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tv   The Exchange  CNBC  July 15, 2022 1:00pm-2:00pm EDT

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be back with his last word a last word from you here, what you are watching between now and then >> telling you what you need to know in the yields. >> all right that does it for us. i'll see you in overtime, the exchange back at our headquarters begins right now. thank you, scott i'm kelly evans and the market is ripping today we got better earnings, stronger retail sales and a key drop in inflation expectations expected to keep the heat off the fed at its next meeting. two big questions now. will gas prices stay down and is inflation or recession the bigger threat, and which one should investors expect and prepare for. we'll dive into that speaking of which, president biden in saudi arabia to try to bring those oil prices down, but will it work meanwhile his policy agenda back at home sitting a senatorial
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speed bump and we have a bitsusy week next week, three stocks to buy and one fail how is the market looking? >> pretty good right now green across the screen for the major indexes. if you look at the dow industrials, 561 is the number we're at right now that is how much we're up. 658 points to up side was the high of the session. the low was up 145 points. so tilted more towards the high end of that range right now. the s&p 500, 3850, up 60 points. 1.5% gains there and nasdaq is lagging if you want to call it that, up about 1.4% composite now 11,406 one place to keep a close eye on is of course energy with rising fuel prices but of course also some of the mega cap names especially in tech and communications services. communications services over the last week by the way has been one of the worst performing
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sectors in the entire s&p, meanwhile today on this bounce that may snap a five day losing streak for the s&p if it holds, you are seeing the likes of netflix, meta platforms and disney outperforming, up anywhere from 3% to 6% on the day so far but just put it in context on a year to date basis, netflix has lost 70% of its value, meta lost half of its value, disney nearly 40%. so some of the bounces are coming in the most beaten up names in that mega cap industry territory. and if you want to look at the stocks in focus today, it is the banks. they have been because earnings season really kicks off with the big banks. two more reported today. citigroup is up 12% right now, better than expected profits and revenues they are making more money on higher interest rates. they are also setting aside money for more possible bad loans in the future as is wells fargo. but generally speaking wells fargo mixed earnings report is still ending up with a gain so
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far today. they think credit losses could accelerate from here, but with a caveat that there were low levels in terms of credit overall being a problem. so it could go higher, it shouldn't be big, but wells fargo also says that they are not seeing any material deterioration in their consumer or commercial business lines right now pay attention to that. and i'll point this out, of the four big banks, kelly, that have reported this week, only one company has beaten revenue estimates and that is citigroup. back over to you >> just a striking jump in those shares and a very different tone than what we saw from jpm and morgan stanley this week has been all so let's recap markets are looking much more relaxed about inflationary pressures. and we have break evens, the bond market's measure of inflation expectations, those are down sharply commodity prices plummeting
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since the fed's last meeting also plunging, gasoline prices down almost 50 cents the past month, one of the sharpest declines ever. as a result a key breakthrough this morning university of michigan's measure of consumer inflation expectations, falling back below 3% on a three rear basis remember the high rating last moment prompted the 75 basis hike from the fed. cpi hitting a 41 year high and says not peaking but the guess is maybe it might. so what should the fed's next move be? let's ask the chief financial economist at jeffries. great to see you you've already ruled out 100 basis point rate hike, is that right? >> that's right. i think there is a very strong case to be made for not upsizing the move this time a month ago we were very quick to upgrade our call for the fed, but it really had less do with the cpi and more to do with that
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number at 3.3% that is what created the urgency to up size the last move inflation sort of tells the fed where they need to go ultimately, but expectations tell them how quickly they need to get there and there was a lot of urgency a month ago after that spike in inflation expectation. since then inflation obviously continues to be pretty upbeat, but inflation expectations have moved down pretty decisively it could be on the back of the gassing declines, but i think that the fed has done what they need to do it restore credibility and that gives them a little more flexibility and rules out another outside increase the next meeting. >> and what if they did only half a point, how would you feel about that >> i think that is very unlikely you know, they have guided very decisively for 75. it would certainly be a
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surprise i think if they did, you know, move by 50 basis point, we would have to worry again about inflation expectations moving back up and then ultimately forcing their hand but i think at this point that is very unlikely >> so it is funny that -- and we've seen this even in google searches that they are spiking for both inflation and recession at the same time and it seems to be that we have only those two very bad outcomes to pick from but when i sort of read through your thoughts and what has happened over the past month here, it is possible we could see more of a goldilocks second half this has been a big reset if gas prices stay down and meanwhile we got better data on retail sales. 38% gain since 2019 is extraordinary. >> it is extraordinary and it highlights that actually a lot of these inflationary pressures that we're seeing are demand driven. but look, i actually agree, i think that we're setting up for an environment that feels quite a bit better than it did over
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the past six months. if energy prices do stay here, you know, cpi is on track to be flat month over month in july, right, and so if we continue to see similar nominal gains in income and spending to what we saw in the first half, suddenly you are talking about real gains in consumption and real acceleration in both real consumption and gdp. so while the first half was very disappointing, second quarter will probably print around 1%, but still very tepid although not quite recessionary but i think in the third quarter we could see gdp back at 3%, 3.5% if energy prices stay down. so it will feel a lot better we've been in an environment of raising rates, slowing growth momentum, deteriorating sentiment and i think that that could change to where we are in a stable rate environment and growth momentum and sentiment that actually improve at least for the next quarter or two. >> i guess the final piece of the puzzle is the labor market and larry summers was out with
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some strong comments again today saying that basically the fed is too sanguine to think that the unemployment rate will stay low. every time it has risen half a point we're in a recession, so on so do you think there is a goldilocks outcome where they can slow wage gains without really creating a much bigger slowdown in the labor market >> i don't think that is possible continuing at the end of the day if the fed is serious about getting to 2% inflation, they will have to create a lot of slack in the market. given the shape of the curve, our estimate is that in order to get back to about 3.5% wage inflation which is consistent with 2% price inflation, you need to push unemployment to about 6%, 7% and that is what we think the fed will ultimately do, but we don't think that is imminent we think that process is still about 12 months away and in the meantime, you know, this is still a very strong
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economy that is actually going to be harder to put into a recession than many people think. >> i feel less excited about the back half if you think we'll still be in recession sometime next year no matter what >> yes, you know, but certainly it will feel better the next several months. >> enjoy it while it lasts we'll leave it there thanks for your time now, the dow and s&p are rallying today trying to snap a five day losing streak dow up 576, but my next guest says investors need to prepare for this recession economy and that it is time to buy staples and names more reserescissors s tent to down turns do you want to piggyback on what aneta was just saying? >> well, i think what she is saying basically is a recession is coming just not as soon as
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many people think. and i'm of the thought that recession is coming sooner than perhaps was just suggested i think that you are not going to see the slack in retail for a month or two after you start to see the rather significant interest rate increases. and while energy prices have come down, which is a positive, which certainly will help inflation, there is still high points, we're still talking $5, $6 gasoline. so goldilocks is a nice thing to talk about, but i think that perhaps it is more appropriate to be a bit more conservative and not hope for goldilocks, but look at a base case scenario significantly slowingfu economyi not recession. >> and we hear more and more hiding out at costco and johnson & johnson? >> yeah, i think you want to look for names that will be resistant in some respects regardless what happens with the economy.
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and of course that depends what is appropriate for them, but names like costco for example will be the places that people go when they are a bit stretched. that is why costco is so popular, it is a discount brand. and then you have companies like walt disney have essentially cratered on probably ceo sentiment than anything else and then johnson & johnson is more of a staples company. so i think dividends make sense in this environment as well and i think that it is not the time to be banking on a goldilocks scenario i think -- i'd love that to be the case, but i just think that it is kind of dangerous to go on that assumption just based on market sentiment in the last day or two think where things were four days ago nobody was even talking about the word goldilocks. so we shouldn't get too excited about one data point >> and i think i'm probably the only one uttering it now we're seeing wall street
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estimates come down, it is all about recession, you know, everyone is -- i totally take your point on that let me follow up on disney for a second because this one is not so much macro but super fascinating. it is the worst stock in the dow this year, it is trading i think at prices it was during the literal march 2020 year of the pandemic and you think maybe it is a ceo issue? >> seems to me i think theme park attendance is strong i realize media sales will be impacted by slowdown in the economy. but i'm just wondering if they had leadership that maybe was more universally appreciated by wall street. i realize the ceo's contract was just renewed by the board. but i think that there is really a vision that people don't quite see right now past sort of the noise. and so for that reason, i think that that is why the stock has been suffering but like you said, i don't see any reason why a stock like
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disney should be trading where we were right at the height of the pandemic it doesn't make a lot of sense to me. >> up 3% today, and they announced a big price hike for the espn streaming service we'll see how that goes over with consumers health care, united health having a strong day today, earnings and all the rest of it, that has been a popular area energy a battleground right now. any kind of parting thoughts on those two areas? >> yeah, i think the money has been made on energy at this point. i realize warren buffett is out there buying more occidental, but i think that oil prices spiked based on what happened with russia situation. you see them coming down and so i think that i wouldn't be -- i think if you are moving more towards health care, media, defensive names, defensive consumer names, i think that you'd be better off than chasing high prices because that will all fluctuate. >> all right michael, good to have you. thanks for your time don't miss tonight's cnbc
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special, taking stock, the state of the market. it is at 6:00. we'll run through key corners of the market and economy coming up, senator manchin steps in again, delivering another blow to president biden's "build back better" agenda what are the sticking points, what does it mean for the midterms plus oil prices are front and center for the president's trip to saudi arabia can he persuade the saudis to ramp up production and what is the fallout if he can't? and as we go to break, let's get a quick check on the markets. dow up 581 small cap russells are the strongest performer. ten year yield, 292. it's a thirteen-hour flight, that's not a weekend trip. fifteen minutes until we board. oh yeah, we gotta take off. you downloaded the td ameritrade mobile app so you can quickly check the markets?
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welcome back as president biden lands in saudi arabia, there is another problem for him here at home pop senator manchin saying that he won't support certain parts of the president's agenda leaving democrats in a precarious position ahead of the midterms ylan mui has the latest. >> the inflation numbers spooked senator manchin. he called the spike an alarming figure and he said that he told
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chuck schumer that it is not prudent to move ahead with a trillion dollar tax and spending bill what he is willing to support right now, allowing medicare to negotiate prescription drug prices and extending aca insurance subsidies for two years. that means no tax increases for companies or individuals, including closing that loophole on the net investment income tax for certain pass through businesses but it means no credits for clean energy or hydrogen battery cars a source tells me electric vehicle tax credits were already out of the deal. fellow democrats lamented his change of heart on twitter, ed markey saying rage keeps flee tear, resolve keeps me from despair, we will not allow a future of climate disaster what ultimately happens with this bill could shift the dynamic around a separate bill to provide $52 billion to the semiconductor industry republicans have said that they
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won't support money for chips as long as democrats are pursuing that other bill. so maybe manchin will make the choice for democrats clear >> does this increase the odds of the chips oig act passing >> republicans feel that reconciliation bill is dead in the water, so maybe they are more willing to support c.h.i.p.s. we won't though for sure until everybody comes back next week >> that is a great point thank youylan mui in washington. and my next guest is here to talk about what it means for clean air and subsidies. dan clifton is joining me. great to have you. it seems like the only remaining items would possibly be drug pricing and obama care subsidies that would stay alive. >> yeah, i think it is important to understand the context of what is being discussed here but senator manchin said this morning on west virginia radio that he is willing to wait and
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watch the inflation numbers come out when they are released in august and see what the federal reserve is doing before deciding whether to act on tax, clean energy, drug pricing and aca but that would require congress passing that bill in september and as you can imagine with the elections approaching, it would become infinitely harder so not saying that it is totally dead, but it is near dead and my sense is that we will wind up positioning closer to a health care only bill and seeing what those possibilities are going to be one other key point, if you do not raise taxes this year, it is very unlikely that we will raise taxes the next two years particularly if the republicans win the house and possibly four years because the republican majority will be so big. and it also means that it is unlikely that you will get significant changes on climate spending for that same time frame if the republicans win and i think that is where a lot of the panic is building in in the
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democratic party given the nature of the urgent need to reduce emissions >> and i am a little surprised at the surprised reaction to this i mean, with inflation going where it is with the numbers that we all can see in terms of d.c. and the midterms, did people really think that there was a shot that this much larger bill was going anywhere? look at the reaction in the clean energy stocks which are definitely acting as if this is new information. >> absolutely. and i just want to be clear, we had a really bad inflation report last month and manchin doubled down and said this is what i want to do. and we were surprised by it last month. and the argument was that those tax increases were going to reduce inflation so let's go ahead and do this. now you get a similar inflation report and it is panic and i think the change of the margin here is that you have a yield curve inverted, both the 210 and the 110, pretty soon it will be the three month and ten
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year when the fed acts and so those recession risks are rising and you are asking to raise taxes on small businesses, high net worth individuals, and so what t manchin is saying i'm still for the clean energy, but not the tax increases that are required to pay for that clean energy and that is the big change since the inflation report has come out. that won't get resolved in the next month or so-an and next month or so-an so he's sayn let's focus on health care he can claim that he is getting deficit reduction and possibly reduced drug prices. and reduce inflation >> and if that becomes the thing to get out of the gate here, and is it drug prices across the board or just allowing medicare to cap drug prices >> so it is a really interesting proposal it will allow medicare to cram down the drug prices but that doesn't start until 2026
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but it is a major change in how the drug pricing system would work before that cram down happens, you would have a cap on seniors out of pocket expenditures limited to do that, you creat more demand for drugs starting immediately. so it is positive for the are phrma companies right at the beginning but monstrous in the back end of the ten year budget window and so i think that the market has been somewhat ignoring the impact that that can have, they are saying wake me up when we get to 2026. but if something like that was to pass, it is a meaningful change in how drugs are priced and i do think that it will start to be a headwind for the industry at least over the next year or so as people start to look at what congress actually did what is driving this is that the aca subsidies will go away at the end of this year health insurers need to price it now and they need to send their notices out. so you will have someone like 14
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million people finding out that their premiums are going to go up you probably will have 4 bimillo people finding out that they no longer will be subsidized. and those letters hit two weeks before the midterm election. that is why schumer is trying to get an agreement today because that time line is so pressing. we'll see. some of the progressive democrats are not really on board with just doing health care only. they are upset and they want climate in there so there will be some wrangling over whether they can even get the health care portion done >> i can't even imagine those subsidies will go away do you think the odds are better than 50% >> i think so even if they have to compromise on drug pricing to get that through they can't walk out of here with nothing. the betting markets have moved to about a 20% probability of something getting done some of that is based on the timing of the contract but overall, i can't see them letting that go away i think cooler heads will prevail once the shock is over and it was shocked last night and into this morning amongst
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democrats and progressives are not happy given that climate change which is an urgent priority for them may be off the table. i would argue once you clear this out of the way though, you can actually set yourself up for bipartisanship because the republicans want to be able to drill, democrats will want some short term extension of wind and solar. maybe they can come together and do something that will help our partners in europe which are dealing with a big energy crisis that is ultimately what i think senator manchin is trying to gear up for and trying to set up some post election bipartisan deal in the lame duck session of congress >> clock is ticking. dan, thanks for unpacking it all for us coming up, ahead of next week's earnings, a quarter of the companies in the dow are reporting. more than 60 in the s&p and gina sanchez is here to set the scene. plus big tech is getting a boost today, but analysts have been slashing their price targets. we'll look at what wall street is worried about and which names are seeing the biggest cuts.
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welcome back we're just off the session highs, dow was up 657, still up 608, so impressive rebound the chinese tech names are among the biggest lag ggards though china just reported its weakest growth rate in more than two years. so that could be helping the
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nasdaq underperform. and check out pinterest, pin is up 15% and today's move has the shares back in positive territory for july and would mean the stock sthaps a 12 month losing streak. let's get to courtney reagan for a cnbc news update good afternoon prosecutors in new york city are asking a judge today to dismiss the convictions of three men who spent decades in prison for the 1995 murder of a transit worker. the clerk died after his attackers squirted gasoline into his token booth and ignited it with matches that mirrored a scene in a movie that had been released a day earlier. but they say there was serious problems of the evidence and including that the men were coerced by confessing by a detective who had dozens of convictions overturned over the years. and in germany, an army officer has been sentenced to
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prison for planning to kill politicians. he pretended to be an asylum seeker so that attacks would fuel anti-immigrant sentiment. and two months after what prosecutors call a racially shooting, the tops supermarket in buffalo is once again back in business the company says it would take too long to build a new store because people in the community don't have many options for buying groceries tonight, why pre-nups are no longer just for rich people, that is at 7:00 p.m. coming up, pariah or partner? president biden's meetingwith the saudi crown prince putting him at odds with his campaign rhetoric will he get anything this return and before we head to break, let's get show and tell where we show you a chart and tell the story. intel is the worst performer in the smatf since the start of the pandemic and nvidia more than doubled
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and this is as semi companies a wait the fate of that ch.h.i.p.s act. >> and my message to our congressional leaders is, hey, if i'm not done with the job, i don't get to go home and neither should you do not go home for august recess until you have passed the c.h.i.p.s act because i and others in the industry will make investment decisions and do you want those investments in the u.s. or are we simply not competitive enough to do tm he here and we need to go to europe or asia?
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welcome back oil prices back on the rise today, still below $100 a barrel though and a down 15% in the past month president biden is in saudi arabia today trying to get more production from the saudis to bring prices down significantly, substantially, further permanently we might say kayla tausche is in washington covering the visit for us. is he likely to be successful? >> the u.s. delegation is lowering expect tations for any increased production from the
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saudis directly. jake sullivan aboard air force one today told reporters i don't think that you should suld expea particular announcement bilaterally. we think that it will be in the context of opec+ president biden meets tomorrow with gulf leaders to discuss energy broadly and moments ago met with the saudi royal family. and peter alexander of nbc news representing the american media pool asked mbs if he would apologize to the family of jamal khashoggi. mbs did not respond. upon arriving in jeddah, biden delivered a fist bump to the crown prince who u.s. intelligence has tied to the killing in 2018 of the "washington post" journalist biden's doctors reportedly disallowed hand shakes due to covid, but conveniently also helped the president avoid a photo-op of shaking the hand of the crown prince >> all of these gestures is all
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part of the visit and the power balance. kayla, thank you very much for more on the fallout from the saudi trip, let's bring in managing director and global head of commodity strategy at rbc and cnbc con contributor some of the early reporting doesn't look too promising what are your thoughts >> i think it was always going to be hard to get a commitment from the saudis to ramp up production significantly i think that opec would always be the forum for which the saudis would do some type of incremental increase over the remainder of the year. the opec+ agreement actually extends through december, so all the stakes have been raised for that august 3 opec meeting to see if we'll actually get additional barrels out of the few remaining members that have spare supply >> so if we're not going to get anything out of the trip, why embark on it >> the team is saying that it is about a reset in the relationship, about america's place in the region.
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they will point to the fact that you had a direct flight from israel to saudi arabia, potential signs of improving relations with those two countries. but this is the price that biden needed to pay to potentially get additional barrels so if we don't get additional supply coming out of the opec meeting, up the trip will be judged as a potential failure. but again, i don't think this is the forum to really see a significant production increase announcement >> so i sort of take your point about resetting relations, but still wonder then what the solution is for meeting the supply that is needed in global energy markets i guess the best thing that the president can hope for is that the price declines we see may be owing to the fed keep prices down where they are for some time >> biden has caught a break with the fact that we've seen fierce of recession, prices have fallen fairly fall just based on concern in the market about demand destruction but they have a real challenge come end of year because on december 5, that is when the
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european oil embargo and a whole host of other pretty severe sanctions on russian energy kick in so there will be a real need to have additional barrels really going into europe to backfill what is not going to be going in there from russia come december 5. so he does actually need to have a conversation with a few remaining countries that have spare barrels. not just for additional supply, but they will have to backfill the russian volumes in europe come december. >> what is your guess these days on gasoline prices, oil prices as get into the fall towards the end of the year? >> i mean, we certainly think that this fear of recession, news about china, potential new covid restrictions, i mean, that is a headwind for oil. but we still think that this is a relatively tight market. and again, we would also point to what is coming in december. i don't think that market participants are fully pricing in the fact that we are going to have for the first time very serious sanctions on russia's energy exports
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so i think that that is something to pay attention to when we think about the overall supply and demand balance. >> meanwhile they are turning street lights off in france and dealing with 100 degree temps in the uk >> and i would point to a very important event that is coming next week. the real question about will the nord stream 1 pipeline that brings russian gas to europe, it is down for planned maintenance and there is concern that the russians will keep that pipeline offline. that would cause a profound energy crisis in europe. so it will be important to see what happens in terms of russian gas exports to europe. >> yeah, july 22 or others have said even if it comes back on, intermittent outages politically from here on out dicey situation to be here thanks for your time today >> thank you for having me meanwhile some of the big tech names are heading higher today, but microsoft, alphabet and meta are all facing declines of about 4% this week and
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analysts are turning negative. should we be ready for downside surprises, that is next on "the exchange." [music - cover of blondie's “dreaming”] [music playing] ♪ imagine something of your very own. ♪ ♪ something you can have and hold. ♪ ♪ i'd build a road in gold just to have some dreaming, ♪ ♪ dreaming is free. ♪ accenture, let there be change. if you have this... and you get this... you could end up with this... unexpected out-of-pocket costs.
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welcome back to the exchange big tech earnings kick off next week and analysts have been getting ready by cutting price targets on some of the biggest names. apple's price target has been cut, microsoft this morning, and similar story for netflix and meta and alphabet. steve comkovack is here with moe >> and like you said, there has been an oof a avalanche of thesd they keep piling up. but this is a good preview of what we can expect from mega cap tech earnings starting next week so let's go down the line. with netflix, it is are they
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going to lose subscribers again. ubs really slashed their target. it was down from like 355 to 198 or something and they are saying that we're expecting subscriber loss in the u.s. and canada, but these other initiatives that they are doing to turn things around on their subscriber front, it will take a year or two to pan out, that means the ad-supported cheaper plans, and the gaming thing that they have been working on, that will take even longer to pan out. and then you go on to apple, lots of things going on in apple. we talk about china so much, but beyond that, there is a lot of signals that app store growth is not as blockbuster as it was during the pandemic. and in fact it might even be shrinking in china and plus foreign exchange headwinds also hitting apple and as we know it is hitting microsoft big time, that is the real concern for microsoft >> and microsoft has warned about that i think if we're all expecting bad news, does that lessen the odds that it is at least a
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downside surprise? >> it could be >> it is just weird to see everybody agreeing all at once that across the board everything will be bad. >> especially going intolast earnings season, there was still tons of optimism but these are the questions when we listen to the apple call and the netflix call coming off earnings in the next couple weeks. these are the questions that all the ceos will be grilled about, what are you seeing with foreign exchange, on the macroeconomic level, they will be the questions coming up. for meta and google, we'll get insight in on the consumer because of app spend >> and reminds me bank of america was pointing out with service now and some of the others that software was really underperforming. and do we still view this as a post-pandemic reset trying to figure out what that new normal is or what do you think might be going on here? >> that is the funny thing, our executive producer maria, i was talking to her about it this morning. and we saw the zooms and the
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like, those pandemic darlings go up last week and then all of a sudden we rotate out of that and into big tack. i think going into today apple was up like 12% for the month or something like that. so these big tech numbers are still outperforming a lot of other names that we were talking about so much during the peak of the pandemic >> and maybe they had priced in what we're about to hear and maybe now they can tell us whether this july rally is warranted. steve, thank you earnings season does pick up steam next week with tons of big names reporting. what should you be doing now to get ready? we have three buys and a bail on all those names next week, well, four of them we're back after this.
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danielle shay was warning it could be a short squeeze in other words, netflix. tell us why this one is a buy for you. >> so netflix is a story that we've actually owned it for a while, so we have taken it in the chin, it is down 70% this year, so that is not great but remember, a lot of that came off of the sort of resetting after the pandemic they did see subscriber growth drop now they are making moves to help improve -- or sort of get in front of all of the password sharing. they are offering subaccounts at a lower price point just to get some of that revenue in. they are trying to bring ad revenue in but for us, netflix is really starting to see a bottom and we see more up side than down side. and so if you are looking for something that has a limited down side and much bigger up side, netflix as a proven giant, they have figured out how to make profits, how to make revenues and so we think that there is still a lot of room to go from
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here >> and we'll move on from netflix, hit up some johnson & johnson. this one is up 4% in a down market lately, earnings are on thursday what are you excited about >> so johnson & johnson for us has been a great stock that stor limited down side. so this really is a defensive stock, right unlike the netflix buy which is about limited upside or getting to the bottom and limited down side this guy has limited down side j & j has limited upside and limited downside it's steady as it goes strong revenues and maintains its margins even in the midst of tough inflationary pressure and their pharmaceuticals are really knocking the lights out, and so we see plenty of great support for this stock, but we also think that when the markets fall out of bed it's a great defensive stock to own >> let's move along to my favorite sector to talk about,
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the homebuilders, because the p-es are so low. they're either crazy or the world is craze or maybe both d.r. horton is the name. they report next week and it's a sub-5 p-e. you're a buyer here? >> yeah. no we really like this stock. we own it right now and this is a stock that has a really great long term story and there was a great article just recently that highlighted the shortage of homes not just on the coast which we've seen a shortage of homes there and the shortage of homes is leaking into the center of the united states which is and d.r. horton, they trade at a slight premium relative to other homebuilders and they're active in 32 states and they're playing across the spectrum from affordable housing to luxury housing and so we think that the long term story on this is very, very strong and this is a company that just has an enormous profit margin and they maintain that profit margin even
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as costs have risen. >> so sticking with it >> the one you're bailing on -- drum roll, please, is snap much like netflix is down 70%. netflix is still okay in your book and snap, you say earnings and watch ability, watch out >> snap is still figuring out its revenue game and they haven't paved a path to profitability and the market won't let them pave that path. granted, they don't have a terrible balance sheet i would say that snap isn't all around a terrible company, but you know, they are having a lot of trouble generating revenue. their new snap chat plus didn't do much in terms of revenue and on the whole it's been a disappointment and my view on snapchat is that it was going to have a tough road to profitability and so far it's proven that out and so, netflix has a lot of upside. i say snap has nowhere to go
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>> all right so let's end things by circling back by steve kovac and snap plays into this theme. big tech in general seeing a ton of downward analyst revisions. what do you expect in the space? >> here's the thing about big tech a lot of the stories that underpin big tech like the cloud play that's not going away and i don't think microsoft is going away any time soon each one has a different story apple has really been suffering with supply chain constraints, they slowly are going to continue to get better, right? that has to be a benefit to apple. you look at, you know, google and there, you know, there the advertising markets is the big problem, right which is one of those things, for example, that works snap chat, but the advertising model and cloud play, that's still
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there and there's still a lot of room for a lot of these names to continue to dominate so i think some of the earnings revisions is just trying to get ahead of an expected, mild recession. >> yeah. >> and so, you know, that's really what that's about, but the long term plays on these stories is very positive. >> it's a tricky time of year, gina thanks very much we appreciate it have a great weekend. >> thank you you, too, kelly. >> thank you, gina sanchez the dow 580 points and still slightly lower for the week getting a boost from united health and a big jump after their earnings results and we'll hear what the ceo had to say about the company's hot quarter next on "the exchange. (fisher investments) it's easy to think that all money managers are pretty much the same, but at fisher investments we're clearly different. (other money manager) different how? you sell high commission investment products, right?
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(fisher investments) nope. fisher avoids them. (other money manager) well, you must earn commissions on trades. (fisher investments) never at fisher. (other money manager) ok, then you probably sneak in some hidden and layered fees. (fisher investments) no. we structure our fees so we do better when clients do better. that might be why most of our clients come from other money managers. at fisher investments, we're clearly different. (vo) hi. we're visible. a different kind of wireless company... ...running on a big impressive wireless network. how are we different? we exist only on your phone. which means you sign up, get help, and pay all right here. so you get a single-line unlimited plan for as low as $25/mo. switch today at visible dot com.
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what if i told you... you'll leave here different? are you ready?! - hell no. - no. welcome back, everybody. before we go, take a look at shares of united health up nearly 5% today and adding more than 170 points to the dow they reported this morning and our bertha coombs sat down with the ceo. she joins us now from eden
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prairie, minnesota bertha >> hi, kelly it was a big beat on both the top and bottom line and profits were helped by lower medical costs and so far they haven't seen as much hospitalization with the latest wave of the omicron variant and that is creating a halo effect today when it comes to the insurance sector united health being the biggest insurer in the nation and sets the tone as we await to hear from some of the others. the company also announcing a new initiative on their fully insured group plans. they will offer zero co-pay and zero out of pocket costs at all. no deductible on insulin and epipens, on naloxone to reverse opioid overdoses and also on albuterol for asthma inhalers, and this is part of their whole effort to try to do better value-based care
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>> we're moving to a zero co-pay and zero deductible and this is zero out of pocket for those patients for the united health care and this affects 800,000 people we think that's a really important thing for us to move forward from, making sure the folks have the prescription they need when they need it it's been a tough environment for people and if we can help we can lean forward and help for them. >> it's part of his whole sort of esg outlook, kelly. trying to do more health equity and he's hopeful that he can encourage self-insured employers to do the same for their workers. >> bertha, thank you very much this is after health care remains in the policy crosshairs potentially with the aca subsidies and drug pricing caps maybe being the only things that move forward in d.c. this year >> it is, and i think that's one of the things that they sort of want to lead and be a part of
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the conversation and say look, we can be part of the solution here if people have coverage we can move them into plans and nudge them to take better care of themselves. >> true. absolutely bertha coombs reporting. speaking of winners today like unh, netflix and snap are both seeing a nice rally and we'll trade them in today's three-stock lunch which begins on "power lunch" right now ♪ ♪ welcome to "power lunch. i'm jon ford in today for tyler matheson here is what's ahead lots of green this friday on wall street. inflation expectations fall, retail sales rise. is this a sign equities on the road to recovery kelly? >> thanks and welcome. it's a good day for the broader markets, it's been a tough week for software estimates cut and target prices slashed and multiples compressing. the sector on pace for the first week since february of 2021.


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