Skip to main content

tv   Squawk on the Street  CNBC  November 17, 2022 9:00am-11:00am EST

9:00 am
we continue to see growth resilient, which perhaps could push the fed funds rate a little bit higher, but i think the 5% range is still a reasonable estimate for where we need to go to get inflation under control >> all right promise you, i want to hear more from you and we'll have you back, but 9:00 a.m., we're out of here. so, we appreciate it good to have you on, meera join us tomorrow "squawk on the street" is next ♪ good thursday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer at the new york stock exchange david faber is at new york media day. futures taking a step back today. we do have hawkish fed speak dollar on pace for the best week since september. plus reaction to cisco, nvidia, macy's, and kohl's our road map is going to begin with growth concerns jpmorgan is predicting a mild
9:01 am
u.s. recession next year we got tech earnings from nvidia, cisco, and even alibaba. overconfident and careless, the words of sam bankman-fried in yet another tweet storm. we'll begin with stocks sinking in the market. a lot of this is coming on the heels of bullard's slide show in which he did say restrictive could mean 5 to 7% it's getting talked about quite a bit. >> i think that we have disparate views, lael b raraina the other day, it sows confusion and uncertainty. i listen to what bullard says, and my first reaction is, be very careful sell everything, raise cash. if you're looking for 7%, do something that is -- that says that things could go into a very severe recession and that they want it. and i'm not sure that that's wrong. i mean, look, if you want to
9:02 am
break, you know, pull volker, did not care if he created a recession. he cared about making it so there was no inflation and bullard's got -- i think he's got a formula that says that things continue to go awry, this is a good idea. but then you have barry sternlicth this morning. i think anything's on the table if inflation reignites and also, anything's on the table if you feel that the cpi didn't have a lot of value >> that's interesting. the jpmorgan desk this week said that ppi made them think maybe the cpi print was not a one-off, not an anomaly but then you had waller yesterday saying, i've seen this movie before and i am not going to get head faked by one number. >> look, i think they have been pretty clear that it is without adoubt that they have to go longer, and jay powell said
9:03 am
that just to be sure that they're right, because the one thing you don't want to do is stop and then the numbers get bad that's their own credibility on the line look, if you want their credibility to be -- to be validated by everything, then you just say what bullard said, which is, look, if things get really bad, you can see this is where we're going to go. once again, i applaud him. my charitable trust owns stocks. clearly, you're at odds with him if you're fully invested but you're not at odds with him if you have some cash, maybe a lot of cash. i listened to all these people they have very different views but they're entitled to their views, but there is one man who runs things and if he thinks that things have indeed gotten under control, then i think that you can take more risk maybe we took too muchrisk based on leal brainard >> goldman says none of the data we've been getting lately is
9:04 am
even remotely recessionary, and that's why atlanta fed's looking for a four handle this quarter >> i know. he's saying, we should narrowly avoid a recession, guys. interestingly -- and we'll get to malone in a bit, but he's in the camp of we'll have a mild recession. if you look at what jan hatzius had to say, we got a half point rise in the unemployment rate. and there you have the rest of it you know, jim, listen, we've got so many earnings this morning, whether it's cisco, obviously, you had chuck robbins on mar"mad money. nvidia alibaba with that incredible 3% revenue growth i kid, because i can remember the days when it was 36, 38, 39. just 3 but not any outsize moves, guys,
9:05 am
in terms of the sponresponse toy of these earnings up or down nvidia may be down a bit, macy's may be up a bit, cisco may be up a bit, and baba down jim, i want to come to you on these. >> well, nvidia said that, over and over again, that china was tough, although they did arrange it so that they had something to sell that was in keeping with what our government wanted but the word "tough" keeps coming up. the supply chain issues that chuck robbins had from cisco have been solved, and those involve china. it doesn't do an actual lot of business in china, in part because i think they recognized early on, not a great place to work the analysts were way too skeptical. by the way, macy's, just to be sure that everyone knows, last two weeks of october were not good, but the first week of november was good, so i think we got to get away from this day, that day, or otherwise we'll have to report what it's like tomorrow on the weather. what i think, david, is that
9:06 am
there's more confusion than i've seen about how strong or weak the economy is, but the more confusion there is, the more nervous people get, the more it becomes inevitable that we have at least a soft recession, carl. >> yeah, the macy'sfigures sho quite a bit of discipline on inventories, jim we've been looking at inventories of double digits easily at some competitors here, only up four, and inventory to sales, down 13 points at macy's >> yeah, down 19% from 2019. holiday gift newness this does matter, what they have this is exciting it's good. i think that you're seeing this kind of all over the map, but that if you ask me right now, target seems like more of an outlier than home depot, than walmart, and certainly lowe's where marvin ellison took a lot of tough medicine, wasn't even mentioned to make lowe's better. so, i continue to think that
9:07 am
things are good, not great good versus where i thought they'd be. but when i listen to someone like bullard, i think he was hoping for bad, and only bad would really shake things up and david, if we're hoping for bad, then we're hoping for a hard landing to eliminate inflation, and i was still hoping for a soft landing to eliminate it over time >> yeah, i mean, it's an interesting point. of course, the question we were asking yesterday, is target more of an outlier? and you seem to be answering it, and perhaps we're getting the answer with all these other results. that said, is the fed going to be happy that we continue to see this pace of layoffs only increasing, even potentially at cisco as well, jim >> well, i think, cisco, just to be clear, they're not laying off. they're moving away from their -- the equivalent of zoom into security, and i thought that was good. security was down 9% but i would tell you, david, that the thing that -- they just
9:08 am
don't want to seem to recognize where the layoffs are coming from and they're coming from tech, and i think that yesterday, when we saw a piece that just said, you shouldn't think that tech, with 34,000 layoffs, is going to mean anything. i continue to think that tech is a function much broader. i mean, the whole point of tech, how it advanced, was because it started touching every single part of our country, certainly, of course, advertising, bankers, lawyers. there's a complex involving tech that's much bigger, say, than housing. so, if we look at housing and we think, oh, that's slow, maybe we're okay you should be looking at tech and the layoffs to decide whether okay and the government has to get a little more in keeping with the idea that tech is integral to the economy and not just something that's ethereal and exists in a little valley in california >> right and we've talked about while the numbers may not be large, the spending power of those who had those jobs and are potentially losing them is quite significant. pointed out yesterday, i think,
9:09 am
the median compensation at alphabet, for example, was $295,000 a year. of course, tci did point out that that's far above much of the rest of silicon valley, something they won't actually see. jim, you and i have spent plenty of time over the last year talking about warner bros. discovery, just to change things up a bit i'm making my annual pilgrimage to midtown where liberty media comes in from colorado and does all their presentations for all the different companies that they're involved with to hundreds of investors here and i always also get the opportunity to sit down with john malone, of course, the man who created it all at liberty media. and we did speak about a wide variety of topics, many of which we will get to as this morning unfolds, but i did want to share a brief bit from mr. -- from dr. malone on warner bros. discovery. he's a significant shareholder, obviously, he was one of the key
9:10 am
engines or at least one of the key architects behind that tdeal when he was willing to give up his super voting shares to allow for that transaction to occur and as we all know, it hasn't gone well at all from a stock market perspective so, i asked him, well, what do you think now? what do you speak to david zazlov, the man who runs warner bros. discovery, about these days >> well, whenever i talk to david, the first word out of my mouth is, manage your cash this is going to be a business that one should keep a very clear vision on cash generation. that will ultimately be the metric that david's success or failure will be judged on. keep in mind that the good news is, yes, it's got leverage, but its leverage is very long-term and relatively cheap in this environment. i believe their average debt cost is 4%
9:11 am
their average maturity is 17 years, so when we went into this, the board knew this wasn't a short-term gain. so i'm pretty comfortable that if you -- if you're patient -- now, this is going to be a patient thing. it isn't going to be overnight, and it's going to be a lot of grumbling because you don't generate $3.5 billion of operating synergies without breaking a few eggs. >> and that is malone, of course, talking about what, as we know, has been very disappointing performance from this company since it was split off and incorporated enormous warner assets from at&t jim, we talked a lot about it. he mentions the leverage there free cash flow is what they want you to focus on. it's certainly what malone wants you to be focusing on and delivering on the $3.5 billion in synergies the company's been talking about. the market cap here, relatively small at this point but there is
9:12 am
$50 billion worth of debt and we do tend these days, as i think we should, to talk more often about the debt side of the equation as well >> right, i think that's great look, dr. malone mentioned about the different maturities, but the fact is the equity here is that debt. so, if you were to have free cash flow and you could buy all the debt, say, between '24 and '28 or even just -- because they've got some very low coupon i think we would say, look, here's what they're doing. they're taking the ebitda and going after the real wound in the balance sheet, and that is, instead of equity, just buy those back, and i think we'd all be much more certain about the viability here did dr. malone talk about viability of this asset? >> yeah, and well, he doesn't have any doubt about the viability. what we did talk a great deal about, and of course, we will share this later on, always as well after the broadcast, it's the entire interview will be available on, but what we did talk a lot about, jim and
9:13 am
carl, was streaming and how we really view the possibility of profitability in that business, to your point about viability, jim. but when it comes to that capital structure, malone's with you. he thinks that they should be aggressively exploring buying back certain parts of the capital structure and doing so at very advantageous dollars or cents on the dollar, therefore a way to retire debt in a very effective way, jim >> excellent really great really great look forward to reading everything >> yeah. lot of media news today. roku with some layoffs we'll talk about that. coming up after the break, the latest about ftx as sam bankman-fried says, "we got overconfident and careless." and as the new ceo, who once helped liquidate enron, has his view on the lack of controls he's discovering at that company. take a look at futures lot of fed speak today bostic, bullard, bowman, mester, kashkari twice as the ten-year
9:14 am
continues to swirl around. we're back in a moment
9:15 am
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. 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.
9:16 am
♪ welcome back let's turn to the latest around the ftx collapse with the new ceo, john ray, going after sam bankman-fried in a new court filing "never in my career have i seen such a complete failure of
9:17 am
corporate controls and such a complete absence of trustworthy financial information as occurred here. he goes on to point to faulty oversight led by a very small group of inexperienced, unsophisticated and potentially compromised individuals and calls the situation unprecedented. some of the estimates of the fair value they have left are stunning 650 bucks. >> yeah, look, you read sam bankman-fried's -- his tweets and they're otherworldly, frankly. it's almost as if there was this kind of fantasy world that we all read about in magazines, and then there's the reality world look, there was nothing here, and, boy, do you want to say you fooled everybody do you want to say -- or do you want to say that people wanted to be fooled because he was so brilliant. he went to jane street, the epitome of hedge funds, m.i.t.,
9:18 am
top. did we want to be fooled by this man? because no one -- it was impenetrable logic we do -- when you just look -- i interviewed gary gensler on this show, and he talked about, there should be an exchange, and people should be very careful. exchanges need to be regulated and could everything just fall through the cracks i don't know, david. the thing that really confuses me here is that, why are some people just invulnerable and viewed, except by the media -- we were somewhat skeptical -- but just in general viewed as being icons without any sort of verification of their iconic stature? >> it's a great question i think it's one of the key questions here you look at the pedigree, the investors in ftx i'm not talking about the people who had money there. i'm talking about the investors who invested in th
9:19 am
tiger. sequoia. bravo. blackrock. i mean, on and on. these are supposed to be the most sophisticated investors they are supposed to do the deepest due diligence. obviously, we question that at this point what really was done there certainly were those investors who chose not to get involved here, jim but i think the fact that many of the names i just mentioned did get involved gave others cover to do so as well, and you had that good old fear of missing out, and it just -- it happens at the highest levels of finance where you would expect deep dives, and you would expect real questions, and you would expect people to say, well, what about that relationship between you and alameda and what about cross collateralization, and what about so many other things? i just come back to that group we're looking at right now, and it makes you question a lot, doesn't it >> yes, well, let's say these were equities companies. we understand today there was no
9:20 am
cfo. would any one of those companies invest in a listed company that had no cfo would they just do it? listen, we don't need a cfo? >> no, no. or board of directors. now, again, private companies don't typically have broad-based board but you usually have some group of people, carl, who are involved in governance and/or can be rely on the in some fashion to look at things. no board of directors. no cfo you know, willisten, all this i hindsight is not particularly helpful. were we somewhat circumspect about him -- >> i disagree with that. >> all right >> there's still a trillion dollars that maybe equally unregulated. we just got to save some for people, right? i agree with you, hindsight is 20/20, but we've got lots of different coins and different things that we are all kind of
9:21 am
just saying, you know what they're fine don't worry about them don't look at them and carl, i question whether this asset class was just regarded as being pristine, and that we shouldn't just say it ends right here with sam bankman-fried. >> we're going to see. we're talking a lot more about potential spillover. we'll see what house financial services can discover next month along with u.s. regulators, and as for binance, cz was on "squawk" this morning, pushed back on criticism, and talked about whether he thought there was a misappropriation of funds. >> it was pretty clear pretty soon that there's, you know, there's misappropriation of user funds. the user funds are gone. and at that point, it's clearly that he lied to his users, his investors, his visa investors, his employees. at that point, i thought i couldn't -- like, whatever data
9:22 am
that's in the data room, we couldn't trust anymore >> meanwhile, whether it's the tweets, jim, or his text interview with vox, which he's now trying to push back on, that's another element of ray's argument that his tweets and his communications now are undermining their ongoing case >> well, david, where's justice? where's s.e.c. how many times did we ask gary gensler about this stuff >> i don't know. >> look, caveat emptor okay, but you do look at the outfits that you mentioned, and you know, caveat emptor wasn't going to protect you we may exist in alternate worlds we have a securities world that is regulated, and then we have another world that has said, listen, we don't want to be regulated, and we obey them. and david, i think that's -- i think the people at home are probably saying, what the hell i mean, you just let this happen i guess it was okay, david >> well, $5 billion in -- i
9:23 am
didn't know. $5 billion in leverage, i thought we had five. we actually had $13 billion. carl, i find these tweets incredible >> yeah. well, tomasic, add it to your list, adding on to that list of vision fund and sequoia. >> we used to have a justice department and s.e.c those were great i remember that. bobby kennedy. >> when we come back,we'll get cramer's "mad dash," countdown to the opening bell. lot of sell-side research to get to as well, netflix, whirlpool, target, service now and some cruise lines don't go anywhere. back in a minute
9:24 am
to adapt in the changing world, you could hire a professor of theoretical mathematics. we all know this equation, right? he'd crunched numbers day and night. that's it. to maximize profitability. morning. i have quarterly numbers that are beautiful. and forecast revenue from every corner of your organization. is that important? or you could use workday. the finance hr and planning system that helps cfos make better decisions faster. for a solve problems like a genius world. workday. for a changing world.
9:25 am
can he stand on his own... once he's all on his own? this is financial security. and lincoln financial solutions will help you get there. as you plan, protect and retire. ♪ futures under pressure as
9:26 am
you got the two-year back to almost 4.4 dollar on pace for the best week since september 23 vicks a little elevated. lot to get to this morning, including the opening bell in n'gowar nus.oumite dot ay.
9:27 am
i started as a single mom with $2000 and a passion for new orleans. i'm lauren haydel owner of fluerty girl. today, my tiny online shop has grown into eight stores. we're a must-stop shop for unique nola-inspired gifts. lauren doesn't just create cool nola merch; she creates opportunities. small businesses like lauren's open doors for neighborhoods to thrive. support your community. support small business.
9:28 am
9:29 am
>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. let's get to cramer's "mad dash" as we count down to the opening bell >> i tell you, very rarely, carl, do i see a piece of idolatry, and morgan stanley has one for service now today. service now is basically, david, saying, this is the one company technology can own they're taking work flow, automation, and taking it to what could be a $175 billion market opportunity, total adjusted market, as it goes beyond just work flow. i think we'll look back at this piece and say, look, if you had one, that was the one. all right. i would say, perhaps, the most positive piece of research i've seen about enterprise software
9:30 am
in 2022. >> that's interesting. guggenheim upgraded now, couple of weeks ago, but this does add some credibility to that thesis, wouldn't you say >> yeah. and he's been on many times. he's winning he is winning big time he is doing more, other than brad, we have palo alto. i think that this is a piece that just says, it doesn't really end with mcdermott, but think what it should be called is mcdermott mvp, not unlike what we saw this morning with the mvps in baseball >> let's get to the opening bell and the cnbc realtime exchange at the big board today, it's gm, launching its evs for everyone strategy in fact, ceo mary barra will be on with jim tonight. >> very excited. >> at the nasdaq, via challenge, focusing on entrepreneurs from vietnam. >> i think that they've got --
9:31 am
my wife, i test drove the -- she checked the hummer, and she says she's never turned as many heads, except for when she was in her 20s >> well, it's interesting, because morgan stanley, adam jonas, yesterday, had a note asking whether or not legacies can stay committed to evs, because everyone operates at a loss on it except for tesla. >> this is incredibly important for ford too my travel trust owns ford and we talk about it today in our club meeting. i think it's the existential issue. i mean, how do you basically get rid of the cash cow and just go for the one that is experimental and i think that straddling is something that mary has done very well, but we can certainly question her she is very abject about the difficulties, but sees the future and knows where she has to go. >> yeah. we'll watch that looking at tesla, once again, jim, in the 180s
9:32 am
reuters with a story today on musk's comments yesterday that he's identified a potential successor as ceo over there. >> look. i'm not saying i have the same feeling for bill mcdermott and service now that i have for musk and tesla, but if you own tesla, you certainly don't want him to leave. you don't -- you didn't want henry ford to leave ford there's just certain people who are synonymous and who are great, but i know that he's taking on twitter with gusto i was hoping he'd solve the twitter problem and go right back to tesla. >> yeah. mkm has a note today saying they believe twitter's losingmarket share. they call it a dysfunctional period they're looking for beneficiaries. they put meta at the top of the list it would be incremental, given its scale, versus twitter. then they add, beyond that, snap and pins >> well, you know, i was talking about the people at nvidia
9:33 am
they have the platform that you write the metaverse on they don't write metaverse, but they have the platform the opportunity, they believe, is vast. zuckerberg's well ahead of everyone else, i think, in taking advantage of the opportunity. but the amount of money that it will cost -- this is not from but my own work -- it's not you say underestimated by what mark zuckerberg says. >> let's talk about nvidia this morning, because there was the miss the guidance in line, gaming down 50. they don't see blockchain as much of their future, given the resale market. >> i know. stay away. look, i think the problem with nvidia is one. it's inventory and you have to work off the inventory for gaming when i say it's got to be worked off, nothing's going anywhere until that inventory but i think it's going to be worked off by the end of the year, and it's a bit of a game of chicken if you get off now
9:34 am
and the inventory is worked off for gaming i think you may wish, wow, what did -- why did i do that right now, the story is not as great as i thought absolutely i thought they would be -- look, sometimes, when you talk to them, you say, i wish you guys were further along in getting rid of the inventory or further along in making it so that we don't have to worry about china. but china is tough over and over, china's tough and i'm not talking about the prc, the military side i'm just talking about nvidia sells a lot of stuff into china, and that is a bad market that's a stop/start market, and they have industrial use, and there's a lot of industrial nvidia, and if you open the factory and close it and open and close it, well, that is just real bad for business, so nvidia's got a lot of problems but they are brilliant and i think you're betting against jensen wong if you think that the inventory's not going to be solved and they won't be in good shape for gaming next year that's a mistake
9:35 am
gaming has become the new zoom gaming -- you know, and it's like peloton dock docusign gaming and i think that's a shame because some of the people in gaming are very creative it isn't like people have stopped gaming it is like we didn't all become gamers >> the industry has a lot of existential questions. i don't know if you saw ken griffin talking to bloomberg "let's be clear. if we lose access to taiwanese semiconductors, the hit to u.s. gop probably on an order of magnitude of 5 to 10%. it's an immediate great depression." >> wow those are big numbers. even i have a good enough sense to know those are big numbers if that were to actually occur. it's going to be more years, of course, this capacity that's being built here that has been funded in part -- will be funded in part by the chips act as we pointed out many times you don't build these things in a day, as we take a look at the semiconductor stocks nvidia sort of hanging in there. advanced micro, perhaps on that
9:36 am
micron warning yet again from yesterday, but generally some weakness there, although in line, jim, with the overall market at this point with the nasdaq down about 1.3% >> right i mean, look, there's no doubt about it we all -- we overbuild i mean, carl, overbuild for pcs, overbuild for gaming i mean, it happens overbuild for home depot people didn't -- everything was in short supply, so a willot ofe companies just went full bore, betting they could meet the orders, which turned out to be double orders in some cases. a lot of this is pcs when you saw 18, 19, 20%, david, when you saw that 20% decline in pcs, that's reverberating still, because it's extraordinarily bill big. >> without a doubt, it is. guys, i want to change direction here a bit because i do want to get back to liberty media day, where we are here, of course,
9:37 am
following it, and my annual interview with john malone as well, where we talk about so many different things, including, by the way, meta. we're not going to talk about that now, but what the metaverse may mean for use of bandwidth was an interesting point that malone discussed, and again, it will all be available on usually there's fairly broad interest in hearing the entire interview. but jim, we talk so often about sports and sports rights, and you talk so often about football thursday night football on amazon it's a story right now as it always is as the bundle continues to unravel sports, perhaps, the glue that holds it together, but at the same time, given its cost, one of the reasons why people may be choosing to cut the cord and i asked malone sort of where we are in that evolution and how he sees things playing out when it comes to all-important sports rights and sports viewing. >> when it comes to sports, one still sees enormous market power in sports as long as there's
9:38 am
competition amongst distributors so that if a distributor feels like he has to have it or he's going to lose a meaningful number of his customers to somebody else, to a competitor, he'll pay the price and hope that everybody pays the same price so that there's no competitive disadvantage the problem with that is, you end up with a total bundle cost that just starts to drive people away from the bundle in total. i mean, for instance, formula one is a sport that i'm fairly familiar with, and the strategy of, do you move formula one over to streaming and get paid a lot of money by a streamer, or do you continue to bifurcate it, have a lot of it on broadcast television or free to air, let's call it? how do you want -- and as you're trying to build up scale and
9:39 am
support for a sport, reach is very important you want the broadest possible exposure of your sport, and you want to be able to promote it on the broadest possible platform the history of using sports as a locomotive or as a marketing tool, you know, has a long history in our business, and i suspect that it will be experimented with by the apples and the amazons to see how sticky it is, you know, how sustainable it is. the leagues are going to have to be careful they don't want to end up with a very high-priced premium service with no reach because then the kids will stop watching the sport, right >> right >> so, it's a -- and the guys who run these leagues are very smart guys, and they've got this pretty well figured out how to
9:40 am
balance reach, promotion, with their short-term economics >> so, jim -- apple and others but it will be -- >> i think just to -- i know he dropped off there, but david zaslav from warner discovery, he's adamant that if you take a look at the nba, that they're the lynchpin he said their numbers are up more than 25% since the year began. it's very early in the season, but those rights end up in 2025. when you listen to zaslav and malone and then you think about what apple has in money, and if you see that zas is saying, this is the greatest thing, then you know what? you just figure out how much he's going to pay, and then you add a zero to it, wouldn't even impact your bottom line.
9:41 am
where i do think that malone is spot on is, which one should go? i mean, formula one is very exciting to people right now, so maybe that is. but it's the idea that adam silver and the nba is going to go with the low-cost bidder because it's tnt is just unfathomable >> right meanwhile, i assume you believe the consumer is solid enough to pay -- for example, there's a great piece this morning on netflix and basic with ads, which he believes is pretty smooth, it's going to add to aggregate revenue over time. >> i think a lot of us don't like commercials, but let's take the nfl. i mean, look, the nfl's got so many commercials per game, but we watch it, and if there's 55 million people watch fantasy -- play fantasy, it's incredible that you would watch fourth quarter of a game where some team is up by 21 points. you'd shut it down but no, people are happy to watch commercials for the nfl, so i think that they'll be happy
9:42 am
to watch commercials with netflix. >> all right we're definitely watching at least eagles in the second quarter. >> i'm very worried. >> goddard on the ir >> there should have been -- that was a terrible -- i can say this because i don't play this week the refs were abysmal, and i think that game should have been reviewed by the commission >> yeah. very tough we'll go to break here, take a look at bonds this morning yields definitely creeping higher across the board, ten-year back to 3.78. dow is down about 230 as we await a lot more news. every sector on the s&p, red right now. don't go anywhere.
9:43 am
lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.
9:44 am
9:45 am
welcome back we're here at liberty media's investor conference, bringing you, of course, a lot of different news and a lot of different things, including the
9:46 am
consumer, the ad market. it's a lot of other things we're going to talk to with my next guest. he's the ceo of liberty media. good to see you. >> thanks for having me. >> sorry it's been a year, but happy to see you well, you've got some news this morning involving the formula one or liberty media itself in terms of the atlanta braves. so why don't we just start with the news there you're going to split off the braves, create a new liberty live tracking stock. why are you doing this >> i think by creating a separate asset-backed braves and by isolating within our tracking stock structure, our stake in livenation, we have an opportunity to highlight the value of those assets, give investors greater choice, and create future flexibility for any kind of future transaction we might want. >> what does that mean >> well, if we wanted to combine with somebody else, and we wanted to bring somebody else in, it's a crisper structure >> how long is it going to take to get done? >> i would think we'll have it done in six, eight months at the
9:47 am
most >> and the braves themselves, i mean, sorry, of course, we both -- both our teams won over a hundred games, fought it down to the wire. >> it was a great battle >> and then 87 wins. >> 87 wins clearly, the phillies got hot and full credit to them, but i think the astros were a stronger team and you saw the phillies kind of ran out of gas at the end. >> when the atlanta braves is sort of their own pure equity and people are making decisions based solely on the fortunes of the team, what is the argument for growth there >> i think we've seen great growth at the braves, both by growing, as you pointed out, the real estate, but importantly the on-field performance i think we have fourth highest attendance of any team we have had the 20-plus percent growth we have the highest utilization of our stadium we have relatively low ticket prices with an opportunity to grow them, so there's a lot of ways in which the braves are an attractive economic asset. >> all right, let's talk about formula one, another asset you've been talking about, and interestingly, i've gotten a lot of incoming inquiries. there does seem to be interest
9:48 am
because the sport is growing that netflix show has clearly helped you a lot >> "drive to survive" has been a great asset. >> what are the prospects of formula one, particularly when it comes to another venue in the united states? you're in austin and miami las vegas is starting when >> next year november '23 >> okay and is there the possibility of growing to a fourth city? >> well, i think we'll probably digest the three and see where we go. the reality is, we have a lot of ways to grow the sport we've increased the number of races. we've increased the revenue we get per race we've increased the tv viewership and what we get paid, notably in the u.s and we've increased our advertising and sponsorships with great partners like salesforce lots of ways we're growing the revenue stream >> crypto is an important sponsor of some of this stuff. does it have an impact >> some of the teams have important partnerships, but frankly, liberty -- formula one
9:49 am
at our level, we have a partnership with we feel reasonably confident when we put our business case together, it didn't have a lot of crypto sponsors in it so anything we get is a lucky strike extra to use a john malone phrase. >> do you think they will be easily replaced in. >> oh, yeah, we have a ton of demand >> it's hard to honor your commitment when you're bankrupt. it depends >> we'll see is not bankrupt yet >> understood. i was talking about ftx. any chance new york? there was some talk that you were talking to mayor adams here in new york, randall's island. is that a possibility at some point for an f1 race >> new york is a beautiful city, but i think it would be a very difficult city to pull off a race >> you do? >> the politics are tough, even despite the mayor's support. >> we have these politicians that like to get involved. there was once the possibility of amazon having a big headquarters here, but a politician named aoc was opposed. she's figuring into your business again ticketmaster, owned by
9:50 am
livenation, 30% plus owned by liberty. so, this tweet, daily reminder, ticketmaster's a monopoly. its merger with livenation should never have been approved, and they need ton reined in. this in response to all the enraged fans of taylor swift who weren't able able to get ticket >> first, the live nation are sympathetic to those fans that couldn't get tickets as a result, it's a function of taylor swift the site was supposed to be opened up for 1.5 million verified taylor swift fans we had 14 million people hit the site, including bots, another story, which are not supposed to be there and despite all their challenges and breakdowns, we did sell over 2 million tickets that day we could have filled 900 stadiums and the reality is, this is not actually a live nation promoted concert. taylor swift is promoted by one of our largest competitors so, though aoc may not like
9:51 am
every element of our business, interestingly, aeg, our competitor, who is the promoter for taylor swift, chose to use us because we are, in reality, the largest and most effective ticket seller in the world even our competitors to want come on our platform. >> you're overwhelmed. is there a way to avoid this, where everybody -- i have a 17-year-old daughter she's pissed. >> i apologize to your daughter. i apologize to all our fans. again, building capacity for peak demand is something we attempt to do. this exceeded every expectation. and the reality is, taylor swift hasn't been on the road for three or four years and that's caused a huge issue. since her last album. >> live nation has benefitted from the last year can that kind of growth continue from concert venue -- was it pent-up demand or do you see it continuing >> i see both. instead of yolo, you only live once, yulo, you only unlock
9:52 am
once the demand for 2023, i expect it it's strong. we see a lot of pent-up interest. >> when it comes to demand for 2023, ads, how is the ad market looking? >> clearly, more challenging we're seeing that in some degree with sirius, pandora, seeing that in places like tripadvisor. you can see the weakening. i don't see weakness in consumer demand but businesses cutting back on ad spend i think high-end customers will do well. i think little and middle consumers are more challenged. >> it's always a pleasure. sorry i didn't have more time. greg maffei from liberty. broadbase weakness, down is down 250 s&p around 3915. about a one-week low don't go anywhere. ent ways i should be trading.
9:53 am
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! 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℠. ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit - yieldstreet presents: alternative investing with kal penn and older kal penn.
9:54 am
- oh, the stock market is doing that fun thing again. - hey news from the future, you're going to live through that about 10 more times. (laughs) - oh, it's no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - ooh. i think some of my gray hairs just reversed. - yeah. you're welcome. - [narrator] become an investor today. yieldstreet: private market investing.
9:55 am
like to get to jim and "stop trading. >> nvidia is up and advanced
9:56 am
micro is up. norwegian cruise, a piece from credit suisse from buy to hold i believe the premium that it has is worthy because i think that they have the best deal i think they have great ships. reasonable prices. i was on the most recent launch. and when they go over the balance sheet and they go over the orders, i feel quite confident, if i had to pick one, that i feel most confident in the stock. it would be that one by the way, you know, we -- my family likes to cruise i'm not saying this -- i was going to take a norwegian cruise trip right before covid broke out, but i just don't see any reason to think that this should be the -- i mean, buy to hold, but not buy to sell. >> it is weird they say they prefer rcl as their -- >> but this made it sound like norwegian cruise was sinking
9:57 am
you know, this is not true >> so, tonight >> okay. tonight we have fitness, a lot of people like as a club, and gm, we have new cars with mary barra, and nikesh arora, i believe the number one security company and you will make money if you're in that stock. >> we'll see you at 6:00 "mad money" on cnbc. when we come back, a lot more with david's exclusive with liberty media's jon meloan we're down 300 as jim mentioned, some chips trying to aga ieray.ste brf ll ♪ ♪ well would you look at that? ♪ ♪ jerry, you've got to see this.
9:58 am
seen it. trust me, after 15 walks it gets a little old. i really should be retired by now. wish i'd invested when i had the chance... to the moon! [golf ball bounces off rover] unbelievable. ugh. [ding] - yieldstreet presents: alternative investing with kal penn and older kal penn. - oh, the stock market is doing that fun thing again. - hey news from the future, you're going to live through that about 10 more times. (laughs) - oh, it's no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - ooh. i think some of my gray hairs just reversed.
9:59 am
- yeah. you're welcome. - [narrator] become an investor today. yieldstreet: private market investing. ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit
10:00 am
good thursday morning. welcome to another hour of "squawk on the street. live at post 9 of the new york stock exchange david faber is at liberty media, investor meeting in new york more from liberty media's jon meloan markets, dow is down hawkish fed speak, and dollar strength putting us in a bit of a risk-off mode.
10:01 am
we're 30 minutes into the trading session. here are three big movers we are watching we'll start with macy's. that stock is jumping this morning after posting better than expected profit and revenue. the retailer also raising its full-year earning guidance you can see those shares are up 11% now. we'll have more on that later in the hour then, norwegian cruise line falling after chris swiss double downgraded the stock analysts say they see risks for the cruise line operator versus peers. shares are down 8%. nvidia, earnings missing estimates. data center growth remains strong but revenue fell 17% overall. nvidia is issuing a soft sales forecast as demand for its video gaming chips wanes those shares are trading flat now. stock cloetsly watched as a leading indicator of the health of the tech industry because it
10:02 am
sells semis to many cloud makers. the fed speaking today cnbc's steve liesman joins us. >> some harshly hawkish comments from st. louis fed president jim bullard who suggests the federal funds rate may need to rise as high as 7% bullard said in a speech using a common rule for policy, taylor rule, uses low end, 5% for peak to bring down inflation. that's using a series of dovish inputs he don't seem to believe. using the more hawkish scenario t could go as high as 7% the two-year note soared on these comments as did the outlook for the peak funds rate, now back around 5% had been below 4.90% after those better inflation numbers here's a problem for the fed, the economy doesn't seem to be
10:03 am
weakening enough to bring down inflation. yesterday we got those strong retail sales numbers forecasters we surveyed in our update boosted their fourth quarter gdp outlook to near 2% from 1.3%, showing, if you look at the two halves of the year, the economy clearly accelerated rather than slowed down despite aggressive federal reserve rate hikes. ryan sweet was from oxford said the consumer spending has picked back up. the economy in the fourth quarter seems to be regaining momentum and joe writes, we think there is still close to $1.9 trillion in excess saving that will bolster household spending we still think the economy falls off the cliff into recession by the late second quarter of 2023. we'll talk about this exclusive interview on"squawk on the street" with susan collins, the new boston fed president all you need to know is the interview we did with san
10:04 am
francisco fed president, mary daly, she said a pause is off the table. her best guess for peak rate is 4.75% to 5.25% if that's dovish, i have a hawk to sell you. >> certainly making news with those comments yesterday i want to go back to bullard because we've had so much fed speak, including this morning. yet it was those comments from him specifically that really seemed to move markets pre-market why is that, because he's been in the past -- i look back to last year, for example, he's been the one to signal a more hawkish tone at times from the fed, kind of being, i guess for better or worse, a leading indicator, or is it something else >> yeah, i think that's a great comment, morgan. let me just make a distinction when you say signal. i don't think bullard is sent out there by the chair of the committee. i think bullard is out there kind of -- i don't know. maybe the intellectual pulling guard for the committee saying, look, if you do the following things and you calculate it this
10:05 am
way, this is what has to happen. he was outthere first talking about 75 basis points, he was talking about bringing forward rate hawks, he was much more hawkish. by the way, right about it, much earlier than other folks and i think the other reason why bullard's comments stand out is i don't know about you, morgan, but i have not heard anybody use the 7 number when it talks about the peak funds rate. i have heard people, though, talk about 6 or 6.50 who are in this market. this idea of 7, it's not crazy the way he calculates it. >> steve liesman, thank you. we're looking forward to that interview tomorrow >> pleasure. for more on what's moving the markets this morning, let's bring in bob pisani, who joins us right here on set at post 9 bob, what are you watching >> the important thing is you had it right bullard is the leading indicator. he's playing, can you top this the immediate effect on the market look at the risk-on/risk-off sector
10:06 am
metal and mining stocks, growth names, ark innovations, semiconductors even with nvidia, and one-month low on oil all the growth sectors are moving to the downside on bullard's comments pharmaceutical is the only thing moving to the upside powell was aggressively raising interest rates through 2018, 25 basis points at a time and we went from 2900 to 2400, christmas eve, powell was raising rates. he changed his tune beginning of 2019 people saying, a-ha, we bet this will happen. who knows. on the retail, it's nice macy's had a beat there kohl's is trading slightly to the upside it doesn't change the overall narrative for retail it's been a disastrous year. the xrt, a basket of all the retail stock down more than 30% what they did, investors did, was sniff out the supply chain
10:07 am
problems and the decline in earnings from a potentially weaker consumer six months ago if you look at what happened to macy's, they started dramatically cutting macy's fourth quarter numbers, this is the quarter we're in right now, four, five months ago. at the end of july they had $2.15 for macy's today they have $1.82. that's a drop of almost 20%. that's nothing we see many, many companies had 50% cuts in their earnings estimates. take a look here at what happened for overall retailers this is the retail sector of the s&p 500. third quarter earnings were down almost 10% the fourth quarter estimates right now are 41% below where they were last year for the same period so, you have companies like gap, for example, 50% cuts in the last several months moving to the downside so, the big question here is, what's going to happen overall is target em bem attic of the middle consumer? yesterday the freakout, target
10:08 am
is the one that really matters it's not clear to me that that is the case at all. >> that's where i was going with my question to you, my follow-up question to you. target -- there's a comparison between target and walmart target is a much more discretionary consumer than walmart where we saw grocery lead the charge in terms of results there today. is that a leading indicator, especially as we're having this conversation about the fed tightening, but the fact that we know the effects of that tightening takes months to actually hit the economy on a much more meaningful way. >> you want to talk about a confused group analysts can figure this out either mastercard puts out card spending data. it was pretty good the retail sales number yesterday was pretty good. so, we have this one company that everyone thinks is emblematic of the middle consumer that suddenly is talking about specific problems. is it a company specific problem or isn't it? the data is very, very contradictory right now. i think that's why we're getting these weird ups and downs.
10:09 am
my point on the retail, they sniffed some of these problems out with a slower consumer and supply chain issue and higher inventory months ago that's why you've already seen it what they're worried about now, heavens, if target is the emblematic consumer, the issue out there, then the estimates are going to have to be cut again. so, we cut them in june, july, august already 40% for the fourth quarter were cut compared to a few months ago. now another leg down where do you come out on either side of that that's why the retail community is so confused right now what's the right way to look at the strength of the consumer >> piper upgrades target because they do believe some inventories are becoming more in line with sales and promotions, margins may be troughing. >> it's a great time to go out and buy some clothes right now low end, cheap i was in the mall the other day, low end, just basic tee shirts, simple things. >> it's clothes in my house. >> that's a big thing for you. >> bob, thanks
10:10 am
bob pisani let's bring in david from liberty media. hey, david >> hey, carl yeah, we're back here. of course, attendees spilling out during the break we'll be speaking later on to jennifer wood, the ceo of sirius this day brings my annual interview with jon meloan, liberty media chairman and you know, one thing we focused on, and we've seen weakness in so many different companies who are at least related in some way to the ad market, and i didask malone what his thoughts were as we head into 2023, given the various perspectives he has both here in the united states and even overseas with ownership of liberty global, a connectivity provider in markets across europe how does he see the ad market next year? >> what i hear is we're definitely going into a very slow, dramatically slower ad
10:11 am
market, as people are anticipating the future and starting to cut back on their ad budgets. so, i do think we're going to see definitely -- whether you call it a recession or slowdown, there's definitely going to be a slowdown in the ad market. and across the board, really that will be everybody from the new streamers to the traditional stuff. >> carl, typically we think more of the linear media companies, so to speak. these days, as you know with netflix and disney adding ad-supported tiers, that could be a pressure point if there's a belief that ad dollars overall are starting to come down in terms of spending. we're seeing weakness across the board in many of those company's stocks back to you. >> certainly ratifies what they said about the ad market a couple of days ago pretty remarkable, even what happened after covid we'll talk to you in a bit,
10:12 am
david faber. still to come, the latest on the fallout of ftx the ceo of binance weighing in on "squawk." >> it was pretty clear pretty soon that this misappropriation of user funds. the user funds are gone. and at that point, it's clear that he lied to his users, his investors, his investors, his employees. at that point i thought i couldn't -- i thought, wtehaver data is in the data room, we couldn't trust anymore
10:13 am
- oh, the stock market is doing that fun thing again. news from the future: you're going to live through that about 10 more times! (laughs) no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - [narrator] yieldstreet: private market investing.
10:14 am
10:15 am
reporting better than expected earnings but revenue that did fall short of forecasts. announcing increase in share buyback program. shares are up about 5% joining us to discuss is crane shares chief investment officer brendan hearn. great to have you back on the show why are we seeing reversal in the stock right now? >> the company met muted expectations as well as it really alluded to one of the major headwinds weighing on the company stock, which has been china's zero covid policy. one of the things ceo and chairman daniel zhang said is he said that they believe ultimately covid will pass and it will have a meaningful on china's economy but obviously alibaba as a transmission engine should be a big beneficiary for
10:16 am
this change in policy. >> certainly we've seen names like alibaba and other chinese tech, that trade here in the u.s., bouncing pretty strongly on the expectation that we are going to see a pullback in the zero covid policy. that being said, do we yet have any kind of idea of how specifically that could play out and what that is going to mean for these stocks longer term >> yeah, certainly we've seen zero covid policy become dynamic zero covid there's clearly a much higher tolerance. we're sealing, you know, 20,000 cases of zero covid in china -- of covid in china today alone. so, certainly, you know, you have probably some officials kind of padded the numbers before the party congress, but it's very clear covid is all over china there's a higher ktolerance not to have the economy adversely affected we'll see this incrementally opening up on china's economy
10:17 am
due to higher tolerance for covid in china >> is that enough to see strength come back economically speaking in china in a meaningful way i ask that because this is a country that is stimulating the economy right now. we have seen real estate, based on the data we do and the conversations we do have on this network seems to be falling off the cliff and other signs of soften willing, so is it enough? >> certainly the zero covid policy has weighed on domestic consumption. that will help bring the consumer back. you're also seeing significant policies geared to the real estate sector. the real estate sector is important to consumption because so much household wealth is in housing. you're seeing a real policy pivot post-party congress, back to business for the chinese government and they're dealing with the big three issues zero covid, real estate and u.s./china relations. >> goldman tweeted yesterday a
10:18 am
full reopening, while not imminent, could drive a 20% increase in chinese stocks, according to their research. does that number sound reasonable to you? >> i think the number could be much higher because i think what's weighed on this sentiment is the issues we've outlined in addition is holding foreign companies accountable act. just yesterday the pcob chair williams said they're going to make a decision on the three audit reviews they met with deloit and touch,'s auditor, kpmg, and they met with pwc, alibaba's auditor and they'll make the decision if they passed audit review it will allow institutional investors to come back into those names in a big way. >> to circle back on something you said before. you talked about three factors that will affect the economy
10:19 am
and, thus, affect this market, this sector. the third one, the relationship between the u.s. and china given what we saw play out at the beginning of this week, i just want to get your take on that and what that could mean for chinese tech and other names that are so heavily traded or potentially heavily traded here in the u.s >> yeah. and certainly it's a real big factor on many widely held u.s. multinationals that do business in china you know, apple, 17% of revenue. tesla, 25% exxonmobil, 12%. so, certainly there's a lot of u.s. multinationals doing really well in china. all those revenues go back to cupertino, go back to detroit. gm just sold more cars in china than in united states in the third quarter. all that money goes back to detroit. so, the u.s. and china, very, very intertwined economically. china, 18% of global gdp can't afford to be ostracized
10:20 am
from the global economy. this dialogue and communication hopefully leads to a path for the two countries, the two economies in the world that have to get along the consequence is very severe for both economies >> brendan ahern, thanks for joining us. we're going to break and get a check on another earnings mover, cisco on that beat and raise. announcing some restructuring, including layoffs of 5%. shares at a two-month high at the intraday highs we're ckn miteba ia nu i'm sam morrison, my brother max recommended you. so my best friend sophie says you've been a huge help. at ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. our neighbors the garcia's, love working with you. because the advice we give is personalized. hey john reese, jr. how's your father doing? to help reach your goals with confidence. my sister told me so much about you. that's why it's more than advice worth listening to. it's advice worth talking about. ameriprise financial.
10:21 am
we planned well for retirement, but i wish we had more cash. you think those two have any idea? that they can sell their life insurance policy for cash? so they're basically sitting on a goldmine? i don't think they have a clue. that's crazy! well, not everyone knows coventry's helped thousands of people sell their policies for cash. even term policies. i can't believe they're just sitting up there! sitting on all this cash. if you own a life insurance policy of $100,000 or more, you can sell all or part of it to coventry. even a term policy. for cash, or a combination of cash and coverage, with no future premiums. someone needs to tell them, that they're sitting on a goldmine, and you have no idea! hey, guys! you're sitting on a goldmine! come on, guys! do you hear that? i don't hear anything anymore. find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit
10:22 am
10:23 am
welcome back it has been a very big week for retail earnings. spdr retail ticker xrt macy's did reverse that downtrend this morning after reporting results, the company raised their earnings forecast while saying it has fresh inventory for the holidays ceo jeff did tell cnbc the customers pulled back in the back half of october and beginning of november.
10:24 am
kohl's citing macro conditions, the uncertainty of the ceo down 7.2, we were looking for 6.8. not surprising they pulled their guide. >> goes back to the conversation we were having with bob pisani the retailers that have been more proactive earlier in correcting their inventory, and you've seen a correction in the earnings forecast and analyst outlooks for those stocks are now performing better or in line with expectations now for this quarter versus the ones who maybe have been slower in that process. we'll see how that plays out i also thought the macy's ceo commentary when he said, is that a slowdown in consumer confidence we'll take back to the fourth quarter or going back to the 2019 buying patterns when they were consistent with what we had ramping into christmas. that's kind of telling
10:25 am
goes back to the conversation we have, how much is signs of economic slowing and the potential for recession, how much is a return to pre-pandemic norms? so, today where you look at macy's, we're talking about retail and consumer health is concerned. >> taking down their inventory to sales by 13 points, whereas kohl's it actually got worse by 7 points that's one reason macy's is doing quite well. after the break, we'll get david's exclusive on liberty media's john malane. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it!
10:26 am
become an agent of innovation with invesco qqq - [narrator] if your business kept on employees through the ypandemic,. don't worry i got it! can qualify you for a payroll tax refund of up to $26,000 per employee, 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 claim over $1 billion in payroll tax refunds. but it's only available for a limited time. go to powered by innovation refunds.
10:27 am
john malone. three people have been convicted of murder for the downing of a malaysia airline flight that killed 198 people. two russians and a pro-moscow
10:28 am
ukrainian separatist were responsible for firing the missile that hit the plane the court also found russia was in control of the ukrainian region where the missile was launched. in central ukrainian, local officials say a rocket injured 23 people and damaged an industrial building and an apartment block. in washington, d.c., we're waiting on word from house speaker nancy pelosi on whether she will step down from her leadership role now that the democrats have lost the majority in the house she has arrived on capitol hill. she's expected to speak on the house floor this afternoon david? >> contessa, thank you contessa brewer. we are live at liberty media day, the annual event where liberty brings in investors to update them on the companies they own the companies they own some of, whether the atlanta braves or formula one or sirius or tripadvisor, live nation, charter, qvc
10:29 am
we could go on and on. of course, it's also an opportunity for us to sit down for a conversation with john malone, liberty media's chairman, and continue what has been a long-running theme of our conversations, namely the development of direct-to-consumer businesses, so-called streaming, and now really the question as to whether or not it is going to prove to be anywhere near as profitable as the business it's replacing, the linear video cable business most of the answers at this point would seem to be, no when we began this conversation, it was quite different we also talked, of course, about companies such as apple and amazon, which have a bit of a different approach >> apple it very intent on making sure they keep their quality level extremely high they're willing to add video content to their offerings, but they want to make sure it doesn't damage their extremely high quality brand
10:30 am
they'll continue to expand and invest, in my opinion, if they think it's enhancing the quality image that they try to purvey. the amazon guys, i think, are more commercial. i think that they're still experimenting. they've -- they're trying sports, they're trying content, trying ad-supported content, they've gone with free-view to see how many slices they can make into bologna, you know. they're still trying to figure out the optimum role they can play as a bundler, as a promoter. >> what are your expectations when it comes to ad-supported? as you say, we're seeing disney and netflix roll it out now. do you think it's going to be a success? >> i'm a little skeptical as to
10:31 am
how many people to save a few bucks are going to be willing to tolerate ads in what i would call long format entertainment programs i think to be successful in streaming, you have to have your own funnel you're not going to be able to spend a fortune on advertising and promotion to gain customers because the churn will kill you. so, you've got to drive down churn and the churn cost, i think, is going to be an important part of the equation you know, if you have your own big funnel, if you're already present and can advertise or promote cheap, if you're already on platforms where it's a simple click to add something, i think that will be an important ingredient in achieving profitability. clearly, there has to be some consolidation. there's going to have to be some budgetary cutbacks on the level
10:32 am
of spend by streamers. you know, it will sort itself out. no question the public enjoys television this way. the real question is, from the investor point of view, can it be done and supplied in a sustainable, profitable and low volatility way, or are people basically going to click on and click off and you can't afford the lifetime of a subscriber may be pretty short, the investment and getting that customer may not be amortizable >> this can't go on forever, as you say. discovery is losing money on direct-to-consumer my parent company, comcast, is losing money on peacock. doesn't have anywhere near the scale of a discovery plus or hbo max. disney is saying they'll be
10:33 am
profitable in direct-to-consumer by fiscal '24, but plenty of people are not sure about that and on and on from there i mean, this period of rationalization you're talking about, are we in it now? a year from now are you and i going to be having a very different conversation >> well, i think everybody i know is taking a hard look at their content budgets going forward and trying to be more targeted in terms of what audience they're after, not try and have everything for everybody, perhaps so, you might see some specialization that leads to profitability earlier for segments, for subsets. you know, i'm a believer in al la cart menu it would appear disney's approach is to bundle internally in other words, have three or
10:34 am
four services streaming that you can combine and try and satisfy a broader household. but all internally there may be opportunities for streamers to bundle with other streamers, not co-own. and there -- >> really? >> yes >> you think -- i mean, how does that work, john, bundling -- the level of cooperation needed to bundle independent streamers, not within the one company you point out with disney. that level of cooperation, you think you could ever see that? would each have to moderate their content spend or it would reduce churn, i just wonder how that would work, in your mind? >> it's been discussed, david, amongst various players. what do i have to add to my stream in order to stabilize it? to make it more difficult for a consumer to decide to disconnect
10:35 am
after they've seen a hot show? it's, i think, going to evolve people will figure it out. it may take bundling with something, frankly, other than entertainment programming. maybe sports or maybe even connectivity services will turn out to be -- >> interesting >> -- a stronger bundle. >> john, i only have, unfortunately, about ten minutes left with you. you did mention cable business your old love. let's get to it as quickly as we can. starting with broadband growth, which seems to be slowing. competition from fix wireless, competition from the overbuilders obviously, my parent company is comcast. you still own a significant stake in charter through liberty. what are your views there in terms of whether good old-fashioned cable is going to be able to succeed in growing
10:36 am
broadband subs or maybe compete in wireless, as it is already in a more significant way >> to me, the number one thing that's wrong from 100,000 feet up is that people can edge suppliers, let's call them, and put stuff on that loads the system up and have no responsibility, no cost related to the pressure that they put on a network. so, there's a disconnect there with respect to the growth of broadband, i think that there's been a lot of too much cheap money floating around, which has led to speculation, in some cases actual investment in overbuilding, which, frankly, is not going to have good economic returns. especially in an environment of higher interest rates and harder to get money so, i do think some of the pressure on the incumbent
10:37 am
distributors from, you know, speculative competition will soften here. it's just not likely that an infrastructure fund promising 5% long-term returns is going to get a lot of equity if they have to pay 6% or 7% for their money, okay it's just -- it don't equate so, i think you're going to see some change in the dynamics of the business the other thing that's happening is some of the competition that the existing broadband guys have is coming from people who are using excess capacity from their 5g systems. >> right you're talking t-mobile's fixed wireless product right now >> yeah.
10:38 am
a lot of that opportunistic excess capacity will dry up. i think you also know that even elon musk's satellite system is going to have to start having much higher prices for heavy users because they don't have enough capacity. the broadband business is the only asset that has, you know, almost infinitely expandable capacity and even your company is probably -- i don't know what brian is telling the street yet, but i think the u.s. domestic broadband guys are heading toward 10 gigabit of bidirectional networks it will take them a couple of years to finally get there there's just no way that a spectrum-based alternative is going to be able to provide the kind of capacity that that kind of a broadband network will provide. so, yes, around the edges,
10:39 am
you're going to see some competition. >> john malone, of course, the man who made his original fortune with tci, which was once the largest cable provider in this country before he sold it to at&t many, many years ago talking about the cable business, guys, interestingly. of course, a lack of broadband growth has brought valuations down dramatically. we've seen comcast stock price we've seen the stock price of charter, for example he does see potential broadband growth, as he said, as a result in part that these overbuilders who have been able to raise very cheap money, won't be able to do that anymore, at least to the point where if they're paying more, they won't be able to get the returns they wanted. and, perhaps, you see the t-mobiles of the world pull back a little bit as a result of not having quite as much 5g capacity to offer wireless. we'll see. interesting to talk to malone. it's about an hour long. if you want to catch it in its
10:40 am
entirety, feel free to do so at he did bring up your guy, elon musk, and the satellite system, perhaps starlink, he would have to pay a little more -- or, perhaps, charge a little more, as malone says, because they don't have enough capacity. >> my ears perked up with that in general, david, your conversations with malone every year always incredibly fascinating. it's interesting because i had a very similar conversation with the ceo of one web not that long ago, which is on the manifest space podcast about that notion of capacity and broadband and this idea that, at least from a space-based satellite constellation perspective where broadband is concerned there is room for more than one player. maybe not all the players trying to compete, but more than one. the other thing that got my attention, david s what he had to say about bundling, and the idea that maybe you have to think outside the box as it evolves beyond just sort of traditional entertainment.
10:41 am
whether it's sports or connectivity, the fact he brought that up there i thought was kind of interesting. >> yeah. i did as well. the idea that, right, that the provider of the service to connect into the broadband, whether it be wireless or otherwise, would actually be the provider in some way or it would all be part of it. and this idea of bundling different services that are independent companies. i don't know you heard my question. but john is nothing, if not a deep thinker, about a lot of these different questions that the industry continues to grapple with not the least of which, of course, is the ultimate profitability of streaming, which so many business models, including warner bros., where he's a significant shareholder we'll have more from liberty media investor day sirius is outperforming the broader market this year
10:42 am
10:43 am
10:44 am
10:45 am
get a check of the markets we opened red and have stayed there. dow down about 225 we'll see if we test 3900. got awfully close at 3906. every sector remains red we'll watch this and be right back stay with us
10:46 am
at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan across your full financial picture. a plan with tax-smart investing strategies
10:47 am
designed to help you keep more of what you earn. this is the planning effect. these days, designed to help you keep more of what you earn. our households depend on the internet more and more. families grow, houses get smarter, and our demands on the internet increase. that's why we just boosted speeds for over 20 million xfinity customers, on us. so you get more of the speed you need for day and night streaming. more speed you need when you're work from homeing. and more speed you need as your family keeps growing. check in on your current speed through the xfinity app today.
10:48 am
welcome back to "squawk on the street." we want to turn to the latest surrounding ftx. john ray iii had harsh words for sam bankman-fried in a new court filing he writes, never in my career have i seen such complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here he goes on to point to faulty oversight led by a group of inexperienced, unsophisticated and potentially compromised individuals and calling the situation unprecedented.
10:49 am
especially noteworthy, since he oversaw the enron bankruptcy bankman-fried continuing to tweet even after being replaced as ceo the ceo of binance, commonly called cz, joined "squawk box" giving his perspective on who knew about the scale of management as well >> sam knows that he was using the user funds to do trading for alameda. he has been doing this for quite a while that no one else knew until recently probably a small amount in ftx knew but most the employees did not know i think that's most likely the situation. >> of course, it's pretty incredible how much this situation is emerging and evolving and information is coming out it still doesn't answer all the questions. it's almost like the more information we get, the more questions this raises. but cz coming on "squawk box" is notable, carl, because it was the actions he took that triggered this entire house of cards collapsing, whether
10:50 am
intentional or not he says it's not. >> he definitely tried to argue it was not forcing a run on ftx, but it is interesting what john ray is finding in his discovery. also the argument that the ongoing communication from sbf is making their case and spf. >> i printed it out. it's almost as long as the filing we got, as well i would imagine -- i mean, there are going to be so many case studies on this, including i would imagine by behavioral scientists because what he's saying and how he's saying it. going back to a word kate rooney used earlier in the week he seems like he's disassociated from what's playing out in realtime >> talking about chapter 11 being a mistake. i have two weeks to raise $8 billion. we'll have more on ftx and crypto coming up on tech check and you will not want to miss an
10:51 am
interview with airbnb brian chesky talking about the coming year and patrick spence of sonos is on the heels of earnings as they see some trends stabilizing. "tech check" begins at the top of the hour. ♪♪ ♪♪ be ready for any market with a liquid etf. get in and out with dia. thinkorswim® by td ameritrade is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support.
10:52 am
that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back. what if you were a global energy company? with operations in scotland, technologists in india, and customers all on different systems. you need to pull it together. so you call in ibm and red hat to create an open hybrid cloud platform. now data is available anywhere, securely. and your digital transformation is helping find new ways to unlock energy around the world.
10:53 am
i started as a single mom with $2000 and your digital and a passion for new orleans. i'm lauren haydel owner of fluerty girl. today, my tiny online shop has grown into eight stores. we're a must-stop shop for unique nola-inspired gifts. lauren doesn't just create cool nola merch; she creates opportunities. small businesses like lauren's open doors for neighborhoods to thrive. support your community. support small business.
10:54 am
welcome back to "squawk on the street." we are live in liberty media day. it's investor conference and i brought you the latest from john malone and greg mufay and joining us now is jennifer we talked about mufay and malone about the ad market. the run rate is $1.88 billion in terms of ads. >> yeah. >> what are you seeing both on pandora, podcasts and the like >> it's a tough market out there. we watch it every week we're tracking obviously the pacing of bookings and there are some weeks that are stronger than others. we have the three categories like you mentioned we have pandora which is the biggest platform which is owned and operated and sirius xm and
10:55 am
the broadcast business that is dominated a lot by podcasts and we've invested in that significantly over the last couple of years and there are strong categories, restaurants, travel and weaker categories including financial services and others crypto will get pretty weak, i would think. >> we're just focused on finishing the year strong and continuing to invest because i really believe there's tailwinds on digital advertising and we want to be there when it comes right back >> would you continue to invest in podcasting because there seem to be a lot of investing and spotify which makes it a key part of their business at least for some period of time and many people say the market's glutted at this point. there's just too many podcasts and perhaps not enough advertising. how do you view it there's certainly a lot of competition for the content. our strategy is pretty unique. we see it two ways, really we have a lot of great properties like audio check,
10:56 am
nbc, conan, office ladies and crooked media. we have the portfolios today and we look at we broadly distribute and the content creators want to be on all of the platforms and we talk a broad based distribution approach and we look for opportunities to use that to bring listeners back to sirius xm. so conan o'brien just launched a channel this week on sirius xm and he has this fantastically popular podcast, conan o'brien needs a friend and we are bringing back content on sirius xm and that's our approach on podcasting. >> the core business always comes back and i'm always asking you or the former ceo, as well about car sales and used car sales. how are you viewing things at this point in terms of the auto market, and obviously, such an important component of xm listeners? >> it absolutely is still the core of our business
10:57 am
in the fast 15 months auto sales have been around 13.5 million and the sar rate hasn't been that much change october we started to see a tick-up and inventories freed up a little bit and i would expect that to continue to get better going into next year used cars, i'm glad you pointed it out because so many people focus on the new car side, but used cars have been up 10% this year and nearly 50% of our sales come from the used car side of the business and that's not expected to change that much going into next year we'll see. my expectation is supply will come back and thereal question is what happens with demand with the economic uncertainties >> how much discounting do you have to do in order to keep people >> for us? >> yeah. >> we have a really strong value p proposition. we launched content. we use selective brands to retain customers and we have a
10:58 am
strong history of raising prices over time. when we launched this service 20 years ago it was $10 a month our core product is now $18 a month and that's 3% on average every year that we've increased prices and we'll look to selectively do that going forward. >> what do you find in times spent with sirius? i ask in part because i have it in both of my cars and i have apple car play at this point and the opportunity to very easily listen to other competitors. do you find it's going down in terms of listening to your viewers or your listeners? >> our share of car is still, we are the strongest in terms of other premium provider out there, and it does differ by demographics, and our longtime consumers and one of the things that we were concerned about during the pandemic is people aren't in their cars as much and what might happen with turn, but the reality is if you're in your car for an hour a day or ten minutes a day, if you have the content you love on sirius xm.
10:59 am
you still want to listen to sirius xm even if it's ten minutes a day. even though we haven't seen it in turn during the pandemic and going into the slowdown. >> howard stern as you're hang down in florida, is he coming back to the studio >> he was in the studio to interview bruce springsteen which was a phenomenal interview and that will be on hbo, keeping it in the family and he's at the top of his game and have you brought people back in 6th avenue >> there's a lot of talent and there are shows going on and not just on 12/21 and also miami, too. >> miami, too. jennifer, always good to catch up jennifer witz from sirius. >> back to you >> great stuff today, david. >> a check leading the s&p higher and another retailer,
11:00 am
bath & body works focused on inventory and expense management those shares are up after the bell that will be in focus and more tech names, specifically applied materials and palo alto. meantime, stocks are lower treasury yields are higher the dollar slightly stronger gold is under pressure and that will do it for "squawk on the street." "tech check" starts now. ♪ ♪ welcome to "tech check." i'm jon fort, with deidre bossa and carl quintanilla the tech stocks are seeing another day in the red and is there hope why some are pointing to sisco and nvidia as travel demand continues to serve the company launches a bunch of new tulles and sonos ceo, patrick spence, listen up. speaking of listening,


info Stream Only

Uploaded by TV Archive on