tv The Exchange CNBC October 15, 2020 1:00pm-2:00pm EDT
bonds. any fiscal package that is aid is another boost >> i have to go to jim after that >> caterpillar is my final trade. >> steve name >> long on jp morgan >> thanks, everybody "the exchange" is now. >> thank you, scott, and welcome to "the exchange" rising cases, rising claims and rising covid doubts we will have the latest in chief earnings mags plus, one analyst says a wave could descend over washington and netflix price hikes. let's begin with the market.
>> they are in the red but better than a few hours ago. the dow is down about 90 points. we were down over 300 not long after the bell the focus on the nasdaq continues. underperforming on a down day as it has on down days. but remember, it outperforms on dow up days. i want to show you a chart what is happening with this this tracks the software industry it is down 1% here, but the lows, a lot of folks buy in some of these dips. the same thing is true of semiconductor and cloud etfs, so watch those trades, whether she is sky high players are getting a discount on the trade.
and the financial in focus again. we are closing out the big mega cap bank earning season. morgan stanley out today it has done well with investment banking. and charles schwab up about 3.5% those two are a key focus, but remember, it has been an underperformer it will have to do more to break out of the recent ruts they have been in. back to you. >> schwab and fidelity it is a retail trading the president said he's willing to raise the bill to more than $1.8 trillion. >> we have a three-way
negotiation less than three weeks before election. that's not a recipe for success. the president was on television committing to go bigger in terms of a dollar figure here is what he said >> i would go higher go big or go home. i said it yesterday. but nancy pelosi doesn't want to give anything. >> so the president said he's willing to go big or go home and blaming nancy pelosi, the speaker of the house, for the resistance, but steve mnuchin said he's also negotiating with republicans on the hill who don't want to necessarily go big or go home here is what he said >> we are also speaking to kevin mccarthy and mitch mcconnell on a regular basis. mark and i had a two-hour conference call with the senate republicans over the weekend
i think there are certain areas there is complete agreement. i think you know what we call the targeted bill which has overwhelming support that's the priority of the senate mitch agreed he would bring the ppe back to the floor to try to get that done. hopefully the democrats won't hold that up we are moving forward and seeking input from everybody >> mnuchin saying he is moving forward, but mcconnell isn't mitch mcconnell said he doesn't see a need for more than half a trillion in spending so the president and mnuchin and the team are caught between a rock and a hard place. they can't talk nancy pelosi down or mitch mcconnell up this one might have to go before the voters before it's sorted out. back to you. >> we are highlighted some of
the difference between the president and mcconnell, but it was interesting to see pelosi get a hard time on cnn against her own stance i wonder what that tells us in terms of the public sentiment if she is seen as unwilling to get smaller deals done >> that's a risk for nancy pelosi there are a few democrats who have been willing to come out in public and say we need to accept this deal. andrew wang said accept this deal, nancy, and move on nancy's strategy has been we are going to take the big bill or nothing at all that's why you saw that testy and emotional bill with wolf blitzer earlier this week.
nancy saying how come we need to come down. why don't they come up they are at a standoff and no indication it will break a logjam soon. >> the president is almost in her corner on that that's an unusual dynamic. >> the president shut down his negotiations and reopened and now is on nancy pelosi's side against mitch mcconnell. it's very confusing. >> thank you very much there is a big jump in jobless claims and putting pressure on the market we are down for a third straight day. how should you invest in this environment? i am joined now. it's good to have you both charlie, i'm struggling with the strange politics here, but not
at the fact that there is a real need for the next round of aid the question i have is that need being reflected in the markets we do move around obviously on these headlines, but these moves are not dramatic what do you think is necessary here >> this is a classic case of short-term factors having a big impact on the market when we all know owning stock means you have years and years after cash flows that won't be affected by the size of this relief package. but there is no denying this would change markets i have changed my mind i thought we were going to get some kind of package and thought it was in everybody's interest but now i am not so sure i don't think mitch mcconnell wants to pass a $2 trillion bill
and i don't think nancy will accept that. in the long run it will be good for the market, but not in the short-term >> charlie, if it was perceived like it was necessary enough, it would get done, don't you think? the market would force it to it's like in 2008 or anything elsewhere they say you have to do this, the economy is on the brink. >> mrs. pelosi things it's in her best interest for this to fall through deficits that senate republicans do not want to bail out states that in their view have not run finance through their houses well there is a gap much i thought we were going to get together because it was in everybody's
best interest, but i am not sure that's true anymore. >> start off with what your advice would be. i know you like to look past the noise. where are you on investing today with all of this back and forth going on >> we are extremely cautious about stocks most of our long positions in volatility which we believe is underpriced, has a lot of upside potential. as it relates to an investing strategy, there are several tipping points where we stand. we stand at a tipping point of a new potential president and a new concept of how to manage the fiscal situation with covid and the health situation as well we have an intense public, socially speaking. these are important themes going into this election and will dictate how markets behave and we have a high valued tech market which has dominated most
of the returns in investment po portfolios money has primarily been generated from tech, and tech here is the weak point going forward because of the valuation. we are cautious with stocks. we are urging investors and others to introduce volatility as a hedge or potential upside for growth >> i know that charlie likes viacom and goldman sachs, hates long-term bonds. tell me why you think people should still invest in zoom. >> if we look at risk in the market, it is not the first time in 2001 and 2008 there were huge successful tech companies that got hammered, microsoft, dell,
amazon we believe they will get through this we see short-term pressure in the market, but when we come out of that, we have new generational means we are all using zoom like we all used microsoft office. we like cloud applications they will be critical in data management over 90% of people who eat meat aren't necessarily vegetarians includi includi includi including docusign as well so we like these >> thank you both this afternoon. appreciate it. >> we are going to look at names
that could take a hit. plus, streaming higher, wall street is in love with netflix with its earnings call next week with one bullish call after another. and are investors giving up on value with a bang, energy and change came to every part of our universe. seismic or small, it continues. change is all around us.
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we are a little more than two weeks away from election and investors are starting to think what a biden win and blue sweep means to the market. >> thanks for having me back there are pros and cons, but the most often one is the negative under blue wave scenario there will be ramifications and retail have to be considered. first and foremost is taxes. most retail we cover are almost entirely u.s. based. that means a change with the
biden tax proposal and wages. biden proposes $15 minimum wage. many states are above that, but this is a negative to retailers to some degree those are the first two negatives. from there you start to think about what is the upside stimulus we saw what stimulus did to consumer demand when covid hit we have already talked about the bad. so there are gives and takes you have to consider >> yeah. let's go through some of the names. basically the scenario you are describing is profit margin. you see names like signet, gap,
these are firms that could be at risk >> when you take the taxes, those are the guys who will be the most impacted because of their geographic mix and margins. but it's important to think about the wild card. it's easy for you and me to raise tax rates and costs in the model. but the thing in the report, under a blue wave, we will not only get the benefit of spending on the low end, but likely will see the heroes act come into play but things that are included there have an impact, things like another round of relief checks, hazard pay for workers and then we are talking about a demand driven upside sector and less about costs so that's why i say you have to look at it from both angles. >> burlington, ross stores and
t.j. maxx. overall how investors should think about the market under the next administration. it is a different playing field depending where you are positioned thanks for your time we will check back in soon ike boruchow with wells fargo. bullish on zoom. we will break down why the shares are up nearly 5%. and the hot ipo of the day array technology, they are up nearly 40% we have the ceo in an interview, next and airlines in the middle of a wave of furloughs
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the s&p is down more than half a percent. that gives you a feel for the sectors. financial and utilities are your leaders. let's get to sue for a news update >> here is what is happening at this hour. uk reporting just under 19,000 new covid cases thursday and 138 deaths the daily case rate is down from yesterday's total of about 19,700 here at home in north carolina early voting is under way. voters can be seen in long lines. the doors opened at 7:00 a.m., but some voters said they lined up as early as 4:00 a.m. movie theaters in parts of
india reopened some theaters in areas like dubai are putting off reopening for now. and queen elizabeth joined her grandson in her outing let's check on array technologies soaring 45%. it is the biggest solar ip of the year joining me now is the ceo of arrays technology. do you feel like you left a little money to grab >> i will say this is an amazing day. proud of the team getting us to where we are they have delivered over the past few years and we are really excited about the future here. >> let's talk about new mexico
i want everybody to know i think this is the biggest ipo ever of a new mexico company >> that's right. if you think of what we do we are utility sales solar tracking this was a u.s. invention. it was our founder who pioneered this industry and made it what it is in the early throes. he is a long time resident of new mexico the value it creates in the marketplace is exciting. we continue to innovate and drive going forward. >> jim, the fact you are on the manufacturing side of this, it's often seen as the less desirable part of the solar business your performance today speaks volumes. how much excitement is there around solar would you trace it to potential change in helm in washington >> we are a technology company
when you think about how our technology enables the production of a solar panel. when you put it on our system, it promotes up to 25% more technology think of it as a cloudy date when you may not want the solar panel straighting directly at the sun. we continue to invest heavily in the technology front this is an asset that lasts 25 years so the amount of engineering that goes into it, designing for wind we have patented technology that protects it in that capacity there is a lot of take away here >> my final question
do you worry about the chinese stealing your trade secrets? at some point they will come up with it themselves >> we have patented technology that protects us for over 15 years. we have a sweep of ip over the protection treaty. over 30 countries are recognized in that. across the globe our technology is being used by the tier one providers. we have defended our path ents before i always keep a healthy pair noise surrounding our competitors, but we believe our path ents are strong enough in the area we want to grow in. >> thanks for your time.
welcome back let's catch up on a few stories that should be on your radar it is time for rapid fire. welcome, everybody let's start with zoom today. the video conferencing giant known as zoomtopia it said total minutes on its platform has exploded by 30 fold price target was raised to $611. a little bit of catch-up >> people are already talking about zoom's valuation being out of control it's standingly higher than where it is trading, about $537. but zoomtopia has been where does the can be go next. to justify its current
valuation, are they doing a good job here i think so this is the idea that you may not want to be on a zoom video all day, but you can transfer this to your phone and go for a walk when we are all working from home, that's appealing the transition is simple and quick to get on a videophone call and why bernstein, i believe, is saying there is room for this sky high valuation to go higher. >> they are saying the future of video conferencing is the conference call. it's such a tale of the biggest two tech high flyers zoom up another 5% even though fastly is getting creamed. there is a specific aspect of fastly where apparently they are losing tiktok business i am surprised that zoom isn't
suffering more on this kind of nervousness about how much these shares -- >> you would think at some point maybe we get a broader rethink of exactly what are we willing to pay, valuation willing to apply to a company that is admittedly accelerating into a fast growing market. zoom is turning profitable they do have business describers but a $150 million market cap. for 2025 estimates for bernstein is at 15 times revenue at 40-times revenue you have to assume it is one of the next platform company like facebook i don't think any of them traded this high in advance
>> we are seven months into the pandemic and they are holding on to their users and a number of copy cat companies emerge. we will have to see if these products stay in the lead. >> we learned that the ceo of zoom will be on closing bell at 4:00 p.m i look forward to that the phone call is the future netflix is getting love on the street for something subscribers hate they are saying that price hikes might be on the way. netflix shares down about 1% they already raised prices in canada and dropped their free trials for new members in october alone, four different firms have raised their price target on the stock. is that how netflix wins the next phase
an analyst yesterday was more skeptical about netflix. >> at some point down the road they have to exploit pricing power. remember when they tried to get tighter on shared pass words there was the story that they were underpricing the product, being lax about people getting in without paying because they wanted to expand the base. they probably feel they are indispensable to people who stream they are still cash flow negative i think the street would like the fact they test this out and see if they have more pricing power down the road and try to make the numbers work longer term i don't think they are nervous about turn down the road especially with hbo at a higher price point.
>> yes, they could raise the prices there is more competition than ever, but it is still cheap. >> but do we think a fast growing high-tech knoll technoly company cares about profits? we talked about disney, how they are releasing more films on disney plus. i think the timing is raising eyebrows here. >> they should be concerned with profit on the other hand this is supposed to be part of -- on the same lines as facebook and apple, but it is not trading like that. it is worth much less in terms of market cap. i think netflix has been able to generate buzzing titles. will they be able to stand the test of time that remains to be seen.
would you watch "house of cards" again? i don't see many titles that you would go back and rewatch like others have. >> i haven't seen any of those i use my husband's sister's log in i had to watch a documentary the other night. so not the best case in point. >> now your sister-in-law is going to get an e-mail from netflix. >> trouble i follow the rules you can only do two screens at a time i check with my mother-in-law and if she's not watching. totally healthy. you have to have -- each person has their own account. elon musk is making two price couldn't he tweeted the gauntlet has been
thrown down. before this the models were going from about 75 to 72,000. now this would put it below 70,000 some people were chuckling at this, but investors weren't. it is down 3.5%. is this why? >> it isn't the first time he promised a cheaper electric vehicle. last month he said he wants the price to come down to $25,000. so for him to say he's looking at other cost cutting means. the real thing is to bring down the cost of the battery cell yesterday we were talking about used car prices doing extremely well right now >> right they have been through the roof. here is my question about tesla.
i think we are coming off a six-day win streak it was below $200 presplit about a year and a half ago. are you amazed at it staying at these nose-bleed levels? >> yes even though you can make a joke about a price cut, but i don't think, all of those being equal, that that's a bullish thing. right now we are just talking about a company that is really on target to meet the baseline expectations of how many cars will sell. it is trading on the years to come it is not trading on how many cars we sell at what price the more focus on the here and now, the more the stock suffers, but usually it doesn't last more than a day where you say are they going to be okay on the volumes? >> we ask and then it takes off
on another six-day win streak. >> i wouldn't read too much into it someone who used to work for him coming out with a new ev model, and that's priced at $69,500 he just wants the last word is my opinion >> the last word here will be on kpop the sensation bts went public today. the boy band label debuted and the stock value about $8.5 there is risks, like the south korean mandatory military service. so dominic choo has been
requested to join us what an ipo. >> it wasn't just the bots it was the army. it is cultural phenomenon. it is a huge move. but this comes down to betting on the future of not just this band but beyond as well. it is not just bts going public, it is the management company behind it going public this management company gets the vast majority of their business from bts each of the seven members of the band got an equity state in the ipo which means they have a vested interest to see this company go beyond just bts as you talk about the cultural phenomenon, all of the supporters, the fans, this is
not about whether or not they get richer than they already are, because they will be looking to find the next show for bts. >> he said if you don't understand how big this is, wait until this goes out. >> do mfrp, it wm, you were rige was so much fandom on this >> i am surprised that dom showed his face here you plugged up my twitter feed as well with that. the last time we talked about this was the fortnight
they have embraced digital concerts as well as a dance party. they know how to operate in a digital world. >> i can't imagine a korean boy band management company is the kind of ipo you would want to recommend to people. >> i was joking this morning, are we surprised, maybe nascar wi -- nasdaq with pull off i am old enough to remember minuto which lasted 30 years they just get new guys this guy turns 15 every year >> what is minuto? >> it's triep soup sorry. >> thank you all so much dom, thank you for joining us. i know more about the subject than i ever thought i would.
up next, no secret that growth stocks have outperformed value. should investors say a final good-bye to value? before we talk about tax-smart investing, what's new? -audrey's expecting... -twins! ♪ we'd be closer to the twins. change in plans. at fidelity, a change in plans is always part of the plan.
shaped by technology chand human ingenuity,s. we can make it work for you and your business. ♪ welcome back ted aronson is closing down his fund and blaming market forces a closer look at what it's saying about the world and value investing. >> ted is a very well-known investor he is going to stop trading november 30. he is respected. he has been around for decades he worked with michael millkin he has been specializing in value stocks since he founded
the fund but value has been underperforming not for just a few months, but 5 years, even 10 years. the gross ets is up over 100%, but the s & p value is only up 30%. even on a ten year level -- so the question here i think, is this one of those bell ringing moment that highlights the bottom of the trade where big time investors throw in the towel. we have seen it in the past where eventually value evens out. big deal when a big value manager says i don't see much of a movement or future in what we are doing. >> oh, yeah. very big deal.
i had no idea that brian roberts interned under him maybe this is a contrary indicator. thank you, bob, for the latest despite the red we have seen in the market, the major averages are still positive over the last week even though the dow is down about 39 i am joined now. good to have you here, sir i was talking to bob about the value trade not working. a lot of people are pinning hopes on rotation. you don't think that's in the cards? >> i think it is in the cards. i think we are talking about a market correction taking place as we approach the election in 2021 bob spoke about how we have had a decade long underperformance
of value, but during the 2000s we had a good performance, so these day, the diversion is taking longer than expected, but i think it is coming from next year on ward >> where do you see the stock market and the bond market at this time next year? >> this time next year meaning you are talking about the second half of 2021, -- the bond market for the next six months or so. equity i think are likely to go steeply down we saw a rally earlier today, some of which was reversed in the last few minutes but my expectation is that it
will go below the 70 basis point mark and below the 60 basis point by election time the expect time ultimately is for the basis to go below 140. >> wow what would your advice be to investors? >> my advice would be that there is still gains to be made on treasuries look for the e-curve to flatten. even though value has underperformed, go more into value assuming you have a two to five-year rohorizon. we have seen a rally in german bonds. gold price is about $1900.
i would like for the gold price to be over $2,000. all of these are risk free plays which i think will do well >> thanks for your time, we appreciate it. >> thank you >> global strategy still ahead, the on going pandemic may not seem talk witho dr. done that, the creator of pasta packs on why the pandemic was the right time to took up idea, next ♪ ♪ ♪
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welcome back we've been tracking the surge of new start-ups launching during the pablo with the number of new business applications hitting its highest level in over a decade one of those is a meal kit delivery service called pasta packs. back in march two brothers decided it was time to let their idea boil over nick and greg joining me now, the co-founders. welcome. >> how are you >> nick, i'll start with you tell me how you launched it and why you would do it in the middle of a pandemic. >> i got laid off from work. being at home doing nothing wasn't an opportunity for me, wasn't a decision for me, so we kind of hit the ground running right away to give people the
restaurant-style quality at home with a little preparation as possible >> and, greg, tell me how the business works and how it's been going since the launch this. must have been an incredibly -- even though you say you didn't have a choice to start a business must have been incredibly nerve-racking >> business is like going really, really good, i think given the situations, you know, just the climate of the world at the moment but it's worked out really well. people still want to enjoy like really good food and, you know, the world of quarantine and everything has just made cooking at home just like all the more important nowadays >> i was amazed to read, nic, your typical order is about $85. you must be a really good cook what is in there and what are people ordering? >> it's the process that goes through it i cook with a lot of love and a bunch of fresh ingredients
i our process saves you of six-how fares of prep time down to ten minutes and a good amount of work on my side to make sure the consumers at home have it nice and easy. >> did you have numbers in mind for this did you say we have to hit a certain number by, you know, six weeks in or a few months in and, you know, tell me about how it has borne out relative to what your expectations were. >> no, i think in the beginning it was just, you know, we just -- i just wanted to dive in like head first, we finally had this opportunity nic finally had time for to us create a concept and work on something so at first during the proof of concept it wasn't -- we had nothing to lose basically. you know, but once that first month went by, the second month went by it's like we have to take this much, much more seriously and set goals monthly to see if we could break them and have broken them month after month consistently that's kind of how we knew, this
is viable. >> that's awesome. nic, what would your advice be to other chefs others that find themselves in a similar position >> i would say definitely have a good team around you be sure of your ideas and go for it it's being -- coming from a chef and only being in the cooking side of of a restaurant and then coming on to the business side i quickly learned there is a lot more work behind the scenes of a restaurant rather than just food, there's a lot of marketing and a lot that goes into it so be prepared for a lot of work and just be prepared >> have fun. >> definitely have fun while doing it. >> do you guys like working together, greg go ahead. >> oh, yeah. this is my brother this is my brother no, it's -- we go through -- we have our business challenges, you know, like just pushing the business
we thoroughly enjoy it like it's a good exercise. >> well, i look at you two and think maybe my two son also go foo business one day congratulations, best of luck wit and thanks for joining me. we really appreciate it. >> thank you. >> greg and nic bryon. jack dorsey subpoenaed over the north on hunter biden. senator ted cruz will join us on "power lunch" after a quick break. change is all around us. shaped by technology and human ingenuity, we can make it work for you and your business. ♪ before we talk about tax-s-audrey's expecting... new? -twins! ♪ we'd be closer to the twins.
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to get our free decision guide. humana - a more human way to healthcare. welcome to "power lunch. i'm kelly evans and dominic will join me in a moment. stocks lower but well off their lows of the session. for the third day in a row, no deal on stimulus and fears of a second wave growing as europe combats a rising number of covid cases and the highest number of americans filing for weekly jobless claims since the middle of august putting a question mark on the pace of the economic recovery and later the senate judiciary committee says it'll subpoena jack dorsey after the social media giant limited the sharing of a new york post