Skip to main content

tv   Worldwide Exchange  CNBC  May 11, 2016 5:00am-6:01am EDT

5:00 am
good morning. it's the magic gone? disney shares plunge as earnings miss wall street's mark. no deal, new this morning, staples and office depot call off their merger after a federal judge blocks the tie. and ultimate valuation. the ufc is going to sell itself for as much as $4 billion. "worldwide exchange" begins right now. ♪ made you glad you came the sun goes down the stars come out all that counts is here now and now ♪ good morning, welcome to "worldwide exchange" on cnbc. i'm sara eisen. >> and i'm wilfred frost. you guys missed out on a very
5:01 am
late arrival. >> yes, i did. >> well, let's get you up to speed among the markets this morning. futures right now, very strong yesterday, not as strong in terms of the market move with the indices, in terms of volume as well. we had strong volume in the last couple of trading days, and we're looking at declines today, offset over 1% of gains all three indices looking at down. dow down by 12, s&p by 5 and nasdaq down by 12 points. and disney earnings estimates came short for the first time in five years. advertising and slumps decline at espn is weaker than expected. more on that story in just a minute. first, let's show you what happened overnight in global
5:02 am
markets. this morning, over in asia, we got a slight gain for the nikkei, just barely. looked like we were going to continue the rally that we saw in yesterday's session but asian shares did close smaller. shankly closing up fractionally. as for the early action in europe, we've been watching the banks and resource companies very closely as they're closely correlated. we are seeing declines, 0.5% in germany, more than 1% in italy. and in spain, we're watching the price of oil very closely. that seems to be the driver of yesterday's trading action, that bullish action that we saw in the u.s. with all factors closing higher. >> yes, jc deceaux, the advertising company down. let's look at markets as well. oil prices, again that correlation very much remain, yesterday, that was strong, up
5:03 am
2% as it were equities. today it's down as u.s. equity futures. wti 44.13. down 1.2%. a little talk that oil entered its golden cross when it goes above the 100 to 200. we'll discuss that later in the show. does it mean anything for equities. the u.s. ten-year at the moment, moving around a little bit. nothing too significant. we're at 1.745 this morning. the dollar, a little move, we're seeing a little strength but back to weakness. interestingly the nikkei was interestingly flat because the yen was stronger by 0.5%. the yen bouncing backwards, having been soft, 1.0865. gold prices looking up by 11 cents. let's get back to disney.
5:04 am
that's the top story. and shares are down as wilfred mentioned for the dow component this morning. earnings and revenues did fall short. among the big drive, espn subscriptions, falling and revenue at the sports network dropping. ceo bob iger discussing viewership a lot on the conference call. here a snippet. >> we're also in discussions with a number of entities, some current distributors that are coming forward with new packages. and some completely new distributors. all have expressed an avid interest in having espn and our other channels included in their initial offerings. and we're very, very encouraged by the discussions/negotiations that we're having. >> so he's talking there about a question in reference to the skinny bundle, or this idea of over-the-top television programming and how espn is very much going to be a part of that future at disney. it's going to be a part of that future.
5:05 am
as for theme park revenue, rose 5%. that is also weaker than expected. the company also announcing it was exiting the console video game business after it launched the infinity title. a bright spot with studio business rising to $2.1 billion. that was driven by "star wars: the force awakens" and the an ma natured "zootopia." the board is searching for a new ceo. iger's contract is up in june 2018, some are speculating he may stay longer. he does address the issue publicly for the first time in the conference call. listen. >> i will say, remind people, that i have just over two years left on my contract as ceo of the company. and the board is very actively engaged in a succession process
5:06 am
has it has for some time. it believes it has ample time to identify a successor, under timing circumstances that will be just fine for the company. i have nothing really to add in terms of the extension of my contract. except that i don't currently have any plans to extend beyond the june expiration date that is june 2018. >> he shut that one down and offered a little color on the decision. as for the overall take-away, iger sounded frustrated in the end. said, any questions on the studio, the sentiment in the analyst community and it has been there for a long time has been on the subscription losses at espn. and what that might mean for advertising and what that might mean for future television which is changing fast. >> i couldn't agree more. let's put that question to ivan fineset, chief financial officer
5:07 am
at tygress partners. ivan. >> that's been the unfortunate situation since last august. i still think that that trend is going to continue where you're going to have a change in how people view content. however, you really have to focus on the strength which is the parks which the content. and the key thing in my overall view has been for some time. that content is king. and disney is the king of content. they own two of the most powerful and valuable movie franchise in existence. marvel and "star wars." and a number of other properties and continue to come out with incredible movies. "zootopia" was very well received. "the jungle book" has done incredibly well. i hear that "finding dora" could be the next "frozen."
5:08 am
we have great movies. shanghai theme park coming on board next month. there's so many good things. i'm a little disappointed in the results, but i'm not really discouraged. and i think any weakness in the stock is a tremendous long-term buying opportunity which has shown to be the case throughout the history of the company. >> let's parse the television business as well. that is the focus, as you say and the reason behind the drop in the stock this morning. was it worse than expected? is the acceleration and trend picking up in the last year in any meaningful and worrisome way that suggests that bob iger does not have a plan for his over-the-top business? >> well, i think even as people go for a skinny bundle, espn is still one of the key choices in the package. also that live sports content and sports commentary has still a strong appeal to advertisers. one of the best areas for advertisers to advertise on is any kind of live content, whether it's news, commentary or
5:09 am
sporting events. because today, consumers can use technology to integrate commercials into television and movies. the one thing you can't record and use later that loses impact is live commentary in sports. >> when you think about how the media world is changing. particularly, the espn business and facing that, you know, future, and how that content is going to be delivered. is disney versus the likes of cbs and the other big broadcasters that unprotected box of the amount of content is creates itself. meaning either way, whichever way it's delivered, it's got a pretty strong portfolio? >> absolutely. because no matter how you connect to your tv, what you watch it on, whether a phone, tablet, computer, giant screen tv, you need content. without content you're staerg at a blank screen. they have the most valuable content on many different levels.
5:10 am
you know, not only espn as a channel but there are also other channels. the various disney channel are also valuable. i think people continue to lose focus on the fact that you're going to have this change over time in what people watch and how they watch it. good content is what people want. >> so had you advising clients to buy? >> absolutely. it deserves a premium valuation because of its premium content, its presence and the halo effect of disney content sells other content. for example, you watch the movies, you want to go to the theme park. you go to the theme park, you want to consume the concept. they have a tremendous halo effect and a tremendous strong customer base and they consistently produce quality content and the best content. one movie after another are block busters and set box office records. >> ivan, thank you for joining us from tigress partners.
5:11 am
the change is happening in a more pronounced fashion than people expect. the company like disney creates so much content itself will be fine in the long term but how much of that margin is going to be hit from the overall results box of transitioning of very profitable espn business. as it goes through that transition, you break up the bundle, maybe they'll continue to sell stuff at a lower price. >> we'll have to see what happens. i mean, espn was a juggernaut for so long. just the idea of not having great news on it is enough to scoop the markets. the other top story to tell you about is staples and office depot officially calling off their merger. that decision coming last night after a federal judge ordered the deal temporarily halted because of antitrust concerns. the court backed the federal trade commission. the judge had ruled that the ftc
5:12 am
would quote eliminate competition and likely to lead to higher pricing and lower quality. shares of both companies fell pretty hard on the news. there's office depot. down 26%. staples down 10%. back to earnings, toyota with weak record outlook. with a weak yen. it warns as the yen rises it will be less profitably weighing on earnings for the year. share prices down 0.75%. fossil slashing its guidance for the current quarter and year. that watchmaker also blaming currency headwinds. the opposite story for electronic arts posting earnings revenue that came in higher than
5:13 am
expectations. nuance communications posting a revenue miss. another big earnings mover, this one to the downside. to the stocks to watch, blue buffalo topping consensus on both fronts. the pet food company highing the lower end to 4.2%. planet fitness gym chain saw revenue rise by more than 8%. it's up 2.9% in the free market. alaska air will replace san disk in the s&p 500. as sandisk is bought by alaska air. >> another one to watch, the federal monthly budget statement, 2:00 p.m. eastern time. sums up the financial activity as far as receipts and outlays and surplus and deficits. the earnings could be interesting, before the bell,
5:14 am
we'll hear from macy's as fast food giant wendy's reports that would be accurate to the closing bell. still to come on "worldwide exchange," shares of amazon jumping to a new high. the details. and the mega payday, ceo, jeff bezos. much more coming up on "worldwide exchange." the economy is growing, with creative new business incentives, the lowest taxes in decades, and new infrastructure for a new generation attracting the talent and companies of tomorrow. like in rochester, with world-class botox. and in buffalo, where medicine meets the future. let us help grow your company's tomorrow - today - at
5:15 am
♪ [crowd cheering] i could get used to this. now you can. when you lease the 2016 es 350 for $329 a month for 36 months. see your lexus dealer.
5:16 am
♪ no, you're not ♪ yogonna watch it! ♪tch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. welcome back to "worldwide exchange" to today's trade the day. yesterday's action in chute oil had many chart analysts excited
5:17 am
from the 50-day moving average. is this a long term trend but is this really the end of the two-year downturn? and we find out what happens when oil displays a golden cross. in stock price actually falls. the top performing s&p 500 names which oil slips. o'reilly automotive and the chartest contrary is bullish. go to cnbc for more details. good it's to be jeff bezos again. amazon stock closing at a record high, above $700 yesterday. bernstein raising on the
5:18 am
retailer believing that the margins will be expanding faster than expected. helped bezos bec billion richer. and bezos is in fourth place on the forbes list of the world's billionaires that came out in march. bezos' network has grown by $50 million. really the standouts are facebook, amazon and when you think about those two companies, i meaner very much propelled by their two leaders which are becoming billionaires. bigger billionaires by the day. >> i know. as you say, management getting a very key round of applause for those companies' strong performance fiscal and recent years. chipotle shares down 2%. the board is expected to come under fire from shareholders today. one proposal from the new york
5:19 am
city pension funds would allow an investor or group of investors earning 3% or more for chipotle's outstanding shares continuously to nominate directors to the board. the company wants that at 5%. i wonder at 3% you also get a free burrito. when we come back, sports news, including a report that the owner of ufc are in advanced talk to sell the league for up to $4 billion. >> i've been to a ufc fight. >> you have. >> awesome, in vegas. big wins for donald trump and bernie sanders last night. but first to the break, let's hear the national weather forecast from the weather channel's jen carfagno. today, the parts of texas up into missouri and illinois, watching a front ahead in the
5:20 am
move ahead of that warm sector. damaging wind is, hail, and isolated tornado risk. and scattered thunderstorms into the afternoon hours into the mid-atlantic. warm and humid across the south. temperatures hitting upper 80s. warping up, too, in the northeast and northwest this ahead of the big cooldown ahead of the weekend. plus warming back up in the west as well. seattle back in the 80s. we'll be in the 70s in los angeles. that's your forecast, meteorologist jen car nafagncar. and what an amazing time it's been, decade after decade of innovation, inspiration and wonder. so, we say thank you america for a century of trust, for the privilege of flying higher and higher, together. ♪
5:21 am
5:22 am
5:23 am
welcome back to "worldwide exchange." political news wins for donald trump and bernie sanders in yesterday's primaries. now donald trump is heading to washington to persuade house speaker paul ryan and other political leaders to jump on his bandwagon. nbc's edward lawrence is here with details. >> wilfred, it would be interesting to be that fly on the wall when donald trump comes here to speak to paul ryan. he's hoping to sway leaders that he's the republican to be president. donald trump looks to unify a very divided republican party. he will start during a meeting on thursday with house speaker
5:24 am
paul ryan and other republican leaders. >> we can't fake it. we can't pretend. we have to actually unify and do it. >> reporter: this as senator ted cruz who dropped out hinted there may be a return as a candidate. >> and seeing no viable path to victory. of course if that changes we would consider things. >> reporter: and donald trump will announce his final choice at the convention. >> i am, if i'm fortunately enough to be the nominee, i am looking forward to debating donald trump come the fall. >> reporter: both trump and senator bernie sanders are now after the same target. >> let me be as clear as i can be, we are in this campaign to win the democratic nomination. >> reporter: sanders won the west virginia primary yesterday but is still behind in the delegate count. and hillary clinton is in a tough spot. she cannot ignore the amount of
5:25 am
votes that senator bernie sanders is getting but wants to put the primary behind her and focus on the help cans. back to you, wilfred, sarah. >> we'll see how that meeting goes. thank you. senator john thune wants answers from facebook. republicans from south dakota sending a letter to the company demanding the social network explain how it handles articles on its trending list. suggesting facebook intentionally suppressed articles from conservative sources. facebook has strongly denied those accusations. and more and more questions come around that article, including the source that was mentioned as politically conservative. and none of the other sources that they spoke to explains that facebook hinted to this. >> it suddenly hit a nerve but if it is proven that they are doing it on purpose, does it
5:26 am
break a law? lots of news agencies are politicized -- >> very much against. facebook has come out and said not only do we not do but it's extremely important for us to be politically agnostic. they're a source for 1.6 billion people around the world. it's an important issue for them. let's move on to the sports. the most well-known name in the mixed martial arts game may be up for sale. espn reports ufc is up for sale. at least three have submitted a list. he bought ufc in 2001 owns 80% while dana white and the abu dhabi government own it.
5:27 am
the. and steph curry news of the day, you can now play like him from the comfort of your own couch, wilfred. to celebrate curry's nba award and first pick in nba history, maxing out the rating which means he'll be the best shooter in the game. it's just like curry's sponsor under armour, in place for 30 hours. when we come back this morning, top stories including forces behind disney's selloff. plus, we'll get you up to speed with big market drivers with tony crescenzi. so when you need a dog walker or a handyman, we can help you get the job done right, guaranteed. get started today at angie's list.
5:28 am
you gein your car. odors you think it smells fine, but your passengers smell this. {ding} eliminate odors you've gone nose blind too, for up to 30 days with the febreze car vent clip. wow, it smells good in here. so you and your passengers can breathe happy.
5:29 am
♪ no, you're not ♪ yogonna watch it! ♪tch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it!
5:30 am
♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. good morning, is the magic gone? disney shares plunge as the earnings miss wall street's mark. no deal, staples and office depot calling off the deal. and macy's kicks off the retail earnings season today. it's may 11th, 2016, you're watching "worldwide exchange" on cnbc. ♪ good morning, welcome to "worldwide exchange" on cnbc. i'm sara eisen. >> and i'm wilfred frost.
5:31 am
good morning from me as well. >> let's get you up to speed on the markets, a nice gain, 1% rally to finish yesterday. dow futures lower by 50 points. s&p by5.7. nasdaq by 13. how about shares of disney, the company falling short of earnings estimates for the first time in five years last night. advertising and subscription declining at espn. theme park revenue came in a bit lighter than expected. much more on disney in just a moment. but we do want to show you it with shares down 5.24%. as for the gold market, let's have a look at europe, we're staring at losses particularly pronounced in france. jc deceaux. italy down 2%. with the earnings weeks the italian banks at the moment and various price targets being slashed off the back of those.
5:32 am
germany down 0.6. >> asia was a mixed session some surprised that we didn't see a more mixed seson following yesterday. the nikkei managing to close basically flat, despite the yen strengthening 0.5%. and oil price reece mained strong. strong performances for the u.s. indices. and down by 0.8 and not much movement in the u.s. ten-year in the last couple days. it's in around 1.7%. just above that level at the moment. we'll have that for you shortly. there it is, 1.745%. the dollar is moving in the opposite direction in the last last few days. as i said, the yen has had a little weakness which is
5:33 am
welcome. today, the yen is stronger and we're seeing the u.s. dollar weaken. gold is getting a little bounce today by about 0.5%. and it is at 12.74 up 0.7%. let's delve into the corporate story that would be disney. earnings and revenue falling short among the big drag, espn subscriptions falling. ceo bob iger discussing this idea of cord-cutting and the future of viewership on the conference call. listen. >> we're also in discussions with a number of entities, some current distributors that are coming forward with new packages. and some completely new distributors. all have expressed an avid interest in having espn and our other channels included in their initial offerings. and we're very, very encouraged by the discussions/negotiations that we're having. >> theme park revenue rising about 5% but that is actually a bit weaker than expected.
5:34 am
the company also announcing it is exiting the video console game business, less than three years after it actually launched. it was called infinity. and it involved a few hundred layoffs. a bright spot was the movie business. studio revenue rose 22% during the quarter to $2.1 billion. that was driven by "star wars: the force awakens" and the animated movie "zootopia." iger talking up some. other movies that they have currently in theaters that will help carry them on movie studio revenue which is clearly what's working. what's not is dominating sentiment as ivan tigress told us the loss in digital espn. >> and the movie business like you said, we've got the latest "avengers --" what's it called --
5:35 am
>> captain america. >> and you can expect the movies to soar. the price focusing on espn subs and advertising which is disappointed. staples and office depot officially calling off their merger. a decision comes off a federal judge orlandoed the deal temporarily halted because of antitrust concerns. the judge ruled the ftc had shown there was a reasonable probability that a merger would substantially impact competition to the sale of larger customers. staples would pay a breakup fee to office depot. shares reacting very strongly to staples down about 10%. office depot down about 26%. >> and just another example of a major deal that has been blocked by this administration. stocks coming off their best day in two months yesterday. joining to us discuss it,
5:36 am
portfolio manager of pimco. good morning. >> good morning. >> this idea that another breakup in the office supplies frommen antitrust line, does this weigh on it? we're getting a lot more of mergers actually happening this year. >> taking it a lot higher, regulation is the sort of thing that worries markets globally is this idea of government intrusion. there's this feeling of elections coming up in the next year, including of course, in the united states, perhaps business won't get that cloud over its head and in particular in the financial sector continued worry about liquidity drying up over time, because banks arles and less willing to lend because of taking fewer and fewer risks by buying the lending that they're engaging in. as a theme in general, 35,000 regulations is still one that is affecting global markets. >> tony, i certainly agree. and it doesn't look like
5:37 am
regulation is going to ease u s. as we focus on the political race, hillary clinton and bernie sanders, on that note, are we overconcerned with the political race could mean for the businesses? >> well, you probably hit the nail on the head. you asked in the form of a question rather than make a statement and that's what markets will be doing. and history shows that just prior to election, perhaps there's a little skittishness in the equity markets. but you're right, both sides of the aisle seem to want some form of action we know that house speaker paul ryan has an active agenda planned. in the last four years or so, signed by the president released in about 200 years so we can only go up from here. but hillary clinton for her part
5:38 am
seems to want some part of corporate tax reform and infrastructure spending. same for donald trump. in both cases we might see a revival of corporate spending. and this is the key to the economy. because the economy has seen only 2% growth. partly because productivity has been weak. productivity is affected by people, stuff, everything that we invest in, how it all get the used. and the data shows the capital investment process is missing. so 0.5% growth in product sift versus the usual 2 if that's boosted means growth could pick up. let's they half percent growth. it's very possible more investment next year or the year after limited to an increase in the united states. we see a better stock market because that means more earnings and more earnings for companies and more earnings for people. >> does it surprise you that we can't manage to get above this 2% sort of growth, sluggishness,
5:39 am
all of the regulation you talk about. barely corporate earnings. this has been somewhat of a depressing earnings season and yet we're only what, 2% from a record high in the stock market. yesterday, we saw a day where financials and energy companies charged ahead all because oil companies were belting. >> the 2% growth is so far relative to history. history is 3%. seems like growth potential is about 2. the potential for any economy to grow is to find the amount of people in the labor force for the u.s. it's something like 0.7% or 0.8% up. and productivity. this is why the potential for the u.s. company to grow, and that's why job growth has been so good. the growth potential is 1.7 but it's 2, this means that companies have to dig into the labor force for more workers because demand is outstripping
5:40 am
the ability of companies to grow. and so, it does seem we're reaching our limits right now, but we could raise that bar. with a bit more investment in infrastructure. and in capital equipment, software, et cetera, structures if we get that next year. but again, is this next year's story. and the stock market might be thinking we might just get there part of the reason it's not far from the mind. and the climate which is like throw presift for the rest of the decade. >> tony, thank you. big earnings stories, macy's first big retailer to report this season. analysts are bracing for another tough quarter. landon dowdy joins us with three things to watch in the macy's report. good morning. wall street looking for earnings of 0.36 per share. here are the numbers to
5:41 am
watch.trend is expected to continue. jpmorgan forecasting sales will drop another 6% in q1. the worst performance with a financial crisis. and how to watch categories for both u.s. customers and tourists. second, margins of inventory. will mall traffic with amazon and fashion brands eating away at macy's pricing power. also eating away at the stock down 45% for the year. third thing to watch, real estate. this may be a positive catalyst as they've pressured macy's to set off its holdings. back to you. >> landon, thank you very much for that. when we come back, today's can must reads" including one on what trump and clinton would mean for the markets. and today is national third shift or night shift workers
5:42 am
day. observed in the second wednesday in may and honors those who lead a more nocturnal life. we can relate. emergency workers, truck drivers, and they make up 1%. while more than 2.5% are rotating shifts. >> and those who get up even earlier than us, our producers. we appreciate that.
5:43 am
5:44 am
5:45 am
welcome back to "worldwide exchange." to today's "must read" stories capturing our attention. "wall street journal," my pick is titled "the cable bundle will be reborn." that of course relates to disney's earnings out late last night. the authorizing light tv is the biggest challenge for the internet. you can't sell copies in advance. live tv if handled like on-demand tv would clog up the internet with streams for every viewer. very opinionated view. the espn subs are falling but is that in line to the content that espn has amongst other things able to be transmitted over the internet because of simple delivery methods, is there another capacity. it raises the question is disney
5:46 am
slightly more protected than we think. >> value of live tv being underestimated? >> yeah. we've got these other roots to deliver it. but does it have to in fact come through existing cable providers or the internet is not quick enough? you're not going to get everyone on the nfl. it will crash. mine is "trump v. clinton: what does it mean for markets?" i love this piece because it goes through equities and it also goes through currency which is is the point that i picked out not since lloyd bentsen is bill clinton's first treasury secretary has an administration publicly talked down the dollar." japan, korea, taiwan could come under pressure, this of course goes back to the comment that donald trump made here on cnbc
5:47 am
on "squawk box" last week where he said, quote, i love the concept of a strong dollar. while i obviously like a strong dollar with certain benefits, it sounds better than in actuality which implies he likes the weak dollar which as a businessman makes sense. >> it marks all of the past presidents since the second is world war in terms of their average annual s&p 500. and there are clearly lots of other factors impacting. it's interesting. the average democrat returns 9.7%. >> for stocks. >> the average for republican president is 7.6%. and poor old nixon is worst performing president down 5.1%. he can't catch a break. >> i know. but look, it's something for democrats to show, i guess. >> great returns.
5:48 am
>> i'd also like to see that chart, though, against what congress loves. you know, in this republican controlled congress and for democrats they say that's good for the markets. >> 18.6%, blowout. anyway, it's a good article make sure you have a look at that. we are approaching the top of the hour, we're getting ready for "squawk box." kelly evans joins us with a look. >> wilfred, sarah. we have a lot coming up, david novak is hanging out with us for two hours. the former ceo of young brands. you were talking about disney and other areas to discuss. jamie dimon is going to be joining us as well. we're going to be talking to ken rangone. remember, i asked at the conference last week, was there
5:49 am
any chance that kasich was your guy. he is like, stop it, stop it, i'm a trump guy. first, though, guys, kicking things off this morning, we're going to are richard fisher for the first hour talking about fed policy. steven parker is going to join us. and donald remote of via. that's the ride sharing service you can use here in manhattan. >> i've heard of it. and people have told me to use it because i'm an avid uber user. and it seems so much cheaper and better so i'm going to use it. >> i'm going to try it. >> the way i understand it, i haven't used it myself, my producer jen has. you're often sharing a ride with people. it's like guaranteed. it's gotten popular very quickly. and the other big guys are doing the pool riding aspect. i don't know outside of manhattan, how much density do you need and how comfortable are people in sharing a ride with
5:50 am
strangers. >> indeed, i'm not sure i'm ready for that. thanks for that. "squawk box" coming up in ten minutes' time. first, retail earnings, the dollar, the catalyst most likely to drive pricing today. when we come back. with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. like in buffalo, where the largest solar gigafactory in the western hemisphere will soon energize the world. and in syracuse, where imagination is in production. let us help grow your company's tomorrow - today - at
5:51 am
cathy's gotten used to the her kitchen rbage... yup, she's gone noseblind. she thinks it smells fine, but her guests smell this. ding, flies, meow febreze air effects heavy duty has up to... ...two times the odor-eliminating power to... ...remove odors you've done noseblind to [inhales] mmm. use febreze air effects, till it's fresh
5:52 am
and try febreze small spaces... continuously eliminate up to two times the odors... ...for 30 days febreze small spaces and air effects, two more ways... [inhale + exhale mnemonic] to breathe happy. welcome back to "worldwide exchange" futures pointing to a lower open, after yesterday marked the best day in two months are for u.s. equities. join us in the studio is ken kamen, president of mercadien asset management. very good morning to you. ken, how big of a factor has the u.s. dollar been for equities recently? we saw a big performance yesterday. it's tended to dumb when the dollar has been weaker. >> yeah, i think psychology is that we got beaten up by the dollar last year. and the strength of the dollar, we're going to kind of see that rubber band bounce back yesterday. and that play for earnings.
5:53 am
and the expectation is that we're not getting the interest rate hikes, but this year, i'm not even in the two camp. i think we might get one this year, interest rate hike. playing into corporate earnings, especially global for the dollar looks pretty good. >> yesterday was a strong rally for u.s. stocks. i think some were caught off guard. in the past few days we've seen moves in the markets up and down. 1% gains. energy sector rally. >> on the back of strong oil prices what does that tell you? >> well, it tells me that people are still in many ways positioned for a much more pessimistic stance than maybe is warranted. we saw in zwrjanuary when the market sold off. everybody thought that the financial world was nut necessarily coming to an end but sliding towards a reinvest. as people were thinking, as they should, investing is more of a
5:54 am
long-term endeavor that we're starting to see some of that come to reality. one of the interesting things to keep in mind, the sentiment that the market overheated and whether it's fairly priced or not i'm not of the camp that i'm expecting a big downturn. markets kind of earning position in that fearle, i don't believe this is real state. markets don't tend to crack when you have people already positioned for that kind of -- you know, i'm not so sure, we're going to go the new highs. and that's exactly when new highs happen. >> what do you think of the tech and media sector if you will? huge differentiation in performance post earnings in companies there. disney the latest one. how do you plan on thinking about that sector? >> well, the whole thing is changing. i think it's kind of interesting this reaction to disney because the first time in five years it's missed, as we say. the company is still a juggernaut. sports is still the way to get people to stay around and watch a commercial. we're seeing not only in tech.
5:55 am
but now in media that everything is being realigned. we've seen in retail also. people are more comfortable buying power online instead of going into the store. believe it or not, i just bought my first pair of jeans online because they had the size i wanted easier and quite frankly, more cost effective than going into the a store. >> way behind on that, ken. i've been buying online for the last ten years. >> what does this mean for your investment strategy? it's been a pretty brutal earnings season right now. are you using some of the weakness in stocks as an opportunity to load up on shares and sectors that you like? >> well, i don't think it's as brutal as you might have just said. although everyone has their opinion. >> i'm just thinking disney and some of these companies which we're not used to seeing have missing and seeing sharp selloffs. >> well, that doesn't make it an entire brutal system. maybe about 70% of companies have beat expectations.
5:56 am
then again, expectations have been lower. i would still asset allocate between some of the big dividend players. and some of the companies that are kind of still off the radar. one thing i would like to highlight. small cap stocks which have gotten beat up, relative to watch cap stocks are still undervalued. if people march away from those, they might want to reconsider toeing back into those. you're paying growth rates for the smaller companies than you're paying for the larger companies. and they don't have the earnings expectations bit into them. misses, if they come, probably won't be as dramatic effect on the stocks. >> kernn, great stuff. ken kamen from mercadien asset management. what are you watching? >> i'm watching disney. i'm going to see if the buyers come in on the week. stock down about 5.25. dow stock questioning on the
5:57 am
overall index. a rare miss. bright spots in the studio not so much on television. >> that's it for "worldwide exchange." "squawk box" is coming up next. ♪ whole communities are living on mars and solar satellites provide earth with unlimited clean power. in less than a century, boeing took the world from seaplanes to space planes, across the universe and beyond. and if you thought that was amazing, you just wait. ♪
5:58 am
shoshow me more like this.e. show me "previously watched." what's recommended for me. x1 makes it easy to find what you love. call or go online and switch to x1. only with xfinity.
5:59 am
good morning, disney's world is a little bit smaller this morning. trouble in the miscellaneoouse . we've got more things than when apple does something for disney. the company posting it's earnings for the year. no deal between staples and office depot calling off the merger after a federal judge blocks the tieup. plus, the world has the fourth new rich equivaleest per. we'll tell who is laughing his
6:00 am
way past carlos simms. it's may 11th, 2016 "squawk box" continues right now. ♪ >> announcer: live from new york where business never sleeps, this is "squawk box." good morning. welcome to "squawk box" here on cnbc. i'm kelly evans along with joe kernin and scott wapner. becky and joe are off. we'll have richard fisher who joins us in just a moment. and david novak will be our guest host. we'll talk to target chairman and ceo brian cornell. home depot co-founder to talk politics and later, we'll talk to chairman and ceo jamie dimon. in the meantime, let's get a check of markets. overnight, it's taken a turn for the worse.


info Stream Only

Uploaded by TV Archive on