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tv   The Exchange  CNBC  February 21, 2023 1:00pm-2:00pm EST

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>> general mills, they're raising guidance this morning, led by their blue buffalo pet business >> that's a nice gain. josh >> bouncing off of support, i like it right here for nextera >> the dow down by more than 500 points we're watching that. "the exchange" is now. hi, everybody. i'm kelly evans. proceed with caution walmart and home depot getting disappointing outlooks for the year walmart's cfo is warning the consumer is very pressured my next guest says there will be no landing until there is a hard handing. and why none of this has been bad news for the stock market. our market guest insists it can continue, and he's answering your questions, too. tweet me and we'll try to share
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them it's all about rates, retail and risk on. three key names about to report. but first, the latest on this selloff. dom chu is back with those numbers. >> not the kind of fat tuesday party goers would want the bulls want some positivity, and you're not getting it today. we're near session lows. the dow down about 529 points, off 1.5% 4,016 for the s&p 500. the reason why this is important, we're getting back towards that 4,000 level at the highs of the session, we were down 27 points in the s&p, down 1 a71 at the low. and not too bad of a similar percentage loss for the nasdaq composite, 224 points down, about 1.9% of the dow. so within the helm of reason
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no real market underperformers in this trade so far today retail, it's the earnings reports that we saw from walmart and home depot a little more mixed for home depot. generally positive for walmart both companies had outlooks for the future quarters and year that came in more tepid and below expectations home depot shares, down 6% right now. walmart, also a dow component, actually up about 1/3 of 1%. general mills, out with a very positive earnings report for quarterly results, and it boosted its forecast so those shares up 5.5% so interest rates are mentioned, as well. multimonth highs for many points of the yield curve t-bills are yielding over 5% five, ten-year note yields, moving toward the highs. and pay attention, kelly, to the
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big two-year note yield we're seeing it's been moving higher, but still, if you look at these levels right now, 4.71%, kell, we have a $42 billion, two-year option back over to you >> 472 is the highest. do you do chocolate, social media fasting? >> i've been generally positive, so i try to do something positive so i thought i'm going to give someone a compliment every day during lent. >> i try to drive the speed limit, and it's very difficult >> i wish you luck with that >> thank you, dom. dom chu. walmart and home depot warning they are bracing for a slowdown in consumer spending. not a surprise to my next guest who says the longer we stay in this no landing zone, the more painful it could become.
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joining me now is francis mcdonald, and steve leisman is here, as well. francis, welcome back. how is it going? >> going okay. hanging on thanks for asking. >> steve, let's start with you can you wind back the clock for us why today where we didn't have much data except kind of -- why all of a sudden are we seeing fed funds futures break out and yields popping >> i think it's because of the opposite of what your guest is going to say, which is the strength of the consumer you had two things happen last week one was the retail sales and other data came in stronger than expected and the inflation data was stickier than expected so what i did over the weekend, kelly, because that's the kind of fun that i have, is i liked at the high frequency retail sales data we get two sources of that we have a chase credit card spending they look at their credit card data and make it available on a
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seven-day average with a four-day lag, and it's still strong in february we had a little bit of a dip down that looks like -- i'm not sure what to do with that. but look at the level of february and it's still above that swoon we had in november and december so it's still running 3.9% year over year up and then i looked at the bank of america credit card data, which is nice because it gives you the full month end there, and that bank of america credit card data is up 5%, month over month that made me sort of think that the retail sales report we got from the government, which everybody said might have been a seasonal adjustment problem was not, because it's showing up in the credit and debit spending of bank of america's credit card. this is actual data they're looking at so it shows the consumer is going with them. i'll show you the tag, which is what kelly brought up. take a look at the fed funds futures market we're now at 516, i believe, on
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the january fed funds rate that is an all-time high maybe most important about that is that is two or three points above, well, call it two points exactly or three points above where the fed is for the year end. so that shows that the market is now maybe a touch more aggressive than the fed. and you'll remember, kelly, that was an 80 basis point gap between the fed and the market pricing a little over a month ago. >> huge, just unbelievable on the back of that data. francis was doing all this on maternity leave, so she's hitting the ground running here. >> i'm not complaining what else do i have to do? >> francis, tell us in light of why all of this you don't buy this as a sign of persistent strength the market is coming to a different conclusion right now >> i too have been looking at
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the data and i don't disagree with you the u.s. consumer is strong, but we don't run money off where the consumer is now. so my question is, why is the consumer so strong they dipped into an excess savings, which are dwindling their savings rate is really low, and they are releveraging very aggressive. so that credit card data is not a good sign that's a consumer saying in order to keep up with my appetite, i have to take on more debt. here's the problem, the problem is all of these elements sustaining this good data, which may have some seasonality, may not, is we look forward over the next six months, these things are just not sustainable we are seeing officers cutting back on consumer loans aggressively, and savings are dwindling. a lot of these pandemic programs and a lot of the government support that's been many n place is falling back. now there is no landing. we're not in a recession today
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if you walk through what steven is describing here, the feds will not be cutting in the next six months the problem is, next year, where does this leave us not in a great position. >> let's get to rick santelli. we're nearly at levels for the two-year we haven't been at since 2007 how is demand? rick, how did it go? >> reporter: you know what it was a bit below average, i gave it a c minus, charlie minus. but the yield at the dutch auction, 6.473 the metrics were all near average. a couple stuck out in my mind. indirect bidders, those are foreign entities, we like to pay attention to those at a time when we're in qt and looking to see what foreign interests are going to continue to buy, and they are still buying.
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the other one that caught my attention was dealer activity. down 15% option is closer to 20 that was the lowest percentage since april of last year, not that long ago. but it does underscore, on a day where we traded 4.72% intraday, which equals the how yield clause from november, that kelly alluded to at 4.72%. we want to continue to monitor that, because it could be the first maturity that will take out its fall high-yield close at a time where everything is flashing red that concerns the fed in the marketplace, and steve liesman is right, the market is always right what it's done is assimilated the data since the february 3rd jobs report and upped the game back to you. >> steve, back to you. kind of respond to both of these. and rick and i were talking to dave rosenberg on friday, and all singing from the same hymna
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about seeing yields go the other way. >> look, i'm a -- i'm a seasoned craps player and i know how to play on the come which is the most important way to play but i'm a little concerned about that, because first of all, the idea that we have some additional use of credit, which is in some cases, it is worrisome, but i was just looking at foreclosures and bankruptcies they remain very low, so broad signs of credit stress are not there. there are some in there, i will concede. not going to make a big deal about that but i have job growth and wage agains, and ultimately what determines how much people spend. i want to tell you, kelly, of all of the information i heard today on the earnings reports,
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the one that made me the happiest was the one from hall wart saying they're getting -- walmart saying they're getting their inventories under control. if we're going to have a recession, we'll have a major realignment of inventory levels. that's one of the big things that causes recessions it's the big companies and retailers, they are getting their inventories under control and if they can do that without a drastic move, i think we can avoid a recession. >> i turn to you francis balance sheets are running thinner, savings rates are declining. but do we take his reading of the same data that we are arguing about, or the shars es have turned positive for the session and for now they look okay >> let's go back to basics what are the coincidence and lagging indicators in a recession? go into recession, we always see
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strong job growth, pretty good consumer spejd these are not leading indicators, they're lagging and koins dent so when we talk about we're not going to see a recession, we see the surge in food and energy costs. i can't look at the data and say we have to discredit all of those. but if you take a step back, what does it mean if we're not in a recession now and what does it mean if the consumer is strong it means the fed cannot cause or cut. it also means the inflationary pressures are not going to cool to the same exextent in this no-landing outlook, we'll see higher inflation and a later harsher downturn in 2024 that's what we are seeing in this environment >> rick, final word.
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if we are going to see higher rates, maybe even a harder landing down the road, what is the yield curve telling us is it in keeping with that hypothesis, or how is it looking on the back of today's move? >> well, lately, many are asking me if these yield curve inversions are bottomed out. the main reason for asking is, we have switched gears in maturities it seems to be paying more attention to the slowing of the economy that's been done to slow down inflation by the central bank so if i had to pick one thing to pay most attention to, because i still believe we'll see a slowdown/recession, the consumer, we talk about how great he's doing i see him in debt, and i think ultimately indebtedness is going to be one of the big issues along with money supply in the u.s. dropping dramatically, even though it's picked up globally >> we'll leave it there, everybody.
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francis, congratulations, seriously. don't miss steve's interview with james bullard tomorrow morning at 7:00 a.m. eastern time you never want to miss a james bullard interview. and let's dive further into these results from walmart and home depot, both names posting cautious outlooks for the year ahead. does this tell investors to put retail on the back burner? michael, what is the big takeaway for you >> number one, the consumer is showing signs of being more choiceful, decisive with what they are electing to buy it was quite a contrast between walmart that posted nearly a 9% comp, and home depot that posted a my ninus 0.3% shows the dichom
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in the economy other retailers are leaning in and take thing time as an opportunity to invest more and leverage their already sizable advantage, such that whatever the economic environment is, the companies are going to come out of it in a much better position than they were in heading into it sure again, just so people caught that, we're talking about them investing, kind of getting more leverage for the future. do you mean that in the balance sheet sense or the broader sense in terms of their business models >> the way their investments are as of late, are areas like labor, tboth retailers announced billion dollar wage investments. they're investing in areas like supply chain they're investing in areas like automation so as we come out of this, whatever we're in over the next
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several quarters, a lot of other retailers have not been able to make these similar investments and the darwinism of retail is going to take over the strong will survive and they'll be in a much better situation. >> so while some might react and say it's an uncertain year, i'm going to back off of the retailers. you would say no, now is the time to lean into the stronger ones, back off some of the weaker players who does that bring to mind? tj max reporting tomorrow. who in your coverage universe is maybe not well positioned nor the decline we're in >> two of the retailers well positioned are home depot and walmart. they offer great balance walmart being more defensive, more stable, more steady home depot being more offensive and interest rate sensitive. owning both of those stocks would be a good hedge for
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whatever sort of economic environment we're going to be in who is not well positioned the retailers barely holding on, the bed, bath, and beyonds of the world. it's only going to get worse that will play into these large, well-positioned retailers, who will be able to gain share at their expense. another retailer that comes to mind that should benefit is target >> interesting we're showing bed, bath under $2 let me ask about this one, a lot of people emphasized they have been the weaker of the big box ones post pandemic here. but you think they can capitalize on share gains. final comment, why do you think -- and i don't know if right now is the moment, maybe we need to hear from them on earnings you think they can do okay this year >> i do. their inventory will be in much
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better position than last year they're working on their customer service, introducing new brands and products. and there is no better retailer who stands to get benefit from the likes of bed, bath tuesday morning, all of these retailers closing stores there's customer and assortment overlap that is greater than other retailers, and target is a way to play that >> wayfair is kind of trading down all the home exposed names there. michael, thank you for your time tonight, walmart's ceo doug mcmillen is on "mad money" with jim cramer at 6:00 p.m. eastern. coming up, another check on the health of the consumer let's get the fuller picture here the ceo of wyndham resorts and hotels joins me.
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the stock is up 250% could 2023 be the year we see a slowing earnings growth but a healthier stock market as we head to break, here is a look at the markets. watch the far right of your screen there yields the dow is down 1.6% russell down 2.5%, 393 that is a new high right now, on the ten-year note going back till november. "the exchange" is back after this this is "the exchange" on cnbc [music - cover of blondie's “dreaming”] [music playing] ♪ imagine something of your very own. ♪ ♪ something you can have and hold. ♪ ♪ i'd build a road in gold just to have some dreaming, ♪
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welcome back to "the exchange." stocks near session lows, dow down 562, as higher rates are pressuring the market. despite this, stocks have gotten off to a solid start my next guest says this will likely be an inverse of 2022 we had a slowdown of the economy and earnings joining me now is jeff crumpleton, head of equities good to see you again. welcome. >> thank you, kelly. >> do you still feel that way? it's just a couple of hours of trading, but it looks like maybe there's some catchup going on with higher rates. >> today has not changed my mind, no you couldn't have said it
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better we do think that '23 will be the inverse of '22, and it is -- this is a period where we might get that slowdown. although that slowdown appears a bit elusive right now. earnings may come in a little bit. and yet the market will likely go up, because we had selloff last year, 25%, anticipating the recession that just continues to look elusive i think the argument has nuanced a little bit it's gone from the fundamentals are surprisingly strong. they're mixed, but stronger than people anticipated and as a result of that, you know, we're starting to get this no landing argument. just like human nature, we just always get a worst case outcome. so it seems like everybody, or at least today, people are jumping to the conclusion that the fundamentals are stronger. that means that inflation will be higher and hotter and the fed
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is going to have to continue to raise and cause a hard landing i don't know why we have to jump to those conclusions you can have a stronger than expected economy and yet inflation continue to calm as the supply chain bottlenecks that were driven by the pandemic and other circumstances, continue to ease so why can't you have improving productivity, falling inflation, which is the evidence of the data right now, and a little bit stronger economy and therefore, you know, to me that signals recovery and healthy movement from here not worst case like people jump to >> i like it not a lot of people are talking about goldilocks, but when you look at how energy prices are falling, headline inflation, all the rest of it, that's really come down. let me ask you the question this way. one of our viewers says if all of this is the case, why is the market still trading at 18
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times? it's not a bargain right now, given the macro head winds and how earnings have come in. he says, i'm baffled what are your thoughts >> well, i think there's no reason to think valuation can stay at a, you know, slightly higher or much higher level than is average so let's say over the last five, ten years, it's been somewhere around 16 times is the average we're slightly elevated, and, you know, i think that they contracted from 22 times, which were way higher than where we're at right now, because rates rose last year. maybe it wasn't because of, you know, fear of earnings slowdown and recession. it was simply we got pe multiple contraction as rates came up and inflation rose perhaps they cannot only stay at these levels, but elevate a bit from here to that 19, 20 times level, if inflation stays under
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control and the fundamentals are okay i don't see any reason why pes would have to collapse if inflation is trending better and price pressure is getting margis easing we may even see them expand a little bit maybe not back to 22 times, but between where we are and that point. that's how i would look at it. >> again, not many people are going to come on for multiples expanding in this environment. let me give you one more from kang, one of our viewers, who said the market ignored the fed in 2022 and got smacked. why would they do it again maybe we are taking rates over 5% by the end oh of the year if that plays out, how do you feel about stocks in the meantime >> our base case is built in with fed funds somewhere around 5.25%, which would be a couple
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more 25 basis point hikes. i think we have to put it in perspective again. i'm not a raging bull here i just think we could see upside after a 25% correction last year you know, people again, they jump the worst case. i hear comments like, oh, my god. this is unprecedented what the fed has done and yeah, you know, we have gone from zero to 5ish in fed funds, but what was unprecedented was zero we're only going back to normal. so, you know, as muhammad alairian comes on and talks about the new normal years ago, which was a brilliant kind of spin on things, you know, we're going back to the old normal we're just going back to normal and people are freaking out. i just think you need a little more poise and patience to see that it's not as bad as folks think. in fact, the market trades on trend, not on absolutes.
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if you don't believe that, think of 2009 when the market was up 30% while earnings cratered 47%, and we were losing 500,000 jobs a month. and yet, the market was up and that's all i'm saying. the logic should hold, the market cares about where we're trending, not where we're at i think we're moving in a better direction. >> '09 would be an interesting corollary, where we were coming out of the recession again, appreciate the counterpart. so many names here fundamentally, you're a stock picker i just want people to know, you're looking at a tesla right now, a planet fitness, a starbucks. tmus, that's been a battleground stock. we just needed the top level, i think, argument on a day like this, and you delivered. appreciate your time thank you for joining me >> thank you keep your questions coming
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we'll sprinkle they will all week long. mark zuckerberg unrolling a new service. it's pretty pricey stocks have doubled off recent lows let's take a look here, down more than 600 points across the board. only two names are positive right now. walmart being one of them. proctor and gamble the second. back after this. (woman 1) i just switched to verizon business unlimited. it's just right for my little business. 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 to "the exchange." we're just off session lows. the dow briefly down more than
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600 points the nasdaq is lower by 2%. we'll check on mega cap tech seeing pressure from the chinese internet names and the rest of it but we are seeing market like declines with amazon almost 3% down today microsoft not spared either with a 2% decline let's get to tyler mathisen now. >> thank you very much good afternoon, everybody. russia's foreign minister says moscow will respect the caps on nuclear weapons in the new start trade, even though vladamir putin suspended russia's participation in the last remaining arms control agreement with the united states last fall, russia refused to resume the treaty's mutual site inspections that had been suspended since the start of the covid-19 pandemic. 13 days after the train derailment that released toxic chemicals and fumes, the epa is taking control of the cleanup in east palestine, ohio, instead of
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allowing norfolk southern to handle the efforts the epa will require it to do so under a plan put together and the railroad will pay for everything we will hear what the ceo of norfolk southern has to say in an interview at 4:00 eastern in new orleans, the parades started early this morning to celebrate mardi gras on the day before christians observe the start of lent. you know what that means a lot of somewhat they consume there today will not be consumed come tomorrow. kelly? >> indeed. still ahead, travel spending is quite long. wyndham is still betting big on china. we'll talk about all of it with the ceo, next. and speaking of earnings, nearly rk rise in this kind of a
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- life is uncertain. everyday pressures can feel overwhelming it's okay to feel stressed, anxious, worried, or frustrated. it's normal. with calhope's free and secure mental health resources, it's easy to get the help you and your loved ones need when you need it the most. call our warm line at (833) 317-4673 or live chat at today. welcome back to "the exchange." shares of wyndham hotels and
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resorts down a little today. they reported strong earnings last week. here now is geoff ballotti, the ceo of wyndham resorts geoff, welcome >> great to be back, and thank you. >> so you do juxtapose well with the home depots, the walmarts of the world. the retail sailil sales report, need to look no further than the hotel and travel area to see the strength have you seen any dropoff lately >> absolutely, positively nothing keeping our middle class guests from traveling. demand has been accelerating you just said it we were up 20% last year, 50% internationally, 12% domestically, and our business had fully recovered by the middle of 2021, which is pretty
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incredible to think we were up 12% over last year, which is the best year we had ever seen. to see it continue to accelerate, from a very strong fall to a stronger winter. and what looks like the early signs of a strong spring in 2023, we're up 6% versus last year we're up double digit to where we are back in 2019. we just think that the middle class is in great shape, whether it's low unemployment as your guests have been talking about, whether it's strong wages or significant savings, whether it's steve liesman talking about the consumer spending, which is just so encouraging. people are planning further ahead. they're hoping they don't get locked out as they have before like last year for their vacations, and booking windows are increasing >> it jives a little bit with
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that i take % is kind of an end gdp proxy. maybe the top line is still there. what i don't know, geoff, and i don't know if you can know either, and this is one hypothesis going around right now -- are people overextending into travel right now? they may say, i haven't had a trip in three years. so if i have to charge it on my card or pull back in other areas, or maybe lower gasoline prices, however i have to make this happen, i'm taking this trip and to heck with the consequences do you see any of that happening? >> we certainly see that happening with this hybrid work environment that everybody is talking about. we're seeing our customers, our middle income guests driving further, driving further than ever, staying longer than ever, because they're ranking travel and getting away higher than they are anything else with their significant savings, which, as we continue to hear, are still there. >> so if you were to describe your concerns, do they run more in this sort of profit margin
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labor market direction or more in the slowdown areas? in other words, if you're saying there's no signs of this problematic area, that brings us back to, what is the labor market like? >> we're the world's largest hotel franchising company. we don't own or manage, we franchise. and our franchise'ees are feeling better they're looking to build more deals. we just had a record development year, where we opened over one hotel each and every day the number of deals we signed increased by 35% in 2022 franchisees, small business owners believe that there has never been a better time right now, because we're just starting a new cycle. and so much of our business, 70%, 80% is leisure. 20% of it is that infrastructure business and that will be such a large tail wind.
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our business travelers wear boots and hard hats. they're traveling more frequently than ever we have seen seven consecutive quarters of infrastructure pickup our infrastructure business was up 15% in the third quarter, up over 20% in the fourth quarter we know that those roads, bridges and ports, that work has not yet started. that will continue to pick up and fuel travel in the economy we operate in. >> that's what your colleague told us last week. many of our guests have commented or viewers have commented on the fact that it's the fiscal almost fighting the fed because so much stimulus is coming in. final question, i'm going to see if your smile goes down, but china. where you guys have made a huge bet and where we have had k kerrfuffles over these balloons and problems with diplomatic relations. do you feel as enthusiastic
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about being in china for the next ten years >> i will keep smiling china represents 2%, 3% of our earnings if you look at the last three weeks of china, our rev par was up 60% the last year, but up 30% to 2019. you can argue that was chinese new year and everybody had the same pent up demand as here in the states and just wanted to get out. but to see what made me smile more than anything is when they came out just last wednesday and said china rev par was back to where it was in 2019 i think that made us all with hotels in china feel very good about that that economy, again, over there, we're adding units we added 10% in terms of the number of rooms we added in our direct franchising business over there. so yes, i'll keep smiling. our team over there is doing a great job and we're very optimistic >> i couldn't break you this time, but i always appreciate the data points.
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thank you for bringing that to us, and always giving us a real view of what's going on. >> thank you >> geoff ballotti, ceo of wyndham hotels and resorts still ahead, tolls brothers has only missed 20% earnings in the past five years. and coinbase with a 20% move either way on earnings we'll have that in earnings exchange, next the first time you connected your website and your store was also the first time you realized... we can do anything. cheesecake cookies? [together] the chookie! manage all your sales from one place with a partner that always puts you first. godaddy. tools and support for every small business first.
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no. he's making real-time money moves with merrill. so no matter what the market's doing, he's ready. and that's... how you collect coins. your money never stops working for you with merrill, a bank of america company. welcome back let's get to a rapid fire of earnings exchange today. we'll get the action, the story, and the trade on three names about to report. and i'll start with tjx. before the bell today, the stock on pace for its worst month since last june. the street watching for wacalms. shares up three out of the last four reports let's get to the trades with gina sanchez welcome. you a buyer of tjx this says am a buyer. i think it is interesting.
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one of the things that we know is that the, you know, tales of the demise of retail have been much exaggerated, and we have definitely seen the retail sales number balance in january and you have seen a huge runup in the retail space tj max is one of these names that is one that will ben mitt iffer going into a slowdown, tj max is at the bottom of that spectrum the big challenge was getting inventory, but they're past that so we are looking at them to do well >> home goods maybe down 8.5%. we have seen that whole area of the market being hit we'll move on to toll brothers after the bell this afternoon, the luxury home builder down 2% today and having its worst month since august lots of twitter questions about the housing market is today's existing home sale data mean the bottom is in for
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the housing market what do you think, gina? >> you know, look, i don't -- i like the housing market, despite rising interest rates, because we are in a housing shortage toll brothers were selling affordable luxury. if one space is going to get slammed, it's there. buyers are reaching to the edge of what they can afford, and they need to finance that is not a good combination so i think toll brothers is going to have some wood to chop from here. >> interesting i like that. pe back over 6.6 so that brings us to coinbase, out this afternoon options looking for maybe more than 20% move. they're on a tear to start the year, up nearly 80% on the back of rebounding crypto prices. are you a buyer of the stock, gina >> look, this is a tough one to love they're going to be down 77% on
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revenue if they just meet expectations yes, crypto winter might be thawing. we have seen a recovery in bitcoin. but i don't think that we're still way below highs. and this is an area that doesn't do well in quite frankly evaporating liquidity. that's what is happening we are seeing liquidity going out the door it doesn't matter what coinbase you do, whether they move to subscription model, cutting their workforce. i have never seen a company cut into greatness so it will be really hard to be excited about the space, and, you know, coinbase may do what it can to survive, which is what they're trying to do until we know what's happening in the u.s., it's a big question mark >> gina, a buyer of one of these, a seller of the other two. gina sanchez, thank you. thank you for your time today. still ahead, have you always
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wanted a blue check on your instagram account but you're not a celebrity or influencer? it can be yours now if y aoure willing to pay up for it that's next. 92% still active? seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. rent a peloton bike or bike+. terms apply.
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welcome back to "the exchange." meta taking a pain from the likes of twitter and snap rolling out a paid subscription service for users who want verified accounts. julia boorstin's got the details. julia? >> that's right, kelly meta verified for creators and influencers. this new service includes account verification, impersonation protections and access to account support. plus more visibility for those accounts now, this service is set to start in australia and new zealand for a monthly fee of $12 on the web and $15 in mobile with plans to roll it out more broadly from there b of a projects the potential for 12 million subscribers by the the end of this year, which they say would yield $1.7 billion in high margin revenue in 2024 and up to an incremental 3% bump in earnings per share. now, meta is joining snap, twitter and discord in working to generate revenue from some of their most devoted and perhaps high-profile creators.
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kelly? >> all right, julia. stay with us for more on what this could mean let's bring in contributor sean mcnulty. sean, okay, 12 million you take the oaf or under on those subscribers? >> end of year i'm going under. but you know, snap has launched snap plus for $4 a month in six months they've got 2 million. you know, facebook and meta, you know, base is a lot larger obviously. twitter has been rumored to have -- twitter blue reported about 200,000 in the u.s. in two months so 12 billion's a little ambition for a product that costs you $12 a month. it seems ambitious to me but the b of a analysts may have a better insight than i do >> sean, what do you think is really going on here >> it's a company that made $23 billion in net profit, their net income last year it's not a great look. it's a classic -- meta makes all their money in advertising
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99% of the revenue is advertising. you're looking for other levers? it's advertising or subscription and this is almost 20 years into the company they're finally pulling subscription sure, i guess it's money left on the table per se and they think they can make some money off it. but it's odd for a company that -- it's not a great time for them but the stock is back up to over 170 so it's a little bit of a question mark for me >> julia, give us some hypotheses what do you think this is about? >> this is all about diversifying their revenue stream and the fact that if this works it could be a win-win. they would get the people who really rely on instagram and facebook to connect with their fans, perhaps even people like journalists, the same sort of target audience for the twitter check mark, twitter verified service. so to get them to pay, to make sure that if there is a problem that they're going to be able to reach someone on instagram to help them out and that they would have this additional element of monitoring so they don't have to worry about their account being hacked they're going to get these sort of devoted smaller group of people who would be willing to pay that monthly fee
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and then if that works not only are they generating a new revenue stream but they'd also be able to improve the overall quality and authenticity on the platform i think it's really interesting that you'd have to upload a government i.d. in order to be be able to get your identity verified so they're serious about making this your real identity. and kelly, this goes back to the early days of facebook when they said they want you to come on facebook as yourself twitter you could put up an alias but they really want this to be really who you really are. and i think that's a big part of trying to make sure that their creator community, which is, you know, growing and certainly a big piece of this, is represented authentically. >> quick final comment, sean does it risk turning people off? it's a bit of an admission of hey, if you want better service you have to pay for it because we can't provide it for free and also to take your most dependable users, your most loyal users and say we're going to charge you for the privilege of having you on our platform. >> yeah. exactly. and julia's points are correct
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if you can get money out of your businesses that are on there, great. but as we all know, not a great time for small business right now. and this is basically $150 a year charge on top of this that you weren't used to paying for and it's a free product. 19 years of being free when you go to paid, you know, you never know what the reaction's going to be when your product doesn't have that reputation with your users there is value there, but is it $12 a month? we'll see if the price point holds. >> do you have any concerns about gifgs your government-issued i.d. over, sean >> i should at this point. but you know, the amount of people who probably have it by now, kelly, you know, it is what it is. >> i'm with you. no, i'm like the worst example of -- throw my hands up. it's all out there guys, thank you very much. we appreciate it our julia boorstin and sean mcnulty. got to draw your attention to markets, everybody we're creeping up toward 4% on that ten-year and stocks are creeping to session lows, down nearly 600 points. a whole lot more on today's sell-off and where to put your money to work coming up on "power lunch." there's tyler mathisen getting
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ready. might set his hair on fire if we hit 4% lloihionheth side of this quick break. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq (vo) if you've had thyroid eye disease for years and you can't get any shut eye yeah... oh. don't worry i got it! because you can't shut your eyes, it's not too late for another treatment option. to learn more visit
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good afternoon, everybody and welcome to "power lunch. alongside kelly evans i'm tyler mathisen coming up today stocks sinking to start the shortened week. rates rising if the fed stays higher will stocks go lower? well, that's what's happening at least now. we've got all the big movers and market reaction covered. >> plus, worries about the consumer one of the things weighing on stocks we'll dig into home depot and walmart's earnings and we'll talk to the head of a regional bank about what trends he's seeing but first let's get a trend here as we're at session lows across the board. dow's down more than 600 points. we're coming off three down weeks in a row and we're up less than 1% now for the year >> let's go over and check in with dom chu give us all the news on what's moving at this hour, leading with home depot, dom >> traders and


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