tv Squawk on the Street CNBC September 8, 2015 9:00am-11:01am EDT
sumner goes to heaven, what's the trust going to do. >> what's the answer? >> it ain't going lower. >> thank you. happy anniversary. >> congratulations. >> a lot of fun. >> as warren said to you guys, another 20. >> it's the first show of the rest of our life. >> right now it's time for "squawk on the street." >> good tuesday morning. hope you had a great labor day weekend. i'm carl quintanilla with sara eisen and david faber. premarket is up big after the second worst week of the year for u.s. stocks. china trade data was this line. europe is looking at nice gains this morning.
ten-year-year-o yields around 2. we sit down with warren buffett at 11:30 this morning. dow futures up making up for almost all of friday's losses after the jobs number. you heard on "squawk on the street" them calling the fed irresponsible but said the u.s. is not poised for decline. >> the i think the u.s. market is fairly valued, and i think the markets in europe, are several years behind the united states. europe is a bit more interesting. we see japan with qe infinity being interesting. that's a relative waiting. would we expect europe to perform the u.s. and japan outperform? probably. >> had some other choice words for mary joe white on the up tick rule. saying all the volatility we're
seeing with the swings is not the way it's supposed to work, and says that rule should come back. >> he's been critical for some time, also of lie frequency trading through the years and various market mechanisms. he has been a vocal critic of the infrastructure of the markets or the lack thereof, i guess, in some ways, and he's also typically bullish. and his fund has done extraordinarily well in the up periods, not as well when the market can bring some volatility, particularly down swings. but he's always been a strong stock picker. and a lot of people sticking to that. i think in terms of just saying yes, china is slowing but understanding exactly why that should have a significant impact to your particularly in a consumer-led economy is not something they fully understand. >> we're still watching china. that's where the swings are coming from and starting another volatile session where china
started with a 2% loss and closed with a 3% gain. the export numbers came out of china a little less worse. down a little more than 5.5%. we're still watching the chinese data and market swing. constructive talk over the weekend from g 20 in turkey. especially from the china central bank governor who said there was no volatility left. unclear if they can control it. >> the quote from the pboc boss, correction stock market is almost done. okay, then. >> if you believe him, i guess. for more on how it impacts these markets in the u.s., let's bring in a chief economist and strategist. david, you've been on the network saying the bull market is still here. do you believe that? do you have confidence in that call this morning? >> well, i had confidence in it last week, and just as much if not more confidence in it today.
i think that we became almost seemingly immune to the reality that in every bull market, you typically get a correction every 18 months or so. this time or so it was about a 45-month stretch, so corrections normally correct the excess overvaluation on the marketplace. we went into this with a 17, 18 multiple. we're now slightly below 15. a lot of the excess in the valuations have been taken out. a bear market full stop requires an economic recession in the united states. so if you think we're going into a bear market, at least have the right macro call that the u.s. economy is going to tip over. there's nothing telling me that's or not horizon. >> i think j.pmorgan is underweighting u.s. equities. if you look at m&a, they argue those are signals of a cycle
top. do you have a problem with that? >> the old saying is that in the land of blind, the one oh-eyed man is king. where do you put your money? when the fed raises rates close to zero and the ten-year note gives you a 2% yield. you're hoping for a capital g e gain. the bottom line is that you could have expected returns and equities four, five, six percent and you're going to be the top performing asset class. if you're talking about under weighting in a global sense. emerging markets have been tarred and feathered. it's telling you as bad as the news is, it's probably being priced in if not more than priced into that part of the world. you talked before about europe. you have to like where european equities are trading against where their bond market trades. so there are probably other parts of the world that look
more attractive. to call for an outright bear market, no. i think this is a classic corrective phase. my sense is it's going to be over very soon if it's not over already and we're already finding significant opportunities in the domestic side of the u.s. marketplace that weren't around a few months ago. significant valuations have opened up with a lot of the domestic consumer cyclical sectors that had the baby thrown out with the bath water with the corrective malaise. >> after all the global volatility, decreased chances the fed moves to raise interest rates next week. according to fed futures, market pricing in a 30% chance that a rate hike happens. what if it does? there are so many economists on this network. i don't think you're one of them expecting a lift off next week. if that's not priced on the market, what's going to be the reaction if it happens? >> well, look, from a near-term
perspective, i think at this stage it would be a surprise, and, actually, more than half the economists surveyed think the fed will be on hold. but a lot of these folks that are calling for the fed to stand pat next week have shifted their tightening call to the december meeting. so it's a -- maybe we'll get a get out of jail card on this in the near term. but once things stabilize, the economy is strong enough to withstand increases. they keep saying they're probably going to go a couple of times and that's it. as i've been saying all along, if you're an investor, you're concerned about not the first rate of interest increase, it's the last one. the last one triggers the economic recession that causes both earnings and the multiple to contract together. that's when you get the bear
narcot market. it's not going to be the end of the world and probably just increase the valuations that much more and make it that much more alluring for a rally in the year-end. i wouldn't fret about it. if they don't go next week, they'll go in the next several months. >> in your comments, they fly in the face of like what glen core is saying today. cutting the dividend, asset sales, raising equity. ceo says we have pitched our balance sheet for armageddon. how can his view and yours co-exist? >> if i'm not mistaken, they're in the business mostly of copper production, right? >> yes. >> they're paring back on some of that. >> we know the commodity sector has been, actually, in a bear market, and i'm talking about this as a canadian, for four years, and if anything, the u.s. commodity, which is a sophisticated large cap service
sector economy, is accelerating right now. you can have that divide. actually, that sort of development, debt reduction, asset sales, dividend cuts, if you're going to turn bullish on the resort sector, that's the blood on the street capitulation news you want to start hearing. when everything is getting thrown out, the blood on the street is a tipping point in the direction for the blood on the street. >> not yet, $45.25 crude oil under pressure this morning. thank you for joining us. >> the nfl today announcing a new digital service giving football fans more options outside of traditional television. julia joins us this morning with some details. >> reporter: that's right. the nfl is launching a new subscription as part of new offerings. for $99 a season, an nfl game pass app will allow subscribers
to watch on their tvs, games as soon as they're over. you can also listen to regular season games live. and there's additional content not on linear tv. this comes on the heels of them announcing live in season games will be free for all verizon customers. and this fall the nfl will offer a game exclusively on yahoo, it streaming also for free two more games than last year. the nfl will extend the partnership from snap chat that it did during the nfl draft. they say they are hedging against the future. these options don't replace traditional tv but if you're a cord cutter willing to comp mie -- compromise, you have more options. >> we talked about the nfl going, eventually, some day, perhaps, over the top.
we have colbert tonight making the argument that traditional tv is where most people are going to spend their time. >> this debate will rage on and has in the media sector for some time since we got the disney earnings and we've watched so many of the multiples in this group come down as a result of all proliferation of streaming options out there and the belief it will hammer away at the traditional bundle. the verizon announcement this morning is interesting. >> disney is making a movie digital announcement. >> verizon is for mobile devices only, and it's not series but actual shows of series and various random programming. it'll be interesting to see what they put together. >> i don't know, i guess, i'll ask the sports fan. don't you want to watch them live? i mean, this doesn't, you can't watch them live. aren't you going to have to pay for cable to watch them live or
do you want to see it after the fact? >> the live element is a big sticking point. >> you don't want to know the score. unless you're a huge fan and you know they won. then you want to watch it over and over. >> just to cherish it. >> but typically you like it live. that's why it's more expensive than virtually anything else. >> before we go to break, we want to share good news about sara eisen who got engaged over the week. congratulations to sara. matt lavine, the lucky man. >> fainance tv. >> someone said it was like romeo and jewel yet. >> that's a good one. >> when we come back, we'll dig into what's going on with art ashen. and warren buffett at 11:30.
we'll talk about his expectations for the fed and a lot more. only one dow component was in the green for all of last week. that was intel. some might try to rejoin it today. here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this.
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>> samsung looking to cut 10% of its work force. targeting workers in areas like public relations and finance. and meanwhile in phone news, tomorrow the big apple event. they'll unveil a series of products. expectations are relatively low. it probably won't be enough, whatever that means. >> we'll talk about that later, with a guy. apple is the back story here. samsung is no longer the back seller in china. apple is number one in the u.s. with 44% market share. samsung went down from 29%. >> can't understand the importance of samsung to the south korean economy. it's been reeling for some time in terms of at least the position it once had in smart phones which has been slowly eroded in a number of key markets.
>> looks like they have about 100,000 jobs total. at this would be about 10,000 jobs. largely concentrated, according to reports in korea. blackberry, they still have a 1.3% market share in that country for smart phones. >> yeah. >> i think i know most of those guys. they're those investment bankser hanging on. >> and apparently don't watch video or anything like that. >> apparently not. when we come back, art cashin is here with the count down to the opening bell. how much volatility is he expecting in this holiday-shortened trading week? let's show you the futures ahead of the bell. a 300 point rally for the dow at the open. s&p futures pointing to a higher start by 35 points. more "squawk on the street" straight ahead.
>> just about ten minutes before the opening bell. let's get to art cashin. he joins us here at post nine. good morning to you. you say the bulls may be shopping for a new general today? >> they may have him in hand. getting a very nice relief rally here playing catchup. a decent day in europe yesterday. and a rather terrific day today, so at the opening, we're going to have a significant move to the up side. the question is can they hold on. and i also wrote in my comments
that probably traders would shift to the crude pits to look for direction. right now we're getting a mixed signal. wti is down but brent is up. of the two i would lean to the wti as a possible signal giver. >> shanghai gets a gain of high percentage. >> lowest volume in six months. it came in the final hour of trading. it suspiciously looked like the government was coming in to do it. the markets are celebratory about it. up is better than down. >> the ones hardest hit, financials. do you need the see the banks rally to see a full-fledged comeback for the u.s. stock market given that they were some of the shining stars ahead of this correction. >> they were the shining stars ahead of the correction. and you'd love to see it broaden out, but a lot of it has to do with the direction of fed policy. can we steepen the yield curve and begin to make money off that, and there is still enough
confusion out there, and now in the latest poll of economists, majority believe they are not going to move in september. >> what do you make of the chinese foreign exchange reserves falling by $94 billion in august? i guess not a surprise in some ways? >> the size was a surprise, at least to me. money began to leave the country as soon as it looked like they were going to change the value of the currency, and it's not easy to move your money out of china, but people found a way to move nearly $100 million, and pretty substantial. >> isn't the signal there from that that it's going to be increasingly expensive to keep interte int intervening no matter the market and it's not very sustainable? >> it looks like they're going to have to move to a free market, but we have a little bit of a leadership tussle going on during this reform movement that they're trying to get through. we'll know a little bit more about that, i think, sara, when
the premier comes here to the united states. there will be some important -- >> that's an important visit, particularly making stops in seattle, will be interesting to see who he chooses to visit with there, and we should point out, china's peaked in 2014. and now at 3.6. high class problem. >> and then you have the fed. you mentioned the fed. expectations 30%. you have williams in the journal today with hills and rats saying head winds are emerging. are you confident in your call of no hike this year? >> if they're sensible, i'm confident. i don't think they'll be able to pull it off. they have some very powerful people asking them not to, the imf and world bank and former secretary treasury, and leading market managers. it's a bit of an up wind, and to say that we're media drifven bu
not market driven is not quite true. i don't think in this particular time of volatility, they want to run that risk. >> i wonder if we've seen sentiment reach a low. enough to have the buyers come back and win. cramer brought in "the wall street journal" cover from 2011 at the peak of opportunity before we saw central bank operation. do you think we're there yet in terms of the peak negativity? >> you're getting close to it. the amount of bullish market letters is the lowest it's been since march of 2009, which was a very significant low for the market. i think we're just short of it, though. we have a little bit more to go. >> more china news to be splattered on the front pages. >> right. >> the opening bell in about five minutes. don't go away.
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you're watching "squawk on the street" live from the financial capital of the world. hope you had a great holiday weekend as everybody gets back to work, a reminder of how acute the pain was last week in equities. the second worst week of the year. all three averages down 3% plus. only one dow component traded positive for the week, intel. and all ten sectors were down, but as art cashin said, the world didn't fall apart over the weekend. so playing catchup today. >> china finished strong overnight and europe continued gains today. we'll be watching certain sectors. also utilities have been under extreme selling pressure which means we'll watch the interest rates and treasuries which continue to rise. prices decline, and that whole new relationship of what that
means and whether the stock market can rise in that kind of voir environment. >> some talk about it being a merger. reports ge might close the austin deal, and then mdp media general. >> we do, combining in a company which, let me see the respective ownerships. i think it's 65/35 in terms of ownership. revenues about $3 billion. media general and meredith combining to create meredith media general. a diversified media company. also a deal in the hospitality. black stone, no stranger to real estate deals. that division run by john gray. buying strategic hotel resorts for 14.25 a share. >> a few upgrades to watch which we'll talk about including aetna and yum and some others.
but let's get the opening bell and the s&p at the bottom of your screen. today mens warehouse celebrating. at the nasdaq, new story, a nonprofit that builds crowd funded houses for families all around the world. men's warehouse reporting this week along with dave and busters, busters, tivo. >> it's going to be a good u.s. on the u.s. consumer. i think it's been a strong story and it's been hit on this prodder stock market correction. a lot of the big hitters have been hit, including kroger and health care. health care and biotech have been slammed on the high beta.
some of the air coming out of those trades, that will be interesting to watch. some of the upgrades and downgrades, yum, clsa up grading yum, raising the price target to 107 from 105. they were looking at the breakup prospects seeing if they spun off their china business which is more than 55% of its business. the stock looks set to open up nicely higher, 2.6%. >> breadth positive, a hand full of stocks in the red in the s&p. among those close to the top of the list, alcoa gets a little love, and netflix up after trading down for seven straight days. >> still had 100% gain for 2015 but that has been brutally hit.
is today a bounce, or is it the start of fall, new buyers coming in, this idea that the bull market is not over, it just needed a correction on valuations? >> shares of apple are up ahead of the announcements tomorrow of various new product offerings. apple tv expected to be featured in terms of, at least, a new version, if you will. not an actual tv thing on their wall, just the apple tv product that you buy, but a lot of people look at how the stock performs both after and prior to these key announcements, and a new iphone being a key part. it doesn't always perform that well into the announcement, but many people have done a lot of work on what the equity days in the weeks and days following. >> it's strange. we talked last week about how you tend to see your run up into the event. it sells off after the event,
but there's been less runup this time. television is not the big one quite yet. we'll see. it's been amazing stock action on apple. wells, pnc and wells gets a similar upgrade at evercore. >> they distinguished between the higher quality regional names that aren't has exposed to the macro turbulence in china. p&g got an upgrade. sun trust likes it because it's unloved. this stock is down 25% for the year. they see a number of catalysts. november fist, they get a new ceo. talk about macro challenges. p&g is very vulnerable. that stock is up a little bit today, i think the jury is out. most analysts still are not
convinced of the turn around strategy at procter & gamble. >> jd, up 13% as they announce a billion dollars in buybacks of their adss. jd.com, the second worst nasdaq component last week. >> yeah. and alibaba has not done particularly well in this weird as well, as people have been concerned about the ability of the chinese consumer to continue to purchase things. or the impact from the stock market's losses. but shares also up about 2%. morgan stanley came out with positive comments on the company, but struggling are some of the chinese adrs. jd deciding to try to do something about it to the extent
it can support it by buying shares back. >> all the 30 dow components are in the green. morgan stanley raising fitbit. apple watch not as much of a threat, and they note there's incredible interest in fitbit shares. it sets them up to do well going into the holiday season. they found that consumers are willing to spend $250 on wearable devices. that's nice with fitbit. that's hat the high range of their prices. all of this ahead of, are we going to get a new version of the apple watch tomorrow? is there any chatter? >> i haven't heard that. we'll talk to someone who has broken everything they were going to say anyway in advance, and we'll ask if there's room
for any surprises. >> go pro, a 16-lens camera that shoots for virtually wall reality, $15,000. lands in early november. there's another name down 40% in six months. >> more than that, i think. certainly from the ipo. that one has been hit hard. not getting much of a list. up half of a percent. >> that's a lot of cameras? . >> are you ready? >> i'm not sure i am. no one wants to see my virtually wall reality. >> i wanted to mention a story i've been following and continue to, mylan's per suit of perrigo. it will commence a tinder offer for perrigo on the 14th of september. that's this monday. that is under irish takeover law. it will close november 14th. it's 2.3 ordinary shares, mylan
stock down sharply since teva walked away. the big battle here will be between what you hear from perrigo in terms of what it's telling the shareholders to do and what they choose to do. mylan is going to be saying we're still paying 19 times ebi ebita. you'll own 30% of the combined company. if you walk away, the stock will fall. and we will be watching to see how mylan shares do over the next two months. they're telling us the tinder offer will begin next monday, and this is in the hands of perrigo shareholders. the board has no role at perrigo. it's in or out, and if 50.1% of shareholders shooz to tinder, they'll toss the board and get rid of management. if they get 80%, they'll be able to get rid of management.
we'll be watching that one over the next two monthinsmonths. it's starting this week. >> chevron just barely managing to hang onto the green. let's go to mary thompson. >> reporter: dow jones industrial average at the highs for the day. up 287 points. we kick off a shortened trading week. strength in asia with the exception of japan. strength we've seeing in europe thanks to decent data on the eurozone as well as out of germany today. the s&p 500 index along with the dow much stronger in early stri trading up. the s&p 500 could still retest the lows it saw in august of 1867. they expect the bottoming process to continue over the
next couple of weeks. when you see a weak start to the month of september as we saw last week, when all three of the major indices declined, posting their second worst weeks of the year, you expect traditionally, historically, that continued weakness in the s&p will be there. a number of people thinking we could retest the lows on the s&p. broadly higher across the board, transports up 141 right now. pretty much broad-based gains across the board with a few exceptions. materials, this is one of the worst performing sectors of the year. getting a bid today on the news at glen core is undergoing a debt restructuring and saying it's going to reduce production at one of the african mines and cut the dividend. that's giving a boost to some other miners, at least it was in the premarket trading. energy, we had russia coming out and saying it has no plans to
work with opec to cut production and ease supply that is expected to remain strong. we're going to see strong supply out of nigeria and the north sea. energy stocks, again, the worst performing group so far this year. getting a bid this morning despite the weakness we're seeing in wti, down $0.82. we've been talking about it all morning. this is tuesday, but it feels like a merger monday. a lot of deals to tell you about. david was mentioning the meredith acquisition. teco energy, being acquired by the canadian utility for over $6 billion. stock up. strategic hotels being acquired by black stone, and ge, it is expected that the your neen commission is going to give approval of the austin deal. this has been a year in the
making. we'll get details on what concessions ge had to do to get the deal passed. this is expected some time today. and lastly, the banks getting a number of upgrades from the analys analysts. this group is higher as well. ahead of the important fed meeting of next week. we'll see if they go ahead with a rate hike this month or waits until later this year. the dow up 280 points. back to you. >> thank you, mary. mary on the floor. for more on today's movers, apple a big part of the story. >> a very big part of the story. and that's part of the story here in terms of the big caps leading the way this morning. you have both the nasdaq and the nasdaq 100 inching back into positive territory for the year with this morning's move, and a lot of that driven by apple. it's contributing about 13 points of up side to the nasdaq 100 at this hour.
apple inching back into positive territory. the stock is on pace to be down for the first quarter in six. nonetheless, it is with today's move, back positive for the year. all eyes on tomorrow's announcement. the expectation is we'll see a revamp of the apple tv. chips also doing well today. they are the leaders as techs lead the overall market. microchip upping the forecast ahead of the appearance at the citi global tech kmpgs. these conferences right now are where the companies normally that are going to raise their guidance might make those announcements, and it's confession season. other companies not there may start to talk about where their quarters look like. biotechs today getting a boost. we have a conference there as well. a number of biotechs talking about trial results. surging after posting positive trial results in a lung cancer
treatment. on pace for the first quarterly loss after a record ten record winning streak quarters when biotechs really have led. they're still up for the year, but they are down for the quarter. back to you. >> bertha, thank you, and mary mentioned oil prices under some pressure this morning. >> reporter: good morning. that's right. we're seeing equities get a bounce and lift, crude oil prices are not. traders are a little bit skeptical about this rally this morning. they want to see how things shake out and they want to get a little bit more news. crude oil prices 45.32. what's interesting is the range we've seen this morning. we tried to get back up to $46. couldn't get make it. that $46 mark is a key technical level. we could see some choppy trading when it comes to crude oil. it was interesting because for the holiday there was pretty good volume yesterday according
to traders. there's interest in this contract but it is not moving in the direction of equities. as i said, we also keep a check on the dollar. slightly lower today. you would expect to see crude higher but it's not. there may be more conviction to the downside when it comes to oil prices. gasoline, ar bob to the downside as well. these have been trading together. it's not surprising to see them both lower at this time. back to you, carl. >> thank you so much, jackie. still to come this morning, apple's big product launch event tomorrow, what we're expecting to see from the tech giant. and warren buffett. we'll sit down with him today at 11:30 a.m. eastern time. the dow now up 313 points. back in a minute.
i'm pulling together data he shared from his wearables, health records and family history, so we can analyze it. he's doing everything right... for the most part. no pain, no gain. you are a beast, ted. my name is watson. how can i help you? >> dow up 318 points after positive revisions to gdp in japan and the eurozone over the weekend. china raising more hopes of stimulus and so forth. we're playing catch up to some degree. apple gearing up for the next
big product launch. aiming to revise sluggish ipad sales. joining us this morning, mark ge german. it's good to see you. >> thank you thr having me. >> you've laid out a lot of what we should expect tomorrow. is there any room for surprise on the part of the company? >> i think the big surprise will be how they position the different products. they're going to have at least three new products they're updating or introducing tomorrow, and we'll learn how they fit together. that will be the big picture of the event. >> you mentioned force touch coming to the phones, and the ipad pro has raised a lot of eyebrows. which do you think is most important? >> perhaps the apple tv, because the ipad is already established. it can go either way. some sales are dropping but i think the ipad pro can push it
to be a bigger deal in the enterprise and education. the iphone will be strong for some time. but the apple tv announcement is where they're hitting the reset button. they came out with the first apple tv in 2007. and they updated it again in 2010 and 2012, but it hasn't been a mash hit like the ipad and the iphone. it's to be seen if the apple watch falls into that category. with a lot of new features and user interface, siri integration and new content, they'll hit reset on the apple tv and see where it takes them. >> it sounds like they're going to emphasize gaming as part of that on apple tv. should others be worries, xbox, anyone men in toe. >> absolutely. they came out with a psp about ten years ago. that didn't last long when the iphone and ipad started gaining
space in gaming. i think with support for blue tooth gaming pads and support for the new motion sensing bundled controller, i think the gaming industry has a little bit to worry about. it yet to be seen how much power the apple tv has and if they'll make the right apps but i think in five year's time, they could be a big competitor in the gaming market. >> it's unfair to ask you about sales projections, but wall street is heavily pinned to the idea of phones going negative in the december quarter. is this s-cycle any different than ones you've seen prior? is there any reason to hope that would not happen this time? >> i truly think this year's s phone is a bigger upgrade that be the previous new s phones. i think the 3-d touch screen, 4 can video recording, 12
megapixel camera, some new interface elements, those add up to a bigger package than the others did. i think the sales won't smash the previous records, but they'll be pretty close. another big thing to focus is on the iphone six and six plus. the current models are going to stick around and those will drop $100 on contract and also $100 on the full con contract prices. those are still good phones. they sold well, and i think those models will continue to sell yewell. i don't think investors have much to worry about. >> rose gold, i did not know that. that's a big development, for me, at least. already we're talking about the s which is set to be announced. we're hearing rumors about the next year cycle, the 7.
do you think anything about that and can they keep the momentum and the sales pace they had with the 6 and 6 plus with the 7 next year? >> absolutely. apple works on these products over the course of several years. they probably started working on the iphone 7 at the same time a few years ago. what they're doing is setting the stage for future hardware improvements. this 3-d touch screen to going to allow them to remove some of the hardware elements, keys around the interface. so this will allow them to make the phone smaller and preserving a bigger screen. i think as we look at iphone design changes over the next few years, they'll continue refining it and making it thinner and lighter and faster but removing interface elements and moving them into the screen. i think they want a screen with everything into it.
that's what you'll see over the course of five years. next year should thinner, lighter, and narrower, but they'll preserve what makes it an iphone. >> a lot of viewers notice where you are. do you have to get to class now? >> thanks for asking. i have time for more questions if you have any. >> we're good. we'll let you go. obviously you've set up tomorrow beautifully, and we appreciate your time. thanks. >> thank you so much. >> keeping a close watch on the market movers with the dow now up 315 points, we'll get more insight after the break and stay tuned for becky quick's live interview with warren buffett. you won't want to miss it. the s&p now up nearly 2%. daughter: do you and mom still have money with that broker? dad: yeah, 20 something years now. thinking about what you want to do with your money?
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strategy. keeping a lot of oil on the market. >> this after the saudi king visit in washington d.c. energy is higher as an s&p sector. it's doing the least well of the group. and keurig green mountain at the bottom of what has been a string of disappointing. keurig is up 10% at the week but at the bottom of the s&p. >> when we come back, warn buffett, becky with l talk to him at 11:30 a.m. eastern time. we'll be right back.
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. >> welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and fdavid faber at the nw york stock exchange. market hanging onto a gain this
morning. only oil is the spoiler in this party. >> let's get to the road map for the ouday. apple's launch tomorrow. find out what it could mean for the stock. and we are joined to weigh in on the state of the media industry. coming up later on, a live interview with warren buffett. he's going to join sidewaquawk . in the meantime, a nice bounce this morning erasing the losses from friday. will the gains continue? we have a chief economist at wells fargo. good to see you. good morning. >> tom, you were pretty resolute in your bullish view even when things were dicey. you said things were changing at
the margin, china, but you don't see a recession. does it return to 1970, give a return of all clear of some sort? >> it's going to be hard to tell at this moment, but i think investors have to go back to this idea, not missing the best gave days of the year. if you look at the last ten years, if you missed the five best days, you had negative years seven out of the last eight years. it averages 11% for the best five days. market is oversold, only one day where the market was up 2.5% or more. half of the best five days are that. i think we have the potential for big moves into year end, and i wouldn't want to be sitting on cash. >> john, we'll bring you in as the backdrop of the u.s. economy. a lot of the bulls say the u.s. economy is doing fine and well. our unemployment rate is now 5
h -- 5.1%. do you stick yo your call on a stronger u.s.? >> i will certainly agree with tom. there's no recession in the outlook. i believe there's a stronger u.s. domestic economy. consumer spending looks really good. auto sales, housing starts, all pretty solid. even some of the equipment spending has picked up a little bit. i think it is resilient. the u.s. economy is resilient, and when the fed moves in domes
pretty well. thank you very much. >> we are getting some breaking news from general electric. the eu giving the go ahead to a bid for french peer austin's power business. the deal is pending a deal. ge says great day for the company. they try to work their way back to industrials. >> the biggest thing happening
in ge is the continued divestment in the disillusion of the entire unit, other than those that support the existing ge businesses. the stock has been hurt in part by the perception that they're bigger in oil and gas. this deal part of that, and exposure to the chinese economy. both of those do not end up being as much as 20% of the revenue. stock price below 20%. >> ge can drive out, and they look back at the problems at company ran into with the european commission, and this is a different process. this is a different company. >> a company standing by, expects the deal to generate five to eight cents of etfs in '16. targeting 3 billion in cost synergies in year five. overall strategics remain the same as when they announced it.
let's bring in mary thompson. she's been watching this from the beginning. >> reporter: that's right. this deal was announced on april 30th of last year. with the price cuts and the joint venture, the price down to $9.5 billion from the originalal price of $13 billion. it's a penny below because of the length of time it took for the deal to get done. ge had so make some concessions in order to get the deal done. the eu was concerned about competition in the gas turbine industry in europe. as a result, ge is going to be divesting two classes of gas turbines and also selling two, the italian energy company, 34 unites for servicing. ge does get 750 gas turbine units in this deal.
34 unites isn't a great amount but it's one of the concessions they had to give. it will be giving up aftermarket power service to another company. in return it will get intellectual property from that company. again, ge is focussed on getting 90% of its earnings from its industrial operations by 2018 and this deal was critical in achieving that goal. the company has been selling off its financial assets from ge capital, expected to reach $100 billion in asset this year. they're somewhere around 80 billion as we peek. a long time for ge to get approval for this deal. the eu finally giving the okay. pending the sale of the assets to the other company. it is expected to close by the end of this year. >> i guess, charming the french establishment worked.
i remember when he learned to speak french. thank you for the update. back with us to talk about the markets and the economy, tom and john. tom, anti-trust concerns aside, it is a reminder this has been a healthy period for m&a. that has helped the u.s. equity market. do you see any signs of it slowing? >> m&a is really a sign of corporate confidence. companies have great balance sheets. i think the last couple weeks are giving people pause because you don't know how much damage is going to come from the real economy. i think these are temporary. i think to the extent fundamental, it's a great time to buy it. >> you still like health care and technology? >> that's right. i think you want to stick with the winners, health care, technology, consumer discretionary, even financials. i think as a contrarian, in the next 12 to 18 months, energy is tough right now.
>> john, any other economic data we should be monitoring into the fed meeting next week? do you think the fed members have their decision? >> well, i think the european numbers this morning were good in terms of their economic growth and i think as far as mergers and acquisitions go, i think it reflects companies restructuring to fit in a economy that's growing for the last four years. dealing with low inflation that would dictate restructuring over time, but i would say the fed has their story in line. most of the members know where they're going. i do expect that the fed will raise federal funds next week. >> we'll see what happens next week and this. thanks for your time. >> a lot going on. congress returning to capitol hill today with a jam-packed agenda including both on the iranian nuclear deal and a
spending deal. we have more on that. aman, a lot to do? >> a lot to do and not a lot of time. they didn't leave themselves a lot of time for this work. goldman sachs put out a note last month saying headline risk out of washington this fall could cause an uptick in uncertainty in the coming months. i think they're right. take a look at washington's to do list. it starts with the iran deal. a series of days debate over iran. the president has enough votes to veto this iran measure of disapproval that the republicans are expected to pass, but whether or not he can block the republicans altogether will be the psychological threshold to watch in the coming days. also a battle over government funding. by the end of the month, will funding for planned parenthood derail a deal?
a lot of issues we have to resolve by the end of the month. also a transportation bill they didn't get wrapped up over the summer. the question is will they be able to get a multi-year deal? they've been doing it in bits and pieces? can they figure out a way to pay for it? that's the trick. and by november, we're looking at the debt ceiling again. that's always politically tricky, and this year we have four candidates ant republican side in the united states senate. that will be a question of whether or not they can come together with a smooth mechanism to increase the debt seceiling this fall. >> up next, rolls royce unveiling the new car today. we'll show you what it looks like and bring you an interview with the ceo of rolls royce. the market holding up nicely. s&p still up more than 1.5%. the nasdaq in the lead, technology stocks doing well
royce. he joins us with pictures. i love the fact that you guys make no bones about it. you say this is the sixiest rolls royce ever. explain why. >> yeah. that's right. we say that for very good reasons. once you see the car and once you sit in the car and have the opportunity to ride it, it is the most luxurious place on earth. it's a pleasure to drive it. imagine going down the pacific coastal highway. there's no better place to be in. the whole appearance of the car is truly sexy. >> you have deliveries starting in the second quarter of 2016. estimated price between 350,000 and 400,000. when you have an economy like we have in the united states where there's a lot of choppiness in the stock market and a lot of uncertainty out there, does that
weigh on people potentially ordering this, or are you dealing with people who want it anyway? >> it's not that we are completely immune against any ripples in the market. but rest assured, we have shown that beauty already to quite an amount of potential customers, particularly in the united states, and the pickup is tremendous. order bank looks good for next year. i'm not worried about that, but we're watching all that situations here closely, what's happening in the market. >> let's talk about china a little bit. i know it is not your largest market, but all auto makers are concerned about the pullback in the chinese economy. and particularly in those larger cities along the coast where there are some restrictions on auto licenses. how much is that impacting potential sales for rolls royce in china? >> i mean, let me say, first of
all, that we are globally nicely balanced. we are never putting all our eggs in one basket, and china is not the number one market. our number one market is truly the united states. and i also think will stay the number one market over the year to come. the luxury segment is contracting in china, and contracting mercifullmercifully. and it's also impacting our sales situation in china and our overall picture, but as i said, it's good to be globally balanced. will we take up the difference in the rest of the world? we'll wait and see. >> the ceo of rolls royce joining us from london. quick, the number one market within the united statesstates, still beverly hills?
>> it is beverly hills, california, and also florida. we are getting more and more stronger pockets all over the united states in the meantime. >> the ceo of rolls royce joining us with a gorgeous convertible, the new rolls coming out next year. it is the dawn, and it is the sexiest rolls ever. >> it looks like it in that shot. thank you for the interview. let's go for a market blast share. >> reporter: good morning. procter & gamble and the consumer staple size. we got an upgrade to a buy from a neutral rating of sun trust. p&g is the fourth worst performing stock in the dow down by 23%. perhaps some retail at least on the consumer staple side value to be found here in procter & gamble. >> they like that 4 % dividend as well.
big news for cord cutters today. from both nfl and disney. we have the details on both moves in l.a. today. >> reporter: good morning. that's right. there are two powerful brands that are finding new ways to make money online. disney shares trading higher this morning agz they expand their disney movies anywhere cloud movie service. the movies you buy digitally are available anywhere. beginning today, disney movies everywhere will be available on
amazon video and microsoft movies and tv. it rolled out to others last year. next week the cloud movie app will launch for android tv. here's how it works. any disney or movie you purchase through these digital services will be automatically added to a disney account in the cloud. you can redeem purchases. disney is positioned to have a branded app. value parents see buying movies for their kids they watch over and over. with the app's expansion, they are trying to make cloud make sense. meanwhile, the nfl announcing today a new $99 per season subscription season as it builds out an array of streaming options. nfl game pass allows subscribers
to watch on their tvs games as soon as their over. you and you can watch preseason games live. it will have different am ra angles and additional content. this follows last week's announcement that games are free to all verizon customers and they will offer a game exclusively on yahoo and it's streaming for free two more games than last year. the nfl chief digital officer says they're hedging against the future and the rise of streaming. >> thank you so much. straight ahead this morning. apple is trading higher today ahead of tomorrow's big event. the stock is still down more than 10% in the last few months. how do you play the stock as it hangs onto a 2% gain. we'll talk about that. ♪ [music] defiance is in our bones.
chaos at the hungarian border. hundreds of refugees unwilling to be taken to camps running across fields. tensions are rising as some have been stuck for days under very poor conditions. north and south korea agreeing to hold reunions in september of family members that were separated during the korean wars. the pope has reformed the process for annulling marriages, all for fast track decisions and allowing automatic appeals to speed up the process. that's the update this hour. back to "squawk on the street." >> thank you. ba welcome back to "squawk on the street." what should you be expecting from apple and how much of an impact will it have on the stock
it's doing well today. here is the managing director and senior analyst at raymond james. has a hold on the stock and no price target. do you have this event as a catalyst to turn it around for apple which is up today but still down about more than 7% in the last month. >> it's interesting. it feels like apple hasn't performed well, but in the last month or so in the market melt down, it's outperforming the market. it's only down 4% or so. the market has been down 7 measured by the s&p. in general if we look at trading of apple, it outperforms in the 30 days prior to the announcement and underperforms in the first 30 days after the launch. it's kind of a typical cycle we see with a lot of stocks where a lot of folks are buying into the news and they sell it off after the news. >> do you expect that today? the concerns have been i've
heard two big things, china, 30% of revenues with the slow down there. how will it impact them. and then the fact that the iphone growth has been tremendous in this latest cycle and that may have marked a peak. are those concerns legislat mat? >> i think the second concern is more la jegitimatelegitimate. a lot of folks upgraded their phones. it doesn't recur on an annual basis. it is a two-or three-year basis. the last time this happened, apple went through a couple of years in market share losses in the smart phone market. that may happen again. nothing was wrong with apple. it's the way the business works. after a successful launch, they
have to consolidate their gains for a while. our view is that the stock is very cheap, but we think the consensus numbers are a bit too high for fiscal '16, and we think it will be disappointing looking into the december and march quarters. >> is everybody sort of ringing their hands about iphone sales being positive or negative or whatever, they seem to be making this the pivot to the enterprise. we'll see what the ipad pro looks like. we have the ibm deal. is that sort of -- will it always be ancillary in the way services are? will they remain a phone company or can people start to buy this name on sort of an enterprise story? >> yeah. i think enterprise hardware has the chance to be meaningful longer term for apple in a way that services probably can't. there's not a lot of revenue opportunity in services relative to enterprise hardware. but i really do view this as a
decade long initiative for apple. things change slowly in the enterprise, and we've seen two big strategic announcements in the last year. i think we'll see more. i don't know that in the next year or two, any of those are going to be meaningful enough to overcome anything going on in the iphone business. >> i think it's interesting they're planting these long-term seeds, music, watch, the enterprise, but those plants need to grow a little faster to make up for what's happening in phones. >> yeah. i think it's just hard to believe apple is a success or a failure on the basis of one year, just like the market overreacted on the downside during the iphone five and five s cycles, now people can understand that was a dramatic overreaction. the iphone business is a recurring business. it's not on an every year basis.
the apple is making long-term investments, and i'm sure a few will work out. i think in the next three to five years, it will be an iphone driven phone. >> i guess the question investors are watching is with apple dependent on iphones for two-thirds of the revenues, is it too dependent as it's trying to attract other categorys? >> i don't know if they're too dpen dependent. they capture well over 100% of the profits of the entire industry. i don't think they'd give that back so they would have a smoother revenue stream. you take the profits where you can get them. >> you mentioned it was cheap. how cheap? can you elaborate more on how you're valuing apple right now? >> if we look at every day is kind of a new story in the market. it bounces around a bit, but on our numbers, which are below the street, probably, it's about a
10% free cash flow yield. for most larger cap names, it tends to be a bottom. it's not as cheap as it was on an earnings basis if you look back at the trough after the iphone 5 launch, i forget if that was 2013 or early 'is 14, the stock got to ten or levin times earnings. we're not quite there but relative to the market, it's getting pretty inexpensive. >> thank you very much. >> thank you. >> we want to take a look at netflix today, down 2 % after being up big in the morning adding to some significant losses over the last few months. netflix, these are stunning figures. down 22 % in the past month, and before we were looking at an official doubling year to date, it's now only up 98%.
>> up more than the number two which is amazon for the year which is up 66%. interesting it took a spill down. there's a lot of news today with disney, and nfl, whether that's impacting the stock. this is a big name that has done well in the market. >> some people believe that for a long time they had the lion's share of concontent, but they'v been nibbled at by so many players, that how compelling does their content need to be to be the first place people go? >> and it's been a growth story. we'll see if that can continue as it gets more competitive there too. >> yeah. it has been a rough couple of month for media stocks. all the big names falling sharply. what does that mean for the industry? the ceo of lion tree advisors is going to weigh in and the
technology is up 2% in trading today. all sectors are up about a half percent or more, but it's important for technology chip stocks outperforming. all up by around 4 %. two of the big etfs that trek the semi conductor space, both up around 3%. and we always talk about technology, because it represents one fifth of the entire s&p 500 so far. >> take a look at this chart. it shows the impact of what has been known as media-geddon. thanks to worries over cord cutting and shaving, changing viewing habits. what can we expect from the industry that seems to be in something of a reset mode, when the stocks are taken into consideration? consolidation coming? we've got just the man here to answer some of those questions
of the boutique liontree advisors. advises for time warner cable and altise. verizon, aol. >> a busy time. >> this has gotten the attention of traditional media investors, this enormous loss of market cap among those who create the content, and the concerns being that with the continued loss of viewers from the traditional bundle, there will be fewer people will paying the fees and advertisers to pay for. do you believe it? >> well, the businesses are in transition. the core strength of the business is still all about the audience and television, but like you said, the people that are watching the television are shifting in their habits. millennials watch job line video three times more often than we did growing up. that will shift the viewership habits and the companies need to adapt as well.
i think the market, whenever business is transition, the market has a hard time digesting that. and they have to do things to create fundamental growth. >> taken together, do you not believe the industry has been innovative enough? >> it has overcome the wall of worry by being innovative overtime. that's the creation of broad band, but now it's an interesting time. they are distributing services outside of the cable and satellite model. there's a moment in time where things are shifting in a pronounced way, and the companies probably have to accelerate their innovation, and their need to take advantage of the market environment to create more scale and balance for themselves. not just by the media companies but the technology industry who have become more powerful and
innovative. >> and they are media companies, facebook derives their money from advertising. i want to show this. is it your argument that they should not be doing this any longer? >> this is what happens at a financial crisis. this is a transition. we were hit by a shock in '08. and we had the companies paying down debt to create flexibility, and that morphed into buying back stock to create confidence in the current income streams and business lines. that has gone a little bit too overboard, and you can see companies in the media sector have bought back around $75 billion of stock. that's their free cash flow they're generating. that financial capacity in a low interest rate environment could be used now for a little more innovation. potentially more consolidation
and m&a overall, it's really the hallmark of the industry. fox created a new net worwork. there are other companies as well like adobe this has done a great job transitioning a new model. companies have taken risk and have been rewarded for it. the content side of the business needs to catch up and diversify their use of capital. >> risk can mean a number of things. but taking on debt to do a deal, there has been talk for some time about the need for consolidation amongst some of these guys. not the biggest guys but the next tier down. do you think we'll see it? >> i do. there are two types of m&a, the horizontal and the vertical. the horizontal m&a is two companies in the same tri getting together and creating more value because there are ways to do things more effectively together. that should happen to create
more scale and balance. there's also vertical m&a which is also diversification. going abroad to europe or going to latin america to diversify the businesses, it's absolutely on the ho rise snn. >> you think so? >> yes. my parent company who owns nbc. >> come cacast doesn't have muc revenue outside the u.s., but zro discovery did a big deal with the olympics in europe. and i would say necessary for a diversification perspective, given the eco system. you'll see people go cross border overseas and into latin america, but there will be other kinds of inno nation. the verizon aol deal is one of those. verizon went out of their core
competency. >> i'm still trying to figure that one out. >> i think verizon's core business is obviously one that has a lot of competition. and they are being very innovative in the respect of getting into other business lines away from wire line television or even wireless to go into other areas. >> you've taken part in advising in the consolidation amongst those who distribute, for example, time warner cable. has the balance of power shifted once again and do these smaller guys, and i mean smaller in the sense of amc or alliance gate or discovery. do they need to get together now to be able to fight these guys, not to mention viacom and cbs? >> we like to talk about the fact that content is king. i would say that content distribution companies are
forever linked without having good distribution, the content won't be seen. those companies have to be linked. distribution has become more risk takers as a result of the environment that we're in today. and has been rewarded for it. and the content industry will have to get rebalanced in the same situation. >> and what about facebook and google and how will they continue to some of the existing media companys? >> that is where the scale and financial heft exists. facebook is three times the size of charter. in terms of audience and reach, and maybe in terms of market cap. >> i think so. >> i think you'll see those platforms get more and more into the content of vertical. whether they're the existing content companies or new businesses on the event side or sports. there will be a day where you will see the nfl on a dijgital platform.
>> people say google will bid for the nfl one day. >> or apple or verizon. i would include verizon in a platform that will reinvigorate the industry. >> is this guy for real and does he continue to have ambitions in the united states? >> i would say no one has used the capital markets more effectively over the last few years than patrick drahi. of course he's for real. the question is which assets are next and obviously, how do you create a portfolio that's an operating plan, but i believe he is sharp, and very innovative, and we'll see what happens next. >> we'll see what happens next. we hope you'll join us again to see what happened next. thank you for being here. >> thank you, david. >> sara. >> great conversation. up next, stocks seeing huge gains across the board. dow up 241 points. off the highs. it was up more than 30 0 but nice gains across the board.
1.6% gain for the nasdaq. how you should be playing today's big rally after the break. a ♪ 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.
. stocks are in rally mode this tuesday morning. after they were closed yesterday. the nasdaq is leading the charge up more than 1.5%, losing some of the early gains we got at the open. the dow was up more than 300 points, now up 238. it's a broad rally if you look at some of the groups that are doing well. some that were beaten up last week. remember last week was the second worst week of the year for stocks. it has been a tumultuous last week. and the word this morning that we've been getting from strategists and traders is expect the volatility to continue. we're going into an historic federal reserve meeting and still have an eye on china, which is unresolved, whether they have a handle on their markets and economy. >> although as carl put it, there was a pboc official who said it's more or less over. which does go to the attempts of the chinese authorities to essentially control the stock market to the extent they can and the failure to do so. engendering a lack of confidence rather than the intended effect. but we'll keep an eye on china
despite what is a debate about how really important it is for our own economy. >> it is important for eat merging market's economies and they are important for global growth. the question is how much is that going to downshift what we've been seeing. let's bring in burns mckinny. portfolio and managing director. joining us with more. burns i know you're watching the recent e.m. selloff, emerging markets, you say they're the cheapest they've been, does that mean you're bold enough to buying the emerging markets? >> you see them trading 10 times on forward earnings on the mci index. which is where they crossed in recent periods, they're trading at about the levels they were in 2008. the difference is back then we were in a global economic crisis, versus today we have a good economic growth in the united states. solid economic growth starting to emerge in europe. you have policy makers around the world that are very accommodative with respect to monetary policy.
that said, we wouldn't necessarily jump right into emerging markets as a whole. there are scenarios we do have some concern about. countries that have large current account deficits. for whom if interest rates rise in the united states, they could face capital flight. that would be places like brazil or like turkey. or you know, as well, countries that are overly dependant on china for exports, such as malaysia or south korea, i spent last week traveling throughout southeast asia and there were bright spots, countries like the philippines where they are not overly dependant on exporting to china. and lower energy prices are a benefit like this. >> eastern and central europe. countries like the czech republic and poland can also benefit from developed europe growth. >> want to get a little closer
to home here in a group that may be easier for most investor does get into. that would be financials, you say you're adding during this recent sell-off. why are you convinced now is the time to buy financials with so much uncertainty as to when the federal reserve going to move on rates. >> well the first thing about it is, it's about valuation. we, we're low-value investors and the s&p 500 is trading about 16 times next year's earnings, whereas the financials are going for about 12 times, that makes it about the cheapest sector out there. they have a lot of positives to look into. for example the fed is allowing a lot of the financials to return capital to shareholders via buy-backs as well as share repurchases as well as dividend increases. dividend increases is something that we love to see and payout ratios in the sector remain low, you have more room for future dividend growth and the recent pull-back was driven by the fact that it was one of the few sectors that would benefit if we do see an increase in interest
rates. last week as the fed liftoff seemed to get pushed back a little bit, they pulled back. that's when you whack want to look at the sector. because when you see it may not be necessarily priced in and lending quality has been much higher and that's like a pig and a python blowing through the system that should have -- allowed a credit tailwind. >> we've got to leave it there, we've got to get to the next show, but thank you very much for coming on and talking about the bargains you're finding out there. burns mckinney. becky quick will be sitting down with berkshire hathaway's warren buffett. the dow is up 242 points. we'll be right back.
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