♪ helhello, everyone welcome to "power lunch. stocks sinking as earnings weigh on the markets microsoft dragging down tech boeing weighing on the dow following its report we'll get you ready for tesla's report tonight plus, other big worry spots for markets. well, it is inflation, in

particular we've seen signs it is starting to slow, but maybe not fast enough for a lot of consumers. we'll discuss the stickiness of higher prices. first, a check on the markets. speaking of sticky, stocks staged a turnaround. dow is down 400 points at the lows, only down 75 right now. dom chu. >> dom chu hasn't been on television for about three minutes straight >> i know. >> he is going through withdrawal. >> i was following kelly through the bowls of the studio to get from studio a to over here, tyler. anyway, as tyler and kelly point out, this is still red across the board, but this is a massive turnaround intraday, at least for right now. microsoft, a huge part of the story, is down three quarters of 1% as you can see on the chart below, we've been steadily moving higher the entire session right now. even despite a mixed earnings report where the outlook, especially for cloud, might show signs of a slowdown, it's still growing quickly. a slower growth at the high levels is still allowing microsoft to climb off the session lows

now, the cloud computing industry is in focus, given the outlook for the azure cloud unit at microsoft if you look at other very cloud-heavy names, names like amazon because it's the biggest cloud player out there, also alphabet, the parent company of google, a big player in cloud, as well. amazon is down one-half of 1%. alphabet is down 3%. we've been seeing at least slight movements off the session lows towards at least maybe the highs. even data dog and other software cloud type service providers are also part of that story, as well tyler, kelly, it's something to watch as we head toward the closing bell, whether or not this bid can hold at the last hour of trade. >> absolutely, dom we also got results from boeing this morning disappointing the street with the loss sales also missing expectations. but the stock right now is slightly into positive territory. another one of the turnarounds it's still up more than 40% in the past three months. let's turn to phil lebeau on the busiest -- or one of the very

many busy men in business news what was the takeaway from the ceo? >> go away from q4 this and the e earnings miss. look at 2023 dave calhoun was optimistic about what they are seeing first, strong demand out there there is no shortage of airlines looking to order the order book is growing. at the same time, you've got them working on reaffirming their delivery guidance. they did that today. look, at the end of the year, it's a possibility they might be able to increase the production rate nobody is saying that at this point, but it is improving the supply chain is still in a challenging state. not just for boeing but for everybody in the aviation industry here's dave calhoun talking about it this morning. actually, i'm told we don't have that information let me pparaphrase what dave said everyone is in the same boat, and it is getting better the industry is better overall whether it is boeing, gv aviation, whoever it is, all of the primary players, they're

doing a better job at managing the supply chain as a result, they're more confident going into this year than they were last year, that they'll be able to hit the delivery guidance they've laid out there. so that's one reason why you see shares moving higher throughout the day. you strip away what happened, the challenges behind the q4 earnings miss, and you have, i wouldn't say it is a great year ahead, it's not pre-pandemic yet, but it is getting better. >> all right phil, thank you very much. phil, please stick around while we bring in noah, analyst with goldman sachs. has a buy rating on boeing of $261 price target on the stock, which is now around $204 noah, welcome. take us through the fundamentals of boeing's business and what you see there that gives you confidence that the stock can perform as you think it will >> yeah, so a few things i'd highlight overall and from what we learned today i think one of the more

important things with boeing, where you have to continue to view it through this lens, is that we're talking about a stock that's near 200. pre-pandemic, it was over 400. you've highlighted the numbers today are a little mixed there's some good, some bad. there's just not a lot in the stock price. the stock is not asking for much expectations remain low. they did miss earnings, but they beat free cash flow. because of some of the accounting methodologies, the free cash flow is a better metric over time stock is more highly correlated to that. i think phil, you know, nailed it, where the demand is really strong what's holding them back is supply chain but demand for the airplanes really strong, and that's the better long-term indicator so i think the fundamentals are still being a due i don't like i don't expect -- duopoly. demand to fly, it's related to boeing, regardless of the numbers specifically to them. >> you referred to when boeing was a $400 plus stock, and we

all remember that. it wasn't that long ago. was that a fair price for that company at that time, or was it overvalued what was the story >> i thdon't think it was a fai price then we recommend boeing today, but not at that time it's not to say we've always had the stock right. we had a sell when it was moving higher during that period. boeing is cyclical cyclicals, when things are really good, the market will get too excited and put a high multiple on high earnings. when things are really bad, they'll put a low multiple on low earnings during the pandemic, boeing got to that spot on the downside it's now starting to recover so i don't think it was a fair price, but the inputs into the business that existed at that time will exist again. again, because the long-term fundamentals are so good it's a matter of time. at the current price, you're looking at a low multiple on low

earnings and cash flow. >> we're showing a 135 pe, noah. what do you base the multiple off of, and have they put production issued firmly behind them or not? >> so, you know, as i eluded to earlier, boeing's earnings are tricky because they use program accounting the cash flow is often different than the earnings. the economic engine of the business, the cash flow statement, often different than the pnl. at current volumes, you know, it's a high incremental margin, high fixed cost business with this constrained volume, you know, the earnings are just in flux while the cash flows are better and improving so the pe you see on a bloomberg screen or something right now is not, i don't think, hugely relevant the free cash flow target provided for the investor day, $10 billion, 2025, that's $17 a share in free cash flow. the stock price is just over

$200 you're ten times over the cash flow, so it is pretty cheap. so -- >> pardon me let me turn to phil for a moment and get a synopsis on boeing's international business, particularly china. >> dave calhoun was optimistic in the fact you were seeing huge numbers in terms of people returning to travel as they come out of the covid lockdowns in china. the numbers looking identical to what you saw in the united states, what we saw in europe, as both of us came out of our covid lockdowns. you saw huge demand for travel that is what boeing is seeing in china. as a result, the airlines there are going to, a, need to use the aircraft that they have, and there are some 737 maxes that are on the ground there that are not flying yet they need to get back into service. they likely will soon. on top of that, the airlines there, just like airlines here in the u.s. and in europe, will eventually say, "we need more aircraft." well, guess what there are about 100 aircraft,

737 maxes, that have been ordered by chinese airlines, that have been built, that are on the ground at moses lake in washington, that are ready to be delivered. obviously, some work has to take place, but at some point, some point, the optimism at boeing is that they will resume deliveries of those aircraft. does it happen in the next six months, the next year? who knows? that's a geopolitical question involving the united states and china and trade relations, et cetera but that's the expectation. >> finally, noah, a quick word on production issues and whether they've put those behind them now. >> yeah, yeah. so, you know, i think that's one of the bigger hurdles left in the business, especially in the near term. the aerospace supply chain recovery is lagging the broader global supply chain recovery a airplanes are complex starts airbus had thousands of supp suppliers. it is an industry where things got really tough during the pandemic you know, they really had to

hunker down. coming out of that is taking longer that's one of the bigger hurdles in the near term the comments from ge this week were incrementally positive from boeing this morning. sounded better talking to the supply chain i think we'll see that improving as we move through 2023. >> all right thank you very much, noah. appreciate your time today noah poponak phil, stay there there is another key company you follow and reporting after the bell got to talk tesla. for that, we bring in an analyst at canicord. great to have you, george. phil, we mentioned the key thing to watch will be this automotive gross martin metric. run us through it again, what you're expecting. >> look, the gross margins are well above the rest of the industry that's the key point to keep in mind here. in part, because of the pricing power and the low cost that tesla enjoys it was in the third quarter at 26.8%, automotive gross margins, excluding government zero

emission credits the expectation is that it is going to be somewhere around 26.4% in the fourth quarter because they've cut prices in china, which obviously eats into margins just a little bit. if it is around there, i don't think you're going to see much reaction from shareholders now, if it is dramatically lower, which is not the expectation, but let's say it comes in at 22%, 23%, people will say, whoa, what happened? where's the unloaded gross margin strength? that's the metric people will be watching. >> george, i turn to you are you bracing for worse news do you think they could clear this bar but maybe still not put questions to rest? talk us through what you're expecting. >> well, look, you know, i would say in the years that i've covered tesla, this is one of the most important conference calls they've had. that's because, historically, there have been other issues related to stock, but this is one of the first times we've seen what the company's reaction is and will be to kind of a demand issue, which they haven't had in the past. the last several months, we've

had issues that started in china and have spread to the united states and europe. you know, we had wrote a note a few weeks ago, a discussion musk put on his twitter spaces. his point on the chat was that the company values units over margin in a recessionary environment. we get it. if you think about the math, the company, like phil said, makes about 30%-ish gross margins on its vehicles those vehicles are forward upgradable with full self-driving software. our assumption is right now, high single digits, 10% of their vehicles globally actually adopt that margin. but if they cede the market with unit uni u units, they can upgrade the software and double the margin if i were in his shoes, which i'm not, i would be doing the same thing with tesla. >> are there price cuts, george,

an effort to grab market share above all? >> sure. it's about market share. it's about seeding the market with units to potentially upgrade them with software i think given the stock has a precipitous fall the tail end of last year, the market is ready for some margin degradation in 2023 the question is, how bad will it be we've heard some rumors they could go into the teens. we're still in the 20s, the low 20s for next year. we think that margin to the teens is highly unlikely, particularly because some of the commodities that go into evs have come off the boil, whether it's a little lithium or steel we put together an index and a note last week, just that tracks ev prices. clearly, they've come off the top. it should help kind of buttress some of the margin degradation due to price cuts. >> phil, do you agree people are

going to be -- that full self-driving will be that c compelling in the long run >> i think the potential is there. i agree with what george is saying in terms of full self-driving has the potential to really boost margins down the road however, i will point out that everybody that i have talked with in the automotive industry, who has worked on autonomous drive technology, has said the same thing we are not close to seeing it any time soon. does that mean we'll see it in three years, four years, seven years? who knows? now, george is right if you have a car that can be upgraded with the software when that technology is perfected, absolutely that's a great potential for growing margins down the road. but you have to go into this understanding it may not happen anytime soon. >> what, george, has tesla done to its existing owner base, people who bought cars, let's say, in the fourth quarter of last year at a higher price, and now find not only is the new car transaction price lower, but that affects the value, doesn't

it, of the car they bought doesn't it affect the value of used cars, and do you expect any backlash there is tesla going to do something to address that or not do they need to? >> if i was one of those people, i'd certainly be upset about it. twitter would indicate some of the videos we saw, that people in china were a little upset about it sure, they may sweeten the deal for previous owners. maybe give them some extra charging miles they haven't done anything yet, but certainly, the company is one that respects its customers historically and has done things to appease any issues. i would anticipate something over the next several weeks. >> asking for a friend, george phil lebeau, thank you, my friend george, appreciate it. >> thank you. coming up, the nasdaq falling today but still up 7% this year. we'll talk to one tech investor who says the recent move may be premature. but a bigger, better one could be coming later.

plus, we head out to chicago to see how microsoft's concerns about the economy are playing out in the bond market 'somg o"perow lunch.

how hard will they get to 2% >> i think rates will be higher than 5%. >> 5%? >> that's my own view. i think there's a lot of underlying inflation which won't go away quick. >> we want to make sure the united states of america, being the superpower of the world, has power security. >> it's a

welcome back to "power lunch. as we digest the market impact of earnings, microsoft has been dragging on stocks, and its caution comments about the global economy is being held in the bond market. let's bring in rick santelli now. rick >> yes, i'll tell ya, today's auction gave us a lot of

information. if you look at three day of tens, realize, rates have been going down they're starting to come back a bit. all in all, the ten-years have traded under the previous day's sessions every day this week we've had two stellar auctions as you look at fed funds, three days, you see the june fed fund contract starting to come up a bit. many of the negative effects we've seen from some of the earnings seem to have a half-life. if you look at the vicx, it shot up but is close to now unchanged. we'll see what the traders think. jason, microsoft came out yesterday a bit disappointing, especially from the cloud perspective. is anything going on strategically from yesterday's 4:00 eastern release to today that may be affecting traders or volatility >> you know, it really seems like microsoft, similar to the other big tech companies, the big five, have really stressed on cutting the workforce and

that trend of cutting employees has led to, you know, their stock price being propped up, if not temporarily. that's the common trend, but, to me, it really seems like the market is in a pause right now, waiting for next week's fomc the fed has made it very clear that they are concerned about the employment and the market cooling off. but the employment numbers we're seeing on a monthly basis, you know, are not really supporting what we're seeing from these bigger companies that are cutting the workforce. >> it certainly seems as though the effects, any negative effects that seem to come into the marketplace don't last long. investors seem to walk right through it and continue to bid up the equities. what are you seeing on the one-day volatility >> yeah. as of late, we've seen a lot of volume on the zero day and one day option volume. it makes up roughly 60% of all option volume that is trading. recently, the realized volatility we're seeing, so our average move on a day-to-day basis from, you know, open to close, really seems to be

outperforming where the implying vol is and where we come in. we're seeing these large 1% intraday moves, and a lot of times, you know, when the day is over, we're kind of unchanged. >> lock and reload for the next day? >> exactly. >> david, any opinions on what is going on with microsoft do you think it is just another horn in the horn section, or is it something that will have a lingering effect >> well, i mean, there's definitely -- there was premium priced in at the close yesterday. it quickly came out. stuff really starts to -- originally, when the news first happens, it is very illiquid once the market digests it, it really kind of will be moving on to the next thing, whenever the next big thing is. whether it is cpi. whether it's, you know, another announcement, that's the big deal microsoft, i think it's over for the day. >> excellent thank you, david well, you hear it from traders they seem to have the same sense of the equity markets.

things don't look good, but it always comes back to rise to the occasion kelly, tyler, back to you. >> rick santelli, thank you very much. a growing debate over growth and inflation in the economy some believe we could be returning to low growth, lower rates and lower inflation sooner than expected. at the same time, despite inflation easing a bit, some prices aren't budging. we'll look at meso of those when "power lunch" comes right back

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welcome back to "power lunch. i'm seema mody here's your news update at this hour federal prosecutors started a civil rights probe into the death of nichols the investigation may take time. nichols died three days after a violent arrest by memphis police all five officers have been fired for using excessive force and failing to intervene. nearly two dozen top state prosecutors are urging congress to allow state prisons to jam cell phones that are smuggled into prisoners the phones are often used to plot violence and carry out crimes the prosecutors are all republicans, but they say they plan to get democratic support

for what they say is a bipartisan issue and in ft. worth, texas, a medical team has successfully separated a pair of conjoined twins. the 16-week-old girls were connected from the breastbone to their belly button and shared a liver. dozens of surgeons and specialists were involved in the surgery which took 11 hours to complete doctors say the girls' recovery will take time, but their outlook is good. glad to hear it. kelly. >> absolutely. seema, thank you. ahead on "power lunch," we'll continue to keep an eye on stocks a lot of reversals today the s&p is only 9 points from turning positive can we do it markets are way off the lows when the dow was down 460. nasdaq was down 2% as we head to break, the stock of the exchange itself was down 9% earlier on after they reported earnings missed on eps ildo aos7%e. stl wnlmt we're back after this. ♪ at morgan stanley,

we see the world with the wonder of new eyes, ♪ helping you discover untapped possibilities and relentlessly working with you to make them real. ♪ because grit and vision working in lockstep ♪ puts you on the path to your full potential. ♪ hi, i'm debra. i'm from colorado. i've been married to my high school sweetheart for 35 years. i'm a mother of four-- always busy. i was starting to feel a little foggy. just didn't feel like things were as sharp as i knew they once were. i heard about prevagen and then i started taking it about two years now. started noticing things a little sharper, a little clearer. i feel like it's kept me on my game. i'm able to remember things. i'd say give it a try. prevagen. healthier brain. better life.

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everyone should have it and now a lot more people can. so let's go. the digital age is waiting. welcome back to "power lunch. let's check the markets now. we're lower right now, but off the worst levels of the session. down just 65 on the dow. we go to the new york stock

exchange bob? >> tyler, we are -- i'll keep it simple the market is resilient and it is acting like it still wants growth stocks. we've been talking about microsoft on the day it's moved $10 it was 231, 241 now? look at that just touched being positive briefly. there's been enormous volume in this despite all the concerns about azure, they're acting like they want this stock. take a look at some other names. there's a lltot of concern with the banks, higher net charge-offs. credit card companies. capital one was okay there was higher net charge-off, but it wasn't dramatic same with us bancorp both reacting. kimberly-clark is a separate story and a problem we're seeing with consumer names. prices are up, and the volumes are down here. look at this price is up 10%. my heavens, they're getting the price increases through. organic sales up 5%. volume is down 7%. see this

you have prices up, volumes down potentially, that means margin pressures down the road. that's going to be an issue for many of these companies. look at the s&p 500. we just touched on the verge of being positive right now we are seeing stronger momentum overall here we're seeing stuff we haven't seen in a long time, kelly we're actually seeing dip buying that's out there the bears seem frustrated right now. the markets are really proving to be resilient, particularly around all of these growth stocks we'll get the big tech names other than microsoft next week and see what is going on now, they're not flustered by concerns about azure slowing down on the growth end kelly, back to you. >> thank you, bob. let's turn to oil now. gasoline prices, i'm just going to keep talking about it, up 40 cents from the lows last moont. >> oil is higher today on a little bit of a smaller than expected build in inventory. it is kind of stuck within the range of the $78 to $82 level, which happens to be the 50 and 100-day moving average we need a new injection of news

in order to have it break out of that perhaps, you know, some giant touch of demand in china around the lunar new year, or opec's upcoming meeting you were talking about gas levels. >> down 6% >> i know. it got within a hair of dropping below the $3 level earlier today. a lot of this, you know, is because of the contract expiration on friday it is different than, say, the oil market you can store that oil it is much harder with nat gas as you approach expiration, it becomes essentially worthless. you know, one treasury i spoke to said the weather is six times more important here than even the freeport production being offline. it really is temperature last year, it was really cold so people were ramping up production was ramping up. this year, it is really hot. it just started to snow outside. >> is it snowing outside >> yeah. >> no kidding, wow first time we've had snow in a long time here in new york. >> exactly people were getting a little unnerved by it almost. it's helped europe stave off a recession.

it's helped stave off an energy crisis back here, you sort of wonder how long these good times can last that's why i come back to the gasoline price 40 cents in a month is a lot for a consumer who is a little in question right now >> yeah, absolutely. and, you know, once again, we're still seeing the impact on utility bills. it takes a long time for those to come down once they've gone up also, there is the phenomenon of once things go up, do they ever come down? >> good question could those -- i know we keep talking about gasoline prices and utility bills but they're both up. people feel it could the utility bills drop i was thinking, well, it's just for this winter. prices were up so much last year is this what we're going to be paying for the foreseeable future >> feels like it it feels like any meaningful drop would be 6 or 12 months down the line. once you improve the rate increases, it kind of -- your bills are then -- >> rates don't come back down. >> exactly the base goes higher. >> tyler is like, let me tell you. >> yeah, there is a variable on

how much they pass through with the underlying commodity as tyler would know, rates don't come back down. >> i know you've been following solar stocks. >> slew of downgrades. barclays cut sunrun to equal weight and enphrase, it's about the consumer market is slowing. when you think about the ira, it is clearly such a positive it also does push out maybe some of the urgency to do these things because its now ensures those that 30% itc for ten years. unfortunately, i know from experience, if i have longer to do something, it'll take me longer to do it. >> interesting. >> don't feel the urgency. don't have an expiration date. >> they should have said, hey, inflation reduction act, you can have this but only for a year or something, if they wanted everyone to scramble and support the companies right now. >> it is still beneficial, absolutely, longer term, but it means for the consumer -- and resi is a smaller market, but maybe it is pushed out a little

bit. >> pippa, awesome. thanks very much. big tech names reporting this week and cutting into the recent rally in nasdaq the nasdaq down about 1% after microsoft's squishy guidance the index is up 10% since late december i wish you could see pippa running across this floor here to escape. >> scampering. >> our next guest holds some of the big cap tech names, including microsoft, as well as apple, amazon and google, and says the recent rally in tech is premature. let's bring in mike bailey, director of research with fbb capital partners why do you think the rally is prem premature, mike? we need proof? >> yeah, i think we're getting a little ahead of ourselves here the bulls are really in charge i think just looking at where are we in the cycle, investors are a little bit of ahead of themselves, in particular, with nasdaq interesting, you flip the calendar year and the bulls are running there, especially in tech if you look at what is driving that, really, it's sentiment if you look at the fundamentals,

how are the companies doing, profits are pretty stable the last few weeks, no real changes. sentiment is starting to boom. on one hand, maybe it's a reversal on the other hand, now companies' expectations are higher they have to execute through that we've seen one of the mega caps, microsoft, kind of squishy results. looking backwards a little bit, worsening ahead. if that is an omen for the next mega cap tech companies, we need to be cautious here. >> you sum it up profits stable sentiment rising the two can cause dislocation ultimately let's talk about alphabet and what happened yesterday with the federal case being brought against it how much of an overhang is that going to be for google for the next several years potentially >> it's a great question i think a lot of times what we've seen with the big cases, there's a big kind of, you know, splash in the media. investors are concerned you might have knee-jerk reaction to selling. lot of times, these go quiet for

a number of months, even years investors may start to push these to the back pages, if you will our sense is, in general, this may not be a big burning risk factor for sentiment for google. it may come back at some point and become more of an issue. we look back at the other big cases. microsoft is probably the big one. companies can't deal withthese things and work through them and succeed through it my sense is investors will eventually pivot back to the base news. what is begingoing on with sear youtube, et cetera this will be a risk factor that will be pushed to the lower section. >> it is striking and we should highlight that google shares is the worst of mega cap tech, down 3% microsoft has turned positive. that's a huge turn jrn around cap it willwill -- capital one turned around. union pacific. talk about other names aside from tech you might feel comfortable dabbling.

>> if folks want to pivot away from tech and see what else is out there, few things. generally, the themes we're looking at is cquality at discount a few names we're looking at, we own currently, eli lilly the health care space, one of the higher growth pharma names out there. medium-sized company chasing two massive opportunities. alzheimer's and obesity. really good company. lot of base business growth. by the way, trading at ligslight discounts. you mentioned union pacific. again, thinking a little more of the cycle. this is a little early we're not even in a recession yet. things haven't quite slowed down, but you can buy, you know, high-quality company bears entry, good market share trading at a discount. again, once investors start to look over the horizon, names like this, transports, companies that have a lot of -- sort of control their destiny, they'll continue to grow last one, a little bit of an in between a cyclical but kind of a safe way to play that is linde

one of the highest quality materials companies out there that diversified across customers, across geographies, that sort of thing as the fed chairman continues to put this chokehold on the economy, things are slowing down, companies like that, linde, that are diversified across europe and china, they can growth despite the constraints. >> mike, thanks so much. appreciate it. mike bailey. up next, perplexing prices you know what we're talking about. inflation is slowing burks not ony.uch in visible parts of the what is causing the sticky prices when "power lunch" returns. aren't we all just looking for the hottest stocks? (fisher investments) nope. we use diversified strategies to position our clients' portfolios for their long-term goals. (other money manager) but you still sell investments that generate high commissions for you, right? (fisher investments) no, we don't sell commission products. we're a fiduciary, obligated to act in our client's best interest. (other money manager) so when do you make more money, only when your clients make more money?

(fisher investments) yep. we do better when our clients do better. at fisher investments, we're clearly different. we planned well for retirement, but i wish we had more cash. you think those two have any idea? that they can sell their life insurance policy for cash? so they're basically sitting on a goldmine? i don't think they have a clue. that's crazy! well, not everyone knows coventry's helped thousands of people sell their policies for cash. even term policies. i can't believe they're just sitting up there! sitting on all this cash. if you own a life insurance policy of $100,000 or more, you can sell all or part of it to coventry. even a term policy. for cash, or a combination of cash and coverage, with no future premiums. someone needs to tell them, that they're

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just tell us - what's your why? ♪♪ welcome back to "power lunch. recent signs show inflation is finally starting to cool, so things should be getting cheaper, right no, no, no, no it seems consumers are not just feeling the pain for a little longer in some places, they're feeling it worse than ever let's bring in senior economics reporter steve liesman and cnbc's retail reporter melissa repko. steve, it pains to point out, just because the price hikes are slowing doesn't mean prices are dropping here. >> right

so inflation is measuring the rate of change of prices you would need a negative number on inflation, prices actually going down what has been going down is the aggregate price level or the change, the rate of change of inflation. for example, we were at 9% on headline cpe back in june. 9% back in june. now, we are around 6%. same thing happened with the core, 6.4%, down in the 4% range. most of the other price indicators we have, kelly, are coming down. the rate of change is slowing, not that prices are falling. >> so going up at a slower rate. steve, educate me a little bit on the history of inflation. when we've had bouts of inflation, do prices eventually ever go back to where they were or even below where they were before that bout of inflation kicked in, or do the providers,

the companies, kind of get accustomed to those higher prices they don't want to give up the higher prices, generally, i wouldn't think. >> sometimes they do companies will act to protect. in the first instance, tyler, i think you know, they'll protect their margin it's not so much what they're getting from the consumer. it is how much they're earning off of it. for example, if they can earn 20% on the dollar of what they in invest, they'll move to protect that if they can they'll lay off people or they'll keep prices high in order to do that the real question becomes one of competition. there are signs out there, tyler, that this economy is less competitive than it was in the past that might mean that high prices stick around longer because it's only competition that would force companies to lower prices. >> everyone is talking about egg prices which have one catalyst being this avian flu going around chicken breast prices dropped considerably all this aside, groceries are one place where people

definitely go, this is still costing more than it used to >> yes. >> will i ever see relief? what are you hearing >> well, the good news on the egg front is, yes, prices are expected to come down. i spoke to the kroger ceo, and he said it is a bright spot. on the other hand, one consumer packaged goods come and they praise prices on detergent, paper towels, canned foods, they rarely come back and say, we'll lower it again the way they do it, they'll reintroduce discounts, coupons, things that ease prices for consumers. so far, he said, no vendors have come back to the company to lower prices no one has stepped up discounting over a year ago. that really hasn't kicked in yet. >> or the vendors will shrink the size of the package and charge the same amount. >> exactly shrink shrinkflation. >> 14 ounces instead of 18. >> that's another way it shows up in general, this is something

that is going to stick around for a while, and people should be prepared for it he did say, for retailers, one way to combat this, they can use the tool of private label. in the fall, kroger rolled out a cheaper version of private label items. that's one way they can say, when negotiating with companies, hey, you may keep the same price but we're going to offer something similar. similar types of peanut butter people can vote with their dollars. potentially, that puts pressure on companies to rethink the price. >> although, it is not like kroger wants to sell things more cheaply if they can get the margin everybody else is they're all in it together the point about competition, they'll shop around, look for alternatives and so on it's not just groceries, though. this is where it gets interesting. goods prices fluctuate quickly sometimes they come back down. services prices, the cost of restaurant meals, especially with the labor market, that's where you wonder, you know, that's where you're sieeing things cresting higher. >> it goes to the reason for inflation. not only did we see a surge in demand during the pandemic because people were stuck at

home, we've also seen wages go up dramatically. services, hotel, restaurants, they're people intensintensive as they pay higher wages, it can't come down. it is a fixed come plus, they lock in the commodities early. they're paying for beef. they're paying for shipping. they're paying for even cotton cotton more on the apparel side, of course. those contracts are long term. they can't pass on savings until they feel them themselves. >> yeah. like you said, any time they get more for a restaurant meal, you're crowding up spending elsewhere. steve, what would you say to watch in terms of -- you know, we have the pc report this friday the market is kind of jumping way ahead when it is looking and says, five years, we'll see inflation coming back to a 2% rate we're not going to be seeing that this week. >> no, no. just real quick, melissa's point, there is an index called the sticky price index maybe melissa is familiar with

it it does measure things that are difficult, that don't often come down and don't fluctuate a lot the idea is you follow these prices because they're reluctant to go up and tough to go back down they are ones that are thought to be good future indicators of inflation. it's been pretty high and staying there. i'm watching that. i'm watching all the data. i'm watching the high frequency data with a big question i have two questions one is, do goods prices fall and offset continued high service price inflation? the other question being, some of the weakness we're seeing in tech tech has been a leader in deflation and disinflation in this company i'm wondering if we have price cuts on the tech side to help with this. >> interesting >> i-cloud story. >> and china's comeback, if there is a comeback, how it'll affect production, whether they want to regain share that may have fallen away from them >> absolutely. thanks, steve liesman, melissa

repko, appreciate it. speaking of inflation, suze orman will be on "fast mo money" at 5:00 and speak on consumer savings. >> she'll make "fast money" even faster still to come, airbnb getting a downgrade at gordon h hasket to underperform the vacation hosting service facing a host offish sh issues, including travel demand and regulatory rksis we'll trade the name in today's three-stock lunch. 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.

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all right. time for three-stock lunch we're trading three ts, travel, telephones and technology. airbnb down slightly after that downgrade we mentioned to underperform at gordon haskett at&t up after reporting better-than-expected subscriber growth and choppy trading for ibm, lower ahead of earnings after the bell here to help us trade all three of them is scott nations, founder and ceo of nations indexes. let's start with airbnb. a downgrade from one company today. what do you think? >> yeah. we're going to start with the

worst of the three airbnb is much -- >> scott nations shall we -- hold on just a minute let's see if we can get it to come back. >> i can't translate what he was saying there >> scott, we can hear you. go ahead >> great airbnb is a sell much more expensive than all the other travel names, there's no brand loyalty versus competitors. the recent conversation about fees, it goes to the heart of the value proposition. so, that doesn't help. that's not just a pr problem i mentioned it's more expensive, forward pe for airbnb is 36.5. that's six times than what it is for legacy air carriers and three times for expedia. the question becomes where does the growth come from to justify that valuation i don't see where it comes from. airbnb is a sell >> a sell. what about at&t? >> at&t is a reluctant buy it's had a great day, up 6%.

tyler talked about subscriber growth, which was a surprise also better-than-expected eps. this has the potential to be an enthusiastic buy for me because while the valuation is compelling right now, dividend yield of 5.5%, and plenty of free cash flow to support that, they're getting rid of non-core products like directv and the warner media businesses. if they can focus on the wireless and the broadband businesses and grow those, then this would be a -- not just a reluctant buy but an enthusiastic buy >> they have the pitch woman lilly out there relentlessly selling at&t wireless, apparently effectively let's move on to ibm i'm sorry earlier, it was tyler unplugged. i couldn't hear you. everybody else could hear you. >> got it. ibm is a buy you mentioned that we will get earnings after the bell.

market expects $3.59 a share and $16.4 billion in revenue ibm has done a wonderful job of reinventing themselves of the past decade. now they're compelling also from a valuation point of view with a forward pe of less than 15 here's the thing, if they can really get going with their hybrid cloud business, then there is an opportunity for substantial growth in ibm. you get a company with a decent dividend yield of 4.7%, decent valuation, and the opportunity for real growth if they can figure out the hybrid cloud business they're not a leader in the space yet by any means but they could be the recent pearl clutching about layoffs in the tech space don't apply to ibm, which did not ramp up headcount during the pandemic >> people are excited about ibm again. it's striking. scott, would you buy tickets to tyler unplugged? i would.

>> i didn't know tyler was an acoustic champion, but i'd go. >> i like pearl clutching. scott nations, thank you >> thank you. markets have a decent bounce off the lows today we'll take a closer lookt athe stocks rebounding up next under dom's microscope 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. edward jones at adp, we understand business today looks nothing like it did yesterday. while it's more unpredictable, its possibilities are endless. from paying your people from anywhere to supporting your talent everywhere,

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dow could almost go positive >> it's down ten points. if you look at the tech heavier nasdaq 100 from the lows from the opening bell to right now, we're talking 2% to 2.5% gains on an intraday basis. where have the biggest reversals been so far? when the nasdaq 100 index, nine stocks have now staged comebacks by at least 5% so far intraday from lows to where they are now. among them, microsoft, amazon and tesla, which are all up 5% plus off their lows. and then a couple to watch here. two of the bigger moves off the lows we've seen are in electric vehicle names, speaking of tesla. check out what's happening with rivian and lucid lucid is up about 8% off the intraday low check out rivian, up 9% off the lows evs in focus given tesla's numbers. if you're wondering who the

other nine are, check out my twitter feed at the domino >> everyone is like does someone know something about the tesla print tonight? >> rivian, lucid -- >> or they don't >> good to see you, my friend. thank you for watching "power lunch. "closing bell" starts right now. >> see you tomorrow. stocks starting the day on a shaky footing amid a wave of earnings reports look, we've made a serious comeback the dow was down 460 points at the worst levels of the day earlier. and now we're at the highs, down 15 this is the make or break hour for your money welcome to "closing bell." i'm sara eisen look at where we stand the dow down 15. the s&p 500 down 6 points. a few groups going strong. financials having a good day, despite the fact that treasury yields are lower consumer discretionary is higher a lot of e-commerce names and travel names working well. retailers having a good day. the nasdaq is down abo