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tv   Power Lunch  CNBC  December 9, 2022 2:00pm-3:00pm EST

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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 unicorns
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over we'll discuss that later this hour. but first to kelly with a check on the markets. >> we have stocks edging lower, the nasdaq is back in positive territory as yields rise after the ppi report this morning. the dow is down 81 right now netflix, meanwhile is trading higher this afternoon on two bullish wall street calls. wells fargo upgrading the stock. the shares are up 5%, we should add, nearly. we'll have more on a call later in the show. it's been a rough week for some of the bank stocks goldman sachs down 5%, wells fargo off 7%, bank of america down more than 10% since monday, john. >> consumer confidence coming in stronger than expected today how confident are investors in the consumer bank of america says e-commerce spending dropped 2% year over year right at the time when it should be peakholiday shopping
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season a sign that perhaps consumers are relying more heavily on cred which jeffries says is exactly what shoppers are doing as savings rates fall and revolving credit speck are cracks forming and how do you invest in this environment with us jeffries retail analyst who says the consumer is stretched. stretched to the point of breaking when is that point >> well, it certainly appears to be on the precipice of arriving. so we look at savings rates and we look at revolving credit balances and revolving credit balances are expanding at a high rate, up 15% in the last month savings rates, which prepandemic, the trailing 12-month average, plus 9%, now closer to 2% people aren't saving as much and spending more on credit. we tend to favor those retailers
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that are value-oriented and sell a lot of food because frankly consumers are stretched with inflation running at 8% through the first 11 months of this year and gas prices above $3 a gallon usd. >> i saw a stat this week over the last couple of days that a lot of consumers are tapping into their 401(k)s, those redemptions just at a rate higher than we've seen since vanguard has been tracking that. but it's one thing to talk about the consumer just in aggregate there are different consumers with different financial profiles who are weathering this time differently is this just a continuing story of the divide between that working class walmart shopper that's more affected by inflation and then the higher end luxury consumer who is less affected >> it's a great question and we've certainly see a bifurcation between higher income consumers and the retails that indicater to that customerd
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lower-end retailers. while both are clearly pressured, the lower income consumer has continued to be a little bit more pressured as it relates to discretionary spending and the retailers have suffered as well. couple that with elevated inventories and markdowns, it's been a relatively rough time for a lot of these retailers but one of the things that is perhaps a little unique to a retailer like walmart is that it's gaining a lot of share. and it's not just gaining share from lower income customers like you would have thought three quarters of walmart share gains are actually coming from higher income customers that are trading down into the retailer same with dollar general dollar general, the average customer earns about $35,000 a year but dollar general is seeing a customer that earns $100,000 trade down into the retailer that's roughly 3x the average
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customer it's clear that it's not just the lower income customer that's feeling the pain right now. >> all of that comes as walmart is looking at this industry into the buy now pay later space. what does that tell you and is it something that could actually increase the fragility of the customer base in the longer run? >> well, i think this is just an extension of walmart's personal financial initiative it started in january of 2021 when walmart launched an investment firm. the company acquired two firms to build that out and then in april of '22, the company hired john david rainy to become cfo if there's one person who knows a lot about payments and to help facilitate the personal financial arm within walmart, i think it's him. >> corey, as we look into their entry into that space and whether it's about technology and whatnot, you know, can they continue to perform well in an
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environment in 2023 where we might simply see more demands on the consumer than we have so far in 2022. the consumer has had a lot of wealth, they have those savings to draw down on. it's not clear especially if wages start to slow what's going to kind of be left to keep -- to keep even the big players going at the pace that they've been going. >> the other thing is that inflation has been a bit of a good guy to some extent because it's helped drive higher sales but at the same time, it's also helped to -- it's increased costs a lot too. so it's been a bit of a dual-edged sword, if you will. and as we look to next year, you actually -- even though you might have a bit of a shaky consumer in the face of a potential recession, you might have the opportunity to drive better profitability as all of these costs like elevated inflation, freight, supply chain, and elevated inventories
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which have driven really high promotions as well start to go away while this year might be an issue from a margin standpoint for a lot of retailers like target, for example, which is probably going to generate an operating margin in the 4 to 5% range, next year it's going to be a little bit better. >> going back to what you said about that core dollar general customer where you said it tends to be 35,000 income but now you see 100,000 shopping there how much of that is because, a, salaries have gone up, so who is making a 100k now, and then also, how much disposal income do you have after you paid rent and food, and now 80k group is looking more like a 35k group. >> higher wages have benefitted consumers, but at the same time, consumers, because of covid,
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they didn't have all these other places that i could go to shop if -- let's say for dollar general as an example where this company has 19,000 stores within five miles of 85% of the u.s. population but men independent mom and pop retailers or grocery stores closed because of the pandemic and they were marginalized because they didn't have the funds or the capital structure to withstand the covid issues that they did and now a lot of these other consumers that earn a higher wage, they don't have a place to go other than dollar general or other retailers that are present in the neighborhood in which they operate. >> great overview. >> it makes those -- >> great insight, corey, thank you. the consumer may be slowing as rate hikes ripple through the economy but our next guest says he's waiting for the "p"s to
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materialize. let's bring in chief investment officer with pence management. are you bullish or bearish for next year? >> it's great to be here we're fundamentally cautiously bullish and a lot of that depends on the pathway of the "p"s, are we on the pause of the fed and where are we on the peace in ukraine we think we've seen the peak on inflation rates and that those are beginning to come down but they're probably not coming down at the rate that the fed would want don't fight the fed, but nobody told the consumer that there's a lag period of time of six or eight months before budgets begin to show, the fed can change it in a day, markets react in an hour, and consumers react in months and companies react in months. so we really think that it's going to take a clear signal that we have paused on rate
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hikes before we're goingto get you know, what i would say is move from causally or cautiously bullish to significantly bullish moving into next year. because i think there's risk of the fed kind of going, you know, too high for too long before they pause i don't think we peaked, but i think we need to pause. >> maybe the way to translate all this is into the stock pick that is you're recommending as a result and you have some defense names. you've got walmart which goes back to the comments our last guest was making but what do these picks illustrate about how you expect the markets to perform and why do these names jump out to you >> these names jump out because we think they're going to be resilient into what we would call what happens no matter what when you talk about lvmh, walmart, we think there's a barbell consumer people are trading down.
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people at the upper end of the economic spectrum kind of spend no matter what so we think if you barbell the consumer, you're in a good position there when you talk about asml, the world is trying to get away from its dependent on china for chips and, therefore, we're going to have to create new chip manufacturing facilities asml has a monopoly on the extreme ultraviolet light production facility. everyone has to buy their machines they have a two-year backlog if you're going to fix the strategic problem that we have in chips, you're going to have to buy from asml when you look at the fact that the war in ukraine is not going to -- we're not going to spontaneously break out in peace any time soon. you would like to see that but what's going to happen is, you have raytheon and lockheed martin are big suppliers of the key ordnance that's necessary
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for this fight we have the new defense authorization act going through with over 800 million in additional aid to ukraine. you have a strong demand signaling. you have all of europe needing to up their defense spending to keep up with their nato obligations. we think that regardless of what happens with the economy, big recession, little recession, whatever it is, you're pretty well positioned in defense stocks that are going to need to, you know, be used during the current war and also as we rebuild the armories of nations that have been depleted. >> let me press you on that a little bit because for asml specifically, i think it's up something like 30% off the lows of just two months ago. it was at around 411 or so and now it's up at 577 a share the s&p, we were under 3600 and now we're around 3950. was all of that bounce warranted even if some of these names are
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going to do relatively well, will they do relatively worse once we digest what's happening perhaps with the consumer right now? >> when you look to asml, it's not driven specifically by consumer it's driven by a demand from the folks that are needing to be long-term strategic suppliers of the consumer you've got to build the factory today that's going to provide the chips for next year, the year after, the year after, the year after and you're doing that in different places other than china. so we think that even though this stock has had an attractive run, the demand signal continuing into 2023 and 2024 is still going to continue to be robust they're going to have a long backlog and a deep backlog for a long time. if you're thinking about companies that are weather the storm, whether it's a big one, a little one, what happens to the consumer or otherwise, you're looking at companies that are going to have strong demand signals regardless of that
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variability. >> all right thank you. >> absolutely. thank you. appreciate it. coming up, the game is not over what microsoft and activision have to do to get their deal across the line. plus, venture capital investment on track for the worst drop in more than two decades. does that signal a further drying up of the ipo market in 2023 as we head to break, a look at shares of chewy that are higher after raising its full year sales forecast good boy power lunch will be right back this... is the planning effect. this is how it feels to have a dedicated fidelity advisor looking at your full financial picture.
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welcome back to "power lunch" the federal trade commission is suing microsoft to try to block its planned acquisition of activision blizzard calling out anticompetitive behavior the tech giant had offered $68.7 billion in january with the intent of closing the deal in june 2023 while the ftc may have hit the pause button for now, our next guest says it's not game over. let's bring in an internet and digital media analyst at raymond james. why is this deal not over? do you think game over do you think the ftc just wants to put up a fight even if lina khan thinks she can't win? >> thank you for having me i think that if we take a step back and look at the broader
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gaming market, this is a massive market nearly $200 billion in revenue even a consolidated prie-- there so many remedies or potential concessions that microsoft or activision could make to get this deal over the line. we still think that it's more likely than not that the deal gets done. but the ftc sued and the various international regulatory processes are likely to complicate the issue and make this more of a drawn-out process than maybe microsoft or activision had expected at the outset of the deal. >> does this come down to the question, really, of consumer harm are consumers are hurt by this or a more european style, our competitors are hurt by it it seems like microsoft is going to hold back games or features or capabilities from sony, from others in the marketplace. if microsoft simply promises not
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to do that, if there are remedies, how doesn't that take care of the problem? >> i think it's a little bit of both in this case. i think in contrast to some of the other -- certainly some of the other consolidations in the gaming industry, i think some of the competitors are the other parties to this merger might have been a little bit more loud and a little bit more strident in their opposition than normal. so i think the anticompetitive and anticonsumer cases are both being taken into account the other issue is around microsoft's acquisition of zinimax. they have made assurances that they would not wall off the content that was associated with the acquisition and we found out that some of the upcoming games are likely to be exclusive to microsoft platforms. so i don't think that in this case an assurance would be enough i think you would likely need something more concrete as a result of that
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>> andrew, i'm also curious where you think activision is valued or would be trading if there were no microsoft deal right now. >> i'm glad you asked that question, because i think this is something that has -- part of the story that has changed pretty significantly over the course of this acquisition saga which is now lasted most of 2022, in contrast to earlier in the year, now activision is in -- we think a pretty attractive situation even on a stand-alone basis. even if the regulatory process does not go well for the completion of the deal, we still think that the stand-alone activision blizzard is looking pretty good at this point with "call of duty," "overwatch" both having recent releases that are, you know, very, very strong, the upcoming game, a couple of other things in the pipeline activision blizzard is looking pretty decent as an investment in its own right which was part
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of the catalyst behind our up y grade of the stock last month. >> how bad would it be even for microsoft if this thing came apart? i don't think many people are arguing microsoft's gaming business needs this to survive or compete, particularly, and this is a transaction that was proposed near the top of the market it's not like they're getting a huge bargain either. >> i would say that really this acquisition from microsoft signals bigger ambitions in the gaming space obviously with the xbox hardware and their collection of first-party studios that they already have, theyhave a fairl sizable gaming business. but i think activision and zinimax are bullets in the chamber for their subscription service which i think they view as the future of gaming and the way that consumers are likely to engage with multiple forms of
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content. i think that activision blizzard is a key component of that. >> all right andrew, thanks further ahead on the show, out of the frying pan and into the fire sam bankman-fried agreeing to testify before congress. are his attempts to appeal to the public just making things worse? we'll discuss what to expect plus, some big earnings movers docusign, lululemon and broadcom after the break. [phone: starting route.] technology helps us navigate to work. [phone: go straight.] but, to navigate the complexities
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♪ welcome back it has been an action-packed week in the bond market. rick santelli has been tracking the action following that hot inflation report rick >> yeah, it moved the markets, john look at intraday ten, far left of the chart, 8:30 eastern rates popped, 10:00 eastern, rates popped and if you look at ten year, starting from june 1st, this is important, folks, look at the mid-june, 614.
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we had that top. a whisker under 3.5% basically where we're trading now, this zone is important. something tells us how important it is, the knob spread 10s versus 30s us how big it moved on the 14th of june. of course, because 10s versus 30s includes 10. it's something to pay attention to yesterday it inverted for the first time since october and finally one week of 2s versus 10s were the least inverted in a week since last thursday also very important. if you're trading the fixed income side, today's data shows you may be peak inflation but historically high inflation. the duo there is going to make trading complicated. john and kelly, back to you. >> thank you very much, rick. time for our weekly etf tracker. we're looking at energy funds. huge outflows this week. $1.3 billion
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this week oil prices fell to their lowest level since late last year. we had the opec meeting, the price caps on russian oil and it comes as china is starting to reopen which many thought would increase demand and prices the oil and energy etfs have taken a big hit. look over here, the energy sector spiderdown 8% this week the s&p, oil and gas etf down more than 11%. this one more specifically focuses on that exploration and production so a really tough performance log, of course now we're seeing the flows follow that as well. all of this data comes from our partners at track insight. more information is available on the etf hub. let's get over to kate rooney. >> here's what's happening at this hour. criminal charges have been dropped against former michigan governor rick snyder in connection with the flint water crisis he faced two counts of
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misconduct he was the first person in michigan history to be charged for crimes related to a service as governor. walmart investigated one of its store's supervisors two years before he shot and killed six co-workers last month in chesapeake, virginia "the wall street journal" reports the investigation is being cited in two lawsuits pr brought by employees who survived that attack it's not clear what actions walmart took as a result of that probe. and defense secretary lloyd austin says russia is expanding and modernizing its nuclear arsenal at the same time that the russian president, vladimir putin, has suggested that he could use nuclear weapons to protect russia austin says putin has engaged in, quote, deeply irresponsible nuclear saber rattling back to you guys. ahead on "power lunch," from done deals to deals that are kind of done venture capital on pace for
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records. analysts releasing top picks for the year ahead we're going to lay them out. "power lunch" will be right back maybe it's perfecting that special place that you want to keep in the family... ...or passing down the family business... ...or giving back to the places that inspire you. no matter your purpose, at pnc private bank, we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why? ♪♪
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well, we fell in love through gaming. just tell us - what's your why? but now the internet lags and it throws the whole thing off. when did you first discover this lag? i signed us up for t-mobile home internet. ugh!
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but, we found other interests. i guess we have. [both] finch! let's go! oh yeah! it's not the same. what could you do to solve the problem? we could get xfinity? that's actually super adult of you to suggest. i can't wait to squad up. i love it when you talk nerdy to me. guy, guys, guys, we're still in session. and i don't know what the heck you're talking about. welcome back let's get you caught up on stocks right now
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markets are choppy this afternoon. the nasdaq actually peakieking o the green, but the s&p and nasdaq flat. it looks like media stocks having a good day. positive analyst commentary on netflix. but disney, warner brothers and paramount also gaining shares of bath and body works higher it increased its stake in the company to 6%. other companies making stuff for your home also having a good day. rising rates in economic uncertainty putting a cap on ipo activity and venture capital investing. the value of new deals globally has plunged 42% the first 11 months of this year. will next year be more of the same or could we see a bounce back joining us is the founder of mendoza ventures what do you think? >> yeah, i mean, we were -- it's
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been really interesting. we've seen a lot of the name brand funds in the last six months stop deploying. we've seen ipos come to a grounding halt what does that look like for 2023 it's going to be a slowdown of ipos they're going to remain flat as well as we're going to see still a continuing of the tightening of the belt, of the ipo tech companies. in 2023, i predict we're going to see a trickle down into pre-ipo and mid to early stage companies. and this is really what we're going to see very, very interesting next year because one of the interesting facts about vc is they're still reportedly $290 billion sitting on the sidelines within funds that hasn't been deployed. >> that's why -- >> even estimates that we're seeing are it may be as small as 160, that's billions with a "b." >> isn't this what a lot of venture capitalists wanted
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i kept hearing over and over again, these valuations got out of control but, hey, this is just what it costs to get in now. we're in there boy, we can't wait for this stuff to rationalize isn't this what it takes for stuff to rationalize when the market doesn't want to pay -- >> john, you are absolutely right. and the vcs love a deal the reality is, we're going to see most of these name brand funds kind of stall in fund-raising but here's where it's been pretty amazing in this market emerging fund managers in the space have taken the pole position of come in at these great valuations, much better stakes, much better economics for them and their investors, and mid of 2023 these vc dollars, that 290 billion that's sitting on the sideline is going to have to get deployed. because lp dollars can no longer sit for six months to a year to two years not receiving gains.
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so we are going to see a bounceback i feel like it's going to be a wave that's going to come in and crash down and 2023 is going to be an interesting time for vc deployments. >> deployed? there's a lot of people with egg on their face with their crypto investments. where is it that you think funds are likely to be welcomed? the funds will be welcomed, welcomed anywhere. but where do you think they're likely to go >> the interesting thing about the ftx debacle, it affected the pension funds, the large institutional allocators that are now going to be a lot more gun-shy about some of these technology deals this is where for me i see a lot of movement in the emerging fund manager space. that first through third time fund the economics here in the u.s., innovation is still being created by vc.
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and this is my worry about the 290 billion that it may just be sloshed around into things that may be vc ready, things that may not be vc ready, and this is my worry about 2023 i think we're getting a lot of good movement, a lot of amazing founders are still building profitability companies, it's what's going to happen to that 290 billion. is it going to be smartfully and skillfully deployed or is it going to be like when the wave comes and crashes, it leaves destruction and damage in its wake. >> doesn't this shake out some of the money that was in risk and maybe in vc -- not because it really wanted to be or believed in that future, but because there is no alternative, they couldn't get yield elsewhere. now people who want a little bit of yield are going to be able to find it elsewhere. is that perhaps eventually a good thing >> well, i think this is a great thing because it's also going to shake up a lot of things that we're seeing
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we just saw the s.e.c. sue a venture fund just yesterday about it being a ponzi scheme and fraudulent activity. we're going to see a lot more stuff -- the excitement of vc in the three months is we're going to see a lot of these issues come up more and more often as the funds that actually are deploying and building gains will be doing the day-to-day business of doing vc and that's really going to be a shake-up. the excitement really a lot of it was led by crypto and a lot of the new technologies where there may have or may not be anything there. we saw this five, six years ago in our -- you know, the last crypto winter. this is really what -- it's very important that good due diligence is done by the vc community. >> a return to get rich slow not so bad for everybody -- >> crazy thing a return to profitability. >> profits we like those.
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those are good thank you. up next, wall street looking ahead to 2023. ipme key firms betting big on chs, casinos and streaming we got details next. >> announcer: the bond report is brought to you by pimco, a global leader in active fixed income and trust are in short supply. [clap] now, as businesses we can blame and shame. or... [whistles] we can make a change. [clap] we can make work, work for our communities. create more equal opportunities. [clap] it's time for business to show its true worth. because it's not goodbye, world. it's hello, team earth. [clap] researchers believe the first person to live to 150 has already been born. it could be you! wow. really? of course, you'll have to eat your greens, watch your stress, wear sunscreen... but to live to 150, we're developing solutions
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welcome back to "power lunch. busy friday as wall street that has several brokerages making calls on their top picks for 2023 we're looking at chips, netflix and the details on casinos let's start with christina that kind of chips, christina. >> it seems like what is jp morgan not bullish on in their latest note. they believe chip stocks are de-risked enough in other words, fallen enough to price in potential risk in the coming months and 30% year to date drop in the stocks must be enough they believe any revenue weakness from the recent regulations to china is already priced in. even if there is a more temper tone or a slight miss in earnings, stocks have stopped plunging on bad news and then lastly, they believe
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the sector will be driven by demand in cloud data center, enterprise infrastructure and lastly auto industrial and so that's why their top picks are analog devices, marvell. >> sounds like they don't expect a pc turnaround, though? >> exactly that's what was missing from their report more specifically, you had a report from citi analysts just yesterday and their signaling pc demand is going to remain weak in 2023 and inventory levels will continue to be high and that's going to hurt, who else intel. intel shares are down 46% year to date. the company is fairing much worse than the entire sector and they say amd isn't immune either but it's interesting to note that unlike jp morgan and their, you know, pretty optimistic note, citi believes that the data center market will be the latest shoe to fall and is
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headed for a correction. kelly? >> some widely differing views on where that's going. >> oh, yeah. >> thank you very much let's take a look at shares of netflix which are the best-performing stock on the s&p over the past three months julia joins us with those details, julia >> cowen making netflix its pick for 2023 they call it the best recession play and raises its price target for the stock. now it's at 324. cowen cites three key drivers, including new monetization levers including the advertising peer, revenue reacceleration as free cash flow growth ramping up next year. it's not cowen with a bullish outlook, wells fargo upgrading the stock and raising its price
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target as way saying stable subscribers is making them bullish. netflix is one of the top gainers on the nasdaq 100 today. kelly? >> wow so the ad-supported model they rolled out, will it add to profitability or will people trade down >> they do -- analysts really very much do think this ad-supported version of netflix will grow that subscriber base which has been stagnating. looking at this wells fargo note, they say that they believe that this new ad-supported tier will drive around 23 million subs by 2025 really adding growth also there's this idea that if consumers switch from ad-free and paying a little bit more to a lower cost ad supported model, they will either have a revenue neutral or actually end up generating more revenue for the company because of the value in
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those ads. trading down should not mean a loss in revenue for netflix. >> thanks. casino stocks have been in the news this week as china reopens. i'm willing to bet contessa brewer has some analysts picks for us. >> you talk about casino, you call me. las vegas sands is one of the few stocks with positive returns up more than 25% wynnresorts is near even since the start of the year. deutsche bank analysts raised the price target on both today calling them best ideas for outperforming the market next year as china reopens and demand returns to macau he said it could be choppy still we've seen with other asian markets, they've seen swift ramp in demand as covid restrictions eased the analysts says he likes gaming stocks with sound balance sheets, organic pipelines and
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capital results. and shares of wynn and las vegas sands are negative today both down more than a percent. look at melco. shares up triple digits over the last three months -- we don't have it up it's really incredible performance from those stocks. >> that's asia, what about the u.s. what about vegas it seems like it's hopping can that keep up >> they've seen a huge postpandemic rebound what seeing is, look, there is a warning for investors. gaming stocks tend to overcorrect when you have negative revisions if the consumer gets hurt, that could affect them. look at the gaming rates which the tenants have positive balance sheets look at the digital providers like sport radar and look at those with huge presence in las vegas. if you're looking at, for
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instance, caesar's and mgm resorts, you have a packed events calendar and the return of international travel. all of that should still see las vegas with even more ramp coming in 2023. >> all right well, investors have to play the hand they're dealt contessa, thank you. >> yeah, she's the best with the quick pun. docusign surging up 14%. but the company is seeing big sales. we'll trade that and some other earningsovs merin our three-stock lunch up next. ♪ ♪ opportunity is using data to create a competitive advantage. ♪ ♪ it's raising capital that helps companies change the world. it's making complicated financial concepts seem simple.
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welcome back time for our three stock lunch we're sipping on big post earnings movers, she said. docusign is surging on better than expected results, including an 18% jump in revenue year on year lululemon is sliding on a weak outlook and a glut of excess inventory. broadcom higher on a big beat, raising the dividend and resuming a share buyback here to trade all three is david wagner, portfolio manager at aptus capital advicers let's start with docusign. do you stick with it >> first of all, welcome back,
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kelly. love seeing you again. given the performance of this name this story has been far from normal. first i think the new management team has done a great job setting reasonable expectations not only for this fourth but the fourth quarter the outside surprise driving the stock is a better profitability guidance i think there is skepticism or concern regarding billings that may weigh on short or medium term growth. maybe they're setting up another conservative guide the market specifically tech right now has been focusing on names that have tried to throw out the kitchen sink with their guidance so the big question, at least for me, is did docusign derisk their expectations enough today? i'm not sure of the answer, but it does feel like the management team has done a great job kind of managing the street and their expectations and that's the first step for a stock and company to regain their credibility. i mean, docusign, they're become more interesting right now i'm worried about valuation still. this report does grab my
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attention to watch the consistency of execution for the new management team. >> i can see the kitchen sink behind you so maybe it is salvageable. next up lululemon down 13.5%, can this get back in shape >> it's going to be tough, jon the price heading into the report was horrible. the stock was up 40% over the last two months. i don't think anyone could have been a fan of this name heading into the report. but i do think that investors can walk away with some positives for a long-term thesis that says a lot for a guy that thinks the only brands that matter are busch light and crocs. it gets down to profitability and inventory levels where the market may be draconian given the price on the name, is around inventory levels they were high but half the increase in inventory levels, well they came from core goods, not subject, in my mind, to markdowns in the future a lot of those positives don't really put me over the edge for
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ownership yet because i can't get comfortable with valuation and the sustainability of margins, especially as they move into lower margin businesses such as shoes. >> let'smove on from your disdain for the lower margin business and got your take on broadcom before we go. what do you make of -- >> this is a business, and i'm excited. i love this name i don't know how you can dislike this name. they're holding their own in a very, very difficult environment. just look at the last few earnings reports the resiliency of the earnings for this company are astounding. the company is outperforming on broader market trends with strong year over year growth in every line of business they have look, what makes this name quality to me, it's the fact that they do not allow any type of pushout in orders that policy looks to be continuing right now so, you know, i really like this name cash flow juggernaut here. i know the ceo sounds optimistic when it comes to broadcom but he
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is a cost-cutting machine. in tech that's what they love. they love profitability and cost cutting. i'm long and strong here. >> dave, you always have a way with words as well thank you for joining us dave wagner for today's three stock lunch. coming up elon musk warning for the fed. that's next. power e*trade's easy-to-use tools like dynamic charting and risk-reward analysis help make trading feel effortless and its customizable scans with social sentiment help you find and unlock opportunities in the market with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity ♪♪ we all have a purpose in life - a “why.”
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five days, welcome back, the fed meeting five days away before wednesday's decision we'll be hearing from a lot of shall we call them amateur policymakers let's start with elon musk who just tweeted moments ago, if the fed races rates again next week the recession will be greatly amplified. >> his own personal recession or everybody's recession? tesla's stock has not responded so well to rate hikes and he's got a lot of debt with twitter at the same time. >> right umb i mean he's been bearish not the first time he warned about rate hikes and sees a recession coming we've heard about it from jeff bezos and a lot of prominent people what do you make of that >> i'm amazed how much the soft landing has become consensus for so many people over the past several months when at the ging there's no way there's going to be a soft landing. i'm curious how that became a base case for so many. >> it's still on the table or realistically could happen yeah, not so good.
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that goes back to will all of this public commentary persuade the fed maybe to lean back a little bit or not we know the data, obviously, is probably the main factor. >> there's commentary and then the ppi he got cpi on tuesday. >> probably adds the recession case when you get a ppi report that hot it's hard to see the fed backing off. >> sam bankman-fried too, another tweet thread this morning seemingly agreeing to testify in front of congress next week. he says he doesn't have access to all the data, quote, but as the committee still thinks it would be useful, i am willing to testify on the 13th. that is tuesday. he previously brushed aside an invitation from maxine waters saying he didn't want to testify before he had completely finished figuring out what happened he says he can talk about getting customers their money back and what caused ftx to crash. this is a man who was so certain, right, months ago about so many things or seemed it, and
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now, he's the absent-minded professor. >> yes i think that is not going over well i mean, people are furious they want answers and they want accountability and don't accept the sort of oops excuse right now. how forthcoming he chooses to be will be interesting to kate rooney's point as she's been reporting on all day it's going against legal advice to put himself under oath and then try to take that way out here. >> there have been people criticizing andrew ross sorkin, why would you talk to him? i think it's good to talk to him. get him on the record. have him say something and then he has to answer for those things later. >> put it this way, sam took himself on a global media tour effectively. there were multiple different places he's spoken to, reached out to people, dm'ed them, going in front of congress interestingly enough we see the dominos continuing to drop crypto website issue their about funds coming from alameda to support it i think there's going to be more
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dominos to fall here >> so many in crypto for better or worse, they're not all the same, who have gotten so far on believe me, believe me, believe me. >> right. >> trust me in this environment is a different argument. >> and we can bring it full circle, the less fed liquidity we have the less any will be left standing. >> thanks so much. thanks for watching "power lunch," everybody. >> "closing bell" starts right now. a hotter than expected inflation trend weighing on sentiment this morning, but investors largely taking it in stride as we await next week's fed decision this is a make or break hour for your money welcome to "closing bell." i'm sara eisen where we stand in the market holding up i guess the dow down about 94 points we were a lot lower earlier down 140, but higher up 63 at the highs of the day s&p 500 down about 0.1%. off lot of pockets of green. real estate, communication services, technology, financials and consumer discretionary are all remaining positive right now. energy, health care an


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