Power Lunch - The sell-off intensifies, inflation fighting stocks and the CEO of Ford. 4/26/22

Episode Date: April 26, 2022

A vicious April sell-off intensifies. Investors are dumping shares on fears of an economic slowdown. Is the bottom in? A veteran market analyst says not yet. Plus, Sherwin-Williams bucks the trend and trades higher. The company says it has pricing power. We have a list of stocks that are successfully passing along higher costs. And, a big interview with the CEO of Ford. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

All righty, welcome everybody to Power Lunch, and here's what is ahead for this very busy Tuesday afternoon. The selling resumes. Kelly's been talking about it. Market's dramatic rebound yesterday. That's gone. That's over with the NASDAQ down more than 3% ahead of big earnings from Big Tech. And our market guest this hour says the bottom isn't in just yet. You heard what Pazani just said about the signal of a bare market if the S&P goes down below its moving average. inflation, pricing power, social media stocks and dividends. That is the subject we will talk about this hour, Kelly. Yes, kind of a witch's brew, if you will. Thank you, Tyler. Hi, everybody, and we are near the session lows. The Dow's down 627 or 37 points. We're only about 20 points off the worst levels of the session right now, and the Dow is outperforming. The S&P is down more than 2%. It's at 4205 down 90 points. The NASDAQ is down more than 400 points, more than 3%, clinging on to about 12,000.

So all of those big tech heavy areas, communication services, tech itself, and consumer discretionary, they're all more than 20% down from their 52-week highs. Communication services down 30% in fact. Now, in the consumer discretionary group at the bottom here down about 21%. You see the selling pressure not just in tech, which we mentioned quite a lot, but also everything from Carnival Corp down 6% today, Chipotle down 5% to names like Under Armour and Nike. also shedding 5 to 6% in today's session. Ty?

All right, the sell-off comes ahead of big tech earnings later today. Amazon on pace now for its worst month since October of 2018. Microsoft tracking, worst month since January of 2015. Apple at risk of closing below its 200-day moving average. Our next guest says we haven't seen a bottom in the market yet. David Traynor is the CEO of New Constructs and Investment Research firm. Also with us, Mike Santoli, at the NYS. David, do you feel the same way today as you did deference yesterday that we haven't seen a bottom yet?

And what would tell you that we do or have? I do not feel a different, Tyler. I think that we're certainly in a long-term downtrend. And if I could pick the exact bottom, you'd be doing this interview on my yacht, sort of in my office. So I'm not prepared to take it. So what would the signals be that would start to tell you that, that the washout has come.

What would you be looking for? I feel like the hard part about answering that question is that you don't know if the person is going to swing to the exact right spot where things are fully valued. Over adjust. All right. David, we're going to try and fix your audio where we're having a little problem.

But Mike, let me let me let you pick up on some of the questions I just asked, David, which is what would the classic signals of a market bottom be, number one, and does is one of them the notion that Bob just hit, and that is that in a bare market, everything goes down, and this is a broad-based sell-off today, very broad. Yeah, Tyler, I mean, usually there is a textbook set up where you get an aggressive, very broad, flush lower, where there really isn't an immediate place to hide.

Now, this is if you're going to get a typical kind of, you know, panic crescendo to a correction, in bare market, whatever you want to call it. I don't know that we're at a point of monitoring the market for exactly that thing. I would point out, you know, the S&P 500 traded down just about to $4,200 in late January, got back there in late February, went a little below it in mid-March, and here we are again, which is to say it's been a very volatile trading range with a lot of time spent in the lower end of that range. We've absorbed everything from the economy's overheating and the Fed's going to have to go really fast to. That's all happening. at the same time, we're worried about global growth, because today's action really does look like

China-Gurban global growth concerns, the dollar is flying, and that creates this unsettled backdrop. All right, David, let me go back to you and let you get your thoughts across because it was so broken up there. I guess the basic question is, what would for you the classic signals be that maybe a bottom was being put in? I think we'd have to see any stock. return to much more normal evaluations. We're a long way from that. And I also feel like picking a bottom is really difficult to consider that you never know if the pendulum is going to swing too far or if it's going to land in just the right spot,

especially for when it's been too far high for a while. Is there, is there, David, a port in this storm? And if so, where would you say you find such port? I think the answer is yes. There are plenty of stocks that are very reasonably about strong cash flows and can be safe. They may not avoid it and wash out at all, but we think companies like Shell, Intel, Domino's Pizza are extremely well positioned to be strong outperformance in the medium and long term. Shell, Intel, and Domino's Pizza, that is a motley assortment. Mike, let me turn to you as we, again, to Tyler's question, kind of look at the dashboard.

here and say, what is it that we're watching? Is it momentum and technicals? Is it the Fed's liquidity and, you know, kind of how much further that has to run its course here throughout the rest of the year? It's all of that, Kelly. I think the big overarching factor has been valuation compression. As you've seen yields go up, as you expect Fed tightening, as earnings growth in aggregate slows, you're seeing these very highly valued stocks that have outsized influence on the indexes that have really had their premiums reduced. And, you know, Alphabet's a great example of that. I've been pointing out that it's down to below 20 times earnings. That's not necessarily cheap, but it hasn't been much cheaper than that in the last five or seven years. It's because there is doubt about the earnings

power and the growth as well as just what are we paying for it in this environment. And finally, Mike, what's going on with Tesla? And how indicative is that of the whole mood of this market? I think crucial to point that out, Kelly, tremendous and aggressive downside in the most heavily. traded stock and option in the market. So down 10%. People are obviously kind of clenching up in advance of likely or expected sales by Elon Musk of his Tesla share, some of them, to back the Twitter purchase. That seems like the most logical thing to expect. He's also encumbering them with margin loans. And it has been a risk appetite tell. It's also owned by a lot of the same people that own a lot of the other big tech stocks. And so you have portfolio damage across the

board. And that has a knock on effect. Mike, if Elon tweets, you know, I don't have to sell any shares. Does it turn the whole market around? I think it would quickly create a then where are you going to get the money question, to be honest with you, because there's not a pool of $20 billion he needs to come up with that we know of that can happen otherwise. All right. Again, Tesla down 11% today in what is a pretty ugly market. Thank you both.

Mike Santoli, David Traynor, for sharing your thoughts. And tech stocks have been leading the declines with the NASDAQ now 22% off its 52-week high. Twitter, we just mentioned Elon Musk. Well, it's actually dropping about 4% after his private takeover of the company was announced yesterday. So Twitter shares are below 50. The deal price is 5420.

Some analysts were saying the deal could help boost add revenue for rivals like Snap, meta, and Alphabet, kind of helping to levitate the whole space. Let's bring in Andrew Boone. He's managing director and equity research analyst with JMP securities. Andrew, you know, I take your point about sort of the

secular opportunity with social media, But right now is all of the sort of internet space facing just the receding tide of the pandemic? You know, I do wonder, even with the cloud numbers we're going to hear this afternoon, whether we kind of just have to work through this period to figure out what doesn't the new normal look like? I think that's fair. And if you look at the data that's out there, MasterCard talked about e-commerce down 3% in March. Other companies have talked about the slowdown that happened kind of post-Ukraine, Russia. And so I think the market is digesting the fact that you did have slowing just overall consumer spend, advertising growth going through 1Q.

And I think that's continued into April, just given the commentary that we've heard from Snap and what we'll hear in the, and honestly, the coming days from Google tonight and then Facebook later. Let's talk about some of the things Mr. Musk says he wants to do. And like limit content moderation, do you open the open the, algorithm and edit button and so forth. The effect of that on advertisers will be what? If I think about less content moderation, there are just now more brand safety issues. And so if you go back, you know, call it three, four years on Twitter, remember the big push here was the fact that Twitter was trying to clean up the platform from basically bullies.

And so they've done a bunch of product work to be able to allow less hate speech to make sure that it's just a safer overall platform. So by unwinding that, I think that there's just more negative sentiment that may scare some brand advertisers away from Twitter. Remember here, 85% of advertising revenue is brand-based for Twitter, and so where could those dollars go? It could be a benefit for YouTube.

It could be a benefit for newer products like Facebook Reels, Instagram Reels. And then I think TikTok is clearly the 800-pound gorilla here and is likely to take brand advertising from pretty much all platforms, as you see engagement ramp and they roll out more ad tools. Are advertisers really going to be that proactive, Andrew, that they would fear that Elon Musk will make the platform such a free-for-all

that they don't want their ads associated and they look elsewhere? No, I think it'll be reactive, right? And so, you know, it's really interesting. If you're on Twitter, you can see the notes from kind of the all-hands meeting that took place yesterday. I think there's a lot of uncertainty in terms of what the operational changes will be. And when Elon comes in, we'll have a best. sense, but honestly, the deal hasn't closed yet. He hasn't gotten inside. He's probably still

talking to people. So I don't know that he exactly knows what he's going to do yet. There are some big picture ideas, but we'll see when the actual details are out. He sort of hinted, and maybe he stated out outright that this Twitter deal is not about making money for him. What is it about then? And what if he doesn't make money with it? You know, it's kind of the million-dollar question. If he doesn't make money with it, he has other money that he will continue to have. Yes, I'm not worried about him. I'm not. You know, the point being is, what could the platform change and what could it actually look like?

And again, it's just way too really to tell what the actual changes will be. Again, it sounds like there's going to be just more free speech, less fettered content moderation. And so, you know, again, we'll see what happens in a year. You know, I'm looking at your coverage space, Andrew, and this is in some ways where we've seen the most selling pressure, you know, a lot of internet stocks, a lot of companies. I mean, even names like Uber that, you know, are trading well below their IPO levels. Where would you tell investors to look for businesses that you think are going to prove more durable than the market is currently giving them credit for?

Yeah, we actually just put out a travel preview yesterday. and we're pretty positive overall in the mix to services, right? And so we're actually positive on Uber. We think mobility is increasing, which is where a lot of the profitability in that business resides. We're pretty positive on travel names. If you look at the cadence in the quarter, you just saw a strong acceleration of a demand across travel from January to February to March into April. And so we think that consumers are now prioritizing just getting out, right? Like one of my favorite stats that we kind of came across and doing work there. So I think a live nation is saying that as of mid-February, ticket sales are up 45% versus last year. I mean, there is just the

absolute shift to consumers wanting to get out, wanted to go socialize, one of you who do stuff. And so we think that we're favoring names within that space. All right. Again, these stocks have been under such pressure. Kind of need to shake it off and get their mojo back with the rest of this market. Andrew, thanks for your time today. Thank you. Andrew Boone with JMP. Let's get a check on these markets where the NASDAQ remains the worst performer still down more than 3%. The Dow down only 610, the S&P, down 88. All right, coming up, Sherwin Williams is the best performing stock in the S&P today.

The company says it has pricing power. So who else has it? And is that the key to investing success these days? And as we head to a break, take a look at GE. That one, down more than 10% after it said it sees inflation. and supply chain challenges ahead, down now almost 11%. Welcome back to Power Lunch. I want to turn your attention to some consumer-facing stocks.

The cruise lines trading sharply lower at this hour. Carnival down by 6.5%. News this morning that CEO Arnold Donald, who's been at the helm for nine years, is stepping down as CEO, effective August 1st. He'll be replaced by the C.O. Josh Weinstein, who's been at the company for almost 20 years. And it comes just four months after Richard Fane stepped down as CEO of Royal Caribbean.

He was, of course, replaced by the CFO, Jason Liberty, as the broader industry, guys, aims for a full recovery. But at the same time, is trying to effort this refresh and bring in some new people who also have long industry experience. You'll see shares of Carnival down about 6% today as part of this broader market sell off, Royal down about 4%. It's been an exhausting period for a lot of those leaders trying to lead their company. through the pandemic. Seema, thank you very much. Shares a Ford or lower as its iconic F-150 pickup goes electric. The first trucks are rolling off the line today in Dearborn, Michigan. Phil Aboe is out there and he's got Ford's CEO. Phil? Thank you, Kelly. Jim Farley, big day as you begin shipping, essentially the F-150 lightning. You made a statement just a few minutes ago on stage. You said

this is just the beginning, ramping up production, accelerating production up to 150,000 a year. make it to $150,000 in the next year? We can't. We have to blow out this building. We've upgraded the building twice, but it's all about batteries and raw materials. And we have the batteries secured now. We're in good shape. What keeps you up at night? For sure, a couple things. Batteries, raw materials that go in them, and localizing that raw material supply chain in the U.S. and the consumer credits. We have to be competitive with China and Europe and have consumer credits to help people. This is a $39,000 vehicle. We have to help regular Americans get in this technology. Get that $7,500 incentive. So here's the question. You know that we don't have localized materials for sourcing of batteries. It's going to take some time there.

If I'm an investor, why do I believe that Ford can produce 600,000 EVs annually when the supply chain is just not there for not just you guys the industry? Well, first of all, we're going to protect these electric vehicles. This is a strong. strategic move by the company that gets the 600,000 units. If we're shorted on semis, they're going into these kind of products. Number one. Number two, it's Ford Motor Company, the B24 Liberator, ventilators during the pandemic, the Model T. This is what we do.

We're not a new startup. This is what we do. We build things in scale. We know how to do this. You said on stage, it's a few minutes ago, this is the beginning of taking on Tesla, beating Tesla. Can you catch Tesla? because the analyst out there believed that the gap between you and other automakers and Tesla is widening.

You're not closing it. I wouldn't bet against Ford. There's a small team that did this product. This is America's best-selling vehicle. We're electrifying it. We're having 200,000 orders. The demand on the product and the way the company's executing Mustang, transit, you know, we really have a chance. Now, it's up to us to execute.

We have to execute to do that. And you know that execution has been a bugaboo for you guys, especially in the last 15, 20. years. What have you done to make sure that this launch is not hit with the same problems you've seen in the past? I've been personally involved. I talk to Linda every night who's a chief engineer. I come down to the Rouge at least every weekend. We're all involved. Everyone knows how important this is. The F-150 is second only to iPhone in revenue as a consumer product globally. We know what this launch means. We know. And we're on time. We've built 2,000 units already. Some of our competitors have been building for a year and haven't built 2000.

Getting back to the question of batteries and the raw materials, is the industry united enough with the current administration to make this happen? Because you can't do it alone. You need the government in Washington to step in. I would say the industry is starting to get in line because we all realize the same thing at the same time. We need mining permitting. We need processing precursor and refinement permitting in the U.S. and we need government and private sector to work together and bring it here.

We can't just mine the raw materials in and ship it out to Asia and Africa. We have to keep it here. To do that, we need the government support. We have to move faster. Big hurdles that you need to overcome in the next couple of years. Yeah, but that's what makes it exciting. You know, that's Ford Motor Company. That's why we come to work every morning.

We want to solve big problems, hard problems. And ones that are important. We want to bring electrification to the many, not the few. Hey, what would your grandfather say? He worked at Rouge. What would he say if he saw this time? Jim, what the hell is that? A flying car? He'd probably say to me, Phil, go back to work. Jim Farley, CEO, Ford Motor Company. Guys, we'll send it back to you on a big day for Ford as they begin production of the F-150 Lightning. Guys, back to me.

Fascinating fact that the F-150 by revenues second only as a consumer product to iPhone. That's amazing. Phil, thank you very much, and Mr. Farley, you as well. Up next, the pricing power dynamism. As earnings roll out and higher inflation rolls in, which companies are displaying the strongest pricing power so far? We will take a look at three names making big moves today. There you see them. Plus, Chipotle, one such name praised for its resilient pricing power. But could this be the quarter where consumers stop shelling out the guac? With inflation raging, investors are looking for companies that can successfully raise prices and protect their profits.

Today, a number of companies said they have pricing power, and Dom Chu has a roundup of some of the names. Hi, Dom. All right, so that's right. We're going to start with the name that's kind of implemented a number of price hikes over the course of the past year or so. We're done talking about paint and coatings manufacturer Sherwin Williams. That stock can outperformer today after topping Wall Street estimates earlier this morning, which the company attributed, by the way, to strong volume and pricing, especially in its performance coatings unit, while executives there believe,

believe the worst of the supply chain headaches are now over. They did note that margins remain under pressure because the pricing actions taken thus far haven't been enough to offset some of those higher total raw materials costs. So watch Sherwin Williams. Also now switching gears to UPS, which also be analyst estimates, even as volumes fell almost 4% during the quarter, but a near 10% jump in the average revenue per piece or package fuel that company's earnings beat. You can see those shares down about 2%. And then elsewhere in transportation land. We've got JetBlue.

That stock firmly in negative territory today as the airline scales back capacity growth in the face of higher fuel prices. But that being said, the company saw higher than expected demand from consumers, even as average fares searched more than 30% versus the same time last year. JetBlue also saw revenue per available seat mile,

a very key metric for airlines, jump 40 for 0%. So as the inflation situation continues, We're still seeing some companies that are able to shift past those costs onto the consumer. So Tyler Kelly, just a handful of names. I'll send things back over to you. Dom, thank you very much. Let's get to Bertha Coombs now for a CNBC News Update.

Bertha? Hi, Kelly. Here's what's happening at this hour. In California, a baby allegedly kidnapped yesterday afternoon has been found. The boy was taken to a hospital as a precaution. Three suspects have been detained, including a woman who made conflicting statements to police about the incident. In Virginia, a forensic psychologist hired by Johnny Depp says Amber Heard suffers from personality disorders. This coming at Depp's libel case against his ex-wife, the expert witness also testified that Herd does not suffer from post-traumatic stress from her relationship with Depp.

Herd's lawyers will get to cross-examine that psychologist this afternoon. And in Moscow, President Putin and UN Secretary General Gutierrez have finished their meeting on any. the conflict in Ukraine. Gutierrez criticized Russia's military action as a flagrant violation of Ukraine's sovereignty. The UN says Putin has agreed, in principle, to help evacuate civilians from the massive steel plant in Maripole. Back over to you. Tyler, Kelly. All right, Bertha, thank you very much.

And ahead on power lunch, 401 Crypto, Fidelity to allow retirement savers to put Bitcoin in their 401K accounts, Kelly. Plus, Bitcoin hasn't proven itself to be an inflation fighter, but there are some dividend names that have done so in the past. We'll lay out a list of stocks that could beat inflation and pay out a big dividend in today's three-stock lunch. And as we had to break, check out markets. The Dow down 657 at the lows. Look at it now down 573. The NASDAQ's still the worst performer consumer discretionary leading the declines. We're talking names like Tesla, Under Armour, and Win.

We're back in a moment. 90 minutes left in the trading day, and it is an ugly day for the markets. Our reporters are standing by to tell you everything you want or maybe don't want to know about stocks, bonds, commodities, and crypto in your 401K. Let's begin with Bob Pazondi at the New York Stock Exchange, tracking the sell-off for us. Hey, Bob. We are off of the lows, Tyler, but not convincingly. The problem is very simple. We are seeing multiple compression in the big tech names.

Microsoft's Cernie's coming out after the bells. after the bell. Microsoft's seen its multiple, it's PE multiple, compressed about 20% in the last, since the beginning of the year, and that's about what it's been down, about what it's off the high. So these are multiple compressions that we are seeing. Apple, Advanced Micro, sitting at not far from a new low right now for Advanced Micro. And VDia, of course, knows 40% off of the highs. So these stocks are having their multiples compressed. We'll see if they actually get their earnings reduced.

Microsoft going to be out after the Bell. Speculative tech stocks, they already had their multiple compressions. Most of these big speculative tech names are at new lows today, Zillow, Roku, Shopify, Coinbase, all associated with Kathy Woods and the ARC funds here. As for the earnings, they're okay, but that's not the big problem. So, for example, Sherwin Williams better unexpected. UPS was good. 3M was good, but the guidance was weak.

World Pool was okay overall. But it doesn't matter, and the reason it doesn't matter is when they're dealing with big macro issues, you don't get good credit for individual reports necessarily, although Sherwin-Williams is having a very good day overall. Another big problem is just Tesla. We're dealing with a trillion-dollar stock that's down 10% today. That is a huge weight in the S&P 500. And if just that alone was down, it would be a bit of a weight on the S&P 500.

Given the tech stocks they're dealing with, no wonder we're down 80 points in the S&P. So the bottom line here, Tyler, is remember the old low there, 21, excuse me, 41-771 on the S&P 500, March 8th, and we are not that far away. A good 40 points. Tyler, back here. Thank you very much. Let's go to the bond market now where yields are lower along with stocks, and Rick Santelli is tracking the action. Why are yield sliding, Rick? You know, yields are sliding because stocks are sliding and there's still this relationship that some investors think that the Fed,

well, whether they push the economy into a recession or not, the aggressive tendency of the market to price in a Fed with massive tightening is under scrutiny. And how can we tell? Well, here's an intro of two year. And this is a short term. intro, meaning from our time zone, and you can see around one Eastern yields dropped because it was a spectacular auction. I gave it an A plus. But if you open the chart up to 24 hours, you can see outside of our time zone, yields really did the bulk of their dropping. So to answer Tyler's question, global growth is in question, the amount of Fed is in question

when stocks get hit this aggressively, NASDAQ on pace for its worst year or months since what? 2008. All that doesn't get lost on the market. The problem is, is that the long-dated treasuries are much firmer. Look at Fed funds for December. Here's a three-day chart. And remember, as they rally, they diminish how much they're pricing in for the Fed. They're up about 13 ticks from their all-time lows,

which means they've taken out only about 13 basis points of tightening. Now, if you look at the dollar, it's strong today, and it's not strong against the yen. It's not strong against the onshore you want. You know what it's strong against? The euro currency. This chart starts in March of 2020 because right around there was where we were competent to until today. Because today the euro dropped even further. Right now open it up to April of 2017 because the euro is on pace for a fresh five-year low close underscoring nervousness about growth. Is the Fed doing too much? And of course, all this brings some buying in, especially to the dollar. Tyler. All right. Thank you, Rick, Rick Santelli.

All right. Now, let's go to crude. It's closing for the day. Back above $100 a barrel. And Pippa Stevens is tracking the move there. Hey, Pippa. Hey, Tyler, rebounding today with gains accelerating during mid-morning trading after Germany's economic minister said that an oil embargo for the country has become manageable. That's according to Reuters. Now, those comments come as the EU moles, how to move away from Russian energy. Let's check on prices. WTI up 3% at 101.47. Brand crude at 104-75 for a gain of 2.4%. NAC gas, pulling back, though, still up 2%. But earlier, it did trade above $7. And take a look at heating oil. That contract is searching 8% today. U.S. inventory for distillates, which also includes diesel, is now at the lowest since 2008. Also wanted to point out shares of Valero, moving higher after the refiner. B, top and bottom line estimates, with revenue growing 85% year over year. City thinks the stock is now heading to a new all-time high.

The firm raised its full target to $138 per share. Tyler, back to you. Pippa with some serious books behind her there. Pippa, we thank you very much for that. All right, I haven't read a book that thick since college. I'm telling you, the price of Bitcoin back below $40,000, even as Fidelity, says retirement savers can put cryptocurrency in their 401K. Kate Crypto Rooney is at an event in the Bahamas hosted by FTX, and she spoke to FTX's CEO.

Crypto Kate, take it away. Hey there, Tyler. Great to see you. I did indeed speak to Sam Bankman Fried. He's the CEO and co-founder of FTX. We sat down about 10 minutes ago. He said he supports Fidelity's movie. He sees it as a good thing for the industry, and he says it expands access.

Take a listen. I think he's going to start off small, like all of these things, you're not expecting billions of dollars flowing in on day one or anything. But what it does is it opens up another option for employers and ultimately for employees to be able to invest in what they want to invest in. And I think that ultimately it's going to become pretty big. I also asked him why Fidelity Charles Schwab, E-Trade, haven't started offering Bitcoin directly.

They right now have to offer Bitcoin through grayscale Bitcoin Trust and some other proxies. He says that will happen eventually. He expects it. He says it will add competition, but it also adds to continue. consumer choice. And he says that FtX may get into 401k's at some point. So somebody watcher also asked him about Twitter and Elon Musk. And Musk buying Twitter. He said the crypto community is particularly excited about that. Sam Beckman-Friede has been tweeting about it. He says he hasn't talked to Musk directly yet, but he says he welcomes that deal.

Ultimately, this only makes sense if he's excited for that vision of it, right? for if he's excited about what could happen in the intersection of blockchain and social media. And I think this would also be an experiment, right? I think it's really compelling. And I think that there's a lot of upside there. But we can't know until we try. And, you know, there are a lot of pieces of this that would need a lot of testing. He talked about the upside being using crypto for payments and potentially taking down some of the walled gardens of Facebook, Twitter, and making them work together more smoothly. So we'll see if he ends up talking to Musk.

Last thing we talked about Bitcoin prices. He says it's actually less Fed related than it has been in recent months. He said things like global politics and really reading the tea leaves, he said, on U.S. politics. But we'll see, a little less Fed related and a little less macro related, at least, according to him. Back to you guys. Yeah. So I just wonder in general, Kate, when we're facing a public that's kind of back at work and a liquidity tide that's been receding. And maybe Bitcoin just becomes, you know, as it seems like a new asset class.

but I do wonder about the rest of the space, maybe other than Doge, which is having it today. Right. Yeah, it's interesting. I mean, 401Ks really are the main entry point for a lot of people into the equity markets. And the argument from the Bitcoin Bulls has been, if you set it and forget it and maybe look at a 10-year time horizon the same way you would for a 401K,

that is really the way a lot of people suggest that you should invest in crypto versus trying to time the market, looking at some of the volatility we've had. So if that is the case, it could be a good thing, But it's also up to the employer at this point. If Fidelity can actually start offering this, we'll see how the employers feel about it and if they jump on board as well.

Even Doge is down today. Kate Rooney, thank you. We always appreciate it. Chipotle keeps raising prices and consumers keep coming back. Is their pricing power waning, though, the stock down this year? Plus, we continue to watch tech stocks dropping Apple

down more than 2%. The stock on pace to close below its 200-day moving average for the first time since mid-March. And Apple's also having its worth. worst month since last February. We're back in a moment. Welcome back to Power Lunch, everybody. Consumers can expect higher menu prices at Chipoli to stick around for a bit. CEO Brian Nicol recently saying that the chain will likely increase prices again this year to offset costs. Now, the stock is down 18% this year.

The question is whether consumers will keep paying up. Kate Rogers joins us with more. Kate? Hey, Kelly. Well, Chipotle has long touted its pricing power and value proposition, and that That will of course be a big focus again this quarter. The stock is one of BTIG and Cowan's top picks for the year because it caters to a somewhat higher income demographic and it has a loyal customer base. Beef, avocados and freight all led to higher costs last quarter along with higher wages in this tight labor market. Now the street today will be looking for EPS of $5.64 on revenues of $2 billion.

Same store sales expected to increase by 7.9%. That's a strong number in this space as costs continue to rise. And the company is set to surpass 3,000 locations in the quarter. as well. Digital sales, always a focus. Last quarter, accounting for more than 40% of the company's overall sales. And a final note of interest here, any more color or announcements on Chipotle's technology plans will be of interest to meet. Beyond just digital, it just launched a $50 million venture fund to invest in new technology companies. It disclosed an investment in Nero. Remember, the delivery robot in late 2020, and it's been testing out Chippy, the robot,

to make its tortilla chips in its innovation kitchen. The company's chief technology officer, Kurt Garner has told me that they want to be really intentional on their tech investments and lead on technology in the future. As you mentioned, the stock is down about 9% in April, but it's up over 5% in the last three months. Back over to you. So how much have they raised prices already, Kate, and how much more are we talking? Yeah, so to date last quarter, at the end of last quarter, Chipotle CEO had said that they raised menu prices by about 6% in 2022. Compared with a year ago, though, customers back then were paying about 10% more for their order. So we'll see if we get an updated number today. But Brian Nichols said these customers seem to be willing to really come back

to the restaurant, pay those prices. They do have a good value proposition. They have not turned away yet. So we'll see what they have to say after the bell. All right, Kate, thank you very much. And hunting for yield and safety, three names to consider for your portfolio amid this volatility. That is today's three-stock lunch. All right, welcome back, everybody. Let's talk about those stocks. They are lower across the board, as we like to say, 638 points. There's a little rally back to about 500 down a few minutes ago for the Dow, but now back, nearly 2% lower.

But it is once again, NASDAQ, off almost 400 points, 3% on the button. The Dow is near session lows. The worst day since March 7th, actually, for lots of these things. Now, for investors who are looking for safety and market amid this volatility, CNBC.com came out with a list of 10 stocks to help counter surging inflation and fight back against volatility. You have high dividend yields and are outpacing the averages this year, among them, AT&T, Intel, and Newell brands. And we will sample them in today's three-stock lunch. We welcome in Boris Schlossberg, managing director at BK Asset Management. He's also a CNBC

contributor and many other things. Boris, let's start with AT&T. And I know one of the things you like about it, apart from the fact that they, frankly, they had one of the most bungled acquisitions in the history of corporate America with WarnerMedia. But they've got a 5.7% dividend yield. That's pretty good. It is. It's a 5.7 dividend yield, which is way above the 10-year yield. They have enough free cash flow to cover it at 69% payout ratio. So they're in good shape financially. And most importantly, they're now turning their attention back to their core telecom business. And with 5G growing, although, you know, it's growing slowly, but eventually it's really going to become a big,

big part of everybody's life, the bigger broadband. It's very likely going to create more applications. And that puts AT&T, I think, in a very, very good spot. So to me, I like the stock. It's a little wobbly on the price action. So to me, I think the interesting strategy here is buy a third here and then sell cash secured puts in two tranches at 19 and 18. And this will kind of emulate the covered call strategy without you having to give up the stock.

get a little bit of a yield and maybe a little bit of a better positioning in the stock. But overall, I think it's a pretty solid pick at this point. You know, all of these make people a little nervous, Boris. And that's kind of why they show up. You know, if they didn't, they wouldn't maybe offer these kind of returns. We have, you know, as we just talked about, AT&T, Intel and Newell, and they've all kind of had their issue. So let's focus on Intel. Is this name now, you think, a candidate to be a steady dividend stock for shareholders?

So I think dividend is pretty secure, but I'm very much afraid that Intel could be a bare trap. This is of all the stocks we have on our list, this is one I have sort of the least enthusiasm for, simply because, you know, they've obviously stumbled very badly in the past. But more importantly, going forward, there's a lot of headwind here. The PC market is going to experience probably a lot of problems because of the war in Europe and because of the slowdown in China. Now, the focus on Intel really is in the data center field. But there, they have tremendous competition from Nvidia and especially AMD.

So the question is, is there a new product set really going to take the market by the storm? That's the big question. I'm not so sure. And that's what makes me hesitate about sort of going full on in Intel. I think it's secure, but it could be one of those kind of things that could just be dead money for quite a long time. Let's go on to another one that has been called dead money for some time. And that's Newell Brands on pace for its best month in a year. Now, everybody's got a rubber-made sink stopper dog.

gone it and a sharpie. And I'm telling you right now, I'm declaring I am willing to pay 10% more for a Sharpie. There you go. And a calm and cooler, right? Yeah. So all of those things, I think that's the key thing. It's got very, very good brand names. The pricing pressure now is actually going to work in their favor. If you look at their underlying fundamentals, they're actually looking pretty good. The free cash flow is improving. And more importantly, the margins are looking almost to double digits. And I think all of that is finally positive. It's been dead money forever, but because it's so cheap now at 20, and because the yield here is almost 4%, I think it's a very attractive buy. It's one of those kind of quiet keepers that could go

to 30 over the next 18 months, so therefore I really like it. All right. Let's get a thought on what you see in the market right now with the Dow down almost 600 points. What's your counsel? Well, you know, we're obviously having a very serious correction. It all depends on your timeline. Generally, I mean, the single most interesting fundamental or statistical aspect about the stock market is it's a 60-40 game, meaning that 60% of all days are winning days. And therefore, buying the dip, whether it's on a quarterly basis, on an annual basis, or even on an intraday basis like I do all day long, is much more of a winning strategy than investors really believe. I am still bullish, but obviously cautious in the sense that, yes, we could have more pain to the downside. We certainly have a lot of macro heads in front of us. Long-term bullish and a couple of big issues, China and a war to settle out, not to mention interest rate positive.

Go ahead. Finish your thought. I think investors need to remember that stock market is always a 60-40 coin and that's a really good out to take. That's pretty good. Thanks a lot. Boris, I appreciate it. Thank you. For more inflation fighting dividend plays, you can check out the whole list on CNBC.com slash pro.

And up next, a very ugly corner of the market. Yeah, still, we're looking at stocks that are trading the most. below their long-term trend prices. Keep it here. Welcome back, everybody. We're watching a pretty tough session unfold in the market that dials down 535 points, about 100, 150 points off the lows right now. We're taking a look at the stocks, though, that are trading the most below their long-term trend prices. Dom Chu, back. He has the details. Dom? Many of them are actually in the NASDAQ 100 overall, but let's take a look at the reason why we're looking at this. Now, at the lows of the session, about 425 some point losses for the NASDAQ composite overall.

But if you take a look at the way things are shaping up right now, the level you want to watch in the NASDAQ is 12,555. That, by the way, represents right over here the lows that we saw for the year just over the course of the last month and a half or so. So that's the key level. You can see we're almost at that low level here. And it also means that we're below both that 50-day average price, medium-term trend line and the 200-day as well.

So we took a look at those S&P 500 stocks that are the furthest below their longer-term trend line, or that 200-day average price. And these are names that we know. Yes, they're in the S&P 500, so they're already large cap to begin with. But take a look at this. Netflix is now the stock and the S&P that's trading the most below its long-term average price, 61% below it. PayPal, we know how tough the fintech trade has been, is now 58% below its trend.

EPM, we're talking technology, digital consulting site engineering services, is 49% below its long-term trend. Etsy when it comes to e-commerce and online marketplaces, down 48% and Moderna's 46% below. Each of these is in the NASDA traded there except for E-PAM, which is an NYSC listed stock. But still, those five now represent some of those deeper value-type situations where people may either say, hey, it's fallen enough,

or is it the falling knife that I don't want to catch because it could still go down even more? EPM might be the one who has been affected by the Ukraine operations that it has as well. But to your point, there's a couple of names in here like an EPM or Netflix where maybe the story has changed for good. And a couple of others, or maybe the jury is still out. Well, I guess what kind of caught my attention was this notion that you have brand names in there. Earlier this hour, I was intensely watching that segment you had on social media stocks that were hit pretty big. Number seven on the list of the S&P 500 stocks, that's the most away, is meta platforms, of course.

you're talking about some brand name situations where there are, yes, fundamental and headwinds at play there. But if you look at the way some investors are trying to figure out whether or not there's a deeper value type situation there. Now, I would also point out that if you look elsewhere down the list, it is typically those growth-oriented names, just generally speaking, right? The curious part about that today is that you have interest rates falling in a bid to safety, yet those interest rates falling are not providing any kind of a help to the overall market, which kind of implies that there's a whole safety trade that may be in play right now. What's interesting about this time, it seems to me, is that so many of the ones that have fallen like a meta, like a Netflix, like a Moderna, for that matter.

PayPal, these were not just high-flying sites. They were real market-leading stalwarts. And pandemic-related for part of the thesis, right? Moderna, certainly, with the vaccine trade. And then you had PayPal because people didn't want to touch anything and they wanted to pay. everything else. So anyway. It's an interesting team. Tom, thanks.

You got a guess. You know what happens on Thursday? The CNBC stock draft returns. It's Thursday, April 28th at 2 p.m. Eastern Time. 60 assets will go up for grabs. Grab your assets. And 10 teams will be on the board, including old favorites. And some new big names.

And we will announce the winner of last year's draft, won't we? I think I know who it is, but with the market, the way. Yeah, anyway. Thanks for watching, Power Lunch, everybody. Closing bell right now. You know,