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tv   Power Lunch  CNBC  November 11, 2022 2:00pm-3:00pm EST

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brian. >> look forward to you going there. maybe, you know, seeing leo, as you call him leonardo to you. >> my buddy leo. >> what's eating robert frank. robert, th thank you very much that was a mu eovie reference that's it for us thank goodness "power lunch" starts now. i'm tyler mathisen, along with morgan brennan. here's what's ahead, stocks having a hard time figuring out what to do after the huge rally. is the fed going to take their foot off the brakes. are valuations cheap enough, especially in big tech, and the other shoe falls for that company called ftx probably not going to see that on umpire's shirts next year in major league baseball.
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sam bankman-fried out as ceo, resigning. the process now to figure out what went wrong. still in the early stages, but does it fgive crypto, morgan, a permanent black eye. >> that's one of the questions being asked right now. o i'm morgan brennan. stocks are mixed the dow is down fractionally back towards the flat line, about 31 points. the nasdaq is higher by 1.9% powered higher by tech yet again. the nasdaq and s&p both on pace for their best week in five months i should also note that the s&p is up 9/10 of 1%, moving closer to the 4,000 mark. again, amazon and alphabet hired today, up 10% on the week. check out meta that's up more than 25% so far this week. 26% right now. what is dragging on the dow. united health is down 5% but that's $30 a share meaning it's taking nearly 200 points off the dow on its own. cigna, humana, also down big
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that has investors rotating out of the health related stocks right now, and other defensive sectors as well, i might add pretty much anything with health in the name, though, that's getting hit hard today, tyler. >> morgan, our next guest says he thinks the rally may be over done while the latest read on inflation was encouraging, the fed is going to need more convincing before it stops raising interest rates chief investment strategist at janney montgomery, good to have you with us. so do you think the bottom is in or not >> well, tyler, that's going to be determined by whether we can avert a recession or not you're likely to see earnings decline by 15 to 20%, and in that environment, typically the stock market declines about 34%, so while we've pledged a considerable amount already, 27% so far, it does suggest that
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there could potentially be more downside however, if by chance we do see a continuation of these softer inflation readings that could encourage a reaction function by the federal reserve to ease off of the pace of its tightening and allow the economy to continue to muster some impulse that is positive in nature, then likely, i think we have seen the bottom, and, in fact, perhaps this rally will pull forward a lot of gains coming out of the relief, ricochet bounce we have had. none the less, we could continue to grind higher here for some time. >> there's either a light at the end of the tunnel or a tunnel at the end of the light i'm not sure which right now, and i don't think anybody really really is. where would you be putting money now, if you had discretionary dollars to put to work >> of course, morgan mentioned the fact that technology continues to rip, but actually among the stack of sectors that are positive so far today, energy is once again regaining
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leadership so that would be a space, as well as health care, even though they're taking quite a hit today for reasons of being good defensive growth sectors, and actually within the market, a sector you can point to as being reasonably valued. having said that, i think one can also start to take a look at these tech companies some of these iconic brands, like an alphabet for instance. these have been marked down since 35% on a year-to-date basis. valuations are coming in quite a bit in the case of alphabet, 18 times earnings even though obviously they may be challenged on a near term basis because of ad spending drying up. nonetheless, they have most of their business another is raytheon, or companies in the defense sector, which we think will stand to benefit from budgetary expansions, not only here in the united states but around the world to bulk up military fighting forces to combat among
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adversaries around the world. >> we see some of the defense names under pressure today given the headlines coming out of ukraine, or the ukrainians reclaiming kherson, the strategic city of kherson as the russians retreat sti still, to your point, names to consider when you think about the growing backlogs the bond market is closed because of veterans day, you had the ten-year yield drop 33 basis points, almost a third of a percent. that's almost unheard of what do you make of those moves? how much are stocks from here going to continue to take their cue from the bond market >> well, morgan, you're right, i mean, the drama in the bond market really was matched by the drama in the stock market. it's exceedingly repair to see the moves we saw in equities and on bond yields plummeting the way that we had. i think if by chance the disinflationary impulse that may be forthcoming by way of supply chains being rectified helps to keep yields low or go lower,
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that will certainly help to support not only the stock market overall, but longer ration assets, mainly technology, and therefore that could be the leadership giving its dominance and the naive benchmarks that draw equity higher on the other hand, if it's disinflation caused by drying up demand, as consumers are retrenching, given the evidence by the university of michigan survey today, that would be more worrisome. so further declines in yields from here could be more indicative of the recession that appears to be looming in the not-too-distant future. >> mark lachini thank you for joining us today. tech is one of the key trouble spots in the market. even with the recent big rally for names like meta, netflix, alphabet, which are down big for the year the economic slow down and recession fear is a reality check for investors in the sector, with most no longer
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willing to give a pass on profits. our next guest says meta can no longer spend billions on speculative technology that firms like netflix need to focus on business growth, and tech in general needs to cut costs let's bring in professor of finance at the nyu stern school of business. professor, great to have you on, especially on a day like today, especially after the moves we've seen in some of the these names. let's start with meta, which continued or i guess finally saturdayed to tighten its belts a little bit this week with some of the layoffs we've seen. >> i mean, i think the layoffs are a small part of the story. if you look at earnings report and what's happened to meta over the last year, year and a half and the trillion dollar market gap in july of 2021, the biggest change has been the dive they made into the metaverse. they have invested $10 billion in the metaverse and plan to invest another 90 billion. the fact that they're investing in the metaverse, what bothers
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me is not that it's uncertain and speculative, i haven't heard a story from the company as to how they plan to make money on the metaverse. what is the business model they plan to use. and i think that's the lacking that i find surprising if you're going to spend 100 billion. you have the obligation to lay the ground work. here's what we plan to do in the metaverse. and we haven't heard that from meta that's surprising, make ing that event. >> what do you think of the fact we have seen the stock move 26%. it's incredibly beaten down in general this year. >> right now, if you look at facebook at its absolute, here's what investors seem to be expecting building in. they're building in the expectation that facebook's going to spend the hundred billion. how can you stop the company you have no corporate governance, no control over the company, and they were building in the expectation that they will get nothing back.
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it's almost like they've built in the expectation that the company is going to open a hole in the ground, throw in 100 billion. nothing is going to come out of it that's a little extreme. this is a company that has a history of making money on its businesses i don't think it changes overnight, a company that just throws money down a hole that's what investors are pricing in what i think you're getting is an adjustment back to some kind of reality saying, hey, we might not make that much money on the metaverse but we're going to make some money. and let's see how that adjusts i think if facebook can craft a story that people can buy into, they can see a much bigger jump in the stock price as people who give them the benefit of the doubt. >> if i read between the lines, aswath, it seems that you're saying that companies like facebook, but maybe other companies too in the tech area have had both the benefit and curse of having too much money sloshing around, and now they really have to focus on what
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their business is and start to run their businesses with more standard sort of -- in more standard kinds of ways thinking about profits, thinking about roi and so forth, so netflix would be an example. they flew money at content maybe they can't do that as much anymore. >> you have to separate the big tech that's true for netflix, and it's true for amazon outside of its cloud business it's definitely not been true for google and facebook. these companies have been money machines margins of 45, 0%. the problem isn't the good times. the weakness is your business models can get hidden by markets growing, investors like you. warren buffet saying, it's only when the tide goes up you discover who's not wearing baby trunks when the economy slows down, online advertising stops, subscriptions start to slow. the weaknesses in their business models have always been there.
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this is not something that showed up last month or six months ago coming to the surface. and investors are saying, i didn't realize netflix spent this much money on content, and it's not getting that much additional subscriptions as a consequence. i think what you're getting, and it's a collective recognition by the companies and investors that there's not as much buffer left in the system. you can hire 10,000 people and f get away with it. >> that's the idea there is that things are changing a little bit and that you can't just hire 10,000 people. because we've got the money to do it, we've been a money machine, and we've got the capital for it, right. >> during covid, stay at home, work, don't work, it's not a big deal when you're making 50% margins, you can afford to do that. when you see growth level up, all of a sudden you're going to ask people to come back to work and work eight hours a day, ten hours a day, 12 hours, like the
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rest of us do, and i think in a sense, if reality is bigting at these companies, and it can be painful for the people laid off obviously. i think you're getting some of the excesses of the last decade kind of getting washed away. >> in light of that, expand this conversation out a little bit. what do you think of the market more broadly, the s&p, for example, which is inching back towards 4,000 right now, as we have these debates about earnings recession, possible economic recession maybe the possibility that inflations peaked and the fed could maybe, maybe, maybe, engineer a soft landing. there's so many question marks going into 2023. what do you think of valuations here >> i agree with every part of what you said there except fthe if he fed. we have given them a central role we shouldn't have we need to worry about the effect on earnings, and build that into evaluations.
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i think the fed is a side bear in the game. i know i'm in the minority here. it's not as if they can bring the rates back to 1 1/2% even if they wanted to unless inflation drops, rates are not going back to 1 1/2, 2%. i think inflation remains the central figure in the conversation that's why yesterday was no surprise inflation is the center of the conversation everything in the market is going to be driven by good news and bad news on inflation. and in my view, this talk of a fed pivot is the most dangerous and unhealthy conversation that you can have because i came into the market in the '70s and i saw what fed did to inflation so if you think a pivot is good news, you got to be careful because the fed pivots and inflation comes back gez guess what, the second time around is more painful sometimes itst b is better to te your medicine. not beg for a pivot.
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and bring inflation down kw why not stop now it looks hike it's down. >> wise words there. professor, thanks for being with us thooday. >> thank you. ftx declares bankrupt ri, fbf goes from the face of crypto to the disgrace of crypto. what needs to happen to prevent more crypto crashes like this one? plus, elon musk tries to fix twitter throwing everything but the kitchen sink at the problem. there's the kitchen sink not all of it seems to be working. we'll have the latest on this after this quick break
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welcome back to "power lunch," a wild week for crypto, the ftx token losing nearly 90% of its value a number of big names comments on the event as they have unfolded in realtime, and weighing in on the broader asset class. take a listen. >> i'm not surprised that this happened there really is no -- as far as i'm concerned, no rules, no laws it's like the wild west. >> does it feel illegal? we'll see. it certainly feels immoral. >> not all companies in crypto are like this, and the financial system has a company that goes bad. it is not representative of the whole. >> if you're going to have a crypto asset, it needs to be nobody else's liability. you need to have full
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transparency to it and that's what bitcoin is, and that's what ftt was not. >> when you give somebody your token and they go down, you're going to just stand in line at a bankruptcy court. >> the original idea is this was a rescue finance situation, and could we somehow help, which would obviously help the entire industry, and then when i got to the bahamas, it became clear, at least from some of the people that worked on legal team and the compliance team that perhaps there was more going on than it being a rescue situation >> of course it all culminated this morning with ftx declaring bankruptcy, and sam bankman-fried resigning as ceo kate rooney joins us with the latest on this developing story. >> that's right. a rapid fall for what was a $32 billion company earlier this week ceo sam bankman-fried officially stepping down but the 30-year-old ceo says he'll stay on throughout chapter 11
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transition the filing includes alameda research and 134 affiliated companies all over the world in uganda, europe, hong kong, switzerland, the list goes on, and the estimated liabilities stand at between 10 and $50 billion. a wide range there i'm also told that could change in the coming weeks, and there are more than 100,000 creditors. also told that number could change we'll see as we get more bankruptcy documents, sam bankman-fried and ftx have been bailing out others in the industry, and had raised money from some of the premier investors in silicon valley and the world. telling cnbc the investment dollar amount was under $100 million sequoia had 150 million in there, and marking it down to 0. ontario teachers pension fun had invested about 75 million.
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sam bankman-fried tweeting this morning, he says i'm really sorry, again, that we ended up here he said he was shocked to see things unravel the way they did earlier this week. the department of justice is looking into ftx and sam bankman-fried, and all of this is shaking investor confidence bitcoin is down. telling clients to stay on the sidelines. in a note they say it is appropriate to wait for lower lows, and there will be other casualties, which could lead to some more forced selling and headline risk. definitely africaing prices and sentiment. tyler back to you. >> what a story this one is, kate rooney, we appreciate it. what lessons can be learned from the crash of ftx in a new op-ed, our next guest writes the manic speculation behind the fall of ftx is as old as the markets themselves, so if we don't learn from all the other crashes, will we learn
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this time. rana always good to see you. what have been the telltales with ftx and bankman freed that would have told people this was one that was on thin ice. >> all of it there's nothing about the crypto market, as i wrote yesterday that didn't, in many ways wreak of a very famous line from stein, there is no there there this is one of the largest speculative bubbles i have seen in my career or studied over the course of the last 38 years, and look, there are a lot of apologists for crypto, saying this is a cleansing process, and dfi is going to overtake cfi, and there's an error in finance. this is nonsense these are fake tokens. this is fake currency. this is not real money it's not backed by anything, and from what we're reading f you read between the lines there may have in this case at least been
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allegedly misappropriation of funds, rather sizable money in fact that makes this another scandal, another scam in a long series of them that we have seen on wall street, and even going back throughout market history. >> i'm a little slow on this kind of stuff, ron what makes the u.s. dollar a fiat currency different in quality from a bitcoin in other words, what is it >> you have a $20 trillion economy behind the dollar, interest bearing securities where you can put your dollars and park them with a relative degree of safety the u.s. is still a very highly rated credit, even despite our debt to gdp levels and other issues we have the full faith and credit is behind the dollar. the federal reserve stands behind the dollar, and there are people that believe that's part of the problem, but look, it's a real thing the dollar comprises about 65, maybe more, 65% or more of
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global trade, used in 95% of foreign exchange transactions around the world it is a reserved currency. bitcoin is not bitcoin doesn't exist in any way, shape or form outside, i think, at least in my humble but seasoned opinion, in the minds of those who created it. >> i want to push back on this a little bit, ron. in the sense that you do have things like the usd, which is a stable coin, tied to the dollar, part of the centralized finance discussion you're touching on, we have had a number of people come on the air this week, michael taylor, we showed that string of sound as an example, talking about the difference between centralized and devalueized tokens and basically says, you know, bitcoin, you know, they were in a dysfunctional relationship with the broader, for bitcoin enthusiasts, a dysfunctional relationship with the broader cryptocurrency community there definitely seems to be a major coming to roost moment, if you will, for the broader space.
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but as long as you do have the michael sailors, and mike novogratz, and squares and all the other companies of the world that believe in something like bitcoin there's going to be a market for it, and there's a limited supply which i think also adds to that, so this idea that the entire thing is a ponzi scheme or a house of cards or the biggest bubble you've ever seen, i'm going to push back on that a little bit. i think there's a bubble here, but i think it's not all equal potentially. >> well, listen, first of all, a lot of people who support bitcoin have failed miserably in other endeavors, blown up their hedge funds, and maichael sailo, look at his company micro strategies and see what the history of that is, and he has put bitcoin on the balance sheet of a company and counted it as cash when it's not cash. i would discount his perspective in particular entirely and look, i think there is no use case for these currencies.
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i have yet to see bitcoin -- >> but there is a use case for some of the underlying technology, like block chain. >> block chain, technology, absolutely, for payment systems that are becoming less expensive, friction free, more transparent, and more safe, absolutely but the cryptocurrency part is the overlay. the under lying block chain technology is the part that's important, so where i see a lot of these people coming out of the wood work, i never saw this coming or, you know, bitcoin is different than ftx or resides on ftx, i think that's nonsense we have done this a million times in the past, whether it's railroad bombs, electronics companies, or bad internet companies that the underlying internet was important, but a lot of players like cmgi simply disappear. they have no functional use case i think that's the same story here >> i'll never forget, realize that bubble was going to burst. i was in a chinese restaurant in asheboro, north carolina,
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population 1,100 or whatever it was, and the waiter asked me what do i think of cmgi, i realize ld a realized at that moment it was all over. >> there was a story in a prior book, petter henderson, used to be a specialist on the floor of the new york stock exchange, was on street signs with me, and stopped me in the middle of my questioning on the floor of new york stock exchange, not to condescend anybody, but a homeless individual asked him if he worked at the exchange and if he had a particular idea or notion about a specific internet stock. at that point we knew the last marginal buyer was in, and that the game was over. and as one wall street veteran on the floor since 1999 once told me, the game never changes, only the faces do. >> we'll leave it on that note >> yeah. of course i think it speaks to the regulation. >> the guy from coin base yesterday, if i read between the lines, he was saying we want
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regulation because regulation legitimizes and creates the rules of the road, and that's what i heard. >> creates a kind of certainty and legitimacy, i suppose. >> and transparency being part of that. this is what we have been hearing from all of the crypto enthusiasts. ahead on the show, coming up, a growing short supply for interest climbing across the market, in some cases controversial stocks are seeing 40% of shares held by those betting against them we're going to trade those names today. plus, the fight for vets, the veteran work force running strong with jobless rates below the national average even as the job market slows down, tech firms are competing for that talent. "power lunch" will be right "power lunch" will be right back personalized education to expand your perspective. and a dedicated trade desk of expert-level support.
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. welcome back to "power lunch," the drama at twitter continues, the $8 a month blue subscription service after users were using it to impersonate fans it allowed people to pay for a verification check mark was launched earlier this week he is pushing the company to roll things out quickly and there will inevitably be
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problems, tweeting just earlier this week quote emplplease notet twitter will do lots of dumb things in the coming months. we will keep what works and change what doesn't. >> let's get to brian sullivan for a cnbc news update brian. >> tyler, thank you very much. here is your cnbc update at this hour, the biden administration announcing plans to tighten regulations on methane emissions from oil and gas drilling requiring fossil fuel companies to monitor for leaks of harmful greenhouse gas and drill sites, expected to roll out the new measure sometime in the next year the biden administration also announcing today that it has stopped taking applications for student loan forgiveness all that comes as a federal judge in texas struck down the plan in a ruling yesterday biden's plan to cancel the 20,000 worth of student debt was unveiled in august and has faced multiple court challenges. administration said the doj has already appealed the latest decision. and unone of the nation's busiest airports disrupted by a
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fuel pump fire flights were halted friday morning due to a small fire. officials were able to extinguish the blaze but a safety inspection is ongoing, and fuel supplies are limited for departing flights. back to you. >> brian, thank you very much. ahead on "power lunch," king dollar no more, the green back on pace for its worst week in years as inflation fears begin to cool. interest rates slide back a bit. who could benefit if the decline continues. we've got names to buy. it turns out investors pile into the home builder stocks thistime of year in hopes that the spring shelling season will pay off. tuly years the trade has acal worked. will this year be the same will this year be the same we're back in two. ...innovation... (music) ...discovery? or simply stability...
2:33 pm you shouldn't have to choose. (music) gold. your strategic advantage. (music) visit i remember the day you looked at me and asked, “what now, dad?” so i said, find a job, any job. work hard. that's just how it is. but of course, you didn't listen. you showed me there's another way. i'm proud of you. ♪ ♪ let's have some fun. alright. [announcer] marc benioff [announcer] and bret taylor! you excited to be here? this is going to be huge. [michael] i want my daughter to have a livable world. [marquita] i just try to keep a [marquita] growth mindset. and the sky's the limit.
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we got 90 minutes left in the trading day. commodities bond market closed today in observance of veterans day. all the major averages are in the green, as you see right there. industrials up 41 points, they have tilted back into positive territory, even if ever so slightly the s&p 500 up about 1%, and the nasdaq composite piling on after
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yesterday's fantastic day for stocks on the nasdaq up another 2% today. health related names, united health and amgen dragging on the dow. amgen about 2 2/3. software and cloud games the biggest gainers at this hour docusign and crowd strike among them crude closing for the day, and the week higher today but still down nearly 4% for the week you see it down there week to date, down 3.9%. >> well, now to the declining dollar today the green back hit the lowest levels since the middle of august, and coming off the worst day since 2015 all of this adding up to the dollar's worst week since march of 2020. so the midst of the pandemic has the dollar peaked and if so, which stocks do you buy, and which do you sell on that weakness boris schlosberg is at bk asset management, and joins us now
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great to speak to you. and i want to start with this dramatic move we've seen that's been coming for a number of days and weeks now in the dollar have we seen the dollar, the strength in the dollar peak, and if so, what was driving it in the first place, the fact that we saw the fed on the aggressive tightening cycle. >> yeah, i think yesterday's cbi number fts was a game changer it's been evident that prices have been going down to everyone but the fed for a while yesterday, and yesterday kind of confirmed it as far as rates go. the drop in rates caused enormous amount of decline in the dollar, and i think that was the big deliver. as a matter of fact, down 11 big figures in less than two weeks that's a very big move, so i think at the very minimum, we have paused, and i would be very very surprised if we see anymore
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75 basis point heights in the cycle. i think we're done with 75 basis points, and i think the market sees that, and that's the reason the dollar rally is pausing. yields are going down, and it's going to be positive for companies that are earning their revenues, other than the dollar. >> so then what are some of the names that you think could stand to benefit here, and i ask that as we're coming off the heft of earnings season where we did see multinational companies. >> one thing that's controversial because it's been beaten to a pulp that's alibaba that stock has been destroyed on economic considerations. however, we're coming off the ccb congress, where it has really consolidated its power, and there's a reasonable chance there's going to be thought in chinese regulatory policy. in the meantime, you still have tremendous amount of demand on the digital economy in china they just had their singles day, it's expected to do 1 trillion
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yuan, which is tremendous. ba ba trading at ten times earnings is going to get some tremendous benefit just from simply modest growth going forward and easing of chinese regulatory regulations all of that drives it as far as earnings go because i think the yuan has really bottomed against the dollar for the near term if i'm right about the fact that the dollar has stabilized, it's probably going to decline against the yuan, you get the tail wind. that's an interesting oucht of e box pickup starbucks is going to put up one new starbucks every 15 hours for the next five years in china that is a huge bet on the fact that their next marginal growth is going to come from the middle class of china and if they're going to earn more and more of their revenue in the yuan and if
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the yuan just basically stabilizes but perhaps strengthens against the dollar, that should provide a tail wind. >> remind me, a weaker dollar would help starbucks how >> if they're earning more and more of their money in the yuan, and it strengthens and they repatriate, that's going to look dollar. >> they're going to get more dollars when they repatriate, that's the mechanism by which that happens, and it happens whether it's the euro or the yuan or the pound. >> or the dollar or the yen correct. but they're making a massive bet on mainland china, and if that bet pays off and their growth continues and the currency does well, they should all do very well i have been bullish with starbucks. >> that's a lot of caffeine in china, thank you, boris. we appreciate it. despite huge gains yesterday, home builders down big for the years. our hopes of lower mortgage rates next year enough to lift
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the group. we'll discuss that when we return after this. ♪♪ the only thing i regret about my life was hiring local talent. if i knew about upwork. i would have hired actually talented people from all over the world. instead of talentless people from all over my house.
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♪♪ we all have a purpose in life - a “why.” maybe it's perfecting that special place that you want to keep in the family... ...or passing down the family business... ...or giving back to the places that inspire you. no matter your purpose, at pnc private bank, we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why? ♪♪ welcome back to "power lunch," home builders were among
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the best performers in yesterday's rally. the home builder xhb, out performing the broader market up a whopping 12%, 13% week to date right now, and better than 2% today. a big reason for that rally, a move lower in mortgage rates and speculation that the fed may be getting closer to a quote pivot in its rate hike path. but the next guest on cnbc says mortgage rates may fall below 5% by the end of 2020, and lsthere a lot of hope for home builders. joining us is john lavalo, senior research analyst. do you believe rates could fall back below 5% by this time next year >> thanks for having me. so really let me give you a little context around this call. what we're saying is that the 30 year spread versus the ten-year treasury has blown out 324 basis points, the widest since 1986.
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the average has been about 172 basis points, all of this spread has been driven by extreme volatility in the bond market at this point what we're suggesting is if you take the ubs house four pass, the ten-year bond, and that's 2.65%, and you layer on the average spread, assuming a normalization of 172 basis points, that gets you to 4.4%. is it possible sure, are there a lot of head winds in the way absolutely >> and this would, if this happens, obviously there would be more people who could afford houses and this would be a good thing for home builders who would benefit first and most >> it's a good question. i think that the home builders across the board would benefit however, i think the entry level first time focused home builders are best positioned. they're need based, willing to pull levers to buy a home, moving away from the city center, borrowing money from mom and dad or moving into a smaller footprint. you look at someone who owns a
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home and has a three handle on their mortgage, maybe a little bit more reluctant to move that first time buyer is where we think the action is going to be the biggest builder by volume, by a large margin of about 30%, focus on entry level, so we favor that >> so how much would home prices actually need to fall in some of these major markets if they do for the first time home buyers to be unlocked and feel like they can come into the market. we talked about the mortgage piece. how about the home price piece, and factoring in the cost to bi build that home as well? >> it's a good question. that's the big debate, are home prices, no, they're not. there's not enough supply in the market existing home supply, which is 90% of the market. there's only 3.2 months, versus a historical average closer to 6. about ten months during the global financial crisis. we don't think that will happen. what we do think will happen is
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you'll see folks migrate to other areas. migration is a big trend and make the math work i think that, you know, could home prices fall to some extent? absolutely in some markets they will fall dramatically, in the hotter markets where prices have soared overall, nationally, more hard pressed that you're going to see a sharp decline in home prices. >> john lovallo, we appreciate your time today, of ubs. >> thanks for having me. it may be getting colder outside, but it's still shorts weather on wall street oh, boy. the number with short interest, thgher than 25%. are ey buying despite the bets against them we're going to dig into that we'll be right back.
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welcome back it's time for today's three stock lunch. today we're looking at some of the most heavily shorted stocks in the market. grill retailer weber has a 39% short interest he beyond plate, which just reported a dismal quarter has a 40% short interest chewy, 27% short interest. let's bring in jeff, chief investment officer and cnbc contributor. great to have you on
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let's start with weber your thoughts? >> i want to be a buy here of weber and this is a small cap company, less than $1 billion in market capitalization but the nostalgia of it. all the time i went to the bears game and burnt burgers or in my dad who i want to thank drill sergeant of the u.s. army and those who have served on this veterans day what transfired october? you saw a chicago based firm came in looking to take weber private and. that was over a dollar ago the short interest have ddt capital possibly on the run to pay more for this company which will see a loss of sales after the pandemic but nonetheless, weber grill, an american classic. >> let's move on to something you can put on your weber grill and that would be beyond meat. >> tyler, i don't know if i would put that on my grill, but
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beyond meat, which is the plant based alter thattive, has seen a move lower when you talk about this beyond meat, it has seen just an absolute crushing. we've seen q3 earnings, we saw significant drop domestically but overseas internationally year over year 52% lower on top of that released about 20% of their global workforce. this is a name that, if you do see or own this company right now, near 10% pop today, i think you close this position because i think this goes lower as it continues to get their arms around their trajectory of their forward guidance i'm a seller here. i really do get concerned as investors have really soured in the wake of their q3 earnings report >> yeah. grocery shoppers pushing back on the higher priced goods. final name, chewy, it's seen a comeback recently, up 28% in the quarter. your thoughts? >> it has. a nice pop in chewy for us pet parents out there.
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this is a name i want to be a buyer of i had my french bulldog on last time you hold on or add to it if you think about chewy the partnership it created with lemonade, people are confused, it's just an insurance technology company, so they had health care offerings on chewy, but now, with this partnership in lemonade which will launch this spring they have the ability to customize these health care solutions. if you think about chewy's customer base, 20 million subscribers, less than 3% of u.s. owners of dogs have pet insurance. i think that's an untapped vertical for chewy the bigger question i guess to get your arms around is when will they start making money we like to invest in companies that make money. if you look two years out, the forecast, they will break even and make money and gets accelerated by any possible way you will see more investors flock to chewy because the leadership and ceo, he was at amazon, and he was at dell you have real people in the room here this is not an ftx company
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>> bonus round given the big rally we saw in the markets yesterday, bear market bounce or the beginning of a bull market here? >> i want to see 4100 in the s&p 500 get tested if we have the ability to close above that, all the shorts being on the run you will see global investors get caught short and the mashlgtsz will move higher encouraged to see the way the bond market acted, 10 year and 2-year moving lower. i have been cautiously optimistic i don't think this is a bear market i think pessimism, we're at max pessimism and max interest rates over the summer and max inflation. we have the midterms behind us, so i think 4100 gets tested and i think we have a santa claus rally no one is expecting. >> nice win by the irish over clemson last week. >> big "w. we needed that one >> thanks, jeff. >> thank you
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(vo) at viking, we are proud to have been named the world's number one for both rivers and oceans by travel and leisure, as well as condé nast traveler. but it is now time for us to work even harder, searching for meaningful experiences and new adventures for you to embark upon. they say when you reach the top, there's only one way to go. we say, that way is onwards. viking. exploring the world in comfort. "power lunch." america honoring its veterans today and many tech companies have been trying to fill their labor gap with those who have served in the military kristina partsinevelos joins us now with more. >> despite the weakening labor
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market across the united states companies remain committed to hiring veterans. a group known for their higher rates of engagement and retention and diversity. over 200,000 men and women that transition out every year and 80% of them without a job, but luckily that doesn't last too long given the quality of the candidate pool >> only 23% of american youth can even quality to enlist in our armed forces without a waiver so all studies indicate that hiring veterans is a good business decision. >> and they stay the jobless rates continue to be below the national average over the last few years the blue line under the orange amazon, disney, comcast are some of the top names fighting to wowo the group of workers especially in tech. boeing, global foundry, dominion energy, veterans are 10% or more of the total workforce you can see i was blocking a few of those right here. the competition to hire veterans
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is so intense, that many firms are partnering with the government and colleges as a way to recruit them early. some of them even getting job offers while still active like mba students in year one >> what do employers, apart from the intrinsic quality a veteran brings to the table, the specific skills these companies are finding in vets? is it technology >> we were talking about this off air but a lot has to revolve around technology and many are receiving the certificates while they are in active duty, certificates in engineering or cyber security and makes them more marketable. the second thing if they don't have those certificates, the de departments of defense has an apprenticeship program to provide those certifications so they are marketable within a year or so after discharge
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>> these are men and women who have done things they haven't just studied it they've really done it >> yes >> thank you have a good weekended. >> have a good weekend,ing moren. >> you too. >> all right. >> thank you to our veterans >> thank you to our veterans and thank you for watching "power lunch." >> "closing bell" starts now this nasdaq rally can't stop, won't stop, up 2% after 7% pop yesterday. this is the make or break hour for your money welcome to "closing bell" on a friday i'm sara eisen take a look at where we stand up more than 2% on the nasdaq, s&p 500 up more than 1% and the dow up 0.2%, 59 points session high up 82 points. it is the growth stocks leading and small caps also out performing as well up 1.3% we have to talk about the nasdaq today, though, because it is up big again. the winners in the nasdaq 100 include the pandemic darlings which ha


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