good afternoon, everybody and welcome to "power lunch. alongside kelly evans i'm tyler mathisen coming up today stocks sinking to start the shortened week. rates rising if the fed stays higher will stocks go lower? well, that's what's happening at least now. we've got all the big movers and market reaction covered. >> plus, worries about the consumer one of the things weighing on stocks we'll dig into home depot and walmart's earnings and we'll talk to the head of a regional bank about what trends he's seeing but first let's get a trend here as we're at session lows across the board. dow's down more than 600 points. we're coming off three down weeks in a row and we're up less than 1% now for the year >> let's go over and check in with dom chu give us all the news on what's moving at this hour, leading with home depot, dom >> traders and investors are

highly focused on that consumer trade. the two massive retailers part of that main event they're moving in different directions at least right now. dow component home depot taking a hit. you can see there -- well, it was taking a hit you can see on better than expected profits on slightly weaker than expected revenues but it's the full-year sales and profit forecast for home depot that were viewed as disappointing. now you've got fellow dow component walmart which is also now moving higher by nearly a percent. america's biggest traditional retailer and private employer posting better than expected profits and revenues but it also gave a weaker than expected outlook for the full year. nonetheless, those shares higher couple other ones to watch, shares of dillard's taking a hit despite an earnings beat but what's being perceived as a weaker result from the holiday shopping season which showed flat sales growth at established store locations. so those shares off 15%. but then check out one more. this is shares of molson coors the beer and liquor maker is up on a tough market day after profits topped estimates helped along by its ability to raise

prices to help make up for rising costs and other factors up 3%, though. kelly, tyler, into down tape seems kind of good now, kristina partsinevelos, what are you watching on the tech side of things? >> well, the nasdaq right now is the weakest indice on fears of higher rates weakness from china price wars weighing on the nasdaq 100 pdd win operates pin duo duo the shopping app down 9. % at this moment after jd.com said it will spend $1.5 billion in subsidies to better compete. fears of a price war and margin compression adding to that chinese tech sell-off. chinese etf tracker kweb negative just the past three weeks in a row another sector taking a hit semiconductors it's taken a negative turn as of late because of weaker server demand weaker memory prices and lack of improvement in chinese consumption. so that's driving the smh lower,

just down for the past four straight business days western digital, which is more on the memory side, three straight weeks of declines intel down almost 50% from its recent highs even qualcomm, which is all the way down here, down a little bit over 2% after announcing, even though it announced a new software service to keep tabs on the supply chain in real time. you can see, sea of red, though he >> isn't it, though? kristina, thank you very much. as mentioned, the markets reacting to earnings report from two big retailers today. walmart and home depot let's bring in cnbc.com retail and consumer reporter melissa repko. it's almost unfair they both report the same day because are they both telling us the same kind of thing? i'm just looking at the fact that home depot's the worst stock in the dow while warmt's the best right now >> there are some similarities but there are some differences, kelly. the one similarity is both companies were saying they realize they might have to work harder in the coming months to get consumers to spend, that consumers aren't spending as readily as they were a year ago, he even six months ago perhaps but they have a different kind of consumer. home depot said a lot of their customers are homeowners and so

they may be be more insulated if there's an economic slowdown and they may also say hey, i don't want to move because i don't want to get a new mortgage because of higher interest rates. >> totally >> so instead i'll stick with the fixed mortgage i have and i will fix up the home that i have walmart on the other hand is seeing a shift to groceries and not as many people buying discretionary merchandise. fewer sales of things like electronics or apparel or home goods. so those are some of the differences. >> and you're absolutely right and thank you for highlighting that it is interesting to see the shares reacting as well as they are. and they did say that it's not just the 100k consumer, they're seeing some more strength in a little bit of the lower income spectrum why do you think the shares are holding up so well >> with walmart i think the shares tend to be holding up because doug mcmillan spoke today on the earnings call, the ceo of walmart said they're a bit of a naturally hedged company. they sell a lot of different things they sell groceries and they sell other types of stuff. plus they're getting into new

businesses like advertising which walmart called out today as a growing part of their business that's helping them through what may be a choppier time so that may explain some of the resilience of that stock whereas on the other hand home improvement saw so many gains during the pandemic and i think in general wall street may say are those days behind it because it had such a boom >> right how can it be sustained. >> melissa, hang on for just a minute as we bring in to talk a little more about what these disappointing results say about the state of the consumer, let's talk about it with marshall cohen, chief retail analyst at the npd group. marshall, welcome. is it so much that the consumers have stopped shopping or -- spending or that they are spending on different things like groceries as opposed to general merchandise, like services, dining out, like other things besides apparel, electronics and so forth >> so the consumer certainly being pressed from both sides. you know, most people aren't making more money but they are spending more money on things

like food and beverage, which are having the highest level of increases in prices. while that's abating somewhat, it's not going to go away. so we're going to continue to see elevated prices in food and beverage consumables, things like consumer packaged goods, you know, just think of paper towels, cleaning supplies, that's pretty level. but what is happening is the products that people are able to buy on discretionary needs that's where they're pulling back so if we're spending more on food we're clearly seeing the impact on discretionary. so think about what happened also in what i call the covid carryovers if you upgraded a television or if you certainly bought, you know, products to make your home look better'll while you were living in it more during covid, that upgrade cycle or even the replenishment cycle has now been sped up and we're going to have to wait a while until those people upgrade as well so that's why you're seeing a lot of these businesses that are

not necessarily full service and full assortment slowing down a little bit walmart has a huge advantage much like the big box retailers do in the sense that they're selling wide variety of product. that's why the future looks bright for them, because they're not pigeonholed d into one particular business. >> they're all over the waterfront there in something you wrote recently, marshal, you said that 2023 will mark the return of the store or the year of the physical store certainly home depot and for the most part walmart are regarded as leaders in the physical store area their numbers weren't all that good on what do you base your assertion that this is going to be the year of the physical store? >> so looking at the fourth quarter and the holiday results, we clearly saw something shift the 16-year momentum that the online environment had in gains and sales has finally leveled off across almost all of the

discretionary categories and what that means is online is leveling if we're buying pretty close to the same level of product, we're spending about the same in most industries, maybe a little less here and there, the thing that's happening is online is slowing but stores are gaining we're now more social about shopping again and without the new products that are in the market, there's just this absence of newness, the consumer's going back to stores to kind of figure out what do i need to buy. a lot of people didn't know what to get for holiday gifts they had to physically go into the stores to shop, to figure it out. >> right melissa, what would you add? >> one of the things i wanted to add just bouncing off the comments that marshal made about discretionary income is people are also shopping sales. that was something that i spoke to a walmart cfo john david rainey about he said that actually there was a pickup in those discretionary merchandise categories as they went on sale after christmas and so maybe as people see a good deal they're still willing to spend but, again, a little

more elected to pay that full price. >> marshal, a tease of what we're going to do later, but what is the staying power of the consumer do you think, the way things are currently >> you know, i never sell the resilience of the consumer short. they always seem to surprise all of us, even when we hear all the bad and bleak news keep in mind that when the recession hit the consumer was six months behind the physical recession declaration, and we're not going to be in a recession for another few months simply because we had a good gdp report so the recession word isn't going to come around for a while. so the consumer looks like the first half of '23 will be there to spend on things they need when the back end of '23 and as we get close to election buzz and distraction and all that that's going to happen, you're going to see the consumer probably start to shift. zmazbarring any economic challenges that get thrown at them on the back half of '23 >> yeah. very good. we prooappreciate it, guys, thak you so much. marshal cohen and melissa repko.

and as we mentioned we'll have more on the consumer we're going to stay focused this time from the balance sheet point of view, looking at their savings, looking at their debt levels are we seeing any cracks emerging you can see the bank stocks down about 2% today we'll talk more about it with valley bank ceo ira robbins after this stay with us wp. what if you were a major transit system with billions of passengers taking millions of trips every year?

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welcome back to "power lunch. higher rates starting to put pressure on consumer balance sheets as walmart's ceo john david rainey told cnbc today, "the consumer is still very pressured. balance sheets are running thinner. saving rates are declining." and my next guest has the view from regional banks which seeing higher rates as mortgage apps are down 15% from last year and auto loan demand is dropping let's bring in ira be robbins the ceo of valley bank great to see you again >> great to see you again. thank you for having me. >> if i didn't preface it at all, how would you describe the consumer right now >> definitely a bit more challenged than when they were previously residential rates have begun to increase -- or have increased which is impacting overall demand on the residential rates. used auto prices have begun to come down but they're still at levels that were above precovid. so the consumer is definitely a bit more challenged as to what their affordability is today >> because some have argued higher rates are such a help for the consumer because maybe you're getting more on your deposits or maybe you're getting

more on safer investments or that kind of thing is there any truth to that >> i'm not so sure that's really true i think for some living on a fixed income higher rates drechbtly a good thing for them as they think about what type of retirement income they're going to have. but for the general consumer as we think about the debt levels of most of our consumers higher rates aren't necessarily a great thing. >> as you look at your borrowers are you seeing any erosion or deterioration in their ability to pay are you reserving more against loan losses? do they all seem pretty healthy and up to date on their loans? >> thankfully, the consumers we have and even the commercial customers still seem very, very strong you really look at areas like florida and some of the areas in the south and demand has been significant and the balance sheets of these consumers corporations have been very, very strong. i think there's going to be a difference as to how we think about credit qualityplaying ou across the united states i think some areas in the northeast where there's been contractions of population growth are going to have a bit more of a challenge than areas we've seen in the south.

>> to me ira you sound more cautious than some of the ceos certainly who have come on from the hotel space or -- what makes you more cautious? what are you seeing? >> look, i'm not a huge optimist as to where i think we're going to end up long term. i'm not cautious about that. but i do believe there's this perspective that rates are going to come down and as a result of the long end rates coming down everything's going to be fine. i don't necessarily believe that's going to be true. i believe the long end is going to stay higher for a longer period of time and one of two things is going to have to happen either there's going to need to be a recalibration as to where that long end is or people are going to have to get comfortable with what that ultimately begins to look like because if you recall where these long ends are they're still relatively low compared to where we've historically been. >> you mentioned something that was tantalizing there about the northeast. elaborate if you would a little bit. you said the population declines how -- what are you seeing in the northeast that caused you to insert that into your last answer >> it's interesting. one of the things i look at a

lot is sort of where we've seen population growth and where housing permits have actually gone and you look at the south. we've seen permits only be about half of where population growth is so there's still significant growth when we think about where housing's going to end up from a pricing perspective. that said, in the northeast population growth has largely mirrored where we've seen housing permits increase so some of the increase in those areas aren't going to necessarily be as strong as a result there's going to be some credit quality issues you're going to have a rising tide in areas where there's population growth and you're going to have some differentiation in the markets where there hasn't been the population growth. >> very interesting. >> south carolina, georgia >> yeah. >> all these -- >> where i was this weekend. >> warmer parts of the country >> you can see a lot of building going on down there and you can see people moving in talk to me about net interest margins and how higher rates are helping you there. >> they've definitely gone up over the last few quarters i think from a general perspective, though, banks have probably hit their peak as to what the net interest margins are going to generally look

like we're competing with the treasury from a department perspective. so deposit betas, which is the increase that we have on our deposit costs vs. where the market increase is, have actually gone up a lot more than where they were historically expected to actually increase. so margins i think from this point throughout 2023 are going to really trend a bit down >> how much have you -- how much if at all have you increased the rates you pay to savers? cds, money market funds. >> too much i would say from an investor perspective from a client perspective probably not enough. but they've definitely increased dramatically funding's a huge issue for everyone in the market today we look at liquidity and we look at the money supply. we're still sitting at $4 trillion of money supply greater than where we were on a precovid level, which is huge a lot of it's sitting in the treasury today and for us to be able to compete against that we have to compete against where treasury rates are. >> you've got a six-month bill at what, 5%. which is a very appealing

number you know, for a lot of people. >> it's a great return for some of them. for us the challenge becomes how do we continue to fund residential mortgage growth, commercial growth if we're competing against the treasury at 5%. there's an expectation that we have to make two, three, four percent above that so to sit there and say our rates are going to go back down to 8% doesn't make sense when the treasury's at 5% >> quick final question, isha, what are you seeing from -- i don't want to call them small businesses but for the corporate clients that you deal with, what's the health loan demand look like there? >> great for the clients that we've dealt with -- this is pretty much true in all the geographies the small businesses are still doing very, very well. there's a lot of demand for their products and we haven't seen the pipeline contract at this point. >> well, that's an unequivocal positive and small business was one of the weaker parts in '07. so it's quite encouraging to see it hang in there this time around ira, thanks for your time today.

>> really appreciate it. thanks for having me >> ira robbins, valley national. >> always good to check in with him. further ahead the train industry following the massive derailment in ohio. the public view on these companies was already divided following labor disputes last year now among government agencies and leaders calling for norfolk southern to be held responsible and detailing high we'll discuss that and as we head to break check out the shares of some rail companies over the past month. we'll be right back. ♪♪ the only thing i regret about my life was hiring local talent. if i knew about upwork. i would have hired actually talented people from all over the world. instead of talentless people from all over my house.

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welcome back to "power lunch," everybody. stocks selling off today we are near session lows down almost 700 points the s&p 500, it's down 2%. all 11 sectors in the s&p 500 are lower as it declines back below 4,000. energy holding up despite another big drop in natural gas prices joining us now with more pippa stevens. what's happening in nat gas? >> more on that in one second but starting first with oil which is trading a little bit lower in a pretty tight range ahead of tomorrow's fed minutes released wti contract for march delivery does expire today. so we're seeing a little bit more activity in april which is trading at a bit of a premium. but nat gas is the big mover

down more than 8% and falling to the lowest since september 2020 and really in danger within falling below that $2 level. we've talked about how this is because of the freeport facility being offline. that's about 2% of u.s. demand as well as the weather now, drilling down on that weather point, as this chart from bank of america shows, you can see that demand this winter has been about 1.3 billion cubic feet below last year and it is well below the five-year average. so that means that the situation in storage has swung from a 300 billion cubic feet deficit at the end of last year to now being about 9% more than the five-year average. this comes as u.s. production hits record levels all of that means this is an oversupplied market. >> it is -- i don't know if we have enough superlatives people in california in particular because of some wonky factors there are getting 800, 900, $1,000 heating bills this

summer i think they're getting a $50 rebate from the governor to try to be save -- the energy producers say relief is coming but they musting going why is pippa telling me that the nat gas price is down 80% from the highs that i'm paying as much as a mortgage for maybe we have to have these feed through with a lag this has been an incredible about-face here. >> yeah. and this is we have to remember there are different types of markets based on your region to your point in california they've had some pipeline issues, they've had stalled production and so as much as even two weeks ago their prices were five times higher than henry hub. so it really is a regional market based on the available infrastructure so just looking at henry hub doesn't tell the whole story but i think one thing that's going to have to happen now to rebalance the situation is producers are going to have to cut back we heard that from eqt they think the market's going to be oversupplied all year and that 2024 is when things will start to rebalance >> and yet the equities have done okay. they're not a disaster it's interesting you would have thought if the price of the commodity's down 80% the stock would be too

it's not really the case >> i think one thing is a lot of producers do hedge their levels. so they're probably hedged at this point at a much higher level, maybe more so at the $4 level. also longer term on this strep you can see january of 2024 prices are above $4. there is this bet that u.s. lng once we can ramp up that infrastructure that will be a catalyst but honestly at this point it's how low can you go >> what's been going on in europe with natural gas? >> yeah. so they've also been saved by the weather there. ttf futures fell below 50 euros per megawatt hour for the first time in months last week we might see some demand increase from switching back to nat gas. nat gas was so expensive last year so power companies switched from nat gas to coal. will we see that trend this year >> this is big disinflationary pressure it's a lag obviously on nat gas but at least on oil and the gasoline front it will be a big help if it stays here and then

we've got to worry about it creeping back up again pippa steevz we appreciate it. let's get to i acnbc news update with kristina partsinevelos. >> thank you, kelly. and good afternoon, everyone a federal judge says victims of the 9/11 attacks deserve to be made whole for the nation's worst terrorist attack but seizing $3.5 billion that had been deposited at the new york fed by afghanistan before the taliban took over is not the way to do it even though president biden has designated the money for victims' families. the biden administration is planning new sanctions on around 200 russian individuals and entities this week according to the "wall street journal" as the war in ukraine nears its one-year mark. and the supreme court today heard oral arguments on whether to narrow legal protections for internet companies the family of an american student killed by terrorists in 2015 is suing google's youtube for recommending islamic state videos and thus helping to recruit jihadist fighters. a lower court rejected the suit based on the federal law known as section 230 that protects companies from liability for material posted by users

kelly, back over to you. >> kristina, thank you ahead on "power lunch," more on today's big stock declines the dow was just briefly down more than 700 points as interest rates move higher. and check out shares of manchester united, seeing a pretty sizable pullback today. down 12% coming off an 80% run in the past three months as they sift roh ltiple bids to buy the team we're back after this. i think i'm ready for this. heck ya! with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. ♪ finally we can eat. ♪ you know you make me wanna...♪ and then we looked around and said, wait a minute, this isn't even our stroller! (laughing) you live with your parents, but you own a house in the metaverse? mhm. cool...i don't get it. here's to getting financially ready for anything! and here's to being single and ready to mingle. who's ready to cha-cha?! ♪ yeah, yeah ♪ (vo) this is more than just glass, walls, doors and carpeted floor.

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we're seeing a sell-off, down 670 now on the dow, on wall street more broadly as well. very close to turning negative for the year, the dow that is. bob pisani following the action. welcome back, bob. he's at the new york stock exchange how are you? >> good, tyler had a nice week off in mexico. wonderful country. i think the important thing about today is you have combined the disappointment with home depot with two-year yields at a 52-week high over 5% a lot of comments on that on the floor today. and you've got a rough day it's really about consume discretionary stocks so home depot really has not moved on that 297, 298 level all day. any attempt to rally has been very, very short-lived over there. so housing-related stocks,

lowe's, mohawk, lennar, stanley black & decker all of those stocks have been in the low end of the range here for the s&p 500. at the same time other consumer discretionary-related names, autos for example, general motors, ford, advanced auto parts, genuine parts, anything like that, 3% to 5% declines overall. there's not much in the gainer list, but it's basically defensive names. people remark very quickly how walmart bounced back pf you've got a defensive stock in a slowing economy. even though there were something things to pick about on the earnings report, that's the key story here and other defensive names. general mills had positive comments as well but kimberly clark and hershey and other names have been holding up procter & gamble's been holding up merck's been holding up. and i think that's the key here. defensive names just either flat or o'not down as much at this point. as for the s&p 500 we're in an at least one-week downtrend we've been seeing. but remember something, we are

still up on the year here. about 4% for the year. so we are down about 1 1/2% for the month of february but still up about 4% for the year kelly, back to you >> in a different mood bob, thank you let's turn to the bond market now, which is -- dim the lights, let's get the interim music going. rick santelli, what is going on today? >> well, it's all about two-year note yields today. it took 3 1/2 months but it occurred today i'll tell you what i'm talking about. looking at intraday of two-year note yields and look at how it's climbed, currently just a whisker shy of 474 is the high yield. why is that significant? well, if you look at a year-to-date chart, first of all notice that it really started to get turbo thrusters on february 3rd as you see on that chart but open the chart up. what's important today is we're finally taking out that november 7th high-yield close that was at 4.72%, which means we are now on pace for a fresh high yield

close in two-year note yields going all the way back to july of 2007. and it's technically significant meaning if we close above that level look for many technically related trades to look for an even more aggressive upside to yields, down side to price in the short maturities and if we look at how it's affected fed fund futures we see another close on pace for august, the fulcrum there. and finally, and i like this chart the best, kelly and tyler, if you look at all three of the major stock indices on top of the two-year note, the last time it closed at that yield you can see that the nasdaq, the s&p and the dow in that order are higher than they were the last time the two-year note traded that yield. back to you, tyler >> and rick, just before we let you go, is my memory, you know, serving me, did you once convert your truck to run on nat gas >> yes oh, yes.

a ford f-150 truck with some friends in oklahoma, we did that i believe it was in 2013 or so, 2012 and we converted it so it was a dual fuel vehicle. we did the conversion in 5 1/2 hours. didn't do anything to ultimately change the structure of the engine or the fuel injection and alls you had to do was hit a little button on the dash and you could go from regular gas to nat gas. and if you were going 60 miles an hour in that truck you'd never even know the difference >> so do you still have it or was this like a one-time thing >> it was one-time thing it was purchased by some friends of mine that were in that business we did the conversion on live tv over about a five-hour period. and after that i do believe they auctioned the truck off. so i still don't have it but i have worked on other vehicles in my kind of near and immediate family it's something that's quite easy to do and farmers have been doing it for decades, converting some of their farm equipment to

run on nat gas and propane gas >> if these prices stay where they are, i might be watching a youtube video. thank you. >> i'll come right over -- we could do it in a weekend >> i've got a minivan. doesn't have great gas mileage rick, thank you very much. rick santelli. >> thank you >> let's talk a little bit more about the markets. our next guest seeing potential for a rotation back to high quality, reasonable growth stocks let's bring in marianne montagne, portfolio manager with gradient investments marianne, great to have you with us can stocks make forward progress with rates rising the way they have been over the past month or so >> yeah. i think there's certain stocks we're always stock pickers there's certain ones that can do well, even if a two-year rate is heading higher a few of them -- they're durable growth stories one that we hold in both our core growth and value portfolio strategies is united health

care this is a health care insurer. we think we can get as much as a 25% increase in the value, total return, that is, over the next 12 to 18 months. and part of the reason is because their on tptum growth wc is health care technology direct to the consumer, is now about 50% of their earnings. it's a fast-growing part of their business and they've been beating revenue and earnings estimates quarter after quarter. we think they'll continue to do that and we just think that's a great story. it's also minnesota-based, as we are. >> so you call that a growth and a value stock. or it's in both of your portfolios >> right >> so you like the price and you like the growth. another one that's on your list is constellation brands. that's much more sort of consumer focused we've been talking a lot about the consumer today >> yeah. in fact, today is the opening day for the consumer analyst group of new york. it's about 660 people in

attendance i used to be president of that group. and i'm quite familiar with the consumer side of things. constellation brands' stock today -- what's going on with molson coors. and they've seen some acceleration in the -- in that fourth quarterfor molson, and we expect to see that in the quarter that ends february for constellation. so with a 3% yield we think that total return of 17% to 18% is likely over the next 12 months here we're looking for volume growth to accelerate to the 6% to 6 1/2% range. that's a very healthy number in consumer land. and that's going to be during the important summer months. and in addition, they should see high teen ebidta growth as their cost pressures are alleviated and they get some leverage out of their expenses. >> so let's widen the lens and

talk a little bit about the macro environment. when interest rates are rising with indications the fed is going to continue raising those rates, number one, when you have the yield curve inverted the way it is rates at the level they are and talk of a recession coming in the second half of the year, talk me through that are you in that camp that sees a recession? and if you are doesn't that make it doubly difficult for stocks to make headway? >> well, a lot of people are looking at two data points that have come out in the last couple weeks, and that's how they're coming to that conclusion and we're not. so one was the jobs report back on february 3rd. very, very extraordinarily strong we don't think that's going to recur at all nowhere near that. the second is in terms of labor -- i'm sorry, i'm forgetting the second point. but maybe the consumer price

index. we just don't think that those rates are continuing we think that prior large hikes in interest rates are starting to dig in to the economy and we think that's going to continue to play out and that the fed will not have to raise rates at an aggressive rate going forward. so we don't think they are going to put us into a deep recession in the second half we think there's already -- oh, one of the points is that in terms of job openings they now match the number of people looking for work so we think that there's a further likelihood that we are going to see the contraction going on in the very, very near term and that will prevent rates from going much higher we'll see that it is paying off. but people just don't believe in that for the most part right now. so we think we can have a good year again, we know that inflation is

digging in to people's ability to spend we saw that at walmart's earnings today even though they were very strong the outlook was more muted. and also at home depot because the consumer has started to pull back on consumer discretionary spending >> okay. mariann, thank you very much we appreciate your time today. >> thank you >> mariann montagne. >> now, the rail industry is under pressure after that ohio train derailment, leaving at least 15,000 pounz of soil and 1.1 million gallons of water contaminated how much has norfolk southern been responding to this disaster we'll hear directly from the ceo next but first as we head to break during february cnbc is celebrating black heritage through the stories of some of our teammates, contributors and leaders in business. here is cnbc contributor and odyssey capital advisers principal jason snipe. >> by definition being a minority is fewer than but not necessarily less than. you know, as a young

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welcome back to "power lunch. the environmental protection agency ordering norfolk southern to clean up the ohio derailment site and pay all the necessary costs. and get this, if the company fails to comply they'll have to pay triple the amount. norfolk southern ceo alan shaw spoke with our morgan brennan about the company's cleanup efforts. take a listen. >> i've come back multiple times. i'm drinking the water here. i've interacted with the families here. and look, i know they're hurt. i know they're scared. i know they're confused. they're looking for information and who to trust i encourage them to ask questions. i think when they really dig into it they're going to see

that all the testing, whether it's done by the epa or local health officials or our independent contractors, show that it's safe to return to this community. and my commitment to this community is we will continue with the environmental remediation. we've made a lot of progress >> be sure to watch morgan's full interview with norfolk southern ceo alan shaw today at 4:00 p.m. eastern on "closing bell" overtime let's dive a little deeper into the crisis with a marketing professor at the wharton school of business and a cnbc contributor, americus. already to you there's so many things this company has done wrong. walk us through it >> yeah, i appreciate the opportunity, tyler and kelly, first and foremost this is a mess because one of the things that is very clear in the research is that most crises are actually smoldering. they don't just show up all of a sudden and so what that begs the question of is to think a little bit about, well, should you have

been prepared for this and it's one thing to sort of try to overmanage rare events. it's another thing to say hey, you know what, we're in the industry of actually moving toxic chemicals by rail, so maybe it might make sense to have a plan that maybe one day one of these trains will actually derail and spill some toxic chemicals into the northwest. so consumers will expect you to have done that, that calculation, and there's really three important things that are really critical here in terms of the brand new brand crisis playbook and that is number one, you have to validate the concerns and we saw mr. saw in that clip talking about saying we feel your pain, we feel that we know things are hurting but he's talking about the aftermath. he's talking about what has happened in terms of testing the environment to make sure it's safe for consumers what he's not describing, kelly and tyler, is the idea that if you just go to your little google machine and everybody's got a cell phone in their pocket, you can see that the federal railroad administration

has reported that norfolk southern has had upwards of 20 of these train derailment crises since 2015 it took me five seconds to figure that out on the google machine. and so when you stand up in front of consumers and you ask them, you plead with them, trust us, we're going to work with you, we understand your pain, we're validating your concerns, you also have to show action in other words, you have to not only say here's what we're doing right now but you also have to be very clear on moving forward. these types of things, they should not happen when you know you're in the business of doing this sort of transportation and the like and so consumers are expecting that and you've got to just do more than just say hey, we're sorry you have to come up with a way to control -- >> how much time does a ceo in this kind of circumstance have to get -- to go from an f grade, which you give this company, to

an a grade in other words, if that gentleman had come out and been appropriately sensitive and action focused on -- within x hours, how would that change both the results and your impression of their response >> it's a great question, tyler. question the answer is you have zero time in this day and age information travels around the world in a second because of how we operate in social media. and every single consumer has that cell phone and they're spreading information. so you don't have any time to have a plan. or to come out and wait and be silent the old playbook says hey, don't say anything because you don't want to start creating litigation before you have to. that's the wrong way to look at it you should jump out immediately to the third point of crisis management, tyler, and try to control that narrative make sure -- >> how -- i'm sorry, americus.

i was just going to say how do they change a narrative when it comes down to the facts that you mentioned? i mean, they can't change the narrative about how many train dr derailments they've had. >> this is absolutely correct, kelly. they can't change the narrative of the past. what they can change is flooding the airway with messages about the plans for the future such that -- i mean, there's a limited amount of oxygen out there. so if there's all this bad stuff in the history you have to push that out of the purview of consumers' expectations and perceptions with this new story, if you will, about what you're going to be able to do moving forward and why you're going to do it and how it's going to be effective. >> in other words, our go team is on the way now to the site in east palestine, ohio, we are going to house people, we are going to remediate, the checkbook is open, you've got to do that immediately and you can't be afraid of what your chief counsel or lawyers may be telling you? >> 100% correct, tyler

the lawyers are going to tell you to shut up because every word you say is going to end up documented in & could be another -- a dollar amount that ends up in a liability sort of case so what you have to push against if you're c suite leadership is to say that i understand there's legal ramifications for coming out and giving information but what we it's just validating concerns initially, and then making sure that the brand does not fall under additional crisis. >> the lawyers will be angry with me for saying that. and with you too i'll call you later. >> thank you very much looking forward to that interview maybe he'll give more candor still to come, contradicting the cracks while retailers are warning of tough times ahead general mills forecasts growth good luck.

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welcome back, everybody. time for "three stock lunch. on the tasting menu today, we have three big movers. wells fargo raising its price target on the pharma giant regeneron and maintaining its

overweight rating. general mills is higher with a boosted forecast and shares of docusign lower following a downgrade at ubs ava ottos, chief investment strategist at e.r. shares joins us start with regeneron >> it's a buy. it's a long-term hold for us we like it because it shines in both good markets and bad, so it has revenue. net income is 50%. so 30% to 4 40% of their growth profits are reinvested in r&d, which makes me believe they'll likely maintain their edge for the future >> what about general mills? >> this is a safe bet in the stock market like this one in a vulnerable market like today. it's a good company to own

i would say it's a hold or a buy given the risk profile of the investor so it will outperform the s&p in a volatile market, but, you know, we see growth come back, it's certainly not going to provide great outperformance >> let's go finally to docusign, eva. >> this is a sell. i know this company once had great promise and potential, but they never made the profits. even during covid, they made no money, never capitalized on their growth so adobe, in the same category, one-third of their revenues drops to their bottom line this is a company that makes no money. the executive compensation is very high and not justified by the numbers. also their r&d is high but has not been yet translating into innovative technology. that's why it's a sell

>> i'm surprised they haven't had more of an activist pressure given what you're describing >> not yet >> yeah. seriously. eva ados, thank you so much. up next, we'll look at stocks trading above their recent averages that might put them at risk of a reversal stay with us this is ge aerospace,

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welcome back, everybody. the dow down more than 700 points with the lows dominic chu is looking at some names that might be at risk of a

reversal >> this is all about the momentum, right. the stocks that have arguably gone up the fastest may be the ones that could be due for the bigger falls here. we looked at the broader s&p 500 in general and looking at the longer-term trend lines. a lot of traders use the 200-day moving average right now to give you a reference for the s&p 500, that level stands at just around 3,941. looking at -- they pulled the chart down, but that was where it was if you look at that past where we are now, some of the stocks in the s&p 500500 that are most above their moving average on a 200-day moving basis on the s&p 500, 25% above, 17 stocks fit the bill on the s&p 500 like that. aamongst those names that are the most in terms of relative strength above where their longer-term trend lines are, these are names you know boeing shares are about 27% above their 200-day moving average. nvidia on the semiconductor side, about 28%.

netflix we talked about just how strong it's been since the lows we saw last year, 34% above its 200-day moving average united rentals on industrials, 40%, and wynn resorts, 48% so, could they be some of the ones that fall the most because they have risen the most >> nvidia reports this week. we know hotels everyone has been bullish on >> yeah. good to see you, dom thanks for watching "power lunch," everybody. >> the new "closing bell" starts right now. >> welcome i'm scott walker this hour begins with serious questions about stocks and whether the rally to start the year is in the processof reversing, and in a big way. we'll ask super investor ke keith meister when he joins me for an interview we'll also set you up for coinbase and palo alto earnings in overtime, two stocks that have run a lot to start the year