Power Lunch - Tesla’s troubles, an energy summit and Suze Orman. 6/23/22

Episode Date: June 23, 2022

Tesla CEO Elon Musk says Tesla’s two new factories are burning through cash. Are threats to Tesla’s growth mounting or are these typical growing pains? Plus, Suze Orman explains why I-Bonds are her top investment choice in this environment. And, signs of peak inflation? 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 for a summer Thursday. I'm Tyler Matheson. Here's what's ahead. Bleeding billions. Elon Musk says Tesla's Berlin and Austin factories are gigantic money furnaces as it faces supply constraints. Are the threats to Tesla's growth mounting or are these normal growing pains? Plus a personal finance power player. We're so glad to have her back. Susie Ormond is here to explain why she believes eye bonds are the top investment to make right now. We'll delve in there a little bit later. But are there risks to holding them longer term? The opportunity costs will ask and hear from Susie. But first, Courtney Reagan. She's in for Kelly Evans. Court? Hi, Tyler. Good to be here with you with a down the S&PR under pressure this afternoon as the

old slide. The S&P hugging the flat line. The NASDAQ, though, up about the half a percent yield on the 10 years sitting just slightly above 3 percent. It's lowest in about two weeks. The Fed chair reiterating his commitment to bringing down inflation. And oil prices in focus pulling back down about 1 percent, and that's sending Valero down 8 percent. Halliburton shares down 6 percent Chevron, off more than 4 percent. All right, we start with Tesla and questions about its growth.

CEO Elon Musk warning that Tesla's new factories are, quote, billions of dollars. The comments were made during a late May interview that are just now coming to light. Ramping up new factories is, of course, a cash-heavy business. Tesla shares are down about 30 percent so far this year. All while Musk could potentially buy Twitter. Here to discuss Tesla's road ahead is Colin Rush, research analyst at Oppenheimer. He maintains a buy rating and a price target of $1,99. Tim Higgins, Wall Street Journal correspondent and a CNBC contributor. Tim, why did these quotes about the hemorrhaging cash take so long to come out? Well, first of all, he did them with some enthusiasts and Tesla enthusiasts, a podcast,

and they doled it out as slowly as they did. I think their idea was they were more interested in the excitement of Tesla and the products, and this was just a side note, whereas investors are very curious on what's going on. There's this concern that the factories in Berlin and Austin could become the next manufacturing hell, which really hurt Tesla in the past, bringing out the Model 3, you know, really almost put the company into bankruptcy. These were remarks made to the Tesla Club of Silicon Valley meeting in Austin, Texas. Go figure. But at any rate, he said they're burning capital.

Colin, is this necessarily unexpected? obviously when you're ramping up a new factory, indeed two of them in Europe on the one hand and China on the other, there are huge, huge capital costs and certainly expectable hairballs. You know, I think first, we need to put this in context. You know, Elon Musk is not afraid of hyperbole as we've seen over the course of years. And so, you know, saying that to get a reaction from a particular audience is not a huge surprise. Second, you know, the supply chain issues, particularly with the shutdowns due to COVID and China, are also not a surprise, fully digested by the street. And, you know, understanding how big that is, you know, short term in terms of cash flow issues is not fully understood.

But I think investors really understand that from an order of magnitude. And then you get down to the, you know, the reality of ramping two factories simultaneously with a couple of different battery technologies. And it's a lot to take on for an organization. And so our sense is that investors really expect some growing pains here, but it's not going to be a revisit of the Model 3 ramp where we had major challenges in terms of actual factory design in Fremont. These guys have definitely improved the factory design. They've optimized it. They've done it very efficiently in China. They've fixed a lot of the problems in Fremont.

And we're going to see these factories get up and going as soon as the supply chain issues really start to ease here in the third quarter. Colin, your point about hyperbole from Elon Musk certainly is well taken. We know that he does sort of speak in those ways. Of course, as an analyst, an equity analyst of the stock, you need to pay attention to it. But I am interested in what you have to say here about the commentary seemingly in a way designed to help motivate employees. What do you mean by that? Yeah, for sure, you know, he's used the public realm as an area to help push deadlines. And we've seen Tesla really a, some pretty extraordinary things at the end of quarters. We're here about a week away from the end of the quarter, and I'm sure they're pushing very aggressively to get as many vehicles out to customers as possible before the end of the quarter.

And we think this is an area where, you know, Elon kind of does a lot of push-pull where he encourages folks, but also, you know, has a fairly heavy stick with folks to keep people motivated and focused. And certainly as they go through some of these cuts, I think there's going to be an extra focus here for the next couple of weeks, particularly with the folks on staff. Tim, let's talk about motivation and focus. Here's a guy who has just put billion, or is planning to put billions of dollars into what I'll describe as a vanity play,

and that is his acquisition of Twitter. Has he got sufficient focus on his main business, the main thing that is generating cash for him right now, or does he need some motivation to pay more attention to Tesla? Well, it's interesting. When he was talking about this issue that he's having at these factories, He's talking about how it's going to require an incredible focus to address it. And this is the concern that some investors have is that he is not focused in a period of time when Tesla is trying to get to the next level, become Tesla 3.0, if you will,

with this incredible amount of growth that they're trying to do. And here's an example of the challenges that happen when you ramp up two factories at the same time. For a traditional automaker with hundreds of years of experience, bringing a new factory online is a really hard thing to do. And Tesla has one of the challenges they have is execution. They struggle with execution. They might ultimately get it. The Model 3 might ultimately come out into rave reviews and generate those kind of revenues.

But it's very messy when they do these things. And so here's a time when he's trying to take Tesla into the next round with new battery technology and new factories. And he's also focused on Twitter and some are worried about that. Let's talk about the cars. Actually, you know, can I just take an exception to that comment around execution? I think, you know, they had some startup issues with the Model 3, but since then, this company's had an extraordinary run of executing well ahead of expectations. And that's been several years now. And so I think some of those legacy comments around execution with the organization are entirely misplaced and out of date.

And so I think one of the things that we think about with Elon Musk is he kind of needs a couple of things going to stay, you know, happy and focused. And so having a side project is kind of one of the things that we think actually helps him, you know, not get too involved in the weeds of Tesla and really help that organization let their managers do what they need to do and really drive the execution that needs to happen here. Really? So I think I would disagree with that. I just heard you say, Colin, that that the Twitter acquisition actually makes here. I don't mean to put words in your mouth because I want you to explain it. actually makes Musk a stronger executive and Tesla a better company? With a situation like this where he can get into the weeds and disrupt some of the things with his senior managers by getting overly involved, I do think having a couple of things going helps the organization at the end of the day. Tim?

Well, I would say that the Berlin factory was delayed, the cyber truck is delayed. Those are execution issues. And to Collins' point, Tesla has done better when Elon's been distracted. The China factory surprised a lot of people by being able to come online the way it did. And someone argued it was because Elon couldn't go there as much because it was in China. Well, I'll tell you this, I see in the New York market more and more Teslas than maybe any other single model of automobile right now. I mean, I can't. And I imagine that this Austin factory is going to.

eventually help the waiting list that is six to ten months long for many of the more popular models. I speak from experience, Colin Rush, Tim Higgins. Thanks, gentlemen. Thank you. Yeah, I know a lot of people that are on those waiting lists as well, Tyler. Well, from Tesla to an energy summit in Washington, the energy secretary met today with the leaders of major oil and gas companies. The meeting focused on how to lower gas prices with the national average just below $5 a gallon. President Biden has called Big Oil's profit. profit margins unacceptable. But what, if anything, can be done about that? Let's bring in Bob McNally. He is founder and president of Rapid Ant Energy Group. He's also a former energy advisor to President

George W. Bush obviously know a lot about this area, both from a company perspective as well as sort of all the political angles and strain right now, certainly in focus for a lot of American consumers, that sticker shock, that price that they're paying at the pump, and then the ripple effect they're out. It seems only logical that an administration would have some questions for big oil, but give us some education, Bob. I mean, what really can be done? Are profit margins really unacceptable? Why is big oil always looked at as the bad guy here? You know, those of us in the fraternity and the sorority of former White House energy advisors understand the brutal math of the oil market. And every president we worked for in the last, you know, 20 years has confronted this,

rising gasoline prices. And the truth is there are no short-term solutions. Oil is very insensitive, where we say sticky, to price on the demand and supply side. You just don't turn it on and off on the spigot. So there are no good solutions. And many of the things the president is doing other presidents done before. You want to talk with refiners ahead of refinery season. You always ask the FTC to investigate gouging, but you never find any, but you do it anyway to make it look like you're doing something.

But what's different now is the president has sort of raised things to a new and sort of vitriolic level. They're accusing folks of gouging and so forth. And at a level we don't usually see before. That being said, Courtney, I understand today's meeting was pretty conciliatory, pretty workmanlike. They tried to dial down the tensions. The one thing that emerged, though, that ought to be a concern, I think for anybody thinking about oil prices longer term, is whether the administration is thinking of restricting the export of petroleum products like gasoline and diesel. That would be an authentic mistake.

And I understood that came up in the meeting, and some folks left that thinking that could be really on the table. Let me ask a couple of questions here, because there's all this talk about, as you said, Court, profit margins are not acceptable. I'm not sure whose profit margins the president is talking about. Is he talking about the big refiners, the expiration and production companies? Is he talking about the retailers? What are the profit margins? and how much have they risen here as oil has gone from 50 a barrel to a hundred and two a barrel? You know, he hasn't been clear.

The folks that sell us, the gasoline and diesel at the pump, are small mom-and-pop businesses. They have a franchise who are like their profit margins are tiny. They're making most of their money on the chips and soda, not the gasoline. Now, because we have a refinery shortage problem, because we don't have enough refining, we've been shutting down refining. We do have unusually wide spreads between crude oil and the wholesale price of gasoline and diesel. Those are $50 a barrel. Usually that's $15 a barrel.

That doesn't reflect gouging by refinerers of the oil industry. That reflects the fact that we have enormous pent up demand. We've been destroying and reducing refining capacity. And the input costs for refining, natural gas and other things are quite high. So there are free market, you know, understandable reasons. is why you have these these high margins at the refining sector. So it's the refining, it's the margin at the refineries that have, that has, have widened largely, the difference between what the crude costs and what the then wholesale product is, whether it's gas or diesel or jet fuel. That's

where the change has been. And that is a function of lack of supply, lack of refining supply, right? That plus the loss of Russian exports. Remember, Russia was one of the one of the, the world's largest product exports. They used to export a lot of diesel, distillate fuel, a little bit to us more to Europe. Well, that is in the process of going offline. We don't have the tankers to move it around. Russia's having a harder time redirecting its distilet exports compared to this crude. Let me just ask you directly. Forgive me for interrupting, Bob. Are the refiners, as they deal with this shortage of refining capacity, do you see any evidence that they are, quote, gouging as they raise their prices?

None whatsoever. And you know what? The FTC has been watching this since 1920. It was in my book. Every single year they watch it, they've had investigation at their investigation. No sign of collusion, market power whatsoever. This is just called too much demand, not enough supply. We're going to pay a higher price to produce this product.

Bob, before we let you go, I do want to get your take on the idea of sort of a federal gas tax holiday. most people say this doesn't really do much. It sounds nice, but not only does it not really help the price at the pump, but you're also pulling potential revenue out of the highway trust fund that, by the way, it desperately needs because of the infrastructure state in our country. So can you just give us your sort of understanding of where that stands and whether or not that would ultimately be helpful to solve with the administration is trying to do, which is to relieve pain at the pump for the everyday consumer? Yeah. So miraculously, President Biden has managed to unite. Democrats and Republicans, environmentalists, and oil industry are on the view that lowering the federal gasoline tax is a mistake. There's no real relief for the consumer. To the degree you even help the consumer, you'd just be stoking demand, which is part of our problem. Meanwhile,

you blow a hole in the Highway Trust Fund, which is one of the few spending categories, most Americans agree on roads, roads, bridges, and so forth. So you don't see Democratic leadership behind this. I think it's dead on arrival and it goes nowhere. And in a week, we're not been talking about it. Bob, thank you very much for joining us here today. I think more education needs to be had for a lot of us on how all this works. The spreads, who makes the money, the fragmentation of the gasoline sellers. We all get the intuitive appeal of wiping away, giving a federal tax holiday in front of an election,

given the president's popularity ratings. But it is not only turning out to be perhaps bad policy, but it also looks like bad politics. It does. Because he doesn't even have his own party. backing him in a big way on this. So we shall see what happens here. Bob McConnelly, thank you very much for joining us here today. I wonder if he's from Virginia.

Rapidan is a river down in Virginia. I wonder if Bob works out of there. He'll tell me one way or another. Thank you, Bob. Coming up, beaten down names. To turn into big winners, our next guest has a list of stocks. He says you should buy now and own for the long term.

Plus, from travel to betting to software, The trade on three big calls in today's three-stock lunch. We head to a break. Take a look at travel-related names, Expedia and booking holdings, on pace for their worst week since March 2020. Welcome back to Power Lunch with the NASDAQ is the relative outperformer today. Names like Data Dog Z-Scaler, Lucid, and Autobast. Desk are leading the index higher. Our next guest says some of the most beaten down, well-known tech names could see some of the best risk-adjusted

returns. So let's bring in, Alan Boomer. He's Momentum Advisors, Chief Investment Officer. Okay, Alan, I need to understand some of your thesis here, but at first, I think we need to lay the landscape for where we are from a macro picture. If we are indeed heading into a recession, and you tell me or not whether or not you think that we are, how does tech make sense here? Isn't that usually an area that you want to avoid if we're looking at bare market territory for some time? Absolutely. First of all, thanks for having me. I think when it comes to a bear market. I mean, we're absolutely in a bear market, but it's a matter of understanding what type of bear market are we in because there's a cyclical, there's a structural, and then there's

like an event-driven bear market. Like what we experienced in 2020, that was event-driven. That was pretty rough, but it was over really quickly. A cyclical bear market's kind of like a medium-sized bear, you know, a structural bear market's when a bubble burst. And I don't think a bubble is first thing. I think what we're experiencing today is really a run-of-the-mill, cyclical bear market. These bear markets tend to see about 30 percent downside. So we're probably two-thirds of the way through it. They do tend to last up to about two years, though. So there might be some more pain for a few more months. But I do think, you know, again, it's a matter of thinking about what type of bear market are we dealing with. And I think it's a cyclical one. Okay. So if it's a cyclical

bare market and we're looking at returns potentially to be down around 30% for about two years. What names make sense to you right now? And I guess perhaps what would be the time horizon for that to be a payoff in the form of a return that you find attractive? Got it. So first I'd say like if you listen to most of your your guests, everyone likes energy, everyone likes materials, everyone likes value. And I think that that's correct. I think those those are the markets that really look the most attractive from a valuation perspective. But when I think about going forward, risk-adjusted returns, you know, what sort of volatility am I going to experience relative to the returns I'm going to make? It brings me back to some of these

big tech names. So I really like Amazon. I like Microsoft and I like Google. And I think, when I think about these names, these are stocks that are really beaten down more than the market. But the upside on these stocks, I think, is really, really strong. What is it? Let's take them in order. A lot of people are beating on Amazon. Why do you like it? Yeah, so Amazon's down, you know, what is it down?

Like a big, 30, 40 percent this year. I think Amazon potentially has 60 percent upside from here. All the bad news, or a lot of the bad news is priced in on Amazon already. Like folks have talked about their fuel costs and their labor issues. but they've got a really valuable cloud business. They've got, you know, again, you get the chance to buy, I think, a really great growth stock at a 38 times multiple on next year's earnings. And if you look at Amazon's PE historically, when have you ever had a chance to buy Amazon for less than 40 times earnings?

Hardly ever. And so that's the reason why I think Amazon's going to do very well. Well, let's move on to the next one there, which, well, the next one, tell me about Microsoft then, battling in the cloud with Amazon, as is Google? Absolutely. I mean, all three of these are kind of around this cloud theme. Microsoft in particular already has a really big, valuable, Azure their cloud business. I think they're going to grow that business. I think they're going to grow the installed base of their office 365 products.

And again, a stock's beaten down more than the market, trades it about 24 times next year's earnings. And I think there's at least 50% upside in Microsoft from here on now. Well, go ahead, finish. Yeah, and then just very, very quickly, can you go just a little bit through some of the details of Alphabet Google before we have to wrap up here? Yeah, sure. I think Google, you know, again, they've gotten beaten up this year for a lot of reasons. YouTube, you know, the numbers on YouTube are not as strong as folks would have expected. But the search business is really, really strong.

And I think they've made a lot of smart investments in class. out as well. So Google, again, one of those names that is trading at a really, really good multiple. It's under 20 times. Our view on next year's earnings. And I think Google's going to give you at least 50% upside from here. But with all of these names, I think you've got to be patient. I wouldn't jump in with both feed. I'd say take some nibbles. And these are positions you want to build in your portfolio over time. Amazon, Alphabet, Microsoft, certainly not names that are going away anytime soon. Complex businesses to be sure. Very interesting for you. future's head. We just have to pick your points carefully. Alan Boomer, I've been told I should say,

okay, boomer. Thanks for joining us today. It was inevitable. Thanks for having me. Good for you. Yeah, you got to do it. I'm a boomer. We're all above. We're not all boomers. Up next, pain and grain wheat on pace for its worst month since February 2019, with other commodities following the declines. We will break down the moves next. A lot of grain, plus brick and water. We will highlight one startup that is working to recycle water from large buildings in major cities. Power lunch will be right back. There's been a battle lately on whether or not we have hit peak inflation. One area where the yes camp may have scored a point or two is grain prices as they start to see a reprieve. Let's start with soybeans. Prices there down more than three percent

today and now back to where they were before, the week before, Russia's invasion of Ukraine. I guess those are soybeans right down there, or whatever. Corn prices. I know in ear of corn when I see it, getting hit today and down 13% this month. That is the lowest level since mid-February, a few days before the war began. New government data showing that 70% of the corn crop in the U.S. was in good or excellent condition. That is higher than last year. Worst month since February 2019, wheat lower down 12% in June. First negative month in five, analysts have been increasing production estimates on favorable weather prediction.

The moves lower sending the ag stocks into the red today. That would include companies like CF Industries, Mosaic Agco and Deer. Let's go to Frank Holland now for the CNBC News Update. Hey, good afternoon, Tyler. NBC News is reporting that federal agents have searched the Virginia home of former Trump Justice Department official Jeffrey Clark. The U.S. Attorney's Office in Washington says it can, quote, confirm there was law enforcement activity in that area. However, it declines to comment on specifics. Clark emerged as a key player in Donald Trump's efforts to leverage the powers of the Department of Justice to support his unfounded claims of widespread corruption in the 2020 election.

Trump's pressure campaign on the Justice Department and his plan to have Clark leave the DOJ will be examined in today's January 6th hearing on Capitol Hill. Former officials, including the man Trump wanted to replace as acting attorney general, will testify to the House's special committee. That session scheduled to begin in just about a half an hour from now. And a judge giving final approval to a settlement, topping $1 billion for the victims of the surfside Florida collapse that killed 98 people last June. That decision by a Miami-Dade Circuit judge comes just a day before. for the tragedy's one year anniversary.

That's the very latest. Courtney, back over to you. Gosh, what a tragedy that was. Thank you, Frank. We'll head on Power Lunch. Four potential investment ideas for your portfolio. First famed financial advisor, Susie Orman, betting big on eye bonds. But could inflation throw a wrench in that game plan?

Plus, our three stock lunch laying out the big calls of the day. And our trader will tell you whether to buy or sell. We'll be right back. All right, welcome back, everybody. We've got about 90 minutes left in the trading. get you caught up on the market, stocks, bonds, commodities, and more, and get Susie Orman's advice for investing in inflationary times like these. Let's begin with stocks today and Domchew. Hi, Dom.

All right, so, Tyler, the trading action has been relatively less volatile, least compared to what we've seen over the last few weeks. Right now, the major indices are just fractionally higher-ish. The Dow's about flat to give you an idea of where we had been trading earlier in the session. The highs of the day, we were up 230-some points in the Dow. The low is down one-nine. 90 for that NASDAQ and positive, the high was 169 points while the low was down 7. So we're kind of in tilting towards the higher end of that range of the NASDAQ.

Now, what may be a little less positive is where the leadership is in the markets right now. It's the defensive sectors, the less economically sensitive ones, utilities, health care, consumer staples, the ones that could outperform even if America is headed towards a hypothetical recession. Meanwhile, no surprise that economically sensitive or cyclical sectors like financials, materials, and energy, the real laggers, energy by far, by the way, the worst performer in the S&P by a wide margin. As for the stocks in the news, KB Home, a big after the home builder reported better than expected quarterly results, and a couple of analysts calls of note here, but one in particular, WeWork also up big, helped along by analysts at Credit Suisse, initiating coverage of the office sharing company with an outperform rating and an $11 price target and tie.

That's double, more than double, what it closed at yesterday back over to you. Wow, all right, Dom, thank you very much. Let's move on now to the bond market where the 10-year yield has been falling sharply to just above 3%. It was upwards of 3.5% just a week ago, Rick Santelli. Yeah, no, not about it. It was literally within one-tenth of a basis point of 3.5%. Two-year notes were very close to 3.45, or 3.45. So, yes, everything has come down dramatically. So whether you look at a three-day chart of two-year note yields, underscoring with Tyler's discussing,

or you go to the farthest end of the curve, 30-year bonds, same look. And if you think about what's going on with regard to high yield, it was the big talk a week ago, how nasty it was looking. Wow, look at this chart. We've gone basically from a two-year low in the H-Y-G ETF. Well, it's bottomed out. Now, it hasn't bounced, but it has bottomed. That's how much pressure there is in the treasuries and flight to safety going out.

Look at these fed funds. Here's three days. The price moving up, right along with the price of treasuries. And, of course, when the price of treasuries goes up, the yields go down. And finally, the three-month versus tenure. This is the real recession yield curve trade. It's gone from the steepest in seven years to the flattest in three-and-half months. Unbelievable.

Tyler, back to you. All right, Rick, thank you very much. And that is a bit of an alarming signal. Let's take a look at oil closing for the day, lower once again. $104 a barrel. It had been as low as 102, the lowest level in more than a month. There you see it down about 1 and 3 quarter percent. We also want to take a look at natural gas prices. Just above six today, down 16 percent in a week and 30 percent in a month. So there you see supply and demand at work. All right, with inflation at the historic highs in the stock market choppy. Our next guest says the number one investment right now is iBonds. Here to explain is a personal finance power player and our dear friend, Susie Orman, host of the Women and Money podcast. She is also co-founder of the emergency savings firm, Secure Save.

Susie, it is always great to see you. Welcome. Good to have you back with us. Let's talk about these I bonds, which I didn't even know about, but my nephew-in-law said, you've got to get these eye bonds. Explain to me what they are, how they work, how I buy them, and from whom? Now, so you buy them from the Treasury directly from them. So you go to TreasuryDirect.gov.

It is the only place that you can buy them, number one. They range in price from you can invest $25 all the way up to a maximum per person of $10,000, although there are ways to do it where you can put in up to $30,000 if you have a trust and or a business. When you invest in an I bond, I stands for inflation, you have got to make sure that for one year you do not need your money. And the reason is from the time you put it in to one year, you cannot touch it. From year two to five, there is only a three month interest penalty. That is how they work. They are attached to CPI. So right now, when they announced in

May. The CPI, the yield on the series I bonds were 9.62% guaranteed. That's annualized. That's guaranteed to you. So they change every six months. The interest rate changes every May and November. So from May to November, everybody who buys one right now will be guaranteed in annualized yield of 9.62% state income tax free. Now, obviously, you're only going to get that for six months, but that's still 4.81% on your money. When they reset come November, let's say they reset even lower. Let's say they reset at 7.11, which is what they were paying before they raised to 9.62. You're guaranteed that for the next six months on an annualized yield. So that's like 3.56% half of that for six months because that's what you're guaranteed.

So for the year, you would be getting 8.37%. That's essentially how they work. They're fabulous. Their maturities are for, yeah, go on. No, no, please. I don't mean to interrupt you, but I wanted to ask you, are you, those numbers that you just cited, and I get it. You explained it perfectly. They reset every six months.

Are you guaranteed under this program to make. a yield if you hold the bonds that is above the then prevailing rate of inflation? So what happens is you are absolutely guaranteed. And what's so great is that the only way of finance person can ever use the word guaranteed is usually with a treasury instrument because it's guaranteed by the authority of the United States government. No commissions or anything. So once they declare that rate on May 1st and November 1st, you are guaranteed for whenever you buy it between those periods. For six months, you are guaranteed the right rate that they declared. Again, remember, that's an annualized yield.

So it's only really guaranteed for six months until they reset. You know, Tyler, I gave a masterclass on this on the Women and Money podcast on the April 17th. addition of it. Everybody should listen to it because it tells you all the ins and outs, everything you need to know. And this is an investment. I've been doing these since 2001. So, Susie, this does make an awful lot of sense. You'd explained it very well, certainly, in your first answer. And talking about the 9.6% rate is very, we understand that that does clear the level of inflation. But if inflation is something like 8.6%, aren't you more or less, just sort of protecting the value of your money rather than really growing it if inflation is only

about a percent less than what you're making? Courtney, you got that right. But don't you want in markets like this to have a percentage of your money absolutely protected? Where are you going to go? You can't go to regular bonds because bonds, if you had done been in bond funds for growth and protect. You're down 10 or 15%. You're down significantly in the stock market. There is, has got to be a portion of your money, whatever that is, that you want protected. You want essentially in cash, at least where it's keeping up with inflation, which is exactly what this will do versus you're in a money market account or a CD or whatever it is. And you're getting 3% where you're losing money. So this is a great place to put.

put your safe money. The bonds mature at what, after five years, you mentioned between years two and five. What is the, you just keep rolling the money or what happens? No, so what happens is the bond is good for 30 years. I see. And what you, and you can redeem them any time after the first year. From the year two through five, there is a three month interest penalty. After the fifth year, you can redeem any amount you want without any penalties whatsoever. But really essentially, all right, so you're in there for a year. So final. And you redeem after that big deal.

Final question, which really Courtney touched on, and that is that this is for a portion of your money, ideally money you don't need to touch, in some ways like stocks, but you acknowledge that there is, with this kind of safety money, an opportunity, cost, which is to say it's not going to be your growth money. The stock market might return you over the five years or the 10 years you hold this bond much more than 8%, 9% a little above inflation, right? I mean, your growth money is a different thing. Absolutely. You have growth money. You have emergency savings account money that would never go into something like this because you can't even afford to lock that up for a year. But you do have a portion of your money that

You want right now safe and sound because everybody's so free. Right. And at these interest rates, if inflation continues, these are a big winner. What's that podcast date again, Susie? Go back and look at it. April 17th. Yep, the Women and Money podcast, masterclass on it. And I guarantee you you'll all end up buying them.

We give a master class in broadcasting here every day at 2 o'clock. Susie just gave us a masterclass. Suzy, good to see you, my friend. Cheers. Thanks, you guys. Take care. Well, still to come, one startup looking to help buildings and cities better recycle water. Clean start is next.

When you think about all the things that we waste, water is close to the top of the list. This, despite more severe drought in the U.S. and around the world due to climate change. So how do we stop wasting so much water? Senior climate correspondent, Diana Oleg, joins us now with her continuing series on Clean Startups. Diana? Well, Courtney, the bulk of water recycling now happens at centralized wastewater treatment plants, requiring thousands of miles of pipeline to move the water. Not exactly efficient nor cheap,

but what if buildings could now do their own water recycling on site? We live in a flush and forget society where we never think about what happens after we flush the toilet and we turn on the top. But not at San Francisco's new 1550 mission where used water is made clean again, over and over again. Seven-year-old startup epic Clean Tech's water reuse system removes solids from wastewater and turns them into soil.

All the pathogens are destroyed, the odor is destroyed, and we're left with this amazing dry product. It then treats the water using proprietary technologies and sends it back up into the building for things like toilet flushing, irrigation, cooling towers, or laundry. Epic claims to reduce a building's water usage by up to 95%. We're going to be saving folks on their water and their sewer rates, and we typically aim to give buildings a return on their investment of under seven years. Epic is based in San Francisco, where local law requires every new building over 100,000 square feet to have a water recycling system. There are similar requirements in Los Angeles and new programs cropping up in Denver, Austin, and New York City. Precisely why

related, a major national real estate developer and landlord is using Epic. Water conservation being such a critical issue, it's actually a really great value add to our design proposition. and something that residents look for for our buildings to be sustainable. Epic Clean Tech is backed by J Ventures, J. Impact, Echo River Capital, and LLNP, Inc. Total funding to date, just over $13 million. Residential water and sewer rates in the U.S. have outpaced inflation by nearly 300% over the last two decades, while growing urban populations are straining the aging municipal water infrastructure. This, as much of the West, is now in a drought.

emergency. Back to you guys. All right, Diana, thank you very much. Unique as a Snowflake, J.P. Morgan bullish on the cloud name, saying CIOs at the major tech firm are very excited about the company's products. We will trade that name in three stock lunch. That one plus those two of them. Welcome back. Time now for our three stock launch on today's menu, three names moving on some bold analyst calls, Snowflake surging on an upgrade to overweight at J.P. Morgan.

Sets higher after Morgan Stanley said it sees shares more than doubling from current levels. And Airbnb lower after Morgan Stanley lowered its target by more than 31% to 100 bucks a share. So here to help us trade them all. CNBC contributor, Boris Schlossberg, he's managing director of FX Strategy at BK asset management. So kick us off, Boris. Let's start with Snowflake. Yeah. My favorite stock of the opinion we have here right now.

The reason why, obviously, it's just a very, very strong, compelling story in technology. And the thing about technology is that the product here is so strong. It has tremendous demand here from both, you know, the small mom and pop shops to all the way to Fortune 10 companies. And as you already mentioned, CIOs now think that this is going to be one of the biggest buys for them in the next couple of years. So the company has no earnings, no real metrics at this point. You're really buying it for growth. but given the fact that it's projected to triple its revenues in the next two years, I think it's a really interesting trade.

And more importantly, in this kind of a market where we are really subject to a lot of macro headwinds, this is a very idiosyncratic story that's away from the headwinds. Boris, let's move on to draft kings, which if you watch sports television, you see them spending furiously to attract customers via advertising. They have spent a lot of money on that. that. This is a crowded space. Do you like it or not? That's the problem. It's a great business. There's no doubt that sports betting and even their own brand at Daily Fantasy Sports, which is a very, very compelling, sort of engaging idea where you get to be a sports manager and pitch your, you know,

pitch your wits against everybody else in the crowd. It's a great business model, but the amount of money you need to just attract customers is incredibly expensive. It's a question of whether they can really sustain and out of the capital burn. My trade on this is to stay away from the stock, but perhaps, you know, sell the 12-50 November calls. You'll be able to buy the stock at 10 at that point. And I think that's a very good fair value at this level. If the stock doesn't do anything, you know, you collect the premium if it runs away. I'm sorry, sell the puts, not sell the cost. Sell the 1250 puts to get yourself into a much better position on the stock. Okay. Interesting play there. And then the final name, Boris, would be AirBee.

What do you make of the moves that we should be looking at here? This is really interesting because I think ultimately Airbnb is a great long-term name, but obviously it sort of hit peak travel at this point. The company is really facing two crunch issues. One is increase in transportation costs, which is really hampering travel demands going forward and higher interest rates because obviously it's a high growth stock with very little earnings power behind that it has some debt on it. So all of that is really compressing its valuation. So I had an interesting idea on Airbnb. I like it, but to play it in a very different way. Usually when somebody looks at leaps, they're looking to establish a position in the stock

on a long-term basis by buying the leaps. But because the stock is so volatile, it's a long-term option, its long-term calls all the way to January 2024. 105 is a trading at 25. That effectively gives you a 36% yield if the stock simply does nothing and expect. fires in 2024. In the meantime, you get paid to wait. Okay. So I would, go ahead. Yeah, sorry, I would just simply sell the leaps against that position instead of buying them. That'll be my idea for this. Okay. All right. Well, Boris Lashberg,

thank you very much for giving us three ideas on our three stock lunch. Interesting ways to play. All right. Up next, what the bond market is saying about peak inflation. That one's next. We'll be right back. Inflation over 8% is not sustainable. So we know peak inflation is coming. We just don't know if it's here yet. So Dominic Chu is looking at the signs. So is it here yet, Don't know.

And no one's going to make that call. No one's gutsy enough. Certainly not a central banker. But we do know the cycle high right now in the 10-year treasury note yield was right here. And it was just around 3.48%. So we've come down markedly from there. Now we're at 3.07. So again, 40-some basis points of the decline, which means people have been buying up government bonds. You don't really do that if you're scared of inflation. Now, check out some of the other places. Commodity prices like copper on a month-a-date basis down 13%. They used to call it Dr. Copper for a reason, right? It could predict economic cycles. Of course, we know what's happening with crude oil prices. They've been on the decline as well. And that if you take a look at some of the market predictors, the bond market right now is showing on a 10-year basis, inflation expectations, 2.5.

0.45% we're drifting lower on the 10-year break-evens. It could be a sign, guys. Hey, lower. Anything relating to inflation feels good right now, Don. Thank you. Tom, thank you very much. Great to be with you, Cords. Thanks for having me. Thanks for watching.