Transcripts For CNBC Squawk 20240703 : comparemela.com

Transcripts For CNBC Squawk 20240703

The idea of a soft landing. Sticking to his guns. First up, on the markets, the s p has gone negative. We started out higher, but lost the gains pretty early here in the session. Down 0. 1 on the nasdaq. The s p holding up a little bit better. Groups like industrials and Education Services are all up, materials too, but its utilities, health care, financials, Consumer Discretionary and staples that are weighing in. Its kind of a mixed picture on the nasdaq, too. Because costco and amd are helping on one side, but apple is weak again and amazon is under pressure as well. So is microsoft and tesla. Got a little dicey here in the last few moments. A few days away from a new month of trading. The question on a lot of investors mind is whether the low we saw this month will carry deeper into the fall. Our next guest says feds higher for longer messaging will remain difficult for the markets to digest, but he does see reason for optimism on the horizon. Joining us this morning, yungyu ma. People are starting to assemble a list of reasons to get more constructive, buybacks, positive earnings, seasonality. But how much can really be done until the rate picture moves out of the way . Well, i think there are a number of headwinds that are still very meaningful. The Interest Rates, the fed messaging is very difficult still, but hawkish messaging and the potential for another rate increase, and longerterm rates are rising. All of those together present a substantial headwind, at a time when you have student loan payments being resumed. Some consumer strength starting to show up in terms of delinquencies and debt. So i think itsgoing to take a while to work through. And those reasons to be bullish, they may be present, but theyre not going to sort of carry the day for a while, so i think its going to be a longer process. What about the argument that you have laid a more fertile groundwork for earnings to impress, given the draw downs so far . Well, i think i think thats okay. But on the flip side, theres a risk of profit margin compression. I think, yes, weve had a pullback in the indices. Theres not as much optimism in terms of the outlook Going Forward, but i think the risk is also the profit margin ahead. So its a doublesided coin here. And i think it just takes some time to play out. There are some stabilizing factors. I think that the labor market will continue to be relatively stable Going Forward, and that will at least stabilize Consumer Spending and eventually corporations will kick back into gear with corporate spending, as well. But the process is going to be a few quarters. Its not going to be a few months. Should you stick with energy . Because im looking at the monthtodate returns, 4 higher. The only sector thats higher for the quarter, up 13 , bestperforming sector. Is that a good place to be . Or do you have to think that oil prices will continue to rise here, even in the face of economic headwinds . Well, energy is a good diversifier here. We like it as a diversifying in portfolios. We wouldnt go all in on energy here. But to the extent that we have rising oil prices, geopolitical tensions, supply constraints, we think its a nice spot in the portfolio that adds stability. And we also like infrastructure and industrials here. We think theyre poised to continue to perform well. Theres a lot of spending going in u. S. Infrastructure. We think theres a very long runway ahead of that. Those are the two areas that we think can still remain stable, and even along this process of a soft landing playing out longer. Even though those are both very cyclical areas, and i know youre worried about the consumer. They are cyclical, but, you know, spending is thats where the money is flowing. The old adage follow the money flies here. We have a tremendous amount of money going, you have infrastructure, we have rising oil prices, and theres going to be continued spending in that area, as well. Just because of or continued profits, just because of the price at the pump. So i think those areas will continue to be stable Going Forward here. You mentioned student loans, and we obviously saw a Conference Board yesterday, fourmonth low, a lot of concerns about delinquencies and the credit card, but you still have jobless claims at 201. Doesnt have to break before you can call a verdict on the consumer Going Forward . Thats right. We think the consumer will remain stable. When you get those initial unemployment claims in the low 200,000s, that speaks to strength underlying the labor market. And at the end of the day, if people have jobs and they feel stable in their jobs, theyll continue to spend. They might pull back a little bit, but it doesnt create an environment where theres a likelihood of downward moment in spending overall. So we think theres stability, but there are strains starting to show. And until some of those strains get worked through, which we think will take a few quarters, its hard to see a catalyst for a sharp upturn either in the economy or in the market. The other interesting twist in this particular cycle is health care, which classic defensive sector, although these weight loss drugs have thrown models all out of whack about what kind of Health Services we may potentially need generationally in the years ahead. I wonder how you think about that. Yeah, thats always been an interesting sector, because theres also a risk of regulation and at least a discussion about that in an election year. But it is a sector where theres innovation. And thats very important, right . Especially if you throw biotech in there as well, theres a lot of innovation going on there. So, you know, its idiosyncratic sector. Its difficult to pigeonhole when you should overweight health care, but theres something that theres a lot of interesting innovations and developments going on. Interesting and not at all what you might expect given the historic playbook. Yungyu, well get into q4 one way or another. Appreciate the help. Good to see you. Thanks, carl. One potential roadblock to the markets in october is the potential for a government shutdown. It doesnt appear theres been much progress made. Emily wilkins has the latest from washington. Emily, is there a path at this point to avoid a shutdown . You know, it is not looking good at this point. And mostly because the house and the senate are on completely different pages right now. House speaker Kevin Mccarthy just told republicans this morning that there was no way that he was going to bring this Bipartisan Senate bill to the house for a vote. And you saw that bill in the senate go through with stronger bipartisan support yesterday. They just started the process on it. And you just saw Senate Minority leader mitch mcconnell, the Top Republican in the senate, come out and endorse that bill as a path forward. So very, very different there. That snenate bill was just introduced yet. It would fund the government until november 17th. It would also include 4. 5 billion for ukraine. And again, its got a lot of that bipartisan support. One thing, though, it doesnt have, is anything on border security. And that is where the disagreement between house and Senate Republicans come in. House republicans really want border security. Theyre very much pushing for it. They think its a political issue that they can really drive home. Listen to what House Majority leader Steve Scalise told reporters this morning. He said that if the house can pass a stopgap bill with that border security, hes confident that the senate and the white house can follow. Listen to what he said. Somebodys got to take reins and say, were going to address the problems facing this country and House Republicans are doing it. And i really do think if we put the skins on the wall, if we pass the bills this week to do that, the senate will follow and the white house will have to follow, because the country is there. Reporter now, scalise said if they pass a bill, that is a big if. At this point, you have a handful of republicans and handful is all that they need, who say that they will not vote to advance any shortterm measure. Now, of course, the house could probably put the Senate Bipartisan bill on the floor and get republicans and democrats to work together. That doesnt seem to be an option that leadership is considering at this point. And with less than four days until a shutdown, its still not clear how the government gets funded after saturday night. One thing that emily, some of the wall street notes are tu talking about is the possibility for double shutdown. So we get a shutdown and it goes for a few weeks and they come up with some sort of deal, they could expire before year end. Are people in washington talking about another potential shutdown . Or were not there yet . I mean, this is the way that things often tend to go in washington. They continue to set deadlines for themselves to put pressure on themselves to do things. And then those deadlines usually keep getting mutuaoved, getting moved, getting moved. You usually see everyone here right before Christmas Eve frantically trying to finish their work. So its absolutely a possibility that that november 17th deadline, they might have to do a very quick turn yararound on. There are a lot of questions left about how the government actually gets funded in the longterm for the next fiscal year. I think they call it kicking the can down the road. Emily, thank you. Still to come this morning, mortgage demand is shrinking as Interest Rates hit the highest levels in nearly 23 years. Well shot with zillow founder Spencer Rascoff here at post nine and talk about his outlook for the industry. And a number of names downgraded today. Well break down the calls when squawk on the street comes right back. Dow is down 58, s p goes positive again. Well be right back. Opportunity is using data to create a competitive advantage. Its raising capital to help companies change the world. Opportunity is making the dream of Home Ownership a reality. And driving the world forward to a Greener Energy future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. At ice, we connect people to opportunity. A every day, businessesone wh everywhere are asking on. Is it possible . With comcast business. It is. Is it possible to help keep our Online Platform safe from cyberthreats . Absolutely. Can we provide health care virtually anywhere . We can help with that. Is it possible to use predictive monitoring to address operations issues . We can help with that, too. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Microsoft in focus, obviously. Scheduled to report results tonight after the close, more than tripling the s ps return so far this year. China will be a big focus after the country moved to ban some micron products back in may, and this will be the First Quarter we get to read that impact. The ceo will join us tomorrow morning in the 9 00 a. M. Hour. Well talk about inventories in the market and china and see where were going in the semicycle, which has been so confounding. Absolutely. Zpl ai, too. Home sellers having a hard time. The Commerce Department reporting a nearly 9 drop in new home sales month over month in august. It comes as Mortgage Rates have ballooned, reaching rates we havent seen since july of 2001. Our next guest says to sit tight and rates arent going away in some time. Joining us now, 75 and sunny cofounder and general party and former zillow ceo and cofounder, Spencer Rascoff. Welcome back to. Thank you. Good to be here. Good to have you. Now with an investor hat, where do you do with some of these Housing Stocks where you have this bad combo of high Mortgage Rates and low inventory and weaker sales . Zpr h rousing is really at a standstill. Things are locked up. On the supply side, 90 of mortgage owners have a rate of 5 or low. So on the supply side, people cant list their home. And on the demand side, were at a 40year low on offaffordabili. Many people couldnt even afford to rebuy their own home. Well do 4 million transactions this year, thats down from a peak of 6 million a couple of years ago. We have to wait it out. We have to wait until maybe the fed gives us a gift, at some point in the future, or more likely, this pentup demand of transactions that are kind of waiting for lower Mortgage Rates, they will eventually have to come through, because life events do happen. And eventually, well also start to seem mortgage resets from five, seven, and tenyear a. R. M. S a couple of years ago and theyll reset to higher Mortgage Rates and at that point, theyll be forced to sell. Those are things that will eventually break the logjam, but for now were kind of stuck. What about the inventory problem . How does that get fixed . It sort of gets fixed through home builders, but they cant bring on inventory fast enough. Its been a great market for home builders. Home builders build a new home and it flies off the shelf and Home Building stocks are on a tear, but were missing millions of homes from the Housing Stock because new construction didnt happen very much after the financial crisis. I mean, we went from about a million new homes being built a yearly to 200 or 300,000 for a couple of years after the 08 crisis. So there are millions of homes missing from the Housing Stock and were feeling the pain from that 15 years later. Is the a. R. M. Component material or is that still a novelty to some degree . Its definitely material, but most of these mortgages were created only two to four years ago, so it will be a little while. If you had a 3 mortgage that originated four years ago and three years from resets, all of a sudden your house will be more expensive and youll probably have to sell and that will create more sell. Theres not enough supply and demand cant afford it so everything is stuck. I want to talk about 75 and sunny, because youre now a Venture Capital sist and an incubator, and i think have your own chat bot, right . 75 and sunny incubates startups. My new company is called hey, libby, like lincoln bio. A lot of journalists use it. It allows someone whos active on social media to create their own ai. On your twitter, for example, you can go create your own heylibby. Ai and that creates your chat bot which appears in your twitter, and people converse with you. What it does for Small Businesses is it helps qualify leads. So if youre an interior designer that puts your photos out on instagram or youre a math tutor and put out videos on youtube, tutoring math lessons, you get leads through social media. And what heylibbyai does is helps qualify those leads and put them into a contact database. Its trying to solve a problem for Small Businesses, that gets leads through social media and need it to qualify those leads. But we see lots of different use cases, including journalists. It sort of cure rates your own Follower Base or potential customer base. It does. You must get dms all the time through twitter. People pitching you story ideas, wanting to talk to you. If you create your own heylibby. Ai, people can train it, and youll get a text and an email summarizing the conversation and it will go into your contact database and it allow you to quantify that lead. I feel like youre a really good candidate. May be. I wonder where you think the number of monetizable use cases really inflects up. Weve heard it will take longer than you think, and others say, copilot goes live november 1. What hey libby is trying to do is solve this problem for Small Business. And i think almost every Small Business has a social media presence, and theyre getting leads through social media. I think its pretty applicable to a lot of Small Business owners. A lot of the startups im seeing in ai, though, are features, not companies. And theyre going to be incorporated into the llms, into the Large Language Models themselves. So, for example, just the other day, we saw now that chatgpt can interpret photos, we saw making its way around the internet, examples of how to fix a bicycle by using photos of your bike. So you take a picture, you upload it to chatgpt and it tells you how to fix the bike through a conversation. Ive been pitched dozens of handymanai startups which are now going to be disrupted by the llms themselves. A lot of these startups that were funded over the last 6 to 12 months will have a hard time finding Product Market fit, because their features will be built into the search engines, google being as the llms become more robust. Out of the spac game. Youre a big proponent of spac. Im a spac sponsor and i can do a little mospostmortem on it you want. The spac product is broken right now. Its broken because the government wanted to break it. That took away one of the key benefits of the spac merger. Its unfortunate because ive been involved in a half a Education Services<\/a> are all up, materials too, but its utilities, health care, financials, Consumer Discretionary<\/a> and staples that are weighing in. Its kind of a mixed picture on the nasdaq, too. Because costco and amd are helping on one side, but apple is weak again and amazon is under pressure as well. So is microsoft and tesla. Got a little dicey here in the last few moments. A few days away from a new month of trading. The question on a lot of investors mind is whether the low we saw this month will carry deeper into the fall. Our next guest says feds higher for longer messaging will remain difficult for the markets to digest, but he does see reason for optimism on the horizon. Joining us this morning, yungyu ma. People are starting to assemble a list of reasons to get more constructive, buybacks, positive earnings, seasonality. But how much can really be done until the rate picture moves out of the way . Well, i think there are a number of headwinds that are still very meaningful. The Interest Rates<\/a>, the fed messaging is very difficult still, but hawkish messaging and the potential for another rate increase, and longerterm rates are rising. All of those together present a substantial headwind, at a time when you have student loan payments being resumed. Some consumer strength starting to show up in terms of delinquencies and debt. So i think itsgoing to take a while to work through. And those reasons to be bullish, they may be present, but theyre not going to sort of carry the day for a while, so i think its going to be a longer process. What about the argument that you have laid a more fertile groundwork for earnings to impress, given the draw downs so far . Well, i think i think thats okay. But on the flip side, theres a risk of profit margin compression. I think, yes, weve had a pullback in the indices. Theres not as much optimism in terms of the outlook Going Forward<\/a>, but i think the risk is also the profit margin ahead. So its a doublesided coin here. And i think it just takes some time to play out. There are some stabilizing factors. I think that the labor market will continue to be relatively stable Going Forward<\/a>, and that will at least stabilize Consumer Spending<\/a> and eventually corporations will kick back into gear with corporate spending, as well. But the process is going to be a few quarters. Its not going to be a few months. Should you stick with energy . Because im looking at the monthtodate returns, 4 higher. The only sector thats higher for the quarter, up 13 , bestperforming sector. Is that a good place to be . Or do you have to think that oil prices will continue to rise here, even in the face of economic headwinds . Well, energy is a good diversifier here. We like it as a diversifying in portfolios. We wouldnt go all in on energy here. But to the extent that we have rising oil prices, geopolitical tensions, supply constraints, we think its a nice spot in the portfolio that adds stability. And we also like infrastructure and industrials here. We think theyre poised to continue to perform well. Theres a lot of spending going in u. S. Infrastructure. We think theres a very long runway ahead of that. Those are the two areas that we think can still remain stable, and even along this process of a soft landing playing out longer. Even though those are both very cyclical areas, and i know youre worried about the consumer. They are cyclical, but, you know, spending is thats where the money is flowing. The old adage follow the money flies here. We have a tremendous amount of money going, you have infrastructure, we have rising oil prices, and theres going to be continued spending in that area, as well. Just because of or continued profits, just because of the price at the pump. So i think those areas will continue to be stable Going Forward<\/a> here. You mentioned student loans, and we obviously saw a Conference Board<\/a> yesterday, fourmonth low, a lot of concerns about delinquencies and the credit card, but you still have jobless claims at 201. Doesnt have to break before you can call a verdict on the consumer Going Forward<\/a> . Thats right. We think the consumer will remain stable. When you get those initial unemployment claims in the low 200,000s, that speaks to strength underlying the labor market. And at the end of the day, if people have jobs and they feel stable in their jobs, theyll continue to spend. They might pull back a little bit, but it doesnt create an environment where theres a likelihood of downward moment in spending overall. So we think theres stability, but there are strains starting to show. And until some of those strains get worked through, which we think will take a few quarters, its hard to see a catalyst for a sharp upturn either in the economy or in the market. The other interesting twist in this particular cycle is health care, which classic defensive sector, although these weight loss drugs have thrown models all out of whack about what kind of Health Services<\/a> we may potentially need generationally in the years ahead. I wonder how you think about that. Yeah, thats always been an interesting sector, because theres also a risk of regulation and at least a discussion about that in an election year. But it is a sector where theres innovation. And thats very important, right . Especially if you throw biotech in there as well, theres a lot of innovation going on there. So, you know, its idiosyncratic sector. Its difficult to pigeonhole when you should overweight health care, but theres something that theres a lot of interesting innovations and developments going on. Interesting and not at all what you might expect given the historic playbook. Yungyu, well get into q4 one way or another. Appreciate the help. Good to see you. Thanks, carl. One potential roadblock to the markets in october is the potential for a government shutdown. It doesnt appear theres been much progress made. Emily wilkins has the latest from washington. Emily, is there a path at this point to avoid a shutdown . You know, it is not looking good at this point. And mostly because the house and the senate are on completely different pages right now. House speaker Kevin Mccarthy<\/a> just told republicans this morning that there was no way that he was going to bring this Bipartisan Senate<\/a> bill to the house for a vote. And you saw that bill in the senate go through with stronger bipartisan support yesterday. They just started the process on it. And you just saw Senate Minority<\/a> leader mitch mcconnell, the Top Republican<\/a> in the senate, come out and endorse that bill as a path forward. So very, very different there. That snenate bill was just introduced yet. It would fund the government until november 17th. It would also include 4. 5 billion for ukraine. And again, its got a lot of that bipartisan support. One thing, though, it doesnt have, is anything on border security. And that is where the disagreement between house and Senate Republicans<\/a> come in. House republicans really want border security. Theyre very much pushing for it. They think its a political issue that they can really drive home. Listen to what House Majority<\/a> leader Steve Scalise<\/a> told reporters this morning. He said that if the house can pass a stopgap bill with that border security, hes confident that the senate and the white house can follow. Listen to what he said. Somebodys got to take reins and say, were going to address the problems facing this country and House Republicans<\/a> are doing it. And i really do think if we put the skins on the wall, if we pass the bills this week to do that, the senate will follow and the white house will have to follow, because the country is there. Reporter now, scalise said if they pass a bill, that is a big if. At this point, you have a handful of republicans and handful is all that they need, who say that they will not vote to advance any shortterm measure. Now, of course, the house could probably put the Senate Bipartisan<\/a> bill on the floor and get republicans and democrats to work together. That doesnt seem to be an option that leadership is considering at this point. And with less than four days until a shutdown, its still not clear how the government gets funded after saturday night. One thing that emily, some of the wall street notes are tu talking about is the possibility for double shutdown. So we get a shutdown and it goes for a few weeks and they come up with some sort of deal, they could expire before year end. Are people in washington talking about another potential shutdown . Or were not there yet . I mean, this is the way that things often tend to go in washington. They continue to set deadlines for themselves to put pressure on themselves to do things. And then those deadlines usually keep getting mutuaoved, getting moved, getting moved. You usually see everyone here right before Christmas Eve<\/a> frantically trying to finish their work. So its absolutely a possibility that that november 17th deadline, they might have to do a very quick turn yararound on. There are a lot of questions left about how the government actually gets funded in the longterm for the next fiscal year. I think they call it kicking the can down the road. Emily, thank you. Still to come this morning, mortgage demand is shrinking as Interest Rates<\/a> hit the highest levels in nearly 23 years. Well shot with zillow founder Spencer Rascoff<\/a> here at post nine and talk about his outlook for the industry. And a number of names downgraded today. Well break down the calls when squawk on the street comes right back. Dow is down 58, s p goes positive again. Well be right back. Opportunity is using data to create a competitive advantage. Its raising capital to help companies change the world. Opportunity is making the dream of Home Ownership<\/a> a reality. And driving the world forward to a Greener Energy<\/a> future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. At ice, we connect people to opportunity. A every day, businessesone wh everywhere are asking on. Is it possible . With comcast business. It is. Is it possible to help keep our Online Platform<\/a> safe from cyberthreats . Absolutely. Can we provide health care virtually anywhere . We can help with that. Is it possible to use predictive monitoring to address operations issues . We can help with that, too. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Microsoft in focus, obviously. Scheduled to report results tonight after the close, more than tripling the s ps return so far this year. China will be a big focus after the country moved to ban some micron products back in may, and this will be the First Quarter<\/a> we get to read that impact. The ceo will join us tomorrow morning in the 9 00 a. M. Hour. Well talk about inventories in the market and china and see where were going in the semicycle, which has been so confounding. Absolutely. Zpl ai, too. Home sellers having a hard time. The Commerce Department<\/a> reporting a nearly 9 drop in new home sales month over month in august. It comes as Mortgage Rates<\/a> have ballooned, reaching rates we havent seen since july of 2001. Our next guest says to sit tight and rates arent going away in some time. Joining us now, 75 and sunny cofounder and general party and former zillow ceo and cofounder, Spencer Rascoff<\/a>. Welcome back to. Thank you. Good to be here. Good to have you. Now with an investor hat, where do you do with some of these Housing Stock<\/a>s where you have this bad combo of high Mortgage Rates<\/a> and low inventory and weaker sales . Zpr h rousing is really at a standstill. Things are locked up. On the supply side, 90 of mortgage owners have a rate of 5 or low. So on the supply side, people cant list their home. And on the demand side, were at a 40year low on offaffordabili. Many people couldnt even afford to rebuy their own home. Well do 4 million transactions this year, thats down from a peak of 6 million a couple of years ago. We have to wait it out. We have to wait until maybe the fed gives us a gift, at some point in the future, or more likely, this pentup demand of transactions that are kind of waiting for lower Mortgage Rates<\/a>, they will eventually have to come through, because life events do happen. And eventually, well also start to seem mortgage resets from five, seven, and tenyear a. R. M. S a couple of years ago and theyll reset to higher Mortgage Rates<\/a> and at that point, theyll be forced to sell. Those are things that will eventually break the logjam, but for now were kind of stuck. What about the inventory problem . How does that get fixed . It sort of gets fixed through home builders, but they cant bring on inventory fast enough. Its been a great market for home builders. Home builders build a new home and it flies off the shelf and Home Building<\/a> stocks are on a tear, but were missing millions of homes from the Housing Stock<\/a> because new construction didnt happen very much after the financial crisis. I mean, we went from about a million new homes being built a yearly to 200 or 300,000 for a couple of years after the 08 crisis. So there are millions of homes missing from the Housing Stock<\/a> and were feeling the pain from that 15 years later. Is the a. R. M. Component material or is that still a novelty to some degree . Its definitely material, but most of these mortgages were created only two to four years ago, so it will be a little while. If you had a 3 mortgage that originated four years ago and three years from resets, all of a sudden your house will be more expensive and youll probably have to sell and that will create more sell. Theres not enough supply and demand cant afford it so everything is stuck. I want to talk about 75 and sunny, because youre now a Venture Capital<\/a> sist and an incubator, and i think have your own chat bot, right . 75 and sunny incubates startups. My new company is called hey, libby, like lincoln bio. A lot of journalists use it. It allows someone whos active on social media to create their own ai. On your twitter, for example, you can go create your own heylibby. Ai and that creates your chat bot which appears in your twitter, and people converse with you. What it does for Small Businesses<\/a> is it helps qualify leads. So if youre an interior designer that puts your photos out on instagram or youre a math tutor and put out videos on youtube, tutoring math lessons, you get leads through social media. And what heylibbyai does is helps qualify those leads and put them into a contact database. Its trying to solve a problem for Small Businesses<\/a>, that gets leads through social media and need it to qualify those leads. But we see lots of different use cases, including journalists. It sort of cure rates your own Follower Base<\/a> or potential customer base. It does. You must get dms all the time through twitter. People pitching you story ideas, wanting to talk to you. If you create your own heylibby. Ai, people can train it, and youll get a text and an email summarizing the conversation and it will go into your contact database and it allow you to quantify that lead. I feel like youre a really good candidate. May be. I wonder where you think the number of monetizable use cases really inflects up. Weve heard it will take longer than you think, and others say, copilot goes live november 1. What hey libby is trying to do is solve this problem for Small Business<\/a>. And i think almost every Small Business<\/a> has a social media presence, and theyre getting leads through social media. I think its pretty applicable to a lot of Small Business<\/a> owners. A lot of the startups im seeing in ai, though, are features, not companies. And theyre going to be incorporated into the llms, into the Large Language Models<\/a> themselves. So, for example, just the other day, we saw now that chatgpt can interpret photos, we saw making its way around the internet, examples of how to fix a bicycle by using photos of your bike. So you take a picture, you upload it to chatgpt and it tells you how to fix the bike through a conversation. Ive been pitched dozens of handymanai startups which are now going to be disrupted by the llms themselves. A lot of these startups that were funded over the last 6 to 12 months will have a hard time finding Product Market<\/a> fit, because their features will be built into the search engines, google being as the llms become more robust. Out of the spac game. Youre a big proponent of spac. Im a spac sponsor and i can do a little mospostmortem on it you want. The spac product is broken right now. Its broken because the government wanted to break it. That took away one of the key benefits of the spac merger. Its unfortunate because ive been involved in a half a Different Companies<\/a> going public the regular way. And i was optimistic that the spac ipo process could fix some of those problems. Unfortunately, the way the product sits today, its irrevocably broken. And there are a lot of good companies, including, i think, the two that merged with my two spacs, that are kind of out there and not trading well, because theyre having a problem doing this. Its a broken product, i dont see it coming back. But hopefully some of the lessons of what it was trying to fix will come into the regular ipo process. We found a couple of good ipos that found price stabilization and orderly ipos over the last week or so. Well have you back on. Thats a whole segment on how to fix that. Spencer rascoff, former zillow ceo. Meantime with the s p on pace for the worst monthly performance since december of last year, investors are turning to assets outside of equities and bonds to generate returns. Our leslie picker has more on where that money is being put to work. Hey, leslie. Carl, take a look at private credit returns and youll see why. The strategy somehow managed to eke out gains every year for the last 13 years. The herd, of course, tends to follow returns. So investors are likely to put another 200 billion plus in commitments into private credit for the fourth year in a row. The debt is typically floating rate, so some are concerned that the longer Interest Rates<\/a> stay evaluated, the more stress theyll put on the Balance Sheet<\/a> of borrowers. So i sat down with the ceo of one of the largest managers of private credit. Hes not too concerned about a major default cycle. I would expect default rates to tick up, but not too dangerously high levels. The irony of this moment in time, which is unlike many cycles weve seen before, the stresses are being created by liquidity and high rates, not deteriorating cash flow. But the debt service continues to deteriorate as rates go up and stay higher for longer. Yes, if rates stay high for long, you know, through the end of 2024, that debt service will force Companies Back<\/a> to the table. I asked himif hes seen any deterioration in lending standards, given all of these new entrants in the space, and he said, not really, while noting he believes the asset class will prove to be quite resilient. Arougheti will be part of a private panel at tomorrows delivering alpha conference, discussing key trends in one of the hottest pockets of finance these days. Guys . Looking forward to it. That private credit boom. Everyones excited about it. Leslie, thank you. Zpstill to come, turmoil at schwab. Shares down 35 this year amid this delayed succession and an integration of Td Ameritrade<\/a>. Well get details on that in just a few moments. It has, a tough summer for the s p. Down about 3 ifn q3. But energy is definitely leading in terms of individual tickers and sectors. Weve talked about this, the performance so far this year. Not exactly what we thought of at the beginning, as 2023 began. Who knew that oil would spike back up to 90, after it had come back down to 70. European market also knowing for the morning, for the month, and the quarter. Continuing to worry about inflation and high Interest Rates<\/a>. The higherforlonger theme weighing on german consumer sentiment. Market Research Firm<\/a> gfk lowering consensus by 50 basis points this morning. All of that pessimism overseas is boosting the dollar even further and prompting ubs to upgrade its view of the u. S. Dollar. The bank moving the currency to neutral from leastpreferred, as it has appreciated more than 6 versus a year. Kind of late for this game, for this matter. Since midjuly. And sees memory risks skewed to the upside from here. And a big part of it is that rate differential and the economic differential were seeing between europe and the u. S. The u. S. Is holding up a lot better right now. And that higher dollar having an outsized negative impact on companies with Significant International<\/a> exposure. Chips are pretty well represented on that list. Qualcomm, intel, along with some more consumerfacing names like apple and mondelez. Weve already seen warnings from the likes of disney, bracing for a decline in international visits, thanks to the strong dollar. While nike did warn 4x rates will continue to impact results, we saw this with u. P. S. Last quarter, as well. The currency swings, as the catalyst behind the companys 41 million fall in Global Package<\/a> and supply chain revenue. And were going to get a fresh look, maybe, at least through the eyes of nike this week. Nike reports tomorrow after the bell. Very exposed with more than half the business overseas. Usually, investors give companies a pass for blaming currencies, because its just unavoidable. And no company can figure out how to hedge currencies correctly. So they usually have a pass, unless theres a big upside or downside surprise to the overall numbers that werent in the models. But overall, yeah, this is not what companies expected either. They came into this year thinking the worst was over. Last year was about the strong dollar. And now, here we are again. On the plus side, we can go to europe for better prices again. True were two hours into trading. Lets go posttopost with bob pisani for a look at whats moving. We were flat, but we had an attempt to buy the market at the opening and its basically failed. Theres not enough buying interest right now to really sustain a rally. Theres very few things that are working. But heres one. Energy, chevrons got great month. Were at the highest level since april. Its up 6 . Thats a big help to, of course, the Dow Jones Industrial<\/a> average. Exxon, very quietly, has been terrific this month. Exxon is up close to 7 . 118. We are very close to a 52week high on exxon. These are the only two stocks really the only Sector Energy<\/a> thats actually been working. The newhigh list is getting a little bigger. Its littered with a lot of consumer names, a lot of Real Estate Investment<\/a> trusts, and a lot of utilities, as well here. So heres one of them. Dominion energy. Theres a whole bunch of them that are essentially sitting right near 52week lows, not far from 52week lows. Eversource, nexterra, a whole bunch of them are sitting at 52week lows there in that space. Let me just show you camden property, the reits, i keep telling you about all of these reits at 52week lows. Crown castle, ive been telling you, a big Wireless Infrastructure<\/a> company. Just a whole bunch of those reits sitting at 52week lows. Heres something thats very interesting. Not many banks there. Citigroup, today, 40. 50, but no, this has a 52week low on an intraday basis. Its not a closing low, but thats a 52week low. Thats the first big bank ive seen thats hit a new low on an intraday basis. That could be the start of a particular trend. Finally, what else do i want to show you here . Oh, remember what weve been talking about, ipos. K kenvue got everyone excited, this johnson and johnson spinoff priced in may at 22. There it is, 20. 27. It broke the allow of its issuance propriice a while ago. And insta cart is also below its initial cart. That was a few days ago. That was 30. Its now below that. You want to keep an eye on this kind of thing. This has got everyone excited. This wasnt just a tech company, this was a company that was a wellknown Consumer Products<\/a> company, Stable Revenue<\/a> situation, now at a new low. Guys, back to you. Bob, well talk in a little bit. Bob pisani this morning. Coming up after the break, well get to a trio of retail downgrades, including macys, talk about rising gas prices putting pressure on the Consumer Sector<\/a>. Plus, we are watching target. Management saying it will close nine stores due to violence and theft. We should note that target has nearly 2,000 stores in the united states. Shares are up a little bit today, but they have been lower of late. Lowest since may of 2020. Well be right back. I got the cabin for three days. Its gonna be sweet what . Im 12 hours short. Have a fun weekend. Unnecessary action hero unnecessary. Was that necessary . No. Neither is a blown weekend. With paycom, employees do their own payroll so you can fix problems before they become problems. Hmm get paycom and make the unnecessary, unnecessary. See you down the line. Your record label is taking off. But so is your sound engineer. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire watching costco today, reporting an earnings beat despite sales remaining a bit soft. Groceries led helped much better than bigticket items that consumers held back on, as weve been hearing from some of the other retailers. For more on the quarter, tune into mad money, because the companys ceo will be joining jim at 6 00 p. M. Eastern. Good comments about inflation and Christmas Eve<\/a> and holidays coming up. And on gas prices. The ceo asked if thats having a big impact on Consumer Spending<\/a>, and he said not a whole heck of a lot. And discounting driving some units, which is interesting, too. Well see if that turns. Lets get a news update in the meantime with our silvana t henao. Consulting firm mckenzie agreed to pay millions of dollars to settle lawsuits. The settlements with hundreds of local School Districts<\/a> still needs approval from a judge. They accuse mckenzie of helping opioid manufacturers design deceptive marketing materials that boosted sales of the dangerous drugs. The money is on top of 641 million mckinsey already paid to resolve claims by states attorney generals general. Hyundai and kia are recalling more than 3. 4 million cars and suvs because theirs engines could catch fire. The recalls cover models between 2010 and 2019. Theres an issue about leak that could start a fire when the vehicles are parked or being driven. The owners of the affected models are being asked to park outdoors and away from their homes and other buildings until repairs are done. And astronaut frank rubio returned to earth this morning after being in space just over a year. During his extended stay at the iss, rubio broke the record for the longest u. S. Space flight. He was there for 371 days. Wow. Amazing. We think we have it hard at work here. Silvana, thank. Lets get to retail and what seems to be more red flags in the space. Gordon has ket noting that september foot traffic falling substantially thanks to mounting headwinds for the consumer like rising gas prices, warm weather, the resumption of student loan prices. That leading them to downgrade a few names. The oanalyst behind that call joins us this morning. Good morning. Weve listened to the consumers with the consumer over and over again. It sounds like its already beginning to manifest itself a bit in traffic. Yeah, i think traffic is pretty much the most important barometer for a retailer right now. And whats interesting, during the summer, we saw a real nice improvement from june and into july and even into august. We were surprised to see when we updated our data yesterday, weve seen a big decline in september, close to 5 on a fouryear geospac basis. Weve given back all of those gains, which leaves us a little bit more concerned going into the holiday season. Whats the multiple on m. Is it under 4 . How cheap could this get . Its cheap, but a big part of their business is from real estate and the earnings have certainly been choppy. Its a cheap stock. We dont think its got a lot of upside in the nearterm. I think theyve done a really good job running those business inventories. Really well controlled. Its the best house on a bad lock in the Department Store<\/a> group, i dont think its got a lot of upside, especially if discretionary is weak in the coming months. What is . I dont know if you just heard, we were talking about costco and how the cfo said not a big change as a result of the higher gas prices. What is the sensitivity. Im looking right now at oil prices. Theyre up another 3. 6 this morning. Wti is about to hit 94 a barrel. So theyre moving. Theres a lot of variables about that influence to consumers. Gas prices tend to be somewhat correlated, not as correlated as you would think, but certainly more correlated at the lower income level. We downgraded burrell this morning. And that was part of the call there. You can see that pressure for the dollar stores, the offprice names. In a costco, theyre really more of the exception than the norm. A really great print last night. They report monthly comps every four yweeks. They do a really tremendous job on value and on price. We mentioned your call on burlington earlier this morning. Well watch that and tractor supply, too, as we talk more and more about the holiday in the coming weeks. Good to see you, thanks. Good seeing you. Thank you. Programming note, tomorrow, dont miss the highlights from my conversation with ray dalio. Hes getting a Lifetime Achievement<\/a> award tonight. Ill talk to him. Hell weigh in on the feds next move, the outlook for the economy, share some sound with you tomorrow right here at 11 00 a. M. Coming up after the break, new reporting about turmoil at zw scabwi t sckow35hw, thheto dn this year. Stay with us. Wer e trades awarg trading app makes trading easier. With its customizable options chain, easytouse tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. E trade from morgan stanley. Shopify announcing a new partnership today to expand the ecosystem for its sellers, heightening the ecommerce competition for amazon. Thats the focus of todays tech check with deirdre bosa. Busy week in the space, d. It certainly is. And shopify is expanding its ecosystem, just a day after the ftc took aim at amazon for running an illegal monopoly. This underscores the idea that amazon is facing more competition than it ever has from upstarts like shopify, but also from established, wellcapitalized retail players like walmart. Shopify is the latest deal. This is an investment in wholesale platform, fair. Neither company disclosed the size or stake or value of the deal, but it will see fair adopt shopify technology for its customers, further entrenching shopify as this alternative to amazon. It follows a string of partnerships between shopify and startups that work with sellers. The list includes newly public klaviyo, affirm, stripe, flexport, some of the darlings of Silicon Valley<\/a>. They get access to shopifys more than 2 million merchants, shopify gets more services on its platform, gets to expand and also gets equity, which pays off in the case of klaviyo. Now, i sat down with faire ceo max rhode and asked him why partner with shopify and not amazon. The most popular filter on our website is not sold on amazon. And really, the retailers that we serve, the reason that theyre so successful is because theyve had theyve figured out how to compete in a world where they dont have the lowest prices, they dont have the largest assortments, they compete really on the uniqueness of their inventory and on the fact that when you walk into one of those shops, youll see something that youve never seen before and youll have an experience that is memorable and will make you come back. And were really in the business of supporting our retailers to create those experiences for you as a consumer. When lina khan wrote her nowfamous love review article on amazons antitrust paradox, shopify was worth about 10 billion. It so serves mostly small and mediumsized businesses, helped them on their backend ecommerce needs. But today shopify has a market cap of more than 65 billion, and it is creating an ecosystem of its own, that includes funding to merchants, payments, marketing and ad tools. Still, they could actually use shopify as evidence of how hard it is to compete against amazon. Amazon has built up a shopify rival. Its called buy with prime, and amazon has successfully built out a massive logistics network, where shopify spent years building out its own network, only to offload it this year to flexport. So its had its fair share of chal challenges. On squawk this morning, lina khan argued that amazon uses its rivals. But this deal between shopify and faire, many of the other deals that shopify has signed over the years, that complicates that argument somewhat. And thats what the regulators and the judge on this case will have to sort through. Deirdre, what is faire. Whats a btob retail marketplace . And how big is it . Its basically its basically a wholesaler, right . So merchants shop at it to get sort of a bunch of products that they can then sell to consumers. Its more of a btob, whereas shopify is btoc, amazon is btoc, goes straight to the consumer. It was valued at nearly 12 billion. They didnt disclose what the valuation was. But we know, and ive talked about it endlessly about how startups havent really taken their medicine and seen those down routes to see them in line with the public market. Faire could be a case of that. But again, you know, i point to that example. Shopify was worth 10 billion, it was a Public Company<\/a> a few years ago, it was then about 100 billion during the pandemic, 65 billion. This is a company that has been able to grow, scale, get a lot of consumers on its platform, even though amazon is dominant in the space. Its up again today on the deal, presumably and up huge for the year. Thank you, deirdre. Deirdre bosa. Economist David Rosenberg<\/a> coming up after the break. Why he says recession hasnt been aidvoed, its just been delayed. Dont go away. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. It has been a tough year at charles schwab, shares down 35 since january. Underperforming the broader bank index. Kate rooney is here with some new reporting on internal troubles at the brokerage firm. Kate, after getting a lot of attention for external issues. Thats right, carl. So five current and former schwab employees tell me the firm is trapped in what they describe as a cycle of uncertainty. Unclear succession plans and problems with integrating Td Ameritrade<\/a> is what they say is overwhelming some employees and contributing to low morale. Two of those sources tell me schwab ceo Walt Bettinger<\/a> was set to step down this year, and then Silicon Valley<\/a> bank collapsed delaying those plans. He was seen internally as the heir apparent. The delay is causing anxiety and uncertainty for executives across the board. The 35 drop in that stock year to date does add to the problems. Schwab announced layoffs two months ago. Some worry more might be coming, causing angst for Td Ameritrade<\/a> executives who joined schwab through the acquisition in 2019. Before the regional banking crisis, schwab was feeling the heat of customers reacting to higher rates. Clients have been moving cash from lower paying Bank Accounts<\/a> into higher yielding options, putting pressure on earnings. Employees tell me the crisis distracted from integrating td accounts. The 26 billion deal was announced four years ago, and now td accounts are just being moved over in waves. The latest was over labor day when 1. 3 trillion assets were moved. This comes with the usual cultural clashes, guys. Employees describe the td team as used to moving faster. Theyre primarily based in chicago, and theyre focused more on active trading while schwabs culture is more like a bank moving slower with more bureaucracy. Schwab called the td integration a tremendous success telling me, quote, we are pleased with the progress of the Td Ameritrade<\/a> conversion and grateful for the focus of our employees on our clients and their commitment to ensuring a smooth transition. Our approach has been deliberate. They say thoughtful and strategic and has proceeded carefully since the acquisition announcement. No comment, though, on the ceo transition. Analysts at William Blair<\/a> pointing out schwab trades at 13. 5 times forward earnings compared to 20 times the historical average. It says now is a good time to play the potential rebound as the risk reward dynamic has shifted. Back to you guys. Kate, Walt Bettinger<\/a> has joined us a few times during the crisis and then also in some of the latest earnings reports, and he actually last earnings was saying the business has turned around, theyre seeing cash flow, lower profitability for them because of the higher rates has started to reverse and there were green shoots. The timing is pretty interesting. The cash sorting conversation was a big part of this, and that actually ticked up in august. As rates have gone higher, that has contributed to clients again looking for some of the higher yielding products. That hit the stock about a week ago, there was news that cash shorting had ticked up again. Analysts im talking to say there is optimism on the risk reward side, but they are still nervous about rates and what that means for schwab Going Forward<\/a>. Its still a showme story. You can see that reflected in the stock. A lot of uncertainty around the name. Thank you, kate. Kate rooney. Lets close out with the fed and the impact of its most recent rate hike. Our next guest maintains his bearish outlook, forecasting a recession ahead with more shocks on the way stemming from rates, oil prices, the breakout on the dollar. David rosenberg, i wanted to talk to you. I was curious if you were maintaining the bearish recession call as it has just not materialized. It hasnt materialized, dot, dot, dot, yet. Im confident to hear from toronto. If it doesnt snow in december then well just call off winter. There are lags that we all know, long and variable policy lags, and the reality is that when you look historically from the time of the first rate hike by the fed to the time the recession starts, its typically two years. So i think that maybe the people that were jumping the gun calling for recession this year were just basically a little too impatient t. Reminds me of the recession calls in 2007. That was a very long, soft landing. But it the recession started december of 07. So i think we just have to basically acknowledge that this year the economy did better than expected for two reasons, sarah. We had the lingering impact of the stimulus and a Consumer Credit<\/a> card boom. With fiscal tail winds moving to head winds, how they will be responding. The Fourth Quarter<\/a> will be a litmus call, absolutely. Im not sure if the fiscal test reverses. I know what you mean on the consumer side and the excess savings coming down, but were also ramping up on Infrastructure Spending<\/a> and the chips act and inflation reduction act, and some folks one of the prevailing views here is all of that money is going to come in next year and offset a potential recession. No, i dont think that will happen. I think when youre taking a look at the fiscal deficit, the gp ratio, the big stimulus is this year. The incremental impact on growth was this year, not next year. I dont know why you would be comparing industrial subsidies in the business, which is a relatively small gdp, to the impact of the Consumer Sector<\/a>, which is 70 of gdp. You cant compare the two. The key is not how the chips act or all these other industrial subsidies will influence the business cycle. The key will be what happens to the consumer now that these fiscal training wheels are off. We just dont know, sara, how is the consumer going to respond not just to the impact of energy prices. I dont look at this as something permanent, but the lack impact of the rate hikes, i think, are being underestimated by the fed, by most of the people you interview from wall street. And i think that the shift from fiscal tail winds to head winds for the consumer, which is 70 of gdp, sara, what youre focusing on in the business sector, is a small share of gdp. Its a small contribution. I think the overwhelming impact is the pullback well see in the Consumer Sector<\/a> over the course of the next several months. That said, david, were still having conversations about real hourly wages inflecting positive, disposable income on the rise. The share of disposable income that goes to gasoline is really kind of moderate. We had rich bernstein on yesterday talking about the reacceleration in macro data. I wonder what kind of debate you and he would be having if you were back in your old chairs . The acceleration, we had Housing Starts<\/a> for the month of august down 11 . We got new home sales, yesterday down 9 . Existing home sales were down and inflation just in terms of retail sales were down. Actually, in august real disposable income was down. So im not getting a sign of economic reacceleration unless your only metric is the atlanta feds now cast model. Everything elseis showing the economy is actually trudging along somewhere close to a 2 annual rate, but dont forget weve been breathing fumes of the fiscal stimulus all year long. Thats coming to an end right now. So i dont know where the reacceleration is coming from unless you believe Interest Rates<\/a> dont matter, that policy lags dont the jobs market has remained tight and solid and wages have grown. Well, sara, hold on. You have to take a look at the changes that occur at the margin. Is the Unemployment Rate<\/a> going down or going up . Its gone from 3. 5 to 3. 8. Unemployment is going up. Youre getting the Participation Rate<\/a> is going up. More people are coming into the labor force, sara. Why is that . They have to get off the couch and start looking for a job now that the fiscal stimulus has run its course. So people are going to be competing for the jobs out there. No, im sorry. I know we have the headline wage settlement in some of the union sector, but wage trends will be decelerating in the next year not accelerating because well get more slack in the labor market. And so i think thats going to bump against the other thing i would look at, look where the savings rate is. 3. 5 . How is that possible . Before covid it was 8 to 9 . People have spent most of those savings. So i think its going to be a struggle for the Consumer Sector<\/a>. I wouldnt rely on some strong labor market Going Forward<\/a>. All right, david. We have to leave it there. Were out of time on the show. You make a compelling case. David rosenberg, thank you very much. Good to talk to you. And there is its a good debate on wall street, hard and soft landing. As for todays take, degrading. Ten years close to cycle highs. Vix close to 19. Dollar the highest since november. Well watch it this afternoon into micron. To the judge. Carl, thanks very much. Welcome to the halftime report. Im scott wapner. Front and center this hour, the road ahead for stocks, which are now on pace for their worst month of the year. The Investment Committee<\/a> mapping up their strategies for the month ahead. Joining me for the hour today everybody here at post 9, joe terranova, jenny harrington, jason snipe, and jim lebenthal. Lets check the markets, see what were doing today. Were red across the board as you can see. The dow down 136, the s p a quarter of a percent, the nasdaq is weaker. Theres the tenyear note yield, 4. 58. So, joe, were headed for the worst month of the year, as i said, bu","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia800506.us.archive.org\/2\/items\/CNBC_20230927_150000_Squawk_on_the_Street\/CNBC_20230927_150000_Squawk_on_the_Street.thumbs\/CNBC_20230927_150000_Squawk_on_the_Street_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240703T12:35:10+00:00"}

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