Power Lunch - Volatility strikes again, Coinbase crumbles and a surprise short position 5/11/22

Episode Date: May 11, 2022

The selling pressure intensified this afternoon as volatility once again gripped Wall Street. Tyler & Kelly asked a long time market watcher if he thinks the bottom is near. Plus, 3 stocks that Wall Street analysts say have big upside. Our trader says not-so-fast. And, Coinbase shares plummet but one analyst says now’s the time to buy. 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. Stocks give up their gains. Volatility picks up after another hot inflation report earlier today. But a long-time market watcher says the S&P won't, won't go much lower from here. So should you stay defensive or position now maybe a little bit more for growth? Plus, Coinbase cracking, the stock plummeting, revenue shrinking, users declining. We've got lots of INGs there. Analysts are cutting their price targets, but we'll talk to one who says Coinbase, Kelly, can weather this storm.

All right, Tyler, thank you very much. And we see selling pressure picking up this afternoon. The Dow had been up 423 points, but now we're down more than 260 for an 8 tenths percent drop. The S&P is now down 1.2 percent to 3951, so we're back below 4,000. The NASDAQ, again, bearing the brunt of this. down 2.7% after being briefly positive today, it's at 11,429. Now, part of that drag is from Apple, which was trading below $150 a share. Here it is at 147.

You can really see this almost telling you the narrative on this market. Again, one of the most widely owned biggest stocks in the market and breaching a level that traders had been telling us they were watching. The yield on the 10-year hovering around 3% after popping above that level following the release of the CPI this morning. Actually, even this has really faded from the highs. Tyler, two point nine one seven is the latest. All right, Kelly, that is where we start, folks. Consumer prices jumping 8.3% overall in April. That was more than expected, but a little bit lower than March, still near the highest level in more than 40 years. Food and car prices continued to rise

with energy prices going up the most, but our next guest does see some signs that inflation is starting to abate. Stephen Rashido is chief U.S. economist at Mizzuho Security. Steve, welcome. Good to have you with us. I mean, this was certainly a report that was a little bit higher than the street had expected, but a little bit lower than the month before. Do you see signs that inflation is actually abating?

When you look at the numbers themselves, you get this sense that some of the base effects, Remember, the base effects slowed the inflation rate in 2021. It's accelerated the inflation rate in 2022. And some of those base effects are starting to come off. So what you saw today was principally a reduction in those base effects from the big, big disruption that took place initially when COVID came in. And then when the economy surged back prior in the post-COVID environment. When you look at the details of the report, there are some interesting things that are starting to happen, which are in particular the goods-related measures.

Those things like apparel prices, used car prices, wireless phone prices, professional medical care prices. These things are all starting to moderate and moderate quickly. While some of the stickier components, you know, things like, you know, some of the health insurance relations, some of the hotel rates, some of the natural gas-related prices. More importantly, some of the services like owner's equivalent rent are remaining stubbornly hot. And the net result is that's why you've got this mix between the month-over-month numbers versus the year-over-year numbers, where the month-over-month was slightly hard than expected, the year-over-year have actually come off the boil. New vehicle prices are up. One of the big worrisome ones, I guess, is rents. And when, and third, when you look at real incomes, they are losing ground.

So people who feel like, well, my paycheck is fatter, they're really losing ground in real. inflation-adjusted terms, aren't they, Steve? Well, there's no doubt that when you look at the impact of the inflation, wages have not kept up with the inflation, and they never do. This is a misnomer economists always do. When they talk about the 70s, they talk about a wage price spiral. It was never a wage price spiral. It was a price wage spiral. And back in the 70s, it was a direct linkage through union contract cost of living adjustments, where prices got rolled right into wages. Here, we don't have that happening. So the reason,

reality is in an environment where the equity market's getting hit, companies trying to juice their earnings numbers, holding back as much as they can on their cost structures, are creating an environment where really households are being squeezed in the middle of it, in particular lower and middle income households. And that's why when you look at the administration, it doesn't seem to be a political will to push back on the Federal Reserve, because they realize if this inflation gets embedded in the system, it's more likely to be more negative long term for their constituents. In the short term, pain the Federal Reserve may bring about by overtightening monetary policy

as we go through the next several months. How soon do you expect to see the effects of Fed policy in slowing inflation and potentially in slowing the economy as they go either a half point at each meeting for the next several meetings or whatever they do? How soon will we begin to see the Fed's effects? Well, let's take a look at the second question. first in terms of the growth numbers. I think you're already seeing it.

When you're hearing discussions of a company like META reducing its employment, when you hear discussions of Amazon feeling that they've overbuilt product, when I hear discussions from some of our retail clients that they're starting to see demand come off, when I look at what's happening to Uber and Lyft, there clearly are issues at the margin that are starting to show up. Are they starting to show up in the data? I think they will in the next month or two. With regard to the inflation, again, right now, I think we're still seeing the base rate effects.

I think as we go through the summer, we're going to start seeing it begin to be reflected, even in the inflation numbers, beyond just the base rate effects. All right. So there you've got it. Steve Rusuto. Thanks very much for your time today. We appreciate it. Let's talk about the implications now for the market.

What does the continued inflation and the rising rates that could come as a result mean for stocks? Our next guest says 4,000 on the key level, which we just breach, is the key level to watch here and thinks the bottom may be in. Barry Bannister is Chief Equity Strategist at Stiefel. Barry, how important is calling the market bottom? It helps if you're a timer. I would not be as alarmed if I were a longer-term investor. I think the fourth quarter will end up going up higher. We always said the middle quarters would be tough.

You know, as we went into this year, we called for a double-digit correction and we got one. Then we played off March 14 lows that cross-rally, the one that went back up. But I have been surprised by the market's epiphany in April at things being serious. It has been stronger than I expected. It reminds me of John McEnroe, the tennis player, when he would shout at the referee, you can't be serious. the market just didn't seem to realize how serious the Fed and how serious the war was until the month of April. And we know what to watch at this point.

We have three key variables we're watching and three more that are not as widely known, but we are watching them. And that'll tell us when the bottom is in. All right. Let's talk through some of those variables from the obvious to the less. Well, obviously you've got to focus on yields. We think the 10-year yield and the real yield are in this topping out, if not already topped phase. So that affects your price earnings ratios. The other one is oil and the war.

They're mutually self-reinforcing. And oil is a product of a combination of lack of spending on new development and the war. The other one is Fed Fund's futures. I think they're never going to get to 3%. Really? I do not think they can. No, no, not at all. In fact, world interest rate probabilities are at about two and a half.

But I think they'll stop somewhere in the low twos, take a pause, and that would trigger a rally. As far as less obvious things that go, you know, Bitcoin is a high-powered speculative instrument. We could not understand why it was holding on into the 30,000s when the financial conditions were tightening and global money supply measured in dollars was falling rapidly on the strong dollar and weak overseas growth. And that's going to give it up. think the Bitcoin could fall another $10,000 or $15,000. And that would mark your low. And the other one is high yield option adjusted spreads. I mean, if you look at a typical slowdown,

particularly in the PMI Manufacturing Index, which is the third thing we're watching, as they slow down, the high yield spreads widen. And when they widen to perhaps up to 6%, you'll probably put in a bottom for the market as well, equities. I mentioned the PMI. That's very weak right now. The PMI is because it's going to be very weak.

The reason that's going to weaken is because Europe and China are going to drag us down. They're really self-inflicting quite a bit of wounds to themselves, and it's dragging down the cyclical economy. So to re sort of capitulate what you just said, to me it sounds like you have a fundamentally more bearish view of the economy, which is why you think the Fed's not going to get to 3%, you know, et cetera. What if you thought, okay, maybe the economy is going to be okay, or maybe, Maybe the Fed is going to have to, our guest last hour, said he thinks the terminal Fed funds rate would be closer to 4%. So weirdly, I guess I'm saying, could I get to your conclusion about the market, regardless

of which path I take to get there? Well, the market is self-reinforcing into the economy. Retail sales in the control group growth correlates very closely with the market. And so the market at a 3 or 4% rate would be under such severe pressure from price earnings multiple going down that the economy itself would slow very sharply. and of course financial conditions would tighten and the Fed would have to pause. So no, I think the Fed will keep going, a couple more 50s perhaps. But by late this summer, early fall, they'll probably take a pause and look around.

And that might help us rally off the summer lows. All right. So that's where you see potential upside, not quite yet, and certainly not for Bitcoin, but maybe a little bit later on as we work through this. Barry, thanks for your time today. Thank you. Barry Bannister. Already coming up, Ken Coinbase weather the crypto storm shares plummeting today, down 75% this year.

We'll talk to the analysts who just reiterated his buy on the stock, plus three calls where analysts see big upside, Chipotle, Electronic Arts, and Planet Fitness. They all could rise 20% or more, according to new notes. We'll trade them in our three-stock lunch. And as we head to a break, take a look at shares of Duke Realty, the stock on page. for its biggest gain since March of 2020 after it rejected a nearly $24 billion buyout from Prologis calling it insufficient. Welcome back to Power Lunch. I'm Dominic Chu. It's been a very wild and volatile day for Bitcoin prices with cryptocurrencies like it going back and forth and Bitcoin in particular

around that $30,000 mark. It hit its session lows earlier just around that 8 to 9 a.m. Eastern time hours you can see there. And then it rebounded in the midday session. and now it's fallen back towards just around the lows of the session, as you can see here. Now, that decline is not helping shares of Coinbase, which are on pace right now for the worst day since going public as a company. The company reported the surprise quarterly loss and revenues that missed expectations, citing a decline in users throughout the recent slump in the crypto market. So Coinbase shares down 28 percent. Bitcoin prices near session lows. Kelly, I'll send things back over to you. Yeah, everyone watching that area closely, Dom Banks.

despite the big move lower in Coinbase, the bad miss on earnings, the bearish outlook. One analyst remains bullish with a price target of 185, saying the company remains well positioned to roll out new products. Let's bring in Jason Kupferberg, senior payments analyst at B of A Securities. Jason, it's good to have you. And, I mean, how serious are you? Or what timeframes, I guess, should we say, for this price target that you still retain? Thanks, Kelly.

So our price targets are set on a 12-month basis. I think we should expect continued amounts of volatility as it relates to Coinbase, as it relates to the volume and volatility of trading in various cryptocurrencies, including Bitcoin. And as good as things were six to nine months ago, now we've obviously hit a bit of a crypto storm at the moment. But I guess my question would be, in order to achieve a price target like 185, it's almost like your call has to be predicated on the Fed pumping a couple trillion dollars more back in. the economy, right? I mean, what's the springboard to get, or how do we rewind the clock, or how do we kind of achieve a reality where this price target is even possible now? Well, I think the reality is that if you look at Coinbase, it's a scarce asset. If you are a believer in the long-term future of the digital asset economy, as we are,

there's very few ways to play that through single-stock exposure. So regardless of the of what a particular price target might be in terms of the number, I think you have to look more at the fundamental thesis. And obviously, there's a lot of people who have now gotten very concerned about Coinbase's future and the future of cryptocurrency. We think it's a bit of an overreaction in the stock. But yes, I mean, inherently, as has always been the case since Coinbase went public, you do have very limited visibility in terms of forecasting the revenue and the EBITDA of the company because upwards of 85% plus of the revenues are driven by retail cryptocurrency trading volume. So that is the reality of the model today. But we see a lot of product extensions

ultimately coming down the pike for Coinbase. Let's say we agree that there's a future for cryptocurrency as I do. Talk to me a little bit about the competition in this particular area. and what is the moat that Coinbase has that makes it stronger than some of its competitors? I see a lot of ads for companies that want my business in trading crypto, a Coinbase among them. What makes Coinbase better than the rest? That's number one. And number two, I guess I can envision a world where Coinbase gets taken out by some bigger player, whether it's a Schwab or a PayPal or whomever.

Lots of competition in space, you're right, and lots of advertising dollars going into the space as well. We do think that Coinbase's brand and technology and the breadth of cryptos that they offer on their platform are all important differentiators. We often get questions to your point around, well, more competition must equate to more pricing pressure in terms of the fees for retail crypto trading.

And if you look at Coinbase's numbers this quarter, their retail spreads were actually up about eight basis points quarter over quarter. So I don't think this is a race to the bottom, certainly any time soon, from a fees perspective. And I do think when people are deciding which exchange or platform to use to trade crypto, they're going to look at brand and trust and security because they want to make sure they can easily get their money in and out. So it's not just about.

And so you feel Coinbase among, you, you acknowledge that there's a lot of competition here, a lot of names competing, but your view is that Coinbase is the strongest of the competitors. Do I understand you correctly? You do. And I would say, especially in the U.S., I think that that brand stands out. And then what about its future? Does it exist five years from now as an independent company? We'll see. It's a fascinating question. I mean, the FinTech space, more broad. is very fragmented and obviously there have been huge corrections and valuations. And so it would not be uncommon in an industry where that has happened, where you certainly could see

more consolidation among various players. Yeah. All right, Jason, thanks very much. I know we'll be having you back as we watch this stock and this whole market over the summer. Thanks again. Look forward to it. Thank you. You too. All righty. Coming up, from oil and coal to silver and gold, First, the U.S. government says oil and coal production are set to rise next year. Plus, given recent market volatility, you'd expect investors to flock to safety trades, like gold. But prices are hitting three-month lows. Details on both those stories next. But first, during May, we celebrate Asian-American and Pacific Islander heritage and feature some of our CNBC teammates and contributors.

Here is the Milken Institute's Bill Lee. My parents had expected me to become part of the middle class by becoming an engineer. And I never wanted to disappoint them. But I knew that being an engineer was not something I had a passion for. My mother was so disappointed she'd never told any of our relatives, I switched out of aeronautical engineering. And yet after that passion and getting my PhD, I found a career at the Federal Reserve International Monetary Fund.

I was the chief economist at City, and now I'm the chief economist at the Milken Institute. So my advice to every Chinese American out there, every Asian American out there, is, yes, respect your parents' wishes, but also follow your heart. All right, oil jumping 5% today, back above $100 a barrel, 105, actually, as you see it. It's been since around this neighborhood since Russia's invasion of Ukraine. Now a government report shows those higher prices are likely to drive up oil production. So what could that mean for prices? Brian Sullivan is here with that part of the story.

We've heard all for many, many months that the producers don't want to produce at lower prices. Now here you've got higher prices. So will they produce more? And what will that do to the price? Well, they're both going to go up or at least stay maybe where they are, which is higher than they were a couple of months ago, Tyler. I don't know if that answers it, but I'll try. All right. So this is coming from a new report from the Energy Information Agency.

They put out these periodic outlook piece, STO's, short-term outlooks, covers oil, gas, electricity. this one even coal. We'll get to electricity and coal in just a minute, but let's start with oil. To your point, the EIA says that despite all that political grousing you talked about about oil companies being stingy, not drilling, etc., the federal government's own agency is predicting that oil production will hit a new daily record next year at about 12.8 million barrels per day.

That would surpass the daily record average in the past of 2019, which was 12.3 million barrels. a day. So the EIA expects a nice pop. But even with expected higher production, the agency also sees maybe not higher prices, but continued high prices with Brent crude in Europe staying above a hundred bucks a barrel for the rest of this year and falling in 97 early next year. So I put WTI, what, 92 to 95, not cheap. Do note this. The EIA says that this forecast is, quote, highly uncertain. If you're on the radio, I'm doing air quote. given the Russian war, got labor issues as well, shortages of things like steel tubing.

So that goes without saying, obviously. All this coming, by the way, is wholesale gasoline prices, Tyler, just sitting a new record high this week. So I'm sorry to say, I kind of feel like the Grim Reaper up here again, that gas prices at the pump are likely to go even higher in days and weeks ahead, Kelly. It's not just that either. What about cooling your home? Oh, see, here you go. It all depends on the weather.

That's kind of our hope. Here's the plan. All right. So the EIA says they expect the average electricity bill to go down a little bit the summer, but because there are projections for slightly cooler weather. The EIA does predict that overall electricity use in America will jump 0.4%. Doesn't sound like a lot, but it is a lot when you think about electricity. Now, how are we going to get that electricity? Well, the good news for renewables is that the EIA says that solar and wind should make up about 11% of our power generation. That's about up a percent and a half from last year. But they also note that coal use is going to go up likely about 3% over last year. And Kelly, that's actually below their previous forecast for 7% growth in coal, 598 million tons of coal.

It sounds bizarre that we're talking about increased coal use to make energy in the year 2022, but it is true. And because their coal use estimates are actually down, they think, that natural gas will get used more. And in fact, Kelly, the EIA's natural gas price estimate for the second half of this year is $8.59 per MBTU. That's the unit. That's about a dollar higher than we are right now and an 88% jump from last year. Of course, we're exporting a lot of LNG as well. So if the weather's cooler and you keep the windows open and the Matheson and Evans households, you'll probably be fine. If it's hot and you want to have the air conditioning on, guess what?

Your bill's going to go up. Maybe not doubling like in the UK, but up a lot. And by the way, I'm told that electricity is needed to make other things as well like all the things. Yeah, exactly. It's pretty shocking to see the official forecast with a number that high. Brian, thanks, Brian Sullivan. Let's get to Frank Holland now for the CNBC News Update. Frank.

Hey there, Kelly. Here's your news update at this hour. President Joe Biden is visiting a farm in Illinois to announce steps to aid farmers and lower food costs. This trip comes as Biden attempts to fight rising inflation and prove to voters that he has a plan to bring relief to Americans. Fernand Marcos Jr., the son of ousted Philippine dictators, declared victory in this week's presidential election in the Philippines. Marcos Jr. garnered over 31 million votes in an unofficial vote count, and he's already facing early cause to ensure respect for human rights and democracy. The Senate confirmed economist Lisa Cook on Tuesday night to serve on the Federal Reserve's Board of Governors. This will make her the first black woman to sit on the panel in its 108-year history.

Cook will join the Fed as Central Bank tries to rain in inflation levels that are now at 40-year levels. And two beachfront homes in North Carolina's outer banks collapsed into the Atlantic Ocean on Tuesday amid harsh weather and powerful waves. According to the National Park Service, the homes were unoccupied and the beach will remain closed as a precaution. That's the very latest. Tyler, back over to you. Thank you very much. Ahead on Power Lunch.

Four stocks on our radar. First Disney, the media giant, set to report results amid a wave of social and streaming industry Edwins, Kelly. Plus three analyst calls promising some decent upsides in this market. Chipotle, EA, and Planet Fitness will trade these names in today's three stock lunch. Power Lunch will be right back. 90 minutes left in the trading day, and we want to get caught up on the markets. stocks, bonds, commodities, everything, and one Dow stock that could definitely use some magic to get going again. Let's begin with Bob Pazani at the New York Stock Exchange. Hey, Bob. Hello there, Tyler,

bouncing off the lows, but not convincingly, and don't particularly like what I see in mega-cap tech. Just look at the S&P 500. We have moved in a hundred point range, high to low, every day, almost every day for the last six or seven trading sessions. It's just extraordinary to see these kinds of moves. and they become sort of ho-hum. We're going to use them, but they really are unusual on a historical basis. Watch Apple here. It's trading below the market down almost 5%. Apple generally has traded above the S&P typical days

and also particularly above the S&P Technology Index. Breaking down like that, and Microsoft's doing it a little as well. A little bit of a worrisome sign. This is one of the big stalwart, obviously, in the markets. Another thing continuing to break down is Kathy Wood's ARC Fund, breaking an important level, by the way. The low on March 20th, 2020, that was the last low, was 3785. You see it trading right below that level there.

So essentially, we're back to the pandemic low levels here for her fund. That's a complete round trip for that. Another thing keep an eye on these continuing heavy volume in these leverage and inverse ETFs, particularly around QQQ, an awful lot of churning, moving back and forth in these. And these are three times leveraged above and three times inverse ETFs. So a lot of complicated movements and money going around. Finally, a Tesla, another stock moving down today. Lowest levels in September, remember, it was just $1,200 in January, $7.49.

And look at Twitter. Now, remember, he's agreeing to buy the company $54.20, and yet it's trading in $46.70. That is rather extraordinary premium there, $8. That's what, 12, 14% premium there for Twitter right now. Tyler, back for you. Bob, thank you very much. Let's go to the bond market in Rick Santelli, who is tracking the eugene. action. The 10-year continuing to fluctuate, Rick, around 3%. Today, a little below it.

Yes, and the fluctuations are taking us a distance away from some of the recent highs, Tyler. And remember, this morning, CPI prices, consumer price index, were definitely, as expected, less than they were last time. Just not receding enough to make the markets happy. Things like energy up over 30 percent in over year is a very sticky number that doesn't seem to be moving down anytime soon. Look at a two day of two year. Two year and three year notes are only yields on the curve higher than yesterday's closes. You see there that there was a lot of volatility, but the flattening has been dramatic. Tuesday to 10 yesterday were around 39.

They're at 29 today, 10 basis points of flattening. Let's look at a three-day chart of 10 years because on Monday, of course, we had our intraday cycle high at 3.2.0. So as Tyler pointed out, we have really dipped well under their approaching 30 basis points from that recent intraday level. And if you open a chart to four years, you can see clearly that four years ago on the left side of the chart is where you had that double top around 3.23 percent in January we want to pay close attention to. And finally, on the foreign exchange side, we know the dollar index is hovering near 20-year highs, but the euro is something to pay attention to because, And boy, do they have issues there. Not the least of which is that rates are going to continue to pressure higher and a major readjustment.

And that euro currency, there's a one-month chart. Look at that meager bounce that's going on. Why is it meager? Because as you open the chart up, we haven't traded at those levels since early 2017. And yet the bounce, not very much. What leads many to believe we're going to end up on a one-to-one with the euro and the dollar at parity? Tyler, back to you. Wow, that would be something.

Rick Santelli. Thank you very much. Oil is closing for the day. It is up 5% today after having fallen sharply in the previous two sessions. Driving the action, Russian energy shipments through Ukraine were halted and hopes for Chinese stimulus to get the economy going after COVID lockdowns. We'll see how that plays out, obviously. As a result of those higher prices, energy stocks are the leaders today. Marathon, APA, Devon, Occidental, among the gainers there by 5% in the case of Marathon, near. the same for APA, a little less for Devin and Oxy. All right, now to one Dow stock that, well, let's just put it this way. It needs a little earnings magic.

Disney set to report after the bell. It's one of the worst performing Dow stocks of this year off 30%. Concerns of a streaming slowdown hanging over the stock here with what to expect is Dave Hager, a senior analyst with Edward Jones. Dave, I think the attention will mostly be on streaming customer growth, particularly in light of the slowdown at Netflix. What are you looking for? Well, certainly the streaming business is going to be probably the top focus in the earnings report today.

And consensus number is roughly for adding about 5 million Disney Plus subscribers. Certainly Netflix and seeing a subscriber loss in the first quarter has not boated well for the entire industry. but we do think that Disney is still earlier in the growth curve in streaming and I think that they still have more room to go in terms of adding subscribers and certainly look at others in the streaming industry. Still we're adding subscribers in the quarter. So we think Disney also will be in that boat. There are so many pluses out there.

There's Disney Plus and Hulu Plus, an ESPN Plus, an HBO Plus, and they all add up to a minus in my bank account. because I'm paying for them. Let's talk about the parks. What do you expect there? Well, certainly we expect to see further recovery in the parks on a year-over-year basis, although relative to the previous quarter, typically first quarter is seasonally down versus the December quarter.

But, you know, we do expect solid profitability. The company has already said that in the December quarter, the domestic parks are actually more profitable than they were. prior to the pandemic. And we expect as capacities go back up worldwide in the parks that they may actually be more profitable as a whole through this year than they were previous to the pandemic. So certainly what we see that is one of the bright spots in the Disney story. And the market seems to be ignoring that potential for further earnings improvement on the park side of the business. All the buzz dave seems to be about the new Top Gun movie.

and it's just a reminder how difficult these businesses can be. Disney's library should be stickier. You know, parents showing their kids the same movie over and over again, for instance. So is there anything in the metrics that they could use that would illustrate why investors should stick with their streaming model over some of the alternatives that are out there? Well, certainly they do have a very strong library of content to draw from. And as he said, the content is more geared towards families and children.

But at the same time, the company is investing a lot in their content this year. And the content offerings, in particular, as we move into the second and half the year, look pretty strong. And so that should be a factor as well that should help in continuing to attract subscribers. also the Disney plus price point by itself is lower than some of its other competitors in the market, certainly lower than Netflix. So as inflation moves forward, that may be something that gives Disney a little bit of a pricing advantage compared at least to some of its competitors. So I want to get a quick answer, if I could, on the involvement of Disney in the debate

over the quote, don't say gay bill in Florida and the apparent removal of its sort of special sort of operational status. What do you make of that? Is it material to Disney? It's not going to be material this quarter, but going into the future, will it be? Well, certainly there's a lot of uncertainty around

what that move will cause for Disney. And really the laws that was passed is not going to affect until middle of next year. So there's still some time before Disney would see much impact on its financial results. Even at that, it looks like the biggest hindrance from that change might be additional red tape in terms of gaining approvals for new construction in their parks in Florida. From an actual cost point of view, it's basically shifting the responsibility for government, services from an entity that Disney funds over to potentially the two counties that surround

the Disney parks. And at least on the surface, looks like the financial burden might actually be shifted more to them than actually on Disney. Certainly Disney would still have to support them financially for those services. But the net certainly is that it doesn't look terribly negative from a financial point of view, especially in the near term. All right, there we go. Dave, thank you very much. We appreciate it. Dave Hager.

Golden Silver falling over the past month. Precious metals, usually a safety trade, but now there seems to be facing tough times. We'll discuss that next. Plus, here's a virtual reality check. Metaverse platform Roblox higher by about 7% today, almost 10% now, in fact, but it's down 41% over the past month. Unity, meanwhile, down 32% today, and EA leading the S&P up about 10%. percent. Just tremendous differentiation there. The NASDAQ overall down about 2 percent and the index has dropped more than 20 percent in the last 30 trading sessions, according to bespoke. That's an

incredible stat. Power Lodge is back in just a moment. Welcome back. Pretty jumpy session here for the markets. In fact, the Dow just turned positive by 24 points. There's gold trying to cling on to about a half percent gain 1851 an ounce. Two of the many worries facing investors right now are spiking inflation and all of this market volatility. So why isn't gold working? It's hitting a three-month low earlier before rebounding to be basically flat for the year. Joining us to explain is Christina Parts a nevelace. Christina?

I feel like I need to get a textbook out because often when we have market volatility and risk aversion, we're like, hey, let's move into those safe havens. So like you said, what gives? It has to do with timing of central bank rate hikes. So let's actually start with the numbers because that's important. Gold futures briefly dip below. It's 200-day moving average today. That is a key psychological threshold.

And also yesterday broke through 1850 an ounce. So the spot prices have been hovering yesterday. They closed at a three-month low. And this despite stronger than expected inflation numbers today, so it's the longest run of weekly losses this year. You can see on your screen just heading downwards. Silver prices also pulling back down about 7% this year alone. Credit Suisse calling for a top around.

$21 and 42. So you can see it's hovering above that at the moment. But why the drop? Historically, in the early stages of a Fed hike, it usually occurs during a period of global growth strength. This time around, though, the early Fed hikes that we're seeing are coming out of time when we're seeing deteriorating growth. And we can show you just this GDP graph for the United States

declining a very similar situation in China as well. City analysts even point out that if China starts to rebound in the near term, They are still overall sellers of precious metals because of concerns about a European recession. So it's not getting any better there. And while TD Ameritrade analysts believe CPI could easily send gold down to 1830 an ounce in the near future. Gold miners' ETF up slightly today. We'll bring that up, GDX. And that's led by Endeavor Silver on strong Q1 earnings.

But take a look at these miners. Just in the past week or so, you got Hekla, Endeavor Silver, Majestic Silver, across the board all down. Much of that also has to do with the strong U.S. dollar, which makes it more expensive to hold these metals and the 10-year treasury yield because often the thought process is we move our

investments to higher yield investments instead of non-interest-bearing gold and silver. Christina, thank you. Christina, parts of Nevelas. After the break, on the upside, amid major declines across the market over the past week. Three calls out on Wall Street promising major

upside. We will trade the names next and there are the names. You'll hear more in a minute. Consumers are changing their shopping habits to keep up with or avoid inflation and big business is watching where they're cutting back and Dom Chu has some areas that are under the knife, Dom. So the smart consumers out there are making adjustments, right, because of these higher prices. And so the folks over at CNBC and Acorns decided to team up with the folks over at Momentive to conduct a survey with regard to what exactly consumers are doing in the wake of all these higher prices. So the first question being asked right now is, if higher prices persist, which will you consider doing?

And among the top answers, and they don't all add up to 100 because people could pick multiple things that they would do to kind of avoid these prices. The biggest thing that they would do here, 52% of respondents say that they're going to cut back simply on dining out. Don't go to restaurants anymore. The takeout, let's cook food at home. The number two response at 42% was cut back on driving. believe it or not. So maybe not so many road trips, not so many family vacations, driving somewhere else. That's a big one. Cancel a trip or vacation. I know that a lot of folks, including myself, already looking at some of the prices for travel this summer, especially in June and July and

thinking maybe we should just wait a little while until prices come down. And then cancel a subscription, we know about that with streaming services, right? And then switch to a generic product. That's something that I know that my household has been doing for quite some time going to some of those private label items. In many cases, they are unnoticeably different than some of the brand names out there. So that's the first question. The other one out there, too, is what exactly from a behavior standpoint could kind of change things up with regard to if those higher prices persist, which have you done in the past six months? Cutback on dining out is 53%. Cutback on driving, 39%. Cancancel's subscription, 35%. Switch to a generic 32% or canceled a trip or vacation, 29%. So over the last

six months, that behavior is always changed. It's already changing. All right, Dom, I'm going to go cancel subscription right now. Which one? I'm not going to say. All right, thanks, man. You got it. Up next, three stocks with potential for big gains. Our three stock lunch will wrap it up after this. Welcome back, everybody. Three stocks that could see some nice upside, according to new analyst calls. Bank of America says Chipotle's shares could rise 21%. Planet Fitness could see 34% gains, according to J.P. Morgan and Moffat Nathanson, upgrading EA electronic arts with 23% upside on the stock. Let's bring in Victoria Fernandez of Crossmarked Global Investments, Chief Market Strategist there. Victoria, let's get your read on these stocks, and we'll start with Chipotle.

Yeah, so I think Chipotle is one of those stocks, Kelly, where you have to separate the product or the service from the stock itself. We know that individuals really like the product, and we've heard in the earnings calls over the last couple quarters that Chipotle's been able to move their higher cost prices through to the consumer. But we're not sure how long they're going to be able to do that. We saw on the CPI today rising food costs. There's labor costs going up. And when you look at our quantitative model, Chipotle is the lowest scoring restaurant in our model. And if you take a step back and look at kind of the broader sector with hospitality, leisure, only cruise lines, casinos and draft kings score lower than Chipotle.

So not only do we not own it because we think the margins are really going to get hit, we actually have a short on this stock. Wow, shorting Chipotle. Yeah, well, that puts you out there. Let's go to stock number two. Down goes Peloton, up goes Planet Fitness. Yeah, so, Tyler, when we're adding a security to our portfolio, not only do we look at the balance sheets where we want to see good debt ratios,

good cash flow, but the business model has to make sense. And for Planet Fitness, the business model is good for us. You know, they fit really within a niche between people like me that want to just stay home and do their Peloton and never go to a gym. And those people that want to go to the gym with all the bells and whistles. So they're that low cost provider. And so the business is pretty sticky. But for us, it's a valuation concern right now. They're trading it 44 times 22 EPS. So it's not that we don't like the business. We don't like the valuation here. We would wait a little bit for that to come down before starting a position there. All right. Even though JPMorgan brings it to

overweight $90 price target, 34% upside, say they. What say you? What say you? you about electronic arts, Victoria? Yeah, this is not an area that we really like as a whole, the whole entertainment gaming area. So we don't own electronic arts. I mean, maybe you own it for strategic reasons. If you think there's going to be something similar to a Microsoft Activision component going on where someone might come in and want to buy EA, you can have that. But we really just don't like it. It depends so much on these games that come out, whether it's a hit or a miss. If we're looking in that entertainment industry, we would actually rather look at something like a

WWE where you have much larger areas of revenue. So, you know, they're weekly on cable and on streaming. They have live shows and ticket sales and merchandise that they can sell. Sure. So not a space we like in general. We don't own this either one of those stocks, but we would look more towards a WWE than an electronic art. Give us in just a sort of soundbite here quickly, Victoria. What's a stock you really are excited about right now? Yeah, so we actually like prologis, and I know you were talking about it earlier in regards to Duke Relity. We think you need to be tactical in this space and find things

that are going to work on the short term. And prologist for us is one that does that. We like the business model and the balance sheet. All right. Victoria Fernandez, thank you very much for your thoughts today. We appreciate it. My pleasure. Shit, all the facts. I mean, Chipoli. Wow, a Chipoli short. We haven't heard that in a long, long time. Usually you hear strong franchise. you know, surveys. Well, the Dow's doing what it usually does, which is go down and up or up and down, and now it's down. It was earlier up, right, in this hour.

Exactly. Ten minutes ago, it feels like the NASDAQ's been more consistently to the downside today. The whole crypto space is under pressure as well. So a lot of pain points to watch in this market. There's the NASDAQ, in fact, down two and a half percent. Yeah, and Bitcoin down below $30,000. I almost said $30,000 a barrel. If you had a barrel of Bitcoin, you're not worrying about it.

All right, thanks for watching, Power Lunch.