Power Lunch - Inflation soars, the market sells off and Power Lunch’s Housing Cost Calculator. 6/10/22

Episode Date: June 10, 2022

The Dow on pace for its 10th weekly decline in 11 weeks. The last time that happened was back in May 1932. A long time investors explains what that means for the Fed’s meeting next week and investors. Plus, a technical look at the S&P and whether the charts signal another leg lower. And, Power Lunch’s proprietary Housing Cost Calculator looks at how prices have shifted in the past year as inflation makes its way through the economy. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

You're listening to Power Launch in progress. Let's go to Kayla Taushy, who is with us to sum up the details of what the president said and for a little bit more context. There was certainly enough said, I think, Kayla, about inflation, but a lot said about other things that are of a more, let's just say, partisan, non-economic feel. Right. Tyler, we heard from the president today much of the same message, the same drumbeat on inflation and what he plans to do, pointing fingers at corporate America suggesting that his legislative package would go far in reducing costs. It's hard to see, though, as the data worsens, how this message lands any better with the American public, especially after this week we saw the Treasury Secretary on Capitol Hill asked about whether corporate greed and price gouging was responsible for inflation. She said, it's just simple supply and demand among consumers, and she did not dispute that there was not corporate greed that was contributing to that.

So certainly, if you have the Treasury Secretary suggesting that, then it makes the message for the president a little bit harder. Then he was also talking about the work that the administration is doing to unjam the supply chain. And certainly there has been a lot done to get containers off of ships and to get more semiconductor chips into this country. But as we look behind the curtain of this record, report, we see it's really not that simple. Take used cars, for instance. White House officials

tell me that even though there have been more chips that have come in to make more cars, now there are other parts that are stuck in China because of COVID lockdowns or in Ukraine because of the war there. And so after three months of falling prices for used cars, last month, the price of a used car went up again. So certainly there is a lot of problems in this report. There's a lot of problems for the administration to tackle the traditional message. is not going to be working here as the data just gets worse. But certainly we see the president believes there is efficacy there, and so he's going to continue pounding the table.

Tyler? All right, Kayla, thank you very much. Kayla Taushy reporting from Washington. Kelly? Let's check on these markets, which are off-session lows, but down across the board. The Dow's down 750 points. The low is about 100 points beneath that. The S&P is down 100, and the NASDAQ is down 376.

So, again, the NASDAQ is the hardest hit sector. The selling is broad-based across consumer. discretionary in particular. Tech and financials are also big laggards. These indices are on track for their worst week since January, as you can see. The two-year treasury yields soaring higher today to its highest level since 2008 after that hotter than expected CPI report. This is seen as one of the most sensitive measures of Fed rate hikes. So the market is expecting more now. The 10-year yield for its part climbing to about 3.15 percent. Our CNBC market reporters are standing by with more this hour. Bob Bassani on the stock sell-off. Frank Holland

at the NASDAQ focusing on tech and Rick Santelli on bonds and the spike in the VIX. Bob, let's start with you. Bottom line here, Kelly, is it's been a pretty awful day, but we have had a very modest little rally off of the lows. We were down to 3,900 about, oh, an hour, an hour and a half ago. And that, interestingly, was the old low that we hit back in May. That would be the 52-week low. So everybody's looking to stay above 3,900, at least the Bulls are.

Why do we get a modest rally? Well, two things. Oil rallied a little bit. Oil was 118. It went to about 120. So energy stocks sort of poked their heads up. A few names like EOG, Chevron, for example, were modestly positive during the day. See some of them have moved back down. But there's one group. This is the new tech. Oil is the new tech, essentially. The other was consumer staples, many of which modestly went into the green. So Proctor, Hershey's, Kroger, for example, all in the green. That's the group that helped. But don't kid yourself. A lot of sectors are round trips, I call them, head and shoulders. They were moving up at the end of May, moved up 10% or so and are now back down again. Those are new lows today on the transports, for example, new lows on the financial sector. Goldman was at a new low. Wells Fargo was at a new low. And new lows for REITs, Simon Property Group, Vernato, all at 52-week lows.

Interestingly, a couple of big movers to the downside, payment systems. I watch payment systems. There's sort of proxies for consumers' health overall. The theory here is people will spend less if they think things are going to be difficult. And you see PayPal, Block, Affirm, MasterCard, all weaker than the overall market today. Another group I watch a lot for sentiment or asset managers. You might think what have they got to do with anything. But if the economy turns down notably, there's often less trading that actually goes on.

So Tiro Price, Black Rock, Franklin, and Janus Week today. So S&P here, guys, we're watching 3,900 would be the old closing low on May 19th. We're above that right now. Back to you. All right, Bob, thank you very much. Let's go over to NASDAQ now. Frank Holland, tech stocks down more than 3%. Frank?

Hey there, Tyler. You know, docu science having the biggest negative impact on the NASDAQ 100. After a miss on profit, very soft billings guidance, that's money they expect to receive from customers in the near future. And CEO, Dan Springer, saying that inflation would hit its full year results and those inflation concerns. CPI coming at at a 40-year high. The 10-year spiking above 3.1% just broadly hitting tech.

Let's take a look at the XLK ETF covering big tech, the W-C-L-D cloud computing ETF, and even H-A-C-K, the cyber ETF, all hit hard by that 10-year spike. You see the reaction earlier this week and then later this week is that 10-year spikes. Cybersecurity before today becoming kind of a consensive defensive play, not sure if that narrative still works now. What we call the fang names, also not immune. Amazon getting hit the hardest. their online shopping and logistics business.

Generates just about two-thirds of revenue, giving them the most exposure to the consumer and that falling consumer confidence. Google outperforming this group at least down more than 2%. And of course, we have to look at what's working today on the NASDAQ. Chinese internet stocks, Pindu-Duo, the best performer in that group. Goldman's saying just yesterday it's time to get back

into those Chinese stocks. That's before the new Shanghai lockdowns. Also, Kraft Heinz, consumer staples generally seen as having the pricing power to pass along rising costs due to inflation. Kelly, back over to you. Frank, thank you very much. Let's turn now to the bond market where yields are rising. The VIX is near 30. Rick Santelli, what does it all imply? You know, rising is what balloons do.

Zoom, zoom, zoom is what this inflation is doing. It's like a rocket chip. You know, I brought out the numbers this morning pretty much across the board, whether it was CPI month over month, year over year, whether it's University of Michigan, new all-time law in confidence, not to mention the, one year and five to 10 year inflation, all hotter than expected. And if you look at a two-year no yield, it's up 23 basis points just on the session. As Kelly pointed out, back to 2008, and we closed here. We're up nearly 40 basis points on the week. Look at a 10 year. A 10 year hovering

now at 314 is up over 10 basis points on the day, 20 basis points on the week. Tuesday 10 spread. Just today alone is about 14 basis points flatter. It's nearly 20 basis points flatter on the week. These are unbelievably large numbers. And if you look to boon yields across the sea, it didn't fare much better. It's just as responsive to our numbers. We've led the charge on inflation. Everybody else, to some extent, is catching up. Look at a boon for one week. It's up 25 basis points on the week. And finally, the dollar index. It wasn't that long ago. Look like we're going to be at 101, maybe going back down even further. And what is it doing instead? 1.04 It is zooming. It's up nearly a penny on the day. It's up nearly two cents on the week.

These are huge moves. And the reason is clear. Inflation is back and it doesn't seem to be going away. Kelly, back to you. Rick, thank you very much, Rick Santelli. All right, CNBC contributor Josh Brown on the halftime report made an impassioned statement to investors saying the market has no real direction. And today's sell-off needs to be taken very seriously. you could say whatever you want about earnings estimates being fine that's because everything costs more you have to spend more money than you had to six months for the same crap that you're buying how do you not understand that and this idea that well the consumer is still spending they have no choice

they have no choice so listen this is not complex we've been in the bare market since the spring and we broke below the 200 day moving average we had the yield curve inversion right around the same time. It may not be a technical recession today for the consumer. They feel like it's a recession. And you see that everywhere you look. So I understand that unemployment, headline unemployment is good and people can find jobs. And that's great. But if their cost of living is rising in excess of what they're making at their job for them, it feels like a recession. Keith Fitzgerald, Fitzgerald Group Principal, Ron Insana, Schroeder Senior Advisor, CNBC contributor, gentlemen, welcome. What do you say to that, Keith, that Josh Brown just said?

It may not technically meet the parameters or the definitional cues of a recession. And the market may not meet the parameters of what is a bare market, but it feels that way. And I have to say, I agree with them. It feels that way. Well, you know, it's funny watching Josh, he is a smart guy, and I wanted to come out of my chair and go, go, Josh. He's right. If the Americans are feeling like their wallets pinch, it doesn't matter one end of the penny to the other. What the government says, what the inflation print is, what the latest report is, what Yellen says. Who knows what Powell's going to say next? What the average American knows and feels in their wallet is my breakfast costs 60% more than it did 12 months ago. My gasoline is more than doubled. I now have to worry about getting to work. putting a roof over my head, paying for my food, where's my insurance, you name it, they got to worry about it. That's why the numbers are so bad. It's all about psychology, and Josh nailed it. Ron? You know, Josh's performative elements notwithstanding, I don't fundamentally disagree with

this perspective, except I would not say that we are yet in a recession, technical or real. I think that, you know, the markers for recession, inflation notwithstanding, are a meaningful jump in unemployment and a contraction in GDP. So yes and no. I mean, it's it absolutely feels bad. But we did have a contraction in GDP in the first quarter. Yeah. And, you know, in a weird way, that was that was a technical contraction. I agree. That was not, you can't have a recession when you're hitting new lows in unemployment. That's just not consistent with the definition, the actual definition of recession. What I fear is that the Fed is going to pound this nail until we actually go into a recession. It may be a deeper one.

than we're expecting the yield curve just suggested is flattening. The stock market's falling. Certain commodity prices like lumber have plunged. So we are getting leading indicators that a recession may well be in the cards. And I think that's what the worry is. The problem for consumers is not a weak economy. It is rising prices. And so in that sense, it's an inflationary problem that's going to be solved, sadly, I think,

with a recession. Keith, if I am an investor who has held on and diversified, I've got my money in a plan that I've felt comfortable with. Are we in a bare market? Should I be considering selling or have I missed that opportunity to take capital off the table, which is probably what I should have done on January 4th of this year? Well, you know, hindsight is 2020. That's what they say. And the other saying that comes to mind is no good deed goes unpunished, right? I mean, you know, if you look at history, I think the thing you need to ask yourself is how much time do I have in front of me, not where is this market been? Because one thing we do know, and history makes abundantly clear, Tyler, is that this stuff, as bad as it's going to get, eventually passes. So what I like to do is when I'm in doubt, I'm going to zoom out.

I'm going to look for the very best companies I can find. I think you're probably behind the eight ball if you want to sell now, unless you've got something you absolutely have to generate the capital for. Otherwise, I'd play offense. I'd be looking at where we're going to be in three and five years from now. That's hard to imagine. It's tough. It's scary. This feels bad.

But the psychology of is you play to win. You don't play not to lose. Ron, let's go back to the Fed's policy mistake here. I mean, is there anyone who still thinks the bigger mistake would be not tightening enough right now? Because this is, you know, what we learned this morning is pretty bad. The consumer sentiment report is terrible. It's at a record low. This is like a 75-year-old series.

You know, real wages are down. real spending is down, consumer sentiment and expectations are down. I mean, it's hard to see why the Fed tightening would make this worse instead of. It could have potentially headed off and helped it not get this bad in the first place. Well, I tell you, and you and I've gone around on this a couple of times. I mean, it's like, I don't know that raising interest rates would solve any of the underlying issues that caused inflation in the first place. And I'm not going to back away from that perspective.

I've been wrong on where inflation is going. Look, the Fed could raise rates 100 basis points at every future. meeting and it's still not going to get you more semiconductors, it's still not going to get you more labor, it's still not going to get you more cars or more homes. In fact, quite the opposite will happen. So they're going to engage ultimately in either a Volker or Vietnam-style strategy where you destroy the village to save it. And I don't know what the administration or the federal government could do other than create

some sort of martial plan to boost supplies of materials and finished goods that are in short supply and then that's not a near-term fix so as one of my colleagues once said you know if all you've got is a hammer everything looks like a nail and so the fed's going to keep hitting the nail until it appears to work yeah i guess and keith maybe you can weigh in on this as well but the fact that we let's just call what it is over-stimulated in response to the pandemic is why we have these problems in every part of the economy and not just an energy

right now well i think ron's be ron's right on it and i think he's under emphasizing the significance of his point The Fed can raise rates until the cows come home, and it will do nothing to address the underlying fundamental problem. We've got to get money out of the system. This is not being caused by too little money. It's being caused by too much money. We've got to get people back to work.

Maybe there's a modern version of CCC that can be formed and go immediately into our infrastructure, stuff that is going to improve supply chain logistics. They've already begun working on. And then finally, they can immediately reverse things. Politics aside, policies aside, transformation aside, they can get back to American energy production. It would at least make a dent in the gasoline, and that would go directly to American consumers.

So I think Ron's point is really interesting. The Fed has got a policy problem. It's not got a rate problem. It's not got a risk problem. They can't back away from this because that's going to be tantamount to admitting they've made two huge errors in a row, transitory, and now what are they going to do about it, and they're behind the eight ball.

And on that note, right? Sorry. There's so many points to make on this. And I partly agree with Keith. But the problem is we don't need a back-to-work policy. We have more jobs than we have available workers. We need more people. And again, the Fed can't print people, right?

That's a real issue. That's, you know, a labor market issue. The Fed can't make computer chips. They printed too many jobs. You mean 3D printers can't make people? That's where Elon Musk is going to rescue us with his body. All right, guys, thank you very much. Appreciate it.

What was that statistic you had in the last hour, or maybe it was at the top of this hour, about the number of weeks in a row that... Yes, for the markets, for the Dow, this is down 10 weeks out of the last 11, and we have not had a stretch like that since the Great Depression. That was the number. Unfortunately, and that's from our desk, so thank you to Peter Shacknow, I think, who had that for us today. And with the market selling off on that hotter than expected CPI report, let's take a closer

look at what the charts are saying. Are we anywhere near a bottom now? Jessica Inskip is director at Options Play. Let's just run through it, Jessica. You got any glimmers of hope for us? Yeah, I'd love to run through it. So I think it's important to take a step back and look at the overarching picture of the S&P 500. And we want to focus on a broad-based market because that's where we can see true trends

and health of the economy, especially from a technical perspective. So what I wanted to share with you is a five-year chart with a weekly moving average. And if you notice that weekly moving average, every time the market hits a bottom, it actually briefly goes below this moving average before it rallies and goes above. And additionally, whenever the market is above this moving average, it's a secular bull market overall. So think about the way the feds even looking at the market when they're trying to understand raising interest rates and all. We're still up from those lows from that pandemic. And overarchingly, even though it's a bear market, it's a secular bull market. And if you look at the overall picture as the S&P 500 is over that 200 weekly moving average.

All right. So that's one sort of aspect. And where does this, where's the takeaway? Yeah. So the takeaway is where are we spotting the bottom? So if it's going to hit, if any time the market rebounds and it gets back into Rally, rally department or Raleigh territory is when it goes above this line. So since this is a calculation, if we find an area of consolidation, so the S&P 500,

right now is supporting 3,900. We have more value there. Those averages are going to intersect at some point. So right now I'm spotting 3,500, but I'm hoping that we'll find an area of support like we defended today around 3,900 that will move that average up. And as soon as those lines intersect, which is the market and the 200 weekly moving average, then that's where I will call the bottom. All right. So you're not ready yet. And again, we see potential downside there, but also some areas right here that could help us avoid maybe going back to 3,500. Quickly on energy, what are your thoughts there? Yeah, I think that's something important to watch out for because what's really contributing to

inflation, like everyone's been saying repeatedly, is that hot labor market and high energy costs. So energy is a great sector. We look at XLE. It's something that's definitely performing well. However, for the overall broader markets to perform better, we certainly need to see a pullback in energy. So it's something to watch, but something to be bullish in the short term. And Jessica, can you just give us a quick read on Apple as well? I'm sorry that I've asked you to do all of this quickly. I don't know.

It just feels like that kind of day. We want as much information about the market as possible. Apple is kind of a bellwether here as much like you say absolutely energy is too. What are the Apple charts telling you? Yeah, Apple's a great stock to watch. It makes a huge component of the market. And keep in mind, you know, even if we're comparing the market over and all to the Great Depression and looking for those downturns.

that happened prior, there's new securities in the S&P 500 as well. And one of those is Apple that makes up a huge chunk of the major indices. Apple is something that's easily tradable right now, is what I'm going to call it. It finds areas of support and resistance. And that right now is 137 to 150. And it's like a ball bouncing from floor to ceiling. So if you're looking for something to trade, Apple is a really great one right now because it's just not falling below that 137 area and not going above 150. So it's just something to watch and something that could be interesting to trade short term. All right. Jessica, thanks. We'll leave it there. We appreciate it.

All right. Ahead, more on the sell-off today. The Dowdown about 700 points plus the inflation ripple effects, how rising prices are hitting home builders and every component that goes into constructing a new home. Some of the biggest laggards in the S&P 500 home builders' ETF today. There you see their names, including Lenar, Flore and Decor, D.R. Horton, and Mohawk. Welcome back today on Power Lunch. We're launching our housing cost calculator. Every week we'll walk you through different rooms and parts of a home and look at how prices have shifted in the past year as inflation makes its way through the economy.

Today we're taking a look at the structure of the house and we'll look at the kitchen as well. So let's kick it off with the materials used perhaps the most discussed lumber. Lumber prices have come down sharply in the past few weeks, but over the year, they're still up 22%. Roofing costs are up 15% since before the pandemic. Almost every kind of concrete is up 7% or more, and insulation for your home is actually up 17%. The industry is saying that material, labor, and shipping delays won't normalize anytime soon, i.e. don't expect these prices to reverse course quickly. So moving on to another part of the house, let's examine the kitchen. Stoves are up 14% over the past year. Refrigerators up 9%,

cabinets up 13% and countertop soaring 11% since 2021. The National Kitchen and Bath Association telling us plywood is harder to get because prices are up fourfold. Material availability continues to be an issue and contractors are resorting to clients' third or fourth options. They all Also note, those increased labor costs, which are further pressuring prices. Next week, we will bring you, Tyler, the bathroom and the bedroom. I can't wait. I can't wait. We won't bring it to you, but we can tell you what's been going on there.

I mean, every one of those categories was a double-digit increase. And fairly consistent. Even despite the fact that lumber has come down off if it's highs from last year. Yes. Oh, man. It's breathtaking. It is. ahead on power lunch, more on the market sell-off. With the tech wreck continue, we'll speak with

City's global head of investments on why they think the group will rise again. But first, as we had to break, check out the cloud stocks docu-sign leading the declines. I just did a docusine an hour ago. Down more than 23 percent. More on that name in three-stock lunch ahead. Plus, fintech, slam, coin base, and block leading the declines there. Power lunch will be right back. All right, welcome back. The Dow remains about 700.726 lower after inflation came in hotter, much hotter than expected in this morning's report. Is a recession inevitable? And what would that mean for your investments in the months ahead? Let's talk to City's Global Wealth's chief investment officer, David Bayland. David, welcome back. Good to have you with us. I note in your notes that you say you think the economic expansion can continue if, one, the consumer remains healthy. And two, the Fed can moderate its current aggressive stance against inflation. Well, we got a consumer report today that indicated that the consumer was not feeling particularly ablient. And number two, why would the Fed moderate its aggressive stance against inflation in light of today's numbers?

Well, today's numbers actually met our expectations because the cost of energy and the cost of agriculturals was exceptionally high this past month and probably has peaked. And we don't expect inflation, by the way, to come down until more than, you know, six and a half percent by the end of this year. So the only reason for the Fed to actually pause is because a lot of the increases of interest rates have already been priced into the market. And right now we already see the effect that that's having on consumer. It's on having on home prices on new mortgage applications. And if you think about it, that's already having a positive impact on the supply and demand of all other goods and services, right? When you think about it, we're seeing stores that are full of inventory. We're actually seeing Target report that they actually have too much inventory, and we're also seeing consumer demand come down.

So the question is, can the Fed be patient to allow inflation to naturally subside, or are they going to crush consumer demand and cause unemployment as a way of getting to the same end? If you have, as you say there, consumer demand coming down modestly, as evidenced by what Target said earlier this week, and other things like that, doesn't that, doesn't that, sort of tell you that a recession is a higher than the normal probability? We also agree that it is a higher than normal probability. The question is whether or not the Fed thinks that that is absolutely necessary, right, to deal with this inflation. The critical thing to look at whether there's going to be a recession or not is actually whether or not we're going to see negative growth, actual destruction of job employment. Because right now, right, consumer demand leads employment. We expect employment to naturally, you know, the heated employment to naturally come down.

And if all of that occurs and the Fed doesn't raise rates more than, let's say, another 100 to 150 basis points, we think that that can be tolerated because it's priced into the market now. If the Fed, however, says we've got to attack inflation, it's way too high, the only way to do that is through a blunt instrument, which is both reducing interest rates and taking liquidity out of the bond market. And if it chooses to do that, you know, that is a recession. And we consider, you know, the middle of the road scenario to be about a 50% probability and recession to be about a 35% probability. And that is a high level of risk that there could be a recession.

So, yeah. I'm sorry to interrupt. Please finish your thought. No, the other thing I want to mention is that, you know, this idea, you know, that a recession, right, will be deep and long and all of that. I also think is something that everyone assumes. It definitely will have an impact on stock prices for a short term, you know. But the fact of the matter. is that from a consumer standpoint, you may see a very relatively, you know, narrow dip in the,

in the markets. Give me a quick 45 seconds on, if I, if I buy these hypotheses of yours, what I should do with my capital right now? Well, this is going to be a little bit contradictory. So first of all, we think that bonds are back, meaning that we are at or near peak interest rates literally, you know, today. You know, we hit the lows that we hit a few weeks ago again today. And if you think about all of what we just talked about, the economy slowing that,

the Fed potentially increasing rates too much, then bonds will actually be a great place to be because they doubled in yield a year ago. They doubled it again in yield this year. And every single time that we've seen from 1963 till now, both stocks and bonds go down in value at the same time, and that's only happened five times. We have seen bonds appreciate and actually do very well. And the reason why people have to get invested in bonded, in our opinion, is that their cash could lose in our scenario 10% of its value over the next two years.

So by buying bonds, they avoid that. Second of all, there are parts of the market that are undervalued and parts where growth and profitability are going to continue all the way through whatever happens. For example, areas like pharmaceuticals. And those should be put into portfolios now as well. David, thank you very much for your insights today. We appreciate it. Have a good weekend. David Baylon.

You too. Thank you. You bet. Coming up, we have more on today's market sell-off and the sector is getting hit the most by rising inflation. But first, check out some of the media names, which are actually leading the declines in the S&P, like Warner Brothers Discovery down more than 144% right now, I should say, down 4.5%. Paramount Global, Walt Disney, even Comcast lower on the day. We're back after this. Welcome back to Power Lodge, everybody.

Markets are selling off as inflation hits a fresh 40-year high. The S&P 500 right now down 2.3% back to 3925. And while stocks are falling, bond yields are rising with the 10-year at 3.15% and the two-year soaring to the highest level since 2008. There it is trailing by only 10 basis points. These rising rates are further problems for housing stocks, which have already been hit hard by inflation. Builders and landlords taking a hit today. Diana Oleg has more.

She joins us from Mooresville, North Carolina, just outside Charlotte this afternoon. Diana? Yeah, Kelly, as if the home builders haven't been hit hard enough already, most of them down over 30% year to date. Take a look at the home building ETF. That's ticker symbol ITB. This includes both the big builders as well as home. Home Improvement retailers like Home Depot, Lowe's, Sherwin Williams, all down about 4%. As are the big names like Lenar, D.R. Horton, and Pulte, all down 4% on the day.

It's the broader market, but as you said, it is also rising mortgage rates. They took a dip back in May, started rising again in June, and today really took off. We hit 5.85% more than 20 basis point rise today on the 30-year fix. That according to Mortgage News Daily. A year ago, it was around 3%. Now, also take a look at the big public landlords, American homes for rent and invitation homes. Those stocks are also getting hammered, even though you would think they would be kind of the opposite play. I'm here at a brand new community by American Homes for Rent, a public landlord now building its own homes,

more than 5,000 in 16 markets over the last five years as demand and rent soar. But none of that appears to be helping the stock. As interest rates rise, real estate is an interest rate sensitive industry. and the value of real estate is inverse to the interest rates. So all of real estate is down. We have actually performed better in the last six weeks than the real estate industry as a whole. Even as inflation is hitting the housing market,

investors are still pouring into single-family rentals, about $50 billion estimated this year alone. According to John Burns' real estate consulting and rents for these single-family homes, they are up 13% year-over-year. Wow, Diana, thank you very much. Diana Olik reporting from North Carolina. Coming up, today is three-stock lunch trading some of the biggest laggards today and this week, including former Wall Street darlings like Netflix and DocuSign.

There you see them. That's coming up next on three-stock lunch. Welcome back, everybody. Let's trade some of the worst performers today and for the week to see if any are buying on the poll. Back on our next guest says they are. DocuSign is down 20% week to date. The Caribbean down 17%. Netflix off 7%. Let's bring in Tim Seymour of Seymour asset management.

All right, Tim, let's start with the good news. You look across this landscape right now, and what names steps out, jumps out to you as a possible buy here? Of those three names, Netflix is the most defensible. You know, $12 a share earnings in 23, if you believe that. And I think we've had a chance to reaffirm some of those EPS targets. It's a 15, 16 multiple. I think the Goldman downgrade, the quote is something along the lines of,

it's a show me stock with few near-term catalysts. And I would buy that. But I would go back to that even when Netflix was a stock that people put a much higher multiple on, it was a stock that people didn't necessarily feel their subgrowth had to be linear. And I just think, look, the fact that they're going to try to remedy some of the multiple devices or the password dynamics, that was a sign of weakness, but it's certainly not something you should penalize the stock for, if anything. that may be reason for some upgrades. I think we've priced a lot of bad news in here.

Let's go to the other two. One is DocuSign. It's down 72% over the past year. And the other one is Royal Caribbean, which just can't catch a break. Yeah. No. So, look, Ty, on Royal Caribbean, I would be more neutral. And I actually think that some of these reopening stocks, and I particularly like airlines. But I think if you listen to their updates in early May, March and April were essentially, getting them back to pre-2019 COVID levels and where at least you saw on the revenue side and that they started to see some inflection in free cash flow. So the stop of the burn, but right now, it's a story where we're concerned about dilution and equities. And I think that's the dynamic here. And so you wouldn't be a buyer of DocuSign? I think DocuSigned for a company that today beat on revenues, on Misson EPS, that is what used to work. That's everything that's failing right now. They still need to show profitability. I think while a company that is going to be here tomorrow,

company whose multiple could go lower. Well said, beat on revenues but missed on EPS, and that is an unforgiving market for that. Tim, we appreciate it. Thank you, sir. Okay. Our Tim Seymour joining us today on what has been a very tough day tie for the market. And you look through a lot of the stocks that we reference and you see these enormous, make you gasp declines over the past, 72% on DocuSign, 62% on Netflix. A heck of a lot of them are Not just in bare market territory, but crushed territory. You want to talk about gasping, rates, inflation? Thanks for watching, Power Lunch, everybody.