Power Lunch - Stay Fully Invested, buying beaten down semis and blue chips most loved by Wall Street. 8/29/22

Episode Date: August 29, 2022

“Stay Fully Invested”. That’s advice of a veteran strategist who’s finding opportunity amid the turbulence. He shares some of his under-the-radar plays for the longer term. And, the beaten down chip stocks that a top analyst says are buys. Plus, we’re trading three blue chip stocks most loved by Wall Street in today’s three-stock lunch. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch. I'm Contessa Brewer. Here's what's ahead. Stay fully invested. That's the advice of a veteran strategist who's finding opportunity amid the turbulence and has some under the radar plays for the long term. Plus, chip stock struggling to bounce back from last week's beating. What this key sector tells us about the broader market and what's to come. But first to Tyler with the tech on the markets. Contessa, welcome and welcome everybody. The major index is trying to bounce back from Friday's big route. And it was a big one. Now down about 300 at the low, up 40 at the high. So it's that kind of yo-yo day. The S&P 500 right now is off just a little tiny amount, as you see right there, and NASDAQ is off about 46. Apple, Microsoft, Amazon, also attempting a bit of a midday comeback. Apple had been down about 2% earlier in the session.

A bright spot today, one of my favorite words to pronounce Pinduoduo, which reported a quarterly profit that more than tripled, citing a recovery in consumer confidence, that stock up about 17 percent, as you see right there. Well, as stocks cut their losses today, investors are trying to answer a key question. Sell into the dip that seems to be persisting or use the dip as an opportunity to buy low and stay fully invested. Joining us with a few names he thinks are worth owning now is Dave Smith, Chief Investment Officer at Rockland Trust. Dave has one of the few names that I can actually pronounce. Dave Smith, thank you.

It's a little easy than pin duo, duo, huh? Yeah, it's not quite as fun, but it's good to have you here, Dave. You're a believer. If one of your stock picks is Warren Buffett's Berkshire Hathaway, I have to believe you're a subscriber of the buy and hold, don't over trade, go for the long run, wrong run school of thought. Absolutely, Tyler. We're big believers that time in the market is way more important than timing the market.

In fact, timing the market is a fool's game. And while this is uncomfortable to ride through, at the end of the day, we're confident that two to three years out from now, this will look like a great time to have bought and just stick with the strategy of staying fully invested all the time. And remember, as hard as this year has been or seemed, the levels in the indexes are probably back to where you were in, let's say, 2019, 2020. I don't know the exact number. But remember that you're probably, if you're a long-term investor, still way ahead of where you were. You have a couple of other names. We'll get to Berkshire in just a little bit. A couple of other names that we don't typically hear about on CNBC. And the first one is Viva.

What do they do? And it's not the paper towel. What do they do? And why do you like them? Yeah, Viva is an interesting company. It's a technology play. Really, bulk of what it does is operates a CRM solution, sort of sits on top of the Salesforce platform,

and it's vertically focused on the healthcare industry. And so they've really kind of cornered the market. they've built out the CRM tool specifically for the healthcare industry, and they've garnered a substantial amount of share there. The stock is like a lot of high PE stocks has come down a fair amount, and it looks very attractive, maybe not so much in an absolute sense, trading it about 44 times, but relative to where it's traded historically looks quite inexpensive at the moment. And so we like that one a lot.

We think there's lots of opportunity for them to continue to expand in the healthcare vertical and do some more things in the R&D side of health care. And there's lots of potential for continued growth there. David's Contessa, where are they downside risks to an investment in Viva? Well, I think like with anything that's in the tech space today, if the 10-year Treasury security continues to increase in yield, there's going to be pressure on price earnings multiples. And I think that's probably, you know, something that we'll see. Ultimately, time will tell the Fed obviously spooked folks on Friday.

But the longer-dated Treasury securities have kind of been very volatile, but, you know, I think they've pinned a little bit around that 3% range. So that would be one of the key risks. I think fundamentally, they're really kind of firing on all cylinders at the moment. And so it's really about valuation and kind of where does that settle out? Let's turn to Berkshire Hathaway. I admire Warren Buffett in many, many ways, not least of which he is a long-term investor, a long-term investor at the age of 88. If you're that optimistic, you're a good guy. Let's talk about their businesses, though. A lot of them you would have to put in the cyclical category, transportation, power, manufacturing, housing. How might a slowdown in the

economy affect this company and this stock? Well, I would argue, Tyler, that the stock is sort of discounting a challenging economic environment already. You know, we think the stock's got some of the parts of value for the company is in the high 300, maybe as much as $400 a share. So there's about 30% upside if it just got to what we think that, the value of the on the line line. businesses are. And obviously, as you pointed out, Warren's been a great investor for a long time. The businesses that he owns, even though they are cyclical, will likely grow over time. And so that NAV, if you will, the sum of the parts valuation is going to continue to grow over time. So not only do you have the opportunity to kind of close the valuation gap,

but we think ultimately that businesses will grow in value over time as well. So there's a couple of levers there that makes us really excited about Berkshire Hathaway at this point in time. You also like an investment in a company that operates in the industrial gas complex, Linde. I'm curious how you see this fitting in, in spite of the risks that we're seeing with Europe, with China, with Russia, and the uncertainty picture there as well as rampant inflation, Dave. Yeah, so Linden is a really neat company. It's a pretty consistent grower, and it has a strong ability to pass through cost increase that it has on its raw materials side to the end customer.

Fortunately for them, for many of their customers, the amount they're spending on Lin's product, if you will, gases, industrial gases, is relatively small in the context of the overall business for many of their clients. So they have an uncanny ability to pass through price increases, which ultimately in this kind of environment is very, very important, particularly given the fact that the input for a lot of their gases is natural gas and other chemicals. And so that's a critical element of it. In the meantime, the industry is very, very consolidated at this point, and Lind, as a result

their acquisition of Praxair a few years back is one of the top providers of industrial gases across the planet. So they've got all kinds of end markets, customers all around the globe. And so, yes, certainly things in Europe don't look super compelling right now, but they have a pretty substantial domestic play as well. And again, because they have the ability to pass through costs, they've historically, at least, and we're confident in the future, that they'll be able to continue to chug away a nice low-double-digit earnings growth. And that's the kind of companies we like to see and own because they're compounders. And that's what drives value. time. All right, Dave, thanks very much. Good to see you again. Thanks for having me. Days with Rockland

Trust. Semiconductor is a big drag again today extending the week-long slide. The Vanek's semiconductor ETF down about three and a half percent over the past week. Invidia, the biggest drag here down roughly 7 percent during that time frame. ADI and Corvo down more than 5 percent. And our next guest has been calling for an inventory glut in the sector. Let's bring in Stacey Raskin, managing director at Bernstein. It's good to see you here, Stacey. So we've seen two years more or less of really strong gains in this particular sector. What warning signs are you seeing? Where are investors getting spooked? Yeah, sure. So investors are broadly worried about recession fears and everything else.

And semis do tend to be quite a bit correlated to the economy and GDP growth. Beyond that, I think just given the strength we've had over the last couple of years, there is real concern about sustainability. People are worried about order patterns in the wake of like really long lead times and tight supply in those environments, customers tend to order more than they need. It's called double ordering. You can think about a stockpiling, that kind of thing. We've been nervous about that in a number of areas. PCs, not only as we've been worried at PC demand, but I think the CPUs like the stuff that like Intel and A&B sell were overshipping by massive amounts last year, even as PCs were strong. I've been worried about similar.

dynamics in automotive and industrial and some other areas. Now, we are starting to see some areas of weakness primarily in the consumer space. PCs are weak, smartphones are weak, TVs are weak, GPS graphics cards are weak, and consumer inflation and everything is impacting. So we're seeing those kind of issues there. Most of the end markets, the other end markets beyond consumers, still seem to be broadly holding up, although these same signs around sustainability and potential stockpiling and overrewarding, I think, are still building. And so lots of investors are worried that those are some of the next shoes to drop. And it's going to get very interesting as we go into the back half of the year as recession fears and maybe crystallize. We see a little bit more about where the broader economy is going. We see what's going on with inflation and everything else. But investors are in that kind of a mindset right now. And that's why the stocks have been quite weak. Are there good buys here?

I mean, I see that you are recommending that investors stay far, far away from Intel at this point. But who do you like amid this question of whether there's been, I don't know, was it fear of missing out when you do double ordering just in case you didn't get the delivery that you were expecting? Well, it's not fear of missing out. You've got to remember, like, the consequences of as a customer of holding too much inventory, it's not that bad. But if you can't ship, you know, like a $50,000 automobile because you're missing one 50-cent microcontroller, that's, that's a cost. That's a huge problem. So in many cases, customers can be incentivized to order more if it takes them longer and longer to get the parts.

You got to remember, the semiconductor companies themselves have no idea. Their visibility is zero. And I'm not blaming them. It's not like it's bad. It just is. They just don't know. All they see the order patterns in front of their face. Now, yes, what might be interesting to look at in this environment?

For clients of mine who are more worried about the cyclical issues, we like Broadcom, they They don't have a ton of consumer exposure outside of Apple. And Apple right now is actually doing fine. It's mostly our data center, enterprise, and that kind of stuff. They have not actually been overshipping. They've been deliberately undershipping because the CEO, their Hoc10, knows what happens in cycles. So they've been undershipping.

They've got a big software business, which is more stable and higher margin and offer support. Highest margins, highest free cash on the industry, and it's cheap relative to the rest of the sector. So I think that's one that's good. There's a couple of others, I would say more secularly driven that maybe have exposure to some of these end markets, but I think are fighting through it really, really well and maybe even punished a little more than they should have in this environment. And we like names like advanced

micro devices, AMD or Qualcomm, who have other secular aspects of the story, whether it's share gains or product roadmaps or anything like that, that I think are helping to offset some of the weakness we're seeing in the markets and they're powering through it quite nicely. You mentioned that companies don't have visibility, and I can think of no company that have less visibility than Taiwan's semiconductors. Not only do they not know about the markets, they don't know about the state of their financial and political independence. Talk to me about Taiwan.

Yes, I don't cover TSM. So I'm going to not talk about the stock. It's a colleague of mine. I'll let him tell that story. But Taiwan in general, that's sort of at the heart of everything that's going on, the Chips Act and everything else. It's like the Chips Act is not going to massively increase the amount of capacity that is installed, like worldwide. Demand will determine that, not politicians.

What the Chips Act is supposed to do is to try to get some of those projects started here rather than other places like Taiwan, because the world is very dependent on Taiwan. Most of the world's leading its semiconductors come from there, and it's 100 miles offshore from China. They think they own the ground that it's sitting on and say, yeah, that is a big concern. It is not something that is easily fixable. It's not something you're going to fix in a year. It's not something you're going to fix with $52 billion over five years, which is kind of with the chips.

It's probably a trillion dollars in 20 years to duplicate what's over there if that was even possible. But you've got to start somewhere. So the best time to do this would have been 20 years ago, the second best time is probably now. Well, you bring up interesting points about how the companies are walking a tightrope here. If they accept the money from the Chips Act, they can't sell their technology into China. And that may be a competitive headwin for some of them, which is where Taiwan semiconductor may come down in the middle. Stacey, it's great to have you with us.

This is a really interesting conversation. Thank you. My pleasure. Anytime. All righty, coming up, we will kick off a new series called Power Lunch Cookbook to look at different parts of the restaurant business. And we start with the suppliers to gauge the employees. impact of inflation, supply bottlenecks, and see which stocks are buys and which are not. Plus, do the charts say the market is near a bottom? We'll talk to Institutional Investor Hall of Fame

Technical analyst Jeff DeGroff for his take and before the break, a look at bed, bath, and beyond. Beyond. The stock is up double digits ahead of a strategic business update later this week, a 30% gain today. That update expected to focus on cash, burn, financing, and laundry baskets. More power lunch straight ahead. Welcome back, everyone. High inflation and recession fears have many consumers looking to cut spending

wherever they can, and one of the first places is dining out. As part of our new Power Lunch Cookbook series, we're going to take a look at some overlooked stocks in the restaurant ecosystem, from beverages to food delivery and more. And today we talk suppliers, names like Chef's Warehouse, Cisco, and Tyson,

Our next guest has best positioned names as we head into this economic unknown. We welcome in Nicole Miller Reagan. She's managing director of equity research at Piper Sandler. Nicole, welcome. The restaurant, how would you characterize the restaurant business? Obviously, it is not one entity. It's a bunch of different segments. But how would you characterize it overall right now or segment it?

I would say this, that it's working really. really hard against the macro. And what I mean by that is the macro is going to have to indeed actually work harder to change the routine and the social engagement that customers are getting at restaurants right now. It's not to say it's easy. Consumers are managing check. They're managing how often they go, how much and they spend. Yes, there's a little fallout at the low end, but there's a bigger picture at play. And the almost like non-discretionary, you know, staple-like, positioning that this space has as a part of the economy today. I just want to mention what I've seen.

One, I'm just back from a two-week road trip across the heart of America. And I saw restaurants that were so full and had hour and a half long waits. It seems to, and I mean at every level of demographic in terms of spending, you know, fast, casual, as well as pretty high-end restaurants. I've seen it in Las Vegas, that you have long waiting lists and people willing to splurge on this one, thing. So if you're a supplier to these restaurants, how can you capitalize on what is still maybe pent up demand at least, maybe not for every day dining out, but for those special occasion dining out? I love that you did that. We're doing the exact same thing all across the

country, getting right in the stores ourselves. And that's what's so interesting is seeing those same trends. For the food service supply distribution space, right, very connected. They can capitalize a couple of different ways. They can capitalize on the pieces of the business that are the best margin to them. That means go into the local independent restaurant. And they're not suffering as much as those would think. They could sell some of their private label product. That's a really good margin opportunity. But frankly, it's just getting, you know, the items there on time, getting the spec there when they need it. And that's something they all have, you know, capabilities to do in terms of the balance sheet and operationally.

Let's talk about a couple of the stocks and companies you follow. And I think like, why don't we begin with Cisco, which I guess is the, this is a very oligopolistic business, isn't it, Nicole? And they have sort of primacy in it, King of the Jungle. Yeah, I think that's right. Yeah, when we think about Cisco and food service distribution, it makes me think about McDonald's and restaurants, like really own both, right? There's defense and offense.

The defense of nature is just simply they're big. They're at scale. They're global. They dominate in terms of market share. But the offense is their balance sheet. I mean, they're still making investments in people. They're making investments in technology that their peers just can't do because they're smaller and they get caught up in the current environment more so than a Cisco does.

What about U.S. Food Holding Corp here? One of the other food delivery services that you like. Yeah, sure. I think, you know, in the current environment performance is best position, but to your point on U.S. food specifically, there's still some things that they're trying to work out in terms of a shakeup with management, and that will get sorted. But the real opportunity, the way we've isolated it in our work, is to look at that gross margin opportunity. So it's interesting to just pause and say, just go so big. Do they have a scale advantage just because the dollars are like 2x, the other players? Or can somebody like a U.S. Foods close the gap. And we think they can close the gap, not just as a function of getting market share, so more dollars, but really how they get those dollars. They need to get those dollars with the best flow through possible. There's some discounting that goes on. They have a different channel mix that goes on. They have a different, you know, operating system. And if they can

kind of clean some of that up, there is eventually a margin opportunity for them as well. Quick thought on performance before we have to leave it, Nicole. Yeah, performance is great. I mean, in fact, fun. They're not recession-proof, but recession-resilient with the core market acquisition that puts them squarely in the convenience store channel and actually makes them almost as big as a Cisco from a revenue perspective. But where the customer, if they're going to follow to restaurants, the first stop isn't

home. It's in between to the convenience store attached to the gas station. And that's not where they're squarely planted. Very interesting. Thank you very much, Nicole. We appreciate it. Thank you. Nice to be with you, Nicole Miller-Ragan. By the way, Tyler, you pulled out oligopolistic as though you'd been saving that to pair with Bindu-Duo. Yeah, with Pindu-O-Duo, yeah. Another fun word.

You like the 25-cent words. I mean, you know, like if that's your word of the day, you figure out how to use it. As we're checking on the state of the restaurant industry, we also wanted to check back in on some restaurateurs. We've heard from on CNBC over the past two and a half years. Here's what Soraya Rendon of Chilombolam of Chicago told us about the impact of inflation on her restaurant. It's hard to find products right now. My chef and I used to change the menu every month. Now it seems like it's every week or even more depending on what we find and depending on the prices

because we need to adjust with everybody's packet. Rendon did tell us that she laid off every employee except. the chef during the pandemic, but she's been able to hire them all back. So she hasn't had to look for workers in this difficult labor market. It's interesting because I stayed at a Weston in Cleveland, which is, you know, a primary location next to the Rock and Roll Hall of Fame. You go into breakfast the next morning. They were literally turning away dozens of customers because they didn't have the kitchen staff to get the supplies out. They didn't have the hostess to take names and They were pulling staff members from other parts of the hotel in order to deal with it.

What I saw was that the hiring crunch remains in many places across the nation. So if she was able to come back and get her employees back on, good for her. It's not the case for everybody. I was with a chef this weekend in association with a charity that I work for. And among the things he said is that getting workers is so difficult that many, many restaurants are, And it's not just that people aren't there, but they don't want to do these hard jobs. These are hard jobs, long jobs, on your feet jobs for long periods of time, and that the restaurants, many of them, have had to cut back hours. So if the restaurant used to be open until 11 o'clock, maybe it shuts its kitchen at 9.

If the restaurant was open seven days a week, maybe it's now closed Sunday and Monday, or if it was doing lunches, maybe not anymore. But so that's how the, in part, the labor problem ripples through the restaurant business and cuts their revenues. Yeah, yeah, I can see that. Okay, so further ahead on the show, lost in space, there's currently more than 50 million square feet of empty office space in Manhattan. There, they're trying to get the workers back into the office. That may not get filled anytime soon. We'll discuss that. Plus, happy hour.

We will run you through three names that Wall Street analysts like the most. In today's three-stock lunch, Power Lunch will be right back. Welcome back to Power Lunch. I'm Dominic. Here we want to get you up to speed and check on two cable and wireless companies that did at one point hit new lows today. We will start with Verizon, which has now turned higher in the session just in the last couple of hours, notching its lowest level. By the way, earlier today since 2017. Now, that stock continues to underperform rivals like AT&T and T-Mobile as well. On a year-to-date basis, T-Mobile is up more than 25%. AT&T is down roughly 4%. However, Verizon is just off around 15% or so far this year.

On a similar note, we've got shares of CNBC parent company Comcast, which are trading at their, at one point, lowest levels since May of 2020. That stock is down about 27% just so far this year. That's roughly in line with rival Disney and slightly better than the broader communication services sector, which is off by 30% this year. So watch Com Services, watch cable and wireless. Ty, I'll send things back over to you.

Thank you, sir. Let's get to Deirdreboza. In from the West Coast. They burn her all the way in from the West Coast for the CNBC News. You know, Tyler, it's warmer here. You may not believe it. It's warmer here on the East Coast. Oh, yeah.

Authorities say a person entered a grocery store in Bend, Oregon, Sunday evening, and fatally shot two people. Police enter the supermarket, hearing shots, and found the shooter dead with an AR-15-style rifle. close proximity to him. Bob Lepone, a leader of the off-Broadway company MCC Theater and brother-to actress Patty Lepone is dead after a three-year battle with pancreatic cancer. Along with his theater career, Lepone also made appearances on The Sopranos, Sex and the City, Guiding Light, and All My Children, for which he was nominated for a daytime Emmy. He was 76 years old.

And a mint condition Mickey Manel baseball cards sold for $12.6 million, making a place in the record books as the most ever paid for sports memorabilia, the rear mantle card, eclips the record posted a few months ago, 9.3 million for the jersey worn by Diego Meridano when he scored the contentious hand-of-god goal in soccer's 1986 World Cup. I'm not familiar with that moment, Contessa. Maybe you are. If you go to YouTube, you can find almost any memorable moment in sports history. It's probably an NFT. Yeah. All right. Well, there you go. They just ruined it by making an NFT. Thank you, Deirdre.

Coming up, charting a course forward for stocks. I guess you now know how I really feel about NFTs. Powell and the Fed setting the stage for plenty of market volatility ahead. What are some of the key technical signs we need to watch for? And what opportunities might emerge. We'll be right back. Less than 90 minutes left in the trading day. We want to get you cut up on the market.

Stocks, bonds, commodities, and a technical take on where the markets are headed. Let's begin with Bob Pisani at the New York. York Stock Exchange, where the Dow had briefly turned positive, but Bob, lower now. Yeah, but an important thing here is it's a bit of a victory for the Bulls contested, considering where we started. We were 4017 with the S&P at the open, at the lows around 11 o'clock Eastern time, 40-46. Now we even went positive for a nanosecond about an hour ago on the S&P. What I don't particularly like is the Leadership Board.

Energy is leading again. And remember, these are proxies for inflation. So Bulls actually want to see the opposite here. That's a new high for Occidental, another new high. Hess is right near a new high, maybe 2% away. Exxon's 3 or 4% from a 52-week high. Marathons on the upside. Chevron's helping the Dow today.

Other thing is these natural gas stocks, there are companies that are more natural gas-oriented, like APA, Pioneer, Katera. Devon has a big natural gas component. They're doing even better than the other energy stocks today. And again, that reflects, of course, all these issues going on with natural gas over in Europe. Other than that, it's mostly defensive stocks that have been holding up throughout the morning and rallied back. So the usual suspects, Archer Daniel Minut Campbell, Clorox doing well on the upside today. Big Cap Tech is kind of to the downside, but off of the lows.

Apples had one amazing run. Remember, they were 130 at the bottom in June. Then they went to, what, 175 a week or two weeks ago, and now they're back down to 162, but that's still pretty good. Can't say the same for everything else. Even Microsoft is kind of a round trip this month. That's about break-even for Microsoft this month, 265. Micron and Nvidia, same thing. Semiconductors tried to rally in the middle of the month

and have basically fallen back at this point. So I'd say contests right now, we're entering a seasonally week period of the year. What matters now is whether earnings estimate hold up in September. And the two things that are going to matter here are number one, of course, the economic data, starting with the jobs report on Friday. Then we're going to have a whole series of big sell-side conferences coming beginning the day after Labor Day where individual companies will be reporting.

Normally it's not a big thing, but the earning situation is very different than mid-July when they were reporting. Now mid-September, they may have very different things to say. That's why this particular conference season could be very important. Contessa? Bob Pisani, thank you for that. Appreciate it. Let's check on the bond market now. Yields are rising today as investors continue to react to Fed Chair Powell's hawkish comments. The 10-year, as you can see, jump to 3.1% now. The two-year is highest on the curve, yielding 3.4. That's the highest level that we've seen since 2007.

And you heard Bob talking about some of the energy stocks. Now, let's talk to oil. 4% gain for crew today, and Pippa Stevens has all those details for us. Hi, Pippa. Hey, Kantasa. oil jumping, as you said, 4% today, with WTI breaking back above its 200-day moving average. A couple of factors driving the price action, including clashes in Libya that are prompting outage concerns. We've also got the upcoming meeting between OPEC and its allies, where some

believe they could announce production cuts. So let's check on prices. WTI up 4.2% at 96-97, Brent crude up 4% at 105. Now, European natural gas, once again, the big mover, today, although this time it's to the downside after a relentless climb higher. The contract dropping about 13% after Germany's economic minister said that the country's gas stores will be 85% full next month, which is ahead of the prior October deadline. But prices do remain elevated, and that's driving up electricity prices and leading to a cost of living crisis. EU Commission President Ursula von der Leyen said today, the block is working on an emergency

intervention and a structural reform of the electricity market. Kandessa? Pippa, thank you for that update. Now, for a technical take on the market and the signal the charts are sending about whether a bottom is near. Let's bring in Jeff DeGraph, research chairman with Renaissance macro. He's an institutional investor, Hall of Fame, technical analyst. That's a lot to live up to in this particular segment here.

Jeff, let's start with chart one. What are the speculators telling you? Well, I think the speculative positioning is really interesting. Thanks for having me, first and foremost. But you can see big, big, net short positions from large speculators in the futures market. And those coincide with other areas of market lows. And by itself, it doesn't mean that we're at a market low. But I think what's important in this environment in particular is the consensus. What the consensus thinks, what the consensus thinks about the Fed, and then how they're position because if enough people are positioned in anticipation of enough bad things happening, then it's going to be very hard to find that dry powder to actually push things into a worse condition for equities regardless of the data, right? So, you know, from our position, we like the positioning because we're seeing a lot of bears express themselves with short positions, and we think that leaves a vulnerability to the upside. Is the blue line on that chart

indicating that those speculators think the S&P could get cut in half? No, it's not, don't worry about the scaling, Tyler. It's just for visual reference, but it does align itself appropriately with where we were back at the COVID lows, so really the same type of sediment or the same type of positioning back there. And then even if you go back further, similar to where we were back in 2018, both of which were areas that I think at the margin, as you look back, you'd rather be a buyer or would have rather had been a buyer than a seller.

Well, I won't worry about the scaling, man. Thank goodness. But it does show up nicely, the blue against the gosh. Yes, it does. Beautiful. Jeff, your second chart here also shows that there were likely to see a retest. Yeah, so we had a good momentum signal, and it was one of about 30 momentum signals that we've had since 1960, and that took place about two weeks ago. And those are high probability signals. I mean, those for us get us really interested in the long side and being more bullish and more aggressive.

I like to fly airplanes. We always have an out. You have to think about the alternatives. And so one of the things that we use is a 20-day low in our work to suggest that the momentum signal might need some more time to marinate and to really come into its own. That happened in 1962. It happened in 1974. And so that undercut low, even though Powell sort of pushed that on Friday, suggests to us that we're probably in a retest sequence. I think importantly, when we go back and look at those thrusts, indications, those momentum indicators, even after we've made a 20-day low with that having happened, you don't go on to make another undercut low. So the combination of sentiment and this momentum signal, even though I'm disappointed that we made a 20-day low, still suggest to us that it's more likely a retest than it is a continuation of the bare market.

Go ahead. And if someone was to press you on, say, a tech stock, do you have a chart that would help you indicate which you like? Yeah, look, we don't think tech is going to end. up being leadership in this next cycle. So broadly speaking, you know, we're okay with tech here and there. But if there's one name that really stands out, Apple, and Bob just mentioned it, Apple looks good. It doesn't have the big top formation overhead that meta and Netflix and even, you know, some of these other names like Nvidia have. So if there's one area that we'd be going after from the tech

side, be comfortable being long would certainly be Apple here. Let me turn back to that prior chart that we were looking at where you were talking about retesting. Put a pinpoint on that. Does that mean that the chart is telling you that the S&P may retest its June low of what was it, 37 something? I can't remember. But not break below that dramatically? Correct. And really, if you go back in look, it probably doesn't get much below that 3,800 level. You don't even go close to those old levels. So yeah, that's right. I mean, we would, if we're, look, this is a probability game. This isn't. a prediction game. And so if we're trying to lay out where the probabilities are, we think that

the June low is a good low. The momentum, unfortunately, wasn't able to follow through. That implies a retesting sequence. But again, given the speculative positioning on the bearer's side, we think it makes more sense to be thinking about what could go right and not what could go wrong here. Cool. Jeff DeGraf, who decided not to donate nor smash his guitar when he was inducted into the institutional investor. of fame. Yeah, that's notable. That's notable. Jeff. Thank you for your time. All right. He's still to come. New York may be returning to work, but office vacancies remain high what this could mean for the city's struggling economy. That's next. And as we head to the

break, can you remember, you can now listen, excuse me, to the Power Lunch podcast. On the go. You can look for us on your favorite podcast app. You can follow and listen today. Jamie Diamond, Howard Schulz, among the CEOs, who are are pushing workers to come back to the office. Apple also is in that group, but judging by the numbers, the work from homers are winning the battle for now. Robert Frank has the details and a look at what it means in Manhattan for real estate. Robert. Well, Tyler, only 38% of Manhattan's office workers are back in the office as of mid-August. It's kind of been stuck at that level, under 40% since June. Manhattan's vacancy rate now twice what it was pre-COVID with more than 50 million

feet of total office space. Now, granted, many New Yorkers, they go away for the summer. A lot of them will come back, but even the most optimistic scenarios right now so that only about half of New York office workers will be back in the office by the end of the year. The New York Comptroller citing a big disconnect between employees and CEOs. Only a third of employees expect to be back in the office more than two days a week. But among CEOs, most expect three days a week. And or even more. The controller is saying, quote, these rates have largely stabilized and appear unlikely to rise quickly in the coming months. Now, the partnership for New York, a little more optimistic. They say office vacancy could reach 50% by the end of the year. It says younger employees are largely back. We've seen that with rents of Manhattan, but the big resistance still coming from, quote, older workers who live in the suburbs and do not miss the commute.

Tyler, no one misses the commute, and next week will be a really important data point in this new normal of remote work. Now, let me make sure I'm understanding the numbers here. 50% occupancy would mean 50% of the workers are back in their office spaces. But that's different from the occupancy rate of real estate, isn't it? Right. So what the partnership is saying is that on any average day, they think by the end of the year, offices will be about 50% occupied. The vacancy rate in New York, which pre-COVID was around 6 or 7% is now around 20% in most major markets in New York City. That's over 50 million square feet. So, yeah, it's 20% total vacancy.

And the thing to remember is that most leases are 10 years. Most leases haven't come up for renewal post-COVID. So this is a really slow-moving, delayed market. A lot of people who don't need space haven't got rid of yet because their leases are not up yet, but they will be in the coming years. Has anybody figured out what companies can do to induce workers to come back, particularly those suburban workers who might not want to come all the way back into Manhattan? Well, you know, they've tried the free food.

They've tried the fall festivals. They've tried all these things. What it seems like, Jamie Diamond and David Solomon, others are saying, look, if you don't come back and you don't perform, your seat is not going to be there. So I think particularly if we see any sort of softening in the employment and the labor market, it's the CEOs are really resorting to threats and just saying, look, you may not have a job if you don't come back to the office. So what would induce you to go back to the office?

The potential to be fired. Yeah, right. That's great. So more stick than carrot there. All right. Thank you, Robert, for that. After the break, Wall Street loves the stock. But should you? Our trader gives his take next.

Welcome back to Power Lunch. After the Dow's thousand point drop Friday, we're taking a look at three blue chip stocks, most loved by Wall Street analysts. The names screened are more than 50% byrated with more than 10% upside to average price targets. Boeing, one of two Dow stocks positive last week, is two-thirds byrated with an average price target of $210. Goldman Sachs, the only financial to make a $1,000. the screen with an average price target of 388, and Disney carrying 75% buy ratings still down 27% this year. Boris Schlossberg of BK Asset Management and a CNBC contributor joins us.

Let's start with Boeing today, Boris. So Boeing was a stock that you couldn't give away for free just a little while back. And now I think, frankly, it's probably the single best favorite stock of the three that we're discussing today, in my opinion. It's got, I think, the strongest secular story here, simply because it's come back in a big way after the 737 disaster. There's a tremendous book of orders that it has in private. In fact, its biggest problem now is deliverability. And that's what investors are looking for every single month at how many planes they're starting to deliver as they really ramp up production. They're still behind Airbus because of China. But I think that's a political,

much more than an economic issue. Overall, the rest of the world, I think, really wants their products. When the Dreamliner comes on, it's only going to add their free cash flow. I think very strongly this is a $200, $250 stock two or three years from now as demand for travel and just the secular growth the need for very, very efficient airplanes is going to be with us for a while. Speaking of demand for travel, what about Disney? So this I'm a little bit more wary of, not because it's not a great company, but because I think most of the good news has kind of already been factored into the stock. The return back from post-COVID to the parks has already kind of happened in. And the further growth, I think,

is going to be much slower than it was before. The Disney streaming has kind of penetrated as much of the market as you can possibly imagine. Now they're going to go to the video and the advertising model. And that's going to take a little while to scale. And then there's also the open question of ESPN, which is really losing a lot of its luster because it's so expensive to do live sports broadcasting. As a matter of fact, live sports broadcasting is now become a domain

of Apple and Google and Amazon. All the cash flow tech companies are going to be willing to pay money for it. So if they spend ESPN off, that's actually going to be, I think, a big positive

for the company because it won't be as much of a profit drain. Overall, I love Boeing, I think, is a perfect covered call stock. It's something you want to own for the long run,

but I think it's going to be range bound for quite a while, and you might as well sell calls against it and collect premium. And final name on this, Goldman Sachs. What do you make of it? So also another really story name, and obviously, you know, the prime name in finance. My biggest issue with Goldman Sachs right now is the Fed. The fact the Fed is

really starting to raise rates and kind of is adamant about going to three, four percent, it's really going to stymie their investment banking business, which is a third of their business. It may stymie their trading business if markets slow down a little bit. So to me, and also the stock is obviously at the upper end of its book value and therefore price to book value. So therefore, to me, Goldman Sachs right now is probably a sell-to-put kind of a story where you may want to sell the 310s or the 300s. It's a great stock to own at those levels, but I just wouldn't want to be owning it at this level right now. Well, cheers to you, Boris Schlossberg. Thank you for that. Thank you so much. For the full list of stocks that made this screen and other top investing news and

stories of the day, head on over to cnbc.com slash pro. Up next, a new sign that inflation is starting to ease. We're going to go under the microscope and look at that when we return. A new look today on how inflation is hitting the wallets of Americans, Dom Chu, putting that under the microscope for us, Dom. So Tyler, Contessa, the bottom line here is things are getting slightly, when I say slightly, just incrementally better for Americans overall. This is the latest data out from a survey that was put out by Lending Club,

and it looks at the number of Americans who were living paycheck to paycheck, having financial difficulties. Well, what happened in the month of July of this year is that number is now 59%. The good part about the story is that that's incrementally, again, better than it was in June, where it was 61%. So things are getting slightly better, but it's still much worse than it was in July of 2021, were a little over half of Americans said that they were saying, you know, things are paycheck to paycheck.

What's interesting about this is no surprise, perhaps, that it breaks down differently by income bracket. If you look at those people who are making $50,000 or less, those people, three quarters of them pretty much say that they are living paycheck to paycheck. Now, as you go up the income spectrum, you suspect that that number gets lower and lower, and it does. What's curious about this latest data, guys, is that the number of people making over $200,000 here is now 30%, where it was the previous month, 36%. So if you take a look at the way things are improving, there is still a long ways to go before things get really good. But what you're seeing in the marketplace is signs of commodity inflation coming down, real estate prices coming down, all of those things moving in the right direction. you're starting to see at least a little bit of that reflected in sentiment among people feeling a little bit better about their finances

versus what they were just a month ago. But you're saying the improvement is happening faster among those who earn more? Correct, that is. And that might be because asset prices during that time span over the last several weeks, up until this downturn that we saw last week, have been getting a little bit better. So maybe people just feel like they're a little bit better off than they were before.

But also paying 15 cents more per gallon of gas, is less likely to affect those who earn more than $200,000 than those who earn less than $50,000. Absolutely, contests. And that's the reason why policymakers and experts alike agree that inflation is one of the biggest regressive taxes that you can put. But it's also one of the falling gas prices is one of the way, the most immediately recognizable way to indicate that the prices are getting better. Right. Yeah. We've got to leave it there. Thanks, Tom.

Thanks for watching Power Lines.