Power Lunch - Snap’s slide, S&P set to rally and our Power House Road Trip 7/22/22

Episode Date: July 22, 2022

Snap shares tumble after it paints a grim picture of the digital ad market. What does the future hold for the industry? And which company will come out a winner? Plus, a market veteran says the bears are making him bullish and the S&P is set to rally 14% into year end. And our Power House Road Trip heads to Austin where the once-hot market is cooling. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome, everybody, to a Friday power lunch. Hope you're staying cool. Welcome. I'm Tyler Matheson. Excuse me, let me clear my throat a little bit. Upheaval in the digital ad market. Snap stock tumbling, 35% today. Excuse me, weakest sales ever.

Vending a grim picture of the industry ahead of next week's reports. From the heavy hitters, meta and alphabet. Plus, a big rally ahead. Our market pros this hour says all of the bears are making him bullish. He'll tell us which stocks will lead the way high. Kelly? Bless you, Tyler. Thanks. Hi, everybody. The NASDAQ getting hit the hardest

today. It's down 2.2% nearly and Snap is not helping. Snap shares will show you a little bit in a moment, down 38% taking the social space down with them. The S&P's down 1 and a quarter percent. The Dow at session lows right now down 220 points or more than two-thirds of one percent. The S&P had reclaimed 4,000 earlier

before pulling back the NASDAQ well below. 12,000 today as well. Now, some of the worst performing stocks are meta, data, dog, alphabet, and docu sign. We're seeing meta down 7% after SNAP's results, even though our guest last hour said they could be a beneficiary of some of the ad trends that he's seeing. Elsewhere, Twitter shares turned around midday

after their own disappointing results. They blamed uncertainty around Elon Musk's acquisition of the company. The shares are 3980. They're up about three quarters of 1%, Tyler, but that revenue number has raised some. eyebrows. All righty, Kelly, let's turn now to the big story of the day, which is Snap. The social media company falling nearly 40% on pace for its second worst day ever. Going back to May, when the company guided down on the exact problems that sent the stop tumbling again today.

On the call yesterday, Snap CFO said as input costs rise for companies around the world, quote, advertising spending has been amongst the first areas impacted. We have observed a fairly steady deceleration in the demand over the past year. So what's next for SNAP and the digital ad industry? For more on this, let's bring in Sarah Fisher, Axios Media reporter. Sarah, welcome. Good to see you there. You've got a smile on your face. I don't think too many shareholders of SNAP do right now. What does this tell us about the digital ad market that we didn't already know? Yeah, well, there's a few things. One, it's not declining. It's decelerating. But what we're finding is that some of the big digital players are getting the spooks. The people who need to pull

their money out of the market are pulling quickly in digital first. And that's because the contracts have really short out clauses and you're able to pull out. Whereas if you need to pull money from television or a legacy media channel, you might not just be able to yank your dollars. And so I think that's the biggest learning here, the other big learning is that for some of these big digital players that are starting to diversify their revenues, you look at Snapchat just introduced a new subscription feature. Twitter has introduced subscriptions over the past year. Those things are not growing fast enough to make up for these giant losses. You know, Twitter is down 1% in revenue for this quarter compared to last year. If its subscription offering was actually moving as quickly as they

thought it would, they probably wouldn't be in that position. Are we beginning to see, Sarah, the first signs that the big are going to be okay and be bigger and the fourth, fifth, sixth place players are going to struggle more. No, I think everyone's going to feel this hit. And that's simply because when the economy slows, the entire ad market is going to slow. And that's going to impact everyone. I also think the big sort of elephant in the room is TikTok. If you were to have removed TikTok, then yes, I think meta, maybe Google would have had a lot of optimism to look forward to.

But you have this big giant that we can't see how fast it's growing because they don't report publicly. and break out their numbers that's starting to really eat at a lot of the market share. I actually think what you're going to see is that everyone has a slower second quarter, but I do think it's going to look adversely worse for some of the smaller players, especially some of the younger players. If you think about it, Snapchat said its revenue was growing 50% on average for the past four years since it went public. You know, a company like meta that went public a decade ago,

you're not seeing that revenue growth percentage just because they're older company. Sarah, we talked to Mark Douglas, a mountain, hour. And I want to call out the performance, the weak performance of Facebook and Google, especially today, because he was saying he thinks a lot of this is just brands pulling back and not necessarily a slowdown in direct ad spending, which could see a benefit and has historically performed well during downturns. And if so, you'd think that meta and Google would be two of the biggest beneficiaries. Mark is completely right. And I watched that interview. When you need to diversify your revenue away from being spent it a lot on the brand side,

you do put it into performance advertising. And so that should benefit tech giants, especially over traditional players. The challenge, though, is Kelly, what I mentioned before is that those ads are actually really efficient, but they're also really easy to pull. And so while I do think in the midterm, like next quarter and the fourth quarter, the performance advertising companies like META and Google are going to benefit,

I think the shock factor hits them the hardest in the beginning. And if you remember going back to the pandemic, this is exactly what happened, right at the heart, at April and March, that's when everyone just halted their digital ad plans because they could. It was the TV companies that did okay at that time because you can't just pull out of a TV contract. So I think you're right, but I don't think you're going to see that advantage come through until probably the third or fourth quarter. Do you expect, I mean, it just made me think of something, Sarah. Will the digital companies turn more to a television model and try and harden up their contracts?

Well, it's funny. They're all hosting these upfronts presentations now, right? They're trying to get brand advertisers to spend more on their platforms in these more strategic long-term relationships. So it's something they've been doing for a while. But unfortunately for them, it's not something that they can flip a switch on. The reason that traditional advertisers can command that type of commitment up front is because they have a long-term schedule of programming months ahead that they can guarantee that inventory to their partners. You know, Google and Facebook, they have a few partnerships with content. But it's not like they can forecast that they're going to have a big show that's coming up where they can just sort of,

to shift some of those brand dollars ahead of time. That's not something they're going to be able to do in time for what's happening right now. Sarah, very complete report. Thank you so much. Sarah Fisher. Appreciate it. Let's turn from that to Twitter. Is it time to bet against the social media space or was this just a snap issue?

Can their larger competitors ride it out a bit better? Brad Erickson is an internet equity analyst at RBC Capital Markets. He's got a hold on snap, lowered his price target to $10 today. Brad, welcome. You want to just build on that point? I mean, are the stocks like Facebook and Google being unfairly punished here or not? Yeah, thanks for having me. I don't think so, honestly.

You know, I think we do a lot of channel work, talk to many, many advertisers, particularly the smaller ones that are disproportionate contributors to Google and Facebook's business in particular. And these guys change behavior basically for one of two things. Either one, one, they're getting a revenue hit. or two, they're trying to seek better return in other channels. Based on our checks to date, we're definitely hearing it's number one. They're either seeing impact or expecting impact, and so they're bracing for it. They're changing, they're making decisions today.

So you are going on the record, for all of those who are saying this is a snap problem and saying, no, it ain't. There is a broad pullback and ad spending happening, and they are a victim of that? Yeah, I mean, we've been doing this channel work for pretty consistent. consistently now for the past six months related to this specific topic. And we're on the record for the past three months that things, cracks have begun to form is kind of the headline we've been using. So yes, absolutely. Are these cracks going to become canyons? And so in other words, are we in the very early innings of what you describe as an advertising pullback?

Yeah. So it's interesting. I think one of the things we focus on in our channel checks is we try and get a sense of how many advertisers have pulled back, obviously, as well as how much each advertiser is pulling back of their spends percentage-wise. And best as we could tell, we last published on June 23rd, we estimated that one-fourth of the small and medium-sized advertisers we were connecting with, which is a sample size of roughly six to 800, we estimate. About one-fourth of those had started to pull back. But again, like I said earlier, they hadn't actually seen a full revenue impact in many cases. And so our call was basically like a quarter have pulled back as of today, but we think that could get progressively worse. So you said these are small and medium-sized

advertisers. Can you give me some names, some examples of the kinds or the or the particular individual companies that have actually been pulling back as you check the channels? Yeah. So we actually speak with agencies that are broad-based. They'll work with, you know, two dozen, 50, 100 of these guys. So unfortunately, I can't give you exact names. But that's the types of folks we're reaching out to. That's what they're telling you. They're telling you as agencies who are the ones who are actually buying the space,

that the medium-sized companies are pulling back and we're beginning to see that 25% or whatever number was you cited just a moment ago. Exactly. Yeah. And kind of to Tyler's point, Brad, so where do we go from here? Yeah, I mean, I think we're in a period right now where, you know, depending on what type of a business you talk to, I think there's some pretty good evidence brewing

that the consumer is starting to show signs of deterioration. AT&T said yesterday that people suddenly aren't paying their cell phone bills on time as much. To the degree that that weakness starts to creep into, again, these small and medium-sized enterprises, we focus on that so much because it's so important to Facebook and Google's business. As they see more weakness, yes, it is logical.

that you would see more advertisers cut spend. And as we said, three quarters of which we think is still to come. Three quarters of which is still to come. And that will explain why a stock like META is down more than 7% today. Brad, thanks for joining us. Thanks for happening. Brad Erickson. Brother dower outlook there.

Yeah, I mean, but that's what the stock's telling you. Yeah, that's right. All righty, coming up, our powerhouse road trip is going to take us down to Texas. Austin, to be specific, one of the hottest housing markets now, seeing a rise in inventory and a drop in pending sales. We're on the ground there to discuss whether buyers are now in control or at least a little bit. And while the housing market cools just a bit, redecorating is taking off. William Sonova, RH, our house, all up more than 20% this month.

A look at whether the spending spree is just starting. And speaking of spending, take a look at shares of American Express. The stock leading the Dow on the back of strong earnings with the company saying travel and entertainment spending came roaring back in the second quarter. Power Lunch is back after this. All right, welcome back to Power Lunch, everybody. We're on the next leg of our powerhouse road trip with hideous photographs of both of us there. But that's all right. This summer we're going to take a look at housing markets, six markets.

Look at how they're changing. Today we go to Austin, Texas, according to Zillow's, Most recent report, the median home price there is about $536,000. Sales count surging recently, up 32% month over month, 69% of homes being sold above asking price there. For more, let's bring in Jeanette Spinelli, founder and CEO, Spinelli Residential Group, powered by Place. Jeanette, welcome. Nice to have you with us. How does today's market compare with last years?

Well, the market has been for so long incredibly weighted towards the sellers. That's what we've experienced this last year, certainly since the last time that you and I talked, that even just a little bit of release implies, rather that it is now a negative situation for sellers. But that is just not the case. I keep hearing in mainstream media, some mainstream media that prices are tanking, but what we're seeing in Austin is really a reset.

the list price and a buyer's opportunity to finally be able to negotiate. Are you finding that inventories are coming on the market at a faster pace than, let's say, last year. In other words, is the count, it used to be like two weeks of inventory. How much inventory is there now? And what's normal? Sure. Well, we were praying for inventory last year.

And I think this time last year we were discussing record-setting homes. sales numbers. 12 months later, it's a different conversation. The inventory is now at two months supply on average, thankfully. And the topic is the triple digit gain and active listings. And that's really coming out because the current properties that are on the market are not being absorbed as quickly. And then we have new listings coming on to the market. But still, And median price points are average sale prices up 13.34% from last year. I guess two questions, Jeanette, but maybe they're related. Who is selling?

And are the sellers lowering prices? Oh, my goodness. I mean, there's all types of people that are selling. There's still people looking for opportunity, meaning they don't have to sell, but they know that the pricing is still up. So, yes, there is those sellers. There's people that need to sell. all different price ranges. I think what we've seen a lessening of are the top price points,

our upper 5% of the market, our $3 million and plus sellers have maybe pulled back just a little bit. They don't have a need to sell, but more of a want to sell. And still, this said, our inventory is increasing. Active listings are up 145%. That's quite a bit. We needed an inventory It inspires you to the opportunity to be able to negotiate. So we're not seeing them put into this pressure for having to make a decision sometimes in a few hours or a weekend. Right, right. Time to breathe. So I'm assuming then that this all implies that sellers are having to be a little bit more realistic about their pricing and their expectation,

that houses are moving on and off the market a little less quickly than they do. did. And so you're beginning to see a little bit of a while the market is still hot, a little bit of that overheating dissipating. That's correct. I think Tyler previously aggressive actions were kind of pushing prices up and now that upward pressure has ceased. So I wouldn't call it necessarily that we're seeing a lot of price reductions or markdowns. But simply it's unrealistic and unsustainable expectations, but they're being corrected to realistic and sustainable expectations. And certainly, we see reductions in some sections of Austin. I mean, really, Austin, like most cities, are made up of a multitude of markets. One in five sellers have

readjusted their list price. Definitely. We're seeing that. Final question, quick one. What percentage of houses are selling above the asking price? and what percentage of houses are having multiple bid or bidding wars? We're still seeing most homes reaching the 99% of list price, but that truly is a function of the sellers in their listing agents having conversations in advance so that they price right to begin with. And so I assume that implicit in that is that there are fewer bidding wars, where there are multiple bids and stuff goes off in two days.

We're seeing it a little long. Jeanette, thank you so much. Continued good luck. I know you like more inventory. You hope you get it. We appreciate it. And stay cool down there in Texas. Thank you so much.

Thanks for your time. You got it. Fascinating. Some of the most beaten down areas of the market are rebounding the strongest lately, like crypto, with some big moves off the low's micro strategy has doubled from its bottom on May 12. The Kathywood arc names some similar huge. huge gains. Teledoc up 50% from its low, which was also on May 12th, even the lower beta names like home decor companies with big gains, but they're still down for the year. Can these

stocks continue to run even if or as home sales slow? We'll talk about that. And let's take a look at the markets right now with fresh session lows for all the major averages. The Dow's down 253 points. The NASDAQ down 2.5%. We'll be right back. Welcome back to Power Lunch, everybody. Mortgage demand may be slowing, but that is not stopping people from redecorating. Money is pouring into home furnishing stocks, making this the new hot part of the housing-related market. Courtney Reagan has more. Hey, Corti. Hi, Tyler. So while the home builder ETF, the XHB, is up more than 13% in July, well up-pacing the S&P 500, retail-related home stocks are even hotter. And this comes even as Morgan Stanley forecast slowing revenue growth

in the home furnishing space through the year 2025. Sales at home furnishing stores were among the strongest categories in June from May, up 1.4% according to the latest retail sales report. William Sonoma shares are up 27% this month. That's the parent of Pottery Barm, West Elm, and others. It logged a record quarter with strong sales and margins, reiterating its forecast for the balance of the year. And while RH slashed its forecast for the year, citing,

higher interest rates, lower luxury home sales, and continued Fed tightening, investors are discouraged, are age up 30% month to date. Our House shares, they're up 24% so far in July, though still well shy of the 52-week high. V-VA says that our house web traffic is well ahead of competitors up about 32% year-over-year, at least in the first 11 days of July. Floor and decor, those shares up 23% this month, and even the more volatile players in the space, both their stock performance and their financial performance when I'm talking about volatility are getting a bullish bid in July. Online home decor marketplace wayfair of 30% this month,

still down 70% year to date to be fair. Bed Bath and Beyond shares, those are up 16% month to date, too. And this is a company that has struggled mightily with its turnaround amid supply chain pressures and, of course, under a CEO that's now out as of the end of June. Tyler. Yeah, you look at the month to date and they sound very nice. very nice for them, but certainly if you look at the year-to-day numbers as you just did, they're still pretty dismal. That whole housing area has been crushed. Furnishing names are hot, but Home Depot and Lowe's not so much. Why not? Yeah, I mean, they're higher, but not as hot as these home furnishing names. And I think that's just some of this reluctance and this concern

about what is really going on in the housing market. And I think those stocks are just so much tied more so to the overall housing market and less maybe to consumers discretionary spending. And so those names are a little bit harder hit or I shouldn't even say harder hit. That's not quite fair. They're not up as much as the home furnishing names. Remember, those are often bigger purchases if you're doing home improvement. We know that labor tight and those material costs are up pretty substantially as well. Courtney, thanks very much.

Stay cool. See you around. All right. Let's get to Bertha Coombs with CNBC News. update. Bertha. Hey, good afternoon, Tyler. A Rochester, New York police officer was fatally shot at another injured after a gunman opened fire on them hours after the city declared a state of emergency over gun crime. A 29-year-old veteran of the force later died. His partner, an eight-year veteran, was shot in the lower body and was released from the hospital. American Airlines saying

it could take up to three years to get back to full nationwide capacity due to an ongoing pilot shortage. CEO Robert Isam telling investors that demand for air travel quote is at record levels, but that the airline's travel schedule remains impacted by supply chain disruptions and staffing shortages. Adelina Ninja Oterra Warren's image will be stamped on a U.S. quarter in recognition of her leadership in New Mexico's movement for women's rights to vote and her pioneering role in politics. The quarter is set to roll out on. August 15th as part of the U.S. Mint's American Women's program. It's a four-year program that started this year

focusing on women's accomplishments and contributions to American history. Go look out for one of those, Tyler. Yeah, be cool to collect them. Wouldn't it? Love it. Thank you, Bertha. Ahead on Power Lunch, so bad, it's good. Why, one market veteran says the bears are actually making it bullish, and he sees a rally into year end. And speaking of bearishness, the NFT craze has slowed dramatically in the past year, and it's leading to crime in the digital world. That story is ahead when Power Lunch Returned.

Welcome back, everybody. 90 minutes left in the trading day, a very different tone this afternoon from this morning as we've turned lower. I was going to say sharply lower, maybe not quite there yet, but the Dow's down 267. So let's get caught up across the markets on stocks, bonds, commodities, and why bearishness can sometimes be the most bullish thing out there. Bob Bassani, let's kick it off with you. Well, the important thing is we get a little bit of a reversal today. And we topped out at 945, and that's when the services PMI report came out. And it was weaker than expected.

It showed some contraction. And immediately the market moved down a little bit, and maybe justifiably so. Bond yields have been weaker in the last day or so. And again, a little bit of concerned about the slowing economy. And that's the debate. How much is it slowing? What side of that debate are you on? And you can see the S&P here.

But what a great week. We were up 3.5% at the open. So now we're up 2% for the week. right now. Let's call it really a tech reset. That's actually what's going on because we've had phenomenal runs in technology stocks. I keep highlighting this has been last week and a half here, but you see the reversal today, all the growth here sections, Arc Innovation, semiconductors, tech and general, communication services, all a little bit weaker here. Just want to show you the semis that are down today, but what a run they have had. Envidia, which was at a 52 week low

a little while ago, was up six days in a row, dramatic turnarounds, and today they're giving back some of the gains. So you see how choppy the action is, but at least they put together a few strings of upside, up days. So what's leading today? Well, all the stuff nobody's wanted for the last couple of months, consumer staples names. These are defensive stocks. So nobody particularly wants to buy these. They want to buy growth, but the game is hard to play right now. So in days when you get a little more fearful, the defensive stocks tend to do a little bit better. The big question for next week is what's Apple and Microsoft going to say? Can you make an argument that the fourth quarter numbers are going to hold up a little better, even if the third quarter is a little weaker?

We've had a tremendous run. I mentioned Arc Innovation, just up 30%. Consumer discretionary stocks up 15%. Look at these moves. Just the last four or five weeks here, these are big moves and the more defensive sectors aren't doing anything and the energy and commodity sector generally are down. So everyone wants growth in the last five weeks. The question is, you know, for next week, guys, is can anybody actually promise some growth, even if it's just the fourth quarter? This is going to be a big week. This will be the most important week of the third quarter next week. All right. Rest up, Bob, we appreciate it. Bob Bassani. Let's turn to the bond market now where we've already had a pretty big week, given that the 10 year was, what, 275 this morning, Rick?

Yes, it's unbelievable. Not only has it been a big week with respect to yields and volatility, but it's been a big week in terms of negative data. And just think, Bob mentioned the PMIs next Thursday. First look at second quarter GDP. That's going to be huge, right, on the throes of a Fed rate hike on Wednesday. Hey, if you look at the year-to-date of the VIX, and I'm at the CBO where the VIX is traded, it's coming off of yesterday with a meager bounce. Yesterday was a three-month low close.

And as you look at that year-to-date chart, keep in mind, there's three tops. We had a top that was in March. We had a top of May and a top in June, and each top is a little bit lower. Doesn't look like there's going to be, at least from a technical standpoint, any big bounces. Look at a one week of tens. It's now hovering down nine on the day, down 13 on the week, and on pace for the lowest yield close in two months. And Boones? Boones were flirting with 1% today.

They haven't closed below 1% since the third week in May. Definitely at a 103. It underscores that weakness is being the big issue. that investors are trying to price in, and it's not only that. It's the fact that Europe, they're acting like things are normal, but to be so close to the energy situation that Russians put them in just makes the market's quite nervous. Back to you.

Since I'm back on a Friday for a change, quick question, quick answer. What's your big takeaway? What did you learn this week, Rick? You know, that there's spreads in the market, and there's the spreads in life. The spread is between reality and desire, And that really sums up what we should be learning from Europe as Putin has them under his thumb. Listen, Mr. Buttigieg, we all want to go green and take care of the planet. But it's not ready for prime time.

We need to concentrate on the fires that are raging right now. That's what's bugging me. Rick, thank you very much, Rick Santelli. Well, speaking of which, that's the perfect place to bring in Pippa Stevens with the latest on the energy complex as we close out the week. Pippa? Hey, Kelly. Well, there's been a lot of voluble. This is a quick review here.

We had the big spike on Monday that took WTI above 102. We then drifted lower over the course of the week and are now ending down 1.6% at 9479 following the latest rig count data. Also fueling this week's decline include the return of Libyan production, soft U.S. gasoline demand, as well as recession fears. Now turning to Nat gas, that continues to be the big story rising here in the U.S., in the UK and EU. There was perhaps a sigh of relief as Russia resumed some gas flows through Nord Stream 1. But RBC, among those noting that gas remains President Putin's weapon of choice and cuts could be coming. Did want to quickly point out shares of Schlumberger, adding about 4%. The company beat top and bottom line estimates during the latest quarter.

Revenue jumped 20% year over year, and the company raised its outlook amid drilling activity. Kelly? And a 4% gain in the stock tells you it wasn't totally priced in. Pippa, thank you very much. Speaking of stock gains, my next guess is not throwing in the towel just yet. He's sticking with his 14% rally in the S&P by year end and says it's all the bears making him so bullish these days. Let's bring in Art Hogan. He's the chief market strategist at B. Riley Wealth.

So, Art, are we at capitulation? Well, I certainly think we're at a couple of peaks here. And I think we've got peak pessimism. And that certainly reflected itself in the UMISC sentiment in the conference board consumer confidence. and certainly in the Bank of America's report earlier in the week, talking about positioning and pessimism in the market. So when you've matched that peak with what we likely are seeing in peak inflation, with a lot of inflation inputs having rolled over,

we talked about energy in the last segment. We certainly have seen that in lumber, industrial metals, copper out an 18 month low, et cetera. All of that sort of plays into a positioning that likely happens at a bottom, not at the top. So I think that you've got enough pessimism in this market, market, enough non-believers that you're actually going to have room for some upside. I think anyone that was going to sell has done a pretty good job of selling already. We've done an efficient

job of taking multiples down significantly across the board. And the average stock in Aztec is still down some 43 percent. The average stock in the S&P is still down some 35 percent. So I think you've got enough of the damage priced in for what for the bad news that might not come to fruition. The bad news that might not come to fruition, you have a year-in target on the S&P 500 of 4,500, that feels pretty good. I mean, if we got it, how do we get there? Well, first, Tyler, if we're going to retrace half of the move we've made from the peak to the troth in the S&P, that gets us back to 4200.

I think that's something we could eventually see heading into September. So that 50% retracement would make sense. But I think what we also see is earnings estimates for the second half, at least for the 15% of the SB 500 companies that are reported, have not degradated at all. We really haven't budged much. We're still seeing the usual 65 or 68% of companies beat earnings and 65% beat revenues. Sample sets too small and next week's going to be very important. But I think that if we have enough companies that beat top and bottom line and keep their guidance the same, we likely are going to see an expansion to multiple and wouldn't be that far a trip

up to 4,500. Beating estimates is one thing. Growing profits is another. Are you worried that companies are going to have a harder time as we move? into the fourth quarter and maybe 2023, not just beating estimates, but really growing profits, because that's one of the main drivers of stock and stock prices. Yeah, for sure, that's going to be an issue. But at the same time that the economy slows modestly, we're also going to see better inventory levels. We're going to see better supply change.

You're going to see lowering of inflationary inputs. And I think all that plays into better margins. So just think about energy coming down and the amount of the amount. that it has and how much that helps in all sorts of transportation issues for companies. So I just think that there's enough, there's more good news, the bad news out in front of us, and we've priced in plenty of bad news. Art, what about those who say, you know, look at the bond market now, 10-year at 275, you know, signs of things rolling over, the data, this, that, the other cycles turning.

What's your response to all that? Yeah, this is a year where we started with the 10-year at 1.5 and went to 3-5, and all of that happened within, you know, a quarter so. the fact that we're sort of settling into a two and three quarter to three and a quarter range, which is where we've been for the past four months probably makes sense in the here and now with what we're seeing in terms of economic data coming in slowing and the potential for a Fed that's less hawkish in their September meeting than they are in the July meeting. So I think that the machinations of what's going on in the U.S. tenure is as much a reflection

of what we think monetary policy looks like going forward, not thinking that anything's changing in the July 27th meeting, but certainly the pace at which or the end point that the Fed finds themselves in the terminal rate at which they raise rates too. So I think that's what's really getting priced in as much as the read-through on some slower economic data that we've seen. Fair enough. Art, thanks so much. Good to see you today. Say hi to the interns.

We'll do. Thanks so much. Art Hogan. All righty, coming up on Power Lunch, the disconnect for telecom stocks. AT&T and Verizon both sliding this week after results. We'll ask our trader if now is the time to buy. Plus, the drop in NFT prices has an stop criminals from wanting to steal them. We'll get the details of a new digital crime spree

when we come back on Power Lunch. Welcome back to Power Lunch, everyone. A new platform and old scam. Criminals have stolen millions in NFTs over the past few months. Amon Javvers has the details. Hi, Amin. Hey there, Tyler. You could call this one a crypto crime spree. New data from the analysis firm TRM Labs shows that criminals have stolen as much as $22 million in NFTs. using the Discord social media platform just since May. And just on June 4th, specifically, they found there were at least 10 account compromises targeting NFT Discord channels. They may be hitting new targets with names like Secret Lama, Dummies, and Young Ape Club.

But the hackers here are using tried and true methods to dupe their victims. TRM Lab says they're using social engineering techniques, sending imposter messages, promoting a false sense of urgency, and hoping to capitalize on a victim's fomo or fear of missing out on that next big thing. Now, Chris Jenske is a former IRS criminal investigator. He's now with TRM Labs. Here's what he said. These are all techniques that we've seen before and other types of schemes. It's just now they've pivoted to a new arena and it's easier to potentially steal one NFT that could be worth tens or hundreds of thousands of dollars than to steal many different types of tokens. And Tyler, if you think about it, it makes sense that the hackers aren't really put

off by this crash that we've seen in NFT prices since they're not buying the tokens in the first place, What they really care about is whether they can sell them for any value at all. Now, Janczewski says, the best ways to protect yourself in NFT land are the best ways to protect yourself everywhere online. Know who you're talking to. If it seems too good to be true, well, it probably is. And be very careful when you click on any of those links, Tyler. You know, the asset may be different, but I have to assume that the reasons people are falling for these scams are the same as they ever were. Yeah, that's exactly it.

But it's a new format, Tyler. Nobody out there has been buying and selling NFTs for all that long, right? So you've been using email your whole life. You get an email scam. Something looks off to you. You sort of have those antenna up. You can kind of see what's wrong with it. You don't click on the link.

But in this NFT universe on Discord and the like, you know, you're seeing all this new stuff coming at you. The formatting's different. The software is different. And people have their guard down a little bit because they think this is a whole new world. I got to get in on it and get in on it quick. That's when they could become vulnerable to these kinds of scams. All right, Damon. Have a great weekend. Amen Javvers. Thanks.

Rough week for Telecom Giants, AT&T, and Verizon. Both stocks down more than 10% this week after disappointing results. And look at their dividend yields. They're still hovering around 6%, but are these value or value traps? An all-teleco edition of three-stock lunch is coming up next. Welcome back, everybody. Today's three-stock lunch focuses on the telecom trade and what a trade it's been. Verizon shares down 7% today after declining yesterday, after. the company said higher prices dented subscriber growth. AT&T lower again on a Barclays downgrade to equal rates, citing credibility issues after they lowered their free cash flow guidance yesterday.

And TeamMobil's results on deck for next week. Let's bring in the brave Ari Wald. He's Oppenheimer's managing director to navigate through these three tumultuous trades area. It's good to see you. Let's start with Verizon. What do you do with it? All right. I would put this in the value trap category.

And broadly speaking for the industry, telecom, typically a counter-cyclical industry, our feel is that group is going to continue to underperform against this market recovery scenario that we see playing out through the balance of the year. Now, what's notable about Verizon, here's a stock that's been trading below its 200-day moving average pretty much for the last 18 months. Now, it did show some outperformance up until recent weakness simply by falling less through the year.

but I think recent weakness is indicating that that long-term downtrend is resuming. And for all these reasons, that's why we think Verizon is a value trap that should continue to trend lower. Let's go to AT&T, much maligned AT&T. What do you think here? Yeah, pretty similar take. It did a little bit better than Verizon. It was able to rally above its 200-day average. But again, I think recent weakness is indicating that safety,

stocks like A&T are becoming a source of funds as the market rotates into the growth year pockets of the market. So AT&T as well, there's some support at 18. It's the gap. There's the support at 17. That's a prior low. I'm more worried about the trend of lower highs going back to 2016 and that long-term downtrend is resuming. Airy, stay with us. We're going to interrupt for just a moment and go to Amman Javers for some breaking news. Amen. Tyler, presidential advisor, Steve Bannon, has been found guilty on two counts here in Washington, D.C. The Trump presidential advisor was under trial here in Washington for his failure to respond to a subpoena from the January 6th committee looking into the attack on the Capitol on January 6th of 2021. Steve Bannon found guilty now on count one.

That is willful failure to appear for testimony. Also found guilty on count two. Count two is contempt of Congress. willful failure to provide records. Now, you know that Steve Bannon was somebody that the committee did want to speak to, and we saw in the committee's hearing last night, they played an audio recording of the presidential advisor to Donald Trump. In that recording, what Steve Bannon was saying was that before the election, Donald Trump planned to contest the election results if they didn't go his way. That is, he would say the vote was illegitimate if he wasn't winning at a certain

point on election night. And because that's the way things actually played out, You can imagine that the January 6th committee would have wanted to hear Steve Bannon's testimony on the question of exactly how he knew that that was going to be Donald Trump's plan going forward. Bannon refusing to testify now being found guilty. We'll wait for additional maneuvering here in the court. No information just yet on any sentencing. Guys, back over to you. All right. Thank you very much.

Short trial. Quick verdict. Thank you very much, Amund Jam. You bet. Ari Wald is still with us. We've been going through the telecom names. been a rough week for AT&T and Verizon, but T-Mobile's up next week, Ari.

Would you be a buyer of the stock here? Kelly, yes, I would. We got one that looks, this is best of T-Mobile. This is the one to own for exposure. Why? Because it's been able to participate through prior market recoveries

and rises in the equity market and you see it in the trend as well. So it's trading off in sympathy with the recent weakness and the other two, the AT&T and Verizon, I'd be a buyer into 123 support. That's the 200-day average. So if you're a long, short investor looking for an industry neutral pair, you want to buy T-Mobile on weakness, and you're looking to sell AT&T and Verizon on Strem. And there we have it.

Ari, thank you so much. Great to have you here today. We appreciate it. We drained all three of them. And speaking of consumptives, slurpee, seltzer. and Sunday. Those are Kelly's weekend plans as well as three other stories catching our eye today. We'll be right back to talk about them. Don't go anywhere. Power Lunch isn't done with you yet. Welcome back to Power Lunch, everybody. A couple of other stories that caught our attention today, including this one, 7-Eleven, which is adding its name to the list of companies, laying off workers, the convenience store chain, cutting about 880 corporate jobs in Texas and Ohio.

the company reorganizing following its purchase of rival Speedway, which it bought for $21 billion in 2020. There you see some of the other companies that have slowed down their hiring lately. We used to say in the magazine, three's a trend. Well, we've got more than three. We've got a trend. And that's why you've got to be careful here, because if it's a reorg or like Ford's big layoffs,

well, that's also a big pivot to EVs, you know, is it that or is it just this kind of binary slowing economy? the more people see these headlines, the more they worry they have to do it their company too. Yeah, and they were saying, I think in the write-up that I read, 7-Eleven said that people were not filling their gas tanks quite as often, so they weren't, or they were spending more at gas, so they weren't coming into the convenience stores and spending money. Bingo, which brings us right to our next topic. FedEx, cutting back on Sunday deliveries in some areas, a lot of places with smaller populations. The contractors who make these deliveries wanted more money, and they say those spikes in gas prices made deliveries less profit.

They say 80% of the U.S. population will still get Sunday deliveries, but this is a story of high fuel prices and tension between a lot of the workers, I should say, and the cost of doing business for what you think would be a beneficiary. And I didn't know that these were contract deliverers in some cases that sort of surprises me. I guess I've been spoiled by Sunday delivery. I never had it before, and it was, it's a treat to have it. Your package will arrive tomorrow. Tomorrow, what do you mean tomorrow? I wonder, too, if Amazon will be able to keep going now that it largely is doing its own with the vans. You know, there's an opportunity here, but they're going to be facing the same cost headwinds as well.

Yeah. All right. And let's talk about hard seltzer. Why not? It's a hot weekend everywhere across the country. You're going to want to inject liquidity, I'm telling you. The hardsiders seeing softening sales. Boston beer cited waning demand.

It's waning in Boston for its truly hard seltzer for lower expected earnings. Get ready for those. cut its full year forecast for the second time this year. CEO of Boston says consumers, especially 35 to 44-year-olds, Kelly, are shifting back to light beers, which are less expensive than hard-celsters, this according to analysis by Nielsen-Dade. Hard-seltzer sales in retail stores down 18% from a year ago after being up 11% in 2020. Remarkable the stock has turned around today.

It's 52-week high was 960. It's at 349. Maybe light beer got so uncool, it's cool again. It's cool again. I've actually, I don't know that I've ever tasted one of those hard seltzers. You would remember if you have. I guess I probably have. They don't taste very good.

Yeah, not that I'm drinking a lot of them lately, but not missing much either. See you on Monday. Thank you. Have a great weekend. Stay cool, everybody. And thanks for watching Power Lod.