tv The News With Shepard Smith CNBC May 10, 2022 4:00am-5:00am EDT
>> the dax higher as well. you see a lot of gains across the board. let's get back to the sectors. defensive. health care, telecoms. just above the flat line oil and gas down that's an interesting one to note you did have brent somewhat recovering now down .20%. the defensive stocks and health care down. construction and materials up 1.8% the building scene and the
mortgage environment here in the uk interesting one to note. home build ping is having a boom we want to give you a look at the european the mega cap value tech stocks state side they were the big sufferers. here in europe, you are seeing a bit of recovery across the stocks nokia is higher. st micro is the only one down .50%. we have been keeping a close eye of chips, julianna rosanna, i made a better choice with my green dress it could all change by the end of the day on that note, let's look at u.s. futures. we are trading higher this morning. u.s. futures with a positive start. dow jones industrial average at 170 points rally the s&p looking at some green this morning
let's recap yesterday's session and see where things left off. it was another brutal day on wall street. nasdaq dropping more than 4% s&p 500 dropping 3.2%. taking the index to the lowest level in over a year energy was interestingly the worst performing sector in the u.s. falling more than 8%. the worst one-day performance since june 2020. the dow dropped 2% rising rates continue to crush the big tech names as you saw with the nasdaq. with the world's largest companies shedding over $1 trillion in three trading sessions apple losing $220 billion in value since the close of trade on wednesday peter joins us now peter, just how bad is sentiment to u.s. tech how does it compare when the
dot-com bubble burst >> i think it was rightly so on twitter a couple of weeks ago. the worst sentiment since 2001 the mood is dark and it is natural. tighter financial conditions relative to the economic back drop since the pandemic. we are in financial conditions territory. we only see when we have crisis. the pandemic and euro crisis and 2008 crisis and 2001 crisis and '98 crisis that is the environment we're in right now. the high interest rates are forcing the technology sector to be profitable faster if you went back a year ago, you have five or six years to break even now you are forced to do it in two or three years that is the dynamic out there. it is moving very fast. >> what do you do from the strategy perspective when things are approaching rock
bottom, you think about buying in is that where we are right now how do you think about the sub sectors within technology? it sounds like there are parts of the tech sector you want to avoid. parts that you want to be seizing. >> you have to start by having the right building blocks in the world we are facing in the section 8 to 10 years. we hit a physical limit. you need to have investments in the commodity sector you need to have cybersecurity and defense and logistics and renewable energy outside of that, you still need the building blocks of high growth technology sector is interesting long term. it is the secretary tor that can generate the least raw input from commodities
just like during the dot-com, we have a lot on the street that will be casualties out of the casualties, there will be long-term winners like microsoft and amazon and amd big losses in the dot-com burst and big winners. we will have the same dynamic and cycle. this time, we recommend people to watch the insider technology sector because of the necessity for driving digitalization look for software companies. we have the short-term to the mega caps because they have monopolies we are getting to territories where the smaller technology companies and you look at the business models, there will be a risk-reward in the smaller technology companies. >> also you did a bit of interesting research about raw materials in battery making. don't sleep on the lithium opportunity. what more can you tell us?
>> well, in the short-term, there is a huge supply deficit in lithium if we think about th transformation, we built up an economy over 250 years very tight relationship with economic wealth and growth linked to emissions. we want to break that going forward. it will take a lot of investment it will require copcopper. that is the theme as well as lithium. a supply deficit as i said and that market is part of the mining industry where we expect favorable prices for the time to come lithium and copper and platinum will be super important for separating hydrogen we are looking for pipeline that will explode over the next eight
years. those they metals are key to watch and exposure to in your portfolio. >> i think elon musk would agree with you there heading back to the broader markets. everyone wants to know where it will go today. we have the battle with higher interest rates and stagflation and inflation environment. how much do rising rates impact equity valuations? >> quite a lot of it f it feeds to the discount rate. the new investors have come into the market it may be the long-term outlook of the company may be unchanged simply from moving 50 basis points in the u.s. ten-year to the 3 to 10 year the interest rates have seen it it in the technology sector.
we are worried and we talked to clients about trying to avoid the areas where you have companies that are applying debt leverage one of the big potential unknowns is china. one thing is the lockdown, but we also know the chinese economy is leveraged there seems to be dynamics in china to what we had in europe and the u.s. 14 years ago. that is the rising dollar and rising interest rates are powerful forces. we think it will continue to weigh down on equities we are up to date, but during that two and a half year bear market we had in the dot-com bubble when it burst we have been in a ten-year bull market where buying the dip is a successful strategy. you have memory effects in the market where people are deploying that strategy because
it was successful. you will have that tug-of-war going forward. we think equities will continue to trend down. as we mentioned, the technical picture looks negative we are getting close to very, very off levels that could take us further down. >> peter, thank you for joining us head of equity strategy at saxo bank. look at swedish board. it is up 23% of the that is because philip morris is in talks to acquire this company. it will expand smoke free all it after alternatives philip morris says it is unclear if it will table an offer for swedish match with the market cap$12 billion.
and bayer has posted the first quarter at 5.2 billion euro. the science crop unit saw the rise off the weaker pharmaceutical sales the war in ukraine is driving up commodity prices you are looking at bayer u up .34%. and first quarter earns fell this time last year. this share of schaeffler is dealing with healthy corporates. and we have the ceo telling cnbc the key business divisions are resilient to the first quarter >> q1 was a solid quarter after a record quarter in 2021 to put in perspective here, the
quarter 1, 202 it was solid. i'm very happy about the business development in the first quarter. particularly the mobility. 2 billion order in ttake is a b number for us. that is the end of the range we projected for the full year. what is positive is the development in industrial. it shows how important that division is for us and how good it is in the days to be well diversified. >> let's stay with the german theme. it is proving well munich re is better than ex expected first quarter maintaining its full year outlook despite the challenges you have munich re up 1.2% the cfo is saying the rising rates are a bet for the
insurance sector, you have to deal with the spillover effect >> pain is a short-term in the context. long term or midterm, we will benefit from higher rates. our investment will go up over time short-term, you have the depreciation of the bonds. there is a certain possibility that we run into write downs and we saw some of them in the first quarter. they were adjustable for us. obviously, interest rates continue to rise into the second quarter. it will remain to see how markets evolve and talking about uncertainty, the capital market is one additional uncertainty and the other things we talked about >> a lot of interesting conversations in europe. a lot of positive earnings that is driving markets in italy, the lender reported a
72% fall in quarterly profit, but beating ex-ppectexpectations significantly lower than the year before. investors not put off. shares moving higher by 8.5% julianna. we will take a quick break coming up on "street signs." emmanuel macron calls for a new european community to unite democracies on the continent as the block struggles to stay united over russian sanctions.
welcome back you can see asian markets moving higher in the overnight session. chinese central bank will step up support for the slowing economy. it will keep the economic operations within reasonable range and not limit to stimulus. it will frame from slashing interest rates china is tightening pandemic
restrictions in shanghai and expanding mass testing in beijing as officials push to eradicate the virus. residence in shanghai received written noticing announcing a quiet period during which most deliveries would be halted and residents barred from stepping outside. >> tesla has halted production at the shanghai factory. the company resumed production three weeks ago because of the covid curbs. it is not clear when the issues will be sorted out or if tesla til will get up and running. tesla had been aiming to return to full production this month. it comes as authorities in shanghai have tightened the lockdown which was imposed the end of march despite saying the number of new covid cases in the
city had been on a downward trend. shanghai reported 3,000 cases today and 6 deaths the latest restrictions could go on until the end of the month adding to worries of the economic and human toll. beijing stepped up controlcontrs residents have been urged to work from home while some restaurants have been closed and public transport suspended 74 new indicases have been repod this is a concern over the growth with the trade data the chinese central bank said it will step up support to stabilize the economy and keeping an eye on inflation and policy moves in other countries. we get a read on chinese inflation tomorrow in singapore, i'm sam vaddas back to you. chinese president xi jinping
and german chancellor olof scholz held virtual talks. state media said they are working to develop peace germany has vowed to continue sending tanks and armored vehicles to ukraine after providing kyiv with heavy weapons. olof scholz welcomed to emmanuel macron to berlin this was the first foreign trip since being reelected. he marked europe day and the french leader urged the eu leader to find a new organization for non-eu countries that share the values. charlotte has joined us with more we heard this from macron before >> an interesting idea we know macron likes to shake things up with the eu level and
it is very enthusiastic. all eyes were on the speech at the europe day we have seen this answer from europe to the putin speech now, remember that france still has eu presidency. that is the first big policy speech for president macron since being sworn in again for the second term just this weekend. he put on the table this proposal of the european political community. he said this is a new space for political corporation. this is different from the eu membership it could be within the european sphere of influence and agreement and work on security and political issues that is what he said during the speech >> translator: it is historical obligation to respond to the challenges and create what i would say is a political community. this new european organization
would allow nations to adhere to our values and find a new space of political corporation and for security and energy corporation and transport corporation and invest in infrastructure where people with circulate. s particularly the young joining forces would not mean you would join the eu and it would not be limited to those who left the eu. >> this could be a way to bring in ukraine and not necessarily a stepping stone to eu membership. this is the next strategy that could help bring the political sphere into the eu with ukraine and other countries that left the eu that could be an interesting development. there is wide ranging speech and macron talked about renegotiating the treaties and
talking about changing voting to the qualifying majority tomake the eu more efficient. we know some other countries have come out, 13 countries, signing that letter coming out against the renegotiation. including chancellor scholz who put a bit of cold water on this. saying europe can do a lot without renegotiating treaties there were interesting ideas and he is ready to discuss going ahead. emmanuel macron talked about allowing certain countries to go with the topic on the table for years, but having the french president mention the european parliament could give new operation to this. he said maybe it is time to carry on with this process of course, very important speech from the european level and during his traditional first trip abroad to germany to kickoff this potential
it is important domestically because emmanuel macron had campaigned on the pro eu platform he was facing the skeptic candidates like marine le pen. in five weeks, you have the first round of the parliamentary elections. he is facing candidates from the parties. he is trying to stop emmanuel macron from stopping majority in the parliament in that pressor in berlin, emmanuel macron will discuss the latest ahead of the parliament elections. we could have an announcement in the next few days. watch this space, guys >> charlotte, thank you for the latest really interesting it will be interesting to see
how much support president macron gets. pushing on we have more to talk about including what's happening with the french and european affairs minister the eu could reach a deal as early as this weekend on the commission's proposal to ban all oil imports from russia. hungary has been the most critical of the project, but president macron will hold cautitalk with orban later today and germany prepares for crisis plan amid the russian gas report they want to wean off the russian supplies. still to come on the show, bitcoin sinking toward the
welcome back to "street signs. i'm rosanna lockwood. >> i'm julianna tatelbaum. european markets with a turn around and wall street looks to follow suit after the u.s. tech losses top $1 trillion. sony's quarterly operating profit more than doubles as gaming revenue jumps nintendo warns sales of the switch console will fall this year tough times for tesla as the electric vehicle maker halts production in shanghai france confirms emmanuel macron will hold talks with the hungarian prime minister today as they attempt to strike a deal on banning russian oil imports
nintendo says it expects to sell 21 million of the popular switch consoles this year. a 9% decline the japanese video game maker lower ed outlook for software sales. very excited to say that argen has been joining out on the set. this was an exciting year after they went after microsoft-activision what do we hear? >> demand is remaining strong. we are seeing that with sony's gaming division continuing to grow one thing to know is the first quarter of the year, playstation 5 sales dropped versus the
holiday period they managed to sell 5.1 million units. it is forecasting 18 million units in the current year. it that gaming division remaining strong as well the issue at the moment for nintendo and sony, the fact they continue to face supply chain disruption in particular, getting their hands on the semiconductors required for the consoles. sony reporting the strong jump in gaming titles like "spider-man" and online gaming subscriptions. another key part of the business was the entertainment business that includes movies as well a huge jump in profit thanks to the release of "spider-man." its image with chip sales and a
fall in operating profit it is seeing pressure from a couple of points r r&d is on the rise and phones in china as well for sony it is forecasting improvements let's move on to nintendo. it saw revenue 3.6% in its fiscal year. profit remained around flat. look, the key here is around the hardware sales switch has been on the market for several years. it is managing to shift units. 23.06 million switch consoles sold in the fiscal year. that was down 20% year on year again, it goes back to the supply constraints that nintendo is seeing. it still remains the second highest year of sales for the switch console for nintendo. the company forecasting 21
million units of sales in the fiscal year. down 9%. making up for the shortfall of hardware is the software sales the games. it has 100 million playing users. it has software sales up like pokemon and mario series it has a strong pipeline of games coming over the current year as well similar story between the two companies. it is really not a demand issue. down to supply chain what is interesting to point out is they announced 10 for 1 stock split hoping to get into the retail investors and get more involved in the stock. back to you. >> thank you for breaking down the numbers. i look forward to more chats about this it is not a sector that dies out soon. let's look at european markets. yesterday was a brutal day in
europe and state side. europe, we saw the stoxx 600 fall nearly 3% this morning, we are bouncing back rebound is under way we haven't recovered the losses yesterday. ftse 100 is down .8% ftse mib is 1.7% on the upside after yesterday's brutal selloff. this is what the picture looks like for forax markets the dollar is trading at five basis points higher. sterling is holding steady just over the 123 mark no major changes today the euro is also fairly steady versus the dollar. a little bit of calm with the currency markets it has not been a calm several sessions. turning to the u.s. futures. green across the board again, this comes after the
sizable losses yesterday nasdaq down more than 4% s&p down 3%. the dow ending more than 2% lower. >> i don't know how much trust i have let's get back to the tech theme. stocks have been hammered across the board. so far this ear, no surprises given what we have seen. it has been brutal for companies that had their market debut in 2021 a 53 tech related companies that cnbc has tracked that went public last year, all but three are trading below the offer price. more than half have tumbled by 50%. notables have lost 60% of value. including coinbase and robinhood and rivian staying with that cryptocurrency theme. 40% of bitcoin holders are now on the verge of losing their investment block chain research showing 40% of the investors are under water
with the bitcoin having lost 55% of the val froue from the novemr peak your company provides asset trading to the uk and beyond we assume the position you might take on cryptocurrency let's ask you this, is it professional investors in the crypto space leading the declines >> good morning. thank you very much for having me the collapse is related to every other asset. as you know, there has been huge demand destruction thanks to higher commodity prices fed through thanks to the supply chain constraints resulting from the pandemic and thanks to the war and china's zero covid policy a lot of factors creating fear the bond market sold off
yields have jumped enormously. everyone is worrying about inflation with the last few going 8% you've got to remember that these are backward looking indicators the bond p market has done a lot of work for the fed now. in that context, if you are relating asset moves to the price of fear money and cost of living, yes, you are right professional investors have driven prices lower. it is marking things lower in anticipation of global slowdown. that's what the markets are telling us and that' what happened. it is hard to pinpoint whether professional inn vvestors are pushing it down or i'm not sure the cryptocurrency is traded professionally
if assets are priced in dollars, which bitcoin generally is referred to in dollars, that would decline along with everything else priced in every asset. >> it certainly is what we are seeing with people in the cryptocurrency space the thing is this is a crowded asset class. will this decline see a streamline in the amount of cryptocurrency are smaller coins to blame >> i wouldn't say smaller coins are to blame for the move down in prices. i think smaller coins can be very seductive to investors. especially retail investors. they had astronomical gains over the last few years in time scales, no other asset has delivered.
that is very seductive you are basically buying an open-ended option that can go up 1,000 times or has done. whether it is impossible to blame the smaller coins like anything innovation spawns a lot of imitators. this is all brilliant creative destruction. >> rufus, i just can't help but think the argument that bitcoin can serve as inflation hedge has now been turned on its head given the strong correlation with bitcoin and nasdaq and other currencies for example without that argument in the bold case for bitcoin, is it still attractive >> that's a very good observation and one that is quite easy to make given
bitcoin's short price history in terms of relative to other assets is bitcoin an inflation hedge? this is a result of the supply chain shocks and macroeconomics issues rather than genuine demand for all those goods and services if we have a market that was run away inflation because people wanted to buy all those goods, i think bitcoin would perform very well we haven't had that macroeconomics environment behind us yet. it is impossible to say that there are great cases for bitcoin in both inflationary market and deflationary one. >> time will tell should bitcoin stick around
a lot of focus on tokens and stablecoin for you who are not familiar, this is effectively a big bet that bitcoin can act as a reserve currency it is already tested with ust. our digital reporter ryan brown put out an article it to understand this. there has been a run on ust. the stablecoins over the last few years and suspended withdrawals of it. how damaging is this episode for stablecoins? the fed and u.s. government has already made clear they are concerned with stablecoins as a source of financial instability. >> no doubt the headlines with stablecoin leading its pick don't reflect well it is part of the destruct and innovation coming to the table on the one hand, it's a good thing because people will be
able to see and work out where these protocols are resilient and where they rant. >> rufus, we will leave the c conversation there >> thank you coming up on the show, peloton is in the hot seat as the fitness equipment maker is reporting first quarter results. we will get a preview live from new york next.
the many companies that closed in the red yesterday, uber closed down after cnbc reported the company will need to become leaner according to the ceo. he said there was a seismic shift. hiring should be considered a quote privilege. shares of rivian tumbling following the cnbc report that ford is set to sell 8 million shares rivian shares are down 8% this year tesla ceo elon musk is meeting with the market
commissioner in texas overnight. the two sides signaling agreement on regulation. the meeting comes weeks after musk offered to buy twitter for $44 billion. he previously warned the giant that it must comply with the digital services act which would tackle illegal content online. julianna investors will be closely watching ruesults from peloton for clues of how it is faring post pandemic. sub vscriber growth will be topo mind peloton slashed the outlook last november and demand was softer than anticipated as people started leaving the house and returning to traditional james lauren thomas joins us now for you who don't know she has been all over the peloton story.
she broke a story back in january that really put the peloton story front and center the story was about peloton having to halt production of the bikes and treadmills because demand was waning. what will inn vvestors look fro peloton today? >> thank you so much for the in intro. this is the new peloton ceo barry mccarthy's first su opportunity to introduce himself to wall street the numbers and outlook that peloton offers is going to be important. that conference call where we get to listen to mccarthy articulate his vision for peloton moving forward is going to be more important than anything and trump everything else he just took over the company
three months ago he hasn't been at the helm for that 100-day mark just yet we will reach that next week actually you know, he hasn't had much time at the same time, peloton has already put into place new initiatives under his watch. the biggest of all is peloton recently put the prices of its equipment and planning to hike subscription fees next month peloton announced that news, but we haven't yet had the opportunity to dig into what that will mean for the company moving foorward and what it mean for demand that will be something that analysts and investors will ask on that call today >> lauren, in terms of the impact of the adjustments to pricing on the business, clearly investors want to see margin expansion, but if they lower the price, that is a headwind for margins.
>> absolutely. i think that mccarthy in the interviews he has done with the press since taking over, he has articulated the idea that peloton is less of a hardware business moving forward. he wants to lower that barrier to entry with the hardware making it a more affordable option for everyone. in turn, and that's why we see the subscription hikes and barry mccarthy has a background with netflix and spotify. subscription focused business. the reoccurring subscription revenue is driving those businesses i think that's what he wants to do at peloton. that leaves a lot of questions unanswered looking at margins and what is that equation for margin growth if you adjust the hardware cost and prices again, that is really where we
see barry mccarthy taking the company. of course, it leaves a lot of questions unanswered what does it mean for current subscribers? peloton has a base to end the third quarter with 2.93 million connected subscribers. those customers have shown they are loyal to peloton peloton has maintained very low turn rates during the pandemic when you raise fees, you don't want to run that risk of potentially losing customers i think that's the big question as well as prices do go up, do we see the turn rates increase which would be a bad sign for peloton. again, this conference call will be highly monitored, i imagine, later this morning since it is barry mccarthy's opportunity to introduce himself to wall street >> once you have somebody locked into the peloton ecosystem, they have the bike, you can hike fees
like they have been doing from $39 to $44 they are trying out the payment online trying out the subscription model for the bike you can rent one between $60 to $100 for a rented bike to me, they are competing against the high-end fitness market somebody who might go to barry's boot camp to name one of the options out there. do you think there is enough demand >> yeah, absolutely not. i'm glad you brought that up that is a trial that peloton has been running in a few markets thus far you can pay a flat fee to rent the bike or high-end bike plus as well as the subscription to the fitness content. you are paying a rate each month. if you decide it gets warmer out over the summer, then you no longer want your bhike and you
want to run outside, you can end that subscription and turn that bike in. it is unclear if that will go nationwide is that something peloton wants to roll out nationwide i'm sure barry mccarthy will roll out how the tests are going so far that is another sign how he is thinking does peloton become one subscription bundle rather than thinking of the company has a hardware business? you know, it is a question that is on investors and analysts minds. like you said, it would make peloton a closer competitor with ja gyms pay a fee to go to equinox or planet fitness >> thanks so much. lauren thomas from cnbc.com.
you can check that article out on our web site. julianna. >> if you want to hear more about the first quarter results from peloton, you can head to cnbc.com rosanna, what a week for tech we are on day two. if you include the last trading sessions, it has been a really brutal one if you were long on the market i keep coming back to the conversation yesterday with our guest about what is driving the selloff in technology and clearly top down, rising interest rates is a key pillar of driving tech down and impact on discount rates. also the added weight of the selloff is the fact that so many investors have been caught out by the selloff that has a significant ripple
effect i wonder when it will shake out. now investors have had a chance to reposition, will we see that pressure ease or is there more to come? difficult task to call the bottom, rosanna. >> absolutely. it has a spooky effect on the number of investors, julianna. it plays the market cycle. we have seen tech which is a huge mixed basket. we have arguments of the fundamentals in place with apple and microsoft and they will be the long one the shift we have seen with the pandemic darlings. no big prsurprises with zoom an robinhood and after the 2021 ipo. this is the stay at home trend where we saw the growth of the companies and now we see them whittled out of the market quickly. rivian
fascinating. it is a beaten down stock at the moment >> fascinating one we hope to flush that conversation out in a future show rivian story is fascinating. lots of tentacles in the market. let's look at u.s. futures and see how today is shaping up. green across the board it looks like a rebound is in store. the dow looking at a triple digit gain 300 points nasdaq looking to gain 200 the s&p 500 implied open is 43 points higher. none of these as strong as the losses we saw yesterday. do stay tuned. coverage continues that's it for today's show i'm julianna tatelbaum >> i'm rosanna lockwood. "worldwide exchange" is up next.
it is 5:00 a.m. on wall street here is your top five at 5:00. markets rocked by global slowdowns. futures are higher right now it is not just stocks. commodities and crypto and oil sold off as investors look to raise cash is the bottom finally at an end? and the staggering number of the biggest stocks lost in just a matter of days. tesla once again hitting the brakes at the shanghai facility as more china lockdowns crush the supply chain ap
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