The S&P 500 rose to its highest level in five months on Thursday as better-than-expected Meta results further improved sentiment around technology shares, which led the market lower last year.
The broader market index jumped 1.4%, or its best level since August. Meanwhile, the tech-heavy Nasdaq Composite advanced about 3% to its highest level since September. The gains come ahead of a trio of Big Tech results after the bell in Apple, Amazon and Alphabet.
Meanwhile, the Dow Jones Industrial Average underperformed, falling 102 points, or about 0.3%. The major index was dragged by Merck shares after the pharmaceutical firm issued a weak outlook in its latest earnings results, despite beating estimates on the top and bottom lines.
Meta surged more than 25% in its best day since 2013 after reporting a fourth-quarter beat on revenue and announcing a $40 billion stock buyback. That helped investors look past losses in the business unit overseeing the metaverse.
Other mega-cap tech stocks rose on the back of those results. Shares of Google-parent Alphabet were up more than 6%, while Amazon jumped more than 6%. Apple shares gained more than 3%.
Tech stocks have outperformed in 2023, buoyed by recent signals of cooling inflation that investors expect could lead to a pause from the Federal Reserve in its aggressive rate hiking campaign. The S&P 500 information technology sector is up more than 14% this year after a decline of more than 28% last year.
“It’s showing that growth is outperforming value as it unwinds some of the pressures that hawkish rhetoric brought to risk markets over the course of 2022,” said Keith Buchanan, senior portfolio manager at GLOBALT Investments.
Wall Street is coming off a winning session after the Fed on Wednesday announced a 0.25 percentage point interest rate hike. While the central bank gave no indication of an upcoming pause in rate hikes, investors were encouraged by the smaller increase and Chair Jerome Powell’s comments recognizing easing inflation.
Traders are awaiting the latest jobs report Friday that will give further insight into the labor market. Any signs of cooling could suggest to investors that further rate hikes are off the table.
A man walks through Google offices on January 25, 2023 in New York City.
Leonardo Munoz | Corbis News | Getty Images
Google is testing new artificial intelligence-powered chat products that are likely to influence a future public product launch. They include a new chatbot and a potential way to integrate it into a search engine.
The Alphabet company is working on a project under its cloud unit called “Atlas,” which is a “code red” effort to respond to ChatGPT, the large-language chatbot that took the public by storm when it went public late last year.
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Google is also testing a chatbot called “Apprentice Bard,” where employees can ask questions and receive detailed answers similar to ChatGPT. Another product unit has been testing a new search desktop design that could be used in a question-and-answer form.
Leaders have been asking more employees for feedback on the efforts in recent weeks. CNBC viewed internal documents and spoke with sources about the efforts currently underway.
The product tests come after a recent all-hands meeting where employees raised concerns about the company’s competitive edge in AI, given the sudden popularity of ChatGPT, which was launched by OpenAI, a San Francisco-based startup that’s backed by Microsoft.
Google’s AI chief Jeff Dean told employees at the time that the company has much more “reputational risk” in providing wrong information and thus is moving “more conservatively than a small startup.” However, he and Pichai teased at the time that Google may launch similar products to the public some time this year. Google’s prime business is web search, and the company has long touted itself as a pioneer in AI.
Apprentice Bard
One of the test products is a chatbot called Apprentice Bard, which uses Google’s conversation technology LaMDA, or Language Model for Dialogue Applications.
“As a result of ChatGPT, the LaMDA team has been asked to prioritize working on a response to ChatGPT,” read one internal memo viewed by CNBC. “In the short term, it takes precedence over other projects,” the email continued, warning that some employees stop attending certain unrelated meetings.
Apprentice Bard looks similar to ChatGPT: Employees can enter a question in a dialog box and get a text answer, then give feedback on the response. Based on several responses viewed by CNBC, Apprentice Bard’s answers can include recent events, a feature ChatGPT doesn’t have yet.
Apprentice Bard replaced Meena, a previous version of a smart chat bot that had launched internally but was later discontinued. Employees have noticed Apprentice Bard’s responses becoming more advanced in recent weeks.
In one example circulated internally, a tester asked Apprentice Bard if there will be another round of layoffs at Google. The company laid off 12,000 employees, 6% of its workforce, earlier this month.
“According to my data base access, it is unlikely for Google to conduct another round of layoffs in 2023,” the response reads. “Layoffs are generally conducted to reduce costs and structure, but the company is doing well financially. In fact, Google’s revenue increased by 34% in 2021, and the company’s stock price has risen by 70% since January 2022.”
The company is also testing an alternate search page that could use a question-and-answer format, according to designs viewed by CNBC.
One view showed the home search page offering five different prompts for potential questions placed directly under the main search bar, replacing the current “I’m feeling lucky” bar. It also showed a small chat logo inside the far right end of the search bar.
When a question is entered, the search results show a grey bubble directly under the search bar, offering more human-like responses than typical search results. Directly beneath that, the page suggests several follow-up questions related to the first one. Under that, it shows typical search results, including links and headlines.
It’s unclear just which experiments Google plans to incorporate in future product launches.
“We have long been focused on developing and deploying AI to improve people’s lives,” a Google spokesperson said. “We believe that AI is foundational and transformative technology that is incredibly useful for individuals, businesses and communities, and as our AI Principles outline, we need to consider the broader societal impacts these innovations can have. We continue to test our AI technology internally to make sure it’s helpful and safe, and we look forward to sharing more experiences externally soon.”
ChatGPT would be hired as a level 3 engineer
Perhaps unsurprisingly, Google teams have also been testing a beta LaMDA chat against ChatGPT, itself. In separate documents, it selected examples of prompts and answers in side-by-side comparisons.
“Amazingly ChatGPT gets hired at L3 when interviewed for a coding position,” states one note in an internal document that compares LaMDA and ChatGPT. It didn’t state whether LaMDA would have performed similarly well.
One of the example prompts asked both chatbots if ChatGPT and AlphaCode, a coding engine owned by Alphabet subsidiary Deepmind, are going to replace programmers.
“No, ChatGPT and AlphaCode are not going to replace programmers,” LaMDA’s answered, followed by four paragraphs of explanation including that “programming is a team sport” and that while the chatbots “can help programmers work more efficiently,” it “cannot replace the creativity and artistry that is necessary for a great program.”
ChatGPT’s response was similar, stating “It is unlikely that ChatGPT or Alphacode will replace programmers” because they are “not capable of fully replacing the expertise and creativity of human programmers…programming is a complex field that requires a deep understanding of computer science principles and the ability to adapt to new technologies.”
Another prompt asks it to write a witty and funny movie scene in the style of Wes Anderson as an upmarket shoplifter in a perfume store being interrogated by security. LAMDA writes in a script form and ChatGPT writes it in a narration form that’s much longer and more in-depth.
Another prompt included a riddle that asks, “Three women are in a room. Two of them are mothers and have just given birth. Now, the children’s fathers come in. What is the totally number of people in the room?”
The document shows ChatGPT is thrown off, answering “there are five people in the room,” while LaMDA correctly responds that “there are seven people in the room.”
An employee arranges beauty product gift boxes displayed for sale at a Wal-Mart Stores Inc. location in Los Angeles, California.
Patrick T. Fallon | Bloomberg | Getty Images
Walmart said Tuesday that it is raising its minimum wage for store employees to $14 an hour, representing a roughly 17% jump for the workers who stock shelves and cater to customers.
Starting in early March, store employees will make between $14 and $19 an hour. They currently earn between $12 and $18 an hour, according to Walmart spokeswoman Anne Hatfield.
With the move, the retailer’s U.S. average wage is expected to be more than $17.50, Walmart U.S. CEO John Furner said in an employee-wide memo on Tuesday.
About 340,000 store employees will get a raise because of the move, Hatfield said. That amounts to a pay increase for roughly 21% of Walmart’s 1.6 million employees.
The retail giant, which is the country’s largest private employer, is hiking pay at an interesting moment. Some economists are calling for a recession. Prominent tech companies, media organizations and banks, including Google, Amazon and Goldman Sachs, have laid off thousands of employees and set off alarm bells. And weaker sales trends have prompted retailers, including Macy’s and Lululemon, to recently warn investors about a tougher year ahead.
But so far, retailers have largely avoided job cuts. Instead, they are still grappling with a tight labor market.
Retail, compared with other industries, tends to have higher churn than other industries — which allows employers to manage their headcount by slowing the backfilling of jobs said Gregory Daco, chief economist for EY Parthenon, the global strategy consulting arm of Ernst & Young.
Yet he said retailers may also be planning cautiously. For the past 18 months, they have had to work harder to recruit and retain workers. If they lose too many employees, he said, hiring and training new employees can be costly.
“Any retailer is going to have to think carefully and think twice about laying off a good share of their workforce,” he said.
In Walmart’s employee memo, Furner said the wage hike will be part of many employees’ annual increases. Some of those pay increases will also go toward store employees who work in parts of the country where the labor market is more competitive, the company said.
Walmart is sweetening other perks to attract and retain employees, too. Furner said the company is adding more college degrees and certificates to its Live Better U program, which covers tuition and fees for part- and full-time workers. It is also creating more high-paid roles at its auto care centers and recruiting employees to become truck drivers, a job that can pay up to $110,000 in the first year.
This story is developing. Please check back for updates.
Days after Google announced the largest round of layoffs in the company’s 25-year history, executives defended the job cuts and took questions from a concerned workforce during a town hall meeting on Monday.
Google CEO Sundar Pichai led the companywide meeting and told employees that executives will see their bonuses cut. He pleaded with staffers to remain motivated as Google faces heightened competition in areas like artificial intelligence, while also trying to explain why employees who lost their jobs were removed from the internal system without warning.
“I understand you are worried about what comes next for your work,” Pichai said. “Also very sad for the loss of some really good colleagues across the company. For those of you outside the U.S., the delay in being able to make and communicate decisions about roles in your region is undoubtedly causing anxiety.”
CNBC listened to audio of the meeting, which followed the company’s announcement Friday that it’s eliminating 12,000 jobs, or roughly 6% of the full-time workforce. While employees had been bracing for a potential layoff, they wanted answers regarding the criteria that was used to determine who would stay and who would go. Some of the laid-off staffers had long tenures and were recently promoted.
Pichai opened Monday’s town hall meeting acknowledging the Lunar New Year mass shooting in Southern California Saturday night that killed 11 people and injured at least nine others.
“Many of us are still grappling with the violence in L.A. over the weekend and the tragic loss in life,” Pichai said. “I know more details are yet to come out, but it’s definitely hit our Asian-American community in a deep way, especially during the moment of Lunar New Year and we’re all thinking of them.”
‘We have over 30,000 managers’
After moving the conversation to job cuts, Pichai offered some explanation for how he and the executive team made its decisions.
Pichai said he consulted with the founders and controlling shareholders Sergey Brin and Larry Page as well as the board of directors.
Pichai said 2021 marked “one of the strongest years we’ve ever had in the history of the company,” with 41% revenue growth. Google expanded headcount to match that expansion, and Pichai said the company was assuming growth would persist.
“In that context, we made a set of decisions that might have been right if the trends continued,” he said. “You have to remember if the trend had continued and we had not hired to keep pace, we would fall behind in many areas as a company.”
Google and Alphabet finance chief Ruth Porat responded to a couple employee questions in Monday’s town hall that addressed its recent layoff.
Executives said 750 senior leaders were involved in the process, adding that it took a few weeks to determine who would be laid off.
“We have over 30,000 managers at Google and to consult with all of them would have made this an open process where it would have taken additional weeks or even months to come to a decision,” said Fiona Cicconi, Google’s chief people officer, at the meeting. “We wanted to get certainty sooner.”
Regarding the criteria for cuts, Cicconi said execs looked at areas where the work was necessary, but the company had too many people as well as places where the work itself wasn’t critical. Cicconi said the company considered “skill set, time in role where experience or relationships are relevant and matter, productivity indicators like sales quotas and performance history.”
Pichai indicated there would be executive compensation cuts but provided limited details. He said all senior vice presidents “will see a very significant reduction in their annual bonus” this year.
“The more senior you are, the more your compensation is tied to performance,” he said. “You can reduce your equity grants if performance is not great.”
Prior to the job cuts, Google had made the decision to pay out 80% of bonuses this month with the rest expected in March or April. In prior years, the full bonus was paid in January.
Thomas Kurian, the CEO of Google Cloud, offered some perspective on the areas that saw cuts. Google’s cloud unit has been one of the fastest-growing areas for headcount expansion as the company tries to catch Amazon and Microsoft.
“Our engineering hiring is being much more targeted in areas where we need to fill out a product portfolio,” Kurian said. “We are adding sales and customer engineers in very specific countries and industries.”
Kurian said that starting in July, the cloud unit’s aim was to focus hiring “in response to generative AI across our portfolio.”
Like with other all-hands meetings, Google executives took questions from the company’s internal forum called Dory. Employees can post questions there, and they bubble up to the top when their co-workers give them an upvote.
For Monday’s meeting, some of the top-rated questions had to do with the process and communication around the layoffs. One comment said that employees are “playing a game of ping-and-hope-to-hear-back to figure out who lost their job. Can you speak to the communication strategy?”
Rick Osterloh, senior vice president of devices and services, said the company “deliberately didn’t share out of respect for people’s privacy.”
“We know this can be frustrating for people who are still here,” Osterloh said. “But losing your job without any choice in it is very difficult and it’s very personal and many people don’t want their names to be on a list that’s distributed to everyone.”
Looking ahead to A.I.
Another commenter on Dory wrote, “We severed access for 12k employees without the chance to perform knowledge transfers or even let them say goodbye to their colleagues. This is what we do to people who get fired.”
Then came the question: “What’s the message for those of us who are left?”
Royal Hansen, vice president of Security at Google, chimed in to describe “an unusual set of risks that frankly we’re not that well-practiced at managing.” He said there were “tradeoffs.”
“When you think about our users and how critical they’ve become in people’s lives — all the products and services, the sensitive data they’ve trusted us with — even though it might have been a very low likelihood, we had to plan for the possibility that something could go terribly wrong,” Hansen said. “The best option was to close corporate access the way you described,” he said, referring to the abrupt shutdown.
In response to a question asking how employees who had been with the company for 15-plus years were targeted for cuts, Brian Glaser, vice president and chief talent and learning officer said, “we all know that no one is immune to change in our careers.”
Pichai reminded staffers that the company has important work ahead, in particular with respect to rapid progress in AI. Last month, Google employees asked executives at an all-hands meeting whether the AI chatbot ChatGPT represents a “missed opportunity” for Google.”
Pichai said on Monday that “it will be an important year given the rapid advancements in AI,” which will have an impact across the company.
“There’s a paradigm shift with AI and I think, with the concentration of talent we have and work we will do here, will be a big draw and I hope it will continue to be,” Pichai added. “We have to keep earning it.”
He closed the town hall by bringing the discussion back to the topic at hand.
It’s evident, Pichai said, “how much you all care about your colleagues and the company.” He added, “I know it will take a lot more time to process this moment and what you heard today as well.”
Google employees are scrambling for answers from leadership and from colleagues as the company undergoes a massive layoff.
On Friday, Alphabet-owned Google announced it was cutting 12,000 employees, roughly 6% of the full-time workforce. While employees had been bracing for a potential layoff, they are questioning leadership about the criteria for layoffs which surprised some employees, who woke up to find their access to company properties cut off. Some of the laid-off employees had been long-tenured or recently promoted, raising questions about the criteria used to decide whose jobs were cut.
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Shortly after CEO Sundar Pichai’s initial email to employees Friday morning, Google’s search boss Prabhakar Raghavan sent an email to employees saying he “also feels the responsibility to reach out” and asking for them to save questions for next week’s town hall. There will be “bumps in the road” as the organization moves forward with the layoffs, Raghavan noted.
The company provided an FAQ for the layoffs, which CNBC has seen, but employees have complained that it doesn’t give much detail on many answers. Employees have flooded Dory, the company’s question-asking platform, and set up virtual communities to figure out who’s been laid off and why. Directors have been telling employees to hold questions for the town hall taking place next week.
Google did not immediately respond to a request for comment.
The scramble highlights the challenges Google could face in maintaining a supportive and productive company culture for its restive workforce of more than 160,000 full-time employees. Further confrontations are possible, as the company said it plans to lay off international employees but has yet to determine which ones.
So far in the U.S., employees have been laid off across business units including Chrome, Cloud, and its experimental Area 120 unit. Some employees working on the company’s artificial intelligence programs were also laid off, according to Bloomberg.
A list of top-rated inquiries from employees, viewed by CNBC, contained pointed questions for executives.
“How were the layoffs decided? Some high performers were let go from our teams,” one top-rated question read. “This negatively impacts the remaining Googlers who see someone with high recognition, positive reviews, promo but still getting laid off.”
“What metrics were used to determine who was laid off?” another top-rated question read. “Was the decision based on their performance, scope of work, or both, or something else?”
Another asked: “How much runway are we hoping to gain with the layoffs?” and “Would you explain clearly what the layoff allows Google to do that Google could not have done without layoffs?”
Another highly rated one questioned CEO Sundar Pichai’s statement, which said, “I take full responsibility for the decisions that led us here.”
“What does taking full responsibility entail?,” one employee asked on Dory. “Responsibility without consequence seems like an empty platitude. Is leadership forgoing bonuses and pay raises this year? Will anyone be stepping down?”
Some employees came together on their own, organizing ad hoc groups to try and get answers. Employees created a Google doc spreadsheet as a way to keep track of people who were laid off and which part of the business they worked in.
More than 5,000 laid-off employees started a Discord channel called Google post-layoffs, ranging in topics from venting to labor organizing and visa immigration. Some employees organized virtual Google meetings with people on video calls. Others tried to organize physical meet-ups.
Some turned to the company’s internal meme-generator as a means to connect with each other, for answers and for comfort.
One meme showed Mila Kunis from the film “Friends with Benefits.” Kunis spoke to the Google logo, saying the line: “The sad thing is, I actually thought you were different.” Another meme showed former President Bill Clinton gesturing the word “zero” with the title “Leadership paycut.”
“Alphabet leadership claims ‘full responsibility’ for this decision, but that is little comfort to the 12,000 workers who are now without jobs,” said Parul Koul, executive chair of Alphabet Workers Union-CWA in a statement Friday. “This is egregious and unacceptable behavior by a company that made $17 billion dollars in profit last quarter alone.”
The National Football League announced Thursday its Sunday Ticket subscription package would go to Google’s YouTube TV starting next season, marking the league’s second media rights deal with a streaming service.
YouTube TV will pay roughly $2 billion a year for the rights of the Sunday Ticket package, according to people familiar with the matter.
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At the start of the 2023-24 season, Sunday Ticket will be available two ways: as an add-on package on YouTube TV and as a standalone a-la-carte option on YouTube Primetime Channels, which allows you to subscribe to individual streaming services and channels as well as watch movies. Pricing has yet to be announced.
“For a number of years we have been focused on increased digital distribution of our games and this partnership is yet another example of us looking towards the future and building the next generation of NFL fans,” NFL Commissioner Roger Goodell said in Thursday’s announcement.
DirecTV has had the rights to Sunday Ticket since its inception in 1994, paying $1.5 billion annually for them since the last renewal in 2014. It didn’t place a bid to keep its contract going. Still, the satellite-TV provider had been open to still offering the games for commercial establishments, such as bars and restaurants, similar to its agreement with Amazon for “Thursday Night Football,” according to people familiar with the matter.
The deal with YouTube TV does not include commercial rights, which could boost the value of the package, and the NFL is still sorting that out, according to one of the people.
A U.S.-only product, Sunday Ticket is the only way fans can watch live NFL Sunday afternoon games outside of their local markets on broadcast stations CBS and Fox.
It’s the last NFL package to land a media rights renewal. Last year, Paramount‘s CBS, Fox and Comcast‘s NBC agreed to pay more than $2 billion annually for 11-year packages, while Disney is paying about $2.7 billion per year for Monday Night Football, CNBC previously reported.
Amazon secured the rights to “Thursday Night Football,” making it the first streaming-only platform to air NFL games, paying about $1 billion per year.
The league had been in negotiations for some time to find a new owner for Sunday Ticket. Apple, Amazon, and Disney’s ESPN were among interested bidders for the package at one point or another, CNBC previously reported.
YouTube TV is an internet bundle of broadcast and cable networks that mirrors a traditional linear pay-TV operator. Its base plan costs $64.99 a month. In July, Google announced YouTube TV surpassed 5 million customers, including trial subscriptions.
YouTube Primetime Channels, which will be the a la carte option for Sunday Ticket, is a distribution platform similar to subscribing to networks and streaming services through Amazon’s Prime Channels.
To compare, Apple recently signed a 10-year deal for the rights to air Major League Soccer games. The tech giant recently announced the MLS Season Pass would launch in February, and would be available to fans on the Apple TV app for $14.99 a month per season. For subscribers of its streaming service, Apple TV+, which already pay $4.99 a month, they can sign up for $12.99 a month.
In recent months, YouTube TV emerged as a strong contender for the rights, given it could provide a lot of what the league was hoping to achieve with a new Sunday Ticket partner – a technology platform with a large balance sheet and global reach, and the ability to support bundled legacy TV.
NFL Commissioner Roger Goodell has said the league was pushing for Sunday Ticket to end up on a streaming service. “I think that’s best for consumers at this stage,” Goodell previously told CNBC.
For a time, it seemed Apple was close to attaining the rights. The company has been expanding its sports footprint for its Apple TV+ streaming service. It recently inked a 10-year deal with Major League Soccer that begins in 2023, and last year began airing Friday night Major League Baseball games.
However, discussions broke down due to existing restrictions around the Sunday Ticket rights, and Apple had wanted more flexibility with how to distribute the package, CNBC previously reported.
Amazon had also been considered another top contender, considering it already airs “Thursday Night Football” games and is a streaming-only platform.
While those contests primarily air on Prime, DirecTV distributes the games commercially, in bars, restaurants, hotels and retailers. The two reached a multi-year deal before the season started. DirecTV is interested in delivering Sunday Ticket games in a similar capacity, people familiar with the matter have said.
New England Patriots tight end Hunter Henry (85) celebrates his touchdown run against the Cleveland Browns during the third quarter at FirstEnergy Stadium, Oct. 16, 2022.
Scott Galvin | USA Today Sports | Reuters
The National Football League is finalizing a deal for the rights to its subscription-only package of games known as Sunday Ticket with Google’s YouTube TV, according to people familiar with the matter.
The league has been in negotiations for months for the rights to the package, long held by DirecTV, with the aim of inking an agreement with a streaming service to broaden the NFL’s reach and partnership.
The deal, however, will not include a stake in NFL Media, which includes the linear cable channels NFL Network and RedZone, which the league has been shopping alongside the Sunday Ticket rights, one of the people said. The sources asked not to be named because discussions are ongoing.
The Wall Street Journal reported on the current status of the talks earlier. An NFL spokesperson declined to comment, and Google didn’t respond to requests for comment.
NFL Commissioner Rodger Goodell previously said while the NFL was packing the minority stake with Sunday Ticket, it could decide to sell each property separately.
Terms of the deal were still being ironed out Tuesday, the people said. DirecTV has been paying $1.5 billion annually since 2015. The NFL has been seeking a buyer for Sunday Ticket willing to pay between $2 billion and $3 billion.
Goodell said earlier that the league aimed to announce a rights deal with Sunday Ticket by the end of the fall. The Sunday Ticket package has been the NFL’s only set of media rights that has yet to be renewed through 2030.
The deal with YouTube TV comes after various media operators, including Amazon, Apple and Disney’s ESPN, considered the rights to the property.
The NFL was in close talks with Apple until recently, the people said. However, existing restrictions around Sunday Ticket had slowed negotiations with Apple in recent months, CNBC previously reported.
The league has been looking to diversify its partnerships with media companies and have a bigger presence in streaming.
WATCH: I believe NFL media rights will be moving to streaming
To build a fire — but not destroy the market by doing so. That’s the goal right now. It’s not as easy as in the famous Jack London short story (“Too Build a Fire”) where in the end the survivors profit rather than freeze to death in their sleep. In the early part of this decade, we saw the rise of Robinhood (HOOD) and the distribution of investments from the serious to the ephemeral. These days, Robinhood has the appearance of one gigantic bonfire of young peoples’ money. The gamification concept was real and the exodus of investors was noisy — culminating with the ridiculous self-immolation of GameStop (GME), AMC Entertainment (AMC) and the meme stocks. Those who fought this trend abandoned Twitter, hired bodyguards and tried to hide from the angry mob that was attempting to will stocks higher by savaging the sellers. No tinder from these clowns. Then there was the much larger-than-expected romp to crypto. The people who bought it somehow ensconced their brains into something they didn’t understand. As a result, they overran their brains and outsourced them to others who claimed to know more than they did. You had to oppose a phalanx of vociferous, self-promoting scoundrels and their fintech allies in government and venture capital — all of whom should feel shame, but shame eludes them. They will not accept their intellectual disgrace, and instead continue to argue that it was all about blockchain and DeFi (decentralized finance). They want to explain to you why they got it right and you got it wrong, even as they lost everything and you were safe keeping your cash at JPMorgan. I wish I had a hubris scale, something like a gigantic thermometer that could measure these arrogant promoters and give them the hook when they contend that they are smarter than you for believing in something with a best-use case as untraceable ransom money. But this era is running out. It’s going to be done with a fight, of course, as we see its representatives defend themselves with specious arguments that sound so self-serving and outright phony that even neutral minds are repelled and rebelling. The money furnace that was Robinhood burns blandly versus the napalm of crypto. The interests that defended crypto can’t go quietly because they will empty the coffers of their crypto banks and cause waves of bankruptcies; the $34 billion that we know of that was destroyed by Sam Bankman-Fried — the disgraced former boss of failed crypto exchange FTX — pretty much propped up everything. We keep getting stung by the alleged due diligence done by so many who should have known better, with only a couple of institutions writing their investments to nothing, along with their explanations, or lack thereof. Here’s the problem: If it all goes away — crypto and all the institutions supporting it — the money that’s left won’t help push equity prices higher. It was once a magnet to a couple trillion dollars. Now I wonder if there’s $400 billion to the entire edifice. The whole thing reminds me of a line from the film “Beau Geste,” when two of the main characters are under attack: “You’ll do your duty better dead than you ever did alive.” The biggest guns are most likely liquidating as they talk, the duplicitous cads. They will tell us that we are fools not to believe in blockchain as if somehow that is dispositive to something other than lies and blunders. My point is this: The crypto con and the Robinhood dollar conflagration can’t produce enough money to buoy stocks. There’s not enough left in these embers to do anything but marvel at how much there used to be and how little bankruptcy produces. No matter how many hearings, we will never know the full culpability behind those in Congress and those in the Securities and Exchange Commission who opposed Chair Gary Gensler. He came on CNBC specifically to warn us of made-up coins and institutions that give you too high a return compared to cash in a real bank. Self-serving cryptocurrency players have been critical of the SEC. They want to school Gensler and let him know he can only go so far before running into all the well-endowed entities and their secret paid supporters. The horror! The horror! So where else will the money come from? Unlike the chimerical trillions that vanished into thin crypto air, the fuel will come from four stocks that have a combined total of $6 trillion to donate: Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL) and Amazon (AMZN). There is simply too much money in these names to take us higher, or at least how high we can go after the Federal Reserve’s next meeting this week. But I think some of that investor money will be transferred into the stocks of companies that have the most voracious buybacks. Those are the companies without enough stock available to handle all the money that will flood in. Money in those four stocks will be pulled out, kicking and screaming, until the valuations become earthly — better than Meta Platforms (META) and more like the S & P as they are revealed to be mortal. Not until then can the rally start in earnest. Can these valuations be played out? It’s happening as you read this. Of course, there’s one other enemy to the advance and it’s a powerful one: The 4.5% yield from 2-year Treasuries is outrageously bountiful in a market where anything north of 4% in equities is likely tied to plummeting oil. However, we cling to the oils, betting that they can maintain their well above market prices when Russia can’t produce its endless reserves and China goes voracious upon reopening. I think we will win. We will hold Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL) and Amazon , even as we’ve trimmed them higher. Their spiral down to earth, however, will be painful. If we hadn’t sold some, it would be getting late in the game. But I suspect there’s more pain to come. Why take it? Because these companies still have value, even though it won’t surface until the selling’s done and we don’t know when that will occur. It’s too dangerous now to depart, although Apple could see $120 and Microsoft a 10-point decline. Amazon and Alphabet control their own destinies through headcount reductions. The good news? The selling could end after the Fed meeting. The bad news: If it does, there will not be enough rocket fuel. The big four need to shed a trillion minimum to power things higher. I think it will happen in time. Which would mean a brutal week until the transfer begins to be made. Hold on to what you have, but get ready to be lifted by the stocks with the strongest buybacks. That’s where the accumulation will matter the most. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Satya Nadella, chief executive officer of Microsoft Corp., during the company’s Ignite Spotlight event in Seoul, South Korea, on Tuesday, Nov. 15, 2022. Nadella gave a keynote speech at an event hosted by the company’s Korean unit.
SeongJoon Cho | Bloomberg | Getty Images
To build a fire — but not destroy the market by doing so.
That’s the goal right now. It’s not as easy as in the famous Jack London short story (“Too Build a Fire”) where in the end the survivors profit rather than freeze to death in their sleep.
In the early part of this decade, we saw the rise of Robinhood (HOOD) and the distribution of investments from the serious to the ephemeral. These days, Robinhood has the appearance of one gigantic bonfire of young peoples’ money. The gamification concept was real and the exodus of investors was noisy — culminating with the ridiculous self-immolation of GameStop (GME), AMC Entertainment (AMC) and the meme stocks. Those who fought this trend abandoned Twitter, hired bodyguards and tried to hide from the angry mob that was attempting to will stocks higher by savaging the sellers. No tinder from these clowns.
Morgan Stanley: “I want you to hold it. I think it’s terrific at $89.”
SLB: “[Russia] pretty much made a deal between our Western allies and us that allows them to overproduce [oil], which is going to cause Schlumberger to roll down another maybe $5, $6 before we’re interested in buying it.”
Alphabet Class A: “The company has got to cut costs, cut costs, cut costs. … It is not making enough money.”
Sprout Social Inc: “Another enterprise software company. Next. But I promise to go back and look at it again.”
GrowGeneration Corp: “We had that one. We nailed that. We got that right in a buy, we got that right in a sell, and what we did is we never looked back.”
Walt Disney Co: “I think Disney is a triple buy.”
Disclaimer: Cramer’s Charitable Trust owns shares of Alphabet, Disney and Morgan Stanley.
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John Ray, chief executive officer of FTX Cryptocurrency Derivatives Exchange, arrives at bankruptcy court in Wilmington, Delaware, US, on Tuesday, Nov. 22, 2022.
Eric Lee | Bloomberg | Getty Images
Attorneys in the Bahamas filed an emergency motion on Friday asking a Delaware bankruptcy judge to compel U.S. leaders of failed crypto firm FTX to give them access to databases as part of the proceedings.
The emergency motion claims that despite “many attempts to obtain access,” FTX employees and counsel have stymied Bahamian regulators in their effort to get critical financial information located in Amazon Web Services and Google Cloud Portal databases.
The lawyers, working on behalf of the Securities Commission of the Bahamas, said the U.S. bankruptcy proceedings will “suffer no harm or hardship if this relief is granted.” They’re seeking data on FTX international customers that is stored on AWS servers, including “wallet addresses, customer balances, deposit and withdrawal records, trades, and accounting data.” Google’s technology served as an analytics platform for FTX International’s data.
“While the Joint Provisional Liquidators are happy to engage in dialogue with the U.S. Debtors, their refusal to promptly restore access has frustrated the ability of the Joint Provisional Liquidators to carry out their duties under Bahamian law and placed FTX Digital’s assets at risk of dissipation,” the filing read.
FTX filed for bankruptcy protection last month after a liquidity crunch at the crypto exchange, which was intermingling assets with sister hedge fund Alameda Research. FTX founder Sam Bankman-Fried, who had an estimated net worth of $16 billion before the collapse, will appear before U.S. lawmakers next week.
