Skip to main content

tv   The Exchange  CNBC  May 19, 2022 1:00pm-2:00pm EDT

1:00 pm
stock in exactly the sort of sector you want to be in >> i appreciate that interesting that, again, we started the show by noting amd, nvidia, the chips which had led on the way down had come off the bottom the nasdaq is trying to hang positive we'll sfe it can it's certainly an unsettled market environment "the exchange" is now. thank you, scott hi, everybody. i'm kelly evans. here is what's ahead this hour like scott said, the nasdaq is trying to stitch together a rebound after its 5% plunge yesterday, but it's only up 22 points right now the dow is negative again and the s&p is back in negative territory. yields are sliding as well on continued growth concerns. we'll speak with one five-star fund manager who has five picks to weather these cross winds retailers with pricing power are outperforming, but nobody seems to care. one analyst cutting estimates across the board except for two
1:01 pm
names. we have them and they may surprise you plus, a commodities play, a street wear name and a chip giant with big exposure to china all ahead in today's "earnings exchange." first let's begin with the markets. after yesterday's steep declines we are not seeing much of a rally as the trading session carries on today the dow down 266 we were down 473 at the lows the s&p down 17 points it was down 1.2% at the lows the s&p just back over 3,900 at the moment and the nasdaq up about 20 points earlier it was down 1% watching this trading action very closely over the next couple of hours consumer discretionary is leading the bounceback, if it's a bounceback expedia, caesars, booking, those are showing some positive today. staples the worst performer again. clorox, the biggest decliners there, talking about declines in clorox's case of almost 5% speaking of decliners, cisco down sharply as well, down 14% in fact, making it the worst
1:02 pm
stock in the s&p the dow and the nasdaq 100 that's after cutting its forecast in its earnings last night. and finally take a look at some of the other cloud and enterprise names, datadog, okta and zscaler putting together a rebound. there is the monthly performance. you can see what a tough slog it truly has been now the yield on the ten year is much lower again today yesterday morning it was over 3% we are at 287 right now as investors watch the fed for any clues as to how they will combat inflation. kansas city fed president george striking a forceful tone >> i think we will succeed in bringing down inflation because we have the tools to do the heavy lifting on that as it relates to demand. and we do see financial conditions beginning to tighten. so i think that's something we'll have to watch carefully. it's hard to know how much we'll
1:03 pm
be needed to make that happen. >> on that note let's bring in our own steve liesman. so much to unpack there in what she said the market is wonderingif the fed is going to back off, frankly, given the tightening we've seen in financial conditions and worries about the economy. >> that was not the impression i got from esther george that is certainly not her opinion that the fed has a job to do and the rest of the fed are squarely focused on that job which is bringing down inflation. they're aware of what's happening in equity markets. they're watching it. there's always some measure of concern but right now they still see the equity markets as a conduit to transmit monetary policy, which is through tighter financial conditions and eventually as well some impact from the wealth effect, kelly. yes, they're aware of what's going on i think esther george is aware but because of the imperson tiff of dealing with inflation. >> but in what she was talking about there, is she trying to
1:04 pm
signal some flexibility, if it looks like we're going into recession? the unspoken thing about the whole recession question, steve, whether that itself would actually cure inflation. we could go into a recession that barely budges the cpi >> i think that's a great point, and i think the fed is ultimately flexible in all of those regards except for, i think, the one issue which is they need to bring inflation down they feel that's their absolute goal they have to accomplish and i think there's some expectation -- not expectation but some willingness to accept the idea of a recession either as a result of that or in pursuit of the goal. we're just seeing, kelly, jpmorgan bring down its forecast for this year and next year. we're seeing others do as well we're going to be running very close to a zero rate i think in some quarters coming up are the forecasts that i'm seeing, and i
1:05 pm
think the fed is willing to accept that in pursuit of its goal i think it feels like there's a lot of froth in the economy that can come out before people feel real pain either through the job market or through a loss of income and they're willing to make that bet that the imperative of bringing down inflation requires it >> steve, what does the fed define success as here what would powell say is his goal right now >> it's a really great question. obviously a soft landing in that they bring inflation down without causing the economy to go into recession would be the first goal, i think, without causing massive losses i don't think the fed wants there to be massive losses in the stock market i think that would be a huge success for them in the spectrum of possible outcomes, i think a mild recession, if it ends up bringing inflation out of the system and allowing the fed to operate at a lower funds rate, a low interest rate, the fed would
1:06 pm
chalk up as a potential success. >> steve, it looks lovely where you are. thanks for joining thus afternoon. we appreciate it >> a great place, kansas city. thanks, kelly. my next guest says enough of the gloom and doom you can ride out this market by holding stocks that have long-term value. portfolio manager of first eco-investments with more than $100 billion in assets under management and he manages the first eagle global fund. it's good to have you. let's cut right to it. well, i guess before i ask you specifics, what's up base case for what happens with the economy right now? >> i would preface my comments by saying a crystal ball is cloudy at best i think we have to remember back to the time of covid how few economic forecasters predicted that i think it's fair to say quite a deceleration is baked into the cards, some of the leading indicators, credit spreads, the forward yield curve, for
1:07 pm
example, all the ism orders index let alone inventory out of the big retailers and fiscal contraction. it seems that we're set for a meaningful deceleration in the u.s. and we're seeing those trends elsewhere around the world in china, europe and the like >> you agree it's tough sledding it give me the five stocks, at least five, that you think our audience could bank on right now. >> i think it's a time for realism. last year we probably saw the lowest cost of capital and i think this correction has been healthy. our response to this kind of environment is to think like business owners. we're not trying to predict where the market is trying to be we're putting together a thoughtful bar bell of businesses that offer basic essentials in different industry groups and so you might have defensive businesses like comcast for wi-fioracle.
1:08 pm
in the consumer space some of the names in europe are quite attractive, names like danone. in some basic products like infant nutrition and bottled water and dairy, yogurt. these kinds of businesses, i think, can form the business of a bar bell approach to investment allocation where you're not trying to pick bottom of the market. it could be lower if we get a recession or a monetary crisis where you're trying to position yourself as a business owner for the next decade where the arithmetic makes since >> yesterday it was mentioned stocks have more i tattractive valuations for investors picking through the rubble i heard europe's recession could be dedeeper and worse than what we're facing because of russia and other issues >> europe does face higher
1:09 pm
natural gas prices the u.s. is more integrated in terms of the energy protection and is shielded from that. let's not lose sight of the fact the united states economy was the beneficiary of much more stimulus greater money supply growth, great ir fiscal deficits all that have is unwinding we've had a fundamental regime shift where money supply could contract, where it's not just interest rates going up but we're seeing a very substantial fiscal contraction and soap the u.s. benefited from very easy policy conditions and so things could get equally challenging in the united states. >> even on the stock picking front -- i'm sorry i take your point. oracle is one of your stocks that you would like. how do you respond, for instance, to cisco's decline last night does that tell us that even relatively stay in parts of the economy can be vulnerable or does it highlight the difference in picking the right stocks,
1:10 pm
maybe you would take an oracle over a cisco, for example? >> i think if we end up in recessionary territory, i think most businesses are going to suffer in one form or another and we've seen that even across the retail complex where staples retailers are doing pretty poorly as well as the discretionary retail i think it's impossible to totally escape a tide going out. in the case of oracle the majority of the operating profits come from recurring maintenance fees on the databases and the enterprise application software they've installed. that's a more stable cash flow stream than having to sell new products to customers. >> a couple other names among your top holdings, meta or facebook, ch robinson, philip morris, anthem matthew, thanks for talking us off the ledge or talking us through it, for your ideas in a very difficult environment thank you for joining us
1:11 pm
>> it's comforting to see folks like warren buffett committing capital but not committing their last dollars prudently doing it in a measured way. >> well said matthew mclellan joining me today. target in the red again after posting its worst day in 35 years if they don't have pricing power, who does? we have some names plus wells fargo, what's driving the call and would it even be enough to bring inflation down and as we head to break, a check on markets as the nasdaq has slipped back into the red. we're off session lows but all three major averages are declining after yesterday's huge falls. the russell 2000 small caps clinging on to a 0.3% gain
1:12 pm
(all): all hail, caesar! pssst julius! you should really check in with your team on ringcentral. oh hi caesar. we were just talking about you. yeah, you should probably get out of here. ♪ ringcentral ♪ this? this is supersonic wifi from xfinity. it's fast. like, ready-for- major-gig-speeds fast. yeah, you should probably get out of here.
1:13 pm
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.
1:14 pm
welcome back to "the exchange." the worst s&p sector so far are the consumer facing ones, both discretionary and staples as you can see there. the retail sector in particular taking it on the chin down more than 30% from its highs with the two biggies, walmart and target, down about 26% and 43% costco reports next week down about 31%. the market doesn't seem to care
1:15 pm
who has pricing power and who doesn't. the retail analyst at truist it's great to have you, scott. first of all, who does still have pricing power >> i think anytime you have or are selling a pro detective that doesn't have a lot of substitutability, you have pricing power. when you can walk in and you don't know what the price is supposed to be and there aren't a lot of alternatives, think of it as autoparts, someone needs a starter for a 2005 ford f-150, you kind of need a starter you don't have a lot of choices in the matter. >> some specific companies, home depot, lowe's, you think should be holding up relatively better? >> i do. what we heard this week business is still holding up pretty well. one of the things we heard from target and walmart they're getting squeezed on costs.
1:16 pm
they don't have as much ability, i think, to pass on price outside of food where we are seeing sizable food inflation. when you need a particular home improvement product, whatever that may happen to be, a drill, a saw, whatever, you go to who has it that's home depot and lowe's >> they are in the green while target is down another 6% after yesterday's declines which is astonishing. you say you've been cutting estimates pretty much across-the-board >> unfortunately, yes. walmart told us nasty things happening in retail, supply chains even more problematic costs are running well above what a lot of people anticipated. we're seeing incremental pressure on lower income consumers. when walmart tells you people are buying more half gallons of milk instead of full gallons of
1:17 pm
milk there's consumer pressure there. we're not seeing that in the home improvement sector where we've had good reports >> where does that leave you, the autoparts companies out there. we saw dollar general taking a hit yesterday. again, if they could lose the discretionary help right now what about the rest of the spectrum as we watch for potentially this low-income headwind to continue to play out. >> i think if you are a retailer and levered to that low-income consumer, it will be tough sledding for a while in the great recession time frame, dollar store sales, for example, were decelerating to the point where they went negative at the end of 2007 once we wound up into the great financial crisis portion of that recession and the employment cycle basically unraveled, then all of a sudden you had a lot of tradedown customers where people were leaving other places to
1:18 pm
shop at the dollar store and help extend their wallet >> right and so, again, that leaves you with home depot and lowe's hopefully relative bright spots in what's an increasingly difficult environment. thanks for joining us today. scott ciccarelli elon musk's bid for twitter. julia boorstin with the story. what's the latest? kelly, more headlines out today about twitter executives telling employees that the deal is proceeding as expected. bloomberg reporting executives telling twitter staff the deal is proceeding as expected and no such deal as a deal being on hold, responding to musk tweeting that earlier this week. twitter shares are up 0.7% they did spike on the news it is worst pointing out shares are still way below that price that elon musk is paying they're at $37 and musk offered $54.20 for the company
1:19 pm
there are more reports of executives leaving the company yesterday had a great article about more senior executives leaving the company it seems the management of twitter is trying to reassure employees things are moving forward. back over to you >> and when they say that, can they force him to consummate the deal i guess it's already consummated. it's murky >> it's murky. obviously he certainly seems to be looking to try to get a lower price for the deal, if you look at the differential between where twitter is trading now and what he offered to pay for it. there are various complicating legal factors that are tying him into the deal right now including that $1 billion breakup fee as well as some other things >> julia, thank you. the latest chapter in the saga, twitter shares still up 1.5% still ahead, three key names on deck with earnings all set to report tonight
1:20 pm
we have some numbers and narratives to know next. plus, we'll head down to the nasdaq to look at the damage as the index tracks for its seventh straight week of decline its longest losing streak in two decades. a look at the dow heat map only four names are in the green as the dow itself is on pace for its eighth straight weekly decline. cisco, travelers and walmart those are your biggest decliners today. home depot one of the biggest gainers. at adp, we use data-driven insights to design hr solutions to help you engage and retain top performers today, so you can have more success tomorrow. ♪ one thing leads to another, yeah, yeah ♪
1:21 pm
- hiring is step one when it comes to our growth. we can't open a new shop or a new location without the right people in place. i couldn't keep up until i found ziprecruiter. ziprecruiter helps us get out there quickly and get us qualified candidates quickly. they sent us applicants that matched what i was looking for. i've hired for every role, entry-level technicians, service advisors, store managers. ziprecruiter helps me find all the right people, even the most difficult jobs to fill. - [announcer] ziprecruiter, rated the number one hiring site. try it for free at
1:22 pm
welcome back to "the exchange." we're still 200 points off the session low but all three are in
1:23 pm
the red today after yesterday's big declines take a look at the action behind me here with a 0.3% gain consumer staples are the worst again down 2%. transports are amongst the biggest laggards csx, norfolk southern, ryder on pace for the fifth straight losing week for the longest stretch. harley-davidson shares are plunging after thecompany is suspending most assembly and deliveries for two weeks due to a parts issue at a supplier. the issue does not impact its electric unit. the shares are still down almost 10% today and on pace for their first week since january of last year kristina partsinevelos is at the nasdaq with a bigger look at the news in tech kristina >> reporter: thank you, kelly. i will let our team know i don't see anything on the prompter, but we will keep moving with what the nasdaq is doing staging somewhat of a comeback now in the green. there are so many analyst notes
1:24 pm
out there, kelly, and commentators that are saying this is like the tech bubble but if we look at the tech bubble at the peak, at its height, early on march 2000, all the way to its low in october 2002, it actually fell 78% so we still have ways to go if we're going to make that comparison and, yes, there's been a deep cut, no doubt. kelly, you pointed out the longest losing streak in two decades for the nasdaq the nasdaq is giving up a lot of its more recent upside just in the past year. it's still higher, if we look at it on a five-year basis. and today's weakest sectors, utilities are in the mix, transportation, consumer nondurables, consumer services and durables are leading the charge many cloud names specifically reversing course to the upside like data dog surging over 10% this is a reversal, though, the past few days. data on the month, though, still in the negative down double digits cisco today the biggest laggard
1:25 pm
of the bunch its reliance on supplies from china crushed it that's why the stock is plunging over 14% other weaker names on the nasdaq, broadcom, rail transportation ctx >> she didn't miss a beat. christina, thank you very much let's get to tyler mathison for a cnbc news update >> to think she did that without a prompter amazing! folks, president biden is in the air right now on his first official trip to asia. tomorrow he will meet with south korea's newly elected president. he will then go to japan for a summit with the leaders of japan, india and australia that should be very interesting. before he left from joint base andrews biden endorsed nato membership for sweden and finland. >> they meet every nato requirement and then some. and having two new nato members in the high north will enhance the security of our alliance and
1:26 pm
deepen our security cooperation across the board >> minutes ago the senate voted 86-11 to pass $40 billion aid bill for ukraine it now goes to president biden for his expected signature and reuters reports biden is prepared to sign off on another $100 million in military help for ukraine as soon as today and at their meeting in germ nip the g7 finance ministers say in a draft communique they will continue to support ukraine throughout the war and are prepared to do more as needed. tonight on the news with shep smith a major military morale problem. why desertions from the u.s. navy have doubled in the past few years. that's an interesting one. kelly, back to you we'll see you very soon. still ahead, my next guest sees a recession at the end of the year the fallout for markets and how he's shifting his investment strategy because of it
1:27 pm
1:28 pm
1:29 pm
welcome back, everybody. time for earnings exchange with stocks trying to recover from
1:30 pm
yesterday's sell-off as retail earnings sparked concerns and they're not over yet the three names set to report on deck today, deer, applied materials and vf corp. deere up 6% this year. that's hard to find. now they have fallen on two of the last four earnings reports seema mody with the story on deere. what are we watching >> kelly, the minute wheat and corn prices start to skyrocket this notion there would be higher demand for agriculture equipment, devices like tractors and combines did that thesis play out the order book will provide the answer and regarding freight and raw material costs like target, seeing a larger than expected pull there it did reference $2 billion in
1:31 pm
freight and raw material costs for this year. given the macro challenges is that number changing kelly this is one of those rare companies it's sort of a mix of agriculture but also technology. in tech from ai to robotics to help farmers and one of the reasons stock in the robotics etf. given the slowing economy does that change the way he's allocating capital caterpillar unfailing a stock buyback program. >> great point quinn, i'm surprised you're not really a buyer here, are you >> i will fade most of the things we're talking about today because we're in this potentially new environment where, believe it or not, what has worked the last several months will stop working i think deere is priced to
1:32 pm
perfection the stock is trading 14 times forward earnings it is 20% off highs. significantly outpacing the averages and has been a hiding spot for money this year still 200% off of covid lows so, again this is a valuation call there's obviously a lot of debt which is normal for a company like this. i suspect the company probably blows numbers away i would use the strength if you're in this name and have absolutely killed it this year to basically lighten up. i wouldn't be surprised to see a sell the news. if we're right and start to see inflationary pressures abate, this stock will get hit. >> who do you think will get hit well, quinn? you're sounding more constructive and not saying that everything will stop working >> here is the deal. we like to look at things that are out of favor and that's very hard to do
1:33 pm
timing is near impossible at times. we're going to talk about applied materials. in the tech space it is a name i think is cheap everybody wanted semis a year ago. they couldn't get enough of them now the stock with a pristine balance sheet, no debt at all, trading forward times earnings at 12. in an environment, again, where we're starting to see chips come online, down 33% if there's any weakness at all in the report, we're looking for a place to buy i'm not going to buy ahead of the report any weakness on applied materials, we're a buyer >> you jumped ahead of us. that's the trade let's get the story. kristina partsinevelos is back with us. the shares have been down 28% into these earnings. >> yes so bear market territory for this particular company. but the chip sector as a whole
1:34 pm
will come from supply and they have a great balance, almost 50% foundry business, where you make chips other companies supply and that will be driven by the internet of things, power centers and so this is a lot of strength two concerns for the latest quarter in terms of cost pressures coming from freight and logistics which we know we can't get around that and then the second point, too, labor costs. this company has been growing. they've been hiring a lot of staff members. wages have climbed we've seen the entire sector this year alone. what about concerns of the
1:35 pm
inventory cycle more broadly in the semiconductor space. should we expect a rebound or do we have to kind of clean out here and reset at a lower plateau post pandemic. >> what is happening investors across the board with retail as the latest victim are realizing that this isn't just segmented to chips chips were the first one in a long line of dom nopes to fall regarding the supply chain issue, getting product to people managing cost and inflation mesh urs. i don't think that's a surprise. i don't think unless there's this newfound, oh, my goodness, we're now out to 2025 to get supplies, i just don't see that.
1:36 pm
i'm not hearing that a drop in a stock that is again trading, in our opinion, below fair value and with a pristine balance sheet. that's all we can hope to do is buy quality companies at reasonable prices and hold them for a long time. that's our objective >> all right well, down significantly but an opportunity, you think we'll turn now to vf corp, which is under pressure with everything we've heard from the retailers this week, they make northface and timberland, the parent company they've been falling 3% today and about 40% this year. courtney reagan here with what investors will be watching for >> wondering what it means and in some cases others frankly are just kind of messy businesses right now.
1:37 pm
going into this many analysts have taken down their estimates when it pertains to what's going on to running the business costs are just so much higher than many of these companies anticipated. whether that is the fuel raw materials cost, foreign exchange rates, you name it. and really there's a lot of concern about the business in china. business in china is about 11% of total revenue they report out the region and china is the vast majority of that it is very important for vans, a brand very important in general for the growth and china is a very important region. those are two big uncertainty points and worries going into this quarter the work wear that's led by the
1:38 pm
dickies brand is a much smaller segment by revenue actually could have been beneficiaries from the colder spring weather but not enough to offset the pressure coming from china. >> great point here is the thing. i know you're a little bearish but what about the goose this morning? a nice surprise, the stock doing well the high-end consumers holding up >> not necessarily north face, timberland, those are brands i would skew maybe towards not ultra higher end but decent here is my problem with this company. i like a lot of these brands i like this company. my problem is balance sheet. and if they continue to go through a cash crunch and issues, that's going to mount. so my concern is more of a balance sheet issue.
1:39 pm
normally when i look at a company that's 50% off recent highs trading at a decent valuation, not great, they have to sniff out any sort of change and i would anticipate a pop in the stock. the challenge as an investor i can't necessarily invest in a company with no turnaround yet after a pop and this earnings report, i don't necessarily think it's a dramatic turnaround it's probably a gift to lighten up >> just quickly on the goose, how did china do for them? that was a big concern as well >> the luxury consumer around the world, kelly, is really strong of course they're going to be a
1:40 pm
smaller company. it is a little bit relative in those terms. luxury across-the-board is doing very well. however, more sensitive to volatility in the market >> true. >> so that's always tough to figure out when you're looking at those two things together >> canada goose is still down 43% this year. thank you both very much still ahead as companies report disappointing results be a stocks sell off, that recession conversation is evolving from harder soft landing to when will it start wells fargo's answer is sooner than you might think they join us next. you're a one-man stitchwork master. but your staffing plan needs to go up a size. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit is it possible the only thought
1:41 pm
that comes to mind is... ♪ finally? this is financial security. and lincoln financial solutions will help you get there. as you plan, protect and retire. ♪ you know, you hear a lot about celiac, as you plan, prot but i neverre. thought my dna would tell me i had a higher risk for it. i mean, i'm a food critic. i literally eat for a living. this can be a game changer. do you know what the future holds?
1:42 pm
welcome back to "the exchange." wells fargo making a new call that inflation and an economic
1:43 pm
slowdown will be a recession and send the unemployment rate higher one of the authors behind the report paul christopher head of global market strategy it's good to have you again. welcome. i should note you made this call before the big sell-off. what is in the data that tells you a recession in q4? >> we've been watching the data slow all year. what really triggered the call we're picking up acceleration since march and particularly since mid-april. starting to see unemployment claims pick up the highest level since february and they're not at all as strong as they were in the spring of '21 when covid was still a concern. we think the economy is slowing under these double blows of inflation and rate hikes that are here and coming. >> so, you know, if we look at the, for instance, three-month,
1:44 pm
ten-year yield curve, that's at historically deep levels, 1.7 points it's not necessarily telling you that recession is around the corner and i wonder if this is going to be one of those weird environments where nominal growth is so strong that we don't have a lot of real purchasing power growth but we also don't have the conditions that technically qualify us as a recession. >> if you look at the impact that slowing growth and slowing spending is having on margins, you have inflation that keeps cost pressures high for firms and at the same time you're not having the sort of demand growth we saw last year that rescue profit margins we think going forward that's going to continue to squeeze so we think about an indicator like the yield curve, you have to ask what's the yield curve not seeing or seeing differently. we think the answer there is still inflation. inflation expectations maybe not quite settled yet. once they do and the dawning of
1:45 pm
the slowdown and the economy come to get the bond market you will start to seep the curve flatten. >> interesting so that makes you a little bit more bullish on bond >> not quite yet >> what about for stocks >> this is an opportunity for investors to be patient, whether you're a long-term investor, and we have a lot of those, or short-term investor, patience will be the key here we've been moving progressively, incrementally away from cyclicals, sectors and markets that are tied closely to strong economic growth and we think there will be opportunities to do more of that in the weeks and months ahead so for right now investors probably need to be pretty well bar belled or balanced between, let's say, a full market weight in defensives like staples and utilities and on the other hand looking at things like energy that would benefit from a supply shortage as well as health care
1:46 pm
and information technology that we think still have good cash flow and they have good business prospects, revenue prospects for the future but really pretty attractive looking valuations now. >> and when would you be a buyer of bonds >> we're waiting for inflation expectations sort of to settle more and for the reality of the slowdown and its trend to that tipping point in a recession we're waiting for that to dawn on the bond market t. it could be weeks. it could be days we don't think it's quite time >> paul christopher, thanks for joining us today >> thank you >> with wells fargo investment instip institute the subways in shanghai are running again. will the return to normal be enough to right the supply chain and alleviate inflation fears? we have that and the names that we have that and the names that could benefit next they collecta points like hrv and rem sleep,
1:47 pm
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. (driver) conventional thinking would say verizon
1:48 pm
has the largest and fastest 5g network. but, they don't. they only cover select cities with 5g. and with coverage of over 96% of interstate highway miles, they've got us covered. cal: our confident forever plan is possible with a cfp® professional. a cfp® professional can help you build a complete financial plan. visit to find your cfp® professional. ♪♪
1:49 pm
welcome back to "the exchange." the chinese internet holdings
1:50 pm
like alibaba coming as the port of shanghai reportedly is back at 90% cargo capacity, but we've seen recent earnings showing supply chain snarls and havoc for u.s. retailers while others are dealing with wreaked for u.r while others are dealing with overstock issues what does china portend for the u.s., joining me is the destination wealth management founder and ceo. michael, what's your best advice to investors about exposure to china specifically or chinese supply chain more narrowly in the case of u.s. companies >> well, first of all, i think it's very, very important to recognize that u.s. multinationals are going to be affected by what's happening in china. it doesn't get a lot of press. you hear about shanghai maybe coming out of the downturn in terms of the lockdown, but the rest of china is locked down all across china you have neighborhoods locked down, cities locked down and that will affect earnings for u.s.
1:51 pm
multinationals and that's the first thing, kelly the second thing in terms of some of these stocks that you're referencing. alibaba at 87, i think, is on your screen right now. just ask yourself where that stock was a year and a half ago. while we have bounces on the shorts term i'm still very, very cautious on china and they're not out of the woods why the. >> to the extent it comes back online it's reassuring for the supply chain and a problem for a potential energy crisis. >> it is a problem, exactly, because if china does go back online the point you're making is there will be more energy consumption and that will be higher prices and that will drive energy prices higher which could potentially cause inflation, but i think the supply chain is starting to loosen up a little and what you saw from the earnings reports yesterday or this week from walmart and target, they're still suffering with the problems of the supply chain issues in terms of just getting the system it's like a siphon, right?
1:52 pm
it just takes a while to get into the system and even though shipping is back to 90%, as you mentioned, it will take time and it will not be resolved until early next year. >> what is your best investment as we navigate the uncertainty for china. >> if you're asking me on an international basis, i would be cautious about the emerging marks about historically cheap valuations for years i still think companies that have good earnings streams, dividends and yes, multinationals and i would be cautious on china and i would be more u.s., mid to late u.s., and buying tech which have been beaten down significantly on fixed income. >> do you think we're going into recession? how do you balance that concern against inflation?
1:53 pm
>> you, i don't think it's quite as much of a certainty as was just suggested by an earlier guest. i think there's sort of of a coin toss right now, a 50/50 toss it really depends on how fast the fed raises rates i just don't see right now the obvious warning signs that we'll go interest as you referenced a classic, a classically defined recession. we could have a significant slowdown and inflation, not stagflation, but slow growth inflation. recession i don't see right now and we're still looking at the tea leaves and right now, i don't think it's likely. i think it's a coin toss do investors need to stay out of stocks given the headwinds >> if you're in stocks now it's too late to get out of stocks. if you're not in stocks now, i don't know if you would start bottom fishing or value fishing with the s&p approaching a 20% down bear market and the nasdaq already well in that range i think there's opportunity to
1:54 pm
start picking over time or a dca sort of strategy and long term we're trading off their highs. >> dollar cost averaging and good to check in with you. thanks for your time appreciate it today. >> president biden can meet with the saudi crown prince as early as next month according to reports and we'll look at what it could mean for crude as it continues to rally above $111 a barrel stay with us (fisher investments) in this market, you'll find fisher investments
1:55 pm
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. (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.
1:56 pm
(mom allen) verizon just gave us all a brand new iphone 13. (dad allen) we've been customers for years. (dad brown) i thought new phones were for new customers. we got iphone 13s, too. switched to verizon two minutes ago. (mom brown) ours were busted and we still got a shiny new one. (boy brown) check it out! (dad allen) so, wait. everybody gets the same great deal? (mom allen) i think that's the point. (vo) iphone 13 on us for every customer. current, new, everyone. on any unlimited plan. starting at just $35 all on the network more people rely on.
1:57 pm
>> welcome back to "exchange." before we go one more thing that should definitely be on your radar. president biden will reportedly meet with the saudi crown prince as early as next month brian sullivan is here with the significance of that for oil production and gas prices. >> yeah, if this occurs, kelly, thank you very much.
1:58 pm
there have been some reports coming out in the last couple of hours or so, president biden may issue meeting with mohammed bin salman better known as mbs, a meeting, if it happens, may come at the gulf cooperation council which saudi arabia chairs. however, i'm not going to throw entirely a bucket of water, a well-placed source in d.c. says it would be hard to see president biden landing in riyad saudi arabia, and with oil prices where they are, president biden may be looking for any thaw for that relationship biden as a candidate in 2019 called saudi arabia a, quote, pariah state with no social value and last year ended support with the saudis over their fight with rebels in yemen. this is not the first leak about a possible meeting between the saudis and prsz and back in
1:59 pm
march axios had a story on it and no meeting saudi deputy minutester, khalid bin salman, one of the brother, the crown prince's brother has been in d.c. meeting with u.s. defense department officials and he's the highest ranking of the royal family to rz during biden's turn he would need the saudis to help push opec to increase oil output to bring down gasoline prices because inflation is a major issue and whether this meeting happens, we'll see. >> the saudis are pumping 12 million barrels a day at the lows of march 2020 and they were in the price with the russians and now they're millions of barrels a day below that level >> wouldn't any kind of a thawing and a meeting help with that there's not a lot of spare capacity out there, but i think there couldn't hurt, although it's ballistically, and if it
2:00 pm
does, we will help, i don't know be careful out there >> we can only hope that maybe you won't fwring online. just one of the reasons cited by the hit to profit margins and were those big stock drops an overreaction we'll explain that on "power lunch" which begins right now. ♪ ♪ thank you, kelly welcome everybody to "power lunch. i'm tyler matheson here's what's ahead on another busy hour. searching for safety, many look to consumer staples and that sector now under attack, too is the group being unfairly punished and is it no longer a place to hide? plus, cheap, mega-cap stocks and well-known names have price to earnings ratios in the single digits these are big-name companies are they a bargain huntser's dream? we'll look for some opportunity throughout the hour. >>


info Stream Only

Uploaded by TV Archive on