"power lunch" begins right now welcome to "power lunch. i'm jon fortt in for tyler mathisen, and here is what's ahead. russian oil caps kick in the global energy crisis enters a new phase. and it comes as china signals a broader relaxation of covid rules, potentially triggering a new wave of demand plus, meta's mega gains. the stock is up 35% over the past month trading above its 50-day moving average. a bull, a bear, and a debate over the future of this battleground stock and kelly evans, welcome back to "power lunch." >> jon, thank you very much. it's great to be with you today. hi, everybody. stocks are at session lows right now. we have the dow down more than 500 points right now that's a 1 1/2% drop, approaching 2% for the s&p 500 under 4,000, and more than 2% for the nasdaq meanwhile, the gains in the oil market aren't holding. this trade putting pressure there as well. we started in the green.

now we're in the red today by 3% wti around $77 a barrel. now, we started higher following the embargo by europe of seaborne russian crude and that price cap that went into effect but it does seem like the macro trade prevailing here. and vf corp. is the worst performing stock in the s&p. the f lowering p revenue expectations for the back half of the year. ceo also retiring. it's down almost 11% and it's dragging down other apparel makers ralph lauren, pvh down about 3%, jon. >> stocks taking a leg down as investors fear the fed's going to continue to tighten into a recession. our next guest expects the fed to pivot and see some opportunities in big tech but cautions against companies in transition let's bring in michael yoshikami, founder and ceo with destination wealth management. michael, you expect the fed to pivot if there's a recession, but i mean even with a mild recession it just sort of seems like the fed's been signaling

they're not going to conductors they're going to hold things at a certain level for a certain period of time, no >> that's absolutely what they've been signaling, but i don't believe that's going to be the case the federal reserve tends to make these pronouncements and then they adjust as they go along. and i think if the economy does seem to be slipping into recessionary territory there will likely be some overlap in terms of interest rate increases as the recession occurs. but i think the fed would very, very quickly pivot and i expect that to happen sometime in the first quarter of next year. >> so what kind of bets are you placing based on that assumption that a pivot's going to happen i take it you also think there will be a recession or are you more inclined to think there's going to be a soft landing >> i think there's not going to be a soft landing. i think there is going to be a recession. and i think you're already starting to see economic activity be significantly yum pacted by what the federal reserve is doing reits are a perfect example of

that, as kelly just said so what are the opportunities? i think first of all on the fixed income side the fed is going to continue to raise rates for the time being so i think you need to be shorter duration on fixed income and i think it would be the time to be drifting into equities i wouldn't go full bore into equities right now but i think there are some opportunities. i think if you drip in i think you're going to on a dollar cost average basis be rewarded. >> and michael, disney is one of the stocks you actually like here >> yeah. a little controversial, to say the least, kelly, but i think that bob iger is going to take the bull by the horns and make some hard choices. he's kind of in a perfect situation for him. he was actually gone during the worst three-year period we can all imagine, the pandemic. now he's coming back to clean things up. so i think sentiment is so negative right now i think it can only get more positive going forward. and i think that will be good for the stock. >> do you watch crypto as any kind of leading gauge for the rest of the market in the fact

that bitcoin is still wherever it is, 17,000 despite everything, some of the ism services was better, that kind of thing is there a case to be made for the relevance still of that asset class or no do you think >> not for us. if i can't explain why something's moving in price beyond manipulation i just don't see how we can buy it. i was having lunch with someone the other day that said they had an f xaechlt x account, what do i think will happen. i heard you just talking about the topic you're going to be talking about more on the show i just think crypto just a real unknown. and i'm just too conservative for that it makes me nervous. can you make money in it yeah, i suppose. it went to 60,000 or 70,000. but i don't know that you can predict what the price movement is based on. and if that's the case you're not buying based on fundamentals, you're buying based on momentum and speculation, something i'm not really terribly interested in.

>> michael, i think it's something investors tend to do in times of uncertainty, is think shorter term right? so i know people are saying right now only stocks with companies that are profitable, et cetera, et cetera but over the past few days there have been some interesting earnings from companies like samsara, iot company, does sensors and cloud monitoring for logistics. popped 20% smart sheet, productivity software, similar pop. intuit larger companies serving small and medium business. still growing nicely at the core during this period of uncertainty. but i'm more curious about the smaller stocks should investors different into those given how far down they've been beaten if the company has unique technology that has good prospects in the longer term >> that's a great question, jon. it really is a tale of two investors. right? one is fundamental long-term cash flow eventually rewarded in

stock price. that's short of the buffett philosophy and then we have this momentum strategy one of the companies you mentioned has reasonable earnings but you have a lot of companies that don't have any earnings and they're actually based on -- their stock price is based on momentum and sentiment in terms of what their technology looks like so if you're a speculative investor, or i should say this, if you're a speculator, how about that and what i would call a pure growth investor. and the fundamental strategy seems way too boring, sure, you can dip into that. but i would be very, very cautious about putting too much in that sort of name we sort of like a mix of maybe 70% large, 15% mid, 15% small. the significant percentage of the investments we're making in more large cap that are more predictable. but that's who we are. we're fundamental investors and we're more long-term conservative investors

for speculators people can watch "fast money. it has all kinds of great ideas in terms of what people should be doing on a shorter-term basis. it's just whatnot what we do and i think investors need to ask themselves can they live with that kind of risk not just will it go up can they live with that kind of risk >> all right michael yoshikami from destination wealth management. thank you. chinese stocks are gaining on hopes the long-awaited reopening is finally going to happen or at least is being seriously talked about let's get out to seema mody with this deepening sell-off back here at home seema? >> hey, kelly. well, those protests may have worked over the weekend multiple cities relaxing covid-19 restrictions in shanghai specifically residents do not have to present a negative covid test to enter an outdoor venue and wall street is taking notice morgan stanley is upgrading its outlook on the country analysts there writing, "multiple positive developments

alongside a clear path set toward reopening warrants an upgrade and index target increases for china. and that's once again fueling shares of chinese tech stocks from large cap names like alibaba, baidu, jd, to tencent and pinduoduo. they've come off the highs we were at at 5:00 a.m. eastern time the hang seng index which does represent the 30 largest technology companies listed in hong kong, surging overnight it was up as much as 9%. and as the hang seng index you can see closing up by 4.5% the rally in chinese tech stocks and just the broader index started back in november when the kweb chinese etf posted its best month ever since inception. you can see up about 55% from early november and of course follows months of underperformance, even with the robed that we're seeing over the past couple of weeks, guys the shanghai composite down about 12% for the year but clearly wall street watching any signs of a reopening >> and i'm surprised, seema,

that the good feelings aren't lasting longer here as he with move throughout the afternoon of the u.s. traileding session. dow's down more than 500 points. all weekend there was talk about how hey, this is going to be a bullish development for stocks, bullish for crude, even crude now lower on the session >> yeah. clearly as much as we're watching for any signs of a reopening in china it's going to take time. and with other reopenings we've watched around the world including the united states, kelly, these reopenings require multiple stages. so in addition to no longer requiring citizens to present a negative covid test there's the reopening of indoor venues, indoor dining as well as allowing people to travel with ease across the nation and while we are seeing some restrictions ease in certain cities the other question is when will we see it across the broader nation so still watching for any signs of this full reopening under way. >> true. perhaps got a bit ahead of ourselves in that regard seema, for now thank you our seema mody let's take a quick look at the market action at session lows the dow down 525 points and the nasdaq down more than 2%

>> yeah. even the s&p down almost 2%. things moving quite a bit. rates not helping the move in equities as yields continue to rise the 10-year yield back to 3.6% one month ago we hit 4.15% and oil near session lows as well-s off about 3%. >> we'll continue to keep a close eye on it. also coming up, meta's met mega turnaround back above its 50-day trading average. two analysts lay out where the stock goes from here and delta, royal caribbean, mgm all up about 10% in the past month. all named top picks for 2023 we'll trade those names in today's three-stock lunch. as we head to break silver gate down 4% as morgan stanley cut its rating to underweight citing x o many headwinds following the ftcollapse the stock down 53% over the past month.

what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work. ibm. let's create

you want to see something cool? xfinity rewards is how we go beyond saying thanks. so we're going to spread the joy this holiday season, the xfinity way. take your trusty sidekick to see puss in boots: the last wish what's a puss in boots? he is me. with buy-1-get-1 movie tickets, on us. in theaters christmas. join for free on the xfinity app. xfinity rewards. our thanks. your rewards. well, we fell in love through gaming. but now the internet lags and it throws the whole thing off. when did you first discover this lag? i signed us up for t-mobile home internet.

ugh! but, we found other interests. i guess we have. [both] finch! let's go! oh yeah! it's not the same. what could you do to solve the problem? we could get xfinity? that's actually super adult of you to suggest. i can't wait to squad up. i love it when you talk nerdy to me. guy, guys, guys, we're still in session. and i don't know what the heck you're talking about. shares of meta, get this, are up 35% over the past month after earlier being crushed. this is despite no change in fundamentals or ceo zuckerberg's big bet on the met averse. the stock is still down 60% this year but it also just crossed above its 50-day moving average. is this recent rally for real or is it better to stay away? mark kelly is a stifel analyst with a 185 price target. in the bearish camp barry

crockett has a price target of 104. it's great to have you guys both here mark, make your case how does meta get to 185 with the myriad challenges and cost-cutting moves they're facing >> yeah, sure, thanks for having me i'd say the first thing is there's a lot of focus on the metaverse investment rightly so but the underlying business is actually doing a lot better than people would expect. so there's a couple points there that i want to make. one is that changes apple made last year that made it hard for advertisers to become very measured in who they target and how they look at return on investment that's getting a little better meta's making some changes to their ads manager in terms of having a longer look back to see what the attribution is for some of your advertisements you can get more granular. so there's reason for advertisers to come back to the platform that maybe didn't spend as much over the past year and then lastly the metaverse investment is definitely

important but i would say our expectations are that they're going to march down there, total expense growth throughout the year which means numbers should revise higher as we progress throughout 2023. >> mark, i just can't get past the metaverse investment, though so you're saying you think that zuckerberg's going to blink? even though it's a controlled company, he can do what he wants? i mean, he says he's going to spend another 10 billion plus on the metaverse. you think he's going to go, uh, actually, i'm not -- because it seems like no matter how well the underlying business is doing he's spending the bulk of that on the metaverse >> yeah, that's right. to be clear, i do not expect him to completely reverse course they changed the name of the company to meta after all. but i do think, you know, the company put out an 8k shortly after they reported q3, which already brought down their op ex assumptions a little bit for 2023 so i don't expect him to completely reverse course but i do expect him to listen a bit more to investors as he gets deeper into that investment cycle. >> okay, barton, on the other

hand facebook, meta, does have a history of sort of sandbagging their expenses and then saying oh, well, actually we're not going to spend that much so even though you've got this bear case, isn't there a likelihood that mark zuckerberg might in fact say well, actually we're not going to spend that much even though i said so and then there goes the bear case up 234 flames >> even if you spend less than the initial guide last year, the low end of their guide for expense growth is up 11% last year they beat by 5%. you're still up 6% you're coming into the year with revenues down. the fourth quarter down 3 to 11%. good chance we're going into a weaker economic backdrop, maybe a recession. so i think you have to believe that the revenue bias is more to the down side than the up side from that macro perspective certainly in the first half. the consensus has 5% revenue growth i think that's too high if we have a recession next year

so i think you've got down revenues, you've got rising expenses, you've got a consensus that's too high on earnings and on revenues. and i don't think that's a great setup for the stock here near term layer on top of that questions about audience they've been flattish in reported overall metrics but i think everyone understands that they have a youth challenge. and i think that there is, you know, also this question about the impact of the kind of new revenue initiatives. messenger an area of excitement, 9 billion annualized revenues recently but even with that the revenue is weak. it tells you the other stuff is weaker than perhaps people were expecting. you've got a company that's transitioning and it's a difficult time to want to be overweight at this time in meta. >> you say the reels transition is rocky and perhaps challenged. spending a lot of personal sweat effort trying to figure it out so is it worth it? isn't that cannibalizing tiktok,

especially given the rhetoric coming from washington recently where even janet yellen made it sound like perhaps tiktok could be banned? and if so isn't that hugely bullish for meta >> i don't expect tiktok to be banned if it is very, yes, that is very bullish for meta i do think what meta is trying to do for reels is bolt on a recommendation of content format that takes you away from getting what your friends and the celebrities that you're following are recommending, which is a change in what they're all about on instagram and on facebook, that you know, there's some reason to suspect that their audience is rejecting that that it doesn't feel authentic and i think that's -- you're seeing a lot of the innovation money in advertising is no longer going into social media that's going into connected tv that's going into tiktok and social media seems to be a source of funds. so -- >> well, then if that's the

case, mark kelley, then maybe this is capitulation that we've had. anytime we're talking about dollars, as much as i love tv, and i do, tv's my life, if we're talking about social media being a source of funds for tv advertising, i mean, facebook -- >> connected tv. >> -- model isn't broken, right, mark >> no, i don't think it's broken in fact, when we talk to advertisers which we're doing as we speak as we get ready to think about next year and put a finer point on our expectations, one thing we're hearing is that money is flowing back to facebook and instagram so they did see some share over the past year. i think it's pretty evident in their numbers. but we see that reversing for the numbers i just described before in terms of just the platform getting better, whether it's changes for meta or whether it's just moving beyond the changes that apple enforced on the whole ecosystem a year-plus ago. i don't think it's broken.

i expect them to gain a little share back next year >> thank you, mark kelly barton crockett. they debate. you decide up next, a peloton of holiday spirit one firm getting bullish on the struggling company based on its holiday sales. and further ahead, deep fried. multiple agencies investigating ftx founder sam bankman-fried. and when it comes down to it, he could face years in prison if they ever finish building their cases. as we head to break check out shares of boeing a bright spot in today's down tape and leading the dow that stock up 54% this quart ow lchwi be right back

- [narrator] if your business kept on employees through the pandemic, getrefunds.com can qualify you for a payroll tax refund of up to $26,000 per employee, even if you got ppp. and all it takes is eight minutes to find out. then we'll work with you to fill out your forms and submit the application. that easy. getrefunds.com has helped businesses like yours claim over $1 billion in payroll tax refunds. but it's only available for a limited time. go to getrefunds.com powered by innovation refunds.

take a look at shares of peloton here down a little right now. well, a little for today but about 2% aiming for an eighth straight up session. the stock up 40% in a month. today credit suisse adding to the optimism saying that early returns from the holiday season look good. black friday and cyber monday promotions seem to be working. as a result the brokerage is raising estimates for subscribers and sales but keeping a $10 price target and a neutral rating

trading at 13 today. $10 price tag. peloton's a hardware company no matter what the current ceo says -- >> how dare you? >> it is you can love subscriptions all you want but if all they're competing on is workouts and they're competing with apple and amazon and whatnot, they're going to get smoked they need to have hardware with margins. >> meaning the argument by those who say they need to get rid of the hardware to boost profitability you think would actually take them into precisely the sort of -- the worst competitive place to be because then any old software, really good software company can just come in and eat their lunch? >> it's like the medieval castle manager saying the real problem is this moat that we've got and our water costs, get rid of that and we'll be great okay >> fair enough let's get to kristina parts nellos for a cnn news update at this hour north korea firing more than 130 artillery shares in a continued show of military force in response to

joint u.s.-south korea drills. the allies have stepped up joint military exercises this year saying they are necessary to deter the nuclear-armed north which has resumed testing of its long-range intercontinental ballistic missiles for the first time since 2017. hertz announcing it would pay millions to settle an erroneously filed criminal reports against customers who did nothing wrong. the rental car giant will pay $168 million to settle 364 claims after customers said they were falsely arrested. some people were arrested for auto theft after they had returned their cars. and the police chief of tampa, florida is resigning after video surfaced of her flashing her badge to get out of a police stop. mary o'connor was traveling in a golf cart without a license plate when she and her husband were pulled over the responding officer let them go after seeing the badge. john, back over to you >> kristina, thank you now ahead on "power lunch," big big week for energy.

opec deciding to keep its current policies ahead of some key geopolitical decisions about russia plus, while the world focuses on fossil fuel, one company is working to reduce carbon emissions using ai limestone. those details in today's clean start. zero-commission trades for online u.s. stocks and etfs. and a commitment to get you the best price on every trade, which saved investors over $1.5 billion last year. that's decision tech. only from fidelity.

welcome back, everybody. as we're near session lows, we have 90 minutes left in the trading session, so let's get caught up across stocks, bonds and commodities and a very busy and crucial week for oil let's begin with the markets, which are lower across the board. the dow's down 555 points right now. that's 1.6%. it's 2.1% drop right now for the nasdaq maybe in part because we got that strong data this morning. ism services triggering worries the fed could still overtighten and cause a recession. that's overwhelming the positive news that we had coming more out of china now, salesforce is also a big drag on the dow today adding to its recent slide and citigroup and credit suisse are lowering their price targets on the stock and ceo of slack, stewart butterfield. he is now leaving the company. so salesforce shares down 7 1/2% tesla also down about 6% today, denying reports they're cutting production in china, saying in fact they delivered more than 100,000 vehicles from the

shanghai gigafactory in november a new record not doing much to help the stock, though, that's down 48% this year now to the bond market where rick santelli is back to track the action for us. hi, rick >> hi, and welcome back, kelly you know, if you look at the post-strong jobs friday number, a lot of things are moving in very interesting directions. let's look at a two-week of 2-year note yields they're starting to come back up and their 4.40 yield has sliced the action over the past and you will weeks traders are going to use that as a pivot np look at that chart. now let's look at the same time period, two weeks with july fed fund futures i picked july. that's the fulcrum that's where prices stop going down and start going up. it's exactly the opposite. because the fed wants rates higher as the two-year demonstrated and when that happens it's bringing fed fund prices back down, which brings more fed in as for 10-year, friday they close at a 2 1/2-month low yield close. under 3 1/2%

they're coming back a bit today. what i want to really point out and on the left side of that chart is august of 2020 when that was the historic all-time low yield close at half of 1%. but right under 3 1/2% at the end of june you see that point traders are going to be watching that carefully when it comes to foreign exchange, the euro vs. dollar on friday closed at a five-month high the dollar index closed at a five-month low and another currency that's really putting pressure on the dollar is the chinese won. offshore and onshore closed 2 1/2-month high to the dollar and we all know the potential reopening of china and some of their covid issues you want to watch this chart very closely kelly, back to you >> a whirlwind as always, rick thank you. and there's also a lot going on in the oil markets today so let's go over to pippa stevens looking at that for us pippa? >> we do have a volatile session for oil with so many moving parts right now. first up, the eu's ban on

imports of russian seaborne crude going into effect today. then we've got the eu and g7 agreement on that $60 per barrel price cap on russian crude this means that anyone who wants to use, for example, european insurance or european tanker in theory has to abide by this cap. although there are still some questions around how it will be enforced meantime, o'opec and its allies meeting yesterday, deciding to roll over their current cuts of 2 million bashlz per day the alliance saying in a statement that it will remain, "proactive and pre-emptive." so in other words, it could shift policy based on market conditions now, u.s. oil had been up more than 3% earlier. but giving back those gains and then some alongside a dip in the broader market currently down 3.6% at $77 with brent crude right around 82.84, a loss of 3 1/4% kelly? >> where do crude prices go from here and is the russian energy gap forcing substitution into

cold with us is francisco blanch, head of global commodities research at b of a research. and kevin brook managing director at clearview prards it's great to have you both here francis koes i'll start with you are you surprised that crude is back in the red today after what were supposedly going to be some bullish developments here? >> yeah, frankly it's a little surprising the sell-off today but of course -- certainly the oil market remains concerned the fed will tilt the global economy into recession by hiking rates as fast as they have and potentially beyond but remember everything that is cooking in the background is still constructive for oil so we remain positive into 2023. we think lower availability of russian barrels coupled with china reopening and what we continue to believe will be a fed pivot in the first quarter of the year will eventually trigger higher oil prices into

the summer and second half of 2023 >> kevin, do you agree with that, that there's still up side for oil prices are you surprised that they've been so tame lately? >> well, you know, down side risk because of markets, cooling off indian tandem or recession risk that's one thing. the cap itself introduce smz degree of up side bias there's frictional supply risk because tankers have gone further than they have gone before a lot of questions we don't know about enforcement of course. but if folks stay out of the market because they don't want to be in the services market when they don't know they could be busted for doing something wrong that could tighten supply. and of course russia gets a vote as with'll so for all those reasons it may be that what we saw in the opec rollover this weekend was really letting the cap do the work. there's a potential long supply in q1 relative to the opec call but if the cap is going to push oil off the market maybe that will take care of the slack. >> and francisco where does this

leave global supply and demand how is the price cap likely to work and to affect that balance into next year >> well, so our initial assumption is that we're going to lose about a million barrels a day of russian oil after february 5 because remember, there's two stages to the cap. first there's a crude price cap and then there is the petroleum product price cap which kicks in on feb 5 so we think we'll lose about a million barrels a day. we've seen a range of estimates including the u.s. treasury which believed the range will be between half a million barrels a day and 2.2 million barrels a day. that's a very big range. it's a range that could make oil swing by $30 a barrel or more. and i think also the other factor is we continue to expect china reopening, which will add about half of demand growth to the global oil market next year. remember, we do expect oecd

economies namely u.s., europe, japan to essentially add zero, big fat zero to demand growth in 2023 as these economies are going to be bordering recession. >> kevin, i find it remarkable how few people actually believe fed chair powell anything he says about what they're intended to do about rates. what about the scenario -- and i understand optimism and all that where we have a bad economy coming out of q4 because holiday spending in part is not what people hope it is, it doesn't hold up for the next three weeks entirely, and there's no fed pivot. right? they just kind of keep raising rates and then hold them where they are what does that do to oil >> well, fundamentally crushing the life out of an economy means crushing the life out of oil demand and if that's how we're going to go then that's going to be probably pretty bearish. but you have a supply side to the story as well. so as francisco was mentioning there's a wide range of outcomes

on the supply side because of the cap. there's still again -- it's important to remember that if you have russia cutting off gas westbound into europe russia is also cutting btus out of the global supply mix, which means that oil sko burn to replace that gas somewhere else. more demand there too. generally speaking, dismal and gloomy as it might look there are offsets on the supply side we're still watching >> and there we'll leave it. francisco, do you have a parting word on what you tell american consumers? should they expect to be paying higher gasoline prices into next year >> i think so. i think we'll see an uplift from current levels i don't think we'll see the record prices we saw in 2022 necessarily but i do think we'll see higher prices. and also i'm particularly worried about energy supplies in the u.s. northeast throughout this winter. it could be challenging to keep the northeast well supplied and consumers will have to pay high price there's for both deesed as well as power. >> fair enough

guys, thank you. francisco blanche and kevin block, we appreciate it. >> today's clean start as more players emerng to help capture and reduce carbon emissions one company is plying a unique method we'll be right back. ♪♪ we all have a purpose in life - a “why.” maybe it's perfecting that special place that you want to keep in the family... ...or passing down the family business... ...or giving back to the places that inspire you. no matter your purpose, at pnc private bank, we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why? ♪♪

i'm in my last life. just tell us - what's your why? what happened to the other eight lives? does this have shell fish in it? - yes, sir. ehhh... a wishing star, will get me my life back. it's in the dark forest. after you. -wait, what?

dog, still alive? welcome back as just about every industry out there is working to reduce future carbon emissions, a new and fast-growing industry is aiming to remove carbon that's already been emitted diana olick joins us to explain in her continuing series on climate start-ups. diana. >> jon, in order to keep global warming below 1.5 degrees celsius we need to remove about 10 to 20% of the co2 emitted globally each year and that's why carbon capture companies are getting so big so fast new companies are capturing carbon in various new ways from the air with massive fans out of agriculture, converting biomass into oil even directly from smoke stacks as the need to curb global warming intensifies so too does

this business. >> we could be removing billions of tons of carbon dioxide out of the air. it's a space that really requires lots of companies, lots of different approaches to go after. >> reporter: california-based startup airloom uses limestone to capture co2 from the atmosphere c oo2 is an interest in limestoe so heirloom removes it by heath the limestone into a powder. the remaining powder is then thirsty for more co2 so it's spread on trays in a modular system where a robot determines location for maximum co2 absorption, a process that naturally takes years is reduced to just three days once the powder is full they start the process again. >> bev we basically just give superpowers to limestone to pull a lot more co2 much, much faster >> reporter: heirloom takes all that captured co2 and stores it safely underground it's relatively cheap compared with other types of carbon capture and removal and highly scalable, which made it

attractive to investors like microsoft. >> we identified that heirloom's enhanced mineralization approach used widely available materials and passive air flow technologies that mean it has a potential to reach a low cost trajectory >> reporter: heirloom's backers including aren innovation capital, breakthrough energy carbon direct, lower carbon kamt and microsoft. total funding $54.3 million. heirloom says it plans to deploy its first site next year and aims to remove 1 billion tons of co2 by 2035. of course it also sells carbon credits. buyers include microsoft, stripe, shopify and clarna >> a billion tons sounds like a lot but how long before we're at the point where we're removing as much carbon as et cetera emipted? because it seems like it's probably a pretty big divide >> yeah, jon, we're not even close to put it plainly. any ceo you talk to and you say

we're doing this much carbon capture but there's just so much more carbon emissions he they say well, you've got to start somewhere. but then critics say if you're selling carbon credits for these it just allows companies to emit more carbon if they buy the credits. what we really need to be doing is emitting less carbon and doing more carbon capture to reduce it overall. we're just not there yet >> diana, i also can't help but think as i watch these massive operations, does the production of carbon reduction itself use more carbon than it harvests if that makes sense >> no. and i do get that. no these are designed in order that they not produce more carbon emissions. so it does look like a big -- the stack and the sheets and everything like that looks like it might use up more energy. but they're very careful to make sure that it is negative in the carbon emissions >> all right had to ask diana, thank you very much it's fascinating i had no idea that limestone had such capabilities. coming up in the cruise ship space finding a winner could come down to a battle of balance sheets wells fargo says royal caribbean is their top pick. we'll hit that name and some

other key travel calls in our three-stock clutchlunch. and take another look at the dow, down 558 points session lows it has been picking up throughout the day nasdaq down more than 2% we're back in a moment is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back.

welcome back, everybody. we're trading three big travel calls in today's three stock lunch. so morgan stanley's bullish on the airlines they named delta a top pick for 2023, said it could be a goldilocks year. wells fargo says royal caribbean is a stock to own. and truist is upgralding mgm to buy from hold and raising their price target to $50 from 40. let's bring in delano sapporo, new street's adviser and ceo and cnbc contributor good to see you again we're showing that delta chart it's still down 8% this year. do you like this call here do you like this stock >> yeah, i do like this call and i like this stock. i am holding this stock. one of the reasons why is there's still plenty of growth opportunity. if you look at the traffic, obviously that's solid traffic for airlines over thanksgiving and the prediction is that they still have another leg higher to go consumer spending as relates to gdp on air traffic and leisure has actually been about 20 to 30 billion lower than we saw in

2019 so there's still opportunity there. if you look at their outlook for december they're trending in the top line at 5% to 6% higher and they're also looking at the bottom line as higher trending in the right way as well amid the high everycosts kelly i think there's still opportunity with delta airlines. >> next up, royal caribbean. delano, how exposed is that stock to perhaps a weakening consumer and an iffy luxury market >> i think pretty exposed. if you look at it in comparison to obviously airlines, it's a different level -- different consumer that would kind of look at that cruiseline vacation. and if you look at their operating costs that's the biggest line that i'm focusing on and that grew 140% last quarter. and if you look at the main component of operating costs that's obviously payroll, food, fuel, those have also been hit by inflation and running hot so i think it's a hold here because these do have a consumer that we still have a deployment rate lower but that could be trending another direction so that could be a concern in the long term. and that's why i'd be holding this stock for the near term

>> interesting so as much as you see delta having opportunity, not so much for rcl. what about mgm, delano how do you feel about the casino play >> the casino play is interesting. and i think the one area that i like obviously when it comes to mgm is to bet mgm, obviously their online gaming sector you know, i'm high, just bullis their online gaming sector i'm high, bullish in general on the online gambling and gaming sector i think it's a big, big strong upside for the three biggest players in that space which is draftkings number one and bet mgm three right there. i think that's the best part, if you look at the company as a whole, if you look at what the economies of scale will happen when they continue to lower the marketing spend and build up subscribers beting the handle, i think it's a positive play for them >> delano, while we have you, what do you attribute today's

market drop to >> i think it's the services sector data. that had investors taken aback after last week, hearing what the fed said about moving toward 50 basis points. the services sector picked up, you had higher employment in that area and higher spend on the manufacturing side, that had investors bracing a little bit and taking away from the euphoria that's okay. we had a good month on the dow and the s&p. i think some othat is being baked in here. i do think we can take what the fed is saying as far as where they're looking to go with lowering the rates of hikes and potentially depositing late 2023 this is to be seen. >> good news is bad news it reminds me of what michael darda said last hour, he thinks the strong labor market could send us into a deeper recession because it's keeping the fed from maybe tapping the brakes

right now. >> 100%. we're still at a very unemployment rate which is good for all of us, but if you look at how that's still a factor the fed is looking at when it comes to their policies, that's going to be the biggest factor, holding on with consumers still spending we saw what the holiday numbers that came in despite inflation, looking at unit basis might be lower. there's still spending going on. that's going to have effect on policy going forward. >> delano, thank you, we appreciate your time today >> thank you, kelly. up next, bitcoin is stuck well below 20,000, in fact, ckba below 17,000 this afternoon. the ripple effect of ftx's collapse still wreaking havoc. we'll check in on the whole crypto space next.

lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect.

terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business. get refunds.com powered by innovation refunds can help your business get a payroll tax refund, even if you got ppp and it only takes eight minutes to qualify. i went on their website, uploaded everything, and i was blown away by what they could do. getrefunds.com has helped businesses get over a billion dollars and we can help your business too.

qualify your business for a big refund in eight minutes. go to getrefunds.com to get started. powered by innovation refunds. welcome back bitcoin today down slightly, below 17,000, still down nearly 20% in a month as the ftx bankruptcy has unfolded. sam bankman-fried could face years in prison over the collapse if he does get arrested the fate of sbf, the talk of the crypto world mckenzie, is that what people are talking about, what's going to happen or are they busy trying to distance the rest of the industry from him like they did from stable coins and other toxic topics

>> it's definitely the latter, jon. there's more since they've removed what some consider to be a damaging aspect of the injury. that being said, crypto twitter has wondered he hasn't been charged with any crime when he's a u.s. citizen who allegedly defrauded other u.s. citizens. i spoke with trial lawyers and former federal prosecutors and they say ftx faces criminal, civil and private threats. criminally experts say a fraud charge, bank, wire or mail is the most likely given the size of ftx's losses, that sentence could be life in prison with no chance of supervised release that scenario apparently unlikely, but it is the theoretical worst. of course, law enforcement has to arrest him first. bahamas had an expedition treaty with the u.s we'll see if they cooperate from u.s. action which could take years. in the meantime, ftx is running

a pr blitz claiming he was unaware, that's how bad it was, saying he was not corrupt, just bad at business. that's hard for many people to swallow. ftx was intricately involved in all his businesses on the civil side if regulators decide to act, they could impose massive fines. there are the millions of creditors who could subbaning man freed for damages. so a lot of moving parts here. >> who do you think sam bankman-fried is trying to persuade with this media tour? most of the crypto people i know are furious with him most of the public don't believe he didn't do anything wrong. who is the audience he's trying to persuade. >> almost seems like he's trying to win in the court of public opinion. he's already lost that battle. it goes to, is this some sort of attempt at a legal strategy. every attorney i've spoken to, people who have tried these

cases in the past say it's the worst possible idea. yes, he's not speaking under oath, but is certainly exposing himself. you have comments from his interview with the "financial times" over the weekend. when she did admit to greater involvement and decision making in alameda, to distance himself from the decision-making process. it's very unclear what the strategy is. >> maybe it's a stay out of jail strategy if he keeps showing up on articles or tv, it doesn't seek like he's running or disappearing do the experts have anything to say about that >> i think a lot of people are confused about why it's taking so long. if you talk to anyone in the legal field, they say this is par for the course they say it takes time to build up the kind of case that prosecutors would look to charge so these fraud cases are incredibly complicated because you're trying to prove intent, that somebody intended to do something wrong. that's not an easy case to make.

on the legal side, people aren't too concerned with how long it's taking even though he's going on this extended media tour and sitting easy in the bahamas, i don't think there's any question that he will ultimately face some legal repercussions. >> is this the only thing people are talking about? let's remind people you're in ghana for this major bitcoin kwon fence what's the mood there? >> people are so optimistic about the power of bitcoin technology they're all talking about the use cases for bitcoin beyond being a speculative asset to trade. you've got jack dorsey speaking tomorrow his company, bloc, has been instrumental and trying to implement wider bitcoin adoption thomas tell tellal ton, creatin new hardware that's more affordable and efficient so people like you and me, kelly, if we wanted to try it out, we

could. ray yousef runs an exchange very popular in africa. that's the story of peer-to-peer crypto in africa people are brainstorming, talking about what kind of potential exists >> also others in the industry trying to distance themselves from sam bankman-fried >> if people stop believing, people who don't already believe, then the price is going to tank. you've got to be optimistic if you're holding it. >> you certainly do at this point. thanks for watching "power lunch. "closing bell" starts right now. >> thank you, kelly. great to have you back stocks under pressure to kick off the new trading week as more strong economic data raises questions about the fed's path forward. we're near session lows. this is the make-or-break hour i'm mike santoli the s&p 500 sitting on about a 2% loss. that gets it down to where t