tv Worldwide Exchange CNBC November 9, 2017 5:00am-6:00am EST
the dow extending its win streak to seven straight days as strong earnings push stocks to record highs. blankfein on the record. the goldman sachs sitting down with cnbc as he travels with the president through china. deal drama the latest back and forth between the justice department and at&t over its megamerger with time warner it's thursday, november 9, 2017. "worldwide exchange" begins right now. ♪ good morning a warm welcome to "worldwide exchange" on cnbc.
i'm wilfred frost. let's get straight to the market picture. some record closes, but slight gains yesterday. we are seeing slight pullback in terms of that tone this morning. down about 38 points for the dow. nasdaq down 8. s&p down about 4 points. week to date we are showing slight gains for these three main indices that hides another story that people are pointing to, the small cap decline. let's look at that very quickly. week to date, bouncing back a bit, but that decoupling from the big cap stocks has garnered attention. people suggesting does that show weakness in the economy to come? i think it's different from that it's fears of tax reform slipping, and we know those small caps are geared to that. to paint that picture further, let's look at banks. banks are also geared towards the tax reform
they have slipped over the course of the week banks performance coming up now. bank of america has slipped during the course of the week. similar decline as we saw in the small caps extrapolating from the small cap decline, down 4% week to date bank of america. yields are slipping. they're geared to the yield curve. ten-year treasury down to 2.31 this morning that wildder yield slippage stoy happened down around the world the bund down 0.3% the japanese ten-year note, down 0.026. yields slipping globally hurting the bank stocks this week.
in asia, a possible slowdown in business investment. asian boards for you mostly higher, but nikkei down 0.2% europe a bit of red on the screen today essentially flat, as you can see there. we are looking at slight declines so far this week. the best part of a percent or so for each of those three indices. oil prices for you, they're essentially flat they have had a good week up 2% week to date most of those gains came on monday following the saudi arabia "game of thrones" story oil prices this morning flat, 56.8 the price for wti the dollar board, even though yields have slipped stateside, we have not seen the dollar fall the dollar is not doing much today. it's a bit softer against the yen. 0.36% for the dollar
president trump continues his trip through asia today. the president addressed a group of business leaders in beijing and called out china for taking advantage of the united states >> both the united states and china will have a more prosperous future if we can achieve a level, economic playing field. right now unfortunately it is a very one-sided and unfair one, but -- but i don't blame china [ applause ] after all, who can blame a country for being able to take advantage of another country for the benefit of its citizens. i give china great credit. >> in a separate meeting today with chinese president xi jinping president trump blamed past administrations for the imbalance with china as opposed to the chinese administration. kayla tausche joins us live from beijing with the latest on this story including exclusive
comments from goldman sachs ceo lloyd blankfein. >> reporter: blankfein was traveling with that delegation of ceos. we'll tell you what he said about a deal he personally did as well as his thoughts on the trump administration the latest at this hour is that rex tillerson just briefed reporters to recap a day of bilateral meetings and high-level discussions about north korea and trade. as you were just mentioning, on north korea he said the two countries were in agreement over the threat of north korea and the need to do something about it, but they disagreed on the tactics with how to thwart that threat on trade, secretary tillerson chalked up the deficit, which stood at 3$347 billion last year to what he called benign negligent, but said that trade representative bob lighthizer drove home the need for a par drim shi paradigm shift deals were inked in front of
trump and xi, among them a deal by goldman sachs the soul purpose of which is to invest in u.s. industrial companies that are exporting to china. and i sat down exclusively with goldman sachs ceo lloyd blankfein to talk about what he hopes to get out of the deem ald the trump administration's broader approach to china we have a great partner in the chinese investment corporation this is a very interesting structure. they're going to put in funds, we'll put in funds jointly we have pledged $5 billion. they're going to put in half of their half commitment, and then raise money from other chinese institutions we'll put in some of our money and raise money from other u.s. institutions and individuals and together we'll put together a fund the purpose of this fund is to invest in u.s. companies that could be helped by having
greater access to china. >> for instance -- give me an example. >> for example, a consumer firm that needs extra capital, so they can manufacture but besides capital for manufacturing, they're also looking for markets for their products so they can get capital from us as private equity vehicle, but also our partner cic is committed to helping companies in which we invest gain greater access to china through their china connections. it's both capital on the one hand but also access for companies. >> what is your exposure to that growth in the long run president xi today said that over the long-term opening up is the direction that they're moving in. at what point will you be able to underwrite, lend and advise in this country the same way that you do in the united states >> that's one of the issues we have a lot of the issues that go back and forth on both sides, in this
trade mission the chinese listen to us, our tales of woe getting access to china. but we listen to the chinese version of their difficulties getting access in the u.s., citing sifi and other things like that. for us, one of the stories in our tales of woe, this is, i think, a big deal for us, is that we can't own 100% of our own affiliate in china we can't do investment banking business, underwriting business, brokerage business other than in a joint venture where we're a minority partner, which means that if we want -- effectively, we're managing, we have the expertise, we have the long history in these markets, we have the global relationships >> will that change? >> we hope so. we hope soon >> you are laying out their investment philosophy, all of
the moves by the administration and congress seem to be in the direction of slowing or thwarting chinese investment into the united states this would seem to go against that >> there's no motivation to thwart listen, investment is going to be a win-win we want chinese investment in the u.s. because it means jobs, it means opportunity gosh, chinese money went into develop infrastructure in the united states, how could that be bad for people in the u.s. >> obviously blankfein sees it as a positive to get chinese money into the u.s., but his comments come as lawmakers unveil a new bill that would broaden the scope of chinese deals that would get tough jute scrutiny and potentially be blocked. i also spoke about his previous criticisms of the trump administration some on twitter. we'll share those with you later
this hour. >> we look forward to that discussion, but going back to the comments we just heard, interesting to hear him talk about the types of changes for goldman sachs and bank access in china he would like to see it would be huge if president trump managed to get the chinese administration to loosen some of those things in terms of that deal with cic, did you ask him at all or did he tell you about why goldman sachs was the partner with cic and why lloyd is the onlybanking ceo on this trip it could be a huge benefit for the company if they're the one picked to go on the trip with the president. >> that is very true but market access to china is something that all banking ceos want if that was something that came as part of this trip, would have seen more wall street ceos included there were a lot that i spoke to who hoped that would be on the agenda and it wasn't the reason why blankfein was included is because the commerce department wanted procurements,
they wanted deals, they wanted one-off items that they could announce and sign in front of both presidents that would begin to chip away at the trade deficit. blankfein said cic has been a client of goldman sachs for a long time. the two firms know each other well and it just made sense it had been in the works since the beginning of this trip >> on the goldman sachs front, the private equity part of the deal comes in the investment and lending business which has been growing incredibly fast. it has a lot of private equity style investments within that part of the business, it's been growing fast in other political headlines, house republicans are considering repealing the individual mandate as a last-minute addition to the tax plan a document obtained by cnbc argues the move could make passing tax reform easier. the congressional budget office says repealing the mandate would raise government revenues by 8 $338 billion over the next
decade while increasing the number of unsuinsured by 13 million. the senate banking committee will meet on november 28th to consider jay powell's nomination to serve as the next fed chair president trump said last week he intends to nominate powell to take charge of the fed in february when janet yellen's term expires that's expected to be a fairly simple approval from social security. we'll get a pair of economic reports, weekly jobless claims are out at 8:30, followed by september howholesale trade numbers. kohl's and macy's will report before the opening bell. some stocks to watch today, shares of century link are falling. the company issuing weak guidance after reporting sales dropped more than expected it's done 4%. monster beverage shares are coming under pressure. earnings missed wall street estimates. roku shares are skyrocketing after its first quarterly report as a public company.
the streaming company posting a narrower loss than expected thanks to strong sales. still ahead on "worldwide exchange," a double bows dose ol drama. the latest on the at&t deal with time warner and the latest on fox's bid to take over sky plus getting kicked. whied a dy ed adidas shares are pressure this moinrng. all that and more coming up on "worldwide exchange.
welcome back to "worldwide exchange." i'm wilfred frost. earnings beating estimates but revenues falling a bit short for adidas the share price reacting down 2.6% astrazeneca brightening its forecast for this year the drug company says its profits are unlikely to drop as much as it previously thought. the decline in sales of older drugs has slowed, but it's up 2% in london trade. shares of burberry taking a hit. the luxury retailer warned it doesn't expect sales growth until 2021 regardless of its higher half year profit number it's down 10%. at&t says it has no intention of selling cnn as part of its planned $85 billion deal to buy time warner this after reports surfaced that the justice department wanted at&t to sell cnn parent turner broadcaster or directv to win governmental approval.
at&t ceo randall stevenson putting out a statement saying i have never offered to sell cnn and have no intention to do so we'll hear more from stephenson later today when he joins andrew ross sorkin live from the deal book conference. that interview will be more interesting particularly in light of other media take ovover stories we've heard. 21st century fox is playing down reports it plans to sell sky news to win uk approval for its acquisition of sky it was a threat more that they might shut sky news if they don't get approval on the earnings call, jim jgyms murdoch said he was confident the deal could be completed by next year. let's talk more about this good morning to you. thanks for joining me. first question is based on the stories we've heard over the last week that fox was perhaps
considering selling part of itself to disney, if we believe that to be true does that suggest that they think the sky news deal is not the sky -- overall sky deal will not get approved >> it's undoubtedly clear that the planned deal for fox to acquire the 61% stake in sky that it did not already own is in trouble you don't need to look further than the share price of sky trading at about 19% discount to the offer fox put forward and the fact that the deal remains stuck with uk regulator the. we're almost a year on from the time they agreed to a bid between the two sides, yet we don't have real clarity. the key murdoch representatives saying yesterday the deal will close by sometime in the middle of next year, way beyond what initial expectations were. this deal is on the rocks. >> if we did see a deal go through where fox sold some of its non-u.s. gnaw news assets
disney what do you think would happen to the sky stake? would the 39% stake in sky move across to disney, and if it did could disney move ahead and implement the full takeover more easily than fox could? >> there's been confusion on this topic one thing we've been trying to make clear based on our sources at "the financial times" is that fox can't sell its 39% stake to disney under the current situation it's in, which is with a binding offer to sky under uk takeover panel rules, a bid has to lapse for regulatory reasons or something of that magnitude, a shareholder vote against the deal in order for fox to get out of its agreement with sky, which is a binding offer. so fox cannot physically at the moment transport its 39% stake to -- in sky to disney or anyone else so that thing cannot move until that transaction with sky either falls apart for reasons that are stipulated in their agreement or
they have to go through with the offer. >> so if the deal fully fell apart, it could then be transferred across to disney >> absolutely. >> remind us where sky was trading before the deal was announced. it's a 19% discount before the takeover price, but where was it before the takeover was being considered >> you mean the disney talks >> no, no, the sky price if this deal fell away fully, where could we see the sky price move to? >> we would see it fall further. fox agreed to pay mid to high 30% premium for sky. so this sort of assumption would be that sky would fall another 5%, 15% depending on sort of its own forecasts. this is clearly an important transaction for sky shareholders, who will be pushing for it to go through many people think that in the market the concerns are overblown. that the question of media
plurality will bend towards fox's favor, and sky news won't be divested or sold. this whole thing goes through. there's a disagreement in the marketplace, with some people build positions in sky, assuming the transactions go through, assuming there is no deal with disney and that everything is fine and it's a bunch of noise one problem for the murdoch family, in the uk there is no incentive according to our sources for politicians to go above and step out and say there's nothing wrong with this deal we don't think it will affect media plurality in a significant way. sky news is a positive contribution to the uk format and landscape. the murdoch history in the uk market is so tainted, it's not ideal for many people to step up and say this is fine >> it's certainly become politicized, and not much inst.tive finst incentive for the government to
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the dow down 51 points the nasdaq down 15 the s&p 500 down 5 let's talk more about markets, joining us is steve cheverone from federated >> good morning. how are you? >> very well, thank you. let's talk about this decoupling this week between the small caps and the big three indices. small caps declining significantly over the last couple of days, certainly earlier in the week. is that a concern for you? what is it telling you >> i think there's a sell the news phenomenon going on the markets were waiting for tax reform what we got was broadly in line with expectations. there was desire to sell that news not only small caps but the highest tax stocks have underperformed over the last couple of weeks. >> so banks are one of those sectors. they had a tough week, much more so than some of the small caps bank of america down 4% week to
date what date what is driving that >> you've had weakness out of europe with banks jerome powell being the fed chair was not as hawkish as other choices we would use these pullbacks as buying opportunities >> what is behind that they've had a great run. bank of america up 60% since trump's election victory the laggard is wells fargo, that's up 20%. >> they're where healthcare was several years ago. it's higher rates help, less regulation helps, but also i think these stocks will become really attractive to dividend investors, they'll look at them and jpmorgan is trading around 13 times, staples trading at 19 times, that's going to be attractive >> talk about earnings season more broadly and how you feel that plays into the level of valuations we're seeing. >> earnings is why the market is where it is today. this should be our third straight quarter of double
digits earnings growth the fourth quarter in a row of greater than 8.5%. it's broad based, in spite of the hurricanes as we turn the calendar into 2018, looking at $145 in earnings, that 19.5 times multiple becomes 17.5. >> you run the global allocation fund what is your highest overseas overweight conviction >> we have been favorable to overseas markets we think that europe is a particularly interesting place as an example, generally the u.s. and efa have a 6 1/2 to 7-year cycle where one outperforms the other. growth is better in europe employment is better in europe and the central bank is more accommodative. there. >> steve, we have to leave it there. thank you very much for joining me. up next, a round up of the top headlines and check of the global market picture and more of our exclusive interview with
shuttle in vegas details on that are coming up this thursday, november 9, 2017 as "worldwide exchange" continues. ♪ good morning a warm welcome to "worldwide exchange" on cnbc. i'm wilfred frost. another set of record closes yet, albeit only slight intraday gains. less than a third of a percent for each of the indices. we had seven positive dow sessions in a row. will we get another one? doesn't look like it this morning. down 6 for the s&p, the nasdaq down 15 points week to date we are up for these three indexes. the russell small caps is down about a percent week to date keep an eye on that slight decoupling ten-year treasury note continues to see yields slip in general from ten days ago. 2.32% on the ten-year. it's been a big global
tightening of yields over the course of the last couple of weeks. the german ten-year at 0.3%. it was at 0.6% mid summer. global yields pulling down yields asian equities for you, the nikkei has been on a great run and the yen is slightly higher the nikkei down a bit. hong kong shanghai showing nice gains. european trade for you, down a percent week to date, down today. oil prices which have had a great week, up about 2%, most of that gain coming on monday when we saw that saudi arabian royal family development today not doing much, but still near the $57 a barrel level, just below it. 56.8 dollar board for you, yields have slipped here but the dollar has not fallen this week because yields slipped around the rest of the world dollar slippingagainst the yen 0.3% slightly higher against the pound. president trump continues his
trip through asia today. these are live pictures from china. president trump is attending a reception state dinner and cultural performance at the great hall of the people earlier today the president addressed a group of business leaders and called out china for taking advantage of the united states >> both the united states and china will have a more prosperous future if we can achieve a level, economic playing field. right now unfortunately it is a very one-sided and unfair one, but -- but i don't blame china [ applause ] after all, who can blame a country for being able to take advantage of another country for the benefit of its citizens. i give china great credit. in a separate meeting with xi jinping trump blamed past administrations for the trade imbalance with china as opposed
to president xi jinping. kayla tausche has the latest from beijing including more of her interview with goldman sachs ceo lloyd blankfein. hello again. >> good morning. the white house had two priorities on this maiden visit to china the first to secure cooperation in that wawarting north korea's nuclear ambition rex tillerson says he believes today was fruitful on both fronts on the trade deficit, a deal making delegation including 29 ceos and officials announced deals in front of the two leaders to chip away at that among those ceo, lloyd blankfein, the ceo of goldman sachs. perhaps an odd advocate for the administration given his recent and fairly frequent criticism of the white house. when i asked him about that, he said his outlook is critical and
constructive >> you used your twitter feed to air grumblings about this administration, whether it was trolling infrastructure week or whether the president was casting a shadow over the country. did you have hesitations about carrying the flag in this trade mission? >> you know, carrying the flag, you mean in the sense of being an american in a bilateral trade mission? >> throwing your weight behind the administration that you have had issues with in the past. >> let me tell you, nobody is on all fours with anybody there's things i disagree with on the administration, but let me tell you what i agree with, i think this is a pro business administration, not for the heck of enriching businessmen at the expense of -- there's kind of a narrative that this is a competitive interest with business interests on one hand and the middle class on the other. i think if you support business
and growth, that helps every american that's what we need. we need to have growth in our country. it's not growth at all costs we need to have some regulation. but i think this administration has thought itself as a kind of a champion for american interests, sometimes i find the rhetoric excessive but i'm not against the concept that the president, the chief executive of the country should be pursuing american interests not necessarily paramount but included in those american interests are business and the economy. >> when you think about the concept or the concepts, plural, that the administration has conceived, a lot of it has been generated by goldman sachs alums. we're a decade away from the coining of the government moniker, but what is the
influence of goldman on the white house and by extension the economy? >> in some ways i wish i had a lot more access if there weren't as many goldman sachs people there and people didn't feel so awkward about engaging i wish that -- that turns out to be an overhang i'm proud of the people of goldman sachs. i'm proud of the people we get i'm proud what they learn when they're at goldman sachs and i'm proud they're highly sought after when they leave goldman sachs. when they leave goldman sachs, they leave goldman sachs people have talked about the revolving door between government and industry. i would say it's not a revolving door at goldman sachs. we're not taking a lot of people out of government. the government is taking people out of goldman sachs and those people are not returning to goldman sachs when they get out >> blankfein went on to list the long line of luminaries that came from goldman sachs and entered high level positions within the government.
among them hank paulson who was known for his work here in china. when he talks about there shouldn't be growth at all costs, that's an interesting phrase we also talked about tax reform, the valuation of the markets, the downside risk of the market and the possibility if you get this fiscal stimulus whether from tax reform or infrastructure, there's a risk of overinflating, overheating the economy. we'll share those comments later on it's perhaps a contrarian view than you've heard elsewhere on the street >> great stuff about his tweeting we'll have to see moving forward whether he continues with this outspoken tone, which so far has kind of worked for him even though it's a big departure from a secretive confidential ceo of an investment bank in the past >> yeah. he didn't show any signs of letting down his criticism he seemed to think that it was a constructive platform to air his
views even while engaging with the administration on what he feels is important >> great stuff look forward to more of that interview and your coverage of this asia trip to come throughout the day and tomorrow on cnbc. check out what's happening with gold. higher today, but not significantly. adding to a near 12% gain on the year of course it has pulled back since september quite significantly. with us now is george millings-stanley of state street gob global advisers. let's talk about the recent pullback in gold prices. is that related to currency moves or other factors >> i think currency moves a little the dollar strengthened, so gold pulled back. it got ahead of itself in early september when we got up to 1,350. so lodgely gold should be in the middle of its trading range. that's where it is >> in terms of the broader year to date gain, it's up 12%
despite that haven't pullback. what drove that gain what could kick start it again? >> you have have decent market internals. investment demand in china has been a big driver. statistics out from the world gold council bear that out you can see significant increase in investment in china that outweighs a decline in jewelry demand in india. rate hikes traditionally are bad for gold prices. gives an alternate safe investment a higher yield. the rate hike last year seemed not to derail gold prices. they were a great performer year to date. what about another hike in december if we get it? >> i think we're seeing, and we've seen this with each of the four rate hikes we've had in the current cycle of normalization and we saw it under alan greenspan going back to powell volcker as well, in the run up to a rate hike, people tend to go long the dollar, anticipating
higher dollar after a rate hike. they often tend to go short gold that's a logical thing to do in the ensuing weeks and months, once we had the reality of the hike, they unwind those trades so they sell the dollar and buy gold counter intutively, after a hike gold softens if we get a rate hike in december, that's what will happen >> is that a short-term reaction if we consider a full rate hike cycle and take all of next year into consideration, assuming three hikes, what do you expect to happen with gold in light of that >> i don't think three 25 basis point increases in a year will unsettle gold. we will not get the rate hikes unless we get the inflation they're set to counter, which means if we get rate hikes and inflation, we'll still be in low to negative real interest rates.
as somebody once said, zero yield will always be better than negative yield >> that's true george, thank you very much for joining us >> thank you president trump is speaking in china now we'll monitor i had comments and bring you any news as we get it. of course he's at the state banquet this evening in china at the moment we'll bring you more comments from that after this short break. also coming up, today's top trending stories including taylor swift's viral reaction to an epic win last night and big news for harry potter fans, the wizarding world may be coming to a smartphone near u.yo all those details to come on "worldwide exchange. t drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets
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in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember. accused of obstructing justice to theat the fbinuclear war, and of violating the constitution by taking money from foreign governments and threatening to shut down news organizations that report the truth. if that isn't a case for impeaching and removing a dangerous president, then what has our government become? i'm tom steyer, and like you, i'm a citizen who knows it's up to us to do something. it's why i'm funding this effort to raise our voices together and demand that elected officials take a stand on impeachment. a republican congress once impeached a president for far less. yet today people in congress and his own administration know that this president is a clear and present danger who's mentally unstable and armed with nuclear weapons. and they do nothing.
join us and tell your member of congress that they have a moral responsibility to stop doing what's political and start doing what's right. our country depends on it. welcome back to "worldwide exchange." time for our top trending stories. kate rogers is with us today what's buzzing this morning? >> taylor swift winning big last night at country music awards, video of her reaction is going viral. she won song of the year for her tune "better man" which she wrote for country group little big town swift wasn't at the awards show but tweeted congratulations to the band as well as her shocked reaction to the win. >> the cma award for song of the year, you ready? >> i'm ready >> goes to taylorswift >> ah! >> i love that reaction that we
saw there. outstanding stuff. also i didn't realize she was still writing country music songs and highlights her talent that she won an award for. >> i don't want her to turn to singing country music, but perhaps filter it into her reputation, but that's not going down far if you're a swifty like me, you like it. the courtney reagans of the world like country taylor. >> we'll have to see next story >> well, good news for harry potter fans. the developers behind the hit ar game pokemon go are working on harry potter wizards unite game. it's being co-developed by warner brothers interactive. the game will launch in 2018 >> i don't think there's been many harry potter computer games yet. certainly not ones that have done well which is a surprise given the scope you would think there would be there and the sort of huge legion of fans. we'll see how well this goes
a new group of toys are about to be inducted into the toy hall of fame the class of 2017 will be chosen based on advice from historians and educators after being nominated by the public. the finalists are the board games risk and clue. the magic 8 ball, match box cars, my little pony, the paper airplane, pez candy dispenser, sand, transformers, the card game uno and wiffle ball the toys must have inspired creative play across generations. >> that is the longest list of finalists i've heard risk could take my vote. you have ever played risk? >> i did but i love clue. >> i don't know what that is perhaps it's only here >> it's a murder mystery game. >> it's what we call cludo
a good one a las vegas based self driving shuttle kicked off its first day on the roads in las vegas with a crash it hit the front end of a large delivery truck driven by a human driver one hour after its launch no nobody was injured >> these issues keep going on. they don't help the future lovely to have you with us. still ahead, the record ral rally as futures point to a lower open coming up, a big day on cnbc don't miss huge interviews from andrew ross sorkin at the deal book conference including randall stephenson as we head to break, here is your national weather forecast from bonnie schneider. >> good morning. we are looking at some much colder air if you're going to be traveling across parts of the midwest, even snow ahead for northern michigan and interior
new england. look at these temperatures they're dropping about 20 degrees below normal for this time of year bundle up if you're headed to the upper midwest. also if your trip extends tomorrow to the mid-atlantic or great lakes, it's getting cold into buffalo, new york city and washington, d.c. and even early saturday morning those cold temperatures will linger as we look towards boston, look at those numbers, well below normal. anywhere where we have the snow falling could cause an airport delay, that includes areas of northern michigan and parts of the great lakes that's your business travelers forecast more "worldwide exchange" when we come back
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build a better website - in under an hour. free to try. no credit card required. gocentral from godaddy. welcome back to "worldwide exchange." some stocks to watch century link falling this morning. the company issuing guidance after reports its sales dropped more than expected monster beverage shares coming under pressure.
earnings missed wall street estimates. roku shares are skyrocketing after its first quarterly report as a public company. the streaming company posting a narrower loss than expected thanks to strong sales. it's up some 30% this morning. futures pointing lower, this comes after record closes yesterday, slight gains that we saw in seven straight sessions of gains in a row for the dow. we are lower, 50 points or so for the dow. some of those falls have exaggerated in the last hour or so down 30 points an hour or so o ago. joining me is peter boockvar, a cnbc contributor this week we've seen the small caps sell off versus gains for the big cap stocks is there data out there that supports the fall? is this a hope for tax reform selloff? >> i'm wondering if its the latter, there's been a divergence with transportation
index trading at a seven-week low. even with the nasdaq decliners are now beginning to outpace advancers. new lows are almost as high as the level of new highs there is some bifurcation in the market, a narrowing of the market that's somewhat notable the last couple of weeks. >> in terms of the tax reform bill, there's been slippage in hopes of whether it will come through because of different versions of the bill if we do get that 20% corporate tax rate, are you positive that can deliver significant lasting growth you are more concerned it's a one-off shot in the arm followed by a ballooning of the deficit >> i see lowering tax rates as not short-term stimulus, it's a longer term technique to make the u.s. a more attractive place to do business to me the most stimulative nature of the tax bill is allowing companies to expense capital expenditures
encourage them to spend more now rather than later. going to 20% tax rate, over time it's a great thing it will hopefully alter the decision making process of a company on where to locate employees, rather than being a short-term jolt. >> let's talk about yields yields have slipped from 2.45 on the ten-year, now closer to 2.3% is that a sign of what's to come in terms of u.s. growth? is this driven by issues abroad dragging down u.s. yields? >> the flattening of the yield curve, the two-year yield is at a fresh nine-year high i think it's a combination if you look at the last two rate hike cycles, we know what happened it paid to flatten the curve, we know where it led. that's a large part of the thinking but also the drop in long-term interest rates in europe post draghi's dovish hike and cutting qe, so it's a combination of those factors, but it's noteworthy
>> that move in germany, yields have almost halved in the space of three, four months. in july the ten-year bund was 0.6, now it's 0.3. and we had a dovish hike in terms of what we were talking about there from the ecb is that move overexaggerated is therefore once again possibly a bubble in the european bond market >> i think the europe bean bond market is the epicenter of bubbles. you have the u.s. five-year treasury yield at 2% there's an epic bubble yield in europe we'll have to see when the ecb ends qe possibly and the follows that up with negative interest rates to me, there's stored up trouble in the european bond market. hasn't been realized yet doesn't mean it won't happen >> do you think there's overoptimism state siside aboute global growth in terms of u.s. stock performance? those moves in junk credit in
europe suggested the growth is still very reliant on ecb stimulus if that's removed might we see a pick up in growth fol away quickly? >> central bankers created this environment where economies, businesses have become addicted to arrested ficially low interest rates when those go higher, we're interest rate credit as soon astive sensitive. so, yes, it matters. if the european economy slows down because the ten-year yield goes to 1%, what was the purpose of pushing it down >> japan record highs, apart from this morning. is the data there strong >> the data is not necessarily strong but corporate japan is better they're returning corporate governan governance, buying back stock, it's a shaking up for the
good morning the record rally rolling on. the dow extending its winning streak to seven straight days. it's been about strong earnings pushing stocks to record highs lloyd blankfein on the record the goldman sachs ceo sitting down with cnbc as he travels with the president in china. deal drama there's a newsticking point between antitrust regulators and at&t over its megamerger with time warner. it's thursday november 9, 2017, "squawk box" begins right now.
good morning, everybody. welcome to "squawk box" here on cnbc live from the nasdaq market site in times square. it's a little chilly out there we'll all be colder. getting into the winter weather on the east coast. good morning i'm becky quick along with joe kernen andrew is on assignment at the deal book conference today he will be on throughout the day with some big guests joining us for the hour is james lu, founder and head of research at clearnomics we have a lot to dig through the tax plans out there. maybe you can tell us how that will be impacting the economy. >> the tax plan is one of the major legs of the trump trade. you had deregulation, the tax plan and then you also have fiscal stimulus so, the investment community is waiting on whether thi