Transcripts For CNBC Fast 20240704 : vimarsana.com

Fractional boards higher the dow about 180 points to the upside 35,304 the s p 500, up about 0. 5, 18 points to the upside the nasdaq up about 0. 3 the under performer if you want to call it that, up about 46 points 13,767 we will have much more on the markets move coming up weve lost some momentum since the highs of the session coming off the heels of the cpi report. A trade alert. Josh making a big buy in the energy industry, so josh, tell us about why its rigged. Yeah. Not big. I was talking to jim about transocean this is a stock i had traded extensively, i dont know, 15 years ago, during the last great oil market. Super cycle. Sure. Its a very small buy. Its a very smallp company, frankly. It used to be much bigger. When you look at the technicals here, this is a stock that has bottomed out consolidating for some time. It is now snapping this very, very longterm downtrend, not quite in an uptrend yet, but thats the first step. Most of its competitors have gone bankrupt. There are few pure play deep water drilling plays in the market, and this is one of the larger ones. Its not the best run one. That would be noble. Maybe jimmy will disagree with me this is the one saddled with the most debt but the most to gain by day rates going higher. So theyve got to pay down a lot of debt, its about 7 billion that explains why its a single digit it stock but, the tailwind that theyre going to have in the second half of the year in my view, puts them at a position for the first time in long time to fix a Balance Sheet and start producing upside surprises its a very tough business its not a business that does well unless theres real demand for that kind of deep sea drilling, but when there is, these stocks work in a big way i have a very, very small position here. Im hoping to add over time. Im new to the story but im paying close attention. You know who is not new to the story. Say more. The other guy at the end of the table, this is a name you have been talking about for some time and involved in it for years at this point now. I wonder, when you look at joshs thee sis why he wants to own it and the reasons you bought it and youre Still Holding on to it, i wonder what reconciles and whats new to you . Its first off great whenever im on the same side with josh, that feels comforting, but more comforting when the technicals shake hands with the fundamentals, which is what youve got going on here ive been in the stock two years. Up about three fold since then not selling a share. I think this is going into double digits. The reason why on the fundamentals side you have a very small number of deep water drilling rigs in the world very small. My work suggests only about half of their rigs are currently under contract which means about two thirds. As prices rise they can get that upside with new leases. Youre on the money with where the next catalyst is 12 rigs are idle, going back to the Oil Price Collapse of 20142015, and you said rightly this is a tough business because its a tough business, you have tough operators operating these companies. What the management of this company is doing is theyre saying to the Oil Exploration and production companies, like mad max, get out of here, you talk to me maybe that was more pesci, im not sure. Like the bronx tales. I didnt do that right, but carrying on, the day rates are pushing up to 500,000 a day right now which is a great rate a moneymaking rate. They will get 12 rigs off cold stack, maybe not all at once but over the next six to 12 months and the ebitda will leap up. Theyre tough operators. What theyre saying, not only are you going to have to pay the extra money and higher day rates, but the reactyvation costs of reactyvating the rigs to buttress the last thing ill say jenny is falling asleep. This is exciting, her type of stuff. No dividend. Well talk about the energy next. A month ago, you should know this, you probably do, a month ago they announced a contract for three of their rigs that starts in 2025, starts in late 2025 thats where the enp companies are. Theyre trying to lock up rigs that start two years from now. Okay if youre in a cyclical business like this, this is the part of the cycle you want top invest in low supply, high demand, controlling price. I want to see two charts quick and then pass the ball to jenny. Noble energy, look at the stock, it looks like a tech stock, not three hours worth maybe a year look at this. Same space, better operator, better Balance Sheet one more, lets do oii, oceaneering. This is robots for deep water drilling these stocks are working theyre better companies, frankly. The opportunity in rig is that they can improve the quality of the business and you need a tailwind to do that. You cant do that in a declining demand environment hard to turn around. When you have the secular trends at your back that gives you the opportunity to fix what was it 50 stock once upon a time i think 100 stock. It was like a sub2 stock three years ago. This is interesting only because youre talking about plays that could arguably be considered the tip of the sphere with regard to the move higher across the energy complex. Thats what im saying so if you look at the rotation already happening between technology and Energy Related stocks in those sectors, jenny, the reason i ask and point to you, is because youre in energy names that are not akin to a transocean or oceaneering. Youre talking about the pipeline plays, the toll collectors, dividend payers to joshs point, anything about this move or these sets of trades that maybe gets you more excited about that more leveraged side to the Energy Market like exploration and production, or Ocean Services and deepwater drilling it cant, right i manage a portfolio that the Equity Income strategy i manage has a 5 or better dividend yield hurdle on it i cant buy transocean a long time ago it had a super juicy dividend and back then i stayed away because it was too leveraged. My job is to deliver a steady and consistent income stream for my clients what i love, it says, jen, youre 100 on track and when jim says the enp companies are locking up rigs for the next two years, tells me Energy Prices are staying high and thats what i need for the enterprise products, energy transfer, Kinder Morgan and on the producer side pioneer and shell, and what youre telling me is not luring me over to a different side of the market, but its giving me comfort and conviction that for the strategy i manage, i am in the right spot and ive been in the right spot for a long time and i can kind of sit back, relax, a little bit, right, at a job you can never really do that, and say hey, yeah, what i own for my clients, for the objectives of this portfolio, are very, very well supported by the industrys broader expectations. We should launch a fund. What . Of what i dont know. Anything. I talk to, o long i always have in my head about how much were all weighing in the conversation i ask many of these oil names to your point dont carry some of the dividends that cap actually get you to that hurdle. So this is important. Its not like oh, if you want to benefit from high Energy Prices buy the riskiest deepwater Drilling Companies like definitely not ive been in this ieo investment, the producers, american producers, all in one etf, im not picking and choosing which one, its on fire right now up 8 over the last quarter and leading the market it took most of this year off, quite frankly, had been under performing and now its up on the year i want to grive you an idea. The median price to sales in the ieo is 1. 5 times, some of the cheapest stocks in the market. Average of the median of nine times price to Free Cash Flow very cheap 21 expected earnings per share growth for 2024. Niece are companies that have Earnings Growth ahead of them, very low valuations, theyve sat out eight months or six months of the rally that weve seen this year, and you could own them individually or own the group. Theyre finally starting to move theyre up 5 year to date about 10 over the last quarter. And i think theres a lot of different ways to win. Jennys ideas, jims ideas, but broadly speaking, it makes sense to me that energy is where the pup is headed. It seems its already heading there now because if you look at a onemonth chart of the reversion of that growth and value trade and specifically energy and it technology, you start to see a divergence happening. 88 in the ieo etf are above 200 day and that is new. One thing that i think is important here, because crude oil has rallied but natural gas has not, okay, not compared to where we were a year ago theres room in the asymmetric trade for natural gas to go higher isnt much room to go lower from here theres thats another catalyst to the whole energy sector. Lets turn to the broader markets overall. Stocks are rallying but well off their highs of the session on the back of this mornings cpi report lets bring in our senior economics reporter Steve Liesman into the conversation. Steve, the initial read, as i was kind of seeing that data alongside you folks, was this was kind of a good number, not good enough from an inflation standpoint to really derail anything the fed has going on, but the market seemed to be happy about it right now is that the right read, or do we have to look a little bit deeper than that . I think thats the way to think about it parse it into two thoughtses the first near term, you come to the september meeting, it very much takes a rate hike off the table. Theres still a bunch of data to come the economy is running relatively stronger, surprisingly strong, in the Third Quarter for a quarter that economists thought was going to be down near zero. Looks like its going to be up between 2 and 4 but then longer term, say out to the november meeting, theres still some possibility out there. What happened after this meeting, i dont know if you have the probability charts, whos better than you guys in the back there, september, 10 , had been up near 15 or 20 there was some bid on the possibility of a rate hike in september that came down take off september if youre a fed watcher. Come back in october and november where theres still some 25, 26 chance they could be hiking rates. One way to look at this number, guys, theres the headline number and core number, 4. 8, 4. 7 and the headline number, but look at it another way, which is the threemonth annualized rate has come down a bit. 1. 9 on headline. If this trend continues, the fed is going to be at or near where it needs to get soon. Steve, what exactly then propels that to get over that big hurdle, right, to get back down towards the 2 target youve spoke an lot and so has diana olick about the housing dynamic and how much that plays into this inflation conversation right now. Theres a wide portion of america thats very intensely focused on what future is for the Real Estate Market and rents overall. That is the big thing that needs to happen . A deceleration of living cost to get that number back towards 2 percent . This is where the micro meets the macro. Housing coming off, went up a tick in this report to 0. 5 . That coming off will be a big part of bringing down inflation. Whether or not that happens is going to be a function of where Mortgage Rates are, whether or not people are feel comfortable to say i have this 2 or 3 or 4 mortgage and im okay with the idea of getting a new house with a 5 or 6 mortgage. 7 seems to be a barrier the construction of apartments out there and whether or not those rental apartments start to arbitrage home rentals or home purchases to some point that puts some downward pressure on housing prices the expectation, some of that is already in our Rearview Mirror that has happened but hasnt picked up in the index over the next several months its expected that will be picked up and bring down the ecbi number. Its jim. I listen to you and rick on squawk box, great discussion, you were talking about the politics of inflation, i wanted to ask then, i have you now, what about the politics next year of the fed, you know, having caused potentially job losses right as inflation has come down . Workers have made it through two years of heart wrenching inflation and now the labor market may just start to weaken, particularly if they continue to raise rates . Whats your thought on the politics behind that if it happens, jim, thats been part of the story weve been reporting, part of the surprise of the economy, that im surprised youre not, you know, getting on that table and doing a victory lap here i think you were the lone soft landing voice. I was with you on a bunch of that, but, you know, you should be doing that. The extraordinary moment were living through, and dont lose it because you dont get to live through extraordinary moments that often, is the idea that inflation is coming down and that its coming down around an unchanged Unemployment Rate. So it hasnt happened yet. Jim, it may happen, we may get loosening, some increase in the Unemployment Rate. The expectation its not necessarily going to happen in the amounts that had been expected if we come off 3. 5 to 4 Unemployment Rate, i would count that as a victory. It could go higher and be more painful. Right now it seems the Unemployment Rate seems to be stuck where it is, 3. 5, 3. 6 area, for quite a while and payrolls, 187 ill take it its more than doubled the demographic of the labor force. Thank you very much our next guest says july is likely the peak of the fed rate hiking cycle the Global Fixed Income strategist at Goldman Sachs Asset Management and joins us live from london it was a fascinating discussion throughout the course of the morning here on cnbc about just how important the cpi read was one data point does not an overall trend make butting do you feel as though anything has fundamentally changed about the u. S. Economic story with this cpi print . First of all, thank you for having me on the show. The cpi data does continue the disinflation trend we saw in june when we make that assessment that july may have marked the peak in the fed hiking cycle, its based on totality of data and to just emphasize that is the terminology that chair jay powell used during the press conference he said what the fed does in september is going to depend on the totality of data between the june meeting and the september meeting, and since then, weve had an employment cost index for the Second Quarter which decelerated, a job reports that was mixed, but other measures such as the jobs workers gap is narrowing and consistent with rebalancing of the labor market and todays cpi data also confirms that disinflation trend. All of that leads us to believe september the fed isnt going to see a case to hike and come november, you will have accumulated sufficient evidence for the fed to conclude that july was the peak. I emphasize that the fed doing nothing at this point is actually the fed doing something. That is because policy rates are restrictive. The trend of disinflation continues. Real rates are rising thats going to tighten monetary conditions and actually help reinforce the disinflation trend. Hi. Its josh brown. Thank you so much for joining us the 10year yield right now is the lowest yield on the curve, about 4 the oneyear 5. 3 im telling people grab as much of that as you can while its still there but steepening has been the story this summer. At what point do you think we get out of inversion is that a 2023 story or do we have to wait into 2024 . How much longer can we really sit with this inverted yield curve with a healthy economy and inflation moderating to the degree it has . Thats great question were actually positioned for the u. S. Yield curve to steepen in the space on the basis of the economic backdrop and we do hope it is a 2023 story actually when we came into the summer, we thought that rates now would be range bound because we thought evidence of disinflation would cap the extent to which yields, strengthen the economy with cap yield forward. We still think that if disinflation continues, the labor market remains resilient and the economy resilient, there is room for the yield curve to steeppen from the current very flat levels. I would caution over the summer, trading liquidity, whats happened with u. S. Trades. Weve had rating actions against u. S. Sovereign debt and u. S. Regional banks, bank of japan which led to reprising in markets and just big picture youve seen markets price in this optimism around soft landing and the fact that fed cycle peaked. Goldman sachs Asset Management, thank you very much. See you soon so not the only one on wall street leaning towards the socalled curve steepener trades, right. This morning on Worldwide Exchange we spoke to skyler at ts lum bared what suggested the same trade with regard to her clients. This is a call on a more normalization of things to come. I wonder, though, jenny, look at you first for this, is this a trade that you play for a trade or is this one you think is more of a trend over the next few quarters or years . Okay. Im very longterm oriented and dont play anything for a trade. Its an interesting thing. I manage mostly Equity Portfolios but manage some fixed income portfolios too. The conversation ive been having with respect to this is interesting. For the better part of the past ten years i discouraged my clients from reinvesting in bonds as they matured. Over the past year and change weve plowed bond allocations back in to the short end of the curve and the conversation were having is lets sit back and see what happens and lets not plan exactly how were going to reinvest the bonds when they mature i dont know whaetsd going to happen if i do have bond portfolios that wilma tour 16 to 18 months from now, as those mature we will have a lot of clarity and if we have a higher long end of the curve fantastic, we get back to where we were for the first two decades of my career and invest in higher yielding bonds. Its an active conversation, but i like the wait and see. Jim, the dynamic has a bearing on how we treat the Balance Sheet<\/a> and start producing upside surprises its a very tough business its not a business that does well unless theres real demand for that kind of deep sea drilling, but when there is, these stocks work in a big way i have a very, very small position here. Im hoping to add over time. Im new to the story but im paying close attention. You know who is not new to the story. Say more. The other guy at the end of the table, this is a name you have been talking about for some time and involved in it for years at this point now. I wonder, when you look at joshs thee sis why he wants to own it and the reasons you bought it and youre Still Holding<\/a> on to it, i wonder what reconciles and whats new to you . Its first off great whenever im on the same side with josh, that feels comforting, but more comforting when the technicals shake hands with the fundamentals, which is what youve got going on here ive been in the stock two years. Up about three fold since then not selling a share. I think this is going into double digits. The reason why on the fundamentals side you have a very small number of deep water drilling rigs in the world very small. My work suggests only about half of their rigs are currently under contract which means about two thirds. As prices rise they can get that upside with new leases. Youre on the money with where the next catalyst is 12 rigs are idle, going back to the Oil Price Collapse<\/a> of 20142015, and you said rightly this is a tough business because its a tough business, you have tough operators operating these companies. What the management of this company is doing is theyre saying to the Oil Exploration<\/a> and production companies, like mad max, get out of here, you talk to me maybe that was more pesci, im not sure. Like the bronx tales. I didnt do that right, but carrying on, the day rates are pushing up to 500,000 a day right now which is a great rate a moneymaking rate. They will get 12 rigs off cold stack, maybe not all at once but over the next six to 12 months and the ebitda will leap up. Theyre tough operators. What theyre saying, not only are you going to have to pay the extra money and higher day rates, but the reactyvation costs of reactyvating the rigs to buttress the last thing ill say jenny is falling asleep. This is exciting, her type of stuff. No dividend. Well talk about the energy next. A month ago, you should know this, you probably do, a month ago they announced a contract for three of their rigs that starts in 2025, starts in late 2025 thats where the enp companies are. Theyre trying to lock up rigs that start two years from now. Okay if youre in a cyclical business like this, this is the part of the cycle you want top invest in low supply, high demand, controlling price. I want to see two charts quick and then pass the ball to jenny. Noble energy, look at the stock, it looks like a tech stock, not three hours worth maybe a year look at this. Same space, better operator, better Balance Sheet<\/a> one more, lets do oii, oceaneering. This is robots for deep water drilling these stocks are working theyre better companies, frankly. The opportunity in rig is that they can improve the quality of the business and you need a tailwind to do that. You cant do that in a declining demand environment hard to turn around. When you have the secular trends at your back that gives you the opportunity to fix what was it 50 stock once upon a time i think 100 stock. It was like a sub2 stock three years ago. This is interesting only because youre talking about plays that could arguably be considered the tip of the sphere with regard to the move higher across the energy complex. Thats what im saying so if you look at the rotation already happening between technology and Energy Related<\/a> stocks in those sectors, jenny, the reason i ask and point to you, is because youre in energy names that are not akin to a transocean or oceaneering. Youre talking about the pipeline plays, the toll collectors, dividend payers to joshs point, anything about this move or these sets of trades that maybe gets you more excited about that more leveraged side to the Energy Market<\/a> like exploration and production, or Ocean Services<\/a> and deepwater drilling it cant, right i manage a portfolio that the Equity Income<\/a> strategy i manage has a 5 or better dividend yield hurdle on it i cant buy transocean a long time ago it had a super juicy dividend and back then i stayed away because it was too leveraged. My job is to deliver a steady and consistent income stream for my clients what i love, it says, jen, youre 100 on track and when jim says the enp companies are locking up rigs for the next two years, tells me Energy Prices<\/a> are staying high and thats what i need for the enterprise products, energy transfer, Kinder Morgan<\/a> and on the producer side pioneer and shell, and what youre telling me is not luring me over to a different side of the market, but its giving me comfort and conviction that for the strategy i manage, i am in the right spot and ive been in the right spot for a long time and i can kind of sit back, relax, a little bit, right, at a job you can never really do that, and say hey, yeah, what i own for my clients, for the objectives of this portfolio, are very, very well supported by the industrys broader expectations. We should launch a fund. What . Of what i dont know. Anything. I talk to, o long i always have in my head about how much were all weighing in the conversation i ask many of these oil names to your point dont carry some of the dividends that cap actually get you to that hurdle. So this is important. Its not like oh, if you want to benefit from high Energy Prices<\/a> buy the riskiest deepwater Drilling Companies<\/a> like definitely not ive been in this ieo investment, the producers, american producers, all in one etf, im not picking and choosing which one, its on fire right now up 8 over the last quarter and leading the market it took most of this year off, quite frankly, had been under performing and now its up on the year i want to grive you an idea. The median price to sales in the ieo is 1. 5 times, some of the cheapest stocks in the market. Average of the median of nine times price to Free Cash Flow<\/a> very cheap 21 expected earnings per share growth for 2024. Niece are companies that have Earnings Growth<\/a> ahead of them, very low valuations, theyve sat out eight months or six months of the rally that weve seen this year, and you could own them individually or own the group. Theyre finally starting to move theyre up 5 year to date about 10 over the last quarter. And i think theres a lot of different ways to win. Jennys ideas, jims ideas, but broadly speaking, it makes sense to me that energy is where the pup is headed. It seems its already heading there now because if you look at a onemonth chart of the reversion of that growth and value trade and specifically energy and it technology, you start to see a divergence happening. 88 in the ieo etf are above 200 day and that is new. One thing that i think is important here, because crude oil has rallied but natural gas has not, okay, not compared to where we were a year ago theres room in the asymmetric trade for natural gas to go higher isnt much room to go lower from here theres thats another catalyst to the whole energy sector. Lets turn to the broader markets overall. Stocks are rallying but well off their highs of the session on the back of this mornings cpi report lets bring in our senior economics reporter Steve Liesman<\/a> into the conversation. Steve, the initial read, as i was kind of seeing that data alongside you folks, was this was kind of a good number, not good enough from an inflation standpoint to really derail anything the fed has going on, but the market seemed to be happy about it right now is that the right read, or do we have to look a little bit deeper than that . I think thats the way to think about it parse it into two thoughtses the first near term, you come to the september meeting, it very much takes a rate hike off the table. Theres still a bunch of data to come the economy is running relatively stronger, surprisingly strong, in the Third Quarter<\/a> for a quarter that economists thought was going to be down near zero. Looks like its going to be up between 2 and 4 but then longer term, say out to the november meeting, theres still some possibility out there. What happened after this meeting, i dont know if you have the probability charts, whos better than you guys in the back there, september, 10 , had been up near 15 or 20 there was some bid on the possibility of a rate hike in september that came down take off september if youre a fed watcher. Come back in october and november where theres still some 25, 26 chance they could be hiking rates. One way to look at this number, guys, theres the headline number and core number, 4. 8, 4. 7 and the headline number, but look at it another way, which is the threemonth annualized rate has come down a bit. 1. 9 on headline. If this trend continues, the fed is going to be at or near where it needs to get soon. Steve, what exactly then propels that to get over that big hurdle, right, to get back down towards the 2 target youve spoke an lot and so has diana olick about the housing dynamic and how much that plays into this inflation conversation right now. Theres a wide portion of america thats very intensely focused on what future is for the Real Estate Market<\/a> and rents overall. That is the big thing that needs to happen . A deceleration of living cost to get that number back towards 2 percent . This is where the micro meets the macro. Housing coming off, went up a tick in this report to 0. 5 . That coming off will be a big part of bringing down inflation. Whether or not that happens is going to be a function of where Mortgage Rates<\/a> are, whether or not people are feel comfortable to say i have this 2 or 3 or 4 mortgage and im okay with the idea of getting a new house with a 5 or 6 mortgage. 7 seems to be a barrier the construction of apartments out there and whether or not those rental apartments start to arbitrage home rentals or home purchases to some point that puts some downward pressure on housing prices the expectation, some of that is already in our Rearview Mirror<\/a> that has happened but hasnt picked up in the index over the next several months its expected that will be picked up and bring down the ecbi number. Its jim. I listen to you and rick on squawk box, great discussion, you were talking about the politics of inflation, i wanted to ask then, i have you now, what about the politics next year of the fed, you know, having caused potentially job losses right as inflation has come down . Workers have made it through two years of heart wrenching inflation and now the labor market may just start to weaken, particularly if they continue to raise rates . Whats your thought on the politics behind that if it happens, jim, thats been part of the story weve been reporting, part of the surprise of the economy, that im surprised youre not, you know, getting on that table and doing a victory lap here i think you were the lone soft landing voice. I was with you on a bunch of that, but, you know, you should be doing that. The extraordinary moment were living through, and dont lose it because you dont get to live through extraordinary moments that often, is the idea that inflation is coming down and that its coming down around an unchanged Unemployment Rate<\/a>. So it hasnt happened yet. Jim, it may happen, we may get loosening, some increase in the Unemployment Rate<\/a>. The expectation its not necessarily going to happen in the amounts that had been expected if we come off 3. 5 to 4 Unemployment Rate<\/a>, i would count that as a victory. It could go higher and be more painful. Right now it seems the Unemployment Rate<\/a> seems to be stuck where it is, 3. 5, 3. 6 area, for quite a while and payrolls, 187 ill take it its more than doubled the demographic of the labor force. Thank you very much our next guest says july is likely the peak of the fed rate hiking cycle the Global Fixed Income<\/a> strategist at Goldman Sachs<\/a> Asset Management<\/a> and joins us live from london it was a fascinating discussion throughout the course of the morning here on cnbc about just how important the cpi read was one data point does not an overall trend make butting do you feel as though anything has fundamentally changed about the u. S. Economic story with this cpi print . First of all, thank you for having me on the show. The cpi data does continue the disinflation trend we saw in june when we make that assessment that july may have marked the peak in the fed hiking cycle, its based on totality of data and to just emphasize that is the terminology that chair jay powell used during the press conference he said what the fed does in september is going to depend on the totality of data between the june meeting and the september meeting, and since then, weve had an employment cost index for the Second Quarter<\/a> which decelerated, a job reports that was mixed, but other measures such as the jobs workers gap is narrowing and consistent with rebalancing of the labor market and todays cpi data also confirms that disinflation trend. All of that leads us to believe september the fed isnt going to see a case to hike and come november, you will have accumulated sufficient evidence for the fed to conclude that july was the peak. I emphasize that the fed doing nothing at this point is actually the fed doing something. That is because policy rates are restrictive. The trend of disinflation continues. Real rates are rising thats going to tighten monetary conditions and actually help reinforce the disinflation trend. Hi. Its josh brown. Thank you so much for joining us the 10year yield right now is the lowest yield on the curve, about 4 the oneyear 5. 3 im telling people grab as much of that as you can while its still there but steepening has been the story this summer. At what point do you think we get out of inversion is that a 2023 story or do we have to wait into 2024 . How much longer can we really sit with this inverted yield curve with a healthy economy and inflation moderating to the degree it has . Thats great question were actually positioned for the u. S. Yield curve to steepen in the space on the basis of the economic backdrop and we do hope it is a 2023 story actually when we came into the summer, we thought that rates now would be range bound because we thought evidence of disinflation would cap the extent to which yields, strengthen the economy with cap yield forward. We still think that if disinflation continues, the labor market remains resilient and the economy resilient, there is room for the yield curve to steeppen from the current very flat levels. I would caution over the summer, trading liquidity, whats happened with u. S. Trades. Weve had rating actions against u. S. Sovereign debt and u. S. Regional banks, bank of japan which led to reprising in markets and just big picture youve seen markets price in this optimism around soft landing and the fact that fed cycle peaked. Goldman sachs Asset Management<\/a>, thank you very much. See you soon so not the only one on wall street leaning towards the socalled curve steepener trades, right. This morning on Worldwide Exchange<\/a> we spoke to skyler at ts lum bared what suggested the same trade with regard to her clients. This is a call on a more normalization of things to come. I wonder, though, jenny, look at you first for this, is this a trade that you play for a trade or is this one you think is more of a trend over the next few quarters or years . Okay. Im very longterm oriented and dont play anything for a trade. Its an interesting thing. I manage mostly Equity Portfolios<\/a> but manage some fixed income portfolios too. The conversation ive been having with respect to this is interesting. For the better part of the past ten years i discouraged my clients from reinvesting in bonds as they matured. Over the past year and change weve plowed bond allocations back in to the short end of the curve and the conversation were having is lets sit back and see what happens and lets not plan exactly how were going to reinvest the bonds when they mature i dont know whaetsd going to happen if i do have bond portfolios that wilma tour 16 to 18 months from now, as those mature we will have a lot of clarity and if we have a higher long end of the curve fantastic, we get back to where we were for the first two decades of my career and invest in higher yielding bonds. Its an active conversation, but i like the wait and see. Jim, the dynamic has a bearing on how we treat the Economic Outlook<\/a> and even valuation for the stock market overall. Do you like the way things are shaping up with regard to the risk free rates across the curve . The same disclaimer that jenny said, im not trading the yield curve. Thats nothing i do. It does have an impact in terms of what the yield curve is saying about the stock market and its been inverted for a long time. I would like to see that go away the presumption all along we would go into a recession, fed would have to cut rates and the short end of the curve would come down. Were seeing the opposite and this is good, were seeing positive economic activity, positive profits which is causing the long end of the curve to go up think about the numbers. Say the fed does its job right and gets down to 2. 3 inflation and say the economy continues to grow at call it 2. 3 , you put those numbers together thats where the 10year should trade, 4. 6 if in the same scenario happened six, nine, 12 months from now, we have 2. 3 inflation and the fed is still at 5. 3 on the fed funds rate, its too restrictive for that environment they start to cut rates, but not because of a recession, but because they won the game, which case you have the steepening of the yield curve not because we went into a recession, but we got a darn good outcome which is the path were on right now. To your question about the setup, i like the way this is moving. All right coming up on the show were talking disney, the shares higher following the Earnings Report<\/a> jim and jenny own it well get their takes on the quarter. Halftime is back after this commercial break wow, you get to watch all your favorite stuff. Its to die for. And its all right here. Streaming was never this easy, you know. This is the way. You really went all out didnt you . Um, its called commitment. Could you turn down the volume . Here, you can try. Get way more into what your into when you stream on the xfinity 10g network. Markets still positive disney shares moving higher following the Third Quarter<\/a> results. The company reporting a revenue miss in its second straight decline in its disney plus subscribers. Alongside price hikes across all of its flagship streaming products and interesting move, dow component, its a chart that doesnt look good. In fact, i remember this morning, we had jason over at citi who covers tech and media and telecom said, quote, i would describe the sentiment on disney as probably the worst its been in 20 years, and it really has to do with big structural issues do we agree on that particular notion yes. Yeah. Thats one of the reasons i like it so much here. When sentiment is as bad as it can be near a bottom we bought this a couple years ago at 120, i think every day is your new day and whats the upside. 90 bucks a share we have enormous patience and i think that tortured my colleagues here, my clients, the viewers. The patience is enormous the thesis remains intact. They should get back to precovid earnings, 7 a share if they get a 20 times multiple, you have 55 upside that might take time from here, but we know the shares always moved in advance of actually reaching that what do they need to do to get to 7. They need to add 4 billion to earnings they just cut 5. 5 billion through cost saving. They have a lot of levers to pull and a lot theres a lot of ways to skin a cat. With bob iger back they can get there. You have a messy bag right now you have orlando slowing but International Super<\/a> hot. Linear tv pretty terrible but as a result streaming they can start to raise prices. Its messy, but i said a couple weeks ago, i think you bet against disney the way you bet against new york city. The loyalty is unbelievable. The customers unbelievable the products are unbelievable. Theyre going to misstep and stomach stumble from time to time, but you dont bet against it whats interesting, you can say theyve taken a page or so out netflix playbook as well with regard to streaming strategy, raising prices, doing the password sharing crackdown is it enough of maybe at least a shortterm catalyst to say we can capture a fraction of the kind of upside move we saw in the bottoming out of netflix and in the resurgence of that . I dont think so. Because disney is not adding subs theyre doing this defensively they have no other way to justify the amount of money theyve invested other than try to make more right now and thats like a shortterm well raise prices do that again. Do that next year. Probably not youre it stuck at 100 million users. The content is not good. They know that its one of the reasons that iger came back hes a genius and he can fix that its not an overnight fix. They cant even film anything right now, even if they had a show to solve all their problems its not going to do it, writers on strike, actors on strike. I was sitting with a hollywood producer yesterday for lunch, they have a he show coming out theyre not allowed to tweet about it its a tough time right now in the content game it will resolve itself its not forever the structural issue is espn thats not a cyclical problem. There were 100 million subs paying 7 a month whether they watched sports or not every month for years and years, and thats more like 70 and aint going back to 100. Probably next stop 50. Cord cutting happened very quietly and then all at once the realization and that requires now something creative probably a partnership, maybe something with apple or alphabet or whatever, because every time a Sports League<\/a> now comes up for renewal tv right, disney is not competing with fox sports. Now theyre competing with amazon, youtube, apple, companies that are trying to sell other things they can pay literally any amount for the rights something strategic has to happen the good news is, iger is the guy. Bottom line. I think theres an opportunity here i think jenny will make money. This stock did not lose 150 billion in market cap because the economy slowed theres something bigger at play here, and the solution is not going to be lets just raise prices for hulu. Its not going to be the answer. Im waiting and i think i will have a chance to buy it lower. Espn a good topic of conversation here, because it is in many folks minds the lynchpin going off rights it inked a big deal getting into online gaming. Thats a Growth Market<\/a> for a lot of folks has it changed the story around the investment thesis on disney . A little bit. First, backdrop, jenny said, there is a mess. This is a messy kitchen that needs to be cleaned up josh is pointing out one of the pots that needs to be cleaned up is espn. The deal with pen sports is interesting. Tiny. 1. 5 billion over ten years. 150 million a year is a not even 1 of revenue for disney, however pretty high margin theres very little that espn and disney needs to do, other than thatto allow penn to use their brand. The only reason this is interesting is it shows a new and creative way of monetizing espn which speaks to what josh is saying. It needs to be figured out people are not going to pay whatever theyve been paying in the linear bundle through their Cable Provider<\/a> you autoneed to find new ways to monetize espn. They have to get the games. People are not paying to theyre not going to do the espn app stand alone and not pay to watch 30 for 30. Theyve within trying to monetize espn they were selling chicken fingers in times zone, people want espn for the games the games get more expensive i think it will be an upside catalyst when they do a deal with a larger Tech Media Company<\/a> whatever were calling them, but if they dont its going to be a tough stock to be in i think theres an opportunity, not yet. Lets get to the headlines news wise. Good afternoon. Hey, dom. Hawaii officials are fearing the worst as the sun comes up. They say the death toll from the wildfires raging on the island will likely grow from 36 Emergency Management<\/a> officials told abc news search and rescue teams are fanning out in hopes of finding survivors they said there are three active fires burning today and theyre only just now gaining ground on containing them. President ial candidate in ecuador was assassinated following a rally in the capital. Days before voters go to the polls. Police say Fernando Villavicencio<\/a> who was outspoken against corruption was killed and nine others were shot Elizabeth Warren<\/a> according to authorities one suspect died after exchanging gunfire with police and six people have been detained in connection with the assassination. And a successful Space Tourism<\/a> trip in new mexico as vir galactic took off with six found for space. Three of the passengers are not astronauts or company employees. Theyre civilians who bought or won tickets. Passengers included a former olympian and a motherdaughter duo. The 90 minute flight took passengers briefly into space where they experienced three minutes of weightlessness before descending back to earth. Thank you very much. We have more Committee Moves<\/a> to get to, including a buy for jenny. The name shes betting on coming up when halftime returns after this break this thing, its making me get an ice bath again. What do you mean . These straps are mindblowing they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. And you are . Im an investor. In invesco qqq, a fund that gives me access to. Nasdaq 100 innovations like. Wearable training optimization tech. Uh, how long are you. Im done. Im okay. please dont go by harry casey, Richard Raymond<\/a> finch please dont go please dont go please dont go please dont go dont gooo dont go away preorder now and get a free storage upgrade. please dont go i did have hearing aids from another company. I was just frustrated. I almost gave up. With miracle ear its all about service. Theyre personable. Theyre friendly. Im very happy with them. We provide you with a free lifetime of aftercare. Meaning free checkups, cleanings, and adjustments. I see someone new. Someone happy. Its really made a difference. Call miracle ear at 1800miracle and schedule your free, no obligation hearing evaluation today. Were back on the Halftime Report<\/a> the dow up 100 points, represents near session lows at this point the halftime chart of the day right now is Capri Holdings<\/a> surging, home of the versace brands and jimmy choo, michael kors is going to be acquired by tapestry in an all cash deal valued at 8. 5 billion from an enterprise value standpoint that translates to 57 a share in cash tapestry shares are pulling back on the shares. Stick with the retail space as well, jenny, you made a buy with regard to another apparel retailer type name what is it and why. Last week we added vf corp, van, north face, timberlands and they own a Company Called<\/a> supreme. Its super interesting because the question that i asked myself when we were researching this, how do you justify buying a Consumer Product<\/a> company when we know the consumer is likely to slow, not go away but slow and continue to shift spending away from goods to travel and leisure. The thing here is, this is a pandemic beneficiary and we know the pendulum swings too far. Shares ran up, doubled between the spring of 2020 and 2021 and then the pendulum swung too far in the opposite direction and were down 80 from the high like i was saying about disney, the starting point is today. Where are we today in 6 dividend yield management decreased the dividend about a year ago and has been super strong behind what they have now because they think they will grow it from here 6 dividend yield trading at less than 10 times earnings. In the next couple years, earnings are expected to grow 17, 18 as earnings normalize back to a normal trend, normal level. Great Earnings Growth<\/a> ahead, extremely why is it down 80 . Because it went too far up. Thatcant be. What are their brands north face, timberland the stock is trading like they invented a a new cancer. Josh. The worst chart ive seen all week. Im going to strangle you. Youre going to buy it and double down because you love a bad chart. I dont know if josh is baiting me or not totally. The last time josh saw the worst chart it was Stanley Black<\/a> and decker and it is the same story, pandemic beneficiaries. You crushed on that one. Thank you. Stock up 25 from here. Same thing in the pandemic beneficiaries, huge earnings bump they were earning almost 4 a share, now its 2. From here it normalizes. You have to be a human like you cant be a program trade or a robot and just say oh, earnings were 4 and now 2, everything is terrible. Well keep an eye on that one. Thank you thank you so much. Someone familiar tell me josh brown spending on supreme branded merchandise dais way down. Before we go to the break a shout out to steve weiss throw up a chart of alibaba. Was this his final trade whats happening here look at this, up 5. 5 . This is Something Special<\/a> all right. Up next okay. Up next we have an earnings pop for one of jims holdings and bullish calls on two tech names ahead of Earnings Report<\/a>s. Halftime is back on this multipronged show after this break. Connecting to opportunity is just part of the hustle. Opportunity is using data to create a competitive advantage. Its raising capital that helps companies change the world. Its making complicated Financial Concepts<\/a> seem simple. Opportunity is making the dream of Home Ownership<\/a> a reality. Writing new rules and redefining the game. And driving the world forward to a Greener Energy<\/a> future. applause opportunity is setting a goal. And charting a course to get there. Sometimes the only thing standing between you and opportunity. Is someone who can make the connection. At ice, we connect people to opportunity. Let Innovation Refunds<\/a> help with your erc tax refund so you can improve your business however you see fit. Rosie used part of her refund to build an outdoor patio. Clink dr. Marshall used part of his refund to give his practice a facelift. Emily used part of her refund to buy. I run a wax museum. Let Innovation Refunds<\/a> help you get started on your erc tax refund. Stop waiting. Go to innovationrefunds. Com you really got the brows. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes thats what im talking about. [ cheers ] running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Welcome back wynn resorts is heading higher, the company beating on tonight and bottom lines and your Earnings Report<\/a> of the day, youre in on this one and it was a call of the day not so long ago. I think it was a final trade. It was a final trade. Unlike steve, they actually have me on the show when its a final trade that goes up. Thats rough. That was a little harsh, sorry, steve. Hes coming to kill you. Back to the show. All right. Wynn. Wynn for like the Third Quarter<\/a> in a row has blown out on all fronts, macao, las vegas, boston, and show signs of good demand heres the interesting thing, right, the stock, which had a torrid run through the second half of last year has been basically flat for the last six months thats a consolidation josh can tell you about it consolidations get resolved. Stock goes higher or lower im looking at the operating results from wynn and think the stock is going higher. Theres no indication that results from macao, las vegas or boston are going to end soon. Theres the call on wynn. Its up 3. 5 on the days trade so far to some of the calls of the day, first up Morgan Stanley<\/a> out with a bullish now note on nvidia ahead of earnings in a couple weeks calling nvidia its top pick in Semiconductors Nvidia<\/a> is a stock you own and have been riding for a while congrats on that the best performer in the s p. I am very good at this. Nvidia is look, nvidia this is the quarter that they did that like very dramatic oh, no were not going to make 7 billion, its going to be 11. Remember that day. The stock there is about what theyre about to report so we have a sense of how good the quarter is the thing is, i dont think they can do it again. I dont think theyre going to give you that same thing next quarter. I dont know what the expectations are in the stock, but i think a lot of new money, hot money has come in and if they dont have their doors blown off maybe they take a profit i would be careful look at this Super Micro Computer<\/a> that reported tuesday night. It went down like 100 a share this was an a. I. Stock, much smaller than nvidia, 18 billion market cap people should understand what can happen when expectations get too carried away im long nvidia, im not talking it down. I hope it all works out great. I just dont feel as excited about it as i did when they already gave us what the numbers were going to be. Some folks dont feel excited about 47 times forward earnings. Palo alto network getting a bullish call Goldman Sachs<\/a> saying the setup is improving into that print jenny, you are into palo alto. Weve owned this for a long time and agree with the goldman note we think comes out of the Earnings Call<\/a> next week they report earnings in line but the guidance is excellent and were likely to grow revenues at 19 through 2026 which is unbelievable the entire investment thesis here is insatiable perpetual demand for Network Security<\/a> and a really wonderful place to be. Palo Alto Networks<\/a> there. Coming up next, we have mike san tony with a midday the session up 177 on the dow. Halftime is back in 2. Welcome back to the Halftime Report<\/a>. Time santolis midday word. Mike, this is an interesting day developing giving the context around macro right now. Weve been talking a lot so far today about this rotation that were starting to see out of certain growth industries, into certain Value Industries<\/a> and we wonder whether or not this is just the beginning stages of a longer trend its been underway for a little while energy is beating tech over the threemonth lookback so i think its a lot to ask of the rest of the market to take up every inch of slack left by the pullbacks and the corrections in the bigcap nasdaq stuff we crossed 4500 on the s p each of the last six trading sessions that rally this morning was like a quick, relax for a second. Cpi came in consistent with the soft landing story the problem is, soft landing evidence is no longer news thats the premise, the baseline assumption of most people. Were trading where we were trading before july, meaning june cpi so i feel as if everything is happening in the context of digesting a huge move through july, and now it becomes a little more of a choose your path moment. Are we going to have persistent disinflation, yields have peaked thats okay. The question is, is this valuation an incremental reason to see aggressive buying is it not out of the realm of reason to watch a red hot Industry Group<\/a> like semiconduct herbs, pull back and shake hands with the average price on a rolling basis . And its not to say thats bearish, it just means these things were going up so far so fast they had to take a breather no doubt they have to even the nasdaq 100, which is right back there, when it touched the 50day moving average on the way up in 2021, it broke up frequently for a little while and then came back. You cant really infer that its anything more than a routine the issue i think everybody has is, pullbacks are the routines until theyre not. They all start the sameand the dont all end the same you know whats going to happen is tomorrow night, at 6 00 p. M. Eastern time, it is a friday, youre seeing both those handsome ssome gentlemen on your screen we have mike santoli, josh brown, cnbc is taking stock. Theyll look back at the whole week of trading. You can sit between us. Im going to watch from the safety of my house with a cold beer thank you very much, mike. Much more on the portfolio moves moving around in the market with the committee. They are coming back now after this commercial break. Ice works fast. Heat makes it last. Feel the power of contrast therapy. So you can rise from pain. Icy hot. You founded your Kayak Company<\/a> because you love the ocean not spreadsheets. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire were back with more Committee Moves<\/a>. What are we talking about here first, i bought this at the end of the pandemic at the end of 2021, realized a 90 gain the opportunity, even though its great, there is less Capital Appreciation<\/a> on that the other we talked about a lot, i bought this about not even a full year ago. They spun off their paper business, and cut the dividends, but also announced a big share buyback. So ftai aviation and mativ holdings, thank you very much for that update. Final trades is coming up, so keep it right here the dow is up about 92 points. So, again, just near ssieson lows right now well be right back in 2 00. camera shutter dont cha wish your phone was fun like this . Dont cha wish your phone was fun like this . Dont cha wish your phone was fun like this . Dont cha wish your phone looked more like this . dont cha wish your phone could flex like this . dont cha wish your phone could fit in here . Dont cha . get a free storage upgrade when you preorder at verizon. Im so glad we did this. Im so glad we did this. Im so glad we did this. Im so glad we did this. Im so. Glad we did this. [kid plays drums] life is for living. Lets partner for all of it. Im so glad we did this. Edward jones you got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness<\/a> mirror. Im also mr. Leg day. 1989 anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. I go through a lot of pants. Before investing carefully read and consider Fund Investment<\/a> objectives, risks, charges, expenses and more in prospectus at invesco. Com. upbeat music awww. Awww. Awww. Nope. Constant Contact<\/a> delivers the Marketing Tools<\/a> your Small Business<\/a> needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. Welcome back we are back in time for final trades. Jim, well start with you. Bristolmyers announced a 4 billion accelerated Share Repurchase<\/a> theyre buying shares at an eight times multiple of earnings, which means a yield of 12. 5 , theyre investing in their own shares so they dont have to pay their dividend on those shares so a winwin jenny National Retail<\/a> properties. You have a 5. 16 dividend yield, they increased the dividend by 2. 7 and they increased their acquisition guidance so a solid, under the radar good company. Shares up 1 today. And josh brown yeah. Toast reported this is a stock that im pretty much right where my average cost is its had a rough couple of weeks, but they had an amazing response to earnings its now almost a 1 billion quarterly revenue run rate company, and they will be profitable earlier than expected so a bunch of price target raises on the streets and im staying long half the restaurants ive been to lately all have toast. Its becoming an Industry Standard<\/a> that does it for us see you storm. The exchange with kelly evans starts right now thank you very much, dom. Welcome to the exchange. Im kelly evans. Heres whats ahead this hour. The markets are breathing a sigh of relief on weaker than expected cpi data. But our guest is warning dont get too complacent she sees inflation rising again, and when it does, stocks will sell off, and you should buy the dip. Shell bring you the names shes ready to scoop up. Disney hiking prices and taking a page from netflix its still a takeover target we tell you who could end up","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia800506.us.archive.org\/4\/items\/CNBC_20230810_160000_Fast_Money_Halftime_Report\/CNBC_20230810_160000_Fast_Money_Halftime_Report.thumbs\/CNBC_20230810_160000_Fast_Money_Halftime_Report_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240707T12:35:10+00:00"}