Transcripts For CNBC Squawk Alley 20240712

Tech stocks taking a pause this morning. No love for the electric vehicles this week, either then there is the tech eco systems. A new Software Brand storming the castle of apples app store. Huge announcements ahead as besos and Company Refresh their Consumer Device lineup what to expect from alexa and amazons ai. Well have that here on squawk alley. Were going to begin this morning with that story on the Apple App Store challenge as Companies Like spotify, epic games, and match group join together to create a coalition for app fairness casey newton of the verge for now, at least, joins us this morning fresh off of announcing he will start his own newsletter called platformer. Give us a little preview, and congratulations, its almost like a labor union that these companies are forming to take on apple. Do you think it will work . I think it has a better chance of working than anything else we have seen in this regard to date. I think their analogy is a good one, right apple really is management, here and these folks have no choice really other than to make a app for ios. They have to do it under apples rules. And spotify has the best guess here casey, congrats on the newsletter i just signed up and i cant wait to read it. There is more tension between apple and epic there is a meeting on monday is there negotiations going on behind the scenes or are they trying to amass enough companies that they will have the he ifff they need. They are usually in fear of losing promotion from the app store or something else. I have to imagine that most of them were taking place behind the scenes before epic came out to drop the hammer in terms of the end game there are so many things that apple could do to take some of the pressure off of itself, right . The fact that you cant sign up for a netflix account for apple is just one of those things. But it is really interesting to watch apple as it faces more criticism doubling down on the anticompetitive behaviors getting it into trouble in the first place. Interesting that netflix is not in that coalition. In terms of apple doubling down, and what the potential compromise is, does it lead to lower fees or scenarios where they exclude certain apps from that tax or how does it end up playing out . I think apple is going to want to get as little ground as possible because it has such deep prokts. This is a war it can fight for a very long time and collect a lot of rent from App Developers along the way. In that regard i think these developers have an uphill battle is there really a Good Business case to be made that they should not let you buy a kindle book on your iphone. These are things that consumers want, and if you take apple at their word, it seems like they would let people conduct more commerce on their phones without always taking such a deep cut. I could take that argument, probably a better place to be made that apple can control their eco system that way than kindle getting whatever they want for their books amazon has a monopoly on e books and is holding peoples heads under water. But i dont stop a coalition to stop e book supremacy. Thats a fair point the last thing i want to do here is to be on air promoting amazons book monopoly apple is taking this rent seeking behavior to the extremes and this year i think you saw developers hit the breaking point. Not everyone will join that colisc coaliti coalition. It is just touch and compete, right . Spotify makes the best Music Streaming Service in the world it cant advertise for free on its phones, it has to give a cut of revenue to apple. So what will it do it has to take over the global podcast market to be a Public Company and succeed. So were seeing other companies contort themselves into all of these bizarre directions and thats what i hope eases up as it gets resolved this idea of the f. A. A. N. G. Tax, i hear a lot about it do you think this could be a tipping point. I mean if it is google, who has not been in the spotlight this much, or a. M. Zob or facebook . The careen i would say yes is that the u. S. Government is finally taking it seriously, right . We just had an antitrust hearing in july. It has been investigating for over a year. And were about to see a number of antitrust lawsuits against some of these companies in the coming months and spilling over into next year so for a long Time Developers were scared of speaking to to folks like us. So for that reason i think youre seeing everyone line up to sing like a canariy great in terms of what is going on here with tick tok, applying for an export license today leading to speculation that oracle may get the algorithm after all. I know we have another deadline coming up on sunday. I would be lying if i said i knew what the government in china was going to do. It seemed like the deal made would allow tiktok to continue operating more or less as is with byte dance maintaining control of the al gor rgorithm. Is there something in a n that transfer that necessitated that. They have been very clear about that in a lot of ways, and so i still think it is a coin flip, but if im the government in china, it really seems like bite dance gets most of what it wants here under this deal casey, hank with us for a second we have yunis joining us now from bay sing with the latest. Thank you, a lot of what you were discussing is being discussed here as well bitedance applied with bay sing for this export license. It said they were in line with government requirements and theyre waiting now for a kripgs no word on what the technology, what the license would be for, what technology it would be, but as you know the government here recently updated its regulations to control the export of technology which included a technology that looks very similar to the algorithm so the speculation that you were discussing is a very wide range. They say they might be willing to sell its al gor rhythm, which would be a huge deal people have been talking on social media that the founder of the company would be a trader. There is also an idea that you would show the source code and that this could be a procedural move. Once filed they could reject the license and in that way, and that way of ending this potential deal so the Commerce Ministry said that they have received the application. Just like all of the others, they would not speak directly to the deal, but they said theyre urging the u. S. To create a fair, stable, and predictable Business Environment separate to that, state media has been slamming the deal they have been saying this is the equivalent of a shake down and that bitedance is a victim of all of this, but overall of course the chinese are not happy that one of the companies is being treated this way at the same time theyre also unclear whether or not this anger that were seeing on state media is really a way to try to posture and get a better negotiating position for china as well as for bitedance thank you. Casey three options that i see here, what this export license is for, based on what yunis just said, to sell the al ggorithm, show it, spike it, what do you think it is . Oracle and the deal that was approved in the United States would have let bitedance retain their algorithm, right thats the show it option yeah, i think that is likely the most likely. He will still get to declare total victory. And china will goat to retain control of a really fast global asset that it is justifiably proud of when youre dealing with geopolitics things can get weird in a hurry casey, the chinese are letting the algorithm go, so to speak. They could have a snapshot of it and they could recreate something similar to it. Sometimes we lose site of the bigger issues here which is the growth of ai in china and if theyre equal or exceeding the u. S. In that it appears that both countrys wi countries are going in die ver gent paths. It is a great question. How good is that a glgorithum is really there is a great article this week that talks about tiktok is built perfectly so every signal you send it in the app is understandable to a Machine Learning system. It is less about the ai itself and more about the design of the product. That is a copy that can be made without an a huge advancement. I think it is important to know that tiktok is a outstanding product and you cant sprat those two things certainly a very addictive product. Well be interested to see what happies ahead of that new deadline now finally, casey, your latest article for the verge is called mark in the middle. You used leaked audio of him speaking his employees asking for him to take a harder line against the president and the user base says the opposite this is such a great article and it shows a paradox that zuk zuckerberg is facing are we expecting more announcements like the one week ban, what will come of this . Look, this is a very fast moving situation, right . It was just yesterday that facebook had to confirm that if trump declares victory the day after the election, even if the results are not finalized, Facebook Says it will block that ad that is a decision they made or announced yesterday. Voting is already under they be this election. So what it says to me is that this is very fluid these folks are trying to understand the ichsituation in realtime like the rest of us are. I was trying to show that no matter what decision the Company Making it will outrage an enormous number of people. At what point does it hit a breaking point have we just entered this space of constant pressure that the company is under and, you know, people have not banded facebook users havent. Probably more than ever, people in general dont hate facebook, even though there may be wary of it maybe this is manageable for them i think certainly youre right that facebook is having a stellar year on the finances, right . You look at their revenue and their usage data you see theyre in there thriving at the same time the public image takes hit after hit. Engineers are continuing to quit and issue these anguished public statements and i wonder if facebook will not have more trouble attracting and retaining talent over time these are some of the sort of paper cut thats are maybe a little less visible, but can bleed some of the emergennergy f a company overtime i wonder if it will hit a breaking point with these constant controversies around these content policies and what it allows to stay up on the site casey, your article really focused on the employees and the users. Then there is a whole other constituency of the advertisers. We have a big boycott in july, continued a little in august, but facebook along with twitter and youtube announced a deal with advertisers around how they would handle certain hate speech issues that seemed like a meaningful step forward. And facebooks advertising has not taken a hit from any of these issues over the past few years. They kicked off this hate speech and the bias so i think it is worth noting and i have to ask if you they is at risk or whether or not this announcement made yesterday with this coalition of advertisers is meaningful progress there. This is sort of always what i thought would happen with the advertiser boycott they would make a big fuss and facebook would agree to some, you know, minor concessions and everyone would move on i think by this week, it is very clear the advertiser boycot itself was not making a dent in facebooks revenue it was not making the progress they hoped it would. If they were going to save face, i think they were willing to take just about anything another point to raise is just advertising revenue is always going to be great so long as the eyeballs are on facebook, right . It will be the most lagging of the indicators as long as people keep showing up, people will want to show their wares there. But people may be complaining about facebook but they keep using it that is another thing, how great it is for advertisers and consumers. Yes, it is one of the biggest communication infrastructures in the world at a time when a lot of people are stuck at home and relying on it more than ever so it really is resilient and i think in some ways it looks, you know, close to invincible. And you know i think that is one reason you see so much resentment for it because seemingly no matter how many things it does that people are unhappy with, it seems like there is never really any consequence for facebook itself. Pretty fascinating times for facebook the stock is up over 21 year to date a great article on facebook, and congratulations on your new venture. Thank you so much it has been a rough few sessions for a software darling like kuppa or even snowflake they are down 20 plus from their highs. Well tell you why the highest flying tech ocstks have been losing some momentum stay with us apple coming off of their worst day in more than two weeks. Other stocks that have seen surges like nvidia or amd not fairing any better this month. It has been a rough september. On track for the worst month since 2018 at risk of snapping a fivemonth winning traek even now that stock is up more that 100 . He says invest sors are now in wait and see mode. What do the new iphones look like, what do they cost, what are the features, and what will demand be like also under pressure, the semis the smc, it tracks the chips down about 10 since the recent high names we talk a lot about like nvidia, for example. Down nearly 20 off of its recent record high r Raymond James says nothing is fundamentally high a potential catalyst, he argues, in the quarters ahead. New products in data center and gaming in addition to the chips Cloud Software names also slumping it is on track for the worst month now since march. Keep in mind, like apple, the remarkable run we saw here even now up more than 80 from the march low opinion the cloud transition is real it is accelerating due to a work from home trend. What has changed, he says, is Risk Appetite and value indication at these levels julia back to you. Thanks, josh. Keep an eye on the payment stocks as well this morning. Theyre trying to remound after a 3 drop for names like shopify and American Express well continue to watch that space. Stay with us were back in two minutes. I felt like. I was just fighting an uphill battle in my career. So when i heard about the applied Digital Skills courses, im thinking i can become more marketable. You dont need to be a computer expert to be great at this. These are skills lots of people can learn. I feel hopeful about the future now. On a day that california announces no more gasoline cars after 2035, you would expect ev stocks to get a boost. No help this morning, either names like tesla, workhorse, and nikola all down this week. Read more about that order on cnbc. Com and the latest electric vehicle plague going public this morning. Stay with us former president ial candidate will be next music anncr give customers access to precisely what they want, when they need it the most. With adyen, the payments platform that delivers convenience for all. Adyen. Business. Not boundaries. Welcome back, everybody. At the Supreme Court President Trump and first lady melania paying their respects to Justice Ruth Bader ginsburg. Some spectators were not happy that the president was there Hong Kong Police has arrested josh ra wong for an Illegal Assembly just over a year ago. And in new york city, three transit employees have been suspended after officials discovered a storeroom that has been turned into what theyre calling a man cave only in new york it is equipped with a tv, sofa, refrigerator, beer, and workout equipment. Youre up to date, thats the news update this hour. David back to you. A lot going on underground in new york. Thousands of companies have joined together to sue the Trump Administration tesla saying the imposed hike could cost them up to 50 million in profit. Former president ial candidate and of course former heweitt packard ceo, Carly Fiorina how do you view Something Like this in terms of our trying to seek fairness from the chinese. Yeah, i think it is a reminder of a couple things, david. First that tariffs are not paid by the chinese theyre paid by producers and ultimately consumers and thats what these i dont find them a very educative tool for effective trade policy second think is a remind near to deal with the chinese, and they need to be dealt with, we need a consistent persistent strategy where business and government are aligned. Because this suit of businesse against the Trump Administration sues chinas purposes, not trumps purposes this is a very Public Division it is part of a larger conversation about our relationship with china. Im curious in your experience and you did quite a few deals, what is your take on how the Trump Administration could be so deeply involved in bite dances tiktok first, let me just elaborate for a moment the reason we need to be consistent, persistent, and t strategic is because they are. They have been very expligs sit about the explicit about their goals they want today be the number one manufacturer, technology, and military power in the world. Theyre making huge progress on all three and they achieved the first one. They mugs be dealt with but if business and government are not aligned we wont deal with them effectively. And if were inconsistent, which the Trump Administration has been, were not going to be effective either in fact i would dare to say that our chinese policy needs to be consistent between republicans and democrats, business and government, and from administration to administration i realize that is a very tall ourder in these short term times. It is extraordinary that the Trump Administration is this involved in the deal on the other hand, im not very optimistic about it. Im surprised in a way that it has gotten this far. Because with my prediction i could well be wrong. My prediction is that the chinese will never permit the fundamental Underlying Technology to be transferred to the United States. Youre talking about consistency acrosspolitical parties and administration to administration how about just within the Trump Administration consistency from day to day within a single week what is the impact of not only the inconsistency of message here, is it a sale versus partial ownership okay also the fact that there has been no effort to accomplish a overall rule for the data. It is a point engagement over this particular company and software code. Youre right, youre right in every single one of those companies. And not only have they be inconsistent, but they have been inconsistent with tie to trump in general now we have the chinese virus, a trade war, all of the rest when we have inconsistent the chinese gain the chinese are incredibly consistent the government and businesses are coowned and coopted, but theyre always aligned so every time we change our minds or we dont know what were doing. Or there is division between business and government, every time the chinese gain because theyre clear about what theyre trying to achieve and we lose in our relative position and we ought to be concerned about that one other area of inconsistency is that they are banned in china. And it is interesting to see that arise again especially around a a deadline on sunday. Is there a world where either of the apps begin to be allowed in china or if there starts to be a ban on anything chinese owned, operating here, particularly in the field of social media. I have argued that one of the things that we need to do to have an impact on china is to ask them, require them, to play by the same rules in the United States that were asked to play by in china. Youre right, its consistent, there are certain apps, but the trouble is that were not doing that in a way that we can realistically go through with it if you have major Companies Like walmart, using platforms to reach consumers, its why consistency and per sis ten si are required, but a view is required and i fear we have been so sort therm and so top tune nis tick as i said were not advancing our position and we have not for a long time. Finally we have an election looming. You ran for the republican nonnation. Are you going to support the republican incumbent i have been very public since june saying im voting for joe biden. I think Character Counts i think Leadership Matters i think collaboration is now critical not just collaboration across the aisle. Dlab ration with city governments, and the federal government, and i think that trump demonstrated his unwillingness and incapacity to lead or to collaborate in business we focus on results and i think his results do not earn him a second term. Carly, thank you for spending some time with us. Thank you meantime, mnuchin and powell back on the treasury secretary this morning we have more with ylon hi, jon, they are testifying and the most contentious moments have been around the size and the scope of the next Coronavirus Relief package they are hammering away on mnuchin on the possibility of extending enhanced Unemployment Benefits these workers, 600 a week. 600,000 people in my state lost their unemployment insurance, and you and senator mcconnell and the president are saying to those 600,000 ohioans that youre just on your own. That is a gross misstatement. If the democrats are willing to still down, im willing to sit down for Bipartisan Legislation in the senate, lets pass something quickly. I would just add you could get 47 democratic votes for 600 a week this afternoon if you would do it for every one of those workers now the fed chairman jay powell said there could be a Downside Risk to the economy if no Additional Support is passed. Certainly. It will be exciting to watch how that plays out wondering what happened to the rally, confused about it we talk about how it is groundhog day all over again stay with us im hector. Im a delivery Operations Manager in san diego, california. Weve had a ton of obstacles in finding ways to be more sustainable for a big company. We were one of the first stations to pilot a fleet of zero emissions electric vehicles. The amazon vans have a decal that says, shipment zero. Were striving to deliver a package with zero emissions in to the air. I feel really proud of the impact that has on the environment. But were always striving to be better. I love being outdoors, running in nature. We have two daughters. I want to do everything i can to protect the environment to make sure they see the same beauty ive seen in nature. My goal is to lead projects that affect the world. I know that to be great requires hard work. Investors are trying to make sense of what has been a few volatile stocks. Thank you for joining us. It has been six months since we sat on a bar stool i miss you, but people are calling and saying what is going on with the prices of these tech stocks, it doesnt make any sense. You said stop trying to think about it i think this morning is a good example, bob. The averages were lower at the beginning. When that didnt turn into a cascade, were seeing the market begin to possible. The momentum guys came in, and i said what have we been trading so far so they went in and the markets rallied. When that rally fail ed ed to de down, to feed on itself, then we saw them stop buying and now were the bargain hunters are back, theyre trying to rally again and it will lead to it. Apple, 100 at the end of july 40 in august, it is a problem with trying to figure out what the earnings are like. I mean just in general, or is it all momentum there has to be some issues here i dont understand youre really moving away from earnings like i said to you on the phone they, you cant make money in bonds, you cant make none a variety of other areas groups are kind of sulky like the fans and others, so what do you have you have the tech stocks, the faang group, that is one of the reasons they moved is they are perceived to be resistant to the virus. If anything there may be mild beneficiaries of the stay at home kind of thing so you go in and it looks like there might be an opportunity this morning after the opening, and you take a position in the faang stocks if they rally further you may add to that position rather than sell it. You may add further as the momentum keeps taking them up until they stop and start to reverse. Then what do you do to protect yourself from seeing the gains wiped out. You put in stop sell orders. They trail what the last sale is and then youre out and thats why we have seen the volatile market of up, sharply down and august, it was an up month, and september, youre saying all of the stel stops gell stops go. Were in down trends, bank stocks, technology stocks, small caps, some of these laggards are not working. The values, the growth, the momentum, low volatility none of that is working, either. Everything is down five, six, seven, or eight percent. Is everything a momentum trade were in a down trend here everything has become a trend of trade, basically, you know . We have to be careful about labelling momentum its a rally that needs to feed on itself. If it doesnt, it tends to reverse and it can produce minor cascad cascades it is not so much the stocks, but the momentum of the market itself okay, theyre up, i bought my first position now are they going to rally again . Now their rally is beginning to go higher. Maybely add some more longs. So you play it like that and the market produces its own internal momentum rather than a group call momentum. That is why people are frustrated as i said, you know to you on the phone, it becomes a wash and rinse cycle, okay do it again. Okay, do it again. So you buy the fang stocks they go up, the rally holds, and you get out. You made nickels and dimes and they add up, and you cant make money anywhere else. The market goes down, stops going down, maybe i will dabble again. So they begin again to buy its a repeat cycle. You use the phrase watch, rinse, and repeat. I want to have you back maybe next week. You have very interesting thoughts on the elections and make question get you back next week to chat about that. Art cashin, old friend, look forward to seeing you in the future julia, back to you thank you thank you, rob and art. Appropiate that the work from home momentum rally all feels like groundhog day working from home. Still ahead here, a look ahead to this afternoons invite only product event from amazon. Onat to expect and how to follow next, stay with us teslas charged up into the green turning positive this hour more squawk alley straight ahead. Stay with us im a verizon engineer. And im part of the team building. A powerful 5g experience for america. Its 5g ultra wideband, and its already available in parts of select cities. Like los angeles. And in new york city. And its rolling out in cities around the country. With massive capacity. Its like an eightlane highway compared to a twolane dirt road. 25x faster than todays 4g networks. In fact, its the fastest 5g in the world. From the network more people rely on. This is 5g built right. Only on verizon. Updates on alexa, kindle, all expected this afternoon at amazons highly anticipated invite only devices and services event. Only about an hour away. Whats the most important thing here is it the echo or is this broader eco system of devices made by other companies that amazon is trying to build with alexa . Its usually a balancing act at this event. My favorite thing is what i like to call amazon throws everything at the wall and sees what sticks event. Do you remember the echo or the alexa powered glasses . Do you remember the microwave. Do you remember the ring they made thats what i think this event is all about its about experimentation for amazon them telling the public, were a hardware player too. Were trying to put our services whether we have created them or brought them via ring into these new hardware products. We want to see what sticks and what works for our customers the most iconic device that amazons got is the kindle i think they talk about it the least. Is this sort of amazon showing its like wild and crazy out there creative or is it about pushing specific devices that are crafted for particular use case its very unapple. Its unapple and ungoogle i thought you were going to say the echo is the most iconic amazon product alexa. I think at one point it was the kindle then maybe it turned to the kindle tablets which are very popular especially for parents buying cheap ones for kids then it became the echo. It got over taken by the competition. Google, sonos trying to make smart speakers many of them rely on alexa what happens is they say weve got the service. We can build on top of it with all these sorts of interesting ha hardware products but what really matters is the service we provide whether it be alexa, amazon prime, the bookstore, whatever it may be you have apple pushing into the fitness space with the fitness app. Will we see any fitness represented here i love that youre asking i keep thinking theyre going to release a peleton competitor with alexa yelling at you to pedal faster i have no insight into that. Fie it feels like they a crazy area they would enter they have been behind in fitness. They did announce this halo band it will do all sorts of tracking of your health theres some weird features in there including pairing with an app and taking a 3d model of your body. If you like amazon have a 3d model of you likely semi nude, that is an option thats coming this fall. Also, i believe it can tell your emotions which is also another thing i dont know i want amazon knowing. Im sure they would target products at you based ong th ed. The other thing is the entertainment component. How much more can they push the ball forward when theres an area thats pretty commoditized right now . I think thats a challenge edding into the Holiday Season all the hardware products do the same thing you have all the companies at this point were expecting announcements from google later in the week or next week around chrome cast you have roku. We will hear about fire tv and their sticks and boxes and the tv partnerships today. What does amazon bring to the table to over lay all these streaming Services Real quick, the fire tablet, is it really popular the ipad seems to be surging i dont see a lot of these tablets. If you look back at some of the data from a couple of years ago, amazon had a rise in that area they released some of the 80, 100 tablets i think what happens and i dont have any real insight to the Market Research but what i can see as a reviewer is those tablets didnt hold well over time people were realize, i got to keep buying these tablets. They dont have as much functionality as terms as apps and eco system as apple. Let me go up to the 329i ipad instead of the 80 amazon. Always great to have you with us on squawk alley. Apple is up. Tesla is up. Well see where it goes from here thats it for squawk alley lets get to scott wapner and the half welcome to the halftime report. The mounting risks for your money as stocks pace for their fourth down week in a row. We debate the keys to the market right now with our investment committee. Joining me is josh brown and amy raskins. Lets go to wall take a look at stocks. We are watching tech as always nasdaq 100 is on track for its worst month since november 08 we have been all over the map