tv The Exchange CNBC July 13, 2022 1:00pm-2:00pm EDT
i'm buying it. >> on a day when netflix has reiterated a sell at goldman >> amd and taiwan semi reports i think there's an asymmetric risk there see you all tonight on "overtime. thank you, scott hi, everybody. i'm kelly evans. welcome to "the exchange." inflation soaring, the fastest pace in 41 years why is the ten-year treasury yield down we'll look at the signals that have been dropping sharply and do stay until pressure if the fed does another large rate hike david zirbos is saying, what do they need to do now to keep the credibility? we will ask him.
now that cpi is out of the way, the markets is focus on earnings we'll get you ready for the big names reporting tomorrow it's coming up in earnings exchange fir first, dom has the picture. >> after the cpi came out, we saw a big move in interest rates and futures for the stock market overall. if you look at the nasdaq trade specifically, many of those stocks took a big leg lower. the dow industrial is only down about 82 points, the s&p pretty much flags the nasdaq in the green by 29 points we were markedly lower at one point today. now, speaking of that, take a look at some of these stocks within that bigger nasdaq 100 trade, these are some of the stocks that have seen some of the biggest intraday reversals throughout the course of today's session. from the early morning lows to where we are right now
if you look at names like tesla, nvidia, amazon, they're each green on the session earlier in the day we've seen low points, rallies higher to the tune of 4% to 6% so as markets have dipped in today's session, there has been some incremental buys interesting in some of those, bay maybe the value proposition, or perhaps a bit of short covering either way, tesla, nvidia, amazon.com, some of the nasdaq 100 names that have done pretty well we'll see if that trend continues this afternoon one stock that's standing out well today,ed best performing in the s&p 500 today, that is twitter. a lot of headlines coming out with regard to what's happening with twitter we know the company itself will sue elon musk to try to compel him to follow through with the $50.20 buyout offer for the
company. right now, shares are up about 8.5% i've pointed out the best-performing stock driven in small by, i will say this, hindenburg research tweeted out earlier this morning they initiated a long position owning the stock in twitter, and they make mention of this, because they say it's the first time they have taken a significant long position in a stock for a short-selling firm that's helping to propel some of that narrative around twitter. back over to you. >> pretty extraordinary, their first long position. that's quite a call. dom, thank you very much new cpi data showed inflation jumped to 9.1% annually in june that was higher than expected and the biggest year-over-year increase in years. the fed's hike last month is already starting to take hold.
since june 15th, wheat is down 21%, soybeans down 13%, corn is down 22% oil sliding to%, copper same thing, gasoline prices dipping by 38 cents a gallon to a nationwide average of $4.63. as a result, especially falling gasoline prices, the new york fed survey showed consumers' three-year outlook improving, falling as well. as for marketses a big change there. their expectations of inflation has dropped sharply to just about 2.5% annually from over 3%, as you can see here before the big hike from the fed last month. my next guest says this all proves the fed still has credibility and the extra-big hike is still working. should they stick with the strategy or take a breather now? david zervos, great to have you
here today the market does appeared worried about growth what should the fed keep doing or not doing about inflation >> i think it should work -- the market should worry about a fed that wants to curtail demand that's what they're doing. they have announced that that is to meet these limited supply stories that we had to deal with since the reopening. so we're bringing demand down. that's how the fed is trading the expectations, and hopefully the supply shocks wane, and we get actual inflation coming down as well. as of today, it still looks dicey, but i think the fed has done anchors long-return inflation expectations i think the last meeting, responding to the university of michigan survey, which was later revised, but showing the market how important that anchor is i think has been a huge benefit to
the market >> as you point out, stocks are flattish, so you do see this as a positive let me ask you the following so now -- it goes well this month is hot, so same thing, but there's been a huge change all the numbers i ran through, it's showing basically 2% annual inflation. what is that pricing in now? how aggressive do they really need to be >> you could make an argument, kelly, as you pointed out, that things have come down, but the fed has the market -- this isn't just the s&p, it's the yield curve being inverted, the ten-year being very much under control. the dollar being strong. all of that is part of the same credibility narrative. i don't know that it's time for the fed to kind of make a little
pivot of sorts, to say, hey, we're winning here i think you have a 175 fund rate you get it up to 2 1/2, make 2 3/4, and you get to see what happens in september you'll get a lot of data and be able to keep your credibility. the market is rewarding the fed for being very aggressive against this inflation fight it still has room to run, because rates still are technically quite low, so i think there's an easy argument at this next meeting to be sustaining the hawkishness, and sending a hawkish message, but maybe throwing in a few bones to the market that, hey, we're encouraged, but we're not letting up anytime soon. >> there's a couple categories in the labor market. i don't know how you fix that one. housing, maybe that moderates, or maybe it doesn't, but it's
morphed, right as much as it helps that wheat prices and oil prices are down, it's not the whole story it may not be even the most important part of the story right now. >> as you know we still have over 11 million job openings last payroll report was not that encouraging on it is participation rate side. we have a very low unemployment read, reasonably low -- the fed has an enormous amount of room to one to get rid of help wanted signs, before it needs to think about eating into the jobs it gives more reason, i think, to be quite aggressive, let's not sugar coat this. we have a 9.1 inflation rate we've got a lot of things, as you just said, are still very uncertain in the future.
this is not a fed that's won anything yet it's done a good job of maintaining credibility i believe that the equity market is rewarding that, because the equity market believes that the number one ingredient for long-run, sustained growth to be as elevated as it can, is to make sure the anchor stays secure equities are forward-looking of course, the fed could make a mistake and go too far, jong we have to worry about it yet, but let's talk about that in september, october, november. >> we got a full-point hike from the bank of canada the surging dollar is something you have to pay attention to, but does a move like that give our fed the opportunity to got bigger >> in a way -- we could talk
about this another day, but i think the dollar strength may be more to do with some really, for lack of a better word, inept policies out of the ecb. you have a german economy with 8% inflation and theis is absurd so we may see the second half of this year with other banks like the bank of canada, and i'm heaping the ecm, to pick up their pace that could be helpful. if they start to bring demand down globally that could help with some of the this inflation narrative and take some of the heavy lifting off the fed's shoulders. >> very, very well said. >> i'm very concerned about what the ecb is doing
i find the whole thing disturbing and i see more of the euro -- >> very well said. i think they're extort of staring at me. on the one hand high inflation and on the other hand, a total breakup. there's just not a lot of great outcomes we've heard so much from some of the general central bankers last decade with hawkishness and tightening anyway, it's very strange times. david, we'll check back in soon. >> always a pleasure. we just had a 30-year bond auction. rick, how did it go? >> you know, sometimes counter-intuitive seems to be the word of the day. first, let's just look at an intraday of 30-year bond yields. i'll bet everyone can guess what's going on. they're making new lows.
it was a stellar auction i gave it an a-plus. 30-year bond auction, $19 billion, completing the third less of a 95 billions resupply of the u.s. treasury 3.115 was below the 3.12 1/2, and some of the med ricks were some of the best going back to my database, 2005, 2.44 bid to cover. super solid. 73.2 in direct bidders that's the foreigners everyone is worried about 73.2%, i don't have any higher 16.3% is a little light on directs. that's the only thing that's smu a smidge light 10.5 is what the dealers take, mean if you look at the 30-year bonds on a big buffet table, it was basically bones and scraps for the dealers, which means investors feasted on 30-year
bond yields. 3.08, new lows for the session in mid june, the yields closed at 3.42 cycle high that speaks invvolumes about wht they think buy, buy, buy, which means yields probably will not retest some of the upside extremes. >> rick, thank you very much let's turn back to the stock market where my next guest has been warning for a while that the fed is behind the curve on inflation. he is the vice chair and head of investment group at ariel investments. charlie, i guess you're proven right and wrong on the same day. right in the sense that inflation is so much worse than anybody thought it would be even six months ago, but the market is turning to growthy kind of stocks, what do you make of that >> well, we have to take a step
back the nasdaq composite is down 28. growth stocks have gotten crushed. value stocks have beaten them by something like 10% so yes, there's beatbeaten-up n that are having a decent day interest rates going up is very bad for growth stocks, and for complicated reasons, they're not going up today so growth is performing okay, but on the year, growth has gotten crushed. >> are we at an inflection point, though? surely you must sometimes wonder if those twilight hours whether the next six months might not be as favorable >> absolutely. in the short run, anything can happen i will say that i think there's a chance we're getting to the worst of it on inflation, but the cause of this inflation, despite denials is the explosion
in the money summer, and two went up by 42% from february of 2020 to april of this year the good news is that it stopped going up the fed stopped pouring money into the economy as a result, there is a chance that we're seeing the worst of inflation now, and it's going to get a little better from here. if that happens, maybe he will take his knife away from the throat of the u.s. economy he's fundamentally wrong, in thinking that this inflation is coming from an overheated economy. we didn't have an overheated economy in the first six months. this inflation is coming from way too much money supply. >> what you're saying is you understand why people are looking to growth stocks if the inflation rate is peaking, and macro is a little wobbly, a little dicey, then maybe bond yields are peaking.
we've seen other parts rolling over you're acknowledging there's a case to be made. >> just to be clear, i still think rates will go higher from here less than 3% ten-year makes no sense in this environment. we have to stop treating bond investors like this is is a advance that can see the future. over the last 100 years, stock investors have beating bond investors. bond investors have accepted negative interest rates, so be careful not pointing to the bond market too much. i'll put more emphasis on the stock market yes, they're up this year, absolutely, but msg entertainment, i think it's at a 52-week low today. >> yeah, that's a good summary the two energy names still trading extremely cheap, apache at less than four times earnings, had a very good year
this year, but has given some back, as people think the price of oil will come down. we'll see. mosaic long term i'm bullish on the demand for fertilizer. they have wonderful mines in florida and canada, very close to the wheat fields of accounts and corn fields of iowa. madison square garden has been a disappointment we think they have quality real estate the garden is a premier piece of real estate, but obviously the acquisition of the regent sports network has put pressure on the stock. >> charlie, always appreciate the candor and running through everything with us thanks for your time today. >> thanks, kelly. still ahead, we're going to dig more into energy prices. oil is down 10% over the past week or so, but the physical market is still super tight. we will look at that crude
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oil under pressure again today. there it is, trying to go positive, but we're back below $96 a barrel while the price of out contracts is falling, the physical markets appear to remain extremely tight. brian sullivan has more. what can you tell us >> listen, here's the thing to remember we bring up these boards that is the futures contract there are two different oil markets happening. there's futures contracts and there's buying actual physical oil. the so-called paper market, multiple times, like 20x times bigger hedge fund managers having huge sellers of contracts that dumping the contracts, you
know, despite that, all signs still point to a tight, physical market here in america, refineries are continues to boost their production they're going to nearly flat out. don't forget, the spr will have been to be refilled in the fall. it's near 40-year lows that's a massive fill coming opec saying there could be crude oil shortfalls, maybe up to 2 million barrels a day, as long as global demand stays strong. so why do we care about this we want gatt prices to come down even more. it's up more than the price of oil.
they raised their selling prices, of course, all of this, kelly, although many in the market probably don't have as much spare capacity still trying to mend some fences. maybe that meeting will give us more information we know what that means. remember, the colonial pap line incident, or there's a new report about the risk to our infrastructure and cy cyber vulnerability. first off, the s&p global plat put out a global report. it highlighted 63 -- that,
kelly, a 250% jump 41 of those incidents were in ukraine, but iraq also a big risk more attacks in the kyrgyzstan region very real concerns are growing that will they turn it back on on july 21st and 22nd? people are calling that the so-called gas cliff. the lng plant caught fire. we had a fire in medford, oklahoma as well haven't had a lot of reasons for those, but these are plants that many people would say -- i have to watch what i say. i don't want to cast aspersios.
maybe your crew is not fully there, or new people on the crew as others quit, it's a risky situation. yeah, there are -- i'll say it there are the conspiracy theorists out there but why we're having all these problems, shall we say, lately >> i think it's a good reminder whether it's an attack or like you're saying, inexperience, emblematic of how tight things are running. brian, we'll leave it there for now. thank you so much. our brian sullivan reporting. still ahead, tesla shares are up, despite their recent declines one analysts is calling it on steroids. north carolina is this year's top states for business what about the flop states we'll bring you the bottom five on the list, ahead on "the
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congress trial he's arguing yesterday's hearing included explicit references to him. the department of justice is continues its prosecution of bannon, even after he agreed over the weekend to testify to the congressional committee investigating the capitol attack. as president biden begins his middle east trip, he visited israel's memorial to holocaust victims, along with several of the country's top officials. after two days in jerusalem, president biden will head to palestine. took, the drastic measures you are some are taking in response to the severe shortages. kelly, back over to you. >> courtney, thank you very much up next, earnings from four of the biggest names in their field. what to expect from jpmorgan morgan stanley, taiwan semi and conagra all before their reports tomorrow morning we'll return in a moment
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tomorrow morning we're going to start with jpmorgan and morgan stanley. one serving retail investor, more institutional, but they're both do you 20% as recession fears grow and volatility grips the stock market morgan stanley has actually risen on three of the last four reports. leslie picker has the story on both and we have the portfolio manager here as well leslie >> wall street has been cutting estimates for both these forms, now the consensus is a 24% decline for jpmorgan and a 17% decline for morgan stanley top line for each also expected to shrink. for jpmorgan in particular, investors will be focus on in recession-related commentary
from jamie dimon a month ago he said we should be bracing for an economic hurricane. so the question investors will be asking is whether he's changed that weather forecast, is he upgrading it, downgrading it to maybe just a sprinkle, we'll see. relatedly dimon has said he plans to be conservative as such, jpmorgan was the only major firm to add to its reserves will they continue to do so again in q2? the firm is expected to say revenue diplomat thanks in part to a slump in fees they'll also look into how trading has translated into revenue and whether the volatility we have seen actually helped boost that top line, maybe even to offset a bit of the decline they saw in investment banking. so let's put the question to c chris.
>> nice to be with you again, ke kelly. i think they're both fine companies. i just don't want to be in this class at this time if there is a recession coming, i think that's probably more likely than not, we're in the early innings. you just don't want to own the finances having said that both of these companies beat tomorrow. if there's strength on the beats, i would be a seller on this. >> we talked in the past, chris about the home builders, where you thought maybe there was opportunity. why wouldn't the same approach apply to these banks at their valuation levels >> because they're just not as cheap as the homebuilder they're really at ten-year lows at earnings and price to book. they're a little cheaper than average, but not much. certainly not cheap if we're going into a recession morgan stanley is a little more expensive than the ten-year average. 'em though both stocks are down. i would still take a pass.
i'm flog going to argue with jamie dimon. if there's bad weather coming, i don't want to be holding the stock. >> he's kind of making the case for not holding it he's candid, that's what he does even the expense issues they faced turn of the year. >> the expense issues are expex expected to still be there across wall street, and given the fact we have seen such large wage inflation, especially among junior bankers, they're expecting to be paid a lot more. just the overall travel costs, senior bankers traveling to see clients going, going to conferences, they're on the road all of those factor into expenses that's something people will be looking at as well, in terms of how banks are faring with the inflation. >> leslie, we appreciate it. let's turn to conagra now, they're actually outpacing the
averages, but inflation did just hit a new 40-year high dominic chu has the story on this one what do you think? >> over the last year conagra has been on a bit of a roller coaster range, range bound on the down saide, so pretty calm y some other standards the duncan hines and slim jim assets, it's birds eye frozen food, healthy choice, red i we want reddi whip. the earnings are expected to come in at around 63 cents a share, but this is very much about the inflation story, right? also the recession possibilities that you guys just spoke about the stock has been an outperformer because of the nature of this business. people have to eat, they have to
spend money on food, no matter the economic condition, but the inflation picture now is what's weighing on investor minds questions still remain conagra, can it raise prices to offset some of the cost pressures it has will profit margins be hurt by that they're going to be a big focus. analysts and investors will pay very close attention, for sure so inflation, recession, all the part of the stories here. >>dom >>dom, maybe you'll surprise me. >> i'm not a conagra guy this is the opposite of the jpmorgan, morgan stanley, that expectations are so low, that they might have a nice beat tomorrow conagra, on the other hand, people are remembering pepsi from yesterday, they had real strong numbers because they passed costs along and raised prices nicely, i think it doesn't have the kind of brand that, will for the most
part, allow them to be price setters. i'm a little afraid folks are too optimistic, that the costs will hit them, but the pricing won't be as strong as maybe other folks. so i would be a little conscious on conagra and i would focus on the costs. >> still trading above a 14 forward p.e., so not that cheep. to our final name here in the bellwether semi paste. taiwan semi is 44% off the highs. the entire chip sector has gotten dragged down, of course kristina partsinevelos has the story. what are you watching? >> we're going in knowing that taiwan semi already posted better than expected quarterly reviews. this foundry in particular, that pretty much makes the most advanced silicon chips, is
expected to hold up. you have apple's chip ramp, means more business to taiwan. intel's cpus, which means more deplanned for more advanced nodes. nvidia and qualcomm moving their wafers back over to taiwan customers don't want to lose their spot at this particular foundry. it's not all rosie micron spoke about this, kniffin to torrie buildup. if customers already have the chips in store, why would they buy more crypto mining has plunged. that's decreased also in graphics chips and taiwan semiconductors has warned that costs with building factor, are much more than anticipated. overall will demand hold up for them to reiterate their revenue growth for 2022. that's a big question i'll be looking at tomorrow, 2:00 a.m.
eastern. >> are you going you want to up watching at 2:00 a.m.? >> if our bosses are watching, yes. if it's just you and me, no. >> first, i think kristina will go far in this business. i think taiwan is the michelangelo of chip business. there's no one better. sap sung is a close second, but even they could do that. while business will certainly slow, i like this company a lot better than the cyclically impaired jpmorgan and morsgan stanley. while you may not neat a more, you are going to knee a semiconductor that only they can make so i think kristina is exactly right. the question is, will they cut
guidance i think there's a good chance they will. if the stock is down on that, i would be a buyer that's the one stock i would be interested in buying on weakness. we'll leave it there kristina, thank you, chris grisanti, thank you for all your picks today. north carolina is celebrating being name the top state for business in our rankings scott cohn has the latest. scott? >> reporter: hello, kelly, from wrightsville beach as you said, we named north carolina america's top state for business some states do really, really well there are other stays you might say they need to be rescued. the bottom state for big coming up next on "the exchange." rse ms a moment this pure demands a lotion this pure. gold bond pure moisture lotion 24-hour hydration no parabens, dyes, or fragrances
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they provide an avenue to support employees and ultimately it leads to retention of the best and brightest. the employee network represents the community at large, and it provides a good feedback loop to senior management to make the appropriate decisions, which ultimately contributes towards the bottom line. if you're thinking about growing your business, if you're thinking about driving the business forward, inclusion is a strong part of this. i am peter akwaboah and we are morgan stanley.
welcome back this morning. re revealed north carolina is america's top state for business in 2022, winning for its economy, technology and access to capital we do rank all 50 states, and scott cohn is with us from north carolina, with a look at the states that did not do so well scott? >> reporter: kelly, you missed it during the break, i rescued a swimmer. you missed it! anyway, here we are on wrightsville beach, thank you for the lifeguard who is on his way to make sure everybody is safe if there are top states, there must also be bottom states, and so this year, these are the states that bring up the rear. hawaii is a great place to live, although even that slipped a bit, because we considered child care among or metrics. tied with whole is 26, new
mexico, one of the worst for education. one of highest crime rates it is cheap to live there. louisiana is leading the nation in targeted incentives, but it also has the least reliable power grid in the nation by far. state number 49 is alaska, a slight improve, but still dead last for infrastructure and tech and innovation speaking of dead last, here is this year's bottom state for business >> state number 50, mississippi, the magnolia state, where the saying is true -- you get what you pay for. mississippi does offer the lowest cost of living and the lowest wage costs, but that buys one of the america's least educated workforces, the least productive, the lowest concentration up stem employees. new workers aren't exactly beating their feet to get here
it might not help that the governor hayes led a crusade against inclusiveness, and a ban on transgender girls in sports. >> which in my view, encouraging transition, and you get one of with a glut of regulations that puts mississippi at the bottom for business friendliness, so much for southern hospitality in america's bottom state for business we should point out, of course mississippi was the state at the heart of the abortion debate, the law that the supreme court upheld to overturn roe versus wade, but abortion is not in our metrics this year. it's something we're keeping a close eye on, as a lot of people try to make a case there's an economic argument to keeping abortion legal
can did reef etch roa reach out to the governor's office for a comment. we have node heard back. you can see where your state ranks, and read a lot more about how we figured out the top and bottom states at t topstates.cnbc.com >> so a caution to all those swimmers it looks windy out there. coming up, one analyst is initiating a buy on tesla. we'll talk to the man behind that bli cl,ex ulshal nt. for your consideration, the world's most innovative eyewear, turboflex.
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genuity. it's good to see you again with everything going around and the drama around musk himself, let's talk about the manufacturing edge how large is it? >> first, thank you for having me i want to assure your viewers that unlike mississippi, can o ac canaccord genuity is a great place to do business >> and there are incredible and modest similarities between the smartphone wars and the ev wars, but the one place and the one confidence that tesla has relative to apple is its manufacturing. they've done an incredible job building cars better than anyone else they recently in their sustainability report announced a 70% reduction in energy used per vehicle and some of their stuff recently like their structural battery and if you look at the youtube videos it's
an engineering marvel and it's a sustainable long term advantage. >> some of the haters and there's plenty one fun thing about tesla is there are tons of fans and tons of people who hate the stock they claim that dojo, for instance is not as exciting as it was a couple of years ago look at the dt stuff does it have a moat on full-cell driving and on ai. >> the short answer is yes, and to those not looking for controversy, i would strongly suggest another stock. i used to have a full head of hair before i started covering tesla many, many years ago, and it hasn't been easy, but suffice to say despite all of the drama and despite all of the ups and downs with mr. musk it's worth sticking with it and with regards to ai specifically and autonomous driving we're
believer that tesla has a strong, strong edge in that. >> the giga press, i can understand why a new player like rivian would take a long time to catch up, but what about the big three? established players who have existing plants, capacity and capital, can they catch up to tesla on the manufacturing front? >> look, you never want to count traditional companies out particularly those like the big three who have a manufacturing edge look, i'm a top analyst and any time there are industries in transitions i've been trained to think and history would suggest that it's the upstarts that make a lot of noise in that and gain a lot of the market share and there are things like cultural inertia that make it hard for traditional players to capture the market and with gm and the interesting offerings, and they've done a nice job within the 12 to 18 months transitioning businesses and there's a lot to say about ev upstarts who are hiring the
right talent and figuring out how to make vehicles with a clean sheet of paper that will give them a long term edge. >> your firm does have a buy and $61 price target along with others in this theme george, thanks for your time we appreciate it >> thanks. have a great day. >> bullish on tesla. up next, the latest housing numbers. are rising prices scaring buyers out of the market? we'll find out next.
♪ ♪ welcome back to "the exchange." inflation was early to hit the housing market sending home prices soaring, but now that inflation is actually seeping in, is it scaring off all of the buyers diana olick has the latest mortgage numbers diana? >> kelly, you're right as consumers worry about inflation fewer are buying homes and if they are, they're buying less expensive homes the average loan size strength,
as well. mortgage applications to buy a home fell 4% for the week and were 18% lower than the same week a year ago and that's according to the mortgage bankers association seasonally adjusted index and the mba did adjust for the july 4th holiday, and this is the average rate of the 30-year fixed stayed put the average purchase loan size was $415,000 and that's after reaching a record high $460,000 in march of this year and that drop is likely due to moderating home prices and weaker buy are activity at the upper end of the market applications to refinance a home loan, they were up 2% for the week, but were 80% lower than the same week one year ago the average of the 30-year fixed was 3.09% and no surprise there are few remaining borrowers who don't already have lower rates on the mortgages and who can benefit from the refinance >> that's really interesting about the timing of those home
price declines, as well. diana, thank you very much we appreciate it our diana olick. that does it for "the exchange," everybody. don't go anywhere. "power lunch" picks things up righ ♪ ♪ we you in just a bit, kelly. i'm dominic chu in for tyler matheson inflation remains hot, costs are surging for gasoline, groceries and rent we'll talk to an expert who says these high prices will not last, and another who's buying dividend names to ride out the volatility we are watching some of those big names coming up and the ceos of unity and iron source are here the companies merging to create a gaming software powerhouse iron source shares surging and how they plan to compete in a very, very crowded field kelly, i'll send things over to you. >> two power
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