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tv   Power Lunch  CNBC  September 8, 2021 2:00pm-3:00pm EDT

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the environment is something to think about. that could come into play. >> that's where this sort of dual obligation could become a practical reality. thank you for your time. that does it for "the exchange." "power lunch" begins right now indeed it does, kelly. wm to "power lunch" for a wednesday. i'm tyler mathison it feels like tuesday, right the fed's beige book is due out this hour as concerns are mounting over economic growth. we will have complete analysis of that one. the s.e.c. threatens to sue coin
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base what are the risks for investors and what does it mean long term? an analyst will name names >> tyler, thank you very much. here is your market check. the dow is down about a third of a percent. the s&p lower by 11. the nasdaq lower by 100. we're seeing the worst performance and utilities no one likes to see as the best performer. coin base is trading lower it's at the center of a public fight with the s.e.c more on that later in the show and shares of paypag are pulling back about 2% after the company acquired a japanese company for $2.7 billion to date the fed releases its beige
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book, economic activity across all 12 federal reserve districts. steve liesman is looking through the report and will bring us the headlines in a moment. also with us is the chief economist at grant thornton and rick santelli. diane, one of the drawbacks of this report is so much has happened since the data was collected. number one, a jobs report that disappointed and, number two, a may score storm that has clearly affected the economy's losses from the south and up through the mid-atlantic states as well. >> that's one of the things we're worried about. we know from hurricane katrina the impact lingered september into october and this was further reaching that's important to keep in
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at a time when everything had been looking very, very good >> rick, the fed in its most recent commentary, it seems to me -- it has a dewell mandate and maximum employment it does feel to me this particular fed is more interested in max mum eimum empn than the later what is the next us between achechg full employment and continuing to buy securities in the open market? is he not hearing? >> reporter: oh, no, i have you. on the latter, tyler, i would say that's the question. every trader i talked to asks how is buying $120 billion a month in securities going to really, truly, at this point in the covid time line going to impact employment? and, and i don't mean to dismiss
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the delta variant, that's one of the issues for the deceleration the fed is citing in the beige book is the delta variant. however, everything i've read from the employment point, ism surveys, show the demand, especially service sector demand, is running high. it's just that they can't get workers. so you have a lack of workers in industries where the demand for products is high it doesn't quite jive with the delta variant. go on? >> let me jump in. over to steve liesman for the headlines. steve, what do you have for us >> reporter: i will pick up where rick left off. the delta variant or the word delta appears 32 times in the august beige book. that's a quick search. some of that will be duplicated. 32 times after appearing zero times in the july beige book covid appears 22 times compared to 9 times in the july delta variant running throughout this the federal reserve saying the
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economic growth down shifted slightly to a moderate base. weakness would contribute to a pullback in dipg out, travel and tourism. that decline, the weakness was attributed to the delta variant being responsible for it weakness in auto sales, of course, subscribe to low inventories, rising employment, however, seen in all districts return to work, however, those schedules were pushed back by the delta variant. inflation was steady, though, at an elevated pace some districts said they saw a strong pace of growth, an increase in inflation. offers said it was moderate. businesses were finding it easier to pass along cost increases. this is the beige book where the delta variant is said to be consequential. kelly? >> let's turn back to our guests >> i want to double-check the
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timing, rick to me the most shocking thing that happened it was from july we had over 11 million job openings what is driving this they say child care problems, even though it was july. it was vaccine mandates. it was a mismatch in wages and you think if there's 11 million openings how much are wages going to have to go up to get people back in the labor force? i'm curious if you can find a way to tie this all together >> reporter: i can't tell you the reason we're not drawing people back in the labor force but the delta variant, although responsible in many indirect and direct ways is not, in my opinion, it doesn't jive as we were talking about no matter what release you look at, the weak jobs report, the underlying theme is that even though the service sector was impacted on creating jobs it
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wasn't due to lack of demand it doesn't mean key big states like new york or california don't impact the service sector and the numbers on dining out and the big data we all pay attention to maybe we've conditioned people that you have some savings maybe it's a cost of living issue. i can't tell you what i can tell you is to answer tyler's question, why do they pay more attention to the jobs the jobs haven't come back why do they ignore to some extent the inflation there's not much they can do about it but tell us not to worry about it until later the inflation part is off the charts the area they think needs more work, whatever the reasons are my opinion buying $120 million a month is not pushing the profile
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of what the agenda is and it will make a big difference, but then again, i'll stick with my boiling frog it all makes a difference. >> let's turn back to diane. either what rick just said or if you would want to go there to the question and whether that in the long runis healthy and why >> i have to say i think given that the asset purchases were to stem the pandemic reduced being impacted by a financial crisis their need has long since expired. because of spillover effects
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which could wash up back on our shores they were not fixed as a consequence and i'm not a big fan of the asset purchases and you saw powell in his speech in jackson hole try to decouple on liftoff of rates in the context of financial and conditions continue to ease and that's not something they need to keep buying asset purchases for. we did see demand for august and it's important to note it wasn't full barrels ahead the data will look very good for the month of august from the indeed listings out there.
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we saw people who couldn't get to work because they were laid off due to covid we saw people sick, the number of people who were ill went up it happened at the time the supplements expired. it would be great if the world was not with the delta variant now but that's not where we're at with children not able to get icu beds, that's a real scare factor and what we've seen with regard to the pandemic >> steve, i look every morning on my "new york times" app and see two maps one are the hot spots in the united states and we know where they are the others are the hot spots around the world and it is
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amazing we are one of about five countries at the highest level of penetration for the covid and up with mongolia and iran. it's really something. >> and some states, tyler, would rank if they were by themselves as the who haddest spots you don't need the beige book. we have been reporting for weeks on the delta variant on the service sector and on growth overall. we've been looking at and that is what has ailed this lee covery schools are supposed to be
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opening and they're now closing. gee graphics, people have moved to place s where the workers cannot move to that's why i have a lot of job openings you have jobs here and people living there >> all right, folks -- final word, di >> broad band, many of these workers in urban areas aren't where the jobs are, they don't have access and they can't access those jobs online >> we thank you. the stocks to own this fall. kids are mostly back to school but adults aren't back in the office and it's creating opportunities we'll explain. chipotle got a new street high price target our "trading nation" team weighs in
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welcome back to "power
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lunch. i'm dominic chu. the home construction etf, itb is lower now on pace for its fourth negative session in a row. pulte group is the worst performing stock today and in the s&p 500 down 4%. now that company with updated guidance on home closings over the course of this morning saying that increased supply chain issues continue to impact the pace of home building operations so those constraints, kelly, leading to weakness in that stock bank of america is tracking back to school and back to office trends. their surveys show 90% of adults, 90%, would prefer to work from home the highest level since the survey began creating more demand for home-related products and investing opportunities in not so obvious areas back of america's elizabeth suzuki good to have you back. let's rattle off a few plays you think investors should be
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watching here. >> sure. thanks for having me on, kelly we've been following some of these stay-at-home beneficiaries which have this incredibly strong trends, and investors have been so concerned about that payback period of when the consumer wallet share shifts back towards these reopening categories that i think it's been ignored how strong these stocks still are and how the demand for these categories remains incredibly high. home improvement, home depot, lowe's, floor and decor, even leslie's, and home furnishings as well. the demand for more space just leads to having to fill these rooms with furniture rh, bed bath and beyond and purple as we continue to see this strong trend of wanting to work from home, wanting to invest in
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a larger home as well, moving out to the suburbs on the desire to move into a less population dense market so we're seeing some of this return to the stay-at-home trend which benefits these stocks. >> i find it interesting that mattress stocks are among your choices here people are tired it's real comfortable. it is the ultimate nesting stock, i suppose >> absolutely. and not only when you move to a larger home if you go from a two-bedroom apartment to a three or four-bedroom house, suddenly that's two more bedrooms you have to put a mattress in. not only that but also health and wellness being such a big focus for everyone especially as they spend more time at home sleep has become a much bigger factor and is that third pillar of health people are investing in along with nutrition and
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fitness. >> you definitely do not need to tell my dear friend with three young children that sleep is a much bigger factor >> we just declared the season of rest at home because we're so exhausted. >> we have to get a new mattress, all the kids come in >> exactly >> and the dog, whatever >> they all pile in. liz, facebook is an under the radar play my activity on the buy nothing page has been through the roof i don't like this list in general and here is why. i thought the pandemic was over. it's so fascinating. this is exactly what we were talking about last segment wait a minute. so the vaccination levels, 75% of the population has had one shot schools, for the most part, are back and you're telling me that people, 90% of respondents want to work from home this is here to stay. >> yeah. now those 90% of people are probably not going to completely work from home but some form of hybrid work from home, work in the office could be the new
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normal even at the end of this as we come out of the pandemic there could still be a new normal where people are working partly at home and spending more time, spending more money in their homes and ultimately that favors these categories the demand could be higher than precovid >> pools, mattresses, like you said, and all the rest of it liz, thanks so much. we appreciate it liz suzuki from bank of america. folks, we are just a few days away, of course, from the 20th anniversary of 9/11 we will reflect on that day and what came next with someone who was there on the ground. our own ron insana as we head to break, a look at how much downtown new york has expanded since 2001.
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i was heading down after we learned of it at 9:00, 8:55, if we should aid the coverage i was on my way down and got fairly close to the building i ran into a cameraman from msnbc. we were trying to get past the world trade center to the west side highway on the lower southwestern corner of manhattan to hook up with our colleagues from cnbc. the buildings started to explode, i guess is the only way to describe it the building began to come down and we ran john headed straight down the street and it began to look like a scene out of "independence day" with blackness raining down i ducked behind a car and it got darker and darker. i stayed there for several minutes and the material and it was pitch black, darker than night for several minutes.
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>> that sound and those pictures still vivid. that's what ron insana described he had just witnessed on the morning of september 11, 2001. we are looking back and remembering as a way to honor those we lost. with us now is ron insana, a cnbc senior analyst and senior adviser to schroeder's north america. good to see you and thanks for joining us in remembrance of this day none of us can ever forget as you were running there, i want to pick up on a couple of things whether did you feel did you feel the concussive effect of the building coming down what did you smell what did you taste what was the experience like >> well, surreal is the only word we used at the time and still the only word i can summon up a huge chunk of the building fell off and an enormous plume of smoke blew out, which i
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didn't mention in that retelling. almost immediately, as our producer at msnbc andy running away from the building knowing whatever was happening wasn't good, i made a right hand turn around the corner. he kept running straight down the street i looked over my shoulder and saw the cloud begin to roll out. and i saw it catch him, and i ran aroundthat car and squatte down for a period of time. it literally was pitch black the smell, tyler, as you know and may recall from having been down in the area of an electrical fire, it was a very strange combination of smells that will never leave. the sound was overwhelming and is the one thing i sincerely don't remember, it was so loud, incredibly loud, something i still can't recall and the blackness was truly darker than night. and what you tasted was the remnants of that building. for an hour or so after we were still, many of us who were down there, were still coughing that
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stuff up and sadly for those who spent too much time down there, they were stricken with illnesses if they weren't killed immediately underneath the rubble of the building in many ways it's still indescribable. like a scene out of "independence day" or a nuclear winter, the way i referenced it at the time, that's exactly what it looked, felt and smelled like >> what did you do next? how did you get from where you were downtown to where you broadcast from which was midtown? >> it was a very strange thing i hid myself in an unlocked parked car about a half block from the towers. when it cleared up enough, i still don't know which building it was, there were some police officers and they decided to move uptown. we picked up some people who were injured and then i walked over to 30 rockefeller center,
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nbc's headquarters jack welch, who had just retired and was pitching his first book on the "today" show was heading out the door i told him what had happened he gave me a hug i walked up to andy, the president of nbc news, and he said get on the set and tom brokaw, katie couric and matt lauer were on and they parked me next to them to recount what i had seen and experienced down on wall street. >> how has it affected you, that day? >> this year has been a little harder some years i've avoided the coverage altogether. i think there's a profound sense of loss, of sadness. the first three years i did not go across the george washington bridge without once thinking about what had transpired that day. on the 20-year anniversary i do feel a little bit more emotional about it we lost friends, all of us, in
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our business new people in the building, some colleagues along the way, either in the iraq war or in afghanistan. i still think it has such a profound impact on our psyche. i wish it had permanently unified the country, which is only did at the end of the day for a matter of months >> ron insana, a day we'll never forget, a day that changed the world and how we live in it. ron insana, thank you very much. flexshares etfs are built with advanced modeling. to fill portfolio gaps and target specific goals. strengthening client confidence in you. before investing consider the fund's investment objectives, risks, charges and expenses. go to for a prospectus containing this information.
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involved in the attack the embassy says any allegation of complicity is categorically false. in an event honoring labor unions, president biden says a measure of success is how working families doing >> some people started seeing the stock market and corporate profits and executive pay as the only measure for our economic growth by the way, the stock market has gone up exponentially since i've been president you haven't heard me say a word about it i'm glad it's gone up. no problem >> the s&p is up almost 19% since biden's inauguration, a gain of 68% during the years trump was in the white house rahel solomon. let's get a check on stocks. the dow down about 2%. the nasdaq's underperforming and this is also the third down day
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for the dow now in a row so we're keeping an eye there and on the fact utilities are outperforming. rates are falling after the solid auction. the 10 year down 1.333%. and a lot of action in the commodity space. oil headed back to $70 a barrel. nat gas popping 8% and approaching $5 could be a problem if prices stay here into the winter. aluminum hitting the highest level since 2008 on the flip side platinum seeing big moves to the down side tyler? let's take you through some power movers, shall we, this hour as we take a look at the broader markets. nio announcing a stock offering saying it will use proceeds to strengthen its balance sheet not the stock right now.
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now perrigo shares climbing. a $2.1 billion deal. the company expanding its self-care portfolio. netflix lower today despite two bullish animal calls barclays reiterating it is an overweight and jpmorgan raising its price target to 605. for more on netflix go to our next guest says go with big cap tech and smaller banks mike vogelsang, $60 billion under management explain the strategy >> kelly, how are you? look, we've been through a massive rotation this year i'm not sure most who are casually watching realize we had
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a massive rotation into small cap value stocks which, of course, are led as sort of to buy the small banks. they were up tremendously ahead of the s&p 500 and particularly against the faang stocks that has washed away and turned around and now small cap value stocks are down on the year relative to both the s&p and mega cap stocks and technology we've seen this big rotation it seems like if interest rates fall, equity flows go into large cap tech names yields on the ten-year rise we see flows in small bank stocks and small value stocks we're careful about trying to be clear what we can reasonably have an opinion on
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the political dynamic, the change in tax codes and all things coming, look, i'm not particularly -- i don't have an advantage in trying to pick way rates will go. we like this idea of staying with the massive cash flow generation and hedging with small cap value should interest rates rise and we get inflation back that's sort of the portfolio construction idea we're thinking about. >> sure. and you say don't buy bonds. if people want to make -- be if you have a strong view on rates you say you can benefit either way from this. if they're going higher or lower and if you're an investor who i've stopped trying to guess what rates are going to do, then this would work for that i also like your other theme here which is investing in old investing, tell me about magna >> there's so much noise and
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buzz around the innovation economy and how things are changing and the names and the stocks that participate in those areas are exceptionally valued by almost anybody's reckoning. and so we're thinking about, okay, where can we find some of that innovation? where can we find an old line company that's changing quickly to come up and to maybe arbitrage some of the differences in valuation tesla is around 17 times sales electric vehicles are doing incredibly well. an interesting company called magna is transforming its business as we speak they're trading at ten times earnings what we're looking for is a little bit of recognition that type of company can get some of the valuation -- maybe not a premium but some of the discount away and we get a little bit of relative performance there the same thing with snowflake versus terradata in the middle of changing their stripes.
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the differences are massive in terms of valuations and, again, you see tdc start to work and it's been working over the last three, four, five months we think we're on to something there as the companies adapt to new environments finding an old company that's had a hard time adapting as a cheap valuation but you get smart and thoughtful management understanding the new world economy i think is an interesting way to invest. >> and tdc is up 148% this year. obviously the market is applauding that. we appreciate all the ideas. thanks for your time today >> thanks, kelly a quick check on shares of pilgrim's pride. the biden administration says it will address concentration in the melissa processing industry. price increases reflect a lack of competition also criticizing companies including jbs and tyson for, quote, rewarding shareholders
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with large dividends and buybacks tyson also lower, though not quite at session lows. up next a crypto clash coinbase and the s.e.c. battling it out over its upcoming crypto lending platform is the regulatory platform coming home for the digital currency firms
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shares of the crypto exchange platform coinbase were lower today, this on word the company plans to offer a high-interest lending product in the s.e.c.'s cross hairs the ceo brian armstrong going public with his frustration on twitter late last night noting coin base has complied with s.e.c. requests for documentation in interviews with employees only to have the s.e.c. file paperwork indicating it is prepared to sue with no explanation according to coinbase as to why let's bring in the director of news at the block. what's going on here >> thanks for having me on clearly coinbase is asking for more clarity from the regulators abouta product that they wante to launch this summer.
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they announced it back in april, and the s.e.c. has not given clarity reason why they don't want them to launch this product. and if coinbase according to their ceo were to ultimately launch it the s.e.c. has indicated they would sue them. that's the high picture situation. that boils down to what they say is a lack of clarity. >> so what is the product coin base wants to launch in other words, if i have x thousand dollars worth of cryptocurrency in my account i could lend that money, which it is out to someone else who is qualified and collect interest on it the way i might lend securities >> you would basically transform your dollars into usdc coins or u.s. dollar coins which is a stable coin that is offered by
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the center consortium which is led by coinbase and circle what i'm hearing from someone who used to work at the s.e.c. this stable coin because of the backing could in some respects help with security the s.e.c. will not really give any light or shed any light on why they think the product is a security and then the coin which you can ascertain yield on is potentially a security and not giving much for coinbase to work with >> you think usdc itself could qualify as a security? >> i don't personally think that but there are regulators i've talked to who think because of the makeup of this cryptocurrency which is a stable coin which basically has cash reserves but corporate bonds and
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municipal bonds and other treasuries, many people think that makeup resembles that of a market mutual fund and therein lies participate of the issue but also the product itself because you're sort of lending out a security and then ascertaining a yield on security is problematic >> let me ask you what you think this means for the future? >> that's probably the most important question because when i think about this news, and when my colleagues think of this, we think 4% yield which isn't a lot of risk, double digit yield but you can get 100% or more from dabbling with some of these different protocols the fact they're going after what, to many of us in the crypto space feel is a not so risky product definitely sends an indication that they're going to be looking to make an example
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and going after some of the smaller operations >> this gets dense in a hurry. the moment at which the original cryptocurrency is transformed into that usdc, that u.s. dollar coin, which is a synthetic version, let's say, of the original -- >> of the dollars. >> of the dollar and of the original crypto asset, you're making a synthetic version then that is the point at which the s.e.c. would presumably say that it has become a security. so my question is, am i understanding that correctly, number one, and, number two, is this a race between the s.e.c., which would will have to declare something a security so they can be the primary regulator of it versus the cftc which might be more interested in calling the crypto a commodity to be regulated or something under the
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office of the controller of the currency to regulate >> yes, mr. armstrong makes that point that you have this tug of war between the regulators and in some respects the s.e.c. is overstepping its boundaries. the usdc very well may not be a security, but the problem is not whether or not it is or not. it's that the s.e.c. is not telling coinbase or sharing exactly why they think the problem is problematic apparently they won't meet with them or explain to them why they view this as problematic >> well, we'll see them in court, i suspect is where this will all get resolved. >> exchanges have sued the regulators in the past >> for sure. frank, thank you for your explanation. we'll have you back soon, frank chaparro wall street's biggest chipotle bowl is seeing red
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saying the market is underestimating the fast casual chain even after this performance. is he right? "trading nation" debates next. it's your future. so you don't lose sight of the big picture, even when you're focused on what's happening right now. and thinkorswim trading™ is right there with you. to help you become a smarter investor. with an innovative trading platform full of customizable tools. dedicated trade desk pros and a passionate trader community sharing strategies right on the platform. because we take trading as seriously as you do. thinkorswim trading™ from td ameritrade. my dvt blood clot left me with questions... was another around the corner? or could i have a different game plan? i wanted to help protect myself. my doctor recommended eliquis. eliquis is proven to treat and help prevent another dvt or pe blood clot. almost 98 percent of patients on eliquis didn't experience another. and eliquis has significantly less major bleeding than the standard treatment. eliquis is fda-approved and has both.
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welcome back to "power lunch. i'm seema mody cowan digging into chipotle upping his price target. it implies 17% upside from where it's trading right now analysts getting bullish on higher margin offerings. let's bring in the trading nation team. katie stockton, michael of bios advisers and, katie, shares of chipotle have lagged in recent weeks. what's your view on this stock >> before they lagged, they really had outperformed. we saw a run up of about 50% from the may low of course, with that, that was an extension of the long-term up trend. chipotle has historically been a leader in the space. and even though it's consolidated or digested those gains, it really still looks just fine from a long-term momentum perspective there's no major sell signals to speak of we had it on our long idea
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recommended list for about five weeks. and we took it off at the very end of july because we felt like it had reached a targeted level from its most recent breakout. that was just around 1815. we left it on the table there. but we do feel like it is now lacking a new upside cat last. and with that in mind, maybe at times not the leadership in the space but some of the laggards for more exciting opportunity. >> michael, this is a company that continues to lean into technology, change up its menu on a regular basis it's not the only company doing this in this fast food sort of quick service space. >> i think it's everywhere it's not called fast for no reason and with technology and rapid innovation, fast is becoming even faster and you're seeing these companies have been able to pivot from drive-in to walk-up to sit down, to create better streamlined services across menus and ease of use is
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off the charts with one click, or a couple of clicks you can have whatever you want, whenever you want it i have two teen daughters where at least one fight is eliminated because they can order from different places the thing with our society is so dependent on technology. this sector will continue to grow what's going to be important is which companies can control quality, keep the speed and continue to expand and i think that's where the analysts are trying to shake out on who is going to lead, but innovation with technology and quality is a tough combination to master. >> $54 billion market cap, too michael and katie, great to see you both for more trading nation, follow us on twitter and other social media outlets. tyler, back to you lights, camera, ad spending. after more than 100 years, amc, the theater chain, is doing something it's never done before that is advertise on television. and it is spending upwards of
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$25 million. we'll take a look rnd the microscope next. and now the latest from trading and a word from our sponsor. different sectors tend to do well during different periods of the economic cycle when the economy is expanding, industrial and technology stocks have historically outperformed the broader market however, when the economy is contracting, more defensive sectors, such as utilities and consumer staples tend to outperform waishee bohl and schb t better place for traders
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faster. vmware. welcome change. it's a movie industry first. amc is launching a $25 million ad campaign and getting people back into theaters dom chu takes us under the microscope is this how they're using their new proceeds >> wasn't that long ago when amc would be sweating just a little more when contemplating a $25 million advertising spend. even before the pandemic, by the way. theater operate orors were lookg to find the cash they needed to keep those operations ongoing. amc itself has gone to the debt and stock markets to find liquidity. between the end of 2019 and end of the second quarter of this year, the company has sold enough stock to more than quadruple the number of shares outstanding in the company but who could really blame them when they had an army of these
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meme stock traders pushing the share price from around $3 a share to a whopping 20 bucks apiece just during the first reddit-fueled frenzy and then pushed it higher to over $72 at the height of the second frenzy around memorial day. the share sales were massively diluted to existing shareholders but with the box office coming off a record labor day weekend haul for the latest disney marvel blockbuster "shang-chi and the ten rings" some may be feeling better about the prospects for the overall theater industry even with a possibly changing paradigm, guys, for how some movie buffs want to consume content. they just want to stream it at home or do they want to go to actual theaters? i can tell you for me, i'm interested to see what it's like to go back to a theater. >> no stopping you you can go tonight >> i can, if i want. all the other fall blockbusters are coming out as scheduled. the james bond movie, which i'm very excited about, is coming
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out in october same with the new venom movie. all of these blockbust ers coming out and maybe people will see them in the theaters >> the people angry about being diluted, are they richer now than they were before? >> take a look at the share price, yeah. >> amazing to see it still hold up at these levels dom, thank you >> "closing bell" starts right now. tyler, tkelly, thank you i'm wilfred frost. the major averages seeing pressure today the dow in jeopardy of turning in its third straight session of declines i'm morgan brennan in for sarah eisen. the latest read on job openings showed how tight the labor market really is with nearly 11 million open positions meantime, the fed saying in its beige book that sxhk growth has down shifted in light of covid concerns crypto remains in focus. toda


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