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tv   Worldwide Exchange  CNBC  June 26, 2018 5:00am-6:00am EDT

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it is 5:00 a.m and here is your five at 5:00. u.s. futures looking to rebound after yesterday's massive selloff. investors trying to digest mixed messages from the u.s. over its trade policy tim cook sounding off on data privacy and immigration. we'll bring you his comments and a uk court could rule early as today as the fate of ubner l ubner grewalgreen's officially replaces ge on the dow
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"worldwide exchange" begins now. >> good morning and welcome to worldwi"worldwide exchange." let's get you a quick check on the early market action following yelled's sharp selloff. s&p 500 fell about 1.4%. you see this morning markets looking to hold their ground a little bit the dow indicated to open up about 35 points, s&p 500 up about 3. nasdaq up 19 indicated open at this hour. we did have actually steeper losses during the afternoon yesterday. they were narrowed in the last about hour, hour and a half of trading after the white house came out and kind of dimmed some of the trade tension fears let's look at treasuries yields are holding below their recent highs the ten year yield right now just under 2.89% 2.9% has been a little bit of a ceiling the last few days. two year not giving up a lot of ground there and take a look at oil, also
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hanging in the high end of its range after digesting a lot of mixed messages out of opec over the weekend. you see wti crude up half a%, 62.348 rig 62.48 right now. natural gas slightly above the flat line. >> global markets trying to rebound following yesterday's big selloff. and we have full team coverage of the bounce back nancy is in singapore, but first let's go live to london for the later on european markets. >> as you can see the picture behind me is a lot more positive today with all of the european indices trading in the green after steep declines yesterday where almost all of these were trading down to the tune of about 2% i want to draw your attention specifically to the german index. we rebounded about 50 points or about half a percentage point. but i should tell you that the german index is down 4% in
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trading. so really getting the brunt of the selling that is occurring. also ftse mib, italian index up 200 points relative to germany on a year to date basis though, it is an you outperformer, who would have thought with all the political noise in the background. let's switch the sectors no surprise that the ones that got hit the hardest are the ones that are recovering the most today. basic resources up about 1.3%. utilities also up 1% as well and insurance and media lagging a little bit back to you guys >> and let's turn now to the action over in asia. nancy has more from singapore. >> hi there. most acian me asian markets clo lower, but it could have been
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worse. you are looking at the nikkei 225 managing to close just barely in positive territory sentiment in japan was helped as the yen came off slightly its recent highs against the green back but the big story, no doubt the shanghai composite off some 0.5%. hang seng was off as well. but for the shanghai kochl positive it, this is significant because it officially closed in bear market territory. let's show you the move here from the january 24th high, we're talking about a dip now just more than 20% sure china is caught front and center in this trade fight with the u.s., but also strategists here in asia have been saying look out for the debt concerns for corporate debt defaults and concerns there on the mainland too. back to you. >> nancy, thank you. investors are now trying to digest some mixed messages from the white house over trade president trump's top trade adviser peter navarro trying to
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calm markets late yesterday. he said wall street was overreacting to trait fears and th and the administration was not working up restrictions on china or any other nation. >> there is no plans to impose investment restrictions on any countries that are interfering in any way with our country. this is not the plan all we're doing here with the president's trade poll is i is trying to defend our technology when it may be threatened. so this whole idea that somehow there will be investment restrictions to the world, discount but that is not what s sanders said, seeming to contradict navarro shortly after. here's what she said >> as the secretary said, a statement will go out that targets all countries trying to steal our technology
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we expect that soon. >> referencing an earlier tweet from steve mnuchin saying the white house won't focus its restriction efforts solely on china but on all countries >> let's talk about all of this. yesterday the markets tried to sort it out with mixed success i guess. joining us now, scott fullin mat revere obviously trade is the main headline mover of stocks even if it hasn't necessarily had kind of an enduring impact over months or all year but what does the market action tell you in terms of where we sit with regard to pricing in these risks or looking past them >> well, it is funny because yesterday when we saw the selloff, we saw a lot of the stocks that not necessarily going to be impacted by a trade war. netflix for example got hit very ha
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hard and the fact is, i looked at something this morning i looked at implied volatility which tells us how traders are pricing risk and yesterday amazon and google saw their implied volatility levels rocket. never saw that on the same day with those two companies before. so i think what is happening is people are extending this across the market the market has had a very, very good move over the past several years. we've had several stocks that have continued to outperform this year while the benchmarks really have not done much. and what is happening is that they are punishing those companies. >> does it telling youit is a little bit of profit taking, a readjustreadjustment,a trend? >> i think it is a bit of profit taking i think the market still has plenty to go i'm very bullish long term but i think we have to shake out some of the noise and there is a
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lot of short term impacts here that have been impacting the market in this correction that started at the end of january. >> but you are still bullish despite the move that we've seen in the dollar. now it is up 5% just in this quarter trading at the highs that we haven't seen since july of last year >> again, we have people coming in from overseas looking to buy treasuries when we get up to a 3% yield on the ten year basically arbitraging what is going on in europe we are also seeing that people find there is a lot more value in the united states still especially with the tax reforms going forward. and we still have financial engineering now version two that is taking place where companies are buying stock not with going to the credit markets, but using the money that they are repay the tree eighting. and that is helping the small cap stocks >> so the dollar going up froops go perhaps for good reasons
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what does it tell you where to position stocks, in the leadership, in the big growth stocks still or is it time to maybe look for some laggards >> i think one of the things, we have to look at the pricing on stocks a lot of stocks are way up there, have not had many stock splits over the past several years. big thing is when you are looking for gains, you measure gains in percentage, you measure losses in dollars. and there is a lot of risk there on some of the high priced stock. so i think people are starting to readjust now and look for stocks that will catch up a bit and take some of the risk out of some of the high priced stocks going into some of the lower priced stocks and that is why we're seeing the russell acting very well. >> and a lot of this happening near quarter end too thank you very much. escalating trade tensions are taking a toll particularly in asia. shanghai composite closing down 20% from its highs set in late
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january. joining us now to discuss, michael every at asia pacific. good to see you, michael what do you make of the move in the chinese equity index >> well, it is not really a surprise given the prevailing backdrop one wonders how much more of a down side there can be given that we are already having whispers of the plunge protection team stepping in or having a quiet word off camera with brokers telling them not to sell shares that have got margin calls coming in place. but nonetheless i'm far from positive >> china's bank decision to cut equity, is that a reason to buy chinese stocks here? >> simple answer, no because what they are going to do with that liquidity is
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effectively debt for equity swaps. so the global backdrop in terms of the potential trade war is far more negative in an what the relatively small targeted to smes actually represent. >> one of the interpretations of the steep underperformance of chinese stocks specifically mainland geared chinese stocks versus the u.s. market is that the larger net loser on a relative basis for on some of these trade issues is china. do you think that is a proper interpretation or is there something else happening here? obviously the broader emerging markets had been under pressure as well with the fed tightening and dollar strength. >> i think it is both. and they are actually linked but i think if you look at it primarily the near term driver has been sudden realization that, yes, this trade war could
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get real and that yes china is likely to be the bigger loser. that didn't mean anyone emerges unscathed or without broken bones. but if you are an export, early you will do worse than the importer even if the importer being the u.s. some individual firms do worse. but as you also correctly said, the overall backdrop doesn't really help very much. >> alot happening here that is making the international trade a bit more complicated michael, we'll leave the conversation there thank you to joins us. we're just getting things started here big tech is on deck, it is decision day for uber. the ride sharing company's fe in london hanging in the balance, all the details after the break. and tim cook on the record, am apple ceo talking everything from immigration to data privacy. we'll bring us his comments. these birds once affected by oil
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are heading back home. thanks to dawn, rescue workers only trust dawn, because it's tough on grease yet gentle. i am home, i am home, i am home
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welcome back let's get you up to speed on markets. we could be in for a rebound on wall street. we're higher by 37 on the dow. nasdaq by 21 s&p is s&p up around 3 take a look at the bond market where treasuries are fairing right now. the u.s. ten year yield at 2.88%. in tech news, a uk judge radio rule on the fate of uber's london licenses as early as
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today. >> reporter: and let me set the context. last september that the regulators said uber was not fit to operate in the uk capital, it raised concerns about the corporate responsibility, about the security of the passengers uber was carrying. and this is the second day where we could get a decision. uber in court yesterday was very humble, it accepted that tfl decision, said they were right perhaps not to give us the license, but they listed off a number of changes that they made to address the concerns including the way they report incidents to police for example. they have introduced a maximum driving hour policy for its drivers. and a phone line for people who need emergency help with the service. the ultimate message from uber is we've changed we are a different company to the one that entered the market a few years ago under the new ceo, and now london is an extremely critical market for the company. around 3.2 million passengers use the service regularly. it has about 45,000 drivers on
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the platform here in london. there is a number of outcomes that could happen. the judge could say, no, uber should not get a new license or the more likely outcome is that uber could get a shorter license. they wanted a five year, but they could get 18 months it is a crucial case because if uber does lose this for example, other countries across europe and other cities could look at this and follow on the examples of london and come in harder and crucially important especially as the company will go public next year and pledges to go for an ipo in 2019 it needs to show investors that it cancan justify its valuation. >> and the changes that it is making to appeal to the regulators is just a testament t is to uber especially ahead of that anticipated ipo in 2019 when i lived in london, i liked
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using uber they accepted credit cards and it always seemed to be more expensive to take a london cab does that change this court case at all, does that give uber some lynch leverage, the public support for uber >> reporter: i think there is huge support here. we saw a petition actually started after uber was banned from london wanting the service to come back but just a little bit of history on this. a lot of the issues around uber have come back of backlash from the cab drivers. they have pressure on the regulators and the mayor of london to tackle uber harder and that is why up seen this but also a test for london itself london has built itself as the tech senatcenter of europe so investors could look to invest in some of the new technology companies out of london, too. so not just a test for uber, but
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also how london looks as a place for innovation and forward thinking ideas as well >> all right thank you for that story still ahead on "worldwide exchange," employees of the cloud reporting company calling out their ceo in a big way we'll explain. plus thousands forced to flee their homes in california as major wild fairs tear across the northern part of the state or ts have the latest onhi sty.
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welcome back let's get you a look at the futures this morning equity market set to hold their ground this morning after yesterday's steep declines about 1.4% down yesterday. indicated now to open up just three points dow up 35 and the nasdaq looking to bounce about 20 points. and also taking a peek at oil this morning, it also firmed up. wti crude $68.22 a share up about one quarter of 1%. >> is that a good sign we had this big selloff, came back of course on the dow. but the fact that we're now potentially rebounding on the second day >> definitely tells you that the market was not caught up in the down side momentum, it wasn't some kind of panic it really was an adjustment. but also tells you the market is
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stuck in this kind of range. it is hard for it to get ahead of steam up in either direction so far and moving on, sales force employees turning until heat on their ceo. hundreds of salesforce.com workers reportedly signing a petition asking him to evaluate their contracts with the u.s. border agency amid the trump administration's recent crackdown along the border salesforce saying we are not working with customs and border protection regarding separation of families at the border. >> a silicon valley trend here where employees are demanding public policy instances. meanwhile immigration story still remains front and center in washington. tracie potts is joining us with the latest >> reporter: good morning. today the president is meeting with lawmakers, we could hear more about this. last night it was a campaign style rally in south carolina where he defended his
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immigration policy and said it is up to congress to come up with the solution. president trump firing up supporters last night in south carolina >> build that wall, build that wall >> it is happening >> reporter: earlier doubling down on his tweet that migrants should be sent home immediately instead of seeing a judge. >> when people come in illegally, they have to go out >> reporter: the trump administration insists those who come through the right door will not be separated from their children >> when they come through the ports of entry, they are kept together >> reporter: as congress tries to line up a vote this week to ban separating families, we're getting another look at where these kids are being kept. this government video from a tent city in texas housing children separated from their parents. >> we are very aggressive about finding it out >> reporter: and this day center recorded by a former employee
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critical of the policy leaving parents in detention centers >> this is a detention facility, almost like a prison >> reporter: for now they will stop prosecuting adults who cross the border with children, there simply aren't enough judges and courts to handle them and then the other thing we're hearing so much about is california congresswoman max se maxine waters gets a lot of heat from her own democrats for urging these public demonstrations >> a story that continues to develop, and one that we're watching closely thanks, tracie potts in washington let's now get a check on the other morning headlines. phill phillip has the latest in new york >> good morning. today is primary day in six states across the country and key races, new yorkers could send former representative michael grimm back to congress after he spent several months in prison for tax fraud
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and utah could give mitt romney the coronation he has been looking for, he is expected to cruise to victory today. brutal wildfires continue across northern california. the pawnee fire has charged more than 10,000 acres. california governor jerry brown has declared a state of emergency. the fire has been burning there uncontained for three days it has destroyed more than 20 structures and forced hundreds of evacuations and two would-be car thieves chose the wrong victim, an offer duty chicago cop this video shows two armed men trying to get inside a parked car. the officer runs out and soon after fires at the suspects. police say he did identify himself as an officer before shooting one suspect fired back at the officer and eventually both suspects took off running. police say no one was hurt and they are still searching for those suspects back to you. >> dramatic footage. thank you. still ahead, your global market rundown markets trying to bounce back
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from yesterday are's massive selloff. everything you need to be watching as we get ready for the big day. and later, what is next for arc buck stbus? ♪ (daniel jacob) for every hour that you're idling in your car, you're sending about half a gallon of gasoline up in the air. that amounts to about 10 pounds of carbon dioxide every week (malo hutson) growth is good, but when it starts impacting our quality of air and quality of life, that's a problem. so forward-thinking cities like sacramento are investing in streets that are smarter and greener. the solution was right under our feet. asphalt. to be more precise, intelligent asphalt. by embedding sensors into the pavement, as well as installing cameras on traffic lights, we will be able to analyze the flow of traffic. then that data runs across our network, and we use it to optimize the timing of lights,
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wall street pointing to a higher opening >> and big change in the blue chips. starting today walgreen's
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replaces ge in the dow and big bet on bitcoin the one firm doubling down on crypto it is tuesday, june 26, 2018 you're watching "worldwide exchange" on cnbc. ♪ >> welcome back. here is what is leading cnbc.com right now. president trump weighing in on harley-davidson's plans to shift some production overseas to avoid european union tariffs trump tweeting he was surprised by the announcement. he also accused the eu of engaging in trade practices that hurt the american economy. apple ceo tim cook speaking out on data privacy saying the company, quote, felt strongly about privacy when no one cared. separately cook addressed the topic of immigration we'llbly you more of his comments straight ahead.
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and a uk judge could rule on uber's london license as early today, this is after uber apologized for past mistakes saying that it is addressing regulators' concerns and index futures have been showing slight gains and still are. the dow looking to gain about 37 points of course lost 328 yesterday at one point during the day yesterday down about 500 so trying to make a stand. looking like it might tack on about 3 points sitting a little above the 2700 level where it spent a lot of time this year. at the treasury market, also relatively steady. certainly below the recent highs in yields. ten year treasury note at 2.888% and the two year note at $2.54 >> and let's check out trade in asia a mixed session overseas, shanghai composite now officially in bear market territory trading down 20% from the highs it had back in
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january. a key psychological level that traders watch. and we're lower in south korea and on the hang seng as well take a look at early trade in europe and you will see that we are mostly higher there. german dax leading the way up around half a percent. still waiting for more details on trade from the white house. and outside of stocks and bonds, oil has been steady as well wti crude losing some of the earlier gains. now $68.21 bren brent up 0.4%. taking a look at the dollar, dollar index has been hovering just under the recent highs. here you see it a little higher against euro just about flat against the japanese yen and marginally stronger against the pound as well excuse me, a little weaker against the pound as well. >> let's continue the market discussion with chief global
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investment strategist at charles schwab big move in markets yesterday all this on trade. why has the move in asia been more pronounced? it suggests that china has more to lose in this trade war with the shanghai composites now down about 20% just this year >> china's mainland stock market has had a big move there are a lot of factors i don't think we need to use that as too much of an indication remember the chinese mainland stock market bounces all over the place. hong kong is probably a better place to look. and while the stocks may be down 13% from their peak, they are more in-line with broader emerging markets reflecting concern about the dollar rise which has really been the factor here i point you to the fact that actually the hong kong stock market, most emerging markets were outperforming this year all the way through the middle of april. that is past a lot of the trade concerns that began with whether the washing mans or solar panels
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through steel and aluminum in march. it was only the mid april rise in the dollar that began to really weigh on the emerging markets. we think that rise in the dollar may soon begin to slow with the dollar caught between opposing forces tightening monetary policy which has been pushing it up, balanced by looser fiscal policy so maybe look for some of the losses in emerging markets to begin to fade if we can finally put some of the trade worries behind us. >> opposing current seems like a good way to describe the overall market obviously very strong corporate fumt al fundamentals, butted are we stuck here for a while or how do you think this plays out >> i can tell you in the coming weeks it might be tough rendering the buy back blackout, this pird of five weeriod of fie earnings where they hold the buy
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back so we've lost that support from corporate buying and that may be a factor here adding to volatility in the coming weeks as we look at the remainder of the summer, it is hard to say. i think trade worries as they begin to fade, stocks bounce as they come back, they get pushed back down again i think we'll be in that environment the nekxt few month. outside trade, i see stocks pushing higher for june what we've seen is the more ex-portthe global economic backdrop and i think that is what earnings and stocks will come back to again if we can put the trade issues behind us >> so where do you suggest investors put their money to work just in the last week we've seen oracle, carnival, red hat all said earnings will be impacted
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by the stronger dollar >> so something to keep an eye on hopefully the dollar rise begins to fade a little bit i think you have to look longer term i think we're on the cusp of major changes in free asset class relationships. and i mean over the next few years. u.s. stocks have been outperforming growth over value and small caps over large caps we think for a variety of reasons we're at a turning point in those relationships so you want to think longer term here and positioning your portfolio for the years ahead, not just months. >> so you think a rotation towards value from growth stocks and also toward international from u.s what is the bond market telling us in terms of where we are in this cycle you know this kind of topic has been in heavy rotation now, looking like not much of a spread there are we going to have enough cycle left to have a bullish rotation into other styles >> you know, i think so.
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i like to look at the three month to ten year yield curve. i think that has given the best signals historically that tells us that we're at least a year from inversion, maybe a year and a half. that is certainly enough time for stocks to continue to move higher and historically they have global stocks have posted double digit gains, never had a loss in that period one year before that yield curve inverted and that is going back 50 years. it is the melt up before the meltdown >> jeff, thanks very much. we'll talk to you again. we have breaking news on general electric the walling street journ"wall ss reporting that they plan to spin off their health care business and unload ownership this baker hughes plans expected to be announced later today. we could also see another dividend cut >> and i think a lot of the streets have been waiting for something like this, a broad gesture of unwinding ge.
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i do think that the idea of spinning off health care is a little bit of a mixed message because it is a relatively steady business. it is one that has performed okay and the ceo at one point had run it and the baker hughes thing, i think investors were probably hoping for something like this it was an unwieldy structure and ill timeding a agre entry in gas as well. so we'll see if it can rebound >> and this is of course a part of ceo john flannery's year long strategic review we're seeing the stock pop around 1.6% on the news. >> and i would expect to pop i think the idea that there was value trapped inside of ge was pretty uncontroversial, but it was not clear what the time table was for trying to realize that i don't think health care is
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really a turnaround story. it is much more about is a spin over better than a potential sale or can you just hang on to it because it is a decent earner you will have the aerospace business, the power business which has been an issue for a while because they did also -- they have sold pieces of the industrial unit away just this week we heard they sold a big commercial engine business >> we'll see if it unlocks shareholder value. let's stick are ge -- >> and it is happening on an interesting momentous day. ge certainly the end of an era in another way which is that ge is no longer part of the dow jones industry average as of today. this decision was made last week of course. gmpt e will b ge will bed by walgreen's >> end of an era >> i felt like this committee in terms of deciding what goes in the dow, it was a little bit of
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a premature move >> walgreen's underperformance in the market as you see down 8% so far this year but perhaps we knew ge, but the fact that it was walgreen's that would replace it, that was a surprise >> also walgreen's just not a very cyclical business, not very geared to the global economy but maybe it is a statement on what the u.s. economy has become which is very health care oriented >> is this a contrarian sign >> history is mixed on that. some it does represent a little bit of a capitulation. honestly i think the low share price was the catalyst $12 stock in the dow was like not having a 309 stoe aing a 30k >> and certainly a stock we'll watch today. coming up, the crypto craze. we'll tell you the one silicon valley venture capital firm that just backed bitcoin in a big way. plus a new age for
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starbucks. big changes coming to the coffee change starting today. what it will mean for investors. these birds once affected by oil
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are heading back home. thanks to dawn, rescue workers only trust dawn, because it's tough on grease yet gentle. i am home, i am home, i am home we want to recap breaking news on general electric the "wall street journal" is reporting the company plans to spinoff its health care business also reporting that ge will unload ownership in baker hughes plans expected to be announced
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later today. and we're looking at the stock up just about 1% in pre-market, but a bigger story of course is that it is down 54% in the past 12 months. it has been a challenging year to say the least for general electric and this a part of its strategic business trying to restructure. >> and the question in that review has been what to keep, what to potentially sell how to sell it and how to pull the conglomerate apart it seems with the health care they will sell 20% and spin off the rest the idea probably to give existing shareholders an ongoing interest if they so desire the company also according to this report will maintain the current level of stock dividend at least until the health care spinoff. clearly that is a piece of the story that is still being evaluated in terms of the ability to continue to pay the dividends. >> and perhaps ge spread itself way too thin over too many different industries
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and so saying perhaps we need to let go of some of these businesses >> they certainly got themselves into that position of seeming like they were spread too thin i can how you 3 m and tell you the spread of their businesses, but the market says that they manage them well they are good at kind of keeping a lot of thieves differe of the business lines functioning but the minute people lost confidence in ge and letting problems like in the power business fester for a long time and the cash flows did not seem what they were in retro he specspec spect so i think they had to make a big decision.he spec so i think they had to make a big decision >> your thoughts on spinning it off, rather than selling it perhaps to an insurance company looking for that strategy? >> i'm sure all of it was explored so you have to know what opgtion they didn't take it is mostly medical equipment
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it is a pretty good part of the health care industry if you talk about long term growth and all the dynamics there of course also up against a big industrial competitors there so it seems as if a sale and spinoff will allow for a clean kind of valuation of both of those businesses what remains of ge plus health care and then of course the oil and gas. history will have to say whether the entry and exit was wise and really did whichevdeliver any v. but at least now you can know on a pretty clean basis >> now that oil is back. >> most of the way back, right >> we are expecting the official announcement later this morning. in other corporate news, howard schultz officially steps wn as executive chairman of starbucks, so what is next rogers is here >> it is a new era as schultz steps away from the brand he made into a household name
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all eyes are on kevin johnson the company's ceo who has been at the helm since last year. the two worked closely together and analysts say this move presents an opening for johnson to step out of shuttle's shadow. schultz's departure also comes at a time when competition for consumer dollars is fierce as companies from dunkin donuts to mcdonald's are offering steeper values starbucks is focused on mobile as well with its reserve bars in seattle and shanghai with openings in milan and new york city later this year starbucks is also in the midst of an ever growing push into china where it opens a new store once every 15 hours. a big challenge right now is increasing same store sales in the u.s. which have been stagnant experts say johnson really needs to focus on innovation and technology to move that forward. starbucks also cut its guidance and announced that it will close about 150 of its underperforming u.s. stores in 2019. that is about triple the number
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it typically closes in a year, a move johnson says will elevate comps. one thing for sure, this is johnson's show now especially if schultz decides to seek the democratic nomination in 2020. he of course will continue to step away from the brand as he has to so we'll see what happens. but two important things, china and also kevin laying out his plans last week saying this is my stake in the ground, this is my vision for the company, this is what will get -- move the ball forward >> absolutely. and looking at last week's one week performance of starbucks, its worst in six years after the announcement that it is shutting 150 locations in 2019. with schultz out, does it allow the company to turn the corner, a fresh start? >> i think that is one opportunity. >> and he commented on the stock to jim cramer which is a rare
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move saying it is cheap and undervalued. so they will right the ship and get it going >> sounds like elon musk >> and are we talking about in terms of how the stores operate, getting people through or is it product menu type stuff? >> really with innovation and technology, analysts will say it is a mix of both, getting people to come in in the afternoon, that is something that they have been trying to do. cold brew is big for them and they are also introducing more food but it is also getting mobile and continuing to work on that more and more people keep signing up, as well. >> all right kate, thank you. still ahead on "worldwide exchange," turmoil on the global market, fears of a trade war hitting emerging markets hard. what the trade wars could mean for your money plus breaking news on ge, the company reportedly plans to spinoff its health care unit and bail on its ownership in baker hughes 'lha t leswel veheatt.
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recapping breaking news on general electric, the company plans to spinoff its health care business the "journal" also reporting that they will unload ownership in baker hughes. the stock is up 1.8% in pre-market let's bring in larry mcdonald at acg analytics. larry, "wall street journal" says sales and profits have been rising at the health care unit which accounted for about 16% of company wide sales or $19 billion. your thoughts. >> michael laid it out perfectly in the last segment. the balance sheet is becoming more and more simplified analysts can now take a cleaner look at this company and the risk/reward down sheheri fantastic. we had a buy above 15 in our capitulation model and when you have a cleansing of
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information as mr. flannery has laid out, typically it causes tremendous exit. and then on top of that, you ha the dow exit. there is nobody left to sell the stock. it is time to buy. >> so you basically think stocks washed ut, management is essentially trying to rationalize the business what are the pitfalls? because i can imagine it looked line of scrimmage t like the stock was getting washed out >> just do a simpg cle calculatn amount of shares in the come to jesus moment and then look at all the analyst reports. jpmorgan analysts had this right. sure there is some down side, but the risk/reward, maybe have 10%, 20% down side, but the up side potentially 200% the next five years or so >> and if we get another dividends cut, how do you expect
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investors to respond especially in the rising rate environment >> it is almost like the trump stock. i think investors are somewhat numb to the bad news over and over again and so many analysts have projected it so what is priced in once you have had the dividend cut in the fall and recent cuts, a lot of negativity has been priced in. >> and so what does it tell us, a lot of industrial stocks have benefited from this willingness to believe, right? we think that boeing is going to be growing for multiple decades at a time. and ge has been in the penalty box for this period of time. is the market kind of correct in quarantining it for a while? i guess i wonder what the new story will be with regard to ge. >> we don't know how big of a piece of the business it will be, but one of the themes will be electric vehicles globally china is in a very bad spot their air quality is very poor
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the amount of electric vehicles that are being sold in china is up maybe 6% the last three years. so there is a need for electricity and a buildout of a network. and ge has that in their golf bag about that so that is an area where electric vehicles and electricity production. >> but with these trade shares escalating, it is industrials that have been put under immense pressure these stocks seen as exposed to china perhaps more so than consumer staples or health care. is that move justified, the underperformance we've seen in industrials given what we're hearing on the trade front >> i would agree with are talki cheap spot relative to growth. probably one of the second cheapest next to 1999. industrials i think you are
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talking about 13, 14 >> versus the market which is -- >> 16. >> and true value like staple, you are down at like 13, 15 times earning. so those are the places you want to rotate into >> do the emerging markets flash to you as a contrarian opportunity or is it still not quite? >> i think that the fed has a big number so behind the scenes, yellen fed put forth this balance sheet reduction. so this is the most important i think data a coming at us. in september we're supposed to go to 50 build a month of balance sheet reduction. and the current balance sheet reduction has obviously led to emerging market capitulation so a good chance the fed softens their policy path in the future and that will create a great bid. >> clear the way for emerging markets. >> larry, thank you forjoining us we'll continue to watch ge
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good morning stocks looking to rebound from yesterday's selloff as investors try to decipher mixed messages from the white house over its trade policy and tim cook sounding off on data a privacy and immigration we'll bring you those comments and is an era for on ge? it is being replaced by walgreen's on the dow jones. it is tuesday, june 26, 2018 "squawk box" begins right now.
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good morning and welcome to "squawk box" here on cnbc. we're live from the nasdaq market site in time square joe and becky are off today. sitting in with us, steve grasso good to have you here. >> thank you for having me >> on a wild crazy situation >> crazy markets >> right now >> not this morning, but yesterday. >> it was back and forth u.s. equity futures at this hour, a little bit calmer. dow would open higher by about 17 points. s&p would open flat. nasdaq would open higher by 16 1/2 overnight in asia, we saw selling the shanghai composite closing in bear market territory, down 20% from its high set in late january the nikkei however higher by just a few

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