Power Lunch - Is Cash Still King? 3/29/23

Episode Date: March 29, 2023

Markets are higher today, as investors seem to be hoping the worst of the banking crisis is over. Is recent bearishness starting to lift? We’ll explore. Plus, if pessimism around stocks is lifting, is it time to change your investment decisions? We’ll talk to the head of the Pacer U.S. Cash Cows ETF about where to invest now. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon everyone and welcome to Power Lunch alongside Kelly Evans. I'm Tyler Matheson. Coming up today, markets are higher. Investors seem to be hoping the worst of that little banking crisis is over. We've seen high levels of bearishness in the market. So is that pessimism starting to lift, Kelly? And if so, do you need to change your investment decisions? We'll talk to the head of the cash cows ETF.

Should you still bet on companies with steady cash flow or is the risk on trade overtaking it? Before all that, let's get a check on the markets though. green across the board with the NASDAQ and tech leading the way again. Let's get caught up on some of the big movers today. Dom Chu, we start with you. All right, so let's start with that tech trade, some bigger games in those computer chip stocks, like Micron, which is up 7.5% right now holding near its session highs, the memory chip maker reporting more disappointing quarterly results,

but said that it is planning bigger job cuts than previously expected. That often boost stocks given more focus on cost controls or at least the perception of it by management and others, so Micron shares up 7.5%. Also, Carnival Corp continues its bounce back campaign after a rough post-earnings report stock drop. Those shares are up again by nearly, you can see about 5% right now tacking on to yesterday's big gains. Today, it's analysts over at Susquehanna who upgraded that cruise line operator to a positive rating from neutral. They cited anticipating operating profit recoveries into next year. And then we're going to end with the egg exceptional move in shares of Cal Maine foods up about five and three quarters

The egg producer and distributor is up after being up as much as like 11.5% at one point today, guys. It was a much better than expected quarterly report driven by what else. Sky high egg prices. A lot of Main Street America knows what I'm talking about. We'll have much more, by the way, on that CalMaine story later on in today's Under the Microscope segment at the end of the show. So keep it right here for CalMaine. Now let's send it over to Christina Parts and Eveless across the studio for more on the other trades. I'm sure that report will be excellent.

But some retailers today aren't feeling the love from UBS. Analysts are downgrading Burlington, raw stores, urban outfurtors to sell from neutral. And that's the reason why you're seeing a sea of red right now. They're betting those names will fall at least 23% more from last night's clothes. Why? Their research shows consumer spending started to slow. And the Fed hikes will, according to them, have a more negative impact than previously thought. In other words, all that bad news still isn't priced into these names right now.

And that's why they prefer names with exposure to footwear because it seems to still be strong and, of course, high-end consumers. Nike Skechers top of their list. And you can see those shares, well, Nike up 1.5% sketches pretty much flat. But not everyone has the same concerns as UBS, with many investors right now jumping into some riskier names today like draft kings, Peloton, micro strategy. Micro Strategy in particular, which is up 93% year-to-date and 10% today. That rallied with crypto. So that's a falling in trend. And then even a name like Carvana with over 50% of its float shorted, it's trending,

3.4% higher as investors, maybe quick to forget about those banking troubles or just want some risk right now. All right, Christina, thanks. Let's get to Washington now where the House got its chance to dive into what went wrong, causing that recent banking crisis. Steve Leesman has been closely watching the proceedings for us, and he joins us now. Steve, what are the headlines? So I want to say this, Kelly, there's been two days of intense hearing. I've listened to almost all of it, all about the failure of Silicon Valley Bank, with lawmakers splitting mostly along party lines on the question of whether the failure was a one-off or a systemic

problem. Here's the battle that we've heard over the last couple of days. Republicans largely focusing on the idea that it was a one-off failure, concentrated deposits in the tech business for SBB, bad interest rate management, and a colossal supervisory failure by the Fed. All of that is true. Democrats, though, probing the issue of systemic failure, not enough liquidity in some banks, for this era of fast-moving money. Whether banks, mid-sized banks, should be subject to the same stress test as big banks.

Some of them were exempt after the reformed to the law in 2019. And mid-sized banks, where they're realizing also can be systemic, maybe they should have more liquidity concerns. Now here's Republican Congressman Blaine Luccahmeyer chastising the Fed Vice Chair about the need for more rules. I don't think we need to look at more rules until we figure out which rules were not being enforced, what messages were not being delivered to the bank, to be able to do your job.

At that point, then we can take a look at see what you need to something else. But for you to make the statement, we need more rules and regulations, how about enforcing the existing ones first? All right. Now, here's Vice Chair Barr responding that money can flee a bank more quickly these days. I think you're raising absolutely important and critical questions about the role of social media, the role of networks, depositors with each other, and the potential. And you're working on a real-time payment system that's going to be right.

for a problem like this with Twitter. So the answer to this debate critical for bank investors because it can ultimately determine how much additional regulations, if any, how much new liquidity rules will have to be borne by these mid-sized banks as a result of these recent meltdowns. Guys? I mean, Steve, I guess the sort of question or takeaways

become a little bit of what we were discussing yesterday and already today, that if there's no appetite to actually backstop all up, uninsured deposits. Where does that leave us? We're in a very ambiguous regulatory backdrop right now where I just like keep watching the regional bank trade. One day they trade like there is no backstop. The next day they trade like there is. It's confusing. Yes. So Nellie Lang, the Undersecretary for the Treasury was asked about this again today. She said our actions are designed to show that all deposits are safe. So there she is again promulgating this idea of the implicit guarantee. And what's interesting

about this, Kelly, is that essentially she is saying they have done something. She's telling Congress they've done something that Congress has said only it can do. But what I'm hearing, Kelly, is I'm not hearing lawmakers complain about this, where you say, why are you sort of implicitly guaranteeing

all deposits when we're supposed to do that? They're not complaining about it. I think they're happy with the effect on the banking system of the simplistic guarantee without having to act. All right, Steve, thank you very much. Steve, thanks again. One lawmaker from the House Financial Services Committee says he wants a bipartisan investigation into the collapse of Silicon Valley Bank

because the Fed could have applied more vigorous standards, but seemingly chose not to. Joining us now from the hearing, Representative Josh Gottheimer of New Jersey. Congressman, welcome back. Good to have you with us again. Good to see you. Today we had regulators in front of the committee, so it makes perfect sense that you would be questioning and maybe critically questioning regulators. But there was very little critical. criticism of the bankers at Silicon Valley Bank who brought this in many ways upon themselves. How much responsibility do the bankers have as opposed to certainly the regulators who did seem

like they weren't regulating sufficiently? No, I think it's a combination of both, and many of us have raised that point, right? You obviously had a bank, had a very questionable asset mix that grew very fast. They didn't have any risk management oversight in their own bank, right? For months, the position was over. The point we were having with the regulators there is you had tools fed to do something about this and you didn't do anything and why not? Right? It's not as if the tools didn't exist. It's not as if they even they didn't know that there was a problem in Silicon Valley Bank. They did They just didn't do anything about it. They didn't use all the tools in the tool chest and what we're saying is

Why not try to get to the bottom that to prevent it from happening again to make sure the fed's doing their job and to the point that was made to prevent a systemic broader problem but this was a very unique circumstance in the case of of this bank with these asset mixes. We just don't want it to spread like wildfires, people pointed out, as assets are moved out of smaller, medium, and regional banks. We don't want a system where those banks are too small to survive. That would, to me, be the exact opposite of what our goals have been. And as Steve just pointed out from the hearing, money can move in and out of banks

much more quickly today than it did in the past. He ended, Steve, that is. I made that point and the social media point, right? Yeah. That social media point that's been made, and I made it to the committee now, like the fact that you had $40 billion leave in a few hours because it's spread like wildfire, not just within the small community there in Silicon Valley, but of course over social media. And you can, I asked Treasury, Assistant Secretary Lang about this exact question.

What are we going to do now and how's the Fed and Treasury thinking about this? How should we in Congress be thinking about preventing runs that could happen in a flash second because of social media? Runs that could happen in a flash second. depositors who are covered only up to $250,000. Is there appetite in Congress to raise that deposit insurance limit from $250,000 to a million or what? How do you keep depositors faith in the system sound? So I think that point you just made is the key. We can't have a system where depositors don't feel that their money is safe, right?

So we all understand that. That's something, and I work with both sides of the aisle, it's something that folks understand. The question is, how do you do it? I believe you've got to find a way to raise that insurance number up. Do you then, if it's significant, do you then price for the size of that risk of an account? That's one idea that's been thrown around. But I think we do recognize, as was pointed out by Lang today, is you can't have a system

where people are worried, right? That's a systemic threat if we suddenly, people in small, medium, and regional banks don't think their money, their deposits are safe overnight. That would be a systemic problem. You then would just go back to a few big banks that are too big to fail. So we have to figure this out as a system. People right now need to feel comfortable. We've got to stop all the money that's flowing out of those smaller banks and stabilize things. But the Fed also has to do its job. And the FDIC and state regulators have to do their jobs and watching these banks of all different sizes and looking at their asset mix, making sure

there's proper oversight, and that to me is an immediate concern. What about Congressman, the commercial real estate issue, office exposure in particular? I mean, Valley Bank, Blue Foundry, just different names that might be within the district, for instance. What should these institutions be doing? And if there are going to be losses out there, I mean, other than a national go back to the office campaign, which I don't think we're about to have, the trend seems. And it seems like there's going to be low values. And yesterday it was bond losses.

Tomorrow it's going to be commercial real estate losses. The next day will be something else, especially if the economy weakens. So what happens as this continues to unfold? Well, as you pointed out, you're going to have bumps. More people are going back to offices. And, you know, I believe this is why we actually have to be watching very closely across the markets, you know, across all the banks and making sure. that there's appropriate mix and that banks are safe and short up.

But that's where the Fed has to play a key role and backstopping. And listen, they stepped in. We've seen, I think, it took a bit, but they did step in over that weekend and calmed things down, calm the waters down. We've had a few blips since that were then addressed. That's the way our system is supposed to respond. Now I think we need to take a step back and make sure a longer term we're okay. That means having the right debate and the right oversight where we're doing today before the committee and before the Senate.

But it also means then thinking about how we should do insurance longer term. And that's a discussion debate we should be having. Unfortunately, took this to spur it on. But I'm glad that we're now having that and figuring out what the Fed did wrong here. Chairman McHenry was incensed, I guess, is a possible way of putting it over what he described as a lack of transparency over the weekend when SVB was engineered. out of existence. He says there are no notes publicly available from the regulators' emergency meetings over the weekend, and that lack of transparency has a negative effect on the public view of the safety of the financial arena. How do you feel about that? Was there enough, is there

enough transparency about what was going on on that weekend when regulators finally stepped in? Not yet, which is why I and others have called for an investigation. It starts with this hearing, but it's got to go a lot deeper. But, you know, there was a lot of questions. We were all talking over that weekend. And I spoke to the chairman, I spoke to the ranking member. I spoke to a lot of banks, smaller, medium, regionalized banks. We're all having investors and consumers, right, and many nonprofits. And we're all having the same discussion of what, they were all panicked.

What's going on? Because it was quiet for a long period, as you know, over that weekend. And a lot of money left smaller, medium regional banks over the weekend, as we have seen in the numbers. That's a problem. We should understand why we didn't have better information. especially those of us on the committee. And we're going to want to have answers, which is why we're doing this in-depth investigation.

Finally, Congressman, if you're laying the blame with the Fed, then should they be stripped of their regulatory oversight? I mean, this has been kind of a festering issue for a long time. They lobbied for it, retained that authority, and now it seems as though you would suggest they, you know, did not do good by it. Well, that's the immediate, well, here let me just put a fine point on this. As you pointed out, one, Silicon Valley Bank, right?

Number one blame of, and I believe we're going to find out exactly what happened there. And it seems and it appears, which is why we're having investigation, that the Fed had plenty of tools they didn't utilize, right, including stress tests, looking at the asset mix. They knew there was a problem. And, right, they had a lot of authority they didn't use. We're trying to figure out why. We're going to get better answers.

And then we should figure out what we need to do from there. It's a state charter bank, as you know, that also makes a, complicated in certain ways. So there's lots of factors here we need to figure out, which is why we're doing these hearings. It's why we need a full investigation, and it's why we need answers, why the Fed also announced that they're doing their own investigation. We're very eager to see the results of that investigation. In the meantime, our goal is to keep depositors and consumers feeling safe and comfortable with their deposits and their banks. And that to me is paramount for our country to make sure we keep a stable bank and that we preserve small, medium, and

regional banks in our country, which I think are key to our communities. answer in response to the question. Well, we'll come back after we get their reports and I think we should talk further. Hopefully you'll have me back. We will indeed. Congressman Gottheimer, always nice to see you. Thank you. Good to see you. And come, you bet. Coming up, check out shares of the Pacer U.S. cash cows ETF, moving up 11% in the past six months. Cautious investors seeking comfort in companies with strong cash flows. Could that strategy work for the next six months. Compare that 11% gain in cash cows to 45% gains in Bitcoin. It's higher again today. We will tell you how the crypto market is turning bad news into good news. Stay with us. We'll be right

back. Welcome back to Power Lunch. As the Fed continues to hike rates and the recent stress among regional banks could slow the economy, investors are looking to companies that can deliver high free cash flow yields. With over 12 billion in assets in its flagship fund, the Pacer, U.S. US cash cows ETF, known as ticker cows, COWZ, is one of the places they're turning to. Let's bring in Sean O'Hara. He's president of PACER ETFs. Sean, first of all, can you contextualize demand for us? How strong is it these days?

For our ETF, it's extremely strong. We've had tremendous inflows. I think we've had over $3.5 billion worth of net new inflow so far this year, which puts us sort of at the top end of the list in terms of the big ETF companies out there. I think what's driving it is that, you know, in this environment, you know, where we're sort of seeing a repricing of the overall stock market, moving from a high P.E regime to hopefully settling down at a more realistic level, using free cash flow and free cash flow yield builds a portfolio of high quality stocks that generate a lot of cash that have a high free cash flow yield and can pay dividends and tend to perform well in these kinds of environments. Sure. Energy, health care, consumer discretion. Before we dig into your holdings, the first two questions I always ask are what are the fees? What's the turnover, especially for something like this, is a little more actively managed? Yes, so the fees 49 basis points.

And the turnover is actually somewhat high. It's about 30% a quarter. I think it was slightly more than that last quarter. But because it's inside of an ETF, because of the way ETFs are able to rebalance themselves, we're able to rebalance the portfolios without capital gains worries. Let's talk about your holdings in energy, which are, tell us, let's start by asking,

what percent of the portfolio is in energy, why, and what are the leading names that you have there? Sure, it's about 34 percent. It went up a little bit on our last rebalance, probably mostly driven by some of the sell-off in energy during the first quarter. We own names like Chevron, Occidental, Marathon, Valero, you know, what did I say? Exxon, Chevron, Occidental, Valero, those kinds of names, the big oil producers. reason they're in the portfolio, Tyler, is that when you look at the amount of free cash flow that the energy sector is providing and producing today, it's pretty astonishing. I mean, it's not really being driven by the price of oil. That's certainly contributing. But what's really contributing is this sort of change in attitude with regard to the management of these big energy

companies. They're not taking every dollar that they generate and poking a hole in the ground, hoping to find more oil. They're sort of taking a more conservative approach to their CAPEX and scaling it back. And so that reduction in CAP-X results in excess free cash flow. And so, you know, in general, as a sector energy trade's cheap relative to the overall market. Our energy names trade in the single digits. They generate huge amounts of free cash flow, and they're buying back stock like it's going out of style, and they're increasing their dividends.

As I look at your top 10 holdings, they are heavy on health care and energy, as I mentioned. But one company jumps in there, and I wonder why, and whether you're satisfied with, and that is Zillow. Yeah, you know, Zillow is an interesting name. I suspect that it probably won't stay very long. It will probably get dragged down by sort of the slowing of the overall real estate market. But I think their free cash flow increased fairly substantially in the run-up in terms of housing prices. And, you know, if things tend to reverse themselves, then I would suspect that they'll wind up rotating their way out. We rebalance a portfolio every 90 days.

We don't really wet ourselves to any names. We're very formulaic, 100% rules-based. So when we run our screen at the end of a quarter, what's supposed to be in the portfolio of the top 100 stocks, for example, out of the Russell 1,000 wind up into portfolio. And if you don't make the cut, you've got to go. Everyone else goes, sounds like a lot of work. I'm buying the triple Q's leveraged, Sean.

Taking it to the moon. Just kidding. It's great to have you with us today. We really appreciate it. Well, great. Thanks so much for having me. Sean O'Hare. All righty, coming up, crypto investors making the best of a bad situation.

Prices all higher today, even after the CFTC filed a suit against crypto exchange finance. Why? Well, it legitimizes crypto as a commodity. We'll explain. Plus, healthy returns just last hour. We spoke with some of the biggest voices in the health and medical field. Meg Terrell will join us with some of the key takeaways from that very fascinating event. Power lunch will be right back.

All right, welcome back to Power Lunch, everybody. Stocks are higher across the board today. The industrials, Dow, that is, putting on a nice gain of 200 points. But in percentage terms, the S&P 500 is up even more. And even more than that is the NASDAQ composite. Smoke may be clearing on the bank crisis. Investors may be increasing their appetite for risk. Let's see what Bob Bizani is hearing at the NYSC.

And Tyler, you're absolutely right. So we're heading it into the end of the quarter and some interesting things are happening. The two most important things, is calming down, not nearly as heavy as it was, the last two weeks, and volatility's calming down. What that means is people are not as worried as they were two weeks ago, and the market is starting to lift, and interesting sectors of the market are starting to lift. Just let me show you the banks here. The most important thing is the banks have stopped going down. It's the regional ones that matter. I'll give you an idea. Co-America was $40 on Friday,

enormous volume. We haven't seen this in years. It's 43. You might see, well, that's not much of a rally, but listen, stop going down is the key thing, and that's what's been going on for the last, the whole week for the banks. Second thing is cyclical stocks have had a terrible month. I'm talking about material stocks, industrial stocks, like Caterpillar, but in the last few days, they've been lifting. This is not a breakout, but they have been lifting off of their lows for the month, which they were at last week. That's a positive sign. Market breadth is improving. Another group, a complete disaster this month, has been the reits, particularly office reits. they are starting to lift. Vornado was $13 on Friday. That was the lowest since 1995 on VORNATO.

You might think, well, now it's only 14. Now they've stopped going down. Again, breadth improving for this particularly beaten up sector of the market. Just take a look at the VIX, Kelly, and I'll show you this. We went in March, started March 19 on the VIX. The volatility index, we went to 30, and look, here we are exactly where we started on March 1st, back to 19. And that, folks, is what you call head and shoulders. Kelly, back to you. Thank you, Bob. Oil's closing for the day, pulling back from its earlier gains. Let's get over to Pippa Stevens for a look at that action, Pippa. Yeah, hey, Kelly, well, oil did move between gains and losses during the session,

but WTI is still holding right around that $73 level. And there are a couple of things going on with the fundamentals. Today's inventory report showed a larger than expected draw of 7.5 million barrels as refinery utilization jumped back above 90%. There's also ongoing export outages in northern Iraq. But Nat gas is the big mover. Earlier, the contract dropped to 194. That was the lowest level in two and a half years.

Now, this April contract does expire today, so volume is thin. But still, Nat gas is now down 55% for the year on pace for its worst quarter on record. Demand's been low after a warm winter and the Freeport outage while production has climbed. And that means that inventories are elevated just as we head into injection season. Now, this weakness has pressured energy companies, including Antaro, Devin, and APA. One other thing to note, we got the latest Dallas Fed energy survey results today, and when asked about where Debbie Chai will be at the end of this year, responses ranged from $50 to $160, with the average being $80. Tyler.

All right, Pippa, thank you very much. Pippa Stevens, turn now to crypto, Bitcoin up 3.5% today and has gained, get this, over 70% so far this year. investors seem to be shrugging off regulatory crackdowns on other big names in the space today as Bitcoin rises another nearly three and a half percent. Our own McKenzie Segalo, CNBC tech reporter, joins us now with more. Mackenzie. What else is behind this latest jump in crypto and especially Bitcoin? Funny enough, part of it is a call for regulation, but in another industry, the banking industry. So one would expect that crypto prices would be down is you have the two friendliest crypto banks collapse, liquidity just dry up. And then on top of that, you've got regulators targeting the two biggest digital asset exchanges out there with recent actions by the SEC and CFTC. But if anything, it's had the opposite effect. As we've been reporting, a lot of the concerns around banking regulation has actually, for a couple different reasons, been a good thing for Bitcoin. What's bad for banks is good for Bitcoin.

I mean, it's apparently the best performing asset year to date, outpacing gold and the NASDAQ. And it's part of this larger narrative that risk assets are back. Who saw it coming? Well, I think that a lot of people within the crypto contingent like to say, hey, this is a safe haven when mainstream banking has certain failings. But really, it goes to that larger narrative of when the Fed, when there's this hope that the Fed might be more tepid in its approach to hiking up interest rates than speculative asset classes like Bitcoin do well. And I think the big takeaway from the banking contagion of a couple weeks ago was the fact that the Federal Reserve was both quick to step in and to provide what was largely seen as QE to the crypto contingent. that bank term funding program, that extra lending to the banking sector was seen as a good thing. And there is this hope that recession signals might mean that there will be a reversal,

of course, a slowing down of interest rate hikes. Also, we're noting what's been happening over with the CFTC and finance and this kind of, did they come out and say outright that it was a commodity, that Ripple was? Am I conflating the three different things here? Yeah, so there are a couple of very interesting things at place. You brought up that suit by the CFTC, so they're coming after Binance. But in that suit, they're saying that Binance, Ether, and Lightcoin are all commodities. And so that's something to celebrate within the crypto ecosystem because typically the CFTC is a better regulator to have than the SEC.

And then you brought up XRP, which is a token issued by Ripple Labs. Now, what's interesting there is that there has been this two-year protracted legal battle between the Securities and Exchange Commission and Ripple Labs. And what's at stake here is whether this token that they issued is a commodity or a security. And if there is a ruling in favor of Ripple Lab saying, hey, this is a commodity, again, that undermines this argument being made by Gary Gensler at the SEC, that a lot of these cryptocurrencies, virtually all of them except for Bitcoin, are under his remit. Sounds like a turf war. And aren't some of these prices up as well on this declaration, if you want to call it that? Yeah, absolutely. XRP was up 17% earlier today. It's a part of a, you know, multi-day rally. Wow.

Mackenzie, love your name. My son's name is McKenzie. For many other reasons. Nice to have you with us. Great joining you guys. Excuse me. No, you. No, you.

After you, Apraevo. Let's get to Christina Parts at Evelas for the CNBC News Update. Christina. You both can have me. Here's your CNBC News Update at this hour. FIFA is stripping Indonesia of its opportunity to host the under 20 FIFA World Cup later this year. This comes as local Indonesian officials said they would not allow Israelis to stay in their cities amid protest over Israel's participation in the tournament. Global football's governing

bodies said a new host country will be announced as soon as possible, with the tournament set to start at the end of May. Rhode Island Senator Jack Reed introducing his protection from abusive Passengers Act today. The proposed law is designed to make air travel safer by creating a no-fly list administered by the TSA for passengers who become violent on fly. The reintroduction comes after a series of incidents on planes, including when a Massachusetts man allegedly tried to open an emergency exit door on a flight heading to Boston. An auctioneer Sotheby's will be unveiling a dazzling pink diamond in Hong Kong on Saturday. It's called the Eternal Pink and weighs a bit more than 10 and a half carrots. No big deal.

Sotheby says the pink diamond is expected to fetch over $35 million when it goes on sale in New York in June. Just pocket lint, Ty. Yeah, we'll pick it up for you. Thank you. All right. Thank you. Ahead on Power Lunch, between the banking collapses,

inflation and economic uncertainty, few investors can agree on whether markets will end this year with a bang or a whimper. Welcome back to Power Lunch. Treasury yields flattish as stocks are rising again. Let's get out to Rick Santelli in Chicago. Rick, what are you watching? You know, I'm watching how the auctions buttoned up.

Real disappointment. I mean, we started out with a two-year, I gave that a D. We ended up with a seven-year, gave that a D in the middle. You had a decent five-year note auction. But it really does express that there is an unwillingness to step in, even though the markets have calmed a bit. Part of that, of course, is the end of March is always a tricky situation. It's T-plus-2 for settlement and stocks. So many are looking for these moves to be pretty big today, but certainly not in treasuries.

Look at a two-day of two-year. The fact of the matter is it looks like it's higher in yield. It's basically unchanged right now. But here's the chart. Look at a month to date. We're down about 75 basis points and historic month for a two-year no-yield drop. And if we look at a year-to-date of tens, which, by the way, settled last year at just a whisker under 390. You can see this chart.

That chart, if that was a stock, Kelly, you would not be jumping in to buy it. It looks to me like yields are heavy. And that's after putting in the high yield in the fall at four and a quarter. And finally, the last chart is January of next year, Fed Fund Futures. That date for that meeting is the last day. So it's what we call a clean month. Look at that. It's up about 95 basis points from where it was on the last trading day of February.

Wow. Back to you. All right. Thank you very much. Rick Santelli. Stocks are higher today, as investors do seem to be shaking off recent negative news and upping their appetite for risk. Check out this chart from Bespoke. Since 1987, the only longer street of net negative sentiment toward the stock market was surrounding the financial crisis in 08 and 2009.

Our next guest thinks the overwhelmingly bearish investor sentiment is creating near-term upside opportunity. Let's talk markets with Jack Ablin, founding partner and chief investment officer with Crescent Capital. Jack, always good to see you. Talk to me a little bit about negativity and how bearish sentiment often. presages of positive market moves. Right. I mean, it's all about expectations. And with the market, that's really the intersection of reality and expectations,

obviously better to have low expectations than high expectations. I convinced my parents in high school that if they expected C's and I brought home Bs, that they would be favorably impressed. And that's really what's going on in the stock market today. If you look at the share of bullish investors as measured by the American Association of individual investors, and this is a weekly survey that goes back years and years and years, the percentile of bullish investors right now is in the second percentile of its historical range. So you can see that even during the financial crisis, yeah, we may have gotten to zero,

but we're pretty close to it right now. Can you blame those investors for feeling as negative as they do? Interest rates are high, maybe too high, and they have been rising. Many people have now shed that soft landing hypothesis and are saying we're due and likely to have a recession. You've got a yield curve to those who understand the yield curve that is inverted, often a sign of recession. So why shouldn't investors be a little pessimistic? Right. I'm not blaming anyone for being pessimistic. All I'm saying is, all right, here's how the cards are being dealt. How do we play them? The fact that everyone is, you know, widespread bearishness in the marketplace means that everyone that is likely to sell is already sold and everyone's expecting the worst. And so now perhaps as data comes through, we get a CPI report, we get some other employment data, perhaps as everyone's

expecting the bottom to fall out. Anything better than that just gives us, you know, essentially a hurdle the height of the limbo stage. So let's leave folks on a high note with a couple of names that you think might be winners here. And what particularly stands out about them is their dividend growth rate. You like their dividends. You seem to like the growth rate of the dividends even more. Yeah. And that is, you know, if you go back over time, a dividend strategy is actually a state, far away ahead of inflation over time. So we take, for example, Archer Daniels Midland, ticker symbol ADM, has a dividend yield of 2.3%,

but more importantly, it's been growing its dividend in an annual rate of 5%. Chevron, everyone knows Chevron, CBX, dividend yield of 3.8%, dividend growth rate of 5.8%. And then lastly, McCormick, the Spice Company, MKC, dividend yield of 1.9%. percent, but growing its dividend in the annual rate of 9.2%. So here's a way you can collect income,

and in these cases, pretty predictable income, and have a reasonable assurance that that income's going to grow in excess of inflation. All right. Jack Ablin, thanks very much. Always good to see you, sir. Thank you, Tyler. You bet. Still to come, look at shares of Bridge Bio surging 16 percent, and the reason why is the definition of speculation. We'll explain. after this. Welcome back, everybody. Check out shares of BridgeBiofarm up about 17% today on huge volume, triple its daily average. Meg Torell is here to explain the big move. What's happening here, Meg? Guys, this is sort of like the biotech-eist of biotech happenings. So I was trying to figure out what was going on with BridgeBio. There's been a lot of news around this company. Recently,

they had some really positive data earlier this month, and Bloomberg came out, suggesting that there was some takeover interest in the company. Well, what's happening today is there is speculation that the company has dropped out of an investor conference that was scheduled for next week. And in the biotech world, when a company is in the MNA zone and they drop out of an investor conference, everybody assumes that means they are immediately going to be bought. And so whether this actually happens frequently or not is a very good question. I would love to see historical data on how often that actually is the case. But what it shows you today is that people are really hoping that this name gets taken out.

And I've actually reached out to them to try to confirm that they have dropped out of this conference. I have not yet heard back. And they didn't tell you whether they were being bought by somebody? Yeah, and by whom and for how much. They didn't volunteer that to you? I thought they would. You always have to try. What do they do again?

What would be the excitement here? Importantly, what they actually do. They make rare disease drugs. So they had some really positive phase two data in a condition called a chondroplasia at the beginning of the month, which is the most common form of dwarfism. Wow. And so you already have biomarine on the market with a drug there. And so this one looked pretty positive.

And so that drove the stock up. Then came the MNA speculation or, at least the report from Bloomberg that there's interest. You just a few minutes ago moderated several panels on healthy returns or health care event that is an annual happening. What was your key takeaway there? And I know there was a lot of talk about RSV and progress against it, vaccinations against it. It is a deadly, can be a deadly illness.

Yeah, absolutely. I thought that was one of the really interesting things of the conference, Jim Kramer's conversation with GSK's CEO, Emma Walmsley. And, you know, he did start out by asking her about the problem. prospects for their RSV vaccine. This is really shaping up to be the next big vaccine race. Here's what she said about it. There are diseases that have not had any vaccine solution ever. An RSV is one of them. Many have been working on trying to find a solution to RSV for 50 years. And now, and we're not the only ones to come forward, but we were the first to publish results,

which we're really excited about. And it's particularly notable, she says there they were the first to publish results. They and Pfizer are really neck and neck in this race with FDA decisions expected on their adult vaccines in May. Importantly, Johnson and Johnson, which was sort of a laggard in this race, said today that they are discontinuing their program. Having looked at the RSV adult vaccine landscape,

you're seeing Pfizer and GSK right there at the front, Moderna close behind them. J&J just felt like this wasn't a place where they wanted to keep competing. How much longer until the kids one is coming? That one is a little bit farther behind. Not to keep asking about it, but... Yeah, so there is an antibody drug that is closer to being available for babies.

So that's kind of similar. You're giving the protection through an antibody drug rather than a vaccine. But then, you know, Pfizer is also looking at vaccinating pregnant people so that the babies get protection in the early part of the time. Oh, interesting. And boy, did you drill down with the folks from Novo Nordisk on Ozympic and Wagovi. Wagovi, the weight loss truck. Fascinating conversations, Meg. Good to be with you.

Me too. That's all the rage, all the talk these days. Coming up, UBS seeing a 23% downside for some retail names. They're talking about a major consumer slowdown. We'll trade one of those names at risk coming up in Three Stock Lunch. Welcome back, everybody. Let's get to Three Stock Lunch with some movers of the day, including Micron, the Chip Major Maker, surging despite reporting its biggest quarterly loss ever,

EV Maker Rivian surging as well, as Lucid, its rival announced it's slashing 18% of its workforce, and Full Locker in the Red on a downgrade at UBS to 6. sell from neutral on worries of a potential recession impacting revenue. Here to help us trade them all is Quint Taitro, founder and president of dual financial quint so much to dig into here. Don't have a ton of time. But let's start with Micron. A lot of people saying this is the poster child for this market.

Terrible quarter, the stocks leading the S&P 500. What would you say? Yeah, everything's baked in and the kitchen sink. I mean, Micron missed on top and bottom. The reality is the stock's cheap. We call this kind of a proverbial compounder. Historically, they have increased return on equity by about 20%. That means their intrinsic value is growing by 20% per year.

The stock does not reflect that. It's a matter of time, in our opinion, before investors continue to step up and add this name at these value prices. We're long the name. Today's a great day. We'll look to continue to buy on pullbacks. Let's talk about Rivian, a company that has $11 billion in cash, no debt, but no profits either. Tyler, you feel lucky? I mean, the reality is this is a lotto ticket.

If people out there want to bet on EV, this is a good way to do it with high risk, high reward. The thing we like about this name, which is fascinating, as you mentioned it, they don't have any debt. They got $11 billion. They're burning through it pretty quick. They're going to raise some additional capital. But the reality is if management can execute, this stock could go a lot higher. I don't think you have to be early. We're not in the name.

We want to see a real turnaround here, a fundamental story that starts to develop. Then you can add the name, and I think you'll have time. So it's on our radar. We're not long yet, but it's not a cell in our book here. Not a sell. That brings us to Foot Locker, which is a cell for UBS. I give them credit. I don't often see retail analysts, Quint, kind of taking a macro theme,

especially when it's not totally baked in yet, and saying, hey, you should be worried about a recession. Here are the names that would be vulnerable, and they think Foot Locker is one of them. Well, UBS is going through a lot right now. I don't know how they can't separate their macro views. I mean, it's probably, you know, pervasive in the whole firm. But I don't agree with their call here. Now, back in August, we did Foot Locker and immediately, you know, admittedly, I was a

sell on the name lower from here. But ultimately, the stock and management continues to buck the trends. And it's a relatively inexpensive stock. I mean, it's trading nine times forward and set to grow those EPS by 17%. Solid balance sheet. and they boast a 4% dividend and a really modest dividend payout ratio. So you get paid to wait. UBS's entire downgrade is based on their view of the recession, as you mentioned, a macro call.

If they're wrong, this is a very well-positioned retail stock for a strong consumer. And I would think that would already be priced in to a lot of the stock. We're a buyer here. We think it goes higher. There you have it. There you go. Quinn, thank you. Great stuff today.

We appreciate it. And some very exciting news for CalMaine Foods and its investors, but the yolk could be on you. We'll take a look under the microscope next. All right, chairs of CalMaine Foods rising after the company's strong earnings report, but we're digging deeper, putting the earnings under the microscope and looking at what the company says about egg prices and where they're headed. Dom Chu never lays an egg. He's here right now. All right, so here's what we got. We got a price movement driving a lot.

of the action for CalMaine. The stock is up, as you can see here, just about six and a half percent today, and that's off the session highs, by the way. It was up as much as around 11 and a half percent at the highs of the session. But this move higher here is coming on the heels of this earnings report and where it handily topped expectations. And a lot of it was because, and I'll show you the reason why, what they characterize it as, still those elevated egg prices that we saw this past quarter. We did see elevated market pricing and it continues, those are their words. And it was, they say primarily due to the avian flu reducing egg laying capacity. We've heard that story as well. And consumer demands still remaining robust, even with those high prices that we saw over the last

several months, people still bought eggs. Now, here's interesting. The folks over at Erner Berry who do actually an index of egg prices, they track a lot of proteins and their prices and their availability and demand structures. You look at where it's at right now, $2.96 roughly thereabouts for a dozen of eggs. Now, this is an index. It probably costs more or depending on where you live. But take a look at this. At the highs back in December at that level, that was closer to around $4.66 per dozen.

That's significantly higher than where we are right now, $2.95. But it was also closer to around $1.96 at these levels just a few weeks ago. So egg prices have been taking higher. These are, yes, these are business wholesale level prices across an index. So they look at various parts of the egg kind of spectrum, if you will.

And that particular move there is the one that's catching a lot of people's attention. So if you want to talk about the reason why egg price volatility is so key, it has been one of those lightning rod issues. Fuel prices and egg prices. In my experience, anecdotally, have been the two things that people have cared about the most when it comes to that inflation story. So this looks across the entire ego system. I see what you did there as well. Here's what I have found. This is for Kelly, because I know that she is as much of a Costco shopper as I am.

I don't know if you are, Tyler, a big Costco phone. Not huge, no. It is the place that you can find, in my experience, the cheapest egg so far, but you've got to buy them at least in two dozen. Dom, I've got to be honest. I don't like them. I'm an egg snob. I am an egg snob.

I'm just happy the Telestrator worked for this today. It didn't freeze today. If egg prices actually drop, that would be the best thing for the Fed. There you go. It would be celebrated. All right, folks. Exciting show. Exciting.

Thanks for watching. Closing bell starts right now. Thank you.