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tv   Tech Check  CNBC  September 13, 2022 11:00am-12:00pm EDT

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nasdaq stocks harder that is partly because they are the big index names and did have a better run off the lows. partly it is just because higher inflation means higher nominal growth it means kind of less of a premium on the more steady growers and obviously you have the discount rate effect where people are worried about more expensive stocks getting hit harder in an inflationary environment. all of that stuff seems to be at play the question for me is does the sell-off become more disorderly? does it look like there is a real breakdown below the recent range of 3900? we are not there yet but it is a pretty kind of grinding, relentless decline so far today, below 4000 i think you lost a certain amount of kind of technical and options based support that was in place for a little while. >> does it make sense? i mean, the dovish argument this morning is you are basically getting a tenth over the course of two months, right >> exactly. >> which is within the white house view essentially flat over
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two months. >> yes. >> gasoline is falling other things have risen. in the end it is a wash. >> it is mostly relative to the markets leaning that it seems more dramatic. it is not so much that somehow the picture has totally changed. i do think there is a risk in here that the stickier parts of cpi look like they're getting uncomfortable in terms of the levels they're at. jason furhmans of the world are saying this is too high for core even though we kind of can live with it, boil the frog slowly and people adapt and incomes are high enough and employment is good, you can have all of those offsets, at the same time you have the fed saying this is unacceptable and we may have to actually cut into muscle in the economy to get it done i'm not saying that's the case but the market has to wonder about that >> mike, is it just me or in this market action over the past few weeks do we have this effect where at first a lot of investors wanted to believe the fed didn't really mean it and was going to lower rates.
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>> yeah. >> in 2023 and kind of that had to get -- then a lot of the investors seemed to wanted to believe the cpi number was going to be benign and it turned out not to be. despite all of the volatility we've been through, there seems to be from where i sit this element of the market that wants to believe the sun will come out tomorrow. >> for sure, john. i think it is really not so much that the market is inherently optimistic as the market inherently wants to anticipate a turn the fed has been saying, we refuse to try to anticipate inflation going in our direction and we refuse to project ahead we want to see multiple months of actual numbers that go in the direction toward our arth on inflation and -- toward our target on inflation and until we see that we are not going to change our posture which is rates have to go higher to a restrictive level so they've been consistent on that. the markets aren't going to say we'll wait and see they'll try to process all of the inputs some of the inputs looked like
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they were looking good inflation going down, used car prices, listed rent, all of this kind of thing you were able to build a story that said the data are leading us to a place where the fed might be able to become more benign even if they're saying they're not going to. i keep going back to the point of the market was wrong about it in august, for the august numbers. but the fed is going to continue to have a hawkish rhetoric, even when it is time to stop having a hawkish rhetoric so the market wants to get there first and sort of tries and fails until it succeeds. >> and when we look across the market today we're seeing tech get hit hardest and look within there and it is unprofitable tech once again. you've got the arc etf down 6.5%, cloud computing etf down 4.25%. there was this thinking over the last few weeks that maybe they stopped moving in lock step with jumping bond yields, if they were to jump obviously we've seen them move off of that cpi data and where do you think the correlation is between the unprofitable tax and rising bond
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yields right now >> it's not some kind of perfectly fine tuned thing where the dial gets turned on yields and it means a certain amount for unprofitable tech but if you're talking about yields being the main thing that keeps risk appetites in check and sort of reduces the idea there is going to be that much more kind of risk seeking liquidity out there in the next couple months or years then it is going to draw from the unprofitable tech. i also think they become trading stocks they become, you know, short squeeze, combined. you be, short squeeze is alternating with people kind of reshorting them or taking the opportunity to get out of losing positions at a slightly higher level. so it's tougher to know. they're sort of the width end of the market at this point as opposed to some area precisely processing the macro yield backdrop. >> finally, energy you got oil down about a buck. is that a dynamic of a stronger dollar or is there real like sort of demand destruction recessionary worries at hand
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>> it is all of it i do think the reflex was the stronger dollar because actually crude was up this morning. and so all of a sudden you have the inflation number that has the chain reaction of yields higher, dollar higher, then a worry that, in fact, we'll have to do more damage to demand down the road if the economy is going to wobble. >> we'll keep an eye on that, getting closer to 86 mike, thanks we'll keep you very close by mike santoli >> we'll stick on the sell-off let's bring in the head of global market strategy at wells fargo investment institute what are your thoughts on the market reaction? is it a new jerk reaction, over reaction, or justified the markets especially the nasdaq had a pretty good run the last week or so. >> hard to call it anything but a knee jerk reaction the real question is, are the ones that you ask next is this justified? we think so. the market has been leaning
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toward inflation coming down even if the month on month number was just a tick higher, 0.1%, that is with energy prices down by 5% so the more worrying factors here are going to be persistent and that's core inflation was twice expectations and services inflation. as long as people have cash and they still want to get out and do things post covid, they're going to be buying services and that is what is going up here in price. so we think this inflation will be more persistent than perhaps the market does right now and we think the fed as mike said, the fed is going to make sure that it sees inflation below its targets or at its targets before it starts to really ramp off the precipice. >> but, paul, does this change anything in the fed's trajectory we did hear an extremely hawkish stance from fed chair powell a few weeks ago. the market while it is starting to price in the possibility of a hundred basis point hike is not
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really seen as super likely at the moment what does this actually change >> i think, yeah you're right it doesn't change the immediate prospects. we think 75 is what they'll do here in september. they're not in a hurry but they are determined, and the markets seem to miss that the last week or so. >> paul, we're talking about inflation and cpi and that's important today. clearly, because of the news, but i wonder if we should also be talking a lot about demand, because q4 is right around the corner, and the next step after you raise interest rates for persistent inflation is demand slows. we're already starting to hear, even here at the goldman sachs technology conference different ways that demand is slowing down even in enterprise when it comes to deals getting pushed out or maybe difficulty expanding with existing customers or landing new customers depending on the company. how much should investors be thinking about that impact
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that's perhaps coming? >> this is the really hard part for a strategist because on the surface you still have a lot of liquidity. the fed's numbers last week showed $5 trillion in checking deposits in this country, four times the previous pandemic, prepandemic record high. so so much cash out there. that's on the surface. but under the surface, yeah. demand is really struggling here the housing, you go to some of the big box stores and all of the people are in the grocery section, not buying the clothes, not buying the electronics they're stocking you on the things they can get cheaply. that lower 3/5 of the income distribution they're really struggling here but investors are missing that because on the surface there is still so much liquidity. >> yeah. even resilience in hiring. it's amazing man power has their q4 hiring sentiment index out today. according to them, it remains strong through the remainder of
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2022 it's amazing and sort of puts into sharper relief how much work the fed theoretically may have to do. >> that's right. you may in the end by next year start to see some of those job postings go away rather than see people get laid off. that will be the last resort so employment again is going to be a trailing indicator here investors want to look at the other things going on with housing, and with real wages the employment picture will only develop as things get noticeably worse. >> so what are you watching in particular about the upper two-fifths of the consumer income spectrum and how much weight is on that cohort of the consumer for the rest of the year to sort of carry this economy? how are we able to tell whether that's happening or whether there are cracks in that armor >> well, the first indicator i
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already mentioned, if you take inflation adjusted wages, that's going to be -- as that gets more and more negative it starts to look more to us like the early 80s. then something that is maybe a little bit more kind of current, contemperaneous, would be look at services. especially the pmis on services and the personal consumption expenditures on services those will tell you whether the aptitude or, excuse me, the attitude about spending is starting to peak or still running hot. >> you talked about the consumer side of the picture. what about the enterprise demand we've been trying to figure this out as we talked to different ceos in the space. where do you think is vulnerable could it reach the hyperscalers, the big five names >> you said it earlier i think we still like quality tech there's still going to be a strong trend toward doing things
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online doing things virtually but those tech names that people had bought with a lot of this cash that looked cheap but don't really generate earnings or even revenue, those are the ones that are going to continue to get hurt here in this kind of up-and-down environment. >> but i'm not talking about those names. we know unprofitable tech has a really hard time when markets are selling off like this. i mean the bigger players, the profitable ones, names like microsoft, amazon, google. how are they going to fare we've seen this deceleration and cloud growth but is that the extent of it could there be more ahead the market maybe isn't pricing in? >> it's possible in the short term it is mostly going to be driven by emotion we think those are quality portions of the market that we want investors to buy but over time the volatility in the near term will be unavoidable. the high beta will be unavoidable. those are examples of companies or a sector rather we want to
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try to buy over time to get past this period of hypervolatility >> finally, paul, the tape's got some stories this morning basically arguing that the street isn't sure how to process the progress of ukraine in their counteroffensive against russian troops, and now the i guess so-called real world possibility that the russian military really suffers a glaring defeat what happens if in fact that happens? in terms of market activity? >> i would pay less attention to that that war looks to us like it is going to go on for a while we haven't seen what the russians' next step might be it might include things like further limiting uraniuim sales and aluminum sales into europe they still have military options available to them. i would put more emphasis on what is going on with the inflation picture and how the market understands it. this is going to be a long war >> yeah. i wonder, how the change of
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seasons affects that, paul i want to mention, also, nasdaq a moment ago again ticked below 4% so still right along session lows as we head into winter who knows what the weather is going to be but particularly with the energy constraints that europe is facing how much of that might affect beyond europe, you know, global players and investors in general? >> that is a significant risk of course in the near term. frozen ground means russian tanks can go more places at once so again, this is not over in ukraine. and of course if we do see further russian sanctions on western europe, as a kind of a counterpunch, then we'll see prices go higher, as well, the temperature idea that you mentioned, the europeans are at around 80% of storage capacity but a couple cold, really cold weeks in there will suddenly spike gas prices again and
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you'll see that start to reverberate in places like the u.s., japan, asia, and africa, latin america. it is going to add strain to global economies and force central banks to get even more aggressive on their end with inflation. not a good thing >> paul, i'm looking at a name like nvidia today down more than 7% such a big name in this market high growth, secular growth, industry leader. even some value investors have become interested in this name over the last few weeks. but today just going even further lower. what do you make of that and what does that say about the big tech complex as a whole? >> it tells me with i.t. as a whole investors are still selling off indes krim nantly here we go back to our advice we like quality. we think tech is a quality sector over time we think that revenue, that opportunity to grow organically is going to remain we would not put all the money in right now
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don't put all the chips in at once but sort of a disciplined dollar cost averaging strategy working with the professionals we think that is the best way to take advantage of what might be a generational buying opportunity ultimately in this sector >> paul, thanks for being with us today. >> thank you. >> nasdaq currently down almost 4% appreciate it. we'll talk to you soon meantime, we'll continue to stay all over the market action. before we speak with the ceos of palo alto and pinterest let's get back to the whistle-blower testimony. our julia boorstin has been tracking the highlights today. >> reporter: fascinating testimony. the whistle-blower, a well known hacker and security expert known as muj taking the stand accusing twitter leadership of misleading the public, lawmakers, and even its own board of directors the questioning and commentary offer the past hour or so centering on twitter's data zatko saying they don't hwan data they have, where it lives, or where it came from and they can't protect that data.
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take a listen to his accusations of incompetence and also dangerously misaligned incentives >> twitter leadership ignored its engineers because key parts of leadership lacked competency to understand the scope of the problem. but more importantly, their executive incentives led them to prioritize profits over security >> zatko also saying twitter repeatedly violated the 2011 consent decree and said the ftc is over its head letting the tech companies including twitter grade their own home work. also raising concerns about foreign agents, government spies being hired by twitter, saying the company doesn't have the technology to identify inappropriate access to data within twitter systems and when he flagged concerns about foreign agents at the company management didn't want to do anything about it. he also talked about chinese
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government entities advertising on the platform, and he said the company didn't know what data they were giving the chinese entities so it has been really interesting to hear this conversation about the failure of u.s. regulators, both in terms of legislation and also funding to the agencies like the ftc. they said that mudge said twitter was a lot more concerned about foreign regulators than those in the u.s one thing he hasn't talked about yet which is very much relevant to the coming trial with elon musk, that is bots back over to you >> julia, thanks very much we continue to watch the markets. the nasdaq still down about 4% meta the worst perform other than the s&p 500 meanwhile let's get a gut check on oracle delivering a top line beat in their latest earnings revenue up 18% year on year fueled by the acquisition of certainer, eps and guidance coming in under consensus. however the stock is holding up a lot better than other tech names this morning shares are down by just 1.3%
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amid the broader sell-off. john >> down 1.3 is the new up this morning. let's turn to cyber security and take a look at palo alto networks the broader sell-off, out performing the broader nasdaq though shares have done pretty well year to date i'm told they are about 8% from their all time highs so let's find out more about that and the entire industry. cnbc exclusive here at the conference thanks forjoining us. >> my pleasure thanks for having me >> i want to start off asking you about expansion and consolidation. you've talked recently about how you're not just staying in your lane palo alto has been able to be pretty good at a number of things at once with this volatility and the way the market is treating palo alto relatively well, are you going to go shopping is this an opportunity to bulk up >> john, i went shopping four years ago. we bought north of 14 companies
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the last four years. when i started the journey the thesis was people want to buy the best security. four years in we discovered people will buy lots of good products from you if you have them we've had the privilege of making 14 acquisitions in the market, consolidated in the last four years we've built three independent businesses outside of our business and all three have a line of sight to get a billion dollars over the next 12 to 24 months so far things are working out. >> that is why i asked do you have indigestion or are you going back to the buffet >> i think the equity prices, both in the private markets and public markets are like real estate neighbor's house sold for a lot of money a few months ago. you still have hopes your house will be worth that i think it will take time for the indigestion of valuation to settle in the seller's market before the buyers can show up. >> let me ask you about secure access service edge.
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sase as it is called new term of art. expected to drive a lot of ak tuft over the next few -- of activity over the next few years. how do you position yourself in that market different from others >> first and foremost, john, the whole pandemic accelerated digital transformation i've seen many people come on and talk about it. we are no stranger to it because that digital transformation meant a lot of people want to get on the cloud faster than they have in the past. that's not slowing down. you see every tech company after tech company tell you, cloud is still driving a lot of the demand when cloud shows up what it does is fundamentally requires you to change your network. you used to bring all the traffic back to your data center, your offices now you can take it to the cloud. the way to do it with the cloud with security applied at the edge is through this concept called sase. there are two vendors on the market it is us and another one i am perfectly comfortable if we can share the market i don't have to beat them at every race it as very large market.
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i think it is going to be an 8 to $20 billion market the next five to ten years and i'd be very happy with half of it. >> who is the other one? just checking. you are not going to say >> best not to talk about competition in any which way, good or bad. >> i'll ask you something else. >> sure. >> you just presented the secular growth opportunity but in the near term, we've been talking about a ton, the length theng deal cycle and you said that has to do with the fact you guys are moving into bigger deals not the softer macro backdrop is that still the case do you anticipate that to be the case through the end of the year and beginning of next year >> as of now, i said this a few times, we are not seeing the macro impact showing up in cyber security i'm sure there's a bunch of belt tightening going on. customers want a better price. they want to see if they can postpone and buy a quarter but really not impacting three years ago when the pd hit there were companies with no
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revenue. now we have oil and commodities strong and then oil and commodities were weak. the industry keeps shifting as to who has more demand we are seeing a bit of belt tightening i don't know where the market is going to go. if you end up further down six months from now maybe we'll see the impact right now we're not seeing the impact look, we've gone from our largest deal being $20 million or $28 million four years ago to $75 million. bigger deals take longer. >> how are you preparing for that possibility that six months down the road from now you could see deals tightening up a little bit? i'll risk your ire by asking about profitability. i know you've done a really good job in bringing palo alto to profitability. where is your focus right now? do you shore that up in a moment like this when you can when your proposition is still very strong or do you focus on gaming against that unnamed competitor? >> look. we are in four different swim
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lanes, not like we have one, we have investments in fire walls, cloud products, we deal with competition all the time the opportunity right now is the current market is making start ups wait and watch they're slowing down hiring. some of the larger companies are slowing the hiring we have always managed our business of profitable growth. we have consistently managed profitable growth. we have the highest cash flow in our industry yet we have grown the last quarter 44% so we'll keep trying to do that and if the market is getting better we can hire people much better than we could six months ago because now there are lesser places they'd like to go they'd like to come to us. there is supply chain pressure, inflation pressure you have to factor that into your planning. so these factor longer deal cycles because we expect to do bigger deals all of that is in the mix and we'll see how it comes together. >> carl has a question for you. >> it is a pretty good color i wanted to ask you about shareholder returns. we're seeing a bit of a spike in corporate buybacks on a trailing
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four quarter basis i know you guys have done some do you feel any urgency to return or to buy back more ahead of the tax that goes into effect next year? >> well, the tax has certain nuances that as long as you are buying back less than your dilution it is okay. we've been consistently buying back about a billion dollars a year, somewhat opportunistically depending on availability. we'll keep disciplined and stay steady around it i feel no urgency to have knee jerk reaction to some potential tax which is probably not going to impact us. >> what is the impact if any of market volatility on your go to market there are several things that people end up talking about, market volatility ends up being one of them. we have mudge testifying in front of congress right now.
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attention on security, broadly, is never a bad thing i wonder how much of that big picture ends up affecting you positively or negatively. >> as i said, the big picture stuff is still very nascent, very early in my mind. because we live this every day i wake up in the morning and watch your channel you guys live this every day somehow we feel this need for urgent action. that's kind of not happening out there. companies are still on their transformation, people are doing their projects are they going to ask for a better price most likely. are they going to say i'm canceling everything haven't seen it yet. i am not suggesting it is not going to happen. i don't have a crystal ball. my job is to keep the on track, keep it prepared get our teams out there hunting for more business. >> part of that right now you're being opportunistic in hiring, is that right? >> yes we're not -- we have not announced we're not hiring people, not announcing we're tightening our belt just making sure we drive more and more
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efficiency for our business and go to market. >> are you leaning on stock based compensation in your hiring >> we always have. our stock is a lot more attractive. >> than many others? >> to people we're trying to hire than it used to be because on a relative basis we seem to have done okay and at this point not just investors but employees crave stability. it is a good time to go out and say look at our stock performance and the opportunity offer. we are the largest cyber security company and not going anywhere work with us. >> a good place to park it thanks >> thanks. guys, we continue to monitor the sell-off today, dow down 878, s&p 5003980 mike santoli is here with me on set. megacap tech bearing the brunt of a lot of this meta pretty much back to the lows of the year nvidia, and amd. >> interesting with meta it is the one of them that doesn't really have that, well, it is a premium valuation and
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we're just going to cut into that there's lack of confidence in the underlying story and the whole nvidia thing it is interesting. massive decline in that stock and now it is bumping in this very tight range for a little while. the rest to me are just proxies for the index but only more so and that's the case with apple which did kind of come almost, you know, half way back toward its own highs from recent lows i think in general we're here, 2% in the s&p above where we were a week ago friday when it was seeming like the market was trying to make a stand at 3900 a lot of the assumptions that went into the last 5% of upside has been challenged if not kind of invalidated at this point i think that's where we are. it is still this very uncomfortable trading range. it seems to be supported by relatively high level of absolute corporate profitability on the down side as well as just the strength of the rally off the june lows, which is a good
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deal lower from here then on the upside it's capped by everything we're talking about. right? which is the fed still feeling as if it has to chase inflation. the fact the valuations never really got too cheap outside the biggest five nasdaq stocks, s&p probably under 16 times forward earnings but now everyone has to tell you forward earnings are going to come down a little bit so i think that is the spot we're stuck in right now. >> speaking of earnings coming down eastman chemical was on that list and did cut their guidance, we got a down grade of dow earlier today. i think industrials maybe in a couple weeks. >> industrials were looking like they were putting up a fight and out performing on a one-year basis the s&p. a lot of that is defense contractors, and some of the rails and things like that now i guess chemicals, anything used in natural gas as an input is not in a great spot so it is definitely not feeling as if there is a real harbor in the cyclicals right now. we're still above the lows that
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desperately levels where it was this stagflationary panic we had in june. this today feels like the cpi said, not so fast. we're not going to give you instant relief you have to wait at least another month to have the kind of peak inflation, peak fed story play out and meanwhile, i mean, we've been operating in lock step here after the june lows exactly two months to the day we peak at the 200 day moving -- everyone says september is scary but it is always the second half of the month. right? you get into the first two weeks and it is okay so, you know, i think we're dealing with a little bit of the mythology and the historical precedent as well. >> yes the back half of september is a little gloomier and more treacherous. >> and then midterm year and we'll see if the same people are telling you that the best six months of the four-year cycle starts with the midterm election. >> that's right. as we mentioned with cashin earlier today. that is good stuff, mike, helping us understand the color of the session as it is in progress let's get a news update.
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update at this hour, stocks are posting sharp losses and holding near the lows of the day after consumer inflation unexpectedly rose in august. higher rate rents and health care costs out weighed sinking gas prices buying yields are jumping with the two-year at the highest level since 2007 the white house is stepping up efforts to help railroads and unions reach a deal to avoid a shutdown of the u.s. rail system officials say president biden and cabinet members are engaging with union and rail companies and more discussions are planned. in england, king charles has wrapped up his visit to northern ireland. he greeted well wishers outside the royal residence if belfast and also met with irish politicians vowing for peace in northern ireland the king is now on his way back to london. in edinburgh viewing of queen elizabeth's coffin has ended the hearse is now carrying it along the streets lined with people on the way to the airport. later today the coffin will be received by the royal family at buckingham palace where it will then stay overnight. that is the very latest, john.
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back over to you >> frank, thank you. dow down 877 nasdaq up more than 4% let's get to dom chu who has a look at what's getting hit hardest. >> it certainly is the parts of the market you would suspect if interest rates are in play right now. if you take a look at the major indices right now, again, just off of the lows of the session with the dow industrials down 880 points the s&p 500128 points to the down side but the nasdaq composite off 4% again, 500 points. 11,765 that is where a lot of that down side pressure is being felt on higher valuation technology growth oriented names and media telecommunications and that sort of thing if you take a look at the etf, the nasdaq 100, one place traders have been watching with regard to how to play this market with regard to overall moves. if you look at the highs we've seen over the cycle and the lows, we are now back below the mid point of this level here, which just happens to be around $302 per share
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$307 per share is what a lot of traders were watching because that represents the 50-day average price on a rolling basis for the nasdaq 100 so a level to kind of watch there as well. with regard to the sectors on the move, it is technology, consumer discretionary, and communications services that are the worst performing sectors getting hit the hardest. 4% plus losses but also real estate remember, as interest rates go higher that real estate sector is taking it on the chin because of some of the valuations and the reasons for higher interest rates. so watch that. energy interestingly enough a cyclical, economically sensitive sector that is holding up the best on a relative basis only down about 1.3%. with regard to the stocks to keep an eye on, watch these names because each of these are megacap technology communication services type names that are now within 5% of their 52-week lows. among them, intel on the semiconductor side you can also throw nvidia in there as well. meta platforms down 7.5%, also
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within striking distance of a new low for the year and alphabet even down 5% as well within 5% of the 52-week low. so it is the stocks that matter, the biggest ones out there in terms of market value that are causing some of the most down side pressure. i'll send things back over to you. >> great perspective, dom. i'm not sure i was expecting to see alphabet in that group let's get more into the sell-off and bring in wilmington trust head of investment strategy megan chu. i'll ask the same question i asked the first guest. is this an over reaction or justified? >> i think this is a bit of a -- another wake up call for the market and a bit of a reminder you can't have your cake and eat it too what i mean is we've had really strong labor market data, really strong services, pmis, and to see inflation come down in the face of that is a challenging mix. we do really think inflation
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will start to slow, but in order to do that you're going to have to see some pain in the economy. we really haven't seen any of that pain. so i think this is -- justifies a reset in expectations for fed activity we've revised up our expectation of that peak fed funds rate that the fed will reach to about 3.754% which is fairly in line with where the market is today but it is very discouraging that we're still seeing so much strain in the core components of inflation and we've highlighted three risks -- housing, oil, and wages. housing was a prominent factor of this inflation report >> yeah. shelter is a concern to a lot. goldman takes their year end to 4 to 4.25. i guess i'm wondering why you are not even higher than you are. >> we still think deceleration -- inflation will decelerate and we have the cpi
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on a year over year basis around 3% we think the fed will recognize housing for one thing on the one hand is something that the fed is able to manipulate more easily than other components of inflation because they have control of the rates and mortgage rate passthrough effect but there is a delayed impact. the fed knows this it takes about 12 to 18 months to see the effects of housing market, price changes pass through into inflation we think that the fed is looking to get to a point of restrictive territory and hold rates there and so we'll see how the data comes through into the end of the year but, you know, the fed needs to get restrictive and they need to anchor rates there so we can start to see inflation come down >> what is the next important potentially market moving data point that you're looking for that is going to, perhaps, inform or change your mind, deepen your understanding of
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what is happening? >> well, i think the fed meeting, for one thing, will be very useful from a telegraph perspective to hear any update that powell has to his view, to the summary of economic projections that the fed puts forth. that will be very key. because i think we need to see where the fed expects inflation to be in order to get a view of where they expect policy to be again, it does come down to, can we thread this needle between having inflation come down but not exact too much pain on the economy? and i think what you're seeing from this inflation report is that the risk of more pain in the economy to come is greater we're getting that from the inverted yields curve, from short rates moving much more than long rates, and it raises a risk of recession in 2023 quite frankly. >> meghan, always great to get your insight thanks very much for joining us today. meghan shue. >> thank you
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we mentioned weakness in the cloud stocks today pretty much the worst day for that sector since june we'll bring in our own frank holland for a look at some of those names getting hit hard. >> as you mentioned, getting hit right now falling on a rising rates fund, high valuations of many stocks also making them very pressured let's look at some of the names. one is asana that had been doing well in recent days, having a bit after rally during the month and other names we've seen hit hard by higher interest rates, datadog, snowflake, zscaler, cyber security name getting hit as well it was thought it was a defensive area of tech during the recent days. this is the recent performance of cloud etf as well as the ten-year and in recent days we've seen the ten-year rise along with cloud rising as well so some thoughts by analysts at least that maybe we reached what a lot of people consider that moment of capitulation or the bottom for the cloud stocks please and this is the moment where investors were ready to jump
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back in despite high valuations and the interest rate pressure but the relationship is starting to break today you see it at the very end on the right-hand side of the screen and also today the hyperscalers, names like amazon, microsoft, google that provide the infrastructure of cloud getting hit pretty hard as well. i'm looking at the movements falling as we speak, amazon down almost 6%. google down 5% microsoft down more than 4%. generally they are hit by this rising interest pressure but not hit as hard. today we are not seeing that down deep in the red right now >> back over to you. >> thanks very much. meanwhile take a look at shares of pinterest also down more than 5% at the moment a number of key issues at play for the company. e-commerce over economic activity and inflation the ceo joins us in an exclusive interview. he just took the helm in late june after holding senior pogs at google and paypal thank you so much for being with us. >> thanks for having me. >> on quite the market day
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you are no stranger to this. >> that's right. >> you were at paypal during a similarly turbulent time skepticism over the business model. how do you approach pinterest at this moment especially at the time when the market environments for unprofitable tech and macro backdrop is increasingly challenging >> i think it is certainly an uncertain and changing market dynamic. one of the things i feel great about is during uncertain and changing times differentiation stands out more and more i think pinterest is a very different platform having inspiration and intent in the same place it's quite unique amongst platforms. and so i feel great about that i feel great about the fact we help our advertisers differentiate meeting consumers across the purchase journey. i think that differentiation is not only standing out for us but increasingly will stand out for advertisers as they make their own shifts i can't imagine there is an advertiser in the country that hasn't had their cfo approach and say we want you to focus on performance and be sure you're getting good payout on the advertising and that often presents a bit of a choice for
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advertisers. oh, you can get to last click but lost your brand story. you're computing just on price and delivery speed or things like that versus pinterest allows advertisers to really reach consumers in that moment where they're still deciding what to buy. they have intent but are still deciding what to buy advertisers can tell their brand story and get great performance on pinterest i think the differentiation is a key to the platform and something over the long term we feel really good about. >> the key word there you said it is intent right that is why i think you saw amazon's advertising business hold up because people go with the intent to buy something. but i don't think anyone needs to be convinced of pinterest's potential. it's always been there it is the execution. how are you going to approach that what do you need to do in terms of getting, scaling that merchant base? what does it mean for the company's balance sheet and profitability? >> it is a great point i think pinterest is a platform that has as you said tremendous potential but a lot of leverage left on the platform i think that leverage on the platform comes in a few
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different places one, while more than half of people on pinterest say they're there to shop, there's a lot more we can do to take that inspiration all the way to action and so of those people on pinterest to shop how many today are able to click to go to a place to buy something that is a small percentage today. we can make it much greater over time in doing that, that is going to drive deeper engagement on a platform, great for our user engagement, but also highly monetizable as well. that is one example where there is a lot more potential on the platform broadly speaking i think the inspiration to action goes across a number of different categories not just shopping we see lots of usage on the platform where we can go for inspiration and intent to action and there is tremendous opportunity in that across the platform >> pinterest was ambivalent about video for a long time. now along has come tiktok. what is the video strategy now particularly because short form video seems to be pretty good at
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attracting audiences >> yes a great point, john. we now see more than 10% of the engagement on the platform is video. so thoughtfully mixing video into the platform but one of the really interesting things about pinterest is that there is a very unique use case on pinterest. i think you are seeing multiple platforms compete for where do you go to watch the next funny dance video? but people come to pinterest with a purpose it is not like other discovery platforms that are leaned back it is a lean forward activity. you're there with a purpose to make, to do, to shop and so in doing that, we think that we cannot only update our content with more video, but more content with a purpose and that is more differentiated. i think the other thing people may not fully appreciate about pinterest is one thing that is very unique about it is not only great ml and computer vision, but a tremendous amount of human curation that happens on pinterest. if you want to go look for a great dress you can do that lots of places but if you want to figure out a great outfit, what
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shoes and handbag and accessories will go well with that dress pinterest can give you that answer in a way no other platform can because of the human curation. >> how do you take unfair advantage given that of the fact that the whole customer acquisition motion in digital advertising has been up ended in part because of ios changes? we've seen it affecting your competitors throughout the sector how do you hone in on that while there's time with q4 approaching? >> it is a great point, john i mentioned earlier differentiation stands out in times of change. pinterest doesn't need to know what you're doing elsewhere on the internet to know what you're interested in. people come to pinterest with an intent and purpose which means people on pinterest tell us what they're interested in. when you think about platform changes that make it harder to know or many other platforms struggling with what is the user interested in because there is less ability to follow a user on the internet, pinterest doesn't need to follow you to know what you're interested in because people come to pinterest and say
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i'm interested in redesigning a room, an outfit, i want a new look pinterest has a great first party signal and exactly the kind of thing that is a real differentiation. >> the idea you brought up about video making up such a part of e-commerce and you said about 10% of pinterest content are you leaning into it? do you expect that to be greater in the future? how closely are you watching platforms like tiktok also getting into commerce? >> it as great point i think we're leaning into it but back to like we have a very differentiated use case. i think you see examples of people sort of being a me too on this and user backlash from that we have a very unique use case we want to make sure to cultivate those unique use cases where people are there, yes, to consume content but in a lean forward type of way. the kinds of video that would be resident on pinterest isn't going to just feed passive consumption but be perhaps video that helps you figure out the new look that you want to put together or the room you want to design or the great meal you want to make for your in-laws
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or, you know, whatever it is you're trying to do, whatever is your hobby or interest, that is a different kind of content and so we're trying to be thoughtful about that. >> when you were at google you made the market place free for sellers to list on to build up that base. are you thinking about doing something similar at pinterest >> i think there is a tremendous opportunity for us to make a much broader set of things shopable on pinterest. in fact, over the long term, i would hope to get to a place that everything you see on pinterest is shopable. every inspirational image on pinterest becomes shopable over the long term. >> your time at paypal you developed venmo, the check out process. how does fintech play into a proposition like pinterest if at all? >> i think there is going to be a lot of opportunities for us to play across the funnel and so we're much more interested in solving shopping than buying. i think buying has been a more solve problem in e-commerce. in many ways you could say the first 20 years of e-commerce solved buying and killed shopping we want to solve the shopping part of the journey.
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how do you walk the bizarre, get inspiration, discovery, but then connect to a great buying experience we operate across the full funnel so i think there will be opportunities to engage across those. >> thanks for being with us today. >> thanks for having me. meantime, guys, market has obviously settled on this level for now. s&p, 3980 or so. dow is down 900 points nasdaq as we said earlier, 4% decline. if this holds, this will be the seventh one-day drop of 4% plus for the nasdaq this year don'gowat ay.
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a gut check on adobe, down to market perform highlighting concerns about the durability of creative cloud from a recent survey they see employees showing greater willingness to move away from creative cloud and that generates about 60% of total revenue. you can see the stock down 5%. also down graded the stock to neutral saying there is a more challenging environment than expected they wouldn't be surprised by a guide down for q4 when adobe reports earnings on thursday that'll be an important one to watch. >> a big one still to come on the show more on the tech trade as the market takes the major leg lower today. we'll discuss inflation and how it impacts one stock in particular, up next.
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demand could be getting weaker, but for us what we're seeing is we're seeing this secular shift demand from retail, target, wal-mart, some of the other retailers talk about some weakness shift to demand for services. we're at a big conference now. everyone's in person, the u.s. open, you know, was record in terms of people going to that u.s. open. so more and more people are
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going out, spending on services, going out in the real world, and that's been a real tail wind for us in terms of inflation, you know, i think inflation, it's everywhere so it's the price of the car, price of gas, thank god is getting a bit better, your groceries, et cetera we're just a part of that basket in terms of spend. if anything 72% of drivers in the u.s. are seeing one of the considerations of their signing up to on uber was inflation. so on the supply side we may be actually benefitting >> that was uber's ceo from our conversation yesterday he was saying uber could actually see a bump as inflation hits the consumer. gas prices are going down but food prices and things like rent are still high
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it's actually not a bad proposition for an uber driver the rider on the other hand, maybe they start to scale back uber is an interesting place right now especially as an unprofitable tech company trying to get there >> yeah, guys i don't know if you've seen about his driverless ride in a cruise vehicle last night in san francisco call me and i'll do my best to explain but just, wow, very impressive stuff >> i don't know if i'm ready for that particularly in san francisco. i don't know, but san francisco wouldn't be the first place i'd try that >> too many pedestrians who are being creative in san francisco for me, but we'll see. interesting, though, that on the supply of driver side perhaps uber seeing some benefit maybe they don't need to go
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autonomous as quickly. after the break we'll get the latest from a twitter whistle-blower, his testimony which continues. don't go anywhere. nasdaq just a little bit shy of a 4% drop. do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. we thought we had planned carefully for our retirement. but we quickly realized we needed a way to supplement our income. if you have $100,000 or more of life insurance, you may qualify to sell your policy. don't cancel or let your policy lapse without
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want to get one more check on the twitter whistle-blower. julia is back with the latest. >> the continues to raise major concerns about the security of twitter's data and how it could be inappropriately accessed and exploited and also talking a great deal about the national security risk. he still hasn't made any comments about bots. of course bots are central to elon musk's argument why he shouldn't have to follow through on his deal to buy twitter but his comments about what he says are twitter's lies to regulators could spark far more scrutiny from the ftc and from legislators. he was asked whether the company misrepresented facts to government agencies. he says, yes he asked whether twitter management misled french and irish regulators he said yes, and he was asked about just how high that intent to mislead and deceive
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government agency was, and he said he didn't know what to level, but certainly it sounds like he's very concerned about that misleading of government agencies now, we have reached out to twitter for comment on what he's been saying. we haven't heard back yet. i'm sure we will be hearing something from them later today. but i want to point out he said the lack of security around accounts could allow peoples information to be hacked or people could be targeted in other ways also referenced by some of the senator he said, quote, it is difficult to get a man to understand something when his salary depends on his not understanding it he was of course talking about misaligned incentives and why the company hadn't done enough to protect user data guys >> and interesting, we see twitter in a weird spot of green in today's market while the nasdaq remains down 4% where it's all hour. tomorrow we'll be hearing from
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airbnb's brian chesky speaking about inflation. average damyerate, this is going to be in focus because we know this is a number that's been creeping higher with hotel rates. >> you've got to come back to what united said it does not appear summer is coming to an end it's that strong, travel demand. 130-point drop on the s&p. let's get to the judge in huntington beach >> welcome, everybody, to the half time report i'm scott walker, we're live today at the future proof conference an event that bills itself as the world's largest wealth festival a big hour ahead beginning with a another inflation gut punch, that cpi coming in hotter than expected we'll debate what it means for the fed in the h


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