Power Lunch - Busy Week Ahead, and Franchise Fatigue 4/10/23

Episode Date: April 10, 2023

It’s a busy week for the markets. We have CPI and retail sales data on the economic front, but also earnings season kicking off with a lot of big banks. We’ll explain what you need to watch for, and what you should be doing with your money ahead of it all. Plus, Disney just announced 3 more Star Wars movies on deck, while “Super Mario Bros.” is cleaning up at the box office. Could franchise fatigue start setting in? We’ll debate. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch, everybody. Welcome back, Kelly Evan. Thank you. I'm Tyler Matheson. Coming up a busy week for the markets on the economic front with the CPI and retail sales, but also earning season kicking off with a lot of the big banks, what you need to watch for, and what you should be doing with your money ahead of all that. Plus franchise fatigue at the box office, Disney announcing three more Star Wars movies while also angering fans with celebrity cameos on the Mandalorian, but Super Mario's just cleaned up at the box office. moviegoers just want something different, but still familiar.

We'll discuss that, get a check on the stocks reacting, and first, though, a check on the markets. With the Dow up by 30 points, it turned positive just in the last hour or two. The S&P still down 7. The NASDAQ down 45, small caps actually leading the way of 2 thirds of 1% today. All right, for a closer look at what's driving the markets today, let's go to Christina Ports and Evelas at NASDAQ. Hi, Christina.

Hi, well, I'll start with NASDAQ because it's taking the biggest hit today. tech stocks are down on concerns. The Federal Reserve is just going to have to keep hiking interest rates after last Friday's jobs report showed a pretty resilient labor market. Tesla, though, let's talk about that company. It's down about 1% lower after the EV maker lowered the price of its cars for the fifth time in the United States since January. This has investors worried, of course, of Tesla's profit margins.

You can see shares down about 2 thirds of a percent right now. Apple selling off on weak worldwide computer shipments that fell over 40 percent year-over-year-over-year in Q1 of this year. That's according to research firm IDC. That means that just Apple alone is shedding roughly about 30 points off the NASDAQ, mega-cap tech names like Microsoft, Google, Amazon, also all lower alphabet down 2%. And part of the reason the S&P and NASDAQ are in the red, given the weight of these mega-cap names. Big winners, though. It's not all bad today. You got memory chipmakers Micron and Western Digital after competitor Samsung said it would cut production, so less competition is good for these U.S. names, but I'll explain all of that dynamic in less than 10 minutes in our tech check update, guys.

All right, thank you very much. Christina, it's now time for our weekly look ahead with Link. There's a lot to discuss on the economy and earnings, and let's do it with Stephanie Link, chief investment strategist and portfolio manager at Hightower, as well as a CNBC contributor. Stephanie, always good to have you with us. We'll get to some of the stocks. You have your eye on some of the companies that report in just a minute. but let's look at economic data first. What do you have your eyes on over the next week or 10 days? And it's great to see you, Tyler. Yeah, I think, look, the CPI, everyone's talking about it. That's the biggest number of the week, I think, economically. We're probably looking at a 5.2% headline,

year-over-year number, 5.6% core. We get the PPI number, which the month-over-month number is going to be okay, maybe two-tenths of a percent, three-tenths of a percent month over month, but up about four percent year-over-year, and that would be an acceleration from last month. And, of course, we get retail sales as well. So we've got to get through a lot of data, and then we deal with earnings. Let's talk about earnings overall, and then we'll get maybe to some specifics. What do you think the overall number is going to be? You hear people saying that maybe a 5% down from last year is where things are going to settle out. With some concerns about the level of specificity or the ability of companies to provide really precise and

accurate guidance? It's going to be tough, Tyler. I mean, I do think at the end of the day, we're going to do better than down 5%. I think margins are going to hold up better than expected. I think companies that have done a really good job at cost cutting, restructuring, pricing power, supply chains have eased a bit. I also think the weaker dollar is going to help, but it's overall, it's going to be about demand. And I think you're going to have some sectors that see pretty good demand and others that not so much. So I think you're going to see a little bit better on the earnings front. And I think for the rest of the year, I think the expectation is for down zero, excuse, down two to zero percent. That also might have upside as we kind of lapse

really difficult compares and get into the back half of the year. So many different kind of nuggets to highlight Stephanie. I mean, it's semiconductors. Those earnings are expected to be down quite substantially, the profit margins too. But obviously the stocks are just flying. as a result of that. I mean, this week we obviously, on Friday, we get the big banks, we get UNH. As Bertha Koos pointing out, we can't overlook the importance there. It's just maybe less cyclical indicator. So what to you is going to capture your attention?

Well, I think the setup, Kelly, for technology is not great, just given the moves. I mean, remember, last year technology was down 28%. The XLK, down 28%. Com services, down 38%. And then we've seen a reversal this year. And so far, the XLK is up 19% and the XLC, the comm services, is up about 22%. So they've had a nice recovery. They're still down from a year ago levels, many stocks.

But you have some moves that I've never seen. I mean, I own meta, as you know, and I was suffering with it last year, but it's up 73% year-to-date. I had to take some profits, right? I mean, that's just the prudent thing to do. Invidia, same thing. I don't own Nvidia, but a lot of the semiconductors. So the problem here is I think that there are a lot of parts. pockets within tech, they're kind of messy, right? Like software, you get recurring revenue,

you get strong free cash flow, you get pretty decent margins. On the other hand, you have very high valuations. Semis were working through inventory issues. You just heard Christina talking about Taiwan semi. And that is a problem because the inventories are so high. I mean, Taiwan semi had total revenues, Kelly, down 11% in March just from February, from February to March. So the inventory problems are still plaguing them, and we have to get through that. We're getting close, but we've got to get through it. And the valuations, thankfully, are cheaper. And then, of course, you got hardware. And Apple, the news was really staggering in terms of total revenue shipments down 40 percent. And the industry from IDC in PCs down 29 percent.

So tough setups, still some challenges. Eventually we'll work through it. But I think you've got to be very careful in tech. Let's close with a thought on the banks. A couple of the big ones outlawful. later this week, J.P. Morgan and Wells Fargo. Are they, are they cashing in where the regional and smaller banks are kind of losing it? Oh, I definitely think so. So first and foremost, J.P. Morgan, we always want to hear about macro. Diamond has been speaking all throughout the quarter, so it's not going to be as surprising, but we'll get macro, we'll get deposit information, we'll see what they're seeing in share gains. We know they grew deposits 50% higher than 2019

levels last year. So I think that's only going to get better. You have to get through their guidance. Net interest income, $73, $74 billion. That's the guide. Expenses $81 billion. Wells Fargo, it's going to be all about expenses. Can they actually do better than $50.2 billion this year? I think they can. It's a cost-cutting story, a restructuring story. Both stocks are cheap relative to their historical levels. I'm long Wells Fargo. All right. Thank you, Stephanie. We'll see you later this week. I'm sure somewhere on CNBC. Fantastic. definitely let's turn to a part of the market that's definitely been working lately and it's actually McDonald's the shares are trading at all-time highs after after they've undertaken those corporate

layoffs and embarked on a host of cost-cutting initiatives our next guest is still bullish as the shares pushed towards 300 let's bring in ubs analyst dennis geiger who has a 305 price target on the stock dennis welcome thanks for joining us great thanks for having me so give us some context here if things are going so great for McDonald's why are they laying off so many people and doing all this restructuring Yeah, so I think this has been the plan, right, to sort of make some adjustments where there are redundancies, allow the company to sort of move faster, move with greater urgency, and be able to reinvest some of those redundancies to accelerate growth going forward. So I think that's the plan. That's the strategy that you're seeing here.

And I think they're not resting on their laurels, right? It's been a terrific last several years from a growth perspective. And I think they're continuing to push that envelope and accelerate growth going forward over the next several years. So is it proactive, in other words? most people, if their stock is sitting at all-time highs, just sit pretty. I mean, why do you think they're undertaking all of this now? Yeah, I think we're going to hear more details at an investor event later on in 2023, where they're going to lay out the plan to re-accelerate or to accelerate global store growth,

which is already in about 3.5 to 4% as a target. I think we're going to go higher than that. And I think you're going to see some headcount in areas that allow them to accelerate that store growth, both in the U.S. as well as globally. And I think you're seeing some of those moves on April 3rd where they look to kind of go from more of a regional model to more of a centralized model. And I think that's worked in recent years

as the company has made some of those decisions. So look for that growth to accelerate and we'll get more details on that over the coming months. How important do you think the use of mobile devices is for McDonald's empowering that same store sales growth? And I noticed one thing in there that they're now going to be able to know when you get within sort of

three minutes of the location where your pickup is going to be, they're going to be able to bang, have it really ready for you when you get there. That does feel really smart. Yeah, look, digital and mobile has been huge, both in the U.S. and on a global basis. You know, some of the top markets, over 30% of sales are digital at this point has been huge for the U.S. You talk about that ready on arrival initiative that's starting to roll out across the U.S. and will do so over the first half of 2023. That's going to increase the customer experience. Now we can order. Instead of getting there and pushing button to start the order, we'll get there and the food will be ready for you. So it's going to really enhance the customer

experience and it's going to improve operations and improve throughput, which should help with traffic and sales. So we see this as a win-win. We like McDonald's focus and investment on digital and technology, and we think you're going to see a lot more of this over the coming quarters and coming years. What's the context here, Dennis, across your coverage universe? You have a lot of the names in fast casual, fast food. Would you say the McDonald's is a standout or how is the rest of the space doing? Yeah, McDonald's from a fundamental perspective and from a stock perspective over the last few years,

I think you'd be hard-pressed to find a better restaurant from a growth perspective, from a consistency perspective, and from a stock perspective. And I think McDonald's, we continue to like it. We think it continues to work as a defensive name, in a tough macro, but one that also allows you to play offense, given the growth that we're talking about

and given the potential to accelerate that growth. So we like McDonald's, continue to like it from here, even at or near all-time highs. We like Yom a lot, another defensive, high-quality name that's maybe got a little more valuation upside. And Chippole is another one that we really like a lot. Sales momentum looks strong. Unit growth looks compelling. And we think margins are going to look better over the balance of this year and the next. So those are three higher-quality names with a little bit more of a defensive skew for several of them that should work well in this environment.

All right, Dennis, we'll leave it there. Thanks so much today. Now we're all starving. But look at this newsroom. Dennis Geiger from UBS. We appreciate it. All right. Some headlines coming out of the Treasury Department right now. And Kayla Tausha. Taushy has them. Kayla. You can pronounce it any way you want to, Tyler.

They're both accurate. But later this week in Washington, the IMF World Bank meetings are going to kick off. And the Treasury Department is previewing how Secretary Yellen will be approaching those meetings. And what she plans to say to her global counterparts, a senior Treasury official says that she is going to be reaffirming the resilience of the U.S. economy and affirming the soundness of the banking system and that the banking crisis that we saw in recent weeks will not be dominating the conversation here in Washington, that there will be no coordinated plan for new regulation floated by Secretary Yellen and her

counterparts, but that really the conversation is going to be about the macro economy and the prospect for growth. This official noting that the forecast for 2023 is much more upbeat than even it was six months ago in the future. these meetings took place back in October 2022, and the conversation was largely about the possibility of the economy going into a recession. Secretary Yellen is also expected to talk a lot about more reforms coming for the World Bank under new leadership. And as for meetings that she's going to be taking specifically with counterparts from China, this Treasury official would not comment on whether Secretary Yellen would in fact be meeting with any of those

counterparts. But of course, we could learn more later this week. And we could learn more even And tomorrow, Tyler and Kelly, with Secretary Yellen holding a press conference tomorrow morning. Good point. Kayla, thank you very much. Kayla Taoshi with the latest there. Coming up, Apple lower after PC shipment's fall. You heard what Stephanie said. We're talking about a 40% drop year on year, but the shares are only down 2%. And micron, a huge gain on a big move over at Samsung.

We'll explain it all in tech check. And shares of pioneer natural resources are soaring on reports Exxon is interested in a buyout. They're up 6% right now. Well, Exxon's only fractionally lower. We'll get our traders take on that story coming up. And tomorrow, don't miss women and wealth of CNBC Your Money event, featuring personal finance expert Susie Orman, WNDA star Brianna Stewart. Go to cnbcvents.com for more info and to register.

We'll be right back. Time for today's tech check. The topic today, demand for computers and the chips that go inside. I'm Steve Kovac and Christina Ports of Nevelis joining us. Steve, let's start with you and why Apple is cratering today. Yeah, let's talk about that. It's about the broader PC demand, though. It fell dramatically the first quarter of this year.

Now, according to a new report from Research From IDC, which we've been talking about all day, the big number in that report, PC shipments are down 29% year-on-year for the first quarter. But even worse, it was for Apple Macs sales down 40% on the quarter, even though it launched new Macs just this January. Now, who knows how much worse that would have been if there's new models hadn't even come out. Now, this is the same trend we've been seeing since last summer, guys. PC demand has collapsed after just grown like gangbusters early on in the pandemic. Apple, for example, was setting new Mac sales records pretty much every quarter for nearly two years straight.

And then that all came to a screeching halt. For example, last quarter, Mac sales collapsed 29% year over year. And this report impacts other suppliers like Intel, AMD, and it's a bad sign for Microsoft's Windows licensing business. But Apple is less reliant on PC sales, which is why shares aren't down as much. The iPhone is still the most important product. More than 50% of its sales come out of that. We'll get earnings on May 4th, by the way, to see if it was able to maintain demand for the iPhone into this year after all those production problems last fall, guys. Well, and speaking of pandemic unwind, Steve, stay there.

Let's get the chipmaker's side of the story and the memory side from Christina Parts the Nevelas. Christina, where we're seeing pullbacks there as well. Well, we're actually seeing, yes, pullbacks overall, but let's talk about the, the uptick in Micron and Western Digital soaring above 8%. And that's because competitors, Samsung, like you said, pulling back, posted its worst quarterly profit since 2009 on slow global growth, as well as less demand post-COVID. Samsung also surprised investors by cutting short-term production plans, something it's pretty much resisted to do compared to its competitors like Micron just over the last year or so.

So what that means, if Samsung cuts productions, that could help level out supply and demand within the memory market and allow firms like Micron and Western Digital to step in to fill the gaps. But it's not all rosy for the sector. The largest chip contractor in the world, Taiwan semiconductors, posted its first monthly revenue drop in almost four years. You can see that just on the right side of your screen, that dramatic drop right there, and it shows it's not immune to weaker electronics demand. The results are not only dragging down TSM's shares, but Intel as well. Two points, though, to keep in mind with this report. TSM business continues to soften.

That could weigh on CAPX plans, creating another headwind for semi-cap equipment vendors like ASML, LAM, applied materials. Secondly, it questions whether the run-up in chip stocks, like the SMH, up 20, what, 26% year-to-date, in Vidae, almost, what, 88% year-to-date, if that's warranted, if the demand simply isn't there. So a couple of questions for both of you.

Steve, let me begin with you. The fall-off in PC demand, was more striking among Apple computers than generally. Any hypothesis as to why that is? A couple things. So they haven't had a big new model. They refreshed their backline early on in the pandemic for those first two years. So there was that.

These brand new computers, new designs, those new chips that we keep talking about, the M-chips. So they kind of got through that transition to their own chips, their own new designs. And that's when everyone bought them. So the comps are just really bad. there was the pandemic boom. On top of the fact, they put out these really enticing of really good new PCs that everyone just kind of snapped up in 2020 and 2021. And then they didn't need to buy them anymore because there wasn't anything new to buy,

basically. So that's part of it. Have manufacturers in the classic PC world, i.e. non-Apple world, have they come out with new refreshed models? Yeah, Dell just came out with a really nice one. I think this week or last week, the reviews just hit. So new things are coming out. And to be clear, they put out.

Apple put out new models of the Mac in January, but that was just a little speed bump necessarily. It's not a brand new design or brand new chip or anything that's going to move things significantly. So that's what we're looking at. You also got to keep in mind one more point. When Apple reports Mac sales, they do it on a dollar basis. We're talking about shipments of actual computers. So just because they're saying 40% down here, even if they're right, doesn't necessarily mean that's what the Mac business is going to look like. Totally.

I mean, it may be fair to say as well, Apple probably did better than the market. during the pandemic boom and then it's under. We talked so long how they're immune to some of these macro head wins. We talked about that all last year. And Christine, I think it's interesting in terms of what to do here on kind of the chip and memory side. It seems like investors are just rewarding Samsung and Micron in the universe for saying, listen, you know, this pullback is healthy and necessary in order to get things back in line. Even maybe there's kind of a same story here for Taiwan semi.

This is a bit of a game of waiting it out until things improve to some extent. It seems like everyone's guessing right now that maybe the bottom is in, given Samsung has finally pulled the cord and decided to cut production. We've seen this with a lot of chip makers, which is, I guess, investors' way of warranting the run-up. But if the demand still isn't there, even with Apple, right, Apple is TSM's biggest client. Yes, TSMC is going to benefit from Apple's iPhone 15 and the smaller chips, the three nanometers that are going to be in there. But the fact that TSM's March month showed a decline in sales, what does that mean for Apple, the likes of tons of other companies that use TSM products going into Q2?

So it could be a little premature to react and call the bottom just yet, but we're constantly seeing that in the chip sector. Yeah. All right, Christina, thanks very much. Steve. Thank you as well. And coming up, rising risks, coral reefs dying an alarming rate, risking not only the ocean life that depends on them,

but the local economies as well. Plus a crypto conundrum, crypto exchange Binance, losing its key banking partner signature. But now it reportedly can't find a new bank to hold its customers' cash. We'll discuss when Power Lunch returns. Welcome back to Power Lunch. NASDAX up 16% today. It is trying to go green today. Right now, it's only down by about two-tenths of 1%.

Let's get to Bob Bassani down at the New York Stock Exchange. Dow's positive, Bob. You know, it's been positive since the middle of the day, thanks to strengthen some of these cyclicals, as well as some of the consumer staples names. And the low print on the S&P, Kelly, was right at the open, essentially, and we've been moving up. We're about to go positive there. And that's because of the strength that we've been seeing generally in some of those cyclical names. Material stocks, industrial stocks, Caterpillar with disaster last week, very strong today.

That's nice to see. New Corps Cummins in the big global industrial strong. The one thing that's not participating curiously is Boeing, which started. strong and it's been generally weaker through the afternoon, but that's the one stock that's sort of bucking the trend amongst some of the cyclicals. Banks also stability there. We mentioned last week, many of the big regional banks trading towards the low under their trading range. Not today. Even First Republic Bank, which late Friday night decided they were going to eliminate their dividend on their preferred shares, they too have turned positive late in the

day, but Comerica, Key Corp, and Zions have been positive all throughout the day. The other thing that's helping the market is the strength in the consumer, staples names and health care. The defensive sector had a tremendous run last week with United Help, just a big, big mover in the Dow, Coke, Merck, Johnson and Johnson, all strong. Now, you see here these are essentially flattage, but these are well off of the lows that we saw earlier in the day. A lot of people were saying the cyclical, excuse me, the defensive rally was essentially over. No, I would say, Tyler, that given what we're seeing late in the day here, sideways, is a big victory for them, considering how much they've moved up in the last week. Tyler, back to you.

All right, Bob, thank you very much. Let's go to Chicago now and Rick Santelli, who is standing by as traders await some key economic data this week. Rick. Yes, it is going to be a big week. As everybody tries to handicap what the Fed's going to do by looking at things like Fed futures contracts, always important to keep an eye on them, but boy, I have a feeling they're going to change dramatically Wednesday and Thursdays as we get into those inflation data points. To your note, Well, here's a chart going back, well, until early March. Because it was around March 8th, we had 507, 5.07% closed for two-year note yields. Now we're toying with 4%.

As a matter of fact, we have not closed at 4% or higher for April at all. The last time we closed about 4% was the 31st of March. And if you put Fed Fund futures for January on top of a chart of two-year note yields year to date, you can see why we're paying such close attention. because however two-year no eels go, pretty much is how the Fed Fund futures, they're linked together, and foreign exchange is going to be right there as well. Okay, the Bank of Japan has a new governor there, Oeda, and he is going to have one heck of a task. So I thought might be very important to take a big macro look at how the yen is shaping up.

Against the dollar, there's the dollar yen. We're well off the October levels of 150, but when you look at a 20-year chart, You can see it's a challenge to try to get some strength back in the yen. Look at the euro yen over 20 years. And finally, the yuan, the Chinese currency, onshore versus the yen. No matter how the governor ends up working towards potentially letting Japanese rates loose out of their containment, I just suspect it's going to be hard going indeed. Kelly, back to you.

Great point, Rick. Thank you, Rick Santelli. Let's turn to the energy markets now closing for the day with oil lower. Gas trying to show some life, though, Pippa Stevens. Starting here with oil, it's not doing a whole lot down just shy of 1% with WTI right around that $80 level. Although it is coming off a third straight week of gains supported in part, of course, by that surprise cut from OPEC and its allies. But Nat Gas is the big mover up more than 9% last I checked.

And Dennis Kistler over at now up 7.8%, I should say. Now, Dennis Kisler over at Bach Financial said there are some fears that perhaps over in Europe they won't be able to store more energy over the supply. summer because of drought, some nuclear power plants being offline, things like that. However, the majority of this move today is thanks to short covering. He noted that traders don't really want to be short with NACAS right around the $2 per M&BTO level. And given how much it's come down this year, there's a much greater risk that the next move is to the upside versus to the downside. So a lot of people just getting out of the market.

Are we going to talk about the Exxon Pioneer? I mean, this is interesting. Yeah. I had no idea that company was that big pioneering. 49 billion. Yeah, I mean, it's the biggest driller in the Permian, and they are sitting on some very hot acreage. And so, you know, it's not surprising that maybe someone is eyeing them for potential takeover.

Now, this, of course, was that journal report, and both companies told our Brian Sullivan that they have no comment. But whether or not this deal actually comes to fruition, I do think M&A is definitely a theme to watch this year in the energy space because companies are coming off a record year. They have so much cash. They have healthy balance seats. And if you can't grow production,

organically, this is the way to grow your output inorganically. Not to mention as a trial balloon, you know, Exxon shares are barely down for the day. I mean, so if you're another big potential, you know, acquire or looking at this, you go, well, you know, the market doesn't hate it. And they're paying, you know, I think pioneer shares relative to Exxon, we're trading at the lowest level of the cycle, let's call it. So maybe something quite opportunistic. Yeah, I mean, Exxon's in a very strong position.

So I definitely something to watch here. All right, Pippa, thanks very much. Good head with us. Let's get to Morgan Brennan now for a CNBC News Update. Hi, Tyler. Well, here's your CNBC News update at this hour. The governor of Kentucky, Andy Bashir, held back tears as he told reporters how the shooting at a bank in Louisville this morning, which has left five dead and nine injured, has personally impacted him. I have a very close friend that didn't make it today. And I have another close friend who didn't either.

And one who's at the hospital that I hope is going to make it through. A senior administration official says the United States is closely watching China's actions in the Taiwan Strait, saying China's three days of military exercises undermine peace and stability in the region. The official also urged restraint. And the Boston Bruins have made history, securing the NHL record for single-season victories with 63 wins. The Bruins defeated the Philadelphia Flyers 5 to 3 with a forward David Pastronach, pulling off a hat trick to give him 60 goals for. for the season. The Bruins will finish the season with a home game on Tuesday against the

Washington Capitals. Might not be perfection for the perfection line, but it's quite a record. Kelly? Impressive. Morgan, thank you, Morgan Brennan. Still on power lunch for years, Star Wars and Marvel have been Disney's Golden Geese, providing a seemingly endless supply of profitable, popular content, but is franchise fatigue starting to set in with audiences? And could it have fueled Super Mario's massive weekend? We'll discuss that next. Welcome back to Power Lunch, everybody. It was a big weekend for the movie business, starting with the blowout success of the Super Mario Brothers movie. The film grossed over 200 million in the U.S., nearly double the second best box office debut of the year.

Meanwhile, Disney announcing more additions to the Star Wars franchise on the way, three more movies, also some negative reaction online to the Mandalorian finale. Are viewers starting to feel some franchise fatigue? Let's bring in our resident movie expert, Julia Borson, and our resident Star Wars export, Steve Kovac. Though, Julia, it takes a backseat to no one with respect to Star Wars. Julia, this was a big weekend for Mario. Who knew? Who knew?

I mean, this movie outperformed expectations, both in the U.S. and internationally. Worth noting that the release of Super Mario Brothers, which did come from CNBC's sister company Illumination, was the biggest animated release globally of all time. So this is a movie that really resonated. And the key thing here, Tyler, is that families came back to the movie theater. Families, people with kids who didn't want to spend a lot of money or maybe have the risk of going out to a theater during the pandemic.

Really enjoyed the fact that so much content was available at home. All of the different platforms, whether it was Disney Plus, or you had first run movies coming to HBO Max. Back in the early days of the pandemic, all of these platforms were offering fans. family-friendly content. Now we are seeing that they're willing to get out to the theater again and to pay up for those tickets and seems like they think it's worth it. But I also have to point out it wasn't just this movie. Cinemark issued a release saying that they had their biggest single

day at their theaters since Christmas of 2019. So what this means is it's not just Super Mario, but people are going and seeing other films as well, whether it was air, which was released by Amazon or whether it was the John Wick sequel. So I think there's a sense that some of the older movies have held up and people are ready to be back in theaters. My son went to see the air movie. Is it good? Did he like it? I'm curious about it. He said, but, but you know, Julia, one thing that seems to stand out here to me is the idea that the Mario movie is one that would apply cross-generationally to men and women, right?

And to young kids who are now picking up the game, right? So it was a triple. Cross-generation. People of my generation grew up playing the game. People of my kids generation are familiar with it. And then there's this other piece in play here. And I think it's worth pointing this out is that Comcast, CNBC's parent company, NBC Universal, also has the Mario attractions at its theme parks, not far from where I am right now here in Universal City. There's a big Mario land.

So what they've been doing is using the theme park attraction, which is brand new to do cross-promotion with the film. And it looks like that cross-promotion is really working. What would you add, Steve? I saw it in the theater's Saturday. It was great. And it was a mix of people, like Julia said, it was families and kids. And then people like me, just regular adults is going to see it because Mario has been around since we were little kids. I've been playing it since I was born effectively.

And it's like a nostalgia bomb went off in the theater. And everyone was just eating it up. This is a new franchise for sure. Speaking of new franchises, what about the old ones? And, you know, and Bob Eiger himself has talked about this. Like, is there franchise fatigue? and how do they start to come up with things that are fresh, but kind of like the super Mario movie, also are familiar.

Yeah, and we're talking about Star Wars now, and just over the weekend at their big Star Wars confab called Star Wars Celebration, they announced three new films that they're going to make. Now, look, here's the thing that gets me, fool me once, shame on you, fool me twice, shame on me. They've announced more movies, Disney, since Disney took over Lucasfilm and the Star Wars franchise, they've announced more movies and killed more movies,

and they've actually produced. So they've announced several different. So I'm a little skeptical that they'll actually pull this off. However, they are trying to get that Marvel movie magic. Remember, several couple years ago, the Avengers movies

kind of culminated in this big event. They're actually trying to pull that off right now. Jumping from what's going on on the TV side on Disney Plus, they want to culminate in one big movie event a few years down the road. That's going to be interesting

to see if they can pull it off, go from the small screen to the big screen. All right, folks, thanks very much. Julia Borson, thank you. Steve Kovac. That's it off my pocket protector. All right, good.

Still to come, coral reefs disappearing due to global warming. And one billionaire is installing man-made replacements to try to offset the effect. Rising Risings has that next. Welcome back at spring break season in the Caribbean. But one of the big draws snorkeling around those coral reefs sits in jeopardy. The planet has lost half its coral reefs since the 1950s, endangering commerce and communities. And now an unlikely pair are teaming up with. the solution, Diana Ollick explains in her continuing series on the rising risks from climate change.

They are majestic and beautiful and critical to the world economy. Coral reefs, often called the rainforests of the sea, support roughly 25% of all known marine species. The total economic value of coral reef services for the United States alone, including fisheries, tourism, and coastal resilience is over $3.4 billion annually. That includes $1.8 billion in flood protection benefits from averting damage to property and economic activity. The annual value of U.S. commercial and recreational fisheries dependent on coral reefs is $100 million each. Coral reefs are one of the most important ecosystems on the planet. Marine scientist Dr. Deborah Brosnan has been studying coral reefs globally for more than 25 years, with a special.

specific focus on the Caribbean. Coral reefs are at risk and the prognosis for losing more is high. So right now today, we lose more coral reefs in a day than we can restore in a decade. So she's not trying to restore damaged reefs, but rather replace them with man-made reefs designed to be far more resilient to climate change. We came up with the technology to figure out the shape that a reef should be, the size that the reef should be, in order to promote biodiversity and to protect the coastline. This fall the first project was installed off the coasts of Antigua and Barbuda. The reefs are made of a pH neutral concrete calcium carbonate which mimics the natural makeup of reefs. It's a dead skeleton but then the team attaches live corals grown in a nursery,

300 of them from three different species. Fish then move in. Not easy and not cheap. Oh look at that boat. How exciting that is. Yes. But Brosnan found a billionaire backer. That's my way of paying a little bit of rent for being here on the planet Earth. John Paul Dejoria, founder of Paul Mitchell hair products and Patron Spirits, is funding the first project, which costs about a million dollars. Dejoria has a real estate project on Barbuda. I'm doing with the Discovery Land Project, a billion dollar project, a fine, beautiful homes. Incredible, it's a big project. Now, the people that are very wealthy people, and they love the fact that we're bringing the people, everybody's getting a good job making a good money and that we're bringing the

reefs back it enhances more people to get involved and buy land and contribute to the project and bringing the reefs back could offset much wider global economic risks to tourism valuable fisheries and coastal protection well this is doable in the region it is doable globally what we need is the investment in the technology and the recognition that there is a return on that investment in terms of our own health our own safety on the coast, and the livelihood of at least a billion people in the planet. And fish from the Caribbean are exported globally, of course.

Brosnan and Dejoria intend to build a facility on Barbuda to manufacture these reefs, which could then be installed anywhere around the world. Back to you guys. All right, Diana, thank you very much. Coming up, some key movers in today's three-stock launch, including an oil giant, potentially on the verge of a very, very big deal. We'll talk about those stocks. in three-stock lunch.

All right, time for today's three-stock lunch. Exxon reportedly, says the Wall Street Journal, in talks to buy the fracking giant pioneer. Micron up more than 7% after Samsung announced its cutting production to end a supply glut. And Charles Schwab up more than 5% following the statement by the CEO Walt Bettinger, who says business is, quote, extremely robust.

Here to help us trade them all is Quint Taitro. He is chief investment officer at Jewel Financial. Let's start with Exxon Mobile and the possibility that it might buy Pioneer. The stock little moved on this news. Yeah, Tyler, I like this a lot. I think we're going to see more of this in the space. I mean, you've got companies that are now in better financial position than they've ever been. Exxon, huge cash surplus, already returning a significant amount of that capital through dividends,

shoring up their balance sheet, pioneer in the same situation. So what better use of that capital than to, expand their footprint. I mean, Pioneer, a huge player in the Permian, this gives them additional resources. I think it's a great play. I think investors, however, can get broad exposure instead of trying to pick the next, you know, target or invest in one of the behemoths and buy the XLE, the ETF, and just get broad blanket exposure to the whole group. I think we'll see more M&A activity here. Yeah, especially if the acquirers are not going to trade down sharply, Quinn. All right, let's move on then to Micron, which is up sharply.

I have the news of this what's happening with Samsung. What do you do with that stock? Yeah, you keep accumulating the dips, Kelly. I got to give ourselves a little bit of credit here. We don't always get them right, but we were on talking about this name after their earnings announcement a few weeks ago where they actually missed, and the stock went up. And the reason they went up is they talked about the cycle slowdown kind of coming near an end. And that was positive for the news.

We said, don't chase it. but look to accumulate on pullbacks. We got that pullback. Now we're getting a nice spark here. Ultimately, you're talking about a fundamental beast. This company has been seeing a compound annual growth in their return on equity of around 20%. That means they've been growing intrinsic value for 20% for the last several years, and the stock price has not reflected that yet. We suspect that's going to happen. Look for a breakout. You can put your technical hat on here over 65, and I think we'll get a little fomo and people will chase the name. I think you can still buy it here even on today's move.

All right. Let's move on then to Charles Schwab, which has been beleaguered, tarred by the brush that has hit some of the mid-sized banks and so forth. What do you think of this one? Dollar, this one hits close to home. We're a fiduciary advisor. We use them as a custodian. Their brokerage side is extremely strong. I don't see any challenges there.

banking side, that might be a little concerning, and that clearly is why the stock is trading where it is. However, if you dig a little deeper and you can look at the bond action and the bond prices are not reflecting the distress that we see in the equity side. So we think that this could be an overblown and an opportunity. That said, I think a lot of these banks that are undergoing this pressure, I think you don't have to sort of act in haste and you can wait. to see a little bit more clarity on what the FDIC and Treasury are going to do with the insured limits. But make no mistake, what Walt's doing and saying, I think, is smart. This is an area we would look to acquire if we got more clarity on the insured limits.

Let's talk a little bit more broadly about the markets right now and what your view of them is. They feel a little sort of tentative, maybe squishy today, little changed after Friday's jobs report. Yeah, we're waiting on CPI and PPI, the inflation data and obviously the FOMC minutes, but we see that there's a lot of fundamental strength out there. There's a lot of negativity baked in going into earnings season. And I don't think people are giving the respect of this recent up move that we've seen, specifically in Big Cap Tech. So we've been buyers in here.

We continue to be long. We're not nearly as pessimistic as other folks out there. We think inflation is going to continue to show signs. of a decline, and I think that's going to continue to put the Fed back off a little bit, and that will give further boost equity prices. Let's hope inflation does come down. Man, it's getting expensive at the grocery store. Quint Taitro, thank you, man.

Thank you, Tyler. And still to come, new details released on what exactly led to the failure at FTX. We will have that discussion next. Welcome back, everybody. The price of Bitcoin has made a pretty large comeback. There you see it now over 29,000. dollars up 46% this month. Some acting as it could be a hedge against dollar to pacement, slow down inflation, pick your topic. But while crypto is meant to be detached from the

global economy and banking system, the effects of the banking crisis could actually be bleeding into this space. Crypto exchange Binance reportedly is struggling to find a bank to hold its customers' cash after the failure of its primary partner signature. Institutions may be looking to avoid risk more than ever after SVB's collapse, and the crypto space has had its share of black eyes lately, namely FTX, which released a report from its debtors, highlighting what led to its failure, which was summed up by new CEO, John Ray, as hubris, incompetence, and greed. Here to discuss the CNBC.com tech reporter McKenzie Sigalos. Welcome back. Okay, so Binance needs a bank pretty quickly, it seems. Yeah, it definitely does. So it's one of those

crypto firms that has been struggling to find a banking partner since the collapse of Silicon Valley Bank and Signature and Silvergate, which were very friendly to the industry. But what's interesting is if you look at some of the bigger players, you've got Circle and Coinbase who haven't had a similar struggle. They're still working with leading banks in the country, but finance has those regulatory concerns. So why don't they just go to some of the big banks and say, I'd like to put my mind? I'm sure a lot of those banks would be delighted to have customer deposits. But with Binance specifically, it's still facing that lawsuit from the CFTC saying that, you know, they've helped to facilitate nefarious trades. They're perhaps bypassing U.S. regulation. So there's

concern about potentially associating with them. And that's just a CFTC. There are concerns that the SEC might have, you know, certain things to say, perhaps a DOJ. There's been reporting along those lines from Reuters. So that's the concern here. And what's actually funny is that you'd be playing in a messy swimming pool. Right. And you don't want to get involved. And if anything, you would have thought that it would have been, you know, crypto markets failing after, or, you know, falling, rather, after the collapse of these two big banks. But if anything, it's been the exact opposite. You've got Bitcoin and Ether outperforming bank stocks by a mile since March 10th. It's one month since the collapse of SVB, and the market's done quite well.

Yeah, and the Bulls are loving it. Meanwhile, over at FTX, as they kind of chronicle the downfall there, a lot of people are chuckling over the $40 million that, you know, Sam Make Me Free said, you know, he can't even find this money half the time. I mean, so that's where you get John raised some summation. I think he said, incompetence, hubris, and greed. No, exactly. And to go to your earlier question, Tyler, and this dovetails what Kelly is saying.

It's these practices where there isn't a lot of confidence in corporate structures and any sort of like typical compliance you would expect at a more established entity. Meanwhile, we're talking about billions upon billions of dollars worth of crypto that's been lost. And Sam Bankman-Fried allegedly in this report wrote it off as so goes life. So is life. Such is life. Right. What's 40 million here, 40 million there? 10 billion, if that's the number.

McKenzie, thanks. We appreciate it. Mackenzie's nice to have you with us. All righty. Thank you all for watching Power Lunch for a Monday. Glad you could join us. Thank you.