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tv   Squawk on the Street  CNBC  May 25, 2022 9:00am-11:00am EDT

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that an unfriendly fed is bad for tech maybe it's good because, you know, finally you get thing mrs. reasonable thank you. >> thank you >> we didn't play fleetwood mac. we didn't do that this time for tusk andrew, good luck today. you're on your way back. see you. i won't be here. >> see you on friday >> join us tomorrow. back in the big city good wednesday morning welcome to "squawk on the street." dow future red, but any bounce would make it four straight days of gains durables were a miss 10-year, 2.71, the least since april 18th the broadest markets on track for their worst start to the year in more than half a
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century. >> and higher short-term rates not bad for stocks and the pandemic effects on apple. they're reportedly taking a hit due to lockdowns in china. >> we will start with the ongoing market volatility a day after yesterday's big rebound for the dow, coming off its third straight day of gains. according to dow jones market data, the s&p and the dow are on track for their worst first trading days since 1970 and for the nasdaq 100, worst ever looking at three months following a 30% nasdaq drewdown, you're up three months later, five of six times. >> yes haven't been that many of them all of the stats you can run based on the cadence of the losses this year tend to get you toward that position where markets go up over time so if you have that deep a hole, unless it's 2001-2002 or
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2008-2009. something about the rittenhouse them year, the fact it was ultimate peak of this bull market on january 3rd. that's why the first 100 days of the year end up looking that bad. if i'm looking at signals in terms of is it enough, it's certainly never clear, but you absolutely have seen a little more sign of differentiation in the market yesterday snap didn't swamp the entire nasdaq. didn't swamp the entire market for whatever reason, the s&p has refused to close below 3,900, even though we've been down there for the last nine sessions we'll see if that matters in the long term. the valuation work has been done clearly, the prevailing fear has shifted towards the growth scare rather than inflation overheating. they're both still there, but the interplay has shifted towards growth >> i don't want to say macro
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desks are getting more constructive necessarily, but i noticed, for example, stifel says recession, not the case for this year, possibly next year. today it's evercore, no recession, with a potential 22% bounce in the s&p. >> that's the whole thing about recessions is we know the ingredients, you know the kind of vector of all the variables that usually are in place before you get there, and typically you get a scare before you get to one. now what's typical does it matter what it's typical? typically you get at least one 10% correction before the market goes down 20% for the first time, right? you can't guarantee these things but it is true that employment being how it is, claims have not gone up, even credit spreads as much as they've widened out don't really clearly signal recession. so i think you can say it's a wait-and-see consumer sentiment looks awful, but the market has, you know, largely -- look, the retail numbers are tough to navigate when it comes to this.
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down 50% going into the print, the guide down still brings the stock down best buy, down almost 50% going in, guide down, managed to rally. it's super hard to handicap exactly what's priced in >> meanwhile, the megacap tech names are all down more than certainly the s&p even though they make up a good amount of it, not to mention of course the nasdaq 100 apple looks good, down only 21%. we saw significant weakness in alphabet yesterday on concerns about advertising spend from that s.n.a.p. update, so to speak, not to mention meta amazon has had more of its share of concerns than that we've talked about look at the losses those numbers are staggering and they are obviously very widely and well held. >> no doubt about it you know, it's a reason they've underperformed, you know, the average stock, really, the equal weighted -- put hit the way, the equal weighted s&p 500
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which is something you can own, not just an abstraction. if you talk about the stocks that are below prepandemic levels, the nasdaq 100 is not, still has room to get there. but they have a whole list of major stocks below prepandemic levels topping the list, amazon, meta, so clearly not all of them -- apple, microsoft, not down there. nobody says you have to get down there. earnings up over the last 2 1/2 years, but it tells you the perception is that's where you still have selling potential you know, the leaders of a bull market tend not to be the leaders in the next upturn, right that's the other thing that hangs over the group a little bit. >> great place to bring in brent phillip to talk about this decline. brent believes there is still 20% downside potential from current levels joining us, brent, good to have you.
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whether or not s.n.a.p. is company specific and why you think in aggregate more of these companies need to be admitting to economic weakness >> good morning, carl. i think s.n.a.p. is not s.n.a.p.'s an industry-wide add trend. companies are continuing to see advertising growth, the first thing you see in an economic downturn it's not surprising to see how bad the result was five week left in the quarter to see they'll be underneath the guidance range is pretty telling, right we rarely see that i think that tells you how bad it is. we think it's across the board we don't think this is s.n.a.p. specific we're seeing all the indicators we cover we've had a couple of pieces of good news with intuit and serv servicenow, intuit living in a world of tax and small business. small businesses won't turn to it, so we think that's more defensive. i still think that we have the worst to come as it relates to
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companies still have to admit to the fundamental weakness that they'll see. we're seeing it in consumer internet, and that tends to be immediate. software tends to lag. i think we'll see that later in the year >> you said those indicators give us a sense of what they are, what you're watching and why you feel they are worthwhile predictors of what's coming. >> we spend a lot of time talking to system integrators and, you know, everyone in the supply chain i think what we're seeing is we're seeing a pause, seeing a concern. i was with a ceo of a software company the other day that was going to upgrade his workday system and said we're not going do anymore based on everything we've seen we're not putting in a $20 million software based on uncertainty in the environment so i think that we're seeing the checks not as good as we like to see on the out, and again, when you look at the consumer data, the consumer data, whether it
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was walmart, antatarget, you set with snaep, those are the indications that the consumers are faster that has a ripple effect of those companies buying technology we're hearing lyft on a hiring freeze, uber sloping down. everywhere, these are data points that suggest are they going to buy more technology and i think the answer right now is we're coming off the pandemic, like going to costco, you bring your suburban, load up food, and you have to digest we had a massive 'adoption of tech in the last year and a half we're not super bearish. we've had seven straight weeks of pain. it's 15 on a 1 to 10 scale of pain for our clients seven straight weeks of a decline, at some point it's so bearish it starts to become bullish because there's no long only demand. these are hedge funds trading
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against each other there's nobody on our desk that is committing to buying. so we have to see companies back to the way i think come out and say we're seeing it, acknowledge the economic environment, and that's when the big institutionals want to buy these stocks that's probably sometime in the summer, maybe the fall >> you're also focused on possible valuation floorings put in by m&a activity where does that come in in terms of the smaller midcap software names gotten to that level or is that a downside target >> the small and midcaps are there. small caps definitely there. four to five times revenue the average takeout year to date, it's nine times. our favorite convenience store, 7-eleven, you look at the mutt ls and we're below and you've seen the broadcom channel for vmware, bravo with sale point.
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i think you'll see a lot of private equity and strategic m&a that happens now you have a lot of companies that have been quiet, haven't done m&a for a while. expect it to come back to the market that's probably going to be the first sign the second thing that our clients want to see is numbers cut and acknowledge the environment is softening that will get -- that will release the ability for more clients to come back and want to buy. >> brent, we'll see how this migrates from some of the smaller players as you point out to megacap in the coming weeks appreciate that. brent thill joining us from jeffreys exxon holding its shareholder meeting later today, what to expect with the shares up a little bit. take a look at the futures, as we said, coming off that upside reversal for the dow, but the sd sllnaaqti at the lowest level since november of 2020
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mortgage rates turning lower for the second straight week, but not enough to boost demand for new purchase loans or refinancing. diana olick is back at hq with a deep dive into market conditions affecting the cost of a home. >> this morning's drop in mortgage demand comes after a report yesterday showing a far wider drop in sales of newly blt
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homes. i want to show you this reversal in what was a red-hot housing market the quick jump in mortgage rates and huge gains in home prices pricing buyers out look at a $300,000 house in the last three years in may of 2019, 20% down and a 30-year fixed, 4.33, the monthly payment was $1,132, not including insurance and property taxes. then you see mortgage rates fell in the next year even though the price of a home went up to 5% at start of the pandemic. the monthly payment, take a look at, that it actually dropped then you go to 2021 where you see that home prices were up 15%. again, the 30-year fixed rate drops to 3.15. the payment really up just about $100 and then comes the real hit. you see in 2022, home prices go up 21%, but the real change here
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is that you see the 30-year fixed at about 5.5%. that's when you really get that big kick in that monthly payment. it's up almost $800 more than that same $300,000 house was back in 2019 so we are seeing more supply come onto the market now, and that's helping a little bit, but that supply is nowhere near where it needs to be and it's also not on the low end of the market, which is where so many of those first-time buyers are david? >> diana, it's entering, "the journal" writing about mortgage lenders under pressure, talking about the fed focused on housing and how to try to cool things off. is there a number when it comes to the 30-year fixed, for example, that really does sort of show itself through history to be the breaking point for many people looking for a new home >> it depends on the price at that point when i bought my first apartment it was up at 9% and i thought that was a good deal because home prices were far lower when you look at where prices
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are today, i think it was 5% inflection point we started to see the buyers pull back that's what the real estate agents are telling me and some of the buyers and sellers are saying, when that rate went over 5%, given how high the prices are today, that was the inflection point. >> we'll talk later about toll and what they're saying. next hour, sara eisen's interview with marc benioff live if davos "squawk on the street" continues on this wednesday. to adapt in a fast changing world, you could hire a professional pit crew. go, go, go. sorry. nope. okay. fresh donuts - hot coffee! they deliver real time data
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it's a tough day in the united states and in fact all around the world as we've gotten comments and sympathies from the likes of ukrainian president zelenskyy, even the pope today talking about the devastating events in texas. the new york stock exchange in a few moments is going to extend its deepest sympathies to those affected in remembrance of the
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lives lost and the families impacted by that event it is the worst school shooting in near lay decade, and this country has obviously introduced once again a discussion about gun rights, school safety and gun safety in this country in a situation that is almost unique around the world let's get that moment of silence. [ a moment of silence is observed ]
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facebook's products harm children, stoke division and weaken our democracy. teens blame instagram for increases in the rate of anxiety and depression. it's not great when your customers are voting with their feet and deciding to kind of walk away. facebook's parent company meta dropping more than 26% last week... that is more than $230 billion
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in market share value. when will there be accountability? how many more people need to be harmed before mark zuckerberg listens?
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mobile's annual meeting today. of course shoeds in a fairly good mood given the 62% gain in the stock over the last two months we've talked a great deal about the energy sector, outperforming, increasing what was minuscule rating overall in the s&p. it was roughly a year ago, obvious, that we got even then what was shocking news in terms of a proxy fight at exxonmobil remember the tiny activist firm of engine one few of us heard of succeeded in ceding three of the
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four board members it had nominated for exxon's board. it was at the end of a fairly brutal fight between the company and engine one and changed the composition of a board that, by the way, had already changed with the addition of the likes of, for example, jeffrey oven and mike angelakis only a few months prior to that but exxon has also changed a lot during the last year, and in fact as we've told our viewers many times and will again over the next intervening weeks on june 23rd, we'll have what we believe is a very meaningful look inside this company at this crossroads as it sort of tries to deal with the coming energy transition and how it's going about doing that but i've had an opportunity of course in the course of reporting that documentary to talk to daren woods, the company's ceo, and to talk to jeff oven, one of its directors as well. i did have an opportunity to ask them when they look back on that
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proxy fight and the intervening year, what they've learned >> i think one of the things we learned going through that proxy fight had outside advisers come in, there's lot of work we're doing that we're not talking about. people don't have a good understanding of the approach we're taking, the whys behind the work and the activity. we've become much more transparent, talk more about what we're planning on going and where we're trying to take the company so people can get an idea how we expect to manage this business as we move into this uncertain future. >> he's been tremendous in the last year. it was easy for him to fix that because he's a smart, capable guy that really -- he just -- he just wasn't aware enough to know that he should be more involved with the shareholders. now he is. i think everybody's benefitting from a room that's got more new thinkers that's why it's the best board i've ever been on in terms of
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just the thinking about the business in a completely different way. >> those board meetings have to be interesting with the likes of karsner as well. oven, angelakis, daren coordinating it all and navigate and make key decisions how they want to position the company for a less carbon-intensive future that is something we focus on when you first get to see your documentary. less than a month from now, mike but we talk a lot about the stock itself for of course reasons given the strength of energy versus almost everythin else of late >> but also so kind of crystallizes what's happening with the industry where there's this massive cultural shift that come nates at the moment when the criticism turns to why you're producing more. not that it was ever either/or,
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not like it would stop all together, but it is interesting. the dividend yield as low as it's been in the last decade because people love the story. dividends can go up over time with this kind of cash flow. way back in favor for what they're doing now, it's not clear that the investor base wants them to do anything different yet. >> that is a great point i think you're dead on it's something we also discuss as well, which is where do your shareholders want you to go as well we talk about this all the time. right now they're fox on re return of capital, whether higher dividends or share buyback, not as interested in watching the company put more money into the ground to increase capital more directly at the same time, they've said $15 billion over the next six years to lower carbon, call it low-carbon solutions but how much more? you know, how much more? and how much cash flow is the other key question, because they're gushing cash flow right
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now as is chevron, many of these companies with oil where it is now. >> cap next the oil sector running at a 30% annual rate in q2 we'd like to see more of that, although there's obviously the global production picture to think about, total's ceo today saying russia is having trouble unloading their crude. and the eu says -- one official confident by the time of the next meeting they can get past some of hungary's concerns and come to some agreement on a russian oil ban. the global production picture, that's the puzzle. >> yeah. i'm looking here, because we did have total as well buying stake in the u.s. women's solar company. that is not the road exxon or chevron has chosen they don't feel their core competency is in these technologies it's more about hydrogen and biofuels being the important
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things >> we look at diesel inventories on the east coast and all around the country and of course the prospect of trying to keep homes heated later in the winter the opening bell on the cnbc realtime exchange. major league pickle ball kicking off its first team competition this year. cary group specializing in vehicle glass repair we'll keep our eye on retail to start. the dix slashing the guide they see 915 to 1,170. nordstrom in a signal that the high end is holding up on a relative basis >> it seems that way high end or at least dressier clothing, different categories of clothing, off of a probably low expectation, certainly outperform you know, people are also pointing to toll brothers in the home building space to say they
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saw less softening of demand in other areas. that is also on the high end the unpredictability of how these stocks will react, but pretty much all the chain stores are single-digit p/es if you believe that but they're also small i think that's worth keeping in mind last week we hear from walmart, target those two are $400 billion plus in market cap, costco another $200 billion dick's, abercrombie, nordstrom, others, all together at $36 billion. relatively small, huge swings in the outlook. nothing quite really affects the general picture of consumers' capacity to spend, shifting the mix. everyone was sort of caught off balance with inventories what's fascinating to me is once we got the target numbers and they said nobody's buying bicycles or the hard stuff, walmart saying groceries taking
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up too much of the spend yet dick's still had downside because you would have thought the expectations would come down enough we'll see how it settles up. >> vorpts at dick's up 40.4, pretty much in the mask mandate of anf and target, a little more extreme than walmart's 24, but eric nordstrom talked about the inventories and the bullwhip effect is affecting all of retail take a listen. >> we felt we were hurt last year from massive inventory and not having a packet hold inventory to lean upon we've been building that double to trip itle the size we had prepandemic, and we feel good about that there's still a lot of bumpiness out there in the supply chain. we're not immune to that so having that packet hold inventory we feel good about >> by the way, urban is the other story, 33 misses 43, revenue a slight miss, and they
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talked about some elevated costs. david, amazon, i think it was the information yesterday put a number on the number, warehouses seeking to unload somewhere in the neighborhood of 14 as clearly you don't need as much >> no, it's kind of shocking in a way given how much money was put into amazon increasing its capacity overall and not to mention hundreds and hundreds of thousands of employees the company added from the pandemic on but that is cheelearly reverseda is the stock price, up $3.56, not much, but nonetheless amazon around that trillion-dollar market value, still down 37% plus for the year. wanted to mention wendy's, stock up 10% had hoped i might have a little more to add to filing yesterday from tryon, i don't, but i'll
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tell you what it said, which is basically that they are -- have advised the board they intend to explore and evaluate the possibility of participating along or with -- alone or with third parties in a potential transaction that they say would enhance shareholder value, that it could be an acquisition or a business combination of some kind we'll see. you know, i would say tryon has obviously been on the board, owned the stock since '05. they each had a long history with the company they know it very, very well it is already levered, too, so you wouldn't expect there to be that much ability to perhaps leverage much more for a traditional lbo. don't have a lot to share there. the stock is responding. got the news after the bell yesterday. >> use different brands in there. you can recombine or separate or whatever you might think i agree. given how much there is in the way of retail, restaurant, super
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dirt chaeeap you have levered yu would think private equity would find itself elsewhere. >> for tryon itself, not typically in their playbook. elliott has transitioned to some extent to be more about transactions and buying company, at least of late than even the activism component but that's not been the case for tryon. they are known as activist they've been a part of this company for a very long time, so they know plenty it's not clear what they perhaps feel that wendy's is not doing that could otherwise be done >> i was going to mention intuit, it's up 2%, not necessarily a huge move given the fact it's been cut in half coming into it some indications that the bigger, more reliable software, the entrenched ones, they basically got massive, you know, highly valued because of predictability or more or less paying off on that you know, seems like it's some
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differentiation going on right there. up 2% and servicenow as well is one of the early leaders in the s&p, up 3% >> some decent action to start an enterprise software intuit raises their guide even though they're heading into the final quarter of their fiscal year, but they see revenue down 8 to 9, street's down 17 a lot of tweet activity from managers the last 24 hours, michael bury and bill atman talking about inflation being out of control, fed has to be more aggressive. 10-year, three-year low, durables miss, mortgage originations, j.d. power with some forecast for auto sales in may down 20 year-on-year we'll see whether or not this was as indicative an extreme as it was back in 2020. >> exactly it felt like a tweet from march or april in the sense that things are running out of control and the fed needs to have radical action.
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what has happens do far this year, you know, diana talked about mortgage rate, went from 3 to 5.25, new home sales down 20%. investment grade yields up 2.25 to 4.5, high yields 4 to 8 the tightening is here what does the fed need to do the nasdaq is down 30. >> which is why normally fed minutes get a lot of attention are nthey going to read hawkish since they were taken and we had this weakness. >> before the guidance they previously did has taken hold to such a degree in markets themselves there's always a wild card in the guidance, the minutes. we read them too closely i agree, what's been said since then, you know, with bostick and the atlanta fed opening the door to saying september is not so sure in terms of a hike or at least the magnitude of it, you know, that's pressure and
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something the market has take on the heart. >> taking a look here at -- i don't know a what to call them, social media stocks, s.n.a.p. is up after that historic loss yesterday, 41%, 42% i think is where we ended on the day down, maybe 43%. some of the other companies' stocks coming along wit who rely on advertising you herd from brendt thill at the top of the program negative on his indicators in terms of the checks they do shares of twitter up about 2.3%, maybe a little higher than elon musk's purchase price when he bought that large stake that started his quick road to actually making acquisition offer for the company that was accepted at $54.20 we all know what's happened since then you can do the math and look at the enormous spread to that purchase price
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yesterday, you know, mike, you and i were talking, i detailed in of the reasons why he is obligated to that in terms of the contract one thing i didn't mention, i have in the past, seen as some risk, although a small one, which is morgan stanley leading the financing, could they somehow try to say no. we've seen it occasionally we saw it during april, may of 2020 we saw it during the financial cr crisis heerp it seems highly unlikely that that would be the case in terms of morgan stanley's role here in providing what is roughly $12.5 billion in financing. remember, also the equity check ashs large one, the margin loan which he's greatly reduced with the equity he's bringing in from other partners such as larry ellison. not to mention morgan stanley syndicated the loan. they're down to 27% of it. it's a pretty good-looking loan too. a $6.5 million term loan plus 475, a secured bridge of $3
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billion, ticks up by 50 basis points i think it's every month after the first three months if they don't pay it back by issuing bonds. you have $3 billion in unsecured bridge, plus 1,000 morgan stanley may be pretty happy with that paper. again, they have already syndicated much of it. so, highly unlikely but at least something that many investors who are playing this is keeping an eye on as one other risk. that would be litigated in new york court, by the way, although you'd assume if it disney v did take place it would be because of a mack asserted by musk that would be in delaware court and then follow with new york. all of this highly unlikely to occur. what's more likely to occur is twitter sues them saying you have to make good on your deal >> right tesla shares, we got to a 49% drawdown yesterday elon musk out of the $200 billion net worth club, but
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we're keeping an eye on consumers shopping for cars. nvidia trading not too badly ahead of the print tonight a lot of confusing crosscurrents in chips, mike you have gaming week but there's data center and crypto money is down, but a lot of -- it will be interesting to see whether or not the inventory shift we've seen in retail makes its way to chips. >> for sure. over the course of this, with nvidia, which, by the way, that stock in the last year has mirrored tesla to a phenomenal degree, might be partially a fluke, but down 52% from its high, nvidia it's now kind of back in the zone of relatively normal growth stock valuations, right. you had forever retain this super premium when it was in that hypergrowth phase now, you know, if the numbers are going to hold in terms of forward estimates, it's under 30 times earnings
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so it's different type of investor that looks at that. it's not like you need break-neck fundamental momentum necessarily to make that work, but very interesting to hear what they have to say. they're kind of a category of their own within semis in a way, so that's why it's not something we read the clues from micron or something else >> right >> of course a much broader story would be apple, which is just south of 140. some argue a critical level. the nikkei headline again today, iphone production could be at risk of distribution delays in china because of lockdowns then this report yesterday that maybe they move air pod production to vietnam, which i was once told would be very difficult. this is several years ago. >> you visited the country. >> because of the distribution problems and no deep-water ports, sort of structural issues that vietnam has in production they can do apparel very well. it's harder to get people to come in and make chips or as
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assemble electronics, but it would be a huge deal >> is there anything that's changed that you're aware of in the least couple years that would allow them to start that production >> only that the conventional wisdom has shifted to vietnam being a net winner of china trade disputes, and certainly now accelerated by the lockdown complication >> yeah. >> they've leveraged that better than some i think would have thought a few years ago. >> just overall market, i was going to make note, trying for traction again yesterday you had this kind of grinding comeback in the index as i mentioned that 3,900 level for a couple weeks, been talking about 3,800 to 3,900 a lot of eyes on that area as potential downside antarctica etd -- targets before they got there. that seems to be where a little of the selling momentum has dried up this is a strong seasonal week people thought we could get some rotation back into equities.
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yesterday very defensive look. you wouldn't deny that it was kind of utilities and staples and health care that was driving things but worth noting that it doesn't seem as if this is kind of we're going to open and the sellers swamp the market >> that said, even though it's sort of a mixed market for the home, it is being led by energy up by more than 1% bob pisani, good morning >> good morning, carl. important thing about today is growth is back a little bit here i think this is based on the idea with the weak data we've been seeing, the fed might take a little bit of a pause further done the road. we haven't heard about that attitude in a long time. growth is doing better here, not just energy, somewhat cyclical, but tech is doing okay, banks are doing okay, industrials, consumer staples are lagging a little bit, but that's a good sign it's also good that the two big growth stocks, companies
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associated with the high-end consumer, toll brothers and nordstrom had generally positive comments overall on the high end. seeing home builders come back they were the first sector that had a downturn in the beginning of january and many of them are 30% off. but today the home builders are moving to the upside, travel and leisure stocks are bouncing back a little if you could put that up for me, after being down rather dramatically, some near 52-week lows i think a key thing about what we're seeing here, you don't need a recession to have margin compression. that's a major problem for the market right now remember the reasons we had this big move up in corporate profit margins in 2022 and 2021, last year, we had corporate margins at 13% at one point, 13.5% in the second quarter of 2021 that's been coming down. those are record profit margins. the historic average is 9% to
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11%. corporate america made a lot of money last year because as the revenues came back when the economy came back, they were able to capture more of the profits that went to the bottom line by cost savings that they had implemented during the climb we saw during covid. that is starting to moderate i would not be surprised to see an 11% handle on profit margins. remember the historic average. these are very unusual numbers you're looking at. historically in the last ten year, profit margins have been 9%, 10%, 11% if you put up the next one you'll see the average for the second quarter has been about 11% for a long, long time. so now the fact that we're getting 13%, there's the average for the last several years, the fact we had 13.5% is very unusual. we're going back more towards the norms for profit margins, and there's putting pressure on the stock market it helped juice it before and now helping it go down the bottom line is it looks like
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growth is replacing inflation as the main worry of the market here so it is quite remarkable to hear the low- and mid-income consumer hit by inflation and walmart and target and the higher end is holding up well from nordstrom and toll br brothers that will change as the market continues to decline, the wealth will affect the wealthy. there will be a wealth impact if the market keeps dropping. which is the bottom? that's the big debate. here's the source of the problem -- 10% earnings growth for the s&p 500. i have noted this for several weeks now. it's not moving. and 10% for 2023 these are not going down appreciably because energy estimates keep going up. many feel that the analysts are wrong here and that the market is going to have to go practically to zero for earnings growth if you think we're going to have no growth at all, then the market's probably still 10% in value. that's how you get to the 3,400,
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3,500 numbers a lot of strategists are showing up on our air about. a lot of people are starting to assume little, if any, earnings growth down the road the you look at where we are right now, 3900, just above 3,900, that was the low last wednesday, i believe, so we're holding up i think one of the reasons is clearly some hope here that the fed may moderate haa little further on we get the minutes today and that could be a problem. that's backward numbers, weak data since then. so the question is how is the market going tory act to the fed's comments based already on fairly stale information that will be the most important things that happens in the latter half of the day today back to you. >> bob, thank you. bob pisani coming up in the next hour, don't miss our interview with salesforce's marc benioff with sara eisen the 10-year up from session lows
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but that's still going to take you back to say the second week of april we'll be right back.
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energy gainers, and there's raised guidance, but check out the homebuilder, as mortgage rates are easing off a touch there's a look at horton, lennar, some relief tote > 'rba ies nam >>wee ckn a moment
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it's day three we're continues our coverage of the forum in davos, switzerland. sara has more for us >> good morning, david clearly the discussion centering around the global economy, inflation, what the world is going to look like geopolitically given the war in ukraine, but also this morning texas is front and center in all of our minds and that horrific
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tragedy in the united states gina raimondo is here, representing the biden administration, and i had a chance to speak with her and what she's telling the global community about what happened here. >> it is heartbreaking, and all too familiar, so my message to every member of congress, every governor, every policymaker in america, stop and ask yourself, what are you going to do about this it's untenable we have innocent kids being gunned down in their schools. we have the power to change that this isn't good for america, certainly not good for business. every single american has an obligation to figure out what they can do to rid ourselves of this scourge of gun violence >> reporter: that last part about how it's bad for business as well, i asked if there's a message for ceos, and she said
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absolutely she said, you usually don't see ceos stand up to the gun lobby but my next interview is a bit of a poster child. marc benioff, the ceo of salesforce, coming up in the next hour. a look at the markets here the dow is aiming for four straight days, the longest streak in a upcole months, currently up about 50 points we'll be right back. at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect. your shipping manager left to “find themself.”
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good wednesday morning welcome to another hour of "squawk on the street. i'm carl quintanilla with sara eisen and david faber. still circling, as we get in yields of course, this afternoon the fed minutes. >> we are 30 minutes into the trading session. let's give you a few we're keeping an eye on. dick's sporting goods, the stock is down after issuing weaker than expected full-year guidance, citing challengie ing
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macro economic conditions. shares of lyft, the company plans to slow hiring that follows a similar move from uber earlier this month, as companies are looking to focus on increasing margins, or at least maintains them finally, wendy's is up in a filing, they're exploring what might end up being an acquisition or merger, or something to create shareholder value. shares had been up as much as 10%. >> we'll get fed minutes later on this afternoon. our steve liesman has more on what to expect, even though it's certainly a lagging print, steve. >> yeah, for sure. the markets will look to the
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minutes of the early may meeting for any light they can shed on whether the fed will require rates rising that it all ends up in recession that is, just how high will the fed go there are three views. the neutral view, 2.5% to 3%, that's a bit above neutral, and then a lot above neutral to restrain the economy the question is how many fed officials fall into each of those camps there. take a look at this. the terminal rate. that's the highest rate in the fed funds futures curve, falling from 341 earlier this month to 293, and now it's the june contract that's the highest, meaning over the cycle, about 50 basis points have been baked
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out. in fact, markets you now even baking in an easing at the end of next year that outlook, of course, requires a belief that inflation is on the way down, and the economy has weakened to the point that the fed thinking it's made a mistake >> steve, i was going to ask a question, which is that -- as you say, a lot of this rests on the inflation outlook. i won't weather economists think inflation will be at the end of the year, it expects, what, in the 4% range that would be a big drop, very successful for them. is that going to happen?
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>> that's the forecast there's a lot to go through near term here. you have the china shutdown which will hurt prices wage prices are still coming through, and the efforts that david was just talking about, the efforts by companies to protect profit margins you still probably have price increases coming from the war in ukraine and the disruption of food supplies, as well as energy supplies 7% for the average this year, but then 3% is baked in for next year i don't know if that's right, but that's the forecast. >> steve, the market has classically overshot on its forecast for hikes, but i wonder that powell is increasingly talking about elements out of his control, how much credence
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do you give -- >> first of all, not a lot a lot of things are moving and this is an extraordinarily difficult cycle to forecast. not just these crosscurrents, but big tides are clashing against each other rates are going up, higher inflation, an economy cooling from the surge, an economy coming back from omicron and covid. all of these are clashing, making it very different, but there's another aspect i want to talk about, which is just the volatility the forecast in the fed funds market is subject to volatility in the fixesed-income market that is higher, because the fed is leading the market. the fed is a big weight on volatility and fixed income. as it beginning to stop buying, you'll see volatility both ways. you look at the volatility in the two-year, they're going to
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go down more you want to be careful not taking big market calls from the volatility. >> steve liesman, thanks speaking of volatility, we do have the down up about 38 points david zerbos joins us today, and joann feeney as well david, what do you think of this as a cooling in expectations the last couple days >> i think the numbers have come out, and it's caught people off-guard, though it probably should have been more expected, i would have thought nevertheless, i'm thinking that the comments give us a bit of a reprieve, but the stock market is down 17% for the year, it's still messy, still repricing, just like we all learned that
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q.t. also words, and the market is pricing it. it's getting the idea of what the fed wants to do. i think we're settling in that the fed needs to slow demand so demand doesn't get worse. >> is this equity drawdown just getting started? >> i don't think that's the case the markets are always forward-looking. at the end of the day, i think the market sees it, they understand it. the fed has been pounding this message home since late last year a lot of people didn't want to listen to it, but just like a lot of people didn't want to believe that qe was going to work, they probably didn't think that qt was needed but here we are, priced at a pretty significant effect from what the fed is doing, and i
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think the important point is the supply disruptions have restricted supply. that raised prices, created the inflation problems we have the fed has no choice, if that lasts, to bring demand back down in check with supply right now, probably a good place in terms of expectations. some of the ten-year break evens are at a low they're doing their job. it just hurts a bit. you have to take the medicine away, the stimulus away, and then we'll be ready to fight when the time comes. >> joann, to you, companies talking about headwinds. is that already priced in? >> hi, dave, nice to see you
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again, another old rochester grad when you look at the economic situation, there's a lot of real headwinds beyond the inflation issue that the fed is trying to get under control, and the supply chain problems are ongoing, lasting longer than expected, but some of the stocks that have come down hard i think are miss pricing like at the microsoft or google or amazon. if you look they cloud side of those businesses, these are areas that will continue to grow for many years, even if we do get a recession, these are companies that have growth in the 20%, 30% range nvidia reports that it's a key supplier to the cloud, and for longer-term investor, that's a good place to be at this point david, just trying to bring color all week with these
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conversations, and something that people have been talking about are the midterm elections and what the investment landscape will look like after that, especially if we still have inflation, the republicans take congress and we have a real divided government. >> i think divided has alleges been better for the market it makes washington do less, and the markets sort of like it when governments are stepping away, unless it's in times of crisis, i guess. so the issue may be more with the fed. does it get too nerve out about going too aggressively during the election period, so maybe that was also part of the bostic comments that came out this week politics always do play a role i wouldn't get too caught up in it i think right now the story is the fed actions work to slow
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demand, we need to slow demand, given what's going on with supply the real story will be can some of these supply disruptions work their way through the system that frees up pricing to be a little more -- a little less aggressive that should bring inflation down and stops the fed from become so draconian to fight this. i think it rests more on the supply side, or even in the end, a lot of what the fed is doing, you just have to get these supply disruptions that have been with us for the better part of a year, year and a half, through. it's great to be on with joanne. we were 1/2 rochh -- invite --
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rochester program today. we're revealing our age here. >> believe me, i know how you feel joanne, let me come back on valuations it's one thing to say that some are looking cheap, it's another to actually buy them, especially with the mid-quarter updates that seem to scare the market. are you going to wait for another earnings season before you plunge in? >> you know, david, it depends on what investor we're talking about. it really doesn't want to see this volatility in their portfolios, there are places too hot. we like some of the higher dividend players that are solid, let cyclical, something like a td bank out of canada, but also even a broadcom in the tech space. they're going to hold off, we believe, so we held these for a long time.
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we any these are good places to be then if you look at the growth investors, you know, there's some very attractive valuations out there. some of the megacaps we talked about, but some of the lesser known names. these stocks have come down very sharply, and are key providers of greater efficiency. even if weapon end up in a recession, efficiency is what companies continue to invest in. we think it's a good time to look at these opportunities. >> thanks, guys. go rochester maybe we'll see you next time together >> go rochester. as we head to a quick break, less ate look at our road map for the rest of the hour, including buying opportunities for tech the nasdaq is off 30% from its highs. why one investor says most of the damage is behind us. a deep dive on the state of the consumer and what it means
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for your money. plus salesforce's co-ceo marc benioff is with us. "squawk on the street" is just getting started.
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welcome back it's been a big retail earnings week, continues with results today from dick's, urban outfitters and more.
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courtney reagan is here with the roundup. >> hi, sara. kohl's shares were halted for volatility bids could be 10% to 15 percent lower than offers that the retailer said were too low the report points to deteriorating trends and the market downturn. this is developing and shares are on the move as a result. separately, dick's sporting goods had a much better than expected quarter this morning, but then issued a downbeat forecast, noting evolving microeconomic conditions the call is starting, so we'll get back to more on what they're expecting to happen. nordstrom, however, had a slightly worse than anticipated loss, but it's one of the only retailers upping its forecast for the year the department store segment did
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outperform the off-price rack division, that's been under pressure, but it also showed signs of improvement urban outfitters did also say that consumers are buying for going out again, particularly at anthroap anthropologie. the company missed on earnings about i a wide margin, comp sales for the current so far are nicely positive. the urban brand does continue to underperform what lessons have we learned in first, consumers are willing to spend when they want to. the ability to anticipate the cost of doing business, adapt and sell the right product at the right time is more important than ever. inflation is pressuring all sides. abercrombie has proved it's possible to continue to pull on
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discount and increase the average price per item most executives acknowledge that things could change by the end of the year. a nice summation for where we are with retail right now. we're joined by tanker outlet's c ceo. steven, welcome. good to have you we have gotten a ton of input from the consumer. can you talk about where traffic stands at the outlets? >> sure, our traffic is still holding pretty firm. so we're thrilled to rove that similarly, we're seeing similar trends people are shopping to go back out, back to work, out to events, et cetera. so we're seeing some of the better brands, brands that are holding their prices relatively
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high, particularly in the value channel, and we're seeing great sales in those categories. >> what does that mean for your business, occupancy and the like how much confidence is there these traffic trends can remain stable >> we just got from icsc it was as well attended as i've ever seen. the retailer demand is there we had robust meetings, speaking to all the retailers, brand-new retailers, new direct-to-consumers retailers. we're excited about those prospects and think there's a lot of new business for us to do. >> stephen, it's sara. it feels like there's an increasing split in retailers at different income levels. you see a ralph lauren or nordstrom saying they're seeing no pressure on the consumer.
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how stark is it from your point every view, and who stands to benefit? >> again, we're seeing right now -- we all read about the issues that old navy had, but then you take a look at the banana republic brand, and they're doing great. i spent many of my years at ralph lauren they offer all different price points, and they've always been ahead of the curve they're an important retailer in our channel and a great business partner. we're pretty confident at seeing all price points will have a good experience this weekend but the back to work or event categories seems to be leading the charge. >> what is going on with inventories? there's been concern with
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investors that some companies have very high level of inventories. how do you -- i guess you have a different view, because you see it from an outlet perspective, but how big of an issue will this be? >> i think the outlet change definitely benefits from the supply issues that other channels of retailers are facing our customers are looking for value. value is usually in things that might be a season old or two seasons old, but again they're looking for their favorite brands at the best possible price, and you see people wearing ralph lauren product that they've been wearing for years, and it's still in style it's great to have heritage brands that are all over our portfolio selling goods that people want to wear, logo branded, driven, and really it bodes well for the customer every single day
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>> obviously one of the things you also stress is being value priced are you able to maintain price in this environment, or at least avoid getting to a number that perhaps destroys demand? >> last year a lot of our outlet retailers were at an all-time high you're seeing prices break earlier and earlier. the trend changed this year. we didn't see it break undulate in december. i think that still holds true today. i think retailers are pushing prices to inflation, the customer demand particularly, they're going after the price points, but, you know, should there be a recessionary headwind that faces us, the retailers have the ability to pull the lever and go more promotional or more value priced in order to stimulate demand in our shopping center. >> stephen, a lot of our viewers
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are looking for clearer guidance on where retail stands, and certainly your input helps thank you. >> thanks for having as we head to bread, toll brothers, that stock is higher after the company beat on the top and bottom lines, says demand is still strong, though it has mooed rate moderated now look at that, a nice rally in the other home builders as well we'll be right back. cal: our confident forever plan is possible with a cfp® professional. a cfp® professional can help you build a complete financial plan. visit letsmakeaplan.org to find your cfp® professional. ♪♪ - in the last two years, we quadrupled our team and the pace we're growing, i couldn't keep up without ziprecruiter. they do the legwork and they get my job posting in front of the right candidates. i love invite to apply. i instantly see great candidates and i can invite them to apply.
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time now for our etf spotlight. we are looking at the tech spdr, xlk. apple and microsoft are that fund's top holdings, and both those names together are responsible for about 800 points of losses on the nasdaq. only amazon have a bigger drag we're going to talk more about that on the potential buying
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opportunities, oh, yeah, in just a minute sara david, thank you still to come this hour, salesforce chairman and founder marc benioff, and his new phrase "environmental citisapalm. we'll be right back. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq you know real chili never has beans.
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you know a cappuccino is for the morning and an espresso is for the afternoon. you know which pizza is eaten with a fork and a knife... and which one is definitely not. the delta skymiles® american express card. if you travel, you know. new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today. facebook's products harm children, whose resumes on indeed mastoke division andria. weaken our democracy. teens blame instagram for increases in the rate of anxiety and depression. it's not great when your customers are voting with their feet and deciding to kind of walk away. facebook's parent company meta dropping more than 26% last week... that is more than $230 billion in market share value. when will there be accountability? how many more people need to be harmed before mark zuckerberg listens?
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i'm contessa brewer, here is your cnbc news update. new details in the uvalde school
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massacre police say the gunman barricaded himself in a single classroom, and started shooting, all of those killed were in that classroom. on nbc's "today" show, a texas range r. >> we're trying to figure out how he was able to attain this rifle and working with the fbi to find out if there was any indicators, any red flags prior to the shooting. >> british prime minister johnson told lawmakers today he's been humbled and learned his lesson as a government report reported a number o illegal parties during covid lockdowns. and kate moss, the model, said she once accidentally slid down stairs while dating depp,
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but in her words, he never kicked me or threw me down stairs back to you, david let's get back to the broader markets. joining us here set nyc, the portfolio manager, larry haverty, good to have you on the set. it's rare to have someone older than me on the set these days. i love your perspective. you have seen plenty of these periods before a, is there a period you with liken this time to >> they're all the same, but there's no such thing as an intellectual bottom. there's only an emotional bottom, get me out of here, i want to leave dodge as quickly as possible. what you have to look at when
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you're in a period like this is signs of emotional distress. you have to get that from financial indicators a couple weeks ago there were 1700 net declines in the new york stock exchange, only once in 40 years has there been a greater number we're in the 99 percentile in that people wanted to get out quickly. that will ring the bell we're very, very close to an intellectual level of the bottom now, when you get to the bottom, i like this quote from my russian history professor. just when you think things couldn't possibly get any worse -- he's talking about russia -- they do. at the bottom, there's always something incrementally going wrong. more or less at some point you have to tune out the news. this morning, dick's sporting goods, a retailer, the stock went down 15% on the quote,
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unquote earnings miss. well, you can't break your neck falling out of the basement. the company at the bottom of trading today was at three times cash flow. >> and look at the stock now it's rebounded just in the last half hour. >> 33% return. you can't go broke buying companies at three times cash flow there are a number of companies in the retail area, trading at three to six times cash flow in the tech area, you have companies like google and facebook trading at 10 to 13 times cash flow. >> yesterday they were quite weak on the unexpected warning we got from snap, only a month after the company had reported its earnings plenty of people come out and say these things are cheap it doesn't mean they're going to get cheaper. why not, in terms of buying a meta or alphabet >> the thing that's different now versus '74, companies can buy their own stock.
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these people are very, very sophisticated financially. so you look at google, and you have at 13 times, it's a seven cash flow at cost -- >> except -- >> google is getting 1% with money sitting in the bank. it yoon to be 500 points was good share repurchases are eventually going to moderate things i think the public will come back >> why why do you think the public will come back? >> because what you have done right now, you're taking the baby out with the bathwater. you're selling the googles and amazons. they're going down as fast the reason you sell these is there are buyers for them. there aren't any buyers for
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snap why facebook at the high end of the ad chain people are forgetting that facebook's ads are accountable you're in the direct response business, and you can tell whether the ad works that will be the last thing you're going to cut, because you're more or less going to have to advertise. you take your combined earnings of where you are at this point in time, apply some of your experiences, and you more or less have to be positive you can't break your neck falling out of the basement. you look at the energy here in the new york stock exchange. we've cut out a lot of the excesses in the systems. the spacs are dead there won't be ipos any time soon, so the supply of new stock is drastically curtailed you have these enormous values
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in the market created on a cash flow basis, and at the end of the day cash flow matters. >> you've written a lot about kniffin toishs, and we're seeing them get bloated >> well, i think the semi problem will get corrected today there was a little notification that apple was may not going to produce as many iphones. last time i looked, the iphones use semiconductors, and maybe the ones that apple was going to use were going to come onto the market there's no such thing as a shortage only a shortage at a price if the semiconductor companies know how to price their products fully, they'll meet the supply i think the semis will have a rough time for a while, because they're going to be order
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cancellations. not all retailers have gotten it right. some have messed up pretty big time, but i think the inflation is likely to have peaked lumber prices, which was one big engines of inflation is down 40%. >> carl has brought that up a number of times. we used to talk a lot about what we called old media now, advertising worries, do you think they extend to the likes of a warner bros., discovery, or nubs u nbc universal? >> i think "jurassic park" is a great example. the first one i saw in the theater i was terrified. this is a film being made to embrace a communal experience. people are still going to football games, baseball games they're going to go to theaters. if hollywood can produce good
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products, i think there's no question the companies will survive and prosper. they're being given away right now, most of them. >> larry, appreciate your time. >> thank you >> good to see you in person thank you. well, david, you were just talking about the tech wreck one stock that certainly felt that, salesforce coming up after the break, i'll talk to marc benioff about whether the fundamentals in the flsiness are changing, reecting some of the drops in the stock. stay with us nergy company? with operations in scotland, technologists in india, and customers all on different systems. you need to pull it together. so you call in ibm and red hat to create an open hybrid cloud platform. now data is available anywhere, securely. and your digital transformation is helping find new ways to unlock energy around the world.
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continues our coverage of the world economic forum here in davos, switzerland, all week long, joining us, as he always does on the final day, marc benioff. welcome. >> great to be with you, sara. thank you for having me. >> thank you. >> what did you do with the
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snow >> i like it better. >> it's easier to walk around. it's not as scary, especially going up the hills. everybody is wondering whether we're going into a global recession, u.s. slowdown. you see what's happening in the world of i.t. spending has there been any big change? >> i think the big change is some of the quarters we saw. snap did not have a great quarter, but the dollar had a great quarter. so when you look at what's happened with the dollar against the yen, again st the euro, sine the second week of-mile-per-hour it's all anchored to the interest rates our fed reserve is doing some very aggressive not just hiking, as much as narratives and
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emotional, i think, content that is really got everybody thinking how many trillions of dollars is exiting the equity market. that's what everyone is holding on to. >> what's moving in the opposite direction of the dollar has been tech stocks, which are right in the cross hairs of some of these changes on interest rates and the economy, including your own stock has gotten beaten up are the fundamentals of the business changing? >> our business isn't changing, but you can certainly see when the fed raises rates, the market is going to come down and growth stocks will come down. of course, our stock has been up 3800% since we went public i've also seen these kinds of shenanigans from different central banks over the many decades i've been doing there. look in 2001, we almost lost our company because of a similar
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situation to this. we were just starting out. we had to makes fundamental changes to our model it made us stronger. i would say salesforce was born in the 2001 recession. do you see other dot-com parallels with what's going on in tech? >> i'm mentors ceos, and saying there's spends they must do. they must move to long-term contracts. for ceos who have customer with his month-to-month contracts, which is what we had in 2001, which is hard to believe 21 years ago, it's very scary you don't know if the customer will be around so move to annual or multiannual contracts. get the cash in advance. secure your relationship with your customers don't allow this short-term volatility to affect your revenue or your cash flow. ultimately one of the reasons you saw such strong cash flow
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from salesforce is changes we made in 2001, because of an environment just like this i'm telling ceos who are trying to build businesses, they need to take this very seriously. >> we have seen some of the younger companies that have been extremely volatile in the market already start to pause hiring, cut costs. we've seen it from uber, from robinhood. is that something you're looking at in this environment >> you have to look at everything you have to look at everything you're looking at an unusual global situation, where you have rising interest rates here, and volatility in foreign exchange you have to look at everything that's the smart thing to do. >> does that mean you slow down hiring you've been hiring a lot over the last few years >> we're certainly going to look at everything. >> you're not going to tell me >> i'm in a quiet period, or i
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would tell you i think we have earnings nex tuesday, so i can't tell you anything about the actual business. >> just in terms of the environment and what the market wants right now, you alluded to some other things. there are always -- you know what some of the concerns are around your stock. expensive acquisitions, high comp, for instance, other sorts of expenses. are you changing up the playbook to match the environment >> i'm very excited about what we have done if you look at since we started the company in '99 to where we are now in 2022, we are the fastest-growing enterprise software company of all time we went public in 2004, over 3800% return to our investors since we went public mid 20s growth last year, and no company has ever seen that type of growth in enterprise software when i look backwards, am i
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satisfied? yes. do we know how to navigate this type of environment going forward? i've been through this before. i think i know how to operate this as now a co-ceo. >> people are talking about the acquisition of twitters. you have looked at a company, passed on. >> yes, thatches many, many years ago. >> is that a good deal for elon? >> he's clearly bored, doesn't have a lot to do you know, he's got tesla, a very boring company, company, spacex, who's not interested in shooting these rockets up, and then neurolink where he's trying to bore a hole in your head and suck your consciousness out. he's clearly not busy enough i think he's one of the most incredible, exceptional
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entrepreneurs of all time, maybe the most exceptional entrepreneur of all time it's fascinating to seehe's so interested in this good asset. >> is it a good asset? >> i've always liked the asset my investors asked me not to buy it, so we didn't i've always been an admirer of the brand, the asset i think it's a great company. >> here in davos, you coined a new phrase, environmental capitalism a few years ago you want capitalism is dead, now it's environmental capitalism is that something that is really an urgent priority, given some of these concerns around geopolitics and the economy and everything else? >> i do think we need environmental capitalism that means when we run our company and i advise other companies, i not only advise them for, i'm advising every company neither to go to net zero we just have too much emissions. you have seen the science, the
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reports, we have to get down to the climate targets. the only way to do that is create net-zero companies. that's why we announced the first coalition here at the conference with some of our competitors, some of our partners hundreds o allow us to accelerate our positions, delivering net zero companies, and number two, you saw our trillion trees program which we launched two years ago. >> i remember talking about it with you by the way, we have a great partnership and you rank very high on the list of environment, number two number four overall, i think number two in the software industry. >> great news. >> i think you got it. we have to sequester 200 gigawatts of carbon. china joined yesterday, the environmental minister was here,
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shea, i was on a panel with him. they announced they will plant in china 70 billion trees. that was very exciting you saw president biden yesterday delivered $8 billion in trees in the united states because trees are the most effective way to sequester carbon that's already in the environment. if we plant a trillion trees by 2030 which is our goal, and now we're accelerating that, we have commitments from so many countries and so many companies, we can do this incredible, incredible restoring of our planet, reforest station we had 6 trillion trees, now only 3 trillion. we get a trillion back, we'd go to 4 trillion. that would be amazing. >> also, cooperation with china. haven't heard a lot about that very few -- >> tree diplomacy happening here europe is on board, china on board, the united states on board, canada is on board. we still have some outliers like
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brazil who needs to get on board and make sure we need to restore biodiversity it's extremely important for the future of our planet. >> speaking of responsible capitalism, on the menu at davos and something you're thinking about, you have always pushed other ceos and yourself to speak out on issues beyond profitability and issues about our society. i do wonder, if there's a role for ceos, gun violence, after the horrific tragedy we saw in texas. the commerce secretary earlier today said time to speak up. it's bad for business and bad for america. what do you think? >> we obviously need to do something. i have said before that i think there should be changes made to many of these actions. we need to take direct action. too many words and not enough action look, i love our freedoms, but with freedom comes responsibility
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we need to take actions to preserve our freedoms. >> you think corporate america can stand up to the gun lobby? >> i think you have to stand up for your values. what is important to you as a company? what is important to you as a ceo. what do you want to create do you want to have the best place to work, a great culture do you want your company to always be doing the right thing or do you always want to be somehow defending the next issue or concerned about how you're going to react our position in our company is our core values don't change the world is changing. there's a lot of changes happening in the world you can see that here. our core values at salesforce, trust and customer success and innovation and equality and sustainability. >> it's a tricky issue for ceos. >> i don't agree with you at all. >> look what happened with disney and the don't say gay bill >> number one, you've got to stand up for your employees.
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you have to create a great place to work. i'm sure you feel that way you work in a great company. you have comcast, right? you have a great ceo his focus is creating a great company. he wants to retain you, have a great culture, stand up for your rights, treat you well. >> are these business issues or are they political issues, something like gun violence, something like roe v. wade, for instance >> i think you want to work at comcast, every network in the world would love to have you work there if brian wants to keep you, he better have a great company, pay you well -- >> we're talking about you and your company >> this is exactly how i think about it that's how i think about it for my employees i want to have a great place to work i want to make sure i'm treating my employees well. i want to attract the best talent to salesforce this is very important to me for modern ceos, if you can't say you want to create a great place to work, you'll end up
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with serious problems. >> these are very political issues you're going to alienate somebody if you take a side on issues that are so controversial like guns. >> i think if you're on the right side of your employees, you're not going to have contr controversy. >> what are your employees telling you about some of these issues you were early to speak out. >> we deal with mayors who say crazy things, governors, presidents who say crazy things. we operate in many countries all over the world when our employees call or write or email and say, hey, i've got a problem here or i need support, then we say, do you want to move somewhere else? how do we help you, support you? what are the things we can do to help you as an employee? number one is, we want to make sure our employees are successful and taken care of, and we want them to feel safe and protected.
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if we're doing that, we'll end up in the right place. >> speaking of employees, it's been a tight labor market and probably tough competition for software companies are you feeling that is that having an impact >> we are -- talking about a great place to work, we just got awarded great place to work in japan, in argentina and european countries, in the united states. that's very important to me. if i have a great culture and our employees feel great about working our company, they're going to bring our friends and recommend us i watch very closely the ratings from the outside agencies about how they think about our company, how do they think about our culture, how do they like working for the co-ceos in the company. that's important to us after doing this for a couple of decades, if you're not thinking about your employees, not thinking about your customers, not thinking about your community, you have to think about all your stakeholders. it's not just about managing for your shareholders. milton friedman said it
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business, he said the business of business is business. i think ultimately you have to think about the business of business is taking care of all of your stakeholders. >> is that why you did the co-ceo move again, for a second time, so you could focus on some of these things? >> i think this job -- salesforce is 75,000 people now, a big company, a lot of responsibilities for example, we have hundreds of customers here having co-ceos, it's divide and conquer. i don't know why more companies don't do it. it's a great thing you can do more. >> especially founders, makes it easier to let go >> i mentor a lot of these ceos and i encourage them to look for a partner, look for somebody you can share these responsibilities with being a ceo is a heavy lift, and especially as the company gets larger so you want to really have an environment where you can take care of everybody. and when there's many people who
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need attention, and it's just easier to share that responsibility with somebody else i have a great partner with brett taylor. >> final question. we're nearing the end of davos and you have a lot of customers and met with a lot of leaders. what is your biggest takeaway of this week? >> it's great to be back together it's great to be with you. we've seen each other at dinner in new york, but to be here and be with our customers and with the people that really matter to us, our key stakeholders, if you will, how ever you want to frame it, there's nothing better than being with people, looking them in the eye, giving them a hug, a handshake and saying how can i help you, how can i serve you and make you more successful at salesforce, the single most important thing to us is our customer success being here and having those kind of meetings and discussions, this is what makes -- this is what makes us -- >> there is a lot of hugging >> i have a special magical
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spray. did i show that to you >> i did. >> you think it works? >> i don't know. >> i have it right here. i have it in my pocket i found this online. you think this works >> i don't know. does it protect others if you do have covid >> i'm not going to squirt you with it. >> marc benioff, thank you always a pleasure. >> sarah, it can go in many directions. >> it absolutely can >> always bring it back to customer success. >> and the trees, always the trees. >> take care of the trees. you saw the lorax. you like the lorax take care of the trees. >> the show is over. i have to go. >> no one is anti tree. >> chairman, co-ceo of salesforce and founder, of course, marc benioff back to you in the studio. >> sara, that was great in so many ways. i love the trees, too. clearly his employees are very important to him we all love the trees.
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a trillion more trees. that's going to be amazing think what that's going to do from the planet. i didn't realize we went from 6 trillion to 3 trillion that's a big drop. is that over the last millennium >> 6 trillion to 3 trillion in the last millennium? >> we have 3 trillion left let's add a trillion. >> thank you, david. we have jim brier next hour. >> ask him about the trees. >> that's it for us. "techcheck" starts now good wednesday morning welcome to "techcheck. i'm carl quintanilla with jon fortt. officially the worst start to the year for the nasdaq ever that takes the index back into positive territory for the week. got back to 3979 on the s&p 500. given the market plunge yesterday, just how serious is this demand slowdown interestingly, check out intuit, heading higher after strong
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