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tv   Worldwide Exchange  CNBC  May 20, 2016 5:00am-6:01am EDT

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good morning. ready for a rally. green arrows as investors brush of hawkish fed remarks. >> and on the agenda, currencies and negative rates a live report from that meeting coming up. >> and retail wreck. gap joins the growing list of companies throwing up caution flags on the consumer. friday may 20, 2016 and "worldwide exchange" begins right now. ♪ ftf-t-g-i ♪ ♪ >> good morning.
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happy friday. welcome to "worldwide exchange." i'm sara eisen. >> and i'm wilfred frost. very good good morning to you from me as well. and let's get you up to speed with the market. bouncing back pretty confidently around the world. we're up about half a%. the s&p up 8.5, the nasdaq up 23. yesterday we were down abo about .5%. wednesday banks the strong performers when talk aft the fed rate hike first appeared. yesterday strangely utilities were the best performers. so clearly confidence off the rate hike slightly dissipated. today we're called higher by 70 points. a bit of movement once again on the 10 year note. >> treasuries heading for their first weekly loss in a month.
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the global market, overnight in asia. green on the screen. the yen weakening which helps japan. out makers in particular. shanghai ending up as well. still extending another weekly loss, that's five in a row europe opened up strong. the euro stocks opened with a 1% gain and we're seeing that continue in the early session. the german dax more than 1% gains. energies strong again. clearly there is stabilization and maybe we're going to be okay if the fed raises interest rates in jup or july or maybe the market not buying it. >> i think that is the take. resources leading the charge. metals a bit of a rebound but absolutely right.
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equities haven't really sold off that much. but wednesday and thursday we ended off the lows down abo about .4%. and particularly that international performance today. over 1% gains in europe. if the fed worried over the week that the fed might scare everyone back to o brichb it's been very far interest that. >> oil and the u.s. dollar. oil prices are rising again this morning. back above $48 a barrel. so multi month highs here. there is still a lot of talk about supply disruptions coming out of nigeria, canada and lower output out of the u.s. >> the euro today is a tad stronger. the yen is a tad weaker. the pound a bit flat, a bit below flat today. close to 146. the pound had has had a decent week.
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retail factors also growing confidence. the betting market saying just a 1 in 5 chance of an exit vote so the confidence is growing the remain camp will win the vote. >> with a lot of angst over the fed and currency market this seems to be whether the stock market globally likes the best right now and that is a weaker dollar versus the euro and a stronger dollar versus the japanese yen. that is sort of the calm force when it comes to the currency market. once the dollar strengthance against the euro. there are concerns about currencies and all that. we might see markets fall out
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but at the moment it is holding. >> and gold. bore the brunt of the selling on the fed on those increased bets of a june interest rate hike. we'll wrap up the trading week with more housing data and retail earnings. >> now to a developing story this morning. a search continues for the missing egypt air flight that disappeared from radar early
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yesterday. hadley gamble joins us live from paris with the latest. hadley. >> good morning. so right now three french investigators and a technical expert from airbus have landed in cairo and we understand the egyptian government has taken full charge of search and rescue operations in the mediterranean. a lot of questions today about the flight path of this a 320 aircraft before it took off here in charles de gaulle airport that fateful night. and where was it before him. belgium, indonesia, as well as cairo itself. so a lot of questions. another big question is if this was a terror act as has been suggested even by the aviation minister in cairo, why hasn't there been any chatter by
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islamic state or al qaeda. right now we're waiting to hear more from egyptian authorities. >> thank you very much for that update. switching gears to corporate news. deutsche bank is investigating a number of trades that may have improperly made a number of employees millions in profits. the trades which benefitted a number of current and former employees reportedly cost the firm up to pay inflated fees. deutsche is up 1.5% today! yahoo bidders are reportedly expected to offer 2 to $3
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billion for companies core business. far below earlier estimates of 4 hello $8 billion. verizon is still considered the front runner at this point. the is latest name to report. gap. posting earnings in line with previous guidance but givening a cautious outlook for the rest of the year. gap now plans to close all old navy stores in japan and some banana republications, mostly outside of north america by the end of this year. ceo art peck on the conference call yesterday. >> a change that is impacting this industry is obvious. it's been obvious to us for a while which is why we are moving with urgency against a multi
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year plan to mod ernz this company across many levels. >> following latest earnings report s&p global ratings downgraded gap to junk status. >> other stocks, applied materials beating the street on top and bottom lines and offering upbeat outlook. a mat's optimism has been --. and shares of shoe carnival down sharply. guidance fell short of con sens. and ross results were in roughly in line with estimate but current quarter and full year earnings guidance was weak. ross was one of the brighter spots. >> for stocks to watch.
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mentor graphics did something. mixed results from brodcade. earnings were in line. down 2.4%. auto desk posting smaller than expected loss and guidance came in light. >> tesla raised more than $1.4 billion from the sale of nearly 7 million new shares. the sales were prices 215, lower than a previous sale price of 242 in august last year. tesla does plan to use most of the proceeds to expand production of its cars to 500,000 a year by 2018. >> valiaueant received a notice default from bondholders.
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it can avert by releasing results by july 15th. australia's oil search agreeing to boy interoil for $2.2 billion. that is the 27 percent premium. >> still to come a live report from the g7 meeting in japan. what finance leaders are saying about currencies negative rates and much more. >> and first 1873 on this day, levi strauss and jacob davis received a patent for denim pants. inventing blue jeans.
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welcome back to "worldwide exchange." if you are just waking up let's get you up to speed on the market action. futures as you can see called higher, roughly eradicating yesterday's losse slosses. >> we did learn investors pulled nearly $4 billion in u.s. based
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stock funds in the latest week. and money market funds attracted nearly $11 billion. >> to today's trade of the day. the potential june rate hike has investors concerned and that's a stent vix volatility index higher by more than 20%. what are the best so called fear trades? when the vix rises there are two e it haves that rals. for more go to and check out cnbc pro. >> is there any consensus from the leaders how to boost growth? >> no consensus just yet sara but certainly the two key issues
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on the table here fx market intervention and a growing rift we've seen when it comes to fiscal and monetary policy. specifically on market intervention. the question is will japan pull the trigger. finance minister tar as has said he's already threatened to intervene saying he doesn't believe a one off intervention would violate the g-20 agreement to avoid any kind of competitive market evaluation. and that's put him at odds with jack lew who has had they have been orderly and don't warranty any intervention. and also the central bamg's decision last night not to move despite volatility in the
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markets. there is a larger discussion whether or not --. >> i think there is a policy effect and certainly the ecb has also proven the policy effect of its monetary policy. yet the mor expansionary it becomes you have to wonder what more effect you can get. and at the moment for effect can come actually from structural reforms. sound policies from governments rather than an even more expansionary monetary policy. so there is the balance. i think we politicians need do more and only then the central bankers can do less. >> and two other euro zone
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issues here at the g7 meeting. the brexit vote next month and greek debt deal. dijsselbl dijsselbloem telling me he is highly optimistic that a deal will be reached finish their next meeting on tuesday. >> akiko thank you very much. live in sendai japan. i've actually been there. that is where the tsunami was and earthquake and very close to the nuclear disaster. >> japan or hong kong, which is your favorite? >> so difficult. i lived in hong kong so maybe that. but i love them both. >> a great picture of all the finance ministers in traditional japanese location, embracing the location. >> what is that the g7 meetings are all about. all about the photo ops.
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taiwan naug rating its first female president, tsai ing-wen. . another high profile person weighing in on brexit. canada prime minister justin trudeau wants the uk to remain in the eu. the comments after campaigners had argued canada was a potential model for britain if it left the union. betting odds today on the brexit issue indicating a 79% probability of britain voting to stay in the european union. this according to bet fair. the implied probability has increased about 9 percentage points in the past week. the pound also enjoying a decent
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week. it is off a bit today but as you can see at close to 146 the range since the announcement earlier in february has been much stronger for pound and definitely the remain camp at the moment gaining strength. >> the pound is the only currency that is stronger against the u.s. dollar this week because the dollar had such a good week o on the fed because it is just marching to its own beat on. to our twitter and facebook question of the day. the british pound up this week in response to the confidence the uk, we ask which way there brexit vote go? >> early indicators suggest otherwise. we'll continue to get your views and bring you results later in the show. josh, don't you have friends coming over?
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clinton is slamming trump when it comes to foreign policy saying he's not qualified because of the dangerous and reckless and irresponsible positions that he's taken. that is the way she describes it on north korea and nato and nuclear weapons and bernie sanders now is being pressured i should say by the democratic party to drop out of this race. they are trying to offer him a key position at the convention to have some say so over the democratic platform in exchange for dropping out early and supporting hillary clinton. >> tracy i know some of the candidates have been weighing in on the still very mysterious disappearance of the egypt air
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flight. wondering what the latest is on that? as we continue to search for answers but we do hear it play out on the campaign trail. >> exactly. and it has a lot do with terrorism. donald trump came out very quick tweeting and expanding on this talking about the fact that it is clearly terrorism even though the investigation has not found that yet. he says if you think otherwise you are a hundred percent wrong. on the other hand you have hillary clinton who in an interview last night with cnn also said that this appears to be terrorism. that it was a terrorist act. but certainly leading to greater discussion how to deal with this. >> and actually end up a major issue for this election? >> it usually has to do with
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what some of the biggest issues are right before the election. if we continue to see more issues like what's happened in paris and with egypt air throughout the summer and more issues into the fall it could certainly rattle a lot of voters. and yes become an issue in the election. >> i think it is an issue in the brexit referendum. >> tracy, thank you. >> to sports the cleveland cavaliers delivering a beat down to the raptors in gain one of the eastern nba conference finals last night. lebron james finishing with a triple double, 23 points, 11 rebounds and 11 assists. he mooufls past shaquille o'neal
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into fourth place all time in playoff scoring. cavs win to go up 2-0 in the series. still co-come the rallies around the world and calls to the consumer and what gap said last night on the conference call. stay tuned. cnbc first in business worldwide
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good morning. ready for a rally.
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green arrows around the world right now as investors brush off hawkish fed remarks. >> gap joins the growing list of companies throwing up caution flags on the consumer. what the retailer said last night on the conference call. >> and apple unveiling an update to its flag ship store in san francisco and has fans buzzing this morning. friday may 20, 2016, you are watching "worldwide exchange." ♪ just one thing i need ♪ ♪ i need ♪ i need >> good morning i'm sara eisen. >> i'm wilfred frost. very happy friday morning to zbrou. >> we're seeing stabilization in the market this is morning after kind of some caution on the federal reserve minutes that were released on wednesday. much better picture in terms of the wall street set up. we are off the session highs. nasdaq futures up 16 and we are still looking at the down week
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for stocks. the fourth in a row for the s&p and the dow. the fifth in a row for the nasdaq. the 10 year treasury note yield very interesting. first weekly decline for treasuries in a month. that results in higher yields as bets rise that june might be on the table for a rate hike. 185 this morning. >> we were close to 1.9 wednesday afternoon. global markets this morning, they have rebounded as well. asia in the green right now. finished in the green already. hong kong up .8%. shanghai up .7. japan eking out half a percent again. europe particularly strong this morning. the ftsi 100 up 1.4%. broader markets in focus as
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well. >> yes. oil at the top of the list as always. we are seeing gains in the price of oil this morning. 48.29 is wti crude. though they have come off the best levels in the last half hour. could explain why some of the steam in the rally in u.s. futures and european stocks has come out. brent is barely higher right now. natural gas as well. the dollar strengthening. big story of the week. higher rate hike odds equals something. we're above that 110 level on the japanese yen. on brexit polling which continues to show confidence and momentum for the camp that wants to stay inside the eu. gold having a tough week on the back of the fed and stronger
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dollar. we're seeing a reversal in some of the trades we've been seeing post fed minutes. >> fed minutes come out wednesday. lots and lots of excitement that june might be back on the table. but no one is expecting june. it just means the chances of hikes are a bit higher. >> or could it be maybe we could handle another 25 basis point mini hike that the fed feels confident. in terms of construction, consumer price, retail sales even higher. it is not perfect but if the fed has confidence to raise mace --. >> either way i think the fed will have taken confidence from the fact that equities response to those minutes haven't been worse. we came off the lows on wednesday and thursday and we're
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bouncing back today. so the response not nearly as bad as perhaps it could have been. >> and that could help. that could go a long way to helping the fed make the move. >> exactly. let's move on. we wrap out the trading week with housing data and retail earnings. april existing home sales out at 10:00 a.m. expecting to have a risen but in a slower pace than march. daniel tarullo is speaking today. and earnings look for results from campbells soup deere foot locker the buckle. >> and according to the wall street an internal probe is focused on transactions that began in 2009 and involves the former co-head of deutsche's
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investment bank. the trades reportedly cost the bank money by setting the firm up to pay inflated fees. yahoo bidders reportedly expected to offer 2 to 3 billion. verizon is considered the front runner at this point. bids are due the first week of june. one to watch still no clear answer who the bidder will be. >> apple's ceo tim cook is visiting this week. he pledged looking for the long haul. we saw it show up in the results last a quarter. the media has followed him along the way. >> absolutely right. lots of travel for mr. cook this week. general mills is making a
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push into venture capital. the "new york times" reports the company's latest move is part of $18 million going into kite h l hill. this is the fifth invest for 301 a unit general mills created last autumn. >> gap added to the recent retail wreck. raised caution on the consumer. landon dowdy joins us with more. >> gap is giving a cautious outlook for the rest of the year. the retailer announcing it will close 75 of its stores in it --.
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the brand which had long performed better than gap and banana republic had struggled in recent quarters. gap shares spiking about 5.5% on the store closure news. in other efforts gap announcing it is open to selling merchandise on amazon. here is what ceo art peck had to say on amazon take a listen. >> amazon's presence is undeniable. so to not fully consider all the options of distribution would be to not think about things that are important to us. >> gap's credit rating taking a hit. s&p and fitch downgrading the retailer to junk status guys.
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>> a lot of people say this is one that's fallen victim to the fast fashion. let's get to our top trending stories. apple unveiling its -- yesterday afternoon. the apple store includes a 42 foot sliding glass door. a 6-can video screen and live trees inside. live trees or living trees? i think that's a better description. >> -- in charge of remaking the stores. >> -- pressure isn't she? >> she makes a lot of money. >> i think -- not been reported as a huge success. >> we'll see how the stores do. talk about about office perk. a north carolina start up is awarding each of its employees a
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model 3. the company is planning to give the car out to both current and future employees. the car doesn't get released until --. still it is a wow. this is like an oprah move for the company. >> par for the course. i'd love a tesla. >> basically you are saying i should drive you around -- >> yeah. >> after a decade of killing under license daniel craig might be done with james bond. turning down a $99 million pay to continue as 007. his refusal comes with little surprise as he's made no secret of his -- i have to stay on the story. first and foremost i still think
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this is a little bit of a ploy so they can come out and announce big news daniel craig has signed on to do another movie. lots of news on. tom hills -- is f the new favorite is what the betting market. >> is there a betting market? >> oh big time. and the other two the tom hardy and the el dris elba. >> i read about daniel craig and i heard he hurt his knee when filming specter. so maybe he's not that into it. >> this has transformed his career. that hurts me a little bit. when you watch it t last one came out and he's oh i'm pretty done with bond. you have to be enthusiastic. i. >> daniel craig, hope you're watching. when we come back.
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today's must reds and first, happy birthday to cher. 70 today. estimated net worth of $305 million. cher has sold more than 200 million records worldwide and the only artist to have a number one song on the billboard chart in each daecade from -- to 2010. >> happy friday. a wet and rainy week. more thunderstorms again today. tracking the gulf coast and scooting the florida pan handle. chance of hail there. rain with the upper level low on the move moving through the tennessee valley, parts of the southeast. one day only of sunshine in the
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northeast. and for the west active weather with showers and thunderstorms. temperatures warming back up closer to average. still a smidge below. and a big warm up over the weekend will be the huge story from the great lakes into the northeast by the end of the weekend. that is your latest coast to coast forecast i'm jen carfagno for the weather channel. "worldwide exchange" continues after this. josh, don't you have friends coming over? yeah, so? it stinks in here. you've got to wash this whole room
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>> back in britain, you know, various elections we've gone through in greece electing
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anti-austerity governments and the situation is one very much of aausterity. so they are trying to keep it quiet from. >> quiet from the british voters. >> quiet from interest british voters. >> we're also not on the brick of the financial crisis market os greece like back in 2011 or other periods. >> right not on the brick of to derail but stale massive issue and it is not like they are going to be able to pay back the principal on the debt at all really. >> mein relates to the campaign. maybe clinton and bernie sanders should share a ticket. writing why not. it would hold the party together for the cycle. it would help keep sanders
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voters in the tent. it would also unsettle trump world. >> it is hard though, right? it is hard when they have been at each other's necks so clearly for so long. kind of just question both of their legitimacy, how genuine they are. if trump were to pick bush after so publicly. you just question the genuineness of these people. >> the point is that bernie sanders clearly has a growing and very passionate group of supporters and die hard fans. and there is a question over whether they will if hillary clinton does become the nominee vote for her or go to donald trump. >> -- >> and he's got to court those -- >> -- picking someone to the left of -- >> -- people point to elizabeth warren, senator. >> sure. "squawk box" and andrew joins was a preview. >> two comments.
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the peggy noonan column. and i take it the opposite. i think putting those two on the same ticket probably gives donald trump a better chance rather than a worse chance. there are a whole group of people voting for clinton who are the never trump thing but also in the never sanders thing. >> if it's never never then what to you do? is that no vote? >> do they cancel out. the other thing i want to do if you would indulge me. there is a little company in raleigh, which i don't know if you saw this, is now offering to its employees. some employees get an iphone or ipad. these guys are going to give away tesla model 3s to all of their employees. they do scientific instruments this company down in raleigh starting next year. >> we just talked about it. i wonder how many hr
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applications they are going to get. because the company only has like 10 or 15 employees right now. >> a new thing that just came about it suggested they might try expand up to 50 or 60 people very quick so this would help. >> also maybe a clever empty promise if you think tesla is not going to be able to deliver. >> so cynical. it will give them time to grow. look, we're going to be talking about what's going on with this airplane in egypt obviously. a lot of people to talk about. a conversation about the security issue. found over roku. and the count of cke. a big show. we'll continue talking about retail. and that's what we have on tap. >> andrew thank you very much. we look forward to "squawk box"
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in 10 minutes. >> and stocks trying to break out of their mini slump.
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♪ ♪ (charge music) you wouldn't hire an organist without hearing them first. charge! so why would you invest without checking brokercheck? check your broker with brokercheck. welcome back to "worldwide exchange." u.s. equity futures off the session highs but still dow futures up 60. nasdaq up 19. not enough to reverse what could be a decline. the third week in the row for the dow and s&p. where do we go from here now that we're flat for the year for stocks? ed keon joins us. you are expecting the s&p to rally 5% into the end of the year on better earnings which a lot of people are saying what makes you say confident we can get there? >> we've been in an earning recession and it's been caused not only by the relatively slow
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growth but i specially by two big head winds. a stronger dollar and lower oil and other commodity prices. both of those head winds have dissipated. takes a while for them to be reflected in earnings. and this quarter now although it will still be down from the first quarter a year ago will be up about ten for the earnings numbers. and in the long run earnings drive prices higher. >> does the change in fed sentiment this week cement that? does the dollar in the short-term start to strengthen again? >> it's rallied a little bit but still now weaker than a year ago. so for overall earnings it is going to be a relatively non issue. now, if the dollar were to strengthen considerable from here that would be a negative for earnings again which is one of the reasons i expect the fed will be somewhat cautious, maybe one hike, possibly two at the
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end of the year but the dynamic of tougher economic policy in the united states is why the fed has such a difficult task hofd it. >> if the fed goes in june, which a lot have been suggesting this week and hinting at. so the fed hikes just off an earnings recession, would that hurt you view that earnings recover? >> i think the market can take a hike in june or july. that will still get us to about 75 basis points i still think the fed will be hard pressed to get us over a hundred basis points. i don't think you will seat must have more out of the fed. there is a tremendous amount of cash with the population is aging. i think you will see some movement out of the fed but i don't think we are going to see much higher rate. just modestly higher. >> -- depending what the fed is
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going to do and how are you positioned on a sector front. >> we tend to be relatively i sector neutral. we're risk controlled in our approach. and -- high yield bonds rather than treasury bonds and so fovr forth. within the stock market you may see rotation back into the higher beta names compared to the more defensive names. >> so you are saying this 5% rise by the end of the year for the s&p is going to be driven by technology, consumer discretionary, those kind of -- >> i would expect overall would be driven by e and the higher beta groups which are more economically sensitive and are going to be the better beneficiaries from higher earnings. >> -- brexit is something on his agenda to consider. is it something u.s. equities should care about? or is there sentiment around it over blown?
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>> my guess is people in england will follow the advice of their most famous play wright and bear the ills they have and fly to others they know not of. how far if they do that would have a very disruptive effect on markets worldwide, including the united states. >> do the pound a bit of a bounce continuing if the vote is going to go that way? >> we'll see how the market reacts. buy on the rumor, sell on the news. we'll see if we get o a bounce before that. but i think the polls will be very important to the market as we try to anticipate what the vote will be. >> quick chart of the week? >> the lynch pin to what we've seen in terms of the stocks bonds currenciy ies commodities the fed. >> my chart is walmart.
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there is strength in the consumer out there to speak off. and that's it for "worldwide exchange" today. thanks very much for watching. have a lovely weekend and enjoy sidewalks which is next get ready for the rio olympic games
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good morning. baracking news on the egypt air flight. the navy says it has found parts of the fuselage as well as belongs north of alexandria. >> retail under pressure, except for walmart. gap's stock has been crushed over the last two months. >> and phil mickelson will have to pay back more than a million
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dollars in ill gotten gains. it's friday, may 20, 2016 and "squawk box" begins right now. >> live from new york, where business never sleeps, this is "squawk box." >> good morning. im. take a look at u.s. equity future this is morning. the dow was down almost triple digits yesterday. this morning dow futures indicated up about 58 points. s&p up 7 and nasdaq 18. overnight in asia you will see the nikkei is up about half a percent. similar for the hang seng and shanghai composite. and this friday morning of trading the dax is up almost 1%. the cac in france 1.1% and


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