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tv   Squawk Alley  CNBC  July 1, 2019 11:00am-12:00pm EDT

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headquarters in hawthorne, california it is 11:00 a.m. here on wall street and "squawk alley" is live ♪ good monday morning and welcome to "squawk alley." i'm morgan brennan with deirdre bosa and david faber live from post nine on the floor of the new york stock exchange. carl and jon are off deirdre, welcome back to the east coast >> thanks for having me. >> the s&p opening at an all-day intraday high. the dow up triple digits again this morning although off the highs of the morning. nasdaq looking for four in a row
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in terms of gains. can tech keep up its recent hot streak >> joining us now to discuss is jeffries senior analyst brent thil and tom forte gentlemen, good morning to you both tom, i'll start with you the fact that we're seeing names like apple, the semis rally on this u.s./china trade truce over the weekend and what it means for some of these companies to be selling into china, how should investors be thinking about that >> sure, i would say the truce is nice, but we would like to see is an actual resolution. so one point in time, resolution looked like china agreeing to buy billions of dollars of agricultural products from the u.s. so, again, the truce is nice, but we would like to see an actual outcome, and something we're monitoring closely, because we would argue it had the biggest impact on tech stocks in the first half of this year >> brent, what it means for alphabet, as well. i mean, i know they had put a hold earlier when huawei got added to the intent 'tis list
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here in the u.s. is there upside for that company, even though we don't have the details around what this truce could look like >> i think for the internet names, it's a modest tailwind. it's probably more impactful for the travel-related names like expedia in booing. they saw some slowdown due to some reluctance of travelers in asia so this will potential help the travel names for google, i don't really think there's a huge impact. the stock has been under a lot of duress from the first quarter miss, as well as the lack of disclosures from google. i think there's a bigger cloud over the stock as it relates to running the company and overhanging operations than anything in china at this point. >> tom, as you said, a truce is nice, but do you really see a way forward? how do you actually get a deal from here? we're talking about alphabet, yeah, some reprieve in terms of being able to supply their operating system to huawei but in the long-term, what does this mean if huawei is particularly turning away from u.s. suppliers
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>> so if you look at apple, for example, china has been the biggest risk for the stock with 20% of their sales to chinese consumers and last week's news that they're moving their production for the mac book from china to texas so i think what you're seeing is a lot of companies still want to make their products in china, because in many instances, china is still the low-cost producer for that sort of thing, but, you know, again, i think the i deal, which won't happen is that they'll protect our property rights to a greater degree, but i think, again, if you look at what the almost deal was, it was for china agreeing to buy billions of dollars of agricultural products. it will be interesting to see if that is the quote/unquote outcome we're looking for. >> brian, when you look at how the f.a.n.g. names overall have done so far year-to-date, facebook up, what, 47%, amazon up more than 25%, apple, 25%, netflix up 27% good evening is the laggard. but is there still room to run
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in some of these names that have performed so strongly in the first half >> yeah, as you mentioned, f.a.n.g. is up 27% year-to-date. so with that kind of gang, you tap the air brakes a little bit and do a check we do think the fundamentals are still very good. if you look at the rally we've seen, it's largely been in growth we're starting to see on our trading desk a shift back to value of sourcing, clients move back to value-earned names that will benefit someone like a google going forward, given the run we've had. but we continue to be really establish on facebook. it's the strongest roi we see in advertising right now. and we think they're capable of $10 of earnings power two years out. and to put a low-to-mid20 multiple on that and you have a 230 to $250 stock. so you still have a lot of room in facebook from our perspective. and again, some of the value names like expedia, google, even in midcap, go daddy, we like, offer, i think, a really
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interesting entry point at the current levels >> brent, does that -- those numbers you just rattled off for facebook, does that handicap the possibility of regulatory risk >> you know, it's -- all of these stocks, it's the number-one asked question from our client base, globally. i think investors have put a much lower multiple on internet than they have in semis and software you look at semis and software and the run that they've had, so i think that a lot of that concern is baked into the stocks you never know exactly what's going to happen, but we don't believe that there's a big breakup coming for tech. we think there's going to be increased tension from regulators as that's their job to do, but we don't think that there's a dramatic impact to their core business at this point. so it doesn't reflect a huge, you know, regulatory overhang. it does reflect already the concern from foreverses in the multiple today and again, i think, you know, a low-20 multiple for facebook
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growing ebitda, you know, at a mid-20% clip is not an unreasonable number to pay for a great growth story >> tom, are you quite as optimistic i mean, they've notched some major gains. even though they're facing these head winds we know that the doj and ftc could be looking at some of the f.a.n.g.s in the back half of this year. so are you as optimistic what are you predicting for the second half? >> the three things we're looking at in the second half is tariffs that we discussed and regulatory risks, and new issuance on the regulatory risk, i think it's not priced in the stock the good news is that this is one of those things where it takes time for legislation to get passed if you have a department of justice investigation into a company, call it alphabet, call it amazon, it isn't like they have the case on tuesday and it's decided on wednesday. so generally speaking, these are things with long lead times, but i do think regulatory risk, especially for amazon, apple, facebook, and google is quite
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significant and not currently priced into shares >> all right, lastly, tom, you do cover apple, a story on the "wall street journal" painting a bearish picture of johnny ive's departure, saying it was a long time coming as tim cook shifted focus away from being a design-first company is it, at this point, especially in light of that report, is this good news or bad news that he's leaving? >> i don't think we need to go out of our way or anyone should go out of their way to tarnish johnny ive's history at apple. he was amazing when you think about what he did with steve jobs. i think of it more as tim cook is an amazing ceo. he's done a great job of taking what steve jobs gave him and taking apple to a whole new level. design is in apple's dna, so i think they'll be able to overcome johnny ive's departure. but an amazing career at apple for johnny ive and i think the company is still well positioned, going forward >> great we'll leave it there gentlemen, thanks for joining us, brent and tom.
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>> thank you when we return, the winners and losers from the g-20 summit. why apple might be this weekend's biggest winner more on that and this morning's cease-fire rally, straight ahead. and later, inside the secret koch brothers' summit. tooladspngt coro ris after the break. stay with us
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welcome back the president restarting talks with north korea and china on denuclearization and trade over the weekend. kayla tausche has been all over the story. she's in washington on the
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difficult road ahead of negotiations kayla, the big topic today is, yes, a truce is nice, but how do you actually get a deal from here >> that's the work, deirdre, that's being done behind the scenes right now president trump says the negotiations with north korea will take place at the staff level at the next two to three weeks to see to what extent pyongyang is willing to denuclearize on china, trump says he's in no rush and that the issues are intricate, but he's facing immediate backlash on his decision to grant a reprieve to huawei in order to strike a truce. at least three republican senators slamming the decision and one, florida senator, marco rubio, suggesting he'll introduce legislation to reverse it that may get a veto-proof majority in the senate white house economic adviser larry kudlow was on full court press yesterday to drum up support for the move, telling fox news, it was not a policy of general amnesty, and telling cbs that president trump would be working to shore up support. >> i hope that when president trump comes back, that he and others of us will be able to
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persuade senator rubio that there will be no national security violations. >> reporter: the semiconductor industry praised the move in a statement saturday saying, the progress is good news that, quote, we're encouraged the talks are restarting and additional tariffs are on hold and we look forward to getting more detail on the president's remarks on huawei. raymond james says skyworks and k corvo could see some near-term upside, but nearly every analyst weighing in this morning said that july earnings will still show weakness and that uncertainty for the chip sector is far from gone deirdre? >> absolutely. still a lot of uncertainty, especially in the long run let's talk about that a little more and a lot of folks are wondering, is tech the big winner from this we could's summit and is the so-called economic has hardball over? let's bring in ben steel with the council of foreign relations as well as director of the tech policy program james lewis. gentlemen, good morning and thanks for joining us.
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>> good morning. >> let me ask you, would you say we're in the clear are markets getting a little bit ahead of themselves. i kept talking about this long run. i spoke to the chairman of huawei last week and he said that they're getting ready to sort of reduce their dependence that they need to on american suppliers. >> yeah, what we're seeing right now is really a relief rally we are far away from the end game here. the big shock coming out of osaka was the president making unilateral concessions to china, both in scaling back the huawei embargo and suspending the next round of tariffs, which was scheduled to be 25% on $300 billion worth of chinese goods so it's a relief rally, but we are far from the end game. >> how do you know it's unilateral >> well -- >> well, they can't reduce its independence dependence -- >> ben -- >> well twh, they can't reduce i
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dependence on u.s. policy. but go ahead >> i'll ask you. >> president trump did say he had some commitments from president xi to pick up purchases of u.s. goods and particular farm goods, but chinese state media is absolutely denying it. and we have yet to hear anyone from the administration provide evidence that china's really made any commitments here. >> james, you seemed anxious to speak, so i'll let you do so but answer a question for me, did we give up a lot on huawei and get very little in return in your opinion >> so far, we haven't given up anything and it's not clear what relief huawei will get. the chip companies, some of the big companies like google that do the android software, they're probably happy, but huawei would have gone out of business within a year, or at least, they wouldn't have been able to make the same-quality products. they depend on the u.s so this was a lifeline i think it's also holding huawei hostage to progress in the trade talks. if it doesn't look like it's going the right way, the president can always put controls back on
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so think of it more as a ploy to get progress in the trade talks, rather than a reprieve >> so how do you reconcile what we've heard, the rhetoric we've heard over the past months, but really years about huawei being a national security concern? how can it be a bargaining chip and a national security concern at the same time and we're already hearing people, lawmakers, like senator rubio, speak out so where do you go from here >> this is the big problem the president, on the one hand, has said that huawei is a national security threat on the other hand, he said in the run-up to the summit that he anticipates huawei being part of a final deal so the administration has yet to reconcile this dilemma whether we're going to treat huawei purely as a national security concern or whether it's a bargaining chip to get a trade deal with china. >> so james, on that topic, as well, do you think that the president is going to be able to use huawei as a bargaining chip, especially since we're already
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seeing this pushback and many, including himself, has said it's a national security concern? >> it's a national security concern, only when people buy huawei products. huawei itself isn't the problem, it's when you install huawei equipment on your networks, especially if you're in a nato country. you can pursue both policies at once, keeping huawei afloat so they can sell to places in africa and encouraging our european friends not to buy from them it's a little complicated, but it's the technology that will determine whether or not huawei is a success so he has them on a choke leash. >> yeah, james, just to dig into that a little bit further, there does seem to be a lot of bipartisan support in terms of keeping huawei under the national security lens and regulations tide s tied to than the u.s. in addition to that, we've got a newly merged defense company today that began trading it's a defense tech company. one of the things they're focused on is spectrum superiority. i can't help but think that
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huawei as a national security threat continues well into the future what does that mean longer term for the dynamics between the tech sectors of these two countries. >> the big problem is that the zte experience, the huawei experience has accelerated the chinese efforts to build their own technology and that has implications for all the chip makers. that's why they were so happy. also for some of the software makers so we are in a race with them. they're willing to spend a lot of money it's not clear it will work, but the chinese have said, up to $128 billion to build their own chip industry. they don't want to be dependent on the u.s., but right now they are. so we have the ability to turn huawei on and off. huawei stockpiled parts. they stockpiled, some people say six months, some people say nine months that's their timeline and then they would stop making equipment. it's a big pressure point that the president isgoing to probably use on the chinese.
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>> although this goes to this bigger issue of 5g and the national security ramifications of not having a champion or not even having necessarily a policy my colleague andrew ross sorkin wrote about that today in "the new york times." do you have thoughts on that, in terms of how it relates into this relationship? >> sure. i mean, 5g is clearly both a national security issue and a major economic issue for the united states. and we're seeing mixed messages from the president about that. what is his end game going into 2020 when it comes to questions like 5g? is this going to be part of an end game trade deal? or is this something that he's going to reserve as a national security issue also, one member of this administration must be very concerned about the outcome from osaka is u.s. tr, bob lighthizer the president's unilateral concessions have put him in a
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difficult situation since he still has major outstanding issues with china, in particular, china's unwillingness to put its supposed concessions on market access into legislation. the president is throwing him back into the ring with china, with no indication that china's ready to deal on these matters >> ben james, thanks so much for your insights today. >> thank you >> big money donors to the sprawling network of political and philanthropic organizations led by charles koch are meeting today and over the weekend to discuss trump, trade, tech, and more ylan mui is in colorado springs with an inside look. ylan >> reporter: well, morgan, this is a private meeting for the wealthy donors and business leaders who believe in the libertarian vision of billionaire charles koch there are about 450 people who are here and this is the first time they've allowed cameras to broadcast from their three-day summit this year, one of the big themes is technology, with the koch network emerging as one of the
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most vocal defenders of innovation and the internet. >> in this time of disruption, if people are wondering, can we adapt and succeed, our answer is, yes. >> i'm told the network has spent already eight figures. that's at least $10 million to combat not just the backlash against big tech, but what they see as cultural fears around new technologies more broadly. and at times, that has put them at odds with politicians they previously supported take republican senator josh hau hawley the network spent $2.1 million to help him get elected, but now they are slamming some of his proposals to rein in big tech. here at the summit, steve case of aol addressed investors yesterday. and there was even a driverless car here for donors to take a spin in, so they could get comfortable with ai and automation i took a ride and i survived back over to you
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>> i want to see some of that video at some point, ylan. thank you for bringing us those headlines. still to come, weed, booze, vaping, psychedelics the founding partner of vice ventures will join us here at post nine on why funding the so-called bad industries is actually a good investment meantime, the dow is rallying in a big way to kick off the second half of the year. here are the names that are powering the index higher in today's session. apple, nike, and jorpmgan. we've got a lot more "squawk alley," straight ahead
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welcome back to "squawk alley. europe is set to close in just a few minutes. seema mody joins us now with a breakdown of today's auction >> stocks in europe kicking off the second half of the year on a relatively strong note a number of elections and meetings will be taking place in july we have the eu parliament, plus waiting to see who will take over for outgoing prime minister to have the uk, theresa may. that's coming up in the week of july 22nd.
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what's working today in europe is technology responding positively to the latest g-20 headlines. a number of chipmakers here in new york, you can see a strong day-to-day, up 4 to 5% and another story we're watching is in turkey the turkish currency and stock market there gaining ground after president trump said he wants to treat the country fairly over its purchase of a russian missile system that's easing some concern about the u.s. putting sanctions on turkey's economy, though many analysts point out that it will really come down to congress on whether congress moves forward with sanctions see, the stock market there up about 3% on the economic front, eurozone manufacturing pmi, falling below 50 for the fifth straight month. guys, this is the lowest level in six years and economists expect the ecb to now lower its deposit rate in its september meeting. a lot of that rests on who takes over for mario draghi, the ecb president and whether his successor will be more dovish or hawkish. as we watch for morecompanies to go public here in the u.s., in europe, it is a very
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different story, worth looking at the numbers the global proceeds raised so far. just $10 billion raised by european companies in the first half of the year european ipos. that's down nearly 60% from the same time last year. and it pales in comparison to the $30 billion raised by ipos here in the u.s. and guys, we're expecting more of the same in the second half of the year. back to you. >> seema, thanks for that. we'll certainly be talking about that later on in the show as well for now, let's get over to sue herrera for a news update. sue? >> good morning, deirdre good morning, everyone here's what's happening at this hour a powerful bomb blast rocked the afghan capital, killing at least one person and injuring more than 100 the taliban claimed responsibility for the attack, which came as the insurgents were holding their latest round of talks with the u.s. in qatar. a 727 passenger jet traveling from colone, germany, was forced to make an emergency landing in tel aviv following a problem with one of its wheels
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emergency vehicles surrounded the aircraft as passengers disembarked. there were 152 people onboard. back here at home, a possible protest has shut down a major port of entry in el paso the protests are reportedly coming from the mexican side of the border the all-exit lanes of the paso del norte bridge are closed. and warren buffett is donating $3.6 billion of berkshire hathaway shot to five charities. it will boost the total amount he has given to charities to more than $34 billion. you're up to date. that's the news update this hour morgan, become downtown to you >> sue herrera thank you. up next, what to expect from ipos in the second half of the year will the rush to the public market continue? meantime, we are all over this morning's rally. how to position your portfolio for the second hf tea icbrk.alafr tle music) - my degree from snhu has helped me tremendously. the flexible class schedules allow me
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to go to work full-time, run my catering business and be a mom and parent. when i reached this accomplishment, it was like, it's here, it's happening, it's now. we, at southern new hampshire university, are the ones who succeed. we are the ones who break through.
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welcome back the recent uptick in ipos becoming a savior to hedge funds looking for a bounce back this year leslie picker is joins us for that story hey, leslie. >> hey, morgan overall ipos are providing one of the best sources of alpha that hedge funds have seen the renaissance ipo compromised of recent listings is up 36% this year. that's more than double the 17% gains of the russell 2000. for equity long short hedge
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funds 2019 could be a turning point at least for some of them. the trick is getting allocation. oftentimes, underwriters will prioritize long-only mutual fund managers in hot deals giving a smaller number of to hedge funds. the bank's concern that hedge funds will be more apt to flip the stock and earn a quick buck. one way around the allocation game in recent years for hedge funds has been crossover investing. that involves hedge funds taking private stakes in companies before they go public with the hope that they'll be able to ride the valuation higher without worrying about whether or notthey received shares in the ipos that may also help hedge funds as the trend towards direct listings appears to become more and more popular this technique democratizes the ipo process a bitly all lby all anyone to buy and sell as opposed to a traditional ipo where shares are distributed to those that the bankers select. private investing can be a much riskier game with only a handful of games actually making it to the public markets and not
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always at higher valuations than their latest rounds. guys >> leslie, thank you joining us now with what to expect from the red-hot ipo market in the second half of the year, is paul holland and university of florida's professor jay ritter, also known as mr. ipo good morning to you both mr. ipo, i'll start with you certainly, uber and lyft getting a lot of attention for lackluster debuts, but overall, the pipeline has been very strong and we've seen a lot of double-digit gains from many of the names that have gone public in the first half. what are you expecting as we move through the rest of 2019? >> i think there's going to be a continued very healthy ipo market the first-day gains this year average 26%, the highest number since 2000 and then with the rising stock market, the after-market performance has been good, as well so i expect the second half to be very strong >> paul, what are you expecting for the second half?
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we have some very big anticipated names. wework, of course, comes to mind but sort of running into some stumbling blocks lately. their latest private market valuation, $47 billion, but some of the big mutual funds valuing them at nearly half that what are you expecting, could that throw off the ipo landscape at all >> well, i think i would generally agree with mr. ipo here, with a little bit of a caveat so one of the things that we've seen happen really recently, really only the last three or four years are many large pools of capital entering the private markets very, very late and creating these vehicles where they come in and put $500 million, $1 billion, even more in these direct investments in very late-stage private companies. i think at the time that that was happening, maybe a lot of people weren't as focused on the risk of that now when we get to the public market, that's when the actual pricing occurs and the expectation of value occurs around the company so i think you're going to see some people that are going to have some puts and calls around
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this that have entered very late in the process, but if you look at foundation capital, we're an early stage investor 70% of the time we're first-money in we absolutely love times like this, because it's a great time to be able to exit some terrific companies that have been incubating for quite some time before going out into the public market >> yeah. paul, when i hear you talk about that, of course, i think about the vision fund, given their proclivity to invest large amounts, late in the process at the same time, they haven't done so badly. i mean, we'll see what happens with wework, of course, but on uber, they at least came in at a somewhat lower valuation than where the stock currently is trading. >> yeah. i think that's fine. it's just part of the things you have to look at is you have to look maybe a layer below that. some of these players that have come in with these large pools of capital without identifying anybody specifically are also very deeply leveraged in some of these investments. so when you look at some of these investments, not only are they coming in with large pools
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of equity capital and writing big checks, but coming in with large pools of debt. and that requires service. so i think you'll see some negative surprises in that arena over the next year or two. but i think i would go back to the original premise here, which is, are we in a healthy ipo market today we absolutely are. there are a ton of companies that are in inventory that have been building up and building scale, nothing like we've seen, say, 20 years ago in the last, really, terrific ipo market. so these are much more significant, mature companies. i look at a company like a zoom for example. this is a company i did the calculation in my head i'm doing a big european trip. i'm talking to you from paris today. so 37 meetings in 21 days. and i will probably be on zoom more than i'll be on my mac book during that time period. that's a company that went public about seven or eight weeks ago. that's a sign of what's happening now. more mature companies coming out. they're more like early stage public companies than they are like start-ups of the old days >> jay, i think that highlights
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a really key point and that is, when it comes to something like valuation, how do you or how do investors quantify, you know, a company like zoom or beyond meat, for example, where there's this societal impact that maybe much more longer term, even if they're not turning a profit zoom, i know, is, but -- >> jay >> for companies like zoom and others that have a lot of upside potentia potential, there's going to be a lot of volatility, because the assumptions can change, but what has led investors to give very high valuations to some of them is that there have been a lot of technology companies that have gone on to norm success, where they have some fixed costs, but
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relatively low marginal costs and subsequently, large future profits are potentially there. and i think that's one of the reasons why airbnb has such a high valuation and i expect it will get a high valuation when it does do public but on the other hand, a company like wework, they have very high marginal costs and they are a high-valuation is harder to justify. >> jim, hearing a lot of optimism here. and you know, kathleen smith at renaissance who we talked to about ipos as well, she said, any private company that is not proceeding to go public in this market should have their head examined but what are the risks here? are there certain companies that should not be considering ipos in this environment? >> well, it continues to be the case that young companies are waiting to grow a bit. and a lot of young tech companies are never going to go public it's not a question of waiting, it's a matter of when they sell out to a big tech company in a trade sale >> all right
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gentlemen, thank you for joining us today paul holland and professor jay ritter paul, please eat some delicious pastries for me on your european tour thank you. >> i'm way ahead of you. way ahead. >> okay. good, i'm glad to hear it. all right, well, new defense giant l3 harris technologies began trading this morning here at the new york stock exchange after completing its merger of equals over the weekend. this was 8 1/2 months in the making two industry heavyweights in aerospace and defense, you have bill brown, who took the helm as ceo and chairman of the combined companies. also chris cue baseick, who will operate as coo, at least for the first years before taking the helm as coo himself. they joined us exclusively earlier on "squawk on the street." here's kubasik >> for the first three years, we have pretty major focuses it number one, research and development.
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we have an industry leading position as far as investing in r&d. we'll spend a couple hundred milliontegrating the business this morning, we announced a $4 billion share repurchase so that will be the focus the first two years. >> trading under ticker symbol h lhx, l3harris is combining a portfolio that will span everything from military radios to top-secret space hardware, air traffic control systems. and technology there cyber's a big part of this spectrum superiority, which i mentioned earlier. they're putting 4% of their revenue towards r&d, towards research and development, independent r&d. and they're really positioning themselves to become one of the next big, i would say, defense primes here in the u.s they are going to be the sixth
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largest company, now that they have merged defense contractor here in the u.s. i would also just note, there's opinion a l been a lot of focus, because we've seen so much consolidation in the sector more broadly last month, united technologies and raytheon announcing their merger of equals we've seen so much consolidation that some analysts have come out and questioned whether we're at a peak in terms of pentagon demand and defense dollars and how much that budget can continue to increase in my conversation with them, i will tell you, they've pointed out what i've heard from other executives in this space, as well and that is that if you do look at the fiscal '20 defense budget, it is poised to increase again. whether you're looking at the house legislation and the senate legislation and that is also poised to increase over the next five years and that the geopolitics hasn't really changed right now we are still, as a country, focused on countering china, russia, north korea, and iran, and all of that is going to mean
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more technology, more connectivity >> and i read your great article on the game plan for this newly formed company and the thing that jumped out at me, they want to be seen as a technology company it reminds me of that chat we had a few months ago and there are so few defense tech start-ups these days how can they be a tech company, you know, one of his arguments was all the big tech companies like google and facebook are getting the best engineers, the best talent. so how does this new company convince and become sort of a global player in technology when you have competing against the likes of chinese tech companies that are attracting that talent? >> it's a key question i would tell you the defense contractors, many of them are very focused on higher american talent i know you talked about this in the interview, and where they're looking to hire from earlier today. >> i asked him with that specific question or answer in mind, but he didn't really as an it in terms of are they competing against the likes of google and competing are
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winning? he didn't say. >> absolutely. >> when we return, why more than a third of americans have said they've cut their spending this year we'll tell you why after the break. it was
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. i'm scott wapner here's what's coming up, "halftime report" at the top of the hour what the truce means for the future of the rally as stocks hit another new record high. will earnings and the fed keep it all going plus, our call of the day made
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by our own josh brown and it plays right into nba free agency and the sweepstakes there. you do not want to miss that and our exclusive halftime stocks survey is on today. where wall street thinks the markets are going in the months ahead. we'll do it at noon on the half. morgan, see you in about 15. >> looking forward to it, scott. cnbc and acorn is partnering with survey monkey for our latest invest in you survey. kay rogers is back with the current policy of consumer spending >> our invest in you spending survey finds that one third of americans say they've cut their monthly spending in the course of the past year, while 45% say they've kept spending about the same and one fifth say they've increased their monthly spend. why are some americans cutting back take a look at this wall here? of the third who are spending less, 23% say they've lost some source of alternative household income 17% told us it's because they've taken on new debt. 16% say they did so because they fear a recession or economic slowdown
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15% told us it's because they've lost their job there's an interesting split between political parties. 20% democrats say they're spending less compared to 10% of republicans and 13% of independents speaking with politics, we've asked respondents if they've given to a 2020 presidential campaign so far as the election gets into swing, 8% say they have. 19% told us that they have not yet, but they do plan to do that and when you break this out by political party, 24% of democrats say they do plan to give that's compared to 22% of republicans. meanwhile, a whopping 90% here of independents told us that they have no plans to donate to a campaign, morgan back over to you >> kay rogers, thank you for more, head to cnbc.com inve /invest in you >> coming up next, growing good companies in bad industries. ntes jnsding partner of vice
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veuroi us next we're back after a quick break
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welcome back growing good companies in bad industries, that is the thesis of a new fund backed by the likes of bradleytusk and mark an degree san, invests in spaces like cannabis, alcohol, even psychedelics vice ventures founding partner katherine dockery joins us now here at post nine. katherine, thank you for joining us >> thank you very much for
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having me. >> tell us about where you saw the opportunity and why this is your thesis? >> i came up with the opportunity as i was interviewing for a new role. all of these venture funds asked me to pitch a business, so i pitched bev, a i invested in. basically all of them loved the founder and loved the company but weren't allowed to invest in it because it was alcohol, i found out we weren't allowed to invest in the companies i found most exciting. that's when i decided to launch the fund >> how did you get around that >> i went to investors who were also excited about the opportunity. i emailed 500 people in order to left from the fund >> and you got interest from big names. mark andriesen can't do it
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because of the restrictions on thus fund. >> they're excited about the thesis and my ability to execute on that thesis >> cannabis, there's been so much money rushing into so many different companies there. of that group, is there one in particular that you're excited about? >> one is cannabis brands. we've seen a lot of money coming into ancillary businesses. we're super excited about harm reduction in nicotine. we see a lot of e-cigarettes hitting the market, creating a new type of addiction and then companies coming in to help overcome that. >> a company like juul seems toing to suggest these companies are not having a problem raising money >> when these companies are in the nascent stages, less than $10 billion, they have a hard time fundraising and have to go to individual investors.
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as they get later in their cycle, it's much easier to acquire funding. >> hadwhat do you see as your average investment >> that's a difficult question to answer because we're very sensitive to dynamics. we see between 1 million and 100 k. >> you've talked cannabis and vaping the argument could be made there's even some tech companies, gaming, for example, that are seen as addictive >> basically it's a bigger question overall because you kind of decide who gets to decide what a vice is and what a vice clause is >> your medium post sounded like you were kind of throwing some shade at google, i don't know if i'm correct here but you said not being evil should be more than about what product the company produces
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was that about some tech giants having some vices themselves >> yeah, it's really hard to determine what is good and evil. a lot of things that try to do good are actually evil >> what is sex tech? >> sex dolls and other sexual technology >> is that an area you can find investment opportunities in? >> absolutely, yeah. >> if we can pull up that wall again, what's hottest right now? >> i like the harm induced nicotine, that's the hottest for sure >> why is e-sports considered a vice >> it's wildly addictive >> it is >> absolutely. >> all right >> here's what i'm wondering why have investors been so excited about this historically, vice stocks have been stocks that performed well, for example in downturns they've been seen as what
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defensive. >> yeah, so i think that's exactly why they are excited about it, is because it's the only kind of recession-proof venture investment even if for example we go into a downturn and a lot of secure companies fail, a lot of companies will come in and acquire these businesses >> you're filling in an opportunity that you saw do you have the expertise to layer over it? it's one thing to see an opportunity to raise aum it's another thing to invest it well >> i think i can, absolutely i have some pretty incredible investors and made some investments myself, i've done very well. >> is the strategy hands-on? are you making sure it's on track? it's kind of a risky business, if you're talking about vices, you want to make sure, as you said in your thesis, that they're morally on track as well >> yeah, we're as hands-on as our founders want us to be recess, which is a cbd sparkling water, we're very hands-on and close with the founder
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>> catherine, fascinating, thanks for being with us a check on where we stand across the major averages on this first day of july higher the dow is up 126 points though off the highs of the morning the s&p is up 21 points, 2,963 aftehiinr ttg a new record intraday high earlier in the session. we're back in three. i felt like part of my identity was being taken away. my team made me feel whole again. cancer treatment centers of america. appointments available now.
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welcome back to sidewalk squawk some news to get to in the music industry over the weekend music mogul scooter braun bought a label best known for owning taylor swift's first six albums swift then responded she was, quote, grossed out that braun now onset her muswns her music,n him of putting her through years of, quote, incessant, manipulative bullying. she had been trying to buy back her masters from big machine for years but negotiations fell apart as the label was asking swift to sign a ten-year deal to stay put in return
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she signed a deal with universal last year in which she would own her own masters going forward. justin bieber weighed in on instagram, defending braun who is his manager guys, it's credibincredible to a despite all the massive changes we've seen in the music industry over the past 20 years, the fact that there are barely any record companies that still exist streaming, the way artists make money, it's still the age-old fight over publishing rights which is still such a key source of revenue for artists and songwriters. >> or the life of the artist, it goes on and on, it's great annuity, even in the streaming world, small numbers but it still adds up. >> exactly >> you mentioned how she was able to enact changes in apple music, her platform is just so huge, to bring this to the light, as you said, the issue of masters and ownership has been an issue for such a very long time i wonder if any real change comes out of this.
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it also goes back to the importance of content. i was reading in "variety" that at one point apple music was interested in big machine for $250 million >> you could call this bad blood. >> ooh, i like that. that will do it for us here on "squawk alley." david, deirdre, thank you for joining us we're going to send it over to scott wapner for the half. >> thanks so much. in this hour, is this the beginning of a summer surge? it's 1:00 noo2:00 noon. this is "the halftime report." >> announcer: is this a case of sell the news? and should investors be more skeptical? plus a brand-new scloef "haexpl "halftime report" stock survey see where our committee stands on the second half o

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