tv The Exchange CNBC August 25, 2022 1:00pm-2:00pm EDT
>> and jenny >> one from our growth, so no dividend yield but aptiv earnings growth for the next three years. >> i will show you what the major averages are doing as we head out one hour from now steve liesman with jim bullard one day ahead of the fed chair himself "the exchange" is now. thanks, scott. i'm jon fortt. investors anxiously awaiting fed chair powell's big speech at jackson hole tomorrow. we will look at what a transformation into a dove would look like for powell and what that would mean for your money plus, the peloton ceo compares the company to turning a cargo ship as it tries to evolve it's not the only company hoping to pull off a transformation as demand for its product wanes a post-pandemic reinvention and
can they succeed making payments, making a fashion statement and making yourself look good we have the action, story and the trade on affirm, gap and ulta in today's earnings exchange we begin with the markets and bob pisani bob? >> reporter: the market is holding up off of the highs. there daent seem to be too much jitterness the dow, s&p, nasdaq all up. we're up two days in a row off the s&p. we're down for the week but up almost 1% for the month for the s&p. the dow industrials are up fractionally the market is not acting like powell is going to suddenly turn into a new higher level of hawkishness. the growth sectors are bouncing. nvidia opened at 168 now 177. they're focusing on sequential growth in the data center
business marvel technology will be out after the bell micron, advanced micro doing well salesforce wasn't that good, trading down, but other big tech all on the upside. i also say markets are holding up well because defensive names, pharmaceutical stocks like bristol-myers and merck and kroger and kimberly-clark are generally down they're buying growth and generally selling defensive names. that's not the sign of a market concerned about much more aggressive rate hikes. the market is not acting like that the china tech stocks, a rare, nice little rally here there's a rumor chinese regulators are talking to the people auditing the companies to see if they can find a deal with u.s. regulators, trying to get access to the audit books for
these companies for years. the china-listed stocks, these stocks listed here in the united states, are all moving up today. alibaba is up. the broader issues related to china/u.s. relations >> bob, maybe lucy will let him kick it this time. we will see. investors, meanwhile, clearly in wait-and-see mode as the fed's biggest players, speaking of jackson hole, three of the five lightest volume days in the market happened in the past week. a question many are asking themselves is whether jerome powell, the fed chair, will begin a slow pivot to a dovish stance our steve liesman was told that patience will be key to their next move. >> we certainly have done a lot of interest rate increase in a short amount of time nothing i've seen in my time on
the fomc i think we should still expect some of that policy will work with a lag we've seen it hit the housing market pretty quickly. i think its full effects may not be seen for some time. >> we need to get to a restrictive stance and then see how things turn out. we don't need to rush way up and then way down. we need to go up and sit for a while and let things play out. >> joining me now david wesle at the brookings institution. a lot of people think the fed is talking tougher than they really intend to be are we going to get some tough talk, do you expect, over the next few hours >> i think so. i think that's wishful thinking for some people in the market that the fed believes it's won the war against inflation. it will be freaked out if the economy slows too much and some people are predicting rate cuts in 2023.
i expect without any inside information that powell will emphasize his priority is bringing down inflation and they will keep interest rates up until they make progress on that goal >> there's a difference between keeping rates up and continuing to raise them aggressively it seems people are wondering how far is going to be far enough and how quickly is the fed going to get there how will we know that aside from when it happens? >> well, we won't really know but that's one of the advantages of these fed projections every other month where they tell us what they think the terminal rate is. there seems to be widespread agreement if you look at fed forecast bes and what people in the markets are saying that they will take rates up another percentage point by the end of this year. i think the big question is what happens after that
it's not difficult to go with inflation. the lags are long and variable the close calls will come early next year. it will depend on the data and what risk they're willing to take are they more worried about too much inflation or more worried about a recession? we don't really know yet >> how much do you think the consumer behavior around the holiday season, the impact on retail, all of that will play into it? talking about real estate and the rising rates, we've seen gas prices ease off, which were a big component of overall inflation. how do you expect that in q4 to work together? >> two things the fed will be watching in that regard, what is happening to consumer spending if it looks unusually strong or weak, they will take note of that even more important they seem to be fixated on inflation
expectations they seem to look at the surveys we have, the michigan survey and others, and i think they will be watching very carefully. one reason they talk so tough on inflation is they want to prevent an inflationary psychology from taking hold. they want to make sure people understand that today's inflation is not going to be tomorrow's inflation that's one reason they speak so strongly and harshly they want to prevent inflation in wages and rent decisions. >> speaking of wages, what do you expect to see in q4 as so many retailers are looking for a spike, peak season, scrambling to find more workers that's happening at a time the supply of workers is unusually tight. they might have to pay more, which adds to inflation and cutting profits. >> real wages adjusted for
inflation have been falling not rising retailers have a lot of inventory so that will limit how much they can raise prices and they are going to have trouble hiring workers i've been surprised how strong the job market has been. i expect it will slow down so they may have an easier time one really interesting issue is immigration is way down and that's an important source of labor supply growth in the u.s i will be interested in whether the business community pushes even harder to open the doors to immigration, legal immigration, of course, to get labor supply issues >> we'll be watching it. david wessel from the brookings institution, thank you >> you're welcome. >> do not miss our exclusive interview with st. louis fed president james bullard on "power lunch" next hour, 2:00 p.m. eastern what does all this fed speak mean for investors
could powell say anything that might give this market the all clear to get a rally going again? my next guest isn't so sure. says stick with the bs, borrowing and blue chip. victoria greene, cio at g-squared private wealth victoria, the market seems to want the all clear whether it's explicitly given to them or not. might that reverse this time when we hear from powell tomorrow or are people looking to jump the gun? >> i think people already jumped the gun. i think we already think there is this all clear. if you listened to the fed speak and even today with george and harper that our job is not done yet. we might be above 4% for a while. they keep saying, market, we're still hawkish. when there's a dislocation between expectations and what the fed does expectations seem to think they're going to roll over early 2023 maybe we have another 100 basis
points and i think powell has to reset those. that's the most dangerous market for the fed when there's expectations of a dove ish mark it's literally at .67, 50% on 50 basis points and 50 on 75. i think the market is in front of itself. i think they will continue to hike i think the numbers will continue to put pressure on the economy and we're nowhere near neutral. i think they're misreading the tea leaves >> where do you put your money if that's your expectation >> like we said, we like to be defensive and boring right now we don't think the value trade is done yet, strong balance flows and dividend the treasury bill at 3.1%, if you look at the curve, the only steepness in the treasury curve is between zero and six months, then six months and 30 years you are nowhere. you're flat, inverted, almost 32
points inverted in the two and ten. short treasury yields are good play defense, look at value, possibly look to trim off some of the high flyers off the june bottom we've hit some big resistances, right? the 200 interday average, kind of overbought. the risk of reversal, and i still think it's a bear market rally, means you want to be playing with a quality defensive trade right now. >> i see a bunch of energy names in there, ibm. but then crowd strike? tell me about that >> everybody needs a little bit of growth, right i wouldn't be a good investor if i didn't speak out of both sides of my mouth. i think crowdstrike, they report earnings next week, they have a unique product their multiple is crazy and they are definitely the growth stock i was just poo-pooing. it's cloud-based as well as ai-based microsoft may be their nearest competition but their rate has been so high first off everybody is spending
more money on cyber security it's one area of the business in i.t. spending businesses can't afford to cut. they've been doing a great job of picking up new sales and cross selling modules. i think you're going to continue to see strong earnings they beat five of the last six quarters i think you will see the company be able to continue this growth trajectory they've been on we'll see what they say under the hood i think that's a good place to be >> how careful do investors have to be? it's had a bit of a run especially after networks performed already a little expensive like crowdstrike outperformed in its earnings what should investors be prepared for even if crowdstrike does well? >> a plus or minus 12% move, a volatile stock this is not one of the boring ones i was referring to earlier. it probably will move.
if you look at eps, like nvidia that were you talking about, not great earnings even with the reset they did earlier in the month, they missed pretty hard on gaming and they're still up today this has been this weird quarter where bad eps actually wasn't very badly punished. you've seen the market be forgiving except for sales force so, yes, expect volatility and earnings day but a forgiving market to the tech stocks. >> all right, victoria greene from g-squared private wealth. thank you. >> happy to be here. coming up, tesla's three for one stock split goes into effect today. what's the next catalyst, and is the street getting too optimistic plus, ulta beauty is flat since january but gap and affirm down. all of these report after the
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sounding more optimistic even than before. >> i am so excited the next ten years i think tesla will be the largest company in the world and in the ten years after that i think it will be challenged by spacex which could be become the largest company. >> okay. he's not the only one bullish. wall street has shown the company a lot of love after the passage of the inflation reduction act. is the positive tone misplaced with us the managing director at bernstein. tony, people lose a lot of money betting against tesla. what does the company have to do to be as big in the next ten years as ron baron expects >> well, good afternoon, jon, and thanks for having me on the show tesla has dominant share of the
electric vehicle marketplace today. it has 20% of all evs sold globally arguably if they were able to hold share and have 20% share of the ev market and all cars were evs, 90 million cars a year, tesla would be selling 18 million a year instead of 1.5 million today. the question is can tesla maintain its share over time i think that is a question there's no automaker today who has more than about 9% or 10% share and that would be toyota and volkswagen the market is more competitive han it has been. traditional low oems it may be a tall order to believe that tesla can continue to maintain share in the face of more and more evs coming to the
marketplace. >> but here is my worry, though, is that saying that is a little like saying back 20 years ago here is what percentage of the pc market apple would have to grow into to justify it being worth anything near half a trillion we know it's beyond that and not because it gained a ton of share in the pc market because it leveraged its loyalty, its brand and platform in a way that nobody else in that business could and did. might tesla do something similar? do we risk in the bear case looking at it too much >> i think that's a great question and there are several potential opportunities that tesla can create for itself. the whole world of autonomous driving for $15,000 per car is a significant market opportunity
tesla has also talked about a humanoid, a robot, in essence, that could displace manufacturers or manual labor in the workforce going forward and this could be a significant opportunity. they're delving into areas like insurance as well. so there is significant option value from tesla i think in tesla's case perhaps similarly to apple is just betting on innovation. apple was only a mac or pc company 20 years ago and then everything changed with the introduction of the ipod and ultimately the iphone. it has evolved into a different company going forward and the question is does one bet on tesla's innovation going forward and there is some that is priced into the stock given that tesla today basically trades at a
higher valuation than all of the other auto companies in the world combined >> right let's talk about apple specifically an event coming up on september 7th where we expect to see next generation iphone and see probably a bit more than that. the stock has been outperforming the market, near its highs the luxury consumer has been doing pretty well and they have some innovation that has allowed them to maintain share and profits. do you see risk here >> i think the real question for apple especially around this time of year is how strong will the next iphone cycle be we've had two very strong years for iphone on the back of strength and the consumer and on the back of two
years prior to that iphone sales were quite weak. that's the operative question, can apple have a third year of strong iphone sales? >> how much of that is up to apple and carriers and how much they will subsidize? >> i think a lot of it is ultimately driven by apple's ability to get people to upgrade. carriers can with promotion certainly. it's also up to apple to deliver something that's compelling that people feel a need to go out there and actually upgrade their phone. so i think it's principally apple. ultimately the iphone 14 is expected to be much more evolutionary than revolutionary. the question will be are there enough upgraders for apple to
continue to have robust sales. carriers can help with incremental promotions but at the end of the day it's really about is the phone compelling enough to get someone who has only had a foenl two or three years to upgrade again >> and for the past, i don't know, seven or eight years at least, most of the people i've heard of said this is evolutionary not revolutionary and half the time apple has a pretty good cycle. toni, thank you. >> thanks, jon amazon prime becoming the exclusive home to "thursday night football" with the first game kicking off tonight how high are the stakes for the league and what's at stake for amazon we will debate can the stocks that surged the most in 2020 make a post-pandemic pivot? we will look at some of the so-called one-trick ponies struggling to get back on track.
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welcome back to "the exchange markets right now mildly in the green. the dow up just shy of 60 points the s&p about half a percent the nasdaq close to 1% plug power moving higher today after striking a deal with amazon fuel cell company will provide amazon with liquid green hydrogen in 2025 the deal will help it reach its goal of $3 billion in revenue by 2025 amazon says the agreement will help it reach its own goal of net zero carbon by i'm guessing 2040 telehealth names are moving higher today after the retail giant said it plans to shutter
its amazon care telehealth service at the end of the year tyler mathison for a cnbc news update the uvalde school board has agreed to fire pete arredondo, the police chief broadly criticized for the texas school shooting in may. the meeting came exactly three months after a gunman killed 19 students and two teachers at rob elementary arredondo is the first to be displaced. the uvalde community's response and what his attorney wrote in his scathing 17-page letter. the death toll from a russian rocket attack on a ukrainian train station climbs to 25 now. this according to ukrainian officials, including two children t. supposedly targeted a military train and came on
ukraine's independence day south korea signing a $2.25 billion contract to help construct turbine buildings for egypt's first nuclear power plant, the plant built in partnership with russia's state-owned company as america and their allies push a campaign to isolate russia over its invasion and war in ukraine. >> tyler, thank you. coming up, we will get another check on the consumer with affirm, gap and ulta beauty on deck. the key things to watch and how to position on all three (driver) conventional thinking would say verizon has the largest and fastest 5g network. but, they don't. they only cover select cities with 5g. so, for me and the hundreds of drivers in my fleet, staying connected, cutting downtime, and delivering on time depends on t-mobile 5g. and with coverage of over 96% of
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saying yes to prop 27 means more people get the assistance that they nee they get someone to partner in such a way to see transformation come to them. yes on prop 27, because there's no place like home. time for "earnings exchange." today we'll take a trip to the mall first up is affirm the buy now/pay later trading near the flat line and having a rough year down 70% so far in 2022 but also doubled off its
may lows what do investors want to hear today? steve kovac with a preview steve? >> reporter: first of all, gross merchandise value, that's the total value of the transactions being done through affirm. it was about $4 billion last quarter so we're expecting to see growth there the better affirm does and then transactions costs, this huge expense every quarter for affirm guiding to up to $355 million and well over a billion for the entire fiscal year and finally, broadly speaking, any insight into the consumer like retailers and payment companies this earnings season, where is the consumer at? is there a pullback in consumer spending and what kind of consumer spending and then finally just looking forward in about a month or so, jon, we'll get apple's apple pay later. going to be built in, every
single iphone that has apple pay and it's a huge business for apple, really digging into the wallet and affirm is this single feature whereas this is more of a broader ecosystem on the iphone they will have to compete with >> steve, thanks and the ceo at new street advisers and a cnbc contributor. i mean, it's down a lot but it's also up a lot. what do they need to do to sort of prove that they're not one of these pandemic plays that deflates from here >> yes, down a lot and up a lot. volatility on the stock, if you look at the positive sides, one of the leaders in the buy now/pay later space. there are signs and trends showing that with this weaker economic environment the trends for their assets on their books is getting weaker. their delinquencies are growing year to date, they might be around the 2019 range going
forward. i think you want to hear more on the call and the regulatory head winds that get worked out over time and competition, competition with apple obviously coming in, a big thing to struggle >> and they've diversified away from peloton but that used to be a huge, huge source of revenue from them. we saw how bad peloton's quarter was. next up gap, having a tough 2022 with shares down 42% this year continues to plug the retail space. will this be like macy's, nordstrom? i don't know >> they've had issues for quite
some time and they're operating in a segment of retail has the most depressed right now apparel is almost exactly where gap's name brands seem to play they have struggled under the pressures of the supply chain, the cost and logistics it detailed it to the dollar amount and it's been really big numbers they've had to work around and through. once it arrives, the shoppers don't seem to want it. investors have a lot of questions, how will you entice shoppers to buy this category when it's a category last on the list when everyone is dealing with inflationary pressures right now and, oh, by the way, what is the go forward strategy when you're still waiting on a ceo? a lot of questions with this one, jon unfortunately, i just don't think expectations are very high
>> well, at least expectations aren't very high delano, what do you say? is there a silver lining in here anywhere in this kanye west garbage bag of an inventory challenge and location challenge that gap's got >> yeah, jon, i love that analogy. in this time with football coming up, they have to go back to the playbook. i think when you have a lot of things mentioned on the down side, it was all stuff that can be actually corrected. look at the inventory, the mismanagement, a lot of inventory on their book, especially on the old navy front. that inventory was discounted. when you shake up management you are able to do some things differently. you could right size that. a lot of that was due to them transporting through air which they can make some changes as well allow for margin expansion
better the supply chain environment and there are things going forward. a higher yielding dividend companies of their peers hold on and look forward to the future >> are they going to be able to hold on to those dividend levels a tough talk if they take the target perspective, we're going to take care of these issues in one fell swoop, but if they're doing a ceo search, are they in position to have that sort of decisive executive action? >> before they started the ceo search, frankly, they were doing a lot of things to try to help move the company forward they were closing stores, trying to right size some of these
brands, fix the inventory, this rotation of executives particularly the more troubled brands like banana republic. it's not as if they were stranding still. they were trying to make changes. it just wasn't fully working or had not yet worked so far. we'll see what they're able to do as they are still in the search for a permanent ceo i'm not sure how much they're going to be able to tell us about the go forward strategy, how much of the quarter may be a kitchen sink, get the bad stuff out while they can if they can, to your point, jon, what many of the analysts pointed to as an explanation for what target did here we'll have to wait and see >> a lot of retail executives trying to put lipstick on a pig. metaphorically, that's good for ulta, up 18% over the past three months, the cosmetics brand has a dazzling earnings record with eps beating consensus 18 of the past 20 quarters courtney, i guess metaphorical pig lipstick not one of their
products this is better than retail categories any reason to think they won't continue to outperform >> no. i think it will be a very strong quarter and if they did sell lipstick for pigs they would probably have strong sales in that category, too, jon. things have really been on fire for ulta and then more in general the beauty brand has been one of the stronger categories so far this quarter, whether they're talking about beauty at target, whether we're talking beauty at kohl's, suffered points elsewhere. we heard from another makeup brand with strong sales particularly at the high end firing on all cylinders as they have been even in tough economic times. consumers are not giving up their skin care and beauty routines i would say as we re-emerge perhaps it's more important more recently we're not seeing evidence of trade down consumers are gobbling up some of the more prestige brands which helps on the margins
i think there's probably a lot to like here that being said this company has been on fire for some time i'll let delano tell us what he thinks of the valuation. as far as the fundamentals, there's likely going to be a pretty good quarter here >> any cracks in the foundation here you want to take a powder? >> i think this is consensus for all of us. the trading has been doing well year to date if you look at it, same store sales or they do great on both sides. they've done better on the net new stores side. 1.4 million to open up a new store and investment on return capital just over 30% on a lot of those stores. they've been doing really well compounding and growing earnings over the past decade if we take it back to the consumer survey had a strong brand nonks gen-z, strong for
ulta beauty. this is an opportunity for people already in the company. >> sounds good and i'm out of puns so thank you. still ahead, chinese ev stocks having a rough two months and the chinese government just dealt the companies another blow we'll have the details next. what if you were a gigantic snack food maker? and you had to wrestle a massively complex supply chain to satisfy cravings from tokyo to toledo? so you partner with ibm consulting to bring together data and workflows so that every driver and merchandiser can serve up jalapeño, sesame, and chocolate-covered goodness with real-time, data-driven precision. let's create supply chains that have an appetite for performance. ibm. let's create.
welcome back chinese ev charging stocks on the back of injecting more stimulus money into the economy. the stocks have been under pressure off 54% from its year high, li auto off by 25% from its high and now some charging stations in southwest china are going offline with the droughts knocking out hydro power live from beijing with the details.
eunice >> reporter: exactly, jon. most of the charging problems are in two large cities in the southwest and they have a combined population of 46 million people as you were talking about the power issues are generally the most severe in that area because the droughts have hit the hydro power for the region so ev makers like tesla, nio and xpen all have their own charging station and indicated to their users that their stations are either suspended or operating on a restricted basis and nio has gone as far as to call on its users to share their home chargers until september 20th. now there are also other services that are operated by, for example, a charging station operator and the grid encouraging users to go ahead
and charge off hours, usually overnight. they're offering steep discounts. what a lot of drivers are doing they're spending time either overnight, sometimes they said on average two hours, charging their evs. also wasting, from their pe persp perspective, driving around looking for a charging station that is open the problems tend to be limited to the region. so far, for example, in beijing, the charging stations are operating normally but more problems with power because the province of sichuan will extend its power rationing until saturday while another area said it will extend the power cuts indefinitely going to have an impact on industry there and, in fact, carmaker honda said their plant is shut for the rest of the week and they don't have any plans yet to open that plant until
they hear more from the government jon? >> when we have things like blackouts in local areas, people buy generators just in case for next time. will this affect demand for evs at least in the southwest in the future or encourage people to have backups >> reporter: i think it's having an impact on people maybe rethinking whether or not it makes a whole lot of sense for them to have evs just because they're dealing with all of these issues at the moment as you said only in that part of the country. however, china is at least one of the largest ev markets in the world and the success of the ev is so hard core built in to government policy and the government really wants this country to move to evs and has been throwing a whole lot of subsidies to drivers and to companies to make that happen. so unless the hassles go on for a really long time it looks as though the direction on the whole isn't going to change.
>> what about solar? i would think if there's a drought it's probably not too cloudy which would mean there's plenty of sun, and if there were solar panels in place or even subsidies, incentives for residential solar, that those folks would be fine. will it perhaps lead to a push in that direction? >> reporter: that's really interesting that you said that because there are quite a few factories trying to find creative solutions to the fact that the power cuts are affecting the factories. so they've actually been putting, some companies, have been going ahead and putting solar panelling on their rooftops others have gone and gotten -- been able to source a generator. in terms of residences, though, there hasn't been as much of a need for solar panels because the government has been prioritizing the homes for power and that's one of the reasons why nio, i would think, is encouraging their users to share home chargers because at least
you have the electricity supply will >> great literal on the ground perspective for what's happening there, eunice yoon, thank you. still ahead, they say necessity is the father of invention and there are several companies that might need to re-invent themselves if they want to survive in the post pandemic world a look at who is best positioned for a second act next.
♪ ♪ welcome back peloton shares plummeting today, down more than 18% after a weak report in a shareholder letter ceo barry mccarthy comparing the company's attempt to turnaround a fast-moving cargo ship saying we sounded the alarm for general quarters everyone's at their station. he goes on to say when the ship will respond is the question he's hoping 2023 and he's betting the partnership with amazon is going to help get them there. shares down 93% from their all-time high and what about the other pandemic darlings? zoom down 86%. zoom phones are doing pretty well in efforts to compete with microsoft and meta is down 56% as they try to go all in on the
metaverse. will the pivots work let's bring in duncan davidson partner at bullpen capital let's start with peloton is the amazon partnership going to cannibalize them or lead them to the land of cash flow >> i think that they're on the right track in their turnaround. you may not know this, but i was on cnbc the day they went public and i said it's a terrific product, but it's not a tech stock. wework wasn't a tech stock either it never deserved the tech stock type of multiple right now it's probably fairly valued what do they do, though? what's their reinvention the subscriptions have stayed strong they have found a core set of customers following serious fitness people and they should serve that customer and that needs to move from product sales to the subscription service sales and get as broadly distributed as they can for their service business >> i guess we'll see if that works. what about zoom?
arguably, it doesn't have the same inventory challenges and is down quite a bit is their pivot more possible >> oh, i think, they're a reinvention which is the suite of software with microsoft, and it's a really weak idea. you're not going to beat microsoft at this game you can raise price here and lower price there. they need a better reinvention they should be able to figure it out. for example, having a videoconference deal that's much more immersive than just a talking head in the screen they need to innovate there or maybe they should think outside of the box and say we're a realtime video streaming platform, what else can we do with this thing than just try to become another part of the microsoft universe >> they're trying to buy fivenine their story would be quite different if they were able to double down on the enterprise months ago finally, meta. is it as bad over there as it looks? is the metaverse thing going to
pan out or are they really just looking for an ecosystem where they can have more margin and more control >> i think, first of all, meta i never met an idea i didn't like this is the first one. they have a real challenge outside of gaming. there are 3 billion or so gamers, but that's not what facebook is doing. they are turning a metaverse into a joke. there was a recent article saying that zuckerberg's eyes, cartoon eyes are as dead as the metaverse. vr meetings, vr social networks, that's over. you're not going to wear the goggles. people do use the goggles for other things, concert, events, training we have a company using the goggles for complicated molecular manipulation including pharma drugs so there are applications for this, but i don't think that's where this is going to go. i'll give you a story. if you look at the old apple when steve jobs was there, they
had videos in the '80s about ipads, but it took them over 20 years to wait for the technology to be ready to launch the ipad this is an example of a technology way ahead of the need people go on the goggles thinking they're in the matrix and they see little cartoon avatars with no legs it's nuts. >> i'm middle aged now, but i'd rather have a conversation with a 2d real person than a 3d avatar what do i need to see an avatar for? i enjoy that duncan davidson, take care >> the nfl kicking off its shift into streaming while kicking it into another gear with tonight's re oseason game on amazon video. mon what to expect and the war for content is next.
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49ers-texans pre-season game tonight, amazon prime video is the only place where you're going to find it julia boorstin joins me with more on the nfl's official kickoff into streaming and julia, i assume amazon's got to measure the success in prime sign-ups in texas and california and jersey sales >> well, yeah. there are all sorts of ways that they'll be trying to figure out how this is boosting the bottom line and tonight's pre-season game is the first time the nfl's broadcasting exclusively on prime video. if you're going to watch and you're not in market, you do have to subscribe to amazon prime. so the same is true for the 15 regular season games that amazon will stream starting september 15th this is part of the strategy to draw and retain prime subscribers that amazon is spending $1 billion on annually for the next 11 years. morgan stanley predicting this investment will result in about $450 million in incremental ad
revenue per season, writing, quote on an absolute basis and the incremental ad revenue is likely to be small, but the strategic rationale of the incremental content investments to build, maintain the prime ecosystem is more powerful, but rosenblatt, more skeptical warning, quote, divorce from the pay tv ecosystem that drives hefty affiliate fees we're not sure how this pencils out better for amazon than for fox. fox had those games last year. amazon is reportedly telling advertisers to expect ratings to decline from last year's fox games and one source tells me that the league won't be surprised if initial viewership is half of what it was last year, though over time they don't expect streaming viewership to exceed linear tv ratings. as the season kicks off, the question is whether amazon will secure sunday ticket rights as it bids against apple, google's youtube and disney's e