Power Lunch - Midterms & the markets, a crypto surprise & Disney on deck 11/8/22

Episode Date: November 8, 2022

What’s the best midterm election outcome for investors? What’s the worst? A breakdown of the industries that could feel the biggest impact. Plus, what started as a tussle on Twitter ended with crypto exchange Binance acquiring rival FTX’s non U.S. unit. And, what investors need to watch for when Disney reports earnings. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch, everybody. I'm Contessa Brewer. Here's what's ahead. Stocks rally as Americans hedge of the polls. What's the best election outcome for investors? And the worst? Write down the industries that could feel the impact. Plus, what started as a tussle on Twitter ended with crypto exchange finance acquiring rival FTX's non-U.S unit. This deal could reshape the trillion dollar industry. And the story's strange. It's unfolding as we speak. We have the latest details. Tyler. Tessa, thanks very much and welcome everybody. The major index is moving higher this afternoon once again. The Dow touching its highest intraday level since late August.

It had been up as much as 528 points earlier in the session. The S&P and the NASDAQ are fractionally higher. There you see the numbers, 200 and some points for the Dow Industrial's about three-quarters of a percentage point. Wall Street Journal reports that Netflix is exploring, investing in sports leagues and bidding on streaming rights. You know, Amazon is already in that game with the NFL. The stock is off its highs, but up about 2%. Volatile day for Bitcoin following the deal that Contessa just mentioned. It initially rose on the news, but reverse course and is now down, Bitcoin is, by about 10%.

We turn now to the midterms. That's what's happening today. Republicans expected to gain control of one, maybe both chambers of Congress. And if history is any guide, investors may cheer the prospect of gridlock as the best outcome for the market. Early voting so far has been strong, and Elon Moy is covering that part of the story. Kayla Taoshi looking at the Biden effect on the midterms. And Invesco's head of public policy, Andy Blocker, is going to tell us what the results could mean for your investments. Elon, we begin with you. Well, guys, the country appears to be just as divided

over how to vote as it is over who to vote for. NBC polling shows about half of the electorate plans to vote in person today, but the other half plan to do it early. Just take a look at these numbers from the U.S. Elections Project. Roughly 44 million people cast their ballot before Election Day, either in person or by mail. Of the states that record party information, 43% of the ballots were cast by Democrats. 34% were submitted by Republicans, and 23% were from another party. That breakdown is expected. Democrats are more likely to vote early. Republicans are more likely to do it on Election Day. So, It doesn't tell us which way the results could go,

but it does mean that it could take a while to know the answer. Pennsylvania just started counting mail-in ballots today, and Republicans and Democrats are already suing each other over which ones to include, whether they should include ballots that were misstated. Now, the majority of voters, 68 percent, made up their minds in this election before September, according to NBC polling. 10 percent said that it was in September. 8 percent said they decided in October, only 5 percent.

said they just decided within the past week, and 7% said they still might change their mind. So, guys, all of the ads that we've been inundated with over these past few weeks are here to increase, here to reach an increasingly narrow audience. You know, it's interesting because you have all of these ads reaching fevered pitch, and the polls show that people had already made up their minds. I'm curious, when they go to the polls, how much are they looking at individual issues to inform their vote and how much are they just looking at the party platform? Yeah, so clearly Republicans have been using the economy as a motivating issue.

Democrats have been looking to abortion as a motivating issue. But what the NBC poll numbers show is that a majority of voters, 66%, actually are just voting for change. They don't feel like the country is headed in the right direction. And that percentage is even higher when you look at women voters and when you look at voters in swing states. Three quarters of voters in swing states just say, we want something different. So I think this is really going to be an election that's about the national environment

rather than turning on specific individual issues, at least for the majority of voters. A lot of passion, a lot of fire. You said something early in the report that's very interesting, and that is that Democrats are more inclined to vote early. Those votes are generally paper ballots. They take longer to count. And this could account for what was described, I believe, as the Pennsylvania Mirage. The Red Mirage. The Red Mirage in 2020.

where Republicans go out to an early lead because the automated voting machine votes get counted quicker. That could happen again this time. That could certainly happen again this time. And so in Pennsylvania, one of the issues is that they're not even allowed to start counting those early votes or those mail-in ballots until election day itself.

And so that's why you could see the process potentially get longer or drag on. And of course, you're now hearing from both parties saying, hey, if some of those mail-in ballots weren't mailed in correctly or if the date wasn't on there or if the date was wrong on there, then perhaps this ballot shouldn't be counted. And that's what they're going to be fighting about in the courts. This election is really close.

All of those individual votes can make a difference. Elon, thank you for that. Let's turn to Kayla Taushy now at the White House with a look at President Biden's economic agenda. And, you know, really, I guess the question for a lot of voters, Kayla, is going to be, did he deliver what he promised? Well, certainly Democrat candidates believe that he did. they have been embracing the Biden agenda on the campaign trail, drawing contrasts across the aisle and talking up the deliverables from the past two years.

To be sure, most of the big items on the 2020 to-do list did get tackled at least partially, rolling out some student debt relief, if not free tuition, raising the corporate tax rate, if not reversing all Trump-era tax cuts, pardoning federal marijuana crimes, if not securing widespread criminal justice reform. Vaccines widely available. There's been a trillion dollars signed in infrastructure. infrastructure spending, though we should note immigration and child care, two major priorities got blocked or cut out in recent years.

But voters in this moment are guided overwhelmingly by the economy, according to that NBC news polling. Those economic concerns exacerbated when the price of gas in particular rises. The number of voters saying the country's on the wrong track in NBC polls peaked this summer around the time that prices at the pump were hitting records. polls improved slightly when they start when prices at the pump started to fall. But after an uptick in gas prices since around September, 72% of NBC's respondents now say that the U.S. is on the wrong track. The administration has trained its focus on that statistic in particular.

They've been drawing down reserves until the end of the year. Though senior officials acknowledge privately that prices are set to rise in a new year, Contessa. Kayla, I'm curious when you're talking about the Biden administration's economic policies, if Democrats lose control of the House of Representatives and or the Senate, do you have a sense of how much they will try to do to accomplish in a lame duck session, what otherwise they might have tried to take two years to do? Well, I think that there are certain must-pass items to keep the lights on in this country that they will try to get done in the lame-duck session. that there is going to be a sprint to the finish line at the end of this year.

I've heard several senators talk about trying to pass a new package of Ukraine funding before the end of the year so that that doesn't get tied up. You know, Contessa, no matter what happens, it's going to take the White House several months to recalibrate its agenda and figure out how it can get points on the board in the second half of President Biden's term, depending on what the composition of Congress looks like. I've heard several people who serve in this administration, who served in the second term, under President Clinton who note that in 1994, it took them at least six months to figure out what they could actually get done and something similar could happen this time around.

Tyler and Contessa. You know, Kayla, I don't mean to prejudge the possible outcome here, but it seems as though the Democrats, at least early on in this campaign, put a lot of effort behind the abortion issue. Was that in retrospect a smart move? I think it depends on who you ask, Tyler. I mean, Jen Saki, the former press secretary, who now works for this company at MSNBC. She went canvassing in Pennsylvania and said that abortion is and was one of the critical issue for voters, but it is behind the economy in most major polls.

And so because Democrats did not have a positive message on the economy going into this election, you heard House Speaker Nancy Pelosi say that Democrats needed to change the same. subject, and abortion was the subject that they felt like they could campaign on, Tyler. All right, Kayla, thanks very much. It'd be an interesting evening and probably next several days as those votes get counted. Kayla Taushy at the White House, I recognize it. It's behind you there, the White House. We got it. All righty. Let's take a look now at the best and worst scenarios for investors and the issues that matter most with Andy Blocker, who is global head of public policy at Invesco. Andy, welcome. Is there such a thing as a best outcome or a worst outcome, or a worst

come from these midterms for investors and the market? Well, Tyler, historically speaking, the third year of the presidency has done well, no matter what the results are in the midterm. But specific to your question, divided government post-midterms has done the best. We've shown that it's over 13% on average growth, whereas single party control, if that's continued, it's done the worst. It's around 5%, 5% to 10%, depending on. which numbers you're using. So that's the normal, but I think we're at different times.

There are multiple variables at stake here. We've got the Federal Reserve. They're the ones driving the markets right now. And so it's really about when they take off the breaks, when inflation's under control, and when the economy can start going in a different direction. I'm curious. I mean, we have what passes for single party control now. You have a Democrat in the White House. You have Democrat control in the House of Representatives. And you have a tie in the Senate that is broken on those occasions where it needs to be broken by the vice president. Is that single party control or is it really, to me, it's single senator control because one senator, whether it's mansion or Murray or any of them can be that single senator who

obviates or gets rid of the idea that there's a single party control at all? Well, I think that's a very good point, Tyler. You've had two senators. Senator Manchin and Senator Sinema who've really controlled the agenda for the Democrats. And so, but at the same time, at least if the Democrats could come together, they could pass something on their own. And so you've seen President Biden do both the bipartisan move as far as negotiating a bipartisan infrastructure bill in this first year and also doing the inflation reduction act later this year. So he's done both, I think once control of at least the House goes over to Republicans, he'll, he's going to have to take, a bipartisan pact, and then for the things he doesn't like, he's going to have to veto. You know, I've been covering elections for a long time. And what really struck me about

Iwan saying that 66% of the voters just want change. They think the country is going in the wrong direction. It seems to me like every election, whether it's a midterms or the presidential election, the country feels like that, that there's a sense that we need to change. For business, if that change includes congressional gridlock, can it still be a good thing, Andy? Well, actually it can. So when you have gridlock, so to speak, what you're really talking about in the body government is you're really reducing the bid-ass spread for what I call policy volatility. There's not much you can mess up going too far to the right or too far the left. And there's certainty, less uncertainty about what will actually happen.

So in this new Congress, whether it's Republicans just take the House or they take the House and the Senate, there's a very limited amount that can be done. And my default is going to be no, that most things can't get done. And there's going to be this sliver of things that can be done. If the GOP takes at least one of the houses of Congress, let's say the House, and maybe they get both, I don't know. But what do you expect to see? One of the things I would expect to see would be a debt ceiling block. or blockage like we had in 2011. Back then, it was absolutely shocking the idea that we would default on the debt. I think it's still shocking, but I think we've all been down that road before.

That would be one of the things that would occur to me that would happen, no doubt. I'm sure there would be efforts to impeach somebody somewhere somehow. I don't know who it is. Could be the president, could be the Secretary of State, could be the Attorney General, who knows. But debt ceiling matters to the markets. You're exactly right, Tyler. All this other stuff, whether it's congressional oversight, impeachment, even a small government shutdown, that's kind of noise in the short term. The real concern for the markets would be if in the second half of this year, when the debt ceiling is set to expire or limit to be moved beyond, have to be raised, it could really cause problems in the market. And so what we're looking at is if it's just the house that turns, that's, that's.

That could be real problematic as far as the debt ceiling negotiation because it would just be the House Republicans working with the Senate, Democrats, and Biden. But if it's the House and Senate, you're going to have McConnell involved. Senator McConnell's experiencing this. He was able to strike the deal with Obama in 2011, as you referenced. And we would feel much more comfortable there. But if it's just the House, you get a little dicey. All right, Andy, thank you very much. We shall see.

We'll know a little more tonight and maybe a lot more by the end of the week. Andy Blocker of Mvescoe. We thank you. And a quick note, tune in to CNBC's special business on the ballot coverage. That starts tonight at 7 p.m. Eastern Time. We'll discuss the key market issues on the line with this election. Coming up, a public feud between FTCX and Binance, taking a surprising turn. Binance buying up part of FTCS's business and helping with its liquidity issues.

We'll have some details on what has been some crypto confusion. Plus, is Disney streaming service on a path of profitability? what investors can expect to hear when the company reports earnings after the bell. And before the break, take a look at the NASDAQ, which is now turned negative after rallying more than 1%. We'll be right back on Power Lunch. Power Lunch, some confusion in the crypto space, finance announcing it will buy FTX's non-U.S. unit amid liquidity square. All of this after what many investors initially thought were growing tensions between the company's CEOs.

So the chaos in the space just adds to the laundry list of problems facing crypto. Kate Rooney understands it all. And it's here to make it simple for us to understand as well. Hi, Kate. Hi, Contessie. There is a lot going on here, but we'll start with the headline.

Binance is planning to buy FTX.com. That's the international side of Sam Begman-Fried's crypto empire separate from FTX, U.S., but the international division brought in roughly 95% of that companies and parent companies' first quarter revenue. So really the moneymaker there. The deal has not closed yet.

Binance's CEO saying they still need to do due diligence and says this was sparked by a liquidity crunch at FTX, which you could argue in part was sparked by the Binance CEO himself and his recent tweets. Binance was an early investor in FTX, but sold its equity in FTCS's last round. As part of that payout, it got a cryptocurrency called FTT. that is created by and closely tied to FTX. It's down about 75% in the last day or so. And the Binance CEO, Cheng Peng Zhao,

tweeting that the company was divesting all of its holdings in that cryptocurrency. Driving FTT, we have the chart here now. FTT down about 70% just today. This came right after a report a couple days ago from CoinDesk that called into question Alameda Research's balance sheet. That is a crypto-quant firm founded by San Bang, that also has very close ties to FTCX. Sam Bankman-Fried responded in a tweet saying a competitor is trying to go after us with

false rumors. He said at the time, FTX is fine, assets are fine. So for one, in terms of the outcomes here, it creates a massive global mega exchange by combining these two companies. FtX and San Bankman-Fried have also played a role as the industry's backstop this year. Bought Voyager out of bankruptcy, also bailed out BlockFi. of those deals that have not been signed yet, technically, will go through.

And now FTX is the one on the other side. It looks like of a bailout now, guys. Maybe I'm shallow here. In fact, I'm sure I'm shallow. But if he's saying, if Sam Bankman-Freet is saying everything is fine, that's not when you sell 95% of your company or your company's revenue stream. Yeah. Yeah.

So that calls into question the tweets over the weekend. And we have seen this play out time and time again this year with Chris. crypto companies, we had the Celsius CEO essentially say the same thing and try and shore up investor confidence, which is a big part of this, part of the issue here. Customer withdrawals when people see or sense some sort of fear on the platform, if they don't trust that there's enough assets backing up their money, they're going to take it off your platform. So as the CEO and leader, you want to instill that confidence. But clearly not enough confidence at this point to keep this company as a stand-alone. He clearly needed the money here. Bankman-Fried is based where and Binance is based where?

Bahamas for Bankman-Fried, but his company, FTCS trading, which is the parent company, is technically in Antigua. So most of their business is overseas, despite Sam Bankman-Feed really being one of the biggest political donors and very active in the U.S. regulatory regime. And then Binance, the other company, the buyer in this instance, was founded in China, but is now based in Singapore, although its headquarters are technically, it's sort of a remote first company. so they don't say exactly where the headquarters are, but founded in China. Don't say exactly where the headquarters are. I mean, there are times when I'd like to be a thing. Oh, yeah. Okay. Kate, thank you for that. Appreciate it.

Thanks, guys. All right, ahead on the show. Consumers are paying up to go out. The ticket broker Vivid Seats reporting record quarterly revenue, but is a looming recession a big risk to the outlook here? We're going to ask the CEO, let's check out Tesla. The stock down 16% already. this month.

Trading around 2021 lows, we will hit that name as well as some of the other key movers of the day when we return right after this. All right, time now to look at some big names on the move today. Let's start, shall we, with one that is often on the list. That would be Tesla. The stock continuing to slide, losing about a third of its value in the past two months. Today, hitting the lowest level since May of last year. Also issuing a software update for four.

That's kind of a recall in their parlance for 40,000 vehicles for a potential problem with power steering. Let's move on to Apple. Slightly lower today. Morgan Stanley maintaining its overweight on the stock, however, saying there might be an opportunity to buy the dip. But the situation with the iPhone's production, that's going to be key to watch. Also cutting the price target by $2 a share to $175. Similarly, UBS maintaining its buy rating, but lowering its target by $5 to $180. share, the stock right now at about 137. And this just hitting in the last few minutes, FedEx going

negative as Reuters reports, the CEO, excuse me, the CFO, says the company is cutting back on its vendor headcount and will defer a number of projects. That's stock down about a half percent at 158 and change, Contessa. All right, let's get to Brian Sullivan now for a CNBC news update. Hi, Brian. Thank you. Here's what's happening at this hour. Georgia election officials say Voting in the state is going smoothly. They say wait times to cast ballots are averaging just about three minutes, and most polling stations have no wait times at all. One senior official calls the voting so far, quote, spectacularly boring and says he hopes it stays that way. In Milwaukee, counting of absentee ballots has begun. Democrats and Republicans. It's sought to start the count before election day, but their bill failed to make it through the state legislature.

In recent elections, results for all of Wisconsin have often been. delayed while Milwaukee ballots have been counted. And hurricane warnings have been posted for much of Florida's East Coast. Tropical storm Nicole has strengthened with winds now up to 60 miles an hour. Nicole is expected to reach hurricane strength before approaching Florida tomorrow night. Large parts of the state are expected to get three to five inches of rain, something they do not need with some areas getting up to seven inches of rain guys. So Florida just still in many ways dealing with Ian.

Now the eastern side of the state might get hit top. By the way, my folks are on a cruise ship off the Bahamas, and I checked it out. I would imagine that ship is probably rocking around a little bit right now. Don't go and knocking then, you know, if the cruise ship's, okay. Hand out the dramamine. Brian, thank you. They're 85. All right.

Head on Power Lunch, folks. What streams may come? Disney's set to report results after the bell. The key number investors were watching for. That would be streaming, subscribe. investors are also waiting on election results and the latest read on inflation. But even if the market gets what it wants, could there be a potential risk on the horizon? We'll be right back with Power Lent.

All right, folks, we've got about 90 minutes left in the trading day. Let's get you caught up on stocks, bonds, commodities, and Disney results coming in in less than two hours. We'll talk about that in just a minute. Let's check on the market where a big gain for the Dow earlier in the day has now turned into a minuscule gain of 35 points. had been up more than 500 at the high. NASDAQ has given it all back and is now down about three quarters of a percent. S&P also similarly in the red by about 15 points. Bitcoin continuing to fall down.

Let's see there. That would be about 15 percent right now. This following the FTX drama that Kate Rooney reported on just moments ago. Let's turn our attention now, shall we, to the bond market and Rick Centell. There is Rick Centellie. Slipping right in. brother. How you doing? I'm good, Matt. See, popping right in. You know, if we look at what's going on with Treasury yields this week, it really is quite important to tie it, hook it in the last week's

important movement associated with the Fed meeting. So if you look at a two-year note yield and look at the far left of the screen, you can see that it popped up. And it's been pretty much sideways, but clipping off historic high yield closes as it did yesterday. So any type of a yield close that is lower on the session, of course, gives a little back. We're now down about five basis points. If we look at 10 year and go back to last Thursday, look at the bottom there. And this is important. We have good support at this 410, 411 area, pretty much four sessions running. We've come down to meet it, but traders will use 410 as a rolling area to protect, especially considering tomorrow's consumer price index for October, maybe the biggest

number of the month over the last several months. Now, three months to tens of recession spread. We've talked about this many times. Guess what we had yesterday, or excuse me, today, we had a three-month bill auction today. It's yield 4.12%. And if we go to when we charter three months versus tens, that flipped it back negative after four positive sessions. It's inverted again, and it continues to be lightly inverted. We want to pay closer attention. And finally, the dollar index. Boy, it really had a nice pop after the Fed raised rates last week. Then the employment report It happened on Friday, and it's been down, down, down, well over 2.5% lower and continuing to cave under global selling pressure. Tyler, back to you. Rick Santelli, thank you very much, and we've got oil. It is closing for the day, but that is far from the only thing in energy that's moving today.

Pippa Stevens following it for a full roundup. Hi, Pippa. Hey, Tyler, natural gas, the big mover as the roller coaster ride continues, with prices down 11%. The EIA cut its 20%. 2022 forecast today and now sees the contract averaging $6.49 per MMTU this year, which is about 6% below prior estimates. A mild fall has meant record amounts of gas going into storage, but a coming cold snap could change the price action. Now shifting gears, a number of energy stocks on the move today, including solar edge. The stock surging after the company posted record revenue during Q3, noting extremely strong momentum in Europe, where revenue was up 90% year over year. Sunpower also advancing after its earnings results,

which saw record customer additions. CEO Peter Ferrisi telling me the strength comes down to solar looking more attractive, relative, Tyler, to rapidly rising utility prices. Back to you. Pippa, thank you very much. Let's talk a little bit about Disney, which is trading higher ahead of its earnings after the bell today. But it is one of the worst performing Dow stocks this year. When it reports, one of the key metrics to watch, will be growth at its Disney Plus streaming service. Cutgun Moral with RBC Capital Markets has a buy rating on the stock and a $150 share price target. Cutgun, welcome. Good to have you with us. What do you say about Disney? And what do you expect when they report later today? Thanks for having me. And on balance, we certainly remain bullish, longer term. But I think a lot

will depend on the commentary for direct-to-consumer tonight. We're focused on three things tonight. At the parks, we see continued momentum based on strong results from peers like NBC Universal and believe the recent price increases speak to management's comfort level around forward demand trends and its ability to continue driving up modernization. Second, media investors have shifted their focus to streaming profitability over the last year. So management's commentary on the path to achieving its target of Disney Plus profitability in fiscal 24 will be key. And lastly, of course, on core Disney Plus, that adds. We think street expectations for around $8 million in the quarter are reasonable based

on the content slate and recent international market launches. That said, we do worry that the near-term setup is less favorable because the December quarter seems to have fewer fireworks from a programming perspective than normal, and we might run into some churn issues in the U.S. following the price increase next month. So hopefully we'll get an indication tonight over the expected subscriber growth trajectory in fiscal 23. You said the net ads for the quarter will be what, and how does that compare with Netflix? It sounds like Disney is doing much better. Yeah, so we think street expectations for around 8 million core Disney plus net ads are reasonable.

Netflix's numbers were far lower than that, but keep in mind that Disney is in a far earlier cycle in terms of its growth curve. So it's still benefiting from a lot of international market launches, whereas Netflix, is more focused on growing penetration in the market set it currently is in. So the opportunity set is a little different. Got it. Why is profitability the target so far away? I mean, it seems like Disney's been in the content creation business pretty much longer than anybody else. They come to the table with a whole library of entertainment options ready to roll out. So why is profitability so far away? Well, because unlike a few other companies like Paramount, for example, example, Disney's sole focus has been the pivot to streaming. You have other companies like

Paramount and Warner Brothers Discovery who are opting for a multi-distribution, multi-platform distribution strategy where they're using the content on linear and streaming at the same time, whereas Disney is really going all in and focusing on its investments around driving long-term sustainable subscriber growth for Disney Plus. And it's an expensive business to catch up to the likes of Netflix, to grow a global business. It's starting to start. not cheap. And I think when you look at the subscriber growth that they've achieved so far, they're clearly seeing strong adoption and the ROI on it so far, but you really need to see that scale up closer to Netflix's numbers and beyond in order to hopefully get to a break-even

number in fiscal 2020. So can we talk about sports a little bit? Because we heard that sports betting, I mean, there's all the speculation about ESPN and whether it could possibly be spun off as an independent entity. Bob Chapick saying that sports betting would be a part of ESPN's future, but not as an operator, but rather as a partner. And then you have these, I mean, we just got news about Netflix,

eyeing whether they should be buying up a lesser-known sports league and putting that on so that they're bringing a must-watch-it-live audience to the table, which its competitors already do. How does Disney factor in that valuable ESPN audience

and the importance of sports? Yeah, I mean, sports is central to Disney's streaming's ambitions. And I think we're actually at the early innings of seeing with the full potential of streaming with sports could look like for the broader industry. It's not just Disney that's been involved with sports. You've seen Paramount with its sports portfolio. Apple, Amazon. Well, Apple, Amazon. Everyone's getting involved.

And when we think about the next leg of what really matters, what drives consumers onto the platform, of what keeps turn low. You know, sports is going to be a mainstay in that arena. And, you know, certainly don't count Disney out ESPN as an incredibly valuable franchise. And I think, you know, what to look out for over the next two years, I'd say, is how that evolves as Disney takes more and more content away from linear and props up ESPN Plus. And so I certainly think we're at the early days of seeing what Disney could do with streaming. I was streaming a Disney sport. I was watching my Virginia California.

Cavaliers yesterday on ESPN streaming, and to see the number of games, college basketball games ad, was just amazing on their streaming platform. Cutgun, thank you very much. We appreciate it. Thank you. You back. Up next, despite inflation and recession risks, Americans still seem to be paying for events and experiences, but for how much longer is the consumer ready to crack? We'll speak to the CEO of Vivid Seats. Next.

Welcome back to Power Lunch, resale ticket broker, Vivid Seats. reported record revenue for the third quarter helped by its concerts, sports, and theater business, though it missed on earnings expectations. Of course, people are, and we are hearing this, across the travel and leisure industry, they're spending more on experiences rather than buying stuff. The stock turned lower today, down about 24% for the year. And with a recession looming, is the outlook still bright? Here with us as Stan Chia, CEO of Vivid Seat. Stan, good to see you. Thank you for being here. Hey, Contessa, thanks for having me.

Set the scene for me, if you will. You guys saw really great revenues coming in. Why did you miss on earnings? Yeah, you know, Contessa, first I'd say, you know, I think we've had a tremendous year. And when you look at the quarter, I think across the board, we came in above consensus, both on GOV revenue and on EBITDA coming in at, you know, I think $28 million in EBITDA for the quarter. So I think we've continued to see, I think, strength across the business that we're growing from a profitability standpoint. But as we look at the areas of investment, we're certainly cognizant that the marketplace,

given the resiliency, is probably a little bit more competitive than it has been in the past. We've heard it from hotels. We've heard it from casinos. We've heard it from cruise ships. That the demand for experience, the demand for things that you can go and do in person is still very high, regardless of the worries about recession. How long do you think that that lasts for somebody in your position looking at tickets for live events. Yeah, I think it's certainly a hard thing, and, you know, like everybody probably wish I had a crystal ball for this. I think what I can say is what with the, you know, kind of backdrop of, you know, I think weakness and potential weakness in the consumer sector, we have been rather

resilient from that as I think the experiential components and the once in a lifetime or FOMO aspects of what experiences are have proven to allow resilient. I think in the industry, whether it's seeing the Phillies for the first time in the World Series since 2009. And then when you look at our business, you know, I think our strength of being both growing, scaled, and profitable with a healthy balance sheet. You know, I think for consumers and for investors alike, I think we present a really appealing opportunity for a resilient business even against the current economic backdrop. You referenced a metric called GOV. I assume that's gross order value. In other words, the total value of all the tickets you are selling, reselling.

Is that right? That's right, Tyler. And then so what percentage of that gross order value do you keep as revenue? What is your cut of that? Yeah, we take, you know, so we take between, I'd say, 17 to 18 percent take rate is probably where we're at. For the quarter, you know, we did 781 or 782 million in GOV. And on that, we generated about 157 million in revenue for the company.

And what's bigger and what's going to be bigger? Concerts or sports? You know, I think in general, when we look at the industry, the sporting category is a slightly larger category. For vivid seats, we tend to index a little heavier on the concert side. But we remain really excited about the outlook for both, I think, with major artists, announcing tours for next year. And I think the continued excitement around returning to live events is Taylor Swift a needle mover

for you? Well, I think we'd certainly hope that she has a wonderful tour. And I think early signs are that users and consumers are really excited to go see Taylor Swift live. I know my own wife is really excited to see her live when she finally gets on stage next year. Although it's interesting that you bring that up because then I see here, Sam, that minor league baseball is a big mover for you, that you're seeing something like eight times your 2017 levels. Yeah, I think we have continued to be really excited about, you know, one, I think the continued consumer excitement about going to live events. And two, I think our appeal to consumers, as you

look at the things we've invested in, whether that's our industry award, industry leading customer service, our only, you know, the only loyalty program out there with a buy 10, get one free for users. I think all of those things combined with user excitement for live events has continued to yield things like the statistics we share in minor league baseball, where that is up significantly as a part of our business. I think it's so interesting to see how other sports that don't grab the headlines the way that the major league sports do are starting to perk laid up, whether it's Netflix's... A family experience thing, I think is the more there. And affordable at a time where a lot of things, I mean, I don't know, I took my kids to a concert this summer and I sheld out. a lot of money for that stand. Maybe I didn't check vivid seats. But thank you for joining us today. We appreciate that. You got it. Thanks for having me. All right. Up next, why a cooling economy could be

good news for investors and how you can protect your portfolio. You've got more power lunch straight ahead. Stocks regaining some steam now. Today, you can see the Dow Jones Industrial's up 230 points. The S&P is back in positive territory this afternoon as investors await the midterm election results. Now, at one point, the Dow was up more than 500 points at the session high, and at the low point, just four points. Jim Tierney, CIO of U.S. concentrated growth at AB joins us. Jim, good to see you today. Talk to me a little bit about what you think is driving market action today, and especially the way that midterms fit into that. Certainly when we look at the midterms, we're looking at divided government as the ideal outcome here.

So whether it's the House or the Senate, we're somewhat indifferent, but as long as you have divided government, because for investors, that means nothing too bad can happen. Both parties have to come together. So to us, that's a good thing. And if that's the outcome that we figured out that we have tomorrow morning, I'll be happy. We've waited our way through earning seasons. We're not over yet, but we've flogged our way through it. What's your takeaway about how that's affected investor sentiment? Earning season has been really choppy. We've had some nice winners and companies really performing well. And then we've had some big losers. And the big tech sort of complex has been in that negative category. So it's been very mixed. And when we're talking about what the Fed is going

to do and how much they keep continuing to raise, is the market sort of shrugging off this news? Or do you think that this still has a huge impact on the way we see? see stocks going? It's a huge deal. We've been fighting it all year long in terms of the Fed raising rates way more than we thought. It's almost like the family taking a car ride and the kids saying over and over again, are we there yet? Are we there yet?

And the parents being Fed Chair Powell saying, not yet, not yet. But we're seeing signs that we're pretty darn close. And you look at all the economic signals that are starting to slow down, not in the headline data, not in the lagging government data. but happening. And FedEx is just the latest example today talking about parking planes because the demand is not there. So are we there yet? We're getting pretty darn close. And I think that becomes an important turning point for the market because you're no longer fighting the Fed at that point. So I hear you sort of suggesting that the terminal federal funds rate is somewhere in the

four and three quarters to five and a quarter level. I'm really not that smart, but probably getting close. And if that's the case, and we're sort of seeing the light at the end of the tunnel, I think that investors can start valuing companies on their earnings prospects in 2023, as opposed to purely how higher rates going to go. And for an active investor, that's a really welcome thing for us. All right, Jim, thank you so much for your insights today. We'll have you back soon. We appreciate it. Thank you. Jim Tierney. Up next, could the labor market be facing a white-collar recession, a look at what could be the next wave of layoffs. That's next on Power Lange. Here are a couple of stories catching our eyes

at this hour in most economic downturns. It's blue collar employees, truck drivers, construction workers, factory hands. They tend to be the first to lose their jobs. But in recent weeks, a number of companies have announced job cuts at flagship offices, and that has some economists predicting a so-called white-collar recession due to a glut of mid-level managers from the hiring spree during the economic pandemic recovery, I guess this could affect such areas. I think of housing here, realtors, mortgage bankers, mortgage brokers, I guess investment bankers also could be affected here. We've heard about technology companies and even some of the big retailers like Walmart

talking about cutting their office steps, their corporate staffs as well. And in fact, Elon Musk had pointed out before this wave of layoff started at Twitter, He said, it seems like there's 10 managers for every one person coding, which really focuses on where are the efficiencies in the business. If you're looking to cut costs and improve your margins, then you're looking at not who is doing the producing of the valuable service or product that you're providing, but how many managers do you really need for those? Yeah, I mean, and it was so much hiring. Hiring has been so strong that maybe the pendulum swings back a little bit in those white-collar areas as well. And who knows about what will happen in the factory space and the other sort of more traditional blue-collar areas. The thing that has kept me on pins and needles all morning long is not necessarily the mid-term elections,

but rather when were we going to get powerball numbers? Officials finally announced the numbers that won for the largest powerball lottery in world history, more than $2 billion after the drawing was delayed last night to give a participating lottery more time to complete required security protocols. This raised a lot of questions in my mind. Like, what are the security protocols? How did this state did not have the proper...

And I actually heard there may have been two states that were having... There's going to be lawsuits. There's always some questions in my mind about this. But anyway, what we now know at this hour, about an hour before the markets close, is that a winning ticket was sold, in Los Angeles County.

The lucky ticket holder will be the winner of the largest lottery prize ever. I did buy tickets, and I am proud to announce that, yes, I too am a winner. Why, how? You are a winner, I mean, just. Can we just keep that and just, I may need that on repeat, like on a gift? You are a winner. I actually won the Powerball. What does that mean?

You know, I got the right number. Oh, you got that one right. Yeah, right. Oh, but you got to get five others. It didn't do that. Would you take the annuity or the lump sum? No, no, because I didn't think that made sense. In this case, if you're going to get double your money over, I think it's 20 years. I think it's 20 or 29. Maybe it's 29. That's too long for me. I can't wait that long. Give me the cash now. But, you know, like, it's a proven growth record. Your trajectory there is pretty good. Yeah, that's pretty good. And also your annual annuity would be great to play with. Oh, yeah, you'd have plenty of income. You wouldn't have. have to worry about that. No, no, no, you would not. You would not. But you know, you look at how it

melts down to 900 and some million, okay, from 200 billion. Okay, from 200 billion. Okay, and then the feds take about 35, 40% of that in half. You end up with about 500 million. It's all right. That's good. Still good. A quick programming note here, you want to tune in to CNBC's election night special business on the ballot. Tomorrow night, 7 p.m. Eastern will hit the they're going to be awake for this? Those three? They're going to be there at 7 to night? Yeah, it's a great line up. You don't want to miss that. That alone just to see them in the daytime.