tv The Exchange CNBC October 9, 2023 1:00pm-2:00pm EDT
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middle east where the supply routes will be messed up and it will probably be a benefit. sad, but true. >> eqt, natural gas prices are up 18% for the quarter. >> the dow is down about 40 and cvs is still red. nasdaq's the trailer today and nvidia is pulling back by 2% and a lot of other things in the green. i'll see you at 3:00. "the exchange" is now. thanks very much, scott. welcome to "the exchange," everybody. i'm dominic chu in for kelly, vans today and here's what's ahead on the show. stocks are lower, but oil and gold are both higher as israel's conflict with hamas enters its third day. we'll discuss what the unrest means for the region and for energy prices and whether now is the time to move into safety trades. also, activist investor nelson peltz reigniting his proxy fight with disney and one of the largest shareholders and peltz is planning to push for multiple board seats this time
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around. what it means for both disney and its ceo, bob iger. plus keybank seeing an opportunity in one beaten down sector. why investors should, quote, close their eyes and just buy utilities. that is coming up. >> but first, let's dig a little deeper and further into today's market action. as you can see, it's generally negative, but we did see a little bit of slight positivity at one part today and the dow industrials down 0.1% and well off the session lows and the s&p 500 4303. at one point we were up five points for the s&p and down 25 roughly at the lows so you can see it is toward the upper end of the dra day trading range and the nasdaq composite the laggard down one-third of 1% and 13,383 for the composite trade. the unrest in the middle east is carrying through for many key parts of the market and a couple in particular are standing up to
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the upside, crude oil prices and possible supply concerns in the middle east and that's leading to upside moves for oil and gas companies like halliburton and marathon oil. you can see they're north of 5% and two of the best-performing stocks in the s&p. northrop grumman and l3harris technologies. two defense contractors and those are very much in focus right now given the unrest and what it could mean for potential defense in armament spending. so northrop grumman shares are up 10.5% and l3 harris up 8.5% and arm holdings on the computer side of things and the arm reached the high of the day right after the ipo price and debut. it is down one-third of 1% today. $52.92. a slate of wall street firms all initiating coverage on arm holdings today. j.p. morgan, citigroup, mizuho, jefferies and everyone out there initiating with a buy rating and we'll have much more on that story later on in "tech check."
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now let's turn to the war in israel entering now its third day. nbc's kelly cobiella is in tel aviv with the latest here. kelly, what exactly is you tell us about where the tensions currently stand out there in israel? >> well, we're expecting to hear from the prime minister shortly, some time at the top of the hour according to his office letting us know that he was going to speak. in the meantime his office has released a statement strongly denying these reports that egypt had warned israel that there was some sort of attack in the works days ago and that that warning was effectively ignored. in the statement the office calls it absolutely false saying that no message in advance has arrived from egypt and the prime minister had neither spoken nor met with the head of intelligence since the formation of his government.
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a very strong pushback to those reports that the government, in fact, did have a warning. the israeli government is saying not so. meantime, the idf, the israeli military says that they're intensifying their counter offensive against gaza at this hour. they say between saturday and monday they struck about 1200 targets and they've stepped that up and doubled that just today. they say that they're hitting weapons storage, manufacturing sites and command and control centers and rocket launchers inside gaza and keeping in mind this is an incredibly, densely packed, urban area with 2.3 million people and the vast majority, and a lot of them are civilians and they're women and children inside gaza. they're potentially, if you believe the numbers put forward by some palestinian militants inside gaza, potentially 130 hostages in that territory as
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well. the united nations says that power has been cut off. there could be food and medicine shortages to come, if, in fact, israel does maintain this siege on gaza which they have promiseded to do. dom? >> thank you very much, kelly cobiella for that and please stay safe out there in tel aviv and by the way, nbc's coverage of the war in israel continues with lester holt tonight anchoring a special edition of nbc "nightly news" live from tel aviv at 6:30 p.m. eastern time on nbc networks. plus, we also have west texas intermediate and brent crude prices climbing 4%. the vaneck vector etf, the ticker, oih, the oil services ticker on track with the best day, with 2% in the fund. joining me now to discuss the conflict's impact on the energy markets overall is cnbc
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contributor halima kroft alongside with bob mcnahle, rapid energy groups founder and he also served as the top international and domestic adviser for president george w. bush. thank you both for being with us. >> halima, we'll start with you, from a big picture perspective that caught a lot of people off guard, there's no doubt about it. just how impactful could it be for the geopolitical stability in the region? is this something that can be quelled rather quickly or could we be talking about this for days or weeks for now? >> days and weeks are in the offing and will we see a ground operation from israel inside gaza and that is a difficult operation and some are comparing it to fallujah. the bigger question is what is the role of iran in this attack because if there is evidence that that's "the wall street journal" reporting that iran
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coordinated this attack there's going to probably be a significant response from israel and what does the united states do? a lot is hinging on what type of support did iran give to hamas and money and how were they coordinating? >> there have been folks out there, analysts who have talked about this relationship between israel and the rest of the middle east, ex-iran. iran not middle east, per se, it's about the relationship with saudi and all of the other gulf states and whether or not this was something that was meant to derail some of the efforts being made to stabilize and improve diplomatic relations with israel and other gulf area states, vis-a-vis iran. is there anything in your mind that could go that route? >> of course, an objective of hamas would be to derail the talks going on with saudi arabia, and i think they have essentially accomplished that. it's hard to see how normalization talks with saudi
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arabia can proceed on a parallel track to a very ferocious, counteroffensive in gaza. >> okay. bob, there's been very much a specific response in energy markets right now. over the course of the last several decades, oil prices have been volatile, but generally speaking it's been a short-ter event and is there anything that could suggest in your mind that this could be a longer term than we've seen in the past? >> yes. certainly. what's been very different than the periodical flare-ups between gaza and israel and even the second lebanon war, the broader incursions is this is the equivalent of the '73 war and the '48 war of independence. we're at a new level and the violence is going to be at a new level and the real issue as helima said is will this expand to iran. if it doesn't, for oil markets,
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it's likely to be more of a ripple. israel, there's not a lot of oil and gas involved in gaza proper. if it spreads to iran in the gulf it's 40% of global crude oil exports and 18% of global refined products exports and qatar, the world's largest lng exporter is inside the gulf in that region and instead of a ripple it becomes a tidal wave. so the key question. no question the level of violence is going to escalate. i believe israel will invade gaza and we will see a prolonged war unlike we've seen in many decades in the middle east. the question is does iran get involved? does israel have evidence that iran involved and do they have rockets that join the attacks and those are the types of things that we're looking forward to see if it becomes a tidal wave market rather than a ripple. >> bob, in your mind, do you see
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a situation evolving where the world will have to turn towards different supply routes and make adjustments and audibles, if you will, with how they supply their energy, given what's happening or what could happen with supply chains that are centric to the middle eastern area as hypothetically this spreads beyond what happens within israel, lebanon and the gaza-egypt area. >> i think that's entirely possible for some period of time. in some ways, the arabian gulf is not big enough for iran and the west, the gulf arab producers and israel. we're antagonistic and we're going after each other. there was a near miss in september 2019 when iran attacked the saudi facility. we saw the largest open in one day in the crude markets. we've had a lot of near misses, but we're getting closer and closer to a real conflict between, let's face it, iran which is behind all of this and
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the west arab gulf producers, israel and the united states and were there to be a broader military conflict in that region given the importance of the facilities in the region and the vulnerability of the strait of hormuz, i think we may have a period of time where the world has to look elsewhere for its energy and realize there really are many other places like the middle east. it's still the vital supply base for the world's energy. >> and helima, to cap this conversation off because it is a complex one, president biden and this administration have spoken very forcefully about the ties that the u.s. has to israel, the support that we will offer to israel. what exactly does it look like for the u.s. diplomatic route and even the military assistance route in the coming weeks if this war were to expand beyond what it is right now. >> if this expands to iran and israel comes out and says we have the smoking gun, if that
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meeting did take place in lebanon that's alleged in "the wall street journal" and the israelis turn to the united states and say are you with us or against us? i think it is very hard for the united states if israel comes up with that evidence for the united states to say we will not back you. i would say at a minimum, president biden will come under enormous pressure in this environment to basically end the go soft approach on iran sanctions. we have seen a significant increase in iranian oil exports on the market. we have basically not enforced the congressional sanctions. i do think there will be an effort to tighten those sanctions and we will see less iranian barrels on the market, irrespective of whether we have some type of military engagement on iran. >> thank you both for your thoughts. we appreciate it. stocks are taking a leg lower as the fighting between israel and hamas continues, but the major averages are well off their lows of the session, but the dollar index, gold prices, silver prices are all higher and one of
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our next guests was already calling for investors to start getting more defensive in nature. joining me now is katerina simonetti, wealth adviser at morgan stanley private waeealth management. thank you for being with us. >> it's hard to be balanced at this time because the conflict and the war is so damaging and so negative, however, we don't want to inflame situations so much where we think the world is going to end. how are investors tackling this so-called safety trade, if you will, and is it worthwhile for them to look further into it? >> well, dom, geopolitics is always a risk for investors and this risk has escalated with the attack on israel over the last couple of days, and we might see the volatility in the stock markets. we might see volatility in the oil markets and while investors are figuring out exactly how to
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handle these risks, we're already seeing an uptick in the bond market as a flight to safety and this is a reminder to us that geopolitical risks, as unpredictable as they might be, we need to prepare for them and we need to think ahead and position our portfolios defensively and this is definitely a case for diversification and protection of the portfolios. good thing is that we do have a benefit of the high interest rate environment. so for investors that do feel extremely uncomfortable about this market, one of the short-term solutions over the next 12 months would be cash, would be fixed income and would be private credit because they can actually get with these areas and of course, we don't want to confuse the short-term solution with the long-term portfolio positioning as we have to think long term and make sure that we are taking advantage and
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some of the opportunities that this market presents. >> katerina. i want to bring in peter and get his insights. this is a scenario as katerina points out, the rising rate environment has created a very different level of bond prices especially for u.s. treasuries which are still viewed as the safe haven of choice for many people in times of real stress. is this, though, a time where that safety trade does present more attractively given the fact that ten-year note yields are pushing the 4.5% to 5% realm? >> bonds have gotten oversold over the past month and treasurys. longer tomorrow treasurys, specifying and there was a reason to get a bounce if price and the dip in yield and while the cash market is not trading today, you're seeing the futures treasury market rally. so you should see a decline in
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yields, but how sustainable is the question? i think short-term treasurys because the fed is done raising interest rates and that's the rally safe haven because you've taken away the risk of short-term interest rates continuing to rise. it's the longer end yield curve that i think is part of what is more at risk, to see, not withstanding a short pf term rally and that get it is even higher yields potentially. >> peter, this is a scenario right now where rising oil prices directly tied to what's happening in israel and gaza is coming at a tough time for the american consumer. inflationary threats were already there. people have been feeling it for a while. is this the scenario where the u.s. consumer is going to get hurt even more entering that all-important shopping season that's critical for the american economy, as well? >> so it's definitely going to potentially extend out the inflation squeeze that they've
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been under. over the last three years, cpi is up almost 20% and just when we thought we would get relief, and the persistently high oil price will complicate that factor and not just for the consumer and certainly for the fed in running monetary approxpolicy. we'll have higher energy prices as well with the risk of much higher prices relative to the potential down side. >> and katerina, from an investment standpoint, you talked about the safety trade before. investing or buying bonds whether they be treasury variety and investment grade corporate, high yield corporate and it's different than investing in precious metals, right? because bonds, spin off income, gold does not and you hold it because you hope it goes up in price. what's the strategy? what kind of safety trade is the most attractive to you right now? >> dom, absolutely. there are two sides to this question.
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one are existing fixed income portfolios and investors actually are seeing declines in values of their treasurys and mortgage-backed securities and high yield held up significantly better than that. so our recommendation there would be to consider tax loss harvesting in taking advantage of this current environment, but also the other side of this trade is the fact that we are at historic high interest rate environment and at this point buying treasurys, buying specifically investment grade corporates would allow investors to extend the duration and position themselves competitively in connection with their equity portfolios. so you look at the defensive plays both on the equity side and on the fixed income side together and this will allow the longevity and also defensiveness of the portfolio in this current volatility which is extremely important. >> peter, before we let you go, quick last word it you. are bonds attractive right now?
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>> to me the defensive trade is turn out to be commodities. it's owning gold. it's owning energy. it's owning copper and owning agriculture and that's proving to be the real defense. >> peter boockvar, katerina simonetti, thank you both. we appreciate it. >> coming up, china is responding to the end to war with a call to end of the hostilities and what role they could play in the ongoing tensions and what to watch out for as the situation unfolds in the middle east. activist investor nelson peltz is reing niggniting a proxy figh disney. those still near a nine-year low. "the exchange" is back after this break. ♪ ♪ >> this is "the exchange" on cnbc. in the u.s. we see millions of cyber threats each year. that rate is increasing as more and more businesses move to the cloud.
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welcome back to "the exchange." shares of disney higher after activist investors nelson peltz increased his stake in reigniting proxy fight concerns and the fund management is one of disney's largest investors holding 30 million-some shares roughly $10.5 million. he's been critical as disney's stock sits near a nine-year low and shares are down 29% since peltz's first battle for a board seat back in february.
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our next guest says it's the only credible challenger to netflix in the space and season upside of more than 25%. joining me now for more is laurent yun. he covers media and telecom at bernstein and recently initiated bernstein with an outperform rating and thank you very much for being with us here. maybe it's not so difficult to put a buy rating on the stock that lost a quarter of its value since the recent highs. that i can understand, but take us why you think disney has a real competitive advantage and a fundamental reason why it should be worth more in the future? >> first of all, thank you, dom for having me. i'm a huge fan of cnbc and grateful to be here. well, there are three reasons why we think disney is a pretty attractive investment to go through at the moment. the first one is the overhang that we have on linear is something that the market
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already extends quite well and should be digested. so yes, the linear decline continues, but it's something that we understand quite well. more importantly, we think that etc growth and what that would look like with hulu is likely to be quite optimistic going forward. we expect btc to outgrow linear by 2024 and there's a continuing growth prospect especially not only the u.s., but also in the international market. that's our second view. more in the short term, there's an overhang on the stock because of what may happen between comcast and hulu in terms of how much disney will have to pay comcast for the remaining one-third stake that comcast owns of hulu and we believe that number is something that is more reasonable and once that overhang is lifted we believe it is a positive catalyst for the
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stock. >> laurent, there's been a lot made of these streaming business trajectory versus those for the parks and recreation side of things at disney. we know that disney's made a very high-profile announcement of trying to pour 60-some billion dollars over the parks business over the course of the next decade. is the growth story that will propel the stock price more about the streaming economics or more about its traditional parks business? >> i think it's both, actually. so the parks business, obviously, the very important com bonent of disney and it's part of the 70% of the firm's tech today and the $60 billion number seems scary, but if you project out how they will grow into the next ten years and the capex is somewhat in line with how much they're investing in capex today in terms of the percent of revenue. of course, if you expect the
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parks business to grow. supporting -- and of course, all of the revenue and coming from the parks business supports the media business that is turning the corner and we believe that dtc and disney plus combined with hulu going forward is what we've seen in the past couple of years. >> one final question, with regard to streaming the economics and we've talked a lot about the writers strike, the ongoing actors strike right now. we've heard reporting about streaming platforms like netflix possibly looking to raise prices in the coming weeks and months getting a response to higher costs associated with media. do you think that disney is more or less affected than other media companies with regard to the increasing costs associated with media generation and streaming as a distribution
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platform? >> i think when we talk about cost, we have to think about cost in the context of revenue and given the newly increased prices that's coming online, the -- the cost actually makes -- we don't believe it will be an additional cost to disney. in pa in fact, the cost will be normalized this year and going on in 2024. >> laurent bernstein, thank you for your thoughts on disney. we appreciate it. >> thank you for having me. >> coming up on the show, close your eyes and just buy quality. that's what one analyst is saying about the worst-per remember toing sector in the s&p 500 this year. that's the utility sector and she'll bring us her top picks in the group since january. as we head to break, here's a look at the dow in positive
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but there's never been a reported ransomware attack on a chromebook. which is why thousands of schools like the fairfield-suisun unified school district switched to google tools for education. so they can focus on teaching and 22,000 students can focus on learning, knowing that their data is secure. ( ♪♪ ) ♪ ♪ ♪ all right. we're near session highs right now and an fomc voting member is speaking out about the economy right now at a recent, vent and steve liesman has the details. what can you tell us, steve? >> not just any voting member, dominic. it's phil jefferson who is the new vice chair of the federal reserve board of governors. he says financial conditions have tightened further.
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he says real long-term yields have risen significantly, and he will take financial market developments like these into account along with the incoming economic data when he figures out what policy is. the upward movement in yields could reflect the view that the economy is stronger, but it also reflect changing attitudes toward risk and towards the uncertainty that's out there. so he's not really telling you exactly how he would fall with these higher yields. he said the fed is in a position to proceed carefully and the fed is also in a, quote, sensitive period of risk management which means they're watching this stuff very closely. too soon to say, he says. we've tightened enough. particularly, to upside risk to inflation and the possibility that inflation expectations become unanchored and not saying that will happen and just saying he's watching it. more broadly or specifically on inflation, he says while recent inflation data remains too high. he does see a path to lower
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inflation without a big increase in the unemployment rate and sees inflation moderating further as a result of the market coming into better balance. core housing services have yet to show a significant slowdown and that's something that jay powell is watching closely. so far the economy has been resilient and then he goes on to talk about the downside economic risk which includes a slowdown in economic growth. he singles out china and europe as two square areas he's watching closely and he expects gradual easing in the labor market conditions and despite the very high job number we got last friday. he's aware of more corporate refinancing that could create further tightening in policy. maybe not quite as outright dovish and lori logan gave us two sides. she gave us side of hey, higher yields and maybe the fed knows how to tighten further and it could also mean a higher neutral
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rate. >> steve, speaking of the fed, the odds of a rate hike at the final two fed meetings of the year have fallen rather notably over the course of the last few days here especially in light of what's happening with geopolitical tensions in the middle east. can you take us through that dynamic right now? the odds and probabilities of what the fed may or may not do at november through the balance of the year? >> all that is 100% accurate, dom. i think we went into this day here or say we left friday after that strong jobs report with about a 30% probability of a rate hike in november. that is halved today, down to 14% and then say we're up near 45%, 46% for december where i'll do the math for you. i'll call it, 27%, 28% and just a one in three chances and let me double-check here. it did not push ahead toward next year at all, and when i look further down road, they're
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starting to maybe bake in, dominic, a cut in may and let me just explain the context here. where the market prices in the first cut has moved from may to june, on hawkish days it's july and tonight call it a dovish day because of the factorses that you put out with the ideas being higher and the awful hamas terrorist attack in rail, but that's the first rate cut that happens in may, dom. >> steve liesman, thank you very much for the update. we appreciate it. now let's move to tyler matheson for a cnbc news update. >> thank you very much. here is your cnbc news update at this hour. an update on the death toll and injuries sustained in the war between israel and hamas. according to officials in the region 700 israelis have been killed and more than 2100 others injured.
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at least 560 palestinians have died with nearly 3,000 injured so far in israel's response to those attacks. >> according to the state department, nine americans have also been killed. >> special counsel jack smith has filed opposition to former president trump's latest attempt to postpone the classified documents case in florida until after the election. trump's lawyers filed the request last week citing the speed in which the special counsel is turning over discovery and issues relating to the review of classified information. smith called those claims unfounded and it's official, robert kennedy jr. is no longer running for president as a democrat. he announced in the last hour that because of what he called corruption in the leadership of both parties he will now run as an independent. dom, back to you. >> tyler matheson, thank you very much for the news update there. coming up on the show. senate majority leader chuck shumer is leading the first congressional have said to china since 2019 and what is on the
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agenda and what it mean for u.s.-china relations with crane share's financial officer. share's financial officer. we'll be right back. share's financial officer. we'll be right back. [sound of airplane overhead] even the ground is moving for me! y'all seeing this? wild! and i don't even have to activate anything. oooooohhh... automatic sashimi! earn cash back that automatically adjusts to how you spend with the citi custom cash® card. [mind blown explosion noise]
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welcome back to "the exchange." chinese president xi jinping leading with a bipartisan u.s. delegation including senate majority leader chuck schumer in an attempt to stabilize ties between the u.s. and china, the meeting taking place after china reopened from its golden week holiday and spending during that week came in strong, but real
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estate sales remained weak and speaking of real estate evergrand debt holders releasing a statement earlier today after the developer canceled a restructuring deal late last month saying in part that the inaction will likely lead to the uncontrolled collapse of this group. so joining me now to discuss this complicated fine amick is ahern, the chief investment officer of crane shares and it is always great to get your thoughts on what's happening with china. this is a very complicated story with the economy there trying to emerge from covid and get back to normal while still battling a real estate crisis. how exactly are things shaping up for that chinese economy and is it investable? thanks for the opportunity dom. certainly the economy is muddling through and coming back post-zero covid policy removal and just coming back slowly that the chinese government's not engaged in the hospital money they've not sent free checks to people and the economy is coming
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back. it's just coming back incrementally supported by small, incremental reforms. we are just not seeing the proverbial policy bazooka because they don't want to create the budget deficit like we're seeing here in the u.s. >> there's also been, brendan, points in market history over the course of the last couple of decades when china does enact that it's seen as weakness and they try to destabilize the situation by injecting liquidity and people say it must be pretty bad. what exactly is that dynamic like right now? >> well, i think it's about supporting the economy. it's just not necessarily overheating the economy by overstimulating that they're willing to understand it's an economic cycle and the government is showing some proverbial patience by allowing the economy to come out of this trough. it's just, i think, investors have a little bit of add and want more action faster and
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that's maybe led a little bit of the disappointment, but i think it is coming back and i don't think most people would think that kweb actually beat the s&p 500 by almost six percentage points in q3. yes, it's one quarter. i'm just saying it's potentially the part of this process and maybe chinese equities rallyinging for thor. >> how much should investors globally here in the u.s. and in europe and other places be concerned about evergrand, be concerneded about some of the real estate issues happening there? is this akin, and i'm just asking hypothetically, is this akin to what the u.s. saw with its own housing crisis back in 2007 to 2010? >> yeah. certainly, the greatest policy error by any central banker was the u.s. federal reserve allowing lehman brothers to declare bankruptcy sending the not only u.s. economy, but the global economy into recession and had a terrible, terrible effect on the u.s. economy, on
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people's lives and the pboc and chinese regulators are aware of that policy error and they're not going to replicate it by allowing a poorly managed company send their economy into crisis. time and again, the negativity say china is about to go off a fiscal fiscal cliff and yet china hasn't had a recession since 1993. they're not going to allow a poorly run economy to send their economy into crisis. yes, there is a problem and it's definitely a problem and it's receiving a vast amount of attention and -- it doesn't mean evergrand will go bankrupt and i just think they have to finish the projects and they will pay for their sins. >> brendan, one last point here, the news of the day is the tragedy that's happening in israel, the terrorist attacks there from hamas and everything else. do you see china and perhaps
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specifically president xi taking a more active role in that particular crisis right now whether through diplomatic channels being more visible and perhaps taking steps of their own to try to influence parties to cease the hostilities there? >> yeah. i think first and foremost, it's a terrible tragedy that's happened on unarmed civilians in israel and our thoughts and prayers are with those people, many of which are called friends and for many of my colleagues family. i think china, you saw senate majority lead are chuck schumer met with president xi along with five other senators and they redid their statement around this tragedy that took place in israel and they re-issued that statement and i think china, out of their economic self-interest would want push a path because of the economic relationships with israel and the dependency on commodities, many of which
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come out of the middle east and they could play a bit of a role there, but unfortunately, we know that the next step, the cop seque consequence of what's happened in israel it will be unfortunate to see this proceed and what we know will occur, unfortunately, and there were many people in finance there are reservists and hopefully they stay safe as this unfortunate situation plays out. >> of course. our thoughts and prayers to everybody out there who is affected right now. brandon ahern. thank you very much, sir. >> still ahead on the show, arm scales are back above the ipo price of $51 a share and the street is decidedly more bullish on the stock. it received 11 different initiations and all, but one of them was ready to buy or some equivalent. we'll take you to that analysis and why so many are excited and here's another check on the
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welcome back. computer chipmaker arm holdings is getting a nice reception from wall street today with a slew of different analysts initiating coverage at what is a buy or equivalent-type rating and that's despite shares up more than 20% since the post-ipo highs and deirdre bosa joins us for today's tech check. $69 for the intraday high right after it and nowhere near that right now, why the buy? >> you mentioned the pop. that was up 25% and as you also said, pared gains since then. i read ten analyst reports this morning and ten initiations and all of them were buy, some sort of a buy or overweight and these
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came from the banks that were involveded in underwriting the ipo. so they waited 25 days to publish their research and it's interesting when you look at where the ratings stood before. there was only one buy and now there's 14 and one sell and it comes from bernstein which did not work on the ipo. one of the things i like to look at, dom, what does this say for softbank? they have the most to gain, if the price goes up these buy ratings are flooding in and i want to show you a chart. this looks at where arm sits in the whole softbank world. this is a japanese conglomerate with holdings in many different things and these are not very liquid because their investments in private companies. alibaba used to be the crown jewel and mass hassan could tap into that because it was highly liquid to fund his capital venture push to short finances with times of uncertainty. you can see now that alibaba
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makes up 0.1% of softbank holdings and arm is the new crown jewel. it made up 12% in march of '22. it now makes up 22% and it's publicly traded. so theoretically mass hassan could lean on arm and could liquidate more of his stake to do more could lick lick date more of his stake. and he wants to invest in more artificial intelligence. so it will be interesting what happens when the lockup period expires and what they do with the stake. >> what will be the big hegest driver for arm, ai, automotive, iot, things like that? >> yeah, i mean, the whole idea why arm has such a rich valuation compared to many others in the semiconductor space, a lot of the buy ratings talk about the royalties from licens licensing. but it needs more of a hold in the artificial intelligence.
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there are different end markets. the biggest right now is smartphones. this is a saturated industry. so a lot of it does rely on whether it is able to move into automotive especially artificial intelligence and other end markets. >> all right. thank you very much. still ahead, key bank seeing the dip in utilities as a buying opportunity but says not every name is created equal. the firm is downgrading the stock. more than 14% so far this month to the down side. we'll reveal that stock and talk about some of the buys and slsel behind the analyst call coming up next. ♪ ♪ every day, businesses everywhere are asking: is it possible? with comcast business... it is. is it possible to help keep our online platform safe from cyberthreats? absolutely. can we provide health care virtually anywhere?
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welcome back. utilities having a rough year. spdr etf down more than 18%, but key bank is seeing some buying opportunities on the pullback. in a recent note analysts advising investors to, quote, close your eyes and buy. upgrading energy names to overweight, shares of three down between 10% to 20% as you can
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see, but nextera energy was the mystery chart. sophie, rising rates are a problem when utilities are supposed to be the dividend payers that compete with bonds for income. how much are rising rates a problem for the utilities sector? >> good afternoon. thank you for having me. yeah, we think that interest rates for sure are a problem quote/unquote for the utility sector that this competes with the risk free yield. but when we look at the evaluation, it is as cheap as it has been in over a decade on any metric that we can see. we look at it versus the s&p 500 ser suc versus the bond yields. we haven't see this in well over
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ten years so we're confident that we recommend investors get into the space right now. we thought it was overpriced going into the year and i was on the show in december and saying don't get into it on that basis, but right now i think that we're seeing an excellent entry point for a number of high quality names. >> and some investors have talked about the idea that higher interest rates are problematic for certain companies with a lot of capital budgeting geared toward using debt. so if you are capital intensive and you have a lot of debt on your balance sheet, rising rates become a problem. is that your view here as well? >> while there might be a lag in the timing of the recovery dependent on the utility and the jurisdiction, ultimately it will be passed through to the consumers as they update the
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rate cases as they go along. >> and so which stocks -- what is the common thread for those three stocks? >> so given the way that we evaluation for the space, we recommend investors focus on high quality names with minute him overhangs that are attractively priced. so this is the common theme. we think that they are very attractively priced. clean names with minimal overhangs and no negative on the horizon to speak. so we feel good recommending them at this point. >> sophie, thank you very much. appreciate it. and that does it for here on "the exchange." you can see stocks are at session highs, dow up 173 points. it was down 154 at one point
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today. the s&p 500 currently up a half of 1%. and 4332 the last trade there. nasdaq up 46 points as well. keep is it right here. "power lun" rhtft isuick break.r this is spring semester at fairfield-suisun unified. they switched to google tools for education because there's never been a reported ransomware attack on a chromebook. now they're focused on learning knowing that their data is secure. ( ♪♪ )
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welcome to "power lunch." coming up stocks are higher. hice of the day after initially falling to start the week after hamas attacks israel and israel declares war in response. we'll get the latest news on this conflict and look at the many ways this is affecting the world and the markets. and let's check in on the markets because we've seen a major midday reversal as you can see all major averages are trading higher with the s&p and
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