tv Closing Bell CNBC November 17, 2021 3:00pm-5:00pm EST
supply constraints that are to blame? >> the hope is they've already fallen for three or four weeks most people think that maybe gets you five bucks a barrel, a couple cents a gallon. they're going to explore everything >> gasoline prices are hopefully going to fall. >> buy your ev, dom. thanks for watching prop"power lunch. welcome to the "closing bell," everyone. major averages pulling back after the s&p 500 came up just shy of a record close yesterday. the dow and the russell seeing the most pressure. >> and i'm leslie picker in for sara eisen let's look at what's driving the action today retail earnings remain in focus with strong results today from lowe's, target, and tjx. though target pulling back today on margin concerns oil prices falling to a six-week low amid oversupply fears. and president biden calls on the ftc to look into so-called
anti-consumer behavior by oil and gas companies. and visa biggest laggard for the dow, a big chunk of today's losses after reports said amazon would stop accepting visa cards issued in the uk next year 59 minutes left to go in today's session. >> coming up on the show, today former treasury secretary jack lew will join us to talk about the biden spending agenda and whether or not he's concerned about inflation. plus, rivian hitting the brakes today after blistering gains since its ipo. and a new call on tastee's stock. busy news day today. wolf, let's focus in on the big stories we're watching mike santoli is tracking market action and phil lebeau is covering the ev stocks as president biden gets set to tour gm's factory in michigan mike, start us off what are you watching today? >> leslie, the indexes are holding up okay. the s&p is probably better than
it has a right to given what's going on below the surface a lot softer footing below the surface. you see a majority of stocks lower. market is actually still in this kind of sideways cooling off regrouping period. i think we've been in for about a week and a half, 4,700 is the record closing high. been kind of sticky around this 4,700 mark it's an options expiration week. could be one reason why the index level is kind of hovering around that level. take a look at the sort of once hot and some still hot groups of the market been talking a lot about how we've had these rolling waves of enthuse zum that go through these different busy groups where people feel like there's a very high story to substance radio. fintech, you talk about visa paypal also down today but a lot of the newer fintech stocks have done really nothing
since the early part of this year the evs are the only group of these four still really riding high, although even today having a little bit of a drop the overall market has been able to absorb this it shows maybe a little bit of a loss of patience on some of these story lines where the business model is projecting maybe some profits in the years out. roku getting a downgrade today where people are just kind of taking the premium out of these long-term stories when they're not delivering right now we'll see if that is just enough residual doubt to keep them from getting to dangerous levels. berkshire hathaway is the ninth biggest stock in the s&p 500 warren buffet's company starting to roll again. hasn't done almost anything since may. if you look at a composite of railroads, insurance, energy infrastructure, all the different components, plus the blue chip stock portfolio, you
wouldn't think it would be performing very differently. but it shows you there's really not a lot of premium in here right now for a berkshire. somewhat defensive stock it's at about 5% below its stocks some people view it as some kind of a bellwether though >> going back to your previous talk about how some of those raciest sectors have started to roll over, if rivian's move today is a sort of early sign of what's to come for the others, then that will have a bigger effect on broader sentiment if it does roll over like the other parts of those racy sub sectors. >> evs obviously would although really it's tesla tesla is the one that's in the s&p 500. it's much more widely owned. it's been around a longer time it's bouncing a little bit today. but there's no doubt about it. now that we have a couple trillion dollars bound up in that relatively young sector >> mike, thank you let's dive a little bit more into that relatively young
sector, evs like rivian and lucid are pulling back today as president biden tours gm's ev plant in michigan. phil lebeau has all of those moves for us >> as rivian and lucid shares pull back, we are seeing a bit of a change when it comes to market caps for the auto sector. take a look at the top four, if you will, among the u.s. automakers you've got tesla no doubt at the top. rivian has pulled back gm is clearly the third largest in terms of market cap and lucid, while it briefly pulled ahead of general motors, it has now pulled back about an $85 billion market cap one reason why shares of lucid have cooled off a little bit today, a note from adam jonas and morgan stanley he said let's hold on a second, let's not get too excited about this stock now he did raise the price target, but he raised it to $16. and where's the stock trading at right now? somewhere in the $50 range
so that stock down about 5% today. meanwhile, as you mentioned, the president is in detroit. he will be touring general motors' factory zero now this is the old assembly plant, used to build the chevy impala, other internal combustion engine vehicles now it will build only electric vehicles including first ones to come off the line there. those will be the all-electric gmc hummers, first deliveries by the end of this year keep in mind that its subsidiary cruise, a number of people have said, look, the stock may be at an all-time high but it's not getting the same kind of love that you see for the ev stocks from investors investors believe, look, gm should spin off cruise earlier today we talked with the president of general motors and he said, nope, that's not happening. >> i don't see that as a separate entity. we don't see it as a great thing to do to be the best in the world at electric vehicles and that's where we're going to be >> and one other thing to keep
in mind when we talked with mark royce. he said there's so much integration for gm's ev assets, whether it's battery production or the software. there's so much integration between that part of the business and the rest of the business that it really doesn't make sense to say, okay, let's make it separate from just building internal combustion engine vehicles. if they were to do one, guys, cruise would likely be the most -- that's the most likely thing that could be part of the business that could be carved off, if you will remember, that's an electric autonomous rideshare service that they are developing out in the san francisco area >> phil, talking of spin-offs, not quite the right term, but rivian, which is of course down 15% today following a storming run higher any idea what the two big shareholders that we often talk about ford and amazon plan to do with those stakes? is ford seeing rivian as a rival and they'll just take some
profits? or what? >> ford does see rivian as a competitor originally when it made a half-bill dollar investment, the idea was that rivian's platform for electric vehicles would be the platform that ford would use. well, they've scrapped that. and they no longer have a seat on the board of rivian now, they didn't cash in their investment so they still own about 12% of the company but ford believes they have all of the technology, the know-how, the ability to do electric vehicles in house, which is why they are developing their own evs, not with rivian but on their own. so i would not be surprised that at some point ford says, you know what, let's cash in, let's take our investment from rivian and we'll take our profits and we'll wish them well and we'll go on our ways that's a lucrative stake that they are holding right now even with the selloff of rivian shares today but, again, i don't expect that to happen right away i think that that's just something that, as i talk with
people in the industry, most expect that to happen at some point. >> yeah, presumably they are locked up as well on that capitol. but certainly significant paper gains that they're seeing despite today's selloff. phil, thank you. after the break, the man who founded google ventures will join us with a look at the opportunities he sees right now in the market and why he says technology is the only thing that can save the human race you're watching "closing bell" on cnbc.
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welcome back here's a quick check on shares of moderna the stock jumping after filing for emergency use authorization with the fda for its covid booster vaccine for all adults 18 and older right now that stock up more than 4%. wolf >> check out shares getting a big boost earlier today after vir and glaxosmithkline signed a deal the stock has since given up a lot of those games crowdstrike, coinbase, are some of the companies in section 32 joining us now is section 32 founder. he's also the founder and former ceo of google ventures great to see you, bill thanks so much for joining us. >> thanks for having me. >> talk us through, first of all, whilst we just touched on
it, that vir news and why you think the stock's given up so much of its gains. >> i think vir is a really great examples of the kinds of investments we're interested in. that's the daily stock fluctuations, that's not the kind of investing we do. we invest early stage kind of in the private market and in the public market fluctuation, who can explain why they gyrate on a day to day but i think longer term really speaks to an area of great interest to me and to my firm, which is pandemics, viral threats, and healthcare writ large. >> and in what sense is that remaining undercovered from the marketplace in creating opportunities for these startups that you're picking out? >> well, i think that -- i think to put it in context, this pandemic has been the most benign dress rehearsal for the real thing that we could imagine. boyfriend 5 million people
globally have died from covid. and let's compare that, again, in context to the flu from 1919 where 50 to 100 million people died or smallpox which killed 500 million people since 1900 with a death rate of 80% among children and the death rate from covid among children is almost zero. and, again, in context, sars had a death rate of 10%. mers about 30% hhaven1, 60% it's a huge opportunity for us to better our place in the world and our security because we are incredibly vulnerable right now >> bill, improvement investment how? is it the allocation of capital that is, you think, misinvent sized at this point? or do you think there needs to
be more of a public/private partnership in order to prevent some handcuff concerns that you have >> all of the above. 0.1% of the u.s. defense budget is dedicated to dealing with bioterrorism threats 0.1% and we're talking about, if you look at a nuclear weapon, which is hard and complex to build, takes a team of people, and it can do a lot of damage it pals in comparison to what an engineered virus could do and could kill tens if not hundreds of millions of people. so we need to really take that seriously and build a new arsenal of weapons against these threats, antiviral drugs, antibodies, vaccines, new diagnostics and really build systems to diagnose, respond to, contain, and deal with these kinds of threats so that we can hopefully stop them before they get out of hand.
again, if this was a dress rehearsal for the real thing, we've failed miserably at it >> well, on thathappy note, i hope either you're wrong or that your investments work. and we'll look forward to an update on that sub sector of your investments in due course but, bill, i wanted to ask you more broadly as well about valuations both public and private market are they reasonable? are you finding it hard to deploy capital that you have to deploy >> so, there are two answers to that no, one, they are not reasonable two, we are finding lots of opportunities to invest. in any market there are opportunities to invest because we're now looking to invest in every company simultaneously we're looking for ten to 20 companies a year. looking to inn every company simultaneously we're looking for ten to 20 companies a year in this environment is essentially negative
and 60% of all u.s. dollars ever printed were printed in the last 12 months. it's no wonder that inflation is spiking and is likely just beginning because when you have twice as many dollars, the dollar's worth half as much. so, completely irresponsible fiscal policy out of washington is creating a really unhealthy valuation situation. we talked about rivian earlier i love what they're doing, i love the technology. that road to see how that's worth $100 billion and this party will end, as you know, bull markets end and when they end sometimes they end in 15, 20% declines or more. it's inevitable it will happen i don't know if it's tomorrow or a year from now. but this kind of fiscal policy is not going to lead us to a good place >> all right, bill well, we really appreciate your insight. we will keep an eye on it. thank you, bill maris, section 32 founder, for joining us
today. former treasury secretary jack lew will join us to talk about the build back better agenda and if more spending could lead to more inflation plus, the head of global multi-asset price at t. rowe price. let's check out some of today's top search tickers on cnbc.com testodcks drawing the most inre tay "closing bell" will be right back i'm so glad we did this.
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let's check in on some individual market movers goldman sachs naming amazon a top pick for 2022. the firm says negatives for the stock are already priced in. jim cramer talking about amazon in his investing club newsletter you can point your phone at the qr code on the screen and become a subscriber to learn more crypto continues to gain popularity with investors. the staples center in l.a. is
being renamed the crypto dot com arena. $700 million deal. >> i think it comes at a time where cryptocurrency is really going mainstream, changing the way art, entertainment, and sports work. so i think it's a sign of times and a fitting name moving forward. >> the stadium home to the lakers and clippers. the name change will go into effect next month. slight shame the price was stated in dollars. >> good point. although it is this kind of metaphor of out with the old, in with the new we'll see. time now for a cnbc news update with rahel solomon. >> here's what's happening at this hour. the house of representatives debating the censure of arizona republican paul gosar. gosar posted an animated video showing him killing fellow representative alexandria ocasio-cortez. house speaker nancy pelosi says
gosar must be punished >> disguising death threats against a member of congress and a president of the united states in an animated video does not make those death threats any less real or less serious. and indeed conveying them this way makes them potentially more dangerous by normalizing violence it isn't funny >> the script supervisor for the movie "rust" is suing alec baldwin and others that killed halyna hutchins. the lawsuit says that the script did not call for baldwin to fire the gun. and in miami, a dog is selling his mansion because why not? the german shepard and his handlers are selling that nine-bedroom home that once belonged to madonna. the price tag is $31 million they're taking advantage of the tight real estate market gunther's great-grandfather inherited millions in 1992
i'm sure it will be helped by this sale because i think they bought it for $7 million and are selling it for the trust >> is it true, the dog owns -- >> technically, yes. but a trust on behalf of the animal has been making all of the investments. but, yes, it lives a very lavish life, i hear >> i am going to read up on that that is just wild and ridiculous, i dare say >> a dog's life. >> but definitely worth a read rahel, thank you after the break, energy the worst-performing sector today. but one expert says there's a buying opportunity in a number of oil and gas names he will give us an energy shopping list, next. here's a check in on bond's yields a little bit lower today but still elevated week over week we're at 1.6% on the 10-year
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bring you headlines when he does begin making his remarks. president biden asked the federal trade commission today to investigate if oil and gas companies are ramping up gasoline prices. here to discuss more is victoria green founding partner and chief investment officer thank you very much for being here what do you make of the letter sent to the ftc by the administration saying that there is, quote, mounting evidence of anti-consumer behavior by oil and gas companies, noting that the prices at the pump aren't mirroring price movements of unfinished gasoline. the api calling this a distraction. what's your take >> i kind of side with the api on that one. if you look at what we've done with crude and counts coming back up, we're trying the best
we can i don't think there's any collusion by any of these companies. i think a little bit of this is window dressing. a lot of this is it's a bad look to have these gas prices and it's really nice to have somebody to point the finger at. >> what do you make, though, of the opec oversupply warning? do you think that's to blame >> certainly opec is the biggest wild card we face in this industry and what we want to look at is i think they're trying to justify there are only 400,000 barrel increase. that was widely panned by most international governments that people wanted to see them speed up the return of their stockpiles but their math is a little sketchy exactly how we get to such a fast surplus in december, considering the massive amounts of withdrawals we have you're not looking at a huge blip you're going to see maybe a
little in supply but then you get to the nitty-gritty who's importing where. i think this was opec justifying the fact they're returning to the market slowly. so i'm not surprised by the administration's comments today. but i think if you look fundamentally at supply and demand, i think the oil market is still a pretty strong place to be. >> let's get to some of the stock picks of how best to play you. you like diamondback >> they just have some really great anchorage. and they are both kind of pioneering in this space and trying to make sure that they're returning cash to shareholders they're not extremely hedged on both oil and gas because we want exposure you'll see most of those stocks that i'm going to talk about today have high exposure to oil price volatility and acreage is just fantastic acreage. their break-even for getting out
of the ground is in the 30s to 40s. they are being very shareholder friendly, they're being fairly disciplined. they also think they have a very good handle on their pricing and i know everybody's worried about potential input prices going up next year but, honestly, they have a very strong management team that seems to have a good handle on ensuring that, and they have good guidance on where they think their supplier costs are going to be for 2022 they think they may remain flat. >> do you see today's pullback as a buying opportunity for investors? >> i do. we are aware that the oil market is very cyclical and very painful. but i think right now in this environment. they're more on hedge, they're very much in the permeum and attempting to return capital through buybacks and their fix
plus variable dividends. i think if oil remains around the 70s to 80s, it doesn't need to go to 100 120, that starts to be bad for the economy and really, really dragging down. but 70s to 80s, it's a great sweet spot for them. and honestly first half of '22 looks very bullish for these names. >> victoria greene, thank you for joining us up next we'll take a closer look at the bond market with t. rowe price's sebastien page. and an interview with former treasury secretary jack lew. why he's supporting president biden's build back better agenda and how it could impact economic growth we'll be right back.
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it's absolutely true that inflation's way too hot. and stocks should be less than they were yesterday. when amazon reloads and reloads and reloads again with orders, can you make the case that this could be the next tesla? watch or listen live on the cnbc app. let's get another check on the bond market. the 10-year treasury yield turning low today but remaining near the higher end of its recent range joining us now is sebastien page from t. rowe price great for see you, as always you've got a new fresh call on what people should be doing with treasuries >> underweighting treasuries or even shorting treasuries, right now is kind of like going long stocks in the sense you're going long growth. the difference is that while stocks look expensive, valuation is on your side if you're shorting treasuries. real rates near an all-time low minus 1.2%
to me, valuation and treasuries, it's like a coiled string. and the direction of rates to me over the next 12 months is likely to be higher. so it should pay to be short treasuries >> and, to be clear, this is because you expect rates to rise, you want to short treasury prices where in particular, long end of the curve, short end of the curve? >> you can short treasuries in the long end of the curve, which is where we're doing this in our portfolio at the moment. but you can also just think of your typical barclays aggregate if you're a 60-40 type investor and perhaps underweighting it tactically there are many different ways to implement that position. but, to your point, rising rates. but think about the growth picture and the pent-up demand you still have 2 trillion in checking accounts. think about break-even inflation right now is running at 3.2% over the five-year horizon
there's flexible, flexible around 2%. then there's letting inflation run above 3% for five years. so somehow if you put the growth picture together with inflation picture, the bond market is pricing a really, really dovish fed and a sharp deceleration in growth if you want to take that other side of that trade, you can go long stocks, but that's becoming expensive. or, again, you can short treasuries >> how do you get diversification if you're short treasuries, where do you find the other type of diversity if your portfolio other than going long stocks? >> as you sell out of traditional bonds, and i would put investment rate bonds in that bucket. as you reduce the allocation to your particular barclays ad, global allocation strategies we're down to 12% from the 40. and we're redeploying the capital strategically and tactically towards a little bit of short-term tips but also
absolute return strategies in the fixed income space, high return credit diversifiers like high yield and loans the loans asset class tends to do okay when you get rising rates, as well as a little bit of cash dry powder, which wouldn't hurt if we get another selloff. >> which way does the dollar go from here? >> probably a little bit of dollar strength. but the thing in thinking about the dollar is that there two sides to this. you have to look at what other central banks are doing in the growth outside the u.s. and think about the differential right now other central banks seem to be going towards a pivot towards higher rates a little bit faster than the fed. but i think the problem is that the market right now is pricing in, in the u.s. a very, very dovish fed so relative to expectations, you can get surprises on that which would lead to higher rates but also slightly stronger dollar
growth >> sounds like you're taking the opposite side of that coin thank you, again, sebastien page, for joining us from t. rowe price when we come back, the retail picture comes into focus, and roku gets rocked on a twngrade. weake you inside the "market zone." with your qb's increased spin rate, any pass with a launch angle of at least 43 degrees puts sanchez in the endzone. you a data analyst or something? an investor in invesco qqq. a fund that gives you access to nasdaq-100 innovations like ai statistical analysis software. how am i gonna do? become an agent of innovation with invesco qqq. ♪♪
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are asking the wrong question about inflation. and we'll get earnings results from nvidia,sonnose, and more. we are now in the closing bell "market zone. cnbc's senior markets commentator mike santoli is here to break down these krurl moments of today and we've got josh brown with us as well. it could've been a lot worse >> without a doubt max 2% pullback over that span clearly below the surface, things are softening up just a little bit i see it as a half step back from some of the riskier, more cyclical areas it's hard to complain about it we do talk about how within the very strong year-end seasonal
period, there is thiskind of couple of weeks period before thanksgiving where it's not necessarily all that strong, and playing right to script this year, i have to say, in so many ways you don't expect it to because it seems too easy. but november starts up strong, and exactly when it was supposed to, so to speak, markets flatten out. >> someone's festive behind their screen there josh brown, any readthrough for you in terms of the retail earnings that you saw this week? anything that we can make in terms of the end of the year with regard to the strength of the consumer >> well, i think by now it's become common knowledge that the consumer is doing great. you see that in the retail numbers. you see that when companies like simon property, which i've been riding all year and have been talking about probably too much, tell you what's going on with foot traffic, et cetera. so, like, i don't feel like that is really moving markets anymore. i think that's become generally accepted for a long time
i think the problem that we're running into now is that we're seeing companies report incredible numbers, and the stocks not react or sell off even and i think a lot of the reason for that is because of how widely known this phenomenon is. and look at the gains in the big consumer discretionary stock so, it's not happening across the board. home depot a great number and reacted well but target is a good example target's down 4.5% after earnings earnings were amazing. the problem is target ran up 50% from the last time they reported into this report so, like, how much room is left? walmart is another great example. the stock does not trade well. meanwhile, they just told you comparable sales were up 9.2%. so a lot of these names have had big runs it's not universal across all of them costco is on a truly insane run. it was 246 early in the year
now it's almost 400. so it's tough to know which of these stocks have the great news priced in and which have more room after the great news. and this is very relevant because i'm in a name nvidia, which has had one of the biggest short-term runs i've ever seen and i don't know if there's enough room. even if they have a great report for this stock to go much higher so i guess we're going to have to find out. >> yeah. the market will tell you what's priced to perfection but to your point consumer discretionary the best performing s&p sector today. let's get more on those retail earnings with courtney reagan. court? >> hi, leslie. so, target, lowe's, tjx all posting quarters that. shares of target are lower as investors there are focusing on the margins from higher freight cost and labor comp costs prop and revenue also beat estimates. lowe's profit beat by a wide
margin, posted a comparable sales result, and it's managing macro pressures pretty effectively. >> as one of the largest importer products in the country, we have scale we've leveraged the scale to manage the global supply chain challenges effectively it doesn't mean we're immune to them but we manage them and we've been able to not push a lot of those costs to our customers >> tjx beat across the board and says most of its holiday merchandise is on hand or will arrive on time for the holidays. current quarter comps are up mid teens year over year those shares higher by 6%. back over to you >> courtney, thank you so much mike, when you look at these numbers, how do you assess the variability? are there any pull-forward effects, as my relatives, for example, buying all of their holiday gifts way in advance they see the headlines about the supply challenges and the labor
challenges and they're just sending them in october. >> i do -- i wonder about that being a little bit of a shadow over the current quarter because presumably maybe some of that happening in october, maybe it was that early but november certainly, which is in the current quarter so i think some of that might be coloring the reaction to walmart and target but i think reactions also tell you exactly what people are hypersensitive about so when it comes to tjx, the big bear case and one of the reasons for the stock's underperformance for a while, they rely on oversupply they need physical inventory are. they going to have enough for people who are just looking for that serendipity effect? target absorbing some of the margin damage for customers, same with walmart. so i think that's where you get the differences and the responses. >> shares of roku getting hit hard today julia boorstin has the details of that far bearish call >> those roku shares plummeting nearly 2% earlier today.
moffitt nathanson slashing its price target to 220 from $320. now, the report cites a couple of key issues, projecting decreasing revenue due to lower estimated video advertising revenue, also talking about tough comparisons with prior quarters when the company got a boost from a number of new services launching in quarters past also citing the need for continued investments in content and engineering to compete with so many other services now, the stock is now up just about 3% over the past 12 months it's down about 50% off its 52-week highs. and that stock down now 11.5% today. >> josh, i'll come to you first of all on this such a darling thing as julia was recently pointing out. and it's almost in freefall. >> i don't really understand this story -- i mean, i don't understand why people are so excited about it i know it was a big winner in
2020 because it related to television and advertising to people who were sitting at home. so obviously that worked but outside of that kind of environment which we're clearly not in anymore, it just feels like this is an operating system in the cheapest tvs you could buy. it's going to have nothing but competition when apple, as apple continues to get more serious and amazon as well about just embedding directly into the operating system of the new tvs. and, honestly, i know people in the mobile ads business and they've kicked the tires on this kind of personalized television ads. it doesn't work. like, there's really very little efficacy there it certainly never comes close to anything like what facebook and google can offer advertisers. so, that confluence of factors has kept me out of this name i'm not tempted by the discount in the stock, where it was at all. >> not even the big slump today
will get you in. a pair of payments companies - >> other than that it's great, though [ laughter ] >> visa the worst performer in the dow today on news that amazon will stop accepting its credit card in the uk in january, citing high fees. paypal also sinking after bernstein downgraded the stock to market perform. the firm says paypal risk is getting disrupted by well-funded newer payment companies like affirm, shopify, klarna. i want to get your thoughts on this jim cramer just sent out a cnbc investing club newsletter on how this is indicative of buying the dip on master card, the idea that master card, of course, selling off is the broader space selling off today they could be a potential winner with the whole amazon payments wars how do you see this space shaping up >> historically there's been so many efforts to displace visa master card as kind of the duopoly and it's never been successful i get that they had their valuations compressed.
it just looked like the road was a little bit less easy for them. paypal kind of an incumbent not a disrupter. it's getting kind of chipped away and also the fact that sort of this bundled ecommerce experience is bad for them one element of that analyst downgrade, the ease of the kind of auto failure credit card information on an app, it's never getting to paypal, you're not going to the button because your phone or your computer knows. all these things suggest that just the valuations are too high it's not that they're going away it's that they have to find a way around some of those barriers >> i was going to add to your point on that. yes, they pull back a bit of late but in terms of the era of fintech being a threat to traditional finance players. the banks have had to compress valuations over the last decade. whereas mastercard and visa have been massive beneficiaries of anything and everything throughout that process.
they've got a huge valuation, i would argue. >> over the banks. i think, interestingly - >> but suddenly people flip from no longer being a beneficiary of all things, you could really turn overnight >> and to think about no longer having pricing power and no longer having real durability of the fee structure because that's what's also get agtacked by the merger >> and who has the leverage. when we talk about kind of the disrupters in this space, amazon partnership with affirm, some of these buy-now-pay-later trends seem to be kind of creeping into the incumbent space. how do you play this >> so, i actually sold mastercard i think i had been holding it for seven or eight years because i am so concerned that there is about to be a sea change in the way we pay for things in favor of buy now pay later if you look at countries where buy now pay later was able to
leapfrog the generation getting credit cards, you see that they are never going back the other way. why on earth would people pay 25% aprs for purchases when they can just do buy now pay later? so you look at brazil, you look at certain areas of europe that is the standard paying with a credit card is weird. and i think that that has the potential to significantly disrupt visa, mastercard, american express paypal, to mike's point, is interesting. i just think the downgrade is late this stock has already lost 60 billion in market cap. i'm getting tempted to add to it i think a lot of the idea with those competitive pressures from paypal have already been built up in the decline we've seen for the stock. and they've already given you the guidance cut for next year they told us in early november that guidance would be like 25 billion. analysts were hoping for 30. so we've already seen that play out, i think
i think there's a better risk/reward being long here than short. >> that's fair enough. i agree with that. but it is still 45 times forward earnings so it's all about what youpay for it. if you get a little bit of a change in the pacing of how fast grows, it changes the valuation. >> it's now only down 4.7% so off its lows. forgive me for a moment, josh. let's get into the market internals as we approach the close. negative now all through the ma major averages >> it's been negative throughout the entire day the advanced decline volume metrics on the new york stock exchange, it's really twice as much as upside volume. interestingly if you look at individual 52-week highs and lows on the nasdaq in particular, you have more lows than highs not too common when you have the indexes hovering near a record high but pretty big number when you get above 200 new lows in the
nasdaq a lot of them are small biotechs but not all. there are still some larger names that are kind of fallen angels at this point volatility angels has perked up above 17 as the market has been sort of unable to make progress and really blast through that 4,700 level. still pretty tame. and i would argue if we just sort of resume the upward grind, 17's going to look a little bit high but we're not quite there at that point yet when the market is sort of beyond this chop period. >> just under one minute lift. you'll see that we have had a little bit of a leg lower in the last 10 or 15 minutes that now puts us down over half a percent or 200 points on the dow the low was 232. we are approaching the final minute in trade. the russell is the laggard down over 1%. consumer discretionary is the best performing sector
energy, financials the two sectors down more than 1%. as we said earlier, holding this week's gains but down a little bit. we're at 2%. as the bell goes, we are down 0.6% on the dow jones industrial average, about 210 points. about a quarter of a percent on the s&p 500. a third of a percent on the nasdaq [ cheers and applause ♪ welcome to "closing bell." i'm leslie picker in for sara eisen, along with wilfred frost and mike santoli, senior cnbc markets commentator. do not go anywhere we have a huge hour of earnings ahead for you featuring results from nvidia, cysta, sonos, bath & body works and victoria's secret plus, former treasury secretary jack lew on the potential economic fallout from increasing inflation fears. josh brown from ritz holtz
wealth management. i want to turn it over to you, mike as we look at the sector breakdownthat wolf so well analyzed for us today, you look at some of the more cyclical players really taking a backseat today. >> absolutely. don't know if there's really a macro catalyst for that. a little more attention on rising covid cases overseas which i think is sort of just keeping the macro sentiment in check a little bit travel's been weak for a while so i think it's a little bit of a back and forth you had a strong outperformance run by things like consumer cyclicals and materials. that's part of it. i think the big question is, look, it's the second day in a row when the handful of the mega cap growths sort of rescue the s&p from anything looking like an apreshable. it can just be a quiet consolidation. or is it going to essentially weigh down the index that's always the question when you get into this kind of a phase. >> rivian going in reverse
today, closing down 15% after a huge rally sends its ipos just increasingly turning higher since its ipo except for today let's bring in victor jones, head of global strategy for tastee this was the move you wanted to see? >> yeah, look, i wanted to stress this wasn't a huge personal of my portfolio and, generally speaking, people should play the positive drift in the marketplace but this is a short-term trade in the long term i'm a big fan of evs i'm even a big fan of rivian you've got big backers like ford and amazon dan ives said tesla crossing a trillion dollars in valuation changes the total landscape of valuation in the ev space. 100,000 vehicles by amazon that's exciting. 55,000 orders fully refundable orders, by the way, in the backlog, that's exciting they're going after a market that tesla has not been able to capture. the most popular vehicles in the
united states are trucks all of that's exciting you've got a $1.2 trillion infrastructure bill with $7.5 billion going towards charging infrastructure, that's terrific on the same time, every esteemed analyst following the ev space is scratching their head with respect to valuations. these aren't people that got evs wrong. these aren't people that got tesla wood kathie woods saying rivian was too expensive at 78. -- uncomfortable and that the valuation at 110 was one standard deviation above what he would call aggressive. they made their first truck deliveries just over two months ago. and at the end of last month the company produced something like 180 vehicles and all of that said, and yesterday we're talking about the third largest auto manufacturer on the planet passing volkswagen volkswagen, they made nearly 7 million vehicles in the first nine months with over $211 billion in revenue. so i think you put that together, and you say you don't have to be a genius to say these
things don't make sense. you just got to be crazy enough to stand in front. >> so, victor, if you want to short it, though, how, a, dangerous can that be, and, b, expensive is it? very volatile stock. it's not like puts are cheap relative to what you might be expecting. >> no, definitely. i think, look, at tasty trade we always talk about trading, small trading often to the extent that you can. i think this was a very riskifying trade >> sorry to interrupt. but president biden is driving an electric hummer as we speak in his tour of the gm store in michigan, which we're going to play now continue your view on how to short rivian this was just moments ago, which is what the viewers are about to see on their screens >> no worries. normally you don't buy out of the money puts the puts are going to be expensive as the stock goes down they take out the implied
volatility and you're either not going to make money or not going to make as much as you expected. but that wasn't necessarily the case in rivian yesterday i think you had an opportunity to go in, and now today the question was you take profits off the table and turn it into a riskless trade i chose to turn into a riskless trade, or excuse me, if rivian continues to move lower, it's just effectively a preroll at this point >> but broadly speaking, how do you look at a company like rivian which at this point still has a relatively small flow. it's trading based on what its expected future value is is it risky to make any big bets surrounding a company like this in this current market environment? >> yeah, i think so. and that's why i emphasize that this is a relatively small percentage going towards this outlook. and then, in general, look, i
think you look at $140 billion worth of valuation and say what is this. there's probably a lot of people that wish they were on that tesla train at 250, call it expensive at 500, call it expensive at 740 and even at 1,200 had reservations of participating. so you got at $140 billion of valuation. how much of that is just regret of not being on the tesla train the first time, and how much of that is hope that you are going to catch lightning in a bottle the second time. and i don't think hope would regret that has great prospects. it just seems like it got a little bit ahead of itself >> josh, only a one-day pullback so far in the likes of rivian and lucid. so, who knows whether they'll kick higher again in the days and weeks ahead. but, once the initial run has paused or started to plateau, do you think it's going to be a zero sum game in terms of total market cap for the next year
between these name can they all continue to just expand exponentially >> i don't know that it's zero sum. i'm more on general motors and that is breaking out that's an all-time high right now since the company emerges from bankruptcy. so technically that has the best setup of all of the automakers but i don't think it's zero sum. i think we're in a once-in-a-lifetime moment of the entire automotive story worldwide being remade like within a five or ten-year span you are just going to see this mass adoption of electrification followed closely by autonomy, some degree of autonomy. you're going to see entire cities just, like, literally convert their grids to accommodate all of the electricity, all of the autonomy so i don't know that it's zero sum. but what i would say, and i agree with what victor was saying, there's a problem here with the way these companies are
coming public. they're coming public on 2025 estimates. and then they're doubling in price. and a lot of this is fomo. and a lot of this is people that missed out on tesla and ain't going to let that happen again and then a lot of this is just there being too much money, too much liquidity, period so all of those things are combining to produce this insane moment for these opening valuations i'm not saying lucid and rivian can't someday grow into these valuations i'm just saying they're getting, like, the benefit of the doubt as though they've already accomplished what's in their slide decks. and, to me that's not a great game to play so i'm not there i don't have fomo. i'm an adult if this becomes a trillion-dollar company before they even sell one car, i can live with that i don't need to take part in every mania along the way. i'll be fine >> cisco earnings are out.
julia boorstin has them for us hi, julia. >> cisco's adjust earnings coming in two-cents better than expectations 82 cents, that's better the 80 cents estimated actual revenue's at 12.9 billion and the guidance is what seems to be weighing on the stock. the stock now trading down over 6% the company is saying it expects its fiscal second quarter earnings to be between 80 and 82 cents per share analysts had been projecting 82 cents per share and they are expected to grow between 4.5 and 6.5% it seems like it's that guidance that's weighing on the results while the earnings did come in two cents better than anticipated. >> down 6%, julia, thank you don't miss jim cramer's interview with cisco's ceo tonight, "mad money" 6:00 p.m.
>> even the two cents being pretty much revenues in line is not anything that's necessarily going to change that story or color it and suggest it's a disappointment, it's a slow growth name top line has been a struggle for a while. it's very well, you know, managed in terms of shareholder return, and all the rest of it but at this point, it's going to trade based on what it did for the next few months. it's had a decent year a lot of the old tech stocks have been discovered by value players in the last year or so >> josh, wharz your take on it is it largely guidance here, or is this another example of a company that's turned higher over the course of a year looking for an excuse to pull back >> i mean, the stock looks technically the stock looks okay even given what's going on in the after-hours. it's been in an uptrend for quite a while. it looks like it was flirting with that record high of about 60 from late 2019.
it's not my type of stock when i'm in tech i'm looking for fast growth this thing kind of plots along at the rate of global gdp. it's not my kind of thing but i think the stock will be all right. >> down 6% as we were just discussing broadening things back out whilst we wait for other earnings what do you make, josh, of the retail earnings and the best way to play that at the moment you mentioned at the top it seems very encouraging but is it priced in to a lot of these names? it's been odd to see the likes of target and walmart pull back of otherwise strong numbers. >> yeah, i think it is priced in at the retail level. but the thing is the news continues to get better. so if you're listening to people describe the progression prosfrom back to school to halloween to christmas, they're talking about acceleration and that might not be in the consumer confidence numbers. but don't listen to what people
say. watch what they do they're spending and there doesn't appear to be any real slowdown when you look at the actual numbers that the retailers are reporting. so, again, as i said earlier, i really think it's very difficult to decide when you're looking at a stock price how much of this is already in it and how much isn't. and there doesn't seem to be any kind of marketwide story because for every stock you could find selling off after good numbers, you could find another one rallying i think it's tough to paint with that broad of a brush right now. >> let's get to sonos' numbers kate rooney's got them >> hey, wolf a slight miss on revenue for its fiscal fourth quarter revenue coming in at 359.5 million just shy of the 360 million dollar estimates gap loss here of seven cents unclear if that is comfortable the company also announcing a stock repurchase program of $150 million and the completion
of a previous stock buyback program full year of guidance looking like it's also coming in better than expected shares are bouncing back they had fallen after hours. now it looks like they're up more than 2% back to you. >> kate rooney, thanks so much news of that repurchase program, jumping the stock a little bit what's your take on this one, victor any strong views >> i think a stock from 30 to 45 it's trading toward the lower end of its range at 33 the options market was actually fairly nervous about this one. nearly, 11, 12%. you don't often see that priced into some of these stocks even on high beta earnings you're typically in the 4 to 5% range so the fact is you had a fairly nervous, you know, options market on the results here you know, it looks like what they delivered was enough to ease the nerves, at least for
now. >> yeah, it seems like they think their stock was undervalued at least going into today, 4.5% but announcing that $150 million stock repurchase program as well. you recently added to your position in a stock that's in your portfolio what is it >> i bought a little bit more uber this week i'm not going to tell you that it looks good technically because it looks terrible technically. this is not a trade for me, just to be clear. but it is an average up from my original cost. this week the ceo announced that he bought 200,000 shares, which is approximately 9 million at the price he says he bought it he also had some very savvy activist hedge funds raising their stakes in this name. i'm not suggesting there will be an act advise campaign overnight. but i do think there's going to be some pressure on management to get the stock moving in the right direction. it's very unique it's a tech stock that's down 15% this year. very, very hard to find.
so, it's been a dog for me this year, but i'm in it since last year i am intending to be in it for the long term because i think they have a very important platform for the future of mobility i really feel that they have the chance to become a mega technology company and provider in this world. but they really have to do a little bit better and execute. that's what i'm doing. i don't know if it'll work i'm not looking for results overnight. but i am adding to this position, and i am hopeful that we've seen the toughest that we'll see coming out of the pandemic >> josh brown, victor jones, thank you both for joining us. great to see you we are just getting started here on the second hour of "closing bell. up next, canaccord's chief market strategist. plus, former secretary treasury jack lew and the impact
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major averages closing in the red today but still hovering near all-time highs. joining us now canaccord's chief market strategist. tony, good to see you. thanks so much for joining us. so, do you feel that inflation is going to run hotter than people expect? >> it's clearly hotter than people expect right now. but i think the question about -- it's great to be with you. the question about whether inflation is high, it's clear it is, and whether it's transitory is important as well but that's not really the right question i think we should be asking when we look at it and its impact on investing. the right question, in my opinion, is when does it affect credit that affects money availability this whole game, this whole financial market system is structured around when there's enough money to buy the things that go up and when money begins
to shut down, that's when you have a significant and sustainable economic retrenchment it's not when costs are going up it's when revenue starts to come down because the money availability shrinks >> and with your view on that, you are suggesting that that's not imminent and even if inflation at the moment is spiking and persisting, it doesn't have to derail stocks. >> i think we have to be educational on here, too and i'll give you three things i look at that really gauge money availability number one is the yield curve. what's the yield curve doing and i am not talking about the long-dated yield curve i'm talking about the spread between what banks are getting and other lending institutions are getting their money at and what they're lending it out at actually the rise in the two and five-year paper in the u.s. treasuries over the course of the last few weeks is a good thing for forward looking money availability rates are still at zero so banks are getting their money near zero
when those shorter term interest rates go up. secondly, we look for bank lending standards. banks are dyeing to give loans out. they're trying to fight the competition of fintech, nonfinancial lending and then, lastly, the financial conditions you look for signs in the overall financial conditions and whether they're tightening or loosening and truly all three of those things right now, wolf, are suggesting that liquidity or money availability going forward is still pretty solid. >> it's leslie picker here what changes that? obviously all of these things you laid out are interconnected. so would a hiking of interest rates impact the liquidity picture that you laid out? or is it potentially tapering? >> it's a policy mistake that makes banks or other institutions that lend or invest money say, whoa, something bad is here economically now, could that n an additional 6% in inflation next year? while that's possible, i think it's important to note that
long-term inflation expectations really haven't spiked that much. and gold is below where it was earlier this year, as is the 10-year yield. at this point i think that's given the fed a little bit of flexibility to maintain the bias that they had. we keep trying to change it on wall street, but they've been very clear, they haven't lied to us yet r rj. >> i get that you're not expecting a big negative surprise catalyst for stocks any time soon. but is it also fair to say where it's hard to see where the incremental positive surprise comes from, from here? what are you seeing from the positioning analysis what are you seeing from sentiment and things like that >> it's a great question, wolf as you know, we upgraded the market on october 4th. it had a heck of a run over five weeks. while today kind of is sloppy, it's been sloppy for the last couple of weeks. and that's what happens when optimism gets too high we track the national
association of active independent managers which manages all sorts of fund managers, real money and what they're doing with it. and it got into extreme optimism a couple of weeks ago and it stayed there so when you get like that, you turn but i think there's a great stat that we came up with that looks at what happens when you're up more than 18% through the month of october year-to-date? which we were up 22% it would be historically unique to have a negative the last two months of the year so if you get a pullback from here, we would use it as an opportunity to add risk, especially into the more risk-oriented sectors. >> that may be true. however, some of the big investors that i speak with increasingly i'm hearing at least anecdotally this idea that people shouldn't get used to the returns that they saw this year, that this was really a remarkable year and that things will get much more pressured in the years to come. so how do you play this current market dynamic
>> when you have a big upyear like the one i just described in that other stat, the next year has immediate gain i've been doing this since 1987. what's happened throughout my career is every year when you have a good year, you feel like and you hear that, wow, it's been such a good year, it's got to have a major drawdown but that doesn't typically happen as long as -- and, again, this is the total important point as long as the money availability through those three metrics i gave earlier are still holding into a solid way i think next year's going to be a little bit of a tougher year and not because inflation's going to spike what happens if the supply chain constraints actually begin to ease and some of the excess ordering that's taking place now because of the supply chain constraints, yes, you'll have solid growth, but it won't be as inflationary so, it's going to be one of those push and pull years just like 2005 was, just like 2011
was coming out of the third year out of those recessions. >> great to see you, as always thanks for joining us. >> thanks for having me, guys. up next, we will get reaction from nvidia's results plus, former treasury secretary jack lew on whether he thinks psintidrede ben should renominate fed chair jay powell. we'll be right back. but there is a single source of essential sustainability intelligence. s&p global sustainable1. i'll shoot you an estimate as soon as i get back to the office. hey, i can help you do that right now. high thryv! thryv? yep. i'm the all-in-one management software built for small business. high thryv! help me with scheduling? sure thing. up top. high thryv! payments? high thryv! promotions? high thryv! email marketing? almost there, hold on. wait for it. high thryv! manage my customer list? can do. will do. high thryv!
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nvidia just out with earnings, reporting a beat on the top and bottom lines and giving strong q4 revenue kwins the company's been on a massive tear up 50% in the last three months alone, adding to those gains after hours today, nearly 3% on these results. joining us now is raji gill of needham. ahead of today's results you said that nvidia's earnings come at a crucial time. it will take a lot to lift this stock. was a lot provided in today's release? >> yes, absolutely the guidance for january was 7.4 billion. the street was around 6.9 billion. so, a significant beat on the guide. the gross margins are coming in at about 67%, which is also
above the street data center revenue grew about 45, 50% year over year so it actually reaccelerated from last quarter, which grew about 15% from year over year. gaming is growing significantly. so, all business segments are growing. and this is even before we start to see, you know, the metaverse impact of 3d virtual worlds or even the autonomous driving, a revolution that will be happening within the next several years, just on the core data center and gaming business will will be extremely strong. >> in terms of the gross margin, i know you are focused on that coming into earnings what was your takeaway, and were you impressed? >> yeah. i think the gross margins have improved significantly for nvidia and if you look at semiconductor companies in general, it's a rarified territory to be in the 60s plus gross margin. there's only maybe a handful of
chip companies that have 60% plus gross margin. nvidia's at 67%. and one of the main reasons why nvidia is generating such high margins that they sell a lot of software, there's a significant amount of software built into their data centers, a lot of software that's built into their professional digitization services for work station graphics going forward, there is more opportunity for them to sell more software, particularly in the metaverse where these companies can leverage their 3d simulation software technology that will all be very high-gross margins. >> the conference call here starts in about a half hour. what are you looking for from executives today what kind of caller would help guide this company moving forward? >> yes, sure so, i would be looking for what is their outlook for data center growth going into calendar '22
data center has been the principal growth driver for nvidia over the last several quarters data center is dependent on hyperscaler spending from companies like facebook and amazon and alibaba it's also -- we're seeing a lot of adoption of artificial intelligence, machine learning across verticals certain industries like financial services and oil and gas and logistics. so i would love to get an update on the adoption of ai using nvidia's gpus for trading inference. hyperscalers, virtual enterprise and kind of what's their view on data center spending and the outlook next year. also, the upgrade cycle that's occurring in the gaming market is just beginning. 80% of their installed base is on the older beaming architecture nvidia has 250 million g-force
gamers around the world. only 20% of that 250 is on the latest gaming architecture they're all going to be upgrading to this latest architecture over the next two years. so it will be interesting to hear on how that upgrade cycle is happening and also would love to get an update on the arm acquisition that has been meeting a little bit of -- meeting some hurdles i think it's very low probability regulatory agencies will approve it. but would like to get an update on the armach acquisition and any kind of crypto exposure as well >> interesting thank you for being here that stock now up 3.4% in after-hours trading on those results. and bath & body works and victoria's secret out with earnings >> so this is the second quarter that these companies are reporting as separate entities we're going to start with bath & body works they are putting up earnings per
share of 66 cents. this is not clear if this is comparable to analyst estimates. the stock is moving higher in after-hours trade. the revenues do appear to be stronger at $1.68 billion. the street was looking for 1.6 billion. they're also giving a guidance range of 210 to 225. again, unclear if this is comparable to analyst estimates as a newly individual public company. so we're going to have wait to hear some new details from these earnings calls we're going to move on to victoria's secrets these shares popping even higher on the back of these results 81 cents gap profit. not comparing to analysts' estimates. and revenues of 1.44 billion in fact, it looked like a slight miss compared to what analysts were expecting the company notes these are down 9% compared with the third quarter of 2019. so that pre-pandemic quarter they do note that there have been 260 store closures since then that's part of what the company
is blaming for the downward sales number for net sales they say their comps are up 4% compared to the third quarter of 2019 again, victoria's secret also giving in earnings guidance range of 235 to 265. we are not sure if this is comparable as well but the revenue guidance range for the fourth quarter of flat to up 3% actually does not look like it's very good compared to what the analysts are looking for when you do the math they're factoring a revenue increase of up 8%. nevertheless, shares of victoria's secret are up 13% after hours. so when we get more details from some of these calls, we'll have to see if investors reassess some of these moves. back over to you >> up 13%. thanks so much up next, former treasury secretary jack lew on the inflation risks facing wall street and the economy plus, we're on pricing watch for a highly anticipated ipo we'll bring you that number as soon as it's released.
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update with shepard smith. shep >> hi, leslie. from "the news" on cnbc. the house of representatives moments ago approved a motion to censure congressman paul gosar the extraordinary step taken in response to the arizona republican posting an animated video depicting him killing representative alexandria ocasio-cortez and then attacking president biden. two republicans, liz cheney of wyoming and adam kinzinger, joined all of the democrats in voting for censure gosar becomes only the 24th representative in u.s. history to be censured by the house of representatives. the jury in the kyle rittenhouse trial asking to review two videos from that night in kenosha when the now 18-year-old killed two and wounded another. they wanted to see a livestream taken by the paramedic whom rittenhouse shot and wounded and the video from the fatal shooting of anthony huber. the rittenhouse defense also asked the judge to declare a
mistrial before the jury reaches a verdict, saying they were given an inferior copy of key video evidence the judge has yet to rule on that motion. "tiger king 2" premiered on netflix today. baskin and her husband sued netflix saying they only signed up for one season of that and that they'd suffer irreparable harm if the content were not removed. but the judge said there isn't enough time to rule before the release. all five episodes are available. but should the judge side with carole baskin? netflix will have to remove the footage of them, so watch it while you can. tonight we're live outside the courthouse in georgia as travis mcmichael, the man who pulled the trigger and killed ahmaud arbery, takes the stand in his own defense what he said wolf, back to you. >> shep, thank you so much former treasury secretary jack lew out with an op-ed on
cnbc.com, making the case that president biden's build back better agenda will lead to a more fair and equitable economy, without adding to the deficit. secretary lew joins us now good afternoon to you, mr. secretary. great to see you again >> good to see you, will >> so, are you so clearly supportive of this bill because of what goes into it though, accepting that perhaps now is no longer the ideal time for so much more stimulus? >> i have to be clear. i don't see this as being stimulus i see this as being, in many ways, long overdue investment. and, importantly, unlike stimulus, it is paid for from the very beginning the administration proposed paying for it, congress is insisting on paying for it. and they're going through a process now where piece by piece cbo is scoring it, the congressional budget office is scoring it and before the bill is sent to president biden to be signed, it will be paid for so, i think the question really is what the bill does, and not
to be about whether or not it is new stimulus the time for stimulus was very real during the covid crisis, and now that we're coming out of it, the time to make investments, it ought to be paid for. >> are you happy with how some of it is paid for or disappointed that some things got left by the wayside? we've spoken before about why the step-up in basis of capital gains is always raised and then discarded is an issue. >> i think the most important thing isn't congress pay for it with serious provisions that are credible i think they're doing that i was very supportive of many of the original proposals and if i had the ability to legislate on my own, i probably would've gone with some of those provisions but i don't think that's really the issue right now. the issue right now is to get this done because what's at stake is whether or not we provide childcare and pre-k
education to all american families the question is whether we expand healthcare coverage and whether we make the investments that will help people get back into the workforce and build a better future for the country. i think that where they've ended up is something that ought to get through the congress, i'm hopeful it'll get through the house this week, and then the senate will finish it in the coming days. you never get a bill that has everything exactly the way you would have written it. i think this is coming out the result of negotiations and compromise but, importantly, at every step of the way it's been clear that it has to be paid for. i think that's important >> is there a will to actually effectuate additional revenue to pay for it, however? i know you recently wrote an op-ed about this idea of building the irs after a decade of decline to seek out lost income that otherwise wouldn't have been taxed. how much of a revenue driver would that be? >> i think it's an enormous
revenue driver the irs has been de-funded for 10, 20 years now that means we don't have the resources for the irs to be effectively watching, especially in the case of complicated tax returns, which is where most of the money and most the tax revenue will be, watching carefully, rebuilding the irs will give us the ability both to have that kind of auditing done, but as importantly, we have a voluntary compliance system. when there is a perception that the irs is on top of things, 95% of people comply when there's a sense that the irs is not watching, that goes down to maybe 50%. and i think what this will do is create two things. first, the ability to catch mistakes and cheating, but it'll also bring people back in to do what they should do anyway, which is follow the law. i think when you look at the estimates, it's a bit confusing because it's a technical thing,
but some estimators do give you credit for that compliance, voluntary compliance bonus, as it were. other estimators don't i look to the treasury department experts in the office of tax analysis who are most expert in this and they actually only are taking credit for less than 10% of closing the gap and that is what produces very substantial revenue. so i think the estimates actually understate what will really happen. >> if you are the current treasury secretary, would you be advising the president to keep or replace jay powell as fed chair? >> i have said on many occasions, i think chairman powell has done an excellent job managing through a once-in-a-lifetime crisis. i have a high regard for him i had a high regard for governor brainer who's also been discussed widely i think the president has the ability to make choices here there are multiple positions open
and i think he needs to have multiple voices in the room. >> what did you make of glenn youngkin's victory in virginia and other election results a couple of weeks ago? was it a sign of dissatisfaction with the economic handling from the president and in particular inflation? is that something that needs to come under control sooner rather than later with the midterms approaching? >> i can't really on pine on the virginia election. usually these races have to do with how the candidates on both sides made their case, and he obviously convinced the voters in virginia that he could be trusted, and he'll be the next governor i think the question of inflation is clearly real right now. we're coming out of a crisis that has disrupted supply chains, it has disrupted labor markets. we don't still know exactly what the course of the disease is either here or internationally and there's going to be uncertainty.
and that causes anxiety. i think the administration is addressing the issue of getting people vaccinated, to get the united states back up as quickly as possible. so we're fully operating i think the fears of inflation in the longer term are a bit premature in the sense that what we're seeing now is kind of the midst of coming out of the crisis we saw in commodities like lumber, prices came back to normal once supply chains became normal i think we're going to see that in other areas as well some price pressure will stay. but i think it's not on the scale of the hyperinflation we saw when i was coming into public life in the 1970s and '80s and the fed has very, very readily available tools to deal with the concerns when they arise. i think the challenge is to make sure that the american people know that the government is doing everything they can to
give them what they need that means protection from the disease, the ability to get back to work, and things like the childcare and pre-k will help people get back to work. >> mr. secretary, great to see you, as always thank you so much for joining us >> good to be with you we have a market flash, meanwhile, on viacom cvs julia boorstin's got that for us julia? >> wolf, shares are up about 1.5% after the company reported that paramount plus had its most successful week ever that streaming service adding more than 1 million new subscribers. that is a record for new total signups since its rebrand. it also set new records for hours stream so, seeing some traction there with that streaming service
rebrand. and the stock now up 2%. guys >> a lot going on over there >> we were wrongly suggesting it could've been "yellowstone." and mike santoli pointed out that that actually wasn't on paramount plus but thank you for filling in the gaps for us. >> big red dog causing a pop we'll get reaction from an analyst who thinks this stock can rally 40% from its current price.
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santoli who is looking at the relationship between stocks and bonds. mike [ no audio ] >> don't think we've got mike there. it's a shame because it was looking excellent both the chart and mike's there. that's a shame because it was looking excellent, both the chart and mike's description of it cko e get mike back, we will g ba to him. we will enjoy that after this short break. esg is responsible investing.
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telling you little about what stocks will do based on yield. this could go either direction based on yield direction but there is no single durable relationship between these things especially with yield in this range >> mike, thank you glad we got your voice back. after the break, ikea valuations to record heights and one more check on sonos getting a big jump after hours, now up more than 5%. is the planning effect. this is how it feels to know you have a wealth plan that covers everything that's important to you. this is what it's like to have a dedicated fidelity advisor looking at your full financial picture. making sure you have the right balance of risk and reward. and helping you plan for future generations. this is "the planning effect" from fidelity.
hospitable the markets have been it's a data point that may be concerning on those already focused on the frothiness of the market >> many of the uniforms today are disrupting the world and valuations the public, 70 or 80% of them will have some sort of reckoning. perhaps late stages of market, the growth and quality of the market became inflated >> out today the alpha newsletter we have seen the ipo market turn on through the end of the year it was not performance necessarily. it is the fact that market is willing to pay on debut. >> market is willing to grab newness, look for things that
might be able to move fast and are not correlated with the indices. 1 trillion is stunning, about 2% of the market, stocks that haven't been around for at least a year and remember number of stocks are dwindling? we are off by a few hundred from a couple years ago >> and kault cquality continues investment banks tesla offset and enjoyed a nice bounce and amazon >> i would call it grabbing the laggerts tesla has a seesaw it seems like the strength in the new names come at the expense of tesla the newer ones pull back a bit
and tesla is more the starwo rfrprt of the group >> dow was down over 200 points. s&p down a quarter that's it for "closing bell. "fast money" starts now. live from the nasdaq market square in times square i'm brian in once again for melissa. and our lineup -- tonight we are all over the after hours action cisco is down. nvidia up about the same company conference calls