Power Lunch - Risk Management 4/16/24

Episode Date: April 16, 2024

The Dow is trying to snap a 6-day losing streak, but new comments from Fed Chair Jerome Powell about a lack of progress on inflation could hinder that. We’ll discuss.Plus, while today’s focus is on earning and the Fed, geopolitical tension is taut. We’ll talk to a global insurance expert about the threats to business and the macro economy. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch for a Tuesday, everybody, alongside Contessa Brewer. I'm Tyler Matheson. Glad you could join us. The Dow trying to snap a sixth session losing street. Haven't seen one of those in a long time getting help today from United Health after its earnings were out earlier today. But new comments from Jay Powell about a lack of progress on inflation. Well, that's tripping up stocks just a bit. More on that in a moment. Well, the focus is back on earnings.

And the Fed for today, the geopolitical tension is taught. Israel has not yet responded to Iran's missile attack. We're going to talk to the head of emerging risks for a global insurance brokerage about the threats to business and to the macro economy. First, here's a check on the markets right now. You can see the Dow industrials in the green up two-tenth of a percent in spite of Chair Powell's comments about rates and where they need to be in the persistence of inflation. S&P 500 off by 1 16th of a percent and NASDAQ composite, just barely in the red. Earning season really picking up and we have several more bank earnings this morning. Let's get to Leslie Picker for a rundown on those results. Leslie, hi.

Hey, Contessa. Yeah, Bank of America trading lower at this hour after results came out. But the call started, the firm reiterated, rather than raised its net interest income guidance. That caused the stock to slide. Executives on the call saying they expect that loanmaking metric to trough in Q2 and grow again in the second half of the year. the CFO noted that if there were fewer than three cuts, the firm could benefit from that. And then on the Morgan Stanley call, CEO Ted Pick addressed concerns surrounding a reported multi-agency regulatory probe into how the wealth management vets clients for money laundering that caused the stock to slide last week.

Pick said that it's not a new matter and that they've been having ongoing communications with regulators. And he added that the costs associated with this are, largely in the expense run rate. And lastly, we are here at Bank of New York Mellon. We just finished an interview with CEO Robin Vince. Those shares lower despite reporting record revenue in this quarter. And he said that there is a possibility of no rate cuts and even rate hikes given the strength of the economy.

Guys. All right, Leslie, thank you very much. Leslie Picker, reporting. And two down components on the move after results. United Health and Johnson and Johnson. And let's get to Bertha Coombs for those details. Bertha. Let's start with J&J, contest a mixed quarter from Johnson and Johnson,

a solid earnings beat, but revenues barely in line. The quarter saw strength in sales of cardiovascular devices, thanks to the BEMED acquisition, as well as in the oncology medications. But sales of J&J's blockbuster psoriasis drug, Stalar, Stara, missed expectations. And given the big EPS beat, well, J&J's guidance was last. at least that's how most investors are viewing it. Meantime United Health Group's earnings report, complicated by the financial impact of the February

cyber attack on its change health care billing and payment systems. Yet the health care giant beat on both the top and the bottom line and maintain guidance as they work to recover. The really positive takeaway on the health insurance side, medical costs in Medicare among seniors appears to have stabilized at a high level, but the medical cost rate ratio of 84.3%. That's how much of premiums they're paying out and costs, includes the impact of the cyber attack on claims, and was pretty much right in line with the guidance that United Health had given. Contessa, Tyler. Back to the Stellara drug, which, as you mentioned, a psoriasis drug. I wonder whether that is such a high competition area, that that may be one of the reasons that drug didn't meet the objectives.

It is high competition. It's going to be facing some biosimilars coming up. That's a big thing with a lot of these drugs. We've seen it with Humira, which has had a slow ramp up on biosimilars. But I saw one report that within the last few days, that AbbVe medication has seen the biosimilars really ramp up because CVS has endorsed one of the Sandoz versions starting April 1st. And they think those numbers are going to climb. Very interesting. Bertha Coombs, thank you very much. Next up on our rundown of the day's big movers, we got Live Nation. Feeling sort of like Dead Nation right now, Dom Chu. As Live Nation. As Live Nation. Tape Nation. All right. So Tyler Contessa, so the reason why the stock is dropping, it's the possibility of what an antitrust case will do to that stock. It's going to right now be the biggest mover in the downside in the entire S&P, as you can see there down nearly 8%. So those shares are down in large part because of that threat of regulatory action. This is According to a report from the Wall Street Journal citing sources familiar, what they are saying

is that they could, the Justice Department, bring an antitrust suit against the parent company of its namesake, concerts, media sponsorship brands, also what most people know them for, which is their ticket master events ticketing platform. So the reason why they're looking at targeting LiveNation specifically is because they are alleging that the company used its dominant market position to stifle competition among smaller competitors. It's a story we've heard before. Now, the report didn't specify any of the detailed claims that would be brought by justice. But what we do know is that this is the latest development in what has been a years-long inquiry from regulators about just how much the entire live entertainment business needs ticket masters

specifically to be able to function. Now, it really got a lot more attention ahead of the launch of the pop cultural tour de force, right? That is Taylor Swift's era's tour back in the fall of 2022. folks might remember that a high-profile Ticketmaster systems crashed during a pre-sale of those concert tickets for Taylor Swift is kind of what precipitated

a lot of the heat for what's going on here. And led to executives being called on the carpet, on Capitol Hill, and now depositions. And what makes, as you said, we've seen the DOJ interest in the antitrust part of this for years. What makes this different? Why is the stock reacting the way it is? What makes this more of a threat?

Well, it's because right. Now, it's gone from a kind of theoretical line of questioning and investigation towards reporting that this could actually happen imminently within the next month. That is what the journal is saying. The reason why the Ticketmaster platform is so much in focus right now is because Ticketmaster or the ticketing platform business at Live Nation makes up the bulk, and I mean the bulk of operating profits for Live Nation overall. And what is their market share in Ticket-Ticketing?

So it's roughly for some of the biggest venues in America, we're talking about roughly what's estimated to be 80% market share for those live entertainment produced events that they have. To that point I was trying to make about the operating profit generation, if you look at fiscal year 2023 for Live Nation, this is a company that made roughly 82% of its revenues, revenues from producing live concert events, only 13% of revenues from ticketing, and only 5% from some. sponsorships and partnerships. But when you look at the profit side of things, the biggest bulk of dollar profits is generated by ticketing, even more so than sponsorships, advertising, and concerts combined. So that's the reason why the Ticketmaster platform is so much in focus right now. Yeah. That's interesting.

I would have thought that the ticketing fees would have been a higher percentage of revenue. I'm not surprised that it's such a high percent of profit because what, one Once you've got the infrastructure in there, you know, it's a fundamentally a no-cost thing to process tickets. Well, to your point, too, if you want to talk about the other side of the business, the biggest profit margins, operating profit margins, come from sponsorships and partnerships in terms of dollar for dollar versus concert preparation and production and ticketing. Interesting.

It's an interesting dynamic. Yeah. All right. Don, thank you. Thanks. All righty, let's turn to the markets more broadly as stocks turn a little bit. higher right now, just a little bit since the top of the hour. Again, following a brief drop on Fed Chair Jerome Powell's remarks, he said there's a lack in progress on inflation. Geopolitics,

higher for longer rates, continued to weigh on investors' minds, including on the mind of our next guest, who only sees one rate cut ahead this year. Joining us now for more, Scott Clemens, chief investment strategist at Brown Brothers Harriman, private banking. Scott, welcome. We'll get to the broader market in a moment. But I wanted to... I wanted... hone in on something that is in my notes that you said about geopolitical risk, that the developments that threaten sentiment and therefore price are one thing, and those that threaten fundamentals, I assume you mean there by the actual operating of businesses, are quite another, and those threatened value. Would you explain those distinctions, why you consider them important,

and which you consider to be the biggest threat to equities right now? It is the most critical distinction that any investor, at least a long-term investor, has to make, is the difference between sentiment risk. And by that, I mean the daily price volatility that is a feature of markets. It's not a bug. And the fundamental risk that threatens either a company's operating structure, as you were just discussing live nation, the possibility of regulatory risk, the possibility of a hit to earnings, the possibility of a hit to the economy.

Those are the sort of things that worry me as a fundamental investor in the longer term. And so when I place the geopolitical risks that populate headlines today into that category of sentimental risk, I don't do that to dismiss them. They're very real and they're very serious. But just to observe that U.S. financial markets are reasonably resilient when it comes to developments abroad, be it the Middle East, Ukraine, be it China's wandering eye towards Taiwan. Those can certainly and should dominate news cycles, but right now I consider those falling mostly into the category of risk to sentiment. So risk to sentiment, which if I'm

interpreting you correctly, would be a less long-term phenomenon than a fundamental risk to the companies and their businesses. Let's go to your interest rate outlook. Beginning of the year, the working assumption was five or six interest rate cuts. You're now all the way down to One, why? Well, two reasons. And I think they're both good. This may be kind of a glass-half-glass-half-empty observation. The economy has proven to be more resilient and robust than I think we expected headed

into the year. The strength of last year is carried forward. We're adding hundreds of thousands of jobs a month. Unemployment rate remains relatively low. The housing market remains relatively robust, despite higher mortgage rates. So in some sense, there's no real cost. call for the Fed to lower interest rates. At the same time, there has yet to be enough improvement on inflation to warrant lower interest rates. And a lot of that really does come down to it. And you and

your colleagues have reported on this, the core measure of inflation and the stickiness of shelter prices in particular. I think unless or until we get improvement on that, we're in an era of higher rates for longer. I do think by the time we get into the latter half of the year, there will be enough improvement and core inflation to allow the Fed to cut interest rates once by 25 basis points. But you're absolutely right. The beginning of this year, the futures market had priced in six rate cuts this calendar year. And there isn't enough time left for six rate cuts this year almost. You know, Scott, if we, guys, can we pull up the intraday Dow Jones right now?

It's so interesting what we were seeing happening while Chair Powell was speaking. You know, you see this big crater about 130. And then just a little after two, you're seeing a spike now in the Dow. It's up at this point in the green more than half a percent. The interesting thing is when Chair Powell says, look, inflation is persistent, that he doesn't see cuts coming anytime soon. You're seeing the markets kind of just shrug it off. What is there to be positive about when you hear that kind of sentiment from the Federal Reserve chairman?

Well, to truly his credit, Chairman Powell, his colleagues have been reasonably consistent in that, even though the futures market was looking for six rate cuts this year to go back to the December Fed meeting and look at the so-called dot plot, the Fed's own analysis of how many cuts would be warranted. The Fed itself was expecting no more than two or three. That at least was the sweet spot of expectations. But I think if you're going to take a glass half-full approach to this, and I think this is probably warranted, note that the discussion is not, is the next move up or down? The discussion is when is the first cut. So there's not any debate yet about the directionality of Fed policy. It's only debate about when. And you've

got to believe, again, as a longer-term investor, a combination of decent economic activity, which is translating into decent corporate earnings growth, coupled with the expectation of interest rates falling at some point and at some pace, that's a pretty good backdrop for investors. Maybe not day to day. Day to day is still a response to volatile news flow, but in the longer run, that's still a pretty good underpinning for markets. To what do you attribute the market softness over the past month? Piler, I think it's just very straightforward that the market has come so far in a relatively short period of time that investors are maybe looking to lock in profits and individual companies, some of those that have led the rallies. And I'll single out

Tesla is maybe the obvious, a stock that led the market this year, last year, at Rouse. rather is at the bottom of the S&P 500 this year. So I think it's really nothing more than a response to a very sharp rally from about October of last year, which is about when people began to conclude that maybe the Fed really was done raising interest rates and that the next move whenever it was to come would be down. We're still very constructive on markets for this year for all the backdrop and the underpinnings that we've discussed. All right, Scott, Scott, thank you so much for being with us.

We appreciate your insights today. Scott Clemens. Coming up, markets appear not just to be shrugging off Jerome Powell's comments, but also the rising tension in the Middle East, too. Insurers, though, still see real risk for the global economy. We'll drill down on those threats on power lunch returns. As diplomats press Israel to use restraint in its response to Iran's missile attacks, the head of the International Atomic Energy Agency briefed the UN Security Council on the possibility of Israel striking Iran's nuclear facilities. Well, of course, the markets are working to weigh the risks of any escalation, but global insurers have been preparing for months,

riding in cancellation clauses and war exclusions. Insurance fees for shipping through the Red Sea or the Suez Canal are now roughly 10 or 15 times greater. Aviation insurance has skyrocketed, and the industry warns the economic impact will spread beyond insurance and beyond the Middle East. Reed Sawyer heads up the emerging risks group at Marsh McLennan, a 22-year veteran of the U.S. Army. He was a senior intelligence strategist for the Middle East for U.S. Central Command. So, Reid, you're coming at this with, I think, perspective that is badly needed right now. Can you give me a sense, first of all, of what you're seeing as the biggest threat as we speak,

not knowing what Israel's next move is going to be? Yeah, and great to be with you, Contest, and Tyler, I think the biggest threat that we see here is that organizations overwhelmingly are struggling, and in some cases, underestimating geopolitical risk, right? That this fact that they're struggling to understand what it means, how it can impact them, and what those follow-on effects are to them, and how that can challenge their strategy really is creating a lot of uncertainty and volatility in the environment as we think forward. So really, it's this idea about, do we have the right lens to evaluate what's happening in front of us? We're showing the big global reinsurers right now.

And of course, they may be bracing for impact more than the primary carriers because the primary carriers have limits on their exposure, rather, before the reinsurance kicks in. Your advice, I assume, would be different from those who have business in the Middle East that might be directly exposed and more broadly those with global business. Yeah, certainly, right? If you were directly exposed in the Middle East right now, this is all about what are your tactical actions? How are you hedging your increased cost and what is it about business continuity? And how are you activating those business continuity plans to drive resiliency? When you step away from those that are maybe perhaps not immediately on the ground in the Middle East,

but because there's so much dependency with that part of the world, right, it's a different set of questions we really need to be asking ourselves, Contessa. Okay. And then for global businesses, you say there's three dimensions you want to look at the particular risk, starting with supply chain. Yeah, I mean, this becomes the most obvious, aside from the energy impacts that we're seeing and the concern that we have over that. I mean, just think about what's happening in the Red Sea alone with the proxy force of the Houthi that's been attacking the, you know, almost 40 plus ships in the Red Sea where we see almost 20% of global container ships moving through that volume. But we've then, because of these attacks, we've been witnessing almost a 30% increase in transit time, which means that the direct cause to shippers and to goods is increasing. from that perspective. But even as we think about what are the longer-term impacts about this, the OECD is estimating that if this continues over time, we may see a 0.4% increase in CPI for OECD countries, right? So let alone if this war spreads and moves beyond that. So the supply chain

contests the obvious dimensions of it, but I think we need to be tracing what those longer-term and broader impacts are to our organizations. A couple of quick questions. You mentioned the delays associated with having to transit South Africa. Africa or however you have to go, are those delays and the costs associated with them? Are those insurable? In some instances, they can be, and it depends on how an insured has their policy structured. But again, these are the pieces, Tyler, that organizations may need to be thinking forward about these risks, much harder once we're in the middle of a crisis than to be saying, how can I insure

and lay this risk off to the insurance market? And then question two, I get the risk from business interruption. the risk to shipping. I'm a little, we mentioned in the introduction, that premiums on aviation insurance are higher. There has not been, I mean, I remember when Russia shot down an airliner not long ago, I believe, over Ukraine, but why would aviation risk be higher today? I think this is just talking about the broader availability of capital in the market, not necessarily tying to this individual issue, Tyler, from that perspective, but just the broader challenges that we see in the markets from that perspective.

You are also raising alarm bells over increased risk of cyber attacks, and I know you have a lot of experience in that area. That could then lead to more litigation for directors, which would lead to an increase in directors and officers, insurance. But what I'm really interested to read is what you're telling your clients about resiliency. How do they start to work that in? Yeah, like, you know, cyber is not the most immediate thing we think of when we're thinking

about the crisis in the Middle East, but the risk of this escalating attacks, how we think about critical infrastructure or direct attacks on corporations, right? And again, back to Tyler's point about business interruption is certainly part of it, but it's the broader long-term challenges we see from this and the need for organizations to develop a view to risk intelligence contests. And I think there's really three points that they need to be thinking about this from a broader perspective on resiliency. Number one is they've got to adapt a portfolio view to risks that spans both insurable and non-insurable dimensions. Secondly and equally important is to test

how the magnitude of risk increases or decreases with the change in strategy. And what does risk mean relative to top line? Again, we see less than 17% of our global clients connecting risk and strategy. And again, that just increases the uncertainty in their operating environment, which means number three. And I think most simply is that directs us to then adopt a hedging strategy to risk that prioritizes risk capital in the investment and how organizations are thinking about laying off that risk. Reid, it's good of you to join us and share your expertise and your perspective and your foresight. Thanks.

Thank you. We're a choppy day for oil prices as the White House weighs sanctions on Iran following its attack on Israel over the weekend. We'll get an energy report when we return. Welcome back to power lunch. It has been a wild hour for the markets. Look at that. Look at that chart. That is a volatile chart.

Sharp drop, the Dow, around 130, briefly in a negative territory. Then we came back on the air at 2 o'clock. The Dow jumped. It was the Contessa Brewer effect, the session highs up about 250 points. Now the Tyler Matheson effect is kicked in, and we're down only up by about 16 points. Well, if that's true, it should be just steady eddy from here. We should just split the difference here. Let's see if there's a Pippa Stevens effect on oil.

Hi, Pip. Hi, okay, so oil is not. doing all that much today. As we've been discussing for the past really 48 hours on air, everything really now depends on Israel's response. U.S. officials did tell NBC news that they expect that response to be limited in scope. And of course, Iran's very well telegraphed attack did not intend to have this, you know, kind of blow up into a broad scale war. Now, we did hear from Treasury Secretary Janet Yellen earlier today who commented on the conflict and also had some words about additional sanctions against Iran. She said, quote, I fully expect that we will take additional

sanctions in the coming days. And she said that all options are on the table. But this does beg the question of what exactly are these options, given that Iran is already heavily sanctioned by the U.S. It's just the fact that we've been turning a blind eye. They've increased their oil exports a lot, and a lot of that's going over to China now. And so as Clay Siegel over at Rapidin told me, the most effective way to get China to stop buying Iranian oil is to enforce the sanctions that are already on the books. But there is not a lot of appetite for that right now. now, given with oil at 90, given where gas prices are, nobody really wants to have, you know, 2% of oil come off the market.

And also the standoff in terms of culture wars and economic battles that we're already having with China, that this is one way that would increase that, PIPA. Thank you. Let's get to Sima Moni for a CNBC News update. Contessa, we'll start in Washington where President Biden is returning to his childhood hometown of Scretton, Pennsylvania this afternoon to make a pitch for higher taxes on the rich. His tour of the battleground state comes as likely Republican nominee Donald Trump spends another day in court for jury selection in his hush money trial. Trump called the case a disgrace and said he should be out campaigning instead.

The Transportation Department announcing a new push today to protect airline consumers. The department says it will team up with 18 state attorneys general to investigate complaints against airlines and ticket agents. It comes as passenger traffic is projected. to hit all-time highs this year, and as airline complaints have risen sharply in recent years. And six-time All-Star, former number one pick in the draft, Blake Griffin, announcing that he is retiring today. He played in the NBA for 14 seasons, starting with the clippers before stints with the pistons, nets, and Celtics. He made the announcement on social media, writing that he's thankful for every single moment in his career. Just 35 years old. Contessa, back to you.

All right. Thank you, Seema. Still ahead. Going global. Microsoft inking yet another international AI deal in its quest for sector dominance. We'll break down the details when Power Lunch returns. Microsoft is making a major investment into the Abu Dhabi-based AI firm G42, and it's not the only foreign deal Microsoft has made recently. Steve Kobach is here to break down that for today's tech check. Hey, Kedessa. Yeah, this is an interesting deal, but let me explain the high level first. Microsoft is spending $1.5 billion for a minority stake in a $1.5 billion.

G42, that's an AI startup based in the UAE. The latest in several foreign AI and cloud investments Microsoft has made in recent months, and the move is designed to continue its head start in AI, as well as locking up another major customer for its Azure Cloud. As part of this deal, Microsoft President Brad Smith will join G42's board, and G42 will use Microsoft's cloud to run its AI models. An additional billion dollars from the two companies together will also go towards training a local AI workforce. Now, Microsoft has a growing network of AI footholds around the world. Some examples announced in just the last six months or so, a $2.9 billion investment in AI infrastructure in Japan that was from last week, opening an AI office in London, a small investment in the French startup mistral AI, and $3.5 billion for data centers in Germany. Now, what Microsoft gets out of today's deal, it's not just a stake in some hot AI startup. It's also a guarantee of more business for its Azure Cloud unit in the middle.

East. The more AI activity happening on Azure, the more money Microsoft makes. A geopolitical angle also part of this deal, and it's kind of unusual. The U.S. and UAE governments are on board with the deal after Microsoft committed to secure development of AI with G42. But it goes further than that, as the U.S. tries to prevent China from gain an advantage in AI. A congressional committee earlier this year flagged G42 for using Chinese tech and suggested to the Department of commerce, it may need to block tech exports to the company. G42 later said it would not use Chinese technology, opening up the space for Microsoft to come in. And of course, it has the blessing of Commerce Secretary Gina Romando guys. So G42 was using Chinese technology? They were,

and they were involved in some Chinese startups. But they were a UAE company? They're based in the UAE. That's correct. But there's also reports that they're involved, an investor in ByteDance, the Chinese parent to TikTok, and some other things like that that Cause concerns for us here in the West. Exactly. And so, you know, what we saw over the last several months was the U.S. kind of come in and flag that saying, hey, we might put some export limits on what technology U.S. companies can do and they open up this deal. Correct me if I'm wrong, but one of Nadella's great signatures has been Azure, right?

Oh, 100%. That is. Before this AI stuff happened, that was the business. Yes, exactly. And that was the motor of the stock price gains. As a percentage of revenue, what is Azure? Do you know? We don't know. They don't break it out. They lump it all into their entire cloud business. They tell us how much it grew year over year, but they do not tell us from what base.

But it's growing rapidly. And it's, you know, there's some back of the envelope math. People have tried to figure out what Azure is worth. But look, like the big point here is we're seeing Microsoft go all around the world and put these footholds in places outside of the U.S. where they can not only grow, you know, get their head start and AI, but also drive more sales for the Azure cloud business as well. So that's really important to watch, especially ahead of earnings. Well, it's also interesting to watch how the government's actions on being protective of our technology and national security are giving business such a big leg up. And, you know, it's not new, but there does seem to be an onslaught of it right now. Yeah, it's the Chips Act, you know, yesterday that Samsung just got that big award, Intel got a big award. But China is doing it as well.

And so this has been Gina Romando's thing, is to keep us separated and competing against China and making sure these restrictions go in place so that the lead, at least the perceived lead that U.S. companies have can be maintained. I would also note it's interesting because Microsoft, they're talking about security and so forth. Microsoft got just taken to task just a couple of weeks ago for some cybersecurity failures that had, like, hacked emails and so forth of government officials. So not perfect reputation, but better than, at least in the U.S. government's mind, better than a Chinese company taking over. Steve, thank you.

Steve, thanks. Still ahead. A host, a host of new economic data out of China raising questions about the recovery narrative there. We will get a live report, live report from Beijing when we return in two. Welcome back to Power Lunch, everybody. The market's getting a new read on China's economy today, and the numbers are presenting a bit of a mixed picture. Eunice Yun is live in Beijing with the details. Hi, Eunice. Hey, Tyler. Well, the headline Q1 GDP figure, surprised to the upside, expanding 5.3% versus expectations for 4.6% from a year ago.

This is thanks to Beijing's efforts to supercharge its manufacturing and expense sell those products overseas. The March data, though, raised questions about the momentum. Retail sales and industrial production both missed new. home prices fell at their fastest clip since 2015, and investment, as well as sales of property, which, of course, is a huge driver of this economy, both down in the double digits. A fixed-ass investment, though, for the quarter came in stronger than expected. A lot of that money going into the manufacturing sector, as well as the efforts to promote Chinese tech products, of course much the dismay of China's trading partners, such as the U.S.,

as well as Europe. In fact, Germany's chancellor is in China and was quite critical about what he described as China's overproduction. China, as you know, has been accused time and again of selling products overseas by using state subsidies to then flood the markets with Chinese products. What accounts for this rather sharp declines? Are these numbers what accounts for the rather sharp declines in Hong Kong shares and others today? Yeah, well, part of it was because of what's happening overseas in the Middle East. There's a lot of concern there. But in addition, people were looking at these numbers and were concerned.

They were hoping to see more strength and more direction from the Chinese policymakers. Now investors are looking to a big leadership meeting by the Politburo, which is called later this month, hoping for some signals. But so far, the signals from President C are that his efforts to really rely more heavily on manufacturing might not be going anywhere. He was defending China's efforts to supercharges manufacturing, saying that China's ability to sell EVs, lithium batteries, as well as solar panels, is only good because it addresses global inflation as well as climate change. of course, not really mentioning a lot of the criticism that people have that China's state subsidies really harm a lot of the other industries in the world by being anti-competitive. All right, Eunice, thank you very much, and thanks for staying awake all night to join us this afternoon. Eunice Yunn, thanks.

A group of U.S. lawmakers is asking the NASDAQ to delist blacklisted Chinese companies. Emily Wilkins joins us from Washington. Give me a sense of what's happening here. Why do they want the NASDAQ to take action? Hey, Kintessa. Well, yeah, I mean, these are lawmakers. A lot of them are on the China Select Committee, and they have some concerns about some of these companies being listed.

So they're encouraging the NASDAQ to deal as Chinese companies that are basically on this Pentagon blacklist. Republicans on the Select Committee, they're sounding the alarm that some Chinese companies like Hayside Group has raised over 190 million while being on this Defense Department list of Chinese military. military companies and they're worried about those connections between the companies and, of course, the Chinese Communist Party. Congresswoman Ashley Hinson, who led the letter, said that Haysai's

connections to China pose a risk, both in terms of the U.S. military, potentially using their technology and in the data that Haysai is collecting in the U.S. It's Chinese Communist Party protocol that they have to share. You know, it's the military civil fusions. There is huge risk here. It's why I want to work with the NASDAQ and other exchanges to make sure that they're not offering these listings and putting them out there. Again, it's a huge national security risk. We don't even know how much of this technology that HESI could access within our own U.S. military going forward. The Select Committee previously raised concerns about LIDAR companies like HESI that use lasers

to measure speed and distance of physical objects. Now, HESI has said the Defense Department's decision to place them on the list was, quote, unjust, capricious and meritless, and they said they have no ties to militaries in any country. But lawmakers are now requesting NASDAQ to respond to questions about their policies around blacklisted companies within the next 30 days. And Congresswoman Hinson said there could be legislation coming depending on what kind of answers they get back. Guys? So now we wait and see how this back and forth goes and how the lobbying and quote education efforts work from NASDAQ toward Capitol Hill, right? I mean, yeah, Tyler, I think we're keeping a very close eye on that. I mean, another thing that you have to consider here is that Haysai has about

47% of the market share for these companies that use this laser technology. It's very common in EVs. It's common in current smart cities. And so that's another kind of aspect to keep an eye on as far as which companies are producing this kind of technology and how they are responding to this potential delisting. All right, Emily, thank you very much. Emily Wilkins reporting from the Capitol for us. Coming up, we will check on the chart on Two names with bullish momentum, and one, our chartist says, is headed for major resistance. It's time for some technical support when we return. Welcome back, folks.

Time now for some technical support, some big earnings out this week, and we're going to look at the charts of three companies that have some technical levels worth watching. Our chart is Jessica Inskip, director of product at Options Play. First up this hour, Procter & Gamble, you say this one has achieved a bullish breakout. Describe it to me. It has. So you remember last year when tech broke out everywhere, we had these beautiful cup and handles. Well, Procter and Gamble has done the same thing. We have this cup, period of consolidation, and it breaks out. Is that the handle? That is the handle. Yes. It did. Make you a better handle. We went from 155, though, to 157 is this key area. And this was back in January of 2022. And that's what makes this breakout is we have a move up. And like I've said before, this is psychological. at this point. There are a lot of people that hold this stock around the 155 to 157 level. If demand comes in and overcomes that supply, then we have a very valid support zone. And you can see that's exactly where Procter & Gamble is following right now.

So good earnings could be a catalyst to take it higher. And that 26 represents, this 26 moving average represents two quarters worth. 26 is the gray line? That is the gray line, yes. So that represents two quarters worth of pricing, which is indicative of the, quarter over quarter earnings, prices going up. So that's a good sign. I just want to see that maintained, the 150 maintained, and more importantly, that 26 weekly moving average. Love the cuff and handle. Golly, that's cool. All right, next up, American Express. Bullish on this

one as well, saying trend momentum is fading pending a catalyst. That it is. So this one, you can see almost a similar pattern where we have this very clear area of resistance here. It was old resistance. And now it's our new support. And once we went through that, you've see this this candle right here. That is a good indication of momentum when breaking through what we were looking at with Procter and Gamble before. So I think it's a really good example. And that's the 182 to 188 level that was around October 2021. But what is important here? So I've switched our moving averages. This is the 13 weekly moving average. It's a little more volatile because it's a more recent prices. That is exactly support right now. What is a candle? You just, you refer to that.

Candle? So that's the WIC. So this is a different type of chart. These are. are weekly intervals. So a candle, the wicks here, are the open, the high and low for the day. And then if it's filled in, that means it's actually red, then that's a down day. The hollow ones are up days. So it tells me that it opened or it closed higher than it opened on an update. Okay. So I interrupted you there. Oh, you're fine. But what's your thought, please. I mean. Yeah, no, but that's a great example because this is a candle where it opened much, or excuse me, it closed higher than it opened. And you can see that momentum. And that's a, that's a, That's a weak range.

Yeah. So it's important to define what that is to show how this really is a beautiful chart that's now on the 13 weekly moving average, which is one quarter worth of prices. We have another quarter coming in. If this isn't maintained and falls below, you can see what happens. All right. We're going to leave American Express and move on to Netflix. You say this one is showing major resistance ahead. Tell us about it.

That it is. So this one I added a little more time frame. Again, the 13 weekly moving average, one quarter worth of prices. you can see how this clearly acts as resistance here, here, here. And once this turns, we really get into a beautiful upwards trend, which is what we look for, those series of higher lows and those series of higher highs. But if we were to draw a straight line around this area where we're currently finding our major resistance, which is around that 640 level, that is exactly when this trend turned.

So it's converging with the 13-weekly moving average at that time when the can-a-weekly moving average at that time, when the candle fell below that. So again, it closed lower than it opened and then really had that downwards momentum. So that's why it's a very key area of resistance. We have to overcome. In order to keep that bullish momentum, or a fret, we may turn downwards like we did earlier.

Like we did earlier. Okay, let's move on. You got a bonus chart. We need to watch the dollar you say, saying it is flagging major resistance consistent with downturns. Explain. It is. So if we were to draw a straight line here,

and about here. So that's 106 to 17. I call this the danger zone within the S&P 500 looking at a weekly view with the U.S. dollar. Is that the S&P? This is the S&P 500 here. Up top. Uh-huh.

And this is the U.S. dollar. Dollar relative to what? Just the dollar. Just the dollar. Just the dollar. This is the index. Yes, the dollar index. So when we get into this trading range here,

the dollar's moving higher. It is consistently with downturns. And what I find very, interesting, this level here, you can just, it's very clear when we go here, the market suddenly turns. And that's happening right now. And even today, you can look at the price action of the dollar and what's occurring with the S&P 500. This is a pattern from a technical point of view. We look at a series of patterns. If it occurs over and over, then that's indicative of strength of the trend. Since this has happened multiple times, we're going to drive some attention to this

because as it's gone into this range, which is here and here and here. What's it telling us? What's it telling us? It's telling us that we have some major resistance coming up for the dollar. If we do not overcome 107, or we do overcome 107, that could be very bad for the market. It has bearish implications. For the equity market. For the equity market overall, yes. Okay.

Got it. Jessica, thank you. Awesome. Thank you, Tyler. Contessa. Thank you both. Okay, remember, you can always hear us on the podcast. Be sure to follow and listen to Power Lunch on your favorite streaming service, and we will be right back.

What do you do with less than 60 seconds? Let's get to the other stories that you need to know. Construction of new homes fell by the greatest percentage in four years last month, according to the Commerce Department. Housing starts fell nearly 15% year over year in March. The sharpest drop since April 2020. It's bad news for the home buildings. Yeah, I wonder what explains.

The people staying put because they don't want to have to take out a large mortgage. They don't want to have to pay the extra premium for a new home. Whatever it is, it's not good for- mortgage rates discouraging. Insurance for sure is. And according to the New York Post, the power lunch, yes. The Power Lunch is back in the Big Apple as Manhattan office buildings reopened for business. New data from placer.AI found that foot traffic at New York office buildings was down just 17% last month for March.

Bad news for expense accounts everywhere. That's the truth. All right, that'll do it for Power Lunch. Thanks for watching.