Closing Bell - Closing Bell: Stocks Sink, Nike's Warning & Intel's CEO On Semiconductors Slumping 6/28/22

Episode Date: June 28, 2022

Stock selling off on Wall Street following disappointing consumer confidence data. Satori Fund Founder Dan Niles says Nike's weak revenue guidance is a warning for investors and discusses why he sees more downside ahead for the market. Intel CEO Pat Gelsinger on today's tech sell off and whether inflation and recession fears are leading to a slowdown in semiconductor sales. Fmr. Treasury Secretary Jack Lew on whether he thinks the economy will avoid a recession. And Piper Sandler's Jeff Harte on whether investors should be buying beaten down bank stocks in this rising interest rate environment.

Well, the major averages pulling back sharply near session lows after an early rally attempt. NASDAQ is down more than 2.5%. The most important hour of trading starts now. Welcome to Closing Bell. I'm John Ford. Sarah Eisen is covering the Aspen Ideas Festival and is going to join us a little later in the hour. And here is where things stand in the market right now. You can see there the Dow is down about one and a third percent, a little bit more. The S&P down close to two percent. The Nasdaq faring worse of all,

about two and two thirds of percent down. The Russell a little more than one and a half. Check out the biggest decliners right now on the Nasdaq 100. See, it's column up. Datadog, MercadoLibre, DocuSign, AMD, Match Group, all down more than 5%, just about 6% on Match Group, and the others down more than that. Coming up on today's show, chip stocks getting hit hard today. We're going to talk exclusively with the CEO of Intel as the discussion over congressional funding of the CHIPS Act heats up. Sarah Eisen is going to join us with Pat Gelsinger from Aspen in just a bit.

But right now, let's get straight to this sell-off. Mike Santoli joins us now. He's taking a look at one part of today's consumer confidence report that sent stocks lower. Mike. Yeah, John, early rally attempt ran right into some pretty rough 10 a.m. data releases. Now, the Richmond Fed was weak. That sort of kind of inflamed the raw nerve about a manufacturing slowdown. But look at this within the Consumer Confidence Survey, which itself was disappointing, showed you consumers still in a dim mood with the outlook being pretty challenged.

Is the expectations for one year forward inflation? This is a question they've asked for a very long time. Record high, up near 8%, basically, which is where the last CPI print was around 8%. So that's a concern, and it gets the market back in this mode of worrying if the Fed is worrying about consumer survey-based inflation expectations. Usually not a market mover, but Jay Powell cited the University of Michigan inflation expectations in justifying his three-quarter percent move. Now, one final point here. Look at these instances when it did spike. That was in 1990. You have here, that's 2008. It's basically a proxy for oil prices. This is when oil was surging for one reason or another. You also had some recession

scares. The actual inflation rate in these periods following that were nothing approaching what was expected here. Okay, in 08 it was under 4 percent, in 2011-12 under 4 percent. My point is it's not predictive, but the fact that it's getting embedded in expectations at least is one more thing that says the Fed has more work to do. It's like that scene in Ghostbusters, right, where they're supposed to clear their mind and not think of their greatest fear. It's not that consumers are great at predicting inflation, but if they expect it, then they're going to pay more for stuff. And if they're going to pay more for stuff, that's going to fuel the possibility of inflation. That's the logic, John. But it's also this sense

out there that the Fed feels it just needs to get rates higher in a hurry. And it's going to use this to buttress that campaign, even in a rhetorical way, even if they don't fully believe that consumers behavior is going to change that much. All right. I can blame Ray for this one. Mike Santoli, thank you. Let's get into this tech sell off. One of the worst performing sectors today. Joining us now, Dan Niles, founder of Satori Fund. And you're not on the phone, Dan. This is this is looking today like what you've been predicting for a while, a series of bear market rallies that fade. What are the characteristics here that you're looking at, maybe particularly in tech, to see if your thesis is holding up? Well, I think Nike this morning is a good harbinger of what you can expect during earnings season.

And so I was looking at it closely. And if you look at the forward numbers, they got cut. And we had a tweet on it this morning. And none of the things that they talked about were unknown. They talked about foreign exchange. We all know the dollar is up a lot. Microsoft actually pre-announced negatively off of that six weeks after they gave guidance. They talked about china uh being an issue on the demand side so again not a huge surprise there we know the cities are being locked down and they talked about supply chain costs and freight costs again no surprise there what's interesting is this morning the stock was obviously up three percent pretty early and now it's down about six percent and so you've seen this sell-off even though everything that they talked about, you kind of knew ahead of time.

Stock's already down over 30% for the year. And it's still getting hit. And it's at near a new 52-week low. So I think that gives you an idea of this whole mindset of, oh, the bad news is fully discounted. And they're down so much. And you just got to buy them and they're down so much and just gotta buy them because you know they're gonna go up that worked over 13 years when you had a fed that was backstopping every move lower in the market the fed is now dealing with inflation they're not going to backstop this in

fact this is kind of what they want which is demand slowing down to try to cool off inflation a little bit so the fed is your enemy for the first time. Dan, what about the Snowflake upgrade today? Brentville upgraded it and it's still down 3%. Does that fall in that same bucket of shrugging off good news potentially and selling things off and that telling you something about this market? Absolutely, because Snowflake at the end of the day is still incredibly highly valued and i think the mistake a lot of people are making is going well business sounds good today and that's true but you have to remember you've heard about a lot of companies going ahead and either not hiring or starting to lay off people in the tech industry where just a couple of months ago

it was about oh we can't get enough people to fill all these jobs and so if you are now starting to reduce your workforce or stop your workforce from growing you're not going to need as many seats from a snowflake or other software so that will show up later in the year where the impact you're seeing today is more driven by consumer demand slowing down what you should see later during the year where the impact you're seeing today is more driven by consumer demand slowing down. What you should see later during the year is the business demand slowing down because those companies that serve the consumer are now seeing slowdowns. Well, that's what I have been wondering, Dan, and I think maybe we've talked about this before, but this idea that

consumers are spending now, consumers are going on vacation because darn it, we deserve it. We've been waiting for this for a long time. But with these concerns about food prices, gas prices being high, once we get back right around Labor Day, is there going to be this big pullback? Boy, I'm getting the credit card bill. Now we've got to tighten belts and that ripples through the economy. What are the metrics that we got to watch to see if that is actually playing out and those consumer concerns become business concerns? Well, I think there's a couple of things intertwined here. So we'll try to post a chart on this on our website. But one of the things that we look at is that during the pandemic, you saw this big surge in spending on goods. So things like smartphones, PCs, lawn furniture,

things that helped you live at home when you couldn't go out. You saw this collapse, obviously, in services spending by the consumer because you can't go to bars, restaurants on vacation, et cetera. But now what you're seeing is that's starting to reverse. So my feeling is that you're going to see a lot worse numbers coming out of the companies that sell goods versus the companies that do services to let you go on vacation. Because I think what's going to happen is you're going to have a really bad recession in the goods sector of the consumer economy. But the services sector hangs in better than we are thinking because of that shift. ship. But on the other hand, we got this tweet out from an analyst about Qualcomm and Apple perhaps not being able to ditch Qualcomm's modems in 2024. That stock is up better than 4%. And this is a company that was very bullish their last earnings round and how they're selling a lot of technology

into industrial IOT and so many companies looking to build technology into their manufacturing process isn't that a potential signal in the other direction I don't really think so because you know whether Apple replaces Qualcomm dish in 2023 or in 2024 don't forget they replace Qualcomm in the application processor that goes into the smartphone eventually they'll get around replacing the modem which is what Qualcomm is selling to them right now so it may not be in 2023 I think it'll be in 2024 don't forget they replaced the microprocessor obviously built their own so this is just what Apple does right they keep pulling

more and more stuff in-house which is good because it helps them integrate all that with the hardware that they have. But, you know, whether it's this year or next year, I firmly believe Qualcomm will be designed out. It's just a question of when. Okay. Cristiano Amon would have, would beg to differ, but we will certainly see. Dan Niles, thank you. Thank you, John. We're going to have much more

on this sell-off throughout the show. And up next, an exclusive interview with Intel CEO Pat Gelsinger following last week's warning that Intel's Ohio factory might be delayed. The plan might shrink if the CHIPS Act funding from Congress doesn't come through soon. You're watching Closing Bell on CNBC. Welcome back. Check out some of the big chip names getting hit in the sell-off. You see NVIDIA down more than 5 percent, AMD down more than 6. Intel actually faring a little better than the Nasdaq overall, which is down nearly 3%. This after two positive days in three for the NASDAQ. And now Sarah Eisen joins us with a special guest from the Aspen Ideas Festival. Sarah. John, we'll pick right up there. Thank you very much. With me here from the Aspen Ideas Festival

is Intel CEO, Pat Gelsinger. We just got off a panel together. It's good to have you on the show. Thank you, Sarah. Great to be on the show again. Well, obviously, we're going to talk about the chipsack, but we've got to start with the market because NASDAQ's down another 3%. The semiconductors get hit every time there are these concerns about the economy and rising interest rates. Are you seeing that in your business? Yeah, it's a turbulent market, right, at the end of the day. And obviously, the implications of inflation in the U.S. and tightening a monetary policy to address that, you know, the implications of Ukraine and energy

prices in Europe and China, right, you know, and their supply chains and COVID and so on. So you have all three major economies having some headwinds across the world. And obviously, this is now, you know, blowing through the business business. So yeah, we think it's going to be a choppy environment for a period of time. And the markets reflecting that isn't particularly surprising. At the same time, hey, I'm on a five-year journey as we're rebuilding this great company, rebuilding this industry as well. So we're not too worried about near-term swings. It's very much about what we do for the long term. Do you welcome softness in the economy right now as a company that's been at the center of the chip shortage, which is driven by, obviously, supply chain problems, but also this huge pickup we've seen in demand? Yeah, you know, I think of it through two lenses. You know, I mean, one is,

you never, you know, everybody wants to be up and to the right forever, but we always know that's never the case. And as we're rebuilding Intel, you Intel, this is a good time for me in the sense that a little bit of austerity as we're addressing and rebuilding the company just helps me to drive change more rapidly. But also with the significant shortages that we've seen now for multiple years and forecasted to last for a couple of more years, a little bit of reprieve in the market hopefully will allow us to catch up a bit more rapidly and get to a better supply-demand balance situation. So you created a lot of drama last week when you delayed the groundbreaking ceremony of the new chip plant in Ohio. What was the thinking there? What message were you trying to send? Well, you know, first, we had never been public on the groundbreaking time, but we were planning on doing it in July. And, you know, with that, you know, we were expecting chips to be done.

And we were sort of... The CHI Act, the legislation. Yeah, the CHIPS Act and, you know, that legislation, you know, it was passed over a year ago by the Senate. And I'm just baffled, right? You know, frustrated, anxious to see this come across the line as they're now in this conference process. And without some certainty of that, you know, as we said when we announced the Ohio project, we can either go slow and small with the project and we'll just do a couple of

fab modules there this decade, or we can go big and bold and go from 20 billion up to 100 billion. But an absence of certainty of getting that across the line, it just didn't seem prudent for us to be barreling as aggressively ahead and to send a clear message to Congress, we need this done. So what is the latest? You're on the phone all day with lawmakers, I imagine, talking about this. Is it going to get done before the midterms, after the midterms, ever? And, you know, I think there is, you know, obviously the House and the Senate are now

in conference process. And, you know, there was too much added around the House bill, things that weren't directly related to, you know, competes and chips. You know, we're sort of pulling that away and getting down to the core issues. You know, we've really challenged and we were chatting with Senator Portman this morning. You know, we are at game time in Congress. We need this done before the August recess. Or else what? Right. Else, you know, it does potentially fall into the fall season. And obviously, you know, with midterm elections, boy, you know, what's the politics of those? You know, how does this play if, in fact, the House swings Republican? You know, does it get pushed in the next year? You know, so our fear is if it doesn't get done, you know, before the August recess,

it just is too easy for this to slide to late in the year or into next year. And that lack of certainty of funding just says I have to build my fabs elsewhere. And this is bad news for the U.S. economy and the national defense. And just yesterday, you know, another fab announcement by Global Wafers and their plans to be in Texas. But they said, we need to get chips done. And there's... Why do you guys need subsidies? Why can't you just pay for it yourself? And, you know, in many ways, hey, we make a lot of money in our business, but every other country in the world has invested in this industry. You know, China, Taiwan, Korea, Japan, India, European countries, Spain, Germany, Italy have all said, we are going to invest in this. And if every other

place in the world offsets the cost by 30% or 40%, my investments in the US are not competitive. And if I'm going to put that kind of capital at risk, and we've already gone to the market, and we said we are putting everything we can to build this industry for the second half of this decade. I've taken my free cash flow negative for the first time in over three decades. But if those investments aren't competitive in the world market, then they're bad investments. And if every other market in the world is saying, yes, we want your fabs, and we ready to incentivize. Got to go elsewhere. Right. Where? You're going to go to Europe? You know, the big the big one for us is we announced the project in Germany. And, you know, despite the complexities of the European Union, 27 nations coming together, their chips act started a year later than ours and is now at least six months ahead of ours. So I'm going to see

euros before I see dollars. How do I turn to my board and my investors and say, you know, we are so nationally focused, but yet a great ally in Germany is ready to put euros in my bank much ahead of U.S. Congress? You know, I have no choice, right, but to honor, right, you know, their incentives to help us move forward. And a great ally, a great partner, they, but to honor, right, you know, their incentives to help us move forward. And a great ally, a great partner, they're ready to move aggressively. We need that same energy from the U.S. Congress right now. Obviously, a huge economic issue. We want to see the jobs come to America. We want to see American manufacturing do well. The national security implications are quite serious. What is happening with China and semiconductors and

China and Taiwan, which manufactures more than 90% of advanced semiconductors in this world? You know, it's a precarious situation, you know, where we have become very acutely dependent on one particular area of the world. And, you know, the philosophy that we've espoused as we're working through this with, you know with leaders around the world is we need geographically balanced, resilient supply chains. We don't want one place in the world that we're dependent. We want a nice distribution. As I like to say, geopolitics has been defined by where the oil reserves are for the last five decades. Every aspect of human existence is becoming digital. And fabs, semiconductors support everything digital.

So this is more important where we build the fabs for the next five decades than where the oil reserves have been for the last five decades. Let's please build them where we want them. And, you know, if you think about our military, you know, is cyber more important for our national defense, right? Think about an AI-driven F-35 that when it takes off, its fleet of AI-driven drones takes off with it, right? And, you know, do we want those chips coming from our leading-edge manufacturing or dependent on foreign?

And we say, this is just a no-brainer, right? That it's great economy, right? It is great jobs, and it's great for our national defense. Let's get it done. Pat Gelsinger, thank you very much. Making a clear statement there, the CEO of Intel. And tomorrow on Closing Bell, I'm going to have highlights from an exclusive discussion with Wells Fargo CEO, Charlie Schar from the Aspen Ideas Festival. John, he doesn't do a lot of media. It'll be really interesting to see whether he's more in the Brian Moynihan optimistic side of the economy or the Jamie Dimon hurricane side of the economic outlook. So we'll have that for you tomorrow. Looking forward to more and more great stuff from you, Sarah.

Give Pat my best as well. What's not getting the best today is the markets. Let's check on those. The Dow is down more than 450 points, about 460 at this moment. The S&P off almost 2 percent. The Nasdaq off two and three quarters percent. Coming up, we're going to talk to former Treasury Secretary Jack Lew about the odds of a recession in America and what the Fed can do, if anything, to stop it from happening. And as we head to the break, check out some of today's top searched tickers on CNBC.com. The 10-year yield, again,

getting the most interest, followed by Tesla, Nike, the S&P 500, and the Dow. We'll be right back. Welcome back. Let's check out today's stealth mover, Farfetch. Shares of the online luxury fashion retailer under a lot of pressure after UBS downgraded the stock to neutral from buy, cut the price target to $10 from $13, citing risks of a recession. And still ahead, bank stocks doing better than the broader market in this sell-off following the dividend announcements from some major firms. We're going to talk to an analyst about the names he likes on the back of that news. The major averages cutting earlier gains after consumer confidence missed estimates this morning

as investors closely watch each data point for signs of a slowdown. Earlier on CNBC, New York Fed President John Williams and ARK Invest CEO Kathy Wood took opposite sides in this recession debate. Recession is not my base case right now. I think the economy is strong. You know, clearly financial conditions have tightened and I'm expecting growth to slow this year quite a bit relative to what we had last year and actually slow to probably one to one and a half percent GDP growth for the year. But that's not a recession. It's a slowdown. Inflation has been a bigger problem, but I think that it has set us up

for deflation. I've been listening to your program. I heard Ken Langone talk about being in recession now. Jeremy Siegel, same saying we think we're in a recession. So are we or aren't we? Joining us now is former Treasury Secretary Jack Lew. Secretary Lew, thanks for being with me today. So first, kind of defining terms. I mean, I know there are these sort of textbook definitions of a recession, but what's the definition that really matters right now? And how likely are we to be in one by the end of the year? It's good to be with you, John. I think the technical definitions of recession are less the issue than where is the economy going to be going. And when you have high

inflation and the Fed raises rates, you know that the goal is to slow economic growth and to slow the economy down. The question is, can you hit a soft landing? I think that what we should expect is it's going to be a bumpy ride. Whether that becomes a technical recession or not is a separate question from is the Fed making its policy trying to control inflation while trying to avoid a deep economic slowdown. I give them a lot of credit for having been patient, waiting until the data was clear that we had strong growth coming out of the COVID recession. One can argue whether they should have moved a month or two earlier. But the point is, nobody knew back at the beginning where COVID was going, what the period of adjustment for supply chains would be.

And certainly nobody knew that the war in Ukraine was going to break out. Going forward, I think it's equally uncertain exactly what's going to happen from day to day, much less from week to week. This past week, we've seen some signs of inflation letting up in some of the commodities, things like wooden metals. But, you know, we're seeing oil bounce around still. So when you ask who's right, I tend to give a lot of credit to the Fed for doing its very best to avoid a deep decline. Does that mean they can avoid a technical recession? I don't know. Well, given all that, though, how important is the consumer expectation that inflation is going to be stubbornly high? Right. Because if consumers expect it, then that in a way kind of fuels it, which in a way makes the Fed's job that much more

difficult, doesn't it? Look, I think that they moved in a pretty dramatic way at this last meeting, and it sent a powerful signal that they're serious about inflation. I think the expectation is a big part of it. And sending that signal may well have even more of an impact on psychology than it does on rates. I think there's a problem when you look at what markets are looking for, which is to know today exactly where things are likely to be a week, a month, a year from now, and the kind of longer view. What the Fed is looking at, and I think what the public is looking at, is where are we going over the next year? And I personally believe that we're going to see inflation letting up. It may or may not get back easily to the 2% bound. They may or may not have to move a little bit harder.

But I would think that given the concern now about recession, that underscores the importance of giving the Fed the freedom to move based on the way data is coming out and it's painful to have inflation it's painful to have a recession it's very hard to fight inflation without raising the risk of economic slowdown I keep wondering as we look at the markets and we look at data how much we need to be parsing the fact that a lot of America is really living in different economies there's the economy for people who own stocks and are trading stocks maybe on a home is the economy for people we're living paycheck to paycheck and you know putting

twenty dollars worth of gas in the car to get to work because they they can afford to fill up right i mean just a one-man people it feels like we're in a recession already and other group of people concerted debate it right so what are the main metrics that we need to watch over the next several months to see whether we're all going to be feeling worse before july yeah it's a really good question i think the good news is coming out

of the covid recession family balance she's household savings are in a better place for many families so for a lot of families while it's worrisome to draw down the reserves that were built up, there is kind of a built-in response to some of the turbulence that we're going through. That doesn't extend all the way down through income levels. And as you get lower into lower middle class

and kind of barely above poverty levels incomes, it's very painful. It's one of the reasons why for a long time, I've been arguing Congress still needs to act on some of the things that are pending, like making the child credit refundable going forward so that families trying to keep food on the table aren't suffering unduly, particularly during these challenging days. I hope we can reach a point of kind of some bipartisan or at least unified democratic response so that in a legislative package that reduces the deficit, that helps fight inflation, there's also the room to provide some relief to the families that are feeling at the worst. Yeah. And this data that we got, the consumer sentiment data certainly shows how they're feeling it. Former Treasury Secretary

Jack Lew, thanks so much for your thoughts. Good to be with you. Now, here's where we stand in the markets right now. Still near session lows. The Dow is down more than 435 points. The S&P off nearly 2 percent. The Nasdaq off about 2.7 percent. Nike, the biggest loser in the Dow today. And up next, the big picture on what Nike's disappointing revenue guidance says about the state of consumer spending. And you can listen to Closing Bell on the go by following the Closing Bell podcast on your favorite podcast app. We'll be right back. Nike shares tripping over their laces today, even after beating estimates on the top and bottom line. Sarah Eisen has the big picture on what Nike's earnings mean for the market and the economy. Sarah. Hi again, John. So that's right. Today's big picture is on Nike and really

what its earnings report says about the state of the consumer. And the answer, it's not all that bad as the stock may suggest right now, which is down more than 6%. It's actually pretty bullish. While Nike executives didn't talk directly about the consumer, there were constant references on the earnings call to the strength of the brand in the face of the headwinds that Nike is facing, like Chinese COVID shutdowns, the stronger U.S. dollar, and supply chain headwinds. Here's the CFO, Matt Friend, on supply and demand in its key home market, the U.S. Inventory supply is normalizing against the healthy pull market across North America, EMEA, and APLA. And we've seen three

consecutive quarters now where consumer demand has significantly exceeded available inventory supply. Consumer demand exceeding supply. Also, we can point to 18% growth in digital as a promising sign that demand appears to be holding up relatively well despite the challenges. And then there's the outlook. Nike is projecting a double-digit percentage boost in revenue for the new fiscal year, which does suggest that management expects a solid recovery in the face of all of these headwinds, which are pressuring sales and profits now and in the current quarter. Though the CFO and the CEO on the call did say, quote, we are closely monitoring consumer behavior amid rising interest rates and inflation, John, as we all are. But so

far, if you read into the commentary and the forecast, it does suggest that they see at least the Nike consumer holding up relatively well, despite everything else they're dealing with. Yeah. Well, we'll see what happens with the stock. Sarah, thanks. And up next, a top analyst on whether investors should be betting on the banks after their latest dividend hike announcements. That story, plus Qualcomm spiking, snowflake melting, when we take you inside the Market Zone. We are now in the closing bell market zone.

CNBC Senior Markets Commentator Mike Santoli is here to break down these crucial moments of the trading day. Plus, Steve Kovach on Qualcomm and Apple. And Piper Sandler's Jeffrey Hart on the banks. Stocks moving lower throughout the day after some weaker than expected consumer confidence data. So, Mike, what are you watching? John, you know, we've been talking for a couple of days about how this bounce we've gotten in the market still fit within the parameters of yet another one of these relief rallies that hadn't really gotten traction and taken hold and carried the market really to a full recovery. So, so far, that remains the case.

We're trading below those kind of levels that would define this as more than a bounce. That being said, all we're doing today is kind of operating within Friday's trading range. Remember that huge jump we got on Friday, kind of testing those levels. Obviously, the fact that the market got more kind of weak manufacturing data this morning, bad consumer confidence numbers, yields going up, oil picking up a little bit on the China reopening. It sort of just undid a little bit of the tension release we had gotten in the past couple of days. So still a familiar pattern, still a lot to prove. Yeah. And some things to prove for at least the U.S. economy on chips.

Sarah Eisen sat down with Intel CEO Pat Gelsinger earlier this hour. Let's see, do we have some sound from that? With the significant shortages that we've seen now for multiple years and forecasted to last for a couple of more years, a little bit of reprieve in the market hopefully will allow us to catch up a bit more rapidly and get to a better supply-demand balance situation. But perhaps crucially, Mike, right, what he was really talking about is not enough help from the U.S. government to fuel the future, including the economy.

That's an issue. Without a doubt an issue in terms of, you know, him feeling as if, you know, there's an insufficient appreciation of the strategic need for Congress to help out in terms of these facts. He did also mention, and this is not a secret till now, but that he's taken Intel into a free cash flow negative position. This was a company that was doing nothing, really. It wasn't growing much, but it was throwing off a lot of cash for years because he's basically betting he needs to plow it all in to the future. So any help he can get on that regard, it makes the stock seem a lot less cheap than it might on the surface because they are consuming so much of their cash, obviously in parts of the market they believe is going to grow

faster than what they have right now. For investors, Mike, I thought it was so interesting that he was saying, look, I'm taking the company cash flow negative to make these big investments. But you can't expect me to do it in a country that's not going to help me out as much as, say, Germany is going to. So being a good steward of capital, right, capital preservation in a way, not just something that investors watching these last 11, 12 minutes are thinking about. No, without a doubt. It's very true. I mean, the stakes are relatively high, even if the amounts of money that might come Intel's way in terms of these projects isn't really going to define whether they can make

it or not. But clearly, you'd want the backstop nonetheless. Mike Santoli, thank you. And now, still on chips, one bright spot today qualcomm that stock jumping after an analyst said qualcomm is going to remain the exclusive supplier of 5g modems for apple's 2023 iphones steve kovac joins us steve it's always guessing right what apple's going to end up doing with its devices because they're not telling these analysts but it certainly is a big deal whether they're going to be able to design 5G modems in-house or still have to go to Qualcomm because they've gotten that much better and Apple still chasing them. Yeah. And John, I think the thing that people are really getting rattled about

here is what Ming-Chi Kuo, who's the analyst you're talking about, said that Apple's development of this 5G modem may have failed. It's interesting. We were just talking about Intel. Apple actually bought Intel's failed 5G modem business, you might remember, back in 2019 for a billion dollars, set up an office in Qualcomm's own backyard in San Diego to develop their own 5G modem with the hope when their five-year deal that was part of their settlement with Qualcomm ends in 2024 or so, they're going to be able to use their own

homegrown chips. Now, if Quo is right and they're having trouble making that 5G modem in time, then, yeah, they're going to have to go right back to Qualcomm after this deal ends. And Qualcomm's going to have all the power at the negotiating table there and can make more money per device that Apple sells. Mike Santoli, what does this really mean from an investor perspective? I mean, yes, people are used to a vertical integration story with Apple and it being very good at developing new technology. At the same time, though, perhaps it shows if there's something to this, that there are still moats in technology and moats provide margin. Yeah, it would seem to me it's certainly a bigger swing factor in terms of investor perception for Qualcomm than it is for Apple. It's interesting when the Apple investor base seems like they're happy with the less

detailed, the better, you know, just just produce the cash flow, share it with us in terms of dividends and buybacks, be predictable, make sure the upgrade cycle is is clicking the way it should add services. It's less, I think, about what is the specific defensible technological IP that Apple can bring to bear at every turn in the process. All right. Thank you, Steve, for bringing us that. Now from chips to enterprise tech.

Shares of Snowflake are lower today despite an upgrade from analysts at Jefferies, taking it to a buy on strong fundamentals, multiple compression and platform expansion. Here's what Snowflake CEO Frank Slootman told me yesterday about spending levels from his customers. We're not really picking up signals of distress and duress in our constituency. It doesn't mean that other people are not seeing it, but I can only, you know, react to our experience. And, you know, the type of things that what we do

are still highly prioritized in large enterprises. And by the way, you're seeing that in CIO surveys that were just conducted by JP Morgan and other people, that the spending intentions are still incredibly high. So, you know, we're not backing off of anything at this point in time. We just see no reason to. Stocks falling on what should be good news of an upgrade, kind of bullish commentary from the CEO. I mean, yes, it's not cheap, but it's way down from where it was. Is this a similar effect to what we've been seeing with Nike today, Mike? To a degree,

John. Yeah, I think I don't think anybody believes that Snowflake is necessarily really a slave to the macro environment. I mean, they obviously have sort of this better mousetrap story going. 50% revenue growth expected in next fiscal year. On top of this one, we're only talking about a couple billion

in revenue right now. Plenty of room to grow. So nobody really is arguing that much about the growth path. It's really is arguing that much about the growth path. It's really about, is this the moment to pay up for it today when it's really not something that you're seeing in the way of tangible financial results? Yes, it's way down. Yes, you know, from 100 times sales to maybe 15 times next year's revenue in terms of market cap. That's nobody's definition of inexpensive,

which is why on a bad market day when the Nasdaq is down, Snowflake more likely to get caught up in it than not. And yet, if you were to make a short list in technology, particularly enterprise technology, of the next companies to be able to build out a platform and become, you know, 100 billion, multiple hundred billion dollar company, Snowflake would be on that list. So in a way, this tells us something about the investor appetite to even take that swing, right? Without a doubt. The investor appetite right now is bird in hand type investments where they don't really have to worry about waiting, where there's not that much about, you know, how many things

have to go right or how much how much time is it going to take for the opportunity to be realized. All right. Well, from software to hard cash, banks mostly outperforming after the major Wall Street firms announced their dividend and buyback plans yesterday. Joining us now is Jeff Hart from Piper Sandler. Jeff, are banks really a good play right now based on what's happening with interest rates and those results that we saw, what the banks are doing with dividends? Yeah, I think banks are a decent place to be. But within banking, there's some very good places to be. I'm personally still a fan of your larger kind of scale players, the BMAs, the JP Morgans, where, I mean, not only do they have net interest income tailwinds, which helps banks in general, but, you know, they've got the scale to gain market share by spending

more on technology, spending more on marketing while still having wider profit margins. The stress test results, let's say on average, were kind of in line with our expectations, though there were some better and some worse, right? The more capital markets players like Goldman Sachs and Morgan Stanley fared better than kind of your money center banks, you know, BNA and Citi and JP Morgan. But dividend increases were better than we were expecting. And I think, you know, what's really weighing for bank stocks right now is what's going to happen over the next couple of quarters.

What's going to happen with credit? Are rates going to keep going up? Will loan growth continue? Not to say that capital doesn't matter, but I don't think banks are very well capitalized. I don't think people are losing sleep over bank capital at this point. Okay, so what's the smart spending that a bank at scale is going to do over the next year or two, assuming that this economic environment continues to be challenging and you say the scale players have an advantage. What are they going to buy that's going to impact their operations so much that they're going to zoom ahead faster than the rest? Well, some of the things I think they can

do, and we're seeing guys like JP Morgan and B of A do it, they're spending more money on marketing, right? It's an opportunity to get more clients because they really can spread it out over a wider base. When it comes to technology, I mean, the fintechs were really taking a lot of kind of share from the banks for a while. If you could be leading-edge technology and kind of stay on the cutting-edge curve, that's going to help you a lot as far as kind of getting stronger while others get weaker.

When you look at it, J.P. Morgan or BAC sent in $10 billion to $15 billion a year in investments. I mean, it's just hard for much of any other bank or fintech to keep up with that. Mike Santelli, what do you think? Are we moving into an either-or scenario in the newer fintechs and the challenger banks, et cetera, versus the scale players, at least where investors are concerned, where maybe the tide shifts? Is that what we're seeing in the tape so far? Definitely seeing that in terms of most of the market value has really come out of, I would say, the sort of leading fintechs like the PayPals

and Squares, where it seemed as if they could race ahead. Right now, though, I mean, the traditional banks to a large degree are trading as if they're captive to the outlook for recession or no recession. That binary call or what happens to credit trends within that, that seems to be what matters. But if it's going to be a stability and a dividend yield type story, JP Morgan, its dividend yield rarely has been higher in the last 15 years than it is right now. And when it has, it's been in these kind of crash type scenarios in 2011 and 2020. So it seems like there's a bit of a margin of safety being built into some of these stocks if you don't get that big economic backsliding that everyone is afraid of right now.

Jeff, wild question here. Does blockchain even matter anymore from a technology and investment perspective? Because I wonder if in a way this crypto story plays out like open source did, where the big players in an industry end up adapting it to their own needs and using it to succeed. Is that part of the investment that scale players are going to make? I think it is part of it. I mean, when you talk about blockchain, there's kind of two different pools. I think you got to think of the pure blockchain technology, you know, distributed ledgers. I think that's here to stay. It's going to be going to come more and more important than the banks will participate the other side is you know crypto currencies and kind of is it a new cash or not that remains to be seen that's where we've seen a lot of the pain so

far but i think you look out five or ten years things like security settlement payment processing i think blockchain is going to be a big part of it and you know the jp morgans of the world are spending to grow that like nobody else. Well, all right. Well, we'll see if they can end up winning that race. Jeff Hart from Piper Sandler, thank you. Now, we've got a little less than two minutes to go in the trading day. Mike's got more on the market internals today. Mike, what do they look like inside? Yeah, just like the indexes, John, they have eroded over the course of the day. Started out positive, but now it's looking like if you look at the New York Stock Exchange,

volume split roughly three to one downside volume to advancing volume. So not really a washout. In fact, it's mostly the mega caps that are kind of dragging the S&P and the Nasdaq down lower, but still decidedly negative. I talked about the bird in the hand. People want current cash. So take a look at the ETF called Cows, C-O-W-Z. It's called the Cash Cows ETF. It's high free cash flow companies in the S&P 500. Great performer year to date, only down 6 percent. But compared to Apple over the last year, it's now roughly neck and neck. Apple have raced ahead. It's not in that index, but it sort of shows you that people were willing to give the big premium for a growth story like Apple. And now it's about give me the cash flow today. The volatility index has perked up, but not really a dramatic response to today's sell off in the 28th. It's been migrating from the mid 20s to the mid 30s. So not really decisive, uneasy, but not panicky, John. Oh, Mike, thank you. And so now as we head toward the close, perhaps the biggest casualties today are the stocks that needed hope. I'm looking at names like Coinbase, which is down more than 8.5%. Peloton also down about 9%.

Affirm, we were just talking about. Fintechs down about 9.5%. And then the major averages closing near session lows. The S&P down more than 2%. The NASDAQ just ticked down a little over 3%, but we'll see where things settle out. There's always something to speak of in the final seconds. And then the Dow down about 495 points.

We will see where that settles.