tv Power Lunch CNBC April 12, 2022 2:00pm-3:00pm EDT
broad-based demand from data centers and autos remain robust and that's what's expected to keep chip demand strong. >> thank you and tonight on fast, we are taking a look at the rip higher today in crude could we see oil surge again paul sankey will join us "power lunch" starts right now thank you very much. good to see you. welcome, everybody, to "power lunch. here's what's ahead for a big tuesday. the big inflation reading out this morning consumer prices up 8.5% from last year. that's the highest in more than 40 years, but roughly in line with the expectation i suppose that's supposed to comfort me somehow has inflation peaked and can the economy and stock market handle this level of rising prices?
plus, hopping a flight we're continuing our series on the travel industry today with a look at airlines will this summer finally be the time when travel gets back to the old normal especially internationally if so, which stocks will benefit? we've also got a working lunch a three-stock lunch and my lunch companion is courtney reagan >> it is nice to sit at the table with you, tyler. thanks for having me stocks are losing gains as markets are accepting of the hot inflation reading that tyler just went through there. you can see the dow and s&p have turned just slightly lower, but the big moves are in the bond market the ten-year yield had jumped 2.8, but then took a sharp turn lower. and tech stocks still holding on to small gains as yields fall. apple, salesforce and broadcom still among the gainers. the real winner is energy. that's sending stocks, exxon,
chevron, marathon, all higher by more than 2% >> courtney, we start with with that big number of the day consumer prices jumping 8.5% from a year ago. slightly higher than expected. just a little bit. also, the fastest annual gain in 40 years food prices overall nearly 9% higher food costs at home up 10% or there abouts followed by double digit gains in new vehicle sales and energy prices so the question is has inflation peaked mercifully, we hope. steve is chief economist at mizohu securities. what do you think of this number, steve? on the surface, it looks really bad. i know you point to some items that slowed in terms of price gains, but still, you're looking at food, shelter, energy, i don't know what's more core than those three. >> you're asking a very, very important question
i think you're right we really can't discount the importance of the rising inflation in terms of its impact on the economy going forward but in terms of getting into looking at the momentum un underlying the inflation rate, there were some signs in the report that get to where it is peaking out. but this high level of inflation is eroding purchasing power because you're right can't take out food. energy because households consume both in fairly large quantities so it has a significant impact on the economic environment. especially now and going forward. even if it's starting to peak at this juncture. >> here, yet again, we can cheer the fact that incomes are rising as well. but they're not keeping up with inflation. >> no. i'm afraid the sad part of the attempt to raise the living standard of a lot of americans from the lower incomes to the middle incomes through subsidy payments that came out of the
post covid stimulus packages is going to wind up backfiring and create an environment where household purchasing power will be less at the end of this than it was before we began it. >> steven, when we look at the driving factors of inflation right now, i assume the supply chain is still having a big impact the war in ukraine with the extent that may impact food prices to be sure. so if we have a fed that is treeing to pull things down economically, you're trying to raise rates, is that really going to do anything the war with ukraine do they really have the tools to really handle the inflation we're seeing thousandnow because reasons we're seeing it? >> you're right in terms of the specific component of inflation. economic demand being in excess short-term of overall supply creates additional upward pressures on inflation so therefore, but contracting
economic demand through the higher interest rate profile and through the quantitative tightening they're adopting, we'll create an environment where other components will come down you look at this morning's report, for example. you saw rents really weren't accelerating further homeowner's rent wasn't accelerating further used car prices started to come down there are components in here that suggest yes, what the fed is doing is going to have an impact on other components in the cpi. not necessarily the ones you pointed out. a big driver was hotels to the upside in the shelter costs. if you wind up slowing the overall level of underlying economic demand, forgive me for that, you really get into an environment here in which that demand for hotels will come off. >> you mentioned a couple of items where the pace of gain seems to have declined a bit so we're looking here, this was a march number of 8% plus inflation year-over-year
what do you think it will be when we get to the fall, september, or the end of the year, december and of course in the middle of there will be an election. >> let's look at the december numbers more importantly because i think the december numbers will probably be down in the 5% year-over-year growth numbers. you know, where we are in september, we will probably be coming down towards that number so we're probably somewhere around the 6.5% number so i think we are going to be coming down fairly quickly a lot of that is base effects so we can't keep on growing at this rate unless we're really accelerating the underlying pace of economic activity and with what the federal reserve is doing, and we're sartarting to e cracks in the system we've seen it in the housing market in the auto space to some extent there's going to be a drag down effect on the economy and that's going to lead to lower inflation, but that's also going to be negative for a lot of the
households in the lower to middle income level. for them, it is going to feel like a bigger downturn than it is for the overall economy >> how should we think about prices if and when inflation does peak? is that corner deli going to peel that down >> no. you asked a good question in terms of the market deli prices. i tend to look at it as extra large diet sodas at my favorite fast food restaurant the answer is they've basically doubled. i do not expect those prices will come down appreciably i do expect them to stop growing and there will be some payback over time, but it's not going to happen quickly i think over the next three to five years, you're going to discover that that jump up in prices probably nets out instead of doubling to about 1.5%. about 1.5% as opposed to 2%.
>> $12 for a smoothie is way too much even in new york city. turning to the markets now, the dow and s&p 500 both losing their earlier gains and hitting session lows after early morning gains. our next guest is focusing on financials, especially the regional banks cheryl is portfolio manager at angel oak capital advisers my first question is why is the market taking this inflation number in stride tyler pointed out it came in about as expected, so do we feel okay about that? it's still multi decades high. >> still is a very sticker shock type of number, but i think it's what the market had anticipated generally and from a month over month perspective, i do think the lower than expected increase in core was really where we're starting to maybe see some green chutes that we might be naearing the peak here. >> a lot of these company's earnings reports are giving us interesting color.
particularly when you get to the executive commentary even if quarters that have just recently closed were relatively strong, there's a lot of uncertainty from executives going forward. looking, trying to forecast the second half of the year. saying it's almost as difficult to do that now as it was in 2008 so if you are an investor, is this an opportunity or is this an increased time of risk? if you have money, is it a good time to put it to work right now? >> i do think it can be a good time to put money to work. i think we probably are range bound a little bit in the next, you know, call it quarter or so, as we start to see more aggressive fed action and as we start to see perhaps some upticks in consumer credit starting to come through again, a lot of uncertainty driving volatility we think over the course of 2022, however, i think there's a lot of positive tailwinds that are being reflected in market
multiples, particularly in areas like financials and more specifically, spread based lenders, which are basically the pure play on higher interest rates. >> that's where i want to turn the conversation and that is why the banks specifically, with the exception of wells fargo, the mid market banks i'd say, or mid sized banks, what are the attributes they have that make them in this environment stand out as a stock pick? >> i think there's really four key things that we look at number one is these are essentially spread based lenders. that's the bulk of their business model loan growth is accelerating. that's going to be a benefit to top line growth in addition to higher rates and a lot of these spread based regional banks, large community bank type banks are going to have higher degrees of non-interest bearing dmeposits. deposits they get at a zero cost that's spread between their lending and deposit products is going to increase here
loan growth is accelerating. m&a has been an area we've really seen an increase. particularly in this area of the bank g system and i think a lot of that has to do with expense rationalization and optimizing your cost base over a larger geographic footprint or product footprint. >> if i'm hearing implicit in what you're saying is this if you have money on dmoeposit a bank, do not expect under any circumstances that bank is going to raise any rates you get as a saver, but at the same time, they are going to raise the rates they charge to borrowers correct? we've gotten kind of accepting of the idea that our checking account or savings account, they don't pay a damn thing >> i think typically what we see is deposit rates will typically lag lending rates and i think that will be true particularly
this cycle given the high degree of liquidity that's flush in the system today but on the flip side, you do have fintechs and online banking franchises that might be more aggressive on the deposit pricing side >> that's interesting. thank you , appreciate it. coming up, we're going to continue our "power lunch" travel week. yesterday, we booked our trip. we looked at the booking companies. today, we hop a flight so will this summer finally be when airline travel gets back to pre pandemic levels? i took a trip this weekend it was pre bpandemic atlanta was crowded, man got a 52-week high list. coca-cola, hershey coming up, we'll ask an analyst which stocks in the food group can raise prices and which will feel the pinch of inflation. stay with us
hybrid work is here. it's there. it's everywhere. but for someone to be able to work from here, there has to be someone here making sure everything is safe. secure. consistent. so log in from here. or here. assured that someone is here ready to fix anything. anytime. anywhere. even here. that's because nobody... and i mean nobody... makes hybrid work, work better.
welcome back we booked our trip yesterday today, we get on the plane from delays from staffing shortages, rising fuel costs, the industry facing a number of headwinds, investors have taken notice with the majority of the stocks well off their one-year highs, but maybe there's a silver lining. just this morning, american raising its revenue outlook in
an investor update let's bring in managing director and senior research analyst at bernstein research david, good to have you with us. you like the airlines kind of as a group and i would call them, i would say the big four are the ones you like the most that would be excuse me, delta, american, ual, and luv why? >> yeah, i think the airline industry is still recovering from the depths of the pandemic. as you look at what the outlook is going forward, the one thing you can be sure of is that airline earnings are going to be a lot higher in two, three years and where the economic outlook shakes out not saying they're going to be totally insulated from deceleration i think consumers have been showing pre pandemic and will show post pandemic >> they've got pricing power the other ones that i think of on the list would include
alaska, who you don't particularly favor would include alaska, jetblue and i forget who's merged with whom spirit, frontier >> spirit and frontier had agreements jetblue is coming up with a top bid. when we think of the airlines, you have your full service network premium carriers that's where i think you've got a real amount of opportunity to push pricing, to discover new ways to get customers to pay more for effectively the same service. the lower cost sort of points point operators that are competing more for the value conscious consumers. i think that's a tougher place to be in the long run as we deal with the cost of becoming carbon neutral. as we think about the actual ability to kind of incentivize demand to bring back the network. we just prefer to be in a space where you've got a better
opportunity to differentiate their fares. >> there's always a lot of focus on the price, but it's expensive to run an airline. how are you factoring in all of that as you are expecting earnings to increase because demand will come back so much more than those costs will increase >> i think right now, you're in a unique situation leisure travel, if you've thrown over the past couple of weeks for spring break, i'm sure your flights were full. if you were delayed, you were looking at three, four, five days to rebook you've got a strong amount of leisure travel people want to get out, see their families, go on vacation we think you're going to see a reopen of business travel. is it something smaller? it doesn't matter. if you get a priced consumer coming in, that's going to be supported in the commercial environment. you are going to have to adapt
to higher costs. you're going to have to take what the macro is going to give you, but the airlines as an industry, matching supply and demand one of the more bullish things we heard this weekend, you've seen a bunch of cancellations because of weather delays. some of the lower, smaller cost carriers are pulling in the capacity in the summer months knowing they can't meet the level of demand they're expecting. so from an overall perspective, that's a pretty good set up looking into the summer months >> if they're pulling in capacity and they've got high demand and high cost both from labor and fuel, that would it will me they're going to be price fair hikes on the way. >> yeah, i think the price of air travel for the next 12, 24-month period there is going to be elevated i think if you were to look to go to europe for summer vacation, you'd be pretty shocked at what you might see out there in fares and that just goes back to the core premise, which is consumers value travel,
business is value travel it's been a while since we've been able to do it we're going to go out. we want to reconnect with our customers, with our families, and the airlines are the only way to get there >> david, thank you so much. preesh appreciate it. quick programming note delta airlines ceo will be on tomorrow >> i miss travel i hope i can get back there soon ahead on the show, the rate divide first, investors thought higher rates could provide a boost, but now, some are getting bearish. plus, stocks with a bad hangover details in today's three-stock lunch. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi.
okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq thanks for coming. yeah... oh. donow when it comest! to a financial plan this broker is your man. let's open your binders to page 188... uh carl, are there different planning options in here? options? plans we can build on our own, or with help from a financial consultant? like schwab does. uhhh... could we adjust our plan...
...yeah, like if we buy a new house? mmmm... and our son just started working. oh! do you offer a complimentary retirement plan for him? as in free? just like schwab. schwab! look forward to planning with schwab. - super excited to open up my diploma from southern new hampshire university. - i'm nervous, i'm excited. - [man] okay, let's see it. let's see it. - oh my gosh. - as soon as she saw this, i did it and it's here. - [man shouting] yeah! (upbeat music) - [narrator] next term starts soon. visit snhu.edu
outreach next up, grocery stocks on two albertson's warn profits could be weaker than analysts expect down almost 7% car max also in the red. the used car giant's rocky earnings could be a warning to car stocks, higher expenses due to bad debt could be a sign of growing inflationary impact. shares of car max down more than 8% now over to christkristina partsinevelos for an update. >> here's our news update at this hour. south dakota's republican attorney has been impeached by the state house. the republican-led legislature rejected a committee recommendation that advised against impeachment and he fatally hit a man with his car in 2020 and initially told authorities he thought he hit a deer federal data shows 2021 was
america's deadliest year ever. the cdc has revised up initial numbers that have shown a decline as the pandemic eased. experts say covid was a reason, but adolescent deaths. and that's part of the opening statement. depp's lawyers say there was no abuse and will prove herd def defamed depp they warned the trial could take six weeks. after the break, inflation continues to hit food costs, driving packaged goods prices a lot higher but how much longer can companies kick the can down the road until consumers start paying up? we'll break down the winners and losers, next plus, today's working lunch, bill, we're going to highlight the ceo of turbo tax parent,
intuit stick around for that and more on "power lunch. (vo) verizon is going ultra! with 5g ultra wideband in many more cities, you get up to 10x the speed at no extra cost. plus six premium entertainment subscriptions, included! like disney+, music, gaming, and more! (mom) delightful. (vo) saving you over $350 dollars a year. and for a limited time get a 5g phone on us! no trade-in required. (mom) amazing. (vo) this is the offer you just can't miss! verizon is going ultra, so you can get more. cal: our confident forever plan is possible with a cfp® professional. a cfp® professional can help you build a complete financial plan. visit letsmakeaplan.org to find your cfp® professional. ♪♪
closer look at a group of companies that's sensitive to inflation. lower across the board, losing some of the gains from earlier you can see the s&p 500 down about a quarter of a percent that's where the nasdaq is as well chip stocks also losing their gains. smh down more than 7% in the past week. also a rough few sessions for the elon musk complex. tesla and twitter down 10% in the past week. and bitcoin falling back below that $40,000 level we are at 39,000 now to the bond market where yields took a sharp turn lower on the cpi number this morning rick santelli is tracking the action for us as always. hi, rick >> hi, courtney. markets are so logical, aren't they i guess it was the whisper number because whether it was the monthly number up 1.2% or both year-over-year, all three of those metrics were at cycle
highs for this morning's march cpi read the only thing that wasn't more than expectations was the month over month core, but you're right. yields moved lower let's look at intraday tens. we moved higher, but we were much lower when the dust settled. then the auction hit at 1:00 eastern and it wasn't very well. finally, you get a real sustainable bounce on yields let's start all the following charts on april fools. the first of april two-year note yields since that day are down six basis points. if you look at ten-year, they're up 34 basis points, which means, drum roll, please, twos to tens are up 40 from minus seven to 33 these are staggeringly large moves. we first started to discuss a month ago, three month to two-year has flattened it was at 194.
it's currently at 163. see, there is some logic to markets. the t bill market is catching up to the coupon market which was in short maturities. we want the continue to monitor that and also remember this rise in long-term rates has boosted the dollar on pace for a fresh two-year high close. >> it has been quite an interesting 12 days. thank you. oil bouncing back in a big way. getting back above $100 a barrel let's go to pippa. >> a big rebound for oil today surging 6% and more than erasing yesterday's losses a couple of driving forces here. we've got easing of virus restrictions in shanghai russian production down by 1 million barrels per day according to energy aspects and the u.s. and u.k. saying they will ratchet up economic pressure on putin to end reliance on russian oil and gas. let's check on prices. wti up 7% at $100.82
brent crude at 104, a gain of 6.5% this is boosting energy stocks, which are the top performing group today. marathon oil, devon and diamondback are leading those gains. the national average is still around $4.10 per gallon. the biden administration saying it will allow e-15 to be sold this summer in an effort to bring down prices. they say this will shave off ten cents per gallon >> interesting i don't know if we'll see the same kind of social media activity when prices go down as when they go up. the big story of the day, inflation. biggest year-over-year jump in 40 years food prices rising 8.8% from last year. which companies are best positioned to deal with those? let's bring in robert moscow
thanks so much for joining us. we're just looking at this big, overall food number as a category, but you know the specifics individually of companies. if i'm an investor and understanding what's going on, what do i need to know about the individual companies in this space and who could be a winner and loser, frankly >> well, before i jump into the companies, i want to highlight that we did publish a big report today that came to the conclusion that elasticity of demand in food is going to increase substantially by the end of the year. and that's because real wages are declining. the price of food is rising faster than wages. consumers are getting tired of eating at home they're trying to regain the mobility and there's a study out there saying that the perception of inflation at grocery is even higher than the reality. so consumers are increasingly getting scared about what they're saying about the grocery store. in order to survive that from an investor standpoint, you've got
to be in companies with a lot of pricing power and with consumers that are very loyal to those brands in that context, i really like hershey. i'm more nervous about kraft hines, conagra and kellogg >> why do those names give you more pause the ones that make you nervous we have so many brands >> so kraft hines is a company that's made a lot of positive changes over the past couple of years. it brought in more experienced management and they started reinvesting in their brands again, but at the end of the day, about 35% of the portfolio is still exposed to highly commoditized categories like cheese, meats, coffee, frozen potatoes, and they're getting squeezed in the middle you have private label on the low end, which is pretty high quality and cheaper and on the high-end, you have organics, which has really captured the premium. so i just don't think those brands in the middle can withstand the pressures on both
sides and i don't think they have the pricing power to off set higher costs cheese prices, for example, are starting to rise again since the start of the year. >> do retailers push back against these packaged goods sellers to keep prices from rising as much as they otherwise might, in effect defending their consumers, their customers >> inevitably. maybe not in the last six to nine months because the inflation's very visible and the consumer so far has absorbed it, but i think the order of events here is going to be consumer-led first with consumers trading down to hard discounters you can find a lot of inexpensive options there and when that happens, a big retailer like walmart, which wakes up every day worried that hard discounters or amazon are going to put them out of business, they will act. look no further than the margin compression in this group, 2017
and 2018, to see what happens when vendors and retailers don't get along. >> what is it about hershey you like apart from the kiss >> i guess it's the closest thing you can get to a drug in food category. chocolate is just one of those affordable luxuries that consumers can't really do without. they've entered this year with a lot of pricing power and good visibility on the cost especially on cocoa. they're hedged very well so enormous pricing power. a lot of investments into category management. capacity sales force coverage they'll reap the rewards of that >> robert, i cover retail and there's always a lot of focus on private label brands so walmart's own private label brand or costco's. but is there a play for manufacture of these yes, i know walmart owns it, but
someone makes it for walmart, so the that a play in a trade down space in an inflationary environment? >> there's really only one public company i cover that makes private label and that's tree house foods that's a company that has gone through a lot of challenges. in fact, they're going through a few that might involve exiting a lot of their portfolio i think the problem with private label manufacturers is that there's a lot of them and it's a very price competitive industry. it's very hard in an inflation market to fully recapture costs and it takes longer. one of the reasons i think at the branded food companies will be challenged this year though is that private label market share declined last year by 50 base base points the factors that have caused those are likely to reverse this year as capacity comes back online and as consumers at the low end start seeking returning to lower priced options. >> got it.
thank you very much. i know my family was very into toasted os growing up. i didn't know it was a different thing from cheerios. >> today's working lunch jon fortt. details from his interview with intuit plus, check out shares of crowdstrike. goldmasas esn chse unprecedented demand due to the ukraine war. we'll be right back. (vo) some bonds last a lifetime. some bonds inspire confidence, and some you grow to rely on. these are the bonds worth investing in. for over 50 years, pimco has reinvented fixed income to create opportunities for investors in every market environment. so, no matter what happens you can build the bonds that mean the most to you. pimco, a global leader in active fixed income.
your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire exploring the heart of historic europe with viking, you'll get closer to iconic landmarks, matching your job description. to local life and legendary treasures as you sail onboard our patented, award-winning viking longships. you'll enjoy many extras, including wi-fi, cultural enrichment from ship to shore and engaging excursions. viking - voted number one river cruise line by condé nast readers. learn more at viking.com.
the bad guys is the winner of the truly moving picture award. oh, stop! you making me blush. it's an action packed animated adventure. show the world that you're more than just a scary stereotype. everyone will love. is this wagging? - good right? tax day less than a week away which means it's show time for intuit this week, jon fortt brings us up close with the company's ceo, who has not always been in a position to offer financial advice >> that's right. he took over in 2019 the market value of intuit's more than doubled since then that's a far cry for how things started out for him when his family immigrated to florida in
1978 shortly after the move, his father died. his family struggled to get by he was bullied for being from the place where american hostages were held he spiralled failing school he was fired from a much smaller job than he has now. >> i got fired from mcdonald's so talk about inflection points. i needed a job and i needed money and so i was the cash register for mcdonald's and at the time, the big thing is you want to make cook. so i finally made it to be a cook and my first day being a cook, it was lunchtime so a friend of mine both had our wr break at the same time, so we grabbed two burgers and it was really hot we went into the freezer for our break to eat our burgers and the manager walked in and we got fired because apparently,
there's a policy you can't be in the freezer, you know, on your break, eating food and so i got that going for me, jon. i've been fired from mcdonald's as well. >> he's doing better now a lot better couple of years later, something clicked. intuit has pursued bold expansion in the three and a half years since he's been ceo most of it during the pandemic among the boldest things he's done is make big purchases 8 billion for credit karma as the world was plummeting into the trouble in 2020 and 12 million for mail chimp last year one thing he hasn't done is try to cash in on crypto or stock trading. he says he enjoys trying to bring customers stability. >> if you start launching products in a speculative market, it actually is against our mission, which is to power prosperity in the world because you know, yeah, one day you could have huge upside the other day you could lose everything that you worked so hard for and the majority of people
around the world live paycheck to paycheck. and it's some of these same folks that are trying to see if there's a way to make quick money with currency trading and we just felt like that is not who we want to be known for and we made those choices in the best of times when the currencies were going through the roof and companies were being applauded for all their trading capabilities particularly in the area we felt we needed to focus on the fundamentals of what mattered most to our customer. >> a big part of what he hopes to do next is make intuit a global household name. that means having software that helps individuals and businesses around the world make smarter money decisions. so that'srelevant, whether you're an entrepreneur setting up a business or a gig worker delivering mcdonald's. >> so is the verdict in or is it too early to tell about this $20 billion worth of acquisitions? >> i think you can see at least in the market cap, investors
believe in the strategy. intuit always had trouble expanding beyond quickbooks and turbo tax and quick back in the day. mint is one of their early software as a service plays. they were doing demand and then pulled back from that. he's pushed boldly into it and thus far, you can see how all of these things from a fintech perspective tie together >> the execution's going to be key. >> it is very interesting, of course, looking forward at what he wants to do when you're looking at the credit karmas and the moves he made during the pandemic, some might not have thought they were a good idea, but sure seems like many are paying off or could be. >> that one was particularly tough because he came on with ken lynn, the ceo of credit karma, right as we were plunging into the pandemic and people were telling ken, are you kidding? intuit isn't going to go through with this acquisition. you need to lay folks off, back away from this so the question was was intuit
going to ask for a lower price against some of the advice that ken was getting, he said you know what, i trust him, and they did go through with it and they've continued to grow revenue. >> if i'm recalling, he's a fairly long time employee there at intuit. >> he is >> which is not that common necessarily among ceos in tech companies. >> also been an entrepreneur worked at honeywell for a while. he's done a few things >> good to see you >> wonder if mcdonald's regrets that decision. from retail to chips to online sellers, shares of bed bath beyond and etsy down. we've got the trade on those ahead in our three stock lunch
hybrid work is here. it's there. it's everywhere. but for someone to be able to work from here, there has to be someone here making sure everything is safe. secure. consistent. so log in from here. or here. assured that someone is here ready to fix anything. anytime. anywhere. even here. that's because nobody... and i mean nobody... makes hybrid work, work better.
around plan will hit investors hard after results you say steer clear of this one. you are in agreement i think with about 40% of analysts >> yeah. no question, courtney. the stock got some momentum ryat involved, formerly from chewy's. he's got kind of a cult following, but bottom line, you're going into what looks to be a sinking retailer. you have 2 to 1 debt to equity, ne negative return on equity and they took a bunch of cash to pursue a stock buyback, which looks more like a pr maneuver than real fundamental change a lot of people might look at the price of the stock and think of it as a value i think it's a value trap. >> there was a lot of excitement when mark tritton was named ceo, he was from target did a lot of things with the private label name that's what he's been doing with
bed, bath, & beyond, but you have earnings they may come down 90%. is there anything in this turnaround that you look looks promising if you're longer term investor >> at the end of the day, you want to go into names when people hate them i'm not sitting here saying it's never going to be back on our radar, but i'm a show-me investor, so i have to start to see it we may actually see a pop on the negativity tomorrow because it might already be priced in what we want to see is we want to see the sustained change. this company, like many retailers, they're dealing with supply chain issues. they're dealing with pricing issues we want to see the fundamental story turn around, and that's not going to be for me until i start to see them actually turn a profit again and start to pay down their debt and improve their balance sheet. >> let's turn the page and look at nvidia. shares down more than 17% over the past week. baird warning of more pain
ahead, saying weakening demand isn't priced in yet. overall pc sales off 5% in the first quarter. pandemic boost subsiding there this was a hero stock, quint, for a couple years i mean, as good as it gets >> yeah. you better believe it. and you know, in the cycle that we're in, when really growth starts to get smashed, these are the dangerous plays. so we have looked at two extremes we looked at bed, bath, & beyond that is trading not far off all-time lows. we're looking at nvidia trading, i mean yes, it's come down, but if you look at the longer term chart, this has been an absolute monster. it would be very easy to get sucked in and go, oh, it's significantly off highs. let's try to pick up this name here and i think, again, you have to be very, very careful. what the analyst from baird is talking about which makes a ton of sense is the gpu sales should
come in softer than expected why? because a lot of these companies have been ramping up their orders on computers and inventories have been soaring. so we're going to start to see, i think, the consumer not only slowing, and i think that will continue, but these inventories are going to be increased, and that's going to hit the consumer segment. not to mention we're seeing this domestically and abroad. but the stock is still not cheap, and it's in my opinion, i think it has further to go >> bottom line me, here. if i don't own it, stay away from it. if i do own it, sell into any strength >> i would look to sell into rallies like we saw today across the board. i think what's going to happen with nvidia at some point is you and i are going to be on the show, we're going to talk about a stock trading significantly undervalued. it's going to go from a growth name to a value name, and then we can get interested in the name again >> our final name today is etsy. shares down more than 13% in the past week.
beginning today, thousands of sellers on the platform launching a virtual stock in protest of the decision to raise commission fees from 5% to 6.5%. it's more than 60% off the highs but you like it at these levels. what are you looking at here with etsy? >> looking at the fact i can't be negative on all three names you gave me for today. but it is, admittedly, we started in our shop to do a lot of work on this name a stock that was a darling as well, has fallen considerably. and there's some interesting data points with etsy. first of all, it's somewhat attractively valued. it could become more valued in this cycle as these stocks continue to get hit. but it's trading 25 times forward earnings those earnings are growing, expected to grow at 30%. they made some very interesting acquisitions they use a lot of debt to do that, so they better be accretive pretty quickly, but they really are looking at a global footprint with some of these acquisitions but here's an interesting
statistic. a lot of people are trying to compare etsy to amazon look at etsy compared to ebay. etsy has 96 million buyers ebay has 147 million but the price point, etsy buyers are spending on average around $24 a purchase ebay buyers are spending $60 so i think if etsy, instead of focusing on ramping increased expenses for their sellers, if they can look to increase their purchasing for their buyers, they're going to see a significant increase in revenue and ultimately earnings. it's one that's very interesting to me. we don't own it yet but i'm looking at being a buyer >> quint, we'll have you back to talk about it. thanks for joining us here today. >> rising rates supposed to be good for the banks up next, why some bank investors are getting pessimistic ineastd. we'll tell you about that in a minute
thanks for coming. now when it comes to a financial plan this broker is your man. let's open your binders to page 188... uh carl, are there different planning options in here? options? plans we can build on our own, or with help from a financial consultant? like schwab does. uhhh... could we adjust our plan... ...yeah, like if we buy a new house? mmmm... and our son just started working. oh! do you offer a complimentary retirement plan for him? as in free? just like schwab. schwab! look forward to planning with schwab.
. jpmorgan kicking off earnings season tomorrow morning. several other banks following on thursday investors will try to figure out if rising rates are helping the bank or if they will cause a recession that will hurt the banks. leslie picker joins us now with more leslie >> yeah, tyler, it's been a slippery slope this year bapg stocks reversing earlier gains and now in the red ahead of q1 earnings that kick off with jpmorgan tomorrow earlier this year, investors were piling into bank stocks on the prospect of rate hikes
then, midquarter, sentiment shifted over concern the war in ukraine and supply chain issues would cause the fed to hike more than the market initially indicated. on average, according to a recent note, the largest banks outperformed the s&p on a market cap weighted basis by 1300 basis points through mid-february, and then underperformed by 1500 basis points through quarter end. higher rates serve as a tailwind to banks because they can charge more for loans than they pay out to depositors boosting their margins for loan making. but when it became clear a few weeks ago that the fed would have to hike more aggressively to get this inflation under control, the risk of recession overshadowed any potential benefits they would otherwise get from the rate hikes. as wells fargo analyst mike mayo said earlier on cnbc, any commentary from bank execs about a potentially better outlook could be a catalyst for stocks to go higher, so we'll see what
happens on these calls this week >> very interesting to see what happens to big banks out this week thanks so much >> courtney, great to be with you. >> thanks for having me here >> we'll see you again soon. thank you very much. stocks giving up their gains right now. sara is along to tell you about it "closing bell" starts right now. >> tyler, thank you. we gave up the whole rally and then some and we're trading near session lows the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen here's where we stand right now. the nasdaq growth is the leader today, up 273 points it's given that all back s&p 500 down .25%. and the dow is down about .1%. energy is leading the way today in terms of sectors. you have strength in utilities, consumer discretionary, materials, financials getting hit hard as we see interest rates go the other way yields lower today that hurts ahead of earnin