Power Lunch - The Fed tells markets rates will keep rising. The start of something big for biotech? And a bold prediction for Beyond Meat 8/3/22

Episode Date: August 3, 2022

Fed officials warn the markets rates will be higher for longer. News from Moderna and Alnylam lifts biotech, could the sector be ready for a longer-term bounce? And a dire warning for Beyond Meat: cut costs now or face bankruptcy. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to everybody to Power Lunch. I'm Tyler Matheson. Did you miss me there? Did you miss me for that 12 seconds? Here's what's ahead this hour. Stocks are higher today. Right near session highs at this moment, even as Fed officials continue to tell the market bulls, we're not done yet. How much higher can rates go? And can the economy avoid recession if the Fed keeps hiking? Plus a bold call on beyond meat. The company must cut costs or it will go bankrupt. We will hear from the first. person who is making that dire warning. And Courtney Reagan is here for the hour. Hey, Corp. And I got the extra 12 seconds of you. Yeah, welcome. Even if it was in silence. Good to see you, Tyler. I am Courtney Reagan. Let's get a check on the markets and how things are going today. Higher across the board right now, now gaining more than 440 points, the NASDAQ with the biggest gain up about 2.5%. Communication services,

the best performing sector led higher by big names that you know, Meta, Disney, and Google. Energy, the worst performing group today. It doesn't matter if it's, it's oil, gas, or solar. You can see ETFs tracking all those groups getting hit pretty hard. And big moves in biotech. Moderna higher after results. I'm going to get this one wrong, but Al-Nium. Wow, that's a tough one.

Soaring on positive trial data. But on the other hand, Horizon getting hammered. We'll dig deeper into the biotechs coming up and make sure we pronounce that name correctly as we move forward. But first, the message from the Fed is very clear. They're going to keep raising rates and no pivot is coming anytime soon. Steve Leasman has been talking to Fed officials, as always, he joins us now. Hi, Steve, what are you hearing?

Good morning, Courtney, or good afternoon. The St. Louis Fed President in the exclusive interview this morning, pushing back directly against market pricing that sees the Fed cutting rates next year. Not only did Jim Bullard say he thinks the funds rate should be higher than the market is priced in, but he said it should be higher for longer. I think we'll probably have to be higher for longer in order to get the evidence that we need to see that inflation's actually turning around on all dimensions and in a convincing way coming lower, not just a tick lower here or there.

And San Francisco Fed President Meridale, just out now with remarks echoing what she told John Fort yesterday, saying, quote, I do not think we should ratchet interest rates up really fast and really high when he did it. We'll bring them down quickly to lower rates, you know, just a few months from then. And Richmond's Thomas Barkin also saying this morning he's committed to doing what it takes to bring inflation down. By the way, also expects better growth in the second half of 2022 than the first half and push back on the idea that the economy is currently in recession. He and other Fed officials insisting that it's just hard to call a recession right now with strong job growth. That is the thing everyone comes back to on that call, Steve. You know, jobs report out Friday, labor market has remained strong to your point, even as signs show the economy is slowing.

What do you expect here on Friday? Well, first of all, Courtney, it's a big anomaly. The consensus is $250,000. and the high frequency data we're looking at says we should continue with above-trend job growth. Remember, that's more than 100,000. We're looking for $250,000. But we did a little research on this, Courtney. What we found was that during times when the economy has negative quarters, job growth almost always falls.

In fact, it falls by half a percentage point. Normally, this time around with the economy negative for these two quarters, job growth has anonymously been up by a full percentage point. So this is a strange time, and I think it has to do with the economy. the pandemic and the tight labor markets and the fact that not everybody's come back to work. And yet there's a lot of hiring needed to get the economy back to where it was. All right, Steve, thank you very much. Steve Leasman reporting from the city today.

So what happens when the Fed pivots? Our next guest says he calls hope, housing, orders, profits, and employment. H-O-P-E. It's fading fast. He says, forget inflation. It's time to watch unemployment claims. He's also naming some names. He likes in this market and those he says to short.

Let's bring in Michael Cantorwitz, Chief Investment Strategist with Piper Sandler. Let's go to what history tells us. When the Fed raises interest rates or changes its cycle from lowering or benign monetary policy to tightening, what typically happens? Well, hey, Tyler, thanks for having me. Sure. So there's two outcomes when you look historically of what happens after the Fed stops tightening. you're either going into a recession thereafter or you're not. And the bullish narrative today is almost that we're not going to go into this deep recession

or where we make it not going to recession at all and that we've found the bottom in the market and we're just going to keep going up, up, up and up from here. You believe that? You buy that? No. But it has happened four times. So if we look at those four times that's happened and it happened most recently in 2019, before that, 1995, 1985, 1985, and 1966.

And so in those examples, the Fed did tighten. We did not go into recession thereafter. And what happened at the bottom of the market when the Fed stopped in each one of those four times was a V-bottom recovery in housing data. Each one of those four times. And that's one of the many reasons we don't think that that's a good parallel for today's market,

backdrop is we don't expect any kind of recovery and housing anytime soon, and we do also expect to go into recession. And I guess to Steve Leesman's point, yes, we can look at history as a guide, but things are very different now. We're just coming out of a global pandemic, the likes of which none of us have ever seen before. And we have this unemployment picture that looks relatively strong, as Steve says, to try to get us back up to where we were. So why then our claims so important for you going forward rather than inflation when that seems like that's the big worry that everyone is trying to tackle. Yeah, well, right now inflation has, this year inflation has been the number one issue, and it still is today. And that's why we've seen the market rally in the last five or six weeks

since the middle of June. As inflation data, oil prices, you know, high frequency inflation data like the prices paid index, we just saw came down to 60, which is the best reading in the ISM, this recovery. And so I think, you know, the market has already priced in that inflation's coming down. Again, that's why the market is up today or in the last four weeks, five weeks. I don't think the stock market's up because we're pricing out a downturn in the economy. If you look at leadership, it's been all growth all day. And that's lower rates, lower inflation fears. So why focus on claims? because if we are going to recession, if we believe that you want to remain cautious on equities, it's going to be claims and also earnings that push the market back down.

And so Tyler mentioned that hope cycle. And while there are a lot of things that are different today, this is part of the story that's never different, never with a capital end. Housing is always the first part of the economy to respond to higher interest rates. employment's always the last. So everything the Fed has done this year and the big rise in long rates we have seen over the last two years, it's showing up in housing. It's showing up in some stocks, but it's not showing up in employment yet, and it will. And it will. And but it does appear that there are some signs that the employment picture is slowing. The jolt's number yesterday was,

was one sign, a pickup in job was claims last week, was another. But I couldn't agree with you more. way the housing stocks, and these, some of them are very blue-chip stocks, have been crushed this year is nothing short of amazing. Let's get to a couple of your choices here in the time we have remaining and why you like Chipotle Dollar General AutoZone and General Mills. Why them? Sure. So those four stocks, three of those, not including AutoZone, are also covered by Piper Sandler fundamental research and have buy ratings on them. So that's a, that's a cherry on top. The reason we like them initially is that all four of those names have a countercyclical relative performance behavior, which means as the economy slows, they typically outperform.

We think the economy is going to continue slowing for at least another year. And they also have the fundamental attributes like high levels of profitability, relatively strong earnings revisions, and solid, realized, or trailing earnings growth. And that's where those are the factors and the types of attributes that have been outperiodies. performing for the last two months as investors are pricing out inflation fears. All righty, Michael, thank you very much. Countercyclical is the word of the day. Michael Cantorwitz, we appreciate it.

Thank you. Well, coming up, the biotech ETF, IBB, down 16% this year, but rebounding 4% today. So could this biotech bounce? Plus another crypto hack this time Solana targeted will survey the damage and discussed the future for one of crypto's biggest bulls. Power Lunch, be right back. Welcome back to Power Lunch. Biotech stocks in rally mode today,

due in part to Moderna, which is at more than 15% on a strong earnings beat. But the I shares biotech ETF, the IBB. It's still down double digits this year. So is today's bounce at the beginning of a bigger turnaround. Michael Yee is managing director at Jeffries.

We're going to ask him. Michael, thank you so much for joining us here today. I guess just to start off, can you talk us through a little bit of Moderna's earnings? I understand you can get us through that because that's the reason we're talking about this as those shares are higher here today. What do you like there? Well, Moderna put up a great quarter in the face of uncertainty, as you can imagine with the waning of vaccines and boosting.

But they put up a great quarter. They obviously announced a big U.S. contract again, which is important as we roll out a new booster. And they maintain the guidance in the outlook. So great quarter out of modern. And as we're looking at the entire sector before we get into more, more specific companies, in general, biotech is not going to be as much a risk when we're thinking about things like inflation or pullback of consumer spending. If you need a prescription drug that one of these companies makes, you're going to pay for it, right? That's not going to be

something you're going to cut. Are these more recession-proof stocks? Yeah. Yeah, well, you know, Heather, that's exactly where I think is going on here. You know, you take a look at since the middle of June and pull up the XBI, the biotech stocks have done phenomenal in the last 48 weeks. I think on the heels of the fact this group has been overlooked for the past year and a half out of the recovery plays around the market. And certainly as the Fed was raising interest rates and we're certainly worried about a global recession, a lot of the big cap pharma and biotech stocks have done well, both because of their defensive nature, a lot of dividend yield, particularly out of Gilead and Amgen, Gilead, I know up 6% today, and a lot of the smith cap biotechs, which are

particularly interesting in the face of M&A and acquisitions, which could happen out of a large pharma, which is another interesting angle. So we do think this has been a good sector for the second half, and I do think we could see it continue to move up for the sector into the end of the year. What about the near-term headline risk with the reconciliation bill and the potential discussion there of drug pricing? Yeah. Yeah, it's really interesting. And we have a note out this morning as well. And there's quite a lot of consternation around whether the market really is concerned about drug pricing and direct Medicare price negotiation, which is in the reconciliation bill. And we fully expect that to get done over the next weeks and next month. Gilead as well yesterday suggesting that this is likely. And I think it's really a question of near term versus long term. We do think while there could be some headline risk for some of these stocks, which have obviously have done well over the last four to eight weeks, that there could be some pullback.

But I do think that the longer term concern is far outweighed by the fact that near term, there's a lot of recessionary risk, a lot of earnings risk. And we do feel very good about the earnings numbers out of these large top biotechs and pharmaists, again, Gilead and Moderna, both putting up good numbers. And I think that's really important in the face of other sectors. One of the great medical miracles, I think, of my lifetime has been, was to watch companies like Moderna, Pfizer, and others come up with a vaccine so quickly and mobilize so quickly with with government help under the Trump administration.

I'm increasingly concerned about monkeypox. And I don't know whether any of the companies you follow are on the forefront of finding vaccines for that or if we already have one. What can you tell me there? Yeah, well, Tyler, this actually came up in the Moderna call. Moderna has said that they have a preclinical program that they're working on that. And I think there's a lot of discussion as to what they want to do. I think obviously they're watching the situation, which is dynamic.

Appreciate that WHO has deemed it an emergency. But I think there are certainly questions around how much and how much investment to push forward. There's obviously a vaccine available and limited supply. And so I think that this is a fluid situation. So more to come there, and Moderna talked about that, but I do think rest of sure that they're ready to go. That's good to hear because we certainly don't want to get caught flat-footed going into the winter season. And we don't really know, well, maybe we do about transmissibility of the monkeypox. But it's good to hear that there are people thinking about it.

Michael, Al-Nylam, I understand you don't cover that one, but you can kind of walk us through what's happening here. huge move up here today. I guess that's sort of why you play the biotech space for days like today. Of course, it could just as easily go the other way, though, right? So thanks for pointing that out. And, you know, one of the more interesting things about biotech is that it has obviously been quite challenging over the last 18 months. We've talked about that. Go pull up the XBI. And there's been a lot of negative data sets, a lot of disappointments, a lot of negative stock reactions. And there were definitely concerns about this study going into it.

There's a having short position as well. Look, we got great data out of Alnilum. It's really got the tape on fire today. You've got Moderna putting up good prints. You know, we're really seeing a change in momentum here. And like I said, I think this keeps us going into the end of the year. Now, Alzheimer's is perhaps the next major event out of both biogen or Roche and Lily over the coming six to 12 months. Don't want to, you know, make too strong of a call there.

But look, I think the real change. year is a tone where biotech investors are a little more optimistic, particularly in the face of a recession. And we are positive on the group on a recovery here going in the end of the year. Michael, we have to go, but I want to just give you a chance very quickly to tell us sort of your top ideas. Hey, look, we like vertex into the print this week. I think they're going to put up a good number. We like that one.

That's been a great call and a good move. And we also continue to like Gilead moving higher as well as Amgen, which we also think we put up a good print this week as well. Thank you very much. We covered a lot of ground. Michael Yee, Jeffrey's managing director. Well, quick programming note, Eli Lilly's CEO, David Rex, will be on Squawk Box exclusively tomorrow morning to break down the company's second quarter results. You don't want to miss that one. All right. Still to come, two massive crypto hacks in two days north of a billion dollars stolen this year alone in crypto. We will lay it all out for you next. Plus, beyond meat, heading to zero.

One firm sees the alternative meat maker going bankrupt if it doesn't make serious changes. We'll be right back. Welcome back to Power Lunch. Let's take a look at the prices of cryptocurrencies today. Bitcoin and Ether are higher, but Solana falling as it was the target of a hack. Kate Rooney has the details for us on what's going on in crypto. Kate. Hey, Tyler.

Yeah, this is the second crypto hack in just the past couple of days. And it adds to a long list of exploits this year. Data firm Elliptic estimates $5.2 million in funds were drained from almost 8,000 wallets holding Solana and some other related tokens in recent days. This hack is smaller than others, but it is significant. The founder of Elliptic telling me that usually these hacks are on one centralized entity. So think of a crypto exchange, for example, but this one was across thousands of individual wallets, which are usually seen as the safer way to store crypto. Not in this case, though.

It initially hit the price of Solana. the token is associated with that blockchain. It was down as much as 7% overnight is rebounding a bit today, but still down more than 2%. The network has been billed as a big competitor to Ethereum. Both are used to build things like NFTs, but Solana has had a share of growing pains as well. It's seen multiple outages and its team tweeting, though, that this week's hack does not appear to be an issue with the network itself. Regardless, many investors I'm talking to have moved their crypto to what they call cold storage or just offline in general. to be safe. This is the latest major hack guys in 2022. Nomad was breached just a couple days ago,

losing about $200 million. You can see Ronan was by far the biggest this year, but the list is definitely growing so far in August. Courtney, back to you. Kate, you use the word safe. I don't think I could ever use the word safe to describe anything that has to do with cryptocurrency these days. But we could ask you so many other things while we have you. I'm going to ask you about Michael Saylor, one of the biggest Bitcoin Bulls. He's stepping down as CEO of Micro Strategy. It reported huge losses on its Bitcoin holdings. That was a big surprise yesterday for Micro Strategy earnings. So Michael Saylor was the CEO. He founded the software company in 1989. The past few years has really shifted the corporate strategy

to use all of the software proceeds, take out loans, and buy more Bitcoin. So it's really become a proxy for Bitcoin investor. Saylor's saying, though, by splitting that chairman and CEO role. The company can now pursue both of those corporate strategies. So acquiring and holding Bitcoin and then growing that enterprise software business. The Bitcoin side of the business, though, suffering big time as crypto prices fall. Microstrategy took an accounting charge, which is known as an impairment of almost a billion dollars, $918 million for the quarter. So that happens anytime Bitcoin goes below the price where the company bought it. And according to yesterday's report, the average purchase price is $30,700,700 that Bitcoin is well below that today.

So that's the cause of that impairment charge. And then the company has spent about $4 billion buying up Bitcoin. About half of that guys has actually been through debt. Wow. Very, very interesting stuff on Michael Saylor, I know, has an awful lot of followers. Whenever he's on CNBC, he gets a lot of attention for what he says. I'm sure that won't change even splitting the rolls. Okay, thanks so much.

Thanks, thanks great. Let's get over to Bertha Coombs for the CNBC News Update. Hi, Bertha. Hey, Courtney. Good afternoon. Here's your update at this hour. Pat Cipollone, who served as former President Donald Trump's White House counsel, has been subpoenaed by a federal grand jury for its investigation into the January 6th Capitol attack.

The Justice Department is investigating then-President Donald Trump's actions leading up to the riot as part of its criminal probe into efforts to overturn the 2020 election results. The husband of U.S. House Speaker Nancy Pelosi pleading not guilty to driving under the influence charges related to a May crash in Northern California wine country. Paul Pelosi did not appear in person at Napa County Superior Court, but his attorney entered not guilty pleas. He had a 0.082 percent blood alcohol level. The legal limit is under 0.08 percent. And Phil Mickelson is one of 11 golfers on the Saudi-backed live golf circuit who have filed an antitrust lawsuit against the PGA tour over their suspensions. They're asking a judge to force the PGA to let them participate in the tour event next week. Boy, this is really getting nasty, this rivalry between these two new golf leagues.

Yeah, it is indeed. I don't know antitrust law well enough to comment, but, But it would seem that Mr. Mickelson is making plenty of money. It's a rival tour. He's chosen the one he wants to go with. So whatever. Yeah, it depends on their contracts, though, with the league. It's fascinating. All righty.

Thank you, Bertha. I head on power lunch. Don't count out crude. Oil may be off the highs, but one portfolio manager says there are some under the radar picks that could bounce higher. Plus a mismatch. Match group trading at all-time lows following a big revenue miss. That and more in today's three-stock lunch.

We've got 90 minutes left in the trading day and we want to get you caught up on the market, stocks, bonds, commodities, the whole kit and caboodle, and a prediction on where oil could go next. Let's begin with Bob Pazani. His stocks are picking up steam this afternoon, Bob. You know, Tyler, Jim Bullard may say he wants rates higher for longer, but the stock market doesn't seem to be very bothered by that. We are breaking out, folks. Take a look at the S&P 540-160. We're on the verge of establishing a new higher trading range. That's the highest level since, what, early June for the S&P? Tech's the real leadership. Traders want growth.

Tech Spider, the XLK, that's the highest level since early May. And Kathy Woods' arc funds doing really well. Look at Mega Cap Tech here. Now, Lamb Research I mentioned earlier is probably up 25% in the last couple of weeks. So big moves up there and Viti's coming back as well. Kathy Woods having a mini-renaissance. I've been saying this for a couple of weeks now. But look at some of these stocks in our Intelia, Block, Unity Software, Twilio, all rather aggressively on the upside.

Again, today. What don't they want? They don't want energy stocks. Even though we had very good earnings reports today from Occidental, we had some names Pioneer raised a dividend and 40% and they sold right into it today, down about 2% other big names. Again, the markets down here on oil, $91 right now. People think profits in 2023 aren't going to be as high as some people think. Finally, where are we right now?

I can't help but think they're shooting against Jim Bullard at this point. Right now the momentum is with technology stocks. Earnings are lower for Q3 and Q4, but not that much lower. There's certainly no earnings recession forecasted right now. Oil is definitely on the downside on those ISM surveys. numbers? Well, Tyler, new order is higher. Price is still up, but increasing at a slower rate. That sounds pretty good for the bull argument right now for a better fourth quarter. Tyler, back to you. Bob, thank you. And now to the bond market and Rick Santelli tracking the action in Chicago. Rick.

Hi, Tyler. You know, many are looking at durable goods back to the orders. And yes, they were better than expected, better than the mid-month reads, especially on durables. But they weren't spectacular. And when I look at the ISM services sector, it's basically coming off 25-month low levels as our S&P Global Services and Composite coming off basically the lowest levels. Actually, those two are at the lowest levels since May of 2020. So we really need to be cautious. And even though all that occurred, look at a two-day of two-year note yields. They're really up solid. More solid, of course, than 10-year, which has caused the curve to flatten it. and invert more, look at an intro of tens and pay particularly close attention to what happened at

9 o'clock Eastern. That's when the big numbers hit, especially ISM services, and boy, the knee-jerk reaction was higher, but the rethink started to come down a bit. Two and three quarters is going to continue to be a very important level. We're resting against it right now, virtually unchanged on tens. Yields are actually lower on 20s and 30s, while the rest of the curve, of course, is higher. And as you look at the twos to tens at minus 36, it's now the most inverted. it again in 22 years. And finally, all of that interest rate popped the last couple days

certainly helped the dollar index on pace for a one week high. But as Bob said, whether it's the equity markets or the long end of treasuries, they don't seem to be paying very close attention to the Fed no matter how loud they shout. Tyler, back to you. All right, Rick, thank you very much. Oil falling today by more than 3%. Let's hear the news from Brian Sullivan. Hi, hi, Brian. Hey, hi, Todd. Good to see you again. All right. There was a lot of Oil headlines going on today. I'm going to bang through them. I've got some breaking news right at the very end. First, oil prices, Bob mentioned them. They are down once again. In fact, close to breaking back below $90 per barrel. It's a level we have not seen since mid-February as well.

So keep an eye on that, primarily on worries about a recession here in Europe and maybe in China as well. China, of course, their crushed demand because they keep closing and reopening due to COVID lockdowns, their economy really struggling to bounce back. So that is headline number one. you got the OPEC meeting. They're adding 100,000 barrels per day that is less than some had hoped for from the group. Spare capacity, really an issue.

By the way, a tribute there, as you can see, they're all standing as a tribute to Secretary General Muhammad Barquindo who passed away unexpectedly a couple of weeks ago. Headline number three, and this is new in the last hour or so, numerous reports that the Caspian pipeline,

the CPC, has seen reduced flows from its 1.5 million barrel a day capacity. It goes through Kazakhstan, Tyler, but it is Russian oil. Again, these are some reports. We don't know what the cause is, how much, how long it may last. This could evolve over time. But these are some headlines here. I wouldn't be surprised the oil firm up a little bit on that as well. But some new headlines there and this just off the phone, literally before I sat down with a senior OPEC official, we were chatting about the spare capacity issue, Tyler, and this senior official, he's very senior.

he said, focus on spare capacity, lack of investment. Basically, OPEC is not joking that many member countries simply do not have the available oil to add more to the market right now. So there's a lot going on with oil today. There's some of your key headlines. It's not really that they don't have the oil. They just can't produce it, right? Yeah, they can't produce it.

Well, better said, Nigeria, Angola, a few of the other OPEC members, they really are struggling to get that oil to market because during COVID, things got shut down, the money dried up, and so the oil dried up in part. All right. Thank you very much, Brian Sullivan. Let's continue our conversation on oil. Our next guest sees prices going back up, 115 a barrel. He expects energy stocks to continue to outperform amid this inflationary environment. Rob Thummel is portfolio manager and managing director at Tortoise. Rob, welcome. Good to have you with us. Make the case for oil back up in the one teens before year end.

Yeah, so Brian just kind of made it for me. So what did you see out of OPEC today? You heard chronic underinvestment leading to limited spare capacity. Those are OPEC's words. This is the largest supplier of oil to the world. And that's what they're saying. They can't produce much more oil. So we're going to continue to have demand potentially rise,

especially as China comes back on as the economy continues to open back up, people continue to fly. You're going to need to get some additional supply. That's going to probably likely result in an undersupplied oil market And what we know is inventories are already low. When inventories are low, the market's under supplied, inventories go lower, so prices go higher. So that's how we get to a much higher oil price, especially as we move into the latter part of the year, when Russian sanctions start to kick in even a major way. How much mischief is Russia going to play both in oil and natural gas?

Yeah, probably more natural gas and oil. That's where the impact's going to be felt. As you know, Europe really relies on Russian natural gas as its primary source of natural gas. And a lot of natural gas is used during the winter heating season. So if Russia shuts off the volumes of natural gas to Europe, there's a potential that Europe will run out of natural gas this winter. Hence, why everywhere in the world needs more reliable U.S. supplied oil and natural gas? If I can go back, Rob, to your first point, and you were talking about all the reasons why you think oil, prices will go to $115 a barrel. And you talked about the economy's reopening up and people continuing

to fly. Yes, that's true. But if we go into a recession, whether or not you think we are on one now, does that not factor into your thesis? Doesn't that mean the demand will fall, even if supply is still tight? Oh, you're right, Gordon. If we have a recession, that potentially could have an impact on demand. It just depends on how severe the recession is. You know, oil demand typically is fairly inelastic to economies, to the economy. So if we have a mild recession, oil demand could potentially go up. You know, energy demand globally has gone up 28 out of the last 30 years. So there's a strong possibility to oil demand continues to rise even if we have a mild recession. Now, of course, deep recessions, that impacts every single sector and would negatively impact oil demand.

Let's get to a couple of stocks that you like. I'm going to just start randomly with Chevron. I was speaking with a respected investor, I know, and he couldn't say, enough positive things about Chevron, its dividend, its management. Yeah, so what investors like about the energy sector in general, Tyler, I think, is what really Chevron provides, which is high free cash flow yield. So double-digit free cash flow yield, you know, double the free cash flow yield, the $1 and $7.500, $1 and $7.500,000, high dividend in case, in Chevron's case, think it's probably 3 or 4 percent, so double the S&P 500 dividend yield.

But more importantly, Chevron is positioning itself not only to benefit from today's economy, but from tomorrow's economy too. And what I mean by that is providing more energy and less carbon, right? And so Chevron has made significant investments in renewable fuels and other areas like potentially like carbon capture, renewable natural gas that will benefit as the economy continues to grow from increased use of energy, but the changing supply source of that energy could be a benefit to Chevron going forward. And Rob, to that point, I was just wondering, what are the risks if I'm an investor in

some of these oil companies that I need to consider when it comes to political risks because of the administration sort of pointing fingers at some of these oil companies saying, you're making too much money as everyone else here is suffering. Does it make more sense than to focus on a name like Chevron because of your points about the renewable sources and other areas that they're going into? I guess I want to understand how you figure out that political risk potentially with some of these names. Yeah.

No, according to, I think that's always something you have to consider when you're looking at the energy sector. At Taurus, we look at it this way. The big picture is really the globe needs to decarbonize and it needs more energy. And where can that energy come from? And where can it come from in a decarbonized way? And that's the U.S. The globe needs more reliable sources of supply of energy. And companies like Chevron, Exxon, Pioneer, lots of different companies in the U.S. are providing that energy and can not only provide it domestically and allow the U.S. to remain a superpower, because of the significant energy independence that the U.S. has, but also decarbonize the rest of the world by providing things like natural gas to China and India and reduce the consumption of coal.

I think those type of points overshadow the political risk of making too much money. All right. I got it. Rob Thummel, thank you for joining us. You like Schneer Energy in addition to Chevron and Exxon that you mentioned and Western Midstream. Well, Beyond Beat, one firm adding Beyond Meat to its list of zombie stocks. The CEO will explain why it could drop to $0.00. That's coming up next. Welcome back to Power Lunch. Shares of Beyond Meat down nearly 50% this year and around 85% off its all-time high in July 2019 when the stock traded above $200. But its problems go beyond the stock's performance. According to new constructs, Beyond's meat burned through 635. million dollars in free cash flow over the 12-month period ending this past March.

It also had just $548 million in cash and cash equivalents on its balance sheet. At this rate of cash burn, my next guess says the company will go bankrupt within 10 months. Joining me now is David Traynor, CEO of New Construct. So obviously, David, the cash burn is a problem. I assume this is happening because it has just not gained the traction, despite all of the big marketing buzz when all of these new partnerships had been announced previously, it's just not attracting the customer it thought was there in that total addressable market? You know, I think it's that and there's a lot of competition that's taking away a lot of its total addressable market.

Let's face it, I mean, we're talking about ground vegetables. There's not necessarily a big competitive advantage there, and it's clear that they don't have one. Not to mention, and maybe most importantly, some of their biggest, competitors like a Kroger and an Albertsons control the amount of shelf space that Beyond Meat's going to even get in the store and have an opportunity to get in front of customers, that's going to be a challenge too. So long term, we really think this company is competitively boxed in and will never generate the cash flow it needs to sustain a viable business. I don't mean to put you on the spot here necessarily, but I don't see impossible as one of

the other stocks that you're calling out. What's the difference between Beyond Meat and Impossible foods when it comes to things like cash burns, shelf space on the stores. Are they just doing a better job? The company's just being better run despite sort of being a direct competitor? No, no. It's in a similar position. It just has more cash, so it's going to be able to stay around for a little bit longer. But it is not in much, it's not at a better competitive position than beyond meat by any means. I think these upstarts were sort of a flash in the pan on a fad that is going to get crushed by the incumbent competitors. There's really no competitive differentiation or advantage by the impossible burger or the Beyond Meatburger compared to what Tyson or Kroger, what these other firms are going to do. So is there

only option really then, on the one hand, bankruptcy, on the other hand, finding some merger partner or buyer who might be more effective at muscling shelf space from grocers? Yeah, I think Tyler, that's exactly right. And I've been having a lot of this conversation. this week with investors around that topic. And there's not really many potential buyers out there when you consider still how expensive the stock is. I mean, we show that it's got to drop to at least five bucks a share, you know, to get to even reasonable expectations for future cash flow. So around 35 bucks, I mean, you'd have to be crazy to want to touch this with a 10-foot pole because it's priced for so much success that it will never achieve. So, but there's a lot of

competitors. I mean, there's very few major food companies that don't really have an alternative meat business already, maybe like a Campbell's, but then, you know, why do they want to get into something that's going to be eventually a commoditized product when they would be going up against other meat processors that have more experience in this kind of business like a Tyson? Yeah. And so it's it's a tough call. It really is. I don't, I mean, you would hope that maybe there's a white knight buyer out here, but I wouldn't hold my breath. We have to go, but I am intrigued by your list here of danger zone stocks with less

than two years worth of cash on hand. Peloton, you actually think is at risk of going bankrupt within three months. And we're talking here about Beyond Meat, and that's at 10 months, very, very quickly because we have to go, what's the biggest risk here for Peloton? Why just three months? Because they got less cash and they're burning cash like crazy, right? So, and the big deal these days is that when these companies went public, it was easy to raise money per their IPO valuations, which of course have been proven totally overblown. But how are they going to stay alive in a world that is no longer tolerating profitless growth. The cost of borrowing money has gone up a little bit recently. You may have noticed, right? So we're not sure that they're going to be

able to get that capital because who in their right mind really wants to go in and invest in one of these companies because you're going to have to pay to buy them, then you're going to have to put a lot of money into keeping them alive. So you're paying twice. And I don't know who wants to do that when at the end of the day, the underlying product is really not that differentiated. Fascinating stuff. Thank you for joining us, David, Traynor of New Constructs. We should know we reached out to be on meet for comment on the concerns brought up here. And David's report, we did not receive a response from the company. All righty, up next, the top movers in the market in today's three-stock lunch.

And speaking of movers, a big gain for stocks right now. The Dow, close to highs of the day, up more than 400 points. The S&P up almost 2%. The 1.2 thirds. NASDAQ up 2.5%. All right, time for today's three-stock lunch. we're going to trade Match Group. We're going to go look at Airbnb and AMD, all of which reported yesterday. Match Group shares off more than 20 percent. It reported a miss on revenue and weaker than

expected guidance as well, despite reporting record-breaking bookings, Airbnb shares fell nearly 10 percent based on lighter than expected number of nights and experiences booked. And AMD beats on earnings and revenue but fell 5% after it forecast under expectations for the third quarter. There you've got the setup. Let's bring in Joanne Feeney, partner and portfolio manager at Advisors Capital Management. Joanne, let's tackle Match Group first. What's going on? Tyler, I knew you were going to start with that one.

Yeah. So Match Group is having some execution problems to which they admitted, and they're making some management changes after other management changes already made. So what happened was in the first half of the year, they didn't pull off some product development that they really needed to push the second half growth that they normally get. And so they pulled their revenue guidance down by half of what the street was expecting. And as a consequence, because they said the third quarter is going to be tough and we're not going to get it together for the fourth quarter either. Once you have six months worth of delays like that, you're going to see the analysts across street downgrading the stock

having sat on buy ratings and then been so disappointed. But ultimately, we do see this as a very strong growth company, just let's get past this six months, because they have new tiers of subscriptions coming out, and they also saw some good numbers in terms of payments of their existing subscribers. So there's still a lot of enthusiasm out there for the products that they develop. All righty, thank you on that. Let's move on.

So then let's go to Airbnb up next. What do you think about this company? And as we return to our lives and love to travel, see the world again. You know, Airbnb should seem like this obvious sort of recovery from the pandemic play. People are going back out there. They're traveling. They're going to hotels. They're renting places on Airbnb.

You know, on the other hand, their bookings, although record were a little bit below expectations. And some people are looking at that and asking, okay, is this a recession impact? impact and is there some concern about all the travel difficulties that we've all heard about, causing people to rethink, whether they want to get on a plane and deal with all those delays and possible cancellations? So, you know, Airbnb is certainly a more risky play. And with, you know, COVID going up and down, with a recession potentially looming, I think folks are wondering, how far up the income distribution spectrum will this spending slow down extend? We're seeing it right now with the low end, are we starting to see it in the more middle income to high income,

the folks that generally use Airbnb? So I think it's a riskier play. It's not a cheap stock, although it's tremendous cash flow. But this is one where we're choosing to wait on the sidelines. We think there are some better opportunities in the consumer discretionary space. Like, you know, for example, on Amazon, which is really a cloud data center play at this point. We don't have time to pick apart the entire AMD report, but what do you think overall? Stock down. Yeah, so we really like AMD here. We only bought it for clients about a month ago.

We were waiting for it to become cheap enough, and it has now. The key thing about AMD is that they're gaining share against Intel. It can't talk about AMD without talking about Intel. In the server chip space, AMD's sales were up 83% year over year, while Intel's were down 16%. on the CPU side for consumers. Similarly, AMD of 25% Intel down 25%. So even if the economy does slow, AMD has the opportunity to continue to grow

because it's gaining share. And without now being in the manufacturing world, all outsourced, their risks are much lower because they don't have those big cap expense to worry about. All righty, we've got to leave it there. Joanne, thank you very much. Joanne Feeney of Advisors Capital Management. Well, more power lunch is coming up.

Welcome back to Power Lunch under the microscope. A Chinese stock that's making game stocks, meme mania look like child's play. AMTD Digital. This is a Hong Kong based fintech. It's a company who will public a couple weeks ago at $7.80 a share. It's now at $1,200. After falling 30% today, the market cap reached a high of nearly $300 billion that puts it on part of the likes of Coke and Bank of America. The stock was the most popular mention on Wall Street bets yesterday. Tyler, look, I don't know, lot about the fundamentals of these companies, but it makes me nervous when you see stocks run like this. And it just scares me about the distrust it can give investors about a 7,200% return. As we look at it today, I mean, you got to have some serious fundamentals if you're going to go up that amount. Who knows whether there are actually fundamentals here or not. This whole mean media. It just makes me nervous. Cautius Courtney is not a real fan of that.

All right, folks. Thank you all so much for joining us for power lunch. Good to be with you, Cork. Thanks for having me. You bet.