Power Lunch - Tech Tumbles, Energy splits and Department stores shrink 8/22/22

Episode Date: August 22, 2022

Stocks head lower and the Nasdaq leads the way down. Is tech’s big summer rally over? Plus: the big split in the energy market. Oil falls back below $90 a barrel, but nat gas rallies to 14-year highs. And the incredible shrinking department store. If everybody’s shopping online, why do they even still exist? 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 Power Lunch, along with Courtney Reagan. I'm Tyler Matheson, and here's what's ahead this hour. Markets are down across the board this day. The NASDAQ getting hit the hardest off more than 2%. So is this the end of the summer rebound or just a pause on the way perhaps even higher? Plus the interesting split in the energy markets. Oil well off its highs down today, back below $90 a barrel. But natural gas continues to soar. 14-year highs there. Could that gas head even higher this winter and what it might mean for you, the consumer, for inflation and the economy.

Courtney, welcome. Thank you, Tyler. It's good to be here with you. As you mentioned, stocks are lower across the board. The Dow down almost 600 points. The NASDAQ down more than 2%. Some of the big names leading us lower. Netflix, it's the second worst performer on the S&P 500,

CFRA cutting the stock to sell after its huge run. Meta and Amazon also lower. Chips, one of the worst group. Intel, Lamb Research, and Invidia all lower. And every S&P subsector is down today, but a couple of materials names are outperforming, Mosaic CF Industries, and Albumarle. All right, lots of data, some speeches, some earnings for investors to watch this week. Culminated, of course, later in the week by the Big Jackson Hole Central Banker Conference. So we got Pals' speech Friday out there.

A lot of things to pay attention to. And joining us with her look ahead for the week is Stephanie Link, Chief Investment. strategist and portfolio manager at Hightower investors, also a CNBC contributor. Stephanie, welcome back. Let's look deep in the week to the Jackson Hole event. It's been virtual the past couple of years, I suppose, some people are going to be there this year. What are we expecting out of that? Well, I mean, I think that you're going to hear a lot of Fed officials speak at Jackson Hole.

So it's not going to just be Powell, right? But I suspect, Tyler, he's going to sound, this is Powell, I think he's going to sound hawkish. I think a lot of the Fed members are going to sound very hawkish because, quite frankly, inflation is everywhere. And so that's why this week is so interesting because we do get a couple of reports that will actually show us that exact thing, that inflation is still very persistent. So within the GDP number, the second revision number, midweek, we also get the chain price index.

And that's going to be up something like 7%. down from 7.5% year over year, but still a very hefty number. And then, of course, you get the core PCE number on Friday, along with Jackson Hole. And the year over year number, again, it comes down a bit to 4.7% expectations, but that's versus 4.8%. But the Fed wants that number to be two. So I don't know how they're not hawkish, quite frankly. And I really don't think that this pivot move that we saw from the June lows,

I don't think it was pivot. I don't think they pivoted at all. And core PCE is the measure, is it not, that the Fed allegedly pays the most attention to. Without getting in touch with our deep inner wonks, what's the difference between core PCE and some of the other maybe less esoteric versions of measuring inflation? What makes the core PCE different and so important? I think it's less volatile for one and it's broader for two. I think that's why they like to look at core. Quite frankly, I don't really want to look at core.

I want to just look at the headline number because I don't know about you, but food and energy are a real problem these days. Even with oil coming down, right, they are still stresses to the consumer. Yes. And so I just think that the headline number and the core number, it's all high. And that's why they have to raise. Stephanie, I want to get your take sort of on what's going on in the broader market right now. I mean, it does sound like you are concerned about what's going on with inflation.

Those concerns haven't gone away. But to see the Nasdaq down more than 2% right now, does that feel right to you? The sentiment feels very negative, and I'm not exactly sure why, especially today. Yeah, well, we've had a lot of data over the weekend, right, between the war and Ukraine and the bombing of Putin's right-hand person's daughter. So that kind of sparked it. We have ports shutting down in the UK. And so you have now, again, supply chain issues potentially. And then, of course, you have interest rates.

Interest rates are backing up, right, over 3%. That's not good for long-duration assets, Courtney. You know this just as well as I do. And long-duration assets are technology and growth stock, so they're getting hit the most. But by the way, they rallied quite a bit off the June lows. So let's dance through a couple of names that you have your eye on this week with some earnings. Invidia and then two sort of retail names, I guess, is Dollar General, and Ulta. Alta seems to punch above its weight on portfolio managers lists.

I hear it mentioned a lot. It's such a good company. It is such a good company. Well run, they have the right products. They have all different price points, low, medium high. They have the prestige theme as well. So they're capturing a lot of growth. And the only problem, Tyler, is it trades at 20 times earning.

But we know Elf had a good number. Estee Lauder in the United States had a very good number. And so I think they're going to be able to do something like a 10 to 12 percent top line number when most are just putting up mid single digits. Quick thought on Nvidia before we change subjects here. Yeah, no, I mean, I think Nvidia, look, they negatively pre-announced, right? So we have the numbers. We just want more of the macro color commentary. We've been hearing all quarter-long PCs are weak, gaming's week.

It's terrible. So we want to know how bad is it and is it getting any worse. On the flip side, Enterprise Data Center are actually growing quite nicely. So I just want to hear more about what the macro tells are from the company versus the actual numbers. I don't expect big fireworks. All right. Steph, thanks so much. I know you're going to stick around as we continue the conversation, Courtney.

Yeah, and tech was a big leader coming off the June Lowe's. We just kind of mentioned that. But the last few days have seen some of that rally stall. The NASDAQ is now down about 5% in just the past week. So could this be a technical breakdown? We're going to bring in Carter Worth. He's the founder. CEO worth charting. He knows all about what the charts are telling us. So, Carter, give us a little

insight into what you're seeing, what's going on with tech, and what you think it may foretell about what's to come here. Well, you know, and Stephanie just touched on it. I mean, talk about the move off the low, right? The precondition for this weakness. We know the S&P was up 19% actual low to high, right, from June 16. But the NASDAQ 100 was up 24 versus 19 and Apple's up 36. I mean, it doesn't matter which one of those you want to look at up 19, up 24, up 36. It's just too much without a pause. The unknown question is, is this a pause or is this the beginning of a real route to the downside? My own hunch is this, and there's no way around this, that the NASDAQ 100 index at the end of last year had completed 13 consecutive years

of positive return. No index has ever done that. The Dow Jones going back to its history, the transports back to their history, 1890s. It's a heck of a thing. It's where all the growth, it's where all the innovation in the world is in many ways. And yet the problem with, of course, is when you're that big a leader on the way up, you're also a leader on the way down. We know the correlation with the S&P 500 and the NASDAQ 100 on a one year, three-year, five-year basis is always 85 to 90%. And so these big names are on the ropes right now, whether it is because of interest rates rising or because they just can't, sustain that kind of move off of the low, but they're under pressure, and I think there's more to

come. Got it. Carter, we know we're going to hear further details from Nvidia, and Stephanie was just sort of going through that really the commentary matters there. I don't mean to throw you a big audible, but anything you can tell us there is we watch the semi-names so carefully here within that broader tech space. What we already know about Nvidia and how that chart has been moving and what we may still find out and what that means for the rest of the chip stocks and then buy in large the tech sector. Well, that's right.

So semiconductors in general are sort of beta, right, in cyclicality within tech. And they're in many ways sort of the first to move on the upside and, of course, first to move and they do it with vigor. And my own hunch is that semis are going to continue to be weak and that they are likely to also inform the overall tech sector. NVIDIA is just one of the big ones. Carter, the NASDAQ 100, as you say, is up. I mean, some of those numbers are just hugely, they're gaudy returns over the last 13 years or so, 48%, 39%, 32%, 36, 19.

Even though the NASDAQ 100 is up off its lows significantly, it is still down for the year. Do you expect it to end the year negative for the first time since, what was it, 20-08? 08, exactly, so it would break this 13-year run. I think that's almost inevitable. If you can say anything is inevitable. And so let's do 991. I would say the odds of being down are 99% at 1% for the chance that somehow it comes to life and puts in the 14 positive year. Stephanie, I want to give you the last word here.

Obviously, Carter looks at things from a technical perspective and points out some good moments on charts here. But anything that you want to add as we're talking specifically about tech going into what we may be hearing from Jackson Hole. Yeah, I mean, look, I think tech and com services, if you add the two together, it's 35% of the S&P 500 waiting. That's enormous. I have been underweight tech all year long. I got underweight semis in the spring because I was very concerned about double ordering. And, oh, by the way, what did we hear from a NVIDIA? There was double ordering, right?

Their inventories hit margins by 20 percentage points. That's huge. And I think you're going to continue to see double and triple ordering as the supply chains start to ease. and they are starting to ease. The one big caveat within tech, I think enterprise is holding up fairly well. And so I think you do want to have a barbell approach. You have some value, some growth. I like Accenture on the growth side. I also like Fortinet on the growth side. I know those charts look horrible, Carter, so I know he's not going to like them. But I do like the fundamentals of both companies very much, especially on the booking side for both companies. And then on the value side,

I own IBM, which is trading at 14 times earnings, gives you a 4.8 percent dividend. and yield, and it's a restructuring story, and it's got cloud within it, right? And so, and then, and then on, on, on, on comm services, I am suffering with meta, because I think it's, because it's not been a great trade, but I do think longer term, they just have the eyeballs that the advertisers over the long term are going to want, and the stock does trade at 13 times earnings, so it feels awfully washed out to me. So pick your spots, value and growth, barbell it. That's kind of what I'm doing. There you go. And look at both the fundamentals and the technical side, take full of your opinions. Thank you very much, Carter Worth, and Stephanie Link.

All right, coming up, from big to boutique, why big retail stores like Macy's are starting to rethink the mall and head to smaller pastures to increase sales and profits. Plus, the energy market divergence crude continues to dip, while natural gas prices continue to heat up. We'll explore why and what it means for the stocks in those sectors. Now take a look at the Dow. Session lows or thereabouts off 661, nearly 2%. and you got 2% declines in a couple of the other major indexes. We'll be right back. Welcome back to Power Lunch.

I'm Christina Partsnebless at the NASDAX. Shares of AMC plunging right now over 38% after the country's largest movie theater chain issued new preferred equity units known as apes. AMC shares also getting hit by reports that Cineworld may file for bankruptcy. You also got an overall meme stock selloff after Ryan Cohen sold his shares of bedbath and beyond questioning confidence in said companies. And lastly, the general tech sell-off prompted by rate concerns. But what's going on? Every AMC shareholder, as of end of day last Friday, were issued new APEP shares,

aka one ape share for every AMC share they owned. AMC shareholders, technically today are worse off based on the combined value of both AMC and Apes share price. So on your screen, you're seeing $11 plus $6.40. That is less than Friday's close of 1802. And AMC has warned that they could issue more ape shares in the future to raise cash, even though shareholders voted against the issuance of new equity at their last shareholder meeting. Very interesting. So much for listening to what the shareholders won on that one, Christina. Thank you.

Well, big retailers like Macy's Gap and Nordstrom are following the trend of going small and getting away from the malls. A bid to evolve in the retail space, Macy's is accelerating its plans of opening smaller stores this fall known as Market by Macy's. after a change of behavior on the consumer following the pandemic, competing with big online stores like Amazon. So are these retailers able to reinvent themselves or is at the end of an era? Let's bring in Jan Niffin, CEO of J. Rogers Niffin worldwide. Jan, you know, thank you so much for joining us here today. I do find this fascinating.

And for those that don't follow retailers ins and outs as closely perhaps as you and I might, explain to us why a retailer like Macy's, if they are seeing their sales fall and go more online, don't just close their stores altogether, or at least in kind with the sales increases that they're seeing online. Why do you need stores at all? That's one of the best questions. And Macy's actually answered that far as a few years ago when they started this closing program. And they said, wow, we thought this business would go online when we closed this store.

And they discovered when they closed the store in a one-store market, not only did the people not take that business and put it online, but they even reduced their purchases that they already were making online. So online sales actually went down and the store sales went away. They looked at it and they said, wow, these people buy from us because they know the store is there and they buy a lot more from us if there's a store there and they can buy online. And so when they looked at it, they said, we better be very careful about what store we decide to close. So they sort of have to evaluate the store now and say if we close it and we lose online business, maybe we should just keep it open even if it's not doing that well. But an even better solution is

instead of sitting there at that 165,000 square foot store, maybe we could just build a 35,000 square foot store, keep all the online business, have a cheaper store to operate, newer, fresher, make it more fun for the customer, smaller staffing, but still accomplish all the things they need to to keep that online business. So you can see them doing that right now. They're already moving. to build that smaller store and drive the online business with that smaller store. And not just Macy's, of course. Coles is talking about doing this too. Nordstrom, we know, has locations actually without any inventory at all that are more like

service locations. It seems to be working for them and the way that they have this flywheel approach, I guess. So when you start to hear about sales falls or traffic falls at some of these department stores, how do we evaluate that with the new smaller footprint as investors as we're listening to some of these calls in the commentary, should we not be discouraged? Should we just expect that some of these metrics are going to fall? And it doesn't mean that things are going that poorly for department stores? Is it just the model's changing? Well, remember, the model's been changing for a long time. When I got in the business before you were born, our stores were 600,000 square feet, and they were in

downtown locations, and there were three of them downtown in most big cities. And sometimes there were even more than that. Well, by the time I was running the store process, we were down to 165,000 square foot stores. And by the year 2000, we were building in some places a 125,000 square foot store. So that process has been a continuing thing as the business has had to reinvent itself. And now with what, Macy's probably has 40% of its sales online, well, the store's 40% too big, unless you're going to drive the sales through the store. So the game now is have a smaller store and also drive as much of it through the store as possible. So if I order online and you send it to the store and I come pick it up,

that's a lot cheaper process for me if I'm Macy. So, Jim, maybe you know or maybe you've got informed conjecture. What is the nexus between closing an underperforming store, let's say a Macy's and a decline in online sales because that location that's near you is no longer there? Why would online sales fall as well? Nobody knows for sure why, but it works like this. You have this big billboard that's the store, so the customer knows who you are. They trust you, you're there, you're part of their lives.

You've closed that store, they don't feel that way anymore. The other thing that happens is they know they can bring that product back to the store and put it back there, right, and maybe pick up something else, but for sure, it's a return spot. So it just drives their knowledge-based, their feeling for the store. This whole effect of I am, you're part of me. I'm part of your process. And when you take that away, and everybody's figured it out, right? I mean, Amazon wants to have 30,000 square foot stores.

Warby Parker's got stores. Everybody that was online only figured out that you do more business online if you get them a store too. So this is not just the Macy's phenomenon. This is across the industry. Yeah, plus when you make that return, to a story of a higher chance, of course, that you're going to either make an exchange and not just your pure return or pick up something additional. Jan, that's all the time we have for today.

We'll have you back. Thanks again. Thank you. All righty, coming up, Amazon Web Services goes Hollywood. The tech giants tapping a slew of celebrities in a new cybersecurity push. We're going to look at why now and why it could be a boost to a number of non-Amazon stocks. Plus, speaking of Amazon, Goldman Sachs, crowning its earnings season winners and Amazon is among them. We will trade that and two of their other top names in today's three-stock lunch. Power Lunch is back after this. Welcome to Power Lunch. Shares of Amazon falling 3% today, the company reportedly making a play for Signify Health. Those shares popping today as reports say United Health and CBS are also

interested in the home health care services provider. Amazon also looking to spread its wings in other ways, of course, Frank Holland has that story for us. What else they want to buy, Frank? Well, you know, it's not what they want to buy, but they are going a little bit Hollywood. So 95% of cyber attacks are caused by human error, not sophisticated hacks or any other high-tech methods. That's why Amazon, a leader in cloud infrastructure globally, is launching this PSA with Hollywood megastars, Michael B. Jordan and Tessa Thompson to shine light on the ways to prevent attacks and bring some more understanding to the mainstream of things like multi-factor authentication. I'm not just going to drop it.

I'm going to explain it. That's when you're required to enter a code you receive by email or text, in addition to your password to gain access to a website or a network. This is a lighthearted spin on data security, but the problem is very serious. According to the FBI, losses from cyber attacks

have increased by 383% and nearly $7 billion over the past five years. Amazon's chief security officer says the goal is to help consumers feel just more comfortable with the transition to the cloud. to the cloud. Customers feel better about their security when they've got full visibility into what they're doing, which is one of the core tenets of operating in the cloud.

And does operating in the cloud drive more consumer online engagement? Yeah, it sure does. So analysts say this isn't about what Amazon wants to buy, but it's also about what they want you to buy. The PSA could also help adoption of Alexa in-home devices and also those devices in cars. the Alexa platform will be in Model 2023 GM and accurate vehicles. Mainstreaming of cybersecurity also helps stocks that focus on multi-factor authentication, zero trust, and other advanced cybersecurity measures, including ACTA, verify me, and Z-scaler.

Back over to you. Do you feel more confident in Alexa based on what Amazon's trying to do? In other words, do you leave it on in your house if you have one? No, I don't like home devices at all. And like if someone has them in their house, I want to know. I just don't, I'm going to be honest, and I do work with Amazon Web Services, but I just don't trust it. I don't want just a big speaker listening to everything I say in my house.

So if you come over to my house, I'm going to have to disclose. Right. I was just thinking that. There's a disclosure at the door. In writing. Anything you say may be recorded in this house. I love it. I hadn't thought of that.

Anyhow, Frank, we'll turn a. it off when you come over. I appreciate it. See you later, man. All right, let's get to Bertha Coombs for a CNBC news update. Hey, Tyler. Singapore is set to decriminalize sex between men by repealing a colonial era law. However, Singapore's prime minister is vowing to protect the city-state's traditional norms by introducing a constitutional amendment that defines marriage as between a man and a woman. Elon Musk is, has sent a subpoena to former Twitter CEO Jack Dorsey in his legal fight with Twitter. Dorsey actually supported Musk taking a board seat and then tweeted his support on the day the deal was announced,

saying, in principle, I don't believe anyone should own or run Twitter. However, Elon is the singular solution I trust. I trust his mission to extend the light of consciousness. Interesting term. And flash flood warnings are in effect in Dallas, Texas. Eastern Talas was hit with more than nine inches of rain within six hours. During an average summer, Dallas sees a total of eight inches of rain. That's tough sledding there.

The storms are just getting worse and worse. I know, aren't they really are? That's worse than our flickering lights here, I think. Yeah. Bertha, thank you. All right, ahead on Power Lunch. The good news. Oil prices are coming down. The bad news? That gas continuing to soar. Get ready for higher heating bills. Why the divergence? And what does it mean for the sector plus? Court? We know that oil prices are already part of the inflation equation, but a new CNBC poll shows there could be a new player to contend with student loans. That story next. And take a look at the markets. Right now, we're still sitting near the lows across the board tech, leading the declines with big cap names and semi-stocks among the laggards that NASDAQ down almost.

Two and a half percent. Power lunch will be right back. We got 90 minutes left in the trading day if you'd like it. We can shorten it if you really want to. We want to get you caught up on the markets, the stocks, the bonds, the commodities, the divergence we're seeing between oil and gas. Let's begin with the markets because stocks are lower across the board today, as you probably have been watching. The selling picking up slightly this afternoon. The Dow Industrial is down about 650 points.

That's, I think, a little off the lows. NASDAQ giving back some of its gains. but it has still had a nice run off those June lows. But this is, I think, maybe the fourth session in a row where the NASDAQ is down. S&P sectors, they are all lower today. But even with that decline in tech, consumer discretionary is the worst performer. Ford down about 5% after announcing it's going to cut about 3,000 jobs. We're hearing more and more job cuts lately.

And in the bond market, we are also seeing selling. Well, when you sell the bonds, that means the prices go up a little bit. You've got to find more, or the rates go up. Excuse me. When you sell the bonds, the rates go up. Always have to think that through. So there you go, it above 3% for the 10-year. Meantime, there continues to be a divergence in the energy markets.

U.S. natural gas surging to a 14-year high amid shortages in Europe, while crude oil is lower once again and amid growing demand concerns. West Texas International, Brent, down about 5, 6 percent, respectively in the past month. Natural gas up 17 percent in that time and has nearly tripled over the current time of this year. For more on where we go from here, let's bring in John Kilduff. He is the founding partner at Again Capital, Kilduff again. John, welcome back. Oil.

Good to see you, Tyler. Do you see oil turning around and, most of the United? higher unless China, if China does not come back and boost demand. Yeah, we need the economy globally to sort of get its sea legs back and for China in particular to straighten it out its situation before we can see, I think, oil prices, you know, head back higher. That's the real turning point here, Tyler. Also, too, we're watching Europe, obviously.

It's a parade of horribles there for them in terms of energy just across the board. And here in the United States, too, we're worried as well. We've had some really weak gasoline demand weeks over the course of this summer. They've been rebounding again here as we close things out. But, you know, the demand has been a real question mark. Surprisingly so, and as everyone has tried to sort out this equation in the aftermath of the Russia-Ukraine war. Yeah, we don't know what could happen between now and the end of the year, both in terms of the Chinese economy, in terms of the war in Ukraine,

and what might happen there. And so global demand for oil is a big, big question mark on lots of levels. Could something happens really tragically bad in Ukraine? Oil could go way back up again. Let's now switch to gas, if we might. How much should Americans be preparing for sort of a doubling in their heating bills this year? For now, that's looking very likely, Tyler. The market, though, arguably is a...

ahead of itself. And I, and I, for U.S. consumers now, strictly for U.S. consumers, and I've got to make an important point here, the U.S. natural gas supplies and storage levels are excellent, are good. I shouldn't say excellent. They're good. But we're, it's a siloed commodity. Our pricing shouldn't necessarily be reflective of what's being priced in Europe and in Asia for natural gas supplies, simply because it's not as though, it's not like crude oil or refined products where we can just flip a switch and send out our supply to higher price points or locales. It's stuck here, and it's stuck in the fields, and natural gas supplies right now are 10% about below last year's storage levels, 12% below the five-year average. That's within the realm of normal. And we're going to

go into a period of time here over the next several weeks where the pace of injection of gas into storage typically accelerates, Tyler. So, you know, we've been lucky to a degree in the energy space from a consumer's perspective, really all year. We haven't lost all that much Russian supply, and these natural gas numbers are favorable to U.S. consumers. We just need to catch a break. We also haven't had any hurricanes. So again, if we can have this winning streak continue, I think the worst case scenario, which the market is absolutely pricing in right now, doesn't come to pass. John, this is Courtney. And natural gas seems to have certainly more volatility when it comes to weather or weather expectations. I know you mentioned hurricane.

but also fluctuating temperatures. What is the price right now of natural gas telling you that the market is expecting to come? And do you think those expectations are correct? Yeah, it's one of those times where I like to joke that the natural gas markets is more nervous than a long-tailed cat in a room full of rocking chairs at this point. Again, they're really pricing in court the worst-case scenario,

that we will get a mass of hurricane or two, that we will get an early coal snap, that some of this heat that's been with this all summer for the most part, particularly in the middle of the country, persist. But again, the storage levels are okay, and the natural gas production continues to rise. So again, the market right now, this is historic, this is typical for energy commodity markets. You know, you get the run-up in gasoline prices in March or April well ahead of the driving season. I think you're seeing a similar thing right here, the high price point for natural gas, which should top out, I think over the next course,

next several weeks, about $12 to $14 a unit. I think we slide from there if the situation continues as is presenting right now in terms of the fundamentals. Okay, so if we don't get major hurricanes and if the winter isn't quite as cold, then we may slide down from these peaks of 12 to 14. Thank you very much, John Kilduff for being here. Thank you, Courtney. Well, energy has been one big driver of inflation. We all know, we feel it, we see it, we pay it, and now,

more people are worried that canceling student loan debt could lead to even more inflation. Senior personal finance correspondent Sharon Epperson joins us now with details from a new CNBC poll. Sharon, this always gets everyone's attention because so many of us still have those student loans. 44 million borrowers, $1.7 trillion. Yes, many people still dealing with their student loans. Education Secretary Miguel Cardona has said the Biden administration will announce a decision on student loan forgiveness in the next week or so. But a new CNBC poll finds that many worry that canceling student debt could have some unintended consequences. A majority of Americans, 59%, are concerned loan forgiveness will make inflation worse.

That's according to a new survey by CNBC and Momentive. The concern is that borrowers would have more money to spend, driving up demand, driving up inflation, and that concern, though, may not hold true for some. Meanwhile, views about whether student debt should be forgiven were mixed in this survey. Nearly one third of adults, 30% say there should be no student loan forgiveness for anyone. 34% say only those in need should have loans forgiven, and 32% want loan forgiveness for everyone who has student debt. Now, the Biden administration has already approved nearly $32 billion in student loan relief so far, and the Education Department says it's working to improve existing programs to make it easier for borrowers who qualify to get their debt discharged.

Tyler. All right, Sharon, thank you very much. CNBC did a student loan survey back in January of 22. So how much did respondents' views change, Sharon, since then? Well, quite a bit, Tyler. We found that the 5,000 or so people that were surveyed in January of 2022, when asked if their financial situation, had gotten worse, about 29% said that it had. When they were surveyed in August of this year, early August,

about 39% of respondents said that their financial situation was worse than it was two years ago. So we are seeing a lot of Americans with some significant financial pain that they're going through, and student debt certainly is not helping the situation. Deterioration there. All right, Sharon, thank you very much. See you tomorrow. Coming up, a clean start for the airline industry.

one company is trying to make jet fuel more environmentally friendly and the big money it is attracting in doing so. And let's take a look at the markets right now. There you see, big red blocks with big negative numbers. Nearly 2% for the Dow. The other indexes are down more than 2%. And as we had the break, remember, you can now listen to Power Lunch on the go. Look for us on your favorite podcast app. Follow and listen today. Today. By now, electric cars pretty much mainstream, but electric airplanes, not so much. That's why finding a cleaner jet fuel is so important in the meantime. Our senior climate correspondent Diana Oleg has the story of one company making clean jet fuel out of carbon in her continuing series on climate startups.

Hi, Dai. Hey, Ty. Yeah, the company is called 12, named for the carbon 12 isotope, the most abundant on Earth, dangerous in the atmosphere, but valuable when made into something else, something clean. What we're doing at 12 is we take that CO2 that's being emitted or that's already in the air, and then we convert it back into useful products. From car parts for Mercedes-Benz to jet fuel for Alaska Airlines. The barely six-year-old company is taking on carbon emissions and transforming them into cleaner products. It just announced a collaboration with the airline and Microsoft to advance production

and use of 12's E-Jet, a low-carbon jet fuel. Our process takes CO2, water, and electricity as inputs. We use the electricity to break apart CO2 and water, and then we have catalysts that recombine the elements to make new products. Flanders says the aircrafts would not need to be changed in any way to accommodate the new fuel, which he said has up to 90% lower emissions than conventional jet fuel. That's huge for airlines trying to reach aggressive emissions goals. We have a goal of reaching net zero by 2040.

We've got five steps to get there, but sustainable aviation fuel offers the biggest opportunity of all of those steps to take a meaningful leap into that 2040 goal. And it's not just jet fuel, fueling 12's business. The amount of CO2 that is out there and the amount of industrial products that we can make from CO2 means that the revenue prospects for this are enormous, as well as the climate impact. 12 is backed by DCVC, Capricorn Investment Group Carbon Direct, Chan Zuckerberg Initiative, Microsoft Climate Innovation Fund, Breakout Ventures, Munich Re, and Elementum Ventures. Total funding to date, $200 million.

And the new climate provisions in the just past inflation reduction law also will benefit 12. there's a provision called the Sustainable Aviation Fuel Blenders Tax Credit. It's a scalable tax credit for producers and blenders of sustainable aviation fuel effectively to reduce the price of that fuel. Courtney. Wow, very valuable stuff. Diana, thank you for bringing that to us in Lightning, truly. Well, coming up, Goldman Sachs, tallying up the numbers and crowning a list of names as the big winners from this earning season, among them, Amazon, Uber, and Meta. Are they right? Well, we'll trade them in today's free stock lunch.

Our Lunch is back in two. Welcome back to Power Lunch. Golden Sachs out with its stock winners coming out of earnings season. They're Amazon, which is down nearly 20% year to date, almost 4% today. Uber, which has fallen by more than 30% this year. And Meta down about 50% this year. All these names are lower. In today's trade as well, let's bring in Todd Gordon.

He's founder of New Age wealth advisors and a CNBC contributor. Okay, Todd, so let's start off with Amazon. Obviously under some pressure here today, as tech stocks, broadly are the worst performers in today's market. But what do you do in particular with Amazon and why? I hold Amazon. Corr, I like it. It's about a 3% weight in my growth portfolio. And don't forget, you know, we've seen a major rotation into tech and consumer discretionary. But this is just a pullback. I don't think we need to read too much into it. Like Amazon has had its own problems. It's been underperforming for about two years. But I mean, look,

they have an unbelievable logistics, distribution network. They had obviously some problems in Q, one and two earnings. They had issues with fulfillment, too many employees, and that rivian investment. But their margins are strong. If you look at those last AWS margins, I mean, they're growing revenues, 25% and their margins were like 28%

where the traditional business is only 3.6. So they're really doing well there. They're moving on the media front. They're doing this testing with like a TikTok feed app. I think, you know, with the healthcare, like I am encouraged. I own it. If we could hold about 125, I'd actually consider adding to it.

And I think the consumer is going to be okay. Let's move on to Uber. Ty, last time I was on with you, I said no on Uber. And I warned on it from a technical point of view after earnings. 31, 32 was a big tech resistance. We did wind up failing there. So hopefully we listened, didn't chase it. You know, they had good numbers.

The revenues that last quarter grew 100%. You know, they were making $8 billion. They went cash flow positive. So there's some good news there. But the problem is their margins, right? They run a 27% gross margin. They're doing about $30 billion in bookings, but they only make $8 billion. So they don't have a lot of margin to grow from.

And my big problem with there is how are they going to compete with the likes of Tesla and Apple and autonomous driving? I feel like that's the only way that they are going to be a long-term investment. So I say no for now. And Todd, our final name is Meadow. What do you think here about meta in the face of slowing advertising generally? Yeah, you know, I've held meta, I've reduced my allocation, I have about a 1.7% holding in our growth portfolio. I think advertising continues to be resilient, the small and medium businesses, from a technical point of view, I'd really like to see these $150 lows hold. If we don't, maybe down to $120.

It's a value stock right now. They've got $170 billion in assets on the balance sheet, and only $44 in liabilities, 13.5 PE. They're trading about 17 times forward earnings. You know, and they're getting a lot of feedback and push back on those reels thing, right? But I feel like they have to go after TikTok. I think they're ripe to be taken down. I understand their foregoing profitability word. They otherwise wouldn't be in this meta transition.

So I actually commend them for doing it. I might be wrong, but I'm continuing to hold it. And I'm bullish on their move into the metaverse. There's some really good followings from their internal management about what they're doing in the metaverse. I'm a believer. Okay, Todd. Well, thank you very much. Todd Gordon says buy Amazon, buy a meta. Uber, stay away. He says sell. Thanks for joining us. We've got a lot more on this big market selloff with the down now down more than 2%.

Exclusive new headlines from the Saudi oil minister on crude supplies heading into 2023. That and more with stocks at session lows. We'll be right back. We've got a news alert on oil as we were talking about earlier. Brian Sullivan has the details. What's going on, Brian? Yeah, Courtney, I just got off the phone on a rare. and a fairly wide-ranging conversation with Abdulaziz Ben Salon, the Saudi energy minister. The comments were on the record. And here's the comments that basically made. There was sort of an indication. Now there's been some stuff in print today, but I wanted to dive in a little bit deeper

that perhaps OPEC could tighten at the September 5th meeting or perhaps even before then. He has a great concern about what they call lack of liquidity in the paper markets. In other words, those futures contracts that we show you right now. We've talked about this disconnect between the price of the market. the futures contract and what oil is actually being sold for by the barrel and that gap continues to grow. I asked him directly, do you believe that the market is, quote, broken? That was my term. And he said, quote, by means of liquidity, yes, meaning that that gap between the two markets simply is too high. The price premiums are too much. So if you're an airline, guys, and you're trying to

hedge out the price of oil next year for jet fuel, the price of doing that from a contractual perspective, has gotten so expensive that it may be difficult to do, which would also mean that you won't do it, which could then have extreme price moves. Obviously, the Saudi energy minister representing in many ways OPEC plus as a group. They meet on September 5th. And I know there were some comments earlier today, guys, but the comments are pretty dramatic about a broken market, the physical versus paper market, and that OPEC may have to take action. And I took that And I'm going to editorialize here. We've got to go.

I took that as the possibility of a cut at the January, September 5th meeting or perhaps even something before then. Just my read, but an interesting conversation. A production cut. All right. Thank you, Brian. Thanks you. Thanks very much, Brian Sullivan. Thanks.

Well, NASDAQ is at session lows down more than 2.5 percent. Following a big rally from those June lows, Tom Chu is putting that one under the microscope, Don. So if you guys, if you take a look at some of the chatter among trading desks right now, they're trying to figure out what the next leg is going to be, and which stocks may be the most vulnerable, if hypothetically there were a deeper pullback. So if you look at the NASDAQ-100 QQ-Q-E-TF, the big rally that we've seen may be starting to roll over. So we decided to take a look and screen for some of the stocks that could have the most vulnerability in a broader pullback. That includes those have had the biggest rally since those lows. Now, here's the screen that we ran. We looked at the

NASDAQ 100 component companies. They had to have hit a recent 52-week low or worse, just since the beginning of the summer, May 31st, and among those, how many have rallied by at least 25% or more from those lows? 14-14 companies fit the bill. These are among them. Take a look at these particular companies. You've got stocks like advanced micro-devices, AMD, also Apple and PayPal holdings. Focus on the right-hand side of the screen, because that's where you've seen their kind of recent rallies and in a possible rollover. A lot of relative strength. Maybe they could be due for a bigger pullback. And the single biggest rally off those lows, the recent ones, guys, and the NASDAQ 100, comes from Mercado Libre. So if you're looking for the stock in the

NASDAQ 100 that has rallied the most since the lows and could be vulnerable to more downside, check out Mercado Libre guys. Oh, and by the way, the rest of those 14 stocks on my Twitter feed at the Domino. I just tweeted it out, Dom. Thanks for joining us. And thanks for watching PowerLine.