Transcripts For CNBC Street 20240703

Evolve, and heres how policy evolved should occur, but you have to maintain this ready position. Teslas stock hitting a reverse, losing around 30 billion in market value. This is after deliveries declined for the first time in nearly four years. Disney reports it secures enough votes to defeat nelson peltz. Its set to meet with the gm later today. And the swiss re ceo will hands over the reigns later aspergeas b b b berger is sets to take over in july. Lets start with the big board and show you whats going on with the european markets. Lets bring up the board. Weve got the ftse 100 down at a downside of half a percent and the ibex in spain. The citi sitting there as well as switzerland. The u. S. Futures saw quite the soggy day with the dow posting their worst day since the 5th of ma march. Also backtoback losses. You can probably point to whats happening with yields as the culprit here with the 10year hitting the highest since november. Weve got more data coming out overnight in the form of u. S. Job openings. They rose by 8,000 to 8,75 6. Its all adding to the idea that the u. S. Economy is still quite resilient. Indeed on the back of that, fed officials continue to spread continued caution on the rate cut path this year. Clevelands president Loretta Mester saying more evidence is needed to show whether upside surprises in inflation means progress is stalling. Mester says she does not expect to be able to make that determination by the feds meeting in may. As for San Francisco, fed president mary daly, she was asked if there was cause to doubt the Central Banks dot plot forecast of three rate cots this year. I think that is a very reasonable baseline, but i would like to say here, this is a projection. Three rate cuts is a projection. A projection is not a promise. I think thats really important because a projection is saying heres how the economy is expected to evolve, and heres how policy evolves should that occur. But you have to maintain this ready position, and i feel like were in a very good place to be ready. We have to be ready for what if inflation is stickier than we projected or i projected . If i look at projection and say what if in234r5igs is stickier, we may want to cut less. What if inflation starts to falter or inflation comes down more rapidly, then we might think cutting rates is more appropriate. Markets are now pricing at just over 60 chance of that cut come june. Thats according to the lseg data. Lets bring in our guest. The high yield story is definitely gaining steam. Do you think its going to be around for some time and provide a headwind for the equity markets . Yes, p , because as youve j been saying, theres an expectation of seven rate cuts this year. Thats been pared back gradually. Even three is in question now. Thats affecting the shorter end of the curve. The number of rate cuts affects 2year yields directly. The longer end is slightly more complicated because its being driven by recession expectations, growth expectations, and so on. But, absolutely, if it yields back up, it will provide a headwind to stocks because of the valuation component. Do you think its possible well see the 10year testing 5 again this year . Well, i think that i think more of the damage is at the shorter end rather than the longer end, so the longer end in a way will depend on what happens to inflation as well. So if inflation stabilizes at, say, 3 , thats not great. But, you know, yields do really go up to what youre saying. You have to see inflation back up. So thats really going to be the key driver of the long end. If inflation stabilizes, long yields are going to roughly stay where they are. If it goes up, youre going to see this backup in long yields, anding of course, that would not be good for stocks either. How likely is it we might see inflation creep back up because youve got oil prices at multimonth highs and the food index is the highest since 2022. If i was jay powell, i would say, come on, what a head jake this is, this is just making my job harder. The key to whats happening with Wage Inflation because if you think about, you know, in a service economy, servicedriven economy, the biggest cost is wages. So thats what we should be looking at. If i were any central bank, i would be looking at Wage Inflation, saying whats happening to Wage Inflation . Is it going down to where it needs to be for 2 Price Inflation . And i think the problem is not so much Wage Inflation is going up. Its stabilizing at much too high a level. That to me is the bigger problem. And theyve said the bigger risk is not that inflation goes up again. Its just that it stabilizes at a higher level. 3 unfortunately is not job done. You need to be at 2 . And that last mile is going to be very, very tough in my opinion. No declaration of victory just yet rchlt you surprised by how strong the labor market has remained . Especially when you look at job openings are up and quitters are up, which shows theres a level of confidence out there that you can quit and get another job. Im not surprised at all. Heres the reason why. Whats happened over the last year or so is that theres been this huge surge in labor supply. So what happened is that the Participation Rate has been going up. All the people that left the labor force during the pandemic is coming back. Participation rates are topping out. Thats why its becoming harder to keep Wage Inflation coming down because that gap between demand and supply is sort of now leveling out. There is a second factor we should take into account, which is complicating matters, which is population is increasing at a phenomenal pace at the moment because of legal migration. Thats another reason why the number of jobs being created is actually quite high because, you know, migration does eventually show up in the official data. The population is rubbing at 2 . Obviously youre going to have more jobs created. You should bear that in mind. Is that a reflection of the Larger Population . Thats a really good point. Given that labor costs is one of the largest expenses of any company, what does it mean for Company Profits and, therefore, what does it mean for stock prices Going Forward . Well, if youre trying to get Wage Inflation down, you do need to see weakening labor demand, and the only way that you see weakening labor demand is if Company Profits are under pressure. Because think about it like this. Why would a company, you know, stop recruiting or, in fact, you know, lay people off . Only if their profits under pressure. So theres a direct link to what is ooh happening no the labor market to the profits. So, yes, absolutely, if the fed need you know, if the fed does its job, it does involve economywide profits coming under pressure. So youre, therefore, a little under weight with stocks at this juncture. What im really saying is youve got to look at the headwinds and daytailwinds. You have to look at where its at off the massive rally in q1. Thats the way i would put it. I would start by saying, you knowing maybe consolidate your position in stocks, expect some sideways move. Maybe it would be healthy to have a breather. I think so, given where valuations are. Unfortunately i would love to delve into the valuation question, but weve run out of time. Its always our biggest problem. Next time. Thanks very much. Were going to hear exclusively from the atlanta fed president Raphael Bostic coming it later on at 2 30 cte. Well be back. At least half of adults globally are stressed about their personal finances with more citing inflation as the source of their stress than any other factor. Thats according to cnbcs international your money Financial Security conducted by surveymonkey. A majority of adults in every country reported living paycheck to paycheck and also citing a look of savings as a cause of stress. I spoke to the surveymonkey ceo and asked about the contradiction between the strong Economic Data and peoples concerns about their financial situation. We were surprised. Like you said, a majority of people we polled said they were stressed about their finances with improving economy. I think you had three big factors that drove that. One of which is inflation. People feel it at the store. They feel it when theyre filling their cars. The second of which is debt levels, and you see it in certain countries where people are holding debt, and that causes debt for their personal finances. And the last is the savings rate, and are they keeping up with what their targeting for requi retirement, and people are falling behind there. Those are the three big drivers causing personal stress. Lets pick up on the inflation part of that equation, first of all, since thats the leading cause of stress among adults globally. Its interesting by most metric, inflation globally is down year on year, so is it a case that while it might be down, some of the big costs like energy costs, health costs and insurance are still at the top and thats whats causing the headache . It seems that is the case. Where the prices came up over the last several years, those have stalked consumers minds. What i that see at the store is different from what they remember. Inflation, although its come down or stabilized, the numbers still feel big, and thats causing stress for those consumers. Of course, sentiment is one thing, but i asked where people are actually seeing their financial situation deteriorate. There were two big factors in that, and both showed concerned about their finances. One of which was the savings rate. Are they hitting the numbers they want to hit for a comfortable retirement, and two is in their governments ability. The average is 40 of people expected the government to help them with their retirement, and probably about 40 who were concerned ed of the government ability to help with that. Its a crude reality. Were all, god willing, going to live longering but the retirement ages are not necessarily being pushed back or pushed higher in commensurate situations. Break it down in terms of peoples confidence in the governments tooblts help their retirement. What did it look like country to country or region to region . The numbers were similar in a lot of europe and in the u. S. , which was general concern about the governments ability to support the retirement for many of these people, and we saw, again, singapore was the outlier, which was confident in their ability and the governments ability. That comes from their savings levels and low debt levels, and those seem to be correlated that youve got people confident in their finances overall are less concerned about the governments need to contribute and it seems confident in the overall economy than stribtds to their retirement. For the full results of the survey, you can check it out at cnbc. Com yourmoney. A lot of articles on that side as well. Now, coming up, tesla shares hitting the breaks as deliveries dive in the First Quarter, but that is not deterring one investor. Well tell you who just scooped up nearly 40 million worth of new tesla stock when street signs returns. What is cirkul . Cirkul is the fuel you need to take flight. Cirkul is the energy that gets you to the next level. Cirkul is what you hope for when life tosses lemons your way. Cirkul, available at walmart and drinkcirkul. Com. Hi. Im Wolfgang Puck when i started my online store Wolfgang Puck home i knew there would be a lot of orders to fill and i wanted them to ship out fast thats why i chose Shipstation Shipstation helps manage orders reduce shipping costs and print out shipping labels its my secret ingredient shipstation the number 1 choice of Online Sellers and Wolfgang Puck go to shipstation. Com tv and get 2 months free switch to shopify and sell smarter at every stage of your business. Take full control of your brand with your own custom store. Scale faster with tools that let you manage every sale from every channel. And sell more with the best converting checkout on the planet. A lot more. Take your business to the next stage when you switch to shopify. What is cirkul . Cirkul is the fuel you need to take flight. Cirkul is the energy that gets you to the next level. Cirkul is what you hope for when life tosses lemons your way. Cirkul, available at hitting the breaks as deliveries. When i was your age, we never had anything like this. What . Wifi . Wifi that works all over the house, even the basement. The basement. So i can finally throw that party. And invite shannon barnes. Dream do come true. Xfinity gives you reliable wifi with walltowall coverage on all your devices, even when everyone is online. Maybe well even get married one day. I wonder what i will be doing . Probably still living here with mom and dad. Fast reliable speeds right where you need them. Thats walltowall wifi on the xfinity 10g network. Welcome back to swiss signs. Swiss renames Andreas Berger who will take over. Elsewhere tesla closed nearly 5 lower on tuesdays trait trade after First Quarter deliveries kamg in not just less than analysts expectations but way below. Almost 30 billion off the value of the company at one point. That puts the stock down by almost a third on the year, making it the second worst performer in the s p 500 since january. Theres been a chorus of criticism from analysts on those numbers including dan ives whos been very bullish on the stocks, calling the figures quite a disaster. Earlier cnbc spoke to the ceo. I actually think the company could duo bust because you think tesla could go bust. Yes. To explain that, i have to reverse. What was the tesla Business Model . Three elements, number one. For ten years they said 50 annual growth. Thats been valued up to january. Second, integrate vertically, so you capture all the value from the courses. Third, direct sales, no value to any retailer, et cetera. Thats the only way youre going to grow because you have negative working capitals. You can get paid for growing. And you capture all the margin. The problem is when you go in the reverse and sales go down, it also goes in reverse. Because the market is thinking 2 billion positive cash flow is going to be a minus on my cash numbers. The next thing, i think most are denying this was a bit of a oneoff and looking at it as an arson attack. Lets face it. How does record high inventories go with production problems . This is a demand problem . Important to note lekander holds short. One who doesnt think its going to go short any time soon is cathie wood. As for the premarket, it looks like its going to be a further rocky start with the premarket suggesting a drop of nearly 1 . Arjun has been following this story and joins us with more. Hey, arj. This is a seminal moment. He actually said the street criticism is warranted, but interestingly hes not dropping his outperformance on the reading of the stocks. Are you thinking like, what, 300 bucks in a years time . Hes going to have to pull out a rabbit out of the hat at some time. I think thats where many of the analysts are still bullish on the outlook for tesla are thinking, that elon muffing is going to be able to navigate this company through what is a very difficult period of time for the company. Were in a very different time, i think, and tesla is facing a different set of issues than it did in the past. In the past it had issues with ramping up enough production to meet demand and making sure all the supply chain was moving smoothly. The issues it faces now are very different. Youve got a macro environmeenvironment, which is very tough. Youve got them questioning whether ev is the way to go given the price range and range anxiety. Youve got a critical market in terms of sales for tesla, which is very tough with cutthroat competition, a price war on everincreasing models and you have tesla not releasing any more models until 2025, 2026 until at a time where chinese rivals are aggressive will i launching new models as well. All of these factors together are now facing tesla, and its a very, very rocky road the company is going to have to drive down. Do you think elon musk is sitting in his boardroom saying, i wish this quarter was over. But theyre still overselling over byd. If you look at the numbers, theyre still one of the largest ev players in the world. I think the issue is this is a company for many investors thats valued in a way that is a growth company, and when that growth stalls like weve seen in this quarter, when deliveries fall 8. 5 year over year, investors begin to question it. This is a company that for so long had high demands and was able to comfortably deal with the demand in the market. Now when things are looking testy, when margins are under pressure, and price competition is up, those valuations are being questioned. Do you think for all the ev makers who go through a renovation, theres the early adopters as well but i guess in evs case, the price so far has generally been the wellhealed consumers, do you think theyll go through a reconciliation and then things will get better . There almost has to be some form. Theres not only the traditional players but also the upstarts, particularly the chinese players. Theyre launching lots and lots and lots ottf models. Theres perhaps mergers and acquisitions. There has to be at this point some sort of consolidation given the number of players in the ev market. Thats something that will happen. I think tesla is, as ive said, a very important time now, a seminal moment where it needs to sort of pick itself up and figure out what the roadmap is Going Forward and how it now manages to navigate, i think, all of these challenges that it has never faced before. Some of them oneoffs and some not oneoffs recurring. On a programming note, dont miss our interview with cathie wood at ark invest at 1 00. In world news now, seven people have been reported dead after a magnitude 7. 2 earthquake struck taiwan, the islands strongest quake in 25 years. Initial tsunami warnings have now been lifted and plans are made into returning to work. Lin lin has this report. The squac struck east of the island. At least 26 buildings have fully or partially collapsed according to officials and dozens of people are trapple under the rubble as rescue efforts are underway. In the immediate aftermath, tsunami warnings were triggered to the islands neighbors such as japan and the philippines. That i have now been lifted. The capital has not experienced any damage. The more than 87,000 households on the island are still without power. From the markets perspective, stocks are down. In the latest statement to cnbc, the company says the employees who were evacuated as a precaution are returning to their workplaces and initial inspections show that construction sites are normal, although, its decided to suspend work for the day. Kirk young from kirkland capital, hes in the capital taipei. He said the immediate fear was the delicate equipment as any small shakes will change the precision and it takes time to calibrate. But hes spoken to some sources at the company who say they havent seen much by way of damage at this stage. Meanwhile apple supplier foxconn has also relace leased a statement saying at present theres no impact on their operations from the earthquake. Coming up, President Biden and president xi hold their first talks in months amid the at aions between the united stesnd china. Well have the latest after the break. What is cirkul . Cirkul is the fuel you need to take flight. Cirkul is the energy that gets you to the next level. Cirkul is what you hope for when life tosses lemons your way. Cirkul, available at walmart and drinkcirkul. Com. Shipstation saves us so much time it makes it really easy and seamless pick an order print everything you need slap the label on ito the box and its ready to go our cost for shipping, were cut in half just like that go to shipstation tv and get 2 months free welcome to street signs once again. Im mandy drury joining you from london. These are your headlines for this half hour. Dont get ahead of the fed. Hes open to a june rate cut as San Francisco fed president mary daly hedges her bets. Prerate cuts is a projection, and a projection is not a promise. A projection is saying heres how the economy is expected to evolve and heres how policy evolves should that occur. But you have to maintain this ready position. Tesla stock hitting reverse, losing around 30 billion in market value after deliveries decline for the first time in nearly four years. Disney reportedly secures nuft votes to defeat nelson peltzs challenge to the board with the results set to be unveiled to the a dgm later on today. And intels chips are down, delivering a blow to its plan to regain ground on rival chipmakers. Ecb governing Council Member says he has no objections to a june rate cut, but he does want to see more data. He stressed the important of moving with the fed, saying the impact of ease of policy limiting could be diminished if the economys not in sync. We look at the preliminary inflation data due out later on this morning. In fact, could be out in about half an hours time from now. Analysts are expecting gains to tick slightly lower. You may recall yesterday we got data out of germany showing inflation eased more than expected last month due to a drop in energy prices. Let oohss take a look at t european yield ahead of the inflation data due out in about a half hours time. The gap between italian and german 10year yield currently around 103 basis points up from 115 in midmarch. As for the european markets, lets take a look at what is ooh going on there. Youve got a all of the markets you see on the board ticking to the upside now, rew e versing some of the losses we saw for a couple of the markets there. The only one thats currently still underwater is the ftse 100 in the uk down by 0. 6 of 1 . As for whats going on in the forex world, we did see the u. S. Dollar on the back foot a little bit in overnight trade in the u. S. Indeed, the dollar yen rate is currently sitting at 151. 71. The dollar trying to regain a little bit of ground in european trade. And naturally the yen is at multidecade lows and doesnt appear to be strengthening any time soon. Sterling dollar is down at 1. 2574. Lets take a look at turkey. If you think youve got inflation bad, you aint in turkey. Coming in at 68. 9 year on year. That comes in the form of education, water, food, and health. Of course, turkey is an emerging market and one survey shows theyre bullish despite the outlook around global rates. Thats kay cording to hsbc, who have just released their 15th market survey. Joining us to join us is the global head of emerging markets research at hsbc. Thank you so much for joining us today. I should note i believe the survey period was in the First Quarter ending march 20th. So i wonder if you surveyed the respondents today there might be a slightly different response given the kind of pushback weve seen on a couple of Central Banks so far. But in terms of your survey findings, tell us why investors are starting to feel more bullish about emerging markets . Sure, thank you very much. Thanks for having me. Indeed its quite interesting that they were unfazed by this big repricing of price cuts from Central Banks, particularly the fed, where at the beginning of the year the markets were prizing in seven rate cuts. This has come down to less throughout the First Quarter. And they were unfazed. You might argue this is the valuation or the excitement that down the road the rates will come down. As a matter of fact, we asked investors in the survey, whats the biggest yu7 side and downside risk, and on either side they say its the Global Monitoring policy and the fact that the banks will start cutting rates as per their current guidance. It was encouraging for investors. Its not only the sentiment thats evolved. Its also the cash levels have come down. We surveyed every quarter where its no risk and its the highest risk. Thats showing the rate has also improved. I think its the excitement that sometime this year obviously this keeps changing, that the core Central Banks will keep cutting rates. I mean, you say the emerging markets were unfazed by sort of the gradual pairparing back of rates. Until they thought, oh, you know what . We were hoping for six originally. Then we got to three. Then it might be only two. Then goodness me, it could be leak the end of the year. Do you think maybe there could also be less bullishness in the next three months for emerging markets if they come to the same realization . Well, its a fair question. Obviously everything has to be reassessed as we have more incoming situation. But perhaps at this point we could go a little bit more granular. Yes, theyre modest and bullish. Where are they bullish . This is still latin america. It has been the case for many surveys that america has what we call the net post of sentiment score in all asset classes. Its actually in asia where theyre bullish. The rest, its all latin america. Thats partly because most of the countries across the region, they plan to bring inflation broadly under control. Theyre cutting rates. Growth outlook is good. External balance is fine. So, yes, you know, perhaps we should look at things a little bit more granular, a little more bottom up where they are bullish, and let latin america follow asia for the markets. Lets get granular. Why is it that latin america stood out . Sure. Well, look, broadly speaking, of course, we have an election coming up in mexico later this year, but broadly speaking, we have left the election cycles, espe so politics is the less of an issue. The balance of politics is pretty strong especially when it comes to brazil. They trade balance records almost every month. I think the linchpin is while a lot of people at Central Banks were thinking inflation might be trans yept in the beginning, many latin american countries have embarked on a tightening point. They have pretty drastically raised rates to high Interest Rate levels, and theyre actually seeing the benefits of it. Theyre reaping the fruits that inflation has fallen very, very low, near target, still high yield rates that offer nominal and carry for investors. And for a current balance, good flow. Also on the fiscal side theres been some improvement. I think investors are looking at a better macro mix. Its all about relative strength on the micro balances and good yield on offer both in real and nominal terms. It makes them attractive. In mexico you can actually is tell a similar story and obviously the icing on the cake for mexico is the cycle so integrated with the u. S. , that the u. S. Economy remains resilient and strong. Every month the u. S. Labor market holds up strongly. Mexico receives more than 5 billion. There is ooh tourism revenues, fran chieg franchiserelated. As for asia, im interested in the fact theres with a positive youtd look for india in that last year india as a mrkt left a lot of other emerging markets in the dust, and yet a lot of people are saying they still have a great economic story. But the stockmarket itself is looking very expensive and its also starting to level out. What are your thoughts . I think were here for a very good reason. The structure story, i dont think anyone has any doubt. Its the Fastest Growing economy in the world. Fantastic demographics, education platforms and theres a huge catchup in terms of capital and lots of fdi coming in. They brought inflation lower. The Monetary Policy situation has stabilized. There are prospects of rate indicates rate later in the year. Theres a domestic story. Yes, the global trade cycle is soft, you know. It hasnt completely rebounded. But india has a very strong domestic market. And on top, theyre opening up, theres a bond index inclusion story which will start from june onward that will bring fresh capital inflows to the country. Whats not to like. Clearly the markets are reflecting the longterm story which is compelling and appealing. Weve not only scratched the surface, but unfortunately were out of time. Thanks for joining us today. President biden and president xi held a rare phone call yesterday in a bid to soothe tensions ahead of a visit by u. S. State officials this week. According to a readout by the white house, the pair discussed a range of geopolitical hotspots including taiwans elections, the war in the middle east, and chinas support of russia in ukraine. President biden meantime says that israel has not done enough to protect aid workers or civilians following the deaths of seven workers in an israeli air strike. Biden did not outline any shifts in u. S. Policy but expressed his, quote, outrage at the level of casualties in the war in gaza. Bidens sentiment was echoed in london with David Cameron calling the deaths completely unacceptable. Prime minister Benjamin Netanyahu responded, taking responsibility for the incident. Translator unfortunately in the last day there was a tragic incident of an unintended strike of our forces on innocent people in the gaza strip. This happens in war. Were checking this thoroughly. Were in touch with the governments and will do everything for this not to happen again. So hes not doing anything to help certain relations between certain countries. Lets bring in dan murphy now with more on this. Dan, what are we hearing in the latest in this story . Well, mandy, weve been following the reaction to this trajdgy because this air strike on the aide convoy has spread widespread condemnation and raised quite serious and valid questions about how israel is conducting this war. The prchl was among the first to speak. He said his country was outraged by what he called a completely unacceptable death. Hes of course referring to the australian woman who was one of the first aid workers to be identified. Heres how he responded. This is someone volunteering overseas to provide aid through this charity. This is completely unacceptable. The Israeli Government has accepted responsibility for this, and Prime Minister netanyahu conveyed his condolences. Britains Prime Minister rishi sunak calling for an investigation after three british citizens were also killed in this air strike. Heres how he responded. Listen in. Israel has the ability to comply with International Humanitarian law. I made that very clear to Prime Minister Benjamin Netanyahu. Whenever ive spoken to him, there have been too many civilian deaths. Of course, we want to see an immediate humanitarian pause so we can get the hostages out and more aid into the region. Of course, the governments of the other citizens that were involved have also called for answers here, and Israeli Forces are under increasing pressure now to deliver a transparent investigation into exactly what happened. Also being called to answer how and why this air strike happened against civilians who were wearing the logo of the aid agency and were also traveling in vehicles that were marked with the aid agency logo as well. Mandy, you mentioned that Prince George netanyahu has also acknowledged these bombings. He said his countrys forces had unintentionally hit innocent people. Now the responsibility is on israeli and the Israeli Military forces to get to the bottom of what exactly happened here, to make sure theres transparency moving forward, and, indeed, pressure mounting on israel and its relationship with the United States in the aftermath of this significant tragedy in gaza. Dan, thank you very much for the report. Coming up on the program, a heated proxy battle of did in as it enters its grand finale with ceo bob iger. Were going to get the details after this quick break. My name is Ashley Cortez and im the founder of the stay Beautiful Foundation when i started in 2016 i would go to the post office and literally fill out each persons name on a label and now with shipstation we are shipping 500 beauty boxes a month it takes less than 5 minutes for me to get all of my labels and get beauty in the hands of women who are battling cancer so much quicker shipstation the 1 choice of Online Sellers go to shipstation. Com tv and get 2 months free norman, bad news. Shipstai never graduated the 1 from med school. Sellers what . But the good news is. Xfinity mobile just got even better now, you can automatically connect to wifi speeds up to a gig on the go. Plus, buy one unlimited line and get one free for a year. I gotta get this deal. Thats like 20 a month per unlimited line. I dont want to miss that. Thats amazing doc. Mobile savings are calling. Visit xfinitymobile. Com to learn more. Doc . A loss in 2023 for its foundry business. Thats a steeper loss than the year before as it tries to rake in a lead for manufacturing technology. The company says it expects foundries losses to peak in 2024 before breaking even midway between this quarter and the end of 2030. Meantime disney has reportedly secured enough shareholder votes to defeat a billionaire activist nelson peltz to secure two seats on the companys board. Thats according to reuters. The results of the vote will be released at disneys annual Shareholder Meeting later today, but they caution some shareholders may still change their votes. Tesla ceo elon muff hockey weighed in on the disney battle and said he would buy shares in the company if peltz were elected to the board. Lets bring in tim. Good to have you. This is the second proxy war for disney in just two years. Is it the end of the road for him, or has he still got something up his sleeve . I dont think its ever ever proven to write off the ability of nelson peltz to be able to review and adapt changing circumstances. And the underlying reason why this activist campaign was launched are still not fully stretched. The jury is out on where disney is in its transition to becoming a visceral First Entertainment proposition, and, of course, we should not underestimate the underlying assets that disney have are diverse and broad. The experiences part of the business is growing significantly. The streaming site, however, growth has declined so the quarter on quarter growth, the previous two quarters, directed the consumer part of the business, subscriptions has declined to 62 and millions are predicting growth for 2024 will only be 2 for the streaming services that disney operates. That contrasts with netflix that many are predicting will have 70 in growth rates in 2024. There are still a lot of questions out there. Weve got this combined sports entity that disney will be leading with fox and discovery. Theyll be launched it in the fall of this year in the u. S. Sports has been broken out as a standalone segment for reporting within the disney financial results. And sports is doing really well. So sports in the previous quarter grew 4 in revenues. Profitability grew 37 . Contrast that with entertainment, which declined 7 in revenues and has a minus 100 operation margin return for yearonyear results. Theres clearly a lot of things to do, a lot of work that is down the road for disney. At the end of the day, if youre a shareholder, you want the share price to do better, you want the company to be able to respond to changes in the industry faster. Do you think that disney would be better off with nelson peltz or without . Its a very good question. I would say its healthy to have a skeptical third party pushing for change. The challenge of all big established companies, especially big media operating entities is complacency because historically theyve been abilable to operate high operation businesses with minimal levels of obstruction. Many of the Senior Management are old and that also applies to nelson peltz. So the Senior Management, theyre not of the young native. Nelson peltz is obviously an excellent operator and understands the business fundamentals, but does he really understand where consumers are going . And the data is clear and consistent. Consumers want streaming on demand experiences. Thats what theyre looking for. Youll never be able to go back to the old model of pay tv networks, of having the box office as a big revenue generator for disney. Those days are over. So its about adapting to what the new reality is. So from that perspective, bob iger is the best place to understand what that landscape looks like. Hes led on this journey of the traditional setup. Theyve also made some very smart acquisitions with ip, a bank of marvel studios, lucasfilms, et cetera. So if you had to ask me bluntly, i would say bob iger is the right person, but the pressure from nelson peltz is a healthy way to keep bob iger focused on what the key objectives are for disney Going Forward. And iger has extended his contract until 2026 and i think is noncommittal about what happen as after that. Thats the biggest question. As we know, investors hate uncertainty. What would you like to see, and what would shareholders like to see with rahrd to succession planning . Succession planning is always a complex business, particularly challenging in the context of bob iger. And, of course, weve been through this process once before with chapak. It didnt work out. He was less familiar with where the future Growth Opportunities are for disney. Now the investors will be looking for someone who can straddle both worlds. So while streaming is incredibly important for your the future of disney, the experience side of the business is one of the key revenue generate erps for the business. It pays approximately a third of the operating costs of the business, and its growing at a reasonable rate. It grew 7 in the previous quarter year on year. Operating margins were up 8 year on year. So someone who understands both the digital challenges and opportunities Going Forward and understands the importance of tieing that in with experiences to create a hybrid combination of in real Life Experiences versus digital would be the ideal candidate. Plus an understanding of changing and evolving International Dynamics around entertainment. Because the challenge that disney has at the moment is what to do with disneys hotstar. They lost their epl rights and thats a huge issue. How do they make disneys hotstar relevant for the asian markets because thats where the growth is going to be. We need the magic back as in the magic kingdom. Thank you so much for joining us today. U. S. Futures, lets bring up the board and show what it could like. It looks like it could be a slightly lackluster stand for the trading day after a very gaveay yesterday. Thats it for the show. Im mandy drury. Worldwide exchange is up next. Not all Caitlin Clarks are the same. Caitlin clark. City planner. Just like not all internet providers are the same. Dont settle. You want fast. Get fast. You want reliable. Get reliable. You want powerful. Get powerful. Get real deal speed, reliability and power with xfinity. She shoots from here . Thats kinda my thing. Its 5 00 a. M. At cnbc global headquarters. Im dominic chu in for Frank Holland and here is your five 5. The dow and s p coming off backtoback losses. Right now futures facing more pressure. Investors with fresh speak and a pair of officials around the Central Banks feds path policy ahead. Were following developments in taiwan after the island is hit by the strongest earthquake in 25 years. Were live in the re