Power Lunch - A rally on wall street, your Power Playbook for Q4 and housing optimism. 10/3/22

Episode Date: October 3, 2022

Stocks rallied to start the month and the quarter as Treasury yields pulled back. Our Q4 Power Playbook focuses on tech and the beaten down names set to bounce. And why a new housing survey shows buyers are optimistic despite rising mortgage rates. 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, along with Sima Modi. I'm Tyler Matheson. Here's what's ahead on a busy start, a trading start, that is, for the month of October. Stocks surging to start this new month, rebounding from those 2022 lows. Technology coming off a brutal quarter. But is that where you're going to find some of the biggest returns from now until year? And we have got your power playbook. And Wall Street divided. Some analysts say credit Suisse's liquidity position is healthy.

others say no. We've got questions and answers, the latest developments on that in Battle Bank. Cima. Tyler, we are near the highs of the day. Stocks rallying to start the month of October. The Dow up about 716 points right now. That's an over 2.5% gain for the Dow Jones Industrial S&P 500. The NASDAQ also seeing gains of around 2 to 2.4%. Now the rally comes as Treasury yields are dropping the yield on a 10-year. at 3.6%. The two-year, which of course is more sensitive to monetary policy, still about 4.4%, but you can see yields moving there. Energy is the best performing sector today. Oil sharply higher on a possible production cut from OPEC. You'll see Marathon Oil, Devon Energy, gains of 8 to 9% at this hour.

And it's a big week for economic data today. A manufacturing report showing activity grew at its slowest pace in more than two years. Investors are looking for signs that the economy is cooling and what it could mean for the Fed. Later this week, we do get that very important job support. Joining us now for a look ahead is Stephanie Link, Chief Investment Strategist and Portfolio Manager at Hightower Advisors and as CNBC contributor. Stephanie, it's great to have you on. First, your read on the ISM manufacturing data didn't really pose, didn't really illustrate a strong

picture. No, it really didn't seem a. it actually was a little bit worse than expected. We've now seen declines. And three out of the last four months from the ISM manufacturing survey, it came in at 50.9, so it is still expansion, but barely so. And orders and employment were very disappointing, definitely showing a slowdown. That's what we're looking for, right? That's what the Fed is looking for. But the interesting piece was the price index fell to the lowest level since June of 2020. So that's good, that's good news on inflation. So prices are starting to come down. So, so, so,

As you mentioned, we do get other data points this week. I think we do get the ISM services figure, which I think is going to be in the mid-50s. That's a better reading. Joltz, we get job openings, about 11.1 million, still quite strong. And then you mentioned the non-farm payroll number. Certainly all eyes are going to be on the average hourly earnings figure, which is expected to be up 5.1%. And that's what the Fed is looking for. And that's much too high in their estimation.

So let's watch that number. And then there's the unemployment report, right? Stephanie, if it goes above 4% speculation about a Fed pivot, even though Mohammed Al-Aryan says the market likes to fixate on whether that is going to happen. Yeah, no, I mean, I think it's much too early to talk about the Fed pivot. It's just much too early. There's too many stickier parts of inflation right now out there. Mentioned of wages, but also rents are still quite high. And those two pieces, along with education and health care, those are going to keep inflation much more elevated.

So even if we come down from the 8.3 CPI number and the 4.9 core PCE number that we got last week, it's still going to be high and the Fed is still going to probably likely be hawkish. Let's talk about a couple of stocks that you are going to be watching this week, not necessarily suggesting, but you have your eye on. American Electric and McCormick, why those two and why are they somehow tells about the economy or the market? Well, and it's good to see you, too, Tyler. American Electric, I rarely come on the show and talk about utilities. I just don't really have a lot that I'm invested there. However, this is an interesting company. They're doing some very good shareholder-friendly actions. They have twin goals, ESG, as well as growing earnings at the same time. And while you wait for this to develop, the stock actually offers a 3.6% yield. It trades about 17 times. Not super cheap. And that's one of the reasons why I don't own it yet, but it's certainly on my radar. But I think they're going to have an analyst day, and I think we're going to get updated total revenue and earnings estimates. They have a kegher to grow about six to seven percent in earnings by 2026, and they're heavily investing not only in transmission and distribution, you know, the typical utility stuff, but it's also renewables. And so to that extent,

they are actually selling their unregulated renewables portfolio. And I think that'll be a nice catalyst for shares. So I expect shareholder-friendly actions as a result after they do that. And McCormick, the Spice Company. Yeah, you know, so I don't expect fireworks because they already pre-announced in early September, but this is a tell on the consumer in the trade down, right? So when they lowered guidance by 13% in the median, 1% was a hit from marketing spend. Okay, fine. 4% from supply chain, but 8% was volume weakness.

So that tells me demand destruction. They have been putting in lots of price increases, double digits, and that's starting to impact the consumer. So we're going to get more of a tell on the consumer versus any kind of stock action. my opinion. And we've got a week to wait, but next week, Big Friday, Banks, Morgan, Stanley, City, JP Morgan, Wells Fargo. What do you think in a phrase or two? I'm calling it, I'm calling it Super Friday. I mean, I think we know that all of these companies are going to benefit from higher net interest income, net interest margin. That's because of interest rates. But then you're going to see very mixed results in investment banking, in sales and trading,

and mortgages. So I think the companies that will benefit from higher rates plus good expense management, I think they are going to act better. Out of the four names, Morgan Stanley City, J.P. Morgan and Wells, I prefer Wells into the print. All right. Thanks very much. Stephanie Link. We'll see you soon. Appreciate it. Thanks, Tyler. Meantime, shares of credit suites have rebounded after falling sharply on word. The company is trying to reassure investors and employees about its financial position. Leslie Picker's been following this story very closely, and she joins us now with the latest. Leslie. Hey, Tyler, yeah, quite a volatile name today, Credit Suisse executives, seeking to dispel this notion that took fire on social platforms over the weekend that the firm is on the brink of collapse.

Now, a lot of conjecture and rumor contributing to this vortex of fear. So let's take a step back and dissect the facts as we know them at this time. Amid a slumping stock price and spiking credit default swaps last week, which ensure bondholders in the event of a default, Credit Suisse's CEO says, sent out an internal memo obtained by CNBC on Friday. In it, he said, quote, I trust that you are not confusing our day-to-day stock price performance with the strong capital base and liquidity position of the bank. Sound familiar?

Well, to sum, that language was reminiscent of the financial crisis when bank CEOs tried to assuage counterparties and investors that their firms were on stable footing, only to later go under. But unlike the financial crisis, where investors could really pinpoint firms that had, say, faulty mortgage-backed securities, it's unclear what, if anything, could cause credit sues to face major issues at this time. Based on publicly available financial statements,

the firm has a respectable 13.5 CET1 ratio. That's a measure of a firm's ability to withstand distress, and about a third of its assets are in liquid, low-risk deposits and securities. So the big question mark is really the firm's purported transformation that's set to be unveiled when it reports third quarter earnings on October 27th. The overhaul itself is expected to consist of divestitures and restructuring of various units, including reportedly siphoning off risky assets. So analysts estimate this process could be costly

and with where the equity and bonds are trading today, perhaps even more so if they do need to go out and tap the market for more capital, although sources close to this one have said they're not doing so at this time, guys. And Leslie, the big worry when people hear what you just said is that this will spread, that this could potentially be another Lehman moment. Here's what Mohamed El-Aryan told Squawk Box early today.

I do not think this is a Lehman moment. If a Lehman moment is defined about counterparty risk in the banking system, if you're worried about systemic risk, look at the non-banks, not the banks. So that's El-Aryan saying this isn't a Lehman moment. But Leslie, what are you seeing out there as far as this? being a Credit Suis specific event or if this could potentially spread across the financial sector. Yeah, I think a lot of people, especially on the social platforms, we're looking for history to rhyme here and looking for when the next, say, Lehman moment's shoe will drop.

But if you just look at what the U.S. banks are doing today, I mean, they're all up pretty significantly. So you'd think that if the market believed there was a significant contagion risk here, that they too would be dragged down or at least see some of the same volatility that we've seen with some of the U.S. European banks today. A lot has changed since the financial crisis. That's not to say that there isn't interconnectivity here, that there isn't similar types of dynamics with regard to interest rate volatility and other balance sheet risk that other banks could experience. But it's not looking like at least the market believes there's too much contagion risk as we go about our trading day this Monday. All right. We're looking at a stock that's about $3.99 right now, Leslie.

So you can buy it at five below, I guess. Anyhow, thank you. very much. Leslie Picker, stay with us. We want to bring in CnBC.com's Cousan. He has been looking at what analysts are saying about the financial health of Credit Suisse. Hugh, is there a ton of concern out there or are some concerned and others not? Hey, he, Tyler, yes. Look, to be fair, this is the hottest story in banking right now. So as you know, over the weekend and today, a slew of analyst reports. And J.B. Morgan and Citigroup are there among the camps saying, you know, siding with bank management saying essentially we view their capital, credit suites

whose capital, as healthy, you know, as Leslie just alluded to, that 13.5% CET capital ratio. Now, I'd be remiss if I didn't mention, you know, the great majority really of the other analysts and we're looking at B of A, Jeffries, and KBW say that, you know, to a certain extent, you know, perception bleeds into reality, at least as it goes into the CDS, which is flashing warning signals here. And they do believe that, you know, the bank will be forced to, you know, to come up with capital as part of their restructuring plan that we as know, as we know, is supposed to be released October 27th

if it takes that long. Now, one of the issues they talked about in that, or specifically in terms of the size of the amount that they'd have to raise, up to $6 billion in credit, you know, in Swiss francs, according to KBW. Where did this company get into any kind of day? What was it about Credit Suisse's portfolio? or their investment tactics. Jump ball here, Leslie or Hugh, whoever wants to take it, raise your hand. Where did they get into trouble? With Credit Suisse, there's two specific stories.

There's a Credit Suisse story, which is, you know, when you have an institution that has to go up against the Goldman's, the JPs, and the Morgan Stanley's of the world, you know, are they essentially forced to, you know, take adverse selection with the clients? And you look at what they did, and of course, is a risk management story I'm about to enter to. If you look at what they did with both Green Sill and Arkansas,

So they've had huge blowups that have to do with risk management. It has to do with, you know, perhaps giving business to institutions and to counterparties that others would sort of thumb their nose at. And so when you look at this history of blowups, you know, you do have to wonder what else is hiding on their balance sheet, you know, as global macro risk off happens and as that ripples around the world, are there other things that have yet to blow up on their balance sheet? Well, I guess, Leslie, when you're fifth in a four-horse race, you got a problem there.

Hugh makes the point that some of the client list was not as blue chip as other banks have. Well, I think it depends on which part of the bank, because the private wealth business is seen as pretty strong across Europe. In terms of other potential risks, though, Hugh brought up great points with regard to Arcagos and Greensill as kind of black swan events that have occurred more frequently than you'd like to see over the last few years. Another issue that's kind of come to the forefront over the last few weeks is the Leverfin market, the leveraged finance market, where Credit Suisse is a very big player and has a lot of exposure. And what we saw was the biggest leveraged buyout deal of the year with Citrix. The banks that underwrote that, including Credit Suisse, couldn't get that debt off their books. And so they had to take some mark-to-market losses there.

It's looking like some other large LBOs that are in the works might also be, quote-unquote, hung deals. So that's a potential risk. None of it seems to be the size that would really take down a bank per se. None of it's even along the size of the losses suffered by after the Arkego's situation. But situations like that are especially as you see the stock price fall, as you see CDS go up, you know, starts to make investors a little weary. Hugh, a number of banks that have to report this Friday. Do you expect Credit Suisse to come up on the conference call?

And how do you expect CEOs like Jamie Diamond to respond? So I think everybody's going to ask about what's your counterpart exposure to Credit Suisse? Are you concerned at all? And I anticipate, you know, a lot of your insurance is basically from the Americans at the very least saying, look, our capital versus pre-financial crisis back in 2008 is more than double the way it used to be. We are prepared for a storm. We are prepared for Jamie Diamond's hurricane to come. And when it does, you know, we'll be fine at the end of this. Oh, fascinating story continuing to unfold.

Husson and Leslie Picker, thank you both very much. All right, coming up, skyrocketing mortgage rates aren't derailing plans to purchase homes over the next year. We have the surprising results of a new housing survey. Plus, the NASDAQ 100 coming off its third negative quarter in a row for the first time since 2002. But there are names that could power higher in the coming months. We've got that list.

Before the break, a look at Carnival, which is giving up earlier gains. the stock hit a 30-year low on disappointing earnings on Friday. That stock down again. Welcome back to Power Lunch. I'm Christina Parts and Elvis. Peloton is firmly in positive territory today as the company strikes a partnership with Hilton that will see at least one bike in all 5,400 Hilton-branded hotels in the United States. The majority of the locations are expected to have their bikes by the end of this year. And it's part of Peloton's wider turnaround efforts after peaking early in the pandemic.

The stock, though, still down about 80 percent. this year and hit a fresh all-time low of $6.66 in today's trade before rebounding. Tyler? All right, Christina, thank you very much. There's a lot of talk about housing recession with mortgage rates spiking and sales softening, but according to a new survey, potential homebuyers are upbeat about their prospects. Joining us now is the analyst behind that survey, John LaVallo with UBS. John, welcome.

Good to have you with us. I mean, I have to say that some of the numbers in here, seem outlandish to me, to be honest with you. 44% of respondents planned to buy a residential property over the next 12 months, the highest reading since the survey began in 24. That's two out of five people. Who are you surveying exactly? It's a good question, Tyler.

Thanks for having me. It's a wide-based survey. In fact, this housing intention survey is from our evidence lab here at UBS, and it's been going on for years. It's one of the longest-standing housing surveys. on the street. So it's a wide range of folks that were that were, you know, surveying across demographics to across ages. And so it's a pretty unbiased account here. How big is the surer? How many people are surveyed? Over 2000. Over 2000. And it is not high income skewed. It is just the general population. Correct. And there's some other interesting things that came out of this. I mean,

you mentioned the 44% of respondents that would buy a residential house. And that was a record. 70% strongly agree that owning a home is a great investment. 80% didn't view affordability as a major problem. And 90% believe it or not believe the value of their home would be higher in six months. Now, that's really important, particularly given what's being contemplated in the stocks right now. Wait a minute here. My note says 78% of respondents versus 66% in June believe that finding an affordable home would be, quote, somewhat to very easy. somewhat to very, but wait a minute, interest rates have gone to 7%.

Prices may have come down a little bit like 1% in the past two months, but that's, that's not, I just don't believe that. I just don't believe that people think affordability is no sweat, as a layup. You know, Tyler, it was surprising to us as well, and the numbers are the numbers, but let me give you, put a little perspective around it. One, I think that if we look at what happened in August with new home sales, interest rates came down a little bit. It showed that there was a lot of demand elasticity. We had a print of 685 that was up 29 percent sequentially. Now, also keep in mind,

we've been talking about this for a while. There are a lot of levers that that first time home buyer can pull, you know, living a little further away from the city, there's a huge generational wealth transfer in migration and so forth, not to mention student debt relief. So we believe that first time buyer that's driving things here today in the market is still reasonably well set up. And if they can buy, they will buy, even if that means buying less. And the price of homes, I mean, they're falling fast, the biggest monthly decline since 2009. I'm curious, looking at the data that you ran, John, and the survey, what does it tell people who are watching right now how to invest in home builders, the sector you cover?

Yeah, it's a fair point. Look, I mean, prices were down, eventually, and I would say actually marginally. It was historically a bigger move than normal. But if you look year over year, they were still up substantially. How do you invest in the group right now? I think you have to be very careful, right? I mean, interest rates are moving 20 basis points a day in either direction. So I can't sit here and tell you in good faith that I'm out there pounding the table, say, now it's the time to buy. What I am saying is that I think it's a time to do the work on the stocks and get ready because we're heading into what is seasonally a very, very strong period for the stocks. And if interest rates can just Settle. Just settle. We could have what's called a hope trade, November through January trade,

that could be on steroids. What would you say to critics out there who don't believe that home builders will have the pricing power in an environment where the economy continues to soften, rates stay above 7 percent? I think it's a very fair pushback, right? I mean, look, these are production home builders. They are going to find the clearing price for the home. They're going to sell homes regardless of what it takes. They need to. That's their job. So, you know, our view is that there's just not enough inventory in the market, right? You think about it, 90% of the market is existing homes, and there's about 3.2 months of supply.

That's about half of what it should be historically and half of what it was normally. That means that there's just not much out there. And if to the extent people are going to buy homes, they're probably going to be forced to buy new homes. Well, we'll have to get you back and get this survey again next month, John, to see if those responses change at all.

John Lavallo of UBS. Tyler, maybe you thought it's bad at. Maybe it's a lot better than I'm sensing, but the idea that 40% of people are going to sell their homes or buy a new home in the next year seems very, very high to me, given the economy, given where interest rates are. Yeah, if you've locked in 2%, why would you now want to deal with a 7% rate? There must be a big reason why you're looking to change. But there are a lot of renters out there who probably are trying to get into the market for the first time. So we'll see. Quick check on markets.

We are in rally mode. The Dow Industrial is just below 30. thousand up 2.7% S&P 500, up 97 points. All 11 S&P 500 sectors are moving higher right now. Wow. Ahead on Power Lunch, the SEC, keeping up with the Kardashians, the queen of influencers, getting hit with a million dollar fine for failing to disclose she was paid to promote a crypto asset on her Instagram. We've got that story. Plus Bolsonaro bolstering Brazil, the emerging market soaring after the weekend's election results. Plus recycling renewables.

We will take a look at a company that recycles solar equipment in today's clean start. Power lunch. We'll be right back. Kim Kardashian settling with the SEC on charges, she improperly pumped a crypto asset. Julia Borsten joins us with a look at the settlement and this whole phenomenon around influencer marketing, Julia. Well, Seema, in addition to $1.26 million payment, Kim Kardashian agreed not to promote cryptocurrencies for three years and to cooperate with an ongoing investigation. At issue, she failed to disclose a payment she received for promoting a security called Ethereum Max on Instagram in a June 2021 post. Investors sued her along with Floyd Mayweather and former NBA player

Paul Pierce over this for allegedly artificially inflating the assets value. SEC Chair Gary Gensler explaining on CNBC this morning how SEC disclosures are different than Instagram's requirement to tag a hashtag ad. Also, this is a highly speculative asset class. And so when a celebrity or influence is touting it, it's important that the public understands that relationship and are they getting paid and how much they're getting paid on their Instagram site. That's what this was about. Kardashians' crypto promotion is part of a growing trend of influencer marketing. U.S. marketers are expected to spend about $5 billion on influencer marketing this year. That's $1 billion

more than marketers spent in 2021, defying concerns that macro challenges would hurt spending in the category. And while Instagram still has the biggest percentage of spending on influencer market, marketing. TikTok is the one that is making gains. It's on track to overtake Facebook's market share this year and then YouTube's market share in 2024. But those influencers, they're likely to be a lot more careful when it comes to promoting securities. This is really just a question of promoting securities. I mean, if an influencer is promoting an automobile or a brand of makeup, they don't have to disclose that it's an ad. This is just securities. That's question one. Well, they do. So Instagram does have rules about this. Instagram says that if you're posting something that is paid promotion, you have to say hashtag ad and make that clear. Of course, there are some people who do this frequently. There are a lot of hashtag ads. But so that is the ad requirement from Instagram. What Gary Gensler was saying is it's different when it comes to a security. We're not punishing her for not disclosing that it was an ad. She did disclose that it was an ad, but she didn't say how much she was going to.

getting paid and that this was a speculative security that she was promoting. Did did Chair Gansler get to meet Kim Kardashian? Do you know? I don't know. That's one question I can't answer. I'd like to be a fly on the wall for that meeting. That would be a good one. I'm just surprised. I'd like to be at that meeting. That'd be fun. All right, Julia, great to see you. Goodbye, Julia. Where you went? Bye. Let's get to Christina Ports and Evelas for the CNBC News update. I know where she is. You know where I am. Hi, Tyler. Let's talk about the news. Sentencing is being delayed for Theranos founder Elizabeth Holmes,

this after a star witness for the prosecution showed up at Holmes' house this summer and expressed regret over his testimony. A hearing about possible misconduct by prosecutors has been set for October 17th, which had been the date for Holmes' sentencing on fraud charges. The trial has begun for the man charged with driving through a Wisconsin Christmas parade and killing six people. David Brooks is representing himself. He petitioned the court to do so, and the judge found him competent to make that decision.

And the man who helped unlock secrets about human evolution says he had no idea he would win this year's Nobel Prize for Medicine. Sponsa Paveau won the award for comparing the DNA of modern humans with Neanderthrales and other hominids. At first, he didn't believe he was now or is now a Nobel laureate. I think I haven't quite digested it yet, actually. Well, I first thought this is probably an elaborate prime. done by people in my group. But then it sounded a little bit too serious to me. So I sort of accepted the fact. I think anyone would take that elaborate crime. Tyler? Wow, nice. That's lovely. Christina, thanks. All right, up next, the Power Lunch, fourth quarter playbook as we enter the final

stretch of this volatile trading year. We break out some key sections for names that could provide a strong buying opportunity in the three months left in the year. Today, the focus is on the market's recent problem child. Technology. We'll be back with that. Not SEMA. Tech. No, not the problem. Okay. Not you. 90 minutes left in the trading day and we want to get you caught up on markets. We have stocks, bonds and commodity coverage and the tech playbook for the fourth quarter. But let's begin with Bob Pisani as a market rally just is gaining more and more momentum. Bob, we all are trying to figure out. Does this rally have legs?

Maybe. I'll tell you what's important. It's very broad. So Caterpillar, Honeywell, Chevron, United Health, big moves on the upside, help, and the Dow. Look at the S&P. Highs for the day. And I'll tell you why that's impressive. Bond yields were down all throughout the day, but they started rising a little bit, although the yields are still lower.

You know, 10 years, 15 basis points lower. But the market still keeps moving up. That's the first time in a long time. You'll start moving up a little bit more and the stock market still stays high. That's a good sign we haven't seen in a while. Just take a look at some of the movers right now. Again look at risk on sector. So metals very strong today. Free ports up 8% that hasn't happened in ages. New Corps has been terrible recently. It's up seven Cleveland Cliffs up about 9%.

Big cap technology stocks. Do it okay. Not amazing. Apple is on the upside. AMD, Nvidia. That's just called the whole thing 3%. That's pretty good given how strongly overall market is. So remember, they're moving in line with the S&P. S&P's up about 3%. How about energy? Well, again, these are the names that are the ones that would move the most. High beta energy name, Big Cap Marathon, Apache. 9% though, 8%. Those are big moves. That's way outside a normal trading pattern. Finally, it's interesting. Kathy Wood's Arc funds have been doing okay. If it wasn't for Tesla, which is down 8%, and that's her biggest holding. That's really what's holding the stock down. That's the other big test you want to see of

real risk on. Other than that, though, Roku, Z-Scaler, Unity, these are all the major holdings outside of Tesla, all to the upside. Seema, back to you. Dow 854. Bob, thank you. Now to the bond market, Rick Centelli, tracking the action there as we start to see sharp drop in yields along with the rally in stocks. Rick? Yes, and Bob asked a great question, and maybe we could weigh in on that. Yields moving down makes sense to see equities moving up, but as they've started to firm slightly on treasury yields. What's going on? Well, I think it's because it isn't necessarily a big capitulation trade, but it's about as close as you get. Many traders think that last Wednesday's extreme yields might be as much as we're going to see for a while, and I think that's where

you're getting a bit of a green light on equities. So let's start all the charts on Wednesday the 28th. Here's a 10-year. We're a 401 intraday, which means we're about 36 basis points lower right now. But that's not all. Look at Boondiills on Wednesday. They were up at 235 intraday. They closed at 191 today. Down 44 basis points. These are huge moves. Look at Giltz, which was center stage because of List Trust and all the issues around the globe of her Thatcher moment trying to cut taxes and, of course, the 45% tax rate that they pulled with respect to the rich that amounted to 2 billion pounds of nearly 50 billion pound package. It was at 458, 395.

It's 63 basis points lower on today's close, and the dollar index made its fresh 20-year high close at 114-10 on Tuesday the 27th. Now, since then, today's going to be the fourth consecutive session that looks to close lower, and that's reflected in bounces in the pound. to some extent the euro, but it really underscores there's been a whole shift in psychology on flight to safety of the dollar. And today we had weak data, which also put a variety of buyers into the fixed income space pushing yields lower. Seema, back to you. A weaker dollar. Investors will take that. Rick, thank you. Now to oil, which is rallying as OPEC considers a production

cut ahead of tomorrow's meeting. Pippa Stevens is at the commodity desk. Pippa. That's right. Tema, oil prices are bouncing today following reports that OPEC and its allies could cut production by 1 million barrels per day when the group meets on Wednesday. The meeting will be held in person in Vienna for the first time in more than two years, which is also fueling speculation that some sort of big move will be announced. But it is important to note that the group has been underproducing relative to quota. That means that if a 1 million barrel per day cut is announced, it will be more like cuts between 300 and 400,000. thousand barrels per day, according to CIBC private wealth Rebecca Babbin. But she added that consensus stands that a 500,000 barrel per day cut could balance the market, so this gets pretty close.

Let's check on prices. WTI up 5.3% at 8367. Brent crude right around $89 for a gain of 4.5%. Natural gas going in the other direction on weaker weather-related demand. EBW analytics saying it could take cold temperatures jump-starting. heating season to reverse the current bearish momentum. And a quick check on energy stocks leading the S&P with a gain of more than 5%. Seema? That's performing sector right now.

Pippa, thank you. Let's turn to our power playbook. The NASDAQ is down 31% so far this year, dragged down by some of the widely held names like Nvidia, Amazon, meta, and Salesforce. Are any beaten down tech names now a goodbye in the fourth quarter? Brent Hill is the managing director and senior technology analyst at Jeffries. Brent, what should investors do here? I think ultimately for tech, the pain isn't over. We still have some headwinds coming in as it relates to numbers having to be cut. And in 2023 is really uncertain.

Investors are buying stocks for 23, not for the rest of this year. So I think ultimately most tech investors are kind of sitting by on the sidelines, not a lot of conviction until we get to early 23 to hear the company's outlook. Many of the tech companies have been way too bullish relative to what we think the demand is going to look like. So we're a little tactically cautious. Our economists, our strategists have all said that it had been in front of this that there's pain to come. So we think we're not out of the woods. That being said, there's a handful of names that we like. One would be Adobe, which is powering the creative movement. They did a big, the largest deal ever with Figma, and that created a $40 billion sell-off in the market cap today.

You know, the deal was worth 20. So ultimately, it got hit harder than the value of the deal. And this has been a story that we've stood by for many years, one of the best management teams, one of the most disruptive companies growing 15 plus percent with a 40 percent operating margin. Not many companies like this. And Figma is really going to change the game for them in collaborative design. So that's the story that we like. Sorry to interject, but the names that you like are none of the widely held names like meta, Salesforce, Apple.

Tell us why you're going for these very specific niche tech companies like Adobe, Palo Alto Networks match versus some of the widely held ones. Well, I think the widely held ones like Microsoft have done well. We like them. What we're looking for are names that are dislocated where there's been some event, or we feel good that if the environment gets worse, that these companies can hold up. So Palo Alto networks would be a name that would hold up. Cyberspend will continue.

And this is one of the best manager teams with an incredible track record, taking market share that we have believed in for quite some time and still believe. So Palo Alto will be able to kind of fly through any economic headwinds. If we continue to see layoffs, Microsoft's going to lose altitude as it relates to their seat sales. And there could be another number cut and with the reported ethics headwinds. So I like Microsoft, nothing against Microsoft, just believe that, you know, Palo Alto, again, will be more defensive in an environment like we're in today. For a company like a match, it really goes back to, you know, global dating. The world's reopening.

Japan's their second largest country. That's reopening now where you don't need a visa or a tour guide to get in. So we think there's some interesting opportunities there as well, given how poorly the stock is done. Right. And matches up 5%. Brent, thank you for walking us through your playbook. Brentville. All righty, coming up next, today's clean start.

As renewable technology advances, how do we properly recycle the older components? That's where solar cycle comes in. And as we head to break throughout Hispanic Heritage Month, we celebrate our CNBC teammates, contributors, and guests. Here's Saul Trujillo, Angua Media, Chairman. The punchline here is that the Latino cohort generates $2.7 trillion of GDP. And when we think about the significance of labor force, providing 80% of net new workplace entrance, growing consumption at 2x the rate of the rest of the economy, it's something that any investor, any executive, any person that's thinking about the sustainability of our competitiveness in this country should be aware of, think about, invest in, and catalyze. A solar panel is probably one of the greatest things you can think of, but when that solar panel gets old, worn out, it becomes garbage, just like everything else. But what if even the oldest panels could be recycled and reused?

Diana Oleg joins us now with more on that in her continuing series on climate startups. Hi, Dai. Hey, Ty. Yeah, the U.S. alone could see about one million metric tons of solar panel waste by 2030 as older models either fail or are replaced by more powerful new ones. But it doesn't have to be waste, according to a startup called SolarCycle. We are applying very advanced technology to recycle solar panels to extract all the key materials out of these panels. They have a lot of valuable materials that can be put back into the supply chain. SolarCycle claims it can inexpensively extract 95% of the high-value materials in solar panels,

like silver, silicon, copper, and aluminum. They can then be repurposed or return to the supply panels. chain creating a circular solar economy. We're seeing increasing volumes that need to be recycled and what we want to do is avoid having those going to landfill. Partnering with Sun Run, one of the largest solar services providers in the U.S. is allowing the barely one-year-old company to recycle at scale. It is absolutely cost effective in the context of what our customers desire for us to be doing

and the future of solar panels and the clean energy revolution. Not only cost-effective, but valuable. Recyclable materials from solar panels could be worth more than $2.7 billion by 2030, up from $170 million this year, according to Rysstad Energy. While solar cycle is still in very early stages, Sharma says the company is quickly seeing high demand. Investors include Lyndon Reeve of Sunpower, Peter Reeve of Solar City, closed-loop partners, and urban innovation fund. Total funding to date, $6.6 million. Sharma says there is surprisingly little competition in solar recycling because the technology was lagging, causing a gap in the market. The recycling that was available was far more expensive and rudimentary. But solar technology is advancing rapidly, making new panels far more efficient and older ones far less useful.

Hence the growing need for recycling. Tyler. All right. We tried to think of solar technology, Diana, something relatively new. So why are we dealing with so much potential waste already? Well, Tyler, because a lot of people don't realize how much the solar industry has scaled and how large it's already become. If you look back last year in the U.S., solar panels accounted for more than 50% of all new power generation capacity that went into the United States. That means the older panels are also being replaced and need to be recycled, Tyler. All right, Diana. Thank you very much. Diana Olik reporting.

Still to come, Tesla shares are down nearly 8%. The company delivering fewer vehicles than Wall Street was hoping for, factory hiccups, commodity prices, and executive turnover having an impact. We will trade it in today's three-stock lunch. This, as a doubt, is just marching higher with the index on pace for its best day since November 2020. We are at session highs. 872. All right, time for today's three-stock lunch.

We trade names on the move this day. Chevron, the best performing stock in the Dow up about 5%. Stanley Black and Decker also up 5% on a report. It's cutting jobs to trim costs and shares of Tesla. That's the problem child here today, off about 8% on disappointing deliveries. Let's trade the names with Eva Ados, chief investment strategist at ER shares. Eva, welcome. Good to have you with us.

Let's talk Chevron first, shall we? Yes, Chevron is a buy. We like it in this market. It has a 4% dividend yield. It has very good margins. In fact, their margins are doubled their industry average. And most importantly, it's uniquely positioned between Russia and the West. Many people don't know this, but more than 20 years ago,

Chevron used to be a small to middle-sized company until they took over the Kazakh oil field, which put them in the map and brought them to the next level. And now that Kazakhstan, with Russia gone, is the second biggest provider to Europe. And given the fact that Chevron's more than 50% of Chevron's revenue comes from international, that's going to continue benefit Chevron in the long-term future. Eva, what about Stanley, Black, and Decker?

So that's a cell. Its fundamentals do not look good at all. In fact, their margins have been steadily deteriorating over the last five years. Their gross margin and their EBITDA margin have dropped in the last year by 10%. percent and its EBDA growth, it's negative, minus 30 percent. So it's fundamental to not good. Its inventory is rising. And when it's combined with decreasing margins, that suggests they cannot sell product. And their short-term debt has increased to $6 billion. And when they have only about $300 million in cash, that suggests a significant refinancing risk.

Let's move quickly to Tesla. We're a little tight on time. So a quick phrase or two. At best of all, we are seeing to date sensitivity to their sales. They're trading are 10 times the industry multiple with the revenue growth, which is also 10 times the industry, which means that investors, just like us, are super, are hyponsensitive to any disappointing when it comes to future sales of Tesla. and given the high interest rates, which does not help big ticket sales and the recession environment we're heading to and the competition,

I do not think it's the best company to own, so it's a hold at best. Eva, thank you very much. Eva, Ados of ER shares. We appreciate your time today. Draw your attention to emerging markets higher today, along with stocks here in the U.S. We've got those details next. Welcome back to Power Lunch, Dow up about 900 points. Also keeping an eye on emerging markets, a big weekend in Brazil with markets moving a closer than anticipated first round of Brazil's presidential election.

No candidate getting a majority of the vote. However, current president, Yarra Bolsonaro, did see stronger than expected support over opposition candidate Lula de Silva, the former president who was forecasted to win. And you can see the market reaction, the EWZ, the I shares Brazil ETF up 10% today. and state-owned companies such as Petrobas, Banco de Brazil, soaring as well. Bolsonaro is seen as more business-friendly than De Silva. The election now heads to a runoff vote, Tyler, on October 30th. Bolsonaro has said if he doesn't win, he will contest the election. We've heard of that tactic before.

Yes, somewhere else. We've heard of that tactic before. But I think it's very interesting that the business world sees Bolsonaro as so much more favorable to their interests than Lula. He has that economic agenda. He's been promising that. Will he deliver if he does, in fact, win again? Dow up right up 33% here, Tyler.

All right. Thank for watching, Power Lunch.