Power Lunch - Travel Optimism, Streaming Issues & Pregnant Pigs 4/21/22

Episode Date: April 21, 2022

Airlines and other travel stocks soar on hopes for a travel rebound. The CEO of Loews Hotels on what he’s seeing. Netflix continues to fall and Warner Brothers Discovery pulls the plug on CNN+. And Carl Icahn seeks allies in his fight with McDonald’s over the treatment of pregnant pigs. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome everybody to Power Lunch. I'm Tyler Matheson. Here's what's ahead this hour. Everyone getting excited for the big travel rebound. Finally here, this is the summer. We get back to going places. Airline stocks rocking today, cruise lines, hotels hire too. And we're going to talk to the CEO of Lowe's Hotels, Jonathan Tisch. And Carl Icon seeking allies in his fight with McDonald's over the treatment of yes, pregnant pigs. It's just the latest example of how ESG is changing the face of investing. We'll talk about how it's impacting companies, investment firms, and even corporate raiders who are supposed to be hard-hearted people. But not Carl.

He's got a soft spot for those pregnant pigs, Kelly. He certainly does. Tyler Banks. Hi, everybody. Markets losing some of their gains this afternoon. As Fed Chair Powell says, a half-point hike on the table for the May Fed meeting. You can see the Dow Down 113, the S&P down 32, the NASDAQ down. on 157. But still, it's been a decent week. The Dow up about 2%. And Netflix still a big driver.

No recovery today, sinking another 4.5%. It's lost two-thirds of its value this year. As you can see here, down 64%. And another streaming cautionary tale, Warner Brothers Discovery shares down more than 8%. They just pulled the plug on CNN Plus. We'll have more on that coming up. On the bright side today, anything traveled, especially the airlines. United shares are soaring almost 11% after their earnings. Delta American up 4 to 5%. Let's go to Phil Labeau for more. Kelly, we've now heard from four of the six largest airlines here in the U.S. And some themes are definitely coming true for each of these airlines. So this is across the industry. It's not like one airline is outperforming everybody else. We're seeing record numbers,

certainly from March and going into the second quarter for the airlines. So what we're seeing is that all of the airlines reporting a loss for the most part for the first. quarter, swing into profitability in the second quarter, strong and extended demand. I can't stress this enough. It's not that they're going to be expecting a big spring in summer. They're saying, look, this demand, it will stay like this for several quarters. And corporate travel is also rebounding. Here's the CEO of American Airlines talking with us earlier today on what he's seeing

when it comes to corporate travel. We're only back 90 percent, maybe 80 percent right now. We'll be hopefully back 90 percent in the second quarter. And as we get out there, you know, people are going to be going to be back 90 percent. going to want to get out and visit. I'm a new CEO. People want to come and see me. It's the same thing in the rest of the economy. People have been cooped up too long. Relationships have faded and they need to be reestablished. All right, so let's walk through some of the earnings that we've had in the last 24 hours. Starting first with American reporting before the bell today, posting record

March revenue. We also heard from Alaska this morning. It's first class revenues up 19% in March. By the way, all of the carriers are seeing people paying up for a premium cabin. And then you've got United reported after the bell yesterday. It is seeing strong transatlantic travel demand. We've got four more airlines reporting next week, including Southwest, JetBlue. We'll also be hearing from Spirit as well as frontier. Bottom line is this, guys, the demand that we are seeing right now in the airline industry, everybody across the board.

And they're just not talking their book. They are seeing booking trends that lead them to believe we will see this type of demand going well into the third quarter, fourth quarter and beyond. Phil, thank you, our Philibaut. Let's turn now to the hotels, which are similarly excited about the outlook. They're also potentially expecting some deal-making as we look for the return of business travel. Sima Modi has more on that for us.

Kemi? Kelly, the recovery and demand is already prompting a surge in deal activity in the travel and hospitality space. More sales of hotels across a nation. So far, $12 billion in transactions this year. That is the highest since 2016, according to Kostar. The states receiving the most interest and top dollar are Florida and California. Hotel real estate investment trusts have been the most active as of late.

There's host hotels which recently sold the Sheraton and Times Square to MCR, which is now the largest owner of hotels in New York City, as is private equity led by Blackstone, which recently sold a residence in in Orange County, California. Now, higher deal flow is seen as a positive sign that investors are starting to once again view hotels as a good real estate investment. It also comes at a time when construction of new hotels has been slowing, yet another reason experts say

we're going to start to see more activity in the coming months. Now, the more hotels added to the pipeline, the more revenue companies like Marriott get to receive, right? They function off of a franchise model. That's why we're keeping a close eye on the deal flow. Marriott is on track for its sixth consecutive day of positive gains, although slightly lower at this point. The bullish outlook for airlines is lifting a number

of travel names. We're looking at Expedia, now lower Vicasa, trading higher by around 1.2%. Tyler and Kelly? All right, Seema, thanks very much. Now let's get to our power player to talk about more about the uptick in travel and check in on the state of the hotel industry and more detail. Jonathan Tisch is chairman and CEO of Lowe's hotels. Also co-owner, Treasure, New York Giants. He joins us exclusively today. Jonathan, always great to have you with us. You say that your first quarter was excellent, one of the best the company has seen. Can you segment it for me? Are you, is it strong across the board or are in town hotels doing better than resort hotels? Or are they doing better?

Or are business-oriented convention destinations knocking them both away? Tyler, thank you. It's always great to be on with Kelly. And you appreciate the opportunity. The last couple reports, obviously, are very bullish on travel. You heard about the airlines. You heard about hotels. We certainly had a terrific first quarter.

due in large part to our resorts in Florida and the property that we have in Arlington, Texas, with another under construction. And Seema mentioned new construction. There is not very much of it, but we feel so confident that we have gone ahead and started the Lowe's Arlington Hotel, 888 rooms, 250,000 square feet of meeting space, which says to us that business travel will come back, come back and groups will come back. Now, a caveat, that hotel will not open for two years. And you ask about, is it an even recovery? No, it is still not even. Leisure travel remains extremely strong, very little price sensitivity, and that's helping the industry tremendously. But business travel is still slow to recover, and probably this year 2022 will still be off about 25 percent from the highs

of 2019, and groups are slowly getting back to meeting again. We're seeing inquiries starting to really drive our business in some of the hotels where we have meeting space. I want to come back to the Arlington, Texas project because I'm interested in it and curious about it, but one of the areas that you say is notably strong is weddings, pent up demand, I guess. Well, we know so many people, I'm sure everybody does. They get married, but they put off the reception. They decided to hold off so that family and friends can come. And the demand for weddings, we're having two, three, four weddings a day in some of our properties. And so it makes sense. It's all very relatable. And I'm sure maybe people have their own family members that have put off getting actually married.

So it is a big part of our business. But there are other areas. that we're concerned about. International travel. Yes, it's picking up, but it's not what it was. And the international traveler is so important. They spend more, they stay longer, and we need some of the, what we think of are very strident restrictions. They need to go away. This notion, if you're vaccinated, to still get tested to come into this country, is a problem. Getting a visa, many offices are still closed internationally. It's a problem. So there are things that Congress can do.

There are things that the Biden administration can do to help the situation. And I'm curious, Jonathan, and it's great to see you again about some of the patterns you're seeing where, you know, good news for New York that you think while that market's down, it's looking strong, Nashville looking strong Santa Monica.

And we're tired of hearing about how strong Miami is where Miami and Orlando, you say, are above 2019 levels. Absolutely. Our business in Miami, Lowe's Miami Beach Hotel is extraordinary. The partnership we have with your parent company at Universal Orlando, eight hotels, 9,000 rooms. On many nights, on 9,000 rooms, we are sold out. Now, that gets into maybe another question you may have, which are labor shortages. The labor shortages are real. The issues that might prevent somebody from coming to work in the lodging industry

are real. And we as an industry need to understand what we can do to become more. attractive to say you can make a really good career out of a role in the lodging industry. There are things that we need to do, but on many nights, we have many, many, many open positions. Let's talk a little bit about the move into Arlington, Texas, and help me to understand it. Is it a bet that Arlington and the Dallas Metroplex, Dallas Fort Worth Metroplex, is going to become a convention destination because that's what this sounds like to me? Tyler, you have really understood what we are trying to accomplish. As your viewers know, Arlington sits directly in between Dallas and Fort Worth, the heart

of the Metroplex, 15 minutes from the front door of DFW. We partnered in Arlington with the Texas Rangers and the Cordish Company to build a 300-room Live By Lowe's hotel, which sits right next to the Texas Rangers' billion-dollar new global life stadium. It sits a parking lot away from AT&T. And even though twice a year I might not agree with the Dallas Cowboys, 363 days a year, we are in total sync about the future of Arlington, Texas. So when you think about the business model to go ahead and build an 888 room hotel

with this amount of meeting space, it is because we have a deep belief in Arlington. We like the business that we're doing. Our existing hotel is doing quite well. And when you think about the demand generators, it's the combination of sports, food and beverage, entertainment. That creates the ability for us to build a hotel, $540 million project. There aren't many of those going on in the country right now.

We were able to get a construction loan from a major insurance company. That shows their faith and their belief in what we're trying to accomplish. And with the support of Lowe's Corporation, we are looking to do more of these kinds of deals. We call them immersive destinations where you combine varied demand generators. And also, I must say, and you guys teased it, which I appreciate, there is nobody else in the hotel business. That also is a co-owner of a major sports franchise. So that gives us the ability to talk to anybody who is trying to increase the value of their IP and their real estate. around where they may have a stadium or arena and play their games.

How can they do mixed-use projects to really increase that value of the real estate? We are not going to spoil this great chat by talking about the Giants, Jonathan. So we'll just leave it there. Kelly, I'm going to end on a very optimistic note. Wait, wait, wait. Before you get there, let me ask you about a less optimistic thing. About a month ago, when recession anxieties in the market were peaking, A lot of people cited the comments from Gary Friedman, the CEO of Restoration Hardware,

who cited a litany of headwinds in challenges and frustrations with the consumer, with inflation, with the Fed, you name it. You are striking such a different tone. I wonder if you can explain what you see happening with the consumer and the dynamics of the inflation situation right now. But once again, based on still business travel, not reaching pre-pandemic levels, with international travel being down, we and other aspects of our industry, other players in our industry, are experiencing very good business. So something must be going on. Are there headwinds? Absolutely. Is inflation causing us some challenges and bringing the most we can to the bottom line?

Absolutely. Energy costs, labor issues. Those are all really here and we deal with them every single day. but the business is there. It may be based on transient demand, but we'll take it. I will just say, you know that my son is a big giant's fan, a huge Giants fan. And I will say, merely look at where the Cincinnati Bengals were two years ago and where they ended up this past year. That can happen with the giants, Jonathan. I agree.

And my point of optimism was that our new GM, Joe Shane, our new coach, Brian Daibble, who created some magic up in Buffalo. Now we're in the Meadowlands, and we have tremendous faith in their ability to understand the challenges that we've been through the last couple of years. And we, the giant diaspora, which spreads throughout our country, is very optimistic. All right, Jonathan, thank you. And continued, good luck with the hotels and with the giants. Jonathan Tisch, thanks.

Such great information there. There's so many different windows of the economy. All right, coming up, stocks losing steam this afternoon, but the Dow is still up about 2% this week and what's been kind of a stealth rally. While everyone is worried about the Fed and inflation, did earnings actually steal the show? And can that keep going as more reports roll in?

Plus, Carl Icon, asking big firms to join him in his fight with McDonald's. It's not unusual for Icons to battle a corporate board. What's different this time is he's not trying to unlock shareholder value. He wants to unlock pregnant fix. will explain. Welcome back to Power Lynch, everybody. Stocks are losing ground this afternoon. The Dow's still up 2% this week. The S&P and the NASDAQ not quite as much. This is happening in spite of inflation, rising rates, and a war in Ukraine. Our investors just focused on earnings and can they continue to be

strong enough to outweigh all those other factors? Joining us is Mark Lachine, the chief investment strategist at Jenny Montgomery Scott. Mark, this is relatively impressive resilience given the fact that the five and the seven-year treasuries were above three percent today. Kelly, no doubt. And I think in spite of all the headwinds that you mentioned, you could probably add a couple even more to the list. I think the markets are looking at a couple of things. One, you've had sentiment readings that were exceedingly bombed out, which contrarily speaking is typically a bullish side. So investors have sort of baked in the prospects that things are likely to get worse rather than better, which leaves room for things to look slightly less dark tomorrow than perhaps today, which might put a bit in equity prices. In addition, of that, though, corporate earnings have come in, albeit so far early in the game, a little bit better than expected. The surprise ratios flirting with a number of around 79%, which is good. But, you know, we're likely to see the evolution of these earnings over the next couple of weeks not only continue to surprise on the upside, but perhaps allow management to talk about the

prospects that perhaps the positive earnings revisions that have been continued to be marked down here over the last couple of weeks may be stabilized or actually move up on the back of the fact that the U.S. economic conditions are holding in much more sturdily than what you talked about earlier in the year segment. Some of the recession risks that were talked about quite exceedingly a couple of weeks ago have started to finally fade. So, Mark, where would you have investors be positioned? Kelly, for us, it's a couple of areas. So one, we like a couple of cyclical sectors that are highly dependent on the fact that it's a supply demand imbalance where there's scarcity. And that, of course, is in energy and metals and mining, which falls largely under the basic material sector.

We think this is going to continue to thrive even with modest demand, primarily because of once again the lack of the ability to get the supply that's needed to even meet modest demand, let alone any uptick of demand that we might see on a go forward basis improve the profitability of stocks in these sectors. The other, of course, though, is to think about perhaps barbelling that approach with more defensive growth sectors, like health care, perhaps like consumer staples and real estate investment trust, that withstand a benefit from still positive macroeconomic conditions, but perhaps those that might begin to decelerate over the balance of the year. Some of these headwinds take on a little bit more

robustness relative to the prospects of higher interest rates. Jay Powell today talking about raising rates, perhaps 50 basis points in May. And inflation, while high and likely to abate, staying well, above levels the Fed is comfortable with engendering a more aggressive posture as we go over the next couple of months, if not quarters. You know, Mark, I think just to follow up on an earlier point, I think you're quite correct. And Kelly, as well, that some of the recession fear fever has broken in the past couple of weeks. But let's not forget that we are, what is the Fed funds right now? and we are just beginning, just beginning the move higher in interest rates. And when those higher interest rates begin to hit home, might that.

Isn't that when the real worry about a recession would kick in? Undeniably, Tyler, I think a lot of it was really born out of the fact that we had the inversion of the yield curve, where the two-year yield finally had broken above the yield on the 10-year bond. And that seemed to catalyze his talk about a recession since it's historically had very high predictive value. Having said that, there are other measures that did not corroborate that signal. But as you said, as the Fed begins to move closer and closer to the unobservable neutral rate, but something that's estimated to be in that 2.5% level or so, markets are going to begin to think about the prospects that going from where we are today, which is easy at monetary policy,

but tightening to suddenly tightening monetary policy to tight. And that is the point at which the market will proceed by way of reflecting in prices the prospects of a recession whose probability may increase substantially later this year or perhaps early in the next if the Fed continues the campaign on a very aggressive hiking schedule like market participants currently believe they will. All right, Mark, thank you very much. Mark, Machini, Lushini, we thank you, as always. Appreciate it.

Thank you, Tom. All right. Further ahead on the program, inflation isn't just hitting food and gas prices, also causing health care costs to rise. Ever with us, details on that story,

plus another major shock to the streaming world. CNN Plus shutting down just one month after its launch. We've got a lot to talk about. We'll hear hit Warner Brothers' discovery in today's three-stock lunch. Welcome back to Power Lunch.

I'm Dominic Chu. Check out right now. shares of Twitter, they've been moving between gains and losses, as you can see there throughout the course of the session as investors digest the latest developments in Elon Musk's potential bid for the social media giant. The Tesla CEO saying in an updated regulatory filing today that he is exploring a tender offer to purchase some or all of the shares of the company directly from its shareholders. Musk says he has received financing commitments worth over $46 billion in both equity and debt financing to help that potential deal.

A tender offer is just one option he may pursue to buy Twitter. That stock has been, though, volatile throughout the course of this Musk Twitter Sotagga, but it's up more than 20% since the start of the month, just a few days before Musk's 9% stake was revealed. And Tyler, you may recall that the floated number was $54.20 from Elon Musk. Twitter shares right now $46.79, tie, back over to you. Yeah, very, very interesting. I mean, he's a bold guy, but you do have to wonder whether this is a kind of quixotic quest.

Quixotic? I don't know. I mean, he's got the resources, right, to do it. So it may not be as quixotic as you think it is. However, it would be very dramatic. If you and I went after it, that would be truly quixotic. Yes, if I took a spear out and tried to stick this massive windmill of Tesla with just my little, you know, whatever it is, and that would be quixotic.

I think Elon Musk certainly is the richest man in the world. a little bit more resource. A little bit more shake there, right? Thanks, Dom. You got it. Let's get to see Momodi. Never quixotic is she for the CNBC News Update. I think I counted eight quixotics.

That is a CBC news. That's a record, right? All time. History right there. Tyler, here's what's happening at this hour. A busy day for Florida's House of Representatives. Lawmakers approving a new congressional map pushed by Republican Governor DeSantis. The vote happened despite a protest by Democrats that clear the House floor.

Critics of the map say it is designed to diminish the state's black representation in the U.S. House. Florida's House also voted for a bill to end Disney World's special tax status. Governor DeSantis wants to punish Disney for its opposition to a measure that critics have dubbed the don't-say-gay-gay-law. The Disney bill could have huge tax implications for the entertainment company, as we've been discussing, and also surrounding counties that could become liable for more than a billion dollars in debt. And Britain's lawmakers have approved a probe into alleged lies by Prime Minister Boris Johnson about attending illegal parties during pandemic lockdowns. A committee will now look into whether Johnson misled parliament,

a finding that Johnson did say would put heavy pressure on him to resign. Story we're watching very closely. Kelly, back to you. Well, quixotic effort to avoid punishment. Seema, thank you very much. A head on Power Lunch, Carl Icon's arch nemesis. The billionaire investor is sparking an ESP. fight with McDonald's over its treatment of animals.

The latest details next. 90 minutes left in the trading day, everybody. We want to get you caught up across the markets on stocks, bombs, commodities, and Carl Icons' latest push in ESG. Let's begin with Bob Bassani down at the New York Stock Exchange. Bob, we've given up a more than 300-point rally. Dow's now down 150. And remember, two days ago, we were all optimistic.

Maybe we were breaking the downtrend. Forget about it. So we started up 50 points. Look at the S&P. started up 50 points in the morning. We're now down 50 points. It's a hundred point move. What's the problem?

The problem is bond yields. They've kept going up. The two year is at the highest level since 2018. That's the proxy for everybody's concerns about the Fed and inflation issues. It just keeps going. It's up 10 percent, the yield this week. And so because of this, tech stocks can't get out of their own way. And it doesn't even matter today whether you distinguish high quality, low quality.

Kathy Woods, Shopify, Spotify, Kathy Wood stuff. down five, six, seven, eight percent. Even big, big semiconductor names like Nvidia, AMD has not been looking that great recently, either. All of them are down right now. So tech stocks are getting hammered. Another big concern is we're losing some of that commodity lift that we had for the market that kind of held things up to get today. Freeport MacMand's a play on copper. Excellent report overall, but you can see they're talking about higher costs. They're selling that. That's profit taking. Mosaic's been a big leader, profit taking. had a great report. It was up a lot more earlier, but it's still up. And even the commodity complex, the energy complex moving to the downside. At least the airlines are happy, Kelly. I mean, look what happened to America. They said sales hit a record in March. United earlier said things were doing well. This group, at least, everybody's still paying up for airlines, for hotel rooms and for plates of pasta. A-1-1-out last night, Kelly, pasta. $32.

What kind of pasta? Cavatelli with Pesto. I don't know what's going on in the Basel Futures Market, but it's getting out of control here. $32 for a plate of pasta. I'm sorry. Sounds fan thing. Sounds delicious, really.

All right, Bob, thank you very much. Bob Pisani. Now to the bond market. Speaking of expensive, or would that be the opposite? Anyway, the five and seven year yields above 3% earlier today. And then we heard from the Fed Chair. Rick? Expensive is a relative term.

And my guess is if you think it's expensive today, also need to do is wait a couple of days. It'll get more expensive. Bob's right. Two-year notes. Look at a two-day of two-year notes. Moving higher. Look at a two-day of ten-year notes.

It's trying to play catch-up, but not nearly as aggressive. The short end is retaking control of the markets. Look at twos to tens. It was all about steepening. Not anymore. Now it's about flattening. What's changed? Think about Fed speak today.

And look at this chart. This is a two-day chart of December. At the end of this year, Fed Fund, So it's like the catch-all. Everything that's happening in all the meetings log jams down because every month is an individual Fed funds contract. So as you change something in one month, it just rolls downstream. It all ends up in December. December's low today was 9733.

100 minus 9733 implies, well, 267 basis points of tightening, which is right about where the two-year note is. The two-year note's been shadow boxing the new hot guns hot December Fed funds. And if you look at a one-year chart, obviously today is the lowest level, meaning the highest probability, the most tightening packed in. And why is that? Because Fed officials are nervously trying to prepare the market for the fact that they lagged. Now they're going to have to be aggressive, so they needed to ramp up the pressure on the individuals

that are trading the markets. Kelly, back to you. Very good way to put it. Rick, thank you. Meanwhile, oil is higher again today to around $104 a barrel. And people are bracing for more volatility with markets weighing the possibility of a ban on Russian oil, a further global ban. That against a slowdown in demand from China. China's been coming back online. Still, there's WTI up 38% this year hovering just around 104. And Nat gas gaining again today, still below about $7 by, but just by a hair. Now, Carl Icon is seeking. to get some heavyweights to join him in his long-running fight with McDonald's over their pregnant pigs. Yes, Leslie Picker has the latest details. Leslie? It's just a yeah, Kelly. Icon putting the pressure

on large investors like BlackRock. In a new letter to McDonald's shareholders today, Icon is urging these firms to vote in favor of his two nominees to the board. Icon has been running a proxy fight at the Golden Arches in an effort to call out what he believes to be an animal welfare issue in the pork supply chain in the treatment of pigs. The activist implied in today's letters that big Wall Street firms have been outspoken on ESG related issues, but don't necessarily plan to vote in favor of his welfare platform. In the letter, he wrote, quote, the reality is that if the ESG movement is to be more than a marketing concept and fundraising tool, the massive asset managers who are among McDonald's largest owners must back up their words with actions. The

billionaire investor's stake is about $50,000 small relative to his previous campaigns, but he said on CNBC a few weeks ago that he is not doing this for returns. In this case, I am not doing this to make any money for myself. And I don't want to even be seen as owning stock because I'm saying, I am not here to say, I'm going to make some money on McDonald. I think McDonald has a lot to answer to people that are fans of ESG. because I really think if you look at McDonald's, hey, they got great gravitas. But in a lot of cases, for instance, in the environment, I would say to get an F.

BlackRock declined to comment. McDonald's did not immediately respond to our request-seeking comment, guys. It's very interesting, Leslie, because I've often thought, as you may know or may not know, that ESG to me is a noble concept, but I worry as ICON does, that sometimes it is a marketing concept, a way to attract assets, as much as it is a real call for change, because you can define socially responsible in investing and socially responsible companies in lots of ways.

Well, that's just it, Tyler. There's not necessarily at this point in time a quantitative approach to ESG in the way that there is with, say, gap accounting, you can say this company is undervalued, overvalued, based on the discounted cash flow model I ran. It's not that way with ESG right now, and that is why you see situations like this that are extremely slippery slopes. There are some kinds of metrics that you can look at in terms of your carbon footprint, for example, for different companies. But even that can be a little bit squishy in terms of the math and the ability to account for that. With, you know, the ability to account for animal welfare, that's not something you can necessarily

look at and say, you know, here's the number that we would attribute to that, and therefore this makes it relevant enough that we would vote for a dissident slate in a proxy fight. It's just, it's a slippery slope. Yep. Leslie Picker, thank you very much. We appreciate it. All right, after the break, record inflation touching every aspect, basically, of Americans' lives, including their health care, will lay out the trickle-down effect higher prices could have on their savings and retirement. plus a CNN.

Warner Brothers Discovery shutting down CNN Plus, barely a month after it started. The company's stock, new stock, down nearly 10% in its first week of trading. You can't like that. Power lunch. We'll be right back. With inflation at a 40-year high, health care costs are surging. Current and future retirees will likely see medical expenses make up a much bigger part of their budgets. Sharon Epperson talked to some who are worried and are stepping up to help curb those rising costs.

When Kathy Martin turned 50, she hit the gym. And I want to be active for as many years as possible. What worries you the most about health care costs? Not being able to access care. When you have to prioritize your living expense versus health care, that's a major problem. Martin is in good company in this Silver Sneakers fitness class whose members are working on staying healthy. But worry about the future. What's going to happen when I get older?

You know, how am I going to be able to pay for the care that I need? Premiums for Medicare Part B medical insurance for those 65 and older increased nearly 15% this year, almost double the pace of inflation. According to one estimate, if health care costs remain this high over the next two years, a healthy 55-year-old couple retiring at 65 is facing an additional $267,000 in medical expenses. total health care costs for this same couple could exceed $1 million. That's nearly as much money as they could expect to receive in Social Security benefits during their lifetime. Whether you're affluent or whether you're the average person, I'll tell you what. When you look at your Social Security check, you're paying for health care.

Regular exercise may keep you healthy, but overall, health care costs keep going up. If you're worried about rising medical expenses, financial experts say the first thing, you should do is understand what your health insurance will and won't cover. You really need to look at the coverage in those types of plans to determine what makes the most sense for you. Instructor Melanie Scala has been teaching this class for over a decade. I'm here to help them to not have medical costs. I'm here to help them to exercise and feel better. Yet staying healthy also requires planning ahead to be able to afford health care costs in the future. U.S. employers expected group health insurance premiums to increase

about 5% this year. So many retirees were shocked to see a 15% jump in Medicare premiums for 2022. Now, experts say that increase is largely due to uncertainty around the pandemic and coverage for an expensive new Alzheimer's drug. Also, they say higher costs for goods and services for health care providers and higher wages for nurses and medical staff are likely to continue to drive health care inflation. And once those price increases are baked into the cake, they rarely go the other way. So

what is a senior guy like me supposed to do? What should I be doing to get ready to pay those higher deductibles, more premiums, more out of pockets, drug costs, etc? Well, you know you've heard it before, Tyler,

you have to save more, but what some people may not realize is when you're 50 and older, you have the opportunity to put money away for your health insurance plans or your health savings accounts, I should say, as well as retirement plans. So you can put up to $27,000 this year in a 401k, $7,000 in an IRA, and then in an HSA, a health savings account, if you're single, $3,750 or $7,300 for a family, but if you're 55 or older, add another $1,000 that you can put in. So make sure you're maxing out those retirement savings vehicles and the health savings.

account as well. And then the thing that you have to remember is many companies do not offer employee health coverage to retirees. So you can't count on that, although decades ago that was possible in some plans. It's not possible anymore for many. So it's really important to save and plan ahead. And use those HSAs. Sharon Epperson, as always. Thank you. This retirement thing sounds kind of scary. Yeah. Yeah. All right, Carvana, the latest example of the auto markets slowdown. They just reported their first ever quarterly sales drop. Look at what the stock is doing. We will hit that name and two others in three stock lunch after this. All right. Time for today's three stock lunch, drowned sorrows or celebrate, maybe a third.

We got three of the days, big movers. CNN Plus shut down by Warner Brothers Discovery in the first week that the company is trading together, down over 8% on the heels of that cancellation. Tesla going the other way, celebrate, raise a glass, record first quarter earnings, the EV maker up more than 5% and Carvana. Ground the Sorrows, down nearly 7% after posting a wider loss than the street expected. Okay, let's bring in Lee Munson, portfolio with wealth and wealth advisors president and CIO. You got all the titles, Lee. Welcome. Let's start with Warner Brothers Discovery.

I know it's not a stock you own. You were ready to talk about AT&T. Let's talk Warner Brothers Discovery. How big a shock is this? And what do I do if I happen to own the shares? I wouldn't own the shares. I'd sell them because here's the thing. CNN Plus should have been obvious.

I would love if I could just own HBO Max as a standalone thing. And when it spun off from AT&T, here's what I get. I get HBO Max. I get a little discovery. But then I have all these legacy cable channels. And as CNN has showed, you can't just take a legacy cable TV channel and then just go and say it's going to be streamed, it's going to be a platform. It's never going to work because you already have the major competition. You have got Netflix, which has its own problems.

You've got Disney Plus. You've got HBO Max. So I would say that I don't think this spinoff is as glorious as people think. I think you've got the crown jewel in there, which is a top-tier streaming service of HBO Max. I think Discovery has put up some great numbers with over 20 million subscribers, but it's still a second, third. rate streaming platform. I would not be long this name. I would prefer to own something more like something where you get a Disney plus crown jewel and then you get like Disney theme parks, which is a value investor's dream. That's my opinion. What do you, what do you make of this week? We can do a

show. John Oliver should do a show for goodness sakes. This week in streaming, you've got Netflix crumbling, you got this news, you've got other streamers who are not exactly lighten it up, my friend. No, it's a complete mess, and I think that people just need to remember. Think about the streamers that we all subscribe to and don't think about playing the, I'll subscribe this month, take a month off where people are gaming it. That's going to go to Netflix, even though they have declining subscribers, that's going to go to Disney Plus because being a kid never goes out of style, and you got Hulu because Hulu isn't just a channel, it's a platform for TV watchers. And then HBO Max, HBO Max, they just nailed it. But Paramount Plus is CBC.

with the lame movie lineup. And then you've got, you know, Peacock, which is NBC with a bunch of reruns. Stiff competition. Stay with the big dogs, invest accordingly. Hey, I love that peacock. I watch those off as reruns every night. Lee. Let's talk some Tesla. So this one, there was some similar concerns about rising competition. If anything, the company tried to show that it's benefiting from that, even saying that after the Super Bowl with all those EV ads, that their stock benefited. Well, here's what, here's like my big take on it. When you're listening to the earnings call, and I like to read them, I don't listen to them. It, it, the one thing that Musk were all those Tesla bulls, you know, the cult of Tesla, they love hearing that Tesla is being bought

by the rich and the upper middle class who could care less about a five or 10 percent increase in pricing or having a delay. There are people who have money and they're willing to pay a premium to have this car. And so Elon Mux has, doesn't have a pricing problem. But here's a thing. Why has it not made higher highs since November? There's probably at least 10. Tesslables out there, someplace in the world, who started thinking themselves, where are we going to get the lithium? Where are we going to get the copper? Musk says, oh, I'm going to have a plan for that. I'm going to have a plan for that. But obviously, that plan isn't here. I think that people don't understand the amount of environmental degradation that we're going to go through to get a

greener planet. And I think that that's a contributing effort, you know, of why this stock can't seem to push higher because we have that commodity issue. And it's going to come to haunt. And as we turn to our third stock, Carvana, I don't think the world appreciates how many people over the next couple of years are going to be underwater on used car loans. Let's talk Carvana. I mean, I never thought I would see it just because there's so much government stimulus checks going out to the average Joe out here. But we're finally starting to see delinquencies in auto loans start perking up.

I do not like that. It's a creepy feeling. It's like when banks say their loan books are shrinking. It's where you run to the heels. The hills. The problem with Carvana is that it was a great core short position. I think if you are short and you're a hedge fund that's been like, oh, I can do no wrong. I would cover it here.

But here's the problem. If you go on their website, all the cars are sold and the prices just keep going higher. Carvana is not Tesla. Carvana sells to the average American middle class person. And they do not have enough wage increases to pay for the increase in car stuff. We can't get enough cars. Their due diligence on buying use cars is non-existent. And I just think it's dead money for a while.

Wait for it to base out. Talk to me in six months about Carvana. We'll see if it's worth looking at. I doubt it. All right. Thank you very much. Lee, appreciate the insights there. Lee Munson. More power lunch next. Trying to net fix the problem. Retail traders are buying of shares of Netflix after those big declines this week. We've got some figures after this. Welcome back. No Relief Rally for Netflix today, which is down again after its huge decline yesterday. But some investors seem to think the bottom is in. Dom Chu putting that under the microscope. So they're nibbling. And we're

talking about retail investors specifically, those ones who are not categorized as those institutional types, mutual funds or hedge funds. So interesting numbers coming out of Vanda research out of Europe with regard to just how much trading activity has gone in. By the way, Netflix shares, you can see there that big plunge erasing more than a third of its value just over the course of the past weekend. By the way, with that, we have now pretty much lost about 70% of its value since the record highs we saw just over the course of the last year. With that in mind, whether or not retail investors do feel as though this is a place to get in, they are kind of putting where their money where their mouth is. Because yesterday, during that

massive drop that we saw, we did see a lot of trading activity coming from those retail clients. Those numbers coming from Vanda research actually point to a lot of money going in. Roughly $70.5 million worth of stock was purchased net on Wednesday by retail-oriented investors. That's according to that data from Vanda. And they also point out that the number of buy transactions and sell transactions over the last year. Yesterday had the number one day for buy transactions and the number two day for sell transactions overall over the course of the past year. And by the way, if you take a look at those in the general context of the overall trade for Netflix, you wonder whether or not there is a chance. People talk about the proverbial

falling knife in markets, whether or not there's still more downside to go. But it may have reached a level at which some point, some investors say, hey, you know, it's falling. by 70% from the record highs, it might not be worth going career long or buying everything I have with it, but it might be worth dipping a toe in or lagging in or something like that. So that's something that we're going to watch,

whether or not more money from retail flows into names like Netflix. Been a rough year for retail now. Yeah. I think it's a long-term turnaround Netflix, if I had to bet. But I don't know where the point is where you get in, but it feels like a longer-term time. $300 billion at the market cap heat. Oh, my gosh.

Under 100 now. All right, Dom, good to see you, man. Got it. All right, thank you all for watching Power Lunch.