don't care if we're technically in a recession or not in a recession. What they care about is how they weather this storm and if they can not impact their livelihood, continue to live their lives and come out the other end of it. That's how we spend our time. And a lot of your clients are high net worth. Yeah. So what is the answer there? Are they feeling it? So the answer is we always talk to our clients about managing risk.

And from a high market, a low market, we position our portfolios to withstand a full business cycle. That includes upturns, which feel a lot better, and downturns like we're in now. So, of course, they can afford it. They're not going to like it when they open their statements, but they're positioned to do just fine during this downturn. In previous appearances in the last few months, you've come on and you've said that you are positioning them more defensively, preparing for the downturn. Correct. Is that still the case? Has there been a change? No, it is still the case. We still maintain a defensive positioning, so we're still underweight traditional asset classes like fixed income inequities. We're

overweight alternatives because that's where we're seeing the opportunity for outsized returns. But what we're really cautioning the more scared investor and maybe the more scared viewer is not to have a knee-jerk reaction in the importance of staying invested. Because as you know, the 10 days following the market bottom has proven to be very important to be invested with a 15% return on average. So do you not buy the idea that, and a lot of people are talking about this today after the Powell News Conference, that we have seen the biggest of the rate hikes and we're closer to the end than the beginning, and that could lead to a pretty nice market rally?

I'm not not buying that, but it's impossible to know the market bottom. I think the first half of the year we spent talking about high inflation. I think the second half of the year, which has started, we're going to talk about slower growth. And the Fed is trying to thread the needle and navigate slowing growth enough to avoid a recession, but not too much to send to send the market tumbling. But it's not the typical recession, right? Or are you using that playbook? No, it's not the typical recession because, look, we have high employment. The housing market remains tight. I think we're relying on the consumer to continue to spend and work our way

out of this downturn. But some people are saying we've seen the worst of it, and some people are saying the worst is yet to come. So the trick is navigating the uncertainty and knowing that there is uncertainty tells us that there's going to be continued volatility. I think in your basket there of recommendations, I know you're underweight stocks, but within the market, you like quality, you like dividends, and you like value still? Yeah, we do like value over growth, but the overriding theme really is high quality companies, companies that have strong balance sheets, low leverage, strong pricing power, and companies that they themselves can withstand this volatility. So we're seeing, and you find high quality companies in every sector and subsector of the market.

So what's really important there is, unlike previous rallies, is the market is finally giving some credibility to fundamental analysis. And that is justifying active managers. And active managers like Neuberger Berman managers are having their best start to a year since 2007. Because value is working. Because analysis, fundamental analysis is working and stock picking is working. You can't buy full sectors because it's not every security in that sector that will do well. What about bonds? Do you think we've seen the highs on yields over the year?

Well, we're still continuing to be positioned short duration, but we're also starting to become a little bit more opportunistic. I don't know if we've topped out, but I think the Fed is going to certainly slow the hikes, if not pause, to see if they've had the desired effect. So we might start thinking about buying longer dated bonds as we enter the second half of the year. How are you thinking about the time frame of all of this? Because whether we're in a recession or not, the real debate is how deep is it going to get in terms of the downturn and for how long? Yeah, we see the volatility continuing well into next year. Just again, because there's still so much certain uncertainty in the world. You and I have talked about this before. You know, we've still got COVID. We've still got the war between Russia and the Ukraine.

We've still got China's zero COVID policy. We've still got supply chain issues. So there is a lot of uncertainty. And as long as we have that, we're going to continue to have volatility. What about commodities? Because in the past, you and I have talked about it, and I think you've been a fan. They rolled over, though. Are you still? They have, but we still think that there's a place in the portfolio for commodities. They've pulled back about 15 percent in the last month, but there continues to be pressure, and we think commodities still have a place in portfolios today. But not cash?

Not so much cash, no. Again, really important to be fully invested, a little bit of dry powder, but really to maintain your asset allocation and to just weather this storm. What will you be looking for that would make you feel like, OK, it's time now to get more into riskier places in the market, more growthier parts of the market. What would it take? Well look, the sectors where we're seeing opportunities are growth. You know, the sectors that have been the hardest hit. You're able to find really attractive high-quality companies in tech specifically. We're also seeing them in communications. You just mentioned that a lot of the communications companies have tumbled, some consumer. So we are seeing opportunities in those growthier sectors that have been so punished. Quality growth that has been hit. Correct. I know you're not, I know

you can't name necessarily. I can't name stocks. But even, what about riskier parts of the market? What about even, what about the non-profitable tech stocks? Well, remember the riskiest part of the market would be alternatives because that's illiquid, right? So that's the opportunity for higher returns. And we are overweight that asset class. We especially like it today because there are a lot of options to have exposure to private equity through liquid alternatives. So it's not as elitist, perhaps, as it might have been before. And, you know, a lot of your viewers, my clients, everybody can have access to it in some capacity. Although a carried interest might go away. The new bill actually eliminates that. Does it change the thesis? I'm not so sure we think that bill's

going to get lagged. You don't? No. You think cinema, you think they just won't get it done before the midterms? I think the midterms have a lot of other things. We have a lot of other things to focus on before the midterms. Holly, thank you. Holly Newman Croft, always good to hear from you. Always good to see you. Newberger Berman. Check out the solar stocks. What a rally today.

After Senator Manchin reached a deal with Senator Schumer for hundreds of billions of dollars worth of climate funding, we were just talking about it, we'll discuss with the CEO of residential solar firm Sinova. Is he expecting it to actually happen? We're at session highs, up almost 400 on the Dow. You're watching Closing Bell on CNBC. Breaking news out of Washington, D.C. The CHIPS Act has enough votes to pass in the House of Representatives. In fact, it actually just passed in the House. So that means it has passed the Senate and the House and will now head to President Biden's desk, where it should be signed into law. Again, billions of dollars' worth of money going to the semiconductors, the semiconductor companies in this country to try to revitalize the chips industry manufacturing in this country. It's been

a long road. Many thought it wouldn't get done before the midterms, but it finally has. It looks like the first celebration in terms of the statement in the inbox comes from the Commerce Secretary Gina Raimondo, who has been pushing for this hard, along with CEOs that we've had on our air, Micron, Intel, and others trying to get America to be more of a manufacturing powerhouse for chips in an effort in, to protect our national security and counter China. We'll stick with Congress, because solar stocks are soaring today on the back of a deal reached between Senators Manchin and Schumer that would invest hundreds of billions of dollars to combat climate change, including a 10-year extension of the clean energy tax incentives.

Legislation will be brought to the Senate floor next week. Joining us is John Berger, Sunova CEO. Boy, did this come as a big surprise, John? We talked to you like a week and a half ago when this bill looked like it was dead. It was a big surprise, Sarah. So obviously a pleasant surprise. And we think it's going to get passed. It may not be in the exact same form, but this seems to be moving very quickly. And I might add that the news that you just broke, the solar industry is the cousin to the semiconductor industry. There's a lot of similarities to it. And there are certainly reasons to do it are very similar in terms of bringing those thousands of jobs home to the United States. The solar industry and the battery industry have become very important from a national security perspective.

And they're also dominated by the Chinese. And so a lot of the same, if not the exact same reasons that the CHIPS bill just passed is the reason why this bill should pass. And then some. Obviously, climate change is important. This addresses that. But very similar bills. No, it's been it's billed as a climate proposal and also to bring down inflation is what the administration is saying. How does it protect our national security? Well, bringing those jobs, those manufacturing jobs for the solar panels and the batteries to the United States away again from from China and some other countries, that is a part of this bill, as well as addressing the climate change. And when you look at the interesting thing about the tax credit, it's not just about solar, but it's actually agnostic and goes to the home of the future.

So addresses both how do you eliminate some of the demand for energy in the home, but have more confidence and to deploy capital into this sector so that we can grow at a much faster rate and really do something material about climate change. So lowering utility bills for homeowners is definitely anti-inflationary. You want to create those jobs, bring those jobs home to the United States, away from China. And then the third one here is you're definitely making an impact on climate change. So, John, your stock is up 25 percent. How exactly does it influence your business? The incentives will just bring more customers.

Also, do you get manufacturing benefits? Talk us through how it changes your plan. Well, first and foremost is that the sector, my sector, has been really over a cloud as far as the number of tariffs. Now, we're not the only sector in the economy that have had to deal with some of the tariffs that the previous administration put in place and has been continued here. But certainly I think we've been the most influenced, if you will, by that, at least on the negative headlines. And so it takes this bringing the manufacturing back to the United States will essentially negate those reasons to have those tariffs in the first place and solve

the problem, if you will, on a permanent basis. And then the next one is, is that, yes, incrementally it lowers the price of the solar service to homeowners, which therefore lowers their utility bills. So Senator Manchin is absolutely right. And I was on your show just a few days ago, as you know, talking about how anti-inflationary this was. And here we are. I'm pleased to see the senator, and it looks like the majority of Congress agrees with that. Why are you so sure it's going to pass? We just heard from a major portfolio manager, wealth manager, Neuberger Berman, doesn't think it's realistic. Well, I respect her opinion, but as when you announced the chips passing, a lot of folks said the same thing, you know, hey, we're close to the midterms.

And I understand that. But I think it's very clear that the Democrats need something very positive here. And the leadership of the Democratic Party, Senator Schumer, Senator Manchin, Representative Speaker Pelosi, and obviously the president, the screen here and said, no, we're not in recession. Look at the data. We're in recession and it's getting worse. There's nothing that's positive about the economy as you move forward in the next few months. So the leadership that wants to stay in power, at least have a shot at it as we move towards the midterm elections, is going to have to do something about the economy, create those jobs, bring those manufacturing jobs here to create those jobs and do something about the rising energy bills, which are going to have to do something about the economy, create those jobs, bring those manufacturing jobs here to create those jobs and do something about the rising energy bills, which are going to

continue to rise, in our opinion, as far as I can see, not the least of which is due to the war in Europe. Does that does a bill like this change the trajectory of how fast and how widespread we adopt solar panels as a country? Do you need this to get that done? We don't. We'll be fine either way. But the trajectory needs to be a lot more acute, if you will. And this will absolutely do that. And it will do it in a way that is anti-inflationary, creates the right jobs here in the United States, addresses some of the national security problems that we have and making sure that that equipment was made here. And if you look at the ITC, the investment tax credit, again, it's going to be technology agnostic after a period of time. So why is that important? Because it can be applied to

batteries and load management, which drops the energy demand for homeowners automatically, and a lot of other technologies that we may not even know that can be deployed out there. Fuel cells is another part of this bill. So there's a lot more here than just solar panels, and that makes it a lot more impactful both to the economy, both to homeowners and to climate change. But you know, John, what the critics are going to say. Why do you need the subsidies?

If it is such a game-changing technology that people are adopting anyway, why do you need the handout from the government? Same thing they said about the chips. Same things about the chips. First and foremost, I think we can all agree that Chinese government doesn't play fair necessarily with regards to manufacturing facilities and so forth. So that in terms of the portion of this bill that addresses the manufacturing, I think it's something that basically the way I think about it is exactly the same on the chip side of things is you've got to fight fire with fire, unfortunately. And I'm a stalwart capitalist. capitalists. On terms of the demand itself, we need to address climate change. We need to do

some things to reduce or create more slack in the energy market with regards to natural gas, coal and oil, if for no other reason that our European allies need more of it and much less of it coming out of Russia. So there's a national security piece of this as well that is addressed by these investment tax credits or subsidies. The other thing and last thing I'd say is I always remind folks that the U.S. power industry is not a bastion of capitalism. It is in many cases directly run by the government. It is heavily subsidized. It is not a capitalistic industry. And so we need to keep getting the message out there that this is unfortunately the structure of the U.S. power industry in terms of it not being capitalistic. So subsidies,

both currently and in the centralized utilities and here, are just a part of the industry itself. John Berger, thank you for joining us at the last minute here once we got news of that deal. His stock is up 25 percent. The tan solar ETF right now up 7 percent. Let's give you a check on the overall markets. We're higher across the board. We're near the highs of 378 or so on the Dow. S&P 500 rocking up 1.3 percent, building on yesterday's gains that we saw after Fed Chair Powell's news conference. And also bucking the trend we've seen where the market has rallied on Fed days, but given it back the following day.

It looks like there's follow through today. The Nasdaq up 1.1 percent. So tech is definitely playing a role here in this rally. It's utilities that are driving us higher, though, as far as the S&P, real estate, industrials and consumer discretionary. Still ahead, Apple, Amazon, Intel all headlining a huge afternoon of earnings. We'll tell you what to watch from those key reports straight ahead. Let's check out today's stealth mover. It's Hershey, top performer in the S&P 500 right now. The candy company beating Wall Street's profit and revenue estimates,

hiking its full-year guidance because strong sales growth is offsetting supply chain issues and a decline in gross margins. Dots Pretzels, which they own, especially strong. The U.S. retail sales of that brand up 50 percent in the last 12 weeks. Analysts really like this name. They say it's recession-proof and not a ton of competition with private label in the candy business. Shares of cannabis company Tilray also soaring today on stronger than expected sales and guidance. The stock is still down roughly 50% this year. Still ahead, CEO Erwin Simon discusses the results and whether the company is planning any price hikes.

We'll be right back. The grass is definitely greener for Tilray today. The company reporting its fiscal year results this morning. It was a beat on the revenue estimates, provided better than expected guidance. The stock is up 10 percent right now, but it has had a rough year, down about 50 percent. Joining us now is Tilray CEO Erwin Simon. Erwin, welcome back. Nice to see you. Nice to see you. Thank you very much. So you needed a good quarter here. It's been a rough ride in the markets. What is happening with the underlying business? So, Sarah, it's been a tough year. Listen, you know, the year started off, we had COVID, you know, in Canada with a lot of closings, you needed a vaccine card to get in.

You know, we had COVID in regards to our facilities. But, you know, I must tell you, you know, we've come back a long way. And, you know, the cannabis industry has had a challenge. But if you look at Tilray Brands and what Tilray has done, you know, number one, we grew our revenue 22 percent this year, 13 consecutive quarter of, you know, positive EBITDA, adjusted EBITDA. You look what we've done. We acquired a great business called Breckenridge Distillery, which is in Boulder, Colorado, with some great bourbons, great gins, and great vodkas. We've added to our sweet water business and have grown that on the West Coast. And, you know, we're focused on Europe and really grown our European business. So, you know, referred to us as cannabis. We're not just a cannabis company. You know, we're consumer products. We're focused on adult use. We're focused on medical. We're focused on

beverage and spirits. And, you know, a business that I know well, we're focused on adult use. We're focused on medical. We're focused on beverage and spirits. And, you know, a business that I know well, we're focused on wellness with our Manitoba Harvest products. And, you know, you can see behind me our hemp products. So are you going to continue that M&A spree? It's been a big part of your strategy. You bought the brewery and you said you've made some other deals. But given what's happened in the markets, does that continue? So if you step back, listen, I put a plan in place how to get to $4 billion by 2024. A lot of that is focused on legalization, both in the U.S. and Europe.

There's a good plan in place to get to a billion dollars in Canada. With our current business, organic growth. We, you know, acquired notes, which allows us to buy up to 48 percent of Hexo, the number two. And, you know, if we acquire some other consumer packaged business, there's a plan to get to a billion dollars in Canada. In the U.S., I don't know what's going to happen with legalization. I think, though, if you come back and look at it, you know, consumers want 90 percent of consumers want medical cannabis legalized. Sixty five percent want adult use. But in the meantime, we're going to acquire businesses or build our current businesses that are adjacency to the cannabis business. Upon legalization, we'll be ready to step in.

And I feel Europe will legalize shortly. You know, Germany is talking about it right now. There's a plan in place how to legalize in Germany. We sell into 20 countries in Europe today withize shortly. You know, Germany is talking about it right now. There's a plan in place how to legalize in Germany. We sell into 20 countries in Europe today with medical cannabis. The disappointment around legislation is one thing. And I know there's the Schumer bill and people got excited about it. But there's been excitement before. Hard to imagine if Republicans do take Congress in the midterms, there's a path there.

Is that why the stock has been down so much? It's so much worse than the rest of the market. And even it trades like an unprofitable tech company even or worse. Well, first of all, listen, we trade a good amount of shares. Our conference call this morning, you know, over a thousand, you know, investors or shareholders listening to what's going on. There's a lot of interest. So there's a lot of interest in the cannabis space. And it's just not Tilray stock that's down. I mean, multiple stocks are down. And you're right. The whole category is taking a hit because I think a lot of, you know,

investors are out there thinking legalization would happen during the Biden administration. It's not happening. But one thing, you know, I am doing and the team is doing here is building out a company that's built around, you know, adjacencies with cannabis. But if not, we got a great spirits business. We got a great food business. We got a great beverage business. And I'll tell you what, they're growing nicely. So we'll be a great consumer package. Good companies with adjacency to, you know, the cannabis cannabis category upon legalization. One thing I can say is I don't know when, but legalization will happen in the U.S. and legalization will ultimately happen in Europe. And there's no one out there will have the assets and, you know, the ability to grow and build brands like we will. The farther we get from legalization in the U.S.

and the more we see this bear market continue, what happens to the industry? Are we going to see companies go away? You're going to see companies go away. You're going to see companies consolidate, just like we've done. You know, we acquired Tilray and merged it with Afria. We now have 48% of Hexo.

So the top three companies ultimately will either merge or get together in Canada. You're going to see a lot of these MSOs in the U.S. ultimately merge. So I think the big thing to look at Tilray, it's just not a cannabis company. It's a diversified company with great adjacencies and great business. Look at our margins today at 50% up, you know, in regards to the cannabis business. And I will take Diageo, Brown Foreman or Constellation brands multiples anytime and look at Tilray as a branded company. Diageo just had good results really quickly is there inflation in cannabis? What happens with pricing when you're in an inflationary environment like this? Actually we've done a good job in

dealing with that there's definitely inflation in regards to transportation. But we've taken close to $100 million of cost out of our business this year, integrating Tilray into it. And with the HEXO business, we've announced that we'll take, over the next three years, over $80 million of cost. So we've really got a lot of costs out of our business, a lot of efficiencies. But yes, there is definitely inflation. We've got pricing. We've stabilized pricing in Canada. And you know what, Sarah?

Listen, there's no other cannabis company that has come out and given guidance for next year. And we've stepped up to the plate. And investors want to own shares in companies that are making money, that good balance sheet, and are cash flow positive. And we've done all that. I know you're promising it. But still, the stock is a $30 stock last year. It's in the threes. Erwin, thank you very much. We appreciate it. Thank you very much. Erwin Simon of Tilray. Here's where we stand right now in the markets. S&P is up one and a quarter percent. Rally day. It is being driven by some of the defensive sectors like utilities and real estate, but you've got cyclicals in the mix too. Industrials, consumer stocks rallying. Technology is having a good day. The

financials are higher as well. Only communication services lower, and that is thanks to a handful of earnings losers. Meta, our parent company, Comcast, they're at the bottom of the list. Still ahead, a top semiconductor analyst joins us with reaction just this hour to the passage of the CHIPS Act in the House and the key thing he's looking for in Intel's report after the bell. And then tomorrow, do not miss a CNBC special, the Tech Trade featuring ARK Innovation CEO Cathie Wood, tomorrow 6 p.m. on CNBC. Stocks holding on to strong gains as we head toward the close. There is the Dow. It's up 342 points, just off the highs, up about 400. Check out some of today's top search tickers on CNBC.com. The 10-year yield right on top. And we're seeing Treasuries rally today,

continuation of the post-Fed move, with yields a little bit lower, moving south below 2.7 today, 2.67, weaker dollar as well. Meta is an earnings loser, down 6%. Ford on the flip side, an earnings winner, up 6%. Tesla up 2%, seen as a beneficiary to the Manchin-Schumer deal on funding of climate and incentives for EV purchases. Doesn't have that union stipulation like in the original version of the bill. So Tesla's rallying. And Apple ahead of earnings absolutely flat. That is coming after the bell today. The countdown is on for those Apple numbers. Also, we'll get Amazon after the bell. We'll tell you what the key metrics to watch coming up are. That story plus a slew of headlines on airlines and chips when we go into the market zone next.

We are now in the closing bell market zone. BDA Capital CEO Barbara Duran here to break down these crucial moments of the trading day with us. Plus, Susquehanna's Chris Holland on Qualcomm and Intel. And CFRA's Angela Zeno on Apple's earnings after the bell. Stocks well in the green here after starting today in negative territory. Barbara, what are you doing? Are you making any moves? Not today. You know, I've been excited about this rally continuing through from yesterday because, as you know, I've been buying all along and sometimes had to suffer some drawdowns. So the question now is is this rally

going to continue what I think is going to happen here is we're establish a new trading range mean last week I talked about. I think we've seen the lows and that was in mid June. And I think this last two weeks have been very important in

terms of information. The earnings expectations were pretty dire. They've come in pretty well you saw that in reactions to the banks. Which missed they bounced up you saw with American reactions to the banks which missed they bounced up you saw with american express which had blowout earnings they were at a at a year low two weeks before that and of course you saw it with microsoft and alphabet yesterday they missed their numbers

but it was not as bad as investors feared and of course the fed yesterday you know really saying hey we don't see a recession out there we're going to be watching the. And they've been very aggressive because I think they and Powell said it yesterday. You know, the consumer and businesses are in very good shape. So this is this is a real positive. So I think. But would you be, Barb, within all of that, the positive price action? Sure. And we're up seven and a half percent on the month. But but would you be buying cyclical parts of the market? It's working today, financials,

industrials, given that we did just see a second quarter in a row of negative growth, whether it's a recession or not, we're seeing the economy slow. Yeah, Sarah, I don't know if that's really sustainable. I mean, I think the GDP number obviously was not good at the top of the first quarter. That had special circumstances. But I think the market will be looking through that. So I still think you've had a bear market in tech stocks and consumer discretion. They've had nice moves. They've been the leader since mid-June. But I think that's going to continue. But I think what you're seeing is a broad-based rally here. People just want to get positioned. They've been underinvested. They've been pessimistic. And so

I think that's what you're seeing now. So I think there's rotating rotating into groups that haven't moved for a while. Got it. It has been a big day. Want to hit on the airlines. Spirit Airlines as well. Shares are rallying after agreeing to be acquired by JetBlue for three point eight billion dollars. This just a day after Spirit ended its merger agreement with Frontier because it lacked shareholder support. Meanwhile, shares of Southwest are under pressure after the carrier beat Wall Street's earnings estimates, but announced mixed guidance and then also warned of rising costs. Phil Abode joins us. Phil, what a saga.

Spirit fought off that merger so hard with Jeff Lew for months, saying that the regulators wouldn't approve it. Why now are they making this deal, and will the regulators approve? Well, they say that they believe that they can get this deal across the finish line. Though when we had Spirit CEO Ted Christie on Squawk Box this morning, he really never gave a complete answer as to what's changed. Why was he so emphatic for so long that regulators would never approve a deal between Spirit and JetBlue and now they think that they can get it across the finish line.

Look, let's talk about the obvious elephant in the room here, Sarah. This is a far richer deal which rewards Spirit shareholders, even if it is ultimately rejected by the DOJ. So if you are a Spirit shareholder, you can put the gun to the head, so to speak, of Spirit management and say, make this deal. Even if it ultimately dies, you can put the gun to the head, so to speak, of Spirit management and say, make this deal. Even if it ultimately dies, you still get rewarded. You still get paid by Jet Blue. And I think that's a big component of this agreement between Spirit and Jet Blue, though nobody will come out and say that. Well, so are the analysts thinking it actually gets done?

Oh, there's a lot of skepticism there. Look, could it happen? Yes. But we know that the Biden administration is already taking JetBlue to court over its Northeast alliance with American. They want to unwind that. Do you think that they're going to be more receptive to a JetBlue Spirit merger? Really, any merger within the airline industry, not just JetBlue and Spirit. There's a healthy amount of skepticism, Sarah. Any merger within any industry might be also a point to raise.

Barb, what do you do about this airline trade? Well, I think Phil's right. I think there's a lot of uncertainty in terms of regulatory issues. I think the Biden administration is signaling some important new directions here. And I think you would just be wise to be cautious. So you could stay and wait or you could take the money and run. So I think that that is not my cup of tea in terms of the probabilities here. Seems pretty much a crapshoot. Long shot. OK, got it. Thank you very much. President Biden meeting this afternoon with CEOs to get an update on

economic conditions in America following today's negative GDP print. Marriott CEO Tony Capuano was in that meeting and he joins us now. Tony, it's great to see you again. Hi, Sarah. Hi. What did you learn from the conversation with the president? Well, I think we learned a lot. I think we learned his level of engagement with business leaders across sectors and he and the administration's genuine interest on what we're seeing, both the good and the bad

of recovery. We were lucky enough to have both the Commerce Secretary and the Treasury Secretary in the meeting. And so we heard quite a bit, especially from Secretary Yellen, about the moderation in economic growth, but at the same time, the strength of the labor market and her view of the power of the end sustainability of that growth in labor. Well, we heard from the president and from the Treasury secretary publicly, and the theme from the White House is we're not in recession just because we're seeing two negative quarters of GDP. Certainly your industry is not in recession. It was the bright two two negative quarters of gdp certainly your industry is not in recession it was the bright spot of the whole gdp report double digit growth in terms of

american spending on on leisure right now is that is that continuing it is we've got earnings next week uh president asked a lot of questions about the pace of recovery and we had great news to share with he and and secretaries. We continue to see strong forward bookings. We continue to see deep levels of pent up demand. And we continue to see the sort of strong pricing power that you and I discussed when I was last together with you in New York. But even if we're not in recession and certainly not in parts of the economy, like in services and like in leisure travel, Tony, we're shifting down on the economy. And this report makes a recession more likely to happen quicker. So what are your expectations for that consumer spending?

Well, again, as we talked about last time, you look at the confluence of inflationary environment, rising interest rates, rising fuel prices. It's not an unreasonable question to ask how it's impacting our business. But the summer has been a blockbuster. Our forward bookings into the fall look very strong. We see steady recovery in business travel. Group demand has been a real strong portion of the recovery. And leisure continues to be exceedingly strong. Is inflation coming down in your sector at all? I was looking at December trips.

It looks awfully high priced. Well, again, we continue to see really strong pricing power. But obviously the other side of that coin is wage rate and other expense item inflation continues to challenge margins. So we're watching it closely on both the top and bottom line. One of the best cases that we have for not being a recession is the labor market, which is strong. And it's something obviously the Treasury secretary highlighted. How does it look from your vantage point hiring right now? So here in the U.S., pre-pandemic, we had a fairly steady run rate of at any one time about 6,000 vacant jobs. Today, we're plus or minus 8,000 jobs. But we've seen about a 40 or 50 percent

uptick in application volume, which I think is quite encouraging for us. That's good to hear. So expected to continue. Tony, there are some questions about, there have been questions along the way about the administration's engagement with business. You're there, you're there for a CEO meeting. Is this the first time you're there? Is it the first time you're having these discussions with President Biden? Do you sense that there's a change happening here? Well, it's my first time, but you'll recall my predecessor, Arne Sorensen, sat on President Obama's Export Council. And so I think as a company and as an industry, we remain heavily engaged with the administration, sharing our perspective on areas where they can help continue to grow travel and tourism.

And I think a great example of that is all the leadership Secretary Raimondo showed on rolling back the requirement for inbound international testing. The U.S. Travel Association came out just last week and said they believe the impact of that change in policy will drive more than 5 million incremental new visits to the U.S. and over $9 billion of incremental spending. So I think the dialogue continues to be critically important. Tony, thank you very much for giving us a snapshot into the meeting. We appreciate it.

Thank you, Sarah. Sorry to be late. No, all good. You had a date with the president. It's OK. You made it. Tony Capuano, the CEO of Marriott, with seven minutes to go here of trading. Qualcomm is under pressure today, beating earnings estimates, but giving current quarter guidance that was short of expectations. Intel also in the red today. The company reports earnings after the bell.

And just minutes ago, the House did pass the Chips and Science Act, now goes to the president for his signature to become law. Joining us is Susquehanna senior analyst Chris Rowland. Chris, is that already in the price of these stocks, the Chips Act passing? This actually came down to the wire and was of debate. This is of particular importance for Intel, which will be getting a nice chunk of that 50 plus billion that now goes to the president to be signed. But do you think it's already in the stock? For Intel, probably, yes. But Intel has some bigger problems beyond long-term

capex, namely the PC market, we believe, this quarter. So you're looking for what after the bell? We are indeed looking for some sort of weakness or a miss for 3Q in particular versus street numbers. We've done our checks via the supply chain, Taiwan, ODMs, and we're seeing weakness. We're seeing significant deceleration in the PC market in particular, and we think that's going to weigh here. All right. Pretty, pretty cautious. We've got to leave it there, Chris. We'll have you back on. Sorry to keep it short. A lot of breaking news here with President Biden's meeting just wrapping up. Because also got to hit shares of Meta, which are under some serious pressure today,

missing analyst estimates on just about every key metric while reporting its first revenue decline as a public company. About thirty three billion dollars shaved off its market cap today. Joining us now is CFRA senior research analyst Angelo Zeno. First of all, do you buy Meta on this on this sell-off or not? We don't. We've been on the sidelines with this name since the middle of last year. For the most part, we view the stock as a value trap. I think a lot of the bulls out there will talk about the momentum that you're seeing right now at a Reels and how that's the answer, really helping engagement levels and what have you. But at the end of the day,

that's going to be a very long transition in nature. And when you put kind of some of the CapEx investments among other things kind of involved here over the next couple of years, this is just an absolutely enormous undertaking for Zuckerberg in nature. And we just think that this is a name that's likely going to be trading at depressed multiples

in the foreseeable future until there is some sort of clear path towards that metaverse vision. You're on hold, but you still have a $190 price target, Angelo, right? We do. We do. You know, clearly, I mean, this is a name that's been the guidance they gave really was kind of a washout type of quarter in our view. I mean, clearly, at any point in time, this is a game that could bounce. But that being said, I mean, we kind of, you know, we're telling investors just to kind of wait on the sidelines here until we see greater visibility in terms of at least on the ad side of things in terms of some sort of recovery there. Barb, you agree? Hold off until the metaverse becomes more of a reality? Well, it's interesting. I mean, I can see, I agree with Angelo in terms of having a hold,

but very short term, because they're setting up actually for a good year next year. Remember, this is a company that has proven itself over and over again in innovation. They've had some challenges. Regulatory issues are still a challenge. But the user growth was very good. It was very good. And people expected that to be down. And that's a key thing to remember because that means the network effect is alive and well.

And when you look at Reels, yes, TikTok is probably eating their lunch in that space right now. But Reels is only a year old. And stories took three, four, five years to really get to full strength. So reels could be if you have a real tailwind next year, as you see, and ad spend to recover because there's also macro issue here that's affecting us. We've seen the last few weeks affecting all these companies. And let's look at the valuation. This is at a five year valuation trough. The stock is down

over 50 percent year to date and it's cheap historically on P.E. and EBITDA. So I think the risk reward here is very interesting. I own it and I'm holding it. All right. Well, we thank we thank Angela Zeno. We're about two minutes till the bell, Barb, as we see another strong session for the Nasdaq up one percent. Just building on the gains that we've seen for the month and so far for the week. So you've been a buyer. What would you be looking for as far as the next catalyst now that we sort of have Jay Powell sounding a little less tough, I would say, on inflation and rate hikes? Yeah, well, he's sounding a little less tough, but he still made it clear he's committed to fighting inflation. But I tell you, I was beginning to worry that he was so committed

to fighting inflation that he would just go overboard was being to worry that he was so committed to fighting inflation that he would just go overboard and go too far. What I heard yesterday is he's going to take a. M. he's back to. You know watching data driven information. They're not meeting till September we have

this another CPI report coming in and two more jobs reports and that's going to be that's going to be key because we start to see a real rolling over in jobs. That could that can stay the feds hand. But right now I think that- you know that's going to be that's going to be key because we start to see a real rolling over in jobs that could that can stay the Fed's hand. But right now, I think that, you know, that's what's happening.

And we've got a few things to watch. And of course, the inflation numbers always being watched like a hawk and jobs. Those are the two things we're going to be watching. And we've got a few of them before the Fed meeting in mid-September. Barb, thank you. Barbara Duran with the Dow up 338 points as we head into the close. Biggest contributor to the Dow gains today is Microsoft, Honeywell, UnitedHealth, and Goldman Sachs. They're all contributing here. The drags are Travelers, Amgen, and Merck.

S&P 500 up nicely, 1.2%. Every sector strong except for communication services. What's leading? Real estate, utilities, and industrials. What's lagging? The only sector down is communication services. Off some media weakness as well as meta. Netflix is down today, so is Comcast and Charter. There is the bell. Another healthy game for stocks, including the Nasdaq, finishing up more than 1 percent.