Power Lunch - Two market power players, crude realities and peak jobs? 8/16/22

Episode Date: August 16, 2022

Apple and Microsoft make up more than 13% of the S&P’s market cap. Is there a danger in that much concentration at the top? Plus, Goldman Sachs’ Jeff Currie tells us why the recent dip in oil prices won’t last. And peak jobs? The CEO of ZipRecruiter on why hiring is starting to cool. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch, everybody. I'm Tyler Mathes, and Kelly will rejoin us in just a sec. Here's what's ahead. Market Power Players, Apple and Microsoft, guess what? They make up more than 13% of the total market value of the S&P 500. That's those two stocks alone. That's a record amount of influence. Is there a danger in that much concentration? And peak jobs, employers are starting to pull back on employment postings. So says ZipRecouters CEO. He's here to tell us if the labor market is cooling and whether workers are starting to lose, Kelly, a little bit of their leverage. Tyler, thank you. Speaking of pullbacks, the Dow not having one right now. It's up 317 points or 1% today. Session highs. It's up for a fifth straight day, by the way, and its outperformance today is helped by those strong results from Walmart and Home Depot. The SMPIP 500 is now up half a percent to 4317. Even the NASDAQ has gone green now by 16 points. And we have some more momentum names like Zoom and Moderna under pressure today.

The retail sector is the standout. Abercrombie Coal's American Eagle all gaining, look at this, almost 10% to 15%. The retail ETF, the XRT, having its best month since January of last year. And of course, we have to mention bed, bath, and beyond. Up 71% now today. This is an $11 move to $27 a share, brings its month to date move to almost 450%. So a more than quintupling tie as meme mania holds strong in at least this name right now. All right, Kelly.

Thank you. Let's talk about market domination, even if you don't own Apple or Microsoft. There are two stocks you can't afford to ignore. Never before have two companies had so much influence in the direction of the market of the S&P 500. Let's start with the fact that they are both part of the Dow, the NASDAQ, and the S&P. Apple now makes up 7.3% of the market. market value of the S&P. Microsoft, about 6%. So if you're a passive investor, an indexer, $13 of every $100 you put in to that S&P 500 fund goes into these two stocks. For more on what

all this means for the market's future is Todd Sown, technical strategist at Stratigas, a Baird company, and we're also joined by Bob Pazzani. Todd, let me begin with you. And before we talk to to big market concepts here. Talk to the index investor who owns, say, a Schwab or a Vanguard or a State Street, Index 500 mutual fund that is market-capped weighted. Should they be concerned about that level of concentration? And is there another kind of fund that indexes but is not based on market value? Yeah, Tyler, great to join today. It's a fantastic question. If you think back to the mid 2020, 2021, there was a lot of consternation about the weight of the top five stocks, right, making up a corner of the index.

Names like Amazon and meta have declined, but what has remained consistent is the strength from Apple and Microsoft, right? And as you mentioned, there are 13% of the SP now. It's the highest in 40 years of data. And so if you're passive, you're thankful that these stocks are acting well, but I want to keep in mind that if they do ever take a hit, your portfolio will be in danger. And so I want to look at the equal weight S&P 500 to help bounce out, right, that concentration towards Apple and Microsoft.

That's the average stock, a great way to measure how much participation there is. And it's more reflective of, say, financials, materials, industrials, and energy. If you're worried about the concentration risk from those two mega-cap tech names, keep an eye on what the equal-8 SMP is doing to at least feel a little bit more comfortable with how your portfolio is positioned right now. Equal weight versus cap weight. Bob Pazani are their funds, are their ETFs that are equal weight as opposed to the traditional market cap weight? There sure is. RSP, equal weight.

You can buy it as a stock, just like you can buy the S&P 500 market cap weight. These have been around for a long time. I'll tell you a very simple problem. For very large parts of the 2010s, they notably underperformed the Equal Weight Index because tech was a dominant sector. for the last decade or so and because of that the S&P 500 market cap weighted outperformed the RSP I look at this slightly different Tyler uh... twenty percent of the market cap of the S&P is about five companies but top ten which is I think what we ought to look at is twenty eight percent now here's a good question twenty eight percent of the

market cap is top ten is this historically unusual and it is slightly this is a little more concentrated than it used to be I'll show you go back to 1980 25 percent the top 10 were 25 percent nineteen ninety it's twenty percent look at this number this is the top ten concentration twenty three percent two thousand eighteen percent twenty percent twenty percent so todd's on to something this is a little bit top heavy right now and i do think he goes to the concentration risk there you do have to understand what you've got if apple has serious problems then the s mp is going to have serious problems but nobody complained about this

when technology was a dominant force in the 2010s what else uh... off the top of your without being exhaustive here, Bob. In those top 10, what are some of the other names that we would see? I assume you're going to see a Facebook, an alphabet. You're going to see some of the familiar techies, but maybe also some health care, some retail. Alphabet's about three and a half percent. That's number three. Number two is Amazon at three percent. Tesla's two percent. And believe or not, Berkshire Hathaway is the number five at one and a half percent. Then you start getting down to Johnson and Johnson, Procter, and Gamble, but they're a lot farther down. The top five are about 20, 21 percent of the S&P. If you were to then, Todd, buy those 10 names, you would capture

roughly 30 percent of what you would capture in an S&P 500 fund, and maybe, depending, you would be getting the best 30 percent. Yeah, I'd argue, yes, that's for sure. I mean, the S&P is a cap weight index, the better your stock performs, the how larger you're going to be to become. Now, I think an interesting perspective here, though, is the is the active management view, right? It's a blessing and a curse. Apple and Microsoft, these other top 10 names can keep your portfolio afloat. But if you're an active manager, you need to go down the cap scale and find those opportunities where you can actually outperform, right? And that's, that's the curse. That's kind of been the curse to last 10 years. That has been difficult to actually beat these names because of how strong they've been.

Yeah, those big names are like the Christmas. the other names are like the ornaments, as a metaphor that I often use. Kelly. I was just going to ask Todd as well whether you'd glean any kind of broader market signals from this. I think when you get concentration at risk like this, you need to do your homework and understand what's going on within the indices, right? Because they can mask internal strength, internal weakness, right? We've seen some of these technical indicators, such as the percentage of stocks of the 50-day start to signal momentum surges. And so that's where it comes in handy to look beyond the top 10 names to really understand if the indices are lying to us about strength or if there's really something going on here with a durable rally. I think that's really a good point, Todd. And Bob, I know you would agree, is you really, even if you're investing in an index fund, even if you're investing in an actively managed fund, you need to know what the fund owns.

And oh, by the way, it was not so long ago, was it, Bob, that energy shares made up a very high percentage of the S&P 500, like 15% or something like that. It's not that now, but it used to be a lot more. So you were in an energy-heavy market if you bought the S&P index. That's why you want to hone an index. Remember back in 2000, Tyler, you're exactly right. What was the biggest company in the world? General Electric and Exxon Mobil. They're still there, but they're way down there.

Just one final point about it's true. You have to understand what's your own. But what's happened here is globalization. These companies are massively global. Globalization has become much more important than it was 30 or 40 years ago. So when you have the importance of software, technology in general, combined with globalization, you tend to get concentration. This is not an incomprehensible thing that has happened here.

Software ate the world. and globalization became much more important. That's why you're getting more concentration. All right, gentlemen, thank you very much, and thanks to Patty Dom, who found this story for us on CNBC.com. We appreciate it, guys. Thank you. Okay. Thank you.

Now, while Microsoft and Apple may have fundamentals to back up their gains and their dominance, our next guest says most stocks actually still aren't trading on fundamentals. Peter Anderson is joining us now. He's Chief Investment Officer at Anderson Capital Management. Sir, Shirley Bedbath is trading on fundamentals, Peter? There's a lot of them out there right now, Kelly, that just, I think because they have such high beta, let's not confuse underdogs, you know, that stocks that you think have a great chance

with losers, where stocks that just no matter what interest rates are doing or no matter what the economy is doing, they're just not going to catch a tailwind on that. And I think there's been a lot of confusion. I think a lot of investors have just looked at the bottom pile and said, when there's risk on, let's just fill our basket with those stocks. And I really disagree with that strategy because not all of them are underdogs. A lot of them are just simply companies with bad business plans that probably will file for bankruptcy eventually. So what are the companies, you know, that you want to stick with, that you look at here and say, especially the time when the S&Ps multiples, we were talking about last hour, has climbed back up to 18, pretty fairly valued. Very fairly valued.

and it is getting more difficult. But, you know, I stick with some of the names. You know, I only own 14 stocks. And I will tell you that I haven't done one trade out of that portfolio since the beginning of this year. I'm very, very patient. And an excellent example that's quite timely in the news was the Trade Desk.

If you remember last week, it reported earnings. Revenue was up 35%. The Trade Desk does targeted digital advertising. on connected TVs, and it has been the underdog of that business. And yet revenues were up 35%. And just because of that news, Kelly, the stock rallied in one day almost 40%. So there is some hope out there that there are companies that people are starting to look at and they will say these fundamentals look excellent in spite of the fact that they're fighting against a lot of headwinds given the competition. So you have 14 stocks. You haven't made one.

trade all gear. What do you do all day, Peter? There's a lot of deep thinking with this. Oh, yeah, deep thinking. I see deep thinking. Yeah. So chin. But also, Tyler, I have initiated a shorting campaign. So I have been spending a good deal of time finding companies not to hedge against the portfolio, but companies that I do think are actually poorly run. And in spite of, say, if the Fed eases on interest, rates or if the economy brightens, I don't think that these stocks should catch that benefit. And I do think that they should continue moving down. So as you look at those 14 stocks,

what is your biggest single holding if you can release it? I don't know, use there sometimes. Your biggest single holding, what percentage of the portfolio is it? And what is your annual turnover rate? Yes. Okay. Well, first, in reverse order, my annual turnover rate is about 25 to 28%. So that shows you the patients. You own the average stock four years then. That's correct, yes. And you might think I have a lot of spare time with that low turnover. But seriously, it is a lot of hard work to continue holding your conviction with these in the face of many, many criticisms about some of these companies that are not what people would think are underdogs, but are failures. In the top holding currently is Palo Alto Networks. I think I've talked about that, frankly,

for years. This company is spectacularly run. It's in an industry that we've talked about in the past in terms of it's inelastic. So no matter what is going on out there, when you look out your window or you look across the world, there will still always be a tremendous need to protect against cyber attacks. Peter, thank you very much. Good to talk with you. And I know you're a busy man thinking deep thoughts. We appreciate it. All right. Thank you. Coming up, crude is down 25% over the past two months. Brent off more than 20%. Is the pullback sustainable, unsustainable? Goldman Sachs Jeff Curry will tell us if cracks are starting to form in that pullback. And from cracks in commodities to cracks in the labor market, the CEO of ZipRecruiter on whether hiring is starting to cool.

Before the break, Carnival moving higher midday after the cruise line said its booking activity yesterday. nearly double that from the same day pre-pandemic 2019. This follows a simplification further of COVID protocols. Well, welcome back, everybody. Long deep sigh there. I'm thinking deep thoughts like Peter Anderson. Recent rally and some commodities coming to a halt over the last month, the WTI crude down 8%.

Today hitting the lowest level since January. Brent crude down 6 and Arbob gasoline down 8%. But despite that drop, our guests calls for $120 oil in the next three months. Jeff Curry is global head of commodities research at Goldman Sachs. We had a guest yesterday from City, Jeff, who goes the other way. You say there are irrational expectations out there that are keeping the price down and moving lower. What are they and what do you think will jar those irrational expectations or sideline them? so that prices begin to move back in the direction you expect?

Well, it's primarily been driven by investor liquidation over fears of a recession. And the other thing that's likely going on is destocking. If you really believe we are going into a disinflation environment and that we're going to see a substantial slowdown, you destock your inventories waiting to buy at a lower price. We see that in metals, agriculture, to a lesser extent, in energy. investors are also liquidating their positions. And why I call it irrational is you have prices going down and inventories go down. So bullish fundamentals with downward price action is not sustainable.

And I like to point this out, the last time we had the rate markets, price in a recession with the inverted rate curve like we see right now, was in 2007, January of 2007. The recession didn't happen until 2008. And what did oil do for that prime period went from 47 to 140? We went up $100 a barrel. The other time we saw the inverted rate curve after a big rate height was in 1995 January. You went up 80%. So this in dynamic, we have seen it before. You de-stock and anticipation of a recession.

Market gets really tight, and then you explode to the upside. So if there is a recession coming as, excuse me, the yield curve would suggest, it might not come soon. And in the interim, the history says, that oil prices go up. I have you. Do I understand you? That's exactly.

And when I talk about the contradictions is you've got, you know, so the equity market is rallying, interest rates are coming down, commodity prices are coming down, it stimulates demand, creates more demand, not a recession near term. Because let's remember, rates, markets, and commodity markets impact activity today. So the investors try to price in expectations of a recession, but all they do is they delay it because they create a stimulus type of environment.

Jeff, my simple question is why have oil prices collapsed the way that they have? I truly don't understand it. The amount of liquidation that we've seen in the investor space is unprecedented. You've basically gone backwards all the way back to, if you look at index money and other measures, you've gone back to the early 2000s. You know, we've estimated something like $60 billion in this market from a peak of $330 billion. You look at open interest, wiped off, you know, $6.000. seven years of buildup of an open interest. I can keep going down the list. But why is that the case when going, you know, at the highs this year, it felt like everybody

had piled into the oil trade. So did it just happen week by week? I mean, you know what I'm saying? I would have thought we still had net long positions. And if anything, you know, we're contributing to a structurally higher oil price. I'm just surprised that we've cleaned out that much investment demand. Well, we cleaned it out. The peak actually was back in March of 2021 when everybody had that reflation tradeout. That's well over a year ago. It wasn't the peak in prices back in February.

And part of the reason is people do not believe in the sustainability of this story. I'd like to point out there's three reasons why investors don't want this space. One, a history of really bad returns. They were nothing short than epic losses two years ago with negative oil prices. Two, the volatility is unbearable. Thinking we have many times we've round turns, between $95 and $130 a barrel this year. And then three, I would put ESG factors

that discourage investors. So there's a lot of reasons why they're not in this space and they're beginning to shun it. And one of the big factors is just the volatility. Take me through a lightning fast preview of what you expect to happen in natural gas here and in Europe this winter. Well, you're already well above, you know, our forecast.

We touch 250 euros a megawatt hour. That's well over $50 a MNBTU, just to put it in perspective. For those that don't follow the U.S. market, it's trading somewhere around $9, $10 in MNBTU versus Europe is soaring above 50. Now, even Cal 23 and Cal 24 have moved up to near $200. What that do is putting a bid in the back end of the U.S. Curve that has relatively low liquidity and then creating upward prices for the U.S. That's why the U.S. may be immune to this more broadly from the ability to export the gas into Europe,

but there's other channels. Export the coal out of the U.S., put pressure on the U.S. that way. Export the chemicals. More industrial manufacturing. By the way, when you look at the U.S., they're relatively well positioned relative to the rest of the world. I'd call the U.S. a barbell economy. It's got tech on one in, commodities on the other, and it's pretty much long, everything but oil to export to the rest of the world. Jeff Curry, always fascinating to talk with you. We thank you very much. Great. Thanks for having me. I feel a little more secure now, just a little bit.

Ahead on the show, crypto crime is falling as digital asset prices remain low. Can criminals no longer hack it or are they just choosing not to? Plus, and all you can eat Buffett buffet and three-stock lunch. We're going to trade the names the famed investor or his compatriots are buying and selling right now. Don't go anywhere. Welcome back, everybody. Some news to tell you about here at CNBC. After 17 years, first as president, then chairman of CNBC, and nearly 30 years with NBC and NBC Universal, Mark Hoffman will step down on September 12th. A TV producer and newsman at heart as a business exec. He's led CNBC to one financial record after another, cementing the company as the number one business and money brand across the globe. Mark will be succeeded by Casey Sullivan, current president and managing director of NBC Universal Global Advertising and Partnership in London, a 13-year veteran of NBC Universal.

KC has worked in a variety of top executive roles, including President of CNBC International, chief financial officer of the NBC News Group, and CFO of CNBC. So this new position for Casey is a homecoming of sorts, and we welcome him and his family back to the U.S. and the mothership. And we wish Mark and his family, nothing but blue skies and a heartfelt thanks. It is always a bittersweet kind of melancholy time when you have a changing of the guard. Mark has been a friend of mine from the day I arrived here.

And that's a long time ago. He was here in 1997, and he and Kiki and the boys are dear friends of ours. Well, and to think what he's done, that was before streaming. That was before social media. and here we are now. And yeah, I mean, on a personal level as well,

I'm about to be on, you know, fourth little leaf here in this many years. And you know the other thing? The other thing, I'm going to embarrass Mark by saying this, and Casey, I'm sure will indulge me this. When you run a large, we are kind of a family here. And when you're the CEO or the chairman, you are not only running a business, but you are a caretaker of a lot of people.

Absolutely. Through births. Of course. Through deaths. Yes. Through families. changes through crises both personal and professional. And it's part of the job that they don't describe to you when they bring you on.

But he's done it and done it masterfully. Casey will do the same. Yeah, Mark, you'll be sorely missed. And Casey, we hear you've become a little bit of a Formula One fan and a British soccer fan over there. But we'll bring you back to your roots. Anyhow, in other news, let's get to Kayla Taushy for a CNVC news update. I will also begin by thanking Mark Hoffman for hiring me 12 years ago and say welcome back to Casey Sullivan. Elsewhere, top congressional Democrats are demanding the Department of Homeland Security's Trump appointed Inspector General

handover information on deleted Secret Service text messages related to the January 6th Capitol attack. They're accusing him of using delay tactics to stonewall their investigation. The leaders of the House Oversight and Homeland Security committees signaled they're willing to subpoena Inspector General Joseph Kaffari if he does not comply with their requests. The Biden administration announcing those who used federal loans to attend ITT Technical Institute, as far back as 2005, will automatically get that debt canceled after authorities found widespread and pervasive misrepresentations at the defunct for-profit college chain. The action will cancel $3.9 billion in federal student debt for 208,000 borrowers,

according to the Department of Education. And Kraft-Hinz is recalling thousands of kids. cases of Capri Sun announcing the kid-friendly drink pouches might be contaminated with cleaning solution. The companies recalling about 6,000 cases of the drink saying the only flavor affected was wild cherry. So if you're a fruit punch fan, Kelly and Tyler, you're all good. That would make that wild cherry pretty wild, wouldn't it? With the clean solutions. Okay. I thought that's just how it takes it. Free son.

Kayla, great to have you here. Ahead on Power Lodge, Apple, laying off recruiters as it moves to further slow down hiring. But even amid recent tech layoffs, are we still firmly in a tight labor market? We'll ask the CEO of ZipRecruiter about that next. 90 minutes left in the trading day, and we're pretty much near session high, so let's check up across the markets on stocks, bonds, commodities, and an inside look at the state of the jobs market with the CEO. of ZipRecruiter. So starting with the markets, the Dow is having the strongest session of the bunch up 330 points or 1%. Being helped by those retail results. Home Depot and Walmart are both in the blue chips. That's helping it double the performance of the S&P today. The NASDAQ is managing a dollar $2.60 points. And here's a look at the retail trade that's winning. And it's some big names and it's also some meme names as well. Walmart up 6% now similar for Target and Best Buy.

Bath and Body Works up 7% for its part. Bed Bath and Beyond is up 70% and that's a little bit more of a meme story. Seeing a lift across the auto names as well, auto retailers, auto dealers. Just here the theme is kind of consumer discretionary Auto Nation up 9% Penske Group 1, 7% gainers as well. Bed Bath and Beyond though, I mean this one is seeing

its biggest trading day ever in terms of volume. It's at $26 a share now with a $10 gain. GameStop up $4 today. even Carvana up about $6. So absolutely some life left in that mean trade. Meanwhile, let's get over to the bond market. Is it all because yields have been drifting lower? I don't know.

We'll ask Rick Santelli about the action today. Well, it all depends which part of the yield curve you're looking at. You know, if you look at a 24-hour of two-year note yields, you'll see it's been a steady rise, almost a 45-degree line higher. And what that has done is, as you look at two-day-of-ten-year. year, which is reversed after it hit the same high yield as yesterday, around 286. Curves are either inverting more or flattening because the short maturities have some strength, but not in the long maturities.

As a matter of fact, let's look at a chart going back to the 20th of July for 10-year note yields. Why? Because that was the last day we had a 3% handle on a 10-year note close, which means this is the 19th session. We've gone 18 sessions without closing at 3% or higher. The high yield is right around 3.5%. And many believe we've already hit peak interest rates on long maturities. And if that's true, that means we're most likely going to see more slowing because that's the way the market is trading.

Finally, on the foreign exchange side, we all know the dollars had a resurgence. It's been strong mostly all year. But let's look at the onshore you want because it is very close to a, two-year low against the greenback, and their stock market is down over 15% on the year. Kelly, back to you. All right, Rick, thank you very much. Let's turn now to energy. We were talking about a moment ago with Jeff Curry.

He's still bullish, but PIPA, these oil prices keep dropping. That's right, Kelly. More declines for oil today, with WTI hitting the lowest level since January. Weak economic data is prompting demand concerns, while potential progress on the Iran nuclear deal is fueling supply size. concerns. But the big mover continues to be natural gas. Henry Hub prices jumping more than 6% and crossing back above the $9 level. Over in Europe, prices earlier hit €245 per megawatt hour, the highest since March 8th before retreating slightly. But that contract is still up

more than 100% in the last three months. And beyond high prices for consumers, this is hitting businesses as well. One of Europe's largest zinc, melters is going offline next month. The operator near Star said it's due to various external factors. Meantime in China's Sichuan province, factories have been told to cut output as industrial electricity is rationed due to a heat wave. The province is home to major lithium processors, which could pressure Kelly an already tight market. I'm so glad you highlight these every day because it's, you know, they're still kind of out of the headlines, but so important. I mean, shutting down zinc smelters. And aluminum's got to be up there as well, right? Yeah, absolutely.

And there are ripple effects across everything. And so then that, you know, we saw zinc prices jump today because now there are shortage concerns. And so some of this is thanks to Russia's invasion of Ukraine. But then a lot of it is also thanks to the climate crisis and the drought. And then that's making river levels drop. And you see the ripple effects all around the world. Yeah, it's bringing France nuclear power offline at the worst possible time. I saw Germany extending it. So anyway, we could go on. We'll leave it there for now. Now, Pippa, thank you very much. Now, if you're looking for a new job, you might want to do it right now.

According to our next guest, we're basically at peak employment. Ian Siegel is the CEO and co-founder of ZipRecruiter, which just reported a second quarter earnings beat, but lowered guidance. Ian, what can you tell us about the job market? Well, what I can tell you is that after an extended record run in the labor market, which led to, of course, zip recruiters' outperformance, both on top line and bottom line in Q2, in the back of the back. half of June for the first time in more than a year, we saw a slowdown in the labor market, particularly among small and mid-sized businesses. In a quarter in which you add 500,000 new jobs and you bring unemployment to 3.5%. It's not surprising to see the labor market take a breath, take a pause. But that pattern has continued, and it looks like it is the beginning of a slowdown

in the overall labor market. So let's talk a little bit about kind of past labor market slowdowns and how they've evolved and what this does and does not maybe remind you of? Well, I mean, these are extraordinary times. You still, in spite of the fact that the number of open jobs came down by 5% in June, have over 10 million open jobs. And to put that in perspective, the last time we were at 3.5% unemployment, there were only 6 million open jobs. So employers still have a healthy appetite for talent.

However, that appetite is being pulled back as they have less success in hiring and they're reassessing the way that they're operating their businesses right now. Keep in mind the fact that we are still an incredibly frothy labor market. And so whether you are a job seeker who is looking for talent or who is looking for a job or you're an employer who is looking for talent, there is still a high level of activity. So if I'm hearing you right, you're telling me. that if I am on the fence about looking for a new job or jumping, now is the time to do it because it's not likely to get better in terms of my negotiating power, the ability to get a

bonus, the availability of a job. If I want to pull my rip cord, do it now. This is definitely the period that I would call peak leverage for job seekers. So if you were considering changing jobs, this is the moment. However, If you look at the trends over the last year, the employers who are having success are recruiting talent as opposed to posting jobs and waiting for talent to apply. And in a recent survey that was done, there were 37% of the people that were hired found that job because they were recruited to that job. And you contrast that with 2019 right before COVID hit.

It was 18%. So it's just been a material change in the way that employers are successfully actually adding talent to their organization. It's actually been a key part of the success we had as ZipRecruiter, because our highly differentiating feature is the fact that on ZipRecruiter, employers have the ability to reach out to job seekers before they have applied to a job. And that's why our customers are having so much success in what we've been able to perform. That's what I was going to ask you. How do the employers, the potential employers, know that someone might be poachable? This has to do with the big change that's hit the job market over the last few years.

and that's the introduction of algorithmic approaches in order to match candidates to employers' potential open jobs. It allows you to identify labor participants in the market who would be rich targets for an employer's new job posting so that they can proactively go out and recruit those people to put this in perspective and the scale it has reached. In the last quarter, employers reached out to candidates who had not yet applied to their jobs

on ZipRecruiter more than one member. million times. Those are the employers that are having success, actually recruiting talent. It is not simply those that are posting jobs and waiting for talent to find them. And you think that's a lasting change? I mean, this is going to be a change that we live with for at a minimum the rest of the year and very likely through the majority of next year. And fundamentally, job seekers are looking for something very different from employers than they were two years ago. Over 60% of job seekers now want either fully remote or partially remote work. And so employers who are reaching out and who are offering that type of environment

have a distinct advantage in this economy. Makes sense. Ian, thanks so much. We appreciate all your time and insights today. Ian Siegel from ZipRecruiter. All right. Up next, crypto crime doesn't pay maybe more literally than you think. Are hackers leaving crypto alone because lower prices are here?

That story is next. And as we head to the break, remember you can now listen. to Power Lunch on the go. Look for us on your favorite podcast app. Follow and listen. That is an order today. Welcome back to Power Lunch, everybody. Bitcoin down today, trading more than 60% below its year high. And as prices have declined, so apparently has Crypto Crime. Kate Rooney has the details of a new report. Kate. Hi, Tyler. Yeah, this might be one silver lining of Crypto's bare market, criminals are having a tougher time stealing money. According to a new report from chain analysis, the total volume for illicit crypto entities is down 15% from a year ago. It's holding

up a bit better than overall crypto volume, which is down more than 30%. The blockchain data firm found a significant drop in scams. It was 65% below what we saw at the same time last year. These are those typically get-rich quick schemes or those fake investing opportunities you may I've seen out there. They promise enormous returns. They might seem a little less believable with prices down and fewer people right now are falling for it. Then you've got dark web revenue. That was down 43% below last year's levels. It was actually tracking higher for this year until April. That's when Hydra Marketplace, a prominent hub for drug sales, stolen data and money laundering services was shut down. One area, though, that crime is still booming hacks and stolen funds.

It topped $1.9 billion so far this year, up about 58%. From a year ago, it's mostly in defyre, what they call decentralized finance. The open source code tends to make it uniquely vulnerable. It can be used on one hand by developers, but it is increasingly being exploited by hackers as well. Half of that total has come from North Korean groups, which have taken about a billion dollars in stolen funds so far this year. Elicit activities still less than 1% of crypto's total volume, but they see. Tax have really weighed on investor confidence. And it's seen as a drag on the industry that's looking to become more legitimate in the eyes of Wall Street.

All right. So let's change topics just a little bit, if we might, Kate. You've been following these crypto bankruptcy proceedings closely. There's a hearing underway right now for the lender Celsius, which filed for Chapter 11. What's the latest? Yeah, Tyler, I just got off that bankruptcy court hearing. It's on Zoom. There's almost 500 people, more than 500 people last I checked on this virtual hearing.

a lot of customers on there. They're being treated as unsecured lenders. And Celsius, for some context, said it had 1.7 million accounts. So a lot of interest in this case. The lawyers putting out some documents showing that this company owes depositors a lot more than we thought. It owes around $2.8 billion more than it has in the bank. That's about three times. The original estimate, it's also set to run out of cash by October, according to Celsius' lawyers. They said that would be detrimental. They're considering additional capital. We don't know exactly what that that'll look like, but they say this company is going to be in the red by about $40 million by October. All of this has huge implications, guys, for that individual investor we talked about.

They're all waiting to get their money back. We don't have a strict timeline, but we'll see if we get anything else out of this hearing going on right now. $2.8 billion. How much in Celsius, how much is that in Fahrenheit? Just kidding. Just kidding. Kate Rooney. Thank you. 5-8s plus 32, plus 32, 5-9-5ths. Yeah, minus. Up next. Burkshire has been making some big moves. Should you follow them, we'll discuss next in Three Stock Lunch. Welcome back, everybody. It's Warren Buffett's special edition of Three Stock Lunch, really a Berkshire edition.

But anyway, it features two buys and a bail from Berkshire's second quarter filings. The firm making a big bet on Ally Financial, more than tripling its position to 30 million shares. They also added just over 10 million shares of Amazon and exited their position in royalty pharma completely. So let's train them all. Eva Ados joins us to do just that. She's the chief investment strategist at ER shares. Great to have you back, Eva. And let's start with Ally. What do you think about the stock here? So we generally agree with Mr. Buffett because he's, he looks like he's selling his value. He's exiting his value stocks. But there's one major inconsistency between his buys and sales. And that's ally. And that's because he's selling GM and he's buying Ally.

Alley used to be called GMAC and it is the car financing arm of GM. So if you correlate those two stocks, they're almost perfectly correlated, which shows that they move in the same way. So the same reasons why he sold GM, we would sell Ally because even though it's the best company in its sector, this is not a sector that's going to perform well with high interest rates. In fact, big ticket sales, such as homes and cars are not going to do well in a high inflation environment. Let's move on to stock number two, and that is Amazon. What do you say there, Eva? So Amazon, we would hold.

Maybe it's a weak buy for us. In fact, we added up to our position. That's going to benefit as the odds of a soft lending are increasing. We're seeing money flowing back into the markets that's benefiting indices, and most of all large-cap tech stocks. So it's going to benefit, however, between its benchmarks and compared to other things, we do not like its fundamentals as much. And that's because it has four times the P of its peers and half the growth of its fears.

All right. So let's see. That leaves us with Royalty Pharma, Ava. And where do you come down on that one? So we agree with Warren Buffett here too. So we would hold or even in lighten, up the position a little bit because this company is at a 52-week high. It is a steady company with 1.5% dividend yield.

So it's going to perform well, but we don't see a very strong catalyst that will push the company much higher going forward. So we would either hold or maybe lighten our position with this one. All right. Greying for the most part, we would say. Yeah. Minor, minor moves. You never want to be, I think, too much in disagreement.

with Warren Buffett. Buffett lunch. We thank you. David, thank you. All right, coming up, Apple, working from home. We've been talking a lot about work from home today. Wells Fargo, leaving homes and mortgages, and Adam Newman, finding a new home. We'll take a look at some other big stories and put them under our microscope.

All right, before we go, a few stories that caught our attention. Leading with Apple, it's going to start to require corporate employees, I believe right after Labor Day, to return to work at least three days a week. According to reports last summer, the company suggested workers head back to the office a few days a week. COVID cases delayed those plans. Apple now in-person work on Tuesdays, Thursdays, and one other day to be determined.

It feels like this is going to be, and you can take up to four weeks a year in at-home work. Well, that will help. That'll probably be a new long-standing part. I mean, people are really upset about this in general. And ZipRecruiter made an interesting comment where he said, look, the leverage is going to go to those people hiring who can offer the remote work. And 60% of people either wanted wholly or part of the time. My suspicion is that this will be an encouraged but not enforced.

And that would be a very important wrinkle, if you're right, which I wonder the same thing. I'm seldom right, but never in doubt. Meanwhile, should we talk some we work? Let's talk who we were. Another sort of sign of the times. The founder, Adam Newman, we all know the story, the billionaire. He's back with another company called Flow. Not a lot of details on it, but they've just raised a ton of money from Andresen Horowitz.

It will combine some aspects of real estate, remote work, and community living. The venture capitalist firm, Andresen Horowitz, is reportedly investing. Get this. $350 million into this company, giving it a billion dollar valuation. All of this afternoon was famously ousted as we work CEO in 2019. and yeah, now you can watch the most line on it. He's the star of movies, you know, Mr. Newman. But he took a company, there was a company.

What was the valuation at one point on WeWork was in the 40 billion under SoftBank. Then it was, and now in a SPAC, then it went to $8 billion. Now in a SPAC form, it's like $4 billion. Right. And his model, I mean, if there's something he proved, it's that he can be quite an effective marketer if nothing else of himself. What's astonishing is to see this happen now. And by the way, it comes at the same week, Chamothpal Hapatia is having trouble himself.

He was obviously another big kind of celebrity money raiser, but his specs, he's having a more difficult time being able to attract investment. It might have to return investor dollars. And we're going to go quickly here. Big shift in the banking where Wells Fargo positioning itself for a serious pullback in the mortgage businesses. According to Bloomberg, one of the few players to remain aggressively committed to mortgages. This was a company that was at one time, number one, in mortgages. But it is a voluble.

business and non-bank mortgage companies have taken a huge share of the business. Oh, they own the business now. In some ways, that's what regulators want. But this now, this housing cycle is going to prove how well that ends for them and for the industry. And I suspect Wells wants to go into a much more steady business, fee-based income, asset management, and so forth. Thanks for watching, Power Launch, everybody.