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tv   Power Lunch  CNBC  May 3, 2022 2:00pm-3:00pm EDT

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hi, everybody, and welcome to "power lunch," i'm tyler mathisen, here's what's ahead on busy tuesday we are one day away from that fed decision on interest rates, 50 basis points, half a percentage point hike. that's what's expected, but it all comes down to how hawkish the fed sounds about what it will do in the future. future hikes, that's what the markets are waiting to hear about, and as the fed fights inflation, consumers are figuring out how to deal with it, what will they cut back on where will they keep spending? we will talk to an analyst who says sell the staples, kelly. >> not so staplely anymore, are they tyler, thanks. hi, everybody, let's check on the markets. the dow's up 120 points so we're
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well off the session highs, but still higher across the board. the s&p actually up 3/4 of 1%, the nasdaq up's 6% it's been the last hour of trade really that's been setting the tone here lately energy best performing sector on the s&p right now. look at nat gas, soaring above $8 again today the touch briefly the highest level in nearly 14 years. we're just below that right now. major problem heading into peak ac season in a lot of states devon, diamondback, coe tara, all three reported strong results. here's the yield, devon yielding # 8% right now you have the travel names getting crushed after expedia's disappointing quarter. they cited wage pressures, the shares down, airbnb down 5%. 24 hours from right now we get the fed's decision on interest rates. there is concern about the fed making a mistake here, but what do we mean by a mistake?
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too much too little is there anything they can go back and fix now steve liesman is looking at the confidence in jay powell, steve. >> hey, kelly, yeah, during much of the pandemic, fed chair jay powell got high marks for -- of the economy, but the latest cnbc fed survey showing the outbreak of inflation and the new aggressive effort, the fed's going to embark upon to fight it taking a toll on how powell is viewed on wall street. take a look, during april 2020 and july 2020, the middle of the pandemic, he got a minuses for his economic leadership, slightly different question we asked this time, overall leadership, well, that's fallen now to a b minus for this may 2022 survey here now, transparency, he gets a b, but moving on now, communication a b minus, economic forecasting a d overall, and monetary policy he gets a c. why? well there's 100% chance of a 50
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basis . point hike in may, 90% chance of 50 basis points in june 2 2.7 trillion expected to come off the balance sheet. and term gnat rate, 3.08%, four months earlier and 72 basis points higher than the march survey perhaps, on powell's marks, the fed not expected to hit its 2% inflation target until 2024, and there's real worry about a recession. take a look at these results right here, asked about the fed's effort to bring inflation down to 2%, 57% said yes, 33% saying no, 10% don't know. for the next year, the recession probability is at 35%, but several respondents said the strength of the consumer and the job market and businesses makes a near-term contraction unlikely, kelly. >> and of course as we've talked about with annette ta last hour, we're listening for his language on the labor market, which is already -- i think he called it, what was the term he used
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exactly. it was sort of overhead heating something to that extent 11.5 million job openings, two for every person looking for work right now this is unprecedented. >> yeah, i think what powell said was it was strong to an unhealthy extent something along those lines. he thinks it's way too tight, and these numbers are not going to give him any comfort. what the fed needs to do is see job openings decline here, 6 million is a normal run rate, we're now at 11.5 million. and as you say, rising we have strong durable goods reports this morning there is very little sense right now that the consumer has eased off at all with these high inflation numbers or higher interest rates all of the concern, i think that's a key part of the report here, kelly. all the concern about recession and contraction in the economy comes into next year after the full weight of all of these rate hikes ends up hitting the
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economy. you know that famous phrase that monetary policy works with long and variable lens. well, that lag now is seen as august or so of 2023, but near-term it looks like there's quite a bit of strength. >> all right, steve, for now, thank you, steve liesman. let's continue our conversation on the fed with cross mart global investment cio bob dahl welcome back, it's great to see you again. you say the key unknown is whether central banks are going to be able to tighten sufficiently to slow down inflation without triggering a recession. i think as i read my notes of what you said is that you think they probably will be able to do that, that you think there are probably some signs that compare tu care tivoli that inflation will slow, and the underlying economy to avoid a recession even with the rate hikes as forecast. >> avoid a recession, tyler, for
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now p i'm with those saying second half of next year most lakely. threading that needle, engineering at soft landing is most difficult those calling for a recession tomorrow morning are missing how strong the consumer is, how strong the job market is, how strong corporate balance sheets and income statements are and the long lag to use steve's phrase and variable from monetary and fiscal policy the ease from last yorear is stl operating on the economy it will take a while for recession to show its ugly head. >> am i right or am i wrong that powell is not alone among central bankers in holding oent a very easy money policy, perhaps longer than he should have >> well said, there's a whole group to blame i guess is the way to put it, transitory lasted way too long in our view and many other views, there were signs that
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inflation, core inflation was getting perky, and they just didn't seem to want to pay attention. so you have a long lag, the policy mistake, i'll call it that, and the need to restore credibility as your poll just showed is going to take a bunch of time, tyler. >> yeah, i'm sort of with you on that, bob. there are a lot of central bankers who could be sort of plead guilty to the same thing that powell was being accused of here and, oh, by the way, there weren't a ton -- i don't know whether you were among them or not, there weren't a ton of market analysts who were all that concerned about inflation a year, 18 months ago. i want to go back to 2018, the fall there, because i think that's when -- i believe it was 2018, could have been 2019 when powell started to raise interest rates, and he came under pretty sharp criticism for doing that, most notably by president trump, and then by december he had pivoted and he had gone back the other way and let rates come
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down in retrospect, was he bullied into lowering rates at that point and would he and we be better off if he had stuck to his guns back three, four years ago. >> yeah, how and why he did it, whether he was bullied, who knows, but the fact that he did, he went too far and it lasted too long perhaps we shouldn't have gone to zero. hard to blame the pandemic and the reactions to it on anybody we didn't have a playbook for that i think the problem was waiting too long as the economy began to normalize in the back part of 2020 and into 2021, that's when the fed should have said let's just get rates back to normal. we don't have to be punitive let's just get back off this zero target. at 1% fed funds, which will still be under after tomorrow's meeting and 3% ten-year treasury, we still have negative real yields. this is still stimulative for
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activity, we're not even in restrictive territory yet. >> we're going to have to go higher for longer on rates it would seem to tame what we did expect we would see and that is very high historic inflation final thought here, what should i do with my money over the next six months are there opportunities? are there going to be opportunities in equities, are there going to be opportunities in fixed income. where? >> i think this is a year we're going to frustrate the bulls and the bears. so far we frustrated the bulls, maybe we'll frustrate the bears. i think the market is oversold to some degree look, we have a tug of war here. the earnings picture is still pretty good. i know we can throw cold water on pieces of that. the problem is multiples, they've come down from call it low 20s to mid-teens they have further to go. the question is can the earnings continue to be okay? my guess is you've got to pick your spots, old tech where p/es
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are single-digit, some of the financials, like to see them perk up today including insurance companies, and if you want some strength since the first of the year, some of those hmos still make sense in the portfolio. that's where i would be shopping. >> bob, it's been a while, great to see you, sir. >> all the best. >> we've been talking about high prices for consumer goods, but as you just heard, auto prices are near record highs. consumers have got to start trading down when it comes to essentials joining us is michael avery, senior research analyst at consumer staples with piper sandler. michael, it's good to see you. tell us first of all where you're starting to pick up this trade down effect. >> well, we haven't seen a lot of it in the history yet what we really wanted to understand is as consumers become more aware of these price increases and see them more broadly, how are they starting to react, how are they planning to react it really feels like we could be close to a puturning point here there's definitely trading down they plan on doing and cutting back as well.
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>> what you're really picking up on is the intention. the idea that -- we've seen this in the saving rate which kind of captures that monthly income inflow versus expenditure, and that's moving back down toward zero it feels like other than the savings they have in the bank, consumers are going to have to make tougher choices here? >> that's exactly right, and we want to be as forward looking as we can and try to understand how they may start making different decisions and that's where within the group we still have names we like. her shey is one -- i believe in their pricing power and in this survey it looks like as a category, they're faring quite well in terms of where churs don't plan to make cuts or trade down if you look at things like meat, half of the consumers that said they plan to cut back on a category cited that as their first primary place to go, and they've said it's a place where they plan to down trade as well.
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we think that's where there's a good amount of risk. >> that's why tyson is one of the names you're downgrading kellogg's and post, downgrading kellogg but saying that post looks like it could be a winner. why is that? >> it's a difference in the composition of their cereal portfolios post has called out pressure on their portfolio in cereal over the last year and a half because they have a much more value brand skew, and they've seen some pressure as consumers have traded up, and we think that's more likely to reverse, and then kellogg is also in a particularly tough spot because they had a strike and one of their plants in the second half of last year that's really disrupted their ability to supply product and run promotional places and events. they already have share pressure they're under and to try to restore that in an environment where consumers may have been away from their brands and are looking to trade down i think puts them in a particularly tough spot. >> and a reminder that sector selection alone really may not save you right now got to get pretty stock specific
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pricing power specific michael, thanks for joining us we appreciate it. >> thank you. >> michael lavery. >> all righty, coming up, the stocks are bouncing back today, but the damage has been done during this recent tech wreck. the nasdaq still down 11% in a month. up next, we will look to the options markets for any signs of where tech and other sectors might go next. plus, we'll talk to the ceo of general electric, larry culp. ge got crushed last week, culp, gulp after reporting earnings. we'll find out whether those supply chain problems are showing any gnofasg.sis ein we'll be right back. introducing icy hot pro. with 2 max-strength pain relievers. ice works fast... to freeze your pain and your doubt. heat makes it last. so you'll never sit this one out.
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welcome back to "power lunch," everybody. the steep drawdown in equities from thursday's close, it's still not recovered as all three major averages remain about 2% off those levels my next guest has seen a wave of activity in options and names that were reported last month, including pinterest, snap and meta options volumes seem to point to a thesis that dividend names are no longer as attractive to investors. joining me now is chris murphy, co-head of derivative strategy at susquehanna great to have you back what's options activity telling you about the next move in this market >> well, you know, everybody option indicator under the sun, every volatility indicator, sentiment position, et cetera, all screaming for a near-term bounce you know, obviously the longer term u.s. economic growth, recession or not, that's going to indicate, you know, the
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longer and medium term stock market direction, but all those traditional, put call ratios, that have worked so consistently over the last 12 years are flashing right now i would obviously point out that, you know, the last 12 years we've had mostly accommodative fed, relatively low inflation, so you've got to keep that in mind. those traditional options time for a rebound indicators are flashing right now >> in other words, you look -- you're saying we could see a little bit of a bounce here. it's funny, i know people feel bad being bullish right now because that's the kind of market that we're in >> well, yeah, and i'm talking about a near-term bounce one parallel that we've been looking at recently, so the last two fridays, 97% of s&p components sold, that's a broad, you know, all hands on deck sale where investors are aggressively unloading risk into the weekend. that has not happened in over ten years. last tame that happened was in 2011, september, so the good
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news, that was towards the end of that bear market, and we did see a pretty sharp bounce right afterwards, about 6 or 7%. you know, the bad news from the low on that second friday, s&p still traded down another 6%, so a lot of these parallels, i wouldn't necessarily say bullish in the medium term, but a lot of these parallels do point out we are due for one of these bounces. >> yesterday, kelly, when you and i got off the air we were down about 500 points, and then i go home and i find that we've ended up by 85 points, so maybe that bounce is in there after that friday phenomenon that you just referred to you point also to retail option trading that small lot call activity remains near pandemic lows and that that has been on the rise suggesting that retail investors are chasing down trend, chasing, chasing,
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chasing. when they do that, is that a signal -- a contrary indicator let me put it that way >> yeah, so here's what i would say. if we think back to 2011, meme stocks, call volume, all those things you know, it was a strong market to the upside, we saw a lot of small lot call volume. now fast forward to right now, that small lot call volume is back down towards post pandemic lows now, not necessarily seeing a surge in retail put volume, but it's definitely way more, you know, evened out compared to, you know, the frothy 2011. >> and chris -- >> 2021. >> what are you garnering about dividend plays, they're becoming less attractive? >> just today, we've been looking at this for a little bit. i'm talking about consumer staples that pay the higher dividend, we've seen a ton of put spread volume in the xlp,
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all-time high in put volume for that product we're also seeing similar -- this is all in june, similar put spreads being bought in coca-cola and j&j and it kind of goes back to that 95% all hands everything gets sold at the same time kind of selloff the consumer staples upheld it a lot better, but if we get, you know, a final flush of everything in the market, you're getting much lower -- much cheaper volatility exposure in a lot of those names, so everything gets hit the same, or if the outperformers get hit more, that's a good place for risk reward downside plays as hedges >> all right, well, chris the market didn't like your bullishness, the dow has now gone negative by 22 points it's a dangerous -- like tyler said, every time you turn around these days it's a different market thanks so much for joining us. it's good to see you again all righty, further ahead on the program, the general electric slide. the stock off 18% this year coming off declines, a rough
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quarter. we're going to speak to the ceo larry culp. plus, travel stocks caught in some bad weather. expedia down more than 10% following weak results guidance disappointing china weighing on the company. we'll discuss in today's three stock lunch.
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welcome back to pl"power lunch," april's auto sales numbers aren't off to a great start. what are the numbers telling us about the future direction of sales, prices, inflation, let's get to phil lebeau. >> these are not horrifically bad numbers, but remember, we're comparing with april of last year when there was more inventory, therefore sales were higher, and what we're getting here is a snapshot based on those automakers who report on a monthly basis. so the numbers we've gotten so far today, you've got toyota, hyundai, kia, just a little snapshot of where the industry is at, down anywhere between 15 and 23%. the average transaction price, it remains close to a record high why? because demand remains strong, and there's just not the supply of vehicles. i mean, you're going to any showroom right now, you're unlikely to see much different than what we're showing you here right now. this is what it's like around the country. dealers have really, really thin supply on their lots average
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transaction, by the way, just under 45,000 the chip supply, it continues to hinder production, but it is gradually improving, and that's why we need to take a look at the auto stocks over the last three months we've talked about this, the overall production rate is gradually increasing the inventory levels are gradually improving, but we're still way far away from where we should be in normal times. pre-pandemic levels. usually you have three to four vehicles in inventory. right now it's under 900,000 that's a little bit of the snapshot of what the industry looks at right now the bottom line is this, april sales a little better than march, but still nowhere close to where this industry usually is this time of the year. >> i don't want to take you down a blind alley. what's going on with used car sales and used car prices? i heard -- i think it was jim cramer last night saying used car prices may be peaking and ready to roll over >> that's the expectation, if
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they haven't already started to roll over a little bit that they have hit a peak, but let's be clear. they're not going to fall off a cliff. there's still so much demand that's out there, tyler, and there's so limited inventory that you will continue to see high prices on the used side as well >> i can't -- you can't stump phil, you just can't stump them, man. stum . >> let's get to our cnbc news update christina. >> here's your cnbc news update at this hour, cay ie sri telling reporters that the leak of the supreme court draft decision is outrageous and not acceptable but she is hoping and praying roe versus wade is overturned. alabama's among 26 states likely to ban or impose extreme limits on abortion if the ruling is overturned. p meanwhile, democratic senator joe manchin ofwest virginia remains opposed to end the filibuster despite the possibility the supreme court could overturn roe versus wade, ending the filibuster is likely the only way democrats would be
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able to pass legislation to protect abortion rights due to their slim majority over republicans. an oklahoma judge ruling a lawsuit seeking reparations for survivors and descendants of the 1921 tulsa race massacre can proceed. tulsa's greenwood area was once the ation's most prosperous black business district before being destroyed by a white mob and take a look at this video of a person scaling the side of the 61 floor salesforce building in san francisco. gosh, that's scary the climber made it all the way to the top and has since been detained by authorities. safely though. >> wow, after that he gets detained that's his reward. >> no, the video and the viral recognition is the reward. >> i guess that's right. >> we're talking about it, right? >> there we go >> spider-man. >> spider-man. >> thanks, kristina. ahead on "power lunch," the brawl in the buckeye state, a
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contentious race forming in ohio with a ton of money pouring in from unlikely places, people, and organizations. we'll discuss that one. plus, natural gas soaring once again to its highest level since september 2008 this as the ongoing russia/ukraine war continues wreaking havoc on global energy markets, we'll get the latest from bank of america's francisco blanch after this.
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to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities.™ . welcome back, everybody. 90 minutes left in the trading day, and we want to get you caught up on the market, stocks, bonds, commodities and the massive rally in natural gas we are losing some steam this afternoon. the dow was up 280 points at the high of the day. small cap russell 2000 up more than 1%, but right now you see the dow is down by 31 points, kind of the flip of yesterday when it spent most of the day down, and then ended the day on a positive note. energy the best performing sector, exxon, chevron both higher, more on energy coming up don't get too impatient. we promise financials are doing withvery w ahead of an expected half point hike from the fed coming
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tomorrow citi group, bank of america, jpmorgan are all higher. let's move to the bond market where so much of the action is these days and rick santelli rick. >> thanks, tyler you know yesterday all maturities 2, 3, 5, 7, 10s, 20s and 30s made new cycle high yield closes look at a two-day of tens. we've traded above 3% intraday two days but we haven't closed higher than 3% at or higher than 3% since the 29th of november of 2018 and that is important because many systems that are automated in this day of computerized trading have what is known as triggers, and many times the trigger's based on closing prices look at a 24 hour chart of boons. big news overnight, they finally breached 1%. if you put a stopwatch to your one-minute charts, you'd find less than 60 minutes of cumulative trade was at 1% or higher they didn't close their -- as a
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matter of fact, they haven't closed above 1% since september of 2014, even though there were intraday trades in 2015. december fed fund futures are on pace for a new contract low, and the contract first traded december 31st of 2019, at 9723 plus is now implying 276.5 basis points of total fed tightening tyler, back to you. >> rick, thank you as always oil closing for the day down a little bit, but the big action today has been on the nat gas market where prices hit their highest levels since 2008. let's go to pippa stevens for the closing numbers. >> nat gas with the eye popping moves today, but let's first start with oil china demand concerns back in focus sending crude lower, wti at 102 pbt 58. brent crude at 105.13. each down about 2.5% energy stocks, though, going in the other direction up more than 2%, and the top performing s&p group today following strong
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earnings from devon, diamondback and coterra all of which hiked their dividends. we also got insight into how companies are looking at production with diamondback saying it will keep output steady the ceo saying quote, we do not feel that the day is the appropriate time to begin spending dollars that would not equate to barrels until multiple quarters from today. he pointed to ongoing uncertainty and volatility in the energy market. nat gas has run higher continuing the contract surged as much as 9% hitting 8.17 demonstrators per mnbtu. that's the highest since september of 2008. it's since moved off those levels, though, now up just around 6%. tyler, back to you. >> thanks very much, pippa stevens. so what's behind today's massive move in nat gas and what does it mean for consumers let's bring in francisco blanch at b of a global research. this is like our weekly date we get together once a week fail
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or not while why today? why the move what can you tell us >> hey, tyler, thanks for having me the market in natural gas is getting very nervous as you know, we have a global energy crisis going on it's just they haven't impacted the u.s. yet, and what's been going on is there's been a big rally in the global price of thermal coal, which is essentially the basis of generation for all our countries, and we've seen coal prices in the u.s. rallying, so natural gas has been getting closer and closer to that coal price rally, and that's been the main trend in the last few weeks. that's really been the main driver of gas, the rallying global power prices and global coal prices. >> so as europe tries to wean itself off of russian natural gas, which it appears it is going to try to do, the pressure point then becomes on our ability, the united states or
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others to send from terminals here and elsewhere around the world liquefied natural gas to europe, but we just don't have enough terminals and they take years to makeand build and yet functioning, and then the question is what is the return on investment of thoseterminal if in 25 years we're not look at natural gas as the power source it is today? >> that's right. you framed it perfectly there. i'm not sure i have a lot to add. but i'll tell you one thing that worries me is that if the u.s. for whatever reason needs the gas domestically and needs to withhold those exports, we're going to have to see a very high domestic price in the u.s. natural gas market re >> francisco, where do we go from here both for oil and for nat gas? do you expect these to be
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near-term price peaks? >> i don't i think the global energy markets are are still extremely tight. we have very low inventories of oil, gas, coal, in north america and europe and asia. we have an energy crisis going on, and i think one of the big issues that is going to help provide some relief is if we have a major economic deceleration, also known as a recession. but of course nobody wants that to happen, and the one saving grace so far has been the fact that china is in lockdown. we have diesel prices scratching $200 a barrel with china in lockdown what's going to happen when china reopens? so i'm pretty concerned about the state of the energy markets. hopefully we'll see some supply responses. hopefully the users in the u.s. and else where will react to the high prices. there is no imminent relief, i think, for consumers for the time being
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russia is just too big a producer to knock off the market >> do you -- do i correctly infer from what you're saying that really the only -- or the best way these natural gas prices come down or diesel prices come down is if we do have a global economic recession? >> well, what i'm telling you is we don't really have the quantities to grow gdp at the pace we want, so it's no longer an issue of price, it's an issue of having the available quantities, and of course you're describing as you pointed out to sanction russian energy, oil and gas and already as you probably know sanction russian coal exports, which is what's triggering the rally at the bottom of the spac remember, coal is the cheapest generation source around the world. so all those prices are trending
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higher, so hopefully we avoid the recession, but it's going to be quite a close call. >> francisco put it in your book for next week. we'll see you then, francisco blanch of b of a. >> and up next, uncertainty in the energy sector along with supply chain struggles are severely impacting ge. it's been hitting their revenue and we're going to talk to ceo larry culp live to discuss before we go, the stock draft may be over, but you can pray the cnbc fantasy stock draft to scan this code or go to, you can play for free and we'll even give you $100,000 in virtual bucks to play the game how do you stack up against the pros we're back in a moment hey businesses! you all deserve something epic! so we're giving every business, our best deals on every iphone - including the iphone 13 pro with 5g. that's the one with the amazing camera? yep! every business deserves it...
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electric >> thank you very much that is right. let's talk about energy because that's why we're here, the transition, ge's a huge part of that larry, thank you very much for joining us before we get a little more specific on the energy side, obviously earnings were out last week, most of what i read was pretty positive about your quarter. the market, which is down overall didn't react as well what is maybe wall street or our viewers missing about the ge story right now? >> brian, always good to be with you. i think that the last we cleary have seen some pressure on the stock. it was really not in our view a reflection of performance in the first quarter, more a function of the outlook that we updated for the rest of the year where we said we'd be at the low end of the range we issued back in late january we cited three things, inflation, policy uncertainty in our renuewables business and the situation in ukraine as we look forward, and it really is about the outlook, we're heartened by the fact that the aviation recovery is
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underway we power two-thirds of the departures the world over. that will be a good sequential trend for us through this year going into next year we had a very strong order book in our health care business, orders were up 8%, but we had trouble because of the supply chain challenges getting product out the door, so it's not a demand issue for us right now. it really is an execution challenge, again, working through supply chain pressures, like so many other companies will do that i think as we work through the course of the year, we'll deliver better numbers. >> you mentioned the regulatory issue with renewables, and this is little bit wonky, and i don't want to bore our viewers here at the conference, there is a department of commerce investigation into alleged dumping -- tell me if i get anything wrong, of solar panels in the united states from china. it sort of came out of the blue next era energy cited this on their earnings call. it's an issue with solar what can you tell us about this? is it going to be short lived? where does this roll out to? we're supposed to promote
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renewables, i thought, not hurt them. >> well, brian, i would refer to jim robo a good customer of ours, solar side of things, we really don't play there in a meaningful way when we talk about renewables for us it's principally wind onshore and offshore the fact that the ptc, the production tax credit was not renewed last year, and at the point it's uncertain as to when it will be as a result we've seen deployments over the last two years plunge by 50% in terms of new installed capacity here in the u.s. that's not helpful relative to the wind business, let alone the energy transition. >> well, okay, there's multiple things going on, at a time when we're supposed to be promoting renewables, that's what i'm told, that's what we hear around climate change aisle sure you've got a crack team in d.c., this ptc, this tax credit, where do we stand with it what are you hearing about it? is it going to go away is that going to pop your business back again? >> we have a crack team in d.c., no doubt
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i was down on the hill last week myself i think there's a bipartisan cons consensus, which i was pleased to see, that we need to do something, not only with respect to wind and the production tax credit, but frankly a range of other incentives including the carbon capture incentive we need to do something from a permitting perspective, and we just need to have that policy certainty. policy in a way that recognizes the role of natural gas, and frankly, the role that nuclear is going to have to play, particularly small modular reactors i don't think it's about policy at this point. i think it's about politics. we'll see how things play out. i'm optimistic that something will happen, and we'll see those incentives, those policy mechanisms in place. today i think it's really more a matter of time we took a more conservative position last tuesday with respect to when that will be resolved. >> i know my colleague tyler mathisen has a question, by the way, a former ge guy back in the day. >> we all, i'm very grateful for my ge pension. i just got the report on it, i'm
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very happy with that thank you mr. culp and everyone. i think i'm right that your previous guidance was for 280 to 350 a share in free cash flow -- excuse me, eps, but your first quarter came in at $0.24 that's a long gap from $0.24 to a low of $2.80 a share in eps. how are you going to get there i mean, that's a factor of, what, more than 10x. >> tyler, thank you for your service. we really appreciate everything you've done over time. i'd say what we said back in january, we knew it was going to be a slow start to the year for a number of the reason we just hit on, but the sequential improvement that we see in the second quarter and in the second half is something that we have conviction in. again, largely a function of demand, the demand is there, and then some with respect to aviation orders have been robust, not only in terms of our
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aftermarket, our shop visits, but also in terms of new units to both our major airframer customers. health care, again, orders up 8% there's plenty of demand we just have to worry through these inflationary and supply chain issues to deliver on that product, and i think as we work through the course of the year, you'll see that step up not unlike, frankly, what we did in 2021. >> i know we got to go, $8 natural gas, we hit it today you have a gas turbine business, you also have renewables is $8 gas good for you >> well, i think the overall environment right now is good for the 7,000 gas turbaines we have around the world generating cleaner energy today s that's a good thing. as the input prices tick up, sometimes we see pressure on utilization. our utilization thus far, brian, has been quite strong. we're encouraged by that and in a moment where we need all the energy we can generate, we think that fleet is going to play an important role. >> and we're going to go do a panel about just that here in the next 30 minutes. larry culp, chairman and ceo of
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general electric really appreciate your time, an important conversation, guys, thank you. and kelly and tyler, everybody wants to live in a 4,000 square foot house with air-conditioning in a warm climate, drive an electric car and charge their phone every night, we're going to need a lot more power it's got to come from everywhere that's really the focus of the conversation here. >> brian sullivan, thanks so much, great to see you, mr. culp thank you as well. jpmorgan says mgm could climb 26% as its convention business recovers. the call not helping the stock, though, as the travel sector takes a big hit today. we'll trade that along with exdianpea d hilton in our three stock lunch. we'll be back in two milken global conference is sponsored by pgim, a global leader in asset management at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions.
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it's time for today's three stock lunch and we're looking at travel expedia after saying covid, ukraine and wages are hurting demand mgm beat on results. the stock rose last night but now getting dragged down with the overcall sector. let's bring in boris, bk asset management's managing director and cnbc contributor boris, welcome
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jpmorgan thinks mgm could rally 25% from here. what do you think? >> i think it has a reasonable chan chance to go to 50 at this point. vegas has to be one of the most desired locations along with orlando. i'll be there next week. so mgm is benefitting from the resurgence of vegas. the only thing is it's trading at 40 pe so it has to execute perfectly in orderfor the talk to perform well. i think it has a reasonable chance to make 50 over the next 12 months. >> you're going next week? maybe i'll go because you're going to be there. let's talk about hilton. good numbers, but lower than expected full-year outlook what say you >> hilton is the one that i'm the most cautious about because i think there seems to be a lot of idiosyncratic risk over there. in addition to that the company has increased its dividend, it's doing purchase buy backs these are not necessarily things you want to impress the shareholders with operational excellence i am concerned about hilton.
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that's one i would stay away from until they show improvement on the operation side. >> what about expedia? i can't believe how much this one is drop ping today. >> i think that's an incredible opportunity today. it's getting clobbered based on the hilton guidance. i think expedia looks very good going forward. you have to remember that the dollar is at 20-year highs that makes europe unbelievably cheap this summer. demand overall will be very, very strong. i think we're all tired of zoom wine parties everybody wants to go out and have a real experience expedia should benefit from that my favorite way to play that is to sell the 150 puts in june that gives you about 7% real yield in three months. worst comes to worst, you buy the stock at 139 so to me that's the better way to play it. >> worse comes to worst, you buy the stock. boris, thanks so much.
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we appreciate it today. >> the three glasses are empty. still to come, raising the capital. millions pouring into ohio's senate race, including tech billionaire, crypto investors, team owners. we've got that story, next exploring the heart of historic europe with viking, you'll get closer to iconic landmarks, 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 (fisher investments) in this market, you'll find fisher investments is different than other money managers. (other money manager) different how? aren't we all just looking for the hottest stocks? (fisher investments) nope. we use diversified strategies to position our client's portfolios for their long-term goals.
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(other money manager) but you still sell investments that generate high commissions for you, right? (fisher investments) no, we don't sell commission products. we're a fiduciary, obligated to act in our client's best interest. (other money manager) so when do you make more money, only when your clients make more money? (fisher investments) yep. we do better when our clients do better. at fisher investments, we're clearly different. alright, so...cordless headphones, you can watch movies through your phone? and y'all got electric cars? yeah. the future is crunk! (laughs) anything else you wanna know? is the hype too much? am i ready? i can't tell you everything. but if you want to make history, you gotta call your own shots. we going to the league!
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a key vote taking place in ohio as voters decide on the candidates who will face off for the senate seat in november.
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you want to know how important this is? just look at all the money that is pouring in. ylan mui is live for us. >> reporter: we are here in ohio where voters have been casting their ballots all day long the toss-up race is ohio's open senate seat. this has become the most expensive senate primary in the country, with nearly $70 million spent on advertising so far and that's just on the republican side a lot of this is coming from outside of the state peter thiel has invested more than $10 million to support the top gop candidate, j.d. vance. matt dolan, whose family owns the cleveland guardians has put in $10 million of his own money. the latest polls show him running neck in neck with josh mandel for second place. he has been endorsed by the
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bitcoin pac and likes to say he is pro god, pro gun and pro bitcoin. >> it's going to be a great story and illustration of how grassroots is more powerful than money. about having an army of christian warriors fueling your campaign instead of billionaires can actually win a race. >> republicans need to hold on to the seat if they want to have any hope of flipping the control of the chamber in november even more than that, this race is a fight for the future of the republican party establishment versus conservatives, and that's why this race has become such a magnet for money back over to you. >> on the republican side or the democratic side, is this a winner-take-all situation? in other words, there is not a runoff between the top two. >> reporter: yeah, there will not be a runoff. it's whoever gets the most votes on either the republican or democratic side. one thing the candidates do seem united on, on both sides of the aisle, is their hatred and rage for corporate america.
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all of the candidates have been calling out major companies from twitter to amazon to apple and saying that corporate america simply has too much power. we're hearing that from both republicans and democrats. >> they used to call the gop the party of business. not so much maybe anymore. ylan mui, thank you very much. the dow is back in positive territory, up 134. >> keep your eye on it, you never know what it will do "closing bell" right now. thank you, tyler and kelly welcome, everyone. stocks are inching higher. the fed meeting gets under way is it the calm before the storm? the most important hour of trading starts now welcome to "closing bell." i'm sara eisen live at the milken global conference in california the markets are higher we're off the session highs. we got up 280 on the dow but we've been lower, down more than 100 today. s&p 500 going strong so we're building on that reversal we saw yesterday, up 0.7 of a percent cyclical group


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