Skip to main content

tv   Closing Bell  CNBC  September 7, 2022 3:00pm-4:00pm EDT

3:00 pm
an eye on. for ethereum prices 67% below what we saw in the records that will be one to watch. >> all right, dom, thank you very much. >> you've got it >> the woes in the crypto world. thanks for watching "power lunch. >> thanks for having me here, tyler. "closing bell" starts right now. we're at the highs of the day right now. stocks posting a bit of a relief rally as the nasdaq breaks its longest losing streak in almost six years. the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen take a look at where we stand in the market the dow higher by about 150 points, about 466 points higher. the s&p 500 up 1.8%. every sector positive except for, looks like energy the leaders, it's kind of defensive. you have utilities at the top, consumer discretionary, materials are right down there behind it. it's broadening out, this rally, throughout the day
3:01 pm
29 out of 30 dow stocks higher only chevron in the tre. home depot is the biggest contributor. the heat map as you can see lots of green on the screen 2% gains plus for all of those groups, financials, communications services, materials, discretionary and utilities. coming up this hour we will discuss the strength of the consumer, inflation, supply chain issues we have an exclusive interview with the ceo of kellogg. apple, though, first up announcing several new products this afternoon including the highly anticipated iphone 14 our steve kovac in cupertino, california, with all the highlights steve what do we need to know? >> reporter: sara, that iphone 14 we have two regular models, an iphone 14. got rid of the iphone 14 mini. those are going to go on sale starting next week and then the iphone 14 pro line this looks different new design for the first time in a few years.
3:02 pm
they squish them into a pill-like cutout on the front of the screen calling that the dynamic island, a goofy name but it will show different status indicators for things like battery life and when you connect your air pods. and speaking of air pods, new air pods pros, the noise canceling version, better noise canceling this time, better battery life and then the new apple watch, something they spent more time on than the iphone the apple watch ultra, the $800 version for people who like extreme sports like mountain climbing, hiking, extreme conditions it's extremely durable, has a big, bright screen, and longer battery life and better gps which is really important for runners. a lot of folks were expecting an increase on the price for iphones. that didn't happen the pricing is steady. it will be interesting to see,
3:03 pm
sara, how that plays into margins when they report earnings in a month or so. >> that's what i was going to ask you about, steve i thought it was surprising they didn't raise the price of the iphone pro, right, the high end. isn't that what wall street was expecting in order to deal with some of the inflationary costs >> reporter: it will be interesting how they can make up any kind of price increase with these problems they're having. keep in mind, sara, there are supply chain issues hitting other lines more than they're hitting the iphone line. so macs have been suffering and ipad but the most profitable product which accounts for half of the sales or more is the iphone and so it sounds like they're able to protect the margins pretty well. >> stock is up, which it doesn't often do on launch days. for more let's bring in our panel for what to do with the stock. dan and mike santoli dan, you're super bullish on
3:04 pm
apple. anything surprise you today? >> no price increase, that shows you the power of the e-16 chip they have a lot of significant pricing power. i think that really showed and then if you look, the models across the board, the fact they had this launch on time especially given the supply chain issues we've seen in china, i view it as almost a superhero like view of cupertino to get through this. the street will like the no price increase >> what do you make of the stock? it's already outperformed, it's only down 13% so far this year is this a catalyst at all? >> i view this as a catalyst combined with what we believe is an underestimated demand cycle i think $240 million of a billion iphones are in the window of an upgrade opportunity. you have 30% of those coming out of china that are in a window of an upgrade with no price increase it just shows the power of the e-16 chip to maintain margins.
3:05 pm
i believe street numbers continue to move up despite the macro. it shows internally they continue to have more control over that ecosystem. >> what do you think, mike >> apple does what it does, the products get better all the time they give users more than they necessarily were asking for. i do think they've already won the benefit of the doubt in terms of being able to kind of smooth out this upgrade cycle over years and just having this huge install base. that's why this stock has already done its job, in my opinion, in terms of holding up better than almost anything else in the nasdaq, trading at a 40% premium to the market based on expected earnings. i don't know if what happened today is going to get the numbers going up for fiscal 2023, which we're basically in right now or just about in supposed to be 6% earnings growth it's a huge, huge aircraft carrier of a company it doesn't take a lot to move it that's because it's already so profitable that tacking on more
3:06 pm
is tough so i feel like it's steady as she goes, consistent with the apple story. i don't know that it's necessarily a real inflection point. >> why do you disagree, dan, with what mike said, that it's already in the stock >> look, mike makes great points i think it's really about the install base when we do this week, it shows 90 million units coming out of the game that's flat with iphone 13 no cuts. i think as we go through it's not just underestimating the product but asp continues to shift much higher than the street's model i think that's going to be the big wow factor as you go into six quarters and i still think sentiment right now is very negative on apple and overall big tech this is the start of what i believe will be a carpet ride into the major upgrade cycle >> i don't know, dan, if sentiment is 80% buy ratings on
3:07 pm
the street, people are feeling as if it is a core holding at 7.3% of the s&p. i'm sure very few investors are overweighted because it's so big in the index to me it seems people are respectful of the story. no >> look, i think respectful of the story but valuation in my opinion when you look at the services and the sum of the parts, that's really the key i still believe services 1.2 to 1.4 trillion that's not softening i think that dynamic is something right now from a buy side perspective from a whisper, the street does not believe there is upside 220 million iphones. you look at what we saw today with the launch and even on air pods, i think cook in cupertino yet again despite the macros on upside. >> what about china, dan what's happening there how important is it for apple right now in terms of profit,
3:08 pm
revenue and growth these rolling shutdowns, aren't they having an impact? >> that is the hearts and lungs of the apple story not just demand but supply. because of zero covid, they had this launch today is unfathomable relative to where we look a few months ago i think the irony is gains 300 bips of market share in the china market and i think that's really going to be a growth catalyst despite geopolitical and everything we are seeing you combine that with supply, the worst of the supply issued in the rear-view mirror and today was cook in cupertino flexing their muscles coming out with all these new products despite the unprecedented supply chain issues >> dan ives, big fan of apple, thank you very much. mike santoli, we'll see you later. up next, the ipo market and tech sector with michael mignano. find out which companies he's
3:09 pm
targeting straight ahead the dow up 465, again, at the highs of the day pretty broad rally with every sector positive except for energy you're watching "closing bell" on cnbc. power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market.
3:10 pm
3:11 pm
3:12 pm
venture capital firm lightspeed is making a big bet in new york city opening a new office here in part because of growing sectors like fintech and crypto and a new partner for their consumer team. michael mignano joins us now michael, it's great to have you.
3:13 pm
for those that don't know you are a founder, anchor, ran their talk business. a leader in podcasts why are you doing venture now and why in new york city >> yeah, thank you so much, sara thank you for having me. like you said, it's a big day for technology startups. and the new york tech ecosystem. we announced i'm joining lightspeed today, we're opening up a new office in new york city and, yeah, we think new york city is an amazing place to have an office. we view it as the hub to the rest of the world. when founders from all over the world come to the u.s., they often stop in new york and having started the company here myself, anchor, i can tell you it's a really great community and great ecosystem. i'm really excited for the next chapter of my career and to invest in lots of amazing companies with lightspeed. >> are people going to be working in the office? >> you know, there's really no replacement for working live face-to-face in the office but for even the companies that are working discontributed and
3:14 pm
remotely, there are still tons of activity and tons of meetings taking place here in new york city absolutely us a mentioned i recently ran the top business at spotify after building and founding anchor, the biggest podcasting platform i can tell you even recently when i was still at spotify there were many of us in the office and, like i said, you really can't replace that in-person connection >> light speed is known for investments putting them up on the screen as well, early investor in snap, i would add. what are you eyeing in the new york area when it comes to categories and areas for growth because we are at this interesting period where a lot of technology in the startup scene is hurting right now and valuations have come down. >> when i'm working with light speed, it's a collaborative
3:15 pm
firm technology really never rests despite whatever the market is doing. technology companies are always being built and always being pushed forward i think lightspeed is in a fantastic position to be the top venture capital fund of the future it's a global firm we've been global for more than 15 years we have deep domain expertise across a number of different sectors. we are a true partnership, a big, flat organization not just a handful of individuals. and we have full stack support we recently raised $7 billion in capital to invest across all stages which, whatever the market conditions may be having $7 billion to deploy is going to be really helpful over the next few years. >> what are you finding in terms of the startup ecosystem and how it's been affected by the volatility in the public market especially in the tech sector? >> yeah, i mean, like i said, i've been angel investing the past couple of years and even up
3:16 pm
until i accepted this job, i was doing a number of really exciting deals i've done about 50 over the past couple of years and, like i said, technology companies won't stop being bill. technology is how we as a collective humanity innovate and push ourselves forward we're seeing lots of exciting companies across consumer, enterprise, fintech, health, growth, a lot of really exciting things in the media, in the consumer sector, especially given some of the recent announcements from the big platforms towards more alg algorithm. >> what about podcasts and the audio business, media, opportunity there? >> absolutely. the internet has taught us that any form of media, any form of content, always over time becomes democratized, easier and
3:17 pm
easier to create it inspired me to build anchor and now we're seeing that the friction is reducing even lower and people are able to make even more content one trend in particular we're seeing a lot of is podcasts, a ped yum that was all about audio up until recently is starting to be more and more about video all of the biggest platforms in the world are starting to add video to their podcast offerings. i think that's only going to get easier and easier for creators to make and there have more and more companies catering to consumers in the sector. >> it also makes me wonder what will happen to the social media companies because it seems like, well, facebook and twitter -- or facebook and tiktok have transitioned into these video companies. >> absolutely. tiktok popularized this new means of content discovery which i call recommendation media where content is distributed based on platform recommendations and less so on social networks or who your friends are.
3:18 pm
so the platforms that will really be strong in the future will be the ones that invest in the best machine learning technology because that's what enables them to power these algorithms >> michael, thank you for joining us on your first day with the announcement. we appreciate it michael mignano of lightspeed. >> thanks, sara. take care. about a 460-plus-point gain. what's driving it today? you're getting a little bit of a breather in the treasury market. that's helping yields are lower for the first time in a while. they've been shooting straight up since jackson hole putting pressure on tech today it's rebounding. the nasdaq up 2.25%. a look at elevated stress in the financial system could impact -- how elevated stress could impact the market and the economy check out some of today's top searched tickers ten-year yield takes the top spot as well as you can see there's buying today for a change yield goes below 3.30.
3:19 pm
a big decline continuing its decline lately $82 a barrel that's why energy stocks are underperforming. tesla, apple all strong today. what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work. ibm. let's create
3:20 pm
3:21 pm
3:22 pm
time now for today's market dashboard. senior markets commentator mike santoli with a health check from the global financial system. so glad you're doing this, mike. >> sara, a lot of attention on a blood pressure level of the market coming into this week especially with the dollar racing higher, bond yield as well dislocations in european power markets, oil having an accelerated decline. here is a measure of overall financial stress this is the office of financial research, going back to the year 2000 it has become a bit elevated right here nothing compared to the covid crisis that was that prior spike this is 2016 or so. you see things like credit conditions, volatility, nothing
3:23 pm
really going on in bank funding markets, that's another thing measured here, equity valuations they're lifting a little bit this is the post-2000 bear market and recession the shaded areas are a recession. you have to be on alert but nothing really is telling you that there's about to be some kind of a financial accident and some strategists are pointing out, look, the fed usually tries to push things until something cries uncle in the financial markets. that hasn't really happened yet except for valuation suffering >> are currencies in there >> they are, yeah. >> because they're getting kind of extreme >> they are. i think that's part of the idea as to why people are tensing up for something like this. when you see the dollar racing higher this way against the chinese and japanese currencies, you do tend to think somebody is upside-down. a lot of leverage money in the oil markets and the power markets specifically there's some worry somebody has margin calls out there, but today you're seeing a little bit of relaxation in the markets as those things ease up >> credit market has been
3:24 pm
remarkably calm. >> it's been resilient >> mike, thank you we'll see you for "market zone." the ceo of kellogg on inflation. why he says the supply chain still not back to normal this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done.
3:25 pm
i'm okay. what's it going to take for the world to reach net-zero emissions? it's going to take investing in some things you've heard of and some you'd never expect. it's going to take funding innovation in renewable energy, helping reduce carbon footprints, and big bets on environmentally conscious construction. citi has committed 1 trillion dollars in sustainable financing to help build a better future. because to reach net zero, it's going to take everything. ♪ ♪ with directv i can get live tv and on demand together: football, housewives, football, housewives, football, housewives... whoops. oh no... the housewives are on the field. i repeat, the housewives are on the field. i just want to talk! yeah! who flips a table?
3:26 pm
get your tv together. call 1-800-directv to save up to $120. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery.
3:27 pm
and you are? i'm an invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.
3:28 pm
the consumer has proven very, very resilient that's what the kellogg ceo said he's seen across his company as consumers deal with high inflation and the stock is proving to be resilient as well. the company outperforming a number of staple stocks. take a look, up more than 13% so far this year. joining us for an exclusive interview from the barclays consumer staples conference, kellogg ceo steve cahillane. welcome back nice to see you. >> thanks, sara. thanks for having me good to see you again. >> tell us a little bit more about what you are seeing right now from the consumer who is dealing with the price shock across a number of fronts. >> i don't want to overstate it when i say the consumer is resilient. the consumer is under a lot of pressure in the united states and, indeed, across the world. what we have seen is that despite the inflationary pressures, despite the ongoing challenges with covid, that especially in our business and in other businesses the consumer
3:29 pm
has proven resilient i think there's still some benefits from obviously the incredible fiscal stimulus that was put in place, the employment prospects remain very, very strong if you want a job, you can find a job. and so in the u.s. consumer remains strong in emerging markets the consumer even before the pandemic for our business has proven resilient through the pandemic and the inflation that we're seeing. quite pricingly i would say the consumer shows great resilience. >> does that mean you're not seeing evidence of tradedowns which we've been hearing about in different parts of retail and consumer sectors where they're going down in categories or to private label? >> we are not seeing that. now we don't take it for granted but we continue to invest in our br brands we have to earn the right to be in consumers' kitchens, on their
3:30 pm
breakfast table and in pantries each and every day we've continued to invest with value added programs with our customers to make sure we mind the price gap that we earn the right, again, to be participate of their shopping list each and every day. so we have not seen that trade down but we think we've earned the right not to be traded down. >> well, what's happening on pricing, steve how much have you taken, and are you continuing to raise prices >> yes so we say each and every day that the first line of defense against high prices and cost inflation for us is productivity when you see high teens inflation and inputs, no level of productivity savings is going to match that. we want to protect our margins for the long-term health of our business so we've had to take pricing to cover a gap between 3% to 4% up to 19% you are talking about mid-teens inflation and mid-teens cost increase that is have had to happen as we look into the future and
3:31 pm
next year we see the same challenging situation exist. we're going through plans. we don't see a mitigation of inflation happening, unfortunately. >> i heard the same message from the ceo of unilever, we're still seeing the high costs and, of course, then people wonder the pushback is are you just using it as an excuse to raise prices for consumers? and by you, i mean the industry and all of these companies right now because you're not seeing a whole lot of pushback when, in fact, some of these costs are starting to come down. you can look at the commodity prices >> yes, sara, they're starting to come down off historic highs. year over year the cost of inflation is still real and it's pervasive. i would say as an industry i haven't seen that. we want to maintain our affordability. the retailers, the customer
3:32 pm
base, is doing their job exceptionally well they are not happily taking price increases. they are challenging everything as they should we're not looking at this as an opportunity to take undue price increases. we talked about our second quarter results. our margins are still under pressure we're not necessarily recovering the disruptive costs, the bottlenecks and the unforecastable, unforeseeable increases. we're having to eat that i think all in the industry are looking at affordability and making sure we're keeping the consumer at the heart and soul of everything we do. at kellogg we certainly are. >> last time we spoke, steve, it was on the day you announced the big plan for breaking the company into three different companies, and i know you've been working on that are you on target? i know you've appointed and named ceo of the new cereal company. how is it all going?
3:33 pm
>> it's going very well. we are definitely on track for the end of next year to spin off the north american cereal business and the plant-based morningstar farms business and, yes, we announced a 22-year veteran for kellogg as the new ceo of the business. that was very well received inside the company and really gave a lot of energy to the folks in the cereal business we announced about half of his leadership team, six individuals, with over 100 years of collective experience, very, very widely respected veterans like sherry williamson as part that have team running the commercial operations and the supply chain very well respected veterans of kellogg and definitely shows that we're on track and ahead of track because we said we would announce the management team at the latest in the first quarter of next year to get it out this early i think was a very positive sign >> we expect more news on that into next year what is happening, you mentioned
3:34 pm
the supply chain what is happening there? still seeing problems? >> still challenges each and every day. the manual and human intervention that has to happen in otherwise automated processes continue in the month of july, in fact, the level of escalations that we had that go all the way to the top of the house was at a record high and so it's a little bit like the old whac-a-mole game, something gets disrupted we're managing through it, but we're not where we want to be in terms of the level of service levels to our customers. we're working hard to get there. there is just a dislocation that has happened that continues to happen it's not just us it's everybody you hear at the conference i'm at. it continues to be a real challenge. >> i'm watching shares that are sharply lower, the company cut
3:35 pm
guidance this quarter, for the full year and didn't really talk about weakening demand they talked about retailers pulling back on orders as a primary reason i wonder what you are seeing on that front if it's an industry wide or specific to their categories which isn't necessarily food it's other discretionary items >> we've worked very, very hard to get our inventory levels back to an acceptable level and build to acceptable levels so we have full shelves and good promotional activities for consumers and so we're at that level. we are always happy to operate at a lower inventory level if we can. we're at acceptable levels for us, for our retailers and don't really see any changes to that and have not engaged in conversations with our retail partners around lowering inventory levels we have safety stocks where we need to be so we can satisfy the consumer demand that we have
3:36 pm
>> well, like i said, the stock has been an outperformer lately. steve, appreciate you taking the time >> thank you, sara >> thank you, steve cahillane, ceo of kellogg take a look at where we stand now in the markets a strong day it's broad we're breaking the losing streak for the nasdaq, it's up 2.25% right now. we're going to discuss whether it's a dead cat bounce a big upgrade today. an analyst explains why he is bullish on netflix's upcoming ad tier listen to "closing bell" on the go follow the podcast on your favorite podcast app the dow is up 469. your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit
3:37 pm
♪♪ ♪♪ ♪♪ be ready for any market with a liquid etf. get in and out with dia.
3:38 pm
power e*trade's easy-to-use tools like dynamic charting and risk-reward analysis help make trading feel effortless and its customizable scans with social sentiment help you find and unlock opportunities in the market
3:39 pm
with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity [watch: heart monitor connected.] technology makes it easy to connect to everything from your wrist. [watch: speakers connected.] but to connect to all your clouds, you need more than technology. [watch: 50 feet to pin.] well that's not fair. you need cdw to implement vmware cross cloud services. a portfolio of multicloud solutions. it'll simplify workflows, speed innovation, and secure all of your applications. how did you get here?! [watch: the backdoor is open.] vmware makes connected multicloud possible. cdw makes it powerful.
3:40 pm
airline stocks are soaring following a guidance hike by a major carrier. the details straight ahead a netflix bear changes his tomb coming up in the market zone the dow me an50uporth 4 this is doubling production without doubling headcount. this is connecting all your team with a shared point of view. this is the system you built moving from concept to customer.
3:41 pm
this is how. airtable.
3:42 pm
my dad was a hard worker. he used to do side jobs installing windows, charging something like a hundred bucks a window when other guys were charging four to five-hundred bucks. he just didn't wanna do that. he was proud of the price he was charging. ♪♪ my dad instilled in me, always put the people before the money. be proud of offering a good product at a fair price. i think he'd be extremely proud of me, yeah.
3:43 pm
♪♪ power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market. we are now in the "closing bell" market zone, mike santoli
3:44 pm
here to break down the crucial markets of the trading day plus tim nolan on netflix and phil lebeau on the airlines the dow is having a strong day so is the rest of the market the s&p 500 up almost 2%, the nasdaq up more than 2%, mike you wonder if it just got oversold coming into today, whether we should read anything into a rally like this >> we were oversold on a short-term basis the key question is whether the market is going to respond to those conditions and we have maybe one day later than a lot of folks were expecting. the s&p 500 has spent a lot of time shopping around the 3,900 level, it was seen as a sort of significant area i think the other thing that happened today, treasury yields ease back. they were up in part on huge corporate debt the dollar calmed down a little bit and we stress tested the stock market for some more hawkish sounding fed news.
3:45 pm
three-quarters of a point when the fed meets and then coming out and reiterating their stance they're not done with the campaign it seemed not so much new news when powell delivered that message late august in jackson hole, here at 3,900 it was net bullish or not scary >> the hawkish commentary from the fed members today including the vice chair brainerd saying we will have to be there for a while. the market didn't react to that, the three-quarters of a percentage point hike doesn't come as a huge surprise. the fed is going to stop hiking in march 2023. >> i think the key is that nothing the fed officials are saying right now is inconsistent with that idea there will be a pause. it seems as if they really would love 2022 to be the year where
3:46 pm
they got rates to where they need to be as opposed to letting it bleed into next year. jim bullard more or less said that i do think there's a market taking in the hawkish speak saying they can't rest and can't wait, can't necessarily be complacent wanting to see more help on inflation in a few months' worth of data. it could mean by march they are where they have to be on rates >> twitter, shares are on a tear after a delaware court slapped down elon musk's request to delay a trial. look at the stock up still a long way from $54.20 julia boorstin has more. this one didn't go his way, julia. >> reporter: it did not go his way. there was a little bit of this ruling that did work in his favor and the judge said musk's team will be allowed to take some of the information from the whistle-blower and incorporate that into their case
3:47 pm
the allegations do change their argument the fact the judge decided not to change the date of the trial, still set for the week of october 17th a five-day trial the fact she didn't budge on that indicates she doesn't think the whistle-blower's allegations are a game changer we see the stock move higher because there's a sense based on what the judge said that she is going to be holding a hard line in terms of making sure musk goes forward with the terms of the agreement and sticking to his original argument when he refused to buy -- go through the sale of the company. very interesting to see the comments and we're seeing analysts weigh in here saying that the fact she's holding a hard line on the date of the trial reflects the magnitude of the damage the musk circus has already done and continues to do, a quote from cfra. interesting to watch those shares up 6.5% today >> now we wait for the trial do you have any sense what is
3:48 pm
happening inside twitter i know you interviewed snap's ceo today. they're trying to move forward and get through the head winds how is this company running with this kind of distraction and cloud? >> no doubt this is a massive distraction. any company that would have to reckon with this, the fact there's a lawsuit never mind the fact all of their employees are probably watching the headlines and waiting for elon musk to tweet, is a massive distraction. some sources said they were surprised the judge didn't split the difference we won't grant a four-week delay, maybe delay by a week or two. i bet some people there are breathing a big sigh of relief today. >> julia boorstin, thank you starbucks shares getting a jolt ahead of the coffee chain's investor day hour schultz voicing his support
3:49 pm
on cnbc earlier today. he's set to join in october. proving resilient in the face of inflation according to mr. schultz. listen >> the price of starbucks coffee is not something customers want to give up it's still an affordable luxury. >> my question to you is where is the street on starbucks schultz has come back. the market is excited about that the reason schultz came in to begin with they had a real problem on their hands coming out of covid with employees and getting back to the kind of growth they were seeing pre-covid. >> respectful of the fact it's a core brand, one of the great american consumer brands and
3:50 pm
steadier in its financial performance than almost anything else in consumer discretionary except for mcdonald's maybe. it seems as if it's at an awkward stage in its global growth buildout and having operational issues to worry about. i would tend to agree with howard schultz on the idea that one of the things that is not a big concern is acute price sensitivity of the customer base i remember in the '90s a great growth stock and the case was who is going to pay $2 for a cup of coffee. it seems they've not reached that limit, still rievley affordable indulgences >> what about china? it's heavily exposed i asked about apple before, dan ives, nike are any of them feeling the impact for what's been happening in china which are millions of people being locked down
3:51 pm
>> i think they're finding the growth side, what they're not seeing is confusion about whether the authorities in china are hostile to the brand or they want to replace it with their own domestic providers not really the case when it comes to the western consumer brand. you have to worry about it cyclically but not over the long term it's still in aggressive growth mode or was until the last couple of years in china >> unless the geo politics get worse. that could be a problem. a new report from "the wall street journal" saying the company is taking a wide range of steps to cut costs in the face of what it's been seeing hiring more junior staff, cloud computing costs and limiting real estate footprint and corporate swag
3:52 pm
just upgraded netflix to neutral from underperform, tim a price target where we are right now. what's your feeling on netflix >> we were bearish on netflix because we saw the streaming wars taking off. just pressure on consumers' time to spend and the amount they're willing to spend on the different services when netflix came out with the discussion of launching an ad-supported tier that began to pique our interest again how the math works behind this and we estimate it could be not only strong ad revenue business if they roll it out smoothly but in terms of incremental revenue to the company and earnings. you'll have migration of paid subs to this lower priced tier
3:53 pm
leads to good earnings performance from netflix over a few years' time. >> do you see that as being priced into the stock at $228? >> it's up from its lows quite a bit. it's past the worst. who knows what the next number might be that's always the primary driver of the stock the view we're taking here ad supported streaming, consumers can't afford to pay for services the companies receive on the ads they placed can be very high they may be lawning on november 1st is what we're reading most recently
3:54 pm
revenue growth, now it's still a very crowded marketplace it's a difficult ad market we're going into the economy slows, it's not exactly the best market to be entering into. a great user base, good data to target ads to consumers and a structural shift into more connected over the top streaming advertising. >> you mentioned a few other stock winners that could be part of the whole ecosystem, the trade desk was mentioned and roku i don't know if you cover the stocks but what's the benefit for some of those companies? >> i do cover them and i do have buy ratings as well. a lot of hubbub that microsoft
3:55 pm
will be exclusive tech partner to netflix i'm not fully onboard with the view microsoft will be exclusive. buying those ads on netflix and there's an opportunity for roku as well to be trying to monetize revenue netflix will be generating when it launches its streaming service. this is a good opportunity as a whole. netflix is the single largest prescription service and they are opening their inventory to advertising for the first time >> i think an interesting point about netflix shows available on the roku channel something to watch thank you. look at the airline stocks they're flying high today after united airlines raised both its third quarter revenue guidance and adjusted thanks to strong
3:56 pm
travel demand. phil lebeau joins us is it still leisure travel or is corporate travel making a comeback >> reporter: primarily leisure is carrying most of the freight right now for the airlines we are seeing an increase in bookings it's not at prepandemic levels yet but is increasing. september and october where you see does most of the bookings and also helped the airlines when you look at what was heard from a number of airline executives, very upbeat right now. >> what are they expecting and then beyond that where the market is expecting a slowdown >> that's exacted in terms of travel
3:57 pm
that happens after the rush. you're going to see airfares rising from here they are going to go up. i think a strong fourth quarter for the airlines and i think that's what they're expecting at this point >> phil lebeau, thank you. if you look at a group like the airlines still 30% off the recent highs the fundamental concern about the consumer and slowdowns, what we might see in europe and the energy crisis. what expectations are baked in here after a surprise announcement from united >> pretty low expectations you have essentially had the huge rush of enthusiasm around the reopening and kind of the rebirth of global travel and it's unwound entirely. because of the balance sheets of
3:58 pm
the pandemic, things can be better than feared a few costs, it seems like it should create a little bit of breathing room in terms of numbers if things are not terrible the global piece of it is tremendous even collapsing internal flight schedules within china very difficult to get going unless you have the rest of the world coming along >> you just heard the two-minute mark mike, what do you see on the market internals >> it's been a comprehensive upside day up versus down volume, not one of those days that gets everybody excited to make you feel there's a decisive reversal but more than 80% is pretty good look at energy relative to retail kind of tells you the story about a turnabout here this is actually year to date.
3:59 pm
retail relative to energy has flipped where energy is underperforming. you are seeing a real giveback there. it's a tax break to the rest of the consumer economy volatility index has shown an easing back, two points lower. bordering on one of these short-term buy signals, three points below its recent high above 27 from 19 to 35 so we're in the bottom third of that one-year range, sara. looking at oil prices, crude oil dipping below $82 a barrel so continues to move south sharply here almost 6% move as we speak and as carl mentioned earlier, it could go flat on the year. the only sector that is weaker on the day everything else is higher
4:00 pm
3% gain there thanks to a rally and some of the beaten up names, ross stores, tjmaxx, utilities are strong, materials are strong the nasdaq composite 2.1%. also just breaking a seven-day losing streak. see you tomorrow into "overtime" with scott wapner welcome, everybody, to "overtime. you just heard the bells we're just getting started we will discuss whether today's big apple event will get the stock moving higher we begin, though, with our talk of the tape whether one very important fed talker just opened the door ever so slightly for an end to the rate hikes and the beginning of a bigger rally the requisite managing partner, cnbc contributor, member of the investment committee


info Stream Only

Uploaded by TV Archive on