...glad we did this. [kid plays drums] life is for living. let's partner for all of it. i'm so glad we did this. edward jones it's 2:00 in the east, everybody. welcome to "power lunch" along with kelly evans i'm tyler mathisen glad you could join us on this thursday coming up, the read on real estate, housing starts falling in january, prices coming down as well. plus, how's the office the back-to-work plan working

out? tom pebbles is here talking residential, commercial and more and what he is seeing in his business >> plus, tesla is the best performing stock in the s&p this year already up 75% but it's facing competition in china, a union issue here in the u.s., as well as the new recall we discussed we'll have more on the tesla turmoil. first a check on the markets with stocks lower, the dow down 137, the s&p similar percentage, .4 sam for the nasdaq, russell 2000 trying to eke out a gain here. >> the numbers on the housing market let's go to diana o'lick in washington. >> home construction dropped in january despite two months in gains in sentiment single months fell month over month and 27% lower than the year before. building permits fell a little less for the month but 40% lower year over year housing completions are outpacing starts which means the supply situation is going to drop going into spring

as for multifamily apartments, starts were down and permits flat for the month and down annually but the number of apartments under construction is the highest since 1973 so a bigger slow down in that sector is coming fast. i can't leave you without staying mortgage rates ticked up again today, an average of 6.78%. remember it was in the low 6s all of january and briefly crossed to the 5% range barely two weeks ago. >>. let's get some more reaction to that weak number and what it says now about the health of the housing market with us on set, don pebbles, founder, ceo and chairman of the pebbles corporation, a privately held real estate development and investment company with properties in major cities including new york, l.a., miami and more let's talk about the building sentiment numbers and how they serve as a window on the mood of

the market right now do they? >> i think to some degree, yeah. i think the market is passive right now. they're concerned, people are reacting to interest rates the rapid increase in interest rates which has doubled the cost of a mortgage in about a year. so there's serious concern about that i think we're going to see more and more of a slow down in some of these key markets i think there will be some markets spared such as the sun belt in south florida. >> what are the key markets and what kind of housing or residential price declines might we expect to see the next 12 to 18 months? >> i think in some of the harder hit markets, mainly the northeast, i think you're going to see, you know, prices drop well north of 20%. >> really? >> yes because they ran up so quickly florida is another story miami, for example, and south florida in general is supply constrained, there's tremendous demand contrast to new york or california which have lost over

half a million people net in the last two years, they've gone -- >> california is going to austin. >> they're going to austin and miami and dallas and so you're seeing those markets continue to grow while the markets have appreciated -- those markets appreciated rapidly, like south florida, in particular miami, prices are pulling back. properties are staying on the market longer but you'll see a drop down of 5%, 10% >> interesting. >> but the other markets it's tougher. >> we haven't seen it yet so it's what's coming i thought what diana said was fascinating about apartments the most inventory being built since 1973 does that mean rents are going to see significant downward moves as well? >> no. many of these projects were planned before the increase in interest rates i think new construction, new apartments, owners are going to be in good position because rents are rising in many key markets and the housing market is straightforward as interest rates increase,

fewer people can afford to buy so people are priced out of buying or can't buy what they thought they were able to buy or wanted they're going to become renters. so you'll see the product is going to improve in terms of quality to replicate home ownership or partner ownership. >> we're rooting for downward pressure, maybe not for you but because the renters, the inflation story. it would seem, you know, that that would be the obvious takeaway from this but maybe not. >> not this year because consumers still have a lot of money. i was at the j.p. morgan conference last week and jamie dimon reported how consumers are still loaded they're spending they're spending now on credit cards so those rates are going to hurt them by the third quarter of this year you'll see people running you on of the money, that will affect consumer spending but housing is going to hold tight in terms of rental housing so i'm very optimistic on that

especially in markets like charlotte, the sun belt, tennessee, texas and miami. >> that's the residential side of the picture that's not all of it let's turn to the commercial piece of things as well. and bring in robert frank for more on that robert, how are things looking office wise? we know people are getting back to work. >> you want downward pressure, here it is new york office still stuck at the new normal of under 50%. the latest occupancy at 49%. tuesdays are the peak day when about 60% occupied, friday is -- fridays are the new saturdays at 25% office leases in manhattan falling 47% in the fourth quarter. that's the biggest drop since the start of the pandemic. there's over 100 million square feet of empty space in manhattan. that's up 70% from pre-covid the defaults we're seeing those now, a default on a $54 million loan for a partnership they're part of backed by fifth avenue r

retail space in miami, a new office tower there just had a new lease at $100 a square foot that's the same as some of the offices in manhattan >> wow 25% occupancy on fridays let's focus on robert's bigger picture point. do you see more pain ahead for commercial office buildings? >> i do. new york we're seeing the beginning. new york, san francisco, los angeles, washington d.c., those markets, chicago, they're in big trouble. and new york, what robert was mentioning about giving back their buildings, that's the beginning. they'll give back more what we're seeing is top tier office owners giving properties back to lenders. people changed the way they work i drove from new york city, allocated the time that it would have taken for me to get here before the pandemic. i had enough time to go into the town of inglewood, have much,

come here and still be early. >> i want to ask you something the cities you mentioned, new york, chicago, san francisco, l.a., d.c. i will grant you that i think a lot or maybe most of the reason there is not higher occupancy is related to the not going back to work phenomenon. the post-covid phenomenon. but the cities you mentioned have been stricken by high levels of crime and violence and homelessness over the past couple of years. and my hypothesis is in part that that is keeping people from wanting to go back to work in those cities do you see that as an enduring issue for these particular markets? >> look, you're 100% correct the biggest problem isn't the, you know, covid effect it's the safety, the quality of life. >> quality of life. >> people don't want to be there. miami, we don't have a problem with people coming to work we have an office in miami, everyone wants to come to work we're expanding, we're taking

more space so it is that people don't want to live in these cities anymore. their quality of life is diminished >> and it's one of the reasons why people from california are leaving beyond the tax situation, beyond all the other issues that are there. it's one of the reasons why they're moving to austin or miami or nashville, say. >> no question look, all you have to do is look at what mike bloomberg did as the mayor of new york city, taxes were essentially the same, very expensive of a city to live in, but it was safe and the quality of life was good and people wanted to be here, they were willing to pay for it new york is like -- it offers a product. all these cities offer a product. if you don't reach the bhuyer ad give them what they want, they won't come people are not going to tolerate being afraid to walk around. until they deal with public safety, quality of life, clean the cities up, they'll continue to have decline. i think what's going to happen

is, it has to get a lot worse before it gets better. >> really? >> yeah. >> that's not a comforting thought. >> no, i was talking to mike milken at the milken conference i said i was concerned about los angeles, he said it had to get worse before it gets better and it will get worse. >> the last time i was in los angeles and walking by the homeless areas there it's heartbreaking to see in the united states. >> yes, it is. >> it is heartbreaking to see. a lot of it is driven by drugs -- forgive me for getting exercised on this -- but it is a disincentive to go there for social outings to go work or whatever. >> how much worse can it get >> look at ken griffin saying i have to leave chicago because my workers feel unsafe here. >> he loves miami. i was at a dinner he hosted last week for milken. there were more new york real estate people, finance people in

miami the last two weeks than you see here in new york you can do more business in miami in a better quality of life, better, safer environment. and that's what's happening here and these politicians, though, are not understanding the reality. there are no walls around manhattan. there are no walls around los angeles. so people can leave when they want to. and they're leaving. >> we can -- i want to get to robert frank because he has a great story to tell us about i wonder, and i'd like to talk with -- don, with you about it later. about whether the infrastructures of these in migration cities like miami can keep up with the influx of people coming there, schools, roads, sewer -- i heard from the control room we're going to interrupt, go and listen to president biden talking about some of the objects shot down in the north. >> our military through the

north american defense program, norad, closely scrutinized our airspace, including enhancing our radar to pick up more slow moving objects above our country, around the world. in doing so, they attracted three unidentified objects one in alaska, canada, and over lak huron in the midwest they acted within established parameters in how to deal with unidentified objects in airspace at their recommendation i gave the order to take down these objects due to harm to civilian air traffic and because we could not rule out surveillance. we acted in consultation with the canadian government. i spoke with prime minister trudeau from canada on saturday. and just as critically we acted out of an abundance of caution

with an opportunity to allow us to take down these objects safely we're seeking to recover the debris so we can learn more about the objects. our intelligence community is still assessing all three incidents. they're reporting to me daily and will continue the urgent effort to do so and i will communicate that to the corning. we don't yet know exactly what these three objects were but nothing right now suggests they were related to china's spy balloon program or they were surveillance vehicles from any other country. the intelligence community's current assessment is these three objects were most likely balloons tied to private companies, recreation or research institutions studying weather or conducting other scientific research. when came into office i instructed our intelligence community to look at the phenomenon of unidentified aerial objects we know that a range of entities, including countries, companies, and research

organizations operate objects at altitudes for purposes that are not nefarious, including legi legitimate scientific research i want to be clear we don't have evidence there's been a sudden increase in the number of objects in the sky we're now just seeing more of them, partially because of the steps we've taken to increase our radars, to narrow our radars and we have to keep adapting our approach to dealing with these challenges that's why i've directed by team to come back to me with sharper rules for how we will deal with these unidentified objects moving forward distinguishing between those that pose a risk and those that do not if any object presents a threat to the safety and security of the american people, i will take it down. i'll be sharing with congress these classified policy parameters when they're completed and they'll remain classified so we don't give our

road map to our enemies to try to evade our defenses. going forward, these parameters will guide what actions we'll take while responding to unmanned and unidentified objects we'll keep adapting them as challenges evolve, if it evolves. in addition i have directed my national security adviser to lead a government wide effort to make sure we are in a position to deal safely and effectively with the objects in our airspace we'll establish a better inventory of unmanned air bborn objects in space and make sure that inventory is accessible and up to date second implement further measures to detect unmanned objects in our airspace. third we'll update the rules and regulations for launching and maintaining unmanned objects in the skies above the united states of america. and fourth, my secretary of

state will lead an effort to establish common global norms in this largely unregulated space these steps will lead to safer and more secure skies for air travelers, military, scientists, and people on the ground as well that's my job as your president, commander in chief as the events of the previous days have shown, we'll always act to protect the interest of the american people and the security of the american people. since i came to office, we have developed the ability to identify, track and study high altitude surveillance balloons connected with the chinese military when one of these balloons entered our airspace over the continental united states earlier in the month i gave the order to shoot it down as soon as it would be safe to do so the military advised against shooting it down over land because of the size of it. it was the size of multiple school buses and posed a risk to

people on the ground if it was shot down where people lived instead we tracked it closely. we analyzed its capabilities and learned more about how it operates and because we knew its path we were able to protect sensitive sites against collection we waited until it was safely over water which would not only protect civilians but also enable us to recover components for further analytics and then we shot it down. sending a clear message, clear message a violation of our sovereignty is unacceptable. we'll act to protect our country and we did now, this past friday, we put restrictions on six firms that directly support the people's republic liberation army the people's liberation army aerospace program. that includes airships and balloons, denying them access to u.s. technology. we briefed our diplomatic partners and allies around the world. and we know about china's

program and where their balloons have flown some of them have also raised concerns with china. our exports have lifted components off the ocean floor, we're analyzing them as i speak and what we learn will strengthen our capabilities. we'll also continue to engage with china as we have throughout the past two weeks as i've said since the beginning of my administration, we seek competition not conflict with china. we're not looking for a new cold war. but i make no apologize -- i make no apologies and we will compete. and we'll be responsibly manage that competition so it doesn't fear into conflict this episode underscores the importance of maintaining open lines of communication between our diplomats and military professionals. i'll remain in communication

with president xi, i'm grateful for the work of our intelligence, diplomatic and military professionals who have proven once again to be the most capable in the world i want to thank you all. the other thing i want to point out is that we are going to keep our allies and the congress informed of all we know and learn. and i expect to be speaking with president xi and i hope we are going to get to the bottom of this but i make no apologies for taking down that balloon thank you very much. >> sir, was it -- there's been -- sir, there's been criticism that this was -- there's been criticism that this -- >> china compromise by -- >> sir, mr. president, there's been -- >> give me aman. >> did you overreact -- >> there's bee done because of political pressure -- >> come to my office and ask the

question we halite people. >> why have you chosen poland for the anniversary of the war and what's your message? >> when are you speaking to president xi, mr. president. >> president biden stopping to contemplate taking a few more questions saying there hasn't been an increase in the palestinians of balloons we're just more aware of them now. meantime here stocks are under pressure following another hot inflation report let's talk about what's moving the market don pebbles is here with us for the discussion and we want to bring in michael and todd. welcome to all of you. michael, let's start with you. why are stocks going up even as bond yields are too? >> it's interesting. the bond market, obviously, is rallying because of the inflation numbers. but i think the stock market is rallying because stock investors

believe that we're not going to have some cataclysmic deep recession. i realize what happened the course of the last week or so has taken the sheen off this perspective that everything is going to be wonderful and there's going to be a soft landing. but i think there's going to be a shallow recession, which is what the market is contemplating. >> when you hear no landing, what's your sense tell you are we going into recession? >> i think we're going into recession. i don't think it's extreme recession because the consumers are resilient. they're pushing back, continuing to spend, we talked about it early. they have money and the markets are responding to that if you look at what's happening -- and the fed is tapering back some of the increases. i think last time we saw something like this where there was an effort to control inflation with interest rates, it was in the 1970s and didn't

work out well for us because it took the rates to get up to 20% before they strangled the economy. >> so it's going to take a while in your view to get us back on the path to lower inflation. >> todd, i sense you agree more than you disagree with what don just said? in other words, you are looking for strains building towards a recession in the second half of 2022, you say the drastic rise in rates risks a severe liquidity disruption and to overweight bonds and underweight stocks that puts a bow on your thinking, doesn't it >> i think you summarized that thinking quite well. there are reasons to have some pessimism about the pace of the u.s. economy and the delivery of earnings and the continued pace of economic demand the fed and other central banks are going to take actions necessary to arrest that excess demand and deliver the price stability that ultimately the market needs and that presents

some serious headwinds for risk asset investors. >> there's one part of the real estate market that i wonder if you can talk about, don. we've seen real problems with liquidity redemptions and the real estate funds and the rest of it. every cycle plays out differently. we know this isn't the housing crash of '06 but early '90s we saw issues with the commercial property and otherwise what does that tell you about the extent people are trying to exit these areas that they thought were going to be the place to be now and what are some of the knock on effects of this >> i think the premises of investing over the last decade with low interest rates, especially on residential apartment buildings and office buildings where they were p purchased and sold with sub 4 cap x rates that rates would stay low forever covid put a kink into that for office space i think you'll see more office building owners and large apartment building owners begin

to have to give their properties back i know a developer who just finished a fantastic development in california. and, you know, in the hundreds of millions of dollars but the construction loan has burned off and in order to get a permanent loan they have to write a check for tens of millions of dollars to rebalance the loan. so these loans aren't going to confirm to any kind of regulatory status or standards so it's very difficult to refinance out of the loans. >> robert talked about earlier about the property that was a give back. do we have to turn attention to the banks, maybe we're not moving forward with the project is the lender on the hook? >> not as much i think the equity investor are, the public employee pension systems and others who invested in these assets, their equity is going to get wiped out look at apartment buildings and you have a shift of 150 basis points, it's going to knock out 75% of your equity if you bought

the building two years ago. >> michael, let me probe your thinking if i might here my notes indicate that you say stock market recovery will likely take two years if historic bear markets are a future indication we expect this to be the case in this cycle on the next page i see you say that equity markets will continue to recover and it's entirely possible that they will hit highs that we're seeing in 2022 that feels like an internal contradiction here on the one hand, it's going to take two years for the markets to recover, on the other hand we're likely to see highs set at the beginning of 2022. is that a 2023 phenomenon or something you don't expect to happen until 2024 or beyond? what are you saying? >> let me be more clear about what i'm saying. the market is -- consistents of data, emotion, expectation the expectation is we're going to have a shallow recession, that's why it's been rallying. but i think investors need to

take a breath and realize, if that does not happen in 2023, history suggests it takes about two years to recover from a correction -- more than a correction, actually, a bear market so i think that means you don't lose patience. you don't lose hope. you don't sell out because you're feeling despondent right now because the market historically has come back might it come back to the 2022 highs? i think it's entirely possible that will happen but investors should also recognize it may not. if it does not in 2023, data suggests it will in the next two years. >> folks we have to take a breather right there thank you very much michael, todd, and don. eli lilly is taking a covid era necessity and using it to improve clinical trials in the post covid world

we have bertha coombs on that story. >> only half of trials report racial data, and it points to underrepresentation for research for people of color. one silver lining of the pandemic is drug makers are shaking things up in order to look at diversity. eli lilly had mobile lab units during the covid now it's using it for trials. they looked for participants in an alzheimer's trial and build trust in communities of color. >> we're able to work with local research physicians and help them help our participants, our potential participants understand what research is, how to be a part of it >> the fda has pushed drug makers to boost racial, gender and geographic diversity in trials, doing more in rural areas for example, though the

commissioner admits there will be limits. >> if you're studying, for example, a new drug that hasn't been tested in many people you may need to be in an intense environment at an academic medical center for other trials it's absolutely the right thing to do. >> and rolling trial participants can take a lot of time and it costs drug makers tens of millions of dollars, now drugstores are trying to get a piece of that business cvs, walgreens and kroger have launched services with their locations they say they can broaden reach for trial participants >> bertha, thanks very much for that don, what's your view on this obviously there are vast inequalities in health care access and treatments for underserved communities, african american communities and others where there are large income disparities between the rich and the poor how do we address that so that

clinical trials, preventative medicine, care can reach down into communities that have heretofore been underserved? >> i think this is an example of bringing care to people directedldir diredir directedly -- directly in their communities. one of the illnesses that is preventative is cervical cancer. it's caused by the hpv virus there are vaccinations that are available to vaccinate young boys and girls who would be prevented from getting this virus and therefore protect them but that has to be done early adolescence and it has to have a booster. so one, people in lower income families don't understand that their doctors don't tell them. so -- and we are working on a program to bring that kind of care to the black community and the minority community so that we can wipe out a disease that's so devastating to women in particular >> a lot of clinical trials, as

i believe bertha said, or many of them are centered in academic research institutions. which may not be proximate to where some of the under served communities live so you have to do a kind of outreach, don't you, to get those clinical trials into underserved communities whether in alabama or new york city. >> yes because most of the people in the lower income communities get their medical care either in the emergency room or in a free clinic but they only go there on a need basis, as opposed to for preventative basis or to be a part of some type of research for a cure, especially those who are exposed to an illness. and i think if we can access people by bringing either these tests to them or bringing them to the testing facilities, i think we can get a better universe and understand why some of these diseases, like

diabetes, for example, affect communities of color more than others >> i don't want to say good-bye. >> i don't want to say good-bye. i want to keep talking one more question. the question we talked about a moment ago that is the strain on infrastructure and the requirement for infrastructure investment in these communities that have a lot of in migration, whether it's nashville or austin or south florida do you expect that to be a real issue and problem in those areas that are seeing such an influx of people? >> i think more so in south florida than texas texas has a very big infrastructure they built that state and the major cities to grow if you go to dallas, fort worth you see a massive highway system that continues to be expanded and a rail system as well. in florida we have a rail system in miami called the bright line and that's very helpful but the schools are a major issue. private schools are overcrowded now to the point they're not

accepting many new students. the public schools, the top ones, are having difficulty with capacity and the roads are very difficult. the number one politicalissue in south florida is traffic and number two is education. so there you have it you're hitting the nail on the head. >> even though we've talked about people leaving new york you have to acknowledge the strength of the rental market there. median prices, average prices all time highs demand has been better on the recovery than expected we see it benefitting the whole tri-state area by the way. what accounts for the strength there? i take your points about the headwinds, certainly on the office piece of this and other major cities in the case of this aspect, why have things been relatively resilient? >> an age demographic shift. i'm a baby boomer most of us have had kids, they're out of the house, so we have freedom to move around the country so we are pursuing quality of life so we are in large numbers bringing our businesses and ourselves to south florida

however, the younger demographic, like my kids. they love new york city. and they want to be in new york city because of all that new york city has to offer and so, that's the shift, they're renters. that's why there's a greater demand on renting. we have great universities here. none of them have sufficient housing for students so that drives the numbers here as well. >> you're implying that once people can be their own boss, set their own terms, they're out of here. >> right. >> i moved to new york city in the 1980s when i was in my 20s and new york city at the time was a mess, but i didn't care. i wanted to be here because the opportunity was here, the business i was in was here. >> i still think that's true today, wouldn't you say? >> yes i would not abandon new york city nor the people in south florida are abandoning it? they're just moving and making that their primary residence but this is still the most dynamic and exciting city in the

world. but there's an age demographic when i was coming in the 1970s and 1980s, it was extremely unsafe it was dirty, all the bad things but i loved it and i wouldn't want to go back to clean, nice neat washington d.c. >> which is my hometown. i grew up in arlington >> nice but not exciting. >> i moved from a very nice condo in arlington to a not very nice -- the roaches basically owned the place. don, it's been great having you with us. >> great being with you. >> come back again soon will you? let's get to a cnbc news update. >> just a few minutes ago, president biden made his first extensive commends on an unidentified aerial object the military has been shooting down, saying the intelligence community thinks it's tied to private companies or research institutions and not engaged in spying he makes no apologies for

shooting down the first object before the president spoke the press secretary said they're dismayed at israel's expansion on the west bank saying it undermines a two state solution. and republican senator lindsey graham said today he's confident he testified openly and honestly to the georgia grand jury this morning that panel said one or more witnesses may have committed perjury but it didn't say who. and saudi arabia investors are joining the race to buy manchester united. according to a report by the telegraph newspaper in the uk their competition is a group from qatar let the competition begin. back to you. ahead on "power lunch," a delux edition of key stock lunch. we're going to look at three

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welcome back we're trying something new with three stock lunch, three stock stories on our radar and our

reporters give us the news and then courtney will give us our trades welcome everybody. so chkristina partsinevelos lets start with you. >> after surprise earnings on monday i wanted to look at profit anomalies we screened fo high net cash flow, a high ratio means they can better pay down their debt nongap doesn't accurately portray. and on top of that list we have new holdings a digital banking platform because of their ability to pay down debt, right now trading at what 5 bucks, the stock is 50% off the high. but berkshire still backs the name other familiar names, snowflake, its earnings are out march due with lin go is on the list and you have crowd strike which

is trending down 2.5%. more than 50% off the 52 week high and it's on the list. hunt continues or at least a great m&a candidate. courtney, what is the trade for you? >> i would stay on the side lieps on the likes of a snowflake here this is a great company but you have to separate a good company from the stock this is a company they had good growth, management, ahead of a receptive platform but this is a company that is not yet profitable hopefully they do turn a profit here, but these are the companies continuing to be under pressure. and the way they're structured they're under a consumption based model. the more you use it, the more you pay. and this can be a problem because the revenue can be more erratic. especially when you have your mid or small size companies. we do go into a slowing growth environment, which we may well be in. it's just not as reliable.

i think for those reasons, good company, stay on the sidelines with the stock. shake shack reporting earnings before the bell pippa stevens has the details but only if you promise to share the fries. >> i can never share fries tyler, a lot of focus on the guidance given that shake shack releas rel released preliminary results in monday, a smaller than expected loss sales rising 1 is.5% due to a combination of higher menu prices the current quarter they raised the revenue and same store sales guidance saying comps were up 17% in january that is against omicron numbers. beef prices have fallen, dairy and fries were up with paper costs always weighing. the company has no plans to weigh prices further, the last

priek hike was in october but that could change. finally amid concerns of cut backs they admitted they were overindexed. >> courtney what's your take on shake shack? is it a shake or a bake? >> i like that question. i would avoid shake shack. i love a good burger, don't get me wrong but the problem right now is inflation you noted a lot of issues where they are operating a loss right now and they have been affected by higher labor costs, inf inflationary costs and delivery costs. and on top of that they had to raise prices they have a higher consumer customer that hasn't impacted demand but at what point is the question there's a survey that just came out, which i thought was interesting, looked at them and

their competitors and people are thinking it's going to get more expensive. i think at a certain point if you don't have the pricing power you want in the environment it's not the company you want, especially if they're operating at a loss right now. let's get to our last name, paramount reporting results. julia boorstin has more. stock well off the lows. >> stocks off the lows but here's what happened here. paramount plus showed user strength and grew faster than expected but the cost associated with paramount plus and macro challenges resulted in a miss on both the top and bottom line that sent the stock falling down about 3% that short fall, especially in revenue was driven by a 5% decline in quarterly ad revenue. that outweighed the fact that paramount plus added 2 million more subscribers than anticipated, adding nearly 10 million in the quarter the company says that streaming operating losses which widened in the fourth quarter would peak

in 2023 and the ceo announced they will raise prices for their streaming services, he also said that the combination of show time and paramount plus should generate efficiencies and minimize user turn he also painted a picture of an improving add market he predicted a rebound in the ad market in the second ha-on this year and noted that certain areas, including food and beverage, pharma and auto are seeing strength right now. so some insight into the consumer perhaps. >> true. although he should be wearing the stetson hat. let's get your final take on paramount? >> i would be a buyer of paramount here they did disappointment on their earning. but when you look at it it was pretty mixed so advertising was a problem for them when you look back at 2022, advertisers were pulling back in the midst of a slowing growth environment but they're seeing a light at the end of the tunnel and their costs are higher there, which really wall street does not want to see they were late to the streaming

game they only started it about two years ago. in the first few years having higher costs is to be expected the fact they're still bringing in so many subscribers, 9.9 million this last quarter, i find it very impressive. they're expecting the costs to peak this year and come down next year. so longer term it's a good story. it also pays a 4% dividend which is worth a look. >> courtney garcia, the glasses are empty. checking the dow, down about a third of a percent we will take you inside the markets as the dow hovers at the 34,000 level we'll be right back on "power lunch. and technology needs. when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose a next generation 10g network that's always improving, getting faster; more reliable; and more intelligent to keep you ready

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♪(lovely day) (lovely day)♪ ♪(lovely day)♪ a bank that knows your business grows your business. bmo. welcome back to "power lunch," everybody. let's give you a check on the markets now, stocks are lower following a hotter than expected report on prices at the wholesale level. financials, one of the worst performing s&p 500 sectors today. goldman sachs, j.p. morgan, they're having a negative impact on the dow but the losses are relatively minor as you see there about a third of a percent for the financials as a group. less for goldman sachs more for

j.p. morgan. let's go to rick santelli to check the bond market. >> everybody is talking about today's producer price index but there were issues that the market is differentiating today look at the two year note yields we shot up close to what is currently the high yield close and that level is 47 2 but 467 and we eased back? why? the year over year, when you look at 6%, it's almost half of the high water mark from march of last year at 11.7 that was headline year over year 5.4 almost half of 9.7, that was the high water mark. you get what i'm saying and the market is paying attention to that look at one week of ten year note yields no doubt that the direction is higher in yields, that's almost a 45 degree line

higher been that way since the strong jobs report it seems as though inflation is more important than weakness in the economy as the fed keeps tightening twos to tens, now at 76 basis points, it was over 90 intraday. so much less inverted. three month versus tens, much less inverted. this is something to pay close attention to finally, despite ppi month over month, look at fed fund futures for august this is the fulcrum, the pivot where prices stop going down and start going up higher by seven basis points than cpi closed at 94.71 on valentine's day. kelly, back to you >> rick, thank you still to come tesla's wheels are turning today. the company recalling vehicles, getting the stamp of disapproval omhaie mgeanstfr crlunr d arting fights with employees.

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when you stay at a vrbo the host doesn't stay with you. because without privacy in your vacation home, it isn't really a vacation... ...is it? [birds chirping] welcome back, everybody. tesla in the headlines today it is most days, one way or another, isn't it? the ev maker recalling now 362,000 vehicles charlie munger, the investor, says the company is, by the way,

losing to byd in china and new reports out that the company fired employees for unionizing, a trifecta of stories to dig into and who better to do it than phil lebeau. hi, phil >> reporter: hey, tyler. let's start off with the rrecal announcement from tesla. this is by tesla after a conversation with the national traffic safety administration which has been testing driving software, reports there have been accidents or incidents where the software was not acting as it should whether it was going through stop signs or going into an intersection from a right-hand only lane or was not acknowledging the change in the speed limit on the road. well, after the investigation, after they said we think you should update this to correct the problems, tesla said they don't agree but they will be doing a software update.

we will see that as they correct this issue if it's not full self-driving technology, why is it called full self-driving? that's misleading, a completely separate question. you will be seeing software updates relatively soon. >> tesla is fairly -- i don't want to characterize it. let me ask it as a question. does tesla disclose that this, quote, full autonomous driving mode is a test version and does not replace your -- the driver's requirement -- to pay -- >> reporter: they make it very clear, tyler, not only when you buy a tesla, but on conference

calls or at other times tesla has said drivers are told you need to stay engaged you need to have your hands ready to grab the steering wheel, take control of the situation. so they have made it very clear legally that it is your responsibility as the driver to stay engaged >> what about this unionization issue, phil? is it true they fired employees? >> reporter: well, the employees have filed a complaint with the nlrb saying they were fired after it came to light that they are pushing for unionization so now this will go before the nlrb, the national labor relations board, and these employees say we have a right to organize, to take a unionization vote, and that they were fired once tesla found out about this. we have seen this happen from time to time with companies, guys, where employees say we were engaging in the right to organize, and then we were let go by a company. the nlrb will be the ones who make a decision on whether or not that was the case. >> quick observation on charlie

munger saying a chinese competitor is going to eat tesla's lunch? >> reporter: well, he says that they have been for years in china. and, look, we don't follow byd a lot here because they're not sold in the u.s., you go to china, you see a lot all over the place. they're doing quite well there >> thank you very much for watching "power lunch. "closing bell" starts right now. the hawkish fed speak sending the markets tumbling here in early trading. we've come well off the lows throughout the session we're at the highs of the day. this is the make-or-break hour for your money welcome, everyone, to "closing bell." i'm sara eisen the dow down as low as 410 the s&p 500 down 0.4%. every sector lower now utilities at the bottom of the pack the nasdaq down half a percent,