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tv   Power Lunch  CNBC  August 15, 2022 2:00pm-3:00pm EDT

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nlrb moves ahead to investigate this. >> fascinating it will hopefully be a netflix series at some point thank you, our kate rogers following our story. unionization may not matter as much to investors as the once red-hot trend shows further signs of cooling and we'll talk to the cio of sustainable investing of blackrock on "power lunch" which begins right now. ♪ ♪ kelly, thank you welcome, everybody, to "power lunch. i'm tyler math soeson and here' what's ahead on monday walmart versus target. both report earnings this week and both coming off warnings about the impact of inflation and which company has a better handle on inventory and margins. we'll have a couple of experts and one who says target and the other favors walmart, and losing
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energy and china raising concerns about a global slowdown and we will speak with citi's ed morris about the falling. >> his oil bearishness being looking reasonable and here's the markets which are putting a decent performance to erase earlier losses the dow's up 0.4% similar for all three and the s&p just below 4300 disney is the best performing dow stock after hedge fund manager dan loeb took a stand on the company under bob chapek, and the expertise of its board on his proposed change ches whio include suspending espn and we'll have this ahead on three stock lunch. shares of tesla jumping higher after elon musk said the company has produced 3 million vehicles with more than a third coming from the giga company in shanghai shortly here which may be helping the shares climb not only 4% today and they're back
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to $934. >> thanks very much. >> we have retail earnings dominating the week ahead led by walmart and target, both issuing preliminary announcements and lowering their guidance for the quarter and the rest of the year and both warning of higher costs and inventory. walmart down about 10%, target off about 20 so which has a better plan to navigate inflation and grow profits? here to make their cases, steph wiszink by jefferies and sed rooma says buy target. steph, you go first. why do you think walmart is better position said than the slightly upscale target right now? >> first, thanks for having me and ed, good to see you. >> good to see you >> the case about walmart here is really about business mix and when we have to talk about walmart, we have to talk about it in two, walmart retail and
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walmart enterprise with the global business with all of these different dimensions coming into play and it competes with target and the one thing that we favor is the business mix and that 65% necessity in grocery that tends to be a winner recessions and we do see them taking incremental price and wide edge the price gaps so in a position to take share in the categories that we know matter most to consumers every week when they're going to the store. >> steph likes the business mix here which is more tilted, ed, toward groceries and necessities though target is certainly in the grocery business, but thetheir sort of sweet spot is upgrading your home and not necessities, but -- but want to have. >> the inverse we think the most competitive price pressures right now is
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grocery. all of the retailers are focused on grocery inflation and a player like walmart which lost share in 2020 is working very hard to maintain market share and so we see them reinvesting in price in grocery which is difficult in an inflationary environment. the other piece i would offer up is one of the pieces that target's an upscale consumer fares better in this environment than walmart's middle of the middle consumer. steph, ed has a point there and there are various sort of not just in inflation numbers to consider, but impacts and you would have to argue that inflation is probably higher and more damaging to the lower end customer than it is to the middle, upper middle or upper end customer. >> you're absolutely right the lower end customer is a more budget conscious customer and they lead the charge on value hacking so we would agree with that that if you're looking at the customer cohort, the lower
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end customer will be more distributed toward walmart interestingly, if you look at walmart's broad customer base this is 150 million to 200 million customers per week and it does parallel the national household income distribution. so what i find interesting is we're leaning into both walmart and target and listening to what they're saying they are seeing the most customers every week so incremental change in the banket basket structure and based on how those basket structures are being built. so bothful of those companies e a unique advantage at this time and it's the index to mix and if we do see discretion continue to underperform staples in the basket from a logic perspective, we do expect walmart to be a share taker here in the next six to 12 months >> ed, you want to respond to that >> i would just say one thing we're watching closely and you mentioned the earlier comments as we think about heading into
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holiday. your target was one of the first with the canary in the coal mine took a controversial step of pre-announcing earnings in the cycle saying we have too much inventory and we'll lower it aggressively and you saw walmart preannounce and one of the concerns we have is the amount that target they were able to move and the amount of orders they were able to cancel leaves them in better positions they have back to holiday to steph's point in terms of basket we would agree wholeheartedly and grocery is a part of the basket where we've seen the strongest amount of pressure and we would like to avoid it right now >> i guess we're talking about the short to midterm performance of the stocks and steph, you take walmart and ed, you quickly take target and how do they tend to perform after earnings, do you know >> yeah. i'll jump in on walmart. both of the stocks, i think, frankly, are volatile in and around earnings and to ed's
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point you had a target fwarning very quickly and i think that is a reflection of the different philosophies these companies have taken about derisking and control. target went after it really hard and heavy right away and you'll see the pressure in the second quarter. so when you look at the numbers reported this week, and the irony is despite the business mixes they'll look similar on paper in terms of the margin pressure because of different actions and as we look out over the next 12 to 18 months, rolling forward the calendar passed the recession and our economist thinks the recession happens in the back half of this year and then you would start to see target become more advantaged with the discretionary orientation with the business model. >> ed, final thought >> the other thing i would add that target is trading at a 7 p-e multiple discount to walmart. we think that spread has to contract a bit and the final piece is a lot of retailers that are struggling right now, we think target is well positioned in take share in apparel and
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they're well positioned to take in home furnishings which you saw them do many years ago when toys "r" us went bankrupt. >> you have a price add of 190 plus target. >> folks, thank you very much. we appreciate your time today. >> thanks. >> you bet. our next guest says don't bet against the consumer and she has additional ways to play it courtney garcia is a cnbc contributor. >> do you want to pick sides on the walmart versus target debate >> i like the walmart conversation here specifically the point that was brought up first, the idea that they have a lot less discretionary product so target takes up, i think, it's 60% to 70% of their goods are non-discretionary, and those are goods and electronics and the bigger picture is we want to see how walmart and target are reporting and what that will mean to the consumer there was a lot of concern on the initial report that came out and i would argue that a lot of
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that was from the consumer going from goods to services i don't think it means a lot for the consumer overall and tldz be interesting to see what they're seeing for the consumer overall. >> the drop is underappreciated in terms of the relief that's probably had on the con cymer. i have to imagine, we've seen prices drop by over a dollar a gallon straight down over the past two months and that is a huge gift for these companies, isn't it >> definitely. that's the whole idea. we want to see how the consumer is affected by inflation and gas prices has been a huge portion of which has come down here. so far the consumer has been able to sustain the high inflation that's been happening and we still have a tight labor force. wages are holding up and people have a lot of cash on their balance sheets and so they've been able to, if they have the savings to get through that, broadly speaking, obviously, but at some point in time we can't have inflation go up 90% a year
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and people's wages will not increase and especially gas prices are above that and that will get us to the point where the consumer can stay with this and we can stay on good footing. >> if you get inflation coming down as the latest readings seem to indicate at least by virtue of the month to month change as opposed to the backward looking year over year, you have the different calculous here everybody seems to love occidental petroleum why do you also? >> you can't find warren buff oat this one if he's one of the ones he likes, i'll have to agree with him there. energy in general it is a still a good play as you see energy prices come down it leads to more of a buying opportunity here and they've put themselves in a good position where energy prices were higher and they paid down in a lot of debt which puts them in a good position. keep in mind they make money when oil prices are lower than where they are at now and we're
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talking about it getting under $90 a barrel right now oil prices are much higher than the point they make moneyy and from a longer term perspective it's a great idea. if you see warren buffett and berkshire hathaway >> let's talk home depot i take it you're a fan >> home depot has gotten overly hit on the concerns from housing which is one of the things that is sleing right now. home depot, your customers with home depot, they're people who own houses and they're not affected by the changes in interest rates or the mortgage interest rates and you have a strong demand toward your professional services there and you have your contractors, plumbers and electricians who are putting money in home depot and they'll likely hold up better than he's been feared so and it's been more than the markets have right now >> courtney, thanks for joining the fray
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a lot going on in retail and the conf confusing world of esg and he's giving word to an antiesg, longtime oil bearer with us to discuss the 10% decline over the past start is this the start to a plunge, a number of consumer names hitting all-time highs and pepsi, genuine parts. >> bless you >> excuse me thank you. ♪ ♪
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welcome back to "power lunch," controversy surrounding esg investing growing as the trade gets more crowded and inflows slow according to deloitte, 22% of all funds launched last year, 22%, one out of five had an esg focus and many mimic the market more than you'd think. the i-shares esg aware etf, one of the largest down 4% over the past six months pretty much in line with the s&p. its top holdings include apple, microsoft, amazon, tesla, google those five names about 20% of the fund and if it sounds familiar it's the same top holdings as the qqqs and that's part of the reason for the rise in the anti-esg movement let's bring in tariq fancy founder of the roomy initiative and former cia of sustainable
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investing in black rock. tariq, welcome back. good to have you with us why is it a concern if so many esg funds have so many of the same stuff namely the largest part of the qqqs or the top 100 nasdaq stocks? w >> well it's a small problem and a big problem and it's dishonest to sell something to people. they think it's one thing based on what it says and they're getting another. effectively they're just paying more in fees to big asset managers for the same thing with green paint on top, and i think there's a much bigger concern that is in the aggregate it just acts as a placebo because we're all buying things thinking it creates an impact and we're moving around shares and giving responsible investors finding more and more green banket to
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act on the issues. >> the fundamental concern, or one of them, if i'm understanding you correctly is that the esg version charges a higher fee for fundamentally a portfolio that is very, very similar to a qqq portfolio that you could get at let's say a quarter of the fee >> that's pretty much it the esg space as with anything there are more areas where it makes sense and certain geographies and industries and with the long term focus at esg matters and the greatest impetus exists at the opposite end so it's not the private stuff where it matters and it's these public market funds that are commoditized and they track market indices for very thin fees and in a space like that, the impetus to paint the thing green to get a feed bump on a commoditized product is huge >> do you buy the argument that i've seen written several times
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over the years that on average, socially responsible investment products outperform a broad market like an s&p 500 do you buy that? >> i don't going forward, there's an argument to be made that more responsible companies perform better and it's scant. it's usually the most difficult thing is you're regressing returns with a moving object, but even the research that shows that esg is good for returns is largely based on a paper that came out of hbs some years ago there's another report that came out from luca that you can't replicate any of that and it's an artifact. any kind of analysis like that and any regression and if you tortured the numbers enough they'll tell you what you want and everybody wants to hear that esg is good for the returns and for the world. >> it's notable tariq that we
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saw outflows about $300 billion by the end of june there is a bit of the turning of the tide and i thought the wall street journal was great and they launched drill and it explains the philosophy there and it was very interesting to see the phrase kind of putting profits before politics and if this represents a turning of the time where there is a substantial enough pushback that you can see asset flows going into funds like the newer ones pushing back against esg practices. >> fundamentally what they're doing is a waste of our time because it moves the debate where it doesn't need to be. so their argument is that larry fink is putting politics before purpose and they'll rescue that and it's complete nonsense larry fink, as they know well is bound by the legal obligation of
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fiduciary duty and it has been for a long time and that's the problem and it's profitable and what's in society's interest for example, investing more and those are non-profitable they're kind of having a debate that is words on one hand and where you paint it green and make people feel better it and i liken it to the catholic church practice of paying for indulgences, and it doesn't include the obvious answer regulating certain areas to protect the environment. >> when you say larry fink is going -- is -- is bound, his fiduciary responsibility is to profit you are talking about mr. fink's fiduciary responsibility to his black rock shareholders and not to the owners of the funds. >> those exist and there are
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subtle differences, but first and fore most, he has a fiduciary duty to retirees and other people whose money they manage they're not allowed to look at values they are only allowed to look at values and if they translate into value for example, everybody says they want top buy nice fluffy green things then larry is going to exploit that to sell more product. i don't see what the right has -- do they have a problem with making money? it all seems that it's a debate about marketing. >> quick question on the way out here because there is one very real world example of this that's highlighted and it's exxon where you had major institutional investors with an esg impetus helping engine number 1 get a board seat and having that submission and where it's putting its future dollars. so the point here is to amass investor class who can push against that real world
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boardroom fight which seems like is happening in a lot of companies. >> it is, but it's not going to give us the change we need at the speed we need it i'll give you an example it's 1950s and we just figured out that smoking causes cancer and what is the right answer to do what is in the public interest the answer is definitely not one by one proxy fights against tobacco companies and it's such a stupid answer, and no disrespect to you asking >> i'm not so sure it's so stupid >> sometimes -- yeah, go ahead >> they nothing harmful about it in and of itself and it's the narrative. the narrative can't be that this is the answer and the answer is government regulation and the simple reason is this is an oil company, so if i get on the board of exxon tomorrow i have a fiduciary duty to shareholders what the world needs exxon to do is probably not in their short
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term interest so we can't rely on a voluntary compliance and that is effectively a mechanism. make no mistake. engagement is better than divestment and if it's pitched to the answer of society's woes we see the reason why people have lost faith in capitalism and it's important to resolve these issues and if that's the best answer we can get, it will not solve what we need >> tariq, we appreciate it >> tariq fancy >> up next, no i-r escape. the service cracking down on tax evasion and cheating and new details on the department's strategy next. plus how the inflation reduction account could impact some of the clean start-ups we've been highlighting, for better for worse? we'll be right back. ♪ ♪ ♪ ♪
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your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit welcome back to "power lunch. as part of the inflation reduction act the irs gets t$80 billion for tax enforcement. robert frank with a look at who should be worried. robert >> the irs hoping to raise $200 billion in added revenue over the next decade from increased enforcement and for high earning taxpayers most of the new audit
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attention is going to focus three specific types of income the biggest is pass throughs about 40% of the tax gap those are all those unpaid taxes that come from pass throughs so they're underreporting their income and that includes partnerships, s-corps, foundations and sole proprietorships. in testimony last year irs commissioner charles reddig wrote, pass through as his first priority for added enforcement the second big one is offshore transactions the study by irs economists found that secret offshore income accounts for $15 billion a year in unpaid taxes the irs said it's going to hire specialists who are really good at offshoring and detecting those offshore accounts to target those taxpayers and the third is capital gains and three-quarters of all capital gain income is earned by those with a million or more in income and sales of stocks and
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financial productses and they are directly reported to the irs so not a lot of manipulation there and sales of private businesses and property, crypto and collectibles are not automatically reported so over the past decade, if you look more broadly, the audit rate for those earning more than $1 million a year has fallen by 80%. so kelly and tyler, they're taking the approach of where the money is and that's the top and these three specific types of income >> well, again, i think the srt of question for a lot of question, robert, are a lot of everyday sort of middle income people will be affected by this? is this we're going after billionaires is it specific structures like the one that you're detailing, you know, so it's helpful to get some clarity >> yeah, and look, if you're a middle-income taxpayer with a swiss bank account you might get
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ready for an audit, but basically most middle income taxpayers like most of us get their income from w-2 wages and those are all automatically reported to the irs with third-party reporting so there's not going to be an audit it's these special vehicles, pass throughs and foreign incomes and extraordinary capital gains so unless you have one of those three your audit rate will probably be the same or lower in the coming years. >> feel better already, i guess. thanks very much, our robert frank. >> let's get to bertha coombs for a news update. >> a school bus carrying 32 students crashed into a home near the ohio indiana state line the driver of the bus suffered a medical emergency that caused him to lose control of the bus sheriff's officials say. all student are okay and the driver was taken to a hospital rudy giuliani who used to be donald trump's personal attorney has been informed that he is a
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target of the criminal probe in fulton county, george a regarding the 2020 presidential election, that according to giuliani's lawyer. giuliani is scheduled to testify in atlanta later this week. and the u.s. centers for disease control and prevention has updated its monkeypox guidance to include dogs as animals that can catch the virus. the cdc tweaked its guidance after the first case of the pet dog suspected of contracting the virus from its owner that was documented in france people to animal transmission. got to be careful. >> that's amazing. bertha coombs. ahead on "power lunch," losing energy down 10% we'll discuss the downturn with citi's ed morris plus the intervention manager dan loeb buying a new stake in disney his first move pushing the company to spin off espn
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we'll trade that name and other big movers in today's three-stock lunch as we head to a break, a market flash, hbo max cutting 70 jobs and that's 14% of its staff cuts a part of the larger warner brothers discovery effort to get costs down fast. lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find
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welcome back 90 minutes lifted in the trading day that has gone from red to green. so let's get you caught up across stocks, bonds, commodities and a closer look at today's big drop for oil we'll start with bob pisani down at the new york stock exchange bob? >> this is an extraordinary day, kelly. i mean, look at this we are positive. we have disappointing china data overnight and we have crumby empire manufacturing number, the new orders are terrible and then we had lousy housing data. you'd think, my heaven, this would be a flat to down day ask we and we're knocking on the door of the s&p 500 we'll put up some of the dow stocks we have consumer names are up, procter & gamble is up, fintechs are up and most of the mega-cap tech sectors are up fractionally
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and look at the other group and the consumer discretionary and this is a group that's been a leadership group and the autos is up and starbucks is up fractionally and these all have had really nice moves. what's down? the stuff people love is down, because oil, as kelly mention side down $90 as kelly mention like schlumberger and they're high-beta names and nobody care because this is an inflation proxy and they're loving it when the stuff goes down and the bulls are right and winning the battle against inflation and it's coming down transports and other group related here and they've had a tremendous run particularly with the logistics companies, hunts, kirby, robinson and expediters they got a great run reesecently and that's down an lawful lot. china allows the housing data
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and the nhp housing market index was 49 the low of the since, like, june of 2020, and we still are pushing on the door of 4300 and a lot of people are getting forced in who weren't participating. >> kelly, back to you. >> let's turn to what he's talking about that's underpinning this move in the reversal where yields are falling and the ten-year note is 2.8% after the double dose of weaker data. we've seen it sliding well off the highs of 3.5% from mid-june and off some of the highs in the past week or so moving long to commodities and oil has been a big story undermining the energy story and the mine complex pippa stephens has the latest. pippa? >> oil is tumbling today down 2% and that is well off the session lows which at one point saw wti down 6%. two primary factors are driving the declines
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first up is the weak economic data out of china and the nation's retail sales and industrial production numbers for july came in well below expectations and that's prompting fears around the oil demand outlook since china is the world's largest importer cibc private wealth managing director becca babin, and if the numbers don't improve, wall street will have to revisit its bullish forecast the second drag is potential progress on the iran nuclear deal and we've also got production in the gulf of mexico re-starting as well as saudi aramco saying it will boost output with that in mind, let's check prices and wti at 89.54 andloss of 3% and natural gas in europe jumping another 10.7 kelly, that will be a record. >> and unrelentless, i should say, unrelenting
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pippa, thank you very much pippa stephens for more on oils drops and whether those will persist let's bring in morris, and you were saying $65 was a possibility and no one believed it and now do you think oil will go back above 100? >> it could go back up above 100 and there are a lot of risks we can't ignore the hurricane risk is the biggest of them all on the upside and we're not into the mid evaluate hurricane season yet. things have been calm for the last several weeks in the atlantic basin, but it's still forecasting up to 20 named storms and three to six category 3 or higher hurnes and that could block it out out of the u.s. gulf and that would mean oil available for the rest of the world. without the weather, i think the signs of slowdown and economic growth and recession are
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dominating the story as far as oil is concerned and nat gas is a bit different and that's responding to a combination to your politics in europe and weather conditions around the world. >> do you think a reason -- what is the reasonable trading range over the next six months for oil? we think the reasonable trading range is downward and we think the likelihood without a recession is oil will be pricing a bit lower than wti was pricing earlier today. so we take wti down to the lower 80s, but momentum toward recession could bring it down another $10 or $15 a barrel more than that. so weir in a period of uncertainty where trying to think about what a reasonable trading range is that you know what the level of recession might be and the degree to which demand is going to be knocked off as a result of that.
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what percentage do you place on a u.s. recession and when you filter in what we got out of china today and you'd have to say that was a struggling economy, as well >> we have certainly two of the world's largest economies, europe and china that are either in negative territory and struggling too keep gdp up where it had been. the u.s., it remains to be seen, but my economics colleagues at citi are looking at a 50% probability of the recession and that's nothing to sneeze at, but it's not a slam dunk we have the september fomc meeting where expectations are for another 75 blips of an increase in rates and that could slow down growth even more ed, thank you very much. we appreciate your time today. always good to talk to you >> thanks for having me. >> we thank you. a fresh start for clean start-ups. we'll take a look at how the inflation reduction act could impact green companies, this week's clean start is next we'll be right back.
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president biden is expected to sign the $369 billion
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inflation reduction act this week it includes the most federal spending ever in the fight against climate change much of that could benefit the climate start-ups that we've been profiling here on our weekly series "clean start." our senior climate correspondent diana olick joins us now diana? >> well, tyler, we've gone back to more than a dozen companies we've profiled here so far and the ceo's agreed this money in the form of both direct subsidies and tax breaks to consumers and manufacturers will give small start-ups a big boost and not to mention the venture capital firms that have funded them so far. >> bloc power was our very first clean start. the brooklyn-based company aims to electrify every building in america. donner baird says it lowers the cost to building homeowners, and it creates a new green bank to
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clean energy projects that wall street can leverage and yes, he said bloc power gets tax breaks. electric hydrogen builds systems to produce green hoydrogen powe and the ceo says it hydrogen power to reward hydrogen producers that can minimize the carbon emissions emic clean tech builds on-site water recycling systems for urban buildings. the ceo says we're thrilled to see $4 bill ondirected to aiding the western states currently grappling with a very difficult drought, a challenge we at epic are actively addressing. indigo ag helps farmers with cash and credits its ceo said the plan's $20 billion in ag subsidies are a powerful accelerant for climate-friendly programs farmers know, use, like and trust. cityzenith creates digital twins
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of cities and buildings right down to its operations its ceo michael jansen said the news can impact our future in the future and facilitate the close of a large institutional investment round later this year or early next year. >> the motion is adopted [ cheering ] >> and that's big, that government investment in climate will give private investors much more climaonfidence in the clime space. >> you have to believe that upon success there will be hundreds of millions to grow. this bill actually, you know, stimulates the amount of venture capital coming into the space around climate because of it >> and robert said he was already receiving dozens of calls last week from potential investors. he added that the ability to manufacture in the united states is really a gamechanger for climate innovation he said that gives us options that we have never had before. tyler? >> so it seems like at these those companies that you sample
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there that you reported on the past, they all see a benefit to them from this inflation reduction act. where does it -- how does it change the u.s.' position in sort of the global spectrum on how sort of active the united states is when it comes to policy and switching to cleaner, greener energy >> it's an absolute gamechange are. barely six months ago it was dead and we thought going into this climate meeting and this fall cop 27 which was the international -- the international meeting that we had last year on cop 26 in glasgow. we thought we would have no standing whatsoever and now the u.s. comes in much more powerful and is able to negotiate like china and india and we did this, you can, too before that, it's not an option and it changes or position and the world stage when it comes to
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climate. thank you, diana diana olick. >> still to come, three stock lunch and we'll have disney, moderna and exxon. our traders' take when "power lunch" comes right back. want more from your vitamins? get more with nature's bounty. from the first-ever triple action sleep supplement. to daily digestive support. to more wellness solutions every day. get more with nature's bounty.
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welcome back and it's time for today's three stock lunch. we're sipping on some big movers of the day with shares of disney higher after hedge fund manager dan loeb not only took a new stake in the company but is pushing among other things to spin out espn. moderna is higher after receiving uk approval for its new covid vaccine that targets or includes the omicron variant. and crude oil dragging down the whole energy sector today including exxon, whose shares are down more than 1%. here to help us trade them all is delano sapporo, ceo of new street advisers and a cnbc contributor. welcome back, delano let's start with disney. are you a buyer of the stock here >> hey, kelly, thanks for having me i am a buyer i think one of a couple interesting opportunities for investors here obviously revenues in the last quarter were really strong if you look at subscribers across all their platforms they're not rivaling netflix as far as subscriber retention. and you're really focusing on that's how the business which a lot of people focus on disney
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plus, it's still not profitable but i think if you look further as valuation that's where it gets attractive. now you're seeing that 3.2 times sales versus netflix which is about -- excuse me, 2.3 sales for disney and netflix 3.2 that's a very attractive valuation for people that are looking for stocks that have more of a growth story, kelly. >> all right let's move on to moderna, which has gotten approval for another vaccine. i guess my question about moderna is do they have a second act? >> yeah, that's the big question because the first act obviously, you know, helping our country and people across the world going through something that's horrible, is to grow the business you look at the covid vaccine revenue, grew over 2,000% from q4 over 2020 now the second act they have other, you know, vaccines and prescriptions in the pipeline that can help but i think we all know there's going to be a slowdown because you're having mandates roll off and different areas where we've got ayn lot stronger from this
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horrible virus that second act is to be seen. they have guidance that indicates they still have large purchasing agreements, but i think i'm kind of neutral right now, waiting a little on moderna. >> all right that brings us to our final name, then exxonmobil, delano this one more kind of reacting to oil prices. we also talked about it earlier this hour. as it release to the esg fight and some of the backlash that's playing out. >> yeah. there's a lot of -- a lot going on with the stock. as you mentioned looking at the prices of oil going the other direction, if you look at six, seven, eight months back when you know, there was a powerful upward climb of prices and that was due to tight supply-demand and geopolitical tension and that led them to having the quarter that they had in the first half of the jerry. they blew past consensus from top to boomt line and they had free cash flow that was really strong in the first half of the year which they used to buy back stock. now, going forward, i do think we're going to see a little more headwinds with margins
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compressing and with the prices going the other direction. so you know, we're still holding onto our shares but it's going to be a little more tumultuous going forward. >> delano, i'm told that you're winning our stock draft right now. is that true remind us. what were your picks >> i had draft kings, kelly and i also believe i had -- >> amazon? >> yeah, i believe i had amazon. >> wow winning -- it's early. >> it's early. don't count your chickens as the saying goes. p. >> i have to stay in it. >> stay humble >> very much so. >> delano saporu, thank you very much up next it's not just higher commodity price that's are making groceries more expensive. we will tell you what is, when we go under the microspeexco nt.
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welcome back to "power lunch. higher commodity prices are leading to higher food prices but there's another reason as well and dom chu is here to tell us what it is please reveal. >> yes so the revelation here is we have seen those food prices come down in certain parts but not in others necessarily we're talking about the fact that food prices from beef to pork may be showing signs of falling but there's a big reason why a lot of these things aren't and if you look at some of the estimates, the united nations says that in a worst case scenario by the year 2027 you could actually see an 8.5% rise in terms of food prices in that
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kind of a worst case scenario by the year 2027. a lot of that has to do with fertilizer costs it's something we've talked about quite a bit in the wake of russia kind of invading ukraine and some of the offsets in the supply chain that have been happening. according to the american farm bureau, some fertilizers have gone up by quadruple in value just since september of 2020, and that factors into grain and crop prices. if you look at how that then carries over, it's interesting to point out that if you look at some of the ways things work out with russia and ukraine morgan stanley estimates that around -- just looking at the american farm bureau, 14% of wheat exports and 28% of fertilizer exports come from the russia and ukraine area with that being said, you can see why these prices may stay elevated for a while if fertilizer prices continue the way that they are. and by the way, this is something where we've seen some softness in the cpi in certain parts but it's the reason why food prices might be a little
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stickier as things kind of progress here. >> and there you see a couple of the big players in the fertilizer area. >> right >> with sporty, let's call it, sporty gains >> and that's the flip side. i mean, one of the only things you can do is -- we always joke should pension funds all be investing in energy so they can reap the benefits of the same dollars people are paying during those times. >> it's not just that. we often look at markets and whether they foretell things if you look at grain and commodity prices, wheat prices, corn prices, even soybean prices to a lesser degree, they have shown some real falloffs from the highs that we've seen kind of since the spring and earlier this year. if that is to then follow through into the kind of cereal markets or into your grocery store aisles, that could be a big sign that maybe inflation is peaking. but the problem is you haven't seen many of those commodities prices falling lead to the grocery store aisle. >> why are seafood prices up as much as they are we bought some scallops last
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night and it was like restaurant pricing. so the it not just for me. >> it's not just supply chain issues it's also fuel prices for transporting some of those because they have to be flash frozen in many cases or fresh and then flown out >> with the wishing fleets who are going out there, they're paying more for gasoline and so on and so forth. >> be creative with tilapia. >> but you don't fertilize the fish >> thank you very much and thanks for watching "power lunch," everybody. >> "closing bell" right now. the summer rally proving resilient here as stocks bounce back from a premarket dip. we are sitting near session highs. the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen take a look at where we stand right now in the market, up almost half a percent on the s&p. we were down as much as half a percent on the s&p 500 so 1% move there the dow up about half a percent, 172 points again, at the lows of the session he we were down almost 180. and the nasdaq up .6 only two sectors are lower right


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