Transcripts For CNBC Squawk 20240704

Our road map does begin with tech stock volatility. Adobe shares are tumbling. Microsoft, though, record highs. Tesla and nvidia, those stocks, at least recently for nvidia, saying its a struggle may be an overstatement, but they certainly have not been going up. The nasdaq 100 pointed to its first backtoback weekly loss since last october. Plus tiktoks owner, bytedance, on track to surpass Metas Facebook as the Worlds Largest social Media Company by sales. And the chamber of commerce suing the s. E. C. Over new Climate Disclosure rules, a lot to unpack there. And were going to begin with the road ahead. In particular, for what has been driving this market for quite some time, and that is namely what we call the Mega Cap Technology companies, a. I. , particularly generative a. I. , and mike, ill turn to you. We just mentioned, of course, nvidia shares, which, yesterday, we discussed. I mean, jim and i, years ago, developed this thing called the key to this market, and it does feel like most days, in some ways, it could be considered that. Its certainly the key to what kind of market day were going to have. Nvidia is in a 10 correction. It doesnt look like anything on the chart. Its down 9. 7 from its high. Its obviously just had this wild run. We have the whole, you know, confab next week. I dont know that anybody wants to get too negative into it. Others are saying, you know, there are parts of this market, mostly exemplified by nvidia, broadcom, amd, that just needed to cool down. No matter what else was going on, no matter how great the story was, and thats been the case for a couple weeks, and honestly, it sort of happened on some level. The s p 500 is down six of the last nine days, but is up over that period. So, theres been just a little more chop. Yesterday, the market was barely down. And the equal weight was down 1 . You had, when yields up, the broader mass of stocks goes down lately, and you can have this defensive move in some of the big tech stocks. Yesterday, microsoft made an alltime high, and its because thats what people want when things are a little bit less certain. So, up days are bigger than down . This week, yeah. The nasdaq composite, were up on the s p a 0. 5 , nasdaq 100 is flat. Your key to the market, i made a chart for it, actually, without talking to you before. Thanks, sara, for the top of the 9 00. Goldmansachs had a trading note this morning, i thought, really visualized just how important and how much these stocks have outperformed. If you look at they did the six, right . Excluding tesla. They go from january of 2023 until now. Thats the blue line, and it just shows you whats whats been the key and how much theyve outperformed. The middle line is the s p, and the 494 remaining s p 500 companies are below, which are still up, i will say, from that period. Thats that is part of the bigger story is that even though you have had this massive outperformance and added trillions of dollars in market value in six stocks, you havent been to the complete disadvantage of the rest of the market. Actually, though, the big six there was also flattened out over the last few weeks, so theres just been a little more churn in this market. Today is a big rebalancing of all these index products. Its quad . Its no more quad. Triple. Quarterly expiration. But they do have the xlk, the Big Technology sector spidr. They just reweight the stocks and nvidia and broadcom are being brought down in weight. Microsoft and alphabet are being brought up, and the market seems to have anticipated that. I think its silly that we think this is driving the action. Its a 64 billion etf, and the tech sector is 12 trillion in market value. Whi why should it matter . Id like to come back to microsoft for a moment. Theres an argument to be made its a strong reflection of enthusiasm around generative a. I. , and it diverged yesterday from nvidia, for example, so i dont know, i mean, is it tech im just curious what may be behind that. If its not, if were not seeing that enthusiasm reflected in some of the other typical names. I think its a matter of theres this kind of push mepull you, right . Microsoft did nothing for weeks. It kind of just went sideways for a little bit, and you know, has not been one of the leaders, and as i said, with a defensive tape, microsoft is a net beneficiary. So, i think weve done a lot of this, taken money from one pocket and putting it into the other when the macro has been quiet, but of course, sara, the macro hasnt been entirely quiet this week because of whats gone on in yields, because you got like a Third Straight higher than anticipated inflation number and were rethinking the fed path. So, i think thats also what has investors hesitating and the average stock hesitating, even if tech is driving the market. Tech can only go up so much. Thats not exactly what im getting at. I thought you were admitting that. No, because its not been true for a long time. But its not a coincidence that this week yields have gone up on the back of two hotter inflation reports, and were now at twomonth highs. Thats absolutely true. I just dont think it unusually yeah affects tech. It affects small caps a lot more. Affects cyclicals a lot more and consumer stock. By the way, barclays wrote on this. More room to run, they say, fundamentally here, but the caution is that big tech is not a safe haven for macro derisking. Major jumps in big techspx correlation occur around market selloffs. We have had this helpful divergence, not only among sectors but among stocks within sectors, so dispersion has been high. The Overall Index has a gentler ride. When its a macro shock, when its really risk off and people want to liquidate and reduce exposure across the board, then everything gets correlated, and tech is not exempt. And i think thats the point barclays is making. Today, adobe shares, not exempt from a downdraft as well, this after earnings and worth hitting at this point. The stock could be down as much as 67 from what had been 570. You know, talking about 260 billion company. You can see it there. It was the guidance, perhaps, that missed some of thestreet estimates or maybe even more so, some of the buyside estimates, and then theres been this overriding fear, you would call it, of a. I. In general and the threat that it represents to adobes business. You remember the stock sold off pretty dramatically after the introduction of sora, this new openai program, essentially, that lets you create full motion video kind of things and the like. At the same time, you know, the bulls would say, listen, theres no sign as of yet that the lower cost competitors such as canva or even figma are really hurting overall growth, even though they may be taking business away. Theres also a thought that perhaps theyre increasing the total Addressable Market by having people get into this artistic side of things more cheaply and then move up in terms of what theyre willing to use the pay the subscription fees of adobe, for example, to use them. And mike, you know, trades at what you might call about 23 times 23 free cash flow, which, again, those who own the stock have said, i think thats pretty cheap. Its below, you know, roughly in line with oracle. Youre talking about 40 plus margins, and there is a hope that theres going to be an acceleration in the second half, and that is what the companys ceo discussed on the call last night as well. For sure. I just think the burden of proof is a little higher now for them to prove that a. I. Is an enhancement, not a real challenge. Theyre going to have to fight that battle for a while. The pricing issues, maybe, were more fleeting, but does seem that right now, it does have that premium valuation. Now, it used to trade at well above this. Right. In terms of in terms of multiples, yeah. Free cash flow, multiples, things like that, because it just seemed such an autopilot grow grower, huge directionable market, massive subscription growth, and i think its a little bit of a rethink of exactly how immune theyre going to be. They also addressed sora, by the way, yesterday on the call, and the president saying theyre actually they work with openai, and he said, we are obviously going to see us develop our own model, but its all a tailwind because the more people that generate video clips, the more they need to edit that content. Should mention as well, 25 billion buyback over some period of time but thats 11 or so of the current market cap or 10 of the current market cap, so not nsignificant. Guys, ive been following sara, you have been all over the place this week, but i know you watch and have been following this tiktok story very closely. It is fascinating to say the least in terms of where things stand and where theyre going. Right now, of course, and im sure well hear over the course of the day from Emily Wilkins in d. C. In terms of where things stand in the senate, how quickly a bill to ban tiktok in the United States there will be created, will it be part of the appropriations bill . You look for Maria Cantwell to play a key role, as well as lisa monaco from the doj, im told. The journal reporting today, and i have been bringing up any number of times the likelihood that the chinese are not going to say, okay, bytedance, you can sell this, and you can sell it along with, by the way, the algorithm and the source code. Now, you can make your own algorithm, but you need at least some time to be able to copy the source code, and i went back three and a half years. I found my notes, finally, after a bit of a search from three and a half years ago when we were going through all this. Back then, it was about ten million lines of code. Now it could be as much as 40 million lines of code. It could take a long time, conceivably, to copy that code. That said, Large Language Models make it easier and more possible, but the problem is that while Steven Mnuchin may be interested in buying it or perhaps there will be some others out there that certainly might be, youre not going to get a chance at this point to actually do so, and so we are left with a real possibility that if the senate acts and passes the bill, and President Biden, as he said he would, signs it, and then theres some time period and there potentially is litigation, nonetheless, that this actually could disappear in the United States, as hard as it seems to imagine, because what youre buying without the source code or access to the source code is virtually impossible. Obviously, youd like the algorithm as well. Steven mnuchin addressed this on squawk box yesterday when he was asked about, when he will, what do you do if you dont actually get the technology . Theyve blocked because they were not happy about the technology transfer, and i would have to convince them and the u. S. Government that there was a way to do this. And that continues to be a key question. You know, theres been some talk about bobby kotick, as well, the former ceo of activision being involved. The sense im hearing is, sure, if there was something to do. He was involved the last time along with oracle and microsoft and walmart when they were thinking about what they could do as a ban seemed potentially possible and we got that executive order from then President Trump to ban it. Not right now. Theres nothing, seemingly, you know, mnuchin may be out there, may be able to raise some money around it, but you got to actually have a deal that you can do, and so well keep a close eye on the senate and how quickly this bill moves. For sure. And its so interesting because i cant get away from the idea that this is all happening at a moment, arguably, when tiktoks financial growth rate and kind of cultural sway might be peaking. Yeah. You know, this is the way these things tend to go. Its very of course, you know, 170 million users here in the u. S. , still not profitable. Again, ive talked to any number of people who say, because theyre spending so much money on project texas, which has been all about moving all the data to oracle servers in texas, that costs a lot of money. That said, theres a belief that if you were, the chinese were to allow the technology transfer, the thing could be worth 100 billion. Youre talking about something that could be generating, just from the ad business, at least 5 billion in operating income. Put a multiple on that and figure it out. Bytedance, though, extremely valuable regardless, and there doesnt seem to be quite as much pushback from owners of bytedance around all this, because they have such dominance not dominance, but such significant position in the Chinese Market. Last time there was a ban, there was a talk it was australia, u. S. , new zealand, uk, it was all the english sort of speaking tiktok that would have been involved. That doesnt appear to be the case so far this time. Theres also the users and the influencers who make a lot of money, and the celebrities and the and tiktok is waging a pretty active campaign, getting them to call their senators right now and lobby against this, and i do wonder if were going to continue to hear political opposition on things like First Amendment really heat up. Yeah. And of course, finally, big beneficiary if this were to happen would have to be meta. Oh yeah. Without a doubt. Thats what President Trump says. Thats what President Trump says. And that seems to be i mean, vertical short video. They created reels just for that. I know. You know, the chief of staff of the jeff saenz, was a board member. Just saying. Tony dwyer is going to share his strategy as we reach the midpoint. Its the ides of march. You can make money the hard way as a bullfighter or a human cannonball. Or save money the easy way, with xfinity mobile. Existing customers can get a free line of our most popular unlimited plan for a year not only will you save hundreds but youll also be joining millions who have connected to americas most reliable 5g network. Sure is a lot safer than becoming a stuntman for money. Get a free line of unlimited intro for a year when you buy one unlimited line. Visit xfinitymobile. Com today to learn more. Some new data just out moments ago. Want to hit february industrial production. Rising 0. 1 . That was a little better than economists were expecting. They expected it to be unchanged, capacity utilization, 78. 3 compared to forecasts. All in all, i think we have seen better indications for manufacturing, which has been one of the harder parts hit of the economy lately. Things are looking up. Things are looking up . Little bit. On manufacturing at least. Not as much on the consumer after retail sales. Lets get back to the market, see if thats looking up. Were about halfway through a month in which the s p 500 and the nasdaq have both hit record highs. Tony dwyer joins us now, give us his take on the road ahead. All right, so, do that, tony. We just i dont know if you heard the data as well, but where to you stand in terms of how you see things unfolding . I think its going to get its been choppy. Its going to get choppy underneath the service. I think one of the most important things thats not talked enough about, so much of the i ask myself when i get up in the morning all the time, wheres the recession . Ive been on a recession call for a while. You had an inversion of the yield curve thats been historic in terms of duration and extent, and bank lending last year shut down over the last 15 months, so how have we not gone into a recession . Most people would think that, well, you have excess savings from the pandemic, you had fiscal stimulus, but i really think its the private credit market that has held up companies that would have ordinarily not had access to capital. So, the question becomes, does that just push out a recession, or does that eliminate one or avert one . And i think it pushes it out. I think as we get some weaker economic data, especially on the employment front over the course of the next few months, that may put a little bit of pressure on stocks, but ultimately, it should turn out to be a really good year when the fed starts to ease. Tony, we have had this conversation with you in the past as well. Sara put up a chart at the beginning of the show, showing the outperformance of those six mega cap stocks versus the rest of the market, and weve talked so often over these first two and a half months of the year about a broadening. What are your expectations in terms of that, whether it continues, and what it means for the overall performance of the s p as the year moves ahead . Well, coming out and talking about the broadening and how its great right at the peak of the broadening, so ultimately, david, how is what differentiates a trade versus a longer duration sustainable advance in that relative performance of small and equal weighted s p . Ultimately, like everything else, it comes down to earnings. I think what most people dont realize is that if you exclude the mag seven from 2023 earnings, they were actually down 1. 2 , according to tj dylan at lseg ibis, so when you actually look at why the mega cap stocks have gotten such a big percentage of the gain over the last 15 months, its because thats where all the Earnings Growth has been, even in the Current Quarter, if you exclude, meaning q1, if you exclude the mag seven, youre still in a interview Earnings Growth environment, so what creates that sustainable advance versus a trade, i call it an owner versus a rental of stocks. What creates that relatively performance sustainability is going to be evening out of Earnings Growth, and that comes to us and starting, really, in q4. So, thats i think that earlier this year, maybe the market was sniffing out thats going to happen. I think its generational. I dont think its going to be one of those quick trades when you get that earnings performance coming in. Any time you have had the top ten stocks, its such a big percentage of the market cap of the s p 500, youve gone into years of relative decline of the mega cap. Tony, just because you just threw out the recession word and expect one, where first of all, its not in the market, so i think you have to defend it a little bit. Certainly not consensus. Where do you see signs of recession . Well, its been wrong. Again, sara, thats why i brought in the idea of why hasnt it happened when its happened every other time . The Capital Markets shut down, money supply went negative for the first time in history, there had to be a source of capital for companies to have access to money when you couldnt get it anywhere else. For the first time in history, we have private credit bigger than the highyield market, bigger than the levered loan market at 1. 7 to 1. 8 trillion, so why do you think were going to get it now . Number one, weve been in a recession in the manufacturing sector. What most people dont know, sara, is that theres something called the initiation survey rate. We had 176,000job reduction in the estimate in the last two months at the latest payroll data. Prior to the pandemic, if i reached out to cnbc and said, how many people are you hiring, how many people are you firing, historically, 70 of companies would respond quickly enough to put it in the initial number. Its called the initiation survey rate. Postpandemic, thats dropped to 40 . In january of this year, according to the bls, it was 27 . So, we have widely incomplete data. The vast majority of the time in the last year, its been negatively revised. How many people like me came on tv a month ago and said, the fed may not even cut rates because employment was up 335,000 jobs only to be revised significantly lower. I think its going to come from a weaker employment picture. The longer that the fed stays higher, the higher for longer, the steeper the debt cliff comes when its time to roll it over. All right. Tony, we got to leave it there. Have a great weekend. Thanks for joining us this morning morning. When we come back, hear what palantirs ceo told me about short sellers this week. Ameritrade is now part of schwab. Bringing you an elevated experience, tailormade for trader minds. Go deeper with thinkorswim our awardwining trading platforms. Unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. And sharpen your skills with an immersive Online Education crafted just for traders. All so you can trade brilliantly. This looks like an actual farm. It looked cute on the app. meanwhile, at a vrbo. When other Vacation Rentals arent what theyre cracked up to be, try one where youll know what you get. [thunder rumbles] the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . [thunder rumbles] all right, as we get ready to start trading a few minutes from now, you can take a look at the s p laggards as we head into the open of trade, led by jabil. We talked adobe, and im almost certain sara will have iignshts on ulta for us as well. I do. Were back after this. Theyre waiting for you. Hey, do you have a second . Theyre all expecting more. More efficiency. More benefits. More growth. When you realize you can give your people everything, and more. Thank you very much. [applause] ask, now what . Heres what. You go with prudential to protect, empower and grow. With everything you need to deliver, you guessed it. More. One more thing. Whos your rock . Learn more at prudential. Com announcer the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. There it is, the opening bell at the new york stock exchange. Lets look back at our headquarters and our realtime exchange out there. Here at the big board, Madison Square garden entertainment celebrating ncaa mens basketball tournament. Big east tournament begins. At the nasdaq, celebrating st. Patricks day, which is this sunday. It is. Very celebratory. We saw big inflows, actually, this week, mike, to equity funds and crypto funds. We did. Almost everything, actually. Called it a little bubbly. It was a buy it all. Yeah. And it does contribute to this idea that we have had sentiment get a little bit elevated and that you can see that kind of across the board, and this somewhat explains this little break in stride we have had in the momentum leaders, the momentum basket is underperforming this week. Nvidia indicated lower. Now it is lower at the open. And tenyear treasury yield crossed about 4. 3 . Its at 4. 31 right now. Hotter than expected inflation, bracing for what the fed might say next week, and really an occasion for a reset, a little bit, in the market, which has had an incredible run, and its been mostly based on soft landing, earnings growing higher, and the fed looking for a chance to ease all at once. Its been hard to fight the rally. The short sellers are like in hibernation on this, and this week, i got to speak with alex karp, the ceo of palantir, about short sellers. He feels very good about the fact that they are not doing well, betting on his stock. Heres what he said. I love burning the short sellers. Like, almost nothing makes a human happier than taking the lines of cocaine away from these short sellers who, like, are going short on a truly Great American company, not just ours, but i just love pulling down grt American Companies so they can pay for their coke. The best thing that can happen to them is we will lead their coke dealers to their homes after they cant pay their bills. Surely all short sellers have coke habits. Do your thing, well do our thing. Tell us how you really feel. He must have watched the wolf of wall street a lot of times. Cokesniffing short sellers . Really . I think he was maybe part serious, part joking, but the truth is that not a lot of favor there for short sellers. We will lead them to their homes. Yeah. The coke dealers. Listen, there are short sellers who do an enormous amount of work that is done oftentimes by others that have very strong cases to be made sometimes, whether its underlying fundamentals or unearthing things that were unaware of. Yeah, enron. That said, there are also times when they do engage in, perhaps, behavior that is seems somewhat unethical. For some reason, short sellers get a lot of grief when they are out there talking their book, and when we dont actually apply the same thing to people saying, we love this stock, its going higher, its going to be great in five years. I kind of dont understand why hes so focused on it. Its 5 of the shares are short at palantir right now. History says that companies that scapegoat shorts and spend a lot of time thinking about and talking about them underperform over the longterm. Youre better off ignoring it. Com combativeness is great. You want them to do well. Hes a founder, first of all. Of course. And i think there were a lot of doubters when palantir went public. Absolutely. What do they do . Its so secretive. Can they have a commercial business as opposed to just d. O. D. . When hes sitting on, first of all, hes proven that they can. Their last quarter, Commercial Accounts rose 55 and its been a big growth story for them. What theyre doing on the battlefield and changing warfare through a. I. , so hes sitting on this gamechanging technology, wondering what the heck are these people doing, shorting my stock . All true, but i agree with mike in the sense that theyre in his head, which is weird. The companys performing went from 9 to 35 in the first two months it was public, and people said, what is this . Theres not a lot there. So, it did have its crash, along with all the other class of 2020, you know, tech startups, and it went down to 6. Now its back up into 23. I guess he bears the scars. I think he probably just says what a lot of ceos think, which is we dont want you betting against our company, our Great American company. Thats fair. Yeah. Distraction more than anything else. Just deliver. Unless lies are being spread, in which case, you need to combat it. You want to talk ulta at all . We talked adobe at the top of the hour. That stock is down sharply. Ulta shares, pairing losses but still down 7 . It was a pretty good beat driven by better comps and margins, its the guidance, like adobe, that came in a little bit short of what wall street was expecting, and there are high hopes for this stock. It was already outperforming about 16 year to date so far. Look, the theyre warning of Slower Growth ahead from the ceo, dave kim bell. He said in 2024, the category will remain healthy but the growth will moderate to the midsingledigit range barring any Major Economic event. So, investors are really used to strong growth from this company, and the analysts are stepping out and defending it this morning. Simian segal of bmo says he think guidance will prove conservative, and that they will continue to outperform. One thing to look at, everything looks at on this one is the ticket versus the average selling price. Tickets were down. The average ticket was down for the Fourth Quarter in a row. But average selling prices did partially offset that. The price increases are still happening. Theyre still benefitting. Theyre contributing less than they have been in previous quarters, and the only other thing i would say is that, you know, the if tiktok does get banned in the u. S. , its Companies Like this that will feel an impact as well. They went to Great Lengths to highlight that they reached a million followers on tiktok. Yeah. Beauty is a major driver of trends, activity, and buying on tiktok. The amount of Economic Activity that takes place as a result of tilktok is not insubstantial. Think about the influencers and how marketing has changed, sara, as you well know. Advertising agencies are actually finding the right influencer for the brand. Thats one of their key value adds that they do now. For sure. Also, you know, generative a. I. , theyre all experimenting with a. I. One of the things theyre doing is theyre able to scrape tiktok and all of these social media platforms to very quickly come up with the trend, whats trending, lip oil, for instance, really big right now. I learned that from tiktok. You did. Yeah. Well, listen didnt we all . I was going to say that the other interesting thing about ulta is it seems like for every Specialty Retail category, theres like the one anointed great growth story that keeps delivering. Ulta in beauty, obviously. Williams sonoma for Home Furnishings and dicks sporting goods, obviously, in the athletic area, and all of them massively outperformed the retail index over the last couple years in a very similar way, so its a little bit of a giveback. Ulta is not a super expensive stock, so kind of an interesting moment, and you wonder if a little bit of the tiktok stuff and the higher potential marketing cost is in investors heads for the moment. We got the mega cap names all down at the very beginning, mike. Tesla shares showing a little sign of life after whats been another rough week. Yes. And thats been the question as to, you know, not only will the kind of downgrades and bad news and lowered earnings estimates start to abate, but will the stock kind of rise on some bad news at some point . It is perking up. It is super oversold. It is a massive laggard, and i do think one of the effects that you have seen recently is when nvidia is down, the laggard members of the mega cap basket have gotten a bid. So, obviously, a long road up from here. You know, its almost as if the less fundamental and Research News on tesla, the better. Just let the thing settle out. Wells fargo with the note yesterday saying its a growth story without growth. Yeah, exactly. That was the other day. Theres a lot of negative research this week on tesla. Its been a drum beat. Its been hard to avoid having to cut your estimates, given whats going on with pricing and volumes recently. But you know, its an interesting sort of test case. People say, what would happen if nvidia really cracked and gave up a huge amount of gains . Well, i mean, tesla is down 700 billion from its peak market cap. I mean, its over a year, whatever. But it didnt exactly upend the entire market. There are ways to kind of bleed away some of the premium without necessarily, you know, it spreading to other parts of the market. Yeah, we pointed out a number of times, its just a bit above a half a trillion dollar market value, nothing not insignificant, but below that of jpmorgan, for example, now, and certainly and i believe broadcom as well, i believe, is also exceeded it. Yeah. 576 billion. So, it just gives a sense. U. S. Steel . Yeah, sure. Lets do a Little Something on u. S. Steel, shall we . I was wondering. Its been a rough yeah, its been a rough week for shares of u. S. Steel. Of course, this was a company that i followed for some time from an m a perspective as our viewers may remember, as there were any number of bidders for the company, culminating in what was a 55 all cash deal with japans nippon steel, and that was a number that was even far above the hopes of many shareholders, but it has not been a good week, and that was led off by a number of stories that indicated that the administration would essentially come out against the deal, if you want to call it that, and President Biden did more or less that with comments about saying that he wants u. S. Steel to remain in domestic hands. What is that going to mean for the future of the deal . Its been a key question for me, and that continues to be a question. You still have the contract with nippon steel. How you would block the deal . Well, perhaps on sifias grounds, although many have pointed out it doesnt represent a National Security risk. What really did play an Important Role was the unions. And the union leader of the united steelworkers, david mccaul, who has some sway, as you might expect, with this administration, particularly with joe biden, a man from pennsylvania whos already walked a picket line over this last number of months when he did so at the uaw when they were on strike. And he got a good audience, right . So, what now . That continues to be the question. Theres a shareholder vote in april. U. S. Steel shareholders expected to approve the deal, some 560 million break fee. Do you try to get sifia is . Do you wait to see if theres a change in Administration Come later this year or into next year . Those are any number of questions. And then theres the role that clevelandcliffs has played here, and its outspoken ceo, lorenzo, i had a chance to speak to him, as many people seem to be lately. This morning, he did go on the record with me, and he points strictly to the deal that he signed with the unions and the fact that the importance of the unions was undersold. He, as he often does, was happy to name names, saying the two bankers who led the process for u. S. Steel were really at fault here as well. Talking about barclays and goldmansachs, saying they just didnt get it. They believe the workers need to eat, so youre going to figure out a deal with nippon. That has not been the case. For its part, nippon says it is open to and wants to negotiate what would be a very attractive deal for the unions. Lourenco said to me, no, theyre never going to get that done. Hell will freeze over before anything like that happens, given all the different acts that will come from the unions. So, the question then, all right, does clevelandcliffs come back in some foashion and bid . Do they simply wait for the deal to fall apart under its own weight and then try to come back at a far lower price than the 54 cash and stock that they previously offered . Well see. He did tell me, and i thought this was interesting, guys, that they had tried in previous weeks, through citi, which is nippon steels advisor, to get nippon steel to talk to clevelandcliffs, because nippon steel began this with wanting big river. That is the plant in arkansas thats the key. They were willing to pay as much as 9. 3 billion just for that, so goncaves was like, lets have a conversation about that. No such conversation took place. And hence, dave mccall got involved. President biden got involved, and here we are, wopdering what really is going to happen here. By the way, the japanese Prime Minister due in the u. S. In early april. Could be a somewhat difficult conversation between biden and the japanese Prime Minister. Theres just a slight bit of irony in the sense that theres this objection to a japanese owner when you consider that Japanese Companies just agreed to the biggest wage increases for japanese workers, above 5 , biggest one in 33 years. So, its sort of this moment when theres an acknowledgement that workers kind of can demand and deserve a higher share. Its not automatic that its going to be hostile to giving the workers their share. Yeah. Sara, the underlying assumption that perhaps was wrong was that the union didnt really have much of a say here. Clearly, that is different because they had a very important call to make, and they made it. Also, unlikely for that that clevelandcliffs would team up with the Steelworkers Union to lobby against the steel, which is what happened in this case. They obviously had been a union shop and have a good relationship, does he, with his unions as well. So, you know, you could end up where u. S. Steel remains a public company, and is that good for the unions or not . Unclear. Can i do a sara report now . Please. After the faber report. It will be half as long. Eisen report. I thought it was interesting, the story about the chamber of commerce today now suing the s. E. C. Over these new Climate Disclosure rules. So, that has been a long saga. It went from proposal to rule. It got watered down a little bit in the process, but it did just get finalized recently, andthat is that big companies, according to the s. E. C. Rules now, are going to have to disclose emissions and other climaterelated metrics. Well, the chamber of commerce, which is the biggest business lobby, is suing. Theyve joined with toen other Republican Attorney generals against this rule. It has proved a Contentious Rule and someone who is not a fan of this rule is ken givenriffin, w spoke with in florida. We talked about gary gensler, he made a joke was his bestie on snapchat, and then i asked about this climate rule and what he had to say about it. Listen. How well do you think the average company in the United States can actually measure that . Not too well. Okay. So, are we doing this for the plaintiffs lawyers, or are we doing this for investors . Im just kind of curious. Investors . The environment . So but shouldnt they be able to measure it . Wouldnt that be responsible . How about this . If youre going to go on a strategy to reduce carbon, how about thinking about addressing that at the source, which would be, for example, carbon tax . There, youll actually get changes in behavior. Here, what youre going to get is a multibillion dollar bill that Corporate Americas going to have to pay. Youre going to see fewer companies go public, which means less Investment Opportunities for american households and american retirees. With fewer Companies Going public, youre going to see less Venture Capital formation. With that, youre going to see less r d in america. Vcbacked firms account for about twothirds of all Americas Research and development budget. So, you see this as political . This is 150 political. Ken griffin really connecting the dots there in terms of what it could mean for americans, what it could mean for Companies Going the unintended consequences, which he has been railing against on this s. E. C. And its bevy of proposals. By the way, he also went after, for the first time, really, the biden administrations new rule to ban exports of natural gas, pause exports of natural gas on a similar theme. Okay, theyre trying to do something good for the environment, but in fact, in reality, what theyre telling, according to griffin allies is, okay, just continue with coal. Natural gas is what you will hear oftentimes is price on carbon is really the most effective way to actually mitigate, and until we get that, were going to be dealing with a lot of Different Things that dont necessarily get to the source of the problem. I mean, hasnt powell resisted this idea that the fed should also be a little bit of a carbon cop, you know, when it comes to banks and what theyre doing and lending . I think there is a little bit of a soft backlash here. For sure. Its not in his mandate. Powell. Good luck putting climate into anything the fed does. Every time hes asked, hes like, no thank you. Im going to do the bond report unless you want to do it, sara. Ill lets tag team. Okay. Lets check. Higher yields. How are treasurys doing this morning, you ask . Well, well show you. There they are. Sara said it. We got hotter inflation reports this week into a fed meeting next week. Will they change the dots . They predicted three this year last time. 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What are they doing here . Hey there. Amazon might not be the first name that comes to mind around social Media Shopping but after a partnership blitz last year amazon is embedded in the biggest social apps. A lot happened within six months. Amazon teamed up with pinterest in april of 2023 and then facebook and instagram and snapchat all in november. The agreements put amazon products into social feeds and lets users link amazon accounts to make purchases for amazon products and thirdparty sellers out there. Amid the deals the ecommerce giant taking a page from instagram and tiktok for its own mobile app that launched inspire in 2023. This lives within the amazon app. Its like reels and these are amazon products promoted by influencers partnering with content creators since 2017 and part of this guy, is scrolling and shopping as you were talking about with ulta, bigger slice of ecommerce that amazon does not want to miss out. Insider intelligence estimates social ecommerce could grow into a 100 billion market. Younger generations are driving it. A quarter of social shoppers are between 25 and 34. Instagram tends to bring the most purchasing power. Tiktok is not far behind. Pretty much tied to youtube. I talked to evercorps about the potential impact on amazon if tiktok does get banned. It could be an incremental positive and means more opportunity for amazon because of these partnerships. The social strategy is driving sales and advertising for amazon. Back over to you. Thats what i was wondering about the sales piece, because i feel like weve been hearing about social shopping. Influencers have made a lot of money and you spot the trend, the shopping has been less successful. Nobody has fully nailed it. What dot trends look like on the sales . Its interesting. Its that impulse purchase youre seeing and getting inspired to buy something you might not need. Its not the core toilet paper and things youre trying to get immediately delivered from amazon. Its incremental and the ill pulse side of things and the skregsry spending. Amazon this is defensive. They dont want to miss out on incremental sales. Its in that category versus being your core shopping looking for diapers, toilet paper it hasnt gotten there, but in terms of the growth potential, its really the younger consumer behave are theyre going after. Kate, thank you. Kate rooney. Coming up right here, an ev winter, is it one for tesla, lucid, ria wllivn,e discuss that with fords former ceo mark fields. Keep it here. Litis nostril uhuh. Bill uhhuh. Hiphop limping mmhmm medical bills uhhuh pancakes cash who pays you cash when you have medical bills . Grrr no idea. [tapping] gap the gap left by Health Insurance . Who pays cash to help close that gap . Aflac oh, aflac get help with expenses Health Insurance doesnt cover at aflac. 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Bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. Tailor the platforms to your unique needs with nearly endless customization. And track Market Trends with uptotheminute news and insights. Trade brilliantly with schwab. Good friday morning. Welcome to another hour of squawk on the street. Im sara eisen with david faber, live for you as always from post nine of the new york stock exchange. Carl has the morning off. Take a look at stocks under pressure this morning down about 0. 6 for the s p 500. For the week as a whole weve just went negative. Dow is the only one of the big three that is positive right now for the week. Nasdaq comps down 0. 5 . Whats working today, energy and materials. Technology is the worst performing sector right now. One reason potentially well we are seeing higher yields a story of the week on the back of some data which we will discuss, but those yields continue to climb. The 10year note yield 4. 3 , the 2year, 4. 7 into a fed meeting next week. 0 minutes into the trading session, three movers were watching, shares of adobe lower, on track for the worst oneday drop in more than a year. The company beat earnings estimates but revenue guidance for the Current Quarter came in lower than expected. Investors worried about ai competition, a recent demonstration of openai video Generation Model sparking fears it could cut into adobes Video Editing business and the stock down 14 . Shares of rivian rallying. Pipe are sandler rating to overweight, the stock can rally more than 90 from here. Shares of ulta plunging. The retailer beating Sales Estimates but expects fullyear earnings to come in below what wall street is expecting and does see a slowdown here in the industry down almost 7 . Consumer sentiment data crossing the fap university of michigan numbers coming in. The street expecting 77. 4. March is coming in at 76. 5. So a little bit softer on the Consumer Sentiment front. Look these numbers have been tied in part to gas prices which have risen again. Oil back at 80 a barrel, and that has been a theme, david, all year all week long in the inflation numbers, you know. We got cpi earlier this week. It was firm as the market expected, and then ppi i think was surprising at the wholesale level yesterday, coming in stronger than expected. Yes, Higher Energy prices are part of the problem here, but we also saw a pick up in trends from goods prices which were deflating, not happening as much anymore. So where are we now . The chart that i made where are we now . Into a fed meeting what are they going to say . What should investors think about it. Here we know they watch core cpi taking out food and energy and they watch the annualized numbers to smooth it all out. So the orange line is the year over year prices. Obviously, they have come down sharply, right. Theyre not at the 2 where the fed wants to see it, but then core annualized, which is smooths it out a little bit on the blue line, you see the little tick up from where were going. Thats not good. Fed doesnt want to see it. The trend is still intact and this is what the fed is going to be debating with the friend in the trend in tact but numbers firmer what should we signal about rate cuts. This fed has begun snalg rate cuts are coming. Do they keep their game plan, or do they find way to tell the market that were going to have to be even more patient . One way they could do that, theres the dot plot. Dont read too much into the dot plot. The dot plot the only tradeable event next at the fed despite what fed chair powell says. They predicted three cuts for this year. Will they change it to two cuts this year as a signal to the market that we have to be a little more patient because inflation is not coming down fast enough or keep it at 3 because they knew it was going to be a bumpy ride to 2 , not in a Straight Line and the Unemployment Rate is a little bit higher and things starting to weaken. These are debates that the fed is having and economists and nobody knows. The reaction function is not what it used to be. Last year when inflation perked up a little, it was like we have to raise rates even in a banking crisis. Were not there. Right. What do we think the reaction would be if we got went 3 to 2 in terms of expected rate decreases this year . Well, it would the market is currently at 3, so it would be somewhat of a surprise. Look, when the market was at 7 and the fed 3 weve had a move up in yields. Will the market come to the fed on this . Does it matter if the next move from the fed is a cut anyway and not necessarily a hike . Because thats been whats propelling the market. You know, David Solomon of Goldman Sachs put out a letter to shareholders today and this is the part that on a related note i took out, the u. S. Economy has proven more resilient than expected and markets are predicting rate cuts, though i think inflation may prove stickier than many anticipate which has been the story lately of a little bit stickier inflation. Ken griffin i mentioned earlier, really stuck with me some of runs the world most profitable hedge fund at citadel, heres what he said along the same lines along the feds next move and what markets are anticipating. I think theyve been pretty clear, theyre going to continue to wait to see how the data plays out. If im them, i dont want to cut too quickly. The worst thing they could end up do cutting, pausing, changing direction back towards higher rates quickly. That would, in my opinion, the most devastating course of action they could pursue. I think theyre going to be a bit slower than people were expecting. A bit slower than people. Is that june . We dont know. Is that november . Right. So the timeline is shifting. Well see what powell says about all of that and how concerned he feels about this recent little burst of inflation. Well again, during the course of this week we have seen yield move up. Its not clear how much that is coloring the action in the equity markets, although i would point outthe s p is down 0. 75 . The nasdaq over 1 right now, and it has been a negative week in part because, perhaps, of yields firmer inflation. Another story moving yields up the bank of japan because its a global bond market. Maybe more interesting than the fed i cant believe it, was the bank of japan because this is the meeting where there are expectations they will exit negative rates. The whole experiment Central Banks have been in, theyre the last man standing and that is expected to change because they are seeing inflation. Mike mentioned earlier the news overnight was that they were doing they were having discussions with the union about wage increases. We saw a big wage increase there. That was expected. The markets didnt react to that. Theyre very happy about seeing inflation. They are. Theyve been trying for 30 years. Exactly. But thats happening, and now they the tricky thing with the bank of japan, governor wada sort of has to hike before the fed starts to ease because theyve been really, really late and they didnt want yen has been super weak on the back of the differential in terms of the policy, so thats why a lot of people are expecting it to happen tomorrow or next week, excuse me, instead of punting it to april. We got the wage increases that they needed to see. And the open point is that influences our bond market because global rates, global bond market. Weve seen that before very tied together. So watch that for next week. It will be an interesting week with all the commentary from Central Banks and we continue to look at signals from Corporate America on how the u. S. Is doing. Is the consumer slowing down . Is unemployment going up starting to hurt . The one comment is ulta, the ceo talking about what theyre seeing from consumers right now. Listen. All indicators as we look at the consumer landscape is, continued level of engagement. When we look into this year, of course, we are, you know, evaluating and anticipating and preparing, you know, for, you know, Consumer Behavior to continue to evolve. We know theres expressures on the consumer and entering into an Election Year and what weve seen in this category is strong growth, but as expected, some moderation in that growth above historical trends, but some moderation. Moderation for the consumer is the biggest question of where that goes and how sharply that decreases. The rebound in spending in february was not as strong as xhirpsz looking for after a january that got hurt by the weather. We continue to listen and look for signals about how the consumer is doing. You bring them to us. I cant say that i have a clear picture. The picture is its still broadly strong, but it is moderating and in certain income cohorts and categories, like if youre in furniture, its weak. Apparel weak as well. So as we continue to see the pressures and the strains on inflation, cumulative inflation for instance, the higher rates, how slow the consumer slows. As david mentioned yields at twoweek highs. Nasdaq on pace for its first negative week since october. Lets discuss the health of the rally with edward jones. Youve been listening to the backdrop, mona. Do you think its time for investors to change course . Yeah, thanks, sara. We think after a 25 rally in the s p 500 since late october, and really a 30 in the nasdaq, could there be a possibility for a pullback, a correction, a period of consolidation . That is a normal course of action. We think that could be a likely next step over the next several weeks. Any given year one to three corrections are the norm in the five to 10 range. Do we think that correction evolves into something more nefarious, a bear market, probably not. There are fundamental reasons behind that. We point to three in particular. We think the fed is heading towards a pivot towards rate cuts some time this year. We think inflation, while it has been volatile the first couple months of the year, keep in mind, we think it will moderate because core inflation, particularly shelter and rent components, should continue to see some moderation in the months ahead and we could get Services Inflation cooling if the consumer and wage growth moderates as well. Thirdly of course we continue to see that while it may be softening to below trend, is holding up pretty well. We could see the potential for reacceleration in the back half of the year when inflation is lower and Interest Rates may be lower as well. So fundamentally correction yes, but not something more nefarious. Why are you convinced that inflation will continue to be down . I just mentioned some of the warnings about the stickiness of inflation, the fact that there still is fiscal spending coming into this economy and that we seem to have stalled with the progress of lower numbers . Yeah. Absolutely. Look, weve gone from 9 headline cpi inflation to about 3 . Its been a good run. Could that last mile prove bumpier . Absolutely. Were seeing that in january and february. But if you strip out shelter and rent, annualized sixmonth and threemonth inflation is at or below 2 already. If you believe that shelter and rent component will catch up with what were seeing in the realtime data, keep in mind if you look at things like the zillow rent index or home price indices on a year end basis theyve come down and we know they operate with a lag when you look at the cpi basket. We think that data will slowly and gradually flow into the cpi baskets. By the way keep in mind the pce next which the fed does look at pretty closely doesnt have as high of a weighting towards shelter and rent. Already lower and continuing to moderate. The other thing well mention is we talked about a labor market that is quite strong, but may start to see some cooling. Weve already seen a tick up in the Unemployment Rate to 3. 9 . Could we get a 4 handle on that . Perhaps. That will put pressure on wage gains and services broadly. Just as far as the stock Market Action this week, nvidia 10 off its highs, meta stopped going up. Can the overall market the broadening everyone has been excited about continue with those names . Yeah. If we get a pull back in correction we think the higher beta parts of the market the names you mentioned the magnificent seven cohort, the large cap which are higher beta have more room to fall than the broader market. We do continue to see this broadening and were starting to see some signs of it already in the first three months of the year. We do see that as a theme playing out over the next 12 months or so. Not only, you know, with cyclical and value parts of the market but if you think about the cap space as well and mid in particular, but small caps as well. Particularly as we get some of these catalysts in play, the fed pivots lower. If we get inflation continuing to moderate, notably this year we expect Earnings Growth to be a little bit more balanced as well not only driven by growth sectors but a broader participation and Earnings Growth should be closer to 10 versus flatish in 2023. We think all of those factors continue to point to a broadening of Market Participation if the economy reaccelerates. Thanks for summing up the view for us. We appreciate it. Have a good one. You, too. As we head to break our road map for the hour. A rough ride for tesla. The stock down more than 30 this year making it the worst stock in the s p 500. Theres growing chatter on the street about an ev winter. We will discuss. And energy has been post Something Big gains, at least this week. It is the best performing sector this month. Were going to discuss that rally and whether its going to continue. And ai hardware versus ai software. Which is a better bet for investors . Big show still ahead. Squawk on the street will be right back with the dow down 90 points and the s p reaching the lows of the morning. Theyre waiting for you. Hey, do you have a second . Theyre all expecting more. More efficiency. More benefits. More growth. When you realize you can give your people everything, and more. Thank you very much. [applause] ask, now what . Heres what. You go with prudential to protect, empower and grow. With everything you need to deliver, you guessed it. More. One more thing. Whos your rock . Learn more at prudential. Com my name is oluseyi whos your rock . And some of my favorite moments throughout my life are watching sports with my dad. Now, i work at comcast as part of the team that created our ai highlights technology, which uses ai to detect the major plays in a sports game. Giving millions of fans, like my dad and me, new ways of catching up on their favorite sport. Certainly has been a rough ride for tesla. The stock down for the last three days on pace to close the week down more than 7 . This weeks losses driving tesla further into decline. Stock at its lowest level since may 2023. The stock has shed 270 billion in market value this year. Knocking it out of the top ten most valued companies in the s p 500 index. Making it the worst performer of the index. A very unusual spot for tesla. It is. And weve noted it any number of times. Barclays out with a note yesterday, theyre talking about demand for evs going from what had been euphoria, to an ev winter, calling for a reset to lower expectations for the industry. Our next guest says ev sales will grow, but perhaps not at the pace many automakers are hoping. Mark fields former ceo of ford and a cnbc contributor. Mark, you know, when it comes to the market in the u. S. The idea of the early adapters sort of having run their course, and its going to be a bit tougher in terms of selling to everybody else, do you agree with that . Well, yeah. Early adopters, they have different purchase criteria, right. Theyre all about the innovation, all about the impact on the environment, but when it cls to mass adoption or the main stream market the average buyer is focused on costs, on convenience and when you look at the issues on the premium for an ev right now the lack of a full charging infrastructure, and importantly, just the convenience factor of the fact that, you know, it takes even with a fast charger, 40, 45 minutes to charge these things, you know, the consumer in the mainstream market is going to say you know what, when you figure all that stuff out, then ill really consider this. Until then, you know, ill stick with my internal Combustion Engine or as youre seeing with hybrids, a really great solution for consumers right now. Thats why hybrid sales, plugin hybrid sales are up so much. They are. Its funny during the Enormous Growth period, its still growing, we didnt talk as much about charging concerns or how long it took or anything else. Is that only coming to the for now because there are people more resistant to that and concerned about how far they can get and whether theres going to be a charging station for them when they get there . Yeah. I mean, david, when you look at the mainstream market not everybody has a twocar garage where they can put an outlet with a power wall on the wall to charge their vehicle overnight. Theyre saying across every demographic, rich, poor, everything in between, the one luxury every consumer has is time and convenience. If youre going to make things more challenging for them, then theyre going to say until you figure that out then ill consider it. Yet its getting down to meat and potato issues for consumers. The market is still going to grow, as you mentioned up front, set a record last year in the u. S. Of over 1. 1 million units, up almost 50 . It will probably get to about 10 of the market this year, but the fact of the matter is the pace that all the automakers were expecting is not there and thats why youre seeing, you know, the ev market act like the industry of old with, you know, price cuts and rising inventory and increased incentives. The transition is still in place. Were only going to get a more robust charging infrastructure the incentives seem to be in place, the chinese are driving a lot of this as well, right, so it may be the transition takes longer, but youre not a believer that says the transition wont happen . Well, the transition will actually happen, but its going to take longer. Theres no question about it that the transition is going to happen. But even if you look at when cars were invented, right, if you look, 100 years later, you know, what do people still have . They still have horses, right. Thats folks that can afford to have them and ride them. You know, if you go out 50, 60 years, as the industry transitions to electric vehicles, you will still have a certain amount of internal Combustion Engines which will be used for collectors items, et cetera, but its going to happen. The thing along the way, what is going to happen to all the startups that have, you know, started over the last couple years . Because with this longer path, a number of them will get into financial trouble and youre seeing that play out right now. Is it just about price, mark . Reading about some of these byd cars, the one theyre selling i think for under 10,000, and their most popular vehicle, they slashed prices to a little over 16,000, we dont have anything like that,do we . No. We dont have anything like that here in the states, but, you know, keep in mind, sara the reason they have those cars in china is, you know, the Chinese Government for the past 10 to 15 years has been supporting these companies with grants and incentives and things of that nature. They have the labor advantage and the input cost advantage, the elements, et cetera, but its not just price as you look about electrification growing in the u. S. Its about the charging infrastructure, its about the convenience as we talked about, but there are also some new concerns, insurance on evs are higher than existing ones and this is all over laid you were talking earlier in the hour about, you know, consumers moderating and looking at the environment were in. Were in a different economic environment, you know, more stressed environment with higher interests and that suppresses the whole market and thats why tesla, for example, is going from a golden era to where they had no competition and very favorable market environment, to a challenging era now where they have competitors and a less than favorable market environment. You mentioned the financial stresses that some of the pure ev makers, not tesla, may face as a result of this transition stretching out over a longer period. Does that mean rivian and lucid may not be long for this . Well, it all depends on how patient their investors are going to be. The whole thesis behind these new automakers was were going to introduce the products on the high end and then introduce lower priced products and be able to introduce them because we will get scale over time. Youre not seeing that scale happen. The auto industry, unless you have scale, you cant drive down your costs. So theres only so many people that can buy a 70, 80,000 electric vehicle, and youre seeing that play out in a number of the players right now where, you know, any time you listen to an Earnings Call where the ceo or cfo says heres how much cash we have and it will last us until x date, then you got to stand up and take notice of that. Yeah. And we will and we have. Thank you. Appreciate it. You bet. Still to come, the latest on tiktok as we continue to monitor the likelihood of a ban in the u. S. A programming note next hour on money movers dont miss bill ruden breaking down the comm commercial Real Estate Market and the nycb fallout. The dow down 90 or so points. Heres morikawa in a tough spot. Off the comcast business van. Look out where did the ball go . Oh, wait there it is. Back in to play and thats in what an impossible shot welcome back. We continue to track the progress being made in the bill that would ban tiktok in the u. S. Barring a sale of the business here. Its now in the senates hands having passed the house earlier this week and it could move fairly quickly. Well be getting updates on that as things move along, between schumer and mark warner and Maria Cantwell and lisa monenyco from the doj, seen as key here in terms of moving it along, whether an appropriations bill, they move faster than expected tiktok has woken up, so to speak, lobbying fiercely against that bill, but the likelihood of a ban of tiktok as hard as it may be to imagine could become a reality if that passes the senate, President Biden said he will sign it. So then a question becomes, is there a potential for a sale of the u. S. Tiktok . As weve reported previously, it seems somewhat unclear as and also unlikely that the chinese would allow any sort of a Real Technology transfer of that that included both the algorithm and the source code. The journal reporting same. Not a surprise yesterday on squawk box former treasury secretary Steven Mnuchin said hey, im putting together a group to try to buy tiktok. He admitted that there would be some opticals, namely the chinese. Take a listen to what his answer was when asked about that. Who can fig figure out a way to solve the concerns of the u. S. And china to transfer this without taking what they believe is critical technology. Thats really what needs to be solved. The source code the key there, 40 million lines of which needs to be basically recopied, if, in fact, this were to happen. So unclear but unlikely at this point that chinese would agree and then youre going to well, what are you left with . Maybe thats what they want. Something they would see as a benefit. Theres reporting about not just mnuchins group and bobby kotick, but whats the point if the chinese are not going to allow it to be sold with the source code. . Is there much you can recreate from a user base that exists . We will see. A beneficiary here certainly would seem to be meta and perhaps some other Companies Including snap if, in fact, this was banned. You heard kate rooney talking about amazon being a beneficiary of any tiktok ban here in the u. S. Lets bring in deirdre bosa. On the private company side of things, of course, theres bytedance and its a company you follow closely as well. Enormous value there. An enormously profitable business in china, not so in the u. S. , as much as you might think, given the 170 million users. But theyve been spending a lot of money here. Im not hearing as much pushback from the owners of byte dance about what this might be for the economics of their actual ownership. Right. David, i think that you were hitting the nail on the head earlier when you were talking about that allimportant technology transfer. A lot of the conversations that im having here in San Francisco is what would tiktok look like if it was separated from bytedance and if the chinese didnt want to transfer the source code. It would be a much different product in that sense. You wouldnt have that algorithm. I talked to people on both sides. Some say mnuchin and his consortium could, you know, seek out 20 of the best data scientists to replicate the algorithm. On the other people who know the Chinese Market well who say that its not that easy. Meta would have hired those people. Snap would have hired those people. Its a difficult thing. Theres also the chinese cultural gap. The internet has developed in china differently than it has developed here. For example, they have super apps. We dont have that in the same sense here. Tiktok developed and bytedance, and its chinese version developed under very different circumstances and that kind of magic is going to be really difficult to capture and as you mentioned, david, too, the chinese are not going to let go of that source code. They say that u. S. Is using what they call robbers logic. They see something good and they want to keep it for themselves i think that is the huge sticking point. Weve been here before a few years ago. This got pretty far along until it everyone involved seemed to realize there was no way forward, and it wasnt going to work. A hope somehow that, you know, if you really were to institute resty, an agreement between the reciprocity, you treat our companies the way we treat yours this would be allowed, otherwise hard to imagine given the hostility between the two countries that would occur. When it comes to programmers, i talked to some people who did Due Diligence 3 1 2 years ago and staggered by how many programmers, machine learning, how advanced they were at bytedance in particular, and that was 3 1 2 years ago. The idea that you could hire 20 people to sort of try to recreate the source code seems to be fanciful. When you look at chinas ambitions and also sort of its power in ai and generative ai, right, the next big platform, theyre one of the biggest investors in the world. Its not going to be easy to replicate that. What weve learned, too, from other reporting and the ft most recently is how valuable tiktok is, right. If you put like a meta multiple on it its worth more than 100 billion. Thats appealing, especially for the u. S. Investors in the company. We talked about that yesterday. Theres everyone from code 2 and tiger and softbank to some of the most prestigious Venture Capital firms like sequoia and ggv. What kind of valuation are they going to take to save the thing. Are they going to put their trust in a mnuchin consortium rebuild the app if that is even possible. A lot of questions here and youve covered chinese Companies Like alibaba, di dishgs in the past and you see that chinese care a lot about face. I think they might rather see tiktok fail than hand it over to an american group. Yeah. One of their most successful companies. Bytedance you could argue is the most successful in terms of the value its created and the advances its made in an area where the chinese have not been considered sort of a head of the ahead of the u. S. In the very least. The algorithm has been the key to its success. Its not clear that its going to go through the senate. If we ban tiktok here, theres implications for other companies. A few years ago when we were talking about this in 2020 tiktok was the company. The First Chinese company to really make inroads into the american market. Now we have temu and schein. What kind ofs from dent does this set kind of precedent does this set, its ecommerce. They are collecting huge amounts of american data, so does this sort of put in play a way for the further bifurcation, a lot of american apps are already banned over in china, like twitter, meta, and facebook and instagram, google. So do we see a further breaking off between the two . Thats sort of where this is all headed potentially. Yeah. Another reason why were going to keep a close eye on it and continue this conversation with your help. Thank you. Thats not even getting into the politics and the geopolitics. I know. Its complicated. Check out the action in bitcoin. Suffering a steep drop after trading above 72,000 last night. A decline of roughly 7 . Well monitor the crypto volatility. Back with you in a few. Lets check it out. Says here it gets plenty of light. And this must be the ocean view . Of aruba . Huh. This listing is misleading. Well, when at t says we give businesses get our best deal, on the iphone 15 pro made with titanium. We mean it. Amazing. All my agents want it. Says here. inviting pool. Come on over too inviting. Only at t gives businesses our best deals on any iphone. Get iphone 15 pro on us. wall street forecasts over 100 billion in sales for antiobesity drugs known as glp 1. But these treatments are largely administrated through cumbersome injections. Enter Lexaria Bioscience with their patented oral delivery technology. Early studies were glp1 suggest reduced side effects and better blood sugar control with reduced spikes. Lexaria bioscience. Transforming the future of glp1 drug delivery. As an independent financial advisor, i stand by these promises. As a fiduciary, i promise to be the financial steward that you and your family need. I promise to put your longterm Financial Wellbeing above any short term transaction. Everyone has a big picture. My job is to help you invest in yours. [announcer] Charles Schwab is proud to support the independent Financial Advisors who are passionately dedicated to helping people achieve their financial goals. Visit findyourindependentadvisor. Com welcome back. Im pippa stevens. A georgia judge ruled this morning that Fulton County District Attorney fani willis can remain on Donald Trumps Georgia Election interference case with one condition, the special prosecutor who she was accused of having an inappropriate relationship with has to go. The judge also found there was no actual conflict brought about by willis relationship with nathan wade, a finding that would have required willis to be disqualified. An aid ship carrying 100 tons of food reached the gaza coast today. The worlds central kitchen aims to deliver the aid on a temporary jetty and the charity is loading a second ship with food and supplies in cyprus. The National Association of realtors agreed to settle a series of lawsuits paying 418 million in damages and eliminating its rule on commissions. Thats according to the new york times. The deal still needs a federal courts approval. It would put an end to legal claims from home sellers who argued the 6 Sales Commission forced them to pay excessive fees. Sara, back to you. Thank you. Checking in on the markets about an hour into trading, theyre slumping. S p is down 0. 4 . Nasdaq is down 0. 6 . Were wiping out the gains that we had so far this week. You know, near the lows of the session. Our next guest is looking for areas that hedge against excessive market optimism providing exposure to growth themes with companies with ai. Welcome. Explain what you mean. What is the strategy from here after 17 of the last 20 weeks higher for the s p . Sure. So look, i mean i think our key thesis has been that theres tons of opportunity in this market, but it goes well beyond the magnificent seven and this view that somehow the other 493 are not worthy or should be valued at multiples of, you know, 16 or 17 times when a handful of stocks are, you know, accorded multiples of 25, 30, and 35 times forward expectations. We think creates opportunity. Where are those opportunities . Were seeing them all over the power generation, infrastructure, data center buildout, themes that those ideas are industrials, actually, in utilities, in energy, in clean, green, and traditional Carbon Capture and carbon transfer oriented plays. Were seeing great ideas that are growth oriented in health care that we believe are under valued and ultimately are backdoor plays on generative ai as we think about the speed of Drug Discovery and customization and personalized medicine. So is your view that generative ai is going to transform margins and valuations in a much broader way than just the magnificent seven or six and investors arent pricing that in . Is that the thesis . Yeah. 100 . So, you know, we make the analogy of studying Technology Diffusion and looking at the winners of the internet. The winners of the internet were not the infrastructure enablers, right. Ultimately the winners of the internet were those who adopted it to create new business models. They were the google, the amazon of the world. And our best guess is its going to be ai adopters who are the winners of generative ai and thats where were seeing the potential for Adoption Across the landscape of the market. Something for investors to consider. Lisa, thank you. Got to keep it short but appreciate the call. Morgan stanley wealth management. Always good to see you. You too. Still to come Energy Stocks have been picking up steam this morning. 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The best performing sector today, this week, this month up 6 in march, ha may be behind that and how would you consider playing it . Joining us is rob, tortoise senior portfolio manager. Its been a nice week for the underlying commodities. You own the names that transport things such as natural gas and the like. I mean, are those beneficiaries of those higher prices and in general, particularly given your Energy Infrastructure fund sort of what are your thoughts on the names of your top holdings . David, thanks for having me. We like tortoise Infrastructure Energy story because its a volume story and less of a price and commodity sensitive story. The u. S. Is the largest producer of energy in the world, exporter of energy in the world and those trends continue and that continued growth supports the underlying cash flows of these companies. What it allows them to do is pay high dividend yields. We capture a lot in our tortoise infrastructure return fund but it allows investors to get access to yields that are 6, 7, 8, 9 . The underlying efforts to perhaps curb Carbon Emissions and the like and the fact that natural gas export terminals, for example, that may have once been on the drawing board may no longer be, is that a concern for you longer term . Not really. Actually thats part of the story. Decarbonization globally. If you use more natural gas globally, in places like china, asia and india and replace coal, youll see a decline in Carbon Emissions. Look at whats happened in the u. S. Cheniere energy, one of our top holders is exporting natural gas to these companies all over the world. The u. S. Will be the largest lng exporter in the world and remain in that position into 2030, no matter if we dont build any new lng export facilities here on out. The existing are growing and expanding and the u. S. Will have a prom flents role in the lng space globally. Not to mention our need for power and its not going to all be renewables, is it . No, its not. The other part is you talked about this and i know pippa has talked about it, ai. Genera artificial intelligence. Thats going to increase the need for power globally but specifically in the u. S. If we have more data centers you need more power, affordable reliable power. Where does that come from . Natural gas can serve that role as a low cost, reliable power supplier and really help develop data centers and help ai grow from here. Its the key issue as we pointed out key issue for development, of future data centers to power this generative a. I. Revolution. Natural gas going to be key. Appreciate your time, rob. Thank you. Thanks, david. Adobe shares sliding. Well tell you why after the break. Down 14 . Its one of the reasons why Information Technology is the worst performing sector right now on the s p. Some sectors are turning green like real estate financials and materials. Were seeing some improvement in the action you know doug, ever since switching to workday youve been a real rock star. Rock star . What do you know about rock stars . Billy idol . I mean wheres the skintight leather . My shoes are leather. Wheres the unnecessary zippers . That thing billy, rock star is just how doug feels when he uses workday. Thanks, rory. Ill show you rock star be a finance and hr rock star. Workday. For a changing world. Billy idol just stole your golf cart at pgim, finding opportunity in fixed income today, helps secure tomorrow. Our timetested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. Pgim investments. Shaping tomorrow today. Adobe shares getting crushed in todays session. One of the biggest losers on s p 500. Kristina partsinevelos tracking the action and what were hearing from analyst investors today. Sara, there was caution heading into this print with adobe shares underperforming the software etf monthtodate. So much caution with the stock down double digits immediately after the results came out yesterday. We had a q1 beat, new 25 billion Share Buyback program and only a slight miss for q2 revenues. And yet the stock is plunging. You think the world ended with that remark. Much has to do with the magnitude of the beat, which is much less than previous quarters. And then the second point is the slight buy side miss for net new Digital Media annual recurring revenues, which is a key metric for investors. Investors are worried pricing is a headwind and well see more upside only in the second half of the year. The company also did not increase fullyear guidance either. Those are some reasons for the selloff. Most analysts on wall street are still bullish. Barclays saying we think the valuation is washed out and expect the stock to recover. Thats really the sentiment from a lot. Jpmorgan, bank of america, a lot of them are saying a very similar thing. This is an opportunity to buy. A major overhang for adobe is competition. Adobe ceo was asked specifically about openais next sora on cnbc yesterday. And, you know, fears of whether its encroaching on adobes turf. Listen to what he had to say. I think it will cause another explosion in the amount of video. And adobe is going to be one of the beneficiaries because people will need more authoring and editing tools to take advantage of that. Doesnt seem that worried but adobe ceo continued saying they will continue to work with openai and develop their, quote, own model. The ceo name dropped nvidia, saying he spoke with jensen and he would, quote, love to partner with us. So, expect more for adobe stock, more volatility on march 26th. Thats their summit and they should have new products and maybe help calm those fears that its falling behind in the a. I. Race and losing market share to openai. David . Thank you. Kristina partsinevelos. Yeah, were keeping an eye on those adobe shares. Its more than a slide, i think, this morning. Its a plunge. I dont know if its a plunge. Its not a plunge . 14 is not a plunge . This is like curb your enthusiasm. Disney, warner bros. , discovery, fox, they have a ceo named. Pete istad, former apple and hulu executive. Hell lead the joint venture from, again, espn,fox, warner bros. , discovery. He said, this is an Incredible Opportunity to build and grow differentiated product that will serve passionate sports fans in the u. S. Outside of the traditional paid tv bundle. Hes excited to be able to pull together what he said will be an industryleading sports content portfolio from the companies. You know whats bigger than that . Taylor swifts eras tour is on disney plus. Taylor swifts what . My sister is in it. She was at the l. A. Concert. Theres a reaction of her. I wonder if theyll have sub ads on the back of that because you have to be a member of disney plus to watch it. On taylor, she has a big impact, you know. She does. Big economic impact. Maybe we can get her for an interview. The two of us. Ive been trying for a long time. I need your help. The next hour forget next hour. A lot of live market coverage. Its money movers. We have bill rudin. Oh, hes right over there. Hes about to come on. Bills coming on. She runs and plays like a puppy again. His 2s are perfect hes a brand new dog, all in less than a year. When people switch their dogs food from kibble to the farmers dog, they often say that it feels like magic. But theres no magic involved. dog bark its simply fresh meat and vegetables, with all the nutrients dogs need instead of dried pellets. Just food made for the health of dogs. Delivered in packs portioned for your dog. Its amazing what real food can do. Moving forward with nodepositive Breast Cancer is overwhelming. 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Tell your doctor if you have pain or swelling in your arms or legs, shortness of breath, chest pain, and rapid breathing or heart rate, or if you are nursing, pregnant, or plan to be. Im making my own way forward. Talk to your doctor about reducing your risk. At pgim, finding opportunity in fixed income today, helps secure tomorrow. Our timetested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. Pgim investments. Shaping tomorrow today. Good friday morning. Welcome to money movers. Im sara eisen with mike santoli live from the floor of the new york stock exchange. How the last two months of higher inflation data is impacting the course of Federal Reserve rate cuts. Pimco economist Tiffany Wilding is with us. Bill rudin on a banking crisis and uptick in leasing volumes in new york city. A mixed bag for retail. Big swings in names like ulta, dicks, Dollar General and dollar tree this week. The read on the u. S. Consumer this hour. Right now, though, in the markets, we