tv Power Lunch CNBC September 30, 2022 2:00pm-3:00pm EDT
'11. five of those times the index roared back a bit with a median return of 7% only in 2008 financial crisis to the s&p continued to fall. got a 16% pop in 1974. does it mean it will happen this year no five out of six, not bad history. wanted to leave with a little good news to feel positive we'll see you next week. "power lunch" starts now all right, thank you, sully, we appreciate it welcome to "power lunch," everybody. along with contessa brewer, i'm tyler mathisen nike says the greenback strength is one of the reasons why margins are under pressure there. so, will big tech be next? we'll talk to an analyst who is slashing estimates and cutting price targets. and too cheap to ignore, just like me. a veteran investor says the bear market is growing tired and he's
buying stocks that could benefit from the next market's up leg. will it be in october as sully's history lesson seemed to suggest. contessa >> from sully side up, look at bad news brewer. it's a choppy day of trading as the markets look to close out this rough week, rough month, rough quarter. i told you about the dow jones industrials down 259 points. the s&p 500 off by 0.50 and the nasdaq down by 0.30. nike, carnival cruise lines, norwegian, the worst performing on the s&p and a number of fresh 52-lows, including mondelez, dominion, southwest airlines, norfolk southern off 2% as well, tyler rough crowd. >> contessa, september has lived up to its reputation, the dow and the s&p down more than 7% for the month. the dow on pace for its worst monthly performance since back
in march of 2020 that, of course, pandemic month. worst september since 2002 nasdaq headed for its biggest monthly loss since april of this year now, those declines driven by rising yields, the ten-year yield started the month at 3.19%. it broke through 4% this week before pulling back just a bit it has been a violent month, frankly, for bond yields dollar index, fresh 20-year high, causing the tech sector to come under pressure. the nasdaq 100 down 9%, led lower by chip stocks, which are trading near 52-week lows. our next guest says the market rout is making some stocks too cheap to ignore. jerry castalini, good to see you. you say in the notes i was given that the bear market is getting tired. what's your evidence for that? >> well, one of my trusted staff members, dylan hoover, walked
into my office today and said, i can't take this anymore. i can't listen to one more story about the fed and all the problems it's caused we're beat up by this whole macro thing. and it makes sense it's gone on now for well over a year the market's been down and what's interesting is it's kind of all we've got left the next year would be good if, and some narrative about the fed. and what i find fascinating is it's such a dramatic change from where we were a year ago on the macro level. and what it's done is completely confuse and set out all the microlevel -- company level stories that have really become intriguing investments here. that's why there's an opportunity, and let's just start focusing on stocks >> i'm not sure you answered my question, jerry. i am definitely sure that there are some intriguing stories in equities right now look at netflix. it's had a very, very good month. there are other examples of
individual shares that have done well for particular reasons. biogen among them. but i asked about the bear market and your claim that it is getting tired. where, again, is the evidence of that beyond a colleague of yours who says i'm sick of hearing about the fed? >> consumer nondurables have stopped outperforming. utilities were one of the biggest down groups in the down market yesterday when you look at the places where you've gone to hide, when you look at the flows of capital, it's leaving bond funds now. it's not leaving stock funds the flows into stocks have increased and are accelerated. the things that would let you believe there's more stocks to be sold, and that would give you more long-term evidence of a bear market, those are starting to go away and they're giving rise to all these interesting green shoots >> let's talk a little bit where you see an attractive
risk/reward. i want to go to las vegas sands, a company i cover and a company i know a lot about but i just want to lead into this las vegas sands is part of a broader group in gaming where there's been generally a radio real disconnect between what the companies are reporting in their earnings and what the stock price shows. so, jerry, talk a little about las vegas sands. what do you like about it? >> i mean, like a lot of these stocks right now, they're trying to discount 2023 midyear 2023 if you look at what is on the horizon, so in this case, this company doesn't have to worry about las vegas, even though it's in the name they're focused on singapore and macau. they just announced last week that one of the provinces would open for people to go to macau and the stock went up six points you think about the number of provinces there are in china you could open up. you get the feeling that unlike the rest of the global economy, china could be in great shape a rear from now, nine months from
now, and this would be one of the great names to own. >> las vegas sands missed out on that huge rebound in las vegas by selling it, but what they got was a lot of cash to sit on to tide them through this rough spot if we see a rebound in macau like we've seen in las vegas, they're set up well. what about paypal, why do you think the bad news has already been baked into this and it could just be upside from here >> yeah, paypal two years ago is one of these glamour growth names that was going to capture every part of connecting payments to all sorts of things, including crypto and everything else like it the company even looked at a harden acquisition in the course of that process, they have now decided to go back to their core business, focus on 20%, 25% growth area that throws off a ton of cash and stocks
down 65% we don't have to look at this as a company that needs to grow 30% or 40% anymore but a really powerful cash machine at a 20% growth rate. >> i acknowledge there are interesting stories like that. i conclude with one more of the notes i have it's time, you say, to gear up for the next market up-leg what is going to trigger that when you have a strong dollar that companies are saying are impacting their margins, when you have profit challenges, rates rising and a war in ukraine that is not getting better >> okay. how much of all of that has not been discounted? that's the big question. >> i don't know about the war, jerry. i do not know about about that because i don't think it has been sufficiently discounted personally because i don't -- because none of us know what putin may be capable of >> yes and that's -- that's why you look at all of the risk
that's been priced into this market you look at what's potentially going to come, which that includes, but you also have to balance the names we just talked about and the things the fed can't affect it's not going to affect the tightness in the oil global markets, it's not going to affect people going to macau, it's not going to affect lilly or some of these great drug companies that have great therapeutics that haven't been priced into their stocks if we do it stock by stock and not worry about some of these overviews that people are taking the worst view of, i think you would find there's a lot underneath in this market right now to focus on. why not do it? instead of focusing all of our time on the fed andle war and the dollar, let's talk about individual stocks because that's really in the end what we own. >> jerry, always good to have you on it wouldn't be fun if i didn't push back a little bit jerry castellini a little bit.
>> a little hard ball with tyler mathisen, i like that. highlighted in nike's earnings, the company says headwinds from foreign exchange shifted significantly in the last 90 takes. nike makes half its revenue from outside north america. it's not just a retailer to be squeezed by the strong dollar. also big tech. our next guest is cutting estimates on amazon, google, meta, partially because of currency headwinds managing director at truist. talk to me about -- you just heard tyler going back and forth there with jerry about whether this bad news is already baked in do you think the spectre of a strong dollar is so new that it's not affecting these companies and their stocks quite yet? >> yeah, so -- contessa, thank you for having me on again to directly answer your question, no
i think we're still in the process of digesting the move of the dollar, the potential recession, the high likelihood of that. if you look at contessa's expectations for the three names you mentioned, alphabet, amazon and meta, we believe whether you're talking the second half of this year or 2023 are way too high a couple days ago we came in lowering our expectation for these three. now we're sitting 10% below consensus for meta and 5% below consensus for amazon, and for google and alphabet. the reason is two-fold one is fx. in the last two months since these companies guided, fx has already 200-basis point headwind to growth that they didn't take into account the other is clearly 2023 is going to be the year of economic detraction and our group is
highly sensitive to that stocks tend to have a hard time moving up when estimates come down. >> you say you're lowering your price target, but you still have a buy on amazon, google and meta i want to be more specific your price target for amazon has dropped from $10 from $180 to $170 there's a lot of upside. google you lowered, and for meta, $240 from $260 again, a buy who's best positioned to weather the currency issues and if you're right and there will be a recession, the coming recession? >> that's fair that's a fair pushback just to put this in perspective, we cover 50 names. those are three or four you mentioned. i would say that google and amazon are best positioned amazon you obviously have aws that continues to grow around 30%. you have the advertising business, which has continued to
grow at 25 plus percent, and those are increasing component of the overall google clearly with 90% of the revenues being derived from that is a steady eddy it's a utility, even in this economic environment or even if we hit the skids, frankly, economically, we still think that is a midsingle digit growth business display advertising is a different story. we think on a relative basis, meta gets hurt more than these other two. >> you mentioned cloud for aws i'm curious whether you're going to see an impact there from the stronger dollar? even domestically, we already heard netflix saying in this move to cut costs, we have to look at how much we spend on cloud. >> 100%, i think you will have some deceleration but on a relative basis, i think aws is going to do better the vast majority of aws's revenues is in in u.s. dollars
that's one two, there is probably more of a risk to aws from a rising energy prices, particularly in europe, i think that people are not taking into account. >> well, thanks for raising that spectre. another thing to think about thank you so much. >> thank you so much. coming up, central banks are breaking things. that's the subject of a new cnbc op-ed. the question is, will it cause the fed to blink. plus florida, one of america's biggest homes for rent in the u.s. market, as they deal with hurricane. alcoa went down 42% year-to-date more "power lunch" coming right up
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welcome back to "power lunch. let's get a check on carnival, down 21.1% the company posted wider than expected loss with revenues coming in below analyst expectations it was rough seas for the company, especially when it came to costs those fuel costs were up 367% year over year while food costs jumped nearly, get this, 500%. the company says it's sitting on
about $34 billion of debt and 7.4 billion in overall liquidity. the ceo adding that advanced bookings were also below it's historical range today's trade has brought fresh lows for that stock which at one point was trading at its lowest level going back to 1992 carnival is down over 60% alone this year. and the drop today is also weighing on other cruise line operators. check out what's happening with norwegian, royal caribbean, both of those stocks also taking a big hit. both names are down 40% so far in 2022. >> thank you very much we'll see you in a bit. fed chair lael brainard says the fed should not pull away from its fed fight prematurely saying monetary policy needs to be restrictive for some time her comments come as the fed's core pce came in hotter than expected our next guest has long maintained the fed will maintain rates until something breaks
in a new cnbc op-ed, he says we may well be hearing the sound of breaking markets cnbc analyst and commentator, adviser to schroeder's north america, he's a senior, that's all he is. >> so, what is the sound you're hearing that is breaking a from the, what i would call, the dissonance and gear grinding and the bank of england? >> we all go back to these points in history, the latin american debt crisis in 1981, the peso crisis in '94, the asian capital '89, whatever it was. i think the uk is the canary in the coal mine here with these liability-driven investment programs that caused a great deal of illiquidity, so much so that when the bank of england intervened it drove long-term interest rates down a full percentage point we're hearing at least reading
to some extent we're seeing similar exposures in u.s. pension funds and that have that situation in london gotten out of control, you would have had a massive and potentially systematic british financial problem that would have had some contagion effect. >> you've got, i guess, in britain, if i'm understanding it correctly, you have a new government coming in and saying, we are going to borrow billions -- hundreds of billions of pounds, in part, to subsidize energy issues and help average britons get through the winter at the same time the bank of england is trying to raise interest rates and at the same time the bank of england says, we have to come in and buy, we have to do quantitative easing here buy up these bonds or else there's going to be a problem. it's all seems to be working at violent cross-purposes. >> absolutely. to a certain extent you have the same problem with the european central bank buying the debt of
peripheral countries, which are heavily indebted on one hand they are engaging in a form of quantitative easing and engaging in higher interest rate policy and tightening this is the type of environment, and, again, we've seen this time and time again through financial market history, where you get aggressive actions by central banks that literally break a financial market, the contagion spreads is very much in the risk of spreading to other nations. that's when central banks stop i don't really care what the fed says, i don't care what they're planning, i don't care how many times they say no factor will stop them from raising rates, and i know larry summers and others are are pushing them to be more aggressive than they are now. something will break and they will have to change course. >> ron, richmond fed president tom barkin is speaking right now. he's reiterating what lael brainard said earlier today, the risk of stopping this inflation
fight too soon is a bigger risk and that it is possible to control inflation without a significant downturn we got this week initial jobless claims falling, less than expected we got the consumer confidence rising more than expected. we got new home sales more than expected home prices moderating more since april of 2021. rents declining, durable goods orders rising and the richmond fed saying regional manufacturing was engineer but better than expected there's a lot of silver lining here so what do you know that the central bankers, including our own fed presidents, do not >> okay. i guess that's a fair question i think, first of all, i think they're misreading history don't think this is the 1970s. i don't think there's a risk of jay powell being arthur burns or j. william miller or another central banker who made an extraordinary mistake during an inflationary period that lasted over 15 years as opposed to 15
months secondly, all forward-looking indicators have already broken gasoline is down significantly housing prices have turned lower. mortgage cancellations are up at near record levels so, we're seeing nike, a huge buildup of inventories, which is also emblematic at the fact that supply chain constraints are easing dramatically. i think they're going too far, they're going to risk something blowing up in financial markets. mexico had a debt crisis we helped to fund orange county went bankrupt and the fed stopped raising rates. this is not unusual and it's not out of line with historic norms. again, whether they're seeing this or not seeing this is an open question, but i really think, based on history and my study of it, is that they're just plain wrong at this juncture with how far they want to go. >> or maybe jay powell is waiting for orange county to cry uncle. it's great to see you. >> might be a pension fund that
derails orange county. >> or that. >> the man knows his history thanks. coming up, the real state of real estate. the invesco real estate etf down 12%, closing out the worst month since 2020 this marks its third straight quarterly decline. up next, we'll take a look at the outflows from other funds tracking that sector plus, we'll speak to the ceo of home rental reit about the impact of rising rates on the housing economy.
welcome back to "power lunch. we have 90 minutes left in the trading day and trading month. for that we can be thankful. time for our weekly etf tracker. we look at real estate etfs, $300 million of net outflows over the past week alone, the biggest reason is mortgage rates they are going up 7% recession fears, they are going up as well and specifically for the mortgage reits, fears about dividend cuts. why do you buy a nice reit because the dividends are
generally pretty plump vanguard, schwab, all down 4% this week. let's take a look at them. there they are look at the ishares mortgage reit, down about 16% right now as opposed to the equity reits, which actually hold property, mortgage reits, the clue in there is the word mortgage, right? they invest in mortgages, and mortgage-backed securities, and many of those names are getting crushed this week on fears that their dividends will get cut the data come from our partners at tracknsight you can look on the ft wilshire etf hub. let's get to brian sullivan. he's everywhere, man cnbc news update. >> you toss to me, i toss to you, tyler here's what's happening right now. hurricane ian near georgetown, south carolina, just south of myrtle beach the storm is still powerful,
85-mile-an-hour winds. myrtle beach already dealing with 4 foot of storm surge tropical storm winds extending more than 270 miles out from the eye of ian president biden urging people in south carolina to heed all warnings from state and local officials. about two-thirds of american adults do not plan on getting a covid booster shot soon. according to new poll. around 12% say they definitely won't get the shot no matter what and nevada governor has demanded and received the resignation of the state's prison chief this after a convicted bomb maker's escape was not reported for four days. the inmate was recaptured on wednesday earlier this mop medical staff and prisoner complained about hostile behavior from the prison director, who is now out. >> thank you very much, brian sullivan. ahead on "power lunch," an energy emergency, pipeline issues, will eu countries have
enough supply to make it through the winter plus, a worry for workers. would a slowdown in the economy hurt union movements we'll be right back. at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect.
89 minutes left in the trading day. we want to get you caught up on the day's actions. stocks, bonds, commodities, the european energy crisis let's get to bob pisani. we have the dow now at session lows what pay way to go into the weekend. >> yeah, but i say that an awful lot, you and i, don't we, in the middle of the day, new lows. but we'll see. it's not as bad as it possibly could be 3,000 to 3600 is where a lot of people are we're down 4% for the quarter, folks. down 8% for the month. this is the worst month of the s&p since 2008 that was the financial crisis. nike's at a two-year low here, but i'm encouraged by the fact that the retailers have bounced. they had an awful open a lot were at new lows chico's was terrible this month but went positive. these are pretty washed out sectors. a lot of comments about the currency issues in europe, how
that might translate have you noticed consumer staples stocks what happened to defensive stocks they've been terrible performers most are down as much as the tech stocks are. once again today, philip morris, mccormick, kimberly-clark, these are new 52-week lows these are supposedly defensive groups not holding up well. same with the transports, this is a cyclical sector we've been hitting new 52-week lows on the railroads all week and dow transports also a 52-week low. i've had a lot of people message me whatever happened to the end of the quarter rebalancing? shouldn't there be some move in the stocks from people rebalancing their pensions yeah, theoretically. the s&p is down 4% a lot of economically sensitive sectors, materials, semiconductors and reitss have been clobbered i want to show you a bond fund
here people ask me about end of the quarter rebalancing. we're down 4% on the s&p, but the bond market is also down 4%. you don't necessarily have a lot of pressure to rebalance here when both of these are down about the same amount. guys, back to you. >> bob pisani, i'm sure rick santelli will have something to say about this let's go to the bond market, and you're tracking the action from cme. what are you seeing? >> the third quarter rebalancing is rather substantial when it comes to what's going on with respect to treasury yields just consider, look at a two-week chart of tens i'm switching things up, control room go to the second chart two-week chart of tens you see where we're trading now at 3.75. that, indeed, shows us there's been some buying coming in will it show up back when we go in october that is the question if we think about the quarter,
two-year yields are up 121 basis on the quarter let's look at tens quart to date they are up 73 basis points. they are at 374. we need to turn to europe. as the temperatures keep dropping, i fully suspect you'll continue to see more problems in europe, especially considering that putin probably has a plan we see sabotage, we see cold weather. i don't think these are things he thought of spur of the moment we need to continue to pay attention to energy. look at the gilt gilt yields are up buckle up. bund yield are up 78 basis points for the quarter and i could have picked the dollar index for a quarter to date chart because it's up 7%. i chose to do the pound versus the dollar, which is down 8.5% historic drop. back to you. >> wow, rick santelli, thank you for that oil closing for the day, crude prices just below 80 bucks a
barrel pippa stevens at the commodities desk tell us about the close. >> oil is falling today in a move that symbolizes how it's performed all quarter. wti dropped more than 24% over the last three months. that's the first negative quarter since q1 2020 when the pandemic began to sap demand for crude. the weakness over the last three months has dpredominantly been driven by demand side concerns, lockdowns in china and global slowdown has weighed on prices let's check on prices. with ti at $79.59 for a loss of 2%. brent is down 0.70%. one area that stood out is refining stocks. marathon petroleum, valero, phillips 66 all higher refinery outages in ohio and california are supporting those shares and finally, not something we talk about that often but orange juice futures on track for a
sixth straight positive quarter. prices currently hovering around the highest since january 2017 after hurricane ian hit florida. the state is the largest orange producer in the u.s. >> thank you for that. always good to get an update on orange juice. the european union agreeing to a wind fall tax the cash raised expected to go to businesses and families europe is bracing for this difficult winter amid a real shortage of energy supplies. let's bring in jonathan maxwell, ceo of sustainable development capital, a uk-based energy private equity company it's good to see you we know that the energy crisis is driving inflation we know the countries are gathering together in talks to try to see how they control the price crunch hitting energy. how do we go into october, november, december with any sense of confidence that it doesn't continue to spiral down? >> europe is doing quite a good job to stop building up its
energy stocks. earlier this year, in 2021 energy prices started to decline. this year the beginning of the year, low gas storage in europe is a big problem europe has now mandated by the 1st of november 80% sdas storage. it's very likely europe is going to be able to muddle through this winter. the big question is what happens over the next couple of years. power is a component of the problem in europe, most of which comes from natural gas the real question will be about heat and transport fuels i think that's go going to be a persistent problem for the next two or three years in europe, driving up demand prices and creating other problems. >> can you talk a little about currency impact on this situation as well and how that plays into what was already a difficult scenario >> yeah. obviously, energy has been a very large component of
inflation. inflation, therefore, is destabilizing currencies and interest rates increasing reacting to try to stabilize inflation. we're in a difficult spot. i think one of the things we've seen is how europe is going to react. the immediate reaction was, we'll double down on new production that was fine, nuclear power, gas. i think what's now happened in europe is a fundamental understanding that perhaps one of the only ways out of this is to start using less energy i don't mean less productive with the economy, just less wasteful actually it turns out in the united states and in europe, roughly two-thirds of primary energy is lost somewhere between the point of converting it, generating energy, transmitting it. that is one of the most fundamental problems that this huge wake-up call that europe has now had, i think, will bring to the surface the policy response in europe
actually now is about not just adding energy supply, but actually starting to say, let's cut demand let's reduce gas, let's reduce electricity 15 and 5% reductions in each case that's been more efficient and productive >> i don't want to bog down on it, but that was a fascinating thing you just said there. that two-thirds of the energy potency or power in gas is lost from the point at which it comes out of the ground to the point at which it's delivered to the home why is that, quickly >> very quickly roughly 10% of energy, primary energy, gets lost converting it to something useful for clients for crude oil to petro diesel. we put it in a turbine, 50% turns into electricity the rest is heat if you're generating energy from the point of use, the heat gets dumped that's 50% another 10% of energy is lost between transmission and distribution it's extraordinarily
inefficient. united states is about 70% lost. europe is two-thirds and last point i'll make on that is the last time russia invaded ukraine in 2014, european energy commissioner said, every unit of natural gas we don't use, every one unit we don't use is 2.6 units we don't have to buy from russia why? because two-thirds they knew was being wasted >> fascinating stuff i learn something every day. this is a prime example of that. very quickly, let me ask you this in a nutshell, is this crisis an opportunity? >> to the point i just made, this is one of the greatest opportunities we have. energy getting lost in the system because we built a decentralized energy network a big opportunity to decentralize bring energy to the point of use, reduce the energy buildings reduce energy is one of the value commodities in the world
everybody and everything depends on it. what a fantastic opportunity for productivity >> fascinating. >> i think that's the big lesson of this energy crisis. >> jonathan, very interesting. thank you so much. we'll have you back soon jonathan maxwell, we appreciate it. up next, 2022, major year for the worker the great resignation, wage fights, but could we see workers hold back in the year ahead if the economy slows down we'll explore that and more when "power lunch" returns.
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welcome back to "power lunch. it's been a landmark year for unions but will a potential recession slow down the movement kate rogers look at whether workers can hang on to their power or eke out a little more >> 2022 was a banner year for unions with data showing 900 more petitions this fiscal year over 2021. key industries including retail, food industry and warehousing have a collective 1 million more open jobs today than they did prepandemic. giving workers more fire to flex
their power. but does a downturn change that dynamic? workers at the unionized rei store in berkeley, california, say a recession makes better benefits and job stability even more important so now is the time to push >> i had coworkers who went through the '08 recession and had a tough time finding jobs then it feels like a way to protect for that in the future >> and worker advocates say that downturn or not, workers' mindsets have changed due to the pandemic and this momentum will be hard to slow down >> i think it's the collective action that you're seeing that isn't going to get stopped by whatever the recessionary forces are. working people have walked through fire during this pandemic, showed up every day to work in many cases risked their lives and they're ready to expect more in their work life and demand
dignity and respect on the job. >> it remains to be seen if that prediction holds back to you? >> are we seeing any slowdown in the companies in the unionization drive >> one we've been watching closely is starbucks we've seen something interesting playing out. in may the company announced enhanced pay hikes for nonunionized stores that went into effect in august, after holding feedback sessions with employees. they've not been extended so far to union shops because they say contracts need to be negotiated with the union organizing petitions have fallen from over 70 in march to 10 so far in september so baristas we spoke to saying some may be holding back, and others have been angered by the fact they haven't been extended. that's one trend we've seen play out so far >> kate, thank you very much still to come, florida is still assessing the destruction of hurricane ian, according to
evercore isi an early estimate showing $27.5 billion worth of insured property damage. imagine that was a good scenario, considering what could have been if the storm had hit tampa. after the break we'll speak to a reit with significant property in florida "power lunch" will be right back (vo) the fully electric audi e-tron family is here. with models that fit any lifestyle. and innovative ways to make your e-tron your own. through elegant design and progressive technology. all the exhilaration, none of the compromise. the audi e-tron family. progress that moves you.
american homes for rent is a loading owner and builder of single-family rental homes and thousands of its florida properties were and are in hurricane ian's path the company currently assessing the damage so far. diana olick joins us now with the ceo david sing lapd. hi, dina. >> dave, good to see you again you're getting your folks on the ground but you have roughly 12,000 properties directly or indirectly within the path of hurricane ian and still both in florida and south carolina to come what can you tell us about the damage that you've seep so far to your assets. >> you know, we were very, very fortunate. we thought that the hurricane was going to take a direct hit right into the clearwater-tampa area we have, us a indicate many assets there, about 3,000
assets, and the hurricane landed south of tampa as a result damage so far, and we're very, very early in this evaluation process as you indicate our people are just getting on the ground today and taking assessment of the damage out there, but what we've seen to date is primarily minor damage, downed trees yard issues. some minor flooding in some of the houses, and a number of the telephone calls coming in are just about things like electricity. how do we get the electricity back on? but we're very, very fortunate that we did not take a direct hit into tampa-clear water. >> you were fortunate this time, but i believe the first time we met was actuallyin houston where your home did sustain a lot of damage. given the increase in extreme weather that we're seeing, whether it's from hurricanes, floodings, fire, drought, are you changing the company's strategy and where you build and
acquire single-family rental homes due to climate change? >> yeah. two aspects there. one is we do look at where we are acquiring. we assess the climate risk in those areas, but we're also much better prepared today than we were five an ten years ago we prepare we have assets on site so we prepare with wood and other things to board up houses, sorry our people started looking at hurricane ian four, five days ago, and we were boarding up homes, creating safe places for our employees to go. sending out communications to all of our residents to provide them storm watch information, how to reach us in times of emergency and other places to turn, the american red cross and theme ark, for example. >> dave, since we have you here, i have to talk about mortgage
rates and interest rates this week we saw the 30-year fixed cross 7% is that actually good for your single-family rental business because people can't buy homes at that higher rate? >> you know, you're absolutely right. the capital markets today are very, very volatile. we're very fortunate we've got tremendous liquidity, and we continue to see strong demand for rentals so it's a program that we have seen from the time that we started american homes ten years ago. demand continues to get stronger. >> what about the reit atmosphere, reits are really getting hammered in this rising rate environment. >> they are. the rates are interest-sensitive stock as an asset class, so our cost of capital is going up, and that's going to impact our ability to continue to grow. we're very fortunate in the fact that we do have liquidity. we have a significant amount of
retained capital, and we have an inhouse development program that's already primed for future growth into '23 and '24. >> let me ask you one quick question, david. i'm very happy to hear that you did not suffer major damage in your properties. >> yeah. >> but for the -- for the renter who has found his or her home uninhabitable, what do you do? do you continue collecting rain? do you waive rent? how does that work >> yeah. tyler, what we first prioritize the human aspect of these disasters over the asset component. no different than what diana was talking about harvey tenants that are impacted, we'll look for alternative housing for them if we do not have alternative housing we will cancel their lease and ensure that they get 100% of their security deposit back in the next day or two. we will forward it to our offices. many of these individuals can't
receive mail or cheques as a result of the flood, so we will work with each and every resident. >> thank you very much, dave thank you very much, david singland and diana olick for that report. appreciate it. up next, how stressed are americans about eithr cost of living we have the numbers when "power lunch" continues right here. power e*trade's easy-to-use tools like dynamic charting and risk-reward analysis help make trading feel effortless and its customizable scans with social sentiment help you find and unlock opportunities in the market with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep,
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welcome back to "power lunch. americans are really feeling the stress of inflation. dom chu back with the numbers. >> the folks at bank of america do a study every year aboutwork place, workforce benefits and they look at the dynamics between employers and employees, and the one of the things they ask is about how good you're feeling about your financial situation vis-a-vis your employment what's curious about the results this year is that they have now maybe not surprisingly found that 62% of americans in the workforce feel stressed about their finances not shocking given the inflationary picture 80% though are concerned about the inflationary picture, not surprising, but 71% of all employees, no matter what level you're at, feel as though their wages are not keeping up with the cost of inflation, the rising growth of inflation so that's something to keep an eye on, a lot less comfort one of the other things, too, is that for the first time in five years a measure, a key measure
of the percentage of people who feel financially well off enough, five-year low. >> wow. >> 44% of all employees survey feel as though they are doing okay, and that's the lowest level going back before the pandemic. >> got to wonder what that is going to take an impact on consumer discretionary session. >> the markets moving towards session lows 357 points down on dow thanks for watching "power lunch." >> "closing bell" starts right now. >> yeah, thanks, tyler stocks are falling again on wall street as we wrap up a downbeat quarter and an awful month for the bulls. we're near session lows. the most important hour of trading starts right now welcome to "closing bell," everyone i'm sara eisen take a look at where we stand right now in the market. we're down on the dow 1.22% about, 350 points right now. s&p 500 down a full percent. the certainly sector remaining higher at the moment is real estate everybody else is lower. utilities and consumer staples are near the