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tv   Closing Bell  CNBC  December 2, 2022 3:00pm-4:00pm EST

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quote, censoring twitter by not presenting it on the platform. i would say that is a company that is making a decision based on its business interests as to what it wants on its platform. that doesn't mean it is being censored to me at least. hey, kelly's back next week. it has been a wonderful several months with you. >> tyler, thanks thank you. i appreciate that. thank you for watching "power lunch." >> we'll see you the dow turning positive "closing bell" right now >> stocks started the day deep in the red following a hot jobs report that enflamed inflation fears but we're rallying as we head into the close. the s&p just below the flat line this is the make or break hour for your money welcome to "closing bell." i i'm mike santoli in for sara eisen. there is a 1.25% decline in the s&p 500 to start the day it clawed its way back bond yield jumped, moderating as
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well the nasdaq composite still underperformer, large nasdaq stocks still provide something pressure but even that has eased up the russell 2000, early sign of some of the recovery today and is outperforming here is a look at the action for the week, the maj averages poised to lock in gains after wednesday's power pop. that comes after two strong months coming into this week as well coming up on today's show, we'll talk to the ceo of a stealth winner this year, steel producer new khcore which is up today we'll find out what's driving the outperformance in that space. plus, we'll talk to the analyst who says elon musk's first delivery of a tesla truck last night is putting the other semimakers on notice let's put the market moves for today and the week into broader perspective. we clawed our way up in the s&p 500, up toward this level that represents exactly where the old 2022 downtrend line sits
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we have been talking about this, connects all the different highs, barely nosing above based on how you do it, i drew the line below the peaks, but it is now at that border line between is this just another fleeting rally or something bigger right here also, love to point out we're just -- go back to about early may where we are right now, over the 4,000 mark, that's when the fed funds rate was below 1, we're above 4 now. all these things that happen in the interim, declining earnings forecast, have been absorbed so far. so far it is more resilient and seasonal strength. ten year note yield as well. it looked like it is rolling over hard, though staying above some of the important summertime highs around 3.5 that is where we were in mid-june that was an earlier low in the stock market we felt 3.5% was going to be too much for the economy and the markets to take. even down on the day, though shorter term treasury yields are
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higher as the fed is still in the game let's get to more on the jobs report from this morning, the november number coming in hotter than expected, adding 263,000 net new jobs wages, growing at .6% on annual basis. on a month over month basis. that's higher than the .4% growth we saw in october it is good news for workers. not great for the fed necessarily. which is trying to cool the labor market to help bring down inflation. let's dig into the report, joining us now, jpmorgan asset management jack manly and karen kimbrough. welcome to you both. karen, put this number into the picture you had previously and you're monitoring at linkedin about where the labor market sits could you reduce the other signs of decelerating demand for workers? how does this change the picture if at all? >> yeah, absolutely. so this was definitely a hot number as you say in terms of
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headline if you look under the hood, you are seeing some fraying around the margins. for example, labor force participation rate has been inching down over the last three months you're seeing temporary employment also cooling off. these are signs, harbingers of weakness to come from our perspective, the labor market is still tight. it is still resilient. we still see pockets of momentum across various sectors but there are signs that the labor market is going to continue to cool by degrees every month by month it is probably, though, not enough for the fed to kind of want to feel comfortable. >> for sure. and, jack, i mean, the fed has done a pretty good job of making sure that investors don't get too comfortable either with what they're about to do. they're trying to stay vigilant. even though jay powell, fed chair this week, had a more balanced take on how they can proceed from here. so how does the job number today impact your thoughts on what the fed is going to ultimately do
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and what it can mean for the markets? >> frankly, i don't think that today's report does a whole lot in terms of fed thinking because as we heard earlier, there are some signs of fraying, right one of the metrics we like to look at is not just what is going on with the establishment survey, what you're quoting when it comes to the 260,000 plus jobs we saw added for the month. we like looking at the household survey that is telling a very, very different picture. we shed jobs to the tune of almost 140,000 household jobs for the month. very different story from what we're hearing in the establishment survey the labor market is not as strong not as healthy as a lot of us feared we live in this perverse investing environment where good news is bad news as you said, the numbers that we saw out today are good news for workers, they're not so good news necessarily for markets because it does mean the fed is still going to move forward. we see 50 basis points in
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december we see at least another 25 basis points coming in february, perhaps 25 basis point hike after that all of that means nothing has really changed in terms of our outlook. i think that one data point from today is not going to influenc the fed one way or the other >> jack, does that also by extension mean the bond market already had this priced? and that seems to be what the stock market is working off of to figure out if, in fact, we can see the end of the tightening campaign for now, a pause, and then what does it mean for the economy and earnings next year i'm trying to figure out the elusive soft landing or not question. >> yeah, powell still seems to think that software -- softish is attainable. i'm a little bit more skeptical about that i do see this economy likely heading into a recession in the short-term with or without the pressure of higher interest rates. we have a massive fiscal drag. we have inflation that stuck around and is eroding consumer confidence i see the economy continuing to slow
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what i don't see, though, mike, is a significant recession because there are no obvious areas of imbalance, no bubbles, nothing booming from a macro economic perspective and that's helpful per spective to have because not all recessions what we saw in 2020 not all recessions are what we saw in 2008. whatever is coming our way is going to be mild and mellow. the second take away from that is that if we get a mild mellow recession, i would not expect the fed to pivot anytime soon, especially taking rates down to zero that is, i think, not happening anytime in the near or medium term we have to get used to this environment of higher rates. it is very much here to stay. >> pretty long way from zero already at this point. karen, just in terms of what character of economic softening we might see when it comes to employment measures, there is a line of thinking that, look, employers came out of this environment of labor scarcity, hard time finding people, you still have stubbornly low labor
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force participation. are we going to see employment remain stronger than you would otherwise expect given demand, simply because of those factors and demographics and all the rest of it >> i think there is two ways to look at this the fed would like to see the labor market rebalance a little bit, a little bit more supply labor by workers, a little easier demand, less demand by employers. and you can do this in two ways. you can have employers who start to do layoffs, but that's not what we're seeing in the widespread fashion what we're seeing is employers are just slowing hiring, just taking their foot off the accelerator. they're not actually punching the brake here with their foot for us, we think it is going to be a long drawnout story in the labor market we'll see some softening next year and it is our view that ultimately this isn't a recession that is going to be catastrophic the way we have seen the last two times, it is going to be a much more mild,
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moderate experience where employers are trying to hang on to talent they fought so hard to get last year, that intensive demand for talent that we saw in 2021 >> absolutely. it was the whole story not even a year ago. see if it does play out that way. karen and jack, appreciate the time today thank you. >> thank you >> all right, after the break, the ceo of nucor will join us to talk about the performance this year, up more than 30%, and get his outlook for the industry in 2023 you're watching "closing bell" on cnbc.
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one of the relatively few bright spots in the market this year is the steel industry the etf outperformed the s&p 500 in 2022 by quite a bit nucor up more than 30% on the year joining us now for a closing bell exclusive interview is n nucor ceo leon topalian. thank you for being with us. >> thank you it is exciting we expect another record year for nucor. >> you're on track for that in terms of a record year strong results in the third quarter. you did offer guidance that there was going to be a stepdown in the current quarter due to broader economic head winds, i guess. how are things tracking. what are you seeing in your end markets that give you a sense of how the economy is performing at the moment >> i think we're not immune to inflation and watching what is
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happening with interest rates and federal policy and in terms of monetary policy but there is a number of tailwinds as well as we close out the year and go into 2023, including automotive expected to be up a million units. in 23 over 22. we see some meaningful infrastructure bill relief take shape. in 2023, the chips act, you know well, a $55 billion investment that translates to -- right now there is 27 or 28 projects over the next seven or eight years that will be built and not only do we use the chips or end users use them, nucor will be providing the steel that goes into that infrastructure there is an awful lot of tailwinds as well as we walk into '23 that we're excited about. >> seems like there are long-term tailwinds. long-term sources of demand with a lot of capital projects going on
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you think those are going to manifest the infrastructure bill and the chips act in terms of steel demand in 2023 already >> yeah, we absolutely do. i think the other piece of that long winded tail that you mentioned and you know this well, mike, not all steel is created equal. nucor is the largest recycler in the western hemisphere as you think about how we make our steel, it is all by recycle. so that opportunity with a near net zero still to our end users and our customers offers a unique competitive advantage to nucor that supplying the safest and most sustainable steel anywhere in the world. we're excited about the opportunity to continue to provide that differentiated value and i do think it takes meaningful shape in '23 and beyond. >> it is interesting because you see things like, you know, auto production is kind of stuck below what you might consider to be more normal levels domestically in north america. i'll looking at some other large kind of mineral and resource
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stocks that serve the globe, and it seems as if they're kind of waking up. is that an expected china demand pull coming and what do you see happening globally that could be a help or head wind? >> i think, again, the u.s. is the strongest economy in the world. i think the resiliency of our economy is strong as your last guests were on, we see this sort of same thing, if there is a slight pullback in '23, we don't see that protracted. at the same time, mike, nucor is positioned for the long-term we have strongest investment grade rating in our industry we have over $3 billion of cash in short-term investments on hand we have been offering a dividend for 50 years now, and so our positioning strategy is for the long-term and i think that bodes very well because ultimately the green and digital economies of this nation and beyond are going to be built with steel and the steel they get built with matters. so we're excited about that opportunity and our future
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>> is there any cause at this point for you to be rethinking your employment levels or anything like that manufacturing employment in general has pulled in a little bit, though today's jobs number had pretty strong kind of goods producing industry results >> yeah. look, i think the talent is -- that's our differentiator, the 31,000 men and women who make up the nucor family are the greatest manufacturing army assembled anywhere in the world. i'm a little biased there. but it is -- it is that team that delivers every result that we have and so how we think about developing them or retaining them, training and equipping them, and offering those that are yet to join nucor that opportunity is a unique platform for us, and how we care for our team, our average wage last year was over $140,000, mike so we have a lot to offer. we take great care of our team through the cycles and, again, great opportunities as we move forward as well for those new team members joining.
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>> what about commercial construction of various types? we know it is happening with single family housing, but it would seem as if, you know, larger commercial buildings are relevant in terms of your business what is the trend you're seeing at the moment? >> 50% of our products flow into some form of construction in this industry. so, you know, as we look at non-res construction, it is incredibly resilient over the last couple of years we see that strength continuing. there is pockets as we think about the digital and warehouse space next year. we anticipate to be off, off historic highs 2018 was the last big year in the space. that's 60% higher in '23 than 18 it is off '22 highs, 15%, 16%. but it is still in a great market, a great opportunity for nucor as we build out that piece and that sector of our economy
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>> leon, great it get the update appreciate it. >> thank you very much thank you for having me, mike. >> anytime, thank you. now let's check on the markets. s&p 500 now also pulled into the green. just barely. ending on a strong note again, recovering about 1.25% decline from earlier today russell 2000 up almost 1%, even the nasdaq is positive after the break, a warmer climate in florida relations between disney and the state appear to be thawing just days after bob iger's return and after a deep freeze earlier this year over the company's response to a controversial bill. we'll explain next and check out boeing as we head to break. getting a big jump midday on a report saying united is close to a deal to buy dozens of boeing's 787 dreamliner jets. stock up 4% right now. good luck. td ameritrade, this is anna. hi anna, this position is all over the place, help!
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about? bob iger possibly working his magic with governor ron desantis, florida is preparing to reverse course on disney's don't say gay punishment, according to the financial times. julia boorstin joins us now with more >> well, mike, a compromise could show the impact of bob iger's return on disney's relations with florida legislators. this all started back in april, when lawmakers voted to dissolve the tax district which enables disney's parks to operate independently. a change which could potentially transfer an estimated $1 billion debt load to the state and that would come at a cost to florida taxpayers. ron desantis today denying that the state would do a u-turn, that was the language in the ft story, but not that a compromise could be in the works. desantis telling nbc news, the state certainly owes no special favors to one company. disney's debts will not fall on
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the taxpayers of florida a plan is in the works and will be released soon disney did not comment on these reports, but at the town hall that bob iger held on monday, he addressed the conflict with the state, saying, quote, i was sorry to see us dragged into that battle and i have no idea exactly what its ramifications are in terms of the business itself, but i can say is the state of florida has been important to us for a long time and we have been very important to the state of florida. so, now we are awaiting that plan from florida lawmakers, we'll see what kind of compromise it could hold mike >> yeah, julia, you know, you mentioned there that the -- going through with this plan would have placed a cost burden on them, municipalities or some taxpayers in florida we're past the election. new leadership or, you know, old new leadership at disney it would seem like things would work in the direction of trying to work something out from all sides, but do we know if this is
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a top priority with bob iger at this point >> well, it definitely seems like it would be beneficial not to have this conflict. it is interesting because we talked to analysts about this. they said disney was going to be okay if they didn't have this tax district it was going to be okay, some of the costs would shift to the state but it certainly is better to reso resolve it it is not like the resolution will mean a massive financial benefit to disney, but disney is very close with the state of florida. if you think about how much they have to have -- it would be a positive to have this resolved i think that the leadership transition from bob chapek to bob iger opens the door for florida legislators to sort of blame the conflict and the fact that they did make this change on the outgoing ceo, the former ceo, and say, look, with this new guy, we can broker something more beneficial and not going to end up having a cost to florida taxpayers. >> would make a lot of sense for sure julia, thank you very much
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stocks have been volatile to start december but the s&p 500 still up 13% over the past two months up next, the top technical analyst discusses whether this is the start of a new bull market or just another bear market bounce.
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major averages gaining a bit of steam here under the close after opening in the red followinth hotter than expected jobs report with us now to talk about how the market is set up, jeff degraph at renaissance macro research jeff, good to see you. following your work, i know you've been in recent months kind of leaning toward the bullish side, believing the market actually had a bit of room to go and it seems as if now we have to decide if it is going to be the start of something bigger. how is the context set up for you at this point? >> you hit the nail on the head, mike, as i knew you always would. i think there is a couple of good things going for the market we thought into the end of the year it would be more of a fomo type of market, fear of missing out, because sentiment was so lopsided, seasonality generally tends to be favorable in the fourth quarter for us, we have an indicator which looks at inflation and growth and juxtaposes those two
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positions. it has been in a really bullish position with this contraction we're seeing in inflation, some of our indications so that really set up, we thought, favorably for a bounce into the end of the year we're through the 200 day moving average. that's a reasonable objective. the struggle we're having right here is we actually haven't seen the good thrust, the good momentum we like to see that characterizes with a high degree of confidence that the bear market is behind us and the new bull market has begun. that's the holdout i was pretty disappointed by the numbers on wednesday, believe it or not they weren't nearly as strong as i was expecting or hoping to see. so i think this is at this point i think there is a reversion trade going on we're still playing it i can't call the end of the bear market yet. >> so, what are some of the internal signals you are focusing on, like when you're evaluating whether wednesday's 3% pop in the s&p was actually a strong momentum? i know that, you know, basically how many stocks are doing
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interesting things to the upside is one of them we have a chart on that. >> yeah, look, it is 20 day highs are important. and we look for the breadth of the market most are breadth indicators, how many stocks are participating in the rally or the advance so the number of issues making 20 day highs in this case for the russell 3,000 on wednesday was only about 17% the chart you have up here is the percentage of names above the 20-day moving average. we're talking about price over the last month that number is at roughly 72.5%. we like to see that number somewhere up around 90% plus to indicate you have high probability of a new bull market these aren't even close. that's a holdout they can get better, no doubt about it the wednesday thrust did not have the escape velocity we look for. >> all right so, obviously still some things to prove one way or the other what about within the market, in terms of themes that you're picking up of areas you might prefer or showing some subtle
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strength >> well, you know, one of the areas that has been strong is industrials. they have been strong and really a head scratcher for a lot of people probably my biggest challenge in the second half of 2022 is trying to convince people that the industrial charts look good and are doing the right things and they continue to do well i think that's bullish news, probably more bullish for the economy than what the consensus is out there the other is discretionary we want to see discretionary, it is a very contrarian group, discretionary tends to do well when the consumer starts to struggle we're getting into this mix potentially that that's going to happen we have seen some pretty good momentum out of discretionary. it hasn't changed trend yet. i think that's going to be a linchpin, particularly as we get through the calendar, into the first quarter of 2023. if discretionary can remain or build on its relative strength, that's a bull, side for the next year if it falters and flags, i think we have just another piece of evidence this is a bear
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market rally. >> all right, that will be one of the tells to keep an eye on jeff, great to catch up with you. thanks a lot. >> thanks, mike. here is where we stand in the markets on the day pulledback slightly. the dow is slightly negative s&p down less than a quarter of a percent. nasdaq composite as well small caps are green, all sitting on week to day gains solar stocks rallying following a commerce department report on whether chinese solar manufacturers evaded u.s. tariffs. details on that ing coming up. follow the closing bell podcast on your favorite podcast app power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities.
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time to check out today's stealth mover. cracker barrel and as you can see, investors losing their appetite for the stock the restaurant chain beating revenue estimates in the fiscal first quarter thanks to better than expected same store sales wall street holding the stack over a barrel because rising food and wage costs squeezed profit margins that trend will likely continue. the company raising its full year commodity and wage inflation forecast shares down almost 13% tesla delivering its first electric semitruck five years after it was first revealed. up next, we'll hear from an analyst who says tesla is putting the rest of the trucking industry on notice that story, plus solar stocks rallying and how the jobs report will impact the fed when we take you inside the market zone
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we are now in the closing bell market zone adam christopher is here to break down the crucial moment fs of the trading day and pippa stevens, and gene munster on tesla good to see all of you adam, interesting, market today, climbing a bit of a wall of worry, negative shock, perceived negative shock on a hot wage inflation number this morning. treasury yields not panicking. and for the past couple of months, stocks rallying in the face of inverted yield curves, all these other reasons to expect more chop to the downside so where does that leave you in terms of believing whether this move can last? >> i think the jobs report today was actually pretty similar to
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price actions to what you saw last month, you had a strong headline number and two things are happening today. if you unpack some of the details of today's report, it is a little bit more nuanced than that headline figure suggests. you had another employment decline in the household survey, and if you adjust for the welcome week, that smooths out the wage increase that you saw as well. and then i think if you look at all the recent data we have seen on the labor market, adp, the challenge report, the employment index of the ism manufacturing, all that is pointing to a deterioration in the employment landscape and you have a myriad layoff and hiring fee announcements at the company that's a big factor where you have the initial shock on the headline, but as people dig a little bit deeper into the figures, it keeps us on the trajectory of slowing down growth, slowdown in real growth and inflation and that's pushing yields to the downside, which is bolstering equity multiples during a seasonally positive time of year i think that's why you see this
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kind of persistent dig for the last several weeks in the market i think that's kind of where we are today. >> and so, how much fuel do you think is in that tank with all those factors coming together? is it just kind of a brief relief or can it beat on itself? >> i think it can beat on itself for a little bit i think yields are going to be biased lower going forward because i suspect you're going to see further disinflationary data and more weakness on the growth front as that takes place, you had a very tight correlation, inverse correlation between yields and multiples. that has more to go. the s&p has a healthy multiple and downside risk to earnings estimates for next year. so, i think maybe you'll be able to squeeze a little bit further on the s&p, but not a whole lot more in this rally i think for the near term given where we are seasonally in this month of december, and then further downside in yield, it can last for a couple more weeks into early next year.
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>> all right well, let's get a little deep near how the jobs report could impact the fed steve liebermeash liesman joins. >> if this is part of an acceleration of the economy, remember, we're supposed to be stepping down, mike. we didn't get much step down today. we accelerated a bit the workweek point is well taken. it did come down a bit but ultimately if putting people back to work boosts supply in the economy, that is if we get more people working and more supply and less inflation, the fed won't have to lean harder. but powell laid out pretty clearly that he sees labor as inflation story. i think he's not going to be pleased with this. what we see today is not a bet on 75 for december, more a bet on bumping up what was a debate
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over 25 or 50 in february, leaning to the 50 side. >> right and, you know, for better or worse, what we have seen short yields up, given the fact we're presenting this as if the fed is inpatient to see the economy slow more, that's coming as wall street sees all the of these what they believe are very clear leading indicators of a recession next year. whether it is the yield curve or consumer and ceo confidence, ism index, all this other stuff piled on one side. on the other we seem to have jobs >> you know, and sometimes you don't need to know more than that obviously ceo optimism plays a role in that if they're going to cut back they won't either hire as much or lay folks off, won't do the capital spending when folks have jobs, folks spend. and when they spend, they pay
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off their credit card bills and they buy new cars and do things like that. and that means the car manufacturers have to keep making stuff, the importers got to keep importing. you look at the 3.7% unemployment rate and there are some economists who say that's all you need to know maybe it turns tomorrow, the next day right now the paychecks are coming in to many americans. >> yeah. might not know the right level, but you probably know that it is too low. thank you very much. we are seeing some big moves in tech on the back of earnings semicompany marvel technology and z scaler offering softer guidance than analysts had anticipated, sending stocks lower. it is a similar story for asana which forecast weaker current quarter sales than expected, pointing to a more challenging macro environment. adam, you can kind of pluck a bunch of these out over the last couple of weeks. are there any themes that are
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surfacing that you think are either worth playing or worth observing in terms of how winners and losers are getting sorted out here? >> yeah, i think the marvell price action was notable the report was disappointing the guide anance was weak. big inventory for this quarter lasting to next quarter. the fact it has been able it rebound off the lows, i think it suggests where sentiment is now for the semis. the consensus view a steep correction into next year leading to then a rebound starting possibly q2 i think the fact that this was able to rebound is somewhat encouraging for the broader semiconductor space. for the other software companies, you know, we had a lot of these midcap high multiple software stocks report earnings in the last couple of weeks. and it has been really a minefield. you had a bunch that had have done well and they have seen their stocks go up and then you had a bunch with similar
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reactions to z scaler. it is hard to extrapolate any of the companies, they're relatively small couple of slipped deals can have a bigger impact on their income statements a lot of the commentary from the companies, especially in software, they say that companies are actually looking to them as far as spending and demand, it is actually getting helped in this environment because their products and make companies more efficient but it is too small, they're too small to extrapolate any one we'll get oracle numbers out in the next couple weeks. that will be a bigger indicator for the state of enterprise tech demand as we sit here now. >> yeah, the oracles and yesterday's salesforce of course you can maj draw conclusions about what it means for just business sentiment and spending in general but so many of these somewhat smaller -- arguably subscale software companies, probably a couple hundred of them showed up in the last several years, they
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never had a profitable operating history. hard time outrunning their stock-based compensation it seems like it is tough to play either side of it, when you can have those overhangs and then private equity can come in and buy one at a big premium at any moment >> totally a lot of these stocks are tremendously off their highs so, market is pessimistic. you make a great point that's a much bigger theme as companies report earnings. and i think analysts are scrutinizing more the nongap definition of earnings but just one quick point relating back to our fed conversation, you see a material decline in the dollar, in the last several weeks, and that's going to be a huge challenge for earnings, especially for software every company has to be rreport earnings this is going to be a big source of relief for earnings next year that's just one other thing to keep nind. in mind
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>> dollar index, yeah, dollar index back to where it was six months ago that's been a big help at least some relief. solar stocks on the move today as well. after a commerce department preliminary determination found four chinese solar manufacturers circumvented tariffs, officials clearing the other four solar companies that were being probed pippa stevens joins us sort this out for us are today's gains in the stock a response to this particular probe or some other relief rally? >> it seems like today's gains are really a better than feared situation since only four of the eight companies that were under investigation were found to be unfairly avoiding those tariffs. it is still a blow for an spree that at the current rate is not able to keep pace with the surging demand now, this case had been a hanging over the industry for many months. stretches back to march when california-based oxen solar first brought the case they said chinese companies were
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unfairly avoiding the tariffs by shifting manufacturing to malaysia, cambodia, vietnam and thailand now, those four countries account for 80% of u.s. panel imports. they are crucial to the u.s. industry and that meant that a lot of solar advocates said that implementing a blanket tariff would really decimate the u.s. solar industry now, we're not likely to see any immediate impacts, won't get a final decision from doc until may. also, back in june, president biden stepped in and said that any tariffs that are going to be implemented as a direct result of this case will be void for the next two years so there are a lot of moving parts here that gets to the issue, which is that if you are a large scale developer, it is really hard to build these projects when you have no visibility into your economic costs and so quickly on this stock impact, it is not really going to have that much of an impact on the names like sun run, sun power and sonova it is for the utility scale
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developers one key mover today is jinco solar, found to be in compliance mike >> thank you for running through all that for us, pippa we got much clearer view of what's happening there meanwhile, tesla, delivering its long wait semitruck last night it is five years after unveiling a prototype. the ceo saying sorry for the production delay during the kickoff event. our next guest says tesla's entry could be a game changer for the trucking industry. gene munster of luke ventures joins me now given the history of elon musk aggressively projecting what supply is going to be and sort of overpromising, what do you think is going to come out of this effort. how many can they produce and sell soon? >> well, to jump into the long-term is that he's expecting 50,000 in 2024 i'll take the under. i'll take the significant under to that. i think best case is 20,000.
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and what that would account to is about 3% of revenue to tesla's 2024 revenue that also i think does understate what is an opportunity for tesla, ultimately i think that this vehicle should account for about 5% of sales, so start out slow, it will never be as big as model wide, but i think you are smart, mike, and just being realist nick termrealistic in their commentary about production that does bury what is probably most significant here. and i think what is more significant than the fact that it will take a few years for this to ramp, is the message that this has sent to the rest of the trucking manufacturing industry this is as big as an event as model 3 was, how that changed how automakers thought i want to emphasize an important distinction between what happened with the model 3 and the rest of the auto industry
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taking notice. that time it was we have to have electric cars to compete with tesla. and in this case, the trucking industry already prepared for these -- for electrification, but there is one significant problem that they have is that they tend to be in the 250 mile range. for the long haul trucks, the average driver drives 500 to 700 miles a day, 250 mile an hour range isn't going to get it done that is what is the true feature here with the tesla semi. >> got it. now, just in terms of the longer term opportunity for something like tesla, let's say they do 20,000, isn't that close to 10% of annual sales of this type of truck. how big is the ultimate potential market and how much can it matter for tesla's overall business if in fact we presume that their passenger car business is going to continue to grow pretty well along the way also >> so, the quick numbers is in the u.s., typically around 7.5 million passenger vehicles, about 225,000 of these class a
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trucks, these bigger trucks, they tend to be priced four times what the cost of a typical car is so it still is a small market relative to the passenger vehicle market but as far as what it can mean for tesla, it is additive. that 3% number i said in 2024, that assumes that tesla is growing their revenue at 35% for the next few years so as you get bigger, it is harder to have products that actually have a measurable impact and the semi has a measurable impact. we'll see the exact same thing happen in the truck manufacturing world as we saw in the auto world and i will leave it at this, these companies, freight liner, mac, volvo, they have hard decisions to make about how they're going to compete in the next decade. >> all right just quickly on tesla as a whole, stock is trading at half its peak value it has been under a lot of pressure for multiple directions where does that leave it right now? even with things like china demand, people skcrutinizing
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pretty closely. >> still optimistic. think about the tam. this is like thinking in 2005 that amazon had played its card out, they had a high market share and where could they take it, more competition was coming. the $2.5 trillion auto market now, tesla has 3% share, they can continue to grow into that i still think that this is eye unique opportunity i think just because electric car companies are coming out with electric cars doesn't mean they're going to be as attractive as tesla's. i'm still optimistic i think the market is going to want to see what the numbers are for december i'm optimistic they'll be favorable and ultimately i think they're going to layer on not just a semi, but probably a cheaper model 2 announced next year and that will continue to move the stock higher. >> all right, gene, i appreciate the update thank you very much. >> thank you little -- about 2 1/2 minutes to go in the trading day. i just briefly mentioned china there, that's an area you're
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upbeat on, right chinese market has a chance to revive here? >> yeah. you had an enormous rally in chinese equities depending what index you're looking at. they're up about 50% off of both trough in just the last month. and i think for three big reasons coming out of the recent congress you had policy changes on properties, so they're -- for the first time in a long time they're now providing a lot more support for the beleaguered property sector, enormous piece of the economy, and covid. and they just have been a clear change in direction on covid it is not linear or clean process. but i think there has been a -- there is a recognition on the part of the government that prior policy of the last couple of years is untenable and they are now going to start to shift in -- shift their approach to the virus, much more supportive for growth on technology, the scrutiny on technology companies is abating.
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for those three policy changes, which, again, these are shifts that haven't happened for years now in that economy. i think it is enormously bullish in the market, coupled with valuations are very cheap, sentiment was atrocious as of just a couple of weeks ago and positioning was very lean. all those factors are helping to propel chinese equities higher in the near term, i wouldn't be surprised if you saw consolidation given how far they have run over the course of 2023, there was -- the story for chinese equities is one of the more positive ones that i can see right now. >> i mentioned earlier, seeing the big china plays in metals and mining and things like that start to perk up maybe that's the market sniffing that out adam, thank you for joining us as we head into the close, the s&p 500 looking just below the flat line. it is up more than 1% for the week you have the breadth numbers decidedly positive on the new york stock exchange today. look at emerging markets on a weekly basis handily outperforming the s&p
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500 and a lot of that is china, but not entirely we have a weakness in the dollar that coming in hard. that is helping for sure the volatility index right at 19 has not had a close under the level since april. that had been the low end. that coincided with competing equity realities we'll see if it is any different this time. that does it for "closing bell" today. i'll send it to "overtime" with scott wapner welcome to this friday edition of "overtime." we're just getting started here. we got a big show ahead. in a little bit, i'll speak live to the "wall street journal's" nick timiraos on what is likely to happen at the next fed meeting. did it derail the year end rally? we'll eric eric johnston that question e your money in the final stretch. what is likely to happenn


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