Fall just as fast. Plus after taking off jack dorsey square, Hindenburg Research has a new target. This time carl icahn and we lay out the key factors at play. Its wednesday, may 3rd, 2023. Youre watching Worldwide Exchange right here on cnbc good morning and welcome to Worldwide Exchange. Im frank holland. Lets kick off the hour with a check on stock futures after a sharp decline yesterday. Looking at futures right now, theyre strongly in the green across the board you can see the dow opening up 20 points higher today is very early. Its a huge day, all of this ahead of the federal Interest Rate decision out ahead at 2 00 p. M. And then the News Conference to follow a tenth straight rate hike from the fed, one of the items on wall streets wall of worry along with the continued debt sector much more on all of that coming up later in the show with that in mind were checking the bond market starting off with the benchmark 10year note at about 3. 30. The 2year yield back below 4 were also watching energy with wti coming off a very rough session yesterday, closing down more than 5 for its worst day since january 4th. Wti crude is just at over 70 bucks, ten bucks lower than it was after opec announced production cuts. Brent crude, the international benchmark, down 2 natural gas up fractionally. Time now for the top stories including a rough session for the regional bank. Silvana is now here. Good morning. Frank, good morning to you. That is right. We continue to watch the action and the regional banging sector after it closed at its lowest level since 2020 leading the group was california pacwest bank closing down nearly 30 after being called multiple times for volatility that stock is down more than 70 this year. It wasnt just pacwest in fact, all 148 stocks in the kre regal bank etf closed lower with names like zions, first hawaiian, and citizens after taking on jack dorsey square, the short seller hin dinburg research has a new target, carl icahn in response, icahn calls the report selfserving aimed at generating products at the expense of iep shareholders. Thinking on the news, seeing its worst day on record and erasing some 10 million in icahns net worth. And vp harris will meet at a summit with microsoft, google, open ai to discuss Artificial Intelligence shell address the need to safeguard and emphasize the importance of innovation frank. I think this is the beginning of the conversation about ai. Way more to come. Way more to come from you well see you later in the show. Expectations are for a 25 basispoint Interest Rate increase and the signal of a pause in its aggressive Hiking Campaign ahead of that decision, jpp morgan says Stock Traders have yet to fully embrace that move, and a change is not fully priced into equities. Jpmorgans trading desk adding a stockmarket rally is in sight if the fed hikes and pauses with the s p adding half a percent to 1 in the aftermath. Joining me now to discuss is de geus write gentlemen, great to have you both here. Great to be with you. Good to be on with you. Alan, lets start with you. Do you agree with jpmorgans thesis, that we could see a rally with the s p 500 we agree. The market is certainly waiting with bated breath for this afternoon and how the feds going to respond to the most recent banking issues as well as the inflationary data, and we think the markets going to do well coming out of that and thinking they will pause. Degus, if everybody is kind of expecting this, why isnt it already priced in . Because weve had so much theres a lot of negative with this market. Degas, sticking with you, we expect a quarter rate hike and probably a pause how do you balance the portfolios and amarrange the sectors when it comes to regional banks lets first talk about regional banks were reducing our exposure there because were still seeing weakness in that area. Were also looking at the fact were overweighting health care. Health care has done really well during this period also were looking aet those companies that have a competitive advantage and those companies that have positive net earnings revisions these are areas that you can still have very good returns in stocks in this market. A alan, where are you at . Weve been neutral when it comes to stocks versus bonds theres going to be a lot of volatility coming out of fed rate hikes and a slowing economy. So we felt invests were best served to have a balance between the two or neutral weighting between those two. And on the fixed income side of the house, we felt investors should stay short duration, really not benefitting from being out long on the curve as well as focusing on quality and credits, feeling that there really wasnt a real opportunity yet on the credit side of the house as it relates to Investment Grade and even on the high yield side as markets got a little more volatile and what weve seen with the stockmarkets unfold. Were going to go lightning round. Alan, im going to start with your stock picks youre looking at cocacola and apple. What makes them so attractive at this Inflection Point . We think its about p and l, return on Investment Capital and equity, looking at companies that have Pricing Power and cost of inflationary trends if they can do that and pass those profits on t shareholders, we think investors will be well served. Degas, i know you have a few picks. If you were to put money on one stock, which would it be it would be copart. Shares up almost 29 , 30ch year to date degas wright and alan mcknight, we appreciate you being here. Plenty more to come here on Worldwide Exchange including that one word thain vesters just have to note today also why Howard Schultzs shadow seems to loom over starbucks new ceo, pushing the stock sharply lower in the premarket. Plus much more in the oil steep drop and the 70 crude is here to say. And later the antiesg wave turning into a tidal wave as Governor Desantis signs some of the most restrict irv bills into law. We have a very busy day ahead when Worldwide Exchange returns. Stay with us seth not to brag, but i just switched to verizon. cecily wow seth and i got to choose the phone i wanted. For free. cecily not that youre bragging. vo switch and choose the phone you want, like the incredible iphone 14, on us. cecily on the network worth bragging about. Verizon its official, america. Xfinity mobile is the Fastest Mobile Service. 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Time now for one of your big money movers you can see here, starbucks sliding about 5 at the open really, the biggest news came from newly minted ceo speaks during the post Earnings Conference Call last night its his first since officially taking over from Howard Schultz back in march, opting to stick with his pred sayser iss fouryear forecast and cited uncertainty on international travel, though, many on the street were expecting an increase especially if Quarterly Results came in stronger than expected lets talk with jefferies managing director. Andy, great to have you here pretty strong beats. We mentioned stocks down almost 5 after the call, its new ceo reiterating guidance what you heard on the call, is it changing your price target and rating for this company . Yeah, we did raise our price target slightly this morning as we went out to calendar 24 numbers to base our price targets with a pretty steep multiple already it doesnt change our whole grading or slightly more cautious view given where our estimates are falling for fiscal 24. Andy, explain this one to me. The street isnt happy with what he had to say, but it actually caused you to raise your price target what did you hear that made you full bullish it really wasnt anything incremental, it was just again looking out to calendar 24. This is the time of year where we move all our price targets out to next year where we had been previously looking at calendar year 23. Our revenue caution comes, again, from what they didnt do, which is raise the outlook for this year. Theres also moderating same store sales in the u. S. Back to that 7 to 9 range here in the q2. Give us a sense i want to get to the numbers more beyond same store sales and eps, the basic thing, was there another metric that you were looking at that gave you a positive feeling about this coffee chain i mean the margins are recovering, and they did recover more strongly than expected, which provided some of the upside in both the americas as well as international. The problem is that the americas margin was boosted by about 180 basis points of onetime items that wont recur Going Forward and the International Margins were boosted by a faster than expected recovery in china, particularly in march when same store sales were up 30 . So they kind of pulled forward, they think, some of the recovery and margin in china. So, andy, double question here for you how big of an impact is the shadow of Howard Schultz and what does the report tell us about the u. S. Consumer. I think howard came in and, you know, stabilized the organization at a critical time when there was some unrest with their partners they continue to make progress with partner turnover down 9 Percentage Points versus the 2q a year ago this is very important for productivity and margins Going Forward. The challenge is they also talk about some incremental reinvection plan investment. The reinvention plan was part of what howard taermed the renewal of focus on the partners. I think that surprised the street a little bit. In terms of the american consumer, right now, solid kind of numbers we are a little bit more concerned Going Forward as we move into the latter part of the year that the consumer may start to manage expenditures particularly in the afternoon daypart of starbucks, which is what they saw with the weakness before the great financial crisis in 06 07. Andybarish, thank you for being here later well speak with the cfo, rachel. Coming up, floalut after cheggs worst session. 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We begin with shares of amd dropping after beating expectations in the First Quarter but issuing guidance for the current period is below analysts sentiments pc and server markets strengthen lisa su will have much more on the quarter in a cnbc exclusive coming up at 9 15 a. M. Eastern time. Ford posting a gain, a uturn from a year ago maintaining its previously announced guidance for the years. It expects to lose 3 billion from its ev operations this year also announcing yesterday it would again cut its startinging price of the mustang mach e by a thousand dollars and chegg loses nearly half its value. Chegg seeing the biggest decline falling as much as 50 yesterday as fears of a chatgpt takeover loom, but the ceo pushing back on the huge move on cnbc yesterday. I think this is extraordinarily overblown and i dont normally say that. I dont talk about the stock price much, but this is just its quite a move. Turning our attention to the energy market, something we continue to watch. You see prices fluctuating oil down ahead of massive losses you look at the impact it will have on the Global Economy and fuel demand. Wti crude dropping 5 yesterday, closing at its lowest level in six weeks. Brent also falling 5 yesterday. Those are the biggest oneday percentage declines since january. Oil and gas stocks falling in tandem with crude prices chevron, conocophillips, and exxonmobil falling 4 . Marathon oil more than 5 . Halliburton falling 8 rita, great to see you as always. Thanks for having me. First, can you given us a sense of what caused oils big drop yesterday of course, we know the fetds making its Rate Decision and the ecb also but shouldnt that have already been priced into the markets no, and i think its been a 25point basis hike. Theyve been expecting that as well i think yesterday lets move was probably more to do with the u. S. Debt ceiling and comments talking about the fact that the u. S. Might run out of money by the first of june. That def notally spooked sentiment. I want to remind people what happened with the debt ceiling negotiations back in 2011. We did see some huge, huge drops in price crude prices back then and given the environment right now, theres so much uncertainty on the macro front i am expecting prices to kind of remain under pressure until the debt ceiling is sorted out. Okay. So a lot of uncertainty, i think everybody agrees on that give us a sense where the oil markets are going. Were looking at brent crude and wti, 70 for wti. Whats your time period for the debt ceiling revolted and whats your prieg tce target . I think for me is to talk about the price target for the end of the year. Fundamentals continue to tighten. Weve seen crude stock drop. Its the first time in decades, over the past two decades actually only two times has the u. S. Actually drawn stocks in april, so the market is tightening very slowly behind the scenes and this is even before opec has got. Physical differentials around the world is strong and holding. That gives us a lot of confidence and we do think second half of the year prices will go up, as long as the economy goes weve modified the session in our numbers we see demand declining. Thats all been priced in mostly i would say definitely factored into the balance the problem is as you ask in the short term could we see a 600 for brent . Absolutely the oil price is price in a deep recession. The equity markets are pricing in a soft landing. Both could be wrong. The other issue is in it its outright short and we havent seen that in months. So any good news could trigger a lot of Short Covering, but i dont see any good news on the horizon on the microfront. You say by year end you see wti crude going up 70 bucks, possibly 100 in between time you see brent going down somewhere in the 60s . And wti as well i cant rule out it out. Were going to get more and more bad news it will spook sentiment. Speaking of bad news and things that might spook sentiment, news out, the u. S. Reports iran seizes an oil tanker in the strait of hormuz oil is ramping back up and u. S. Is refilling the Strategic Petroleum reserve. Those are a lot of the things going on i know its a mishmosh, but give us a sense is any of that a catalyst . As far as iran goes, that could push it up that will be brush aid side in terms of the economy china, its interesting you say that ive heard a lot of people come out and talk about the slowing Chinese Oil Demand blew out. It was absolutely enormous in march, well above our expectation takes as well. The issue is the oil demand has been very, very focused on transportation, not manufacturing. Why . Because, you know, we are not consuming as much. U. S. And europe are not consuming as much and theyre not exporting as much. The manufacturing side is weaker that doesnt mean the overall recovery is slower its that that bit has been slower we are continuing to see very Strong Demand out of china, and thats supporting the physical crude market i dont think thats going to change the last point was on the u. S. Strategic refilling. I dont think the spr is going to get refilled any time soon. Theyre selling spr. This is part of the management relief in q2 the earliest theyre going to do something is q4. Amrita sen, thank you for covering the ground especially with oil down 2 great to see you. Straight ahead on Worldwide Exchange,ite note just wall street, but nine straight hikes hitting wall street in a very big way. We break down the rising costs facing consumers and how much worse it could g aeretft today much more on Worldwide Exchange. Back after this. No big deal . Go on. 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