Power Lunch - Power Lunch 11/9/22

Episode Date: November 9, 2022

CNBC’s Tyler Mathisen, Melissa Lee and Kelly Evans take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day���s agenda. “Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists. 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's what we got for you this hour. Election aftermath, the red wave didn't quite materialize, but control of the Senate still up for grabs. So what happened and what does it mean for markets and politics and that looming 20-24 election? Plus, Tesla, we've just been talking about it there, continuing to tumble, hitting session lows right now, losing nearly half its value this year, and now Elon Musk does seem distracted by his shining. tiny new toy called Twitter. We've got a bull bear debate on Tesla with two analysts with drastically different views on where that stock. Contessa is headed. Tyler, thank you. And hello everybody. I'm Contessa Brewer. Here's where the market stand right now.

Lower across the board, nearly every index at session lows. You're seeing the Dow Industrials off of one and a half percent. So is the S&P 500 now. And the NASDAQ off more than 2%. Disney's having a more direct impact on the markets today, taking about 75 points off of the Dow, down 13 and a third percent. Disney Plus lost a billion and a half dollars, even though it added more subscribers than expected. And boy, the crypto carnage just continues today. Bitcoin falling below 17,000 for the first time in two years, down 9 percent on the day. And FTT, that's the token behind FTX falling even more today. That means Sam, Bankman Freed has lost more than 90% of his net worth in less than a week, according to some estimates, Tyler.

All right, folks, as Contessa just mentioned, uncertainty about control of government is weighing on the markets today. Enough House and Senate seats remain uncalled at this time to keep the election drama going for a few more days, maybe weeks, maybe even longer. But what we do know is that we are not seeing a red wave that some predicted. A key race for Senate in Pennsylvania. Well, Dr. Mehmet Oz conceding that race to june. John Fetterman, this was one of the most contentious and expensive races of all, and it represents an added Senate seat for Democrats, picked up, flipped from the GOP. The Michigan Governor's race, another example.

Tudor Dixon, a candidate closely aligned with former President Trump, losing to the incumbent Gretchen Whitmer by 54% to about 44%. To help us make sense of these results in what they mean going forward, let's bring in Jerry Sybe, executive editor with the Wall Street Journal. Jerry, welcome. Did the pollsters, did the experts get it wrong in talking about a potential red wave? Or was it sort of right? Well, you know, it depends on how you slice that question. At the 10,000 foot level, I think the polls were basically right. They said the race for control of the House would be close. Republicans would have a slight advantage.

And that's kind of what happened. What didn't happen was what some people read into the polls in the final couple of weeks, which was that there would be a development. red wave that the movement back toward Republicans that we saw on the last month or so of the campaign would keep moving and would crest. And I think maybe what people missed a little bit was a bit of a snap back toward Democrats. And why did that happen? Well, I think one of the things that happened was that abortion rights, the woman's right to choose an abortion, didn't fade as an issue as much as some people thought. I think Donald Trump proved to be a drag on Republicans net net. An interesting number out of the exit polls said three-fifths of the voters who cast ballots yesterday had a negative view, an unfavorable view of Donald Trump,

and three quarters of those people voted Democratic. So that was a problem. I think Republicans suffered a little bit by not having a very clear economic message, frankly. I mean, they thought for a long time that's simply running against a relatively unpopular Joe Biden and inflation worries would be sufficient. I think they never developed their own answer to, here's the inflation problem solution that we stand for. And finally, candidate quality matters. I think some of the candidates that Republicans put forward, and you just have to look at Pennsylvania with Doug Mastriano and the governor's race and Dr. Oz in the

Senate race probably weren't their best and most reliable candidates, and they paid a price for that. I think it's very interesting. As you said, the Republicans certainly made the economy inflation the issue, but maybe they didn't have the solution. The Democrats seem to have no answer on inflation to me, by the way. but that's just me. You say that it was a great night for Ron DeSantis and not such a great night for Trump. I think Trump, what I'm hearing you say is that he's both a motivator for

Republicans and a motivator for Democrats. Well, that is what Donald Trump is. He's a motivator for both parties. And the question, since going back to 2016, is who is he a better motivator for Democrats or Republicans? And, you know, it may have been a slightly better motivator for Democrats than for Republicans in some places last night. So I think Republicans will step back from that and say, what does this tell us about, whether we want to continue to be a party that's essentially led by Donald Trump? Or do we need to go in a direction or at least diversify in there? Why do you say it was such a good night for DeSantis, whom Trump this morning is already tearing off after? Well, look, Ron DeSantis won on two fronts last night.

First of all, he won a giant re-election win in Florida in his own right. I mean, far more, I think, than most people expected. He was projected to win, but not by the margin that you've seen the margin on the screen there, not by that margin. So he blew away the Democratic opponent. It was a credible opponent in one of the most important states in the country. So that's item number one. Item number two is that he benefits now by being the leading alternative to Donald Trump. You know, he is Trumpian in many ways in terms of the policies he supports.

And in some ways, the style he projects, but he doesn't carry any of that Trumpian baggage. And so if you're a Republican looking at this landscape today, you're thinking, well, maybe that's not a bad ticket for us. Now, there's a long way to go. And we didn't even know that Ron DeSantis is going to run for president. But there's going to be a lot of pressure on him from within the Republican Party from people who want a Trumpian alternative who's not named Donald Trump. We don't know if Donald Trump is going to run for president either, although he seems to be hinting very, very, very, very probably soon he's going to make an announcement, Jerry. And though I'm loathe to do, I feel like much of the nation has been bombarded with campaign advertisements for so long that everybody kind of needs a break. I'm going to, you open the door, I'm going to throw it even wider. What about 2024?

What does this tell us about what's coming down the pike for the presidential election? Well, before I answer that, let me point out that there's one state, the state of Georgia, where there's going to be a runoff for the Senate there probably, where they're not going to be done with campaign ads. They're going to get a whole bunch up next month. So anyway, let's set that aside. know, but certainly Donald Trump acts like somebody and is talking in the last two weeks like somebody who wants to run again, who firmly believes he should be president now and should have had a second term, and we'll get that second term if he runs again. I think he probably sees it to his advantage to open the gate and get out early, and so you probably see that in the next

couple of weeks. But I think that one of the things that happened last night is that the the idea that you can challenge Donald Trump may be a more resonant idea within the Republican party now than it was a year ago, let's say. And so maybe you have a wide open Republican primary, not a two-man or one-man race. It's worth remembering on the Democratic side, there'll be some similar questions because on the one hand, Joe Biden and his Democratic Party avoided disaster last night. They did, by historical standards, quite well, actually, when you compare this midterm to other first midterms after a new president takes office. That will lessen the. somewhat, I think, the anxiety level in the Democratic Party about whether they can be led again

into 2024 by Joe Biden. But it's not going to go away. I mean, he's going to have a birthday a few weeks, and the age question is still going to be there. Final question. We all like to play political analysts one way or another. But as I look at the red state, blue state map, if I look at three states, Florida and Pennsylvania and Ohio, where there were major, there were Senate races in each of those states, if you look at the states by county or precinct and you put red GOP and blue Democrat. These are really red states. We just showed Florida on the map while you were talking about the Santa's there.

I think it was maybe Fort Lauderdale, Broward County was blue. West Palm Beach, yeah. And Orlando is very blue. Orlando may be blue. But look at, you look at Pennsylvania. Most of Pennsylvania is red. Almost all of Ohio is red. it's not close in these states in terms of the dominance of the GOP by geography.

No, it's a good point, Tyler. One of the things we probably need to quit saying after last night is that Florida and Ohio are up for grabs. I mean, they're red states. We kind of do that about Ohio. I think we now know that for sure about Florida. I will add, though, on the other side, you've got to say Colorado looks like an even more blue state than we would have thought. and Arizona, you know, may turn out to be a little more blue than some people thought. So one of the interesting things that happened here is the map sorted itself out.

But you're absolutely right. No matter what the result, Florida and Ohio, spoken. There's that Florida map. Look at that. It's sort of Broward County, Orlando, as you pointed out. Tampa can be somewhat blue. Maybe up near Tallahassee. I'm not sure what that is up there in the panhandle.

But at any rate, Jerry, thank you so much. Go ahead. But changing, yeah. Changing, yeah. It's true. Jerry Saib, always great to see you, sir. Thank you. Well, with the midterm elections behind us, we hope, the majority of earning season behind us comes to a close.

What could be the next catalyst here for the markets? Joining me now is Abe Dechpande, Chief Investment Officer at Center Stone Investors. It's good to talk to you. You know, first of all, I do want to talk about how the markets proceed going forward. What's your take on how we start Wednesday after election day? looking forward at politics and the way it moves the markets? Well, there's probably some hope that as a nation, people would choose, you know, on the hot-button issues, you know, one way or the other.

It looks like that didn't happen. So maybe there's some disappointment there. But from an investment standpoint, you know, I'm an optimist, but also a realist. And, you know, the things that were in place prior to the election continue to be in place, the trend line is still pointing towards, you know, some recession or economic weakness. the sequence of events that typically precede recession are in place. There's been no change to that. You know, on the positive side, I mean, there's some things that could happen that could mark a bottom. I mean, there could be a recession. This sounds weird.

And why do you think that data that confirms it would move the markets higher? Well, because usually the market is active as a discounting mechanism. It's looking forward. And generally speaking, the stock markets bottom three to six months before the economy actually does. So as we see real-time data that suggests that there is recession, primarily being, you know, ending with really the most lagging of indicators, which is unemployment, if that were to suddenly begin to tick higher, and you're already starting to see signs that that's actually starting to roll, that would kind of, you know, give some hope that the end is near. And that's good enough for stocks at bottom.

I don't think we're there yet, but that's something we're looking for. We showed some of your thoughts about what the upside catalyst are. What about the downside catalyst? How closely are you watching what happens with consumer credit, what's happening with the corporate credit markets moving forward, and whether that could be actually a downside catalyst? Yeah, so, you know, what I tend to do in these situations where you have a flagging, you know, kind of economy, is look at where the excesses were, right? So you had obviously had crypto that you're on top of that,

the name stocks, which everybody knows about. But maybe under the surface that people are not focusing on is like the auto loans, for instance. These are relatively small parts of the entire system, but they tend to be quite volatile and leading. And you're starting to see already some issues with the auto loans, especially in some prime space. And then the fourth area where we had some accesses was really, state. And I think one thing that is similar, I don't want to draw too many comparisons, but one thing that was similar to pre, you know, global financial crisis was that we didn't know where the leverage was in the system at that point. It's surfaced everywhere, right? Here, the hope is that,

you know, because most or 30 to 50 percent of housing demand in the last couple of years has been investment by, you know, rent or buy to rent kind of investors in cash. So people sort of assume, okay, well, that's safe. Well, I don't personally know any real estate investors who don't leverage real estate. That's sort of a point of real estate. So maybe it's not in mortgages, but they did leverage somehow. And so that shadow banking system, you know, it's very hard to gauge how healthy or not it is. But I suspect since that's where a lot of the excesses were, that's something that we need to keep an eye at. Abbe, thank you very much for joining us, Abbe Deschpande from Centerstone. All right, coming up one year ago today, Bitcoin traded at an all-time high around 68,000. Today is about a quarter of that.

Up next, we'll dig into the crypto chaos that is sending everything in that area sharply lower. There you see some numbers. And bad news, good news for meta stock, the company getting set to cut thousands of jobs, but markets like the cost cutting scene. The stock is up 13% in a week, as you see there. And now a look at stocks hitting all-time highs today. There's a theme. Merck, Eli Lilly, Elie, Bristol-Myers Squibb, Eli-Lilly a little bit off its high earlier in the day. You'll notice that pharmaceutical bent.

Power lunch, you'll be right back. Crypto's Lehman Moment. That's how one industry executive described the shocking deal between Binance and FTX. And it has a lot of people asking, how did we get here? Well, the end of 2019 before crypto's big rise, Binance takes a sizable stake in FTCS, and makes a big bet on the FTT token. And then two years later, FTCs becomes a main competitor to Binance. Finance exits their equity stake,

taking with it nearly $2 billion in collateral of that FTT token. Last week, CoinDesk reported that FTC's hedge fund, Alameda Research, held a quarter of its assets in unsecured FTT tokens. This was the same token they created. Binance's founder then announced that after, what he called revelations, the firm decided to dump its $2 billion stake in FTT. This sent the price plummeting down 32 percent, as you can see. FTX, desperate for cash, pauses withdrawals, and turns to Binance for help. This has left investors from Sequoia to BlackRock,

even the Ontario Teachers' Pensions Fund holding the bag. To decipher all of this, let's bring in Frank Chaperow, Director of the News, at the Block. And Frank, I guess now I want to know if anybody involved with all of this is pulling a Steve Urkel and wondering, did I do that? Yeah. Well, it's not just that list of investors that you mentioned. It's also the customers, right, of FTX International who, unfortunately, are holding the proverbial bag.

It's an upsetting day for the industry, for the market, and it's very uncertain right now. what's going to happen next. There's a lot of unanswered questions, the fate of FTX US, as a, for instance, Alameda's website has gone offline, as has also FTS ventures. It's unclear even if that deal that you're, you know, the big headline deal between Binance and FTX, it's unclear that's even going to ultimately happen. Bloomberg reported earlier today that after Binance took a look deeper into that balance sheet, they found possibly a $6 billion hole, which might result in the deal falling through,

which would be, you know, let's be very blunt, cataclysmic for the entire space and industry, possibly setting us back five years. So when you look at an executive describing it as Crypto's Lehman moment, I mean, are you saying the contagion not only is apparent, but is probably deserved? The contagion traces back to the summer, right, where we had that major credit crisis that gripped crypto starting with Luna, which then hit three arrows, which then hit many of the biggest lenders in the market from BlockFi to Genesis. And many people in the industry hopeful thought that's where it ended, but it didn't end

there. There was more to the story, as it were, and it may end with FTX. How do you think this story ends? And is there a white knight that would come in and act as a savior to FTX or FTX International? I'm thinking back to 2008, and we talk about the Lehman moment, there were a lot of big powerful companies, whether it was Wash Mutual or whether it was Merrill Lynch, whether it was Bear Stearns, that got rescued by bigger players. Is that possible here? Is that necessary here?

How do you see the movie ending? It is necessary. I mean, FTX was the biggest player. They were supposed to be the lender for West Resort. And if finance is out, I mean, that finance is quite literally the largest company in the space. If they're out, then I don't think there is someone to bail out the international business. I think for FTXUS, they do hold that DCO license, which is fairly valuable and hard to get. So there might be someone after a bankruptcy proceeding, maybe an ICE or Terry Duffy over at CME.

Maybe they swoop in and get the scraps, as it were. But for FTCS International, I don't think there is a buyer aside from finance. It just doesn't make sense, especially with a $6 billion hold. I don't see that story. ending well, to put it, frankly. Yeah. So we could look at this wall over here and show some of the investors in FTX, SoftBank, Tiger, Toma Bravo, Sequoia, BlackRock, Paradigm, among others, how are they going to hit them if this company implodes?

Oh, it's not good. It's going to hit them hard. It's going to also, like I said, set the space back. I don't see, you know, a lot of those. funds investing in a firm like an FTCS in the future. I think it's a big hit for centralized players. But I don't think crypto's going away, right? I think it's obviously a dark moment in time. And it'll take a couple months of silence, maybe a couple of years of silence and building. But at the end of that, there's going to be maybe an opportunity for defy and for NFTs.

But this is going to hit the reputation. The reputational hit that crypto is going to take as a result of this cannot be understood. Well, you know, it goes to the real heart of the legitimacy, not maybe especially of crypto, but if some of the companies, silence, I think silence of the shams. Frank Chopro. Thank you. Thanks. Still to come, we will hear from one blockchain startup whose customers include both Binance and FTX. That's in today's working lunch. But first, the Draft King Slayer, California, voting against a bill to legalize online sports betting. Those details when power lunch continues. We will be right back.

Welcome back. And it looks like Draft Kings is getting a losing hand today, down 7% so far following bad news for the commercial sports books. California voters rejected the most expensive effort ever to legalize online sports betting in the nation's most populous state. Prop 27 failed by a margin of 83% to 16%. And then on top of that, we got earnings. Draft King's biggest competitor, Fandall parent company, Florida, reported U.S. revenue that soared by 82% over the previous year and lifted U.S. guidance for 2022.

Now, Flutter's shares in the U.K. declined on the day, down 5% as it announced. It anticipates losses next year in line with its previous guidance. But look, the real story here is that Fandul is defund. is defending its 42% market share in the online sports betting world. And look at that year-to-date decline for Draft Kings, 57%. All right, let's get to Sima Modi for the CNBC News update. Hey, Seema.

Tyler, here's what's happening at this hour. House Minority Leader Kevin McCarthy has announced his bid to become the next House speaker. This, even though control of the House, remains undecided. McCarthy says he remains confident Republicans will take back the House. NBC News says Republicans are on track for a small, in the House, but many races still remain too close to call. Senate Minority Leader Mitch McConnell is holding back from commenting on the elections. When asked how he felt about the midterms, McConnell said, quote,

I don't deal in feelings that he is awaiting for the votes to be counted. And for the first time since the 1970s, Grand Rapids, Michigan will send a Democrat to the House. Hillary Shulton defeated Republican John Gibbs, who in turn had beaten incumbent Peter Meyer in the primaries. one of the 10 House Republicans who voted to impeach former President Trump after the January 6th attack on Capitol Hill. Contest Ann Taller? All right, Seema, thank you very much. Ahead on Power Lunch, Tesla's breakdown. The stock sinking today, down 44% this year, dropping way below the trillion-dollar market cap.

It hit just about a year ago. We will debate that name next. Plus Disney and Roblox miss on earnings. Meta announces a massive round of layoffs. Could it be worth buying into some of this bad news? Power Lunch. We'll be right back. We've got about 90 minutes left in the trading day, and we want to get you caught up on the markets.

Look at stocks there down about 535 points on the Dow. We've got your bonds, we got your commodities, and a bull-bear tussle on the future of Tesla. Let's begin with stocks, getting worse as the day goes on. The Dow down about 532 points right now, as you'll see in just a moment. There it is. The S&P 500 off 62 or 1 and 2 thirds percent. But look at the NASDAQ. Once again, down 200 points or a...

a little more than 2%. Big CPI report coming out tomorrow. Everybody will be watching that. Consumer discretionary stocks, they are getting hit hard. Tesla, among the worst performers, as you see, they're almost off 5%. More than 5%. The S&P 500, more on that in a moment. We'll talk about that.

Cruise lines, toys, target, all sharply lower, as you see right there. Homebuilder stocks actually higher today. That's despite rough results from DR. Hortense. missing on earnings and revenue. Orders are dropping. Cancellations are rising. The company saying it's too early to know what housing conditions will be like in three or six months as a result of the result the company not giving forward guidance right now.

Let's move on to the bond market where investors are awaiting tomorrow's big CPI report. And Rick Santelli is in place and tracking the action for us. Hey, Rick. Yes, right here in place. And it might be the midterms. The fact we don't know all. the final results, but something certainly is affecting traders today. Look at an intraday of 10-year notes and realize that line on the right side where yields popped up from around 411, 412, all the way

up to 416, 417. That was an auction. I gave it a D-minus. It could be one of the worst 10-year auctions I've seen. And we all know what's at stake, whether it's politics or CPI. The flying the ointment, though, is that tomorrow's CPI is supposed to be at least on the year-over-year, a bit cooler we'll have to wait and see. Now, yields towards the high end of the range. However, if you put a two-day chart, you could clearly see that isn't the case. As a matter of fact, it really underscores the fact that even though yields have popped, we still haven't gotten even to the middle of yesterday's range. Finally, here's an intraday of the dollar index.

And very similar to interest rates, look at it looks like it's flying. Until you realize that yesterday opened a chart up to 9-11, yesterday we closed at a two-month low. Matter of fact, from an intraday perspective yesterday, we traded at the lowest level since the 19th of September. So the dollar index indeed might be up today, but it is under pressure. And that gives some investors a bit of hope. They're using that as a way to shadow box that rates, at least in a bigger picture, may be moving a bit lower. Contessa, back to you.

Actually, I'll pick it up, Rick. Thank you very much. And oil is closing for the day. Seeing a dip back below $90 a barrel, Pip Stevens has the number. numbers for us. Hey, Pippa. Hey, Tyler. Oil is in the red with two factors driving the declines. First is the latest inventory report, which showed a larger than expected crude build of 3.9 million barrels, although distillate stockpiles, which includes diesel and heating oil, fell by half a million barrels. The second key headwind is China demand as the country maintains anti-COVID measures. WTI's down

3.6% at 8569, with Brent crude down 3% at 92-54. The S&P energy sector is coming off its highest close since 2014, but in the red today with Occidental, the biggest laggard. The company posted earnings last night with net income for Q3 at $2.5 billion. That is down from the last two quarters, but up 300% year over year. And within clean energy, one notable mover is array technologies. The company makes tracking and racking systems for utility scale solar and beat analyst estimates for the latest quarter.

the stock is up 12%. All right, Pippa, thank you very much. Let's move now to Tesla. Elon Musk has now sold close to $4 billion worth of shares in his electric car company since that Twitter deal. The stock has now lost nearly two years of gains in the Twitter saga alone. So should you own Tesla? We got a bull-bear debate. Old school here.

Joining us, our bull is Colin Rush, senior research and analysts with Oppenheimer, who rates Tesla a buy and carries a $436 a share. Price Target, our bear. is Craig Irwin, a senior research analyst with Roth Capital. He says Tesla is egregiously overvalued. He's got a neutral rating on it with an $85 price target. Wow. Okay, Craig, why don't you make the case first? $85 a share.

You see this thing going down, down, down. Why? So Tesla's facing a really interesting competitive environment. If you look at the credible equities out there, are companies that are executing well. You've got names like Lucid and Polestar doing what they said they would do. You've got names like Porsche, where it's the Tycon that's really driving the growth for that company, coming out at a much more attractive valuation. And then you've got, you know, forward with their spin-off coming this spring. They're really much more attractive places

to put your money. And, you know, for Tesla to be valued at an outsized premium versus the largest car producer in the market. When they really don't have anything, nobody else doesn't. To me, that doesn't make any sense. It means you should probably look elsewhere and avoid Tesla. All right. So, Colin, why don't you respond there? The point, he makes an excellent point. There's a lot of competition here. Some are executing very well. You've got a CEO who may, to very mildly put it, be a little bit distracted. What do you say? separate from the Elon distraction issue, I think Craig's mistaken on the fundamental technology position of Tesla. When you look at what a vehicle looks like over the course of the next 10 years,

we're really looking at materials and advanced materials being operated by software. And Tesla's advantage around its understanding of basic materials inside the battery as well as with power electronics is substantially ahead of other folks. We're seeing that again and again with the partnerships that are developing for established OEMs as well as some of these newer OEM to try and drive that technology curve. And Tesla is doing that on an integrated basis. We're seeing them drive costs out of the vehicle as well as the process. And we've been talking about Tesla having a two to three-year advantage from a technology

perspective, but we think that's really closer to three to five years at the end of the day when folks really start to implement some of these newer ideas. And even though Tesla's falling short on some of the timeframes on some of their advanced programs, they're still substantially ahead of all their competition. And so as you look at the cost structure for those vehicles and the performance as they come out, It's really just, you know, apples and oranges from our perspective. And the earnings power, when we look at Tesla, getting up to 25% plus operating margins, you know,

driving towards 4 to 5 million vehicles is really, you know, puts us into a potential for, you know, $12 to $15, $18 of earnings at this point and really puts you into a pretty reasonable, multiple perspective as you look at a differentiated technology company. Does it have a plan in place to maximize the opportunities to, you know, make profits on its battery technology? Without question, we're just watching them execute against this ramp, and as they roll the new 4680 technology in and leverage a lot of their understanding of silicon carbide, as well as the operating systems in these vehicles, we're seeing them just walk cost out on top of what they're doing from a structural battery pack and the stamping process. We just see them being proactive on where there's opportunities faster to market with the IP and defending their position by inventing things than actually bringing them to market before other.

folks really are even looking at the opportunity. Well, there's a lot there, Craig. Do you want to respond? So I'll say I think that's absurd. Tesla buys a very large portion of their batteries externally. And if they really had such a large advantage for what was captive, they wouldn't be buying anything externally. You know, Colin likes to talk about the 4680.

I'm not sure if he remembers where that comes from. The coders there are actually commercially available. What was developed for Tesla was not exclusive. and the company that's selling the coders actually has tens of millions of backlog with other battery producers today. So, you know, Tesla doesn't have anything that nobody else has. Software takes a team of engineers, right? There's many highly competent teams across the street. You know, I think Apple is probably going to be the one that will be taken most seriously

when they choose to unveil their car and probably in 2024. But, Craig, let me interrupt. Let me interrupt if I might, Craig, just because we're running a little short on time. The one thing they do have is a lot of cars on the road. I mean, not that there aren't others, but they've got a lot. I see more Tesla's on the road than I do, Lucids or Porsches or Kia electric vehicles, or Hyundai are electric vehicles, or Chevy electric vehicles. And a lot of people say that Model Y may be the biggest selling car in the market in a couple of years.

I agree with that. They've done the missionary work. They've done an impeccable job. Elon Musk created the market, right? He recreated the auto industry in a tremendous way. And, you know, missionary work is expensive. You know, the earnings have been disappointing over the last several years. Now they're coming through.

I agree with Colin. They're doing a fantastic job. I just see that there's better relative value. I think you're overpaying for it if you buy it here. But I fully respect what they've done. they've changed the world as far as transportation. I just think there's better value and better opportunities for people to invest now. I just can't help myself.

Tesla is in the missionary position. Craig Ergwin, thank you very much. Colin Rush, thank you very much. This is going to be a YouTube moment, gentlemen. Thanks. Why don't you read the next one? Let me just take it from here. I'm taking turns on this, aren't we?

Coming up, helping government solve some of the most high-profile criminal crypto cases. We'll hear from the CEO of Chain Analysis, whose clients include Binance and FTX. That's at today's working lunch. You won't want to miss it. This is anything but magical at the Magic Kingdom. Shares of Disney just plummet down almost 13% following weak earnings. In fact, now this is on pace for the lowest close since March of 2020, the beginning of the pandemic. Perfect time to buy the media giant at a discount. or not. We'll discuss. All right, folks, the crypto market taking a dive today. Bitcoin trading below 17,000 for the

first time in two years. This week, John Ford brings us up close with a CEO whose company counts both FtX and Binance as customers and whose technology supports trust and compliance in the ecosystem, John. Yeah, Tyler. Michael Groninger is co-founder and CEO of Chainalysis, a late-stage startup. It's rated more than half a billion dollars. in funding. Chinaysis doesn't buy or sell crypto. It's a data-focused company that tracks transactions across the blockchain to aid law enforcement investigations and company compliance. He didn't start his career as an entrepreneur. Groninger has a PhD in quantum mechanics and was leading European research efforts when a typhoon stranded him at an airport in Bangkok

and he had a fateful conversation with a colleague. And we start to talk about what is the meaning of life. Why are we doing what we're doing? And I kind of slowly get back to this, like, I am not doing the right thing. I'm actually not chasing my dream from back then of becoming an entrepreneur. Yes, I build new projects. I help discover the Higgs particle. I help this and that. But I'm not building something of value that's kind of mine,

and I have the ability to influence. And I'm always talking to politicians that actually doesn't care about what we are doing, but they only care about how do they get two more postdoc students into their country. And I'm like, I couldn't care less. Well, Grinager says he believes blockchain and cryptocurrencies are the future, but that doesn't mean he's putting much investment into individual coins expecting they'll go up. Instead, he's trying to build software that helps instill trust and safety in transactions taking place in the crypto economy.

That requires a ton of data for us all to have the best possible knowledge about how we should trade them, how we should look at them, how we should value them, and all of these things. And that data is useful for a ton of different things. Other things are to identify criminal activity that happens on crypto, different kind of abuses. So a big part of our work is, of course, and that's a top-top problem, is to ensure that everyone is safe in the crypto landscape. And that means if funds get stolen, find who stole them. If someone do a ransomware attack, figure out who did it, and ideally get back the funds.

Now my sense, guys, is that companies like Chainalysis face some real risks during this crypto upheaval. After all, FTX is a customer, and it looks right now like FTX is going away. But there's also higher demand as governments investigate thieves and scammers and regulators try to figure out how to protect consumers. John, what other industries does he think that this might have an application for? If you're looking at, like for instance, casinos in my world, they're looking at cryptocurrency, but nobody's gone full in on this just yet. And it's not just cryptocurrencies, it's blockchain writ large. So you start looking into NFTs, areas like that, as well where this blockchain technology at least has the prospect of being used.

What could the what could an FTX implosion mean for this company? I think for all kinds of companies in the ecosystem, right, if your customers are going away and FTX is one customer who a lot of people thought hey it's pretty big, people thought you know 32 billion dollars what have you, then you take a revenue hit and so potentially at least in the industries we cover that can mean that other companies in the ecosystem have to downsize to fit the level of revenue that they're getting. But at the same time, they're not just leverage to the price of crypto. They also have, you know, blockchain's not going away. I really do believe that. There's a level of value here, so some are going to be able to survive.

So let me ask you one more question here. He says he wants to make people feel safe in the environment, right? Is that kind of big? Well, he wants to expose the data, right, and the connections through analysis that help people to feel safe. To feel safe. But something sort of existential that happens to a major player, that can do a hell of a lot to damage people's sense of safety in the space, right? It sure can. There's only so much that you can understand from just knowing who did a transaction, who tends to do certain types of transactions. When there's this kind of data kind of in the mix, doesn't signal a problem. At a certain point, people commit fraud, people tell lies, and that's not going to show up on the blockchain.

Interesting, timely. John, thank you. Coming up, Meta announcing a round of big layoffs. The stock is rallying on that news. Flirting with its best week in nearly a decade will trade that name and others. And today's three-stock lunch. All right, time for today's three-stock lunch. Looking at some big movers of the day, Disney moving the wrong way, if you're a Disney owner, 12% lower today after reporting an earnings and profit miss.

Shares now on pace for the worst day since March of 2020. Mehta, those shares up nearly 6% today after announcing more than 11,000 employees will be laid off. And Roblox sinking after reporting a bigger than expected loss, shares down 20% today. Let's trade these names with Delano Sapporo, CEO of New Street Advisors. He's also a CNBC contributor. Let's talk Disney here. Disney stumbling, Delano. Yes, Tyler.

Good to see you. It is stumbling. And I think one of the reasons why is because they missed heavily on the park side, and that's where a lot of investors wanted to see some of the strength. If you look at what's going on the DTC side, that's where you'd be able to pay for investor premium and be also looking at the stock in this exaggerated move after earnings. Because they're looking to shrink losses over 200 million in Q1 for them on the side of the DTC side. And also, you know, they're predicting a stronger holiday season. And so I think if you look at it in totality, their game, you know, share on Netflix, obviously, when you talk about ESPN Plus, Disney plus, and Hulu subscribers.

So there's opportunity there at Disney. I like to wait for these exaggerated moves to kind of clear out before I jump in, but I think investors can be looking at it. All right. Let's talk meta. It's clear that investors have been waiting to see whether Facebook owner Meta could pivot and really tighten the belt somewhat. They announce that they're doing it and look at what happens with the stock.

What do you think of this? Would you buy it? Yes, so holding, and that's kind of the same sentiment I had last week. I think, you know, you obviously the positive move on a little bit of restructuring, which is not, you know, something in the business used to do, but obviously we don't cheer for those things in these certain cases. But, you know, they're focusing on those small areas, as Zuckerberg said, where there's high priority for growth area.

So I think that's going to take time to shake out, especially on the Metaverse and Horizons world. That's an area where you want to see it as best they add more users, and it's still in a tough environment. So, you know, holding that position is something that I'm going to be continuing to do and waiting for kind of the strategy to play out a little bit more. Let's get to Roblox then. Wider than expected loss yesterday. What do you think of this stop?

Yes, very much wider than expected loss. They're trading, you know, 65% down here to date. But, you know, I think here there's an opportunity for, you know, sprinkling name. This is obviously a high-growth name. Sprinkling has some opportunities for holdings here. If you look at their revenues, the bookings is up, and the big thing I'm tracking is how they're growing. Their daily active users are up over 24% from a prior year. And I think they're going to be able to monetize their fastest growing demographic, which is that 17 to 20-year-old, four-year-old age range, which they're growing and gaining penetration in.

So I like robots, especially on such an exaggerated move. It's still a name that you're cautiously buying or holding, but there is some opportunities there. DeLano, thank you very much. Alana Soporo. We appreciate your time today. Thank you. Coming up, more signs of trouble in the housing market, plus one final check of the markets with the Dow currently lower by 592 points. We'll be right back.

Time now for other stories catching our attention, starting with another bad sign in the housing market. Redfin is shutting down its home flipping business, according to the Wall Street Journal. It says the business was just too expensive and too risky to continue. The move will result in layoffs of 13% of the company's staff that stock has lost in. 90% of its value so far this year, and the market cap has fallen to $350 million. The company blames in large part the rising rates. But, you know, you have company execs saying, look, we own all these homes that you yourself wouldn't want to be sitting on at this point.

It's expensive to flip homes. The materials, the laborer are expensive, and then with home prices as uncertain as they are right now. And things are staying on the market longer. It's harder to sell with rates higher, and purchasing power eroded. I'm so struck. I watch the Chip and Joanna Gaines video. How quickly they flip these houses. It's just not, never happens that way. Does it happen in one hour?

It happens in an hour. It happens in an hour. And it's all done in two months. I've done it before. I've been involved in flipping a house. It is not easy. And when you're trying to get, it's trying, you're trying to game out, right? How much is it going to cost to get this into sellable condition so that you can make a profit? What was the decline on that stock? 89% in a year? Wow, that's crazy. 90, something like that. Or let's take a final look at the markets near session lows as we head into the final hour of trading. You see the industrials off about 580 points. S&P off nearly 2%.

NASDAQ lower by more than 2% today at 10-366. Boy, if you put Bitcoin up there, you'd see some carnage as well, folks. Yeah, Disney, the biggest loser on the Dow right now. That does it for Power Lunch.