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tv   Power Lunch  CNBC  September 20, 2022 2:00pm-3:00pm EDT

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i was kind of joking makes sense. that way they can move the car around the airport wherever it is phil lebeau, looking forward to that big interview 4:30 3:30 eastern. closing bell i was speaking halifax time. phil, thank you. that does it for us. see you tomorrow "power lunch" starts right now and welcome, everybody, to "power lunch." glad to have you with us i'm tyler mathisen along with seema mody here's what's ahead. historic high. nomura senior economist calls for the fed to raise rates by a full percentage point. he will make the case for that as the divide grows over what the fed should do tomorrow and then we're going to hear from, yes, power player jay leno he is with us live from his garage he met up with none other than elon musk, someone he calls the greatest innovator of all time he'll tell us what they
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discussed about the future of cars and, seema, space travel. >> looking forward to that, tyler. less than two hours left in trade and stocks are near the lows of the session ahead of tomorrow's key fed decision. the dow is down 524 points about 1.7% s&p 500 lower by a similar amount and the nasdaq down about 1.6% bucking the trend is shares of humana, which is hitting an all-time high right now. the stock getting upgraded today by morgan stanley to overweight, citing an improved competitive position that will drive earnings growth. stock up just about fractionally at this hour in prepared testimony the ceo of wells fargo plans to tell congress that the bank is at risk for setbacks as it works to address long-standing regulatory issues the hearing is scheduled for tomorrow, and the stock is down 2 1/2% the yield on the two-year and ten-year treasuries notching new highs ahead of the fed's rate hike decision. perhaps why stocks are moving lower at this hour, ty >> all right, seema. the decision from the fed will
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come in less than 24 hours from right now. widely expected that the fed will raise interest rates by 75 basis points that's 3/4 of one point. and it upgraded its forecast and is calling -- nomura did, calling for 100 basis points that's a full point. rob dents, the man who made that call, he's senior economist at nomura what persuades you, rob, that the fed is ready to do something they haven't done, golly, i don't remember the last time that they raised by a point. and if they did it had to have been under volcker >> well, thanks, tyler look, i would say a couple of things clearly the strategy the fed has been using for the past 12 months hasn't really produced the results i think they've been looking for. they've been gradually guiding the market toward higher rates over time. but trend inflation pressures really haven't improved much at all. in addition to that, financial conditions we think just continue to show they are not
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tightening enough for the fed to feel comfortable that growth really is going to slow down and that the unemployment rate really is going to move higher, meaning that inflation could stay higher for longer from our perspective i think this could be the moment where policy makers look up and decide we need to change strategy, we need to surprise the market a little bit and just get a little bit more of a knee-jerk tightening in financial conditions to really get ahead of the entrenched inflation problem we think that they're facing >> i don't disagree with anything you just said there about the entrenched nature of inflation or the need to squeeze it out because if we don't wrestle inflation to the ground it becomes a very, very serious long-term economic inhibitor but let me ask you this. i was speaking last night with a very skilled investor who said it's one thing to do an interest rate hike, whether it's 3/4 of a point or a full point. but then what the market is going to be listening for is any, the slightest little hint during the press conference of a walkback because there's a lot of capital
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on the sidelines, there's a lot of dry powder that just wants to get in there, and that if the chairman kind of goes in wobbly in that press conference the money's going to flow in >> he we would be a little bit cautious of that view just because i think the fed has become a little bit more concerned about how those press conferences have played out over the prior four meetings. generally speaking once the statement comes out at 2:00 p.m. we tend to see risk off price action in the market and then once powell starts the press conference at 2:30 risk assets tend to rally >> yes >> tomorrow is going to be to come out and make sure that doesn't happen i think he's looking at the market reaction to jackson hole where there wasn't a press conference, only the prepared remarks, and saying maybe it's time for a little more than that and i think the way you achieve that is by sounding as hawkish as you can -- >> this is exactly what my friend said.
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he said when they didn't do the press conference the hawkish message stuck in a way that it wouldn't have before he's very skeptical, by the way, that if there is sort of a rally that eventually it's going to get crushed because eventually the fed is going to have to do what you seem to be saying and that is continue very aggressively to raise interest rates through the end of this year >> i think that's right. and i think that's another argument for 100 basis points. it takes away that uncertainty of how is the press conference going to play out. that immediate tightening in financial conditions that you can deliver with policy action directly at cpm, removing a little more of the uncertainty of just how the press conference unfolds. i think that's the signal policy makers want to send at this point. most people we talk to suggest that 100 basis points might be the, quote, right move from the fed. it's just a question of whether or not they're willing to take that leap. at some point policy makers are going to look up and say you know what, inflation situation's
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bad enough, growth needs to slow down, and i think it's time we change tracks. >> i've been bloviating. i need to get seema in >> the nasdaq was up 2% the day powell hiked by 75 basis points. guess rob for the longer-term investor who's less worried by the day-to-day price action whether it's 75 or 100 basis points tomorrow what's the message to that investor who's more concerned about what their portfolio looks like in two years from now >> i think the overarching concern that we have is that financial conditions right now are not at levels that the fed would consider overtly restrictive. i think they need overtly restrictive levels to slow growth and inflation so our view is that the fed's going to remain very hawkish over the next six months even as inflation slows and the risk is that financial conditions over that period tighten very abruptly we continue to think we're going into a recession later this year we think at this point it's likely to be a foed-induced recession to loosen the labor market, to bring wage growth lower. and the real question right now is whether markets are fully pricing that in.
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we don't think they are. which means it could be a little bit rocky for the next six to twelve months. >> okay. right now the dow is down about 500 points rob, we appreciate your time we'll be waiting for the decision tomorrow. rob dent of nomura >> thanks very much. >> if you're looking for stocks that can outpace inflation, our next guest says health care is the place to be. let's bring in marian mont yain, poefrm portfolio manager for gradient investments. why do you think health care can do well in an environment where rates rise and inflation continues to be an issue >> first of all, we're pointing to companies that are u.s. based as a preferred area and within that the defensive health care sector we have companies who really rely on procedures and treatments rather than energy prices and ininflation they offer strong dividend yields top three picks are bristol-myers squibb which offers a 3.1% dividend yield
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and it's still cheap at only about 8 1/2 times forward earnings they have a strong pipeline of new products, including a psoriasis drug which can replace other drugs with no side effects. a second one would be johnson & johnson. it trades like a consumer staples company but with a much lower valuation at about 16 times forward earnings and it offers about a 2.7% yield. and then thirdly, medtronic. so this is medical devices that are for the treatment of heart issues that's not something that is cyclical it's just a condition that needs to be treated pretty quickly so that one's trading also at about 16 time earnings but it actually has a growth rate that's stronger than that of johnson & johnson and they've this had supply chain headwinds. they've talked about that. those headwinds we think are going to turn into tailwinds
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>> both bristol-myers and j&j have used m&a as a way to build out their pipeline do you expect that trend to continue even as rates rise? >> absolutely. i think they're active buyers in med tech and pharma to enhance their growth prospects. >> mariann, you seem to be taking the radical position that people are going to continue to get sick even if there's a recession or inflation, right? that's the basic thrust here >> yeah. you know, not just get sick but also have the opportunity to live longer. the numbers of people that are over 100 years old today are astounding my dad turned 102 this summer. >> wow god bless him, man whoa >> yeah. we're accustomed to that but as many more people are. but he had a table full of friends who are all over 90 and they all live at home on their own because of, you know, great strides in medical care. >> wow 102. what's his secret, mariann >> what's he eating? >> he has some great kids who
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keep him going i don't know >> i love that all right. let me ask you about johnson & johnson. i thought johnson & johnson was doing something where they were going to break the company in various parts. one was the consumer products. the other was the drug pipeline. i want to ask you about that, their strategy, and are you at all troubled by what j&j has done with respect to setting up a shell company to handle the liabilities involved with their talcum powder lawsuits it's called a texas two-step it's a very controversial move frankly, it seems like it's raising a lot of questions are you worried about that at all? >> you know, that's not a concern for me it's a legal maneuver to separate the -- you know, the trials and tribulations at trials really from the rest of the operating company, and it's probably a gooddecision to kee it separate. >> our last guest said he was
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expecting a 100 basis point rate hike tomorrow. if we see a more aggressive stance from the fed, how do you expect health care stocks to react? >> i would think that they would do well in a higher inflationary environment. the problem with the whole 75 or 100 basis point increase tomorrow is simply i don't think it frees up supply chain, and that's been the problem at fedex and at ford. we have to have supplies out there in order to manufacture. and i think that ripples across the entire industrial sector and that just makes health care look more attractive >> yeah. the supply chain does not seem to be getting better anytime soon as we heard from fedex and general electric last week mariann, we appreciate your time >> thank you >> mariann montagne of gradient investments. >> coming up, 3m making a big investment in hydrogen, but will its green strategy help the stock, which is down about 35% this year? plus, smoother sailing for
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norwegian cruise line? shares are up about 50% this month. we'll talk to the analyst who upgraded this stock this morning. and figures the stock can go even higher. how about nike downgraded, heading into earnings next week it's down 3% today 38% so far this year seema's from oregon. she knows a little about nike. >> i sure do >> is it a buy on the pullback we'll trade it in today's three-stock wen. >> ten minutes away from where my high school's located >> is that right >> yeah. huge campus.
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welcome back to "power lunch. 3m announcing today that it's developing a new technology to manufacture green hydrogen at a lower cost to customers. demand for green hydrogen has been growing as the automotive industry looks to pivot to clean fuels. 3m's bet coms as a stock has lagged recently. shares are down 20% over the last month with the overall industrial sector outperforming 3m by 10% industrials overall have faced a tough year but my next guest says demand will remain strong in the sector despite ongoing market volatility. that's dean cray, rbc capital markets director thank you for joining us first want to get your reaction to 3m's pivot into hydrogen, clean energy is it too late there's certainly a number of other companies who are trying to do the same thing >> yeah, thanks for having me, seema. no surprise that 3m's making this announcement. there's a big event this week in new york, climate week and 3m
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has got a headline out there talking about some of their initiatives in green hydrogen. but these are really early stage r&d venture capital arm of 3m. it's not what we would consider to be needle moving at all for the company but it's certainly a sign of the times. we see a number of companies we cover that have similar green initiatives going on right now >> let's pivot to ge warning from the cfo last week saying that the supply chain issues are continuing and that they see their free cash flow under pressure that sort of weighed on the broader industrial sector. i'm curious if ge is the first shoe to drop or you think other industrials could come out with a similar warning in recent -- in future weeks. >> so first of all, every industrial company is talking about supply chain pressures this has been with us for more than a year. maybe at the margin it's getting a little bit better. but you are seeing it pressure
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all of these companies and it is showing up in working capital drags and as a result lower free cash flow. this feels far less specific to ge and much more of the sector and the operating macro that everyone's working in right now. but you do bring up an important point. we're at the threshold of third quarter earnings and this will be the next opportunity here from companies as to how they're holding up in the macro. and so far based upon our conference last week the demand still remains resilient. >> you know, deane, you cautioned, going back to 3m, that the results -- or this report is a very early stage indicator and that it's not a needle mover in terms of 3m's stock. but i do wonder this there are a lot of companies out there. a lot of large industrials, the 3ms of the world and many others that have very active industrial
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r&d arms how do you rank 3m in that whole cluster? are they ahead of competitors? are they right there with a group of competitors how do you rank them against other companies that may be sniffing around the same innovations? >> tyler, it's a really important point, is it's hard for us to be able to identify who's being really successful in r&d. you can look at it as a percent of revenue 3m, it's anywhere between 5 1/2% and 6% of r&d to revenues. it's among the top decile. we also look at new product vitality how is the percent of new products introduced in the last few years, a percent of revenues and 3m has been essentially a machine in being able to crank out new products so they typically get really high grades in terms of their r&d initiatives.
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but you know, i just want to highlight also honeywell honeywell right now half of every r&d dollar being spent is geared towards sustainability initiatives, sustainability technologies in some way so it's really -- it's opportunistic but that's where the expected growth is >> that was an interesting answer, deane, thank you >> xli down 1.8% right now so it's down a little more than the broader market deane, thanks for your time. >> thank you further ahead on the program, getting thrown a life saver? president biden declaring the pandemic over. poof just in time to potentially aid cruise stocks, which have struggled significantly this year and for the past two or three or four or -- >> and a little bit today too. >> yeah, they are struggling sinking today. ha ha. we'll look at why wall street says now is the time to jump aboard the sector. plus, back in the new york groove the number of workers in new york city hitting its highest level since the pandemic
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what this means for the city's commercial real estate and don't forget, cnbc's delivering alpha returns in person on september 28th the world's top investors will discuss risk, opportunity, navigating these new market dynamics you can scan the qr code on the screen let's leave it up there for a second i'm just going to keep talking for about five more minutes. go to to register, folks. b leue or dotcom events -- >>iginp. >> we'll see you there we can make this work. and the feeling of confidence that comes from our advice? i can make this work. that seems to be universal. i can make this work. i can make this work. no wonder more than 9 out of 10 clients are likely to recommend us. because advice worth listening to is advice worth talking about. ameriprise financial. (vo) give your business an advantage right now, with nationwide 5g from t-mobile for business.
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it is a down day in the markets and really no place more so than ford it is down 11% today worst performer in the s&p 500 that's the last 500 stocks there, folks on pace for its biggest one-day drop in more than two years. the company saying inflation and parts shortages will leave it with more unfinished vehicles than expected. and the parts it is able to get are going to cost more a lot more it's going to have to pay suppliers it says about a billion dollars more than it had budgeted for in the quarter. that is not small change let's get to christina
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partsinevelos for a cnbc news update kristina >> hello, tyler. 47 people have been charged with allegedly stealing $250 million in covid aid federal prosecutors say the group claimed to be serving meals to thousands of low-income kids but instead they used the money to buy luxury cars, property and jewelry >> the scheme that began with a simple idea in march of 2020 grew to become the largest pandemic fraud in the united states as alleged in these indictments, over a short period of time these 47 defendants engaged in a brazen scheme of staggering proportions. the white house is accusing russia of holding sham referendums in parts of ukraine in a bid to absorb those regions into russia. national security adviser jake sullivan says the u.s. will always recognize those areas as belonging to ukraine and in las vegas the local
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official charged with murdering a journalist who wrote articles -- or one article critical of him has been arraigned. robert telles was assigned court-appointed attorneys. he was not asked to enter a plea back over to you >> kristina, thank you coming up on "power lunch," some musk-see tv. tomorrow jay leno getting a special visitor to his garage. that is the ceo of tesla, elon musk sitting down with the famed late-night show host jay will join us right here on "power lunch" and tell us what they discussed and let's take a look at the markets off the lows but still deep, deep in the red right now. dow is down 1.4% s&p 500 down about 55 points the biggest laggard right now is ford that is weighing on the index. we'll be rhtac ig bk. go emerson software. go science people. go breakthrough meds and safe science. go space age welds for super silent cars. go big. or go home. from software that delivers new cures at warp speed,
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we've got 90 days -- 90 days it feels like 90 days. 90 minutes left in the trading day and we wanted to get you caught up on the markets stocks, bonds, commodities and then jay leno's going to join us. he talked with elon musk for the latest episode, new season "jay leno's garage. but let's begin with stocks. it's not a pretty picture. though the dow industrials are off the lows of the day i think the lows were about a negative 530. so you've got the dow now at
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30,573 basically one day away from going below 30,000 there's your s&p off 55, about 1 1/2% let's call them all sort of in the 1 1/4, 1 1/2% neighborhood in terms of negative action. ford as seema mentioned one of the big drags there in the s&p 500. as the company continues to struggle with supply chain issues let's turn now to rick santelli on this day before the fed meets. rick, clear indication from the bond market on what they expect or it expects from the fed tell us about it >> yes no, as a matter of fact, i was somewhat shocked today, tyler. looking at an intraday of 20-year bond yields. right around 1:00 eastern when the auction for 12 billion of those buttoned up, you can see what happened to rates they fell. yes, there was a lot of buyers that showed up and it surprised me a bit considering tomorrow looks to be the third 3/4 of a rate increase in a row and if you look at 20-year bond
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yields, they're going to be closing at a fresh 11 1/2-year high as a matter of fact, all long maturities, which weren't keeping up with short maturities like two and three-year, which have most closely followed the fed's tightening cycle, but that's all changed if you look at 30-year bonds, they're on pace for the highest yield close since 2014, call it 8 1/2 years. and if you look at the ten-year today, yesterday we closed above that very significant 3.48%. that was a high water mark for june and indeed it's now on pace for another fresh 11 1/2-year high close. and it's not only with the long dated and short dated treasuries, tyler. look at the etfs that represent a fixed income glimpse as well hyg, a high yield etf, it's on pace for the lowest close since july 1st of this year. call it a couple of months but as you look at that, realize we're on the precipice of much more aggressive sell-offs.
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look at the mub. this is a muni etf we were talking about munis and how the price drop's playing havoc with many investors at the moment well, they're on pace for the lowest close since march of 2020 covid. but look at that chart they're just a whisker away from the lowest closes since 2014 if you look a bit past what we were talk in march of 2020. tyler -- >> let me -- can i get one question in to rick? when we're looking at the last two etfs we're looking at the price of those etfs, correct >> that's correct. the price. where i normally, especially with the hyg, i normally look at the securities and look at the spread between, for example, a high yield instrument and a comparable maturity in sovereign like a treasury, which is your best credit. so as those prices drop that's not a good thing in the case of the hyg the spreads will be getting wider in the securities industry and in the munis the price is dropping,
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pushing yields up. >> because yields are going up or they push yields up rick santelli, thank you very much we've got oil closing for the day. pippa stevens -- no, there is no pippa stevens today. sliding throughout the session, oil prices -- i'm so excited to be back up and standing in front of everybody fed concerns, that's the big thing. the u.s. economy, maybe a recession, global recession. who knows? slowing oil demand september is on pace to be the fourth straight losing month for oil. can you believe that and the quarter ending in ten days could be the worst quarter for crude since the beginning of the pandemic well, you know what needs fuel, lots of it rockets. new episode, "jay leno's garage" airing tomorrow night at 10:00 p.m. eastern time. the rocket man himself, elon musk, took jay leno on an exclusive tour of spacex's star base facility. leno calls musk one of the great innovators of all time hard to debate that. and talked to him about the future of space and humanity
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>> we're trying to achieve the holy grail of rocketry, which is a fully and rapidly reusable rocket no one has ever made a fully reusable orbital rocket and never one that can be rapidly reflown like an aircraft and that is actually the essential sort of invention if you will that is necessary to make humanity an off the planet species. >> joining us is our friend jay leno host of "jay leno's garage." jay, welcome good to have you with us >> thanks for having me. >> it's fantastic to have you with us. what was your impression of elon musk as you toured his facility down there >> well, you know, i live in hollywood, which has a lot of dreamers people dream of making a movie but oh, here's what happened we almost got there. we almost got -- he's a dreamer where the dream actually comes true i first met elon back in 2007 and he came by with his tesla roadster that was the original two-seater, small, electric sports car and i thought it was nice and interesting. you no he.
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and i remember he said to me, you know what i'm going to do? i'm going to build these charging stations all up and down the coast and hopefully all across america so people can just pull in and charge for free i'm going, yeah, okay. that's going to happen you know, i thought it was interesting. but like most people i meet it never comes to fruition. and yet that's what he did he was building those -- the infrastructure as he was building the product even today when i see other electric car manufacturers, they can build the electric car okay but they don't seem to have any interest in the infrastructure or how to keep it going. i mean, now they do and they're hooking up with other companies because i think elon got the bandwagon started. but it's a classic example he knows manufacturing go ahead >> you are obviously a car guy par excellence do you remember riding in that roadster and how fast it is? >> yes it was quite quick it was fast. >> it's quick. >> it had the problem -- it was quick. i remember i had one of the
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early evs from general motors. but it only had a range of like 80 miles, which is really only a range of 40 miles, which is really only a range of about 30 miles because you drive and then you go am i going to be able to go home again? you know so it really took elon to take it to where it is now. i mean, i remember back in the day people saying it would take 50 to 75 years for the electric car to overtake the gas car. well, that's -- it's happening way quicker than that because battery technology has increased tenfold. you know, for new technology to succeed it can't be equal. it's got to be superior. and for years it might have been quick and it might have been maintenance-free but it didn't have the range or you couldn't charge on the road well, now a lot of those problems are being dealt with, you know and that's what i admire about elon you know, when we were down there, he was explaining the manufacturing process. i remember he said it costs a billion dollars to put one
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gallon of water on mars. he wants to get it down to $100,000 a gallon. which is still crazy money but it's not a billion dollars you know and he's a practical thinker he understands manufacturing he understands supply chain. i mean, he built that whole place down there in 2 1/2 years. >> and that's why -- >> i'm watching nasa try to get two rockets -- yeah, go ahead. >> jay, that's why tesla is the leader in the electric space but it's becoming a crowded market i'm just curious what elon shared with you about the competitive landscape, folks like rivian and lucent motors that are now playing a bigger role here. >> i think it's great. i think it's great that they're american companies you know, we're getting like the english here in america. we like noble failures we seem to revel in people's failure so much as opposed to applauding their success i mean, the thing -- i remember people said to me oh, tesla's doing okay now but once the germans and everybody else get involved in the electric car
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market they're going to blow them away. well, they still haven't he still has just about the longest range battery, or right up there when he was getting 300 and 400 miles range, everybody else was at 250 to 275. he's still pretty much ahead of the game i would not rule it out. and the fact that i will always go with an american-based manufacturer over a european one. i've driven the rivian it's a fantastic truck it's really good and of course the lucent excellent also lucent is quite a bit more expensive than the tesla but that's okay. and you know, the thing i found fascinating about elon, he doesn't believe in patents if you've got a good product let everybody use it because thinks thing is to get the electric car ethos out there, get everybody understanding how it works and the more manufacturers there are the more people are getting in on the game, the better it is for him. he's already the -- if not the
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richest guy in the world, okay, the second richest guy in the world. so he doesn't think like a billionaire. there's no giant yacht there's no mansions all over the world. when i went down to visit him, he had his little airstream trailer in the parking lot >> that's amazing. >> and that's where he lived i mean, that's where he lived. and would just eat the regular -- but the most fascinating part, as we walked around he's got this project to put -- he wants to build 1,000 rockets to go to mars. you go okay, that sounds like some bad 1953 science fiction movie. but then you go into spacex and you see hundreds and hundreds of huge, the most powerful rocket engines in the world lined up there and you realize okay, this is going to happen like all the other things he said would happen. you know, so -- he's a dreamer who actually fulfills the dream. >> i think that's really a great caption on his life. i mean, he's a guy -- like you
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say in hollywood there are a lot of big dreams but a lot of them don't happen he's a guy, he's a doer and not just a dreamer you know, the season in your program, you not only got to chat with musk, you sat down with president biden i know you took a ride with him in an electric car you talked about electric vehicles let's take a listen to one of those passages >> electric cars are a big part of your climate bill, aren't they >> a gigantic part also a part of the -- what people don't realize, it's part of the infrastructure bill you know, building the highways and the like because we're talking about putting 500,000 charging stations and the money for those charging stations in that bill in addition to the charging stations, individual companies are putting in so it's a game changer you've got 40% of all pollution, all the co2 going up is from a tailpipe >> right >> and imagine if we just changed that >> you know, president biden is also known as a car guy. i am sure that while you seem to be a devotee of electric vehicles, he certainly is both
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politically -- you've got to miss the roar of the engine, right? i mean, i'm sure he must and you must >> oh, yeah. of course. and there's no reason -- personally, in the same way the automobile was the savior of the american horse i think the electric car will be the savior of these classic vehicles that we all like to restore but it will become like a recreational vehicle i mean, to have a 426 hemi which gets 9 to 11 miles per gallon idling on the 405 freeway in bumper to bumper traffic makes no sense so use your electric car on the weekends -- during the week and then the weekend comes you want to go to bob's big boy or there's a car meet in valencia or whatever it might be, then you do that. and i think it'll take the pressure off the internal combustion engine because there won't be as many of them so consequently, restrictions will ease up a bit perhaps and gas will become more plentiful i see it all as a good sign. you know, when they asked henry
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ford, when henry ford was asked what do people want, he always said faster horses you know, nobody could think of the automobile as a practical thing that every american could have and what, are you going to replace blacksmith shops with gas stations that's what you're going to do yes. and that's what we did and eventually you will see gas stations being replaced by charging stations. but there are still horses there are more horses today than there were during the civil war. and i think all of these sort of cars will be somewhat classics and people will enjoy working on them and tinkering with them, but you use your electric vehicle to go to the airport or run errands. i have a little electric car that i use to run around town. you know to me it just seems to make sense, and it seems like the future >> jay, thank you so much for your time today. we appreciate it >> thanks for taking the time. >> oh, you bet >> tomorrow night. >> yeah, catch the full episode of "jay leno's garage" with elon musk that's tomorrow night at 10:00
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p.m. eastern time only right here on cnbc thanks again, jay. all right. a look at the markets. nasdaq down 1.4% names like meta, amazon, alphabet, all trading lower. after the break one analyst out with a new note getting bullish on norwegian cruise line aed hweskim if this is a pivotal moment for this industry we'll be right back. ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪
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welcome back to "power lunch. cruise line booking volumes are estimated to have surged by 30% in the last three weeks of august versus 2019 that led our next guest to upgrade shares of norwegian to a buy and saying its luxury offering set it apart from its competitors. with the analyst behind the call is truist's patrick scholes. patrick, good to have you on you've been pretty negative on cruise lines why the upgrade and the sudden change in your outlook >> well, what's really interesting, seema, i would say like lazarus rising from the dead, as soon as the cruise
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lines in early august pared back on the vaccination and the testing requirements we saw really an explosion of bookings for the next four weeks. now, to be clear, they've moderated since then after labor day, up mid single digits, but certainly much stronger pace of bookings than we saw in june and july where they were still tracking down 10% to 15% versus comparable precovid levels >> despite your upgrade all these stocks are trading down with a broader market. i think wall street is still concerned about the debt on the cruise lines' balance sheet. your thoughts there. can they get around it >> yeah. you know, i think if assuming these strong revenue trends continue, that will bode very well for them. and certainly it's quite an excruciating exercise in
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modeling all these various interest expanse and pro forma situations but we do model that assuming we don't have some other horrible black swan event that these companies will be able to survive. granted, the cost of debt is very high for them, but the best thing that i can say is that revenues are finally, finally starting to come back and we keep our fingers crossed that it will continue. >> fedex told us that a global recession is coming. yet travel companies, a lot of consumer-facing names have been painting a rather optimistic picture around americans and how much they're spending right now. why do you think we're seeing this divergence in the economy and what these ceos are telling us about the future coming months >> well, there's a couple things here first of all, i did upgrade norwegian, in addition to the strong trends norwegian has far and away the greatest exposure to luxury and super high-end luxury it's about a third of their
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business so that component of consumer spending and travel is blowing away the mass market spending. keep in mind i still have a sell rating on carnival, which does have far and away the greatest mass market exposure so i'm picking my names carefully, dipping my toe back in and i just felt most comfortable with the forward booking and pricing data especially on the higher end certainly what's driving that, people have been cooped up for a couple years and they want to get out. that combined with as i mentioned the dropping of most vaccination and testing requirements >> we'll see if luxury can be an area or a pocket of growth amid rising rates patrick, thanks for joining us patrick scholes. >> thank you, seema. >> coming up, today's three-stock lunch. we'll run through the key movers of the day and as we head to the break, we celebrate hispanic heritage
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welcome back. time for three stock lunch we're going to trade big movers. winn rising on news that covid restrictions could ease. nike lower after a downgraded barclay's citing excess inventory in its wholesale business joining us is steve grasso let's start, why don't we,
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with -- shall we start with wynn is it a winner or not? >> so wynn is probably my favorite stock out of the three. you nailed it. it's lowering the covid quarantine protocols i think that was the major tailwind for the stock today if you look at the technicals on it it's had recent momentums. the stock is off its lows. up 22% in the last three months. heading towards the 200 day. if you look back on the chart, tyler, this stock has not been above its 200-day since july of 2021 i think most of the bad news is out of the way. >> next is weyerh a.
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ser this is tied to lumber if lumber is lower or not going up to the nosebleed price, it's tied to it the housing market. the housing market has just started to show signs of weakness so, further weakness means further weakness for this stock. >> let's move on to our next and final name, that would be nike >> right so, tyler, this one i put in that neutral to buy camp for me. what i do like about it is that it was recently downgraded when you get a stock recently downgraded, that allows the bulls to have the better entry price going forward. this stock has gotten hit. we all know the bad issues of this stock we have a strong dollar, zero
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covid policy, 60% of their revenues are based off outside of north america if you look at the chart, this had a low recently it defended that low that low was $100. if you want to be a buyer and you can't help yourself here, i would use that $100 as a stop loss, meaning you buy it here, you shoot against the 100. if you breaks $100 to the downside, you should probably exit the trade this one looks like the setup might be okay going forward. >> my friend, thank you very much we finished three drinks in about three minutes. have a good afternoon. >> that's usually what i do in the bar. >> good stuff. >> thank you, steve. still to come, new york offices are filling back up, but are things returning to normal he atto nt.
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welcome back to "power lunch" and welcome back to manhattan for many office workers. last week's numbers were the highest since the pandemic began. it's a little too early to call it return to normal. robert frank joins us with that story. hi, robert >> seema, if you look at wednesdays, new york city is getting back to the office the average office occupancy last week was 47%. that's a huge jump from the 38% from the week before
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by far the highest since the pandemic wednesday actually hit 57.5% with big drop-offs on monday and friday new york's subways, buses and commuter rails hit a post-covid record as well on wednesday. the subway carried 3.7 million people that's about 63% of pre-pandemic levels the same goes for buses. the number of workers who are still fully remote also down, only 16% that's down from 28% this spring three days a week seems to be the new normal a survey of employers by their partnership for new york city found that 77% of employers are going to stay hybrid most are going to be three days a week by the end of this year only 11% will be in the office five days a week it also varies by industry real estate companies are expecting 82% of attendance. they're the biggest by the end of the year. financial services also up there at 61%
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the tech industry not as high. that's less than 50% if you look nationwide, the city with the highest office rate right now is austin, texas, at 61%. the worst is san jose. still under 40%. guys >> robert, thank you very much robert frank reporting thank you for watching "power lunch" today >> "closing bell" begins right now. stocks are falling hard here as yields are rising again the fed meeting is getting under way. the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen take a look at where we stand in the market down across the board. the s&p 500 down 1.3%. every sector is lower right now. interestingly with this rise in yield, the two-year, ten-year note yield the ten-year, almost at 3.6. technology is faring a little better than some of the other sectors right now. you have sectors like real estate, materials, consumer discretionary and technology under pressure still tech is getting hit. the nasdaq i


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