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tv   Power Lunch  CNBC  January 27, 2023 2:00pm-3:00pm EST

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when covid hit, we had some challenges. i heard about the payroll tax refund that allowed us to keep the people that have been here taking care of us. learn more at happy friday, everybody. welcome to power lunch, i'm tyler mathisen alongside kelly evans. welcome. coming up, intel the big loser after the results. company missing targets left right and willy-nilly giving a weak forecast. when will a turnaround take hold we're hear the ceo and what he had to say and talk to an
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analyst who said the transition is still in the early. >> and another sign inflation is starting so slow and a key consumer sentiment number improved could it be strong enough to avoid recession. but first, let' check on the markets where we're off the highs. the dow up about 88 points the nasdaq up 1.2% outperforming in the week with a 3% gain. >> let's look at some of the dow movers right now american express, visa on the upside after results there. signs that consumer is still spending chevron giving back the gains from yesterday it missed on estimates despite record profits and then, there is intel down 7%. jon fortt spoke to intels ceo pat gelsinger about the turnaround plan and he's here now. what is the big takeaway from the conversation >> it is a really rough quarter for intel. maybe one of the worst that intel has ever had and a lot of
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that has to do with the slowdown in demand for pc's and the inventory build up that happened before that came along. i asked him about that this morning. >> well we've seen krcustomers carried a fair amount of inventory in q3 and q4 and back to school and the holiday refresh. as they come into the new year and the macro situation for their business major inventory adjustments. we're selling into our customers well below their sellout rates in their businesses so it is the biggest single quarter of correction in the market place in our history thatwe could look back as we see our records. >> so chips and inventory. and what does this all of this mean think about it like this it is as if you and your spouse are in the midst of this huge remodel, like practicicly rebuilding your house. huge capital you're already spending the money on the contractors and what not, and then between you
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and your spouse, one of you loses your job, so big revenue cut. you still have to pay the bills. you still have to do this project already out there. that is what intel is dealing with trying to rebuild the manufacturing while having this enormous slowdown in pc sales at the same time. big fixed costs, big outlays big promises but revenues are tanking. >> how long might it take to get the ship back on course? >> well, if you're talking about getting the process technology, the manufacturing technology fixed, gelsinger said that is on track. so building this house, we're actually on schedule we're getting the walls up everything looks good. but it is going to take a couple of years to actually get that house built and then in the meantime, got to get another job. >> where is the revenue going to come from. >> right so pc business is expected to stabilize in the back half of year because right now intel is selling fewer chips into pc makers than the pc makers are
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selling out in finished pc's trying to work down the inventory levels it is expected in the back half of the year that stabilizes and intel pc revenues could come up. but there is a question about data server and that is microsoft and azure of the world are slowing down on spending if they continue to do that and ente enterprise customers also slow down even as pc's are coming back sh the data center could come down and then you're still not in a great spot. >> this may go into the category of tell me what i don't know but is in tell simply put too dependent on pc's? >> well, intel in a way would say yes, that is why they bought mobile eye as a public company they also have data center which isn't pc's but when you have manufacturing issues, those chips, same chips come out of those factories whether they're going into pc's
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or data center so they become less dependent on pc's but the stuff they have to fix effects all of it. >> thanks very much. good to see you. >> let's get to the stock side of the story with an analyst who if not slash his price target today. with us is rubin roy, steifels applied technology analyst i'll start with that question. a lot of people lowered estimates on the back of this. why are you staying put? >> well, hi, thanks for having me we did lower estimates like the rest of the street, pretty shocking guidance as you've seen my price target was at $28 and we're keeping it there because i think while we're not a at bottom yet, i think we're at a bottom process there is a lot of downside potentially to the target price that we've got, 28 we do have a hold on intel shares because we don't see catalyst to the upside in the near term. i think john just mentioned a number of the issues that are
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coming up and they're longer term issues. it will take a few years for the company to catch back up to parity on a transistor gate length perspective and we have competitors out there winning share and gaining share in the market so it is a wait and see sorry. >> we do have to bring up the government's involvement here. is it helping or hurting intel's prospects? >> well, i think the longer term outcome will be helping. because i think intel does have a very large investment cycle ahead and they need some capital offsets to have that investment cycle work itself out. as you've seen, i think the cash flow metrics of the company are a challenge. they lost -- they were negative free cash flow last year we've got them forecasted for another $2 billion of negative free cash flow this year so i think we have to see these capital loss if we're going to get to the levels of
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manufacturing that intel does need to get to, both to reach their strategic initiative of getting to 5 nodes in four years but also the important boundary services business that the team are trying to build. so i think it is a good ing this but again it is going to take some time. the other thing i note is we haven't really heard from the government how the money is exactly going to be dolled out and so that brings into the e equation another level of uncertainty. >> how, simply put, did wall street analysts and most importantly the management of intel get the quarter so wrong they missed on all kinds of estimates and most strikingly the company even missed its own estimates. so how did that happen, number one? and number two, does it cause a confidence question about the management of intel? >> it is a great question, tyler.
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so, i would go back just a couple of months ago and had been at some investor conferences and they were trying to forecast and highlight that things had deteriorated in the pc market heading into the end of the year, 2022. and at that time intel had said, look, q1, which they haven't given official guidance for, but they did tell investors that q1 was shaping up to be at best season and seasonal is down mid single-digits for the first quarter of the calendar year what ended up happening is revenues are going to range from down 18% to 20%. so quite a bit worse than seasonal and what happened was that the extensive inventory and the correction of that inventory really had gotten out of hand. i think it is been mentioned on yes program today, intel was planning on raising prices in q4 of last year and they have done so but prior to that, it is certainly likely that some of the channel partners were
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sto stocking up on chips before the price increases were put into place so you have the math coming down and inventory in the channel and a big period so that is why we all got it wrong and it is going to be questioned as to how long it is going to take to see that inventory clear itself out of the channel. >> ruben, thank you very much. we appreciate your time today and your candor. ruben roy. coming up, more signs inflation is easing so is it enough for the fed to start easing off interest rate hikes as well. we'll discuss the impact on stocks and more. plus shares of chewy are no dog. the stock up 26% this year today wed bush boosting the price target have you missed the chew y run? and plus chewy gains pushing former macy's ceo terry lundgren into second place in the cnbc stock draft. but with just two weeks to go,
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ron sonna is here, a co-ceo and a buffalo bills fan. sorry. >> thanks. you really had do. >> and doug butler, managing director >> thanks. >> let's look at the inflation number that came out today what do you think, ron, it does to the fed not just in the meeting held next week but moving into the spring >> well what is interesting, i wrote about this today, is is that other central banks are beginning to recognize that the fever is passing so the bank of canada has indicated a pause. brazil and the czech republic and poland and other central banks are dialing back or stopping their rate increases. because they're recognizing that the inflation fever has cooled and we're seeing that all of the data, whether it was yesterday's gdp numbers and this morning number's pce, personal consumer expenditure deflator within the consumer spending and personal income data eased rather
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markedly and in an annual rates, a big pronounced slowdown in inflation. the fed will still do a quarter and may do two more. larry somers said the fed should stop after this rate hike. >> he did. >> after spending last two years saying it was a '70s all over again. so even larry, who has held fast this is a wage price spiral issue said the uncertain outlook should get of fed pause. >> for this meeting? >> after this meeting. >> so what is your reaction to what ron just said about larry somers an the effect of a potential pause or some signaling that we're getting closer to the end of the trail on rising rates. what will that mean for equities >> with, -- well if they stop after one, we've been sang win about inflation knowing it was a
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this too shall pass. we're getting concerned that people are moving to becoming overly unconcerned about inflation. we think there might be some wage stickiness out there sort of circling in the back half of the year i think there are a decent chance of recession. i love for them to stop after probably two i've sort of with ron in terms of thinking that it is probably after two they're going to stop. it would be very unlikely that there is a third but i also think larry, you know, larry somers might be right theoretically, but practically, it is -- >> listen. i just take that position -- for someone like harry to come out and clearly still have the fed's here and saying it okay to pause feels like it gives them wiggle room but let me rattle off why people say they shouldn't commodity and oil prices are up. the five year break evens are up
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five basis points but we should start hiking again. >> but it the 228 down from 359 and you look at lumber priced were at 416 and they're two pops copper is up a little bit. that is all of the china play. assuming china rebounds and everybody is making a strong resumption that revenge spending is very big in china we don't know. but if you look at the atlanta fed gdp for the first quarter, up .07%. personal spending this morning, down 0.2%. there is deceleration taking place in residential real estate. >> what is your response to doug's idea that can we kind of hang on here and ride this out so to speak. >> well, i mean, the market will price in the fed stopping. so we're seeing that and we've seen it already in the bond market where rates have come down considerably the yield curve is inverted and equity markets are sniffing out what other central banks are doing too. so i would agree if dog, if the fed pauses you get a more of a
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rip to the upside. >> but is it a lasting one >> it is hard to know. because then you have earnings revisions that could effect equity sentiment. >> doug, you mentioned the word recession. if there is a recession, when and if i had to guess, it might be a very spotty kind of -- maybe not a deep one but a very spotty kind of recession, where some sectors of the economy will really feel it, like real estate and housing. other sectors of the economy may feel it less >> well i think that is -- you're seeing the start of it in terms of housing and you're certainly, i think real estate will struggle into the back half of the year. but i still think it is ome a one-third chance we're not forecasting a recession around the corner right now. we think that there is a decent chance of one but not -- it is not even 50/50 for us. >> so a two-thirds chance. >> a two-thirds chance is okay.
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>> ron, go ahead doug, finish your thought. i stepped on you. >> there is two-thirds chance of everything working out okay and the fed stops appropriately. look, as ron was saying, we've got -- we're not negative real rates so that is a good thing. the rates, the rates come down over the past two months, has been really good you're going to start to see mortgage refinancing will tick up of everybody who bought a house in the last six months although it is not that many people. >> not that many people. >> and mortgage purchases are down or housing purchases are down 30% >> final thought quick. >> i think that, you know, we need more confirmation but i'm shocked to hear what larry somers said this morning and if indeed the fed takes heed, we used to watch the anglo banks and they used to lead. now bank of canada and england and australia have their own problems that are separate and apart from our own but i would watch other central banks
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because those who were first in and are now first out and that means the fed may be right behind them. >> thank you so much coming up, a disjointed toy business hasbro joining a wave of companies cutting back on their work force in an effort to lower costs and shift the whole direction they're taking we'll discuss all of that when power lunch returns. ♪ you've got a lovely day to do it in, that's true ♪ [ chuckling ] ♪ and i hope whatever you've got to do ♪ ♪ is something that... ♪ [ music stops ] [ beeping ] cars built with safety in mind, even for those guys. the volkswagen atlas with standard front assist. ♪ ♪ what if you were a major transit system with billions of passengers taking millions of trips every year? you aren't about to let any cyberattacks slow you down. so you partner with ibm
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welcome back to power lunch, everybody. just over 90 minutes left in the trading day. we have stocks off the highs lext's get caught up bonds and commodities an more. we start with bob pisani and it comes down to visa and american express? >> yes and i actually would say that. we are in the midst of a very powerful rally here of not only for the day, the week, the month, two to one advancing to declining stocks and i think kelly has it right you could thank american express here it wasn't the actual earnings report, it was the guidance that was good and the comments about the consumer and potential loan losses down the road maste mastercard had accident comments consumer spending is resilient but i want to focus on what am-ex said highest ever quarterly card member spending.
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that doesn't sound like a imminent slow down but people were concerned about potential losses down the road provisions for losses. credit metrics restrain strong, below pre-pandemic levels so the higher provisions for losses they put in, there are higher provisions but not higher than the pre-pandemic levels. in other words, you can't compare 2021 and 2022 because it was unusually low levels of reserves that were out there elsewhere, we don't have a lot of new highs but the market internals are looking good we're going to get an ocean of very big earnings reports next week including really big global industrial names like caterpillar, which had a new high today and honeywell as well big global consumer companies. starbucks is next week as well that the thursday night, i believe. we'll also get mcdonald's next we're. starbucks is at a new high we have a small number of oil stocks at a new high it is popped to the low 80s at
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this point, like marathon petroleum. but a big week for earnings next week so the key point is the technicals have been tremendous in the last week when people don't know, when active traders don't know what the fundamentals are, they go look at technicals and the technicals have been great we're up 6% so far almost straight up since the beginning of the month there are many more stocks advancing than declining and that is the most important thing right now. and guys, the value stocks an the growth stocks are both up. that is what you call a market with a lot of breadth. back to you. >> bob pisani, thank you. to the bond market now and rick santelli has pulled it all in rick >> yes, tyler. you know we had a lot of important numbers this week. but when you consider we're at a 3.52% yield in ten-year notes right now, that means we're up two on the session, up four on the week not a huge change. and if you look at a couple of weeks of tens, something should jump out at you. we talked about this yesterday
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afternoon. the ranges are obvious and traders are trading them like gems mid 350s on the top and on the bottom 340 notice to the left, that close last websdnesday, that was a for month low, since the lowest since mid-september and i pointed out meager bounce on yields after that close. and if we look at what is going on with regard to one week of three months versus tens, nearly unchanged on the week. that is important. and finally fed fund futures they stop going down in price in june of this year. that is the concentration. it is 25 basis points off the low close and the higher is goes the less fed and it is consistent at this level they're still at odds between what markets are looking for and what the fed said they're going to deliver and that means there is room for profits and trades kelly, tyler back to you. have a good weekend. >> you too, rick thank you, sir. oil closing for the session,
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wow, it could actually go down 2% chevron falling 3% after reporting results. but pippa stevens is here with more. >> we have to start with chevron down more than 4%. ex expectations were high this quarter and the q4 did miss and it was significantly below the earnings from q2 and q3. but again taking a step back for the year, chevron earned $35.5 billion. >> so don't feel bad for them or our shareholders. >> exactly it was a good year for the company. and on the call just now the very first question was about the buybacks and the company said this is consistent with our strategy they said they've been buying back stock over the last few decades and this is consistent and nos a deviation from what they've been doing and when asked about the reaction in washington, michael werth said that he thought it was a touch overblown. he said we weren't trying to be splashy. and that they were just trying to make -- to put a policy in place that doesn't expire and give them more room to run
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now, while we are talking about the cash on hand and the healthy balance sheets, i want to take a look at m&a in the oil sector. as this chart shows, you could see that last year deal activity fell 13% compared to 2021. to about $60 billion but deal count fell a lot more and actually dropped to the lowest since 2005. and then andrew ditmar this is a new trend, this fewer but much larger deals the land grab days are well behind us so companies will be more strategic and more focused in their activity. but we could see an uptick given that they have so much money. >> they have cash and maybe they don't need to borrow as much, i would think rising rates might have influenced the deal count but if they have a lot of cash, they don't have to borrow as much pippa, thank you. >> let's get to seema mody for the cnbc news update. >> here is what is happening at
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this hour. we're finally getting a look at the brutal attack on the husband of former house speaker nancy pelosi last october. some viewers will find these images disturbing. this is body cam video released today showing the struggle for the hammer that suspect david de pop used to strike pelosi in the head. in jersusalem, a gunman opened fire near a synagogue the gunman was shot and killed police are describing it as a terrorist attack the shooting comes days after the deadliest israeli raid in the west bank in two decades. and not a great week for one of the richest men in the world. indian conglomerate adanny group has lost some $50 billion in market cap following fraud from short seller hindenburg research it accelerated after activist ben acman tweeted that he backed the report on adanny calling it credible and extremely well researched and coy tell you, this is getting a lot of attention back
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in india. >> seema mody. we appreciate it. ahead on "pouter lunch", retails are still struggles with companies like lvmh and h and m seeing margin and profit issues. we'll discuss that when we return on "power lunch." ♪♪ 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? ♪♪ good luck.
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1-800-217-3217. that's 1-800-217-3217. welcome back to "power lunch", call it the consumer conundrum, personal spending data out for december fell for the straight month but three major conference call companies reporting signs of a strong and resilient consumer with us to break it down, melissa rev co and deborah floit le me begin with you people are spending money, are they spending more of it on services than at retail and what could change that? >> that is a great question. so certainly we are seeing a lot of inflation in services
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and we're also seeing spending up year on year. we're continuing to see the consumer buy goods both food and nonfood because inflation in food has been high, right, that is taken a chunk out of non-food sales. so as i would summarize it you continue to see strength in spending i do think when there is a lot of rhetoric around inflation and mid '22, we did definitely see a bit of a pause but if anything, the gas has been accelerated and we're seeing a very different consumer right now. >> and maybe, melissa, the way to talk about this is to say yes, consumers have come out ahead a little bit lately. they're wages are up a little bit more as inflation is slowing. but we all wonder about the sustainability of this they're saving rate is going up because savings are running dry. we're just looking for those signs that while the downturn might not be here, but are people starting to feel the squeeze a little bit >> yes that is something that i've been talking to retail executives
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about. it is very much on their mind. i spoke to macy's ceo jeff gannett and he said on their credit cards for macy's and bloomingdales and also from am-ex which they have cobranded and they've seen the amount go up from month to month going up which is what he said is a little bit concerning. that is what is leading to signs of caution because he was saying, look people are paying out more and going out to dinner and traveling more that takes a bite out of what they're spending at macy's but it also means that maybe they are not able to pay down credit cards and when do they face the music. >> that is a great point. >> what about a lunchy spending. lvmh out with numbers last night that were very good. >> so it goes back to the very much kind of parallels but melissa just said, we are seeing strength at the low end and at the high end that is kind of getting excused if you think about an hourglass. and if you think about china opening back up, right, and you've seen as much as 100 basis
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points added to global gdp for '23 which may be on the high end. but not only is luxury done fairly well throughout the past three years, but we believe it will take another step up as we look ahead to '23. >> deborah makes a good point about china reopening and how that could be a helpful element for a lot of companies that are in the luxury space and do have more of a presence mr. this is a market where people care about labels. they're spending more on beauty and they're going to have a delayed kind of revenge spending dynamic that we saw play out earlier on we're through that in the u.s. but china is starting. but if that is enough if the consumer is getting weaker in the month ahead. >> where else could we glean some signals we've had everyone report from pocketor and gamble and auto companies with exposure to that sector where things are looking rockier. it does feel like it is sector by sector right now. >> it does and i think you're seeing the
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discount players feel more confident. i talk to saks ceo and there is a space of a lot of growth potential. we saw walmart earlier in the week saying it was going to raise wages. it is feeling better positioned in this environment. so on the one hand you see that but on the other hand you have to look at indicators like the housing market because the housing market has so many implications we saw people spend more on furniture and spend more on home goods and so that is the domino effect if the housing market does start to cool. >> sure. >> what does that mean for the different goods people buy when they buy a house. >> thought to put too fine of a point on it. but bed bath is not finding itself -- the news flow is worse as they flail around for options here. >> exactly bed bath & beyond had strategic problems and pushed into private label and that doesn't res on ate but now it is trying to do a
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comeback and really pay the bills whether home goods has gotten very soft and that is a really popular pandemic category how many more of those items do people need. so it is in the toughest time to make that comeback let alone financial problems and business problems that are unique to that company >> i think the water has come out of the bed, bath and beyond tub. deborah, do you have a favorite stock in retail? if so, which >> that is a tough one here. i would agree with melissa that it is really kind of those that the opening price point or viewed by the consumer, i think walmart right -- a decade ago talked about themselves being a technology companimy and during the pandemic they've put many pillars in place to do that. and they've built out this market place and what i like, there is still a lot of wood to chop. the fact that they are moving
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ahead with raising wages for -- it is a shocking number of minimum wage employees that work there, and almost 350,000 people you're talking about real changes and i think that if you -- if you look at how we do a lot of work around consumer sentiment, what they've done during the pandemic is they've always had the value kind of position, but they have now more of the quality as well and so you do have a different consumer who is shopping both in store, buying online and pick up and online and as they're moving to more of the loyalty and you know, this walmart plus, and a lot of what they're doing around live streaming and other technology, metaverse, it is really they have pushed the envelope and i actually want to tag on what in a melissa just talked about with bed bath and beyond. think about walmart is off mall, bed bath is off mall and everything that bed bath does is plor branded so they
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could be a significant beneficiary of the fallout from bed bath. >> very interesting insight there. deborah, thank you very much and melissa, always great to see you. have a great weekend. >> after the break, we'll take a look at a company focusing on the development of smart cities woinluadys rkg nch is next. unlimited premium data. unlimited hotspot data. (woman 2) you know it's from the most reliable 5g network in america? (vo) when it comes to your business, not all bars are created equal. so switch to verizon business unlimited today.
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welcome back, everybody. there is a ton of volatility in tech these days as we know just look at the results out of intel today. but there are pockets of continuing growth. jon fortt brings us up close with a company who is building on ai and the internet of things i remember when that is all we talked about. >> it is still happening the ceo of vera mobility, became a spac but up about 50% and open every the past 12 months and the past 24. it powers transportation like technologies like red light cameras, automated speed enforcement, toll payments and rental cars and digitized parking. revenues was up 22%. roberts brought the company public and grew up with a dad who ran a business his dad had a big influence on him as a leader and when his dad was diagnosed with cancer, when david was 23, it reshaped his
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outlook. >> as my dad got sick, that was like an immediate like control alt delete moment, we're going to redo this relationship. and so what i would say is that over the course of the last oh, even 24 months of his life, i was with -- certainly after i grud the college, i was with him. i was learning from him as much as i could and then as he got sicker and sicker, i was just present for him. so what i would say is that the ending of that story was a really great relationship and i think what it did for me is, one, i think it -- as i mentioned i have four kids, i have two boys and two girls. it is sort of giving me a much brighter line of i i need to be connected to these kids much earlier. i want to give them room to grow but having a tighter connection. >> right now on business side, he's focused on paying down the debt and growing influence in technologies connected to trax
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and safety both are top of mind with people traveling more and governments needing revenue. >> we today do tolling and violation processing but in the future you could really see us looking at things like vehicle payments, how a car makes a payment or telematters and how do you manage these assents and these are potential interests for us over the next 12 to 18 months and then if you look at on the mobility side, there are so many new things coming, like congestion pricing and the increased attention to distract the driving. those are big problems that we feel like we're well suited to help drive solutions for and we're excited at the challenge to do so. >> he said travel remains extraordinarily strong, including business travel. which is interesting because a year ago people were still saying a big portion of that wouldn't come back the numbers on rental car tolls
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suggest otherwise. four kids, can you believe it. >> two boys, two girls and the fact that he is the -- the numbers are incredible and they're a toll collector and you joke that you want to be it just, it is impressive given some of the headwinds we are facing. >> have the government municipalities and toll authorities, as opposed to consumer connection here >> absolutely. mainly those but also universities like if they have a parking garage on adieu parking enforcement. but local governments up to state governments, dealing with those highway areas where there is construction going on or they have the camera on you to snap the picture of your license plate if you're not doing the right thing. >> good economic indicator like you said about the rental car piece of it. thank you. >> still to come, chips, charge and chewy. the three c's in today's three stock lunch. you know, it seems like hope and trust are in short supply.
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time now for three stock lunch. looking at bigger movers american express surging after issuing upbeat guidance. chewy higher after an upgrade and intel, yikes, sinking on a brutal earnings report here to help us trade them all,
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craig johnson from piper sandler. craig, let's start with american express, what do you see, what do you say >> fundamentally, you look at plern express and things are better than what people have been expressing. credit trends are better than kmekted and you look at the chart you have a great down trend reversal, back above the 150 moving day arverage and on any pull backs, back to the 160ish left should be bought. >> i'm tempted to dwell on this. let me throw the visa at you what about this one? >> visa looks like another constructive looking chart we're seeing all of the credit card companies between visa, mastercard, capital one, again the credit quality trends are stronger and so a lot of these charts still continue to look constructive and from our perspective, visa is certainly moving up in sympathy with what we've been seeing with american express today.
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>> just making sure it was across the board let's talk about chewy up 4.5% today. what about that one. >> the number one sort of player in the pet category at this point in time. has been in this kind of seven-month consolidation and from our pect spiective, it is very interesting looking techni just about to break topside of this seven-month consolidation range and we would be a buyer of chewy here at a topside breakout. >> up 5% today as you see at 46.20. let's move on to i guess you would call it the dog of the day, that would be intel >> yeah, in terms of semiconductors, so we like the semiconductors across the board and if i like something like the smh, it's making a very nice bottoming pattern and we continue to think that semiconductors should be bought. now, intel specifically, they've got some challenges, it looks like it's a little more specific to intel than not, but from our perspective we are coming back
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to an area of support, not ready to buy it yet because other names i'd rather buy than intel right now, that being clack and amat and nvidia and qualcomm, but intel for me got to wait, see if we can hold that support. it's down, not recovering. very different than what we saw with microsoft earlier in the week that did have an earnings miss, but was able to recover throughout the week. >> maybe have another one of those martinis while you wait. >> absolutely. >> one of those ones that's already been emptied. >> some people think you need a craig if you still think you can be that bullish on the market this year. make the case for us, yes, we're seeing green shoots right now, absolutely, but make the case that the market can move throughout all of the economic events that may be to come and close this year higher i know you're looking at this from a chart basis but how compelling does it look to you >> kelly and tyler, keep in mind when you talk about having another martini for lunch it's always 5:00 somewhere, that's always been our thesis in this market, there's always something to do. in terms of why we think this
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market can ultimately continue to move higher is simplistically this, one, we're finally techniqcally seeing a reversal f the down trend resistance line we've been seeing on the s&p 500 and a lot of the popular averages for more than a year. we're finally pushing through that second, the breath of the market is improving the number of stocks in uptrends, confirmed uptrends in our work, the number of stocks making 26 and 52-week new highs continues to expand at this point in time. lastly, i will just say this, again, there's $4.3 trillion of cash sitting on the sidelines and the higher this market goes, the more pressure there's going to be for investors for the fomo, the father of missing out, as that unfolds it will drag people back into this market and most portfolio managers didn't have a great year last year, can't afford to get too far behind the benchmarks in early 2023 the market will go higher, no change of our year-end objective
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of 4625, a move toward 4200, 4300 is probably in the cards. >> the case made on a technical basis for higher stock prices. craig johnson, have a great weekend, sir. >> thank you you, too. >> you're welcome. mean time, hasbro announcing massive layoffs saying they will refocus aspects of the business. we will get the wall street take next with the stock down almost 8% power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market.
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welcome back, everybody. shares of hasbro are down nearly 8% today after the company says they will cut 15% of their global workforce or about 1,000 staffers this like many companies an effort to reduce costs let's bring in the senior analyst with da davidson linda, good to have you here why isn't the market responding positively as it does sometimes to cost cutting efforts? >> well, i think that, you know, it's been a real disappointment here with has brow, even though we've been expecting kind of a weak quarter for the toy companies, hasbro seemed confident when they gained confidence for the quarter and they were guiding to down revenue and it turned out that the toy business was much worse than expected, down over 20% and even the other two divisions, the entertainment and the wizards and digital gaming
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segment were also a fair amount below expectations so it wasn't even just the toy business, it was across the board and it does raise issues with regard to their visibility, on forecasting their own projection as soon as in toys, how much of their problem and the industry's problem has to do with sort of working off inventory that was loaded up in 2022 early so that people avoided supply chain problems and avoided the problem of having too few products to sell? >> yes, that, in fact, is really the issue here that's going on if you recall last christmas in 2021 there were some supply chain challenges and actually toy shortages, and so retailers didn't want to have that problem again in 2022 so they really bought quite heavily in early 2022 and then the consumer started to weaken up around the summer, june, july, and then
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retailers found themselves with excess inventory. >> so how long does it take for that process to work out obviously we can't know exactly what consumers are going to do and when they're going to come back and start spending again on toys, but how long will it take for the inventory issue to work off so that fresh orders start going to hasbro and mattel and others >> we expect that there could be some overhang of inventory reductions in the first quarter of 2023, but then we expect things to be really back to normal in second half of 2023 with a strong outlook for the toy companies in the second half. >> are these job cuts just unwinding positions that were added the last few years, and are they the only ones in the industry who are cutting back now? >> a lot of what's going on here at hasbro is company specific. they're going through kind of some management changes, reorganization, they have some activist pressure on them right now, and they did announce there would be some actions taken a
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few months ago so they just gave the exact number but mattel did a head count reduction and their own restructuring that started several years ago. >> so part of this is hasbro specific, part of this is the industry, like tyler was saying more broadly, but does this just unwind sort of growth that they have had or this really kind of cuts from the existing, you know, workforce? >> well, i think that, you know, mattel and hasbro both at some point in time have the ability to just get leaner i think when the pressure is on you and when you have declining revenue for a few quarters in a row that puts the pressure on. they're doing this in terms of right sizing their cost structure. >> linda, thank you so much. we appreciate it. >> how many of these toys that are in the background here do you have in your house >> this was a picture from my house. >> a picture from your house. >> no, it's too organized. >> especially the xylophone. she's probably got several. >> a lot of the legos, too
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we appreciate it very much, everybody. >> thank you, linda and thank you all for watching "power lunch. we will see you next week. >> and "closing bell" with sara eisen starts right now thank you, kelly, big name earnings from intel and american express pulling the market in opposite directions today, but the major averages have climbed throughout the session and are pacing for a solid week of gain. this is a make or braer hour for your money welcome to "closing bell," i'm sara eisen we are at the highs of the day right now, s&p 500 up almost three quarters of 1%, the dow up half a percent, about 166 points or so, most sectors are green. what's leading consumer discretionary, communication services, the reits are higher the nasdaq up 1.3% building on what is a strong week, up almost 5% for the nasdaq on the week adding to the gains this year, up


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