Closing Bell - Closing Bell: Mixed action on Black Friday, Apple’s China problem, Hottest brands on StockX 11/25/22

Episode Date: November 25, 2022

Stocks were mixed in a shortened Black Friday session, with the Dow turning in solid gains while the Nasdaq pulled back, weighed down by Apple amid production concerns in China. CNBC’s Eunice Yoon reports from Beijing with the latest on Apple’s iPhone factory protests. Analyst Dan Ives from Wedbush discusses the impact on supply for the holidays. Peter Boockvar from Bleakley Financial Group discusses the market action and his outlook for tech stocks. The CEO of sneaker and apparel platform StockX breaks down the hottest brand on his site for the holidays – and how controversy around Kanye West is impacting Yeezy sales. Plus the latest on Activision, Airlines, Tesla, and Manchester United.

Stocks are seeing mixed action on this shortened Black Friday session. The Dow is actually at session highs, but the Nasdaq is pulling back as we head into the final hour of trading. This is the make or break hour for your money. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Take a look at where we stand right now in the market. Dow's up a half a percent. It's the China-exposed names that are weighing more heavily on the market today. Apple, Caterpillar, and Nike right at the bottom of the Dow.

The S&P 500 is flat. What it reflects is a tale of different sectors. You've got strength today in healthcare, in utilities, industrials, and financials, all going strong, some of those cyclical groups. The weakness is in technology. That's why the Nasdaq comp is down about four tenths of one percent. Tech, communication services, both lower on the day. Activision, Blizzard, we'll talk about it. One of the reasons why the communication moves are lower. Check out the move in Apple today, falling to the bottom of the Dow, dragging on the Nasdaq as well amid concerns about iPhone production in China. Much more on that story in just a moment. Also ahead on this special edition of Closing Bell, we will talk to the CEO of sneaker and apparel platform StockX for his early read on holiday spending and the brands getting the most interest from customers right now.

I'll also be with you for overtime today as well. We're going to talk to Fundstrat's Tom Lee about his predictions for the market heading into the end of the year. And of course, his outlook for crypto amid some new news today about a fund to back up crypto. Let's begin, though, with retail, because today marks the unofficial start of the holiday shopping season. But consumers, turns out, were spending in force yesterday as well. Adobe out, saying customers spent a record $5.29 billion online on Thanksgiving Day. And that was up nearly 3% from last year. CNBC's Melissa Repko has a look at the retailers, Melissa, that stand to benefit most from the holiday rush. How are you thinking about winners this year?

Hi, Sarah. So far, Walmart is topping the list as the most searched for retailer for Black Friday deals, according to Captify, an online research firm that's tracking that today. Target and Kohl's round out the top three. Amazon notably has fallen to fourth place after dominating those Black Friday searches last year. Those early results for Walmart and Target bode well for those big box retailers, especially because that doesn't include traffic to stores today and into the weekend. Some categories are jumping out, too. Beauty and tech are the top two, and activities and experiences are number three, which could

indicate people are looking for nontraditional gifts like taking a vacation or going to a concert. So we'll have to wait and see which retailers ultimately win or lose this holiday season. And the stakes are high. Online shoppers are expected to spend $9 billion today. To put that into context, a typical online spending day is $2 to $3 billion. And even more spending is expected tomorrow and Cyber Monday. Sarah? Melissa, I wanted to ask you as well about

Amazon in particular. The stock is a little bit lower and there is word of warehouse strikes. Is this real? Is it materializing? And how big of an impact could it have? So far, it's hard to tell how many people are participating in that event, but it's worth noting that Amazon strikes have happened before on key days like Black Friday, and they did not have a material impact. It's also safe to say that Amazon could potentially make up for those sales if there was any losses in the coming weeks. Got it. Melissa Repko. Melissa, thank you very much. We'll check back in with you. Let's bring in our retail panel now and what to do with these consumer discretionary stocks. Joining us, Simeon Siegel from BMO Capital Markets and Ed Yeruma from Piper Sandler, who is at a mall right now.

I love both of you old school retail analysts still going to the mall. Does anyone still go to the mall, Ed? You know, there's actually a decent amount of people here. We saw a lot of people in line at Target and Walmart early this morning. So, you know, it's clear that the consumer wants to come back to stores and we're seeing them out this morning. Sarah, you better call him out. There's like one person behind him right now, as he says. Well, his shot is very tight. So I couldn't I couldn't see how much traffic there actually was. So, Simeon, what are the sort of I think you were at a mall as well, right? Even though you're making fun of your colleague. What are the sort of things you're

looking at in terms of prices and traffic and what makes this year different? So I call it a friend more than a colleague. But I think at the end of the day, the mornings, which we're so used to, probably don't matter as much. And I think that you walk through it. If you're there at seven o'clock, there's no one at all. So it feels like, I mean, listen, not that this is going to matter a whole lot to the stock, but it feels like there's lines outside of Lulu. There's some lines outside Apple, but the lines that you normally see outside the teen retailers and the people like the shoe companies, they just don't exist. And whether that's because of what you just brought up, you can shop yesterday or whether that's because we're in a different mindset. I think it's a very different perspective on we need to run in their stampedes and grab something or it's going to be gone.

Yeah, I mean, we're not seeing the door busters that we've seen in the past. And maybe that's probably a good thing. We're still dealing with COVID, right? We don't want the crowd. So, Ed, how do you determine which stocks, which companies are doing the best to recommend right now with traffic kind of vague, given the bifurcation here with online spending? I mean, right now we like companies that have very specific catalysts, like a Target, where they've had some massive inventory problems and are in the process of clearing that through. We like players like a Nordstrom because the high-end consumer has been

more insulated, I think, in this environment. But clearly, you have to be selective. The consumer is pulling back in a lot of areas. Interestingly, we saw a lot of people buying luggage today. So to Simeon's point, you know, clearly the travel experiential might still be the thing for holiday. But haven't we seen weakness? Isn't the notable weakness, Ed, from places like Nordstrom, Kohl's, or Target as far as October and November trends? You know, it was interesting last week Nordstrom called out that actually the mid to end of November got better. It seems like with cooler weather, we're seeing more interest in apparel. The other thing I would add

is that it's more the entry price point where you're seeing the weakness and not really the true high end. One of your strategies I know for picking winners has been who is able to maintain price and profitability in an increasingly promotional environment? Who is that? Yeah, so I've been talking to a lot of friends in business, and I think right now people are scrambling. And I think there are companies that are going to win because of all the excess inventory, and that's a TJX. That's the one that's going to be able to benefit. And then I think there are companies that are going to be able to benefit in spite of all the excess inventory, and that's a TJX. That's the one that's going to be able to benefit. And then I think there are companies that are going to be able to benefit in spite of all the excess inventory,

and that's a Capri. You and I have talked about a lot how Michael Kors is explicitly stating they're not going to promote. I think the ones in the middle, companies that are just pulling the ripcord because there's a lot of inventory, I worry they're just giving back all the brand equity that they earned over the last two years. Since 2008, you and I have been talking about Capri. So Michael Kors, I think, is a perfect example of a company. Oh, sorry. They're the ones that are holding line. I think if you look across the mall, most others are promoting. So most of the teen retailers are. And so when I look at that, I just think that

if you can maintain this pricing power and you can weather it from a balance sheet, just giving away things to clear is not the right strategy right now. The other big theme in the consumer that you both have talked about and everybody has paid attention to is the split. And we've heard it from companies between the low-end consumer and the high-end, the income levels,

and how inflation is really hurting the lower end even more. Ed, is the high-end also starting to see weakness on the fact that everything is costing more in our lives? You know, less, I think, pressure from inflation. But one thing we worry about with the high-end is it's very leveraged to asset markets, right? The high-end consumer is less about can they spend, but do they feel comfortable spending? So clearly the stock market, real estate prices are not helpful to that high-end consumer. Again, we're starting to see very early signs. That's something we're going to watch pretty closely through the holiday and then clearly into 23.

Does it impact your view on some of the names that are more exposed? Nordstrom is higher in consumer, isn't it? And Ralph Lauren is doing really well today, but I feel like that's been a barometer for luxury too, and it's held up very well. I mean, luxury broadly has held up very well. Nordstrom inventory is actually one of the better in the space. But yeah, I think it's something we're gonna have to watch closely in 23. Because this consumer has been much more resilient than we would have expected coming into the year. But yeah, so I think that point's important. I think we're seeing a huge I know, I know the high versus low income story is a very easy narrative to jump on to. And obviously,

inflation hurts low income more. But I think at the end of the day, what we're seeing, to your point about Nordstrom and Ralph, is that it's more of a product discrepancy than it is a high income discrepancy. Company that the three of us have all talked about a lot, Peloton, I hate to say it, but the stores were empty. It's a different reason. That's a high income product. But people don't need another bite. People don't need more patio furniture.

So I think more than recession, I think we have to understand where's the replenishment. And if there is a call to action, if there's a reason to buy, people are out there shopping. Well, the other thing, Simeon, and this final word and final point is that we've been spending it's very unusual because of all the covid disruptions we've been spending at a much higher clip over the last 18 months than is typical going into Black Friday, isn't it? I think that's exactly it. I think we have to ask ourselves how many pairs of shoes or scented candles or grills did we buy in the last 18 months? Because it was not a normal annual. Air fryers. Yeah. And if you have them ready, you don't need it. I think it's as simple as that. Let us use our stuff. We'll come back to it. So

that's why I think it's all about replenishment now. And I think the companies that can hold on to that, maintain their pricing power, I think walk out better in 23. Ed Simeon, great discussion. Thank you. Ed, award-worthy shot there at the mall. It does look a little quiet. Thank you very much.

Look at Apple. It's at the bottom of the Dow today, even though the Dow is seeing some nice gains up 155. Investors are keeping a close eye on developments at the Foxconn plant in China. We will take you live to Beijing. And analyst Dan Ives will weigh in on the supply disruptions around the crucial holiday season, what it ultimately means for Apple. You're watching Closing Bell on CNBC. Welcome back. Apple heading into the crucial holiday season with fresh concerns about its

production capabilities in China. It is currently weighing on the Dow and the Nasdaq. Our Eunice Yun joins us now from Beijing tonight with a look at the increasing tensions at Foxconn's iPhone plant. Eunice, what is happening there? Thanks so much, Sarah. Well, most of China's iPhone city or Zhengzhou in central China is in lockdown tonight until Tuesday. This is after violent protests erupted at Foxconn's main iPhone facility there, which is responsible for 70 percent of global iPhone output, including iPhone 14 models. Now, the company, Foxconn, has apologized for what it described as a technical error in worker pay, which at least in part triggered those protests. Foxconn is now offering $1,400 or so for any recruits that want to depart the facilities. Apple has sent in staff and said that it's working with Foxconn to try to meet some of the employees' demands. Now, the turmoil raises

questions if Foxconn is going to be able to meet its internal end-of-month deadline to get that facility up and running. Sarah? So, Eunice, this is sort of aside from the COVID concerns, which are also front and center for China today. For the global market today. Another reserve ratio cut, so China's stimulating to address what appears to be more shutdowns. How bad is it getting? Yeah, that's right. So in theory, that's going to inject about $70 billion into the economy, which would be a good thing. The problem is it doesn't address all the uncertainty around these lockdowns. You mentioned the supply chain. In addition to the problems that we're seeing at Foxconn in Guangzhou,

which is a huge export hub, they have been denying that there's going to be a citywide shutdown, or even what the authorities there described as a silent period, which is a slowing down. However, tonight, one of the key districts announced that it is suspending all public transport and is ordering all residents to stay at home. So since in the past, especially around the Shanghai lockdown earlier this year, city officials had denied vehemently that there was going to be a lockdown. And then there was a lockdown. There isn't a whole lot of faith that the residents have in some of these announcements by city officials.

Eunice Yoon, thank you. With China, COVID cases topping 30,000 for the first time ever. The KWeb ETF, by the way, that trades here in the U.S., tracking those China companies down four and a quarter percent right now. For more on China's issues and specifically the impact on Apple, let's bring in Dan Ives, Wedbush Securities Managing Director. And Dan, you published today on this issue with some specificity. So how are you getting your information here on what's happening in the Apple supply chain? Yeah, I mean, based on going into today, I mean, we thought it was about 5% cut to iPhone units, maybe short just 5%, 10%. What we saw at stores today across retailers, it's about 25% to 30% below typical for Apple within Apple stores. And I think you're seeing those wait

times continue to increase. Look, this is not good news. I mean, clearly going into holiday season, at the most important time, it's been a body blow to Apple from a supply chain perspective. And right now, this has really been potentially a straw that broke the camel's back for Apple in terms of China. But right now they can only watch. So Apple has managed pretty well throughout the supply chain crisis that came out from COVID, right? And it's been, there've been questions before about China and Apple and it manages to overcome those. Are you saying something's different this time? Well, I think this time is different, I think, even within the walls of

Cupertino, because it's the most important time for holiday season. They had the 90 million units. Demand continues to be oversupply. And here it is. You're losing about a billion dollars a week in lost documents, Alison. This could not come at a worse time for Apple. And I think it's reached a boiling point. I think frustration is building. The images you see, that's been a black eye for Apple, black eye for Foxconn. And I think right now, they just continue to be at the mercy of the zero COVID China policy. So how does it impact your earnings expectations for

this quarter and the coming quarters? And Apple, are you taking down numbers? Yeah, so right now, I mean, iPhone units have come down, if you look across the street, about 4% or 5%. It may be on the low end, best case, 3%. That probably could potential to increase if we see these shutdowns continue. I think right now we're going into early to mid-January for a lot of week times. Now, look, I think from the street perspective, demand continues to be firm. That's the important thing, you know, in terms of what we see here, despite the economic storm clouds. But the supply chain, the clock struck midnight. Frustration's built. You see it in the stock. And this is really, you know, at the time where

Apple has been able to be almost tough on like, you know, finally, you're seeing cracks in the armor in China because what we see in Foxconn. But you're not changing your price tag or anything. You've got a strong buy, right? 200 long time. Yeah, 200 continues to be our topic. Sarah, my view is that this is more supply driven rather than demand driven. Demands, it continues to be our view going into 2023, along with services. And I think Apple and Cook will get through this. But clearly, it's a defining time, a moment of truth for Cook to really navigate what's probably one of the biggest challenges they've seen in China from a supply chain perspective. And remind us how dependent Apple is on China. They've been making moves to diversify the supply

chain away, but clearly can't happen fast enough. Yeah, I mean, look, they could talk the talk realistically. It's the hearts and lungs of Apple. And in the best case scenario, if they wanted to diversify, they could probably get 5% to 7% of iPhone production out into other countries by the end of 2023, maybe 2024. So right now, I mean, they're really hands are tied. That continues to be. They dove into the deep end of the pool in China. It's been their success, but now it's come back to haunt them. What about AirPods?

A lot of sales on AirPods at Black Friday. I guess which also reflects that people want them. But does it impact products other than the iPhone? Well, in terms of the production, not as much. I mean, AirPods, we think the production's actually been pretty firm in terms of what got into stores, especially for holiday season. I think that's actually trending above expectations, what we see there, especially on AirPods Pro. Look, I think that's really the story here. Demand remains firm.

The problem is, is that I'd say by next week, finding an iPhone is almost going to be like trying to find a piece of gold. It's really not going to be out there. And I think that's the issue right now. It's exactly what Cokin Cupertino did not want to see. Does anyone benefit as a result of that? Samsung, Google, any of the competitors? Or people just frustrated they can't get their iPhone? You could say tangentially maybe a Samsung would benefit,

a Google in terms of maybe frustrated iPhone users. But again, 98% of iPhone users stay within the ecosystem. And there is the fact. Dan, thank you. Dan Ives, appreciate it. From Wedbush, happy holidays. Let's check in on the markets right now. We've got a 170-point rally here on the fact. Dan, thank you. Dan Ives, appreciate it. From Wedbush, happy holidays. Let's check in on the markets right now. We've got a 170-point rally here on the Dow.

It is doing better than the S&P. That's thanks to UNH, UnitedHealth adding the most, as well as Home Depot, Boeing, Goldman Sachs, and Visa. In the S&P 500, you've got healthcare strong, utilities, industrials, financial, real estate, energy, and consumer discretionary all in the green. But those tech stocks are weighing. A big part of that is Apple. Some of the semiconductors as well. NVIDIA is weaker. Communication services are weaker as well. The video game makers. We'll talk about that in a moment. Also still ahead, the CEO of sneaker and apparel marketplace StockX will join us with a look at the hottest brands this holiday season. And then later, the airline ETF gaining some altitude of late. It's up more than 25 percent from the lows. We're going to ask an airline analyst for

her take on holiday demand and the setup for the stocks into year end. Be right back on Closing Bell. 36 minutes left of trading. Check out today's stealth mover. It is Manchester United. Another big move. Stock continues to score for investors up 14.3% today. Shares of the iconic soccer club soaring again. They're now up more than 70% this week after the Glazer family announced it is exploring a possible sale. Forbes estimates Man U is worth about $4.6 billion, but the Glazers reportedly have a goal

of netting more than $7 billion, which would be a record for a sports team. Stock soaring. Up next, the CEO of sneaker reseller StockX on how Nike supply chain issues and Adidas terminating its partnership with Yeezy are impacting his business. We're up 176 right now on the Dow. Continue to push higher in this final hour of trade. The S&P is up just a few points. We'll be right back. Well, sneakers have grown into one of the buzziest parts of the commerce market. This Black Friday, some of the hottest items include holiday release Jordans like the Jordan 1 Chicago, the Jordan 4 Black Canvas.

That's according to some new data provided to us by StockX. Joining us now is Scott Cutler, CEO of StockX. Happy Black Friday to you, Scott. Welcome. Oh, it's great to be here on Black Friday again, Sarah. Thank you. So talk to me about demand for sneaker resale, because you guys are coming off of a pretty hot stretch of a few years where everybody during COVID started really building up their collections. Well, you think about this year, this Cyber 5 holiday weekend, probably the most challenging consumer environment that we've seen in years. And yet at the same time, the consumer wants to really show up, buy the right gift, find the right item, deliver happiness and joy during the holiday season. And so we're seeing a surge of demand

today. I think that's driven by the fact that today is probably the day that consumer is going to find the best values. And so we kicked off Black Friday with a spin to win challenge, giving away everything from site credits to sneakers for a year, apparel for a year, all to drive demand to the site. Are you seeing more than, say, last year? How does it relate? Yeah, so so far, so far today, which is our biggest day of the year, we're ahead of last year. Our transaction volume has been about a trade every or two trades every second. So high velocity. And what we're seeing is a lot of focus on not only sneakers, but in the other categories in apparel and electronics and in collectibles. Again, trying to find that right gift for the

right season, but also across a broad range of categories, which I think is emblematic of what consumers are trying to find today amidst supply chain challenges and challenges finding that right gift because it simply hasn't been available in most retail outlets. So Scott, I've been really eager to talk to you since this whole Yeezy scandal broke, because as you know, the sneaker resale market,

it's been dominated by Nike, Jordan, and Yeezy lately. And that's a big chunk of business. So how has this, the breakup with Adidas impacted you? Well, it's important to understand that we have zero tolerance for anti-hate speech. And StockX has a wide range of products that are powered by artists, influencers, athletes. Their views, their beliefs, their actions are theirs, not ours. And as a resale platform, we're a little bit different than a lot of brands where individual sellers are selling the product. And so it's typically not the athlete, the artist, or the brand itself that's selling that product. And we don't have relationships with many of those that have been challenged today. That being said, consumers are still inspired

by the collaborations that brands are having with these influencers to drive creativity across their products. So you're still selling the Yeezy sneakers. What's happened since this whole ordeal to pricing and demand for them? So what we've seen is actually a lot more focus on other brands, particularly in sneakers.

We've seen the holiday releases largely driven by Jordan and Nike. For example, the Jordan 1 Lost and Found, the Jordan 1 Retro 11 Cherry are going to be the hot sellers for sneakers. We're seeing a surge in New Balance. And we've seen a little bit of drop-off in other brands like Adidas. That being said, I think people are finding inspiration in other areas, even though some brands kind of rise and fall depending on consumer preferences. So does the Nike supply chain issues impact you? They had real shortage problems, and now it's the opposite. They have such high inventories, and they've been having to unload them at discounts. Does that impact you at all?

Well, for retailers, you're reliant on an entire supply chain of creating the product and then getting that product to the consumers. And of course, over the last couple of years, the supply chain across every category has been incredibly challenged. StockX is a little bit different because we operate a marketplace where sellers are getting access to that product wherever it might be released. And then we're usually using freight and carriers to be able to deliver that product one by one instead of on container ships that might be sitting on ports. And so while we're not immune to the challenges of the supply chain, to the extent that any product is released anywhere around the world. We're serving customers in over 200 countries and territories around the world,

and brands are releasing products globally. And so then our customer can have access to that product whenever it's released. So it hasn't impacted the number of hot releases of Jordan, retro Jordans, or anything like that, given what's happened to that? Is that the thought of mine? The timing of releases has been challenged. So people haven't been able to hit the deadlines they expect. But again, I think what you're seeing now is that most of those supply chains have got caught up. And now you have probably the opposite challenge in the market where you've got a weaker consumer and the supply chain is getting caught up into and finding more of an environment where demand is challenged. And so therefore, as a place where you're trying to drive demand, you really have to be top of

your game to be able to drive demand to the consumer when that consumer right now is facing incredible challenges. I often go on StockX to see just what the trends are, right? What people want, because you get such a good taste from the resale market of what people are willing to pay for the hottest styles. Are there any up and coming brands or brands you wouldn't necessarily think of outside the big three or four to watch that are having a good moment here? Well, it's impossible to be wrong finding the right product on StockX. And so I think if you're trying to get that best gift for the hype beast or the gamer or the fashionista, you're going to find it on StockX. I think what's really interesting is that we always reflect what is current culture.

We're always reflecting changes in the market. A couple of things to highlight. Legos, collectible Legos, has been a huge category for us. The Swatch Omega collaboration, we've sold over $13 million in just that collaboration alone. In sneakers, you're seeing the resurgence of some old brands, but are also new with collaborations. Crocs, Birkenstocks, New Balance. And then in other areas of fashion apparel, you see great collaborations, whether it be Gucci, Palace, Cause, North Face, all really trying to release great product that is inspiring to be able to find. And you can find those right products that typically, again,

you can't find anywhere else on StockX. And that has been our value proposition during the holidays. Scott Cutler, thank you very much. Good to get color from you on what's working. CEO of StockX. Here's where we stand right now in the markets, up 158 or so, strong session for the Dow. S&P 500 did just turn negative, though. It's being weighed down by technology today.

And the biggest drag there is Apple, though some of the chip stocks are lower. Communication services, materials, and now consumer staples and energy have just joined those sectors in the red. Oil prices are down today. Treasuries are also down with yields a little bit higher. So is it game over for Microsoft's $69 billion acquisition of Activision Blizzard? Up next, details of new antitrust concerns over that deal, sending that stock down 4%.

And a reminder, you can listen to Closing Bell on the go by following the Closing Bell podcast on your favorite podcast app. Up 162 on the Dow. We'll be right back. Activision Blizzard, among the worst performers right now in the S&P 500, dagging down the entire communication services part of the market. New antitrust concerns today over microsoft's pending acquisition of the video game company julia borsten with the detail this was always a risk and we've always seen this spread between the deal price and the stock price julia what do we know now we've seen that spread and now we're seeing that spread widen widen as politico reports

the ftc is likely to file a lawsuit blocking Microsoft's $69 billion takeover of Activision. Now, shares of Activision falling about 4% today on the news, though the report notes that the lawsuit is not guaranteed and that the FTC's commissioners have yet to vote or meet with lawyers from each company. No comment from the FTC, but at the heart of its concern is whether the deal could give Microsoft an unfair boost in the gaming industry. Sony has emerged as the deal's primary opponent, arguing it would be disadvantaged if Microsoft made popular games, such as Call of Duty,

exclusive to Microsoft's gaming services. But Microsoft saying in a statement, quote, "'We are prepared to address the concerns of regulators, "'including the FTC and Sony, to ensure the deal closes with confidence. Together, Activision and Xbox will benefit gamers and developers and make the industry more competitive. Now, as to concerns that Microsoft would make

Activision games exclusive to its platforms, Microsoft tells us it offered Sony a 10-year deal to keep Call of Duty on PlayStation. We've reached out to Sony and Activision for comment, but have not heard back from those two companies just yet. Sarah? Yeah, the Warren Buffett angle is interesting, too. Berkshire's been buying up Activision as a merger play all year long. Julia, thank you very much.

Keep us posted. Julia Boorstin. Take a look at the airline stock. They're soaring as the holiday travel season takes off. Up next, a top airline analyst gives us her picks. That story plus one surprising Black Friday trend this year and Tesla self-driving expansion when we very special closing bell market zone bleakly financial group CIO Peter book bar here to break down these crucial moments of the trading day with us plus

we've got Christina parts nevelos on the retail scorecard and Raymond James Sabi sit tight on airlines first up we'll talk broader markets here Peter because the Dow is rallying it's up one hundred fifty points S. and B. five

hundred it's little change. The Nasdaq's lower. Again, it's this pressure on technology. There are concerns about China out there. But we're still up nicely on the week. So with a lot of catalysts coming next week, how would you say we're set up here? With the Dow near a multi-month high? I think the market's riding on this hope and belief that inflation

is rolling over, which I think it is. And that will mean that we're now getting to the tail end of these Fed rate hike cycles and that after the Fed goes another 50 in December, they're not going to have that many left. So that is creating a lot of relief because we know inflation and its trade hikes have been the main pain point for the markets this year. So that's all good and cause for the market rally. On the flip side, increasing concerns about what's happening with the economy. University of Michigan sentiment number out on Wednesday showed a drop from October, a 15 percent or so drop from November of last year. And so the bears will argue, well, the recession hasn't been priced into earnings and the market at this point.

What do you think? Well, I'm somewhat in that camp. I think that's the sort of the next hill to climb for the markets is what is the economic consequences of such a sharp rise in interest rates? What's the economic consequences of potentially, and I believe, a global recession and what that's going to mean for earnings? But it seems like the market wants to deal with that next year. But it's still going to be a major challenge for markets. And I think that's really the next hurdle to climb and sort of the next leg of the bear market. And I'll clarify, we're on track for a seven-month closing high for the Dow again, two and a half months closing high for the Dow again, two and a half month closing high for the S&P if it can squeak out again today. Doesn't look like that's

happening at the moment. Let's talk retail. Black Friday shopping kicking into high gear. Our Christina Partsenevelos joins us. Christina, yesterday, record day for online sales on Thanksgiving. How are things shaping up online today? What kind of intel do you have? Well, so the latest numbers I'm getting right now are from Rakuten and they're an e-commerce platform. And they are saying an interesting trend that people are heading to luxury stores. They're seeing a 9 percent increase year over year for shopping trips to luxury stores. The actual luxury category, though, is up 26 percent year over year. So improvements over there. Other trends, and this is from another firm, we saw gift cards that are making a comeback. And this is according to Captify. What they're seeing is a surge of roughly almost 427 percent higher in terms of searching for gift cards.

And the reason that might happen is because when you buy a gift card, it's a set amount, 25 bucks versus buying a blender that could increase due to inflation or, you know, have the price fluctuate. So with a gift card, that could exemplify that people are a little bit more cautious and concerned about pricing. And then lastly, for those that are watching right now and wondering about sales and discounts and what's getting out there, toys are seeing the largest discount down 30 or 34 percent off of their listed price on average. This, according to Adobe Electronics, is second. But keep in mind, Cyber Monday tends to be a little bit better for electronics.

Good news for parents. The toys are off that much in terms of promos. Christina, thank you. Thank you. How do you factor the consumer right now, Peter? Because so much of this data we're getting, it's hard to know if it's inflation adjusted because people are paying more for everything, even with these discounts. So how do you figure out what the health of the consumer truly is? Well, you're absolutely right. For every percentage increase we hear about, we have to deflate that back for inflation. And what we've seen in a lot of consumer products companies, what they're selling every day, most of it or not, if not all of it is price. I think what we've

heard from a lot of retailers with their earnings over the past couple of months, I'm sorry, last couple of weeks has sort of been this two lane consumer highway where you have the lower to middle income consumer that is clearly spending less, is much more sensitive to pricing, is really focused on the discounts, and that the other lane is the higher end consumer that's clearly spending less, is much more sensitive to pricing, is really focused on the discounts, and that the other lane is the higher-end consumer that's still spending, but even that lane is becoming more sensitive to prices. And Walmart, for sure, talked about how they're seeing more people making more than $100,000 that are now shopping at their store. And I heard earlier the Shopify president, Harley Finkelstein, said that the consumer is being much more intentional.

And I would call it sort of judicious in how they're spending their money. Let's talk travel, because holiday travel is roaring back this year. Nearly two and a half million travelers passing through TSA checkpoints on Thanksgiving Eve. Airlines predicting overall holiday demand will top pre-pandemic levels. Those stocks leading today and adding to gain so far this quarter. Let's bring in Savi Saif, airlines analyst at Raymond James. Savi, every time the market worries about discretionary demand falling off and hitting travel, we get these really strong numbers. So what do you do with the stocks? I think what you're seeing is, if you look at spending, the spending on goods

have been above kind of the normal historical trend line. And what you're seeing is travel is finally getting back to the historical trend line. So I think that's why we're seeing travel spend being so strong here. Now, it doesn't mean that maybe there's some weakness next year, but I think that's the biggest difference between good spending and travel spending, which continues to be very strong and benefiting from work from home as well. So what do you do with the airline stocks? How much is factored in that we're having a strong holiday travel season and what comes next? Like, you know, we're being cautious. We're reflecting a recession in our numbers. And if you look at it in our numbers, there are some airlines you can justify even on 2023 numbers, even if you assume a recession. And Delta Airlines is an example of that. So I think there are selectively some good opportunities here. And we have a strong buy in Southwest as well. And, you know,

there are selective opportunities to be able to kind of buy quality airlines because there is this sense that there's a recession coming. We don't want to own kind of travel cyclical companies. And I think there's something different this time versus kind of past downturns, given that we're still recovering on the travel demand. But it looks like you also like United and Delta as well. Exactly. So Delta is kind of the top picker amongst the U.S. airlines here. Both of those airlines should also be benefiting. Keep in mind that the international markets didn't really open up till June, which is when we didn't require any more testing. So we're starting to see that in long haul international demand coming back.

You have a lot of countries in the Pacific that are just starting to open up the doors. So there is a level of demand that didn't show up this year that will show up next year. Even if you do have a recession, there'll be some new level of demand coming up. And the biggest beneficiaries from long-haul international are Delta and United. What about the financials of these airlines? That was always the concern. And then we had this huge surge of demand. If demand starts to fall off, what do they look like, given the debt they've had to take on during COVID?

Yeah, I mean, I think there's going to be a lot of discipline in the market to continue to improve your financials and improve the balance sheets because they've been hit. Keep in mind that airlines are looking to be reporting a profit this year, even with the Omicron hit in one, two. So I think the setup is really good. You had fuel that's like really quickly, really fast, where fuel prices are double what they were in 2019. It takes time for prices to continue to improve their balance sheets as you go forward.

Savi Sai, thank you for joining me today with your picks from Raymond James. Appreciate it. Let's hit Tesla because shares have been volatile today. The EV maker recalling more than 80,000 vehicles in China because of issues over seatbelts and its battery management software. In the meantime, CEO Elon Musk announcing the company's full self-driving beta software is now available to all customers in North America. On the positive side, Phil LeBeau joins us. Phil, Tesla expanding that full self-driving software.

Is that what the investigation is focused on as well, the safety investigation? It is, Sarah. The investigation is by the National Highway Traffic Safety Administration. And essentially what NHTSA is looking at, they've been looking at the autopilot software for some time. They expanded their probe a couple of months ago. And what they're looking at are 16 incidents. And they want to know exactly whether or not the software is working as was designed. And also, is it designed to essentially make it foolproof? In other words, is there some way for the driver to misuse the system? If there is, then it's on the manufacturer, which would be Tesla, to figure out how do you make this so-called foolproof. In other words, so that people can

use it and there may not be any incidents. But that's early in the investigation. Look, they may come back and say, we don't see a problem with autopilot software and there's no issue for Tesla. But when you're looking at full self-driving beta and the release across the board here in the United States and North America, it's not really a game changer because people who already have it, if they've already got the software or the hardware in the car, they paid 15 grand for it. They're likely going to be using it in some fashion. But it's not a driver at this point, because let's be clear, these vehicles here are not fully autonomous. Let's emphasize that they are not fully autonomous. Let's emphasize that. They are not

fully autonomous. And that is well known within the industry, and regulators are looking at that right now. No, and Musk has said it himself in defense of some of these issues, that that's how it's marketed. So what's the biggest risk for Tesla now? Is it China, the pressures there on supply and demand? Sarah, I think it's a combination of factors. I think China, for one, when you look at what's happening with the economy there, Tesla has been one of the big leaders within the electric vehicle demand over there. And electric vehicles are still in demand over there. But you've got some cross currents with the economy, which makes people say, OK, will demand slow down a little bit?

And remember, Shanghai Gigafactory is their most productive gigafactory. At the same time, and we've talked about this for some time, this is a stock that moves based on whatever catalyst is out there or Elon Musk giving it oxygen. He hasn't been doing that lately. He's primarily focused on Twitter. And when I say primarily focused, that's what we hear about. That's what he's tweeting about. You rarely see him tweeting about Tesla. Occasionally, he will, like with the full self driving beta expansion. Without that, if you're a Tesla investor, you're waiting for that next catalyst and you're wondering when it comes. Yeah, I'm sure Tesla investors were happy to see that he was tweeting about Tesla again for a change. Thank you. Yes, exactly. You bet.

The focus is still there. Peter Buchvar, I just wanted to come to you finally on tech, because the market has recovered, as you summed it up really nicely, on hopes for smaller rate hikes, potentially a pause in the rate hiking cycle, the Fed kind of rethinking how they're going there on the path. And yet technology has not really recovered that strongly as the overall market. I'm looking at groups like information tech, communication services. Is there a buying opportunity there if you do expect the Fed to change its tune in the coming months? I'm still suspect going into next year. I mean, a lot of these tech companies certainly are solid,

but I think the valuations just got so extreme over the last bunch of years that this sort of growth to value trade is not just a six-month, 12-month thing. It potentially is a multi-year thing. And what we're also learning with a lot of tech companies is they're just economically sensitive and cyclical as many other sectors. And if growth is going to slow, if the consumer is going to slow their spending, if businesses are going to spend

less, then all of tech is still going to be impacted by that. And I think it's that realization in this bear market that has re-rated them. And I still think that that re-rating will continue. So really quickly, where do you go now? Are you in more defensive spots like Staples? So I do want some Staples, some of the consumer products companies, still liking commodity stocks like energy stocks, still very much loving precious metals, how difficult that has been, but still positive on them.

And also believing that if the dollar has topped out, because the Fed is almost done raising interest rates, they will benefit, as will international markets. And also emerging market bonds, I find very interesting in local currency, if I'm right that the dollar has topped out. Dollar index up about two-tenths of one percent. But again, it is off its highs. Peter Buchvar, it's been great having you here in the Market Zone. Appreciate it. Thanks, Sarah. From Weekly Advisory Group. As we head into the close here, we're looking at the Dow, which is outperforming.

It's up about 130 points or so, 140. UnitedHealthcare, Home Depot, Boeing adding the most to the Dow gains. Apple is taking off the most. S&P 500 is going to close red just barely. And that's because of tech stocks as well as communication services. And energy is now underperform red just barely. And that's because of tech stocks, as well as communication services and energy is now underperforming as well. You've got industrial financials. They're having a good day. For the week as a whole, the S&P 500 is up one and a half percent. The NASDAQ is up about three quarters of one percent. So rounding out what is a positive week

with a mostly negative session. That's going to do it for closing bell. And now I'll take you into overtime.