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tv   Squawk Alley  CNBC  September 27, 2019 11:00am-12:00pm EDT

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good morning it is 9:00 a.m. at micron headquarters in boise idaho, 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪ good friday morning. welcome to "squawk alley." i am carly fiori quintanilla wi fortt. dow is up on decent headlines on usmca. we will begin with ipos shifting negative with nearly half the ipos trading below the offered
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price. peloton fell sharply in the first day of trade, down another 5% endeavor pulled the plug on its offer late last night. a headline in the times asks is the ipo party over bob greifeld, chairman of virtue financial, and author of the book "market mover." lessons from a decade of change. great to have you back happy friday >> great to be here. >> we would love you to help us draw a thread through some of the ipo pricing we've seen this week, the offers that have been pulled what should investors be keeping in mind right now? >> well first, i would say we have to recognize the ipo market generated over $50 billion of capital this year. i remember back in 2003 when i started with nasdaq, we had zero ipos and zero dollars raised let's keep it all in context
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i also want to make clear you have a number of ipos that have come public which are not nyow making money peloton yesterday, their market cap is $10 billion that's about ten times revenue to me, when i hear and read about what's wrong with the ipo market, i think the goalpost moved very high to float a company at ten times revenue, that's money losing. that's pretty successful outing. >> is this partly what happens when you shove a year and a half of ipos into a year? i mean, this is a very active year of ipos, besides the 50 billion you mentioned. could it be that demand just isn't there as well as valuation issues >> i think that's a great point. for the market, for investors to absorb $50 billion not in 12 months but 9 or 10 into it is a
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statement. you have something there there's a certain amount of supply for the market at one time, certainly we've had a rush to the door this year, i think that impacted some of the ipos, but not all of them. >> all right if everybody is trying to get to the dance at once, how long of a period of absorption do you need before you can get other large deals to market and not disrupt everything >> well, i think what you have to look at is the quality of the offerings. anytime you have difficulty in the ipo market, we see there's a flight to quality. clearly if you have a company that's generating profit that is growing, i think that window is wide open. but to the extent you have a story to tell like we and others where you're not making money, in certain situations losses have increased, that's going to be difficult for some period of time here. >> you think you actually need paper profit to come to market or is the promise of one still good enough?
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>> i think the path to profitability has to be fairly clear right now. that's a line that you can see, not just a story you have to believe in you look at the we ipo, you saw that regardless of what they said and the story they weaved, they were still in a real estate business with its amount of peril to it, and a somewhat limited path to profitability. >> what does this do to private markets? silicon valley, we have seen this the past decade let's say as a trend toward companies staying private longer because there's money there for them, even employees able to cash out during some of the transactions in private markets, are they getting the price wrong now in a way that's going to effect how that works for the next ten years? >> the first thing you have to
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really focus on is private market valuations are fundamentally different than public market valuations, and a private market, most of the transactions are bilateral and they're also not dealing with common stock, they're dealing with some kind of structured note i remember many years ago i heard the term and it stuck with me, said if you name the price you want, i'll give you the terms i want, or if you name the terms, i'll give you the price when you see the price, the headline price in private market companies, you have to recognize there are terms associated with that that has economic value so the public market, you're dealing with common stock with many investors discovering a price without terms except buying, selling, and clear the transaction in two days. there are two different worlds there. i would also say the private market since it is primarily bilateral has a greater
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opportunity to get that price wrong. clearly public markets have mispriced assets, that's with many people voting when you have two people voting to come up with private market valuation, that obviously has a greater percent probability of having something wrong with that price. >> yeah. speaking of valuations being wrong i guess, quote, unquote, i wonder where's your head on softbank and its potential to become a liability for the broader market the way in which their fund has been modeled, and the bets they've made that this year if you look at uber and sprint even and wework have gone wrong. >> i would say this. one, they're dealing on a large scale, dealing with assets that are in some ways priced not to perfection but perfection plus that's going to be tough to pull over in the long term. we is a great example, you had a
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$47 billion valuation put on it by softbank. now, we had a great story, when i went to visit their offices, it struck me that it was going back again to 2003, 2005 and the dot com era where you used to have great user interface for company websites, we went to we, had a great user experience as a person that came to work every day, i liked the feeling in that situation. but at the end of the day, it was a real estate play we had one problem, they had public company comps that did the same thing when you stripped away the great user interface, whether a website or real estate, you have to look at what's the core business this is a core leasing real estate business which has a certain value associated with it, and that value had been firmly established by the public markets for a long period of time, and that was a very hard thing for them to argue with
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other investments that softbank had might not have such a clear comp. associated with it, but they'll have to deal with fundamental economic reality at some point in time. >> bob, taking another bite out of the call he is getting at where softbank is concerned, they pumped so much money into so many companies. when companies have just a ton of money, they do things differently than companies that are trying to be super efficient. peloton is not a softbank company, but i look at them, for example. they spent $320 million i believe in the past fiscal year, ended midyear, and lost $200 million. i wonder, for a company that has such great retention, low churn, high customer sat, spending all that money on marketing, that's not what you would have seen maybe 15 years ago, post dot com bust companies were on diets. they were being efficient in a different sort of way. does that have some impact on
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what we're seeing in ipos today? >> yeah, i think that peloton story is a great story one, i am a user of the product, i love the product, and it is a question of how large can the marketplace be i look at peloton, i think of apple, right they're the apple of that space. and one of the concerns i have with peloton is the android competitor will show up which will be quite capable at a different price point. how does that survive that the second factor you have with peloton is we have all been around awhile, seen a lot of gym equipment turned into a place you can hang your clothes. that's an issue you have with peloton over time. certainly the churn rate now is pretty good, but you don't know what it will be over time. clearly they think they have a large market opportunity you don't spend that money on marketing unless you believe it is a large addressable market. what i liked about the peloton business model is they chose to
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scale back that spend, which is their option to do that, if they recognize the ability for customer customers to buy a bike and then for subscription is limited. then they could scale it back and have a good recurring revenue model. getting $40 a month from a dedicated core group of users, you can have that be a very successful company is that company worth more than $10 billion over time, that's not my business to understand that, but i know 10 billion is a large amount of money for an exercise company >> clearly they have their sights set on overall gym member ship ships, but the point is really good, bob. good clarity on important names. good to see you. have a good weekend. >> good to see you you too, enjoy it. >> that android to peloton's apple has already arrived, called echelon
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at costco for half the price. shares of micron getting crushed. the ceo told us earlier is next, and the first test of the tv creator deal ever, why netflix thinks the debut of "the politician" will turn the u.s. bssu decline around. back after a quick break man: can i find an investment firm that has a truly long-term view? it begins by being privately owned.
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shares of micron are lower following disappointing guidance from the chip maker. the ceo joined us exclusively to talk about the current quarter and the bounce back he predicts is coming for semis in early 2020 >> the industry has some excess supply that's impacting the pricing that's effecting our fq 1 guidance it is important to note demand growth is now higher than supply growth the industry is coming down rapidly. basically, the stage is set for improving fundamentals in the industry as i look at the 2020, yes, in the first calendar quarter of 2020, there will be some seasonality, but long term health of the industry, i'm optimistic about industry fundamentals in 2020 >> supply dynamics again in focus. we have been here before with these guys >> oh, yeah.
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late last year, beginning of this year, sanjay was saying back half of 2019 is going to look a lot better. we got some trade stuff, the semiconductor industry has these supply issues always you always have to pay attention as to what's happening right now, and a grain of salt to the sun coming out tomorrow. netflix, meanwhile, hoping its $300 million investment in content creator ryan murphy begins paying off tonight with the show "the politician" launching on the service today is it enough to turn around decline in u.s. subscribers? julia boorstin has more from l.a. >> jon, netflix is hoping it will help it compete with upcoming rivals. when the series "the politician" lauchs today, we'll see the first product. the reviews are not great. it has a 56% positive rating
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from over 30 critics on rotten tomatoes, but netflix lured murphy from fox where he created hits, including "glee," american horror story it is the priceyest deal for a tv creator in tv history they also have deals with other big producers. game of throats, david benioff and dbwise, and a deal with shonda rhimes. behind "scandal" and ""grey's anatomy."" barkle barclays could be too much content. writing we recognize it is only
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getting more competitive, we continue to believe new services will not be a major threat to netflix subscriber numbers, given netflix quality and quantity of content. when netflix reports earnings next month, we'll see what the ceo says about traction for this show, and whether it is helping reverse that decline in u.s. subscribers, jon, that you mentioned we saw last quarter. carl, jon. >> i have to ask you about more big news your way in hollywood marvel is back in for another spiderman movie with sony. is this disney blinking? he said he didn't have time to work on another spiderman movie but time for "star wars. what's going on? >> to give the news. back in august sony which has rights to spiderman and disney who has rights to the rest of the marvel universe said they were splitting sony said it would make future spiderman movies on its own, not
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having them produced by disney/marvel who did a good job with those so far. just now, sony and disney announce the third film in the spiderman series will be produced by marvel and kevin figey, the big name at disney marvel here's the thing, jon. i think it is sony that blinked. spiderman is a more valuable property if also included in all of the other vendors and marvel movies, the characters are woven in there i think it may be sony realizing that they would be better off having disney and marvel help them out there, rather than going it alone >> that means you think they're sharing profits on this. that was the big issue, right? they didn't want to give disney all the extra money, disney said if we work on it, we want a bigger take. do you think they're getting that take? >> exactly i don't know the details of the deal i haven't, this just crossed,
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haven't been able to make calls to sources yet, but i will say there's probably some sort of compromise seems like it is better for everyone if marvel is involved in the production of these movies to be able to have a spiderman basically promoted by all of the other vendor movies would be great thing for sony, and arguably, sony should want expertise with superhero movies from marvel, which kevin brings. you could argue it would be in sony's best interest to share the profits with marvel. >> one more example of tug of war over creative ip in the media. incredible this month. after the break, remember the grass roots campaign designed to take down amazon it is funded by the likes of walmart and oracle pulitzer prize winning reporter hihat story joins us in a minute he way, she's the next mozart. as usual we were behind schedule.
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so-called grass roots campaign was launched, intentions of cutting down amazon. except backers behind it weren't exactly so small funded by amazon rivals like walmart, oracle, simon property group. those are major businesses, each with a bone to pick with amazon. they each have things like a government cloud contract, with foot traffic in the mall, direct head to head e-commerce competition to think about now the pulitzer prize winning reporter behind the story joins us james gramaldi >> thanks for having me. >> great to have you fascinating how you dug through, figured out who was behind this. how common do you think this is and what does it say about the state of play in competition and all of the things amazon has its fingers in >> i think it happens a lot where you find corporations that are backing think tanks and
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other groups that may share their agenda, may divert their agenda a little bit that direction. what was somewhat unusual about this is this group is only what's called free and fair markets initiative was only aimed at amazon. just about everything they had done with a small exception had been critical of amazon, critical of government subsidies, critical of hq2, alleged privacy lapses, damage to small businesses, what have you, as well as anti-trust concerns had a list of people listed as members. when i dug into that, i found a lot of phony baloney and realized i needed to dig deeper to figure out who was really behind it. >> we long suspected that walmart may have pressured suppliers to choose maybe not amazon web services, you can see what's in it for oracle. what about comment from either
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of the two giants? >> oracle acknowledged that they had funded the organization, of course as you pointed out, they were big competitors for them, for this $10 billion cloud contract from the pentagon oracle is out of the running, amazon still in it oracle is trying to slow it down walmart said they never funded this group free and fair markets initiative my reporting shows it was funded through an intermediary that supported it and simon properties simply didn't respond they're the largest mall operator in the country. the whole operation was run by phil singer, former aide to senator chuck schumer and hillary clinton's 2008 presidential campaign. he founded an organization, a firm called marathon strategies. walmart is a client of marathon strategies, at least until the time the story was reported, and oracle also had helped fund the
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organization so they really tried to distance themselves from it, somewhat deny it, but our reporting showed they were bank rolling the operation. >> james, arming the opposition is a time-honored tradition in washington a few months ago, we had a story about facebook working with definers there are a number of rivals in silicon valley and outside it who have a bone to pick with google as we see big tech generally under fire, do you think it is likely, are you looking into the possibility that there are just numerous forces at play, even within silicon valley, trying to take down their competition? >> well, yeah. just to be fair to their concerns, i think there probably are legitimate anti-trust concerns involving these companies. that's why the trump administration at the ftc and department of justice are conducting a very real investigation here
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i think if you're going to create a group, you want to do one with a group with real members, not someone that's been dead six months or defunct tea party movement in rural pennsylvania, or citing the name of a union, service employees international union in los angeles which denied they had anything to do with it, then the group marathon strategies provided a document that the union said was forged and fake, not a real document. so i think it is probably legitimate for these companies to raise competition concerns. the real issue is how are you going to do it, are you doing it in an ethical way, be up front about it, or create a group, pretend you're grass roots and submit bids throughout the country while pretending to be something you aren't. >> clearly the knives are out and you documented it well thank you. >> thanks for inviting me. >> meantime, european markets are set to close in a moment as the dow is up.
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>> stocks in europe closing higher by a half percent these moves are primarily driven by what's happening in the currency market. take a look at the euro, hitting a fresh two year low against the u.s. dollar, dragged down by further indications of loose monetary policy from the ecb, and a slew of recent weak economic data, including the latest read on eurozone business confidence falling sharply in september to the lowest level since 2015, and meantime a big move in the uk currency, the pound pushing the ftse 100 to a two-month high, up 1%. uk currency is dropping sharply, set to post the worst week, since they hinted brexit uncertainty could cause policy makers to cut rates. marks the first time they explicitly said brexit extension could prompt a rate cut and sharp reversal from june when
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saunders argued rates could rise sooner than expect weaker pound helps global miners, bhp one of the best performers in the stock market today. back to you. >> let's get to sue herera for a news update. good morning, jon and good morning, everybody here's what's happening. house speaker nancy pelosi appearing on msnbc morning joe earlier where she discussed the impeachment inquiry against president trump. >> this is about national security of our country, and the president of the united states being disloyal to his oath of office, jeopardizing our national security, and jeopardizing the integrity of our elections. about 100 vacated homes and two schools are closed in response to a natural gas leak in the same massachusetts city rocked last year by gas
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explosions that damaged 50 some homes. authorities shut off the gas and power in lawrence to minimize dangers. the cause of the leak is yet to be determined. thousands of students took to the streets of rome to combat climate change this is part of a global strike organized by various unions and green activist groups. young people from all over the world are holding demonstrations today, calling for world leaders to tackle climate change you're up to date. that's the news update this hour carl, i will send it back downtown to you. >> sue, thank you very much. the journal reporting apple plans to bring its original movies to theeaters, keeping the there for weeks before releasing them on a streaming service. we'll talk about what that strategy means in a moment there's apple. 220. why wework is halting new lease agreements and clearing space at the top bradley tusk weighs in on wework when wco bk.e meac dow up 106
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turning back to ipos with half of this year's debuts below the original offer price, the question the street is asking is if the ipo party is over always good to get your opinion on things. welcome back are you concerned about action this week? >> been thinking about this a lot as every venture capitalist has.
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there's fundamental misalignment between private and public markets. trying to figure out why this has happened, so much money has been raised by growth equity funds, private equity funds doing venture, vc funds, softbank, $100 million, doing it again. but they have to deply it. justify that 2% management fee as a result, they put more money to work at higher and higher valuations it meets needs of companies doing the rounds, but once it hits the market, it is available to retail investors, they're saying there's no way wework is a $47 billion company. uber is not a $72 billion company. there's mispricing is there a price for wework, absolutely might be 4 billion or 5 billion. price group that sets the right price, absolutely, maybe it is 30, not 70 billion until two things become aligned, this will keep happening. >> hard to imagine public valuations catch up to the up side i assume you think private -- >> they're not going to go down. right now, we invested, it is a
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scary time at some moment, valuations fall off. right now, they're still high. you don't want to overpay and hit a recession in 12 months and everything, alignment happens on top of you you also don't want to miss out on deals part of it is things are priced too high the other thing, we as venture capitalists are not putting the right governance >> is that secondary or is that a big deal >> part of it is valued too high part of it is adam neumann's behavior freaked everyone out, rightfully so. you saw this at uber with travis cal eni can. you can't not invest in the slightly crazy genius, they're the ones that tend to do great things you can't say the ipo will switch them out, hasn't worked for uber, people don't believe the company can innovate what it comes down to, even at
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the expense and risk of losing the deal, we tech investors have to say no, you can't have total control over the board and through the stock classes and everything else and do a better job managing. >> is there something also in the way companies are being run when they're swimming in all this capital. >> yeah. >> from investors. you look at the way wework was growing, talking about scaling it back now, the way companies are spending and spending on marketing, it is hard when you read the s 1 to understand how the business model works, how much of that top line growth is driven by marketing, how much is because they've got a great product. >> absolutely. we look at when we try to figure out, we come in five, six rounds before it goes public. we see how they get immediate boost, you buy a lot of facebook ads, you can probably sell product, does that sustain through multiple rounds. they're spending on marketing. spent $60 million on a private
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jet for adam neumann and his team, that's crazy uber announced they were cancelling the policy of having helium balloons for the birthday, cost the company $100,000 >> here's the broader concern among many in ten years, you want to have created googles, amazons, microsofts of tomorrow if it is not uber lyft, not wework and not the other things that haven't done well, bitcoin or whatever, what's it going to be >> you hear amazon, microsoft, are there four companies with startups that will likely be that yes. but we're eager to anoint, we accept the notion of as long as they keep growing, they'll figure the rest out, become profitable at some point if a founder can't say here is how we become profitable in x
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amount of time, trusting them to figure it out is not a good business strategy. >> if you're airbnb, said 2020 is my year, we are going public, you see what's happened in the last couple weeks, throughout this year, what do you have to do when you are crafting the s-1, thinking about governance to have the best debut possible. >> i think in this case, airbnb has an advantage he is seen as a reasonable ceo they don't have to become the amazon of whatever they have to do what they're doing on a bigger scale, execute on it. of all of the big tech unicorns out there, they may be the best positioned still, he has to show in his own words and s-1, they get why the markets are skeptical of other companies, here's where they're different, and also the answer may be they come in at a lower price than expected.
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one thing we're seeing, tech stocks doing ipo are a company three, four years, couple billion valuation, and still people believe in the up side and the story. if you have been private 10, 12 years, there is no honeymoon when you go public. >> i don't want to surprise you too much, a headline on the tape, white house weighing limits on u.s. portfolio flows into china with that, lost a triple digit gain, s&p is in the red as well. there goes the trade optimism for the day. >> for sure. >> do you sense negotiating becoming more extreme? >> that. i think the negotiations always are reflective where other things are going on. now you have impeachment, the president will want another narrative going. >> the thinking was he was become more dovish. >> you would think so. you would think if you assume impeachment, it is going to hurt him at some level, if he was reelected, it is because the
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economy is strong, you would try to resolve things with china either a, i think he tends to live for the immediate headline, whatever it is, and doesn't matter what the implications are six months or six years, it is how do i get the guys on "squawk alley" talking about me in a way the others aren't. >> this will do it this is weighing limited portfolio flows into china, which had been called for by the likes of steve bannon. >> but everyone in the building now, i feel like everyone i know has a hard time wrapping their heads around this. >> change the way you invest early stage? >> it made us look a little more sober. what it also changed, because valuations are so high, we're just doing cna out of the previous fund did series b for us at this point, numbers are too high, and opportunity to see it become 10x i don't think is there i think the valuations are
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inflated when they have an exit, they're not where you thought they would be i talk about returning the fund on every investment we make, in th this market, i can only do that. >> all of the major indexes are negative dow about flat, but had been 'lita t gh wel be back. be working harder.ways that's why your cash automatically goes into a money market fund when you open a new account. and fidelity's rate is higher than e*trade's, td ameritrade's, even 9 times more than schwab's. plus only fidelity has zero account fees and zero minimums for retail brokerage and retirement accounts. just another reminder of the value you'll only find at fidelity. open an account today. when i needed to create a better visitor experience. improve our workflow. attract new customers. that's when fastsigns recommended fleet graphics.
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what is the blowup in the ipo market meaning for where we go from here. the investment committee, whether it is a sign of overall trouble for the market and the faang stock they say is the best large cap pick now and is it time to buy wells fargo and other big banks? we discuss that and more when we see you in 15. carl, see you then. >> scott, thanks. don't get it wet, keep your pocket free. a lot of things to keep the sam song smart phone from breaking we'll test it onset in a minute. y minute so more screaming, streaming, posting fans... can experience 5g all at once. this is happening in 13 stadiums all across the country. now if verizon 5g can do this for the nfl... imagine what it can do for you.
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well, it is here the highly anticipated smart phone from samsung is here it has the heftiest price tag, $2,000 it is getting largely positive reviews, though concerns over the durability remain. let's look for ourselves joining us with the phones on set, joanna stern, and ed beg. light touch, don't get it wet. can i feed it after midnight >> only every other day. >> so it is expensive, the first attempt from samsung, they pulled back in april because it was breaking do you get the sense this is durable or failing that, are they going to give me a
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replacement if something goes wrong? it's got a good warranty >> seems like they've done a lot to protect the phone, made a lot of improvements to protect the phone. the crazy thing is, when you open the box, get the new phone, not only do you get a cover with warnings when you power on the device, you get a lot of warnings about what to do my opinion is that it might be easier to work up fireworks or some other thing with tons of warnings than this phone >> what was your reaction? >> the same thing. the first thing you see is that care instruction sheet, then as joanna said, you turn it on, there it is again. the first word of my first look was gentle that's how you have to treat this you have to treat it with kid gloves i understand what samsung went through last spring when the first versions came out, there were all sorts of problems, early reviews, peeled off a
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protective layer that wasn't supposed to be taken off so you understand their nervousness. when you spend $2,000, last thing you want to think about is can i actually use this thing. >> is this innovation? apple is getting criticism for years. apple is not innovating any more, amazon has all of the innovation here's a $2,000 phone that flips open, flips closed, but i have to handle it with tweezers is that more innovative than we saw from apple a couple weeks ago? >> i think there's some innovation here. the idea devices converge, whether it is laptops, tablets, phones and tablets, phones and laptops, i think it will happen. there will be interesting innovation around that apple is clearly not there yet when you use this device, you're not thinking about that innovation, you think of how gentle to be i have been scared, i don't want to say the word on air to use this thing, but on top of that, you wonder when you would use it in this mode or that mode,
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there's a lot of thinking of i have to open this to get to this screen, the more i use it, the more i realize this is why we ended up with big screen phones. >> is this like 3d tv, look back at this in two years and laugh? laugh? >> i think we're going to see foldable technology phones from other companies. we have already seen some. something, of course, is the first so-called mainstream offering, if you can call a $2,000 phone mainstream. you know that apple -- pun intended. apple no doubt at least has it in the lab, i'm sure. i don't know that it's going to go the way of 3 d tv. it looks really nice. it's impressive.
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can't wear it in the ring or on a day where there might be particles in the air. >> maybe there is a market for that. the question is how big. people are impressed. >> they're impressed, but then they ask you if they are going to buy it? and i wonder if you think about something samsung's innovation as bringing you features that no one really was looking for, although others would say apple gives you things the consumer didn't know they wanted. >> i think about it on that end, there are so many times i reviewed a samsung phone and said who is going to do this with it? then there are times where i said no one is going to buy this giant phone. that's what i said about the note many years ago.
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i couldn't have been anymore wrong. samsung set the pace for apple and so many other phone manufacturers. >> we remember the days even looking at computers where the ads would be literally a feature list. even with apple against android phones, sometimes you see a longer list on the android side. how many features are being used by folks >> at the very least it might provide a brand halo. i defend my decision to buy a something phone. thanks for being with us. bringing the cool stuff. >> after the break, we will try to answer pot or wine? jane wells has that as we continue to watch some of these. >> why not have both as pot and wine are growing side by side, some farmers say they don't mix and huge money at stake when we come back. liberty mutual customizes your car insurance,
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a couple big onliheadlines. >> there was a story out of bloomberg saying that the u.s. is weighing limits on u.s.
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portfolio flows into china, a little vague on what this could mean. could be considering delisting. did see a clear influence on companies traded here, absolutely moved to the down side. there is an etf that holds a big basket of chinese stocks that you saw. dropped on that. there has been discussions about maybe limiting government pension funds, investment in anything that invests in china. other than that, i don't know how you can do this or stop anybody from private funds. passive indexing has been growing for years and years. we have been talking about it. it involves indexing and pegging your investments. people who want access to the global markets naturally would be having more waiting in china as the china stock market has
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grown. it has become more influential. other indexes have been adding more mainland china stocks to their global indexes. i don't know how you would exactly stop that from happening. this is obviously part of a greater effort to somehow put pressure on china to come to terms on a trade agreement. >> we'll see if it gets walked back here. s&p has gone green again. dow has gotten back half. >> nasdaq is still in the red. hard to say. it looks like the market is taking this very seriously given that nasdaq is trading off just a half a percent. i know you'll keep an eye on the headlines as will we. in the meantime, what's more important to california and its growers? pot or wine? that is the question that counties like santa barbara are asking as farmers fight over how best to use their land. jane wells joins us with more on why pot and wine don't always
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mix. >> reporter: this is one of the famous grape vines. santa barbara county has made so much money on wine. supervisors think they can make more money. some of the hundreds of permits being handed out. why is santa barbara going all in on pot like no other county here well, money. the crop could be worth 180 million a year versus 120 million for grapes. that's creating friction for the owners. farmers of traditional crops whether wine groups up here or avocadoes could have legal issues if pesticide spray drips on cannabis because under the new law, cannabis cannot have pesticide residue. >> nobody wants to hurt anybody's business. the cannabis growers have done whatever they possibly can.
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their hands are tied. >> it's going to be a giant legal battle. i guess in the end the lawyers will win. we're going to fight it until the end. >> what kind of community does it want to be? a tourist agricultural beach community or known as the cannabis capital of the world. >> we know from our market data that we have a large overlap of customer base between the cannabis industry and the wine industry. if we can learn to get along and market together, i think we can both thrive much better than if we're at each other's throats. pr. >> some farmers are trying to work together to see if they can make it happen but says cannabis industry is not only fighting 80 years of stigma, but also continuing to fight a successful black market here. >> that's a really fascinating
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look at it. we're going to watch the markets. china not doing well on this headline. the white house has at least considered moving to keep chinese companies from listing. >> and semis also under pressure with that micron headline. >> let's see what the afternoon session brings and get to the half. >> i'm scott wapner. the ipo implosion, what it says about the state of the markets and your money. it is 12 noon. this is the halftime report. >> peloton plunges. endeavor pulls and almost half the stocks that have gone public this year are below their offer price. is the ipo bubble bursting amazon shares taking a big hit this week. why you may want to buy now. it's our call of the day. wells fargo shares soaring. the bank getting a new ceo. the traders take their positions on the financials. the investme


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