Skip to main content

tv   Power Lunch  CNBC  May 17, 2022 2:00pm-3:00pm EDT

2:00 pm
exactly have that choice i'd love to hear at some point what the company's excuses are for not drilling more. well, pippa, thank you, and that will do it for "the exchange." "power lunch" starts right now ♪ yes, it does, jon. thank you very much, and welcome, everybody, to "power lunch" for tuesday i'm tyler mathisen, and here's what's ahead we've got the ceo of robinhood of, that stock of course cratering, users trading less. the company laying off workers, so oare new products enough to kick start growth? we'll ask the ceo about his plan to shore up investor confidence. how about buffett, warren buffett's big bets from citi, to paramounts to chevron, if the world's most respected investor is buying into these stocks or into stocks, should you? but first, welcome to julia boorstin who's in for kelly evans. >> hi, tyler, stocks are near
2:01 pm
session highs at this hour, the dow and s&p are up more than 1%. the nasdaq outperforming the others with a gain of more than 2%, but walmart falling 10%, the biggest decliner of the dow after an earnings miss and a soft profit forecast boeing the best performer on the index up about 6%. and energy is on pace for its sixth straight day of gains. exxon, chevron, and valero just some of the names in that sector hitting 52-week highs in today's sex. tyler. >> julia, today's rally offering investors some relief to the relentless selling that has gripd the markets. the next guest says the best offense is a good defense. he's got some picks that could offer some downside protection let's bring in kevin mahn, president and ceo of hennon and walsh management welcome back good to see you. we're going to talk a little bit more about buffett, but if buffett is buying, should i be buying he's the definition of an optimist because he's a
2:02 pm
long-term investor, and he's 89 or 90 years old. that's pretty optimistic >> it is, and i think if you look back to this past weekend and some of those exciting aim sevens in both basketball is and hockey, what we learned is that sometimes as you correctly pointed out, the best offense is a good defense that also applies to investing, particularly in a year that's marked by heightened and sustained levels of volatility consider this stat, tyler, of the first 92 trading days of this year, 30 of those days have been marked by a move either up or down by more than 1.5%. that's 33% of the time or one in every three trading days we see a move by 1.5% or more, so rightly so investors have become unnerved so what do investors need to do in this type of environment? stay invested in equities so that they don't miss out on the potential recovery, if and when
2:03 pm
that happens, but also give themselves some downside protection to help weather these bouts of volatility, and we think dividend paying more defensive equities are certainly worthy of consideration. >> you say that you expect the fed to turn a little less aggressive after a couple of 50 basis point hikes here, maybe late in the summer, early in the fall why do you think that? >> we know there's five remaining fomc meetings this year, tyler. they've all but telegraphed 250 basis point hike in june and july there is no meeting in august, and nthen they meet again in september. at that point in time, being data dependent, we anticipate they'll see more slowing earnings growth, a slower economy andcertain inflationar pressures starting to subside. as a result, i would not be surprised to see them raised by just 25 basis points in september, and perhaps increase the pace of their balance sheet
2:04 pm
reductions at that point in time if in fact the fed turns less hawkish than many currently believe, that could actually help support stock price growth potential during the second half of this year. >> kevin, in light of that outlook, what are some of the names that you'd recommend right now? >> excellent question, julia, and i'll turn to our defensive 50 equities trust here at smart trust where we look to identify those dividend paying stocks that have a history of outperforming each time the stock market experiences a pullback three names i'd like to highlight starts with the largest chocolate provider in our country, that being hershey with trailing 12-month yield of 1.5% staying in consumer staple sector, i also like general mills with a trailing yield of 2.8% with products we all know and use each day such as kmchi owes, yoplait and häagen-dazs.
2:05 pm
-- one of the largest distribution companies that circulates natural gas in our company and electric utility provider we believe consumer staples and utilities. >> if you think about general mills and hersheys, those are products that are sold at walmart. we got a lot of caution about walmart's earnings today are you concerned at all about those inflationary pressures >> the one thing i took as a positive from wall street's earnings this morning was the strength of the consumer, the relative strength of the consumer given that they beat on the top line with respective revenues what was concerning with respect to walmart's earnings announcements was their problems with supply chain related issues and across labor force, which are having an impact on their profit margins hopefully this is just a walmart issue and not more endemic of the overall retail sales
2:06 pm
we're relatively strong reported earlier this morning. >> that's certainly something we're going to be watching across the rest of those retailers this week. kevin, thanks so much for joining us . and our three stock lunch is focused on warren buffett, the shaking up berkshire hathaway's portfolio with bold new bets that includes a $3 billion stake in citigroup, more than $2 billion in paramount global and more shares of chevron bringing his total stake to nearly 26 billion. here to trade these nailmes is jeff mills a cnbc contributor. let's kick things off with citi. what is your play here >> yeah, hi, julia, so citi is interesting, and tyler alluded to it. it is all about time horizon i know it's cliche, but especially when a stock is cheap like citi is it's trading at seven times forward, a yield of 4%, and even from a technical perspective, the stock has held in well around that 40 to $50 level. i think if you have a multiyear
2:07 pm
time horizon, say very reasonable entry point for a stock like citi. i'm just concerned on more of a cyclical basis, a shorter term basis over the next two to four quarters, and it all has to do with my macro outlook. the fed we all know is hiking into an economy that is already slowing down i think you want to do your best to avoid areas of the market that are overly cyclical for banks it hasn't been an earnings problem yet it's been a multiple compression issue. i just think wryou're going to have a difficult time seeing bank multiples rerate. i look at high yield spreads, for example. they're still reasonably tight as credit starts to deteriorate, you usually see pressure on bank multiples if the economy starts to slow. then you could see pressure on earnings as well i think it's a good long-term story. i just don't think it's for this market. >> let's take a look at a second one, and that is the media firm paramount global, 2.6 billion buffett put into it.
2:08 pm
what makes paramount a standout in the streaming wars vis-a-vis a netflix or a disney plus or a hulu or whatever >> yeah, hi, tyler i think it's interesting and it kind of speaks to buffett's style generally, and you know, at 13 times forward earnings, i think the downside is somewhat limited here, so potentially he's looking at valuation. but then also the core businesses remain reasonably stable, if you look at the last earnings report, so fundamentals good there, and then huge growth in the direct to consumer business the subscriber growth has been really strong. i think dtc revenues are up something like over 80% year on year, and i think the content story is very good for a company like paramount you mentioned netflix. i will be the first one to raise my hand and say i got that story very, very wrong, and i think there was a lot of fear that built up around that earnings report that streaming growth was dead i think disney sort of dispelled that rumor after they reported, and i think there's still growth there. i think paramount will be able to capitalize, and just from a
2:09 pm
technical perspective, this is a stock that's bounced off $28 three times, so as with citi, i don't know there's a terrible amount of downside of the stock are from here. >> my question is, the final name, chevron is trading around an all time high how much more room is there to run for this stock >> yeah, all time high price, but still not a crazy multiple, you know, looking at 11 times forward, so a little bit surprising there energy is really the only sector for me that i guess is a little bit opposite to my anti-cyclical, my anti-cyclical trade generally. energy is consensus, it is overbought and chevron is no different. it's 26% above its 200 moving day average. i would be buying weakness because i think there's an idiosyncratic issue in the commodity space. i think oil prices will generally remain high. i think supply was tight already, and then obviously with russia and ukraine, i think that perpetuates that issue, so that's going to continue the price is reasonable, even
2:10 pm
though it's at an all time high from a valuation standpoint. i think you can buy on weakness with a name like chevron. >> we see chevron shares up about 1% today we have a bonus stock in our three stock lunch today. buffett exiting his decades long stake in wells fargo what's your take on this one >> yeah, so i would put it in the same bucket as citi really, but then obviously wells fargo, it's a higher risk situation, right? i think that management needs to prove that it can execute here there's potentially more upside, but in an environment where i don't think the macro backdrop is your friend, i would rather be moving into financials that are more stable, tried and true execution like a citi, like a jpmorgan versus the risk of a wells fargo. >> jeff mills, thanks so much for joining us for our three stock lunch plus bonus. coming up, airline stocks are higher after united raises its revenue forecast, but the industry is facing a number of
2:11 pm
challenges we'll take a look at which carriers can avoid getting stung by higher fuel costs. the ceo of robinhood faces many challenges, a falling stock price, fewer active users. we'll ask him where he's finding growth in the short-term and how he plans to stay an int dependent company in the long-term. it is a "power lunch" exclusive 'lbeig bk.want to miss wel rhtac it is a "power lunch" you won't want to miss we'll be right back. what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work.
2:12 pm
ibm. let's create
2:13 pm
2:14 pm
welcome back to plu"power lunch. as the airline industry recovers from the pandemic, it's facing a host of issuesfrom rising ticket prices to surging jet fuel costs, inflation, now hostile bids are on the table as well united's ceo scott kirby sounded upbeat as he spoke to "squawk box" earlier today as the airlines revenue beat forecasts. >> we're out of the tunnel we were in this long, dark tunnel going through covid we're out of the tunnel, you know, even with fuel prices up $10 billion year-over-year, we're going to be almost to 2019 profitability levels, and we got the 777s there's all these good things that are happening >> well, the optimism from united comes as jetblue launches a hostile takeover bid now for spirit airlines. spirit air's ceo ted christi was here with us yesterday and expressed his concerns and frustrations >> the reason that we view the jetblue deal as problematic is the antithesis to the way we look at the frontier deal.
2:15 pm
these are two like-minded, low cost businesses that are looking to expand and drive more stimulation with lower fares this is not a discussion about capacity constraint and higher fares, which is what we're hearing out of the jetblue camp. >> all right, for more on this and the state of the airlines, let's bring in gordon bethune, former chairman and ceo of continental airlines and a cnbc contributor and jamie baker, senior airline analyst at jpmorgan mr. bebethune, welcome to both you, let me begin with you, what do you see happening in the airline business obviously there's a bounceback from the pandemic, but now there are rising jet fuel prices there's war in europe. there are still labor shortages, and now we have a hostile bid on the table for frontier what is the state of the airline business from where you sit? >> tyler, you're 100% on the problem is that all of this is happening in a steep
2:16 pm
recovery, which can absorb some of these macro changes you're seeing, especially like in fuel. at the same time, things like jetblue and spirit make a lot of strategic sense when you start looking at a business long-term because they need to get their size to be competitive in the coming years as united and others add to their fleet and become mega, mega carriers there's a lot of upside and growth, and there's a lot of pent-up demand, and leisure traffic as you know is a canary in the mine shaft. it's the first thing to go, and it's really, really strong because it's been pent up for so long. >> so is jetblue's bid for spirit, then, really a defensive play rather than an offensive play in other words, if they don't go out and get scale, they're not going to be able to compete with the airlines like united, american, delta, that do have scale? >> i think -- i think, tyler,
2:17 pm
it's defensive, and it's strategic as well. they need scale, and to get the scale they need another 150 airplanes, they're not for sale, and in the short-term you're not going to be able to do it. while companies like united have announced 500 new airplanes in the next five years. so the seawall is coming at you. you need to scale to compete you have to do it. >> jamie, let's bring you in here what's your prediction with this jetblue bid? what do you think the chances are that that deal happens, and what's your prediction for consolidation in this space? >> there have been deals in the past that were born of absolute necessity. if we roll back to the post-9/11 environment, putting america west and u.s. air together, both of those franchises might have failed without m&a we're not in that kind of situation right now. would it benefit the industry to see further consolidation? our answer is yes. is it absolutely necessary in order to, you know, achieve some
2:18 pm
of the price targets that we have for the names that we follow no we do ascribe a reasonably high probability of regulatory passage to either of the two deals that are on the table right now. >> jamie, i'm sorry, we're going to have to interrupt and mr. bethune, we have to interrupt because we want to bring to our audience some headlines from fed chair jerome powell. he's speaking right now at a wall street journal conference, and mr. powell says that 50 basis point hikes or a half percentage point are on the table if the economy performs as expected he says uncertainty about the economy's future limits guidance, and he adds that the markets have priced in a significant path of rate hikes and that financial conditions have tightened significantly the ten-year, there you see it, moving a little higher rising to session highs as mr. powell continues to speak there's the two-year, and so it's about 30 basis points away from the ten, which is now at
2:19 pm
2973 i guess what mr. powell is saying, julia, in effect, is we don't have the visibility on the economy, but we know we're going to be raising rates here for at least a while. we'll take it as it comes to us as the data comes in. >> what's interesting is this plays into this broader conversation even about the airlines and this question of what the consumer is going to be looking like, what kind of inflation the consumer is going to be reckoning with, and how that might impact spending on all these different things. >> the consumer is going to be looking a lot more tired if it's a summer of $5 a gallon gasoline and you're driving back and forth from the jersey shore, or wherever your choice beach is. it's going to be an interesting summer what did you say, control room all right, one more question for jamie. i'm sorry to break it up this way. so do you agree, jamie, that the -- that the big guys have
2:20 pm
the clearest path moving forward and that the jetblue deal is actually one that jetblue has to do to remain competitive >> i think there is relevance and scope that jetblue would achieve, if they can close the deal with spirit, but to your earlier question, yes, we think the big guys are coming in right now. this is a subject that came up at an aviation conference in dublin last week pre-covid, if you had asked me whether there was a scenario where american would be guiding to a profit and spirit would be guiding to a loss, that would have sounded really counterintuitive at one point. and i'm not picking on either of those franchises. >> right. >> but it just goes to show you how much change has taken place within the domestic airline dynamic. >> jamie, thanks very much, and mr. bethune, thank you as always it's good to see you both.
2:21 pm
we appreciate it. >> good to see you, gordon and coming up, cnbc's new disrupter 50 list. after the break we'll lay out the industries and companies that are leading the pack. plus, doordash failing to deliver gains this year. the ceo's plans for the future in today's working lunch. and during may, we're celebrating asian american and pacific islander heritage, and featuring some of our cnbc teammates and contributors here is cnbc video producer dean milar. >> my parents taught me at an early age the value of education and hard work. being the only asian kid in the room in most of my classes, i didn't have much of a choice but strive to be the best that i can be working alongside my paernts at their restaurant really inspired me and motivated me to be my best and those are the values that have always stuck with me throughout my education and my professional career, and i hope to pass that down to my daughter someday.
2:22 pm
- look, this isn't my first rodeo, and let me tell you something. i wouldn't be here, if i thought reverse mortgages took advantage of any american senior or worse, that it was some way to take your home. it's just a loan designed for older homeowners and it's helped over a million americans. a reverse mortgage loan isn't some kind of trick to take your home. it's a loan, like any other. big difference is, how you pay it back. - find out how reverse mortgages really work with aag's free, no obligation, reverse mortgage guide.
2:23 pm
eliminate monthly mortgage payments, pay bills, medical costs, and more. call now and get your free info kit. - other mortgages are paid each month, but with a reverse mortgage, you can pay whatever you can when it works for you. or you can wait and pay it off in one lump sum when you leave your home. - discover the option that's best for you. call today and find out more in aag's free, no obligation, reverse mortgage loan guide. access tax-free cash and stay in the home you love. - you've probably been investing in your home for years, making monthly mortgage payments, doing the right thing, and it's become your family's heart and soul. well that investment can give you tax-free cash just when you need it. - learn how homeowners are strategically using a reverse mortgage loan to cover expenses, pay for healthcare, preserve your portfolio, and so much more. - look, reverse mortgages aren't for everyone,
2:24 pm
but i think i've been around long enough to know what's what. i'm proud to be a part of aag. i trust them. i think you can too. - trust aag for the best reverse mortgage solutions. so you can - retire better. welcome back to "power lunch. the disrupter 50 list is out, over 1,400 nominees this year, and of the 50 companies we picked, the number one company on the list is flexport.
2:25 pm
it's a logistics company that's battling the global supply chain crisis by tracking and strea streamline ing the movement of cargo cross ships, planes, trucks and rail. second is is brex offering financial services to startups number 3, lineage logistics it uses a proprietary freezing process to improve food supply chain. number 4 is graphics design platform canya, and number 5 is guild education. logistics is the top category with ten companies total and fintech is the second spot with nine companies on the list including eight time disruptor stripe web 3 is also well-represented among the newcomers on the list, in particular including you can see the full list at >> without going into mind numbing detail, how do you end up on this list, and how do you get into the top five? it's not just revenue growth, is it
2:26 pm
>> it's not just revenue growth. it's the size of addressable market, it's the traction that you already have with customers, so you may have doubled your revenue size in the past year, and even tripled it, but if you're not at a certain scale, it's hard to get into the top five we do take nominations from venture capital investors, nominating their own companies or also the companies themselves there's a break down of all the quantity tative analysis on >> what do you have to do to disrupt? >> the question really is how these private companies are challenging the status quo are these companies introducing new business models? are they forcing the other established public giants to change the way they do business. >> we've got haa new freezing technique on food. that's their disruptive quality that would catapult them thanks, good to have you here. let's get to seema mody for a cnbc update. >> president biden concedes he can't do much to toughen gun
2:27 pm
regulations with executive action, and he says he will keep trying to get congress to do more but acknowledges it is going to be very difficult speaking to reporters in buffalo today after visiting the scene of saturday's supermarket massacre, he said america needs to face what he called the reality the country has a problem with domestic terrorism that is, quote, real an administration official tells reuters that the u.s. is considering a move to block russia from paying u.s. bondholders as a deadline approaches that would bring the kremlin closer to a default, but the official says, quote, i don't have a decision to preview at this time. and a sky news reports a conservative member of the uk parliament has been arrested on suspicion of rape and sexual assault crimes over a seven-year period through 2002 to 2009. the party has asked the unnamed member to stay away from parliament as the investigation continues. thank you very much, seema ahead on "power lunch," battered brokers once a disruptor now
2:28 pm
facing major dysfunctions. robinhood hit by stock market volatility with the crypto selloff and sinking customer approval so does the company have a plan to move forward? the ceo sits down with our own kate rooney next we'll be right back. 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 zero-commission trades for online u.s. stocks and etfs. and a commitment to get you the best price on every trade, matching your job description. which saved investors over $1.5 billion last year. that's decision tech. only from fidelity. caution. vehicle electrified. contact results in rapid heart rate.
2:29 pm
shortness of breath. and a tingling in the extremities. serious thrills may occur. the all-electric amg eqs.
2:30 pm
this? this is supersonic wifi from xfinity. it's fast. like, ready-for- major-gig-speeds fast. like riding-a-cheetah fast. isn't that right, girl? whoa! it can connect hundreds of devices at once. [ in unison ] that's powerful. couldn't have said it better myself. and with three times the bandwidth, the gaming never has to end. slaying is our business. and business is good. unbeatable internet from xfinity. made to do anything so you can do anything. there are lots of choices when it comes to your internet and technology needs. but when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security. and you choose fiber solutions with speeds up to 10 gigs available to more small businesses than any other provider. the choice is clear: get unbeatable business solutions from the most innovative company. get a great deal on this limited time price with internet and voice for just $49.99 a month for 24 months
2:31 pm
with a 2-year price guarantee. call today. we have 90 minutes left in the trading day, and we want to get you caught up on the markets. stocks, bonds, and commodities, and a big binterview is coming p with robinhood's ceo first a check on stocks this hour, major averages are higher. the nasdaq leading the way up about 1.5% financials are the best performing sector today. warren buffett disclosed a $3 billion stake in the company, wells fargo higher as well, even though butch fete exited his stake in that company. walmart is getting hammered after its results. warning about the impact of inflation on its customers home depot is higher after a strong quarter target and lowes both report their results tomorrow. moving on to commodities, oil is down slightly today holding around the $113 per
2:32 pm
barrel mark, but that's still close to the highest level in nearly two months. energy stocks higher today and are continuing strong gains recently, and moving on to the bond market, the ten-year yield rising today as investors jumped into stocks and out of bonds also, comments from fed chair jay powell speaking this hour, this may be the key comment. we need to see clear and convincing evidence inflation is coming down. if we don't see that, we'll have to move more aggressively. but the ten-year at 10.96 is still down sharply from its peak of 3.17 last monday. now, turning to robinhood, which has seen its stock sink 70% in the last six months and as crypto gets crushed and stocks swing wildly, is the robinhood user still training? let's go down to west palm beach where our kate rooney is with robinhood's ceo vlad tenev for an exclusive interview. >> it's great to see you in person you just got off stage
2:33 pm
we're here at the permissionless conference, which is a crypto conference we'll get to some of the news you had out today. it is good to see you. thanks for joining us. >> thanks for having me. >> i want to start with the markets. crypto is getting crushed. stocks are down and individual traders are trading a lot less than they were say a year ago, for example. how are you looking to growth, and where are you looking for growth in the near-term? what should shareholders know if they're trying to be confident in investing in robinhood, what do shareholders need to know about the future of the company? >> from the very beginning, kate, we started robinhood with the idea that we should challenge the status quo brokerages were charging expensive commissions. they had account minimums and robinhood came in there and changed the entire business model, and you kind of see the same thing happening in crypto right now. you see lots of companies charging customers high fees it being kind of the realm of early adopters, and i think with this product in particular, we have the opportunity to do that
2:34 pm
again, to challenge the status quo and make something that was accessible to only a select few, accessible to a much broader mass market audience, and that gets us very excited. >> and so the product you're announcing today essentially lets users hold their own cryptocurrency and in nfts it puts you in direct competition with coinbase. you're doing this no fee model that you just mentioned how can robinhood afford that? are you subsidizing the fees and what does the revenue look like on the back end? >> it's a question that's a couple of steps ahead. so our primary objective is to give customers a great product, right? to give them the opportunity to not just trade through the centralized exchange of robinhood, but also keep complete control and custody over their keys and will help them access decentralized exchanges and swap coins the revenue model, once we deliver a product that we think customers will really, really
2:35 pm
love looks really good, the revenue model takes care of itself our focus is on just making sure that, you know, this is the way for our customers to access web 3 and maintain self-custody going forward. >> so your customers are going to plug into other exchanges you mentioned in the release something about earning yield on stablecoins, for example there was a huge, huge incident last week with luna, that really collapsed. are you worried at all about the liability for robinhood? if you connect a customer through a decentralized exchange that goes through a hack, how did you get your regulators comfortable with that? >> it's not unique to crypto there's certainly lots of projects not all of them are going to succeed. but you have, you know, incidents like that happening in the traditional equities markets. you see it happening in currencies historically, and i think it can be tempting to be wrapped up in what's happening week byweek, but you look at all the protocols that are popular today, some of them have
2:36 pm
been really successful you see the companies behind them or the dow's at this conference, they were all largely built during crypto winter so when everyone says, oh, crypto is over that was fun while it lasted, people put their heads down, and they build and they build these great products, and that's what we're excited to do. i think now is actually the best time to build. >> got it. and julia boorstin back in the studio has got a question for you. >> thank you, kate, and thank you, vlad for joining us there's no question that robinhood dramatically disrupted the financial services industry and brought in so many new traders to the market, but my question is, a year after you were number one on the disruptor 50 list, here you are now. you have a lot of the incumbent banks changing their offerings, and you have consumers whose behaviors is fundamentally different than it was a year or two years ago. how concerned are you about competing with the giants as they try to copy what you've
2:37 pm
been doing >> well, we feel very confident. i couldn't be more confident in the future than i am now, and i'll tell you, robinhood this past quarter, you've seen all of the new products that we've been rolling out, and it's not just robinhood 3, the web 3 wallet, but things like stock lending, the 1% apy on your uninvested cash that we announced last week, you know, we're -- we see opportunities to serve our customers and pass back more value and challenge the status quo in all market environments, and i think it's a very exciting challenge for us in the company. we want to make sure to serve customers well and high inflation environments, low inflation environments, every opportunity we get, and you'll see us continuing to do that >> and vlad, speaking of competition, we had the ceo of ftx buying a 7.6% stake in robinhood. did he approach you about this first? how did you find out that he was
2:38 pm
going to take a stake in robinhood, and does it make you worried at all from a competitive standpoint >> no, i wouldn't say it makes me worried from a competitive standpoint i mean, we have -- we're a public company we have lots of shareholders we're a company that is all about democratizing access to public markets, and cryptocurrencies so happy to have shareholders involved in the company. >> did he call you up? have you ever met sam in person? >> i have met sam. i mean, we've shared some similar investors when we're private companies, smart guy, yeah so i've spoken to him over the years. >> got it. and speaking of big name investors, warren buffett and charlie monger have been among your loudest critics i don't know if we've ever got a response directly from you most munger said
2:39 pm
robin hood is unraveling what's your response to that >> so if warren buffett and charlie munger were getting started today, i have no doubt they'd be robinhood customers. >> you think they'd be using the platform. >> i have no doubt if they were getting started today, for sure. >> what's the investing behavior we talked a little bit about the slowdown in trading behavior how are investors handling what may be their first good market >> we're seeing -- we have lots of different types of investors on the platform. so first timers, obviously is what we've been talking about, but we have lots of advanced investors as well, so customers coming to robinhood for our competitive crypto offerings, customers that actively trade options, and you know, during this time, i think it's a great opportunity for us to get closer to their needs, understand them, and build great products for
2:40 pm
them them so a couple of things i've announced in the recent past, hyper extended hours trading which allows customers to take advantage of a longer trading day as well as the eventual goal of making equities markets 24/7. these are all examples of us kind of catering to a big and important audience for us, which is those active, more advanced investors. >> got it. i want to ask you about employee morale as well we had coinbase this morning saying it's slowing down hiring, robinhood cut about a tenth of its work force, i'm sure that was a tough decision, but i wonder in terms of how you're keeping employee morale up, how you're keeping employees at the company when their net worth may be cut in half from where it was a year ago i wonder if you can tell us a little bit about how it is and how your discussions have gone with employees internally at robinhood who may just be feeling down about where the stock price is right now >> yeah, the way we like to think about it is robinhood needs to go through market
2:41 pm
cycles and prove that we're a company that has very, very exceptional cost discipline. so it's about cost discipline. we obviously know that when, you know, the fed is sending stimulus and the markets are going up and interest rates are low that things are great and it lifts all boats, but i think it's the companies that exercise that discipline and show that they can stand the test of time through rough market conditions that that really separates companies, and that's our goal i think we've been cost disciplined from the very, very beginning, and this is just an opportunity for us to display that excellence over and over again. >> got it, vlad, a lot has happened since the ipo we appreciate you sitting down with us. tyler, i'll send it back to you in the studio. >> kate, thank you very much we thank you you and vlad tenev. coming up, we are getting our working lunch delivered today. john thorpe brings us his
2:42 pm
interview with the ceo of doordash. plus, home costly home, costs continue to climb for homebuilders, sinking sentiment. details when "power lunch" returns. ♪ ♪ >> announcer: the bond report is brought to you by pimco, a global leader in active fixed income ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ 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... like one's that re-opened! hi, we have an appointment.
2:43 pm
and every new business that just opened! like aromatherapy rugs! i'll take one in blue please! it's not complicated. at&t is giving new and existing business customers our best deals on every iphone. ♪ ♪
2:44 pm
do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. we thought we had planned carefully for our retirement. but we quickly realized we needed a way to supplement our income. if you have $100,000 or more of life insurance, you may qualify to sell your policy. don't cancel or let your policy lapse without finding out what it's worth. visit to find out if your policy qualifies. or call the number on your screen. coventry direct, redefining insurance.
2:45 pm
the stay-at-home stock darlings are feeling the heat now testing the strategy and resolve of their leaders, and today jon fortt brings us up close with the ceo of a tech company that is continuing to expand its services portfolio even though sentiment has turned negative this is a company i patronize o maybe i should put it this way, my son patronizes. >> many of us do tony shoo is cofounder and ceo of doordash, a company trading below its 2020 ipo price, down more than 70% from its november highs. i first met tony four years ago when doordash was a hot startup in a surging gig economy even back then he struck me as having an unusually methodically pragmatic approach to his role in the enterprise -- sorry, restaurant ecosystem, and that's partly because he told me he and his parents worked for a time in other people's restaurants
2:46 pm
>> i was born to classic immigrants, and you know, my family moved to this country with $300 or less in our bank account. my dad was getting his ph.d. at the university of illinois, and working full-time as a waiter, and my mom to support the family worked multiple jobs she was working multiple jobs, one of which was in a restaurant so that she could save up enough money to afford the medical education to get back her license because she had effectively lost her license moving from china, where she was a doctor in eastern medicine, but when she immigrated to the u.s., that license was no longer recognized, and so she was saving up money in the various jobs, both to, you know, put food on the table and support the family, but also to never give up on her dream. >> tony has taken the long view on today's market too. i had a working lunch with him just last week in manhattan, sit-down, not delivery, and he talked about the ways doordash is trying to help delivery drivers cope with high gas prices and help young employees
2:47 pm
deal with gut wrenching market and help restaurants innovate with the flexibility that technology brings. he shared similar ideas this month on cnbc after earnings >> during the pandemic, we saw restaurants get very inventive and creative selling different types of food from the same kitchen, you know, a chinese restaurant selling now mexican food and many versions of this in fact, we've seen, you know, tens of thousands of these types of opportunities, these virtual brands and stores rise on the platform literally from zero just a couple of years ago we also saw new innovation, you know, where restaurants are now shipping some of their foods, whether it's, you know, frozen foods from places like lumonottis and their great delicious pizza in chicago, to other restaurants who are now recognizing they're not just a place that sells food but a place that sells merchandise. >> so with labor costs high, consumer budgets tight, as we
2:48 pm
saw today in walmart's earnings, a lot of restaurant customers could use the extra sales, and now that the hype has faded from a lot of pandemic names, we'll see whether tony can effectively roll up his sleeves and pull away from competitors and local commerce and logistics it's not so much about delivery as it is about marketing and some things like ghost kitchens that are going to determine whether this model works longer term. >> my question really is how much he thinks that consumers are going to want to keep spending at the same levels they were before inflation was so high and whether he thinks that when it comes to ordering takeout, that might be the first thing to go. >> a big part of what he's doing is a share of wallets. it's not just about restaurants. it's also convenience stores, so getting something from walgreen's, getting medicines for example. now they've got this thing called double dash where you put in your order and then do you want not fries with that, but do you want ice cream with that they map out the route using data so that the driver can also pick up something else for you so if those things catch on and
2:49 pm
it's not just about ordering out, but it's also about convenience stores it's also about groceries, there you go. >> it's not just delivery from restaurants anymore. if i need some aleve cream to put on my aching achilles, i can call them and do it. what are their arrangements with restaurants? do they sign up restaurants to use their service or what? >> they do >> and part of what they've done during the pandemic is roll out a new pricing structure where it's not just here's how much it is, you've got to have us deliver it now you can order something on doordash and pick it up yourself right? and so it's good for restaurant. it's good for you if you want to pay a little bit less, and their argument in part is that the interface is convenient enough for the people who subscribe and use doordash a lot, they'd rather use an interface they know than go to each individual restaurant if those plays work out, doordash could end up being a different kind of model than a lot of investors expected. >> and ultimately about consumer
2:50 pm
loyalty to that interface and that system. they already have your credit card saved, so that makes it easier. homebuilder sentiment hits a two-year low we'll explain the growing impact inflation is having on the industry you can now listen to "power lunch" on the go look for us on your favorite podcast app and follow our ow lchpoas"perun" dct. follow o "power lunch" podcast.
2:51 pm
2:52 pm
2:53 pm
we want to show you the markets as we come back to air here the industrials, nasdaq and s&p are at session highs and the dow just about 40 points off its highs of the day materials and financials continuing to lead stocks today. consumer staples still the only sector lower but there you see nearly a 2% gain for the s&p and a better than that one for nasdaq julia. >> and one of the sectors that is higher, home builders this despite a very weak reading of home builder sentiment. let's get to our diana olick for more on that report. diana? >> well, julia, it was much wider than expected, a drop in home builder sentiment in may, down an outsized 8 points to 69. this is the fifth straight monthly drop and the lowest
2:54 pm
reading since june of 2020 the street was looking for 75. now of the index's three components, current sales fell 8 points to 78, sales expectations fell 10 points to 63 and buyer traffic fell 9 points to 52. the average rate on a 30-year fixed jumped from 4.88 to a high of 5.64 in the first week of may and that's according to mortgage news daily nahb's chief economist, robert dietz, says the housing market is facing growing challenges building material costs are up 19% from a year ago and added that less than half of new and existing homes are affordable for the typical family today why are the builder stocks up? probably because they have been so beaten down the home builder etf is off 28% year to date so as the rest of
2:55 pm
the market rises, they are along for the ride back to you guys. >> diana, thank you very much. diana olick reporting. is there a catch-up trade among small caps we're looking to the charts for answers to that e. wel rhtac 'lbeig bk.on hing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay. (vo) everyone knows to get wireless savings, you need to be on a family pla- ...oh... (jane) with visible, i get unlimited data for as low as $25 a month. no family needed. (vo) i guess i spoke too soon. visible. single-line, unlimited data as low as $25 a month. in the future we'll travel to incredible places
2:56 pm
with the help of magical technology. but what about today? ♪♪ i can't wait for what tomorrow will bring, but in the meantime, let's enjoy the ride... ♪♪
2:57 pm
small cap stocks may be sending an important market message right now, and dom chu has received it. >> i have received at least some inklings of it, guys
2:58 pm
here's what we're talking about. first of all, nobody knows exactly how this story is going to play out, but we've seen enough damage in the market so far where if the small cap stocks start to do something, it might tell you something important. if you look over the course of the past year, 12 months, things started off pretty smooth around the beginning. as the year progressed, you could kind of see that gap in performance has widened out. the orange line is the russell 2000 -- rather, the s&p 500. the white line is the russell 2000 so that gap in performance has been widening out over the course of the last year. if you look at a year-to-date chart, things have gotten a little narrower. all of a sudden the performance gap is not quite as big. they were tracking pretty closely in the early part of this year and now you're starting to see a little bit of a pickup here. if i show you a one-week chart, this is where the journey of a thousand miles starts with a single step kind of line what you're seeing here is, again, tracking fairly closely
2:59 pm
here and then all of a sudden that white line, which is the russell 2000, is starting to outperform the large cap market. so those small cap stocks generally speaking, the conventional wisdom is they're a lot more sensitive to slowdowns in the economy, inflationary pressures, rising interest rates. if those stories start to resolve themselves, maybe those small caps are telling you something more about a recovery that could be taking place right now or at least a diminishing fear of recession that's imminent in the u.s. economy sometime soon. >> what about the fear of infl inflation, whether the small cap companies are equipped to manage inflationary pressures >> that's been the pervasive narrative, that interest rates and inflation are the huge driver of things, which is why that underperformance is so huge maybe those small cap companies
3:00 pm
don't have to fear inflation as much going forward or maybe can see interest rates start to play less of a story. we'll see what happens. >> all right, dom, thank you very much. interesting insight there. julia, it's been great being with you the past couple of days congratulations on the disruptor 50 to you all, thank you very much for watching "power lunch. >> "closing bell" starts right now. thank you, julia and tyler stocks are rallying with the nasdaq in the lead the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen take a look at where we standing in the market, up almost 400 points on the dow, s&p is up 1.75%. every sector is green right now except for consumer staples. you've got technology stocks leading and coming back today. financials are also doing quite well, materials, so it's a mix of the cyclical groups, beaten down grumsoups the 10-year note yield also going


info Stream Only

Uploaded by TV Archive on