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tv   Power Lunch  CNBC  February 8, 2021 2:00pm-3:00pm EST

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hello, everybody welcome to "power lunch. morgan brennan will join us in a moment the s&p 500 now up 4% in the past week, as congress works to pass that $1.9 trillion stimulus package. plus elon musk goes full crypto, the company revealing it has bought $1.5 billion bitcoin. we'll talk to michael sailer who
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first encouraged the move. and the vaccine roll-out continues, and new variants could be the biggest roadblock for a render to normal "power lunch" starts right now welcome to "power lunch. i'm morgan brennan record highs for the dow, s&p 500, nasdaq and the russell 2000 it's the small-cap stocks with the biggest gains, up 1.8% another big winner -- energy, as it continues to climb to levels not seen since january 2020. by far and away, the best performing s&p sector so far this year. as you mentioned, tesla's big bitcoin sending the cryptocurrency surging to a
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record t. and tesla up 22% this year, which seems paltry after the year we saw for 2020 for that name. >> just 22%? a slacker. my goodness. phil lebeau, you have spent years following the outside the box moves the elon musk, and many of them have paid off will this one? >> that remains to be seen, tyler. this is all a question for elon musk and tesla, but for any ceo. what do you do with your cash and securities on hand how do you manage them how do you invest them from elon musk's perspective and the tesla board, they believe that cryptocurrency, at least a portion of it, makes sense they're investing up to $1.5 billion. they also said today in the 10-k, they may invest in gold. that's why you see all of the
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digital occurrencies moving higher today because you could see other currencies being held by tesla in the future. elon musk has tweeted about cryptocurrencyies five times in the last -- tesla is also say it may accept bitcoin for payments of vehicles in the future. that's an option they are now saying is a possibility now that they are dealing with cryptocurrencies, back to you, guys. >> i guess it is a little curious why they would choose to manage their cash in bitcoin, but not yet accept it as a value worthy of paying for a car let me ask you this -- when you
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think about short-term securities, they tend to value stability of price above everything here. >> yeah. >> boy, bitcoin has not been stable of price. >> that's why a lot of people looked at this move and said, wait a second, is this the smartest use of basically 7% or 8%, at least in you're going by how much they had at the end 20620. given the volatility of bitcoin, that 8% could go up appreciably in the next month. so they're going to have to be nimble in terms of handling this bitcoin position, but $1.5 billion is how much it said it has bought. >> as for today. it's 12% higher, so that's better you can do on a money market fund. phil, thanks. we're going to continue with
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this threat. the company shared a playbook last week for matching it -- microstrategy michael sayler had a twitter exchange with musk, urging him to make this exact move joining us now to discuss is microstrategy ceo michael sayler. >> did you share your playbook >> there are business rules how public company officers are allowed to communicate to the public so i'm constrained in what i can say, but -- >> that's not a no. >> you know what we want on twitter. you know what you've been saying all along, which is that it's a great idea. >> all right that's not a no, but not a yes
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either because of this move with tesla, i imagine you're feeling pretty vindicated in your strategy, and i want to know, how you would respond to critics that would say the volatility of bitcoin, the risk associated with it, as an asset class, that you are not only putting the company at rink, but shareholders investments at risk. how would you respond? >> first, they were measured in this and so i don't think there's any criticism of what they have done companies that are converting their dollars into bitcoin are taking a nonperforming asset and turning it into the best performing asset bit conhas been appreciated something like 230% year after year after year for a decade this is part of the digital transformation, taking an alog
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and converting it into a digital asset. ultimately over the long term, that will be good for the business i get that bit counsel their pressure -- but it's been extremely volatile as well how do you yourself think about that and how do you discuss that with companies potential looking to get involved and convert their cash to bitcoin. >> if you take the long view over the decade, you'll have a stable loss of 75% of your shareholder value if you hold the money in cash, or you're going to have a volatile appreciation that may as well be doubling -- i would rather have a volatile appreciation than a stable depreciation at the rate of 15% to 20% a year. >> >> this was interesting to me in the tesla filing today.
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s digital assets have been and may in the future be subject to security breaches, cyberattacks or other malicious activities. it goes on from there. how do you keep your bitcoin safe >> i think there are institutional-grade custodians that have worked out those issues, and corporations are doing their purchasing with those custodians, you know, the same way you would trust a customer to doiaen for retention of other assets you hold on your balance sheets. >> currency or commodity i ask because we see official considering more regulation. and how it's defined will have -- >> bitcoin is not a currency it's digital gold, a store of value. it's taking the place of gold. people realize you can use a block of bitcoin a million times faster and program that bitcoin on a computer to run a million
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times an hour. it's the basis of 21st century cybereconomy it will not replace the dollar it will not replace the visa or payment rails. it's simply a stable store of value to build a financial framework on. >> i know you laid that on in your conference last week as well, a hedge against -- the fact that bitcoin has appreciated relative to that fiat and others in recent times, and what that means in terms of spending power and store of value for companies such as yours. i am curious whether and if you are having conversations with other ceos at other companies. rbc today just put out a note apple could be the next likely contender to buy bitcoin. >> i think, first of all, i was surprised. we had more than 7,000 enterprises in attendance last
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week those discussions have gone viral into 250,000 or more views of just those sessions in the past few days. i have spoken to lots and lots of ceos and spoken to lots of other investors and enterprises. i think the word is spreading rapidly. with tesla's move, i think they derisk this. i think you'll see more cfos and make decisions. >> certainly one of the conversations last week was with ross stevens at stoneridge about all the institutional money. so i i'm sure we'll talk more about this in the weeks and months to come thanks for joining us. >> thanks for having me. coming up, stocks powering higher an janet yell enset with the stimulus package, it could return to full employment by next year. we'll have more on that.
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another good sign for the recovery coronavirus cases are on the decline as the vaccine roll-out continues, but with new variants taking hd,ol are there roadblocks ahead more "power lunch" after this.
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welcome back, they all hit intraday record highs. for more on what's driving this
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action, bob? >> a broad rally, but it's what we call the reflation trade. new highs. the russell 2000 even, and that's very, very important. what you're seeing here is what we call the reflation trade. it's a tendency for cyclical stocks and small-cap stocks to outperform when the economic is expanding or there is a belief the economy is expanding industrials, materials all doing better that's the reflation trade this has been going on all throughout 2021. the important thing is those are the trades that matter so retail, energy, banks, the s&p is only up 3% this year, folks. there's the reflation trade stocks if you look at what the market narrative, it's all about the reflation trade.
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everybody loves janet yellen, because thee arguing on the stimulus the market loves that. virus infections are slowing, the vaccine will roll out. we'll have a big reopening in the second half of the year, and we're starting to see it in earnings first quarter, second quarter earnings are starting to rise now, tyler that's the key point, the market have to believe the reflation trade has got some play. tyler? >> bob, thank you very much. with stocks hitting record highs, is there more room to run from here? or are we do for a pullback. rebecka patterson is with bridgewater associates how have you been? >> i'm doing great thank you. >> let's get your sort of stake and take on the market i gather it is not necessarily full steam ahead, but you see the tailwinters you favorable
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monetary policy and yeah, thank you, tyler i agree for what was said about the reflay trade and a resumption of those serve sector job, that's definitely a tailwind, but in addition to that, i think the big thing is the policy backdrop, which is different from previous cycles there's two facets to this one is that short-term interest rates really have converged around zero. that's pushing investors out the risk curve, but the second thing is, with central banks, relatively speaking, running out of ammunition, they have to coordinate more with fiscal policymakers, and fiscals become the dominant lever we'll see something between 1:00
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and $2 trillion. haz a huge amount of money into the economy, but even yet we're not doing. president biden will address congress on february 23rd and likely detail another package he hopes to put out later this year you have both the low interest rates making people look for additional risk to reach return targets and the combination of the vaccine, the fiscal and the monetary, as you said, all likely to -- and then asia, of course, what's -- >> let me ask -- >> go ahead. >> no, no, finish your thought on asia, because i'm going to turn it a different way. >> sure. sure >> real briefly on asia, what i think is interesting, we talked a minute ago before i started on sectors, i think that is important, but i would also make sure people widen their lens and think about geography. if you think about who is doing
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best so far this year, it's a part of the world that had good virus response, by and large, hasn't had to do as much fiscal and monetary, and therefore policymakers have more roof to man maneuver china you're still get a nominal and positive return there, unlike many other places so looking for those opportunities, giving that diversification is important >> i believe you said a moment ago that the monetary authorities are reaching the point at which they're running out of ammunition. there's only -- you can take them below zero, but there's only so much ammo there, but there is ammo left in the form of quaint at a timive easing you said that monetary authorities and fiscal authorities need to work hand in hand my question is, are they working too much hand in hand?
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and how does that end when what you have on the one hand is a fiscal authority, congress and the administration wanted to push through a lot of new spending, all of which will be borrowed, and the main buy other of those bonds is the federal reserve. it is a reliability buyer, because it can print the money >> yeah, i think that's something that we want to keep a very close eye on. we're going to have a huge supply of bonds, this huge amount of issuance, will we see commons rcommence rant going forward? the other thing i would watch in terms of the fed, and again this time is slightly different with the cycle. the fed announced it's no longer looking a the 2% inflation, but 2% over the cycle. this is a big, big question for the market what is that magic number for the february 2 1/2, 2.75 when do they start
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talking about tapering >> we le see a taper tantrum, a la -- ala 2013. >> i think it will be how quickly inflation rises, but we don't know what that timing will be when i say, you know, we're optimistic on stocks, to me that is one of the big unknowns what could hospital this that's also a business focus. >> rebecca, along those lines, given the flack there's a reflation debate maybe any second happen, we just started the show talking about bitcoin with tesla buying bitcoin. is this something that you see as taking root among institutional investors, retail investors, this idea of bitcoin
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as a hedge >> i think it's a big question we just purchased a note on this last week. there are reasons to think bitcoin may be a good inflation hedge. central banks can't print a lot of it, devalue it. that makes sense we did look at the last ten-plus years that bitcoin has been alive and said, okay, how has it done as an inflation hedge we looked at equal period of times where you have drawdowns of a, say, a 60/40 portfolio, booic basically the upshot from those two exercises is bitcoin hasn't proven itself to be a good inflation head or diversifier. it has the potential, absolutely, but if you bought it today, it would be an option, not the actual day >> interesting rebecca patterson, good to see
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you. thanks for joining us. good to see you. thanks ahead, we're watching vaccine stocks as the roll-out continues, and we wait to see if johnson & johnson and knnovavax receives an approval the'mu me w high can oil go? ers chor"power lunch" after this good morning!
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concerns this morning about the effectiveness of vaccines against new strains of covid-19 virus. meg tirrell joins us with the latest data and what it means for the vac vaccination efforts. >> we learned a lot over the weekend, as well about the variants themselves in the united states. let's start on that front. there was a big study released in a preprint over the weekend, not yet peer-reviewed. and what they found is that it probably entered the united states multiple times -- eight times they said going back as far as november 2020 it could have come here with
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travel other thanksgiving and christmas, they suggested. it could be 35% to 45% more trance miscible. they project, like the cdc, this strain will become the dominant strange in many u.s. states by march. from their sequencing work, they estimate it's making up about 2.1% overall in cases, about 2% in california, and 4.5% in florida. they say we really need to focus on the things that worksocial distancing, masking and geskt information out there. in vaccines we have seen so far have proven to be effective against in b.117 wen down to 49 to 60% against the south african variant, and we are seeing that these vaccines are seeing leave efficacy in clinical trials against the south african
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variant. new data over the weekend from astrazeneca and oxford showed minimal activity against that variant in south africa. it even caused south africa top the rowellout of the astrazeneca vaccine as they get more information, they have not -- encouragingly the j & j vying did though strong efficacy in south africa tyler, back to you >> so, meg, let me ask you two questions that are a bit in opposition to each other in light of these different variants, where the vaccines or the exists vaccines don't seem to be quite as effective, what are the odds we end up living with covid one way or another
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for a long time? then i'll come back with my second. >> that is an increasing consideration. the companies are talking about making new generations of the vaccines, talking about it it will be like the flu shot, maybe you have to have updated vaccines every year or every couple years, so we don't know what the future of living with this disease potential could be, but we could be living it for some time, tyler. >> and second, on the vaccine roll-out, there are some who believe that at some point we're going to have infective glove the low-hanging fruit will get vaccinated, butted second group will be harder to reach, more resistant, harder to convention, what do you say? >> this is something that dr.
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scott gottlieb talked about, it's going to happened faster than we think. right now it's so difficult, but that fairly soon we will be at -- here's what he said a "squawk box" this morning. >> i think we're going to run out of demand. i think we'll run out of demand sooner than we think, and certainly by the end of march, we'll have to make it generally available. i think everyone will be able to go online and get an appointment sooner than we think dr. gottlieb warning there could be a significant number so he's encouraging a lot more outreach now. >> i think so far i got an appointment in my county, but
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it's not easy. there's a lot of hitting sand, hitting sand it's like getting tickets to a big concert or whatever. we have a big event tomorrow night, pronods for recovery. we'll be talking all aspects the ceos of johnson & johnson for more information and to register, we surely hope will you do that. how softbank had a strong profit last quarter, and hedge ndarhainifou have for now.
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for just $64.90 a month. and ask how to add comcast business securityedge. call today. here's your cnbc covid update even though it was super bowl sunday, more than 1 million covid vaccine doses were administered, with more than 32
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million people receiving at least one dose since the shots began. a today's white house covid briefing, dr. fauci warned a immediate concerning, the more contagious uk strain could be more dominant by the end of next month. the encouraging news is that they're quite effective. you and the new york mets are hosting a mass vaccinate site starting wednesday back over to you all. the oil market is closing for the day.
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for that we turn to frank holland. >> hey there, morgan oil prices rising today to the highest levels in just over a week wti has settled just under session highs. the rising prizes are fueled by stimulus hopes at home and supply cuts by key producers, including saudi arabia, who promised extra reductions in february and march the s&p sector jumping, marathon oil and occident jumping about 11%, and aup 9%. tyler, back over to you. frank, thank you very much crude climbs more than 55% in the past three months, after a year of lockdowns depleted de demand will the rebound continue? ed morris, welcome, what do you say?
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everybody that we can think of indicates that inventories are drawing at a nearly record rate. and if i our revision -- numbers really cut down to where we think there will be. that's what the sadis wanted to do thereness sign that they'll be eager to pump more they really want to see that number back down at the five-year average. when it's still going to be almost a quarter away from that
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when this quarter ends, so i think they're going to be adding much less back to the market so i think they'll play it right through the spring to make sure that the market really does get rebalanced faster than not i think they want to wait and sigh if there's any large coming into the market of market soon. >> we've seen output from those u.s. producers go up as well i think wt, is that something you would expect to happen against this year clear energy and curbing some of those drilling possibilities, will it be a different story >> i think it's not a different
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story. it's based on where oil prices are. there's nothing that's been done by the biden administration there's plenty of pipelines, and at these prices, yes, we expect there to be a continuing ramp-up. bear in mind that where rates currently are are about $300 that's not enough to stop oil prices from declining. and then a reversal setting in i think there will be a but for the rest of the world, and the better it will be for american production that's not a 2021 stories. we're already down more than $2
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million a day, so this is the way to go. >> so what is your sense of the range of wti through 2021? 55 to 65 what >> i think i put the range a bit wider than that. i think it's definitely within the range, and i'll tell you how you get there. so managed money was short it's now about the five-year average with higher prices we should see more money coming into the market, and that could lift it higher i would say wti is in a good 55 to 68 range through the rest of the year all right. ed, thank you so much for your time today we appreciate it, your insight
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as well. >> thanks for asking me. coming up, in "power lunch," the stock is up 200% today shares of target continuing their run as well. analysts getting more bullish. have you missed the run? our traders will weigh in. the lexus es, now available with all-wheel drive. this rain is bananas. lease the 2021 es 250 all-wheel drive for $349 a month for thirty six months. experience amazing at your lexus dealer.
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into time now for our first "powers movers" of the week. hasbro shares stronger s shares of tillray soaring again today hitting its highest level since september of '19 other cannabis stocks are
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higher tillray up more than 250% this year let's check out ocugen, the company sod 3 million dollars at $7.75. that was a preium to the friday close. 201%, you're reading it right. they focus on gene therapy to cure blindness, but also working on a covid-19 vaccine. seema mody >> check out target moving higher after topping $1 billion for his activewear brand the trading nation teem is eric wall, and gina, when you they of@leisure, targets not top of mind, but so far it's done well
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with its private label. >> they have actually managed to keep putting one foot in front of the other they're actually one of the cheaper names in the segment, so it's an interesting look right now. >> ari, if you look at the chart, the correlation between start and the 200-day moving average, what did you find >> well, target is an established momentum name here it has worked, it is working, and should continue to work based on its high momentum profile and bullish trend. in terrible of levels, $182 if you're looking for a level to trade around, but looking ahead, we expect a new high above $200. based on that bullish trend, stick with it. >> trading at $193 a share at this hour. ari and gina, thank you.
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check out their top cloud computing plays on tra >> thank you, seema. the crush worked, sort of. we'll get the number how the hedge funds really did plus, why is this man smiling? he counts his golden egg "power lunch" will be right back
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welcome back to "power lunch. following the reddit rebellion, some hedge funds are under pressure leslie picker has more on the
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winners and losers >> that's right. new data shows that hedge funds actually posted gains for the month of january on average they were up about 0.9%, according to weighted average indicating returns of 3.4% for the month now, hedge funds also bested the s&p 500 and a widely used bond index. but the disparity is very wide during the month the winners won big. the losers, well, they faced pretty deep losses here with the bottom des i will down nearly 8% on average, the top up 11.6% melvin capital perhaps the poster child of losses in january with 53% declines for the month thanks to a bet against game stop and other names. another fund took the opposite side of that trade and profited $700 million from that one trade
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alone. still the latest data, just a reminder that the hedge fund industry is not monolithic it has over 9,000 funds and $3.6 trillion in assets some of them suffered and some of them did well >> leslie, i'm curious i know it has been a debate for years now. but what does all of this discussion, this -- that we have been having in the last couple of weeks, the so-called reddit rebellion, what does it do to the fee structure for hedge funds? is that under closer scrutiny now? >> that's a good question. the fee structure has been coming down for as long as i can remember it used to be two and 20 some charge more but the majority are charging less that, well below 2% from a management fee standpoint as far as this specific discussion with regard to
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reddit, i haven't heard evidence of specific funds where that's really changing the dialogue right now. i think the dialogue is more centered on risk management and what you can do to make sure that you don't suffer significant losses if something like this were to happen again. >> yeah. i guess that would make sense. leslie picker, thank you. another investment firm delivering some surprising numbers. soft bank turning an $11 billion profit, helped largely by doordash maybe i should call them golden egg? >> that's right. the golden egg comeback? less than a year ago, soft bank posted its wos financial results every. last night a different analogy here you see it a golden goose laying golden eggs, each titled soft bank's biggest and most
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profitable investments doordash has earned the vision fund more than $8 billion in paper gains. today the delivery app announcing the acquisition the robotic start-up, chow bottics open door, lemonade and faultics among other holdings the fund criticized on rework ahead of its implosion now soft bank reported an $11 billion net profit that, guys, led shares to their highest level since peak decades ago. back then, massa san had taken stakes worth very little when you think about it in alibaba and yahoo japan that would turn out to be hugely lucrative it was also right before he nearly went bankruptcy after the internet burst it shows you that he makes big
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bets he makes big bets. and sometimes they turn out and they don't. >> i like the willie wonka and the golden egg metaphor. deirdre, this is a timing situation to a certain extent with soft bank it is past the rework woes or do you think elliot has had a hand in this performance, too? >> well a lot of these investments were made before elliot management got involved and started telling massa san to do thing a little bit differently. what he has been saying for many many years, decades, actually is be patient you can't pick all winners but over time, this is what he calls his 300-year vision. over time if you believe in the information technology revolution thing like row bolt igs, artificial intelligence then these bets are going to turn out that is certainly what we saw with alibaba it may be too soon to say.
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because the market have been on fire we shouldn't forget his public market investments haven't been doing very well. again, he would probably say that time will tell. that certainly has been the case for massa san. >> deirdre, as i think back to the rework debacle of a couple of years ago two years or less. at that time there was some sense he would not make it as you said, once before he was on the drink of drups. i don't know whether he came that close this time talk to me about that. and how did he turn it around so quickly? >> well, he -- that was a huge black eye on his reputation. but did he actually come that close? no rework was a massive, what, nearly $20 billion bet but remember, that vision fund was worth $100 billion that certainly hindered hess ability to raise outside money for vision fund two. so they ended up raising with it soft bank money.
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it has done very well at this moment in time we haven't seen anything like massa san in double and when that burst. but reputationally he suffered over the last few years and soft bancshare prices reflected that. at the time, tyler, he is certainly on the up and up and soft bancshares are worth the highest they have been since boom when he was gaining in net worth $10 billion a week because of all of his investments. but that can be undone very quickly. so we have to wait and see >> yeah. yeah $10 billion a week i could live on that thank you, deirdre we'll see you. all right, a record-setting day on wall street new highs -- new highs for all the major averages we will get you set for the last hour of trading right after this don't forget, you can always watch or listen to us live on the go on the app. we'll be right back.
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folks, we are going to hand it off to "closing bell" in just a minute with markets at record highs f. it goes down, morgan, from here, it is their fault it is not our fault. we gave them a perfect hand-off just like the tampa bay bucs last night we are giving it to them, they view it up, it is their problem. i thought the most interesting part of our show today was your discussion with mr. saler about bitcoin. and he said if you can have cash
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in a volatile but appreciating asset that's what you want that sort of goes against my thought what have cash is for. but whatever. >> that is the debate. micro strategy up 20%. bitcoin, all-time high te tesla off because of the bitcoin news it will be a discussion we continue to have he didn't deny talking to elon musk. >> he certainly didn't it wasn't a no or a yes. we have got to go. >> thanks for watching "power lunch," "closing bell" starts now? we right also be responsible for record closes here on "closing bell." welcome to the show. i'm wilfred frost along with sara eisen the rally continues. all four major indices hitting new record highs because of us energy leading the market. exxon up 4%. crude rise forth the sixth straight session value and small cap outperforming. the


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