Power Lunch - Record crude exports, changes in the C-suite and the 50% club. 6/29/22

Episode Date: June 29, 2022

A new report is forecasting record U.S. Gulf crude exports this quarter, despite a domestic supply shortage. Why? And what does that mean for already sky high energy prices? Plus, the CEOs of Pinterest and Bed Bath & Beyond are out. What that means for the outlook for the stocks. And 3 stocks that have lost half their value this year. A market pro explains why you should buy them. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch. I'm Amin Javvers in today for Tyler Matheson. Here's what's ahead. Oil exports leaving the Gulf Coast could hit a record this quarter. That's the conclusion of a new report. And it comes amid a domestic supply shortage. So we'll find out why and what that means for prices as crude continues its client. Plus, from Pinterest to Bedbath and Beyond, changes in the C-suite could be changing the outlook for stocks. We'll trade the names in today's three-stock lunch. Kelly? Amen, thank you and welcome. Hi, everybody. Markets all over the place today. The doubt was up 200 points. Then we were negative last hour. Now it's up 137. The S&P is positive again and the NASDAQ is still down 11. Now the S&P is still poised for its worst first half return since 1970. Even worse for the NASDAQ. And Big Tech, which was hammered yesterday, is holding up this afternoon. JPMorgan reiterating its overweight on Amazon. The shares up nearly 2%. Apple, Microsoft meta, also in the green. McDonald's and Goldman. Goldman, Our two of the best performing Dow stocks today, both getting an upgrade. The analysts saying these shares will do well in a slowdown.

That's helping a 2% lift, amen. Well, thanks, Kelly. We start today with a look at what's become a complex and some would say confusing energy market right now. The war in Europe showed us just how fragile our energy infrastructure is, and the response has been felt across the entire complex. Some of it in a way that we might not have expected, certainly a head scratcher here. Crude has, of course, taken off up 56% percent. the year taking the sector with it. Investors also quickly moved into coal as well. The average

coal stock is up anywhere between 46% and 140% this year. Now, flipping the narrative, you'd think that with such high oil prices, the alternative energy world would be skyrocketing, but it's not. The solar ETF is down 11% this year with major solar stocks like sunpower, sunrun, first solar. They're all down at least 25% in 2022. And none of the clean energy ETFs, the ones that focus on things like wind and hydrogen, none of them are higher this year. One of the biggest names, the global clean energy ETF, is also down 11% this year. But the odd dynamics don't stop there. A new report from Rysstad Energy Products predicts U.S. Gulf crude exports will hit a record this quarter.

That number expected to top 3.3 million barrels per day exceeding the previous pre-pandemic record. Experts exports have risen in the last three months, in part because of Washington's decision to release 180 million barrels from the Strategic Petroleum Reserve. But more barrels are being sold to international buyers attempting to offset sanctioned Russian oil. So let's bring in John Kilduff, CNBC contributor and founding partner of again Capital. John, explain this to us. You'd think with these gas prices so high, oil so high, you'd see a huge skyrocketing market in solar, but we're not seeing that, are we? And I think John is frozen here. So, Kelly, as we wait for John to get unfrozen here,

we're going to talk about this mystery here of why it is that solar is just not doing very well in this market where you would expect that it would be. Right now, we're going to move along. And Kelly, why don't I toss it back over to you? Sure. And, Aiman, we'll circle back to that in just a moment, I should say. As we keep an eye on the whole energy complex,

you'd think with it under pressure today, the airlines would be doing better, but they're not. Those shares also firmly in the red as the sector struggles. And Senator Bernie Sanders now wants the government to take action against the airlines over their delays and cancellations. Let's get the details of what the senator wants to do from our own Phil LeBow. Phil? Well, he wants the power of potentially massive fines to force the airlines to improve their performance, Kelly.

Here is the proposal that Senator Sanders has sent to the DOT, and it's unclear whether or not this is going to get much traction with Secretary Buttigieg. he would like the DOT to fine airlines $15,000 to $27,500 per passenger for delays, depending on how long the delay might be, whether it's domestic or international. He would also like them to be fined $55,000 for some canceled flights and also reimburse passengers for meals. Let's have some reality or a reality check when it comes to cancellations. Are they up compared to the same time last year compared to June of last year? Yes, but not dramatically so. We crunch the numbers through Flight Aware.

Right now, the industry in the month of June, averaging 600 flights a day that are canceled. I think it was like $565 in June of last year. The delays are also up, but not dramatically compared to last year. 6,113 flights are delayed every day. That is the average for the month of June. On average, about 51 minutes. That's the same length of delay time that we saw in the industry. last year and pretty similar to what we saw before the pandemic. Nonetheless, there are people who

are saying the airlines have to do better, even with United and Delta pulling back their schedule starting July 1st. A number of people believe that this weekend is a recipe for a lot of delays and cancellations because of how much has been already booked and whether or not the airlines will have the staffing in order to complete those flights. And the wildcard in all of this guys is weather. If we get some type of a storm that pops up somewhere, that's going to add to the cancellations and the delays are out there. But I suspect that we will continue to see these types of proposals or complaints on Capitol Hill over the next several weeks because it's going to be an ugly summer in terms of staffing and in terms of cancellations and delays for flights.

Phil, let me ask you this. I suspect there's a little politics at play here because you've got two people involved in this dispute who are both potential Democratic nominees next time around if Joe Biden doesn't run. So let's set that aside for a second. And talk to me about the airlines and why it is that they can't seem to get their act together here. I mean, I fly a lot, flew this morning. And it seems like, you know, the COVID is behind us as far as the airlines are concerned. They know sort of what their schedules are going to be. How come they can't get this together? A couple of things going on here. There's simply not enough slack in the system. And by that, I mean, there are enough, there are not enough pilots and key pilots. You just

can't take any pilot and put them in any plane or her in any plane. They have to be certified for a particular aircraft. It makes a difference whether they're a first officer or if they're a captain. So it is an intricate system, and it's not something. I talk to a number of people who say, well, why don't they have pilots on standby who can just sit in and jump into an aircraft? It's not that simple. There are rules in terms of how often they can fly, how many hours in a day, et cetera. And in addition, there are also issues with flight controllers. Now, the FAA and the DOT are both saying, look, we're not the cause of delays around this country, but there is an issue with staffing in certain areas, New York and Florida, that has contributed, and the airlines say it's

contributed to some of the cancellations in those areas, that they simply can't handle the number of flights that were originally scheduled into that area. And you add on to that, Amen, you mentioned, well, COVID is over. It's not really over. What happens if you have somebody who gets sick? Whether it's a pilot, a flight attendant, a crew member, all right, they're out of the mix. Do you have somebody who's automatically ready to step in in in some cases? Yes. And the airline say they have the reserve pilots who are ready to go. But this is a complex situation. The bottom line is this. You've got the pilot shortage and you've got the staffing shortages. And all of that is just, it's coming together where people are saying, you schedule too many flights for the summertime, and that's why we see the airlines pulling back

their schedules. This scrutiny, though, Phil, I mean, the fact that Sanders is coming after him now suggests that the scrutiny will keep growing. So how do you expect the airlines to respond by canceling even more flights, maybe leaving people without options, or what? Well, they'll scale back their schedule. They're already doing that right now, and I've said for the last couple of weeks, I wouldn't be surprised if we see more of this for July and August.

Now, let's see what happens as we go into the fall. when you typically see fewer people flying. Part of the issue here is that the airlines are not highly thought of by many consumers. They don't like the flying experience. But on top of this, guys, a number of passengers, most passengers who are flying right now, they book these trips in March, April, maybe early May. They have been waiting for so long to take these trips. And they're paying a hefty price in many cases because the ticket prices have gone up.

So when their flight is delayed, they're much more vocal than perhaps they would have been in the past. And if you're a politician in Washington, not saying that this is all politics, but you would look at this and say, all right, then let's hit the airlines where it hurts in the pocketbook. And we will say that you should pay us if there are cancellations. And they're also going to point out the fact that the airlines received billions in payroll support, not bailout money, but payroll support money, similar to what other companies received during the pandemic. So their feeling is, well, you were assisted with that payroll support. Therefore, you should not be going through what you're going through right now. Lost in all of that, guys, is the fact that the airlines, when the payroll support ended,

they were still losing billions of dollars. So they did what any company would do. They had to make cuts in staffing. And that's why we're seeing the shortages now. Phil, you say it's not all politics. There's definitely some politics in there, though. Thank you for that fascinating issue. We definitely have not heard the end of it.

So from jet fuel to gasoline, let's turn back now to our energy conversation and bring in John Kilduff. I think we've got him up and running. He's a CNBC contributor and founding partner of, again, Capital. John, we're talking about this at the open. Explain this weird dichotomy to me because I don't get it, right? You'd think with surging gas prices, you'd have a banner year for solar and wind, and yet we're not really seeing that. So why is that?

Good afternoon, I'm sorry about that before, but let me just say that I think there's a lot of trepidation. these days about some of these renewable systems, given how intermittent they have proven to be when it's become crunch time. Spectacular, not too long ago in Texas when the grid failed in the winter. We were on pins and needles just a few weeks ago with that heavy heat wave that ripped through Texas that the grid might not hold up, but it did, thankfully. And renewables were a big part of it, but there's just not a lot of enthusiasm for folks right now because of the situation that we've seen people be in, not just here, but in the

UK and Europe especially. How much of it is just the timing, right? Short term versus long term. Short term, it's easier to just double down, increase production where you're already getting it rather than making some of these longer term investments in things like solar and wind. Well, certainly the supply chain hiccups are impacting the renewable space. But yeah, I mean, all reliable is hydrocarbons. I mean, you can count on the gasoline in your.

in your tank, you know, completely, as opposed to worrying about having range anxiety and the like with some of the electric vehicles, for example. But yes, I think right now, given the inflation situation, given the uncertain economic outlook, there's just not a lot of embrace of new renewable systems right now. I think the government's going to have to step up yet again and take a winner here and make the encourage folks to get into that space much more heavily. And tell us about these oil exports from the United States. Because a lot of people still aren't used to that, right? It was just during the Obama administration that we even allowed oil exports to go out of the U.S. market.

Why is it that we're continuing to allow exports, even in the teeth of what we see here in terms of high gas prices? Is that political? Is that about our allies overseas? Or is that about the mix of oil that we need in our refineries here at home? Well, for starters, it is the mix. Most of the shale oil is very light and sweet, as we call it, not really suitable for much of. of our Gulf Coast refining complex, which relies on heavier sour-type crudes, like what used to come from Venezuela, for example. And it wouldn't be very sporting of us during these tough times,

I don't think, to cut off other countries from our fuel supplies, not just crude oil, but we are big exporters these days of refined products. We are the refiner for democracy these days, the way we used to be the arsenal of democracy. So there are some politics, or at least geopolitics, in this one. Explain where you think prices are going to go from here. given everything that you've just laid out? We are in the major crunch time right now. This is the height of the summer driving season this weekend. There's going to be strong demand, record driving,

and we continue to see now the rebound in Chinas evolve, and because their COVID restrictions, and they also gave a huge chunk of crude oil permissioning to their independent refiners, which could make a difference in the refined product market down the road here. So there's a lot of moving parts, as usual, Amen, but I think there's a bit more higher to go. Maybe we touch 120 one more time,

but I think we could see it some real relief as we get deeper into the year in, say, late August and the early fall, period. The driving season begins this weekend. John, are you driving anywhere, taking your gas guzzler out? No, my gas guzzler is going to stay local. Amen, maybe just go as far as the golf course at this point. Fair enough. Have a great weekend. John Killed up. Thank you.

Still coming up. Reets are often considered a safety play in times of recession, but real estate developer Don Peebles told us yesterday that not all reeds are created equal. So which should you own and which should you dumb? Plus, the 50% club, some stocks have seen their valuations cut in half this year, why now might be the time to buy. And as we head to break, shares of General Mills at an all-time high after its earnings beat, it's one of the best performing staples stocks over the past month. Welcome back to Power Lounge. I'm Christina Partsenebless. Shares of Data Center REITs, Digital Realty Trust, and Equinix, I should say, are among the worst performers of real estate today. This as famed short seller, Jim Chaynows, tells the F.T. that brick-and-morter data centers are his biggest short right now because of increased competition from big tech's cloud-based servers.

Chainhouse now taking to Twitter to emphasize that there will always be some demand for hybrid solutions, but arguing that physical data center reeds are overvalued compared to the cloud-based. giant. For instance, Amazon trades at around 64 times forward earnings higher than Alphabet and Microsoft, but still well below Equinix and Digital Realty Trust, whose forward PEs are both above 80. Kelly? Wow, didn't realize they were that high. Incredible. Quite a discrepancy. Yeah, Christina, thank you very much. Now, while Jim Chanos may be shorting Data Center REITs, real estate developer Don Peebles told us yesterday that he thinks office reets will also remain challenged for a while, but he does see some other opportunities emerging in the industry. Take a listen. I mean, New York City is essentially over 20 percent

vacancy factor overall in terms of leasing, not necessarily occupancy. And occupancy is only about 40 some odd percent right now, mid-40s at best. And so what you're going to continue to see is more sublet space going to market. And that's going to depress rents even further. If I were going to look to invest, I'd start looking at the gaming business again. And any reeds I would look at would be in the hospitality sector, especially those hotel reeds that are focused on leisure hotel ownerships. Yeah, and he was bullish on gaming as well. Joining us for a deeper dive into the sector, Alex Goldfarb is a managing director at Piper Sandler. Reeds are pretty sexy right now, Alex. Whether you're shorting them or going along some niche areas, where do you think the opportunities lie?

Well, it's interesting. And first, thank you, Kelly, and Eamon for having me on. It's funny. Real estate, we have to be always optimist, right? It's never been a better time to buy, you know, whether they're high, they're low. You know, we always are an optimistic bunch. You know, that said, I was listening to some of your earlier people that you had on. And I think there are some real issues, but there are also opportunities. Take, for example, retail. That was a sector that was much maligned pre-COVID.

Everyone thought Amazon was going to destroy physical retail. No one was going to go to the mall anymore. Suddenly, COVID happened. And people realized that in order to get their hand sanitizer, you know, wine, toilet paper, etc. The local shopping center was their only option. What's funny is that 15 years ago with the housing bust, retail development basically stopped. So we haven't built a new shopping center in basically 15 years. Retailers overnight realized that their store fleets were their best option to get product to customers and did a 180. So instead of all focused

on e-com, they went to their brick and mortar. Now you're seeing incredible rent growth. If you look at shopping centers like site centers, bricks more, even the malls, Simon, they're booking solid rent growth, solid demand. Wow. And it's something that we've never seen before because, again, supply, people miss this about, and your fellow Don Peoples mentioned it in New York. Supply is critical when looking at real estate. And when you look at retail, for example, we've had no new supply in 15 years. That does wonders for landlord's ability to price. I was going to say up here in New Jersey, we have American Dream Mall. So we're retail saturated. I think, but the Sunbelt is really where both he and you are bullish apartment reits,

even office reeds there? Or do you agree with him that the office category is going to be challenged because of work from home? Well, we'll take the office in two batches. You know, obviously New York has a lot of availability. Mayor Bloomberg promoted the far west side, which provided a lot of new product that was desperately needed. Remember, the average office stock in New York is over 60 years old. And unlike other global cities like London, New York, it's pretty hard to build new. And the acceptance of the far west side is what drove S.L. Green to build one Vanderbilt, which is arguably the best building in all of Manhattan, and it has been a success. They've signing rents over 300 a foot. That said, there is a lot of supply,

as was noted. When you go to the west side of L.A., it's almost illegal to build anything new. I mean, anyone who knows, you know, Santa Monica, Brentwood, Beverly Hills, the approval process is so onerous that very little product gets built. And all the people who occupy those buildings are people who live right around there. If you go to L.A., you know, half your time is spent on either the 405 or the 10, and you want to minimize that. And therefore, office becomes critical. I think one thing that people miss in this whole death of office narrative is that for career advancement, training of the next generation, or even sustaining corporate culture, you need to work together. So yes, workplace flexibility, working from home is wonderful.

But if people don't go to the office, it's pretty hard to get ahead and also for new employees. And again, every company wants diversity. Everyone wants to hire new people who are new to the industry. It's really hard to train and hire diversity if you're not getting people together at the office.

So, you know, in office. Alex, let me jump in here real quick. If we could, not much time left. And I do want to get to this question, which is I get that you're an optimist on real estate and you talk about the supply issues in commercial. real estate and office, but I wonder when you think we're going to see the bottom here of the

office market, because this is a long lead time, right? I mean, companies make these decisions about office space years and years in advance. So it seems like we might not know fully yet where the bottom is because we haven't seen companies finally grapple with what happened during COVID. You're absolutely right. And look, office definitely has challenges. There's no question. Tenants, you know, don't feel like they need to be in a rush to sign deals. It's bifurcating. the bulk of the activity is at the brand new buildings or buildings that have undergone heavy renovation, but actually a company like WeWork. Everyone thought WeWork was for dead a few years ago.

And in fact, their occupancy, their space utilization far exceeds traditional office right now. Why? Because people like that flexibility. If you look at what Sandeep Bethrani has done since he's come into WeWork, he's cut over a billion and a half of expenses. he's also got out of leases that saved about $9 billion in future liabilities. At the other end, you have companies like Boston properties that drive their earnings through development. And that's a big story.

And the reason why they're so successful in there is they really target life science and the heavy tech nodes where their buildings are essentially pre-leased before they start. So they're able to capture strong lease. But look, you're right. If you're an average landlord with just average buildings, life in office is not much fun. You did mention Sunbelt Apartments. It's incredible. Two years after COVID, they're still getting rents of double digit.

I mean, we had one company, Mid-America at the recent real estate conference, say if tenants don't want to renew at 15%, they have others coming in north of 25%. But the bottom line here, Alex, is you think office market not dead yet. Alex Goldfarb with Piper Sandler. Thanks so much. Sorry, we have to jump short of this. We're running out of time. Don't worry.

Thank you for having me on. From a new bare case of zero at Morgan Stanley to a ballooning debt and growing doubt from investors, it's anything but smooth sailing for cruise line stocks. We'll look at when the rough waters could calm down. And we're going back into the home for our last installment of our housing cost calculator. You won't believe how much more it's costing people to barbecue this summer. Power lunch is back in two. Welcome back, everybody.

Well, we've been following it for weeks, and we've reached the final part of our housing cost calculator, an inflation gauge of what costs what. We've walked through the foundation, the bedroom, the bathroom, in the kitchen. Today, we're looking at the living room and the backyard, in honor of July 4th, especially. Let's start with the family room. Everything from lumber to cotton and electronics here. We've got TVs up 13 percent. Flooring, only up 4 percent, actually.

Couches and sofas up 8 percent. Drapery up as much as 15 percent. The NPD says that TV prices are due to a rise in key component costs. Floor places are around the highest in 40 years. believe it or not, even though that increase was relatively small. Now, moving to the backyard, two things needed for the summer. Amen knows it. Barbecues are up 10%.

Pools are up 17%. According to Lazy Man Grill's component costs are up 20 to 30%. Labor costs are up 15%. Healthcare insurance up 30%. That's all factoring in. We'll check back in to see how these prices change over the next few months. You wonder how mortgage rates are going to play into this, right? Because all of this stuff is stuff you need if you're redeveloping your home.

You're putting on an dish and you're redoing your kitchen. All those things that people do when they do a cash out refire, they get some money. Now if people can't get the money, they're not going to be doing all these things. So you wonder, does that play into prices? Great point. Or if you really have to stretch to get the house now, do you have less left over? I mean, we had rooms that were empty for years when we bought our house. Right.

I mean, swimming pools here up 17%. That's astonishing. And during COVID, you saw this huge demand for swimming pools. Everybody wanted to put a pool in. At 17% up, maybe that stops dead. In the irony, the stocks have been huge beneficiaries, but of course, have been selling off and normalizing. They're not even capturing that 17%. Now it was already priced in, and now they're normalizing, too.

So everything is more expensive. Are there any winners here? I don't know. Flooring. That's the smallest increase is the big winner. Let's get to Contessa Brewer now for a CNBC News update. Contessa. Hi, Aymann, hi Kelly. Hello, everybody.

Here's your CNBC News update right now. President Biden announcing he's ramping up U.S. military deployments across Europe in the coming months. According to a White House fact sheet, Biden has ordered additional bases, soldiers or assets to be set up in Poland, Romania, the United Kingdom, and the Baltics. The U.S. will also place an Air Defense Artillery Brigade in Germany. Amazon is limiting sales of Plan B and other emergency contraceptives to three units per customer in the wake of increased demand. Customers who order emergency contraception on Amazon still face a bit of a weight. Amazon's main listing for Plan B displays an estimated delivery range of July 19th through August 6th.

And Bed Bath and Beyond is shaking up its leadership, ousting its CEO, but the retailer could have another big change in store saying it remains open to the potential sale of its baby gear chain, buy-bye baby. Buy-bye baby sales have slowed. Financial advisors are now looking at the company's future there. But of course, that stock down almost 30 percent today. Amen? Contessa, thanks so much. Coming up on Power Lunch, we'll get you caught up on the markets.

The NASDAQ down this week, giving back some of last week's big gains, plus a big group of names you know down big this time this year. Check out Trade Desk, Caesars, and Troupanion, all down at least 60% from highs after the break. We'll be joined by someone who says now is the time to buy these names. Stay with it. Welcome back, everybody. Just 90 minutes left in the trading day as June rapidly draws to a close. Let's get caught up across the markets on stocks, bonds, commodities, and we'll hear from someone who says now is the time to buy the names down 50% this year. Let's begin with Bob Bassani at the New York Stock Exchange. Bob?

About break-even, although Dow is doing a little bit better midday. Take a look at the S&P 500. Fairly narrow range, about 3,800 to 3840 throughout most of the day here. We've got a few new lows out there. We've had some interesting moves up in technology stocks. There's a modest rally in tech going on in the middle of the day. But it's not helping the semiconductors much because we've got new lows on some very big names, including NVIDIA, which is the big mover in that space, AMD, NXP semiconductors, all new lows.

And they haven't really participated in the mid-afternoon rally. Same with oil. We started out strong. Oil was 113, but mid-morning dropped to about 111. Exxon mobile has been all over the place today. It was 93 at the, almost at the open. Look at 88. So a very quick, rapid move to the downside.

This has been very choppy this sector in the last four or five days. A bunch of new lows out there include Carnival, negative, very negative, unusually negative. Morgan Stanley report essentially cutting the price target to $7 for that. And a lot of negative comments out of Morgan Stanley from that. Honeywell, a Dow component, new low there. That's a bit of a surprise. Martin Marietta, also 52-week lows. So the question here, of course, Kelly, is can we avoid this issue with stagflation?

That seems to be the big issue. Well, of course, we're going to get some very important inflation reports tomorrow morning. Yes. It does feel like we're in a bit of a holding pattern for that. Bob, thank you. Let's get over to the bond market, though, where the yield on the 10-year has been falling. And, Rick, do we blame European inflation data for that? Yes.

I think we blame Europe for everything today. You know, if you look at a three-day chart, a week-to-day chart of 10-year notes, you know, we reached three-and-a-quarter intraday yesterday. Now, we've been drifting back down. If you look at a month to date, we almost hit three-and-a-half. mid-June, but we can't hold any of these sell-offs. Yields seem to come back. Why? Well, I think central banks every time we look to see their strategy, you have to scratch your head and think about recession. You really do. And if you look at a two-week of boons, you know, they almost

hit 180, 1.80%. Then they drifted back down. Then this week, when we were trading three and a quarter, their 10 got up to around 165 back down. Can't hold those yields higher. And one of the reasons, of course, fragmentation. How are they going to possibly have a multi-speed quantitative easy when they need a quantitative tightening? I'm not sure the market gets it. And if you look at what's going on a week today, the Euro versus Dollar, almost 58% of the dollar index. You can see it's moving lower. It's pushing the dollar near 20-year highs, fresh ones, and the dollar yen, only 13.6% of the dollar index. But you can see the dollar's ready to make a new 24-year high against that currency. Back to you.

blaming Europe for everything. Rick, thank you very much. What about for oil and energy? Well, you can kind of say that too. Oil prices are down as they close for the day. The focus is also on the recent move in metals. Pippa Stevens at the CNBC commodity desk. Pippa? Hey, Kelly. Well, starting with oil on Pacea here to snap a three-day winning streak ahead of tomorrow's meeting between OPEC and its allies. That comes amid growing calls that more supply needs to come online. But the group is expected to stick to their plan of increase. increasing output by roughly 650,000 barrels per day next month. WTI is down 1.6% right around the 110 per barrel level. Brent crew down 1.5% at 11622 after earlier touching 120. And with just one day left in the quarter, did want to point out the underperformance in metals all down and giving back Q1's gains as recession fears grow, which would lead to weaker demand.

Commerce Bank adding that metals markets have also been better supplied recently, and remember it was the supply shortage fears that were a major factor driving Q1's gains. Copper on track for the worst quarter in more than a decade, with aluminum Kelly tracking for its worst quarter since 2008. Wow, that is quite some disinflation. Pippa, thank you very much. Turning back to the market, there are 14 members of the S&P 500 that are down 50% or more this year, And that's where our next guest is finding opportunity.

Let's bring in Peter Anderson, Chief Investment Officer with Anderson Capital Management. And Peter, a lot of these names are exactly where Chardis might be looking at them and saying, no way, these are broken stocks, maybe broken business models. Where and why do you see opportunity? Well, Kelly, I call it the 50% club. And it's not necessarily an enviable club to belong to. These are stocks that have lost 50% of their value since the beginning. of the year. In Chartists, you know, that's a whole other discussion that we should have some other

time. I don't quite believe in Chartis. I think that it's, you know, a mathematical entity that doesn't necessarily belong in investing, but we can talk about that. Now you've just picked a major fight, so all of that to the side. Tell us what your process is that turns up stocks that could be attractive buys here. Well, you know, these three stocks that I mentioned, the trade desk, through Pannon and Caesars. They have had, and I'm not sure investors have focused on this, but average annualized revenue growth of 30 to 50% over the past three years. And it doesn't, none of them shows any change in that kind of sales momentum going forward. Even through the pandemic and now through a possible recession, these companies are so robust in their underpinnings

that the outlook for them is tremendously positive, yet people are throwing them out with the bathwater just because right now we are in such an unusual stage. I've talked about this now for probably two years, but I do believe that this stage is confusing most logical investors, and they don't have the time or actually the courage to look at these companies in more detail the way I do. Peter, Cesar's I get, right? I mean, that's sort of a COVID reopening play. Everybody wants to get out, gamble, have fun, play, all of that. That makes a lot of sense. But talk about True Panyan. That's an interesting pick here because that's medical insurance for cats and dogs. And you think, hey, the pet boom was a COVID thing. That's over now. So all the pet stocks should track with the end of

COVID, right? Why are you saying that one's actually a buy here? Well, and also full disclosure, I own that stock prior to COVID and held it through COVID. So I want to tell you that I bought it with the early intention of not going into a pandemic, but the fundamental appeal of ensuring pets has always been very, very strong in this country and actually across the world. And two important things that are happening with Trupanion that are just being totally ignored is Chewy and Affleck

have signed selling agreements with Trupanion. So they're going to cross-sell, and their 50 are a huge number of customers, millions of customers, 50 to 60 million customers, are going to get flyers in their deliveries saying, have you ever considered pet insurance? So just think of how that will multiply the top line revenue growth of a company like this. And Trupanion is doing this slowly. That's the other thing I think people are very impatient about.

This has not been rolled out all at once. And their earnings calls, they're saying that they're doing this very thoughtfully, very gradually, in a cross-trial state. So we have to have patience. But these stocks, and I'm mentioning, are for patient people. You would not invest in them if you needed tuition money in six months or so. I'm talking about at least a year horizon. But the positives, the members of their 50% club are that they will probably gain 50% from this point on.

You just have to have patience. Trade desk, Trupanion, Caesars, and a fight with the Chartist. Peter Anderson, thanks for joining us today. We appreciate it. Good to see you. Bye-bye. Pets and gambling. Up next, shares of Carnival, speaking of pets and gambling, are down 15% today, 35% in June, and one analyst sees more rough waters ahead,

even a scenario where it hits zero. That's coming up next on PowerDunch. Shares of Carnival crews are down 12% to about $9 a share today. That's $9 more than it could be worth, and the worst-case scenario now, according to one analyst. Sima Modi is here with the details for us. Seema? Kelly, Wall Street analysts have been reducing their estimates for the cruise lines over the past few weeks.

Now, today, Morgan Stanley outlining an extreme barricade scenario in which the stock could fall to $0 a share. Analyst Jamie Rollo pointing to weaker pricing trends, the upcoming winter cruise season that is reliant on Asia where restrictions still exist, plus higher oil prices taking aim at margins. He writes that if the high yield market closes or if there is a demand shock, that causes trip canceling. or weak bookings, liquidity could quickly shrink. Now, Carnival plans to refinance about $2 billion in the coming months. If the stock continues to fall, the prospect of raising more debt or issuing equity does rise at a time when it's getting more expensive with interest rates continuing to rise. Now, the goal for Carnival is to continue filling ships, explore the sale of underperforming brands

like Seaborne, which I reported the Saudis are in discussions to potentially buy, and instill long-term confidence in Wall Street that it is able to steer this company towards profitability. Kel? It's just a shocking and eye-opening thing to see, you know, Wall Street analysts who can be pretty conservative, you know, with something this bold. So all the cruise lines took on debt to get through the pandemic. It's not just Carnival. It's not just Carnival.

All three, Royal Caribbean, Norwegian, and Carnival did what many companies would do in that scenario. When your industry is shut down for 18 months, they had to go to the debt market to raise billions of dollars of debt. If you were to look at the metric debt to EBITDA ratios, according to tourists, Norwegian you would say, would be the next in line to potentially be facing some type of risk. But again, this is a scenario a lot of highly leveraged companies are in and it comes at a time where the high yield bond market has been drying up in recent weeks. So that's raising some

concern about their ability to refinance this debt as those maturities maturities expire, Kelly. All right, Seema, thank you very much. Seema, Mote. Yeah, Seema, thank you for that. Up next, three companies with headlines from the corner office, Disney, Bed Bath and Beyond, and Pinterest. We'll get our traders take on each in a gossipy three-stock lunch.

Coming up. Welcome back. It's time for today's three-stock lunch. We're looking at companies whose CEOs are in the spotlight amid some stock turbulence this year. Pinterest CEO, Ben Silberman, stepping down after more than a decade running the company. The stock is down over 40% year-to-date, Bedbath and Beyond, replacing its CEO after another quarter of declining sales. Shares there down 20% today and more than 60% this year. And Disney, renewing CEO Bob Chapex contract for another three years,

shares still down nearly 40% just this year. Let's bring in Marianne, Portfolio Manager, with gradient investments. Thanks for being here. We start with Pinterest. Well, Pinterest CEO stepping down. That tide has retreated for digital ads and sales of home decorating items and casual apparel. Since people are now focused on away from home experiences, they're going to weddings, grand parties, graduation or garden parties, you name it. They want to be off socializing. And this has really hurt their ad income, which is seen as a key growth driver. So as evidence of this, we've seen monthly average users been trending negative from plus 30% last year's first quarter to minus nine in this year's first quarter.

Meanwhile, they've been lagging on investments in technology, particularly video offerings. So the new CEO has been Google's president of commerce and is viewed as a highly capable person in this space. But we'll wait on this name, sell for now. Sell for now. All right. What about bed bath and beyond, Marianne? Oh, Bedbath and the end. That's, you know, been history the last couple of years of consumers focusing on those home furnishings, including some high-ticket appliances. Everybody's got the countertop friar, whatever those things are. The air friar.

Yeah, I didn't need that. But Bedbath reported a 23% drop in same store sales, and we're seeing the stock drop similarly today with a much larger than expected law. for the quarter. They're now in survival mode. They're appointing a board member to interim CEO role, new chief merchandising officer. They probably need a lot of new chiefs in there. I see no path to earnings growth right now. So bedbath beyond is just a bet we're not willing to take. That's itself. And Marianne, your next name is Disney, right? Yes, Disney is where we saw a CEO have his contract extended. And, And that may help alleviate any fears about another CEO change possibly. And this follows on by Bob Eager's departure after 15 years of CEO.

So they want to see stability their investors do. Their parks division is rebounding sharply. And those future visits, I think, are rather sticky. Who wants to tell the family that we're canceling that trip? They've also announced that the Shanghai Park is reopening tomorrow, June 30th. might be June 30th there already. But also their ESPN division has a new deal with Formula One, which could also help. So we see the valuation is very reasonable at 17 times next year's earnings for sure.

That's at the low end of its historical range, and we'd be a buyer in here. Investors want stability. They're getting it with Disney. Mary Ann Montane. Thanks so much for being here. Thank you. One buy and a couple of bales. Google and Apple may soon have to remove TikTok from their app stores.

we will have the latest on this government pressure right after this break. The FCC pressuring both Apple and Google to remove TikTok from their app stores. Deirdreboza has the latest on this battle with China. Hey, Deirdre. Hey, Aman. Well, this all has to do with TikTok's parent company, Bite Dance, being a Chinese company, with access to American consumer data. Commissioner Brendan Carr, he joined us on Tech Check earlier today to discuss his concerns.

Most people look at TikTok and they say, well, what's the big deal? just another viral video sharing app. And that's just the sheep's clothing. As you walk through, it is a sophisticated tool for harvesting this data. And one thing that we do know is that right now, the CCP is running one of the most widespread data gathering operations out there. And TikTok has repeatedly said, don't worry, your data is stored in the U.S. What we've come to find out through some of this investigative reporting and leaked documents is, in fact, according to TikTok employees, everything is seen in China. So he's essentially calling TikTok a surveillance tool

and he's citing a BuzzFeed report that indicated Chinese bite dance engineers had access to US data as recently as this year. Now, Alphabet and Apple, they have not yet responded to our request for comments, but Commissioner Carr says that he wants a statement from them by July 8th. TikTok in a statement does say, quote,

we will gladly engage with lawmakers to set the record straight regarding BuzzFeed's misleading reporting. TikTok has consistent. consistently maintained that our engineers and locations outside of the U.S., including in China, can be granted access to U.S. user data on an as-needed basis under strict controls. Now, guys, if this all sounds familiar, especially to you, Amen, that is because it is. Commissioner Carr was nominated to the FCC in 2018 by the Trump administration, which, of course, went after TikTok as well, of course, to little avail. We will see if anything happens this time, guys.

And Deirdre, I want to just ask you about that, because, you know, he is the senior Republican on the FCC. The Trump administration went after TikTok. They didn't really do anything there. They sort of talked a lot about forcing a sale. Never actually happened. The Biden administration seems like it hasn't really made up its mind about what it wants to do. So is this one FCC commissioner trying to push the issue in a private sector way and sort of push those private sector companies to do what the government seems to be unable or unwilling to do here? Yeah. Well, listen, I mean, TikTok is an extremely easy target, right? This is a Chinese company with access to sensitive data. I was actually surprised, Damon. I thought more progress had actually been made, but it was only earlier in June of this year. The TikTok said it was going to move to Oracle infrastructure and Oracle servers. I thought that that had already been done. So clearly, Bight Dance, things didn't really happen during the Trump administration,

and they are slow to happen this time around as well. We'll see if this makes a difference, but it is one FCC commissioner, Brandon Carr, that signed this letter. Yeah, it's like if this actually happened, it seems like it would be the best thing ever for shares of meta, some of the rivals, you know, competing out. And the politics of this are fascinating, right? Because every teenager in the country, every 20-something in the country, is on TikTok all day long, as far as I can tell. I mean, that's a huge group of Americans out there. It would be deeply upset if anything happens to TikTok.

But they're not as big at voter turnout base, you know? Yeah, that's right. You've got to show up at the polls in November. We'll see what happens. TikTok your way down to the ballot box. Thanks for watching, Power Lunch, everybody.