tv Closing Bell CNBC September 27, 2021 3:00pm-5:01pm EDT
everything is about supply chain. >> thank you >> i think tyler's thinking about flipping houses. >> no! no no way. >> not his thank you for watching "closing bell" starts right now. >> you don't know the mathson law. mathson buys at the top. welcome to "closing bell." i'm wilfred frost at new york stock exchange a mixed picture today as we kick off a trading week with the s&p and nasdaq in the red. >> i'm morgan brennan. let's look at what's driving the action today energy today with goldman raising the year-end forecast for oil. growth names are under pressure with apple and google and microsoft in the red and the durable goods number up this morning the number is up 15 of the past 16 months. today morgan stanley's mike
wilson will join us to talk about why investors should get defensive in their portfolio. after the bell rolts from aurora cannabis and miguel martin will join us to break down the numbers. wlbob pisani has a look at tech products and luke meanster is here to weigh in. bob? >> the important thing is rates and the reopening and it is a little bit about value let's show you what's going on the big tech names are weak today. the dow up with bank stocks up and oil stocks up. a price weighted index but the s&p is not and weighing on the s&p. cisco, apple, nvidia to the downside what's going on here the three things that are putting pressure on these
stocks the whole reopening story is favoring cyclicals generically secondly higher rates. generally tough on technology stocks more so than other cyclical stocks out there and finally had big runs most up 20%, 30%, 40% this year. the valuations are very high on them as for the month the s&p closing out the month down 1%. look at the other big tech names weaker not dramatic underperformance but happening and that's part of this concern about the reopening and the higher rate story. don't get too concerned about this it is a great year tech is still a big outperformer for the year and this is an equal weight index sxd and up 22%. not bad considering the s&p up 16% for the year back to you. >> not bad given the 10-year up
18 basis points in a week so a big move in yields and resilient high price stocks in the face 0 of that. thank you so much. apple shares under pressure today on reports of china causing production halts joining us now gene munster at loup ventures. this doesn't matter for apple and tesla because they're the kings, aren't they they get what they want. >> well, they get most of the time what they want. in this case they probably get most of what they want it does compound on a picture that we all are well aware of. you recently framed it in and the supply constrain equilibrium question persists to apple and tesla. we think that we're not going to reach supply demand equilibrium in the december quarter. apple and tesla are not immune
there may be curtailing of energy usage of suppliers. will consumers wait for their products when you think about tesla and apple, there are some loose substitutes to them but i don't think t-- i think that consumer are willing to wait and i will bring it together into the most important phrase that investors will be keenly listening to on the december earnings call which is, of course, did demand outstrip supply? if either of those companies apple and tesla frame that in think they'll largely get a pass for whatever the december miss if there is in fact a miss in december. >> just to dig in more apple just released its new series of iphones. the new devices. does this cloud the picture in terms of the early demand
readings >> it's tight. things are tight we check this on a daily basis and seeing a week longer lead time than a year ago the iphone was different shipping a month later and the answer is that we are seeing some impact to this. we'll continue to monitor this but the demand equation seems pretty robust and i'm always skeptical seeing a video and i think it's genuine about chinese buyers over the weekend hundreds of them running in a shopping mall to get in the queue for an iphone 13. it is the camera that got upgraded i wonder should we call them cameras because we use the cameras more than the phones the demand picture despite some of the supply constrains is robust
one more piece to the deland is 400 million iphone users three years or older it is collectively how did it improve? in that context there's substance to give thisiphone launch a boost for the next few quarters. >> also wanted to get your take on facebook with instagram now pausing the launch of instagram kids and earlier today on sister channel we heard from instagram head let's listen in. >> today we want to talk about how to put the work on pause i still firmly believe that it's a good thin to build a version of instagram to be safe for betweens we want to talk to experts to get to more consensus about how to move forward. >> how significantis it that they've been forced to at least
pause this rollout >> it's a good headline and it makes for a good topic for today by r but it is not significant ultimately facebook is going to pause this project they may even kill the project around this but it doesn't change i guess my opinion that facebook is toxic for mental well being doesn't change my prediction whatever happens with the children's version and investors are rewarded for owning facebook because there's one global directory and that's facebook and its properties so i think this is yet another in the long list of headlines that they're navigating and i would just ask facebook as they can justify thinking in their offices that this is a good thing, that ultimately having an avenue that has better content and parent l
controls is a good thing i would disagree if they do this product it opens a floodgate of twe ns and usage and some ways it is irrelevant this is important. the concept of the teens spending time in digital environments we are at the beginning of it. i hope they kill this project and give the mind more years to mature before moving to a digital world because we are at the tip of the iceberg of this digital world with the identities in digital. it is really intense i would say it's unstoppable and facebook is going to benefit in the decade to come around being that global directory for the digital universe. >> which is why it is still a compelling investor story and i guess to the point in some ways there is no alternative trade essentially because digital
advertisers need to be on facebook's platforms to get those eyeballs and everythin attached to that at what point does that actually shift? seeing tiktok i think a billion active monthly users is it going to be something else >> it is really hard to change the dynamics of this global directory. i think facebook is just -- to answer the question is i think that facebook is -- it is hard to say this but i think they're unstoppable and the reason why it's hard to say it is i'm a person who believes in investing in technology. i believe that the meta verse is real i do question how -- what that is going to mean think about identity and just around a digital first universe. it is crazy. but facebook is going to be the beneficiary of that.
a biggest beneficiary. on the hardware side i think apple wins on the hardware side. google is a winner but in terms of the network i can't see anybody reply kating what they're doing and can't see anything stopping the drift to these digital environments. >> all right gene, great do get your thoughts today. thank you. >> thank you. >> shares of facebook are actually up fractionally right now. online resell platform stockx is in china you're watching "closing bell" on cnbc.
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welcome back to "closing bell." stockx expanding launching the latest center in south korea today. it is one of the fastest regions for the platform with local trades up more than 130% year over year. let's bring in ceo scott cutler joining us in an exclusive interyou great to have you on in terms of this new center, why south korea? tell us about the growth and strength you see in that market. >> this is a continuation of the strategy to grow the business internationally. in the last year we opened three authentication centers so korea is a place with customers in fact in the last year half of our customers from korea are new
to the platform in the last year and so as we open up a localized expirns of buying and selling on the platform in korea it's a global stock base. >> in terms of activity in korea or the other international markets expanded to, is it a similar mix to the u.s. or different types of collectibles apopular across different regions? >> opening in hong kong or australia, or japan, we open up local supply from great brands and great sellers in those regions and make that supply available to the buyers around the world. the key strategy is to key yate a localized experience which means that it's localized in language and payment and can include faster shipping times, lower fees, greater access to product. all of that leads to a better
experience for shopping on stockx and then as sellers come to the platform we are able to allow that economic opportunity for sellers to be able to really reach a global buyer base with supply that's coming and released by brand in those regions. >> clearly now authentication can happen better and faster in korea and asia with the new center what about shipping? do you face the same pressures that other companies are >> when we open up an authentication center in a region we bring our authentication technology and people to the process. we stand in the middle of the transaction and opening in a region we are able to more quickly match that supply to a buyer in that region and so typically when we launch in these new markets we can more rapidly get product to the buyers in that region coming from sellers in the same regular and then to the extent they
can't get access they can from anywhere else in the world the platform is not dependent on shipping lanes or containers to get product to the buyers. we have hundreds of thousands of sellers on the market from all regions around the world and the sellers reach buyers again typically creating an opportunity to get product to buyers anywhere that a brand releases a product around the world. >> as we get ready to enter the fourth quarter of the year, what are the expectations for the holiday season >> it is going to shape up to be another great season for us that we have spent the better part of a year preparing for another record q4. we have been doing that by expanding obviously into other countries and territories and been aggressive to expand into other categories we are best known for sneakers but we have expanded into
electronics, into collectibles, into apparel and now as more and more customers looking around the categories of assets it is access to the asset class for investors that not only consume but want to make an investment opportunity and we think that's a trend that plays really big into q4 and then '22 and beyond. >> just looking at this chart that we are showing. 610% growth for birkenstocks alone. now. amazing. scott, thank you for joining us. >> thank you. we have about 41 minutes left before the bell the dow is positive. it is up about 132 points but the s&p is basically flat. the nasdaq is down about .3% the russell outperformer up. coinbase getting into direct depositive it to allow customers
to put the paycheck into crypto. we'll dive into the details and what this means for the broader crypto economy next check out the top searched tickers. 10-year yield, tesla rng apple, amazon and crude oil round out the top five we wl rhtacilbeig bk. your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire
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welcome back s&p nearly flat again on the day. just 5 bases points lower. coinbase announcing today to allow kus hers to deposit a percentage of the paycheck directly into an account hi, kate. >> hey coinbase is moving into banking with this new payroll feature that they will let users deposit in cryptocurrency like bitcoin or u.s. dollars and will convert paychecks into crypto for zero
fees the company talks about this removing some friction in funding coinbase accounts and also offers quote instant access to the crypto economy as they call it. coinbase says they're looking to be the most trusted full suite of crypto first services coinbase's core business of trading seen more competition with robinhood, square and sofi offering crypto trading. it is a big move into traditional banking and it comes at a tense time in crypto regulation s.e.c. chairman genz ler sharpening the criticism lately with comments for the need of more oversight last week and coinbase canceling the plans to launch a separate product, a high interest crypto lending product after the s.e.c. threatened to sue the company over that issue. back to you. >> i love this announcement. i'm not sure what it really
contains surely if they're allowing people to depositive it from the paychecks that's not different from the customer deciding what time of the month and how much to put in the coinbase unless employers start to offer the service themselves to say we can pay only 75% of the wages in dollars into the bank account and willing to pay 25% directly into coinbase. surely this is up to the customers to decide what they do. >> it is up to the kusz her. you have seen athletes and other folks paid in crypto and allows sort of an average person to do that but i think symbolic of what coinbase is looking to do moving more into crypto first financial services they have the pressure and the need to different yate with robinhood really moving into crypto trading and i think coinbase feels the pressure to launch products and position itself as crypto first and
appeal to a more crypto focused customer as the competition heats up. >> i feel like the lines are beginning to blur and means more potential products for the customers. kate, thank you. still to come, we'll look at where to find opportunity in the international market when we talk to harris associates david herro and mike wilson weighs in on the market volatility and why investors should stay defensive. as we head to break, a check on bonds. 10-year yield hovering around 1.48%. crossed above 1.5% earlier today. yields higher across the board stay with us what the world needs now... is people.
welcome back you can see the dow continues its out performance. it is off the session high which is up to 263 s&p lower by about 0.1%. nasdaq down. energies, financials outperforming which is in large part why the dow is jut performing the nasdaq. with what? 31 minutes left. let's have a look at individual market movers. shares of best buy jumping the firm is bullish on the membership program of best buy total tech and expects it to drive activity by members.
the stock up 5.5%. citi upgrading western union. the firm say it is development of a global digital bank is a longer term opportunity and the stock's up 2.6%. it's time for a cnbc news update. >> president biden has proposed a new rule to end the deportation of hundreds of thousands of immigrants coming the u.s. as young children, a latest round in the battle of dreamers and the daca program. r. kelly is found guilty of racketeering in the sex trafficking trial. jurors deliberated less than a day. prosecutors said that kelly used the stardom to lure women and underage girls into his orbit for sex. creative arts agency is buying ism partner just the merger will leave three major hollywood agencies
and atlanta an unusual way to start the week. goats on the loose a herd of about 40 goats hired to clear weeds behind a supermarket but they break through the fencing and wandered the neighborhood their owners called get your goats could come pick them up. i welcome this sight on a monday morning. >> it is a goat of a story it is like the goat story. >> there you go. all right. thank you. we've got 29 minutes before the closing bell it is really a mixed picture the dow up about 111 points. s&p down slightly. nasdaq is understood performing being led lower by the big tech stocks names that are in that index and the russell 2000 up about 1.8%. david herro joins us with an outlook of the international
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chief investment officer of international equities david, great to have you on. as i do look at oak mark international fund and the top ten holdings i see a lot of banks, particularly european banks and european automobile makers cyclical is your bet that we are in a phase focused from an equity standpoint at least europe that's cyclical and value operated >> when you look at valuations of these companies verse the cash flow streams, especially when we are entering into an environment with global reopening of the economies causing fairly robust growth, as we know the problem isn't growth but supplying all the demand that's out there when you look at the environment and the price you pay for these world class businesses, mercedes, bmw, these are big blue chip companies that should
benefit quite greatly from what we are now seeing is kind of reopening phase two. phase one kind of happened and then we took a step back because the daeltd variant and now we are seeing really uneven reopening of the global economy which is extremely beneficial for these companies. income statements and cash flow statements and then looking at the price you pay they trade at massive discounts to the main components of the index these areas and these companies represent value propositions, especially in the environment of today. >> we started talking at the out performance of financials this month here in the u.s. and interest rates rise again squ similar dynamic in europe as well is there more value to be had
out of the european banks and financial service companies versus the u.s., for example >> it is interesting to note that all these financials face to some degree or another the same phenomenon. interest rates pushing higher, overcapitalization, a pickup in growth these are good for these financials and yet the european ones haven't moved anywhere near as aggressively up as americans and as a result you're able to buy these things at roughly 60% to 65% of book value verse u.s. financials which trade at anywhere from 1.25 to almost 2 times book value and when you look at the dividend yields that you are getting there was a question on whether the european financials would be allowed by the ecb to pay back the excess capital. that question was answered and
as a result most of the financials are yielding high single digit to low double digit so they face that same positive phenomenon but sell at a significant discount to their u.s. brethren and come with near double digit dividend yield so this is a highest area of strength where we see going in the global financial markets over the medium term. >> i'm interested in the take on the drivers for this climb in yield we have seen which occurred sharply in european, as well do you think the trigger is in europe or here in the u.s. >> the financial system is now somewhat global and understand the last ten days you almost have to go back to last ten years. postthe global financial crisis institutions had to add trillions and trillions of dollars in terms of reserves on
the balance sheet. this is money that did not get multiplied through the economy and as a result all the expansion of the money supply none got to the end of the money market because of velocity money fell because banks were hoarding cash to build reserves. now all these banks are at or above where they need to be. we see growth picking up we see inflationary expectations picking up so i do believe that what we saw in the laths ten years is about the slowly reserve to reverse itself and this -- this little move we saw i think europe peaked the 10-year at minus 65 basis points and now minus 22 at some point i do believe we see positive interest rates. i think it's because of the unwind of the big capital build and a pickup in the velocity of money which was so quiet of the
last decade. >> given that you have the cio are you invested in china? would you go anywhere near asset classes or equities where that country is concerned >> very, very good question. we were significantly underweight china we'll say but we watched this situation quite carefully and we see happening two things number one is these companies and industries that have groan so rapidly, the regulatory infrastructure has not kept up china is now simply trying to grow that regulatory infrastructure along with the size of the businesses this isn't necessarily harmful however, the second part of this is don't forget china's controlled by the communist party. chinese communist party and seeing the industries and individuals becoming larger than life perhaps they throw shadow
on the ccp which they might not like and maybe are taking prohibitive actions against the companies and balancing both things and the quality of some companies and the amount these businesses have fallen we are selectively increasing what was a very low exposure to china to some of the high quality names alibaba. ten cent even a company like vip. these are some names which we are invested in but we're not super aggressive but at these price levels there's so much risk already in the share prices that we think it makes sense on a risk return basis to increase exposure gently. this isn't something to own 20% of the portfolio but we are happy to have 8% in the portfolio. >> david, great to see you as
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welcome back we're now in the "closing bell" market zone. commercial free coverage of the action going into the close. we have lin si bell here with head of investment charlie varimskoy. the nasdaq and s&p moving lower and the dow is higher. russell 2000 is outperformer today. charlie, i'll come to you first. i guess this is what we call a trading day. >> i was going to say. take a picture of the screen because i hope we have a lot of days like this for years higher rates more inflation a strong economy is good for value stocks and not so good for growth stocks and it helps that those value stocks were trading very cheap relative to those growth stocks with a historic gap in the price earnings ratio
why when the bonds return to norms none of this negative real interest rate stuff, when we get back to real interest rates it is very good for value stocks. not so good for growth. >> just to keep tugging on this thread, is this a rotation that is afoot again how sustainable is this? >> yeah. we have seen all year there's been rotations in and out of growth into value and cyclical so i think we start to see that with the start of september as investors got nervous and braced for the worst which may have come last week and the market ended in positive territory. after last month's scare but i tend to agree with charlie. i think now we are in a phase where we are returning to the value in cyclical sectors. we'll talk about energy later but you saw that with energy leading, financials are
performing well again after a pullback and the reopening trade seems to be back on and as delta cases rescind you'll continue to see this risk-on trade take place. >> charlie, i can see the argument why some of your stocks outperform if the themes of the last week continue to play out but we have seen quite a sudden move higher in yields in the last week or so. if that continues and the fed has to announce faster tightening than expected by the market will that not derail all of the market and mean absolute declines even if you have relative outperformance? >> i don't think so. it's a great question. i don't think so the key is the strong economy. if we get the earnings beats that we have had from the industrial and financials with 88% of companies beating estimates we can have good absolute and relative performance in value stocks.
it helps to start from the nine times earnings it helps if you're a goldman sachs at 11 times earnings so you absolutely can have stocks go up. if earnings continue to increase and let's face it. there are a lot of financials where the earnings go up with normal interest rates. >> yeah. of course another sector to fit in the conversation is the energy sector. several analysts weigh inwith bullish calls. pip pa stevens have the stocks for us. >> energy stocks up bringing the september gains to nearly 12% and analysts are not fading this rally. goldman sachs hiking to $90 a barrel noting that names like exxon and conoco phillips look attract i. saying the stars are aligning. devon pioneer natural resources
and canadian natural among the top picks. bank of america said that while energy recovered it is not back to pre-2020 levels stocks on the buy list are chevron and hess back to you. >> thank you your thoughts on energy and specifically the stocks? it is not just crude natural gas is what? i think $5 73. energy stocks are the best performing sector in the s&p year to date is there more room to run? >> yeah. if you're zoomed out year to date the energy sector is on fire but don't ferlgtd the middle of the year we saw this sector correct and a horrible year last year for the energy sector so seeing the sector correct and get back to prepandemic levels so what's interesting about the energy sector is wti prices, oil prices
moving higher. there's fundamental reasons. we are in hurricane season ida is playing a role and benefitting the price of oil and as oil prices go up that benefits energy earnings so we have actually seen energy earnings move up the most in the third quarter of any sector but the stocks while on fire on a year to date base i i guess you can say they haven't caught the move higher in wti and looking at the energy sector overall it is trading at a discount and the s&p 500. and it's a sector that is only -- 8% off the 52-week highs and don't see that in a lot of sectors out there so it's something to consider. >> we are firing up the various charts there and the move in the last ten days or so for the
energy sector is very pronounced ripping high every of course taking profits or confident that it will continue >> i think you have to go name by name here we love apa, the former apache with oil rigs in the north sea we have got eight times earnings with big exposures in europe natural gas is over 10 bucks. so natural gas is a good place to be and frankly hasn't been a lot of money spent shareholders demand that energy companies cut back and so we think the subpoena p-- supply demand ratio looks good. >> apple under pressure. tightening energy consumption
policy just the development comes days after apple released a new iphone 13 and raises fears of a potential slow down in supply chain some taesla suppliers slowed production to what extent is this already priced in to some of these names? it is not news that there are supply chains particularly in this sub sector of the tech sector. >> yeah. when you look at an apple, the name traded down initially on the news and then moved higher this is a name within the tech space and faang that's not performed as strongly as the other names so this is a sock that i think is interesting to look at. high quality growth name they don't get a lot of credit for. so i think what you saw today was investors jumping in and buying on the dip opportunity. the multiple on the stock at 26
times. that's a lot lower than it has been for the better part of 2020 and the early part of 2021 though it's elevated versus its history but that's because it's changing moving more into services and higher margin businesses so i think that apple's an interesting name to look at here. >> do you think apple's an interesting name to look at or big cap tech names it wasn't that long ago that some of those heavy hitters were being looked at as value plays in their own right. >> you are like my daughter that brings up the fact i could have bought apple at 17 this is painful because there have been times when value was -- apple was a value stock not quite there now. i do think this current focus on supply chain is a focus on a short-term factor that will clear up we won't have 60 ships waiting
to unload in the los angeles harbors forever so i think this is temporary but these stocks still in our opinion are not quite value names yet even though they have come down. >> go ahead. >> does it continue to play into your inflation fears, charlie? do you think we'll finally see the fed have to admit to that or still something to come through next year when they get to hiking rates or doing something that would positively derail markets? >> great question again. i think secretary powell, chairman powell is trying do get reappointed and he knows that higher rates are not good for that but at this point it is a point of inflationary pressures are undeniable and the idea of it being transitory is starting to fade fast. the majority of participants
think we'll have inflation be transitory but the factors pushing inflation up with a strong money supply, commodity prices higher, labor prices higher, strong gdp demand we don't think they're going away we'll have inflation really frankly we think for four years. >> brings up a key point and maybe not 5% inflation but the reality at which we do settle down at does that remain elevated that is worth a debate aurora cannabis is set to report after the bell frank? >> shares up about 7% ahead of earn wings a revenue forecast set to fall and a loss of 27 cents a share. big thing to watch will be the medical cannabis revenue last quarter 75% of sales with 17 prs of groewth overall.
the call will be key canadian cannabis stocks higher today. canopy and tilray heading higher. >> thank you i want to get your thoughts on these more i guess frothier parts of the market or at least what were previously frothier parts of the stocks. seeing the areas go public the fact that we have seen some of the i guess air come out of the excitement here. how does it speak to the broader markets and investor sentiment overall? >> yeah. it is interesting that some of the air has come out and seeing participation in the area but smarter. we look at the customer actions. when gamestop recently moved
higher and the rumor around that from a bloomberg article was that it was driven by institutional investors we saw the customers selling taking money off the table, too you will seeing the retail investor get more -- more prudent and smart with their money, too so i think it's great that these -- this type of action is driven new people into the market but i think it's probably good thing to start to see a cool down in this stuff and ipos seem to be coming back into the mix it's been up and down with things like this. >> we have got 40 seconds left of the session taken a leg lower in the last couple of minutes really it is not pronounced down 0.3 pi% on the s&p higher on the douby 0.2% the high of the session on the dow is 263
the charts of the dow show you that leg lower that we have taken of late. energy, financials comfortably outperforming the other sectors. half are higher. half of them lower health care, tech and real estate the sectors down more than 1%. it's a disappointing close the last ten, 15 minutes leading to a decline on the s&p. 0.5% decline on the nasdaq the dow holding on to .2% of gains. ♪ welcome to the "closing bell." i'm morgan in for sara with wilfred. if you just heard him mention as stocks do settleinto the close the dow finishing higher by 72 or .2% i can speak today. i promise. the s&p finishing lower. 4443 the level there
and the nasdaq the underperformer with the composite down half a percent. russell 2000 an outperformer up 1.7% and the transports up 1%. morgan stanley chief strategist mike wilson on why he thinks it's time to be defensive and the sectors to stick with right now but first breaking news on another fed retirement steve liesman has the details for us. >> thank you robert kaplan, the president of the dallas fed, announced moments ago that he'll retire as of october 8 kaplan, of course, was one of the ones that became a focus of a conflict of interest at the federal reserve. kaplan saying that because of the issues surrounding the finances, he made the decision to retire so as not to take focus from the federal reserve saying it's a critical point in
the recovery unfortunately the recent focus on my financial disclosure risk being a distraction to the execution of that vital work for that reason i decided to retish and been president of the dallas fed for six year just a statement by the dallas fed has powell praising him and the chair of the dallas board of directors. kaplan maintaining that he adhered to all standard and policies my securities investing activities met bank compliance rules and standards. kaplan's disclosures showed multiple trades in individual stocks kaplan maintained that he made all trades during the blackout -- outside of the blackout period when the federal reserve officials are banned from trading he is the second federal reserve president to announce retirement today. the boston fed president who
also made several trades in mortgage backed securities and the federal reserve buying at the time he was trading and announced the retirement this morning as of september 30th wilfred? >> steve, clearly rosengrad said d distractions seems like too much of a coincidence to not apply my question to you is, using the words of mr. kaplan that it was a distraction, were there misdemeanors if that's the right word for both two noticeably worse than those of chair powell or will the focus pivot to him, too? he himself admitted last week that he needed to do better on that front. >> that's an interesting question certainly kaplan and rosengran
were actively trading. in the sense of rosengran saying he did not make any illegal trades or violate code of conduct he was buying and selling in the year same assets the fed was buying kaplan didn't seem to but made trades on multiple days he said were outside of the blackout period and not disclosed on the form powell owned municipal bonds in the year before -- years before the fed began buying them. he said in a perfect world he wouldn't have owned them i don't know that powell will face the same type of pressure here i don't know by the way if either would face any legal jeopardy in what they have done and doesn't appear initially anything unlawful initially here at least more of the impression that it
gives of officials >> totally agreed. doesn't imply anything illegal but the key point that is absurd the rules so flexible in the first place not that the individuals broke any rules or laws that existed. >> yes. >> just to offset the prior question, the fact that chair powell is making statements for both people backing them up and say what a great service they have given suggests the broader fed board is trying to draw a line and isolate these two individuals as opposed to it going further. >> i think that sounds right you'll remember powell was asked last week during the press con frensz if kaplan and rosengran had his support and didn't answer directly and perhaps the
writing was on the wall that powell did not countenance the trades and acts of the two he said, hey, a complicated situation and didn't answer directly the question whether or not he supported them. there was one other set of trades we talked about which was barken from the richmond fed that owned individual bonds previous to the federal reserve buying them. the outrage doesn't seem to be on them gauging the temperature on the story >> steve, thank you so much. bring us more if it comes. let's pivot back lindsey and charlie are with us. aj, i'll come to you first this late-day selloff and saw nothing too pronounced but the take on the action, the sector broke down and the selloff into the close. >> thank you for having me i think today is mostly due to
some movement on rates value and the reopen trade coming back around again and honestly today is reminisce ent of last year around this time. and then september being more volatile than normal we are starting to see that move up in rates. and so we see the market start to move back into the reopen trade again and i wouldn't be surprised if the russell 2000 outperform other indices. >> charlie, i want to go back to this fed related news. we don't know yet who would be replacing kaplan or rosengran. it might not have immediate impact in terms of policy set or changing from the fed but depending on the replacements and how they could speak to the composition of federal officials in general and years to the
future, is there a market impact here potentially that we should be watching for? >> good question i think that the fed officials have been dovish i think inflation is going to override that. i think the persistence of inflation, the bond market is going to say we don't care how dovish you are we are not going to lend you money at 1.4% if we've got 3% inflation. so it's some point here the dovish i think tapering is going to happen and stop buying the incredible amount of bonds they have been buying and can't do that in the face of a strong economy and high inflation and some point it's not going to matter. >> looking to 2022, given the fact of a couple more months to the year you have the potential based on the stuff in d.c. this week with higher taxes we know there's more regulation
starting to roll out for more industries you have a fed to take the stimulus away. of course this idea that q2 is potentially peak peak economic growth peak earnings. so you have tougher comps for companies reporting into 202 are the risks mounting for the markets more broadly or do you see equities continuing to chug higher >> yeah. look the wall of worry continues to grow that's our jobs as investors to really kind of be concerned about where the issues and risks lie. while those are very valid worries and concerns by market participants one thing you didn't mention is strength of the consumer while inflation could be coming one thing that we have seen is that the consumer has been resilient throughout this and while economic and earnings growth may be peaking in the
second quarter it is expected to remain above trend for the next couple of quarters and into 2022 so that is a positive sign i do think, sure peak earnings comes peak margins right now the consensus for earnings, e bit margins going out into the next couple quarters to reach 17% in 2022. its current margins at a peak now. if there's risk to that that's what i think the biggest risk in the margin is where margins go from here. the historical rate about 14% so even coming in a little bit i think the market can withstand that if the consumer is strong and is continuing -- is able to continue to spend. i think that we could be in a place to really maintain that above trend growth at least through 2022 >> aj, real estate down 1.7%
is that a buying opportunity >> i think it is looking at inflation we are concerned about being more persistent so our stance is that we are looking at potential for large cap quality, but also for real estate reits and the income they bring in and where we allocate and seeing it as a buying opportunity definitely. >> it is of course a critical week for democrats on capitol hill and the future of president biden's economic agenda. ylan muoy explains why. >> reporter: the senate is planning to vote in just about an hour and a half on a bill that would fund the government and raise the debt ceiling but the bill is destined to fail republicans are determined to block it and chuck schumer accused them of playing a dangerous game. >> they will be on record
sabotaging the country's ability to pay the bills and likely causing the first-ever default in american history. >> reporter: now democrats though have yet to settle on a plan "b" and gop leader mitch mcconnell said democrats are in power. this should be their responsibility. >> democrats steered our country straight into a storm of serious cris crises all of their own making. >> reporter: two potential ways out of this. the first for democrats to get republicans on board with a so-called clean government funding built to last through december 3 and then democrats tack the debt limit on the big social spending package. or democrats try to pass a one or two-week government funding bill and squeeze republicans into voting for that debt ceiling increase but both options are fraught. >> so much on the table.
this week. thank you so much. we have to leave the market zone there as well. thanks to lindsay, charlie and a.j. for joining us today up next mike wilson will join us. he's warning that companies raising prices at a historic pace his cautious market call. ceo of aurora cannabis breaks down the results before scsihem with analysts on the corporate call we're back in a couple minutes
worst performing the russell outperforming up 1.5%. ceo of aurora cannabis will join us to discuss how the safe banking act could impact the industry. plus speaking to an analyst that calls this mystery media company an underappreciated entertainment powerhouse find out which stock it is and why it could rally a further 20% from here. the power industry to integrate renewable energy sources to modernize and improve the electric grid. emerson. consider it solved. flexshares etfs are built with advanced modeling. to fill portfolio gaps and target specific goals. strengthening client confidence in you. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.
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welcome back aurora cannabis results are out. frank? >> shares of aura a cannabis down just a second ago unchanged right now after a miss on revenue still call lated the eps number. the dramatic increase in the price of the flour medical can dissales with two thirds of revenue increased by about 9% as overall sales fell by 20% margin improved to 54% this quarter. a miss on revenue. shares of aurora cannabis down
fractionally right now we'll get back to you. that's the latest. >> all right they joining us now ahead of the conference call is aurora cannabis ceo miguel martin why thank you for joining us with the numbers fresh out. i want to start with the cannabis flower prices 42% jump in prices what was that due to >> i think the strength of the medical business number one canadian lp of international medical sales and looking at the margins in mid-60s which have been steady and havestickiness to it we se strength there number one in flower in germany. huge shipment into israel and exceptionally well in the canadian medical businesses and where you can make money more and more so the medical business which is portable and responsible opposed to chasing the rec story. >> you reported a loss but
narrowed in terms of that path to profitability what does that look like? when do you expect to turn a profit >> it is a great question. we announced 60 million to 80 million of savings last week had to announce layoffs with infrastructure right sizing we believe that with no change to the q4 revenue on top of 300 million we announced we can be ebitda positive and well on the way to do that we won't sacrifice an upside and again it is built on the strength of the medical business which is one of the strongest in the world. >> the restructuring news, is that the reason he restructured numbers? >> no. nothing to do with that. we announced last week in two facilities redundant with infrastructure we have in europe coming online and other things nothing to do with those announcements. >> just thinking ahead to what
some analysts might ask on the call, have you considered exiting domestic recreational and focusing on medical and international? >> i think it's a great question everyone is so consumed by the u.s. it's a big world out there and in my opinion and i think we have been proven right the u.s. is take longer looking at the vote in germany we are sort of pleased with that outcome and we believe there's a pathway of medical to rec. there's two parts in canada. but on the other side of it premium flower and concentrates you see margin there and where we'll play and important to have a relevant rec business but to say you're one, two or three we don't think is a path to
profitability. >> a number of analysts raising concerns about the cash position just looking at the balance sheet and the numbers you reported here today, do you have enough to get to the point of pr profitability? >> we absolutely do. it's a lot different when you burn cash than positive and so we don't have a big cap-x needs unless there's something to be opportunistic and made significant investments over time around the world and taking advantage of that. >> thank you so much for jumping on much appreciated. >> thank you we're pleased. major averages moving in different directions dow in the green for fourth straight day joining us now on the phone is mike wilson. mike, thank you so much for
joining us good to hear from you. >> thank you thank you for having me. >> looking through the recrept note that the bottom line is that for the major averages at least the headline level you think the outlook is pretty bleak. >> yeah. i wouldn't say it's bleak but not that exciting. it is fully valued the revisions probably going to be less exciting, as well. and of course the fed now is moving towards tapering but not a great come by nation for the major averages and really i mean the s&p 500 which has been far and away the best performing major average in the world and as you know our narrative for this year is all very normal right? at the end basically the highest quality index is the one that underperforms and seeing that in the last couple of days nicely under
underperforming. the dow did better >> gauge for us what we talk about here sideways move for the s&p the rest of the year or see one of those elusive 10% pullbacks? >> we are still very much -- target for year end is 4,000 and assume a 10% pullback between now and year end so that is our call 10% krix in an equity market is not that big of a deal there's a bigger deal if there's no place to hide and seeing a rotation back to the areas that underperformed can they go up some can that's the job to find the areas to outperform and do better than the major average. >> what are the areas? >> health care and staples on the defensive side and finance r shls and that combination that bar bell worked well last week
it was up. those would be three areas and consumer services opposed to goods. where we think there's overcon survegs. >> for the fed and yields is that the key factor for being cautious or the fundamentals and the earnings estimate peaked >> little bit of both. rates is definitely part of the story. clearly the fed moving away from maximum accommodation is likely leading to higher real rates 10-year yield up 35 basis points and a tightening of financial conditions we also though to the point we think earnings next year are too high now because essentially numbers extrapolated and leverage flowed through and have
to deal with taxes that's not been legislated yet but we think it will be with the budget package if the budget package passes there will be higher taxes and about a 5% s&p earnings on that front alone. >> sounds like you're defensive well into 2022 and not necessarily that bullish in terms of the move to see for the s&p. >> between here and the first quarter that's right exactly. the market will take a break corrective activity. try to move around a bit and play the areas where we think there's lagging performance. defensive areas is an area consumer and that's how you outperform. >> how's this view gone down with the clients and do you think that positioning at least somewhat reacted to this view? because we have been talking on the network about how quite a few members of the sell side started to be we have to be
cautious september or october. not like peak bullish right now. >> i think that's fair a good point. we started to position back in march and april with the quality trade and served the clients well and followed that advice and got on board with that idea and faded small caps back at that time and the cyclical areas and now reverting back a little bit. not full cyclical but the financials is where we make a bet on right now but no. i hear you sometimes opinion marries with the fundamentals right? i think everybody understands the deceleration now and fed is tapering people are less excited. doesn't mean we have to avoid the correction we can have the correction just because people sometimes get it right. >> where does the dollar go from here and do to this entire conversation we are having >> yeah. i think currency is important.
we think that over the next several years the dollar will be weaker it is stronger now but ultimately for trade to work which is the intermediate term view and the market will go back to that mind set the dollar has to weaken and will be the movement of the dollar weaker. >> my final question is whether the mega cap names fall into the basket of overpriced tech to avoid for the rest of the year or defensives to hold on to. >> it's a mixed bag. tech sa very hetero genius group. i would argue scyclicals are du for a pullback and will continue to hold up but i it's a -- pick the spots within technology. it is not homogeneous. there's places to avoid. >> mike wilson, thank you for
joining us today. >> thank you. >> just a quick check on how we ended the first day of the trading week the dow finishing up higher. tranports and the small caps outperforming the market the nasdaq ending down about half a percent tech stocks under pressure we have breaking news on fed chairman jay powell meantime steve liesman has the details for us. >> thank you very much fed chair jay powell will say in part of the mandated testimony upward pressure from supply constraints and supply bottlenecks have lasted longer than he expected and pose potential inflation and constraints in the economy says if they pose a serious concern the fed would respond to higher
sustained inflation. on the economy strengthening and points to the areas most affected by the pandemic as areas that started to strengthen strong growth expected in the second half and some industries constraints of activity. labor markets overall he said continued to improve. >> just looking ahead to day one of testimony tomorrow, given the fact that in d.c. you have this show down and the funding and the next year will look like is there an expectation to field questions about how the fed can i guess help to step in if things go sideways >> it's going to be a long and interesting morning tomorrow i suggest you with the viewers tune in because of the things you laid out there are going to be on the table and they are going to be bantied about. the effects of a potential
shutdown of the government along with what's going on with covid. the spending bills that are before congress right now. i think that's on the table. the outlook for monetary policy will be on the table i don't think we should not -- i think we should connect the two reports in this half hour which is the one about the resignations coming the day before powell has to sit before congress so i think that that's another potential possibility. the retirements of kaplan and eric rosengran the day before powell has to sit before congress and potentially answer questions of conflicts of interest. >> i think optimistic if you were in team powell, not saying that you are, for it to be potential questions. i'm sure that's top of the list and interesting to see if he has
a good polished legitimate answer to the question which is why should they resign and you not? >> yeah. it will be interesting to see if congress makes a distinction there. it is a distinction that maybe other members of the press have made it's unclear if they own the asets before the fed started to buy them whereas kaplan didn't appear to be trading in any of the asets. the trouble is you can say that you followed to the letter the fed rules about trading. same time those same rules say you have to avoid any appearance of a conflict so the question is whether powell also created some form of an appearance of conflict in owning the same asets that the fed was buying and selling. >> i think as we discussed there is a good answer to give the question is in these types of moments does the chorus and
cacophonies of more blood get too loud so far it hasn't for him but clearly in the short term whether it was an attempt or the pre-emptive and kill it for them it did get to there. very interesting. >> it is worth mentioning powell did seem to move rather quickly and to say that he was doing an investigation of this and say he was looking at the rules again and thinking about what code of conduct the federal reserve is governed by and now the resignations a few weeks later also seems to have moved quickly in that regard and didn't deny the ownership of the bonds either. >> also of course some members of congress easily in a place to pose the questions than others
given a lot of the same problems apply there. we could talk about this for hours. thank you so much. we look forward to the testimony tomorrow which we know you'll be covering closely for us. shares of beyond matte rallying today what they could mean for the bottom line d anthe alt meat war just that's coming up.
. welcome back time for a cnbc news update with shepard smith. >> hi. thank you. from the news on cnbc, the r&b singer r. kelly convicted on nine counts of racketeering and sex trafficking. federal prosecutors accused him of being a ringleader of a scheme to recruit and groom women, underage girls and boys all for his own perverse sexual gratification. he described as emotionless with the eyes cast downward he could go to prison for
decades. sentencing set may 4. it is deadline day today in new york state for health care worker just they must have at least one dose of the covid-19 vaccine or face termination. the new york governor said she's prepared to bring in out of state workers to fill gaps the state's health department reports close to 20% of all staff are not vaccinated tens of thousands without shots in arms. and president biden rolled up his sleeve for the thoird time today getting the vaccine booster shot it came just days after the cdc endorsed an extra doze of pfizer for certain high risk groups the agency approved boosters for people 65 and older and front line workers including treechings and nurses but confusion orr who's eligible is still a major issue nationwide tonight i'll ask the director of
the cdc about that and about the time line on vaccines for younger kids that's on "the news" 7:00 p.m. eastern. back to you. >> we'll be watching thank you. up next, entertainment analyst making a bull oish call on what he says is an underappreciated powerhouse. we'll reveal the stock he says can rally 20 pistons from its price. stay with us
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shares of beyond meat with a pop today continuing the chicken rollout. kate rogers with here with that story for us hi. >> hey beyond announcing today the meatless chicken tenders are going to be available in select grocery stores in october including walmart, giant foods and shoprite they use fava beans and the company says they have about half the amount of saturated fat of a traditional chicken tender. ceo brown told me that the company is continuing to work on building out plant-based options so that if they seek an animal protein product there's a beyond option to choose from. restaurants shuttered and then consumers loaded up with grocery and there's a less clear
landscape and the productings continue to do well and expects that the rollout is well received this is the continue waegs for beyond with nuggets and strips in restaurants over the summer and impossible launched earlier this summer. back over to you guys. >> thank you so much. up next, if you can't beat them join them hedge funds are sick and tired of private equity and making a swift change it's made investors a lot of money. we'll explain coming up next. powell and yellen set to testify motorrow what we'll be listening for when we return. buried in receipts, invoices and other paperwork that's preventing you from doing what matters most? then get the all new epson rapid receipt smart
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point? >> yeah. thanks for having me on. sony has really transformed itself over the last decade or so the legacy isn't the video games, movies, and music and they're at the forefront of how digitization is changing the way music is consumed and distributed and have benefited a lot from that >> how much has the timing of your complication of this note with the share price target of a 20% up side been linked to universal music's very successful ipo and strong initial trading and the valuation that it has commanded? >> the direct proximity was a little bit of happenstance we've certainly been looking at sony over the last year or so, in part because we see that the music industry has really come
back from kind of a dreadful beating it took in the wake of anim napster. streaming is now a powerful profit driver. it is one of really three players to control the vast majority of the music streamed out there so they have an excellent position in that part of the business is growing rapidly. >> it is incredible. in terms of of beating, it was almost two decades of beating. i'm really curious about the film and tv studio piece of the puzzle, doug because by my count, i think sony is the only one making content but doesn't actually have its own ott platform. will that change >> i don't think it will change in the near term they have a smaller platform they don't have a broad disney plus, hulu, type service
that was a decision on their part and i think they feel comfortable that they can produce contend and then sell to it all the other direct consumer providers who are ravenous for content. they've recently signed with disney and netflix which will net them in the range of $3 billion. it's definitely a seller's margaret for content right now and we've positioned them very well >> so talk us through what your price target is. how you got there and how the valuation multiple stocks up against it >> so sony, essentially, we've valued them on par with comparables so the music business, we look at warner music and the universal music. we cover traditional media, we used to value the film and tv
businesses a very nice semiconductor business, with valuations and consumer electronics as well when we add those up, we value them at market rates and we think some of them are at a premium. even if we decide the market rates, we can see the 20% up side it is at a conglomerate discount i think they can be reasonable when you talk about a company with a lot of poorly managed businesses but we think they all fit together quite well. we think the company has a pretty good sense to invest in for growth versus just for cash. >> that's where i was going. the fact that it is a conglomerate, whether it would be spinning off any of the businesses to realize greater value or whether it makes sense to be together >> yeah, i think right now they feel very comfortable with their
assets they did some asset rationalizization. they were pressuring the company to do more significant moves but i think they like their mix. they feel like they're leaders in the business that's they have and i don't think they're overdiversified. i think that's the key they're not trying to be everything to everybody. they're trying to focus, providing emotional connection to their consumers and that's where their entertainment properties drive >> thanks for joining us today >> thank you hedge funds ramping up their stake in the private markets leslie is here with that story for us >> yeah. convergence is the industry lingo here meaning the merging of hedge funds with venture capital style investing. many have invested more than $150 billion into start-ups this year, already surpassing last
year's record. it is marked a huge shift as you can imagine in the venture capital land scape which all of a sudden is seeing this rush of capital from a different type of investor one willing to do deals faster with less intervention they're not interested in board seats which start-up dozen appreciate because they like to do things their own way. why are hedge fugds all of a sudden attracted to this market in the first place you can see they're generating annualized returns last year around 14% that's twice the performance of hedge funds. that wasn't the case a decade ago. past performance though not indicative of future returns and given that hedge fund managers are writing very quick checks, some are wondering whether they have enough different intelligence and discipline terms valuation. >> yeah. i was going to say just the fact that you do have so much more
demand for the company that's are out there. i would imagine it is really putting some upward pressure on valuations >> yeah. that's right the challenge is not supply of capital right now. it is the supply of companies. so this competition, it was already pretty fierce just with traditional investors. maybe a couple of what they call tourist investors, the lingo for investors that they don't think will stick around and they're new to the game. given all the capital, they're really hiring and upping their head count in terms of people who specialize on this stuff it really does seem like a pretty permanent trend of course, that will follow what happens with valuation and that will happen with what happens with some of the macro aspects creating this perfect environment for hedge fugds to be investing in private nds to be investing in private markets. >> you thank
don't forget, alfa is back september 29th we'll be bringing you unparalyzed insights and strategies join some of the biggest names and investing. register now at delivering alpha.com. looking ahead to tomorrow, we'll get earnings from micron after the bell and front and center, jay powell and janet yellen set to testify in front of the banking committee. and don't miss our discussions you can catch both of them right here closing bell tomorrow afternoon. some big ones there. morgan, i'm particularly looking forward to talking with jeremy grantham again we've had him on before. it is rare to hear from him. it is an indepth interview clearly he's been too early, he
said it is the fourth real mccoy bubble of his career he's accurately called the prior three. this one, if he's right, has been early but it would be great to get an update if he has greater conviction of that call or if things have changed since we last spoke to him a year ago only particular topic. >> a fascinating interview to watch. a key investor voice when the market is at quite a cross roads in terms of the different risks that are comprising the waffle worry for investors as we go into the final months of this year and we to look 2022 it is interesting to see as well, well, what is going on in d.c. with all the different legislation that is making its way through and you have the fed chairman and the treasury secretary doing day one of testifying on the hill tomorrow, too. i certainly will be focused on that tomorrow morning to see what kind of headlines come out
there. >> sure. it will be great and more market discussion a very interesting day today the vix picked up despite the overall flat day and a huge surge in yields as well. 148, the ending. we are out of time here on closing bell thank you for watching "fast money" starts right now. overlooking new york city's times square, this is "fast money. tonight's trader lineup. tonight on "fast," a kid version of instagram as pressure mounts that the platform is too toxic to teens we'll break it down. plus, lights out power problems plaguing china forcing factories to shut down how this could add even more pain to the global supply chain. and later, energy stocks in rally mode soaring 3.5% today we'll drill down what is behind this big move.