welcome to "squawk on the street." i'm carl quintanilla with sara ei eisen. fresh off latest billion dollar deal, thoma bravo founder orlando bravo, areas he's looking to with potential targets with $131 billion in aum. let the games begin. as the football season kicks off tonight, expectations for the betting industry are huge. fanatics gaming ceo is here with his outlook. eqt, can the industry bounce back this winter with the commodity down 40% this year.

first a look at the markets. the nasdaq falls for the fourth day in a row. apple is a big part of that story and a contributor to that decline. and then economic data out including fewer jobless claims which is good news but adds to fears that the fed might relax tight monetary policy. let's bring in cnbc senior markets commentator mike santoli. i late saying higher for longer but that is the name of the game lately with the strong dollar and the higher yields and weaker equity prices and firmer economic data. >> i think it's been the assumption, sara, that higher for longer is the fed's preferred mode in terms of policy rates. now we're seeing longer term treasury yields also try to register that to some degree. if i interpret the market action, it's not that, you know what, you can't get this economy down, it's just stronger than we anticipated and it's going to stay that way. that's why yields are at 4.3 on the ten-year. that's why we can handle 7% mortgage rates. it's not that.

it's that we're strong right now. we have a structurally tight labor market. inflation is down but not down enough. therefore, higher for longer on rates means the psychology is later for longer in terms of the cycle. we live with the late cycle concerns of, we would like to see more cooling. it's not happening quickly enough. you see industrials and cyclicals register that. we got back up to 19 times forward earnings. you don't have the compelling valuation case. you could make the argument that we should be there but it's harder to sustain that. you have the september effect and we are fighting it out around the 50-day moving stuff. >> is volume backing this up necessarily? >> no. i would say it was a light volume rally last week. it really actually has been relatively low volume coming back. it hasn't been about a stampede out. it's been about buyers on we and the seasonal effects and the

valuation headwinds. when you don't have the secular growth story animating the apples and nvidias that are covering up for the cyclical concerns, which is what's been going on right now as well. i would argue apple is always its own thing. it's not really a bellwether economically. it sort of operates in its own kind of atmosphere, but you clearly have some coattails there. some storage names are weak are some downgrades. nvidia is not holding the earnings related pop. >> you say apple is not a barometer but it might be an indication of the china sentiment. >> oh, for sure. >> and risk out there that hasn't been reflected much in the u.s. stock market. >> not too much. if you look at china-exposed stocks it's things like tesla, estee lauder. that's another thing that has almost its own energy source. you never know when it's going to wax and wane.

>> thanks. tech sector does fumble a bit, our next guest sees the gap closing. value has been catching up and u.s. growth funds turning negative. joining us at post 9, rbc head of equity strategy lori. great to see you. explain how this fits in with your overall thesis regarding equities. >> our target on the end of the year is 4250. we've said there's a large range of models. some are higher, some are lower. generally we feel more neutral on the market and we were more constructive at the beginning of the year. we have been concerned about the seasonal september/october effect. i feel like we're in an information vacuum at this point in time. we don't know what the new narratives are. it's difficult for the bulls to have anything to latch onto. now we're seeing the stalwarts and the engines of the market. it's a plain, old fashioned, crowded, overvalued trade. it needs to correct. it's got a ways to go.

if we have a few more days like this, we'll get there fast. it's something that needs to happen. the leadership is tired. >> you're an old tech hand, yes? >> i'm small caps. more on the small caps side. >> have you been questioning some of the longevity of the large tech models? >> what i will tell you is i grew up in the aftermath of the tech bubble at a different firm and lived through that. i've always been scarred by that experience. so i look at tech today and i try to be really unbiased, unrational. i think it is crowded for a reason. i think we're staring down the barrel of sluggish economic growth for a while. that's the price we pay. it's crowded and overvalued for good reasons, which kind of make what we're going through very difficult intellectually to grasp. so i think there's going to be an opportunity in here for longer term investors to come in and buy this stuff. it is going to require a strong stomach. it going to require some patience. i can't tell you it's going to turn around tomorrow. we have big problems on

valuation and crowding we have to get fixed before the fundamentals can take over again. >> so, if the market loses tech as its leadership group, can the market hang in there? >> that's exactly the next logical conclusion. i said to one of my traders this morning, we were talking about energy and how they're starting to think that's getting to be a tired trade. that's been one of the more recent deals. our xhotty strategists are saying maybe we have consolidation. if value is starting to ining t you'll get a day where defensives start to prop up. they're just not big enough to sustain the market. you have to have some consolidation in the broader market if growth and value are both losing some luster at the same time. >> what is your favorite defensive play if you're nervous about this stuff? >> we've said health care. it's got more reasonable valuations than what you've seen in utilities and staples. i think staples has a pricing issue. our analyst has been negative on the idea that pricing is going

to hold up in that sector longer term as consumers become pickier and chooseyer. health care has reasonable valuations on the pharma/bio side. there's a growth component there. it's benefitted from the labor back drop easing. we're seeing a nice rate of upper revisions. it's not the most exciting story. i'm not going to lie. it's sort of the best of a bad bunch. >> speaking of exciting stories, google had a blog post this week talking about a.i., bigger than the shift from desktop to mobile. it may be bigger than the internet itself. isn't that an idea that is inevitably going to come around to us and hit us in the head? >> i think so. i think we're struggling with the lack of really good growth themes. why we got so crowded and overvalued in this tech space. look, i feel like maybe that case is overstated a little bit. i'll leave that to the experts to figure out.

i think it's important. i think i think it's a product enhancer. we've seen commentary come out and not be as cheerleadery but talk about how it will improve their business. i'm in that latter camp. but it's one of the best growth themes we have to choose from. i got you that and reshoring. that's about it right now. >> what is your forecast about what happens with yields and how that impacts overall stocks? because i think the surprise has been that the two-year continues to move to 5% and goes to the upper end of the range at 5.3 on the ten-year and that's stood in the way. >> when we've seen the yield move above 4% it's sick logically kill for them to wrap their heads around. the big past 3% was a big move as well. it's these round numbers, whenever we have other reasons to come in and prick the bubble. in my valuation model i have plugged in 4%. i've plugged in 5% on the

ten-year. i have a model -- that model based on where general expectations have been have been, look, we can sustain a multiple in the low 20s. that's been baking in 3.5% ten-year treasury yield. when i stress the model, it pulls the number down but not as you might think. same on 5%. >> 5% ten-year doesn't pull it down much? >> it doesn't pull you down to like 15 times. the moderation in inflation, as long as that is still baked in the forecast, that can give you lift of pe multiples. that's important because if you go back to the 1970s, inflation rates did a better job of explaining pe rates instead of multiples. i look at why hasn't the market been hit harder over the last month or so with this move above 4% and that dynamic of inflation and what we saw in the '70s is giving me comfort in here. >> that's good. are you in a first half '24 cut

camp? if so, do you sell the first cut? >> so, our rate strategists are saying second half of next year. i will tell you that i kind of think it doesn't matter. i think the reality is is that portfolio managers and strategists and economists, we're going to go back over the next few months and write our outlooks and talk about that around thanksgiving and they're going to get hit hard in january. they'll say, some time next year we'll get cuts from the fed. that may effect positioning and timing but i think in the fourth quarter of this year and the first month of next year we'll be talking about coming fed cuts. >> that's going to be good for stocks? >> i think it should be. at the end of the day it should be supportive of pe multiples, especially risk trades like small caps tend to do well when the fed is in an easing mode. i think what we've seen over the last year and a half or so, we're just acting more and more forward looking in the equity market than we have in the past. you see this in relation to

earnings. so i think if people can reasonably say with confidence we're going to get some cut some time in the next 12 months, you'll see prepositioning trades. >> i love that time around thanksgiving when the 2024 -- >> you don't have to write them. >> no, but we get to read them. >> such good research. >> capital wait to read it. when we come back, thoma bravo agreeing to take nextgen healthcare private this week. he joins us on areas of the market he thinks are undervalued. nat gas prices have plummeted but eqt has outperformed. er mkee toin us for moronhe engyarts. don't go away. alling each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald.

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bravo founder, orlando bravo. it's good to see you at post 9. good to see you. >> sara and carl, good to see you. it's good to be here in person. >> good to have you on a week especially when you made a deal, nextgen healthcare. i'm curious how that came together. >> well, you know, i can't talk about the specifics, because the deal announced but not closed. it's subject to regulatory and shareholder approval. look, we're always buying companies and we're always selling companies. and the way for us our deals come about, which may be interesting to your audience that trades these stocks is we care about three things. those three things are literally the only thing that matters to us. one is, can we buy high-quality revenue in enterprise software? can we predict that revenue line over a long period of time. second, can we create an earnings stream from that company? can we turn those companies from low profits, which most of them are in the public markets, to very highly profitable and

growing companies, doing what we've done over 25 years. then we take that p&l and make the rate of return our investors expect by selling it at a reasonable multiple of cash flow, say, four to five years down the road? there's so many deals in enterprise software in any market, whether the index is high or low, that really fit us well. >> the first point i can see the visibility, for instance. this is an electronic health care records company. and most of their revenue is recurring. is this a space -- you've done other deals in this space, health care tech a space you're more interested lately? >> we've done many deals in health care software. it's a great space. it's very stable. and the buying environments within health care are very stable. they depend on technology. they're at the beginning of digital transformation. they've been at the beginning of digital transformation for a long time but it's an excellent space for long-term buyout fundamental investing. >> we saw competitor cerna get

taken out by oracle. i'm not sure how many public companies left that do this sort of thing, are there? >> there are more. not many. you have to pick the right ones. we have some in our portfolio that does cyber security and single sign-on for hospitals. if you go to a hospital and get a checkup you probably see the imperva system working. >> i was curious about the timing of the deal. this is a year where the nasdaq rallied 30%. it's not like last year when we saw the selloff and valuations look good in tech. so, what can you tell us about the valuation in this space that made it appealing and just overall given the market's climb this year? >> such an important point, especially as it relates to owning a company versus trading an index. we don't buy the index. we don't sell the index. therefore, we don't have to attempt to predict the index, which nobody really can. we had a conversation before and it was when we were doing all these deals, the index was

coming down. salepoint, ping, 4drug. now the index is all the way back up. what we care about is, is the company that we're buying, does it fit those three criteria and can we make a rate of return on a fundamental basis with that company? >> so, you still see -- you see this as a still ripe deal-making environment? >> for us it's always -- the right time for us to buy a great company that fits our strategy is when we can. and there are just thousands of targets in the market. there's a trillion dollar market cap sitting in enterprise software and most of these companies are still unprofitable. there's a big value add opportunity -- >> but debt financing is tougher to come by. that has to affect the market. >> the quantum of debt financing is there. there's so many private lenders willing to put in significant capital into these companies. the problem is the rate. the rates that you have to pay for financing now are roughly 13%.

so, what we choose to do and do in recent deals is take a lot less debt or in recent deals finance equity because they work from an ir stand point without any leverage. >> once you take these companies private, you say you make them more profitable. what sort of operational expertise have you developed in tech beyond just cutting costs? >> oh, there's a lot to it. it is so important that you focus on leadership. if you have the right ceo partner and you're of like mind philosophically on how the company is run and operated, that's a must. it starts there. that ceo needs to have the right direct reports in the key functional areas of the company. they need to be on the same page. then you set up the right processes, the right metrics, the right set of priorities. groups like us, thoma bravo, we talk to ceos of our companies every day. the head partner together with the operating partner.

we monitor them on a monthly basis. we take a contrarian approach, which is the true approach. we believe that the more profitable you are, the faster you will grow. we don't subscribe to the view that happened in the bubble grows that you need to dip earnings and be unprofitable -- >> the amazon view. >> that requires -- in enterprise software you can do that and it requires a level of leadership, execution, a set of priorities, being very mindful of what's driving the business and pulling the train. and it can absolutely be done and it's the right way to build a business. >> you mentioned as far as the overall -- you were talking about the overall environment for deal-making. what as far as exits. i know you had a big one to nasdaq, for instance. who are the buyers you're targeting and what kind of environment are we in for that? >> it's so interesting, you know, 2023, right, has been a tough macro year. year to date in 2023 we have sold almost $20 billion of

assets, but all of them to strategic buyers. i feel that the private equity industry, and we are different than most of our peers, but i feel the private equity industry has lost a bit of touch with how these groups make money. you make money by buying great companies, operating them a lot better. what i've been saying before. i feel a lot of our peers have been too concerned about the macro. they've been levitating too much trying to predict interest rates, trying to predict a recession, trying to see how the macro affects them instead of doing something about it. on the other hand, you have the strategics. the strategics care more about how their business is doing and over the last four quarters we've seen a very stable bookings environment. there's stability in these numbers and in these companies. when operators of these companies feel they're doing well and their businesses are solid, they look to buy -- they look to buy businesses. >> software, cloud computing,

this was hot. this is the area you were into. now it's all about a.i. i'm wondering if that has changed your thesis and your strategy at all. >> a.i. is very complimentary to that. our thesis is that we are still at the beginning of digital transformation of these companies. it's not even close. how software and cloud computing is changing the way these companies basically run every business process and become a lot more efficient. our companies, we have about $40 billion of revenue coming from our portfolio. we have been big investors in a.i. over the last five years and machine learning specifically. now with generative a.i., these companies have the opportunity to add a lot more value to their customers. if you own the system of record, if you own the data, if you own the work flow, by implementing generative a.i. into your solutions, you just increased the value over what you can provide to customers. there's also something really interesting going on with c-level managers in these companies.

now they're a lot more interested in these systems and they can relate to what software is doing for them in a more human way. >> what about the public market valuations of some of these companies with a.i.? are they frothy to you or just getting started? >> for us, revenue multiples of any kind in companies losing money feel frothy. we look at ebitda multiples and leverage free multiples. if you look at the software universe, about 15% is comprised of growing profitable software companies that trade on fundamental metrics. today those companies are trading very well near historical standards at 25 forward ebitda multiple. that's a very healthy place and compares favorably to the s&p 500. it shows investors highly value enterprise software and digital transformation of these companies. revenue multiples are frothy in

the hot categories and are really down in others as well. it's really hard to predict those. >> what do you think about the arm ipo, do you think it will be safe for retail investors and change the flow of funds in the tech sector? >> we stay in our lane. our lane is enterprise software. i can talk to you about that. i don't have a big comment on that ipo and on retail. now, on ipos in general, and i've been talking around the new york stock exchange and it's so quiet. it's like we need ipos. i've only come here for ipos. >> you get the crowds. >> and i do feel the next wave of enterprise software ipos are going to be the companies that have scale, big profitability that investors can depend on those fundamental values. >> do you think that wave is coming soon? >> i do believe that because there's stability in bookings. q2 of last year, of 2022, that's the first quarter we saw a big downdraft.

q3 as well. q4 picked up and it's been stable since. >> even though some are warning we haven't even seen a recession yet. >> look, this is the way we think about a recession. my operating mentor 25 years ago told me this -- in times that are looking difficult, it's better to be overly conservative than overly optimistic. so, the way we've run our companies is we have been assuming a deep recession starting at the beginning of 2022, which means you go back to your companies and you realign resources, you take out costs, you review strategic priorities. a recession hasn't occurred yet which means all those revenue streams are dropping to the bottom line and you may end up with a better business when revenue growth comes back up. if it does come in and times can be more difficult, our companies are prepared for that. >> but it's not holding you back from making deals, clearly. >> because of the three things that matter that are fundamental strategies. >> we appreciate you joining us

here to talk through the strategy and how you think through these things, especially on a big week. orlando, thank you. >> thank you so much. >> orlando bravo. still to come this morning, nfl season kicks off tonight. 2022 set a new record for sports gambling. how can investors play in that space this season? apple down now more than 6% in the past week. we'll break down that move and how big of a threat china really is for u.s. businesses when "squawk on the street" comes right back. coach saban, this goat done took over our office. and he's using it to send out medical bills. good hands! hospital bill for prime?! gaaaaap! did you just say gap?! he's talking about expenses health insurance doesn't cover. good thing coach prime knows about...say it one time! aflac! because aflac gets you money to help close that gap! now how do we get this goat outta here? (whistles) aflac! meet one of my new homies! gaaaaap! get help with expenses health insurance doesn't cover at aflac.com. elephant would've been scarier.

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stoxx 600 set to close lower for the sixth negative session. longest losing streak since 2018. the eu releasing final growth numbers showing the economy grew 0.1% in the second quarter. that was lower than the 0.3%

estimated in a preliminary reading. more negative data out of china overnight. every day now. exports dropping by 8.8%. it was better than expected, still weaker. imports have fallen every month this year. all of this sending the dollar to the highest level since march. big news today, carl, was the onshore yuan, the rmb that circulates within china is at a 16-year low and pushing the lower -- the weaker end of the ban that china sets for it. it's a managed currency but it is significantly weaker. and, you know, the broader market always gets a little agitated when a currency is getting too weak or too strong. weakness in chinese currency is okay because that means exports are up and helps the economy. when it's too weak you worry about flows and confidence. we're trying to figure out what that point is right now for the chinese authorities and for the

market. >> let's get a news update with bertha coombs. authorities are expanding the search perimeter for an escaped convicted murderer in pennsylvania today. they say he scaled a wall one week ago today and jumped from the roof of the chester county prison in a breakout that guards didn't notice for a full hour. today authorities say dense brush and the heat are slowing down their manhunt. texas governor greg abbott says the fight over the disputed floating border barrier in the rio grande is not over. his comments came less than a day after a judge ordered the state to remove the roughly 1,000 feet of connected buoys. the judge gave texas until september 15th to get rid of the barrier and prohibited the state from setting up similar structures on the river. japan is joining the space race to the moon.

the country launched a lunar lander today, which it calls a moon sniper because it can land within 100 meters of its target site. india just deployed a rover on the moon and a russian probe crashed on approach about two weeks ago. gives a whole new meaning -- or i guess this is the literal meaning of, to the moon, right, carl? >> it's literally rocket science, bertha. thank you. still ahead, the ceo of eqt, biggest u.s. nat gas producer has been able to outperform this year despite near halving of nat gas prices. we'll get into the outlook for the energy market and what it might anorme f the consumer when we're back in a moment.

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got a little taste of fall on the east coast, but now temperatures back on the rise. nat gas prices are reacting accordingly, rebounding but still down 6% over the past week. with cooler weather on the horizon, is that about to change? let's get the latest with eqt chief toby rice after ringing the opening bell at the nyse earlier this morning. do you think weather is the overriding dynamic right now? >> absolutely. it plays a big factor in the natural gas markets. it's one of the differentiating factors about hydrocarbon pricing with natural gas versus oil, it is dependent on weather. there have been two events that have taken place that have created a little bit of fluff in

gas pricing, in softening the gas pricing today. number one is freeport lng outage that we had one of the warmest winters on record last year. without those two events, gas prices will be a lot -- would be a lot higher and we would be -- prices would be closer to where we were in 2022, closer to the $6 range. the reason why prices are lower now a little bit is of luck, but let's make no mistake about it, we need to take advantage of this opportunity to bring in more flexibility, bring in more pipeline infrastructure so we can protect americans against future price shocks because of these type of events. >> it would be difficult to dodge a bullet two winters in a row, you think? >> eventually, that's not the game i want to play. we're talking about energy security is not -- you're messing with modern society. and we saw the consequences of that in europe when energy security is compromised. and devastating consequences. from a business perspective, they've lost over 30% of their industry. that trickles through to

inflation, which causes other issues. the good news is we do not have to play this game. we are blessed with the biggest energy resources in the world. specifically in american natural gas. we are the power house energy producer and we can do so much more to provide energy to the world by leveraging exports. >> i'm sure you were thrilled to see the president yesterday announcing he was canceling all remaining oil and gas releases under the last administration's arctic refuge and favoring the environment instead. >> it has been surprising when you hear some of these actions like that. we've made so much progress i'd say this last year opening people's eyes to the fact that if you're concerned over climate, american energy is the solution. we have the key to the biggest green initiative on the planet. using our natural gas, unleashing that on the world stage to eliminate biggest

emissions is foreign coal. that's what matters. if you think about climate, you should think about american energy and unleashing us. the trouble is, we're asking people to support pipelines in american energy because of their concern for the environment, they've been blocking and challenging american energy because of concerns of the environment. we need to flip that dynamic because we are the solution to their climate ambitions. >> overall, biden's strategy on energy is a big sticking point. republicans like to go after it. what would you say? >> i would say this is not a political issue. the politics of energy should be aligned with the politics of the people that use energy. that is all of us. so, this is not a democrat or a republican issue. things like energy security, affordable energy bills, which we pay, the lights coming on, energy security. these are things that impact everybody. this -- these are things both democrats and republicans both care about. i think it's one of the most pressing issues we need to get control of today.

and i'm excited to see the progress that's been made with things like the fiscal responsibility act where we took steps, baby steps but big momentum change for us. we need to keep working that so that we can get back to an all of the above approach to building things in this country. >> can you give viewers a sense of how you're thinking about, i guess, recent developments in the ukraine fight and the country's willingness to help support europe with lng? >> yeah. let's just talk about what really happened. what does europe need? russia pulled 10 bcf a day out of the system. the united states can step up and supply that, lng for the long term. we've stepped up in the short term. we have the opportunity to build lng facilities and pipelines here to provide a long-term solution to europe. last year their energy insecurity cost them $800 billion of excess energy costs. i believe that we can build a facility to provide 10 bcf a day to europe for a cost of around $60 billion. these are the type of amazing

opportunities that are in front of us, but we've got to have a real conversation about what problems are we trying to solve and what are the biggest solutions we can put on the playing field? the answer to both of those questions are unleashing american energy. >> and finally, you're here at the stock exchange today, you rang the bell, because you closed this big acquisition. i'm curious what your outlook is for more m&a, both you and the sector. >> what's happening with our industry on the natural gas side, natural gas is breaking out from being a regional constrained commodity, governed by pipelines, to now natural gas is more of a global commodity. that means there will be opportunities across the globe. so, global opportunities require global scale. that's where companies like eqt, being the largest producer of natural gas in the country, are going to have, i would say, a closer reach to grabbing some of those opportunities. as the industry becomes more and more global, scale is going to matter even more, consolidation,

the right consolidation could allow you to take steps closer to capturing those opportunities. >> it's a great point about how things in australia are affecting he's things halfway around the world. great to see you. >> thanks, carl. thanks, sara. up next, sports betting, looking to use the kickoff to the nfl season to boost profitability. this season there's a new entrant in the space, fanatics joining after acquiring pointsbet. (sfx: stone wheel crafting) ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪

quick check on disney. within two cents this morning of a seven handle. something it has not had intraday since the spring of 2020 when covid was shutting everything down. the company battling with charter over this carriage agreement for its channels, including espn. this would be the biggest closing low, i think, sara, still back to that 14 years. >> wow. switching geears, are you ready for football? nfl kicking offand the big winner could be the betting industry. a record 73.5 million americans are planning to wager on games this year as new entrants to the sports betting market look to gain shares and blitz the likes of fanduel and draftkings. one of the dominant players joins us, fanatics ceo matt king. you're the newcomer on the

block. you've been live for a little bit now. >> less than a month. >> what are the results showing? >> we're the third most downloaded app, even though we're in four states. the feedback from consumers is they love the product. we also positioned ourselves as the most rewarding sportsbook out there and customers are loving our rewards. >> what do you mean? what do you do -- what are you rewarding customers with that others are not? >> what we do is you earn fan cash back every time you bet. you can earn up to 5% back for a same game parlay. you get real money back. you can use that fan cash to buy merch, use it to buy collectibles, to place bonus bets, anything you want to do in sports. >> i wonder if you think the fascination with live sports in general, we just talked about disney, and how important it is to content everywhere, is dovetailing with the ascend ants of your industry. it's been amazing timing in that respect. >> i think it is. the reality is fandom is growing every year.

i think things like football are one of the few things left that everybody goes to each other's house for and you enjoy in person with friends. i think people are looking for that type of connection. >> are there voices within the company that say, we have to spend less on customer acquisition? is that an ongoing debate internally? >> for us, our model is very different. we're acquiring users at 80% less than the competition because we already have a database and our unit economics are phenomenal. we're acquiring users at scale. from our perspective we're trying to invest more in the rewards program back to users as opposed to using all of our money up front. >> when can this be a profitable business? fanatics is a profitable company. >> we think we'll reach profitability faster than anybody else in the industry. >> the betting industry. >> the betting industry. they'll get there first but we started later. the period of unprofitability

will be the shortest. >> what about a consumer that's stretched. >> what we've seen historically is there's very little correlation between the economy and how much people bet on sports. most people aren't betting that much money and they see a lot of entertainment value in it. while i wouldn't -- i don't call any industry recession-proof, we're much less correlated to the economy than disposable income categories are. >> you alluded to the fact it's competitive in the industry. we were talking to contessa brewer. you were the big one to watch coming in, and then we got this penn/espn deal. there are high expectations that they will grow very quickly. what did you think of that deal? are you threatened by it? >> so we're focused on serving the fans the best we can. we want to create the best fan experience out there. that starts with product. you have to have the best product in the marketplace. and so as it relates to espn, the easy part is getting the

deal done. the hard part is making it work. and so we're just focused on, frankly, our playbook, which is build the best product and create the most rewarding sportsbook. and then build this digital sports platform more broadly. ultimately, fans love the fanatics brand. they want to do more with fanatics. we think if we can offer better experiences, they'll keep playing with us. >> i guess it helps that you make the merch to give away. >> it does. it's funny you mention that. we are doing our biggest jersey giveaway ever. fy new user on the fanatics sportsbook or pointsbet, will get a free jersey from any team, any league, any player. >> the shameless plug. >> i did. >> thank you very much. the start of the nfl season. we appreciate it. the nfl season does kick off on nbc tonight, 7:00 p.m. eastern time. matt says the chiefs are heavily favored, which even i knew. >> you did?

>> meantime, the move in apple has caught investors' attention these last couple of sessions. worst back-to-back streak in about three years. we'll dig into that, talk about what investors need to know on reports of partial iphone bans in china. at morgan stanley, old school hard work meets bold, new thinking, ♪ to help you see untapped possibilities and relentlessly work with you to make them real. ♪ this is dr. arnold t. petsworth, he's the owner of petsworth vetworld. business was steady, but then an influx of new four-legged friends changed everything. dr. petsworth welcomed these new patients. the only problem? more appointments meant he needed more space. that's when dr. petsworth turned to his american express business card, which offers flexible spending limits that adapt with his business. he used his card to furnish a new exam room, and everyone was happy. built for dr. petsworth business.

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down the last couple sessions and sparking a broader sell-off. our deirdre bosa is watching that in today's "tech check." china the ever-present risk lurking in the background until it isn't. it's front and center, this time putting the company on track to lose some $200 billion in market value in just two sessions. two issues are emerging here. one, the report china is restricting the use of iphones, tim cook has been on this mission to diversify supply chain to india in particular but the company still relies on 19 per19% of revenue from china. the fear is the ban on the government side could expand to state-owned enterprises, and that could put a real dent in sales because some of china's biggest companies are state owned. a potential resurgence of huawei, seen as the first significant threat to apple's dominance in years. huawei is the giant chinese

national telco equipment company at the center of beijing/washington a number of times over the years. the export beer decimated huawei's business by restricting to android, the operating systems its phones use. the winner of that move, far and away, is apple. market share in china went from 56% to nearly 70% in just a few years largely because of the effects of that export ban. bofa writes the new phone could be an opportunity to increase shipments and regain market share. of course at the expense of apple. this has broader implications using an advanced chip that represents a breakthrough for semi ambitions and how u.s. sanctions have rallied the chinese state and its industry for achievements like this.

tensions ratcheted up and sanctions hurt home grown companies like huawei. many wondered when china would strike back in a significant way. now that it's here and affecting apple, where does it stop, guys? it opens up a whole new shchapt in the tensions on the two. >> on the point about the chips and semiconductors, did this defy expectations that huawei would be able to even do this, make such an advanced chip because of the sanctions? >> smc is making the chips huawei is using and has been where the hope rests. it's a state-backed organization trying to make more and more advanced chips. it's still far behind. it is a breakthrough and could signal they have more going forward but highlights the

challenges. it's nowhere near the nanometer chips our companies produce. >> getting the attention offer the hill, dee. thank you, deirdre bosa, on apple. still ahead, new developments gm negotiations with the uaw as a potential strike looms after the break. every day, businesses everywhere are asking: is it possible? with comcast business... it is. is it possible to use predictive monitoring to address operations issues? we can help with that. can we provide health care virtually anywhere? we can help with that, too. is it possible to survey foot traffic across all of our locations? yeah! absolutely. with the advanced connectivity and intelligence of global secure networking from comcast business. it's not just possible. it's happening.

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we have a news alert on general motors. phil lebeau with the details. phil? >> reporter: sara, we have a counsellor offer from general motors to the uaw and it comes down to this. we're not going to go into all the details, but the numbers you need to pay attention to is general motors is offering a 10% pay raise and then two lump sum 3% payments to uaw members over the next four years. put that together, gm says that's 16% increase in pay for the uaw except there will be signing bonuses, et cetera. keep in mind the uaw is saying, no, no, no, we want 40% over four years. you have a gap now you can look

at between 16% and 40%. that's where the negotiation begins between general motors and the uaw. we'll get an update from uaw, at least a background briefing over the next day or two. look, this is going to continue over the next week. if we get a deal by next thursday, i will be surprised based on the number of people i've talked to within the auto industry. but at least you know now what the parameters are of this negotiation when it comes to wages. >> phil, the wires say that the automaker is saying this is the largest proposed hike in about a quarter century. gm is trying to reach the union and public opinion as well. >> reporter: they're both playing to the public, carl. it is far bigger than they've offered in the past. it was 3%, 4%. 10% to that is 67% b6 to 7% bigger. it ain't 40% and, again, that's the rub here. 16% versus 40%.

>> it seems like a big gap still. >> reporter: they'll come to an agreement. it won't be 40% or 16% at the end. it will be somewhere in the middle. >> all right, phil, thank you. phil lebeau. all i can say is on top of this higher unit labor cost number with these strikes and these demand, wage inflations is something for the markets. >> let's get to the judge. carl, thanks so much. welcome to "the halftime report." i'm scott wapner. front and center, unsettled apple. the stock suffering its worst back-to-back sell-off in nearly three years now. the investment committee debating the road ahead. joining me for the hour today right here at post 9 josh brown, stephanie link, jim lebenthal, bill baruch. let's check the markets. we have an interesting story developing here. apple obviously is the big story. the nasdaq is down for the fourth straight day. put up m