all right. welcome to "power lunch. along with contessa brewer, i'm tyler mathisen glad you could join us coming up, everybody watching netflix, the streaming giant out with results today after the bell a high flying stock recently will the pass word crack down and add tier platform slow the company's growth >> plus, amazon is losing the smile. doing away with the popular service that donates a portion of sales to charity. amazon says it wasn't effective. is there more to it?

we're going to dig in. first, let's get a check on the markets. stocks are lower for the second straight day you can see the red across the board. dow by .5% s&p 500 same and the russell 2,000 off by .75%. mike, what is driving this move lower? >> well, contessa, i think it's a combination of in the last couple of days especially just digestion and profit taking off a strong start to the year 4% higher on the s&p 500 in the first two weeks. we have given back a little more than half of that. a bit stronger on the nasdaq side all of that combined with i would say is the familiar anxiety about whether the fed is going to be able to thread the needle and slow the economy and restrain inflation without really causing sharp down turn this is the hard/soft landing debate in the absence of high conviction about which way that particular debate breaks, the market sometimes defaults to raiding, kind of technically kind of mechanically and we did that.

this rally ran right up to a level on the s&p 500, 4,000. people said that will be the wall for now that represents the down trend from last january. maybe that's where we pause. so far, i don't really see this pullback as being too material it has not broken anything decisively although keep an eye on treasury yields they look like maybe they have fallen up in the short term. as well as the u.s. dollar has come down a lot in a short period of time and so the falling yields have been tail winds for the stock market in the last few months. will we'll see if that continues. >> and there you're seeing the yield on the ten year now right now. 3.4% and the yield on the two year 4. 4.123% thank you for. that. >> let's move on to the earnings on deck from netflix the streaming giant making a comeback after smernome earnings missteps last year subscriber numbers, obviously, pass word sharing and how

they're going to crack down on that and the impact from the new ad tier. we have more on what to expect julia? >> well, tyler, netflix expected to report some top and bottom line declines. revenue growth is anticipated to slow to 1.7%. that is the lowest rate of revenue growth since they went public earnings per share are expected to fall by two-thirds to 45 cents per share. netflix guided to accelerating subscriber growth to 4.5 million people to be added going forward, netflix is not giving subscriber guidance there are two key factors that are in this spotlight. first, early attraction of the new ad supported service and second, the impact that is cracked down on the pass word sharing. and they report the launch of the ad supported plan drove netflix's highest daily subscription rate since april of 2020 it's worth noting netflix shares

are up about 8% so far this year but that is only after the stock lost about 50% during 2022 tyler? >> julia, thank you. you'll stay with us. we're joined now by michael pactor and shawn mcnulty is also us with welcome you to both. michael, you see this stock going to $400 a share. why? >> i that i when they stopped growing investors just gave up on them. they're trading in the high $600 before fundamentally, there is value here you know i hated this thing for ten years. i only upgraded from sell to buy in 2022. but the fact is that they finally turned the corner on cash flow. they generated free cash flow. they got religion on cost. so they're trimming their production cost and their staff cost and starting to actually focus on profitability and it looks to me like the

steps they're taking with ad supported tier and pass word sharing crackdowns are going to drive subscriber growth back to acceptable numbers so there will be a slow growth but still growing very profitable company and i think people will pay, you know, 25, 30 times earnings for that >> shawn, how do you react to what michael just said and of the things he identified which is subscriber growth, ad tier, password sharing crackdowns and the slowing of the content pipeline or the reduction of spending on content. which of those is the most important for netflix to get ahold of >> the ad tier is a big thing. a lot of people are trading down to the $7. that is a problem. you lose a lot of revenue. if people are coming in on the $7, that's great we don't know that information and that's what we'll find tout

day. a lot of people are trading down that say big problem for them. that's where the revenue becomes a problem. remember, over half of the revenue comes from overseas. so again, you have the strong dollar, the fx changes that will be a big factor year over year comparison back to spending, they just released the film slate for 2023 that is at 49 films. it was over 80 last year starting to see the austerity work in here a little bit. >> shawn, do you think that they're going to tell you how many subscribers traded down to the ad tier? if they're stopping -- julia said they're not going to give forward guidance anymore on subscribers, so why would they give that you kind of detail if it comes in low, people will ask why. that could be a real reason if they miss the target, you'll have to explain what the reasons

are. the number, con tes yashgs may not there be but if the trend is there, that's important the last earnings call they were asked this question. they didn't believe a lot of people would trade down. so if we see that, that krikts w contradicts what they said a quarter ago. i don't know that they're going to tell us that. that is also only been eight weeks since they launched in early noof they may say that is a q-one call thing we'll do. we'll hold off on that for now so that is entirely possible >> julia, when you talk to the company about that content pipeline, clearly harry and meghan got so much attention i think it's reasonable that there would be people who sign up simply to watch that

documentary. i know kpeople don't have accounts but they share pass words. >> people who are borrowing someone else's pass word, seven out of ten of them, seven out of ten wobbling to pay. but i think the idea is to have a really diversified assortment of content they have this show wednesday. it was a massive hit they also have films like "glass onion. so i think this idea is having a variety of content you might sign up for something like the meghan and harry show and stick around for other content one thing that was a surprise advantage to netflix is they found that local language content liked that korean language content did have a very broad appeal and so they were able to create problem from the content investments in more ways they would have anticipated there is this focus on making sure they're creating the right type of content to both ad

subscribers and to retain them and thinking about how to exploit that content i mean exploit in a good way exploit that content around the world. >> so michael, let me get you to react to what shawn said shawn's concern about the idea that people would trade down from $15 to $7 for the ad sponsor tier netflix's play here, isn't it, is that, number one, they're going to add more subs at that lower price point than they might lose in tradedown. and number two, that they're going to make up for those losses in ad sales that's a needle that needs to be threat >> i will tell you how many they have tomorrow morning oren my note i'll be able to figure it out. shawn is right that people will trade down but you're right, tyler, you know, hulu generates $10 a month per subscriber in ad revenue so no reason to believe that

netflix will generate less than that in a year so it's going to take them a while to ramp. so that $7.99 customer absolutely replaces the $15.49 customer if he trades down i think what shawn didn't mention is that there are people who quit every quarter and it's millions of people every quarter. you know, the old churn rate was over 3%. and so probably five or six or ten million people quit every quarter. if they can convince the people to substitute quitting with an ad supported tier, they're going to keep that revenue so my bias is net-net their revenues go up the password offer us a family plan that has four separate accounts and let us pay $20 a movement i would absolutely do that i do that with spotify i pay $7 a month more for family plan and my daughter is in college.

they use that in their cars and it works i'm happy to pay >> gentlemen, julia, thank you very much. and michael, we'll see you later as we discuss another topic on the program. that is amazon >> coming up, it's electric. hertz partners to get more charging stations for electric vehicles not just for the rental cars we're going to talk to the hertz ceo coming up. and amazon ditching one way customers are able to donate to their favorite charities why those that closely floolw this company say boy that is a bad move stay with us dad, we got this. we got this. we got this. we got this. we got this. yay! we got this. we got this! life is for living. we got this! let's partner for all of it.

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welcome back to "power lunch. as electric vehicle interest continues to grow, hertz is teaming up with the city of denver to build out its charging infrastructure the rental car company plans to add more than 5,000 evs to the denver fleet for daily customers. here with more on the partnership is stephen share, the ceo of hertz and our own phil lebeau. take it away >> thank you, contessa stephen, thank you for joining us you heard her set up this agreement with the city of denver adding vehicles, adding chargers, targeting underserved hears. what is behind this agreement? >> so this is all business, phil good to be with you. we as you know have been a mover in electric vehicles and we're about 40,000 electric vehicles now on our way to 80,000 at the end of this year and 25% of our

fleet to be electric so it's important that charging stations and networks get developed. as you know, we have a partnership with pulse to develop them the reason i'm here at the conference of mayors, we're looking to partner with as many cities as we can on the development and president obama live rags of charging stations denver is our first partner. and what we're doing is working with the city. we're going to put cars, electric vehicles into the cities we're going to look to develop charging stations with the benefit of partnership we have with the bp. we're going to look to educate through community colleges to get technicians more educated on the electric vehicle project and we bring data. we'll help cities determine exactly where to build those charging stations. and that is just simply good business for hertz as we rollout

and want to put our customers in a position where it is easy to charge >> what about other cities where they are being driven. do cities have a road map in terms of ev use and ev adoption? >> hertz with all of the electric vehicles we have, we know where they're going and moving we obviously rent leisure customers. we rent to corporate customers but we also rent electric vehicles to uber drivers uber drivers tend to live in neighborhoods largely underserved. those cars are unaffordable for manufacture them to buy. they're very affordable for them to rent through hertz. and they make 10% to 15% more in take home income a month when they rent an electric vehicle

from hertz but importantly to the city, create something equitable outcome on the distribution of charging station as cross all neighborhoods is important. it's in our interest to see the charging stations put in neighborhood that's might be overlooked >> stephen, you mentioned the uber drivers you mentioned you have corporate customers, leisure customers renting evs, whether it is a tesla or a pulse star. what does the data show new terms ff i were to go, let's say i'm taking a vacation somewhere and i rent an ev are the people renting the evs renting them for longer periods of time as compared to an internal engin vehicle what does the data show you? >> sure. so i would tell you a couple things first of all, when you look across the whole of our fleet, electric vehicles are held

almost twice as long as a kbungs engin car. now that number is skewed by the dominant sort of component that uber drivers represent an uber driver is going to keep that car upwards of four weeks the rental of a conventional leisure or corporate ride is much, much shorter than that but it skews longer. part of the reason we're able to offer more afor theable pricing to uber drivers is because they keep the car longer. therefore, our cost, the number of times we're touching that car comes down quite meaningfully. we pass much of that along but just look at the leisure sort of component or corporate, it's roughly the same. and i'll tell you on corporate business, particularly around electric vehicles, what we're seeing is more corporate customers are compelling employees to rent an electric vehicle. it satisfies much of their own esg objectives, wholly independent of what hertz is

doing. this is a gi g. way they can fulfill that >> i'm fascinated to hear that uber drivers rent from hertz and then use the cars. i did not know that. category of learn something every day. these new charging stations, will they -- two questions here. will they operate with all of the evs that you will have in your fleet whether it's tesla, gm, kia, hyundai, whatever. that's number one. and number two i think about denver airport it's 45 miles or so from downtown denver. by the time i drive to denver, i will have drained a good hunk of my battery if i continue driving to say, vail or steamboat or where ever, i will have drained it enough. are there sufficient charging stations for those travelers coming to denver and then using the car for a longer trip? >> well, that's a great question you know ven ver well. for those renting, particularly on the leisure side and want to head off skiing in the mountains, first of all, the

duration of a fully charged electric vehicle will get them there. equally in manufacture the ski towns, there are ample charging facilities to get a charge part of what is going on in washington, though, particularly around the various infrastructure bills and the like is there is quite bate of federal money particularly earmarked for federal highways. hertz, for example, has upwards of nine locations in and around greater denver we intend to use the locations as real estate on which we and bp will build a charging network. and those charging stations at that location or at those locations will be available not just to hertz customers but open to the public.

and so over time, you'll see the proliferation of it. i think the duration or distance you're capable in going to cars will get you to the ski slopes and there are charging stations there: >> and they will work with all different brands >> so we are moving now and we're seeing more interoperability among the various charging networks. tesla, for example, has a large network. in europe where it first began, interoperability was there we're now seeing it in the united states. and so as we take on more teslas and as you know we committed to buy 175,000 electric vehicles from gm over next five years, interoperability and our engagement on behalf of customers with any and all networks are being developed, you know, that will put us in a place to make it easy for customers to get to a charging station. >> thank you very much appreciate the conversation. thanks >> and still to come, we will

continue to watch markets. the dow off the lows of the day at this point. one key front capturing the markets attention is washington. and that debt ceiling showdown that is brewing. we'll discuss what a shutdown could mean for the economy when "power lunch" returns. [music - cover of blondie's “dreaming”] [music playing] ♪ imagine something of your very own. ♪ ♪ something you can have and hold. ♪ ♪ i'd build a road in gold just to have some dreaming, ♪ ♪ dreaming is free. ♪ accenture, let there be change.

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welcome back to "power lunch. indiana supreme court is hearing a challenge to the state's near total ban on abortion. critics of the law want the high court to find the law violates the state's constitution even before lower courts fully consider the case. lawyers for the state want an injunction blocking the law to be lifted. wwe executive chairman vince mcmahon has paid millions of dollars to settle a rape accusation from a former wrestling referee. that according to "the wall street journal." the news comes as mcmahon is pursuing a potential multibillion dollar sale of the company. and the agriculture department is strengthening rules on what what foods can be labelled organic the new guidelines are meant to raise consumer confidence in

organic foods. it's one of the biggest changes to oversized organic food industry in decades. a lot of us look for organic you kind of hope that they're really telling the truth, right? >> it's a lot of trust, isn't it >> yeah. >> thank you >> ahead on "power lunch," hard to grin and bear it. amazon closing the doors on its charity business amazon smile users are not happy. it could reveal issues with amazon's broader business. we'll get into that when we come back power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities.

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coming up on half past the hour let's check on the bond market yields are rising to day the tenure back above 3.4% ever so slightly the latest jobless claims falling to the lowest level in june the labor market is still stronger. >> time to get a check on commodities. oil higher $80 a barrel hi >> hello stocks are down.

this is another big inventory bill if you look at the chart of wti, can you see right at 11:00 a.m. when that report was released. it did fall to negative january. and that is puts up our futures. so gasoline futures now up 20% in the last month. i hate to be the bearer of bad news, that probably means that prices at the pump are going back up much one thing we're watching is the best performing stock in the energy sector they reported earning that's were largely in line with the forecast revenue missed a little bit. they increased their buyback program from $2 billion to $3 billion and announced a in you ceo. they pointed to lng as a key growth area. >> i'm looking at solar stocks here just getting really crushed today. can you pin point a catalyst

>> the stocks move in broader access of the market f we look on to more granular basis, it is the home installers. they're down really, really sharply. one person i spoke to said that this comes down to consumer weakness we heard from proctor and gam to believe day that consumers are cutting back this could be around fears that if people are reigning in the he spending, then maybe solar panels is something they decide right now. >> postpone that and the generator or whatever. >> pip yashgs thanks >> first now let's go to bob pisani at the new york stock exchange stocks once again are in the red. the industrials are off about 100 points bob? >> and we are starting to actually move towards the green. the low point of the day was just prior to 1:00 eastern time. that is just about when they started speaking there was nothing particularly bearish or at least that we

didn't hear before in her speech stocks started lifting very soon after that take a look at the risk on and risk off sectors the semiconductors have had a tough time throughout the day. they move pretty well to the positive side. industrials were near a 52-week high they've been down all day. and the banks three days in a row, moredefensive sectors lik health care and utility have generally outperformed if you want one sector that is the big story of the day, it's all of the credit cards. we had discover out with earnings after the bell yesterday. there was net charges higher than anticipated we saw this before with the banks. this is adding that the consumer is down. synchrony, capital one also to the down side. finally, just on the s&p 500, again, we started lifting in the middle of the day after they finished talking and still a lot of resistance around the 4,000 level that is 17 1/2 times forward earnings

that is a little rich now for a market remember, contessa, to argue that we should have a somewhat higher multiple going into potential recession, well, that's a tough argument to make. and frankly, looks like a lot of people are having hard time swallowing that idea back to you. >> bob, thank you for. that as we were just talking about, here you have the dow falling for a second straight day. erasing this month's gains as wall street worries that fed will overtighten we heard that he was out of that slowing inflation coming down. it needs to be more. our next guest is seeing potential for a rotation back to high quality reasonable growth stocks it's great to he soo you this teams like a no brainer to say, hey, you want high quality growth stocks at this point. but what are you looking for what are the characteristics that you're look foring for wheu

suggest that >> some things we're looking for is ability to meet or exceed earnings expectations and grow backlogs faster than the overall market indicating their taking share. and one of the companies that personifies that is service now. they have been doing that. they're feeding on the orders or back logs. they have controlled expenses better than most in the sector and also, they have taken market share. the customers look to consolidate the number of vendors they'reusing service now is a beneficialry. >> when you're -- we're looking at practiocter & gamble there is a lot of talk about this today despite the restructuring that provided tail winds zshgs that indicate you to that there will be other consumer companies to get hit down the road this earnings season? >> well, what it indicates to me, first of all, is that they're taking a lot of pricing

in their case 10% which hit their volumes by 6%. and as their commodity pressures roll off, we expect that trend to reverse and they, in fact, raise their numbers for the full year which ends in june to say that they're now going to be flattish they expected volumes to be down as much as 3% for the full year. but it looks like they're on an improving trend if they could have that ind koof confidence in the june numbers >> talk to us about amazon you have a hunch, i would put it, about a possible transformational change there. explain. >> yeah. well, the chairman, jeff bezos, is sitting at his board meetings and he has to be truly frustrated with what is going on with the market capitalization and some of the ancillary businesses aws is doing very well it's probably in my thinking going to go back into the hands of mr. jazzy and just kind of

stay there while bezos comes back and runs the rest of the companies. it's a maneuver that worked very well for starbucks in the past in the case of disney, they brought back the chairman recently i can't say it's been great for share olders but it certainly stopped the hemorrhaging in the stock price in disney. >> we heard from mike santoli, a rundown on the day and decline that we have seen for second day in a row, marianne he says without the absence of a catalyst, it looks like, you know, we ma i see the hedging and hemming and hauing in the markets right now. what do you think comes down the pike in nearterm >> well, i think we're just smack in the face of earnings season right now and i think it's going to be an unusual management team that guides revenues and earnings up versus expectations for the year so i think with that positive news, the market will probably

languish here for a bit. great opportunity to buy some of those large cap solid quality growth names and not all growth names. but the ones that are reasonably priced and a lot of value stocks so i just expect the market to languish here for a while. it will bounce around and providing good buying opportunities. >> marianne, thank you >> thank you, contessa >> still to come, a debt ceiling showdown brewing in d.c. what a shutdown further weaken the country's already shaky economic backdrop. that is meaning a government shutdown as we head to break, check out some of the big laggers in the semispace. wolf speed leading the way up 6%. wel rht down 3% 'lbeig back. we'll get it right

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all state is preannouncing fourth quarter net loss of nearly $400 million. sun run leading the solar decline. down 10% today and coamerica, beating earnings estimates for the fourth quarter. let's bring in victoria green. she is from g squared private wealth and cnbc contributor. we don't see moves like this in insurance very often but it was travelers before and now allstate down almost 7% on the day. what do you make of it >> they just weren't ready for the mayhem that was inter storm elliott. they weren't prepared for mayhem that happened. it was a surprising swing. they also are struggling with auto loan underwriting they cannot make that profitable they're going to try to go back to hike rates again. behind the curve, auto loan underrating is bad they lack catastrophe losses, well above what is expected. they were just not ready for it. they need the auto loans to perform better they're in a down shyed right now. it's not a buy for me.

i think you need to steer clear. >> i also point out they've had -- they've gone to the state regulators they asked for rate changes. on average it's 11%. wells fargo analyst says that is not enough and the infrequency is still very high. >> how did they get it so wrong? how did they get it so wrong >> i think they were just mispricing it. i think the underwriting needs to relook at the algorithms and how they're doing it and figure out how they're mispricing the loans so badly they have states that are over 100% in what they're losing. they need to reprice and do it aggressively 11% wasn't enough. but you also have this kind of double edge sword that they may end up having to lose customers if they hike too aggressively and somebody else can swoop in so it's a lose-lose for them it's surprising analyst how's poorly auto loans are going. >> just to pile on, just for the record, i'm tired of the mayhem ads. let's move on to sunrun, shall we what do you think there? >> it's not a buy for me right

now. i think they're fighting rising rates and costs. look at what they were getting on the advance it's now 57% it used to be 95% on the advances and they're just strug wgling wh the rising rates it's no the just sunrun, it's all of solar it's hard to sell expensive solar when people are starting to pinch pennies and not looking to make a maj kor change to ther home they're 100% residential solar they may struggle to keep up the sales and seeing the rising cost of capital bite into the margin. they're lose-lose on both ends if they see a slowdown of sales, they want to sell the batteries and really kind of get the whole solar going. i think that is difficult in a recessio recession when the commission squeezed i think they're looking at the exposure and saying not right now. i think can you see this retest down to the 19.5, 20 level

it's hard to make money in a rising rate environment. >> our final name today is coamerica. we got a beat on earnings here which really stands out among the banks. >> yeah. it was fantastic the net interest income actually outpaced the cost. they're one of the only financials that's why you're seeing the nice rise. i think the stock has room to run. it is down 36% can you see retesting of the 75 or 77 level. the net interest income is expected to grow 17% to 20%. they've done a good job also increa increasing revenues from other fees and the loan loss provision climbed slightly that's them being prudent. they're trading with a dividend. it is a solid quality stock and executing very well. it should stand out. other financials struggled and saw that the profit got eaten into by rising cost, c os deshg managed the rising cost very

well as well as expanding the loans an minimizing loss of departments. >> victoria green, good to talk you to thank you for your insight >> happy to bring mayhem >> coming up, the looming debt ceiling showdown and the potential ripple effects in the markets. "power lunch" back right after this because you've got the next generation in global secure networking from comcast business, with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want... your team, ours or a mix of both... with the nation's largest ip converged network, from the most innovative company. bring on today with comcast business. powering possibilities™. you ok, man? the internet is telling me a million different ways i should be trading. look! what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible]

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this is forcing the treasury department to keep paying the bills while congress tries to hammer out a deal on raising the $31.4 trillion debt ceiling. our next guest says prepare for a bumpy ride joining us now is wells fargo economist. mike, welcome. good to have you with us i'm going to start with a somewhat inside out question i've read a lot of stuff about this and there are a lot of people -- let me label them the hysterics who say that if the u.s. defaults on its debt, even a little bit, even for a day, that, to as you the allstate commercial, mayhem will happen in all the markets the world over do we know that?

>> yeah. thanks for having me on, tyler i think what i would say is we don't know it for sure but to some extent, i think that's where the fear comes. from the fear of the unknown we had a the lot of close rush rushes with default. the more recent and serious examples but it never happened before what i can say, though, is it certainly understandable from where all the fear comes from. the u.s. treasury market is the deepest bond market in the world. it is the oil that really keeps the financial system going and running. it's major source of liquidity for pension funds, corporations, money market funz ds run into t trillions. state and local governments. so you sort of start to step back if that did come to pieces, what did it mean for financial markets and the economy? i think it's hard to make a case it will be good. >> it's interesting. i feel like most of my adult career, we keep covering debt ceiling limits that come into

play and the fact that congress keeps having to come to the table and can you use it to extract a promise to cut spending which is right now what a core brugroup f republicans is trying to do. i'm curious. what would longer debt ceiling what if we could just borrow whatever we need to borrow for that year? what happens >> yeah. i think what would happen is these fights would go away i think of what the debt limit is, it's a legal limit on how much money the government can borrow it doesn't have a lot to do with authorizing new spending when i think about what the government spends, social security, defense spending, or med medicare, that comes from previous laws, maybe passed recently or as recent as december, or decades or decade that's what's authorizing the spending and the debt ceiling is just a

limit on how much borrowing can be done. the government needs sobligate - >> are you as concerned with the national debt? if we're at $34 trillion, is that, to you, a real risk to our featec future as a nation >> yeah. i think it's a risk. i think of it more asser termit in the foundation than at the door it's hard to know how much debt is too much debt when it comes to gdp as a share of total debt. 100% or so, is the biggest it's been it's a concern but that's the kind of thing we don't know when it will be a major problem it may not be today. it might be down the road. it does concern me >> how concerned are you that there really may be a catastrophic moment that will come some time between june and august of this year, by most forecasts, when the ability of

the treasury to do fixes to this run out. and the moment comes where a bond is defaulted upon what will the ripple effects be and what are the odds of that happening? it seems to me that you may have a very strong political presence on the right wing of the republican party that wants concessions in return for raising the debt limit there may be more moderate republicans who really think that that would be a bad idea to go into default. >> yeah. the way i think about this is i think the odds are elevated, into the past fights a year ago, or right before the pandemic in 2019 and i think the odds are elevated for a few reasons the makeup of congress looks a lot like the makeup back when we had more close brushes with default in the past, like 2011, 2013 in terms of what it would look like, if we get to that point where, you know, i think the

true default date is around early august or so that's the thing no one knows if the treasury was able to prioritize payments on principle and interest, someone is going to bet shortchanged somewhere. whether it's social security beneficiaries, medicare benefits, military pay nondefense sectors we don't know what it would look like how long would that lost and that's what a lot of the f fear comes from. when you have such small majorities in the house and the senate, they are so far apart, it caused a lot of trouble for me particularly when we're talking about recession nary risks withu the debt ceiling >> mike, thank you very much amazon wiping the smile off its face the company discontinuing its charity service, that you may know about while it may help with finances, could it do lasting damage to the brand and its image? that's next. power e*trade's easy-to-use tools like

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it's just right for my little business. just tell us - what's your why? unlimited premium data. unlimited hotspot data. (woman 2) you know it's from the most reliable 5g network in america? (vo) when it comes to your business, not all bars are created equal. so switch to verizon business unlimited today. welcome back to "power lunch. amazon is discontinuing its charity donation program called amazon smile a sweeping review of the company's costs, here to discuss is cnbc.com technology reporter annie palmer and back is michael, analyst at webbush. let me ask you how this program worked and how widely used it is and by whom.

>> yeah. so, through this program, amazon would donate a portion of prime members' purchases to a charity of their choice. it was launched in 2013. over that time, amazon says close to $500 million was donated to charities worldwide >> is there a percentage amount? if i spent $100 on prime, is it 2% of my expenditure that goes to the charity what is it >> it was less than that it was about 0.5% of purchases most of the time half. >> amazon wants to curb this are they being penny-wise and pound-foolish? >> yeah. it's peanuts and i think what this is telling you is that andy jassi is at his fire phone moment, where he's got to make a decision about continuing to do stupid things at the expense of shareholders he's grasping at straws because i don't think he wants to lay off more people. amazon has the worst h.r.

department i've ever seen. they have noclue what they're doing. they don't pay their people enough in cash and way too much in stock so, when the stock price goes down employees get upset and they start to leave. he's seeing people head for the exits and he picked the wrong thing to cut cutting $500 million over the last ten years, who cares? it's peanuts >> wait, michael this is a company that is notoriously conscious about costs and reins in with the travel expenses are for their investor relations and -- you know, you have jeff bezos driving an old beater around because he's cost-conscious. $500 million, while it may be chump change in the bigger picture, if you're worried about whether your people are taking black car ubers or uber x, don't you think that makes sense to do that rather than cut more jobs >> he has 300,000 corporate

employees. that means people that don't work in fulfillment center that's too high by 200,000 it's a crazy number. i defy you to find a company that has 300,000 people that work in offices. that's crazy talk. it's because nobody in amazon talks to anybody else at amazon. it's a bunch of walled garden silos. and it's not an efficiently run operation. he has tons of room to cut people and he has skunk work projects he cut alexa finally they could cut on amazon prime video. you know freebie and prime video people don't work together that's crazy >> i assume they thought alexa would be a selling device. i have multiple alexas we heard from a guest earlier today, who hazarded a guess that

bezos may come back as ceo are you hearing that >> so far, no. i'm not hearing that i think he has time to show he can take the company where it needs to go. i don't think folks are clamoring for bezos to come back >> michael, thank you for joining us >> michael speaks his mind love it. thanks for watching "power lunch," everybody. "closing bell" starts right now. >> the major averages adding more losses after wednesday's big sell-off we're well off the lows of the session the last couple of hours. this is the make or break hour for your money welcome to "closing bell." i'm mike santoli sara eisen is at the world economic forum in davos, switzer land the s&p down 11 points one-third of 1%. we were down to the 3900 level we bounced up a little bit the nasdaq an outperformer for much of the day. about if line with the overall tape at the moment