Power Lunch - Collapsing Inflation?, Signs of a Bottom and Exxon vs Chevron 9/9/22

Episode Date: September 9, 2022

Is inflation about to collapse? That’s the call from a long-time market watcher. He joins us to explain. Plus, the three things to look for to determine whether the market is bottoming. And, the battle of big oil majors. Is Exxon or Chevron the better buy? Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch. I'm Contessa Brewer in for Kelly Evans today. Here's what's ahead. Is inflation about to collapse? That's the call from a longtime market watcher. He'll tell us why he thinks that is the warning of permanent price hikes and why it's wrong. Signs of a bottom. There are three things investors need to look for to figure out if the market downtrend is ready to reverse. We'll tell you what they are and what it means for your investments. First to Tyler and a check on the markets. Hi, Tai. Contessa, thank you very much. Stock's right around session highs right now. Take a look at the Dow Industrials, up 1.19% as you see right there. The S&P. But the NASDA is the big gainer. Let me look over there behind Contessa. 2.03%. There it is right in front of me. Golly, that's amazing. All 11 S&P 500 sectors, they are higher led by communication services, energy and information technology. You should see Contessa trying to sneak in here. Big tech seeing strong gains, meta, up for. 4% Netflix, Microsoft Alphabet, gaining about 2%. We're going to talk about some of those stocks a little bit later and what they're doing to cut costs and why. Shares of Roblox rising this afternoon after it announced it plans to test an ad format by the end of the year.

Well, two hawkish statements this afternoon from a pair of Fed officials. Governor Christopher Waller says there's no evidence that inflation is moving meaningfully and persistently toward the Fed's 2%. target and he sees another significant rate hike in September. In a separate speech, Kansas City Fed President Esther George says the economic constraints pushing inflation are likely to be with us for some time and that the case for continued balance sheet reduction and rate hikes remains clear. But our next guest says the Fed needs to chill man sooner rather than later in a new CNBC op-ed.

He makes his case. You know Ron Insana. Senior analyst for CNBC, he's a commentator, senior advisor to Schroeder's North America. He has more titles than King Charles. All right, Ron Insana, welcome. Good to have you with us. Thank you. You think inflation is peaking and about to cool dramatically.

Why do you say that and how do you filter what Esther George and Waller say to the contrary? Well, one, I think there's an extraordinary popular delusion, Tyler, that we have entrenched inflation. I mean, if you look at every metric at the moment, and it's possible next week, we will see a negative CPI print, given the big drop that we've seen in gasoline prices over the last 87 days, decline in other commodity prices. And well, rents might be the only area that are continuing to go up. But we've already seen the peak in inflation as far as I'm concerned. And, you know, listen, we've talked about this a lot. I've been saying it for quite some time. But I do think these clarion calls of inflation staying elevated, of the Fed needing to keep rates

well above four or even five percent as the supply chain is normalizing very rapidly with shipping rates coming down, lag times and deliveries falling, prices in a wide variety of areas, even including residential real estate, are falling sharply. I think this is a wild misread on the type of environment which we find ourselves today. Okay, well, I'm reading through the op-bed that's on CNBC.com, and you've got the gasoline prices are down for 87 days in a row, quoting, information coming to us from AAA, that commodity prices are sliding here, that the prices paid component of the most recent ISM manufacturing report dropped. Okay, so you're saying that.

Don't you think that these Fed Vice Chair are looking at this same information? What are you seeing, Ron, that they're not seeing? Well, I don't think they're taking into account that this is effectively real-world data. They had said early on in this process of raising interest rates that they wanted to see real data, not just indicators or expectations of inflation falling. And we're getting very hard data. When you look at the charts of shipping costs from China, they have fallen precipitously almost all the way back to pre-pandemic levels. The same with lag times. Inventories of accumulated retail goods, as we discussed in the last couple of weeks, are building auto production, vehicle production is back to pre-pandemic levels. The supply chain is writing itself. And I think with

the exception of labor markets and the physical availability of how, housing, even though housing is in a recession, we're seeing all those inflationary pressures that the Fed thinks are may be entrenched actually being ameliorated quite quickly, far faster, I think, than anyone had thought. So I really think they're just misreading the tea leaves here and they're ignoring hard data amid expectations that somehow the consumer believes this inflation to be permanently entrenched like the 70s and 80s. I don't see any evidence of that. Okay. You're also pointing to what's happening in China as being a real global recessionary risk. Here's my question. If you look at what happened

in the United States and other countries coming out of pandemic lockdowns, there was an explosion in pent-up demand. If we see China either loosening its zero COVID infections policy or getting past it, or getting past it, what then happens to inflation around the world? Well, look, their property market contesta is imploding. We're seeing some serious and potential systemic risks in Chinese property values in the government and bankback guarantees of property developments that have been pre-sold but are not necessarily going to come to fruition. They have outright deflation and the volume of global trade has fallen rather precipitously as the Fed and other central banks have already tightened. And so I don't think China is in a position to export inflation

anytime soon, nor is Europe, which is facing the dual threat of an energy crisis and a deepening recession simultaneously. So I don't see where exported inflation will come from, particularly with the dollar as strong as it is, which in and of itself may create the type of problem overseas that the Fed will have to respond to down the road. So I think all the signs are pointing in the direction of falling rather than rising inflation, and we'll get more and more data on that over the next couple months. Just quickly to pick up on Contessa's point here, if China does come back, I don't I don't mean to say set aside the property market issues that they have over there. But you would expect to see if China comes back strongly an increase in demand for petroleum and other fossil fuels.

That would be number one. You'd expect to see the Chinese consumer come back. But you would also expect to see, wouldn't you, a ramping up of factory output, which would have, I suppose, a deflationary effect as you bring more supplies of product into the marketplace. So it could go either way. There could be countervailing influences and China's a wildcard. Yeah, China's a wild card. Europe's a wild card. Listen, we're still the best house in a bad neighborhood or however we discussed it in the past.

But look, I don't see China or Europe exporting inflation anytime soon. If anything, they're both in a weird and strange way, probably exporting more deflation than inflation over time. All right. Weird and strange. We'll leave it there. Ron and Sana. Thanks, man. You too.

Well, if Ron's right, if inflation is collapsing, our next guest says there are two other signs investors need to look for trying to figure out whether the market is bottoming. Let's bring in Jack Ablin, Crescent Capital founding partner and CIO. It's great to see you today, Jack. All right. So inflation is one that you're looking at. I'm interested in your thoughts bouncing off of what Ron had to say about whether inflation is collapsing.

But what are the other signs that you're looking for? Sure. Really, bottom line for me is the U.S. dollar. The dollar's been strong on anticipated Fed tightening, particularly against other central banks. And so once we get to a point where perhaps we see light at the end of the tunnel of Fed tightening, whatever that may be, 4%, whatever that number is, then we would expect to see the dollar roll over. One of the ways that I can confirm that the dollar is lower is to see the dollars, 50-day moving average, cross below its 200-day moving average. And right now, that's probably just given its strength. That could be several weeks away at a minimum.

The other is credit spreads. The yield premium lenders require to extend credit to lower quality borrowers. Now, this broke down in late January, early February, and one of the reasons why we took an additional measure out of our equity risk and moved into gold, that has still stayed in a risk-off position. Now, I will say, banks are starting to tighten their lending standards, and so that's tending to move an argument away from easier credit. But if we could see those yield premiums come down, that would also be another indication that, okay, maybe we're moving back to a risk-on environment. Ron made his case, inflation is collapsing. Do you agree with it or not agree with it?

I know you sent us a chart that we can put up where you show various commodities that would tend to argue against what Ron said. But basic question, do you agree with what Insana said or disagree? In general, I do. I do believe that inflation is trending lower. I do believe it peaked in June and we'll head back slowly toward the Fed's target. The problem, Tyler, is it's a monthly indicator and the market is minute to minute. And so it's going to take several months for us to say, indeed, inflation is trending lower and consistently lower. And right now, expectations are inflation not hitting the Fed's target until something like 2026. So it's a very slow erosion of inflation right now. We're looking at one of the charts there. I do buy gasoline down seven

and a half. I don't typically buy lean hogs. But if I did, I'd be grateful that they're not as expensive contest as they were. I think, but I do think if you look at this and the heating oil we're heading into winter, that's one of the biggest contributors to inflation, along with natural gas, corn and wheat at this point, which affects food prices, of course, Those are the things that have consumers on guard and matter to their spending. Jack, I'm just wondering, when you're looking for these signs that the equities market has bottomed, are you taking risks now on equities? Are you still trying to play a defensive posture here with high-quality companies and dividends?

Right. So we're still defensive. So generally we're underweight equities, our growth portfolio, which would normally, a risk on market would be 100% allocated to equity risk. Right now we have 20% out of the market. Some in non-correlated, which you could call hedge funds, another 10% in gold. So what we are doing is within our equity positions, we want high-quality companies that pay a strong and consistent dividend. And then once we start to see evidence that the dollars rolling over, we're moving back to a risk on position, my sense is any new buys that we're going to make in the equity market

will likely be in foreign markets. The yen, for example, is remarkably cheap. I've never seen the yen this cheap relative to the U.S. dollar. Of course, cheap markets can get cheaper, but this is an area where I suspect when the tide ultimately turns on risk-taking and the dollar rolls over, I believe foreign markets will lead the way higher. And you like one of the companies that's a Dow laggard today, McDonald's, tell me what you like about McDonald's. Sure. Just, you know, very basic story, very high-quality company paying a 2.1 dividend yield.

But here's the thing, Contessa. it's been growing its dividend at 8% annualized. So if you're looking for some solid income that will likely stay ahead of inflation and you believe inflation is going to drop below 8%, McDonald's is probably a decent bet for keeping your head down and clipping a nice quarterly dividend. Jack Ablin, great to see you today. Thank you so much for your insight.

Thank you. All right. Coming up, Google, Netflix, and Snap are just some of the major. tech companies that are cutting costs for it a little earlier. Is it a sign of a slowing economy or a signal that these firms are getting back to their inventive roots? And with crude on pace for its second straight weekly decline, which big oil stock is the best buy? Chevron versus Exxon in a knockdown, dragout. Discussion. Before the break, a midday mover lift up more than 5% and 24% for the week.

Luke Capital says it could be the next meme stock, in part because of its heavy short interest. More Power Lunch is straight ahead. We'll be right back. All right. Welcome back to Power Lunch, everybody. Cost cuts are coming to Silicon Valley. This week, Google unveiled plans to simplify the company and plans to cut down on employee trips, among other things.

Netflix trying to pull back on content and non-content related spending, including limiting corporate swag. The Reed Hasting Bumblehead dolls are out. And Snap is reigning in investment in a range of areas, it says. Plans to shut down projects. Is this just the start? Alex Cantorowitz is a CNBC contributor and the founder of big technology. And a lot of this big technology is doing pretty well today, but one day makes just one day.

Why are these companies making these moves now? Is it because, well, I guess interest rates are higher and they have. to focus more on on on on their knitting absolutely the market no longer has tolerance for like the runaway spending and you know the slimmer margins at these companies had by giving the perks by sorry contessa but by printing the swag making those bobblehead dolls right now we're in an economy where it's all about profit that means the companies need to focus on the businesses that are printing cash and they have much less leeway to work on those businesses that you know maybe somewhere down the line would end up netting something for investors, but just weren't producing

right now. And that's why we see Google saying we're going to focus on our money-making businesses, and we see Snap saying, you know what, that selfie drone, we didn't really need that. Netflix saying those bobblehead dolls, you know, maybe we actually could take that money and use it on content. And I think this is ultimately a very good focusing moment for the big tech companies that we're talking about. But interestingly, even on content you had Netflix saying, we're going to pull back or hold steady what we're investing in content creation in movies and television series. Not only that, but they're going to look again at what they're spending on cloud computing and their well-known partnership with Amazon. Could this have trickle-down effects for other tech companies? Absolutely. You know, a lot of the tech

companies that we're talking about are platforms. They're companies that other companies build their businesses off of. The example that you give with Netflix is perfect. If Netflix draws down its cloud computing spend, same with Snap, by the way. Snap has a multi-billion dollar cloud computing spend. you know, every year. So if they draw those down, you know, that ends up hitting people like Google or companies like Google, companies like Amazon. And, you know, this is what we're seeing as the tip of the iceberg. Companies all the way down in the economy are also looking at places to cut. You know, that being said, cloud is, you know, a fundamental, basic part of the digital economy. It's not going away. But it could start growing a little bit slower than it was.

These, you seem to be saying, Alex, that these are the moves of mature managements making wise decisions in light of economic changes and changes in the monetary landscape and so forth. If they turn out to be correct, how soon would you expect to see these moves start to show up in higher stock prices and higher profits? Well, look, Tyler, I think that these companies have been a beneficiary of the macro environment. and now they're getting hit by the macro environment. You know, there's only so much they can control in these moments, right? You know, you look at the last few years where the cues were up, you know, 39, 48% in 2020, 27% last year. They, you know, when it comes to the stock price, they ride these waves.

And now they're being hit harder because the interest rates are going up and that ultimately is going to hit a tech company, you know, more often. I don't think that they can flip the business overnight. I don't think they can go from being long-term spend. to short-term focus immediately. You know, we look at these things in three, four, five-year increments. So I do expect it's going to be a tough ride for these companies for the next little while, for sure. But you seem to be making that they're not necessarily being short-term focused here.

They're really being long-term focused. In other words, they're cutting out the discretionary spend in favor of sort of a return to innovation and a return to what got them the scales they had. That's right. Look, I think that when a company gets bloated, as all these companies have, you look at SNAP, which added 60% more headcount since the beginning of 2021. You look at Google where the CEO Suna Fuchai remarkably said that the company is getting slower. Once you admit you're getting slower, you are in deep trouble as a CEO. So I think it's a good thing that these companies are starting to say, hey, we need to become more efficient, 20% more efficient. That sounds good

to me. It does take a little bit of time. And then, you know, in terms of, terms of how you approach this as an investor, it's the ultimate question, right? Do you have the patience? And a lot of people don't have patience right now, understandably so, to see these changes push forward, or are you going to try to get your money into something that will net you profits immediately? I think ultimately this is good for these companies long term. That's the way that I think. And ultimately, you know, investors will have to make their mind up on which way they go. Alex, thanks, man. Appreciate it. Have a great weekend, Alex Cantorowitz. We appreciate it. Thank you. Still ahead on the show, a handful of stuff.

stocks surge this week despite heightened volatility. We're going to trade the leaders in today's three stock lunch, plus crypto prices moving higher today. Sam Bakman-Fried making another big bet with FTX. And there you can see Bitcoin up almost 10%. While more on that when power lunch returns. Markets pushing higher with the Dow at session highs right now. You can see that that's up almost 2%. And you've also got the S&P up a percent and a half in the NASDAQ composite up more than two percent now. Oil also heading toward the highs of the day, and let's show you that. All right. Welcome back, everybody, to power lunchtime for the ETF tracker for this week. And today we focus on energy, $1.1 billion of net outflows in the latest week.

Prices for oil and natural gas both falling this week. But Europe and Russia, of course, remain on the brink of an energy price war. And there are record temperatures in California, other parts of the U.S. Although that heat wave is expected to come to an end mercifully. If you look at the performance of some individual ETFs, the XLE, that's the big energy sector spider. That one is pretty much flat for the week. But if you get specific on natural gas, the United States Natural Gas Fund is down 10%. And the 2X leveraged fund boil, I guess that's boil, down 20.

percent or thereabouts. These data come from our partners at Track Insight for more information it's available on the F.T. Wilshire E.T.F. Hub. Let's go to Brian Sullivan. Is there a show you haven't done today? CNBC News Update? And I'm going to be doing Crypto9 America tonight, guys. Thank you very much. Good afternoon, Tyler and Contessa. Calling Donald Trump's racketeering accusations against Hillary Clinton and other perceived enemies, a political manifesto, a federal judge in Florida is dismissing the 200-page lawsuit in his ruling. The judge writes that what the suit lacks in substance, it seeks to substitute with length, hyperbole, and the settling of scores and grievances. President Biden is at Ohio today, where he is participating in the groundbreaking

for a new Intel semiconductor plan. Facility is getting support for the federal government under a new federal law and aims to reduce the country's reliance on semiconductors made in China and other nations. Vice President Harris, who describes herself as a, quote, space nerd, her term, spoke with astronauts on board the International Space Station. She visited NASA's Johnson Space Center in Houston today. She is there to lead a meeting, the National Space Council this afternoon. There's your CNBC news update, Tyler. I'll set it back to you. All right, Brian, we'll be watching you tonight at 6 o'clock. Ahead on Power Lunch, the best big oil bet, a top energy analyst is going to make a tough call between Chevron and Exxon,

plus the car market divide. Yeah, Middle America is really struggling to afford even used vehicles because of these record prices. But upper income consumers are buying up the luxury rides. We're back in two. All right, folks, 90 minutes left in the trading day.

We want to get you caught up on the markets, on stocks, bonds, commodities, and the best way to play big oil. Let's begin with Bob Bassani's stocks hired to end the week. We're heading into new highs, Bob. How's it looking from where you sit? We got a...

Okay, well, we're having a problem with microphones at this point, but let's get back to Bopassani minute, first to the bond market. The 10-year yield flat today after jumping yesterday when the ECB hiked rates by 75 basis points. We've also heard hawkish comments from Fed officials, the latest being Christopher Waller, who said today, he supports another, quote, significant increase in interest rates. Let's take a look at oil now, closing with a nearly 4.4. gain on the day making the commodity flat on the week. What wasn't flat this week? Clean energy

names. And Pippa Stevens has the standout. Pippa? Hey, Kintasse, it was a big week for energy as Europe's crisis drives interest in the space with clean energy stocks outperforming. Power prices are surging around the world, sparking interest in alternatives. The Invesco Solar Fund down slightly today, but still up 8% on the week. Names like Sunpower, Maxion Solar, Sonobos, and solar edge all up more than 16% in the last four days. Those gains come as California's greatest struggles to keep up with demand as temperatures hit record levels. Positive developments from the climate bill also playing a part here. A new report from Wood McKenzie forecasts the U.S. solar industry nearly tripling over the next five years,

growing 40% more than prior forecasts thanks to the IRA. Hydrogen, wind, uranium, and lithium stocks also gaining this week Lithium Americas, Albemarro, Levin, and Piedmont all up double digits. Meanwhile, Tesla is considering building a lithium refinery on the Gulf Coast of Texas, according to a newly released letter to the Texas Comptroller's Office. Finally, over in Europe, energy ministers met today in Brussels for emergency talks on how to protect consumers as power prices surge. European Commission President Ursula von der Leyen laying out a five-point plan, which includes a price cap on a Russian gas and a windfall tax on fossil fuel profits. President Putin has said if a price cap is implemented, Russia will halt all fuel deliveries. Contessa.

Watching the situation there closely, Pippa, thank you for that. Well, from clean energy to big oil, Exxon up 57% this year, and Chevron gaining 35%. but with crude, $40 off its high, which company is better positioned to keep those gains going? Let's bring in Sam Margolin, managing director at Wolf Research. Sam, it's great to see you today. This is sort of a game of that tabloid. Which would you rather? Would you rather Exxon or would you rather Chevron?

Yeah, it's tough. I think a lot of the differences between the two have been known to the market for some time. so it's hard to find new information. But like you said, Exxon's outperformed Chevron by 20% this year. And I think there's a pretty good case for Chevron to close some of that gap. First of all, Chevron should have better utilization on its LNG business in the second half of the year, which right now is really important because Europe needs a lot of gas to replace Russia. And then secondly, because Chevron has less debt, I think they're more likely to raise the dividend next year.

by a greater amount. So investors are looking for dividend growth might favor Chevron. So it's really close. You know, if I'm wrong, I wouldn't be surprised, but I think there's a pretty good case for Chevron to close some of that gap for the rest of the year. Which of these two companies benefits more from the provisions in the Inflation Reduction Act, which had precious little to do with the reducing inflation, but had a lot to do with the climate. Which one of these companies might stand to benefit more? Yeah, there's really three asset classes that both of these companies care about

that were main beneficiaries of the IRA. Hydrogen, carbon capture, and biofuels. And so both companies are going to make pretty significant investments in all three. I would say Chevron's a little bit further along in biofuels because they made an acquisition earlier this year. So it's a little more immediate gratification.

but huge support in those three areas, which are really, those are the three sort of integrated oil company focus areas in terms of low carbon energy. Talk to me a little bit about buybacks and where you expect to see those go among Chevron and Exxon Mobil. Well, but the advantage is that neither one of those companies

is going to determine their buyback on any kind of forward oil price outlook. They both increased their buybacks because they made more money than expected in the first half of the year, and they were able to pay down a lot of debt. And they're in a position to buyback stock in almost any commodity environment.

So again, because Chevron has less debt, I think that their buyback is probably more resilient to commodity volatility. But I think both companies are going to easily be able to hit their buyback targets for this year and next, really irrespective of the oil price. Sam, when we're looking at the global picture facing energy markets right now,

how crucial is what happens this winter in Europe? Europe? It's pretty critical. Europe's entering winter with natural gas inventories at a pretty decent level. They're not at critical levels. It doesn't look like they're going to run out of gas this winter. But with Russia shutting off, the Nord Stream pipeline, you know, it's getting tighter. And if winter is significantly colder than average, that drawn inventory is going to be pretty powerful. And then natural gas in Europe determines a lot of costs for other energy commodities, too, because if gas is really tight, you have to replace it with oil.

So it's a huge factor for the outlook, and it's a major swing factor. But it does look like gas prices are going to be steady, if not, like, make a massive spike in the winter. Is that what you expect, possibly a massive spike? Well, no. I mean, it's going to depend on the weather. And I have hard enough time forecasting commodity prices. Yeah. But I think that Europe's going to be able to get through a winter without running out of gas based on the history of the pace of inventory trends that have happened in years prior.

So we might be able to avoid a massive spike. That is good news. Sam, thank you very much for bringing us your perspective. Appreciate that. Thanks so much. Oh, you got it, Sam. Up next, a Lux Redux, the luxury car market, having a massive comeback here in America. Robert Frank with the shades.

pulling up with details on why we're seeing this surge. Welcome back, everybody, to power launch. We want to take a check on the markets with stocks near its session highs right now. And for that, let's go back to Bob Pisani. Bob. Hello, Tyler, trying to snap a three-week losing streak. We're up 3.7% for the week. Just take a look at the S&P.

You know, the lowest print was right at the open on Tuesday. We were below 3,900 at one point, and basically it's been a slow climb up ever since. One thing helping lower China inflation data this morning. That helped all of the European and Asian markets. On top of that, we had some decent tech earnings today. So we had DocuSign, Z-Scaler came in, and that's giving a nice little lift to all of the, well, let's call them speculative stocks that are out there,

speculative tech stocks, so block, Zoom video, Twilio, all the Kathy Wood stuff. That Kathy Woods, Arc Fund's having a great week. It's up about 10% this week, but remember, these bounce around an awful lot. Energy and materials also doing pretty well. also doing pretty well. Remember, they were all basically straight down for two or three weeks as oil's kind of collapsed, but oil's been a little bit stronger the last day or so. So Halliburton Schlumberzee's come back. Metals, Freeport's doing very well right now. So Freeport was way down there. At one point, that's probably up $4 this week. It was 27. So it's 31 or 32 there. Yeah, that's a nice little run for Freeport for the week. Don't kid yourself, though. If you really want to look at the leaderboard, all 11 sectors are up today. But in terms of of the new high list, it's basically, believe it not, utilities, you know, Sempra, American Electric

Constellation, all having a nice run at the new high list. We're ending the week on a bullish tilt, though. I call it a bullish tilt. So if you look at the factors that really move the stock market right now, the dollar index down three days in a row. That's starting to look a little topy. That could help. Two-year yields are looking a little topy as well. The VIX was 22 to 27 this week. closing out at 22, so up a little bit, but moving to the downside. And the S&P, that 3,900 to 4,100 level, Tyler, up 3.7% for the week. ending on a high note. Back to you. Bob, thank you very much. Have a great weekend. The luxury car market, having a massive comeback. Wealthy Americans are snapping up Lambos, Bentleys, and Moore. Robert Frank has that story. Hey, Robert.

Well, Tyler, this is another sign of that growing consumer split between the absentee. and everyone else. If you look at the share of cars sold that are considered luxury brands, that hit 17%. That's up from 14% pre-COVID. Sales of super premium cars. So that's your Lamborghinis, your Bentley's, that's up 36% over the past five years. Lamborghini, Bentley, Roseroys, Ferrari, all reporting record years in 2021 with no signs yet of slowing sales. Now, the big reason for all this is simple wealth creation. The U.S. added more than three million new millionaires during the pandemic. It's now close to 17 million of them. Also, the supply of cars has been better at the high end since the car companies and suppliers,

they give priority to their most profitable models when it comes to chips and other components. And then you have the SUVs. They've been the big driver at the top. Most of the Lamborghinis sold today, for instance, are SUVs or its Udus model. Rolls, Royce, Bentley, Aston Martin, and also seeing much of their growth from the SUVs. That's broadened their market to include more women and families. The Rolls-Royce Cullen, and that's the biggest of these super SUVs. That starts at $350,000. Even Ferrari expected to launch its first SUV next week

at over $300,000. It's called the Puro Sangue, and that is Italian for thoroughbred. Tyler, and if you could pronounce it, they should give you a discount. Puro Sangue. I like that. Mikiamo, contest. Yeah, yeah, there you go.

You got it. Do you know, I think two things. One, maybe people are buying luxury SUVs. I don't know, Robert, because they can't get a Toyota Highlander. Maybe they just can't get the high-end models of it. So they're like, well, whatever, I'll just throw them more money and get myself a Lambo. But two, and I don't understand this, why would you want to spend all that money on a car that essentially looks the same as a $55,000 model that everybody else is?

driving. So on the first point, let's say about the Highlander, you're absolutely right. There is availability at the top end compared to the mass market. And that price differential between the sort of high-end mass market and true luxury, that has shrunk as sort of regular car prices have gone up. So that jump into luxury is not only easier, but it's a shorter jump. And as to whether it's the same car as the 55, I mean, you should drive the Bentley Bentega, the Urus, any of these SUVs. These are amazing cars. Are they $100,000 better? Maybe not. But they are certainly difference in terms of the amenities, the interiors, the materials, and certainly in Lamborghini's case, the ride. So people feel it's worth it. I'm willing to test drive it if you will lend me your

car for the weekend. Okay? We'll do that. Thanks, Robert. Pills, parleyes, and profile picks. After the break, today's three-stock lunch. Tim Seymour will trade three of this week's top movers. Time for today's three-stock launch. We take a look at some of the week's biggest winners. Nice to be able to look at winners. Regener on up 26 percent. After posting positive trial results for a potential eye drug,

match group shares up nearly 13 percent, despite being one of the worst performers in the S&P 500 so far this year. But it's had a nice week. And finally, Caesar's entertainment. 12 percent gains this week as football season kicks off. so does betting. So how should you trade the week's winners? For that, we welcome Tim Seymour. He's CIO at Seymour Asset Management and a CNBC contributor. It's been a while, Tim. Good to see you, sir. Why don't we start with Regeneron? What are your views?

Hello, Tyler. Great to be. Look, I think I'm Regeneron. This ILA news this week is massive. Is it a game changer? I'm not sure. It's clearly a positive. And the question is, for how much longer do they extend pricing on this high dosage drug that clearly data shows doctors and patients will want. But you've revalued the stock, as you mentioned, 23%, effectively 30% from when this news started to percolate in. Is that worth $30 billion in the valuation, which is more or less what we did to regenerate on, which already I think had gotten some pretty good news. Their lib-tied drug, their oncology story, their pipeline looks better. Stocks had a great run. This isn't a story of a company that's not produced.

It's a story where a lot has been priced into this. And in biotech, I think you have other places to be. So I would be a seller here. All right. Next up, Tim, you have Match Group. What do you like about it? Well, Contessa, I'll tell you what, I would swipe right. And let's be clear, I'm not breadcrumbing on this one. I think it's a case where really, look, the long-term growth story here is 13 to 15% over the next five years. They are the largest leader in the online dating. We, you know, all are aware the size of this addressable market. I just think, you know, the Tinder reorg is something that's had the market concerned. I think the COVID comps and the pull forward are why this stock has struggled.

And obviously, it's massively struggled. So the stock's pulled back 60% off to 52-week highs. Never a reason to buy. But if you look forward and you look at a 26 times multiple with that kind of growth on 23 numbers, again, for the leader in the space with the space having a secular tailwind, that to me is actually very interesting. Good support for the stock at these levels. It's like it.

Worth a bet on match? How about a bet on Caesars? Well, you know, it's with great irony that I think the digital side of their business and the TV commercial that's every other commercial out there seems like it's Caesars or Draft Kings or one of these other ones is really what's holding the stock back. If you look at their last quarter numbers, they had record numbers both on the strip and in their regional properties. The digital lost less than expected.

And in fact, what was once a reason to get very excited and their acquisition last year of William Hill property. was a big catalyst for the stock. But really, at its core, this is a company that's executing and generating free cash flow. And probably most importantly, for the investor community, also paying down debt. So I think an unassuming valuation at around nine and a half times 23 EBITDA has had a major pullback. I think the stock's very interesting.

The digital is bonus, I actually believe. They've got the largest loyalty group out there with $60 million or so strong. So like Caesar's a lot here, I think the run is just beginning. The market has had a nice week. We began our program today talking about inflation and whether it has peaked and maybe turning down or even collapsing to borrow Ensona's word. Where are you on those two things, the markets and inflation? Look, I think the labor inflation is still something that stays with us. Obviously, the Fed won't come out and say that they're targeting the labor market. Clearly, we need higher participation rates. We need to see the unemployment rate go higher. the market's going to like the ability to rally into a what I think headline will be a light CPI print next week. Clearly, gas prices have come down. Clearly, you have some headlines that should be appealing. And in fact, I think for the market, with the Fed going on silence till

this week, no Fed rhetoric into that meeting either. So good news on inflation. All right, sir. Thank you very much. Tim, Tim, great to see it. Tim Seymour. Thanks. Thank you, Tyler. Up next, office friction. People are returning to the office, but Some reports say workplace culture may have gotten worse since the pandemic. Are we just rude to each other? Not me and Tyler. No, no.

We'll be right back. A huge kickoff for the NFL. Big win for the Buffalo Bills last night against the defending Super Bowl champs, L.A. Rams. Who else are the big winners? Sports of betting operators. For one thing, you have geo-compli, which verifies location. They say the activity surged 77% over last year. Fandul, the nation's leader, tells me it cleared 2.4.4.

million bets on the game last night. That's 176% higher than last year's NFL opener. And BetMGM tells me they saw a 20% increase in handle. Consider this. Professional football is America's favorite sport to bet on. We expect to see a big increase in action from this summer. And the first half of this year, commercial casinos already saw a 64% increase in sports betting revenue over the same time last year. They're starting to restrain their spend on promotional and marketing expenses. So you're going to see those ads now that it's football season again. You just may not see them everywhere all the time. But boy, they have been everywhere all the time. And so you would have to say that the expansion of sports betting has really taken off. Those ads must be working

or you wouldn't see this kind of growth. Well, and because they're all trying to elbow each other out and grab the market share. It's one reason they do that because promotions matter. The research shows that sports betters are not a very loyal group. They will follow the promotions. And who will be the end game winners here? I mean, there's going to be a shakeout here. There is, and a lot of consolidation that's already happening, mergers and acquisitions. I'm watching to see what happens on the November ballot in California because sports betting is up for a vote there, whether the tribes get it and whether the commercial operators get it. And that will all matter to how the three shakes out next year. All right, let's take a look at a question that we just mentioned a moment ago.

Have Americans gotten less polite since the COVID-19 pandemic started? New report in the Wall Street Journal suggests the workplace is getting ruder, highlighting fewer handshakes, short notice quitting, people ghosting potential clients and employers and just waiting longer to reply for emails. Two emails. Abrupt quitting, clearly a symptom of the great resignation. Hiring managers also pointing out the job candidates skip cover letters whenever possible. Imagine that. Seldom follow up with thank you notes, oh my, and can't be counted on even to show up if they are hired. I work with a charitable agency in northern New Jersey, and we have had that happen to us, but we've extended offers, and the day comes, and the people just don't show up.

Okay, that is. Or they work a day, and they're gone. That is rude, but somebody not shaking your hand. It could be because we all got scared of germs. Like, not following up with the thank you note. We all send texts now. To me, this seems like a little bit of etiquette queens complaining. Yeah, yeah.

I mean, I do write some handwritten thank you notes, but more often I just use email. It's easier. It's faster. And it saves the environment. And just as sincere. All right, folks, I promise, it is just as sincere. Programming note tonight, Crypto Night in America, Anthony Scaramucci, among a great lineup of guests.

He's been in the news. 6 p.m. Eastern time, Brian Sullivan host. That is on CNBC. You won't want to miss that. And, of course, Shep Smith's program follows at 7 with the latest coverage of the change in royalty across the park.

Well, and we have watched the markets now on an update. We've got 11 sectors positive for the day. So the Dow Jones Industrials, the S&P, the NASDAQ, all up, ending on the week on an up note. Always great to be with you. Nice to be with you. Thanks for watching, Power Lines. Closing bell starts right about now.