Power Lunch - A Fed power player, an inflation gameplan and a tech hub in the heartland 8/25/22

Episode Date: August 25, 2022

St. Louis Fed President James Bullard makes the case for front-loading interest rates. Steve Liesman speaks to him ahead of Fed Chair Powell’s speech tomorrow. Plus, if you’re looking to protect your portfolio against inflation and a recession, our market pro will tell you which names he’s buying. And the Oklahoma Governor tells us how he plans to develop a tech hub in the heartland. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

John, thank you. Welcome to Power Lunge. I'm Sima Modi and for Kelly Evans. Here's what's ahead. A Fed power player, St. Louis Fed President James Bullard. He is here. He's known to speak to his mind about the central bank's inflation. How big should the Fed go in September? Stay tuned to find out. And if you're looking to protect your portfolio against inflation, our market pro is buying up some energy names. He will tell you which ones later this hour. Bye. All right, Sima, thank you very much and welcome everybody. Materials, Communications Services, and Financials leading the market higher at this hour. There you see the Dow Industrial is up 114. The S&P 500, higher by about three quarters of a percent, and the NASDAQ. If I move my hands out of the way, you will see that it is up 1.09%. Two cloud stocks moving in different directions, snowflakes surging 20 percent this afternoon on strong quarterlies,

while Salesforce moving the other way, sliding, disappointing forecast for fiscal 23. shares of Peloton, tumbling after the company reported its sixth straight quarterly loss. The stock did surge 20% yesterday on a partnership with Amazon. Seema. The biggest event of the week for investors happening now, Tyler. That's right. At the Fed Jackson Hole Symposium, the Fed Chair Jerome Powell is speaking there tomorrow morning. Investors looking for clues on the size of the coming rate hikes.

Our next guest is known for speaking his mind when it comes to how it. aggressive the Fed should be in fighting inflation. St. Louis Fed President James Bullard is with Steve Leasman in Wyoming for a first on CNBC interview. Hi, Steve. Hey, Tyler, thank you very much. Our Jackson Hole coverage continues here with St. Louis Fed President Jim Bullard. Jim, thanks for joining us. Happy to be here. Tyler gives you a curtain razor there, a man who speaks his mind, not afraid to talk about where things are going. What's your take on? We talked a couple weeks ago. You talked about a four-point 0.4% peak funds rate. Are you still in line with that idea?

I think I said 375 to 4 is my target for this year, for the end of this year. And I like the front loading. I like the idea that you get the rate increases in earlier rather than later. We've got inflation right now. We've got a strong labor market right now. it seems like a good time to get to the right neighborhood for the funds rate. We had a good debate in the noon hour about the idea of 50 or 75 and how much it matters. Why does it matter to go faster? What's the upside of that? Yeah, I think the front-loading idea is that you, first of all, you show you're serious about inflation fighting, and you want to get up to the level that will put downward pressure on inflation.

And we're at 233 right now. You know, that's not high enough to be. be serious about putting downward pressure on inflation. Market has helped us a lot. There's been a lot of pre-pricing during the spring and the summer here, but we have to get our policy rate to where it needs to be to put downward pressure on inflation, and I think you've got to have a three-handle. What happens after 375 to 4 at the end of this year? Yeah, I haven't talked much about next year, and I think...

Go free. Yeah, well, this is such a volatile environment that you're not quite sure what's next, and so I think I'd want to be careful about promising anything one way or another about what would happen next year. But, you know, a baseline would be that probably inflation will be more persistent than what many on Wall Street expect. And that's going to be higher for longer. And I think that's a risk that's underpriced in markets today. So do you worry about that when you look at the outlying futures contracts and say they're not embracing the rate hikes that I think or the kind of financial conditions that I think need to be there.

They're showing outstanding confidence in the Federal Reserve, which I appreciate, and I really hope that they're right. If we act early and aggressively, that we will bring inflation under control relatively quickly. But the risk is that the other side of that isn't being priced enough, and the reality is we may have to be higher for longer. Talk to me about how you react. And I understand you try not to react to the day-to-day changes. But in general, when you see the stock market rising, you see bond yields falling.

Does it make you feel like you have other work to do? You know, I try to stay kind of away from equity pricing because there's so many things going on in equity markets. And a few stocks can drive the market on a given day. And usually those are developments at those particular firms. And you've got the heavy silicon. Valley component and who knows how to value those companies. So I don't want to take too much signal from equities when I'm trying to make monetary policy. Try to look at other aspects of

asset pricing, you know, spreads, volatility, levels of rates. But right now, bond markets yields are higher. Does that give you more comfort that your message is getting out of what it is you want the market to embrace about financial conditions and where they're going? I would say that that's a little better pricing of the risk that we'll have to do more at the Fed to keep inflation under control. You talked earlier about this idea of inflation being more permanent. The topic of the conference here is constraints on the economy. There's some discussion and talk about the idea that maybe some of the factors that have led to high inflation now may stick around. Is there a world that's coming in or an economy coming to the U.S. of higher permanent inflation?

I don't see any reason why we have to have that. I mean, you need to understand the economy in order to make monetary policy. And I would say if there are structural issues or things that are changing, that's very relevant for making monetary policy. But really, in the end, we have an inflation target because it's up to the central bank to hit the inflation target. And, you know, you take all those factors on board, you print the right amount of money for that situation.

You should be able to hit the inflation target, even if there are these long-run structural. factors. I mean, it's important to understand those factors, but that doesn't stop us from hitting the 2% inflation target. When you talk about hitting the target, does it matter to you if there's a recession in terms of the making of your policy? Obviously, you would care if there's a recession, but does it matter in the making of your monetary policy if there's a recession or not? Well, of course, we have two sides of the mandate, and we have a labor market side, and if the labor market was very disturbed, that would enter into our calculations. So that's important. I don't think recessions are all that predictable. There are models out there that try to

do something, but they don't do that great of a job. And when you think about the big recessions that we've had recently, the pandemic or the global financial crisis, those were essentially unpredictable event. I wouldn't go overboard on that, but they're hard to predict events. So, yes, of course, we're taking recession risk, and there is recession risk out there in the future, but I don't think we know that there's going to be a recession. way or the other. So walk me through your base case for next year, or even the second half. We had those two negative quarters. Does negative growth continue into the second half? And what happens in 2023? How much does inflation come down? So what I'm thinking right now, if you look at the

GDI number, so GDP... Let me interject, gross domestic income, which is how much we take in versus the value of what we put out is they should be equal, but they're not. So these two GDP and GDI are supposed to be the same, but they're not. And GDI, according to the... the estimate that just came out. This morning. Yeah, is actually positive for the second quarter. The growth rate was positive. I think the GDI in this particular instance

for the first half of 2022 is giving you the better metric on what was going on. It was a slower economy, but you had a hack of a lot of jobs added. Now it looks like 3.2 million jobs added in the first half of this year. Well, they just add another half a million in the benchline. So it's really a lively job market, and that's consistent with what everybody says when you talk to businesses.

It's hard to hire workers. It's hard to fill jobs. Jimmy, talk to her about the making a policy. Chair Powell has acknowledged there were mistakes that were made. Is the Fed addressing those, and how are those addressing those? And when you look back on the decisions that were made, for example, to continue to buy assets when it seemed pretty clear there was an inflation problem. How do you fix that or do you need to fix it?

Well, I think we did fix it in a way. By changing policy. So I mean the process by which you arrived at that where everybody agreed we should keep buying assets. Yeah, I just think when the pandemic came along, just to defend what we did a little bit, the pandemic came along. Of course, it was a gigantic shock, and we were all in to try to protect the U.S. economy from this really big shock. And we set out a path that was kind of overboard, you might say, both in fiscal policy and in monetary policy. And that was by design. We didn't know how bad the pandemic would be.

We didn't know what kind of damage it would do to the U.S. economy. As it turned out, the economy is more resilient than we thought, and some of that was kind of overdone, and we got some inflation out of it. I think that will be the way history looks at this, but now we have to switch back and say, okay, we've got to get the fiscal situation has to settle down, and the monetary authority has to bring inflation back to 2%. I think we're doing, you know, both of those things are going in the right direction.

Last question, Jim, but your, the median forecast of the Federal Reserve does not see inflation getting back to 2% over, say, the horizon of through 2024. Does that mean you're not been tough enough? You're not going to do enough in order to get back to your target? Why is it okay to miss your target for essentially two and a half more years? Yeah, I mean, with an eight handle on CPI, I think we'd be happy now to get going in the right direction. There will be a debate at some point about how long do you want to linger above 2% and what do you have to do to get it down and actually hit the target.

And I think that's an important debate, but that's out there in the future. Now it's getting it within the range. Well, it's getting it moving in the right direction. Again, let's get it toward 2%. Jim, thanks very much for your time. All right. Thank you. Tim Bowler, St. Louis, Fed President from Jackson Hole.

I believe we have Rafael Bostick coming up tomorrow and, of course, full coverage of Fed Chair. Jay Powell's speech from the mountains, gentlemen and ladies. Steve, thank you. James Bullard and Steve Leesman for us. A lot of there to digest, Tyler. A lot of macro information. Yeah. Is what James says. But as we try to fixate on 2%, getting to that level, but also trying to quantify the trajectory of the move in consumer prices.

We saw the big move in July. Does that signal that inflation has peaked? But as Esther George says this morning, she wants to see three months of consecutive data to say that inflation has been. I think in the end there, you heard him say what is more important than hitting a target, is moving in the right direction and consistently doing that, which is kind of what Esther George is looking for too, is moving in the right direction, bringing the numbers down, coming towards that target,

and then we'll talk later about how we actually get to the target. Dow up about 30 points, S&P 500 as well. Coming up, reaction and analysis to St. Louis Fed President James Bullard, plus a tech hub in the heartland, the governor of Oklahoma discussing his push to compete with Silicon Valley and make his state the state, the center of transportation innovation. And later, Ron Barron says he's investing in Figgs,

Hyatt, and Red Rock Resorts. Should you follow his lead? We'll trade those names in today's three-stock lunch. Before the break, some of the names hitting 52-week highs in today's session. Take a look. C.H. Robinson, CF Industries, and on semi. Power lunch.

We'll be right back. Happened next year. But, you know, a baseline would be that probably inflation will be more persistent than what many on Wall Street expect. And that's going to be higher for longer. And I think that's a risk that's underpriced in markets today. So do you worry about that when you look at the outlying futures contracts and say...

All right, that was St. Louis Fed President James Buller just moments ago speaking with Steve Leesman. His comments coming one day before Fed Chair Jerome Powell is set to give his speech at Jackson Hole, a speech that could have big implications for the market. Let's get some reaction now from Michelle Girard, head of U.S. for NatWest markets. Michelle, nice to see you again. Good to have you back. Hi, Tyler. You have just heard what Mr. Bullard said.

He always speaks his mind, and he said there he thinks maybe the, I guess the equity markets, most principally, are underpricing the idea that inflation may stay higher for longer. Do you agree? Yeah, well, equity markets and fixed income markets. If you look at where the market is expecting the Fed funds rate to be, it's pricing and rate cuts in 2023, expecting probably the economy is in recession, and the Fed will react to that. And I think that what we're hearing and certainly what we heard from James Bullard is that, you know, this idea that inflation could well be more persistent, that we're, I think the Fed is more fearful of rates having to stay higher for longer, maybe move higher from here.

even when he talked about the inflation outlook, talking about the inflation rate moving in the right direction, but by the Fed's own acknowledgement, not getting back to 2% through 2024. I mean, none of these things set the stage for a quick pivot toward easing that the market is priced in. And I think that that's something he's calling out here in those comments. Yeah. And he is also one who, in that interview with Steve just moments ago, he said that his expectation for the end of year level for Fed funds is something like 3.75 to 4.

That's a little higher than you have it. Yeah, we expect the fund rate to get to 4% by the first part of 2023. So our forecasts are not dissimilar. I do think the question, and he referenced it, as something the Fed will have to be thinking about going, you know, at some future date. But I do think it does be, it will be. it will become the predominant question in 2023 is, is 4%, even as high as that sounds,

is that going to be enough? Will it be sufficient to bring inflation all the way back down to 2%? How long will the Fed tolerate inflation being above 2%? I mean, as he talked about, that isn't something the Fed has to deal with today. But when I look ahead at 2023, that is going to have to be something the market is going to have to, I think, grapple with. Again, right now, the market is pricing in cuts. That may be called into question, and it could be worse if inflation is more persistent.

It may be that the Fed, you know, the market starts to fare. The Fed is going to have to do even more in terms of hiking rates higher than 4% in order to get inflation down to where the Fed is comfortable where it should sit. Yeah, they're fixated on that 2% target, Michelle. At the same time, you've got to wonder how much weakness in the jobs market is the Fed willing to endure. Today we had applications for unemployment benefits now steadying at around 250,000 over the last couple of weeks. But we also have an August jobs report coming up next Friday. And I think that's the question.

I think the markets, and to some extent say, sure, the Fed can say all they want. But if the economy gets worse, employment situation deteriorates, we're in recession. You know, will they blink? We know, will the Fed have the appetite to focus on inflation at the expense of drive? the economy into a recession or a deeper recession. And, you know, what we're, and that's the clues that we're trying to get to when we listen to these Fed speakers in terms of, you know, the reaction function going forward. So far, they've been pretty clear that the focus is going to be on inflation, even if at the risk of doing some detriment to the economy, that that is going to be

a risk that they are willing to take because they are absolutely committed to getting inflation back to target. But again, this is what will be tested. It's easy to say that when you're, I know we've had some weaker numbers, but when you're in general are still looking at a pretty healthy job situation. But I suspect that is going to be tested on that. And that will be, I think, the kind of the defining moment in terms of the direction for Fed policy beyond sort of what the market is priced in now. Quick, quick thought, if I might. We spent a lot of time focused on interest rates, but the other part of the tightening has to do with the balance sheet, and that is moving along at a brisk pace. How much does that help the Fed in reaching its goal

of cutting into inflation? Well, it can help certainly. And to the extent that it contributes to a tightening in financial conditions, that also will help the Fed to get to, you know, to achieve its goal of basically removing accommodation more quickly. it's moving quickly, but we haven't gotten to the point yet about the Fed actually thinking about selling any of its assets. And that's something we keep waiting for. We thought maybe there would be hints of that, particularly with respect to mortgage-backed securities in the FMC minutes. We're not really seeing that come to the floor, but that is something I think that we're watchful of. All right. Michelle Girard, thank you. Good to see you again.

Thank you. We obsess over interest rates. We don't talk enough about quantitative using and the shrinkage of the balance sheet. We'll have to see a power. it. See if Powell addresses it tomorrow at 10 a.m. Up next, we will check in on the competitors in our bullfight. We had two analysts pick their sides in the battle of the dollar stores, Dollar Tree versus Donald Dollar General, both reporting results and prove that not all stores are created equal. That's next. And as we had to break, check out the cruise stocks rallying for the second straight day. Royal Caribbean Norwegian Cruise Line up 10% this week. Power Lunch. We'll

be right back. Welcome back to Power Lunch, everybody. Want to get you updated on Yesterday's bullfight, as we described it, analysts debating which dollar store stock gives you the best bang for your buck. And the early results are in. Both Dollar General and Dollar Tree reported their earnings this morning. General, Dollar General, that is, beat on earnings and raised sales guidance, helped out by increased sales of groceries as consumers trade down for bargains. That stock, however, down 1% today. But Dollar Tree is down even more, 10%. Even though it beat on earnings, it missed on sales and lowered its earnings forecast.

The key difference here is it, so the saying is, is less exposed to groceries than Dollar General. And I guess if you are a buyer and you're going to Dollar General trading down to get things cheaper, and grocery prices are going up, so that is helping overall revenues. I guess it also tells you that even in this environment where Tyler consumers are trading down, they're still being selective as to where they are going. So Dollar General offers groceries. They're going to say, why don't we just go there to get everything we need versus making two stops. And it's also a sign of the market here.

If you don't deliver what the market wants to hear in the case of Dollar Tree, down 10% today, they sell now and ask questions later. I mean, that's the way it goes. And that's why inventories have been so key this retail season too. All righty, folks. Let's get to Bertha Coombs now for a CNBC News update. Bertha? Hi, Tyler. Thanks very much.

The Russian held Zaporiboridia nuclear. plant has completely disconnected from Ukraine's power grid for the first time in its history. Today, according to the country's nuclear operator, Ukraine has warned that Russia was planning to disconnect the plant in a potentially risky effort to divert it to the Russian grid. Fighting around that plant has sparked growing fears of a nuclear catastrophe, with the two sides having treated, treating blame for the attacks. President Biden is expected to hold a kickoff rally today to try to boost Democrats' fortune 75 days out from the midterm elections. The event in the Democratic Washington suburb of Rockville, Maryland, comes as Democrats have

seen their political hopes rebound as voters remain negative over the Supreme Court's decision on Roe v. Wade. And police for a second time in two days rushed to the Georgia home of Republican Marjorie Taylor Green for another false shooting report, a person who called him himself Wayne Green reached out electronically to a suicide crisis center to report gunfire. Police are calling it a swatting incident. That's very concerning when people do that. Seema? To say the least.

Bertha, thank you. Ahead on Power Lunch, we'll talk to the governor of Oklahoma about his plan to make his state a tech hub in the heartland. And China, planning more stimulus to boost its sluggish economy. You can see the impact that's having on Chinese listed stocks, JD.com, up 9%. among the big leaders on the S&P 500 today. Up next, we get an update on stocks, bonds, and oil. Stay with us. 90 minutes left in Trading Day, and we want to get you up to speed on the markets in our power rundown, stocks, bonds, commodities, and protecting your portfolio from inflation. Let's begin with Bob Bassani at the New York Stock Exchange. Bob.

We're holding up nicely, Seema. Yields are down. The VIX is down. The dollars down. stocks are up. The market is certainly not acting like Jay Powell is about to enter some new level of hawkishness. In fact, we're up for the month overall. The S&P 500 has just moved into positive territory for the month. The NASDAQ is doing a little better. That's up about 1%. It's really kind of a miracle we're holding up so well given the uncertainty, but they like growth. That's the key here. So look at semiconductors. It's a little bit rocky in the last week, but we're up today overall, even though NVIDI had poor guidance. 168 NVIDIA opened out. Look at this, 176. holding up very well here. They're ignoring the decline in gaming. They're focusing on the

sequential growth in the data center business. That's fine. We'll get marble technologies after the bell. Microns holding up, advanced micro. These are all sitting right near the highs for the day. Other big tech stocks doing well on top of that, even though Salesforce had poor numbers, Alphabet, Apple, Microsoft, all holding up pretty well. And the other key component here is the defensive sectors. So Big Farm has been weak recently. We've seen Merck and some of the big names like Bristol Myers on the downside and even some of the consumer stable names like Kroger and Kimberly Clark. So bottom line here is we see growth up. We see defensive stocks down. Markets not acting like there's going to be some imminent bad news coming from Jay Powell. See my back to you.

Nice positioning ahead of Powell tomorrow. Bob, thank you. Now to the bond market where the 10-year yield is hitting session lows after James Bullard's comments on this show. Rick Santelli tracking the action, Rick. Yes, and there's so many dynamics going on here, Seema. Look at an intraday of seven year, and I picked the seven year because it was the last of our auctions, and boy, it was the best to breed. As you look at that, you could see at 1 o'clock how yields drop. Yields drop because of the buying every investor saw when the results of the auction came out. It sounds sort of, well, incongruent with all the information we've had over the last four days, but it is what it is. Look at it one week of tens.

The buildup to Jackson Hole Symposium, making investors nervous. It all seemed to ease back a bit today. And it didn't stop in the U.S. Boones and the GILTS, UK and Europe. Well, look at a two-day of boons. Yields moved down. Why is that important? Because they had been closing up seven sessions in a row.

Boones and GILTS, and they both reversed. Down five in Boone's today, down eight basis points in 10-year guilt in the UK. And finally, the dollar index. Bob mentioned it. He's exactly right. It followed interest rates higher. It's eased back just a bit. Don't want to make a big deal about this.

But do remember, the big hedge funds are super short with respect to interest rates. And also, with respect to the dollar, they're long. So you want to be very careful here on these reversals. Seema, back to you. Dollar 10845. Rick, thank you. Oil closing for the day following a rather volatile session. Pippa Stevens at the same.

CNBC Kamadi Desk with what's happening today, Pippa. Hey, Seema Oil is giving back some of the strong gains we've seen this week. The market is waiting for additional clarity from Fed share Powell and looking ahead to the upcoming OPEC meeting on September 5th. WTI is down about 2.5% at 92-54, Brent crude right around 9937. I did want to point out shares of Occidental in the red now, but the stock earlier hit the highest since 2018,

as Berkshire Hathaway scoops up shares. Now, WTI has fallen quite a bit since breaking above 1.30 in March, but energy companies are still making money. Globally, oil and gas producers are on track to report a record $1.4 trillion this year in free cash flows. That's according to a report released today by Deloitte. Seema? Pippa, thank you.

Earlier this hour, we heard from St. Louis Fed President James Bullard saying that investors are mispricing inflation. right now, that he expects that higher for longer. He also admitted that the Fed is taking recession risk, but no one can really predict if it will happen. His comments come ahead of Fed Chair Jerome Powell's speech tomorrow. Let's bring in Jerry Castellini, president and chief investment officer of Castle Ark Management. And Jerry, you've been looking at ways investors can protect their portfolio from inflation.

Topic is energy. Tell us why. Well, I mean, the Fed has the same problem you and I do. and basically the economies in the world. We just can't predict today how long it will take high rates to slow inflation. We can't predict how long the Chinese economy will stay under lockdown, and we can't predict how long the war will last in Russia. All we can do as investors is try to assign enough high probability outcomes

to the different investments we have. And the one way we feel is really obvious is to just have a nice set aside for inflation-sensitive stocks, and specifically energy stocks, the names that will have the greatest upside in the event of some continuation of inflation, but also give you some downside protection in the event that there's a market that really craves yield and Warren Buffett buying stock. So it's this nice in-between that you don't have to have this debate. You can own a part of the market that kind of buttresses one side of your portfolio and gives you upside on the other. Is there an argument, Jerry, to take out the specific security risk of owning a single security or a couple of securities, whether it's Exxon or EQT or Devin or whomever, whichever I should say, and buying instead an EFT, an ETF, excuse me, an ETF or a fund that is an energy fund.

and just buy a basket of the stocks? I wouldn't argue with that for a second. I mean, in the big XLE, for example, it's dominated by Exxon and Chevron. Those are two great names. If you want to get a little more growth, but a little more risk, the XOP offers that to you. So you've made a great point. And the important thing is you need to have a collection of names or at least some bulk word in the portfolio that has these unique characteristics.

Playing the consumer has become increasingly difficult, Jerry, to say the least, as we hear from Walmart, Macy's other consumer-facing names. But you still have some picks. Ulta and Nike, why do you think these two names are ways investors should protect their portfolio from rising prices? Yeah. Well, in both cases, one is a retailer and the other as a manufacturer. Both of them have something very, very powerful.

Alta is by far the one-stop shop, and no one's challenged that. And its sales have continued to thrive here, and we think this is going to continue. And Nike's this global brand. I mean, we're sitting on top of probably their greatest brand recognition in the history of the company right now. And we think that just squashes the poor competitors in both cases. And that gives you what you've seen out of these companies, which is the strength of their underlying franchise. And kids, two observations there, one with respect to Nike,

if you're a Nike kid and you've grown up with Nike, you stick with Nike and you don't want, that's called Good Drip. You do not want the competitor. You're about the fourth person this week who's mentioned Ulta. Maybe I need to go in one of these stores. And reporting earnings tonight. I'll go with you. Yeah, because everybody talks about them as being one of the great plays right now.

as you do. What makes them different and better? It's just the branding and then the product offerings they have. None of these types of businesses are dominant forever. But if you go through the history of, you know, the Dick Sporting Goods, the Alta's, the companies that nail it in terms of the current brand interest, they're in that spot right now. And it could be five years before they give that back. You know, Jerry, you and I've known each other a long time. We're both a little grayer than we used to be. I'll meet you in Alta. Maybe they've got something for us there. We should we should we should we. Thanks, my friend. Good to see. A little makeup, a little oil. A little makeup. Oh, the dome of the people has to get more done here every day. Yeah.

By the trowels. You guys are perfect. Just the way you are. Oh, I don't need it at all. Sorry, Jerry, good to see you. Coming up on power launch, we're going to talk to the governor of Oklahoma. His state has one of the lowest unemployment rates in the country, good for workers, not so good for companies who are looking to Phil Jobs. We're going to discuss his plans to attract workers and make his state a tech hub. We'll be right back. Biggs, which is you haven't heard very much about, but you will soon. It's the Lula Lemon of Healthcare, and we invested about $100 million there. But I've invested across the board in travel. I love travel. It's been deferred for three years. Nobody's traveled. And now the business has really taken off,

and we're investing in Hyatt, we're investing in Vail, we're investing in. in Red Rock. That was billionaire investor Ron Barron's buy list and the focus of today's three-stock lunch. Figgs is up about 10% today after being down about 60% this year. Hyatt is up 17% in the last month. And Red Rock Resort, the stock down about 24% in 2022, but up 13% just in the last month. Let's bring in Steve Grasso, Grasso Global CEO and CNBC contributor to trade these names. And let's start with Figgs.

Yeah, so hey, Seema, thanks for how. having me. So I am constructive on the name. The only issue I have is on a technical basis, the stock has been following a declining trend line. And usually when it tests its 100-day moving average and fails, the stock fails. So I'm looking at it on a chart now. It did fail. It did just that. It's tested that 100-day, which is currently at 1188. But I think Ron's comments this morning goose that stock, and now we have a little bit of momentum, and investors are trying to see some value in that, and I do see some value in it. I believe he also mentioned some new product lines. So on a chart, you see a bottoming pattern in June, and with those new product lines, I think

you have the chance to have a substantive bottom in a stock that's been hit pretty hard, so I'm looking for higher prices in this one. Well, there you go, up 13 percent today. But down about 60% year to date. You look so healthy, Steve. I can't tell you. A little sunscreen. You're there. No, no, no more bronzing. That's good. You're looking good. Let's go to Hyatt, shall we? What do you think? Thank you. Yeah, Hyatt's another one I'm positive on too. And I, you know, people, Tyler, and I'm sure you could attest to this, they want to get out of their homes after the pandemic. They want to go out and they want to have experiential vacations. And Hyatt has benefited from that. It's above all of its moving averages. All of the moving averages are moving up.

Quarterly Rev is up, I believe, 120 or 123%. And then a term in the business, RevPAR, that is up 140% revenue per available room. There is some resistance around $97 in the name. But if you look at the fundamentals in the stock, they've been really firing on all silver. And I would think this would continue the momentum higher, although recently it has climbed up pretty decently. So look at that resistance level at around $97, but I am looking for higher prices in this one as well. Yeah, to your point, though, it has outperformed other hotel operators this year. Final name, Steve, Red Rock Resort, the casino operator. Your thoughts on this name? First of all, this one gets the best name in the group. I mean, it's just fun to even say, right? It's got a great sense. symbol, but unfortunately, unfortunately, this one is in the declining trend, and it doesn't look like it's breaking out of it just yet. It would have to pop above 43 to break that declining trend line

SEMA, and the 200-day moving average is at 4385. If it could take out both of those levels and hold above for a couple of days slash weeks, that would make me change my mind on the stock. I'm a little bit more so negative on this one. Net income has dropped by 77%. Net revenue, not growing. Profitability is down in double digits. So whether it's on the fundamental side or on the technical side, this one is not matching up for me.

But you know what? Two out of three ain't bad. Not bad at all. Steve, we appreciate you joining us today. We will see you soon. Steve Grasso. Coming up on Power Lunch, the tech hub in the heartland, we will speak to the governor of Oklahoma about the state's big push to attract workers as it looks to become the epicenter for the future of transportation. Power Lunch, we'll be back in tune.

All right, welcome back to Power Lunch, everybody. State of Oklahoma has one of the lowest unemployment rates in the nation. Enviable, you would have to say, sitting at 3%, but with so few people unemployed, it is sometimes hard for companies to find labor. According to the Oklahoma Chamber of Commerce, the state had 36,000 more job. openings than applicants last year, and more than half of those required a bachelor's degree. Now the state is teaming up with its neighbor, Arkansas, to create a tech mobility hub that is expected to create thousands of new jobs. Let's bring in Oklahoma's Governor Kevin Stitt, Mr. Stitt, Governor Stitt, I should say, welcome. You're an entrepreneur yourself. You built a business. You know that workers are the lifeblood of a business. You have an enviable problem, a very low unemployment rate, but you have a lot of jobs that are going begging, in part because you don't have the high skilled labor pool that some of those jobs require. How are you going to fix it?

Well, I think, you know, workforce, like you said, it's what every single business is concerned about. We've got really great quality of life here. We've got great work ethic. lining the jobs of the future with our universities is something we talk about all the time, but also our career techs. And we're actually number one in the country right now and bringing an aviation curriculum into the high schools. So looking at those A&P mechanics, HVAC, also the technical degrees that we have at our universities.

So kind of bringing them together with the workforce and the companies and actually filling that is what we're always focused on. How does it work when you partner with your? your colleague, Governor Hutchison, across the way in Arkansas. Is this a, how's that going to work? And is this initiative focused on your great universities, University of Oklahoma, Oklahoma State, where you went, Arkansas, which of course has a developing area there in northwest Arkansas.

Yeah, you know, Governor Hutchinson and I, we signed an MOU with governor of John Bell Edwards in Louisiana as well on a hydrogen hub. And then just recently, we signed an MOU for an advanced mobility. Oklahoma is already number one in the country in drone readiness. I think Arkansas is number two or three. So together, we're developing this corridor between our two states where we're inviting all the tech companies to study what does drone looks like, what do unmanned vehicles look like.

Our universities are focused on that. The only place you can get a Ph.D. right now at Oklahoma State University is an unmanned aircraft is at Oklahoma State. So by creating that corridor between our two states, we're letting everybody know that this is the future, and we want them located here in Oklahoma and Arkansas. Governor, I recently went to Wisconsin to report on the shortage of housing and how that's affecting manufacturing towns like Sheboygan from allowing more residents in. They may have a job, but if they can't find a house, why would they move there? I'm similar. I'm curious if you're seeing something similar in your state of Oklahoma, I know prior to becoming governor,

did run a mortgage services provider. Yeah, absolutely. Well, I mean, first off, the barriers to entry in Oklahoma, the regulation is so much lower than other states. So we've got great home builders that are going to meet the needs of our citizens. We're going to remove any issues or problems and let them go create that, you know, build those homes, those apartments to make sure we meet that workforce. We have the lowest unemployment right now in our state history.

We don't think housing is going to be an. impediment for our workers. These are high, this initiative to be a transportation high-tech hub is going to require a lot of STEM-related degrees and credentials. According to the State Chamber of Commerce, the state ranks 45th in the country in terms of people who hold a bachelor's degree and they only account for 26% of the workforce. STEM-related degrees, Oklahoma ranks 50th. That's quite a hurdle you've got to surmount here so that,

the companies that come can find the workers they need. Yeah, you know, Boeing has 3,500 engineering folks there in Oklahoma City all around Tinker. Tinker is the largest maintenance repair facility in the country. But yes, they're hiring engineers. We need to produce more engineers in our universities. I meet with university presidents, OU, OSU, TU, to continue to talk to them about a bigger vision. Let's go ahead and focus. Let's set a bigger goal to recruit these kids from,

out of state to train more engineers. There's no doubt about it. We need that across the board. But also, you know, we're recruiting those from out of state. People are wanting to move to our state. We're number 11 in the country right now in migration to the state of Oklahoma. They love our pro-business, pro-freedom policies. And that's why our unemployment so low is because companies are coming here and we know that the jobs are, that the folks will follow them. Let me ask you a question that I know you've probably been asked before, and that is with respect to abortion. You have been a staunch anti-abortion rights person for your entire career. Does that issue come up in your conversations with companies that you're looking to attract to the state,

with workers who might be considering moving to the state, and how do you answer it? Well, first off, not at all. I believe when you're clear with your culture, it's very attractive and sticky. to a lot, a lot of people. People are moving to Oklahoma because of our policies. And again, it's not for everybody. But on the abortion issue, every state's going to do things differently. And we recognize that. We're clear with our values and who we are. But this is a conversation that now you can have at the state level. And we recognize that every state does things differently. Oklahoma is a very pro-life state. So did I hear you say then it really does not come up in those

conversations? That's exactly right. I mean, I have to be. people all the time moving from California. And I tell them, I kind of joke with them, hey, I had to wait 18 years to vote in Oklahoma, so you can have to wait 18 years to vote as well. And they kind of laugh. But they say, listen, there's 12 million of us that voted for President Trump from California. We are moving to states like yours because we believe in lower taxes. We don't believe in mandates and we believe in freedoms. We appreciated the fact that you kept your schools open, that you kept your businesses safe and open. And we're not going to shy away from our culture and who we are as Oklahomans.

All right, sir, thank you very much. We appreciate your time and your candor, Governor Kevin Stitt of Oklahoma. Well, car loans are getting bigger than ever, and so are prize pools of golf tournaments. We're going to put those stories under the microscope next. All right, folks, rounding the bend to the 3 o'clock hour. check on the market right now. Stocks are steady ahead of Chairman Powell's speech tomorrow. You see the industrials up a third of a percent. The S&P up three quarters of a percent. And NASDAQ hovering really right where it began the hour, Seema, up about 1%.

Higher for longer, that was a takeaway from James Brulard earlier on this hour. Inflation, that is. And presumably interest rates. And the market could be underpricing it. All right. Stocks are up and technology, best performing sector. Thanks for watching Power Launch, everybody. Closing bell begins right now.