Closing Bell - Closing Bell: Rally gains steam, Musk makes a deal, Hasbro CEO’s growth plan 10/4/22

Episode Date: October 4, 2022

U.S. markets saw another sharp rally, building on Monday’s strong gains, with every S&P 500 sector closing in the green and the Nasdaq climbing more than 3%. Holly Newman Kroft from Neuberger Berman and Sameer Samana from Wells Fargo break down the 2-day rally and what they’re advising clients to do now. Twitter shares exploded higher after Elon Musk notified the company he intended to close his deal at the original offer price of $54.20 per share. Analyst Brent Thill joins to discuss what the news means for the future of the company. And the CEO of Hasbro talks about the company’s growth plan following its investor day.

Stocks are surging again as this two-day bounce back gains steam. This is the make or break money hour for your money. Welcome to Closing Bell. I'm Sarah Eisen. Take a look at where we stand right now in the markets. Near the highs, we're up 767 points. Every Dow stock is higher at the moment. The S&P 500 up 2.85%, adding to gains for the week, which now stand at up 5.5% for the

S&P 500. NASDAQ is leading the charge. It's up more than three percent tech making a big comeback basically the spots in the market that have been hit the hardest in the spare market are rebounding the hardest right now the cruise lines are leading the s p up double digits some of the big tech players are having a really strong session like amazon and nvidia and apple here's the s p 500 heat map we'll show you because it shows just how broad this rally is today. Very few winners.

Every sector is stronger on the session right now. Energy's at the top of 4%. Consumer discretionary, though, up 3.5%. So are materials. Worst performing group looks like real estate now, and that's still up 1.3%. We're going to be all over the rally for you throughout the show. Also, coming up this hour, we've got two CEOs with reads on consumer spending.

We're going to talk to HP boss Enrique Lores about the outlook for PCs and hardware in this hybrid work environment. And then later, the CEO of Hasbro, fresh off the company's investor day, where they just cut their full-year forecast. That stock has been all over the map today. We'll also talk to him about the new plans to slash hundreds of millions of dollars in cost. But we'll begin with the top stock story of the day, and that is Twitter rocketing higher mid-session on news that Elon Musk is now looking to complete his acquisition of the company at the original price, $54.20 per share.

Stock is halted still for news pending. Our David Faber has been all over the story, joins us here at Post 9. What a treat to have you here. Working hard today. Yeah, you know what? It has been a longer day than I anticipated it would be. But that's what it is with Mr. Musk. You never know what to anticipate. I mean, last night he's sitting there tweeting about Russia and Ukraine, making a lot of new enemies perhaps. But at the same time, he appears to also tell his lawyers, you know what? Send a letter over to Twitter's board and to the court in Delaware. Tell them I'll just buy Twitter for $54.20. Yeah, that's the price that I agreed to back in late April before, well, things got a bit more complicated. Of course, Twitter would say before

he got buyer's remorse and then try to come up with many different explanations and or reasons why he should be let out of the deal. That is where we were left as of this morning with the possibility of going to court seeming quite strong, in fact, on the 17th of October. Now, there had been plenty of people who had anticipated perhaps there would be some settlement talks. That really wasn't the case. In fact, I was on with you, Sarah, on Friday when we had that weird story involving Ari Emanuel. But there were no talks of significance about an actual settlement. And in fact, there still aren't. What this was, was Mr. Musk deciding, for whatever reason, and we can all speculate about why, that he wants the case to end and that in order to do so, of course,

he has to buy the company at the agreed upon price of $54.20 a share. That is what a letter that he sent, as I referenced, or his lawyer sent last night indicates. But we haven't seen the letter yet. We're either waiting for the court to unseal it or we are waiting for Mr. Must to update his 13D filing. Remember, he is Twitter's largest shareholder, owns about $4 billion worth of stock. So he would update his 13D filing with this letter. So sitting here waiting for that to sort of get a little bit more idea of what it is that he says. But Twitter, for its part, I'm told, is a bit just concerned, wants to make sure everything is appropriate

before it drops any litigation. And so you may find that this ends up in court in front of Chancellor McCormick in some way before it is finally resolved. But based on what everything I've heard and what is in that letter and the expectations on both sides, this deal is likely to come to an end very, very soon in terms of Mr. Musk acquiring the company at 5420, his investors coming in, Sarah, the $7 billion that he raised and the likes of Larry Ellison and Mark Andreessen, them funding, Morgan Stanley coming up with its $13 billion. And there's a look at what they've committed to with other banks. That's not going to be pretty for them to the extent that that was committed to some time ago when the bond market was a somewhat different place. And so one would expect they may have to take haircuts as they sell that debt down. But that being said, the credit worthiness here is

going to be quite high because you have $33 billion in equity ahead of you as a lender, or $32 billion, given the equity check Mr. Musk is writing, along with the $7 billion. We do believe he's raised most of the money for that equity check, but Robert Frank has been tracking this pretty closely. He indicates to me you could have another $2 or $3 billion that he has to raise, if you make sure on the math. But, you know, again, that becomes a bit unclear. Brookfield was in that deal as well. Brookfield, a lot of different investors.

Yes. You have to think that he saw that the chances in the Delaware court weren't looking good for him. You have to think that was the case. And certainly, to the extent that we've been following things closely, they have not been doing a particularly good job in making their case in front of Chancellor McCormick. You know, the latest back and forth was about privileged communications, but also the fact that the Musk side didn't seem to be making good on pledges to share certain communications, or there were text messages that were disappeared somehow. And so you did sense a bit of frustration on Chancellor McCormick's part.

You know, there was this possibility people have raised that she could make a ruling of adverse inference, which would essentially be almost saying that if this witness comes before the court, they are not necessarily to be believed. That would be bad. Musk was supposed to be deposed later this week. There are those who believe that he simply doesn't want to be put in that position. And so, you know, we can go down any number of rows to try to understand what it was that motivated him last night to tell his lawyers, I'll just pay this thing. But certainly you have to think about a couple of those events as being key.

So obviously the stock is moving a lot, up almost 13%, still below. Well, it's halted right now, news pending. So it moved up before that. It's halted, news pending. It moved up but not near where it will once we see that letter and it begins trading again. My question is if we do see it, so it could go up to 5420, is there any regulatory risk still ahead? No, none.

Everything is signed off on. It has been approved by shareholders. And so the only thing, once they sign this deal again, or he commits to the deal he already signed, would be the 15-day waiting period or marketing period that Morgan Stanley has. It doesn't have to exercise those 15 days, but it does have the right under the contract to say you've got to give us 15 days to market our debt. They could easily waive that, and that's why I said earlier

you could see conceivably a deal done within days where Musk owns Twitter by next week, which is pretty astounding given everything we've dealt with and gone through for these last six months or so. There's always a twist. Always. Always. I mean, and I keep imagining, like last night, he's tweeting ferociously about Russia and

Ukraine, making some strange proposals. And then at the same time, he's also, oh, yeah, OK, all right, I'll buy it at $54. I just, the man's amazing. Well, we got a little bit of a window into the text messages from the Delaware court. We did. We did. It's been interesting. But it does appear that very likely we will not be seeing the inside of that courtroom.

David, thank you. You're welcome. It's good to have you here on set. I'll just stay. You can stay. I got to stay till 5. Yeah, we got a good show coming up. OK.

In fact, right now, we're going to talk to Brent Thill. He's the Jeffries Senior senior equity analyst, covers Twitter. Brent, are you surprised that it is looking like it's ending up this way? Not really. I mean, he said at the TED Talk this wasn't about money or the economic value. It was about the democracy of Twitter. And so I think there's been so many twists and turns and it's been, it's been a roller coaster that I don't think that anyone, if you listen to the TED talk,

I think he was very clear that this wasn't a way to make money. What is it? What, what is the status of the company that he is buying now? Employees, how's the business doing? Feels like in the market, given what's happened in the stock market and in the tech stock sector in particular, it wouldn't have been a long way from 5420 at this point, naturally. Yeah, I mean, I think he also has to understand that this has caused a lot of pain on the company. There have been a lot of employee departures. There has been a loss of faith among the advertisers. And so he needed to get this deal, if you really wanted it in the long term, he needed to cut this off and get it moving because he's just inflicting more

damage on the story than he needs to. So I think this is good. We're moving on. We have clarity. It was in a holding pattern. Are we going to land at the runway? Are we taking off? There's clarity now. So I think he needed to do that because it's been they've lost a lot of goodwill among the advertisers. The advertisers have gone other places. The users have drifted. So they've got a lot to do to kind of repair the story now. And so now it goes back to get the deal closed. What about the status of Twitter's business with the advertising market weakening and even the stalwarts like a Google starting to feel the pain? Yeah, I mean, the economic headwinds are going to put more pressure on all the ad names across the board, Meta, Google, Amazon. You go through the list. That's a reality.

And we've seen it in every downturn. Advertisers turn off. They're really going to turn off the platforms where there's uncertainty. And so Twitter is going to face this in the interim, that they're going to not have the faith among the advertiser community as we go into an economic storm. So they have to act quick. He has got to get the playbook out, get this deal done and move forward. Because right now it's in a tailspin. Yeah. Well, Brent, thank you very much for weighing in. And as we

speak, we're just getting some breaking news on this front. The filing is out, the 13D from Twitter that we've been waiting for, David. Yeah, I have been. I'm reading it right now. Probably came out as you and I were talking. Very straightforward and two paragraphs is what we're talking about here. Gentlemen, and it's sent to Simpson Thatcher, of course, the lawyers for Twitter, on behalf of X Holdings and so on and so forth, they basically say, hey, we're ready to move forward

to proceed to close the transaction as contemplated on the 25th of April. That's when the deal was signed, the merger agreement. On the terms and subject to the conditions set forth therein and pending receipt of the proceeds of the debt financing. So, Sarah, very straightforward. This letter does confirm what we've been telling people and basically is now simply in the hands of the court and the lawyers for Twitter and is just subject to them making sure they feel safe, almost in a sense that if we drop our litigation, you're going to go ahead with this, right?

I'm sure that is the case. They have nothing to really be concerned about, one would expect, but nonetheless, you can also anticipate. They didn't think that the first time around either. You're dealing with Elon Musk, right? The Musk party has provided this notice without admission of liability and without waiver of or prejudice to any of their rights, including the right to assert the defenses and counterclaims pending in the action, that being litigation, including in the event the action is not stayed. So they obviously want that to be the case.

And that's it. So we'll see if we get the stock open. Yeah, it's still halting. Because this would constitute the news, confirmation of his decision to tell his lawyers, or I should say his decision to buy Twitter for $54.20. See if it opens before the close. Yep. David, thank you.

Stay close, I guess. Let's get a check on this market rally right now. Going strong for a second day in a row. We are looking at the Dow up about 674 points or so. We're seeing every Dow stock higher at the moment and every S&P 500 sector higher. S&P is up two and a half percent. The Nasdaq up almost three percent. When we come back, we're going to talk to Holly Newman-Kraft, who's a major money manager at Neuberger Berman, about whether you should trust this rally and whether we've seen the peak in bond yields. We'll be right back on Closing Bell here on CNBC.

We are watching Twitter right now, of course. It is still halted for news pending, but we did just get that filing, that news, that 13D came out, where the company did acknowledge that Elon Musk has indeed revived his bid to buy Twitter for $54.20 a share. That was the original takeover, the one that he tried to fight in court. As our David Faber reported last night, he texted Twitter that it was back on. We got the official filing. We'll see if Twitter opens before the closing bell. We've got about 45 minutes left of trade.

In the meantime, we're seeing a pretty broad market rally here for the second day in a row, with the S&P up 2.6 percent, every sector doing well, energy at the top of the market, real estate on bottom, but it's up 1 percent. Joining us now is Neuberger Berman Managing Director Holly Newman-Croft. Holly, you have to wonder, with such a sizable rally, if we are near the beginning of the end. I think people would like to think that, Sarah, but we don't at Neuberger. This is nothing different, I don't think, than the rally we had this summer. People like to hang on to good news. We had a good jobs report this morning that continued the

rally that we saw from the open. But we're not going to have a recovery in this market until the Fed signals that they're going to stop raising rates. And that's not going to happen until inflation starts coming down. So I'm not that surprised to hear you say that because you have been on with us before saying you're defensively positioned. Yes. Stick with quality. The thing is, and so the jobs report you mentioned, the jolts showed a million fewer openings than where we were last month.

That's what the Fed wants to see. So maybe there's some progress. Manufacturing was weak this week. Well, hopefully there's some progress. They've been raising rates the fastest they have in the last 40 years. So eventually it's got to have an impact, a desired impact on the market so we can see those inflation numbers coming down. But, you know, like we've discussed before, there are opportunities in the market today. We do want to be defensive and we want to position our portfolios today so that they can really take advantage of the recovery when it

happens. You're just not ready to go there yet. No, this market has seen 35 moves of 2% or more this year. That's crazy. That's compared to seven such moves last year. I mean, that's insane. So this market is volatile. That's the theme of 2022 and it's going to seven such moves last year. I mean, that's insane. So this market is volatile. That's the theme of 2022, and it's going to continue to stay volatile. So where defensively are you positioned? So we're still underweight equities, but we're seeing a lot of opportunities in the fixed income space. Short-duration munis, you can get yields that are almost competitive with equity returns after tax close to 5%. This year, we've taken our high yield allocation and invested it in floating rate funds.

That's been a great defensive play, down only 4% versus the high yield market, which is down 15%. But now high yield bonds are yielding about 8%, and we're going to strategically move back into that asset class. We are focusing on quality in equities. And you can find quality stocks in every asset class, even in technology. There are chip makers that are trading at 30 times, and there are chip makers that are trading at 10 times. So we will say active management is key, fundamental analysis to buy the stocks that are going to be good value today and positioned to outperform. So interesting. You like the chip makers, even though not exactly defensive. No.

What I'm saying is that there are high-quality companies in every single sector. We are still positioned value over growth. We haven't completely exited growth. That would be a very big tax bill. Because let's also not forget the S&P 10-year average is still 50 percent higher than long-term returns. The 10-year annualized return is 12 percent, whereas the long-term average is 7 percent. So our clients, your viewers, they're still investing money that has had a huge run, even taking into account the downturn in 2022. Holly, thank you very much. Good to get an update from you.

You're not buying it, not buying the rally. Thank you. From Neuberger Berman. Technology is certainly extending its rally from yesterday, adding another 3 percent today. One name that is joining the rally is PC maker HP, though it is still darned sharply on the year. Joining me now in an exclusive interview is Enrique Lórez, the CEO of HP. Enrique, welcome. Good to see you. Thank you, Sarah. Great to be here. You do have to wonder with the market rallying if whether we can get out of this Fed rate-hiking cycle without going into a deep recession. Do you think that's possible, given your vantage point?

Well, what we see today is that we continue to be in a fairly challenging situation, but at the same time, the new hybrid way of working is clearly giving us an opportunity to expand our PC business to grow into new areas. So despite the current environment, we are very optimistic about the potential that we have going forward. Can you just give us an update? Because last quarter, there were some concerns around the guidance.

On what you're seeing right now on consumer spending on tech, printers and PCs, and commercial spending as well. How much is that slowing? What we shared in our call, and I would say the trends continue to be there, is we saw a slowdown of the consumer business and we started to see a slowdown of the commercial business. And I think the trends are very consistent with those projections.

I think what we are seeing is the impact of the current environment. But again, the fundamentals of the company remain strong, and especially the growth opportunities are there and continue to perform very well. You mentioned hybrid work as a big tailwind for your business. And I'm curious, I know you've been following this debate closely and have a lot of skin in the game. Is Manhattan 50% back to work? New York City, just as a test case, is it really, are people coming back to work? It does feel like in September it changed, but we're not quite there yet. What are you seeing?

Well, when I talk to other companies, I think overall the percentage of people back to the office is lower than 50%, especially in the U.S. And we think that going forward, this is here to stay. I think we have found a way where people can really live their lives better and combine them with work. We also see the advantages this brings to companies in our ability to hire talent, in our ability to reward employees in different ways. And for us, it's a great opportunity because of the new products that we can build,

new solutions we can build, and new services that we are going to be delivering to our customers. So you think it's here to stay. What about the supply chain, Enrique? Has it improved? It has significantly improved from where we were a year ago. There are still some pockets where we see component challenges. But if I look at the next quarters, I think the situation will be completely fixed very soon. The other thing we wanted to ask you, of course, is it is Hispanic Heritage Month, and you are one of the few Hispanic CEOs among S&P 500 companies. Have we made any progress as companies have stepped up their efforts on diversity

and inclusion in recent years? And what are some of the best practices that you've seen? I think we have made progress. And the fact that I'm here talking to you today could be one of the examples. But I think at the same time, we need to acknowledge that we need to make much more progress across all fronts, not only in Hispanic front but almost in any type of diversity. And I think that at least what we are trying to do in the company is really embrace that very strongly. We look at HP both as a community where internally we need to behave in the way we think the rest of the world should be behaving, but also as

a platform where we can influence our suppliers, we can influence our partners, we can influence the communities where we are. And also I think it's important that as leaders we take accountability of the change that we need to drive. We need to be transparent, sharing the progress that we are making or not making. And we need to hold our teams accountable to make sure that we take these goals as seriously as we take other business goals. Enrique, we appreciate it. You're shedding light on a number of topics for us. Thank you so much.

It's good to see you. Thank you. Great to see you. Enrique Lórez, the CEO of HP. Banks, take a look among the top sectors in this rally today. Up next, former Barclays CEO Bob Diamond on whether the Federal Reserve should be paying more attention to Credit Suisse and the state of European banks. Dow's up 700. We'll be right back. We are watching Twitter. Stock still hasn't reopened, still halted for news pending. It's

been that way for several hours now, but we did get the news just 15 minutes or so. That was the filing from Twitter, the 13D that did acknowledge Elon Musk's revived bid to buy this company for his original price tag of $54.20. Looking like they'll avoid any of the legislation and the fight that Musk was having in the Delaware court to reverse this deal. We got the news. We'll see if the stock opens. We've got 30 minutes left of trade. In the meantime, we're watching this rally. Take a look at the financials, making quite a comeback this week as concerns over the health of Credit Suisse have eased. Joining us now is Atlas Merchant Capital CEO and former Barclays CEO Bob Diamond.

Good day to have, good week to have you on, Bob, because you used to lead one of these European banks. What do you make of the fact that these executives are having to try really hard to assure their shareholders that everything is OK? So I think against, this is against the backdrop, Sarah, of something you and I have been talking about since we formed Atlas Merchant Capital in 2015, and that is the competitive strength of the U.S. integrated banks versus those in the U.K. and Europe. And, you know, the actions taken by the regulators post the financial crisis in the U.S. around TARP allowed two banks, Bank of America and Citi, who at the moment without tarp were insolvent, to become very, very strong. They recovered. And today they're competing very, very strongly in

the U.S. market and globally. And we've seen this across Europe. Royal Bank of Scotland is still owned by the government. You're seeing the situation and the challenges at Credit Suisse today. We've seen the trials and tribulations of Deutsche Bank over a decade. So I think the theme here is that the European integrated banks were not allowed to recover and prosper post the financial crisis, and we're seeing a continuation of that. So Credit Suisse is in some ways an example of that and in some ways a separate case. So you don't sound very optimistic. How bad do you think it's going to get for some of these companies like Credit Suisse? What do you think is going to happen here? You think we're going to see mergers? You know, I think over time across Europe, you're going to see some of the stronger

banks acquire some of the weaker banks. I think probably seeing that domestically before cross border in the situation in Switzerland. You know, I think it's a one off in terms of the performance of the investment bank and credit suites over a period of time. And I think what the markets are looking for is for this management team. And I think what the markets are looking for is for this management team. And I think it brought in a strong management team with Axel as chairman and Uli as CEO and now Dixit Joshi as CFO to make some bold decisions around the investment bank and allow kind of that core Swiss retail bank, asset management, and private bank continue to grow. But, you know, one of the things I can tell you for sure is this is not 2008.

This is not systemic. This is about one institution in a country, Switzerland, with a very strong regulator. Would you buy this stock right now, Credit Suisse? You know, I was thinking you might ask me that. I think if you look back in five years and you say at this moment I had to make a decision to buy credit suite shares or sell credit suite shares, I would clearly be a buyer. You would. So you think the credit default swaps, all of that is a bit of an overreaction. It's less than 20 percent of book value. I think the situation with the investment bank needs to be resolved. I think, you know, that's priority number one. But I think the retail bank

is very strong. And I think that Credit Suisse has a good position in both asset management and private banking. All right. That's quite a statement of support. You know, Bob, what I ask you every time, which is, are you still planning to take Circle public? Because you're at the intersection here of two very bad trends with SPACs and with crypto. So is that deal going to happen still? Yeah. Let me take each of those in turn. I mean, SPACs have been around, Sarah, for years and years and years and years. And there have been many successful SPACs. And then we hit the hot market of the last two years, which is already dissipating. But SPACs will be here for a long time, high-quality SPACs.

We made an agreement with Circle that was to seek approval of the SEC a while ago. It's been a very, very strong collaboration between Concord Acquisition Corp. and Circle. We continue to wait for the final approval from the SEC so we can go public. But we really, really like this business in Circle. It's about payments. It's a really well-run business by Jeremy Allaire. We're encouraging the development of a more robust regulatory platform around stablecoins. We think we would benefit as the most conservative. So, yes, we're very

much looking forward to taking Circle public. I have a number of things. I'll just on stable coins. Do we why do we need stable coins? The U.S. dollar is up 15 percent this year. Everybody wants the dollar. It's the most valuable place to turn right now. It's just a digital version of the dollar. And I think, you know, to say that we're not going to have a digital version of the dollar would be very strong, not from the central bank. It's not a U.S. It's not a central bank digital currency, which could be coming. No, USDC is not a U.S. central bank digital currency, nor does the Fed necessarily have to develop it on its own. I mean, the Fed did not develop the Fed wire. The Fed wire was developed by private actors and it was highly regulated by the Fed.

Swift was not invented by the central banks. It was it was developed by private actors and then highly regulated. Why can't we in America have a digital version of the U.S. dollar that is strong. And in the case of USDC, all of the redemptions have been in the dollar. They always will be in the dollar. We've had far more redemptions than we have outstandings. And why can't we see a strong regulatory environment or strong regulatory body doing their job, which is regulate the the strongest stable coins bob thank you it's always good to talk to you especially on a week like this on those european banks appreciate it bob diamond by the way the dollar is weakening it's actually down significantly this week which

is part of the rally here for stocks still watching twitter shares are still halted but could reopen any minute let's bring back david favor for the latest on the mustail so we got STILL WATCHING TWITTER, SHARES ARE STILL HALTED, BUT COULD REOPEN ANY MINUTE. LET'S BRING BACK DAVID FAVOR FOR THE LATEST ON THE MUSTALE. SO WE GOT THE FILING. WHY ISN'T THE STOCK OPEN? WE GOT THE FILING AND WE GOT A STATEMENT FROM TWITTER ACKNOWLEDGING THEIR RECEIPT OF THE LETTER. SO IT SHOULD OPEN ANY MINUTE NOW. ONE WOULD EXPECT IT WILL OPEN PRIOR TO THE CLOSE ABOUT 25 MINUTES FROM NOW, SARAH.

SO WE'RE WATCHING THAT. IN FACT, I THINK THEY'RE STARTING AGAIN. THERE'S A CROWD GATHERING. YEAH, THEY'RE STARTING TO SCREAM AND YELL. SO THAT WOULD INDICATE THAT THEY'RE GETTING VERY CLOSE. We were watching that. In fact, I think they're starting again. Yeah, they're starting to scream and yell. So that would indicate that they're getting very close. And as we said earlier, stock is expected to gap up. Not quite 54-20, but probably not far from it. You know, we read the letter, as was sent last night.

It's just Musk is so, I mean, everything he does is just weird. That's the only way I can put it. Why wasn't there a settlement talks? Why didn't they agree to all these things ahead of time that they need to sort of nail down, not big things, but little things that, you know—so you satisfy every other condition? It's not your traditional M&A story. No, and in no way. And that continues.

There you see, you know, 52. Looks like it's open. Yeah, it'll open very soon. But, Sarah, there are a couple of things that Twitter wants before it's going to just drop its litigation. One main thing would seem to be Elon Musk has to sign a solvency certificate. Essentially, it says based on the new capital structure I'm proposing for Twitter, I submit it will be solvent. That's for Morgan Stanley. So Morgan Stanley moves ahead with the debt financing. He hasn't done that yet, or at least he hasn't said anything in the

letter about doing that. So it's those kinds of fairly obvious, not overly important things. Well, I shouldn't say overly important, not overly onerous things that need to occur before, I guess, everybody's going to be a believer here that this is going to happen. And you can expect that people would perhaps wait until the very, very last minute to believe it because of everything that's happened previously. We've got a good crowd here standing around the post waiting for Twitter to officially open. We've got some indications on the board. But clearly, stock is going to go up, and this should remove all the layers of uncertainty around this deal, right? Yeah, I mean, listen, even if you trade right there at the top of the bid-ask, it looks like, you know, 52.50.

You're still talking about a decent spread to 54.20, but that does reflect this concern, at least on the part of Twitter's lawyers, and say, well, we're not dropping any litigation until you do everything you're supposed to do, Elon Musk, which includes, you know, for example, signing a solvency certificate, a couple of other things. So there will be a spread there for a deal. By the way, once he does all that, we'll close very quickly. And then the hard work begins. Then the hard work begins. And shareholders get 5420.

Twitter is a private company and Elon Musk owns all of it. And also, remember the outrage? I mean, really, in just the general public, the beltway about Elon Musk taking this company private and trying to make it into the town square of free speech. Yes. It's a huge experiment and one that really riles people up. It does. And it's funny because that has sort of been on hold pending, of course, the expectation that we would be going to court

and therefore still unclear whether he would be the owner and would certainly not be the owner for quite some time. Now we're looking at a scenario where, as I said, conceivable as soon as next week, he could own Twitter. It will no longer trade. This will be the last time you ever see guys around the post screaming at each other. So yeah, you're right. There's going to be a lot of perhaps consternation in a very short period of time here. But it's happening. All the sign offs have been done pending these little things that Musk needs to still do to make sure that he's believed. You do wonder if this if this if he went through with this now, for instance, what the price of Twitter, like how good of a deal is Twitter getting here? Such a good I mean, this was April 25th. This was before the downturn in the NASDAQ,

before the real downturn in the markets, certainly June, what we've seen. And Twitter was already in weaker shape. And the ad market has weakened since then. There are people who believe that this stock would trade at $15 were it not for the deal. So, you know, he could have come back for it at, let's call it, $ bucks and put a premium on that and paid a lot less. He is spending way more than he would have if he just waited six months or never done it at all, of course. But that's, you know, the question I have is also why not try to settle? Why not save yourself at least a couple of billion dollars? There's an expectation,

Sarah, that the board would have at least said it will take 50. I just want to show you its opening here up 22 percent or so, 51 80. So not quite at the 54 20. No, there is a spread again based on at least people being somewhat hasn't been above 50 in a while. About no, it hasn't about whether he still is serious, despite this letter that he apparently sent while he was also tweeting ferociously about Ukraine and Russia and probably doing seven other things. So that's the life of Mr. Musk. But, you know, why he didn't settle is also a question because he conceivably could have gotten off some discount to that $54.20. You never know what the board's approach would

have been. As I had indicated, you know, many times in my reporting, they really felt like they had an incredibly strong case and were looking for a 50-4-20. But that said, was he trying to avoid the deposition later this week? His lawyer was supposed to be deposed, I think, as soon as today. You know, it's possible. Maybe there was just something that really concerned him about those potential depositions. Well, he wanted out of the deal, and their argument was the bots were not as reported. That's correct. And maybe that wasn't as strong of a hand.

All the analysts say. We've kind of known that. And even based on the arguments that they've made so far in court, we've gotten the sense that his side was at a decided disadvantage. And he certainly is a very smart man and could potentially see the writing on the wall. But he still might have said, hey, you know, how about 50? Should I take 50? And then you get everything signed up and then we get a press release that says it's all done.

Instead of, again, a letter saying I'm going to pay full price. Never goes as expected here with Elon Musk. And as Brent Thill from Jefferies, the analyst who joined us at the top of the hour, said he's getting a weaker company. Because not only has this been a major distraction distraction they've seen employees leave because of it and the ad market has turned for the worse um and he's going to be the ceo of this company at least this is based on my reporting from some time back so i haven't heard anything different it's possible to be the ceo but he is going to i remember the investors who were being brought in, the $7 billion we've referred to, talked to a couple of those investors and they've indicated in the presentations that Musk had made to them

he would be interim CEO pending the appointment of a permanent CEO. Now, maybe he's found that person in the interim, so we'll see. But it's possible that he will be running that company and obviously SpaceX and, of course, Tesla. Boring company. The boring company and the other company, Neuralink. By the way, Tesla is higher still, 2.3%. There was a point where as the deal chances increased, Tesla shares decreased. He doesn't have to sell much more.

By Robert Frank's math, very little. Maybe another $2 billion, but when you're worth $200 billion, you could probably just look in his couch. Well, there's that issue, but there's also the distraction issue. This is a major project. That's a bigger issue. Yeah. That's a bigger issue.

Especially if he's going to have to lead it. Yeah, leading it, worrying about it. Listen, I don't care how rich you are. $25 billion of your money in there, that'll get his attention. And he's obviously going to be focused on making sure that that is money good, if not able to actually compound it. Twitter shares are open for the first time in several hours, confirming the company, confirming that that deal has been revived. And Elon Musk will buy Twitter 5420. David says the deal could close

as soon as. Well, we'll see. You know, if you get all these other little things signed off on that we've talked about and that the court agrees to and that the litigation is dropped. So let's say that takes a couple of days. Then it's just up to Morgan Stanley if it wants to exercise its right to try to market. It's that over 15 days or just as we waive that, it could close next week. Twitter's up 22% or so, $51.95. Again, the deal price $54.20. We're going to keep following Twitter for you. Also up next on the show, Hasbro's CEO on the Toymaker sales guidance cut and whether that's a red flag for the holiday shopping season. Still got a nice rally going up $7.65 on the Dow. We'll be right back.

We are now in the closing bell market zone. What a busy hour. Wells Fargo Investment Institute's Samir Samana is here to break down these crucial moments of the trading day. Plus, we've got Hasbro CEO Chris Cox on Investor Day and Julia Borsten on Twitter and Musk. We'll kick it off with the broader market because we are seeing a sizable and broad rally for second day in a row. And it looks like we've held the gains pretty much. We're up more than 700 points on the Dow. S&P 500 is up more than 2.5%. And the Nasdaq is up even more than that right now.

It's up 3%. Samir, this whole rally is about, yet again, reassessing the Fed rate outlook this week in light of some weaker data on manufacturing and job openings. Does that make sense to you? We've been fooled before. Would you get back in? You know, it makes sense, but again, it's probably still too premature. And in some ways, it seems like the market's trying kind of a Jedi mind trick with the Fed about, you know, you will cut rates. I mean, nothing in what the Fed saying suggested they're willing to cut rates next year. I mean, if anything, everything they're saying is suggesting that inflation is corrosive. I'm using their words, not mine, and that it's going to linger for some time and it's going to

take some time to bring it back down. So for all those different reasons, I mean, again, I think it's OK to nibble kind of in the lower end of the range, 36, 3700. But there's no reason to chase this rally higher. Yes. and you are defensive, just like Holly Newman-Kraft was earlier. Let's hit Hasbro right now, because shares have been all over the map today. They initially fell sharply, as you can see. Actually, they initially rose, and then they fell sharply after the company issued guidance and have come back since into the green of 2%. The news was they cut guidance for 2022, but also announced a big restructuring plan where they'll cut hundreds of millions of dollars in costs over the next

three years and have outlined a new strategy for driving sales and profits. Shares are down more than 30% on the year. Joining us now is Hasbro CEO Chris Cox. Chris, thank you for joining us fresh off of that investor day. Welcome. Thanks for having me, Sarah. So first on the guidance cut, what is it out there that you're seeing right now that is weaker than expected? Well, we knew going into Q3, going into 2022, Q3 was going to be our toughest comp of the year. And indeed, it manifested that way. You know, as we look for the balance of the year into Q4, we see a growth quarter, but we have some concerns around particularly some entertainment deliveries, which causes us to have a more measured guidance

for the full year. Now, that said, you know, we think Q4 queues up our new plan, which we're calling Blueprint 2.0. It includes a blockbuster lineup of entertainment, which starts off with Black Panther, Wakanda Forever in November, follows that up with seven consecutive blockbuster movies, two of which will be our own, including the upcoming D&D Honor Among Thieves film in March, and then following that up in July with Transformers Rise of the Beasts, the seventh blockbuster film in the Transformers franchise. And then we have a ton of new innovation coming out,

like our new Nerf Gel Fire Blaster, as well as Wordle the party game based on, you know, the internet sensation Wordle. And then we announced an all new cost savings initiative and operational efficiency initiative that we see having rising impact quarter over quarter. So do you think the street, you've talked a lot about entertainment and you're talking about sort of refocusing the priority businesses and the key brands. Do you think the street understands the strategy or thinks of you as sort of an old school toy maker? What's the disconnect? Well, I certainly think the street appreciates the power of the brand blueprint. It's been a great strategy for us over the last decade,

driven a tremendous amount of return. You know, over the last couple of years as an industry, we've had to deal with COVID. We've had to deal with supply chain challenges and most recently inflation. I think the strategy we outlined today focused on fewer, bigger, more profitable brands, leaning into our gaming strength, which is a $2 billion super high profit, high growth category for us, and the $250 to $300 million of operational run rate cost savings that we can achieve over the next three years. I think our investors and analysts were impressed. Where are the cost savings going to come from? Is that layoffs? It'll be a combination of what we call labor

and non-labor. Labor includes contingent staff and includes full-time staff. Non-labor includes systems, inventory, and a variety of other aspects of our corporate overhead. You know, the first half will be a little bit more focused on labor. The second half will be more focused on non-labor, particularly as we make those system investments to drive our supply chain, drive our improved demand planning, and gain efficiencies in IT. What about the macro environment, Chris? There are clearly worries about discretionary spending, especially going into the important holiday season for you. You've told me before that you think that games and toys are, I don't know if you use the word recession

proof, but definitely not as, are more immune than some of the other categories. Is that not what you're finding? Is that why you lowered numbers? Well, toys have proven again and again to be a resilient category in bad times. And we continue to see the toy category up this year. Games, likewise, tends to be a very economically resilient category. And our biggest brand, Magic the Gathering, which we just announced is our first billion-dollar property,

that's grown for 12 out of the last 13 years, and we expect this year to be another growth year, so that'll be 13 out of 14. So in general, we find the consumer holding up. Inflation is a concern, and, you know, that contributes to our measured outlook for the company. Are you passing along higher prices?

Is that still happening in your portfolio? I know you've dealt with supply chain issues like everyone. We have had price increases over the last couple years. That's basically been to keep up with the rising costs in our supply chain. However, we are seeing some indications of abatement, particularly in logistics costs over the last couple months that we expect to continue into 2023 and 2024. So you're putting your stamp, your new CEO on this company and announcing all these new strategic transformations. How different is this company going to look in the next year or two than where it is right now?

Well, I think the biggest thing is it's going to be far more profitable. You know, we announced today that we have a plan to improve our profit by 50 percent over the next three years. Our free cash flow is going to be over a billion dollars by 2024. And we're going to be driving a lot of incremental discipline into an already great company, driving an extra 250 to 300 million dollars of cash savings per year, which at our current multiple, that's worth about four billion dollars of enterprise value.

I think that's why the stock has turned up. Analysts impressed by the 50% boost in profits. Chris, what about entertainment? You started by telling me that's going to be a big focus. It was very delayed during COVID with production. You have a slate coming out. What does that look like? And what do investors need to know about the cost benefit analysis there? Yeah, I mean, our entertainment roadmap is very strong going into 2023. Between Hasbro and our partners, we have six blockbusters coming out between January of next year and July of 2023, plus a host of scripted and unscripted content from our partners at Disney, as well as from our teams at E1. You know, in terms of entertainment, Hasbro has been in the entertainment business since the 1980s.

It continues to be a source of strength and resilience for our brand Blueprint, and something we'll be continuing to invest in, particularly on our Hasbro-based IP. That really drives that Blueprint flywheel of digital engagement, merchandise, and licensing. And I think you'll see over the next couple years, we're going to double our overall investment in Hasbro-based IP entertainment, and that's going to run the gambit from blockbuster movies like D&D Honor Among Thieves to reality TV or unscripted TV shows like Plato Squished. You should do a Guess Who one, because that's really what the current rage in my household is. Chris, thank you. Chris Cox, we appreciate it. CEO of Hasbro, thank you for taking some time on Investor Day. We're watching Twitter. We're glued to Twitter

all hour. They did just reopen moments ago, and they have been surging up 22 percent after the company said it received that letter from Elon Musk and he intends to close the transaction at the original price, $54.20 per share. Julia Boorstin joins us. Julia, what insight can you share as to why this is all happening right now? Oh, Sarah, it's all about the timing. We are less than two weeks to go from when that trial was set to start on October 17th. And Elon Musk was set to do his deposition on Thursday and Friday of this week. He must have been consulting with his legal teams, looking at his options. I know from sources close in situation that Twitter always felt very confident that they had an ironclad deal. And now it seems

like Elon Musk is realizing that none of the things that have happened in the past couple of weeks have worked in his favor. And those are two key things here, Sarah. First was the whistleblower. That whistleblower came out with very harsh criticisms of Twitter, but none of them really supported Elon Musk's case. And then there were those text messages that came out last week as part of the discovery for the trial. It indicated in those texts that Musk was aware that there was a bot problem at Twitter and knew that that would be part of his job to fix it. It also, I have to say, Sarah, those texts didn't make him look that good, made him look like he wasn't actually being constructive

in his back and forth with Twitter CEO. Got it. Really good caller, Julia. Thank you very much. Keep it coming as we monitor this developing story. Julia Boorstin, we've got just over two minutes to go in the trading day. Samir Samana, you say stay defensive. You're not quite convinced that the market has found a bottom. But, you know, you'd miss these powerful rallies if you're sitting out of the market. So what is the strategy right now? It's not going to be like one day the Fed is going to pivot, right? And then that's been the bottom. Or is that what you're expecting? No, that's a great question. What we've been telling people is, you know, look, again, on the down days, you know, feel free to provide liquidity,

because especially in these markets where liquidity is so scarce, you know, on the down days, you get some pretty spectacular moves. And for investors who're kind of thinking, you know, over the intermediate to long term, we've got a, you know, 4,300 to 4,400 target for the S&P for next year. And what we've been telling them is, you know, look, if you can buy this market in that 3,600, 3,700 area, you're going to be feeling pretty good, you know, once the economy starts to turn sometime later next year. So to your point, you know, please don't try to tell the market, you know, go ahead and please kind of keep putting money to work over time and you'll look pretty good. Yeah, the market always looks ahead, ahead of the Fed, ahead of all of the turn. So what about

tech in particular? I just wanted to home in there because the Nasdaq's up 3.2 percent right now. It's up more than five and a half percent for the week. Obviously, it was the hardest hit going down. And so on these rally days, I mean, you're just seeing tremendous strength. Do you have a strategy there on how to capture the upside on days like today without getting into some of the risky business that gets hurt really hard when there there are fears of rising rates? Yeah, so we think tech, energy, and healthcare are, you know, sectors that can play kind of both in this, you know, middle ground kind of period where we're kind of going through a transition and lead, you know, somewhat on the other side as well. We think consumer discretionary, which a lot of people kind of lump with tech, which has kind of your e-commerce and EV players, we think that will continue to struggle. Again, as the consumer feels the most pain next year,

that's when we think the brunt of the recession hits. And then comm services, where you've got search and media, that's probably a neutral. So that's kind of how we would view growth as a whole, would be tech would be our favorite play there. Comm services, neutral. And discretionary would be the unfavorable. Samir Samana, thank you very much.

Wells Fargo Investment Institute Senior Market Strategist. As we head into the close, take a look. The Dow's up 800 points, near the highs of the session. Every Dow stock is higher right now. In fact, this is the Dow's best day since May 4th, when the Dow gained 2.8%. So far for the week, we are nicely higher on the two days to start this week. S&P 500 looks like it's going to close up about 3%. Again, best levels of the session right now.

The Nasdaq also sharply higher, up 3.3%. And look at small caps. They're up almost 4%, a powerful rally, filled in part by a weakening dollar and lower treasury yields. Another rethink of the Fed rate outlook. That's it for me. I'm closing now.