tv Squawk on the Street CNBC August 2, 2016 9:00am-11:01am EDT
join us tomorrow, "squawk on the street" begins right now. ♪ >> good morning and welcome to "squawk on the street." we're live from the new york stock exchange. let's give you a look at futures this tuesday morning. we're set up for what appears to be another lower open. >> six straight down. >> and of course because you asked, how did the european markets fare? how are they faring right now? >> ftsi down. 10 year yield, yield's been moving up a little bit.
1.56. and japan has moved up. there's another big story for the markets. crude hanging right around that $40 level. >> left out "by a thread." >> okay. lot of cliches today. more coming of course. including our road map. pfizer lower, while procter & gamble is higher. we're going to dig into both of those reports. warren buffett slamming donald trump while campaigning for hillary clinton last night in omaha. >> and shares of williams are higher this morning on earning. i talk to the ceo about cutting its dividend. saga with --. and more. >> all right. as the dough looks to break the six session losing streak,
pfizer beating the street with quarterly results. helped by new sales. procter & gamble's fourth quarter results also ahead of consensus but the company says it expects currency fluctuations to disproportionately effect current quarter earnings. where do we start? >> why don't we start with proctor. the fact is the organic quote buzz --. the last conference call was really widely about currency issues. so they basically put it up. this is a company that has an arg arc. they are in a lot of currencies remember that are really bad. and they stayed in venezuela. if you are in venezuela, you are just losing money. it is like putting your money in german tankers.
you must lose money. and proctor looked a lot like the other organic growth of other companies now. proctor is much improved. and i think to -- a problem with currency is to not recognize the actual underlying growth. >> growth i think was 2% which may not sound like much but is actually not bad. expectations i should say for 2% organic sales growth fiscal 2017. sales growth about in line with what's anticipated but particularly i think healthcare and grooming were very strong. >> grooming 7%. healthcare 8%. that is really the story. and look, i was presently surprised. i was very worried about grooming. not that long ago grooming was terrible. these are very well run company. >> you had some doubts. you have expressed them in terms -- >> -- for a while.
>> yep. >> but they came in and attacked the divisions that were weakest. they had a very big explosion, basis points higher in spending. margins are still good. and i can tell you no company is prepped more about currency problems. they gave a premium on currency last time --. how if they don't lower price they can't win versus local brands. it was an excellent disposition. >> anything more broadly speaking question take away from this. perhaps reads through into the economy or anything else? >> i don't know. obviously you don't feel badly if they are spending that much. and combine that with cvs, which was an extraordinarily good kpae quarter. the stock has been very disappointing but the company wasn't disappointing.
i think spending on that kind of healthcare but combine cvs and procter & gamble you -- they got rid of the tobacco and cvs healthcare was good. >> yes. >> these companies have both been big question marks. people have been concerned about them. and they don't feel concerned about them today. >> pfizer as well. a huge name in healthcare. always on the acquisition trail it it would seem. these days more modest when they were trying to buy allergan. >> secretary lou put the wood to that deal. >> he did. >> i remember i was talking with you off camera. a little insight yelling at each other and being an -- completely untrue. >> it is. >> >> that pfizer i felt would
split. what they did do is create two distinct businesses. pfizer innovative health and pfizer essential health. i think they are setting themselves up to break up. and you know when you look at the break ups --. but yes, i think this is a nice prep. and those who are selling off the companies release, you should always listen to what they have to say. >> they did reiterate their 15 year fiscal revenue guidance of i think between 51 and $53 billion. people -- the criticism has been this is a financial company masquerading as a pharmaceutical company. >> they have a couple of drugs that are going come off patent. but they have --. whenever i hear that.
i know you care and about the financial implications. but i think they are smart in the same way that malone is smart. we can say in the end he's about taxes but in the end he's about value creation. and how he creates it, maybe it is not the way we want it but he creates it. and he should get more credit. >> think so? >> i think so. >> -- bristol-myers -- >> the huge allergan deal which -- >> would have been good. >> and therefore have access to overseas cash and a lot of other reasons they wanted to do that. >> company's been strong. they have some new drugs. is it on fire like -- which kwi
guided up big? sno no. but if they split the company up into two different businesses, i want them. -- a fabulous buy. anyone who bought that. idxx labs. >> the unification of pets when you said that last week. >> i had kimiko on yesterday and -- a pet store. and what can you not do in amazon? you know, if you like fido then you may not like --. >> -- [inaudible]. >> you do take your dog for a lot of walks? >> no i take him for a fortune for healthcare. >> do you -- >> what do you think i'm an idiot? >> so you're not doing that? picking up the poop. >> no. >> it's the law o here in new
york city. >> -- my wife --. is actually talk --. five years, starts to sink into the consciousness. >> things are going well. i wouldn't rock the boat if i were you. quick before we get to warren buffett. japan stimulus of course -- >> disappointing. you didn't say disappointing. that is another cliche you have to say. these guys are doing everything they can but disappointing. >> it's been 30 years of disappointment at -- >> -- immigration. children are a necessity. immigration helps. if you shrink your country and it doesn't grow. it is like russia finally got back to where they were before the -- look at the gdp. you need ed kids. it is a demographic issue. they can't create kids with money. you have to have what's known as
household growth. >> which means what? there is no way for them to get out of it no matter how much they stim lasmt and buying a lot of etfs. >> it's working. they have getting the market up but you have to have people participate. i think all of this is a artifice and people are droekt say what the heck is japan doing. but you need income growth and household formation. and japan doesn't have it. we talk about the central bank as if they can create kids. >> some wear adult diapers and some wear kids diapers. so. >> -- e got hit very badly. proctor came in there and just vis raited them. i was trying to give him a little more of a pass. that was not good.
i read that wrong. we didn't talk about european banks but the -- >> we're gonna have plenty of time. let's get to politics. warren buffett did join the list of billionaires are with harsh words for donald trump. yesterday at a hillary clinton rally he questioned trump's business ethic and tact and also challenged him to release his tax returns. >> i would be delighted to peat him any place, any time between now and election. i'll bring by tax return. he can bring his. nobody is going to arrest us. there are no rules against showing his tax returns and just let people ask questions about the items that are on there. >> baa do you think is in those tax returns? of course mr. trump continues to say he's subject of an irs audit and that's the reason. and many people say that doesn't
make sense to them. >> the irs tends to audit wealthy people. they go where the money is. i'd like to see everybody -- on tax return, look i pay 53% tax. you want to see my taxes? i have income. and i've got -- and i pay taxes. and so i'm not running for president but i'll tell you, i get to keep 47%. just now i think -- >> -- [inaudible]. >> -- another ten days. made a lot of money for jersey and new york and for feds. they let me have like from mid august. like when football starts. >> ford auto is out a few minutes from now. and williams company is higher after releasing quarterly results and an interview with gain the freedom to fumble with the new
ford has pulled back a little on incentives in the last month. when you look at the breakdown of sales, it's been weak for all the auto makers. suvs down 5.3%. trucks was up 4.8%. overall sales declining a little over .8% for ford. that was the decline last month. we'll jump on temperatuhe sales this morning and see what they have to say. a lot of people were saying you are spending a lot more than expected. we'll see if that's still the case. >> of course he referenced last week when the stock took a real pounding there. >> interesting. that ford almost happened in a vacuum. i read that and well that's going to be a real tell and retail is going to go down and it went up. market seemed to be impervious last week in terms of
negativity. and oil were on fire last week. >> there was a disconnect. >> and coming home to roost. tech remains strong. idti. integrated device technology. tech remains the bright spot. healthcare is strong. >> when it comes to oautos, gm reported a decent number. >> value trap, value trap, value trap. were those hedge funds that were like saying something has to happen here. >> they have run for the hills. >> they have. and how about the macy's two for one --? people thought macy's were going to do something. they should have just gone and bought dollar tree which is on fire. and then you will eaten.
and emerson report a worse than number. union pacific a better than number. a --. the one to watch was cummings which was to me disappointing. >> and -- >> -- some of those names can typically give a decent tell. not good quarter. >> no. but i am amazing that nothing negative really seems to stick. sea gate is up 10 straight points on the fact that they can pay their dividend. >> that makes sense. as the market of stocks. it is not a stock of markets. >> that didn't used to be the case. >> is there discernible differences now? and judgment being made on how companies are doing? >> yes. >> but o then no because
everything seems to be going up. >> the market seems to favor the rally. and i think that we're going test wit oil because oil seems to indicate that maybe the demand side is not as strong. but i got to tell you, i look at these quarters and i think how did united technologies get up to 107? how come honeywell is not down? the answer is the market's given a pass. >> ge has reversed -- >> -- did not do a good quarter. i this think they are going to buy --. >> you do? >> this guy did a great piece yesterday. just says it is going to happen. they are partners in a lot of stuff. 12 billion, used to be 40 billion. ge should buy them. royal caribbean, immediately the stock goes up too. and then under closer observation the stock gets hammered. everything -- there are so many mistakes being made here. it's just --. don't act until you --
[inaudible] >> facebook, after reporting an extraordinarily good quarter really hasn't done anything. when you look through the numbers and daily average users or a percentage. of the month users what percent are using the service every day. that number declined by 50 basis points quarter to quarter. and maybe that was the reason. >> we can find reasons why a stock is going down. but then what happens when we find out there was a lot of insider selling. because the window opens. and we'll go wait a minute let's find out what that was. and the one thing. eps. they don't have that stock compensation thing for as bad as others. and that is one of the stories we have to talk more about. you put that in my head. i now ask all the time. because a lot of these companies act as if it is notten.
>> expense. >> a huge expense. in many ways the most important expense. important as cap ex. thank you for putting that in my head. >> no problem. up next, a little more wisdom there. the mad dash from jim, of course. another look at futures as we count down to the opening bell. we are headed for what appears to be a lower open. more "squawk on the street" after this. this is my new alert system for whenever anything happens in the market. kid's a natural. but thinkorswim already lets you create custom alerts for all the things that are important to you. shhh. alerts on anything at all? not only that, you can act on that opportunity with just one tap right from the alert. wow, i guess we don't need the kid anymore. custom alerts on thinkorswim. only at td ameritrade.
mad dash coming up about six minutes before the opening of trading for stocks. >> we -- you could never say a bad word about kroger. they took on whole foods, they were a able to prevail. they krogerized the place. they were krogerizes izized thi morning by bmo. downgrade to market perform. sara, cincinnati, eisen and i went over there and we were surprised. because why? because this company has been the winner in the space. and deflation, it is very hard to overcome. but then they talk about walmart. didn't you think that kroger could continue -- benefit from continued underperformance of walmart. walmart has been under -- >> stock hasn't been doing --
>> no they haven't. >> what are they talking about? >> they can't make the money they used to. food and home data is not that good. i got the say. i don't know whether i want to -- people look at charts and they look at this head and shoulder thing. i think the stock can go down. but at a certain point i want to buy. if it is going to earn 215 next year and it is the quality play. so maybe buy it at 12 times earnings. but i just regard that as what isn't supposed to be happening. by the way whole foods. is that stock has not bounced back from that disappointing quarter super markets are under pressure. and walmart seems to be in the throes of price wars. and -- got out of that kind of dollar store business? >> yes i did. >> and talking about the food
deliveries. this area is in flux, david. it is in flux. but look at this. doug mcmillen, man of his word. >> so far. >> so far. >> so good. walton family feeling pretty good. >> i know you have richard -- >> mr. mcmillen knows the invitation is out there. when he wants to join us, it is up to him. mornings.♪m.eyton on suy
watching cnbc, "squawk on the street." the opening bell is in about 50 seconds or so from now. i want to ask that broad question, what is the key to the market? i bet i know the answer but what would you say right now jim? >> pfizer. it is so important. what you nigh that? >> no just thinking it's funny that. reminds me of 1998. >> lirica coming out soon.
viagra. and it is the most important that we're going to see today because it is so gigantic. i'm looking at the market and i'm looking, for instance, at some of the industrials. so we had illinois tool works last week. and it was fabulous. emerson was just bad but they are selling the power division which i remember when they fers fied into it. it was supposed to mean so much. >> i know. >> a lot of these companies are just shuffling their assets. >> enterprise software company and the bayern munich football club. >> we heard from ford. let's get to those gm july numbers and back to phil lebeau in chicago. >> and sales for the month of july weaker than expected. decline of 1.9%.
in comparison with calling are if ab increase in sales of 1.9%. it is hard to make a loet out of this other than a general slight pull back in sales really across the board. fleet sales, 11.6%. much lower than the entire year. gm continues to pull back on the fleet sales, which frankly are not the most profitable sales. also day supply, down to 66 day supply compared to the year over year average of 72 days. you want that as well. and a final note, they always put out that you are estimate in terms of the full monthly sales rate. gm saying the estimate for the industry for the month of july, 17.9 million. that's higher than many were expected and we'll get that later today during the closing bell. back to you. >> again that area is just in peek. people don't like the autos.
and in the in the meantime --. stocks up. >> what does that mean? >> people just think the worldwide company. cummins. talking about the utter inconsistency of a market where if you don't go granularity, dig down deep you may miss the big picture. you've got places to go. you have heavy industrials. and you have healthcare. i'm looking for signs of what people are going to. they like tech. they like healthcare. and they like industrials. as odd as that combo is. >> speaking of healthcare, shares of aetna are up. of course here one of the keys is them going to court to try to be able to overturn the injunction against the deal or
that the doj wants fair their accusatia acquisition of humana. >> i felt maybe they were waiting to see if the field was blocked and kind of play ball with the government. hey we're still there unlikely --. these exchanges have been very unprofitable for most of those companies. i think a lot of these companies are saying hey look this is just a bad business for us. and new president coming in. maybe they change the legislation and it gets better. >> and anthem however which of course is the other big deal which is also being challenged has been very aggressive in the exchanges. when i talk to joe swedish, he's actually mejtsed they were going going to be the largest single health insurer in the exchanges. at a million lives. >> do you think there is enough profit there.
>> they think there will be over time. the key for all these companies are going to be in court. they seem to be very pleased about the judge that will be overseeing these two cases, jim. >> what do they have a win in the wheel there. >> they -- given his previous ruling against the ftc when they were seeking an injunction back in 2004 that they have a real shot. we'll see. >> oil holding in. remember oil yesterday was kind of like the first day in a long time where oil went down. and a lot of stuff got hit. although the nasdaq has been a great place to hide. nasdaq, can you imagine? >> it has been strong. snot the case today. even apple which had a strong day yesterday down a little today. >> there are some positive read throughs. i don't know. i'm always cautious. you did have a good number from cirrus logic that kind of was a
read through that was somewhat. but then infinium last night in germany said things aren't so good. and we can never figure out. i think it's important to note no one comes on and says listen, apple's week. you are not allowed to mention the name apple. apple will cut you off and find another distributor. so when the --. one of our big customers and you have to do a read through. >> you have to figure it out. >> and samsung and apple and cell phones are weak you really don't know twho pin the tail on. >>. discovery is up this morning. second quarter results showed solid growth in the u.s. of course much of this company's fate hinges on its international operations. but second quarter. i think it was adjusted eps.
66 cents. this has not been a good story for some time. at least in the stock market. >> yeah. >> there continues to be this question as to whether there will ever be the consolidation among the lower tier content providers. when will it happen? scripts, discovery, amc. you can go through so many names. >> the one that's been most obvious to me that i've been awaiting your comment. after watching cvs just explode upward today. i'm still waiting for walgreens/riwalgreens walgreens/rite aid. >> the question what do the dwestures need to be? >> they have a ability and merchant agreement. they can invest in as many as a thousand stores. >> will it be enough? >> that is the question.
>> is it predicated on some other company wanting to come in and be a drugstore company? >> yes. and whoever the buyer of those stores is going to be a company to have the financial wherewithal to really compete. >> how do they give you the thousand worst rite aids. here sold to you. but there was no cure to baker hughes or slumm schlumberger. >> huge spread. >> -- williams spread. i would love to hear from the williams ceo. >> we'll taublgt that too. that spread is no longer because that deal is no locker. >> we don't talk enough about that either because that's what wealthy individuals have been doing. they can't get enough income in municipals. they can't get enough income in
bonds. -- to see a big dividend cut like that is rather shocking. >> we're going to talk with alan armstrong or share parts of the interview i did late yesterday in a bit. let's get to bob pisani. and check on the rest of the markets. >> a mixed market overall. i want to show what's going on in europe. tough day for the european banks. credit swiss and deutsche bank are going to be deleted from the index. it is the -- deleted because the market caps are too small. they are not important enough anymore. commerce bank the big german bank warned profits would be lower than the previous year. we've got this perfect storm. low rates and very little client activity. that is the two things killing these european banks here. unicredit, the big italian bank
briefly suspended over concerns with bad loan portfolios. that stock down. in europe, intercontinental hot hotel, they reported a rise. they are up. bmw is down a bit. even they reiterated their 2016 guidance after reporting a rise in luxury cars. stock still down overall here. the earnings in the united states. martin marietta. this is the stone business. up 6.8%. getting more money for the stone. the shipments were up. cement business, shipments up 2%. pricing up 2%. overall good numbers. the problem was the revenues were lighter than expected. the stock is trading down. they had all of this really bad weather. remember those floods in texas? colorado, north carolina as well. so the stock is down a little bit here. but they reaffirmed the main
values matr s metrics for the y. historic high two days ago. a real favorite in the job growth construction industry overall. down a bit. not that big a deal right now. procter & gamble. i'll give you an idea of how tough it is to move the needle on this company. they are having revenue growth problems and earnings growth. earnings around $4 a year. had been several years and same with revenues. how do you move the dialen something with 70 billion dollars in revenues. they still report 2% organic revenue growth. really that is pretty impressive but you see how hard it is to move up in any significant way and the earnings still around $4 a year. same problem they have got but it is a darling of investors, 3.1% dividend yield. a lot of dividend etfs have proctor in it. and it's not far from historic high. oil up a bit today. little bit of pressure off the oil companies but a lot of questions now.
what happens if oil has a $30 handle. remember the narrative. we were supposed to be at 50, towards 55 and on into 2017. now we're back to this old issue of what do you do if you can't figure out what the price of oil is? one, you keep cutting costs. two dozen companies reporting in the next two days, we'll hear mar about that. you can also sell more shares. you can sell more assets, and if all else fails you can just go m&a. we haven't heard a lot about that but you will hear a lot more about it if oil has a three handle later in the year. right now the dow down 44 points. back to you guys. >> thanks bob. and speaking of energy, of course williams releasing earnings after the bell
yesterday and taking a cleaver to its dividend. this after it's deal fell apart and half the board resigned saying the current ceo is not up to the job. i asked him why he feels that a company why three times levered and now six times --. >> we've got a $2 billion capital expansion program this year. a little over 3 billion next year. so we're taking that money and reinvesting at a high growth opportunities. >> explain to me and the rest of the invests why it was wise to cut the dividend substantially to 2.50 a year to 60 cents a year in and reinvest --. >> a matter of capital allocation. we're holding the distribution at wpz. the williams partners.
so we're holding that distribution. but we're just taking the distributions from that and reinvesting it in equity in wpz. and that is providing the growth capital for wpz to go out and invest in business. >> at some point do you expect the dividend -- >> absolutely. >> at williams itself? >> absolutely. >> about a month or so half of williams directors resigned. misguidance, poor capital allocation, even --. i asked mr. armstrong for his side of the story. >> we had some big complicated projects. we had some big acquisitions that we had to go in and get on the front end. and we started. we had virtually no position at all. and we started in there in 2010. today we gather through our investments. we gather 38% of the natural gas
coming out of the the marcellus and the yutaka, which is by far the most importants in u.s. today. >> okay. so meaning you are going to go better than you did? >> we have gotten our ourselves positioned in an incredibly position. people know it is by far the best pipeline into the markets in the u.s. it is continuing to grow rapidly. by 2020 we'll have nearly doubled the capacity on that system. and when i say capacity, i mean fully sold out capacity that we had in 2010. and it is already the largest pipeline. and so doubling the nation's largest pipeline is no small feat. >> if you want to see the entire interview if you are interested in the transmission of natural gas you can go to cnbc.com where we do have about a 15 minute interview. we did go back and forth a lot but he really did not want to engage on the board's and why he chose to stay on when six board members resigned.
six of course staying on. >> -- >> it was. >> if you back out williams and just go back in time, had energy transfer actually been able to pay current prices rather than obviously -- they couldn't afford to pay what they were paying. the combination of that pipeline and energy transform would have been amazing. remember when i say this natural gas market to -- take -- [ indiscernible ] >> also talked about the fact that they are going from the source of the fracking to all of the energy generation plants. which are going to be using natural gas in the midst of being built. >> all the fraction aators. -- >> stock reacting positively.
>> he's quite sanguine. >> he is quisanguine. >> in the face of what obviously many consider -- let's say i actually would rather not say. because i was going use something like, you know, choos choose. >> -- six members of the board decide to step out because they disagreed with the other -- >> -- >> on the trust. >> when i saw six resign i said well i guess that is it for the ceo. but he's stick to ittiveness. >> appreciate his coming on to talk. and they are on site in new york meeting with analysts and inv t investo investors. >> hats off to you for getting him to be as candid. because they screwed up.
well everybody screwed up. because the industry, let's not forget, i mean the industry fell apart. natural gas is regaining some strength but it is now just weather dependent. the guy -- they had a vision. they had a vision. kind of like the vision that mo green had, for vegas. >> you love coming back to that godfather. >> i do. >> let's get to rick santelli now in chicago. good morning. >> good morning david. well, in order to see what's going on or at least get a handle on the fixed income sovereign market. let's start where it all began. japan. japanese rates. lejs let's look at the jgb, 10 year japanese governmenten bond and realize the extreme negative yields we've experienced. may 19 is the last time we were at minus 7 basis points which is actually a huge selloff. from minus 30 to '07 covered a
lot of ground pretty quick. a two years, reached its most negative level at minus 36 basis points. around the 15th you can see how it moved through last time we were up here at minus 16. so minus 36 to minus 16. short period of time. these are big selloffs, even though they are both still negative and the it really is along the entire curve of varying degrees. let's keep that mid may to see where everything else was while all this is going on. so we're right back at where we were on the japanese side in mid may but not true in the other markets that are part of the relative value trade. so our ten year around that time was 2% to 156. the bund in mid may was around 15 positive. it is 02 negative. and this is really interesting. this is within two-thirds of a cent of where it was in mid may. but the dollar/yen, is more euro
centric with the euro pull there. but the dollar-yen and this really speaks volumes was at 113. the last time jgb yields were basically at these levels. now it's 101.30. so the dollars significantly weaker. and the yen significantly stronger. we want to pay attention to see which market's gone too far or maybe which markets will play catch up. david back you do. >> thank you mr. santelli. tomorrow don't his our exclusive interview with peter hanco hancock. "squawk on the street" will be right back. >> of >> of images, videos, social updates. we call it dark data. 80% is invisible to most businesses.
the ibm cloud has tools that can help see dark data and put it to work. hello, my name is watson. working with watson in the ibm cloud, we can help an energy company predict pipeline corrosion. and help a start-up to use social data to predict market trends. now businesses can get more out of their data. that's what the ibm cloud is built for.
well run restaurant change. explain about why the company had weak numbers. admitted by himself they were disappointing. everything from is it related to there being a big shooting on tv to the conventions and the olympics in rio is next. here is the problem. here is a seasoned ceo of a very well run restaurant chain not able to figure out why stopped going in the same numbers as before. that's whether what people are trying to grasp. >> certainly in this city people are not going out. >> uber in china. --. killing it in china. i've got to tell you. when i read texas road house. people don't necessarily follow all these companies but i do.
[ indiscernible ] it is a weird year. maybe people are staying at home. i'm staying at home more. >> watching mad money at 6:00 tonight. >> science and technology is their niche. >> see you back here tomorrow. >> good interview again with williams. >> more of that in the next hour. "squawk on the street" back after this ter this
and mike santoli live from post nine on new york stock exchange. the dow down for the seventh day in a row. minor decliebs but still we are in a losing streak. s&p down .3%. >> let's get to our road map this morning. and starting with those markets and bank of japan as the japanese cabinet proves their fiscal stimulus. >> and the warren buffett slamming donald trump's business practices and challenging him to release his tax returns. the latest from the campaign trail straight ahead. >> and williams is out with earnings. we're going to speak exclusively with the ceo of that energy transmission company about its decision to cut its dividend by nearly 70%. proxy battle and a lot more.
>> as i mentioned the dow has lost six days in a row. potentially going on seven if these losses hold. that is the longest losing streak in almost one year. in the meantime. and italian bank worries continue to grab attention. joining us to discuss it is ed keon. and kathleen gaffney. kathleen, lerts start with japan overnight. it is a giant fiscal stimulus package. perhaps it is because it is the 26th one since 1990. any chance will will lead to a growth spurt? >> it does not look like it is impressing the market at all. and i think the market is really having a tough time with a large proportion of government bonds trading at negative yields and the impact that that is having
on the economy. we need to get some effective stimulus and it doesn't look like it is coming from japan at this moment. >> why not? why do you see it is not effective stimz. and we are seeing global rates jump and japan is leading the way in terms of the moves there. >> you are seeing rates pick up a bit. but we really need to see more of a bigger move in order to catch the markets' attention. we seem to have this constant back and forth without any progress. so i think it has to be bold enough that the market takes note and we get a real strong reaction in the rates markets. but right now with yields where they are, it isn't enough to get the market moving. >> so ed, i w07bder if you agree. and also whether this move in japan could be the start of something bigger for governments around the world in developed markets and that is a move towards fiscal stimulus instead of austerity. >> i think there is a strong
case for fiscal stimulus but tlatzn't been much stomach for it around the world. so that may be changing but i wouldn't expect it any time sooner. >> how would you be positioned here? there is such cliche out there that there are mother else to go except stocks. where are you allocating these days? >> just rask week or so we pulled back from stock. this has been a very tactical market. so we made looft o move this is year. the latest one to pull back. underweight stock, and towards other asset class. bonds, real estate and the cash. >> in. >> what's behind that? thesis we had an overweight on was the earnings recovery. are we feel we bottomed in the first quarter. and see some recovery. and trouble is part of the reason we saw the bottoming in earnings was because of the head winds from oil prices going down
and from the dollar strengthening. those have dissipated and now it looks like the dollars going stabilize and obviously oil is down from peek. i would be surprised to see, in fact i think you are starting to see revisions to earnings for the downward direction the second half of the year. not that they wouldn't be up a bit from a year ago but the reason to get optimistic in the post brexit area is largely disappoi dissipated i think. and the fundamental case for getting beater has weakened a bit. >> jay diamond said i would buy a 10 year bond he said. justify bonds which barely pay anything compared to a lot of stocks. >> for me in a portfolio context. bonds are large lay hedge. if you need to hedge your equity position, the 10 year bond has been a great way do that. bonds give you way of hedging the weakness in stocks.
that you still have a positive return even if it is low. >> and -- in a great spot recently. even holding up with oil prices. what does that leave you with regard to the corporate bond market? >> i think the corporate bond market looks like it is price forward perfection. they ever caught up in that reach for yield with treasury yields so low. i think you can find pockets of value but much of the corporate market i think is getting stretched. it looks expensive. so any kind of move in interest rates, i think you see some downside risk in corporate boonds if you are not really selective about focusing on companies that are generating good cash flow or countries and currencies that can two well. it is a tough market right now. >> what are you seeing in the energy space kathleen in terms of the credit market with oil back to $40 a barrel.
>> we have seen energy bonds coming out for sale and spreads have widened pretty dramatically. so that definitely has caught my attention. we have owned energy and metals and mining. have had a fair amount of commodity related exposure for quite some time. that's paid off well this year and we've the market give a little of that back and i think that is a good source of opportunity here. >> finally, maybe we should mention the auto sales which have been somewhat disappointing. gm posting a drop while analysts were looking for a rise. ford coming in worse than expected. does this saying in sabt this consumer or specific to the auto markets. >> i think the consumer is in good shape but overall the economy is weak. i think we have a trend of close to 2%. but the data so far this year has not supported that. and i think we'll see a little bit of recovery in the second half. but youave to accept that we are not in a strongly trended
market or economy. not a terrible economy but not one that is going to get away from us. >> thank you both for joining us this morning. the world's largest maker of household and personal care products, procter & gamble beating on the returns results. --. and to develop products that are large enough to move the needle. this quarter we did see a bit of improvement. led my healthcare and grooming. the outlook was somewhat disappointing. this has been a strong stock. consumer staples in general have been bit up. and i was looking at returns. it is nowhere near a hormel. even a campbell soup or kellogg
but a good year. >> procter & gamble i think the outlook was probably good enough to support the valuation here. it is the kind of stock, the quality, low volatility stock, at least by reputation that investors want here. you also have colgate palpalmol. and tyson foods. and maybe rates aren't going stay down forever. >> lot of holds and sells on p&g in terms of analysts calls. not yet proven but certainly it was nice to see that positive organic revenue growth in all the categories. >> you would know better than i certainly when it comes to currency that they do keep citing that. even venezuela as being ab issue. >> big household companies like
clorox just bailed on it because it was such a difficult market to be in. so yes that is continuing to plague them but they need a hit product. another swiffer. >> love that swiffer. >> sounds like an apple type thing. keep think you can get bailed out but the next thing. >> we'll hear from the ceo next. and later in the hour our exclusive interview with richard gelfond. stay with us. digital world? communication. like centurylink's broadband network that gives 35,000 fans a cutting edge game experience. or the network that keeps a leading hotel chain's guests connected at work, and at play. or the it platform that powers millions of ecards every day for one of the largest greeting card companies. businesses count on communication, and communication counts on centurylink.
williams reporting earnings after the bhel yesterday. a company buffeted by a great deal of distraction. it's deal to be acquired having fallen apart a month ago. half of its board resigned when it decided it no longer wanted the current ceo to be in power but that ceo alan armstrong still running the company. and in fact i had opportunity to sit with him yesterday to discuss some challenges ahead for the company. including what they are going to co-about replenishing a board that lost six members and simply has six remaining right now? >> we would hope to do that here in the not too distant future but we do want to make sure that we've taken into account any good ideas that come out either from contacts that we have,
using spencer stewart to do the recruiting and making sure to get the best athletes in the the door and excited. >> you've gone through plenty in the last year. a merger went bad. and fighting with a partner on that and not to mention descension on the board of directors. but there is the possibility of a proxy fight. >> we are so focused as an organization right now on playing offense and really taking advantage and executing against this great strategy. that is the thing we can control as an organization and me as the ceo. and we've got a new breath of life in the organization that is really excited about carrying out the strategy that we're -- >> to give me a brief sense of what your life has been like over this last period. i followed it closely from an ma perspective. rare we see that type of
hostility erupt. how are you feeling now. >> it's been stressful certainly. but it's been so important for me personally to see such a commitment from our organization and our employees that are really excited now about the stand alone. kind of like hey, we've been given a second chance here and we're going to kill it. >> stock going up 7% after the company did cut that dividend. goes to 80 cents. much of that being diverted to invest in williams partners. i asked mr. armstrong why the company is moving in the right direction? >> we've got a $2 billion capital expansion program this year. a little over 3 billion next year. so we're taking that money and reinvesting it into very high growth opportunities.
>> explain to me and the rest of the investors why it was wise to cut the dividend substantially from 2.56 a year to 80 cents. why? >> just a matter of capital allocation. we're holding the direction at wpz. so we're holding that distribution. but we're just taking the distributions from that and reinvesting in equity in wpz and that is providing the growth capital for wpz to go out and continue to grow that business. so long term we're just reinvesting in growth and it is just a capital allocation issue. >> do you expect the dividend will come back? >> absolutely. >> at williams itself? >> absolutely. >> alan armstrong, ceo of williams which as you see doing rather well today. >> when the market already figures out a dividend is going to be cut or has to be cut, once it actually happens, typically you have this reaction. people okay, we're freeing up
money for something else. >> and this year the stock has been a very strong performer. >> second best performer in the s&p. energy actually the only sector that is higher right now. when we come back, donald trump upping his rhetoric against hillary clinton in what some are calling his fiercest attack yet. and warren buffett, challenging trump to release his taxes. and a look at where stocks are trading. seventh day of losses for the dow. those loss rsz picking up steam with the s&p down more than half a percent. stay with us. ♪
warren buffett speaking out at a hillary clinton rally yesterday slamming trump's business record and challenging him to reveal his tax returns. john, any word from trump on that? >> no word on those tax returns. and he dismissed warren buffett as a democrat supporting hillary clinton earlier today. hillary clinton has been brawling with donald trump over the last several weeks, months really. yesterday she got a billionaire
wing man at her side in the form of warren buffett. he mocked donald trump for not releasing his tax returns. and he mocked his business record including the faith of a casino company that donald trump started in the 1990s. >> in 1995 when he offered this company, if a amomonkey had thr a dart. the monkey would have profited --. but the people came away losing well over 90 cents on dollar. >> he also went over donald trump on moral grounds citing the insults he's directed at members of the society most recently the khan family who lost a soldier in the iraq war. >> joe welch had a young assistant of his maligned by
senator mccarthy. and mccarthy went on and on and implying this guy was a communist and doing all kinds of things. and finally joe welsh couldn't take it anymore. and he said, and i'll quote him. have you no sense of decency sir? i ask donald trump "have you no sense of decency sir?" >> hillary clinton raised 90 million during the month of july. donald trump says he raised 35. he's firing back against bernie sanders yesterday. saying sanders made a deal with the devil and hillary clinton is the devil. this morning on fox business he said that he was going double hillary clinton's intrch and --. >> warren buffett joins mark cuban and mike bloomberg who have obviously taken the time to
attack him and undermine his self styled reputation as the great businessman. is any of that element sticking in terms of trump support? >> well if you look at the polling, we've seen since the democratic convention, hillary clinton's has gone up significantly. it is difficult to pole in the middle of big events. but one of the problems donald trump has is although he's gaining support among non college educated whites. blue collar white voters. he's losing support among college educated white voters. he needs to hold that support to win the election. and the more those voters hear from people like warren buffett and mike bloomberg, mark cuban potentially as well world health organization have a lot of stature in the business world, that has the potential for preventing donald trump to get support from that group he needs. >> we'll watch the polls and those breakdowns.
thank you john harwood in washington. another story, florida identifying ten more cases of zika virus with a total of 14 cases in the state. the governor of florida rick scott calling on the cdc to activate an emergency response team. we'll break down how the government is responding to this developing crisis. eamon? >> you can see that building behind me. what you can't see is that building is pretty much dead empty rights now. congress is on recess. they have gone back home to districts and states to campaign, go on vacation, everything but pass a zika funding bill which they were unable to do before leaving for that recess. and that's left the rest of washington playing the blame game here. ron clain, he was on "squawk box" this morning. he said it's congress's fault. >> it is time for congress to cancel its vacation.
it could some back this week or next week, pass the president's response package and get this help on the way because, you know, people need help from their government. >> meanwhile i talked to speaker paul ryan's office yesterday. they said it is democrats that plokd the bill. here is there statement. this only underscores the importance of senate democrat s ending their filibuster. guys a real controversy over just who is whose fault it is. this bill had a bunch of provisions that were political in nature. without funding it. they say there is enough money in the system now for some of the initial zika fighting efforts but what is at threat long term is the opportunity to find a vaccine for zika. that is something that is going take a little bit more funding over a little longer period of time guys. >> eamon, is there any way to handicap exactly how likely it is that congress might come back and do something on this.
>> it is extremely unlikely. getting everyone back to town. is going to be very difficult. one side or the other would have to admit it made a mistake and both sides are neither really that good. >> fair statement. thanks eamon. appreciate it. when we return. imax continuing its expansion in china. we'll speak with the ceo richard gelfond next. plus italian prime minister matt matteo renzi speaks out. what he has to say on the possibly referendum. le trading so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me? anywhere you want to go! the market's hot! sync your platform on any device with thinkorswim.
your business needs better technologywho wants to to drive better performance. so you need it to be reliable and fast. really fast. introducing the comcast business summer savings event. fast internet speed to drive performance, plus cutting edge wifi for your employees and customers, and voice mobility so your calls find you wherever you are. get some of our most advanced products at a great price with over $500 in savings. call today and ask how to get these savings plus a $250 prepaid card. comcast business. built for business. good morning everyone. i'm sue herrera. here is your cnbc news update at this hour. president obama welcoming the prime minister of singapore toth the white house to celebrate the 50th anniversary of diplomatic relations between the countries. high on the agenda the ratification of the trans
pacific partnership free trade deal. on pogs to that deal is intense fieing in the u.s. five killed and 30 injured near the town of atwater. a kentucky man accused of attacking members of an airline flight crew has been banned from flying. the video shows an american airlines pilate attacking 25-year-old michael kerr after kerr allegedly attacked a flight attendant and threatened to break her jar. >> vice president joe biden participanting in a same sex wedding. the first time bind officiated a ceremony. afterwards biden tweeted he was proud to mary the two. >> thank you sue.
imax announcing aed by to build an additional 150 theaters, increasing its presence to 360 theaters. that's that mean for the chinese movie going public? it's a pretty big deal for you today. >> it's actually the bigts deal in our 50 year history. and if you want to quantify it simply, the average i max theater does about 1.1 million in box office. a million, a 150 screens for 12 years is --. not only good for us but good for hollywood in general. >> how is box office doing in china right now. i know you have been expanding into the smaller cities but overall how is it doing? >> they say it is disappointing
because it is not growing at the same 50% compounded and for us it hasn't been growing that way either. our box office for the first half of this year was more than all of 2014 which is just 18 months ago. so it is a little bit relative. we're up about 3.5% this year. in general the box office up in the country. but i think it is a question of content. even in the u.s. as, you know, in the second quarter it wasn't as good a year ago with jurassic world and avengers and fast and furious. i think the trends are there. i think this deal shows the confidence in the cinema expanding and i don't think you can make too much of a quarter. >> you started this partnership back this 2007. almost ten years at this point. and you have revised it along the way. are you happy with the terms of the deal? when you do something like this, is your take smaller and smaller? >> it is more or less the same. for certain things it is higher. for other things it is a little
less. when you blend it together, it is substantially the same. you reminded me with your question, 2007 i remember i had lunch with chairman wong who hat point was not a household word in the entertainment business. and he asked who is the biggest exhibitor? who's the biggest studio and e said i'm go doing beat all of them. and i thought it was funny at the time but i guess he lot got the last laugh out of that. >> how many i max screens for example? >> we've targetted about a thousand zones in china. and with this deal, our backlog in our theaters open will be about 750 as the theaters roll out over the next five years or so. so if you look at the u.s. market a whole, the u.s. has about 40,000 screens. but china is set to exceed that in 2018.
but you could see someday china having double the screens as the u.s. >> i know the female ghostbusters for instance had a tough time opening in china because it was considered a cult superstition so they banned it. >> more a question of importation. china has sensorship on films they import and sometimes they edit. and sometimes they just don't allow it in. there are so many films get in right now. so it doesn't really effect the box office. but as a general matter, in 2017. the mpa is renegotiating a deal with china. and i expect to see wider quotas and more films going in over time. but for the foreseeable future i think there will be some kind of censorship regulation. >> your business model is partnering with other exhibitors. and you have done that in china. what advice would you give other executives look at china as the
marketplace given that you have been keeling with it now a decade or at least. yesterday we saw uber give up ambitions and instead take a significant equity stake in its competitor there. what advice do you give other ceos how to operate there. >> o two things. one, create win-win situations. i think a lot of u.s. companies look at international markets and say we can go in and take out. but i think you really have to make sure it is an equal partnership and the chinese win also. and the second thing i would say is do it personally. so a lot of companies think they can outsource it to their head of china operations or a consultant. but i think nothing works as much as building personal relationships. and i've been there and when i go into a room and there are as many chinese as americans and i know as many chinese as i do the americans. you build a trust over a period of time. and i don't think you can short circuit that. >> you mentioned -- and a studio
as well as being a huge exhibitor. do you think they have ambitions to potentially buy a studio? >> i've heard that. and there are rumors i'm sure. i think it is a possibility. they already bought legendary as, you know. >> yes. >> kind of a mini studio. for about 3.5 billion dollars. but they are clearly going to build one and i wouldn't be surprised if they look at some of these pretty hard as well. >> you mention the necessity of having good content. obviously you are dependent on it. do you pick up any feek whether w what hollywood is putting outs there. or even something like 3-d. >> i think the only way you can measure fatigue is by the box office and the box office has held in pretty well. i talked to kevin figi of marvel and he said a comic book is just like a regular book except in a different form. i think it just always evolves.
look at what's coming up. "star wars" is really successful. >> but the summer has not been a great summer. we're down stoonl year over year. >> it hasn't been a great summer. right. but you look at 17, the next fast and furious. the next "star wars." you have avengers coming up again. you know, places like disney and marv rl cranking them out. and warner brothers has suicide squad which is a little different coming thout weekend. and of course there is fatigue but it will be substituted by the new franchises. >> wich wed got to leave it there but always appreciate you joiq joining us. >> italy's prime minister is speaking out this morning, backing his nation's banks to our very own julia chatterly. more from her exclusive interview on a day julia where
italian banks got hit hard again. >> absolutely sara and the prime minister did his best to push back on these concerns saying the banks here are good. he also tried to shore up confidence by saying he's not going to impose losses on italian savers because these guys are those that are invested very heavily in the bank bonds here. so this is pushing back against -- here in europe. but he also said this would be a terrible mistake. listen in. >> i don't agree with the new -- in europe but obviously i respect that. i don't agree because i believe the priority in this moment is give confidence to the citizens. and if we continue with the bailings, this is a problem for the sentiment of the confidence of european citizens.
>> now, after tackling the non performing loans and i'm talking an estimated $90 billion worth of non performing loans that don't have provision, they don't have cash set aside. they had a kind of unique solution. more italian growth. listen in. >> the best way to solve the problem of mpl is the growth. and this is my priority. my dream and my nightmare. every day i think about it. growth, growth, growth. >> now, the lack of economic growth and also these non performing loans are not just a financial issue for prime minister renzi. also a political one ahead of a crucial referendum in october this year on political reform. this is turning into both a confidence vote on prime minister renzi but also a
confidence vote on italy's future in the eu. and we know you can surprise here where we've seen that with the brexit vote. prime minister renzi has said he'll resign if this referendum goes against him. he's not just fighting for the security of the banks but also his political future. guys, back to you. >> julia chatterly in rome. thanks with the italian stock market down 2.5%. >> watching shares of delta airlines. now catching at least a little bit of an offer today. one of the worst performers in the s&p 500. of course on higher fuel prices one of those things and also some of headlines about passenger unit revenue numbers that are a bit of a decline than they were on a year over year basis and delta always a stock in focus for those watching transportation. you have to culture the delta
ceo on at 4:00 eastern today on "closing bell"'s special show. all weighing in from atlanta georgia later today. back to you guys. >> we'll be watching, dodge, thank you. when ke we come back, art cashin joins us. waez head to break take a look at the markets trading this. the dow is off 86. the dow's seventh losing day in a row ♪ using 60,000 points from my chase ink card
rick santelli has the santelli exchange. >> thank you mike. good morning. and i'd like to welcome my special guest, andy johnson. thank you for showing up here. >> good to see you as always. >> i walked in rates already up. -- personal income and spending weren't too bad. >> good thing of course. >> in the final analysis you and i come from a world of fundamentals. fixed income investors. you deal with institutional ones. they like fundamentals but it hasn't been the market. >> it's been all about technicals. a large part about negative yields across the globe. really it is a gravitational pull on our markets. and the rates are really low but i wouldn't expect that to change any time soon. >> jgb, you will find they are a whole lot less negative than they were just three, four five
weeks ago and that really is a compelling dynamic. i asked how many invests have you ever heard say a positive word about negative rates and what was your answer? >> the answer is zero. who would like lending money and having to pay to do that. it makes no sense but that is the world for now. >> with japanese getting less negative on rates and stimulus packages and kuroda not throwing out any newer picture ee eer pu there. are we seeing japanese truly reconsidering the negative rates are the medicine they need? >> i think they reconsidered but i don't think they are certain. they panicked and barked off but we'll see. we may see helicopter money. japanese economy is still
struggling and i don't expect that to change any time soon. >> now the dollar. the last time japanese rate were here was around mid may. in mid may the yen was significantly weaker than it is today. so it's gained ground against the dollar rather significantly. there is a lot of debt around the world dollar denominated. it really makes the feds job a two front war does it not. >> sure does. we live in an over indebted, over obligated world and in that world you have difficult challenges. the fed is really struggling with that. anything in terms of normalizing rate, purchasing emerging markets and of course that is not good and causes financial conditions to weaken and the fed backs off. that is what we've lived with the last six to eight months i'd say. >> andy a pleasure. you have to come back soon. sara back to you. >> rick, thank you as always. coming up later, "closing
>> when you look at that headline number, certainly the largest economic stimulus package passed here in japan since the financial crisis back in 2009, but we saw the nikkei fall about 1.5% largely because of the details in that package. just 7.5 trillion yen. that's less than half that headline number. in terms infrastructure project. related to areas affected by the earthquake earlier this year. the government will be given cash handouts roughly $147 to low-income individuals, and they'll also be boosting hourly minimum wage by 3%. now, this is part of a renewed
push by the central government to show that they are coordinating policy efforts here with the bank of japan. just on friday, the bank of japan moving to nearly double the etf purchasing. they kept much of the policy unchanged. neither of the policies have done much to take the pressure off the yen. in fact it reached a three-wee high against the dollar today both the ministry of finance and the bank of japan, though, going to great lengths to show the optics at least that they are on the same page. the finance minute terr and governor kur on. do meeting today, reaffirming their efforts, at least publicly, that they are committed to beating deflation and talking about issuing more 40-year japanese bonds. the question is how much will it boost the economy? the ruling party has said it could booth as much as 1.3% of gdp in the near term, though that skeptics say that number is
more like 0.4%. there is increasing fatigue here? this is the 26th package passed since 1990, none of which have done really what they have looked to turn the japanese economy around. there's increasing fatigue with that, and increasing pressure on the japanese government to go for larger, bolder structural reforming that so-called third arrow of abe-gnomics that has been slow to take shape. let's go to art cashin, as we watch this sell-off accelera accelerate, you saw some key levels? >> you did a couple things. you made a lower low than yesterday's low, that always gets people a little worried, then you took out the 2060 level which had been bot range that we had been trading in, so that made the bulls even more
nervous, and now a lower low for the day. we have taken out the earlier low, so successively things are beginning to waste. our old friend crude oil is on the verge of giving up almost all of its rally so far today. if that goes negative, we'll add to the pressure here. >> though that was the one bright spot pretty much all morning, to akiko's point, how do you read that? >> i agree, i think there was less there than meets the eye. i think the key question is what does kuroda do next it? there's a feeling they may be thinking they have toes hit the limits of the keynesian policies. if abe scoops up the bontsds, discuss kuroda scoop them up?
i think they would rather do that than take rates in an even more negative fashion. >> we have the ten-year pushing 1.6%, a little below that. what do you read on that? is that an unwinden of that buying panic after the brexit we had across government bonds? >> it could be that, but i tend to think it is the feeling that if monetary policy is reaching the limits, then the gun dlach odds is highly unlikely. you're seeing people stepping away from it. the next thing we want to watch for is, does money come from offshore to buy the slightly higher american yields? that is something that's working against the fed. >> are we in another energy-led market here? or at risk of that? i know it's a while ago. every tick up or down is based on wti? >> to some degree, i think.
those correlations go in and out. if you look at it over 20 years there's not only zero correlation, but an actually slightly negative one, but we are up to probably 60% correlation about now, and -- what accounts for that? i mean given historically, as you say, it hasn't been the case. is ittal go rhythmic -- what accounts for that change? >> it could be some of that. the other thing is a concern about the debt of the energy companies. if oil keeps going down, some people are going to have to declare bankruptcy or default at the very least, and that's going to hurt the banking system. if you look at the senior loan officer survey the banking have already begun tightening their helping standards even before the fed did anything. it's not as hospitable as it once was. coming up tomorrow on
and why a leading car brand counts on us to keep their dealer network streamlined and nimble. businesses count on communication, and communication counts on centurylink. andrea sikon. medical doctor from cleveland clinic, watson, let's review the electronic medical record of the next patient.. no problem. it's a pretty huge file. done. sorry for the wait. that was quick. as part of our research, i also compared lab results with notes about prior treatments, then cross referenced it with thousands of medical journals. and i get the benefit of much more data, and a lot more time to plan the best treatments. i stay focused 24/7 and never sleep. you sound like a lot of medical students i know. first reaction to adp employment numbers, plus the
"squawk box" tomorrow on cnbc. a live shot from ash burn, virginia, where we are expecting donald trump to start speaking at the top of the hour. the doors opened at 9:00 a.m. this is inside a high school, brierwoods high school in ashburn, virginia, where he's expected to start speaking in a few moments. this comes after billionaire warren buffett campaigned with hillary clinton yesterday, dared trump to release his tax returns along with mr. buffett and take questions, also went after his business record, including a number of things including his comments about the khan family. we'll bring it to you as soon as it happens. we're also monitoring the market sell-off. s&p 500 down 0.8. there's better data when it comes to personal spending.
incomes also rose. so far autosales have been disappointing. we're watching crude oil very, very quickly. with that, kayla, i send it to you for "squawk alley." >> thank you, sara. in the meantime it is 8:00 a.m., 11:00 a.m. here on wall street. "squawk alley" is live. ♪ good tuesday morning. thanks for joining us on "squawk alley." with me here for the hour, david faber and mike san to