Power Lunch - The Fed Minutes, a Power Rundown and 3-Stock Lunch 8/16/22

Episode Date: August 17, 2022

The Fed releases the minutes of its last meeting. We have market reaction, analysis and any hints about the size of future rate cuts. Plus, Musk’s joke, Bed Bath & Beyond’s surge and Wall Street gets even more bullish on Apple. And, the trade on three stocks that reclaimed their long-term positive trend. 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, we call it breaking Fed News. The minutes of the last meeting, the one where they raised interest rates by 75 basis points, three quarters of a percent. Those minutes are due out momentarily. And of course, investors will be looking at what is going on about the clues, about the size of future interest rate hikes. Ahead of the minutes, stocks are lower across the board, as you see there, 163 points. Let's go now to Steve Leesman, who has those minutes. The Federal Reserve, after hiking 75 basis points in the July meeting, decided that they would anticipate further rate hikes ahead. They said they needed to move to a restrictive policy that was required for them to meet their policy goals of low unemployment and stable inflation. The pace of future rate hikes over was data dependent, and it was a little tricky to read these minutes and get a read on a 50 or 70 or 7. 75 from the September minutes, and I'll explain why here in a second.

They said it would like to be appropriate to slow the pace of tightening at some point, no indication when that would actually happen. But after the 75 basis point hike, the funds rate was seen by several participants in the range of the long-run range of its neutral rate, but some participants thought because inflation remains high, it was still below the shorter run, neutrary rate, meaning the Fed had more work to do in that regard. Some expected the Fed to hike and maintain the level for. some time. We haven't seen that language before, although several Fed officials did sort of talk about

that idea that it was lucky the Fed would reach a certain level and stay at that level rather than cutting, which is what the market has priced in now. There was also quite a bit of concern about tightening too much. In fact, many were concerned about that, so that's important. But overall, there were a lot of hawkish talk about inflation. Inflation was seen as unacceptably high and broad base. And this is interesting. The declining commodity prices was not seen as enough for the Fed to be comfortable that inflation was coming down. They said it was broad-based, and they said, commodity prices can go up, they can go down.

They want to see broader base declines in inflation to be comfortable with that. There was little evidence they said of inflation pressures that were subsiding, and they said inflation could say, it could be high for some time. And just a real quick thing on the economic outlook. They did say the second quarter saw a noticeable slowing,

but they did see growth in the second half of this year. Tyler? All right, Steve, hang around for just a little bit, and we'll talk the conversation a little bit farther with Aditya Bave, senior U.S. economist at Bank of America. Aditya, welcome. Good to have you with us. You heard Steve's recap of what the Fed said they discussed at their most recent meeting and in light of what they did. How do you interpret the language there?

Thanks for having me. Yeah, I think the language is consistent with our base case for a 50 basis point rate hike. One thing to note is that the minutes are a touch stale. because after the minutes we've gotten, you know, the very strong jobs report, the very strong retail sales report this morning, and the soft of an expected July CPI inflation print. So if the Fed looks at that, you can say, okay, well, inflation slowed down just a touch, not just on the headline, but also in terms of the core. And we are seeing the housing and CAPEX data suggests that the interest rate sensitive parts of the economy

are being affected by Fed Hikes. So they really do want to be data dependent going forward. Then I think there is a pretty good case to slow down just a little bit. So if they're true to their word and going to be data dependent, the data, Steve, says Aditya, tells him, at least, that they may not do another three-quarter point that they might come back to a half point. We just heard from Diana Oleg, who used the word housing is in recession. The Fed acknowledged that quite a bit, the housing being in recession. the Fed did not say that. Sorry, the Fed talked about the housing slowdown.

And also, Tyler, they brought up this idea, which I thought was interesting, that because of the Fed's communications, which, as you know, is quite extensive, that the market, the economy may be responding more rapidly to these rate increases than it has in the past. Just take a step back from this, Tyler. You know, next week we're going to be in Jacksonville. We're talking to a lot of Fed officials. I'm kind of realizing reading these minutes. I have my work cut out for me.

There are some differences of opinion on this committee that maybe I wasn't quite as aware of until I read these notes. There is definitely a hawkish wing and a doveish wing that has emerged. And I think that may have come out after the 75 basis point hike, that now there's a real, maybe a more intense debate on the Federal Reserve about where they go from here. With many saying that there's a concern about tightening too much, I'm not sure how well that may have been appreciated. And some are at this maintain, reach a higher level and stay there for a while. There are some differences out there. We have to do some more reporting on this. And thankfully, we're going to get a big chunk of that next week at a Jackson Hole.

Who would you say has the balance of power? And what does the Fed Chair represent in terms of those wings, Steve? You know, I think the Fed Chair is more likely to be a little more hawkish here. He wants to stamp out inflation and not have it be part of his record as being Fed Chair of a long and lasting inflation. And one that he's, for example, moved to combat and then took his eye off the ball and have it come back. My best guess is that's the way Powell feels about it. I will say this. Following Jim Bullard has been an interesting exercise where he says things that feel like they're extreme,

then they end up being the center of the committee. In other words, people scoffed at the idea of 75 basis points when he first said it. Well, guess what? They've done it twice now. Absolutely. Aditya, what would you add to that? Where do you think the kind of center of gravity is and where do you think it's going? Yeah, I think the doves, the hawks, sorry, still carry the day. I did say we expect 50 in September, but that doesn't mean we necessarily expect a lower terminal rate.

If anything, the risks from potential soft landing with better consumer spending data are that the terminal rate goes higher because the chain of reasoning for me here is lower inflation on the one hand means less urgency to hike in the near term. But on the other hand, it means that consumer spending and the broader economy holds up a little bit better, which means there's less conflict between the Fed's two mandates, and so they can keep hiking. So the risks are that we could potentially see a terminal rate of 4%, maybe even higher. I want to follow up on one thought. I'll get back to you in just a sec, Steve, if I might. But Aditya, I'd like you to explain the thesis that I'm reading here.

Our base case is still for a recession to start in the coming months, but the risks now are skewed toward a delay or a soft landing in the near. term. So if you get a softer landing where the inflation comes down, the economy slows a bit, and we're just kind of there hovering, what is it, what changes at what point that takes the economy then into a downturn? So basically the reasoning there would be that at some point, unless demand slows down meaningfully, the job market keeps chugging along and you get another bout of inflation, but this time hits demand driven. So the supply shocks that we saw during the pandemic, those potentially fade over the next several months. But the baton of inflation gets passed

over to demand. And that could in a soft landing scenario, which is not quite our base case yet, but that could push the Fed to do more next year. By the way, if you're wondering why we haven't said much about the market reaction here, it's because there hasn't been much of one. You know, stocks are kind of where they were beforehand, Steve, as Rick makes the point, Maybe yields have now put in their highs with these tilting, a little bit more dovish, you could say, than expected. And, you know, some action in gold, slightly pairing losses. Fed funds futures, I know yours are a little bit different.

Maybe the odds of 50 looks a little bit higher now versus something stronger. That's right. Yeah, so here's the deal, Kelly. I went into these minutes thinking, okay, does the market, was the market justified in hearing a pivot, hearing a softer Fed out of the last meeting. And I actually thought these minutes would be a little bit more hawkish. What I see in these minutes is there is a path both to a lower funds rate than the one that was mentioned before, a 4% one.

And there is a path towards a softer landing that is envisioned by some Fed officials. And Kelly, when you ask the question, where's the center of the Fed? I say, yes, I'm not really sure where that is right now. And I need to understand that. But you can read these. minutes and come off with that more doveish outlook. And you can read these minutes and you can walk away really scared about what the Fed's going to do. Yeah. And yet the market kind of taking it in stride DE, would you say? Yes, I think so. I think the bigger news of the day was the very strong retail sales

report. Really there, the surprise was the upward revision to May. It was very, very large, which moves the levels for June and July of retail sales up quite considerably. And, And that suggests that the consumer's holding up just fine. And again, that means, you know, maybe less urgency to hike now with lower inflation, but risks of more later. And that's the way the markets have responded. All right. There's the 10-year 289.

So close to where we were beforehand, maybe 2.91. So we've come down somewhat. We'll leave it there for now. Steve, thank you, as always bringing that to us. Our Steve Leesman with the minutes and analysis and Aditya Bave as well from B of A. Our next guest says she is betting on the consumer when it comes to essentials, experiences. Metaverse gaming, how to pay for it all. Joining us is Anne Barry, Threadneedle Ventures founder.

So, Anne, listen, this kind of takes the retail sales report and runs with it in the sense that you don't think the consumer is out of steam here, do you? I don't think it is in segments, Kelly, and experience as being the main one. You know, one of the areas I've been very focused on has been travel, and the other one I've been very focused on is in things like live music, where I've made some private investments and you're seeing a rally in places like Live Nation. So I think where the consumer still hasn't scratched the itch that has been building through COVID, they are still spending.

But I am more dovish when it comes to the consumer spending on stuff and spending it, particularly in D2C distribution channels, which are continuing to get pummeled in the public market. So this is still a rotation for you. And we've talked about how you're bullish on the music industry, for instance. Where else? Kind of walk us through soup to nuts, if you will, where you would be betting on the consumer?

Well, right now, I'm still bullish on PayPal. I know that there was the upgrade that came through from Diway yesterday, but I'm excited about that one because I think PayPal is massively undervalued relative to other fintech businesses, particularly in the private space. And it has the balance sheet to go out and start doing some really aggressive M&A on the B2B space, but also really building on some of the peer-to-peer developments and buy-now pay later developments as well. So that's one, Kelly, that's very specific to a more mature company that's a more mature company

that's got still growth ahead of it. The other place on the other end of that spectrum is Roblox, and you sort of teed that up at the beginning when you talked about the metaverse. Roblox is absolutely fascinating to me, and I went into that too early and lost money, actually, in the process of doing so. But this is one where it's got coming up to now

60 million daily average users, just under 50% of those are under the age of 13. This really has been the social media and gaming platform of choice for the next generation of consumer. And I think there are ways that this business can monetize that unique insight that is not doing right now. And I think this one is right for either an activist to come in and start shaking things up, or it could be an acquisition target down the line.

Not sure I'd go into it right now, but in watching it very closely. Wow. What about in areas that you'd be staying away from? I mean, these are all kind of pointing in the direction of services, experiences, virtual experiences. And is that pretty much the only place that you'd want to wager on? Well, I think there are certain areas I stay away from Kelly. And it's a little bit less about the macro for those. It's a lot more about what are these companies actually saying they're going to do to execute

in a market that is deeply uncertain. And if you look at what the chatter has been in the market and the run up to the Fed Minutes, it's become a lot less around whether there's going to be a 50 basis point hike or a 75 basis point hike. It's been a lot less about this sort of mystery of whether there's a recession or not, where the market has either rewarded or actually. absolutely punished individual stocks. It's been where the management teams have had or not had clear path to cut costs, clear growth avenues that are well articulated to the street, and

where there is real confidence that there is a way to navigate what may or may not be a recession or at least a slowdown. So I think there are companies out there who do not yet have well articulated plans, though the ones I'm staying away from. Snap was an example. Netflix got punished. We saw a bit of a rebound, so it's managed to pull it back. But again, where there's no articulation, no plan. I think I'm staying away there because this isn't the right environment for that to be the case. Talk to me a little bit about Walmart. Tyler, this is one you and I've talked about in the past. And the reason that I've liked Walmart is really threefold. One is if you look back at recessionary consumer behavior, a lot of

consumers have tended to gravitate towards two areas of retail. One is towards the value end, the low price, but decent value, where we've seen the Walmart. and the targets tend to thrive, or the dollar stores, if you want the real value end, and then luxury tended to do well. We saw that in 2008. We saw that prior. Anything in the middle tended to get squeezed. And so I like that Walmart is well positioned in this particular economic environment.

The second piece that I like about Walmart is they are sitting on enormous amounts of data because over 100 million Americans per week are passing through the doors of the digital reach of Walmart. There is data there to inform product development, advertising strategies that is, just really beginning to be tapped. I think that's an exciting growth avenue. And the third is Walmart has shown it is not afraid to make bets.

It's not afraid to have relationships with Paramount for its key plus subscribers. It's not afraid to start moving into FinTech. It's not a great afraid to start making big moves into last mile, same day delivery. So I think Walmart is showing more and more. It's got courage. It's got good capital allocation decision making

and it's got scale that no one else can touch. You make a very strong case for the behemoth there. Anne Barry, thanks very much. We appreciate it. Good to see you again. Thanks, Tyler. You bet. Coming up, Apple, up one 30% since the June lows, and it is less than 5% from its yearly high right now. Major Wall Street firm says the stock could go even higher. We will break it down in today's power rundown. Plus, three stocks regaining their long-term trend that analysts say could rally some more.

We will trade the following. T-Mobile, Thermo Fisher, and Helmut Aerospace in today's three-stock lunch. you're going to get a lot of lunch here today. Before the break, look at Progressive and Northrop Grumman. Two names hitting 52 week highs. Yes, highs. In today's session, Power Lunch returns in a moment. Welcome back to Power Lunch, everybody. Overall retail sales flat last month,

but when you take out gas and autos, sales increased 0.7% from June, showing that spending remained sort of steady. But the shift in spending has been tough for companies to navigate. Target today said its profit plunged, does it cut prices to clear out a glut of excess inventory. So which companies are best positioned in this high inflationary environment? Steve Sadov is a former chairman and CEO of Saks.

He's currently a senior advisor to MasterCard. Steve, it is always good to see you. I don't know whether you just heard Ann Barry talking about Walmart and why she likes it. She basically looked at the consumer market as bifurcated. low-end stores or bargain discount stores represented by the likes of Walmart or at the extreme end, the dollar stores, and then luxury. And she thinks there's room for both of them to succeed in the current environment and that the vulnerable stores are the ones that are kind of in the middle and are neither fish nor foul. Agree, disagree. I agree, Tyler, and it's good speaking with you.

I think that Anne was right that the middle is a tough place to be, but it's not quite as simple as that. because there are some parts of the middle that actually can do well. But the high end and the value end are going to play well in this market. The overall consumer is pretty healthy. If you look at those retail numbers today, if you look at on a year-on-year basis, we're seeing 10% 11% growth. So the consumer's still spending. They're spending differently. And I think that's the important part here, which is that they changed their behavior during the pandemic. Everybody got caught flat-footed. You saw it in the Walmart Target inventory numbers. They wrote it down. They took the hit. And now you're going to come into the fall season a little

cleaner. And people ordering fresh goods for holiday season in a better place than they were in the spring season. So let's explore what you just said a little bit. Forgive me for interrupting. No, go ahead. Consumers are still spending and they are spending differently. I'd like you to elaborate on how they are spending differently and on what kinds of items. That's number one. And then question Number two is where are they getting the money to do this spending? Two years ago, last year, we know that some of it came from a COVID-related cash that hit people's pockets. Where's it coming from today? So first, how are they spending differently? And second, where's the money coming from? Well, they're spending differently because if you looked at it during the pandemic,

they were spending on their homes. They were spending on at leisure, if they were buying apparel. It was everyone was on Zoom, just like this. In a post-pandemic world, the consumer is getting out, the experiences. Anne talked about experiences. They want to spend on that. They're also spending on fashion. Apparel is not all like. Apparel actually grew 17% last month.

So apparel's holding up well, but they want newness, freshness. Brands that are fashion-oriented and selling the newness. Everyone wants to go to a wedding, to go out to entertainment. That's what's selling. So the stuff that's sold before didn't sell. The grills aren't selling. But what they are selling is things that they want to do today. So you've got to change what you're buying.

So overall, I see a behavior in terms of apparel as newness, sexy apparel, as an example, is doing well. Grocery is doing terrifically well. A lot of it being driven by inflation. Yeah. I'm going to say, isn't that driven by inflation? Right. Yeah, most of it's inflation. Yeah.

The luxury jewelry is doing well. Department stores have held up very well during this. environment. But things like home improvement. You saw it in some of the numbers this morning. Home improvement has slowed. People are still on their homes, but they're not buying as many televisions. How many televisions do you need to buy? So those are the things that aren't doing as well. Even in luxury, it's more the experiences than it is some of the products. All right. We got we got to leave it there. Kelly, are you getting out much? I know I'm not, I haven't got an injured ankle. I'm not doing a lot of sexy fashion. Neither of us, Steve, are getting out very

much. But, I think the important thing that we have to focus on is inventory. You saw the Walmart target writing off the inventory. It's really about what kind of fresh inventory are you going to have as you go into the holidays. Everybody's going to cut back. They're going to try to get their inventories in line. It's important that you have that fashion, the freshness, if it's in the apparel space

or it's the newness and other categories, you've got to have that for the holidays. I think you're going to have a healthy holiday season. You asked about where the consumer money's coming from. You still have several trillion dollars of incremental savings from where you had pre-pendemic. So the dollars are there. The high-end consumer still feels good. The lower-end consumer is under a lot of pressure, the bottom quintile. But overall, I think you still have some very healthy spending going on,

especially since gas prices are coming down and people are feeling a little bit better about that. I got a lot of friends and family going to weddings, traveling. People are getting out. The travel expenditures? Yep. Steve, it's always great to see you make me want to go out and shop. Thank you, man. Stocks are off their post-fed minute lows, or I should say they're off their lows post-fed minutes.

Here's a quick look at the markets. The Dow's only down 83 points right now or a quarter percent. Remember, we were down more than 300 points at the lows earlier on. The NASDAQ is trimming its loss to less than 1%. The semi-stocks are now up 10 percent over the past month. The group benefiting from the Chips Act, yet multiple names still issuing some warnings this. earning season. The CEO of Arm Holdings weighs in on that shortly. And today's three-stock lunch is still ahead of us. Names that have not only climbed back from bare market lows, but still have

more room to grow. There's a preview. A sneak peek. We'll be right back. Welcome back, everybody. Technology names remain in the red. Fintech, the biggest laggard, led lower by a firm and blocked today. Teledoc also down big. In fact, it's on pace for its worst week in three, so we're still seeing some pretty big declines here as we keep an eye on stocks across the board. Moving off their session lows, let's get to Dom Chu for a CNBC news update. Dom. All right, so Kelly, good afternoon. Here is your CNBC news update at this hour.

A small museum near New York City's World Trade Center dedicated to preserving the memory of the September 11th attacks is closing after being the victim of financial pressures made worse by the COVID-19 pandemic. The 9-11 Tribute Museum, which opened in 2006, offered tours led by volunteers who had lost a family member or were connected in some other way to those terrorist attacks. Most of the museum's collection of artifacts is being moved to the New York State Museum in Albany. The museum is not to be confused with the official 9-11 museum over at Ground Zero. Monkeypox continuing to spread across the globe with cases jumping by 20% over the last week,

according to the World Health Organization, infectious infections increased by nearly 7,500 to more than 35,000 cases total across 92 different countries. And Pope Francis got an unexpected visitor at his most recent weekly audience. During the ceremony, a young boy emerged from the crowd and ran towards the Pope. Francis did not seem to mind the company, though, as the child stood by his side for the rest of that audience. It's a pretty big move there. Very strong move by a child, Tyler. Wow, that is something I'm surprised that the Pope's security didn't jump in there.

But anyhow, tackle the kid. Obviously he was welcome at the Pope's side. Thank you, Dom, Dom Choo. All right, now I want you to listen to the pure cleverness in this. Ahead on Power Lunch, Man You, Musk be joking. Man You must be joking. Elon Musk creating a stir on Twitter after joking that he wants to buy Manchester United,

otherwise known as Manu. we will discuss the controversial CEO, along with some other key tech stories in our power rundown next. Man, you must be joking. Let's think about it. Good. Welcome back, everybody. We've got those Fed minutes out. The market's had some time to digest them.

We've got 90 minutes left in the trading session. So let's get caught up across stocks, bonds, commodities, and we've got an extended power rundown to go through with you. But we'll start with Bob Bassani as we take a look at the market moving well off its lows after those minutes, Bob. Yeah, and normally, Kelly, the minutes are a bit of a snooze in terms of the move on the markets. But look here. We move 15, 16, 17 points on the S&P 500. Yields move down. That doesn't normally happen.

A lot of traders messaged me some lines that they all wanted to see in here, and maybe they got a little more opium in. And here's what some of the highlights in the Fed minutes. Many concerned, and talking about Fed officials, about tightening too much. Oh, the Bulls love hearing that. and also likely appropriate to slow the tightening pace at some point. So those are opium. That is, oh, see, they're actually going to slow down further in the year, and that supports this whole idea of eventually the possibility of a Fed Pivot in 2023.

There's the S&P 5 motor moving up here. In terms of what's moving throughout today, you know, retail's doing well, sectors that have gotten big moves up, they're down a little bit today. So Arc Innovations had a tremendous run. The transports have been on fire for the last three weeks or so. And even the small cap Russell 2000 has been on fire. These are the sectors down the most. So a little bit of understandable profit taking here.

In terms of retail, some of the retailers are down. But again, not as bad as feared in some of the big retail names. We had Target out reaffirming its previously reduced full year forecasts. Even though the Q2 numbers were disappointing, lows optimistic for improving do-it-yourself trends, full-year earnings at the high end of expectations. And look at TJX. That's doing really well today. One of the biggest gainers on the S&P. The fourth quarter estimates, 94 cents, the company said, and that's right in line with the expectations. Bottom line, Kelly is, all right, not on fire, but certainly nobody's falling apart.

Remember, these stocks have had very good runs recently. Kelly, back to you. And look at that. Dow's only down 30 points right now. We could go positive. Bob Banks. Let's get to the bond market where yields are also putting in, I guess, you know, if stocks are putting in lows, Rick, the flip side is yields look like they're putting in some highs. Yeah, yeah, we definitely, there's been a lot of things cross-current trading going on in treasuries, but let's keep it simple. If you look at an intraday of 20-year bonds, you'll see at one Eastern rates pop, a very messy auction on 20-year bonds. But as you look at an intro of two-year no yields, look what happened at the top of the two. When the minutes were released, it was less than a minute for all the buying came in pushing yields back down.

And I think it makes perfect sense, because the market has been more. more right than wrong over the last couple of months. The market sensed the slowing that the Fed underscored in a minutes to the last meeting. And yields are moving down. As a matter of fact, as you look at that two-year note chart, yields are moving down. They're moving down faster than the long end. So we're actually seeing bull steepening. And that's always important.

Price going up, yields going down, yield curve steepening. That's actually a good thing. If you want a yield curve to do anything at this point in the cycle, you want it to be steepening in bull terms as price. prices go up. Finally, overseas really set the stage more than anything today. Look at the boon chart. They close at a one month high yield today, just shy of 110. And look at the guilt in the UK as their inflation top 10%. They closed guilds at a two and a half month high, just shy of 2.3%. That is going to have a huge influence, ongoing influence in U.S. markets. Kelly, back to you.

All right, Rick, thank you very much, Rick Santelli. turn to oil now, which has been selling off sharply for weeks, if not months. Pippa Stevens has the latest for us. Pippa. Hey, Kelly, and actually oil is in the green today on the back of a better than expected inventory report. Stockpiles fell by 7.1 million barrels last week, which was much larger than analysts were expecting. Gasoline inventory also dropped by 4.6 million barrels, and this is giving oil a boost because much of the recent weakness is thanks to concerns that demand is slowing. Did also want to mention that the inventory report showed U.S. oil exports at a record 5 million barrels per day. Let's check on prices. WTI up 2% at 8813. Brent crude up a 1.5% at 9369.

And natural gas is taking a slight breather today after closing at the highest level since 2008 in yesterday's session. OTC Global Holdings Campbell Faulkner said prices are going to remain elevated even as temperatures cool because gas is being diverted from storage and going to LNG cargoes bound for Europe and Asia. He said, Kelly, that Henry Hub could break above the $10 level. Wow, that's really interesting. Pippa, I don't know if there's any protocol for dictating whether that should be going into storage or being exported

or whether that's the kind of thing that could still be coming down the pike someday. Yeah, we'll see. I mean, right now there's high prices for these LNG cargoes going to Europe and Asia. We're seeing new LNG plans being built in Europe. So right now, that's if you're going to get the highest price there, you will send that. But no doubt if prices remain elevated here, there will be some administration officials looking into it. Yeah, absolutely. Pippa, thank you, our Pippa Stevens. All right, let's extend our power rundown with three more stories today, beginning with Elon Musk,

tweeting that he's buying Manchester United. This is a publicly traded stock. Hours later, he says he's joking, but more than 10 times the amount of options have traded today compared with that stock's 10-day average. We're going to delve into that. Also, Bedbath and Beyond shares bouncing once again as their volume surges. And Apple's summer rally getting even hotter with Credit Suisse putting a 201 price target on the stock, makes him now one of the highest on the street. Let's bring in Sarah Fisher now.

She's a media reporter at Axio, Sarah. Great to have you today. Let's start with Musk. And, I mean, you got to just ask the question at this point. Did he know what was publicly trained? Is he just trying to poke the bear at this point? I don't think he cares. I think he cares about being a part of internet culture. And right now, a lot of the internet culture that you're hearing is people who are frustrated with Manu's ownership. The fans are frustrated. They haven't had a great season in a long time. So they're talking about it online. So he wants to be a part of the conversation. I don't think he cares that much. I think the last time he got in trouble for a tweet like that in 2018, the SEC essentially slapped him on the wrist with a $20 million fine and said some lawyers should review your Tesla tweet. So it doesn't matter if it's publicly traded or not to Elon Musk.

He is not worried about the consequences of this tweet. So he doesn't mind if he gets slapped on the wrist again or worse? No, he doesn't mind at all. I think Elon Musk right now is really focused on being the internet culture meme king that he is. And this was a joke that he thought was funny. So he wanted to put it out there and rally up his fans. He doesn't worry about what the SEC has to say. Yeah, well, he has an interesting sense of humor.

Bedbath and Beyond Belief, this stock keeps, you know, it's a rocket ship. It goes up a lot like 92% week to date. That would be a lot. How is that possible? Where does that money come from that can catapult? Or is it simply that the float of shares is so small that it doesn't take all that much money to send it to the moon? Well, I'll tell you where I don't think it comes from. I don't think this is all retail traders moving this stock. I think right now this is a bunch of hedge funds

who are trying to figure out what's the best way to capitalize on that. And you do have some retail traders from Wall Street bets trying to get in on it. But I don't think this is the same thing as GameStop. I think this is a little bit more institutional. But you're right when you call it bed back and beyond. This stock obviously shouldn't be trading where it is. It's the latest example of the mean stock warfare. I think what's so notable about it, though, is that it's kind of going at alone right now. When you saw this with Gamestock, we had AMC last year, there's a bunch of them. We haven't had this for a while. It's interesting that Bedbath and Beyond is the one that's making the mean stock mark. Any hunch as to why that's true? I mean, it could be that because

the person who has that vested interest in it, Ryan Cohen, who is the chairman of GameStop, had a position in Bedbath earlier this year. And then there was a little bit of a change in the number of outstanding shares that made it look like his position was more inflated recently. you know, that could have been sparking a little bit of the retail fervor as well as some of the hedge fund movement. But other than that, I just think it's along for the ride. All right. Let's move along to Apple, Sarah, which has been just an incredible story. You know, down at the lows in the 130s, a lot of debate about where it was going, has been leading the market down and then leading the market higher. And now, now you've got a split. You've got some like Carter Worth, the technician,

saying sell it. You've got others, Daniel Shea last hour saying chase it, new high price targets on the street. We spoke to Dan Ives. He says, you know, it's going to 200 and not looking back. Yeah, I tend to agree with Dan Ives. I think that the guidance that they provided for Q4, that they expect iPhone sales to continue momentum would make me very bullish on Apple stock right now. The concern with Apple, of course, is that the reliance on manufacturing in China would impact sales because of the supply chain issues there. Clearly, that has not been an issue and there hasn't been as much of an issue with demand. I also think with Apple, what's notable is that they're very cautious about how they talk to the street. You'll recall in April, they warned that some of these

macroeconomic issues might impact their stock. Well, take a look at what happened. When investors saw that it wasn't as bad as they thought, it's almost like they rewarded Apple, right? And so I think that the momentum is still there for the company. The concern for Apple, if you want to take the bearish look, obviously foreign exchange had went. are going to continue for a company like Apple. And then they also said that they're being impacted in their services business, things like advertising because of the macroeconomics impacting advertising. But personally, I don't think that those cons outweigh the pros.

I think Apple is on its way to 200. All right. No further questions, Your Honor. All right. Sarah, thank you very much. We appreciate your time. Still after the break, Christina Parts Nettel is sitting down with the CEO of Arm Holdings. They're going to talk about the struggles that have been

facing the semi-space this year and whether the Chips Act will help to ease shortages and underpin a new bull market. We're back in a moment. Welcome back to Power Lunch. The NASDAQ, the worst performing major average today so far. Chip stocks, a big reason why the SMH-E-T-F down one and a half percent. You can see the list of names leading chip stocks lower losses of 3 percent or more there on those stocks, including Micron, Texas, Microchip. and analog. Christina Partsen-Evelace has been talking to chip company CEOs and joins us now with a look at what she's been hearing. Christina. Well, that's why I've come here to San Francisco, but we've heard company after company like Intel, Nvidia, AMD, warn about the slowdown in consumer

electronics and the supply glut, which is why it's been so important for them to pivot to other growing segments like auto, industrials, and data centers. But data centers, think those big computer and storage systems that are found in your company offices, there are starting to start. show some supply snags. Invidia, for example, warned about supply issues, such as longer lead times. That's the time between when a chip is actually ordered and then delivered. And I was actually at Nvidia's campus yesterday, and an engineer was just chatting with me, and he said he's still struggling to get his hands on enough chip power for their artificial intelligence systems. And then earlier this morning, I spoke with the CEO of Arm, the company

that provides the chip blueprint for over 90% of global smartphones. And he echoed, NVIDIA's comments on data centers. We certainly are impacted by anything that we see on the supply side. And in data center, particularly, we have seen supply issues, not just for the dye themselves, but the substrates that the dye goes on to in a custom package. So yes, certainly we have been supply constrained in the data center. As for the market reaction specifically today, analog devices is the drag on the semis. Tyler, you mentioned that briefly. It's down almost 6%. And this, even though the analog chip provider issued strong guidance, management did say cancellations were starting to increase. So the cyclical nature of semiconductors and an economic slowdown clearly, clearly still in play.

So question for you, SoftBank owns a chunk of arm. That's sort of a bad metaphor. And right now, SoftBank could use a win. It's been pushing for an IPO. What can you tell us there? Yeah. So SoftBank's Vision Fund owns 25% of it. of Arm. Arm is a UK-based chip company. It's massive. It provides the blueprints for a lot of mobile

phones all around the globe. And so originally SoftBanks said that they were going to do a dual listing in London, as well as New York. Just a month ago, though, SoftBanks said they were going to halt the London listing because of, I guess, drama within politics in the UK. And so I asked Renee Hask the CEO of Arm specifically about this. And he said, this is something new. Maybe I'm reading too much into it. We are in the process right now, but he can't comment anymore, which means that the NASDAQ listing could still be in the cards. It would be one of the biggest IPOs that we've seen in a while, especially given how tough this market is. Christina, thanks very much. Enjoy San Francisco.

Christina, Hartson-Evel. Thank you. It's hard not to. Grab a jacket. Coming up, three-stock lunch is live and it's in-person, Ty. We have a special visit from Jeff Kilberg. He will join us in studio to share his topics right after this. Welcome back, everybody. Time for today's three-stock lunch. It's a special one. CNBC Pro highlighting some former high flyers that have been regaining momentum. They are all trading above their 200-day moving average. And not only do they have a majority buy rating on the street, but analysts also see upside of at least 10%. From here, our list today, T-Mobile, Thermo Fisher, and Howmett Aerospace. I hope I'm pronouncing it. Here, live in studio to help us trade them. CNBC contributor Jeff Kilberg, Chief Investment Officer at Sanctuary Wealth. Jeff, welcome. Let's start with Team Mobile, which is one I think you own personally and you like. I do, Tyler.

And these are three great names. If you're not familiar with the CNBC Pro Scanner, this is what it's all about, really revealing. And we use a lot of these themes to understand where there's strength, where there's conviction, where there's actual chart conviction. If you look here on the chart, it's really interesting to see Team Mobile, which has had a lot of recent attention from Dan Lowe, at third point. You've also seen how the buyback in the end of the year, this may actually be a $60 billion buyback tie, but what's interesting, if you think of the big three AT&T and Verizon,

this has absolutely been the superior one. So I want to be a buyer here, despite the fact, it's not cheap. Traded it 30 times forward earnings in conjunction or compared to AT&T and Verizon. It does seem expensive, but you're getting what you're paid for. It does seem as though this company, which used to be number three, If number three, has now come up into that top echelon. Well, you bring up a great point, and they actually bought Sprint, so this is the digestion. But look here, Ty, this is really interesting. You've seen this strength.

If you look at the chart here, what does this mean? Well, you have the 50-day in purple, and you have the turn-day in gray. And once you get that type of relative strength above, that's kind of the all-clear for a lot of institutional investors to come in. So I like this chart. I think it's interesting to see the technical strength, and this is the name I want to buy. All right. Let's move on to Thermo Fisher, which we don't often talk about. Why does it jump out at you?

Well, here's a Massachusetts base name, Kelly, right? And when you think about Thermo Fisher, you think about global. This is a global exposure. And what's interesting here on this chart is that this is another buy. And when you talk about this is a cash cow. This is an under-the-radar name. You don't really hear a lot about it. And it's had a nice performance.

When you look at to its peers, it has outperformed. But what's interesting enough about the lab equipment, the global exposure that they have, they're continuing to make money. The way they make money, we don't talk about that. We talk about so many different, we talked about Bedbeth and Beyond last week. We talked about companies that don't make money. This is a company

that makes money. It prints cash. Therefore, that's why I like Thermo Fisher. Well, printing cash is a good thing. Helmet Aerospace. What do we think there? So, I'm not going to kill this stock. I like this stock, and if you look from a

year-to-day perspective, it's done tremendous. This is defying gravity compared to the other sectors, but this is an aerospace winner. What I like better, to be honest, and I don't own this, and that's why I'm putting a sell on this, Kelly. And not so much a sell for the fact of the matter. We want to take profits here. But Lockheed Martin makes a lot more sense. It's a bigger market cap about 10 times the size. But this has been a tremendous name. We saw a $100 million jump in net income. So this is a name. If it comes back a little bit here, you can own as well from a diversified perils.

Listen, up 20% year to date is no mean feat for anyone. But remember, this is a micro cap, not a micro cap, but it's a small cap. It's a $16 billion mark cap, very different from Lockheed Martin. Yeah, 16 billion. That's not a microcap by any means. Fair enough, but it's a small cap. Let's put in the small cap bucket. All right, thanks, Jeff.

You're going to stick around. For more stocks with positive momentum, be sure to visit cnbc.com slash pro. And up next, what the latest open table data tells us about the American restaurant recovery when power lunch return. Welcome back, everybody. After two subdued summers, Americans are getting back out there this year. They're traveling and eating out, but the pace of recovery isn't the same everywhere. Dominic Chu is here with a look at what the data is telling us, and Jeff Kilberg thought he'd join the table.

Well, here's the thing, because I know that killer over here is a big traveler of these. You're getting out a lot more now. You're seeing a lot more of what's happening in America. So anecdotally speaking, one of the things that you want to look for is how much more of that travel and leisure activities back and how much more people are getting out there to spend money. So we always look for data. There's CPI, advanced retail, sales, all that stuff. but there's also alternative data that can tell us a story.

And in this case here, it's open table reservations for people going out to dine at restaurants. They've got a very robust set of data. And what it does show that is during the month of July this year versus the month of July back in 2019 pre-pandemic, these are among the metro areas that have seen the biggest jump in diners versus the same time in 2019. And see if this kind of jives with what you're seeing anecdotally. Las Vegas, massive move higher. On average, 36% gains over the same time in 2019. Miami, Florida, Austin, Texas, Nashville, Tennessee, and Phoenix, Scottsdale, Arizona, all among some of the biggest gains in terms of restaurant usage.

Now, take a look at this. Among some of the places where you have not seen as big a recovery, it's very large metro areas. We're talking Minneapolis, Minnesota, not massive, but still, down 54% in July. Oh, that's a huge. San Francisco. Look at this, down 46%, Seattle, New York, Washington, D.C. There's an interesting story developing there about whether people are going back to restaurants in some of those big metro areas. What's going on with those? That's versus 2019. Jeff, any hypothesis? You know, I think this is really amplified. Talk about the dislocated reopening. And all of a sudden, you talk about red and blue states, this is evident.

But at the end of the day, I slept in Nashville last night. I'm going to San Francisco next week. seeing this data materialized. So what's fascinating me is that yes, we're reopening. Yes, there's going to be some ebbs and flows. But I think at the end of the day, this is a positive development. Keep an eye, though. If you're a traveler, just watch. Use your own mind and see what you think. All right, guys, thanks very much. Appreciate you. Good to see you, Killer. Thank you both. The rally didn't materialize out. Briefly went positive. Couldn't hold the gains. Thanks for watching, Power Lunch, everybody.