Power Lunch - Iger’s back, trading the Nasdaq & holiday cheer? 11/21/22

Episode Date: November 21, 2022

Shares of Disney rise after the surprise ouster of CEO Bob Chapek and the return of Bob Iger. But Iger’s to-do list is long if he’s going to regain the confidence of Wall Street, shareholders, employees and Hollywood. Plus, it’s been about one year since the Nasdaq’s peak. Should you buy the laggards and sell the leaders? And the former CEO of Macy’s on whether there will be holiday cheer for the retail industry. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome everybody to Power Lunch, along with Contessa Brewer. I'm Tyler Matheson, and here is what is ahead. Disney, the sequel, the stock takes off after the surprise ouster of CEO Bob Chapec and the return of Bob Iger. But Iger's to-do list is long if he's going to regain the confidence of Wall Street, stockholders, employees, and Hollywood. And holiday cheer? Well, not all retailers are going to experience it, but the ones who will have a few things in common. Former CEO of Macy's is here with a look at where consumers plan to spend. Contessa. Good Monday to you, Tyler, and good Monday to you. Stocks mostly lower to start this holiday shortened week,

although you see the Dow is just hanging around the flat line, sometimes popping into the green, and then the other direction. The S&P 500 is off a third of a percentage point. We're seeing this really weighed down by consumer discretionary and energy names, and now the NASDAQ off nearly a percent. Boy, did we see a dramatic U-turned for crude. Oil rebounding from the lows after the day after Saudi Arabia denied a report that OPEC is considering a production boost.

Right now, you're seeing WTI just off about a third of a percent after that announcement. And the stock of the day, of course, is Disney. It's the best performing Dow stock and this on the news of the return of Bob Iger as CEO. That marks an end to Bob Chepec's short and rather rocky tenure since February of 2020. Tyler. Well, Contessa, Bob Iger's to-do list is. A long one, Disney coming off quarterly results that were weaker than expected, and that is putting it mildly. It saw widening losses in its streaming business and recently announced cost cuts and hiring freeze.

Here to discuss Iger's endgame and what investors can expect. Janice Minn, CEO and editor-in-chief of the Ancler and Cut Gun Maral with RBC Capital Market, has a buy rating on the stock and a $130 a share price target. Welcome to both of you. Janice, what went wrong with Mr. Chepec? I think the better question is what went right. I think we saw signs early on that he was not great in a crisis. And I know these seemed a little bit insignificant at the time. But if you recall, he had the don't say gay fiasco, which somehow ended up in a culture war with Ron DeSantis, the governor of Florida. He got into a fight with Scarlett Johansson, star of Black Widow, one of his big marble stars. And he, I think more importantly, though, he was. not adept with the town. And I think anyone who works in Hollywood knows it's clubby, it's chummy, it's all about relationships. And to me, the removal of Chepec is basically a referendum on the

streaming wars and everything it wrought, which was, this is going to be a tech-driven industry. It's going to be data-driven. Relationships can go secondary to the algorithm. And we're seeing with Bob Chepec, none of this worked, and he happened to be writing the streaming wars. right when Hollywood was discovering it's not really working out so well. Cutgun, let me ask you, what do you think is number one and number one A, let's say, on Bob Iger's to-do list? Yeah, I mean, I think it's a long to-do list. It's re-getting back to the creative roots of the company and executing on the creative excellence,

improving the franchise strategy, especially around Marvel and Lucasfilm, and making sure that going forward the investments that the company's making across content are tethered a little bit more on an eye towards profitability, on returns, and making sure that we end up getting towards not only the profitability timelines that management outlined, but also even beyond that, what does the earnings power of this company look like? And it all has to be centered on an eye on profitability and making sure that the returns are there. You know, it's interesting because we're getting a way.

lot of headlines and spotlight paid to Bob Iger's return. But I'm curious, he's going to deal men with the same board that acts Bob Chapic. This is the board that renewed Bob Chapic when, let's face it, the stock price wasn't that much difference in June when they said, yeah, let's give you a new three-year contract. And then in November, ax him, does it raise in your mind at all questions about this board and whether they're really prepared for a long-term view? I think that the board, it reflects that the board has lost confidence in Chepec, obviously, but part of it was a response to this rapidly, you know, rapidly declining market in Hollywood. Everyone here is in a total panic, full-blown panic about this sort of, all these headwinds

that have come together, the advertising decline, the ceiling being hit in streaming subscription growth, lower average revenue per user and international growth. Just everything isn't working. And to me, I interpret this as the board in bringing back Bob Eiger, needing to communicate confidence, a steady hand. I think that confidence in Chepec was so eroded that he couldn't really get out of this mess without, with Wall Street supporting him. You know, I'm wondering, Cutgun. I mean, there will be books written probably. And Janice, maybe you'll be one of the authors. I don't know.

Books written about this chapter in Disney's history. But I wonder what the gossip is. How much of this move was a dissatisfied board? How much of it was a dissatisfied executive team that just did not think that Mr. Chappek had what it took to run this company? And how much of it might be Bob Iger, who, as I recall, was a reluctant to give up the reins of this company on several different occasions.

How much might he have been playing behind the scenes to make this change happen, Cutgun? Yeah, I mean, it's hard to sell from the outside. I think that, you know, Iger did push out his retirement on a number of times. You know, according to press reports, he was approached by the board, you know, late last week. And I don't know that he came to the board and was probably more to do with the board realizing that, listen, the stock price is where it is. They've gone through a number of different challenges. And the outlook for 2023 certainly came below street expectations in terms of revenue and segment operating income. Perhaps the management team has been a little bit too aggressive with leaning into its pricing power at the parks, putting through a number of price increases, as well as direct to consumer.

We do have an upcoming price increase at Disney Plus in just a few weeks. And maybe the concern is that these moves have been, or will set in somewhat of an alienation of the customer base and maybe damage the long-term brand of Disney. Looking at the gossip in the town and looking at the news flow that seems to be percolating today, you know, there does seem to be a sense that senior leadership within the company went to the board. And maybe this move is not necessarily 100% board driven, but it's more a matter of leadership within the company. And the reality is you could be the CEO of Disney, but you do need buy-in from the different personalities and different management teams. And Bob Iger certainly has that to offer. And I don't know that Bob did. Would you speculate here on ESPN?

Because clearly in the world of gambling, which I follow closely, the shift in, the shift in, interest from Disney, and we heard Bob Chapick say it in the last earnings call, the interest in sports betting and how do you tie ESPN to what is anticipated to be a burgeoning industry? Do you anticipate that there will be some immediate movement on ESPN and sports betting? I think Bob Eiger, I think it's important to keep in mind that his term is, at least for now, only two years, right? And there's only so much you could do operationally with an two-year time frame during, as you battle a murky macro backdrop going into a potential recession, and he needs to find a successor as well. And so I think the biggest changes we'll see over the next

two years from Bob Eiger will likely be repositioning the company structurally and making sure that the strategic decisions are a little bit more forward-facing and set the company up well for the next five, 10 years. Within that context, let's keep in mind, Bob Eiger has a very story background in a history with executing against incredibly successful M&A, whether it be IP with Pixar, Marvel, Lucasfilm, or otherwise with technology. So I think as you move forward, there aren't too many different avenues that, you know, from a M&A perspective or inorganic paths ahead, that makes sense. And I think sports betting is certainly one to keep an eye on, along with likely going ahead with pushing up, pushing up the timeline to acquire the remaining stake in Hulu that's currently owned by

contest. Cut gun morale, Janice, Min. Janice, I'm sorry, I called you by your last name earlier. Sometimes people call me Brewer, too, so I just go with it. I went with it. Yeah, thank you. Thank you both for joining us today. The week started with a big surprise, of course, from Disney. Can we expect more? Here with her look ahead is Stephanie Link, Chief Investment Strategist and Portfolio Manager at High Tower Advisors and a CNBC contributor. You know, I'm curious because mostly when we go into a Thanksgiving week, we talk about two things. We talk about groceries and we talk about Black Friday shopping. Do you think that this could move business this week, Stephanie? Yeah, well, look, I think we're getting mixed signals in retail. I think it's very, very clear that inventories, even though

they're coming down for the industry, they're still very elevated. And I think that's going to be the theme throughout the rest of this year into early part of next. And then, of course, as you mentioned, there's this big trade down into grocery and food. We heard it from Walmart, we heard it from Target. We're going to hear across the board. And why I think, uh, dollar tree and dollar general make sense is for this very fact, right? So they do see a trade down. And so these stocks have held up remarkably well, Contessa. I mean, dollar tree's up 16 percent year to date. Dollar general up nine. I happen to own dollar general just because it's lagged. But dollar tree is sort of an interesting story. Again, it's this trade down, but it's also a special situation

story. You know me by now. I love special situations. And they bought family dollar for eight and a half billion dollars back in 2015. And they're just going through an entire restructuring process. a SKU expansion, better in-stocking, price controls, price increases. And it's interesting, the CEO of Dollar Tree came from Dollar General when Dollar General went through their restructuring back in 2009 to 2016. So, yeah, I mean, I think these stocks can be market movers. I don't expect big, big moves. I think they're steady, Eddie compounders, and so I like them both.

You know, the special situation that I'm particularly aware of right now is that you have your Christmas tree up already. Is that true? You are a special situation. Let me just say, you are a special situation. Let's move on to Anna. I'm so jealous. I mean, oh, my God.

Anyhow, analog devices is another one you're watching. Why? Yes. I am watching it because this has been a relative outperformer, only down 8% year to date. The SMH is down 30%. And I think the reason it's held up well is because of its diversified end markets, right?

auto and industrial have been strong. I expect that to be the case. And then, of course, consumer, very weak, but that's not going to be a surprise. Here's the thing. We've been hearing about double and triple ordering in semiconductors. They even saw it last quarter. They saw some cancellation rates increase. And so that's a real key point. Now, all of this is kind of like offset because they spent $21 billion last year on Maxim and their competitor. And I think you're going to continue to see synergies there. And that's another reason I think the stock has held up. So there's kind of these offsets, right? Bad on the order side of things, how bad did it actually get?

And versus what kind of synergies we're going to continue to see from maximum? I think it's going to be pretty good on weakness on a buyer, if it is weak. And what about deer? Are you watching the tractors? I'm watching the tractors. I own deer. And deer's been a good performer year to date, Contessa, up 20%. Still only trades about 17 and a half times earning.

So still okay in terms of valuation. But the farming fundamentals remain very, very strong. You have very high crop prices. You have an old fleet. you have a restocking of inventories. You've got a good order book. Hopefully, input costs have come down because that's been the real bane of their existence, right?

Supply chain problems, labor issues. So that's the one negative. But they've been able to offset it with price increases. And they have this great technology called precision farming technology. And it really gives them not only the pricing power, but also the visibility on gross margins between now and the end of the decade. So I like that one, even though it's had a nice run.

I like this not only into the end of the year, but also for next year as well. Thank you, Stephanie. I hope you have a great Thanksgiving. I hope you do too. All righty. Coming up, many call Florida's insurance market a mess. And that's one of the kinder words.

Real estate deals are falling through, and one insurance executive says she is preparing for a coming bloodbath. We'll talk to her next. Plus, the NASDAQ peak one year later. We're trading the best and worst performing stocks since that high point to identify which ones might be worth a look right now. And as we head to a break, a look at shares of SOFI moving lower on a report that lawmakers are calling on regulators to look at SOFI's crypto activities. Our lunch, we'll be right

back. Image estimates from Hurricane Ian are still coming in on the high end. $70 billion is one estimate in insured losses that exacerbates a meltdown in Florida's insurance market. Even before Ian, premiums for property insurance had skyrocketed. Coverage options, shrank, partly because of litigation costs, insurance fraud, inflation on housing costs, materials and labor. More than a dozen insurers have folded or fled Florida in the last couple years, just unable to make the finances work. The CEO of slide insurance predicts a third of the insurance market will collapse by the year end.

Deals are absolutely falling apart because the cost of insurance is unaffordable, and that alone will kill a home sale. In other instances, they simply cannot find insurance coverage and close on the loan. So it's a real crisis. Danielle Lombardo is the head of global real estate at Lockton, one of the world's largest independent insurance brokers. Danielle, tell me if you're seeing, I've called it before, I've described it this way as a special kind of hell in Florida insurance, whether it's also killing big commercial real estate deals. Absolutely. It's a total bloodbath. right now. I mean, I have a commercial real estate client, regional developer out of Florida, that was under a contract on a $110 million apartment deal. Prior to Hurricane Ian, the cost

for coverage was $600,000 a year. Post-Ean, $1.7 million. So that increase in expense reduces the property's value by $21 million. The client walked away from the deal. They just can't do business. So the multiple of the expense is $20 to 1? Really? Really? Yep. And so have you seen Ian exacerbate this situation? Has it gotten worse and harder to operate? It's much worse. We have numerous examples from a development standpoint where developers were about to break ground and the insurance pricing was it was repriced and they could no longer do the deal. And then what happens when reinsurance, which is basically the insurance that insurers buy in case of these major catastrophes, when those renewals come due after the first of the year? reinsurers are running away from Florida. I mean, if you think about it, Florida is the highest state from a litigation standpoint. It is the riskiest piece of land in the world. Why would a private

insurer want to do business in Florida? So when you look at reinsurers, they want to start diversifying their books of business. They want to get away from the frequency and severity of claims. And we're already seeing pre-Ean we were expecting increase in reinsurance rates. So something has to be done differently. You really make a point of this litigant. risk and among other things point to fraud that can take place sometimes between contractors and attorneys who then bring a case and say, and then the insurance company, against an insurance company, and then the insurance company is put in the position of having to say, well, we'll settle this for $65,000 when the real cost, if they were looking at it,

was maybe $1,000, or $1,500. Why do insurers do that? I mean, how do they get away with this? I mean, it's basically what I'm asking. Well, I mean, if you look at... Judges aren't stupid. No, they're not, but I think it's just, it's the way that the laws are set up in Florida. It makes it very easy for the contractors and the attorneys to ban together and drive these

types of fraudulent lawsuits, and the insurers can't do anything. The insurers don't want it, right? When they look at Florida, you know, Florida is 10% of the Florida's of the nations overall property insurance claims. But 80% of the litigation, right, that tells you there's an imbalance in the system. And partly is because the way that the state regulation is set up to pay lawyers, so there's one-way attorney's fees. I did reach out to the chief financial officer of Florida, Jimmy Petronis, and he gave me a

statement, and he said that he's working with Governor DeSantis to crack down on fraud and unscrupulous lawyers. he says, though, that part of this blame belongs to Washington, D.C. and to inflation that's driving up the cost. But I'm really curious. And we know that that's true in states, it's not just Florida, right? Inflation is driving up the cost of claims across the nation. But when you look at Florida, what can be done to fix it before the whole system falls apart? So I think there's two things. One, address the litigation and fraud issue. That has to be done first, because right now insurers are paying pretty much a 20, 30% tax to do business in Florida because of those issues. And then the lenders and the borrowers, the real estate owners and the lenders have to work together to create reform

around lender insurance requirements. Meaning like right now they might say that you have to have 100% coverage for your property and that might be unattainable in Florida. It might be unattainable, but also in certain situations you might not need it. If you're looking at catastrophe modeling, which utilizes thousands of years of historical claim data, and they overlay it on top of information regarding construction type, etc., it will help you understand. It's just a data point, but help you understand what the real risk is. So I think everyone needs to come together, everyone, meaning the lenders, the borrowers,

the state of Florida, the attorneys, the insurers, to say, what is the real risk? We've got to allocate the risk appropriately, because if you're being forced to buy a $25,000 deductible, but that's going to kill your deal or you're going to default on your, mortgage, you've got to look at creative ways to put in place non-traditional insurance products to solve the problem. Well, the legislature is planning to meet in a couple weeks, beginning of December, we'll keep our eye on whether they can grapple with what a big problem that is.

Danielle, thank you for your time. Thank you. Civil trial lawyers waiting for you outside here. Yeah, exactly. Thank you. Thanks for coming today. Thank you. All right, still to come, the railroad supply chain at risk just before the holidays. This, as the industry is still failing to make a deal with its various unions. We've got the details on that next. Plus more bulls entering the China shop. Some of the biggest China hawks are turning positive. But with COVID cases already climbing, is it too soon for optimism? We will be. Excuse me. Right back. Welcome back to Power Launch, everybody. Workers at two of the largest U.S. rail unions diverged on a labor on labor deal votes today, leaving the state of freight in jeopardy once again.

So far, eight out of the 12 major rail unions have accepted the tentative agreement that would raise wages by nearly 25% over the next five years. But the other four groups aren't convinced it's enough. If the two sides cannot reach a deal by December 9th, a rail strike would be inevitable, costing the U.S. economy more than $2 billion per day and creating major supply chain issues into the new year. Contessa. Well, let's get to Brian Sullivan now for the CNB. news update. Hi, Brian. Hey, Contessa, thank you. Here's what's happening at this hour. In Arizona's Maricopa County, a top election official has been moved to an undisclosed location for his own safety. Bill Gates, Republican pushed back against claims of voter fraud in both the 2020 and 2020

elections. Reality TV stars Todd and Julie Crisley are expected to be sentenced for their part in an extensive bank fraud scheme. A couple was found guilty in June on federal charges of hiding their wealth from tax authorities. Todd Crisley faces up to 22. years in prison, wife Julie could get up to 12 and a half years. And a meteorite lighting up the sky in southern Norway. Local police tweeted messages assuring people that the bright light was just a meteor. Experts say it had completely burned up in the atmosphere some 40 miles above sea level. I guess when you've got pipelines mysteriously exploding sort of near you. People are a little jumpy these days, Tyler. Can't blame on one bit. Brian, thank you very much. Ahead on Power Lunch.

getting the retail in gear, the group displaying mixed signs and guidance ahead of the holiday season. So what should we expect this week? We'll talk about that with the former Macy's CEO, Terry Lundgren. Plus NASDAQ to square one. It's been a long road since the NASDAQ hit its record high. Since then, tech has been in a constant state of havoc. We'll trade the biggest winners and losers. Power lunch will be right back.

All righty, folks, we've got about 90 minutes or thereabouts left in the trading day. We want to get caught up on everything, the stocks, the bonds, the commodities. And we'll take a look at the holiday season for retailers with former Macy's CEO, Terry Lundgren. Let's begin with stocks. The Dow has turned positive this afternoon as oil has rebounded from its lows. At least the Dow industrials are higher, but not by much to one-hundredths of a percent. The NASDAQ down about 1% at this hour. It seems like a risk-off kind of a day, basically.

Safe consumer staples plays like Hershey and Clorox are doing, Well, don't mix the two of those, please. Consumer discretionary, the worst performing group, sector group, Tesla, Amazon, Target, among the stocks leading that group lower as you see them. Look at Tesla off another 7% today. It's been a rough ride for that company as well as for Target after last week's report off 3.5% today. To the bond market, we go, yes, bond report. That would be Mr. Santelli tracking the action in Chicago.

Hey, Rick. Hi, Tyler. You know, if you look at chart maturities today, Tyler, they're the only ones in the red, meaning that their prices are lower, their yields are higher. We're talking two-year and three-year, and even those numbers are now less than one basis point. The rest of the curves in the green, meaning higher prices, lower yields. And the reason that's so interesting is because the Fed keeps pushing back at investors being too optimistic. Look at the two-year chart.

That is one week. You can clearly see there is an upward trend there, but still under-consum. control, but when compared to two weeks of 10, you can clearly see. We haven't even traded 4% or higher since the 10th of November, haven't closed above 4% since the 9th of November. And if we consider how that all is affected, the yield curves, we continue to monitor throes to tens. It's currently trading minus 72. Should it close there, it will be another fresh 41-year inverted close. And finally, the dollar index. Many believe it's turned. And that the high, Highs are in for the year from the third week in September. Hard to argue, but nonetheless, they had a huge bounce off their three-month low on the 16th, as you see on this one-week chart, and they're heading higher. One of the big reasons is because the euro, 57 plus percent of the dollar index is heading lower and heading lower, rather aggressively.

Tyler, back to you. Rick, thank you very much. We've got big moves in oil prices today as the commodity does a complete U-turn midday, and Pippa Stevens is here to explain it all. Hey, Pippa. Hey, Tyler, a roller coaster ride today for oil with OPEC's production policy at the center of it all. So earlier today, the Wall Street Journal reported that Saudi Arabia and allies were eyeing an output increase of 500,000 barrels per day at the upcoming OPEC Plus meeting, which caused crude prices to tumble. U.S. oil dropped more than 6% at one point to $75 and $8, the lowest level since January 3rd. But then Saudi Arabia said they categorically denied the report which caused oil to bounce off its lows.

In a statement, the energy minister reiterated that the current cut of 2 million barrels per day is in effect until the end of 2023. He added that if there is a need to take further measures by reducing production to balance supply and demand, they remain ready to intervene. So not only denying the report around an output raise, but even bringing up the possibility of a full. further cut. The group is set to meet on December 4th. One day before the EU embargo on Russian oil goes into effect. Let's check on prices. WTI down half of 1% at 7974. That contract does roll today. Brancruid is at 8750 for a loss of one-tenth of 1%. Tyler. Pippa, thank you very much. Let's turn to retail, shall we? There are signs of consumer strength heading into Black Friday. But inflation and rising interest rates promise to make this a little bit of a challenging holiday

season. With us is Terry Lundgren, former chairman and CEO of Macy's, which has been doing quite nicely lately. Terry, welcome. Good to have you with us. You know, I think that the consumer generally responds mostly to a couple of things. One is their sense of job security, and job security with some pockets of exception generally is pretty high across the board. So that would argue for a reasonably good holiday spending season. Well, Tyler, first of all, good to see you again. It, it, It certainly has been a good season so far, a good year so far. We're in the final leg of the 2022 retail marathon here with maybe an uphill finish. But I like where we stand right now.

Consumers are spending. They do have enough to spend, at least in the higher and upper middle income bracket. So I think we're going to finish the year about 6 to 7 percent through the fourth quarter, which will make the year turn out to be similarly strong. And there's going to be strengths and weaknesses, of course, as you described in your overall report here. Not everybody's doing as well. And I worry about those who have not dealt effectively with their inventory lumps that they clearly

had in the second quarter. And some carried them into the third quarter as well. When you've got too much inventory, Tyler, you know, you're kind of dead in the water. You can't buy the freshest, latest, most desired products for the holiday season. I worry about those guys, but there's lots of others that are doing quite well. Who are those guys who have got those inventory lumps? Well, anybody who's got, you know, significantly more than their sales forecast, and I saw a couple of them out there at, you know, 15, 16 percent more inventory than last year

with a forecast of three to four percent increase. I think those are challenging. And on the other hand, you see Walmart blew through their numbers last quarter, and I think I like their momentum. I think they're on a good track. Now, granted, food retail is very strong, sadly, because inflation is driving those prices up. Yeah. Let me ask you about one thing that's out there, Terry, excuse me for interrupting.

I didn't mean to speak over you. Is the possibility of a rail strike? Is that a non-issue for the holiday season? Because what stores have bought, they've already got, it's not on a train or a box car somewhere? Yeah, I believe that is a non-issue for this holiday season. season for sure. I think it's a major, major issue for 2023. We've had a lot of retail experts, Terry, come on and talk a little bit about the strength of the luxury consumer. And then the questions about whether that very lowest end consumer is going

to hang on and really be holding back their dollars. What about the middle of the road consumer? Yeah, and you just described it properly. That's sort of barbell situation is as 100% accurate contests. So that middle consumer is the one, frankly, the economy is counting on. That's who's going to drive economic growth. And that's a pretty big range there in terms of household income and savings account strength. And if they have the money, they're going to continue to spend it. I do worry about next year. I think when you get these credit card bills after this holiday spending season,

and you couple that with your utility bills that are going to be obviously higher this next year as we get through this winter season and paying for those higher bills, I think we're going to have a little bit of a sticker shock and perhaps a spending hangover that will occur early next year. So I have good news for you, Terry. You remember you took part in our stock draft. months ago. You remember that? I do. Probably one of the great days of your life, actually. And I want to make it even better. You're not in first place. Ryan Reynolds has that distinction right now and his

partner in stock picking, but you are in second place. How does that make you feel here? Must be swelling with pride. First of all, it's really good to know that if the acting thing doesn't work out for Ryan Reynolds, that he's got a backup plan and trace. So I'm really happy for, I was really deeply

concerned about, you know, his box office sales. Not really. But as far as I feel great, mostly about being ahead of O'Malley and Kramer. I mean, I'm sorry, Kevin O'Leary and Kramer. Those two guys were, those two are my primary, my primary objective of being ahead of them at the end of the year. I know this is not over, not over yet, but I'm really hoping I can keep ahead of those. Okay, you picked Macy's, which I think, I mean, I don't know, I question your buy in choosing Macy's as a former Macy's chairman and CEO. But if you're... Okay.

So now that that's all out and people can judge for themselves, you know, where your loyalty lies. What about Chewy? Like, would you still go back and pick Chewy? It's done really well, up 28% since the stock draft. Yeah, definitely I would. And I did. And I actually invested in Chewy at that time as well. So I feel like that, you know, first of all, but when things get difficult,

people take care of their pets first. I mean, their children are right behind them, but they take care of their pets first. Sometimes the pets are ahead of the children. Sometimes the pets are, and they're clearly ahead of the spouse. So I think this is a good bet, and I think that'll continue to perform in top-line sales. Well, congratulations, Terry, for now. There's a long way to go. We wrap it up, I think it's a Friday before the Super Bowl.

I can't remember. But at any rate, we thank you, Terry Lundgren for your insights today. We appreciate it. Have a good holiday. Thanks very much. Same to you. You got it. China reporting its first COVID deaths since shutting down in May, and the country was just beginning to ease COVID policies. China's Internet ETF, the KWEB, down more than 3 percent now.

We're going to take a look at where Wall Street stands. Next. China is lifting some of the most strict parts of its zero COVID policy. Does that make now the time to invest in Chinese companies and U.S. companies with China exposure? Let's bring in Sima Modi, who's watching this. Hi, Sima. Hey, contestants, and what we have seen is a dramatic change in tone from some of the biggest Wall Street firms on China. Citigroup turning bullish, upgrading Hong Kong as well to overweight. And over the weekend, Everco-ISI strategist, Nia Wang, predicting China will begin exiting zero-COVID policy around March of next year,

which he says will help unleash $760 billion in household savings, further supporting China's stock market. The K-Web ETF, as you were pointing out, taking a breather, though, after gaining nearly 8% last week. Of course, there's news as well of three COVID deaths in China over the weekend. Evercore also says the reopening, though, will help U.S. companies with large revenue exposure to China. So names that they highlight Tesla, Nike, Domino's Pizza, Chevron, among others, all of these names, with 15% or more of their sales tied to that country. However, geopolitics still remain atop concern.

Cowan Co. writing, we still struggled to understand. the optimism around Biden's meeting with Chinese president, Xi Jinping. And they say, quote, simply put, talk is good, but it's also cheap. I mean, you raise up the headlines about the COVID deaths. China has locked down one of its key districts following an outbreak. I'm looking at a note from an analyst that I follow talking about wind resorts, which is one of the most highly exposed U.S. companies to what should be China revenue, but right now is sort of faltering. And he says, look, they upgraded the shares on November 4th, but that was based on the expectation of Macau reopening and it just hasn't happened. Is Wall Street getting ahead of

itself? Yeah, it's a great question. I put this specific question to a number of strategists, Contessa, and all of them say this quest to pull away from the economically disruptive zero COVID policy, it's needed, but it's not going to be easy. And in regards to those debts over the weekend, they point out that while unfortunate, these individuals were 80 and older and had underlying conditions. So at this point, they don't see China moving away from this, this ambition to ease policies. Contessa. Seema, thank you. Appreciate that. Tyler. All right. Is it time to get NASDAQ in the saddle? The index down more than 30% from its high. A year ago to this day, those declines led by tech. So are there any names that have fallen enough to buy?

We're going to look at that and more when we return. All right, welcome back, everybody, to Power Lunch. It's been almost a year since the NASDAX's all-time high, 16,057 on the composite, now hovering near 11,000. Since those record highs on the index, meta and DocuSign are among the biggest laggards, down 70 to 80 percent or thereabouts. And Dollar Tree and T-Mobile, among the biggest leaders, up 20 to 30 percent in this sour year. So what does the next year look like for the tech-in-year? index and which of these stocks might lead it to new highs, if any of them. Let's bring in Steve Grasso, Grasso Global CEO and CNBC contributor to trade the names. Let's start, Steve, welcome,

with Meta. Meta has been sort of an epic story this year. Which way do you think it goes from here? Well, I'm an owner of Meta, so I'm going to say that it goes higher from here, Tyler. it's had every headwind thrown at this, political, social, everything. The stock has shown that it's been beaten up pretty dramatically, and it bounced pretty effectively recently. Hit a wall again, though, hit some resistance. So around the 120 mark was as high as it got. Now it's backed up a little bit, meaning drop back down.

I think it's due for another bounce, but maybe a little bit longer in the tooth before we get there. All right, talk to me about DocuSign, which is another laggard. It's low. Is now a good time to get in? Well, Contessa, I actually used the product today, and I use it on a regular basis, but good product, bad stock. That for me is a bad recipe.

That for me is a bad recipe, but I'm very close to saying it's a buy. And the reason why I say that is the stock has to level off. It has not found support in the charts just yet, but it's very close. You have revenues actually growing on a year-over-year basis, which is good. You also have people starting to think about restructuring within the company, which is good as well. So I think we're close to a bottom. I don't know if we're there just yet, but we're very, very close to a buy. Not yet, though.

My question about them is, can they be something more than a one-trick pony? Yeah, I mean, that's the question that everyone asks about this and plenty of other things. My wife's been asking that about me for years now, Tyler. So, you know, it's a problem. Sometimes you've got to stick to your core competency, and DocuSign has a great core competency. It's just a matter of it was bloated by a growth valuation. Will you stick to your core competency, too, Mr. Grasso,

and you'll be just fine. Let's move on to Dollar Tree, which a lot of people love. We had a, I think it was Stephanie Link earlier this hour cited it as one of the ones she's watching. You know, this one is, this is the perfect environment, right? Rising costs, people are looking for their dollar to go a little bit longer, but it's also the one that's ripe for margin compression. So we've seen that in the name. This is one that I would think you probably have to scale back a little bit if you've owned it. You know, take your money to the bank, cash in that profit. But going forward, I think the headwinds are going to be.

prevalent in this in this name just due to margins coming in a little a little bit now with uh they they've they've made the dollar go as far as it can go and i think there's probably headwinds ahead hey steve uh team mobile has been a huge winner this past year at 30 percent year to date or so what do you like about the stock now or do you think that it's hit is about as high as it's going to go now i i think this this one was a disruptor right and now it's the number two carrier It's bypassed AT&T with its merger with Sprint. John Ledger did a fabulous job in running this and disrupting the entire industry, probably one of the top CEOs of our time, quite frankly,

especially in this space, he really shined well. They disrupted the mobile carrier industry. Now they're going after broadband, but they have to build a fiber optic network, and I think they'll be able to do that successfully as well. Mike Sievert has taken over from John Ledger. He's doing a great job himself. So I think there's further disruption ahead once they enter the home instead of being just a cell phone carrier. You know, Steve, I'm looking at this chart here.

You've got T-Mobile up 30%. You've got the NASDAQ down almost 30% year-to-date, more than 30% year-to-date. Give me a sense of whether you think for the NASDAQ, there's a turning point in 2023. Yeah, I actually have been a proponent of. a rally going into year-in. I think we are going to rally pretty aggressively going into year-in. And then when people start to really settle in with whether we're in a recession or not, or how deep that recession is going to be, I think the market could drop back down again. But I see a pretty aggressive rally, and that's going to take the NASDAQ higher aggressively as

well, Contessa. So I see the market rallying probably to 43, 4,400 in the S&P. by year end. That's aggressive. Steve Grasso, good to talk to you. Thank you, sir. Thank you. Up next, as tech companies layoff workers, one controversial firm is doing just the opposite. We'll tell you which tech company is hiring ahead on Power Lunch. Welcome back to Power Lunch. Here are a few stories catching our attention this hour. Shopper's satisfaction with Amazon is slipping.

It's according to a survey from Evercore, which found 79% of Amazon customers were extremely or very satisfied. Now, that's up from a pandemic low of 65%, but down 9% from peak levels about a decade ago. And last year, Amazon's customer satisfaction just plummeted to a record low on the American customer satisfaction index. It fell below the online shopping sites of competitors like Costco and Nordstrom. And why is it slipping in satisfaction? Well, the former people, employees, and experts who work there say there's a lot of frustration over search results and how they return it.

Also, I would say there's frustration over delivery. Like, they promise you two days, and sometimes it's two weeks. Sometimes it doesn't come on time. I'd still like to be in Amazon's position. Those are remarkable customer satisfaction numbers. And if you're coming in behind Nordstrom, which prides itself on just elite customer service, you're still doing okay, I mean, I think.

All right, let's talk about while Amazon and other, tech behemoths are cutting jobs, TikTok is bucking that trend, the Chinese-owned subsidiary of bite dance, committing to hire 3,000 engineers worldwide, although its CEO did say it plans to slow its hiring pace overall. Many of those jobs will be based in the company's largest U.S. engineering hub in Mountain View, California, where TikTok is looking to partially boost headcount by recruiting those recently laid off from rivals like Meta and Twitter, according to reports. The company obviously is, I think, I think it's based now in Singapore, maybe. Well, the interesting thing about bite dance is bite dances in Beijing, but TikTok itself doesn't really have corporate headquarters. They're all over the place, including Singapore.

They're a virtual company in that sense. I mean, in some ways you can do it. As long as you can dance from place to place, you got it covered. So TikTok will be hiring. Others will be laying off. And I assume they will pick up some engineers from Twitter, given the number of the, layoffs there. There's a lot of layoffs at these other companies, so there are people looking for work right now. And interestingly, because we've seen such a demand for skilled labor,

it'll be a big turnaround. Maybe TikTok will have an advantage now hiring now. Yeah. All right, folks, thanks for watching Power Lunch today. We appreciate it.