tv Tech Check CNBC September 1, 2021 11:00am-12:01pm EDT
news about knew features always good to be in the news about more and better, but i see even alphabet up 0.75% as well pulling their weight. >> apple shares up 1.25% a close eye on markets all day mike join us later that does it for "squawk on the street." "techcheck" starts now. ♪ happy wednesday. welcome to "techcheck. i'm jon fortt with julia boorstin, joe kernen and deirdre bosa are off one long-term bear turning around kind of. joining us and are tiktok adds a better value than facebook? that analyst as well later a monster partnership
between google cloud and c 3 c3.ai. up today hear from both ceos this hour in a cnbc exclusive interview. we start with apple. that's an all-time high. next guest just raised rating price target on the company citing growth in the u.s., rising market share globally joining us, the analyst behind that call. long-term bear on the stock, and also today we got news from apple that this promised capability to store an i.d. on the phone in a way similar to apple pay, but with, say, a state-issued driver's license is beginning to roll out. eight states have agreed, at least to do that is apple's ecosystem and the durability of that part of the reason for your call here? >> no. i think the ecosystem is easily well established, jon.
i feel like adding another element to that doesn't really change our thesis. i am hopeful that adding more of a wallet replacement type features will boost share or sales of the launch, leading into health care in the launch, and not as much wallet overtile. that seems to be happening so i would hope this would be a positive, yes. >> yeah. part of what i mean. that you had been negative on the stock for quite a while. seems that ecosystem, whether phone seams during the pandemic, attached rates of the watch, use case would help, held up pretty well, and that's part of the reason, if i read this right, why you're turning around on it a bit? >> one of the things that i think has proven different about this particular iphone cycle is that the carriers are the ones that are driving 5g adoption
it's not something that i think most consumers really talk about at cocktail parties or show off 5g capabilities, but it is important for the operators to get us over to 5g. to take some pressure off the 4g network. we've noticed in past months this isn't a phenomenon that is restricted to at&t right? at&t started to promote to their existing subscriber base last fall, and in the last couple of months both verizon and t-mobile added to their existing subscriber base. that's something none of us have been doing for about five years. >> yeah. those promotions should be beneficial, although it is unclear how much consumers are really focused on 5g right now i wonder if you could weigh in on the regulatory issues we've been talking about this so much this last week. apple, a settlement for the class action lawsuit just heard from south korea, and
they're pushing to regulate how apple manages its app store. what are those issues going to do to the potential for that part of the ecosystem going forward? >> well, i do want to return to the point about consumers and 5g, because i do think you are right that it is not something that consumers are particularly interested in, but what is different is that the operators are. so i would expect all three of the national operators to be reasonably aggressive with their iphone 13 promotion, whichever apple calls it, once we get into the holiday selling season as far as regulatory goes, oh -- as typical, it's difficult to predict quarter to quarter how those things fluctuate but i think that the trend is a little away from apple charging 30% for app store, on app store
revenues and that is going to have a modest impact on their app store sales, but only slowly as different regions make irregular process towards that fee. >> certainly every region is approaching this in its own way, but there is pending legislation here and a broader sense of antitrust scrutiny the epic lawsuit as well what is the risk from all of those factors? is it a risk of distraction? and is there ultimately going to be a meaningful risk to the revenue from the app store >> i think it is something we have to keep our eyes on, for sure. i don't think it is necessarily fiscal '22 issue for apple but may well be for fisk's '23 one of the things apple is doing is starting to allow other payment systems on the app store, but, of course, kind of you have to opt into them. it's not something that is going
to be as easy. even if that premise goes much broader, well, consumer behavior must change as well. >> all right thank you. >> thank you. and the nasdaq hitting an all-time high to kick off the first trading day of the month major averages ending higher to wrap up august with s&p notching its seventh straight positive month and the nasdaq and nasdaq 100 locking in three-month win streaks. joining us now, the spoke investment group co-founder paul hickie you look at the numbers and trends, the question, are we due for a correction >> well, yeah. i mean, really, looking at the tech sector overall is that we really have seen, you can't stress enough to how much the sector matured over the last several years. prior to 2013, the sector never
saw experience to pull back -- always saw a pullback at least 10% in a given year. since 2013 on pace for the fourth year where it hasn't pulled back more than 10%. so tech matured. the maximum draws, median drawdown smaller in the last ten years than the prior 20. what you look at now is the current headlines for the technology sector are phenomenal you have, you know, a dovish bet. you have economic growth, but slowing. look at economic data points that we've seen since, in the last-since start of august all five regional fed reports shows deceleration, weaker than expected consumer confidence weakening, and then also you saw the miss in private payrolls. all positive but all showing weaker signs that is an environment where growth becomes more scarce, which is positive for tech, and when you see the covid numbers going, continuing to rise, that
should be another reason why investors gravitate towards more of these tech stocks which have consistent growth. but the key here is that, to your point, julie, you mentioned, are we due for a correction interesting, while tech sectors reach record highs day after day, today is the one-year anniversary where the sector peaked relative to the s&p 500 and hasn't taken out that high from september 1st, 2020, yet. so, you know, we've rallied off lows on relative basis since may 12th but yet to take out the highs. >> paul, when you look ahead towards the rest of the year, and the fact that the whole sector has performed women, are there certain elements, certain parts of the sector, that are better positioned to break out between now and 2022 >> yeah. first for the overall tech sector as a whole, just like the
market one of those things historically where strength tends to beget strength years where the tech sector was up 20% or more through end of august the average -- september usually a point where the there was positive or negative the rest of the year, the average, median gain 10% for the tech sector going forward. so it tends to be positive going forward. unlike a lot of other sectors where we've seen dispersion, that group lagging recently. i.t. services primarily 140% of the sector is visa and mastercard a number of deals seen over the course of the last month with buy now, pay later, and, you know, square buying afterpay and other deals. even amazon with the firm are sort of getting investors to wonder if the, you know, very
strong moat of these two stocks, visa and mastercard had will be weaker going forward. >> let me key off what you just said, in a way, and ask the flip side of that correction question which is, we're seeing a number of companies starting to make kind of aggressive moves to try to secure growth and pursue a strat ji post-pandemic today a partnership between google cloud and c3.ai, up almost 5% ahead of earnings on that news. is there a potential acceleration where these multiples in some cases become justified, because of the adoption of a.i. and partnerships between the companies with good technology and those companies with great distribution >> yeah. i mean, if a company is willing to pay, you know, these multiples are sales for some of these other companies, that's one thing. i see -- c3.ai, i don't know
about multiple sales but pretty sure extremely high at this point. back to the payment sector i just talked about. all of these companies are looking for growth in different ways you hear robinhood wants to be the next payments platform so whereas, talking about square and paypal eating into the moat of visa and mastercard, yet other companies are coming forward to become, try and compete with square and paypal so there's a lot of competition here sort of reminds us of ten years ago when apple, google and amazon were all, you know, all doing great but in order to keep the growth going all starting to eat into each other's turf it caused short-term disruptions for stocks, because investors were fearing increased competition and spending would impact growth going forward. so i think that's something to be concerned about with some of these payment stocks as so many different areas and so many
different players are starting to, or wanting to become, the dominant player there. >> thanks so much for joining us, paul, on this day, when nasdaq is at an all-time high. >> thank you, have a good one. and day one for china's new data and cybersecurity laws. eunice eun has the latest from beijing. >> thanks, jon the new data security law from, out of china ditches that companies both foreign and local should store process transfer and manage their data, according to this law. now, the law requires all companies classifying data as important or core, and core is mainly related to national security companies that want to transfer data overseas must get explicit permission from beijing and violators face hefty fines or even criminal charges.
the law is broad and not very clee exactly how it will be implemented. what is clear, it's going to limit the fund-raising options via overseas ipos for many chinese companies. especially those data rich also one of three frameworks meant to tighten the reins on china's big tech now, the tech sector is also having a built of a watershed moment that's because dd and jd have apparently announced, or set up, i should say, unions for their workers. this is coming from various reports oos well as some union members themselves some social media reaction, though harks been a bit skeptical that this is all going to work, because unions here are generally controlled by company management as well as by the government in fact, just a couple of months ago, there was one worker who tried to organize thousands of people food and delivery service
in order to try to fight for their rights he has been arrested, and so i think that really shows even though we might be seeing a bit of a move towards unionized workers, that end of the day, beijing is the one that wants to be the one organizing. guys >> really interesting. unions not the same everywhere important to note. eunice, thank you. and c3 a.i. getting a boost. stock up 4.5%. hear from the ceo as well as the ceo of google cloud. c3 c3.ai, stock sifford down 7% since a big ipo prop alphabet pairing withgoogle on the other hand, historic run eight straight months of gains that stock hitting new all-time highs during a $2 trillion cap
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company c3.ai, targeting industries with a.i. offerings and the politicians now living on google cloud as well as aws and azure. c3.ai stock up more than 5.5% at the moment today on the news remember, this stock priced above the range of ipo last year, skyrocketed on first day of trade, but down 70% since february i caught up with google cloud's ceo and c3.ai ceo exclusively yesterday ahead of this announcement telling me teaming up with c3 is especially attractive behalf the inventory risk models and what it can do for customers. take a listen. >> a lot of organizations in manufacturing and supply chain
use our platform to collect data about their broader supply chain. but they want algorithms to understand inventory risk, because if a part is in short supply, you can't deliver an overall product offering and c3.ai has sophisticated risk modeling and algorithm, but combining solutions together we can offer solution to customers in that area. >> talking to me for a while building up google cloud's enterprise sales force hour important that is and now hoping that integration with google cloud will be so seamless users won't be able to differentiate where one company ends and the other begins and getting a boost from google cloud. >> this is a major partnership thomas and i are serving, personally executive sponsors of
this partnership making sure it succeeds, and we are committed to dramatically expand the lasting cloud computing and massive enterprise a.i. market ensuring each and every one of our customers are elated with our products and services. >> remember, these two guys are enterprise software veterans, pre-cloud. both of them worked at oracle. seibel systems, oracle bought it a running cloud at google, of course check out the entire conversation on "techcheck's" web page and in our show "twitter stream" as well julia? >> great stuff, jon. meanwhile, elizabeth holmes is back in court the infamous founder of theranos now charged with fraud jury selection has begun and day two kicks off in less than an hour cnbc's reporter is outside the courthouse yasmine, what's it like inside
the courtroom. >> reporter: julia, waiting for elizabeth holmes to arrive at any moment for day two of jury selection. in there seven hours yesterday, just about a tense, long day. there were 14 jurors total dismissed out of a pool of almost 40 yesterday, and it really came down to who has heard of elizabeth holmes and who has heard of theranos and to what extent? that was the first question the judge asked this pool of jurors yesterday. and the answer was a resounding, yes. a lot of them have read the book "bad blood." have watched the documentaries, seen the media reports they have heard the ted talks and podcasts, and just a couple examples one guy said, sure i can be unbiased, but i do remember the defendant's penchant for turtlenecks another guy said he opens up his laptop and all he sees a theranos, theranos, theranos, and a woman later in the day said that she had read the book "bad blood."
she put it down feeling a sense of disappointment, because she said she was actually rooting for elizabeth holmes, and rooting for theranos, because she said there's not enough female ceos out here in the health care, tech world. she wanted to see them do well she wases did appointed after reading the book also i have to tell you, elizabeth holmes was inside the courtroom. gep it was a tense, long day i was keeping my eye on her, and every time a new juror walked into the room, she turned around in her seat and attempted to make eye contact with them. >> so fascinating, yasmine i'm curious here if you think about how challenging it is to find jurors who are unbiased besides that, what types of jurors do you think they're looking for? young, old, female, male >> reporter: right, right. i have been talking to legal experts and jury consultants who say for the defense team the
type of jurors they're looking for, the sympathetic kind. the type that will say, sure, elizabeth holmes might have broken some laws, but she didn't intend to. and that's really what this case boils down to. intent if the, you know, the government can't prove that she intended to do this then it's not a crime. that's really up to the government to prove. >> so interesting to get your on the ground perspective that educated workforce and jury pool out in san jose silicon valley making it tough on this process. thank you. scene an eye on shares of cloudstrike. shared under pressure today. down plus 2.5% one name in the green, zoom. trying to regain life today cathie wood buys the dip later in the hour. "techcheck" will be right back
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welcome back to "techcheck." i'm julia boorstin with jon fortt former doj antitrust chief joining us in a moment first, get a news update with rahel solomon. >> good morning. what's happening at this hour. surprise acceleration. rising to 59.9 despite ongoing supply chain problems the private sector added fewer jobs than expected in august saying companies added only 374,000 people to their payrolls, compared to the 600,000 expected campbell's soup giving back more than half of this morning's gains. stock up less than 2% surging on strong future profits, although full year guidance below forecast. and i hate to say it toilet paper sales jumping again. "wall street journal report"ing procter & gamble, maker of charmin, running factories
around the clock to try to keep up with demand and limiting shipments to some businesses julia, feels a bit lie deja vu l here we are again. >> all over again. yesterday south korean parliament approving a bill banning google and apple's app stores from developers to only use their payment systems. this at the heart of what epic games and other active developers here in the u.s. are fighting for, but apple and google say outside purchase systems make it easier for fraud and put user privacy at risk for more on the global regulatory crackdown on big tech, bring in former assistant attorney general for the doj's antitrust division thank you for joining us today very curious to hear your thoughts on this development out of south korea, and whether you think this going to kick off a wave of regulatory crackdowns on
these app stores >> good morning, julia thanks for having me on. you know, i think this is interesting in the sense that every jurisdiction is trying to grapple with this issue, and you know, with what the issue, being, the market power of some of these online marketplaces you've had legislation introduced here in the united states, korea just seems to be the first to really act on this. and treating the app store and goggle play store almost like a common carrier and saying that you cannot discriminate. you should allow for other payment systems, and, you know, you have russia, you have australia, canada. everybody is looking, trying to grapple with what the actual solution is, and here we have a legislative solution rather than some kind of a negotiated solution by the parties. >> well, curious for you to put
your regulator hat back on and look broadly at this issue of big tech what do you see as the risk to consumers being right now and what do you think the appropriate remedies would be? >> the risk to consumers right now is basically two gatekeepers. google and apple, through their app store. now, you know, it may or may not be a violation of the antitrust laws they have built it, but it doesn't mean that it is not a broader public policy concern. both from a competition standpoint allowing consumers to benefit from different app developers, different content providers. being on those two platforms and that is the challenge that everybody has been trying to address. now, there is no uniform standard globally for
anti-trust -- for even the violation, let alone what the remedy should be so whether or not these will be addressed through antitrust laws and law enforcement, or prescribed through regulation, like the european union is doing, or crack down through legislation. i think all three of those will be on the menu, and i think the companies will probably face, you know, solutions and different parts of the world depending on the form of governments to address the market value. >> sounds like a nightmare interesting you mention common carrier and strikes me this is maybe an effort to turn app stores into utilities. like almost electric utilities, or complete with rate cases and all kinds of other, you know, government interventions into how they can do business but is there danger there? especially given that few people love their electric utility, dare i say their cable company,
but people do love apple, google and amazon you mess with them and governments around the world, in the wrong way, might you kill the goose that lays the golden egg? >> no question all three of these companies have brought innovations and conveniences to consumers. i mean, we just saw through the pandemic we have gone through how amazon delivers for most consumers, many of the goods including your last segment talking about toilet paper coming home. but it is an absolute nightmare when government steps in to previbe business rules, and we have done that in the united states when the old ma bell was broken down and the local phone systems became common carriers and you had, you know, different delegations until you had some regulation in 1996, but that's the direction, it seems like it is going i thought it was smart of apple to have settled the class action case, just a few days ago.
>> yeah. but was that really much of a settlement didn't seem to me like apple gave up that much at all except saying, okay. we promise not to skew things more in our favor, and, yeah you can send emails to your customers letting them know of other ways to pay. i don't know how many customers will do that bringing me to the second question that this isn't just about pricing. there's so many developers who complain how they're even able to update their app, engage with consumers within these app stores, and i'm not sure that legislation will be able to address that very well. >> legislation most it can do is prescribe new rules of the road for these businesses. but with apple, i think what they did give up was much more than they have in the past so that was an important step, and i think it also sends a signal that, you know, i think the leadership at apple, they're adults they are realizing that even though you can win a legal fight, the public relations
fight especially with consumers especially with a consumer-facing brand, is also important and think about, are there regulatory risks not only in the united states but abroad. i think they settled didn't have -- that was a private negotiation between the representatives of that class action of the app developers, and the company. and they were able to come to a solution was it the perfect solution for all parties and developers no but that is, i think, a first step and a recognition by them, and i thought very smart for them to do that. now, is it a little too late does that forestall government action we'll have to see. again, there is no international rules. we have all sorts of rules that govern, you know, the transfer of money. >> yeah. >> the protection of intellectual property. but for antitrust, we really don't, and every jurisdiction, 140 of them -- >> yeah. well, i -- i want to ask you to pivot away from this question
for a moment and weigh in on this question of whether these tech giants should be broken up, and if it's even possible to break them up? this is what the ftc that pushed for with facebook in particular. what would you do if you were khan. >> a lot of what you could do. and -- under the laws, and what want to do there's a huge delta there. i had an old friend, jack walenti said you can tell a man to go to hell, getting him there is a whole different story that's proper for this now you might want to break them up but do the current antitrust lius allow nfor that you have to prove violation of the law and also some rules. microsoft 20 years ago in court of appeals that prescribed what the remedy could be. when is a breakup appropriate? a judge can you know, can order
a breakup. will that uphold all the way through the supreme court? that's a long road a regulator especially in the law enforcement community, like the antitrust division or the f ftc, can't just come in and say, we're just going to break you up you have to go through a litigated process. legislation is different congress can step in and say, you can't do this or you could do this. right now there seems to be some bipartisan appetite to do something in this antitrust space. >> so sounds like you think breakups are less likely, or certainly a longer road to get there, but legislative action changes the way these companies operate is far more likely, with all of that in mind, though, with what we've seen from the ftc so far from these reviews of amazon buying mgm what do you anticipate from the biden administration in terms of oversight of m & a and how do you think that's going to impact what some of these tech giants do in the next couple of years >> so i think the procedure,
procedurally, the new administration and head of the antitrust division, just nominated. not confirmed and installed yet, but at the federal trade commission recently changed internal rules about when you could ask for a detailed, you know, a second stage investigation into some of these m & a. i think most merging parties would be wise to think ahead of time, and factor in the process delays that will take place. and with respect to the big tech you know, if, i don't know if apple tried to buy ford motor company, or even a ford dealership for that matter what is the ftc going to do? are the critics going to come out and say, none of these tech companies can do so? we'll see what happens with the mgm transaction, and amazon. you know, will the ftc allow that to go forward you know, within the content
production business, mgm doesn't account for a huge market share, but the issue of amazon having access to the data is something that is going to be interesting to watch, if they challenge that transaction. and we'll see. we'll see if it holds up in the appellate process. if you're one of the four big tech companies, having a transaction, even one where it shouldn't be a problem under current economic thinking, there's going to be some procedural delays by both agencies taking a very close look. >> well, thank you so much for sharing your insight on this very complicated landscape >> thanks for both of you for having me. >> indeed. now there's elizabeth holmes you can see entering the courthouse we'll have more "techcheck" after a break.
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cantar showing another reason to be bearish on facebook namely, competition. second year in a row tiktok the number one platform in activity followed by others tiktok's ad growth nearly doubled from 19% to 39% and fast a major competitor to the social media giants along with amazon joining us now, the analyst who downgraded facebook today. from rosenblatt securities thanks for joining us. lay out your thesis here how much of this downgrade is about competition and how much about other things, limitations, for instance, thanks to apple? ants ants. >> sure. first off it's about the business it's been d rer. a massive competitive advantage both in seams, and google
they've had essentially an stk in every app known to man and able to leverage that with, know, very strong roas what happened with, recently with apple and -- it put a kink in the armor and seen roas come down considerably and pricing facebook is trying to press at that lowerroas is having a difficult uptake first it starts with the, you know, core business, which is dr the other piece of their business, more focused competitively with, you mentioned, the tiktoks the staff chats. youtube shorts, short videos that is a little more at par, if
you will, with those platforms particularly with the higher prices that facebook is pressing here today. so competitively we're seeing, you know, those names you mentioned come more into focus today and advertisers have a little more leverage i think on facebook than they've had you know, on the advertisers in the past with, you know, with those options. >> we spent our last segment talking about anti-trust risk to the tech giants. how much does the regulatory scrutiny of facebook come into play in your downgrade >> very little. i think, you know, we've got, gone through the regulatory side of the equation multiple different ways, and you know, if you break up this company and separate instagram and facebook, you still have the two largest, you know, ad platforms, if you will, out there.
i think what's a bit more of a nuance to that, that now is sort of how d.r. will play out over the, you know, ensuing months with the roas they're offering, and personally, i think facebook has, know, a bit of a transition to work through here on, with this idfa initiative. >> yeah. a space we'll be watching. facebook shares up about 1% today. thanks for joining us. >> you bet take care. meantime, in crypto, ether hitting a high level since may "techcheck" will be back in a moment.
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>> reporter: for those who are still making a living or at least trying to, from ride-sharing platforms, the companies are not offering enough. >> we know your salary >> we're all drivers, right? you know we're all drivers >> driving around, it's not -- at $1 to $1.50, a mile people would be content. >> transparency issues in terms how much drivers are actually earning and which markets and where there is imbalance. >> that full piece fronted by digital video producer dain evans. you see deirdre bosa in there, too. on our page cnn.com/techcheck. julia? and valuations taken to the skies in recent months breakdown in winners and losers is next. and a slew of tech names
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vmware veteran sanjay joins us now. i can't help but think about microsoft, nuance and the ai and industry focus there, looking at what google cloud and c 3 are trying to do here. do you think this is going to help them accelerate, maybe try to catch up with aws >> yeah, i think this is classically sort of out of the playbook of s.a.p. it's very clear in anything. software structure but also in the cloud as you move up stack into industry application and solutions. you get more value it's like selling to the ceo versus the cio i think this is good for both companies. goog sell another three. but behind thomas and bet behind others at your own peril c 3 announced a partnership with aws last year with azure now with google. i see this as multicloud and data is the new oil of the
economy and ai is the engine so this is good for both companies. we'll have to see how it it plays out. >> you know all those guys you guys were at the mortal enemy companies s.a.p. and oracle a while back. is this similar to what happened 20 years ago when we saw oracle buy people soft and then a bunch of other companies trying to go at very specific types of solutions to grow the enterprise footprint? is it a similar playbook >> yeah, i was fortunate to work on all the multicloud partnerships with vmware azure goog and we have very good friends. it was like lebron and coby. i respect what they are doing. the cloud market is a 100 billion-dollar after aws and azure reported growing 40% 1 trillion of spend. 20, 25ed% moved to the cloud
so i have not green a growth phenomenon of that kind rich that's part of the valuations the reason it's not just three companies but many others in the cloud. >> what about amazon and aws specifically we have andy jascy ceo of amazon overall no longer holding the reins directly of aws? does that open up opportunities for competitors perhaps with the original boss not in that seat any more >> i think, listen, all three companies can do well. i don't think it's a winner take all. clearly amazon has got a head start. they were way ahead of everybody. jeff bezos talked about a five-year head start about a $55 billion run rate company no one catches them at number one any time soon. but azure is creeping up there about 30 billion in run rate and then google is distant third. they have come a long way. they were the fastest growing player when you have 54% growth rate for google in the last quarter
51% for azure. and 37% for aws, i think the growth rate of all these -- i saw when i talked to customers a significant move of workloads to any one of the three clouds. and many of them are specialized. aws was good with developers azure for use case enterprise like office 36 and google for ai. >> sanjay great insight appreciate you joining us on tech check >> thank you, jon. and one more thing kathi wood's on another buying spree, this time getting discounts. in new disclosures out last night wood doubled down on her belief in zoom, buying $56 million worth of the stock after yesterday's dip of more than 16% following weeko weak results another embattled name also saw some buying. robinhood with wood adding 260,000 shares to the etf despite the dive last week
following paypal's potential entrance to the space and new comments on payment for order flow from graffiti gary gensler. looks like she is looking for deals. but robinhood faces challenges now. >> indeed. and weaver got the nasdaq and s&p at least slightly in the green. to the half now. >> welcome to the "halftime report" i'm brian in again for scott. by the way, welcome to september as well. and tradie kicks off with new record highs for the s&p 500 and nasdaq it's mostly rally on for now but many big names on walds are starting to sound a little bit nervous. so could this finally be as good as it gets for stocks at least for a while? will the merg cap names, apple, microsoft, you know the ones, continue to do the heavy lifting in the market? we'll discuss and debate all hour long with your investment committee today. and that is kari firestone jaso
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