Transcripts For CNBC Power Lunch 20240713

Testifying about the safety of the 737 max. We have the details. Grub hubs failure to deliver. Shares are cratered down 40 wall street abandoning this stock. A top analyst explains why they are waving the white flag. Power lunch starts right now lets take a look at where we stand with the markets. The s p 500 off a record high earlier. The dow is higher but still about a percent away from its all time highs now up just about. 03 of a percent another rate cut is expected steve is looking at that and a key issue troubling the fed in the cnbc fed survey. Lets take a look at what the implications are and then well sge get into that issue. 79 . A bit on the low side for some but its a clear and Strong Majority expecting that rate cut. They is sort of kind of one more cut after october of some kind part of the issue right now, the odds of recession picking up to an 11year high at 34 part of the issue right there, its only one issue. Trade is a big deal according to the 42 he respondents to the survey 76 believe they have raised consumer prices. Opt mitimism about a deal nobody thinking a comprehensive deal is coming 17 dont believe theres going to be any deal at all. That number 80 is what they thought about a comprehensive deal twice before. Well see and there were some headlines today. Twice burned is where were headed now if theres no deal when xi and trump meet Officials Say just because there may not be a deal signed in chile doesnt mean there will be a deal. All these show theres a bit of picking the can down the road. It depends on where you sit kind of in terms of where you stand on this. What i think they will say is we have done what we kind of set out to do which is provide to the market they did that buy. To the fed view theres a lot of stimulus or easing then they want to wait to see how that effects the economy i think the message will be meeting by meeting you may think of that as hawkish. The fed will strive for a neutral zone here. I think thats where he is with the fed decision looming, the s p 500 hitting an all time high. Even higher by earnings. The picture isnt entirely rosy its really two stories one u. S. Consumer doing great. Global cyclicals in not so great. Take a look on the consumer side look at mastercard their guidance the about 15 revenue growth. About 10 of the rev gnf revenum china. Gm on the strike issue, also a little bit on the sign in but thats the week for the year its not the case on consumer staples. Its very well were not seeing reduction where are we whats going on. Thats the answer to Global Growth the bad news is estimates for is cyclicals and industrials and stocks have been coming down energy has been a complete disaster dramatically coming down where else do we get complaints from were at new highs and its shockingly light volume. For connect, for options, everything there seems to be lack of conviction here. Were not getting enthusiastic buying its a lack of selling thats driving the prices up. Remember, right now the market is expensive if you look at the 2020 number. Five today was 70 million shares today. Look at the volume here. 28 million shares in the middle of the day thats what im talking about. Not a lot of conviction. Back to you. Weird thank you very much. With earnings on shaky ground and the fed decision looming, maybe the market is also waiting. Can this rallykeep going is there anything you can glean from this strong period of time. Thanks for having me back i think its fact were out of the worst six months of the year and entering the best six months of the year. November through april, thats 7 on average. The calendar really is what people favor its a good chance well get 20 for the year at the end of october a couple of days ago here. Every stock that might be named, you have to take it with grain of salt. We hit the market bottom a couple of days before the calendar happen to turn. You look at the 52week highs, its a totally different story for companies. What do you think is really going on i really think if we do hit new high and we will, it will be driven by a different cast of characters all the talk about market highs have been drif p by the defensive. If you look at about october of last year, which is important because thats when Jerome Powell made people worry he would put the economy in recession, all the market highs have been defensive. Staples, minimum volatility stocks if were right and the fed have pivot pivoted, and the trade war comes off, i think the formula Going Forward is much different. Its more cyclical and more value and more global stocks new highs but different players. We were having the discussion saying there was lag in Monetary Policy and all that easing that the fetd has been workid has be come out thats where you stand so youre shifting more towards a cyclical at this point. Yeah, i mean were going with the caveat of political uncertainty. If those things kopt to turn, which we think they will then the narrative Going Forward is cyclical you like small cap values, value stock, international and also commodities at this point yeah. Commodities are more for wish. If you look at the component while bond yields have gone down by 150 points, it hasnt moved a year ago today, it was 1. 86. Today its 1. 77. We believe you have to have something with the Federal Reserve desiring to end the sickle right now we have a bit of inflation, not much. No central bank that wants to end it right now all right appreciate it. Thanks very much mullenburg testifying in front of the senate. Phil has all the fireworks phil were not going to show you all of what the senators had to say but its safe to say that Dennis Mullenburg was blasted by a number of senators they dont believe boeing has been totally on the up and up not only the regulators but with the public you told this committee and me half truths over and over, including in that meeting. You have not told us the whole truth and these families are suffering. When boeing came to us and said its the pilot inexperienced pilots, you were lying to us as well. Senator, if i try to respond to your question, first of all the premise that we would lie or conceal is just not consistent with our values. Dennis was drilled for about two and a half hours before the Senate Commerce committee and hes not done on capitol hill. He will be back tomorrow testifying in front of a house committee. Tlp will be some tough questions as well. The victims families were asked to stand up and hold up pictures of their relatives who died in those two plane crashes. Krou can you cant really see it here but i was watching from the gallery, dennis turned around he saw the pictures. He did not duck and say im not going to look at the family members. That was one of the most stirring members that he did turn and and look at pictures. Then he came back and answered more questions it was a rough day for boeing and ceo. He was asked whether or not he would step down he sort of dodged that question. Before he went into the hearing. We asked him pointblank if he thinks he should remain the coe. He said im not thinking about im thinking about getting the 737 max certified and back in the air. Thanks. Weve got a news alert on the streaming service right now. This internet tv bundle that starts at 50 a month has been tied into game consoles and its the smallest of all services the expensive content and network deals have been slower to change than we expected sony saying its focusing on its core daily business. Back over to you thanks very much. Coming up, promise its taking the stock down 40 today. We talk with analysts who stju double down the stock. Were delivering more power lunch after this grub hub blamie ining promiscuo diners thats exactly what door dash is, what mopost mates is. I feel bad for them. Do you really care who delivers your food. Theres no loyalty in that business thats why the diners are promiscuous. Why did he have to use that word that word is saying dont touch our stock. Its becoming too congested for grub hub jag going into the quarter what do you think is the biggest thing you missed its really that frequency, the amount of time existing designers were ordering from grub hub we already knew they were losing market shares to door dash, uber and others i think investigators are okay on the customer they just werent going to see as many its going to cost more. It was that all of the innovation that the competitors done wp their product and we can talk about that is fiej lfinall hitting grub hub sgr did you think it wouldnt hit them things like loyalty and membership they have their version of a loyalty program. I dont think its what uber could offer. Again, up to this point youve seen a high amount of loyalty in the big cities remember, where grub hub does different is they have these in the restaurants. Restaurants historically havent had their own delivery it costs the restaurants more to do third party deliveries. Grub hub, whielg le we are seeig competitors, if you track that, we havent crossed over. The bottom line is when you look at the company and say what is a diner worth, they are worth way less to the companies than we all saw. They said the Industry Growth is slo slower do you see a way out for grub hub or what you thought the Business Model was maybe 24 hours ago, does it no longer exist. Theres definitely a Business Model if you can make money at it its 2 per transaction. Makes a ton of money the idea is if youre seeing who youre effectively come down, how do you make money. You have to do a whole lot more order. They are competing with companies who have much weaker pockets and i think when you back them up against other internet marketplaces that we look at, the company has the lowest net cash balance as any other or theres one other similar, but they are just not prepared to take on these other companies and looked like they were doing okay and theyre not anymore. Most likely they are probably going to have to sell or merge with another company to try to get better share scales. Well see what happens right now uber is offer rides and food loyalty it can use the Customer Base this grub hub has. We do think theres value but not at this stock price. Thanks for your time. In less than 24 hours well hear the feds decision on Interest Rates another cut is expected. Well look at how rates are using the Housing Market and how long it will last. Major shake up in College Sports those details that we just learned in the past hour when power lunch returns. And you should be mad at people who take unnecessary risks. How dare you, hes my emotional support snake. But youre not mad, because you have e trade, whose tech helps you understand the risk and reward potential on an options trade its a paste. Its not liquid or a gel. And even explore whatif scenarios. Wheres gate 87 . Dont get mad. Get e trade and start trading today. Welcome back as the fed gets ready theo make its big decision, one of our next guest sees a warning sign its lifted nicely off the august lows. Been hovering around 1. 8 where do you see it headed next . The key levels that were looking at are at a very critical juncture here just below that level right now. The reason why that is important is that that 1. 9 prts where t trend line is a high it will give it both take it above that line and give it its first higher low sequence in over a dwreer. It holds there and has implications for the bond market but also for the stock market as well lets face it, banks are cheap and looking for higher rates to help them move higher and utility stocks are expensive it could cause a rotation in that market. Its an important juncture for a couple of different markets. It was late july when that yields cracked 2 in a pretty dramatic way they recovered since then. I guess with the fed coming perhaps one more time and going on hold, does that mean the bonds could be stable for a while . I think its changed. A lot of it you have brexit. You have tariffs current agreement. You have an extension of the tariffs. All of those things believed is more complicit we have whether or not powells signals this is the end of the mid cycle correction if so, i think youll have a lot more upward pressure in a negative way potentially yes certainly when you put upward pressure on their yields well see how et goes. Right now the market seems steady heading into that Rate Decision which well get in about 24 hours for for more trading nation head to our website or follow us on trading nation back over the you. Low rates boosting home sales but is the high end for Home Builders. Well ask one analyst whether the stocks will hit a wall cannabis pot industry expected to be worth 4 billion next year. Why products could be what fires up growth. The ncaa board of governors will allow College Athletes to receive compensation for use of their likeness those details when power lunch returns. Woman my reputation was trashed online. I felt completely helpless. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. Welcome back here is your cnbc news update. Vice president pence viewing training exercises at ft. Hood we watched a live fire demonstration at the texas army base involving n1a2 tanks. He was scheduled to spoke to soldier and civilian personnel a judge blocking alabamas effort to ban all abortion ruling the state law critic criminalizing all abortions as illegal. A powerful earthquake shook the philippines killing one person, injuring dozens and sending people out of their homes and buildings. The 6. 6 quake was caused by movement in a local fault. Prince harry preventing the Invictus Games they will compete in the netherlands next may its an International Pair olympic style multisport event for injured war veterans you are up to date thats the news update this hour back to you. We are off the high by 30, 40 the dow is up by two points. The nasdaq is down by. 4 now for todays power movers how about shares of beyond meat. They are tanking today about 65 lower. They are down 20 on the session. The Company Posted a bigger than expected profit and raised guidance and investors and insiders are bailing as the ipo lock up period is expiring General Motors warned it will take a 3 billion hit because of the uaw strike we end with two big drug makers, p pfizer and merck we ha we have a news alert on Fiat Chrysler they are in discussions about a possible combination with psapeugpsa peugeot. Its mainly in europe. They also have large exposure in china and parts of asia. They have big exposure in north america with jeep and exposure in asia. It would create a 50 billion auto maker and give both companies the kind of size and scale they would be looking for. We have reached out for a comment from Fiat Chrysler we have not heard anything dont be surprised that this talk will start to heat up because many people believe the Auto Industry is right for consolidation. We know that Fiat Chrysler was looking a t a possib ining at a combinati combination. That fell apart. Chrysler has been in talks so many times im sure you cant keep track anymore. Do you think this could run into resistance by antitrust officials in europe . Not at first. People said what about peugeot thats starting to be a possibility. Thank you. Now to major shift in College Sports the ncaa will allow athletes to be compensated for their images and likenesses here so explain, eric and jabari young join us. This news just broke the ncaa board of governors were meeting they said they will start the process to enhance name image and likeness opportunities its not about getting paid from the school but you want to get some sponsorship deals, sign some autographs and nowhere did it say we will definitely allow this to happen were going to start working on this were going to start looking at rules and gather feedback. We have all these rules to make sure they stay within the College Motto and not within the professional model were going to start the process but were not guaranteeing anything just yet. Youre thinking through this. First of all, its a very Quick Response to what california had done to try to move forward and say we want our athletes to be compensated for this and saying to the nca its your move. What would be the significance if this ultimately does come to pass it has to come to pass because the ncaa cannot abide by all the rules that the states wanted he wanted 15 of all College Sports revenue to be given to the student athlete. Florida has another set of law california has their law the ncaa cannot abide by there law. They have to do something and credit to gavin newsome. He put many in place once government interferes, there is no turning back how much money could be at stake for these students depends what they allow they could benefit but only up to five grand. You could benefit but only up to ten grand. The first bullet point is sure student athletes are treated similarly to not athlete students so thats the first caveat that says were going to start working on this. Theres already been tweets saying dont get ahead of yourself jay has been noticed for his im not going to get sucked into the ncaa saying were going to try to work on this but if it doesnt really fit our needs we might not do it. They might be trying to have it both ways theres still a law in place. He says if you got three years, were coming to get it if you dont have it together in three years. New york is the same way theres always a local representative who has got an affinity they have a bigger lobbying power than professional teams. A lot of these colleges are public run institutions. They would say were going to work on this maybe get some kids 10 or 15 gs. It keeps getter than that states cant allow these nice recruits to go off to all the other states that will be paying them morning right now california has the advantage. If im an athlete, california or pennsylvania im going to say california. New jersey did it and then pennsylvania and new york said we need to do it too because new jersey will do it. Money need to be earned if this is train is headed down the track, what does it mean for the amateur status of olympic athletes does it raise though questions as well. If youre in an olympic sport at a college, if youre on the rowing team or the tennis team but if youre random guy doing archery at home, nobody cares about you. If somebody says ill give you 500 bucks, im taking it that means i wont have to eat ramen noodsles. A lot of switchers have to decide if im going to go pro or stay in college. Youre doing your best swimming in college its not about those kids its about the inner city kids those kids who are going to represent these kids who dont have anything. They dont come from anything. I come from north philly i know what its like to not have these kids that come from the inner city neighborhoods will benefit because now they can help their parents they can help their mom or dad pay present livie rent living m projects thats why i think this bill is great. Even sure im say they will say thats more than we were working with better than nothing thanks. Marijuana stocks low r across the board after disappointing results. A 10 decline in revenue. That decline put lot of pressure on the sector just as a new revenue stream opens up with the legalization of edible and drinkable cannibas this month. Today the Company Offering a tasting of those products without thc at its headquarters up in canada he expects consumer roles to be a driver for attracting new customers. Canopy selling several brands of edibles and eatables also tokyo smoke a chocolate, both of them with cannibas we can produce a product that is pro siecisely dosed. That is major step to overcoming one of the ob ta. Caller s th obstacles that consumers face its expected to grow to 3. 7 billion. Consumerables are expected to be about 10 of that. Next, if you think markets are scared of Elizabeth Warren, what wouldapn hpeif Bernie Sanders got elected . Well hear from senator sanders on what his democratic socialism would mean for business. Stay with us robinhood believes now is the time to do money. Without the Commission Fees and account minimums. So, you can start investing today, wherever you are even on the bus. Ooh, like this guy. Yeah, i bet hes investing right now. Hes taking charge. Hes grabbing the bull by the horns and he just missed his stop, yeah. Its time to do money, so what are you waiting for. Download now and get your first stock on us. Robinhood. On a scale of one to five . Wait. One to five . When it comes to feelings, its more like five million. Theres everything from happy to extremely happy. Theres also angry. Im really angry, clive actually, really angry. Thank you. And seat 36b angry. Youre clive owen. And youre barefoot. Yeah. Theres also apprehension. Regret. Relief. Oh and theres empathy. Ah, i got this in zurich actually, whats the opposite of empathy . But what if your business could understand what your customers are feeling. And then do something about it. You can turn disappointment into gratitude. Clive, you got to try this. I cant im working. Turn problems into opportunities. Thanks drone. Change the future of your business. Change the whole experience. Alright who wants to go again . I do i do i have a really good feeling about this. Welcome back its the day before the next fed decision lets get to the bond market where rick is tracking the action rick if we take some charts back to the last fed meeting, the last decision the lower court appoint, september 18th. You should note a couple of things maturity yields are lore thwer n they were but long maturities are higher as a matter of fact, all maturities are the highest levels in october and they go back to various points of september. Since last fed meeting its really got the hit it was acting really solid most of 2019. The question is why are traders behaving this way. Is it a fed issue. Theres a lot of growing criticism about over seeing central banks. Its probably both tomorrow we get fist look at Third Quarter gdp. A biggie for traders and well get a glimpse of what may occur on the jobs number kelly, back to you thats right. Thank you very much. The Mortgage Rates pending home sales rose to a 21month high in september. Nearly 4 from a year earlier. We got a read on august prices they rose just over 3 nationally the Home Builders were at 52week highs. The fed is expected to deliver another round of rate cuts ken, its been great year for these stocks the game has made it this point. Thats the debate for investors because the stocks, the home builder index is up 60 . Last year it was down 35 . The year before 75 . This is a hyper cyclical group you got to get it right. Is it more dependent on race, the macro environment. Whats the key fundamental factor to watch . I think its transitioning to be macro were going into the slower winter months. Were seeing the slow down in order and backlog value compared to unit volume part of that is moving to entry level homes. The other part is maybe the Housing Market is pulling down a bit. Is there a seasonal trade involved, ken . We had tom lee on earlier this week he had done a study and found that were in a golden period of six months from october 20th through april 20th Home Builders out perform the s p 500 and its happened nine of the past ten years especially when rates are rising. Im wonder if you see seasonality as a factor at all its a great question what im seeing is anticipation of that kind of rotation and performance happens a bit before you anticipate the period. Home builder stocks have done terrific since midaugust. I see you have a buy on Taylor Morrison and the rest on toll brothers. Why Taylor Morrison . They report tomorrow to get stronger performance as a home builder you need the aggressi aggressively increase Community Count and migration to entry level and first move up. They are doing a terrific job. Its easier on year over year whether its Taylor Morrison, kb homes to get that kind of comparison if youre a larger builder in the near luxury market and geography, some of the more difficult areas, the year over year comps are much more difficult. On a relative basis that will lag. Appreciate it today thank you. More and more Fund Managers are warning about market sell off if Elizabeth Warren is atected president. Wh about selfproclaimed socialist Bernie Sanders what if he wins . What happens to markets then thats next. Staffing a Small Business is challenging. Filmgate is growing really quickly and. I needed to fill a production coordinator role. I was looking for someone with specific skills. So i posted a job on linkedin. Maribel had all the skills i was looking for. And looking at her profile. I saw shared connections. That was a plus. But the most important thing. Is the ability to connect to people and she had it. And i knew. She was the one. Post a job today at linkedin. Com grow pat jones becoming the latest fund manager to warn about a big stock decline. How they feel about brrnernie sande sanders, who calls himself a socialist. John harwood sat down with senator sanders and asked him how thought he could pull the u. S. Towards democratic socialism. Well, depends, you know, what we mean by democratic socialism. What im trying to do in this campaign is pick up where roosevelt left off and say that economic rights must be considered human rights. I uniquely, in all due respect to my colleagues, i am taking on the insurance companies, the drug companies, the fossil fuel industry, the military industrial complex, the prison industrial complex, wall street, the democratic establishment theres a guy ahead of the corporate wing of the Democratic Party. And he said, Bernie Sanders is an existential threat to the Democratic Party i agree with him, i am i want to convert the Democratic Party to break its dependency on big money and corporate interests. Would it be your intention to appoint democratic socialists to big well, youre making youre going a little bit too crazy on the word here. I will appoint people who believe in the working class and the working families of this country, who are prepared to stand up to the incredibly powerful corporate interests that today dominate our economic and political life so, when i talk about democratic socialism, you want to talk about, what does it mean lets be clear, what does it mean lets not get people overly nervous about it what it means is that health care is a human right. Not a very radical idea. John harwood joins us now from washington. And john, it is Elizabeth Warren who has surged in the polls lately and thus the reaction when asked what that would mean for things like the stock market have Bernie Sanders, in a way, and Elizabeth Warren might actually go on to win. Who knows . Has Bernie Sanders in a way already won . Because the party now reflects so many of the priorities that hes said hes been pushing for three decades. He said he wanted to i forget his language there, make it over or, you know, he was an existential threat now theyve kind of come around to his point of view well, kelly, its a good point. He claims credit, partial credit, since 2016 in his campaign then against Hillary Clinton for having moved the party on things like medicare for all, on things like free college at public universities however, hes still in this thing. And he theres a new poll out today in New Hampshire that shows him in first place in New Hampshire. He does trail both joe biden and Elizabeth Warren in the national polls. But hes got more money in the bank right now than any other candidate in the race, so hes got a little bit of room to run here and its interesting, in our nbc wall street journal poll, weve shown the two characteristics that voters consider least attractive in a democratic president ial candidate are, one, being a socialist, and two, being over 75 years old Bernie Sanders is 78 he just had a heart attack, hes a democratic socialist hes still in this game. You know, john, in our introto your piece with Bernie Sanders, we mentioned paul tooututo jones and his comments about a stock market decline he was guessing that an Elizabeth Warren victory would send the stock market down 25 a sanders victory would send the markets down by 20 . Im wondering if Bernie Sanders himself even cares if the stock market could or could not do in response to his victory. Well, i think, at the moment, getting criticized by people on wall street or having predictions of that kind for both warren and sanders are positives within the Democratic Party. A different story if you actually get elected and then you have to superintend the economy. Then youre a little bit more concerned about the consequences he does say that he wants to fundamentally change the way corporations are governed, but he does not want to get rid of private corporations and if Bernie Sanders manages to get elected, which i think is a less than 50 50 chance, but its not impossible, you would likely have a Democratic Senate and then you would test how far you could go with his agenda he says by putting public pressure, he could get even conservative democrats like joe manchin to come around to his program. We will see if thats the case, should he break through. All right john, thank you bet john harwood with the latest speak easy and chk,lee s xtec pas ine when i lost my sight, my biggest fear was losing my independence. Mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. When i see obstacles, i create opportunities. It is already working in c soft music okyo. When i see adversity, i find a way. When i hear never, i say now. [announcer] southern New Hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. cheering so when i face barriers, i can break through. [announcer] breakthrough at snhu. Edu. Check, please. Obviously, fed is front and center for tomorrow, but were also going to be reporting apples in todays session, interesting price action for apple hits a new 52week high, alltime high, and now its back down by 2. 6 its interesting positioning going ahead. Were seeing for a lot of these tech names, a runup to earnings and a selloff out of them so you wonder if this sort of lowers the bar the hot now trade lately has been apple and jpmorgan. Interested if earnings is a headwind for that. And i want to mention kellogg, which is higher for today. They said demand in pringles and chee cheeseits is offsetting the drop in sugary cereals im going to make muddy buddies. Have you ever had muddy buddies . No. The chex and the Peanut Butter and chocolate like a sweet and salty thing. I like them segregated thanks for watching power lunch those pilots never had a chance these loved ones never had a chance they were in flying coffins. You have told this committee and you have told me halftruths over and over again, including in that meeting. This is why im so upset i would walk before i was to get on a 737 max i would walk youre the ceo, the buck stops with you did you read this document and how did your team not put it in front of you, run in with their hair on fire, saying, we got real problem here . That was the u. S. Senate putting boeing ceo dennis muilenrg