tv Worldwide Exchange CNBC September 13, 2016 5:00am-6:01am EDT
good morning, breaking up international energy. crude prices under pressure. >> bank backlash, outrage growing against wells fargo. senate preparing a hearing on the firm's sales tactics. going the extra mile, new this morning, general motors announces its chevy volt can drive longer than its competitors on a single charge. it's tuesday, september 13, 2016. "worldwide exchange" begins right now. ♪ good morning and welcome to "worldwide exchange".
i'm sara eisen. >> good morning from me as well. a big day ahead on cnbc as we bring you a front row seat to the sixth annual delivering alpha conference. >> bringing together the most important players in asset management and tackle the critical issues facing investors in today's economy. among the headliners treasury secretary jack lew kicking things off. his predecessor tim quite quite speaking, paul singer, steve are schwartzman karl icahn. another triple-digit move here in the pre-market. we saw this kind of move yesterday completely reverse course and the dow closing up more than 200 points. dow futures under pressure again, minus 112 there. s&p futures are down 14 half points. nasdaq futures are down about 30 points as well.
again this after yesterday's reversal that clawed back more than half from friday's big selloff. >> amazing turn around. yesterday we were looking at similar futures declines. by the end of the day two sectors were up less than 1%, energy and materials. a massive rally that we saw during the course of the day particularly around about lunch time. let's have a look at oil prices. international energy agency cutting its forecast for global demand. they cite would belibbling asia. quick look at the ten year note as well. and we're seeing yields at 1.653, the high yesterday before the turn around was close to 1.7, 1.697. quick look around the rest of the world. interesting thing here is european equities ended down yesterday. they didn't enjoy the late rally that wall street had so we
expected a bit of a catch up. same true of asian markets. neither saw it highlighting the difference of what we saw. we have a change of expectations for the fed, markets rallied but not a change of expectations from the ecb thus european stocks are not rallying across the pond as you can see germany and france eking out slight gains. asia similar story. didn't take part in that rally or catch up today. nikkei fractionally higher, hong kong down around a third of a percent. >> the dollar reversed and weaker after a rally on friday. back to its stengthensing way just fractionally here. 112.27. it reflects nerves of barely a move this morning. we'll see how that goes into the u.s. below the critical 1.02 level.
quickly let's show you gold. we should also mention china released some data overnight which we'll get to in a moment. better overall in terms of the tone, industrial production retail sales and the like will go in a moment. gold higher about $7.13. will the selloff that we're seeing risk aversion continue throughout the morning? that's the question after that head fake yesterday. the other big question was yesterday the "fake out" or was friday the fakeout? that's what our -- >> before the drop. >> that's because people are trying to figure out it's one hawkish fed comment on friday, one dovish fed comment yesterday, a lot of noise. they will be quiet now until the meeting next week. expectations are no move in september, yes move in december. is the market and economy going to be okay with that. that will drive us forward. >> what an amazing lineup to break those recent market moves
for us throughout the day. >> goldman sachs cutting the odds of a fed rate hike next week to 25% from 40%. the firm's goal came after fed governor, the fomc member caused about the central bank moving too quickly. >> to the extent that the effect on inflation of further gradual tightening in labor market conditions is likely to be gradual the case to tighten policy preemptively is less compelling. >> a fed black out policy will prevent any policymakers to speak publicly until after next week's decision. light day for economic data. national federation for independent business releases its monthly small business survey at 6:00 a.m. eastern followed by the monthly federal budget statement at 2:00 p.m. later in the week we get industrial production, retail sales and other data. maybe the markets will trade on the data. >> wishful thinking.
now to one of this morning's top stories. more headlines on the wells fargo sales practice issue that broke last friday. it's emerged that the executive who oversaw the knit that created 2 million unauthorized customer accounts who stepped down in july did so with a pay package worth nearly $125 million according to reports. but wells fargo said the executive's department was a personal decision after 27 years with the firm and was aware of the wrongdoing and working to reduce it. regardless, it raises questions whether some of her pay should be called back. this comes after wells was handed a $185 million fine for those questionable sales practices. today market watch reports its analysis raises the possibility that the practice is not just limited to wells fargo, however speaking to cnbc yesterday the head of the cfbb said he does
not see problem similar to those discovered at wells fargo occurring on any kind of systemic basis. the government taking further action with the senate banking committee announcing plans to hold a hearing into the bank's sales practices. they intend to question wells ceo john stumpf. he'll be on "mad money" tonight with jim cramer. expecting comments from the ceo on "squawk box" this morning. i suppose this additional sort of realization of how much money the head of this department was paid, albeit stepping down in july, not just in the aftermath of the find and more of a pr disaster level to it for the company. but i suppose if you look at the other factor on the stock price 185 million maintains quite a small fine. wells themselves have paid 9
billion in fines since 2010. 185 million isn't huge. terrible embarrassing reputation thing which this executive was paid quite so much in the face of it. again the stock price -- >> we talked to richard on closing bell and i brought up this squuf this executive departure why they weren't going after. he said they don't do that but there will be follow on and hearings as you mentioned in congress. they did what they do which is impose a fee and fine and that's the biggest fine in the history of that office. it will be interesting to see. do they come out and downgrade the bank. banks are supposed to look out for their clients. that's their business. how many years since the financial crisis it doesn't surprise the public these tactics go on. but it certainly is an investor issue. >> it surprises the public
because it's hurting the consumer. not sort of what people expect. i think particularly for wells which relies very much on cross selling and the customer it's very embarrassing for them. just coming back to the size of the fine, yes it's the biggest for the cfbb relative to fed and fines it's peanuts. on top of that why aren't they going after the executives. wells has gone away without having any admission of guilt. that was part of the deal. this is an issue that's rambled on since 2010, came to light in 2013 and now getting closure with these headlines. they are getting headlines with small fine and no admission of guilt. it could be seen as a win for them particularly if it blows over time. it's not blowing over yet. headlines of the size of the pay embarrasses them further. no admission of guilt. there might be a senate hearing but no guilt. >> which is why it would be
important to listen to what stumpf has to say. >> european commission to slap apple with a tax bill sparked jack lew to respond. wrote an op-ed in today's "wall street journal" just hitting the wire and landon dowdy joins us with the high likes of that piece. >> reporter: this is a must read. in a letter to the european commission learning ew noting retroactive penalties threaten the business climate pointing out the commission's action jeopardize america's corporate tax base because u.s. companies can claim foreign tax credits for any payments to eu countries. still acknowledging paying taxes is a global problem. u.s. corporations holding more than $2 trillion in deferred overseas income and urging congress to act on president obama's proposed plan for u.s. tax reform and he says there's
three reasons that makes america less attractive place to do business. the combination of high corporate rate, our complicated system for taxing and our ageing infrastructure. back over to you. >> thank you very much. jack lew at delivering alpha today, 8:30 a.m. eastern time. another big part of the day ahead not to miss. >> i think one question for him he's going after the european commission for these preemptive tax claw backs. his inversion rule that wasn't announced too long ago was also sort of a look back that ruined one of the biggest department deals, tore it apart. >> i'm glad you brought that up. was going to bring it up when we discussed it. in britain and in europe there are other flip side stories, finds on the like of deutsche
bank and there's an argument on the european side there's a holier than thou perspective from the u.s. treasury on this. either way it's dlaer conclusion that the u.s. should use this news headline and fallout publicly to reform its corporate tax. >> right. let's move on to some other corporate news. general motors announcing its new chevy volt can go 238 miles on a single charge. this tops the range of its more expensive competitor the tesla model s. the volt will go on sale later this year with a sticker price of $37 rk 500. gm executive will join "squawk box" later this morning at 7:15 eastern time. >> when we come back slightly better than economic data out of china. we'll head to china for a complete round up of numbers. later today don't miss complete coverage of our delivering alpha conference. among the headliners a panel
with former treasury secretary tim quite quite and ray dalio together on the stage. we'll bring to it you live. stay tuned you're watching cnbc business in business live. what's going on here? i'm val, the orange money retirement squirrel from voya. we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? more of a spokes metaphor. get organized at voya.com.
"worldwide exchange". >> triple-digit declines in the dow futures. we were looking at this yesterday. we were looking at steeper declines in the future markets yesterday and we saw a strong rally throughout the day as there was a push back on expectations of a rate hike with more dovish commentary than expected. we have no fed speakers today. that means these declines may carry through for the whole day. we're looking at over 100 point decline for the dow. 0.6%. oil prices are slipping today as the international energy agency pushed back expectations of demand particularly because of wobbleness in asia. now to asia. we got a bunch of economic data out of china overnight. we go singapore to round out the headlines. good morning. >> reporter: hi.
i think these numbers are consistent with tentative stabilization with growth rates around 6%. so not consistent with a hard landing. let's get that out of the way. what we need to see here apart from the fact that rebalancing is gaining some momentum. i want to high like the sales numbers. 10.6% in august. markets mainly chinese equities typically agnostic about these data points. the main driver will be the current circumstance dollar and pace of capital market liberalization. all in all a fairly risk on the day. we started with initial gains after the dovish commentary from brainard overnight but did evaporate. degree of caution out here. i'll leave you with mccrory's bank takes on brainard's comment. say her comment leaf the hawks
outgun, outmaneuvered and looks like september is no longer aa live event. we're one and done and happens in september. >> goldman sachs is bullish on china over the short term. upgrading chinese equities to overweight. goldman says although the long term picture is murky china is a decent bet for those looking to make money to the end of the year. goldman thinks the economy will strengthen in the fourth quarter due to recently easing measures. coming up on the show headlines from the campaign trail including president obama stumping for hillary clinton today. >> first as we head to break here's today's national forecast from the weather channel. >> good morning. another beautiful day across the northeast. if you loved yesterday you'll love today. starts off on a cool, crisp note temperatures warm up to the low
80s. under sunny skies. we have a front coming from the midwest bringing a couple of showers. not as widespread in terms of thunderstorms but behind it big temperature changes. 59 degree high temperature in bismarck, north dakota that's the kind of air that's coming in. in the south more thunderstorms especially in florida and especially in southeastern georgia and south carolina. thank your tropical disturbance for that. won't develop but will bring some extra rainfall. temperature side of things very warm ahead of the front behind it a big cool down coming in with lower humidity as well for the next couple of days. that's your latest forecast worldwide exchange continues after this. what's it like to put your home in good hands?
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i'm booked solid for weeks. it takes ingenuity to make it in the big city. . welcome back to "worldwide exchange" and good morning. let's get you up to speed on today's market action. we're looking at a selloff. dow futures down 101. nasdaq down 27. we saw triple-digit declines in yesterday's pre-market action and that turned around throughout the morning. we're still seeing more than 200 point rally for the dow making up for more than half of friday's selloff. at the root of some of these stock market moves the bond market. let's show you what the ten year is doing. relative calm in the bond market after the mini spike on friday. ten year treasury note sitting below 170 level, 1.65. very level in economic data. we'll hear from the secretary
treasury and the former treasury secretary tim quite quite who will be monitoring the remark and reaction for any market moving comments. >> let's move on to politics. president obama is traveling to philadelphia today to campaign for hillary clinton. as she recovers from pneumonia. nbc's tracie potts joins us from washington with all the latest. >> reporter: good morning. she's got surrogates out there, she's doing what she can by phone. that's kind of the only way she can campaign right now. former president bill clinton hitting the road on her behalf. after nearly collapsing from dehydration, hillary clinton is home this morning in new york tweeting i'm feeling fine and getting better and i'm anxious to get back out there. she tells cnn why she did not disclose friday's pneumonia diagnosis earlier. >> i didn't think it was going to be that big of a deal. >> reporter: today bill clinton heads to the west coast in her
place and president obama campaigns for clinton in philadelphia. like clinton someone got overheated at a donald trump rally but he's not focused on clinton's health. instead trump is hitting the air waves. >> you know what's deplorable, hillary clinton viciously demonizing hard-working people like you. >> reporter: and demanding an apology from clinton for calling half of his supporters a basket of deplorables. >> the racist, sexist, homophobic zexophobic. >> reporter: clinton said she regrets how many she labelled but insist extremists are backing trump. for now she's making her case from behind closed doors. that's because she's still under doctor orders. bill clinton headed out west to california today. and then nevada to represent her until she's back on the campaign trail. >> the issue, of course, of how open and honest the campaign has
been is one thing but if we put that to the side, of course, yesterday you mentioned to us still a long way to go until november. the actual health scare itself could look a distance speck in the distance by the time we get to election day. how long does she have to remain behind closed doors for it to become a much bigger issue in terms of the health side of things? >> reporter: what the doctor had said initially was five days. that was from friday's diagnosis. obviously she didn't do that for first couple of days and she's acknowledged that. anything beyond this week if we don't see her by this weekend and certainly early next week questions are going to start to pop up again. wait a minute. if she was doing fine, she said she was doing fine, doctors said she was recovering she's had a few days then what's the problem? >> thanks very much as ever. tracie potts in washington. moving on to sports. week one of the nfl season wrapped up with two games on monday night football. the late contest featured the
rams and the 49ers. much has been made of niners quarterback back up colin kaepernick. colin kaepernick and eric reed knelt during the national anthem. others raised their fists. a few isolated fans yelled at colin kaepernick to stand up. the game wasn't much of a contest. rams scoring both on the grounds and through the air. niners winning easy shutting out the rams 28-0. >> thank you 49ers for my lack of sleep last night because that game ended late and there was a lot of yelling in my apartment with a 49er fan. >> and the rams having moved to l.a. >> also the 49ers weren't that good. when we come back this moaning's top stories including the iea cutting a key oil demand forecast moving the price lower and then as we've been telling you all morning can't miss our
complete coverage of delivering alpha the conference today among the headliners, we don't of end hear from him, paul singer elliot management founder. you're watching cnbc first in business worldwide. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. man: ♪ you're beautiful [click] ♪ i'm coming back to you [click]
[ clock titime. ] you only have so much. that's why we want to make sure you won't have to wait on hold. and you won't have to guess when we'll turn up. because after all we should fit into your life. not the other way around. good morning, crude crushed these national energy agency cuts its forecast for global oil demand and prices are under pressure. fed up? stocks swing wildly as investors try to figure out what janet
yellen and company will do on interest rates. we'll bring you a call from goldman sachs and others coming up. plus attacking the stars, ryan lochte ambushed on live television. we'll bring you that story this tuesday on september 13th, 2016. you're watching "worldwide exchange" on cnbc. ♪ good morning. welcome back to "worldwide exchange". >> a very big day ahead on cnbc. we bring you a front row seat to the alpha conference. the event brings together the most important players in asset management and tack tell critical issues facing investors in today's economy. among the headliners treasury secretary jack lew, his predecessor, tim quite quite, steve schwartzman and carl icahn, a massive day at a moment when volatility has speck.
stay tuned all day here on cnbc. let's check in on what the markets are doing. we're lower. triple-digit declines while not any more. typical. the dow lower by 97 points. the s&p by 12, the nasdaq by 25. expecting about 0.5, 0.6% decline at the open. yesterday we expected by the same but by the end of the day we saw a significant rally. only two of the s&p sectors didn't rise by more than 1%. that off the back of fed expectations, being pushed back out to december as opposed to september. we'll discuss that in just a second. european trade this morning, somewhat surprisingly and same is true of asia not showing significant gains because asia and europe decline. yesterday they didn't take part in a late rally we saw on "wall street journal". therefore some expected them to rally today. it comes down to what fed expectations, ecb expectations didn't and europe is soft.
quick look at asia. slight declines for the hong kong index slight gains for the japanese index. >> as for the broader market picture oil is on the move. giving back yesterday's gain. wti down 2.5%. hovering above $45 a barrel. brent, benchmark 47.28. after the iea warned of soft demand. ten year treasury note yelled. this is the source of anxiety in the global markets. that tick up on friday coming back down below 1.65. thank you brainard fed governor who says maybe the fed shouldn't rush to raise rates. a divided fed going into next week's meeting. as for the u.s. dollar a bit stronger. weaker yesterday. stronger against the euro and japanese yen. that just turned around. some tension easing. that's when we saw futures come off their lows.
the pound weaker against the dollar, 1.72. gold getting a boost on the back of that this morning. making a move. up about 7 bucks. >> making headlines this morning goldman sachs cutting the odds of a fed hike next week to 25%. previously they had it at 40%. it came after the fed governor caused against the central bank moving too quickly. >> to the extent that the effect on affiliation of further gruel tightening in labor market conditions is likely to be gradual the case to tighten policy preemptively is less compelling. >> joining us now to discuss what to make all of this fed speak is president of money strong former adviser at the dallas fed and hopefully a fed interpreter of commentary. now that we know they lobbied for their own positions and the market is confused as to what they will do, what do we make of next week's meeting?
>> the outcome will be less compelling. it's fun watching cnbc asia and europe overnight and i've never seen a speech repeated so many times over and over again. brainard speech along with neel kashkari's comments yesterday. >> he got blame for the sell off. >> but rossengrand has been hawkish two weeks prior as well. at least it was an e-mail from deutsch bank from their chief economist that came out and said where did this brainard speech come from. it's not like her. not like theory schedule something that last minute. then, of course, the cynicism in the twitter sphere started roaring clinton stumbled and health came into question and brainard is public in having contributed to the campaign and no way brainard would be strong armed to be hawkish.
>> whether it's september or december provide -- >> if it's december. i'm with neel kashkari. >> if we did get one of those two you think markets would be surprised to the down side? >> i think what friday taught us is markets is very skittish. we've come through a very incredible era of complacency. kind of a cottage industry sport to count the number of days that the s&p hadn't moved inside or outside of a band of 1%. what friday reminded us it's got that capability but only if there's a true threat on the horizon of this tiny 25 basis points. >> did you just agree with donald trump that the fed is acting politically? >> oh, my goodness. >> what was your comment about brainard. >> my comment the fed has acted highly politically. i think that the market was correct in being concerned that brainard was going to wax hawkish yesterday despite the
fact that she truly leans dovish 99.9% of the time. her last minute scheduling of the speech was indeed questionable naerngts were right to be concerned about it because of the trifecta of dudley, fisher and yellen and how cohesive they've been. >> what about the charge that yellen is keeping rates low. >> one rate hike since 1990 when we had fed statements released this close to an election. that was in 2004. we were to expect 25 basis points. we're not there right now at all. >> regardless of the motivations do you agree with donald trump and others perhaps that if we do even get 25 basis rate hike we see a much bigger selloff >> absolutely. i think that's what friday -- i think there's at least 4% or 5% down side in the market and 3% was enough to make people extremely nervous and that's the kind of environment we're in.
3% can make that big of a difference. it's absolutely ridiculous but, again, i think the optics are there and i think that the fed's track record stands on its own that it's extremely rare in the past 30 years to see anything this close to an election. >> what about the economy? does the economy, if you can take the asset price does the -- >> if you back up, janet yellen's favorite labor market indicator, the caboose on the economy strength we've seen a negative showing for seven out of the last eight months. so i don't think there's necessarily -- and the services sector is at 6.5 year low. there's no justification for hiking rates which leads you to believe they are hawkish for completely different reasons. >> if the economy is weak then why is it political not to raise rates? isn't it responding to the data? >> they are responding to the data. i think all of this huof this wy
determined to raise the hole it started with the united front in jackson hole so we have to wonder what else is compelling the fed to want to raise rates so badly in december and do they see recession over the horizon and stanley fischer especially is concerned there's not enough in the way of conventional monetary policy to address a recession i.e. interest rates. 25 basis points won't cut it when you need 3% or 4%. >> it's started to help in the uk. we'll see. thank you so much for joining us this morning. in corporate news more outage at wells fargo following headlines on sales practices. it's emerged the executive who oversaw the knit that created 2 million unauthorized customer accounts who had stepped down in july did so with a pay package
worth nearly $125 million according to reports. however, wells fargo says that executive as retirement was a personal decision after 27 years with firm and was, in fact, aware of the wrongdoing and already working to reduce it. regardless cnn analyst says it raises questions whether some of her pay should be called back. this comes after wells was handed a $185 million fine for those questionable sales practices. today market watch report its analysis raises the possibility that the practice is not just limited to wells fargo, however speak being to cnbc yesterday the head of the cfbb said he does not see problems similar to those discovered at wells fargo occurring on any kind of systemic basis at any other bank. the government also taking further action with the senate banking committee announcing influenza hold a hearing. they intend to question wells ceo john stumpf but we'll hear
from him before then. he'll be on "mad money" tonight with jim cramer. 6:00 p.m. eastern. protesters rushing the "dancing with the stars" stage last night after ryan lochte's performance. two men stormed the stage, threw something at lochte during the season's premier forcing abc to cut to commercial break. both men were arrested. additional protesters in the audience were wearing anti-lochte shirts. they were heard chanting liar, lia liar. lochte came out and said i'm hurt. >> people love "dancing with the stars". kind of a controversial move they hired him right after this whole scandal. you don't usually see
protesters. >> tot typical viewer. >> like "dancing with the stars". >> another trending story pep liked it so put a ring on it. beyonce massacinterrupting one concerts so one of her dancers to propose on the stage. the boyfriend named john silva was handed the microphone, gave a speech, got down on one knee and put a ring interest. i love that story. you love beyonce even more. >> still to come must reads including treasury secretary jack lew. as we head to break check out european securities. the ftse in the red. germany eking out a quarter of a percent of positivity. we're back in a couple of minutes. if we're not ready when the planets are perfectly aligned,
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welcome back now to our must read stories catching our attention. my pick in the "wall street journal" written by jack lew and titled europe's bite out of apple shows the need for u.s. tax reform. the treasury secretary writing the most important thing for u.s. taxpayers the european commission's actions threaten to erode america's corporate tax base. the apple decision and bipartisan reacshot in the may present a new opportunity to make reform a reality.
that opportunity should not be lost. really this is the bottom line of this article from the treasury secretary. very sort of criticisms, of course, about what europe has done but saying that this has created a swell of opinion and high liked once again the issues that the u.s. corporate tax system has and it must be used to capitalize interest. they propose reforms. haven't been passed and really just saying we got to use this opportunity and he says he hopes the new administration and congress do act swiftly after the next election. >> because that's a huge issue the $2 trillion parked overseas from u.s. corporations and he says it's a loss for u.s. taxpayers with the europeans going after that kind of claim. >> on that note do not miss our coverage of delivering alpha, jack lew will be keynote speaker at the start of the conference 8:30 a.m. eastern time. my pick is in the "usa today" titled trump will never be ready to lead on foreign policy comes from max boot who
is an expert on foreign policy. senior fellow in national security studies. i picked it because everything else was about hillary's health and some campaign they tricks and drama. this op-ed says, it talks about trump on russia in particular, and max boot saying putin is more ruthless than obama but to praise him for being strong sutterly inappropriate especially when it is not leafened by a sing word of censure for any of putin's crimes from the murder of journalists and political rivals to the invasion of sovereign countries. going after trump for some of his praise on vladimir putin. also sort of outlines some of the other issues that mr. boot of the council on foreign relations has with mr. trump on national security because that's the issue. we're electing the next commander-in-chief. let's turn it back to some of the colts that both candidates
say on these very important matters. >> absolutely right. one of the issues where there's less congressional oversight for the commander-in-chief to act on his own accord. >> when we come back u.s. equity futures pointsing to at that rough open on wall street. we'll talk to chief economic strategist. brand new note how safe are dividend stocks. >> synchronized your clocks we're getting closer to the kick-off of the alpha conference. all excitement begins at 8:30 a.m. keynote address by jack lew. catch it here on cnbc. we're first in business worldwide. announcer: alvin and the chipmunks want to remind you--
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hello, my name is watson. now that fedex has helped us we could focus on bigger issues, like our passive aggressive environment. we're not passive aggressive. hey, hey, hey, there are no bad suggestions here... no matter how lame they are. well said, ann. i've always admired how you just say what's in your head, without thinking. very brave. good point ted. you're living proof that looks aren't everything. thank you. welcome. so, fedex helped simplify our e-commerce business and this is not a passive aggressive environment. i just wanted to say, you guys are doing a great job. what's that supposed to mean? fedex. helping small business simplify e-commerce. >> welcome back to "worldwide exchange". let's check in on futures. just over triple-digit decline expected for the dow, 107 points
lower. yesterday we saw similar declines in the pre-market but did rally throughout the rest of the day. >> total reversal. joe kernen joins us from today's alpha conference. joe? >> monday was a reversal of friday now today a reversal of monday. all triple digits. i'm starting to realize that was pretty quiet trading we had in the dog days of august. three straight days. i don't understand really the move today. i guess europe didn't follow through with our positive market action and i don't know what we want from the fed at this point. what scares me is if we do get the idea that the fed won't hike, but we come back to focus on the weakness that caused the fed to put off another hike and when that finally happens, i don't know what we're going -- i don't know what will move the market higher at that point. at least we got a lot of people
that are going to be able to explain these things to us throughout the day, including treasury secretary jack lew and steve liesman. we searched high and low for a hedgeman guy back being trump. he's a long time guest of the show and he'll be on for about an hour and will explain ration education rationale. a great year to have these guys in one place. gets a little bit loud later on. we'll put on those bob costas olympic type -- madonna. bob costas' mike i'll use the madonna cones. >> actually got you in a suit. we're not used to seeing you in a jacket. >> you look smart and serious.
>> you might even wear these shoes that i have on. no probably not. but they are shoe betcha. so shiny an make the whole conference. >> i did see them. >> we have to see them up on the desk at some point because otherwise we can't believe you. >> lift your leg. >> i don't think i can. i'll rip something. then what am i going to do. >> we'll see you down there on the floor and i'll get a glimpse of the shoes then but also throughout the shot very smart looking, "squawk box" coming up in eight minutes time. here on "worldwide exchange" time to discuss what to expect from the markets. joining us is john golub. good morning to you. fairly common view that if we do start to see rate hikes we'll see a big sector rotation, stocks that have done well this year will start to under perform those dividend stocks in particular. what's your conclusion? >> it's interesting.
my clients are hedge funds and big institutional owners and been very concerned with high dividend stocks riding up the way they are that if we got any kind of increase in interest rates it was bad for the markets and these stocks would get crushed and do a bunch of damage. >> which we saw on friday. >> we saw on friday. if you think the markets sold off by 2%, sold off by 3, out performing by 13%. in perspective not the absolutely worst thing. we look to see how vulnerable things really werer and what we found the story is nowhere near as bad. i was in the camp with my clients that these things were a disaster waiting to happen and there's reasons why it wasn't. first is while they are out performing by massive amount for the prior three, four, years they haven't been performing that well. they haven't run up as much. their earnings were actually because the economy is so lousy the earnings of these dividend
stocks was actually better than the rest of the markets so some of the move up that they had over the last several years was justified. so that was a couple things. we looked at the valuation of these companies, if you look at reits, other things, things that mom and dad hold in their portfolio the evaluation of those companies was to the market. really this valuation market wasn't there. the most important thing was that when we looked over the last 25 years what happens when interest rates rise and it's a real problem except when interest rates are uber low like they are now, the market is dying for yields so it ignores the movement in interest rates. so, i think that they probably holding way better than most investors think. >> everyone on cnbc in the last week and a half has come on, investors, strategists have said these are the riskiest parts of the market, utilities, staples, defensive, they run up so far so
fast and the second that the fed just gives a little hint of an interest rate hike all the air comes out. >> there is one part of what you said because you talked about staples and they are a very different story. so it was about dividend stocks. we looked at what i call low volatile stocks. they are more expensive and mr. vulnerable. there are parts of the market that look like they are a bit frothy but you have to be very careful when you look exactly where you want to make those betts. >> what about the flip side people putting on buys for the like of the banks and industrials that are expected to perform better as rates go up. do you underplay those expectations as well? >> i think the story on those stocks and we're talking about cyclical companies in general and have done well over the summer. if and when we get fiscal
stimulus those are the companies that will win and banks are clearly the big winner, industrials, materials. i think it's too early for trade. trade is a winning one but after election day. >> how much of your portfolio should you allocate to what you're calling out safe dividend stocks, yiels and telcos and how much to the more sicyclically oriented company. >> what i'm saying is that there is not this pending disaster. there's two stories to the market. between now and some kind of fiscal stimulus stable boring companies like those at risk consumer staples companies everybody loves to hate i think they continue to lead the market even though they look frothy. once you get fiscal stimulus it's then that the bank stocks and discretionary and industrial names really start to hit it very hard. >> thank you so much for joining us this morning. >> we know what we're watching,
delivering alpha all day here on cnbc. >> don't want to misogyny of that. "worldwide exchange" is done. "squawk box" picks up next. so many things can go wrong. it's my worst nightmare. every second that power is out, my city's at risk. siemens digital grid manages and reroutes power, so service can be restored within seconds. priority number one is keeping those lights on. it takes ingenuity to defeat the monsters that live in the dark.
gentleman good morning. breaking overnight the international energy agency cuts its forecast for global oil demand and crude prices are understand pressure. maybe that's why equities look so weak. and a developing story, bank backlash. love when we do iteration. outrage growing against wells fargo. senate preparing a hearing on the firm's sales tactics. plus europe handed apple $14 billion tax bill. now treasury secretary jack lew is firing back, warning that there will be fallout from retroactive tax penalties as lone as it's not one we levy here in this country. secretary lew will deliver the opening comment. it's that time of year. we look forward delivering
alpha, tuesday, september 13th, 2016. "squawk box" begins right now. ♪ signed sealed delivered ♪ 0 yeah good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin and we do have a big day ahead of us as we bring you a front row seat to the sixth annual delivering conference. produced by cnbc and institutional investor. >> signed, sealed and delivered. not seeking. very few deliver. >> this event brings together the most important players in asset management and tackling the critical issues facing investors in today's economy. among the headliners today we have treasury secretary jack lew, his predecessor tim quite quite, ray dalio, steve schwartzman and carl icahn. stay tuned to cnbc all day for the hi