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tv   Squawk on the Street  CNBC  September 26, 2022 9:00am-11:00am EDT

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go down into the middle of next year that's more something you might pair against a short >> dan, great to speak with you. thank you. dan niles. >> thank you, melissa. >> 13 seconds. make sure you do join us tomorrow we'll see what happens is that lesson up? 53 >> yeah. >> good job, melissa good job make sure you join us tomorrow "squawk on the street" is next ♪ good monday morning, welcome to "squawk on the street," i'm carl quintanilla with morgan brennan and mark santoli stocks do look for the fifth day lower, although we've had a wild ride on cable today, approaching 1.03 the two-year hits 435, oil got close to 77. futures point to a fifth day of losses as yields rise and a pound hits that record low >> plus, searching for tea leaves from the fed. investors closely watching
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central banker comments today, and by the way, the rest of the week, with bostic yesterday predicting the economy can avoid deep pain. >> and apple's manufacturing shift announcing that it's going to producing the iphone 14 in india instead of china >> looking at the markets, s&p was down about 4.5% four straight days down we've been watching, on alert to see which things crack and cur cur currencies is an easy target >> the macro-forces that have been pressuring stocks have remained there n place so it is the strength of the dollar rampaging higher yields still moving in an unfriendly direction what it's colliding with is an equity market that at least in a very short-term tactical basis has started to look a little more oversold and washed out and people trying to pluck out whether that's enough to provide for a bounce or more than a bounce i look back to the june 16th
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lows, where just above those, what's done better, what's done worse. you know, software's lower than it was transport's lower than they were consumer and housing oddly higher than they were back then. but it's all nip and tuck. it's not as if there's a real strong story usually, when you get a retest attempt, you're looking to see fewer stocks make new 52-week lows at the same index level and this idea that downside momentum is not as strong, the urgency to sell is not quite as intense it remains to be seen. let's put it this way. it seems coin-flippy >> the s&p and the nasdaq 100 flirting with a retest of those lows, certainly closing higher and not testing where the s&p is concerned that intraday, june low, but the dow closing lower than its previous june low, making a new low for 2022 and to your point, dow transports as well, which you definitely want to get into first, but inflation, earnings, valuations, you got china, taiwan, rates in
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the fed and other central banks, nuclear threats coming out of russia in the past week. you have had unrest in iran and now the possibility of a currency crisis. am i leaving anything off the table in terms of the macro picture right now? >> plenty of watch and that's what strategists are trying to process. goldman's david costen saying, our year-end target is 3,600 but 3,150 would be their bottom level and mike wilson, another monday morning victory lap literally writes, can you hear me now it appears investors have finally gotten the message with a pivot undeniably off the table. still looking for a range of 3,000 to 3,400 >> pivot undeniably off the table right now and it's all contingent on the next series of inflation numbers. the market -- whether it's been told and believed it or not, if you start to see downward trajectory in the inflation data itself, the market's going to try to attempt to say, we can see the end of where the fed's
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going. now, that doesn't mean it's going to be right but i think it's going to attempt that trade again. >> it's interesting because we've been having that conversation and certainly this idea that inflation data is a willing indicator, interesting note of sgh macro-investors last night, especially tim, he noted that fed leadership is going to be focused solely on price straight right now and the data now is likely to reinforce that focus, and he actually stripped out with the cpi, he stripped out food, energy, shelter, and used cars and sttrucks and if y still look at that chart, it's still pretty parabolic right now. >> it doesn't look friendly. the other piece of it is, the fed was target gasoline a few months ago gas gasoline's crashed now they have this employment forecast, they have to soften up the labor market, let unemployment go higher employment itself is a lagging indicator. you're targeting the things that move lasts in order to achieve
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the job of inflation getting back into your target zone it's a tough mix and i think they have to talk as hawkishly as possible and persuade the markets that the market should not get comfortable and so far that's working and we'll see if the data give us any reason for that to tilt >> that's exactly what citi says this morning as well scott croner, who we talked to from time to time, the fed is using its voice as a policy tool, we need to acknowledge the impact that may have on behavior it causes us to rethink our view towards a severe recession, previously about a 5% probability as opposed to a base case mild recession in the first half of next year but the way, the tone that's coming from the fed is causing some desks to think maybe we need to revisit our model. >> which also, morgan, to your point, is the idea of, if that's going to be the presumed path and that's going to be the fed's stance, where's the dollar going? is it going to take a break, even though it looks like it's completely gotten stretched? what market-wise happens to
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disturb this idea that the fed can just continue in lockstep to raise rates? and so, i think that's the other thing that makes people a little bit uneasy is that the velocity and the magnitude of these moves of yields and currencies moving beyond multidecade bans is uncomfortable. so far, i don't think you could say anything's broken. citrix having to take a little bit of a hit, and the banks taking a little bit of a hit, that's nothing if that's the kind of thing you see. >> i've seen a few notes in the last 12 to 24 hours suggesting that when you start to see these volatile moves in currencies, for example, that can sometimes indicate the second leg of a bear market, which depose back to the debate, at least where equities are concerned, as we're retesting june lows, whether it is a double bottom or whether we're going to see a bounce because equities are oversold, arguably, right now from a technical standpoint as well and then maybe move even lower dow transports, we touched on it
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briefly before, a fresh 2022 low. you can argue that the transports right now, and fedex was the canary in the coal mine, but it's doubled the losses just this month of the dow and the s&p that this is really flashing warning signs where the economy is concerned, where the possibility of a bigger recession is concerned and you do have some of those walks that follow dow theory very closely, pointing to the dow, testing, reaching a new low as a very negative sign moving forward. >> right and you know, freight rates are crashing all the things you were concerned about, you thought that was the problem a few months ago, which was these tightness in the logistics markets causing friction and inflation. it's now the other thing we're worried about. things like u.p.s. have followed fedex to a degree in the stock market breaking down a bit >> we're going to stick with the markets here with all of the major averages poised to open lower this monday morning. let's bring in mark makepeace,
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who manages $84 billion in aets a assets and joipzns us here i do want to start with more of a global lens and specifically looking at the uk, which you have some deep experience with and also europe. and sort of get your sense on the fiscal stimulus package we're seeing coming out of the uk that really sends gyrations through the global markets, the moves we're seeing there and the possibility that we're already in recession when we do look to that continent >> i think you got to remember, you've got a new prime minister, and new chancellor, and this is, you know, weeks after they come into power that they then go beyond what was expected of them and that's caused the shock in the market that's surprised the market, and you have had that reaction but you're clear here, you've talked about some of the issues, you know, are we heading for a recession? should governments be pushing for growth more?
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or should they be focused on inflation? and here, i think we're going to see, you know, the government clearly trying to promote growth and now we're looking at the bank of england to say, are you serious about inflation? because so far, the bank has been, i think, timid is the wrong word that's too strong a word but the bank hasn't been as strong as the fed. and i think the market is now looking for the bank of england to step up and have a much stronger approach to increases in rates and much stronger approach to trying to tackle inflation. >> and of course, just this morning, we're hearing about calls from some politicians in the uk to step in where currency moves are concerned as well. or to step in where this entire conversation is concerned as well it's pretty incredible because here in the u.s., the narrative has been that the fed has been behind the ball. now the fed's tightening aggressively, and we have other central banks tightening behind
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the fed and catching up aggressively as well >> and you talked -- i mean, look, the strengthening of the dollar, that's continuing. and whilst the fed remains ahead of the rest of the world, that will continue. and the pound, yes, it's fallen with this decision, but it was falling before i mean, we've got to remember, it was only a couple of months ago that the pound was at 130 and before that, 140 to the dollar and now we're seeing it down to, in the asian markets, under 1.04, and really only coming back a little bit because the market is expecting the bank of england to do something if the bank doesn't step in, i think we will see parity to the dollar >> that was -- that's partly why it arguably bottomed this morning was these reports that it would at least get a statement today and it didn't sound like the bank denied that would be coming today. >> i think they will try and talk the market up a little bit to start with, but i think their
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next committee is in november. they can't wait until november to take action so, i think the market is looking for strong words and going beyond that to see them start to take action before that november meeting >> we have had this -- we have had this world where, i mean, you have had these eruptions in individual areas but it's really a similar story almost everywhere global correlation is very high among equity markets, among bond markets, i mean, one of the reasons, arguably, u.s. yields are as high as they are is what's happened to euro yields, everything else. what's the asset allocation message from that? because you've lost in stocks, you've lost in bonds, a lot of the former models are being challenged right now >> they are. they are and if you look at the old 60/40 approach, i think you've unde underperformed, apart from the
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2008 financial crisis, look at the last 25 years, we're close to that range. remaining diversified but thinking about some of the defensive areas, i think, is important but also taking account of the strength of the dollar you know, whilst the dollar is strong, the u.s. remains a safe venue. and i think many people around the world will be looking to that while there is such volatility in the world, and it's not coming from just one issue, we've just got so many issues. but i think thinking through these issues, i mean, china, it's -- will china actually open up will it keep going back to these lockdowns? and that affects demand not just in china but around the world. and we're also seeing disruption in europe itself i mean -- >> italy >> italy elections i mean, everyone at the moment is watching all these changes and trying to work out -- i want
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to say diversified, i want to be defensive, but also to your point earlier, it's -- we can't see the fed keep raising rates there comes a point when they've either tackled inflation and will start to see the end of it and the market will then respond, once it can see the end of the tunnel. >> of course, italy is one to watch, not only because of the election and the perceived outcome there, but also a mountain of debt, as you have interest rates rising. as we have this conversation, what does it mean for indexes, stock indexes, that investors have just piled into, in recent years, and whether the competition needs to be rethought? >> if you think about, look, these markets have changed so much, and yet most of the indexes we use today were designed 30, 40 years ago. i always give the example, we think a small cap in the u.s., which has been underperforming, but must come back at some
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stage, and our measure for that is the russiell 2000 and yet the russell 2000 not only captures the bottom 5%, it tells you more about microcap than it does small cap. at wilshire, we're trying to bring in new measures because technology has completely changed the industry climate change is having its impact if you think about electric cars and the automobile industry so, lots of these factors over the last five, ten years really are captured properly in the indexes that exist today and i think if you're going to analyze markets properly, you need better tools. >> what a time to be having this conversation mark makepeace, thanks for being with us today. >> a lot going on this morning when we come back, we'll talk about a setback for china. apple announcing it has begun manufacturing the new iphone 14 in india as it begins to diversify its manufacturing base got some calls today on lyft, apple, amazon, some good news in
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casinos, and fed speak returns today with bostic and meser. more "squawk on the street" in a moment
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big shift for apple today, the company manufacturing its iphone 14 in india, moving some production away from china apple issued a statement saying, "the new iphone 14 line-up introduces groundbreaking new technologies and important safety capabilities we're excited to be manufacturing iphone 14 in
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india. meantime, jpmorgan today, guys, says demand for the phone, quite elevated for the pro models, weaker for the base models, with the pro and pro max lead times pretty much in line, robust demand for the watch ultra, as we keep a very close eye on this new product cycle. >> yeah, i was just going to say, it continues to push back against the, you know, they're pricing people out, there's not a need for a refresh, or upgrade cycle. yeah, i do think the way the stock has acted, it's almost acted as its own defensive asset class relative to anything you could say is like it it's actually expanded its valuation since the june low just this general sense that apple is going to figure it out, product cycles and financially, it's very much in the stock, and i think it's very conspicuous that it's not backed down to the
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degree that almost everything else has alongside in the indexes. so you can take that as, hey, you always want to buy relatively strength, but i said the other day, like, what would keep apple from trading at 19 times earnings instead of 23 that would still be a generous valuation. and yet, it would kind of hurt the indexes. we'll see if it happens. doesn't mean it has to, but at 7% of the s&p-plus, it's just very interesting outlier at this point. >> exactly you see a bigger downdraft in apple. you see a bigger downdraft in the broader market we've talked about so much >> it's what you see a broader downdraft in the index so the market has taken valuation pain already. that's where the earnings risk is the valuation risk, if you ask me, is still in the apples, of course, amazon, tesla, can trade wherever they want, relative to earnings it doesn't link up very closely to what they're going to report next year but that's the interesting piece. take out the top five of the s&p and you're two multiple points below where the overall index is
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because that's how relatively expensive the handful at the top are. >> meantime, we talked on friday about them sponsoring the super bowl halftime, taking it from pepsi and what that may or may not mean for their future involvement in football at large and of course over the weekend, rihanna confirming she'll be the headline act as she tweeted to her 105 million twitter followers. interesting. i mean, that's -- it's getting very, very interesting, their marketing shift. even on a day where jerry jones is in the house. we're going to talk to him later and they do away with the pro bowl >> right lot of interesting -- it's fascinating, though. if apple does make a bigger play in the nfl, along with amazon, it sort of helps them. they're getting more entrenched in a certain area but it really hurts the other folks who are losing that audience to whatever degree they are. i find it funny that the excitement over apple and the halftime show, did we talk about
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what it meant for pepsi all those years? we buy pepsi stock because they do the super bowl? >> but pepsi doesn't have a streaming arm. they aren't trying to diversify into that business, which i think is notable about apple you mentioned amazon i do just want to flag the fact that amazon basically said this weekend they're going to roll out essentially what is a second prime day. speaks to this inventory glut we've been hearing about from retailers. got to wonder if that's another canary in the coal mine. >> early access sale, i guess, is what they're calling it, october 11 and 12. we'll see how much that disrupts the holidays >> ahead of halloween and christmas. >> exactly >> well, we are on track now for a mixed open with a nasdaq poised to actually open a bit higher right now the dow, lower the s&p, lower keep in mind, the dow closing on friday at a new 2022 low we've got more "squawk on the
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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. we're going to do all that we can at the federal reserve to avoid deep, deep pain, and i think there are some scenarios where that's likely to happen. this is something that is going to be hard it's not going to be easy.
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there will likely be some job losses, but i think if you look over the historical history here and our economic experiences, there's a really good chance that if we have job losses, it's going to be smaller than what we've seen in other situations, and that's what i'm banking on >> that was atlanta fed president raphael bostic on cbs's "face the nation" over the weekend. saying, look, soft landing is not going to be easy there's going to be some pain. fortunately, we're going to get 20 more fed speakers to see if they agree, just this week >> it's incredible, the amount of fed speak that's scheduled to happen this week, and i think there is this expectations that it is going to be a very similar to message to what we've heard several times over now from the fed chair powell about the fact that they're going to have to inflict pain, up for debate how much pain, but pain on this economy to bring the inflation numbers down and we do know, even though it's not showing up in the macrodata, there are companies cutting jobs right now. >> for sure, and that's one of
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the other ways that this kind of course of fed speak does operate which is on the hiring, firing, investing intentions of ceos that's, without a doubt, if you're looking at the fed's collective economic forecast for, you know, 2023, you think that's what they're going to navigate toward and that's what they think is going to happen if they get rates up to where they expect, you're probably going to moderate your own views of top line i do think, though, if there's one slight benefit to having 20 fed speakers in a week, it's that s&p is down 10% in two weeks, like 15% in five weeks, and two-year yield is up, in other words, market's gotten the message here so they don't feel quite as much if they need to move investors off of an entrenched, you know, errant position as they did a couple weeks ago. >> also, it's interesting, bostic sort of hinting that it won't be as bad as the last crisis kind of what john paulson told
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bloomberg over the weekend even if housing falters, it may not lead to systemic risk. >> i think that's undeniable with bostic talking about employment, sure, tighter labor market, but does that mean the fed has to go farther to get wages under control? snip >> there's the opening bell and the cnbc realtime exchange comstock resources celebrating its 525th listing anniversary we're going to be joined by the ceo and majority stockholder dallas cowboys owner jerry jones in a little bit. omega flex, maker of flexible metal hose products. not too hot at the open here coming off of four straight losses one bright spot will be casinos. macao is now going to allow tour groups through for the first
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time in almost three years >> it's certainly notable. and you can see right there, now that the -- we did get the opening bell, we do have some pretty big jumps in those names, despite the fact that for the s&p, we're trading lower, fractionally lower, down about a third of a percent right now but every sector in the s&p is in the red, mike. >> yeah. and you know, some of the sort of more beaten down and heavily shorted areas of the market do get a lift you got to kind of, basically, as many one-month highs on friday's close in the s&p 500 or across the market as you had any time in the last couple of years, so a lot of stuff was punished pretty hard clearly the indexes themselves are still getting down near not quite toward where we were friday's lows. real estate has been a real struggle, real estate stocks i noticed some of them are near the lows these are dead financed assets, long duration assets, real
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yields are much higher and for all the reasons that you say that, you know, the fed has to do this for the economy, real estate's in the sort of the wrong place for some of that stuff, but the fact that real yields, and inflation adjusted yields are doing well is one of the bullish points people are making about bonds, the idea that you're getting paid in real terms to own bonds right now the ten-year, 3.7 or something like that. it tends to coincide with periods when the nominal yields start to peek out. that's the hope, the expectation. global yield is not cooperating with that picture, though. >> i mean, just to your point where real estate is concerned, which is the worst performer this morning so far in the s&p, 30-year fixed mortgage rate has doubled. doubled in the past year and i realize housing was hot, hot, hot just this morning, you had a stat this morning that brent prices are decreasing. >> they got below $85 for the first time since january of course, that reversed this morning. but yeah, global recession worries definitely took its
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toll wti got near 77. and that's even with the pressure that we may get from hurricane ian, which is going to be cat i, going to be in the gulf of mexico probably by wednesday and we'll see what impact it has on refining. we've gotten some, with the bp fire last week and a couple upticks in gas prices in the midwest as a result. >> ti and brent are higher this morning, despite the fact that energy stocks do seem to be taking it on the chin. names like generac, trading higher, as you expect to see when you have a hurricane moving through. second hurricane in a week, i should note. if this hurricane, hurricane ian, actually stays the course that's been modeled right now, poised for a potential direct hit based on some modelers' forecasts on tampa, for the first time in many decades, we have estimates out there where
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the insurers are concerned that could lead to $30 billion in losses if you were to see significant flooding in that city so insurers are something to watch too. the other one, guys, i would say, is boeing, which actually dropped 5% on friday it was pretty dramatic move for that stock as well we don't talk about space and defense with boeing as often because it is not typically the thing from an investor standpoint that moves this stock. it's usually the commercial business but you have that giant, mega nasa sls rocket. it was supposed to launch tomorrow morning now it's being rolled back another launch attempt, there's been a couple of them. now it's being rolled back in anticipation of this hurricane so that launch date has pushed again. depending on how that rocket launches and how successful that artemis i mission is, that could move boeing stock. boeing is the prime contractor >> pretty fascinating. one thing from a market standpoint that got a lot of discussion over the weekend was the amount of put protection on
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friday record volume going back to the beginning of data in the '90s. is that -- i mean, do you take it as a bullish indicator? >> yes, all else being equal, it's certainly bullish if you look at the overall, kind of how many puts are people buying relative to calls and how has that been? it's at the upper end of the range. it's not necessarily the kind of thing where you see it being this climatic rush for protection so, i know people were trying to kind of caveat that data point a little bit in terms of where the put volume came from, that's a massive amount of put. i think the basic point is, institutional investors have relatively low defensive equity positioning. some of that is through hedging. a lot of it is just they took their exposures down, and that's maybe moderated some of the velocity of the downside that we've gotten and maybe depleted the demand for immediate protection but if you're putting all the
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signals together and say, does the market look like it's more fearful than greedy? absolutely you saw the retail investor survey last week some of the other stuff out there, in terms of the extremes of negative breadth, you know, they're clicking in that direction. i think the big argument is, what do you do with the bounce also, by the way, you have these downside targets, like mike wilson and the allow 3,000s and other people, dan niles on our air this morning had something similar to say, and you can't, obviously, disprove that that's where we're headed f. if you get a big valuation and earnings hit, that's where the math brings you. it is worth keeping in mind that whatever the ultimate low is in the index, typically, the market doesn't spend a ton of time there. right? so it's like, what are you playing for? are you playing for, make sure you catch the last move lower or the next move lower? or are you saying, on a three-year basis, if you buy the market down 20%, you're more often up than down and you can get some yield up front on the
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bond side of things, and so i think there's a tactical picture that's very fast-moving and there's a strategic one that allows you to kind of figure out how the risk-reward has changed with what's happened in the markets this year. >> as you're speaking the s&p is turning positive, albeit fractionally it does seem like the trajectory near term, to your point, is a bounce in the s&p, given the fact that we are looking at these oversold levels, and also to your point, from where we go from there, sort of delineates between the bulls and the bears. but i was going to say something, and i totally -- this is what happens when you're not sleeping because you have a 4-month-old at home. >> in terms of levels, it's interesting because btig last night, jonathan krin skooe, says the june low got a lot of attention but he's more interested in the 200-week which would take you to 33,585 >> if somebody told you today that the downside was the
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200-week moving average, 112 s&p points down from here, you would say, give it to me every time. the plausible next downside target seemed really scary and it doesn't right now you do, obviously, in september and october, when the market's already been oversold, when you do have this dollar pressure, you do have the capacity for casc cascading-type moves and oversold markets are the kinds that get out of hand to the downside sometimes but it's very hard to handicap that kind of thing. that's just a little bit of an out of left field type of dynamic. >> yeah. as morgan said, still circling here around 3,700. let's get to bob pisani this morning. hey, bob >> good morning, guys. s&p is positive and the dow is negative now, the good news is tech's really helping, so salesforce, for example, microsoft, apple, they're really helping the dow out, what's really weighing the dow is united healthcare, down about $8 and that by itself is almost enough to put the dow in the negative territory, so
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that's why the dow is not in positive territory right now so, take a look at the sectors right now. ark on days when the market tries to bounce, you usually see ark, that's a very good indication, when ark opens up 2%, now 3%, that's a sign the market's trying to bounce. banks, a little stronger tech, microsoft, apple, salesforce helping the dow energy down fractionally and male metals and mining, more stable today. that has been a disaster, energy and metals for the last couple weeks. we know how dramatically oversold things are. every indicator over the weekend, when people were evaluating, was a mess momentum, rsi, relative strength indicators,52-week lows, almost a thousand on the nyse, almost 40% on friday. breadth oversold that's advanced decline line stocks above their 200-day
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moving average and 50-day moving average. very few, simply put so, really, oversold so what do we need for some kind of bottom? the three points i kept hearing over and over on the weekend was we need some kind of rate stabilization, obviously with a two year over 4% is a problem. pc on friday the cpi, october 13th. and q3 earnings. so, we can't have wholesale downward revisions i'll tell who you what the problem is let me show you the s&p 500 earnings the forward earnings estimates are $232, and they've been relatively stable. they haven't fallen apart, they're lower than they were, but stable compared to a couple months ago when there was massive concerns the forward multiple is what's come down dramatically from about 17 to about 15, just below 16, that's what's come down, what people are willing to pay for a future stream of earnings. the risk to the market is that downward earnings, that 232, goes down a lot of people have been reducing that, some have it as low as $200 you get to $200, times 15, and
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you get $3,000 that's how the lower band, how a lot of people are getting to 23 3 th 3,000. watch for forward estimates. what's changed since june 16th we touched the june 16th lows yesterday. amazingly, utilities, consumer dischris d discretionary is higher, materials and energy have been down, these are the cyclical sectors, semiconductors also down in cyclical and transports, we know that, a new 2. 7% that was a new low on friday >> see you in a bit. still to come this morning, dallas cowboys owner jerry jones and the ceo of comstock resources rang the opening bell today. they're going to join us in a moment as we go to break, let's check bonds. two-year did get to 435 this morning, settling back now to about 420 and change the british two-year had a range this morning of 40, almost 40
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the most powerful investment event of the year is just two days away. cnbc's delivering alpha comes back in person on wednesday, featuring economic leaders, policymakers, and the world's best investors talking about how to navigate this market. you can scan the qr code on your screen to register we'll be rig bk.htac
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welcome back oil prices have come down substantially since june, as you know wti now positive by only 5% on the year nat gas only hitting its lowest levels since july. heating bills are expected to rise this winter companies like comstock resources have helped the u.s. reach record nat gas production this year. and for more on the markets and of course maybe some football, we're joined this morning by dallas cowboys owner, majority stakeholder in comstock resources, jerry jones, as well as comstock ceo jay allison. celebrating 25 years of listing. congratulations, guys. >> i told jay earlier, it seems like i'm in the habit of riding these greattraditions to a
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little bit of gain cowboys, of course, we've ridden that great tradition to beyond anything we could have imagined. and really here comstock is 25 years on the stock exchange, and we've ended up with more natural gas in the right spot than anybody in this country, and so it's great to be riding tradition at 25 years in this case >> you know, 25 years and 9 months ago, you'd have never thought we'd be here at the single largest financial institution in the world, and having natural gas, which is, you know, it's american gas. >> does this cycle, this energy cycle, feel different than anything you guys have been through? >> no, i think we've focused on natural gas since 2008 we're one of the first three to drill the hanesville bowsier if you look at our footprint where we are to the gulf coast which is where $20 million of
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lng facilities are being built, we have the biggest acreage position to provide lng shippers with gas we've just been more of who we are, which is a dry natural gas company. >> it's pretty amazing we're talking about record u.s. natural gas production we're seeing and yet the price is so incredibly elevated, even against the strong dollar and even as you've seen it come off a little what's your outlook for that >> you know, before pre-covid we had about 120 rigs drilling for gas. now we have about 160. we have more rigs drilling for natural gas. i think if you look at the demand, once russia invaded ukraine, what happened is, just like an epiphany, you realize you need natural gas russia provided about 50 mrs went to germany, the rest went to eu. i think what's happened with the u.s., we have cheap gas, it's abundant and now i think we can
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provide that to our allies across the shore, either to europe or asia we're set to do that and prices will fluctuate. >> you say you're set to do that, the infrastructure is there. it seems like prices peaked right around the time where germany said we're basically ahead of schedule interms of storage for this winter, but on a longer term basis, can we get it around the world to where it needs to go? >> yeah, i think if you look at the gas price even before the invasion of russia, going into ukraine, the gas price in europe, it was probably $80 per cubic thousand feet. here it was maybe $6 or $7 they had a weather issue it's always weather-driven then it spiked up to about $160. now it's about $80 i think with the recognition is that you either have to get this gas to the eu from qatar or you have to get it from the u.s. you probably won't get it from australia, so you'll get it from us
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that's why the single largest financial commitment in all of '22 in the whole wide world is an lng facility off the gulf coast. that's your answer it will take us three, four years to provide that gas to our allies, but as jerry knows, i mean, he's a contrarian that came in in 2018, made an investment and doubled down in 2019 so he could look around the corner >> yeah, and i do want to get your thoughts on that as the biggest investor in this company, jerry the fact we're talking about natural gas, but oil was until a little while ago was the big discussion. >> yeah. and i don't know -- but i think on an individual basis i put more money into natural gas than anybody living i've spent over $1 billion since the last time i was sitting here, making an investment in comstock
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that allowed us to change at comstock we were able to go and acquire more at the right price natural gas holdings, reserves, if you will we have enough gas, comstock does to make a big dent into what germany needs in this country. and so i'm real excited because of where the natural gas is. it sits right by the gulf coast. the amount of it and the cost that we have we get it out of the ground and get it in that pipeline cheaper than anybody else there is that's why we decided to make the commitment we've made and consequently, these are great times right now to be doing what to be getting ready to supply lng in other places with natural gas. this really is freedom gas >> you have this huge new marginal buyer do you worry about global recession? that's weighed on energy prices,
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weighed on oil the last few months >> i've always thought there's no way that i know what the world or even internationally the market is going to do. so our company every day operates as though it's $2 gas if it goes to $2, we'll produce the gas. we can make money. if it goes higher than that, we can go there now is the time to take the dollars you're getting and reinvest that into more natural gas so that you've got it for the days when it is $3 and $4. >> i do want to get to the nfl, but before we do that, quickly, do you feel like the government is doing enough to support your efforts, especially when it comes to exports >> we have great reserves in this country, but the politics will keep us from having them available economically for the benefit of the country if you would get your political
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pot right so that you could get more pipelines, so you could get more of this gas to the market, then you would have a better situation. i think that -- i'm playing to that the fact there are restrictions. that creates opportunity and that's what we've taken care of with my investment in comstock what i'm excited about is as we move forward of increasing our volumes, i think that we can be double our volumes here within the next 24, 36, 48 months in comstock and i think we have the ability to do that we definitely got the reserves and the gas to do it >> the good thing is, you can ring the bell here and go to metlife tonight, right >> the giants have a lot to say about what's happening tonight i'd almost rather be solving this gas problem than i had solving that problem against the
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new york giants tonight. but we know what's at stake as a team cooper rush is going to be starting tour dak prescott he did real well last week the giants will have a lot to say about this but it's a big game for us while dak is away and mending his thumb, we need to have some wins and we need to start right here. >> how are you thinking about, i mean, the ratings alone, the ratings on amazon, the upsets, how that has helped parlay bets and things getting busted. one of the most exciting beginnings to a season i can remember >> when i bought the cowboys i could have never, ever seen what was going to be the continued interest and visibility of the nfl. and as less people watch tv, a higher percentage of them watch sports and watch the nfl that's what you're seeing with our thursday night package with
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amazon so, what the nfl wants to do, what the cowboys want to do, is we want to get as many people in front of that television set in the fall, thanksgiving, christmas, that's the time of year the decision-makers need to be there we want them here in this country and really internationally as well. we need to take advantage of the interest in this game to expand our influence in the nfl >> it's going to be exciting tonight. congratulations again, guys. >> thank you thank you for having us. >> we'll take a break here and take a look at the markets some small chop, the s&p riding bu wk.thpoint game to start is syee don't go away.
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but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire good monday morning. welcome to another hour of "squawk on the street. i'm carl quintanilla along with morgan brennan dow is a little red but 1% gain on the nasdaq. we'll watch that closely as we've had a pretty crazy morning in currencies and yields and a lot of fed speak headed our way over the next five sessions. >> that's right. we're 30 minutes into the
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trading session. here are some big movers we're watching starting with the casino stocks as macaw looks to ease covid restrictions we'll have more on that later this hour. but wynn and melco up. pg & e up 0.50%. lyft can deliver industry level top line growth. those shares are down 2%. the broader markets, the major indices hoping to avoid their fifth straight negative session. our dom chu is back with more. >> good morning. so, we've talked a lot about this idea that the dow jones industrial average at this point is trading at the levels it was roughly at in february of 2020 before the virus pandemic and all the market turmoil that happened in the wake of that so, let's put that in context
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for the s&p 500. everyone's watching that 3636 level. why? it was the intraday low during the june lows during this pullback we got above 3700 in the last couple minutes here. if you want to take a look at the three-year chart, this level over here for the s&p 500 pre-pandemic was roughly 3400 or thereabouts. we'll call it roughly that amount if you're talking about an s&p at 3700, if it were to fall back to where it was pre-pandemic, you'd have another 300-point loss from here, so call it roughly maybe an 8%, 9% drop from where we are right now. that's where we stand with regard to the s&p 500 in context of the june lows and where we were pre-pandemic. if you take a look at we drill down into some of those trades, it has been very much about a growth underperforming value over the course of this last several months year-to-date period for sure it's gotten a little tricky now because over the last couple of months, we've seen a little bit
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of outperformance in value-oriented stocks that has now reversed and growth has kind of outperformed a little here. the gap is still fairly large between where people are seeing a little bit more of that downside risk. it's been very much growth and underperformer so far in 2022. if you look farther beyond that into specific sectors, west texas intermediate, west texas crude prices are back to where they were in january this year we're up 5%, 6% for wti crude on the year massive move higher on crude prices has leveled after being almost flat. we'll see if that kind of disconnect, remember, this widening out of this gap here starts to close up a little bit. and then you've got to talk about what's happening in currency markets the charts for the british pound and the euro are just stunningly bad at this point right now, which is leading some traders to look at whether or not there's a possible bottom in sight that pound hitting a fresh
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record low here, carl, is certainly something a lot of folks are paying attention to right now and what impacts it will have on many of those companies that do business on both sides of the atlantic and how they exchange their profits back and forth, carl back over to you guys. >> a huge story, dom a great place to start with our next guest let's bring in jim o'neill, former uk treasury minister, goldman sachs asset management lord o'neill, great to have you back i wonder whether or not the pound and gilts are the two most important numbers on your screen >> i can't resist in saying to you, carl, over 30 years every day of my life focused on this stuff. the one thing i learn is they go up and they go down. right now to say anything with more confidence about the next twist, i think it's pretty hard. the pound is really cheap. it's fallen a long way but, my god, uk policy seems to
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be a real mess given it's five weeks off to the next bank of england rate meeting, in order to salvage the pound's decline, we will have to have, i think, something that's not happened since the bank became independent, which is an inter-meeting move to raise rates. we have plenty of intermeeting moves to cut rates, but we have not had one to raise them. but the bank has been -- even without the fiscal largese we had announced, the bank has been lagging the fed, as you know certainly if the bank of england would have met the day after the new chancellor announced the passage friday, i'm sure the bank would have done at least 75, possibly 100 that's what the markets have got priced in, what's needed to begin to rescue this mess. >> do you think it's -- it sounds like you think it's reflecting a policy error on the
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part of the new administration >> you know, it's a combination of audacity, intellectual ambition, cavalierness, and to be frank, also what seems to me like a lot of naivety. for them to be unaware of the circumstances in which they were unveiling that kind of size of package is really -- i'm still sort of struggling to fully comprehend it three days later, despite having been more focused on it given my life these days than i expected to it's amazing it suggests there's a small group of quite young intellectual advisers that are driving these guys to not realize the markets could do what they could do. let's not forget, friday alone i think is the biggest single decline in the day after a uk budget ever. it's pretty astonishing.
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>> jim, it's morgan. we could talk about the uk and the incredible moves we're seeing in the pound, but you can have that conversation the world over, especially where the dollar is concerned. the incredible strength of the dollar, is that sustainable here or as you see more central banks move to play catch-up, could we see some of these dynamics change and reverse in some of the directions where volatility is concerned >> to be honest with you, i've misread the last rise of the dollar i didn't think we'd get to where we are but obviously with the fed getting even tougher and the dramatic repricing of the foreign exchange market is simply following the message of the fed. but linked to the spirit of your question, what i really get drawn to looking at it this morning is we've seen a big decline in quite a few commodity
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prices the past few weeks. and the five-year inflation survey is now seemingly established that below 3%. so, i wouldn't want to be the first time i bought dollars here, that's for sure. trying to chase the bottom of the dollar has proved to be a very costly exercise on many occasions -- sorry, the top of the dollar it's proving to be so again here it's clearly dramatically overvalued you've got a number of asian central banks now deliberately trying to stop it. so some of the ingredients are beginning to appear. that might also be indirectly why the pound is suffering even more because traders might be thinking, well, we can't really short the dollar against the yen or -- sorry, can't really go long dollar yen so we have to try european currencies. i'll tell you, i'm just glad i'm
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not in it every day anymore because it would be pretty tricky, that's for sure. >> you may not be in it every day anymore, but as somebody who has watched these types of markets unfold over the years, over the decades, does this remind you of another period in the past when you have strategists, as i've seen notes this morning, suggesting we could be entering a next chapter of a bear market given the moves we see in currency does it feel that way to you >> to be honest, i've got a lot of my old pals, a few of whom around the foreign exchange market, whether it be traders or hedge funds, must be ecstatic, it seems to me, in the near decade i left and the foreign exchange market has become so boring, it's kind of come alive again. the foreign market thrives on macro economic uncertainty and unpredictability and that's what we've got. in that sense, the uk move is a bit of a gift. the uk seems to be trying some
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version of a repeat of the reaganomics era, which i first came into the business, but without the bank of england being tougher, i think a lot of people who are making that parallel are wrong i used to have these four different quadrants, policy mix and monetary policy, with the bank being relatively timid. it's a bit more like the lira pre the european monetary system before eu. it makes it tricky because, as i say, if the bank were to meet tomorrow, and who knows, it's not out of the legality of them to have an emergency meeting sharply, the pound would bounce, i suspect, pretty quickly. but i suspect the bank of england will be really nervous about doing something like that because that would create its own political attention with the government and commentators.
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so, it's very tricky but for traders that don't mind the volatility and losing every now and then, it must be a bit a period of relief, i thought, given how boring the foreign ex market has been. >> i know. we forget how quiet it had gotten >> this is how it used to be every other day, guys, in my glory days maybe i'll have to make a comeback. >> finally, jim, on a more serious note, how are people talking about potential resolutions regarding russia/ukraine or are they even going there yet? >> i mean, across europe, as i'm sure is probably the case in u.s., serious discussions, i mean, putin is being now regarded as an extremely fragile position and that he does from one bad calculation to another and it's making some people
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think we are short of the absolute worst response of putin, which of course would be to do some kind of devastating attack outside of ukraine, people are starting to think this is kind of coming to endgame. now, i'm a bit reluctant to say that given how unpredictable putin seems to have been by his standards of this -- since early this year, but it does look to me as though he's got very much the weak cards and i suspect, i don't know whether you guys covered it, there wasn't enough to focus on. incredible rumors all weekend about a coup in beijing as well. but linked to that, if i look at the meeting that a lot of asian leaders had with putin last week in asia, i think it was in kazakhstan, i think putin is losing his support from people that he thought were allies as
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well so i think he's in a very, very tricky position. >> yes one more curveball for markets to handle. jim, we covered a lot of ground. as you said, there's a lot more. we'll see you soon thank you. >> take care perform good luck, guys >> we just talked about currency, but now let's talk about rates and fixed income the treasury yields continue to climb. two-year yields here in the u.s. hitting its highest level since 2007 joining us is goldman sachs chief credit strategist latvit thank you for joining us want to get your take on what we are seeing more broadly in fixed income, whether it is the treasury market here or whether it is globally, since we do see these moves happening somewhat in tandem in light of all the geopolitical discussion. >> yeah. look, i think it's useful to think about it in terms of the drivers in the back up we're seeing in the last couple of weeks. the move has been entirely driven by shifting policy expectations you really have to ask yourself, what's in the price and how much
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room there is for the rest of the curve to move higher from here for 2022, when i look at the very front end of the curve, it does seem to me that risk is fairly balanced, but there's clearly upside risk for 2023 essentially the fed's reaction is going to depend on two things one, how much progress you have on the inflation and growth funds. two, whether they are willing to essentially pause or even cut in the face of inflation that will be above their target. i think in both cases the risk is due to the hawkish side i do think the direction is still higher from here >> to your point, just looking at the short end of the curve, yielding over 4%, we just mentioned the two-year hitting highs back to 2007, but we have a four handle on everything from the five -- the one-year to the five-year. treasury yields right now.
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is it finally becoming a more attractive place for investors to put some money to work or are there still too many red flags >> no question about that. look, gas has definitely re-established itself as a very attractive value proposition for asset allocators what that means for risk assets is investors will likely be in a better position today to dial up a little bit the risk of a hard landing or demand a higher risk in the face of recession risk. but the return of cash as an attractive value proposition is nothing short of a paradigm shift in my view, but it is something that reduce risk incentives and probably means that readjustment has a little bit more room to go here >> how are you processing and telling people to think about reports about the leverage loan market, the big tranche that is riskly priced being in danger
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of, obviously, a rising rate environment, are we in some kind of danger zone yet or not? >> i think we do have a little bit of time to continue that transition so, the good news is that the debt servicing capacity within the broader leveraged finance space is the best it's been in two decades, at least. that being said, i think you're facing a new reality of a much higher cost of capital and by mid-2023, a lot of companies will have to refinance existing debt at dramatically higher levels our message has been pretty straight forward whether it's within the higher market with a preference for double rated companies that were cc rated or between bond issuers, we prefer bond issuers because of the greater ability to withstand higher funding costs. to answer your question, we still have a little bit of time. >> and just to dig into that a little bit more, i mean, given the fact we are seeing higher rates, is your expectation that
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there is a race now against the clock in terms of capital raise in the credit markets or is that something that is drying up quickly as we see rates move quickly? >> refinancing needs are very low all the way till 2025. if you look at the so-called maturity wall in the higher market, very it is to refi in 2023 and 2024. history suggests that companies do refinance a year to a year and a half before, you know, the debt is coming due that's why i said by 2023 you should see, you know, an uptick in primary market activity this year i think we're still on track for a pretty muted year in terms of new issue volumes we're down something like 75% on a gross basis relative to last year and even more staggering net supply is actually negative in the higher market, meaning the pool of bonds you can have access to actually shrunk year
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to date. by 2023, there should be a return to refi. >> interesting thank you for joining us today >> thank you as we head to break, here is our road map for the rest of the hour, including a lot more in casino stocks, which are rallying as macaw allows tour groups after nearly three years. plus, we're watching the energy sector. wti crude still trading around 80 bucks a barrel. tech stocks trying to bounce back microsoft, alphabet and meta, trading close to the 52-week lows dow went green for about five seconds. we'll watch that "squawk on the street" continues after a break.
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s&p up about 20 points casino stocks will lead us as macaw eases some travel restrictions our contessa brewer has more on that sector. >> mgm resorts, let's take a look at casino names mgm resorts is up. las vegas sands up 13% wynn resorts up 15%. melco based in asia, up 32%. sands china outperformed in this group, closing up 15% in hong kong the lift here is sparked by the news the macaw government will resume issuing electronic visas, making it easier for individual visitors to travel there the government is clearing the way for gradual resumption of group tours. that is a critical component of
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the casino resort business before the pandemic, about a quarter of its business was group travel this is expected to really pick up by the end of october, early november we'll begin with neighboring guangdong province and extend to three more provinces, including shanghai the government says it's hoping to consider other measures next month to allow more access from all of mainland china. the top macaw tourism official says he's hoping between 20,000 to 40,000 visitors a day by october 1st, which is a holiday there. before the pandemic there was an average of 113,000 visitors a day. so, still a big shift. for the first eight months of this year, visitation has been off 86% from pre-pandemic levels still they're going to have strict hotel quarantine requirements in place for international tourists not just american tourists, but think of those coming from malaysia, from japan, from vietnam and other places and the casinos in macaw are
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facing other challenges. there's still a crackdown on junkets over money laundering. they brings in the big high rollers. then the surprise bid from gentin for six existing concessions to license casinos there. this means an unexpected seventh competitor for those licenses. there's still a lot of headwind, but for today, enjoying a nice tailwind >> yeah, for today, certainly a reopening trade that we're seeing take place where china is concerned. contessa brewer, thank you for breaking that down for us. as we head to break, the nasdaq 100 up 1.3% here are the top gainers in the ndx, another china name, jd.com and docusign, airbnb and liduc group. we have more on the tech sector next
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tech is up to start the week, but still trying to recover from that september slide. watching the spyder technology select fund ticker xlk, top holding is apple relative bright spot in the sector as we talked about last
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hour rising rates, growing competition continue to wear down valuations in the space overall. our next guest says to stick with the blue chips. with rosenblatt's crocker barton good to see you again. i wonder whether or not you think the dollar is going to be a really important story for q3. it's certainly getting a lot of conversation over the weekend. >> i mean, certainly there's going to be some headwind, i think, for numbers for the international, particularly european focused companies yeah, i think that's the type of thing that you want to try to look past. hopefully what we're seeing now is not something that's going to continue to trend down hopefully will stabilize currency tends to be something you want to look past but currently there's numbers and noise around risk to currency as we update models into the end of the quarter. >> when you say stick with blue chips, not that those were your words, but what exactly do you mean >> what i think we're looking at is an environment where it's
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m more treacherous than any times in many years, to own blue chips. you've got a plethora of kind of new secular challenges, you know, emerging, let's say in advertising with competition from tiktok, new competitors getting into internet advertising with netflix, disney plus, amazon, you know, even walmart ramping up so, you have a lot of things to consider but you have to own tech, right? tech is the future the question is, how do you navigate that? i want to stick with -- have exposure to the best names at a reasonable valuation in my book right now, that's someone like an alphabet which, of course, has exposure to advertising which is economically exposed if you're willing to look longer than the next couple of months, this is a company that's here for the long term and at a great valuation. you can own it for search, you can own it for youtube video,
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you can own it for cloud, equity investments and things like waymo. that's one of the blue chips you want to think about when the markets give you these kind of pullbacks. >> barton, do you want to own those or be buying those on a day like today or wait until you get earnings in the next couple of weeks >> i think it's -- it's okay to own them now if you have any type of time horizon i think that clearly there's risk, increasing risk, as we worry about the macro into the earnings reports you know, that said, the stocks have reflected a lot of this already. and i think that you could be looking sell the rumor, buy the news type of situation you know, i don't know what the macro's going to be. it could be that we have a brief, you know, dalliance with kind of a slowdown that's not a real big recession or we could have a terrible recession. that unknowable means you could miss an opportunity if you wait too long don't try to be too cute try to get great names on pullback and your safety net is
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you're buying them at a great valuation and buying a business that will be here for the duration. >> speaking of pullbacks, meta today eyeing 140 it's pretty unbelievable the decline. obviously, cutting expenses. it doesn't sound like you believe there's a lot of operating leverage to be had >> my problem with meta is that secular competition issue. so, tiktok, you know, if you think that it is clearly the case that not all media trees grow to the sun and meta is used by more people on the planet than anyone, but that isn't an argument for growth and impacting an argument for something else picking up some of the momentum. i think we're seeing that in tiktok i think this is a company that at that, you know, time that we're seeing this challenge is also distracted by the transition to metaverse which i'm not sure anyone is a believer on wall street that that's going to pay dividends in
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an investable time frame can't control management because of the structure you have audience on the core facebook property. there tends to be no multiple that's too low when people worry about the sustainability of audience we've seen that in traditional media with the viacom of old, paramount is a different story i think those are why meta continues to plum new depths in terms of the multiple it can go to. >> that's a good summation of the challenges zuckerberg is facing good to see you. all the major averages trending higher. bertha coombs with an update >> here's what's happening at this hour. hurricane ian is closing in on the cayman islands before hitting western cuba ian is expected to hit florida's west central coast as a major
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category 4 hurricane on wednesday. in italy a party with neofascist roots, the brothers italy, has won the most votes in sunday's national elections. the party is set to lead the farthest right leebing government since world war ii and make its leader italy's first woman premier. and canada is removing all covid restrictions for travelers entering the country mask requirements on planes and trains are also being dropped. the rules will change on october 1st. finally, say good-bye to the pro bowl the nfl says it will replace the game, which has been played since 1951, with the week of skills competitions at a flag football game. new format designed to lower the risk of injuries while at the same time raising the level of play and ratings you know what would be a big ratings boost, morgan, if they had an end zone dance contest.
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i would really love to see that. >> that would definitely get some attention bertha coombs, thank you as we head to break, get ready for cnbc's delivering alpha, which returns in person this wednesday, featuring economic leaders, policymakers and the world's top investors. register now at deliveringalpha.com. 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 investor...in 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.
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welcome back to "squawk on the street." getting a check on the markets the s&p is higher. the nasdaq is the outperformer up 1.1% right now. the dow is hugging the flat line, flirting with gains and losses, but very fractional. joining us dan suze and pimco portfolio manager erin brown good morning to you both dan, i'll start with you
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given the moves and gyrations we've seen in the market in the recent days, the dow closing on friday to make a new 2022 low, the s&p and nasdaq flirting with those june levels as well before bouncing today, does the market have its arms around a tighter for longer fed >> yeah, it's a really good question, morgan first of all, it's great to see you again. great to have you back on the set. yeah, i think that part of the story, the market has largely gotten their head around i think the bigger concern for me going forward is that the part of the story that the market really has them wrap their head around is growth is probably going tocontinue to slow and probably going to disappoint relative to expectations the transition from the tightening fed story to the slowing growth story, i think that we're kind of in that transition right now that's where a lot of the second -- you know, the volatility from here, you know, could bubble up from >> erin, how do you see the
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market right now and the levels we've been moving around and where we go from here? >> i think that the market has discounted some of the financial conditions tightening we've seen year-to-date certok no further than on a year-over-year basis. the market still is anticipating a pretty strong back half of next year, which i think is premature to expect. i think the market is still expecting that the fed could start to cut middle of next year, which we think is probably likely premature in terms of the market's thinking. with that, with financial conditions likely to prevail at tighter levels, i still think the market is too complacent about the outlook and the risks are still on the horizon for weaker equity prices from here >> that's interesting. dan, i wonder in terms of tone
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on the q3 earnings calls, we've already processed fedex and a lot of the chemical warnings and ge and what target and walmart said about consumer a couple of months ago what do you think they could say in q3 on the calls in terms of commentary that would be surprising or incremental? >> yeah, carl, i think it's going to come down to that guidance that's going to come from the companies as they talk about, you know, not the trends for what we've seen over the last few months but what they're expecting over the next few months after that. those guidance numbers will come in pretty weak most likely the question for me is, it's really not so much about this quarter's earnings i think it's possible that you get a situation like you saw in the second quarter earning season where the markets braced for really bad news. they got that bad news but there wasn't, you know, a huge reaction, you know, through earnings season on the back of that it's possible you get some of that to your point, you know, a lot of the bad news, we've heard a
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lot of foreshadowing bad news from fedex and what not. i think the question is, you know, this quarter's guidance, the next quarter's earnings season and their guidance and the quarter after that are probably going to continue to slow and continue to disappoint. that trend over the next 6 to 12 months is going to be the bigger headwind for markets i'm not sure if the market is already braced enough for this one earning season. >> erin, if i'm listening to you correctly, it sounds like you think the market potentially has further to fall here, which raises the question, how should investors be positioning themselves if that is actually the case >> yeah, i 100% agree the market has further to fall. i think positioning should be quite defensive. keep powder dry, wait for better opportunities to get invested in the market, whether that's bringing up cash or trying to at least diversify your portfolio into more defensive oriented
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sectors. one place investors can look across multiassets is start looking at fixed income, which looks attractive if you can get a 4% plus yield on two-year paper in fixed income and you add a little spread on top of that for either municipal bonds or even ig corporates. that's a much more attractive, you know, return to lock in at about 6% just from your yield component over the next couple of years versus what you could expect on a risk-adjusted return in equities. i mean, you know, with respect to equities right now, margin estimates are still way too high for next year. and i think that's what really is going to be what to watch in -- in this upcoming quarter's earnings season. we still need to see that contract, see that become, you know, more level set with what reality is so equities is a real wait and see asset, keep your powder dry for better opportunities ahead. >> really tees us up for an
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evens busier than ever earnings season in the next couple of weeks. thanks for being with us today. >> thanks, guys. when stock markets were on the upswing, bonds were out of favor, especially for younger investors. now bonds don't look so boring anymore. our sharon epperson has more on that today >> bonds seem to be making a comeback, even among younger investors. millenials mostly invest in stocks and crypto. many are bailing and looking elsewhere. bonds can be complex for less experienced investors and it's important to understand a bond's credit risk as well as its duration and price sensitivity to interest rates. financial adviser says it's a good time, though, to consider a range of fixed income assets from low-risk treasuries to investment-grade and high-yield corporate bonds. >> high-grade bonds have a lower defaults risk. as a result, when you have a lower default risk and you're
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going to -- you're going to yield less than you would in a high-yield bond, which has a lot more default risk. you're taking more risk, therefore, you're getting paid a higher yield to assume that risk >> she says to think of bonds not only as -- or not as a long-term investment in your portfolio but instead as a temporary placeholder for extra cash many younger investors may have a lot more cash on hand. a recent survey finds nearly half of millenials, 49%, sold all or some of their investments from august 2021 to august 2022. that's compared to 21% of gen x, 13% of boomers other polls show millenials, like most investors, say they are more interested in holding bonds than they were a year ago. morgan >> sharon epperson, thank you. as we head to break, with the dow really hovering around the flat line right now, down about 49 points. here are the biggest laggereds
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on the blue chip average travelers and insurance name down 2% as we see hurricane ian making its way closer to florida. unitedhealth also lower. boeing as well down 1% as nasa stands down on its latest attempt for the sls rocket that boeing makes verizon and goldman rounding out the losses. throughout hispanic heritage month we are celebrating our cnbc teammates and contributors. >> my mom cleaned hotel rooms, my dad worked in a kitchen at restaurants. what always struck me is how much pride they took in their job. that's something that's always stayed with me i can distinctly remember starting my career and being the only latino in the room. really being the only person of color in the room. your first impulse is to try to acclimate and sometimes be someone you're not the power and diversity is what you bring to the table
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welcome back hundreds of unfinished housing projects around china have become symbolic of the deepening problems in the country's real estate sector. we have more from beijing. >> reporter: hey, morgan construction has restarted on one of them, the one behind me this housing project used to be owned by embattled property giant evergrand. as of last month, the project was transferred to a state-backed rival the government here has been prioritizing delivering homes. this has been since homeowners have been voicing their concerns online, threatening not to pay their mortgages on unfinished homes. there's one website that tracks the number of these complexes
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and says, as of today, 343 complexes in 104 cities are taking part. the troubles in the real estate market had accelerated as of almost a year ago today. this is when evergrand had flagged that it might not be able to pay back its $300 billion in loans because of government regulations from a year ago, home sales and prices are down. property investment also declining. in fact, citi says nearly a third of all property loans are now classed as bad debt. the government here has taken some supportive steps. no grand plan ala u.s. circa 2008 so no chinese t.a.r.p. of any kind, but they have been taking minor measures, including targeting unfinished homes by allocating $30 billion in special loans through policy banks.
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the regulators reaffirmed that they -- that those loans went into effect as of last friday. s&p says that china needs, though, at least four times as much, by their calculation, or even ten times in a worst case scenario as of now the leadership looks as though it's still prioritizing reining in debt that is much to the dismay and in conflict with, morgan, what the local authorities want because the local governments make a whole lot of money off land sales and property taxes and they want to see the property sector stabilize. that just leads to a lot of, you know, pressure on the overall economy. >> pressure on the overall economy. we're talking about real estate right now, but then i think back to the fedex warning a couple of weeks ago and the fact that that company pointed to weakness and covid lockdowns in china meantime, macaw this morning, so some reopening news. there are a lot of cross-currents and layer on top the rumors over the weekend
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about, i guess, a power coup potentially in china just give us a sense on the ground of where we are in terms of the economy and this reopening process amid all this political chatter. >> reporter: well, everything is on hold during this is on hold during this political chatter just because of the focus right now is on the 20th party in congress, which is the big political event happening in a couple weeks when president xi is expected to take an unprecedented third term people are saying the priority will be getting these unfinished homes finished because they don't want to see any unrest over here. so this is one way to handle that but in terms of policy longer term, when it comes to the property sector and covid lockdowns, it is kind of similar in that there is a camp that believes that the property sector is going to be, you know, after president xi gets into place that he's going to go
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ahead and save the housing sector, put in a lot of support but a lot of people think no actually, that he's going to do whatever he wants, which means clamping down on the property sector, similar to covid lockdowns. >> thank you coming up at the top of the hour, we will talk about how to navigate tech volatility right now and why one guest says now is the time to get in on tech names like shopify, coin as the nasdaq is hanging on to gains. stay with us ng, peyton. hold for peyton. they'd huddle.... welcome to the peytonverse. such a visionary. game plan... you go. no, you go! and call audibles... double our investment in omaha! omaha! omaha! omaha! or you could use workday. omaha. the finance, hr and planning system used by over half of the fortune 500.
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welcome back to squawk on the street we have made a run toward session highs. the s&p 500 is losing some of that steam now from a sector perspective, we have consumer discretionary names in technology, some of the relative stand-outs as you can see behind me right here but it is real estate and utilities the worst performers within that real estate trade in particular, a mix of names leading the sector to the downside you have warehouse lead like pro
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lodges and duke reality. also timber land owner ventas. keep an eye on those real estate stocks as real estate stocks continue to be in focus here. >> don, thank you. a reminder cnbc is building alpha investor summit returns this wednesday meet with leaders and the world's best investors to register go to cnbcevents.com or just point your phone right there at the qr code that's on ur screen. we'll be right back. don't go anywhere.
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well, take a look at markets. it is a mixed picture, but we largely paired the losses that we started with this morning at the opening bell the dow is down about 37 points, but the s&p and nasdaq are both trading higher let's bring in bob with more. >> not a robust bounce, but a little stability, that's fine. we will take that, folks, any time you can bounce nicely when you have microsoft on your side, apple on your side, salesforce,
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cisco. that will move, including tesla, that will move the s&p 500 but there are large swaths on the market that aren't doing anything transports, a bunch of new lows, fedex, united parcel, southwest air, some of the railroads, these are 52-week lows here. they're not bouncing people keep messages them over the weekend, boy, we're really oversold yeah we're strangely oversold momentum dramatically oversold right now. we see crazy numbers here. 52-week lows oversold. stocks above their 200 day moving average dramatically oversold you get the point here the big thing here is the cvix curve is now inverted. that cash contract is higher than the contracts a few months out. what happens here, morgan, is usually this is associated with market tops because traders are
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more panicky buying protection right now than they are several months out that's not like normal think about it you want more time period. you want more protection of course, you have uncertainly over time. >> yeah. it's a key point you make. there is so much to parse out in this conversation. that's going to do it for us here on "squawk on the street. "tech check" starts now. >> good morning. today the nasdaq is outperforming for a change is it a bottom or just another head fake? we will talk about that. is it time to be aggressive or passive? why one guest is a buyer today and another says wait it out billionaire orlando bravo will sound off on crypto. interesting setup this week. >> it was. and we will kick things off with a look on tech stocks. the key number there is

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