Power Lunch - Breaking Down the Senate Bill, Nvidia’s warning and a big move at the box office 8/8/22

Episode Date: August 8, 2022

The Senate passes a major economic bill which could have a huge impact on companies in many sectors. We look at EVs, solar and health care for potential winners. Plus Nvidia cuts its revenue guidance on weakness in gaming. We have the fallout in the chip sector. And Top Gun: Maverick passes Titanic at the box office, but there’s a catch. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon, everybody, and welcome to Power Lunch. I'm Tyler Matheson. Kelly will join us in just a sec. And here's what's ahead on a busy Monday. A major economic bill passing the Senate. We will look at what it could mean for the economy, corporate America, and taxpayers like you. We'll dig into the industries that could be most impacted, like EVs, solar, and health care. Plus, a major revenue warning from the chipmaker invidia. The company expects a decline in orders from its gaming customers. So what does it mean for the chip industry, which is still struggling with the effects of a shortage? We'll get into that and a lot more. Kelly. Tyler, thank you.

Hi, everybody. Let's take a quick look at Nvidia as we kick things off here because this stock tells you a lot of the market story today. Down 8% after that warning, dragging down a lot of the other chip names as well. The SMH down about 2% right now. The others fighting back some of the components more towards positive territory. The NASDAQ as a whole pretty much shaking. it off. The Dow and the S&P with gains that disappeared earlier, Dow was up more than 300 points. We turned negative about an hour ago and it's climbed back to a gain of 100, 8 and in part by some

good news from Boeing on the Dreamliner. S&P NASDAQ up a couple of points. There's Boeing, as I mentioned, 3% gain now after the FAA says they have made necessary changes to the 787 Dreamliner, and Boeing expects those deliveries to resume in the coming days. Ty? All right, thanks, Kel. Well, let's get to the big story of the day after much, much, much negotiation. The Senate passed a wide-reaching climate health and tax package. Now, the legislation is, of course, dubbed the Inflation Reduction Act, ironically, it's now going to head to the House for final passage. The bulk of the spending, $300 billion, are investments in clean energy. This includes the extension of the EV electric vehicle tax credit.

For the solar industry, an investment tax credit for the industry will return to 30 percent. and it'll stay there over the next decade. The bill also targets the health care business, giving Medicare the power to negotiate prices with drug companies on a very limited number of drugs. But this is significant because it could be, as they say, the camel's nose under the tent, cutting prescription prices for seniors.

So which stocks could benefit or lose from this new legislation? Let's dive into the EV Solar and Healthcare names. We begin with, EVs and George Genachar carius of Canacore. George, welcome. I know I mangled your name, but forgive me. It was a great attempt.

It was a great attempt. Gianna Ricas? Gena, that was perfect. Bang. Thank you so much. Just give me three tries and I'll get it every time. Let's talk about the EV makers. The return of this tax credit, which

applies to only certain people. It phases out at income levels. Why don't we start there and tell us how does this affect Tesla? How does it affect Rivian and the others? Well, first, I want to say thank you for having me on today. You're welcome. On a day when we're on the verge of passing the most important piece of climate legislation in U.S. history. And with regard to EVs, I want to say, first of this is a huge positive for a sector, but the adoption is accelerating regardless of these measures, and they're adding fuel, hopefully renewable fuel to the fire. The new measures are a little more complicated than

they've been in the past, as there are, like you said, income and price caps in addition to domestic production requirements. But the problem with EVs right now is that it's a supply problem, not a demand problem. Let me give you a few data points. First, try ordering a Tesla model Y. It'll take you over six months. Rivians are worse. GM has already committed to building a million EVs by 2025 and four two million EVs by 2026. In less than 10 years, it's going to be hard to get an ice vehicle, not an EV. Now, this is all good for the sector, but like I said, we're having a supply issue and not a demand issue.

Is the supply that the manufacturing can't keep up? Is it shortages of parts? There are many fewer parts, for example, in an EV than there are in an internal combustion engine vehicle. Is it part shortages, or is it just the manufacturing capacity isn't there to meet the demand? I would say it's all of the above, but the part that we're focused on, and we think the most important, is the materials issue. And this bill does a lot to address that. It incentivizes battery production to come back to the United States. And so, you know, there are certain battery

requirements, 50% in 2024, up to 100% by 2029. It puts actually test. in a really good position because they're already doing a lot of that in the United States. So the supply that we're looking at is more from a materials perspective. And this actually applies broadly to renewables. We call it the great resource irony. As we move away from extractive industries and oil and gas with drilling, we're moving towards extractive industries with lithium, cobalt, nickel, and rare earths. We're actually recommending a stock called MP Materials that has a mine in California,

that they get rare earths from that are important to EV motors. MP materials. That's the one you just mentioned. MP is in Paul. So I'm guessing this is a rising tide that will lift all manufacturers, but it probably won't lift them all equally. My guess is that it will lift Tesla the most because it's the biggest. I think that's a really fair assumption. First, anything that helps the EV market,

is good for Tesla, particularly in the U.S., where they have over 70% share. Second, like I said, there are this domestic battery requirements that they're very well positioned to meet because they've already doing a lot of this in the United States. And lastly, remember, Tesla buyers haven't had the $7,500 tax credit since the end of 2018 because they already hit that 200,000 cap. So it's all coming back to Tesla, and it's an unmitigated positive for $1,000. It seems odd to me that we're subsidizing Tesla or in that relatively well-income people who can afford these cars. Why? Well, look, that was from what we understand, a debate back and forth

in the Senate. There are actually income requirements and price caps. You can't get a car that's over $80,000 and it's a little bit less than that if it's not an SUV. So there are certain restrictions in caps on this. We're just trying to, I think, as a culture, as a country, accelerate renewables. And it will have a positive impact on lower income brackets who can't currently afford the people. Tesla has probably raised the price of the Model 3 by at least $7,500 over the past 18 months because of cost, wouldn't you say? Well, that's right. So that it actually helps them a little bit. Our suspicion is that economic impacts and maybe pricing impacts may have had a small impact on their order book, given the price increases that they put in place.

So this does help re-accelerate order momentum for Tesla. And you can't buy a Model Y to qualify for these rebates, right? Can't get one anyway. No, you can't get one anyway. You can't get one anyway. But the model Y is up in the 60,000's, upper 60s. That's right. You can't get them anyways because of the supply constraints that we referred to.

But after the application of some of these credits, it could really, re-accelerate adoption and push some of these order dates over a year if things go well. All right. George, thank you very much. Appreciate your time. Thanks for having me. Have a great day, everyone. You too. You as well. Let's move on to the solar stocks, which are also seeing a move higher today. I'll bring in Mark Strauss. He's senior analyst at U.S. Alternative Energy and Services with J.P. Morgan. Mark, great to have you back. So this is being hailed as the most significant climate legislation. Are people referring specifically to the solar piece of this as well, which is just basically retaining the existing incentives?

Yeah, definitely. I think a lot of the companies in MySpace are calling this kind of a wish list of everything that they pretty much could have hoped for. The tax credit itself for solar that's been in place, it increases a little bit from 26 percent up to 30 percent. More importantly, though, it was scheduled to step down over the next couple of years. it now, assuming it passes in the house, it will be extended for another decade. On top of that, there are tax credits for wind geothermal that have previously expired. They will be put back in place. There are, I think, most importantly, there are tax credits for domestic manufacturing.

You think about some of the issues that the industry has been dealing with, certainly over the last year, kind of geopolitics between U.S. and China. Most of the solar supply chain is located in China, in Asia, in general. Having a more domestic supply, you know, obviously increases energy security. And from a stock perspective, we think makes it a more investable space and gets rid of some of the volatility from those geopolitical risks. Sure, I can't help but think, though, that, you know, we move too quickly in this direction and the fragility of our energy system becomes apparent. You know, there's projects for fossil fuel-powered plants that are no longer. economical and plans that are going offline aren't getting the maintenance they need and so

forth because we've seen such high adoption of renewables. Are we ready to further incentivize this adoption while full on recognizing now the fragility of the grid that it's kind of leaving in its wake? Yeah, well, I think it is a long-term evolution. I don't think that we're going to flip a switch overnight. I think we still need natural gas. I think we still need other thermal sources of power. This is part of a transition that will take several decades. And this is just a big step somewhat early still in that process. So what are the companies that are going to be the winners here? I really think you could throw a dart and find something in my space that will benefit.

I think the bigger question is to the extent of that benefit and kind of the timing of that benefit. We upgraded two stocks today from neutral to overweight, first solar. took her FSLR, is a thin film solar panel maker, and TPI composites, which is a wind blade manufacturer. First, solar has a very large presence in the U.S. already in Ohio. TPI has a facility in Iowa that was shuttered last year. They had a contract that was canceled. We think that within the next two to three quarters, that plant can be up and running. and again, going back to those domestic tax credits,

anything that they are producing going forward out of those plants, they will receive a tax credit for. Very quickly, if I might mark, how much is consolidation going to play in the rise in these stocks over the next half decade? Yeah, it'll be interesting to see. There have been companies in the past that have tried to consolidate this space largely have failed

and since kind of fragmented. I do think there it is ripe though. You don't see a big conglomerate that is kind of kind of dominating and all of the different verticals. I think where you are seeing the most scale at the moment is in some of the downstream owners and operators, the people that actually own and run the plant. They have the biggest scale. They are very much acquisition driven to a certain extent, always some of them.

Yeah. So I do think that there will be. consolidation within the upstream product space, especially as more and more domestic supply chain comes online. Interesting guidance there, Mark. Mark Strauss, thank you very much. We appreciate your time today. The final sector to take a look at is healthcare, where both insurers and pharma companies could see an impact. Les Fontlighter is a healthcare portfolio manager at E-squared capital management. Good to have you back, Les. Thank you for having me. And Bonasara from the Adairo Ventures meeting in Tuscan. Oh, you.

You're in Tuscany right now. Buenos Aires. Yes. Ah, good. Mangebelle. Have a great meal wherever you are. And open the window. Give us some blimps.

1,400 here, so it must be about 8 o'clock there. We'll get you out of here in time for a lovely dinner. Let's talk about, you know, people talk about the, quote, price controls. The only one that I see as being controlled is a cap on insulin prices. for people on Medicare. I suppose you can say that allowing Medicare to negotiate is a form of price control, but it isn't really, is it? It isn't.

So first of all, we would have assumed that the insulin cap would have passed, and apparently it's not passing. So no, but Wall Street's using it as a synonymous price cap negotiation. But you are true. It is not. It presumably will put some pressure on prices for some drugs in the out years. That's 2026 and beyond. But we're not even sure how the mechanics are going to work, which is why, you know, the big pharma stocks who are more likely to be impacted really haven't reacted that badly. Oh, yeah. And why would they less? As I read it, now I haven't read all 700 pages of it. I promise you, I haven't done that. that it affects relatively few drugs. I don't know whether it's two dozen or or a little more than that. It's not many, number one, and the effects don't even phase in for some years.

Am I right on that? Correct. I believe it's 10 in the 2026 and they accumulate over time to 2030. So, yeah, and we don't even know if there's an offset, maybe there's to raise prices before. Yeah, well, why would they raise prices now? and then say, okay, let's negotiate from this higher base that we've just put in. Right. And so the mechanics are to be determined. If you took the maximalist view, you'd say this is the first time Medicare is allowed to negotiate, and maybe it's a slippery slope.

And if you thought it was a really bad slippery slope, then it'd be worse at some point in the near future or sort of mid-future. Not clear that that's going to happen. And again, you kind of see it in the way the stocks are reacting. And to be fair, the Congress has been signaling this is the direction they've been going in for a while. So probably much of this is priced in already. It does, however, maybe make the orphan drug companies a little bit more attractive since they seem to be exempt from these rules. So what does it mean to negotiate less? And what are the other impacts for investors? Well, you know, again, I'm not sure we know yet about how we're going to negotiate and who's going to negotiate.

negotiating and which organizations are going to be negotiated. But in terms of our investment approach, we've been, as I said maybe a few weeks ago, we've been accumulating in the mid-cap area, the life science tools like Twist and Sight-TAC and United Health. These are not impacted at all by these regulations, at least in the near term. And the medical devices as well, Boston Scientific, for example. So there will be more noise as we head into the election season because there always is. But I'd say other than major pharma, I think health care still has a little bit to go up.

I think the path of police resistance is still heading up. All right. Take two drugs and a nice barolo, Les. I will toast both you and Kelly tonight. All right. Thank you. What's a Barolo? Is that a wine? It's a wine.

Okay. Coming up, some big earnings that are still coming out this week. We'll get you set for the Disney report and all the other important events to watch. Plus, we'll dig deeper into this Nvidia revenue warning. The stock getting crushed out 8% or so earlier, a little more than that right now, is at the start of a shift in the whole chip business. And here are a few of the names hitting all-time highs today, McKesson, which is since trying to stay higher, H&R Block, Waste Management,

all at record highs. We're back in a moment. Welcome back to Power Lunch, everybody. From inflation data to consumer sentiment and earnings from giants like Disney, there is a lot for investors to watch this week. And joining us with her always speedy look ahead is Stephanie Link, chief investment strategist and portfolio manager at High Tower Advisors. She's also a CNBC contributor.

Stephanie, always great to see you. Let's have you walk us through a couple of the macroeconomic numbers that are out this week. and what your expectations are, if not decimal point by decimal point, at least by trend. Sure. It's good to see you, Tyler. So big week for inflation, right? We get CPI, PPI, we get the unit labor cost for the second quarter, and all the numbers are going to be hot.

Maybe not as hot as the last couple of prints, but they're still going to be high. Core CPI, 6.1%. Core PPI, 7.7%. These are year-over-year numbers. That's these expectations. And then the unit labor costs for the second quarter, 7.1%. So they're going to be high, but we probably have seen peak. But it's way too much higher than what the Fed wants, right?

And so I look back at last week, and we actually had some pretty good data. It wasn't just jobs. It was joltz. It was factory orders. It was new orders within the ISM. And it was prices paid that came down. So it doesn't look like recession right now. I just worry about 2023 because there is a lag effect between.

when the Fed raises rates and when we start to see it in the data. It's not just obviously data that we're going to look at this week. It's earnings numbers. Let's go through three stocks that you have on your watch list, not necessarily that you're buying or something. The first one is international flavors and fragrances. IFF. Is this an iffy stock?

I like this stock. The only problem is it trades a 22 times forward estimate. So if it were to pull back, it would absolutely be on my. radar to be buying it. We're going to learn about demand, pricing, inflation, trends because they have 45,000 global customers, right? And they sell into the household products, companies, as well as the personal care, beverage, and food. So I think organic growth is going to be double digits, a nice margin expansion. We're going to hear a little bit about discretionary because they have a fragrance business, right? But I think the big kicker to this story is the synergies that we are going

to see from the DuPont acquisition last year that they made for $26 billion. I think there's upside there. And that's why if the stock were to pull back, you've got cushion on the top and bottom lines. So that's international flavor. Steph. Let's talk about some of the other ones, Disney Illumina that you're watching. I mean, how important are earnings this week in general?

What's its stake here? Well, Disney, because so many people are wondering about streaming, and we haven't gotten any good data from any of the streaming companies, unfortunately. This is a very popular name. Here's the thing, Callie. It's down 31% of the year, but it has just rallied over the last couple of weeks of 15%. And it doesn't, it trades expensive. It's 28 times earnings.

And the reason is expensive is because of streaming. And we're all kind of worried about those numbers. Now, I think the sub number is going to be just fine, $11 million for the fiscal third quarter. But we want to hear about their guidance for $230 to $260 million they expect by 2024. I think that's going to be a struggle. And if they do make it, they're going to have to see a lot higher expenses. know, it's just a very competitive environment. Yeah, and this one I think people will certainly be watching.

What about Illumina? Yeah, Aluminah, I think is sort of interesting. A DNA sequence of a business with a total addressable market about $5 billion, growing at about 12%, maybe off the radar screen for some people. But I do think this is an interesting growth stock. They're going to grow total revenue 7 to 9%, but that includes a 300 basis point hit from the China business. They're seeing margin expansion. They can expand their margins by 500 basis points over the next couple of years.

The one problem we have is the Grail acquisition. It has antitrust issues. It's a $6 billion acquisition that would provide very nice growth for them. But we're not going to hear about the antitrust from the EU until September. So there might be an overhang. They're also looking for a CFO. They also have an analyst meeting in October. So a lot of catalysts here in the near term.

Right. And a year to date down 41 percent with all that sort of holding them back. Stephanie, as always, we appreciate it. Thank you. Stephanie, like you as well. Still ahead, reducing the furniture. One company trying to turn the furniture industry green. That's today's clean start. Plus Goldman out with a list of stocks, they say have unsustainable margins. There's a hint. We'll lay out the names next. Welcome back to Power Lunch. A new warning from Goldman Sachs today with the firm saying investors should prepare for difficult times ahead. And some stocks are facing unsustainable profit margin expectations. Let's go through a few names on their list. Match group is one of them. The stock already down 48% this year.

They point out their profit margins fell. Get this. 5.6 points quarter over quarter. There you go. Match still trying to fight into positive territory today. Now, Whirlpool, its profit margins fell more than four points between the first and second quarter. That's a huge decline.

Analyst still see expansion, but Goldman says that will be tough to achieve. And Yum Brands. Yum brands, also among the names on Goldman's list. The stock, sort of an outperformer, or down 15% this year, but its margins fell 82 basis points in the second quarter, and Goldman warns there could be more to come. You can find the complete list over on CNBC.com slash pro. Let's get to Sima Modi now for our CNBC news update. Seema? Hi, Kelly, here's what's happening at this hour. Greg McMichael has been sentenced to life in prison, plus seven years for federal hate crimes. Earlier today, his son, Travis, got

a life sentence plus 10 years. Both men are already serving life sentences in a state prison for killing Ahmed Aubrey in their Georgia neighborhood in 2020. Now, their neighbor, William Bryan, will hear his federal sentence later today. Gabby Petito's family announcing it intends to file negligence claims against the Moab Police Department,

a Utah-based law firm says the police department could have prevented their daughter's death by interviewing, intervening. Further, when officers responded to a fight between Petito and her fiance weeks before she died. The family is seeking $50 million in damages from the police department

as well as city and state officials. And efforts to feed a dangerously thin beluga whale that strayed into the Sien River in France and got stuck have failed so far. Local authorities say veterinarians have given the whale vitamins and appetite stimulants

as well as some medical treatment. They're hoping he'll make his way back to the ocean. Tyler? All right, Seema, thank you very much. And ahead on Power Lunch, a worsening semi-situation, NVIDIA, issuing an early warning on second quarter revenue, sending a panic signal through the semispace. We will break down the news and trade that name along with some other key movers in today's three-stock lunch. Power Lunch will be right back. Welcome back, everybody. 90 minutes left in the trading day. We want to get you caught up across the markets on stocks, which have lost the earlier gains,

but are trying to make a comeback. Bonds, commodities, and Invidia's, big. revenue warning, which is a big part of the story today. Let's start with Bob Bassani. Bob, what's the very latest? Well, the latest is we've tried earlier in the day to break out to a new trading range. The S&P is just on the verge of breaking out to the highest level since really early May, but it's had trouble sustaining that. And as Kelly mentioned, it's due to semiconductors. So there's the S&P 500. We were briefly positive. That was right around the highest level since early May, believe it or not, and sunk around three hours ago. And what happened was semiconductors basically gave it up. Now,

Nvidia was week right after the open on, of course, those warnings, the revenue warnings there, but a lot of the other semiconductors were actually positive earlier in the day and just started heading south about three hours ago, and that's when the overall market kind of drooped on that. So AMD

moved down, Intel, Micron, all the big semiconductor names moved to the downside. Big Cap Tech has been down since the late morning, but not down dramatically. Apple, Microsoft, Alphabet, all down fractionally. Microsoft's the worst one of them now, down about 1%. At the same time, the more speculative group, the Kathy Woodstocks, all have done fairly well today. They've held

most of their gains. They're off of their highs, but they've held most of the gains, Twilio, Roku, Tesla, Teledoc, all looking very good today overall. So again, Kelly, the game here is how much further can you push the growth stock story when you've already had very big gains, 20% in the case of some of these stocks in the last few weeks? on top of a warning, essentially, or poor guidance from NVIDIA. It's been a tough day for that. And we'll have more on that in a moment. Bob, thank you very much, or Bob Bassani.

Elsewhere in the bond market, yields are pretty much lower today. The 10-year down around 2.77 percent falling just a couple of basis points there. The two-year yield also falling, but not quite as much. It's making that inverted spread. People follow even wider. That said, the 10-year versus three-month spread, which is, I like to think, a little bit more reliable predictor of recession, still positive by about 20 basis points. Maybe that buys us a year or so before the big R event.

Let's get a final check on oil now as those trades come in. Pippa Stevens at the commodity desk with her numbers. Pippa. Hey, Kelly, oil reversing early losses and closing here in the green. WTI regaining the $90 level, although just barely. And of course, both WTI and Brent are coming off a brutal week with Brent registering the largest five-day drop since April 2020 as recession fears way. Now, Oil Bowl, Goldman Sachs has reduced its forecast.

It now sees Brent averaging 110 to 125 during the second half. That's down from the prior target of 140 to 130. The firm, though, did maintain its 125 target for 2023. Nat gas is the big mover today, down 6%. That's after weather forecasts call for some cooler temperatures. No doubt a lot of people on the East Coast happy about that, Kelly. Oh, my gosh, please. Every day I go, maybe it's going to thunderstorm.

storm, maybe the humidity will break, and then it doesn't. Pippa, thank you very much. Now let's talk more about NVIDIA, which is getting crushed today after that revenue warning. Christina Partsenevelas is here with a look at what's behind this weakness, Christina. Well, Kelly, the negative pre-announcement shouldn't really be a major surprise given gaming data points have been negative for quite some time. We've seen GPU prices.

Those are the graphics chips used in gaming. They've been falling for quite some time. And that's because shortages have disappeared. Remember, we talked about those supply chain gluts, problems? And then you also have gaming and crypto mining that has also weakened. So demand has weakened. And these are all negatives for GPs. Those are the chips specifically used for graphics and AI.

The revenue cut, though, from NVIDIA today is sizable. Gaming, plunging 44% quarter over quarter. And it's not just about GPUs. Its data center also is only expected to increase 1% quarter over quarter. So that was a little bit lighter than what a lot of people are expecting, and that's because of supply chain issues. Luckily, that's not because of demand. Intel and AMD suggested something very similar. Fortunately, though, data centers is still expected to be up 60% year over year.

Wall Street, though, sees this news, not necessarily as unexpected, but as a sign that in video is pretty much telling investors to shift your focus away towards auto and data centers, segments that are expected to grow, because demand for PCs and smartphones, we've seen that weakness for quite some time now, and it really is continuing to batter down these stocks. So where will Nvidia go from here? The announcement did include future insights on demand, so today's stock drop could be a reset to fundamentals,

which means a good time to get in. Or there's another leg down to go, given the economic slowdowns that we're seeing all around the globe. One positive, though, Nvidia management still plans to continue stock buybacks, and that shows confidence in Nvidia's ability to raise cash. Shares down about over 8% right now. This dire outlook for the chip sector, though,

causing semiconductors to be the weakest, players on the NASDAQ today, Kelly. And I mean, while we can delve further into what's going on with the chips, there are other tech firms preparing investors as well for weak results, right? It's not just the semis. Yeah, yeah. So you have this announcement from Nvidia, but there are several other names. Let's just go over recap what we've seen. We've seen several tech names that have detailed troubles this earnings season. On the left side of your screen, you're seeing Intel, Seagate, Microsoft that missed on their earnings, and then Qualcomm, AMD, Microsoft. And then Qualcomm, AMD, on Western Digital that put forward weaker outlooks. And then today's warning from

NVIDIA, the other little point in there, too, is that they did say they dropped prices. And when you drop prices, that's eats into margins. So, Nvidia's adjusted gross margins are expected to be roughly, what, 46%. That's a 21% it's drop compared to the prior estimate that the management put out. So the shift is happening, the shift towards data center and auto. And so if you want to get in, maybe possibly focus on companies that have that focus that are exposed to auto, like NXP semiconductors, for example. In video, though,

earnings are out on the 24th of this month. All right. Christina, thank you, Christina, Parts in Avelace. All righty. Up next, today's clean start, one company trying to reduce the environmental impact of fast furniture. We'll explore that in just a moment. You have probably heard of fast fashion,

excuse me, cheap clothing made quickly to take advantage of new trends. It's often associated with pollution and waste because the garments are often thrown away so quickly from season to season, not good for the planet. And the same is true for what's known as fast furniture. Diana Oleg joins us with a look at one company trying to build a better model for that as part of her continuing series on clean startups. Hi, Di. Hi, Ty. Yeah, we don't often think about fast furniture because people usually hold onto it longer than clothing. But younger generations

are now more mobile, more conscious of environmental waste, and more often. are demanding new options. Enter the Los Angeles-based startup, Furnish, spelled like the plant. After walking by many, many, I'd say nuclear bombs were the furniture on the side of the streets in urban metro's where I lived or some of our other employees lived, we came up with the idea of reuse, refurbish, and recycle.

In other words, rent. Furnish is a furniture rental company that allows consumers to either return the furniture when they're finished or rent to own. While rental furniture is nothing new, it's often used by consumers who can't afford to buy. Furnish targets a different demographic, wealthy, environmentally conscious consumers

who choose not to buy. 90% of our customers had not even heard of furniture rental as an option before finding us. We're able to say now, hey, if you've rented this product, this is how much in terms of pounds saved from landfill, you are contributing. The furniture is higher quality than typical rental companies and therefore easier to refurbish and reuse. Exactly what Veronica Drulia was looking for when she and her roommates moved out of a small apartment and into a large townhouse.

I really, really valued the sustainability that Furnish has. And I also just wanted something that felt like a forever piece. But as a 25-year-old, I don't know where I'm going to be next. I don't know where I'm going to move to. Julia is a social media influencer, so she made a deal with Furnish to promote. the 18 pieces she rents rather than pay. If she did pay, the bill would be about $900 a month. Furnishes backers include Zillow co-founder Spencer Raskoff,

former Amazon consumer CEO Jeff Wilkie, Intuit co-founder Scott Cook, as well as Kozla Ventures, Tech Stars, and RET Ventures. Total funding so far, $75 million. Now, the furniture industry generates nearly 10 million tons of waste per year that ends up in U.S. Lamp-Ean That, according to the EPA. Part of that is because furniture is very hard to recycle.

If renting it, though, were to become both more attractive and more mainstream, that could be a game changer. Back to you guys. Where do they source their items, Diana? How do they come up with the furniture that they then refurbish and resell? Higher-end retailers like crate and barrel, pottery bar, not the typical cheaper stuff that you would see from the large rental companies that are marketing to a different demographic. So they would take their unsold inventory and then put it out for rental. In other words, I couldn't take the couch I don't want anymore and put it on furnish. No, no, no, no.

They own the furniture and they rent it to you. So they will buy it from these companies. It's not stuff that's unsold from the companies. It's things that they buy and then rent out. Interesting. And the price for that, I want to be an influencer, as everyone knows. 18 pieces, 900 a month. So that's, what, about $20 a piece?

Well, it depends on the piece. It depends on the piece. Like she rented a couch or a couple of chairs, it's going to be less for a chair than it is for a bed or for an armoire, et cetera. So it depends on the piece. But in total, her $18 were $900. All right.

Diana, thanks very much. Coming up, bedbath and beyond, soaring for people who still buy their furniture. The meme stock getting pumped on social media. We'll hit that and more in three-stock lunch next. All right, welcome back, everybody. Time for today's three-stock lunch. It's hot out there. We have some cold beverages and maybe some hot stocks, maybe some cold stocks. We're going to track some of the big movers of the day. As we discussed NVIDIA sliding after warning on the second quarter, Palantir falling on a surprise quarterly loss and warning that timing for some important government contracts remains, quote, uncertain. And bed, bath and beyond surging nearly 40%. That's beyond surging 40% as meme stocks are gaining traction once again on insurgent. internet message boards, despite no apparent catalyst for such a move.

Here to help us trade all three, Craig Johnson, market technician, Piper Sandler. Craig, welcome. Let's start with Invidia. Much in the news today. We talked fundamentals. What do the charts say? What's the trade? Thanks, Tyler.

Thanks for having me back. So despite today's 8% drop, there's really not been much technical damage that's been done on NVIDIA. And from our perspective, if you look at the RSI, still is bullish at this point in time. There's good downside support around the 170 level. I can see upside back to the 196 level. And that really sets up a really positive, about 30% upside, 10% downside from we're at. And yeah, Tyler, talking about the fundamentals, the top semiconductor analyst, Harsh Kumar,

who happens to be here at Piper, he's still got an overweight on at 235. And he thinks that the fundamental story is not broken. So we've got Tyler a stars and moon alignment here on Nvidia, and it should be bought. All right, stars in the moon in alignment. I'm guessing Palantir might be a different story, Craig. What do you think? Absolutely. I think, you know, after having an 80% drop in here, the shares have kindly started to find a bottom in here.

Today's pullback is not really disrupting a lot from a technical perspective. But from our perspective, we'd be a buyer on the pullback, but we got a little bit more downside to go around 940 to get back to the 50-day moving average. You know, Kelly, I just note that any sort of weakness, and the dollar would also be a big positive proponent with about 40% of their business comes from outside the United States. All right. Let's look at the final name here, which is one of those meme stocks, bed, bath, and beyond. I always like the Beyond Department there at that store. Yeah, it seems like up up and away at this point in time. But from a chart perspective, today's gap higher, it's running into major overhead resistance at the 200-day moving average at about 14.

27 on the chart. I just note that it's an extreme overbought condition on RSI. And when I look at charts like this and I see that kind of exhaustion type set up on the chart, this is where I want to start taking some profits and fading the stock. So I'd be fading the stock in here. Where would I change my mind? Any sort of move above that 200 day moving average is where I changed my viewpoint. Craig, quick question. What do you think accounts for sort of just the fact that meme stocks or that bed bath is popping at all today. I mean, we all understood when the economy was shut down, it was the pandemic and there was liquidity everywhere, but why now? I think there's a sort of a lot of interest back in the market. I think people are starting to see the market starting to work again.

You've seen this market get pretty beat up and the breadth measures in the market got to extreme oversold readings. And I think people are looking at this market, whether it's professional investors, meme stocks, et cetera, and they realized now it was a time to actually make some money in the market. And that's why I think you're starting to see some of these stocks coming back for these trading opportunities. All right, Craig, thank you. Always good to have you on. Appreciate it. Craig Johnson. Thank you. Still to come, we'll put some other big headlines under our microscope today. Don't go anywhere. We're back in a moment. Welcome back, everybody. Time now to put the three other stories we're watching today under our

microscopes. And we're going to start with Top Gun Maverick. The news here, Ty, is that it's It's moved into seventh place all time in terms of the U.S. box office, $662 million. And this is what got my attention, surpassing Titanic. I haven't seen the movie yet. I hear it's very good. What amazes me is when you look at the list of the top ten, how many of them are franchise films, whether it's a lot of Avengers in there. There's a Spider-Man in there.

There's a Star Wars, which is number one, in there. Top Gun, I don't think you can call a franchise. film because the first of them was, what, 40 years ago? Yeah, I mean, but to your point, it does still help that it has an existing legacy to build on. Now, because, you know, 97

Titanic, I had to defend Titanic's honor here a little bit by doing the inflation adjustment. So, you know, this was 1997 that it made about 600. Oh, these numbers aren't inflation adjusted. No. Unfair. Unfair.

Unfair. So Titanic still has the crown $1.2 billion in today. In today's dollars. It just edges out the number one film, which in today's dollars, I think it was Star Wars film from seven years ago. Today's dollars a little shy of $1.2 billion. So Titanic still get your crown. You're gone with the wind there. $4 billion, price adjusted.

I feel like the king of the world. All right. The world's largest money management firm BlackRock opening a satellite office in South Florida. There you are to accommodate the growing number of execs and employees moving out of the New York area. We're seeing a growing number of firms moving or opening additional offices in Florida. Starwood Capital Citadel, as well as individual proprietors like Carl Icon. Rick Reeder, the Bond King of Black Rock, is leading the vanguard to borrow another company's money management name in this move by BlackRock. Two important things here.

I mean, one, obviously, the continued migration of people from New York to Florida. But I think even more importantly than that is companies still trying to figure out what the post-COVID potential work from home environment looks like. And do they stick with some kind of hybrid or not? Every day is a different example of companies grappling with this. Andresen Horowitz just moved its headquarters to the cloud. And they have offices everywhere, but they're basically saying, you know, we are a digital, we exist digitally as a company in where you choose to work, still important, still relevant. There's a bunch of satellite offices to pick from.

And I am curious now with this satellite office for Black Rock in South Florida, if that model will become more prevalent. One of the things that was interesting to me, I think they've taken 5,500 square feet, in a place in West Palm or Palm Beach or someplace like that. And they're right now going to only move 35 people there. I don't know what that works out to. Is that like 150 square feet per person? I mean, we don't have that in our little cubicles, do we?

No, we'll take it, though. Elsewhere, SoftBank posting a loss of about $21 billion on its Vision Fund. We should say another loss. That was just the first quarter. It's the second biggest quarterly loss ever. A downturn in tech stocks is the reason here. Couping DoorDash. Masa Sun, very humble in his remarks about all this.

He says he's embarrassed and remorseful. He said the company would start to be more conservative with their investments. Even using a baseball analogy, stop going for home runs and instead hitting singles and doubles. And I just thought this was a nice contrast as well with the Berkshire results over the weekend. This has been the kind of view that's absolutely vindicated a company like Berkshire, unfortunately not for SoftBank. And two years ago, it seemed like a very different story. Yeah, and SoftBank now known for huge, more known by me for huge losses. But you have to have huge gains to get to the point where you can lose that kind of money, I guess.

And it goes back to the WeWork thing, one of their most prominent investments. And now, you know, there's some who wonder if We work the new version, 2.0, we'll have some staying power in this economy. Absolutely. We've heard that on this program. We shall see. Of course, they lost Mario Choiré as one of their key executives over there. Masasan. I'm sure we'll miss him.

Thanks for watching Power Lunch, folks. Closing bell starts right now. We'll see you tomorrow. Thank you.