Closing Bell - Closing Bell: Dramatic Comeback, Jobs Jolt & Man of Steel 12/2/22

Episode Date: December 2, 2022

Stocks staging a big comeback after initially selling off following a stronger than expected November jobs report. Investors fearing the jobs data could force the Fed to be more aggressive with its rate hikes. LinkedIn Chief Economist Karin Kimbrough says the if you look beneath the headlines, the labor market is showing signs of cooling off, but it may not be enough for the Fed to feel comfortable. JPMorgan Asset Management's Jack Manley discusses why he doesn't think the Fed will be able to achieve a soft economic landing, although he is predicting a modest recession. Renaissance Macro's Jeff Degraaf discusses whether the recent market rally is the start of a new bull market or just a bear market bounce. Vital Knowledge Founder Adam Crisafulli says there may not be much room left for the market to rally. Steel stocks have been red hot this year. Nucor CEO Leon Topalian discusses what is driving steel demand and whether that strength can continue. And Tesla finally delivering its first electric semi truck, 5 years after unveiling its prototype. Loup Ventures' Gene Munster explains why he thinks Tesla's offering is putting the rest of the trucking industry on notice.

Stocks started the day deep in the red following a hot jobs report that inflamed inflation fears. But we're rallying as we head into the close. The Dow just turned positive. The S&P just below the flat line. This is the make or break hour for your money. Welcome to Closing Bell. I'm Mike Santoli in for Sarah Eisen. Here is where we stand.

There's about a one and a quarter percent decline in the S&P 500 to start the day. It has clawed its way back. Bond yields also jump but they're moderating as well. You see the Nasdaq Composite is still the underperformer. The very large Nasdaq stocks still providing some pressure, but even that has eased up. The Russell 2000 actually was an early sign of some of the recovery today and is outperforming.

Here's a look at the action for the week. The major averages poised to lock in gains after wednesday's powell pop of course that comes after two strong months coming into this week as well coming up on today's show we'll talk to the ceo of a stealth winner this year steel producer new core which is up today and higher by more than 30 percent in 2022 we'll find out what's driving the outperformance in that space plus we'll talk to the analyst who says Elon Musk's first delivery of a Tesla truck last night is putting the other semi makers on notice. Let's first put the market moves for today and the week into some broader perspective. We clawed

our way up in the S&P 500 up toward this level that represents exactly where the old 2022 downtrend line sits. We've been talking about this connects all the different highs that actually we're barely nosing above based on how you do it. I chew the line a little too below the peaks. But the point being, it's now at that borderline between is this just another fleeting rally or something bigger right here? Also love to point out that we're just yet go back to about early May is where we are right now, just over the 4,000 mark. That's when the Fed funds rate was below 1. We're above 4 right now. All these things that happened in the interim declining earnings forecast have been absorbed so far.

Maybe that makes the market a sell, but so far it's more resilience and seasonal strength. Take a look at the 10-year note yield as well. It really has looked like it's rolling over hard, although staying above some of the important summertime highs around 3.5. That was where we were in mid-June. And remember, that was an earlier low in the stock market because we thought 3.5% 10-year Treasury yields were going to be too much for the economy and the markets to take. And here we are.

The stock market's a bit above that, even as the 10-year Treasury rolls over. And even down on the day, although shorter-term Treasury yields are higher as the Fed is still in the game. So let's get to more on the jobs report from this morning. The November number coming in hotter than expected, adding 263,000 net new jobs, wages growing at 0.6 percent on an annual basis, that is on a month-over-month basis, that is higher than the 0.4% growth we saw in October. So it's good news for workers, not great for the Fed necessarily, which is trying to cool the labor market to help bring down inflation. Let's dig into the report, what this means for the markets.

Joining us now, J.P. Morgan Asset Management's Jack Manley and LinkedIn's chief economist, Karen Kimbrough. Welcome to you both. And Karen, put this number into the picture that you had previously and that you're monitoring at LinkedIn about where the labor market sits. Could you reduce the other signs of decelerating demand for workers? How does this change the picture, if at all? Yeah, absolutely. So this was definitely a hot number, as you say, in terms of headline. But I think if you look under the hood, you are seeing some fraying around the margins.

So, for example, labor force participation rate has been inching down over the last three months. You're seeing temporary employment also kind of cooling off. These are signs, Harbinger's, of weakness to come. So from our perspective, the labor market is still tight. It is still resilient. We still see pockets of momentum across various sectors. But there are signs that the labor market is going to continue to cool, you know, by degrees every month by month. It's probably, though, not enough for the Fed to kind of want to feel comfortable. For sure. And Jack, I mean, the Fed has done a pretty to feel comfortable. For sure I'm and

Jack I mean the Fed has done a pretty good job of making sure that investors don't get too comfortable either with what they're about to do they're trying to stay vigilant. Even though Jay Powell Fed chair this week. Was had a more

balanced take on exactly how they can proceed from here so how does the job number today. Yeah impact your thoughts on what the Fed's gonna ultimately do and and what it can mean for the markets? Frankly, Mike, I mean, I don't think that today's employment report does a whole lot in terms of Fed thinking, because as we heard earlier, there are some signs of fraying, right? You know, one of the metrics that we like to look

at on our team is not just what's going on with the establishment survey, which is what you're typically going to be quoting when it comes to those 260,000 plus jobs that we saw added for the month. We also like looking at the household survey, and that is telling a very, very different picture. We actually shed jobs to the tune of almost 140,000 household jobs for the month. Very different story from what we're hearing in the establishment survey. The labor market is not as strong, is not as healthy as a lot of us fear. And I say fear because we kind of live in this perverse investing environment where good news is bad news. As you said, Mike, the numbers that we saw out today are good news for workers. They're not so good

news necessarily for markets because it does mean that the Fed is still going to move forward. We see 50 basis points in December. We see at least another 25 basis points coming in February, perhaps a 25 basis point hike after that. All of that means nothing has really changed in terms of our outlook. I think that one data point from today is not going to influence the Fed one way or the other. Although, Jack, does that also by extension mean that the bond market essentially already had this priced? And that seems to be what the stock market is working off of to figure out if, in fact, we can see the end of the tightening campaign for now, at least a pause. And then what does it mean for the for the economy and earnings next year? I

guess I'm I'm trying to figure out the elusive soft landing or not question. Yeah. Well, Powell still seems to think that soft or at least soft-ish is attainable. I'm a little bit more skeptical about that. I do see this economy likely heading into a recession in the short term with or without the pressure of higher interest rates. We have a massive fiscal drag. We have inflation that is stuck around and is eroding at consumer confidence. I do see the economy continuing to slow. What I don't see, though, Mike, is a significant recession because there are no obvious areas of imbalance. There are no bubbles. There is nothing booming from a macroeconomic perspective. And that's helpful perspective to have, I think, because not all recessions are what we saw in 2020.

Not all recessions are what we saw in 2008. Not all recessions are what we saw in 2008. Whatever is coming our way, I think, is going to be mild and mellow. The second takeaway from that, then, is that if we do get a mild, mellow recession, I would not expect the Fed to pivot anytime soon, especially taking rates down to zero. That is, I think, not happening anytime in the near or even medium term. So we do have to get used to this environment of higher rates. It is very much here to stay. Yeah, pretty long way from zero already at this point.

Now, Karen, just in terms of what character of economic softening we might see when it comes to employment measures, there is a line of thinking that, look, employers just came out of this environment of labor scarcity, had a hard time finding people. You still have stubbornly low labor force participation. Are we going to see employment remain stronger than you would otherwise expect given demand simply because of those factors and demographics and all the rest of it? So I think there's two ways to look at this. I mean, obviously, the Fed would like to see the labor market rebalance a little bit, a little bit more supply of labor by workers, a little easier demand, less demand by employers. And you can do this in two ways. You can have, you know, employers who really start

to do layoffs, but that's not what we're seeing generally in a widespread fashion. What we're seeing is that employers are just slowing hiring. They're just kind of taking their foot off the accelerator. They're not actually punching taking their foot off the accelerator. They're not actually punching the brake here with their foot. So for us, we think it's going to be a long, drawn-out story in the labor market. There's still a lot of strength there, but I think ultimately we'll see some softening next year. And it's our view that ultimately this isn't a recession that's going to be catastrophic the way we've seen the last two times. It's going to be a much more mild, moderate experience where employers are trying to hang on to talent that they fought so hard to get last year. If you remember that really intensive demand for talent that we saw in 2021.

Oh, absolutely. It was it was the whole story not even a year ago. We'll see if if it does play out that way. Karen and Jack, appreciate the time today. Thank you. Thank you. Thanks. All right. After the break, the CEO of Steel producer Nucor will join us to talk about the stock's big outperformance this year, up more than 30 percent, and we'll get his outlook for the industry in 2023. You're watching Closing Bell on CNBC.

One of the relatively few bright spots in the market this year is the steel industry. The VanEck Steel ETF has outperformed the S&P 500 in 2022 by quite a bit. Steel producer Nucor up more than 30 percent on the year. And joining us now for a Closing Bell exclusive interview is Nucor CEO Leon Tepalian. Leon, it's great to have you. Thanks for joining us. Thank you very much for having me, Mike. Excited, and as you mentioned, it's going to be what we expect to be another record year for Nucor.

Yeah, so certainly you're on track for that in terms of a record year. Very strong results in the third quarter, though you did offer guidance that there was going to be a step down in the current quarter due to some broader economic headwinds, I guess. How are things tracking? I mean, what are you seeing in your end markets that give you a sense of just

how the economy is performing at the moment? You know, look, I think there's obviously we're not immune to inflation and watching what's happening with interest rates and federal policy in terms of monetary policy. But there's a number of tailwinds as well as we close out the year and go into 2023, including automotive expected to be up about a million units in 23 over 22. We see some meaningful infrastructure bill really take shape in 2023. The CHIPS Act, which again, you know well, is a $55 billion investment. And roughly that translates to right now there's about 27 or 28 projects over the next 7 or 8 years that will be built. And again, not only do we use the chips and our end users use

them, but Nucor is also going to be supplying the steel that goes into building that infrastructure. So there's an awful lot of tailwinds as well as we walk into into 23 that we're excited about. Yeah, certainly seems like there are long term tailwinds or, you know, long term sources of demand with a lot of capital projects going on. You think that those are going to manifest the infrastructure bill and perhaps the chips act in terms of steel demand in 2023 already? Yeah, we absolutely do. And I think the other piece of that long winded tale that you mentioned,

and you know this well, Mike, but not all steel is created equal, right? Nucor is the largest recycler in the Western hemisphere. And so as you think about how we make our steel, it's all by recycling. And so that opportunity with a near net zero steel to our end users and our customers offers a unique competitive advantage to Nucor that supplying the safest and most sustainable steels anywhere in the world. So we're excited about the opportunity to continue to provide that differentiated value. And I do think it takes meaningful shape in 23 and beyond. It's interesting because you see things like, you know, auto production is kind of stuck below what you might consider to be more normal levels domestically in North America.

I'm looking at some other large kind of mineral and resource stocks that serve the globe, and it seems as if they're kind of waking up. Is that, you know, an expected China demand pull coming? And what do you see happening globally that could be a help or a headwind? Yeah, look, I think, again, the U.S. is the strongest economy in the world, and I think the resiliency of our economy is strong. As your last guest, Ron, we see this sort of same thing. If there's a slight pullback in 23, we don't see that being protracted.

But at the same time, my Nucor is positioned for the long-term. We have the strongest investment grade rating in our industry. We've got over $3 billion of cash and short-term investments on hand. You know, we've been offering a dividends for 50 years now.

And so our positioning strategy is for the long term. And I think that bodes very well because ultimately the green and digital economies of this nation and beyond are going to be built with steel and the steel that they get built with matters. And so we're excited about that opportunity in our future. Is there any cause at this point for you to be rethinking your employment levels or anything like that, in fact, manufacturing employment in general has pulled in a little bit, although today's jobs number had pretty strong goods-producing industry results. Yeah, look, I think the talent is our differentiator.

The 31,000 men and women who make up the Nucor family are the greatest manufacturing army assembled anywhere in the world. Obviously, I'm a little biased there, but it is that team that delivers every result that we have. And so how we think about developing them, retaining them, training and equipping them, and offering those that are yet to join Nucor that opportunity is a unique platform for us in how we care for our team.

Our average wage last year was over $140,000, Mike. So we have a lot to offer. We take we care for our team. Our average wage last year was over $140,000, Mike, so we have a lot to offer. We take great care of our team through the cycles, and again, a great opportunity as we move forward as well for those new team members joining. What about commercial construction of various types? I mean, obviously, we know what's happening with single-family housing, but it would seem as if, you know, larger commercial buildings are relevant in terms of your business. What's the trend that you're seeing there at the moment? Yeah, look, about 50% of our products flow into some form of construction in this industry. So, you know, as we look at non-res construction, it has remained incredibly resilient over the last

couple of years. And we see that strength continuing. Now, there's pockets as we think about, you know, the digital and warehouse space next year. We anticipate to be off, but it's off historic highs. And so if we look back prior to last year, 2018 was, you know, our sort of last big year in that space. Well, that's forecasted to be about 60 percent higher in 23 than it was in 18. Now, again, it's off 22's highs, about 15, 16 percent. But again, it's still in a great market, a great opportunity for Nucor as we build out that piece in that sector of our economy. Leon, it's great to get the update. Appreciate it. Thanks for joining us. Thank you very much. Thank you for having me, Mike.

All right. Take care. Anytime. Thank you. Now, let's check on the markets. You have the S&P 500 now is also pulled into the green just barely, ending on a strong note again, recovering about a one and a quarter percent decline from earlier today. The Russell 2000 up almost one percent. Even the Nasdaq is positive. After the break, a warmer climate in Florida. Relations between Disney and the state appear to be thawing just days after Bob Iger's return and after a deep freeze earlier this year

over the company's response to a controversial bill. We will explain next. And check out Boeing as we head to a break. Getting a big jump midday on a report saying United is close to a deal to buy dozens of Boeing's 787 Dreamliner jets. Stock up 4% right now. We'll be right back. What's Wall Street buzzing about? Bob Iger possibly working his magic with Governor Ron DeSantis. Florida is preparing to reverse course on Disney's Don't Say Gay punishment. That's according to a report in the Financial Times.

And Julia Borsten joins us now for more, Julia. Well, Mike, a compromise could show the impact of Bob Iger's return on Disney's relations with Florida legislators. This all started back in April when lawmakers voted to dissolve the tax district, which enables Disney's parks to operate independently to cover the costs of providing water, power roads and firefighting services. A change which could potentially transfer an estimated one billion dollar debt load to the state. And that would come at a cost to Florida taxpayers. Ron DeSantis today denying that the state would do a U-turn. That was the language in the FT story, but not that a compromise could be in

the works. DeSantis telling NBC News, quote, the state certainly owes no special favors to one company. Disney's debts will not fall on the taxpayers of Florida. A plan is in the works and will be released soon. Now, Disney did not comment on these reports, but at the town hall that Bob Iger held on Monday, he addressed the conflict with the state, saying, quote, I was sorry to see us dragged into that battle. And I have no idea exactly what its ramifications are in terms of the business itself. What I can say is the state of Florida has been important to us for a long time, and we've been very important to the state of Florida. So now we are awaiting that plan from

Florida lawmakers and we'll see what kind of compromise it could hold. Mike. Yeah, Julie, I mean, you mentioned there that going through with this plan would have placed a cost burden on the municipalities or some taxpayers in Florida. We're past the election, obviously new leadership or, you know, old new leadership at Disney. It would seem like things would work in the direction of trying to to work something out from all sides. But do we do we know if this is a top priority with with Bob Iger at this point? Well, it definitely seems like it would be beneficial not to have this conflict. It's interesting because we've talked to analysts about this and they said, you know, Disney was

going to be OK. Like, right. If they didn't have this tax district, it was going to be OK. Some of the costs would shift to the to the state. But it's certainly better to resolve it. So it's not like the resolution. This will will mean some massive financial benefit to Disney. But Disney is very close with the state of Florida. If you just think about how much they have to have good relations. So it definitely would be a positive to have this resolved. And I actually think that the leadership transition from Bob Chapek to Bob Iger opens the door for Florida legislators to sort of blame the conflict and the fact that they did make this change on the outgoing CEO, the former CEO, and say, look, with this new guy, we can broker something that's more beneficial and is not going to end up having a cost to Florida taxpayers. Would make a lot of sense for sure. Julia, thanks very much. Talk to you soon.

Stocks have been volatile to start December, but the S&P 500 is still up 13 percent over the past two months. Up next, the top technical analyst discusses whether this is the start of a new bull market or just another bear market bounce. The major average is gaining a bit of steam here into the close after opening in the red following that hotter than expected jobs report with us now to talk about how the market is set up. Jeff DeGraff, chairman and head of technical research at Renaissance Macro Research. Jeff, good to see you. You know, following your work, I know you've been in recent months kind of leaning toward the bullish side, believing the market actually had a bit of room to go. And it seems as if now we have to decide if it's going to be the start of something bigger. How's the context set up for you at this point?

You hit the nail on the head, Mike, as I knew you always would. Look, I think there's a couple of good things going for this market, right? And we thought into the end of the year, it would be more of a FOMO type of market, fear of missing out, because sentiment was so lopsided. Seasonality generally tends to be pretty favorable in the fourth quarter. And for us, we have an indicator we call our market cycle clock, which looks at inflation and growth and juxtaposes those two positions. And it's actually been in a really bullish position with this contraction that we're seeing in inflation, some of our indications. So that really set up, we thought favorably for a bounce into the end of the year. Obviously, we're through the 200-day moving average. So that's a pretty

reasonable objective. The struggle that we're having right here is we actually haven't seen the good thrust, the good momentum that we like to see that really characterizes with a high degree of confidence that the bear market's behind us and a new bull market has begun. So that's the holdout. I was actually pretty disappointed by the numbers on Wednesday, believe it or not. They weren't nearly as strong as what I was expecting or hoping to see. So I think this is at this point, I think there's a reversion trade going on. We're still playing it, but I can't call the end of the bear market yet.

So what are some of the internal signals that you are focusing on, like when you're evaluating whether Wednesday's 3 percent pop in the S&P was actually a strong momentum move. I know that, you know, basically how many stocks are doing interesting things to the upside is one of them. I think we do have a chart on that. Yeah, look, it's, you know, 20-day highs are important, and we look for the breadth of the market. And most of these are breadth indicators, how many stocks are participating in the rally or the advance. So the number of issues making 20-day highs, in this case for the Russell 3000 on Wednesday, was only about 17%. The chart that you have up here is the percentage of names that are above just their 20-day moving average, right? We're talking about price over the last month. That number is at roughly 72.5%. You know, we like to see that number somewhere

up around 90% plus to indicate that you've got a high probability of a new bull market. So these aren't even close. So that's, you know, that's one of the holdouts. They can get better, no doubt about it. But the Wednesday thrust did not have the escape velocity that we look for. All right. So obviously still some things to prove one way or the other. What about within the market in terms of themes that you're picking up of areas you might prefer or showing some maybe subtle strength? Well, you

know, one of the areas that's been strong has been industrials. And they've been strong and really a head scratcher for a lot of people. It's probably been my biggest challenge in the second half of 2022 is, you know, trying to convince people that the industrial charts actually look good and are doing the right things. And they continue to do well. So I think that's bullish news. It's probably more bullish for the economy than what the consensus is out there. The other is discretionary, right? We want to see discretionary. It's a very contrarian group. Discretionary tends to do well when the consumer starts to struggle. So we're kind of getting into this mix potentially that that's going to happen. We have seen some pretty good momentum out of discretionary. It hasn't changed trend yet, but

I think that's going to be a linchpin, particularly as we get through the calendar, getting into the first quarter of 2023. If discretionary can remain or even build on its relative strength, I think that's a very bullish sign for the next year. If it falters and flags, I think we have just another piece of evidence that this is a bear market rally. All right. Well, that'll be one of the tells to keep an eye on. Jeff, great to catch up with you. Thanks a lot. Thanks, Mike. All right. And here is where we stand in the markets on the day. Pull back just slightly. The Dow is slightly negative. S&P down less than a quarter of a percent. NASDAQ and positive as well. Small caps are green, all sitting on week-to-date gains still, though. Solar stocks rallying following a Commerce Department report on whether Chinese solar manufacturers evaded U.S. tariffs.

Details on that coming up. And you can listen to Closing Bell on the go by following the Closing Bell podcast on your favorite podcast app. Time to check out today's stealth mover, Cracker Barrel. And as you can see there, investors losing their appetite for the stock, the restaurant chain, beating revenue estimates in its fiscal first quarter thanks to better than expected same store sales. But Wall Street now holding the stock over a barrel because rising food and wage costs squeezed profit margins. That trend will likely continue. The company raising its full-year commodity and wage inflation forecast. Shares down almost 13 percent. Tesla delivering its first electric semi-truck five years after it was first revealed. Up next, we'll hear from an analyst who says Tesla is putting the rest of the trucking industry on notice.

That story plus solar stocks rallying and how the job support will impact the Fed when we take you inside the market. We are now in the closing bell market zone vital knowledge founder Adam Chrisifulli is here to break

down these crucial moments of the trading day plus Pippa Stevens on solar stocks and Luke Ventures' Gene Munster on Tesla. Good to see all of you. Adam, interesting market, you know, today climbing a bit of a wall of worry, a negative shock, at least perceived negative shock on a hot wage inflation number this morning. Treasury yields not panicking. And then really for the past couple of months, stocks rallying in the face of inverted yield curves, all these other reasons to expect more chop to the downside. So where does that leave you in terms of believing whether this move can last in stocks? I think the jobs report today was actually pretty similar to price

action to what you saw last month, where you had a very strong headline number. And I think two things are happening today. If you unpack some of the details of today's report, it's a little bit more nuanced than that headline figure suggests. You had another employment decline in the household survey. If you adjust for the work week, that smooths out the wage increase that you saw as well. And then I think if you look at all the recent data we've seen on the labor market, whether it's ADP, the challenger report, the employment index of the ISM manufacturing, all of that's pointing to a deterioration in the employment landscape. Plus you have myriad layoff and hiring fees announcements out of companies. So I think that's a big factor where you have the initial shock on the headline, but as people dig a little bit deeper into the figures, I think it kind of keeps us on the trajectory of slowing nominal growth,

which means you're seeing a slowdown in real growth and inflation. That's pushing yield to the downside, which is bolstering equity multiples during a seasonally positive time of year. And I think that's why you've seen this kind of persistent bid for the last several weeks in the market. And I think that's kind of where we are today. And so how much fuel do you think is in that tank with all those factors coming together? Is it just kind of a brief relief or or can it feed on itself? I think it can feed on itself for a little bit. So, you know, like I think I think yields are going to be biased lower going forward because I suspect you're going to see further disinflationary data and more weakness on the growth front.

As that takes place, you've had a very tight correlation, inverse correlation rather, between yields and multiples. So that has a little bit more to go. But the S&P already has a very healthy multiple and you have downside risk to earnings estimates for next year. So, you know, I think maybe you'll be able to squeeze a little bit further on the S&P, but not a whole lot more in this rally. But I think, you know, I think for the near term, given where we are seasonally in the month of December and then further downside in yield, I think it can last for a couple more weeks into early next year. All right. Well, let's get a little deeper into how the jobs report could impact the Fed.

Steve Leisman joins us now. So, Steve, is this going to force the Fed to lean harder on the economy, this jobs report this morning? You know, it could if it's part of an acceleration of the economy. Remember, we're supposed to be stepping down, Mike. We didn't get much step or down today. In fact, we accelerated a bit. The work week point is well taken. It did come down a bit.

But ultimately, if putting people back to work boosts supply in the economy, that is, if we get more people working and more supply and less inflation, the Fed won't have to lean harder. But Powell laid out pretty clearly that he sees labor as really an inflation story. So I think he's not going to be pleased with this. So what we see today, Mike, is not a bet on 75 for December, more a bet on bumping up what had been a debate over 25 or 50 in February, leaning towards the 50 side. Right. And, you know, for better or worse, what we also have seen in terms of side. Right. And, you know, for better or worse,

what we also have seen in terms of the bond market reaction is, you know, short yields up long, not up or not up as much. And so you have that upside down situation there. You know, Steve, given the fact that we're presenting this as if the Fed is impatient to see the economy slow more, that's coming as Wall Street sees all of these, you know, what they believe are very clear leading indicators of a recession next year, whether it is the yield curve, whether it is consumer and CEO confidence, you know, the ISM index, all this other stuff piled on one side. On the other, we seem to have jobs. You know, and sometimes you don't need to know more than that, Mike. I mean, obviously, CEO optimism plays a role in that.

If they're going to cut back, then they won't either hire as much or they'll lay folks off. They won't do the capital spending. But when folks have jobs, folks spend. And when they spend, they pay off their credit card bills and they buy new cars and do things like that. And that means that the car manufacturers have to keep making stuff. The importers got to keep importing. You look at the three point seven percent unemployment rate and there are some economists, Mike, who say that's all you need to know. I mean, maybe it turns tomorrow or the next day. But right now, the paychecks are coming in to many Americans. Yeah, you might not know the right level it has to get

to, but you probably know that it's three sevens too low, I might not know the right level it has to get to, but you probably know that it's three sevens too low, I guess, is the way they might think about it. Steve, thank you very much. We are, meantime, seeing some big moves in tech on the back of earnings. Semi-company Marvel Technology and cloud security firm Zscaler are offering softer guidance than analysts had anticipated, sending those stocks lower. It is a similar story for Asana, which also forecasts weaker current quarter sales than expected, pointing to a more challenging macro environment. Adam, you can kind of pluck a bunch of these out over the last couple of weeks. Are there any themes that are surfacing that you think are

either worth playing or worth observing in terms of how winners and losers are getting sorted out here? Yeah, I think the Marvel price action was pretty notable. You know, the report was disappointing. The guidance was weak. The conference call commentary last night was pretty underwhelming. You know, they're talking about a big inventory correction for this quarter lasting into the next quarter. So the fact it's been able to rebound off its lows, I think it's suggestible kind of where sentiment is right now for the semis, where it's the consensus view that you are going to have a very steep inventory correction in Q4 this year into Q1 of next year, leading to then a rebound starting in possibly Q2. So I think the fact that this was able to rebound is somewhat encouraging for the broader semiconductor space. For the other

software companies, you know, we've had a lot of these SMIT cap, high multiple software stocks report earnings in the last couple of weeks. And it's been really a minefield. You've had a bunch that have done well and they've seen their stocks go up 10 percent. And then you've had a bunch with similar reactions to Zscaler and Asana. It's hard to really extrapolate. Any of these companies are relatively small. You know, a couple of slip deals can really have a bigger impact on their income statements. A lot of the commentary from these companies, especially in software, they say that companies are actually looking to them as far as spending and demand. It's actually getting helped in this environment because their products can make companies more

efficient. They can help lower costs. But again, it's just too small. They're too small to really extrapolate any one. We'll get Oracle numbers out in the next couple of weeks. I think that would be a bigger indicator for kind of the state of enterprise tech demand as we sit here right now looking at the environment. Yeah, I mean, obviously the Oracles and yesterday Salesforce, of course, you could maybe draw some conclusions about what it means for just business sentiment and spending in general. But so many of these somewhat smaller, you know, arguably subscale software companies, I mean, probably a couple hundred of them showed up in the last several years. They've never had a profitable operating history.

Some of them, they have a hard time outrunning their stock based compensation. It just seems like it's tough to play either side of it when you can have those overhangs and then private equity could come in and buy one at a big premium at any moment. No, totally. You know, a lot of these stocks are tremendously off their highs. So, you know, the market's already quite pessimistic. You make a great point about stock based compensation. That's becoming a much bigger theme as these companies report earnings. I think analysts are scrutinizing more the non-GAAP definition of earnings. But just one quick point relating back to our Fed conversation. You've seen a material decline in the dollar in the last several weeks.

And that's going to be a huge tailwind for earnings, especially for software. Every company that's been reporting earnings lately has called out the dollar strength as being a huge headwind. So if we were to see this price action continue, you know, this is going to be a big, a big source of relief for earnings next year. So that's just one other thing to keep in mind on these software companies where. No, absolutely. I mean, dollar index. Yeah. dollar index back to where it was six months ago. So that's that's been a big help, at least some relief. Solar stocks on the move today as well after a Commerce Department preliminary determination found that four Chinese solar manufacturers circumvented tariffs, officials clearing the other four solar companies that were being probed. Pippa Stevens joins us. So sort this out for us, Pippa.

So are today's gains in the stocks a response to this particular probe or some other sort of relief rally? Well, Mike, it really seems like today's gains are really a better than feared situation, since only four of the eight companies that were under investigation were found to be unfairly avoiding those tariffs. But it's still a blow for an industry that at the current rate is not able to keep pace with the surging demands. Now, this case had been hanging over the industry for many months. It stretches back all the way to March when California-based Oxen Solar first brought the case. They said that Chinese companies were unfairly avoiding these tariffs by shifting

manufacturing to Malaysia, Cambodia, Vietnam and Thailand. Now, those four countries account for 80 percent of U.S. panel imports. So they really are crucial to the U.S. industry. And that meant that a lot of solar advocates said that implementing a blanket tariff would really decimate the U.S. solar industry. Now, we're not likely to see any immediate impacts since we won't get a final decision from the DOC until May. Also, back in June, President Biden stepped in and said that any tariffs that are going to be implemented as a direct result of this case will be void for the next two years. So there are a lot of moving parts here. But that gets to the issue, which is that if you are a large-scale developer, it's really hard to build these

projects when you have no visibility into your economic costs. And so quickly on this stock impact, it's not really going to have that much of an impact on the resi names we talk a lot about. That's names like Sunrun, Sunpower, and Sunova. It's much more for the utility-scale developers. But one key mover today is Jinko Solar. That's up more than 10 percent. They were found to be in compliance. Mike. All right. Thank you for running through all that for us. We got a much clearer view of what's happening there. Meanwhile, Tesla delivering its long awaited semi truck last night. It's five years after unveiling a prototype.

CEO Elon Musk saying sorry for the production delay during the kickoff event. Our next guest says Tesla's entry could be a game changer for the trucking industry. Gene Munster of Loop Ventures joins me now. So, Gene, you know, given the history of Elon Musk kind of aggressively projecting what supply is going to be and sort of overpromising, what do you actually think is going to come out of this effort? How many of these can they produce and sell soon? Well, the kind of jumping to the long term is that he's expecting 50,000 in 2024. I'll take the under. I'll take the significant under to that. I think best case is 20,000. And what that would account to is it would add about 3% of revenue to Tesla's 2024 revenue.

That also, I think, does understate what is an opportunity for Tesla is that ultimately, I think that this variant, this vehicle should account for about 5% of sales. So it'll start out slow. It will never be as big obviously as model y but i think you are smart mike and uh just being uh realistic in terms of some of their commentary about the uh the production but i think that that does uh i think bury what is probably most significant here and i think what is more significant than the fact it will take a few years for this to ramp is uh the message that this is

sent to the rest of the trucking and manufacturing industry this is as big of an event as Model 3 was how that really changed how automakers thought and I do want to emphasize an important distinction between what happened with the Model 3 and the rest of the auto industry taking notice that time it was we have to have electric cars to compete with tesla in this case the trucking industry has already prepared for these uh for electrification but there's one significant problem that they have is that they tend to be in the 250 mile range and for these long haul trucks the average driver drives five to seven hundred miles a day a 250 mile an hour range isn't going to get it done,

and I think that is what is the true feature here with the Tesla Semi. Got it. Now, just in terms of the longer-term opportunity for something like Tesla, though, let's say they do $20,000. Isn't that close to 10% of annual sales of these types of trucks, this class of trucks? So I guess how big is the ultimate potential market, and how much can it matter for Tesla's overall business if, in fact, we presume that their passenger car business is going to continue to grow pretty well along the ways also? So the quick numbers is in the U.S. typically sell around seven and a half million passenger vehicles, about 225,000 of these class A trucks, these bigger trucks.

They tend to be priced about four times what the cost of a typical car is. So it still is a small market relative to the passenger vehicle market. But as far as what it can mean for Tesla, it is additive. That 3% number that I said adds in 2024, that assumes that Tesla is growing their revenue at 35% for the next few years. And so as you get bigger, it's harder to have products that actually have a measurable impact. And the semi is going to have a measurable impact. And I think we're going to see the exact same thing happen in the truck manufacturing world as we saw in the auto world. And I would just leave it at this, is that these companies that abound for

a long time, Freightliner, Mac, Volvo, they're going to have some hard decisions to make about how they're going to compete in the next decade. All right. And just quickly on Tesla as a whole, I mean, stock is trading at half its peak value. Obviously, it's been under a lot of pressure from multiple directions. Where does that leave it right now? I mean, even with things like China demand, people scrutinizing pretty closely. Still optimistic. And the biggest reason is that just think about the TAM. This is like thinking in 2005 that Amazon had kind of played its card out given that they had a high market share and where could they take it? More competition was coming.

The two and a half trillion dollar auto market right now, Tesla has about 3% share. They can continue to grow into that. And so I still think that this is a unique opportunity. I think just because electric car companies are coming out with electric cars doesn't mean that they're going to be as attractive as Tesla's given the whole software integration piece to it. And so I'm still optimistic. And I think that the market's going to want to see what the numbers are for December. I'm optimistic that they're going to be favorable. And ultimately, I think that they're going to layer on not just a semi, but probably a cheaper Model 2 announced next year.

And I think that's going to continue to move the stock higher. All right, Gene, I appreciate the update. Thanks very much. Thank you. All right. Talk to you soon. A little about two and a half minutes to go in the trading day. Adam, I just briefly mentioned China there. That's an area that you're actually kind of upbeat on, right? I mean, the Chinese market has a chance to revive here. Yeah, I mean, you've had a quiet, enormous rally in Chinese equities,

depending on what index you're looking at. You know, they're up about 50 percent off of the trough in just the last month. And I think for three big reasons coming out of the recent Congress, you had policy changes on property. So they're So for the first time in a long time, they're now providing a lot more support for the beleaguered property sector, which is an enormous piece of the economy. On COVID, I think there's been a clear change in direction on COVID. It's not going to be a linear or a clean process. But I think that there's been a recognition on the part of the government that the prior policy over the last couple of years is untenable. And they are now going to start to shift in a shift their approach to the virus is going to be much more supportive for

growth. And then on technology, the scrutiny on technology companies is abating. And so for those three policy changes, which, again, these are shifts that haven't happened for years in that economy, I think it's enormously bullish for the market in China for Chinese equities, coupled with valuations are very cheap, sentiment was atrocious as of just a couple of weeks ago, and positioning was very lean. So all those factors are helping to propel Chinese equities higher. In the near term, it wouldn't be surprising to see some consolidation, just given how far they've run. But I think over the course of 2023, the risk-reward, the story for Chinese equities is one of the more positive ones that I can see right now. Yeah, I mentioned earlier, you've seen some of the big China plays in metals and mining and things like that start to perk up.

So maybe that's the market sniffing that out. Adam, great to talk to you today. Thanks for joining us. Adam Crisofoli. As we head into the close, the S&P 500 looking just below the flat line. It's up more than 1% for the week. There you have the breadth numbers, decidedly positive on the New York Stock Exchange today. Take a look at emerging markets on a weekly basis, handily outperforming the S&P 500.

And a lot of that is China, but not entirely. We've got a weakness in the dollar. That coming in hard, that is helping for sure. The volatility index right at 19 has not had a close under the 19 level since April. That has been the low end of the VIX range, and that's coincided with some peaking equity rallies. We'll see if it's any different this time. That'll do it for Closing Bell today.