Power Lunch - Power Lunch 2/28/23

Episode Date: February 28, 2023

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 pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon, everybody, and welcome to Power Lunch alongside Kelly Evans. I'm Tyler Matheson. Coming up, the future of Goldman Sachs, CEO David Solomon on CNBC today, saying asset and wealth management will be the new growth engines for the company. But will he be around to lead Goldman to its next chapter? We'll discuss what's ahead for Solomon and the back. Plus, target shares are moving higher, earning speed, but the outlook is weaker. We'll dig into those results in what the company is saying about the strength of the consumer. It's good a look at these markets. In the meantime, the Dow is still the only negative of the major averages, down a quarter percent while the S&Ps up a third of 1%.

The NASDAQ, 2 thirds of 1 percent, and the Russell small caps leading the way today. Let's dig a little deeper on the markets with Dom Chu and Christina Parts in Revelis. Dom, you first. All right, so speaking of the Dow, the underperformers, you can see there, due in large part to declines in both Goldman Sachs and United Healthcare. It's the price-weighted Dow. So Goldman carries about a 7 percent waiting, Goldman close to... 10% United Health, 7%, I mean, the whole thing, 17% between those two stocks. If not for those two, the doubt would actually be positive today.

I know you guys are going to have more on that Goldman story coming up. Now, from a sector perspective, health care, one of the bigger drags more broadly. I mentioned United Health. It's also a 9% drop in universal health services on the day after the hospital operator reportedly generally positive quarterly results, but it's profit forecasted fall shy of estimates. Outside the S&P, there's a down day for Acadia health care. It's an operator of mental health and addiction treatment facilities, better or at least more mixed results here in a higher cost environment.

Now, as for the best performing sector, it's real estate overall, S&P 500 members, extra space forage, and then public storage, both outperforming, getting help from a smaller non-S&P competitor in national storage reporting generally more positive results. It seems like there's still a lot of demand out there for folks porting and storing their stuff off site. So with that in mind, I'm going to send things over to Christine. here because real estate is one thing, but tech much more important from a sector perspective. Exactly. And I'll start more specifically within the crypto space because we're seeing shares

of Coinbase now surging, what is it, almost 13% without any major news catalyst, but it could be because of surge in certain crypto AI coins. Coin is heading for its first back-to-back monthly gain since August. The major bounce doesn't appear to be supported, though, by Bitcoin because we can see Bitcoin is up, but just about about a percent right now. Another important crypto player is Robin Hood. Its shares are up almost. Look at that. Over 4% right now, even though the SEC has subpoenaed the firm over its crypto listings and platform operations. Switching gears completely. I want to talk about Norwegian cruise lines right now because its shares are down 11.5% on a wider than expected loss for Q4 and weak forecast due to what? Soaring fuel

and labor costs. And it's not the same reaction, though, for some other travel names right now. When resorts and Expedia, you can see both win up both 3% in Expedia over. 2%. Guys, back to you. Christina, thank you very much. We begin this hour with Goldman Sachs, one of the key stories of the day. Shares trading lower as the company holds its second investor day in the company's 154 year history, off nearly 3% the stocks right now. It comes as there are growing concerns about the execution of some of its businesses. Earlier on Squawk box, CEO David Solomon addressed some of those concerns with Andrew Ross Sorkin. I think it's absolutely fair that our execution around the consumer platforms hasn't been to the standard we'd like it to be.

I think we tried to do too much too quickly, and as a result, our execution in some areas of this wasn't good. And so what do you do? You correct that. And so, you know, that's what businesses do. There isn't a business that kind of goes through and doesn't have successes, but also some stumbles. And will those stumbles eventually cost Mr. Solomon's job? Let's get some insight now on Goldman's Future with Paul Argenti. He's professor of corporate communications at Dartmouth's Tuck School of Business. Paul was also a consultant to Goldman Sachs in the late 90s and early 2000s, knows the company well.

Professor, welcome. Good to have you with us. Thanks. Great to be back with you guys. Were you convinced this morning in listening to the interview with Mr. Solomon, both that he has the right strategy to get Goldman clicking again and that he's the right guy to do it? I don't feel confident on either front based on today. I mean, you know, it's really, you have to prove it with action over time. And one interview today isn't going to change what has happened over the last couple of years in terms of the way Goldman has performed and what's happened to its reputation and image over the last decade for sure.

So still a long way to go, I'd say. How much time does he have to do the turnaround that you think is needed? I don't think he's got much time. I mean, starting to get pressure from partners, if the culture is the same as I knew it, once partners start to rattle the cages, things are starting to go the wrong way for him. I think he could clearly turn it around. It seems sometimes like he's distracted with other things. The DJing and focusing on other things is not good for the image of the bank or for him.

And I think he needs to bear down pretty much on really focusing on Goldman and trying to get it back to where it needs to be. The interesting thing, Paul, is the humbling in some ways of the organization. You know, those of us who were formed by its reputation in the early 2000s and the 90s when you worked with them, it was, it had such gravitas that it was the subject of, you know, the famous Matt Taibi article claiming it brought down the entire economy. And, you know, does it have the same status today? And if not, why? And what would your advice be to try to either get back to those days or to accept that maybe they're never going back? Yeah, it may be impossible to get back to those days. I mean, the mystique surrounding it when it was a partnership, you know, they still attract hundreds of people for every job they have open and it's still a sought-after employer. But it doesn't have that same mystique that only a handful of organizations in the world have. Whether they can ever get back there or not is really dependent upon how they look at the world. I think part of their problem is they just don't really have a good grasp of how communications works in the 24. first century, like worrying about leaks when, you know, everybody has access to everything.

You need to be more transparent about what you're doing. So they clearly can't go back to the days when information was so tightly held as it was in the late 90s when, you know, I knew the organization. But they need to find a way to thread that needle, to try to get Goldman to be a more respected institution than it is today. And for the leader of the organization, whether it's Solomon or someone else to have a little bit more of the gravitas that goes along with being in that position. Let's compare it with its arch rival Morgan Stanley, which kind of doubled down on asset and wealth management, which now seems like where Goldman is going to put a lot of its emphasis. Meantime, Goldman over the past decade went in arguably off brand into consumer finance and

consumer banking. Is it too late now to turn this ship around? and do what it needs to do. Absolutely not. Absolutely not. I don't think so. I mean, look, this is one of the premier organizations in the world, the people who work their world class. And, you know, if they have the right strategy and the right leadership,

I'm convinced this organization can do anything at once. And, you know, right now, this is what's successful for Morgan Stanley. And I've also worked with Morgan Stanley in the past. But I think whether that's going to be the future, and we'll have to wait and see. But Goldman certainly can get back into that business and crush it. I think the consumer business was a distraction, totally off-brand from what I know about Goldman. And if they were going to do it, they needed to do it at a much higher and more prestigious level than they did enter the market. Paul, did you just hint there that you don't actually think we should take it to the bank,

the idea that wealth management is the future from Morgan and Goldman? I don't think it's the only thing that's going to bail them out here. They're going to need to do more than that. I mean, look, Goldman could certainly get into wealth management and do better at it than just about anybody else. But then what happens when, you know, other things become more important and the investment banking business comes back? So they can't get rid of their core businesses and the things that made this organization great while they tried to figure out ways to increase revenue in a tight marketplace. I mean, you have to, your strategy has to transcend what's going on in the marketplace, right, to be successful. And Goldman was always good at that. And I can't imagine that they're not going to figure out very quickly how to settle themselves and get back to business.

All right. Paul Argenti, thank you for your time and thoughts today. Thank you. Let's keep it on Goldman. What does it all mean for the stock? Gerard Cassidy is here. He's head of U.S. Bank Equity Strategy at RBC Capital Markets. He's got a hold and a 370 price target. Gerard, it's great to see you again. What were your big takeaways from Investor Day today? And how important is David Solomon's future to resolving what the company should be worth right now? Well, Kelly, thank you for having me on the show. And I would say one of the big takeaways that investors soar today was that over the last three years,

this company has delivered incredible book value for share growth and dividend for share growth, much better than his peer group, and the shareholder returns have been better. They also pointed out that they are a preeminent global investment bank with incredible quality and brand recognition. That all being said, though, they do have the challenge of this consumer banking business, which you were just talking about with the prior person on the call here. And I think what you're going to see is that they are going to need to make some tough decisions about this consumer banking business because they don't expect it to be profitable until about 20, 25. And this is when their peers are all very profitable in this credit card business

and another type of point-of-sale lending. So that's really the issue. It's unfortunate. It's taking away from what they have done really well. And this Albatross is something that is around the neck of Goldman at this time. So it seems in the metrics you cited there, some of them sort of better than the peer group in return to shareholders and so forth. Those are important things.

Is Goldman just not getting credit for the things it's doing well as its missteps in consumer banking have overshadowed them? I think that's part of it. And that's a really good observation because I think you're right. There is maybe the distraction of the consumer banking business. But we also have to remember that this is a market-dependent industry in which Goldman is one of the best. in. And so that is not something that the markets pay up for in terms of high valuations. As we all know,

predictability of earnings is critical in achieving a high valuation. And because they're in a market dependent business, of course, the capital markets, that makes their earnings and returns more volatile year to year. As you saw last year, they were quite low relative to 2021 when they were incredibly high. So that is one. one of the factors why I think the stock doesn't do as well as maybe a Morgan Stanley who has a more predictable earning stream. So simply put, if you own the stock, what would you do with it today? If you didn't own the stock, what would you do?

I think it really comes down very straightforwardly to what is your outlook for the market over the next 12 to 18 months. And if you think the market's going to go into a further correction, you want to be on the sidelines on a bank that is in that business. On the other hand, if you're positive on the market and bullish, you want to own this. This is a pure play on the capital markets. And finally, Gerard, what about what Charlie Burenskoy said last hour, that he would buy it at one-time's tangible book and sell it at two? Buy low, sell high.

Always works for most people. So I'm with you, Kelly. That's a pretty smart strategy. All right, Gerard Cassidy. A pleasure. Thanks so much today. You're welcome. All righty, coming up, we're going to turn our attention to the other big CEO.

interview of the day on CNBC. Target CEO, Brian Cornell, weighing in on that company's quarter and the strength of the consumer, the stock, higher, despite some wishy-washy guidance. And today is Rare Disease Day. We'll put the spotlight on some companies working on treatments that could lead to major breakthroughs. Here's a look at a couple of ETFs in that space. We'll be right back. Welcome back to Power Lunge. Let's check out shares of Target up close to 3% today after a 14% drop over the past year. They beat estimates for the first time in a year in those earnings. They saw holiday sales growth, but they did warn of continued slowdown risks as consumers spend less on discretionary items. CEO Brian Cornell was on CNBC earlier today.

While there has been some softness in discretionary categories, we've delivered $55 billion of revenue through discretionary categories in 2022. So they're not going to zero, but we have seen a consumer who's not spending the way they were during the pandemic. Let's bring in Deborah Weinzwick. She's founder and CEO of Corsight Research and a former top-rated retail analyst at City. Deborah, great to see you again. A lot of people following the stock

were a little concerned about where Target is heading, but they seem to have put some of those worst fears behind them. Yeah, so they had an analyst meeting today and talked about their guidance for the year ahead in terms of traffic, looking at, you know, comps and also margins and provided some details, but I think that, you know, there is a, are a lot of questions that many have around the strength of the consumer, but also a lot around

kind of macro policy, et cetera, which certainly could impact that. All right. So in an uncertainty, it kind of goes back to what we were just talking about with Goldman. You know, if you think the market's going to do great, you want to own them. And if not, you don't, I mean, is it that binary for a company like Target? Absolutely not. So I think that if you look at top line growth, the story of 22, a lot of it was around inflation and traffic. They're still talking about having great traffic. inflation is abating. I mean, in the past four months, most of their key categories are down well over 200 basis points. So top line could definitely be muted. But as we start to look in the margins

as well, on the gross margin side, there have been, and they've been probably the most public company around challenges to shrink, so that's merchandise leaving without being paid for. And then many retailers right now are also facing pressure as it relates to SG&A around higher labor costs. However, on the positive side, and they did talk about this, but I would say, you know, the details were scant. And this could be the kind of, you know, where it all does follow the bottom line in a very interesting way is this idea around retail media networks. And so that is right where you're working with vendors and you have this opportunity to monetize your digital shelf, not just the physical shelf. Two questions quickly back to back. One is how much

are they going to have to discount to start moving general merchandise, number one, and how's that going to affect their business? And number two, is the question about, well, why don't you just take question number one first? That's actually a very important question because they, you know, they were very transparent about how bloated their inventories became in 22, especially around Holiday. So I believe they send a call, discretionary inventories are down about 13 percent. And so they have worked through the majority of that. You know, there certainly could be product that's backed up.

It's not on their balance sheet at this point. So I do think there have been these inventory issues, and they are very focused. focused, right? I mean, you know, their customer obviously is coming in, you know, multiple times a week, I would say about two. So they're getting a very good read and they seem to have adjusted their balance between kind of, if you will, fashion and, you know, discretionary and staples. But even within categories like apparel fitwear accessories, they are definitely a bit more kind of weighted towards basic merchandise right now with a fashionable flare, as it is target. But certainly I think they are, they are being prudent in 23.

And I think that, you know, that probably is right now from an investor perspective, one that people are probably more comfortable with. Yeah, you kind of answered my second question, which was circled around inventory, basically, and whether they've made progress in what had been a bit of a sore point for them. Yeah, they really ended up, you know, on the heavier side. I mean, their stores saw it, you know, it was something that they very much talked about, which could have actually led. It's an interesting point to the very high shrink that they saw. And with less inventory and at least shrink, you know, hopefully the same maybe less, that could also set up a very interesting story for this year, which I don't think necessarily came out of the meeting today. Deborah, finally, what would your recommendations be to investors?

Is Target a name they can own here? Should they look to Walmart instead? I mean, mall-based rate, just what's your spidey sense? So I would say off mall, probably more than mall, right? We are definitely seeing this kind of very, you know, you've got to eat. People go to the grocery store 2.1 times per week. So they've got the traffic. And they also have the, it's not just the weekend traffic.

Now it's the Monday, Tuesday traffic as well. And I think that with the discretionary, you know, kind of, if you will, merchandise at a warrant and target, you're in great shape. But more importantly, and probably the most important, is the windfall from bedbath and beyond, right? And so we are seeing a significant opportunity in this discretion, highly discretionary category. and these, you know, both Walmart and Target, you know, Target, obviously, from a mix, has a higher percentage of home. And so just looking at that, if I had to pick one, if you may be, I would pick Target over Walmart at this point because of home, because of the opportunity, you know, around retail media networks. I think they have, you know, they've been very focused on shrink.

They've brought their inventories down and they didn't shy away from any questions. They really kind of addressed them head on, which means they're probably doing that in their business as well. Very interesting. That one company kind of, I don't know to say going under struggling, and the others kind of get to redistribute that market share. Deborah, thanks for your time today. We appreciate it. Thank you very much. Deborah Weinzwig. All righty. Ahead on our program, office race, workers in Europe and Asia returning to the office at a much faster rate than here in the U.S. That story, when power lunch returns. Well, let's get you caught up on the market. Stock's a little bit mixed, as you see right there.

What's going on in bonds, though. So we're going to begin with Rick Santelli and Chicago. Rick. Yes, and the only maturity right now that actually has a lower or higher price and a lower yield than yesterday are 30-year bonds. But all maturities are drifting a little bit lower in yields. Hey, the last day of the month, let's look at some month to date. Two-year, month-to-date. Well, it's settled at the end of January at 420.

It's up 60, 60-0 basis points for the month. 10, settle at 351, the last day of January. they're up 40 basis points, as you see. And when was the last time, tens closed at 4% or higher? I can tell you that. That day is easy. It was November 9th. As a matter of fact, that was 112 days ago, 72 trading days ago.

It's been a while. And if you look at Europe, pretty much the same scenario actually may be leading us higher in rates earlier in the session. But boon yields at 37 basis points up on the month. They settled the end of January 228. GILTS, 3.33 is where Giltz were on the last day of January. They're up 50 basis points. It's been a big month in the U.S. for rates, but it's really been a big month for the world in terms of rates. Kelly, back to you.

Great point, Rick. Thank you. Let's turn to Bob Bassani now at the New York Stock Exchange, Bob. It's the Dow and the Red and everyone else positive, or is that still the case? United Health, Merck, some of the other consumer staples really weighing on the Dow right now. But the S&P is to the upside. A little bit of news in the middle of the day. Wall Street Journal says Apollo is in talks to acquire aerospace parts maker, Arconic.

That moved in the middle of the day a little bit on top of that. But the big story here, and you see that big jump layer in Arconic, is just how we've got some big gains in some of the major tech names for the month of February. Just want to show you this. Invidia, a huge mover in the semiconductors. Tesla is up 22 percent. Met is up 19. And GE Healthcare, which went public in the middle of December,

it's been a real big winner. That stock is right near a new high, but it's only been public for a few months. Big decliners for February, Domino's, News Corp, and some of the energy stocks like EOG, ConocoP Phillips, and Devid Energy, also with oil stuck in the mid-to-high $70 range. S&P 500, let's just say down about 2% for the month of February, but up about 4% for the overall year right now. So been choppy. We're ending just off the lows for February. Kelly, back to you.

All right, Bob, thank you. Christina Partsenevilus now has our CNBC news update, Christina. Thank you, Kelly. United Nations inspectors have found uranium particles enriched up to 83.7% in an Iranian nuclear site, this according to a report seen by the Associated Press. The report specifically refers to particles suggesting Iran is not stockpiling significant amounts of uranium above its usual 60% level. But, of course, the discovery is likely to increase tensions with the West. The Commerce Department is assessing a policy started by the Trump administration. that allows some U.S. technology below the 5G level to be exported to the Chinese telecom equipment maker, Huawei. That's according to an official's testimony today before a congressional panel. And in Wales, as they toured a fitness center, the Prince and Princesses or Princess of Wales competed against each other in a virtual contest to see who could ride the furthest uphill in 45 seconds on stationary bikes.

Despite wearing high heels, Kate was declared the winner. Did anyone doubt that? I mean, come on. As it should be. Stuff. Many comments, but I'll be like that. Should we take it off line, Christina? All right.

I head on Power Lunch, revenue regrowth. Telehealth stock hymns and hers reporting a narrow-than-expected loss and issuing some upbeat revenue guidance the stock at its highest level in more than a year. Plus, speaking of the health space

today is rare disease day. What progress has been made in treating these illnesses? Which companies are leading the charge? We've got details. after this. Welcome back to Power Lunch. Today is Rare Disease Day, raising awareness for afflictions that don't normally get much attention, but taken together, 300 million people worldwide are affected by more than 6,000 rare diseases, and biotech and Big Pharma are taking notice. Joining

us now with more on the companies working in this area, our own Meg Terrell. Hi, Meg. Hey, Kelly, well, this is a really important area for pharmaceutical companies and a growing area of importance. So we define rare diseases in the United States as diseases affecting fewer than 200,000 people. Now, that still seems fairly large. And a lot of these diseases that have been targeted by pharmaceutical companies actually affect even fewer patients than that. This is a market that in 2021 was estimated at about $29 billion in revenue for the industry. That's expected to more than double by 2027, according to Cowan estimates, to $68 billion. In terms of the companies working in space, Vertex Pharmaceuticals has the biggest market share right now with its cystic fibrosis

drugs. These have been incredibly transformational for this horrible disease, followed by some big pharma companies, Sanofi, Astrozenica, and Pfizer having the biggest market share as of right now. But Cowan expects that Surrepta, biotech company, is actually going to surpass Sanofi in terms of market share by 2027. They're working in Duchenne muscular dystrophy. There are a few reasons why this area is really appealing to pharmaceutical companies. It all changed in nice. 1983 with the passage of the Orphan Drug Act. Essentially, Cowan points out there can be lower clinical risk here if these diseases are really well understood. There's more flexible pathways to the market, so sometimes they can get there more quickly with smaller clinical

trials. And there's a lot of flexibility when it comes to pricing. A lot of these drugs can cost hundreds of thousands of dollars a year, and they get market exclusivity in many cases. So seven years of not having competition. So all those things put together make this a very important an area for pharma and growing guys. Meg, thank you very much and stick around as we continue to talk about rare disease for more on the development of rare disease treatments. Let's bring in. Peter Saltonstahl, CEO of the National Organization for Rare Disorders, commonly known as Nord, and of Boston Children's Hospital, Dr. Oloff Botamer. I hope I pronounce your last name correct, doctor, but we'll get to that. Peter, let me begin with you. Meg touched on two things that I know

are really important here. One is that historically, so the common myth goes, pharmaceutical companies haven't wanted to invest in rare drug treatments because they're too small. They can't get the payoff they get from other kinds of drugs. Number one, there simply aren't enough cases. And number two, those drugs are often hugely expensive. Are we making progress on both of those fronts?

Great question, Tyler. I think we are making progress on both of those fronts. And yes, the populations are smaller. They are smaller than large disease states. But you have to remember that there are 7,000 rare diseases right now. And when you start to take a look across the one in 10 Americans that are impacted by a rare disease, the populations can get larger. And as we start to work more on with the human genome project, if you will, we are starting to see. We are continuing to see small markets, but we're continuing to see opportunities in various areas where small biotechs are coming in and developing new therapies that not only work in the rare disease, but then have multiple opportunities to work on other indications as they grow forward.

So I think the Orpun Drug Act has been a really successful vehicle. I mean, I will say to you, there were 38 drugs on the market that were developed by FDA prior to 1983. And since then, we now have 600, I think 657. And last year, FDA, 50% of the approvals were for rare diseases. So it's clearly a growing market and it's a real opportunity. I think I have more and more time I'm just taking a closer look at it. Dr. Bottomer, I see you nodding there. I was struck by the fact that such a high percentage of rare disease patients are children. And in many cases, tragically, it results in.

in fatality, where are we making progress the most progress and where are we lagging behind with respect to progress against these rare diseases in children? Yeah, thank you for the question and thank you for having me. I think it's important to recognize the efforts that have been ongoing for the last couple of years to advance diagnostics, newborn screening as one example, to identify these undiagnosed patients as early as possible in their disease course. And I think another important initiative that is the designation of rare disease centers to bring together medical teams, physicians who work on rare diseases in a more coherent fashion

and make better use of their expertise and knowledge. And I think this is an important step in the right direction. What we are still missing is kind of a more universal access to rare disease centers, providing access to families and children in particular who live in rural areas, for example. There's certainly some inequity there. And also making better use of the tools we already have available for diagnosing these patients earlier to provide potential life-saving therapies at an early. is staged in that lives.

Meg, if I'm not mistaken, we hear quite a bit about smaller biotech companies that maybe have some promising treatments in these areas, and they're often talked about as acquisition targets. Do they have high valuations? I mean, is this an area where we could expect the major pharma companies to end up kind of bringing more treatments and drugs to the market in the next couple of years, rewarding investors in these stocks as well? Yeah, absolutely. I mean, for probably the last decade, it's been rare diseases and cancer drugs that

pharma companies have been most eager to acquire. And actually, if you look at this list of the companies with the largest market share in rare diseases, Santa Fe got there because they acquired Genzyme, which really was a pioneer of this entire market. Henry Termier, one of the early CEOs of Genzyme, who's now passed away, really pioneered this high-price model, but also actually developing medicines for rare disease. Sanofi acquired Genzyme, and that's how they got so big in this space. Astrozenica acquired Alexion, another major biotech company working in rare diseases. So these have really been very popular takeout targets and are expected to continue to be so.

So it's a space that biotech investors are very interested in as well. And Peter, if I could ask, what makes something considered a rare disease when I'm reading stats here? I don't know if you need to, you know, if I'm correct, but if one in 10 people in the U.S. have a rare disease, that seems actually somewhat common. So can you explain how rare we're talking about? Kelly, that's a great question. I think that rare diseases are really sort of a misnomer nowadays because when you take a look at the populations of being less than 200,000 and then when you look at the fact that there are more than 7,000 rare diseases, it really is a very large market right now. And that's why we're seeing so much interest from an investment perspective. Meaning, Peter, let me just make sure I understand that in order to be considered rare, less than 2,000 people have to have any one particular disease, it's just that we now have identified more than 7,000 of them?

200,000. The definition in the United population is under 200,000 it qualifies as a rare disease. And there's 7,000 of those plus. So it really is a fairly large market when you start to think that one in 10 Americans is basically afflicted

with some sort of rare disease. You take a look at your own company, NBC, and start to talk about it, you'll see that there are people within the organization that all have rare diseases that don't talk about them as much as you hear about cancer and so on, because they just have been very small populations to start.

But now when we aggregate all of them together, the population, I mean, it's 30 million Americans right now. That has a huge economic impact. Last year, the GAO estimated it was somewhere in the range of $400 to $600 billion impact on the economy. So it's a growing market right now. It's a place where industry is very interested. And we're seeing that in the number of drugs that are being approved by the FDA. Meg, you have a question. I do. Thank you so much.

And it's for Dr. Bottamer. I'm wondering, you know, we hear a lot of stories about just how incredible the diagnostic capabilities are now, where, you know, parents of sick kids are able to figure out what's driving their disease. But then sometimes it is so rare that you can't get biotech companies interested in it. I'm wondering, how frequently do you see that, that our diagnostic capabilities through genome sequencing are so good. We know what's causing a disease, but still it's too uncommon to attract biotech companies. Like, where is that window where that happens? And are you seeing ways of addressing that?

So that parents, when they do finally figure out what's wrong, you know, we can get drugs start to get developed for them too. Yeah, thank you. That's a great question. I think you're referring to the diagnostic odyssey. And when we look at the diagnostic odyssey and we look at the data, it takes up to five years. sometimes even longer until the patient who initially developed signs and symptoms of a rare disease is brought to the specialist who will then order the test whole genome, whole exome testing as an example. So we need to make sure that we provide, we move forward much

smarter in addressing the diagnostic odyssey. One approach is to bring genomics closer to primary care physicians informing, educating primary care physicians about rare diseases in general, also raising awareness about rare diseases. But then also making sure that our colleagues in some of the sub-specialties make use of these tools that we have available or refer the patient to a rare disease center for diagnostics. I think this is still a long way to go. I think in my own experience, it's a mixed experience. Some patients come to attention very early due to the significance of the symptoms. Sometimes it takes up still in some cases years until a diagnosis is finally made. Fascinating conversation in the intersection of science and commerce here. Dr.

Bottamer, Peter Salton Stahl and Meg Terrell. Thank you very much. And still to come, China's oil demand is not regaining strength. Shhipments remain at low levels. We'll discuss with crude rebounding somewhat today, $77 a barrel. But as we had to break during February, we've been celebrating Black Heritage through the stories of some of our CNBC teammates, contributors, and leaders in business. Here is Roz Brewer, Walgreen Boots Alliance CEO.

We actually have more shared values than we really understand because so many of us face adversities or different trials or tribulations, not only based on race and gender. And so what are those? things that might feel like they hold us back, but actually they give us the strength to be who we really are. And so outside my community, I'd love to have conversations about who we are at our

core and then begin to share our lived experiences and find those commonalities and then realize that race and gender have sometimes less to do with why we are not interacting with each other at our best points. Welcome back. Oil finally closing higher by about 2%. Pippa Stevens here with more. It is closing higher and shaking off yesterday's losses. And we've been talking so much about how this rebound in Chinese demand has really been what's driving the bullish narrative and how that has yet to actually come to fruition. And so I wanted to take a look in a little more detail in just exactly where that Chinese demand stands. And so if you look at this chart from Kepler, you can see that oil bound for China in December, January,

and then especially February, it was way down compared to the prior months. And so what they shows this is this is loading bound for China, not imports. So it's a leading indicator of sorts because if that oil is being put on the ship in February, it means that the import numbers for March and April will be down. And so what this essentially says is that that demand just has not materialized. Exactly. It's higher in November. Exactly. And so part of that, part of the higher numbers in the fall was because China implemented a product export quota in an effort to spur their refineries because their demand was still low. They were still under lockdowns. And so that was a calculated move by the government to give their refiner

something to do so they had higher exports. But right now, you know, they also have the refiners are going into maintenance in April and May, which means that at the very earliest, we could start to see a rebound come June. So that is quite far away. And then if that goes up in the back half of the year, that could be counteracted on the other side by slowdown in demand from the U.S. and Europe. I do feel like it's one of the most important things that literally just the price of oil, but underpinned by what you showed us, to try and figure out whether the markets are going to rally more this year, whether we're going to have real demand, the inflation trajectory.

I mean, this is not just a leading indicator for crude prices. It's kind of a leading indicator for the global economy right now. And given how much oil and gas are inputs into basically every single thing, and, you know, industrial numbers and productivity numbers and all of these data points, kind of if they all come back to oil at a certain level. Does anyone in the industry have a theory for why demand might be so weak right now? So one person I spoke to you said, you know, that even though the lockdowns have been lifted, behavior doesn't change overnight.

And remember, when our lockdowns were lifted, people were still hesitant to go out, and our lockdowns were not nearly as long as they were in China. And so it just doesn't happen overnight. You don't just turn on a switch and behavior changes. You think it'd be like the biggest revenge travel or something like that of all time. Yeah, I mean, you would think so. And I had the same question. I just said, where is this demand? Why hasn't it materialized? But, you know, manufacturing is down and just people are saying it doesn't happen overnight, and we just have to wait a little bit longer to see if it comes. It's very important.

All right, Pippa, thanks. Pippa Stevens. Up next, hair care, car care, self-care, some key earnings movers in today's three-stop one. All right, time now for three-stock lunch. We're actually going to sip on some earnings movers today. Hymns and hers health surging on a record fourth quarter and positive guidance, advanced auto parts higher after topping its fourth quarter estimates and DISH network going the other way after a multi-day service outage and a double downgrade at Bank of America.

America. Ooh, double downgrade. Here to help us trade all three. David Wagner, portfolio manager at Aptus Capital. Let's begin with Hymns and Hers Health. The company went cash flow positive. Yeah, Tyler did. It's no secret that Higgs has been absolutely taken to since November. But it's simply because the company has continued to the expectations and lose guidance. And that's in today's market. If you're consistent in the news, then your stock is just going to go straight up. I do. I think that the market has been somewhat surprised by the company's consistent 85% retention ratio for a strong portion of a younger, millennial generation, and generic prescriptions.

And thanks to their growth and cost of age, they're really starting to highlight their operating leverage. And that was a big standout in this past quarter. This past quarter was the first quarter that the company actually was Eidda Pardip. And not under that, their first year 25 targets actually had Eidda at $100 million. dollars. There are straight expectations of $5 million.000. So, yes, the stock is on a lot here.

But I actually am pretty interested in a unprofit of company, which is an out fulfill myself with its recurring revenue and that's really sort of to highlight it's average. Dave, it's a little warbly. Your sound, let me try to get

in advance auto parts here, which you wouldn't be a buyer of. Tell us why not. Right. You know, Kelly, there's not many things in this world outside of these Cincinnati Reds, and go to one of playoff series that will consistently discipline you moving this stock.

I mean, just asked Starboard. They had six years of frustration here. And there are many investors. You know, advance audit, it streams really well. It's a 50% discount to peers with half the margins. And the amazing team that continues will come out saying that the promising new business developments that will unlock profitability and relate the stop. Just never happens.

AAPE, it's been a fire and I believe that it's going to continue to be a value trap. I do think that investors through the Talon last quarter when the company talked down their margin guidance, the low end of the range. You know, it just feels like there's no paths or rectified this profitability problem. And that's what I would say, just please, please save yourself the frustration that many of us have felt, pay up for crime, pay up for execution, only the wires are in AutoZone instead. All right. Let's get a quick thought. Finally, on DISH. Yeah. Tahr, you know, if I have a guess, I think that this is. is really the nose of the camel inside the tent on the number of downgrades that we'll receive

with DISH. I mean, it's really hard to bet against Charter, especially after he's, you know, really assembled a portfolio of assets. This has been a portfolio of options for a very long time, but it feels like these options are really the opportunity to make money, not just in the near term, but the long term. And obviously, the 5G wireless buildout has been a majority of a thesis in this name. If you look at, you know, Verizon and their commentary on a 5G-centric outlook, and I think people are figuring that I do have a welcome program than it is a mechanism. Mechanism for monetization. So I'm not liking this name.

And I think the Icelandic cake today is the cybersecurity breach. So I have no interest here. No interest on Dish. Dave Wagner, thanks. Appreciate it. The rest of the world is getting back into the office faster than America is. Can you believe that? We're going to take a look at all of the numbers under the microscope next.

Welcome back to Power Lunch. We've reported. On the pushback, CEOs like Amazon Zaddy Jassy have gotten on their back-to-the-office policies. Now we're getting numbers showing how the U.S. stacks up against the rest of the world in that regard. Dominic Chu has put it under his microscope, Dom. So Kelly, Tyler, what it turns out is elsewhere around the world right now. There's a lot more appetite to go back into the office than here in the United States. So Jones Lang LaSalle, JLL is there known right now, big commercial real estate company all over the world.

they have a good insight on just how many people are occupying offices around the world and around the country. So they put together some numbers. And the interesting part here is how we stack up around the world. Now, in the U.S., according to their data, it was a great story in the Wall Street Journal today. About 40 to 60 percent occupancy of pre-pandemic levels, that's where we're at right now. You compare that to places in Europe, the Middle East, Asia, and it gets very interesting here. Take a look at this. In the U.S. 40 to 60%, but in Europe and the Middle East, we're already back to 70 to 90% of pre-COVID levels.

And in certain jurisdictions in Asia, it's gone anywhere from 80 to 110%. With 110% meaning that there are effectively in certain cities in Asia, more people back in the office now. These are working the pandemic. Office, this is office filling jobs, correct. So this is, what's interesting about this is just what the evolution or the psychology is like around this. Now, there's also a case. COVID that was just lifted in China. And that was just China, right.

So there are certain places elsewhere in Asia that have seen a lot more of that appetite to come back to the office. Now, the interesting part will be the evolution here in the U.S. How many CEOs will be like Andy Jassy and push for people that work five days a week in the office? With his just five? I thought it was just three even.

Anyway, Dom, thank you very much. We appreciate it. Dom Chu. And thank you for watching power lunch. Closing bell starts right now.