Power Lunch - Rail strike threat, the Fed minutes & signs of a bottom. 11/23/22

Episode Date: November 23, 2022

The probability of a rail strike is rising and the chemicals industry could be the hardest hit. The CEO of Huntsman is here to discuss how his company is managing the looming threat. Plus, the Fed releases the minutes of its last meeting, leaving hints about the pace of future rate hikes. And has the market bottomed? A big call from a veteran market strategist. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hello everybody and welcome to Power Lunch. I'm Contessa Brewer. Here's what's ahead. The probability of a rail strike is rising. Analysts put the economic cost at $2 billion a day and the chemicals industry could be the hardest hit. The CEO of Huntsman is here to discuss how his company is managing this looming threat. And before, we'll hear from him. We get to the minutes of the last Fed meeting. Investors will look for clarity on the pace of the future rate hikes. We'll have the release, the reaction, and the analysis. That's straight ahead. Tyler. All right, Contessa, ahead of those minutes, consumer discretionary stocks are the best performers, energy the worst right now. Let's take a look at the major indexes. As you see there,

the industrials waffling between up a little and down a little. It's basically flat, folks. That's the kind of day it's been. S&P 500 also very minor moves. There's six points higher at 4,010. NASDAG moving up about a half percent at 11,232. Sentiment getting a bit of a boost after the latest data showed that U.S. consumers dialed back short-term inflation expectations. The yield on the 10-year note trading right around 3.7 percent at this moment, Contessa. All right. Let's get right to Steve Leesman now with the minutes of the last Fed meeting. Steve, what are you seeing? Contessa, the Federal Reserve in the minutes, too, its early November meeting said that ongoing rate hikes would be appropriate. a substantial majority support likely slowing the pace of tightening soon.

That really does set up for a 50 basis point rate hike in December. A few participants, notice the qualifier. A few suggested it was better to wait to slow hikes until it was clear that inflation is receding. So that is not where the center of the board appears to be. Members emphasize it more important to consider the peak rate over the pace of future hikes. In other words, that where the Fed is going is more important than the pace that it gets there. Many participants said the effects of the rate hikes were, quote, still quite uncertain. Some of those people are in favor of either lower rate hikes or slower rate hikes.

Many participants said the full extent of policy tightening was, quote, yet to be realized. Risk to the inflation outlook were high, tilted to the upside. Recent inflation data was higher. Remember, this came before the recent November. The meeting was before the recent October inflation report that came out in November. but inflation at that time was said to be more persistent than anticipated. Tentative signs of labor market moving towards better balance. And we've heard some officials talk about seeing some signs of slowing in the labor market.

Risk to the economic outlook, however, we're weighted to the downside, particularly due to global headwinds from China and the Russia-Ukraine war. And they were seeing softening in consumer and business spending growth, although I have to say we got data this morning that we need to get to get. that idea, business spending, slowing. And of course, some important information here on the Treasury market. They saw the function of the Treasury market being orderly and important an important assessment, given that they are shrinking their balance sheets. The higher mortgage rates were notably restraining housing activity. One other thing, several participants said, tightening

global monetary policy could spill over it to the U.S., and we heard that from Mary Daly last week, who said that was one of her reasons why she thought there was maybe more tightening out in the economy than is in the actual funds rate because in part of global tightening as well. Tyler. All right, Steve, I'm going to ask you to stick around because I've got questions. I've got questions. But let's get some more reaction to the Fed Minutes and what it could be telling us about the path of raid hikes.

And to do that, let's bring in Michael Gaypen. He is head of U.S. economics with Bank of America Global Research. I see in my notes that it says we expect the main message from these Fed Minutes to be hawkish on net. Does that seem to be what you're hearing there, even though a substantial majority support a likely slowing of the pace of rate of tightening relatively soon? You know, I think it does. So first of all, thank you for having me on. And I think given Steve's comments there, we would agree. It's more about the destination now than the journey. So the on-nut part in my mind is, yes, there seems to be widespread, except.

on the board that they should slow the pace of rate hikes. A wide variety of reasons suggest that, as Steve mentioned. But it doesn't really change where most FOMC participants think the terminal rate should be, with most of those comments coming in either at the very high 4%, if not a little above 5%. So maybe in the range of 475 to as high as 5 and a half for some. So I'm not, yes, I think they still have a lot of work to go, go, although there's reasons to slow the pace of rate hikes from here.

Yeah, and I'm going to turn back to you, Steve, and note that the Dow has just moved up 130 points. It can move down 130 points in another second here. But it would seem to me that if I were reading what we're putting on our screen, many participants said full extent of policy tightening, yet to be realized, but that the pace of those rate hikes may be slowing a bit, that that would explain why equity investors are favorably inclined. Yeah, I think folks might have been geared up for a more hawkish set of minutes here. I'm not sure it delivered. I don't think it's doveish.

Don't get me wrong about that. I think people would make a mistake, Tyler, if they took the idea of slower to mean lower. And picking up on what Michael was saying, you know, five is the new four, Tyler, when it comes to the Fed. I'm hearing people like Marydale say four and three quarters to five and a quarter being her sort of outlook for the peak funds rate. And I think, you know, you probably take that pretty seriously. As Michael said, there are people up near five and a half. The Fed's going to slow down. Let me give you what you need to know.

We've got to repeat this after me. 50, 50, 25. That's how the market is priced for the next three meetings. And I don't see much change. I want to get a fresh look at the probabilities here. 81% chance for a 50 in December, a 76% chance of a 50 in February, of a 50 in February, and then a 52% chance. of a 25 in March.

And that would be the end of it. So 125 from here, that's still work to do. We are closer to the end of this process if inflation cooperates, if employment were to soften, but there's still a ways to go. Don't mistake slower for lower. All right. And we are seeing the yields moving lower now as well. Michael, when we're talking about one of the last notes that Steve had said here is that

several participants noted that tightening global monetary policy could spread to the United States. Is that a risk to our economy? How would it work? Well, certainly, it certainly is a risk. Historically, during periods when many, or in this case, almost all central banks are lifting rates, you do risk spillover effects. I think the risks of that have come down a little bit, particularly as dollar strength has abated. But historically, the transmission channel would be that financial stresses build strong, a strong dollar rising interest rates, puts a lot of volatility into markets, and a stress point arises somewhere. And then financial conditions tighten and it spills back into the U.S. So in prior cycles, for example, this would be like

the East Asian financial crisis in the 90s, the Latin American debt crises of the 80s, for example, just kind of unforeseen landmines that we can't really see in advance. And when everybody tightens in the same direction. We just risk getting a lot more tightening than we think we're getting individually. And Steve, you mentioned here that what the Fed Minutes note in terms of the softening in consumer and business spending is at odds with new data that we saw this morning. Can you explain? Yeah, Contessa, thank you for bringing that up, because I'm afraid we need to be having a whole different conversation here than the one suggested by the minutes. I'm interested maybe if you have a second for Michael, and I'll try to shut up in a second, but the data has been

stronger. We have been using our rapid update. We've been upgrading GDP for the fourth quarter. It's not as strong as the third quarter yet, but it is certainly the second half has been stronger than the first half. That business spending number kind of knocked my socks off. So did the retail spending number, I guess that was last week. So you have the two key spending components, business and the consumer, doing very well and really, sort of, surprising to the upside, leading to higher GDP forecasts out there. I don't know that this is necessarily inflationary, but it is certainly not the cooling that the Fed was looking, and it is certainly not the definitive recession numbers that some

people thought we were going to be getting in the fourth quarter of this year. Maybe that recession has put off to next year if it's coming, but it's certainly not in the numbers we have seen in the past couple weeks, Contessa. Michael, we're looking at the November Manufacturing and Services PMI falling from, it was 46.3 from 48.2 in October. Can you weigh in a little bit about the disconnect between the Fed Fed Minutes and what we're seeing? Yes, and even in those PMI data points, a lot of the weakness is really about forward-looking indicators about new orders and new export orders, which says something about production, saying, in the first half of next year or maybe even later. Look, I agree completely

with Steve. There are certainly signs the economy is slowing. We're seeing it in housing. Some of the other investment-led components are weaker. The inventory cycle seems to have slowed. Business spending has been mixed on net. But I would agree the Durables data today was quite strong. Retail sales quite strong. Still adding 290,000 jobs a month. The Fed has to do more work to slow the economy down.

I still think risks are in the direction of the funds rate, needing to inch higher, perhaps closer to even 6%, to slow this economy down. Right now, it just doesn't. doesn't really want to slow. Hey, Katessa, I'm sorry to interrupt, Michael, what have you done to your tracking forecast? I did not have a chance to give you a call this morning in the last couple days. Are you, are you been upgrading the tracking for GDP for the fourth quarter?

The GDP tracking for the third quarter for next week is around 3%. And where I think we're at 1-8s, let's call it close to 2% now for the fourth quarter. So yes, it's been coming in higher. We expected things to moderate. We are one of those kind of mild recession forecast for next year. But we've kind of said, look, the risk to all this is there's just a lot of momentum in the economy, and it may take more rate hikes than we all think to slow it down. And I think recent data support that.

Michael Gaypen, Steve Leesman, thank you both very much for that. Appreciate it. Let's get to some developing drama in the crypto world. Of course, the industry is now facing a massive crisis of confidence. And we're watching the effects of FTX's collapse. just ripple outward. Kate Rooney joins us now with more. Kate. Hi, Contessa, that's right. Genesis and its parent company are now the big risks that crypto investors are worried about after the fall of FTX. So this was the first lending desk started about a decade ago. Genesis suspended withdrawals last

week and is reportedly considering bankruptcy at this point. The company is saying that isn't imminent and that it's having constructive conversations right now with creditors. Its loan book had been around $14 billion earlier this year. If you look at the second quarter there, it had roughly a billion dollars of exposure to the now bankrupt hedge fund, Three Arrows Capital. It's also got about $175 million right now locked up at FTX. Its loan book was just under $3 billion, as of the most recent quarter you can see on that chart there. There are also some potential effects around its parent company, Digital Currency Group, or also known as DCG, the CEO of that company, Barry Silbert in a letter last night trying to really calm shareholders. He said, we have weathered

previous crypto winters. And he says, while this one may feel more severe, we will come out of it stronger. DCG is also the parent company of Greyscale, which runs the Grayscale Bitcoin Trust. It's been a proxy for investing in Bitcoin. That lack of confidence is now showing up in the price of GBTC. That's the ticker. It's at about a 43% discount to where Bitcoin is trading right now. And investors are worried that if the lending desk, Genesis I mentioned, collapses, DCG may be forced to wind down that Bitcoin trust. And this crisis of confidence after FTX is also showing up elsewhere in crypto. Exchanges have seen record withdrawals as people look to get their coins offline, but they've been to more safe haven storage offline, and there's been more selling by what they call

older wallets. So those are the longer term investors. And they tend to usually be the least likely to sell that data coming from GlassNone. Back to you guys. It's almost like if this is another crypto winter, this is the one from Game of Thrones where the whole horde is coming across the wall, you know? Sam Bankman-Fried released an apology letter, Kate, to FTX employees. Did you get a look at it? I did.

So a current FTX employee sent that over. And it's really about how Sam Bankman-Freed says he lost track of the most important things. He called it sort of commotion within the company and talked about employees, called them all family, said he apologized and the idea that he just got over his skis. The other line, he said that he blamed his own irrational decisions and then some circumstances here. But yeah, we did see that letter. He said he also froze up in the face of pressure and leaks. And then also regrets filing for Chapter 11. He said within a couple minutes of filing, I did the former employee, or current employee, excuse me, who sent that letter did say the words rang hollow. He said he and his colleagues

are still upset that did nothing to make them feel. better. We reached out to Sam Bagman-Fried, but haven't heard back. All right. Kate Rooney, thank you for the reporting. All righty, coming up, the chemicals industry on the verge of taking a multi-billion dollar hit if there is a nationwide rail strike, the CEO of Huntsman on how his company is preparing. Plus, have we seen the market bottom? Veteran money managers making a big call on stocks, putting his money in some names with potential earnings growth. And as we head to a break, a look at shares of Kupa Software.

they are spiking on a report that Vista is exploring an acquisition of that company. We will bring you any further developments. Power Lunch will be right back. Welcome back to Power Launch, everybody. Rail strike that would cost the U.S. economy an estimated $2 billion a day is on track to start on December 9th. This after one of the largest unions in the industry became the fourth to reject the labor proposal this week.

A strike would hit nearly every industry, but expected to really hit chemical producers. hard. Chemicals fill 33,000 carloads worth $2.8 billion a week. And to prepare for a shutdown, railroads stop accepting security-sensitive shipments, including chemicals essential to water, treatment, health care, energy, agriculture. When the last rail strike loomed in September, rail carriers saw a drop of 2,000 carloads of chemical shipments. This time it could be even worse. According to the American Chemistry Council, a one-month rail strike could trigger the loss of 7,000. 100,000 jobs across industries increase the producer price index by 4% and pull nearly 160 billion out of the economy.

Let's bring in Peter Huntsman, president and CEO of the Huntsman Corporation and Chairman of the American Chemistry Council. I assume all of those numbers are ones that you would swear by, Peter. How is the possibility of a rail strike affecting operations at Huntsman? Well, Tyler, thank you very much for the opportunity. to join your show today. Sure. This is very worrisome for us. This is something that we need to start preparing for this coming week.

So we will start looking at where we need to be idling lines, where we need to be shutting down facilities. You take a small facility, a chemical plant, and it typically will produce hundreds of different grades of products. So going to everything from agricultural, the automotive, to home construction, to the food industry, everything you look around you right now, everything that's high-tech, everything that's lit, everything, your furniture, your carpeting, painting, everything. All of that has to do with the chemical industry. And so this has, this will reverberate very quickly through the economy if there's not a deal here. What percentage of your company's output leaves factories by rail?

Oh, it would, well, we would have an even greater number of raw materials that would come in to our business. And that would be probably close to 50% of our raw materials. Now, any business that loses 50% of our raw materials, it doesn't matter what your means of leaving the plant, your plant's being shut down. But I would say beyond that, about 40% of our outgoing freight is also shipped by rail as well. And, Peter, do you have to, as you said,

you have to figure out what to do with all of these, not you personally, but what to do with all of these containers of chemicals that are all around the nation? Do those have to be off the rails and somewhere safe in the event of a strike? Does that have to happen, even if the strike does not materialize? Yes, so that's why we have to start right now. There'll be many products that we will stop shipping in the next couple of days. If we can't get an firm guarantee that they will show up and be at either the customer's location or our location, we will not be shipping those products.

And so the supply chain will start getting backed up here in the next. next couple of days, regardless of what happens on December 5th. So what you're saying is there is an economic impact just because of the imminent threat of a strike. Oh, yes. That certainly would be the case. And you'll see this reverberate, not just in the chemical industry, but the United States still gets a third of us electricity from coal.

And so you think about virtually 100% of the coal that's moved into power plants will have to be stopped. I mean, we've seen a recent war on pipelines. So there's less product on pipelines. We're more reliant now, our infrastructure on rail. So this reverberates throughout not just the chemical industry, but all industry sectors will be feeling this very quickly. The ACC estimates that a one-month strike would trigger the loss of 700,000 jobs

across multiple industries here and spike inflation with a 4% increase to the producer price index. Do you feel like the nation's? leaders are taking this threat seriously enough? Is there more you would like them to be doing to avert a strike? Well, I'd like to see, this is just my personal thing, I'd like to see President Biden, who has championed many of the causes from the unions. And last September said that, you know, we had a victory here, a win for the American people and a win for unions and companies under the terms. It'd be great if he could use his bully pulpit. But ultimately, this may well come down to Congress having to reach across on a bipartisan basis.

This is not a red or a blue issue. This is not labor or management issue at this point. This is going to affect millions of people. It's going to affect hundreds of thousands of jobs. It's going to affect inflation. And Congress can avert this from taking place. Well, that's what I want to ask you, because, as we just heard in the last hour, the administration has some, the bully pulpit, obviously, is one.

but basically this is in Congress's lap. Peter, what are you doing as the head of an industry council and as the head of a large corporation to create an outcome that is not damaging to your business and to the economy? What kind of lobbying? Where are you putting pressure? Well, in the last few hours,

about 30 of the largest company CEOs got together and had, I think, a very productive meeting with representatives from the White House. we had a very fulsome discussion where we talked about the impact of all of this. So it's very clear that they understand the impact of this and for the president to be able to use his bully pulpit on this. But it's also going to be very important for each of the CEOs and not just for the CEO and the leadership, but for the associates of each of our companies, which number in the hundreds of thousands, to be able to go out and to lobby their legislators.

Again, it doesn't matter what side of the aisle they're on. This is an American issue right now, an American manufacturing issue. And we as companies are fully mobilizing all of our individuals, letter writing campaigns, calling congressional offices and make sure that we can avert this. Peter Huntsman, thank you so much for joining us. And we hope that you're able to see some resolution here in the very near future. Well, thank you. And thank you for bringing attention to this.

This is very important. Sure. We have set the table for Power Lunch, and we are willing. ready to dive in or drive in between planes, trains, and now automobiles. We'll explain why you probably should expect more driving, more traffic, more gridlock this year. Plus, your Thanksgiving dinner costs you much more this year, thanks to inflation. We'll break down the prices. But there are some things to be thankful for in the market at least.

We'll run you through a trade on some of the best performers this month. And today's three-stock lunch, we will be back in two with all the trimmings. Welcome back. As Americans cram into supermarkets to finish their shopping for the Thanksgiving meal, they are forking over lots more at the grocery store registers. According to the Farm Bureau, Thanksgiving dinner will cost as much as 20% more this year compared to last year. In fact, a 16-pound turkey will now cost you nearly $30, as compared to $23 last year. two frozen pie crust will now cost $3.68. Money well spent if you ask me when you consider the hassle of preparing your own pie crust. What about a bag of stuffing?

That has even jumped significantly in price. Most of the traditional ingredients needed for a Thanksgiving meal are also more expensive. Staples like eggs and butter and flour. So I guess this would be the time of year that we should start intermittent fasting. Because we can't afford more. You bet 43% higher on eggs. That's amazing. That's amazing.

$5. You're traveling tomorrow, so you're not cooking. I know that. I don't mean to share that with the entire world. But if you see me at the airport with small children in tow. That's why. All right. Let's get to Frank Holland, who we can always get double helpings for.

Frank. I definitely need seconds, Tyler. Happy Thanksgiving to you and Contessa. The person suspected of killing five people in an LGBTQ nightclub in color. Colorado made a court appearance by video link from jail in just the last hour. The defendant was slumped over in a wheelchair and had difficulty speaking after being released from a hospital yesterday. Police say the assailant was beaten as a submission by patrons at the club Saturday night after opening fire. Also in Colorado, four teenagers were rescued by neighbors and the fire department after falling through the ice on a lake.

One was taken to the hospital for treatment. And a woman in North Carolina has won this year's National Gingerbread House competition with an entry she calls when dreams have wings. The top prize, $7,500. Didn't even know this was a thing. Tyler and Contessa, back over to you. But for that kind of money, maybe I'm going to start getting, maybe baking is in my future, no matter what flour costs. You were very pro the pie crust, so I can see. Yeah, that's true, Frank. Thank you.

All right, ahead on Power Lunch. Is there nothing but upside for the market from here? That's what our next guest says. But you still need to be careful which names you bet on. We will run through some of them next. Plus, posh parking. why the future of parking in New York City could be fully robo-automated underground

and cost you $300,000 of space. We'll be right back. We have 87 minutes left in the trading day and let's get to caught up on the markets on stocks and bonds and commodities and the case for why the market actually may have a bottom here. But let's begin with stocks, which are near session highs on the back of the Fed minutes.

The NASDAQ is really leading the gains here up almost a percent as big cap. tech and semi-stocks lead. Let's take a share of, take a look at the shares of Disney now with Alex Sherman reporting just now that newly appointed CEO Bob Iger will hold a town hall with employees on Monday at 9. You can see Walt Disney shares up two and a third percent. And then to the bond market where yields are reacting to the Fed Minutes. Rick Santelli is tracking the action there for us. Hi, Rick. Hi, Cassie. Yes. If you're a market whisper, you get me, need to read the minutes to the last Fed meeting because the markets were pretty clear in their opinion.

Look at the intraday of two year on the short maturity side. Look at further down the curve at intro of tens. Both responded very quickly. Rates dropped. They dropped about three basis points from where they were pretty much across the curve. But of course the curve is having more buying and bigger drops and longer maturities. If you look at a two month of tens, we're not far from two month low yields. and some of the markets that are closed already, like Boones, as you see, October 1st chart, they close at a one-and-a-half-month low yield. And if you look at Gilts in the U.K., they close at a two-and-a-half-month low yield. And the dollar index, well, while rates were dropping and stocks were popping, the dollar index was dropping as well. And it is very close to three-month lows.

What does all this mean? Well, we saw initial continuing claims creep up a bit, and we saw all three PMIs under 50. and even with strong durable goods, the market waited until the minutes came out to really push that rally through. Contessa, back to you. Rick, thank you. Happy Thanksgiving. A lot of the action in the energy complex as crude falls and net gas surges. Pippa Stevens joins us with those details. Hi, Pippa.

Hey, Contessa, let's start here with oil dropping today amid talks for a price cap on Russian crude. According to reports, the European Union is looking to set the level between $65 and $70 per barrel. Now, the aim here is to deprive Russia of money that's funding the war in Ukraine, but some say the high level of the cap, which is above what it costs Russia to produce oil, means it won't actually do all that much. Also, on the bear's side, today's inventory report showed a much larger-than-expected distillate and gasoline stocks build. Let's check on prices. WTI down 4% at 7775, with Brent crude down 3.5% at 8518. natural gas, though, going in the other direction up more than 7% and jumping to its highest level since September 22nd.

Cold weather forecasts, the potential rail strike, and technical factors are all driving today's action. Now, taking a look at the energy sector, it is the worst group today with Halliburton, Baker, Hughes, and SLB leading the declines. Nat gas names like EQT and Koterra, though, are bucking the trend and holding on to slight gains. All right, PIPA, thank you for that. And our next guest says the bottom is in. And as long as you can find stocks that match or beat earnings estimates, you can make money. Joining us now with some names to own is Jerry Castellini, Chief Investment Officer of Castle Arc Management. Jerry, good to see you.

First, lay out the case for me. What are you seeing that makes you think we may be seeing the bottom of the barrel? Yeah, I mean, the meth on the Fed is quickly now eroding the bearish case. They're not going to go crazy. The rates aren't going to go up a percent every month anymore. This is over now. I think the announcement of today's minutes kind of insured that. We'll creep up another percent or two.

It won't matter. It's the front end of the curve. What matters is the back end of the curve. And you can see by the reaction in the long bond today, that that is a sign that you're never going to see any more support from lower rates anymore. Now you've got very good, attractive bond yields. are going to start buying bonds, and that's going to spin over to the valuation of equities, which we think could be really, really cheap based on individual companies.

And you still want to look at some fundamentals like those with freak cash flow or those that are seeing their earnings growing now. Talk to me about names that you like that meet those criteria. Yeah, so since we don't know what the cyclical effect will be on earnings in a broad level. But we get a little hint, right? The companies that are laying people off, some of the financials, obviously the big tech, those are companies that have more downside risk in earnings, versus, and we just talked about energy, I mean, it's going to be hard pressed to get Exxon's earnings estimates to be too aggressive for next year. It's already pricing in something in the $60, $70 range for oil, and there's a much better case that the price of oil is 90 to 100. So the upside is really there

in an Exxon. But it's also true in a lot of these retailers who have been laying here dependent on a recession to keep their prices down. And yet people keep showing up at their stores and clicking on their products. The reality of the companies like Alta Beauty is pretty powerful. And we've gotten Macy's, Dix, Best Buy, Home Depot have all told you things that a cautious management wouldn't be telling you today if we were in the verge of having a hard recession. These guys all came out and said, consumers better than to think.

And I would argue those are names that you're going to actually not see earnings weakness on, but actually earnings surprise over the next nine months. If the consumer stays relatively strong, do we avoid a recession? You know, we could have a statistical one, Tyler. I mean, a down a percent or two. I honestly don't think it'll matter for an investor. So the investor wants to own a stock that goes up, right? And for the sentiment to be very, very bearish, which it is today, and companies actually bucking the trend one by one in this space, I think it won't matter if there's a recession.

If people are still fixing up their homes or taking trips or going to Alta Beauty to buy makeup. That's what will happen underneath this big global recession that is so well priced right now. It's hard to see it getting much worse. Yeah, we just showed the third pick that you're offering up today, which is, MasterCard, which you need, if you're going to travel for Thanksgiving or buy gas of the gas station or whether you're going to stop in and pick up a little shopping on your Black Friday. But, Jerry, are you concerned at all about what we started to see about the use of credit going up in the consumer sector?

No, that's something to watch, right? And it's a clear cyclical indicator. And if you use that indicator early on in the 0708 experience, you got out of the way of a lot of things. But I would point out this time, the consumer balance ship is much different place. Cash holdings in banks is higher than it's ever been. Real estate values haven't collapsed, and there's no evidence that the mortgage market is going to behave anything like it did in the 0708 experience.

So if you take the consumer as a whole, that will be a concern. But if you look broadly at MasterCard, they're the one. So first of all, inflation has helped them. increased the average ticket price by six, seven percent. And that's a bigger, right, same store sale number if you want for MasterCard and everything that people charge on them. But the second thing is they are a call option on other parts of the world opening up and having the experience the United States did. And we can't, we just can't forget what is likely at some point to happen in China with respect to their economy reopening. Yeah, there's a lot of industries that are

sitting back holding their breath and opening for that big reopening so that they can see, I'm going to call it the Vegas rebound. Jerry Castellini, thank you so much for joining us. Happy Thanksgiving to you. Hey, you bet. Same to you guys. All right, same to you. And up next, big city destinations growing in popularity this holiday season, and it is bound to create more gridlock. We will talk about that story when we return. Food, family, and the Cross Bronx Expressway. A mess on the roads could mean a profitable, weekend for travel companies. Sima Modi looks at where the big money is being spent. Seema.

I like that, Tyler. Going into the holidays, 31% of Thanksgiving travelers plan to stay in a hotel that's compared to 22% last year, data according to AHLA. And with average gas prices breaking below $5 a gallon, that's expected to push more Americans to drive to destinations. Data from gas buddies showing nearly a quarter of travelers will spend one to three hours in the car versus less than one of one. hour last year. And as for the most expensive cities to check into a hotel, topping the list is Maui, where average daily rates are above $500 a night. New York City, average daily rates above

300, 37% more expensive than a year ago. That's according to STR. Yet according to Pablebrook's CEO, John Boerts, he says bookings remain strong, but that could change next year. Take a look at this new survey from Expedia, which found that 35% of travelers plan to stay in one to three, three, star hotels in 2023. That's higher than last year and nearly a quarter of global travelers plan to be, quote, more frugal. So far this year, the hotel operators have performed better than the airlines and vacation rental stocks. And you can see that an advisor shares hotel ETF beds outperforming both the U.S. Global Jets ETF and the travel tech ETF, which includes names like Airbnb. Speaking of Airbnb, that stock downgraded yesterday by an analyst at Baird, citing

concerns that over time travel budgets will be cut. Just waiting to see when that will happen right now, projections suggest sometime next year, Tyler. So hotel demand looking pretty good. Are they able to staff their hotels as they need to? Well, post-pandemic, Tyler, we've really seen the hospitality sector lead jobs growth. With that said, the industry is still 200,000 jobs short. And that's right to impact the customer experience. Jan Freetack at Co-Star Group pointing out that hotels, some of them are offering limited housekeeping, giving guests the option to skip cleaning services altogether. QR codes and restaurants is another example. Tyler Morris, who you know, Tyler, is the owner of the third largest hotel operator.

He says the labor pendulum is also starting to swing back in favor of employers. And over time, as layoffs start to escalate, he sees that helping alleviate some of the shortage. All right, Seema, have a great holiday. We appreciate it. Up next, let's talk turkey. A special Thanksgiving edition of three-stock lunch. Stocks to be thankful for this month. In today's three-stock lunch, we give thanks for stocks that have seen big returns in November.

AMD and Etsy up 26% this month, raw stores gaining 21%. But will those returns continue to be bountiful in the months ahead? This graphic rather suggests that these stocks are turkeys. It does, doesn't it? But they're not. Right. I see that. Well, let's bring in Bill Stokel.

Stone, Chief Investment Officer at the Glenview Trust Company. I don't know. Are they turkeys? What do you think? AMD. Let's start with that one, Bill. Yeah, well, I mean, it's been a turkey for a while in the sense that it's down still about 50% off a tie. I think it's interesting. I think the semiconductors in general are interesting. So AMD really dominates the CPU market for PCs and servers with Intel. So there's really only two major suppliers there. The PC market is a little more challenged because a lot of people went out, bought PCs during COVID or from work from home. So that replacement cycle will probably be a while. But the server market just continues to grow because of the move to the cloud, which is not likely to slow down. And again, as I mentioned, since it's been cut in half and again, almost all the semiconductor companies are really down significantly. I think AMD is worth a look.

I don't think necessarily that that move is over yet. Well, let's move on to Etsy. You could probably find on Etsy a nice little outfit for your turkey if you wanted. You can find anything, yeah. I mean, I think you hit it on the head. It's this really interesting global marketplace for, you know, niche and artisanal items. I think the interesting thing about Etsy is it, you know,

it really got caught up in kind of the gross stock, you know, again, and go back to COVID, the growth stock, COVID phase went up big, is now down about 60% off the highs. I do think you separate it from some of these companies that, frankly, won't be back again. Etsy looks like it's going to last. They're still continuing to grow users. They actually are making earnings, and they actually have free cash flow and cash flow. So I think it's actually an interesting one, probably not quite – maybe I'm being too stingy,

cheap enough yet for me. But it's certainly one that I would watch and be interested in at some point. I think we should have artisanal used more often here on. Meanwhile, in our whole fall theme, may I just point out that the turkeys have been cooked on AMD and Etsy now. If we take a look at this, they're no longer live. This is exactly ready to go, perfectly basted and brined. What do you think now of our last one, Ross Stores, where you can also find things that are Look at the trussing on those legs.

But normally by machines, Bill. So, me, raw stores is an off-price retailer. Probably most people know there's obviously good things for off-price retailers right now in two senses. One is, you know, you've got some uncertainty around the economy that tends to drive people to look for more values rather than going to full-price retailers. So they're certainly likely to benefit and continue to benefit there. The second part is for a while, you know, frankly, that a hard time, getting inventory because they try and get, you know, marked down inventory from other vendors that they're trying to get rid of so that they can offer those lower prices. You know, as you

know, for a while, you know, everyone was buying everything that wasn't nailed down, so there wasn't that extra inventory out there. It's back in that sense. So I think they'll have better selections. So there's a lot of good news, and they just recently reported earnings and same store sales better than expected. So certainly a lot of things are holding up. The hard part for me here is just really the pricing. We've owned Ross stores before we sold it not long ago, I guess, too early. So at the right price, I think it's super interesting. I just think a lot of the good news is in this stock at the moment. You know, that's probably the biggest issue there. Well, thank you for a very full meal of the stocks that we loved in November. Bill Stone,

thank you. Happy Thanksgiving. Thank you. All righty ahead. The future of parking has come to the streets of New York. Well, below the streets exactly. That story is next. Well, it looks like something straight out of Batman with its own superhero behind the wheel. Hidden deep below some of New York City's most expensive buildings is an exclusive world of high-end, high-tech parking,

and who else would you want to drive the story? But Robert Frank, hi, Robert. Hey, contestant. Well, this is the latest luxury in New York. It's called, you might call it the Robo Garage. It's a 24-hour automated. parking spot that can cost an additional $300,000 on top of your multi-million dollar condo. So here's how it works.

You pull up to a kiosk in your building, you swipe an RFID tag, and a metal pallet rises up from the garage to retrieve your car. The car then automatically descends into that subterranean robo garage where it is stored in its special spot. Now when you need it again, you just swipe your tag and your car is automatically lifted up in about two minutes. minutes, no garage attendants, and they can fit in more cars in the garage because you don't have all the turns and ramps you need for human drivers. Now, the lack of space is one reason regular parking spots in Manhattan condos have sold for as much as $750,000. A parking spot in a regular garage in Manhattan can now run over $1,000 a month just to rent one. Now, Miami has come up with its own take on luxury condo parking. It's a car elevator.

that brings you and your car up to your high-rise condo where you can park it in the condo. The Porsche Tower in Sunny Isles was the pioneer. Now, the Bentley Tower expected to open in 2026 will also have its own car elevator. And guys, at some point, the robotic cars will just start talking directly to the robotic garages and they won't need any people for anything. Okay, can I just point out a couple of things? $750,000 for a parking spot is for people. who have too much money. Two, the parking in New York City, and I wonder about Chicago and Boston

and other places where parking is always at a premium. Part of the reason it's at a premium is because they've allowed the restaurant sheds still to take up most of the streets and the parking spots that are left are taken over by the city bikes parking. Give me, I mean, they just do not care the cities about drivers anymore. They don't want the cars. Contest, you're absolutely right. is a parking crisis in New York, partly because of the reasons you decided, but also because remote work, so many people bought cars during COVID and are still not taking public transportation. And on a Tuesday and Wednesday and Thursday in Manhattan, it is impossible to find a space, which is why you're seeing these new innovations in the condo towers.

I'm thankful for my free space at work. Well, that is a good thing to be thankful for on this pre- Thanksgiving. Have a great Thanksgiving. Have a great Thanksgiving. And you too, Robert, Robert Frank. Thank you. Happy Thanksgiving to all. Thank you.