Investment in chinese technology. Later on, renting in manhattan just got a lot more expensive. Its thursday, august 10th, 2023 you are watch wiing Worldwide Exchange here on cnbc good morning welcome to Worldwide Exchange. Im dominic chu in for Frank Holland this morning lets kickoff the morning with the down day for the stock market s p is implied higher 24 points. Dow jones industrial average is 17 177. Investors are geeg gearing up for the latest read at 8 30 a. M. For consumer prices. The estimates right now are for 3. 3 gain year over year after the 3 gain for the july cpi checking on the bond market with the cpi print. Benchmark yields are rising. 10year treasury is 4. 018 2year treasury at 4. 811 . In energy, energy could be a key driver of the inflation story this time around you see wti crude at 84. 65. That is up. 30 . Ice brent crude futures at 87. 85 nat gas prices which were on a tear yesterday, is flat today. Time for the mornings big money mover. That is disney Silvana Henao has that story dom, good morning shares of disney moving higher after posting the second rest revenue miss adjusted earnings bheat estimates. Disney getting a boost from cost cuts from bob iger telling the company is on track to exceed the goal in savings. The story is streaming thanks to higher prices, the directtoconsumer unit reporting a smaller loss of 512 million. That is down from 659 million a quarter ago. Subscriber numbers did disappoint from a quarter ago. To offset that, dom, disney will raise prices across the board for streaming. Including disney plus which costs 13. 99 a month ponth witht ads. Hotel and attendance and higher costs for the parks, dom. Thank you. To a developing story and beijing responding to the latest executive order targeting inn p vestments in china notably a. I. And semiconductors. We have eunice yoon with the la latest reporter dom, officials have been criticizing the investment curbs. They are concerned about the curbs and Foreign Ministry said it is logging a solid representation to the United States the commerce Ministry Said it reserves the right to take Counter Measures what is interesting is it held off announcing any Counter Measures and state media has been largely focused on the 45day Comment Period to the public in other words, potentially a time for negotiations before the rules kick in. The thought is that china has in mind the vulnerability of the economy and does want to woo Foreign Investment dom. Eunice, one key here in the ongoing back and forth with the countries has been the tit titfortat response is there anything the Chinese Government could do in response to this . We know with semiconductor products, the chinese, perhaps respond with exports of Rare Earth Minerals what could be the response be from an economic or market standpoint reporter it is difficult to say. What people have said so far is chinese target micron which was perceived in the u. S. As retaliation for the chinese for the u. S. Export curbs on semi kconduct ers. As you mentioned the export con tro controls on the Rare Earth Minerals there are a lot of issues here that the chinese dont necessarily have a good way in terms of the chip industry without hurting themselves without the situation backfiring on them. That is why unofficially people talked about certain ways in which the chinese can get back at american companies. For example, in some ways, launching an investigation or something against an american company. What is difficult to say is how that would impact the China Economy at the time china is trying to get American Investment in the country. Eunice yoon with latest on the u. S. And china relations thank you. Back on wall street, investors are on the roller coaster ride with the s p and nasdaq and russell 2000 with the sixth down day of seven futures are pointing to a rebound. Lets bring in skylar conning to look at the bearish storm taking shape. We are not, skylar, having an issue with doubt take us through the concerns i talk about the bearish storm and the market and we had amusement the last couple weeks. The boj yield curve and downgrade and resilient growth and Rising Energy prices no doubt, these factors like the u. S. Increase will put upward sector on yields that is bullish bonds and when you have the yield surges, that is an opportunity to buy the dip. We have seen the precedent. Everybody thought it would be a Straight Line higher for yeield. It wasnt that we moved up with the 10year and fell to the 3. 5 and now trading at the 4 level again is this the opportunity for people to say if it gets above 4 on the 10year treasury on the lodge ng side, take the yie and go does it trade in that range for a good while yeah. I think the key point is where are you looking for growth and the fed in terms of the 10year treasury where we have been range bound in terms of the growth the expectation that growth will slow and that has come off in terms of we entered 2023 as everyone expected with recession, but that has been pushed that growth is weighing on yields you cant get a significant rally unless you have fed cuts we are stuck in the range until the recession point and the market is confident it needs to cut. The problem is you are in the range and take opportunities with the top or bottom and you really see the recession coming and fed cuts coming and you take the opportunity to go long at the front end. Speaking of the front end against the longer side of things with the highprofile debate, but bill ackman saying he thinks rates will rise for the 30year. You have Warren Buffett saying he will keep buying and buying shortterm tbills because the u. S. Government is the only place to be. What is the reconciliation and where is the relative value trade . Do we park it in shortterm . I think steepenor steepenerst if you have recession in fed cuts which is the traditional way to get out of yield curves and that is the opportunity. The second scenario is if we get the continued growth resilience. I think there is a ceiling that has been put in on the twoyear point because the fed is done tightening that means it is safer to b be long there. You have great inversion i have think that works well and in the past, we have seen it work with the issuance concerns and the work with the longer inflation concern. You know, it makes more sense at an absolute long in terms of when we get the cuts in recession, it also makes sense. Skylar montgomery koning, see you soon. More to come on Worldwide Exchange, and the one word investors have to know today. First, digs into the pharma sector and the weight loss drug wars. And more on disney and why our next guest is holding on to the 125 price target for the house of mouse later on, details on Richard Bransons milestone launch today. More still ahead when Worldwide Exchange returns after this commercial break nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes thats what im talking about. [ cheers ] running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Welcome back to worldwide exch exchange. Futures looking to bounce back this morning lets see if europe is following suit we have Arabile Gumede in the london newsroom with more. Good morning, dom you could say we are leading the way. We have seen gains and we hope to blow them along the way to the u. S. Market. We are seeing a big gain with cac 40 in france at 1 same with ibex 35 in spain general positivity is flat in the ftse 100 in germany today, we saw siemens divesting in the energy. Not doing well on that front managing to see a robust set of earnings despite that, down 5. 5 for siemens. Luxury front news. Capri, owners of versace might get purchased. Valued at 1. 1 billion that has meant there is movement in the luxury counters this is a big gain lvmh and burberry to the gain. You see the positivity filter through. We are anticipating that number from the u. S. When it comes to inflation and could that lead the way when it comes to how the markets may trade not just today, but hit it off tomorrow dom. Arabile gumede in london with the latest on the european trade. Thank you. Speaking of europe, novo nordisk profit fell shy of estimates, but sales of the weight loss drug w wegovy jumps 5. P 5. 5 billion guidance is increasing on the surge of the drugs and it expecting to see shortages for the drugs. Lets talk more about novo and the booming market for weight loss and antiobesity drugs with emily field at barclays. Emily, novo and eli have been on a tear because of a lot of sentiment against the antiobesity drugs how much can you take from novo results today and extrapolate what it means in the future . Thanks for having me. The fact they were able to put up 1 billion in a supply constrained situation is spectacular for wegovy they said they would restrict the starting doses in the United States which is really the only market with a true commercial launch by 50 right now. To put up those numbers in light of that is stunning and reflective of very strong demand. Emily, how big is the first mover advantage for a company like novo with regard to the latest trend in antiobesity drugs . These did not start off as weight loss drugs, but treatment for diabetesrelated situations and everything else. Now they have taken on a life of their own as antiobesity. Is novo in the best position they were first with wegovy both novo and eli have continued to invest in the diabetes space. Others have scaled back. Obesity has been a difficult market to crack for the Pharma Industry for decades the way we are thinking about it is novo and eli and everybody else scrambling to catch up. These companies have such a very strong first advantage between the two of them. We get asked if it is novo or eli. Both will win. Speaking of eli, they have the diabetes drug which could be used for antiobesity as well. What is the expectation with how that dynamic plays out you mentioned both can win eli and novo trading at record highs with the optimism. Is eli also going to be as well positioned as novo given mounjaro i think for the near term, it is who can make it fast enough because both companies cannot meet the underlining demand. However, the other big news for novo is and what gives them advantage from the commercial payer perspective is they had phenomenal results for the study this week. In simple terms, that study shows you are not only losing weight with wegovy, you have a 20 less chance of heart attack or stroke if you had one that is money payers will save novo with wegovy had the benefit trial before eli eli has one going on that will withork, too we think with the tangible result will help them get insurers pay for the drug. That is the optimism the last couple days. Emily, you mentioned novo and eli and everybody else who among everybody else is the catchup trade if you missed novo or eli . We get asked that a lot pfizer is not in phase three with the oral compound. This is a hot area and any time you see clinical general amgen had a small number of patp patients got excited about last year it takes a long time from phase one to fda approved drug i cover astrazeneca as well. They are fully engaged in a pipeline in obesity as well. It is some time before we have more data pointss from who will be out in the commercial market. If you want to plan on obesity, novo and eli. Emily field, thank you. Thank you. Ahead on the show, the average manhattan rent just did something for the First Time Ever likely pricing out millions of folks along the way. Our robert frank is here wh it that story coming up welcome back to Worldwide Exchange. Time for the big money movers. App applovin citing the rollout of the advertising product as the key driver for the positive quarter. Shares up 24 . Shares of sonos popping after the Equipment Company beat the earnings and narrowed the range of the fullyear Outlook Management noting the brand portfolio continues to perform well amid market share gains in the u. S. And europe despite the challenging environment for Consumer Electronics sonos shares up 7. 5 . And illumina cuts annual profit after the testing tools and diagnostics products warning of the cautious spending and depllayed recovery in china. Turning to real estate and the pricey city in the country just got more out of reach for Many Americans robert frank has the latest. Robert, it is our neighbor across the hudson river. Thats right, dom average rent for manhattan apartment is 5,600. Median rent hitting a record with price per square foot every single measure of manhattan rent hitting an alltime record high rents are declining. Manhattan has seen records in four of the last five months average rents are 30 higher than prepandemic. This despite manhattan has a smaller population than 2019 we know offices are at a 40 occupancy rate due to remote work adding to the mystery of the high rents is that inventory in july rose by 11 over last year. With more supply, you think rents should be coming down. They are not there is one hopeful sign for renters and the fed. That is new leases in july fell 6 over last year. While prices keep rising, there are signs renters hit their limit with price and affordability and may be going else where august is the peak rental month. Jonathan miller saying that we will expect another month of records in august, then finally a flattening out or decline in the fall dom, they have been saying this for six months we will finally get a decline and they just keep going up. Robert, it doesnt matter which Market Real Estate or bonds or anything else the experts and people who transact in the markets say when you get these kinds of cross currents and data indicates a market in transition is this a scenario where we could see a bit of a steeper falloff . I think about it in context of i kick myself every time i didnt buy manhattan real estate in the wake of the pandemic i thought it has to come back and it did come back in a sharp way. All of these different cross currents are telling me there is a lot of opacity in prices i dont know what goes into them people really dont know whats going into the record highs. You are right, there are cross currents we have a lower population in manhattan and rise of remote work and offices are still half empty. You think that would be reflective in the rental market. It is not. Part of the reason is that airbnb units have been taken off the rental market for airbnb rent price controls created a situation for incentive for landlords to warehouse apartments that need renovation rather than rent the fact that high Interest Rates are causing people to hold on to their apartments and not put them to sale the sales market is seeing low inventory and low sales. A lot of those wouldbe buyers are camping out in the rental market those are some of the reasons. Broadly, you are right, it is baffling and opaque market with the lower population from 2019 and now has rents 30 higher. Baffling. Robert frank is there. Thank you very much. See you later on. Straight ahead on the show, in aking with the high end of thgsnd m a deal in the luxury market. Well have that story when we come back. Its 5 30 eastern time right here in new york theres a lot ahead on Worldwide Exchange. Heres whats on deck. New hope for stocks trying to rebound after another rough session for wall street. Investors looking ahead to the july cpi report due out in a few hours. Iger strikes back. Disney moving ahead and higher ahead of the opening bell despite the mixed report in slowdowns. Nothing a few price hikes cant fix. And return of the tourist. China unveiling another stimulus in the con kcon hopes of boog the economic conditions. You are watching Worldwide Exchange here on cnbc welcome back to Worldwide Exchange. Im dominic chu in for Frank Holland. Lets pick up this half hour with the equities and futures. Dow jones industrial average implied higher by 73. S s p by 24. Get your popcorn ready the pace of price increases is easing with the cpi print due out in a few hours headline cpi is forecast to risen by. 20 month over month which is the same increase as june, but 3. 3 on the annual basis which is the first rise in a year likely driven on a headline basis by higher gasoline prices. Lets get more from the chief investment strategist at citi growth wealth steve, how important is this cpi data to the overall fed and economic narrative especially seeing inflation is certainly not gone i filled up earlier this week and it cost me more to fill up my car than a year ago it is quite important to the Federal Reserve which is continuing to look back at inflation the last couple years. When you think about what chairman powell just said at the last fmoc meeting, it was different from the prior one for the year ahead you heard it from the president of the Federal Reserve bank of new york that if inflation was headed down convincingly and in the coming year that Monetary Policy need not stay as restrictive. That is the bull or dovish case. How we respond over the next few months to this and whether or not this is persistent inflation is still the ongoing issue the stock market is taking great comfort from the drop in headline inflation from 9 to 3 we still think by the end of the year, headline inflation will be higher at 3. 5 what has happened with Monetary Policy is dramatic from where we were from 2020 and 2021 with zero policy rate for qe. I think the dip for cpi and lower if the Federal Reserve doesnt ease out into 2024 that is the big picture. If that is the case, that is not terrible it feels like this economy could be resilient enough to avoid a hard landing or recession scenario is the market, i guess the question is is the market priced for perfection given what we have seen p with the Economic Data is it setting up for disappointment if the inflation or Economic Data starts to disappoint in the coming months . Dom, i dont think it is perfection given the fact that seven stocks generated more than 40 of the global return this year, but it has gone further in that direction it is possible as the soft landing views are predominant than the last few months that any troubling data point like if the cpi is hot for a single month, means little for the picture i outlined, but that is the case we could have a setback. We priced in a longer case for a soft landing that is good news. Real incomes are going up. Drag from 9 on consumer income from this to the 3 has been a big help we dont have every part of the World Economy or American Economy falling at the same time you can see Consumer Confidence start to come off recession lows they were there. Right now, we have inflation diminishing. It is not the kind of story where we had this rally and we priced in the soft landing the risk to the market disappointment has risen as this good news is unfolding it is still good news. Good news steven, thank you very much. Thank you lets get a check on the top corporate stories with Silvana Henao. Silvana. Dom, good morning tapestry, the parent of coach and kate spade, is in talks to buy Capri Holdings according to the wall street journal, the deal could be official today and be valued at 9 billion the s. E. C. Says it plans to appeal part of the judges ruling that stated the regulator does not have the authority to oversee sales of ripples xrp. This was seen as a huge boost for crypto firms with oversight and sent shares of coinbase and marathon digital surging this morning, shares are higher in the premarket. Virgin is set to launch the first private space tourist into the skies today during the secondever commercial space flight the move caps 20 years of development and allows finally start clearing the backlog of ticket holders. Passengers on the flight include an 80yearold accomplbritish on dom, would you do it i dont need to be a first mover with space travel. Ill wait for the commercial development to take hold. I would do it thanks, silvana. Time for the big money movers disney saw an earnings beat, but revenue shy of estimates disney reported 10 million fewer subscribers than consensus the key take from the quarter is streaming. The media giant looks to reset the business through price hikes and password sharing crackdown similar to netflix and its partnership with espn and sports book franchise bob iger doubling down on the economics of streaming during the Conference Call saying it is a top priority for disney management since my return, we reset the whole business around economics designed to deliver significant sustained profitability. Were prioritizing the strength of the brands and franchises and rationalizing the volume of content we make and what we spend and what markets we invent we deploy the Technology Necessary to both improve the User Experience as well as the economics of the business. For more on the economics of the business, lets bring in jason over at citigroup. Jason, the stock reaction maybe tells you what the verdict is. There is optimism. Is there as much optimism over disney given what you heard last night as you should be i dont know if there is a lot of optimism out there. I would describe the sentiment on disney stock as the worst in 20 years it has to do with structure issues what is the future of hulu what is the future of espn there are concerns of circucyclical risks in the parks until we get clarity on the first two issues, we are muddling through quarter to quarter. The stock will react to earnings those are the two big elephants in the room. On the yeartodate basis, the stock is up 2 or 3 relatively flat. Last nights call did give some semblance of positivity to the idea that the streaming business is a focus for profitability the loss has narrowed and trajectory might be right. Is the price Hike Campaign one you think is right one for disney plus . It is the right one for disney plus it is right for the industry i keep this simple the linear tv bill is 105 a month. There is not a service out ther. Most people have five. All of those and we are getting normal pricing tiers we have the consumer to go in and take the product with ads for disney to generate more revenue with the better pricing that comes with webbased advertising opposed to linyinea. Jason, the streaming side is in focus here. You mentioned the parks side of the business disney is the highprofile target of the tugofwar here in america. The mpark attendance numbers bet estimates, but showing signs of a slowdown how much do you think disney will benefit from the rebound or dragged lower by the continued slowdown in the park side of the business it is really interesting. The street was very nervous about the park numbers you point out that iger was signaling softening. This is strange to me. Disneys attendance numbers at disney world last fiscal year were 20 below 2019 levels a lot of the things mr. Iger highlights like lower hotel tax results in the counties in florida is technically true, but a red herring. We were coming off record levels of hotel receipts. He is signaling a slowdown at d disney world, but i wonder if it is Company Specific or something more macro based i dont know. Jason, i was there with my family back in february and the place was jam packed lines out the wazoo. Jason, thank you very much i appreciate the thoughts. Good luck with the analysis. Thank you. Coming up on the show, penn entertainment revealing details about the sale of barstool spo sports also the massive loss in the process. We are back with the penn, espn, barstool story after this. Tens of thousands of customers wrote about carvana being easy in their five star reviews, including eric. The whole process was really simple and easy, and this is my third time selling to carvana. So i can practically do it from memory now. You just enter your license plate or your vin, answer a few questions. Boom, you get a real offer. True story. Its still shocking how easy it was to sell my car to carvana. Sell your car to carvana today. Welcome back to Worldwide Exchange. Time for the morning call sheet. Truist downgrading penn entertai entertainment. The stock could be big following the espn deal, but it is a showme story and recommends waiting before adding to positions. And oppenheimer is naming fresh pet a top pick in raising target price to 100 a share. It is increasingly confident in ability to deliver on top and bottom line target numbers the firm adds the views high Short Interest in the stock and investor skepticism as positives. A number of upgrades for wedbush moving to roblox hold. The nearterm headwinds against longer opportunity for growth. Roblox shares down for the week. Time now for the global briefing today is all about china the countrys ambassador to washington, d. C. Warning that beijing will retaliate if the u. S. Follows through on the executive order and investment ban on computing and Artificial Intelligence and micro chip industries speaking at the aspen security formum, china will not stay si silent getting set for the boom, China TourismMinistry Said the country is set to resume travel to the u. S. And uk and japan and south korea. The more which takes effect immediately comes after china closed the borders for three years and marks the first time in six years that whine is an allowing group tours to south korea. And we are watching chinese internet stocks as those companies rush for nvidia chips for a. I. Systems amid fears of export controls by the u. S. Government amid the names making 1 billion of orders of a. I. Processors are baidu and bytedance and alibaba. Ahead, the one word every investor needs to know and pope francis weighs in on the Artificial Intelligence boom as well well have that coming up. Welcome back to Worldwide Exchange. Time for the wex wrap up 36 people have died and more than 270 structures damaged in the maui wildfire. Ecuadors Fernando Villavicencio was killed yesterday in a campaign rally. Six peoples have been arrested in connection with the crime pope francis is warning against the dangers of Artificial Intelligence saying it has quote unquote, disruptive possibilities and ambivalent effects to society and those who develop and use a. I. Must do so responsibly. And Occidental Petroleum names Sunil Matthew as the new cfo. Shares of wynn results rising after Second Quarter results were stronger. And David Portnoy is the owner of barstool responsibilities after buying back from penn entertainment for 1 he will have the right to 50 of the Gross Proceeds if he sells or monetizes in the future here is what to watch today. Consumer price index at 8 30 a. M. Along with weekly jobless claims we also have a string of earnings from key names like alibaba and krispy kreme and six flags. A pair of fed speeches this afternoon from atlanta fed president bostic and Philadelphia Fed president harker lets get you ready for the trading day ahead. Futures are big. Dow jones industrial average implied higher 181 points and nasdaq higher 108. If you look at the trade so far this year, growth versus val, no doubt, growth is winning out etf up 28 value up 6 . That gap is slightly narrowing a bit. It is pretty wide for the year are things changing . Value sector like energy over tech over the last month here we have seen energy start to out perform technology on the neartomedium term basis. Could a reversal be happening . If you want another sign that momentum trade is slowing down for Technology Check out the semiconductor etf. It is up 1 in the premarket trade. Over the last year, 27 . You can see here where it closed below the 50day moving average for the first time going all the way back to midmay. Could there be a reversal in the making right now we dont know. Lets bring in greg serian founder of 213 Strategic Partners greg, i noted the mostmentum indicators right now are you seeing signs of a cooling off period dom, thank you for having me back we are entering a challenging time in markets. We have seasonal prints and jackson hole coming up in the near term, we could see a pullback our view, dom, is markets are forward looking indicators and already pricing in the fact the fed is likely, if not done, nearing done with the hiking cycle and earnings more resilient. Our view is we are optimistic in the back end of the year investors need to be tactical over the next sixtoeight weeks. If that is the case, greg, what is on your Shopping List . Where do you add a few things. First of all, you noted the narrow leadership we is seen in the market with the six megacap tech titans driving 100 of the markets. We have seen this broadening out in the market the last few weeks. We have seen the value small caps we believe that trend will continue we believe you will see more breadth. We dont necessarily think tech stocks crater or have a nose dive, but more broadening out in other sectors of the market in the catchup trade, if you will. We also think investors should lock in duration high quality muni bonds. That is 5 for those in the highest bracket. Greg, a few moments left here what is your place to stay away from we would be cautious chasing these technology names, dom. I think there is better value and more opportunity elsewhere just be careful not to chase that trade stay away from technology for the time being check out other parts of the market greg sarian, thank you very much, sir. Lets get a check on the markets right now. We are seeing futures big big. Dow jones industrial average higher by 25 poibnts. We have key cpi sdatdata comingp in two and a half hours from now. Squawk box picks up the coverage next. With izon business unli i get 5g, truly unlimited data, and unlimited hotspot data. So, no matter what, im running this kitchen. vo make the switch. Its your business. Its your verizon. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes thats what im talking about. [ cheers ] running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Good morning stock futures sharply higher as we await key inflation data. We will show you what is moving ahead of the july cpi report plus, the big news of the morning. Disneys bob iger says they are looking to crackdown on password sharing following netflixs lead. And the rent is too damn high average prices in new york hitting the record of 5,600 a month. Squawk box begins right now. Good morning welcome to squawk box here on cnbc live at the nasdaq an market site in times square im Andrew Ross Sorkin hanging out with the one and only kelly evans. Can we do it . Joe and becky are off today we have so much to talk about. Thank you for waking up early. I feel like i can offer a couple of personal anecdotes at 6 00 a. M i have such a bad canker sore on my tongue. I Start Talking with a couple of be beverages. We have great sympathy for canker sores i have had them