Skip to main content

tv   Closing Bell  CNBC  July 21, 2022 3:00pm-4:00pm EDT

3:00 pm
back what do you want >> a croissant there is never a bad time to visit paris. you can read all of her stories from paris on >> i'm still chuckling i hope she gets into the party with the defi degens thanks for watching "power lunch. everybody. >> "closing bell" starts right now. see you tomorrow. the nasdaq once again driving the market action as the major averages build on a solid week of gains here the dow is lagging, just turning positive, up 4 points as we head into the close the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen take a look at where we stand in the market the nasdaq adding another percent. it's up 5% this week heading into a friday. s&p up half a percent. the losers, energy, because oil prices are down today. communication services, at&t's a big part of that story, consumer staples and utilities. check out the top performing s&p
3:01 pm
500 sectors. you've got consumer discretionary, thank you, tesla, with a 10% gain off earnings driving that sector to the top of the market but it is earnings driven in the technology sector, a lot of the chip stocks, software stocks and mega cap tech are all working today. coming up on the show we will talk to the ceo of sap, which is moving lower today on the back of earnings it's a great day to have him as the ecb hikes rates more than expected and europe faces an uncertain economic future and energy crisis. plus snap gearing up for earnings after the bell. the stock fell sharply after a profit warning in may. we'll talk to an analyst who says this might be your time to buy. we'll start with the ecb rate hike. it's the first time they have hiked rates in 11 years. they increased by 50 basis points wh points what does it mean for the fed's
3:02 pm
move next week joining us now, randy crossner how as a fed participant would you look at what the ecb and the rest of the central banking world is doing as you debate next week's decision. >> they're catching up the fed started moving certainly faster than the ecb. this is their first rate increase in a very, very long time inflation has been very high in europe for a while it started a little higher in the u.s. a little earlier but they have been very slow to act. so i'm very glad that they moved by 50 basis points they had sort of telegraphed 25, but 50 seemed to make a lot of sense. the markets have taken it reasonably, so i think the fed would interpret this as people are now realizing that this is not transitory, this is not short term and other central banks around the world will act like they're acting. >> so the fed was first out of the gate when it comes to hiking and setting the tone in terms of size of hikes.
3:03 pm
will they be the first to pivot on the other side as well? >> well, hopefully what will happen is we'll be able to get inflation under control relatively quickly or at least the fed is hoping that i think we'll see inflation start to come down certainly by the second half of the year. it's going to continue to be above the fed's 2% inflation goal i think the underlying strength of the u.s. economy is there much stronger than in europe europe is being hit very directly by the war, very directly by the cut-off of natural gas, by the up certainty of the sanctions, and so they're in a much more difficult position >> hard landing in europe, soft landing in the u.s., is that a plausible scenario >> that's a plausible scenario. i'm hoping it will be softish.
3:04 pm
i think we'll have an unemployment rate move up. no one thinks it will move up but i think it will. so we'll see some softening in the labor market but i think europe is facing a much more difficult -- much more difficult task and also the ecb announced this transmission protection instrument the tpi. so they're going to be buying bonds at the same time they're trying to raise rates. >> i don't get it. do you get this? >> so what it is, they have a much more difficult problem than they have in the u.s in the u.s. the fed had to worry about buying california bonds and new york bonds people got really worried about california having very low credit rating. so the california of europe is italy. mario draghi, the former central bank governor of the ecb just resigned as the prime minister the spreads between the german bund, the safe rate, and the italian bonds have been going up
3:05 pm
very significantly and so what they have created this new instrument to try to prevent the spreads from getting too wide that means they're going to be buying bonds. >> they're doing it as they're tightening it's a little odd. >> what they would argue is they're just going to be moving things around to try to bring some of the spreads down in practice, there's a tension between the two and i think they're in a really tough position. >> so you mentioned the u.s., softish landing. we've got a pretty bad batch of data today and yesterday with existing home sales. today it was jobless claims. we saw a little spike up to 251, highest rate of americans filing for unemployment claims since last november, randy, and we've seen it in leading economic indicators, we saw it in the philly fed today i know the fed has told us number one goal is fighting inflation and we're willing to tolerate the softness. how much softness, though, do you think they're really willing to tolerate?
3:06 pm
>> they're willing to tolerate a recession if that's what it takes. they're hoping that they can avoid that. >> how bad on the jobs picture you said you expect the unemployment rate to rise. how much damage could we be looking at before the fed blinks >> the key will be -- what they're hoping to do is raise rates quickly enough, bring inflation down enough that they don't have to raise rates so much they have to put the economy through the wringer like we did in the late 1970s, early 1980s. i think that's right i don't think it's like low that we'll have to get to something like that. but they really do wanting to bring inflation down one of the ways to bring that down unfortunately is through a strong contraction of demand which is a high unemployment rate they would prefer not to see that, but if they need to, they'll tolerate a reasonably high unemployment rate. >> how high do you think is a bar for 100 basis points, or that's just not in consideration right now for a fed hike >> i don't think they feel they
3:07 pm
need to move that much i think they'll move 75 basis points i don't think -- i think one of the concerns that they will have is core inflation is moving up headline inflation is going to come down. the most recent numbers we got is just before we started to see gasoline prices coming down, started to see some declines in a variety of commodities and food stuffs. so likely the headline will be coming down a bit. but core is more predictive of what's going to happen to inflation, and that's starting to move up a little bit and i think that's going to give them some concern one of the things that they're pleased about is that the long-term -- intermediate to long-term inflation expectations have come down a bit so they're not as worried about inflation expectations >> how do we get, randy, from 9.1% inflation to 2% inflation, which is the fed's goal? how long does that take to
3:08 pm
unfold and do you think we'll be at a point where the fed is willing to tolerate a higher level of inflation, just because that's a big drop and there's some changes in the economy that might lead to higher prices more lasting. >> so i think the fed doesn't believe that there is that fundamental change i think they do think that they can get back to their 2% goal. i don't think -- maybe over time they will change their view but i don't think they're anywhere close to that now. i do think this is going to take time by the end of the year we could see inflation perhaps at roughly half the level we're seeing now, in the 4 to 5% range rather than the 8, 9% range that we're in. but i think it's going to be a slow slog to get back to anything close to 2, unless the economy really goes off the rails. i don't anticipate that the economy will
3:09 pm
there could be shocks that come in we've got a war going on, we've got sanctions and a lot of other geopolitical tensions, so there could be things that push us if there aren't any extreme shocks, we could have a significant slowdown and potentially recession but not necessarily something that would cause such a demand contraction that we'd get rid of inflation like that. >> finally, randy, should investors fear qt? this is the shrinking of the balance sheet which we really haven't seen yet and kicks off a little bit later this fall i don't know if investors think the fed is going to have to stop and not be able to go through with it or what, but when is that going to look like? >> so i think the fed is pretty committed to keeping that going. what they need to do is keep that in the background in some sense the main quantitative easing response is to market dysfunction. if you think back to march, april of 2020, the treasury
3:10 pm
market isn't working if that's not working, no other market is going to be working. so they made sure that fundamental market was functioning. unless they see some significant disruptions of markets, i think they're going to continue on that gradual decline of the balance sheet. so there will be a little less liquidity and unless there's a major glitch, they're committed to slowly bring the balance sheet down. >> randy, thank you very much. not worried about it today or this week. the nasdaq is surging now 1.25%. shares of sap, take a look one of the largest companies falling today after second quarter earnings missed the mark we'll talk to ceo christian klein. you're watching "closing bell" on cnbc. we are at session highs on the dow now, up about 80 points. we'll be right back.
3:11 pm
i may be close to retirement, but i'm as busy as ever. and thanks to voya, i'm confident about my future. voya provides guidance for the right investments. they make me feel like i've got it all under control. [crowd cheers] voya. be confident to and through retirement.
3:12 pm
thanks for coming. now when it comest to a financial plan this broker is your man. let's open your binders to page 188... uh carl, are there different planning options in here? options? plans we can build on our own, or with help from a financial consultant? like schwab does. uhhh... could we adjust our plan... ...yeah, like if we buy a new house? mmmm... and our son just started working. oh! do you offer a complimentary retirement plan for him? as in free? just like schwab. schwab! look forward to planning with schwab. - in the last two years, we quadrupled our team and the pace we're growing, i couldn't keep up without ziprecruiter. they do the legwork and they get my job posting in front of the right candidates. i love invite to apply. i instantly see great candidates and i can invite them to apply. we have hired across all departments, engineering, marketing, hardware, field techs. you can basically tell ziprecruiter who you need, when you need it, and they deliver. - [narrator] ziprecruiter. rated the number one hiring site.
3:13 pm
try it for free at try it for free at this is xfinity rewards. try it for free at our way of showing our appreciation. with rewards of all shapes and sizes. [ cheers ] are we actually going? yes!! and once in a lifetime moments. two tickets to nascar! yes! find rewards like these and so many more in the xfinity app.
3:14 pm
shares of sap, the german cloud giant, falling today after company reported q2 results trimming its profit outlook for the year i spoke with ceo christian klein earlier. i started by asking him if we should take the results as a sign of a broader tech spending slowdown >> absolutely not. i would consider q2 as a good quarter. despite the macroeconomic situation and the geopolitical tensions you know, let me show you three numbers which tell the story best when you look at our cloud revenue, which is in the meantime our largest revenue
3:15 pm
stream, it's up 34%. it surpassed $10 billion and it's also up 34% as for our solution in the cloud, it's grown by 100% in the current backlog. so the transformation is ongoing. top line exceeded expectations on the bottom line, however, fair we had two one-time effects. one, we are actually exiting russia second, what we are seeing is part of our transformation that customers are moving faster to the cloud, less upfront investments on prem, faster move to the cloud these are the two one-time effects we had on the bottom line. >> so no sign of economic weakness in any parts of the globe besides russia >> for sure the macroeconomic situation is challenging but on the other hand when we talk about tech and when we talk about sap, when i talk to my
3:16 pm
peers, first, no one wants to stop the transformation of the enterprise now they all want to move to more resilient business models. the second challenge where we can help with our tech is to build supply chains. and third, the pressure is on towards one or more sustainable foe >> so even though cloud is resilient and growing faster than the economy, christine lagarde just today said that the baseline scenario for the ecb is no recession this year or next in europe. what's your expectation? >> for sure when you see the inflation here in germany, when you see it all over the globe and when you see the energy
3:17 pm
crisis, especially here in germany, it's pretty severe. i don't see signs that high inflation will go away any time soon but, again, in order to offset some of these inflation, margin pressure, what many super prizes are helping, tech can help for higher automate productivity to have financing and come to better cash flows. also there we see these challenges as a solution with our tech to help our customers to overcome these challenges >> and you're enjoying the benefits of the weaker euro on american companies, which are feeling the negative impact. do you expect that to continue >> sara, it's so hard to predict how currency will develop. but in the last years, definitely we were not on the side where the currency helped us now we are seeing a lot of tailwind and these two pieces together, strong pipeline, strong cloud
3:18 pm
momentum and also getting the tailwind now from the currency is also giving us the confidence that we see better and stronger years ahead. >> what about the energy crisis, which you mentioned is very severe in germany right now. how does that impact you how do you plan for an environment where you will have to be rationing gas? >> a good question first, with regard to sap, our data centers here in germany, here in europe, are already sourced with 100% clean energy so we are not dependent on russian gas. the second, how is germany impacted, of course this will all depend how the gas supply will develop over the next months, especially going into fall and the winter season of course this is the scenario for germany, it's an industry
3:19 pm
where manufacturers are dependent on energy supply and not further increases on cost for energy so this is definitely a scenario where germany has to double down on the energy transformation to get more independent from russian gas and oil. >> christian klein, ceo of sap the stock has underperformed rivals so far this year like a sa salesforce, microsoft or oracle. i asked klein if he was losing share to them. he said quite the contrary, he is gaining share and has been cloud on commerce cloud. let's check in on the markets right now. about 40 minutes left of trading and we are seeing the dow push higher it's been up and down today. it's been higher er most of the afternoon. the s&p 500 up 0.6 of a percent. strong on consumer discretionary, strong on health care, technology, materials. still ahead, the u.s. just charged a former coinbase
3:20 pm
employee in the country's first cryptocurrency insider trading case we'll ask a top lawyer if he thinks more cases will come in this space as we head to break, check out some of the top search tickers on tesla takes the top spot again, dethroning the 10-year it's up 9% on the back of earnings actually there's buying of treasuries today, lower bond yields got a batch of negative data on the economy earlier today. at&t having its worst day in years, down 8% off earnings. amazon up 1.4% it was lower earlier on the announcement of a deal of one medical. we'll talk about it later. quin us the company it is acirg,p next to it 70% paying a pretty hefty premium. we'll be right back.
3:21 pm
3:22 pm
3:23 pm
check out today's stealth mover, discover financial. it's one of the biggest losers,
3:24 pm
down more mthan 9%. shares plunged after the company is launching a probe into its st student loan servicing business and suspending its buyback during that investigation. will snap's results after the bell help the stock snap out of this year's plunge? a top analyst makes the bull case when "closing bell" returns. we're up more than 3% on the s&p now for the week
3:25 pm
esg is responsible investing. who's responsible for building esg into your investments? at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions. as asset managers and fiduciaries, to outserve, with our commitment to better esg outcomes. join the pursuit of outperformance at pgim. the investment management business of prudential.
3:26 pm
3:27 pm
3:28 pm
snap reporting its second quarter results after the bell today. the company remember back in may slashed its outlook citing a weakening economy. shares took a dive on that niew. joining us is roheed kokarni the chart is pretty ugly if you look since last fall, october or so what do you do with it ahead of these results? >> we talk like the setup heading into the print was -- the street has already cut estimates, cut numbers for both 2q and 3q. some of the checks that we did seems to indicate that the ad market is slowing down but not falling off the cliff.
3:29 pm
if snap is facing specific issues, they probably are going to be more conservative. i think they could do an inline and bracket print and spark a relief rally so long as we don't see any evidence of engagement from tiktok hitting snap as such that's the black box right now but it feels to me that we are at a price where the stock price is -- >> so you are a buyer. they do often set the tone for earnings and ads a lot of people were surprised of the warning that came in may. they were the first to warn of the weaker environment what has happened based on the conversations you've had and the companies you cover since then with the ad environment? >> i think there's been a bifurcation in terms of what verticals do you extend to overindex and which verticals do you tend to underindex
3:30 pm
if you overindex to europe, you're seeing a bigger hit if it's e-commerce, online streaming, game, then probably you're seeing a greater hit. i feel snap is more overindexed in the second camp and that is why it is feeling more of a hit. there is no clear falling off a cliff. i feel a gradual slowdown, people are being cautious but it's not coming to an end right now. >> who is better insulated on the ad side given what's happening now? >> google would be the one that we like, given what search is. when we are in a slowdown, advertisers tend to be sensitive and they want to make sure their dollar goes further and search is where exactly that is search is still a reopening play through travel and i feel what google is doing with their more top of funnel, middle of funnel
3:31 pm
advertising, products like performance max, evei think gooe is the one that should be less worse off in the next three to six months it will have some downside, numbers need to come down but all else equal, google is who we like more. >> 75% the stock is down it can't just be the macro environment that investors are worried about here is it engagement is it user numbers what's the issue >> i think it's a trifecta of issues it's the macro environment probably that's a third affecting everybody. but then there is tiktok user engagement and how that is affecting time spent away from a company like snap. that is the biggest unknown yet. and when that abates is something that we don't know and the third issue is around apple. apple has been changing a lot of
3:32 pm
policies that affect facebook, snap, pinterest, and many other companies in the mobile equalizing system. snap has been on again, off again with how well they have mitigated risks from apple those are the three issues there. there's an issue of management credibility as well. if you see the whiplashes with how the stock has reacted to earnings, i think more than five times that's something investors feel very queasy about steady eddie returns is what people want. and that's -- management credibility is something we are personally focused on as well. >> and you're a buyer. you have a $26 price target, $10 upside from here rohit, thank you for joining us. here's where we stand right now in the markets we're continuing to build here near the highs the nasdaq is up 1.1%. s&p up 0.7 of a percent.
3:33 pm
there's the dow that had been lower and underperforming. it's up 0.2 of a percent you've still got consumer discretionary in the lead thanks to tesla and other earnings winners are helping. verizon, dow chemical, ibm, chevron, so some of those groups, the telecom companies after the at&t quarter, the energy stocks after wti is what's weighing down the dow. wall street is buzzing about what the justice department is calling the first ever crypto insider trading scheme a top lawyer weighs in on whether this is the first of many cases to come you can always listen to "closing bell" on the go by following the "closing bell" podcast on your favorite podcast app. we'll be right back. the dow is up 50 ♪ ♪ jerry, you've got to see this. seen it. trust me, after 15 walks it gets a little old. i really should be retired by now. wish i'd invested when i had the chance...
3:34 pm
to the moon! [golf ball bounces off rover] unbelievable. ugh. [ding]
3:35 pm
3:36 pm
3:37 pm
what is wall street buzzing about? the first-ever crypto insider trading scheme the department of justice announcing earlier today charges against a former coinbase product manager and two others all three defendants are accused of using confidential coinbase information about which crypto assets were scheduled to be listed on coinbase's exchanges joining us now is ian mcginley you've been following crypto fraud for a long time. what is the significance of today's charges? >> yeah, sara, this is the beginning a government crackdown on insider trading in the crypto space. last month the doj southern district of new york brought the first insider trading case in this space in the nft space. and now just a month laird doj has made an even bigger case, one to the tune of $1.5 million.
3:38 pm
and i think that that is really -- the timing is no coincidence, right the crypto market is under stress there is a lot of concerns investors have this is the government saying we can act in the space and we will. >> all of it is happening at the same time that the s.e.c. is in this tiff with coinbase. they want them to register as a securities exchange. coinbase is refusing it filed a petition today. where does -- where does coinbase end up ultimately with the s.e.c. and how does today's news fit in? >> it's an interesting question. the doj case actually does not depend on whether coinbase is selling securities it doesn't even depend on whether a piece of cryptocurrency is considered a security, which is a very complicated debate and so in this case the charge was wire fraud, which was essentially just a scheme to defraud that doesn't have to include securities so in this case the doj was
3:39 pm
saying it doesn't really matter if this is a security or not the other thing that's very interesting here is that coinbase is actually the victim in this case it was coinbase's confidential business information that the indictment alleges that these defendants stole from coinbase and used to make a handsome profit >> got it. ian, thank you i have a feeling we'll be talking to you again soon on crypto ian mcginlcginley. shares of one medical skyrocketing after amazon made a bid on it. plus ford's ev road map and stvestors hanging up on at&t the ock down sharply let's take you inside the market zone, next
3:40 pm
3:41 pm
3:42 pm
s power e*trade's easy-to-use tools like dynamic charting and risk-reward analysis help make trading feel effortless and its customizable scans with social sentiment help youind and unlock opportunities in the market with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity
3:43 pm
. we are now in the "closing bell" market zone. welcome. julia boorstin is here, bertha coombs and the markets are rallying again take a look at the dow, it's up 74 points right now. we built on these gains throughout the final hour of trade. there's the s&p 500, it's up about three-quarters of 1% the strength today is coming from earnings. consumer discretionary is the best performing sector up 2.1% tesla and las vegas sands are the leaders there. hasbro is up there as well health care is your number two sector the only two sectors lower, communication services and energy the reason communication services is lower, the telecom
3:44 pm
companies. at&t at the bottom of the list, down 8%. the telecom giant did beat wall street earnings estimates but lord its full year cash flow guidance this morning the ceo discussed some potential weak spots for the consumer listen. >> there's clearly some dynamics going on in the economy where we have customers stretching out their payments a bit we expect that they're going to continue to pay their bills, but they're taking longer to do it. is what the street is worried about here. >> that is exactly what it comes down to. as the company lowered its free cash flow forecast, they did talk about heavy investment in growth but sara, it really came down to the fact that people are not paying their bills on time stankey was very careful to phrase it in such a way so that it's clear people are paying their bills but just taking longer to do so. that's a key thing here because it also speaks to an overy'all
3:45 pm
p overall pullback in spending another key thing to note here is that at&t hiked rates on some of its older plans in june that is another factor weighing on its forecast. they talked a lot about the economic climate in the latter half of the year being weaker. so a lot of concern there. i think for a company that beat on the top and bottom line, the fact that the stock is down nearly 8% is all about the outlook. >> dan, there's still the dividend which people like and obviously goes up when the stock goes down like this. would you be a buyer >> no. and, sara, you knew the answer to that already. here's the thing when you see a service like a cell phone, which is a staple right now for almost every american and they're pushing out
3:46 pm
paying that bill, you've got to extrapolate that out to a whole host of other consumer things and what it means for the broader economy. our economy that is, what, 73% led by consumer spending so i just don't think that if you put this together with some of the things that we've heard from some of the autos, right, about just -- you know, with rates where they are, with mortgage rates where they are and car loan rates where they are, this is not good. you don't have a whole heck of a lot of pricing power if you're at&t and seeing people push out the payments of your staple product or service to me, i just think there's not enough attention being paid to that and other consumer oriented service companies right now. >> julia, i think of the telecom companies as somewhat defensive. don't they usually hold up a little better? people need their cell phones even during economic hard times. >> cell phones and broad band. i mean that's the thing, sara. there's nothing that feels like
3:47 pm
more of a utility right now, an essential utility than your cell phone. also broadband but i think there's a question as they roll out those price increases, are they going to see people pay, or just pay later. so we'll be watching for other signs of how that consumer pullback shows up in other earnings reports certainly i'm watching in the advertising sector at&t, verizon, t-mobile, these are some of the largest advertisers in the country, so you can imagine they're going to be looking for ways to cut spending which will have ripple effects as well. >> t-mobile down 3%, less than half of what at&t is down, 8% today. julia, thank you look at amazon taking another step into health care, announcing it is acquiring one medical, an all cash deal, roughly $3.9 billion or $18 per share. it gives amazon access to boutique primary care offices.
3:48 pm
bertha coombs joins us we've seen a few moves in this space before. >> this helps them leapfrog what they have been trying to do. they announced that they wanted to build out brick and mortar primary care facilities to go with their amazon care virtual service. this gives them a footprint. as elizabeth anderson over at evercore notes, it also gives them the infrastructure because one medical has relationships with health systems like mount sinai here in new york, mass general in boston, and they also have relationships with insurers so that's one of the things that helps amazon now build this out faster and it gives one medical a lot of backing to be able to expand faster than they would on their own. >> a few things stand out here one, bertha, the premium that amazon is paying, 80% to the closing price yesterday, not too
3:49 pm
shabby and then just the overall broader who is going to be scared of this move. whenever amazon reaches further into another industry, there's always that fear factor, whether it's justified or not. who would you be watching? >> we've seen that before, and i think the market because of amazon's initial moves not paying out as much of a category killer, people are now taking a wait and see that's what jpmorgan says. you've got to wait and see how they build this out. nonetheless, it is healthier for the market because a lot of these companies like one medical or oak street health, which is also in the primary care building, they're rallying today because their stocks have been beaten down so much the last couple of years, people wonder about what kind of deal they're able to get. you've got cvs in the hunt for more doctors' practices. you've got walgreens expanding even united health, even though it has an army of 70,000 doctors, they all want to get into this value-based care,
3:50 pm
primary care business. for investors, it's also good news carlisle, for example, is able to get out of its investment with one medical with this deal. but those that have been investing in the startup companies, those investments had slowed in the first half now they might see more of an exit through m & a and you might see that start up again. >> bertha coombs, thank you. dan, i also think it's an interesting question what happens to m & a with the economy deteriorating. it's not dead. you're still seeing pockets of strength with some nice premiums here how do you find the winners? >> i think it's an interesting question, sara when you think about this, you mentioned it's a good exit for a primary equity firm. we saw elliott take the stake in pinterest. pinterest was down 80% it's a profitable company. about a third of their market cap was in cash. nearly 80% gross margins elliott taking a stake
3:51 pm
the ceo had just left. it is to maybe push them to sell to private equity or lever the thing up a little bit. we might see a lot of m & a in some washed-out stuff and see some strategic like this deal you just mentioned we're not going to be talking about one medical probably for a long time again with amazon until they roll it out with something broader and it's really some sort of deal that might move the needle here but i think it is important to understand, especially with a name like amazon, andy jassy who took over for bezos a year ago, he's going to put his own imprint on this company and it might look like a different company than it was under bezos a few years ago. especially when you consider that he was the one who built aws over the last ten-plus years that allowed amazon to go in a lot of these different directions because of the great margin and great growth in that business so andy jassy probably has a few
3:52 pm
tricks up his sleeve. >> for better or worse because the stock has underperformed, partly the environment under his tenure but also amazon a disappointment for the bulls. >> i think for better. i think at the lows just a month or two ago, the stock was down 45% from its all-time highs last summer this is a company that built a vaccinated supply chain during the pandemic they obviously overbuilt they're bringing back some of that spend as it relates to logistics and the warehouses they're going to get their expense ratio back, i think, in line here and there will probably be some good strategic pushes that take the company in a different direction that make long-term believers in the story. you have to be a long-term believer because of the valuation that this stock has always traded at, at a premium to the market and its peers. so to me down 33% from its highs looks interesting. i love that.
3:53 pm
i'd love to see this thing back toward 100 and start taking a longer term view of how that gets back to its highs over the next few years. >> well, it is helping lead the market along with apple and tesla is the number one performer on the s&p 500 look at the dow at session highs, 115 higher now. tesla is up 10%. it did report better than expected q2 profit last night. this as ford updates wall street about its ev strategy. phil lebeau joins us phil, what is the big question for investors to keep in mind when it comes to evs right now >> battery production, sara, and by extension, the ability to ramp up final assembly if you listened to the tesla call yesterday, a good chunk of the time for elon musk was spent on how they can increase their battery production because that is ultimately the key of getting their sales of vehicles well over 1.5 million or close to 1.5 million. that's what the street is expecting for the full year and
3:54 pm
they're only at 559,000 right now. today ford came out and said, look, we plan to have a run rate, a production rate by the end of next year of 600,000 evs and we have the battery supply needed to make that commitment and then you have rivian today showing the first amazon electric delivery van. those are going to be deployed by amazon. there's an order for 100,000 of those. so it's all about the battery production and by extension the ability to ramp final assembly. >> rivian popping 4% today tesla up 10, dan so you do not like it. we were on "fast money" last night and you are not that impressed and yet the stock surges today even though it was a margin miss. they cut their 50% growth target for the year are you surprised to see this kind of strength >> i'm very surprised. the stock was up initially 5% on the results there and we were picking through it
3:55 pm
i think the margin thing is a big issue. i just thought that the visibility that they have into the back half of the year to continue to guide to those delivery numbers just didn't make a whole heck of a lot of sense to me so i'm kind of shocked the stock is up 10% here i think there's a lot of reasons why elon needs this stock to stay well bid. i guess if you were a bull there was enough to look through it and be optimistic that they were going to be able to manage some of these supply chain issues better than some of these oems that have less experience building evs one of the things we've talked about is competition let me tell you, on the high end the germans and japanese, they got a lot of really good alternatives to the model s and model y. on the low ending, the 3 and the x, look at what's coming out of detroit. you just mentioned what ford said they're going to be able to produce next year. have you seen this f-150, this
3:56 pm
ma mach-e >> it's all out there, dan people have been saying this forever and tesla maintains a leadership position and there's been no showing of demand weakness. >> sara, this is a company that has low single digits at best global market share competing with companies that have been doing this i just think this is going to be a story that changes very quickly. that's my opinion. i've been losing money on it recently and i'm wrong. >> are you short >> i was short via put into this. >> yeah, the shorts are getting crushed today. phil, we've got to ask you about the airline stocks united missed on the top and bottom lines american matched profit estimates but beat sales alaska under pressure despite better-than-expected results what is the takeaway from the airlines >> higher costs and capacity cuts the capacity cuts that were put in place at the end of the second quarter when they had all these cancellations and delays
3:57 pm
and simply couldn't fly the schedule they had set, a lot of those will be kept in place or gradually increase the rest of this year. they're certainly down anywhere between 8 and 15%. that's the expectation for the second half of this year sara, it's that limiting of capacity that feeds into the higher cost per available seat mile, excluding fuel so that's why investors are looking at this and saying not a lot to get excited about, at least for the near term when it comes to the airlines. >> pretty sharp declines there look at united, down 10% phil, thank you. dan, as we head into the close, we're looking at another rally. it's been like this all week where we see this surge on a sound rally. the s&p is now up a percent. the nasdaq is zooming, 1.3%, adding to gains for the week it's now up 5.25% on the week. just remind me of your positioning. i think you think this is a bear market rally and you're not a buyer, but you've been in some of these tech stocks, right?
3:58 pm
>> for a month and a half, i started picking out qqq. i bought paypal and snap down 80% at their recent lows i also bought a little meta. to me, i find some of those names very interesting i think it was like a generational reset in some of those names. so i want to take a one, two, three-year time horizon in some of them. i do expect there to be -- some of them to have some nasty gaps. maybe one more bad guide down. maybe we see it next week with some of the tech names but i think most of the damage is done in those sorts of names. what you're seeing over the last couple of days is a little catch-up it's a beta trade. people think maybe we get the s&p back or nasdaq back to those breakdown levels that we had in june prior to the fed meeting. we do have a fed meeting next week we do have the five largest tech names other than tesla reporting. so i expect maybe investors to
3:59 pm
hit the pause button if we get the s&p near 4050, 4100. i expect new lows in the s&p possibly in september. i expect unemployment to start ticking up i think that's going to be the thing that people really start to price in what is stagflation look for the broader market right now. the s&p down 16% in my opinion on the year does not encompass all of these headwinds that we see in the economy. >> you just don't think the recession has been priced in we're 10% almost off the lows. dan nathan, thank you very much for joining me in the market zone as we head into the close, the dow is up nicely, up 150 it did not look like that was going to happen earlier in the day. we get as low as more than 300 that was shortly after news that president biden tested positive for covid-19 we dipped down to the lows at that point quick reversal and recovery later, obviously helearning tha the symptoms are mild and the
4:00 pm
president is doing great and fine as we learned throughout the day. better earnings have helped carry us consumer discretionary is up 2.2% the only two sectors lower at the close, energy and communication services the nasdaq soaring 1.3%. the s&p up a full percent. even the small caps join the party at the end of the day up 0.4 that's it for me on "closing bell." into "overtime" with scott all right, sara, thanks very much welcome, everybody, to "overtime. you just heard the bells we're just getting started here at post 9. another top name on deck for earnings snap will report soon. it's also a first mover read on facebook and alphabet which both report next week in other words, even if you don't own shares of snap, this report is critically important at a time when the nasdaq has been outperforming lately, including today. so we'll bring you the repor


info Stream Only

Uploaded by TV Archive on