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tv   The Exchange  CNBC  September 28, 2021 1:00pm-2:00pm EDT

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steve weiss. >> dick's sporting goods stock is under pressure. i think it trades back up with the market >> all right and pete najarian? >> sticking with energy, scott i will give you xop. it will give you all of the beta names i talk about each and every day. >> yeah, looking at crude oil, it was above 75.50 earlier today. it is another interesting move there too because now it has gone negative on the day we are watching a whole bunch of things today so is "the exchange. it begins now. ♪ ♪ thank you very much, scott hi, everybody. i'm kelley evans here is what is ahead this hour. a dangerous man, senator warren lays into fed chair jay powell as the market debates whether his days are numbered. what will the rising number of fed vacancies mean for policy? does it explain rising rates and the steepening yield curve we'll explore. let net gas goes wilder, the only thing wilder is reversing lower on the session today but the 20% surge over the past week is causing trouble in the uk and
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reverberating across the globe we will get the latest and the impact it could have here. a dire warning from secretary chair janet yellen if we don't raise the debt ceiling the country could face a recession and debt crisis, no big deal we will follow the latest action first over to dom chu with a look at today's big market drop. >> it is not just the drama in d.c., it is drama everywhere these days, right, kelley? for the longest time we haven't seen volatility, it has come to a head over the last couple of days, specifically with evergrande over the past week in china and now given the concerns over the debt ceilings and everything else in america what we have is a very down market it is actually toward session lows right now the dow industrial is down 580 points, 1.75% down there the s&p 500, 4349 right there. up 94 points to provide context around the trading day, at the highs of the day we were down roughly 24 points, at the lows of the day down now about 96.
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just again at about the lows of the session so far, off more than 2%. nearly 3% declines for the nasdaq composite, off 417 points, 14,552 the last trade there. within the broader technology, nasdaq steam there are certain parts of the market hit worse than others the semiconductor etf took the smhs off, around 4% at this stage. the i share tech software, ticker ivg, 3.5% declines there and similar declines for the internet etf with a lot of the base names, communication services names those etfs again underperforming the market even in the sell-off. if you are looking for stocks showing some signs of life right now, they may not all be positive but check out kroger, tyson foods, clorox, jm smucker and hormel they're either up or marge neal to the downside today. what do they have in common? all consumer staples companies they were pretty much given away over the course of the last year
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here as people refocused on the reopening trade post-pandemic. however, in an ideal situation for these stocks you have a mini rotation out of some tech names like we have shown you into some of these we will see if it sticks, kelly. still, food processors really in vogue, at least for today. we'll see if it sticks back to you. >> thank you very much, dom chu. let's get a check on treasury yields, trading near three-month highs and rick santelli here to dig into it for us rick >> yes, kelly. if you look at a one-week chart and, of course, these take into account the fed meeting last tuesday and wednesday, here's 10s and 30s. you can see they've been zooming higher even to on 10s we are towards the low end of yield, the high part of prices for today still higher in yield than yesterday, and the 30-year bond seems to make up lost ground and it has been the laggard because it has to deal with the big demand, the longest maturity positive yield, even though it is a negative yield, still lots of buyers there.
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look at boons and guilds, same scenario the central banks are going in opposite directions. ecb leans more dovish. the bank of england sounds more hawkish. no matter how i slice it, no matter where you look the pressures of inflation are building call it transitory or anything you want, call it anecdotal, whether you look at five-year break evens or ten-year break evens in europe, back to 2012 respective price in the s&p for july what you will notice is 19.7% year over year, second highest ever going back to '88. personal consumption expenditure, cpi year over year. by the way, cpi in europe comes out friday let's look at what is going on with the 30s minus 5s. you know, the 30-year has been a bit of a laggard even at 105 it is a flat yield curve, but it has steepened a bit as the 30-year starts to play catch-up. finally, what is it all doing to foreign exchange it is helping the dollar and it is certainly hurting the euro, but maybe the biggest issue with the euro is that even though
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they seem to have vaccines at a nice fashion coming and improving some of their history in that regard, they certainly seem to be dragging their feet on inflation pressures and any type of policy reversals kelly, back to you >> rick, could you go back to the sort of steepening or flattening or, you know, what we're seeing at the moment and the extent to which in a sort of circular way the more dovish the fed the more rates are likely to rise and things might -- you know what i'm saying it is counterintuitive but seems to be what is going on here. >> yes, it is counterintuitive even though i can't see the results of the seven-year note auction, rates ticked up a little bit in the last few minutes. my guess is therein lies a good answer to your question. forget the two-year for a minute three, specifically fives and sevens, that mid part to the beginning of the curve is what is going to start reflecting the nervousness in the real world of finance for rates to potentially move up. the longing is caught between the cross fire of a nervous equity market trying to swallow
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higher rates and, of course, what is going on with buying and nervousness over inflation the long and the short of it is i think yield curves are going to remain more on the flat side, but i think they will be taking back a little flatness as the 30-year and the 10-year, of course, start to price in a bit more inflation, more in tune with some of the levels we see on the break evens in europe >> right like in other words the less likely the fed is to raise rates, the more likely yields are to rise which is, again, the paradigm we have been in maybe for quite sometime rick, appreciate it for now. we will check back in soon rick santelli watching the action in chicago for us let's pick up the discussion with our markets panel we have rising rates, slumping tech stocks and the energy crisis hitting markets hard today. we are just off the session low as the dow was over 600 points down a moment ago. chris crisantini with ami capital market management. it is good to have you guys both here chris, i will start with you how much further do you think
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this move has to run >> oh, i think it may have a little further to run, kelly nice to be with you again. what i would say though is i would be a buyer of elquities here i think we are coming to the end of a delta variant-induced slowdown i think it is the end because we are starting to see something, that people are taking as negatives. for example, oil is going up interest rates are going up, but that's not a bug it is a feature of a growing economy. sure, does anybody love higher rates? not necessarily, but if they're a byproduct of a growing economy and the economy continues to grow next year i think we will be fine and i continue to buy equities here. >> continue to buy equities. mark, i think a lot of people want to know maybe which kind, you know, financials and energy, we saw it trade in the first quarter. is the trade back on now obviously it is back on, but for how long do you think? >> well, for short-term traders these are the sort of rotations
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that they feast on and what they enjoy. we tend to be a little more longer term, but, yes, we are very positive on financials. there's a couple of dynamics that going even beyond the rate hike cycle that we -- maybe not the rate hike cycle but the tapering in a rising rate environment. that is favorable for banks. we also saw another regional bank merger next year. we expect those to continue. banks must consolidate there's too many stores and they need to close to compete with online banks and the mega banks. so i think you would be well-served to look at a broad range of regional banks here that are going to benefit also from a stronger economy, rising rates and potential merger increasing their valuation >> and, you know, it is interesting even while you are saying that i know you like the tech names, mark which of them, all of them would you be adding here you are not concerned rising rates threaten their attractiveness and that sense in which they typically act, the kind of long-duration bonds? >> i understand that sentiment, and when there's a momentum
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trade like today and rates are moving sharply, i would expect growth to pull back. but we would look at that more as an opportunity for longer term investors to buy quality names. look, if you want to sell apple because the ten-year is at 1.5%, maybe you never should have been there. the huge cash flow machines, companies like microsoft oral pta bet and facebook, these are not your typical tech companies that suffer because the longer-dated cash flows are discounted at a higher rate. i think that's where investors need to be careful in lower quality names, tech names that aren't cash flowing. that's where investors should be careful in a rising rate environment. i wouldn't fear these behemoth who have massive cash flows and will become almost utilities for the economy. >> chris, i see you like names like boeing and disney here, but when you have names like apple and the rest of big tech off 10% from their highs, is it a chance to add them? >> sure. no, no, i think there's clearly opportunities to be opportunistic. what i would say is that i
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disagree with my friend a little bit in that i don't think this is purely momentum i think the market is acting common sensically because all of a sudden it sees the economy getting better rates are going up so a stock like boeing, a reopening stock like disney, banks, for example, ought to do quite well as you pointed out with rick santini. it is going to be a steeper yield curve so it is great for the banks. so i think the world is changing while i like tech, i think right now that's not the game that you want to be playing i think right now you want to be finding those opportunities. we get a second bite at the apple here, kelly, because the reopening stocks have come down with delta and now they're going to go up again >> quick last thing i would ask, chris, is this time the energy trade looks much more uncomfortable. you know, the pace of the increases and -- >> right >> -- there's sort of one thing to be said for, hey, we are coming out of the pandemic, you know, energy demand will be high irand another to say, hey, we have a totally bizarre power crunch going on in large part
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because russian gas isn't there. >> right >> it is going to cause a huge crunch with backlash from politicians and all the rest is that a trade you want to be on the long side of? >> you know, we don't really want to be, kelly. but, boy, it sure looks like it has legs to us it is not -- we don't love those companies. they're too unpredictable. the returns on equity aren't great. the cap x rirequirements are so large. once every five or seven years we sit back enviously and look at them. right now we are in the sixth or seventh inning and i think it is a little late. >> we have to leave it there we want to go back to rick santelli for the results of the seven-year auction he mention. rick, what are we learning >> reporter: you know, here is what we learned. i gave the auction a b all of the internals were basically slightly above average, the yield 1.332 what we learned is at the big concession, meaning rates have risen and prices have fallen, if you want to buy it is the time to buy
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they showed up but didn't chase it and investors weren't aggressive, which tells me they're not sure if they believe the sell-off or if they should be buying the dip in prices. >> rick santelli, thank you, with the seven-year yielding about 1.326% let's turn to the energy discussion, pick up on that gas prices remember, these were up more than 10% earlier today they've since dipped negative. they're still up about 20% in just the past week as nat gas nears the $6 mark. it is currently about $5.77 or so it is prompting huge rallies in shares of companies, with one up more than 60% since january. others have more than tripled but are the prices sustainable and if so what kind of cataclysmic results could it cause around the globe brian sullivan here on what is driving the surge and how long it can last. >> the second part i don't know, but i do know the first. i will talk about it by the way, the ceo of shaneer will be on with us next week just a quick tease there
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what is happening really overseas, europe and asia, truly incredible i don't say incredible like in a good way prices for natural gas, they are through the roof that is not tv hyperbole this is chart priced in british pence per thermal unit but don't worry. we can do the conversion for you. it basically shows the spot contract for natural gas now above $25 per contract in parts of europe, and we are hearing talk of up to $30 or even above $30 in china what does that mean? well, consider this. let's look at the u.s. natural gas futures price, the one that we talk about all the time it is at $5.79, which, by the way, is actually a seven-year high so consider that spot gas prices in europe are about 350% higher than here, and asia is 400% higher. the question is why. well, the answer is not just one thing. really if you break it down there are four reasons why we are seeing this phenomenon
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here we go number one, you just referenced it, lower supplies from russia they've been a bit stingy, and some suspect it is so they can apply leverage over germany to get the key gas pipeline, the nord stream 2 approve. could you imagine vladimir putin doing something like that? no also, other power sources aren't meeting enough expected demand they took a bunch of coal off line and the wind has not been blowing in italy or the north seas, so wind energy has been kind of a dud. third, china's demand is sky high they come booming out of the pandemic, which is why they're willing to pay nearly anything for l ad g right now fourth, global supply is lower in part because 20% of u.s. production is still off line due to hurricane ida now, because people are nervous about not having enough supply they're almost panic buying, like we are seeing with gasoline in the uk. so what does it mean for europeans and for us okay for europeans it means electricity prices are going to soar and they already are in some places that are not on
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fixed pricing contracts. one of those is spain. the impact there already been felt wholesale electricity prices are nearly 200 euros per megawatt hour what does that mean? well, they normally would be between 10 and 40 euros per megawatt hour. so maybe 50 at the high end. so they're nearly four times the normal price put it in real-world context, kelly, let's say your home, the electricity bill is, i don't know, $200 a month right now for ac or heating. suddenly you open your bill and it is $500, $600 or more that's what is happening in spain. when other countries like germany, france and most of europe that are on twice-per-year pricing changes, right now they're in fixed contracts, start to roll over, costs for hundreds of millions more people may start to surge this is probably the single biggest global economic story that is happening right now. i guess these days that's kind of saying something. >> it is saying a lot, brian
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we are also beleaguered. the last thing we want now is the most vital supply crisis to be the power supply. so, you know, again, in the uk when you have a lot of these bills are actually capped to households, why you have power providers literally going under. some are refusing new customers and all of the re of it. i guess i wonder if you are again -- like you are long this trade, you have to assume policymakers aren't going to intervene here and i don't see how they couldn't. i don't see how they fix it but they have to do something. >> well, they've got the climate summit october 31st through, i think it is november 12th in scotland there is a meeting october 21st according to reuters to, quote, discuss it here is the reality. okay we are coming out of a pandemic. people are already ticked off. all right. if you start having people whose bills triple, quadruple or they do not have heat >> right >> because, you know, a bunch of rich bureaucrats in brussels decide to pull a bunch of coal plants off line, i'm not sure -- you see where i'm going.
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i'm saying it without saying it. >> it is a pretty bad look the population is not dumb to the extent they think it is a reason for it they will be furious. it will be interesting to see what happens over the month. we look forward to seeing them maybe the u.s. actually could benefit from demand for l & g in the long run coming up, team coverage of the market sell-off and disfunction in d.c. as we approach, oh, yes, the deadline to fund the government we are watching under performers as the big legacy name enters the buy now, pay later space we will tell you who it is and what it means for fintech. here is a look at the dow 30 heat map as it dips negative for the quarter, dropping below 35,000 only three names in the green, i think chevron was one of them earlier. interestingly, goldman one of the worst performers we will have more in a moment. back in a minute this is "the exchange" on
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congress is racing to address the debt limit and avoid a government shutdown before time runs out, but the process is proving to be even more complex than expected. ylan mui is live in washington with the latest for us ylan. >> reporter: kelly, democrats are scrambling to find the path forward on the debt ceiling now that we know the deadline is october 18th i tried to ask treasury secretary janet yellen after her
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hearing whether markets might be getting a little worried about this she didn't respond but she has emphasized that even a delay in raising the debt ceiling could start to spook investors now, today senate majority leader leader chuck schumer will ask for unanimous consent to raise the debt ceiling with a simple majority vote, meaning that republicans would not technically have to support it, but the gop is expected to block that maneuver as well. >> it is a way out it is a straightforward proposition. if republicans really want to see debt ceiling raised without providing a single vote, i'm prepared to hold that vote >> reporter: now, this all puts democrats right back at square one. this morning democrats in the house were talking about shifting the responsibility to the administration, minting that trillion dollar coin, or even that the constitution means that a debt ceiling isn't necessary guys, republicans say that democrats should just use the same fast-track process they're using to pass the social
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spending package, to raise the debt ceiling as well democrats see that as a last resort kelly. >> ylan, we appreciate it. ylan mui with the latest for us. turning to the other drama on capitol hill, fed chair powell revealing new information in the senate testimony today regarding a story we've been following closely. the controversy about trading and holding by fed officials steve is here with the latest details. steve. >> reporter: thanks. fed chair jay powell in testimony before congress revealing the federal reserve is looking into the legality of trades by fed officials. he did not mention what trades specifically and who is being looked at, but fed presidents rosengren and kaplan resigned yesterday with questions surrounding trade practices last year >> we are also looking carefully at the trading that was done to make sure that it is in compliance with our rules and with the law >> reporter: both kaplan and
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rosengren said their trading were within the law and fed's code of conduct. powell said it may well be the case, showing the need for rules to change. >> even if as appears to be the case, i think appears to be the case, these trades were in compliance with the existing rules, that just tells you that the problem is that the rules and the practices and the disclosure needs to be improved. >> reporter: powell has promised a wide ranging review of the fed's code of conduct in the wake of the controversy. banking committee chair told ylan mui, you saw her in the previous report, he thinks fed officials should be barred from trading and owning individual stocks kelly. >> steve, perhaps the larger narrative here is whether fed chair powell is out of a job as dave over at jeffreys writes, he thinks he might be because of the trading issues on top of everything else. he says why didn't they just do something like alan greenspan where everything was held in a blind trust? how could powell own munis and
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approve a muni bond asset facility for the first time? i understand if the fed is going through an unprecedented crisis and needs to respond to it and not be ham strung in doing so, but there was still a year and a half between the time the programs began and we had these revelations. it feeds into the timing leading up to his renomination or lack thereof. senator warren came out against it today i just wonder if there's going to be more of a drum beat actually for him not to be renominated in the wake of all of this, more so than we might have thought even a week or two ago? >> reporter: yeah. let me clarify, kelly, that warren's objections are different, right as you know, warren feels like powell has done too much to deregulate the banks or amend dodd/frank just to be clear, powell roundly rejected those criticisms from warren saying that the banks, indeed, had a lot more capital than they've almost ever had she had said he is a dangerous man and that she would oppose his renomination so you have the progressive democrats on the other hand,
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they have been clamoring for a different fed chair, that's one. then you did not have, by the way, any other democrats come forward and defend powell from warren that's, two. then you have this question about how the inflation issue plays. finally, the final question i think is this ethics controversy, and he still has a couple of cards to play in that in terms of how he can respond and the fed respond, and how the fed responds and getting the fed out in front on this issue >> well, the resignations did happen very quickly, but then others are wondering why powell himself didn't call for them >> reporter: it may be, kelly, i can't say for sure, but it could be because he doesn't really have a role in that regard it is a decision of the boards of directors as i understand it. he did not call for them he did not ask for their resignation. he allowed, i believe, the process to play out at the local level, which is sort of how the fed is set up in that regard these were the decisions of individual banks with their
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boards of directors who appoint and i think can get rid of their bank presidents. >> interesting steve, thanks for all of the reporting today. we will see just how monumental it ends up being our steve liesman with the latest there will the resignation of the hawkish presidents, rosengren and kaplan, change the timeline for a fed taper? how might this affect fed policy in the next couple of months joining me is bill lee bill, it is great to have you. do you want to offer a comment about the ethics issue, and if it is likely to strip the fed chair himself of his job, you know, how much more important would that be in terms of changing fed policy? >> well, that's a great question, kelly. as an ex-fed staffer and i still company myself a fed guy despite the fact i have been at imf and citi longer periods, the key thing about the fed is that it has had a tradition of pristine behavior on the part of its personnel. its integrity was always unquestioned to see trades done by bank presidents saddens me because it
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goes against tradition within the fed staff. so i think the rules have to be enforced and i think it is very important to modernize these rules of conduct as far as your question about impact on monetary policy, we are losing two fairly aggressive hawks from the fomc, losing as presidents, but it is really clear that the board of directors in the regional banks will likely pick people similar to them. now, rob kaplan had tremendous sway and rosengren had tremendous sway because of their service and their intellectual fire power i think coming up we are going to see this hawkish tilt progress more because jim bullard and esther george are becoming voting members. we are having a convergence of hawks whereas the centrists and doves on the board are starting to leave >> let me highlight this it is interesting and against the grain right now because, bill, as you know the current line of thought is the more vacancies, the more likely the fed is to become dovish. there's a lot of political pressure on them obviously from
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the white house, just the democratic party in general, and there's a thought that even though the regional banks choose their own representatives that somehow that political pressure is manifested in those who are more dovish. you have a completely different point of view on this, which is, you know, the selections will remain on the hawkish side, that we've got bullard, who just this morning was talking about the need to shrink the balance sheet next year coming on to the fed staff. so i guess the only thing i wonder is, is the market not pricing that in? you know, a hawkish fed would tend to sink bond yields in fact, we see them rallying the curve, steepening somewhat so the line of thought right now is a more dovish fed could be a reason for that. >> well, right now the key question is a hawkish fed will be very aggressive against inflation, and the real question to ask is can the fed do anything about the current high prices that we're seeing chair powell has gone on and on about this is not your grandmother's inflation. it is not the inflation we saw in the '60s where it was demand pull it is really caused by shortages and bottle necks
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i think that's the line that is going to be attacked by the more aggressive hawkish members who will be voting members, because they're going to say, you know, even though it is supply side generated and its duration is longer than we anticipated, its size is much larger than we thought, so we have to do something and pull back demand to offset the high prices and try to bring down the average level of prices. that's where the markets are starting to price in a much more aggressive market policy, and that's why you see the entire yield curve rise up in the last several days >> right i guess this is not my argument to make, but i do as an on-looker wonder if the point of high prices is to cause demand destruction, which is what it does when natural gas is where it is, the whole point is to destroy demand why would you need the fed to destroy more demand on top of that can't the prices do it themselves >> that's exactly what i would say. but apparently the so-called price elasticities of the certain items aren't enough to destroy enough demand. the argument among a lot of the hawks is we have to offset even
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more downward pressure, put more downward pressure on other prices to get us the average inflation rate from 4%, better now, down to 2.25% by the way, the fomc itself, the average inflation forecast for next year is about 2.25% the range is 2% to 2.5%. the majority believes we will be seeing 2.5% to 3% inflation sometime next year >> that's true that's not even something we're debating at this point the pressures look worse. bill, great to have you. thanks for your thoughts today >> thanks for having me. >> bill lee is with the milken institute. as we head to break ford is one of the few bright spots in the sell-off as they announce four new plants and 11,000 new jobs shares up nearly 2%. ford is now up 60% this year here is a look at the s&p 500. about two out of the ten lines in the green today it is the worst day for the index since may and worse month so far since last september. we are back after this
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emerson's breakthrough technology enables the power industry to integrate renewable energy sources to modernize and improve the electric grid. emerson. consider it solved. welcome back to "the exchange." minus 606 was the session low so far in the past hour or so, about 100 points off that level. the blue chips actually the out performing today the s&p 500 down 1 pnts 85%. the nasdaq is down 2.5% as people are concerned about the fact their inflation is worse than maybe the industrial sector remember, tech has high head count as part of its operating cost that moves up with inflation, and the industrial sector you can see things more fixed. they get better operating leverage anyway, that's the rotation going. energy only group in the green tech and communication services
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biggest laggards with tech on pace for the worses day since may. with mega cap tech firmly in red as yields move higher, cloud stocks and work names are moving lower. zscaler is down. zoom down as well. adobe is down 12% in september for the worst month in more than a decade here is a look at vaccine makers, seeing big declines. novavax down about 11% moderna down another 5% or so today. it is now down 15% since friday. even biontech shedding more than 7% on the session. over to rahel solomon for a cnbc update rahel. >> hi, kelly here is what is happening at this hour. the man who has been sentenced to life in prison for killing four people at massage business pleaded not guilty to four more counts of murder robert aaron long could face execution if convicted on new charges. 11 people have been charged in the hazing death of adam observation, a student at virginia commonwealth
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university the charges come six months after he was found dead. his family says he attended a frat initiation party where he was told to drink an entire bottle of whiskey. on the news, new cars will abolish fraternities and sororities at northwestern university we will have a reporter on the ground tonight at 7:00 eastern and amazon is unveiling new products there's an amazon echo you can hang on a wall the company 'first smart therm stat and this. meet a home robot that puts your alexa on wheels. it can also talk to other smart devices and even up your home security by patrolling the house. astro will cost about $1,000 and be available by invite only. no release date has been set kelly, it is like something out of a sci-fi movie. >> yes i'm waiting for the iteration that does household chores and then i'm all in. >> hear, hear. me too >> rahel, thank you very much. coming up, shares of apple down about 2.25% today we will talk to dan niles of the is a torey fund about the tech
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rep, his concerns about apple and where he sees opportunity next
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welcome back to the exchange, everybody. tech stocks are getting hit hard as bond yields climb to help make sense, dan niles, founder and portfolio manager of the satori fund. great to have you here i don't have a ton of time and i want to rattle through about 18 different things so let's see how much i can get through big picture, what do you say to those that say tech is more vulnerable to higher rates because they don't have as good operating leverage from inflation and all of the rest? is the sector, broadly speaking, something to be avoided for the time being >> yes because all of that is true. the other thing is don't forget a lot of tech companies benefitted last year from the global pandemic and that you streamed more movies, you bought more things through ecommerce, et cetera. so there was this massive uptake during that period of time, and now what you are seeing is streaming companies are on the same forecast. ecommerce companies are missing
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forecast fedex, you know, when they gave their updates said ecommerce was worse than expected, et cetera so, you know, the tech companies, also the big thing is companies that don't make a lot of earnings and you are looking for earnings, you know, ten years into the future, as interest rates go up those earnings are discounted at a higher rate and that hurts tech stocks disproportionately that have high growth rates but little profits >> why would you be a buyer of google with all of that said >> well, with google you look at it and say the company is growing revenues in high 30% range year over year it is trading at below market multiple, and they benefit from economies reopening in the sense they have about 10% to 15% of their revenues in travel and in hotel and leisure activities so you really get that benefit, and they're obviously the cutting-edge of a variety of different technologies so they're one of the few exceptions to that rule. don't forget, they got hurt by
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the pandemic last year because there was no advertising from a lot of sectors but they still managed to grow revenue, so it tells you how strong their business model really is. >> i was surprised one of the areas you actually are most bullish about right now is sports betting >> yeah. i mean if you look at sports betting, you know, there's very few sectors that are left that still are getting transformed by the internet, and sports betting is one of them don't forget, you've got about, you know, a couple dozen states that have legalized gambling, but only about 15 or so of them have online sports betting allowed. also, this year you've got the nfl allowing these companies to advertise within the game their offerings. so you should see very strong growth this is a space that should grow 30% a year for the next several years, and the nice thing is a lot of the stocks have gotten absolutely killed as tech has rolled over. so, you know, we're actually adding to some of our positions in that space today, which is great because the stocks are getting absolutely crushed >> let's talk old tech where
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we've already noted the names like sysco and dell and oracle with really nice gains this year, almost double the s&p 500. i haven't checked in the last month or so, but do you continue to like this space i don't know if they created a huge opportunity here because, like i said, they've been up so nicely if there's a sell-off, would you be a buyer of those dips >> yeah. i mean the biggest picture way to think about this is last year you wanted to own consumer because we were all stuck at home buying things online, streaming things, playing video games, et cetera this year you want to buy businesses that were clobbered last year because nobody was going into the office. so names like sysco and oracle and dell, those are the types of names you want to be in. the other thing you benefit from is they trade at half the market multiples in a lot of cases. they've got dividends, or in dell's case will have a dividend with the vm spin that's coming so that's the type of name you want to own in this environment and you can see it today those names are vastly
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outperforming in this type of tape where tech in general is getting absolutely destroyed, even though those names outperformed year to day nicely. >> i would mention you are cautious on streaming which i assume includes disney and netflix. you do like viacom and cbs >> yes, i like them a lot because you can pay 50 times earning. if you look at viacom, cbs, you can pay ten times earnings for a company that did almost a billion dollars in streaming last quarter roku grew their revenues just over 80% you look at netflix it was about 20%. so, you know, they're growing much faster. people hate the space, which is great, because it gives you an opportunity to buy something with a dividend, with a low pe, whose business is doing fantastically well i think when companies report this quarter disney has already told you their subs are light, discovery has told you the subs
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are light. netflix missed the last two quarters we will see what happens this quarter. they seemed to sound good. i think you will see fantastic numbers out of viacom at 10pe which is half the market value >> let me end by putting it in context, dan we heard a lot of specific names you do like, but caution about the tech sector broadly speaking and some of big tech, and maybe some caution about the stock market overall as well with your analogies to the 1970s and so forth. so what does the portfolio look like for the investor who might be watching and agreeing with that is it comprised of just a concentrated portfolio of a few names that might have some overlap with tech but you avoid a lot of the rest of it? i mean what does that look like? >> yeah, i mean so we've written up a lot of this on for viewers who want more detail but, yeah, in general we have more shorts in techs than we have longs our longs are more in areas like financials, energy, et cetera. we're actually selling some of those names to buy a little bit,
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to cover some of the shorts we have we're having a pretty solid day. our longs are getting killed, but our shorts are getting destroyed. that's kind of how you are trying to balance the portfolio. and interest rates are going to go to 2% that's been our take for a while, and that hurts tech names in particular in that interest rates are going up driven by financials, energy and things like that. so that's where you want to have a mix of your portfolio, and be very careful because don't forget the underlying backdrop is valuations of record levels market cap to gdp at two times a 50-year average is 0.8 tech bubble peek was 1.4 you are taking a lot of risk if you stay with tech right now >> dan, we appreciate it thanks for walking through pretty much every aspect of this market, especially in a sell-off like this one. we actually killed a commercial to fit it all in that's about the biggest compliment i can offer thanks for your time today we will check back in, dan niles.
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meanwhile, consumer discretionaries is down 2% right now. remember, it is tech heavy could the dip provide buying opportunities? dom chu is here with names the street says could climb higher dom. >> if you look at consumer discretionary as a sector for sector no, ma'amics this month, it has been an underperforming versus the s&p 500 if you look at the chart on a year-to-date basis those track closely until may, early june, when you see the orange line diverting. the orange line is the broader market the white line is consumer discretionary sector the broader market has outperformed there have been stocks beaten up and for that reason average analyst target prices for these names still remain well above where they're currently trading. the five biggest gaps in terms of where prices are right now compared to where they should be based upon analysts', average analysts' target prices are las vegas sands which has a 53% applied upside to analyst target prices
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homebuilder puttie group, 42%. vf, up 41% gap at 40% general motors not nearly the performer ford has been over the course of the year, implied up 36%. those are the potential upsides. as opposed to downsides where maybe stocks have run their course, check these out. tesla could have a downside target of about 1% tractor supply has had a great run this year, down 4% hilton and marriott on the reopening trade have maybe run their course chipotle, sitting right where its target price is right now. kelly, when it comes to discretionary there are parts of the market that have really underperformed maybe it is where some of the out performance could come from if there's a broader catch-up trade. consumer discretionary back to you. >> thank you very much the headlines keep coming. we have news out of jpmorgan according to reuters ceo jamie dimon says the bank has begun preparing for a potential credit default as talks get down to the line he supports a bill that would
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get rid of the debt ceiling but he warns failure to pass legislation in time would be, quote, potentially catastrophic. coming up, the code conference is underway, bringing some of the biggest names in media and tech together. the co-ceo of waymo joins us with carl to discuss the future of autonomous driving. stay with us you have the best pizza in town and the worst wait times. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit
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with no line-activation fees or term contract required. see if you can save by switching today. comcast business. powering possibilities. welcome back, evg. the code conference is underway drawing executives from across the tech and media space carl is out in l.a. and joins us now with the co-ceo of waymo >> he joins us here in l.a. at code where so many themes are talked about including mobility and definitely autonomy. thanks so much for the time this afternoon. great to see you >> thank you great to be here >> we're dealing on a day where the market's been royaled with headlines about driver shortages in the uk and how to get fuel from here to there, and are there enough schoolbus drivers in america
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i wonder if you think autonomy were truly mature today, how many of these troubles might be alleviated >> so there's no doubt that they would be alleviated and the reason is because at waymo, we're focused on two sides of the business via, where we focus on moving goods and one, where we focus on moving people. once you build the driver, the waymo driver, you have this ability to deploy it across multiple business cases and so the question you're asking, we would be deploying it in those use cases. think often people think of autonomy as replacing the driver versus being an opportunity to actually address the shortages >> does all of the concern about moving goods, in particular this year and maybe part of last year, mean that trucking and delivering of goods is a higher priority now at waymo than it was before >> so, no, for us, and once you think about this, once you've built the driver, you can deploy it across all of these business
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use cases. we're starting with ride hailing, but we've also, we're testing trucks we've partnered with daimler trucks and we're testing local delivery with ups and auto nation so we think there are multiple ways to leverage the driver. >> so, let's talk about the testing you're doing it was phoenix, but now san francisco. i imagine the topography, the roads, bridges, are totally different. is it a big challenge or a natural evolution? >> both. building the waymo driver, what you learn is that going to a city like phoenix, arizona like we did, it was early day, so bringing the community along was really important teaching them, sort of getting their feedback and what to expect in the service. now anyone who goes to phoenix can download the app and they take a ride and the car shows up, it's completely empty. it's one of our chrysler
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minivans in san francisco, they have our fifth generation driver in them. we still have the autonomous specialist behind the wheel and so san francisco residents are now having the chance to have this experience where one, we have this one mom, who she's lived there for a long time, but now she's experiencing the city with her son through these new lens then we have people in the city who are really passionate about actually figuring out how to improve mobility there are riders so they can provide us with that feedback. >> for viewers like, i've been hearing about it for so long, driverless, driverless, at what point does it really become an everyday occurrence in everyone's life? >> it's a great question and we are laser focused on delivering that we were founded in 2009 as a
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google self-driving car project. one of the lessons learned is that when you're pioneering, you have to have enough humility to know what you don't know in the early days, we attempted to predict around the corner and down the hill. we don't do as much of that anymore. i think the reason we don't, there's sort of that last 1% and as you continue to tackle that, moving from phoenix to san francisco, that now operating in two cities, that's an exciting development. and at the same time, testing our class a trucks between tucson and dallas, that's exciting so we're really celebrating each of the milestones and focusing on the shared tech platform that the waymo driver gives us. >> a lot of this is going to come up with your chat you're on the lineup, regulation and everything else. we look forward to listening to that, too. thank you so much for your time. kelly, back to you >> thanks for that, carl we look forward to a lot more today and this week from code.
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ford making a huge investment in the midwest betting millions on electric vehicles phil lebeau spoke with jim farley and has the details now hi, phil >> take a look at this investment we're talking about four brand-new plants two that are going to be in tennessee. one building the electric f series another one for battery self-protection. then two battery cell plants, brand-new, outside of louisville where ford has a couple of plants the whole idea here if they add 11,000 jobs is that these are green sheet facilities they're going to be building these from the ground up
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they want to cut down on the pollution as well as have these facilities next to the plants where the evs will be built. >> look at the chip situation. we have to insource the batteries. we have to learn how to manufacture them in this country. we can no longer import raw materials from around the world. these materials have to come from north america >> and there will be a recycling component at all of these ev battery plants one last thing, guys, you take a look at share of ford, this is a stock that is up by 40% in the last year. we see first production from these facilities in 2025 back to you. >> gigiford. thank you very much. that does it for the exchange, everybody. "power lunch" starts right now >> i wore my green tie, but all the numbers on the screen are not green. they are


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