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tv   Power Lunch  CNBC  June 24, 2013 1:00pm-2:01pm EDT

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>> mr. weiss? >> one of the coal names. >> catch "fast money" at 5:00. certainly following how this market day has ended following the big stories and what it could mean for tomorrow. follow me on twitter @scott wapnercnbc. "power" takes it over now "afl time is over" and "power lunch" and the second half of the trading starts right now. >> if you're in the market these days, you might feel like a flying willenda there. he is, nick willenda. he made it all across the great gorge. our question this hour is will your money in the dow is down big today, and right now we are down, but full coverage awaits us at 14,626. there we are, down 172, off the lows but nevertheless down. behind the great wall. we'll go there. big problem is fear about china. we have a top exec from a major financial power. just has been on the other side
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of the great wall, and we'll get his take today, what he saw and what he thinks it means for you and your money, and the boeing dreamliner, the brand new company, flagship plane. the operation center. they are tracking the flights of every sickle one of these 787s, and we're tracking them. we're going to take you out to the op center in just a few moments. sue is out today. michelle live at the nyse. hi, michelle. >> hey there, tyler. let's get a market check and show you what's going on. talk more about what to do on a day like today. the danching ow jones industriae is lower by a full percentage point. the s&p down 1.5%, industrials off 177 points and the s&p down 24 points and the nasdaq lower by 47 points. josh, i guess we could say we're off the lows. >> that's right. >> that's a half glass full kind of interpretation. you do have the blue chips down about triple digits right now. two really broad concerns. one fed tapering, right, the fed signaling they could taper.
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>> still worried about that. >> now on top that have you have chinese liquidity worries, that a credit crunch could slow down the economy even more. goldman sachs out there lowered their gdp growth forecasts, right? in terms of the s&p 500, your benchmark gauge, the sectors leading lower right now, no surprise, the cyclical sectors, economically sensitive sectors, materials, energy, financials, and industrials in, terms of etfs and back to china, keep a close eye today. one would be the fxi, lowest in about a year and a half and the lowest, gxe, lowest in 11 and a half hours. talking commodities, copper and seen as kind of a bellwether dividend. hits its lowest in three years, also combining names we'll be watching. clf, one of the names on the radar. >> the chinese effect is pretty startling when you see it throughout different sectors. thanks so much. we told you the nasdaq was lower by 1.33%. a lot of that because of a.
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seema modi shows us. >> concerns with the product pipeline weighing on the stocks an global equities research, riding that and employee morale at apple is low and recruiters are seeing more and more employees applying for jobs at google, linkedin and even hewlett-packard. a lot of tech names are performing down today, intel down 3% and dell, a key support level that the stock was able to hold for the past two months and nasdaq on pace for its worst juniper formance in three years. some traders say that the market gyrations we've witnessed over the past couple of days will continue, especially as we see interest rates rise. michelle? >> all right. thank you very much, seema with the latest on nasdaq and apple. as the major market is selling off, the volatility index is hitting the highest level.
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a chart of the vxx. this is a chart that actually is an etf that tracks the vix. up 20% in two months. there's the vxx. let's bring in kenny polcari, and from the cme jim mario joins us as well. what are you doing on a day like today, are you buying? >> not nervous because anyone not expecting this, and we've been talking about it, i think now as you approach the 1550 level which is not that far away you'll start to put money back to work. i think there's a chance we test the april lows down at the 1530 range over the course of the next couple of weeks but for the long-term investor this is exactly what we've been waiting for. >> jim, do we agree, what josh lipton outlined, knew them on wednesday, thursday and friday, too, poverty same, concerns about tapering and concerns about a china credit squeeze. >> no question about it. when kenny says he's not nervous at all, can't agree with him
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100% on that, but i do agree for the most part. this is a transitory period and the market doesn't like that. what's going on in the interest rate market, by the way, started out with the chairman but now that's kind of morphed into a leverage kind of thing. the stock market, we were in a correction when this all began and we really hadn't snapped out of it. i think i would think about coming in and buying some. volatility mighting back, when we see the moves like in china, people realize sometimes it's a good idea to buy some options to hedge your positions. >> you know, kenny, here's what confuses me or when we note answer to this question we know where we're going. both stocks and bonds have sold off, both. assume it's cash and when that money comes back where does it go? >> i think it goes to equities, and that's my point. jim, to your point.
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the reason i'm not so they are vows is it's not panicky by any stretch. repricing of the assets over the last couple of weeks in the equity market. you don't have this throw everything out the window sense so, therefore, it doesn't give me a sense of nervousness. >> i agree with you, but i think if yields start to go higher again and that starts to feel like capitulation, then that could move over into the stock market. we see -- there's been a couple little windows of small panic in the stock market over the last couple of days. granted only one today and it was ten minutes long. i agree, but for the most part it's been orderly. that could change. we've seen a change in the past. >> guys, good to see you. kenny, see you later on in the show. tyler? >> michelle, alcoa kick off earnings season. that doesn't come until july 8th, two weeks from today but it will be pounce quickly enough. cnbc's jeff cox wrote an article attracting a lot of attention today ahead of the earnings season and basically says watch out below. earnings pre-announcements running 7-1 negative versus
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positive, says cox and that is the worst level since the first quarter of 2090. he reports that wall street consensus expects very little profit growth from the s&p 500 companies, so how healthy is that economy really? vanguard health system soaring as you see there, up nearly 70% today. the hospital operator tenet health care will buy that small arrival for $1.7 billion, $20 a share and 7% premium to vanguard's friday close. further evidence of consolidation being driven by president obama's health care reforms air, among other things. investors like the deal and tenet is up as well on this otherwise down day. barrick gold losing its shine. the gold mining company had to lay off a third of its corporate staff at the toronto headquarters. this is the world's top bouillon producer entins fights a
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downpricing plan. it's fallen some 20% over the past three months but that doesn't give you half the story there, way off from the highs of a year or so ago coal stocks among weaker sectors in the s&p 5 up. the supreme court says it will comfort epa's bid to save a clean air regulation that limits power plant emissions blowing across state lines. cliff's natural resources, peabody and consol energy all weaker, significantly so at this hour. coming up, a special look beyond the great wall, from one wall street executive who just returned from that country. what's really happening in china and how is it going to affect your stocks, your money. we'll tell you, plus ryan air's outspoken ceo is with us and phil lebeau in a special boeing command center. phil? >> reporter: tyler, every day there are more than 150 dreamliner flights around the world. here are some of them in the u.s., and every minute there are tens of thousands of pieces of
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data being fed here to the 787 operations control center. we'll tell you what they are watching and what they are seeing from the dreamliner when "power lunch" returns. [ male announcer ] my client gloria has a lot going on in her life. wife, mother, marathoner. but one day it's just gonna be james and her. so as their financial advisor, i'm helping them look at their complete financial picture -- even the money they've invested elsewhere -- to create a plan that can help weather all kinds of markets.
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luxury depth store nieman marcus filing for a $100 million ipo. also bergdorf good american and a chain of outlet stores.
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it will not receive any proceeds from the ipo. chairs in the offering will be sold by existing shareholders. the dallas retailer was bought in 2005 for $5 billion. tyler. >> michelle, two boeing dreamliner flights had to be re-routed last week and there was an emergency landing over the weekend. phil lebeau has an exclusive look inside boeing's 787 operations center. >> you know, tyler, what's interesting about this control center here in everett, washington, is that it's staffed 24/7, and they are monitoring every single dreamliner flight. here are the ones over the united states. you see a few that are getting ready to take off from los angeles. over here a few more around the world, but this is the most interesting chart here. this is every flight around the world. every dreamliner flight color-coded. red indicates it might be a flight that could need a possible maintenance issue, but in this case they check with the plane and everything is fine, so why are they here at the control
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center and what are they doing? they are getting thousand of pieces of data in every single minute, and they are monitoring the performance of those dreamliners. in many cases they know at the same time as the pilots in the cockpit if there is an issue with a particular flight. as for the two diversions last week with the dreamliner, they knew relatively quickly what the issue was, and they talked with the airlines about it. >> any time you have a diversion or an air turnback those are event we look at very, very closely, very seriously. however, when it put it in context of the flying fleet, those things happen every day. they are all part of the system that makes aviation so safe. >> keep in mind, 63 dreamliners are currently in service around the world. 4,500 flights since the faa lifted the grounding back earlier this spring and two other diversions. take a look at shares up 37%, a big part of the optimism of the shares behind boeing is the
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rampup in the delivery of the dreamliners, so when you're looking at the dreamliner, boeing telling the airlines we've got realtime data that tells us how these planes are delivering and according to jim mcinerney they are meeting the benchmarks they set for their customers. michelle? >> we have one of boeing's big customers ryan air, the irish airliner order 175 boeing 737s at the paris air show last week. it was boeing's largest ever order from the european airliner. ceo mike o'leary says he was disappointed he couldn't get more seats on the aircraft. great to have you here. >> great to be here. >> you wanted more seats? >> more seats. ryan air is a huge price leadership in europe which is why we're growing so strongly, already got a fleet of 300 aircraft. we sign a deal with the new team in boeing for 175 firm orders. none of this option nonsense and it will grow to 450 planes. >> this is mostly additive to your fleet, not replacement.
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>> pretty much mostly additive. some replacements but set up with a senior team to follow on the order by the end of the year. >> that growth comes from not an exploding european market, right, or must come from market share? >> exploding flag carrier airlines in europe. these guys can't walk straight and chew gum at the same time. they are cutting back the short haul operation and losing share loads of money and all of europe is trading down by airlines, we're the southwest airlines of europe. >> phil? >> michael, phil lebeau out here at the boeing facility. you talk about the possibility that you would love to strip out second bathroom, add another six seats but that's really an faa issue as much as everything else. when you've brought up this to regulators they say that's michael ollie being michael o'leary or do they look at you saying some day we could do
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that? >> it's a manufacturing issue. clearly boeing has to clear it with the regulateors but i think the regulators are coming around to our view on short haul flights. we don't need three bath rooms. we would be able to lower everybody's airfare by 5%. >> you would -- you would still have two toilets on the flights. >> or three, get rid of one of the galleys we we don't need on short haul flights or one of the three toilets. >> i understand that you think that european bureaucrats are holding back your growth. >> european bureaucrats are holding back everybody's growth. that's what european bureaucrats do. you look at one of the few successes that the european commission has had in the '70s an '80s was airline deregulation. it's worked so well all the flag carrier airlines are losing money or going bust so they spent the last 15 years trying to roll it back.
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it's too late to put the genie back in the bottle, but that doesn't stop a lot of idiots in brussels trying very hard. look at them last year. started taxing us for using carbon ton the basis of global warming and now they had a meeting last week about how global warming. >> they have a very good service. i like newark and hate j. newark works well as long as you know where you're going and it's a great connect airport. good facility. >> so nice you have to on. >> a great pleasure. >> you didn't disapierre point. over to matter thompson with a quick market flash. on a down day taking look at two dow stocks that held on to gains since the record close, first of all, krifrko systems up 1% since
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that time. you might earl shinhosterier in may the company came out with stronger than expected results because of strong demand for its network equipment and then united health care. in general health care stocks have outperformed the broader markets. unh up 1.4% since that may 28th record close for the dow but recently the company also increased its did you have dend by 32% and also renewed a share buyback plan so something added in addition to that defensive play it offers for investors. >> microsoft shares up on this big down day. reports of a major shakeup at the tech giant. that is next, and how is this for a brain twister? your company loses money and market share and the founder and ceo resigns last year because of insider trading charges, yet the stock is up 90% today. that's what we call a tease, baby. stay tuned for the details. we'll be right back.
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here's the answer to the little brain teaser. shares of the solid state computer drive-maker stec soaring in very heavy trading, up nearly 90% at 6.71 a share. western digital buying the sop for about $340 million in cash. 91% premium to stec's friday close. the money losing stec has lost market share in the highly lucrative and cut throat solid state market. its founder and ceo resigned
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over insider trading charges. investors not too crazy about the deal, at least from western digital's standpoint. that company's shares down about 3% at this hour. >> solid state, tyler. doesn't that remind you of your uncle's shares in the '70s? >> thinking of a little trancister radio. >> microsoft, a bright spot in today's selloff. reports that ceo steve balmer may be planning a major shakeup at the tech giant. stock is up 25%. jon fortt is here live with what he's hearing. >> the last major reorg microsoft had was back in 2002 when they broke out into online and devices. current structure dates back to 2008 when ballmer and the group spun it out on its own. back in 2002 when microsoft adopted the division structure,
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the critics tlerwarned it couldd to islands and fifedoms. today's microsoft structure has the effect of protecting the autonomy of the windows and business divisions which own the windows pc and office frances. a problem though, mobile devices and cloud are the areas where microsoft really needs gain ground and those live elsewhere in server and tools and entertainment devices. i spoke recently with the president of the server and tools division about changes he's making. take a listen. >> our sill verse are all getting upgrade iing, so anyone with a service enterprise that wants to stand up in cloud gets to do that using same technology we use ourselves. >> in other words, the cloud,
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through asoourks really influencing the rest of the company. i suspect that might carry over into a new less siloed structure. back to you, guys. >> thanks so much. let's talk about oil stocks. oil prices weaken. exxon, chef ron, conoco all to the downside. deutsche bank downgrading allegen to hold saying its treatment for dry eye disease could face again rick competition sooner than expected and pfizer will complete the sinnoff of its animal business. pfizer says it no longer would hold any ownership interest in zoetis. joining us from chicago jim yorio are tjm institutional services. welcome back. jpmorgan downgrading deere from the u.n. weight to neutral saying a confluence of factors saying u.s. crop fundamentals have passed dierickx up 2% for
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the one-year period. the question is do you agree or disagree with this downgrade? >> i agree with the downgrade. i read the analyst note and he makes a point about the wet planting season delaying in the midwest. don't get that and then he moves on to higher prices based on dollar valuation juxtaposed against a glut of used equipment being bought and that makes perfect sense. plus, if you look at the chart. to me it looks like 70 on the downside. >> let's move on to morgan stanley, cutting zynga to underweight, the firm citing challenges in mobile and relatively unattractive risk versus reward versus other stocks in the coverage universe. shares of zynga about 70% lower. do you agree or disagree with this downgrade? >> i agree with this downgrade as well. my rule of thumb with game stocks is if i'm familiar with it, they are way past their prime and certainly not cool anymore and i'm familiar with zynga. something that the market does with a name like zynga.
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they include this valuation that has something to do with facebook and linkedin. they have networks built in to become non-portable. zynga doesn't v that. plus, again, it changes like the wind with kids and games so i agree 100% with the zynga downgrade. >> cantor fitzgerald downgrading wall green to hold but keeping the $49 price target. the firm saying it's moving to the sidelines as valuation on wall green looks full. shares of that drug store operator falling in the down market but up more than 60% over the past year. jim, third time, do you agree or -- i'm not asking again, jim. do you agree or disagree with the downgrade? >> final answer is i agree, but i'm reluck tap the. walgreens deserves a whole lot of kritd for getting themselves out of the debacle from last november. i think downgrading them to hold is the appropriate move, too.
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if it trades 46.50 on the downside, a little lower here, that's where i would be tempted to initiate a short with 42. >> jim yorio, one agrooel growable guy. michelle, down to you >> another update on the trading action. josh lipton joins on the floor of the nyse. off flows but a negative day. >> off flows and down triple digits for the dow. two fears, fed tapering and now on top of that you've got these chinese liquidity concerns, worries that the credit crunch could slow down the economy there even more. >> what's new today about that? is it the goelt goldman call coming out with their assessment of what the economy will do? knew about those wednesday, thursday and friday. >> goldman is adding on, but goldman did downgrade their gdp forecasts. >> that's interesting. >> you're seeing that show up in the casino stocks, gaming stocks, winn, mgm, las vegas
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sands that gets about 85% of revenue from china and winn about 75 and mgh 20% but highly lefrmgd so it will respond more to that's rates. >> las vegas sands improperly named. josh, good to have you. >> you got it. >> over to the nasdaq and seema mode following the movers there. >> apple is now off of its lows and holding on to that 400 key support level so apple is now down just about 3 boston on the day. but as josh was pointing out, very much a global story. chinese adrs reacting to concerns over china's cred crunch problems. a lot of hotel names with exposure to ma could you, asia's hot spots particularly underperforming sectors and wynn down and sands down about 6%. worst performing stocks, not tech stocks, rand gold responses the worst response due to
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fluctuations in gold prices and goldman sachs cutting its gold financials. shares of rand gold down 15% over the past week. a quick look at nasdaq. it broke 3400 last week and now close to breaking 3,300, down about 40 points on the day. michelle? >> a perfect transition, seema, to talk about gold prices which are closing right now. jackie d'angelis is tracking metals action over at the nymex. >> watching the gold price down 15 bucks or a 1% drop on the day today. a strong dollar but also concerns in the pits here about fed tapering continuing to -- to pressure the precious metal. meantime, seema mentioned the goldman cup. looking at 1,300 for 2013 and 1050 for 2014, and, you know, it's been a really rough ride for gold. down around 25% year to date while last week alone the precious metal saw its worst weekly performance since september of 2011 hitting a three-year low of 1268 and
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that's what traders say is going tonight key level. if we break through 1268 the next stop would be 2014. meantime, gold equities taking a hit. barrick is laying off up to 100 employees in toronto. that is a move that is helping it trim costs as these gold prices decline. last but not least, wanted to touch on copper as well. news coming out and pressuring copper prices. back over to you, michelle. >> china, china, china, all the rage today. let's go to the bond market and track rick santelli. richter, here is something i don't understand. i know you've been following the situation in china closely. if everybody was or terrified about a chinese financial crisis, their economy is slowing down, wouldn't people be buying u.s. treasuries instead of selling them like they are today? >> i'm not sure if i would say that about the treasury side because i think the price of real risk interest rate poker has gone up, but i think make an interesting case for potential
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lit equities at some point, once defense turns to offense on strategy. you know, look at comments by richard fisher called farrell hog, some of the market players. maybe they were farrell whogz they were buying things on the way up, kind of playing the game. normally we say 10-4, but i'm saying 10-3. look at intraday of ten-year. ten down from the high yields and three up from friday's close. if you look at the hyg and the dollar index, you can see both are pretty much stable for the session, but here's where it gets interesting. open the chart up to may 1st, obviously we see the breadth of this humongous re-pricing on interest rates and risk, but as you look at the dollar index, you know, it's basically unchanged from where it was may 1st, and the hyg as one would suspect is getting the extra volatility of the etf paired with credit discrimination. back to you. >> all right. rick santelli, thank you. rates on the rise as rick
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just ably illustrated. americans being hit from both sides. banks are hiking mortgage rates, but they are not really passing along higher yields to savers, at least not yet. plus, fears about china. one of the big reasons for today's selloff as we've been discussion, so what is real going on there? we'll take you to an investment strategist who just came back from that country over the weekend what. he saw and thinks next. [ indistinct shouting ] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ]'ll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪
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take a look at your screen and check out images coming out of brazil over the past few days. over a million people protesting demanding an end to corruption and social inequity. protests breaking out again today, blocking access to the biggest port in santos. this is all happening in the midst of a major soccer tournament in brazil, the confederation cup, which is always meant to be a dry run for next year's world cup. the turkish prime minister erdogan using police to break up
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cashes over the weekend. the interior ministry estimates about 2.5 million people have taken part in demonstrations across turkey since the unrest began may 31st. and another hot spot in the world, the middle east, where the lebanese army is fighting followers of hardline sunni cleric hold up in a mosque. it's the second day of fighting that's left 16 soldiers from the lebanese army dead. this violence is linked to the conflict in neighboring syria. >> where in the world sed ward snowden, the former cia analyst whose leaks have caused global controversy. was supposed to catch a flight, we thought, from cuba to moscow, but he wasn't seen on the plane. eamon jafers is live in washington with this big where is he question? >> that's right, tyler, it is a question and the white house today responding very sharply to what it said was china's conscious decision to allow
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snowden to board a flight in hong kong originally headed for moscow, the white house saying they believe that he is in moscow or he is in russia as of right now, but some very sharp words for the government of china. take a listen to white house press secretary jay carney just within the past hour. >> we are just not buying that this was a technical decision by a hong kong immigration official. this was a deliberate choice by the government to release a fugitive despite a valid arrest warrant, and that decision unquestionably has a negative impact on the u.s.-china relationship. >> so the white house there saying a negative impact on the u.s.-china relationship. also in play here is the u.s.-russia relationship, the white house very much leaning on the government of russia to return mr. snowden to the united states. they say they want him extra dated forthwith. some question about whether or not he may be able to make it to ecuador. earlier said julian assange held a press conference over the
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phone because he's been couped up in the ecuadorian embassy in london, hiding there from law enforcement authorities under diplomatic immunity from ecuador saying edward snowden is not a traitor or spy, simply that he's a whistleblower. michelle? >> wait and see if the legal system here thinks that. the market selling off particularly on concerns about a cash crunch in the chinese bake system and also a possible slowdown in the chinese economy. the s&p 500 is down more than 1% today, 5% in the past month. overnight shanghai xhos it fell dramatically over 5%. down 14% over the last month. should investors be worried? bill stone is chief investment strategist of pnc asset management an just came back from chip. i understand you were there at heist credit crunch going on there and concerns of the financial system. you didn't cause the credit crunch, did you? >> the real reason that the
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markets sold off is because i lift. >> how concerned is it that the chinese central bank decided there's a nub way of doing business? what does that mean for the economy. >> i think i saw less concern about that. i think, you know, certainly the companies that i met with, you know, they talked about a difficult operator environment, not an operate are environment set apart so that set that to the side but in terms of the chinese central bank, know, i think most them really looked targets as, you know, in essence, what we would say is the central bank was sending a message to the banking system saying, you know, listen to what we're saying because we kind of hold our financial life in your hands and we'll make it clear there's a new sheriff in town and that's exacty will what they are saying and as soon as they decide they want to let off a little bit you see the rates come back down. it was more about message sending. >> how about the overall economic impact in the economy
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right now. gaks coming out and downgrading their segment of the chinese economy. are you as bullish as you once were. >> certainly would have to say, hey, the risks are a little bit to the downside. we've got some pmi data that didn't look quite as good, but i think the ray we're looking about it, looking forward, one thing is we think the u.s. economy will look bert here in the second half the. europe is going to -- well, it's all relative there, but, you know, we think that stabilizes and the last thing that i think a lot of people are losing track of is up thing we got from a lot of companies is the government had put off a lot of purchases here in the beginning of the year because of the changeover in the administration. they believe that kind of logjam ends sometime here in the fall so you're going to get some government purchases coming through. >> you come back from a trip and you tell your investing clients
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what? are you encouraging them to buy stocks in hong kong or companies in the u.s. with chinese exposure? this translates into what when it comes into decided what assets to buy or sell? >> the main thing for us anyway is looking for opportunities in china and particularly hong kong. i think the one thing that we saw is you have to be extremely careful on the asia side things, the shanghai exchange, but careful everywhere. i think the bigger picture is we don't think things are falling apart and may in fact be future opportunities for us. we saw some day there will be an opportunity in mobile, and what i mean is maybe mobile commerce, e-commerce in china that will certainly be watching here going forward. >> bill, good to have you on. welcome back. >> thanks for having me. >> all right. tyler? >> thank you, michelle. bill, interest rates moving higher.
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double whammy for americans. banks raising mortgage rates, but holding off on passing along any higher yields to sabers. kayla tausche and diana olick all over this story for us. kayla, you first. >> tyler, wall street is worried about the fed raising rates, markets are reacting and will you see higher rates in your savings account? the answer is no. i'm busting that myth right after the break. >> and rising mortgage rates are a big yes, if pricing people out of the housing market? we'll tell you next coming on plunch. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess with cialis.
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they're not sitting by as their life unfolds. and they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people. people who want to take ownership of their investments, like they do in every other aspect of their lives. don't look now but the dow is attempting a comeback, down triple digits, 114 points, but remember, it had been down 248 points, so cut more than half of the losses. nasdaq lower by 36 points and the s&p is lower by 1% as well. as we've seen stocks come off the bottom, crude oil has started to rally as well, higher by 1.11.
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in today's yahoo! finance question of the day, we asked china's economy may be driving u.s. stocks lower. how closely are you watching china? answers, plays a big role in my decision. 9% says it plays a big role. 53% says i'm watching china with a lot of other factors and 18% said i'm not paying attention to china. meantime, what's coming up next owns signs? >> is this just a seasonal summer swoon, a garden variety connection or something real big? smart minds on that dilemma. why china's pain could be our gain. a look at the retention of employee issues. we're standing by with that. meantime, back to you on "power lunch." >> thank you very much. americans are getting squeezed
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on two sides these days. banks are raising mortgage and other lending rates, but mortgage rates particularly on home buyers and not passing on higher yields to savers. kayla tausche has that part of the story and is busting a money myth but first to diana olick on how rising rates are affecting home buyers. >> reporter: rising mortgage rates are never a good thing during a housing recovery but especially today when borrowers are facing tighter underwriting and higher fees for mortgage insurers including the fha. i did a little math for you so you can get the whole picture. you're buying a home today, let's take the median home price in may from the realtors of $208,000. put 20% down and get a $166,000 loan. back in early may when rates were at 3.5%, were you paying $745 a month, that's not included insurance and taxes. bump the rate up to 4.5%, and you're paying $841 a month, a 13% jump. this affects not just the amount
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of home you can buy but it also affects what you can qualify for. given today's strict to debt income limit. george says his refi volume is still cloeg but mortgage home buysers who would lower their payment. for buyers, most don't realize how fast things are rising. today the 30-year fixed is pricing 4.5% with no points. rates are rising just as some double digit price increases from a year ago and that's not helping. tyler? >> all right, diana, diana olick reporting fours. now to kayla tausche with a look at why banks are not passing on these higher -- let me just say they are not passing them on because they want to make for money for themselves, right? >> you would hope so and the
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benchmark these savings accounts are tied to. they don't have to or need to. mortgages are the only place where higher yields will affect you meidt immediately because these savings accounts and other personal financial products are based on the fed fund rate at or above zero and even though other products with spiking this won't affect you until the federal raises. right now the average savings account .86%. online only accounts will pay you just below 1%. while you may be missing interest on savings you're knot also not paying it on some of your other borrowings in the last section weeks. the average interest a five-year car loan, 2.12% and the average rate on a credit card budged barely a bit. once the rates start to rise,
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it's both a blessing and curse. >> rates on home equity lines credit will stay where they are because -- >> exactly. >> pegged to the prime rate, and if the price of the home is rising and you can get more out in credit that's a good thing to do while the rates are still low. >> thanks very much. michelle, down to you. >> hey there, tieier. markets are well off the lows of the down, are still down. is now a good time to get in. as we head out. allergen, boeing and peabody energy. we'll be back in two minutes.
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well, there is a selloff to start the week continuing last week's declines. right now the industrials off 142 point at 14,657 and nasdaq down to 3316 and the s&p 500, the biggestlouser among the major indices down. michelle with us and josh lipton and joe greco with meridian equity partners. let me start by asking you, what is the market telling you about
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today and more particularly in the last hour or so? >> it seems like a lot of people, in the last hour is a lot different than today because we obviously started off today chasing the asian dog there and heading lower, and about an hour or so ago dallas fed president fisher says i'm not worried bip flakes. i think you've got to read too it a little bit. people can't pay more if they are not working and the unemployment rate he doesn't see improving any time in the near term. that's what i think is there and that's really a negative comment even though the market needs europe up. >> josh lipton, most sectors are down. maybe health care least among them but generally this has been a day where material stocks have gotten hurt and energy stocks gotten hurt and more. >> yeah, and no surprise there, right, tyler. came in like joe today. all about fed taper talk and all about china. worries about china liquidity fears and worries that the
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credit crunch may slow down and goldman came out and cut their gdp growth forecasts. not surprisingly when you're in the red today, the cyclical sector economically sensitive sectors where materials and energy get hit the hardest. also, you're well off the lows. dow down 248, now 141 and the s&p down 32 and now you're down 20. >> michelle, i'm struck by a couple of things. you can take a jump on and go wherever you want with it but i'm struck how sentiment has changed over the past month and a half or some back then the market seemed to play past any bad news. this piece of data out of china, that peeves news out of europe, whatever it was. it doesn't matter. now the market seems to have deeply internalized any kind of distressing news, and this in light of the fact that bernanke did what he said he was going to do half broke with unexception. he put some dates on it. >> exactly. and i think the dates, tyler,
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were sooner rather than later. i think at this moment right now that you know two of the largest central banks in the world are n.o.w. not as's as they were going to be just a week envelope ago, right? that's the fundamental change that we know has happened as a result and when you have now, used to say, don't fight fed, now you're talking about two fed in the world that are not as easy as they used to be. joe, here's one thing i wonder. if everybody was truly worried about a financial crisis in china, wouldn't people be buying u.s. treasuries instead of selling them like today? i mean, you would hide there, right? >> potentially, but to your earlier point. the sentiment has changed a little bit now. we have the dates and are a little bit more concerned. who gets out the door first? you know. if you're up 18% on the year and 16% on the year, up 22% or 24% on the year, do you real want too-to-wait until the market pulls back another 5% or 10%? what do you do, a little too late to get on the shorts. near the end of the second half,
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especially on this monday, great day to see some selling. i think going into week end we might get a nice little lift into final days of the first half. >> interesting as portfolio managers do that traditional window dressing before to make their portfolios look a little prettier. >> they would never do that. >> joe greco, thanks a lot. josh, michelle. we'll take a quick break. cnbc is debuting two new shows, "netnettv" which will ask and answer the questions is america's domination coming to an snend and when we come back, we'll show you the winner of the world's ugliest dog contest. can't wait for that. [ male announcer ] we've been conditioned
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the question is how do you make sure you have the money you need to enjoy all of these years. ♪ all right. there you see the dow industrials off 20 points, this after being down about 240 earlier in the day. the s&p 500 has come back just a bit. it is nevertheless, michelle, down 17 points at this hour at 1574. >> let's show you what's going on with the ten-year yield at this point. usually when you see a selloff in stocks, you also see buying in treasuries and we actually
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are seeing that. this is the yield of the price so the yield is rising, so even though the -- people are buying stocks, i mean, selling stocks, got -- >> ugly day in the market, michelle. ugly day for this dog. this is wally, the winner of the ugliest dog contest. it was on the "today" show today, a mixed beagle, boxer, bassett, one ugly bassett. see you tomorrow, folks. >> a scary situation filled with slow, careful steps. all kinds of things to navigate. a real high wire act with the potential for a big drop at any time. no, not nick willenda's incredible walk across the grand canyon. that is your market setoff as it's in the redmund, but we've got the skill and the balance to help you get through this mess, mandy. >> a


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