Skip to main content

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

3:00 pm
winnings with you. >> you wouldn't. >> that would be against company policy. >> i would have to pay for my own hotel. >> for 10% you might be willing to bail. >> good luck, everybody. >> thank you for watching "power lunch. hope you have a great weekend. "closing bell" starts now. the major averages giving up a sizable post jobs rally though we are trending higher as we head toward the close. the dow was up more than 600 points at session highs, it is now almost 200 this is make or break hour for your money welcome to "closing bell" on a friday, i'm sara eisen coming to you live from d.c. today here is where we stand right now in the markets, so you see the dow, the s&p 500 up three quarters of 1%, we were up as much as 2% earlier you have a broad rally materials are the leading sector up more than 3%, financials, communication services having a good day the only sector lower is health care utilities are also lagging a bit. the nasdaq up a little less than
3:01 pm
half a percent and small caps the name a look at the action for the week, it has been a really rough one, especially for big tech and the nasdaq look at that chart, the nasdaq composite for the week is down 6.5% after that winning streak we saw in october, a lot of give back obviously the fed meeting during the week was one of the highlights that sent stocks sharply more lower than where we had been earlier in the week a big show coming your way from washington in just a moment we will talk to dan clifton from strategas about today's job reports. plus wally adeyemo will join us as we prepares for an overseas trip and the ceo of marriott will be with us fresh off the back of earnings with a look at labor in the hospitality industry and much more one of the bigger job gainers in this economy. >> let's get to the big data point of the day the jobs report coming in stronger than expected on the headline, initial market
3:02 pm
reaction was positive. senior economics correspondent steve liesman with more on the data and what it means for the fed's plans and the question next >> yeah, sara, it was an initial positive reaction from a softer but still strong 261,000 jobs created in october better than estimates but unfortunately not much in there to make anyone think least of all the fed that the fed might do less, not after a harshly hawkish press conference this week from the fed chair. private sector job growth covered to 233,000 and eased down during the year but remains well above normal and we will have to have to get just back to average let alone a level that the fed would think is creating any slack. speaking of slack, the number of unemployed ticked up by 306,000. look what happened in august, it ticked down, declined again as the tight job market seemed to
3:03 pm
put the unemployed right back to work most of all the fed itself didn't see any way that this was a dovish side of the report here >> demand remains solid, the labor market remains tight and you can point to the unemployment rate, point to wages. we are not getting much help on the supply side, participation ticked down and i just think firms are still holding on to workers. >> all right what did the market think? the peak funds rate, the june contract, ticked down to 509 for june that was from around 518 before the number, but it's held on to most of the gains in those hawkish remarks from powell on wednesday, no the much help there when it comes to the jobs report. >> big selloff in the dollar notable as well. let's talk more about the employee and how it plays into the midterms, four days away from the election and more than 35 million votes have been cast in early voting nationwide most forecasters have pegged republicans to retake the house while the senate remains up for grabs.
3:04 pm
how should you be position thing your portfolio to take advantage of whatever the outcome? joining us now is dan clifton partner and head of policy restretch for strategas a baird company. >> the chances that the republicans taking the house are 90%, the gains can be so large 25 to 30 seats that they are probably going to lock in that majority for two, not only the next two years but possibly four years. that means no tax increases, little energy regulation, little health care regulation, the market will like that divided government the senate is mixed so the question is which way are the undecided voters going to turn you can feel the market starting to position as if they are going to turn to the republicans how do we know that? you can see it in stocks dedicated to immigration enforcement, which is a priority of the republicans you can see it in energy infrastructure which will be a main priority if the republicans have complete control. so the market, the forecasters and the betting odds are all suggesting there is a slight probability of the republicans taking the majority and if that
3:05 pm
doesn't turn out to be the case the biggest sector with the rally will be the clean energy stocks which have priced in negative reaction if a republican sweep so far. >> so the administration and the democrats don't get credit for better than expected jobs which it's been a string of good news on the jobs front. >> absolutely. >> but the inflation numbers on the other side. >> the main driver of voter behavior is after tax, after inflation income so normally when you have low inflation you get a lot of jobs, you get a lot of income. no you you're getting jobs but the income is being eroded by inflation. the best way to think about this is the energy election, gasoline prices, groceries, that's the driving issue for voters and for a while, sara, that wasn't the main issue b you it came roaring back in september, the opec decision cut production probably fueled it, gasoline prices are $3.85 today. that's what's driving the voter today and that's what's going to lead to the policy implications if the republicans are able to take advantage of that. >> there is also some noise
3:06 pm
about the debt ceiling if the republicans gain control because already we're dealing with very high levels of debt in this country and now a push back against stemming in an inflationary environment. >> what investors need to know is we are at the return of deficit politics, this is the first time in 30 years because the net interest cost of interest is going up that's because interest rates are going up so now we have to feel the true cost of that debt and that means that when we raise the debt ceiling it's going to get harder the debt ceiling is being pulled forward into the first quarter, a new republican majority would have a hard time raising the debt ceiling immediately coming into office, they would demand spending cuts. we are likely going to see the debt ceiling get raised in a lame duck session of congress right after the election in november and december as a way to diffuse the issue if you are able to take that risk off that table i think that helps risk assets in the first quarter. >> you think the democrats will be able to get that done >> there is a lot of talk. if this was last week i would have said no you're starting to see more
3:07 pm
people within the democratic party saying it might be better to do this to be held hajj for spending cuts. >> i know nobody is in the mood for spending, certainly what we saw in the uk and on the inflationary front but if we doing into a recession and it gets ugly next year, doesn't seem like there is going to be a lot of appetite to fight back with stimulus. >> that's correct. there's not going to be the appetite or fiscal capacity to do it. you have to figure out where you can help the economy in other places improving the energy infrastructure and getting more oil and natural gas into the economy and bringing down oil prices would act as a stimulus without pulling the fiscal policy lever you have to get creative in how you do it. if you have too bad of a recession and you get to the end of next year i think you will start to see a little bit more appetite for fiscal policy, especially if inflation is coming down because of that recession. most of those members of congress will be up for reelection in 2024 and they are not going to want a bad economy in 2024. we may have to eat our spinach in 2023, if it's too bad i would
3:08 pm
expect to see more candy at the end of the year. >> so you said that by your metrics a lot is priced in in terms of shift toward republicans taking both houses where do you see the opportunities within sectors >> when i say it's 70% priced in that means there's still 30% upside the key sectors i would focus on right now, energy, health care, particularly biotech and pharmaceuticals, financials, particularly in the insurance industry and in the defense sector. >> why >> less regulation and, again, the size of the republican majority in the house is not only just a two year majority it could be a four year majority and that means you're lowering the probability of a full democratic sweep in 2024. you're creating some level of protection for those industries over the next four years overall. i still think there's room to go here, but a lot of it is starting to price in and the market is starting to realize that the republicans have a chance for a full sweep come tuesday. >> dan clifton, good to talk to you. thank you. >> thank you
3:09 pm
enjoy your time in d.c. shares of marriott trending lower this week after the company reported revenue that missed estimates though it did see a major benefit from the summer travel boom up next ceo tony capuano will join us to talk about the quarter, his read on labor in the industry and travel demand you're watching "closing bell" on cnbc. medium latte, half-caff, no foam. quite the personalized order. i know what i like. i've been meaning to ask you, carl. does your firm offer personalized index investing? hmm? so i can remove a stock that doesn't align with my goals. i'm a broker, not a barista. what about managing gains and losses to be more tax efficient? not a wizard either. looks like schwab personalized indexing can. schwaaab! learn more about personalized indexing at schwab today.
3:10 pm
3:11 pm
(chloe) wireless family plans save you money, but then you have to deal with family. schwaaab! so i got visible. get unlimited data for as low as $30 a month. no family needed. (dad vo) is the turkey done yet? (mom vo) here's your turkey!! (vo) visible. one-line wireless plan with unlimited data for $30 a month. well, we fell in love through gaming. but now the internet lags and it throws the whole thing off. when did you first discover this lag? i signed us up for t-mobile home internet. ugh! but, we found other interests. i guess we have. [both] finch! let's go! oh yeah! it's not the same.
3:12 pm
what could you do to solve the problem? we could get xfinity? that's actually super adult of you to suggest. i can't wait to squad up. i love it when you talk nerdy to me. guy, guys, guys, we're still in session. and i don't know what the heck you're talking about. tough week jobs data showing stronger than expected growth in october we want to zero? on one specific part of the report, the leisure and
3:13 pm
hospitality sector, gains of 35,000 jobs, the pace of increases has slowed on average the sector saw campaigns of 78,000 jobs a month this year. joining me exclusively on set is marriott ceo tony capuano. great to have you. >> nice to see you welcome to washington. >> we are talking about all these tech companies that are pausing, hiring or laying off workers, not you guys. >> not us. demand is strong. >> you're still hiring. >> we are. we just had earnings yesterday and big quarter for us obviously leisure continues to be really strong, almost up 10% over '19 but in the third quarter group came back above 19 and even business travel which has been heavily debated we were only down about 11% to '19 versus 25% in the first quarter. we have to take care of those guests which means we're hiring. >> but the worker levels are not back to 2019 levels, overall for the sector i think they are about 6% or so, 6.5% below that. >> that's right.
3:14 pm
>> is there appetite to fill those positions? >> there is no question. we are down 8,000 positions in the u.s. and canada, but they are a little more concentrated those vacancies in the markets where demand has come back most strongly we have lots and lots of pricing power in those markets, but we have to deliver on service which is challenged when we are struggling to staff the hotels. >> at higher wages, a big jump in wages especially in your sector. >> we are although we talked in the earnings call even in the face of wage inflation, some of the efficiencies we identified over the last two years our margins are up about 200 basis points at the property level. >> because you found ways to cut costs? >> yeah, we found some modifications to service, we've changed some of the staffing models because we knew we would be challenged coming out of the pandemic. >> now, that demand, that strong demand in all the sectors, any signs of a slow down >> not yet we talked a little bit on the
3:15 pm
call the good news is we continue to see really strong demand, the forward bookings into q4 look ter difficult, early read on holiday looks terrific the one caveat, we are like any business, we are subject to economic headwinds, our booking window is almost historically short, the booking window is only about 21 days while we see nothing in the data other than good encouraging news, it obviously could shift >> corporates as well because we are starting to see companies tighten their belts. >> we are. so small and medium-sized businesses are meaningfully ahead of where they were pre-p pre-pandemic, the larger employers are not back. >> are they going to come back >> they're not back to 2019. what we are seeing in group is maybe most interesting pre-pandemic in a normal year only about 25% of our group business would have been booked in the year for the year because folks wanted to have some price
3:16 pm
negotiation leverage here i think groups are negotiating for flexibility. they understand they will likely pay a higher rate but about 50% of our group business this year was booked in the year for the year. >> i know you mentioned also on the call that the strong dollar was helping americans travel to europe and abroad. on the flip side is it hurting our tourism here in this country? >> well, i mean, we look at it in aggregate and pre-pandemic about 20% of our global room nights were cross border travel. in the depths of the pandemic that dropped down to single digit as you might expect because so many borders were closed by the end of the third quarter we were back to about 15% and, remember, that's back to 15% with effectively no travel -- cross border travel coming in or out of china we think there's still lots of run time. >> i was going to ask you about china because the stock got hit on delayed plans for open things in china there's word they are softening
3:17 pm
their stance on the covid zero policy, they will allow foreigners to take biontech's vaccine. how have your plans changed in china and what do you anticipate >> the plans haven't changed the good news is when you look at our pipeline, which is a little over 500,000 rooms, big pipeline in china. the fallout from the pipeline is below historical norms so we think about net unit growth from a when not and if perspective and that applies to china as well. as the borders open, if in fact the rumors that i'm can a out over the last 48 hours are accurate, with he would expect that construction activity to ramp up. >> i was going to say the when is the big question. >> exactly. >> do you have any guidance from the government or from your people on the ground there >> no. although forus there is a significant silver lining even in china and that's the volume of domestic travel we've seen. the challenge in china has been at least during the zero covid policy we obviously price and
3:18 pm
sell our inventory anew every day. when you see a city lockdown we see demand fall off a cliff but as soon as that city reopens we see the demand accelerate pretty quickly. >> you're finally launching the cruise. >> past tens, we launched. >> bulls very bull market, tony. >> well, i mean, again, if you look at those bookings that is a longer lead booking time and it's really the power of our loyalty program that seems to be driving it more than half the bookings we had both for this year and future years are bonn voy members. we are getting a lot of folks that maybe historically have not been active in the cruise space but they like the endorsement of the ritz-carlton ship and the scale of the ship. it's only 149 cabins. >> is that a growth opportunity for you? >> it is ships two and three are under construction >> tony, thank you for the update. >> my pleasure
3:19 pm
>> tony capuano, the ceo of marriott. dow is up 263 off the highs of the day, s&p up 1%. we have gained some steam since we started this final hour of trade. every sector is now higher, health care joining in the positive territory, it's materials that are really charging ahead today up more than 3%. still ahead, the deputy treasury secretary of the u.s. will join us with his read on the economy and the latest on russian sanctions ahead of his trip next week to meet with european allies. check out some of the today's some surge tickers on yields are higher today so there's some selling in bonds, 4.16 on the two year we are seeing yields come down, that's been the one tracking the fed apple down for the fifth day in a row, three quarters of 1%, there is the two year buying yields lower amazon gets a little relief after a tough week and twilio which we will talk about in the market ze wnondo 36% on earnings we will be right back.
3:20 pm
what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.
3:21 pm
3:22 pm
energy is everywhere... even in a little seedling. which, when turned into fuel, can help power a plane. at chevron's el segundo refinery, we're looking to turn plant-based oil into renewable gasoline, jet and diesel fuels. our planet offers countless sources of energy. but it's only human to find the ones that could power a better future.
3:23 pm
what is wall street buzzing about? that supermarket mega merger kroger buying albertsons the political opposition is already heating up a state court in washington has just blocked albertsons from paying off a special $4 billion dividend to shareholders ahead of the deal scheduled for next week after the company was sued by the ag of washington, california and illinois alleging it had made albertsons less able to compete, a claim albertsons denies strongly calling the suits meritless saying it plans to challenge the restraining order next week at a hearing so it can pay the dividend to investors. this is a contentious one because it combines two of the country's largest grocers operating 5,000 stores across the country with a 22% market share compared to walmart's 33% according to key bank. remember when the deal was announced three weeks ago i asked kroger ceo rodney mcmullen why this wouldn't be bad for
3:24 pm
consumers. >> we believe this will increase competition. if you look at the synergies that the combined companies will create we will invest half a billion dollars or $500 million in lower prices for customers and especially in this inflationary environment that's a huge help. >> regulators don't agree. it's not just the states, lawmakers including senator elizabeth warren took aim at albertsons largest shareholder and former onner capital management writing a letter this week saying the special dividend should have been used to invest in the business. now, none of these are the antitrust authorities that can approve or block the deal, but it does show you the kind of political and regulatory opposition already building strongly against it. likely the reason why albertsons stock is more than $10 below the offer price. when we come back deputy treasury secretary wally adeyemo is about to leave the europe to discuss additional sanctions
3:25 pm
against russia up next he joins us in a first on cnbc interview to discuss that trip as well as to react to the jobs report. and check out shares of carvana, down 27.5%. the used car dealer missing earnings estimates and raising liquidity concerns among wall street analysts. we will be right back.
3:26 pm
♪ ♪ this is the moment. for a treatment for moderate-to-severe eczema. cibinqo — fda approved. 100% steroid free. not an injection, cibinqo is a once-daily pill for adults who didn't respond to previous treatments. and cibinqo helps provide clearer skin and less itch. cibinqo can lower your ability to fight infections, including tb. before and during treatment, your doctor should check for infections and do blood tests.
3:27 pm
tell your doctor if you've had hepatitis b or c, have flu-like symptoms, or are prone to infections. do not take with medicines that prevent blood clots. serious, sometimes fatal infections, lymphoma, lung, skin and other cancers, serious heart-related events, and blood clots can happen. people 50 and older with heart disease risk factors have an increased risk of serious heart-related events or death with jak inhibitors. this is the moment. but we've only just begun. speak with your doctor about cibinqo today. an innovation from pfizer.
3:28 pm
3:29 pm
welcome back as the war in ukraine rages on deputy treasury secretary wally adeyemo will travel to europe next week to meet with allies, discuss imposing more sanctions on russia and a price cap on russian oil. reuters reporting today that the g7 has agreed to set a fixed price on that russian oil. joining us here first on cnbc is deputy treasury secretary wally adeyemo. secretary adeyemo, nice to see. >> you great to see you, too >> what can you tell us about where the price cap on russian oil stands and what that price might be >> sara, i can't tell you anything about the price because as we said previously it's going to be set by the coalition of countries that are part of the price cap. what we are doing is we're working closely with them at the moment to make sure that we have done the analysis that's needed to make sure that we set that price appropriately given our two overarching objectives, one which is make sure that russian oil continues to flow and the second one is to try to deny
3:30 pm
russia revenues especially the revenues they have made because the war that they have started in ukraine we've already seen this strategy be effective russian oil continues to flow today and we've seen and heard from our allies and partner that russia is getting -- is offering discounts to countries in order to sign long-term contracts in anticipation of the price cap coming into effect as you know, europe has decided to no longer purchase russian oil as of december 5th they've also said that as of december 5th european services can't be used for the transportation of russian oil and europe and the uk provide 90% of the world's insurance for shipping of oil. the price cap actually creates an exception to that saying that now you can use western services for the transportation of western oil -- of russian oil as long as it's below that price cap. >> we've seen china and india step up their purchases and you mentioned that oil still flowing. i'm wondering, you've been leading a lot of the portfolio
3:31 pm
around sanctions on russia is it working as you expected? is it devastating enough because this war is still ongoing. >> i think the thing that we're doing with sanctions is it's part of an overarching foreign policy strategy. part of that strategy is diplomacy but another part is providing the ukrainians with the weapons they're using to defend themselves in ukraine at the same time that youk is getting those weapons we're using sanctions to deny russia the ability to purchase the weapons that they need and to build the weapons they need. one of the things we learned from covid-19 was about the vulnerability of supply chains and russia's military industrial lysed complex was a vulnerable supply chain we went over drv what we went after part of that has been denying the ability to get access to the most complicated semiconductors, the ones that go into the building of precision missiles and you're seeing they're unable to build those things today because they don't have access to that. that's one element going after the military industrial lysed
3:32 pm
complex. the second element is going after the revenue, money making to pay for the war and that's where the price cap comes in our goal is not to stop china or india from buying russian oil, it's so make sure that any country that buys russian oil going forward is paying russia far less for it. so that russia has less money but we have oil on the global market. >> what more is there to be done on the sanctions front >> a big piece of this is continue to go after the military industrial lysed complex because what russia is doing is as they see that we are cutting off access to supplies they need, they're building new networks and a big piece for us is making sure that we did you tell off those networks as they rebuild them russia is good at evading sanctions they've been doing it for decades. a goal for us and part of my conversations in europe will be around what can we do to make sure we take additional steps to top evasion. >> which is a bigger risk, the europeans lose the want to
3:33 pm
support ukraine or that the republicans gain control in the midterm elections and we start to lose appetite in this country for supporting ukraine because you're already hearing some movement from some of the trump republicans around that. >> i think people overestimate those risks because when people look at it ultimately the thing that we all agree on is that we believe deeply in democracies and the idea that -- of sovereignty. what europe has done over the course of the last several months as part of this war is taken a number of steps that have been important in order to make clear to russia they will pay a price tore this invasion i think the europeans have done a better job than people expected in terms of taking steps to guarantee their energy security going into this winter and stores are more full than people expected and the winter to date has been less cold they've demonstrated a willingness to do things that will create some pain for them but in order to make sure they're sending a clear message to russia. for example, earlier this year they stopped the purchase of
3:34 pm
russian coal by europe -- >> still getting less than 10% of gas, though. >> and the reality for them is that they've found alternative sources of that gas including from l & g shipped from the united states. what i've heard from my european counterparts and what we expect for them is for them to continue taking steps we will talk about how we put in place the price cap and take additional actions here in the united states as you've seen over the course of this year we've seen bipartisan majorities in both houses support packages for ukraine and we expect that to continue. >> you do. okay that was the question. i did want to ask you about the u.s. economy, we have another strong jobs reading and i know the administration is happy, i saw secretary yellen's tweet about it i guess the concern would be as we continue to get these strong jobs numbers coming in better than expectations and higher wages, while that's great for americans it just means the federal reserve is going to tighten even more and potentially sink us dear i thino things at the same time, both
3:35 pm
bring ng to have a robust healthy labor market we're seeing that's possible because of the underlying strength of the u.s. economy you think about where we are today, we created more than 10 million jobs during the biden administration and we expect that to continue but at the same time we're taking steps alongside the fed to try to make sure we bring down costs for the american people. you're right that the fed has primary responsibility in what they're trying to do is make sure they take steps to bring down costs in order to support the american people but also because it's critical to the businesses in america and the administration thinks we can do that while making needed investments in the future of our economy, investments like the chips act which we were talking about before which is going to lead to massive investments by companies like micron and intel in the united states, they will create jobs of the future and bring investment back to the united states while we take steps in the near term to bring down costs in the u.s. economy. >> are you frustrate that had inflation hasn't come down faster given we are coming off of four jumbo sized rate hikes,
3:36 pm
six in total this year including some of the administration's efforts to fight like releasing oil from the strategic petroleum reserve and we are still stuck with very high inflation. >> as you know inflation is a global phenomenon. when you look around the world i was just in asia two weeks ago and when i talked to those economies they facing high inflation because we are all coming off of dealing with covid-19 and also the impact of russia's war in ukraine. the difference between the united states and the rest of the world is that we start from a position of strength in dealing with this versus a number of other countries given the policy choices we've made. we've created more than 10 million jobs as i mentioned. we all know that the high levels of inflation are having an impact on the american people, that's why the president has been so focused on t i've released energy from the strategic petroleum reserve which has helped to bring down the cost of gas by more than $1.20 over the past several months also bringing down the cost of prescription drugs more needs to be done but we have to recognize compared to the rest of the world we're
3:37 pm
coming at doing this from a position of strength which will give us the ability to bring down inflation over time while also making sure we have a healthy labor market here in the united states. >> we appreciate the update. safe travels keep us posted. >> thanks for coming on to discuss. wally adeyemo the deputy treasury secretary of the united states take a look at where we stand, the s&p 500 holding on to a 1% gain for the week overall, though, still sharply lower, down more than 6.5% for the nasdaq this week, it's up three quarters of a percent today. a little bit of a rebound. materials, financials and communication services, your best performing sectors. still ahead paul hickey to explain why he sees a growth stock warning sign in the market right now. check out shares of draftkings which are being dest destroyed. that stock taking it on the chin down 27% we will be right back. power e*trade's award-winning trading app makes trading easier.
3:38 pm
with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market. you ok, man? the internet is telling me a million different ways i should be trading. look! what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah!
3:39 pm
it's time to take control of your investing education. cut through the noise with best-in-class education resources that match your preferred style of learning. learn your way. not theirs. td ameritrade. where smart investors get smarter℠.
3:40 pm
3:41 pm
check out today's stealth mover. top golf callaway brands the stock hit ago hole in one with investors today. the golf equipment and entertainment company beating earnings estimates and raising its fourth quarter forecast as a result jefferies driving the price target up to $56 and implying more than 200% upside from here citing the market share gains, rising margins and emerging apparel business. when we come back, we discuss whether the huge rally in chinese internet stocks this week can last. by the way, it's having a spillover effect on china names,est stay lauder, everything tied to metals. that plus twilio tanking and a
3:42 pm
warning at growth stocks when we take you inside the market zone next
3:43 pm
3:44 pm
power e*trade's easy-to-use tools like dynamic charting and risk-reward analysis help make trading feel effortless and its customizable scans with social sentiment help you find and unlock opportunities in the market
3:45 pm
with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity hickey is here to break down the crucial moments of the training day. deirdre bosa is here as well and kate rooney on the fintech movers paul, the broad market the dow up 360 the s&p ending the week it looks like we have taken a leg higher up 1.25% and tech is rebounding, but apple slower fifth day in a row, tesla is not part of the tech rally, microsoft, nvidia alphabet
3:46 pm
getting a little bit of a bid today. this week clearly all about the fed, higher interest rates for longer, more restrictive for longer is the take away that these stocks are too risky >> you know, i think to your point, sara, is that the -- this week has all been about the mega cap stocks coming in if you look at the performance of the s&p 500 relative strength of the equal weight versus the index you've seen that -- you've seen outperformance from the cap weighted index there are some good things to like about the market here but every time the fed comes up, every time something good happens a fed official rears their head and they seem to think that they need to be very aggressive, continued very aggressive going forward even when the economy is showing signs of slower momentum, housing is basically dead right now, manufacturing is slowing.
3:47 pm
even employment, today's report was better than expected but the pace of job growth has been slowing relative to 2021, the averages, versus the average earlier this year versus now you almost have to take a step back, the fed should and see what's going to happen it's interesting, six months ago today powell took 75 basis points off the table and now over the last five minutes -- five months we've seen four hikes of 75 basis points so, you know, these things take time to work their way through the economy and i think the fed should look at that and take a step back and let that happen because it's not like if things do turn south that they can just flip a switch and make things -- everything right again fed policy takes time to work itself through. >> so back to the growth trade question i know you've been looking at the relative strength of the s&p and the nasdaq for clues about where this goes next >> yeah, so if you go all the way back to the financial crisis
3:48 pm
there's a trend line in the relative strength of the nasdaq versus the s&p 500, the nasdaq has steadily outperformed in this -- ever since the fed has become increasingly aggressive in hiking rates over the last six months to year, we've seen the relative strength of those growth stocks really come in at a critical point at this level so i think in the next few weeks here as we get into thanksgiving we will have some clues as to whether that level will hold or if the growth stock trade will see some notable weakness going -- continued weakness going forward. >> we're showing that now. a guess a lot depends on where yields go, as long as the two year yield continues to go higher. >> day to day doesn't necessarily matter the overall trend is higher. we've seen unprecedented increases in the fed funds rate over the last five months and so that's going to be, you know -- you can't get anything worse for
3:49 pm
growth stocks than that aggressive hiking of rates. >> one thing that's helping today is the semi-conductor stocks are rallying near the top of the market, that sector has been hit hard. stay with us, paul let's hit chinese tech stocks as well, they're surging today, capping off a big week even as american tech stocks fell, the k web chinese internet etf on a tear on these reports of easing covid restrictions in china. some of the biggest winners thi, those stocks shaking off reports tiger global has cut its exposure and will not take any new positions in chinese equities on concerns over president xi's recent moves to solidify power our deirdre bosa joins us now. any indication that other funds or companies could follow tiger's lead or maybe do the opposite now that we're getting some clarity on china? >> that's a good point, they may be getting out at just a time when others are seeing opportunity here
3:50 pm
chinese stocks have been doing well this week, you pointed out some of the big winners but zoom out further, take a look at the k web versus the s&p since late 2020 what a remarkable dispersion, the k web is down 70% compared to the s&p which is up nearly 9% that tells you the bigger story going on in chinese stocks, some have called uninvestable over the last few years because of the crackdown, the scrutiny, the idea that xi jinping will take another term as president and not willing to give up any power leads some like tiger to believe that it's going to be harder to invest in the market going forward. certainly others have been burned like softbank, it's vision fund has taken stakes and invested in chinese companies, even uber that has a stake in didi said when it reported results that that is no longer a strategic investment you could see some pulling back, but, sara, some of the investors that i talked to on the ground in china say that the long term story is intact.
3:51 pm
xi jinping is trying to switch this to a consumption based economy. there's opportunity if you're willing to do your due diligence but for american investors you need a very high risk threshold. >> the zoom out shows how beaten down some of these stocks got. is there anything solid about china actually making a turn on the covid zero policy? i've seen expectation, there was some social media reporting, a bloomberg report that they were relaxing rules to penalize airlines for carrying covid passengers but is there anything real to this that would make those stocks more investable >> it is so hard to know which is why i think american investors struggle with this, without knowing what beijing is thinking, the ins and outs, what to believe in terms of state media reports on media reports elsewhere. that's what makes this to difficult. the latest of course is that xi jinping if he's thinking about relaxing this the propaganda minister will have to get
3:52 pm
involved, certainly an interesting one because propaganda has been so much behind this zero covid policy to get out of it you would think you would need that as well. that's why this is so difficult and why these markets are so volatile because you really don't know, it's impossible to see inside the beijing administration. >> very hard to get a picture. thank you, deirdre it's having an impact on u.s. stocks like estee lauder which got hit, up 8.3%, metals and mining stocks rallying as well fin stocks big movers -- fintech after reporting quarterly earnings block is booming after beating on the top and bottom lines thanks to a 51% increase in gross profit at its cash app business paypal under pressure after issuing a weaker fourth quarter revenue forecast coin base is higher as higher than expected user numbers offset a wider loss and revenue miss kate, what was the tone on the earnings calls from the fintech executives as their stocks have
3:53 pm
been hit very hard this year and some getting some relief today. >> i have to say the tonewas a lot more conservative than what we've heard in prior years in prior quarters paypal, block and doin biz, you think about these as the growth names, the big winners during the pandemic, they used to talk about customer acquisition and a lot of those ambitious plans to take on the banks, being a one-stop shop for finance. definitely not this quarter. it was all about cost cutting, a lot of the talk also mentioned the uncertain macro backdrop, paypal called it a difficult economic cycle and they all talked about lowering op ex. that was the theme throughout the three companies and robinhood earlier this week. the numbers and guidance for these varied but we just heard a lot more about a disciplined approach to spending, the word prudent was thrown out a lot on the analysts calls they are trying to show wall street they can be more disciplined through what's looking like a lot tougher of an economic cycle than obviously a year ago and for coin base in
3:54 pm
particular with what's going on in crypto markets they're really getting hit by that slowdown. >> yeah, boy, have times changed, the era of being prudent. paul, are you excited about any of these valuations? >> they have come insomuch i think the key here with block was the fact that it was riding that crypto wave and the buy now pay later wave way higher in 2021 and then it got hit hard as both of those waves crashed this year what's encouraging about -- on the prior screen you showed block and coin base higher and they have the most exposure to crypto and the crypto market has stabilized the chart of block almost looks like a chart of bitcoin and so you've seen it leveling out since june on that respect stabilization in crypto will certainly help coin base but i think it will have some benefit for block as well. >> a nearly 2% selloff in the u.s. dollar.
3:55 pm
that's certainly helping bitcoin today. twilio down more than 30%, easily the worst day ever after reporting earnings, swing to go a net loss compared to a year earlier, host posting a quarter on quarter slow down on sales growth and c 4 revenue guidance fell short of analysts estimates. here is the ceo on cnbc earlier today. >> customers and end users are using more of our customers' applications while we will tend to make more revenue, if they are using them less then we will make less revenue. that's not a dynamic of did we sign new customers or lose customers, it's a matter of what's the economic activity going on out there with all those b to c companies. >> twilio also taking down their cloud stocks like cloud flare, snowflake, octoberkta. okta down 10, this is on the back of not another surge in interest rates, concerns about weaker demand, right i guess these were the pandemic
3:56 pm
winners. >> right i mean, you've seen where are the layoffs happening in the market right now, they're happening in the tech space. these tech stocks that are most of their customers are technology companies, that's going to hurt the -- that's going to hurt them twilio and others are a perfect example of what happens when the fed takes on a mandate of crushing the stock market in addition to its other mandates so look at this stock, it traded at 37 times sales in early 2021, it trade at two times sales now. it's just been decimated it's like -- i mean, it's like getting interest rates to these stocks are like getting carrot sticks for halloween from somebody it's not going to be met kindly. so i think in this respect as long as the fed continues to be aggressively hiking rates these areas of the market are going to be -- are going to be under pressure twilio is an interesting
3:57 pm
company, again, their technology is essential to mobile and eventually the sentiment will shift, but, you know, i don't know when that's going to happen. >> i just want to bring up apple again because it's lower, not significantly, but it's been lower every day this week, paul, it had that big rally at the end of last week which actually helped the broader market but it's given all of that back and then some. i wonder whaungst you think that signals about the growth trade and the broader market, how much of a bellwether this is. >> i don't necessarily think apple is a bellwether for tech it's more of like almost valued like a consumer staples stock in some respects and when you talk about buffett owning such a large share of it he tends to be in consumer staples stocks to see a stock like apple which has held up relatively well suddenly fall under pressure maybe that's a sign that everybody has to get hit hard during a selloff like this so i think in that respect, you know, no one will be immune and
3:58 pm
so apple is taking its medicine right now, too. >> so what's your strategy right now? >> i think when you look at the overall market here, you know, technology is still overvalued relative to the market and it still trades at a higher premium than it normally does, that premium has come in a lot over the last couple of years, so far this year, but it's still at a premium. i think in this market in the smaller to mid cap space you can find so many companies out there in the trade under ten times earnings and which offer, you know, pretty attractive opportunities for investors. they have less exposure overseas and more exposure domestically if investors want to take a stock by stack attitude you can certainly find good opportunities there. >> paul hickey, thank you for joining me from bespoke investment group. as we head out for the weekend and taking a look at this final trades here a number of 52 week lows, salesforce trading at lows that we haven't
3:59 pm
seen since april 2020, live nation lowest since february '21, edward life sciences, camden property trust all at new 52 week lows today if you look at the s&p 500 up 1.2% right now, healthy move but still down more than 3% for the week overall materials leading the market today along with financials higher communication services are having a nice refound day, it's been a hard hit sector overul. alphabet is up and that's part of the reason, up almost 4%. meta as well a little bit higher, 2%, our parent company comcast, news corp. all helping that group industrials are there as well. but for the week in general it's been a tough one the only three sectors to close higher for the week are industrials, materials and energy stocks. energy stocks again the winner for the week, for the month and for the year just if you are keeping score. looking at the dow as we will close out the week, you have three losers, salesforce, unh, united health and apple,
4:00 pm
caterpillar the biggest contributor on the upside, overall down week for stocks, double the loss for the nasdaq as the s&p 500 that does it for me on "closing bell." now we will send it into overtime with scott wapner all right. sara, thank you very much welcome everybody to overtime. i'm scott wapner you just heard the bells we are getting started from post 9 at the new york stock exchange in just a little bit i will speak to ed yardeni who says the bottom it in for 2022 despite a hawkish fed and expectations for several more rate hikes, interesting call, we will test him on it. we begin with our talk of the tape the road ahead for risk is it getting worse or does today's hot jobs report mean the economy may be able to withstand the interest rat


info Stream Only

Uploaded by TV Archive on