Power Lunch - A Midday Rally on Wall Street & and a Warning on Bitcoin 4/19/22

Episode Date: April 19, 2022

Stocks are in rally mode even as bond yields rise and questions remain about whether the Fed can engineer a soft landing. Is a Fed tightening priced in and how should you invest amid the uncertainty? Our market guest shared his playbook and ended the interview with a big call on bitcoin. Plus, we asked a veteran tech investor if it’s time to load up on tech stocks, especially if you’re in the ‘peak inflation’ camp. And our three-stock lunch trader weighed in on WeWork and whether she thinks the company is on a path to profitability. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome everybody to Power Lunch. I'm Tyler Matheson. Here's what's ahead on a busy Tuesday afternoon. A rally on Wall Street stocks are up. Yields are up, which means bonds are actually down, but if you like, the yields going higher, they are. Already has the market priced in a Fed tightening? That's the question, and the answer to it is really key to whether the rally can hold. And a tectonic shift, if you think inflation is at or near a peak, is it time to start getting back into technology? shares. We'll ask a veteran investor in the sector, whether the sector is at a turning point, Kelly. Tyler, thanks. Hi, everybody. Big camps, small camps. Just about everything is moving higher today, especially the NASDAQ, even with rates on the rise. We'll start down there, NASDAQ up 240 or 1.8%. The SMP up 57 for a 1.3% gain. The Dow up 403. We are just off session highs. Natural

gas. We highlighted this yesterday. It's move above $8. Really backing off that today, back down to about 715 per million BTUs. Yesterday was a 13-year high. We're continuing to keep an eye on the action here. It's still an elevated level, historically speaking. Same story for the 10-year yield, 2.913%. We were even at 292 earlier on, the 30-year over 3% as well. So both of these moving to some significant thresholds.

The 10-year continues to be at about three-year highs. On that note, let's start with Rick Santelli this hour, who's got the story behind these ever-higher. creeping yields. Rick? You know, and the market gives us so many clues, Kelly. We had noticed in the last couple weeks that long maturities have taken off. They've been leading the charge, curves flattening, balance sheet in center stage, maybe driving that dynamic. Well, today, a bit of a change in path, we see flattening in the yield curve, and we see short maturities have woken up. Let's look at a two-week of two-year. You can see that it's rather stochastic, but it's off to the races.

on pace for a fresh high close going back to the spring of 2019. But look at the difference of the two-week chart of a longer maturity in the form of 10-year note. You can see the 45-degree angler. It's been more aggressive. But two years are still going to close at a fresh high. So are tens. When was last time 10s closed 3% or higher? The end of November 2018.

And it doesn't end there. 30-year bonds ticked off over 3% today. That is something to pay attention to as well. the sleeping giant of the long of security certainly has come back to the party of higher rates. And I don't see it diminishing any time soon. The Fed's so brilliant. If there's a mistake here, they're going to blame the market. They've incited the market and they throw out all the ideas of what they're going to do.

You heard Mr. Bullard potentially 75 basis points, but will they actually do it? No, they have a litmus test called the market. So we're going to have to continue to pay attention. The Europeans are paying attention. the guilt, the 10-year in Europe. It is in the U.K. It's closing at the highest yield since December 2015. Their Bank of England's been aggressive. They've raised rates to three-quarters of 1%. But the ECB, boond yields are also on pace. They close at the highest yield since the summer 2015, but their central banks dragging their feet. The moral of the story is all rates are going higher

and central banks better buckle up because the markets seem to be in charge. Tyler, back to you. little bit more about that very point, Rick, as those yields continue to soar, are the markets listening? How much are they listening to what Fed officials are saying, or is it the other way around? James Bard says inflation is much too high, but Charles Evans sounding a little more optimistic. Let's bring in Steve Leasman to make sense of what sometimes seems insensible. Do my bestest, Tyler. Both Chicago's Charlie Evans and St. Louis is Jim Bullard. They both have positive economic outlooks, despite the Fed's plans to raise rates to combat inflation. But they differ on how much of a threat inflation is than how much the Fed should do this year.

Evans saying the economy should do well, even in a rising rate environment. He would not have to say that he sees the Fed going to raising rates to tune a quarter, two and a half percent by the end of the year. Not enough for Jim Bullard. He said yesterday the Fed should hit three and a half percent by year end, moving in 50 basis point increments, thinks the U.S. will still have above-trend growth and declining unemployment. He said the economy did well in 1994 when the Fed also hiked, including, by the way, a 75-bases point hike.

That one was successful and did set up the U.S. economy for a stellar second half of the 1990s, one of the best periods in U.S. macroeconomic history, so it was successful. And in that cycle, there was a 75-bases point increase at once. one point. So I wouldn't rule it out, but it's not my base case here. Bullard said the key is making clear to the public and markets that the Fed is in a new inflation fighting regime and that it means what it says. If it gets that right, a forecast not shared, however, Tyler, by many right now. So let's talk a little more about Mr. Bullard. How does he square the circle here if he thinks inflation might come down at the same time as the economy grows above trend and unemployment

is really very low. Yeah, it doesn't make sense in a classical framework. But what he did, Tyler, is he pointed in the interview I did with him yesterday to this 1982 paper by Nobel Prize winning economist Tom Sargent, who looked at four inflations in Europe, hyperinflations in Europe in the early part of the 20th century. He says all four ended pretty quickly when the monetary authority and the fiscal authority changed their regime, when it became obvious to the public that they were not going to stop that they were held bent on ending inflation. That's when inflation went away and did so

without massive unemployment in that sense. So he says that the paper argues that the perceived cost of ending inflation through recession is well overstated. Ah, very interesting. Okay, thank you, Steve. Steve Leesman. So how do you invest when there are so many questions about the health of the economy? Should you put your money into safety plays or growth and the more volatile names? Our next guest has a list of names to buy and to avoid. Welcome back Michael Cantrowitz, chief investment strategist with Piper Sandler. Michael, welcome. Nice to see you. Nice to be back in that beautiful room of yours. Love it. Talk to us about the markets and whether you think now is the time to start nibbling at some of the more, the growthier names, the tech names, or

whether it's still time to play it safer. Sure. I think this year, the mantra of the market is is it's going to be going nowhere fast. So it's really a year about positioning. When the S&P's up 20, 30 percent, positioning is less relevant. When the market's down a little bit are flattish on the year, it's all about positioning. And so as the world continues to slow, and I don't think there's much of a debate about that, the question is how long are we going to slow for and what's priced in? And we think the answer for the first question is we're going to be slowing into the middle of next year. And we have not priced in very much yet. investors should continue positioning or repositioning their portfolio to stocks that act as

countercyclicals that are less cyclical to the economy. You've got two trades going on right now. The higher rates, higher inflation trade, which is likely to end sooner than later, and then the growth slowdown trade, which has got at least another year left. So we would continue to avoid high beta stocks and expect cyclical stock leadership to continue to narrow increasingly as this slowdown continues. So as I look at your list of cells, they are, I would call them concentrated in cyclical areas like DuPont, Floor, Textron, H.P., Hylenbrand, right? Yeah, there's a couple of different ways to pick buys and sales. We do both fundamental

approaches and macro approaches. This is a real pure macro approach. What we did is look at which stocks in the S&P 500 or 1,500 have the highest correlation to earnings revisions. And these five stocks have correlations of earnings to earnings revisions in the high 80s. So given our view that earnings revisions are headed lower and lower and lower over the foreseeable future, you don't want to be having too many stocks in your portfolio that have performance profiles that only do well when revisions are moving higher. And conversely, what we think investors should increasingly embrace are stocks that can do well in an earning slowdown. So that's names like Campbell Soup, AT&T, Eastern Government Properties, Cable One, Kimberly Clark Corp, there are many more stocks in that list.

But these are stocks that have a negative correlation of about 85% to earnings revisions. So earnings revisions go down. These stocks are likely to outperform. So it's a pure macro view on stock selection. of course, adding a fundamental overlay would make sense as well. Michael, it's Kelly, and I'm in a cyclical mood today. So I want to ask you a couple of questions for those of us who might be feeling this way. I look at commodity prices breaking out, right?

I look at rates moving higher. I look at stocks moving higher. I look at growth holding in there. All of these factors, the steepening yield curve were up, what, 40 or 50 basis points in just a couple of weeks on Tuesdays? And I just think what if there is still some cyclical momentum here? Well, I think there is some cyclical momentum, but it's going to be increasingly narrow. We're even beginning to see stocks that typically perform well when rates go up like banks, not performing very well.

So while the market's up today and there is a cyclical tilt to leadership today, again, we look at the market since the beginning of the year. We've gone nowhere. And I don't think we're going really anywhere for the rest of the year. And so I think we're going to see a lot of volatility, a lot of gyration in stocks, and where we have the highest, most highest conviction is thinking about what's the end result of all of this increase in rates, inflation, gasoline, literally everything. We've had a shock to literally everything that helps to explain a slowdown. And we're going to get a growth slowdown from that. And that's how you want to be thinking, as opposed to reacting to, let's say, Bullard today. Well, let me put it this way because we all are kind of approaching it just from a different. point of view. So if I said to you that the Fed is still behind the curve and that's what the market is telling us, what would you do with the market in the meantime? For the overall index,

I think you really want to go into lower, lower beta indices, so large cap in the U.S. I would avoid small cap, especially small cap value, would be avoiding emerging markets and European equity markets that are far more cyclical. Don't do well with a stronger dollar backdrop. And the Fed being behind the curve is only going to continue to increase the strength of the U.S. dollar or weakness elsewhere. And that's generally an additional tightening for those markets overseas. So would be avoiding higher beta stocks, highly cyclical stocks. I think we're in the ninth inning of this commodity trade cyclically.

But we're in the second inning of this global slowdown story. Wow. And I should add, in case you haven't riled people enough. You also say full stop, avoid Bitcoin. Yes, and Bitcoin over the last three or four years has seen an increasingly higher correlation with equity markets. And specifically, it trades with about an 85% correlation to higher beta stocks. That is the last place you want to be at a time where the global economy is slowing.

Risks are rising. So, yeah, I think Bitcoin gets cut in half over the next 12 months. Wow. Wow. Okay. So ninth inning of the commodity story, second inning of the growth slowdown. Michael, this is why we bring you on. Thanks for your point of view.

We really appreciate it. Thank you, Kelly. Michael Cantowitz at Piper Sandler. Shall we? Cut in half, Bitcoin. Coming up, grain prices are pulling back today after rising to multi-year highs. Have we seen the peak or are we just one weather event away from a major spike? Plus the CEO of blockchain.com.

Is there an IPO in its future? We're live at the Emerge Conference. And as we head to break, let's check on Bitcoin and the financials. J.P. Morgan and Goldman rallying 1.5% today. Look at citizens flying by more than 7% after better than expected earnings and an upbeat outlook. We're back in a moment. Welcome back to Power Lunch. Green prices pulling back today after yesterday's big run that saw corn hit a nine-year high.

So far this year, weets up 46%. Corn's up 35%. Soybeans and cotton are up more than 20%. And it may not be the end of the spike. Oliver Slope is vice president and co-founder of Blue Line Futures, a commodities trading firm. Oliver, it's good to see you. And has this move persisted longer than you would have thought? Yeah, it really has, as you had alluded to from the start of the segment, corn, soybeans, and wheat have just been really on a tear from the beginning of the year after we get bullish catalysts after bullish catalysts after bullish catalyst.

The first catalyst to start the year was obviously the bullish input costs, which we all know about. And then what really added fuel to the fire was the Russian invasion of Ukraine. Obviously, we all know by now that Russia and Ukraine account for about 30% of global wheat exports and about 20% of global corn exports. So those are the two markets that are most affected here with what's going on overseas. But I think wheat has probably run its course and maybe ran a little bit too far. What we're focusing on right here right now is the corn market as we enter that spring planting season. And weather becomes a lot bigger of a factor going forward, which, as we know in the Midwest, can be a coin flip from day to day.

The most recent USDA report that showed prospective plantings, how many acres of corn were going to plant, came in at 89.5 million acres. That's about 3 million acres less than the average analyst estimate. So lower acres in corn is driving prices higher and higher and higher. We've tacked on about a dollar since that last USDA report. Let me ask you two questions you referred earlier to we knew early in the year about, quote, higher input costs. What are those input costs that were higher and why? Fertilizer prices are just screaming higher. We all know commodity prices as a whole have been screaming higher, but fertilizer prices for corn are the big one.

And as I alluded to, the shift from corn acres is moving to soybean acres. So we're seeing about 3 million acres less of corn shifted towards soybeans because soybeans require less. So that's what's driving prices here in the corn market going forward. Now we're starting to get these weekly crop progress reports from the USDA as well. Yesterday's report showed us about 4% planted for the corn. It's about 2% below the 5-year average or behind the 5-year average pay. So nothing to get overly concerned about right here right now, but looking at the 6th and further down the road forecast,

and if it continues to be cold and wet in the eastern corn belt and hot and dry, Western Corn Belt, we could see this market continue to rally over the next one to two months. Well, it's cold here today, I'll tell you, and it was wet last night. Let's talk a little bit about Ukraine. How much wheat do your sources tell you that Ukraine is going to be able to grow? What percent of their normal crop are they going to be able to produce in wheat and or corn this year? Well, it's definitely been diminished and in cut substantially. Now, when we're looking at the wheat market, a lot of countries that grow wheat use it for domestic purposes. And the United States grows a lot of wheat as well. And we use that largely for our consumption. So I think the

world has plenty of plenty of supply of these grains. It's just more about logistics and moving it from place to place. And that's going to be the interesting thing to see, probably more so in the wheat market. But as I alluded to earlier, I think the wheat market probably got ahead of itself earlier in the year on the back of that Russian invasion because the funds managed money were net short wheat. So there was a bit of a short squeeze there, which added fuel to the fire. And then you had the growing popularity of the wheat ETF, which prior to the invasion was trading anywhere from two to 300 shares a day. At the peak panic in the wheat market, we saw that ETF trade as many as 27 million shares a day. since then we're trading about $5 million on average.

But again, pre-invation, that ETF was trading anywhere from 200 to 300,000 shares a day. Right. So, Oliver, let me ask you this before we let you go. Our last guest from a macro point of view said he thinks we're in the ninth inning of the commodities move in the market and only the second inning of a demand slowdown. What's your response to that? I would tend to agree. I think the commodities have had a heck of a year, year and a half.

moving to the upside and looking at the corn market, since that's what we've been talking about, mostly here, is moving into that spring planting season and crop progression stage, if we get a good crop in the ground over the next one to two months and weather looks to stabilize and be fairly normal, there's going to be plenty of corn coming down the pipeline in that new crop December contract. So we're keeping a very close eye on the December futures. That's where a lot of the momentum has shifted towards looking past some of these near-term hiccups that December contract is going to be one to keep an eye on. All right. We'll leave it there. Oliver, thank you so much. We appreciate it.

All righty. If these higher food prices persist, which stocks are likely to benefit? Who knows better than Simomodi? She's looking at the names. Hi, Sumo. Hello, Tyler. Good afternoon. Well, at first, the agriculture stock Wall Street really gravitated towards was John Deere, and the story was and is simple. Weak goes up. Farmers will be inclined to spend more on machinery and equipment. That is reflected in shares of John Deer up nearly 30% this year. But higher commodity prices, coupled with concerns of a food shortage, have given rise to a new wave of ag-related names.

There's Corteva, which spun off from Dow DuPont. It's an ag and chemical seeds company. Shares are up this year. Mosaic trading at its highest level in nearly 10 years. CF industries up about double digits in April as demand for fertilizer grows, especially in Latin America where countries like Brazil are big producer of crops, access to fertilizer has become a bigger issue as Russia and Ukraine scale back on production. And then there's Archer Daniels in Bang. They play a role in the processing of grains in soybeans, a process called crushing that is used

to extract ethanol. Up big over the last year, so much so that Bank of America this morning downgraded both names and lowered earnings estimates. The challenge, as highlighted by analysts, is the unknown. How long does this war last? And how much more are consumers willing to pay for food and consumer goods? That's why earnings from these major players in the the coming weeks will provide a better gauge as to how strong demand really is, and if the fertilizer shortage is holding farmers back from growing more crop. Tyler and Kelly. All right, thank you very much. Sima, Sima Modi reporting for us. All right, further ahead on the show, we got three stocks, three calls. We'll lay out the next rounds, our three stock lunch. The buying or selling,

the chugging or plugging is the call of the traders. Three stock lunch coming up next. And Bitcoin Bulls holding firm on crypto. keeping the assets stuck around $40,000 in the hopes it hits 100K, but does it need to fall before it? There are so many things moving around here. I can't even follow, but it's cool because you know what? We're going to come back, right? Right here.

Right here. It's a lot of stuff moving. Welcome back to Power Lunch. I'm Dominic Chu. We are tracking a rebound in some of the big home building and improvement stocks, names like Floor and Decor, Lenar, Mohawk, Polarck, Polaro, Polaro, group among others. Now, one of the ETFs attracts those names, many of them

anyway, the spider homebuilders ETF, the ticker there is XHB. It's in positive territory right now, but it's still trading along the flat line for April as a month, and a decline this month would add to its longest monthly losing streak since 2011. This all comes, as recent data

shows Home Builder's sentiment at its lowest level in seven months with rising mortgage rates and housing costs, turning away some would-be buyers. Watch those home names and mortgage rates Ty, I'll send things back over to you. All right, thank you, sir. Let's get to Bertha Coombs for a CNBC news update.

Hi, Bertha. Hi, Tyler. Within the last hour, President Biden arrived in New Hampshire to push for infrastructure spending. On the flight, reporters were told there would be new U.S. sanctions imposed on Russia this week, as it begins a new offensive in eastern Ukraine. A lawsuit that seeks to have Marjorie Taylor Green taken off the ballot in Georgia can proceed. a federal judge rejecting the Republican lawmakers attempt to block the suit. An election reform group says Green had a role in the January 6th Capitol attack,

so she should not be eligible for re-election. It cites the Constitution's 14th Amendment, which says anyone who engaged in insurrection or rebellion cannot run for federal or state office. Green denies the accusation. And in Oklahoma, victims of the 1995 attack on a. federal office building are being remembered. 168 people were killed when two right-wing anti-government extremists bombed the Alphid P.

Mara building 27 years ago today. Ty and Kelly, back over to you. Bertha, thank you very much. Ahead on Power Lunch, the clock is ticking on your portfolio between rising rates, inflation and recession risks is time running out to trim your tech holdings. We'll discuss when Power Lunch returns. All right, folks, we've got a big 90 left in the trading day, and we want to get you caught up on the markets.

We're going to talk about tech stocks, and we want to talk about yields moving higher. Can those higher markets and higher yields coexist? Plus, we'll get a check on the commodities. But first, we begin with Bob Pazan. Bob. And, Tyler, I like what I'm seeing, and it's because of those commodities you were talking about. Oil's down 4%. That's sort of a proxy for inflation right now.

And the rest of the market is doing better because of that. Let's take a look. Remember the transport's sliding for weeks now. Finally stop going down. That's a great sign. Banks and other group not doing very well. Finally stop going down. Industrials have stabilized as well. And there's a little weakness and energy that's exactly the kind of action that you want to see. A little bounce in the sectors that everybody has been abandoning and a little bit of sell-off in the sectors that everybody has been buying into. Thematic tech having a very good day. Remember, these sectors have been very weak recently. So Kathy Wood talked to her last week at the ETF conference, Arc Innovations up almost 4%. Cloud computing stocks, electric vehicle stocks, clean energy sector, all what we call thematic tech, all rallying nicely today.

Of course, Kathy Wood's stocks, the Teledox, the Twilios, all doing really well today overall. And again, those stocks also had been down the last three or four weeks, Zoom video, also having an exceptionally good day. If you doubt the winner for this earnings cycle, you should see today what Halliburton had to say. Halliburton is up 80 percent so far this year, and they are gushing cash. I've rarely seen an earnings commentary like this. The company said we have a multi-year cycle underway. We have price improvement. We have strong customer demand, and we have a sold-out equipment market.

Tyler, they are the equipment market. They can't sell the stuff that they offer to the oil business companies fast enough right now. 1% year to date. Pabazzani. 81. Thank you very much. All right, let's go to the bond market now and talk yields. We heard from Rick at the top of the hour.

Yields now are at levels they haven't been for a long time. Basically it doesn't matter where you are, what country, what kind. For the 10 year, it was 2.93 for the first time since late 2018. There it is. 2.923 right now. The 30 year is above 3% or was for the first time since April of 2019. Rates arising. How about energy prices giving some credence to the idea that inflation may have peaked at least for today? Oil and net gas, both giving back recent gains. And let's check in with Pippa Stevens now at the commodity desk. Hi, Pippa.

Hey, Tyler. Oil and Gas are sinking, reversing yesterday's big move to the upside. Let's start here with Nat Gas. At the lows of the day, it sank more than 11% and traded under $7. Just yesterday, it serves. above $8 and hit the highest since 2008. So all told from yesterday's high to today's low, it fell 14 percent, some profit taking here after five straight weeks of gains. Moving over to oil, both Brent and WTI are down about 5 percent, but holding above 100, this is the first negative session in five and comes after the IMF cut its global growth forecast, prompting fears around oil demand. Now looking at energy stocks, the sector did. hit the highest since 2014 earlier today before pulling back. We did hear from Halliburton this morning, which beat top and bottom line estimates.

The company said they see, quote, significant tightness across the entire oil and gas value chain. Adding, Tyler, that the equipment market is almost sold out. Back to you. You saw it. Bob saw it. Everybody sees it. Halliburton soaring today. Thanks, Pippa. So with the NASDAQ up nearly 2%, is this the start of a bigger move higher, especially if you're in the peak inflation camp. It's about to roll over just a bit.

Paul Meeks is a portfolio manager at Independent Solutions Wealth Managed, finance professor also at the Citadel. Paul, welcome. Good to have you with us. What do you say? Can those growth tech names make progress as interest rates inexturably move higher? The typical thinking has been that that's going to be an impediment to them.

That's definitely going to be an impediment to them. But you hit the nail on the head. It's not what happens today or tomorrow. It happens six to nine months out. And if we do see peak inflation, which wouldn't necessarily lead to peak interest rates, but it would be a good sign that should bring some relief to tech and aggressive growth names. Is it thus then a time to wait, or is it a time where you can start safely to nibble at some names? maybe some of the safer, bigger mega-cap tech names that might not be quite so volatile if that is your want?

I think you can begin to nibble. And you're right. If you take a look at the fangs, I think it's always an opportunity when they're weak to buy, particularly Microsoft, Apple, and Google. I think the business models at the rest of the fang group may have changed somewhat, so I'm more skeptical. But then there's also an opportunity to jump on some new themes, or maybe not particularly new themes, but themes of this age rather than yesteryear. If you take a look at some of the infrastructure software companies, particularly those names that are focused on cybersecurity, companies like Palo Alto networks and Fortnet, you might have some opportunities, even though they're not particularly large cap and they might fly under most tech investors rate. And even a name like Box, you think, is one that fits this environment? Paul, why? Yeah, so Box and the other two that I mentioned are laser beam focused on cloud management and cybersecurity. And I don't want to say regardless of valuations, because that would be a dumb comment. Valuations are always at least somewhat important.

These are enduring themes. These are accelerating themes in these very odd geopolitical conditions. So I think they'll do well. So you have those names for infrastructure software, which are kind of a hiding place right now. You think a lot of the names like Apple could be relatively safe, Google, Microsoft. What about Broadcom? I do like Broadcom because Broadcom is a hybrid. You know, it's part semiconductor company, and it's supremely well managed.

They have a good handle on their supply chain, and so they've been able to weather the COVID supply chain clog. And they're also, at least partially, a infrastructure system. software company. And they pay a very lush dividend, which is rare in the tech sector. So I think that one is probably also good to buy, Broadcom, ticker symbol, AVGO. And just to put a button on it, tell us why, again, you think, you know, names like these infrastructure plays are a place that investors can seek out in tech right now. Yes. Again, they're not necessarily value plays, but cybersecurity, red hot has only come more into the four in recent weeks. and months, as we all know. And then also with Box, here's a company that helps you manage your

cloud applications. And even though Amazon Web Services and Amazon came into that infrastructure cloud market back in 2006, it's been some time, we still are relatively embryonic, believe it or not, as far as the market share with cloud versus traditional hardware and software. And so if you can embrace that theme, I still think there's many years ahead of it, and it's going to be a lot of dollars, trillions of dollars in market cap created. All right. Paul Meeks, thank you for your time today. We appreciate it. Thank you. After the break, you know what time it is? Three stock lunch? Yes, we have a whiskey on the rocks, an apparel spritz, and a Long Island Ice Tea. We're going to run through three top calls of the day. Welcome back, everybody.

It's time for today's three stock lunch, where we highlight three names moving on some bold analyst calls. On today's menu, WeWork, surging after Piper Sandler initiated it and overweight, saying now it's on the path to profitability. Amazon hired despite a rare neutral rating from Rose and Blatt on fears of slowing retail sales. And Lulu Lemon, hire after an upgrade at Truist, citing its pricing power amid red-hot inflation. So how do you trade these names? It's welcome in Gina Sanchez, Chief Market Strategist, at Lido Advisors, and a CNBC contributor. Gina, welcome, an apparel spritz for anyone who is wondering is rhubarb liquor. So we've learned something today. What would you do with shares of

our first stock, WeWork? So WeWork is an interesting one because it has such a short history. And so when I want to look at that space, I look at IWC, which is Regis. And that has a much longer history. And there's no question that this kind of flexible workspace theme is here to stay. And if you look at the trend, even though it stalled out during the pandemic, it never broke that lower trend line. So it really still is on an upward trend and they're on a rebound right now. So that part of the story is absolutely true also for WeWork. The problem with WeWork is that the path to profitability takes you all the way into 2024.

With rising interest rates, cash is going to be king, and that is going to be the biggest challenge that WeWork has is getting to cash flow positive. And that's probably not going to come until the middle of next year. So I'm not sure the market is going to have the patience to get through WeWRewK, Works profitability run. But whatever the market sees it likes today, up eight, almost eight and a half percent. Gina, let's turn to Amazon. The Rosenblatt sort of tepid call here, launching with a neutral rating, $3,000 price target, basically saying retail sales are going to continue to be a struggle for, not necessarily. We should all have such struggles, shouldn't we, Gina, as Amazon

in the retail space. But what do you think of the stock? So actually, Lido Advisors owns Amazon and we continue to own Amazon, we agree that retail sales generally is falling. However, the real theme in Amazon really is the continued growth of Amazon Web Services. And if you look at the three big players in that space, Amazon, Microsoft, and Google, they are still growing like gangbusters. And we think that theme, it's a long-term theme because we went from the digital age to the computational age. Now we're getting interactive.

But the demand for cloud services, that's going to continue. to grow and Amazon is already the largest player in that space and they're going to continue to be. Still, Gina, that is, you know, it's hard to digest some of the numbers we've seen. That retail sales report last month showed like non-store, the online retail has dropped dramatically from the pandemic. Isn't that going to be a headwind for them? Yeah, absolutely. It's going to be an enormous headwind. And, you know, we are we are kind of taking the good with the bad on the long-term play. If you have a shorter term horizon, this may not be the best place for your money right now because all retail.

sales are actually going to be pretty, pretty challenging as we continue to slow. Fair enough. Which brings us to Lulu Lemon, by the way. Do you like this one? So Lulu Lemon is one that I thought was a pandemic darling that had gone sour. But interestingly enough, because of this flexible workspace, work from home, come back to the office, but only two days a week, turns out aphleisure is going to be a regular part of everybody's wardrobe. And I think that's really what's what's driving this bounce is that it's not dead yet. You know, the mirror, sales were obviously a big disappointment, but they continue to add new lines to their athleisure space. And I think that that's going to be just an enduring part of everyone's

wardrobe, at least for a few years. I think we're nodding our heads in agreement. We agree. You have agreement. Thank you very much. We appreciated Gina Sanchez with our three sides. And once again, we have drained all three drinks there. We have. It's good, good news. Apparel, spritz and doll. Apparel, spritz, everything. All right, Bitcoin's volatility dragging crypto exchange coin base down 40% this year, despite the fact that the stock is higher today, as you see, up 3.5%. What does this mean for the future of competitors like blockchain.com? The CEO of that one joins us next. The price of Bitcoin back above 41,000 after dropping yesterday. There you see it up $871 today. That's 2%. Our guest earlier this hour said he expects prices

of Bitcoin to be cut in half over the next 12 months. Crypto prices. Prices. is just one of the topics being discussed at the Emerge Conference down in Miami, and Kate Rooney is there, and she's got the CEO of blockchain.com with her. Hi, Kate. Hi, Tyler. Thanks so much. Peter Smith, joining me now, CEO and co-founder of blockchain.com. Thanks for being here. Thanks for having me. And so we just got off stage. We're calling this our post game, because we had our longer conversation. But I do want to ask you about Bitcoin prices and markets. We've got this inflationary environment. Why isn't Bitcoin and crypto in general performing? better right now? Yeah, so Bitcoin is, you know, really a risk asset. Trades is a risk asset.

And right now what we're seeing is sort of all assets reprice. And so the crypto market always moves faster. We saw that in the COVID sell-off. We've seen that historically when there's financial turbulence. So I think I usually expect the crypto prices to come down fastest, and they also reverse that the fastest usually. And so I think we are in a downtrend and in a consolidation period in the market. And you expect them to rebound faster than tech stocks and some of the growth names? Yeah, I would expect crypto assets to rebound much faster than tech stocks and gross stocks. Got it, got it.

And so blockchain.com, you're a crypto trading platform. There's a lot of competition out there. You've got the likes of Robin Hood. Block is sort of moving into that area as well. How are you differentiating? And what do you expect to happen on fees? Do you expect some of the prices to come down when it comes to the trading fees? Yeah.

I think retail trading fees are pretty high in the space. We're a little different from the other companies you mentioned because about half of our business is an institutional business. In that business, the fees are already where you'd expect institutional fees to be. So we've got a lot of confidence in the future fee load there. And then on the consumer side, most of our business is outside the United States where we have a much wider moat. And so we're feeling pretty good about where fees are at and compression, but I do think

you'll see a compression in the U.S. market. And you guys have been spending big on advertising, a lot of branding and sponsorships. Is that to capture the U.S. market and talk us through your ad budget. We really see blockchain.com on a lot of sports names and partnerships here. How are you justifying the ad spending as a percentage of revenue? So we're very countercyclical. So, you know, last two years when you saw the market's really kind of euphoric, you saw a lot of companies, fintech companies, crypto companies,

spending huge amounts on ads and paid, you know, paid acquisition. We were completely out of the market. So you're spending zero on marketing. Now that there's a lot of heat out of the market, prices have come down. There's value opportunities. And we'll allocate significant capital into marketing this year. Got it. And we talked a little bit on stage about central bank digital currencies.

And the idea that private stable coins may have a different role going forward. What's your expectation if the Fed were to issue a central bank digital currency? what would happen to the likes of Circle, Paxos, and the billions of dollars in private stable coins that exist right now? So I think it's nuanced on the coins. For example, Tether is like offshore dollars. That's not competitive with a government-issued stablecoin. You know, with an onshore stable coin, ultimately you're going to be asking your customers, would you prefer a dollar from a company or from the United States government?

And I think most customers will want the dollar from the United States government. So I think it'll be very difficult for those business. is, particularly in that specific business line, to be competitive against a national actor. Got it. I think Tyler's got a question for you. Peter, as Kate was mentioning there, there are a lot of companies in the crypto space that are advertising a lot. And it's hard to know who's who and what's what. In other words, what they all do? What is your point of differentiation from all these other names that are just blizzarding me from dawn till dust.

Yeah, so there's always been a lot of startups in crypto. Everybody's just aware of them today. I think a little bit of what makes us different is, one, our diverse business, so having both the consumer and the institutional business. But more importantly, it's trust. We've been in this market since 2011, doing the right thing by our customers. And, you know, there's now 40 million of them all around the world

that trust us when they want to engage in the crypto market. Got it. Peter, last comment, IPO plans or reports today that you're looking to go public. What do you think about that? Blockchain will be a public company someday. And when we know more about when the day will be, we'll get in touch. Got it. Let us know.

Peter Smith, CEO and co-founder of blockchain.com. Thanks for being here. Kelly and Tyler. We'll send it back to you. Kate Rogers. Kate Rune, I should say, in Miami, we will know. In Miami. They're exchanging numbers right now for the day when he goes public.

Yeah, we need the markets to come around to that. Up next, it's tax refund. season. How much people are getting and how are they spending it? We've got the data next. Welcome back. It's refund season for taxpayers who plans to save, who plans to splurge. And we're getting back more, I think, than last year, Dom? Almost a few hundred dollars more than last year. So we are seeing people do that. But again, there's a little nuance there, right? Because if you're getting more back, it means you put too much away during the whole season. But anyway, that's besides the point. If you are getting a refund, you are likely, if you're the average,

American getting more back. This is now data coming from the IRS. As of just before the tax deadline this week, on April 8th, they had already received 70 million total refunds for processing, and the average refund for those was $3,175. So not a bad way to get a little rebate back from the government. Of course, that's not really a rebate. It's your money to begin with. You just gave the government too much money during your tax withholding season. But with that in mind, what exactly are people going to do with that $3,000-some-odd dollars? Well, according to a study from Lending Tree, if you look at the way consumers plan to use their tax refunds, now, these numbers don't add up to $100, as you're seeing, because you could select multiple options.

But 46% of people nearly half say that they are going to save that $3,100-some dollars that they're going to get. And 37% are going to pay off debt. People are going to spend on necessities, maybe invest a little bit, splurge on something nice or do a nice vacation. But overall, if there's something that we should maybe take away from this, it's that during the course of the last couple of years and certainly during government payments, stimulus or otherwise child tax credit during the pandemic, we've seen people tilt a little bit more towards fiscal conservatism seeing what's been going on around them. And if they do get a windfall in terms of cash payments, they tend to do something different with it. They just don't go out right away and spend it all

necessarily. So maybe that's a positive that we've learned as a society in America from some of the things during the pandemic. It certainly made people more acutely aware that if the economy shuts down, as it did in the spring of 2020, you need a cushion. A rainy day fund or a rainy season fund. If you lose your job, your business goes out for six weeks or whatever because of pandemic or whatever, you need money. There you go. All right. Thanks, Tom. You got it, guys. Appreciate it. And thank you everybody for watching Power Lunch today. We'll see you tomorrow. Thank you.