Power Lunch - Market’s next test, visionaries vs. operators & a new bull market for oil? 11/14/22

Episode Date: November 14, 2022

The market rally hinges on the flood of retail earnings reports this week. What are the key names to watch? Plus, will demand from China kickstart a new bull market for oil? And visionaries vs operators. When should a founder step aside? Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Well, you can see, you're in for a fun-filled hour. Welcome to Power Lunch. I'm Morgan Brennan. Here's what's ahead. The market's next test. Results from major retailers could determine whether last week's big gains will continue from Walmart to Home Depot to Target and Macy's. The key names to watch that could recharge the bulls. Plus, a new bull market for oil crude up about 15% since last September. As China relaxes its COVID restrictions will demand from the world's second largest economy send energy prices surging. We have got a lot to cover this hour. Brown. Yes, we do. Thank you very much. Morgan. All right. And guess what else is surging? Well, okay, stock market's not surging, but it is up and it was down earlier. The NASDAQ and the last

hour turning positive, the Dow on its highs for the session. It is still building or trying to build more off of last week's big gains. The Dow is up half a percent, 181 points, S&B up, and even the NASDAQ, which was down a lot. More than a point earlier today, that's higher as well. Now, yields are higher in the bond market, but they are off their session highs. I mean, it's almost a perfect correlation. Yields go down, yields go up. The market goes in the opposite direction.

Yet Fed Vice Chair Lael Brainerd earlier today saying it may soon be appropriate to slow the pace of interest rate hikes. That's probably helping the market here today. And one of the biggest business headlines happening right now, and that is Amazon, reportedly planning to lay off 10,000 employees. A New York Times reports the cuts would be the largest in Amazon's history, but still represent less than 1% of Amazon's global workforce. Still, it's going to matter a lot to each one of those 10,000 people. A rep from Amazon did not respond to request for comment.

We will talk about this later on, this hour. Morgan. All right, well, it's likely to be another big week for the stock market and the rally hinges on key economic reports, also earnings from some of the world's largest retailers joining us with her look ahead. Stephanie Link, chief investment strategist and portfolio manager at High Tower Advisors and a CNBC contributor. Stephanie, great to speak with you. I do want to start with... I'd like to see you. I do want to start with inflation because we know that that really powered the market into the final trading days, into a strong end of the week last week. We get another reading on inflation PPI tomorrow,

given some of the Fed speak we're getting so far. Walk me through this notion of don't fight the Fed, because it seems like equities have been fighting the Fed a little bit. Yeah, yeah, and it's really great to see you back. Welcome back. Thank you. So I think we're still processing the CPI from last week because on the one hand, it's absolutely quite positive that the core CPI fell month over month year over year. Owners equivalent rent fell a little bit more than expected. That was a surprise.

Of course, though, we have been getting the prices paid indexes from the PMIs, and that, as you very well know, they're a six-month leading indicator for CPI. So all that was really good, and I get why the market rallied. The problem is, Morgan, we still have services, which is 73% of core CPI that remains elevated. So that means that all of the positive surprise on the headline number on the core CPI number was all goods related. And that's not a surprise because we know there's inventory, bloated inventory everywhere, right? And so we've seen a lot of discounting. And that's what makes this week so interesting because you get the government retail sales.

sales report, but then you get 33% of the retail market cap, 50% excluding Amazon of the retail market cap reporting this week. So we're going to hear about inventories in spades, right? So in addition to that, we get PPI, as you very well know. So it's going to be a wild week. Now, in terms of don't fight the Fed, yeah, because that's always been the case, right? We put an unprecedented amount of liquidity into the system over the last three years, and the market's rallied as a result. Now the market is doing, the fiscal side is doing something different in terms of not putting more money in, in terms of programs, or not as much, at least, and you have a much more hawkish Fed. And so that's really one of the reasons why you don't want to fight the Fed. On either side, that being said, if peak inflation is here, I get why the market's rallying, especially because seasonally this is the strongest part of the year to be invested in the market.

All right. That was a comprehensive answer right there. I wanted to go back to the retail piece of this puzzle, though. Are there certain names given how many companies are reporting this week? Are there certain names that you're watching particularly closely, given this macro conversation that we've kicked off here with that first answer? Yeah, no, absolutely. And I think in Target, I own Target, and it's been painful, Morgan, for sure. It's down 25% on the year. But this is a show me story.

They pre-announced negatively two out of the last three quarters. Then last quarter, they missed earnings, but they reiterated the second half of the year guidance. and they talked about a comp of 2%, 2 to 3%, which is what they've been doing. They're taking share from some of the weaker players. But on the inventory side, they actually talked about operating margins getting back to that 6% level in the second half of this year. Remember last quarter, they did 1.3% in an operating margin situation. So did they write down everything? Did they kitchen sink it?

And throughout last quarter, I think they did. And I think the valuation at 15 times forward is very attractive, especially when you look at, at Walmart, which is trading in a low 20 times multiple, and it's held up much better than Target, only down 2% of the year. In terms of these green shoots of a reopening, materializing in China, your thoughts on that and what it means for some of the other names that we might see report this week? Oh, well, I mean, I think that, I mean, we're seeing every other day headlines, they're opening, they're closing, they're opening closing.

If you saw last week, you saw when they announced, or it was the word was that they were going to partially reopen. You saw companies like Nike do really well. You saw companies like Starbucks do really well. I think you're just going to have a lot of overall the discretionary sectors do better than expected. Just some of the other names though that are important for this week. I mean, TJX is up 19 percent quarter to date. The expectations are so high and they are a clear beneficiary of inventories and escalated inventories. But I think we have to be careful. They have very tough comps year over year in Marmax as well as in home goods. And also they've talked about price increases that they've been putting in place and we want to see if we get any

pushback. They say no so far, but it's sort of interesting. They're an off-priser that's raising prices. So it's kind of a conundrum. Semistocks, they've been rallying as of late. We know they're a forward-looking economic indicator. Applied materials, your thoughts. Yeah, and that's also part of the reopen, right? I mean, do you see what these stocks, all of the semiconductors did last week? They all shot up much higher than expected. Clearly, they are feeling the full brunt of the closures of China and also the restrictions. Applied materials already pre-announced, so the number itself isn't going to be important. What is going to be important are the restrictions. They said that it's going to cost them $400 million for the next two quarters. We'll see what

happens there. But Waifer Fab equipment spend is also very top of mind because we've seen the CAPEX numbers come down from the likes of Micron and TSM and others. So that's going to directly impact the equipment makers. And applied materials is one of them, obviously. But that being said, trade's at 14.8 times earnings and it's down 30% year over year. I just wish it didn't rally 25% over the last two weeks. Stephanie Link, great to see you. Always great to get your thoughts, especially in a busy market moving week like this one. Have fun this week. All right. Now, to the big story, and that is FTX in the continued fallout. Now, Bitcoin prices, they are stable, though slightly higher this afternoon after last week's 20% decline. Traders

continuing to evaluate the damage that FTX is left in its wake, and by the way, still continues to. Kate Rooney has the very latest in the developments of what we know. Julia Borsden looks at the potential impact on the ad business, Kate. Let us start with you working all weekend as well. I know there's a lot more to come. What do we know at this hour? Exactly, Brian. Well, all of this bankruptcy fallout for FTX is sparking a lot of questions about broader contagion,

and really what this means for crypto markets, the latest, another crypto hedge fund. caught up in this FTX collapse. Eiki Guy Fund had a large majority of the fund's total assets on FTX, the firm's partner, Travis Kling, tweeting just now that by the time they went to withdraw on Monday morning, he said, we got very little out. We're now stuck alongside everyone else. He adds, it's hard for me to imagine the space bouncing back quickly from this ordeal. He says too many have gotten burned too hard.

Sources tell me a handful of other funds, hedge funds in particular, are in this position, not just crypto funds, guys, likely more traditional crossover funds as well that may have dipped their toes into cryptocurrency. Sam Beckman-Fried, the former CEO of FTX, told us in an August interview that these really were FTX's core clients. Take a listen. Most of our volume comes from customers trading at least $100,000 per day of volume. And so these are high volume, highly engaged users. And it's sort of everything from like someone in the crypto ecosystem to a small, small quant trading firm, a family office, to day traders, to larger quant trading firms, to institutions.

It spans a lot of different sort of demographics and countries and types of players, but they're all generally fairly sophisticated, fairly engaged, and fairly large volume. You heard him say it's sophisticated traders. We also heard from Binance's CEO, Chang Peng Zhao, who walked away from a deal to buy FTX and bailout FTX just last week. He said on Twitter spaces this morning, this was extremely surprising to everyone. He says, quote, if I was writing a fiction, I couldn't imagine this stuff. He also gave some advice to crypto traders.

He says, if you don't know what's going on, just hold for a couple of years, not months. He says years. And this will eventually blow over. CZ, as people call him, also trying to reassure investors that Binance doesn't have loans or debt. He questioned the liquidity, though, of some of the smaller exchanges out there. Back to you. Yeah, Kate, when do you think the next big news dump is going to be? I mean, what do we kind of sit in a holding pattern?

We don't really know where he is. There was some private jet chatter over the weekend. Yeah. Any idea when we're going to start to clear some of this stuff up? It's kind of stalled out in the last couple days. I know. I wish I had a crystal ball, Brian, so I could run out for lunch. Or a jet. Or you're running jet.

Well, the one thing we are waiting for that we haven't gotten yet in terms of what is next and what's a little more predictable is something they call the first. day affidavit. So FTC filed for bankruptcy last week. I've been talking to some experts on this on the legal side who say this was clearly a rush. They went to get out the initial paperwork, but they didn't have that longer paperwork that affidavit that typically comes out. That should provide a lot more information. And I'm told that would have come over the weekend. We had eyes out for it. We haven't seen it yet. So you'd think of the next week or so, but we're supposed to get more documentation and more of a play-by-play from FTCS on how this actually happened and

explaining that to the bankruptcy court. Kate Rooney. Thank you for joining us with the latest. We still have more questions than answers. It's going to be a while, I think. All right. Well, now to Julia, with a look at FTX's dramatic collapse and what that could mean for the ad industry. Julia. Well, Morgan, the ad industry is already struggling with concerns about an economic slowdown and now looking at another loss with the implosion of FTX, which was named one of the top 10 marketers of the year in 2021 by ad age. Now, since FTX began advertising July 2021. According to I-Spot, FTCS spent about $75 million on TV ads, many of them touting celebrity partnerships with Tom Brady, Steph Curry, and others. FDX's TV ad buys peaked in February

at $36 million in the month, including ads in the Winter Olympics and the Super Bowl, which you may remember was nicknamed the Crypto Bowl because of the four national crypto ads that aired in the game, where 30 seconds sold for as much as $7 million. FTX's TV ad spend plummeted to just $1.5 million in September and $145,000 last month, according to Ispot. And FTX's ad decline is part of a larger trend amid crypto's contraction. In February, the industry was the 13th highest spender among industries on TV ads. Last month, it fell to 175th place. Crypto.com actually spent the most in the sector on TV ads, $92 million in total, but has not.

not bought any ads since June. FtX and other crypto companies did spend far more on TV than on digital ads, according to the records that we have. But Google did blame its slowing revenue growth in part on reduced ad spending by both crypto companies and other financial terms. So now we're seeing the absence of crypto advertising yet another blow to an already challenged space. Morgan? I mean, it's fascinating. You kind of just touched on it right there. But, Julia, we've been talking about the slowdown in an ad. advertising and in digital ad sales. And when you lay those numbers out, I mean, even before all of the implosion stuff at FTX, the fact that as we've seen Bitcoin and the price of other

cryptocurrencies just plummet over the past year, that that was probably a very big driver of those ad dollars and that that has essentially dried up. And I would imagine now, the expectation is it's going to dry up further. Yeah, I would expect it to disappear entirely. I mean, I think it's so interesting just looking at the chart watching the decline of the crypto spending that really peaked in February. And of course, that decline does go along with the decline in the actual values of some of these coins, including Bitcoin. So I think those things move in tandem. But it'll be fascinating to see who sort of fills that void for the Super Bowl. But also if you just look at the fact that the TV ad market has been bolstered by some things such as political advertising,

trying to figure out where the next wave of growth will come from for these different ad markets. All right, Julia Borsden, thank you. And for more on the growing scrutiny over the crypto industry, tune into Squawk Box's interview with the CEO of Crypto.com. That's tomorrow at 7 a.m. Eastern Time. There are so many questions. I mean, that's going to be a really important interview. Where is Sam Bankman-Fried?

Where is Caroline Ellison who ran the hedge fund? Where is the money? How do you lose $10 billion? What do they invest in? So much stuff to come out. All right. That's not all that's going on. Coming up is President's Biden.

And she meet Corporate America. is navigating a changing relationship with China. Different companies are using different strategies. We'll talk about it. Before the break, make a look at shares of AMD, which are higher, following Wakanda Forever's big opening. I think they mean AMC. AMD is a semiconductor company?

AMC is a movie theater chain? They're close in the alphabet. Close enough. That stock up at 45%. We are back in two. Welcome back to Power Lunch. President Biden and China's President Xi meeting face-to-face. taking a small step in stabilizing what has been a tense relationship.

And that tension has been hard for corporate America to navigate. Sima Modi has a look at the differing strategies. Sima. Morgan, while expectations were low going into this meeting, the takeaway so far seems more constructive. The President Xi reiterating the red line on Taiwan. Now, remember Taiwan, just one of the reasons hedge fund Tiger Global recently announced plans to halt new investments in Chinese equities.

That's according to Wall Street Journal. Talk about unfortunate timing, the Chinese K-Web ETF on pace for a record month. And it comes as Beijing announced plans to support its debt-ridden property sector. Check out these moves, sending shares of Chinese real estate companies sharply higher on the day. In the last seven days, ETF manager Wisdom Tree has seen $185 million of inflows. Of course, follows months of outflows. Datatrek, separately, also s tightening air quality in the month of November versus prior two months, as a sign that factories there are starting to reopen.

So is China on the verge of a major pivot? Global Chief Investment Officer of Wisdom Tree, Jeremy Schwartz, telling us investors are going to be looking for signs of further reopening of the economy next year and moving past COVID-Zero policies. Carnival, Royal Caribbean, among the hospitality company, citing plans to delay their return to China due to uncertainty around this specific policy.

However, infrastructure-related companies like Caterpillar, General Electric had been rather optimistic. CEO Larry Culp, reiterating the company's commitment to growing its business there. Morgan and Brian. Seymody, thank you. All right, let's talk about oil and geopolitics, because there is growing concern that a full China economic restart, along with the December 5th EU sanctions that kick in,

could send crude oil surging. Listen to what Jeff Curry, Goldman Sachs, head of global commodities research, had to say. The physical goods were the root of the inflation at the very beginning. When we think about the outlook for physical goods, it starts to get really bullish over the course of the next six to 12 months, primarily because you get China back in the picture. All right, let's bring in Halimacroft. She is global head of commodity strategy at RBC Capital Markets. Obviously, a CNBC contributor. I know that you listen, Jeff, you probably know him, but he's also a competitor as well.

So you don't have to agree with him one bit. But do you? I mean, I actually, I like Jeff Correa a lot. He's an exceptional analyst. Here we go. I would say that the market, though, has been waiting with bated breath for the China reopening story that does not come. And last week, we had all the expectation based on they're going to take new vaccine

technology. They were shortening quarantine time. And we were basically saying, okay, this is going to be it. And now today, you can see oil is softer. because you have record COVID cases in China, particularly in places like Beijing and major manufacturing centers. So I do think that people are going to wait to see how we really turned the corner on a China reopening. And certainly, this has been the big headwind for oil. I mean, it's amazing that oil prices are this high when Chinese demand is this week. So if we were to get a reopening

combined with the EU six package of sanctions, that's the ultimate full story for oil. But I think we just need to wait a little bit longer to see when China really reopens. Yeah, it was kind of like I heard Morgan before the show. She was like, you know, I like like Brian, but anchoring, you know, it's kind of like one of those things you just did with Jeff. Oh, you heard that. Fair. Fair. I did hear that Morgan Bronagh.

I was joking. No, you're not. Fair enough on Jeff. How about this, though? Let's talk about what we know, Halima, which is OPEC today, their monthly number. They came out. Yeah, they cut their demand forecast, growth, but still growth, by the way. They cut their growth forecast a little bit.

But, man, everybody's talking about India. You've got these December 5th full EU sanctions coming in, and all India is doing is buying more and more oil. They are backing up the truck. I mean, Russia is now the top supplier into India. India likes nothing more than a discount. And Janet Yellen was out essentially saying, like, India, go ahead, continue to purchase. The only problem that India is going to have on December 5th is if they do not abide by the price cap, If there is no workable price cap mechanism, there are no Western services to move those barrels

to India from December 5th onwards. So those India numbers may not hold when these sanctions take effect. So Halima is, at least in the near term, and I realize there's a lot of question marks and uncertainty here, but in the near term, is it, is the trajectory higher for oil prices or is it lower? I mean, to me, the big question is on December 5. If, you know, if you, these sanctions take effect. If there are no Western services to move Russian barrels to anywhere else in the world, and you have this EU embargo take effect as well, you could be looking at a multi-million barrel disruption in the oil market. That is obviously a catalyst to move higher from here. The question is, do they get the price cap mechanism working? Does it allow those

barrels to move? What is the scale of the Russian disruption? And I don't think we're going to have the OPEC meeting on December 4 come out with some announcement of the price cap mechanism of a major OPEC surge. I think they are going to wait to see what happens with these sanctions taking effect on December 5. We'll be there. It's a Sunday meeting, Halima, and the sanctions, I want to be clear with our audience. On December 1st, the U.S. starts the latest sale trunch of the SPR. On December 4th, which is a Sunday, OPEC will meet. We will be there. And December 5th, which is the Monday, EU full sanctions on oil kick in. We are in, whatever ends up happening, You have to agree we are entering what could be a weird and wild time for crude oil in the next couple weeks.

I mean, it could be the explosive endgame for the market this year when it comes to oil. How these sanctions launch will determine do we have a major supply disruption or do we continue to have a relatively well-supplied market. I cannot put enough emphasis on how important December 5 is going to be for the ultimate outlook for oil. Halima Croft, RBC Capital Markets, Halima, really good stuff. As always, putting it into perspective. Thank you very much. See you in Vienna. See you.

Yes. If you need a partner or sidekick on that trip, I mean. Well, we got Santa. This thing scared the heck out of me. Look at this wall moves. It's been moving back and forth. This is the inventory nightmare before Christmas viewers. Retailers,

retailers gearing up for the holiday season, a time of higher foot traffic, fierce competition, hopefully more sales. But this year, the focus seems to be getting rid of excess inventory. And so that story is coming up when Power Lunch returns. Welcome back to Power Lunch. Another warning about the state of the economy from Amazon founder and former CEO Jeff Bezos. In an interview with CNN, Bezos commenting that the probabilities say, if we're not in a recession right now, we're likely to be in one very soon.

Quote, my advice to people, whether they're small business owners, is to take some risk off the table. If you were going to make a purchase, maybe slow down that purchase a little bit. Keep some dry powder on hand and wait a bit. The comments spilled on Bezos warning last month that it was time to batten down the hatches. Hearing more and more of this type of commentary from some major players in the market that... It's interesting. Why would he...

He runs a cloud company, retailer, whatever we're going to call it. Well, touches so many different aspects of the economy, right? Yeah, but he doesn't... No obligation to come out and saying it's like J.P. Morgan's Jamie Diamond saying similar commentary too. Didn't your mom say, if you don't have anything nice to say, don't say it at all. But that's what's so fascinating about this moment. It's weird. I've never heard him in 25 years. I've never heard Jeff Bezos come out and say stuff like this. Well, now he's chairman, right? He's not, he's no longer CEO. And he's got the Twitter. He's the

chairman. He's all ripped. It's going to outer space. Let's get out of Christina Parts in For a CNBC News Update. Thank you, Brian. Here's what's happening at this hour. The U.S. General Assembly has voted to require Russia pay reparations for, I can't get that word right now, so I'll just skip it, for its invasion of Ukraine. The non-binding resolution passed 94 to 14 with 73 abstentions, while still overwhelming, support for the new measure was the lowest for any of the resolutions against Russia since the beginning of the Ukraine invasion. Another court has ordered a halt to President Biden's student loan forgiveness program. A federal court in St. Louis has agreed to a preliminary injunction while an appeal plays out. Grammy-winning singer Roberta Flack has ALS, commonly known as Luke Garrick's disease, and can no longer sing.

The progressive disease has also made it difficult for her to speak, but her manager says Flack will stay active in her musical and creative pursuits. And in Miami Beach, a hotel that hosted President Kennedy and the Beatles is no more. The Doville Beach resort was imploded yesterday after falling into disrepair. The future of this site is unclear. local voters rejected a development plan for the site by Miami Dolphins owner Stephen Ross. Ryan, mess up that word, but back where you? It's all good. Christina parts a smithiless.

That's a hard name too. I was trying to show solid solidarity. Solidarity with my Canadian friend, Christina. All right. Still ahead here on lunch to power. as as of late, there has been a lot of controversies surrounding what they call visionary CEOs and founders. Most recently with the likes of Mark Zuckerberg, Elon Musk, and, oh yeah, this Bankman-Pried guy that's now missing. Is corporate America in need of a major leadership reset, Morgan?

Plus, no more fun in games. Bank of America downgrading Housborough highlighting the problems gathering around, well, magic the gathering. We're going to explain in today's three-stop lunch. We'll be right back. We are 90 minutes left in the trading day, and we want to get you caught up on the markets right now. Stocks, bonds, commodities, and looking for leadership. So let's begin with the market. The Dow off the highs of the session, the S&P coming off of its biggest weekly gain and the biggest gain in about five months.

The NASDAQ also coming off the highs. But as you can see, we still are hanging on to some gains in general with these averages right now. The S&P 4,004 is the level there. and the Dow is up 137 points. Now, to the bond market, treasury yields, those are higher, though off the highs of the session there as well. That's following comments from Fed Vice Chair Lail Branard, who said it may assume be appropriate to slow the pace of interest rate hikes. The 10-year yield is around 3.87 percent, as you can see right there. A lot of Fed speak this week. The yield on the two-year, that's at 4.41%.

Okay, well, oil is closing today, or closing lower right now for the day. Let's get to Pippa Stevens at the CNBC Commodity Desk for more. Pippa. Hey, Morgan, oil is declining on weak Chinese demand as well as a stronger dollar. Meantime OPEC cut its oil demand growth forecast once again in its monthly report. The group lowered its 2022 demand growth forecast by 100,000 barrels per day, and it now sees demand growth at 2.55 million. barrels per day this year. OPEC saying the world has entered a period of significant uncertainty

and rising challenges. Let's check on prices. WTI down 3.9% at 8552, brand crude at 92, 83 for a loss of 3 and a third percent. And natural gas is in the green, but well off the highs of the day amid ongoing uncertainty as to when Freeport LNG's facility will be back online following that fire back in June. Finally, take a look at NIC. earlier today, jumping more than 10% and crossing above $30,000 per ton, hitting the highest level since at least June. But low trading volumes has meant this market can be highly volatile. Morgan?

Yes. Pippa Stevens, thank you. We're going to turn now to two controversial CEOs, Elon Musk and Mark Zuckerberg, both big visionaries, both leading, struggling companies. Our next guess says their management styles aren't working. And it's time for a new breed of leaders. Bill George is former CEO of Medtronic, as well as a senior fellow at Harvard Business School. He's also the author of True North, Emerging Leader Edition.

Bill, great to have you on the show. Break this down for me. Elon Musk, I mean, he's a cult figure. He's an icon. You don't think he should be, you think he should be taking some stuff off of his plate right now? Absolutely. He finally admitted it today. He's running three or funny on account five companies.

And he needs to go away from the cult. idea of having a lot of charisma and hyping stock and get back to being a responsible CEO. He's got a huge responsibility at Tesla, and he's fooling around with Twitter. No one knows what his objective is in Twitter. We thought we knew in Tesla. He was all for climate change and SpaceX for exploring. And so I think he is really getting caught up in the charisma trap. And I'm very concerned about that.

And I don't know how he's going to get back. I think right now the first thing you should do is Twitter is following. apart. And I don't know who's going to run it, but he needs to get a CEO in there very quickly to run it for him because they're not getting anyone left the way he's going. If you had planned a worse takeover attempt of a company, I don't think you could have top what he did. It goes back to AOL Time Warner for maybe a worse example. So he's got a lot to do. He definitely has a lot to do. And certainly it remains to be seeing how everything evolves at Twitter. And certainly we know some advertisers are pausing their spending on the platform right now.

That being said, he has come out multiple times in recent days and said that there's more users on the platform than ever before and that you're seeing records there. So there does seem to be some sort of engagement happening. He has also said that he doesn't plan, or at least back earlier in the year, he had said that he didn't plan to stay on as CEO permanently at Twitter. We saw John Ledger, former CEO of T-Mobile, basically throw his hat in the ring. And that was kind of bat it down. If it's not Elon Musk, who could actually take that job, Bill? Well, that's a very good question. I'm sure that there are a lot of qualified people out there. I think he'd have to look for them. Somebody like Cheryl Sandberg could easily step into it if she

wanted to and turn this place around, having left Facebook or meta. So she's one person I would put up there, a very, very capable person. See, he's got to recognize that all his revenues come on from his advertisers. They are as customers. And he's turned them off. And he's going to turn off more of him if he doesn't do a quick turnaround. Isn't this the difference, Bill, ultimately, between a founder and an operator? They're very different skill sets, are they not? Absolutely. They are, you know, entrepreneurs, these are brilliant entrepreneurs,

Musk is, because I would say the greatest inventor of our era, the homeless of Thomas Edison, Brian. But, you know, it's very different than running companies. And how can you run four of them? I mean, why does they put CEOs in all of them, call it the Musk holding company? And have a CEO of Tesla. Tesla is, you know, lost $475 billion this year. This is a huge amount. Next to Facebook, Meta, they're the second largest loss of all time.

So I think he's got a responsibility to his shareholders, which he doesn't seem to be focusing much on right now. So let's talk a little bit about Meta. What would you, what would you advise happen at Meta where Zuckerberg is concerned? Well, Zuckerberg seems tired. He's been there 19 years. I thought a year ago when he changed the name, he abandoned his core name, that he was really abandoning Facebook. And I think right now, number one, Mark needs to hire a CEO for META.

And he can go be chair and chief creative officer and focus on virtual reality. The problem is he's spending $10 billion a year. That's got to come way down because no one knows when this is going to pay off. But someone's got to restore Facebook, Instagram, because it's going the wrong way. And if these people don't set some standards, both Musk and Zuckerberg, you're going to have forced government regulations. No one wants that, but they need to act as very responsible CEOs. Yeah, just to take, I mean, just to play devil's advocate here a little bit.

It seems like historically a premium has always been paid, at least from an investor's standpoint, for a company that has been led by the founder, especially if the founder is seen as a visionary. And the flip side of that is, and I just look at Amazon and FedEx's recent examples, those are companies where the founders have stepped aside, and to Brian's point, operators have stepped in at the helm. Are you suggesting that we're entering more broadly, that we're entering an era, especially given the fact that it is a tight monetary environment right now, where the vision means less, and there's less premium to be had from the founder? I definitely think so. I mean, you had Bezos comment a few minutes ago. He's put Andy

Cassie in charge. Look at what Tim Cook's doing at Apple. Look at what Satchinadela is doing Microsoft. None of them are founders. Larry Ellison turned over Oracle to Satchakas. And so, yeah, I think it's time that you get competent CEOs in running all of these two companies. And I think you're going to three companies, really, and you're going to be a lot better off. And the visionary founder can have great ideas about inventing and they can be out still representing the public phase of the company. But somebody's got to run the data. today. And yes, if we go into a recession, it's going to have to be tightening down and somebody has to run the place. And they don't seem to be running it very well right now, any of them.

Bill George, thanks for joining us. Thank you. All right, coming up, we're going to switch gears and talk about the holidays because apparently all retailers, all they want for Christmas this year, Morgan, is not their two front teeth. It is less inventory, so they don't have to discount, crush their profit margins, and disappoint investors. Merry Christmas. We're back right after this. All right, welcome back. It's going to be a big week for retail earnings. You've got Walmart's numbers are out tomorrow. Target on Wednesday. Coles and Macy's reporting on Thursday.

Now, many retailers are facing the problem of just too much stuff, excess inventory. Investors are going to be watching the inventory numbers as well to see what stores have been able to sell through some of that. Joining us now is Melissa Repco, CnBC.com. All right, Melissa, Walker. Walk us through some of the names where they stand because he went from not enough to too much. Yes, it's been an abrupt shift. Target is really one of the big ones to watch. Target cut its profit forecast not once but twice.

In May and then in June saying it was going to take very aggressive measures to cancel orders, to do deep discounts to try to clear the way for some fresh merchandise this holiday season. Walmart's in a similar situation, but the difference with Walmart is that more than half of its sales come from grocery. So its hope is that people come in for the milk and eggs, come in because they know of the low-priced reputation, and they cross the aisle, maybe leave with some clothes they weren't expecting to buy. Coles and Gap are in a tougher spot. Coals and Gap, of course, sell a lot of apparel, and it's just simply harder to sell summer clothing when people want winter clothing or sell them sweatpants when they want dresses.

So I'm expecting that it might not be as rosy as some of the progress that Target and Walmart may have made. Macy's is actually an interesting one because at the end of last quarter, its inventory was only up 7% year over year, which was much lower than some of the double digits we were seeing among other retailers. So that may give them advantage going into the holiday season because, again, you can bring in some of that fresher, newer items that holiday shoppers may want. That's interesting. I wouldn't have expected to hear that. Okay, so maybe for some of these retail names with the inventory builds-ups, maybe it's not so good for investors, maybe it's not so good for margins, but is it going to be good for consumers looking to find some deals ahead of Christmas and the other holidays? Yes, that's definitely the good news.

Deals will abound this holiday season. Abound? Abound, yes. Because even if you think about last year, people were nervous about out of stocks. They were rushing to the store really early. They were worried about shipping delays. That dynamic has completely shifted. And so that means that almost everything it feels like is on sale and has been since October.

Black Friday really started early. And so for people who are looking for a deal, they will be all around. The only bad news is it might be in categories like electronics or workout clothes, things that people, frankly, have already bought and may not want again. Didn't we buy everything during the pandemic? Yes, that's the dilemma that a lot of retailers have, is how do you make it new and fresh, and how do you create urgency? So much of what Black Friday is is about that idea of the doorbuster, right?

When you have weeks and weeks of sales, how do you create that same dynamic and excitement for people to come in and get something new. Yeah, it's going to be interesting. This push-pull that we've seen between goods and services as more people spend on more experiences. Melissa, Repco, thanks for joining us today. What about air fryers? Air friars are still big, but a lot of people bought them already.

I got to tell you, everything's better in an air friar. Oh, you're one of those. What does that mean? I mean, give me the old-fashioned fry. I don't know. Then I've got to deal with the grease and the oil. I'm trying to save the planet. Listen, deep-fried turkey.

Save the planet. Get on board next week, my friend. Oh, I can deal with some deep fried, air fry. All right. Air friar. Melissa, thank you. Thank you. By the way, the graphic was beautiful because it looked like you were literally coming out of the bag with the shot. Look, look, look.

Oh, my gosh. It does. Merry Christmas. I'm on sale, too, I guess. No, you are not. Still to come. We're going to pivot. We're going to trade some of the biggest calls of the day in three stock lunch.

That is coming up next. Welcome back. Three-stock lunch focuses on three big calls. AMD upgraded by Baird to buy, saying demand for its products remain strong. The stock is up 3% today and 19% in a week. Hasbro, sinking nearly 10% on a downgrade from Bank of America to underperform. The analyst citing changes to its highly profitable magic, the gathering card game, and Tava pharmaceuticals also falling slightly after a downgrade from JPMorgan to underperform,

as they say the company is struggling with growth in its portfolio. So let's bring in Craig Johnson, chief market technician at Piper Sandler. Craig, great to have you on. Let's start with AMD. Sure. In terms of AMD, so the fundamental story on AMD is still quite constructive. I mean, Harsh Kumar follows AMD for us here at Piper. And there's a lot of positive things happening around the data center, enterprise PC market, that should really be a positive for the stock. Now, technically, when you look at the chart, you have not reversed a longer term downtrend yet.

you're still below a declining 200-day moving average. And the bottom line for us is, Morgan, that we're going to need to see a close above $80 before we think this is more than a relief rally at this point in time. All right, Craig. Hey, by the way, good to see in the daylight hours, too, my friend. Congratulations on your Vikings. We'll talk about that in a second. But right now we've got to talk about toys, and that is Hasbro.

We just talked about Christmas, from what I understand, children like Christmas. How's Hasbro setting up? Hasbro is a pretty distributional-looking stock, Brian. And by the way, winter, when you look at the chart we've got here, it looks like kind of a big rolling over dome. When you look at the chart, you're below a falling 50-day, 200-day moving average. And at this point in time, there is no indication that there's any sort of support here for the shares. So from our perspective, I would be using any sort of relief rally to be selling Hasbro as it looks like there's still more downside left to go. All right. So stocks down 9% right now. Final name, Teva Pharmaceuticals. So tell me Pharmaceuticals is kind of interesting trading name. The stock has been sort of range bound for a long time. Around the $12 at the upper end, $6.50 or so at the lower end, just class above its 50 and 200-day moving average. But at this point in time, maybe you got 15 to 20 percent trade to the upside. But it's just a trade because we have not broken out of the consolidation range that the stock has been in for more than two years.

All right. Breakdown on the technicals on three key names that are moving today. And thank you. Thank you. All right. Maybe a big move up there in Teva. All right. Job cuts in big tech.

They keep coming. We'll give you the latest. Next. All right, welcome back. Got to hit a couple of stories that are on our radar. Now, we normally don't talk a lot about sports. Probably should with sports betting, right? But we have to start with the wild football game between the Vikings and the Bills.

It is being called one of the most amazing finishes in NFL history. It had, well, had a lot of mistakes. Josh Allen, bunch of interceptions as well. You had one of the greatest catches of all time. And the Vikings underdogs came out, won the game. Not only covered, won the game 33 to 30. Jason Gay of the Wall Street Journal wrote, wrote about it today and called it, quote,

an epic masterpiece. I don't know if this game was on in your house. Maybe you're watching Red Zone, Morgan. The game was on in my house. I mean, it was being watched. I hear it was a nail biter. was not watching it. Well, I mean, listen. But I hear it was a perfect storm of events that had to take place for this incredible situation to play out the way it did. And if you had maybe or maybe not had

money on the Vikings plus seven and a half, they won outright, then you look back and go, well, maybe I could have done the money line. It sounds like there's a personal experience being put to work. I wanted to bring that up just so I could talk about sports betting, actually. Which we should be talking about, right? Why not? Well, meantime, I'm going to be a little bit of Debbie Downer here because there are more job cuts coming in tech. Amazon reportedly planning to lay off approximately 10,000 employees in corporate and tech roles. That's beginning of this week. It would be the most job cuts we've seen at Amazon on the history of the company. So this is according to a report from the New York Times. And it comes in areas that are perhaps

not so profitable for Amazon. And we saw some signaling from the Wall Street Journal's reporting last week that this could potentially be coming. And it comes on the same day or in the same couple of days at Disney, for example, has implemented a hiring freeze, too. So you're seeing, Brian, more and more of these companies begin to, going back to the Jeff Bezos comments earlier in the hour, batten down the hatches, potentially. Just, I mean, again, right before the holidays. The timing cannot be overlooked at a company. You know, and then they're going to announce they're going to hire 50,000 people for other jobs, seasonal jobs, the warehouse, and then they're laying off. I mean, I get it. You've got to

right size your business, but, man, wait until January. second or so. I mean, you know what I mean? Right ahead of the holidays? It's a tricky one. It's a, uh, it does. It speaks to all the layoffs in general. We're seeing in tech and whether that's a canary in the coal mine, right? We shall. Or too much hiring during the pandemic. We'll find out. Hey, Morgan, I'll see you tomorrow. Yeah. See tomorrow. All right. That's going to do it for us here. Thanks for watching, Carolyn.