Skip to main content

tv   Squawk on the Street  CNBC  September 2, 2015 9:00am-11:01am EDT

9:00 am
200 points. that's a gain of 208 points if we were to open now. the nasdaq is up by about 63 points. this is no way making up for yesterday's losses, but it is a substantial move higher this morning. you're seeing that reflected in europe as well. brian, kelly, thank you for being here today. >> thank you. >> i'll see you tomorrow, kelly. that does it. right now it's time for "squawk on the street." ♪ >> good we understand morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange. david faber is off today. premarkets trying to build off the lows of yesterday. the third worst day of the year for stocks. china managed to have a relatively quiet close. adp pretty decent. ten-year around 2.18. oil, inventories and the storage data suggests another build. the road map goes like this. futures higher after yesterday's
9:01 am
sell off. will this continue. apple stock now in the red for 2015. one week away from their event in san francisco. and nfl games go online. netflix says it's sanguine about apple competition. there's that word again. >> we're on track for a green open as they try to rebound from a worst job. ahead of the adp, 190,000 private sector jobs added. that's a bit shy of the consensus. manufacturing, 7,000. it's being called a relatively solid number heading into a print that is historically weak on friday. >> you wouldn't tighten based on these, and i know, i regard the tightening camp as basically of two components. one says let's get it over with and the other says let's get it done. no one is saying the data says to do it. if the data depends on stabilization of the markets, we don't have it. the numbers are benign.
9:02 am
the mortgage applications were good. housing and auto are the two bright spots. if you want to tighten on housing and auto, you have maybe 25% of the economy that you can say is a little better. that meechans you have the othe 75% that's not that good. >> for last week, which includes a lot of the volatility, up 11.3. refie is up 17. some people are trying to argue that means the consumer at this point, not, their behavior is not being adjusted by the volatility. >> i think the consumer feels like this is your last chance. it's finally seeped into the great culture that we're going to have higher rates. if you have a mortgage banker or talk to anybody in the housing business, what they're saying is this may be your last chance to refinance. it might be before things start floating up. these are healthy numbers in
9:03 am
housing. housing 10% of the economy. we're not seeing anything else to me that would justify as tightening other than the fact that a lot of people are saying let's get it over with. there's a new camp that says it would be good. that camp, i don't want to describe that camp the way i would off camera. they're misinformed. >> but they're nice people. >> they're very nice. you took the words out of my mouth. >> yesterday we talked about the list and levels on various names you wanted to see. did we get there by the close last night in. >> no. there will be some technicians, i have two drafts lists, my football draft lists, and then i have my s&p 500 list. this is a list of the stocks, the s&p 500 their low that they hit on monday or tuesday, and how many took out that low. 77 took out that low but only 30 were more than 1%.
9:04 am
so there are probably people here, this is a technically driven market which tends to happen when people don't know what to do. that would be regarded yesterday as a successful retest of monday and tuesday, we didn't take out most of the lows. we took out 30 lows. many of them i could argue were aberrations, but there will be some people who say we hit the bottom yesterday. i'm not of the camp that you hit bottom, not hit bottom. i think it's a rolling bottom. that was a successful moment. most of the stocks i was looking at to be able to buy for my charitable trust never hit it. they didn't hit the levels because they didn't take out the levels i was opening they would. that's bullish for someone who's thinking i have cash i haven't put to work yet. >> we do have bill gross today echoing what others have said. you have to be building cash here. >> i think you to start applying cash now. you have to start applying cash. if we didn't take out all the lows, you're going to get an
9:05 am
unemployment number, my problem is -- when you have a really thin -- having run a trading desk. when you have a thin market like this, it's almost impossible to buy on an up day. because the futures are so in c control. yesterday was a day where if you run 20 billion, you had to be bidding. if you go in to buy mcdonald's, you want to buy 2 million shares of mcdonald's, you're going to move it right now, so you have to buy it when the futures are at the worst. you move it up a dollar if you buy it. mr. -- you move it up a dollar. i used to be a block trader. when i saw how little mcdonald's moved, i realized if i went to an equal weight on mcdonald's and ran a lot of money, i would take it to 95.5.
9:06 am
the only time you can buy is in big downs. that's why people are buying today. they're afraid the big institutions didn't get to buy when they should have if they didn't want to move the market. big institutions are afraid of moving stocks. the only time they can buy are days like yesterday. >> not like days like today. >> no. just watching the tape like everybody else, let's say i wanted to buy a million shares of tesla. i'll offer you 200,000 at 260 to finish the order. people buy 500 shares at home. they don't understand, you're going to be moving a stock if you're putting in a regular order today. >> this is interesting. so what degree of the volatility, the last ten days do you think is because of this dynamic, this idea that there are a few people on the floor? >> at a big trading desk, they're also afraid of
9:07 am
committing capital means that if you want to go and buy, let's take a stock that's much less volatile than a tesla. let's say you wanted to come in and buy ibm. they would sell you on a day like today, they would say you want to buy one million shares. they'd sell you the first 200,000 -- the stock was at 142.5. and now they look at the futures and say i'll tell you what. i'll say 100,000 at 144.5 and i'll work the rest of the order trying to bring in sellers. but they can't. they say i have a buyer of ibm. yesterday you were a seller of ibm. now the guy says it's up. look at it. at 146 i'll offer it. that's the way it looks. the futures were down, but now they have ibm not were sale because the futures are up.
9:08 am
that's human nature. human nature is frail. and that's why you see such volatility. >> it's a big reason why you've been thinking about the market the way you have been. >> yes. >> we're going to get to the upgrades, and there are a bunch today in a moment. but apple in negative territory. the dow component now down about 18% from the july highs. we mentioned their event is a week from next week, september 9th. we've had tim cook on the tape. we've had word of the new television product. >> all that is against this. you're an institution. you're usually pretty equal or overweight in apple. it's been a good stock. you need to raise capital because of the withdrawals. you can talk about how badly einhorn is doing. a typical institution is getting withdraws because the market has been freightening. they need to raise cash.
9:09 am
the easiest way is to sell apple. there's always a bid on apple. everything i said about all the stocks, it does not apply to apple. apple will say if you want to sell apple, i'll buy 1 million apple on the line at 109.90. that is like a u.s. treasury because it's so liquid. that's the place you raise cash. should they do that having had to raise cash in 1998, i would tell you -- i'll sell you as much apple as you want and be a source of funds. apple is a source of funds for big institutions who are getting large withdrawals. >> an atm? >> if i said apple is good, they would say samsung watch, my apple watch fell asleep at three hours. rationality plays very little role right now. everyone has the right to be
9:10 am
irrational. if china falls apart, it's scheduled to fall apart the day after the commemoration of world war ii. that's the day they set. not out loud. i'm being fa seerks. they're propping up stocks because they don't want the commemoration of world war ii to be spoiled. >> it's a parade. 10,000 troops will march but the market is closed thursday and friday there. >> that's a break. and you're right about holding the 3,000 level. does the rest of the week look a little bit more benign? >> no. no. tomorrow up. which i'm working on. it's not benign. there's no more benign. we're so focussed on everything that's negative. now, the eighth army, which we celebrate as having been the victor in world war ii. if they all bought stock, that's
9:11 am
the way they're thinking. have you noticed the buildup militarily they're doing? you could say we aren't, china is about to fight and you have to put x. war, what a great way to put people to work. build aircraft carriers. >> there's a big piece in the ft today says how do you have a more market based economy, china, while you're concentrating political power? the two do not mix. and then whether or not china can do it will be a big test. >> in our country, if the economy turns down, you throw out the party. in their country, the economy turns down, they have a revolution, and that's what they fight. the stakes are higher there for everything. a journalist who breaks a story who says the market is going down gets punished. can you imagine -- they have fighting revolution every moment. and they live with that. in the same way that jeregerman
9:12 am
lives with hyper inflation. they have longer memories. the party does not want to be overthrown. they say we hold the 3,000 level until after the celebration. we let the air out of the market. we devalue, which is what i think they have to do again. hopefully they don't rede value on the same way the fed raises rates. that's how you get out of the mess. the lower, lower, lower, devalue, u.s. takes more of their stuff, the rest of the world, emerging markets go bad. euro goes higher because they're going to have to expand because they have such a migrant problem and that's how you get out of it. but remember i have china a couple days early. they let the market go down after the celebration. >> yes. >> congratulations to the eighth road army. >> the report yesterday that blamed part of the pmi miss on
9:13 am
them shutting down the factories to clear the air for the parade which is not out of the possibility. >> people day from respiratory problems. when you're in a city that's basically under quarantine because of bad air, that's not a stable society. the party is in charge of the stre supreme court and every aspect of life. they're worried. they don't look worried. it's not like the old days where we can tell something is wrong because someone is deciding with joe. there used to be a group of people. the capitalist roaders. >> when we come back, cord cutting cvs, football and netflix. and also jean claude triche tri.
9:14 am
dow down 9.9 for the year. more "squawk on the street" from post nine in a minute. so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep it all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberry apple scones smell about done. ahh, you're good. i like to bake.
9:15 am
add new business services with at&t and get up to $500 in total savings. woman: when a student understands a concept for the first time. man: when the students get it. man: their eyes get big, the lightbulb pops on. woman: "i got it, i think i got it!" they light up. it's like magic. woman: this is not just a job. woman: the rewards i get are... priceless. man: we help kids grow, and that's part of the rush of teaching. narrator: the california teachers association.
9:16 am
educators who know quality public schools make a better california for all of us. there's a look at futures. premarket trying to build after
9:17 am
hitting the lows at the end of the session yesterday. cbs announcing it will live stream two regular season games this year and make it free. and they'll stream super bowl 50 on connected devices and laptops. can you imagine saying what i just said five years ago? >> i know march madness is something, but that's extraordinary. remember, they're all afraid that google is going to take up the international contract. we're going to move the game every weekend to international. that's the rights there are still for sale, and this, i think is a shot across the bow to google saying we're going to do that too. we're going to get it. cbs has to do this. disney upgraded today. that's interesting it could bookend the bottom. >> initiate. >> yes, initiate. and i look at what's happening with even the most pressured of
9:18 am
products which is the informnfli recognize that they have all this cash but all they do is buy back stock. but if google, if porat came in and said i can risk bidding on the international rights, they're going to be fearful that google is going to take everything. they have so much more cash than everyone else. serve scared to death. these are people i talk to off the desk. i happen to be close to the sports management teams. >> google has talked about moon shots and diabetes research. >> i'm just betting there's people there who now with porat who will be more grounded. they'll put that in the alphabet soup side, and the nfl is lucrative from day one if you get it right. just be aware that the nfl is in many ways what a lot of the things that are going on with the networks is about.
9:19 am
because it's the gem they have. it still generates lots of people watching the show the next day, which is why this is so breathtaking. it leads into nothing, carl. you broadcast that game on the web, the next day it's not going to lead into csi queens. you're not going to want to start csi. csi philadelphia wouldn't get off the ground if you have the game on the web. so what does that mean? it's a bad lead. i think that's crucial. >> by the way, opening game, nbc, next thursday, pats, steelers. >> well, i don't have anyone playing in that game. i don't. i mean, no one ahead. i got branded lafel. >> we might get a ruling today. the judge said the brady ruling could come by the fourth. >> it's incredible that got to a federal court and that's what their courts spend their time on. good use of time. >> we'll get cramer's mad dash
9:20 am
and count down to the opening bell. more "squawk box" straight ahead.
9:21 am
this just in: 50 million customers' data was not compromised this morning in a security breach that didn't happen. wall street. not rattled. at all. no. not at all. not at all. i mean, look at the day. sir. sir. what went right? what went right? everything. thank you. with threat intelligence, behavioral analytics, and 6000 experts, ibm security will help keep you out of the news. my dad's company wasn't hacked today. cool.
9:22 am
volatility once again the name of the game as futures are up triple digits on the dow after yesterday's drubing. in the meantime, minutes away from the opening bell. zl >> we talked about block trading. this is the intellectual property behind drones and go pro. there was somebody who said i can get ambarella. the ambarella was a good quarter. the guidance was tepid. this is the line everyone is
9:23 am
reading through. it's about go pro. wearable camera revenues are expected to be down sequentially in year over year reflecting the release of existing products by go pro rather than what occurred last year. what happened is people are reading through this and saying there's nothing new, go pro. you kind of knew, and there is no up side surprise coming from go pro, which is new from the momentum guys and they're going to sell go pro and ambarella off this. this is an inline quarter. it doesn't cut it because we're in a bearish phase of the market. you can't do inline. you have shock. and ambarella didn't shock so go pro can't shock. >> nick woodman announced the drone roughly in here. it hasn't been that long. >> and through the conference call, there's one guy who says i hate to beat a dead horse. that means he is. when is someone coming to wreck
9:24 am
your drone business. those are man eaters. >> we mentioned some of the upgrades. at least a half dozen. one is morgan stanley on general mills. >> i read through general mills. ken pal made it more natural and organic. that was not one of the reasons to buy. talk about the greek yogurt and the streamlining. i thought the upgrade was not that rigorous. it should have been based on the transformation that ken has intimated to me on mad money several times. if you buy it, buy it because it's becoming natural and organic trix are still for kids. general mills are a buy but not for the reasons he talked about. >> and some cost management. >> it was boring. memo to morgan stanley, make
9:25 am
your research more exciting when you do an upgrade. mention artificial. mention annies. be more rigorous and i will be more thoughtful about your upgrade. >> coming back, the opening bell in about five minutes. while every business is unique, everyone is looking for ways to cut expenses. and that's where pg&e's online business energy checkup tool can really help. you can use it to track your actual energy use.
9:26 am
find rebates that make equipment upgrades more affordable. even develop a customized energy plan for your company. think of it as a way to take more control over your operating costs. and yet another energy saving opportunity from pg&e. find new ways to save energy and money with pg&e's business energy check-up. sup jj? working hard? here at the td ameritrade trader group, they work all the time. working 24/7 on mobile trader, rated #1 trading app in the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of the other competitors do in desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivative pricing model, honey?
9:27 am
for all the confidence you need. td ameritrade. you got this.
9:28 am
you're watching "squawk on the street" live from the financial capital of the world. we'll get the opening bell in just under two minutes after the dreadful action yesterday. our producer now, today, jim, informs me that even though we're in this correction territory, being a born optimist, the dow is 688 points above the recent intraday low. we've not gotten close to retesting that. >> that's why i look at my s&p cheat sheet and almost no stock was down in double digits from last monday, tuesday.
9:29 am
that is clearly held. and by the way, in terms of something else that held. people are really freaked out about it. oil went down but it only repealed the gain from monday which was the real short cover game. oil is reversed today. we have inventories. they have proven to be out of whack. we have a big surplus because we're not able to export. mexico comes in and sells the future every time they lift part of their hedging program. most of our big oil companies didn't hedge. i think they tried to hedge yesterday. they're going to get their chance. those who do have finding below 40 of which some do will use the futures to be able to generate cash flow or meet bank debt. that's important. >> e conoco, where -- >> did they make a push on the quarter about the dividend. i want people to watch cimerex
9:30 am
oil company. exc is the symbol. watch it. a really good company. >> overweight energy based on 20-year valuation lows, earnings expectations cut in half, nonopec supply coming down. demand going up. >> the 20-year valuation lows, when you look at where oil bottomed last week, that is exactly the trend line that it should have bottomed at. a lot of technicians liked the bottom. there was a lot of big liquidations at the below 40. that's important. carly, thank you for that information. >> there's the inverse of yesterday's breadth. a lot agreeing this time. pgn celebrating the original listing on may 20, 2015,. and at the nasdaq, bluebird corporation. did you ever ride one? >> of course i did.
9:31 am
you had to. it was -- what else was there? that's what we called it. >> talk about a monopoly in the school bus business. >> a suboptimal situation. >> i can't remember the last time navastar had it together. >> cullens has it together, but they provide the most smock free engine. it's been popular in china. i hate to ever count out cummins, a great indiana manufacturer. they have been fantastic at export. >> we mention the general mills upgrade and the disney initiation outperform but at&t gets upped at citi. has bro uppbro up at piper. >> star wars, i remember we were
9:32 am
saying star wars is about to come up and now after the dow, it's like it doesn't come out until december 18th. that's forever. i think some research is working today. that's important. please don't buy the -- i'm going to say something. if the market goes up a little higher by 11:00, then all the people who think and stay top beating your wife, i just got married to her. i would point out that don't buy this up opening. we had a nice reverse in the last 15 minutes yesterday. you can come in and buy it but the odds don't favor doing that well because of what i described at the box dust. that's what that's not a lot of sell and some firm is trying to buy it and they'll move the stock up while the futures are going. be careful. >> yeah. >> oil. >> oil is going to be key. the inventory numbers at 1030. >> jackie will have it for us. i want oil to go back to 43.
9:33 am
then you'd have the v bottom. you would absolutely be able to make a case that we took out 42, 43, which we held twice and dipped to the high 30s and then didn't go back down unless the inventories proved to be outsized. and then we'll start the process again. it was a move that had to be retraced. >> we got storage data last night out of api that suggests another monster build. we'll see if it confirms. >> the refineries are running 24/7. i used to do a lot of work, you run those places 24/7, you get fires and problems. we can export con den sate but not oil. those places are running 24 /7. when you get down time, you get a build up. that's why the price of gasoline hasn't come down as much. >> banks had a rough day today.
9:34 am
an upgrade for bbt. is that this based on two weeks from tomorrow. >> bbt was down 4 %. if the fed raises the ten-year, it stays where it is. the market is anticipating a yesterday raise and the yield curve staying the same. all numbers have to be cut when we come back in october. if you want all numbers cut, you can look through it. that's fine. most people can't look through the downturns. >> yesterday i tweeted a statistic, the percentage of components in a bear market, 20% off the highs, in the s&p it's 43%. naz 100. it's 42. the comp, 63. 20% off the highs and people write back and say people don't care about 20 %. they worry about 50%. does that describe the current
9:35 am
move? >> if china had allowed us to do r real exports, i would be far more concerned. i am concerned about brazil. the brazilian real, it's 3 at any time 7. i'm not worried about systemic risk. what you just described is probably midway through a bear narcoti market. i think we're further along than people realize. we're in a bear market. if you want to wait down 50%, why not wait to down 80%. you're not going to get in. if you have an i.r.a. or 401 k, i think you have to put some money. there are people in cash. there are big funds in cash, and they have no choice but to buy on the downturns, and some people it's going to feel like they missed it. what they had last wednesday, thursday, friday, we had a bull
9:36 am
market. within a bear market at the end of last week. and i think there will be some people who say if employment is tepid on friday, i'll miss my chance to get in. this is a rolling bottom bear market and a lot of stocks have bottomed because the bear has been so horrible, and when you finally hear people say i'm going into cash because we're going into bear market, i want you to go to october 4th, 2011, and look at "the wall street journal" where a lot of people said we're beginning the great bear market and the market bottomed that day. all the stories were about we're now beginning the great bear market and it was the exact bottom. you couldn't -- there wasn't an analyst who upgraded that day. the bottom is very murky. it's when many people it's just about to start. >> yes. it's funny how that works out. in terms of the fed, you mentioned the fed. rosen gren is out yesterday talking about canada is in recession. his quote is we're not totally
9:37 am
insulated. now there's a conversation, does canada's recession mean -- he says he does not think the risk is very high. >> mexico is doing really badly. canada clearly linked to oil. the peso is in free fall and has been for months. you can't even look at it. tell me, how is that peso doing, but these are -- federal open mouth committee people just can't restrain themselves. thank you for a federal open mouth committee joke. they can't restrain themselves. they have to talk. we're on the eve of the nfl season. can you imagine if the offensive line coach let the steelers play first. mike, i love him but he's got the wrong formation without the levy and belt. they'd be fired. but yellen, it makes more tremendous indecision and tremendous uncertainty, which is not good. they are creating more uncertainty than china.
9:38 am
i mean, every day they -- now, does everyone have a right to speak? yes, but that doesn't mean they should. it's not a good time for these people to speak or they could speak off the record or not speak at all. it's okay. it's okay to not speak. it's okay. hard for me, admittedly. i'm paid to speak. they're not. >> yes. keep it in the locker room. >> yes. >> dow is up 208. let's get a market flash. >> good morning. the dow may be up but area pharmaceutical shares are tanking. down about 20%. this after headlines say the baxalta is giving up on takeover talks with ariadn the contention is possibly over price. we called both companies but baxalta on the headlines is said to have least given up for the time being with ariad, that's
9:39 am
the reason why the shares are sinking. we'll follow up with details when we get them. >> thank you. if david were here, i'm sure he'd have thoughts on that. >> baxalta, they got a bid. a lot of companies got bids. you had a stat the other day, $180 billion in m&a, the most ever. >> in 2000. >> and the last few have been fought. and i know there are people who are shareholders who are saying we're in a bear market and you're turning down bids? you're issuing stock in are you out of your mind? we want to take the money and run. i've been watching perrigo. it's a great company. there are people who say i don't care that the earnings are good and the p/e is shrinking. people want their bids, and they're not happy, because the market is so bad. without a bid or propup, some of the stocks would go down as much as they're going down that don't have bids. let's get to bob. >> essentially at the highs for
9:40 am
the day. global markets stable. the dollar is firmer. take a look at the s&p futures. the productivity report helped. better than expected. we had a nice pop up around that time. about ten points. that helped out. good news on the economy, generally. sectors, all ten sectors to the up side. tech leadings, financial, health care, energy. a broad swath up. some of them as much as 1%. those global multinational stocks i love to stock about, the honey wells and general electric are better after a horrible week. a lot of them are down 3% even with the up moves today. over to china, modest to the downside. i want to point out something interesting about china. is shenzhen was down 2 %. that trend has been going on for a number of days. take a look for the week and how shanghai and shenzhen had been performing. shenzhen is down almost 10%.
9:41 am
bigger blue chips on the shanghai. and this is not a surprise because the government has made it clear that they're encouraging people to buy blue chip stocks. somebody was asking me yesterday, how much money do you think the government has lost buying the stock market. i don't know. we don't know. we could take a stab at it. there was an estimate at the end of the july that the government had spent $200 billion. if we assume the shanghai is a proxy for the blue chips they had been buying, look at the numbers. the shanghai index or the median price was between 3500 and 40 4,000. today it's at 3160. that's a decline of 16 %. if we assume the government is in line with the figures, the loss is about $32 billion. i don't know if the government considers that a good deal or not and the market has been down notably in the last week and a
9:42 am
half and the government is still buying. no not including any estimates there. no not clear if the government considers that a good investment or not. we were talking a little bit about what was going on with the overall markets. take a look at europe. we're up a little bit, small. the ecb meeting is on thursday. everything is up roughly 1%. and want to note, jim, you were asking earlier what would put in a bottom in the market short term. there's two answers for that. first is to friday, august jobs report. if we get some weird outlier number. i was asking people, what's a weird outlier number, 160,000, way below consensus of 220, that puts a stake in the idea of them raising rates in december. at least we get a number. if we get 280,000, it would increase the chances. we can get a short-term estimate but also a lot of chinese growth metric numbers next week.
9:43 am
we'll get trade, cpi, ppi, retail sales on the 12th, and any kind of stability there might also help stabilize the market or potentially if they go in the other direction, unstabilize it. right now we're off the highs of the day, dow up 180 points. >> let's get to the bond pits today and check in with rick who's had a busy morning of data. >> good morning. we're only going to get busier. volatility keeps us busy. if you want to know what's going on in treasuries, of course you watch the data. many are saying the data doesn't warrant this or that. there's one data point that doesn't warrant zero interest rates. that is gdp since the crisis. that's averaged 2% plus on the handle. anything with a two doesn't warrant zero. the flows in europe seem to be dominating what treasury traders and fixed income traders are
9:44 am
looking at. let's look at a two-day of bund. open it up, we haven't been there on a closing basis. yesterday and mid july, here's what's interesting. look at the difference between ten-year yields minus bundle from june 1st to august 1st this year. see how tight that is? computers create the scale there. basically all in the 150s. let's look at just august 1st to today. basically a one-month chart kmch. it tells us the bundle are leading, and this is the stickiness that's the common dmom nay or the with the entire curves. 30s in particular. let's look at the individual parts of the curve. if you look at june 1st of 2011 for two-year, you can see what's going to happen in the meeting in september is going to which kind of this basis level we're at. we haven't closed above it since january of 2011.
9:45 am
let's go to the other end of the curve. they closed at 275. 18 basis point above where they closed. ten-year note yields are flirting with where they closed at 217 and all the levels are higher or close to where we settled friday despite all the volatility in equities. the dollar index, everybody talks about it. dollar strong affecting multinationals. it's true if you go back to the end of last year but since may it's the middle of the range. and tune in next hour. jean-claude trichet will be my guest on "squawk on the street," and it's going to be interesting to see his take on tomorrow's ecb meeting. back to you. >> we'll talk to you soon. rick santelli in chicago. oil is not going a lot in front of inventories in a little less than an hour. >> good morning. that's right. slightly higher on the day. wait and see reaction in the markets looking to see how equities fair today but also
9:46 am
last night the api data. a very big build. negative for prices and rebounding from there because markets might have digested this information. we'll get the information out in an hour. plats is expecting to see a little bit of a draw down and sometimes we can differ from what the api said, but right now tentative. >> all right. when we come back, a lot more on the rebound today. dow is up 166 off the session highs. tomorrow don't miss the exclusive with jack lew. a lot more "squawk on the street" is back in a moment. [ male announcer ] we know they're out there. you can't always see them. but it's our job to find them.
9:47 am
the answers. the solutions. the innovations. all waiting to help us build something better. something more amazing. a safer, cleaner, brighter future. at boeing, that's what building something better is all about. ♪ at bobehold, these are twolding socan you spot the difference? the wind farm on the right was created using digital models and real world location-based specs that taught it how to follow the wind. so while the ones on the left are waiting, the ones on the right are pulling power out of thin air. pretty impressive, huh? now, two things that are exactly the same have have never been more different. ge software. get connected. get insights. get optimized.
9:48 am
9:49 am
>> take a look at the map. all the components in the green led by home depot as we continue to get decent reads on housing and mortgage apps. another chance for you to nail
9:50 am
the number. tweet us your predictions for august nonfarm nail. tweet us and the lucky winner receives a nice golf shirt autographs by the entire "squawk on the street" gang. including you. >> they love it when the guys wear collars. i wear a t shirt. >> you will have until one minute before to tweet us your prediction. estimate 205. >> i think there could be some manufacturing layoffs. that will make it tougher for the fed to raise other than the fact that people say we have to and one and done. watch out for chinese devaluation at the same time to the rest after the celebration of the end of the war. >> some called adp today solid but it's five out of six months below 200. >> economy is not that strong. housing and autos are strong. that's the strength i see. >> we'll get to stop trading
9:51 am
with jim in a moment. >> the s&p just above a 20-point gain. ♪ no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts
9:52 am
to get you the right gear. office depot officemax. gear up for school. gear up for great. in the us, three in ten college students drop out. but how can you spot who's at risk? the one who lives far from campus? the one who works the night shift? the one with new responsibilities? one thing can't tell you, but the right combination can. universities are using ibm analytics to understand pressures in and out of the classroom- some expect to cut dropout rates by twenty-five percent. ibm analytics is working to make education smarter every day.
9:53 am
9:54 am
trading. >> citi goes out hold to buy textron and lulu, the checks are positive. i'm hearing the same thing from my sources and i have to tell you, lulu is in canadian dollars. there could be a translation issue. when we had this snap back last week on tuesday after the monday decline, at 11:30 the market peaked and then margin calls and then the selling accelerated as we heard the remarks. we want to get through the margin period which is 12:00 to 2:00 before you believe in the rally. 11:30 we peaked on tuesday of last week. those are your points of pain. get past that time and go up and get through 12:00 to 2:00 where the margin clerks say if you don't put in the capital, we're selling. >> it's after the margin calls we start to get a sense of the on close, the balance on close?
9:55 am
>> right. well, they tend to kind of mirror each other. but i like the action like everybody. but the dollar is strong today. and interest rates are up today. that tends to be not my combo. let's take our key from the 11:30 hour and from how much margin selling there is between 12:00 and 2:00 and whether the speculators don't come up with the money and the margin clerks sell everything between 1:00 and 2:00, and you continue to accelerate with the bell. i'm not saying it's going to happen but that's tuesday's pattern. and then the bull market fwbega and then it ended yesterday. tonight the one stock that's going swell h&r block. bill cobb, a man of his word. the next quarter numbers aren't that good because of tax returns. it's a good company. it's an inexpense i companies and they announced a bayback.
9:56 am
>> you are still a patient man. no urgency. >> no. a lot of stocks down a great deal. i like that. travel trust turned net buyer yesterday. >> net buyer for the first time since -- >> putting the cash to work since the, we raised a lot of cash. very fortunate. >> we never got to mcdonald's breakfast all day. >> there was a nice note today. people are starting to talk about mcdonald's, they're breaking with the core, let's say, way. i think he's an agraeszigressiv. he has to win back the franchises. win them back with tech nothing and throughput and cleaner bathrooms. i'm not kid act the latter. that's the first thing you have to do is clean the bathrooms. >> getting the operator group to approve this, there's a big
9:57 am
hurdle. >> you know it better than anyone because you did good work on mcdonald's. back to basics. worry about the labor costs, use technology, make it so we don't have to wait in the drive through lines and clean the bathrooms so our kids can go. >> we'll see you tonight. don't forget a live interview with jean-claude trichet, that's coming up on "squawk on the street." dow is up 180. back in a moment. can a business have a mind?
9:58 am
a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?
9:59 am
10:00 am
good wednesday morning. welcome back to squoik. i'm quintanilla with sara eisen and simon hobbs. david faber is off today. we're getting a turn around. off the session highs. dow is up 168 or so after the third worst day of the year for stocks yesterday. crude will be the crucial thing to watch this hour. inventories coming out in about 30 minutes. in the meantime, santelli with factory orders. >> factory orders 40 tenths of
10:01 am
one percent. half of what we were amendmentinamendmen anticipates. we got basis points back on the backside of last month. it now stands at 2.2. it seems as though we do a lot of positive revisions. if we look at extransportation, that's the new norm. that's the core factory orders down.6. this gives you a clue as to the affects of transportation on the headline number. maybe the most important number to look at. it had a subtle positive revision on that control, that core number. originally released up last month. now stands at .6. even though the equity markets are firm today, rates are firm as well in a very tight range. we'll continue to monitor that. lots of things going on with the fed and the minutes. back to you. >> ten-year note yield, 218. the dow is still in rebound mode. up 190.
10:02 am
we were higher but good for a gain so far of 1.2%. s&p up a percent and the nasdaq up a little over 1%. 51.5 points. a brutal start of the month. worst start for september which is traditionally a weak month, in 13 years. what do investors need to know to prepare for the months ahead, let's welcome a global advisor, saying there's no end of the savings glut. it's good to see you again. >> good morning, sara. >> before we get to the savings glut, since rick broke the data, the u.s. appears to be doing relatively well. in a global economic storm, how confident are you in the resilience of the u.s. economy as we see canada, brazil, possibly japan and australia in recession mode many. >> look, i think the u.s. economy is torn between
10:03 am
conflicting forces. you have a pretty strong domestic economy. the consumer is doing well and is benefitting from a strong labor market. you have a pretty strong labor market. domestic demand is doing well but the global economy is very fragile, and these are the head winds that i think are holding u.s. growth back. overall, we're in an environment where u.s. growth is around 2 .5% in the current quarter. that's a little bit more than average in the first half of the year. but i think the main impact from these global developments is not so much on growth. it is very much on inflation which is below target, and i think this is something that the fed has to factor in. >> as an e con guy, do you look at this recent market reaction, the violent swings as an overreaction to the fundamentals of a slowing china and slowing emerging markets, what's happening in the u.s., or do you think it seems justified? >> well, i think there's clearly
10:04 am
a slow-down underway in the global economy but the vicious swings in markets, particularly the sharp sell off we saw over the last one or two weeks, i think that was overdone. and i was on your program a week ago. what i said then was i think the markets overreacted. that was at the beginning of last week. and i think we're not heading into a global recession. i think this is an overreaction. >> all right. with that in mind, let's talk about your new piece. we have an oil glut and now you say we have a savings glut. what is the up shot of that? what does that mean for the u.s. economy going forward and for the markets? >> well, first of all, this savings glut term is already 10 years old. ben bernanke came up with it to explain why interest rates are so low long term. if anything, i think that savings glut has increased. it's bigger now. i think there are three reasons for this. one is demographics.
10:05 am
we all live longer. but we don't necessarily retire later. we have a long retirement period ahead of us and people want to save for that. the second reason is emerging markets that are tightening the belt. growth is slowing there. this means they're exports more savings. capital is fleeing places like china and other emerging markets, and that increases the savings glut that is going into developed market bonds and developed market equities, into real estate. and this is also holding interest rates low. what it means is if people want to save more and nobody wants to invest -- >> you know -- >> that means agate demand is weak. >> you really confused me with this analysis. surely the overriding theme is central banks pumping cheap liquiditity economy. force feeding money into the kmo community.
10:06 am
the cutting edge seems to be coming from deutsche bank which is talking about quantitative tight pie tightening. the huge amount of foreign exchange reserves that china and everybody has accumulated, all the oil exporters accumulated is beginning top out and slowly you'll see people not buying frsh ris like they did in the past. that's why you see the ten-year yield rising at the moment, in china. what do you have to say about that? >> good point. nice try, simon, but i actually think that this is partial analysis. yes, it's true that central banks like the chinese central banks are reducing their reserves. they've been selling treasuries. but at the same time you have an even bigger outflow of private sector capital from emerging markets. the chinese that is rights are trying to stem against that, but the overwhelming forces that investors are moving their money
10:07 am
out of emerging markets, emerging markets current accounts surpluses are rising, and this actually increases rather than reduces the savings glut. so i think the term quantitative tightening is not the right term in this environment. what is actually happening is there is more money coming out of emerging markets into developed markets but it's going into all kinds of differents a the sets, not only u.s. treasuries. >> i want to change the subject for a moment. the euro is back to 1.13. why is it such a safe haven, a currency that four months ago we weren't even sure was going to survive? >> well, we were used to the idea that the yen was the safe saven currency. when you had risk of moves in markets, the yen did well. what we're seeing today is the euro is the new yen. the euro is a risk of currency and benefits. that's because europe is running
10:08 am
a fairly large current account surplus. so the natural force is for a stronger euro. that force tends to dominate when there is a risk of move, but over time, i think as the fed starts to tighten policy later this year, as the ecb continues to buy bands, to do quantitative easing, i still think that eventually the euro will weaken. >> all right. thank you very much. interesting market dynamics we're seeing. the dow now over 200 points. thanks for joining us. >> stocks back in the green after yesterday's selloff and the positive data coming through as well this morning. joining us now for more is jason pride. jason, what are you doing in this environment? >> well, you know, we've been reviewing this as a correction, mainly. our thought process was that we went back and looked at corrections historically and dising a gaited the data into
10:09 am
two piles. a correction associated with the recession and one that wasn't. obvious sort of scenario. after a 10% correction, environments where you don't end up in a global recession tend to be better returning toward the previous highs been five months and even surpassing them. ones associated with the recession, tend to find newer lows within the next five months. so determining which way you go on those two outcomes in terms of path is very important. our indicators when we looked at the leading economic indicators still seem to point to the majority of developed international markets and u.s. markets pushing an expansion. what we're doing is proceeding as planned at this point in time, gradually allocating to equities over time, providing that the opportunities continue to come around like they did yesterday. and last monday. and just proceeding as normal but keeping a close eye on the data, because there is this risk in the system that what's going
10:10 am
on in china, manufacturers and shifts its way over into the international and u.s. markets. we're keeping a fine-tuned look on that within our leading economic indicators. >> i am fascinated. i am fascinated to listen to what people are saying on cnbc at the moment, and this reassurance that so many are bi bringing to the table biased on what happened in history. a lot of what you say is true but dressing it up as scientific evidence as to why people should buy stocks. i want to read you a quote from jim reed. i think for many people it sums up where we are and why we have difficulties from lessons from the past. >> never before have so many of the most important countries in the world printed so much money and left base rates where they are and tried to start a slow process of reversing this extraordinary policy. there is no road map for this journey.
10:11 am
that's what many of us kind of adhere to. it rings true for many of us. why are we wrong in that? we can we draw lessons from the past? >> you know, i don't think that thought process is necessarily wrong. every environment that we end up in tends to be a little bit different from the past environments. that doesn't mean you can't use historical analysis and a look back to frame the outcome to some degree or another. we recognize this is an environment where central banks have piled in the capital, particularly the developed markets interest rates. that provides an unusual situation for central banks to be able to respond to the scenarios. that doesn't mean that you shouldn't look through the data, figure out your base case scenario and assess it based on all available information you have. we will look at the picture today. equities are not that extremely overvalued. they're sitting at about fair valuation range in the u.s. a little bit discounted
10:12 am
internationally developed markets and em is starting to look somewhat cheap on that note. and the global economy seems to be in that slow-growth environment that really is matched to this low interest rate environment. >> okay. before we let you go, what is the screaming buy here? if you believe that everything is going to revert to the norm, it's got to be energy, hasn't it? >> energy is starting to interest us, but we think you really have to be playing with very sustainable investments there. if oil prices stay low for two-year period, there's a lot of questionable companies out there that are overlevered. there's a reason the high yield credit markets are showing what they're showing in the energy space. that doesn't mean there's not an interesting opportunity in sustainable players. i think the announcement from schlumberger was interesting along these things. they're a cash flow balance sheet company that's strong financially.
10:13 am
that's what the strong companies do in this environment. that's how they grow through the period and that's the reason they end up being the sustainable players. >> thank you for your time. jason pride. >> thanks for having me. >> twitter expanding the ad business a day before the highly anticipated board meeting. will that help turn around the stock which is up 2.5% today. and how china's slow down is weighing on the startup world. and later a live interview with jean-claude trichet ahead of the ecb presser tomorrow. dow is up 179. "squawk on the street" will be right back. ♪ every auto insurance policy has a number. but not every insurance company understands the life behind it.
10:14 am
those who have served our nation. have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life.
10:15 am
i'm a senior field technician for pg&e here in san jose. pg&e is using new technology to improve our system, replacing pipelines throughout the city of san jose, to provide safe and reliable services. raising a family here in the city of san jose has been a wonderful experience. my oldest son now works for pg&e. when i do get a chance, an opportunity to work with him, it's always a pleasure. i love my job and i care about the work i do. i know how hard our crews work for our customers. i want them to know that they do have a safe and reliable system.
10:16 am
together, we're building a better california. >> swi >> twitter shares have been trading slightly higher at 27. julia joins us with the latest. >> they are under pressure to grow users and revenue, announcing it's expanding the self-service ad program to the rest of the world. now small and medium size businesses can buy twitter ads in 15 countries. they have 100,000 active advertisers. that's up from the count at the analyst day last november. >> we do have a lot of work we've done to be able to target
10:17 am
specific prospects that we think are good candidates. it's an exciting accept forward for the business to be able to tap into that market. >> but this move for the global ad moves. some say it's too late as they face growing competition from facebook. and twitter faces lack of user growth. it says it's working to address, or the product overhaul set for this fall, and the search for the ceo. sources tell me there's a lot of focus on whether jack dorsey can take the helm, considering he's also running square. i also hear we're unlikely to get an announcement about the ceo search this week. every week that passes without a ceo brings more concerns about
10:18 am
the investor's concern about the company getting the user number growing again. >> thank you. we're getting breaking news on congressional support for the iran deal. we have that in d.c. >> reporter: a major moment for the obama administration as a democrat of maryland has come out in support of the iran deal. that's important in the united states senate because that makes her the 34th senator that the democrats needed to uphold what's expected to be an upcoming veto by president obama. republicans are going to take up a measure of disapproval of the iran deal when they come back to congress next week. the president would be expected to veto and he needs 34 senators to support him. barbara ma cull ski now becoming that 34th senator. it means the iran deal is likely to go through. >> that's one to watch.
10:19 am
deepening worries over china's slow down pushing asian markets lower again. just what impact will that have on market volatility on chinese startups and what's the investor outlook on the ground. joining us, managing partner with ggv capital. great to have you back. good morning. >> good morning. >> you seem to be drawing a line between the shares over there that you call old economy and new economy. can you explain what that is and why it matters? >> sure. most of the stocks that we see on the a shares are commodity stocks. retail, distribution, that kind of companies. almost all of them are not interline labeled. a lot of them are being disrupted by the mobile internet startups that we're investing, as well as the big boys are in
10:20 am
the u.s. and alibaba and others that posted good growth in q 2 this year. >> does that suggest a lot more pain to come for the old economy names? >> for some of them, yes. if you look at the break down of the old economy economies, a lot of them are in what we call the rust belt in the north part of china. those tend fb more stable enterprises that are not as equipped to deal with the new economy. what is good overall, taking a bigger chunk of the gdp growth. >> how important is u.s. institutional capital for the chinese startups. i would imagine there's concern about putting money to work in some of these companies. is that a big deal? is that going to hurt companys? >> that's an interesting issue. for the investors, the worry is not about the company themselves, it's about china as a whole. is there something else going on
10:21 am
that people outside are not aware of. for us, who are institutional investors, we are very bullish in china. we've been investing in china for over 15 years, over three cycles. we are more experienced dealing with the ups and downs and think this is the best time to invest in companies in china. >> we had a conversation with jim cramer this morning. he thinks they're underestimating in concentrating their political power. in his words, they fight revolution every day. do you think that's a fair statement? >> that's a great point. a lot of people who are following china are doing it for the first time. they haven't seen chinese government dealing with these kinds of issues on this kind of scale over the last 30 years.
10:22 am
recall the e-mail from tim to cramer about how apple sales are going strong in china. we're seeing that in other companies as well. i'm on the board of another company, known as the little red book. they're doing import e-commerce. taking things from europe and japan and the u.s. and taking products to consumers in china. they're doing well. people are focusing on other companies that are hurting and slowing down because they're not equipped to deal with the mobile internet new world. >> as far as people and where physically technology innovates within the asian area. is everybody going to stay in china, do you think, and work on the technology starts as they've done in the past or will guys like you find it increasingly, a greater ability to take them to the united states or for them to want to be in the united states and actually innovate in the states for china? >> i think you'll see option
10:23 am
three which is company will go global. they will have presence in china as well as presence here in the bay area or new york or in the u.s., or around the world nmpl you start to see more and more chinese companies have the confidence to take their companies to e-commerce and gaming and utility apps to go global. that's happening for alibaba, for cheetah mobile, and others as well. that is going to be the ongoing trend. >> let's assume the chinese government becomes stricter in the way that it deals with the citizens through the process, and many people say they've embarked on that, accusing people of being nonparty. would they be happy for large proportions of tech world to be based offshore and writing code offshore? >> i don't see a company being based offshore. they will be based in offshore,
10:24 am
but they're increased global presence, and it's a good thing in the sense that the sale power which influence chinese business proctors and values. from that standpoint, i think government will be on the encouraging side of seeing companies from china going global and contributing worldwide economy growth as well. >> thank you so much for your time. appreciate it very much. >> sure thing. happy to be here. >> when we come back with the wild swings in oil prices, today's emergency data will be that much more important. that's happening in less than ten minutes. wti crude oil trading $45.18. down half a percent. we'll be right back. no student's ever photographed mean ms. colegrove. but your dell 2-in-1 laptop gives you the spunk
10:25 am
for an unsanctioned selfie. that's that new gear feeling. all laptops on sale, save $230 on this dell 2-in-1. office depot officemax. gear up for school. gear up for great.
10:26 am
10:27 am
straight ahead on cnbc, breaking news on oil stockpiles. the numbers you need to know and the pricing that results in just a few minutes. and a live interview with the head of european central bank,
10:28 am
jean-claude trichet. when a moment spontaneously turns romantic, why pause to take a pill? and why stop what you're doing to find a bathroom? cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex.
10:29 am
do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use. insurance coverage has expanded nationally and you may now be covered. contact your health plan for the latest information.
10:30 am
welcome back to "squawk on the street". the department of energy out with its weekly crowd inventory report. inventories in the u.s. were up 4.5 billion barrels last night. it was drastic sending prices down in the afternoon session.
10:31 am
got a rebound this afternoon but crude prices turning negative when we got the news that president obama has the news he needs to veto opposition to a iranian deal. crude oil prices sllower at thi point. we are moving up in terms of the inventories to bring the prices to a stabilization. you with the business news updates. >> here's your news update at this hour. the man hunt for three suspects in the fatal shooting of a veteran police officer is resuming in fox lake, illinois. the officer was killinged after responding to a suspicious activity call. hundreds of passengers were stranded. migrants were blocking the tracks leading to the tunnel under the english channel and were attempting to climb aboard. two of the trains were returned to the original departure
10:32 am
stations. students in iran setting american, british and israeli flags on fire. a day after the trailer for concussion debuted online, the football film starring will smith is sparking controversy. the film's director refuted reports of altering. >> cutting the games in half. only up 95 points. were up 200 earlier. let's go to rick with a special edition of the santelli exchange this morning. >> thank you, sara. i'd like to welcome a special guest, former president of the european central bank, jean-claude trichet. there's a bit of a delay. i'm going to go into my first
10:33 am
question. it's about china. everybody i talk to seems to want to dismiss the notion that we're linked with china, whether for good or bad, and the growth they exhibited to the global economy the last several years is going to come in deficient this year. first of all, i don't know who's going to make up the growth. that's the first part of my question. is second is, there's a lot of capital leaving china. i can't imagine that if our fed normalizes, that's going to help that situation. and lastly, china has one main defense now, and it goes in the face of all central banking activities. they're going to want to export more and they're going to lower their prices so central banking activity is going toing aggrava that. could you speak to those issues regarding china? >> well, first of all, i would say that we knew for a long period of time, of course, that the chinese growth would slow
10:34 am
down. that it was necessary in a way, because the rate of growth was extremely high, because there was a level of investment and a level of preparation for future investment that was very, very high, and so the normalization of the chinese economy would go through some kind of slowing down. now, we are into slowing down. i don't think that all what we know now is changing -- i would say -- on everybobservers had i. that growth could be a little bit lower than 7% this year and remain between 6 or 6.5% next year. i will not dramatize what is clear is that any news, any event, any, i would say, new
10:35 am
facts, more or less, triggering a level of volatility, which is enormous. we have to keep calm in these circumstances in my opinion. >> well, you know, i understand keeping calm, but i think that central bankers, central planners, more from the chinese perspective, they want to differentiate between the economy and the markets. but in the end, the markets are going to control capital. and it's going to affect the economy. next question, ecb meets tomorrow, sir. the bund has been normalizing all by itself. bund yields went down close to zero. treasuries are right with them. bundle a bunds are up to 80 bay sisis po. how damaging is that going to be to control and how much will mar mar mar mar mario draug gi think about the
10:36 am
normalization of rates? >> he expressed himself on this particular point, and, again, i am back to what i said. the present global financial system is hectic and proned to high level of volatility. high frequently volatility. fortuna fortunately many would say lower frequency volatility. it is prone to volatility. in this universe, the ecb as well as is the federal reserve are anchors of stability. they must not, in my opinion, depart from the role of anchoring as much as possible, the financial economy as well as the real economy, and it is what i expect they will continue to do. they did that very well in the past, obviously, and then we continue too to do it in the future. >> in our final couple of minutes, you said the large
10:37 am
developed economies, the eurozone and the u.s. are the anchors of stability. i see just anchors. the growth in the u.s. is half of what it should be. the bright spot in the economy in europe is i see is spain, but they're a small portion. china represented about 40% of the global growth with regard to gdp last year and it's going to be significantly less. i don't see an anchor. i see no plan b. we can't print youth, agrowth. where's the growth going to come from and how is the ecb going to remain in control of a market where the chinese are controlling trade? >> well, again, we know that the global trend are and that has been underlined by the imf quite well. the advanced economy are perhaps doing a little bit better than what we thought at the beginning of this year, and the emerging
10:38 am
economy, perhaps, doing a little less good than the beginning of this year. all taken into account. it doesn't change much, global growth. global growth, we'll probably be at the level of 3 .3%, and we'll see exactly what the new projections of the imf and of the global institutions. but i would not, again, dramatize the situation from that standpoint. we had the second quarter. this is also to be priced in at the global level. in europe, to my knowledge, growth is confirmed. of course, it is not easy. it is difficult in some countries, but as you can see, again, the euro here approved a level of resilience that has been more or less underestimated in advance by global observers, since greece is there, and greece will implement a new
10:39 am
program. all taken into account, it seems to me the u.s. is going quite well. obviously, europe is now doing a little bit better than was foreseen at the beginning of the year, and there is some kind of slowing down. not everywhere in the emerging world. in china, certainly, but, again, this was more as foreseen. india looks good. the last pmi i have in mind for india, not that bad. again, i would say a world which is difficult and remains hectic, a world where you have a lot of risks that could materialize here and there, and a world where nevertheless, we have growth and where central banks have to be anchors of stability. >> you know, there's a lot of trading going on last-minute in baseball in the united states as we get close to the end of the season. i think trading the growth of india and foregoing the growth
10:40 am
of china is not a fair trade, but i understand the trend. my last area is the federal reserve. first, do you believe we're going to see janet yellen and company normalize rates, meaning raise them, and i would like to know, if they don't raise rates, and we see a 1200 point rally in the dow, will we finally see central bankers admit with the stock market and the levels of investment and the financial asset appreciation or inflation is all hooked into strategy of what our central bank will do? >> well, central banks will be judged in the long run. they have to be anchor of stability. as i say, i think the fed did that very well, and i'm sure they will continue to do that. when they take their decision, every member of the open market committee as well as the governing counsel in europe will
10:41 am
take the decision, taking all into account, and all the information they have, knowing that, again, they have medium term goals. i don't expect that they will take their decision as a function of the good advices they receive permanently from said, i would say -- advisors, pointed advisors that would recommend to go in this direction or that direction. i think they will do that with all the calm and all the medium term perspective they have in mind, and i am confident. >> all right. we're out of time, but give me a yes or no answer if you want to. will they raise rates in september, the federal reserve? >> again, i have full confidence
10:42 am
in the federal reserve open market committee. and the decision they will take, whatever it is, will be according to my knowledge, fully in line with what they are aiming at, which is to be anchor of stability and to be delivering what they have to deliver, in particular, price stability without deflation, without inflation, in the medium run. >> well, thank you, mr. jean-claude trichet. you have a lot more confidence in the outcome. seven years after a crisis than many traders i deal with on a daily basis. you're a gentleman and a scholar. back to sara. >> nice try with the yes or no answer. he is a central banker. wti crude prices under pressure.
10:43 am
$44.55. they're down. we did just get word that crude inventories rose by 4.7 million barrels last week. that was the biggest rise since april. we'll talk about where the oil prices are headed next. tomorrow, an exclusive with jack lew in the middle of this market turmoil. "squawk on the street" will be right back. [ male announcer ] we know they're out there.
10:44 am
you can't always see them. but it's our job to find them. the answers. the solutions. the innovations. all waiting to help us build something better. something more amazing. a safer, cleaner, brighter future. at boeing, that's what building something better is all about. ♪
10:45 am
as stocks sell off, some are doing way worse than others. we're talking two names down 70% in a year. more "squawk on the street" coming up next.
10:46 am
your loving touch stimulates his senses and nurtures his mind. the johnson's scent, lather, and bubbles help enhance the experience. so why just clean your baby, when you can give him so much more? crude oil is continuing the wild ride. wti falling on the inventory data in the last 15 minutes and news that president obama has secured enough support in the senate to secure his deal with iran. let's bring in phil steeble.
10:47 am
do you have some clarity? >> i think oil prices are going to continue to be under pressure. the expectations was to build up 700 million barrels. more importantly, gasoline expectations were down 2 million. this is going to be a total inventory at 455 million barrels. it's 95 million barrels above the five-year seasonal average. in gasoline it's more in line with the expectations. traders needed a big draw down to bring the numbers in line with the averages. we're going to face some head winds going forward. we have the chinese economy and seasonal dmanlemand. it will start to decline. the volatility is scaring a lot of people away. look at the 44. that's your key level support. we barely hungen to it.
10:48 am
>> you know, phil, i could forgive you for this program and the network being confused as to where we're going with oil but yesterday, we had someone on the program suggesting that the pain was so deep domestically within saudi that they might capitulate and do a deal within opec to cut supplies provided they could do a bilateral deal with the russians. are you not buying that? >> when it starts to come down to the lower levels, near $40, if you're basing your country's budget on oil prices, and it's not just the saudis and opec. it's other south american countries as well, they're going to collaborate and try to boost prices up. i think that was part of the job owning we saw yesterday. but that along with some short covering, but it's failed. and it's out of steam. i think the u.s. is extremely efficient on the production and oil. i think they're going to continue to get better. you're going to see oil prices. my opinion, work their way lower, and come back closing in
10:49 am
on the $40 level. i think that $50 is too high right now. at $50 you see the rig counts going back up and production levels will go back up. i think lower is the way to go? >> on the volatility, we saw a steady decline down for the price of oil, and all of the sudden in the last four trading days, 6% plus moves up and down. what are these not normal volatile price movements about and is this going to stay with us? >> i think it's going to stay with us for a little bit as long as we're seeing every morning you wake up and look at the dow jones, it's moved not just 100 points but 200 and 300 points. those triple digits warrant it. oil prices, the problem was you had money managers and everyone on the short train riding it down, it's a slow and steady grind down.
10:50 am
now you have money managers that jumped out of the market. you have a lot of people making more emotional trading decisions rather than technical-based decisions. i think that's where you get the wider ranges. broadly in the market, what happens when the shorts are covered. we'll leave it there for now. thank you very much for your time for talking oil. up next, those funds that so many investors use for their retirement, the target-dated funds that your employer dumps you into in a 401(k) could be missing the mark. we'll explain why next.
10:51 am
♪ every auto insurance policy has a number. but not every insurance company understands the life behind it. those who have served our nation. have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life.
10:52 am
10:53 am
. question a lot of folks have lately, have the recent swings in the market knocked your retirement fund off track? sharon epperson has more. sharon? >> we're looking at target date funds that are extremely popular, 83% of employers now offer a target date fund and assets in these funds reached $700 billion last year according to morning star. much of the fund's performance is determined by its glide path, that's the formula it uses to determine its mix of assets over time. and all target date funds get more conservative over time,
10:54 am
shifting out of stocks and buying more bonds as they approach the target date. but some financial advisers caution these funds are very limited. >> a target date only takes one factor into consideration, the allegation, and that's your time horizon. what i find is more often than not, investors' individual proclivity to take risk, their willingness to take risk is the bigger factor at play. >> these popular funds have had a mixed record during the market's wild swings. take a look at two target date funds for those retiring this year. these two target date funds fared better than those that are more focused than on stocks, like the fidelity freedom 2015 fund. but over the past five years, the fidelity freedom fund and other target date funds with larger stock allegations have outperformed their peers overall during the bull market. still many financial advisers agree these funds can be a great
10:55 am
tool for retirement savers who have neither the expertise nor the inclination to actively manage their own retirement accounts. they're not perfect but they're better than nothing. and for more, i have to tell you, there's a great story on cnbc.com by tom anderson that really breaks down how these funds work and how they've fared through this market. >> if you have a target date fund for 2015 and you showed it was down almost 5% on a three-month basis, something's gone horribly long for people intending to retire and that's what they face over this period. that's not right. >> that's exactly right. that's why for some people who are close to retirement, it may not be the best place to have all of your retirement assets. i think a lot of financial advisers would agree it's a good way to set it and forget it for those just starting to fund retirement savings but not something necessarily that's great for all of your retirement stavings as you approach that retirement year.
10:56 am
>> to the point you may take control of it yourself. nice to see you, sharon. thank you. let's take a look at what's coming up on "squawk alley." >> more inside this market rally which has just been losing steam on the back of crude inventories. and nick builten will join us to talk about his new piece in "vanity fair" where he said we should be worried about an everything bubble. and apple is valued at about one-tenth of where it should be. that's next on "squawk alley." rheumatoid arthritis like me... and you're talking to a rheumatologist
10:57 am
about a biologic, this is humira. this is humira helping to relieve my pain and protect my joints from further damage. this is humira helping me reach for more. doctors have been prescribing humira for more than 10 years. humira works for many adults. it targets and helps to block a specific source of inflammation that contrubutes to ra symptoms. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal infections and cancers, including lymphoma, have happened, as have blood, liver and nervous system problems, serious allergic reactions, and new or worsening heart failure. before treatment, get tested for tb. tell your doctor if you've been to areas where certain fungal infections are common, and if you've had tb, hepatitis b, are prone to infections, or have flu-like symptoms or sores. don't start humira if you have an infection. talk to your doctor and visit humira.com this is humira at work. no student's ever been the king of the campus on day one.
10:58 am
but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.
10:59 am
two days to go until the big jobs report. that means another opportunity for you to nail the number. don't forget to tweet us your predictions for the august nonfarm payrolls report. the handle is @squawkstreet and use #nailthenumber. you could win this shirt signed by all the gang here. companies added 190,000 jobs in the month of august. a little bit bit of what
11:00 am
economists were looking for. they were looking for a number around 220,000. >> let's send it over to "squawk alley." thanks, guys. 8:00 a.m. at apple headquarters in cupertino, california. 11:00 a.m. on wall street and "squawk alley" is live. ♪ welcome to "squawk alley." joining us today, john steinberg, ceo of "the daily mail" north america. jon fortt is back tomorrow and kayla tausche is here. the dow was

53 Views

info Stream Only

Uploaded by TV Archive on