Skip to main content

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

5:00 am
good morning. global market alert. futures point to a higher open on the heels of yesterday's rally. >> google, disney and apple are said not to be eyeing twitter. and the mets lose their magic on a last-inning home run. we'll bring you the highlights from the late-night finish. it's thursday october 6, 2016. "worldwide exchange" begins right now. ♪
5:01 am
good morning. welcome to "worldwide exchange." i'm wilfred frost alongside s. m it's thoughback thursday, throwing it back with some rock classics like the rolling stones. they're about to play at coachella. >> old-chella people are calling it. >> i'm not going, but i'm sure it will be an awesome concert. the stones kicking us off. let's check in on global markets. yesterday good performance, about a half percent to 6% of gains. banks for the second day in a row soaring largely because deutsche bank fears eased earlier in the week, particularly because yields have taked up so significantly. it highlights the potential these names have to respond if and when we do see a rate hike. stocks this morning are up about
5:02 am
21 points for the dow. 1 point for the s&p. the nasdaq up about 4 points. we have slipped a bit in terms of yields in the u.s. and europe today. but we are, as you can see, close to 1.7%. yesterday we hit 1.73%. that was the high of the day. those lows we saw at the back end of last week around 1.5% when the risk aversion around deutsche bank was at its peak and seemed some way behind us now. >> let's look at european equities. a mixed day of trade. a lot of if he cuss focus on t dax. factory orders driven by domestic demand. the dax at 10,600. france, italy and spain also trading higher. ftse 100 has been the big outperformer this week. helped in part by the drop in
5:03 am
the pound. in today's trade slightly lower, still trading well above 7,000, a milestone it surpassed this week. if we look at asia, the trade there. the japanese nikkei is on a four-day winning streak helped by the weaker yen. also a report out there that fujitsu is in talks with lonovo. in china, back above 3,000, another psychological level that is watched in china. >> if we look at oil, wti gaining about 2.3% yesterday. fraction softer this morning. we are very close to $50. that deal, supposed deal out of algeria about ten days ago, has given great impetus to oil markets over the last week or so. we're closing in on $50 for wti. the dollar was flat yesterday.
5:04 am
much stronger earlier this week. yesterday just pausing for breath if we look at some of those, movement again in the pound. it's off its 31-year low. it is down another quarter of 1% today. it had brief reprieve yesterday. but only slight reprieve and soft again, 1.2719. gold prices have suffered markedly earlier in the week as the dollar strengthened. stabilized a bit. it's flat today. 1267. fed speak continues to dominate global market conversation. fed vice chair stanley fischer said late yesterday that there is evidence that the natural rate of interest has fallen to low levels and that could mean the economy is stuck in a low growth rut that could be hard to escape. fischer said central bankers may face a future where short-term rates never get above zero.
5:05 am
jeffrey laker said a strong september jobs report with payroll growth of 100,000 would strengthen the case for a rate hike sooner rather than later. context here, lacker for the longest time pushing the fed to raise rates. >> looking at bank stocks again, earlier best performer two days in a row. yesterday the broad banks were up 2%. goldman sachs up 2.5%. so quickly when sentiment changes on whether we could get a rate hike, these guys are so geared to it, picking it up so quickly. the best point is wells fargo. if we did get a rate hike of 25 basis points, it would far outweigh in terms of earnings and financial terms any issues it has been facing. you would think there are pr issues here, but the bottom lines for the banks, if you get a rate hike, all the short-term f fears go away. >> so a strong correlation
5:06 am
between banks and fed policy. hkuroda saying qe will not lead to hyper inflation earlier this morning. to to today's corporate news, shares of twitter down sharply in the premarket session as re/code reports that google will not move forward with a bid to buy the social network and apple and disney are unlikely suitors. according to other reports, twitter told potential buyers it wants to conclude sales talks by the time it concludes third quarter results. salesforce is in the running as a potential buyer. here's what marc benioff told jim cramer about a potential purchase. >> when it comes to twitter, you have to look at it like this. number one, we look at everything. it's in our interest to look at everything. we have to understand what is possible for shareholders, what isn't. in the scheme of things, if you
5:07 am
look back at my track record as ceo, you'll find while i look at a lot of things, i pass on most things. >> more potential trouble ahead for mylan. the federal government says mylan overcharged the medicaid program by millions of dollars over five years for its epipen. according to a letter for the centers of medicare and medicaid services, mylan incorrectly classified the device as a generic instead of a name brand product. the classification allowed mylan to pay a smaller rebate. shares of mylan down about 20% over the past two months. developments around the deutsche bank story. repo the official line remains this is a deutsche bank doj matter, but rumors of political players influencing the negotiations have been around for the last week, especially with everyone gathering in washington this week for the imf meeting including deutsche bank ceo john
5:08 am
cryan. and barfin no wrong doing with deutsche bank with a china laundering bank. t the. on the data front, the september jobs report on friday will be watched closely. weekly jobless claims are out at 8:30 a.m. eastern today. forecast to rise slightly from the previous week. claims are still at historic lows. as for earnings, look for results from international speedway, that's the owner of several nascar tracks including the home of the daytona 500. and helen of troy reporting results later today. stocks to watch, shares of
5:09 am
alnylam pharmaceuticals falling after stopping a drug to treat heart failure. a late stage study showed pains given the drug were more likely to die than those given a placebo. shares down 45%. yum brands third quarter profit and revenue missing the forecast. the parent of pizza hut, taco bell and kfc says shares for its china business fell 1%. yum is spinning off that operation next month. walmart is nearly doubling its stake in china's jd.com to 10.8%. the move comes four months after walmart bought its initial position in the site as part of a deal underwhich he sold its chinese online retail business to jd. shares up 4%. coming up, the plunging pound's latest victim, easyjet. we'll tell you why the carrier is issuing a profit warning that's weighing down its stock. "worldwide exchange" will be right back.
5:10 am
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.
5:11 am
5:12 am
welcome back to "worldwide exchange." let's get you up to speed on the market action. not much of it pretty much flat in the u.s. equity futures. 19 points higher for the dow. yesterday we got a half percent of gains. the banks once again the best performer. the banks up about 2%. goldman sachs up about 2.5%. let's look at oil prices. decent day for them yesterday. just up over 2%.
5:13 am
frank shunally down today, but not too much. as you can see, we're very close to 50 bucks a barrel for wti. 49.8. let's go across the pond for a look at what's happening in the european trade. carolin roth joins us. >> one sector that's not faring well today is airlines. why? the main culprit is easyjet. look at shares, off by 5.8%. the low cost carrier said it is on course to post a 25% fall in annual profits in what would be its first full year earnings drop since 2009. a couple factors here. high exposure to egypt, turkey and france, and then the depreciation of the pound in the wake of the brexit post. thirdly continued overcapacity in the european airline sector. it's a big drag on the sector. in terms of the overall markets. we did open higher this morning. since then swinging between
5:14 am
gains and losses. we are seeing some outperformance in the beaten down banking sector. that's because citi is upgrading european banks to overweight from neutral because of receiving macro risks. and german industry orders rising more than expected in august. up by 1%. the xetra dax and germ no up by 0.1%. ftse down by 0.2me men0.2. back to you. emerging hedge fund investors kicked off the san francisco investment conference yesterday. and the founder and ceo of social capital told the crowd that workday, an enterprise software company, will be worth $100 billion in ten years. the company's market value is a little more than $18 million. he explained this pick to kate kelly. >> if you look at the transition to cloud, there's been a winner in the first two things, amazon has won infrastructure and
5:15 am
salesforce has won sales. nobody has won hr and finance. when you look deeply, there's only one single company that we think is emerging, that's a pure product story, which is really important. it's not about m&a and it's not about sales and marketing. >> he was an early executive at facebook and made waves at the sohn conference in new york when he predicted amazon would be worth $3 trillion in ten years. if you look at shares of amazon, they are trading in record territory. >> not 3 trillion yet. >> not yet. >> ten years to go. >> to today's trade of the day, with hurricane matthew reportedly set to make landfall in florida on thursday, our data team found the best performing assets a week after a hurricane hit the u.s. gold performed well while the
5:16 am
s&p 500 declined. conoco phillips was the best performer historically up a half percent on average. coming up on this show, the mets magical year crushed. the highlights from last night's heartbreaking game. and later today, don't miss wilfred's interview with philip hammond. that's at 10:30 a.m. eastern on "squawk on the street." guess what guys, i switched to sprint. sprint? i'm hearing good things about the network. all the networks are great now. we're talking within a 1% difference in reliability of each other. and, sprint saves you 50% on most current national carrier rates. save money on your phone bill, invest it in your small business. wouldn't you love more customers? i would definitely love some new customers. sprint will help you add customers and cut your costs. switch your business to sprint and save 50% on most current verizon, at&t and t-mobile rates. don't let a 1% difference cost you twice as much. whoooo! for people with hearing loss, visit sprintrelay.com.
5:17 am
5:18 am
5:19 am
good morning. welcome back to "worldwide exchange." about 1.5 million florida residents are being urged to leave their homes as hurricane matthew makes its way towards the state. florida is just one of four states in a state of emergency as people living in the storm's path search for safety. morgan brennan joins us now from daytona beach with an update. good morning. >> good morning. parts of florida will feel the effects of hurricane matthew which is expected to strengthen again starting later today. the race is on. folks are really restocking throughout the state of florida now. take a look at this. this a marathon gas station. it's completely out of gas. they have just enough gas to keep the pumps operational. later today they expect a resupply truck. but this is a very common scene. i've seen it from west palm beach up here to daytona. a lot of these gas stations
5:20 am
don't have gas because consumers are coming in, stocking up on fuel for their cars, for generators. this gas station said they sold out of gas tanks and other equipment that would be used to bring in more gas -- to get more gas, we're seeing this at retailers as well. you have many examples of stores that have shelves picked clean. no bread, no batteries. a target i visited last night was out of water and chargers for cell phones. home depot says it has been delivering hundreds of loads to stores throughout the area to refill all the stocks that have been picked clean. generators in short demand now. so basically as we get ready for this hurricane, the race is on right now. folks are stocking up. we see a lot of business getting ready to shut down throughout the coast later today. airlines have already canceled thousands of flights. many hotels here in daytona, including the one we're staying in are shutting down to the general public starting the
5:21 am
middle of today. >> morgan brennan, thank you very much. turning now to politics. the stakes are high as we get closer to sunday night's big debate between hillary clinton and donald trump. round two. the presidential hopefuls are doing whatever they can on the campaign trail to drum up more support. tracie potts joins us from washington with more what do we expect today? >> today we're expecting to see one candidate but not the other. donald trump has said he doesn't like poring over policy details behind closed doors to get ready for debates. he will be out today. hillary clinton will be in poring over details. the bottom line, they're both trying to impress voters and move the polls in their favor. >> reporter: it's a tale of two candidates with very different ideas on how to prepare for sunday's debate. >> sure, i'll prep. i'll do what i have to do. >> reporter: hillary clinton's behind closed doors with her team again today, studying policy. donald trump is doing just the opposite. going public. a town hall in new hampshire
5:22 am
tonight. practicing sunday's format. >> didn't mike pence do a great job? great. he's our guy. what a great guy he is, too. >> reporter: pence is not expected to help with debate prep. the campaign is keeping him out front while trump holds one more session between now and sunday with his team. including new jersey governor chris christie and the republican chair. both candidates hoping to build on tuesday's debate. >> my counterpart was serving up -- he with you serving up an avalanche of insults. >> despite tim kaine's constant interruptions. >> i got dinged by my wife a bit for interrupting too much. >> reporter: hillary clinton gave him praise. >> when your own running mate won't defend the top of the ticket. that tells you everything you need to know. >> reporter: sunday will be different.
5:23 am
half the questions coming from the audience the testing the nominee's ability to go one-on-one and connect with undecided voters. so, as we prepare for this debate, experts are warning that getting ready for a town hall style debate is always a bit different. the candidates really have to be focused on, as we said, connecting with the voter, showing some empathy for the questions that are being asked, not just trying to one up or get back at their opponent. >> what is the consensus now both in likelihood and what is most sensible for him in terms of how mr. trump decides to perform on sunday's upcoming debate? straight after the last debate he seemed to suggest he would be more on the front foot and attack secretary clinton more. then mr. pence is getting plaudits for being more reserved. what do we expect on sunday? >> he might want to take a page from mike pence's book. again, this is a town hall format. so some of the questions are
5:24 am
going to be coming from voters. you certainly do not want to give off the impression that you're attacking the very people you want to vote for you. obviously he doesn't want to do that. so it does take a different approach, sometimes a softer approach. you have to understand the question, you have to let the person know that you understand the question, and then the dynamics are different. the camera angles are different. they have split screens, you can see the person who asked the question. you can see their reaction as you answer the question. it's a completely different way of communicating the message. >> okay. great stuff. tracie potts in washington, thank you very much. the fbi has arrested a contractor for the national security agency for allegedly stealing top secret documents. court papers show harold thomas martin was taken into custody in august. the "new york times" reports that martin worked for booze allen hamilton, the same firm that employed edward snowden. the fbi's investigating whether he stole and disclosed highly
5:25 am
classified computer code. booze allen said they are cooperating with the investigation. president obama is hailing a global agreement to combat climate change after backing from european countries raised it above the flesh hotlsh thres implement the deal. it requires rich and poor nations to take action to curb emissions. >> today the world meets the moment. if we follow through on the commitments that this paris agreement embodies, history may well judge it as a turning point for our planet. >> in total 72 countries have ratified the agreement. the u.s. and china joined last month. to sports, the baseball playoffs, one night after thrilling finish in the american league wild card game, there was more excitement in the national league match-up when the san
5:26 am
francisco giants and new york mets. the game was scoreless going into the ninth inning when conor gillaspie crushed this pitch for a home run to put the giants up 3-0. he is an unlikely hero hitting just six home runs during the regular season. couple of late-night finishes. >> you don't typically see that. a three home run in the last inning, and madison bumgarner, giants pitcher, one of the stars of last night. there you go. impressed by that? >> certainly impressed. i still haven't been to a baseball game. >> you need to do that. that's part of the new york, american experience. get a hot dog and beer. >> just one beer? >> as many as you want. >> excellent. >> no rules. coming up on today's show, your morning stories plus the pound headed for 110. we'll talk to a strategist about the most bearish sterling call on the street. that's up next.
5:27 am
5:28 am
5:29 am
good morning. futures point to a higher open on the heels of yesterday's rally. >> how low can the pound go? the strategist with a very bearish bet tells us why he's calling for steriling to drop to 110. and pokemon in parliament. norway's prime minister caught red handed trying to catch them all. the details straight ahead. it's thursday october 6, 2016,
5:30 am
you're watching "worldwide exchange" on cnbc. good morning. warm welcome to "worldwide exchange" on cnbc. i'm wilfred frost alongside seema mody sitting in for sara today. great to have you with us. it's throwback thursday. throwing it back with some classics like the who on right now. you didn't know who this was. >> i didn't. now i know, i was reminded. this is not really our generation. >> no, but it's british rock but i know a bit about it. let's look at markets this morning. good gains yesterday, about a half percent or 0.6% of gains. the banks were the best performer for the second day in a row. goldman sachs topping the list up 2.5%. we are now lower. the dow lower by 5 points. the s&p 500 by two. the nasdaq by two points. we have been hovering around that flat level over the last hour. markets expected to open pretty
5:31 am
much flat. let's look at european trade. we had a good run this week. both because of reprieve earlier in the week around deutsche bank and a soft euro in the middle part of the week. we are softer today. pretty much flat yesterday. softer today. the dax down. the ftse 100 on a tear this week. exporters doing well there. seeing some profit taking today. asian trade f we look at that quickly, has been strong as well this week. it continues to be so. the nikkei up a half percent. hong kong up 0.7%. >> oil has been in focus. earlier this week it went above $50 a barrel and trading around that level. wti crude at 49.74. ice brent crude at 51.85. gas down on the day. there was some speculation that a special meeting would be held
5:32 am
by opec producing nations from the 9th to the 13th of october. that would be well ahead of the opec summit that takes place in the end of november, where we could see some type of production cut. so that perhaps is one thing that commodity traders are focused on. if we look at the bond market. focus on the ten-year yield. diverging views from different central bank governors. jeff lacker yesterday making the kay for why janet yellen should raise rates. that's the focus and question as to whether that september jobs report, if it surprises to the upside, does that make the case for the fed to raise rates in 2016? the ten-year note now yielding 1.69%. as for gold, interesting started to the fourth quarter. it was down 2% on the first day, yesterday coming back a bit. gold still up about 20% year to date. currency is a big part of the equation with the dollar weakening ahead of that jobs
5:33 am
report. to the top corporate news. shares of twitter down sharply in the premarket session as re/code reports google will not move forward with a bid to buy the social any work. apple and disney are unlikely suitors. twitter has told potential buyers it wants to conclude sale talks by the time it reports third quarter results at the end of the month. it had a great run on the takeover talks, but 10% pull back shows overall net, it's still out there, takeover talks, but it's softening. >> the investment thesis has changed about twitter. it's no longary ber a bet on wh the company will improve, or whether they will be bought out, but rather by who. omega will no longer manage goldman sachs employees money.
5:34 am
this after they were charged with insider trading. cooperman maintains he and his fun did nothing improper and denies all allegations. yum brands reporting earnings after the bell yesterday. results disappointing investors who were hungry for more. landon dowdy has the details. good morninging. >> good morning to you. yum brands raising earnings guidance despite reporting not so tasty numbers on an unexpected decline in quarterly same-store sales in china. yum is spinning off its china operations next month. the parent company of kfc, taco bell and pizza hut posting third quarter earnings of 1:09 a share on revenue of 3.32 billion versus the 3.46 billion that the street was expecting. yum says same-store sales at yum chain that restaurants fell 1%. analysts were expecting a gain of 4.1%.
5:35 am
t the ceo says overall sales at all locations rose 1% year over year. take a look at the stocks, shares up 21% this year, down about 2% in premarket trading. back to markets. and the british pound, which is still sitting in and around 31-year lows has been in the eye of the storm this week. it's down 0.2% this morning. 1.2728. joining us now is the head of fx strategy at hsb securities. his firm forecasting sterling to drop to 1.20 this year and 1.10 by the end of next year. thanks for joining us. we have broken below the post brexit range, we are in the 127s. you think the next resistance level is 120?
5:36 am
>> we are onwards to 120. this is unchartered territory. you're talking about the '80s rock thing, it was 1985 and we were seeing back to the future when it was at this level. this is just a grind lowering in sterling. >> dive into that a bit more for us. clearly over the weekend the headline was just that we got the brexit timeline date set. there's more details to this, current account deficits and the like. >> the underlying story is the uk runs a substantial current account deficit. it will remain under pressure despite weaker sterling. a number of elements are sterling insensitive and you have the financial services surplus which is under threat. that's the underlying theme. do you get enough capital coming into the uk if you would like to finance that debt, to put it simply. over the weekend, that story is punctuated with additional negative news. the idea that we are almost certain to trigger article 50 by
5:37 am
the end of the first quarter. most rhetoric from the uk points towards a harder format of brexit rather than the soft ones that people in the market were hoping. >> i read that the uk is the second most popular country in the world for inbound capital. >> you say i offer it cheaper today than yesterday. is that not enough to get you in? tomorrow i'll offer it cheaper. that's what the exchange rate is doing. >> at some point could the massive depreciation in the pound not be good for the uk companies? >> it's about pace. if we get a reasonably orderly decline in sterling and it's not undermining the value of those assets in foreign investors eyes, then it's helpful. if you get a sudden decline and it feels like it's spiraling out
5:38 am
of control. it changes the dynamic. >> those levels you're suggesting, 120 by the end of this year, 110 next year that seems like a spiral. this is a major currency pair. it's not a penny stock. >> we're spoiled in sterling because it's been relatively stable. you could forecast 150, 160 most years and you got it right. think of euro/dollar, we went from 140 to 105, the consensus is we'll go through parody. currencies can do big moves. 1.20 1.10 doesn't seem that outlandish. >> the imf upgraded gdp forecasts for this year and downgraded significantly for next year. will we hit 1% gdp next year? >> we are slightly sub 1% on that. we had better numbers for the third quarter that raises questions over whether the bank of england needs to ease further in november. the real question is what happens next year. investment intentions are much lower, that's where the squeeze comes. we are still in for a weak 2017.
5:39 am
>> thank you very much for joining us this morning. to our top trending stories of the day, norway's prime minister was caught red handed playing pokemon go during a haven't parliamentary debate. the prime minister openly admitting she's a big fan of the game. the leader of norway's liberal party was speaking while the prime minister was trying to catch them all. we ladies can do two things at the same time, this is embracing the millennium era, these two politicians. no one complaining about it. >> i was going to say, i like how she responded. she took ownership of it. she said i might be at an important meeting, but this is a game, it's addictive, i like it. it like catching you playing pokemon while anchoring, which would never happen. >> no, because i haven't downloaded it yet. >> i see. >> their response is the best part of this.
5:40 am
uber is adding an entire city to its customers helping to solve a downtown parking shortage. they struck a deal with summit, new jersey to provide free rides for commuters to and from the train station. the city is estimating it will cost $160,000 to hire huber versus paying $15 million to build a new parking garage. the pilot program is the first of its kind hinting at a much larger role uber could play in the future of public transportation. the other part of this story is their research and development around driverless cars. interesting to see uber take these more unconventional ways to target this transportation industry. >> absolutely right. lady gaga kicking off her dive bar tour last night with some new music. gaga taking over a bar in nashville, tennessee where she performed her hit "million reasons." her show was live streamed with
5:41 am
millions tuning in. her upcoming album will be released later this month. >> i love this, at a dive bar versus a huge concert. i'm going to see beyonce tomorrow at metlife stadium which will be fun, but not an up close intimate experience like being at a dive bar with lady gaga. environment can play a big role in the overall experience. >> now that they can stream the live thing and get revenue or traction off it through that. >> right. >> they should do these small ones. i like it. still to come, the must reads, and later today don't miss my interview with philip hammond. lots of topics, including the fall of the pound, brexit fallout and the state of the banks. 10:30 a.m. on "squawk on the street."
5:42 am
5:43 am
5:44 am
back to the must read stories catching our attention. my pick in the "wall street journal" titled trump sorely needs a debate win. the next debate on sunday. karl rove writes apparently the first debate fired up democrats and discouraged republicans. if democrats have a bigger turnout machine mr. trump must reenergize supporters to counter it. that means after failing in the first debate there's enormous pressure to win the second. the reason i picked this one out, there's lots of talk that he didn't do that well in the first debate that mr. pence, his running mate did well, and he needs a good performance this
5:45 am
debate. karl rove writing the ground game of democrats is much better, compares it tos 2004 an 2012 elections where the win was bigger for democrats, because the democrats are better at getting the vote out, apparently. this is an added factor for why mr. rove thinks we need a better performance for mr. trump. >> it shows you that the story can change. even though hillary clinton did seem to have the upper hand in the first one. we'll see what happens on sunday with trump and clinton. my pick is from the "usa today." the editorial board writing that trumping real estate taxes, the revelation that donald trump lost nearly $1 billion in 1995 is reason to question whether it would be a good thing if he within a america like he ran his business.
5:46 am
it's even better reason to question a tack cox code that a billionaires to pay less than teachers, secretaries and firefighters. i think these tax revelations bring up a question about whether the debate should be more about the structure of the tax code rather than individuals and companies taking advantage of them or undermining them. that's part of the discussion as we learn more about these tax revelations from donald trump. >> the over point, the revelation is so small in terms of what's factual in this, and what's been extrapolated from it in terms of attacking mr. trump, feels exaggerated. either way, it's still an issue affecting him. whether it's justified or not. >> likely to be discussed in the next debate as well. coming up on the show, the majorstocks shrugging off a two-day losing streak.
5:47 am
we'll get more from mary ann bartels. that's coming up next on "worldwide exchange." what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley
5:48 am
sprint? i'm hearing good things about the network. all the networks are great now. we're talking within a 1% difference in reliability of each other. and, sprint saves you 50% on most current national carrier rates. save money on your phone bill, invest it in your small business. wouldn't you love more customers? i would definitely love some new customers. sprint will help you add customers and cut your costs. switch your business to sprint and save 50% on most current verizon, at&t and t-mobile rates. don't let a 1% difference cost you twice as much.
5:49 am
whoooo! for people with hearing loss, visit sprintrelay.com. welcome back to "worldwide exchange." on a southwest flight yesterday, it was reportedly evacuated because a samsung phone caught fire. the owner of the phone said his device was a replacement galaxy note 7 which was supposed to be free of a battery defect that sparked fires and prompted a massive global recall. the news comes after google unveiled its own brand of pixel phone, a potential threat to samsung's position in the android smartphone market. approaching the top of the hour. the team is getting ready for "squawk box." joe kernen has a look at what's coming up. >> the lead is becky's not here. no real -- nothing has happened yet, but i don't think we'll see
5:50 am
her until it's all done. >> wow. i didn't know. i wish her great luck and -- >> it's not happening. not happening. >> fingers crossed. we hope. >> it's better that -- just think better for all of us that, you know, she's in the comfort of her home ready to go and do and whatever she needs to do. but from here, it's -- there could be traffic, who knows. none of us need that. >> that stress. >> i'm sort of a -- >> the tension, i could peel it yesterday. i understand. >> her husband -- i can't be her work husband, he's here, too. but wherever i am, i was nervous, too. we will -- this is deep, that nsa stuff, isn't it? andrew was just up there at t. a
5:51 am
atm.i.t. at this cyberdeal. >> and theranos, in terms of a compelling story and almost shakespearean. we'll talk about that at some point. shutting down its facility, shrinking its work force by 40%. we'll be talking about the big number tomorrow. how that impacts what the fed is eventually going to do or not do. how that will affect this market, which has really been turning around, but not going anywhere. i don't know how it resolves itself. i would like to know. it matters whether it goes up 10% from here or down 10% from here. if someone could tell me that, it would help. and then the hurricane. >> i'm sure you will find answers to that question on "squawk box." we're also going to find answers to it in the final five minutes of "worldwide exchange." >> will be different answers, i get. >> that's what makes the market, joe. let's check in on futures. the market has been turning around. we were slightly positive 20
5:52 am
minutes ago now slightly negative. down 17 points on the dow. european trade has slipped the last half hour. all the markets in the red, except for stockholm. joining us to discuss markets is mary ann bartels. thank you very much for joining us. let's pick up on the main factors over the last week or so. we have seen yields move quite quickly higher again, from 1.5 on the ten-year to 1.7 again. is that based on expectations of a fed rate hike or a risk off sentiment? >> i think it's a sign there's some -- i hate to use the word inflation, because it's not a lot, but we're starting to see wages improvement see some of the inflation numbers on producer prices firm up. i think the rate market is starting to price some of that in. going from 1.5 to 1.7 is not a very big move.
5:53 am
we're near historic low rates. when we look globally, nearly 30% of the global bond market has a negative yield. when we take into account rates with such an historic level, i think we're able to hold some higher pe multiples we're seeing in the equity market. >> with this expanding pool of negative yielding assets, where does one put money to work? is it the dividend paying sectors which are trading at a premium to the s&p 500, valuation, i could imagine, a bigger concern. that's true. for our clients we try to sit down and figure out what goals are. and try to put together a portfolio with the appropriate asset allocation. and so, you know, every client has a specific ail keg, but when we look at our asset allocation, we're still overweight equitiyi versus bonds. when we look at the yield of the equity market versus the yield on the bond market, equities are
5:54 am
still higher. those are long-term, very strong buy signals. addre as for valuation, dividends are in a shortage relative to the pool of income from baby boomers. so the risk is overtime anything that is yielding that has good cash flow with a good dividend payment may trade a bit higher than what we're used to. >> which sectors are you most attracted to at the moment? we talked about bond yields and possibilities of rate hikes. the banks in the last couple days have responded. best performer two days in a row because yields ticked up fractionally. >> when you look at banks, they're the value component. they're very undervalued. where we see the longer term strength is coming from technology. we're in the digital era.
5:55 am
that's only going to grow between big data, cloud computing, cybersecurity, even robotics. the nasdaq is hitting record all-time highs. it has taken 16 years to do it, none of us are celebrating. >> why is the market not paying attention to the nasdaq? >> when you come off such a major bar mear market in 2008 a 2009 and go out to a secular bull market with new highs, you stay in that secular trend only when there's pessimism. >> so more room to run? >> a lot higher over the next three, five years. >> based on companies finding innovation or just on the likes of apple, can they grind higher based on what they're doing already? >> it's all a mix. it's some of the older, larger cap companies with great balance sheets, good cash, paying dividends in high demand and newer, smaller companies coming up with the newer technology. it's a blend. where i see a sweet spot is in
5:56 am
semiconductor chips. they almost have a rebirthing to them. everything we're using has to have a chip. even a car now is a computer on wheels. that's one particular sector that's way off its 2000 high. you mentioned overall overweight on bonds. and your high on cash at the moment. is that a positive or negative? this is coming from our global fund manager survey. cash levels, 5.5%, and they're global. so there's no strong down side to the market. there's no crash-like behavior the there's a cushion. we think any pullbacks that happen within the market should be brief and bought. >> mary ann, thank you very much for joining us. pleasure to have you with us. mary ann bartels. what are you watching today?
5:57 am
>> oil. i think if it stays above 50, that could be a buller signal for the commodity market. >> 10:30? >> your interview. tell us. >> with philip hammond. "squawk box" is next. the highly advanced audi a4, with available virtual cockpit.
5:58 am
5:59 am
good morning. hurricane warning. nearly 2 million people urged to evacuate the coast in southeastern united states as hurricane matthew slams into the bahamas. we'll have a live update on the storm's track and preparations in florida. twitter shares plummeting overnight on reports that the biggest rumored bidders are not going to bid. and a samsung galaxy note 7 smartphone catches fire on a plane. but this one had already been replaced by the company and was supposed to be safe. it's thursday october 6, 2016,
6:00 am
"squawk box" begins right now. ♪ >> live from new york where business never sleeps, this is "squawk box." good morning. welcome to "squawk box" right here on cnbc. i'm andrew ross sorkin along with joe kernen, and becky is off today. hasn't had the baby yesterday. hasn't had the baby, but she is not here. i don't know if we'll see her before the big day. >> no. >> probably not. melissa lee is here. >> in the house. >> hanging out with us. >> that's the point. she's at a point where doctors said --. ne >> needs rest. >> we are here more nervous and -- we don't need this. >> you were more anxious than everyone else. >> i was more anxious. she has done this before. i have never done it. >> really? >> traffic, new york, think

145 Views

info Stream Only

Uploaded by TV Archive on