>> by design by dine. [ laughter ] see you in a couple minutes. welcome to "power lunch," everybody. chip checks, the global sellout, getting caught up in a geopolitical value are there any beaten down names. tesla coming off a week it saw drop 15% the bulls cites potential for strong earnings growth two analysts with two different opinions, just minutes away. brian? >> we certainly have more to do here stocks are way off their lows. that's the good news, the dow in the green, but earlier today they hit their lowest level in two years. investors remaining focused on a lot of things, but jamie diming to our colleague julianna

tuttlebaum, and jamie dimon things the economy could -- and the overall economy is starting to teeter. >> you see it today in bond markets around the world, and people selling u.s. treasury debt it's the war these are very, very serious things, which i think are likely to push the u.s. and the world -- europe is already in a recession, and likely to put the u.s. in some kind of recession 6, 9 months from now. >> that's a big call from an flussial ceo, and economists tend to agree. a new survey shows they are ramping up the odds of a recession. steve liesman has more do they agree with jamie dimon >> pretty much just as the nationality big economics, upping their chance of recession and downgrading growth for this year first, i said to tell you that

fed governor lael brainard also agrees she said she was marking down her economic outlook, and i quote -- i now expect the second-half rebound last quarter limited and real gdp growth will be essentially flat this year. i don't think fed governors gig anything lower than a zero she added she expects monetary policy last quarter restrictive, but added some hope there's progress maybe being made. here's that nabe economic outlook, just 1.1% for next year, 0.1 for this year. cpi inflation numbers ratcheted up eight, so it does come down next year, but the payroll growth goes down to just 94,000

a month. many responded the risk is to the down side, but evans did start off saying that he believes inflation can be brought down without causing a recession. that is a forecast, brian, that you know has a lot of doubters on wall street these days. >> anything i think is possible, steve. to be fair to the federal reserve, i don't imagine -- you've been covering them for a long time. will anybody come out and say we'll be lucky to avoid a depression they can't say that they have to be somewhat optimistic >> assist a car-driving enthusiast, you should know if you're controlling the accelerator and the brakes, you should be able to say we're not going to have an accident. the fed has a single minded mission, which is to drive down inflation. and they're willing to have a minor accident, in that they

have said if there's a recession, that if there is a recession, they need to keep hiking as long as inflation is a problem. >> a good analogy, picked up by paul ckrugman. >> they have a control over a sundry of other things. >> a giant anaconda that comes out of the engine compartment? things could happen. >> exactly i digress. >> steve, thank you. there are signs that investors are moving to cash in anticipation of a recession and maybe some better buying opportunities. according to bank of america, flowing nearly $89 billion during the week ending october 5th. that's the miest since april of 2020 in other words, people are selling stocks, putting money into cash. it is getting ready to deploy it

basically this would be a great market, i guess, long term for people who have cash, and apparently they still do how long do we sit on it before we start to buy again, may be the only question. the magic question -- when did it all happen and when do you hit the gas? none of us know perfectly in terms of timing things it feels like a few weeks ago, does it make thence to go aggressively who knows, it had be a bit choppy, a we're thinking of protecting capital, line up your

ideas you may get a better opportunity in a few weeks after the next rate hike. >> where write do we put that money >> we've been looking more, it sounds like a chicken respond, but defensive, but with kind of a growth flavor. there's a couple different ways you can do that. the sector is kind of blowing up for us, i think there's a way to participate, underweight the sector and go defensive. you know, taiwan semis is a name that we have owned you can buy americans if you want to go that route. you can also pivot a bit and utilities, for the classic way to avoid, next era, that's probably the fastest growth utility that's out there can you hedge that a bit own a safety sector, but make play more on -- last name, this

is a counter-cyclical if you're not quite sure if jamie dimon is right, own property casualty -- casualty insurances i'm asking, for people out there who are sitting on their own catch thinking about when they should go in, it may seem daunting to just sit there and wait or try to figure out what time to get in. some of the safer

semiconductors, you definitely want to do that. if you start at zero cash, that's probably a reasonability place to be at this point. >> if you're a believer there's going to be a recession in six to nine months, would you sit on it? i think six to nine months, that's a long time to hang on to excess cash. if you think you're smart enough to pull out now and get back in later, that's two good decision, so, again, as that cash piles up, a good move is just participate in some of the defensiving, utilities, health care, some of the safe sister -- good growth, high quality, you may underperform on the way up

>> mike, thanks. mike bailey. >> thank you mean title the etf dragged down by lamb research, and this is a sector that finds itself calling in the middle of a semiconductor arms race. seema mody has the details. >> hey, melissa, the new restrictions are the most aggressive actions taken, limiting u.s. and making it increase get different for companies in china to obtain advance computer chips developed in the u.s. pointing out this is not an outright ban. this is an important step of china, those criticizing the move, a violation of trade rules. b of a vivek aria says the exact effects really depends on how these rules are enforced

he expects intel, applied materials, nvidia, lamb research to potentially see a 5% to 10% hit to sales and micron and western digital could potentially benefit incrementally by taking market shanks from yangtze it ecknowledges >> now is christopher rolen, great to have you with us. >> great to see you, melissa. >> what's so interesting, chris, a lot of people thought this sector had been derisked and here we are. if you look specifically at how certain stocks have reacted, because these export restrictions were floated before, and we saw immediate reactions from nvidia and amd, to trading down again on basically the samening, except

it's codified at this point. how do you interpret all this price action in terms of where the semiconductor sector is and how derisked it is, in fact. >> sure, in terms of the restrictions specifically, the language is somewhat open-ended. so semiconductor analysts today are trying to figure out specific products from specific companies, and how this will expand, potentially hit them and what that revenue impact is. it's really hard to figure out right now, but we do know that things used in a.i. and super-computing, as well as memory, as you had mentioned, as well as compound semis, all of these are getting thrown into the mix here overall it's difficult to exactly determine what is going to be enfierced and what is not, but i think overall, at least a 5%

revenue hit for semis overall would be a base case for this new legislation. >> let's delve deeper into a couple of them a new 52-week low, and amd, but lows we haven't seen since 2020. do you think that that 5% revenue hit is factored into these multiples at this point? or is it just too unknown? >> for amd, this was most likely about their preannouncement last week, but for names like nvidia and partially amd, it's really going to be this language around a.i. and super computing so, for example, we know leading he edge nvidia trading equipment are going to be banned, but what about inference for a.i., for example? this could take another call it quarter of sales off the table

here so there are some risks. this may not be completely deri derisked. are there certainly sectors you take a look at that had been huge growth sectors that the industry will no longer sell into i'm thinking of comments of the chairman of xpang, where he said it would hurt the a ton mum driving. that had been a big growth sector if we cut that off in terms of exports to china, is that meaningful >> that is meaningful for many of these players there are internal efforts to the a.i. side beyond hardway china is incredibly good at a.i. software, so they may be able to use those algorithms on internal china-made chips, but chips, for example, from companies like

nvidia, even qualcomm, could be at risk here eventually if they were to expand that and impact the ev and autonomous driving segments in china. >> we're talking about the chip sector as a monolith, chris. i'm wondering when you think about the fallout or impact on semiconductor equipment versus semiconductor manufacturers, is there one side of the equation that feels it harder >> well, there's one that feels it less. that was memory, as they really are putting these restrictions down here. yes, that would be lagging-edge technologies that they still may be able to produce in china. so smith, for example, think of that as the chinese national fab and champion there they are not going to be doing leading edge there because of these restrictions, but they can

do older technologies. that may be a winner for them. >> are there chip buys in your view at this point, or too many unknown as, whether it be the export restrictions, whether it be, you know, just concerns about the global economy, et cetera >> yeah, we are working through it i which i finally pc on the back of amd's news, we're probably close to a bottom here i don't know if it's 3q. or 4q, but we have hit total units from 350 million a year during covid to now we're thinking 260 so that's really derisked. we still think mobile has another quarter or two to go finally we haven't begun to talk about industrial or auto, cuts to numbers there i think it will be into next year before we finally see a bottom in numbers there. >> so a rolling sort of process

here chris, we appreciate your thoughts >> thanks, melissa all right. coming up, a high-growth stock that may have found a path to profitability. the fin named that one analyst now says is a buy. >> tesla, the bears are piling on bulls always finding a reason to pile in. we'll debate next. rivian down about 9%, ev maker recalling nearly all its vehicles will the company not be able to meet pre-production starts wee ckft ts. 'rba aerhi flexshares etfs are built with advanced modeling. to fill portfolio gaps and target specific goals. strengthening client confidence in you. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. at ameriprise financial, our advice is personalized. based on your goals, whatever they may be. all that planning has paid off. looks like you can make this work. we can make this work.

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welcome back to "power lunch. shares of tesla are looking to make a comeback, driven in part by the ongoing controversy it also had disappointing q3 deliveries on the flip side, the shanghai factory had a record-breaking september. it's weigh more bearish, accelerating with a $73 right target it's interesting it's real that you have a bull/bear debate with so people so far away from the away from

the stock. what are the dat lists there especially if we see a recession, which many, many more people are calling for is $400 realistic? >> yeah, thanks for having me. let's not forget just three weeks ago the stock was above $300 so while the stock has come in, sold off sharply over the last few weeks, we think $400 is achievable over the nest four months simply put, we view it as one of the best earnings growth stories over the intermediate term adjusted earnings of $2.26 last year, we see the earnings growing to about $7 by 2024. so, you know, at a time when inflation is really weighing on earnings growth, you know, broadly across the entire market, and, you know, consumers

are pulling back on spending, there's really no other company out there that has this type of earnings growth trajectory, even if you assume that analysts are wrong, by, say 20% to 30%, it's impressive earnings growth, but driven by increasing production and sales at the two new factories that they just started up in texas and berlin the argument had been in the past and maybe going wake by accounting issues will expire, all these different things that sort of have come to pass. >> good to see you tesla is effectively valued, and the problem is they're no longer

growing. the issue is very simple tesla in q3. why is that a problem? tesla is -- more than the ten largest automakers combined, more than the ten largest combined, despite selling just 2% of 9 cars that they sell. if you look at the lead times, can you in and out get a tesla car effectively in a week, and for all of the variants across time they're no longer growing there. the sales in q3 were down versus q1, and effectively no backlog, and the lead times for model 3 are roughly a week, the model y roughly three weeks. this is a company that is no longer growing i think the issue is, unless

tesla cuts prices significantly, we think it's going to be down, so you're looking at a company that is either going to see no growth i don't think you want to pay 100 times earnings for that company. when people say tesla is more than an auto company, they're not. >> but the division that is. >> also, can you talk to us a bit about tesla's cost structure? to be fair, they've done a better job of sourcing thinks critical materials i don't know how they did it, but they have done it, between knowing what they're paying for that, is a model y going to cost $90,000 in a couple years? where is our cost and price

structure going? >> yeah, they're way ahead of the industry in terms of sourcing raw materials where there's real concerns, way ahead of the rest of the industry who are just know reaching supply agreements so that's another reason why we -- because if you look all their fact tors are essentially brand new. that's why their gross margins are highest in the industry. people always make the argument, well, they're overvalued, compared to traditional auto makers, but a significant portion is coming from software sales. that's really important. that's really high margin, compared to vehicle manufacturing. when you see they have just raced the price to north america, from $12,000 to $15,000, that revenue prettysh flowing down to the bottom line.

you know, when you have a company with that am of software, you think about the margins on that product, you know, so we think the valuation is justified >> you know, gordon, i mean, teslas are cool. they're cool cars, they're fast, right, the model s is a good-looking car the model y, eh, but a sibs scripps to self-driving. my -- how big is the pool of buyers how many people are buying $75,000, $100, throw in another 15 grand in self-driving awesome if you can afford it, but maybe the addressable market is huge. >> the take rates have completely collapsed full self-driving rates have completely collapsed one ounce thing, keep in mind,

tesla has seen their sales growth decline it slipped from q2 do q3 their sales are actually down from -- and keep in mind so they're having a hard time selling their current production they produce about 365 so despite the fact -- and with respect to technology. tesla was dead last.

so they make promises they don't deliver on, the growth has completely slowed, and we believe in decline, and they're not even at full capacity, so we say we're going to give them a great valuation that doesn't exist, i think it's a step too far. i think you have to look at the uchbts and i think there's big problems there. >> a good debate it's a company, though, gordon, that people will buy the stock and buy the car regardless, almost despite -- the fans of tesla will be the fans of tesla, and no amount of valuation discussion will probably sway them we'll get you both back on respectful, smart, polite, amazing in america these days. thank you both very much ahead here, three stock lunch, mixed drink, if you will. ubs downgrading. goldman sachs, and also kraft

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the nasdaq is feeling the brunt of the losses today, down almost 100 points or almost a full percentage point. biorad and biogen both moving here in just the past half hour as dow jones reports that they're in talks to combine the companies. bio-rad is down, and seema mody. >> here's what's happening nbc news is reporting that kristina bobb has spoken to federal investigators.

she denies having written the letter instead she was told to sign about by trump's lead lawyer at the time they did not immediately respond for a question for com nuri martinez stepped down at reportings were leaked for crude comments she issued an apology, but did not say she would resign from her city council seat. in italy, dramatic video of ash and lava blasting into the air and tumbling down the side of the strom boli volcano. this is one of the most active volcanoes in the world it's been continuously erupting over the past 90 years >> amazing scenes there. thank you. a correction i haven't done this in 20 years or so --

>> sorry to laugh. [ laughter ] tesla parent it was $15,000 a year, but it's a one-time fee. i widely -- somebody who's in a dealership about to pull a trigger, no, stop. >> brian sullivan 208d me -- >> yeah, that's right. coming up on "power lunch. mizuho proposes a toast. the stock down 51% as many sheds riskier, but out with a bullish call, says it has a clear path to profitable. the company, you know them if you dineut o we'll talk about it, coming up stick around

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s&p 500 did just about about, and that's under 3700 and then they did get this, and we're holding most of it right now, add lael brainard did have more nuanced comments about the fed's inflation flight, make acknowledges some of the effect of the rate hikes that have already been in the system and perhaps that eventually a way to see clear to them. it's been the down side driving. with exports restrictions, and all the rest that seems to be the main problem that the nasdaq is having in handling that. now, u.s. cash bond market closed, something that you guys have been hitting, long-term treasury impact, making new low

s so that's one of the things keep investors a bit on alert here of course, the tlt bond etf is trading, but the u.s. bond market is not trading. it's closed for columbus day we do want to bring your attention to a big intraday move jim car ron explains the move by saying this is concerned the gilt market when the bank of england purchases end, basically their quantitative tightening. and then the question then becomes, they have to extend that qt. it's really volume tiff, scaring a lot of people pippa, we are back above $90 a barrel.

>> we are giving back some strong gains, but brent isn't that far from topping $100 again. the market continues to did i jest that 2 million barrel a day cut from opec and its allies today lifting its brent target for the first half of next year to $110 per barrett, though the firm added that inflation-induced economic headwinds will make the road higher a bumpier one brandy crew at $85.77 for a loss of 2.2%. heating oil, which is a proxy for diesel is in the red, down more than 3%, but coming off a nearly 20% gain from last week, and amid that jump, prices at the pump are up 19 cents over the last week, according to aaa. finally energy stocks are the worst s&p group falling 2% with every component, brian, in the

red. pippa stevens, thank you very much many newer financial technology stocks are yet to turn a profit, but your next guest says compete called toes is on the path for that. let's bring in dan dolefthey'r getting into information software as a service. what about toast do you like, as the market has not liked the stock? >> thanks for having me on the show toast is a massive share gain we're seeing gig share across the board. what we like, is people don't

think think can be profitable. we ran a survey of restaurants, and people who use the payroll are twice as much likely to take other software and services. if you think about the incremental margins, they could be in the 60s an higher, so the bear case on toast we say today, they continue to upset over the next 12 to 18 months which is not in consensus right now. i'm wondering how you think aboutsh and the various base case scenarios, in which restaurants may not survive, and there may be cuts at restaurants. there's a lot of things to short out there.

some of the restaurants that are not going to survive, about you when think where tilson heads bigger restaurants, and those restaurants tend to be more resilient and going into restaurants. we're not modeling a recession, i don't know how it's going to play out, but i think there's some resistance. >> how hard was it to make this call in which even for companies high multiples, and that's basically where toast falls.

i think our team thought a lot about do we want to do it in this vipr. we couldn't sit there with how much share they're gain ing gaie cooperate just sit there and watch it it's just too good i mean, they're just executing so well. one we saw the data on the s.a.s., we thought it's a buy. we're taking a risk, but -- >> there a takeout premium every time you go to a restaurant, it feels like it's a different venter >> i think -- that's actually what makes is such a great stock to buy if it does -- things fall apart,

let's say, there's always a legacy guy that will want to take them out. it reminds me of -- which we cover. there's a put on robinhood, that's what made it so resilient. there's a lot of people interested in buying robinhood, if things don't go the right way. it's the best in class, like the apple of restaurant point of sale >> good to speak with you. >> thank you. ahead top calls of the day we'll be right back.

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a more human way to healthcare. welcome back to "power lunch. let's get straight to steve liesman with a fed alert steve? >> fed vice chair lael brainard in the q&a portion following her speech, said the fed recognizes -- and monitoring the situation carefully.

ben bernanke taking questions after receiving the nobel award this morning he said the occurrence economic issues are different from the great financial crisis, because the gfc was created by the financial system, the upset in the system this one was created by the pandemic >> there are issues of financial stability in various markets, et cetera, but we're certainly not in anything like, you know, the dire straits we were in 14 years ago. bernanke said over time, financial problems don't create the financial crisis, they can add to it. yieldsd have risen 20 and 30 basis points, so very apropos, brian. >> yeah, certainly is. so much to unpack there, steve the brainard comments seem to move markets as well

bernanke talking about covid did it, though many would argue it might be covid, but then it was the response as well but going back to the uk, we'll call it like wbi wongie, but important. how do we analyze this move? to be perfectly blunt, it's hard to understand, at least for me >> we've been talking to a bunch of people this morning about what caused today's upset. i don't know if the back -- they didn't know we were going to talk about this, but these kind of moves, 20 basis points, it is best -- who said the concern is how good they are in the back -- look at that chart come right up the best explanation is the bank of england confirmed the plans to stop buys bonds at the end of this week, and that it hadn't taken as much as it said it was going to take, in terms of taking it off the hands of the

pension funds, it was the sort of all this tum mutt so going back to the liquid is a little fragile when i saw that headlines, that concerned me, was she speaking about a specification market question was that seems a little bit frightening. >> i don't know. how you take that. >> i guess a little smoke that i smelled, maybe there's a fire. what does that mean? >> yeah. i think it is a statement that you could cause to have concern or just one that says you know what, there are some illiquidities out there in markets that's a known fact and we've been reporting this over time, but not a broad, systemic wide illiquiditity problem i told somebody the other day, melissa, i don't have to report the illiquidity problem because people call me when they can't

place these things and they say, the markets are all screwed up in march of 2020, i got calls from people who could not place 30-year government paper we are not there right now there are times when some of the guys who are placing the big paper want to use smaller than bigger lots and sometimes they find out there's not liquidity in certain markets down the credit spectrum. >> all right steve, thanks. steve liesman. >> some big comments, disguised as benign, wouldn't you agree with that? >> i would love to hear the speech it's a little fringele >> little fragile, read the facial expression. big deal more "power lunch" after this.

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i remember the day you looked at me and asked, “what now, dad?” so i said, find a job, any job. work hard. that's just how it is. but of course, you didn't listen. you showed me there's another way. i'm proud of you. ♪ ♪ time for three stock lunch today, ubs downgrading ford to a sell and gm to a neutral goldman wayfair with a neutral and goldman making a call craft hines to a buy, cutting procter & gamble with a neutral. here with a take is scott, nation shares president and ceo. what do you think?

the entire auto sector u.s. and europe could see profits decline 50% next year >> this is not very helpful when the stock prices are already down 50% or more and you know, even if that comes to pass, then general motors would still have a p/e ratio in the single digits and ford would be just over single digits with a p/e of about 11 even then they would be relative bar begins and i don't see this being very helpful. >> etsy and wayfair, your take >> etsy, being a buy makes a lot of sense it's an interesting company. it has to become more than where you go to buy homemade pot holders but huge brand equity and loyalty. this makes sense to me wayfair is a neutral you know, i don't know how they're going to grow ebitda, earnings, profit, from where they're at right now. >> final pair, kraft headlines and p&g. brian said ketchup and swifers

summarize this one. >> i want to be long any company that makes the stuff i have to buy or sells the stuff i have to buy. p&g a little bit more expensive with a 21 p/e, but i still want to be opening a company that's going to do well when it comes to managing profit margins kraft hines all the sense in the world. a bargain in the staples space and a company that makes the stuff you have to buy. >> scott, quickly before we let you go, i feel like we ate the appetizer and ditched on the check. your take on the lael brainard about lack of liquidity. seems like a big deal. no >> i'm with melissa. i want to hear the context of what she said and the context of the question and was it asking about a particular asset class because there is plenty of liquidity in the s&p 500 names but mortgage backed securities or corporates that are not

triple a or double a i know there are liquidity problems there. >> right. >> if that's the context of the question, i'm good. >> thanks for take three stock lunch and then some dessert. >> like fast food. >> thank you for watching "power lunch. see you tonight at 5:00 on "fast". >> and "closing bell" begins right now. see you tomorrow stocks are starting the week on a shaky footing, though making a decent comeback we took a hit when jamie dimon told cnbc how much more downside there could be for the market. >> there could be another 20% and, you know, i think like the next 20% will be more painful than the first. >> then stocks gained ground back after comments from fed vice chair lael brainard. >> moving forward deliberately and in a data dependent manner will enable us to learn how economic activity, employment and inflation are adjusting to the cumulative tightening in order to