tv The Exchange CNBC November 7, 2022 1:00pm-2:00pm EST
at 250 >> i thought you were going to talk about skyworks. i did, but -- skyworks, the stock's barely down, despite the apple news 50%, 70% of the news comes from apple. to me it seems washed out, but i have to do more work thank you, guys. i'll see you all in "overtime. "the exchange" is now. thank you, scott, welcome to "the exchange. two tech titans taking a hit apple, and meta planning large-scale layoffs this week. a lot of questions remain. plus, do not let today's 70-degree weather fool you winter is coming it's going to be cold. there may not be enough energy to keep everyone's homes heated
or lighted, not just in england, but in new england as well we'll speak with the ceo of their biggest utility about what the white house can do plus, a trip on earnings exchange with lyft, trip adviser and norwegian cruise lines the markets are split. apparently there's an election tomorrow, dom chu. >> so i've heard just from the election side of things, a lot of volatility there. i live technically in new england, so i'm watching those electric bills as well as everything else. the markets are relative mixed the s&p 500 has now kind of gotten back up toward the 3800 left, 3780, up about ten handles. just about flat for the composite. nasdaq down just one point the underperformer on the day right now.
remember, though, a lot of upside volatility. one theme that some traders are watching is the nice move in energy stocks have been on a tear the energy sector spdr is up about the last year, call it the interesting part is it's been up 15 of the last 16 trading days, even with some more downside trend in oil prices themselves. that kind of gap has gotten a bit wider over the course of the last several months, so watch whether or not that energy trade and wti crude prices dislocate a bit. remember, they tend to track pretty closely over the longer term we'll see if that divergence plays out a bit more the stock to watch today is vtrs they're up far and away the best-performing stock in the s&p 500. this is the pharmaceutical
company formerly joan as upjohn, part of pfizer and mieland, they combined a couple years ago. and formed viatris they announced two big acquisitions to give them a bigger presence in ophthalmology, eye care. that's leading to some op miism here for viatris stock you can see some momentum here we don't talk about it often, but the best performing in the day, due in large part to acquisitions would you say their focus on eye care addressing focused -- >> i would be reamed by management for making up -- >> then i'm doomed
massive tectonic shifts, apple coming off its worst week in 2020, and covid reese strikz are hurting iphone we have full team coverage on every angle. steve kovach is looking at apple's exposure eunice yung, and what it all means for your market and money. we're going to get to news first. steve kovach, what is going on a lot of rumors, a lot of chatter, what is the real story. >> yeah, we got this report -- or this warning, rather, from apple last night saying it won't be able to ship as many pro models, as it originally expected due to the latest covid shutdowns? china. let me tell you why this is so important. before today, the hopewas extr demand for the more expensive
pro models would offset any drop in unit sales from a year ago. now apple is at risk of missing it's even modest risks the company has expanded production elsewhere, such an india, but it won't be enough to make up for the lockdown at the foxconn facility in china. if you order now, it may be tough to get one in time for the holidays if you wait too much longer services already under pressure from foreign exchange and a drop in at-store sales, and apple said mac sales will see a significant drop the pro was supposed to be the bright spot for apple's quarters, helping it reach in a tough make roe environment, but the warnings last night will make it that much more difficult to pull off. apple is also saying demand for the pros are strong. >> steve, great stuff.
thank you very much. now to eunice yung eunice, what are you learning and hearing? >> reporter: well, brian, it's not very good. foxconn said it had revise down because of the covid restriction, and is the company is working closely with the government to reach full capacity as quickly as possible. to foxconn, that means reorganizing the facilities to further restrict movement between the factory and dormitories, but, of course, also improving the conditions at the factory so that workers will stay, and also continue to come. they're also driving up financial incentive,s with a one-time bonus of $69 for anyone who decides to return and ramping up the recruitment
drive, saying they'll offer 20% salary hikes for new recruits. china also singled out this so-called iphone city, or the city of zhengzhou. they also saided zero policy is the policy of president xi jinping is completely correct, the most complicatal and effective. so after those comments came out over the from beijing, that dashed hoped mostpeople are going back to the expectations if the reopening, it won't happen quickly
this might be some targeted measures, but nothing so quickly despite the destruction at businesses such as apple. >> you don't have to answer, eunice, my guess is they did not poll the people before coming out with that response eunice yoon, thank you very much we're going to talk more about what that means for your mo money. so is meta facebook, meta could begin layoffs as soon as this week do we have any idea what large scale might we mean? >> according to "wall street journal," it's thousands they'll get the layoffs as soon as wednesday after going on a hiring and spending spree during the pandemic, along with other big-tech peers, so meta declined to confirm the layoffs are actually happening this week, but a spokesperson pointed us to the statement in the last
earnings call, where he said some teams will grow, but others will stay flat or shrink on the floor the next year. but, look, that head count ballooned during the pained, meta growing from 45,000 to 87,000 employees over the last three years, nearly doubling head count in that time period, and they weren't alone alphabet during the same time period grew 57% to 187,000 employees. amazon, it doubled head count, up to 1.6 million employees. apple is an outlier, hired more slowly than its peers, growing its head count about 20% all these names are cutting costs, though, but meta is the only one expecting to do mass loaves it's under the most pressure, after rattles shareholders on the increased spending on the money-losing metaverse business. shares down over 77% for the year, brian.
>> they're hire thousands of employees and now reversing that, a lot going on in meta steve, thank you very much so let's bring it all together, and see what it means. tech obviously under a lot of pressure this year, just look at some of the declines we're showing on the screen. microsoft 34, and meta down 72%. this year, this year, well, your next guest says these companies are still meaningful, maybe they don't have quite the impact, but they matter a lot. jason brady at thornburg, good to have you back on again. i know there's people who have to be looking at meta and thinking, wow, down 72% threw fourths of its value, there is got to be value there. is there value there, or is this the classic value trap >> that's a great question, brian. i would say that what is happening within the dynamic of the ownership of that name
happens a lot in markets, right? where a name goes from being a growth leader to becoming a value name, and that's a painful process. that's one which often overshoots from a price perspective. the real question for meta is what is the r.o.i. that they're spending on the metaverse. it's still very cash flow genre tiff in its main business, and the growth is slowing a lot, but it's a very successful business, one where you should be willing to pay some interesting multiple, but the meta in question is enormous. >> are you guys looking at it? okay, valuations have come down, but the core business is going down how do we look at this company this is -- this is like a 2001-like wipeout. >> we have owned the name at various times in the past. what i'll say for investors, a few notes of caution
just because something is down 75% doesn't mean it's a good value. it says that the top tick actually has some information 58 value. in this case, it doesn't seem to be the case. the second piece is what is the forward look on the organization we've had some nice transformational moments for facebook, then meta, moving to mobile, for example. microsoft, another name that's prominent, has absolutely executed an organizational transformation, but these things are hard to do it strikes me the one is much more challenging >> let's go on to some other ones, microsoft down 34% a lot of these companies got bid up during the pandemic they figured everybody would be working from home forever, we'll never leave our computers, so we look at it, down 34%, but still well higher than it was a couple years ago. by the way, they're not the only
ones like that how do we look at a microsoft? >> they're not the only ones like that, as you say. what's happened in the interim, even when you take out some of the significant boost from the pandemic is they have grounds revenue and earnings quite nicely to say, gosh, you know, it's still higher than it was, it's a pretty interesting name with great growth characteristics, and a transformational business to more recurring earnings that's a bigger-picture statement about this group, more cyclical than we thought there are some challenges, ties with china for apple, that you have detailed. now that things are cheaper, you can look at each individual business and say, do i want to pay this for this? in microsoft's case, i think there's something interesting there. >> give us some opportunity, jason, a name you are buying actively >> there are so many ways for investor to say balance their port
portfolio, amp from fixed income, which is much, much more interesting. in that context you're seeing the quote unquo names that are taking off actually those names are interesting and still going. astrazeneca is a great example double-double top line they'll report here. honestly it looks like a very interesting cash flow story to us health care as a sector in technology, in essence it should have been at the top of everyone's minds for the last couple years jason, always love having you on thank you. coming up, sailing f. hailing and trip taking. three key consumers names after the bell first, listen up boston, and all of you in washington and new england right now. your biggest utility says they may not have enough energy to
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natural gas prices are rising again today, hitting the highest level in a month temperatures are expected to turn sharply colder in the next week one provider is sounding a bit of an alarm. in a letter to the white house last week, eversource ceo joe nolan explained he's deeply concerned about the energy shortfall potentially on the region the lng is not available in the amounts that the region needs. joining us is joe nolan. good to have you on, i guess, though i wish it was under different circumstances. we've been talking about this potential for more than a year people say you're fearmongering, whatever we are now at the point much 12
days of diesel in new england. what's the real risk to your customers? that there may not be enough natural gas to make the power you need >> it's a very, very challenging times. what's taking place now as we speak, there are tankers downs in the gulf of mexico filling up with lng, and leaving for ports around the world, not america, unfortunately. if we want lng in the northeast, they're coming from trinidad and tobago we can't get domestic lng not natural gas so much, though pricing is significant, but a lack of fuel for these electric generators will pose a problem in the winter months, january and february, should we get a
polar vortex >> and there are projections for very cold weather over the winter let's hope they're wrong forget about pipelines they're probably a nonstarter for you guys and probably a multiyear thing. let's buck the near-term, and what you -- from lake charles or corpus christi, going to europe, which they're willing to pay a lot of money for because of the what's going on in ukraine do we need an end or a waiver for the jones act, so we don't care what ship it is, whether it's from cyprus or saudi arabia, that you can ship from corpus christi to boston, because you can't do it right now. given the time of the year, we're looking for a waiver
that would be manna from heaven. >> would you be able to get enough into the one harbor and get it at the price where we know rates have gone up -- they've gone up everywhere -- could you get it where your customers could afford it? >> i feel like we could. this would be a burden on electric customers we store 20 to 25 days of fuel for our natural gas customers in tank around the new england area so this would strictly be for generators in the area that needs to provide electricity the alternative is rolling blackouts. i think that everybody understands that that's not an attractive option. >> no, this is america okay, boston, potts moth, kennebunkport, hartford, rolling
blackouts because we can't get enough energy in america this is mind blowing i don't want to dive into politics, i'm sure you don't want to, either, 70% of the iso, 70% of your power generation is natural gas or nuclear new england has grown its population by a million in the last 20 years. it doesn't feel like what we hear is the reality of what is actually occurring, and the challenge we have is the wind doesn't always blow and the sun doesn't always shine we need battery storage in the area we have a battery to carry 11,000 customers for several hours should at outage occur that's the kinnell of -- that we
need again, renewables are awesome, the technology is very cool and they create jobs, but even the best battery storage is, what, 12 hours max just like a cell phone no different >> correct >> so you can generate a bunch of wind power offshore, everybody generates it at the same time, because you generate when the wind blows or the sun shines you try to store it, or you've got to use it or lose it and we talking about taking nuclear out instead of putting it in. >> nuclear power is going through its change right now you do see opportunities there certainly as an industry, there's been a lot of talk around it. i wouldn't lose hope on the nuclear powers option, brian
>> so five years from now, what do we do >> you have significant offshore wind at that point, and i'm sure the battery technology will be in position as well. i'm not worried about five years. i'm worried about the next two years, just being ability to get through this difficult and challenging time. >> and what does it mean for customers and prices we know they have already gone up it's not your fall you guys are regulated you have to buy your input costs, what does it mean for bostonians >> the pricing is such a challenge for our customers, and folks are seeing pricing anywhere from 15 to 40% for the commodity portion. that's the gas and the electricity. it's very, very difficult for them there's really no need for it, given how close and how much domestic lng we have even just opening the diesel
reserves, getting diesel up here for these fossil fuel plants the government has ha significant petroleum reserve. let's bring it up -- they did it during super storm sandy, and they can certainly do it now >> 12 days of diesel in new england, i think that's the lowest it's been in decades. joe nolan, really important, i hope the white house and congress are listening, maybe making tweaks to the jones act thank you, joe. >> thanks very much, brian electricity prices year over year in the new england region coming up, business is on the ballot in tomorrow as midterm elections, though voters may not agree on a lot, you might be surprised how many on both sides said they're worried about the economy. ylan mui joins us. and tonight, powerball's
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s&p and nasdaq also in the green. insert reason why -- more buyers/sellers s. some of the people talking about polls shifting either way, more on the markets coming up. right now a cnbc news update with tiler mathisen. >> another nfl coach has been sacked after a weak start to the season the indianapolis colts have fired head coach frank reich, as a painful loss yesterday the colts now have a 3-5-1 record, and lowest scoring offense in the league. now houston is filling with astrofans to celebrate their team's world series win. local police expect a million people to cheer on the victors, and to accommodate the big turnout, the parade will be nearly twice as long as last
year's celebration some school districts have even canceled classes, as they cheer their astros. jimmy kimmel will host the next oscars. he thanked the show's producers for asking him to work the oscar again, calling it either a great honor or a trap. the oscars will be held on march 12th next week brian, back to you. coming if you have this... and you get this... you could end up with this... unexpected out-of-pocket costs. so if you're on medicare, or soon to be, consider this. an aarp medicare supplement insurance plan from unitedhealthcare. medicare alone doesn't pay for everything. and what it doesn't pay for, like deductibles and copays, could add up to thousands of dollars. medicare supplement plans help by paying some of what medicare doesn't...
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employees, not independence z independent. we have our cnbc contributor here, again, jeff. same question i asked earlier, good value or value trap >> hey, brian. pretty bleak interim there relative to lyft, but i think it's interesting heading into the earnings i think you probably see some reaction sell race in growth consumers are still spending on services, certainly more so than goods, so clearly good for a company like lyft. you made the point that the cost structure could increase, but at the same time i think that's pretty much expected at this point? i also don't know that the near-term impact is well understood, but maybe most importantly it's reflected in the valuation, so you have a profitable company, basically trading at a market multiple i think with better growth prospects, to unlike the other two stocks, lyft is on the lows, no optimism priced in, so i
think you can see a positive reaction. >> because, again, the company is profitable. they are very different that is uber people lump them together, but they're not the same >> yeah, i think that's key in this market, too i think companies will continue to get punished for not being profitable, not producing cash flow, for a company like that that doesn't have any optimism heading into the print, potentially interesting. >> i think it's jpmorgan that has an unprofitable index, and it's just been leveled maybe we'll find that tomorrow two istrip advver. it's to detached from what
we're -- so when trip -- with an active users, the rebound in the experiences category, whether it includes tours, cooking classes, photography lessons, airbnb's ceo said it saw a record number of experiences booked in the third quarter, so is trip seeing something play out specifically here in the united states and europe, when it has via-tour it's widely been seen as a takeover target. unconfirmed, but that's been the speculation, and a new ceo was appointed in may, just brought on a new cfo in the last four weeks, so this will be the first time shareholders will get to see these two individuals address the company, address the company's direction going forward and what the trajectory looks like. >> jeff, we know travel has been booming, but when you look at the stock, it's probably past the travel peak, at least because of summer, if nothing
else the stock's had a 40% pop off its lows you wonder if the stock -- if they would have done this a month ago, it may be different with what you're going to say right now. >> i'll give you the good and the bad, but ultimately because of that pop, i think you probably tread lightly heading into the -- the stock often shows some resilience around that $20 value, so that's good, the valuation 15, 16 times forward that's historically cheap for the stock, however, my expectation is certainly might be too high, especially coming off that 40% move. you're also starting to see some fatigue with the downward sloping 200-day average. obviously, like you said, a huge spike in travel demand, but to me, there has been to be some impact from the economy cycle. consumer -- probably continues
to drift lower ineurope it's abysmal. the question is, does this pent-up travel demand outweigh the weakness in the global economy? my guess is probably not you have a margin of safety. look at livenation, expedia, missed bookings, now the stock is getting punished. i don't know why this would be all that different. >> earnings are backward-looking norwegian, up nearly 30% in the past month frank del rio announced last month carnival will eliminate all masking and vaccination requirements outside of that -- jeff talked about, you know, europe. my gosh, if you're paying these -- these ships run on
bunker diesel fuel they have to be paying a ton >> that's one of the questions managing fuel costs, but asuit from that. shares were upgraded jest in the last two weeks on the idea that as the commit soft everyones, it's the luxury traveler norwegian has the strongest footprint, oceana and regions brand make up about 14% of its fleet. a very different story that we heard from carnival when it said it's discounting tickets the average occupancy has been in the 80s, so certainly we see an acceleration in bookings. as we know, it's also about the balance sheets over the course of the next two to three years, norwegian has a billion dollars in debt. >> a lot of debt, and also half the revenue coming out of europe to seema's point, brent crude is back at $100 they'll be paying a fortune to
fill all these ships up, when the consume ner europe is getting crushed with their own personal energy costs. this seems like a tough story. >> i think it is first of all, like we mentioned, 50% of revenues, so we all know the issues there for me just exposure to consumer discretionary. cruise lines haven't done particularly well. i think there's this impairment coming out of covid. things are getting better, but i look at this as similar, real structural challenges that -- i want to see some path to profitability, free cash flow, and like you said, this stock has run up quite a bit it's hard for me to see a positive earnings catalyst seema, are cruises fun
i've never been on one is it worth it >> i've been on a cruise it can be fun. i think the one thing to take into account when it comes to cruising, it is very convenient. if you're with your family, which includes your 80-year-old grandpa to a niece who is 2 years old, there's something for everyone if there's a picky eater, there are so many restaurants, and families tend to like this option >> not paid for our endorsed by the cruise industry. >> no. i've been on an oil rig. you've been on a cruise ships. let's flip beats you're winning. >> happy to. >> thank you very much by the way, oil rigs are cool there's something for everybody. inflation rage is no surprise that americans are unhappy with the economy today, tomorrow they may take it out on the party in power.
midterm ease electric are tomorrow more than 80% are unhappy with the economy. ylan mui is here with us the mid terms are mercifully upon us. >> just one more day, brian. a polling by nbc news shows that voters are unhappy with the economy, and that appears to give republicans an edge this -- the last time we saw numbers this bad was back in 2010 after the great recession. republicans upon 53 house seats back then, and president obama famously called it a she
lacking. 55% of republicans are dissatisfied, but more than a third of democrats gave the economy a negative 589% shows inflation, 38% picked abo abortion that is important, because democrats have been brian, it's clear in the polls data that is voters want change. >> what are you -- you know, you're the experts on this, what are you going to be most closely watching tomorrow and tomorrow night, in temples of kouds, other races, what?
>> i think theswing states we've been talking about, those are going to be really important, but i think a crazy dynamic is republicans have been running to the right to ensure they still have the maga base and energy, but they have running toward the center with this new ad out, attacking his gop challenger, senator mark kelly in ace as is out canvassing with republicans. we've seen it in nevada as well so we've seen democrats actively and directly court republicans here, because they know in order to win, they have to appeal to the more moderate ground that's where they'll make up those independence and swing voters. >> and watch the maine's governor race. it's supposed to go to democrats, but how klee could be
an early tell on the mood of the voter, or maybe that's just maine. appreciate it, ylan. we'll have more on tonight's 7:00 p.m. special "taking stock. that is 7:00 p.m. tonight. tune coming up, cash has trapped for like the past, i don't know, 20 yrsea 20 yrsea citigroup now says cas ♪♪ be ready for any market with a liquid etf. get in and out with dia. (chloe) wireless family plans save you money, but then
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even with this year, the s&p 500 is still up more than 170% over the past decade do not forget that this year has been tough, but the market has made people a lot of money in that, cash has trashed, but as the fed continue to say hike, stocks go down, bonds go down, cash may be looking more at attr attractive
joining us now on why cash may be king once again is dirk willer at citigroup. good to have you on. >> thanks so much. >> cash doesn't generate a return if it's sitting in a bank it also loses that value on a real basis when you factor in inflation, so how can cash outperform other assets unless, of course, you think the other assets are going to go down. >> thank for having me on the show in real terms there's still negative yields, but inflation -- returns as well i think the interesting thing that is happening this year is yields for the first time for many years of cash, will be
above the yield of a 60/40 portfolio. when that happened in the past, it was not a particularly good environment for the 60/40 port portfolio. so risky assets struggled. the combination of these higher cash yields by the december fed meeting, plus shock reduced benefits of correlation between bonds and equities, which helped in the past really mean they became much more attractive in the past than, yes, for 20 years. how long should we invest in cash how long do you see this trend lasting, dirk? >> yeah, i think one other positive aspect is that it does give you options to have that cash the way we see it is that u.s. treasuries have to buy when the fed is almost -- we have a call to maybe, to roughly 450,
550 the upper end of the range, and that is close, i think some of the cash should go into treasuries, again, on the s&p 500, it really is only when the u.s. recession has started, well on the way so the way we would see it is, then, as the fed gets to the end of the cycle, some of that would be bought in treasuries, as it's fully understood, then it's time for the rest of the assets >> and citigroup, do people like at you, like, dirk, i've never ahead anyone recommend cash. >> yeah. it's rare, right especially because usually the 60/40 benefits from the
correlation, but it's not the case anymore. >> you know, be -- that's why, i think it's rare that -- it should work. >> it's an interesting take. listen, maybe we do a whole hour devoted to cash strategy thank you very much. we appreciate that cash in turmoil. still ahead, so -- you're going to win the power-day-old ball tonight we hope you do how much -- and you're the only winner how much of that $1.9 billion do you actually get to take home? robert frank is up wit
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that's the record powerball jackpot, set to hit $1.9 billion. let's assume you did robert frank joins us now. okay, we win $1.9 billion. we call our lawyer, call our family, say good-bye, whatever it might be. how much do we actually get to take home? >> brian, don't forgets your accountant as well that's the most important call if there's a single winner, they would say home less than a third of that, not because of the taxes, brian, but because of the fed. the official jackpot number is the total earns of the lump sudden if invested in an annuity for 29 years that rate of return, now that rates are higher, the jackpot is hundreds of million higher than it would have been off the same lump sum that's what everyone takes
the lump jump is $929 million. there have been higher in the past, but those higher rates right now make this a record if there's a single winner, they would pay the i.r.s. $223 million of withholding taxes, another $122 million at tax time, leaving them with $585 million after taxes. some states also tax winnings, if you live in new york or new jersey, your total take hough home we about $485 million in new york city it would be only $450 million. that's a lot less than $1.9 billion, but still enough to buy a whole garage full of the lamborghinis you were driving a while back, or the yacht western showing on friday. >> it's amazing you can duran it only into $400 million without doing anything >> well, paying your taxes and
taking the lump sum. it's still a life-changing amount of money. >> i'm not turning it down, and i won't when they announce my winning numbers tonight. i pick 1, 2, 3, 4, 5, 6, powerball 7. good luck to "power lunch. this start right now is this an anything but tech market is that a good thing why one technician is watching the charts of the mechanic acaps to figure out when the equity market will bottom plus your mid terms playbook from energy to esg to china to health care. what is at stake, wall street,
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