tv Worldwide Exchange CNBC June 23, 2017 5:00am-6:01am EDT
markets now, stocks pointing to a higher open on wall street as traders gear up for the weekend. clean up in aisle four bed bath & beyond shares down following an earnings miss. and happy birthday brexit. we're taking a walk down memory lane, one year to the day since the uk voted to leave the eur e european union it's friday, june 23, 2017 "worldwide exchange" begins now. ♪
good friday morning. a warm welcome to "worldwide exchange" on cnbc. i'm wilfred frost. >> i'm seema mody in for sara eisen. happy friday to you. >> i was going to say the same to you >> took the words out of your mouth. >> happy friday to everyone watching let's look at the global market picture. we were essentially flat for the week coming into today for the dow and s&p. higher by about 1.3% for the nasdaq ahead of today's trade. futures pointing to a modest positive open. 30 points, just shy of that for the dow. 13 for the nasdaq, 13.p for t3 nasdaq an energy led story, the sector down 3% for this week. it is the worst performing sector, 9 out of 11 sectors have been in negative territory the week to date average return has been propped up by the tech sector the nasdaq the out-performer of
the three indices. oil prices have been front and center all week. slightly higher today by a half percent. slightly higher by half a percent yesterday. as things stand now we'll look at about a 4% decline for the week 3% decline for the week as a whole. ten-year treasury note has been flat around 2.15 area. 2.16 this morning is the yield on the ten-year treasury note. >> stocks around the world, starting with asia, japanese markets closing up, just fractionally week to date the japanese nikkei did see a gain of 1% overall positive week for japan. hang seng closing flat the big story this week was the msci approval, the inclusion of china "a" shares that sent the shanghai composite to an 18-month high on friday closing higher by 0.3% let's look at europe it has been hurt by the weakness that we've been seeing in the
oil market once again looking at european equities lower dax down 0.3%. the french equity index also lower by 0.2%. economic activity we got that came in better than expected add to that consumer confidence yesterday hitting a-year high. so the economic data so far has been supportive of this eurozone growth story that we've been seeing play out. >> it has in general in recent weeks. the manufacturing pmi was better than expected. 57.3 versus 56.8 but services were soft, 54.7 versus 56.2. in germany, the negative surprise in there, 53.7 for germany's services pmi expected to be 55.5. still well above 50, just a bit light of expectations. >> just point out on the politics front, eu leaders are meeting in brussels today, brexit is likely to be a big topic of discussion. >> theresa may has given an indication that she will allow
eu citizens who have been in the uk for a decent amount of time to stay. that's given a positive bounce to the british pound let's look at the dollar the positive tone emanating from that meeting helped the british point, 1.2727. the euro up 0.2% dollar against the yen is soft a soft dollar day to end the week which has otherwise been positive for the dollar. the dollar index up 0.4% coming into today at the moment you might see it end close to flat but still positive territory gold prices up about 0.7% to end the week roughly flat as well. to politics. senate republicans could face an uphill battle passing their new healthcare bill. nbc news reporting that four republican senators will not vote for the bill in its current form the gop can only afford to lose two seats among their own ranks. senate majority leader mitch mcconnell is pushing for a vote as soon as the congressional budget office scores the bill.
that could happen as soon as next week. we'll get more reaction to the bill from tom price. he joins "squawk box" at 8:00 a.m. >> as we said earlier, healthcare stocks the best performing sector yesterday. america's 34 largest banks fared well in the stress test. all had a cet 1 capital ratio above the required 4.5% level under the severely stressed scenario the money cities did better than brokers, like goldman sachs and morgan stanley, overall the results bode well for the banks in next week's test and with a chance to return more cash to shareholders morgan stanley up 2% in the premarket today. they're one name that had a big swing factor in terms of the payout ratio last year and the possible increase they could go to this year investors getting confidence that next week they should be ability to go through with the bigger shareholder return of capital. >> in general the stress test
tells us these banks with prioritize capital returns going forward? >> yeah. ccar is the real pass for that but yesterday's indication points to a positive ability to return cash to shareholders. the positive step back would be the banks have themselves in better position even before we have trump's deregulatory agenda that's an encouraging cattlist for bank share prices. >> corporate news on the radar american airlines ceo doug parker says he is not happy with qatar airways plans to buy a 10% stake in the company parker telling cnbc's phil lebeau he found yesterday's offer confusing, adding why an airline we're aggressively fighting would want to take a stake makes no sense he wonders if the motivations were misguided and ill conceived. news sent american shares
sharply higher in yesterday's session. >> one surprising thing on this story is that he wasn't aware of this coming through. particularly given they're part of the one-world alliance, american alliance, british airways, qatar airways and qantas, they share their schedules so you can book respective flights so you would think they would have a stronger allegiance not only did he not know about this investment and didn't like it, but he also seemed to say we are fierce rivals and fighting those sorts of sky alliance partners, i would have thought, had more conversations than that >> interesting to see how geopolitics is injected into corporate america in some way. on the earnings front, shares of bed bath & beyond had an earnings miss >>shares of bed bath & beyond down sharply after posting weaker than expected results the retailer's same-store sales tumbling 2% in the most recent quarter. the company citing softness in
its physical stores. the one bright spot, digital sales. that strength was offset by higher direct to consumer shipping expenses, you could upon expenses and advertising costs. the company says it's too soon too know whether the challenges are more pronounced in the quarter due to the smaller sales base and/or a later start to the simmer selling period. shares have been struggling. down more than 23% year to date. the stock dropping about 8% in early trading. back over to you >> thank you very much for that big move in the premarket. stocks to watch today, shares of sonic under pressure after the fast food chain reported a revenue miss for the latest quarter same-store sales coming in weaker than expected the company is trimming its goins f guidance for the current quarter. toshiba expects to report a bigger than expected loss for the past year and will delay reporting those results as it undergoes an audit it revised its yot outlook for
the year saying it expects higher sales and lower net income. and synnex beating on the top and bottom line. the company says operating income jumped more than 50% in the latest quarter on higher revenues. google's waymo hiring an ex-tesla engineer to start up its self-driving car division. google's up a bit in the premarket. takata shares rebounding after plunging more than 50% in yesterday's session. the company is expected to file for bankruptcy on monday mondelez's ceo joining jim cramer on "mad money" last night. the executive breaking down growth at the snack giant. >> we've delivered about 500 basis point of mar swrigin expa, double digit eps growth, returned $15 billion to shareholders in the forms of
dividends and buybacks we have a strong story the challenge has been the top line growth has been a little more muted as you said, it's still distinguished -- we've distinguished ourselves relative to the beer companies. >> she told jim that mondelez is not worried about the amazon whole foods deal no move in mondelez share price this morning housing sector will be in focus today. may new home sales out at 10:00 a.m. they're expected to rebound. forecast to have risen 4% last month after an 11% decline in april. also on the agenda, a pair of fed officials are speaking today. st. louis fed president james bullard and cleveland fed if thr coming up, big brexit
birthday it's one year to the day isn't the uk voted to leave the eu what's changed since then? we'll look at that. and later a milestone for youtube. details when "worldwide remalware attacks... actually, we just handled all the priority threats. you did that? we did that. really. we analyzed millions of articles and reports. we can identify threats 50% faster. you can do that? we can do that. then do that. can we do that? we can do that. you give us comfort. and we give you bare feet... can wi love you, couch. ...backsweat and gordo's everything. i love you, but sometimes you stink. ♪ new febreze fabric refresher with odorclear technology...
live-streat the airport.e sport, binge dvr'd shows, while painting your toes. on demand laughs, during long bubble baths. tv on every screen is awesome. the all-new xfinity stream app. all your tv at home. the most on demand, your entire dvr, top networks, and live sports on the go. included with xfinity tv. xfinity the future of awesome. welcome back to "worldwide exchange." looking at market action this morning coming off a week where
we were essentially flat for the dow and the nasdaq yesterday nine sectors were negative this morning positive, albeit only slightly. the nasdaq slightly the leader for the week as a whole, oil has been in focus. down around 4% without today's move so just offsetting that by a half percent energy that been the worst performing sector week to date it's down around 3% within the s&p. >> british prime minister theresa may says eu citizens who legally arrive before brexit will be able to continue living in the united kingdom. she calls the offer fair and serious. she wants a similar guarantee for british citizens living elsewhere in europe. speaking to reporters this morning at the eu summit in brussels, may said her government would release more details monday eu leaders are greeting the proposal with some skepticism
and say many questions remain. it was one year ago today that the uk voted to leave the eu a decision that certainly caught the global markets by surprise here's a look back at the turbulence sparked by the referendum result over the past 12 months. >> reporter: a year ago today the most historic vote and surprising result in europe for decades. >> uk voters backed an exit from the european union >> the british pound collapsed falling more than 10% as the results emerged. instantly trillions of dollars wiped off global stock markets the ftse 100 dropped nearly 9% in the next day of trading the result led to prime minister david cameron's departure. he was replaced by theresa may who felt that -- >> brexit means brexit >> brexit means brexit >> brexit means brexit >> but with just a small majority it wasn't until march that theresa may finally invoked article 50 of the lisbon treaty thereby triggering the two-year
exit process may then took an enormous gamble calling an election to try to increase her majority, with it strengthen her authority for brexit talks but the opposite happened after a disastrous campaign. >> a very, very poor result for the conservatives. they have missed the majority. the pound has fallen >> reporter: despite the blow, brexit is still expected to happen here is chancellor phillip hammond speaking earlier this week >> we're leaving the eu, because we're leaving the eu we'll leave the single market. >> reporter: formal negotiations began on monday and the uk has a monumental task to reach a beneficial deal in the 20 months they have left the british pound remains 15% below its pre-brexit average the ftse recovered largely for the rest of europe the result has not sparked collapse of the eu as shown by recent elections in holland and france. instead, the biggest losers are
the political elites of the conservative party who delivered the referendum in the first place and acted on its result. let's discuss this further joining us now is peter spiegel from the "the financial times." good morning to you. >> good morning. >> the first question i got following interesting comments from various european leaders over the last couple of weeks including president macron, is the result possibly going to get overturned given the resent uk election >> that's the wishful thinking you're hearing from the continent, not just macron, but schauble and tusk, but i think it is wishful thinking the only thing hanging out there is because of the general election result has resulted in chaos in london. there's a minority government that can't seem to strike a deal with the coalition partner if this gets worse and worse and they're unable to come up with a plan for brexit and get the
legislation through parliament to implement brexit there becomes a question later on whether there's second thinking going on right now there's two conversations going on, one in london, one in europe, they are not meeting. there's a perception in the continent they're having a rethink in britain i think with the election results, though people are angry at elites, the tories, both of the big parties were pushing brexit and there seems to be little rethink here going on >> peter, in terms of what this all means for markets, we've seen the pound rally on days when people are more confident of a softer brexit, fall on days when we expect a harder brexit is that a misnomer some say this election result will soften theresa may's angle on brexit. is that a misnomer in terms of if you're leaving you're leaving, that's bad for the british pound? >> no. i disagree with that i think what we're seeing now is the perception was a month ago, two months ago, there would be
hard brexit. hard brexit means almost no access to the european common market, single market. there was this line that no deal is better than the bad deal. that began to spook, i think, traders thinking that, you know, it's going to be a bad deal. there seemed to be a political decision it was too difficult to try to negotiate with brussels. have a clean break, go to wto agreements that would hit the economy we don't know whether this soft brexit can be achieved it's because the government is so hampered by its inability to have a majority in parliament, if we think they're headed towards soft brexit, can it be achieved we don't know. that's why we're seeing much more volatility in sterling. there's no ceiling and floor we've seen every day there is a -- an mpc member making a comment, some movement on brexit it falls and rises between 1.25 and 1.30 there's a huge amount of
volatility in sterling nobody knows where we're going it's unfair to say there's no difference here. we have gone from frankly the certainty of harder brexit to uncertainty of we don't know what we're getting so we'll see 18 months, two years of real volatility in sterling >> peter, these one-year anniversaries allow us to reminisce and look back at the type of shock and surprise that was associated with that moment when we learned britain had voted to leave the european union. the economic data tells us one story. how would you sitting in london say consumers have reacted >> that's the thing we have to watch closely. you saw the government immediately responding both by -- on the monetary decisionmakers pushing liquidity into the system. you saw a roll back by fiscal authorities. treasury has not moved on austerity. you saw corporate spending and
investment capex frozen and rolled back. one thing keeping the british economy going was consumer spending within the last quarter and last month or two we suddenly have seen british consumers get nervous about this it's tied to inflation inflation because of the pound sinking, it has begun to bite in the uk the last quarter it was 2.9% expected to go higher. suddenly consumer spending is dropping off consumer confidence is dropping off. there's a narrative that it hasn't been as bad as we thought it would be. look at the gdp numbers, they're fine suddenly soft and hard data shows that the consumers are beginning to fall off. that's why we see this fierce debate going on in the -- at the bank of england othver whether it's time to cut rates or raise rates. it was a 5-3 decision this month. the governor and chief economist have come out publicly in
different views of this. consumer spending is something to watch closely >> peter, pleasure to speak with you as always. up next, a high stakes visit for president trump next week as the indian prime minister comes to the white house what you can expect coming up. as we head to break, here's the national forecast from nbc'. >> we are watching what's left of cindy moving from little rock and memphis. still a chance for flash flooding today, maybe even isolated tornado in areas of tennessee and kentucky 30 million people are under a flash flood watch, potential for flash flooding including the southeast, tennessee valley and southern ohio valley that's where the heaviest rain will be focused today, tonight and tomorrow morning humid air mass, showers and thunderstorms associated with cindy, a cold front from d.c. to new york hot from texas out to california saturday morning some areas of
heavy rain around d.c. to new york that will exit and clear out saturday afternoon still very hot in the desert southwest. that has not changed warm in the northwest. right into sunday. finally we clear out with a nice day on the east coast for the weekend. at yth'sour business travel forecast more "worldwide exchange" when we come back [vo] when it comes to investing,
looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock. . welcome back to "worldwide exchange." it is a big week in washington next week. leaders of the two largest democracies in the world,
president trump and indian prime minister narendra modi will meet for the first time at the white house on monday. they are expected to discuss defense, trade and how to strengthen the u.s./india economic relationship. india is a big buyer of u.s. arms this week lockheed martin announced its relocating the manufacturing plant for f-16 fighter jets to india. some ceos will meet with modi this weekend he will engage with ceos like tim cook of apple, nadella of microsoft india's growth story continues to get stronger and inflation is helping to reaffirm interest in indian stocks. the bombay sensex up 17% this year >> what is modi's position like in india
how does his position stand at the moment this year he's been able to regain a lot of key states support. he has a majority in the lower house. that's helped him pass key reforms around demonetization and trying to simplify the tax code so far this year he's been doing very well. that's the big focus, how to make sure he stays in power coming up in the 2019 election >> we should point out, because donald trump clearly now celebrated as the politician who grasped twitter sooner than anyone else, but modi was the big social media user before that >> trump is the most followed leader on twitter, but second in line is modi they both use social media to convey messages had is one way to draw parallels between the two leaders. still to come the top stories and a round up of the global market. and it looks like tesla may be taking on apple and spotify in a new way.
stocks pointing to a higher open on wall street. healthcare front and center. we are live in washington with more reaction to the gop's plan to repeal and replace obamacare. and tesla is making a big bet on music we'll explain the details. it's friday, june 23, 2017, you're watching "worldwide exchange" on cnbc. ♪
good morning a warm friday welcome. i'm wilfred frost. >> i'm seema mody. >> let's check in on the global market picture we are pointing slightly higher in the premarket to the tune of about 0.1% the dow is up 17 points. nasdaq leading the charge up 0.2% the s&p up 4 points. markets broadly flat yesterday broadly flat for the week for the s&p and dow. healthcare in focus yesterday as the senate announced its healthcare plans we'll go to kayla tausche for an update on that week to date the biggest sector move has been in energy. that sector is down around 3% because of the decline in oil prices asian markets for you today ending mixed hong kong down slightly. japan and shanghai up slightly for europe a soft end to the
week pmi data out this morning showed decent pmis across the board all readings above 50. the services pmi was soft compared to ekts pe ed td to exn germany. one of the reasons we've been seeing weakness in european stocks is oil. wti on pace for the fifth consecutive negative week. higher today at $42.96 ice brent crude at 45.45 all the weakness this week has had a dramatic impact on energy stocks week to date the energy sect ser down sector is down 3.2%. the worst performing sector in 2017 the ten-year note, this time last week, we were trading at 2.15%. here on friday the ten-year note yielding now
2.16%. the dollar interesting against the yen, a bit of stabilization, that helped japanese stocks outperform the japanese stock market gaining 1% u.s. dollar holding tonon to 11. the pound at 1.2716. gold, let's show you where that's trading up about 8 dollars today 1,257. >> scrubbing out the week's losses still flat for the week. to washington where we're starting to get more reaction to the senate's healthcare bill kayla tausche has all the details. good morning >> reporter: we got reaction from the outset. the senate bill meeting a lackluster reception on capitol hill with no senators offering outright support when the bill was released despite key changes like offering tax credits based on income and elongating the time frame to end medicaid
expansion. it did get the backing of the white house. last night the president tweeting that he supports it he's looking forward to making it really special. saying remember obamacare is dead the plan also getting an endorsement from the chamber of commerce most other medical industry groups coming out against it six physician groups in addition to that asco, the american hospital association as well as aarp which again called the legislation an age tax that would strip 17 million seniors and children from medicaid there's a group of four conservative senators who said they oppose it and want to change the current bill mostly because it doesn't cut costs or lower premiums enough. senator lindsey graham said they are not the only ones who want changes. >> there are 52 of us. all of us have leverage. the question for us, will we deliver or not i don't know what they want
changed in the bill. this is an opening offer, not the final deal so time will tell. >> there's only six days time. for 52 senators to try and get changes that might not be enough nbc news last night spoke to senator graham again he said the chance of getting enough votes to pass this by next week is 50/50. >> we have not even had the cbo score yet. usually that makes things tougher, doesn't it? or could it this time be the catalyst that gets it more support from the republican senators >> could go either way but an important note is with every change you make substantively to legislation, the cbo needs to come out and score it again so even if the cbo comes out on monday with a score viewed address favorable for senators that were on the fence, but then another change is made to bring over some other people who were in opposition, then the cbo might need to skeer it again depending on how material those changes are. that could drag you out beyond the july 4th recess.
it's unclear what changes they will need to make at this point. you're right if the cbo comes out and says we'll still have 23 million fewer americans who have coverage, you will see the deficit shrink by 119 billion, but people yes, ma'am premiums couple percentage points, that may not gain enough support for this >> karen handel's win this week may give some senators more impetus or confidence to think they don't need to support the bill yet because the republicans are still winning these sorts of races. >> that's a house race, but i think in the senate, too, they're taking note of that, but a lot can hatch in a year's time there are a couple senators, notably dean heller of nevada who is up for election in nevada and has seen his poll numbers rise when he comes out against the legislation. he's assumed to be a given no.
leadership in the shatt wa shise will vote no and they don't want his seat to turn over. as the party overall it's viewed as a win, but 2018 is still a ways away and a lot can happen before that. >> so 50/50 to pass, but the markets liked it yesterday healthcare the best performing sector >> the hospitals gaining momentum to offset the losses in energy let's look at what economic data will be on your radar today. the housing sector will be in focus. may new home sales out at 10:00 a.m. eastern they've expected to rebound. forecast to have risen 4% last month after an 11% decline in april. also on the agenda, a pair of fed officials are speaking today. james bullard and loretta mester blackberry and finish line report before the opening bell
don't miss blackberry's ceo, john chen on "squawk alley" today. tesla may be considering launching its own music streaming services re/code reports the company has spoken to major music labels about he acquiring the rights to stream songs and albums from big-name artists tesla is interested in offering multiple piers of service starting with a web radio service like pandora there's so much competition already. why would they want to launch this rather than partnering with one of the existing services to incorporate in their vehicles? >> it's a good question. a lot of these companies have been trying to bring services in-house apple, too letting go of that uk supplier of iphone screens saying we will let go of that supplier, make that component in-house at apple. you wonder if this is another trend. they want to incorporate music and develop their own services
inhouse. >> i agree, perhaps that's the driving force. i'm surprised by it. we'll see how it plays out. youtube hitting a major milestone. it reaches 1.5 billion viewers every single month the youtube ceo sheaing the news at the video con conference in california yesterday adding that users are watching more than hahn hour of mobile videos per day. >> i can't believe that, 1.5 billion users impressive, but a full hour of videos per day of 1.5 billion people that's extraordinarily high. >> becausewe're consuming videos on other platforms like instagram and reddit among others that still youtube has done quite well and is engaging with the consumer. micdonald's is cashing it on the minions craze unleashing a minion menu ahead of the
despicable movie next weekend. the producers like my pronunciation or not for now the special menu is availability on the dollar menu at mcdonald's locations in singapore. >> will you go to the theater to get a -- >> i don't think so. i want a large meal when i have one. >> no banana for you >> i always eat bananas, just normally, ahead of exercise. don't need banana pie. now i said it ten times. coming up, how tinder could take back the white house. that's part of today's must reads. as we head to break, a check in on european trade which is soft at this hour. slightly disappointing services pmi data down about a quarter percent
welcome back to "worldwide exchange." i'm wilfred frost along with seema mody time for our must-read stories my pick is in the financial financial, a debate between peter mandalson, a clear remainder to used to work for tony blair and john redwood, a longstanding exit mp one year on, how do we bridge the brexit divide? the reason i suggest people read it is that one key takeaway, we're not sure how brexit will come out, even lord ma flshgs
delsd mandelson is not suggesting that brexit won't happen. that's the key point post the uk election with the surprise weakness theresa may has yes, her hand has been weakened, even the most ardent remainers don't think brexit will be overturned >> one year on it's good to read these op-eds my pick is in the "new york times," how tinder could take back the white house an interesting read. with the help of two software engineers we designed a chat bot a smart computer program that deployed a script. the chat bot struck up thousand of conversations with thousands of young people between 18 and
25 years old on tinder the chat bot talked about politics with the aim of getting voters to help oust the conservative government. the results were amazing over 30,000 megs reached young people in key constituenconstit. so a lot of apps that people are using including tinder >> i thought you were going to suggest the brits were slightly more active on these things. >> i'll get back to you on that. >> it's a great read on the uk election, young voters turned out in force. they also voted very clearly for labour and social media another big factor i don't think it's been fully harnessed or understood whether it was last year's election or this year's uk election, i love the title of that. how tinder could win back the white house. he uses twitter a lot, do you think he uses tinder he shouldn't >> i don't think he has to
>> he gets caught out with sollo his tweets f he used tinder -- >> steve schwarzman making a bet on the future. he invested 1$100 billion of hi own money to launch swartzman scholars scott wapner has more. >> reporter: they're extraordinary, 110 students chosen from more than 3,000 applicants, tougher odds thantid they'll face a clash of cultures, language barriers. and unexpected turns >> don't do what i did >> reporter: in a country where the government watches everything >> there's so many interesting things to understand about
china. how have they been able to revolutionize their economy? how does the communist party make its decisions how does a chinese student think? these are interesting questions for me and they're the ones that i came here to answer. >> a billionaire's bet, the best and brightest premieres sunday night at 10:00 p.m. on cnbc. in tt o ext, why one markepr thkshe fed sit the bar very high indeed.
hey, i've got the trend analysis. hey. hi. hi. you guys going to the company picnic this weekend? picnics are delightful. oh, wish we could. but we're stuck here catching up on claims. but we just compared historical claims to coverages. but we have those new audits. my natural language api can help us score those by noon. great. see you guys there. we would not miss it. watson, you gotta learn how to take a hint. i love to learn.
welcome back to "worldwide exchange." u.s. equity futures pointing slightly higher for the week as a wholef a whole. joining us is david rosenberg chief economist and strategist and john manly from wells fargo funds. thank you for joining us david, let's start with you in terms of what we've seen in the
energy market this week. when does it become a concern for the rest of the equity market >> when you start to see the financials underperform, that will be the canary in the coal mine that's what happened in early 2016, when you started to see the impact of energy on credit spreads, credit spreads on default risk, then hitting back on the financials, that's when you see the second round impacts on the rest of the market. hasn't happened yet. >> what level does oil have to hit for that concern to be a bigger topic of discussion for investors. back in 2014 we saw a strong correlation between the dow and the price of oil it was at 80% correlation in april of 2014. this year not so much. >> what's happened, this is the whole learning process, back then everybody thought that the marginal cost of production and the shale industry was roughly $50. we broke below 30. that created a lot of pain back then you could see it in the bond spreads, financials.
what's happened now is this realization that the break even level for the shale guys, they are so operationally efficient we've seen 35, $40 as a new estimate for when the blood starts to hit the streets. that marginal cost curve has moved down dramatically. the canary in the coal mine is always the relative performance to financials. when that starts to break down, that's when you know the rest of the market is not far behind >> john, oil prices down 4% this week energy sector down about 3% week to date. is it a buying opportunity for that sector? >> for certain stocks it is. if you're looking for yield and you wanted to retire, by high quality oil companies when they're down other than drugs, they're the only cheap area still in the market >> sit tight we're coming back to this conversation, we're approaching the top of the hour. let's get a quick preview from becky. >> good morning. we'll be talking about the healthcare bill that's been rolled out what the senate is actually
considering. there have been four senators already who said they're not on board with this. if they do more negotiating they may knock people off the other side, some moderates who have come to the table. we will talk about this with health and human services secretary tom price. he will walk us through this, and what he thinks the most likely political outcome will be we'll also speak with former governor frank keating from oklahoma we'll talk about trumponomics, some things he sees on the horizon. a lot of things coming up in about eight minutes time >> we look forward to that "squawk box" in eight minutes time back to john manly and david rosenbe rosenberg. tom price will be on the show, healthcare front and center following yesterday's announcement from the senate is it a sect every you like? what's your view on the likelihood of a bill being executed >> i like it a lot
i have no idea whether the bill is coming through or not but you have great demographics, technology, an interesting area. >> what kind of conclusion would you draw from this version of the healthcare bill? is there a sign those in washington are coming together now? >> they're getting closer. the fact is you can't tell the average american he or she can't have healthcare because it's too expensive. it doesn't happen that way no matter where they are now, they'll be pushed in the right direction. >> stepping away from sector specifics, your latest take on the data and the reaction to the fed decision >> i think the economy is soft i was on one of the other cnbc shows the other day, everybody was telling me that the pundits are saying the my is goeconomy , we're growing 2%, 2.5% i was saying things are not good, we're not growing 2.5%, we're barely growing 1.5%.
this economy is fragile. i don't think fragile economies deserve a 24 multiple on reported earnings. my sense is that the economy is weak i don't see it with the flattening yield curve the fed is saying we're on autopilot, we're tightening policy into a flattening yield curve. the yield curve leads the economy with a four quarter lag. the run rate on gdp growth is better than 1.5% where do you from from here? we'll weaken off >> home sales are actually due today at 10:00 a.m what do you expect how would characterize the health of the u.s. housing story? >> i think the housing market is starting to weaken the big story is not single family that never got off the ground. you can see in the bank ride lending data, this will change if lending changes the real prop for housing market was never single family, it was
multi family bull market now with vacancy rates going up, occupancies, that sector is cooling off. the one positive leg for the economy, which had been the houses story is starting to taper off as well. >> john, your take on where evaluations are for the market as a whole >> they're okay. they're high, but sort of the low end of high. i look at forward numbers, that's 18 times, average is 16 times, i would rather 14 times, but it is what it is in terms of sectors, financials in focus dwreyesterday. stress tests came out. the banks fared well what is your take on that sector >> i'm a buyer part of it is they have seen the promise of better times. they have not seen the actuality yet. we have not seen higher rates. we have not seen regulation, we're moving in that direction david, the dollar has seen volatility and softness.
will that infect the equity markets soon >> i don't think so. i think the dollar has been stable the dxy is hovering over 97. if there's a positive that you can throw into the mix, it's that the u.s. dollar is no longer strengthening that means they could breathe life into the industrial sector. we talk about the oil price decline compared to early 2016, we're not seeing the big run up in the u.s. dollar at the same time that created this havoc with the emerging market that filtered back into the u.s. market that's the missing link. part of that is because the u.s. dollar that been more or less stable, stable to softer and that's actually usually a good thing for the oversees equity markets >> thank you very much for joining us john manley and david rosenberg. thank you very much. >> time for our chart of the week my pick is in energy, xle, down 3.5% just gives you an idea how the weakness in oil prices is
good morning crude prices edging higher today but still on track for the worst first half performance in 20 years. retail wreck shares of bed bath & beyond down sharply on a miss as far as earnings go, but there was one bright spot in that company report. and the gop senate healthcare proposal is out the white house supports it. but several republican senators say they can't back the bill without some changes details straight ahead it's friday june 23, 2017, "squawk box" begins right now. ♪
live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" on cnbc. it is friday, we are live from the nasdaq market site in times square i'm becky quick along with joe kernen and andrew ross sorkin. look at the u.s. equity future the. yesterday the dow ended ever so slightly lower, as did the s&p and nasdaq slightly higher this morning things are relatively flat. forever now everything has a glean arrow in front of it s&p up by 2 points, dow up by 1, and the nasdaq up by 8 points. the nikkei was by 0.11 points. this morning we have been looking at higher prices for european markets right now the dax is down by a half percentage point.