tv Squawk on the Street CNBC June 23, 2017 9:00am-11:01am EDT
ads. >> final check on the markets. take a quick look. been a week, not a real memorable week in terms of what we saw although they had a great come back. down 6 on the dow. the s&p called a little bit higher and so has the nasdaq and there you saw the yield complex. make sure that you join us on monday, squawk on the street is next flfs . >> a mixed picture down ever so slightly the futures have been moving around this morning. asia by the way was more or less down let's take a look at europe and
you'll see how the european markets faired i had them mostly in the red. >> a wet blanket this week. >> hasn't been a great week for your markets after what has been a very strong performance over the week. >> it's actually been up quite a bit. >> it has. ten year note yield you ask and we can answer with 2.15. now we're 2.165. there's a look at wti up 9 cents and bitcoin is 2,682. >> were you reading my mind about my bitcoin segment >> no, i wasn't. i figured i'd throw that in there. >> that's incredible. >> we're like an old married couple let's get to our road map and it starts with health care related stocks they have been soaring senate republicans moving ahead with that obamacare replacement plan plus puzzling.
that is how ceo doug parker sees a plan to invest in american airlines and mondelez ceo told jim why she is not afraid of an amazon whole foods deal. >> she is tough as nails. >> she's one tough lady. let's start with health care stocks on pace for the best week of the year of course yesterday we saw a significant rally after tun vailing of the senate gop's health reform bill but as of now at least four republican senators expressed opposition to the bill in it's current form. the gop can only afford to have two no votes among it's ranks. then it would be 50/50 vice president pence would then be the tie breaking vote so on the conservative side we haven't heard from the moderate side yet jim but the response from the market yesterday among the hospitals and the hmos was positive the day after the election it
was down 16% and worked it's way back from there. >> my problem is you can't have both of those. the hospitals go up because i think this bill is in the past. >> it will pass. >> it will not >> no, you cannot have both of those go up. that's like oil and water and i feel like people have to recognize a vote to be able to cut back medicaid which is what this really is and take millions of people off the rolls and it's a vote to be able to lose your seat so i think this rally sabt how this thing is dead not about how it's alive. >> i talked to a number of people in the marketplace that happen to own both hospitals and manage to a certain extent yeah, yesterday at least it was good for them but they seem to be of the opinion this thing has a real shot. >> they do. >> at least one person i spoke to said the senate bill narrowed the goal posts and it is some what more moderate version than the house version. >> watered down.
>> they stay in place for 18 and 19 it's not a profit making opportunity but maybe it could be something. >> i think the insurers do great. i like it very much here. >> why. >> i think they're winners >> it still has to be part of some consolidation at some point. >> the governor, i mean, the vice president of the united states, you remember governor of indiana say eli lily huge employ employer and this is a bill that eli lilly would love going from 78 to 84 without an ounce of news. this group had been stuck in the mud but now that we realize that
the people that are involved are very pro pharmaceutical one of the guys supposed to be involved in priegs iscing is a former lo. the idea that there's going to be some tightness with drugs. >> tom price was a guest did you hear anything in that interview that leads you so any other conclusion. >> no. >> no. >> okay. >> this is a bill for the drug companies and the health care insurers it's huge and that's why they're being bought >> yeah. >> remember they have tremendous mind share, the health care insurers and the drug companies and they are winners again.
>> i am going to listen now to see what he had to say about the progress being made to repeal and replace obamacare. >> i have been here for only five months. peoplesaying where is the health care? well i have done in five months what other people haven't done in years and people have worked on health care for many years. it's a very complicated situation from the standpoint you do something that's good for one group but bad for another. it's a very, very narrow path. >> well, that's true. >> it is a narrow path. >> that's absolutely true. >> the subsidies would stay in place until 2020 and then working it's way down to 58% by 2023. >> that's the sweetener. again my issue here is that i don't think the hospitals ultimately win because i think that you cut back. they can cut back. they do better initially
but -- >> do you think there will be more uninsured >> some people take issue saying they made assumptions that were far higher they had projections of how many people would be ensured and then looked at the gap. it wasn't an actual gap. >> united health is your tell. it should go to 200 on this without a problem. they're the huge winner. united health is one of the great companies that's in the dow. they were sued by the justice department and the stock went down for about 38 minutes. it's the bell weather pane in the industry now in bio tech and those are all done well because people recognize that all the promises of clamping down on costs to health care dfsh. >> out the window. >> not going to happen >> no. >> the group won again it won again in '94 with hillary. the group just wins.
they're very powerful. >> this has broad ramifications but we're talking about roughly 22 million people out of a population of 320. >> 317 million. >> 32 million of those 11 million went through the exchanges. that's not come down maybe it stabilizes and starts to move up. >> there's no real penalty. >> and then half went to medicaid because they qualified and didn't know and another half for the expanded medicaid. >> it was worth more than the health care insurance and everybody would be in but they made the penalty too low that's my own view if you raise the penalty, then people come in competition >> that stock will continue to be a winner. >> you don't think it's going to pass >> it can't. i'm not being political. i'm saying buy these companies
they're winners. buy them they're winners. >> we talked a good deal about this story yesterday because the one man we hadn't heard from me have now talking about american airlines and doug parker that is now saying he is not happy with qatar airways desire to buy a 10% stake in the company he found the offer confusing, a little bewildered. we are aggressively fighting would want to take a stake makes no sense kind of more or less signalled that yesterday they, in fact, even had the writing that they used and i quoted somebody close to american as saying they have no idea why they'd want to do this. they don't know. >> people buy stocks because they're going up doug parker should be a little more, listen, of course. welcome in our stock is about to fly. i think he's very smart but doug chose to take a different path
i interviewed her. >> comparing qatar airways to warren buffet. do you want to keep rubbing that >> on monday. >> i'm aware i never interviewed irene. >> yeah, you know. >> i stay in touch >> it's a dog eat dog world. >> it snchts people don't realize that. >> benny doesn't even like you. >> i know. >> did you even go through the barclays piece about how there's multiple bidders for whole foods which i think is not going to happen >> i don't know how you got to that but no. kroger wouldn't seem to have the financial wherewithal to pull
something off. given the difficulties they're having with their own stock price. >> i wanted to get you on that. >> you were, monday, you were all about walmart. >> i would do a bidding war to make amazon pay more it doesn't matter how much amazon pays because their stock went up when they announced the buy. >> there's so few companies that in no ways could explain their rational for a deal and still be rewarded like amazon we heard nothing why are you doing this did you read that press release? >> yes. >> that weird press release. >> you had ca, staples. >> what do you mean? you had nothing. >> nothing actually happened. >> i'm trying to make something out of it. >> do you want to tell me your favorite pick in the airline industry. >> southwest. >> why are you so predictable.
>> it never misses the numbers. >> we'll talk about bed bath and beyond. >> bed took a bath beyond. >> it did. that means the shares are down in the premarket actually we're going to do it now. we're going to do it now. >> let's bust the commercial. >> this is a crisis at one point they say we get better but we're losing foot traffic and that's the share of our business sooechb though we are been able to sustain healthy growth in the digital world but when the big base deteriorates that's a big hit for us. >> they can't do well. their margins are being crimped on an over $29 you get free shipping but under $29 it goes to amazon. over $29 they don't make as much money. this is a -- and they spend a fortune on stock.
>> on buying back stock which is something you pointed out. >> and now people wonder why they bother. >> now it's 142 million. >> they address it they say this is a great moment. if we could have forseen what the stock was going to be doing we would have acted differently. no kidding >> i would assume that means that even here you're not a fan. >> no. >> it is a very well run company. they are hoping to renegotiate leases they have almost no traditional
retail left all are profitable. >> i'm hearing good things about the new ceo. >> when we come back we're not going to talk bed bath and beyond. >> there she is reacting to that amazon whole foods deal. here's another look at futures, of course? 16 minutes to the opening trading. >> does irene talk to you at all? >> yes we speak. >> what's going on with biui ua othstet is is live from post 9 when we come back. dynamic performance, so you can own the road. track-tuned handling, so you can conquer corners.
well. >> 30% is going to be digital. the only one that's higher is closing in on 50%. >> they did interesting stuff there. in terms of 200,000 being supported by the supply chain and the international is where the growth is. emerging markets doing well. >> i think the stock is a serious buy. >> you do. >> obviously been working on margins for sometime and met her targets for the most part. they have no real top line.
>> i think they are seeing this is a play on emerging markets doing better russia coming back. >> really, good. >> you would have brick again. >> remember brick? >> i do remember brick. >> the u.s. is going to be good and u.s. is weak also banking on the idea that as people move up in terms of income they're going to want to snack more. >> she has healthier snacks. they're quite delicious. i got two so i'm conscious with this stuff >> i like the stock. >> they were odd in terms of she is not going anywhere she is chairman of the board and you have to prepare for suck cyst session. >> she and i are getting over it but she woke up for the next lease of the chocolate bars and she wants to get it better
she needs more and needs to beef up the candy aisle. >> bigs chewers of gum. >> the ritz, what she is doing is rather amazing. making it better for you a lot of different advantages and things you haven't had it yet it's delicious. we are going to spend more time in that aisle. don't forget, kellogg got rid of the direct to store trucks. >> they did. she is going to be the winner there. i like what she is doing and i give you top line. >> cheap. >> up next we're going to have a mad dash and count you down from the opening bell
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opening bell bitcoin. >> bitcoin these two are just taking off and what is happening is one of the reasons why amd has been going up is their chips are used for mining. >> to mine for it and one of the things, rbc capitol a good report this week from the street.com saying there's been $100 million worth of dprks pu sales in the last 11 days alone and they're the best ones for the platform so people keep wondering why didn't these go up what's the deal? the answer is their chips, now of course there's so many other uses for their chips but a lot of retail people love bitcoin. >> if more and more people are mining for it. >> yes, but a lot of people are saying this is not sustainable either, remember skyrocketed 4,000% in the last year so it's not sustainable.
however, david, retail is playing them for that. you play it for artificial intelligence for gpus for autonomous cars. and gaming you play and for gaming and they have a faster chip for intel don't play it for this is what i'm saying but it's being played for that. >> ever use bitcoin to buy anything >> she spent a day with bitcoin. no i use dollars they really work they're incredible. >> they're amazing. >> they take them everywhere it's fabulous. >> it's just a piece of paper. >> we have the opening bell about 4.5 minutes from now ayith us on squawk on the street as we wrap up the trading week [vo] when it comes to investing,
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a last stand here need to see that count not grow as much as it has every single week i think they will be disappointed i know a lot of people felt the key to the market should be jp morgan with the stress test but i think everybody figured. >> up to this point the only surprise would be if some bank failed and nobody failed. >> that would have been the key to this market had that not happened i was going to say j and j but the drug stocks. >> do you believe riggs will continue to operate or there will be more of them. >> yes. >> we're going to get to 10 million a day domestically produced. >> do you know that morgan stanley put out a note that no one talked about saying we're going to have a dramatic decline in the rate of oil because of the lower price. that would work. >> i think it keeps going up
if they make a stand, oil has to hold if that count is up oil does not hold [ bell ringing ] >> that's the opening bell over at the nasdaq celebrating lgbt pride month we haven't talked about t-mobile in a little while. the key question is if and when will they get something done how do the germans feel about it how does john ledger feel about it are they on the same page? are they on different pages. >> i don't know. >> it will evolve. >> it will evolve. it will. >> i can't figure it out.
>> we'll have more to report on it. >> all he tells me is listen we're killing everybody so what's the point. >> here i have the barclays, 50 or higher. not unrealistic as a competing bid from kroger or walmart. >> or walmart. >> david you have systematically shot this down i need you to shoot this down again. >> kroger is different, not that they might not want to but can they bit in a position to mount a competing bid is a difficult one for them >> no. >> that's if they would have to take on -- >> equity. what they wanted by the way, they don't get the amazon pass. everybody is going to want to know what's the strategy and they'll want to ask the questions that nobody seems to ask. >> you realize that to go up against amazon, do you know what's interesting in the last ten days we learned that to go up against amazon web services is suicidal for companies but walmart is demanding you get off that platform. >> although they seem to make
some inroads. >> it's very early i don't think they'll compete. i know they want to. but i don't think you can compete with amazon web services oracle is going to try. >> if it just going to be when we talk about services and how it develops in this world it's going to be amazon, google and microso microsoft? >> i think they're doing better. >> that's the microsoft prime. >> they have been doing better will she step up and make it so alphabet is really as powerful they could fall behind. >> they could although i hear that their technology is very strong as you might think at alphabet. >> absolutely. >> that could carry them and then there's always the question of would they ever consider doing an acquisition to get things moving? >> like who. >> alphabet, i wonder who -- >> are you going to float the sales force. >> i'm not floating anything that's been around. >> i'm not doing that. i'm just saying that when we're
having a discussion about this evolution and they talk about being ahead in five years how are they going to get there. >> i love it you can with the flick of a switch, that's why red hat stock has been so strong by the way. flick of a switch you can get off the amazon cloud. >> get on to what. >> microsoft cloud. >> okay. i think that david you know walmart better than anyone in the press. >> that is not i don't know thank you for saying that. >> you're welcome. >> what kind of power does a -- if walmart calls you and says listen we love you but we don't like to use the amazon what kind of company would have to >> walmart is still the largest employer in the country. >> largest grocery. >> probably the largest user of electricity. they're the largest -- >> don't they have the ability to get a lot of people right now. >> incredible power still over their venn doris
maybe not as much as they want to. >> if you see diane green then i would be worried if i were amazon web services because they can make a deal and they have to they need that walmart business. they need everyone, walmart steering everyone away from amazon web services because walmart, you will not be able to get that walmart business because they are tough and mcmillan should come on and talk about this maybe it's almost antitrust at a certain point. you can say listen amazon ties everything together. that would be an interesting case >> you think there would be an antitrust case to be made against amazon. >> you do. >> i do. >> i think so. anything there was doing below cost to be able to keep that business, yeah, i think you could make the case. >> same way there was a case made years ago against ibm, many years ago and against microsoft. >> you have to keep in mind i think the empire is going to
strike back is what i have been saying the last ten days everyone has shook all of consumers, everywhere, watch these guys trying to gang up on amazon. there will be a reaction it happens so swiftly. 2014 to 2015 all the retails were up big but walmart is a sleeping giant and they have the family backing so it's not going to be as tough for them. if you notice that walmart among the retailers has not gotten hit this week very hard. >> i have. >> what does that say to you walmart is not going to take this amazon laying down and the next few stories that you hear is that amazon has real competition and they better be careful. >> you're not the first to float this idea. i can't imagine it by the way. it's a hallucination at this point. >> everyone is worried look at hane it's been going down. >> when we spoke about hane
yesterday the stock was up and turned around after we took a closer look. hain celestial. >> come on yesterday at the 11:00 hour. >> everyone it's really directly amazon because of the free shipping and if someone felt that amazon is doing, is giving the shipping away to destroy other companies that would be the case >> how do you win that case? >> you tonight have to win it. you just have to make it >> it's a proworker case and this is a pro worker administration. >> well, yeah. but amazon is going to tell you how they're hiring 100,000 people. >> they have to hire another 100,000 real quick. >> or they have to do a jack ma and talk about a million jobs somehow. >> i want people to stay close to it. i think that the free pass that amazon has gotten ended this week >> it hasn't ended from their
investors and that's the key that will continue >> we're not told why and it's fine they're going to figure it out. they're great. >> 5.5, or $6 billion in it's entire existence. >> i know. we have to talk about caterpill caterpillar. there's no more upside this is downgrade. expectations too high. this stock started going down when oil broke 45. there's a linkage between oil and heavy equipment that is taking down the heavy equipment sector that is leaving again only the health care sector. today health care is coming down a little so i'm looking for more sectors. maybe it's taken over by banks and next week is the return of capital. playing that one close too. >> but your thoughts on caterpillar here as it approaches par as we like to say. >> oil has to go higher. >> oil has to go higher. >> we had great numbers from
caterpillar this week worldwide but people are thinking that's the peak because the oil companies use so much. i like cat very much but you need to see oil higher >> maybe we default to the oracles of the world. >> the guy killed it your buddies killed the stock. what was that about? >> i'm cast down again below 40 now. >> stopped that thing in it's tracks. >> market value is barely above verizons >> one firm. one firm stops a stock like that. >> went very well yesterday. >> it was a very small deal. they got it done at 30 and it traded nicely. kudos frothere. we had the ceo come on and they're not sure what they're going to do with the currency they now have.
>> they're refinancing some high cost debt. they are unfortunately he never came on even though you yelled at him. >> i did what can they do antitrust wise. >> they can do whatever they want but a lot of smaller guys. >> they don't want to go vertical they don't want to do entertainment? >> i don't think so. he firmly ruled out any play on wireless. >> really? >> yeah. even though 5-g maybe to use your word a threat to company likes this >> a lot of money has to go to qualcomm for that. market a little soft here. >> it is a little soft. >> i think bed bath is causing people to once again question the bricks and mortar and that's causing another like them. >> i was looking at my names here and then i saw aaba
i was like what the heck is aaba do you know what it is remember yahoo! is now altaba. >> why are people floating marissa mayer as someone that's going to take over uber. it's fanciful don't you think? >> i do. >> you shoot down everything i like that. >> you speak about uber, one that had almost as much as a $70 billion value in the private market given it's last round of financing but when you lose your founder though, fiber led is is important. alibaba has ma, zuckerberg at facebook >> if i were these four members i would have brought someone in as a senior guy to be the public face. >> kept him as chairman. >> the model which is you bring in a seasoned hand who everybody loved by the way, made it so that was the next leg of google
was when they brought in a seasoned hand. that's been the formula. now zuckerberg turned out to be the seasoned hand but he also has fabulous staff. >> yeah. all right. aaba got to get used to that. 384 million shares of alibaba. it has a lot of cash. >> so banks are leading today. some leadership. >> there's a little bit of leadership from the banks even with a 2 -- what are we, 215. >> what is it about toshiba. >> other than what we reported earlier this week that broadcomm was there but moved away there was some reuters reporting that now toshiba is willing to talk to western digital. i don't know if that's true or not. >> they need the money badly. >> this is an amazing story that no one has covered biggest bank
takata you need to be strong. i don't get that either. >> no, toshiba story is a important one. westing house in this country. the power plants. >> overruns nuclear power. people still come on and use nuclear power. there will never be a nuclear power plant built in this company. never. just left and right. another story about natural gas. natural gas is from oil this week because of the heat wave. nobody cares nobody cares they trade together because of etf. >> let's leave it there from here and get to the floor and give us more on what smooufing this morning. >> so david we do have some of that gyration among sectors right now but overall we're seeing fractional losses so far. you can see the dow down by 1/5.
s&p holding steady only down by 2 points early on you guys did mention the financials they're assuming a leadership position now in the early going of trading you see financials and you also see energy you guys were just chatting about the idea of natural gas in that market there. if you look at energy, the banks, the real estate investment trust some of those guys showing early signs of strength and we'll see if that carries on into the 10:00 a.m. eastern time health care has taken a breather today and it may be that it should take a breather talk about a sector and industry group that's been hot over the last couple of weeks here of course all ahead of the senate proposed legislation or appealing the affordable care act. the spider health care etf and bio tech etf all three of those guys had abnormally high trading volumes yesterday and in the last five or seven trading days
or so so we'll see if that trading volume activity carries into today but for right now a little bit lower on the day so far and speaking of trading volumes it's russell rebalance day for those people that aren't familiar with it it's a big deal for stock traders out there because the russell 1,000, the russell 2,000 small cap there's around $8.5 trillion of fund assets tied to this and they all have to remove around when these things rebalance it's one of the highest volume trading days in the year and traders and commission brokers benefit the most they get a lot more activity on a day like today but it's not necessarily a driver of volatility fractional losses in early trading. most will happen toward tend of the trading day as well. one more check, that big ipo from yesterday the second big oefs the year we're seeing those gains being added on to. $30 ipo still trading above $32 a share. and guys later on we'll take a
broader look at the picture overall to see how everything fits into that first half ipo picture. back over to you. >> time there as we hear a bell for another ipo here morgan's trust hitting the floor down it's down about 6%. >> what do you hear about russell rebalance? energy for russell rebalance so that could offset whatever i'm betting on. >> okay. let's get to rick santelli and get a check on the bond market from the group in chicago. >> let's look at one week charts i like to do that on friday. one week of twos now interesting it popped and went side ways and if you look at it it's up a couple of basis points on the week unchanged on the day. let's move down the curves let's look at tens which by the way unchanged on the day, unchanged on the week.
look at that one week chart. so it popped early in the week but it popped from settlement and then dropped down and went sideways along set southern landment 215 you have seen it a few times this week. now here's where it gets fun one week of 30s it came out of the box pretty good but unlike tens it went down and it's been hovering bottom fishing here so let's look at 30s minus 5 a lot of excitement among traders this week. it started to get some legs. dollar index is up a little bit on the week and down a little
bit on the day and on this chart what is interesting is it looks like it wants to get traction. is it already running out of gas? never had a close with a 98 handle maybe if we take a bigger view on the chart we could get a better idea. and it certainly doesn't seem that the dollar index has enough power here it looks like other charts we have seen with big moves the less volatility the more traders will be disinclined on the upside back to you. have a good weekend. >> and to you although i think you and i will speak again the next hour. still to come bill george is going to weigh in on the senate gop health reform bill squawk on the street will be right back think again.
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>> amazon looking at $2.8 million for the nfl ad packages they would include 30 second spots during thursday night football games and other ad placements amazon will be streaming the nfl live to its prime customers this coming season although you also can just get it on regular cable. >> true. >> which is interesting. they spent 50 million if i believe. >> it's not my night to watch but i think that amazon is trying to take one too much. >> so you turned a little bit here. >> i just think they're not like
the publishing this role and didn't have the antitrust. remember you don't have to run. >> workers antitrust a lot of people don't understand there's a lot of different ways to skin a cat. there's ways to build cases and amazon has to be a little bit more careful because i think that they are destroying too many margins of too many american companies so you find a way to make the case companies do not understand.
you. >> we have to be able to have a strong defense industry. >> apparently there is some political push back on this though congress doesn't have the right to do much about it rather than protest >> it's a real stretch by president trump. >> national security issue override world trade organizations. >> i would say these companies need it. there's still a lot of dumping that's my own view but i think that people are buying these stocks expecting there's about to be a cloud lifted and we're going to do the first real big portion of the fight back we
have been at war for a long time and tint know it. >> what do you have on mad tonight. >> shopping centers. every single part of the concept is being challenged. even tanger downgraded don wood is going to fight back tonight and energy is one of my favorite utilities i like yield so do our viewers. >> have a great week. >> you too i hope the mets start playing better it's all about injuries and it's too bad. >> thanks for ending on that nork fo new york sports it's great. >> she's french. how about a former american airlines ceo, bob crandel. ept rel t s acon ke ihe headquarters. this is where i trade and manage my portfolio.
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we are live at post 9 from the new york stock exchange. carl has the day off today let's take a look at the markets. the s&p 500 just barely positive the dow is negative. crude oil is bouncing this morning. it's up three quarters of a percent. the weakness in oil has been the theme of the week. it's really dragged down the major averages energy the worst performer though health care and technology helped make it a flat market. >> that could prove important. let's get to our road map for this morning it starts with health care the senate unveiling it's draft of the obamacare repeal bill and the impact on stocks straight ahead. >> plus not happy. that's what american airline thoosz say about qatar airways plan to buy a stake of his company. and more pain for retail bed bath and beyond getting
hammered today that is coming up. >> let's get to rick for those numbers. >> david, listen we're looking for the new read the may read for new home sales out at 610 units better than expected last month gets a nice revision from 569 to 593. that puts this up just shy of 3% real quickly we want to point out with that revision it still doesn't change the notion that march at 642,000 was the best number basically going all the way back to the '07 area so we want to underscore that but for more granule detail on what this means let's talk to diana. >> well, rick i want to talk about prices because that's a headline for me here we have a median home price of $345,800 that's the highest median home
price for a newly built home going back in history. so all of this talk about how they're trying to get that entry level market in the first time buyer building smaller homes doesn't seem to be the case here that's where the demand is on the higher end of the market we're not seeing the affordable homes. yes a nice revision and nice bump up in may but still not as strong as we would like to see housing starts definitely not as strong as we would like to see but given the number of existing homes at record lows we should be seeing them put up more of the affordable homes and we're not. we're going to continue to keep them sidelined of course if you have the money it seems like you'll be able to get a newly built home that's much better than existing homes so there's plenty of new homes for sale out there they're just pricey. >> getting more expensive. diana, thank you health care stocks surging on the draft from the republicans companies not yet weighing in.
meg joins us with more on the impact of a very busy week. >> that's right. you're seeing stocks across health care surging on this version of the bill that we're seeing analyst saying it looks to be positive let's start with hospitals you're seeing the stock up as some uncertainty is being removed here from the system hospital stocks in terms of pushing back the medicaid cut backs we're hearing from analysts that looks like a positive for them health insurers also seeing a surge. we might see the stabilization of the exchanges through this draft of the bill. they're all there in the red today getting a boost on the draft of the bill. in terms of pharmaceuticals you're hearing not much from the industry they're crossing their fingers that drug pricing that we didn't hear a lot about in the health care reform bill does stay on the back burner. those have been surging.
you're seeing them all not moving so much today it's been having it's best week of the month that's the bio tech etf. this on expectations that any drug pricing reform coming from the president won't be as feared things like giving medicare the power to negotiate on drug prices and things like that. while you're hearing the drug industry being neutral about the bill we did hear from one ceo on twitter yesterday, that's the ceo tweeting out should not making america great again include access to health for all of our citizens? the mark of any civilized country. he was responding to a quote there. so some ceos were weighing in here but the industry is hoping for not a lot of movement on drug pricing investors biggest fear guys. back over to you. >> after all the talk on the campaign trail thank you. for more we are joined now for cnbc contributor bill george as
well as piper jeffreys senior health care analyst to talk more about the impact you're not a fan of this bill but just in terms of what it means for health insurers, hospitals and drug makers so far it seems to be positive. do you agree with that or are they rallying on the fact that it might not get done. >> i think that they're going to be big winners here. they can can pretty much do what they want to do now and not have to worry about medicaid patience and they're going to have very, very big price increases this bill is for consumers you pay more and give less to flip it on its head. pharma is a big winner here. they'll have free rain on pricing. 20 million people will lose their health care. okay they pushed it out a little bit. that's a political game to get past the 2020 elections but i can tell you they'll be hurt
badly and those people are going to show up at the worst time in our emergency rooms so when we have to look at this this is not a health care bill this is a giant tax cut and the largest wealth transfer in history from the poor to the rich people whose investment incomes are the ones that are going to be helped by this and everyone else, the poor and the middle class are going to be badly hurt by this bill and we have to look at that. is this the kind of country we want to be yesterday there was a poll out in the wall street journal nbc, your parent, and they said 16% of the american people favor the republican bill in the house and i tell you this bill is worse. donald trump called it mean, this one smemeaner he promised not to cut back on medicaid so we're dumping this problem off. you're going to have 31
governors that get stuck with this it does nothing for health care. it's going to hurt the american public and does not include health care delivery it's just passing the hot potato around. >> you have gotten into the political issues in this bill but to keep the focus here on the stock and company reaction to this do you agree this is positive for the health care insurers if we do see federal cut backs on medicaid those that participate on medicaid isn't that a problem or is it a focus just on the tax cut. >> sarah. >> sarah. >> yeah so we agree this is better for the insurers than the hospitals. we look at a company like community up 5% yesterday but has 16% earnings expouz sure to reform it's still having the number of insured people come down that's driving them the last few years so it's a head win for the hospitals and the moves that
were done. we'd rather play this on the insurers side. how many people are covered in managed care, medicaid rather than the number of people in medicaid as awhole 70 basis points of pricing head wind in there. takes $2 billion to offset that but we're already at 17 billion contracts to be awarded. we think there's 300 billion to be awarded overall so we still see it as the best way to play this and highest win rate and they're only trading at 15 times but we think they'll grow revenue 10 to 20% over the long-term with some earnings outside to 17 and margin expansion so that's how you want to be playing right now. >> that would be how you would play it but do you think there's a high probability that a law is going to be voted on by the
senate is going to happen? how do you think the market vaeding it right now >> i think the market is reading it as this is a place holder that maybe we get reform pass but that the government will not uphold some of the harsher pressures on medicaid spending it's kick the bucket every year with more money put in and that's how the stocks are trading right now. >> ultimately if this does pass or something like it passes are they able to operate in a more profitable environment >> they will they have freedom to raise their prices dramatically but what happens is you're going to have huge adverse selection the concern of every insurer and now they have cleaned up the pre-existing conditions in the senate bill so they'll have to cover all of that so all the healthy people are going to get out. they removed the mandate they told large employers they don't have to have a plan.
you're going to get a lot more people in these plans but they're going to be a lot circumstance and you're going to have a lot fewer healthy people on the plan so there will be no balance so you'll see rapid increases. they don't like the exchanges because they lost a lot of money on them because they have adverse selection there and they're going to price over the top. they're going to put more risk coverage for themselves and they're probably going to make a lot of money nobody is focussing on that. the harm to the american public and to the health care system. we have to worry about that as citizens we have just undid a lot of good we have done people have to take care of themselves burt nothing in this bill encouraged them to do anything about it. >> you will hear a lot about it next week where the senate is still expected to call a vote.
up more than 3%. >> when we come back, not happy. that's what the ceo of american airlines has to say about qatar airlines proposal to buy a sta t cpanyke we'll have bob crandall with us next squawk on the street is right back hen 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. steve, other than making me move stuff, i'm here at the td ameritrade trader offices. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need
qatar airlines proposal to buy a stake in his company good morning, phil. >> doug parker has been relentless since this first came out yesterday morning that qatar airways wants a 10% stake in american airlines. he doesn't like the idea and doesn't think it makes sense yesterday afternoon i had a chance to talk with him and during our brief conversation i asked what did you think when you were first approached by the ceo of qatar airways about the idea of taking a 10% stake in american he said i found it confusing i was a little be wilderred. why an airline we are aggressively fighting would want to take a stake make nos sense here's what they would like to do buy up to 10% of americans outstanding shares anything beyond 4.75% however would need to be approved by an american board and those board of directors have yet to receive formal notification from qatar
that they intend to buy up to 10%. what's the motivation here doug parker heard that perhaps the ceo of qatar wants to perhaps soften the resistance of doug parker and other u.s. executives when it comes to enforcing the open skies agreement and restricting qatar flights in the u.s when i asked parker about the possible motivation. he said if that is their motivation it's misguided and ill conceived. all this is doing is strengthening our resolve to defend our airline which we will continue doing vigorously. shares were up yesterday and this morning earlier in the session they were moving higher as well. bottom line is this guys, now you see trading slightly negative now but the bottom line this is, doug parker is not fan of this move and it will be interesting to see whether or not qatar actually follows through with this. >> absolutely.
thank you. >> joining us now on the phone on this story former american airlines ceo chairman bob crandall i don't know if you heard phil's report but if you were still in the pilot position in this airline would you react the same way that parker is >> yeah. i absolutely would, sarah. i'm baffled by the whole thing it makes no business sense as doug has pointed out it isn't going to have any impact on americans view with respect to so i'm simply mist identified i don't understand it and doug doesn't understand it and we're in the same boat. >> yeah, you're not alone, bob
but that said, i mean, for their part, qatar airways in the brief comments we got from them said they think it's a good investment they can go up to 4.75% without board approval got to let them do that. it might not make a sense one way or the other. >> it's not going to make any difference it's a public company. anybody that wants to buy stock can buy stock up to a certain level. then we share the same point of view. >> i guess they do have significant stakes in some global players don't they? >> they do and unless you are trying to create some sort of
partnership as for example the various ones around the world and that isn't going to happen in this case and unless you're trying to do that, these tiny investments from what i can see make no sense. >> bob, what is your sense of the state of this complaint that american and other airlines have had about the overseas carriers. is there any progress there? does the administration have any more of an aggressive stance that might push that forward >> none that i have been able to perceive in my view but you shouldn't be using dollars that are not your own. they're all subsidized
people always want to equate this most of the people in the united states would recognize there's multiple implications of these things including jobs. and good jobs are not something that we want to let other people take without making sure that everybody is playing by the rules. >> if passengers get diverted on to nonstop routings that they cannot replicate then u.s. jobs go away. that's the basis of the complaints that they have been
filing >> so bottom line if they continue with this push do you expect the u.s. government to get involved for a number of political and geo political reasons? >> i wouldn't think the u.s. government would want to be involved in this i think the american board will want to think carefully about whether or not they want to take the money on the other hand the airline business is volatile if they want up to 10% and that benefits the shareholders as a whole i'm not sure there's a basis for turning it down but once again it puzzles me and particularly puzzles me because of the very straightforward position that doug has taken isn't going to have any impact at all.
>> they have been fierce rivals. thank you for weighing in. >> my pleasure. >> always good to talk to you. >> as we head to a break, take a look at shares of bed bath and beyond getting hammered. the home goods retailer reporting quarterly profit and revenue both came in belowest ms it saw softness in in store sales although digital sales growth was strong. that stock is down to an 8 year low right now. only a $4.3 billion market cap squawk on the street will be back after this. ray's always been different. last year, he said he was going to dig a hole to china. at&t is working with farmers to improve irrigation techniques.
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>> markets flat on the last trading day of the week. the dow trying to finish positive be the first time that happened since december oil slightly up. still headed toward the biggest first half decline since the 1990s. for more let's bring in the executive vice president of pimco and the global strategist
at jp morgan both here at post 9. good to see you. tony, economically, we're about to close the second quarter. first quarter we kind of wrote off and said it was soft we always have softness in the first quarter. second quarter growth expectations all of that lagged a little bit. where are we in terms of the potential for having the growth rate pick up >> i think he'll chime in and tell us the same thing i hope. it's not just about the united states in terms of the movement of financial markets the story is really global recovery year over year nominal gdp which is all gdp plus inflation is running about 6% estimates were in the fives. growth like that tends to lead to double digit gains and corporate earnings which of course is supporting the equity markets and worldwide. at the same time it tends to support gains in capital spending so the markets are
presuming that the pick up in spending, call it mid single digits or so that sort of thing tends to lead to a cycle of self-reinforcing increasing and this is the optimism markets have putting aside the first. second quarter all summing up to the as yule new normal, 2% growth. >> so are markets going to remain patient and content to say well we'll buy a bunch of big growth stocks and we're going to buy bonds too along with it and everything is going to stay supported until we see policy move or acceleration? >> so we're leading into risks in this environment but to your point it's a tricky time for us because at least on its face markets are telling us different things from different angles so you have equity markets pushing up presumably underpinned by the growth story but bond markets are a little bit more cautious so which one is right and don't say the bond market is saulz right.
there's a sense in which both of them are correct here. so you have descent global growth and solid u.s. growth pushing equities up. at the same time its fair to say some of the upside risk has been taken out over the last month. upside risk to growth. upside risk to inflation upside risk to policy tightening when you look at u.s. treasury yields that's a reflection of that as well so we're comfortable leaning into risk here probably you'll see more on equities than in bonds. >> inflation is a missing ingredient tony and there's a lot of talk lately that the federal reserve is a little too optimistic and maybe too aggressive when it comes to raising interest rates again in an environment where inflation expectations are falling do you predict they'll be able to get it done >> you're right. looking at ten year tips break even with the market pricing in as inflation
it probably is the idea that it might be overtightening. it's a reflection of the idea that central banks globally will keep their policy rates low for the foreseeable future at least for the rest of the decade markets are priced for that outcome with a 0 pktd outcome for the ecb and the same for the bank of japan. >> the likelihood is there will be one more and probably three although markets are priced for just one but the flattening of the yield curve is unnerving some investors and thinking the fed is overdoing it. we would think of the global picture and the enormous pressure to move into it one final point the long end has the greatest of all bonds in the world which is to say that if things go wrong in the world whether it be china or europe, what have you, there will be a
flocking in as there has been to longer data u.s. treasury because that's the area of the yield, that's a part of the yield curve globally where there's still some yield to be had. some price gains in contrastthe final note is the german tenure for example yields 23%. >> so that point, the fact that still remain some what attractive at 215, 216, i don't know what's the number still around the world it's a huge number doesn't that have to reverse >> it's an important driver of potentially higher long yields going forward. we're more comfortable with that idea on a 12 month horizon than we are on a one or two month horizon. part of that story is a little tightening in the labor market which will push up inflation that logic is slow moving so much more confident in over 12 months and the other central bank balance sheet which is is the other big driver of net supply which we saw from the fed last week. we'll see from the ecb that they're on a path to at least do
something with the balance sheet even if it's a slow roll off so all of those things will push yields higher over that time frame. >> we'll continue to wait for all of that to come together. >> thank you. >> the latest results are in from cnbc cfo survey jackie deangelis has the results. >> great to see you. we have cfos a variety of questions but focus mostly on the stock market 60% of the respondents said the dow will cross 22,000 before it falls back to 20 k we'll go higher before we go lower. interesting where they think the market strength is going to come from 40% said technology will drive the market up. that was up from 20% last quarter. financials which was where they had placed their bet last quarter dropped to 2nd place but 50% still think that the banks are going to be a bright spot. when asked how they think the fed is going to act for the
remainder of the year a little more than half said we got our two rate hikes and they're not going to see more this year. we also asked about economic stability. more globally speaking four regions were tagged as improving. asia pacific, china, japan, canada, the euro zone and the united states. now finally on president trump they're more pessimistic that he can pass key legislation in 2017 the probability of passing dropped in every crucial category to view the full results of the survey visit cfo council.cnbc.com. >> okay. thank you jackie now let's send it over to courtney reagan for a cnbc news update at this hour. >> good morning to you david i'm courtney reagan here officials say a powerful car bombing in south western pakistan killed at least 15 people and injured 70 more a police spokesman says the explosion was so powerful it was heard across the city. shattering windows in nearby
buildings. speaking in england last night actor johnny depp appeared to suggest he endorsed the assassination of president donald trump >> when was the last time an actor assassinated a president i want to clarify i'm not an actor. i lie for a living it's been awhile >> long time nbc 4 new york correspondent gabe pressman died his local broadcast career spanned more than six decades. he is credited with being the first television reporter in new york he was 93 years old and quite a pioneer. that's your cnbc news update for this hour. back to you david. >> yes he was. still coming to work at 30 rock. >> unbelievable. >> he will be missed when we come back, the health care battle back in focus as the senate unveiled the strap to the
in the last 24 hours it's become the central focus of the criticism emerging about the senate bill. medicaid has been cited specifically by associations representing hospitals and physicians including asco that represents cancer doctors and aarp called it an age tax because the bill allows insurers to charge up to five times more for older customers but medicaid is going to be the stick point because states with moderate republican sen tors like ohio, pennsylvania, colorado that
expanded medicaid don't want people previously insured to lose coverage. republican governors voiced their support too but there's not a complication here. two senators from nevada and arizona also medicaid expansion states are up for re-election next year. but others want bigger cuts. >> this is a process you all know this. if you look at a snapshot sometimes it doesn't look so pretty what we're doing is reaching out to every single senator and making sure that they have comfort level with the piece of legislation and knowing that it will improve it's called the better care legislation and that's what we're interested in make happen. >> but the response created a complicated narrative for this bill and for the health care
platform that republicans overall campaigned on last year. the president last night on twitter voiced his support for the bill despite the fact that during the campaign he said he wouldn't touch medicaid and now is supporting this very bill david. >> thank you. >> for more on the health care debate in washington we're now joined by the senior fellow at the center of budget and policy priorities and chair at the american enterprise institute. jim let me start with you. give me a sense of whether or not you think it can make it. >> with respect to medicaid the bill will roll back the enhanced federal funding for the expansion population under the affordable care act beginning in 2020 it would impose new per person limits on federal spending in the states also effective 2020 it would index those per person limits to initially the medical inflation
rate and then the regular consumer inflation date. the upshot is its a very very substantial reform of medicaid program. you have to understand along with social security and medicare is the reason the united states is heading into major fiscal problems in the coming decades so it would be a big shift in medicaid no doubt. states would be under a lot of pressure to cut costs and frankly there would be more people moved into under the senate bill private insurance because they would be eligible for tax credits instead of medicaid so i think we'll see what the congressional budget office says but those are big changes in the program. >> yeah, well, jared i would assume you don't necessarily see things the same way as jim it's funny when it comes to cost control with health care costs still going up dramatically well above the inflation rate every year, do you see anything in the senate version jared that's going to do something to contain costs in a way that was just implied by jim. >> actually a lot of what jim
said i agree with. i wouldn't call it medicaid reform as much as medicaid cuts. in fact in terms of cost control this pushes in the wrong direction. if you look at the annual average increase in health care costs they're lower for medicare and medicaid than private insurance and, in fact, medicaid grows slower each year medicaid does a good job of providing coverage for the poor. i shouldn't say just the poor by the way because 50% of births are paid for my medicaid 2-thirds of people in nursing care are getting medicaid coverage so this kind of cut is really a disaster from the perspective of vulnerable people.
we need to make some improvements but i wouldn't try to dress this up as anything either in the cost control or in terms of covering more people. >> jim i'm sure you want that but let's get to the path here so the cbo scored the house bill says 23 million americans would lose insurance over the next decade under this bill i think it will be a substantially lower number they targeted the subsidies through the tax credit and people on the lower end of the income scale frankly they're building off of the tax credits that were in the affordable care act and those are income tested so they're pretty generous for people at the very low end and then they phase out as people's income goes up so there should be more support for people that enroll insurance on the low end of the wait scale and that will improve the coverage numbers it's important to characterize what is going on and everyone
would have some financial support. if people don't buy it it's more their choice than not being able to get some kind of an insurance product. >> the discussion around doing something with obamacare reforming it or repealing it has focused in on the small minority of people in the individual market the exchange market. what do you think -- obviously the political realities are what they are and what do you think could be done to sure things up there beyond just more generous subsidies. >> first of all thank you for making that important point. it's about 7% of the population is covered in the market 20% is covered under medicaid which is another reason i think the senate bill is actually worse than the house bill.
what the senate bill does and jim is right it definitely provides a subsidy base now not just on age but age income and geography but that's much diminished even from obamacare and obamacare was too low. i would have boosted the subsidy to low and moderate income people so they could afford descent coverage in the exchanges. what they're going to get through the senate bill is flimsy coverage and much larger deductibles and that's a problem. >> i want to come back to something that interests me in terms of the fiscal state of a number of big states let's assume this goes through and medicaid gets cut. let's see if tax reform goes through and you get state and local income taxes states like the one i'm in right now like a number of other states that want to try to provide broadly speaking for
less advantaged people they're going to get crushed aren't they >> this is another great point because the way the bills are written it says look we're going to end the expansion and we're going to really cut the heck out of sub sy cities but if states want to they can do more but i can't believe any state is going to be able to do that. states have to balance their budget every year so we'll see what the cbo says but i suspect, especially if it goes out more than ten years i probably would disagree with jim. i think it's going to show a larger decrease in coverage but it's going to take a longer time to get there >> what happens to it in the tax and what happens to tax reform game it all out since you're supporter of the bill. >> i'm still assessing it like everybody else i want to see the congressional budget office estimate on monday
before i decide. >> well you're more supportive. >> that's true if it passes the senate it will probably pass with votes from key people like senator cruz and mike lee if that's the case then i think also conservatives in house will be hard pressed to vote no as well if they have gotten a bill through the house and the senate the odds of something making it to the president go up pretty substantially and they probably are on their way to passing something. it's going to be complicated and it will be messy along the way but they're probably on the way to passing something if they can get it through the senate. >> do you put a lot of stock in the cbo score? some people criticized what they did in terms of measuring the house plan because i think they assumed as many as 18 million people in the exchanges which is not the case right now. >> i'm a big fan of cbo in general. that doesn't mean they get everything right and then the health care arena i
think they have done a couple of things that are probably skewing the estimates. one is they're working off a old baseline a baseline from over a year ago and a lot more enrollment than would occur and exchanges than would occur. and makes the coverage numbers look worse than in actuality they do believe heavy in the individual mandate and i believe it does have some effect but probably not as much as cbo. so those are some differences and we'll have to wait and see what they say on monday. >> we'll do that jim and of course jared bernstein thank you to both. mh rehe osqwk y. >>ucmo aadn ua on the street
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before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc. >> let's get out to the cme group in chicago. >> all right, jim. a lot of what you have been writing, a lot of what every
economist and analyst and people that follow fixed income marks have been writing about is a yield curve. getting real flat and what do you think it means >> the yield curve still matters on one level that as it flattens it constricts the financial sysm of borrowing short lending long that the net interest margin comes in and if it continues to flat en, it matters. on another level, i think that the yield curve is highly manipulative becausest fed. >> oh, boy, thank you. >> because, jim, when i read most of your letters, i agree in the traditional sense precrisis. but post crisis, there's a lot of thumb on the scale making the curve even flatter than it would be so kind of a modelling issue here going on for those that are trying to decipher what to do with this flatter curve. >> absolutely. there's all kind of modelling problems when it comes to the curve as well. the biggest modelling problem that fed has with the curve is that they're expecting that inflation is going to heat up. if it doesn't, i could seat curve pancaking from here. but let's not talk about
modelling, you know, the cbo, let me give you an example of that >> talk about a change of gears, okay, cbo. >> monday they're going to come out with the scoring of the health care plan >> okay. the senate version. >> right fine i want to know what the scoring would have been if they do nothing i want to know -- >> i see so what you're saying is when we hear about all the people going to be uninsured or all of these facts, right, what happens if nothing happens? i want to know is it based on the previous program obamacare running smoothly when it just started, toward the end when -- like right now when it's not working at all or in a perfect world when they looked at it and didn't put it in physical world. what it is benchmarked against >> i have no idea. neither does anybody else. they're going to tell us a gazillion of people -- >> we're not slapping at the cbo, it's a fair question. if advertise compared against obamacare, when in the time line of the success are they pointing to >> what happened if we do nothing? >> which is really the issue f
the cbo want to do it right, they would do it based on the way that obamacare is date at the they make the study. >> exactly i think you find it won't be much different >> we could spend all our time talking about. there are big groups of young people that like to see people flourish this is one of last one left, sfligt. >> right. >> before obamacare really started to take off in the early days 20sh10, young people come n and i ask them, who would cross more, me i'm older. i point to a student they're pretty smart kids. they always say me, i'm older. cbo assumed that these young people are going to go sign me up i want to pay three times more than i actually cost please, sign me up how could they have missed that? if that assumption was missed, what are they missing now? >> why do you think all the exchanges are closing? why do you think the insurance companies are getting out of the business they missed a lot of this they're going to give us static analysis. how many people are going to be uninsured without telling us what would be this case if we
did nothing? what would be the case if obamacare ran like everybody wanted how many people would be unemployed or lost their jobs because of higher tax and higher fees >> we're not knocking the cbo. ultimately this new plan is going to be like a birthday party, surprise party, right surprise we're not going to really know what the numbers are modelling human behavior is difficult. >> it is very difficult. look no further than the political polling and just the georgia election it's always difficult to model >> you keep opening all the doors. we could talk for hours. we're out of time. thank you. back to you. >> all right thank you, rick, rick santelli let's send it over to jon fort >> blackbetter ji tanking down 10%. we have the ceo john chen. i'm going to explain what happened to sales. and a digitsal doctor giving you a blood test yeah, it's happening hey dad, come meet the new guy. the new guy? what new guy? i hired some help. he really knows his wine.
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with qatar last week the acts came from the kuwaiti who's are mediating the situation. the demands including severs ties with iran, removing the turkish military base in qatar and shutting down the news network al jazeera al jazeera responding with this statement, we assert our right to practice our journalism professionally without bowing to pressure from any government or authority. and calling the demands nothing but an attempt to silence the freedom of expression in the region well, mark, it's not reacting to this i'm going to send it down to you at "squawk alley". >> thank you, jackie good morning it is 10:00 a.m. at american airlines headquarters in ft. worth, texas 11:00 a.m. here on wall street and "squawk alley" is live