Power Lunch - Stocks Bounce back, so does crypto, is this a buying opportunity? 5/13/22

Episode Date: May 13, 2022

Stocks ending a rough week with a strong gain. Is it just a head fake or the sign of a bottom? Some of the hardest hit names are bouncing back the most, is now the time to buy? Plus, Elon Musk casts doubt on his deal to buy Twitter. Then says he’s committed to making it happen. The latest on the Musk drama. And the metals meltdown, why gold and silver are selling off. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right, welcome everybody to Power Lunch. Two hours of trading left for the week. I'm Tyler Matheson. Here's what's ahead on this busy hour. Markets ending a lousy week with a strong bounce back. Then Azdak up 3%. Is it just a head fake, though? A bare market bounce or the sign perhaps that we have hit a bottom

and that the coast is, if not clear, clearing to buy now. And Bitcoin also rebounding today after a very brutal stretch. All the cryptos are. We'll talk to a man who told us last year that half of his wealth is tied up in crypto. So how's he been feeling these past few weeks? Kelly? Tyler, thank you.

Hi, everybody. Markets are firmly in the green as we head into the final couple hours of the week, but it's not enough to offset the big declines we've seen. The NASDAQ is still the strongest up more than 3% even as rates rebound today, but it's still down 3.5% on the week, even with today's move, and it's still down more than 25% from its all-time high. Casinos are actually the biggest gainers on the day with when Las Vegas stands, and Cesar's all seeing some nice jumps. LVS, the highest stock performer, up 13% to about 34 a share.

And many of the names hit hardest Monday through Thursday are leading the rebound today. Names like Carvana, Rivian, Upstart, which is up about 10% today, still down 50% for the week. Coming up in three stock lunch, we'll look at three hard hit names. Ask our trader if today's gains, Tyler, are now a green light to buy. All righty, the volatility continuing today, as Kelly mentioned, The NASDAQ up 4% today, but this week there, I'm looking at it, up 3%. 3.05. Still down for the week by about 3%. So as a bottom or forming, or is this just a bare market bounce today?

Let's talk to Ron Insana, CNBC senior analyst and commentator. Also a senior advisor to Schroeder's North America. Sarat Setti is managing partner and portfolio manager at DCLA. Also a CNBC contributor. Ron, as you look at this week, I know you're a student of Mark. history. What in the price action, the volatility, the ups and downs, what is it telling you? Well, Tyler, I think these are bare market rallies until proven otherwise. I mean, you know, you get these big snapbacks, Kelly, which is pointing to a handful of stocks that have done extraordinarily

well today, but there's probably a lot of short covering going on where those who were short those stocks are taking profits and getting them to pop back up. Fed's still raising interest rates. There's no change in that. And I don't know of a bare market that ends while the feds in the middle of a tightening cycle, usually the market has to be convinced that the Fed is coming to the end of that cycle. And we still have the other factors like Russia and China's lockdown to contend with. So my guess is that this is a bare market bounce until proven otherwise. So, Ron, makes the point that kind of you don't fight the Fed on the way up and you don't fight it on the way down when stock prices are going down. Do you agree with that?

and the idea that you can't be confident that the market is bottoming until you start to see some signal that the Fed is stopping its tightening cycle. That's number one. But that doesn't, even if you buy that, that doesn't mean there aren't things to nibble at today. I agree with that. I mean, Ron's right. We are in the middle or early stage. We don't know, but we do know rates are going to go up. We know quantitative easing is coming off the table. table. But as we've always talked about, it's impossible to time the market. We're off 16% of the highs, you know, the P multiple of the market's still pretty high. But absolutely, there are companies now that have come down a lot more than the market has. And, you know, we talk about the stock pickers market. And if you're going to buy companies, just like if you did in 2020, if you start buying them now or nibbling at some really high quality companies, you can actually dollar cost average in. I'm not saying put all your capital in now, but you can definitely get opportunities, not in. like today, but the whole last week we had before. I'm going to come back to you and get a couple of those names in just a moment.

But before I do that, I want to turn back to Ron and ask you, Ron, what you think of crypto right now? Same thing I've thought of it all along, Tyler. I think it's, you know, maybe one, still a solution in search of a problem. Two, far more levered than some people would have realized, particularly when it comes to these algorithmically driven stable coins. And three, look, at the end of the day, you know, regulation will out. And so you can trade this stuff. I've got a 20-year-old son who's trading it, you know, for fun and potentially profit. And I encourage him to, to learn what it's like to see things go up and down by this amount on a daily basis. Just as a learning experience, I still don't understand the use case. I have been a billion percent wrong on price. But I don't, aside from, listen, radical shifts in payment systems, the important and transformational features of the blockchain itself, those things are all important. The 12,000 cryptocurrencies or crypto assets, whatever they are that exist. Look, you know, if you didn't see this coming, you kind of had to be blind.

And that's true for the bare market in stocks. It's true for the bare market in meme stocks. You know that you recall that I got into a rather high-profile Twitter war a couple of years ago about day trading, all this stuff. thought it was a bad idea, still do. And I think you just have to be careful with this stuff. You know, you have to be a pro to really make money in something that's volatile. Yeah, well, I wish your son good luck, and I think there is value in pain. Frankly.

And you're letting him experience that. Surat, let's turn back to a couple of the stocks that you call buys right now. And I've sort of been surprised at the dearth of buyers or advocates for Disney. but you are one of them. I am, and I'm looking out a couple of years. I mean, this was a classic pandemic-to-endemic reopening story, and now what is everybody focused on the streaming war? But if you look at the parks business,

you look at the flywheel that they have there, the demand is far outstripping the supply. People want to go out. They want to go. They're spending 40% more than they did before. The stock's expected to earn just on. without the streaming $6 in 12 months. That's a 16 multiple on a stock that is hugely cash flow.

What did they do during the pandemic? They reinvested back in the business. I love companies that do that. And I think longer term, when we're all out and about as we're starting to be, you've got a call option for free on streaming. I think everybody understands after Netflix. It's got to be rationalized. You're actually negative value if you spend too much money.

So I think you've got a stock here that's back to, Tyler, pre-pandemic levels in five years, you haven't made any money in Disney. And look at the content, the evergreen content that they have. So much of that is just, does not have to be recreated it. And a new business line from where they were five years ago that is really generating revenue. Let's give me a quick thought on Blackstone, the private equity and money management company. Okay. So when Ron was talking about, you know, bear markets and who's going to take advantage of this, you've got almost a trillion dollar money management firm that has sitting on a couple hundred billion of dry powder.

At the same time, they've raised about 300 billion of perpetual capital. What does Blackstone love? They love opportunities when things are out of favor. They love real estate. They love deploying capital, where now you have a lot of consumers who are looking for fixed income higher than the two, three percent you're getting. They want yield. They want private equity.

And this is a shop that has one of the best professionals around. Great trackered. It's off 40 percent of its peak in 2020. So you can take advantage of owning a Blackstone, even if you think the markets are going to be up and down and we're in a bare market, because the Blackstone, they're sitting there with some real great ammunition. You like the horse. You love the jockeys. Jonathan Gray, Stephen Schwartzman, really a pedigree kind of firm. Surat, thank you. Ron. Great to be with you. Go ahead, Ron. Number one, private equity firms should be selling real estate to individuals because they're holding supply off the market by being renters instead of sellers. Number two, just with respect to the market overall, usually in a bear market,

you get a momentum low and a price low. I talked to my old friend, Helene Meisler, who trained at the knee of Justin Mamis, a very famous technical analyst. In 2008, the market's momentum low occurred in October. The price low occurred in March of 2009. So it might be a script to follow here. All right. Ron, Surat, thank you very much. Good weekend to both of you. Two. Just heard the bear case on crypto. Now here's the bull. Call it a crash, a collapse, a reset, or a setback.

It's been a rough week for all of the cryptos. Despite being hired today, both Bitcoin and Ether are having their worst week in almost a year. Cryptocurrencies in general have lost more than half a trillion dollars in market cap this week. The stable coin tether on pace for its worst week in more than a year after dropping below its dollar peg. Joining us now is Lou Körner. He's a partner at blockchain investors. Was it $100,000 or a million that was your price, target for Bitcoin, Lou? It's a million dollar price target in 2031. And 20. All right. Well,

for all of those who say that the closest we ever were going to get was whatever it was 62,000 last year, what's your response? Look, they might be right, but I don't think so. If you telescope out, Bitcoin has been the greatest investment opportunity in our lifetime. And I believe that it's just begun. If you take a look at the usage of Bitcoin, the number of Bitcoin wallets that we've seen, it's growing dramatically. And Bitcoin is obviously just one of many use cases of cryptocurrencies that are going to change the world far beyond anybody's expectations. So far, if we've learned anything about Bitcoin, it's that it likes super negative real interest rates. It loves stimulus. And when should we expect those macro conditions to rear their head again?

Well, I think what Bitcoin loves most is decentralization and is community. And what we just saw happen in the crypto world is, you know, in unbacked security or what people thought might have been a stable coin, but it was unbacked. And eventually unbacked things that people don't have natural demand for go to zero. The U.S. dollar is another unbacked thing that, you know, people like myself who believe in Bitcoin think that, you know, we're going to see dramatic declines in the dollar over time. And the one thing that we can actually have faith in and believe in is Bitcoin because we know how many there are. We know how many there are, but it's not like you need one full Bitcoin to transact in Bitcoin. You could have any number of stats, right? I mean, almost an unlimited number.

So it can have a use case, but why do you think that's going to support the price itself going significantly higher from here? And have you made any changes yourself? I mean, a big part of your net worth is tied up in this. Sure, sure. And I haven't made any change because nothing. in my worldview has changed. As prices going up and down, you know, it doesn't mean that anything is fundamentally changed. You know, the last big call that I had before Bitcoin was Facebook. And I got it at six. I wrote it to 40. It went public. It went down to 15. And then I went over 300.

So, you know, the highest growth opportunities are also those with the most volatility. So you would expect to have large down drafts like we've seen time and again in Bitcoin when the upsides are so huge. Let me ask you about stable coins. Do you view all of the leverage in the system, the stable coins, breaking the buck as emblematic of a problem in crypto that needs to be corrected in order for a healthier ecosystem to emerge? Or how would you categorize the strains that we've been seeing? Well, I think it depends on how much freedom you think people should have to do with their money. What was super interesting to me about Tara, a lot of people called it a Ponzi scheme.

I called it a Ponzi strategy. A scheme is when you lie to people about what you're doing. They were very transparent about what they were doing. And if people wanted to believe in the religion of Doe Kwan, I think that they should have the right to do it. But caveat and tour, what was super interesting is hard money, things like Maker die. There's six billion die out there. Maker has been up over the last week in a devastated market because people have once again realized, hey, maybe it's better to have, you know, own something that has backy.

In the stable coin. And by the way, there have been algorithmic stable coins like tracts that have also done extremely well. He is not giving one inch, not on stable coins, not on Bitcoin, not on nothing. Lou, thanks for joining us today. I'm in hands. Lou Kerner, with blocked, partner with blockchain. All right. Coming up on power launch, gold down 4% this week. That's a big drop for what's supposed to be a safety asset.

Now, if gold is dropping while rates are rising and markets are fluctuating, when will people? by gold. We will dig into the metals meltdown and the latest Musk Twitter drama. It's Musk CTV of the stock falling today as Musk cast doubt on the deal in a tweet. Will it eventually get done? And we are continuing to watch this big rebound at the end of a rough week. Check out shares of Apple back today, but still down 4% on the week. And also take a look at the Dow. we're way off the highs. It had been up 545 at the high, now up about 2.11. Welcome back to Power Lunch, everybody. Rough week for the metal, silver down 6%. On pace for its fourth straight weekly loss, gold hitting its lowest level since February. Copper, which is typically seen as

an economic bellwether, hitting its lowest level back to September of last year. Platinum while we're at it, also on pace for its first negative week in three weeks. So what is all of this signal, and is there any upside? Philip Strebel, his chief market strategist at Blue Line futures, and he focuses on the metals futures. Phil, welcome. Good to have you with us. Let's start with gold. What's its problem? Well, I mean, if you look at gold, I don't really necessarily believe that it has a problem just because it violated $1,800. It is a little bit on a psychological level alarming. But if you look at the performance of gold over the course of the year, it's about unchanged and it's outperformed many other asset classes. I'd rather own gold than own something like

the NASDAQ, cryptocurrencies, or any one of other technology stocks out there. You know, the problem that gold's having right now is that it is strongly correlated to other metals like silver and also correlated to other asset classes that many people, you know, they go into cryptocurrencies, they hold that as your safe haven. They're trying to look for a decentralized safe haven asset. many of those same people have the same mentality that hold gold and silver. So when you get a collapse in crypto, a lot of times that spillover effect hits the silver and hits gold. Could we possibly call up a 10-year chart of gold versus the S&P 500? Because I think we did this last week.

And gold actually outperform the S&P, if I'm recalling correctly. I'm not sure. But maybe we can pull that up while they're grabbing it, they say. Is gold an inflation hedge or not, Phil? It depends on the economic environment. If you have inflation rising and you have growth slowing, that's going to create a perfect stagflation scenario for gold. That's why gold did really good into the third quarter.

And then you start looking at you go into a reflation trade where inflation goes up and also growth goes up. Your best asset class to own is going to be crude oil or gasoline or any kind of of technology-based stock. So it all depends on the current economic environment. You know, what we're looking at on gold specifically right now, the Fed's going to get past these two next 250 basis point rate hikes. At that point in time, they'll have defeated inflation and they'll start to look at the carnage that they created in the housing market and the stock market, and they'll pivot to it's obvious, and that's where gold gets its tail win.

I have to confess that I was completely wrong that gold beat the S&P 500. I'm not sure what I was thinking. Maybe it was on a 300-year chart that if you go back 300 years or something like that. I was completely wrong on that. The S&P is whipped gold's patuti. Let's move on to, why don't we move on to copper then, which is obviously an economically sensitive item. Yeah, if you look at copper, I mean, there's a couple of key themes you have to look at, you know, what the catalyst that's driving the price action. Obviously, the biggest discussion right now is in full. The U.S. is raising rates to combat that. Other countries like China, which consumes 54% of the world's copper, they are using lockdowns as their method. Remember, they can't raise rates because they'll increase borrowing costs. You've already seen their fourth largest property builder start to default on its debt. They can't raise rates at all. They use the lockdowns as their tool, and that's going to drive down demand, and that'll drive down commodity prices. Copper is one of those industrial. industrial metals that sold off with that news. All right, Phil, thanks very much. Phil Strebel, we appreciate your time today. Thank you.

Amazing to see copper now down on the year. Still had turmoil turnarounds. Some of the biggest laggards in the NASDAQ this year could be poised to see major comebacks, which ones will lay them out in today's three-stock lunch. Plus, during May, we're celebrating Asian-American and Pacific Islander Heritage and featuring some of our CNBC teammates and contributors. Here is CNBC producer Crystal Lau.

My best advice for the Asian American community is to speak up. Growing up, my parents taught me and my sisters not to be the squeaky wheel. But what we've learned over the years is how important it is to find our voice and to be the voice for others, speaking out against injustices in our community and advocating for yourself at work, whether it's during a contract negotiation or making sure your opinions are heard. To the future generation, speak up. All right, folks, time now for our ETF tracker of the week. And this week we look at the bond market ETFs, nearly $4 billion of inflows in the week ending yesterday.

The reason is, of course, persistent inflation means that the Fed is likely has to stay the course on rate hikes. That's not necessarily good for the value for the total return of those funds. But nevertheless, as interest rates rise, so do the yields. Stock market volatility, sending some investors into bonds, obviously, for safety. Let's check some of the bond ETFs, beginning with the TLT, I. I shares 20-plus year Treasury Bond ETF and Vanguard's long-term Treasury ETF, both up more than 2%. I guess these are for the week, but these are today's quotes there, despite pulling back

today. This data comes from our partners at Track Insight. More information available on the F.T. Wilshire ETF hub. There you see it. Bonds down today, but a little higher for the week. Let's get to Frank Holland for the CNBC News Update. Hey there, Talley. Here's your CNBC News update at this hour. The president of the United Arab Emirates, she Khalifa bin Zayyad al-Nayan, has died at 73 years old. The UAE's Ministry of Presidential Affairs

is announcing a 40-day period of mourning and a three-day suspension of work. His brother, Abu Dhabi's crown prince, Mohammed bin Zayed, is in line to inherit the top post. North Korean leader Kim Jong-un held a meeting at an antivirus center as his country reports six deaths, just days after acknowledging its first COVID outbreak. State media saying hundreds of thousands of people fell ill amid an explosive spread of fever across that country, although the true scale of this outbreak is still unclear. 11 people died Thursday after a boat believed to be carrying dozens of migrants capsized off the coast of Puerto Rico. The U.S. Coast Guard rescued 38 survivors from the suspected illegal voyage after a border protection helicopter spotted that boat late Thursday morning.

And the FDA will announce his baby formula import strategy sometime next week. The administration is planning to work with infant formula makers to ensure the product brought in from overseas meets safety standards. The FDA chief saying these efforts should dramatically improve the U.S. supply in just a matter of weeks. That's the very latest. Tyler and Kelly, back over to you. All right, Frank, thank you very much. And ahead on power launch, Elon Musk seems to be playing his own game of cat and mouse with Twitter. Musk putting the deal on hold pending details on what he Goals, fake accounts, what it means for his takeover and the future of this struggling company. Speaking of games, from the metaverse to consolidation to a battle for content, the gaming

world on the verge of a major shift, we'll look at what it means for the stocks which have suffered a lot this year with the former CEO of Nintendo. Power lunch back in two with the NASDAQ still trying to lead this rebound in the markets today of 2.5%. Welcome back, everybody, 90 minutes left in the trading day. Can we hold our gains? The Dow's only up about a half a percent right now as Boeing has turned lower. The NASDAQ looking much stronger will also hit the latest action in bonds and commodities, plus that battle for Twitter. Let's start with the markets.

Dom Chu is watching things with the very latest numbers for us. Dom? All right. So, Kel, it's been a pretty strong rally today. Now, will it last, as you point out, as we head towards the closing bell to close out a week into the weekend? We are off the best levels of the day by a wide mark, but still solidly in positive territory and definitely better than the worst levels that we saw from. yesterday, intraday. But some context. At the highs of the day, the doubt was up 546 points.

The S&P was up 108, and the NASDAQ composite was up 486. So as you're looking at those numbers next to me, keep that in mind. Every sector is in the green today, led by energy, also discretionary in technology. The laggards, as you might expect, are the less economically sensitive ones, like utilities and consumer staples. Now, we've got a lot of stocks on the move in a very big way today. So let's start with the big gains for the casino operators, like Las Vegas Sands, also wind resorts. That's due in large part to some of that optimism that lockdowns in China will ease in the coming days, especially in major cities like Shanghai.

Travel names, more broadly, higher, all outperforming. Names like Norwegian Cruises, Carnival, Royal Caribbean, American Airlines, and United, you get the picture. Also keeping out on the beaten up semiconductor stocks, also catching a bid today, look at names like NVIDIA, AMD, Lamb Research, and KLA Corp and Micron. And of course, all of them have been on decent slides. Of course, there is the downside with Twitter. The biggest drop by far on the S&P 500 today on that renewed skepticism over Elon Musk-posed takeover of the social media company. So so many names to track.

We're trying to track them all, Kelly. I'll send them back over here. We'll have more on that Twitter story in just a moment, Dom. Thank you. Now to the bond market where yields are actually moving higher again. Rick Santelli has more for us, Rick. Yes, what a week. whether you looked at inflation receding but still sticky and high,

where University of Michigan at 11-year low with no shortage of volatility. Here's a one week of tens. Yes, we're up eight basis points on the day, but we're down 21 basis points on the week. And if you look at three months to 10-year, you know that recession curve spread? Well, just about a week ago, it was the widest it's been in seven years at 229. Look at the week. What happened?

It's now on pace for minus 33. meaning a flattening of 33 basis points, that is huge. And if we look at Boone's overseas, their tenure, well, they closed up on the day as well, but down 18 basis points on the week. Because last Friday was kind of the cycle high on most of these interest rates, whether you looked at the U.S. or in Europe. Now, it doesn't end there. Everybody's a bit nervous about credit these days, and rightfully so.

You know, it seems though our chairman of the Federal Reserve, no matter what stocks are going to do, is going to zero in on trying to combat in. inflation. To that end, look at the year to date of high yield on the Barclays spreads. It's definitely above its wide peak in March. But investment grade, much better behaved. It's still narrow, more tighter spreads than it was at its peaks in March. That's something to pay close attention to. Kelly, back to you. Absolutely a key signal. Rick, thank you very much. Now let's head to the villain, unless you're an energy investor. The commodities complex has oil in the green, even despite its first weekly loss in three weeks, but Pippa Stevens, gasoline prices, they just keep going up.

Hey, Kelly, yeah, the villain here. And today's gain is actually pushing U.S. oil into the green for the week, the third straight week of gains. Now, the EU is still mulling a ban on Russian energy, but starting Sunday, there are some new restrictions. Traders will no longer be permitted to purchase state-owned Russian oil unless strictly necessary. So let's check on prices. WTI at 11033, Brent crude at 1112, both up around 4%. But I do want to focus here on gasoline futures, which are up 4% hitting a record high today. And that does not bode well for prices at the pump with just two weeks before the busy summer driving season begins. And the national average 4 gallon of gas hit a new high in each of the last four days and now stands at $4.43, according to AAA.

Missouri hopes Bob Yeager noting that inventory has fallen over the last 13 weeks, which at a time when it's usually increasing ahead of driving season. And he said, Kelly, that the national average could be heading towards six bucks. He said $6, Pippa? Yes. And it's already there in some places. You know, look at California, and they are already seeing that $6 level. Wow. Pippa Stevens. Oh, I can't say thank you for that. Let's get to the stock story of the day now.

Shares of Twitter are falling, although they're off the lows as the drama between the company and Elon. Musk continues. First, Musk tweets the deal is on hold, putting details on how many fake accounts there are. Then he tweets he is still committed to the acquisition. Add it all up, as John pointed out, Twitter's still down about 10% right now. Let's bring in Anne Barry for more now. She is the CIO of Wheelhouse Capital, quite a background and in private equity. And based on your deal experience, what are the next likely moves here? What do you think Elon Musk is up to? Kelly, bluntly put, the math on the Twitter deal that's out there right now just doesn't work. When you take a look at the amount of debt, $13 billion in traditional financing that he's had to line up,

and then the more structured financing he's been going to private equity to look for preferred equity or for other kinds of debt or hybrid financing, there's just not enough cash generated by Twitter to be able to support the cap structure at that $54 plus a share bid he's put forward. To me, this is negotiating tactic. That top level enterprise value bid has to come down. He knows it. And I think he's playing for time and he's playing for value. You know, he could say, okay, the deal is going to be done at 44, 20. I mean, you know, as our Alex Sherman has reported, maybe Twitter sues him if he tries to back out or renegotiate the deal.

But as we know, Musk doesn't really care about the traditional way that deals are getting done here. So if this is about a lower price, is there really any way that we would avoid that outcome? Well, Kelly, in any deal, whether you're buying a house or buying a company and whether that's in the private order in the public market, negotiating by finding diligence outs is pretty much part of the course. So the fact that Elon Musk is coming forward now and saying there are some holes in the operations that are causing me to pause, I don't find particularly surprising, frankly, if anything, I'm surprised it didn't happen a little bit sooner. He's also honing in on a piece of information that Twitter itself has put out in the public domain around. bots for the last two or so years when you look in their public filings. So I actually do think this is

posturing. I do think there's a chance he still wants to buy this business. I do think this is a price negotiating tactic. And I still believe that he will walk away if ultimately he doesn't get this because I don't think he can get the capital at the value he's looking at right now. I think he's going to have to get it down or he's going to have to get out. So you think ultimately he's likely to have to walk away. I think I just heard you say that. And there is, oh, by the way, the not insignificant fact that Tesla's own stock has fallen dramatically by 25%. So he is a quarter less rich than he was, and that stock is moving lower. So he's going to have to liquidate more shares to contribute to the deal, right?

Tyler, I think that's a very meaningful point. If you look at the financing that Elon Musk had teed up for this bid, roughly $12.5 billion of debt financing was collateralized by his Tesla stock. that is a huge amount of leverage. And that was initially lined up at a time, to your point, that Tesla's share price was higher. So this idea that he's going to multitask, the idea that he is going to be splitting his time,

potentially as an interim CEO at Twitter, on top of running the golden goose that has Tesla, clearly Tesla's shareholders aren't buying into that, and that impacts directly his ability to get that financing at attractive enough terms for Twitter. It's hugely complicated. The interplay is tough. I think that must be nerve-wracking for Elon Musk right now.

It must be, and he's, of course, got his space ventures, which seem to be very successful. But he is, well, he is a multitasker. And thank you very much. We appreciate it. Good to see you back during the week again. Thanks, Tyler. You bet. All right, coming up, video game stock sinking this year.

So what is fueling those declines? And could the industry be on the verge of a major change? Plus, speaking of a big change, the ARC Innovation ETF is higher today. This, after weeks of declines, still down 50% for the year. We'll be right back. I'd like something out of Mario Kart. It's been a wild ride for video game stocks recently. Console makers, publishers, software developers, down big.

So why the uncertainty? Well, production delays leading to console shortages, one thing. Publishers pushing back release dates. While the Metaverse aims to disrupt the industry, it is facing its own issues, including safety concerns and slow adoption, plus growing consolidation. The latest being Microsoft in the final steps of its acquisition of Activision. Blizzard. To discuss this and more, we're joined by Reggie Fizame, former president and CEO of

Nintendo North America, and author of the new bestselling book, Disrupting the Game. Reggie, it is great again to see you. How are you? I'm doing great. How are you? I'm fantastic, sir. So how is the metaverse going to change our lives, and how is it going to change affect the gaming industry where you spent most of your career. You know, so look, I think there's a lot of different talk around the metaverse, and you need to start with defining exactly what the metaverse is going to be. From my perspective, the metaverse is going to be a place where you have digital experiences that also touch on some sort of physical activity. It'll be a place that you go with your friends. It'll be a place where your avatar has meaning.

And this is something that doesn't quite exist today, but a number of companies are making, making movements to go there, whether you're talking about Epic and what they've done with their Fortnite video game, where they've had real world experiences within that game. Another company that's making progress in the space is Fortnite with a variety of different experiences coupled with one common currency. So, you know, the metaverse is going to be a place where you'll be able to interact and have fun, but what it is and how it takes shape is going to take years for us all to see. It seems as though Mr. Zuckerberg

and the company formerly known as Facebook has made a huge bet on the Metaverse. They've changed their name to Meta. Is it a wise bet? And is the Metaverse natively something that plays to Facebook's

or Meta's strength? So look, I've been aggressive in my position that I don't think this plays into their strengths. Historically, they have not been an innovative company. Aside from the very first social network that was created, everything else they've done, they've either acquired or been a fast follow.

It's been an acquisition. Yes, yes. And so the other piece is that from a physical tech standpoint, again, they don't have a great legacy of progress. They believe that VR is going to be a key driver of this metaverse. I don't really believe that. I think AR is going to be much more the type of. experiences that will have. And then lastly, I do believe a key element in the metaverse is going to be a common currency. And again, this has been a place where meta has tried to make progress but hasn't

been effective. And then lastly, they don't have really the positive belief and positive feelings by consumers today, given their primary approaches to use your personal information to sell advertising. So I have questions whether they as a company are really going to be the leader in this space. The other companies I mentioned, plus there's a lot of private investment happening to try and figure out exactly what's going to be the best execution to drive this overall metaverse concept. While we're, Reggie, it's Kelly here. And while we're in the middle of this massive flux within the industry, you have GameStop sitting out there as kind of the original meme stock. You were briefly on the board. Do you see obvious opportunities that it should be chasing right now?

or do you think it's best kind of crouching on the sidelines, waiting a few years to see how this all shakes out, and then identifying some future opportunity? Well, look, I was very clear that, you know, from my perspective, the key advantages that GameStop has, they've got a fantastic employee base who are passionate about games. You know, when you would go into a physical store, they would be the ones telling you which consoles to buy,

which games to get. They need to find a way to take that and present it in a digital, type of experience and leverage that type of passion amongst their employees. They've also got to figure out how to monetize digital software sales, which is where the consumer is going to get their games. And that's where the profitability is for the industry. So until they figure out those things, I think it's going to be quite challenging for them. Let's talk just a little bit about your book disrupting the game. I guess I want to just ask what is the big lesson of it and the big lesson of

your career from the Bronx to the top of the industry running Nintendo North America or Americas. Well, look, the book is a collection of my personal stories, my life experience. But in each case, I buttonhole every story with a so what, a key lesson that anyone can take away. And it's lessons around managing a bad boss. It's lessons around how to pivot a business and take what is a declining business and to turn it around. I talk about how to build relationships because relationships are key for any executive or anyone looking to drive a business forward. And so these are the key lessons. that I look to share throughout the book,

using my own personal experiences as the demonstration, whether it was launching the Wii and having that platform generate over 100 million units of hardware, almost a billion pieces of software, or whether it was launching the Switch after Nintendo had had challenges with its prior home console called the Wii U. So these are all of the lessons that I share throughout the book. And so far, the feedback has been incredibly positive, as you mentioned.

It's a business bestseller right now. Reggie Fies-M-A. Thank you. Good to see you again. And we look forward to seeing what you do next because you're a creative dude. Reggie Fis-M.A., formerly of Nintendo. Appreciate it. Thank you. After the break, three stocks making a comeback.

We'll trade names going from laggards to potential leaders when Power Lunch returns in just a moment. All righty, folks, it is time now. I know you've been waiting. The three-stock lunch. we are on the hunt for a comeback story tracking three stocks that have ripped higher in the past couple of days, despite being beaten down over the course of the year. And here are the three. OLAPlex, Carvanna, and Teledoc, all in the green today. Look at OLAPlex following a pop yesterday. Are these three stocks throwing us a head fake or should we buy in? Let's bring in Tiffany McGee for more. She's CEO and CIO, EIEO, of Pivotal advisors and a CNBC contributor. Welcome. Tiffany, let's start with Oliplex. Hi, Tyler. Good to have you with us. 11% pop in three days following a very rough Monday. I had a rough Monday, too. Yeah, I think we all did. So listen, I tend to look at stocks along the lines of balance sheets and business models.

And Oliplex is one that I really like here. I definitely own it. I've been using the product for, gosh, I don't want to date myself. But what I really like about this business model is that it really They actually have proprietary technology. So I don't know if you get your hair colored, Tyler, but I certainly do. And a lot of Americans do. A lot of people around the world do. And what they do, everybody who knows, if you get your hair colored, especially if you are bleaching it, it really damages your hair.

So Oliplex has this patented technology that bonds your hair. A couple of other companies have tried to kind of mimic that, and nothing really comes close. So also the thing I like about their business model is it really starts with a salon service. So all of the professional hairstylists are using it. But then they had this take-home, like number three is what they call it, that you have to use after you get your salon service. And now they've actually expanded their product line.

They have a couple of skews that are really doing well in places like Sephora. So I like that. Balance sheet perspective, sales are up 58% in the last quarter. they just reported a couple weeks ago. Margin's 78%. And so I think the stock is really inexpensive right now. So it's definitely a buy for me if you don't own it. Well, you've given my secret up.

This is how I get my perfect shade of gray here. We call it, you know, what am I? Anyhow, thank you. Oliplex. Oliplex. Let's talk Carvonne and Tiffany. The stock up more than 20% this morning before selling off 24% higher yesterday. What do you do with it?

Yeah. So, again, getting back to Balanchi some business models, I really do like the business model of Carvana, but then we take a day like yesterday, right, where the stock hits a low, and then also in one single session, then look at like the trading volume, right? So the average trading volume is usually around like $9 million.

Yesterday was about $41 million. They had to halt trading four times yesterday. That makes me a little bit nervous. And then when you factor in the fact that about 30% of their shares are sold short, and, you know, that really, they're really kind of pushing up, in a meanstock territory.

It makes me very uncomfortable, dangerously close to that meme stock territory. And then, you know, I really want to stay away from those names. Let's move on very quickly as we are coming up on the end of the hour to Teledoc, two days of back-to-back pop, 7%. What do you think? Yeah, well, first of all, it's about time. So for those of you who bought Teledoc in 2020 and were really excited about it flying high, 2021 was really not a good look for the stock.

And so I've been right with you along for that ride. So again, from a business model perspective, we really like it. It's a leader in telehealth. And they really know the space really well. So, but getting to balance sheets really quickly, you know, they actually have increased their revenue and their users pretty fast. But they actually reported about a $6.7 billion loss last quarter. But I really, when you kind of pull back the bail, it was not a good.

cash loss. They actually acquired a company called Livango in 2020. And really what this loss was was something called a goodwill impairment. So that really refers to, not to get too technical, but it really refers to the aspects of a company that really don't show up in a balance sheet, right? So like the value of like brand, the value of like the brand or the intellectual property. So they wrote that down, but it really wasn't a cash loss. So it's almost, it's real, but not totally It's kind of an accounting loss, I guess. I would absolutely think about Teledoc here.

It's an accounting loss. All right. Tiffany, thank you so much. Have a great weekend. Appreciate it. Thanks, Tyler. And for more on beating down names that have bounced back strongly, you can head to CNBC.com slash pro for an exclusive screener.

Up next, we're continuing to dig for stocks that could be poised for big rebounds. Dom has put together a list of S&P laggards that he is putting under the microscope next. Today's theme in the stock market. What goes down? sometimes comes up. Dom Chu is looking at which stocks have had the biggest bounces off the lows.

Dom? All right, within the S&P 500. So let's take a look at this. Components of the index that hit 52-week lows or worse just this week and have now bounced 10% from those low levels on an intraday basis. Among the names that kind of pass that screen, check out these ones because they're brand names that we talk about all the time. GM shares 11% off its lows this week.

Netflix is up 12% off its lows this week. Under Armour up 13% and wind resorts up 16 and Tapestry up 22. And by the way, the one stock in the S&P that had the biggest bounce of all of them, check out what's happening with DISH Network after a disappointing Investor Day earlier this week. Those shares popped higher by some 23% from the lows that we saw intraday, guys. Fascinating stuff there. I mean, it's very interesting to see those things come back. Obviously, some clearly oversold.

Short covering. Short covering. Maybe value investing. Who knows? Have a great weekend, sir. Thank you, Dom. Thanks for watching, Power Lunch, everybody.