tv Worldwide Exchange CNBC May 19, 2016 5:00am-6:01am EDT
break news. an egypt air flight from paris to cairo vanishes. 66 people aboard. the latest coming up. walmart set to role out quarterly results this morning following disappointments from many other retailers. three o things to watch for that. >> and monsanto has received a takeover bid from bayer. could a mega merger be in the works? may 19th, 2016. "worldwide exchange" begins right now. ♪ >> good morning and welcome to
"worldwide exchange." >> overnight an egypt airplane carrying 66 passengers and crew disappeared from radar this morning over the mediterranean. egypt air is egypt's national airm. on board, 30 egyptian, 15 french nationals, one brit, and one belgian among others. scrambled aircraft and bottas search for the plane. the plane was flying an altitude of 37,000 feet when it disappeared at 2:30 a.m. the live report from paris is coming up in a few minutes time. let's get up to speed on early market action. after stocks were gyrating all over the place on the back of yesterday's fed minutes were which were interpreted to put june firmly back on the table for a interest rate hike.
the dow is down lower this morning. extending losses after what was another volatile session overnight. dow futures down 84. s&p futures down 10 and a half. nasdaq futures down 20. as for the 10 year treasury note. jump on the back of that reaction as the june hike odds went up sharply. not at 50% but they have adequate roomed at least in the. >> the dow down. japan flat. hong kong down. and europe more markedly in the red. the ftsi 100 down.
france just shy of a 1% decline. >> it is broader markets saw decline in oil. brent is off more than 2% at this hour. also below 48 at 47.89. so wti and brent spread coming in. as the two price come closer together. the dollar index having its best day yesterday since late february. actually that is reversing a little bit over this morning. as for euro picking up a bit of strength. the pound stronger as well. gold selling off sharply on the back of the stronger dollar yesterday. gold and silver. down almost 1.5%.
>> back to today's breaking news story. egypt airplane carrying 66 passengers and crew on a flight from paris to cairo disappeared from radar this morning over the mediterranean. hadley gamble joins us from paris with the latest. >> reporter: good morning. here in paris the french foreign minister is expected to speak any moment now regarding the fate of missing egypt air flight m ms8 ms804. they are also in the contact with families of the least one british national believed to to have been on board. in operations search and rescue is under way. 130 miles off the greek island of karpathos. they lost contact with the flight earlier today when it disappeared from radar. carrying 66 people on board and one of two non stop flights per
day to cairo. at this point nothing's been confirmed and even egyptian authorities have slammed social media for miss reporting the situation saying wait for our press conference. we have heard from airbus, the company tweeting they regret the loss. they lost contact around 2:30 a.m. egyptian local time. search and rescue operations under way and a press conference expected a few hours from now out of cairo. >> hadley. thank you very much for that update live from paris. >> and of course we'll bring you all the details as we get it. investors get a fresh snapshot of the markets. we'll see with what we get.
at 10:00 a.m. look for the monthly philly fed survey. and fischer and dudley, part of the inner circle of janet yellen are speaking today. and earnings will be key. walmart reporting. also dick's sporting goods. after the close earnings from applied materials and gap, as for walmart. will be very interesting to see whether we mirror some of the problems in apparel and accessories that we saw out of target. walmart is more grocery side of things with more than half sales coming from food. >> corporate news from yesterday. tesla motors announcing it will offer up to $1.7 billion of stock. shares dropping on the news.
last month ceo elon musk said the company might need to raise additional cash after raising 370,000 reservations for the model 3. the plans to build under way. musk will sell some of his own shares as well. >> monsanto says it received an unsolicited acquisition offer from bayer. no word on the details. monsanto is in the process of reviewing the proposal. a deal would likely be bigger than the san gen that takeover which is currently the subject of intense regulatory scrutiny in the u.the u.s.
>> more stocks to watch. american eagle outfitters first quarter profit beat forecasts. the teen retailer says demand was strong for its airy line for women. it's you have 15%. urban outfitters fell but was in line with estimates. demand rebounded for its clothing. up 7%%. cisco beat profit. the company is also giving upupn beet outlook for the quarter. and ceo chuck robbins will be
on. sales force hiking outlooks. saying its cloud strategy is what has set it apart from competitors. >> our competitors have been dramatically weakened by not shifting aggressively to the cloud. look at oracle. at sap. look at the messages they have delivered right on the show but they haven't delivered their products. they haven't trampled their -- transformed their businessed. >> -- the firm saying a combination will allow them to cut costs by $400 million annually. the video game maker take two posts fourth quarter results that beat on both fronts. the firm's forecast however did disappoint and the stock dipped lower. it's lower by less than 1%.
let's dig deep entire one of the bigger corporate stories of the day. and that's walmart. the retail sector has been under intense pressure recently following disappointing earnings from others. landon dowdy joins us. >> sales, nanls forecasts slightly higher. and despite recent retail wreck they say walmart should be insulated thanks to its grocery operation. but margins are also critical as the company's increased spending online and in stores including on higher salaries is weighing on its bottom line. and that brings us to investments. walmart has made big investments in its grocery segment focuses on fresh produce and organics
and innerva investors want to see how that's paying off. and how will they maintain annual revenue and continue to grow specifically with emerging markets and online sales. >> as retail results have disappointed. and landon brought up the grocery story again. which a lot of people do say insulate it. but kroger had a disappointing quarter. and even with the rise in consumer prices in april. the biggest we've seen in a year. >> retail sales in the uk this morning they were up. that is why pound is responding positively. still the come. egypt air flight vanishes with 66 people aboard. officials say no theory can be
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latest. >> the latest is the search is still ongoing. now well into the search in the middle of the mediterranean about 130 miles north of the egyptian coastline, south/southeast of crete. all looking for any sign of egypt air flight 804. it took off from charles dugal airport last night. about three hours in greek civil aviation authorities say they contacted the pilot as the flight was about to enter egyptian air space. the contact was routine. there were no problems at all. the plane at 37,000 feet at that point. just about 20 minutes later another -- they tried to reach the plane again, the pilot again. there was no response. and shortly thereafter the plane
disappeared from radar at which point egyptian authorities were contacted. so far egyptian -- air egypt is deferring to the egyptian civil aviation authorities in terms of information. we are expecting to hear an official press conference from egypt in probably two hours or so. there are crisis centers set up in both france, in paris, and in cairo where relatives of passengers are showing up at the airport trying to find any information at all. but so far no sign of this plane. 66 people on board. among the crew, three security personnel, which french officials say is completely normal operating procedure on a flight. of those people on board more than half were egyptian. 15, french and others from throughout europe, middle east and africa.
crisis teams have been set up at both airports and countries, including france, greece and egypt lending or offering their support for this search in the mediterrane mediterranean. >> thank you very much kelly. we'll have a quick look as well at transport stocks in europe and see how they are reacting. airbus down about 1%. airports of paris down about 1.4% so far. markets here in the u.s., futures are pointing to a lower open. we saw quite a sea saw session yesterday immediately after the fed minutes pointing to possible rate hikes. and the dow fell more than a one hundred points negative. and at the end of the day the dow was flat.
as you can see now we are more pointedly in red. down about 70 for the dow with the s&p and the nasdaq also called lower by in and around .4%. let's have a look at oil as well. it did hit a new high of 49.85. finished down about a quarter of a percent. down again today about 2% for wti. >> here we go again. the federal reserve hints and investors react across assets. stocks commodities, bond, and currencies. and then the question is. does the federal reserve react to the market panic. is it going to be pronounced enough for them to get cautious again? because we went through this whole exercise over the last year. >> i think the key from yesterday is there was a very pronounced reaction in the dollar, very pronounced in the bond market but that wasn't in
fact that pronounced in the equity market. all three indices ending basically flat. yes we've got asia down now, europe down now and futures as well. but in fact yesterday itself we recovered from the lows to finish basically flat suggesting the equity market may be in fact more prepared. >> or maybe they are not buying it. that the fed is going to go in june. it comes one week before the referendum. they are still watching china and with the dollar spiking overnight china's currency is down for the second day in a row so we'll see how the markets react and that brings us to the trade of the day which is the dollar popping following yesterday's fomc minutes as a june rate hike now appears to be on the table. our data team looked at what happens when that rises by 5% more or in one month. turns out financials materials and energy stocks are the worst performing sectors in those time
periods when the index surge. multi national strengthening as the u.s. dollar as currents cut into sales and earnings for markets and interesting that financials are up there. i guess they are more internationally exposed these days the likes of citi group and other parts of the world. o now the financials are doing better with a stronger dollar. >> exactly. depends what's causing that stronger dollar. >> makes the sense that energies and materials that are commodities go o other way. >> certainly a good day for the banks yesterday. >> when we come back, facebook's ceo mark zuckerberg meets with conservatives amid allegations of trending bias. highlights of that gathers extra. in but first here is jen carfagno. >> wilfred and sara. we've got more rain in portions of the south. texas again some rain. heavy am times. some of the thunderstorms, possibly severe. especially in south texas. atlanta, chance of storms,
better chance further south. another chance of heavy rain again in florida and in the west active weather. temperatures cooling down in the west as well. not hitting 60 in seattle. d.c. we've yet to hit 80 this month. not going to do it today. we do get into the 70s and i'm jen carfagno. "worldwide exchange" continues after this. the thing is, most businesses aren't getting the most out of it. the ibm cloud is uniquely designed for all kinds of data. like data from the weather company for 2.2 billion locations. or billions of health-related data points. even social sentiment in real time from hundreds of millions of people. it's all in the ibm cloud. if you combine that with the data your business already has- then things get interesting. so right now we're working with a retailer to blend social and inventory data to help predict demand.
disappeared from radar this morning over the mediterranean. flighting at an altitude of 37,000 feet when it disappeared. the last reported position was 165 miles from the egyptian coastline. let's get up to speed on the early market action. global market selloff was the reaction to the fed minutes which suggested june was more of a possibility than investors were betting. you saw that immediate reaction in the bond market. commodities and the dollar. stocks ended flat yesterday but they are losing ground this morning. dow futures down, s&p futures down almost 10. nasdaq down 19. that was on the black of losses across asia in early action this morning.
facebook mark zuckerberg -- dlbtly leaving news. in a post zuckerberg says i know many conservatives don't trust that our platform services content without a political bias. he says he wanted to hear their concerns personally and have an open conversation about how we can build trust. a facebook spokesman says the meeting was productive and some attend dees called it productive. and the golden state warriors trying to avoid two strait losses. and they succeeded. they go on a run to start the first half capped off by this
crazy shot by iguodala, behind his head and into the hoop. puts golden state up by 8. second half is steph curry show as usual. steph leading the way with 28 points as golden state wins 118-91 to even the series at one. records continue to fall this week as another rare auction for a diamond as is held. more than $57 million, including fee. that crushed the previous most expensive diamond sold at auction by $9 million. the oppenheimer diamond gets its
name from sir phillip oppenheimer who long oversaw debeers and had given the diamond to his wife. >> there we go. do you like blue? >> i like pink better. although i like purple even better and that's more rare. >> if there was one that size and it was purple would it be more valuable? >> yes. >> i think. >> yeah? >> i think purple is more rare. >> okay. taking notes on these things. more on the vanished flight still to come
break news. an egypt air flight from paris to cairo vanishes. 66 people aboard. the latest details straight ahead. >> walmart set to role out quarterly earnings following disappointing results from many other retailers. we have the three thoings watch on that report coming up. >> and monsanto says it's received a takeover bid from bayer. could another mega merger be in the works? "worldwide exchange" continues, thursday, may 19, 2016. good morning on a thursday. welcome back to "worldwide exchange" on cnbc i'm sara eisen. >> and i'm wilfred frost. >> breaking news overnight an egyptian airplane carrying 66
passengers and crew on flight from paris to cairo disappeared from radar earlier this morning over the mediterranean sea. egypt air says the plane was flying at an altitude of 37,000 feet when it disappeared in egyptian air space at 2:30 a.m. travel stocks in europe have been under pressure on this news. nancy hulgrave joins us love from london with a lookout some of the biggest movers. thomas cook at a three year row? >> that's right sara. straight to thomas cook here. the shares off more than 18%. but you have to keep in mind this company also issued results this morning and it was the guidance that really worried investors. full year guidance that came out the lower end of the range. anticipated by analysts forecasts there. that weighed on thomas cook. they are also pointing to specific weakness in turkey. you can bet that too is a drag on peers.
you can see two by off sohey of as the global selloff. the ftsi 100 off more than 1%. in comparison yes weak nnts travel stocks as investors keep an eye to this terrible situation with egypt air but relative to the overall market not doing so bad in some cases. thomas cook really lower there on guidance and cfo telling cnbc's european "squawk box" earlier that yes this is still a very tough environment. >> we're going discuss this disaster further now. joining us on the cnbc newsline is jonathan galaviz, he governors the airline industry as the partner global act
advisors. . what is your latest take now what happened this morning? >> i think we're dealing with a situation where there is certainly without a doubt a catastrophic failure with the aircraft. and there are a few caps that go with that one. possibly structure failure. possibly catastrophic mechanical failure or in externality which in this case would be possibility of terrorism. any of those scenarios are possibilities. and a huge investigation is going to be required to get a handle on what exactly happened. but it is certainly a tragedy and certainly again is rare for an airline to have this kind of
problem interefrom a cruising ae perspective. >> how rare is this for a location somewhat known and they were so close to coming to their arrival. we know what happened with malaysia but that was a different situation. >> i think one of the things the community communities, the situation of not getting good data from aircraft when they are at their cruising altitude and accidents happen aggregate the cruising altitude perspective i think there probably has to be a revisit as to new technologies and new methods to get more real time data that's more accurate and more live. because i think the situations happening.
i think it is kuwaindicating th really technologies and methods need to be updated by companies like boeing and airbus. >> and as far as we know, no signs of zpredistress up to tha point. what does that suggest is the possible cause. >> if one was to go with theory of mechanical were structural catastrophe, certainly getting close in as they were, there would be the possibility of a slight beginning of decescent o change of altitude to a lower altitude level. and certainly something can happen at that point when we transition from cruise down to the start of a slow descent. so that is a possibility. one of the strong possibilities here is terrorism. and i think that the french government and the egyptian
government, they have to kind of work from the worst case scenario back and one of the worst case scenarios is looking at the terrorism possibility and seeing what kind of security issues may have been -- >> how do they do that? what specifically are they looking for if they are investigating possible terrorism linked here? >> well the first thing obviously on the french side. the french side is obviously you are going to have intelligence agencies and data points and all of the personnel that have been involved with the aircraft on the ground all the way from maintenance to service personnel to aircraft staff that may have been putting fuel on the plane even. things like that the government in france is certainly going to be scrutinizing every single person that has contact with that aircraft since it was on the ground and since it took off. so that's going to be significant. in addition to pinging the intelligence information that may sbis there.
all of this is going to exist behind the scenes. certainly terrorism is one of the possibilities and i guarantee you the governments of both france and egypt are going to be looking at that behind the scenes over the next 24 hours. >> thank you very much for joining us this morning. jonathan galaviz. >> in terms of u.s. futures we're seeing a selloff. after a flat close yesterday, stocks all over the map in reaction to the fed minutes but they are pointing lower this morning. the early action in europe is negative as well. will nancy showed us some travel related stocks. but overall a broad market selloff. german dax down 1.6%. losses in asia overnight for the asian currencies.
commodities and for stocks, this all in reaction to what was interpreted as the more hawkish fed statement. i.e., fred officials are considering june still for a rate hike. it is this protectable reaction that we have been through in the past. fear of a fed hike. even though theoretically that should be a signal that the u.s. economy is doing pretty well. >> reaction yesterday at least was that negative. it certainly saw a move in the dollar. certainly saw a move in bond markets but equities basically closed flat. >> closed positive. >> sold off hundred points immediately after the minutes and banks were a positive beforer. broader markets quick. oil price down a quarter of a percent yesterday. intraday they hit a fresh high although. 47.22 today. wti down 10%.
the 10 year note and 2 year note yeerar note. the dollar stronger yesterday. the pound rallying a little off the back of stronger retail sales. the euro also just above flat having sold off a bit yesterday. gold prices there in the red today. >> while the fed is ruling the markets these days, we do have corporate movers to tell you about. tesla offer is. 1.7 billion of stock to finance the new model launch. after receiving 373,000 reservations for the new model. as a result of the strong demand tesla plans to speed up production in factories to build 500,000 vehicles a year in 2018.
and that was two years earlier than first planned to hit that milestone. alongside the tesla share sale he'll sell some of his own shares. >> in deal news this morning monsanto received a unsolicited officer from bayer. no word on the details. monsanto is reviewing the proposal. a deal would likely be bigger than china's 43 billion sangenta takeover which is big news. >> and cisco beat forecast driven by demand for security products. and expects revenues to be flat. and chuck robbins will be on
squa"squawk on the street" toda 9:00 a.m. eastern. don't miss it. retail, walmart set to post quarterly results before the bell. looking for earnings of 88 cents a share. analysts forecast slightly high sales and consumer traffic. they say walmart should be insulated thanks to grocery operations which account for more than 50% of sales. margins are also critical. the companies increase spending online and high salaries is weighing on the bottom line. walmart is up about 6% in pre market. the key earner to watch today. >> and top trending story of the morning. bernie sanders falling behind on the campaign trail and it is showing up on twitter. people are turning to social media with the #bernie lost me
to tell whel when support-his campaign faltered and why d to e smell of lingering garbage... ...in her kitchen yup, she's gone nosebld. she thinks it smells fine, but her guests smell this. ding, flies, meow febreze air effect 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 and try febreze small spaces... ...to 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.
what aremaking a cake!ht now? ayla reminds me of like a master chef and emiana reminds me of like a monster chef. uh oh. i don't see cake, i just see mess. it's like awful. it feels like i am not actually cleaning it up what's that make mommy do? (doorbell) what's that? swiffer wetjet. so much stuff coming up. this is amazing woah. wow. now i feel more like making a mess is part of growing up. stop cleaning. start swiffering. good morning and breaking news. the egyptian aviation ministry will be holding a news conference at 7:30 a.m. eastern. this after a plane carrying 66 passengers on a flight from
paris to cairo disappeared this morning over the mediterranean sea just shortly before it was due to land. to this morning's must read stories. in the "new york times." my pick is "the real bias billionth in at facebook." facebook said that the process was neutral. that the stories were first surfaced by an algorithm and that it is not a defense however saying of neutrality because algorithms aren't neutral themselves. this is an interesting read. quite a complicated topic with good explanation. and he says the algorithms don't necessarily pick a political bias. he does say they are geared to what drives interaction. more clicks and comments because that is what drives advertising revenue based on that rather than just people reading the
articles. >> isn't that better than people picking them in terms of bias? >> might be. but either way i'm saying the algorithm has a bias built in. >> someone has to program that. >> and it's generated on what drives revenue but either by away there is a the bias built into it. >> we'll see if the meeting can help make progress. my pick is in the british paper the telegraph. economists at a shench of failure behind them. no wonder they back remain now. and he he's talking about the focus actually backing britain leaving the eu. they are not wanna be donald trumps. arguing that it would ruin us and portraying a post brexit
britain as a nation that decided to turn its back on free trade and foreigners. and it is a very comprehensive look as to why economists have been wrong for centuries or at least decades, and modern history as well, in the 90s and 2000, why everyone is believing them now that a british exit would hurt britain's trade and economy so much. it is interesting and powerful. >> interesting. and very much right wing view. very much pro exit view. but i think the point he's also making there is at the moment the remain camp are trying to say that we've already won the economic argument. the exit camp are making sompbt games.
we're approaching the top of the hour. so that means the team is getting ready for "squawk box." andrew joins was a look. >> before that hold on. i'm adding an article to the list. cover of the "new york times." costlier ice cream bar comes with an apology to japanese. did you see this piece? this is about stagnation in japan. an ad for a company that is raising prices for the first time in 20 years. the executives went on television in the ad to apologize. this ice cream bar, they just raised the price by the way only by about 9 cents. but that is what the commercial is. it says a lot about the economy
over there. >> does it say they are out of deflation. >> we don't know yet. that is probably the bigger question. we have gordon bethune later on in the show. we're going talk about the tsa. all of those lines and who should be paying for it. it is a big issue and a big debate. and scott spurling, the world of private equity, deal making. the economy. a react on what's going on with walmart. and a tim gunn -- he's not going to be on the show anymore? did he just cancel again? >> maybe. >> maybe now. behind a product called who say which is an awesome digital product a lot of celebrities are using. you might be using it for social media. i don't know. nonetheless we might be having
>> what they did in these minutes is they put a june hooik back on the table. i think that is a mistake for a how many of reasons. first quarter gdp was poor. corporate earnings were poor. the brexit vote literally eight days after the june fomc meeting. too much volatility there. >> a risk? >> which is a risk. and if you look at the polls. the prospect of brexit. while we don't think is going to happen, it is still out there. >> why is this a mistake? they haven't hiked rates. they have just opened the possibility and given themselves more flexibility as the year comes on as opposed to acting. >> no question from our perpetrate aspective a december
appropriate. july and september is appropriate. but we think a june hike would be a mistake. the fact that i think what the fed did to some degree is rattle the equity markets cage because of this kplas kplanssy. >> so what are you telling your clients to do? >> we're playing defense. and we anticipated this a couple of months ago. we've pulled our equity allocation back to neutralal. and the equities we have are more defensive in nature. >> like what? >> the lower bader the higher dividend payer. reits. healthcare. telecoms -- >> -- selloff if the fed gets
back on track with raising rates. >> we don't think the fed is going to do that. right now we don't think they are going to hike in june. we think we'll see something later in the year when the data gets better. >> citi group yesterday up about 5%. was that over done. >> we are concerned what's going on financials. once the fed came off that rate hike for the beginning of the year we -- >> how do ge wee get out of this vicious cycle? it can't even get to 50 basis points because the markets throw a tantrum and we're constantly going. >> what we need is better data. first quarter gdp was one-half of 1%.
we need 3% growth consistently. >> and the bond market. is that a good place to be if you want protection? >> our bond guys would prefer spread product. maybe junk or em or munies better. but certainly what happened in the treasury market is probably a little over reaction. and if the fed in fact does nothing in june we ought to see treasuries rally back into the 1 and a half percent neighborhood. only a minute left. weefl watch from speeches from dudley and fischer. >> and keep an eye on walmart.
breaking news an egypt air flight from paris to cairo vanishes. 66 people aboard. and i think ten crew. details ahead. walmart set to role at quarterly earnings following a dismal week. and chemical connection monsanto says it received a takeover bid from germany's bayer. could another mega merger be in the works? it's may 19, 2016 and "squawk
box" begins right now. >> live from new york, where business never sleeps, this is "squawk box." >> good morning everyone. welcome to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. u.s. extends at this hour you can see things are sharply weaker this morning dow futures down about 80, s&p off 10, the nasdaq down 20. yesterday the market up triple digit gains for the dow until the fed minutes come out suggesting the fed is more serious about raising rates in june. you saw what happened with the fed futures, went from 0% chance of them raising rates, talking 4% chance or something. now up to 24% chance. >> down a hundred. and up -- >> -- back and. >> all the way back. >> essentially ended the day flat.