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tv   Tech Check  CNBC  May 2, 2022 11:00am-12:00pm EDT

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a lot of other things we talked about this morning with our guests and negatives and positives. the key would still be, when you talk to mark rowan for portfolio companies, still seeing strong demand, which does at least give us something to build on with the s&p up, up .9% that will do it for us on "squawk on the street. send it over to "techcheck.." good morning i'm carl quintanilla with deirdre bosa and jon fortt how much further can checks slide. nasdaq worst start to the year ever, worst session since the early pandemic smt streets and valleys biggest investors now weighing in, bill girly teasing more pain ahead on those looking to capitalize on tech valuations. nevada bezos co-signing the tweet. markets teach, the lessons can be painful apollo's mark rowan warning of the 30% drop in the s&p.
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take a listen. >> technology is going to change the world, but that doesn't mean it's not overvalued. so you look at average s&p p/e today, 21, long-term average 16, that's 30% to go you look at bht s&p is today, versus where it was at the end of '19, we have a long way go. >> and not the only way, dee, morgan stanley's mike wilson, minimum downside to 3800 in the near term, possibly as low as 3460 the 200 weak moving average as investors come around to the idea that the earnings yield in the s&p hasn't been this negative in half a century. >> yeah, when it comes to individual names as well, i mean, you have to wonder how much further they can go you take two large names in the market, netflix and paypal jon, it's really astonishing they have fallen below pre-pandemic levels. if these kind of big players can do that, is there still a world of pain in store for some of the other names that have come close to that level, but it's no
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longer that floor that some might have thought it would be, as if the pandemic never happened in terms of the digital transformation, can they go lower. those raise red flags for the rest of the space. >> sure. i mean, of course the market could go a lot lower i mean, what's the opposite of a cathie wood? we've been talking about cathie wood a lot but in this market, what's passed for debate is somebody who's bullish about one thing arguing against somebody who's bullish about another thing. equities-wise. but, what, a little bit more than a year ago there was this argument, we should go away with shorts, shorts should get out of the market the shorts were right, you know, and things traded at inflated valuations for so long, that people started to think it's normal carl, things could just as easily trade below where they historically have for so long, that people think that is normal and so that calls frs investor conviction what do you really think is worth it what do you really think is going to last? and by the way, the math is
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going to change here as growth slows, you know, both the numerator and the denominator is going to shift on these multiples. >> indeed. you know, we're starting to use words like the tmt covid bubble bursting, dee, interesting work by michael battenik, particularly the decline, worse than the q's were over the same number of days, going cab to march of 2000. you can literally say bubbles bursting and no one's really going to look. >> the bill tweet over the weekend, he says revenue and earnings quality matter, that's interesting coming from him because obviously he operates in the venture capitalism world you have to see things further out in the distance. he argues the price to sales multiples is a value metric that really matters, you have to see the quality within there, things like gross margin and free cash flow, guys, it's a good question to ask at the start of this week when we had the gig economy
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companies reporting. they came up over the last decade in a lot of ways it was the recession of 2008-2009 that enabled these business models and now they're coming back down to these low levels. uber in particular never reached the level it was at. should investors get in, are they value plays, are they tech companies? we'll see, this week will give us more clues about where this market's heading. >> indeed, uber, lyft, dash and some others, along with 160 other s&p names. meantime, as stocks did slide in q1, buffett was buying he detailed some of berkshire's move over the weekend in omaha what do his purchases say about where we are in the cycle along with his cash position mike santoli is there with us. >> on surface level i'm inclined to take buffett at his word. he doesn't make a market, in fact he'll tell you he has no feel for where it might go, talked about how in october of 2008 he was doing a lot of buying, people thought he was a genius that wasn't the bottom
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it was four, five months, and maybe 20% lower, before there was an actual bottom however, the fact that he has been a net buyer shows you opportunity for value sensitive investors who have a long-term arise, i did find it interesting that berkshire hathaway increased its stake through buying of apple shares a little bit because buffett has been content to have his share of apple go up on a relative basis, as apple buys back stock from everybody else, and he really extols the virtues of that approach the fact that he found a reason to actually lay out cash for that may be interesting it's of no help to the nasdaq 100, which is, again, stretching this downside. we're down on a one-year basis, 7% it's within been the downside -- sensitivity growing among tech investors, that's been the project of this market for the last six months. we've been working on the "p" side, the multiple side. the earnings have mostly held up and i think it makes a lot of
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sense. i don't know necessarily that that's news to this market it's happening in an orderly way. i think the fed's okay with it for that reason. so my point is not that's wrong, that we don't have to ragtallize p/es more, we're only back to the pandemic levels, but i also feel like this process is well under way. >> they say the pendulum never stops in the middle. i'm curious, how many cycles have we been through where buffett's been called out of touch, was there any sense of justification that berkshire shares, back to even, going back years now? >> in general, they were able to point to many ways in which their approach, which is buy real businesses that we understand, essentially don't worry about where the market is going to go. don't chase something because it's hot yeah, sure, they can kind of brag about that. also, it's a little bit of happenstance in there. where have they made investments over the very long term. it's in utilities, it's in railroads, it's in energy infrastructure, it's in consumer
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staple type names, it's in insurance. literally all five of those areas are in relative favor right now compared to the rest of the market. they didn't build it that way. it's come to them. >> yeah, and what's notable, the past quarter as well, mike, he didn't pick up more tech he famously said he only invests in things that he understands. >> sure. >> but one thing that was interesting, is his bet on activeision. an arbitrage bet that this deal would go through, which would be interesting for big tech companies except markets never really cared about the regulatory piece of things they never moved with the threat of greater regulation. at the same time, we do have these headlines coming out of europe this morning, that could result in billions of dollars of fines for apple. >> sure, it could, and you're right, that the market is usually set those things aside the activision deal to me has nothing to do with tech, it has to do with the warren buffett
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insurance underwriter, looking at the risks embedded in the price. am i willing to take the other side and bet this goes through, $20 a share, and free money the market's handing to me it really isn't about the insight around the business at all. it's one of those times he felt like the market, you know, gave him a little bit of a lopsided risk/re risk/reward bargain. >> even if it did relate to the regulatory environment microsoft in a bircht category than other big tech names. we're going to continue discussing where the value in this tech drad meta is the only one seeing earnings more results ahead uber and doordash reporting later this week. and morgan stanley senior internet equity analyst. brian novak, good morning to you, before we get to the move ahead. did anything fundamental for cap tech names change last week? >> thanks for having me. i would say a few things stand out that are notable, the first thing is, generally speaking,
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across all the space, the consumer continues to hold up for now, you know, amazon is still seeing very robust demand, no real sign of weakness in the advertising markets, which are very predicated on strengthening e-commerce first bunch line, the consumer for now is still holding up quite well important for the whole space. there are certain idiosyncratic factors, on meta and facebook, they are actually making more progress on driving engagement of their new reels product, which we think is important for the long-term monetization, and turning the narrative on that asset. we like the progress that meta is making a lot of run reels. on amazon, i think the punch line is they overbuilt and they overhired and it is going to take a little longer for all of the profits to come through that we thought were going to come through post-shelter and reopening. they added the equivalent of the same amount of capacity in the last 24 honest, as they've added in the past 25 years, and now they have to grow into that.
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and so we don't think anything has changed fundamentally about amazon's -- but the time in which it's going to take to grow into this capacity is going to take longer, which probably means that outperformance for this name is probably going to take another three six months down the road. >> right, but the loss, just over the last week, has been staggering for a company of this size, nearly 17% you know, there's been a lot of discussion, if you value amazon where it is now. you're essentially valuing its non-aws, non-cloud business at almost zero. on the other hand, this is the -- a 28-year-old company that has a negative operating margin. >> yeah. that's correct i mean, i think, you know, the company goes into the penalty box. because there's now questions about the long-term economics of retail which still do matter to make thinking a strong stock next 12 to 24 months like at total valuation, company
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wide valuation, know the parts, you say the long-term average multiple on amazon is about 20 to 21 times forward ebidta it's now down to 12 times that even if you don't want to talk about some of the parts, even if you just say let's say you can even get to close half that gap from 12 to 20 on a multiple as you prove the retail business still has the economics we hope it can, there's a lot of upside in the name when you have patients for investors. >> brian, let's talk about these gig economy ride hailing and last mile companies in a way so uber, lyft, doordash, there is this weird thing happening where the inflationary environment type labor market has made uber and lyft really pretty expensive right now doordash is in this interesting position where, yeah, of course it's also expensive, but it's got dash pass as well, and it's kind of making this move to be a marketing vehicle, even for consumers who want to pick up
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from store, perhaps. so of those names, which do you think is most inflation protected, and most labor market protected? >> good question i think it's uber, just because of the rides side of the business you know, we think that the elasticity around rides is likely to be lower than the elasticity around eats, but there is an impact on both now, in the near term, as we go into the back half of this week, and look to the rest of the year, we think that between the reopening of the world, people going back out, people traveling, people coming back to work, even at more -- at smaller percentages than previously, i think the rides business can really snap back much more than appreciated, and the rides business, because we think the unit economics there are quite strong, we think it's actually the ride share industry a piece that the market is not giving uber or even lyft credit for when we think about the free cash flow that can be generated over the next couple years we think rides as more
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protection from inflation than the eats business does. >> brian, that's interesting because, you know, today new york city is raising its covid alert level, pfizer's -- failed end point as a preventative measure. vaccine makers up today. this is a question no one wants to think about is there a possibility that tactically some of these covid names and the ride dynamics at various companies might get a second life, even for a short time >> you mean if there's a pullback in reopening, is that what you mean, carl? >> yeah, exactly. >> yeah, hope not, certainly but no, i mean, if that did happen, then you would probably have -- you would go back to the shelter inplaybook, rides would probably stall in its reopening, and all the travel dynamics and all the travel companies would probably have an air pocket from that but then the beauty of uber here is this where you have eats. when you did have shelter
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income, that really did pull forward a lot of new eats users, eats families and ultimately eats volumes it's possible, i certainly hope that doesn't happen for society. but that's part of why we favor uber you do have both sides where if rides stalls, then eats can sort of come in. >> that eats is supposed to be a hedge, but certainly the stock hasn't acted that way, we'll see if that changes, brian nowak, thank you so much. >> thanks so much. now, the selloff in tech has been a big part of the market, but if we look under the hood, there's been some divergence in performance, for better and for worse. frank holland has a look at enterprise software faring. >> the nasdaq 100 down more than 20% year to date, but enterprise and cloud stocks taking an even bigger dive. looer taking a look at the igbtef worst month since inception. and the cloud -- coming off a tie for its worst month since inception. let's take a look at what's working. enterprise focus on the payments
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jack henry, a company that processes payments for the financial services industry. fleet core, fuel cards for fleets and other wig payments for government customers, you can see both of them up double digits here to date. but despite supply chain challenges and some really big business shifts we're looking at a company like sales force down 30% year today, and cupa, a company that handles supply chains, that stock down 44% year to date, almost 45%. but this stock has a forward p/e over 400 getting hit especially hard in the current interest rate environment we're going to look at something i've been beating the trum about, cloud spending up 30% year to date adoption to be accelerated, but the cloud stocks just remain under pressure the outlier, one of the big outliers right now, that's box that is a cloud storage company, also a bit of a hybrid workplace. storage always needed, box also giving guidance. it will sure prasz that rule of
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40 this fiscal year. that's combined free cash flow margin, and revenue growth that's a really key metric for high growth stocks but we're also taking a look at a stock like data dog, a bad p/e over 200, getting hit by the interest rate pressure, and docusign falling this year after weak guidance over the past two quarters and also growth slowing down in the current, you know, covid environment, certainly not the growth that we saw during the peak of covid, maybe just a year ago back over to you. >> still stuck on box. you know, you made me look back. it is up about 42% over the past 12 months. it had been an underperformer for a long time. this gets into that whole issue of -- for a lot of reasons, i think cloud can be a nonsense term these days. because it's software, and there are all sorts of different layers of software, and infrastructure in there too. there are some companies like microsoft, right, service now, we just had on last week, post earnings, even within enterprise
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software, they're doing relatively well. >> absolutely. i mean, you want to talk about software, there's definitely a line there there's also another company zen desk, up to i believe double digits this year there are some bright spots in here if you want to stretch it out. a company like mastercard, positive this year, is that a software company, processing payments you're right, the lines are blurred when it comes to some of these things. >> software is hot everybody witness to be a software company, we'll see what they want to be next frank, thanks. still to come, tceo of on semiconductor. more "techcheck," next at cdw, we get these new ways of working
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up better than #%. about 1.2. that's now gone negative the dow, dee, down 125. >> yeah, and amazon a big name in this market, down another 3% today after closing down 14% friday gut check on amazon where it
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stands this morning. slow notes from broader takeaways from the company's result, citi removing ups from its focus list, the firm says amazon's labor and infrastructure overcapacity means a potential fullback for the rest of the industry, shares of ups fell friday after amazon's numbers while amazon's hyperinvestment in its fulfillment centers that raise costs and hurt their results, bank of america, mizuho and others are not worried about a slowdown barclays saying buy duke realty. >> let's get a check on semiconductors, the soxx down 27% year to date the index in the green today as are shares of on semi. chip supplier reporting record earnings and margins for the first quarter. joining us on semi's ceo hassane el-khoury. overall, you were up in
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automotive and industrial, that area for you, 42% year over year, it's now 65% of your revenue, this reminds me of qualcomm we were talking to chris chri cristiano a -- what's happening -- >> sure, at a high level auto and industrial are driving a lot of megatrends that are demanding the demand smart customers if i break it down it comes with, for automotive, it's the adesk for autonomous driving and on our side the power for electrify cation, that is driving net content increases at a much favorable asps. that's what's driving a revenue increase year on year, and we see that electrify cation, and autonomous penetration in
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automotive vehicles to be more as a percent of cars made. that growth is multi-year growth think about the next decade. >> you're saying that despite the macroeconomic environment, geopolitical tensions, you're confident in the underlying drivers of these trends. but how much do you expect the weakening consumer, perhaps, that seems to be what's happening, and the implications then for your customers to affect the business? are you giving an extra eye to costs, going forward, or something else, or do you think that you're largely immune from the macroeconomic environment because of what you mentioned? >> look, from a cost perspective, we never let our eye off the ball from what happens to costs, that's where we're driving efficiencies through manufacturing. that's what you see reflected a lot in our gross margin. expansion that we've had last year, and even this quarter. but fundamentally, what gives me comfort, in the growth trajectory that we've had so far, and having moving forward,
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is really the content that those mute vehicles are going to have versus the same vehicle last year you know, ev, for us, has 30x more content than an internal combustion vehicle that fundamentally is driving the growth no matter what the sar or the total number of vehicles happen. we remain confident, so do our customers, that the number of evs, net number of units made, that are -- vehicles are going to be higher next year than they were this year, and higher this year than they were last year. that's the fundamental growth. >> hassane from other ceos who have this level of growth, and this level of confidence in the underlying trends in their industries, i'm starting to hear more and more, yeah, we're open to m&a, because not everybody in this space is going to be as well positioned as we are, and there's some good product out there that maybe has had inflated prices in the past, and the prices are coming down, are you seeing that? are you -- do you have a
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shopping list? >> look, m&a is a continuous process for us here. the beauty of where we stand today is our stand alone plan, what we've done so far, and what's yet to be done as far as value creation allows us to be very disciplined about the m&a target that is we go after we're always looking, you know, these are nondeterministic, our focus is always on having a solid footing. m&a will be incremental to that. our ability to be very disciplined. because it's not about worries about pricing, or worries about costs and so on, it's more on a strategic level, is when we will go after a target for m&a, because i don't see the volatility in pricing, because we've been pricing on the value of our products, and value of the product does not change, depending on what the macro does it's tied to the product itself. >> okay, finally, please talk to me about two risks, in particular, one out of china,
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and that's the covid lockdowns going longer than some expect, and then out of europe, and this continuing tragic war in ukraine, on the potential downside, how are you positioning yourself versus those two things >> yeah, look, so we've put up a strong guide for the second quarter, up from even the beat that we had in the first quarter. but in that guide we already had about a 2% top line risk, given the macro, whether geopolitical, or the covid lockdown. so even with a very healthy beat in q2, up from q1, that already includes about a 2% top line that's not demand that's going away that's demand that will just maybe shift into other quarters as the lockdowns ease and we're able to run operations back to where we were prior to the lockdown. >> all right, with on semi up 2.5% hassane el-khoury, from on semi,
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thanks for joining us. >> thanks for having me. as we go to break the tape overall pretty choppy. nasdaq back in the green, but only to the tune of about 16 points as the s&p, once again, not far from the opening lows today of 4110. we'll keep our eye on that ♪ on the road again ♪ ♪ just can't wait ♪ ♪ to get on the road again ♪ ♪ the life i love ♪ ♪ is making music with my friends ♪ ♪ and i can't wait ♪ ♪ to get on the road again ♪ hit the road in skechers.
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welcome back to "techcheck." i'm carl quintanilla, julia boorstin, deirdre bosa, and jon fortt. a lot of stocks badly beaten down to start the year first, it's time for a news update with our kate rooney. >> shares of spirit airlines are
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down almost 10%. the carrier's board is rejecting jet blue's 3.6 billion cash bid, saying there's too much risk that revenues wouldn't approve the merger spirit wants to be acquired by frontier u.s. construction spending edged up by .1% in march that's less than february's 0.7% gain the institute for supply management says its index of national factory activity dropped from 54.4 to 57.1 in march economists were expecting that number would rise carl, back to you. >> kate, thanks so much. as we've said this morning, april did mark the worst month for the nasdaq since 2008. came on the heels of last week's big tech earnings, as you know who's left standing and where might you start to look for value, joining us this morning, capital founding, managing
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partner, lowe tony is with us. >> thanks for having me. >> we've had some conversations in the last few weeks about relative strength in areas like software, and cyber, and cloud but given all the uncertainties, with the fed on the horizon this week, are you actually shopping right now? >> well, you now, look, i thin if one has a long-term perspective, which is really important, you know, i think back to comments from the berkshire hathaway conference this past weekend, i mean, we need to get out of this short-term mentality, this casino mentality if that's the case, then there are some important trends to take note of, and be able to apply that to a strategy, and, you know, i think one of the ones that stands out within this environment right now is microsoft. you know, if i think about the nature and the composition of the business model for microsoft, it's ex-timely resilient to what we see right now in this inflationary
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environment, the growth of the cloud computing business the ability for microsoft to continue to show leadership there, focused on the digital transformation that's not slowing down if we look at the surveys of the i.t. professionals in the large companies, they're not going to slow down in terms of what they're going to deploy for dollars to provide more infrastructure, continue the trend of the, you know, remote workforce now that the genie is out of the bottle post covid those are all things that we like, and we think that those are long-term trends that are not going to go away and if we focus on some of these companies, especially a company like microsoft, that does have a really strong balance sheet, and good cash flows, you know, that's definitely going to be one that's going to be a little more resilient within this environment. >> that's interesting. because on a strict valuation basis, it's less expensive than some, but more expensive than others i mean, among the big names that we talk about a lot. >> that's right, that's right,
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and, you know, look, i think right now, again, if we focus on long term, you know, these are the types of opportunities that we need to take a look at. and, you know, look, don't have a short-term focus i'm not here to talk about things on the short term but if what is interested in how we're going to see some of these trends play out, particularly digital transformation, within the enterprise, but even touching the consumers, you know, these trends are here long term, and we need to look at the strongest companies that have the ability to generate cash flow, while at the same time being extremely efficient, and how they do their growth as well. >> lowe, what about fintech? i mentioned at the beginning of the show paypal has done more than a pandemic round trip in terms of its stock pricing we had scott miner of gugenheim this morning, saying these are trading like value companies is there opportunity here, the landscape has changed, however, there's a lot more competition.
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>> there's a lot more competition, and the competition is coming from a lot of the upstarts companies that have recently gone public. you know, we've seen some resilience in the private markets with fintech in particular, with regard to valuations i do think, you know, again, not only do we see a lot of these more resilient names, showing the ability to generate cash flows, they've held up fairly well in fact, when we look at the multiples, to your point, they almost look a little bit and trade more like a value stock. but, deirdre, it's important, jon always talks about the faang, and we talk about unbundling that, what we're really speaking to is going deeper on the actual business models, and i think we have to apply that to fintech as well. not all finteches are created equal. some of them have their business models more geared towards consumers, in this environment, of increasing inflation, and interest rates, you know, we might see some of those companies struggle
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but for some of the finteches that have more of an enterprise focus doing things like providing the back office support for processing payments and things of that nature, you know, those companies probably will look a little bit different in their performance. >> hey, lo, this might be a little controversial, but might this be a historic opportunity not to buy anything? i mean -- i mean over the past six months, there's very liflt you would have missed out on if you just hadn't bought, if you just waited around, waiting for bargains to show up. right now, you might think, there's a lot that's cheaper now than six months ago and a lot of the stuff has gone down, right, a lot more than inflation has endangered the dollar. so might this be an opportunity to wait and see the impact of what the fed does, wait and see how much the economy slows down, which companies, you know, fall by the wayside, and, you know, look again in three months >> yeah, look, i mean, one of the things that i always learned when i was coming up was, you know, don't try to catch a falling knife.
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and, you know, i think there's something to be said there don't always rush in and try to make a decision. i think, jon, your point around fed and what they're going to do, we have some signals around the -- from the fed, you know, it -- i think we do need to really understand what these rate increases are going to look like the fed has made it extremely clear, their number one focus is to combat inflation, no matter what and even to the point where it might throw the economy into a recession. i think the fed is in a really tough position they waited too long to make moves on interest rates. it's going to be very difficult to navigate a soft landing and so your point, jon, yeah, i think, yes, there is something to be said about just holding steady, to see how things play out. is there a 50 bips increase in rates, is it just going to be 25 you know, those things, i feel like some of it's priced in. i don't think all of it is priced in, and there's still
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some uncertainty. >> yeah, that's -- and it's that white space between, say, a 50/50 recession scenario, lo, and the one in three that we appear to be in right now, that appears to be leading to a lot of this inter-day chop because there's a wide disparity among the valuation models you could put together on any of these names. >> yeah, no doubt, and, look, i think, when we look at our models, everything that we try to look at gives us the indication that, you know, we're so close, and on the edge to a recession, there's too many moving pieces. you know, we've looked at the increase over the past 12 months, in commodity prices, particularly oil, and we kind of got to that one indicator of doubling oil prices within 12 months, but then we reseeded back, when we pulled back. you know, inflation above 4%, employment below 4%. unemployment below 4%. i mean, that's another indicator. the yield curve. all these things are teetering
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right at the edge. everyone is trying to figure out where should we be right now with regard to our trading strategies and, again, i just think about it, john's point, let's just take a reset, and think long-term, there's no real rush, there's no need to make moves right now. >> yeah, hard to imagine that with -- what would lead us explosively higher, and certainly we're going to know a lot more by the end of this week than we know right now lo, good discussion, good to see you, man, thank you, lo toney. a firm asking if we've reached the point of no return for media stocks t "techcheck" is back in joechlt just a moment you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit (all): all hail, caesar! pssst julius! you should really check in with your team on ringcentral.
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media stocks have been a scary movie this year. you kind of had to watch it like this disney down 28% year to date netflix down 67% our parent comcast down 21%. are those moves and valuations causing companies to rethink their businesses julia boorstin has that. hey, julia. >> well, jon, with netflix's earnings raising questions about the what the future of streaming will look like the media giants continue to bet big on the format nbc universal, cnbc's parent company, this morning at
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peacock's new front ad presentation unveiling new ad formats. one that runs ads around the frame of the show. and integrates a brand into a show pest production peacock announcing three original films that will premier on the streamer in 2023. they're making peacock the streaming home of bravo and of l lionscape films. peacock pushes for subscribers, and nbc universal acknowledges the uncertain fate of the theatrical film business all this comes despite the fact that the original streamer netflix has, as you mentioned, jon, seen its stock fall 67 #% year to date meanwhile roku is down about 58 #% year to date and the other media giants are suffering as well disney shares down 27%, nbc parent comcast down about 21%. and this year warner bros. discovery shares down 22%. paramount, global and fox, the only two media companies that are pretty much flat this year
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and while fox is down just a hair this -- today, paramount is down 26% in the past year. those two stocks run flat today. but moffett nathanson, with a neutral rating, other than fox, a buy rating, writing judging by the recent struggles at netflix, the business model isn't as attractive as once thought due to the intensitying competition for time, attention, and consumer spending. so today's ad presentation from peacock, there are going to be other ad presentations from youtube and amazon and others, they all shine a spotlight on the potential for ad-supported services, which of course come either free, or at a lower cost, and the alternative tonette flix, this all comes as netflix works to launch its own ad-supported service paramount reports its earnings tomorrow morning we can be sure that its subscribers, as well as its digital ad business will be very much in focus. guys >> julia, i wonder what you
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think happens with content spending in this environment with multiples compressing how do you think that also the traditional players are looking at this, versus big tech, which still does have mountains of cash to spend on content >> look, i would say there are probably two categories here because we have amazon and apple in one category, and they are using their content investment in a very specific way they really want people to be part of their ecosystem. netflix has said it's going to be a little bit more cautious about spending, maybe a little bit more thoughtful about where it puts those content dollars. and then we have the traditional media giants and what they're balancing is these tradeoffs should we put things direct on our streaming sfls should we condense that window between theatrical or is this something that's going to get us those big theatrical box office dollars. everyone is making these calculations right now about where they're going to get the most bang for their buck and how they can try to build their streaming services without having that cannibalize that
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theatrical movie business. we don't know how big this is going to be but this summer is a big test. >> fascinating, including announcements out of our parent, good summation where we are right now. coming up after the break eu regulators take on apple pay, that story is coming up next
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gut check on apple, morgan stanley reiterating the stock, price target $195. the firm highlighting the continued growth market expansion. down 1.5%. they see multiple tail winds driving a rerating over the next 12 months. pc market share gains, some examples the tech giant is facing scrutiny steve, of course we have to put a disclaimer on this thing, it's a preliminary view, but it does take aim at apple pay, which people who cover the fintech space, they sometimes say this is the biggest threat to some of the smaller players on more than a billion devices, what is this specifically about >> that's exactly right, deirdre, the eu is signaling to apple this morning, that they're not too happy with the way these
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nfc payments work on the iphone. that's the chip that lets you tap your iphone to make payments at a credit card terminal. right now apple that has that locked down to its wallet. you can have your american express card or whatever major credit card you want in there, it's still in there, it's still locked into that apple ecosystem of which every transaction apple takes a fraction of a percent of each. that's how apple makes money, multiply that by a billion iphones and however many zillions of transactions are going on, and it adds up what they're saying is apple really needs to open this wallet up and allow other wallets, maybe a paypal, maybe a block onto there as well to increase the competition. apple's already responded to that they told me, quote, apple pay is only one of many options available to european consumers for making nfc payments and has ensured equal access to nfc while setting industry leading standards for privacy and security it's open to other credit cards
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and banks but another open wallet app cannot live there on there. there's a little bit of a different. >> steve, i would argue that this doesn't matter because this is sort of like arguing that, oh, you know, google and chrome, you've got to let people choose search on another search server. there's a big lift for people to do that. when you set up your iphone or ios device, even your mac at this point, you're given a smooth way to put your credit cards in or transfer your existing apple pay credentials over so apple's going to win either way, even if after this goes through the process for years and years they have to open up the option for people to add their credentials to other services, don't you think? >> that's exactly right. that's the simplicity of being in the apple ecosystem maybe they try to change the way that setup works, but what the eu is saying here is they're not giving enough opportunity for these alternatives to live and have access to that nfc chip that's where the real sticking point is
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any remedies that come up for that is going to be really interesting to see how they want to tackle this problem as we're seeing with all of this regulation coming out of the eu, just because it's only an eu thing, these change so fundamentally how the ios works that it's going to be a global change if they have to do it, not just restricted to eu. >> we didn't even get to the 10q looking at gross margins normalizing. >> that's part of the circus. >> that is fascinating, the ive era and what happened when he left as we go to break, a quick programming note, don't miss brian moynihan on "power lunch" today, coming up at 2:00 p.m. eastern time in the mnwleeahi, "tech check" will be right back when my genetic reports told me about my heart health, i was able to take action.
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in today's over valued, undervalued, how about no value? warren buffett saying he wouldn't buy all the bitcoin in the world for $25. take a listen. >> whether it goes up or down the next year or five years, ten years, i don't know, but the one thing i'm pretty sure of is that it doesn't -- it doesn't multiply, it doesn't produce anything it's -- it's got a magic to it and people have attached magics to lots of things. >> in my life i try and avoid things that are stupid and evil and make me look bad in comparison with somebody else,
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and bitcoin does all three >> that's buffett's number two charlie munger chipping in with choice words for bitcoin the buffett previously referred to it as rat poison and a m mirage he was called a sociopathic grandpa for those comments. >> he doesn't invest in tech that he doesn't understand, and so the key question here is do you need to understand the technology behind bitcoin and other cryptocurrencies to invest in it. many mt. space would say no, and draw parallels to the internet saying people didn't understand the internet at the beginning. we'll see what happens, but don't forget to follow, subscribe to our podcast, "tech check" is back in just a moment.
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one more thing and that's putting the block in blockchain, lego is planning to increase software investments by hundreds of millions of dollars, while also tripling their digital work force. people close to lego say one of their biggest regrets is not developing minecraft now it's partner with fortnite maker to launch a metaverse for kids in the next 12 months roblox touching all time lows earlier, would that change your
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mind on metaverse? >> no, but legos great, epic is great. my kids love lego and love fortnite, so they could be on to something, carl. >> a believer. >> exactly a lot of stuff to get to in the coming days, airbnb and amd tomorrow night busy week ahead along with the fed and jobs friday. it's almost noon, let's get to the judge. >> all right, thanks so much welcome to the halftime report, i'm scott wapner, front and center this hour, a new and busy month for your money whether stocks are in for better days as the fed looms and investors brace for volatility joining me for the hour today, joe cher nova, jim laichb that will, pete najarian, let's show you what the markets are doing now. 12 noon in the east. it's a mixed picture we kind of have been all the over the place, there's the dow down by 51 or so, nasdaq is up by 48. we've put new intraday lows in at least for the year for the


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