tv The Exchange CNBC October 5, 2021 1:00pm-2:00pm EDT
>> don't be so defensive gosh pete >> geez, you have trained me well >> thank you >> we were talking energy just a moment ago and i'm sticking with energy devin, some huge upside call buying layout in january >> paypal is yours, josh real quick >> yeah, real quick. >> good stuff, everybody "the exchange" starts now. ♪ ♪ thank you very much, scott hi, everybody. welcome to "the exchange." i'm kelly evans. here is what is ahead. markets are bouncing back after yesterday's sell-off should you race to buy what is left of the dip? we will hear from one investor who says don't buy until stocks fall quite a bit more. speaking of key numbers, bitcoin above 50,000 as money continues to flow into crypto. are signs pointing to a bigger rally? everyone is talking about facebook, the whistle-blower is on capitol hill, but yesterday's outage shows how much we depend on the company's platform to
connect and do business. kevin o'leary joins us to discuss whether facebook is a friend or foe to small business. dow is up 410 points this hour, off the session highs. seeing a nice come back after yesterday's decline, up 1.2%, and a little more even across the board today. 1.2% for the dow 1.4% for the broader s&p 1.5% for the nasdaq. still not quite erasing yesterday's decline. dow was up 480 at the session highs today. big cap tech is making a comeback netflix the out performer hitting an all-time high netflix is up 4.5% today, almost at $631 a share. amazon is up nearly 2%, still in negative territory for the year. financials are also leading the rally today. check out some of these names. the qqq invesco trust, that's a little different story, up 1.7%. but charles schwab, goldman sachs, bank of america, wells fargo. goldman is up 3%, up 45% for the year charles schwab getting an initiating in atlantic equities with an overweight
let's talk about our personal obsession on the show. look at what is happening across the energy complex look at nat gas, not what you want to see if you are on the receiving end. you are seeing out performance, an 8% gain with nat gas trading and 6.26 per million btus. devon, modest increases today. 2% or 3% in the case of marathon a lot of discussion how nat gas may drag up oil prices and energy prices into the end of the year on the flip side of the equation, over in the ev space it is another rough day for lords town morgan stanley downgraded the stock. analyst adam jonas reinstated the company just last week at an equal weight the concern here is the plant sale they just named foxconn, the seller for this plant. they had obviously, but also the price of the plant a fifth of what the prior estimate had been so the disappointment there that this asset was not worth what the analysts had hoped, shows
rideshare is down nearly 11% today, trading at $5.22. so stocks are rallying after yesterday's sell-off, but the s&p is still down nearly 4% since the start of september it was the worst month since last march for the next guest this recent drop still isn't enough to put capital to work. let's welcome in barry knapp, the managing partner over at iron side knapp for economics. why is that 4,100 a magic number for you? >> it is 10% off the highs and if you look at every business cycle since world war ii and the last cycle in particular, what we find is when we reach the point the fed starts normalizing policy, we have reached escape velocity, you get what prior to the global financial crisis was about an 8% correction post-the global financial crisis when qe was involved, and we have talked about that and i can amplify or extend my views on this, you got more like an 11%
correction so we have expected 10% to 12% furthermore, we have seen very little signs that some of the issues that have started to really roll over like earnings revisions, for example, which are headed south, they don't look like they've bottomed yet we have not seen any extremes in sentiment as evidenced by the volatility market. we never -- we haven't had an inversion of the vix curve for example. we are very far from really having completed a correction the way it typically would occur when we start normalizing policy >> so you are watching the vix i would imagine you are watching interest rates, you are watching the fed here what are the green lights that you are looking for? 4,100 might be one of them but what are some of the other fundamental catalysts that could change your view or tell you that the chase is now on for stocks to move higher? >> well, there were a whole bunch of inflection points here that all occurred. i know the book has been on the bad and i made it sound as if it
was the catalyst for my call, and in some ways it was the catalyst but we have fiscal policy tightening coming as well, thinking that somehow spending another $2 trillion financed by raising corporate taxes is fiscal stimulus. not from the perspective and equity -- of an equity investor it is not. it is tightening so we are still faced with that hurdle we have a big change in liquidity coming when we get the debt ceiling deal done, which it will be part of reconciliation the treasury is going to start issuing again. that's going to drain liquidity out of the system. all of that money that's sitting in reverse repo, that's going to change it is going to change the liquidity dynamic. we still haven't seen volatility in fixed income go up as a consequence of the fed cutting back on their mortgage purchases. that's a hurdle. as i said, we really haven't seen this downward trend in net revisions, earnings revisions, the number of analysts increasing estimates less those decreasing analysts.
that's headed south and we haven't seen that bottom either. now -- >> yeah. >> could it all happening during earning season maybe. >> we actually talked about it with neil hennessy yesterday, i believe it was him it might have been barry james the day before but tell me why you see estimates heading down you know, we are used to people kind of setting estimates low and then moving higher as the quarters approach. what is going on there >> yeah, that was what part of my bullish thesis for most of this year, i set my models to update every friday. every single week that s&p 500 2021 estimate went up. it started at 163, went all the way to 203 by the beginning of september. 23% increase so really the rising earnings estimates were driving things up, but then it stalled in september and it makes sense the comparisons are getting harder for tech. that's leading revisions to go down because it is a rate of change indicator, right. if the numbers aren't going up, that starts to fall. it is like ism, for example, and
then the staples sector is coming up very hard. that's concerned about input costs, commodity costs and the like so, you know, we've just reached a point where the comparisons are much more difficult, and this is a manifestation of that. it is important early in the cycle when revisions are going up, that generally pushes the multiple up and earnings up, and why the rallies are so powerful early in the cycle but when you reach that inflection point where it stops going up, that's when we are vulnerable to corrections and i think that's where we're at. >> there's the tech sector which i know you have been cautious on for over a year now. let's pull it back to the s&p 500. the levels that you are watching, are you seriously going to wait until 4,100 before you put capital to work? that's what i was trying to get at, is what is more important for you, the technicals or the fundamentals, the story itself >> well, as i said we need to get through these fundamental catalysts and we haven't yet, right. we haven't decided on what the corporate tax hike is going to be there's likely to be one we haven't started the taper process and seen fixed income ball move, and revisions haven't
bottomed yet so i need to see those things happen from a fundamental perspective, and it is likely my technical perspective on this is we will see it in the ball market i care far more about what they pay than what they say, right. so surveys of investors i don't really care about. i'm an equity derivative guy from way back when when i see that vix curve invert i know fear is taking over, and then we probably will bottom history will tell you it is at least 10% off the highs. >> barry, thank you so much for explaining this and kind of bringing it all together great to have you today. we will check back in soon that's barry knapp from iron sides. now to china investors are on edge as the country faces continued problems with major property developers and energy shortage slowing growth and spiking prices worldwide and aggressive behavior towards taiwan. joining me is the destination of both management and ceo. michael, it is good to see you
first it was evergrande and where are we going from here >> we will have problems you will continue to see a correction in the china real estate market and it is going to cascade through the entire economy. i think, as you mention, it is really important to recognize that 15% of gdp for china is real estate. what happens if real estate actually goes into a deflationary mode, which i expect it will it will have a negative effect on china, negative effect on emerging markets that's trouble is for the chinese economy and for the global economy it creates a headwind >> and we talked about sort of maybe the concern over the next year or so heading into this big event next year where president xi is likely to get a third term, nearly unprecedented situation. do you think maybe it is a position of strength that he is allowing for these various kind of shakeouts and all of these different parts of the economy where he is clamping down.
>> right >> what would you tell investors about the aggressive behavior about taiwan as well does that fit into your previous point of view about what is happening there or is that new information that changes the equation for you >> no, i think it all fits in. i think it is part of a new nationalist perspective that is really very much focused on the core ideology pre-capitalism, you know, pre when jack ma had free run in the economy. something else i want to bring up that i mentioned to you in a note is how much off the balance sheet transactions are happening in china believe it or not, even municipalities are doing it. there's a term out there, local government financing vehicles, that are used by municipalities to float debt against that municipality, but it is off the balance sheet. does that sound a little bit like what happened during the financial crisis in the united states, off the balance sheet transactions >> uh-huh. >> so the lack of transparency in china is what is troublesome,
and i think that's going to create continued problems for the chinese economy. >> so we've talked about how you would tell people maybe tread warily here. repeatedly you said it is too soon to buy these dips, so to speak, that, you know, others might see as opportunities because the sell-offs have been pretty striking. >> right >> what is your advice to investors now? you know, is there -- are there parts of the market that have either gotten too cheap for you or areas that you think might be relatively more safe you know, it goes back to the discussion we've been having all year if a company like alibaba might have capped the upside, but if it is not going away it trades quasi utility like as an asset of the government. how much more downside is there? >> there could be a lot more downside you know, it is something that was really not reported very much, was alibaba gave a third of their cash -- think about this a third of the cash they pledged to give to the government to
fund social programs for the government now, i don't know why it wasn't reported so much, but think about it imagine if apple had to give a third of their cash, what would that do to the share price >> it probably would go up, wouldn't it? i mean wouldn't we all go, great, they're so cozy with the government they're never going away >> no, i don't think that's -- i think what we would say is they've lost a third of the cash so the company is worth less so i think that how much lower can it go? i think it can go lower. i think that really you are in a position where on the china front you've got to wait until the dust settles when the government really has made their statement very, very clear i think it is going to take time i certainly think it is going to be not this year i think it is going to be some time next year when you get more clarity, when finally companies understand what the rules are and when the real estate issue shakes out >> final word. you want more clarity for companies. think maybe it could come next year what would you say to those trying to figure out how to price in the aggressive behavior
towards taiwan is it simply a demonstration or does it raise the risk of some kind of geopolitical incident? >> oh, i think it definitely raises the risk. i mean china is not only playing around with what is happening with taiwan, but also in the philippines. they're actually really disputing some of the territorial waters near the philippines as well. so i think that this all fits in, again, to president xi's nationalist agenda and i think they've already shown that they're willing to go to great lengths, including limiting children doing video games ten hours a week i mean if that isn't dramatic i don't know -- i don't know what is so they're really going to act in as an autocracy and it is not over yet i think what is happening in taiwan is indicative of what the whole chinese perspective is now. they're going to control the economy, they're going to control the politics and they're going to be heavy handed when they do it >> michael, thanks it is good to get updated on all
of these events with you we appreciate it today >> my pleasure >> from destination wealth management coming up, tech at least in the u.s. is rebounding from yesterday's sell-off, but nearly 50 names in the sector are still down more than 10% from recent highs. we will ask a top tech analyst which names to pick up here and which to leave behind. plus, facebook is getting a ton of attention this week as whistle-blower frances haugen's testimony coincides with the social media's worst outage since 2008 how bad was the fall-out for small businesses and are they too reliant on facebook? we'll explore that as we head to break, here is a look at the map. only two sectors are in the red today, utilities and real estate quite a rates play we're back in a moment this is "the exchange" on cnbc our retirement plan with voya, keeps us moving forward. hey, kevin!
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♪ ♪ welcome back, everybody. quick news alert not many details but we want to get the headline to you. the white house is now saying that the president has full confidence in fed chair powell the president reportedly commenting en route to michigan today. we will bring you any more details as we get them meantime we will look at monday's tech sell-off costing facebook, apple, amazon, alphabet more than $200 billion in value the nasdaq more than 2% yesterday, putting it more than 7% from the all-time closing high last month.
after yesterday's drop amazon is now 16% down from the yearly high facebook is down 15% apple is down 12%. so which tech names should investors buy on these dips? d.a. davidson's tom forte is here to tell us. no pressure, tom good to have you let's start with are there any that immediately jump out to you as, you know, under valued, over sold, names that investors definitely want to pick up here? >> sure. so thanks for having me, kelly when i think about the sell-off, the one standout to me is apple. when you look at the current multi-year benefits they're going to have from the slow-but-sure buildout of 5g, their most important product from a sales and profit ant standpoint, the iphone is incredibly well positioned so well-positioned i think better than expected sales could offset lost revenue when you think about in-app purchases from the lawsuit with epic games. so i really think apple is amazingly well-suited after the pull back.
>> you have been raising for over a year. is 175 still your latest thinking we are at 141 now. >> yes, it is. >> tell me about that and whether you have any of the concerns that have been weighing on the stock for the past year, whether it was the hangover post pandemic, you know, questions about the competition that's out there for all of the different services, the future of the app store. are none of those overly significant to you >> okay. so i do think that the antitrust regulatory risk is very significant for big tech, but you have talked about that today with facebook and the whistle-blower we have watched the damage in real-time in china in particular for alibaba. but if you look at the challenges facing tech right now, in particular the supply chain, apple seems to have a better handle on it than its peers in either managing the chip shortage or managing logistics inflation. i think in that regard when you think about that setup, and, again, very strong iphone sales apple i think is different than the others in big tech and
attractive on the pull back. >> tell me if i'm reading your thoughts here correctly as women. you think some names like apple have big upside potential but also on your list that could have downside potential, too >> the risk in general for tech is rising interest rates due to concerns on inflation. if you look at the good news in most of tech, while apple has warmly embraced the debt markets there's a lot of tech companies that have no debt on their balance sheet. again, i think apple has done a better job of managing the challenges as far as supply chain shortages, logistics, things of that nature. yes, the lost in-app purchase revenue from the epic games lawsuit is bad, but if you think about stronger iphone sales, it being the most important product and a much more robust capital tv plus subscription and video on demand effort for apple, i backed off on the loss of in-app purchases. >> do you have others that have
potential, like sonal and others, do they have other factors? >> when you look at the downside in tech i look and compare the% en enterprise value those you mentioned are trading at premium valuations versus where they have historic allegedly. the good news for overstock and way fair is both have done a good job leveraging strong home category to the extent you have a give and take with consumers spending more on travel, that could present issues if you believe like i do the home category stays strong, then over stock and wayfair should be more than okay the advantage on supply chain where the consumer has shown a willingness to wait for their products even if it takes longer to get them. >> finally, what would you do with the rest of big tech? >> i think the challenge for big
tech in general, in particular facebook, is the antitrust regulatory concerns. if you look at ecommerce had a very strong '20 and advertising had a weak '20, so some of the better performers this year like google have been able to take advantage of the easy compares on the advertising front the good news is we flip the charts next year, and i think ecommerce will be much better boding well for amazon in 2022 >> if it bodes well for amazon where does it leave netflix, which has totally different things that are drivers? >> yeah, well, netflix i would argue the strength of netflix is because they have yet another big hit on their hands when i think about their international content, and their ability to sustain popular content despite the fact there's been a meaningful increase in subscription video on demand, kmegs is impressive. >> more than 20% upside potential for apple, amazon and maybe of the others like overstock, pintrest, roku that
you mentioned, but, again, downside risk in mind with some of the same names as well. tom, thank you for joining me. >> thank you, kelly. >> tom forte of d.a. davidson. bitcoin is up over 20% over the past week and above 50,000 for the first time in nearly a mont we will speak with the regulator overseeing the $4 trillion muni market about the push into usg andthe rising popularity of muni green bonds stay with us
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today as well. real estate is the biggest laggard, one of the only sectors in the red chips are rebounding from yesterday's sell-off, led by nvidia with about 4.5% upside today. every stock on the board is still down 5% from the 52-week highs and negative over the past four weeks peloton and zoom are two stocks sitting out today's rebound. peloton just went positive, zoom is still down about a quarter percent. we are talking about 30% declines over the past three months as well bank of america is hitting its highest level since february of 2008 this stock is up more than 1,300% since the depths of the financial crisis there you can see it is gains today, and it's sengs for much of the year. finally, albertson's is moving lower after being downgraded to under perform. the grocer is up nearly 50% in three months albertson's is down about 2% today. head over to cnbc.com/pro. now to frank holland for a
cnbc news update hi, frank. >> hi, kelly the cia reportedly warning top officials around the world that too many of the agencies informants are getting captured or killed. this according to "the new york times. the paper reports the top secret cable giving exact numbers of informants lost and details practices that could have compromised them the nation head of the national institute of health is stepping down. francis collins will resign at end of the year. on the news health worker 's attacked and verbally abused, it is a growing trend during the pandemic especially for those treating covid pashtsd that's tonight at 7:00 eastern also, volvo recalling near 260,000 older vehicles for airbags that can explode and send shrapnel into the car it recalls vehicles from 2001 through 2009 one lucky person in california bought the only winning ticket in last night's
$700 million powerball drawing the ticket was sold in a small coastal town in central california, just about halfway between l.a. and san fran. kelly, i might have a cousin there. i've been checking really closely. back to you. >> i mean it seems like they should say, all right, if there was only one winner maybe we will give you half and run it again. isn't $350 million enough, frank? >> i totally agree, unless i bought the ticket and i want it all. >> we'll see you again soon. thank you, sir the facebook whistle-blower testifying in front of the senate today her warnings for congress next yesterday's facebook outage may have been unfortunate timing for the social media giant, but for small businesses reliant on the company it cost them money let's do some show and tell. shares of pepsi slightly higher today after beating earnings estimates and hiking guidance. only up 2% this year lagging the s&p 500, the company acknowledged supply chain challenges and cfo hugh johnson
tel tel tel telling "squawk box" prices will have to go up. >> i expect we will see pricing increases in the first quarter of next year as we deal with the fact input costs are just higher that's the reality for us and everybody else get decision tech from fidelity. [ cellphone vibrates ] you'll get proactive alerts for market events before they happen... and insights on every buy and sell decision. with zero-commission online u.s. stock and etf trades. for smarter trading decisions, get decision tech from fidelity. (vo) unconventional thinking means we see things differently,
welcome back shares of facebook rebounding today, about 2.5%, despite some damning testimony to the senate from the whistle-blower this morning and yesterday's massive outage across its app. julia boorstin joins me with the latest on both fronts. julia. >> kelly, the whistle-blower frances haugen urging congress to take action for what she calls the disastrous choices facebook has made for children and democracy. saying that the ceo was given opportunities to make the platform less viral, to tamp down on the spread of misinformation and he chose not to take those options. she also said that the buck stops with zuckerberg. >> the severity of this crisis demands that we break out of our previous regulatory frames facebook wants to trick you into thinking that privacy protections or changes to
section 230 alone will be sufficient while important, these will not get to the core of the issue which is that no one truly understands the destructive choices made by facebook except facebook >> haugen and senators discussing new privacy laws and the reform of section 230 which could force facebook to be more transparent and take responsibility for its algorithm. the court platforms, facebook, whatsapp and instagram all down for nearly six years which facebook says it was due to a technical problem around internal routers rather than due to a hack. this creates many headaches for businesses around the globe that rely on facebook the social giant says there are more than 200 million businesses around the world that use its services each month, not just for marketing but also for customer service and for many small businesses facebook effectively runs their website
so, kelly, big, big ripple effects from that outage yesterday. >> sure, that are just starting to be felt julia, thank you very much joining me to discuss the impact of the ought only a small businesses is kevin o'leary, cnbc contributor and investor in more than 30 small businesses. kevin, welcome tell me, you've got a front row seat to this, just how important facebook is to this community. how important is it? >> you know, facebook has been so consistent for so long that we never even worry about outages like this. it was pretty material because you have to understand that in america even though it is -- we're doing more facebook bashing now, and i understand why that happens and it seems to happen every six or seven months they're always being investigated but the truth is that facebook runs small business in america more than 50 cents of every dollar spent in small business, which is about 66% of the economy and two-thirds of where small jobs are created in america, is spent on facebook for a bunch of reasons one is geo locking of
advertising. if i am a veterinarian or food services business and, let's say, pick any city in the midwest or something, i don't want to advertise past 200 miles of where i am because i don't -- what's happening in los angeles has nothing to do with my vet business in kansas city. so that's very important to understand so the idea that, you know, facebook shuts down is very problematic. two issues, customer acquisition. number two, customer service and maintenance of existing customers so it was chaotic for the seven hours yesterday. >> a friend of mine who runs a small business in town had kind of the opposite take when i was asking about it yesterday. he said if facebook went away tomorrow it would help small businesses, and the reason he said is because their platform allows disenter mediation of local businesses and services. nords if i'm a digital presence, if i'm a national brand i can go directly to that customer now. normally you would have had monopolies basically where if you needed a local product,
service or what have you, you are going to the local one in town what do you make of the argument that facebook actually makes it easier for people to sort of bypass the small, the local business >> no, i don't agree with that at all in my view, it is a personal opinion but i do work with over 30 businesses now, i 100% disagree with that, particularly now that we come to the pandemic the pie chart of distribution prior to the pandemic was 50% through retail, the big box like walmart, target and bed, bath and beyond retail is 50% on the dollars, amazon was $60 on the dollar but no customer data and 10% went to our own websites on shopify and other platforms. now many businesses because retail was shut down and amazon went to essential services have built up their direct-to-consumer businesses on their own platforms so they gather their own customer data in a way we never have before. what did we use to do that
facebook so i totally disagree with that premise. facebook allowed us to acquire customers during the pandemic and sometimes at a 90% gross margin because we're not paying the margin goes to retail anymore. facebook is the backbone of small business in america, and i guess if you want to shut it off you will find out some really bad news very, very quickly. now, i get the issues around, you know, privacy, but what is being debated on the hill today has nothing to do with just facebook by itself those algorithms are used by every social media site, so we might as well make laws for all of them together it is okay to bash facebook, they're the biggest, it is always good to bash the big one, but the truth is these issues exist every where across social media on every platform. >> so if facebook is that essential to small businesses, then what would you say -- so, let's say, you know, you get up there after frances haugen and congress says to you, all right, what do we do about these problems, what would your answer be >> my answer would be this let's understand what problem we are trying to solve. if we are worried about young
children on the platform, i totally understand that and i think you have to go through the whole idea that parents want some input into this, too. after all, part of the job of being a parent is deciding what contin content you give to your child on any platform including what books they read. it has been that way for decades. there's that issue to deal with. when it comes to small business in america we should understand that that's commerce those issues aren't the same for commerce i want to make sure that the platform that provides for building a franchise around an individual business is not harmed by an overreaching government that says we have to change everything about facebook, everything about social media, everything about how you communicate with your customers because we're worried about one subgroup an important subgroup, i agree, but i can't break the whole system trying to solve one problem. solve that problem if you want to shut down facebook and instagram for people under 18, okay, let that be a decision the market decides. but let's remember, 66% of jobs in america come from small business, don't hurt small
business the last thing you need is another politician telling you how to run your business that happens to be a personal opinion, but i don't want that that's for sure. i don't think any of the businesses i invest in want it either so i don't mind the bashing. it is a circus that's gone on for years and years and years. generally nothing happens afterward. every time you can say, this is the one that's going to get facebook >> right >> let's solve the problem they're trying to solve, not break american business. >> so the shares are up 2% today. your other personal opinion i will ask about is what would you do with the shares then? would you hang on to them? >> of course it has been a core holding for me 5% of our operating company since the beginning. why? i need and use the service as soon as something better comes along, i will use that let the competition begin. i wasn't even using tiktok 18 months ago now it is a huge part of what we do on social media so the market changes based on need i'm not worried about facebook if they don't do a good job, they will lose their franchise and someone else will pick it up so let the market be the market.
let's keep those politicians away from american small business we don't need them there why don't they pass that infrastructure bill? they haven't been able to do that meanwhile, they're spending all of their time bashing facebook >> well, the point is taken, kevin. i appreciate your joining me today to talk about it thank you. kevin o'leary with strong views on the essentialness of facebook to small businesses. we appreciate it thank you very much. up next from the meta verse of sports betting, cnbc's document looks at the way people can wager on anything any time we will have an exclusive hit involving a $10,000 hat next take a look at shares of paypal, higher today but down from 16% from the july highs jim cramer can ready to buy the dip. you can read about his trade in the newsletter when you sign up you will get access to his e-mails, articles and exclusive online individualors, winners and losers and the trends he is seeing in the market bcomnvticl oe by signing up at
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we've learned that possible is just the beginning. ♪ ♪ welcome back shares of companies involved in meta verse are climbing higher this year. roblox up more than 67% and this multi-dimensional share down space is promoted as next step in sharing of the internet in "generation gamble" melissa lee looks at what the virtual worlds already have to offer >> central games casinos reportedly racked up more than $100 million in crypto transactions in the first six months in addition to gambling players can invest in nfts or non-fungible tokens, those speculative digital assets like land, art or fashion >> for example, this pair of pants, these are $4,000.
>> $4,000 for virtual bell bottom pants >> exactly $10,000 for that hat >> that seems like a lot of money something only your avatar can wear it is not the only game in town. >> melissa joins me now. i could ask a lot of questions about the $10,000 hat, but i know this is a much broader issue that is raising some concerns about sort of the gameification of everything. >> it is sort of the notion, kelley, you know, during the pandemic people got online they're looking for things to do they're looking for ways to earn money, and fast fortune was the mantra of the younger generation they were online betting, they were online investing and the lines are getting blurred. if you open the apps according to a lot of the gambling experts we spoke to in the documentary, you look at, for instance, robin hood or others, it is the same as gambling. there's intermittent reinforcement, there are graphics, things that feel like you are game-ifying the whole
experience a lot of people don't think it is real money because all they have to do is press a button they don't have to walk up to a teller, pull out money and make a bet or deposit it with your broker, et cetera. it is instantaneous these days >> right i guess the question is where is it all leading it is one thing if people go, well, you know, i needed a different form of entertainment while shut in. okay, that's fine. but it feels like it became an opening for which to push for these ways to push forward the traditional parts of the economy. >> for this new generation they think that this is, in fact, investing, many of them, that this is the way to earn the money for your retirement, to buy a car, to buy a house. you see that on instagram. all of these social media influencers on tiktok with more than a million followers, they tell you exactly how to do it. >> oh, yeah. >> according to them by buying this stock or buying this crypto it is not, you know, based on any fundamentals, and these people, you don't know who they are. >> i think part of it light now
is you don't know if they're wrong. so it has been - >> right >> -- so early, you know, in this bull market where the joke -- you know, the old line from last year, stocks never go down nfts, you want to spend $4,000 or $10,000, who is to say whether it is going to pay off or not i hear people passionately speaking about how much the tokens will be worth in the future in the meta verse it could be years or decades before we know if it is true or not. >> in a bull market it is easy to make a right call, to make a good trade, right. we won't know, that's the truth. if you look at the meme stocks or doj for instance, some people made a for tour on all of this if you got in at the top because you are following the crowd you aren't so lucky. >> i still have a lot to learn about all of this going on here. >> the metaverse >> yes >> the look of incred ulity is amazing. >> can i stream this >> yes >> be sure to catch the premiere
of "generation gamble" tonight here on cnbc at 8:00 we need a qr code for that as well melissa, we appreciate it. still ahead, the esg investing trend is extending beyond stocks green muni bonds have seen an up tick in popularity speaking of regulators, senator elizabeth warren joins "closing bell" at 4:00 p.m. eastern time on cnbc. don't miss it. and strengthen client confidence in you. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.
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welcome back the esg movement the making its way into the uni market. green bond is expected to hit 375 million. here with more on the changing dynamics of this market is mark ken, the ceo of the municipal securities rule making board mark, it's good to have you. i guess the first thing to ask is what's a green bond >> sure. kelly, thank you for inviting me on it's a pleasure to be here with you. to answer your question, what is
a municipal green bond, it is targeted towards investments that are aimed at achieving certain environmental outcomes or aimed at achieving environmental sustainability we are seeing a growth in municipal green bond issue to meet that rising demand for investors. >> i read there's no definition of what makes it green, so is that itself a problem or is that you think part of the evolution of the space there was only $2 billion of this a decade ago. what real world examples have these bonds financed >> so these bonds have financed both climate resilience so looking at building the next generation of infrastructure that is more resilient to the impacts of climate change. these types of investments, these bonds, are also financing
clean energy and other projects that lead to a more sustainable future if you think about the impacts of climate change, whether it's w wildfires or hurricanes, it is our state and local governments that are on the front lines of battling climate change and the investments they're making in infrastructure are largely going to be financed through the municipal bond market, which is why green bonds make sense for the muni market. >> so there's a couple of things i'm thinking about are these, is the appetite for green bonds driven by people who need esg approval for their port kn portfolios on their own, these would seem to make sense anyway so what is the importance of this distinction is it to just bring extra investors into this space or are they potentially giving up some returns in order to step a little bit out there in terms of
some of the financing for these projects >> so, i think there's an argument in the market that esg, environmental, social and governance factors are totally separate from investment decisions and i think we're seeing a maturing and evolving muni bond market are investors are integrating esg factors into their investment decisions and consider them material to make investment decisions we're also seeing other market participants incorporate and integrate esg factors into their business models. for example, all of the major credit rating agencies in the muni space now either provide an independent esg score in addition to the credit rating or they're incorporating esg factors into their underlying fundamental credit analysis. we're seeing fund managers in fact recently, we saw the very
first sustainable muni bond etf launched a few weeks ago we are seeing fund managers now incorporating esg factors into their individual security selection and their portfolio valuation models so it's no longer something that is happening independent of the investment decision. it is actually being integrated within the investment decision itself >> like you said, a lot of these places on the front lines seeing the impact of storms and unseasonable weather patterns and really suffering as a result, so i can understand the factors driving us there are a lot of other financing avenues out there to kind of push this ball forward thanks for joining us. >> thank you so much >> the ceo of the muni securities rule making board bitcoin closing in 50,190 why the crypto's climb could continue when we come back.
tech has been trounced, but bitcoin is bucking the negative sentiment. it's up more than 20% over the past week. kate rooney is here with more on the numbers and what people are saying about how high it could go >> it's emerging as a real outlier this week. topping $50,000 since early september. this comes as the nasdaq and high growth names in tech got crushed yesterday. they're recovering a bit today though in the past month, bitcoin had been trading in sync with those names unless a store of value or hedge. for the year, bitcoin is now up more than 70%. a few drivers this week. 50k was really seen as a key resistance level for crypto
traders. moving above that can start sort of a domino effect and analysts are pointing to short covering it's above its 200-day moving average which -- says the it is quote, indicative of strong performance. fears around evergrande as well as tougher talk added to the september rout, but there's new optimism about a bitcoin etf being approved in october. th and more bullish comments off wall street. bank of america calling the digital asset sector too large to ignore. and we've seen a rebound of inflows into crypto markets after seeing its longest run of outflows, bitcoin is now in its third straight week, totaling $115 million coin shares analysts calling
that a decisive turn around in sentiment. >> and so many of the long-term holders, 80% of people you had that survey. in it for the long run >> so fewer bitcoin available to buy. so that liquidity, lack of liquidity in bitcoin market is seen as good for prices. >> thanks so much. that does it for the exchange, but stick around for "power lunch. it starts right now. oh, yes, it does, kelly. welcome to "power lunch. we are tracking the market's big bounce today and here's what else is ahead. yellen's warning the treasury secretary tells cnbc a recession is inevitable if the debt ceiling isn't raise. what investors need to know ahead of a key congressional vote beaten down and battered the bio tech sector is in one of the worst drawdowns. but the pull back is creating opportunities. you just need to know wher