tv Squawk Alley CNBC September 21, 2020 11:00am-12:00pm EDT
11:00 am
ere is nothing there to boost travel in september and october. there is some sales out there, and there are some markets that are adding flights and routes, but overall this is a slow time of year. that mark is depressed in addition to everything else. so this is not expected. >> all right, phil, thank you very much. appreciate that watching the airline trade today. we have to ask the control room if we have an open, if notly welcome everyone back. the dow is down almost 840 points we're joined this morning by people whoa can help us figure it out
11:01 am
we see the dow below the 50 day for the first time in awhile >> nasdaq hit that last week we're off of the lows, 32.29 maybe just ten tonights off of that the problem is not so much technology, but the reopening sectors. they are weighing on the s&p if you just take a look energy, industrials, and materials. they have separate issues with suspicious trading activity. not as they are notably week taed and this is another sign that the reopening story is not going as well as people anticipated. remember the bucket that's we watched the market with. it is true there have been
11:02 am
advancements with treatment and vaccine. the delays in the stimulus program, europe locked down is a worry. concerns about the potential for the european lock down is there. as far as the stock market goes, we have been looking at valuations for a long time many people feeling the market is over valued but earnings overall have been improving. there is a lot of balance and debate going on. that happened on friday, nasdaq prior to that, and after september, it tends to be among the weakest of the year and we're having that as well. the value suasion a problem. it is a big problem and when you
11:03 am
have run ups you tend to overshoot on the downside. you see it over shoots the same thing with all of the f.a.a.n.g. names google, alphabet, that goes to 1700 now back to 1400 essentially see that over shoot, that heavy shoulders. then it goes back down, essentially. and you see the same move to the upside there and moeft down. 100 all of the way up to 138 and back down to 105 right now the over shoot is very important. if you look at the sectors, the real problem, how do you rally with technology and bank stocks down on the month nap is a real major problem. you're not going to do it on industrials an material that's
11:04 am
have tended to out perform that is the problem for the markets right now. >> thank you to carl for opening things up, deirdre bosa, thank you for joining me as well apple is down 15% but still up 20% in the past three months, right? >> that is a good point, september does not make a year, but it has been a tough sell off for tech stocks. some of the most valuable companies for ratios or sales to earnings, whatever you want to look at, they're going up and up today. you have zoom video up they are all names in the black
11:05 am
today despite the broader sell off. these are some of the growthiest stock frothyist stocks working from home is still going strong in the last month or so what sector has been out performs that has been materials. this is really a play that the real economy is going to open. we have seen that performance this month so far, but on a day like today you see these work from home, remote plays, really working. >> expensive stocks you mentioned still expensive. earnings, pretty strong. oracle and adobe tend to be two of the big software names first out the gate they both had really solid earnings and as we talked about, and we will talk about more on the show
11:06 am
today, mna still continuing to happen into the back half of this year. >> a big gaming deal, and we know you're all over that. the commentary has constructive saying historically it is an interesting time to get into aerospace. ups with a upgrade tonight not just because of the pricing power going back to the carriers, and that all makes sense, but as they begin to flatten out that adds to a margin story that is where the street wants to focus, right? hopefully better profitable in the next year or two. >> absolutely, the big question, how will they emerge, will they be more efficient, better cost
11:07 am
structures, but another element are these rising geopolitical trade tensions when you look at just the broader market over the weekend you had beijing come out and say they were looking at their own blacklist. so what does that mean for apple, tesla, some big company that's operate and get a large proportion of their revenues from china, right, john? i wonder if this has been fully baked in yet and if we will continue to see that rise in the next few weeks >> i'm skeptical that china will do too much to apple at a time of year when there is so much of the chinese economy relying on that let's talk about that. confusion over who own what's is clouding the trump administrati administration's approval of a tict tiktok deal. >> that's right the president injecting real confusion into the deal this morning after having given his conditional approval over the weekend.
11:08 am
this morning he went on fox and said under the terms of the deal basically walmart and oracle would have toe a control of the new entity he said if they didn't approve of it they would not approve of the deal they're scribing a a deal where walmart and oracle would have only 20% of the combined entity. here is what the president said this morning >> they're going to buy it and have total control it will all be done through oracle in a cloud, and i guess nehr going public and buying out the rest of it they're buying out a lot, and if we find that they don't have total control, we're not going to approve the deal. >> so the president there saying that if those two companies
11:09 am
don't have total control he won't approval the deal, but even when you talk to the companies, they're not saying it is total control, they're saying it is 20%. they're saying oracle/walmart will make their investment and the shares will be distributed to their owners. americans will be the majority and bite dance will have no ownership. the shares in the new entity will pass through to the bite dance shareholders because some of the investors were americans the majority control will say 53% american it will fwhot a majority control by oracle and walmart. there is still significant ownership on the board of the company when all is said and done that adds to the level of
11:10 am
confusion here we have this tweet from a journalist seen as very well connected with the chinese government and that indicates that this might not go through at all saying, based on what i know beijing won't approve current agreement because it would endanger china's national security interest and dignity. the chinese may decide they can't stand this deal. so we're still in a little limbo here until all sides weigh in. >> that would not be anything knew, it feels like every day we take two steps forward and one back it is all so complicated i changed my desk top this morning to bitedance's corporate
11:11 am
structure chart because i have already gone to it about 18 times today to see how it works out if is complicated on it's own, but basically this is how everyone says they're getting what they want out of it how the u.s. and the trump administration say it will be owned by american companies. so the complication is gone. i know we have talked about this a lot, but what we talked about here is security and oracle being that cloud provider. and along the way we seem to have forgotten that the algorithm, the source code, is the most important thing here nap is what really controls sensorship no deal hear whatsoever is talking about the source code. bitedance said very explicitly
11:12 am
it will remain in china. >> this deal stinks to me. it still stinks. i don't know if the president was bluffing, but the president is calling that bluff. he is giving conditional approval to 20% ownership. now he is saying it is something that it is not it is not total ownership. it's not even majority american ownership. they're trying to con flflate t use stake in bitedance in a way that the math doesn't make sense. >> a lot of the commentary surrounding the things that the president, some believe, did not get in his original ask. control of the algos, the key to the treasury, but so much is fluid right now. we're watching the selloff right
11:13 am
now. >> that is right, you know the other big story this week is the death of supreme court justice ruth bader-ginsburg. now her death will create a major overhang on health insurance and hospitals. the issue here, if the president and the republicans are able to install a conservative justice, the possibility then would be that you would have a vote of 6-3 to over turn the affordable care act there is a case right now before the supreme court. the supreme court saying they hear that case to throw out the law after the election in november if there were a new justice installed, they would perhaps
11:14 am
vote to overturn the case. as of this moment the president and the republican party have not revealed a replacement particularly for the health insurers aligned with medicaid the hospitals, of course, would be thrown in disarray because of the issue of reimbursement if you have large numbers of people that are once again unensured, that would leave the hospitals with less reimbursement for care for people who are poor and don't have coverage. so this is a overhang in the same way that we saw the democratic debate last year over the issue of medicare for all. if this case ties in the supreme court it could end up coming
11:15 am
11:16 am
what if you could have the perspective to see more? at morgan stanley, a global collective of thought leaders offers investors a broader view. ♪ we see companies protecting the bottom line by putting people first. we see a bright future, still hungry for the ingenuity of those ready for the next challenge. today, we are translating decades of experience into strategies for the road ahead. we are morgan stanley.
11:19 am
publisher. we told you to focus on a gaming as a company that is growing they bought maker bethesda with us now first on cnbc, the microsoft executive vice president of gaming, phil spenc spencer. great to have you. first i want to ask about this how will these assets help you with this latest launch, your game pass momentum, and x cloud? >> yeah, they love great games you just mentioned we have the xbox consoles going on preorder tomorrow for the next generation last week we aided game pass cloud streaming so they can play
11:20 am
on their phones. 15 million subscribers and going. so getting to work to bring an amazing collection of games to game pass is an incredible unlt for us >> are you making cuts to this company as you acquire it or will you leave it alone? >> our plan is to leave it alone. they have an amazing track record of bringing great games we want zenimax to be the best they can be. getting their creators feedback into the things we need to build. that is a fly weed field for us. >> tell me about the gaming ecosystem overall. they have spoken out about the app store, but show that different from the percentage
11:21 am
that they make on their platforms? >> when you get large scale general compute platforms, people should have access to the great content and services out there. we remain committed to that. there is over three million that play video games today many on phones, and we want to bring game pass to all mobile phones out there including apple phones i'm sure we'll get to some resolution >> i'm not sure that gets to the issue of how it is different, though what is the core issue are they trying to command the way you do games in the cloud that also work through the app store? >> our biggest issue is not financial, it is that cloud game streaming apps are not allowed in the way that game pass is built for other platforms. so for us this is about gamers having great access to the content from the creators they love and the devices they own. play with the community you want
11:22 am
to play on the devices you want to have, that's our goal >> how will this affect the launch of future games, does that stay in tact or does it change after this deal >> the commitments we made with the gamers out there on the games that people know about we will continue with those this is a huge investment in our xbox community they know the great games coming from all of the studios, we're now at 23 studios. those games come to the xbox community and they come to the game pass day and date and people will have an amazing collection to continue to play on xbox. >> xbox and orders opening tomorrow you won't have halo iniffinite
11:23 am
with that. >> people are shelters in place, working from home, we have seen incredible engagement. and we're really proud of how it plays a pivotal role for people. games today are hundreds of people coming together to build massive games if is important to be conscious of the safety of our teams and it has an impact on production. but when we look at this launch and people's appetite for gaming right now we're very bullish on how preorders go tomorrow. we have the most powerful console in the market. we have things like xbox that allow people to join a next generation of gaming for no up front costs. and times like this i think that price point and that offer is really important.
11:24 am
>> thank you, one of the biggest acquisition acquisitions hard to believe that 7$7.5 billion, a lot of money phil spep t phil spencer, thank you. we have big news in the entertainment names. julia joins us with more >> theater tooks plummeting further than the broader market today on concerns of a second wave and also in box office returns. they still dark. they are down 5% imax off 5%. cinneworld down 6% that is one outperformer r roku spiking this morning. they are adding the peacock
11:25 am
11:26 am
i felt like... ...i was just fighting an uphill battle in my career. so when i heard about the applied digital skills courses, i'm thinking i can become more marketable. you don't need to be a computer expert to be great at this. these are skills lots of people can learn. i feel hopeful about the future now. ♪
11:27 am
11:28 am
a september sell off continues here the dow cutting a few losses, we approach the end of a rough session in europe. seema moody has more on this yeah, a second wave driven by tourism related travel. in spain there are 14 cases per 100,000 people on average in the past country the big concern is the uk. they have seen 103% soar in the last two weeks with 4,000 cases reported on sunday officials there are warning the country could see 50,000 cases per day in mid october if no action was taken they are meeting to discuss new lock down restrictions including
11:29 am
a 10:00 p.m. restriction it could hurt boris johnson as they are recovering, there is also money laundering accusations and the uk is down 3.3% and germany now 4.6%. outside of the sectors, the british airways under pressure today as well. >> all right, thank you. keeping our eye on the markets this morning, the do you is approaching a 1,000 point drop 920 at the moment. the s&p down 2.5%. more on today's selloff is next. stay with us
11:32 am
welcome back, everybody, here is your news update at this hour three cities have been designated as anarchist jurisdiction the cities are new york, seattle, and portland, oregon. all three could lose federal funding, but bill deblasio calls it insulting and saying any withholding of federal funds is unconstitutional storm beta is already causing damage in southern california the bobcat fire grew to more than 100,000 acres and containment is just 15% with strong winds and low humidity continues to fuel that blaze
11:33 am
and in madrid a lock down to address surging covid-19 infections 850,000 people infected in mostly lower income neighborhoods. that is the news update at this hour, deidre, out to you >> sue, thank you for that i should note that the dow is off session lows, still lower than 900 points. let's get the latest on the sell off. >> let's check out our move on the stacks, walmart bucking the trend, trying to hold on to positive development taking a stake in tiktok percent partly news that it is starting private label clothing to help put it in a position to fill a void being left by the bankruptcy of retailers like j.c
11:34 am
penney next up you have an interesting one. this is cnhi a european based maker of heavy equipment and farm equipment the broader marker taking it's toll, but it is also lower due to an alternative stake in nikola they have a 7% stake whose shares are tanking today founder and chairman resigning on the controversy about making false statements the stock is down over 20% on the day. lowering those shares as well. ending on sharing of roku after it and comcast will reach a deal that will be on roku devices the two parties had been trying to hammer out a deal an how to divy up advertising revenues
11:35 am
carl, that disclosure is there those shares are up 15%. i will send things back over to you. >> we appreciate it, dominic chu. back to the tiktok deal. this morning a huge story. the president giving his blessing for a deal that would take place with oracle and walmart. bitedance would still own 80% of that new co. kara swisher is joining us this morning to try to make sense of this good morning >> good morning. >> i see you told stephanie ruhl that it doesn't make any sense at all, can you expand on that >> i'm talking about that extra $5 billion their trying to put in place to extract from the deal president trump is, to create a education fund that teaches real
11:36 am
american history i'm not sure what that is, it sounds like propaganda to me i think i'm confused why china will still own this company. walmart and oracle will have about 20%. the other part is where does the code go in i would like to know who is in charge of the algorithm? and who will oracle protect the information? it is just so lacking in detail it is hard to understand how someone could bless it maybe he has more information that we don't. i don't know if they have total control of tiktok without owning it it is confusing to me. it feels like it set out to sell the company, it didn't happen, and now with have a shift in
11:37 am
investment series. i don't know what it is or if it will help. >> or a licensing web hosting agreement. do you expect to get enough details to where those questions are filled >> i'm just looking at what they said would happen and what has happened it looks like a back scratchy kind of thing to a company supportive of president trump. i don't understand why it has to move from google, necessarily. don't see that they could not have protected it, it is just not what was said would happen, and a lot of this is done for headlines. none of this feels very substantive. walmart and oracle oracle is great but it doesn't have consumer experience, whatsoever it is hosting zoom in the cloud. walmart does not have media
11:38 am
experience at all. it is a great commerce company, and the other idea is moving the head quarters to texas to me a media company should be in hollywood the whole thing is just a ten headed monster here that is hard to understand and hard to understand how that is better for consumers or how that protects them more >>. >> a shell game of details to me, kara on this issue of total control, people are conflating money and votes. if u.s. interest has 40% of bitedance and 20% of tiktok, that is not a majority or control of anything. >> it doesn't unless there is a special board that gets to overrule bitedance it doesn't make any sense to me
11:39 am
at all and they have to get china's approval as well they said they would do one thing and it is not that and it is creating a more porus situation. it feels so back scratchy. you add on this $5 billion education fund, linked to the idea of what american education should be, part of a political ploy, i just it is just become a political if is not about how good the app is, how to protect american consumers, or what was the point in the beginning i don't know, maybe it will. >> the same thought of you, it looks like a late stage investment round at this point, let's talk about the quality of
11:40 am
the app. do these amount to distractions if tiktok is the best chance we have at competition for facebook, google, and digital advertising? where does it stand now? how damaged is the app given the saga that we continue to go through? >> it can't be good for the employees, right and the people on the platform, the creators, it just creates all sorts of noise and it's bad noise this is an innovative platform people like it so i don't know how having a multiowner -- i don't know, people know how startups lose their ground it feels not good for the app itself they were going to add people anyway it is just a lot of noise.
11:41 am
it is not a shock that this is the way it ended up. this is not something that makes any sense if you're, you know, trying to be an innovative start up that tiktok is trying to be. >> kara, we can talk about what the street is saying about it, what you think about it, but are the views that you're putting forth the one that's are being circulated right now in the valley itself? >> i'm sure they're just looking at this like what? you know, i think there is a lot of investors that own bitedance. i think they were looking for any way not to have to sell this company at a discount to microsoft or oracle. this is what they came up with, which is may maintain maximum control. they will be able to take it public in a year, and we will forget about the possibility of
11:42 am
there being data inkuscursioninr propaganda and influence i think they did not want to sell this and have a fore sale at a discount. and they put pressure on the government, you know, this is a business deal. this is a business deal. >> kara, we hope we get more granular detail, to your point we'll talk to you soon >> thank you >> it has been ugly for nikola why that stock is down more than 30% and taking gm with it. stay with us, that is next
11:43 am
11:44 am
to help you do your best work and to see what you can become. you're made for bigger things. what do you look for when i want free access to research. yep, td ameritrade's got that. free access to every platform. mhm, yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. now offering zero commissions on online trades. we charge you less so you have more to invest. ♪
11:45 am
shares of nikola trying to hold 27. phil lebeau has more on that >> they have come back a little bit. trevor milton saying he is leaving the company. he was the founder and the former chairman saying i asked the board of directors to let me step aside from my boards. the focus should be on the company and the world changing mission, not me. i intend to defend myself. he is also foregoing 4.8 million. he also must clear any social media postings, anything he says about nikola
11:46 am
staking his place is steve gersky he was the architect of the nikola ipo he ran a company earlier this summer, did a reverse merger, and he is a former vice chair at general motors speaking of general motors, questions about what this might mean for the relationship between gm and nikola. they say we will work to close the transaction that we announced nearly two weeks ago to seize the growth opportunities in broader markets with our fuel and battery systems and to build the badger. that is the electric truck they will build with nikola general motors is due to receive 11% stake in nikola when that transaction closes there is pressure on gm, but really the big pressure today is on nikola. shares down 20%. at one point it was down 26% or
11:47 am
27% today. starting to hear from analysts saying okay, we don't think is a complete lost here, but we're still trying to assess the situation. >> as we all are, fill, thank you for bringing that to us. the street's number one tesla ann list will join us up next ahead of the company's battery day. so don't go anywhere, we'll return in just two minutes jean, did you know geico is now offering an extra 15% credit on car and motorcycle policies? that's great! that's 15% on top of what geico could already save you.
11:48 am
so what are you waiting for? john stamos to knit you a scarf? all finished, jean. enjoy! thank you. i give. the stitch work is impeccable. it's just a double fleck pattern with a reverse garter stitch. no big deal. is your hair this soft? softer. geico. save an extra 15% when you switch by october 7th.
11:50 am
11:51 am
i got help from a pro. my financial professional explained to me all the ways nationwide can help protect financial futures in peytonville. nationwide can help the greens get lifetime income because their son kyle is moving back home and could help set up a financial plan for mrs. garcia. and he explained how nationwide can help mr. paisley retire early and spend more time with his pal, peyton. and their new band. exactly! yeah. don't forget the band. i haven't.
11:52 am
11:53 am
>> tesla is clearly the apex predator in the battery arms race right now we think for tomorrow they're going to take the augmented cobra kia approach they're going to strike first. they're going to strike hard we think he will show a little mercy. i'd be very surprised if he didn't open up his patents and a lot of his intellectual property in an open source way to help get the rest of the battery industry to help get their act together and catch up to where tesla is pushing the stats e of the art. >> is that enough to justify the gains we have seen over the last 12 months? >> no. however, for a stock that regularly trades 40 or $50 billion of notional value per day, i think one could maybe not be surprised if we saw an all time record high volume day tomorrow it kind of begs the question not so much who is trading tesla
11:54 am
what but is trading decembe ini. i don't want to go too far down that rabbit hole to get the stock to justify higher prices, tomorrow would have to do is convince people they're not just in the business of selling car times price but to have some piece of content per unit, say an electric skateboard of every car sold on earth or 50, 60% tight market share of that. in addition to that, they would need to convince people that battery breakthrough they have could also accelerate the regularly recurring software model. those two things could be worth 30 bucks a share post-split. everything from telematics insurance, driving, fuel,
11:55 am
infrastructure, service. that could be worth 1 or 200 bucks a month. that's something the real tech geeks are focused onto add a zero to the price. >> secondary story will be the behavioral element of leading the company and speaking for the company and i wonder if you think the downfall of milton at nikola is humbling for musk or trying to own the shorts >> i think elon has so much has changed and clearly he has been a distraction by his own admission and he's gone through some of that hubris. there's really no better way to put it
11:56 am
we have governments printing trillions and tens of trillions of dollars for green new deals in this country and europe and china all around the world and elon's place in history, i mean, we call it battery day and there's been a lot of hype but you go back to the 19th century, there was lightbulb day. tlp w there was current day. that's the magic of -- that's one edge of the sword of capitalism we think elon is pretty firmly focused on that right now. >> do you think that tesla offers any protection for those who were trying to hedge against
11:57 am
extreme policy out comes in the election >> that's an interesting concept. it makes a lot of sense. when you think about if you want to invest in cars and green technology and ai, machine learning, you want to do it from the huge market like transportation and you could add so many augmentations and adjustments to it. that comes with some -- it's like a prediversified portfolio. added to that they can make some side bets on the next spak or the megatech or start up or some other aspect, even some of our
11:58 am
traditional lems get added to the mix. tesla holds it out as the diversified play it's seen largely as apolitical. >> what you were saying about the battery technology, tesla opening it up in an open source kind of way. i want to push on the idea that might be bad i thought apple should license ios to other phone makers. i was dead wrong isn't that the same kind of call >> i think it's a different industry i respect what you just said i think elon, it's more than just money i think he made a tweet on yul 28th to that effect. he knows that clean energy and battery and transportation is such a national security issue he knows he will return into head winds in china.
11:59 am
he knows that national champions will be formed as important as smart phones are, the auto industry and transport is different it's politically different i'm not going to have 70% market share any way. he accepts that's the way this industry will be it's a big pie he can get a large chunk of he's not going to get the same percentage apple has of the smart phone market >> adam, thanks for your comments today we'll talk to you again soon carl >> tomorrow will be fascinating. we see tesla recover from
12:00 pm
session lows speaking of session lows, the s&p has defended 32.29 two times today. it's leading some to believe that traders have found a lefl th -- level they are getting comfortable with thanks very much welcome to the halftime report i'm scott wapner the state of stocks and your money and why one closely watched strategist says the major averages are still vulnerable we'll debate the next direction for the markets. i'll take you to the wall. i'll show you the markets. rough day under way. a number of issues the fourth straight down day for the s&p and the nasdaq taking a look at some of the bigger movers there there's facebook, amazon, your
78 Views
IN COLLECTIONS
CNBC Television Archive Television Archive News Search ServiceUploaded by TV Archive on