Power Lunch - Google Searches for Answers, Netflix’s Live Flop & DC Real Estate 4/17/23

Episode Date: April 17, 2023

Google CEO Sundar Pichai warns society is not yet ready for AI.  Netflix tries to stream a live reunion show for “Love is Blind” and fails.  And a Washington-area realtor updates us on the state of the housing market. 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 alongside Kelly Evans. I'm Dominic Chew in for Tyler Matheson today. Coming up on the show, searching for answers. Alphabet CEO warning about artificial intelligence saying every product of every company will be impacted and society is not ready for it. We'll discuss that and a potential major move by Microsoft coming for Google's own turf. Plus the state of housing as we entered the spring selling season. Are buyers getting used to the new normal for mortgage rates? This week we'll talk to realtors across the country about. what they're seeing, and we'll start with the Washington area today. First, let's get a check on markets, though. They were unch earlier, but we're moving more to the downside now. Dow's down 78, S&P, down a third of a percent, 4123. Nasdaq worst performer down four-tenths.

On that note, let's get to Christina Parts Nevelis for more of what's moving today, Christina. I like that unch, but stock starting off the week, like you said, fractionally lower. Wall Street really is waiting for a lot of these corporate earnings to find out how the health of the consumer is doing. But let's start with some big movers today. Morderna. Shares are down over 7% even though the pharmaceutical firm shared positive results from a trial of its experimental cancer vaccine. The MRNA vaccine helped cut the risk of death or reoccurrence of deadly skin cancer melanoma by 44% when combined with Merck's katruda immunotherapy. So some analysts, though, are worried about the treatment's successful approval and that's why you're seeing the shares down. Switching gears, shares of Roblox, tumbling after the gaming company released March data showing a potential drop in average bookings per daily active user.

And that was compared to last year. Despite this, daily active users, hours engaged, and estimated bookings, and parents can vouch for this, who are all up from a year earlier. Shares, though, down over 12%. ASML leading the SMH semiconductor ETF to the downside right now. The European chipmaker is headed for its worst day and weeks since this past December, after Taiwan Daily Economic News and Digitimes reported Taiwan semiconductors considering cutting its CAPEX outlook, which shows it's not immune to demand weakness.

is ASML's largest customer and is set to report quarterly results Thursday morning very early. All right. Christina Prestonevilis, thank you very much. Lots of Google news today as the company reported these planning to release new AI-powered search tools next month. Meanwhile, CEO Sundar Pichai warning about potential harm from artificial intelligence. It will be possible with AI to create a video easily where it could be scar. saying something or me saying something and we never said that and it could look accurate. But you know, at a societal scale, you know, can cause a lot of harm.

All right. All right. All right. All right, the parent company, following a report that Samsung is considering swapping out Google and bringing in Bing, the Microsoft product, as the default search engine for Samsung phones. So we've got a big panel discussion right now. Let's welcome in CNBC's tech correspondent Steve Kovac, along with Arun Sunderaraj on an NYU School of Business.

He's from there. Also with this is Roe Kulkarni, managing director with Roth, MKM. He has a buy rating on Alphabet, who he covers, and a $126 price target. So thank you, gentlemen, all for being here right now. Maybe Steve will start with you with a kind of bigger picture story about just how important AI is to both Microsoft and Amazon and every other big tech. It's important to everyone. If you listen to Sooner for Try, Dom, it's important to literally every company is going to be

using this. That's one of the fascinating things he said in that 60 Minutes interview. What struck me, though, is what we're seeing now between Microsoft and Google is they're warning ahead of time before they start breaking things. Hey, this is coming. Whereas with social media with YouTube and all this misinformation stuff that we've been grappling with for so many years, you know, they apologize after the fact. After a fact, they start asking for regulation. Now they're asking for regulation before they can fully launch these products.

At the same time, though, Dom, we have even seen our Congress. pass laws for child safety online. So if they can't do that, there's like little appetite out there to regulate something as wonky as AI. They don't understand it yet. So Arun, let's bring into the conversation. What's interesting about this right now, and I think Kelly and I have talked about this before, sometimes technology just moves at a pace that's too fast to regulate. In other words, we outrun some of the constructs that we have for kind of establishing what the right and wrongs are about certain types of things. Is this a situation where, where it's going to be years possibly before lawmakers and regulators catch up to artificial intelligence?

Well, I think it depends on which country are in. I'd see China move very fast. They actually already have rough regulations circling. It will probably be passed this year that puts in its measures to reduce bias, like restricts the sort of the values that should be coming out of like generating. AI gives people the rights, you know, allows people to sort of own data that's used for spectrum. So there's certainly ahead of the curve here. I think in the United States, it's going to be a little longer. We're certainly moving faster today than we did 10 years ago, where the regulatory

needs around social media was starting to emerge. I think, you know, Google's call for regulation here. It's a surprising point out, but it could also be imperative tactic. I think, you know, Google sees for the first time probably to a non-trivial threat to their search business. And, you know, if regulation slows down everybody, it gives Google a little more time to catch up. Absolutely. I don't think you're the only one considering that. Rohit on that note, let me turn to you and ask if you think that's what's going. on here. Talk to us a little bit about it from the share point of view and this drop in Google shares today. It is not surprising that Google shares are weak. I think they are in this

big sentiment black box starting since Microsoft has been on an all-out aggressive war as far as as PR is concerned and launching new products. People are questioning whether Google is truly the leader in AI. Remember, Google, remember chat GPT is built on something that Google released, seven or eight years ago. So we think Google is the leader in AI, but they don't have direct-to-consumer products that people can tinker with, that people can play with and get the confidence. So I feel they are in this black box of sentiment, and so stock is going to stay weak until we see the evidence to the contrary. I agree with all the things stocked about regulation. We don't expect that to happen anytime soon. So Google needs to play offensive, and I feel they're just falling behind that

PR campaign. And Rohit real quickly before we move on from this, the timing now where there are both competitive suggestions that people might look at other browsers, other search options, and regulatory threats that could push them in that direction as well by breaking up some of those preexisting deals. How big, I mean, that's its core business. No matter what happens with AI. And by the way, the trends show people are not moving to Bing at all. I mean, there is no loss. But these are real competitive threats. How seriously do you take them? I think less so from a Samsung standpoint, but what if Apple starts to rethink what they need to do on Safari?

That's a $20 to $25 billion per year payment from Google to Apple every year. Samsung is probably a couple of billion dollars. So when it comes to Apple, that's when the real question mark comes up, and I think that's what the stock is doing today. The unknown renegotiation between Google and Apple that will happen in the next 12 months, with AI grabbing a seat at the table, that's where things start to move, and whether they'll break things, we don't know. If Microsoft comes to the table, that's what is going to move Google from here to the next leg.

You know what's interesting about this is Roeit basically calls, he just said Alphabet is the leader in artificial intelligence. But what metric are we using? A lot of folks figure that ChatGBT in OpenAI makes Microsoft the leader in artificial intelligence right now. So, Steve, from that perspective, how do you care? who's in the lead, so to speak, at any given point of AI. It depends because, I mean, Apple will tell you they're a leader in AI because they use a lot of artificial intelligence every time you take a picture on your iPhone. Or what about Amazon?

Or Amazon would tell you because just last week they announced a bunch of AWS products that help train these large language models. So there's no, it's hard to tell. You can't really say who's the winner or loser. But I think the stock moves are watching today, Don, there's some important context that we just alluded to is the payments that go between these companies. So even if Samsung was seriously considering moving. moving over to Microsoft, does Microsoft want to spend $3, 4 billion

dollars paying Samsung to be the default search engine? Does Microsoft want to pay Apple $20 billion to be the default search engine? And these are all those so-called tax, right? Traffic acquisition costs. That means they pay, so Google pays Mozilla, for example, the Firefox web browser, tons of money to be the default search engine, pays Apple again, reportedly $20 billion a year. Microsoft's not a search company.

Do they have that $20 billion to spare every year? Google needs it. They need those iPhone users to be searching on Google, not somewhere else. So, again, even if someone wants to switch over, whether or not they have the money to do it is the big question. They probably don't want to you, to be honest. Well, I'm just, I mean, from a competitive point of you, if I were Microsoft, I'd spend more than $20 billion just to harpoo.

Just to get my competitor right there in the kisser, you know. And in commenting on that, I think, as you mentioned, you know, Google had the AI technology, but they don't have the consumer product. ChatGBTGBT is the consumer product. They now offer plugins with all of these different types of things. You can do really neat. They're clearly what started as not a consumer-oriented company is quickly becoming one. And that benefits Microsoft because they have a share in them.

But how else, as they continue to evolve, does that impact your coverage? I think it's going to be a fascinating next few months. The velocity of how consumer products are exclusively built on top of AI, AI native products are coming to market and disrupting things that absolutely nobody can imagine right now. I feel Google, just simply by what we heard from Sundar yesterday last night, they are accelerating that direct-to-consumer product launch a roadmap. And I feel next six to eight weeks, I feel that they would give some comfort and confidence in the stock, whether that translates into numbers.

And to some extent, I guess, you know, part of what. gives, I guess, as comfort for Google is that this is Microsoft, this is not Apple. You know, Microsoft has historically been a business business company, and it's a tremendous amount of opportunity for large language which models and rid of AI, AI, and it will be space-based, and I'm that Microsoft will own that. But on a sort of a consumer point of view, I think part of what makes this really complicated for Google is that one of the antitrust cases against them is precisely about these sort of slotting fees or these traffic acquisition fees that are paying Apple and Samsung.

So they have to tread that lightly in terms of their competitive response. All right, Arun, we're going to get that Mex, Max Headroom audio effect. I kind of like it. Fix the next time, fix the next time. Good for a tech segment. We get the other. Yeah, exactly. It's throwback to Max Headroom.

Anyway, Rohit. Arun, thank you guys very much for being here. We appreciate it. And Steve, before you go, what's the latest with Apple finally putting into action something they announced a while ago? by the way, today down about half a percent. Yeah, this is their high interest savings account. Basically, it's part of the Apple card, which is a normal cashback card.

You make 1% percent cashback on your purchases, depending on where you buy. Now what they'll let you do is dump all that cash back into a Goldman-backed high-interest account. 4.15 percent annual interest rate on this. That's what they're pushing. No limits, no bare minimum, no minimum balance, nothing like that. It's just free for any Apple card customer to use. To me, the big story here, for me, interest-wise is just the Goldman is kind of still there, still present with regard to.

And we know this, we know how much trouble that's gotten them into, but they're still, you know, in bed with Apple on this one for sure. Steve, thank you. Thank you. I appreciate it. Steve Kovac. Coming up, the state of the housing market, we are heading down to Washington to ask a local realtor what he's hearing from perspective buyers as the spring season gets underway. Plus, an embarrassing flop for Netflix ahead of the company's earnings report tomorrow.

The shares are down 2.5%. And a big drop for Roblox as user numbers disappoint. Have the kids moved on to something else? Those shares are down 12%. Those stories and much more coming up on Power Lunch. Welcome back to Power Lunch. Spring is the crucial time for the housing market. And we're about to take a closer look at what's happening with a realtor.

But first, let's get a quick check from Diana Oleg on the latest numbers around housing. Diana. Well, Dom, we're getting a ton of monthly housing data this week. And it started this morning with Builder's sentiment, which rose very slightly, but it's still in negative. two out of three of its components, current sales and sales expectations over the next six months did crack into positive, but buyer traffic, the third one's still very low. Now, one interesting note, the builder said currently one third of housing inventory is new construction compared to historical norms of around just 10%. So that's close to a record. And it points more at the real shortage of existing homes for sale, not to more construction because housing starts really haven't done much lately.

And that speaks to what's going on in the housing market overall right now. now. Demand is still quite strong, but supply seriously weak for existing homes. New listings are down about 25 percent from last spring, and we were already seeing a shortage last spring. A new survey today from Realtor.com found more than half of the people who say they currently want to sell their home to buy a different one. They said they are all waiting for mortgage rates to drop before they list, and that might be a problem because rates are up about 20 basis points just since last Friday. Wow, they're up to, wow, exactly because of yields. Diana, thank you. And this is as the spring housing season is ramping up.

So let's check in on the state of the real estate market across the country. Since summer vacation hasn't started yet, we're not going to do a full road trip, just a day trip, people. We'll visit the D.C. Metro area. And here to give us our tour is Corey Burr, Senior Vice President at TTR Suthbees International Reality. Corey, welcome to you. Good to see you. Welcome. Thank you, Kelly and Dom.

All right. So look, anecdotally, it seems still crazy out there. Open houses, Dom, is it just my... At one o'clock Saturday and Sundays, you see loads of cars. There's still tons of cash buyers in the market. There's no inventory. What do you see in Washington, D.C.? So we're seeing still a pretty strong market.

The market froze up as interest rates doubled at the end of last year. But in the last 75 days, this historic spring market has really kicked into gear. The real rubber on the road will be what happens at the second half of the year if the rates stay high, And the CPI number doesn't moderate like it did last week. Corey, I wonder, though, how much then can anybody at this point, real estate professional or otherwise, glean about this spring selling season? If there are this many externalities and abnormalities at play, can we trend-wise establish anything worthy about the data that we're seeing in the housing market right now? Well, year in and year out, the time period from March 1st until the end of June is always good. Even in the worst markets, those are good months.

As I said, the second half of the year is going to be all important because we're dealing with low inventory, but the rates are still very high. And to get sellers, as Diana just mentioned, to get sellers to sell to move to another property is problematic because they don't want to trade in their 3% mortgage for one that's now. in the five and a half to five and three quarters range. So, Corey, I won't get into the $40 million. What was it, $49 million for Daniel Snyder? I want to talk more, okay, the everyday stuff.

There is a bifurcation taking place you highlight, which I think is good to think about. Yes, a bunch of the houses are still going right away. 50% of them, first 30 days on the market. But the ones that are sitting are starting to sit and starting to see price reductions, aren't they? How is that different from the market last year, the year before? So we're getting a much wider experience on listing.

right now. Many properties are selling the first weekend with competitive fids and escalation closets. But we're also seeing more and more properties sit on the market, ones that would have otherwise sold a year or two ago. And what's happening is that those are only going to sell with price reductions or seller concessions. And my impression is that having lived through the correction in 2008 and 1991 is that we're going to have more and more of those properties as we get through the next year or two. And Corey, since you open the door, so to speak, on this, is a 2008-2009 type scenario coming for the housing market, not just in the D.C. metro area, but other markets around the country. There are some hot ones out there in places like Arizona,

Florida, that people are saying, hey, this could be something that, that that's a real risk. I don't see it. 2008 was a shock to our economy. You know, the CEOs of all of our major banks met at the Treasury Department to save the economy over one weekend. This is a much more normalized correction. It's exactly what the Fed set out to do a year and a half ago. And it's having its effect. And it's going to have more of a cumulative effect as we go further into 2023 and into next year. And then finally, you know, days on the market, nine average for March versus 20, Feb 30. Jan, some of that is seasonal. But you do have 20% more inventory than last year.

So at what point, Corey, do you think we will not be talking about a pandemic, you know, goose type of market? What point do they think we're going to normalize this fall next year, a couple more years still? I still think it's going to take some time for that existing demand. from younger buyers to play out. You know, this younger group, we're told about 10 years ago that buying a house was a bum investment and not part of the American dream. But what we're seeing right now is they're just cascading into the marketplace.

And as long as those families are being formed, I think there's going to be decent demand. And we have to hope that the inventory picks up because we don't want to squeeze all those new buyers out of the market. Yeah, absolutely. Corey, thanks. The surprising resilience remains a theme. Corey Burr, joining us on the D.C. housing market. Kelly, I got to tell you the number of conversations I've had with people who are not going to give up their three-handle mortgage. Oh, yes. Yes. Even if they want to move, they're not moving because they don't want to give a mortgage. And that's why we've seen analysts say the biggest catalyst, actually, for the market

to normalize would be for interest rates to drop again. Back to where they were. Exactly. Anyway, well, further ahead on the show, convenience or conservation, meal delivery kids, It took off during the virus pandemic, but it's producing a lot of plastic waste. We'll take a look at one startup trying to fix that problem. Plus, a big biotech by. Merck paying nearly $11 billion for Prometheus biosciences. Prometheus shareholders loving it. But what does it do for Merck?

Why make the acquisition? Stay with us, that story coming up. Welcome back to Power Lunch, everybody. Dallas still down 45. The SP down a quarter percent. The NASDAQ down a third of 1%. Last check, the Brussels were positive, though. Let's get to Bob Bassani with more on today's training.

Bob. We're exactly even on the advanced decline line. So mixed market. Banks are doing a little bit better. That's the main story. Consumer staples, that's got momentum. Semiconductors are kind of running out of steam, and so is energy. But it's been a great run for both of them.

Let me just show you the financials because the banks are reporting. M&T had good numbers. That's a relief. Schwab is up. Remember, Schwab's down 30% on what was going on with the whole banking crisis. But they had good numbers overall. And, of course, they reported some serious drops overall in their deposit rate. And they said that the cost of funds, paying more people for their deposits was definitely going to weigh on their revenue for the next couple of quarters.

Zion's going to be Wednesday morning. Comerica will be Wednesday afternoon. So we'll get more on this. But so far, better than feared is generally what we're seeing. In terms of what else is moving, mostly you're seeing consumer staples and consumer names in general. Coke's been strong recently. Walmart's been strong. McDonald's is just a monster. McDonald's just moved $20 in the last three weeks. That's a big move for a low beta stock like McDonald's. It's finally running out of steam.

And J.P. Morgan also has been a terrific performer. That's a lot of momentum. So there's where your main momentum stocks are going. If you're interested in why we're holding up so well, believe it or not, Don, we are 1% from a new high for the year on the S&P 500. It's mostly because people are still invested heavily in the sole soft landing hypothesis here. So hoping for a final rate hike in May. Inflation is cooling. Negative sentiment is extraordinarily high. That is good for the market. And, of course, China's starting to reopen. Remember, that's a big factor for the overall stock market. Don, back to you. All right, the S&P is still above 4,100. Bobassani, thank you very much for that. Let's move to the bond market. Now, Rick Santelli is tracking the

action from that floor out in Chicago for us. Rick? You know, Dom, it's fascinating because despite much of the green we've seen lately in the equity complex, It certainly looks as though interest rates are going to continue to aim to the upside. Let's look at a two-year note going back to early March. It's on pace right now for its highest yield close since the 14th of March, a little over a month. 30-year bonds, as you see, are right there as well. They're on pace for the highest yield close since March 14th as well. Look at those bottoms all slightly above 3.5%.

A very good formation to potentially retests at 390 to 4%. area in 30s. If you're wondering where tens are, they're on pace for their highest yield close. Well, since the 21st, they're about one week behind from a historic perspective. Now, let's really go to the epicenter here. What's changed? Fed Fund futures, even though it certainly seems to everybody that if you don't want to argue about the last quarter point, we're near the end of the Fed run. Now, higher for longer may be true, but to think that interest rates have picked this particular time to move higher is quite enlightening. And when you pair it up against the dollar index and realize that Fed Fund futures are on pace for their lowest close since March 13th, or excuse me, March 8th,

which means that the lower they go, the more Fed you're building in that normally helps the dollar index. And even though the right side's aimed up there a bit, you can tell that the half-life of the benefits of Fed Fund futures falling hasn't had the effect. Many thought to firm up the green back. Kelly, back to you. Rick, thank you very much. Let's turn to oil now, closing down. Pippa Stevens for more. Pippa. Yes, down more than 2%, but that does follow four straight weeks of gain.

So it had gotten a little bit into overbought territory. A couple other things to watch here include the stronger dollar, which weighs on oil since it makes it more expensive for foreign buyers. Then we also have some technical factors at play. It got within range of that 200-day moving average last week, but couldn't quite top that, and so that's leading to some selling pressure there. But take a look at natural gas because that was up 7% last. I checked. Now, Eli, yeah, 7.7% actually right now. So Eli Rubin over at EBW Analytics said that a lot of

this is thanks to record demand for U.S. feed gas. So that's gas that's and liquidified and sent abroad. And that, of course, comes as free ports operations get back online. And a lot of this narrative has been around short covering, particularly when we got around that $2 level. And he said that unlike over the past few months, this might be more than a head fake this time, since there are some fundamental reasons driving it, meaning it could be more durable. But it is snack gas. What are the fundamental reasons? So just just Freeport's operations getting back online and driving it. We had some weather pattern shifts, a little bit colder temperatures coming for the next two weeks. Those forecasts were updated over the weekend. So that's leading to

some support for today. Is Freeport fully open then now? It's getting back there. So the demand is just about. Good for everybody else, I guess. Yeah, yeah. So the demand is there, but they're still working on them liquefying all of that and then getting it ready for export. And then quickly, one other stock to watch today is N-phase. It is the top stock in the S&P. It did get upgraded to overweight over at Piper. On some more optimism about the U.S. residential market, of all things. Well, that goes with what we were just talking about, doesn't it? Yep.

All right, Pippa Stevens. Thank you very much. Appreciate it. All right, let's get over to Contessa Brewer, who's got the CNBC News update. Good afternoon, Contessa. Dom, thank you for that. The Justice Department unveiled a number of criminal complaints related to Chinese government operations in the United States. Charges have been filed against Chinese officials, allegedly, for harassing

Chinese nationals in the United States. Additionally, two people have been arrested in New York City on charges related to running an illegal police station for the Chinese government. The White House is threatening to veto a pair of GOP bills expected to go to the House floor this week. The administration said President Biden would veto a Republican effort to overturn a D.C. policing bill, said he would not support opposition to what he considers common sense police reforms. And the White House also says Biden would veto a bill that bans transatlanticians. gender students from playing sports consistent with their gender identity. It is race day in Beantown with the running of the Boston Marathon today.

There were ceremonies over the weekend to mark the 10-year anniversary of the bombing attack that killed three and injured hundreds. Last year's champion, Kenyon Evans Chebet, won the men's race, and compatriot Helen Obie Re was victorious in the women's race. Kelly, send it back to you. My shout out to Blake, our local ath 244. Wow. Great.

Team race faster. Contessa Banks. Sure. Ahead on Power Lunch for Netflix, love hurts, and so does live streaming. The platform's second major live program falling apart. We'll discuss the details and the implications next. Welcome back to Power Lunch. Shares of Netflix are down 2% or so today ahead of its earnings due out tomorrow after the closing bell,

after an embarrassing situation last night. technical issues preventing viewers from watching a live reunion show for the dating series Love is Blind. It will now be available later on today pre-recorded. So love may be blind, but investors probably are not. Does this call into question the company's ability to handle live programming? It's a different paradigm. For more on the drama, we bring in Elaine Lowe at the Ancler. This is a, I mean, in streaming it happens.

right? We know that there are certain overload issues, but this is not something that Netflix has really made a career of, live programming. Is this going to be a hindrance in the future or just something else to work through to evolve? Well, this is Netflix after all. This is the streaming market leader of the last decade or so, so never put anything past Netflix, but this was absolutely a debacle for them last night. You know, they've only done live streaming once before, really, the Chris Rock Stand Up Special Selective Outrage back in March that went off without any problems. But it's very much so live a new technology for them and appears to be need. There appears to be a need to be more stress testing perhaps. I mean, technologically, you'd think that this is a platform

that would be able to handle anything given its tech roots, its sheer engineering power. But of course, when you're looking at rolling out such an enormous new element at scale, there are going to be kinks that have to be worked out. Is that Nick Lachey? I think Love is blind. This is probably great PR for those of us who didn't know about this show. Yeah, I caught an episode recently myself and knew that there was a lot of buzz about this. A lot of reality fans were really excited for this. So there was a lot riding on this live special yesterday, right?

And it's interesting because Netflix really hasn't expressed that much outward interest publicly, at least in the live space, at least compared to Apple TV Plus, Amazon, even Warner Brothers Discovery, which have live sports components on their streamers or Peacock, which has news and sports on it. But, you know, I think the other element here is also just the immense amount of Schadenfreude that the rest of the entertainment industry seems to take whenever Netflix makes a stumble because it has been the streaming leader for so long. And it feels like the industry just never quite got over it. So anytime there's an incident like this or last year, almost exactly a year ago with the Great Netflix Correction, where they lost subscribers

for the first time in a decade and laid off 450 people. There's definitely an outsized reaction from Hollywood. What's interesting, first of all, I don't believe that Elaine's only watched one episode of Love is Blind. I haven't watched any, by the way, just so you know. I think she's underestimating how many episodes you watch. But first, if you take a look at the reason why this is important, like you said, this could, by the way, happen to any streaming service out there if they get a really popular show or anything like that. How much of the conversation now shifts towards just how much we consume live content on a streaming service as opposed to going back to where we usually got it before, which was the old cable bundle? That's an interesting question,

right? Because I think when you look at all of the major networks and all the streamers, really, who is the only player bringing live appointment viewing back to the table? It's always been HBO and Warner Brothers Discovery. And so I think maybe this was a test of appointment viewing, of, you know, the kind of outsized press attention and viewership that you can get from a live program and, you know, how much of that can drive subscriber growth, especially again, because we saw subscriber losses for the first time at Netflix last year. And they've also had to roll out an ad tier and crack down on password sharing in order to boost and, you know, sort of support revenue initiatives over there. So I think that's an interesting element to it. You know, I,

I would say that when it comes to live viewing, that's an important element for sports in particular. And given that there are so many rights that have been tied up, I think it's an interesting way to go with reality TV being the next frontier of live appointment viewing. I don't know. Now we know why they were always so adamantly against live sports. Well, that's a great point, though, about the sports thing.

I mean, those things are like multi-month-year contracts. And Kiecock are apparent company. Prime video. I mean, there are streaming services, Elaine, newer. to the field that have had not this degree of technical problems. A few other bumps and problems here. With their earnings, you think this overshadows them. I mean, obviously, password crack down some of the bigger issues around the stock. How significant is this really in the long term? Well, I think for quarterly earnings tomorrow, it will unfortunately be one of the headlines going in,

right, especially since we're not looking. I think we're sort of past all the major executive restructuring, it feels like. It seems like the, the stock. has certainly rebounded from the correction last year. Things seem to have sort of stabilized. So I think this will be a primetime moment in the earnings called tomorrow that Live itself was not ready for prime time. But taking the long view, I know there are a lot of Netflix supporters out there who will say, hey, these guys are the Netflix, are the streaming market leaders.

And they've always been able to overcome this hump. So what's to stop them from really pursuing this long term? Yeah. And just judging by the disappointed fans, that they were. were able to make that appointment viewing, even though they couldn't make the appointment. Elaine, thanks for your time today. We appreciate it. Thanks so much.

Elaine Lowe with the Ancler. Coming up, the meal kit hit to the environment. We'll explore a company trying to reduce waste in the meal delivery space. That's today's clean start right after this break. Welcome back, everybody. Meal delivery kits really took off during the pandemic. They're still pretty popular, but there is a downside. All that wasteful packaging to keep it cold.

Big money is now pouring into a. a solution. Diana Oleg has more in her continuing series on climate startups. Diana. Well, Kelly, on anyone who gets food deliveries like I do knows the convenience is immeasurable and the packaging waste, a lot of which is styrofoam is colossal, but it doesn't have to be. Just two years ago, fresh food meal kits were a $7 billion industry. By next year, it's projected to be over $10 billion. Much of that, though, is wasted on packaging that can't be recycled. So companies like thermosave, sealed air and a Virginia-based startup called Temper Pack are inventing new materials that don't go to waste. All of the paper in our products can be recycled and the starch, which is cornstarch that we use, is compostable.

Temper Pack is working with grocers, meal kit companies, biotech and online pharmacies, anyone who previously had used styrofoam coolers. It's very affordable, which means we can scale it up. And then everything we build is extremely sustainable in terms of, you know, how we get it, how we make it. what the options are at the end of life. Because not only is the packaging recyclable, but Temper Pack is putting the machines the insulation is made on, basically 3D printers, inside customer facilities,

lowering costs and increasing sustainability. That was a big draw for Martha Stewart-branded meal maker, Marley Spoon. The goal is to save money at various points within supply chain. Obviously, because we make it within the facility, we don't have any logistics or shipping costs. Temper Pack is backed by Goldman Sachs, Grovenor Food and AgTech, Revolution Growth, SJF Ventures, Arbor View Capital, and Harburt Growth Partners. Total funding, just over $200 million.

Temper Pax McGough said just one of its customers could receive 40 tractor-trailer trucks a month of insulation. So by producing it on-site, that goes down to just four. So keep going with that math. And in a year, it's taking more than 400 trucks off the highway just for one customer. Back to you guys. You know, I'm kind of in a sour mood. Why?

Diana, the bags at the stores issue and the plastic straws, I can't get past. Yeah, it's tough. It's getting worse as time goes on. Now I, you know, so I'm glad that they are making this more. Let me put it this way. this this would not materially become problem this is great if the packaging is better that's that's wonderful there's no real downside you know i already have the kid in my house and it's it's more you know it's better for the environment it's the bags coming in and out of the stores that is just

i've got to i have like 55 because i pick up my groceries and they can't use the recyclable bags right take the same one put it back in the truck i can't do back and forth i pick up the groceries every time so i can't give them a bag to put the groceries into that and put it back in the car. I've got like probably 150 of these bags at this point. You've got a workflow problem. Donate them back to the store. Bring them back to the store. Tell them, clean them and reuse. But they have the sticker on them. I don't know if they can get the sticker off. Ask temper pack. Exactly. All I know is I was at a facility one time and they had plastic and they said, no, they're not plastic. You know what they are? They're made from avocado pits.

It was amazing. We did the plastic straw. So we already covered a company that did the plastic straws, turn them into another type of straw made of something else. So it is growing, you know, and you see, you know, wooden cutlery, that kind of thing. So it's not plastic anymore, too. No, I think you're right. Temper Pack needs to take on the grocery bag, pickup industry. There you go. I'm all in.

Diana, thank you very much. Yeah. Diana Oleg. All right. Coming up on the show, we'll take you to view some key movers and calls in today's three-stock lunch. You're not going to want to miss this. Welcome back, everybody. And on the menu for today's three stock lunch, we've got Merck announcing a big

acquisition of that Prometheus biosciences for about $11 billion. It's down half a percent on the news. We've got Roblox tumbling on disappointing March metrics. The last time we'll get monthly numbers, that stock down 11%. And we've got State Street. The biggest loser on the S&P today after its first quarter results missed estimates. That stock down 11%. Here to help us trade them all.

Let's bring in Ari Wald, head of technical analysis at Oppenheimer. Good to see you again, Ari. man, health care is a busy, busy. There's a Catalan news with Dana Heard today, and maybe that's not going to happen. But what would you do with Merck here, who shares are down about half a percent? We're bullish on Merck.

I think this is one of the names you want to own for exposure to the health care sector. This isn't a call on large cap pharma. I would note, I think just given the industry is more defensive and low volatility characteristics. I think there is risk for some of these stocks to rise at a lesser pace than what should be a stronger market. and for that industry to under purport. But really, against those top-down headwinds, this is best of. You know, we're relative strength investors and really Merck and Eli Lilly, best of that mixed industry.

I think Merck is just really about sticking with the uptrend. Stock's currently coming into resistance at its January peak. That's at around $116. But above that 200-day average, I think you're buying pullbacks, and I think it starts to become tactically attractive around 109. That's the 50-day average. All right. All right. Let's move on to is it a game company? Is it a video game? Is it a human development platform content? It's Roblox. What are we doing with this? Yeah, I would describe it as stuck between a bull and a bear in terms of the trend. I suppose my kids would call it a gaming company. I see a stock that's been making a series of higher lows since May of last year. So it's stabilized. It stopped going down. It moved above its 200.

average this year as well. So with all that going on, with the stock down 11% today, I think it finds buying interest. I think it does snap back here. I think with a stop at 3850. I think it's really just a trading stock at this point. I think you need a tight stop. Above 3850, though, I think you do snap back into $43.44. That's the gap that was created this morning and you look to reduce into that resistance. Yeah, look at that up sharply your today, even with this decline today. Okay, finally State Street. And this one, you know, a bit of a landminder for earnings this morning, taking down competitors and sympathy.

What do you do here? So industry-wise, capital markets, this is where we are looking for opportunity within an entire financial sector that's been down sharply, you know, since the February peak here. With that said, State Street isn't the one I'm looking to buy. I'd probably be keen on and maybe a private equity manager like KKR. The reason I'm unsure about State Street is that, well, we didn't really like it even before the drop. It's been making a series of lower highs since 2018. And nothing really has changed except for it becoming, I suppose, oversold on this pullback. So still down about 11, 12 percent today.

Had a bit of a reversal off the initial low. There could be a little bit more near term of a bounceback. But again, starts hitting resistance at $73. That's the gap with the 200-day average follow. at 75, and I think that's a near-term ceiling for the stock. All right. Ari, appreciate your time today. Thank you.

Ari Wald. All right, still to come on the show, a couple of other stories catching our eye today. Keep on an eye on those ones. We'll be back after this break. Welcome back, everybody. Before we go, a couple other stories worth watching. Check out this big, huge number, $363 billion. We just learned that's how much flowed into money market mutual funds in March.

That's according to Morningstar. It's the highest. one month total, Dom, on record. It's crazy. I mean, we knew this was coming, right? But it's still this kind of trend, I guess. This idea that people are still kind of yield hunting and doing it not in banks, per se, but in treasury, short-term treasuries, which is kind of what money market funds are.

Yeah, I mean, it's what Barclays talked about, where we've moved from the kind of quick deposit flight to the slower, but still bleeding deposit flight phase probably for the time being. Kind of interesting to see whether people realize that there's a settlement time before they can liquidate some of these funds, not cash. Last week, we reported on JPMorgan ordering managing directors to come back to the office five days a week. Many work from home advocates say people can be just as productive from home, maybe more so. But take this piece of data, Stanford University researchers, and a data tracking firm called Enrix, compiling this chart on midweek golfing rounds and trips.

Now, you can see Monday through Thursday in 2022, the number of golf trips is way up compared to 2019 before the pandemic. Tuesday, Wednesday, twice as many people go out on the links in the middle of the afternoon when they're not in the office. So what does that say about what happens from work from home or anything else? Yeah, maybe golf industry under threat if this is for real, but it could save commercial real estate. So speaking of things that have changed since the pandemic, the job of flight attendants and airline crew is one of them. And a debate that's burning up the internet right now, some people are taking their side or many people really are on what just happened with Major League Baseball player Anthony Bass.

As a Bass is a Bass or Bass. Tweeting a picture of his two daughters on a plane, some popcorn spilled under their seats. We've all been there. And the text of the tweet, Bass complained the cabin crew made his pregnant wife clean it up. Hey, I think the guy's got a point. But in the comments, no, sentiment overwhelmingly against him. Dom, you've been the guy in the front of kids. And I feel obliged.

And maybe it's the guilt factor in me. But I always feel like I have to clean up after my kids because they are my responsibility. But are you 20 weeks pregnant? It wasn't even got with popcorn. But if so, then somebody should be helping. Yes, true. Good Samaritan is always the answer. All right, thanks for watching.

Power Lunch, guys.