your game plan never changed. ♪♪ some still call it luck. let them. because you know what it's always been. inevitable. ♪♪ ♪♪ ♪ good afternoon, everybody. welcome to "power lunch." alongside seema mody, i'm tyler mathisen. glad you could join us for a tuesday. we're 24 hours away now from the fed decision on interest rates. fed already meeting down in washington for a two-day session. more conflicting economic data out this morning. big drop in the chicago pmi shows some slowing economic growth. but the employment cost index shows continued inflation. so we'll discuss the difficult position the fed is in.

plus, the other big piece of the market puzzle right now, earnings. we'll trade some big names which reported this morning and preview some of the names due out after the bell, including amazon. but first a check with the markets with two hours to go. the s&p 500 trading by 40 points. small caps the key laggards as we watch the dollar strengthen. gold is down by 0.2%. big mufr to up the side, eli lilly raises guidance thanks to sales of the obesity drug which exceeded half a billion dollars in the quarter. way ahead of expectations. and here is a few of the other big names we're watching for after the bell. one would be amazon, two would be amd and the third would be super micro. two out of those three are lower but amd is higher by half percent. we begin, however, with the fed as we are just 24 hours away now from the decision on interest rates. widely expected that the fed will keep rates unchanged. our next guest doesn't see a cut

tomorrow but is sticking with his forecast for three rate cuts this year. starting in july. michael feroli chief u.s. economist at jp morgan. michael, something occurred to me as we were reading that introduction where we talked a little about higher than expected inflation and maybe some slowing in the chicago pmi. is the fed's challenge neither going to be inflation or too fast growth but something we remember called stagflation, perhaps? >> well, i think right now the bigger challenge is inflation. take that much signal from the growth numbers we saw this morning. particularly with the labor market, that continues to add jobs. pretty robustly, so i do think what we see friday morning will be a lot more important than what we saw this morning with respect to any stagnation of the economy. absent that, i think job number one continues to be, as it has been for the past two or three years, continues to be inf inflation. >> why are you a little against

the grain right now in predicting three rate cuts this year, when many are retreating from that number to two, one, some zero, what makes you confident? >> well, we're a little on our heels particularly after this morning's eci number. but you know, we'll see if we do see any softening in the jobs data. we had unemployment rate that has been unbalanced, drifting higher over the past year. if that continues, i think we could be on track for an easing sometime this summer or fall. but if we see the labor market, you know, continuing to -- or showing more resilience and less of a move up in unemployment, i think it calls into question whether they are going to be cutting any time in the summer and fall. >> michael, how do you think jerome powell handles questions on the strength or weakness in the u.s. economy and how much weakness he is willing to tolerate just to get inflation down to 2%? >> well, one thing is he'll sound a lot different than he did six weeks ago when he kind of brushed off concerns about

the inflation prints we saw in the first two -- first two months of the year, the third month really seemed to have changed -- changed the tune. i think on growth, though, however, he's been pretty consistent that they will react to unexpected weakness in the labor market. that has been, you know, part of their story here for a while, except we just haven't seen any unexpected weakness in the labor market. i don't think he needs to modulate that message. but i think really where you're going to hear quite a different is how he's talking about inflation. sounding quite a bit less confident i think than six weeks ago. >> he started to do that, as if to condition the market and the audience for what he might say tomorrow that his confidence level that we're making sort of unimpeded progress toward 2% is less high than it was, right? >> yeah. so two weeks ago he made those remarks. he also said because of that, you know, the rate cuts will come later than previously anticipated. so then i think what leaves --

what the big question for tomorrow is he had in march said the committee expects rate cuts at some point this year, right? maybe no longer expecting three, but are they expecting any. i think that's another question he'll have to -- >> is it interest rates that have troubled the market this past month? and what do you see heading into the future for equities? >> well, i'm not much of an equity strategist. clearly the pivot in the fed has been something the market has had to digest over the past i guess really three months now. i think we are at a point here where, you know, taken out a whole lot of pricing for this -- a whole lot of fed cuts for this year. i still think the bar to hikes is going to be pretty high. and again, coming back to powell's remarks two weeks ago, he really said the decision is how long to keep rates elevated, not when to hike rates again. i think for that to happen, you would really need to see a sense that the labor markets are tightening further and that wage pressures are building,

inflation expectations are moving higher. i think we're hopefully still pretty far from that point. >> what is your take on the consumer right now, michael, just given that you're expecting three rate cuts this year. we look to add the consumer confidence data, a 21-month blow and report from mcdonald's which showed not only did profits come in light but the company really stressed this point that the consumer is looking for a better deal. they may offer discounts on their menu. how do you size this all up? >> first of all the consumer spending data have been very strong, at least through march. now, that's history. going forward, there are some reasonable concerns about very low saving rates, credit card balances that are moving higher, and those are legitimate concerns. however, i think what's really going to -- not to sound like a broken clock, it comes back to the labor market. the wherewithal for the consumers to keep spending like they have in the first quarter of this year becomes more in question. absent any slowing in the labor

market the consumer can continue humming along like they have been so far. >> even if the housing market stays so strong and prices remain elevating which we know is pricing out so many people right now. >> that has been a problem. you are seeing -- i guess you saw -- reminder of that again this morning with rental and homeowner vacancy rates remaining super low. that is a problem here. i think it's a structural problem and will take years to correct. >> we'll leave the conversation there. look forward to your insights tomorrow. michael feroli of jp morgan. our next guest is focus on the fed but says the labor market holds the key in 2024 to sustaining market expansion. let's bring in chief investment strategist at janney montgomery. we have adp tomorrow anl job openings right before we hear from powell. >> well, you mentioned the latter to me is more important. the jolts report, i would be looking inside that number for the quits rate which is holding

2.2%, which is in line with pre-pandemic trends. i would also be looking at the job vacancy rate. this is something governor waller had noted as it continues to move lower from current levels of around 5.3% toward what he believes around 4.5% rate, which could trigger an acceleration in the rise in the unemployment rate. i'll be looking for that. then obviously later in the week, jobs claims which have been hovering near historic low levels and obviously culminating on friday with the bls number on jobs. and so a lot of activity on the jobs-related market that will give us a per view into how well that's going to stay conditioned to be able to provide the income stream and the wherewithal for consumers to continue to propel economic activity. >> mark, as to how investors should be positioned, you're saying this rotation away from tech into industrials, energy, that's where investors should be looking for opportunity. but you could argue those

sectors have all seen that rotation, the run-up this month. >> well, they have. but that's also relatively fresh. these were the sectors that were really laggards last year. only more recently that you started to see these other sectors usurp tech leadership and communication services has only recently given way a little bit to these sectors. and so i still think there's more horsepower embedded in them, particularly given the fact that the u.s. economy continues to elicit signs, for the most part, that it's still quite stout. and we're even starting to gather some evidence, albeit somewhat embryonic, nonetheless, that global activity is picking up with better news out of europe and china alike. so important to the big, large cap multinationals that propagate those sectors like materials and energy and industrials. >> since you mentioned europe,

let's talk about one of your choices which is bnb parabas. nearly 7% dividend yield on its adr. >> huge dividend yield. attract i have for investors looking for not just current income but total return which starting off with something north of 60 will get you a long way to pretty exceptional prospect for a total return. but, you know, it's the largest financial institution europe, banking institution. the ninth largest in the world by assets. trading at about seven times a multiple on earnings and trading at about 30% below book value, with signs of improving conditions in the european economy leads us to believe that bnp is undervalued and a re-rating is at hand. >> we know that data shows home prices remaining at an all-time high. do you think in a way that's propelling the stock market, mark? where americans just don't have another place to put money, can't buy a new house, might as

well put it into the equity market? >> well, that could be a cause for it. you know, certainly cash continues to compete on a lot of levels with the equity market given the enormous piles of cash that are sitting in money market accounts. but, at the same time, yeah. i think the deterrent to committing capital that otherwise might go into say investment if not necessarily a primary home, real estate as an investment property may be finding its way into the stock market because cap rates on real estate, whether you were talking about residential for renting purposes or for commercial purposes are exceedingly low, leaving a very low mar john for safety there. maybes that capital has been freed up for risk-based investment that would be otherwise earmarked for real estate helping to again put a bid into equity prices and sustaining them at somewhat elevated levels. your previous guest talked about some of the chop we have seen here recently, which we expect

likely to continue for a little while as investors realize that perhaps rates will stay elevated for longer than what was originally expected. but ultimately we think the advance will resume. >> why did stocks stumble in april? and what do you expect through the summer? >> well, tyler, i think it was an intersection of somewhat overbought conditions. intersecting, if you will, colliding with rates. and this -- you know, fundamental shift in the outlook for what the federal reserve's reaction's function will be to high inflation, that we've had three cpi readings, a pce reading and obviously culminating with the exclamation point the employment cost index came out with today is shaving those rate cut expectations. so, i think investors were out a little over their skis with regard to the prospects for an imminent and multiple rate cuts. that's been reflected in

reevaluation of stocks lower. we had a correction that maybe were not through the complete mist of it this juncture. >> so what's next? >> we'll rally into year-end. >> you think we'll rally into year-end? >> i do. >> what sets that up? >> well, the presidential election cycle. if -- as an analog, passes prologue what we typically see in election year is consternation over the summer, sell in may and go away and rally emerges later in the year which could coincide with still sturdy economic data and the federal reserve getting away with maybe one or two cuts before the end of the year. possibly even three, like michael had expressed. but, nonetheless, that would be enough i think to put a bid into equity prices as long as, again, consensus estimates for earnings stay reasonably sound. >> yeah. i guess the answer there is if the republican doers, that's good for stocks. mark, thank you very much. >> you're welcome. coming up, musk announcing

another round of tesla layoffs. this coming after a watershed moment for the company as it gets self driving when the dust settles. what can we expect for the future of tesla? we need to talk about tesla everyday. we'll do that next. trading at schwab is now powered by ameritrade, unlocking the power of thinkorswim, the award-winning trading platforms. bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. tailor the platforms to your unique needs with nearly endless customization. and track market trends with up-to-the-minute news and insights. trade brilliantly with schwab.

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shares of tesla pulling back today after a big gain yesterday. this on news of layoffs earlier in the month. phil lebeau tracking the latest news for us. what's happening with tesla today, phil? >> well, we got -- two pieces of layoff news. you have the news that came out last week about cutting 10% of the staff. i think it was last week. might have been the end of the priest week. i'll run it together here, tyler. then you had the news that came out last night, this was first reported by the publication the information. and here are the latest tesla layoffs that has gotten some attention here. senior director of the super charger business as well as the head of the new vehicles program

and the employees in those divisions, some numbers have put that at about 500 employees, bottom line is, more cuts at tesla. the company, as you mentioned, had already said, hey, look, we're going to be laying off 10% of the staff. that's approximately 14,000 employees. those were cuts that were announced a week, week and a half ago. elon musk, however, after those came out, there were a number of reports that he wanted even more cuts. than 10%. whether you believe that or not, it is clear from the latest moves that he is serious about cutting as much as possible to bring the company's finances in order because they are facing the ev winner that everybody else is facing, which we saw with the numbers that were reported last week. as you take a look at shares of tesla, keep in mind, that the earnings were down 47% versus last year in the first quarter.

that will get any ceo and certainly elon musk to say, how much more can we cut and where can we cut? that's why you had these latest moves that caught so much attention last night. >> my question is you mentioned that the executive in charm of the super charge division the executive in charge of new car development were being cut. i think maybe i misunderstood, are those divisions being eliminated? because those seem like pretty important -- >> unclear. >> unclear. >> unclear if it's divisions eliminated or be consolidated into other divisions or if there's going to be some type of a restructuring. you know how this works with tesla. even when you reach out and ask for a comment, what you often -- you don't hear anything often in response. so that that's up to your interpretation, tyler, in terms of what will happen there. and let's be clear, the super charger network is one of the shining stars, if you will, within tesla. >> yes, yes. >> in terms of what attracts buyers and we know that they basically have -- it has become

the gold standard within the ev business here in north america with other automakers saying, yeah, we're going with tesla's service and we're going to have access to the super charger network. >> inner operability between their chargers and tesla. we want to ask you about stellantis. what was the stumble there? >> little bit of the stumble was accelerated not just by the numbers that came out early this morning regarding q1 deliveries and revenues. remember, we don't get the first quarter earnings. they do half year and full year. look at the deliveries, not great. total down 10%. europe down 7%. u.s. almost 6% increase which is relatively speaking a bright spot for the company. but keep in mind, they have made the decision that they will not be taking any hits in terms of pricing. that they're going to hold pricing as much as possible. that said, that means you have

lower volumes. and that was reflected in their q1 revenues dropping 12%. but again, the real pressure that came on the stock, it happened after the executives gave an outlook in terms of what they're expecting. it was not a very optimistic outlook, even though they have reaffirmed their earnings guidance for 2024. bottom line is, tyler, you're looking at an industry right now that is facing pricing pressure. and you have one of two choices, if you're an auto company right now, you either cut volume or you're going to have to cut prices. and that's why you see inventory levels, whether it's at stellantis or at other automakers continuing to increase because they have not cut pricing as much as many believe they should. >> phil, thank you very much. phil lebeau on stellantis and tesla. after the break, copper is rallying to a two-year high. we'll take a look at the commodity's space when "power lunch" returns. ♪

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1.2 was the high until covid hit. that was established in march of '03. if you look at the remaining numbers, whether it was 945 we had chicago pmi or 10:00 when you had consumer confidence, while eci was jumping, confidence was dropping and chicago, well, 20 months since we had a reading above 50. how do you spell stagflation. look at 10-year note yields, boom. they jumped. matter of fact, portions of the curve were actually higher in price, lower in yield until that

number hit. that all reversed higher. you look at the dollar/yen still being talked about. the two-day chart the dollar versus the yen. you see the yen is creeping up a bit. the dollar is sleeping just a bit. but what's interesting here and i continue to point out that while everybody is talking about the '90s, we're not above 160 anymore, we haven't closed above it, though, since december of '86, 38 years. we're still not sure whether the bank of japan actually intervened. when you put it all together, it's pretty hard to say that they didn't. seema, back to you. >> yeah. there's the speculation, right that the japanese stepped in with intervention. we'll be watching that closely. and of course, tyler, i would mention with this weaker yen, we're watching a spike in travel. so more americans going to japan, taking advantage of not just the stronger dollar, but weaker yen. so we'll see if that trend continues. something to watch on booking holdings this week. let's talk copper. best month in years.

pippa stevens is here with more. she covers everything, including copper. >> copper is lower, as you said, after perhaps getting a little ahead of itself but still in track for the best month in more than three years. they chalked it up to recent supply disruptions we have seen. they noted those display disruptions aren't going to have a long-term impact on the physical market, but what it's done is acted as a catalyst to bring to the attention of the wider market what the underlying fundamentals are saying in copper. of course, we see all this demand from the energy transition, from the ai boom. so there are these calls that we are going to flip into a market where demand outstrips supply. on the heels of that, we have seen since the middle of march a huge influx into traders, into the copper market, 133% short positions have decreased by 40%. you see the way flipped net long. in the short term that does mean that perhaps we are due for a pullback here, but longer term, the forecasts are that prices are going up.

we saw last week unsolicited takeover bid for anglo american which anglo did reject. bhp was looking for was their copper mines in chile and peru. >> copper is widespread from phones to kitchen appliances. any talk how this is inflationary as we await powell tomorrow? >> that's the point that is copper is in absolutely everything. demand was already there and talk about things like the china property market bouncing back, the energy transition and now ai and data centers and what that means in terms of grade upgrades, that all increases the demand. in order to build a new mine it takes 15 years. it's difficult for the miners to now forecast -- how can they forecast building a new mine when they don't know what the price is going to be. so far it hasn't been high enough to incentivize all of that cap x and also shareholders haven't wanted that. we have seen the same thing in oil and gas where shareholders want steady discipline and not

signaling we're going to invest billions of dollars in a new mine that won't come to fruition for a decade and a half. >> not to mention environmental issues that might arise around building of new mines wherever they might happen to be. >> pippa, thank you. pippa stevens. let's get over to dom chu for a cnbc news update. columbia university officials say the students who occupied a building on campus overnight are facing expulsion. they say their top priority is restoring safety and order on campus. the school's warning comes just one day after students were told to leave a pro palestinian encampment nearby if they wanted to be allowed to complete their ze meser. meanwhile, about four dozen encampments remain on other campuses across the nation today. the supreme court declined to block a texas restriction on pornography today. the state is requiring age verification to prevent minors from accessing adult content online. the justices turned away the request to hear the case made by free speech groups. hell's kitchen and

stereophonic dominated nominations for the 2024 tony awards. the former inspired by alicia key's teenage years in new york city picked up 13 nods. stereophonic was nominated for best play and in 12 other categories as well. the tony awards will be held on june 16th. seema, back over to you. >> dom, thank you. we'll be watching. following alphabet and microsoft's strong results, amazon has a high bar to meet. after the break, we'll dig into the company's balancing act between growth and profitability. we're back in two. do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. call coventry direct to learn more. we thought we had planned carefully for our retirement. but we quickly

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♪ marijuana stocks are soaring this afternoon as the white house moves to reclassify pot as a less dangerous drug. brandon gomez joins us with more on this move now by the biden administration. brandon? >> yeah, that's right, tyler. look at shares of tillray and some of the etf. stickers mj, msos all up double

digits surging on the news that the u.s. justice department will recommend reclassifying marijuana as a schedule 3 narcotic instead of schedule 1. that would move marijuana into a category that includes drugs like tylenol with codeine and steroids versus now where it is currently reclassified alongside drugs like heroin and lsd. this is the first time the drug would be reclassified since the controlled substance act came to be more than 50 years ago. what does it mean for investors, right? rescheduling cannabis opens the door for pharmaceutical companies to get involve with the sale and distribution process of medical marijuana in states where it's legal. companies in the $34 billion industry would also be able to deduct business expenses like any ore firm. makes the industry much more attract i have to investors like potentially shrinking the black market for marijuana. the move still faces a public comment period and the industry needs congress to pass additional legislation before it can fully access traditional capital markets. this is a big step forward for those pushing to open up the

legal marijuana market. >> the market is responding. stocks are up. brandon, thank you. brandon gomez. shares of alphabet shooting higher. now amazon's cloud business will be the focus when reports after the bell. kate rooney with a breakdown on what investors are expecting, kate. >> hey, seema. yes, the big focus is amazon web services aws which really is still the profit engine for amazon. the growth rate to beat, 14.7%. investors want to see that growth reaccelerate and any signs of last year when growth did dip that that was the bottom. aws could signal that microsoft's azure and google cloud are taking some market share. it's a very competitive cloud space right now especially with what's going on in ai. e-commerce business that is still in focus. investors are watching north american revenue margin and free cash flow margins.

they have started to be reflected in margins. we have seen faster delivery speeds also translate into prime membership. so advertising, another big one to watch this quarter as amazon prime video ads start to factor in. they've got these more broadcast style commercials. we may also find out how many customers are willing to pay extra for the ad-free service which rolled out in the quarter. amazon is now the only big tech company other than tesla not paying a dividend. that's not expected to change guys. the street really wants to see amazon reinvesting in ai. but not going overboard. this is a balance here. they need to balance cap-x spending and also profitability. amazon is announcing the chatgpt amazon q a gen-ai assistant. we expect ceo andy jassy to talk about that on the call, guys. >> kate, we appreciate that. let's get an analyst take on amazon's earnings. our next guest agrees that

growth in cloud and retail service is key and expects to deliver on both when they report later. joining us now is ron josey. one of the reasons you are favorably inclined towards this stock is that you see mar generals potentially expanding over the next couple years. how can the company do that at a time when they are having to spend as much as they are spending on capital investment in the cloud and in ai? >> thank you for having me, tyler. that is the question. we're at a point we think aws demand is actually accelerating. if it's accelerating, we should see revenues coming up. ideally it's accelerating not through optimizations call it attenuating like the company likes to say but new instances, higher margin revenue. that's aws. tyler, the real answer to the question in our view is the core retail business is actually

becoming more efficient. we started seeing this kal it last year with the implementation of the regionalized shipping zones in the u.s. that's rolling out overseas. we're seeing new fees come out. we're seeing basically a shift from consumer demand being mostly discretionary or a lot of discretionary to a lot of it being nondiscretionary and getting goods faster, using amazon more and i think they're clear to say it's one of their cheapest or most efficient form of delivery is the quickest. so frankly i think they're becoming more efficient in the core retail business and aws improves, we think that margin can at least sustain itself as the retail business improves overall efficiency. i think there's more room to go there. >> they seem not only to be more efficient but just better at getting more goods in the hands of consumers quicker. >> i mean, that's been a game changer, i think, same day, next day delivery just opens up so many different opportunities for them. we saw recently the launch of a

new prime add-on for grocery. i think 9.99 a month for grocery orders over $35. you get it within several hours sometimes within the hour. if you can rely on amazon for more of your goods, whether it be paper towels, shaving cream, whatever, you're going to rely on it now. scale begets scale here. >> i wanted to send a romantic thing to my wife and it arrived that afternoon. it was impressive. >> that's impressive. >> internationally, that's not the same case, right? what are they doing on the international front to have similar margins they have here in the u.s. and make that work. >> yeah. seema, a few things. first and foremost, what's driving here and now retail margins in our view is the advertising business that will be around 55, $56 billion this year alone growing 20 plus percent on our numbers. but as the core retail business becomes more efficient, that's going to drive margins overall. internationally, advertising helps, but as importantly, you know, there's a lot of these

emerging markets they've been in now for five, seven-plus years. it takes seven to ten years to reach that profitability threshold. we saw mexico reach profitability i believe in fourq. that was about eight years after it launched. so really we're coming to a level and scale here in more of these emerging markets that they're getting to the size they can be more profitable. and just taking the largest markets overseas, germany, uk, japan, your getting this new call it benefits from the regionalized shipping where i think they're shortening the distance to delivery and therefore getting goods to users faster. we think that gets them stronger and stronger. >> so that's retail, ai. we talked about cloud. what about its dividend or potential dividend. i was looking at the s&p 500 companies with a market cap of a trillion dollars or more. they're all offering a dividend dend. amazon is the one left out. do you think they change that today? >> you know, i'm not too sure of it today. i'm sure we get some insights this year around capital

allo allocation. we're looking for -- i mean, this is a business that has a significant cash balance on its balance sheet. in our view, as we just talked about, getting more and more profitable around o-i. capital allocation has to be a question on today's call whether buy backs first and then a dividend. frankly we saw the benefits with meta, seeing google. certainly change in approach in terms of capital allocation from buybacks and increasingly dividends. >> we'll be watching. ron, thank you. coming up on the show, a check on chips. amd set to report after the bell. can ai help fuel its results? we'll discuss when "power lunch" returns.

in addition to amazon, two closely-watched chip names are reporting this afternoon. amd and supermicro.

kristina partsinevelos joining with what to watch for, those two companies, ai seems to be the dominating factor. >> yeah, it is the dominating factor but cyclical head winds is another concern and anything non-ai is weaker in the latest report. cpus will continue central processing units will continue to be flat in q2, but the positive is that all these companies are talking about this bottom, this paraphrasing this cyclical bottom with improvement in the second half of the year. which bodes well possibly for amd. so we're going to be looking for any demand trends in pc and server as well as changes to amd road maps that should reflect those trends. their embedded segment, that ch contributes to 25% of revenue. gaming would fall significantly in q1. expecting weakness there. while we have seen this pullback in shares this past month down

11% on this non-a-i cyclical weakness. the important factor is the adoption of the latest ai chip mi 300 series and any updates to the previous fiscal revenue forecast you're seeing on your screen now at 3.5 billion. the street is anticipating that number to jump up anywhere between 4.5 to 5 billion. so that investors feel confident that there is a path towards $10 million next year. i bring this up because this is the ai you're roeferring to the ai dpland 140 billion coming from microsoft, meta, google helping the ai demand narrative. now, another ai cap x beneficiary is supermicro. some even say it's in meme territory given how the stock has climbed. but they currently have 6% of the ai server market with key bank betting that jumps to 23% of the ai server market just next year, given that super

micro focuses on high performance computing. they didn't, though, preannounce positive earnings last tuesday when they normally do so. so that had a lot of investors spooked. you saw the stock dropped dramatically. down 14% just over the last month but this name is still considered an ai darling. >> do you expect, christina, china to come up in the discussion tonight on the earnings call? >> for amd and super micro, definitely given the weakness in concerns there was a lot of front loading, oerding and yes. the answer is 100% yes. >> okay. we'll be listening for your reporting on this. thank you. >> thanks. mcdonald's posting a first quarter earnings miss as consumers do some belt tightening. is it time to sell your shares? we'll trade that one and a couple more in three stock lunch. trading at schwab is now powered by ameritrade, giving traders even more ways to sharpen their skills with tailored education. get an expanding library filled with new online videos, webcasts, articles, courses, and more -

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all right, time for today's freestyle lunch. we're going to take a look at components making moves after reporting results. first up we have got deal 3m, performer today after beat on first quarter earnings but the

company cutting its dividends. it puts an end to six decades worth of dividend increases your trade here on 3m. >> great to be with you, tyler. for us, we would sell. because, you know, typically we like companies like this which have, you know, slow growth and pay a good dividend but they are stable. 3m, i'm afraid it has been the opposite of stable. the stock is been for the past five years down more than 30%. sales are going in the wrong direction. they have a host of litigation issues they're facing. this would be un-avoided. >> next up is coca-cola. topping q1 estimates, hiking its revenue outlooks and the shares are lower by 8/10 of 1%. what's the trade? >> for us, this would be a biased mod. there's a reason that this is a

buff a favorite. the broader theme that is happening is that eventually whether it is this year or next year the year after that we're going to get rate cuts. when that happens, we feel that the near $6 trillion that is sitting in a money market will go to dividend paying companies like coca-cola which allows the dividend to raise year after year. consequently, conversely, if they don't get rid of it, coca- cola could be viewed as a safe haven. he could do well under both scenarios. that's why for us this would be a buy. >> it wins even if we lose. that sounds great. let's go to mcdonald's. it missed its first quarter estimate falling short of expectations. middle eastern boycotts weighing on sales. what's your take your on mickey d? >> so, tyler, another good dividend paying company. we take a step back and look at the bigger picture. we feel that this is an extremely strong company. for us, this would be a buy.

they have over 90% of the restaurants and majority of them don't own the building. they have to pay mcdonald's rent. mcdonald's makes money on the high margin rent and on the high margin franchise fee. this makes it an extremely profitable business. to give you an idea, they are a profit margin for last year was about 46%. compare that to chipotle which was only 16%. >> that is a pretty big difference. thank you very much. we appreciate it. remember, you can always hear us on our podcast. be sure to folloanw d listen to power lunch on your favorite streaming service. we'll be right back. so this is pickleball? it's basically tennis for babies, but for adults. it should be called wiffle tennis. pickle! yeah, aw! whoo! ♪♪

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i want to draw your attention to the markets as we are falling to session lows with the dow down nearly 470 points, down 62, labor costs rising at its fastest pace in a year and a half. i was latest data. we got that from the employment cost index this morning. the s&p 500 and the dow down more than 1%. viking river cruise going public tomorrow aiming to be the third-largest cruise line on the public market with evaluation of $10.5 billion. the luxurycruise line was focused on the older baby boomer traveler that is willing to pay up for experiences where as carnival, rail and the region have emphasized their efforts to go after not only the older generation but millennial's as well. that will be a key topic. >> your tell me on the break that biking is no longer just a

river cruise business which was the core of their business. they look like elegant vessels. now they are in the ocean liner business as well. >> they transform from a reserve -- with river cruise line. they transition to an ocean- based carrier. they are looking to compete with the big three. >> those river -- their bill to go under bridges and everything? i'm sure they are or they would get stuck. >> it's a great question. they are completely different vessel than a cruise ship. they're smaller. averaging around 190 passengers per ship. people love it. again, they are not shying away from the fact that they are going after adults 55 and older. >> you're going to be interviewing -- >> the ceo tomorrow on squawk on the street as a company gets set to trade. don't miss it. >> all right, the treasury department announcing the new interest rate for eye bonds is now 4.28% for the next six months.

that's down almost a full percentage point from the last time the yield was suggested six months ago. the variable portion of the yield is tied to the inflation rate, not the bond market. despite the drop in yields, the bonds can be attractive due to the tax advantages. i think you pay no state tax on those bonds. >> that's right. and they've been popular. >> they been popular. they're going down because interest rates have come down from where they were. >> a rebalancing in the market. separately, the wall street journal reporting that nbc universal are preparing to pay upwards of 2 1/2 billion dollars annually to secure air rights to nba basketball games as warners tnt network tries to hang onto those same networks. the package at hand includes regular-season and playoff games and would air on nbc and streaming services, peacock. >> this would be a big content by for nbc and especially for peacock. they been with tnt for a long, long time and tnt is kenny smith picked warner discovery in our draft last week because

he was so confident that wbt would hang onto those rights. we will see. soon you will be able o eat, play and gamble at your local dave and busters restaurant. the arcade chain partnering to make a betting function on its mobile app with letting customers 18 and older make bets. we have to leave it there but dave and busters, you can go there, you can make some money to pay for your hamburgers. thanks for watching. power lunch. >> entertainment. closing bell begins right now. welcome to closing bell. i'm live here at the new york stock exchange. this make or break our begins of the countdown. amazon earnings, whether that report is just what this unsettled market needs. we ask our experts what to expect from the company when it delivers and a short period of time. in the meantime, the scorecard was 60 minutes to go in regulation, hotter than expected employment cost index, will that set yields up stocks downright from the jump today and it's been hard to recover.