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tv   The Exchange  CNBC  September 14, 2022 1:00pm-2:00pm EDT

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done that's where this company comes in great chart on it, almost at a new 52-week high every day >> that's going to do it for halftime now to the exchange with brian sullivan thanks for watching. >> we call it the get some sle exchange some way bargains now abound we're going to talk to the pros about what they're doing now while yesterday's sell-off saw widespread losses, we're going to go glass half full, finding some bright spots, including cheniere energy. the ceo is coming on live. the big bank rising rates. they're good for banks inflation, not so much why one analyst says the smaller lenders are the place to be now.
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all of this is ahead, but we begin with today's market action, a man who knows something about lack of sleep these days >> i was going to say. >> sir, i commend you. >> for some people, it's the i got some sleep exchange, for others, it's the i didn't get any sleep at all exchange. let's talk a little bit about what we saw today. earlier today, things were positive, then got a little bit negative after the inflation printed the wholesale level, then positive again in midday trading. the dow industrials is about 112 points half a percent gains for the s&p 500. 3955, the last trade there to give you an idea of the trading range so far, as we were up 22 handles right now, at the highs, we were up 29 at the lows, we were down 14 so tilting towards the higher end of that trading range today, and the nasdaq composite, 11,735 up about 100 points, up about two-thirds to three quarters of 1% if you take a look at the action, very bad over the course of yesterday's section
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however, let's put some of these moves in context we know that over the course of this year, the markets have been to the down side no need to reiterate that. take a look at the one-week chart of the dow etf, the diamonds, the spyder etf, and the qs which track the nasdaq 100. over the last one-week span, we're actually not that far below where we were just about four or five trading days ago. so despite the fact that we saw a massive move to the downside, there is this feeling that you have to put some of the moves in context, so we'll keep an eye on whether those levels hold. and the megacap technology-related trade still very much a huge focus outsized losses, microsoviet, google parent company, alphabet, and tesla. now we are up anywhere from 1/3 of 1% for microsoft all the way up to 4% for tesla a big bounceback and what i want to highlight for you, brian microsoft and alphabet the parent company of google
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outsized losses yesterday. both of those stocks entering trading today were less than 5% away from 52-week lows a lot of traders whether or not this is a level. watch that megacap trade >> we have a market cap loss coming up on the show, dom, which dare i say is random but interesting. thank you very much. so let's bring it all back to your money no matter what the fed rate hike is at next week's meeting, the one thing that is definiteis that there will be a hike. does that mean for run for cover? buy the dips what do you do it's a confusing time, has been a confusing year joining us is david spadeck. when your clients call or email or text or whatsapp, what are they asking? what's the biggest question you're going >> i think for the most part, they want to know, are we going
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to have a recession this year and what does that mean for the ma markets? what we're telling them historically, when we have high inflationary periods, and this is a very high inflationary period, the fed has had to raise interest rates to a level where they're above inflation, and that has caused a recession. so what we're doing is we're helping our clients understand that recessions don't have to be the end of the world recessions do a good job of reducing imbalances in the economy, and we have a lot of imbalances today whether it's housing prices, the hot job market, inflation, all of these things need to be brought into balance, and a recession can do that. the bad news is the stock market is clearly not pricing in a recession at current levels. >> you red my mind or read my notes, david that was going to be my next question everyone has got their own number, it's called 16 times forward earnings that's not recessionary. how much lower -- do multiples and thus prices have to go
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>> history tells us that the market generally bottoms somewhere below 12 times, on the s&p, going into a recession. i don't know that we need to get there. but one thing to keep in mind, earnings estimates for 2023 have yet to really be cut the market expects 8.5% earnings growth next year, which is an acceleration from this year, although the market also expects revenue growth to decline as inflation comes down so the market is saying, we're going to have multiple operating margin expansion next year how does that happen so if earnings have to come down, that 16 multiple is going to have to come down too if earnings are really too high, the real multiple in the market is not 16, it's 17 or 18 times somewhere from 13 times is reasonable if you have a recession. >> does that put us at s&p 3,500? >> that's probably a pretty good floor. now, all of that said, there
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still are opportunities, but again, a recessionary environment is one when you see earnings cuts, you see multiples come down. we saw multiples up above 20 come down quite a bit beginning of the year, when rates started to go up but not nearly enough to reflect a true recessionary environment. so, yes, that is likely to happen and there's likely to be some additional pain felt >> yeah. and it's all going to come down to earnings. once we start to see companies release their earnings, october, going into early november, if they're not cutting their earnings, that could be a positive sign heading into the year end, right? let's try to be a little bit more optimistic to end it out here, david. >> it certainly could be i'm not sure what causes that. we've seen more indications or more comments on recession at this point in earnings commentary than we even saw going into the '08 recession clearly with, management teams are concerned. costs continue to go up. we're going to start to see revenue come down, because consumer spending is going to get hurt in this environment
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i mean, real wage growth is negative year over year. at some point, consumers are going to feel the pain and they're going to stop spending yes, a positive earnings guidance coming out of the third quarter earnings would be good news i just don't think that's reasonable and honestly, i think we need to rip the band-aid off we've been in a period where monetary policy has lifted all boats. we're now on the other side of that we've got inflation is too high, we've got interest rates normalizing. all of that long-term is good for markets and the economy. >> and i hate to talk about a positive off of such a negative, but americans are consuming more health care than ever. millions of americans unfortunately have gained a lot of weight. swe we've seen health care costs go up health insurers, whatever you think of them, you think a name like a humana maybe a port in the storm? >> humana is a very high-quality company. today, we want to own companies that are high quality that aren't economically sensitive. and you hit it on the nose,
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brian. american consumers are con sumg a lot of health care humana is a leader in medicare advantage, so they'll benefit from the aging population. and they undercut their business coming into 2022 thinking that we were going to have significant covid-19 issues that didn't materialize so they'll have the opportunity to rereprice the business going into 2023 and create better operating margins and benefit from that increased consumption of health care >> david spika, thank you. now to the key factor of where stocks could head. so much of the debate has been around how much they're going to raise, 0.75%, 1%, more next week but maybe that's not the best discussion, maybe it's about the journey as well as the destination. joining us is ethan harris head of global economics research at bank of america securities i do kind of feel like that we're so obsessed with the
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numbers next week and in november and where they may end, that are we missing a part of the fed story that we immediate to be paying attention to, ethan? >> i think they basically told us what to pay attention to here and it's really not the speed of hikes in the short run that's kind of kind of -- you know, they're catching up now. this isn't a hawkish fed they're just kachcatching up. the real question is, how far do they go? when do they stop? and how long do they keep rates at very high levels? and that we'll only learn gradually over time. they themselves don't know where they're heading here but i think a reasonable forecast has to have the funds rate going at least above 4% and conceivably as high as 5% in order to get that recession they need, unfortunately, to create, to get inflation under control >> do you think inflation, the way that we're seeing inflation,
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can be, to your point, put under control? given that so much apparently seems out of our control >> well, you know, inflation is being driven by four things. two of which can resolve themselves without the fed is if we can get stability in commodity markets. a lot of uncertainty there in terms of what mr. putin does and so on. the second is reengaging supply chains we're seeing the improvement there. i think over the next six months, a lot of the supply chains will dissipate. that leaves you with the two parts where the fed has to do the dirty work they've got to cool off the job market it's way too hot and they have to make sure that inflation expectations don't get out of control that people don't start expecting inflation and embedding that in their wage and price decisions. those are the two parts that are going to be much harder to get rid of it.
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the first part is where you get the flat commodity prices, better supply chains you can get significant improvement in inflation in the next six months. that's not where you win the war. you win the war in cooling off the job market and controlling expectations >> how long is that going to take >> well, i think at minimum, they've got to keep hiking through the end of the year, probably into the first half of next year. you know, right now, there's a lot of momentum in inflation data that's been really the message out of the cpi report. you know, in the last 18 months, we've had ten positive surprises for the cpi and only two negative and if you add up all of those surprises over the last 18 months, we've had 2.3% of inflation that wasn't forecast that's telling you that people's inflation models are not inflationary enough. they still get some of those old where inflation was dead we're still underforecasting
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inflation. that's going to be really hard >> when i hear the fed talk about 2% and i know we were at 2% forever. in 2021 stuff, we had the ppp stuff, inflation soared. to think about getting from where we are now to 2%, i mean, it seems like a fantasy. i mean, we're not even close >> no, i think -- listen, it's been disappointing that that we haven't had -- we have had very tiny progress on inflation >> we keep spending money. why would inflation go down? >> well, i think that the -- that right now, we haven't called off the labor market yet. so we've got to get the employment rate up, and again, i don't want that, but i think that's necessary to control inflation. you know, we are only the beginning of the inflation battle the big easy move, which will get us down from like eight to four, is flat commodity prices
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you know, and better supply chains it's the last part, getting from 4 to 2 where the real hard battle is. the supply side issues resolved themselves over time and then we're left with the fundamental and economy story. it's not a fantasy to go from eight down to four and then maybe three. but as you get closer to the 2% target, it may end up that it takes them quite a long time to make that final leg of lower inflation. >> maybe the fed can just do what wall street does. just change the target did we say 2%? i'm sorry, we meant 4% right why not, change your model >> no, they're not going to do it >> i was being a little tongue-in-cheeky never! ethan harris with bank of america securities, we'll leave it there appreciate you coming on the beginning of the inflation
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battle thank you very much. well, ethan talked about energy, cheniere energy raising its full-year profit forecast, plans to boost its dividends and payouts and buybacks all why american natural gas literally savvis germany cnn jack fusco will join us next and more pain in parts of the market here's a look at names hitting new 52-week lows this week, facebook, meta, tyson foods, paramount charter and dow inc. all down plus, where can you find some shelter in all of this market volatility our traders have some pointers and three picks just for you stick around
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>> we pain in a recession. i see downward pressure on our earnings coming out of energy. >> if this market sniffs out that inflation is rolling over, we could be in for a big shock >> i think once people realize that the fed
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we've got a market flash on netflix. get right now to julia boorstin. julia, what's going on >> netflix shares are moving higher and a "wall street journal" report that the company estimates that the ad-supported version of its service, which has not yet launched yet will reach about 40 million viewers globally by the third quarter of 2023 this is according to a document reviewed by "the wall street journal," that they are apparently sharing with ad buyers now, apparently, according to these preliminary projections, netflix told ad executives that it expects to have 4.4million
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unique viewers worldwide at the end of the year for this new service. of course, that would be a quick launch, since it has not launched yet, brian. but we see netflix shares are up over 3% on this news >> wow watching netflix julia boorstin, thank you very much big move there let's talk lng, both the gas and the stock. shares of cheniere energy are jumping again today. despite pretty much everything else selling off yesterday, lng is in the green. this week it raised its guidance, increased its dividend, and its share repurchase program here is jack fusco, the president and ceo of cheniere energy amazing, jack. you were probably watching yesterday's market action and thinking, my stock held up you just raised, what, 1 billion in free cash flow estimates? >> we did, brian first, thanks for having me on the show and it's nice to finally get recognized, as being such a
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critical energy provider to europe, right? as you know, 70% of our cargoes this year alone have went to europe europe each cargo, one cargo is enough heat for a million european people for a month it's all working, production has been really strong we produce two tankers a day right now. >> go back into that you've probably heard me say this, jack i'm not saying this to stroke your ego or lng, but you guys are literally -- you and others, by the way, there's others, that are saving europe. report that stat each ship load of american lng is 1 million german homes for a month. that's a lot >> yeah. yeah yeah, and you know, we're sending out two a day. 70% of them went to europe and
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we expect to continue to do that and we've been extremely reliable this year so, you know, it's all working and that allowed us to raise our capital allocation plan. we call it capital allocation plan 2.0 so, it's all working >> how much of this are deals that you have made with europe versus the yoourneuropeans goino some of your asian buyers and saying, i know the ship has already gone through the panama canal, but can we take that ship off your hands they can resell it to europe, probably at a huge profit. how much of europe's business is that versus direct cargoes >> it's a little bit of both, brian. this year, we had the benefit of completing two of our trains a year ahead of schedule so that gave us 10 million tons that were for cheniere's
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benefit. and we debottlenecks and that gave us another 5 million tons we had 15 million tons at our benefit that we could send directly to europe and you're right, some of it is asia and especially china and what they're going through now with their covid outbreaks again and the fact that their demand has come off, so they're sending it all to europe to take advantage of the higher prices >> i do worry about if -- i mean, god, you wonder what president xi is doing over in china. it's almost insane but if they start buying a bunch of gas again, because they reopened their economy full blast, what's that going to mean for europe that's the worry >> it's going to be a tough winter for europe. and as you know, they've been working on filling their storage. i saw dan jurgen on cnbc this morning. they are 84% full, but that's not enough to last them the entire winter.
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so it could be very, very difficult. and we intend to do our part to try to help out as much as we can. >> because they've never existed on just storage. storage is great, but they also drain their storage even with a flow it's going to be very, very challenging. do they have -- they're building, i hope -- i know that germany was very smart, jack, in that they got all of these ships, these floating regasification ships where do they stand on making permanent import terminals so that you and some of your american competitors will have a permanent, giant new multi-decade partner for u.s. lng? >> and they're making a full effort, as you mentioned they have 13 re-gas terminals that they want to build. we think five of them will come online relatively quickly. but brian, it takes the pipe, right? the pipe has got to go from the
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ship into their gas system for it to be usable. and that's taking some time for them to build. i'm not sure that there's going to be many of them ready to go for this winter. >> i'm going to bring up something that's a little touchy and i don't want to be all weird about it, but, like, you know, freeport, one of your competitors had a roblem, they had a fire i don't know exactly what happened what i think, and i've been to your facility in corpse cus christie great people, by the way do we have to work about the safety and security of u.s. -- the facility faies? >> no. that was an unfortunate accident at freeport. i am so glad that no one got hurt or injured during that accident we take our responsibility very
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strongly and as you know, i'm an operator through and through. i spent my whole career, 40 years, being in operations and it's a prime focus of our safe and reliable operations to make sure that we don't hurt anybody and that our product is available at times of need, which is right now >> it's a fair question, though, right? you guys are so important to the world right now. you're some of the most important companies in the world. and i don't think that's hyperbole. >> well, thank you and we hold that responsibility very dearly to us. and thanks for the shout-out for my employees they've done a fantastic job this year. our safety record is second to none we're very proud of our record and what we've been able to accomplish >> we've got to go, jack i was driving down this country road an hour outside of houston and i turned the corner that
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said the jack fusco energy center you know what i'm talking about. kind of interesting and random, just on the road by the way, get some bigger ships. the one behind you, that doesn't heat a lot of homes. the stock up 7% right now. coming up, from gas to steel melting down newcorp cracking after its guidance underwhelmed wall street but there is one related name hitting new all-time highs today. we'll reveal that ahead. our rising rates and fewer deals creating a greater storm for wall street bankers? we'll take a look at some of the winners and losers, the financials the exchange is back, but the market's up. the dow is only down 70, but it's up. we're back after this.
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nlgtsds bd h all right. welcome back to "the exchange. your money a little bit better we're not getting anything back from yesterday, but at least we're in the green now no fall through selling. dow industrials up a whopping 5. that could turn. they've been losing steam. i wouldn't be surprised if we ended the day in the red nasdaq up 0.7% the megacap tech names, apple, microsoft, alphabet, and amazon are mostly higher. meta platform is down again. all of these names are on pace for their fourth week, fourth down week in the past five and i want to show you something that may blow your mind about how bad this year has been this is the combined loss of market value for apple, meta, amazon, alphabet microsoft down $670 billion from
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its all-time high, similar to facebook, amazon slightly less apple is down under $500 billion, alphabet, $464. so this is what like $2.5 trillion of market cap loss from their all-time high. i mean, it seems hard to believe with just five stocks. by the way, microsoft's market value loss, just by itself, if it was its own company would be the seventh or eighth largest company by market cap in the s&p 500. i think that's random, but interesting, but also, random but painful. tyler mathisen, take it away and give us a cnbc news update >> i'm going to try. thanks very much a big surprise at the trial to determine whether the parkland school shooter should get the death penalty. the defense for nikolas cruz unexpectedly rested this morning after calling about 25 witnesses. defense lawyers had said 80 would testify. the judge slammed the lead defense attorney for unprofessional behavior and wasting the time of the court
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and the jury proceedings have been delayed for nearly two weeks to let prosecutors prepare their rebuttal case. serena williams is hinting at a possible return to tennis barely two weeks after bidding farewell to the sport, or seemingly so, at the u.s. open this morning on abc's "good morning america," williams says she likes the trend started by buccaneers quarterback tom brady who returned to the nfl after less than two months after retirement and in london, well wishers have started filing by queen elizabeth's coffin, paying their last respects. thousands of people have lined up for that privilege, mile-long lines. the queue stretching now for more than two miles along the thames officials have prepared for the line to grow to as long as ten miles long >> moving scenes tyler, thank you very much coming up, we are going to sift through some of the wreckage from yesterday's
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welcome back to "the exchange." volatility has been the name of the game this year, not just yesterday, but really all year and keeping your money safe has not been an easy feat. but sometimes a roller coaster market creates the biggest opportunities. and your next guest says are some areas that you can find shelter in right now to ride out the gyrations. let's bring in ceo as news street advisers, cnbc contributor. and no doubt a man who is getting about a billion questions from all of your friends and clients and family members. i know we haven't spoken in three years, but what do we do what are you advising them to do right now? just go out and buy goldman sachs and let it ride? >> yes, calls are coming in, but that's part of the gig i think there are a few things that you can do in this situation. obviously, breaking down different industries, looking at the banks, there is opportunity in the banks goldman sachs, they're trading well they're trading at something that is valuable to track 17.5
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times earnings if you look at how they perform over the course of the year, it's relatively in like this obviously, still down 20% from its november 2021 peak but one of the big attractive areas for investors when you look at goldman sachs is the stronger-pushing consumer banks is relatively newer for them and that may be undervalued. obviously, with rates still going up and probably aggressive fed continuing, this could be hedge for investors. >> also, we were just talking about market cap losses and i was talking about how microsoft has lost more in market cap than the market value of all but seven companies. i mean, it's down $100 a share you like that, though? you want to buy low? >> yeah, we've always had this conversation obviously, some of life's new megacap tech areas, this is something that investors should be in, as much as it makes
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sometimes their stomachs queasy, you mentioned the loss of market cap. but their cloud business still st strong and growing, $65 billion in free cash flow. so operationally, they kind of were doing the right things to tighten up their free cash flow and tighten up their earnings as they saw the forecast that was going on for the beginning of the year. strong balance sheet, still providing dividends to investors. you'll have to ride out a couple more quarters of volatility. i don't think we're past it yet, but for people who have discretionary cash, this is an opportunity for them to look at microsoft as well. >> the other day we had a segment on the show with our tech reporter about roblox and how roblox was starting to have ads and i gave my opinion about what i think about ads in children's video games but that aside, they're going to make a lot of money from it, because that's where people literally live these days. virtual reality, real money. >> virtual reality almost
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equating to real money i agree with you on the ads, hoping the algorithms are working, so it's age appropriate all across the board roblox is interesting. this is a growth story, obviously, 100%. they were trading at $140. you know, obviously, a while ago, and they've bottomed at 22 a share, but if we look at their most recent earnings, over 160 million active users consumers are spending less on the platform that will probably continue for the next couple of quarters, but they're increasing engagement with -- i was engaged at 60% year over year s so they're at a strong metric there. this is a stronger, longer-term growth bet, but the trends are going to get better. they're at the worst parts of it right now. >> there you go. goldman sachs, microsoft, and roblox i agree, we don't want to see like, welcome to kids world, brought to you by so-and-so hard seltzer. because the cans already look
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too close, anyway. delano, thank you so much for coming on. up next, rates are on the rise, but shares of big banks are not. lower by about 4% or more the last few days because they're walking a tightrope. higher rates, good bad investment banking, bad. we'll talk about some names, coming up. "the exchange" is back right after this another busy day? of course - you're a cio in 2022. but you're ready. because you've got the next generation in global secure networking from comcast business. with fully integrated security solutions all in one place.
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how do we show strength and stability? o(eagle call) a mountain? a tree weathering a storm? (thunder) lions? nope. (lion rumbles) we do it with our people. all right. like a lot of the market, bank stocks continue to tumble. the kp bank index down today, following a higher than expected cpi report you might have heard something about the hotter than expected inflation number on this network yesterday. while higher rates are usually good for banks, because it raises what's called the nim, the net interest margin, at last slowdown in market activity and a potential recession is keeping some investors at bay. jpmorgan say it sees investment banking revenue headed for a 45% decline. citigroup warning fees it
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collects from deal making and capital markets are likely to drop 50% and then you've got goldman sachs announcing a plan to cut several hundred jobs this month. what's the bank trade going forward? let's bring in gerard cassidy with rbc capital markets gerard, yeah, listen, higher rates, good, but if you're not doing deals, if m&a gets cut off or slows down and trading slows down, what's the balance for the big banks? >> that's a really good question and the numbers obviously in investment banking, which were pretty dramatic, as you just described, really no surprise since, i would say, the spring of this year and the reason being, of course, is the fed is raising rates, as you pointed out. so when it comes to banking, the two parts, as you know, is the fee part, which is driven by in- investment banking, but more important, it's the spreads, the lending, the deposit gatherings. and for 15 years, the banks have
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had to suffer with low rates so the banks that take in deposits and make loans are seeing very strong revenue growth unfortunately, it's negatively impacting the investment banks, as you just described. >> sounds like you're just saying that we should own boring old actual banks i don't mean wall street banks like, let's trade the bitcoin. but hey, give me your money, i'll put it in a checking account, put it in a toaster and you can write a check. >> brian, that's music to my ears you're absolutely right. that is what we want boring is beautiful. you know, we're not talking tech stocks, as you know. that would be derogatory for a tech stock, but for banks, that's a compliment. and i would say that taking in cheap deposits, those non-interest bearing deposits. because you have to remember, brian, it's been 15 years since investors had to look at the right side of the balance sheet, meaning deposits the fed takes the fed funds rate to 4% by the end of the year or into next year think about the spreads that the banks will earn on
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non-interest-bearing deposits such as checking accounts. it's pretty impressive >> so who's doing it well, gerard which stocks are you recommending who's good at banking? >> it's the regional banks, brian. when you take a look at names like keycorp. out of ohio, you have m&t bank up in buffalo, new york, and regions financial down in alabama pennsylvania, another very good bank all of these banks have very low-cost deposits. they make commercial loans that are tied to the fed funds rate, and therefore the margins are going to improve, not only did they improve in the second quarter, they're going to improve again in the third and fourth quarters of this year >> wow it's funny you're talking about the banking capitals of america. buffalo, cincinnati, birmingham, alabama. what are they doing right? maybe because they're not -- they don't want to be fancy. them to make money >> when you think about the financial markets, that's
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affecting wealth management, it's affecting asset management and investment banking and these traditional regional banks, they have some of that, but that's not the dominant area that they're known more. they're known for lending. and they have been struggling during the pandemic and loan growth has really picked up this year, indicated by the data on fridays. like you said, it's not the big urban markets like new york or in chicago, but it's these smaller markets that are doing quite well >> they are. you go, buffalo! by the way, you go, bills. they'll win the super bowl and give a double win to buffalo they could use it. gerard cassidy, really appreciate you coming on thank you very much. >> you're welcome. up next, from banking to materials. one of the worst-performing sectors today, but individual components accounted for 100% of the stocks that saw green in the s&p 500, yet there was one, so that's 100%, including this one. one of the best performers of
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only five stocks in the s&p 500 ended year up. of course, that means 495 were down four of those five were actually fertilizer stocks. mosaic, a lithium company, cf industries and korcortiva leadi at all-time highs. let's bring in joel jackson, senior analyst at bmo capital markets. i don't want to brag, but im going to on september 17th of last year, i threw up this tweet and i said, basically, if you think there's a big natural gas ark tragedy here in europe, you want to own cf and mosaic not a stock pick cf is up 150 or whatever percent since i tweeted that out a year ago. mosaic up 7% not bragging, just saying another reason to watch cnbc these companies are printing
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money. >> absolutely. them and nut ren are printing money. the gas differentials in new york and you've got some hot production challenges in the u.s. and china and skbroourp brazil there's a lot of good things happening. there's a lot of complexities, too. rail strikes, every day what's going on with the war, what's going to happen here and there but amid a very dynamic environment, they are printing money. >> what is if there is -- by the way, this rail strike, that's maybe coming, starting friday night at midnight. to me, this is the biggest economic story in america right now that nobody else is talking about. if we get a shutdown of the rails, what happens to these stocks in the near-term, joel km >> there's a lot of fertilizer production in places like florida, ohio, texas, louisiana. a lot of retail farm centers across the midwest definitely in the short-term, but if it extends for a period of time, you know, you're going to have a lot of problems with these companies getting supply around
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and you may have a bad fall season if it goes on for a long time >> i have watched many rail roads going from charlotte to port city, florida, to load on to ships if there is a rail stock and own these stocks, be noted we also talked about hybrid now it's got this fancy name they're not really a fertilizer company pure play. how are they different being more on the seed side? >> right this is the dow and dupont merger of their agribusiness it's about half of seeds and half of crop protection chemicals or pesticides. they have a lot of good things going for them the iconic pioneer like you said higher yielding seeds. farmers want to pay for those. a lot of good things in their pipeline developing their own biotech seed trade to compete with bayer slash monsanto they did an event in iowa where they rolled out a really good incredible plan to streamline the business, go to other countries if they're not making a lot of money
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they have a very good midterm target here and trajectory here of a very solid double-digit growth that i think investors should look at >> but it is getting close to your target of 66. >> we raised our target price overnight to $72 on the back of that event >> i got old news. i'm fake news. so 72? >> 72. 14 times multiple on '23 numbers rolling forward the target from '22. and by the way, if they can meet their growth targets on something like 13, 14, 15% earnings growth over the next few years you roll that multiple forward it's a $9 stock in two years. >> for our listeners on the radio who can't see the chart's up 63.50 if you go to 72 you're making 8 1/2, whatever bucks. lithium. electric cars all the rage the demand for lithium just soa soaring. al bem arl charlotte, north carolina king of the lithium world almost. how much money is there to be
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made in albemarl people go i want to go electric but i can't drop 100 bones on a truck -- >> isn't lithium as good as it can get? that's been the play all year. albemarle and other competitors, prices started to flatline they're like 14 times -- they're up 14 times the past two years $70,000 a ton. what you're seeing is the prices are starting to rise again there's no lithium inventory really in the world right now. yes supply's going to come on. but we don't see the snugness in supply-demand really changing until late '23 into '24. right now until a lot of new products can come online and add inventory to the system you're going to see lithium prices stay quite high and numbers will keep going up >> numbers keep going up i love the fact we're just talking about fertilizer
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some people say i still trade fertilizer for a living if you know what i mean joel, thanks very much >> thanks, brian >> still ahead one options trader says an increase in options activity is not to blame for yesterday's sell-off but could play a huge role in what could be a big volatile end of the week. going toeathtelees rd e a av with chris murphy. next icy hot pro. ♪ ice works fast... to freeze your pain and your doubt. ♪ heat makes it last. so you'll never sit this one out. icy hot pro with 2 max-strength pain relievers. (vo) hi. we're visible. a different kind of wireless company... ...running on a big impressive wireless network. so you'll never sit this one out. how are we different? we exist only on your phone. so you get unlimited data for just $30/mo, taxes and fees included. plus we have a new plan with 5g ultra wideband.
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all right. welcome back to "the exchange" as the market attempts to come back from yesterday's big sell-off, long way to go, market's up a little, adjusts including art cashen at ubs say options bets may have contributed to the plunge. but our next guest does not buy it chris murphy , his research is must read at least for me. i went to dinner last night with some wall street friends and colleagues and the term gamma squeeze kept coming up in plain english can you tell our audience what i agama squeeze is and whether or not we
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had one yesterday. >> sure. the argument for a gamma squeeze on a day like yesterday would be that investors are long aw ton of puts to protect their down side that means that the market makers are short those puts and when the market starts to sell off the market makers have to go out and sell more stock, etf or futures or whatever to stay hedged that will exacerbate the sell-off and the move lower. the options are always a piece of the puzzle. but as you mentioned, we rallied 5% this month into what we expected to be a cooler cpi number we got a higher cpi number that 5% disappeared pretty quickly. and the s&p and the vix are pretty much unchanged compared to the beginning of september. >> i know it wasn't maybe to blame, chris, but how much does the positioning alone contribute to these massive moves where maybe there's a little bit of a tinder box but it's kind of
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like the underlying gasoline it is going to accelerate things, is it? >> if you make the argument that everyone has the same position -- if you look at those very simplistic charts where they talk about gamma positioning the assumptions in those charts is that everybody's long -- the world, not market makers, the world is long puts and short calls. and that's just simply not the case we see a ton of -- and in fact, some of the trades that were highlighted the most aggressively heading into the cpi event were all upside call purchases in the biotech space, in the nasdaq, small cap, things like that. let's just say that investors are long a lot of upside calls or when the stock market sells off those upside cost, their impact gets even smaller even if that was the most highlighted trade that wouldn't be much of an impact either. >> here's what makes me nervous, because i've been reading a guy named chris murphy and chris murphy's history shows that yesterday was a three standard
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deviation move for the s&p 500 forget about even what that means. we haven't had one in more than two years. okay since the pandemic -- initial pandemic panic wipeout we tend to get three a year but as you note they tend to come in bunches. does that mean there's a potential for another multiple standard deviation move to either direction soon? >> i like that that's a really good question. they really do tend to come in bunches. so you know, we had the first one in over two years, and that was the longest stretch in a couple of years. but then if you look in between 2018-ish, remember we had a lot of big events then, obviously covid, so yeah, they do come in bunches. it will be interesting to see. one thing you really would point out, everyone's been talking about, the volatility index is pretty low compared to how bad everything feels we're pretty close to the mid-point of our year-to-date range. is it too complacent if it is you're going to
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actually see more two and three standard deviation moves >> chris murphy, must read, must watch, must listen chris, thank you really appreciate it gamma squeeze. good fantasy football team name. that's all for "the exchange." the markets are a little in the green. the volatility index down a little bit "power lunch" starts right now tyler and courtney, everybody. welcome to "power lunch. i'm tyler mathisen courtney reagan to my left here's what's ahead. tech stocks attempt to come back after yesterday's rout from mega cap to chips to the cloud, the stocks to buy on the pullback are the ones to be wary of and those that have more to fall and what's the difference between low volatility and momentum etfs? maybe not that much. you might be surprised by those funds' top holdings especially if you're looking to offset some of these big market swingds. and stocks are off their highs modest gains right now today's gains slowly, slowly


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