Power Lunch - Green light for tech?, the red hot jobs market and our Power House Road Trip heads to Raleigh. 7/8/22

Episode Date: July 8, 2022

Shares of big tech bouncing this week. Is it a sign mega cap tech is forming a bottom? Plus, the new risks the Fed needs to take into account. And our Power House Road Trip heads to Raleigh, North Carolina where sellers are cutting prices and showings are slowing. 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. My name is Dominic Chu. I'm filling in for Tyler Matheson today, and here is what's ahead. Is it a green light for technology? Apple, Microsoft, Alphabet, Amazon, even more, all moving back above their 50-day average prices just this week. The names to watch and to own in technology if that trade is in fact back. Plus, Power Lunch's Powerhouse Road Trip. Today's stop is in Raleigh, North Carolina, where realtors say showings are down and, sellers are actually cutting prices. And on the ground view of that fast-shifting housing market, real estate, a very big key to this entire narrative in economics right now. Kelly, over to you. Yeah, I'm looking forward to that. Don, thank you. Welcome. And hi, everybody. The major averages are on track for a winning week despite today's declines. The Dow was up 127. It's down 38 right now,

the S&P down seven, the NASDAQ down 20. So small arrows to the downside here. Some of the best performing stocks today are in health care. This you'll see repeated as a theme. Centine, McKesson, Molina, health care is the only sector that's even higher. And three health care names are also hitting all-time highs today, including Humana, Sina, and Eli Lilly. But we begin with the job market defying recession fears. Payrolls increased more than expected last month. Wages are up and growing substantially. That'll likely keep the Fed on track for a big hike at its next meeting in a couple of weeks. Something the Atlanta Fed president today said he supports? The tremendous momentum in the economy to me suggests that we can move at 75 basis

points at the next meeting and not see a lot of protracted damage to the broader economy. Our next guest says there are new risks the Fed needs to account for that could disrupt its plans. Ron Ansana outlined them in a new CNBC op-ed. He is a senior, CNBC's senior analyst and commentator, also a senior advisor to Schroeder's North America. Ron, no, no, no, no, no, you don't. You have to acknowledge. It's pretty good. It's the first half of the year, at least, much better than fear, don't you think? With respect to the economy? Sure. Oh, yeah, no, and Kelly, I've never suggested that we're currently in a recession. The risk is always, you know, somewhere down the road. The yield curve isn't appropriately inverted from the three-month to the 10-year yield as Arturo Estrella, the person who studied this most closely. has pointed out on Twitter all day today. And yeah, the economy is still growing. Well, GDP is not in real

terms, but the job market certainly is. Although our colleague Sarah Eisen pointed out in the household survey, there were 300,000 jobs lost, which accounted for the downtick in the overall workforce participation rate. So there are a few, you know, signs on the horizon. What I'm pointing out, though, is that the Federal Reserve, as it continues to raise rates, probably needs to take a look at what's happening in Europe because they could have a very, very difficult winter that leads to a broad and deep recession. That will have some repercussions outside their borders. Well, I mean, they're in a pickle in Europe because of Russia's invasion of Ukraine and their kind of reliance on Russia as an energy supplier. So to the extent that they're left with no other options,

slowing demand, i.e. through rate hikes, is one of the only options. Well, yeah, but they've also got a double-edged problem in Europe right now because the peripheral countries that are so heavily indebted, also can't afford the higher interest rate. So they've been looking at the European Central Bank on ways to get rates up, slow demand, bring inflation down, which is higher there than it is here, but also not put Italy, Spain, Portugal, and other heavily indebted countries in a bind and create the type of crisis we saw in 2011. So, you know, at least out of the corner of one eye, the Fed ought to be looking at this field, because I do think there, for Europe most definitely, there is a, and this is an ill-used expression, but it's a winter of discontent that is coming.

And if they are diverting natural gas to homes before they send it to businesses, it's almost the equivalent of a COVID lockdown if it comes to pass that way. So, Ron, I mean, this idea, all of these things that you mentioned should be viewed as economic headwinds, not just here, but globally as well. If you look at the overall picture from your perspective, though, there's been a big discussion about whether or not markets have already kind of priced in this economic slowdown if it were to happen. I mean, recessions are inevitable. It's just a question of when. Do the markets have it correct right now, both the bond and the stock markets? They've already sold off fairly decently

in expectation, perhaps, of that slowdown. Yeah, I'm not that worried about where we are with respect to the stock market. We've come down a lot. I mean, the average stock is down more than 30%. The NASDAQ has gone down sharply. The meme stocks have collapsed. Speculative excesses have been effectively rung out of the market. So I think net net, a certain portion of that is a good thing. And so, yeah, the market has discounted a slowdown or what we used to call a growth recession back in the day. I don't think the markets have discounted, you know, a decline in corporate earnings for a full-blown recession that drives the unemployment rate to, as someone like Larry Summers, for instance, suggested, back to 5 percent as being a necessary precondition for inflation

to fall. I don't think the market is certainly discounted in any. not dramatic. Yeah. And so all of this said, Ron, we still have a 10-year yield that's poking a little bit higher, stocks that are trying to figure out which way to go with it. We rarely get super tactical with you, but I mean, is there anything, health care is the outperformer today? What would you do or have investors do with their money here? Well, I still think, you know, look, cash doesn't hurt you right now. And I know there are people say with inflation at 8%, that's like a tax on your money. But I think, you know, health care outperforming is a sign that the market's in defensive mode, right? It's not a growth

sector, if you will, in the purest sense when you're looking at it compared to technology. But, you know, I think that you're getting very close to the point at which you start buying very, very good companies at deeply discounted prices. So I'm not saying the world's coming to it. And I think the Fed just needs to be extremely careful with this additional three-quarter point rate hike, pardon me, that's expected later in the month. And I still think there should be a stop, look, and listen moment for the Fed to take, to really address what's going on, not just domestically, and obviously overseas is not their purview, but take into account those headwinds before taking another step. Because we've seen, as we've discussed in past weeks, we've seen

commodities roll over, we've seen break evens fall rather dramatically. But because of what they're doing, I mean, I credit them for pushing them. But if they've accomplished their objective, Kelly, why go farther? I mean, there's a real question. I mean, you're missing five million workers. they're not going to print people, as we've discussed before. But they have to destroy job openings, right? Because you can't print people. I mean, to me, you know, wage inflation is already starting to come down. So that's less of a pressure on the economy.

Supply chains will eventually ease. Again, I go back to the comparison that this is much more like a post-war environment than it is like 1966 to 1981. This will work itself out over time as long as the Fed doesn't overdo it. To be continued. Ron, thank you very, very much. Again, we appreciate it on this Friday, Arran and Sana. All right, Kelly, we're going to continue it right now because what is the biggest risk to the market?

Is it recession? Is it the inflation story? And how is that changing the way people invest? Joining us now is Jonathan Thomas. He's somebody who can tell us a little bit more about how people are doing it because he's a CEO of American Century Investments. We have, all right, so we are going to try to get Jonathan Thomas. Thomas, do we have him back now? Okay, we do.

Jonathan Thomas, J.T. is one of the nation's largest asset manager's CEO, American Century Investments. They've got $200 billion in assets under management. He's coming to us from the American Century Championship, the Celebrity Golf Classic out in South Lake Tahoe. Jonathan, in years past, I've been right there with your shoulder to shoulder. I wish I was there with you right now. But we just had a big discussion with Ron Insana, Kelly and I. about the risks out there. Do you think that a recession is coming anytime soon?

Yeah, thanks, Dom. And by the way, we miss having you out here. But, yeah, our view, you know, if you looked at what happened this morning with the jobs report, I think the market read on that was generally right. You know, the market immediately started to go down, which I think people read into it, that it gives the Fed that economic breathing room to go ahead and raise it to raise the rate. Okay, I think, yeah, I think we were going to, work on trying to get that Jonathan Thomas shot back up there, the mountains out in South Lake Tahoe, Kelly.

You know, playing some... Between Sun Valley and Tahoe, all these beautiful places that people like to go in the summer are just not as reliable for signal. We need the satellite shots to become more reliable for those spots. And I will say this. I've been out there with Jonathan Thomas in South Lake Tahoe. It is an amazing, amazing spot to do that. Yeah, I'm sure. But, you know, you know, internet being what it is. Coming up, everybody, our powerhouse road trip heads to Raleigh, a market once dominated by bidding wars. they are now seeing price cuts.

Wait until you see some of these houses. Plus, the trade on Twitter if Elon Musk's deal comes undone. It's one of three controversial names we'll discuss in today's three-stock lunch. And two movers as we head to break six flags. We don't talk about this one often, but it's lower 6% on a city downgrade siting. Get this, slowing attendance and recession risk. I was at a Six Flags Park just this past weekend. I kid you not.

Well, don't tell Ron and Sana. Right. And Vita Coco shares are soaring on a bank. of America upgrade noting falling freight costs, a cocoa up 17% today. Power Lunch comes back in just a moment. Welcome back to Power Lunch, everybody. We're on the next leg of our powerhouse road trip. Yep, here we are in the RV, hitting six cities for the summer to take a look at how the housing market is changing. We did it last year. It's fun to revisit it this year with a very different market. Today we are in Raleigh, North Carolina. Now, according to Zillow's most recent report, the median home price there is just under 418.

thousand dollars. Inventory is down at 10% year over year and around 75% of the home sold in Raleigh still selling above listing. I'm not shocking. I'm the top five in the country. Yeah, it's been such a strong market. But our next guest says things are shifting quickly. For more, let's welcome back Jason Dalton. He's an agent for Keller Williams preferred realty in North Carolina. All right, Jason, bidding war is still happening or price cuts? What are you seeing? I'm seeing both. I am still seeing people competing for opportunities. And I'm definitely seeing some price reductions. I think it's never been more crucial to price homes appropriately right in line with the comparables so that buyers aren't entering

having this fear that they're going to have an appraisal shortfall. So I'm definitely seeing 20, 28, 30 days on market and some price reductions. So Jason, if you're talking about fear of an appraisal shortfall. That implies that people are still seeking financing, right? Mortgage financing to go and buy these properties. I mean, before the story was about people getting beaten up by institutional buyers, cash buyers, that sort of thing. Do you feel as though that dynamic is changing, given what we're seeing with interest rates? Is home affordability now a real issue, given the monthly payments that have now spiked over the last six months? I definitely think that has had some impact. I definitely think, you know, when rates go from three and a half to five and a

half percent, that lessens what someone can afford and, you know, increases that monthly payment by hundreds of dollars. What I have personally made at my mission is to educate my buyers and encourage them to keep their eye on the endgame. Acquiring that piece of real estate, when I first entered the business and bought my home, it was 7 percent for my money. For my own, my first one. So I definitely think it's calmed things down the competitiveness, and it has required a lot of educating buyers that have kind of been burned and are worn out from the past two to three years of bidding wars. And if I could follow up, Jason, Raleigh Durham is in that Research Triangle part of North Carolina, highly educated workforce, a lot of academic institutions. You could see a lot of

people relocating there during the pandemic for telecommuting and everything else, has that market cooled off? Or are you still seeing folks come into town because they're commuting from somewhere else and they want to live in Raleigh and work remotely? I still see it. I still see a prevalence from the West migrating here because, quite frankly, it's so much more affordable. And they're coming and making weekend visits and seeing like, oh, wow, the triangle, it really is a great place to live. And then they look at what the cost of a home is here. And they're like, wow, okay, so the cost of living. And I, yes, so I absolutely see it happening daily.

Yeah, that geographical arbitrage, if we want to call it that. I mean, we were showing homes that you have on your website, $850,000, that, you know, people can't get a house like that up here. I wonder, though, about work from home where a couple data points this week say that trend is slowing. So we had recruiter.com yesterday telling us fewer remote roles are available. This morning in the jobs report, Labor Department says we're down to about 7.1 percent of the U.S. workforce working remote last month. Is that going to impact demand for housing as that's been a big driver the past couple of years?

I don't think so. I mean, I really don't think. The thing that I heard quite frequently in 2020 was we need two home office spaces. So we were trying to find a first floor home office in a bonus room or a bedroom on the second floor so they could have independent conversations and not disturb each other. But I don't think that's affecting what I am seeing personally. All right. Jason Dalton, a fascinating story, especially in the North Carolina real estate market. It's obviously been one of the hottest ones, given the kind of work from home during the pandemic and everything else.

Jason Dalton, Kelly Williams. Thank you very much. We appreciate it. Now, as mortgage rates cooled this past week, home builders rose in value. Look at Lenar, Pulte Group, D.R. Horton, all up around 4% or so. The forward price to earnings ratios of these stocks are in the single digits, right around 4, 4 times next year's earnings. Mortgage lenders like rocket companies, Lone Depot, both up around 4. 14% over the past week, but that's off major declines over the course of this past year,

as we know. Rocket remains 50% off its yearly high. Lone Depot is off more than 86%. So you kind of keep some of these things in perspective. Now coming up on the show, edgy investments. Today's three-stock launch is taking a shot at some names with strong risk and maybe reward profiles, plus the economic enigma. The jobs report coming in stronger than expected, defying, yes, session fears. We will discuss what it all means when power lunch returns after this break. Welcome back, everybody. Time for our weekly ETF tracker. We are following the money and we are looking at biotech this week, $142 million of net inflows. Like tech, the biotech stocks have been bouncing back after a rough start to the year. There's also that news that Merck is close to a

$40 billion deal to buy Seagen. Takeover news, always a big catalyst for the sector. The gains this week in these ETFs have been pretty huge. Kathy Woods, Genomics Revolution up 13%. It doesn't get the press that Arcade does, but that's a pretty hefty gain. Meanwhile, the Global X genomics and biotech ETF up 11%. Spiders, S&P biotech ETF up 9.5%

iShare's version, a nice 5% gain. All of this comes from our partners at Track Insight and indicates that stock selection does matter here. More information is available on the FT. Wilshire ETF Hub. Let's get to Sima Modi now for the CNBC News Update. Sima. Kelly, good afternoon. Here's

your CNBC News Update as this hour. In a statement, President Biden said he was stunned, outraged, and deeply saddened by former Japanese Prime Minister Shenzhou Abe's assassination, but separately telling reporters he does not believe it will have an effect on Japan's security. I tried to put a call in to the present prime minister, and he was very late there at night. I'll be talking there in the morning. I do not believe it's likely. to have, but I don't know yet. Likeed to have any profound destabilizing impact on Japanese security or Japanese solidarity.

Incredibly sad news. Moving on here, the National Institute of Health is rolling out one of the largest studies in the world to understand long COVID symptoms. The study will cost over a billion dollars and will follow 40,000 participants for four years. And the goal is to identify what those long-term symptoms look like. And in the auto space, Ford Motor, the company is issuing a new recall for 100,000 U.S. vehicles over fire risks. The recall covers certain 2020-through-2020 model year Ford Escape, Maverick, and Lincoln Corsair vehicles. Dom and Kelly, I'll send it back to you. All right, Sima Modi, thank you very much for that.

Ahead on Power Lunch, the Big Fang Theory. You get it? I do. It's the group that seemed left behind by the newest disruptors, but are these names actually becoming a new safety? tech trade for some investors. We'll break down those names coming up next. Welcome back. We've got a little more than 90 minutes left in the trading day, and we want to get you caught up on what's happening with the markets right now, stocks, bonds, commodities-wise, and the return of that fang trade. So let's begin with the stock side of things lower today,

but it's still been a very good week, especially for the NASDAQ, up more than 4% in that timeframe. Health care is the best performing sector today. And by the way, the only sector that's higher on the session. You've got United Health, McKesson, CVS Health, all kind of moving to the upside. And then check out what's happening with Moderna. It's up about 16% just over the course of this week. And Upstart and WD40 also have stocks to watch,

two stocks in very different industries, both getting hammered today after disappointing earnings results. Also lower today, those travel names. Think about cruise line operators, casinos, that sort of thing. They're all lower on the session as well. Now to the bond market. Yields are moving higher as the strong bond report really likely means the Fed will stay aggressive. That job side of things is really getting better.

Rick Santelli is in Chicago for us to break it down. And Rick, that strong jobs report reverberating big in the bond rates market right now. Oh, absolutely. And, you know, whether it's two-year or the longest maturity, 30-year bonds, everything is moving down in price up in yield. And do remember, in two and a half weeks, of course, we have the Fed means. And it certainly seems though once again three quarters of a percent 75 basis points on the table the last three days have been pretty wild ride for treasuries

Look at a three day of two-year note yields and realize low to high yield we've gone from two and three quarters to nearly three point one five three fifteen a huge move and if you look at a one month of tens you could clearly see that we are now starting to get closer to that intraday high that was nearly at three and a half percent in mid June and continue to monitor all that has to do with yield curves because the yield curve spreads as you see on this long-dated 10-year chart going all the way back 11 years. We're going to have the highest weekly close basically in nearly 11 years for tens and what it's done is it's really starting to flatten out that curve. Now we know twos to tens is inverted down but really the trade to monitor is three months to 10 year. Now, if you look at this chart since November of 2020, you'll see we're hovering right

around 122 basis points. But the interesting thing is within two months ago, it was 230 basis points. One month ago, it was 170 basis points. So it is really moving much lower. And the last time that it was at zero before it inverted was February of 2020, right before COVID hit. And finally, the dollar index. It's been on a tear.

Why? because the euro currency is really getting socked hard. Right now, it looks like the best weekly closed since the third week in October of 2002. Back to you, Dom. All right, some of that past economic data, not showing recession, but the markets may be predicting some of it there. Thanks very much, Rick Santelli. Oil right now is also closing for the day.

Another gain overall for that crude market. Pippa Stevens has those details. Pippa. Hey, Dom, some strength here at the end of the week for oil, but not enough to make up for heavy losses earlier in the week. That puts crude on track for its third negative week in four. WTI currently up 2 percent around 105. Now looking ahead to next week, a couple of key things to watch. President Biden headed to the Middle East with the stop in Saudi Arabia. The president has been calling on countries to increase output. And Saudi Arabia, of course, one of the world's largest

producers and the de facto leader of OPEC. On the gas side of things, Russia is set to temporarily shut the all-important Nord Stream 1 pipeline for annual maintenance. This is a routine procedure and normally wouldn't be a cause for concern. But this time, some are worried the Kremlin simply won't turn the taps on. Again, European natural gas jumping 15% dumb this week. It's still a volatile trade. Pippa Stevens, thank you very much for that. One of the big market stories this week has been the big bounceback in the Fang stocks.

For more on that tech turnaround in comm services, tech adjacent, whatever you want to call it, Let's bring in Steve Kovac as well as Gene Munster, managing partner with Loop, a tech and research and investment-type firm. And Steve, maybe we'll begin with you, just the setup here. Why are people buying tech again? Yeah, I'll tee it up here for my boy, Gene. Let's talk about where we're at going into the week. Alphabet was up 8%. You had Amazon up 4%.

Apple up almost 5%. And Netflix, which has just been beaten down all year, up about 2% going in today. And then there's meta up more than 5%. 5% and it was on pace for its best week since April 29th. And by the way, all those names I just said had been positive two out of the last three weeks. And look, as the sell-off continued throughout the spring, people were looking at these names, especially Apple, to hit their bottom and start going up again to see if the rest of the market has bottom. And now everyone's asking, are we there yet?

So lots of mixed signals and headlines coming out for these companies in recent days. We had the EU passing the Digital Markets Act and the Digital Service Act, which will impact profits from Apple, Meta, Alphabet. and Amazon when it goes into effect next spring, especially going to hit the app stores from Apple and Google. But there's more optimism about hardware for smartphones and PC, like we saw in Samsung's earnings earlier this week.

Meanwhile, Morgan Stanley analyst this morning saying they're optimistic about China, noting that all the Apple stores there are now open in the country, and their other names like Dell and HP might benefit as those lockdowns are coming to end. And by the way, Kramer had his own thesis on this, last night on Mad Money saying IT spending is still going to be strong for tech companies,

even if the consumer weakens, Dom. All right, Steve Kovac, it's a pretty interesting setup overall. So let's bring in the next part of this discussion is the tech sector nearing a bottom. Our next guest says it is, and that's Gene Munster. He joins us now. Loop Ventures. Gene, you heard Steve's report. I also kind of harken back to what he kind of just said about whether or not tech

spending is still there from Jim Kramer. I seem to recall an Apple analyst at Goldman Sachs coming out this past week saying that they have to now price in certain parts of a recession possibility and that they have to lower their target price. So is the worst over for tech? Simply put, I think it is. And we've been more than 50% in cash for more than a year. It was a difficult position to be in late last year. It's been a better position to be in this year. But I just add some context to we have not been saying that.

tech has bottomed, I am beginning to say that. The bottom is not a single point. It is a forming of a bottom, and I think we're in the early stages of that. In particular, I think we've seen some positive signs regarding micron, for example, guiding down by 20% last week, stock closing down 3%. And I think you see this hot jobs number today. The expectation is that rates are going to be going up, and yet the market hangs in there. And so I think this is encouraging for big tech, and I would just kind of point to this is that at the end of the day for the September, for the June quarter, when commentary comes out from all the big tech companies about September, I would be bracing yourself for bad news. I think that the smart money would say that the commentary is going to be negative about September.

I believe most, but not all of that is priced in. And so to kind of finish out the thought, Dom, is I think we're going to hit a bottom probably after this earning season. And part of that is not just because the commentary, I think resets a bar, but more importantly, the market looks six months forward. So the market's mentality, especially with big tech, is already in early 2023. And I suspect that some of these revisions, downward revisions to numbers that we're going to see in the next few weeks sets up for an easier bar in 2023.

So as you kind of play this forward, think about the bottom of forming over the next couple months. And I think 2023 is going to be a great year for tech. I was not saying that a year ago about 2022. So if 2023 is going to be a great year, Gene, what's the big deal about September and what companies are likely to say and what you think we're likely to hear? Well, the important part is just resetting that bar. And I think that what investors want is for companies to exceed expectations. They don't want surprises. So the theory is that the September quarter is I think the first true reset quarter. We've looked at the commentary from companies after they reported or when they reported their March quarter, the commentary about the June quarter.

And we looked at 20, the top tech companies. And of those six had negative commentary about June. There was some commentary, other ones that had some commentary about Eastern Europe. But as far as the macro, it was six. I think it's going to be more like 12 or 20 will have some negative commentary. But, Kelly, just to answer your question is that I see that. is kind of a changing moment here allows investors, tech investors in particular, just to take a deep breath and say, yes, we've been waiting for these cuts. Now the cuts have happened. And now we can start even more fully embracing, which should be easier comps in 2023. So, Gene, you know, one of the reports we did earlier today was this notion that many of these

mega-cap technology and comm services names are kind of hovering back to around their 50-day average price on a rolling basis, right? They're starting to get back a little. bit of positive momentum. We're talking, of course, the apples, the Amazon's, the alphabets, the meta platforms, the Teslas of the world. Do you have some top picks there? Is it Mega Cap? At one point, just in the last couple of years, we used to call them a safety trade. I think it is. I think portfolio should have a balance, obviously, of some of the safer ones, especially in this market in front of this commentary that I'm predicting for the commentary about September and answer your question is that I kind of don't think all, I do not believe all

big tech has created equal when it comes to a safety. And the safety experiment that we believe is that ultimately which companies are going to provide earnings upside in early 2023, which are the best position big tech companies to do that? And I'll just kind of put Tesla on the side. That could be up or down 30%. I think there's massive upside in that over the next five years. Put that aside and just think about the core, which of the, what are the three top? I would put Apple, Amazon, and meta for all different reasons, but the same general principle is earnings upside starting in the March quarter. And maybe just to fill in quickly in terms of why is that with Amazon, they've been in big investment phase. They usually will show some profitability after

that. And I was encouraged to hear commentary from Zuckerberg recently about some tightening of hiring. that is a different language that he's used in the past, and that, of course, translates to better profitability. You'll take a few quarters to get there. But, Dom, that's where safety is, companies that are strong, Apple, Amazon meta, that are thinking more about earnings upside early in 2023. Gene Munster at Loop, the three top picks, Apple, Amazon meta platforms.

Thanks very much. We'll talk to you soon. Thank you. Fascinating. Right. Up next, some econ recon. More and more Wall Street firms talking about recession, but the jobs data remains strong.

When will the data take a turn for the worst? Will it? We'll get insight from former New Orleans mayor Mark Moriow. Stay with us. Welcome back, the June jobs report coming in better than expected. 372,000 jobs created helping to ease those recession fears. But while total unemployment held at 3.6%, the rate is still higher for blacks and Hispanics and the disabled. Let's get some insight on the state of the labor market with Mark Morial.

He's the former mayor of New Orleans and the president. president and CEO of the National Urban League. It's great to have you here and have you back, Mr. Mayor. So, you know, we've talked a little bit about this conundrum between, I mean, sort of boringly comes down to what the Fed should do, but do we have an economy running too hot or too cold? And what's the right way to address the problems most consumers are feeling? What are your thoughts? I think that continuing growth in employment has to be an objective of both both monetary and fiscal policy. And I also believe that the Fed in its tightening efforts has to be extremely careful not to overreact

and perhaps create a 70-staff stagflation situation where you have both high inflation and high unemployment. What these jobs numbers show is that job creation has been consistent since the end of the COVID recession. What the slight growth in the economy shows is that consumers notwithstanding inflation still have confidence. A comment on inflation, some of this inflation in the energy markets, in let's say grain and food markets, those are being prompted by international factors. China, Ukraine, and the like. So if they ease a bit, and there's a discussion about tariffs and our relationship with China,

if they ease a bit, perhaps the fears of a recession will also ease. I think it's premature to suggest a huge recession. I think we've got to be cautious, remain vigilant. But the likelihood is maybe a shallow slowing down to the economy until there's a rebalancing of supply and demand. Sure. And we know it takes years to kind of get to full employment. We might be there within a few more months at this rate, helping all of those categories that I mentioned earlier. But the Fed, since its 75 basis point hike three weeks ago, has seen energy prices and gasoline prices fall anywhere from 15 to 25%.

That has to be good news for consumers, don't you think? I mean, wouldn't that be exactly what people would want the Fed to be trying to do here? And I also think it is the intended effect of the Fed. raising interest rates as they have done. The notion that you expect that it would have an impact on inflation and really in a short period of time, it appears to have had that impact. But, you know, Kelly, I would offer this thought. I think it's also important that the Fed rethink what its benchmark inflation rate is, whether

2 percent is correct or whether it should be higher at 3 or 4 percent. Something I'm always concerned about is the balance between wage inflation and price inflation, because for a long time, the cost of living went up, but wages were stagnant. And so the American worker and the American consumer, it's the relationship between the two that really, really counts if we're going to have a healthy, growing economy that benefits everyone in the future. Mark, it's Dom. You mentioned this kind of...

Hey, Dom. You mentioned this inclusive element to making sure our economic recoveries now and in the future kind of take hold and bring in more people into the fold. I wonder, from a policy standpoint, though, there's not much you can argue the Fed can do on that particular front. They can't target things that directly. So what has to happen elsewhere, either on the government side of things or societally, to make sure that some of these recoveries don't leave wide swathes of our population behind? So it's important, for example, I know you've been talking about layoffs in the tech sector or reductions in headcount in the tech sector. It's important that as that occurs that technology companies do not retreat on some of the commitments they've made on diversity, equity, and inclusion, and maintain those commitments so that the impacts are not disproportionate on the last hired as they become the first to be laid off. Number two, fiscal policy is crucial here, and that is continuing to provide job training

and investments in human capital so that those that have historically been locked out are prepared for the types of jobs that the economy is indeed being created. So those are, I think, important steps as well as a continued commitment towards diversity. I mean, we saw a slight narrowing in the black, white, a black, Hispanic, unemployment rate in the last month. You know, my goal is, and my hope is that we reach parity where there's no differential based on race in the unemployment rates in this country, which would be a positive step in the right direction.

So corporate America's got to be committed to it. Fiscal policy plays an important role. I think the Biden administration wants to make these investments. I think they've got to accelerate those investments while job creation remains strong. A lot of variability for sure to kind of talk. target there. Mark Moriel, always a pleasure, sir. Thank you very much. Have a nice weekend. Appreciate you all. You know, interesting, Kelly, it brings us back to that Corsera to conversation that we were having during working lunch about how to retrain people and everything else.

And the tools available to do so and try to help that participation. It all loops together. Anyway, coming up on the show, today's three stock lunch, our traders giving their take on the top controversial names that are in this market right now, whether it's from the volatility side of things, it's deal drama, or if it's changing trends, secular or otherwise. So keep it on that three-stock lunch. And if you're looking for trades for the second half of the year, be sure to tune in tonight at 6 p.m. Eastern Time. Our own Frank Holland and Josh Brown from Ritzholt-Welts will have your second half playbook. Tonight, 6 p.m. Eastern Time, CNBC's special taking stock. We'll be right back.

Shares of Beyond Meat, basically flat today, but take a look at this one-week gain up almost 25%. Same with Oatley. Kate Rogers has more on the rebound in these so-called alt food names. Kate? Hey, Kelly, well, both Oatley and Beyond have had some great months to date so far. The Oat Milk Maker is up about 18 percent, beyond up nearly 30 percent. This comes after a brutal six months for both names down over 50 percent. While there's not one catalyst here, a few factors could be at play. Both names have been so beaten down that there is, of course, the possibility for investors doing some bargain hunting here. And also with grocery inflation continuing to climb, consumers may bristle less at these prices,

as they tend to be a bit higher than traditional meat and dairy. Now at Oatley, analyst John Baumgartner of Mizuho notes that pessimism on the stock is likely bottomed, and the second half of the year will be all about distribution and meeting targets after COVID delays. Execution will be key for the stock to make a real comeback, and the company's cashburn also needs to slow. At Beyond Meat, it's a very different story as investors will want to see these big partnerships pay off, and a lot of it will ride on McDonald's. Last month, BTIG, Pete Sillay said that franchisee checks on the McPplant were disappointing, and a national launch is likely not coming in the second half of the year.

Missouho also says that recovering volume growth will be key for beyond in the second half of the year. Remember, it does face so much competition. Its CEO, Ethan Brown, did mention, you know, there are so many new entrants into the market that it was kind of losing market share. So they want to see the volume kind of pick back up and it have success in both grocery and in the restaurant sector as well. Moving ahead. All I know, Kate, is Jane Wells has me thinking about almonds and almond milk and fighting inflation right now. So that's where I'm turning for my alt foods. Kate Rogers, thank you very much for that.

That brings us to our three-stock lunch, alt or otherwise, which could include things like Beyond Meat, which Kate just mentioned. We're also highlighting other controversial names, Twitter, which is lower on reports that Elon Musk's deal to take it private are now in jeopardy. And then beaten down brokerage and crypto firm Robin Hood. Here to help us break them all down as Quint Taitro, founder and president of Jewel Financial. Let's start with Twitter. It's in the news right now. Is this a stock you want to own, given the deal dynamics, Quint? Well, Dom, given the deal dynamics, I don't think you can speculate on that.

It's a very dangerous play. I think if you are a long-term believer in the company as I am, you might want to buy it as a long-term investment and hold and see if it actually can turn into a viable business. This company traditionally has a hard time sort of identifying how they're going to remain consistently profitable. But right now, as far as the volatility and trying to glean some sort of edge, you know, around the musk buyout, it's just not for me. Again, long-term investment, if you want to do that, that's fine. The company is trying desperately to, you know, sustain profits over the long term and kind of really work through their business model. But as a trade right here,

not for me. Beyond meat, would you own that for the long run, Quint? Well, again, Kelly, these are difficult stocks, right? I mean, you're talking about a company that is exceptionally highly levered up, I mean, huge amounts of debt, and they're losing money. So this is a very, very difficult, you know, combination, a company that, you know, has to somehow find profitability or they're going to have to raise more capital. If, again, if I don't want to discourage people, if they believe in the company, you know, the sort of old Peter Lynch methodology, if you believe in beyond and you think they can do that, maybe, you know, take a very, very small speculative position for your portfolio. But right here, there's very little edge other than the fact that they have a 40% share

float or short float. And that could certainly help with the sustained move that we've seen over the last week or so. All right. And Quinn, our final name is Robin Hood. It's also not one of the so-called profitable names, right? But is this a buyer a sell? Okay. Now this I can speak to you, Dom a little bit, because I actually like Robin Hood and I think of it more as a call option. This is a company we own. And this company is fascinating because trading at $9 a share, no debt. They have $7 a share in cash. Now, they're set to lose about $86 next year. If they were to do that two years in a row, it's a buck 70, they'd be down to about $5.40 in cash, still exceptionally high cash levels. So this stock has all to do with road to profitability. And if they

start cutting down on those losses, I think this could be an explosive stock. So again, much like a call option, I think you're either going to do exceptionally well buying deep, deep value here, or you're going to be in trouble. But out of the three, it's one that we are actively pursuing here recently. All right. Three stock lunch. Twitter is a sell. Beyond Meat is a sell. And Robin Hood is a buy, says Quintetra at Jewel Financial. Kelly, it's a fascinating discussion there about some of these controversial names. A little surprise at the end. Up next, the return of high beta.

So, Kelly, as we kind of close out the show for Under the Microscope, we wanted to take a look at that tech trade, because we talked about it with Gene Munster a bit on the mega-caps side. Yeah, he was kind of bearish for the near term, more bullish on 2023. Right. But he's talking about the mega-caps. But many of those companies that have taken the biggest beating have been the ones that have been so-called, you know, not profitable, cash burners. Many of them, innovation companies in this ARC innovation ETF, Kathy Wood's flagship fund.

And the reason why we want to highlight it is because at one point today, we actually hit the highest level in about two months on this stock. And what traders are looking at right now is whether or not on that right hand side, you can see a bit of a breakout hypothetically. And if it were, would that be constructive for the stock? Now, the reason why we want to point it out is because many of the holdings are some of those high beta, high growth volatile type names. Let's look at robots.

I was going to say, we always think of robots. There's got to be Roblox. Exactly. But look at Roblox. It's down 60% year to date. But this move that we've seen kind of higher off the lows here is now like 90-some percent off the lows. You know, again, just a little bit interesting to see that play out. And then also, if you take a look at some of the other ones here, take a look right now at what's happening overall with Zoom video,

which is now abruptly 50% off its lows. Wow. And then one more just for you. Take a look at this one. Tele doc. Please. Teledoc. 50%.

And it doesn't look like much from the highs, but it is starting to be a lot for those who watch the chart, shall we say. And the arc. Dumb, thanks so much for everything this week. Have a great weekend. Thanks for watching Power Lunch, everybody.