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tv   The Exchange  CNBC  December 9, 2022 1:00pm-2:00pm EST

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>> i'm going to take the other side of rob's view from earlier and say costco you know, i think if you look at two things that costco does really well is inventory management and being able to create value through having a warehouse, so, i mean, i think that's important >> caribbean i'm short it i think everybody should be short it 17 bucks this year $25 billion market cap, slowing. >> you see the clock it says 13:00:01, 02, 03 "the exchange" is ow >> thank you, scott. welcome to the exchange miami kelly evans. here's what's ahead. stocks have turned higher on the day, but we are still facing losses the fed's next decision on rate hikes is coming in just a couple of days. can they still engineer a short landing or is a recession unavo unavoidable? we'll debate and it's game on for microsoft in its battle against the ftc. what the government's stance
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means for the future of m&a. and we're continuing to look for other ways to invest, turn a profit, and have some fun along the way. today we're focusing on investing on wine and whiskey. let's take a look at how health stocks are trading this hour as we mentioned, we started turning higher, but the blue chips are struggling, and frankly, we've been under more pressure since that ppi report yesterday. the dow is down 42, the s&p is up one point, and the nasdaq is up about 20. the only sector on pace for weekly gains is utilities, never a good sign, also a rates trade. we've seen upward pressure on rates. the worst performers are energy, given that collapse in oil prices we've been highlighting and communication services some big earnings movers to mention. broadcom jumping on better than expected results that was up 3.5% d docusign up 15%. meantime, the lululemon, we were singing itspraises yesterday, but a weak outlook for the fourth quarter today has the stock tumbling 12.5%
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elsewhere, netflix in the spotlight after getting an upgrade to wells fargo wells saying their ad-supported tier could lead to a strong 2023 it's got the stock up 5% let's take a look back at the data this week that had a lot of bright points, but even the good news can be traded as bad news we started with the services pmi, coming in stronger than expected on monday that sparked a sell-off, actually, as it kept more fed tightening on the table. unit table costs a little softer than expect. that was a good thing for markets and qimplies that wages can be softening the services pmi, we'll put over here mostly in the good category and today, some doubly good news on the consumer front. sentiment rising three points, this one a real sticking spot to the consumer all of a sudden, a three-point jump in sentiment. we'll take it. it's not amazing, but it's something. significantly for the fed as well, inflation kpgssexpectatio
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a one-year horizon those moderated and that will take some pressure off unfortunately, we're still reeling from that hotter than expected ppi report. this one is definitely going in the bad category the monthly jump, twice as bad as expected, up 4/10 the one-year surge, 8.5% that sent yields upwards and renewed pressure on stocks that brings us to today's pig debate can the fed engineer a landing chris thornberg thinks that the fed can still avoid a sharp downturn jay briceman expects more of a hard fall into recession welcome to both of you chris, we'll start with you. and do you see soft landing only if the fed starts to pull things back here? >> well, listen, if the fed raises the federal funds rate to 12%, we can all agree we're going to have a recession, right? now, i do think the fed will start backing off. we know they way unemployment far more heavily than inflation when it comes to their
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decisions. they're very worried about overdoing it when it comes to the labor markets and probably will start to back off as a result of that with that in mind, the big question you're asking about is what about this recession we're supposedly about to have you know, it's intriguing. that's been a watch word for the entire year. my question has always been, why? why do you think we'll have a recession? inflation, to be clear, is not hurting consumers. it's being pushed by excessive consumer demand and consumer demand has been overheated by the massive amount of stimulus that the government unnecessarily put into the economy over the course of the pandemic households are still sitting on trillions of dollars in cash $5 trillion holdings this morning, five times what it was pre-pandemic that will be enough to push the economy through the troubles from interest rate sectors to sectors like housing so i just don't see a recession on the basis of strong consumer spending >> the consumer piece of this is hopefully a stalwart jay, we turned to you, though. you're expecting more of a hard
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fall here. why is that? >> it comes down to inflation, kelly. inflation is having two issues right now. the first is, it is eroding real disposable income. you know, in october, year over year, real disposable income was up or down 3%. at the same time, real spending was up 2% over that period of time so we're seeing the consumer, the household saving rate is essentially at an all-time low right now. credit card debt is going up the fundamentals to the consumer are starting to weaken and you throw on top of that the fact that the fed is not done, inflation, in our view is our number one prior right now and so, the combination of weaker consumer and higher interest rates, i think, leads to a modest recession next year. >> it's curious that you guys differ pretty strongly on the consumer chris, why aren't you more concerned about those signs of weakening that jay is picking up on >> jay is talking about income, i'm talking about wealth that's the primary difference here jay is referring to some of the ebbs and flows over the course of the last year, which i don't
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disagree with. but again, what is driving consumer spending is not income, it's the wealth numbers, which are up fantastically again we just got the third quarter flow fund number my favorite number on there is cash on hand prior to the pandemic, all households were holding on to about $1 trillion of cash liquidity. right now, $5 trillion of cash liquidity. that's a phenomenal amount of cash burning a hole in consumer's pockets and that's going to continue to keep consumer spending up and running, right through this problem. indeed, i'm going to start worrying when inflation does slow down, because slowing inflation means a weaker consumer, and that in turn suggests that my primary, shall we say, driver of the economy next year may not be showing up. but, boy, we're not seeing any of that now. >> let me be clear about that, chris. why would inflation weaken the consumer because it would deflate home price, house price, for instance >> no, no, because if inflation starts cooling off, that's a
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sign that could have impacts whether you're looking at the fact that auto lots are still largely empty, the fact that vegas -- revenues in the vegas casinos right now are 30% higher than they have ever been before, again, sign after sign suggests just how strong consumers are. consumers don't care about the federal funds rate for the most part, they're not exposed to the big increase in interest rates, because most of their debt is in 30-year fixed rate mortgages for the consumers, this is more noise than reality and they will again be the -- be able to push us through all the problems that we're almost assuredly going to continue to see in asset markets as a result of rising rates. let me put i just slightly differently. i think there's going to be a wall street on -- i think there's going to be a recession on wall street, but not on main street and when it comes to gdp, main street dominates >> jay, what do you think? especially about the difference of the income and wealth between the consumers right now? >> sure, if you look at balance
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sheets of consumers, as chris is pointing out, they're very, very strong right now but i guess what i would say to that is, if consumers continue to spend, if the economy doesn't slow down, then you're going to keep the unemployment rate very, very low you'll keep wage growth extremely high right now, average hourly earnings on a year over year basis are running about 5%, and that's just not consistent of a inflation rate of 2%, where the fed wants to get us through. if consumers continue to power through this, if the labor market doesn't start to weaken, wage growth is going to remain very, very high. that's going to keep inflationary pressures higher. and that's where the fed will continue to raise rates. will they go to 12%, as chris alluded to earlier no, certainly not. but we're in restrictive territory now, and the further we go, the more it's going to weigh on things like manufacturing production and on housing, et cetera, which then does lead to job losses, and then that does affect consumer spending >> the last quick thing i would
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say is that your more upbeat outlook for the economy to me would be worse news if it means that the fed ought to keep tightening to avoid those wage pressures that jay is talking about. even if you're right about the fundament also, wouldn't that make you longer-term concerned that we're going to end up in a deeper recession because they have to react to that? >> again, that all depends on what the fed decides to do and i appreciate what jay just said, for sure, but again, i don't actually think that the fed is as worried about inflation as they pretend. their primary focus is on equity, inequality, labor markets. they love tight labor markets. they love the fact that it's benefiting low-income workers. and as a result of that, i just don't think that they're going to be quite as aggressive about handling this as jay does. so i think they're going to back off. if nothing else, just on the basis of these very bearish headlines. my guess is they probably won't peak anywhere past 5%.
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>> we'll leave it there. great discussion, guys thank you both very much we'll hear from the other jay powell next wednesday with that fed decision. turning now to the talk of the tech in media world, the ftc suing to block microsoft's acquisition of activision blizzard but both players seem confident that their deal will prevail steve cocerak is here with microsoft's strategy to push the deal through and kayla tausche is in washington to detail the rough road the biden administration has had in fighting these mergers. steve, let's start with you. >> sure thing, kelly here's the ftc's case against this microsoft deal. the suit lays out a history of microsoft's gaming acquisitions, alleging microsoft has the pattern of buying game publishers to make their games exclusive on microsoft platforms the ftc makes a lot of other claims about microsoft's market pour it claims that nintendo isn't even in the same class as microsoft and sony, because they make more expensive and powerful game consuls it also claims that cloud gaming, which is still in its
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fap infancy, could become more relevant so far, the ftc hasn't shown much evidence proving these theories nintendo has a bigger market share in consoles than microsoft. as for the exclusive question, microsoft has offered to put "call of duty" on rival platforms for ten years and said it's even willing to make that enforceable by the courts if this deal goes through meanwhile, microsoft president brad smith making it clear that the company is going to fight this in court, saying in a statement, microsoft tried to, quote, give peace a chance, by offering concessions to the ftc earlier this week. but it now sounds like, kelly, no more peace. microsoft is ready for war >> i mean, one of the things that i guess rivals are pointing to is that microsoft has held things for itself in the past so do you think that people are right to sense in some ways that anything that they're trying to do by offering "call of duty" to
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other platforms right now is more of a charm offensive than it is a real signal of what their long-term intentions are >> it could be they do have a point there, they have, especially with this company they bought, they have put those exclusively or some of those main titles coming out exclusively on their platforms but "call of duty" is a different animal altogether. "call of duty" makes so much more of its money outside of microsoft's platforms, so it would be financially irresponsible for them to yank it off their rival's platforms, because they would be losing money. i also point to "minecraft." they bought "minecraft" within the last decade or so. it's still everywhere. you can play it on your phone, laptop, playstation, anything. certain games, if it makes sense, microsoft has also shown they're willing to keep it platform agnostic. and you can look at what microsoft has done just on the phone. at first, they tried to fight apple and make their own phone system, but now you can get tons of microsoft apps on your mac, on your iphone, they are platform agnostic in a lot of
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ways, too. >> i'm thinking, if you're making the case and i'm the judge, this is a tough one there's precedence for both outcomes here. steve, thanks. let's turn to kayla now. the biden administration not backing down from taking companies to court, even though their track record so far hasn't been that great. kayla tausche in d.c. with those details. kayla? >> reporter: the biden administration pledged an aggressive with challenging mergers, these so-called vertical deals like microsoft and activision but in recent weeks, u.s. court have not been buying those arguments, disagreeing with anti-trust agencies' attempts to block acquisitions and despite a win in blocking a merger between publishing houses penguin and simon and shuster, anti-trust attorneys and their clients are now emboldened to stay the course.
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the top doj antitrust official jonathan cantor told congressi september that improvements to anti-trust enforcement will not happen if the anti-trust division is unwilling to challenge aggressively anti-competitive conduct and unlawful market consolidation. cantor says he remains committed to bringing difficult cases. alina khan, the ftc commissioner, praised as successes the six deals where the specter of litigation alone caused them to abandon the deals. notably, lockheed martin's bid for aerojet and nvidia's acquisitions of arm holdings that's not likely to happen here the government has already remarked on the sheer volume of resources microsoft could devote to this fight and activision ceo told employees yesterday he's confident the deal will close. kelly? >> we also heard from some experts say, the government doesn't have unlimited talent and resources when it dcomes to litigating these cases this one would probably get the best resources
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how much of a -- how much can they tap in here how much do they have in terms of financial resources, the legal muscle to throw at this, and all the rest of it >> certainly, nothing compared to what microsoft has, not only in house, but also what microsoft is willing to bring on in terms of external resources and outside larm law firms and experts and consulting firms that doesn't matter to the ftc its playbook has been to challenge as many cases that they possibly can where they see any inkling of a concern they're, of course, rooted in the law. they did make an argument as to why they wanted tochallenge this, but in hopes that even this specter of litigation, as we were just mentioning, causes the companies to walk away and whether those string of recent setbacks now causes companies to rethink that and be even bolder in their hostage, remains to be seen this microsoft activision case
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is going to be an important precedent, both for these agencies, and also for the companies who are fighting them. >> it's fascinating. i'm curious what you think about how it's affecting the deal-making environment. because you -- if you start getting the sense that the government is going to be on the losing side here, then it should almost encourage people to start pursuing a lot of m&a. because if they don't, their competitors will have a leg up on them. there's this sense, if they're going to prevail in the long run, they have to go for it now. or maybe it favors the biggest companies with the most resources, while the smaller o ones say, maybe we can't take those risks. >> it's hard to say exactly, kelly, how active companies will be in m&a right now, strictly out of anti-trust considerations because certainly, the way that the stock market has traded in the last several months, you could make a valuation argument that companies will start doing more deals i think it is notable that there was a sort of chilling effect in the early days of the biden
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administration, in the early years of khan and cantor being atop those divisions, because they wanted to see how they played out, they wanted to see how the courts reacted but certainly, kelly, we should also note, it's not just here in the u.s. even when the u.s. agencies have lost in court, the european union has also not been shy about bringing its own challenges to some of these deals, too >> that's absolutely right i think there are 16 jurisdictions where even just a microsoft/activision deal has to go through kayla, for now, thanks appreciate it. kayla tausche in washington. coming up, chinese stocks have been jumping, but it's not all good news out of china this week we'll look at the risks building there next plus, it's not all about the fed. one manager sees the three separate tail winds for next year's earnings, and she says the market is overlooking them what they are and why they matter, ahead on "the exchange."
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welcome back to "the exchange." it's been a big week for china and the chinese investors. the large-cap etf up 3%. and the hangsen also up 6% in terms of data, exports fell at the steepest pace in more than two years in november
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cpi, better than expected, though and finally, the driving force is policy. the country is finally starting to loosen its covid restrictions hong kong eased quarantine and testing rules. people can now quarantine at home with mild cases isolation periods were reduced and foxconn lifted some of its covid restrictions let's bring in marco papich for more, chief strategist at clock tower group. what do you think the takeaway is for investors here when it comes to china >> this is one of those moments where we as investors, kelly, have to be watching where the puck is going, not where it is the steep decline in exports has been really kpfd for 12 months western consumers are moving away from goods to services. there is also, of course, tightening by the fed and other central banks. experts were always going to weak for china chinese policy makers know that and have been extremely aggressive post the october congress in terms of having these 180-degree pivots, with
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rals, pboc liquidity projections and fiscal policy. this is an extremely bullish set-up for china >> extremely bullish set-up for china, you see >> absolutely, in terms of a trade for the next six months, chinese stocks could be the best performers in the world. you're talking about a country that is near recession or effectively in a recession stimulating on allcylinders. and most of us are focusing on zero covid, because it's interesting, it's a topic that everybody understands. but the pboc has restarted its pledged lending support facility, the psl facility, which it has basically been dormant for the past three years and it's increased by a massive amount over the last two months since october so they are clearly turning the ship around at a much faster pace than
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anyone had expected. >> that's fascinating. i wonder if that means people who are throwing in the towel on the energy, on the oil trade are throwing in the trade. can you get in a position that the stocks rebounding and that doesn't mean we have upward pressure on oil prices globally? >> that's one of the takeaways you have to start looking to high-beta plays through china. oil prices could face more over the next few months, uh i agree with you i think you're having a set-up very similar to january of 2016. when you had the shanghai accord, 10 months of no fed rate hikes and china do its stimulus through the shantytown redeve
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redevelopment. and we're setting up for a similar replay of that january '16 moment >> that's fascinating. one more question about the region before i move on, what about the impact of the semi-conductor ban >> so i think that that's been overblown massively. the united states administration, the october 7 ban, they had toe effectively bribe allies with 12 months worth of gorging on chinese demand, which is going to skyrocket, because chinese has this window to purchase every piece that they can. it's a sign of weakness, that washington, d.c. is trying to get their allies onboard which impacts only a silver of china's demand for semiconductors so if this is how much the u.s. has to work on to get allies onboard with something very simple, it tells me that this is the end of the u.s. department's focus on semiconductors, but there will be other things there'll be other head winds,
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other news headlines you know, we expect on public markets, as well, over the next 12 months. that could create a dip in chinese stocks, 10, 20%, when some new order comes out of d.c. about public equities and investing in china in privates and publics. but what i would say about that is most large institutional investors domiciled in north america have already guinn up on their allocation to china and there'll be plenty of known north american, known western institutional informers who will be ready to scoop up chinese equities, which may become very similar to tobacco stocks or other premium sectors. >> and we've seen the outperformance there, although china has been a tougher one over the past decade or so let me just ask you one broad question here. because i believe this is the last time i'll see you before the fed meeting. what are you telling people. in your holiday party cocktail chat, when people say, is the fed done here. are they hiking 5, 5.5%.
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what would you say >> we just had our holiday party. so i'm struggling in this interview already, i'll tell you this, so i'm not really sure i think 50 basis points, what we should be focusing on is, what is truly a fed pivot it's the effect they have on the real yield real yield was shot out of a cannon in 2022 this was a trade of the year if the real yield flattens out, if it comes down, that is the fed pivot. >> so the best thing to watch kind of is the ten-year tips yield, something like that if you want to know where stocks are going? >> i would look at two-year.
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that would be your pivot >> that makes you a buyer of stocks, basically? >> absolutely. i said this on your show three months ago once cpi peaks, equities bottom. that's so far held true. but we'll see. and i hope jay powell is not watching this. >> don't we all! if we want that outcome. marco, thank you we appreciate it >> absolutely. >> marco with clocktower on deck, investing in stocks and bonds is so 2022 ahead, we'll tell you why you should be looking at wine and whiskey as your next investment one market strategist says there's a glass half full scenario out there that isn't being appreciated by the market. she'll break down what it is and how to play it "the exchange" is back after this td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation.
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welcome back, everybody. markets are back in the red this afternoon. moments ago, the dow was positive but we're now seeing it down 78 points, with the s&p down 4, the nasdaq also down 4 it was the nasdaq positive earlier that has given up its negatives. some of the movers this hour we're watching, bath and body works higher after dan loeb's third point disclosed upping its stake from 3.5 to over 6 the shares are only up 1% right now. loeb just told our scott womwoapner that says several issues with the company. bath and body works tells cnbc, they will continue to take actions they think are in the best interest of the company and their shareholders but these shares are down almost 40% this year, trading around $42 with this about 1% pop today. let's get to kate rooney now for a cnbc news update
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kate >> hi, there, kelly. here's what's happening hat thi hour keith ranieri has lost an appeal and will continue to serve a 121-year sentence. ranieri was convicted on charges including sex trafficking and sexual exploitation of a child the appeals court affirmed the 7-year service that was involved in that group. kyrsten sinema will retain her committee assignments. senate majority leader chuck schumer says that sinema told him that she would be leaving the democratic party yesterday and asked him to keep her assignments, which he has agreed to do. and 700 more species added to the list of those threatened with extinction. among those is the doogong with a relative of the man tee that lives in the western pacific ocean. the list now includes more than 150,000 approaching extinction the doogong, maybe a favorite
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new sea mammal >> thinking of the sinema news, kate, here we were all obsessing about the outcome of that georgia runoff little did we know that just a day later, the senate numbers would be thrown up in the air for a different reason >> always something. absolutely >> kate, thank you coming up, we've talked a lot about the problems that are forming in the commercial real estate sector. but with those problems come opportunities. yes. we'll discuss them when "the exan" bk jt chgeisacinusa minute stay with us car is so boring to drive. let's be honest. the rent-a-car industry is the definition of boring. and the reason can be found in the name itself. rent - a - car? you don't want a friend. you want the friend. you don't want a job. you want the job. the is always over a. that's why we don't offer a car. we offer the car. ( ♪♪ ) sixt. rent the car. we're told that success is all about making it on your own. the truth is... need some
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a wishing star, will get me my life back. it's in the dark forest. after you. -wait, what? dog, still alive? welcome back to "the exchange." yields are inching higher again and there's more econ data on deck next week, along with the fed's decision on rates. that's the biggy dom chu has a look at what's happened since the last meeting. .com >> november 2nd, that was the last time, and we got that 75 basis point or three quarters of 1% hike. so in that time frame, since we've seen that move, we've seen some nice highs, all the way up to just around kind of that 4.25% mark remember, at the highs of the year, it was closer to 4.33% and now that we've kind of fallen off since then, again, 4.25%. it was about 4.06 around that
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fed meeting on november 2nd. now it's at 3.56%. so again, over the course of the last year, kelly, it has gone from 1.37%, about a year ago, to as high as 4.33 and here we are now at 3.5 >> all in one year from 1.4 to 4.1, call it, and now where we are my next guest, despite all of the concerns, thinks there could be a lot of tailwinds for the market let's bring in maria chrin who joins us from circle wealth management good to have you you're saying, stop obsessing about the fed, everybody there are some other good things going on what are those things? >> we've had a number of things in the past week, we've had company ceos talking about the landscape and talking about how it's stable, much with expectations, and really thinking about how consumers are starting to spend a little bit less and so the landscape is one of
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cost-cutting, of supply chains normalizing. and at some point, when the fed starts to peak its rates, of the dollar weakening and all of those tail winds for earnings are not appreciated yet by the market. >> i take your point the weaker dollar, normalized supply chain, we'll take it. i don't know if cost cutting such a good thing, so to speak but certainly, we haven't talked enough about a weak dollar trend underpinning stocks, supply chain normalization. we have heard some positive commentator throughout the earnings season from companies saying, finally we're not facing as high as shipping costs. >> i think everything in markets is relative. if you look at the relative weakening of the dollar from where it has it's still very strong on a relative basis compared to where it was about a year or so ago. and the u.s. does represent still probably one of the better economies in the world scale so the dollar will still have some relative strength in that whole trade. but if you take a look at the way things are playing out right now, a huge part of that growth story will be hinged towards china. if china's zero-covid policies
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really do continue on a possible track of easing and they are able -- remember, china has been a big exporter of deflationary pressures over the last several decades, if it can manage get some of those issues sorted out, that can have a real carry-through effect on that front. but a lot of folks are kind of curious roight now as to whether or not there's a slower growth dynamic developing overall, longer term. that's the reason why you're seeing at least a little bit of that pullback in yields to bid up prices for the longer end of that treasury spectrum >> what would you say to that, maria, to investors that are trying to figure out if there's anything that can help give earnings more of a boost next year >> yeah, we agree weith everything that you've said, and actually think that we have to assume that rates are going to go higher and stay higher for longer and valuations are there for, at this point, priced for perfection and it's part of the reason that the markets have been a little bit nervous about what earnings
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will look like for next year but that having been said, we feel that a soft landing is most likely the scenario that we'll end up with, not a deep contraction. so we continue to think that equities will be volatile, but there is room for upside, some time, in the next year >> before we debate the soft landing again, let's find one area of agreement that maria echos from our theme this week and guess what asset class, short-term fixed income. >> i'm telling you -- >> how much have we talked about. >> there are so many investors that i've spoken to in the last couple of months here who have said, why -- i can just park money in two-year treasuries yielding 4.5%. and i'm good with that for right now. and by the way, i said on yesterday's showi, this is the funny part about high-yield savings accounts, closer to 2 to 2.5% i was corrected on twitter it turns out you're talking about high-yield savings accounts of 3 to 3.5%.
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liquid account with no risk of ftic insured products. >> maria, what would you say to that we'll give you the last word >> totally dpagree. we like corporate bonds of short duration and also looking at bank-preferred stocks, which have floating coupons where you can get about 7% and have two years we've really liked the short end of the curve and agree that that's a great place to park cash >> we need a anytime for this call, like getting wonky, but worth it >> maria chrin, thank you very much dom, always a pleasure still ahead, ftx founder sam bankman-fried says he will testify in front of the house financial services committee next week. he shared this news in a series of tweets earlier today at hthe lawyers may not be loving. we have the very latest, ahead
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welcome back a new development in the ftx saga with sam bankman-fried saying he's willing to testify in front of the house financial services committee next tuesday when they exam the collapse of his company. kate rooney is here with the very latest. what a tweet storm, kate >> a lot going on here this will be the first time that we hear from the former ftx ceo and it will be under oath. sam bankman-fried has been on a bit of a media blitz recently giving hours of interviews and hasn't been holding back on twitter, as we saw this morning, bankman-fried saying in a tweet, responding to maxine waters, quote, i still don't have access to much of my data, so there's a limit to what i will be willing to say and i won't be as helpful as i'd like, but as the committee still thinks it would be useful, i am willing to testify ceo of ftx at this point, john wr ray is on the witness list already. senate banking chairman, chair brown, telling nbc that he is still thinking of using a someone to get sam bankman-fried to testify we still don't know if
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bankman-fried will appear in person on capitol hill or from the bahamas, where he's been since this bankruptcy started. i've been talking to legal experts who say that he will likely testify remotely because of the possibility of an arrest. others say that the doj still needs some time to build a case and collect proper evidence. you wouldn't want to rush into making an arrest no surprise that congress has taken an active interest and role here. ftx has impacted more than a million creditors, has more than 130 affiliated entities involved here, and is now one of the biggest corporate bankruptcies in history, kelly. >> okay. so what are the legal experts saying about his strategy here, especially that he appears to be taking this into this high-stakes meeting next week? >> every legal expert, defense attorney, white color attorney has said, why? why is he testifying our advice would be, plead the fifth. he does not have to testify or speak here they're saying the likelihood is that he's using this as sort of a strategy to try to paint
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public opinion here. and the thought is, on one side, if he thinks he didn't do anything wrong and he's just right to prove that it was negligence and he wasn't aware of what was going on, it wasn't an intent to defraud investors, he's trying to make that play, in front of congress but the question is, he's now under oath it's different than doing media interviews a lot of them are wondering why he's doing this. and the potential for an arrest, as well, is a big thing people are watching although the big -- one topic, too, is just the excitement around here. i think there will be a lot of political theater. lawmakers, he had spent a ton of time on capitol hill, was the poster child of consumer protection a lot of lawmakers now want to take their own shots and get answers from sam bankman-fried >> oh, sure. and we'll see how forthcoming he is and is able to be, but we can't wait we know that whatever happens there will be having moment-by-moment implications for the amount of time he could be spending in prison, the future regulation of crypto, the
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value of bitcoin, and all the rest >> and potential perjury at this point. >> exactly kate, thank you. for now, our kate rooney still ahead, call it the ultimate liquid asset. our series on alternative investments continues. robert frank is over at the wall with some very expensive spirits. robert >> a bottle of yamazaki was aged for 55 years could sell for up to $500,000 at sotheby's. we'll take a look at the whiskey boom, what's driving prices and how you, too, can invest coming up after the break. what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work. ibm. let's create
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welcome back to "the exchange." if you're looking to make your portfolio more liquid, how about adding some wine or whiskey to it, the latter being the top-performing collectible asset class over the past decade what kind of returns are we exactly talking about? robert frank is here with his latest sblinstallment of his alternative investment series, along with jamie richey, sotheby's' worldwide chairman of wine and spirits wait until we tell you all how much this is all worth let's check this off >> you and i have watched this whole whiskey craze emerge over the past ten years
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what's driving it? who are the buyers, are they in the u.s., what's really driving this >> so there has been tremendous demand, particularly since 2019. and the demand is originally for scotch and japanese whiskey. the american bars are certainly getting into it and we're developing a secondary marketplace here younger buyers are getting engaged in it. 39% of our buyers are new to the process for us and over 40% of them are younger than 40. >> so we have a bottle of 55, it's aged 55 years that's bottle is coming up for auction tomorrow -- >> this bottle. >> within reach. between 3 and $500,000 the most expensive sothebys has ever told is 1.9 million. do you think we will ever see that 1.9 million record being broken how high can this go >> sure. records are always there to be
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broken that record was set in 2019 for macallan in 1996 it's the oldest yamazaki at 55 years old? >> i'm afraid -- this is a half a million bottle of the oldest one that exists of this kind. >> we sold that for $600,000 before the action is tomorrow we'll see what it sells for. the lowest is $250,000 the highest is 500,000. >> how does it taste >> can we find out >> why do people -- >> have you ever tried it? >> i have never tried this bottle they are rare, but they have extraordinarily high quality and age produces a lot of that and the flavors, the length, the complexity is what people are looking for. >> somebody who is spending a half million or more on that bottle, they're not going to drink it, right? that's an investment. >> i wouldn't know about that.
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certainly i would think a number of those bottles are going to be consumed there was a second release of 100. the initial release, the second release. it's not like the only one of one. i would think a number of these bottles will be enjoyed. >> in order for us to call this an investment, we can't be consuming them, correct? the whole idea of investing, you want to park your cash and have it accrue value over time. i think of these things as decaying assets. i guess that a certain of them mature and are better over the years, but can you talk about the returns and whether these actually could, you know, be on par with stocks and bonds and maybe this year people go, i would rather -- at least i can try it other than the stocks and bonds. >> the number one collectible investment by performance is whisky up 204% over the past two years. mine's done well this year up 17% when you compare it to stocks, it's a pretty good return
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and, jamie, i guess that leads to the question, there are more and more ways that people can invest, not just to buy a bottle that you drink and it disappears, but you can buy casks now and they appreciate in value. you can buy whisky funds that have done well is that a good area for people to invest in, or do you think it's safer to buy a bottle, you know what it is and you store it away >> i think having some knowledge and interest around the subject, whether it's whisky or wine is important. you want to understand what creates the value, why it is valuable, and what you need to know about the storage there are obviously hidden costs. you need to make sure it's available to you and someone is not pretending it is theirs. there are different elements you need trustworthy intermediaries you need to make sure it is there, it is being stored and it is of a quality level. you have to make sure what the quality level is in the cask. >> whiine, you guys are going to
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have a record year this year but asia is a problem in the wine market. how do you see that going forward? >> asia has been a positive for us because since 2009, asia has bought between 60 and 70% of what we sell -- >> but they're slowing, right? >> we've seen a slowdown in mainland china and hong kong but still 50% of our sales they've bought and consumed a lot of wine. i think they will still be the most important buyer going forward. we've seen great resilience in europe and the uk and growth and demand in the u.s. >> amazing i'm astonished that in a year in which we've seen the fed pull back on liquidity, asset classes get popped and you're talking about the numbers that you are >> we'll have a record year this year which is fantastic. >> thank you for joining us today. please, someone, take these away carefully before i knock it off the table and destroy the legacy
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and half a million dollars worth of these beautiful spirits and wine that you so kindly brought. thank you. still ahead, as cracks begin to show, one major developer is making a big bet that a rebound is ahead ilte y wreig rht after this
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♪ welcome back the news of redemption limits being triggered at two big private reits has investors more worried than they were about the commercial real estate sector, but are there also now some new opportunities. diana olick joins us with more. >> blackstone said the redemptions had nothing to do with the performance of the rates but the markets are spooked. on the public side, reit stocks have been slammed, down 23% year to date and apartment reits are down over 30%. the big issue is what rising
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rates are doing to commercial real estate investing and development. we spoke with the ceo of a mid-atlantic apartment developer and landlord. >> today feels a lot like 2000 -- end of 2008, early 2009 where there was a significant decrease in capital being deployed when there's no liquidity in the marketplace, develop eers, reits have a hard time transacting even if the fundamentals are positive. >> investments were down 24% in q-3 year over year multifamily fundamentals are still considered strong and that's why bozzuto is making a big bet on it now. >> there's a generational opportunity to develop a pipeline or aggregate a pipeline and also to acquire new apartment assets
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so better values >> now bozzuto said he's raised 400 million in private capital to both build and acquire more apartments because he said the market is sorely undersupplied. >> that's fascinating coming in when others are leaving quickly. thank you very much. now from real estate deals to the latest on the microsoft activision one and what needs to happen for that to actually get done it's coming up in "power lunch" which begins right now ♪ welcome to power lunch i'm jon fortt and here is what's ahead. the consumer stretched thin. credit card balances are up, savings rates are down and now a walmart-backed fintech is reportedly ready to launch the retail stocks to own with the signs of consumer stress plus, venture capital deals on track for the sharpest drop in 20 years is the era of tech


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