Skip to main content

tv   Closing Bell  CNBC  November 7, 2022 3:00pm-4:00pm EST

3:00 pm
state and progressive, that they have seen what they have to pay out for claims because used cars are so expensive, and now because auto parts have been so expensive as well as labor, that there's an impact there. >> if there's a hypothetical easing, what does that mean? >> exactly. >> dom, thank you. >> you got it. thanks for watching "power lunch." "closing bell" starts right now. stocks kicking off the week in green right around session highs with energy and industrials leading the charge this is a make or break hour to your money welcome to "closing bell." i'm sara eisen live from the new york stock exchange. take a look where we stand right now, up 400 points on the dow. maybe didn't see that coming with the apple news overnightp apple is one of the few losers in the session in the dow right now. almost every dow stock is higher, unh up the most and nasdaq also rebounding intense this comes off a week when the
3:01 pm
nasdaq sells 3.5%. every sector except utilities and consumer discretionary in the green. take a look, the consumer discretionary story is tesla and the cruise lines are down. leaders, everything from communications services to energy, tech, health care and industrials. coming up this hour, bridgewater chief investment strategist rebekah patterson and why she's still hawkish on this market first up a read of the stocks and abroad with senior markets commentator mike santoli what are you watching, mike? >> the setup was not only the selloff last week but also a market that the last couple of weeks has absorbed a lot of blows and hasn't buckled we had multiple blow once from the big tech stocks and had the fed rate hike in a warning and the jobs number which was not optimal for either of the stronger or weaker economy however, the market has held in there, that's because industrials, health care,
3:02 pm
financials have been resilient and then today you finally have the oversold mega cap growth stocks apple almost flat or green earlier, but the rest of them higher and participating a little bit where does it take us? a little over 3800 the rally raced above 3800 off of the mid-october lows and stalled out not far above that also just for mental accounting purposes we were around 3835 at the end of jay powell's press conference last wednesday, so the selloff happened from that level we've almost gotten back to that point right there. obviously they are positioning for a widely expected or at least people acknowledging the prospect of a post-mid-term election rally as well now, around the world, there's been some interesting dynamics taking shape which is really surprising strength in european equities relative to the rest of the world over the last several months even as that economy is obviously struggling and you're seeing inflation problems, you're seeing an almost certain recession. you see the outperformance on a six-month basis. asia, of course, still really
3:03 pm
dragged down to date by the china or lack of reopening and the shut down there. what this really is a value trade. the european indexes are staples. they are exporters benefiting from a weak euro and they are health care and things that are non-tech in fact, tech is a tiny percentage of it. >> well, in fact, what's interesting, that's coinciding with your strain the dollar today and friday having on friday one of its biggest selloffs in years which is obviously very helpful for stocks. >> totally taking the pressure off equities unclear exactly what we're seeing in the dollar selloff in terms of is that some kind of projection of a fed pause to come pretty soon, or is it just, you know, a retracement after this very aggressive time? >> don't think the dollar was as cheerful as the stock market on the jobs number. >> right. >> maybe focusing more on the household survey. >> below the surface, yeah. >> mike santoli, see you in the market zone. for more on the markets and what to do next let's bring in
3:04 pm
bridgewater chief investment strategist rebecca patterson welcome. nice to see you. >> good to see you, sara tough week last week interrupted the october rally that we saw broadly. you guys are still cautious on this market. do you think this is typical bear market stuff? >> yeah, i mean, i think we've seen one of two shoes drop we've seen an unexpected tightening in real yields. the fed tight yepped much faster than the market expected at the beginning of the year and so that has been the main thing that's been pulling down equities if you look at earnings expectations, beyond 2022, they are still looking very robust, and so that i think is getting largely priced in, but the second shoe to drop is going to be when growth continues to slow, and i think we're still in the very early days of this, but the fed needs to see wage inflation come down significantly as part of getting to its inflation target. to do that it has to get the unemployment rate up, reducing the job openings is not going to be enough in itself, and so as
3:05 pm
the economy slows, as the fed continues to tighten to meet its goals, we think we're going to see growth continuing to slow in the united states and that's going to bring down earnings expectations and actual earnings. >> so why do you think the market has remained relatively optimistic on this front around a soft landing around, you know, not a sharp earnings slowdown when the message from the fed has been we've got a lot more work to do and even the bond market is pricing in more than 5% we're great. >> yeah. i think we're still seeing investors extrapolate from the previous regime, that the fed is going to be able to get inflation quickly under control without engineering a recession and we'll just go on our merry way. you see that reflected in market pricing around rates the market is expecting discounted interest rates are expecting that the fed peaks around mid-year next year and then we get 100 basis points of easing between mid-'23 and mid-'24 and think about that if we have that easing you can
3:06 pm
see investors saying that's going to be a great lift for stocks, but to get that kind of easing, you'll have to see growth absolutely collapse for the fed to react that way, so be careful what you wish for. if you get to a world where the fed is adding liquidity again, it probably means we have a much deeper recession than anyone is expecting, and that would be a major hit to earnings so right now what the market is discounting doesn't add up. >> it's like the market would rather have stimulative policy and a recession than vice versa, more afraid of tighter restrictive monetary policy. do you also think, rebecca, the dollar keeps making new highs and will continue to go up it's been a pretty significant two-day selloff here. >> well, i caught your comment earlier about the friday move in the dollar, yeah, it was striking this whole year has been striking we haven't had bank of japan intervention in how many decades, so it is an interesting time for currency markets, and obviously that has so many implications for equity investors all over the world
3:07 pm
we don't think the dollar's rally is done. we might be getting to the latter stages, and it moves more into a range trade, but we still think the bias of risk is for a stronger dollar. what i think we've seen in the last few days in part is these -- these hopes around the china reopening perhaps early next year leading to a bounce in activity there as consumption can get some momentum, and that leading to a stronger rmimby which is starting to work its way through currency global market the question is how likely is that reopening and how smooth will it be will they get vaccinations out that quickly to so many millions of people around the country we're getting hope priced in those markets very quickly it's absolutely possible, but i certainly wouldn't make that a high confidence bet right now. >> about china, i was going to ask you guys because i think at bridgewater you guys have liked china for a long time and have liked it also as a diverse fire lately. >> we do like china as a diverse
3:08 pm
fire i'm saying specifically put in a lot of eggs on a reopening basket wouldn't be where i would lean i think that china is in a very different place in this economic cycle than most of western countries today and that it does have low inflation they do have policy room, both to cut interest rates to ease montearily and fiscally, and we're seeing the government after the party congress signaling that we're going to get more infrastructure as we see him go into 2023 between the valuations, how much negativity is discounted in that position, the lack of positions and its continued stimulus we do think china offered some very positive diversification benefits for a portfolio if we get that that's another positive catalyst for chairman i'm saying in and of itself specifically i think it's hard to have a lot of confidence. you know exactly how that move is going to play out. >> you know, we're expecting a lot of fed speak, even this afternoon, expecting some fed speakers, and we'll get a lot of
3:09 pm
them because the window is open now, and the market has been pretty sensitive, especially around some of these hawkish comments, rebecca. i wonder though how much it really matters because we know they are not going to panic and pause until something really ugly happens, right, in the economy, or they break something as the old adage goes, and then it doesn't matter what they are saying now or how hawkish they are feeling now, does it >> no. it's fascinating to me how you'll get these little wiggles in the market intraday on back of different comments from different fed policy-makers, even former fed policy-makers who aren't even influencing the votes today. at the end of the day, sara, i agree. as long as inflation is so far above target and as long as the unemployment rate is so low, still only at 3.7%, the fed is going on we're going to keep getting hikes, maybe at a slightly slower pace. we'll keep getting tightening as well as tightening of the
3:10 pm
balance sheet which will continue to exert a drag on the economy. it will get a lot harder next year when the labor market does start cooling and we see more and more people unemployed then it starts to get to be a harder do you want to get to your inflation target for credibility at the cost of a deeper recession, and can you also see an environment where that gets some political pressure as well on the fed. if the fed's actions in the interest of inflation credibility are causing voters households, to be out of work so would i say it's going to get more divisive next year than it is today. >> well, i know the bridgewater alpha fund is up big, more than 30% this year, and you guys have about pretty negative. looks like you're sticking with that call. rebecca, thanks very much for the time today. >> thanks, sara. >> rebekah patterson look at apple underperforming the dow today but as mike santoli said it's really come off the lows and it's almost flat the big news, an issue of an iphone shipment warning caused by covid lockdowns and blue
3:11 pm
shirt group's gary dvorchak says there's opportunities now emerging in china. we'll tell you next on cnbc.
3:12 pm
esg is responsible investing. who's responsible for building esg into your investments? at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions. as asset managers and fiduciaries, to outserve, with our commitment to better esg outcomes. join the pursuit of outperformance at pgim. the investment management business of prudential. if you wake up thinking about the market and want to make the right moves fast... get decision tech. for insights on when to buy and sell. and proactive alerts on market events. that's decision tech. only from fidelity.
3:13 pm
xfinity rewards is a program whose sole purpose is to say that's decision tech. "thank you" with experiences big, small and once-in-a-lifetime. sometimes it's about cheering hard enough to shake the stadium! sometimes, it's as simple as movie night right here at home, on us. you mean the world to us. so we're bringing you closer to what you love. kinda like this. welcome to 30 rock! join xfinity rewards for free on the xfinity app today. our thanks, your rewards.
3:14 pm
welcome back an iphone shipment warning taking a toll on shares of iphone today is it a supply or demand warning? >> reporter: this one is a supply warning let me break it down for you, sara apple warning last night it won't be appel to ship as many iphone 14 pros as originally
3:15 pm
expected thanks to the latest covid shutdowns we've been hearing about in china here's why this is so important. before today the hope among investors was that extra demand for the more expensive probe models would offset any unit sales we saw a week ago and now apple is at risk of missing its modest growth for the quarter. they have expanded production such as india but not enough to make up the difference not to mention its services division already under pressure from a drop in sales and mac sales are expected to fall year over year, too the iphone 14 pro was supposed to be the bright spot helping it reach growth targets in a tough macro environment, but the warning that we got last night will make it that much more difficult to pull off. but of note, apple saying demand for those pros are still really strong and that's likely why we haven't seen shares punish as much as they normally would have been, sara. >> just turned positive, steve,
3:16 pm
to your point. >> it's coinciding with special highs, the s&p up over 1% and on the dow right now which is up 463 point as we head into the close. for more on the china question let's bring in gary dvovchak of the blue shirt group which individualses asia companies speak seeking to ipo in the u.s. he's currently in china now so maybe you can help clear this all up about what's happening as far as any potential easing of the covid zero policy. is that what's really happening? >> sara, thanks for having me on, appreciate it. as is often the case we're getting a lot of mixed messages, and as you mentioned i'm here in beijing now, and i've been back in china for a month i had been out for nine months, and the changes over the course of nine months have really been stark, and -- and the mixed messages are really coming from two directions u.n., there's a general support by the people for the communist
3:17 pm
party because they have delivered the goods over the last 30 years. economic growth has been fantastic and china has really emerged, you know, as an economic player. at the same time they need to continue that, right, and the government understands that, and one of the rays of hope, if you will, over the weekend, there's a very large trade show in shanghai, an import trade show and president xi gave a speech in which he really emphasized the fact that the country needs to open up revive the economy, et cetera, so they understand that, and they are giving that message at the same time the biggest challenge internally is the covid restrictions and i can tell you just in the nine months since i was gone and came back they have gotten a lot more challenging. it's very difficult to do the most basic things like traveling. it's really difficult to plan ahead because the out of the blue there will be an outbreak and people will get locked down so it's very challenging and discouraging just to -- just to operate your business or even
3:18 pm
operate your life on a dale basis, and, glen was some hope and rumors going around that they were going to reduce the covid restrictions, but very recently the health ministers have said, no, the covid zero policy is one we'll stick with. >> right. >> so it's hard to really see what's going to happen >> yeah. the kweb etf that follows the chinese companies it's up 18.5% so far this month on a lot of the optimism it fell overnight. i guess, gary, as someone who advises chinese companies on whether to go public in the u.s. whatexactly are we doing right now because we're not seeing any that have happening? >> that's a great question and the answer is we also work with them after they are public so we have a whole set of clients that are traded in the u.s. now and we continue to work with them because there's no ipos happening and they are not going to happen for a while and even if there weren't -- the really big issues around ipos which is the audit issue that's outstanding, you know, companies
3:19 pm
are looking for a plan "b" right. they are looking at hong kong and looking at singapore as places that they can do in an ipo if the u.s. is closed off to them and most of them are sitting and waiting and having said that there's a whole set of companies that aren't traded in the u.s. markets now over 160 china and hong kong-based companies that are traded in the u.s., and we're finding that the fear factor is so intense right now and, look, we talk about it every day you have folks on your shows that talk about you can see it in the charts. the fear is unbelievable now in terms of no one wanting to take china risk and each look at these stocks >> right, because there's the zero covid policy. there's the nationalistic policy where you just heard from president xi there's the geopolitical tensions there's the real estate level. it's such a laundry lives issues right now, so what is it -- what is the biggest in your view, and where does that audit situation
3:20 pm
stand? do these companies risk getting de-listed? >> well, absolutely. there's two elements to it the countries at the highest level need to come to an agreement because both sides have legitimate claims about access and who can see what and so they will have to compromise on that. having said that, we did have a test case where -- and this is, you know, to your point about the optimism, the pcob investors sent report to hong kong and wrapped up their work and that's been generally positive. that means there's been progress there. that issue needs to be resolved above all else without resolution whether the audit firms are complaint. if they are not complaint, if there's not inspection of the audit papers, there will be a de-listing and the bigger element is the they are actually potentially accelerating this. should have been one more year for resolution and now it may happen this winter, so it is
3:21 pm
going to break one way or another. >> wow. >> that's the key overhang to most but not all china stocks. >> this wednesday, it's going to happen this wednesday? >> no. we've just heard -- we've heard rumors there's legislation and things in progress that could speed up when this will happen moving it up by a year it will be this win thor >> sorry, i heard wednesday. >> i hope not. >> gary, thank you, for the report, from the ground in beijing. let's show you what's happening with markets because we are now higher. we've accelerated in this final hour dow up 452 points or so. s&p 500 in a broad rally we've got every sector higher except for utilities and consumer discretionary communications services are tied for the lead up almost 2%. nasdaq up a full%.
3:22 pm
look at palantir shares. up next, we'll break down the numbers of what's behind and the top per former on the s&p 5 up viat ri s has now noceanund plans for an ophthalmology franchise after firing life sciences investor - [narrator] if your business kept on employees through the pandemic, can qualify you for a payroll tax refund of up to $26,000 per employee,e even if you got ppp. and all it takes is eight minutes to find out. then we'll work with you to fill out your forms and submit the application. that easy. has helped businesses like yours up
3:23 pm
(vo) whil thrown% we'll be right back. your raymond james financial advisor gets to know you, your passions, and the way you give back. so you can live your life. that's life well planned.
3:24 pm
3:25 pm
check out today's top mover. it is a palantir beating estimates and missing on the bottom line. analysts missing some lines. william blair pointing out margin erosions. up next, the mid terms and your money. we'll discuss how you should be investing depending on the outcome of tomorrow's election
3:26 pm
results. and tomorrow we'll get the latest read on consumer spending got an exclusive interview with the ceo of kimberly black, mike the ceo of kimberly black, mike hsu. 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, we'll be a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. with the dow up 450.
3:27 pm
dad, we got this. we got this. we got this. we got this. we got this. yay! we got this. we got this! life is for living. we got this! let's partner for all of it. edward jones
3:28 pm
3:29 pm
3:30 pm
republicans have a 70% chance of ripping the senate according to predict it, a big jump from two months ago when the odds offered around 30%. if that holds, how should you be positioning your portfolio for divided government and potential gridlock let bring in scott kroner in wells fargo and michael pulisi great to have you both here. are you telling your clients to do anything different given how the odds have changed about republicans taking more control certainly the house and potentially the senate >> so the answer is no we've been of the view that going into q4 we were set in for a risk-on rally that was consistent with the end of the year target. the mid terms were part that have calculus and the ongoing assumption that you would have a police congress would be a modest tailwind. the math is over that succeeding-year-old post mid-term elections you do tend to see stronger s&p moves on
3:31 pm
average up 20% or so but we think that's more of a positive tail risk relative to the ongoing discussion around interest rate, earnings and valuations as a rough. >> which none of which is positive, right, scott >> well, we still have a few issues that we have to contend with i would say the q3 earnings season what we expected earnings resilience with fraying around the emgts and expectations for earnings for '2 still need to come down. we still think that happens going into q1 with earnings reports, so, again, the mid terms have important context on this we just don't think that they are going to be the ultimate market driver in the near term anyway. >> michael, i wonder what you guys at wells fargo are telling clients and investors. if the key drivers are the fed and the economy, how the mid terms and how -- how the -- how -- what congress looks like will impact any of that if at all. >> yeah. well, thanks for having me on,
3:32 pm
sara and i agree with what scott just said. the way i think about this, i don't think you'll see major revisions to economic forecasts like ours on the other side of the mid-term elections when i think what happened in 2020 we did get major revisions to the economic outlook. once it became clear democrats would have unified control of the house, the senate and white house on the other side of the georgia senate elections we made really big changes to our forecast for growth, inflation and the fed as a result of the american rescue plan which ended up being nearly $2 trillion just two months after the georgia senators were sat and democrats had unified control. i don't expect those kinds of major election outcomes this time and as a result i don't see us making big changes to say our federal forecast or inflation forecast on other side of election day tomorrow. >> a lot of people athat it's it a tailwind, it's positive if republicans take some control back or moderate the biden administration, that divided government is the good but doesn't it create the chance for a potential debt ceiling debacle
3:33 pm
and another cliff? >> there's still a lot town fold on this, but what i would say is i think the market is appreciating that too much fiscal stimulus isn't a great thing when the fed is trying to fight inflation so i do think this divide government aspect of it to the degree that it takes some of the edge off that have is really what we want to focus on in the shorter term. >> michael, there also also important read-throughs through the 2024 presidential election, why wall street is going to be watching races like ohio and pennsylvania to see how the trump hand picked candidates do and whether he'll potentially announce that he's running how would the market take that >> yeah. so, i mean, still a long way away until we get to 2024 in terms of who will run and what's the nick commit and what's going to happen with the fed and the fight against inflation than somers point absolutely right. when i think about the 2022 mid-term election i'm not expecting a big shake-up but 2024 could be a big story.
3:34 pm
first and foremost, a presidential election and see what happens on the republican side and when you look past that in terms of policy implications. you have the tax cut and jobs act. big parts that have expiring on the other side that have 2024 election or the makeup of the fomc, as an example. you have one governor, governor cook's term is up but come 2026 you've have the chair poul and vice chair brainard and a lot of members who have will to be reappointed 20 24 could be market-moving than will come into investor focus next year. >> a lot of time to talk about that scott, thank you, and michael as well good to see you both. >> and do not miss cnbc election night special. "business on the ballot," tomorrow night at 7:00 p.m. eastern featuring a great lineup of guests. here's where we stand right now in the markets as we head out to a quick break. the highs of the day, 480 points on the dow we're continuing to build on the session here the s&p 500 up more than a
3:35 pm
percent and the nasdaq gone up more than 5% microsoft, meta, adobe leading the charge even though tesla and netflix under pressure carvrana shares crashing after last week's selloff and now wall last week's selloff and now wall street i power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market. future of the company. details straight ahead
3:36 pm
wow! same deal! yeah! it's kind of our thing. wow! that's a great deal! what if i'm new to at&t? cam, can you? nice! hey! but what about for existing cust- it's the same deal! it's the same... is he okay? “it's not complicated.” with at&t new and existing customers get our best deals on every smartphone.
3:37 pm
3:38 pm
3:39 pm
what is wall street buzzing about today? carvrana running out of gas. down to below $7 per share and currently they are about 750, down 14.5% this comes after the stock had its worst day ever on friday on news that it missed wall street expectations for the third quarter as the outlook for used cars falls for record demand and pricing. over the last 12 yards, shares are down 92% or so car vrana ceo ernie garcia described the coming year as a, quote, difficult one on the company's quarterly call this past thursday. for more let's bring in our own phil lebeau. what is going on here that -- that bonds are trading this and the stock market is crushing this one. >> sure. >> got to be more than just used car sales and prices going down. >> it's more than just used cars that are specific issues that have analysts as well as investors worried about the future of carvrana when you look at really what's driving it, the used car angle is getting the most attention because the market is weak anything we've known about that for a
3:40 pm
couple of months so that's one headwind that carvrana is facing another one it's less affordable for people to buy a used car right now. whether that's the high prices which remain elevated even though they come down and the higher interest rates and the real issue for car vrana, the debt load and whether or not this is a company that, a, can get back to profitability and then, b, has a runway to pay off the debt remember, they bought the wholesale retailer odessa for a couple bill crop last year and a lot of people at the time said they are loading up the debt if you look at the conference call, they believe they can get out of it and there are more than a few like adam jonas, the bear case jonas laid out is ten cents a share, sara. >> wow. >> that's what's hitting shares of carvrana. these guys are going under but a lot of questions about the headwinds they are facing. >> gave up the rate on this stock on friday which is notable. >> phil, thank you.
3:41 pm
>> it's unclear, yeah. >> phil lebeau thanks we'll keep an eye on it. meta shares are surging on reports that the company is announcing major layoffs up next a bullish analyst on whether the stock can keep rallying that story, plus elon musk heading back to court and a heading back to court and a countdow or whatever this is. but the things that last a lifetime like happiness, love and confidence... you can'n to live e. but you can invest in them. we believe that your investments should work harder for the future you imagine. and that's where our strategic investing approach can help. t. rowe price. invest with confidence. when we take you inside the
3:42 pm
market zone next just look around. this digital age we're living in, it's pretty unbelievable. problem is, not everyone's fully living in it. nobody should have to take a class or fill out a medical form on public wifi with a screen the size of your hand. home internet shouldn't be a luxury. everyone should have it and now a lot more people can.
3:43 pm
so let's go. the digital age is waiting.
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 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 we are now in the "closing bell" market zone. market commentator mike santoli
3:45 pm
breaks down the crucial moments of the trading day and carney is here to talk a little bit meta let start off broad. we've seen a nice rally here, and it's gone up to highs during the final hour of trade, up 450 points or so on the dow and the s&p rallying more than a percent. the nasdaq joining the party we all had it roughly last week which was the contact, maybe a snap backyear and interest rates continue to rise the ten-year yield at 4.2 and the two-year yield at 4.72 usually technology is the first to get hit on that you're seeing a little bit, you know, the impact on the market utilities are underperforming perhaps on the higher rates, but tech is okay. >> well, last week, yields really didn't do a lot last week and the nasdaq was down 6% so it's not a mixed one-to-one relationship do i think it's much more about the mega caps really did a massive underperformance in the short term relative to the rest market they ever snapping back a little bit. the meta news about cost-cutting is helping the notion that they
3:46 pm
have their profit margins somewhat under their own control, not entirely but somewhat and so i do think that's just a little bit of a short term and things like energy making a new high the tape gathering itself up 3,800. very familiar level for the s&p and that's exactly where it is 1.6% on oil. eqt up 8% and baker huse hughes up 5%. on top of such strong gains. let's focus on tesla elon musk has been focused on twitter, tesla's stock has tumbled. down around 12% since musk took over as the head of twitter less than two weeks ago that's more than double the losses on the nasdaq 100, and a lawsuit scrutinizing musk's compensation package the suit alleging that the company set low bar targets as part of his 56 billion pay deal. not sure it's a thing that's moving it, but it is interesting that he's -- it's hard to tell where his folk just and if you
3:47 pm
look on twitter it's on twitter. >> right they are even -- they are calling these teams within twitter like the 24/7 team he's bringing engineers over from tesla and some of his other companies. i don't think that that's necessarily something where tesla is operating and outlook and -- and investment plan is at risk it's just one of those things. it seems like massive distraction. he's already sold a bunch of tesla shares the stock itself was topping along with a lot of big-cap growth stocks and takes the stocks back to where it was two years ago right before it got that huge ramp on inclusion into the s&p and a some split really big round trip over almost two years right now it was under way already, with you do i think it's just accelerated this sort of idea that the valuation had to come down to some degree to meet the current level of the business. by the way, it's like a 35 forward pe multiple right now. used to be well over 100 not
3:48 pm
even a year ago. >> wow, tesla shares down. another few percent. meta on the other hand is rallying helping the nasdaq. reports of looming layoffs possibly affecting thousands as soon as this week. investors taking that as positive sign that the company is serious about cutting costs after multi-billion dollar spending on the meth verse iec chairman diller talked about the evolution on "squawk box" earlier today. here's what he said. >> if he just paid attention to his basic businesses i think all is well and maybe better because of tiktok or whatever but all is well those businesses are great they are great they are great i mean, built from nothing they are just fantastic businesses. if you change the name of your company to something that doesn't yet exist, bury what wildly does exist successfully, something is quite odd in that
3:49 pm
>> here to discuss mkm partners, a buy rating and $140 price target on meta name change aside, clearly indicative of what the market has been worried about lately which is all the spending on the metaverse and changing the company's entire focus which is not focusing on the business which is weak anything does the reporting today out of "the journal" signify that they are in control of the margin story and cost-cutting >> i think what's positive in "the journal" story today is they gave the message from the street loud and clear. we are clear about what mesaverse investment would look like having said that, if you can control costs in meta verse, i think that that would be a positive what the earnings call was exactly the opposite what they said was meta verse losses will increase next year while we're investing in the cool business's news comes to be true and they are actually going to be losing head
3:50 pm
count which i feel is going to be a little bit heard for a company of this size and scale to do, i think that today's gains will stick, and as said, the business was hit last year and it's recovering and i think it's recovering in the right direction. the manish uis about costs and margins into next year. >> but it doesn't get at the problem which is that the metaverse still seems very far away and for a bear market focused on discipline and show me profits right now it's still kind of an elusive idea. >> yeah, absolutely, but i think the core business is strong enough or getting to a point where it can sustain so long as they are willing to spend no more than $5 billion to $10 billion of cash burned every year and every growth company should do that, a certain proportion of their profits should go towards moon shots so long as the proportion happened
3:51 pm
that way and that's where people were opening that look the core business is slowing down you're taking moon shorts and there's absolutely no line of sight as to what they could look like could be three or five years and we need some things to control those costs, so that's where i think the issue is with the stock and i feel today's us? a step in the right direction. >> yeah, i mean, the other factor for a bullish analyst like yourself has to be the valuation and just how far shares have come down and what is being factored in there. >> yeah. i think no matter which way you cut it, the valuation is extremely cheap, whether it can get cheaper based on the margins and more deterioration of the core business, yeah, it's possible but this looks like a valuation as people are looking at lower earnings and multiples
3:52 pm
and that's where we'll be aggressive buyers so long as you can look beyond six months from today so i think that's where the stock on $90 fees is where we need to be and then we'll be aggressive buyers on valuation whether they can show margin expansion next year. depends on proactive steps that have been announced today. >> sound like you're not 100% convinced on that but would appreciate seeing that r ho hit, thank you. iec chairman diller's comments on "squawk box" this morning not the only thing on our radar. he talked advertising, an area, of course, of the exper tier, top of mind, social media and technology companies recently pointing to a big slowdown in spending as a headwind and diller says it's not that bad. listen. there is a slowdown in advertising. it's always first out and then first in which is to be expected. >> iknow about my stuff.
3:53 pm
my stuff is advertising which is suffering and somewhere between 5% and 10% and it's not hideous. >> diller also commenting on the selloff on media stocks and the potential for further consolidation among the big players after the warner brothers discovery merger earlier this year and when it comes to stream he says there's always a clear winner. >> netflix won get over it. >> netflix won, get over it. >> of course netflix -- netflix will never be displaced as the leader in streaming, because if you say who leads streaming, it is netflix. >> right. >> and it will continue to lean streaming, and eventually thrill pear their costs down but they shot their costs up in order to build their business so they put a lot of money in the program. i don't know, mike
3:54 pm
telling a different story on his own stock and portfolio companies. >> for sure. on netflix it's pretty acknowledged that maybe -- i don't think anybody says they are going to displace netflix. it's all about how big is the ultimate market and can you get to scale disney is not that far behind. that's interesting, but on advertising his direct exposure to advertising within iac is dot dash and that's a lot of consumer interest websites as well as the old "time, inc" mag scene. the other stuff and expedias spun off, angie's list, lending tree, that's really a lead generation business. match.come, you know, doesn't sound romantic that's a lead generation business so you do see the pricing change in there and general consumer kind of looseness with their wallets and their attention span is obviously not what it was a couple years ago >> reporter: no, it's been a volatile trading session for lyft let's that he had that one it will be reporting earnings
3:55 pm
after the ball and comes days after rival uber did issue strong guidance. deirdre bosa joins us. what will be the key numbers we'll be watching for and how did the uber report change expectation? >> the uber report typically does change expectations but they have really been moving in different directions over the last few months so it may not be as good of an indication as it used to be guidance will be key as usual as well as its progress toward profitability as seen through adjusted ebitda. lyft has been a major underperformer over the last year, not just relative to the broad markets but to uber as well and investors have sold out of lyft more aggressively because they think management has been maybe a little slower to react to the changing macro environment. ride-sharing though, it is part of the services economy that has held up relatively better in other areas. uber ceo said a week ago demand still remains strong so will lyft echo that the bar though sara is low for this >> yeah. look at the gap, mike santoli.
3:56 pm
deirdre, thank you between uber and lyft it's really widened lately. >> absolutely. there's always been that, uber more global and more diversified in terms of the delivery business that they have, lift more of a peer play. there has been the big question that's hung over the group which is does this business truly scale? i mean, i think that's still an open question. uber has somewhat better financial, you know, economics at the moment, but if it doesn't necessarily scale that we're positive about, lyft scale is much more subscale so that's why i think you have that underperformance that we've seen recently, and, you know, we talk about adjusted ebitda and all the kind of asterix that you have to wade through to go through the numbers in companies like this. i think the investor base is a little less willing to do so right now in this type of environment to kind of give those allowances to a company, you know, that's still giving out a lot of stock-based comp
3:57 pm
and not really one-for-one profitable on a bottom-line basis. >> it used to be the opposite where uber underperformed because it was global in scale and more complicated and had the eats business. this is pre-covid, of course, when they went public. mike, looking at the broader market, holding on to gains and come off a little bit. real estate, consumer discretionary all in the red it's interest, you know, so far what we've been seeing over in the last month to date which has been a week or so energy materials and industrials, financial are your leading sector, so there are assertion of the value trade i'm curious when you're watching and what you think is driving that. >> it's interesting. it doesn't really feel as if the drill outperformance explicitly has said we're in for a great macro environment. there is a little bit of resilience in some areas of capital spending industrials in general, you know, relatively well-managed. also not a sector that's dominated by one or two companies so it's been better. in terms of financials they are finally dap touring a bit of the yield story but that was also
3:58 pm
beaten down going into this phase. somewhat encouraging that you're finding the value sectors continuing to work better, value over growth is in a pretty solid uptrend so all those trends remain intact. energy and materials is interesting because, you know, commodities have not really fallen apart if you're looking for help on inflation, you've stopped getting the tailwind from sharply lower commodity prices in the last couple of months less >> especially oil with brent crude back to 88 and wti up to $12 per barrel two minutes to go here in the trading day. what do you see in the internals? >> they turn positive. all morning it was pretty much 50/50 if you look at the market. it's gotten a little bit better ernl is the not an overwhelming dominance by the bulls but certainly 2.2 billion versus 1.5 billion and look at energy on a year-to-date basis the energy sector etf today on an intraday basis came up three cents short of the prior intraday high from about five
3:59 pm
months ago in june i. still could be on track for pretty close to a closing high, so we'll see if it can break through that it's a pretty aggressive move. you're seeing it still outperform the commodity itself over the last few month. it's one of the few areas of the market with any earnings momentum whatsoever. volatility index is settling back below 25. making the effort to pop higher in the morning and then sell off because the overall equity indexes remain big and you do have a divergence which helps it to calm down the index over volatility. >> i would add transports to some of the list of the cyclical stocks that are up again the best date since dow transports take a look at the dow 130 point or so. biggest adder to the dow is amgen today and on the downside. look at the s&p 500 which is higher by almost one full percentage point again, noted energy has climbed
4:00 pm
to the top of the list, up 1.7%. technology is having a strong day. so is communications services. that's in the lead right now because you've got a big rally in some of these names not just meta. it's dish network which is up 10% today, paramount, live nation, and second day in a row for gains on the dow and s&p into "overtime" scott wapner i'm scott wapner twoum "overtime. earnings about to drop the including lyft and activision and take two along with trip advisor. our report remembers standing by everything you need to know, and we're going to follow the stocks moves as they happen in "overtime. we begin with our talk of the tape today's rally and the resilience of this market despite a series of serious risks can stocks find some fractio


info Stream Only

Uploaded by TV Archive on