Power Lunch - FedEx’s warning, stocks vs bonds and the Blink Charging CEO 9/16/22

Episode Date: September 16, 2022

FedEx’s CEO says he expects the economy to enter a worldwide recession. As investors grow concerned about the health of the economy, are bonds finally a credible alternative to stocks? Plus, the CEO of Blink Charging on the growth of the EV charging industry. And, trading the week’s winners and losers. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch. I'm Contessa Brewer. Here's what's ahead. Stock slide as investors grow concerned about the health of the global economy. Amid the warnings, there are new opportunities emerging, especially in the fixed income market. We'll explore why bonds might be a credible alternative to stocks now. And despite the weak data, a prominent economist is forecasting more than 3.5% growth in the third quarter. We'll find out what he sees that makes him so optimistic. First to Tyler. And a check on the market is now, Ty. Contessa, thank you very much and welcome everybody. FedEx's big profit warning, dragging down sentiment and stocks.

A major average is now on pace for weekly losses. The Dow, the S&P, and the NASDAQ. There you see them. I can't see them, but you can see them. They're all in the red. FedEx on track for its worst day ever after warning of a $500 million. Revenue miss. Half a billion.

The CEO telling Jim Kramer, he sees a worldwide recession. coming. The stock is the worst performer on the S&P 500, and that is pushing the Dow Jones Transportation Index now to a 52-week low and pressuring shares of UPS and XPO logistics. Those recession warnings playing out in the bond market with the yield on the two-year, hitting 3.9 percent now. Rick Santelli has more on those moves in the bond market. Rick. Yes, Tyler, we've seen an aggressive week in two-year three-year, especially those short maturities where they're up on the week over 30 basis points. But in the intermediate part of the curve, seven-year, 10-year, we see that those prices have

moved higher pushing yields down. As a matter of fact, as we're speaking, twos, three, five, sevens, and tens are now all in the green, meaning lower yields than yesterday. Even though it's been a big week, that's important. Now, if you look at a June 1st of 10s, and I've been on this in a big way, we still have not closed above that mid-June. 3.48% high yield close. We've had the last two days intraday trade above it, but not close above it, which underscores there's a lot of investors looking at the global condition economically and deciding that they like buying some of these long-dated treasuries. Now, let's think foreign exchange, because I'll tell you what, if you think there's a global

recession coming, the currency markets agree with you. Let's look at a 22-year chart of the dollar index. It isn't necessarily on the high, but look at how strong. strong it's been. Let's look at the pound versus the dollar, which is on its lows. Lowest since 85. Here's a 38-year chart of the pound versus the dollar. A 25-year chart of the dollar versus the yen. A 20-year chart of the euro versus the dollar. You see what I'm saying? The stronger the dollar is, the more expensive it is to service debt, the more pressure on emerging markets and weaker economies, and the more investors want only dollar-denominated securities. And all roads for capital lead out of those countries, most likely in to the U.S.

Tyler, back to you. Boy, who even knew we had charts going back 38 years? Rick Centelli, thank you very much. It is not just treasury yields that are rising. Investment grade bonds yielding above 4% now. And since the summer, many states have issued new munis with yields above the 4% mark. This week, double-in-ins Jeffrey Gunlock said, if you really want to go for it, My advice is to sell stocks and buy opportunistic bonds.

It was brutal to be a bond investor for the past several years, but now it's actually the place to be, says Gundlock. Our next guest agrees and says buyers of investment-grade bonds will be very happy 12 months from now. Guy LeBah is Chief Fixed Income Strategist with Janie Montgomery Stock. Guy, welcome. Good to have you with us. Thank you, Tyler. For the first time, in a long time, bonds look.

like not just a place to put some cash, but really investable. Yeah, it really is remarkable. I mean, the year has been absolutely brutal for fixed income investors with interest rates rising and the worst returns, certainly since bond indexes were invented, possibly by some metrics, the worst return since the Washington administration, believe it or not. But bond selloffs to some degree are sort of self-limiting because at some point interest rates move high enough that there's enough appeal, even if they move higher, that the carry, that the income generation capacity is really substantial.

And portfolios of one to ten years, so relatively short to intermediate term investment-grade corporates right now, we're seeing yields above four and a half percent on average across those portfolios. And I can't recall a time in the last decade, aside from maybe a week or two of crisis periods where we were anywhere near that level. So it was really appealing in that sense. And then let's look at Munis. What's been going on there?

We said yields above 4% on Munis. Boy, that is a nice way to make some tax-free cash. Yeah, absolutely. And for individual investors, including the ones that we support here at Janney, Munis are a massive portion of their overall fixed income asset allocation. Lots of reasons. Historical stability, the tax exemption being, of course, the biggest one. Now, last spring, in addition to rising interest rates,

we also had some very acute weakness in the muni markets. This time around over the course of the last month, or two months or so, base interest rates, treasury yields and other sort of safe haven assets have been rising. But the muni markets have been a lot better behaved. And to some sense, that makes us sell off a little bit more viable in munis. But the reality is for intermediate to longer term bonds, higher quality, whether it's investment grade, whether it's municipal, even government bonds. again, I think 12 months from now, you're going to be pretty happy with buying around these levels.

Do you think that yields are near their peak, gee? Well, it's very hard to say, of course. I think they're a lot closer to their peak and the heart of their trough. That's obvious. But I would wait for a couple of signals to be more confident of that. Number one is perhaps the most obvious. A few months of slowing or at least plateauing core inflation figures. We have yet to see that. But the odds are very much skewed at this point that yields, again, 12 months from now, hour lower than they are today. So really, I think for people who need a little bit of a refresher course, as I often do with bonds, you have to remember, really what you're saying here is that if I started to tiptoe

into bonds, any increase in interest rates from here might not be so drastic and dramatic as to wipe out in total return loss the yield that I would be getting from buying at a four and a half percent yield on an investment grade corporate, right? Yeah, absolutely. We talk about that in the fixed income markets is break-evens, right? How much do yields or how much do relative spreads between one bond and another have to move before you wipe out 100% of the income? And when interest rates are starting at, say, 1%, that break-even is very, very narrow. But as portfolios, again, of investment-grade corporate bonds in the four-and-a-half percent range, right, there's a much, much thicker cushion before you start to experience net losses. So interest rates would have to move significantly higher than they've already moved before it becomes a big problem for corporate bond investors at these levels. I hope you moonlight as a professor. That was a great explanation. Gila Ba. Thank you. Thank you. Economists are beginning to lower their growth forecast following the recent weaker economic data, but not our next guest who's calling for 3.6% economic growth in the

third quarter thanks to the strong consumer. Joining me now is Stephen Stanley, chief economist at Amherst, Peerpoint. Boy, I wonder what that kind of introduction, whether you sometimes feel like a voice crying in the wilderness right now, Stephen? Yeah, I have to admit, I didn't realize just how low some of the other forecasts had gotten. But, you know, I'm still pretty optimistic about the third quarter. All right. Well, tell me what you're looking at that makes you have such a rosy outlook. Sure. Well, I would point to a few things. I mean, firstly, as you mentioned, the consumer, I think this summer was the first time that people have really been able to get out there and do the

sorts of things that were restricted during the pandemic. So we know that travel was kind of crazy over the summer, all the crowded airports and things like that. So I think there's a lot of services spending that we'll see in the third quarter. A second thing that we're saying, I think, is the unwinding of some of the snafus in the trade situation. So the first half of the year, goods imports spiked. And I think what that was was it was the kind of all the stuff that had been ordered in 2020 and 2021 that didn't get delivered, as some of the logistics problems were unwound, I think those came in in the first half of 2022. And so the trade deficit widened dramatically in the first half of the year, particularly in the first quarter. It was really the main reason

why we saw such a negative GDP number in the first quarter. It looks like that's reversed. Inventories or, excuse me, imports are getting back to something close to normal in terms of levels. And that means that trade is probably going to be a big boost to growth in the third quarter, maybe as much as two percentage points. And then finally, another big drag has been the government sector. It's been very negative in the first half of the year. It just feels like the government sector should begin to turn around. I think the federal government is going to be spending a little more on defense spending, given what's going on in Ukraine.

State and local governments should start to see more activity around the infrastructure bill that was passed last year. So, you know, all three of those things combined, and I end up with a GDP forecast about 3%. How do you collate what we heard, for instance, from FedEx, what we even heard from General Electric about supply chain snags still disrupting their delivery to customers. How does that coincide with the way you think the strength of the American consumer is going? Yeah, we're still definitely not back to normal in terms of, in terms of the supply chains. And so that's going to be an ongoing issue. It is getting better, it feels like, but it's certainly not all the way back to where we'd like it to be.

I think in terms of the consumer, it's important to remember that we're seeing a kind of a reversion to mean, if you will, in consumer preferences. So during the pandemic, a lot of services were not available to consumers, and so they concentrated on goods, and that's been a well-documented conversation. And I think we've seen kind of the reversal of that. And so I think, you know, FedEx is certainly one element of that, as people are a little bit less interested in goods and maybe more interested in services going forward. There's definitely a shift in the composition. It doesn't necessarily mean that the consumers weakening dramatically, but merely that the composition is returning to something closer to the pre-pandemic norm. But we are starting to see an awful lot of CEOs talking about

slowdowns in their business. FedEx just last night, we're going to hear from a container board CEO shortly here. Interest rates seem to be going up rather dramatically. Housing seems to be coming off the boil. There are an awful lot of things that are countervailing influences to what you describe. Sure, absolutely. And I would just add, I mean, I'm pretty negative on housing in the near term, too. I think you're going to see a big drop in housing activity in the third quarter just as we did in the second. So I certainly not ignoring that. I think, you know, in terms of the FedEx thing, too, I would point out, well, there's a couple of things I'd point out about that. Firstly, FedEx is a global company, and I think there's no question that Europe and some other parts of the world are probably dealing with more acute downward pressure to their economies right now than the U.S. might be. And the second point is that, hey, look, the Fed is trying to slow things down. We had extraordinarily strong growth. The economy was overheating last year.

And so this is all part of the process of trying to moderate things and bring the economy into better balance. There has been a lot of pushback this week on this idea that CPI is a lagging indicator and that, in fact, the Fed is too late to act and is looking at, and we heard it earlier, the economy breaking. I'm just curious, do you think that inflation is still a significant risk? And where do you put the risk of recession at this point? Yeah, I do think we're probably going to end up seeing a recession, but I think it's going to come much later. I think it's more likely to be late next year or even in 2024 rather than in the near term. I mean, Fed policy is normalizing.

It's not as easy as it was, but it's probably even now still not really that tight, although it feels like we're going to have to get there, to get inflation down, I would continue to pay a lot of attention to the labor market. And it just doesn't look to me like the labor market has cool off much yet. So while we are seeing some moderation, it does feel like there's a little bit of slowing in the demand in the labor market. It's still pretty hot. The unemployment rate is still well below 4%. And so I think the Fed has more work to do to get the economy back into better balance. All right. Well, thank you for sharing your bold view. Stephen Stanley, Amher's peer point. All right, coming up, finding opportunity in energy, the best performing sector this year,

what to look for and what to stay away from as market uncertainty grows, plus shares of international paper falling sharply on a downgrade to sell. We will talk to the analyst behind the call who cited a collapse in container board demand, which is a proxy for the economy. And META's market cap now below $400 billion, a sharp decline from its one-time trillion-dollar valuation. We'll trade that one and two others in three-stock lunch. Welcome back to Power Launch, everybody. Some market bright spots.

The home builders are trading higher today. Lenar KB, D.R. Horton, up more than 1% in a down market. We're also seeing a move higher in some consumer names like Dollar General, Clorox, AutoZone, J&J, but with so much economic uncertainty, how can investors find long-term opportunity? Megan Shue is executive vice president. and head of investment strategy at Wilmington Trust. Megan, welcome.

Good to have you with us. Thanks for having me. I want to go back to our first segment where our guest said that if you buy fixed income now, specifically, I think he was referring to high-grade corporate bonds, in 12 months' time, you're going to feel pretty, pretty, pretty good. You say underweight fixed income. Explain why. Yeah, so we have held an underweight to fixed income for the better.

part of this year. We've chosen to hold our defensive positioning and cash instead. And I think that's broadly been the right move as we've seen interest rates move up. I do think looking forward over a 12-month investment horizon from these yield levels, even if you see rates move, let's say the 10-year moves 25 basis points higher, maybe even 50 basis points higher, for a diversified, high-quality fixed income allocation, you're still going to be clipping a total return that's positive. very, very different from the backdrop where we started the year, sub 2% yields. So it's looking better, but it's been a really, really tough environment for that diversified investor looking for bonds to offset the volatility that we've been feeling in stocks.

It just has not worked. But going forward, we do think it will work a lot better. And we're just waiting for that right time to add to our fixed income, most likely from cash. I'm glad you clarified that because you're exactly right. If you had been, and he's conceived the same, if you've been in bonds, this year, it has been a bloodbath. It has not been a pleasant place to be. And one should have put that defensive capital, as you urge, in cash. Now I'm hearing you say we're inching toward that point where investment grade fixed income may be more attractive. Do I have you right,

Megan? Well, we've used that cash as an optionality. And I think, honestly, if the market continues like this, we're going to have a lot more attractive option. potentially on both the fixed income as well as the equity side. But, you know, the point is that the pain investors have felt, and we talk to a lot of clients who are diversified, who have just been totally floored by what they're seeing in their statements, mostly because of the, you know, the lack of offset coming from bonds. And we're really urging them not to give up on bonds, but to hold a little bit less than we would in a full kind of strategic allocation. So are there particular sectors that you think will hold up better given the economic weakness that seems generally to be predicted and especially on a global front?

Well, the sectors that are going to hold up better in a period of economic weakness are clearly the defensives, consumer staples, utilities, maybe even real estate depending on the pocket that you're looking in. But the problem is that valuations for defensives have gotten very expensive. And there might be a little bit more room to run there. But if you look at the historical relationship between valuations for cyclicals versus defensives, it's trading very low relative to history. So we've got a lot of pessimism priced into the cyclical part of the market. I would actually look not necessarily towards cyclicals, which might be financials. And we do have a slight overweight to energy.

But other parts of the market, maybe more value-orneigh. that are tied to the health of the economy, instead start to eye those pockets of secular growth, which have really taken it on the chin. We've seen that in the NASDAQ underperformance as rates have moved higher. And we don't see rates moving materially higher from here. So I think we're going to get, you know, as soon as we find what that ceiling is on the rate market, which I think we're probably close to that peacockishness from the Fed, that that might become a more attractive opportunity for a long-term investor to get involved in that secular growth, maybe more tech-oriented parts of the market.

One of the things that you mentioned and a lot of our guests this week have talked about are discount off-price retail, warehouse retail, home improvement. Why is that so appealing to so many right now? Well, I think if you're looking at the risks out there, and again, what I said about, you know, valuations already pricing in so much in terms of favorability for the defensive parts of the market, We're fairly neutral across sectors, but we're trying to find pockets that might hold up better, as you originally asked. So within retail, if you're thinking about off price or discount or even warehouse, those are places where you can see bottom end consumers by income and higher income consumers kind of come to the middle and meet and support demand through more tumultuous periods, especially if we start to see import prices and consumer price inflation start to decline. We think that'll hold up.

And then the housing market's really interesting. We're going to get a slew of housing data next week in terms of home builder optimism, as well as new and existing home sales. But we expect continued softening there with a mortgage rate north of six and a quarter percent. And so in that environment, you might expect people to focus more on updating what they already have. So that would speak to home improvement holding up relatively well. We'll look forward to that slew of data and a big Fed meeting. Megan Schu, have a great weekend.

Thank you, too. Just ahead, supply stream. General electric warning that supply chain pressures could delay orders. What's that mean for the stock? First, up next, a paper cut. Jeffrey's downgrading international paper saying cardboard box demand is slipping. And that could signal a weakening economy. And as we head to another break, a look at the stock of the day. FedEx, cutting its sales forecast by half a billion dollars. The CEO says he expects a worldwide recession. We will be right back. Welcome back to Power Launch, everybody. The packaging companies like international paper and packaging corp are getting hit by a double whammy, the FedEx profit warning and a downgrade at Jeffries.

That analyst cites slowing demand for container board, which is often viewed as a proxy for the economy. And joining us now is the analyst behind the call. Philip Eng with Jeffries. Philip, welcome. Good to have you with us. Thanks for having us. So you're downgrading both of these IP and PKG to underperform. I assume that's because you see a slowing economy, number one.

And number two, basically an idea that they have a lot of inventory that they bought, that they've got to work through, right? Or that they sold, rather, that, you know, that's out there. Sure. It's all that, right? I think it shouldn't be a surprise. we got some pretty clear demand signals with a major input for container board collapsing the last two months. And we reached out to some of our contacts started in the industry.

And they're seeing exactly that where orders were really strong up until June, started to weaken. And it's been really soft since July. And there's just a massive blood of inventory. And they're just trying to work through that. And typically some of the smaller players that are able to kind of cut a deal in the spot market of exports. do not have that avenue just because there's so much inventory in the channel right now. So, you know, as you kind of pointed out, Tyler, accurately, container board, cardboard box is a pretty good proxy for the economy.

And it shouldn't be a surprise, right? FedEx cut numbers last night. And you've seen the retailers like Walmart and Target reset expectations a number of times right now. Should investors expect a dividend cut here? No. I mean, certainly IP went through that the last cycle. But I think the balance sheet for all the big public container board producers like IP, Pee, Rastrock, BP, have pretty healthy balance sheets.

Cash flow should be pretty solid. So we do not expect the dividend cut. So how close a proxy for the economy are these companies? Are they really just directly correlated or what? Pretty high. The correlation is pretty high. You know, if you look at the end market, it's going to be pretty spread out. You've got staples, food, beverage, right?

If you go to a grocery store, you'll see produce in the box at cardboard boxes. I'm sure being your wife, she's. shop at Amazon, right? So it's a pretty good indicator for, pretty good indicator for the economy and certainly got some that durable, good exposure. So when you saw Walmart and Target cut back and de-stock earlier this year, the container board container work guys certainly felt it. Yeah. And we're seeing that dynamic accelerate in recent months. A box a day keeps the Gremlins away. And what about, and what about, Philip, the export market? I mean, is that just collapsing as well? Yeah, that's a great question.

What was shocking to me was when we did reach out to some of our contacts are big in the export market, the message was the same. The market was really tight up into June, July, and everything's grinded to the halt. And the big producers like IP historically have used export market as a relief out. But that option's not really available because China is really weak, right? A bunch of lockdowns. Europe, certainly a weak backdrop, even Mexico. And everyone's working through a glut of inventory. So the export markets are pretty squishy right now.

So we think it's a pretty good read for the global economy. Very quickly. If demand falls, how much will pricing fall? Great question. Peak to drop in past recessions, about 20%. And what makes it a little trickier right now is there's about 5 to 6% of capacity starting to come on as we speak. So weakening demand, a lot of inventory, and capacity coming on is usually not a good

combination for any commodity, including container. Philip Eng, from Jeffrey. Thanks. Let's get to our friend Brian Sullivan for the CNBC News Update. Hello, Brian. Hello, Contessa. Thank you very much. Here's what is happening at this hour. Migrants who are flown from Florida to Martha's Vineyard are being moved now to Cape Cod, where they will have temporary housing at a military base. Massachusetts governor says the move is voluntary. U.S. diplomats are not planning to have any meetings with their Russian counterparts at the United Nations General Assembly next week. U.S. Ambassador to the U.N. Linda Thomas Greenfield

blame Russia's war on Ukraine. We will be having meetings with the Ukrainians. There are no plans at this time to have meetings with the Russians. They have not indicated that they have an interest in diplomacy. What they're interested in is continuing to raise this unprovoked war on Ukraine. And please don't do this. In Evansville, Indiana, a van driver ignored barricades and drove on a road, by the way, the wrong way. That had been weakened by a water main break.

The van ended up falling into a sinkhole where it then landed on a natural gas main. That meant more repair workers need to be called in. Apparently the van driver was okay. I'm trying to find out. Drove the wrong way through a barricade into a sinkhole. You know, he thought that it was a guideline rather than a rule. Yeah. Just like speed limits.

Back to you. Brian Sullivan. Thank you. Thank you, my friend. All right, ahead on Power Lunch. A lot can change in the blink of an eye. Evie demand surging a couple of months ago, but stocks like blink charging are now down big over the past month.

We'll hear from the CEO next. Plus, three-stock lunch. Stocks taking a big hit this week will run through some of the key laggards, as well as which names held in store for today's three-stock lunch. Less than 90 minutes left in the trading day. We want to get you caught up on the market, stocks and bonds and commodities. and the latest on EV infrastructure with the CEO of Blink charging. But first, let's begin with Christina, Partinevalis, at the NASDAQ, talking tech stocks today.

Give me a sense of what's happening with the markets, Christina. Well, the NASDAQ in particular continuing yesterday's trend, where it was pretty much the worst among major equity indices. Investors are bracing for rising rates, a sales warning from FedEx, a strong U.S. dollar, and the expiration of many futures and options trading. So that's adding to the volatility. Investors are clearly, you know, rethinking their expectations. But today, Apple is actually having the biggest point impact down over 1% right now,

even as the latest iPhones hit stores today. But when you drive into the equal-weighted NASDAQ-100, it's the software names. DocuSign, Octa, Data Dog, all trending lower. The bug cybersecurity ETF had its worst close yesterday thanks to Oxus plunge. It's already down about 4% today. So we're seeing that continuance trend. And then you've got the pillars of technology. Let's talk about the other players like the Sky Cloud ETF or the SMH SOX ETF representing semiconductors.

All of those on your screen down over 6% or more just this week alone. But today, some of the semis like Nvidia, Intel, trying to stay in the green. Only look at that. Intel up above 1% of Nvidia up above 1%, but they're still just 2% off their 52-week lows. And I'll point out Texas Instruments is trending higher today on a dividend increase and a $15 billion buyback program. And last but not least, because we're ending on a positive. Netflix is turning around on pace for its third positive day in a row. I said positive, but still down over 60% on the year on a pace to break a seven-year win streak. I want it to end with some good, but then I ended with some bad. Well, you know what? You have to start with the bad first so that you can end it. Yeah,

it's like ripping the Band-Aid off, right? Let's do it. Christina, thank you. And there's a lot of action in the bond market today. Let's start on the short end of the curb. The two-year yield is hitting its highest level in nearly 15 years and getting very close to 4% now. And that 10 and 30 year yields are relatively flat, but they've jumped this week after that hotter than expected CPI report on Tuesday. And of course, oil has always had a busy week. It's rising slightly today. And for that story, let's go to Pippa Stevens. Hello, Pippa. Hey, Contessa. Well, it's been another volatile week for energy prices here. And we have this constant push and pull between the demand. and supply side. And traders say that supply is still very tight. And so it really is the demand part

that is driving the price action right now with so many uncertainties around the macro conditions in the months to come. So let's check on prices. WTI is at 8516 with Brent crude right around 9130. Both are on track for a third straight week of losses. But it is natural gas that is once again the biggest mover over in Europe. That contract sinking 11.6 percent, now down 7 percent for the week, also on track for a third week of losses. Now, in a very bleak market, a bleak, you know, macro view for the broader market this week. One area that's really stood out is the EV charging stocks. We're talking names like ChargePoint, Beam Global, and Walbox. This week, President Biden announced the first tranche of funding under that $7.5 billion out of

allocated in the infrastructure package for a national network. So these stocks are responding and in the green. Contessa. All right, Pippa, thank you for that. And blink charging is one of those companies that stands to benefit from the big round of funding from the Biden administration. That stock, though, is down today. Double digits.

You can see down, or it has been down double digits, now down eight and a third percent over the last month. Michael Farkas is the CEO and founder of blink charging, which has more than 51,000 charging stations across 25 countries. When you're watching what's happening with the stock today, Michael, do you just see it as a disconnect between the reality

and hopes for the future and what investors are worried about? Our business is a long-term business. So, you know, the day-to-day volatility on our stock price is not something that we really take notice. We're looking at the long-term and this business really is at its infancy.

When you look at the total market of where we are and how many chargers that are deployed today and where we need to be in, 2030 or 2040, there's nothing but growth for the entire industry. We'll talk a little bit about numbers then. Like, how much do you want to grow in the medium term? What can investors in your company expect out of your growth?

It's exponential growth. If you look at the actual numbers today globally, and that's the market we participate in, there's roughly a couple, a few viable charging stations deployed. By 2040, you're looking about 450 million to 500 million chargers. The growth is astronomical. We're going to complete change over how we transport ourselves, how we move, and we're going from a gasoline environment, fossil fuel environment, to renewables and electricity. What's the challenge for you in trying to get new charging stations up and running? Is it just money, or are there regulatory headaches?

And I don't know, is the whole nimbie feeling of people who are in these communities coming into play at all? Not at all. Everybody wants to have charging stations. It depends on what kind of charging stations are needed in those specific locations. And that's one of the things that separates Blink from all others. We have a hardware, as well as a deployment methodology that works for whether it's single family homes all the way to off highway routes. And everyone across the board is interested in having these charging stations deployed where a couple of years ago and a few years ago was a lot more difficult explaining to them exactly what they're going to be doing. In the past, people didn't have much faith in having electric mobility, completely different world we're living in today. A majority of people, you know, when looking at new cars, are looking at either plug-in hybrids or full battery electric vehicles. And the type of vehicles that are now being released are phenomenal. It's just really, it's the digitization of the automobile. And it's similar to what, you know, we experienced as having an analog phone and having a digital phone. We're now seeing those technologies applied to, you know, transportation and mobility.

You know, I want to come back to the stock and its activity. We had a chart up there that shows, I think, the stock from the pre-pandemic to today. If we could bring that back up, it was very interesting. Because we're looking at some of the charts that indicate down movements today, down movements for the month of like 18%. There you see from the pandemic, March 11, 2020, your stock is actually higher, higher by 800%. We can focus on. today and show that you're down

8% we can focus on the week. So I guess my question and so this stock chart suggests the growth you're talking about the market recognizes okay or they wouldn't have driven the price up 810% over that time. What is the

moment, what is the amnesia that has set in with them that would cause them on a week where the president says I want to have X,000 of the these new charging stations deployed quickly. What is the amnesia that has set in with these investors this week, if you've got an idea? Unfortunately, it's not based on reality.

It's more based upon how people trade the stock. You know, we have about 50-some-odd million shares outstanding and almost 11 million shares short on our company. You're talking about artificial selling. It's not actual real owners of the company who say, hey, I don't want it because it's not a great investment. but you have artificial selling that's taking place. And I think once the market realizes that blinks here to stay, we're not going away, then 11 million shares are going to start to be bought in. And we believe then we'll be fairly valued because at this point in time, you're correct.

There is amnesia in the marketplace. And especially if you compare us to our peers, whether it's ChargePoint or Evigo or others, we are very, very undervalued when you look at what technology we have, our team, the amount of locations that we have, our own and operate model and how much money we could generate off those charging stations, owning them and dispensing the electricity versus selling the hardware. I think when people really get an understanding of what Blink does, I think things will change. Michael, I want to ask you about the big cities, which is the place where, to me, electric vehicles

make the most sense, not these long haul drives, long commutes. I want to know what your idea is for people who have to park on city streets. You know, you're not going to pay for the $900 for a garage in Manhattan to come into the city. What's your idea for how to equip our cities with electric charging stations? That's a great question. It's not about us thinking about it. It's actually about what we've already done. You can go into cities in the U.S., Los Angeles being one of them,

and see hundreds of charging stations of ours that are on the streets, deployed in the streets. And that's how we deploy charging stations elsewhere in the world. And we're expecting to do even more so here. Now, you've got to understand there are people who park on the streets, but they're also in these dense urban areas. People are accustomed to going into those garages and parking their cars. And that's where a substantial amount of cars are parked.

And that's a huge market for us. And that's where we've been focusing, you know, this month we're starting our 14th year of doing business. As a charging station comes from day one. That's what we focused on with dense urban areas. Because I do agree with you. out in suburbia and rural areas, people are going to charge their cars at home. Public charging infrastructure, if you're on a long route in a travel corridor, you may need it. But almost everyone's going to be charging at home.

So less public charging is going to be necessary. It's the dense urban areas, those markets right outside those dense urban areas where people are parking on the streets where they don't have cut curves. They don't have parking facilities available for them. That's a market that Blink is already focused on. We have a solution for it. and we've already deployed charging stations in those types of locations. Michael, it's very interesting. Thank you for sharing that with us.

Thank you for having me again. All righty. Up next, materials the worst performing sector this week, even underperforming tech. We'll take a look at some of the biggest moves next as we head to the break. However, remember you can now listen to Power Lunch on the go. Look for us on your favorite podcast app. Follow and listen. That's not an invitation. an order.

All right, welcome back to Power Lunch, everybody. Time for our weekly ETF tracker. This week we focus on metal stocks, which had net outflows of $309 million in the past week. Recession fears, a big factor, as you might expect. Any economic weakness could hit these stocks. We saw that in steel stocks, new core. Profit warning there. That stock down 20% this week.

Also a bit of a market reversal as these funds gained last week. Now to some specific names in the materials area vanguard materials. It's down one week, 7 and 3 quarter percent. Materials Spider down 7.03% for the week. And First Trust Materials Alpha Dex, down 11%. This data come from our partners at Track Insight. More information available on the F.T. Wilshire ETF Hub. Go check it out.

And now for a hard right turn or maybe a leap. It's a quick programming note. Nearly 30 years after the original series ran, Quantum Leap is back as a new series, premiering Monday on October 9th. Oh, no, no, no. Let me rephrase. At 10-9 Central.

See, it's written 10-9-9. 10-slash-9. Okay. 10-9. That looks like October 9. I'm new at reading the teleprompter. I don't know how to do this. On NBC streaming, next day on Peacock,

I can't believe I'm old enough to remember the original Quantum Leap. but I am. And Quantum Leap just got more time than they were really going to get. It was amazing. If you hadn't screwed it up to that, right? I don't call it a screw-up. I call it an opportunity for learning. Let's not jump too far ahead because right here in the present, we have more of power lunch. After the break, time for today's three-stock lunch. We're going to have a little drink, and we'll be right back. Quantum Leaps for all.

Welcome back, everybody. Time now for three-stock lunch. We're trading some of the biggest leaders and lagger. this week. And among the week's worst performers is Meta, while Royal Caribbean and APA are set to close with some solid gains. Here to help us trade them, Boris Schlosberg. He's managing director of FX Strategy at BK Asset Management and a CNBC contributor. Boris, great to see you today. Let's kick things off with Meta. Facebook's parent down about 13% this week. Yeah. Meta reminds me of Steve Balmer's era Microsoft, where the stock is dead. money, but actually the company itself is a cash machine. Stocks very cheap as trading 11 times free cash flow versus 22 for Google.

It's got $60 billion worth of cash on the balance sheet. But the market hates the whole metaverse idea. In fact, as a matter of fact, if they probably were to close reality labs right now and just put the money back into core businesses, the stock would rally. But it's a perfect candidate to sell puts against and just hold tight because eventually there's going to stumble into some sort of a strong business and there'll be a catalyst and investors get excited about. But for now, it's just a simply very very good.

cheap, good long-term hold, in my opinion. All right, let's go forward to Royal Caribbean. What do you think? Royal Caribbean, Royal Caribbean. You say, Petra, say, Petaro. To me, the stock is very, very strong right now because of enormous amount of pent-up demand post-COVID. You know, COVID has gone now from a pandemic to an endemic.

Everybody, I think, is pretty much over it. So demand for cruise travel, which is a very attractive proposition for a lot of consumers because it's a one-price-buy-type of a trade, a type of a travel, is very, very strong for the company. The other thing that I think is very attractive is oil prices have moderated considerably, so there's a enormous amount of operational leverage in the stock. And if you sort of believe that the labor market remains relatively tight, incomes remain steady, the travel boom in cruise travel is only going to continue for next 12 to 18 months. That's why the stock is responding so positively. And I think it has a very bright future going forward.

And the final name here, Boris, APA Corp, up about 4% this week. Yeah, so Apache. So an interesting thing about energy. Energy has had a big decline, all of it, all of it based upon multiple compression rather than any kind of an earnings decline. That's a very, very good sign. That means that basically the industry itself is really operating on all cylinders. And Apache, of course, is doing very well as well.

So to me, if you believe that oil remains in this $60 to $90 ban, all of those prices are very, very attractive for them. They're just going to continue printing higher free cash flow. They're trading at four times P.E., one percent yield. It's got to be very attractive by the situation at this point. All right, Boris Schlossberg. Thank you so much for joining us for three stock lunch on this Friday. All right. He's still to come. General Electric warning supply chain issues could further hurt that company's deliveries. The stock already down 30 percent this year. Could this lead to even further declines? We'll explore that one in a moment. Welcome back. Shares of General Electric falling more than 10% this week.

Supply chain challenges once again hitting the aviation business. Sima Modi has that for us. Hi, Sima. Hey, Contessa, supply chain problems simply won't go away. That was a message from GE's CFO, Carolina Dyback Hap, who said those issues are affecting its aviation business, resulting in delayed orders. A shortage of key parts, raw materials, and skilled labor. those comments were made at a Morgan Stanley Industrials conference last night. Aviation is its cash cow and makes up about 40% of sales. Last time I spoke with CEO Larry Kulp, he shared that they've implemented a dual sourcing strategy,

which entails using different vendors from different countries, but it takes time to implement. And a lot of the products are highly complex, making it harder to find an alternative source. The key metric Wall Street tracks for General Electric is free cash flow. Carolina also said that the number is now, expected to be in line with last quarter or, quote, slightly better. That's what is behind GE's sharp fall today. Now down double digits from its 50, two week high.

Tyler and Contessa. Well, it's tough to hear that. Seema, thank you very much. All right. All right, we got the Dow down about 200 points right now off the lows. At one point, I think it was down more than 400. As Brian Sullivan pointed out last hour, it is a quadruple witching day. So take a, you know, hang on to your hats.

The next hour might be, and your brooms. It might be a very interesting. interesting close. Thanks for watching Power Lunch. Closing ball starts right now.