tv Power Lunch CNBC June 23, 2022 2:00pm-3:00pm EDT
did? it does put the pressure on some of the crypto peers here with more cash on their balance sheet. sam bankman fried stepping up could inspire some of the other ones and i am told to keep an eye out for that or more loans from sam himself >> a transition phase, very much in crisis. thank you very much, kate rooney that does it for the exchaurmg "power lunch" begins right now. >> dom, thank you so much and welcome everybody to "power lu lu lunch. i'm tyler matheson, elon musk says they're gigantic money furnaces as it faces supply constraints and are the strengths to tesla's growth mounting or are these normal growing pains? plus a personal finance power player, we are so glad to have
her back susie orman is back to explain where she believes i-bonds are the top investment to make right now and we'll delve in there a little bit later, but are there risks to holding them longer term the opportunity costs, we'll ask and hear from suze, but first, courtney reagan is in for kelly evans. >> thank you the dow and s&p are under pressure this afternoon as the yields slide the s&p hugging the flat line. the s&p up about half a percent. the yield on the ten-year sitting just slightly above 3% its lowest in about two weeks. the fed chair reiterating his commitment to bringing down inflation and oil prices in focus pulling back down about 1% and that's sending valero down 8% and halliburton shares down 6% and chevron up more than 4% all right, we start with tesla and questions about its growth ceo elon musk warning that tesla's new factories are, quote, losing billions of
dollars. the comments were made during a late-may interview that are just now coming to light, ramping up new factories is, of course, a cash-heavy business. tesla shares are down 30% so far this year all while musk could potentially buy twitter. here to discuss tesla's road ahead is colin rush, research analyst at oppenheimer he maintains a buy rating and a price target of $191, and tim higgins and a cnbc contributor tim, why did this -- did these quotes about the hemorrhaging cash take so long to come out? >> they doled it out as slowly as they did. i think their idea was they were more interested in the excitement of products and this isa side note that that's why they're curious about what's
going on and austin could become the next manufacturing helm which hurt tesla in the past bringing out the model 3 and almost putting the company interest bankruptcy. >> the tesla club of silicon valley meeting in austin, texas, go figure. but at any rate they're burning capital. colin, should -- is this necessarily unexpected obviously, when you're ramping up a new factory, indeed, two of them in europe on the one hand and china on the other, there are huge, huge capital costs and certainly expectable hair balls. >> i think first, we need to put this in context. elon musk is not afraid of hyperbole over the course of years. saying that reaction from a particular audience is not a huge surprise. second, the supply chain issues, particularly with the shutdowns due to covid in china are also not a surprise, fully digested
by the street, and understanding how big that is short term in terms of cash flow issues is not fully understood, but i think investors understand that from an order of magnitude and then you get dun to the reality of ramping two factories simultaneous with battery technologies and it's a lot to take on for an organization. our sense is that investors expect some growing pains here and it's not like the model 3 ramp where we had major challenges in terms of actual factor design in fremont these guys have definitely improved the design and they've done it very efficiently in china and we will see these factories get up and going as soon as the supply chain issues start to ease here in the third quarter. >> colin, your point about hyperbole with elon musk, he does speak in those ways as an equity analyst and the stock you need to pay attention to it, but
i am interested in what you have to say here about the commentary seemingly in a way designed to help motivate employees. what do you mean by that >> yeah. for sure he's use the public realm in an area to push deadlines and we've seen tesla in the end of quarters and we are here about a week away from the end of the quarter and they're pushing aggressively to push as many vehicles out before the end of the quarter and we think this is an area where elon does a lot of push/pull where he encourages folks and also has a fairly heavy stick with folks to keep people motivated and focused as they go through some of these cuts there will be an extra focus here -- on staff. >> tim, let's talk about motivation and focus here's a guy who has just put -- or is planning to put billions of dollars into what i'll describe is a vanity play and
that is his acquisition of twitter. has he got sufficient focus on his main business, the main thing that is generating cash for him right now or does he need some motivation to pay more attention to tesla >> it's interesting. when he was talking about these issues that he was having at these factories, he was talking about how it would require incredible focus to address it and this is the concern that some investors have is that he is not focused in a period of time when tesla is trying to get to the next level and become tesla 3.0, ifyou will, with this incredible amount of growth that they're trying to do and here's an example of the challenges that happen when you ramp up two factories at the same time. for a traditional automaker with hundreds of years of experience, bringing a new factory online is a really hard thing to do, and tesla has one of the challenges they have is execution a struggle with execution. the model 3 might ultimately
come out to rave reviews and generate the revenues and it's very messy when they do these things and here's a time when he's trying to take tesla into the next round with battery technology and the new factories and he's also focused on twitter and some are worried about that. >> go ahead, colin >> i take exception to the comment about execution. they had start-up issues with the model 3 and so far they've been executing well ahead of expectations and that's been several years now and some of those legacy comments along execution are entirely misplaced and out of date. one of the things that we think about with elon musk is they need a couple of things going to stay focused and having a side project is kind of one of the things that we think helps him not get too involved in the weeds at tesla and let their managers do when they need to do and be proud of the execution that needs to happen here.
. >> really? i just heard you say, colin that the twitter acquisition actually makes -- i don't mean to put words in your mouth because i want you to explain it -- >> i'm happy to clarify here -- >> and tesla a better company? >> with the situation like this where he can get into the weeds and disrupt some of the things with his senior managers, i do think having a couple of things going helps the organization at the end of the day >> tim >> the berlin factory is delayed and those are execution issues and to colin's point, tesla has done better when elon has been distracted the china factory surprised a lot of people by being able to come online the way it did and some might argue that elon couldn't go there because it was in china
>> i tell you this, i see in the new york market more and more teslas than maybe any other single model of automobile right now, and i imagine that this austin factory is going to eventually help the waiting list that is six to ten months long for many of the more popular models i speak from experience, colin rusch, tim higgins, thanks, gentlemen. >> i know a lot of people on the waiting list, as well, tyler from tesla to washington, the president met with the leaders ofmajor oil companies. with the national average just below $5 a gallon, president biden has called big oil's profit margins unacceptable, but what, if anything, can be done about that let's bring in bob mcanally president of rapid energy group and former adviser to george h.w. bush and he knows this from the company perspective and the
political angles and strain right now certainly in focus for a lot of american consumers. that sticker shock, that price that they're paying at the pump and then the ripple effect there out. it seems only logical that an administration would have some questions for big oil, but give us some education, bob i mean, what really can be done? are profit margins really unacceptable why is big oil always looked at as the bad guy here? >> you know, those of us in the fraternity and the sorority of former white house energy advisors understand the brutal math of the oil market and every president we worked for in the last 20 years has confronted these rising gasoline prices, and the truth is there are no short term solutions oil is very insensitive where we say stick toey to price and yous don't turn it on and off on the spigot and you want to talk with refiners ahead of refinery
season you ask the ftc to investigate gouging and you do it anyway to take a look at what you're doing something. the president has raised things to a new and vitriolic level and they accuse folks of gouging and we had a level that we don't usually see before i understand today was conciliatory and they dial down the tensions and one of the things they emerge with oil prices longer term is whether the administration is doing restricting the export petroleum products like gasoline and diesel that would be an authentic mistake and some folks left thinking that that could be on the table. >> there's all this talk about, as you said, court, profit margins are not acceptable i'm not sure whose profit margins the president is talking about. is he talking about the big
refiners the exploration and production companies? is he talking about the retailers? what are the profit margins and how much have they risen here as oil has gone from 50 a barrel tol 102 a barrel >> he hasn't been clear. they're a small mom and pop, and they're making most of the money on the chips and soda, not the gasoline because we have a refinery shortage problem, because we don't have enough refining and we've been shutting down refining, we do have unusually widespreads between crude oil and the wholesale price ever gasoline and diesel. those are $50 a barrel, usually that's $15 a barrel. that doesn't reflect gouging by refiners of the oil industry and we have enormous pent-up demand and we've been destroying and reducing refining capacity and the input costs of refining natural gas and other things are quite high
so there are free market, understandable reasons why you have these high margins. >> so it's the margin at the refineries that have -- that have widened largely the difference between what the crude cost and the wholesale product whether it's gas, diesel or jet fuel. that's where the change has been and that is a function of lack of refining supply, right? >> that, plus the loss of russian exports. remember, russia was one of the private exports and they used to export a lot of diesel, distillate fuel to europe and that is in the process of going offline and we don't have the tankers to move it around and russia is having a harder time, compared to this crude let me ask you directly, forgive me for interrupting, bob are the refiners as they deal with the shortage of refining capacity, do you see any evidence that they are, quote,
gouging as they raise their prices >> none whatsoever the ftc has been watching this since 1920 and every single year they watch it and they've had investigations after investigation and no sign of collusion, market power whatsoever and this is just called too much demand, and not enough supply and we'll pay a higher price to produce this product. >> bob, before i let you go, i want your take on the idea of a federal gas tax holiday. most people say this, it doesn't really do much it sounds nice, but not only does it not help the price at the pump and you're pulling potential revenue that by the way, it desperately needs because of the infrastructure state of the country so can you just give us your understanding of where that stands and whether or not that would ultimately be helpful to solve what the administration is trying to do which is relief pain at the pump for the consumer >> president biden has managed to unite democrats, republicans
and analysts that lowering the federal gasoline tax is a mistake and no real relief to the consumer, to the degree you help the consumer and you'd be stoking demand which is part of the problem. meanwhile, you blow a hole in the highway trust fund most americans agree on roads, bridges and so forth you don't see democratic leadership on this and i think it's dead on arrival thank you very much for joining us here today. more education needs to be had on all of us on how this works and the fragmentation of the gasoline >> we all get the intuitive appeal of wifing away and having a federal tax holiday in front of an election given the president's popularity ratings and it is not only turning out to be bad policy it also seems like bad politics because he doesn't have his own
party -- yes thank you very much for joining me, i wonder if bob works out there. he'll tell me one way or another. next up, beaten down names our next guest has a list of stocks he says you should buy now and own for the long term. plus from travel, bedding to software the trade on three big calls in today's three-stock lunch. we'll head to a break. take a look at travel-related names, expedia and booking holdings on pace for their first week since march 2020. ♪ ♪ at fidelity, your dedicated advisor will help you create a comprehensive wealth plan for your full financial picture. with the right balance of risk and reward. so you can enjoy more of...this.
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welcome back to "power lunch. the nasdaq is the relative outperformer and data dogs, zscaler and lucid. our next guest says some of the most well known, beaten down tech names could be the best risk-adjusted returns. so let's bring in allen boomer, he's momentum adviser's chief investment officer okay, allen. i need to understand some some of your thesis here and first we have to lay the sland scape from where we are with the macro picture. if we are, indeed, headed into a
recession and you think we are, how does tech make sense here? isn't that an area that we want to avoid if we look at bear market territory for some time >> absolutely thanks for having me when it comes to a bear market, we are absolutely in a bear market, but what type of bear market are we in because there's a cyclical, there's a structural and an event-driven bear market like what we experienced in 2020, thanks event driven and that was pretty rough, but it was over pretty quickly and the cyclical bear market and it's a medium-sized bear and the structural bear and i don't think a bubble is bursting i think what we are experiencing today is a run of the mill, cyclical bear market and these bear markets tend to see about 30% down side. we are probably two-thirds of the way through it and they do tend to last for about tw years and it's a matter of thinking
about what type of bear market are we dealing with and i think it's a cyclical one. >> if it's a cyclical bear market and returns are down 30% for about two years, what names make sense to you right now and perhaps what would be the time horizon for that to be a payoff in the form of a return that you find attractive? >> got it. first, if you listen to most of your guests, everyone likes energy, everyone likes materials and everyone likes value and that's correct those are the markets that look the most attractive from a valuation perspective, and when i think about going forward, risk-adjusted returns and what sort of volatility am i going to experience relative to the returns i'm going to make and it brings me back to the tech names. i like amazon. i like microsoft and google. when i think about these names these are stocks that are really
beaten down and the upside is very, very strong. what is it let's take them in order and a lot of people are beaten on amazon why do you like it amazon's down. what is it down? a big, 30%, 40% this year. i think it has 60% upside from here all of the bad news and all of the bad news is priced in on amazon already folks have talked about their fuel costs and their labor issues, but they've got a really valuable cloud business, and they've got again, you get the chance to buy a really great growth stock at a 38 times multiple on next year's earnings, and if you look at amazon's p-e, historically, when have you ever had a chance to buy amazon at less than 40 times earnings hardly ever and that's why i think they'll do well. >> the next one, tell me about
microsoft, then, battling in the cloud with amazon as is google >> absolutely. all of these are around this cloud theme. microsoft in particular already has a big valuable azure that their cloud business and i think they're going to grow that business, and i think they're going to grow the installed base of the office 365 products and the stock is beating down more than the market and trades at 24 times next year's earnings and they at least 50% upside in microsoft from here on out >> go ahead, finish. >> and just very quickly, can you go through some of the details before we have to wrap up here? >> yeah, sure. i think google, you know, again, they've gotten beaten up this year for a lot of reasons and y youtube, and they're strong and made a lot of investments in
cloud, as well google is one of the names that's trading 20 times on next year's earnings and i think google will give you at least 50% upside from here, but with all of these names i think you've got to be patient and i wouldn't jump in with both feet. i would say take some nibbles and these are positions that you want to bud in your portfolio over time. >> amazon, microsoft, alphabet and certainly not names that will go away any time soon. >> agreed. >> very interesting futures and you just have to pick them i've been told, okay, boomer >> you have to do it i'm a boomer >> no. [ laughter ] >> up next, pain and grain, wheat on pace for its worst month since february 2019 with other commodities following the declines we will break down the moves, next, a lot of grain next, brick and water.
we will stalk about a start-up bringing water to major buildings. "power lunch" will be right back ♪ (sha bop sha bop) ♪ ♪ are the stars out tonight? (sha bop sha bop) ♪ ♪ ♪ alexa, play our favorite song again. ok. ♪ i only have eyes for you ♪ trading isn't just a hobby. it's your future. so you don't lose sight of the big picture, even when you're focused on what's happening right now. and thinkorswim® is right there with you. to help you become a smarter investor. with an innovative trading platform full of customizable tools. dedicated trade desk pros and a passionate trader community sharing strategies right on the platform. because we take trading as seriously as you do.
inflation. one area where the yes camp may have scored a point or two is grain prices as they start to see a reprieve let's start with soybeans. prices as low as 3% today and now back to where they were before -- the week before russia's invasion of ukraine i guess those are soybeans and corn prices and i know an ear of corn when i see it down 13% this month and that is the lowest level since mid-february a few days before the war began. new government data showing 07% of the corn crop was in good or excellent condition and that is higher than last year. the worst month since february 2019, wheat lower down 12% in june, first negative month in five and analysts have been increasing estimates on the weather prediction and sending the ag stocks into the red today. that would include companies
like cf industries, mosaic, agc and deere. let's go to frank holland for the news update. >> a former trump justice official jeffrey clark it can, quote, confirm there was law enforcement activity in that area, however it declines to comment on specifics he emerged as a key player in donald trump's efforts to leverage the powers of the department of just tice to confm the 2020 corruption. the doj will be examined on today's capitol hearing. the acting attorney general will testify to the house's special committee. that session is scheduled to begin in a half hour from now. a judge giving final approval to a settlement topping $1 billion to the victims of a surfside,
florida, collapse that killed 98 people last june that comes a day before the tragedy's one-year anniversary that's the latest. courtney, back over to you. >> what a tragedy that was thank you, frank >> up next on "power lunch," first famed financial adviser suze orman betting big on i-bonds and can inflation throw awrench in that game plan and our three-stock lunch laying out the plans of the day and whether you should buy or sell we'll be right back. y to support that village. ♪ ♪ i am peter akwaboah, chief operating officer for technology, operations and firm resilience. when you think about diversity, the employee network group is fundamental to any organization to provide a community and a belonging environment for the employees. they provide an avenue to support employees
and ultimately it leads to retention of the best and brightest. the employee network represents the community at large, and it provides a good feedback loop to senior management to make the appropriate decisions, which ultimately contributes towards the bottom line. if you're thinking about growing your business, if you're thinking about driving the business forward, inclusion is a strong part of this. i am peter akwaboah and we are morgan stanley.
welcome back, everybody. we have 90 minutes left in the trading and i want to get you caught up on the market, stocks, bonds, commodities and more and get suze orman's advice for investing in inflationary times like these let's begin with stocks today and dom chu. hi, dom. >> tyler, the trading action has been relatively less volatile compared to what we've seen over the last few weeks the indices are fractionally higherish to give you an idea of where we had been trading earlier in the session, the highs of the day and the low is down 190 for that nasdaq composite. the high was 169 points while
the low was down seven so we're tilting toward the higher end of the nasdaq now what may be a little less positive is where the leadership is in the markets right now. it's the defensive sectors and the less economically sensitive ones utilities, health care, consumer staples and the ones that can outperform even if america is headed toward a hypothetical recession. no surprise the economically sensitive or cyclical sectors like financials and materials and energy, by far, the worst performer by a wide margin as for the stocks on the news, kb home after the home builder reported better than expected quarterly results and the analyst calls of note here, one in particular, we work also up big helped along with credit suisse, initiating coverage with an outperform rating and an $11 price target and ty, that's double, more than double what it closed at yesterday. back over to you. >> thank you very much let's move on to the bond market
where the ten-year yield has been falling sharply to just above 3% it was pwards of 3.5% just a week ago, rick santelli. >> yeah. no, not about. it was literally within 0.1 basis point of 3.5%. two-year notes were close to 3.45, so yes, everything has come down dramatically so whether you look at a three-day chart of two-year note yields underscoring what tyler is discussing or you go to the farthest end of the curve saying, look, and if you think about what's going on with regard to high yield, it was the big talk a week ago, how nasty it was looking wow, look at this chart and they've gone to the a two-year low in the etf, it's bottomed out, it hasn't bounced, but it has bottomed and that's how much treasury there is in the flight to safety going on look at these fed funds and the price moving up right along with the price of treasurys and
think, where the price treasurys go up, the yields go down and finally, the three-month versus tenure and this is the recession yield curve trade and it's gone from the steepest in seven years to the flattest in three and a half months. unbelievable tyler, back to you >> tyler, thank you very much. that is a bit of an alarming signal let's take a look at oil closing for the day, $104 a barrel and it had been as low as two in the lowest level in more than a month and down 1.75% we also want to take a look at natural gas prices down 16% in a week and 30% in a month. so there you see supply and demand at work with inflation at a historic highs in the stock market choppy, our next guest says the number one investment right now is i-bonds here to explain is a personal finance power player and our dear friend suze orman host of
the women and money podcast. she is also co-founder of the emergency savings firm secure save suze, it is always great to see you. welcome. good to have you back with us. let's talk about the i-bonds which i didn't even know about, butmy nephew-in-law said you have to get these i-bonds. explain to me what they are, how they work, how i buy them and from whom. >> now so you buy them from the treasury, directly from them so you go from treasurydirect.gov it is the only place that you can buy them, number one they range in price. you can invest from $25 all of the way up to a maximum per person of $10,000, although there are ways to do it where you can put in up to 30,000 if you have a trust and/or a business when you invest in an i-bond, i stands for inflation, you have got to make sure that for one year you do not need your money
and the reason is from the time you put it in to one year you cannot touch it. from year two to five there is only a three-month interest penalty. that is how they work. they are attached to cpi so right now when they announced in may, the cpi the yield on the series i bonds were guaranteed and annualized and it's guaranteed to you so they change every six months the interest rate changes every may and november so from may until november everybody who buys one right now will be guaranteed an annualized yield of 9.62% state income tax-free obviously you're only going to get that for six month, but that's still 4.81% on your
money. when they reset come november, let's say they reset even lower. let's say they reset at 7.11 which is what they were paying before they raised to 9.62, you are guaranteed that for the next six months on an annualized yield so that's, like, 3.56%, half of that for six month because that's what you're guaranteed so for the year it's 8.37% that's essentially how they work they're fabulous their maturities are for -- go on >> i don't mean to interrupt you, but i wanted to ask you those numbers that you just -- and i get it, you explained it perfectly. they reset every six months and are you guaranteed under this program to make a yield if you hold the bonds that is above the then-prevailing rate of inflation? >> so what happens is you are absolutely guaranteed, and
what's so great is that the only way a finance person can ever use the word guarantee side usually with a treasury instrument because it's guaranteed by the authority of the united states government no commissions or anything so once they declare that rate on may 1st and november 1st you are guaranteed for whenever you buy it between those periods, for six months you are guarantee the rate that they declared. again, that's an annualized yield, so it's only really guaranteed for six months until they reset you know, tyler, i gave a master class on this on the women and money podcast on the april 17th edition of it. everybody should listen to it because it tells you all the ins and outs, everything you need to know this is an investment. i've been doing these since
2001 >> this does make an awful lot of sense you explained it very well in your first answer in talking about the 9.6% rate. we understand that that does clear the level of inflation, but if inflation is something like 8.6%, aren't you more or less just protecting the value of your money rather than really growing it even if inflation is only apercent less than what you're making. >> courtney, you got that right, but don't you want in markets like this to have a position of your money absolutely ro tekted? where are yougoing to go you can't go to regular bonds, because bonds if you adopted in bond funds for growth, you're down 10% or 15%. you're down significantly in the stock market there has got to be a portion of your money, whatever that is that you want protected, you want essentially in cash at least where it's keeping up with inflation which is exactly what this will do versus you're in a
money market account or a cd or whatever it is and you're getting 3% where you're losing money. so this is a great place to put your -- you mentioned after five years, you mentioned 27 year is put for 30 years >> i see, and you can redeem them any time after the first year from the year two through five there is a three-month interest penalty after the fifth year you can redeem any -- you can redeem any time. >> without any pevnalties when s ever really, essentially. so you're in there for a year and you redeem after that, big deal. >> final question which courtney touched on and that is that this is for a portion of your money, ideally money you don't need to
touch. in some ways like stocks, but you acknowledge that there is with this kind of safety money an opportunity cost which is to say it's not going to be your growth money the stock market might return you over the five years or the ten years you hold this bond much more than 8%, 9%, a little above inflation, right your growth money is a different thing. >> absolutely. you have growth money. you have emergency savings account money that would never go into something like this because you can't afford to lock that up for a year, but you do have a portion of your money that you want right now safe and southbound because everybody is so freaked, and at these interest rates, if inflation continues these are a big winner big, big, big. >> what's the podcast again, go back and look at it. >> april 17th, the women and money podcast, master class on it and i guarantee you will all
end up buying them >> we give a master class. >> suze orman just gaves a master class >> suze orman. cheer! >> thank you take care. cities that recycle water. clean start is 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 indeed.com/hire 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 coventrydirect.com to find
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>> when you think about all of the things that we waste, water is close to the top of the list, this despite more severe drought in the u.s. and around the world due it climate change, so how do we stop wasting so much water? senior climate correspondent, diana olick joins us now with her continuing series on clean start-ups. diana? >> courtney, the bulk of water recycling happens at centralized waste water treatment plans which requires pipelines to move the water, nor efficient or cheap. what if buildings can do their own water recycling on site? >> we live in a flush and forget society where we never think about what happens after we flush the toilet and turn on the tap. >> not at san francisco's new
1550 mission where used water is made clean again over and over again. seven year old water reuse system removes solids from waste water and the turns them into soil. >> all of the pathogens are destroyed and the odors are destroyed and we are left with this amazing, dry product. >> it treats the water with proprietary technologies and sends them into the building for toilet flushing, irrigation, cooling towers or laundry. epic claims to reduce the building's water usage by up to 95%. >> we'll be saving folks on their water and sewer rates and we typically aim to give buildings a return on their investment of under seven years. >> epic is based in san francisco where local law requires every new building over 100,000 square feet to have a water recyclingsystem. there are similar requirements in los angeles and new programs popping up in denver, austin and new york city, precisely why related, a major real estate
developer and landlord is using epic. >> water conservation being such a critical issue it is a great value add to our design proposition and something that residents look for for buildings to be sustainable. >> epic clean tech is backed by j-ventures, j-impact, echo river capital and ll & p inc.. total funding to date just over $13 million. residential water and sewer rates in the u.s. have outpaced inflation by nearly 300% over the last two decades while growing urban populations are straining the aging municipal water infrastructure this as much of the west is now in a drought emergency >> diana, thank you very much. >> unique as a snowflake j.p. morgan saying tech firms are excited about the company's products we will trade that name in threstk nce-ocluh. that one plus those two others
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morgan stanley sees shares more than doubling and airbnb after they lowered the target to $100 a share. here to trade them all is boris at bk asset management so kick us off, boris, let's start with snowflake. >> yeah. my favorite stock that we have here right now the reason why obviously, it's just a very, very strong, compelling story in technology the thing about technology is that the product here is so strong it has tremendous demand here from both, you know, the small mom and pop shops all the way to fortune 10 companies cios now think this is going to be one of the biggest buys for them the next couple of years. the company has no earnings and no metrics at this point you're buying it for growth. given the fact that it's projected to triple its revenues in the next two years, i think it's an interesting trade.
more importantly in this kind of a market where we are really subject to a lot of macro headwinds, this is an idiosyncratic story ahead of the headwinds.>> boris, let's move o draftkings if you watch sports television, you see them spending furiously to attract customers via advertising. >> sure. >> they have spent a lot of money on that. this is a crowded space. do you like it or not? >> that's the problem, it's a great business there's no doubt that sports betting and even their own brand, daily fantasy sports which is a compelling, engaging idea where you get to be a sports manager and pit your wits def against everyone else in the crowd, it's a great business model but the amount of money you need to attract customers, it's a question whether they can sustain enough capital burn. i would stay away from the stock
but sell the calls i think it's a fair value at this level if the stock doesn't do anything, you collect the premium. if it runs away -- i'm sorry, sell the puts, not sell the calls, sell the 12.50 puts to get into a better position on the stock. >> the final name for us would be airbnb. what do you make of the moves that we should be looking at here >> this is really interesting because i think ultimately airbnb is a great long-term name but obviously it sort of hit peak travel at this point. the company is really facing two crunch issues. one is increasing transportation costs, which is hampering travel demands going forward, and higher interest rates because obviously it's a high growth stock with very little earnings power behind it. so all that is compressing its valuation. so i had an interesting idea on ai airbnb i like it but to play in a very different way.
usually somebody is looking to establish a position in a stock by buying leaps. because it's so volatile, it's a long-term option with long-term calls all the way to january 2024 that effectively gives you a 36% yield if the stock simply does nothing and expires in 2024. in the meantime you get paid to wait >> okay. >> so i would -- >> go ahead. >> sorry i would simply sell the leaps against that position instead of buying them. >> all right boris, thank you very much for giving us three ideas on our three-stock lunch. up next, what the bond flioet is saying about peak inatn. that one is next we'll be right back. rket and want to make the right moves fast... get decision tech. for insights on when to buy and sell. and proactive alerts on market events. that's decision tech. only from fidelity. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing!
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indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today. inflation over 8% is not sustainable, so we know peak inflation is coming. we just don't know if it's here yet. so dominic chu is looking at the signs. so is it here yet? >> i don't know, and no one is going to make that call. no one is gutsy enough, certainly not a central banker but the cycle high was right around here and it was just around 3.48% so we've come down markedly from there and now we're at 3.07. 40 some basis points of a decline which means people have buying up government bonds you don't really do that if you've scared of inflation commodity prices like copper on a month-to-day process down 30%.
we know what's happening with crude oil prices they have been on the decline as well if you look at some of the market predictors, the bond market is showing on a ten-year basis, inflation expectations, 2.54%. we're drifting lower on the 10-year break evens. that could be a sign, guys. >> anything lower relating to inflation feels good. >> great to be with you. thanks for watching "power lunch. "closing bell" right now. >> thank you, taylor and courtney stocks are off the best levels of the day still pacing for some solid gains on the week. the nasdaq is up a percent the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen we're about 0.4 of a percent on the s&p 500. it's a defensive led rally you've got the leaders, utilities, health care, consumer staples right on top of the market worst performing sectors energy again, crude oil taking another big fall as you can see at the bottom of your screen, down 2% materials, financials and industrials. so the