Power Lunch - Power Lunch 12/21/22

Episode Date: December 21, 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.

The Dow up 505. What a day we got on in store for you. I'm Tyler Matheson. Here's what's ahead. Tesla bears, they've been in control of that stock. It's down 60% this year. Market cap below 450 billion. Boohoo, 450 billion. But are the charts starting to tell a different new story? Why one technician says it's time to take another look at Tesla. Plus an earnings recession. One analyst is cutting his profit estimates on two major retailers, citing worsening consumer space. trending. We'll talk to him about his call and what to expect Kelly as we enter 2023. Tyler, thanks. Before that, let's get a quick look at today's rally. The Dow's up 516. That's near session highs. The SMPs up 60 points, a 3882 in the NASDAQ up 1.7%. Now, the semiconductors are also putting in a pretty decent performance today. The ETF up about 2%. All components trading higher.

AMD up 4% ASML up 3%. Elsewhere, six flags is trading higher after an activist investor took a stake and is urging the company to sell or spin off its real estate, six flag shares up about 12 percent, tie. All right, let's dive deeper into Tesla, shall we? Shares of the EV maker down 55 percent since surpassing the trillion dollar market cap point last October. Now, it's worth noting that Tesla has joined the S&P 500 exactly two years ago today, and it has lost all of its gains since that announcement way back in November of 2020.

Now, our next guest has been very bear. on the stock sticking by his call to sell over the past six months. But now he has changed his tune, saying it's time to nibble and go small, long on Tesla. Let's bring in our friend Carter Worth, founder and CIO of Worth charting. Carter, good to see you. I don't know what that device is over your right shoulder there, but it's handsome. It's handsome. Maybe it's something Tesla. It has all the answers in it. It's got all that's the answer. That's the answer, Tron. Okay, we got it. All right. So why have you changed your view on Tesla. Do you think this stock is just sort of bottoming out and the worst is down the river? Well, for starters, this is very dangerous stuff. It's bad technique in principle

to buy a stock in an established downtrend. This stock is in freefall. And so it's not for the faint of heart. But at this point, it feels to me as though we have something of a crescendo. You have a couple things going on that all together, to my way of thinking, mean that it's time to take the road less travel, play for a bounce. And they would be as follows. One, we are getting day after day analysts, quote, throwing in the towel, reducing their price targets. Still high price targets, higher above the current level,

but cutting them in half and things like that. Two, you can't get a stock that's more in the news, not only the stock itself, but its founder. and ancillary and related news items to this company and other endeavors that the founder is engaged in. Three, we're now on our fifth monthly decline. That has never happened since Tesla's IPO going back to 2010. So that in and of itself is a rarity. And then just in terms of an oversold condition, whether you were to use an RSI indicator

or just this simple fact, we are now trading right now 43% below. the 150-day moving average, the two other times when you were that far below trend, below your average trailing price, you've got to bounce. And so I think it's a trade. And at a minimum, if you have been short, happily short, just get out. Yeah. And if we'd followed your charting here, sell Tesla, sell Tesla, sell Tesla, and had been short, we would have made some nice money here. Now, tell me how, how, you say to go small long, what does that mean? and in practice, if Tesla continues to slide, do I have, oh, we've got some breaking news, I'm sorry. We're going to watch here as President Zelensky of Ukraine and the President of First Lady of the United States greet him at the White House.

As you know, he flew overnight from Kiev, presumably, or an undisclosed location in Ukraine to meet with the President at the White House. That is his first meeting. and then later today he will appear in front of Congress for a primetime televised address. The United States is offering something in the order of $1.8 billion in additional aid that will apparently include a Patriot missile battery, which is an anti-aircraft or any air defense missile battery. That is an inflamed grant to Ukraine from the point of view of the Russians who call it something that is going to bring

unpredictable consequences. We shall see. But there, Mr. Zelensky at the White House. So, Carter Worth, with thanks. Basically, Carter's saying, go, oh, you're back. You're back. Oh, wonderful. Look at that. So how do I do it? If I start to make a little money, what do I do? If I start to slide,

what do I do? I mean, just for just one second on that breaking news, I mean, all the honor and respect to that man, talk about profiles and courage. Yes, indeed. But anyway, back to Tesla. Look, when you're doing something that's basically bad technique, buying into downtrend, don't do it big. Go small. And then here's the key.

Just as you implied, Tyler, if and as it's wrong, get the heck out. But if it starts to bounce, add to it. You press your bets when they're working. You cut them if they're not working. All right, Carter, thank you so much. Appreciate your indulgence there on the breaking news. We appreciate it. Let's look at the broader market rallying today on hopes that corporate earnings might be better than feared.

Look at Nike. Look at FedEx. our next guest says we're in the eighth inning of the rate hike ballgame, eighth inning. And with recession expectations high, let's bring in Randy Warren, EP wealth advisors, senior vice president and partner. Randy, you have opinion on Tesla before we dive into all this? Well, not so much. I mean, I do drive the car, so I do love the car. I do love Elon Musk. He's doing a great job. But, you know, as it was said, it's in a decided downtrend. So you've got to be pretty careful with that one. All right. So where do you think it's a little bit safer for investors to be

looking these days? Well, like you were saying, most economists, you can't find any economist today that isn't predicting some sort of a recession next year. So it's, you know, the question really is how severe is it going to be? And we want to remain optimistic, but we do think there's probably about a 75% chance of a mild recession next year. GDP may shrink by, I don't know, half a percent or so. So that's relatively mild. So you might want to think more about, things in the energy sector right now, something like that. Just steer away from, you know, falling knives, as we just talked about. Maybe go steer away from retail, things like that.

But, you know, the energy sector would be a good place to top up your bets right now, I think. Sure. That's an interesting. You know, I'm just going to channel my inner Michael Darta for a second. He gets so upset when everybody keeps saying it's going to be a mild recession. It's just going to be. He goes, why? You know, how do, why would you, why would we say that?

We just hope. I mean, if it's not, Randy, if it's deeper, if it's harder, and maybe it's not, you know, for a little bit more time, I don't know what you do in a position like yours. I don't know how you even brace for that possibility or what you do if it starts to really set on us. Yeah, so we are long-term investors here. We're not trying to just make stock picks or something like that. We're trying to do, you know, full wealth management picture. We're trying to do the full planning picture with the clients. We're trying to help them achieve their goals.

So stock picks is a very small part of that. But overall, you want to stay long for the long term and not try to guess where the market is going. So maybe at this point being a little bit more safer, you want to stay away from the individual picks and more go in the direction of like the diamonds for the Dow Jones Industrial Average or the spy, where you get really a nice set of diversification. But you're also going to get the beaten down tech stocks. So you're getting some of that if you're going broad. fraud. And that's a pretty nice way to go right now.

So let me come back to your view that you ought to top up your energy holdings. We're going to have a guest on later this hour who says that the best days in energy are behind energy and that 2023 is going to be a year of reckoning for energy, particularly the large integrated oils like Exxon Mobil and Chevron. If we're going into a mild recession and that recession is not just the U.S. but perhaps more global than not. Why would energy be a good bet here? And what part of the energy sector are we talking about?

He will later say, you know, the Exxon's and the Chevrons are done. What do you say is the place to put money in energy? So I look for those companies that are doing exceptionally well from an earnings point of view and that are returning earnings to the investors. So if something like a Devon Energy or something like that, It's paying around an 8.7% dividend. And why would you go against energy? Well, I would say if the recession's really bad, yeah, you don't want to really be in energy.

It's cyclically sensitive. But if the recession is mild, and there's really, as Kelly was saying, there's really not a lot of indication right now that we're in a recession. I mean, the economy is incredibly resilient even in the face of all these rate hikes. So if the predictions are correct and the recession is mild, it's probably safer to go in energy. And then you think about, well, what could be the upside? Maybe there could be China reopening and some more demand for that energy going forward into 2023. But if it's a terrible recession, if it's a really bad one, energy is going to take a whack.

Well, you explained your reasoning there very clearly. Randy, thank you very much. Have a good holiday. You too. We appreciate it. All righty, coming up, a new survey shows spending trends are worsening. and that could spell trouble for Target and Walmart's bottom lines, plus the comeback stock of the year and the greatest collapse.

A look at some of the biggest surprises of 22 and what could be in store in the new year. As we head to a break, take a look at shares of Boeing. The stock, the second best performer on the Dow, after a provision in the new spending bill gave the company a reprieve from a regulatory deadline for its 737. That stock up 7, almost 8%. Welcome back to Power Lunch, everybody. Look at consumer discretionary leading today's rally with a 2% gain buoyed by, you guessed it.

Nike's strong result. That stock up double digits. But the long-term retail picture might be a little bleaker, according to a survey from Stiefel. Consumer spending intentions are worsening. People plan to spend 4% less this holiday season than last year, and it's more difficult for people earning below $75,000. They plan to spend 26% less. It shows the pinch from inflation. What does it mean for retailers?

Let's ask Mark Astrakhan, retail and consumer. analyst at Stiefel. Do these results surprise you, Mark? They don't other than the fact that the holiday spending intentions continue to get worse. I mean, it's funny. We asked that question starting in late August, early September, and the intentions at the time were holiday 2022 would be up almost 10 percent, and now obviously what you're seeing is down. So I feel like it shouldn't surprise, but it probably should have surprised the people were as optimistic as they were earlier on. Do you literally think we're going to see a decline in outright holiday spending year on year once all the numbers are in? Hard to say, but obviously the direction would suggest that it's

going to be harder. I mean, I think you've seen that too out of some of the retailers so far. Obviously, we're in the middle of their fourth quarter for January quarter ends, and you're still a few days before the holiday here. But, you know, they talked about general merchandise, mainly things non-stapely being weaker, heading out of the third quarter into the fourth quarter, things, you know, electronics, toys, et cetera, apparel, all those things being a little bit worse. I think Walmart's numbers were down mid-single digits for general merchandise. They were down low single digits in the prior quarter. So they are negative for things that are more discretionary in nature. Sure. And you are reducing estimates as a result of this. You're trimming your EPS estimate

for shares of Walmart and Target. I mean, those are the consumer names. Every person who comes on and says if they want any exposure to the consumer, they always want those kind of names. Walmart, especially, the trade down effect. This is telling you that, you know, how would you play the retail space then? Well, I think those are still the best place in a tough neighborhood. I think that's how we would put it. But in terms of the reason we're taking numbers down, it's less about the comp growth being necessarily a lot worse than people expect. In fact, I think at least in the short term, you probably hit the numbers that are out there. But a lot of it's being driven by consumer staples purchases, right? So it's just pass-through of inflation. If you think about Walmart's

October quarter, for example, overall growth up 8% from a cop standpoint, but grocery up mid-teen. So basically all that pass-through of inflation-based pricing, general merchandise, as I said, before declining. And so that's how you get to a high single-digit overall comp number, where it hits earnings and where I think the piece that folks are going to have to pay attention to going forward is that unfortunately general merchandise tends to be higher margin. I'm talking more gross margin, but obviously flow-through as well to profit. And staples tend to be less profitable.

And so the more staples purchases you have, the lower gross margin that hurt to overall profit margins. Conversely, right general merchandise does better. That helps things as well. Talk to me about Costco and why you have a buy on it as opposed to a hold on Walmart and Target. And I was struck by the sales per square foot number that I read somewhere. It's almost double at Costco what it is at Walmart. Well, Costco's just a great retailer. It has been historically, will continue to be a great retailer in our view.

So they often tend to have a lot more insulation, especially relative to the company like Target that has a lot more general merchandise categories. And so almost 60% of Walmart's business is being driven by Staples purchases. And even what they sell in general merchandise tends to be more selective. They have members. So it's a captive audience. Those members, interestingly, see more value in shopping at Costco. So even in tougher time, people tend to go there more.

You saw a huge benefit to the business from gasoline inflation over the summer. People going there for local prices. They have membership fees that drives. Roughly two-thirds in that income over the years, they're probably going to take pricing on a membership fee. They're probably going to offer a special dividend at some point because of balance. She's in great shape. So it's just a really good business.

Wow. Special dividend, that'll catch people's attention. Mark, thanks. Good to have you. Thanks. Mark Astrakhan of Seafel. All right, coming up, four of the biggest companies in the world joining the bidding for the very expensive and potentially very lucrative NFL rights package. Which one has the winning ticket?

We will tell you coming up. plus a huge winter storm moving across the country just in time. Screw up my Christmas shopping. Some of the busiest travel days of the year as well. You got to get it done. You got to get it done. We're going to talk to the Transportation Secretary, Pete Buttigieg. He's going to tell us how the airlines are going to get everyone home for Christmas.

Power lunch will be right back. The saga of NFL Sunday ticket may finally be coming to an end. And the winner could be YouTube and Google. As we reported earlier this week, Apple and Disney dropped out. leaving only Amazon, which has the Thursday package and Google's YouTube. Now, DirecTV had the rights to offer this package for nearly 30 years at a cost of about a billion and a half dollars per year. No word yet on what Google is paying or how much fans will have to pay to get every single NFL game every single week. I guess that will be a streaming product.

It would be you'd get it through your internet subscription as opposed to a cable product. I guess, but, you know, this gets back to the myriad. You know, are you opening the YouTube app and then, or are they going to try to make it accessible in different ways, even maybe including on an existing cable channel. Like some TVs like mine will offer a channel called YouTube in my package. And of course there's YouTube TV, which is an excellent product, by the way. I've used it before, but you have to pay for that. I wonder if they're going to use this.

I would think they would use this to cross-sell to get people to go over to YouTube TV. Because reportedly Apple was in the mix to this classic auction technique. They wanted to be in there to raise the price. but not actually to get the package. If that's the case and if that pushed up what YouTube had to pay, they're going to have to come up with ways to monetize this and cross-promote, obviously. You watch Red Zone? You know, I love Red Zone.

It's the best product ever. I love Red Zone. So Scott Hanson. That guy is good, man. That guy is good. If he were involved with Sunday tickets somehow, I don't know. I don't know how you can't get him announcing every single game. But I agree with you.

That is the problem. I don't get how he doesn't go to the red zone. for seven hours or something like that. I try to listen. I go, we haven't heard from him of 45 seconds. I bet. They just told me we can move on after I've made that remark. So, all right. Let's get to Christina Parts and Nevelas for the CNBC News Update. Yeah, move on to me. Kelly, Tyler, here is what happened. Well, and everyone else watching. Here's what's happening at this hour. President Biden has welcomed Ukrainian President Zelensky to the White House. Zilinski says he has come to Washington to thank the United States for its help in the war against Russia. He also says

he's made the trip to discuss strengthening Ukraine's defenses. Justin Bieber, fellow Canadian, is reportedly near a deal to sell his music catalog for $200 million. The Wall Street Journal says a unit of Blackstone is the buyer. Earlier this year, that same unit bought the music rights for Justin Timberlake, and that was over $100 million spent on him. And the New York Mets are saboring their deal, snapping up Carlos Correa in a $350 million 12-year deal. Correa had signed a $350 million contract with the San Francisco Giants, but that deal fell apart over an issue with his physical.

Tyler? Oh, my father-in-law is going to be so over the moon about Carlos Correa coming to the... I think he is. I mean, my goodness gracious. And only $5 million less. Yeah, right? And you've got... It's nice to be Steve Cohn, isn't it?

Just be able to buy any player you want. Christina, thank you. Thank you, Tyler. All right. I head on Power Lunch. As 2020 comes to a close, we're going to look at the comeback stock of the year and the collapse of the year, Kelly. And speaking of collapse, the supply, demand dynamic in children's medicine has all but fallen apart with empty shelves everywhere. We'll look at how we got here and what will fix it. Power Lunch is back in two. Welcome back, everybody. 90 minutes left in a pretty strong trading day for once.

So let's get caught up across stocks, bonds, commodities, and the outlook for holiday travel with someone who knows thing or two about it. We'll start with the markets Bob Bassani down at the New York Stock Exchange. Why the rally, Bob? Well, two things. Number one, consumer confidence came in better than expected. That's helpful. We want consumers to be confident. Good news is good news. And great earnings reports from the two key stories of the day. Nike and FedEx. Nike is by far the most important thing. And this is the biggest mover on the end on the on the S&P 500 right now. So we had better inventory, better holiday sales and better comments on China. The big three.

Low expectations, they exceeded those expectations, double-digit gains. Carnival had decent, not amazing earnings. The important thing is bookings were pretty strong. That's why we're seeing those cruise lines move to the upside. Another group that's doing a little bit better today is the home builders. Existing home sales are a little bit on the disappointing side, but mortgage rates are continuing to come down 6.3% versus 7.2, about 6, 7, 7 weeks ago. All of the home builders are moving to the upside.

Another group that had a frankly terrible month of December were the banks. A lot of the big names were at 10% down this month. Zion's in Comerica, 52-week lows not that long ago. And look, they're bouncing nicely today. That's a really good sign to see the financial showing some signs of life. So right now, folks, we're in a little bit of a mini rally. We had four down days, two up days. Remember, Kelly, the Santa Claus rally starts on Friday.

This is the tendency of stocks to move up in the last five days of the old trading year and the first two days of the new one. We'll see if Santa Claus comes to Broad and Wall. Kelly, back to you. We're hoping for it after this year. Bob, thank you. Let's get to the bond market. Now, Rick Santelli, tracking the action after that strong 20-year auction, Rick.

Yeah, you know, strong 20-year auction, strong consumer confidence, yet every yield from twos out to 30s right now is lower on the session. Let's look at intro of 20s. You can clearly see it one Eastern rates dropped as investors flocked to buy into. the 20 year. Month to date of tens, here's what you want to notice. On the left side there, that low, that month to date low is 3.41%. Many believe that is the low and the yields have been going a bit higher. And if you open the chart up to mid-October, we see the post-COVID high yield close right there on the left. It was on the 24th of October, right around 4 and a quarter.

Why is that important? Because that's the upper bound, the lower bound? Well, go all the way back to mid-June. You see that left side there? That spite there is 3.47 percent. Many traders think that is the support level to pay attention to in the big picture. Kelly, back to you. Thank you, Rick. Oil's closing for the day. The energy complex getting a nice bump again. Pippa Stevens back with us, I think from Cairo with the numbers, Pippa. That's right, Kelly, back from Egypt. And oil is higher today, thanks in part to the inventory report, which showed a larger than expected draw, meaning demand is still. there. U.S. stockpiles fell by 5.9 million barrels last week against estimates for 1.7 million

barrel decline. Now, optimism around China curbing some COVID restrictions is also boosting crude. Let's take a look at prices. WTI up 2.7% at 7827 with Brent crude right around 82 for a gain of 2.8%. Now, we are also watching the winter weather blast that's bringing frigid temperatures to much of the U.S. starting today. And that could curtail holiday travel. travel plans, meaning we could see softer demand for gasoline and jet fuel next week. Now, turning to energy stocks, oils climb is lifting the group. It's up about 2% and leading the S&P. Much as it has all year, PIPA thanks.

Now to the travel season, AAA predicting that 2022 will be one of the busiest in more than two decades. An estimated 112.7 million people will travel between December 23rd and January 2nd. And of course, this is just as a major winter storm is. sweeping the nation. For more on how airlines and passengers are preparing, let's bring in the Secretary of Transportation, Pete Buttigieg, who joins us now, Mr. Secretary. Thanks for your time and welcome. Good to be with you. Thanks. What's your message to both the airlines and passengers who are right now trying to figure out what to do? Well, the message to passengers is to stay informed. Make sure you're checking frequently on the status of your flight and check whether your airline

has offered a free opportunity to change your ticket. A lot of the airlines have been doing that in the last couple of days, giving people a chance to move their travel up. Maybe if you're in the Midwest, for example, and your travel plans were to go tomorrow night or Friday morning, be good at looking whether you can beat the storm or pushing them back and traveling a little bit later after it's passed. This is weather that is impacting multiple key airline hubs. And so, you know, having gotten through such a great smooth Thanksgiving week in terms of travel, including the busiest travel day since before COVID. Things went so well.

But this time around, unfortunately, it's just not going to be as smooth because of this weather. It's a good time to look at options, create lots of extra time, have a backup plan, and stay informed. Yeah, I don't know whether you, Mr. Secretary, going back to your home in South Bend, but good luck with that if you are, because it sounds like it's going to be pretty tough. Let me ask you about employment levels of both the airlines. And I know TSA is not in your department. it's a part of the Department of Homeland Security. Are there enough people in the airports to handle the people who are coming to the airports? Well, there are, but there's not a lot of cushion.

We really need to see more staffing on the airline side. We're especially looking at pilots and mechanics. Even in our own organization at the FAA, we're working to get more air traffic controllers prepared and qualified. Really, across the travel and transportation sector, what you're seeing is a business model that over the years really stripped out any sense of excess employment, now catching up as you've got demand off the charts. We're so glad that there's this kind of demand. But airlines, as we saw over the summer, we're really struggling to service that demand.

And it's going to be very important for that hiring to continue, that staffing to continue, to create some cushion in the system, especially when you go into days like this, where there's weather. Nobody can control the weather. but you can control how resilient the system is as you're dealing with it. And I'm going to be watching closely to see if the airline sector has made itself more resilient than it was early this summer when we saw some of those extraordinary levels of disruption delay.

Right. Speaking of resiliency, Mr. Secretary, is it true that if we were able to just upgrade the radar system, we could have like triple the number of planes, perhaps better communications, less cancellations and that kind of thing? Where are we on the next gen front? So there's definitely a lot of progress to be made. None of it's simple. I don't know that there's any such thing as low-hanging fruit when you're talking about the most complex airspace in the world and an extraordinary safety record that has to be maintained through all of the changes. But it is true that a lot of air traffic control works on a paradigm that has been built up over decades. And as we enter a period of new technology, new forms of computing power coming online, there are more efficient ways to manage our air traffic. A lot of different things need to be balanced through all of that. Our priority is going to be safety. But we can't go further into the 21st

century on a 20th century model. And that's why we're making these upgrades and these changes. Again, very carefully and very intentionally. But you're going to continue to see that progress across the system. There was a lot of pride, I guess, taken on the part of the administration regarding the infrastructure spending bills that have moved through Congress. and reached the president's desk to be signed. What can you tell the American people about when they should expect to see the fruits of that infrastructure spending on their roads, on the rails, in the ports, even in the air? When should we expect to see the cross Bronx get back to where the cross Bronx ought to be, for example? So one thing that I'm really looking forward to as we go into this new year is that it's more and more going to be about delivering,

We spent the first year of this administration just getting that bill passed. Last year, a lot of time spent standing up these programs, moving the dollars out the door. We've already got about $100 billion on the move or identified for projects. That's only going to accelerate going into this year. Now, of course, not all projects are alike. Some of them can be done in one construction season. Some of them are already underway. Others, including some of these major complex projects that are the things you see in the gateway vision.

in New York or things that straddle multiple states sometimes. Some of these are going to take years to complete. And what's exciting about that economically is it means a pipeline where people can plan businesses and workers can plan on a lot of construction opportunity, not just one year at a time, not just a one-off, but really a decade of building. But it's safe to say that we'll be cutting ribbons on some completed projects in relatively short order. Others are going to take the better part of this decade to see through.

And we intentionally designed this with long, medium and short-term projects in mind. It's really exciting and really fulfilling to be underway on those, including just today an announcement of another round of projects, focused on rural America that are going to improve everything from safety to throughput in a number of key locations. Going back to the rails for just a second, you know, it's ironic to hear all this funding on the one hand, but many of us are more sympathetic than ever to the plight of a lot of a lot of these rail workers, as you realize they've had no paid leave. They're trying to push through these wages. They're exhausted after years of being overworked.

Are you satisfied with the way the rail strike talks played out? And do you have any regrets about how that went down during that period of time? Well, look, our position has been that every American worker ought to have paid leave. Every rail worker, every journalist, every fast food worker and everybody in between. And we're going to continue pushing for that because we think it's the right thing to do. you know, if even one Republican had changed their mind about that in the Senate last year, that might be a reality today, but we're not giving up on that. At the same time, there have been extraordinary gains. The rail labor deal, for example, that was agreed, tentatively agreed to

and then enacted by Congress, definitely not perfect, definitely didn't satisfy everybody. But that 24% pay increase and the other improvements, I think, are well-deserved by rail workers. And yet it's clear that there's more work to be done. And, you know, in a way this time, back to the conversation we were having earlier about the airlines. You've got so many businesses that have really tried to ring their business out of as few workers as possible. In the case of rail workers, what that has led to is even when they have sick days or vacation days or days off, and many of them do, they can't actually access them because of the scheduling. It's not that different from the dynamic you have with a lot of pilots who, I think this is going to be a big

topic going into next year, pilots finding that they're not able to. able to get the kind of work flexibility that they feel that they've earned. It's playing out across the economy, definitely the transportation sector, and something's got to give here. Interesting. Yeah, fascinating. Mr. Secretary, thanks. We appreciate your time today. Good being with you. Thank you. Pete Buttigieg. All right, coming up, the country facing a new shortage this winter season, cold medicine, especially for children. We will look at why and what's being done to boost supply. And as we head to break, remember, you can now listen to Power Lunch on the go. Look for us on your favorite podcast app.

Follow and listen today. That is not a suggestion. That is a direction. The Biden administration says it will release doses of prescription flu medication, Tamiflu, from national stockpiles to help with the strong uptick in flu this season. Add in RSV spikes hitting hard in school age kids right now, and that's creating a shortage for children's fever and pain medications. Let's bring in Bertha Coombs with the story.

Hi, Tyler. You know, retailers are seeing heightened demand like they've never seen for children's over-the-counter fever and pain medications. The majority of the country is experiencing elevated levels of flu and it is hitting kids hard. The CDC reporting 30 deaths from influenza among children this season. That's just as of December 10th. On top of a big increase in childhood respiratory synchital virus or RSV infections this fall, it's making for unexpectedly strong demand. for children's OTC METs. J&J, which makes children's Tylenol and Motrin, says the issue here is demand rather than supply chain. And tells CNBC, we recognize that this may be challenging for parents and caregivers and say they are doing everything they can to maximize production capacity, including running a lot of their production sites 24-7. Now, I just spoke with FDA Commissioner Robert Caliph.

He says all of the manufacturers are working with. all out right now to meet supply demands, and the FDA is monitoring those supplies carefully. We're urging people not to buy more than they need, because there is enough to go around for the amount of illness. It's just that the minute it gets shipped out, it gets bought. And if people buy more than they need, and everybody does that, then people who need the products won't be able to get them. To that end, some pharmacies are acting to try to preempt shortages. CVS is now limiting purchases to two children's pain relief items in store and online. Walgreens and Rite Aid are limiting online purchase, not in store, but again, everyone is urging people to be cautious about just how

much they buy so there's enough to go around. So, Bertha, is there anything more here that Jay and Jay could do? I mean, we're coming off of COVID, which is the whole point was to mobilize national resources. In a way, the sicknesses now are related to COVID because it seems to be this boomerang effect. Can we do something more to try to mobilize supply chains to get more of these medicines out on shelves? They are trying to. They are literally all producing 24-7, so they are adding more production capacity. The problem is that we are not just seeing it here in the U.S., but across the northern hemisphere where we're all experiencing this tripledemic right now. The hope is that maybe we will not see yet another spike over the holidays that people will be

more careful and will see supplies start to. normalized in the new year. We are seating some areas where RSV, for example, is starting to stabilize and even come down. The flu as well as looking to stabilize. But again, we do have the holiday coming up and lots of gatherings over the next week.

I think you just hit it at it. When could these shortages abate? That is the question. If we don't get another big spike, Dr. Caleb seems to believe that over the next few weeks, we'll start catching up. But again, that all depends on whether we see these levels in

terms of flu and RSV in particular abating here as we head into the new year. All right, Bertha, thank you. We can only hope. Yeah. Bertha, thanks very much. Bertha Coombs. For all the factors we talk about the move markets, nothing matters to an individual stock like earnings.

Coming up in three-stock lunch, we're discussing three big movers and where those stocks might be headed next. Stay with us. Today's three-stock lunch is focusing on three big movers post-earnings. FedEx, higher after. they reported a beat, say they plan to cut more than a billion in costs, Nike surging after they topped expectations made progress on their inventory issues, and Carnival trading higher after reporting a narrower than expected loss. Let's trade these names with Bill,

New Trust Company Chief Investment Officer. Bill, great to have you here. Let's start with FedEx. What do you say? Yeah, you know, it's interesting picking that. We actually just sold FedEx at the beginning of this month after owning it for quite some time. So, I mean, long term, I'd say, a lot of the reasons why we liked it are still intact. And that's really, you know, underlying that there's really only a couple public traded companies in the space. You know, so they dominate or one of the people dominating it. Long term, the e-commerce volumes will be there. The problem is short term, they're lapping the volumes from COVID, so their volumes are down. Second part of it is really wage inflation, fuel costs of all crimp their profitability. So that's

where it gets a little bit hairier and why the stock, you know, though the bounce today has been down. You know, they announced a lot of cost cuts, which is, you know, the right direction to go. We just say wait because probably think there's more pressure on the company. Since we expect a recession next year, there may be kind of an additional pressure point. But long term, we look for an opportunity to get back in there. All right. Let's move on to Nike, which is one of the stocks of the day, up more than 13%. Yeah, I mean, Nike, that is one of the great ones in terms of So when you looked at it, sales up 27% year over year stripping out currency, which is, I think, the way to look at it, things that they can control.

I think it just shows the strength of their brand and why you should probably be interested in it. I think the other parts of it that get interesting is, you know, they're one of the things. And again, strength of brand, they have the ability to go around retailers, so they are seeing growing growth of direct-to-consumer sales, so they don't have the middleman in there. The last part, which is really a play on China, which is if China's really opening up, there's another opportunity for growth there. So I think that one, we don't own it here, but I think it fits in what we would like, which is, you know, great brands that can live through any sort of recession. And frankly, you know, you don't need to worry about in terms of any sort of economic downturn. Not that the earnings won't get hit some or stock might go down, but they will, you know, highly likely they come back stronger than ever after.

Final name then. Let's talk about Carnival. What do you say? That was an interesting one. So, you know, the positive is Carnival is right now benefiting from, you know, the thirst for getting out and traveling and experiences rather than goods post-COVID. But that being said, the company was just, you know, close to crushed by COVID. So they lost money in 2020, 2021 and will lose money again in 2022. Looks like they should be able to turn it in 2023 in terms of at least some earnings. But the problem is margins will still be crimped by a lot of the additional costs to deal with, you know, protecting people from the health side of things. Also, they have still credits that people need to use from that they paid for already from COVID times.

So it's a road back. I'd say because it's, you know, financial health and balance sheet is pretty weak. I call it a speculation. It's not the kind of company we'd own here. It may be worth a look at for speculators because, you know, again, it's been beaten down into the ground. But it's so leverage that if you get another, unfortunately, I don't want to talk about another kind of COVID shutdown kind of thing. It may not make it. Wow.

Bill, thank you. We appreciate all your thoughts today on these three bigger. earnings movers, Bill Stone. All righty, check out shares of Netflix. That stock has rallied nearly 80% off its lows for the year. Up next, we will discuss more of 2020's biggest bouncebacks. And as we head to the break, check out our stock draft leaderboard at Big Gain in Netflix, propelling Ryan Reynolds Mountain Goats into first place.

He's got a pretty sizable lead over Mr. Wonderful Kevin O'Leary. Terry Lundgren in third place. We'll be right back. All right, 2022, it is no secret, was volatile year for stocks with many seeing big moves off their 52 week lows. Of course, they had to get to those 52 week lows first. Occidental Petroleum, up 127 percent from its low. Etsy, 100 percent off its low hit in June. Netflix, up 79 percent.

May was its nadir. And Boeing with a 70 percent game. But what about the biggest collapses? Joining us now is Steve Grasso, who's with Grasso Global. And he's also a CNBC contributor. I guess one place to start, welcome, by the way, Steve, and happy holidays. One place to start would be with the semiconductors as a collapse. Yeah, so this is a, you know, and Tyler, when I look back on this, this was sort of a, you know, a setup that was telegraphed.

You had coming off the pandemic low, you had people over-ordering computers. They were stuck at home. They had to order laptops. They had order TVs. They were making their man and women caves pretty luxurious. A lot of overordering. Supply chain distraught. You can't get any.

You couldn't get cars. So they were overordering chips. So we went from a drought to a glut. And now if you look at it, what do you associate these chips with? Gaming, that's probably a head win right now. Crypto mining, you think that's a head win right now? That's a head win right now. And AI is probably the biggest tail win.

But once again, tremendous headwinds going forward. Everyone overordered. They have to catch up. And you think of putting a name on it, Invidia, which had been such a darling in 2020, 2021. It was a superstock, frankly, and today representing what you just described. Let's move on to oil and energy. You sort of called the peak, called it phone. rolling hard at 125 a barrel? You were right. Yeah, you know, and I appreciate that.

Well, first of all, it's very easy on Wall Street to go against the consensus bets. And you're right a lot more often than you're wrong on those. And when I had called the collapse, it was around $120, 125. People were still calling for $1.75, $200 a barrel oil. And it just doesn't happen like that. So although there was a disconnect, Tyler, from the energy companies that are run more efficiently now and the price of the commodity. So the companies went higher. Commodity went lower. It's still, if you look at ExxonMobil, use this as an example. It didn't get to the level that it was at in 2014 until this year. It took eight years to make that new high. So I think the two years of outperformance is over for the

energy names. Steve, I like your big comeback stock. the year, the only problem is it hasn't had a comeback yet. Well, which one are we talking about? The Disney? Meta. Oh, meta. Well, for me, you know, meta, when I looked at that when it was trading basically in the 80s, middle 80s, that one was ripe for a bounce back. So, you know, there's been a headwind where I've been very negative on meta, Kelly, for a while now. It doesn't, no one knows what the Metaverse is. Change the name of a stock. No one has any clue. It needs a therapist.

So I think Mark Zuckerberg now is actually figuring out. Let me figure out what to do with the successful part, the investment part, how to throttle out investment. That's all up to him about how to throttle that investment. But if you look at the stock, it's bounced back pretty aggressively, and I expect a lot more to come in the next year. I love that. Meta may need a therapist. Another one that may need a therapist is Disney, after all, that's gone through there. We've just got a couple of segments. I know that's a couple of seconds. I know that's one of your picks here based on its franchise strength and so forth.

Netflix as well. And Netflix as well. Steve Grasso, great to see you, my friend. Have a great holiday. See you next year. You too. Take care. Thanks for watching Power Lunch.

We'll hope to see you tomorrow.