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tv   The Exchange  CNBC  December 2, 2022 1:00pm-2:00pm EST

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tbm. >> you were only angry for the first 59 minutes and 40 seconds. so go ahead. >> that's progress for me, isn't it, scott. that's major progress. tbf, short longer end of the curve. >> jason sunshine? >> honeywell, stay long. >> good stuff. good weekend, everybody. "the exchange" is now. thank you, scott i am brian sullivan in for kelly. here's what's ahead. the november jobs number coming in hot as a result, stocks, they're not. but we are way off session lows. are we back to like good news is bad news or is the market overreacting we'll look at what, if anything, today's report does to the fed i 's tightening plan and what you can do with your money in the meantime here's an idea buy farmland it is becoming or has become a red-hot asset class and inflation hedge. we'll look at what makes it attractive and how you can add
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it to your portfolio i guess you just buy farmland. and there is the opec plus meeting, the looming eu sanctions, and the just-announced likely 60 price cap on brent crude oil we are at a critical touchpoint for the global energy market we are going to look at the week ahead, how it could all play out in three very different scenarios, about next week and the weeks and months ahead for energy all of that, but we begin with mr. dominic chu and the markets. >> a decidedly red day that has become less so to your point, brian. after those jobs numbers and the average hourly earnings numbers came out, the ones you will be discussing way more in depth, we saw markets and futures sell off precipitously. we've come back well off those lows right now the dow industrials is down about 119 points 34,269 we're down 25 points on the s&p. the trading range today at the highs, down relatively, just po.
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and down about 50 points at the lows of the session. again, a down day, but well off those session lows we've seen the nasdaq composite, 11,388 down 44 points, about three quarter of 1% declines here. one thing that has been in focus on the heels of thateconomic data, jobs or otherwise, has been the interest rate complex, ten-year note yields, because of that hot inflation number, did tick higher, markedly so, again, up towards highs that we haven't seen over the last couple of days but as you can see now, we've kind of moderated a bit and back kind of towards that little medium term downtrend that we've seen in yields the spike higher in yields was right after the news, and then all of a sudden, we've resumed kind of towards the downside, flatline side of things. we'll keep an eye on those moves in treasury yields and by the way, because those treasury yields have spiked and moderated, we've seen a steady climb higher technology, media, telecom, or otherwise. check out the intraday chart of these three names.
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microsoft, meta platforms and netflix, we've seen them move off of those session lows. especially when it comes to names like meta platforms and netflix. we'll keep an eye and see whether or not those technology trades continue some momentum or whether or not those jobs numbers really did put a little bit of that headwind towards that growth trade, bri i'll send things back over to you. >> appreciate it, as always. thank you. so when bad news is good news, that is kind of one takeaway from today's jobs numbers. it's good for people, it may be bad necessarily for the market and inflation. america's labor market is strong an average hourly earnings continue to grow and again, while that is very good news for workers, you want to make more and make less, maybe it's not such good news for fed watchers and investors that were maybe actually betting on a potentially slower pace of hikes. joining us now is kathy bostjansic we want people to make more money, have more jobs, be more
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prosperous that's what it's all about do you think that this number being pretty good does change fed thinking >> brian, happy to be with you well, i think if anything, it's going to enkbbolden them to continue to raise rates to a restrictive level. they weren't very resolute saying that inflation needs to slow down. unfortunately, today's numbers don't really support the idea that it's going to slow rapidly. and particularly, chairman powell spoke about that earlier in the week. this connection between wage growth and core services excluding the rental market, right? because we all know that rental prices in realtime, that the inflation is slowing so, unfortunately, it could continue to keep the economy running a bit hotter in fact, we look like we're on course to accelerate in the fourth quarter, to over 3% and in the meantime, the fed wants things to slow down.
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they don't want to throw everyone out of a job and to have a recession but they would like to see below potential growth rate and in fact, we're getting just the opposite >> was there anything in the jobs number that alarmed you at all? or was it pretty much good news across the board >> well, it's really good news in terms of activity, but the wage number, you know, clearly was shocking you saw the overall increase, month-to-month pick up, you know, 6/10 and many of us were looking for just a 3/10 increase if you annualize, that's 3/6 pre-pandemic, we were running 3% so now we're at -- you know, we're still at over 5% in terms of overall wages and the production workers were even higher. we were running at 5.8 that's too hot, that's too good for the federal reserve. and i think unfortunately for the markets. the markets, both the bond
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market and equity market, quite surprising, actually and the bond market is still looking for the fed to ease next year that's the problem that's where the market got tripped up this is the fed saying, we have to slow things down. we have to raise rates to at least 5% and hold it there for a year >> and are you in the, we will have a session next year camp? >> yes unfortunately, i do think it takes a recession to cool things down but we're in a moderate camp you know, typically peak to trough in a recession, exclude the great financial crisis and covid, we are looking for a decline of 1.6%. so, you know, not mild, but kind of a more moderate but then, balance sheets still look good. so that can help, even as we come out of the recession. >> yeah, and what would that change then? if we get this mild recession, and let's hope if we get one, it is mild. does that necessarily mean that the fed pivots and starts
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cutting? because that's kind of now the debate the rate hike debate is kind of over we know hikes are coming, but they're closer to being done than starting. the next debate, as you know, is going to be, okay, when do they pivot? or do they just stay put, for like three years >> yes, that is definitely the debate and the markets are weighing in saying, we think they're going to start cutting rates possibly by the middle of next year certainly by q4. we just think that's too quick of a turn around for the federal reserve, just given all of the evidence we've seen so far, the data and inflation we think that one year, you know, get a bit above 5%, hold it for a year, that should be suffer but it's really going to depend on the inflation numbers, right? and we now know what the focus is on, core services excluding real estate or rental prices >> kathy bostjancic, a real
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pleasure to have you on again. our next guest thinks that investors should be prepared for rougher seas ahead and a recession next year, but even in this kind of marks there are some companies and stocks that he likes that can ride out the volatility that may even prosper. let's bring in bill stone, chief investment officer at glenn view trust. and there is this idea, bill, that recession, it's a scary word, oh, gosh, markets must come down. stocks are going to come down. it feels like everything i'm reading suggests much of the hit, maybe not all, but much of the hit for next year already happened this year what's your thought? >> yeah, i mean, that would be the typical, right you typically see a sell-off somewhere in the neighborhood of 25 to 30%. and we were at our worst, down about 25%. a complicating factor is, we typically don't bottom this early before the recession starts so, now, that doesn't mean that it doesn't happen, right these kind of streaks are meant
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to be broken but it makes me a little mindful, particularly when you have a stock market and a bond market that are really glued together, like today, right? stocks and bonds together through all of november. you had stocks and bonds up together and the currencies thrown in there. so, i think you just have to be mindful, you know, some of these risks that, you know, it is certainly possible, you know, we saw it today with the payrolls, that yields do start heading up again. and i suspect that will put pressure on at least certainly the growth side of the market. >> all right let's talk about post-it notes and ketchup, and hopefully not together, because that would be kind of gross. first up would be 3m this is a consumer products company to end all consumer products companies i'm not sure that scotch tape demand is going to drop off, even if we get a recession >> yeah, and they have a lot of other industrial products and things that you don't think of, but you're right the beauty of 3m is they own all
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of these patents and frankly, they make very good products that people are willing to pay a premium for and as a shareholder, that's a great thing. now, the not-so-great thing is they have a couple of litigation issues hanging out there that's why the stock is as cheap as it is, and it yields 4.7% i think the dividends stays -- eventually, they'll have to pay out a significant amount of money. the balance sheet is very good it's just unclear how long you're going to have to sit there and wait before people are willing to take a step in. it's just one of those, no analyst wants to be positive on the stock, because, you know, it's got this overhang on it but it's historically been a very good blue chip and i suspect that it will return to that at some point >> and of course we know them for their consumer products. but not to dis3m, they're getting bigger and bigger into energy they make parts that go into wind turbines, into solar panels, make flnuclear stuff,
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they're oil and gas, they're a secret energy company in a way >> they do health care and auto repair all of the things that makes things easier and better, and again, their secret sauce is that they come up with these things pro p proprietarily and can charge for them. as long as that continues, i think you can feel pretty good about oeng owning the company for a long time. >> talk about the sauce king, that's kraft heinz, as well. a similar -- you're not going to get 30% growth out of kraft heinz, but that's kind of not the idea anyway. >> and it's been a dog for a while. part of it was, people got excited about it, because buffett put a good amount of money in it. he even admitted that he paid too much for the stock not as good as it used to be doesn't mean it's not a good company. and they underinvested for quite a long time in the brands. they've done a really good job of trying to reinvigorate the
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brand. it's kind of old, but my personal favorite is the m maymay mayochup it builds a better body for me, you know >> you're flexing, i can see it. >> there's a lot of interesting innovation that i think will do just fine. and you get a dividend of 4% along the way. they may be able to pass along some price increases it's kind of one of those sneaky recession plays, because likely if there's a recession, people might eat at home more, and that would obviously go right into their wheelhouse, as well. >> by the way, we are going to be live in brussels, belgium, on monday morning you mentioned mayonnaise, mayonnaise is for fries, not ketchup. mayonnaise is the way to go. bill stone, glenview trust, thank you very much. >> thank you >> by the way, do not miss the final event of cnbc pro week, that is today at 2:00 p.m. on your second screen kristina partsinevelos is sitting down with mark mahaney,
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he'll take some of your questions on stocks. sign up right now cnbc.com/protalks. on deck, european union officials are now backing a $60 price cap on brent crude oil and with full sanctions set to go into effect against russia next week, we are going to lay out the three scenarios that could have very different outcomes for the global energy markets. that is next plus, three themes to watch and a way to invest in each. how you can play the fed decision, the jobs number, and the energy story, all coming up in our trader triple play. "the exchange" is back after this
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all right. welcome back next week is a big one for the global energy markets. both for europe and for the world. first, you have opec meets on sunday and a small cut, i'm telling you, could happen. then on monday, it gets even more interesting, because that's the day the european union sanctions on russian oil into europe kick in now, they are designed to stop the sale of nearly all russian oil going into the con innocent. doesn't get a lot of attention, but there is still some russian oil going into europe. and that is not all. as we speak, european commissioners and the g-7, including the united states, look like they have come to a decision on a price cap for
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russian oil of $60 in brent crude. that would try to limit the price that russia can charge by selling oil to other countries, like china, india, turkey, and more ones that have continued to buy. like we said, earlier, it looks like they have agreed to a $60 cap and that is about a 25% discount below the current price, but probably right around where oil is being sold by russia anyway. so, sanctions into europe and a price cap for the rest of the world. it is a lot to take in what's even more complicated is how russia and putin might react to it all. remember, putin has said that they will accept no price cap, whatever the final number there is so there's a lot of potential outcomes, but rye stad energy with the economists have done some great work on laying out the three possible scenarios and yo outcomes this is very rough, but it should give you an idea. first, scenario one, things kind of stay about the same as they
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are now. you have russian oil getting sanctioned, that's monday. there is a price cap russia is annoyed,they're unhappy, but they keep the majority of their oil flowing. yes, costs for europe probably rise a bit, because there's probably going to be a shortfall of a million barrels of oil per day, at least at the beginning but that's the status quo outcome. number two, this scenario we'll call escalation. russia gets really angry they'll cut their oil production, as they've said they might in retaliation they hope that prices rise they could also shut off the one last remaining pipeline to europe they could stop selling lng, which, by the way, they're almost secretly doing right now. again, doesn't get a lot of attention. opec may be cutting in sympathy, fearing a major economic slowdown and then prices rise that's scenario 2. all right, scenario 3. the worst case don't even want to bring it up, but got to do it call this the all-out energy war.
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all remaining russian pipelines, they're cut off. other pipelines, like the big one coming from norway or others end up getting sabotaged like the nordstream was millions of russian barrels disappear from the market. this puts europe and maybe the world into a deep slowdown, recession, et cetera opec does a massive cut to try to keep prices evaluated this is the so-called doomsday or energy war scenario now, that is highly unlikely, but it cannot be discounted to zero so let's find out what is most likely to happen let's bring in vice president of analysis at rystad energy, jorge leone. he and the rystad team have done great work on this, using a lot of their dad, jorge, great stuff. thank you for joining us in your mind, which of these scenarios -- again, they're kind of rough outlines -- which of those scenarios is the most likely outcome >> thank you, brian, for having me it's always a pleasure so, at this point in time, i wouldn't rule out any of the three scenarios. things can go south very, very
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fast, i think. now, one would obviously want to avoid as much as we can, scenario 3 but things can go south very fast on one extreme, we have the base case where we'll be paying for the european union you have the extreme scenario, of course. and it will be extremely painful for the global economy and for consumers around the world >> that said, to your point, there's a lot we don't know. we don't know how russia will react, the shipping markets will react, et cetera what do we do know right now what are sort of the certainties as we go into the weekend? >> i think there are three certainties, even though these scenarios show a wide range of uncertainties, i think we know three things the first is that the energy crisis is far from over. yes, the european union has made
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it through this winter, essentially paying a high lng cost and a mild weather. we've been very lucky. that's the first certainty energy crisis is not over. the second half of next year could be painful the second certainty, i think, is that europe, especially, will have to pay a premium for diversifying imports away from russia that's energy security so energy security comes with a cost and finally, the third certainty is that oil and gas prices will remain evaluated for the coming months or so always, when there's a disruption in the market, there is going to be some price action and that's going to affect the global economy and also, again, consumers around the world >> it looks like they've agreed on a price cap of $60 for brent crude. that's about 25% below where brent is right now, jorge. but with your own data, this is not my data, it's yours. you have seen russian oil that is actually trading -- because they have to sell it at a discount, below $60 a barrel
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right now. so do you think this cap, if oil prices kind of stay where they are, is going to do anything >> so i think it very much depends on the reaction of russia great that we finally have certainty from the european union about the price cap level. just a few hours before the embargo kicks in, but i think there are two pieces of the puzzle that are still uncertain. russian reaction they've been very clear, saying that they will not sell oil at a discount you know, if countries or companies signed up to a price gap. it remains to be seen if they still take that hard stance. and the second puzzle is, what would china and india do in these scenario and this is still uncertain. so, we expect to see some action in the coming months, in the coming days, actually. >> well, you used to work at opec i hope that's okay me saying that seeing you inside the building in vienna. sad we're not going to see you on sunday.
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but opec is still meeting. they're meeting virtual. maybe they dwwon't do anything. i think we could still have a small cut. but now that we have a price cut, how do you see opec reacting to the sanctions and the current price levels >> it's a very difficult one for opec, i think, this time as you correctly mentioned, they're meeting on sunday. and essentially, they have to balance all the risks that we see in the market right now. and the first one, we discussed russia, what is going to be the reaction of russia what's going to be the reaction of china and india to the announcement still don't know but on top of that, you have also the uncertainty from the demand side. growing covid cases. and we still don't know what's happening there. so my expectation here, is that opec might take a cautious approach and we'll wait until the dust settles before taking any decision >> we know that russia has been kind of almost secretly buying up or somebody on behalf of
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russia, china, perhaps, a bunch of old sort of crappy old, but seaworthy oil tankers to kind of get around some of these sanctions. we'll talk more about that in our full coverage which starts on monday from europe. that said, how many barrels of oil, do you think, when the sanctions kick in, the price cap is ratified, as we expect it to be, how many barrels of russian oil per day do you think may, in the near-term, come off the market >> if russia does not sell to anybody, the price gap, we think that around the medium barrels per day might be lost in the first quarter of next year and that's because of the limitations on the fleet, on the tanker fleet of russia but as you correctly mentioned, as they gradually build that fleet, maybe production will start recovering in the short-term, impact around a million. >> it's pretty unbelievable that they've been building up a secret oil navy. but we'll talk more about that
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on monday with our live coverage from brussels, belgium, where the sanctions are kicking in jorge leon, amazing stuff by your entire team appreciate the work. everybody. thank you very much. as we mentioned about a hundred times, all next week -- not all, monday, tuesday, wednesday, we'll be live in europe monday, we'll be covering the opec meeting plus the eu sanctions, plus the price cap reaction, okay it's kind of an oil day monday on tuesday, we're going to head to the netherlands and take a look at their shortfall of gas you just heard wjorge say it the problem is not over. it could get worse next year we're going to talk about the role of u.s. lng, a marshall plan for energy, if you will run the math see if they can get through next year, as well. what companies will benefit. talk about all of that and on wednesday, we're going to talk about the role of renewables, try to get off gas altogether in some industries if they can and we've got a really cool shot coming up on wednesday i'm going to be really high up, looking down on something really cool i hope
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all right. as soon as my flight takes off coming up, it feels like every day now, a different company is announcing a round of layoffs. that is making some employees consider choosing career cushioning what the heck is that? sharon epperson is here to tell you what it is and what employers need to know plus, we know it's been a rough year for most investors. and while some of you may be thinking about putting your portfolio out to pasture, your next guest says it's time to bring the pasture into your portfolio. stick around thinkorswim® by td ameritrade is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back.
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want to find a bright spot, we're not at low of the day, down 121 nasdaq down about 0.8% here's some of the movers at this hour. ulta beauty touching an all-time high before going flat saying that spending jumped across the board, across all income levels. cosmetics company also raising its outlook for the year stocks down a bit. it did have a nice pop that's that little green thing you see there. marvel technology falling after mixed third quarter results. much weaker than expected guidance that stock is down 3.5%. and boeing, getting a bump on monday, on reports that united airlines, close to buying dozens of boeing's 787 dreamliners. that order would be worth billions of dollars. and the chinese tech names, they're getting another bump today and are up big for the week jd.com, alibaba, all rallying about 20% this week. pin duo, duo up 30%. tyler mathisen with a cnbc news update >> brian, thank you very much.
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and here is your cnbc news update, up to the myinute. part of interstate 90 remains closed after a u.p.s. semi truck caught fire, crashed off a bridge, and dangledbetween two overpasses my goodness. do a river below officials say emergency crews were able to rescue the driver and transport him to a nearby hospital he was released with minor injuries, no other vehicles were involved, but the traffic snarl is epic. germany's chancellor scholes had a call with vladimir putin, where he condemned russia's air strikes against civilian infrastructure in ukraine and stressed germany's determination to support ukraine according to the kremlin, putin told scholls dz that the german western line on ukraine was destructive and urged berlin to rethink its approach and a new survey, 35% of millionaires were found to say
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it's going to, quote, take a miracle to be ready for retirement americans now expected that they will need $1.25 million to retire comfortably, as higher costs strain household budgets that's a 20% jump from the $1.05 cited just last year according to a separate survey from northwestern mutual. brian, whatever the cost turns out to be, it's pretty high. >> but it's not what you make, it's what you spend, right if you want to keep the lifestyle you have while you're making $1 million a year, that's a whole different can of worms >> no, that's right. you have to either -- you have to adjust to where the income is >> by the way, your solid gold bentley scraped my rolls out in the parking lot. >> yeah, right have a good weekend. >> you too up next, investors are staring down the barrel of a potentially fifth straight three quarters of a percent rate hike. naanezp do you do about it ge sch unext with some ideas.
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it's normal. with calhope's free and secure mental health resources, it's easy to get the help you and your loved ones need when you need it the most. call our warm line at (833) 317-4673 or live chat at calhope.org today. welcome back stocks, they're lower, but they're way off session lows after the stronger than expected jobs number. all of that as the market and everybody else still digesting j. powell's statement that rates
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will start to slow as an investor, our next guest says she's watching three key themes going forward let's bring in gena sanchez with lito advisers and a cnbc contributor. all right, theme one beaten down, but great outlook, what does it mean? what's the pick? >> so, here we're just expecting that no matter where the fed finally ends up peaking out at rates, whether it's four and a quarter, four and a half, maybe even as high as five, not very many people are expecting a rate easing cycle after this. whatever we've lost in multiples probably not coming back everything you buy into right now has to be a great earnings story. one of the earnings stories that we look is a long-term story it's got some near-term weakness, but a long-term great story. it's microsoft microsoft cloud is still growing strong double digits, 20%, azure is growing 35%, in terms of earnings and while these numbers are
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slowing for the near-term, because we are going into a recession, the long-term story is still very strong >> okay. theme number two, consumer spend ing power. even i can understand what that means. what's the theme >> here, obviously, you heard the great jobs number this morning. we heard that wage growth still reasonably strong. and obviously, there's still a lot of pent-up demand. we still have a shortage of workers. so people are finding jobs and finding jobs pretty quickly. we're seeing lots of layoffs coming and what that means for the slowdown is more than priced into many of these consumer stocks nike is a great example of a great brand. and there you actually have a double bump, which is that you have decent strong consumer growth, but you also have the
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anticipated china recovery it's an incredible brand, and one that we thinkis going to recover. and it's definitely been beaten down, as well. >> here we duo, theme number three. and this is energy beneficiary of course, i've talked about energy once or twice here. jb hunt, a trucking company? how is that an energy beneficiary? >> so here we're talking about, the oil supply market is adjusting to the fact that this conflict in ukraine is not going away we've already seen oil prices drop from 110 down to as low as the high 70s it's obviously still in the 80s right now was but there are lots of segments of the economy that were crushed when oil went up. and you look at a company like j.b. hunt, not only is it a transport company, but it invested a tremendous amount
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into technology. and they are seen as a big disrupter in sindustry, with their jb hunt 360 platform that's making the entire logistics experience a lot more efficient. so we see a lot of room for them to benefit from oil prices at a lower level, but also to benefit from the investments they've made in technology >> j.b. hunt, microsoft, nike, gena sanchez, thank you. >> thank you, brian. still ahead, the jobs report blowing past expectations today. at the same time, we're continuing to see layoffs from a growing number of companies. and as a result, a growing number of workers are doing sothg ll cee cushioningr what is that sharon epperson is along with it, next ry. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you.
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companies, twitter, meta, amazon, salesforce, more, they're making headlines so what is the likelihood that mass layoffs will hit other industries adds well for more now on the jobs market, we're joined by cnbc's personal finance correspondent, sharon epperson sharon >> we're looking at these numbers, brian, and we're saying, well, they must be megalayoffs. looking at 320,000 job cuts so far this year. but actually, that number is the lowest number that they've seen since they started looking at these numbers in 1993. war we hearing about we're hearing about tech we're hearing about the tech layoffs that you mentioned, the companies you talked about as one story on cnbc talked about, they're in the media. we're talking about them all the time but the reality is, the layoff numbers that we're seeing in automotive, in health care, services, retail, not nearly as high as what we're seeing in technology but still, it's making people think about it and worry about it for their own jobs. >> well, and so that's leading
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them to do something, maybe this is your term, career cushioning. i've heard of quiet quitting what's career cushioning >> this is a term that i did not come out, that hr leaders are looking at, a tried and true strategy of making sure you secure your greatest asset, your career make sure you're positioning for a new job, because you're concerned about the job you have, you're looking at your resume, building new skills. you're networking with as many people as possible, inside and outside of your company, but what business leaders need to know, their employees are doing this they're concerned and worried and looking elsewhere at the moment >> if i think my employees are looking elsewhere, they're talking about it, they're disgrublted or whatever, what's some advice to those folks >> i think people need to be honest about where they are in their industry and whether or not they'll be resilient in the
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year ahead what do people need to be doing? how can they build confidence in what they're doing now in their reorganization strategy, if they have one and talk to the people that you want to retain about their career plans what have they done that's good for the economy? what do they need to do more of? give them some guidance and some indication that you want them to remain there and also, how they can pbenefit from staying with your company and not going elsewhere, knowing that they're already looking >> do you think that the pace of pay hikes is starting to slow? because for two years, i mean, top talent could pretty much name their price or they bolt. >> i think a lot of people may not be negotiating as hard, because they want to make sure that they have a job, particularly if they've been laid off or if they're concerned that that's going to happen. that may indeed happen >> is the power is flipping back to the company >> moederating a bit >> sharon epperson, always great stuff on the jobs market appreciate it. coming up, down on the farm. if you're looking for a true inflation hedge and maybe you just like farming, we're going
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to talk about how and what you should be buying that is next plus, auto sales they've long been a bright spot in the economy but are we finally starting to e meseso cracks? we'll talk about that, as well we're back in two. i got into debt in college and, no matter how much i paid, it followed me everywhere. between the high interest, the fees... i felt trapped. debt, debt, debt. so i broke up with my credit card debt and consolidated it into a low-rate personal loan from sofi. i finally feel like a grown-up. break up with bad credit card debt. get a personal loan with no fees, low fixed rates, and borrow up to $100k. go to sofi.com to view your rate. sofi. get your money right. ♪♪
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inflation is cooling off a little bit, but there's one asset that is pretty much hotter than ever. that is farmland interest and investing in farms is at a 30-year high and some experts say it's one of the best inflation hedges out there so is it time to grow requyour portfolio in a totally different way? seema mody is here with more seema, what can you tell us about the farmland >> reporter: in addition to being an inflation hedge, higher crop prices are contributing to rising farmland values, plus a transfer in wealth families inheriting the land and choosing to sell it because they no longer live on the farm, they've moved to the city. average price per acre for farm real estate, $3,800. that's the highest on record in this nation, up 12.4% year over year, according to the department of agriculture, with values in iowa, illinois, above $8,000 an acre interest expanding to the pacific northwest, as well and that's attracting new
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investors. >> what we're seeing is new buyers, new entrants into the market that have historically not been in the farmland asset class, and they're coming in with cash, you know, pulling it out of equities and other places and they're looking at this as an inflation hedge >> the mormon church, bill gates's family office and private equity firms are among investors buying the land, in most cases leasing it out to farmers. two others with exposure, farmland partners and gladstone. they have outperformed over the past three years experts including bruce herick, the university of illinois professor, he says one of the big risks and opportunities is going to be china. right now, one fifth of our agriculture exports go to china. that's about $38 billion a year if the economy slows down, that could bring crop prices and farmland down with it. brian? >> all right, seema mody, thank you very much.ecte it. so exactly how do you do invest in farmland i guess you just buy a farm? maybe it's not that easy let's ask martin davies, global
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head of novene natural capital so if i believe seema's report, and i do, do i start asking realtors for a couple acres in iowa how does this work >> hi, brian great to be here i think there's never been a better time invest in farmland many different ways in which an investor can access the asset class. there's some exchange-traded vehicles, opportunities to invest in funds for qualified investors and new platforms online, which investors can use, and of course an investor can invest directly in farmland. but the one thing that i would say is if you want consistent returns there in farmland, you really have to diversify so a vehicle in which you can get some diversification is critical to deliver consistent returns over time. >> okay. like what? how do we do it? >> so, if you have a diversified
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fund, you might have different crop types, different locations, different ways of operating the asset. so you might lease out cropland and operate permanent crop land. different return profiles give you complimentary aspects and that gives you the stability an returns over the long term >> yeah. so is it better to physically buy the land or no sounds like you're recommending financial instruments. is that the better way to do it? >> the characteristics you're looking for not correlating to the economic side or the inflation characteristics and low volatility of returns and strong returns as well, fundamentally you need to have free held ownership of the land. instruments won't give you the same characteristics high quality, deliver consistent returns in the long term >> is there a better crop?
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i mean, like if i was going to -- okay, i believe what martin is saying, i want to own farm land, what am i buying? >> we try and diversify globally, so investing in the u.s. but also other location, australia, south america, europe we've got 46 different crop types growing across 2.2 million acres globally, and all those different crop types, you haven't got a correlation between the different returns of those crop types and that's really what gives you the strength in the construction of the portfolio. so it always is diversification. agriculture is primary production, so we can't get away from weather risks, commodity price volatility, and government intervention is something we have to deal with as well, so diversification is key. >> what kind of returns can we expect >> the u.s. farm land index,
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which over a long period of time the index goes back to 1990, so we've seen returns, total returns of about 10% of the index. that's about 4% coming from appreciation and 6% coming from income so you've got complementary returns and very stable over the long term. >> martin davies, nuveen capital. i love talking about it. something different. thank you very much. have a great day >> thank you >> you're welcome. the auto market has been red hot for years. is it starting to crack? we'll get the latest sales numbers, ford and athemawh ty y say about car sales overall. w, s 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.
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(woman 1) i just switched to verizon business unlimited. it's just right for my little business. unlimited premium data. unlimited hotspot data. (woman 2) you know it's from the most reliable 5g network in america? (vo) when it comes to your business, not all bars are created equal. so switch to verizon business unlimited today. the american automobile market makes up nearly 3% of total gdp and has been a very, very bright spot for economy
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ford, though, reporting a big drop in sales last month does this bright spot see some clouds phil lebeau joins us with more i wonder is the drop just a measure of they can't get the cars made or the trucks made or is it a real softening >> well, it's a number of factors, brian, and i know that's not the answer you're looking for. keep in mind when you look at ford's november sales, down 7.8%, that's in comparison with november of last year, where the chip crisis, they had better supply in november of last year, it's really hard to do nies year-over-year comparisons right now. it's lumpy the bright spot for ford, its ev sales. they have three models that are electric it's up a 103% keep in mind, that's coming off a small base f-150 lightning sales for the month of november just over 2,000. as you take a look at shares of ford this year, the stock is down because it's still predominantly an internal combustion engine vehicle manufacturer as a result, that market is feeling some pressure right now,
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especially if pricing has to come down. but its ev sales of the lightning totaling more than 113,000. for ev sales by the end of the decade, it will be up close to 40%, at least according to estimates. ford will be ramping up that production to 150,000 units per year that's going to happen over the next year, year and a half, and they expect to be a big player here by the way, they have now passed hyundai kia for number two in the u.s. when it comes to ev sales. yet as you look at the automakers, some of the primary ones here, the reason the traditional automakers are lower is because many are saying we're not seeing the level of demand that is out there in part because prices are so high they'll have to come down at some point here. and when you look at tesla, completely different beast, even with the unveiling of is semi truck last night its issues are separate from the rest of the auto industry right now. >> okay. let's talk about elon musk because we don't talk about the
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guy enough >> yeah. >> this tractor-trailer truck is unbelievable looking >> yes, it is. absolutely and everybody has said this since they first unveiled it back in 2017 the final version looks similar to what we saw back then when you look at the cab, the steering wheel is in the middle as opposed to the right or the left if it delivers the performance they're touting, it could be a game changer for the trucking industry but keep in mind, they're not the only ones building an electric semi truck. there are others who are working on this. so it's not going to have this market all to itself, and there are more than a few on wall street who are very skeptical that they're going to be able to ramp up to 50,000 semi trucks a year production by 2024. a lot of analysts are saying i don't see it moving the needle >> and this thing works, right they're not, like, just rolling it down a hill for a commercial. >> oh, yes it works yeah >> you know what i'm --
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>> we are not looking at another nicholas situation when they first showed that model back when they were first going through the process of this. >> rolling down a hill and wherever it lands. this runs. >> oh, it runs it runs. and it will be interesting to see how much demand is out there and how much of that demand tesla can meet keep in mind, there's a lot of preorders out there. preorders are great. can you convert those into actual deliveries? pepsico got the first one last night. >> i can't wait to see one on the road like there's the cyber truck or whatever, not the cyber, the cyber semi truck phil lebeau, appreciate it cool-looking truck thank you. >> you bet speaking of energy, do not forget we'll be live in europe monday, tuesday, and wednesday covering the opec meeting, eu sanctions, the price cap, everything that is monday tuesday we're focusing on gas. can europe with almost no russian gas make it through next
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year and the role of u.s. lng we'll make companies, price targets, how much they can actually send and fill and then on wednesday, more on the renewables, how much can renewables actually grow and actually plug some of these holes. we'll see you there. i'll see you in "power lunch" but the show begins right now. we do look forward to seeing you, brian, in 40 minutes or so and next week from europe. welcome to "power lunch. with contessa brewer, i'm tyler mathisen stocks are falling today after a better-than-expected jobs report do markets fear that the fed will have to keep raising rates maybe even higher than anticipated? or are there other signs of weakness in the economy that investors are nervous about that explain why the market is down just a little bit this hour? contessa >> well, tyler, markets are lower right now off the worst levels of the sessio

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