Closing Bell - Closing Bell: Dramatic Comeback, Chips Chopped & Prime Time For Disney 9/1/22

Episode Date: September 1, 2022

Stocks staging a big late-day turnaround, helping the Dow and S&P snap a 4-day losing streak. Chip stocks getting crushed after the U.S. government restricted Nvidia and AMD's sales to China. Piper Sandler's Harsh Kumar explains why he slashed his price target on Nvidia and discusses the other stocks that may be at risk. Keycorp CEO Chris Gorman on the outlook for commercial and consumer loan growth and how rising interest rates are impacting the regional bank. Chargepoint CEO Pasquale Romano discusses the outlook for the electric vehicle charging business after reporting huge year-over-year sales growth. And Epyllion CEO Matthew Ball reacts to reports that Disney is exploring a membership service similar to Amazon Prime, something he predicted the media giant would do six years ago.

The Dow clawing its way back here from a nearly 300-point decline on this first trading day of September. But the Nasdaq and the S&P are still in the red, pacing for their fifth straight decline. The most important hour of trading starts now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Take a look at where we stand right now in the market. Again, at the lows of the day, we were down 290 on the Dow. Look at where we are now, up about 18 points or so. S&P 500 is only down a third of 1% because it's kind of balanced in between sectors.

You've got strength in utilities, defensive, health care and consumer staples, but also communication services are strong. Following through on yesterday's rally, names like Netflix, Dish, Comcast, Charter, Alphabet, some of those meta names also. That's helping the Nasdaq a bit, but it's still down about 1%, and that is being weighed down by software and chips. Take a look at the names dragging most on the Nasdaq 100 right now, which is down about three quarters of 1%. Okta earnings, they lowered their billings guidance. The stock is down almost 32%.

Nvidia, which we'll talk to in a moment on some Chinese export controls. Zscaler, Datadog at La Cien. it's really the hardest hit part of the market there on tech. Coming up on today's show, we'll talk to the CEO of regional bank Keycorp about the latest surge in treasury yields and how student debt loan forgiveness could impact their lending business. Plus, the CEO of EV infrastructure company ChargePoint will join us right on the back of earnings that sent the stock higher this week, though it is pulling back along with the market today. We'll kick it is pulling back along with the market today. We'll kick it off, though, with the market dashboard.

As always, our senior markets commentator, Mike Santoli. What are you watching today? It kind of feels like a split market. It's split and also really a quick turn in the middle of the day with this bounce off of, you know, these lows that go back to late July, $3,900 and change on the S&P 500. It seems to me the rally was mostly about, we've been talking about it the last couple of days, which is the market is getting short-term oversold. Remember, we went down 300 S&P points,

4,200 at last Thursday's close, down to 3,900 this morning. That's more than 7% in a week. So that's a pretty heavy short-term loss. We do have the jobs number tomorrow, which usually when you have a big known catalyst coming up, the market, as I always say, likes to get a little more neutral as opposed to leading too far in one direction. That's probably what we have going on right now. 3,900 was a pretty widely watched area here in terms of potential support. So we'll see, because a lot of these areas have given way this week. But as I said, we did get pretty oversold. Also, if you drew a line trying to connect, you know, that entire July, June to August rally,

this is where it basically either is going to stay in place or get challenged. Now, the economic numbers this morning, ISM manufacturing better than expected, actually accelerated the sell off because bond yields went up. It really exacerbated this idea that Fed hawkishness is going to be a continued drag on the on the markets, tightening financial conditions. The economic surprise index is actually up nicely since the lows in June, Sarah, which was good initially because it alleviated some of the most acute recession fears. But this little run that we've seen since then, it seems like now that the Fed is saying, you know, they're not simply going to back off just because they expect inflation to go down. It seems like, unfortunately, it's a good news equals bad news for the markets type of story. So that's the setup, it seems to me, going into tomorrow's jobs. Which makes total sense because the takeaway, I think, from Jackson Hole and now that the dust has settled on Powell is that they're fine with the recession. In a

sense, they feel like something near a recession, if not an outright bad one,'re fine with the recession. In a sense, they feel like something near a recession, if not an outright bad one, is part of the process. And I say it because we've gotten a lot of disinflationary data. If you looked inside that, you said prices paid had a big monthly drop. We're seeing it all over commodities prices coming down. Usually the market would rally on that. But now Treasury yields just march higher and stocks sell off because the threshold for the Fed on paying on the economy and weaker inflation is much higher. That's what they've said. We'll see if that remains consistent. Remember, a couple of months ago it was all about headline inflation and gasoline prices.

Gasoline prices have crashed, and now they're talking about, oh, core inflation. We really need to see financial conditions tighten. So it shows you they want to keep on the pressure. Mike, stay with us if you would. We're going to dig into the tech space, especially chips. NVIDIA and AMD sales to China are in trouble. Both companies were warned by the U.S. government to stop the export of some AI chips to China. NVIDIA is applying for a license to continue some exports, but unclear whether the U.S. will grant an exemption. NVIDIA and AMD plunging on the back of this announcement,

and the whole chip sector is getting dragged along. Joining us now is Harsh Kumar from Piper Sandler. Just lowered his price target on NVIDIA on the back of the news, Harsh, and you were also able to speak with management. So what did you learn about how big of a deal this is? Sarah, thank you for having us on your show. So about five days ago on August 26th, NVIDIA got a letter from the U.S. government suggesting that the latest, the best of the breed chips may not be sold to the Chinese customers.

And, of course, NVIDIA sells these chips to the cloud and the hyperscalers within China, guys like ByteDance, guys like Baidu, Alibaba, et cetera, and such. And so this was a pretty big blow to a company that already had seen its gaming business get eviscerated, largely from consumer backing off and excessive amount of inventory. And so now, you know, what that means is the beloved data center business was now coming under pressure. Investors love the data center business. It's what they like about the company more than anything else. It's why the multiple is so high. And the impact was characterized at about 400 million for the current quarter. And we think, you know, eventually some

of these customers will get a license and some of these customers will be able to get the chips. But NVIDIA is doing what it can, which is mitigation efforts to basically get them to buy older products and such things like that. Is the sell-off justified in your view today? The stock is down 8.3%. I know it's been obviously a long-term winner, but if they're quantifying it as a $400 million hit, is that overdone? It's $400 million on a $ billion dollar per quarter uh revenue stream and so the problem here is that this brings back flashbacks of the china trade war and you know

who knows where the buck will stop and eventually what will happen but it does bring in about you know uh 10 to 11 to 12 percent of uncertainty to what i mentioned was the beloved data center business this is the business street cares about the most uh within nvidia and so when that particular business gets hit to the 10 to 12 to 14 percent tune you know stock will have to pay the price and that's what's happening here a reminder heart also reminder mike santoli that that chips are squarely in the middle of this fight between the U.S. and China, as Harsh says, which brings back memories of the trade war. You wonder what comes next. For sure.

And it's also this yet another thing. I mean, in bear markets, bad things tend to happen, even from out of left field. And it does just create another negative catalyst for at least some companies in this group, like in NVIDIA, where I would argue as much as it was down, it had just had such a boom, had such a premium valuation that there's just more to be bled out of it. Now, look today. Texas Instruments is holding up. It's a completely different business mix than everything else. Texas Instruments, Qualcomm, it seems like the cheaper semis maybe can be a little bit more resilient in this environment. But when it comes to an NVIDIA, still, you know, everyone loves it. And the street has a $205 consensus price target on it.

Yeah, I mean, even Harsh has taken down the price target all the way from $235 to $200. So you still clearly like it at this level. Who else is at risk? So we think, you know, effectively what's happening, and you guys were talking about this earlier on your show, that inflation is hitting the consumer pretty hard. We had another company that reported last night, a smaller cap play called StemTech. They talked about, you know, doom and gloom in the handset and the laptop sector. And they generally notion that all around China, things are sort of starting to crack a little bit.

So that message, followed by the NVIDIA message, was not well received. But effectively, anybody that supplies to the cutting-edge hyperscalers and cloud within China would have to take a hard look at their revenues. So companies such as, for example, Intel that we don't cover or AMD that we do cover, there are parts and pieces that you have to question how much of that may come under the licensing requirement. AMD did receive such a notice, but the effect is negligible to their overall revenue stream, whereas it is not so for NVIDIA. Yeah, we got a new lockdown overnight in China as well. 21 million people in Chengdu. Harsh, Michael, thank you very much. Michael, see you in a few. Thank you. Yields are marching higher again today. That has been the backdrop lately.

The two-year yield hitting levels we haven't seen since 2007. Up next, we'll talk to the CEO of Key Corp about how higher rates are impacting the banks, especially the regionals. Dow's climbing here up 86 points. You're watching Closing Bell on CNBC. Dramatic moves in the bond market. U.S. Treasury yields rising this week. Again, the two-year hitting its highest level since 2007, sitting above 3.5%.

Joining us now to talk about what that could mean for the banks and the outlook for regionals is Key Corp CEO Chris Gorman. Chris, it's great to have you on the show. I can't figure out if it's a good environment for the banks because you want to see higher yields, higher interest rates. It helps the margins. But we're also seeing this deeply inverted yield curve. So I can't figure out what kind of environment that is for you. Yeah. Well, Sarah, first of all, thanks for having me. I think in general where all the banks are focused and frankly where the economy is focused is what is the impact of these higher rates? And I'm frankly not surprised that the rates are higher. I think the Fed's been pretty clear from the very beginning that price stability and controlling inflation was at the top of their list.

And I think for a while, the markets thought, you know, that the rates would go up to Fed rates would go up to 340, 350 and then start coming down in 2023. And I think Chairman Powell was pretty clear last Friday that, you know, that the Fed is going to continue to do what they need to do to control inflation. And then then the question is, what does that mean for credit quality? And I think that's what many of the bank investors are focused on. So what does it ultimately mean for credit quality and for your business? I'll tell you, we think we're really well positioned. We've been de-risking over the last decade. As we look at the health of both our consumer and our commercial clients,

give you an interesting statistic. Our consumers today in non-interest bearing accounts have 60% more cash in their accounts than they did going into the pandemic. So we feel like our customers are well positioned for what will be probably an inevitable downturn, and they'll be able to weather it. 60% more cash deposits than pre-pandemic. That still holds today, even though we've started to see savings being drawn down. Exactly. And so that is one of the things that gives us confidence of the resilience, not only of our customers, but of, you know, the customers throughout the country. And, you know, on the commercial side, Sarah, the real challenge there is not so much inflation, is not so much their business slowing down yet. It's the scarcity of labor.

And that's really where our commercial customers are focused. So you painted a pretty optimistic portrait a few months ago in earnings about loan growth, both commercial and consumer. Is that holding up? It is. We continue to see loan growth on a linked quarter basis and year over year. And part of that is, as the supply chains, Sarah, become a little less, free up a little bit, people are able to, one, get inventory. And secondly, in an environment where there's a lot of inflation, people are more likely to sort of go long on inventory than they have in the past,

particularly given some of the challenges people have dealt with in terms of availability. So from your vantage point, it sounds like, Chris, you think the economy looks pretty okay. Are you expecting recession? I do. I think, look, it's inevitable that the economy is going to slow down. We're slowing down as we speak. And then the question is, you know, how deep, how long? And I think that really remains to slow down. We're slowing down as we speak. And then the question is, you know, how deep, how long? And I think that really remains to be seen. We're kind of in uncharted territory. You have, you know, coming out of the pandemic, you have very significant rate increases.

And one thing a lot of people aren't talking about is concurrently, the Federal Reserve has to unwind this $9 trillion balance sheet. So I am optimistic. I do think a soft landing can be engineered, but it's complicated and it'll be tricky. What about the student loan forgiveness, the new plan by the Biden administration? What impact does that have on your business? And what do you think of that policy? So it's actually positive for our business. First of all, we have a student loan refinance business called Laurel Road, focuses on doctors and dentists. And now that there's a definitive end to the federal student loan payment holiday, I think it was extended like seven times, almost three years. So that will be good for that business because it removes that uncertainty.

The other business we have, Sarah, that's very interesting is we own a business called GradFin. And what GradFin does is in addition to doing student loan counseling, they help people apply for public service loan forgiveness, a program that's been around for a long time, but frankly has been underutilized. And I think all the discussion around student loan debt forgiveness is actually quite helpful to that business. Wow. Well, didn't expect you to say that. Wouldn't expect that necessarily from a lender. But Chris, thanks for highlighting it. Appreciate the time. Thanks so much, Sarah. Appreciate it. Chris Gorman. Yeah, Key Corp. Let's give you a check on where we are in the markets right now. Dow holding on to some small gains, but it is a turnaround from where we were earlier, down almost 300. The S&P 500 is climbing back to the flat line.

It is being helped by utilities, health care, staples, communication services, and now consumer discretionary has joined the positive sectors. You've got strength in a lot of the retail names, Bath & Body Works, Ross Stores, Yum Brands, Target, TJX. Look at ChargePoint giving up a big chunk of its post-earnings pop yesterday, sinking along with a number of the other EB players today. It's down 7%. Up next, we'll talk to the company's CEO about Wall Street's reaction to the numbers

and how the new Inflation Reduction Act could impact his business. We'll be right back. ChargePoint shares are in the red today after getting a 12% pop in yesterday's session. The company this week reporting its second quarter results, seeing more than 100 million in sales, growing 93% year over year. Joining us now in an exclusive interview is ChargePoint CEO Pasquale Romano. Clearly, investors cheered the update, giving some back today, Pasquale. So why are you confident in reiterating the full year sales forecast? What are you seeing in terms of growth of the business? Well, Sarah, thanks for having me.

You know, we're continuing to see unprecedented demand for our products and services, and that's on the back of unprecedented demand for electric vehicles in general in the population at large, both for consumers and fleets. So as we commented in our remarks on the earnings call, we saw demand greater than we were actually able to ship, you know, given the supply chain constraints and our extraordinary growth rate. So as we see it, this growth trajectory will continue, and we're at the front end of a very, very long, protracted, multi-year growth cycle. Obviously, installations are growing very fast. I think 70 percent, you said.

What is the biggest challenge to meeting the incredible demand that you're seeing? So for us over the last few years, as you know, the world has been grappling with that overhang of a very, very challenging supply chain environment, which we see narrowing over time in the foreseeable future, but right now too hard to predict. So that's been the challenge for the last few years, and we expect that to continue. So still supply chain. What about the Inflation Reduction Act? The stock is up sharply, along with a lot of other EV players after this got passed. What direct impact does this have on you? Well, we focused over the 15-year history of the company on building a business that is based on a business model that doesn't require or depend on subsidies or stimulus to basically be robust.

We think critical infrastructure for passenger vehicles as well as fleets can't depend in the long term on any subsidies or incentives. With that said, we think that this is good policy. It's balanced between vehicle incentives and infrastructure incentives. And it also really looks at fleets as well as passenger vehicles. We think it's reasonably comprehensive. And relative to whether it moves our needle or not really depends on how fast the supply chain situation for both us and auto OEMs clear up. Given that the demand exceeds supply, both the infrastructure and in the auto market, it may have an effect only after

the supply chain situation start to subside and we can actually build to demand. But you do see light at the end of the tunnel, you just said on that front, right? Yeah, we see light at the end of the tunnel, we just don't know how far away the light is exactly. Now, these policies, they exist for a reasonable period of time. So we're hoping that as things clear up on the supply chain side,

that people can really pull some investment forward. With that said, our growth rate is extraordinarily high and we treat any additional stimuluses upside. It's not in any of our forecasts. Still, the stock has been pretty volatile. I don't have to tell you that. And it gets swept up sometimes when there are these big sell-offs, especially around higher rates, because you're not profitable. It's a future growth story. What is the path on that? What are you telling investors about that? Well, we've been very consistent. We've maintained that the cross-through of cash flow breakeven will happen inside of 2024.

We haven't come off that guidance since we've been a public company. What you're seeing, this quarter was substantial operating leverage. So the growth rate of the operating expenses versus the growth rate of revenue is substantially different now. We forecast that that will continue on a go forward basis. And based on our internal forecasting and modeling, we're confident that we will cross through cash flow break

even in 2024. Pasquale, thank you for joining me and for an update. Appreciate it. Thank you. Look at the cloud stocks. They are crashing today to earth. Coming up, we're going to discuss what's behind the ETF, the cloud ETF's worst day right now since mid-June, down 5.3%.

Dow continues to remain positive. Just turned positive in the final hour. It's up 15 points, recovering from a nearly 300-point decline. We'll be right back. What is Wall Street buzzing about today? Serena Williams, of course, after last night's stunning performance where she defeated the number two seed in the world in an upset and an incredible fashion, by the way, wearing diamond-encrusted Nike outfit and sneakers. She now will head to the third round of the U.S. Open, the final tournament of her historic tennis career. The Serena effect immediately hitting the box office for what could be her final match. Courtside seats went from $805

to $3,500, according to ticket tech company Logitech. But the next act could be equally impactful. She's focusing on Serena Ventures, which has put money into names like Masterclass, Daily Harvest and Tonal. They raised $111 million this year and have more than 60 angel investments with nearly 80 percent of the portfolio in female and minority founded companies. Here's what Serena recently wrote in Vogue after announcing her retirement. Quote, sometimes like attracts like. Men are writing those big checks to one another. And in order for us to change that, more people who look like me need to be in that position, giving money back to themselves. In 2021, companies founded solely by women garnered 2.3 percent of the total capital invested in venture-backed startups in the U.S. Serena has already broken

down barriers for black and diverse women in sports. Her next chapter as a businesswoman could very well do the same for finance and venture capital. Here's where we stand right now in the markets. Keep an eye on the Dow. Just turned negative again. It's kind of hovering between gains and losses at this hour. S&P is down a third of one percent. It's held up by some of the defensive groups like Staples and Healthcare and this hour. S&P is down a third of 1%. It's held up by some of the defensive groups like Staples and Healthcare and Utilities. Those are the outperformers in the Dow today as well. The Nasdaq's down a full percent.

It's technology names like software that are getting hit the hardest, along with the chip stocks. Disney is reportedly exploring a move to a membership program similar to Amazon Prime. Our next guest predicted this six years ago. He lays out what it could mean for the stock straight ahead. And remember, you can listen to The Closing Bell on the go by following The Closing Bell podcast on your favorite podcast app.

Down about 30 points now on the Dow. We'll be right back. Finally, an edit button is coming to Twitter, but you'll have to pay up. The long-awaited feature was announced by the company in a blog post today. The function right now is being tested internally, but it will roll out first to Twitter Blue subscribers later this month. Users will then be able to fix their text and add tags to a tweet within 30 minutes of the initial publication. The company says this will, quote, help protect the integrity of the conversation and create a publicly accessible record of what was said. The changes come, of course, amid the company's legal woes

with Elon Musk. Remember, back in April, the company announced it was working on an edit button after it was announced that Musk would join its board and after he conducted a Twitter poll himself asking his followers if they wanted that feature. Clearly, they do. I think it helps. You don't have to erase messages now that have typos. In other media news, prime time for Disney. The

Wall Street Journal reporting the company is exploring a membership program similar to Amazon Prime. The program could offer discounts, exclusive merchandise, and other perks to incentivize customers to spend more time on its streaming platform and its theme parks, of course. The report is right in line with the prediction from our next guest. He made it, though, back in 2016, three years before the launch of Disney+. Joining us now is the author of that blog post, Matt Ball. He's the CEO of Apillion and former head of strategy at Amazon Studios. So it's wild that you made that prediction so long ago, Matt. Why do you think this is a good idea for Disney? The best way to understand this is to observe current Disney behavior. There are families which consume multiple different theatrical purchases.

They go to the theme parks. They go on cruises. Now they watch streaming on demand. When you put that behavior in the broader framework of Disney, which is organized around entertainment ecosystems, into the original corporate strategy of Walt Disney himself in 1957, the idea that they would use digital technology to bring this all together to keep you always within the Disney ecosystem,

it just made sense. Do you think that anybody else could do this in the media universe? Like our parent company, Comcast, which also has theme parks and streaming? We're doubtlessly going to see more products bolted onto streaming services. Most of Hollywood has spent the last five years trying to launch that core product, Disney included. The idea that as that starts to saturate, but more importantly, as they become more familiar with direct-to-consumer offerings in general, that they'd add in their ancillary parts of the business, that too makes sense. But I think overall, we're looking at either two other companies. That would be NBCUniversal because of the parks department, or perhaps WarnerMedia, or now Discovery Warner Bros,

because they have their games division, which is still one of the biggest game publishers globally and produces many of the most celebrated titles in the DC franchise in particular. How should Wall Street look at this packaging of Prime-type membership across the media universe? Not really moving much on Disney's stock price, but it does seem to me that it would be an opportunity for them to cross-sell and add new revenue streams. Certainly the basic introduction of additional products into the Disney Plus application should help to drive cross-purchasing.

Today, they use your love of Captain America to recommend other titles within the Marvel universe. The ability to target just on a merchandise basis, another purchase of an item, an apparel, a bed, but most importantly, to use that into more tailored advertising, into a cruise package themed around the characters that you love, that too should help with cross-sell, up-sell, personalization, and targeted pricing in particular.

But beyond that, we're looking to solidify really a generational experience. The fact that a single family, your house, so to speak, might be a Disney member for decades, that's unique to the company. Yeah, it also, I would think, gives Disney a leg up to Netflix, which I know is with some of the impetus for you writing this blog post a long time ago where everyone was trashing Disney because Netflix was so far ahead of the game. The tables have turned, at least in the stock market, given the subscriber loss by Netflix.

Where do you think that rivalry stands right now? Well, we're still looking at a Netflix which has 80% more subscribers, and more recently, two and a half times the ARPU. That's going to close considerably with a price hike. We should also note that in November, Disney Plus is three years in the market, which means their three-year promotion comes to an end.

I myself purchased three years of Disney Plus for $140, less than $380 per month. In December, I'm going to go from $380 to more than $10 per month. That's going to close a lot of that subscribership delta. We also know that the Disney bundle now has the lowest churn in the entire streaming service. That's going to drop a lot of that gap between these two large giants. Matt Ball, thank you very much. Thank you. Clearly following this very closely, Appelian CEO. Lululemon, take a look under pressure ahead of its earnings after the bell. Up next, the key numbers and themes investors should be watching out for in this report,

which comes after the bell. That's Rory Plus, chips chopped and Okta plunging when we take you inside the Market Zone next. We are now in the closing bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here as always to break down these crucial moments of the trading day. Plus, we've got Christina Partsenevelis on the chip stocks and John Fort with us on the pullback in cloud names. We'll kick it off broad, though, right now, because, Mike, we're seeing another day of selling. This is the fifth day in a row for the S&P and the Nasdaq extending the declines for August. We know September is always an ugly month. I just wanted to bring up two points today that, I don't know, a month ago would have been, I think, celebrated by the market. Oil prices settled down another more than 3 percent today, now at the lowest level since

January. Good news on the gas front and inflation front. And then the Atlanta Fed GDP forecast is now predicting 2.6 percent growth for the third quarter. So that's like lower inflation and a soft landing, which the market used to love. But it seems like now that's completely flipped on its head. It has, to a large degree, upended the previous view that a soft landing was not only possible, but was the objective of the Federal Reserve. Now, it's not to say that they're going to run away from that possibility, but they've essentially told us they're not particularly data dependent right now. Now, if they are, it's because over multiple months they want to see inflation to come down.

But they're not necessarily going to just take heart in what's happened to gasoline and oil prices, even though a few months ago that seemed like the whole ballgame. So I do understand why the market is back on its heels. But also, look, we firmed up today. The market did get stretched. That rubber band got stretched pretty far down and has sprung higher. And 3,900 on the S&P, a lot of folks would argue, is one place it should try and hold because we've gotten reasonably oversold. To me, the rally from June into August was both because Fed rate expectations were moderating at the same time.

Recession risk looked like it was going down. We still have recession risk looking like it's going down, in fact, even more so. But it's on the Fed side that has had the bond market reprice. And that's what's upended stock. Well, yeah. So you've got a strong dollar and you've got treasuries which are selling off. And both of those things are still plaguing stocks. Clearly, take a look at the semiconductors getting crushed, led by that big sell off in shares of NVIDIA, which is at the bottom of the S&P right now. Also, AMD getting hurt after the U.S. government imposed restrictions on some chip sales to China. Christina Partsenevelis joins us, covers the sector. Christina, this afternoon, NVIDIA did get the green light, though, to continue developing some of its chips

in China. So what does that mean for the company at this point? Yeah, it is a little bit of a positive. This news came out earlier this morning. And you have to think of it. NVIDIA has two major chips that revolve around artificial intelligence. One is currently in the development stages. The other one has been on the market for three years. The one that's in development stages today, NVIDIA did get the green light to continue developing that chip with Chinese partners. The other one, though, and this is the A100, that one will need licensing requirements in order to export back to mainland China. However, if NVIDIA wants to share this product or sell this product to countries like France or Italy or anything like that, they would just do so

through their Hong Kong hub. Overall, though, this is news that comes at a time where you had gaming revenue that was a little bit weaker for NVIDIA. And then, of course, data center sales that are a huge portion of NVIDIA's portfolio, and they're anticipated to grow, but it's growing at a slowing rate. So definitely news that put pressure on the stock. We're seeing lows close to, what, March 2020. And it's not just NVIDIA. AMD also pointed out, too, that they may not have as significant of a monetary hit.

You had NVIDIA say they could potentially lose $400 million in this next quarter from a drop in China sales. AMD said, hey, it's not going to be as bad. But the big question going forward is which other companies are going to come forward? And how is China going to retaliate? Because they did accuse the United States of abusing their powers. How have the chip companies, Christina, approached the China issue, whether it's the COVID lockdowns, which there's more of, or some of these geopolitical tensions? As we keep an eye on what's happening in Taiwan, they're clearly at the center of all of this.

How have they been dealing with the China issue? Well, it's definitely a topic for conversation all the time, but specifically with NVIDIA, they said that they are going to continue working with their Chinese customers to offer them other technologies, other chips that may not be that leading tech that the United States is so worried about getting into the hands of the military in China and Russia. So it's a way of, I guess, circumventing it and finding other avenues, maybe lowering the reliance in the long term on China. But given China is such a big player, they're investing so much money in their chip sector, and yet they still have no competition or no competitor to NVIDIA right now at this moment, especially with the leading edge technology. So you can't deny it. Every company seems to be

relying on a lot of these tech companies. They do a lot of their development in the country. So you can't just say, hey, we're going to say goodbye to China. But it's a slow process to slowly break away from that country. Christina Partanavos, thank you very much. Wanted to hit shares of Campbell's Soup. They are down today more than 2 percent, two and a half percent now. Sales were decent, up 6 percent, which reflects higher prices, mainly that people are paying for food, their soup and their snacks. Volumes overall were actually down 4 percent. I did speak this afternoon with the CEO of Campbell Soup, Mark Klaus. He told me they just finished the third wave of price increases and for the moment feels pretty good about where they are and will only do more, he says, if warranted.

Some concerns today raised by analysts, especially at JP Morgan, about promotions, which did take a little bit off the top line. Klaus told me it's just a normalization of the promotional environment coming out of COVID. He said they're not going to be sacrificing margin or anything like that. And he said it's also not outsized compared to what we're seeing broadly in the industry. On the outlook, Campbell Soup expecting now strong sales growth to continue, but the profitability is going to be hurt a bit by a technical pension fund accounting change. Klaus telling me the categories that he is in, and especially soup

and pasta sauce, are big beneficiaries of this kind of economic environment where there's some pressure on consumers. He says consumers trade down to his categories. Soup, for instance, is growing double digits. Klaus also says that snacks are holding up relatively well, and some people think that they're discretionary, but they're actually proving less so in this environment. Also, his team has innovated to keep the newer millennial customers that came into these brands during the pandemic. Mike Santoli, not sure if you've had the pumpkin spice Dunkin' Goldfish. I didn't think it could get better than the Frank's Red Hot Goldfish,

but actually these are even better, especially if you're a pumpkin spice fan. I think the question, though, is has this stock already reflected the fact that they are seeing pretty strong sales growth? It is inflation, but volumes were only down a little bit. I think one member of my household might be up for the pumpkin spice goldfish. We'll probably end up trying them. I would say that it is the type of stock and business mix that tends to hold up well. Not a lot of growth projected over the next two fiscal years. Again, it's kind of like a $3 a share earnings, 3% dividend yield, but steady. So I don't necessarily think that, you know, it's gotten overdone in this defensive environment that we've had in the market.

Sometimes that does happen with some of the food stocks, but not necessarily here with Campbell's. And then if you do have a little bit of, you know, benefit from reduced food costs, I mean, obviously we see what's going on in the commodity markets and the supply chain's okay. You know, it might seem like a little bit less of a dicey environment for a company like Campbell's. No, on inflation, they're at the end of their fiscal year now. He said that the worst of inflation is going to hit in the beginning of the next year and then it should moderate throughout the year, which seems to be what the market's saying. Interestingly, it's down today, but a lot of the other staple stocks are up, like Procter & Gamble, Philip Morris, PepsiCo, Kraft Heinz. Look at the cloud stocks. Not so much. They're being hit hard. The WisdomTree Cloud ETF on pace for its worst day, in fact, since back in June, June 16th. Okta, a big reason behind the sell-off.

The identity software company reporting better- expected quarterly results, but did warn it is reevaluating some of its longer-term targets because of unexpected problems integrating a recent acquisition. Earlier on TechCheck, the CEO, Todd McKinnon, also discussed the impact the macro environment is having on that business. Listen. We are seeing a little bit of macro change, a little bit of lengthening in sales cycles. But I think big picture wise, that's a very small part of our mixed results. And we have a lot of these corrective actions we're taking in the short term are going to yield to a lot of positive momentum in the future.

John Fort joins us. After having done that interview, John, what is your big takeaway on Okta and on the cascade it's having across software? weren't able to integrate this other company well enough. And partly because of the macro environment, because the labor market is so tight, their salespeople aren't sticking around for them to figure it out. They're losing salespeople, and that slows down their momentum a bit. Now, look at the stock, though. It's down by a third. It's lost all of the market value that it's accumulated since beginning of 2019. So this is as if the stock reaction, you would think maybe the business is falling apart. That's not really what these

results show. Their competitive position seems to be relatively strong, their momentum being hampered a bit. So part of what it tells me is that in this environment, there's very little margin of error, right? Because the expectations have been high and investors are pretty concerned about what the macro's impact is going to be in the quarters ahead. Right. Even though he said it wasn't that big of a deal, what are you getting on the macros from some of these other software companies? I'm looking at Datadog, which always is at the bottom of the list for some reason, down 8.3 percent. Zeek Scalers down, CrowdStrike, Atlassian.

What are you getting on the spending environment? Well, there's a little bit of a sense, once you get outside of what we call the hyperscalers or even the big software names, that the story is getting a little bit worse quarter by quarter. At first it was we don't really see any macro impact, but we're being a little conservative in case we do see it. Now we're hearing, yeah, we do see it. Sales cycles are lengthening, which means customers are taking longer to make decisions. Maybe they got to get extra sign off. Maybe they want to do extra pencil out to make sure that they expect a certain level

of return on investment. Also, you see these companies, Okta included, shifting to a shorter length of contracts. So customers committing less money up front, maybe because they want to preserve capital in case things really go badly. We also saw C3 AI move to performance-based pricing versus signing big contracts up front. So, you know, there's more hesitation in enterprise spending, whereas a couple weeks, couple months ago, that was mainly a consumer thing. We're seeing that leak into enterprise now. Yeah, a lot of good examples. John, thank you. John Port, good to see you.

Look at Lululemon. Hopes are high for when this company reports after the bell, even with the stock down about 25 percent this year, which is actually better performance than Nike, Under Armour, and many of its retail competitors. Here's what Wall Street is expecting from Lulu. The quarter of the belt bag. It was the must-have summer accessory sold out pretty quickly. Analysts say that should be a benefit on top of solid traffic. The expectation is north of 20 percent sales growth for the quarter. Some questions. Inventories. We know they've been bloated across the industry. Lulu is no exception. Promo. Lulu has not really been big on sales and promotions in the past because it just hasn't had to. Will that stay the case as promos start rising across the industry?

Key question. And then, of course, guidance. Do they raise the annual guidance? It will be a clue about how Lulu is seeing back to school, which has already started, and then holiday spending. Of course, we also want to know just about the strength of the consumer, especially the high-income consumer, which Lulu caters to with $120 yoga pants and $70 bras, Mike. But there have been doubters before. You know, Jeffries is now calling into question the longer term five five year targets. But Lulu has proven in the past that the strength of its brand has really kept it the momentum strong, both on sales and margins. I guess the question is valuation. By the way, we'll have the CEO, Calvin McDonald, on right after the results in Cleveland Bell overtime. I'll bring you some of that sound. What do you think about where the stocks?

Well, in the valuation has really been compressed quite a bit. It's just about in parity with Nike right now. Of course, it used to be at a huge premium because it does have a lot more of a growth runway ahead of it in terms of market share. And it's a smaller market cap. So, you know, it's down in the 28 times forward earnings range, which is certainly a big premium to the market. But it's lower than it's spent most of its history at. I do think it's a good test of somewhat higher-end consumer that has been very much a theme recently, people feeling as if you want to emphasize those consumers, those brands that cater that direction. So we'll obviously see on that front.

I always keep looking at the store expansion potential. It seems like there's really still a lot to go there. But the market's been pretty stingy in giving credit even to the retail and consumer names that have done better than others in this environment. All about the belt bag. It was such a good accessory for a summer of travel. We've got just about two minutes to go in the trading day. Dow just hitting session highs. Mike, we're up 100 points, just like that. What do you see in the internals? Yeah, market sort of didn't want to be leaning too negative ahead of the jobs number it sees,

but it's hard to drag the internals to a positive state. You see, we started out with breadth, 85% of the downside. It's improved, but it's still pretty well skewed toward the negative. The U.S. dollar index, Sarah, I know you were focused on this as well, making new highs above 109. It's really more like a 20-plus year high, but this is a one-year look at it. Very, very consistent uptrend going right there. We'll see if the jobs number is hot enough to inflame that even more. The volatility index had actually popped toward 27 earlier, but as the market has rallied, it has come back down in the 25 area. Keep in mind, S&P down something like 7 percent as of this morning's lows in a

week. And we've gotten back, let's call it a percent of that at this point. So clearly at the lower end of the recent range, but still holding well above those lows. The debate as to whether we have to retest the June lows is still on. It doesn't seem to me like it's a foregone conclusion we have to. Well, we've just gone positive on the S&P just in the last few moments, a little rally here, which means that we are going to break the losing streak, the four-day losing streak for the S&P and the Dow. Take a look at where we stand right now into the close. If you're looking at the Dow, what's helping the most?

It's the health care names, Amgen, Home Depot, UnitedHealthcare, McDonald's, J&J. You've got kind of a defensive rally. The S&P 500 is now higher by a third of 1%. Health care, utilities, communication services, staples, now discretionary, real estate, financials, and industrials turning positive. And guess what? The NASDAQ 100 also just going positive in the final moments of trade. The NASDAQ composite is still down about two-tenths of 1%. But you've had some buying here just in the last few moments or so, potentially positioning ahead of that all-important jobs report,

which comes out tomorrow morning. Just the Nasdaq and the Russell of 2000 extend the losing streak, but well off the session lows. The S&P, a third of 1% higher. That's it for me. I'm closing now into overtime with Scott.