Closing Bell - Stocks Struggle, All Eyes On The Fed & The Next Uber 11/1/22

Episode Date: November 1, 2022

Stocks kicking off a new month in the red after more evidence the labor market remains resilient, which could force the Federal Reserve to maintain its hawkish stance to curb inflation. Macropolicy Perspectives' Julia Coronado says investors will be disappointed if they are expecting an outright dovish message from the Fed when it announces its interest rate decision tomorrow. Elon Musk announcing the new pricing for Twitter Blue. Evercore ISI's Mark Mahaney reacts to that news as well as how social media stocks are being impacted by the FCC Chair's call to ban TikTok in the U.S. Kindred Ventures Founder Steve Jang, who was an early investor in Uber, discusses the company's revenue beat and what he thinks will be the next Uber. JMP Securities CEO Mark Lehmann discusses why he is now so bullish on software stocks. And Hologic CEO Steve MacMillan breaks down the medical technology company's strong earnings and what is driving unprecedented strength across its core businesses.

Well, stocks have been tracking for more gains to kick off a new month, but some early session data took the steam out of the rally. This is the make or break hour for your money. I'm Sarah Eisen. Welcome, everyone, to Closing Bell. Take a look at where things stand in the market. The Dow, it's certainly off the lows. In fact, we're coming back nicely here, only down 58 points, got as low as down 226, but earlier as high as 242. What's contributing the most to the Dow today?

It's Goldman Sachs. Financials are having a good day. All the value sectors really are doing quite well today. Energy, utilities, materials, healthcare. That's what's green. S&P down a quarter of a percent. Small caps outperformed for a second day in a row. Take a look at some of the big earnings movers of the day.

Uber surges on a big jump in gross bookings. SoFi jumping on a beat and raise as well. Pfizer beating estimates. It's up 3.3 percent. And Eli Lilly topping estimates but cutting its full year forecast. That is the earnings loser of the day. Coming up on the show today, we'll talk about Uber's big move higher and other opportunities in tech when we are joined by early Uber investor Stephen Jang from Kindred Ventures. Plus, a COVID winner that's winning big today. The CEO of Hologic will join us on the back of strong earnings to talk about the current setup for medical tech companies. But we'll start with the market dashboard senior markets commentator Mike Santoli. With some of these tech names under a lot of pressure, Amazon's down almost 6%. Yep, just a real continued exit from the more expensive parts of the growth mega cap universe.

Doesn't seem like it's too much in the way of a specific catalyst, but just more of the same. Even though it's a new month and people thought that tax loss selling was a contributor in October to some of that weakness. See the S&P 500 just hovering right here. Mentioned yesterday, it's right where it was just about ahead of the last Fed meeting in the third week of September. So there you have it. You sort of, you know, had the makings of what looks like, you know, somewhat retested low, slight undercut from the June lows. It's trying to make some progress. And again, the long-term downtrend, that's still in place and would take a few percent higher from there to challenge it.

So right now, it's a lot of waiting ahead of the fed you mentioned the somewhat stronger jobs and manufacturing data did put the market back on its heels just a little bit now in terms of value versus growth massive outperformance all year from value and even the deepest value stocks so this is two etfs it's pure value against pure growth It's just strictly a statistical low, low P.E. stocks in the S&P against the fastest growth stocks in the S&P. This goes back to January 31st of 2020, right before the COVID crash. They are exactly neck and neck. But look at the lead that growth had a year ago. It was a 30 percentage point closure of that gap by value to growth. And it's mostly insurance. It's some energy, certainly, but a lot of financials and health care as well as the energy stocks in

there, Sarah. So it's kind of an interesting dynamic, because if you dial this back a few more years, value has got a lot of catch up to do still. So even though it seems like everyone loves value stocks, everyone loves the boring stuff, it's still on a multi-year basis, not really back to parity with growth. Which is the bullish argument by all the value investors. I think we should pause a moment on the data today because that does appear to be in focus. So we got Jolt, showed that job openings unexpectedly rose, which might put more pressure on the Fed to do more to tamp down wage growth, ultimately, to get control of the inflation. On the other hand, we got this ISM manufacturing number.

Yes, it came in better than expected, but the prices paid index. Moving into contraction, that's a good sign on inflation. Very mixed, which I think is why the market didn't completely panic on it. But you're right. And, you know, this job openings data, it's not really the hardest data series, right? It's just listed job openings. It costs nothing to keep a job open. But Jay Powell has focused on it. And he has said we need to get that number down. It's been a good sign of how tight the labor market has been. Well, but the quit rate actually was down quite a bit. That's what people are actually doing.

And so people are trying to massage the numbers and say, look, it's still mean to decelerating labor market. The question is enough for the Fed to change course. Many openings for every job candidate, which is why it's so tight. Well, we'll get the full jobs report on Friday. Mike, thank you. We'll see you in the market zone. Let's turn now to the social media story of the day. And it's not Twitter for a change. Axios reporting this afternoon that FCC Commissioner Brendan Carr is calling for a ban on TikTok. And that is certainly helping boost shares of Meta and Snap this afternoon. Julia Boorstin with the details. It's like deja vu. Didn't the Trump administration try this? Yeah, we've talked about TikTok being divested before,

haven't we, Sarah? Well, right now, shares of Meta and Snap are trading higher after a report in Axios that FCC Commissioner Brendan Carr says that CFIUS should move to ban TikTok. Take a look. Meta shares up 3 percent, Snap shares up 4.5 percent. Now, one of the five FCC commissioners, Carr, telling Axios, quote, I don't believe there is a path forward for anything other than a ban. What he's referring to is recent revelations about how TikTok and its parent company, ByteDance, manage user data. Now, keep in mind, the FCC itself does not have any authority over TikTok. CFIUS does.

And CFIUS is already in talks with TikTok to determine if it can or should be divested to a U.S.-based company. TikTok telling us in a statement, quote, Commissioner Carr has no role in the confidential discussions with the U.S. government. We are confident that we are on a path to reaching an agreement with the U.S. government that will satisfy all reasonable national security concerns. And we have seen TikTok draw growing ad dollars as well as users away from its rivals. It's been downloaded more than 200 million times in the U.S. And we've heard a lot about the threat that it poses to both Snap and Meta. Meanwhile, shares of Oracle, they are lower on this news. And that's because TikTok routes its U.S. traffic

to Oracle's cloud infrastructure. Oracle shares down more than 1 percent. Sarah? Well, remember when Oracle was going to be part of that deal to IPO it and that seems like a long time ago. While we're on the subject of social media, I also have to ask you about Twitter because Julia, Elon Musk did just announce that new pricing for Twitter Blue. A lot of speculation about this. We got some news. Yeah, Twitter Blue is a subscription service. It previously cost $5 a month. There was some speculation that Elon Musk might charge as much as $20 a month, but he just came out just recently and he tweeted out that it was going to be $8 a month,

indicating that's how you would be verified. You need to pay that monthly fee in order to be verified. You would also get priority and replies, mentions and search, and also have the ability to post longer video and audio, and you would see half as many ads. So it'll be interesting to see how many Twitter users actually will be willing to pay $8 a month, Sarah. But one thing's for sure, Elon Musk is trying to send the message that he is moving fast, he's not messing around, is working hard to diversify Twitter's revenue beyond just reliance on advertising. There's certainly a lot going on right now. And get rid of the bots and all the misinformation. Unclear whether that can be done with this move, but we'll keep you all posted as we follow the

tweets. Julia, thank you. Julia Borsten, let's bring in Evercore Head of Internet Research, Mark Mahaney. So a little bit of love for Meta today. It's up 3% after a pretty rough stretch here. It doesn't sound like the FCC can really move to ban TikTok though, Mark. What do you think? No, I don't think so. I think if you're an investor, you have to assume that's a very low probability event. I think the only interesting angle here is there's probably the issue that has, one issue that has more political consensus other than lashing out at big tech is lashing out at China. So, you know, maybe something that's in the U.S. So maybe something actually would occur.

But I think the probability of that is pretty slow, but is pretty low. But anything that sort of gums up TikTok, I mean, that's been the biggest competitive risk, no doubt about it, to Facebook, to Snap, to Meta, to Snap. So anything that's bad for TikTok is positive for Meta. But not a reason for investors to buy it necessarily on this news. Is there a reason for investors to buy either of these companies, which got shellacked again on earnings? Yeah, I think so. Look, the user base continues to climb at meta. Engagement continues to climb. This is a company that's a highly profitable business, 30 percent

margins. They're aggressively investing, as is Google, in artificial intelligence, $35 billion a year in CapEx. The market is essentially treating all of that as a loss and maybe not giving them any credit for the idea that they may possibly, through all that spend, come up with better products that are better for consumers, for advertisers, for enterprises. That's my guess. These companies have generally been pretty good stewards of investment, capital allocation in the past. My guess is that they will be in the future. So I know there's a lot of things that go behind all this AI spend, but I don't think they're getting any credit for the positive return they could get on that investment. And the stock is so cheap. Yeah, I just don't think things get worse from here, from Meta, but I also didn't think that

a week ago. So we'll see. But I continue to like Meta. I was going to say, you've liked all these stocks. You've liked Meta. You really like Amazon, which right now is down 6%, about to close at the lowest since 2020. What do you think you got wrong? Because it did for a long time look like these were defensive growth companies that could hold up better, relatively better in a recession. Well, I'm not sure they're defensive. I don't think there's anything in consumer Internet that's defensive. I mean, it's cyclical.

They may have some resilient factors. Cloud computing probably holds up at 20% year-over-year growth when GDP goes flat or negative. I think search advertising can still stay 5% to 10% year-over-year growth when overall advertising is going to decline next year. So there's some recession-resilient elements, but there's nothing in consumer internet that's recession-. Recession resilient part of it. And the much heavier exposure is consumer discretionary. That's Amazon's retail business, consumer discretionary. And so is most of the advertising that goes on in the internet. So, you know, that shoe is starting to drop. The question we all have to ask ourselves is how much further is that recession shoe going to drop? And is that estimated and valued correctly in these stocks?

That's a very hard call to make. I think it is. But, you know, I'm more nervous about the next two or three months. I'm more confident about the next two or three years. So you have you changed your views on all and I know you had to adjust price targets, but have you changed your view, your positive view on any of these companies in light of what we got for earnings? Not yet so far. And we've had a couple of positive surprises. So it hasn't all been negative. Uber gave us some positive news, not necessarily on demand, but in terms of profits. And then you have with Netflix, a brand new revenue stream. So those two remains amongst my top picks. I'm more cautious near term,

no question about it, on names like Google, on Facebook, and on Amazon. If you're willing to look out more than 12 months, I think these fundamentals are going to inflect backup positively. And they're still really well-run companies for the most part, particularly Amazon and Google. So yeah, I would stick with those. The more they get beaten down, the more attractive they should be, and they are to long-term investors like myself. Yeah, you've liked Uber. Uber's up 12.3%, having a good day off those earnings. We're going to talk about later in the show. Mark Mahaney, thank you very much. Always good to talk to you. Shares of medical tech company Hologic surging today on the back of solid earnings. It's a company that Barron's recently profiled, writing

COVID companies are losing steam, not this one. We're going to talk to the CEO about the quarter, whether he expects more M&A in the space after Johnson & Johnson's big health tech deal today. You're watching Closing Bell on CNBC. Some notable moves in the healthcare sector today. Look at Pfizer, shares in the green after the company beat on the top and bottom lines. The company also raised its full year guidance. COVID a big driver, clearly, though. Paxlovid sales were light.

The company also saying it now has enough promising data for its RSV vaccine to protect newborns and will submit for FDA approval by the end of the year. Can't come soon enough. It's going around. Meantime, Eli Lilly shares are dropping today after reporting earnings cutting its fiscal full year earnings guidance for the third quarter in a row. That stock is down more than 3%. And then a big M&A transaction. Johnson & Johnson will acquire Abiomed for $380 a share. That's about a 50% premium to Monday's close. Abiomed shares surging on the news up more than 50% to that deal price. And then there's Hologic getting a big pop today on the back of earnings. The medical

technology company that makes diagnostic products seeing, quote, unprecedented strength across the core businesses with 2023 earnings guidance coming in better than some analysts feared. Joining us now exclusively is Hologic CEO Steve McMillan. Steve, welcome back. Good to see you. Thank you for having us, Sarah. Good to see you again. So I pulled out the quote, I read the quote there, unprecedented strength in the core business, because we've been talking to you throughout COVID where you fully transitioned to these PCR tests. Does this mean that it's a return to normal in other diagnostic testing? I think what it really means, Sarah,

is we quietly transformed the company. Obviously, you know, and you've been on the front lines of reporting what a great job our team did responding in COVID, but we used the proceeds to really invest in some additional R&D and targeted acquisitions to where we enter 23 with all four of our major businesses, breast health, skeletal health, diagnostics, and surgical, all poised to grow double-digit rates next year.

And I think it's been masked because of the ups and downs of COVID. The last few years, people haven't been quite sure about what's going on in our core. And we use that time to quietly transform. And I think it finally hit when we gave our 23 guidance last night. So is it pent up demand for people having to go get mammograms and pap smears? Or are you seeing new demand? How does that how do you figure that out? It's less pent up demand. Certainly, we still want to make sure that all women are getting back to their screenings, particularly, you know, pap tests, as you said, all of the, you know, mammography exams, everything

else. And we're seeing that coming back, but there is still some pent-up demand. It's also really just the ongoing demand as we've broadened our menu. So we have more offerings today, including things, you know, for RSV, for example, and we broadened our menu of diagnostics. We've brought new products to the market in our surgical business, and we have more recurring revenue in our breast health business. We've also dramatically expanded internationally. And so now while, you know, it's not just our U.S. business, our international business is poised to grow at rates higher than our corporate average and, frankly, be double-digit growers here. And that's been, I think, a huge part of the excitement for next year. And yet COVID is still with us, Steve.

So how do you factor that into the forecast in terms of what testing is going to look like this winter and into next year? The one thing we've been saying all along is we're going to forecast conservatively, but we'll respond for whatever the market needs. And I think we've been incredibly we've produced literally over 200 million tests. You know, these are the true molecular tests with great specificity and sensitivity and the ones that really, you know, the medical professionals have counted on through this. We're there for them when they need it. But we, you know, ultimately for society, we're hoping it goes away. I do think it's going to continue to be a piece of our business and probably represents upside to the core business. We've been trying to get people to focus on the core because we know that's the true sustaining part and then

COVID's additional upside. Right. Have you had to convince the street that you're not a COVID winner like a Teladoc? Because the stock did very well during COVID as you put your Panther machines to read these PCR tests all over the place. Has that been a struggle to convince investors? You know, not particularly. I think we did a great job all along, candidly, and our CFO and our team here of not getting ahead of ourselves. And we never wanted to be considered a, you know, quote unquote COVID play. We always wanted people to look at what we were doing to invest in our base business. And so I think, play, we always wanted people to look at what we were doing to invest in our base business.

And so I think frankly, we didn't have the huge run up during COVID time that many companies did. We also managed our cost base very tightly all through it. And we didn't get silly in hiring a bunch of people just because we were selling a whole bunch more. And I think that puts us in a great position here from both a cost base and a top line revenue base

as we head into 2023. And I think that's just becoming clearer. No, that's an interesting distinction because a big problem with some of these COVID winners. Steve, you also though did fall victim to the chip shortage, I know, when it came to some of the testing. So where are we on that problem being alleviated, if at all? Sure. We feel like the worst is behind us. And our vendors, we've been

working, especially with the Intels and some of our key vendors, to help provide certainly some great additional chips for us. We've also been doing an amazing job, our service organization, extending the life of the machines that are out there in the field. And so ultimately, we can see our way here in the coming quarters to getting to the other side of it. So the great part is we've been able to avoid any women being affected in terms of machines being down or not enough for them to get their mammograms. And then we're gearing up for additional products coming on stream here over the coming quarters. So it's been a tough balancing act, but we've been balancing all the way through between first COVID and the scale ups in that and then the chips. And

it's all just one of these things we take in due course and kind of manage through it. Well, we appreciate you joining us to talk through some of what you're seeing. Steve McMillan, really appreciate it. Great. Thank you, Sarah. All right. CEO of Hologic. By the way, we're going to have much more on the health care sector tomorrow. We've got an exclusive interview with the CEO of CVS Health, Karen Lynch, that company reporting earnings tomorrow morning. Let's show you where we stand right now. Down 35 or so points on the Dow. SMB is down a quarter of one percent. Again, the strength is in energy today. It's in financials, utilities, material, health care and industrials. Technology is getting hit hard. Consumer discretionary is

the worst performing group. It's being dragged down by Amazon. Communication services held back by Alphabet. The Nasdaq is underperforming, down seven-tenths of one percent. We are now just a week away from the midterm elections. And one of the buzziest states to watch is Nevada. We'll tell you about the business issues at play there next. What is Wall Street buzzing about today? The nail-biter in Nevada's Senate race. Incumbent Democrat Catherine Cortez Masto is trying to fend off Republican challenger Adam Laxalt. Five thirty eight projects. It is one of the three true toss ups in the country right

now and could determine which party, of course, controls the upper chamber. Our Elon Moy joins us now from Las Vegas with a look at the issues at play. And Elon, I was just looking at the national average on gas prices, a dollar cheaper than what it costs in Nevada to fill up a tank. Yeah, that's right, Sarah. I mean, here in Nevada, it has the highest gas prices of any swing state in the country. There has been a little bit of relief lately. Gas prices have gotten just below five dollars a gallon here to be about four dollars and ninety seven cents. That's still higher than what we're seeing in Arizona, Ohio, Pennsylvania, and in Georgia. And so when we've been talking to voters, they've told us that

they've had to change their behaviors because gas prices are so high. In some cases, it's just asking friends for gas money when they go out together or maybe not filling up your tank all the way. But we did talk to one voter, Sarah, who said that she's even thinking of leaving the state because she simply can't afford to leave here anymore. So this is something that is really top of mind for voters during this final week of the election. What about the overall economy, Ilan, besides the inflationary issues with food and gas? The rebound we've seen in Vegas, for instance, how much will that matter? Yeah, so the hospitality and tourism here, of course, is something that is a big driver of growth. We've heard already from Senator Catherine Cortez Masto sort of playing up that issue. She said that her family grew up working in the hospitality industry. Her grandfather started

here as someone who parked cars and was a pit boss at some of the local hotels. So she's trying to sort of use that as a way to connect with voters. But even if they have the jobs, they may not be able to afford as much as they were before because of the high prices. And Sarah, when we talk to voters, even at an early voting location, inflation is what they told us was top of mind for them, both for Democrats and for Republicans. Well, watch it, Elon. Thank you, Elon Mui. Up next, we will discuss whether Fed Chair Jay Powell

could signal a dovish pivot tomorrow. That's the key question for investors. And what impact that would have on the market, which has sort of been gearing up for that in the past few weeks. And another check here on Amazon. Look at this now, plunging more than 6 percent in jeopardy of closing below a one trillion dollar market cap for the first time since April 2020 and set to close at its lowest level since 2020.

We'll be right back. Stocks started the day strong and then look what happened just after the open. We got that jolts data on jobs. The market lost all of its gains and turned red. We're down four tenths of a percent on the S&P. What happened? September saw more than 10.7 million job openings, possibly giving the Fed more reason to stay aggressive. Joining us now is Julia Coronado from Macro Policy Perspectives, which just shows you, Julia, the kind of good news is bad news dynamic we're in in the market. More job openings. Does that suggest that the Fed hasn't really done enough here on the inflation fight? I think there's no doubt that the Fed doesn't believe it's done enough to conquer inflation. And the question is really around nuance. There is no pivot on the horizon as far as the Fed pausing rate hikes or certainly

not cutting rates. The real question right now for the committee is around pace. Do they need to keep going at 75 or can they downshift to a 50 basis point hike in December? I mean, that's really quite a limited nuance around a still very hawkish path towards higher rates. Well, the market is expecting 75 tomorrow and then 50 in December and then 25 after that. Right. Reasonable. Yeah, I think that's reasonable. And I think that Chair Powell will acknowledge that that is the discussion on the committee that maybe they can slow the pace

to 50 basis points in December and then maybe even downshift the pace after that, but that they may also have to go to a higher terminal rate given how resilient the economy has been so far the pace after that, but that they may also have to go to a higher terminal rate given how resilient the economy has been so far and given how persistent the underlying inflationary pressures have become. So I don't think if we're looking for an outright dovish message, I think that will be disappointed. The question will really be again around those nuances about strategy. How do you get to that higher terminal rate? And how flexible is this FOMC now that we've gotten to a much

higher rate, now that we're seeing leading indicators like housing really turn a corner and correct downward? You know, that's a good indication that you're getting into restrictive territory. The economy is telling you that the Joltz data obviously kind of go in the other direction. But the Joltz data are from September and things have been moving pretty quickly. The other the other issue here is with the Fed actively trying to soften the labor market. The politicians are getting noisier, especially the Democrats, hearing from Senator Elizabeth Warren and now a new letter, Senator Sherrod Brown, Bernie Sanders, questioning very publicly of Fed Chair Powell why he's trying to crush what is the greatest jobs recovery we've seen in a generation to deal with inflationary problems that might not be easy to fight. How do you expect that to

impact the Fed? I think it won't really impact the Fed. It's to be expected at this stage of the tightening cycle. I think, you know, that we've also heard not that kind of criticism from President Biden, who's been studiously respectful of the Fed's independence. And it doesn't really matter for the Fed. The Fed, when it deliberates and it meets in that meeting room and makes those decisions, it really isn't focused on those political pressures. And it's trying to make the best decision for the medium term benefit of the economy. So that has been a focus on inflation and that means continued rate hikes. But not to cut you off, but it could result in the opposite where the Fed wants to show that it is not political and

it is not influenced so much so that it will stand defiantly toward interest rate hikes away from what the politicians are asking in order to prove that they're not influenced politically. And there could be a mistake there. Yeah, I don't think that that is likely either. I mean, the Fed doesn't has already sort of demonstrated through the summer its willingness to kind of take extreme actions. And we're actually at a different inflection point right now. We are seeing the effects of tightening start to deepen and spread through the economy. Again, these leading indicators are decisively showing the impacts of Fed rate hikes. And we know there's lags in policy and more to come. So

now the question is really around, you know, have we done enough and do we pause now and let those lags play out? So I don't really feel like that political pressure is going to influence the decision either towards the hawkish side or towards the dovish side. I think that they're going to we all know what they're going to do tomorrow. They're going to raise interest rates 75 basis points. Between tomorrow and the December meeting, we get two more months of the most important data, CPI, the employment reports. We're going to have a lot more information on which to base that December decision. We'll leave it there, Julia.

Thank you very much. My pleasure. Fed watcher Julia Coronado. Taking a look at the market here, we're down 40 points on the Dow. Uber, though, is a big winner on Wall Street after revenue beat. Coming up, we'll get reaction from a very early Uber investor. But first, the air is really being let out of today's stealth mover. That was your clue. We'll reveal the name straight ahead. Check out today's stealth mover, Sealed Air. And shares are getting popped. The maker of bubble wrap and other packaging products missing revenue estimates,

slashing its full-year outlook, which as you can see is letting the air out of the stock. The company also announcing it is acquiring its rival Liquibox for $1.2 billion, down 6.3% today. Up next, an early investor in Uber tells us where he sees opportunities in the tech sector right now. That story, plus SoFi surging and a bullish call on the software stocks when we take you inside the market zone. We are now in the closing bell market zone. CNBC senior markets commentator Mike Santoli here, as always, to break down these crucial moments of the trading day. Plus, we've got kindred venture Steve Jang on Uber and JMP security CEO Mark Lehman on software stocks. We're going to start, though, with the broad market here. Dow's down 72. S&P is down four tenths. Mike Santoli, nothing extreme, but there was definitely a negative reaction to the job openings data, which came in hot and suggests maybe the Fed will make the Fed think twice about calming it down on those rate hikes.

What signals do you expect from the Fed tomorrow? What's being priced in? Yeah, if nothing else, it definitely sapped any energy toward really betting on an outright dovish message, which I don't really think is the baseline assumption. Anyway, the two-year note yield did tick higher after that news. It's back up, you know, 4.5% range, not too far off the high. So what we expect, I think, is Powell to essentially continue to say that the job is not done, the fight against inflation remains the only objective, and they will continue to get policy into the restrictive zone and keep it there for

a long time. I do think he can characterize policy as already having come a long way, rates already being restrictive and maybe observed at the housing market and everything else has shown the effect. So it'll be a nuanced one. I think it's not going to be some kind of outright signal that says we're stepping down the pace of tightening, but he will leave open the possibility one would think for a real full-fledged debate about that in the subsequent weeks. Let's hit some movers. SoFi climbing after a better than expected quarter and also an improved full-year forecast. Its net losses came in narrower than anticipated, while revenue rocketed 55% higher. The fintech company also adding more than 400,000 members, bringing the total to 4.7 million.

SoFi CEO Anthony Noto spoke about membership growth on TechCheck earlier. Listen. Seeing in the results is strong growth in personal loans up over 70 percent year over year and with great credit quality. In addition to that, we're seeing an acceleration in the growth of our direct deposit members because we're offering a really high interest rate on checking at 2.5 percent and we'll offer 3 percent on savings later this week. That high interest rate's driving high quality account openings. Mike, apparently good news for the market. It's reacting well, but this is a ugly looking chart still. Well, exactly. So the starting point here is a stock that was down more than 75 percent from its highs. It seems like the things under the company's control in terms of actually addressing the market, getting new customers and growing in those areas are on track. But, you know, that formula that Anthony Noto was talking about, paying higher than market checking account rates to attract deposits.

At the same time, he's saying they're growing loan growth to high-quality borrowers. I mean, I don't know how long that can necessarily last. This is a competitive banking market. It's not easy to just grab share. I also am still uneasy with a company that's essentially a bank, making its money eventually through bank-like activities that still reports things like adjusted EBITDA, you know, like as if it's a fintech and tech startup.

So it's a tough blend of those things, of that sort of busted fintech story with banking economics. The analysts, some of the analysts really still love it, though. Mizuho writing strong with the chance of excellence. No, I think there's a real brand. I think there's absolutely more. It's not that there's nothing there. It's just it's tough to to find your way toward a really profitable model from this starting point without, you know, having bumps along the way. Well, in a changing credit environment as well. Mike, thank you. We're going to let you get ready for overtime, which you are hosting at the top of the hour and move on to talk about Uber. Uber, because it is up double digits today after posting strong revenue numbers and giving updated guidance that topped expectations. CEO Dara Khosrowshahi joining Squawk Box this morning and said despite

recession worries, customers are still spending. The consumer and especially the U.S. consumer remains strong and they're spending and they're moving a bunch of their spending from essentially retail to services. And we are in the service sector, right? If you're going out to restaurants, cities are opening up, you're taking Ubers and Uber Eats growth continues at a strong pace as well. Joining us, Stephen Jang from Kindred Ventures, early investor and advisor in Uber. He is still invested in the stock. Steve, you are super early. When did you get into Uber? I was an angel investor when the company first started in 2010.

And so clearly you've done very well and you're sticking with it. It does feel like a new sort of era, obviously, since the company IPO'd. Darakos Rashahi has been focused on profitability, but now it feels like they're really serious. They generated $358 million in free cash flow, adjusted earnings. Was it strongest that it has been? How would you describe where Uber is on that journey? I mean, this has been a long journey, well over 12 years now since the company was first founded in 2009. Even then, at earliest stages, and even right up until last quarter, naysayers were saying, hey, you can't grow an on-demand sharing economy marketplace like this and also be profitable.

It's basically a statement that's been blanketed across every company, including Airbnb, DoorDash, you name it. I think what Uber has proven now with two straight quarters of growth in EBITDA and free cash flow is that you can achieve growth and profitability. You can create a mobility and logistics network that's increasingly profitable. This feels really, really good to a lot of the early employees and investors that had to weather a lot of that naysaying. Today, Uber has over 120 million active customers.

It's done about 2 billion trips in this last quarter. And it has done net revenue, net revenue, not GMV, net revenue of 8.3 billion. That's growing 73% year over year. The ride sharing business is profitable. It's proven profitable. And I want to say that again. It's proven profitable. And this is a big deal. This is a good sign for a lot of the other companies in the space, for a lot of the other marketplaces. I mean, today, Uber from a marketplace perspective is the third largest marketplace behind Amazon and Shopify,

if you look at just pure GMV. The ride-sharing business alone is almost a billion in EBITDA this last quarter. So I think there's a lot of craft around the story of Uber, the narrative of Uber, but the original platform that Garrett and Travis built has proven true. The concept of building this network into a profitable state growing globally has been proven true now as of this quarter. Does that change if we continue to see regulatory crackdown on the gig economy workers as the Biden administration Labor Department has just put out in a proposal? Absolutely. I mean, a misguided approach from the U.S. government would be to hammer down on a global income platform that has generated almost $11 billion in earnings for its contract workers and drivers for part-time work. And this is global. This is 25% higher than last year. And if you were to take a policy that would basically be a dull hammer and hammer down based upon an edge case

within the labor driver pool in Uber and other companies like that, that would be a mistake. What we're creating out of the U.S. is the largest global mobility and logistics network. This is an incredible thing that the U.S. has been responsible for, and it would be just a shame to do that. But this is a critical thing, and this will be adjudicated not by a single agency, but actually by Congress, I believe. So, I mean, lots more on Uber, but while we have you, Steve, since you got in here in 2010, believing in the model and the profitability potential. What is the next Uber that you're excited about? You guys are in all sorts of consumer tech. Some of them have done well. Some of them, Coinbase in the public market, not as hot.

What's the next one? Well, what's interesting right now is on the Web3 front, you see some of the efforts by Facebook and Meta, now named Meta, in the metaverse, and that's caused some rancor for them in the public markets. But I think that's generally directionally right for Zuckerberg to focus in on that area. Now, that's a five to 10 year story arc. Coinbase as well is on a five to 10 year story arc. Right now, all risk assets are down, equities, crypto, NFTs. But Coinbase is so well positioned in that area. Their trading volumes are starting to come up. They've consolidated a lot of their products. They've shipped a lot of products over the years, and they've consolidated them over the last six months. I think they're well positioned when

basically equities, crypto, and NFTs, and the Web3 world rise back up. So I'm very bullish on Coinbase's opportunities in the future. Steve, it's great to talk to you. Come back soon. Thank you very much. Stephen Jang from Kindred Ventures. Tech stocks, again, one of the biggest drags on the market. The sector today is down. It's down more than 27 percent if you're looking at the S&P tech sector so far this year. But our next guest says one slice of tech has been unfairly lumped in with the laggards. Let's bring in Mark Lehman, CEO at J&P Securities. You've liked these growth stocks for a while. Are you saying enough is enough? Partially, Sarah. I mean, we have been selective and we've talked for the last six months how we

no longer talk about FANG anymore. We want to be really careful lumping the entire sector into one big everything's good or everything's bad. So you've got to be really selective. And I think we've seen some quarters for the third quarter reports that we've seen so far and a couple names that have been quite good. And you've got selective and i think you're uh we're looking at profits now not just growth and the companies that got ahead of that and are playing um in some of those high growth markets are still going to show a lot more profit you mentioned uber which obviously had a big quarter and some other ones have done quite well this quarter you just want to be really selective so what what are you selecting looks like you've got Snowflake, SAP. How do you make those choices?

Well, we saw a great quarter last week in a company called ServiceNow and one of the great software companies that we've been following for some time now. They had their best government quarter ever. They showed re-accelerating growth. They've been focusing on the bottom line. And I think that it's just a time in the marketplace where you really want to go with companies that are seeing that kind of growth, despite the disruption in the economy. We've talked about Snowflake before. This is the disruptor in software out there. You are probably not going to be able to pinpoint when investors

will come back. But while this company treads water from a valuation perspective, they continue to gain market share. They are bigger and better. And this will be a platform that we talk about for a very long time. We have talked about names like this in the past, a company called Workday, which took years for the investor public to realize what a great, powerful platform they had. And I see Snowflake being that company. Another one, SAP, had their best cloud quarter that they've had. They grow that over 25% last quarter. It's got reasonable valuation. The overall SaaS market has gone from 20 times revenues to about six times revenues. And we're seeing buyouts happen in the eight to nine times revenue, while private equity

is still there licking their chops to find the next one. And that's why we want to be selective. But whether it was Anaplan, which went private, we've seen other ones recently go private. There's want to be selective but whether it was uh anaplan which went private we've seen other ones recently go private there's going to be more m a these companies are ready to go uh i've let it on the private side there's some players who are looking at these every day i'd expect more by year end right we saw a tom about buying that one orlando bravo excuse me so mark do you have to wait for the two-year yield, though, to stop going up to buy some of these companies, which always get hit hard?

It's a great question, Sarah. I mean, we saw earlier today, right, we walked into the market opening today and everything from the twos all the way up to the 30 years were down 10 to 15 basis points and that quickly reversed. I think once we get a handle on where inflation is going, I think we're going to have a great revaluation of some of these names because last I checked, innovation hasn't died over the last year while valuations have. And I think once that happens, there'll be a clearer perspective about what we'll really pay for these stocks. Right now, it's six and a half times revenue. A year ago, it was 20, arguably too much. And maybe it was a little, you know, we're waiting for that Goldilocks where it's just right. You see more, you see more very quickly buyouts in this sector. You mentioned

the Anaplan deal. Who are the acquirers? I mean, Vista's got a big pay, you know, blank check. I think you mentioned Orlando Brown. I mean, he was on your show, Sarah, saying how everything is so expensive. Everything is so expensive. And he's buying stuff at the same time. Sounds like somebody who's talking to his own playbook. I think there's multiple buyers there. KKR is in the marketplace. Obviously, there's plenty of people on Sand Hill Row. There's no lack of capital. There's lack of conviction. Mark Lehman, making the case for software. Thank you very much, JMP Securities CEO. As we head into the close, just want to show you what's happening right now. There's the Dow down 69 points, started off strong earlier in the day. And then we got that number

on jolt at 10 a.m. Eastern time, showed more job openings than expected, perhaps putting more pressure on the Fed to do more and not lessen up on the rate hikes. That is what the big question is into Fed Day. Will they signal any kind of pivot? In other words, going from 75 to 50 basis points. Everyone expects 75 tomorrow. Will they go lower? There's the NASDAQ. It's down the most, down eight-tenths of 1%. Some very pronounced weakness in names like Amazon today, which is down almost 5.5% right now.

It was down more than 6 a minute ago. Intuit, also down. Alphabet is also having a rough day, down 4% or so. Meta is doing well on that FCC remark that TikTok should be outlawed from the United States. The Russell 2000 index of small caps, I'll just point out, is higher for a second day in a row and outperforming again, up three-tenths. That's probably due to the strength in energy and financials, which is heavy in small caps, which are outperforming on the day. Worst performer is consumer discretionary.

That's going to do it for me on Closing Bell. See you tomorrow. Bad day. Now I'll send it into overtime with Mike Santoli.