Power Lunch - Power Lunch 8/24/22

Episode Date: August 24, 2022

CNBC’s Tyler Mathisen, Melissa Lee and Kelly Evans take you through the heart of the business day bringing you the latest dev elopments 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.

Here is what's ahead on Power Lunch. Stocks hired today as the markets brace for a lot of Fed speak from Jackson Hole, is the Fed near the end of the hiking cycle or full speed ahead. We'll get some stock picks and look at how this is all affecting currencies and emerging markets. Plus, the Twitter versus Elon Muskport battle begins right after a former employee blows the whistle on the company. We'll talk to an analyst who is downgrading the Twitter stock today. Tyler? All right, Seema, thank you.

and welcome to you and welcome everybody. Let's check the markets right now as we're seeing some green on the screen with the NASDAQ leading the way. Some of the high beta volatile names are on the move today. Netflix, Meta, Tesla. Remember, Tesla stock is going to be split

after the closing bell today. Three for one. It'll be a $300 stock tomorrow. Cruise lines among the... Cruise lines, that's what you follow, Seema. Among the biggest gainers in the S&P 500 today, There you see Royal Caribbean Carnival and Norwegian, all with sporty gains there. We'll talk a little bit more about live events and the sector, the crews, the experiential sector later in the show.

But first, Fed fears have creeped back into the market with the big Jackson home meeting this week, kicks off tomorrow, culminating with Powell's speech on Friday. So has the Fed chair kept his hawkish stance or has the recent drop in inflation? changed the tone. The answer could determine where stocks move from here. Let's bring in Doug Butler, portfolio manager with Rockland Trust. What do you say? What do you expect Fed Chair Powell to do and say?

And what effect do you think it will have on equities? Expect is one thing. I think I hope that he is a little less hawkish than we've been hearing the last few days from other Fed members. So I think we're concerned that they're going to push a little too far with this, but we remain optimistic that inflation will be sort of kept in check and continue to slide down throughout the rest of this year and should be back, you know, not at the 2% level, but more normalized by Q1 of next year. Do you think inflation has peaked? Yeah, I think I think inflation has peaked and it may, you know, I think there may be the PCE coming out on first. Friday may still so really signs of aggressive hikes, but I really think you think about it, commodities are down 15%. You saw the used car prices, which went crazy last year, are now down.

You're starting to see the tempering of everything. And as long as you don't get exceptionally hot wage growth going forward, which could push up inflation, we should see it continue to get in line. So, Doug, if you think inflation has peaked, what sectors or stock should investors be getting exposure to ahead of Jackson Hole tomorrow? Well, I mean, I think a couple of the names that we mentioned. One of the names that we really like here is EcoLab. And EcoLab is a, you know, they make every sort of sanitary and, like, cleaning product known to man used at the industrial level.

One of their big core input costs are, like, you know, plastics and energy-based commodities. So their margins should expand even if the Fed goes a little too far and sort of pushes us either into a recession or if we're in a recession now. We think that that stock should hold strength throughout, you know, throughout the coming year. Are you concerned that if the Fed takes a slightly different stance than what you're anticipating tomorrow and perhaps says that they will embark on a more aggressive path to higher rates that growth stocks could start to underperform? They've certainly led this rebound that we've seen in the stock market since the lows hit back in June.

Yeah, I mean, I'm not a huge fan of the hyper-growth names. You know, I was debating whether or not Tesla would get back to 420 on its own without the split. But really thinking about, you know, if the Fed pushes really hard, you're going to see a suffering to the growth stocks. You're also going to be a big suffering to the bank stocks because, frankly, at that point, the degree of yield curve inversion will be really high. And that's the difference between short-term bond rates and long-term bond rates. As proof of the fact that you were not a fan of the hyper-growth stocks, here's one, Verizon. That's on your list. Not a hyper-growth stock.

Not a stock that gets a lot of shout-outs. No, no, no. I know. Everybody, like, you know, one of the upsides for us, we've been a long-term holder, but also, you know, they have disappointed the past two quarters. And we really think they've been hit a little too hard. We think they're likely to raise the dividend in the country. coming in the coming weeks or months. They don't report for another two months, so they can't disappoint for at least that long. But also, they're trading now down at a level at which

they're assuming, the market is assuming that there's parity amongst all the providers and that they won't continue to grant a premium. We think their loss rate has probably, you know, will stop. And we also think AT&T will likely be less aggressive with their promotional activity in Q1 and Q2 of next year. Yeah, but speaking of promotional activity, the one that seems to be highly promotional is Team Mobile. Anyhow, thank you so much, Doug. We appreciate your time today. We appreciate you. Thanks a lot, Tyler. CNBC is the place for coverage from the Fed Summit in Jackson Hole, of course, as it always is. Huge lineup of guests the next day, today, including James Bullard on this program tomorrow at 2. He is a real interesting cat on that Fed board.

Powell, Friday morning. That is his speech, 10 Eastern Time. You'll be there. You'll see Steve Leasman. There are elk. Elk there, Seema, as well. The mecca for Fed speakers. It is not just the U.S. markets that will be watching Jackson Hole closely. Any potential pivot from the Fed chair could have an impact on emerging markets. Let's bring in Racheir Sharma, chairman of Rockefeller International and founder of breakout capital. And Ritcher, you say what Fed officials say over the next 48 hours could be critical. to emerging markets, specifically China. Tell us what you're saying. Hi, Seema. So I think that if you look at emerging markets,

there are about 150 developing countries out there. So I think that the Fed's decision has a different impact on different markets. But clearly the most vulnerable to me is China, because, you know, we have spoken so much about inflation and how inflation is rising everywhere. But one country that is still suffering from possible deflation is China, that China.

that China's property market is nearly bust. They are being forced to roll out massive amounts of stimulus, not as much as they used to do, but still considerable amount of stimulus, and they're cutting rates. But their ability to stimulate and cut interest rates is going to be constrained by the fact that the Fed is increasing interest rates because that accelerates capital outflows from China. They don't want a repeat of that.

The currency has already depreciated around 7% to sow this here. They don't want a very sharp depreciation of the currency. So I think China is the one emerging market possibly most vulnerable to more Fed tightening. So negative on China, but I believe you're still bullish on other emerging markets that could perhaps get around a stronger dollar and higher rates. Which ones are those? Well, I think we've already seen a lot of resilience. If you look at the markets around the world today, once again, some of the most resilient markets have also been in emerging markets, such as Brazil, Indonesia, India's had a remarkable run over the last couple of months. So I think that these were all countries,

if you recall a decade ago, were being clubbed as the fragile five because of their large current account deficits and bad fiscal positions. So those have all improved significantly from back then. So these are some of the countries that I think could keep doing well and have already shown a remarkable amount of resilience at a time in the U.S. markets down 10, 15%, and usually a strong dollar would not be good for these countries. But these emerging markets, I think, have stood up relatively well. Let me ask you a wacky question. Would China rather be America economically?

In other words, with the problems they are facing, including a big issue of, are we going to be able to manufacture enough jobs for the young people who want jobs? That's exactly the opposite of what the problem is here in the United States. we've got more jobs than we have people seeking them. How do you react to that sort of wacky thought that China may be in a less desirable economic position right now than America is? Well, that's a great point, and I completely agree with you, which is the fact that, in fact, a projection I'm currently working on

is the fact that I don't think the Chinese economy is going to catch up with the U.S. economy in the foreseeable future. A lot of people thought that in current dollar terms by now, the Chinese economy would have overtaken the U.S. economy. I think the gap is considerable. And guess what? I don't think that China is going to catch up with the U.S. economy for the next 10, 20, or even 30 years. Because their demographic situation is a lot worse.

Their debt situation is arguably worse. And I think their long-term growth prospects are not looking good at all. So I don't see the Chinese economy doing well. And you talk about unemployment. If you look at the key cohort of people in their 20s, the Chinese unemployment rate is way higher than the U.S. unemployment rate. So at this stage, yeah, I'd rather be the American economy than the Chinese economy any day. I know you're recommending investors to not buy Alibaba, Pinduodu, all those Chinese tech names. Finally, Ritchie, your take on Europe, the looming recession

there, and now this gnat gas shortage, certainly increasing concerns. Yeah, it is, but of course, the only sort of silver lining there is that it's in the price. The European markets today are trading at their lowest ever in both valuations and price terms against the U.S. market. So I guess we need the dollar to stop rising, and then hopefully some value will emerge in Europe, and especially in Eastern Europe, because those countries also have economic growth, unlike mainland Europe. So, yeah, I think that it's been a very difficult time for international investing in general over the last decade, but I've got to believe that over the coming years, that's got to change

because nothing lasts forever, and you have valuations in the U.S. at record high compared to the rest of the world today, including Europe. Yeah, I guess you just have to be selective. Richieer, thanks. Thanks for going around the world with us. Racheir Sharma, Rockefeller, International. All right, coming up, it's a dollar store bullfight. Two analysts are going head to head on what the best play right now is in the dollar area. Dollar General versus Dollar Tree.

Plus, as the first hearing in the Elon Musk versus Twitter trial kicks off today, one analyst says yesterday's whistleblower news, big news there could be a big help to Musk's pace. He will join us ahead. All right, let's drill down on the dollar stores, shall we, with the consumer very much in focus in this high inflation environment. Dollar General, Dollar Tree, both out with earnings tomorrow before the bell. Both stocks are up so far this year. How about that?

But Dollar Tree has been the outperformer. Which one is the better buy right now? Time for our dollar store bull fight. Our dollar general bull is Rupesh Parique, Rupesh Parik, excuse me, managing director and senior analyst at Oppenheimer, and our Dollar Bull is Scott Chichorell, is Scott Chichorelli, senior equity research analyst at Truist. Ruppesh, why don't you go first and take your case, put the stake in the ground for your stock?

Yeah, so thank you for having me. Yeah, so we're Dollar General. I think the key point here is we think they have the most attractive unit growth prospects within the Dollar Store channel. So Dollar General right now is about 18,000 stores. We think they can open up, you know, it was called another 10,000 stores or so over time. The management team has said that there is 17,000 store opportunities out there, and we think Dollar General could capture the vast majority of those. And if you think the Dollar General, they have their core concept. They also have a new concept called Pop Shelp, which is going after more of the five below

Dollar Tree type with more of a treasurer in a multi-price point format. So we think they're going to gain tremendous share with these concepts. And then secondarily, you know, I'd say just over time, the DG management team has been one of the most consistent performers out there. They've continually outcom, dollar tree for several years now. And I think what's unique about DG is they invests a lot about innovation, whether in stores or on the digital front. So when you go into Dollar General Store today, you're going to see a treasurer hunt with

the new home section. There's a renovated party section with their NCI initiative. And even natural organic, you know, bigger section for natural organic. And on digital front, you know, they've made a lot of progress, whether it's digital coupon, self-checkout. And I think even now they're testing the entire store with self-checkout. So I think DG just has, you know, superior unit growth prospects, and we think they're position to continue gaining significant share. And they're the proven, you know, proven executor over time.

And, you know, this is the management team that's been, you know, that's had success for several years. All right. The future CEO, you know, is going to come in place soon, and we think he's going to help to continue to drive strong returns over time. Well, Scott, Ruppesh has made a strong case there. Now it's your turn. I appreciate that. And what I would say is, look, we. have a tremendous amount of respect for Dollar General. I mean, the simple fact is we raised our

estimates, you know, last week based on proprietary credit card data from the truest organization. But, you know, the Dollar Tree concept is pretty simple here. Like, you know, they are in the midst of a turnaround. They brought in a brand new, basically, they refreshed their board of directors. They're bringing in new management. The new chairman of the board was actually is Rick Dreiling, who was previously the CEO of Dollar General when they went through their own turnaround back in the mid-2000s. So look, they've already brought in a bunch of new management, you know, senior management people. The simple fact is they know the playbook, they know how to make this business work. And, you know, to Rupesha's point, you know what, family dollar has significantly underperformed

Dollar General for years. And so the idea is you start to catch up, right? You know, right now Dollar General generates 25% more sales per store. Their profits are well more than double a family dollar. Dollar tree, on the other hand, you know, they have just raised their point from a dollar to a dollar 25 they're able to capture a lot more margin they can offer a lot more value through their products so we just think there's a long runway to growth the simple fact is wall street really likes turn around stories one they can envision this is not a super complicated box they're really simple boxes and so we just think the runway for dollar tree is much more significant from here than what it is for dollar general but scott don't you think the price increases that

dollar tree is implementing from a dollar to a dollar 25 on certain products could actually be risky at a time that we're hearing from Walmart, Target, Macy's yesterday that the low-income consumer is trading down? Yes, I mean, that I think they saw some negative elasticity in the first quarter, and yet they still generated a double-digit positive comp because they have a 25% increase in ASPs, and what consumers are still going to do is look for value, right? So even though they may not be able to buy something for $8 even, if the $1.25 is still at a better, at a better point, price point than something else at a competitive retailer, you know what? That still becomes a good relative option for that consumer. Final thought, Rupesh. Yeah, so, you know, I think, yeah, Dollar Tree

is taking the right options, I think, to turn around that banner. I think it's still too early to call a turn. We really haven't seen their family dollar plan to turn around that chain. So we're still in a wait and C mode, and that's why we think DG is a better play, more consistent performer over time. Gentlemen, thank you very much. Interesting conversation. Tree, General, General. Take your pick. You made the cases. Rupesh. Scott, thank you. Thank you very much. Coming up on Power Lunch, he's known as the Elon Musk of Europe. He's 34 and running Europe's largest EV company that just got a huge cash infusion from SoftBank. We'll take a look at his auto empire and his plans for robotaxies. Plus, from fitness to financing to a fashion miss.

We've got the three on three of today's biggest movers, Peloton, Bedbath and Beyond, and Nordstrom. Don't go away. Welcome back to Power Lunch. A young brash billionaire trying to make big changes in the electric vehicle world. But it's not Elon Musk. Perhaps Europe's answer to Musk, though. And now Robert Frank spoke with him. Robert.

Well, see, Mamate Remack built his first EV in his garage when he was just 18 years old. Now, the Remack Group has over 1,500 employees and evaluation of over $2 billion. Goldman Sachs and SoftBank were part of a $500 million investment round back in June. Remack makes multi-million dollar super cars under the Bugatti and Remack names, but its big growth is in selling battery technology and components to companies like Porsche, Aston Martin, and Hyundai. He says most TV companies went public way too early. We will go public at some point. We are in no hurry. I was very publicly against this kind of frenzy that was happening over the last couple of years with specs and so on. I knew it would

and ugly and most of them did. Of course, they are very good companies who also did the spec and went public in that way, but a lot of people lost a lot of money, especially now industry in the electric vehicle industry. So we didn't want to do that. We want to go to the market when it's really the right time when the company has really very strong financials and we are very close to that. Remax's main push will be in Robo Taxes, which is keeping under wraps until 2024. Meantime, they are making big profits from old school engines. The new Bugatti a 16-cylinder gas guzzler priced at $5 million. And sorry, Tyler, they're already sold out.

How many dollars they priced at? $5 million. $5 million each. They're only making 99 of them, but they're sold out. Does this entrepreneur have any relationship with Elon Musk? Are they buddies? They talk to each other on Twitter? They are.

I say that Matae Riemack is Elon Musk, minus the tweets and three zeros. They respect each other a lot. They had lunch in New York City recently, and I think the main reason is they don't compete directly. Remak makes components as opposed to entire cars, except for at the very high end. But I think Monte Remick is definitely a name to watch.

He's going to be big in this industry. Maybe not Elon Musk big, but right now they sort of know each other. They have mutual respect, and I think they're both going to grow. Musk is, I think of him as a guy who is championing electric vehicles for the mass market. Is the other guy really a niche market player? So, Mante Rimex focus is when it comes to building full vehicles, it's on the super high end. So they're all electric supercar is $2 million.

But they also make high performance battery technology. And that also is at the sort of high end. Again, it's Porsche, it's Asson Martin, it's Jaguar. Hyundai, we get to see that car. But I think that's exactly right. Those are the different segments. Mate is at the very high end and Musk is more in the mass market and more global. All right. Thanks so much. Robert Frank, as always, fun to be with you. Let's go to Deirdre Boza, shall we? CNBC News Update. Hi, Deirdre. Hey, Tyler. The number of coronavirus deaths reported worldwide has fallen by 15% in the past week while new infections drop 9%.

That's according to the latest numbers from the World Health Organization. Omicron, sub-variant VA-5, still the predominant COVID-19 variant worldwide, which accounts for more than 70% of virus sequences. The turn-up gear that every firefighter has to wear to protect themselves against fire may very well be loaded with chrycinogens. This comes after the International Association of Firefighters and Metro Chiefs issued a joint statement this week, warning firefighters about the dangers after a new study was released. All three layers of the protective clothing contain chemicals which have been linked to cancer.

And First Lady Jill Biden has tested positive for COVID-19 again in an apparent rebound case after she initially tested negative for the virus over the weekend. President Biden spent three days with his wife at their Delaware vacation home and continues to test negative. He also suffered, you might remember, a rebound case earlier this month after an initial recovery from the virus. Back over to you guys. The great rebounders there, Deidre, thank you very much. A head on Power Lunch, hashtag Complicated. The Twitter whistleblower has one analyst rethinking his outlook for the company's battle with Elon Musk.

He tells us why it's a huge blow for the stocks. And speaking, Tyler, of a murky outlook. The housing market showing some big signs of slowing as prices fall for the first time in three years. We will break it all down. Power Lunch is back in two minutes. 90 minutes left in trade and we want to get you caught up on the market, stocks, bonds, commodities, and a battleful Twitter. Let's start with Bopasani, who's at the New York Stock Exchange. And Bob, stock's gaining a bit of steam here in the last 20 minutes.

Yeah, just a little bit. The problem is we don't have escape velocity. We're stuck in a range. Look at the S&P here. We've been 4,100 to 4,300 for several weeks now, essentially. And what we've got to do is we've got to get through PAL speech on Friday. But first, we kind of have to get through the NVIDIA announcement. So, semis have been floundering around.

A lot of the markets, frankly, floundering around. But NVIDIA will be reporting tonight. Marvell will be reporting tomorrow. Remember, we've got all these issues out. Gaming's been weak. Data Center's been a little bit unsure. So we'll get a clear view of what's going on in the semi-business from Nvidia. Intel, look at that 33.

That's a new low. In fact, that's a five-year low for Intel. Retail, you know, you would have thought the inventory issues, inflation issues are kind of behind us a bit. Look, I'm rather surprised Northstrom's down 20% here. At AutoZone, same thing here. They had a miss. Their DIY, their Do-It Yourself business was hit by inflation.

fuel prices. Didn't we know that already though? Macy's is still down even after its earnings and gaps down about 2%. So this is still ongoing a little bit of correction in the retail space. Energy, we've been talking about these natural gas stocks. Occidental is at a 52-week high today and some of the more natural gas-oriented companies like EQT, Devon, range resources. They've been having great moves up recently as Nat Gas has been hitting 14-year highs. Consumer staples, kind of a mixed group. Generally they're for sale, and that's good when they're for sale, because the more defensive names are down, but then you get names that are moving new highs here. Kimberly Clark was doing well. Hershey's and GIS also hit 52-week highs here. So sort of a mixed

picture overall. In fact, Seymour, the market's really looking for a direction right now, and hopefully Powell can give us a better narrative, one way or another, more bullish, more bearish, whatever. But right now we're kind of floundering right in between those two narratives. Yeah, hopefully we get some clarity tomorrow. Bob, thank you. Now to the bond market, where yields continue to rise ahead of Jackson Hole, Rick Santelli, tracking the action. Hi, Rick. Yeah, there seems to be a whole lot more clarity when it comes to the fear and the interest rate market. Everybody thinks the symposium's going to be very, very hawkish.

And maybe they'll be correct. Yields definitely are rising, and I don't see any way around the Fed presenting the hawkish face. Look at a two-year no yield. Today, it got ever closer to that June high yield close. that went back 15 years at 3.43% as we hovered just under 3.4%. And if you look at what's going on overseas, same scenario. As a matter of fact, the 10 year in the UK and the 10 year in Europe, Boons and Gills, they closed at the 7th consecutive higher yield day in a row. And as you look at their two-year instrument hovering at 2.94%. That is a 14-year high close. Let's look at our 10-year.

Well, our close in mid-June, the high was 3.5% of whisker below. So you can see how much the curve has moved and how far below that level we are. And if you look at the UK Gilt, a completely different story. Their tenure, you see the 6-1 there, they took that out. That was 2.65. They closed at 2.7%, an 8-year high, as you see, on the last chart. And I draw everybody's attention to the notion that we had our 7%. second auction in a row that was below average.

But who's going to step out on a light volume summer August session in front of the Fed symposium? The answer? Very few. Fascinating. Fascinating story playing out here and across the pond. Rick, thank you. Oil closing for the day continuing to move higher this week following the Saudi output comments

that we got on Monday. We have Pippa Stevens here with the latest numbers. Pippa. Hey, Sima, off the highs of the day, but still closing in the green with Brent crude holding above the $100 level. The Iran nuclear deal also in focus today. The White House submitted its response to the latest proposal, which Iran is now reviewing. Discussion around the potential agreement has intensified recently, but Eurasia Group said a deal is likely not imminent. They pegged the odds of an agreement this year at just 45% due to different demands and political challenges.

WTI is up 1% at 9475, but natural gas is modestly higher once again today after that large swing yesterday, although the big mover is European natural gas, surging more than 15% to $300 per megawatt hour. Excuse me, 300 euros per megawatt hour. That puts it on track for a record close, and that's equivalent to nearly $88 per MMBTU, according to Argus Media. So that is more than nine times, Seema, as much as that we're paying right now. And it's helping energy stocks, best performing sector today. Pippa, thanks. Now to the complicated saga at Twitter, as its trial with Elon Musk kicks off today. The company is dealing with blowback from a whistleblower that came out yesterday. Rosenblatt's securities downgrading the stock today, saying the bombshell report creates heightened risks for the case of outcome.

Let's bring in the analyst behind that call, Broughton Crockett. Barton, it's good to see you. exactly are you worried about as to when you read through the revelations that the whistleblower claims here? Well, I think that what we've done is we've opened a whole new area of potential risk for Twitter. You know, we had liked Twitter and their stance position in the suit against Elon Musk when it was just a debate about spam because Twitter had made disclosures that were very hedged and very likely we thought to stand up to scrutiny and, um, and, um, and, um, set up a really speedy kind of process and the judge's initial ruling seem very much on board

with that. What we're seeing now though is a totally different area of concern which addresses computer security, which has been an area where Twitter's had a number of issues over the years with a very credible, you know, background for the person making the complaints. And I think that the risk here is really twofold. One, that the judge pauses the expedited process and takes time to let this be investigated. And time is Twitter's enemy in this process. Their business struggles as that happens. And secondarily, that it gives Elon Musk a greater probability of success. And we put those two things together. And we now think the better assumption is that Twitter has less leverage than we thought. We think the ultimate outcome is what usually

happens in these situations is a negotiated settlement. But it's going to be less favorable, we think, most likely than we thought before. So we had to stand back with the stock where it is right now. You need to be really bullish to be buying into this. So Barton did Mudge, who is the sort of nom de garre of this individual, did he say anything about bot accounts? And because that is what Elon Musk is claiming is his principal concern, i.e. that Twitter has a lot of bot or fake accounts.

Did Mudge address that? I mean, he touched on it, but that's not really, that's not what's driving us. What do we think could happen is these issues which nobody knew about externally could get pulled into this case. Security issues, IE. Security issues. Yeah. And those have not been pulled in.

And so there's clearly, you know, we'll see. And there's a hearing today and maybe we learn more soon. But we think there's a meaningful risk that those get pulled in, stretches out the process, increases the risk that, you know, Twitter feels compelled to kind of accept more of a compromise settlement than we were thinking before. So you've brought down your price target from $52 to $37. It's currently trading at $40. Walk us through why you think $37 is the right price. Well, what we're thinking is that Twitter on a standalone would be a $20 stock, trading a little over three times this year's sales, you know, kind of in line with to the low end of peers.

And if they get the deal done, it's at the Musk price, it's 5420. So it splits the difference saying that, you know, essentially they just come together in between with both sides having pretty good leverage. You know, if Musk gets support from security, he has a lot of leverage on the spam bond. I don't think he does. Twitter still has a very strong agreement. You know, so they have some reasons to bring Musk to bear as well. So we think compromise in the middle is the most likely way to think about it today.

I was looking at the stocks that you cover, and of all the social media, media names, the only buy rating you have is on Roku. Tell us why you like that name. Well, look, I'm also recommending Alphabet and LargerCAP wouldn't just be social media. Look, I think that Alphabet's the quality play. Roku is really the debate. And I think the debate there is these guys are the leading gateway to TV, connected TV. And the stock's been hammer. but we think that their audience position is as strong as ever.

And the money will flow through this gateway to these eyeballs. The ad presence on TV, which is what drives them, is getting bigger with Netflix moving in, Disney moving in. So I think that we're going to see an acceleration as we, you know, get past the kind of economic headlines that we're seeing today and a re-engagement in the excitement of Roku, which is why we're keeping that as a recommended stock today. Okay. We'll leave the conversation there. Roku trading us $69 a share. Barton Crockett of Rosenblatt Securities. Thanks for your time.

All righty. We got sports, singing, and spas. The demand for in person experiences has taken off in the past few months, helping shares of everything from Dick Sporting Goods to Live Nation, booking holdings. Can that trend last? As we head to the break, remember, you can now listen to Power Launch on the go. Look for us on your favorite podcast app. Follow and listen today. shares of home builders higher across the board today, despite a huge drop in pending home sales compared with last year. Diana Oleg joins us now to make sense of this latest round of data. Hi, Di. Hey, Ty, and there was certainly a lot of data today, and I'll start with those pending home sales, which measure signed contracts on existing homes. They fell 1% in July from June and were down 19.9% year over year. That's slightly better than the street expected, but this is the second straight monthly decline and the eighth in the last nine months. The Realtors' chief economist said the smaller decline in July reflects a brief retreat in mortgage rates during the month, but rates have since popped higher again, and we saw that reflected in the weekly mortgage demand. Applications from homebuyers last week were down 21% year over year.

This has rates climb again back up towards 6% already at 5.84% today. We also got exclusive numbers this morning from Black Knight showing the first and a rather sizable crack in home prices. prices. Prices dropped 0.77% from June to July. That doesn't sound like a lot, but it is the largest single month decline in prices in 11 years and the second worst July performance on record with only July 2010 during the Great Recession, seeing a larger single month drop in prices. Prices almost always rise from June to July because the housing market's seasonal. Families buy bigger and pricier homes in the spring and summer so they can move during school breaks. Tyler? All right. So should we expect to see prices drop everywhere? as we did during the Great Recession and prices and drops of the scale of that time?

No, absolutely not. This is not that kind of market. You will see price drops, I imagine, and we're already seeing them in some of the hottest markets, you know, L.A., San Francisco, Denver, and where prices really skyrocket like Las Vegas and Phoenix. But overall, you're not going to see these massive national home price drops because it was a completely different scenario during the Great Recession, the subprime mortgage crash. And that's just not the case today. And you had a lot of borrowers who probably shouldn't have gotten loans in this. Exactly. Home equity now is sky high.

It was nowhere back then. What about those, are there markets, for example, in the center of the country that are holding up better than some of those coastal markets that rose so much so fast? You know, you would think so in the Midwest because that's, of course, where prices are lowest. But they're actually seeing weakness as well. Where you are seeing the prices hold up is actually in the sunbelt. And prices there really went up. during the pandemic because so many people relocated to areas in Florida, etc. But those prices are still holding up pretty strongly because that demand is still

there and supply is still low. But we'll be watching that closely. I had a Jackson Hole, Diana, we're looking at rates resuming their rise this week, the 30-year rate, I believe it's getting close to 6 percent. So what does that tell you about the outlook for housing going forward? Well, and a lot of that is because of investors concern over what you're going to hear in Jackson Hole, whether it's going to be more recession-related because it's starting to be more recession-related because it's starting to started really last Friday. You started to see rates pop up really sizably again on Monday, again yesterday, and another big jump today. In fact, we're up nearly 40 to 50 basis points

somewhere we were from just a week ago. So that again is in anticipation of what said and also in concern over the greater economy. So we may see them go a little higher, but we have kind of tested that 6% ceiling a couple of times. We'll see if it breaks. Yeah, and what it means for the economic data. Diana, thanks. Sure. Coming up, three big headlines, big movers, an inventory build at Nordstrom. Peloton gets help from Amazon and Bedbath and Beyond getting a lifeline. We've got

the trade on all three of these stocks. Next. President Biden speaking now at the White House on his plan for student debt forgiveness. Let's listen in. The Pennsylvania border. And I drove down to Newark, Delaware, my dad worked at an automobile agency.

And I walked in and I had my spikes because the reason I was going down, when your dad works an automobile agency, the great advantage, you get a new car to go to the prom. Or a good use car off the law. You think I'm joking. I'm not joking. And so I went down to my 51 Plymouth with beach towels for seat covers. And I had my uniform on, my spikes off. I ran in. And the woman's name was Mary, who ran the place. I said, Mary, where's dad? He said, he's out in the lane going into the repair shop. Give my word, true story. And my dad was a well-dressed, refined

fella and I walked out and my dad was pacing back and forth between the big garage door going into the into the repair shop and the door going out of the showroom and they looked up he said oh Joey honey I'm so sorry I'm so sorry I thought god something happened this before cell phones saw something something happened to one of my brothers or my sister or my mom or something I said what's the matter dad said I went to see the guy's name was Charlie Delcher who was a vice president of the Farmers Bank, which was a state-owned bank that did a lot of the financing of people wanting to purchase a car. He said, I went to Charlie and asked to borrow the money. He said, he won't lend it to me. He said, I'm so ashamed. I'm so damn ashamed. You know, my dad would,

you know, my dad was like millions of parents all across the country. I want to help the kids to get to school, but there was just no way to be able to do it, you know, and because he believed, as I do, that education was a ticket to a better life. It's something Jill and I, Kamala, and Doug, we understand deeply. I'm sure the vast majority of you do as well, but over time, that ticket has become too expensive for too many Americans. All this means is an entire generation is now saddled with unsustainable debt in exchange for an attempt, at least, at a college degree. The burden is so heavy that even if you graduate, you may not have access to the middle-class life that the college degree once provided. Many people can't qualify for a mortgage to buy

a home because of the debt they continue to carry. They, you know, they carry it's too high. They can't come up with the down payment anyway. A lot of folks are even putting off starting families because of the cost. And the dream of starting your own and your own business is just way off in the distance with the debt that someone you're saddled with. Many of you had to leave school because of financial strain was much too high.

About a third of the borrowers have debt but no degree and worst of both worlds. Debt and no degree. The burden is especially heavy on black and Hispanic borrowers who on average have less family wealth to pay for it. know they don't own their homes to borrow against to be able to pay for college. And the pandemic only made things worse. But we responded aggressively to the pandemic to minimize the economic impact of the harm

of COVID imposed on individuals, families, and businesses. You all were there with recovery. Look, we increased unemployment benefits for workers who were laid off. We provided loans, small businesses so they could stay afloat and take care of their families and their employees. We provided assistance to people to put food on the table. Remember those long lines you guys would all film of cars? Decent looking car.

I'm not with jalopies, you know, nice cars. Just waiting for a box of food to be put in the trunk in the United States of America, waiting for over an hour to get food in a trunk. And we provided rent and mortgage assistance to keep people from being evicted and thrown out in the street. Our approach to help Americans who needed the most, most was necessary. And it was the right thing to do. And it helped people avoid financial crisis, which helped our whole country as a consequence of that. That didn't benefit them. It benefited

the whole economy. Our approach is why America's economic recovery was faster and stronger than any other advanced nation in the world. Now it's time to address the burden of student debt in the same way. Working closely with the Secretary of Education, he's got the hard job, you know, Secretary Cardona, here's what my administration is going to do to provide more breathing room for people so they have less burdened by student debt. And quite frankly, to fix the system itself, which we came in, we both acknowledged it was broken in terms of, anyway. There are three key factors what we're going to do today. First, we've made incredible progress advancing America's economic recovery. We've wound down pandemic relief programs like the ones or unemployment insurance and small

businesses. It's time we do the same thing for student loans. Student loan payments pause is going to end. It's going to end December 30. I'm extending to December 31st, 2022, and it's going to end at that time. It's time for the payments to resume. Second, my campaign for President, I made a commitment that would provide student debt relief, and I'm honoring that commitment today. Using the authority Congress granted the Department of Education, we will forgive $10,000 in outstanding federal student loans. In addition, students who come from low-income families, which allow the

them to qualify to receive a Pell Grant, will have their debt reduced $20,000. Both of these targeted actions are for families who need it the most. Working and middle-class people hit especially hard during the pandemic, making under $125,000 a year. You make more than that, you don't qualify. No high-income individual or high-income household on top of the five-per-year, you in the top 5% of incomes, by the way, will benefit from this action period. In fact, about 90% of the eligible beneficiaries make under $75,000 a family.

Here's what that means. If you make under $125,000, you get $10,000 knocked off your student debt. If you make under $125,000 a year and you receive a Pell Grant, you'll get an additional $10,000 knocked off that total for a total of $20,000 relief. 95% of the borrowers can benefit from these actions. That's 43 million people. Of the 43 million, over 60% are Pell Grant recipients. That's 27 million people who will get $20,000 in debt relief.

Nearly 45% can have their student debt fully canceled. that's 20 million people who can start getting on with their lives. All this means people can start finally crawl out from under that mountain of debt to get on top of their rent and their utilities, to finally think about buying a home or starting a family or starting a business. And by the way, when this happens, the whole economy is better off. In the coming weeks, the Department of Education will lay out in detail a short and simple form to apply for this relief, along with information, when this application

process opens. By resuming student loan payments at the same time as we provide targeted relief, we're taking an economically responsible course. As a consequence, about $50 billion a year will start coming back into the Treasury because of resumption of debt. Independent experts agree that these actions. taken together will provide real benefits for families without meaningful effect on inflation. Let's be clear. I hear it all the time. How do we pay for it? We pay for it by what we've done.

Last year we cut the deficit by more than $350 billion. This year, we're on track to cut by more than $1.7 trillion by the end of this fiscal year. The single largest deficit reduction in a single year in the history of America, And the inflation reduction accident cut up by another $300 billion over the next decade because Medicare will be paying less for prescription drugs. And over a trillion dollars we added out for the next two decades. The point is this. There is plenty of deficit reduction to pay for the programs, cumulative deficit reduction, and pay for the programs many times over.

I will never apologize for helping Americans working Americans in middle class, especially not to the same folks who voted for a $2 trillion tax cut that mainly benefited the wealthiest Americans and the biggest corporations that slowed the economy, didn't do a hell a lot for economic growth, and wasn't paid for, and racked up this enormous deficit. Just as we've never apologized when the federal government forgave almost every single cent of over $700 billion in loans to hundreds of thousands of thousands of dollars. small businesses across America during the pandemic. No one complained that those loans caused inflation.

A lot of these folks in small businesses are working in middle class families. They needed help. It was the right thing to do. So the outrage over helping working people with student loans, I think he's just simply wrong. We're going to dip away now from the president announcing his new student loan forgiveness plan. It will wipe out $10,000 of debt for. most borrowers, $20,000 for Pell Grant recipients. Relief is limited to those earning less than 125,000, 250 for couples. It could affect up to 45 million loans. The federal government, the

largest student debt lender, about $1.6 trillion in loans. For many of the people, it will wipe out their obligation on student debt. So that's it. Thanks for watching Power Lunch.