tv Fast Money CNBC November 28, 2022 5:00pm-6:00pm EST
and that's what every official has been saying. i don't think the market is going to be surprised by that, because we know there is more to do it's about how much, how fast, and we're kind of moving on to i think what you're saying, which is what's the economy going to show us. >> right. >> not how much more does the fed -- >> you better not go all bullard 5 to 7%. all right. i'll see you tomorrow. all of you as well "fast" is now. right now on "fast," an unmitigated disaster that's what stephen roach is calling china's covid policy what it will mean for our markets here at home plus, a ba humbug holiday? black friday hit a report, but could it be hiding a lump of coal we dig into the numbers to find out how strong the consumer really is. and a three decade deal. we'll talk to tabula about his ad with rackspace. i'm melissa lee in the heart of times square on the desk, karen finerman, dan
nathan, the dow nearly dropping 500 points, closing down almost a percent and a and a half the nasdaq seeing even losses the moves coming as wall street grapples over the unrest in china over zero covid policies and what that means for market and supply chains. apple down more than 2.5% after the hit to production of its latest high-end iphone could be double than what expected. lumen technology shedding 6% a better outcome for casino stocks china granting wynn resorts, mgm provisional licenses to continue operating in macau went up more than 4% melco up more how much was it, all the protest video we started seeing over the weekend? >> we call it a sea of red what was going on in the u.s., the s&p 500 has rallied 15% over the last four or five weeks
right to the downtrend where the 200-day moving, the vix came back into the uptrend that's in place throughout this whole year that's really been a good spot to sell stocks down near 20 we had the hen-year u.s. treasury 4% over the last couple of weeks the 40-year wise and the 210 spread to 80 basis points. that's not something we've seen in an awful long time. and crude oil making near 52-week lows you put all that together and you say to yourself here, it's not that optimistic of an outlook, especially after the enthusiasm, as we see in the stock market, the lack of panic that we see in the vix but to me, what crude oil and what yields ten-year are telling me is the markets or parts of the market are starting to price in slower growth slow throw in the china situation here and if that really is going to be a headwind for global growth as we head into 2023, then the s&p 500 down 16.5% or so on the
year just doesn'te encapsulate what we're going to see next year to me, the higher we go in year end if there is a rally it's probably the harder we drop early next year. >> basically, you're saying what's going on in china is sort of the cherry on the of the bear case. >> unless you tell me the chinese are going to do an about-face on zero covid and things are going to come back online in a way where you're anticipating that supply chains are not mangled. and that's what happenle is telling you. >> definitely apple is telling you that, for sure but i think supply chains are actually easing up i think we've heard it from a number of companies. and we saw this inventory glut that came from supply chains delivering before they expected for these stores before they expected to get the goods. i think that is helping somewhat the thing -- i actually think china slowing down really does help on the inflation story, and then you get the issue, all right. well, can the fed take their foot off of the restrictive
policy a little bit? i don't know this -- we'll see how quickly this zero covid policy gets changed or loosens up. i'm not really quite sure. i don't know >> things are very different in china. they had this policy in place for some time. i don't know that xi after this unprecedented congress vote, right, for him to solidify power to that degree, i don't know if that will cause him to reverse policy what we do know, though, is national security is top of the agenda in this leadership team's mind in xi's mind in particular, guy. and we've been saying for a long time that china just one lockdown away from mangling our supply chains once again and i'll put out there either a lockdown caused by covid or a lockdown caused by military law, whatever the cause is, we can see real disruption. >> no question maybe that's their game all along. and mr. roach will speak to that i definitely have posited that before it doesn't necessarily matter.
i think it just reinforces the point. in terms of the market, though, dan hit all the salient points in terms of the 200-day moving average. we traded up to it we traded up to the downtrend that's been in place since this time last year every time the vix has gone below 21 over the last 18 or so months, it's been an opportunity to sell stocks all those things came into place. and oh, by the way, inverted yield curve to the town of 80 basis points probably headed to 1% is just not bullish again, i'm not an exist. but i'm smart enough to know that it's not particularly bullish in a slowing environment. what are you willing to pay for stocks i think this rally mirrored what we saw in the summer it's something we've talked about happening now since the middle of october. and i think we exhausted ourselves last week and we're seeing it now today. >> yeah, jeff, your thoughts on the markets? >> yeah, so as he does, i think guy mentioned a lot of really important things and i think the yield curve is one of these things that we ignore at our own peril here it's the deepest yield inversion we've seen in the last 40 years. if you go back and look, history
is littered with these really sharp equity rallies with inverted yield curves that ultimately don't stick and one of the things i can't help but focus on is since the october low, google, amazon, tesla all negative microsoft lagging. apple lagging. so the top of the market still feels risky to me. and that's going drag down the overall index. we've talked about this before but you still need to see some valuation resetting. we've talked about a name like apple, for example it was already in a vulnerable spot, and now you have china on top of it. failed again at that downward sloping 200 day. it's now below the 50 day. and it's still a stock trading at 23 times forward earnings so if you get this compression in demand for consumer electronics and other things, it's going to pressure that multiple you look at these levels like 120, 100 for a stock like apple, and i think tesla is a very similar story. >> dan, how much more should we go lower, that is, when it comes to the big cap tech names in
order to reach a sort of equilibrium? >> i think to the point microsoft, apple, google, amazon, tesla, the five largest tech stocks in the market, the five largest stocks in the market, they all guided downpour the quarter we're in right now if you think that we're not going to retap some lows in the broad market, then those stocks are a buy. but i actually think they're going to lead us to a retest of the lows when we finally do have a bunch of strategists throw in towel on 2023 earnings one of the big reasons we know s&p earnings have not been particularly good this year. they would have been down. now you can say we can't prove that kind of factual what would have happened otherwise. but we also know the disconnect between where the commodity of crude is and where energy stocks are, if you look at the xle and the oil services names, they made up a good part of whatever gains we're going to have in 2022 i think has been saying this for a few weeks, if you're going start to see that declining into q2 next year if we do see these large tech
companies that don't get back on their horse, if we do go into recession, in the stocks start discounting that, then we have a situation where stocks are very likely in q1 of next year to retest the lows we made in october. we just have to get to a point where investors feel like the multiple on s&p earnings, they both seem fairly discounted, and we're not there yet karen, for apple specifically, we saw 2.6% decline today. it felt like that was based on china and the expectation that iphone production would be disrupted for i don't know how long however many units not sold this holiday season >> right. >> china, if everything dissipated tomorrow, that there would be a large snap-back rally in apple i don't know if you feel like what we saw today, the decline that we've been seeing is a reset in expectations or if it's just specific to this situation here, which could be resolved and then we go back higher >> i'm not sure which it is. it could be a little bit of both we always talk about this issue of are these sales delayed or -- >> denied.
>> denied. i think in the past, when iphone has had some issues like this, it's been delayed, not denied. but then that begs the question, to dan's point, what is the right multiple let's say they get those sales back. >> right. >> what is the right multiple in this market? do they deserve a premium multiple absolutely how much of a premium? i'm not really sure. i'm sticking with my apple, though i feel like, you know, it's definitely not my biggest bet. i've lost money in the other faangs much more >> do we need to reset expectations >> i think we need to reset earnings expectations really across the board all we've seen so far is multiple compression and i think you're going to see a transition from people worrying about interest rates and inflation to worrying about earnings that's why i think you're seeing relatively underperformance from the likes of apple, for example. carter had a chart flagging this maybe even over the weekend or last week, but just talking
about apple not only just from an absolute perspective, but relative to the overall market and that relative weakness tells me that investors are starting to look elsewhere because they are worried about the demand picture. whether it's china as the catalyst, we can make that argument but i think what's going to continue to pressure the stock lower is the demand side of the equation, and ultimately that what that means for earnings >> all right our next guest calls china's zero covid policy an unmitigated disaster stephen roach is a yale university senior fellow and has a new book coming out tomorrow so you can all get it tomorrow "accidental conflict: america, china" and the clash on false narratives." he can either let this sort of play out or really crack down. what do you think happens? >> he is not going to drop his zero covid policy. he is going to tweak it on the
edges. but autocrats can't afford ever to lose face and for him to admit that this is an absurd, impractical, harsh policy is not in his dna but, you know, he'll reduce the quarantine restrictions a bit, and there will be some easing off. but what he's got to get is a break from the highly transmissible omicron. that's unlikely to happen for quite some time. i mean, everybody knows how transmissible these variants are. i finally got hit by it two weeks ago myself it's absurd to think that he's going to reduce this policy at a time when the transmissibility is surging >> do you think that it gets to the point, though -- because we do know that xi's top priority is national security, and that he's willing to sacrifice some
degree of economic growth for that the security of just not his people, but security of the party. and in that goal, stephen, do you think he enforces military law? do we see this escalate to the point of a tiananmen square, for instance >> no, we don't. i think every newspaper that i looked at today, i probably looked at five or six of them, and they all had the tiananmen square comparison in the lead paragraph. tiananmen square was triggered largely by a young generation whose political champion, the former leader and reformer hu yao bing had died. and the movement became a movement that was focused on these political issues xi jinping, as you know, has no political opposition he took care of that in the recent party congress.
so this isn't about politics this is about understandably frustrated and angry population who is suffering job loss and economic hardship from a ridiculous covid policy. >> so he doesn't admit that he is wrong he tweaks around the edges things largely go as they are. and that's it, stephen i mean, that seems to be so limited. it does seem like these protesters are of a younger generation they did not witness the miracle of economic growth that he sheparded in the '90s or so. they were not young enough to remember i'm just wondering if it just ends here. because some are even calling for his stepping down, which would be an offense that would be jailable in china >> yeah, i wouldn't bet on the autocrat stepping down i don't think he's going to call for martial law.
i think he does have at his disposal a far more repressive and surveillance technology than was evident back in 1989 so he certainly knows how to restrict the discourse and the concerns that are being expressed by the protesters. as i said, he will tweak some of the restrictions at the margin and hope that as we've seen in this country, that the incidents, these variances ebb and they flow, and he'll get a break as omicron starts to recede as i write in my book, he could have been so much better for china if they had collaborated with us on health care practices and learned from our experience in developing these mrna
vaccines, if they had vaccinated their vulnerable elderly population, he wouldn't be dealing with this. but he doesn't want to collaborate and cooperate with us, and we don't want to collaborate and cooperate with him. so that's why i'm worried about this conflict escalation that i write about in my book >> so does this change at all what's going on in china right now? does this change at all the backdrop for companies doing business in china in your view >> i think it makes any company more mindful of china concentration risks. you know, you've been talking about apple here apple is a classic case where it had bet 100% on the production assembly platform in guangdong province and lo and behold, it's now just starting to make iphones in india. so supply chain diversification, weaning yourselves just from relying on the world's largest and most efficient offshore
production platform doesn't make as much sense today as it did before this conflict and covid-related disruptions gripped the chinese economy. >> all right stephen, always good to see you. thank you very much. we'll all be looking for you book out tomorrow. stephen roach. all right. so what do we do in terms of thinking about a nike, a starbucks? we've been talking about this for a long time. but it seems like there are more and more examples again and again and again of the risk that might not necessarily be priced in, guy. >> yeah, i think it's a broader market story as well you're right to focus on those stocks i still think apple's got the gigantic crosshairs on their collective back. and the chances -- listen, maybe it's tail risk, maybe it's 10, 15%. but if this thing escalates, apple is going to be in the crosshairs of china, without question and just to throw apple in there one more time, don't discount now a very public feud seemingly going on with elon musk in terms
of his role at twitter now, in terms of apple as well there are so many headwinds they're facing, china not the least of which i don't think the broader market is fully encapsulating what could potentially happen there >> all right coming up, bob iger back at disney what he had the say at his first town hall meeting since reclaiming the company's top spot plus, shake it off why one analyst wasn't harboring any bad blood over the taylor swift live nation fiasco ♪ ...i'm over 45. ♪ ♪ i realize i'm no spring chicken. ♪ ♪ i know what's right for me. ♪ ♪ i've got a plan to which i'm sticking. ♪ ♪ my doc wrote me the script. ♪
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welcome back to "fast money. bob iger holding his first town haul since returning to the ceo position at disney he took questions from employees and confirmed the hiring freeze set out by his predecessor he said the company needs to focus on making the streaming business profitable. shares of disney closed down over 3% today. shanghai disneyland will be closed starting on tuesday there is a lot going on with disney do you like this ceo do you think the 3% move today
was overall markets dragging it down do you think there is a concern about china? what was behind that >> i think it's a little bit of both you have to attribute some of it to china but overall the stock has been pressured since its last earnings release overall, i like bob iger i think he has a track record here i think maybe figuring out where some of the content goes in terms of its platforms, cutting costs like you mention i did like hearing the discussion about profitability during the town hall today i think that's super important so what you're talking about the ad based generating higher revenue for the user or the free version, an increase in subscription fees, all of these are very important even if it means slower subscriber growth next quarter will be very telling. i think we'll see some of that impact in december overall, the question in my mind, i think the question in the market's mind does this focus on profitability pull forward that 2024 disney profitability state. that's the key having streaming become cash
flow positive is very important. can the company finally start paying a dividend again? that's key the stock is at the same price it was february of 2015. and back then it was trading at 20 times forward right now it's trading at 22 times forward. so what is the right premium for streaming? i think that's another really important question it's certainly not 40 p/e terms, what it was in 2021. but 2 seems reasonable to me there is certainly the possibility for near term volatility >> when i first sawcoming out of the meeting iger focuses that the company is going focus on creativity which made me think oh, lack of focus on profitability. but then, jeff, what you had talked about came up and that's basically giving up this dream of growth at all costs for the streaming side of the business which had been the mentality for a loft the services that started up with that out of the way, disney seems a much more stable sort of -- a more stable trajectory in terms of profitability. karen, what do you think of the changes here, what came out of
the meeting? >> growth at all cost is a lot more expensive than it used to be. >> yes. >> because of debt, right? and they are not without debt from that fox acquisition going back i don't know, three or four years already. i think for morale, that's something that's really important, that he is back but i think chapek also wanted to get to profitability. he was willing to spend more on streaming. but for the rest of the businesses, he really did want to, you know, he wanted to improve the businesses i don't know i feel like this valuation here, it's fine. it's a premium it deserves somewhat of a premium. they are disney. but i think that there is still a lot of work to be done and i don't know that the whole space, particularly the streaming space that is, the whole space is really under a complete reevaluation. i don't know who is going to survive. i think there will be some consolidation. i don't know that -- disney is not going to be consolidated they two be the consolidator
>> he said they're not going to sell the am which is interesting. there must have been a question about that let's see if they actually made a bid. he said no, i don't think so this probably has to do with the box office they had the big release this weekend of one of their animated shows. i'll just say this, about what they did on the don't front as the launch of disney plus. they put out a lot of great content over the last couple of years from marvel, from lucas, all those sorts of things, and they probably do what they need to do to establish a beachhead and compete for netflix. it was also an arms race when you think about what apple was doing and amazon and hulu and some of these other streaming networks i think the investors should be happy that this guy who is the original architect for all the plan is focused on fixing it or getting to it the next stage i'll say this. the night we had the deal announced or were talking about it on "fast money," all of us were it probably goes lower with the market i don't think it acts worse than some of the names in the space here but this stock will have an eight handle on it again and
could go back to the march 2020 lows which was somewhere just above 80 bucks >> all right there is a lot more "fast money" to come here is what is coming up next >> analysts got a blank space, baby, and they're writing live nation why they think this stock will shake off the recent taylor ticket fiasco. plus, black friday boom. retail sales coming in hard. and cyber monday still under way. but with inflation lingering, is the consumer really that strong? you're watching "fast money," live from the nasdaq market site in times square. we're backig aerhi rhtft ts. ♪♪ this... is the planning effect. this is how it feels to know you have a wealth plan that covers everything that's important to you.
live nation. analysts at citi upgrading the stock to a buy saying the company's risk reward looks more reasonable after the recent taylor swift ticket fiasco citi did cut its price. analysts laying out a 20% likelihood that live nation is forced to split into two firms you've been in this for a long time, karen. what do you think? >> so there are two things going on there is the taylor debacle, right, which we all know 3.5 billion orders things didn't work out well. but ticketmaster was pilloried for sure however, this was extraordinary, extraordinary demand and ticketmaster was not the only one who sold tickets for this was not the only ticket supplier. >> oh. >> others did as well. you haven't heard one thing about them they had problems just as bad if not worse. but ticketmaster is, you know, the 900, 800 pound gorilla this is a little bit of a black eye. but it's kind of over right now. there were too many ticket demands for taylor
but the more important thing is the doj issue, right for a long time, people have been -- since actually the merger in 2010 or 2012, people have been concerned about them owning tickets and venues and having too much power. i think if this the 20% likelihood that that deal is undone, then i think it's kind of you can't own it. i think the chance of that is lower. >> thank you. >> than 20%. but so i'm still long. it is not cheap by any stretch they are in an extraordinary position i do think that post pandemic, things really came back hard but i think they'll continue to grow >> guy >> yeah, to karen's point, trade is probably 55 times next year's numbers. maybe you have 30% eps growth, which is good. but it's still an expensive stock. and what i find really interesting is the broad range of price targets in the analyst community. it goes from 70 on the low end to 140 on the high end
i think the average price target is 106 i think you probably with the doj stuff, maybe having to go in front, all those things might have marked a short-term bottom. so if you're looking for a trading stock, you might have it but i think it's hard to make an investment thesis in this environment given the valuation and given some of the hurdles they face. >> it's a pretty courageous call on the part of citi when there is so much uncertainty ahead, and there are to be sure congressional hearings on the whole matter, because all these congress people are outraged that their couldn'ts buy taylor swift tickets, jeff mills. what do you think of this call >> i agree with guy in the sense i think you can play it for a trade here it's something like 30% below the 200-day. it's right at that $70 level, which has been long-term support. so i think you can play it for a trade, up to at least 80 in the near term. and i actually like it longer term i like the business there. my issue over the next 12 months
is this is a cyclical stock. i really feel like there are no two ways about it. you can't really draw a straight line between the 2022 business fundamentals and what we're likely to see in 2023 and 2024 you can chart this stock's relative performance versus manufacturing pmi. those things move in lockstep. it wouldn't surprise me if this was an underperformer in 2023. coming up, the real read on retail black friday shows showing up strong but is there trouble under the surface. we'll dig into that next dollar general as options traders pile in ahead of earnings where they see that stock heading next "fast money" is back right after this get your trades to go with the "fast money" podcast catch us any time, anywhere. follow today on your favorite podcasting app we're back right after this.
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there were bright lights ulta and merck hitting all-time highs. black friday scored a win for retailers at least on the surface. online sales the day after thanksgiving topping $9.1 billion. that's a report according to adobe analytics. what does that number look like when you account for inflation let's bring in joe livono. so owe, we're talking about this oh, on the service, all the headlines are cheery the consumer is still strong when you think about what inflation has done to prices and you think about mentally backing that out, it would seem to me there should be a decline. >> yes well, look the nominal numbers look okay because the prices are higher. so the units times the higher prices gives you good nominal numbers. it may turn out that november consumer spending looks great. and november 2007 looked good. and december 2007 looked good. and it turned out that was the
peak the economy entered a recession in january there are three factors that are going to hurt consumer spending going forward. one is higher rates. the change in interest rates has been the largest in 25, 30 years. you look at mortgage rates very high food and energy costs running above wage growth. and the third piece is wealth. households are losing in the stock market they're losing in the bond market and their home prices are slowing. all three of those prices suggest to me that the economy is going to be a lot weaker next year >> we started to hear from retailers also was a less of a use on the part of the consumer of debit and cash, and more on credit at a time when obviously the rights on credit cards are through the -- they're through the roof before, but now even more so. i'm wondering how you factor that in terms of viewing the consumer's health as they lever up in a time when rates are rising still. >> they're levering up in part because the average consumer's real wages is declining and credit cards are a way to fund a lifestyle change people want the get back to normal i was happy to come back into the student.
hadn't been in a long time everything is remote and people are still -- think of the vestiges of that excess demand are still there but at some point if the economy weakens as i expect and the labor market slows, you'll see credit card debt go up higher as people try to fund that spending a bit longer but eventually it will turn down and the fact that there has been too much debt usage is a problem. it's not a sign of health. >> yeah, joe, appreciate obviously you coming on. $5 trillion now consumer debt approaching, if not through it north of a trillion in credit card debt in the united states i mean, these are astronomical numbers that you still have people come on and talk about the health of the u.s. consumer. what's the disconnect there? >> i don't think there is a disconnect so much, guy. again, we were coming out of a pandemic and all the lags in the normal relationships have been askew. but i don't see how the consumer, given what i laid out, is going to be able to sustain these rates. if you look at household net wealth through the second quarter, the fed's data show
over a $6 trillion decline in household net wealth so you have $6 trillion decline in net wealth. $5 trillion in debt. i think the issue, guy, is the spending is contemporaneous. it tells you where you are now it's not forward looking if you look at things like consumer sentiment, expectations, which are in the index of leading indicators those are at recessionary levels so the question is how bad is the downturn, not whether we're going have one >> so, joe, let me ask you, okay, we accept we're going into a slower economy what do you think is going to happen to credit quality obviously it gets worse. how much worse do you think it gets >> i would just correct you, karen and say it's going to be a krgt economy not like we had in the first half of the year with a we lose jobs and the unemployment rate goes up. if we look at the loan office survey, we're seeing banks start to tighten lending standards both to commercial and on the industrial side, the commercial
and stateside and households so it could get a lot worse. it kind of depends, one, what happens with food and energy do those come down that will lower inflation. it will add liquidity into the is it's like a tax cut that will help the fed can ease rates as consumers feel more flush. and what's the fed's response? do they continue to raise rates? and importantly, keep rates at a restrictive level. my view is they won't. jay powell will flinch when the labor market weakens, i think they'll fold and fold quickly. you may have higher long-term inflation, but that will help risk assets, especially on the credit side. right now, karen, we're pulling a significant amount of liquidity out of the market. the balance is just started. the correlation on a change basis between the s&p and the balance sheets about 94. and right i know based on liquidity trends, s&ps have not hit their low for the cycle. so to me there is a lot still that has to come through the system and as that happen, credit trends will get worse, because as you know, credit and equities tend to be interconnected.
>> what's the magic number in your view where jay powell flinches >> when we start to lose 150,000, 200,000 jobs a month. this is a weird way to put it. when there is concern the unemployment rate is going to go to 5 and possibly higher and that could happen with the rate in the low 4s if the job numbers start to show a couple 100,000 loss a month >> joe, good to see you in person >> thank you for having me thank you, everybody >> joe livorgno. >> it's the last piece of this whole puzzle joe just talked about how we have seen risks come down as rates have gone up that's what happened here. we're all sitting here waiting listen, there is a silver lining scenario where maybe the recession is not that deep, and maybe unemployment doesn't go up meaningfully because of some of the issue weaves been dealing with for a while and immigration is a big part of it maybe it is different this time as it relates to the unemployment but it seems like very likely he seems very convicted that we are going to see a contraction so a recession is going to come. it just depends how bad it is.
when do stocks start to discount that >> jeff, hoy did you feel when you saw those black friday-cyber monday numbers come rolling in were you happy or raise an eyebrow? >> it's been an eyebrow raiser it's the less stuff at higher prices story you see it all over the place. we looked at a chart related to this months ago and it looked at nominal sales that were trending higher and real sales that were flat and now you can see really specific examples of it. pepsi i think is a great example. overall food and beverage market, you've seen about 14% price hikes. what's pepsi's revenue growth? about 15%. same thing in clorox you even see it in names like am amazon i think you're seeing less stuff at higher prices that's what is driving some of these numbers. that's why i continue to favor some of the discount retailers i know we're going to talk about dollar gen in a second that's where i am in the consumer story. >> let's talk about dollar gen one trader making bet against
it mike khouw has the action. what did you see >> so dollar general traded well above average daily options volume today right now the options market is implying a move of about 5.5% by the end of the week. that's in line with the movement that we've seen over the past eight reported quarters. the most active trading was going on in the december 240, 230 put spread we saw a block of 709 of those trade for a little over a dollar and a half ultimately, about 2200 of those traded by the end of the day the buyer of those put spreads is targeting a move below that 240 put strike by at least the premium that they spent and maybe as low as that lower $130 strike price that would be a decline of 6 to 10% over the next 2 1/2 weeks or so. >> thanks, mike for that for more "options action" on friday 5:30 eastern time tab bowl la topping the tape what is behind the massive move
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welcome back to "fast money. oil staging a big reversal today, closing higher after hitting its lowest levels of the year earlier in the day. rumors of potential opec plus production cut helping erase early losses energy stocks meantime closing largely in the red exxon, chevron, conoco closing lower in the red what's behind this divergence, guy? >> we talked about it for a while. i know jeff is going to speak to it i think the biggest part of it is crude can go sideways to slightly lower in this environment. the fact that so many of these companies are so much better run and their balance sheets are so much more pristine than they've been historically. the irony of course is esg and the biden administration is probably the best thing that ever happened to these energy stocks i think the disconnect is there. now at a certain point if crude continues to go lower, it's going to have an effect. but right now at least it still seems to be in a bit of a sweet spot >> jeff, you were talking about
this in our conference call earlier today. >> i know we just had the chart up it's super interesting if you look prior to this revolution, the correlation between energy stocks and oil was pretty low and all of the sudden post shale, profitability took a back seat for a lot of these companies. they were focused on production growth and they became highly correlated with the commodity. to guy's point, i think you've seen a reversal of that. that correlation has backed down to the preshale boom levels. i think it absolutely has to do with the capital discipline, these companies being less impacted by the commodity. and you see it now the energy sector relative to the s&p is still holding up relatively well. exxon, chevron holding key levels even though you have seen some volatility recently, even though the commodity has been bouncing around, i still think the stocks are a reasonably good place to be >> i don't and i think that spread is going to resolve itself by maybe crude going lower to sustain put and the energy stocks coming in. >> you were on grasso on his call >> i missed his call but i will tell you i think it's
a very crowded trade and i think technically it's in a tough spot and i think we're likely to see some people kind of find different places to put their money in 2023. >> coming up, yahoo's 30-year deal and the software stocks surging on the partnership the ceo will join us next to break down the digital ad space. don't go anywhere. "fast money" is back in two.
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welcome back to "fast money. shares of ad tech firm taboola topping the list today internet giant yahoo announcing it will take a near 25% stake of the company, part of a 30-year agreement which gives taboola exclusive rights to native ads across yahoo's digital brands. here to take us inside the deal is adam singolda, ceo of taboola. adam, great to see you. >> thanks for having me. >> it must be a crazy few days, cooking the turkey and doing this deal. what's behind the 30-year number that seems like an extraordinarily long time for any company in any industry, let alone an ad tech company in a vastly quickly changing internet digital ad space. >> i would say not long enough taking a step back, when you look at where we are, i think today is a big win for
journalism, for good guys. we're trying to build in alternative to social networks that are kind of going through flex these days with privacy and all these issues think of the open web and open journalism and the importance they play for the future of our children, having a trusted environment when consumers can learn things, not on tiktok. 30 years is just one step forward looking to the future saying we're committed to how the future will look like. >> adam, is there anything about the current environment that informs this deal? i know why you wanted to partner up with yahoo. it's a massive audience there. is there anything going on right now? we've seen some of the largest platforms really pull back on spending, right? we're seeing ad spending in general kind of plateau or decline after ten years of just gangbusters growth. >> when you think about google and factbook and amazon, they have so much scale it's so much easy to spend with them you open an account and it just works. in the open web, it's very fragmented
it's a $64 billion plus market, but it's so difficult to spend it's part of this partnership. now around $2.5 billion in revenue. that's a huge step forward making advertisers a little bit easier for them to say we want to find the publisher, the open web in a safe environment for consumers. this is important to find an alternative to social networks >> hey, jeff mills here. so just a quick question in terms of what you're seeing overall in the digital ad space. i feel like potential ad dollars going less toward grand advertising, more towards direct response are you seeing that? and maybe talk us through what companies that may be having an impact on. >> yeah, that's a good question. i'm seeing three things. first what we just talked about which is privacy issues going into contextual. and i think the future will be much driven by not who i am as a person, but rather what am i reading as a proxy for who i am. that's one we just talked about that one. and the second one is exactly
what you said, especially now in times of recession, we're seeing the value of attribution and knowing the dollar and putting here, what is the value it creates for me as a client, as a business so performance advertising is much more resilient versus brand advertising. i think everyone here, they have learned a very important lesson as to how important it is to know how to spend those dollars and drive towards performance advertising. and i will say the third one i think which is more related to the pandemic is e-commerce so much nicer now to go to "the new york times" wire cutter and check out the review and say i trust them i'm going to buy that product. these are the three trends i'm seeing in the advertising market at large and that's a great opportunity for all of us at cnbc and the open web. >> but at large, is there a contraction in those dollars >> i don't think so. i think time spent is going up i think apple is spreading news on every apple device. i'm very optimistic about people spending more time with news and trusted information and as such an opportunity for advertiser
20s spend. also, i think we're going to see a huge wave of millions of advertisers who just cannot buy social anymore because it's too expensive, because privacy has been making it hard for them to succeed with apple and those things they will look for other places to spend so i think in fact we'll see demand increase over time because of those issues. plus consumers want to find trusted sources of information so they'll spend more time >> just quickly, we're almost out of time. it sounds like the dollars are moving away from a meta then >> i bet there is going to be huge opportunity for contextual advertising, open web, trusted, stuff like that. >> that's your nice way. we'll leave it there thank you. adam singolda, the ceo of taboola. karen, you're a meta shareholder. >> i am. thanks for pointing it out meta shareholder it's been very, very painful i always come back to it and it hasn't been right, the valuation there. i do think that the ad market is growing less slowly, maybe even shrinking a little bit is possible
however, it's still enormous and if we see zuckerberg do a little bit on the cost side, i think it will be very good for the stock. turkey, the point, it's a secular shift 245esthat's going continue on. i suspect we see it slow down a little bit 's tndouanto wt invest in for decades to come. up next, final trades. the pursuit is on. the pursuit of outperformance at pgim. with deep expertise to outthink across multiple asset classes, actively managing investments in the world's public and private markets. outscale, with the resources to serve 1,500 clients in 52 countries. and outlast, with long-term conviction that looks beyond today's volatility. join the pursuit of outperformance at pgim. the investment management business of prudential. another busy day? of course - you're a cio in 2022. but you're ready.
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time for the final trade let's go around the horn guy? >> look at that good-looking man with karen finerman. lower rates means higher utilities. con edison >> jeff mills? >> i think genuine parts looks interesting here it's a little overbought but i like it on pullback. a good defensive name for this market >> karen, you have a special guest today. >> i do. i have my son jack here for thanksgiving week. we talked it over. jack, what have you got? >> it's great to be here thank you for having me. we're really excited about lyft.
they've turned the corner on profitability. and i know some of you out there a little bit nervous, but now is a great time to buy. >> well done. >> as guy would say, #stud xle, not a fan here. i'd be a seller. >> you did that almost as well as conner, tim's son >> who is make you money i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now hey, i'm cramer, welcome to "mad money," i'm just trying to save you a little money. my job is not just to entertain but to educate and teach about days like today. call me 1-800-cnbc or twee
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