tv Closing Bell CNBC August 1, 2022 3:00pm-4:00pm EDT
they've been anywhere from $5, $6, to $24 billion i offerings. do they really need the money? no >> is it better to describe that than not as their cash hoard but as their liquidity position? >> or their war chest if you will something like that. but cash and stock buybacks an dividends. >> all right, thank you. and thank you for watching power lunch. >> closing bell starts right now. stocks are mixed as we hea towards the close up and dow session here on wall stree following the market's bes month since 2020 the most important hour of trading starts now welcome everyone to closin bell, i'm sara esen. and we're making a little push right now. the nasdaq is positive right now. a little undecisive trading.
prices for manufacturing cam down sharply perhaps a sign that inflation is really starting t come down here look at the s&p 500 sector ski map. it tells a story, a spli market strength in groups like consumer staples, consume discretionary. what's not working is energy it's down 2% as oil prices slide on weaker china numbers. materials, real estate healthcare, communicatio services, utilities, and technology just turned red it had been green a moment ago coming up on the show how much more upside is there in this market after the big rally i july we'll ask the cio public investment at goldman sach asset management, what he' suggesting clients do next plus we'll talk to the ceo of insurance company lemonade, which just closed its deal t buy metro mile the stock is jumping today, bu it's down sharply on the year. let's get straight to the market and the question on everybody'
minds. is the july strength going t last joining us now is kyle bass from capital management kyle, always good to have you, welcome back >> great to see you, sara. >> what do you think, are you buyer? >> i think that we're stil going to see a little bit more tightening we're still pulling $100 billion risk of the capital off th market each month. the feds and its language is saying they're going to tighte some more. as you know they inverted by about 30 basis points. i believe we'll be cutting b this time next year. so i'm not sure if we pu the bottom in, sara, but i think as we get closer to th midterms, that's probably th right time to buy. >> because that has been a par of the bullish thesis that the feds will be cutting next year and the market has started pricing that in. the pivot, the sounding less hawkish at the last spending even though fed officials have come out since then and sort o walked it back doesn't seem like the market believes them? >> yeah, i mean it's hard. we've never printed the amount
of money we've printed we've put 40% more broad money in the system in 18 months that's never happened before when you look at the construct of the cpi and what the medi and the fed reports to the population about inflation, th year-over-year number, what is it now 9% june over june? >> 9.1, yeah >> but you know you look at th components and the owner equivalent rent. when you think about the rent or the mortgage that you pay, o the housing price that you hav to pay to be a housing buyer right now that year-over-yea number is up 5%. i beg you to find me someone whose rent is only up 5% i mean look at apartment rents up 18% year over year. they were up 18% the yea before so our price level has moved u about 40% because we put 40% more money in the system for us to get a deflation print, given the level of the restrictions that the feds have imposed on the financia markets, we're going to get th print. but you u have to remember since
the fed was founded back i 1913, there have been seve disinflationary periods. all seven have had recessions. we're already in the recession you'll see the lagging indicators that will catch u here pretty soon >> so it sounds like -- so you just need more streams they need to do more to figh inflation and then more on the other side when they go too fa on the inflation side an therefore you're waiting to buy, is that the summary? >> yeah. they went way overboard. with the monetar expansion. you know i'm a believer that you're not going to see the fe take $1 trillion off the balance sheet. we'll have a permanent $ trillion balance sheet at th fed. and before they have to revers and say you know what, maybe that was a bad idea and we'r going to have to start expanding the balance sheet again becaus i think they're going to induc it very quick, very shar recession and that is what's going to force them to start cutting again a year from now. >> so where do you see evidenc of a very quick, very shar
recession? because you know the earnings weren't all tha bad. there was a lot of fea especially around big tech and in general companies are still managing t eke out profits, doing bette than expected. holding up a little bit better there's a lot of demand pulled forward from covid and to some of the services side of th economy, kyle. but no evidenc of something sharp in terms of recession if that's what we're looking at >> i mean be careful of the word no evidence, sara. >> if you look at the most recent report, real business investment in both call it structures and equipment dropped faster than it dropped as we went into the covid scar and disaster in early 2020 so the leading indicators are telling you tha this kind of gap is happening. you know when yo look at employment, it i typical for employment t continue to actually grow or get better for a few months goin into a recession because it is such a lagging indicator
so you're seeing the number of job postings or job openings drop pretty substantially mont over month and you're starting to see this as an investment literally collapse so it's just going to take a little while to show, but it's clear. and i know the national bureau of economic research hasn't did claireed a recession and the administration wants t define it. but when you have tw consecutive quarters of th negative growth, it's pretty much a recession >> well the leading indicator on jobs though is jobless claims. yes, we started to see it move up to multimonth highs but still historically prett low? >> yes, i'm looking at payroll employment it's continuing to increase, but that typically increases going into a recession you know, when i went and met with the variou fed members back in 2006, goin into the global financia crisis, i heard the same arguments. i heard from the fed people that i met with, you know, we look at jobs and real incomes.
and those things move in tandem and we don't see a job decline. therefore we don't see a globa financial crisis or a severe recession coming you can't look to that as bein your indicator you have to understand the way the economy is actuall operating. and it seems t me that if you look at cap backs and you look at real busines investments in these kinds o things that you would need t see the economy keep growing it just gaps down faster than it did in the first quarter o covid. so i think it's worth paying attention to >> no, and that's how you made your name and a lot of money kyle you were betting against the housing market at that time. what are you doing now >> yeah, so i think the patter is set at the central bank meaning again, i mentioned i think we're going to be cuttin by the end of next year. i think you need to be picking your spots and starting to buy. and you know what we're buying at our firm is, we're actually buying, you know, land and rea assets within certain radiuses of major metropolitan areas in
front of population migrations from the state called th northeast in the west coast. but basically you can buy grea u.s. businesses, u.s. centri businesses that are dollar focused that will endure the test of time at the evaluations that yo think are worthwhile meaning between now and november i'm not suggesting be short. what i'm suggesting is pick your spots on where to belong because one, two, three years from now the feds will be in anothe cutting cycle. when you think about in typical recession, the fed has to cut rates 400, 500 basi points sara, we're not going to hav the fed fund rates high enough to cut 400 to 500. so you're going to see monetar policy kind of hit its limits. you're going to have to see ne things happening in the next call it round below zeros. so i just believe the pattern is set. and while we might see more an more inflation, the market aren't going to allow rates to
go higher and that's maybe where i defer from many of the participants >> always seeing central bankers get creative before. kyle, there's the politica risk, which certainly we've seen some reaction today. i know you'r very hawkish on china and assume you believe the speaker of the house, nancy pelosi should be going to taiwan, which all indications at this point is that she will. china has been making a lot of noise about it what do you expect to happen a far as investment risk here an economic risk if we continue t see this escalation? >> yeah, it's a great question a lot of asset managers lost a lot of money investing in russia becaus things were "cheap." and the banks and the energy companies there were worth investing in and taking that risk the day that putin decided t invade and commit war crimes i ukraine, they lost all their money. in china you've got anothe story. you have such an enormous amount of capital invested in china so i think in this scenari
we've seen the frictions boi and get greater and greate overtime here. and look i applaud the speaker. the speaker has taken a stance against human rights abuses in communism. and that's difficult to do but she has done it she's done it on the back end of the massacre in china back i 1989 and she's doing it again her towards the end of her caree and with taiwan. i think it's important, sara, to note that if you listen xi's speech from last summer. he said it's his life's missio to, "bring about the rejuvenation of the grea chinese race." which is another way of saying they're going to annex taiwa and that is xi's life mission, which he said it would be an abject failure if they didn' accomplish so they're going to attack and invade taiwan whether speake pelosi lands there or not.
that china's playbook is jus like putin's playbook. he gave the rational of th invasion of ukraine that the ukrainians basically made hi invade and do what he did. and their playbook is to blame the victim and i think that's what we're seeing happe with the chinese and their belligerence towards the thriving democracy >> how do you as an investor even begin to comprehend wha that looks like? it's not russia where it's not the second most importan economy in the entire world. >> so look, there's never been a case in the world's histor where the second biggest economy in the world has a close capital account. has a fire wall that disallows any real news from getting in. and even here on cnbc when i talk china, you know wha happens, sara. the guys in your office in beijing actually cut the fee and it turns into the rainbo
screen i think the viewers need to know when any truth about china i being spoken, china doesn't want to hear it and the censors cut it off so when i think about what would happen in this scenario, a lot of these institutions that hav seen all of the writing on the wall, but they've had a fear o missing out. they've had such a rare fomo that they have applied so much private equity and capital int the world's second largest economy. when you think about -- look a the shanghai composite index sara over a 10-year period it might have annualized a 1% return, annually and the s&p in the u.s. where we have the rul of law and we have the bes innovators in the world ha annualized prior to this dro this year about 14% a year so you're not even being compensated for taking tha chinese risk here we are now with someone that's a genocidal dictato warmongering and others say they
might shoot down jets if the escort pelosi in again that happens between the investment world of wall street they can't wait to make anothe dime on china and the real world. and whether you look at th director of national intelligence or the bide administration's nationa security council china is our biggest threat, yet we continue to pile money into it like we can't wait to atten better herds it doesn't make sense to me al around i think those that are doing s are going to pay the price wit their jobs when somethin negative happens it only takes one bad event fo this to precipitate at a l fa. >> you've been warning about that for a while, kyle thank you so much for joinin us >> thank you, sara >> kyle bass by the way as kyle mentioned it's up to the nber to determine the recession tomorrow on th show we will talk to the ceo james poterba who leads that organization, the national bureau of economic research. go through his checklist on what actually makes a recession sort of up for debate righ
now. up next insurance upstar lemonade got a pop early in th pandemic it's been on a downward slop ever since though. gaining some ground today. we'll talk to the company's ce about the stock's performanc and the closing of its new acquisition car insurance metr mile you're watching closing bell o cnbc we have turned higher here o the dow up 17. a few attempts earlier today we'll see if it sticks into th close. we'll be right back. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq
esg is responsible investing. yeah... oh. 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.
with the carrier rated #1 in customer satisfaction. that's a whole lot of happy campers out there. and it's never too late to join them. get unlimited data with 5g included for just $30 a line per month when you get 4 lines. switch to xfinity mobile today. as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network with no line activation fees or term contracts... saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. check out the mover and th door and the window maker that's
plunging after the profits and due to weakening demand and also higher costs for the raw materials. the freight cost as well and labor also hurting down 13% shares of lemonade getting a pop today. to pay for the mild ca insurance company. but they are still down here 15%. and it is th exclusive daniel schreiber welcome back >> good to be with you >> so why now? why is now the time for the auto insurance facing some real challenges with the supply chain and the inflation and softenin demand >> yeah, it is the large players. but also where we're standing, you're seeing it is unlimited to the available market this is a quarter trillion number and we have none of i and having the renters impact,
we will get them banging on th doors, asking them to bundle i with the car insurance and they spent about a billion dollars on the car insurance. and that we have learned for quite a while. >> and saying that it is a standalone company that they were challenged. the company, they're buyin several head winds and the remain challenged coming out o covid and consumers turning to traditional policies how do you respond >> well we didn't buy metro mile as a growing concern and for some of the core asset as we launched six months ago. and newcomer into this highly competitive market and disadvantage, wit the scale and it is tough in this industry and we don't hav
our own data and that is reall what this entire industr thrives on they had exactly those thing and the highest quality texts. and they are out there for ten years where they have had senses and driving ou of billions of miles o americans, driving around an that data is tremendous. and they are wel across, working for years to distill those into model les that can predict claims driven at the level of precision that the rest of the industry reall wishes that they had so far it's about bringing those two together and already havin some of the best tech and th best product from a continuous perspective. marrying that with the best data science and the best archive that are out there that should allow us to leapfrog a lot of the competitive dynamics out there and eve being a disadvantage newcomer to being with a player who has
competitive advantage that should endure. >> daniel, you're still talkin about growth, this growt company on the runway that's ahead of you as a new. cooer. the stock has had a real rough ride this is a stock that was wha 160 or so in the beginning o last year and now down to th 20s or so. have you had to refocus th attention on profitability, on cutting costs. how has it changed what you're trying to do there >> and so yes and no clearly we're no seeing the entire stock market let alone the gross stocks hav been hit more less in proportion of trying to take it personally these are greater forces they are now reflections of th performance and the company ha been public for nine quarter and exceeding each time. so we have been focused on doing what we said we were going to do and in large measure we have been able to do that and the stock will reflect that. and that said the cost o
capital aren't driven by stock price. as the cost of capital increases, we definitely want to utilize our resources to make sure that they last the distance and they keep doing what we're doing and notwithstanding that we're seeing something like 70 this year and peak losses. so we are seeing ourselves a the point of turning that corner towards profitability within a few months we're starting to decline the losses all the way through to profitability and seeing robust growth because this is an industry unless scale matters and you have to keep growing. >> so profitability within quarters is that what you're saying >> i'm saying that withi quarters we're turning towards increasing the profitabilities so we will see our losses peak this year and every successful year that will be there in terms of losses toward profitability. we do still have a billion dollars in the bank. we are well capitalize and w
should be able to manage tha process reasonably well. >> got it. that's the kin of commentary that investors want to hear right now thank you. let's give you a check o where we are here on the markets. dow has been flip-flopping positive negative pretty muc unchanged right now. because it's a tale of various sectors. and they remain strong and energy though dragging on th market along with banks, materials. all of those sectors are almost out of a full percent coming up mike is back and the dash board today, we'll take a look at the big swings specifically in the energy market energy stocks down 2%. later we'll talk about boeing' boost with an analyst that see much more upside ahead that stock surging 6%. it's the biggest contributor o the plus side right now to the dow. chevron is the biggest drive actually now we've got unh a the biggest drive. united healthcare. chevron is down there too.
it is time for today's market dash board. welcome back to michael santoli, you missed quite the rally >> a lot going on today. thank you very much, sara. glad to be back with where i belong here is what the market look like since i've been gone for little over a week a big exhale got to the market and actually cleared the hurdles. and a lot of these targets are doing some work in tha direction and now right abov it, people are talking about how really 4,200 and change might be where you need to get to that's halfway back from the total decline from january dow to the recent lows and i thin pretty constructive at least o the short-term basis still the could easily be as big as 12% to 13%. now take a look at the wholesale gasoline prices. and you don' want to overstate the role o gasoline, but you also don't want to overthink what they have been up to gasoline means persistence o inflation and the e fed is
targeted directly. and obviously th big stock higher and a littl bit of trouble with that then when they really got that momentum into their lows in june and you're seeing the invers move since that. it's not the only thing that matters, but it doesn't carpet late a lot of things and how far they will need to go to check off inflation. >> yes, so far up next, we'll discuss whether the market is starting to get ahead of the fed though when we're joined by goldman sachs asset manager cio public investing next
it has been a seesaw session after a strong july. s&p rose 9%. the fed hike rates by another 75 basis points minneapolis fed presiden warning in a new york time interview that markets hav gotten ahead of themselves and anticipating that the feed i near the end of its hiking cycle. joining us now is goldman sach asset management publish investment cio ashish shah welcome, ashish, it's good t see you. >> thanks, sara. thank you for having me. >> i want to start with th action of bonds today because 10-year yield is below to 60 and so your background, your expertise in fixed income. we're seeing a greater inversion of the curb? what is the message right no from the bond market >> look, i think the bond market is telling you we're seein slowing growth and b accelerating inflation in th marketplace. and so, you know, the market believes that the fed is price in getting tight
but they kno that tightness is going to actually slow the economy. down the lin that we're above the neutral rate and so i think what we hav to engage is what are the type of returns that we could get b buying bonds where we're using this to be priced in i would much rather be buyin those higher yields. we were almost 100 basis point higher about a month ago and now the risk return is looking a little less good out the curb >> but do you think we've seen the highs for bond yields this cycle? >> we've probably seen the curb but in the near term, you know we certainly could see mor hiking, in fact, i would expec more hiking from the feds as they would go from neutral t tight. >> and do you think they hav gotten ahead of themselves whe it comes to a fed pivot an easing next year >> look, i don't think the market has to have gotten ahea of itself here i think that the market is
acknowledging the fact that they do have risk priced in for their heights priced in over and 80 basis points. priced in from here to the end of the year. you know equit markets have rallied as function of simply having less uncertainty. we were talking about 4%, 5% interest rates there are folk that were talking abou inflation that was out of colorado and what we're finding is th fed is being affected and th support guidance and its hikin cycle. so that's a part of the reason why the markets have rallied back in. have we gotten a little bi overdone in the near terms probably but i think that kind of just reducing the amount of volatility has been constructive for both bonds an stocks in the near term. >> so what is the signal for beyond just the very near term and the technical move tha we've seen what is the signal for stock that you're getting right now as it relates to this questio about recession and the feds cycle and everything like that
>> and so take a look at what' happening today. you have them getting hit an that is partly as a function o the weak data we got over th weekend. and as we go forward, the real question is going to be can we keep from going into a deepe recession or bounce out of a really shallow recession or are we going to see shots that will really limit the growth of the global economy and i think the bottom line is no one knows this, right no one could actually forecast but we have priced in some goo risks into market. and i think you could earn som good income given how rates have gotten or how high rates hav gotten in the near term. so we are definitely seeing good opportunities across equity, credit, and frankly even bonds all you have to do is not sit in a bank account that's earnin zero because there are plenty of those out there. >> cash is trash >> where is the cash flow is
key. i know you think so where is the best entry point? what types of sectors or stocks >> yeah, so the things that we think that are kind of interesting here, you know, kind of point to the gross space, which has gone through lot of consolidation and a lot of folks are hiding in kind of the names, the largest caps in growth equities. i think maybe a little bit too much has been priced in on the backup of strong earnings. where we see opportunity is in the software sector where we think there is just a secula trend of software eating the world. where mid caps represent good value to captur real growth. we also see a lo of value in biotech where, you know, they have very robus research pipelines you know at th end of the day they have a ton of cash that they're sitting o granted that they're burning i to do that research. but we think there will be a lot
in that space going forward. it represents real opportunity for activ management >> and people have been waitin for that biotech for a while ashish shah, we'll leave i there. thank you for joining us goldman sachs management o cif. >> and down 14 on the dow. as ashish said, it's some of the markets that are under pressure that's energy, financials, materials, although consumer discretionary is having a good day. at the top of the markets yo have staples industrials are a little higher celsius heating up pepsi is taking stakes on th company that has wall street buzzing. closing bell will come right back
what is wall street buzzin about today? a jolt for celsius the energy drinks company, not the bankrupt crypto lender peps key announcing it's investing $550 million and for a long-term distribution deal. it's a very fast growing energ drink that builds itself as healthier cleaner alternativ with ginger and green tea an vitamins its share has been growing fast take a look. thank you to beverage digest celsius has a 3% share monster and red bull dominat the energy drink business, but as you can see celsius has bee
growing quickly. and this deal according to jpmorgan would likely boost it distribution, at convenience stores, gas stations, whic represents about 70% of th energy drink demand. for pepsi it's a chance to compete harder and t distribute bang, another competitor is over the leader, monster, i distributed by coca-cola, with a nearly 17% stake red bull is independent. and the other top players bang celsius, and rock star, whic was bought by pepsi for nearly $4 billion back in 2020. monster is lower a little bit today probably on worries that i could lose share to the no stronger celsius but the bottom line the energy drinks category is still super hot and coke and pepsi continu to pour money into these faste growing upstarts who are starting to take real share in this market. the next step would be a outright acquisition something the market has bee speculating since coke first put in that stake in monster
monster's market cap over that time has tripled boeing shares are rallying after taking a big step toward resuming dreamliner deliveries in the next few weeks. up next we'll discuss whethe the stock has more upside from here that story, plus more big tech hiring concerns, and rough sea today for royal caribbean. when we take you inside th market zone, the dow is down one point. we've been as lo as 200nd a up as high as 140 we'll be right back. hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq
millions have made the switch from the big three yeah... oh. d to xfinity mobile.! that means millions are saving hundreds a year on their wireless bill. and all of those millions are on the nation's most reliable 5g network, with the carrier rated #1 in customer satisfaction. that's a whole lot of happy campers out there. and it's never too late to join them.
i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market. we're now in the closing
bell market zone commentator mike santelli here to break down the crucia moments of the trading day and plus on boeing, bi run today. we'll start off with the broader market now mike, indecisive after a ver strong month where the s&p gained 9%. we're sort of wavering you've got strength in some of the tech names like in amazon, amd, microsoft, apple, google. so you can see the split the last few weeks it's been sort of more of nasdaq outperforming. >> in general the index level is kind of pausing. first day of a new month the worst first half in 50 years, which is what we ha through june, gives way to thi very oversold rally. it makes sense that we are where we are definitely a tone across the market of some concerns stil building in the at pace of growth you can see it in the bottom market you can see it in the treasury yield curves inverting the way they are but it's also happening in a way where financial conditions are
kind of loosening along the wa because corporate credit i holding it that's the macro side of it. on the micro side, no bi earnings yet today really, but in general this sort of sigh of relief that in fact companies are able to beat lower expectations that's okay for now. we'll see if they could carry it now that s&p is back up 17 times earning again. it's really not cheap from tha perspective. >> that's the bare case, right that the market has not gotten cheap, that earnings expectations really have not come down enough so where does the price tack u relative to history, relative to bare markets and recessions? >> well look, i think we're in the zone of fair value at th s&p level. so you probably consider investors to have gotten off relatively easy if all you do is migrate from expensive back to fair value with that being said it is still a very large mega cap growth stocks that are holding up if you look at the equal weigh it's like 14 times earnings.
the typical stock has come dow a lot more in evaluation i'm fully on board with the idea that if we get a true all-ou recession that comes along wit the 10% to 20% decline in s& profits, it's not priced in. but i also don't think that th market should rush to price that scenario in before we know that's what we have waitin for. >> let's hit big tech. alphabet is the latest company to weigh in on spendin concerns the ceo telling employees last week they need to improv efficiency and focus during this uncertain economic period. that's according to attendees of that all-hands meeting and internal documents that were reviewed by cnbc executives also say they're no ruling out layoffs, although none are currently planned steve kovach joins us. steve, how does this message from google compare to wha we're hearing about hiring and spending from some of the othe big tech companies >> yes, sara it's very similar. a few weeks ago mark zuckerber told meta employees the same thing. hey, we all need to buckle dow
here we're heading into a real toug environment, and we need to se productivity go up there's a sub text through all of this that if you're not willing to do that, you better get out now before the layoffs hit. you can kind of see this, sara as preparing these staff for any kind of future job cuts. on the apple side i asked ti cook about this. just during the earnings repor last week. and he wouldn't really say they're slowing down or laying off. he just said they're going to be deliberate about hiring. and then all these ceos have been talking about what they'r seeing through the end of th year foreign exchange head winds ar expected to be a huge pain especially through at least next year and then we're seeing other head winds ahead just like lower ad spending, which is reall hurting meta and linkedin side of microsoft as well, sara >> so what's happening, steve? with the estimates and the expectations for these stock after the big sigh of relief w
got last week? >> yeah, that's what's funny despite all these warnings o the economy just getting so much worse, sara. a lot of these companies are saying we're still going to be growing. we're going to, you know, even beat our own expectations. apple, for example, beat eve its worst expectations due t the covid shutdowns in china and they had warned they'r going to have at least a $ billion hit and came under that so because they're so big, they're actually able to perform better than anticipated. so they're just going to be okay at the end of all of this. >> steve kovach, thank you wanted to hit target as well because shares are movin higher the stock got an upgrade fro the analyst in wells fargo taking the stock to overweight with the price target of 195 from a previous target of 155. analysts there writing tha management is taking decisiv action to protect its pandemic share gains and it is well positioned for a faster recovery than it itself peers wells fargo also writing the are barish on the prospects fo
next year that this year's margin misses are one time related. target shares are down about 28%, mike, so far this year. a few bad news surprises too that stock pretty lower. also we got the news fro wal-mart as well so are these one-time issues with inventories or not? >> well they're one time in th sense they're about a moment i time or this phase that we hav been in where everyone got whips on by worrying about shortages too much ordering. this huge drop off in goods, demand all the stuff we know about. but one thing as a part of the upgrade really is the idea tha target in itself didn' necessarily make any uniqu missteps along the way even though they first warned it seemed like they were an outliar and they really had botched th ordering system. basically misengaged demand. so you know i think you coul make the case stock is ver reasonably valued here ran up a big premium whe everyone thought they had it perfectly figured out and th
right mix for a huge consume boom so it is rationalized to som degree it's unclear if real cor discretionary like big box retailers are going to be th leadership of this market. but at this evaluation a lot o the risk has been taken out of it >> a lot of the e are tailer are working today. bath and body work up today. all higher except for wynn resorts. and so now every stock in that group is higher. boeing is also a big winner. today's top performer. shares getting a boost on news that boeing can resume deliveries of its 787 planes i the next few weeks the company's inspection protocol of the aircraft has been approved by regulators. this comes 14 months after the company was forced to halt those deliveries boeing has roughly 120 built that have not been delivered joining us more, shayla, how big of a surprise is this fo investors? >> it's a positive clearly 84 for next year
i would say it's about 25% o the risk removed from th stock. the other being the max. >> right, and so phil rt are earlier that it is really good timing what the carriers want right now are these larger body jets because they're investing in international and that's sort of the missing piece of the recovery that we expect to pic up so how much of a tail wind d you think it is from tha perspective? >> so what's happening right now in the market is we're basically 100% of domestic at back at 2019 levels but international is still really far behind. so to give you guys a sense of wide body aircraft, which is what a 787 would take folk internationally. with airbus a350 will produc that 17 per month in 2022. that number was 28 we're still well below the peak there's a full cycle on the wide bodies to go we project about 80 to 177
deliveries per year between 2023 to 2025. that assumes only about 5% tha comes from china so american airlines, united they're all really asking fo the 787s this is big and it will driv the next line of the recovery, which is international >> so you agree with that? the stock is up still 16 for the year what do you do with it >> you know, i think you buy the news although they were an analys number, we're waiting for th next leg of the story for th mass recovery in china that's 40%, which is yet t deliver. but you know, that has other ramifications that we're waiting for. then we will work off of the recovery commercial aircraft profitability, which i currently loss making. so everybody is looking to buy arrow, but now the 787 with th
faa allowing this allows it to happen >> i guess the question is i getting too late are we getting near the end of the cycle? we're worried about discretion and demand and things like travel after a huge jolt that we have seen, sheila. >> well, that's the best part of aerospace. we haven't seen a recovery covid is still very much impacting it whether you look at wide bodies, which i mentioned are 50 depressed or narrow body production if we're lucky boeing and airbus combined will produce 90 narro bodies this year regardless of what happens t air traffic whether a recessio in 2025. we predict that to go up to 12 units per month per production so a 7% case and regardless of recession, aerospace is pretty much the same session when they're looking for a bit of the news here on th performer. and the royal caribbean th worst performer in the s&p right
now after announcing an offering of senior convertible note worth up to $900 million the cruise line operator planning to use those procedures to restructure its existin debt seema mody joins us. seema, carnival stocks after its stock offering, why is royal caribbean getting crushed on the bond deal? still struggling financial deals for this group >> sara, investors are being reminded that how much deb these cruise lines have had to take on during the pandemic an now that needs to be refinance at a higher interest rate. it's important to highlight each group is taking a break to i and it is not diluted in the way the concern vax stock sale are. jason liberty said raising equity, a very high bar for us we don't have any plans to d so but clearly with about $ billion in debt maturing nex
year there are no new shares, but clearly again a news that is still pressuring the softest idea that as interest rates rise these companies that took on a lot of debt have to refinance. and at a higher rate sara >> seema mody, thank you we've got just about two minutes to go here in th trading day. mike, it looks like we have lost the gains on the stock market. despite the fact we have lower yields, lower prices of oil, and a weaker dollar, which all hav typically done well for th stock market lately. what do you see? >> they have within a very narrow range especially by recent standards in terms of the high to low. it's been mixed. take a look at the new yor stock exchange it's mostly skewed slightl negative here you go close to 50/50 a this point and the nasdaq just a little bit weaker you mentioned the dollar, th u.s. dollar index has, you know, kind of stayed in this pul back in fact it's actually in a interesting point right now.
if you look at the uptrend since february, it's sitting right o that line. so if it break down from here, you're going t have some people to say mayb there is something more decisive about this pullback that i reflective of loosenin financial conditions althoug there could also be a concer about growth as you mentione the vol ill itty index has retired. nothing too dramatic we're at the lower end of th recent range for the side just as we are for the s&p 500. a lot of the mov today is just monday, rebuilding some of the premium. so people might also be lockin in some of this rallies gains, sara >> down 31 points on the dow we got as low as down to 200 a one point today as we head int the close. take a look at the dow jones industrial average it's boeing that's the biggest contributor on the upside fo the dow. and united healthcare, the biggest drag along with chevron, caterpillar, microsoft, an travelers. within the s&p 500, we are off just about a quarter of 1% of course after the 9% monstrous rally we saw during the month of july which brings u
about 14.5% off the highs fo the s&p 500. and about 13% off th lows you've got staples on top, energy on bottom 5% declining in crude oi prices that's certainly weighing on energy stocks. nasdaq losing some of it earlier gains closing down that's it for me on closin bell we'll see you tomorrow now into overtime with scott wapner all right, sara, thank you very much. welcome everybody to overtime. i'm scott wapner you just heard the bells we're just getting started her at post 9 at the new york stoc exchange in just a little bit i'll get ed yardeni's august playbook as h makes the case why stocks will have a strong second half of the year we'll find out why and what th risks are to that call some key earnings, they're imminent pinterest and activation blizzard hitting any momen now? our reporters are obviousl standing by to break in with everything that you need t know we'll show you the stock moves have all the analysis that you need we begin
IN COLLECTIONSCNBC Television Archive Television Archive News Search Service
Uploaded by TV Archive on