tv Power Lunch CNBC August 10, 2018 1:00pm-3:00pm EDT
sky and so you want to be mindful of risks that could spill over to the real economy i don't think this is one of those. it could, but i don't think this is one of those. >> you've got to look at the crowds there gathering in istanbul you've seen the upset in the lira today, maybe some spillover certainly in the euro. "power lunch" will follow the global market story and that begins right now. i'm cup tessa brewer, fears about turkey's financial crisis raising alarm bells about possible contagion into other markets. what does this mean for the american economy, the banks and the mighty greenback. plus president trump piling on turkey's troubles as relations between the two countries get worse. he's authorized the doubling of steel and aluminum tariffs the fallout from it straight ahead. and rising rates, a low supply, soaring prices why the housing market is about to feel a whole lot of pain in the second half of the year. "power lunch" starts right now
welcome to "power lunch. i'm courtney reagan. turkey's turmoil bringing out the bears. today's drop wiping out the dow's gains for the week and the month. the nasdaq breaking its eight-day winning streak the emerging markets getting crushed too. turkey, russia, argentina, china, all of those countries in an official bear market. but the real action is in the currency and bond market we'll have much more on that in just a moment. hey, bill. >> hey, courtney i'm bill griffeth. we have all kinds of angles covered for you. we have michelle caruso-cabrera on exactly what's been happening in the last 24 hours, seema and kayla tausche covering the political angle and steve liesman will tell us how much or how little turkey matters to the u.s. economy michelle, start us off. >> well, the turkish lira plunging today, bill, in one of the worst currency selloffs
we've seen in decades. at its worst moment it fell 20%. on wednesday one u.s. dollar cost 4.5 liras today it costs 7 liras still very bad poor economic policies have been pushing the turkish currency for months but the sell-off got much worse after the turkish leader erdogan said the country is at economic war and he told his followers if anyone has dollars, euros or gold under their pillows, they should go schapg it for liras at banks. this is a national domestic battle investors took that to mean that he's not going to constitute economic policies to institute the situation. his finance minister said all the right things, tighter monetary policy, independent central bank, but the market clearly doesn't believe a word he says and we are seeing that as well. president trump, by the way, is
angry at erdogan for not releasing andrew brunson from house arrest he's accused of spying we'll have more on what president trump had to say as a result of all of this coming up later from kayla tausche but first let's setalk to seema mody >> i don't know about you but i vepgt spoken to one investor who said now is the time to buy turkey there's way too much working against it. >> you might be catching a falling knife is the old saying. >> to your point, u.s. markets are responding in a strong way we're looking at the industrials down about 191 points, both the dow and s&p now on track to snap a five-week winning streak financials faring the worst. stocks here as well as in europe have come under pressure amid these contagion fears. take a look at this chart. traders worried that turkey could pose global systemic risk
to the financial system with its external debt as a percentage of gdp above 50%, one of the highest in the world, makes it harder to pay that debt off as its currency, the lira, weakens. materials, financials leading the u.s. market to the downside. energy and utilities faring the best certainly a defensive tone heading into the weekend it's worth noting the vix also on the rise just at 12 but up about 14% in today's trade gold, which is lagging this year, down 7%, is also spiking today. we also got another read on inflation this morning showing core consumer prices hitting their highest levels in a decade, putting the federal reserve on course to continue raising rates. the question is how international risks like turkey complicate this ability to continue tightening. guys. >> all right, thank you. and president trump piling the pressure on turkey, hitting them with massive tariffs kayla tausche joins us from washington with more on that kayla.
>> a little salt in the wound from the president citing relations with turkey that are not good he moved by tweet to double steel and aluminum tariffs for turkey alone to 20% for aluminum and 50% for steel. it was an order via tweet, up accompanied by an official statement by the department of commerce who has been executing the steel and aluminum tariff strategy turkey's trade minister just last hour spoke out saying that this move that the president is instituting is against wto rules. the u.s., you remember, slapped initial metal tariffs on turkey in late march. turkey retaliated in late june with other european nations. the u.s. trade representative has been studying turkey's market access here in the u.s. since then amid tensions between the two countries. the white house in a statement said that president trump has, quote, authorized the preparation of documents to raise tariffs on imports of steel and aluminum from turkey section 232 tariffs are imposed
on imports from particular countries whose exports threaten to impair national security as defined in section 232 independent of negotiations on trade or any other matter. well, that usage of tariffs as a blunt negotiating tool continues to have criticism between lawmakers. rob portman says that the misuse of 232 could result in the loss of the tool or repercussions from other countries lots of lawmakers have potential legislation to try to keep the president from doing things like this, but, courtney, it remains to be seen whether those tools can be effective and whether the president's tweet will actually be carried out by the commerce department we still have yet to see that. >> very interesting stuff. we're following all of these developments very closely. thank you very much. well, the markets selling off today on the turkey turmoil, but how much does turkey really matter to the u.s. economy this is a key question, steve, we've been asking.
so disstill it for us. >> some of their problems are of their own moaking. political alpha saying turkey's downward trajectory won't end any time soon. turkey has 17% inflation the central bank is not independent, a high percentage of foreign debt and a president who thinks high interest rates causing inflation. it's one of a series of unconnected global fires that are smoldering, including u.s. trade disputes with nearly all of its major trading partners that have led to global tariffs. the u.s. central bank is way out far in front in tightening compared to other developed nations. all that has combined to strengthen the dollar. that puts pressure especially on emerging markets, like argentina and russia, especially those with weak fiscal positions now, the fed, it's warned these
countries for years that it would tighten, urged them to get their fiscal houses in order some did, some didn't. a big difference now, a u.s. administration that does not see its role anymore as being responsible for global stability. and you see that this morning with the tweets from the president. here you have a major ally, a major -- they have tactical nuclear u.s. weapons there and they're experiencing a financial meltdown and the president pushes them further with tariffs. maybe he'll get what he wants out of it and has other reasons for doing it but clearly he doesn't see the role of the u.s. as fostering global financial stability. >> that would be the understatement steve liesman, thank you very much so how much of a risk is turkey to the global markets? bring in ron insana and david wessel, a senior fellow at brookings. gentlemen, welcome david, history repeating itself here what shoe are you looking to drop next? what next, do you think? >> well, i think you're right
about history repeating itself it begins to look a little bit like the asian financial crisis where we had a series of unconnected events, thailand, brazil, russia, that contributed to a lot of global upheaval. one important thing to watch is what happens to the euro that's a symptom of the contagion. apparently a lot of european banks are exposed to turkey and that's taking a toll on the euro and the dollar is going up as a result, as steve said. >> ron, i don't see anybody trying to contain this yet everybody is just pouring kerosene on the fire. >> and the president is lighting the match. >> erdogan as well. >> absolutely. as david was saying, there is some historical press denting. you can go back to 1994, mexican peso crisis, '97 with asia, '98 with russia. all of this began with the risk of the u.s. federal reserve tightening interest rate policy and the dollar going up. of that the first end of the fuse an things began to spiral
out of control the next couple of years i think this gets bigger for two reasons. number one, the president is using a blunt instrument to deal with every problem he has with every other country. that's not good to start with. number two, with the dollar strengthening, when we see these emerging market crises, even though people talk about idiosyncratic risks one country to the next, it never works out that way you ultimately have something that's global as opposed to country by country. >> speaking of risks, seema pointed out a key fact turkey has external debt as a percentage of its gross national product of 50%. >> in the asian crisis, all of them had dollar determined debt. it leads to higher inflation and a collapse in the economy. we're likely to see that given what we've seen in venezuela and some other countries you can see that in turkey again, a nato ally, as steve pointed out, that could be a very critical situation. >> david, what about emerging markets.
you had wall street really pushing this as the next go-to growth area after domestic stocks ran through their cycle what's the impact on these other nations? >> well, there's been a lot of cash flowing into emerging markets, much of it hunting for yield because rates were so low in the united states this is the kind of the circumstance where the money starts to flow out that's what happened to argentina and it could happen again. one really different thing this time is what you've mentioned before is usually the president of the united states is not trying to make things worse. he's making things worse, and that makes it hard to see how the international monetary fund can come to turkey's rescue. turkey doesn't want the conditions that the imf would put on it and it doesn't sound like the president would support them, so that could make this go on for a lot longer. >> an one thing if i could on em and wall street, right, we've seen a lot of presentations -- >> emerging markets. >> emerging markets, i'm sorry we've seen a lot of presentations since the start of the year where wall street
analysts was saying the u.s. is getting long in the tooth, this economy is going, the fed's tightening usually around this time in the u.s. economic cycle, emerging markets outperform for three years beyond the united states if you challenge that assertion, a lot of analysts would tell you that you didn't know what you were talking about and history as your guide would suggest that this emerging market rally should continue for quite some time they downplayed the risks of tariff increases, they downplayed fed risk, dollar risk, and they have been dead wrong all year long. >> david, what about fed risk? what's jerome powell thinking about all this right now at the last meeting it was pretty clear they intend to raise rates two more times, but that's only going to add fuel to the problem here as well if they continue to do that, won't it? >> right obviously the fed will take note of what's going on in the rest of the world, but they like to say, an i think they mean it, that their first concern is the united states. so unless this gets a lot worse, they're likely to stick to their tightening after all, we're beginning to
see signs inflation is picking up the interesting parallel from the late '90s was when alan greenspan was chairman, they flinched and cut rates in the u.s. greenspan said at jackson hole the u.s. could not be an oasis of prosperity in a troubled sea or something and it turned out to be wrong, that the u.s. actually was not hurt by the asian financial crisis so i suspect they keep going but i think another really important thing to look at that's different this time is how big china is when we talk about emerging markets, china is the big emerging market and they seem to be slowing down. that's where the trade tensions could be the most severe with the u.s. >> real quick, david and i were both on the fed at that time during the asian currency crisis the reason that the u.s. didn't get hurt is the fed responded in the asian crisis not raising rates after long-term capital in russia by cutting rates and extended the durability of the recovery so they didn't just flinch, they acted and helped protect the u.s. from the contagion. >> hopefully somebody in power
is watching history as well. >> they're all watching cnbc. >> that's a good thing too thanks, guys. jackie d., how does it look? >> u.s. oil drillers added ten rigs to take the total up to 869. that's the highest level women seen since march of 2015 so the market seeing these additions for a second week in three. ten rigs is a substantial add. i can't recall a double-digit number in quite some time. the danger is that the market's supply/demand balance is tight right now so turn the faucet on too much and prices will move lower. you can see we're trading over a percent higher today, guys back to you. well, stocks selling off today, ten of the 11 s&p sectors are lower right now. is turkey really enough to derail the march to new record highs or are the markets finally giving in to all the worries that have just been hanging about? that's coming up on "power lunch. are you ready to take your wifi to the next level?
welcome back to "power lunch. add turkey's currency turmoil to the wall of worry for investor is this a contained event or will it spill over into other markets? joining us is the president and chief investment officer of castle management. jerry, i want to start with you and start with that very question that we started with. this is going to be a grease or more along the lines of venezuela, where there's turmoil but it is a bit more contained when it comes to the u.s. markets. >> my guess is two things on that number one, this is one more event. we've been dealing with five or six of these geopolitical issues now for some time. the difference this time is we're now deep into the trade conflict as well and this is an interesting intersection of
those two themes, particularly from the standpoint of the united states. now you have the potential risk bubbling up really across a wide spectrum of things, particularly those things that affect the united states. will we, for example, start demanding a higher risk premium for u.s. stocks and a lower risk premium for bonds. that was clearly the action today. but more interestingly is what about these markets for commodities, oil specifically, that are much closer to these areas and probably haven't really been touched with respect to the risk that a different economy or different trade barrier could affect and that's what i think as an investor one has to be close to that and appreciate that the potential for an oil price flare-up here is also part of this one that's probably not discounted into the market. >> that's a good point to raise. wti crude is higher by about a percent. steve, we've had a really strong earnings eason we have a little bit more to go
with some key retail stocks left, but by and large, very, very strong. jerry mentioned we've had a bunch of trade and tariff worries and this situation in turkey is one more thing so far earnings have been paramount. that's what the market seems to care about do you think that that is the right way to think about it, that earnings strength can absorb all of theseother problems that are bubbling up, or is this something different when we're talking about what's going on with turkey and the potential spillover? >> i think it certainly makes it a lot easier to deal with things when you've got earnings growing 25%. our comment has always been when we look at these events that bubble up, do they impact earnings, do they impact interest rates, do they impact inflation? most issues do want carry the potential to do so this one may and we'll have to see. in order of who's impacted most, obviously turkey is feeling this i think emerging markets are feeling this there's some risk because there's a lot of companies with
high levels of debt that's u.s. dollar debt. europe has some risk through their banks. i think relatively speaking the u.s. has the least risk of those four groups. we'll see how this plays out, though i think a breath and a little perspective over the weekend won't hurt us. >> reuters is reporting that turkey's trade minister is quoted as saying he's imploring president trump to return to the negotiating table, that this can and could be resolved throughout cooperation. >> if you're choosing where to allocate your funds and you have someone in the white house who's using a mallet to whack a mosquito, how do you factor that into where your money should go? >> yeah, you know, it's interesting. this is another example of economics really taking a back seat to politics this whole event was precipitated by a diplomatic row. i think what you have to look at when these things pop up are who has the most vulnerability and who has the least. again, that big debt that's denominated in dollars, that's a
risk so we've been underweight that part of the market for most of the year in terms of europe, there's some exposure to the banks, particularly in spain. you've got to be a little bit more cautious there. in the u.s., though, again you have that strong earnings back grounding. if anything, we might see the fed be a little less aggressive on rates it's not a bad thing it's not to say we won't be impacted by this at all, but of the constituents, we're probably the least impacted. >> jerry, i want to give you a chance to give us some of your investment advice, particularly in the oil patch i know you've got your eye on a couple ofnames there. >> i would make sure you have some exposure there. the outlook for the oil markets over the next 18 months in particular are much tighter than i think people give credit given that any type of issue here in the middle east in particular could set off a much bigger move in oil, you should own names like oxy, eog,
pioneer, as not only a growth name and a growth opportunity but also as a way of hedging against the types of risks that don't seem to be going away. >> got it. thank you very much, gentlemen appreciate you joining us here on this summer friday. >> have a good weekend. >> you too. 23 minutes in and we haven't even mentioned tesla stock yet, but now we will. it's near where it was before elon musk's tweet about going private. but the company is still putting the pedal to the metal to consider that proposal we'll have the latest on that. plus tiger woods will be fighting to make the cut at the pga championship under way in st. louis. but just him stepping on the course has been a huge boon for golf equipment makers this year. we'll talk to the ceo of feidgestone golf about the tiger ey sponsor tiger now they're next on "power lunch."
tesla shares turning around today, they're now higher, but still close to where they were before elon musk's infamous tweet about taking the company private that he posted on tuesday. the board moving ahead right now at tesla, considering his going private proposal phil lebeau joins us with more on this story. >> bill, we don't have a whole lot of details about what the board might do next, but the board as we understand it when it meets with financial advisers next week will be discussing setting up a process for evaluation of potentially tesla going private. so it's unclear if there's actual details that will be
discussed or if this is more, hey, let's set up a process so if this is a possibility, here's how we go about resolving it the tesla ceo, elon musk, is expected to retain his own bankers and potentially recuse himself from any discussions that might be held by the board as a whole as i said at the top, it is still unclear if there is an actual privatization plan. is there secured funding who is it from has there been an offer sheet extended these are all details that people are hoping will come out in the next week in terms of the largest shareholders at tesla, remember, elon musk owns one out of every five shares. t. rowe price, fidelity, baillie gifford, tencent we have no comment from the s.e.c. or tesla regarding what y inquiries the s.e.c. has made regarding the tweet on tuesday or other e-mails that elon musk -- or other tweets that elon musk has put out regarding production or sales targets. so, bill, we go into the weekend
with more questions than answers. >> indeed. phil lebeau, thank you now over to sue herera with our cnbc headlines for this hour >> hello, everyone here's what's happening at this hour canadian police say they have onesuspect in custody followin a shooting this morning that left at least four people dead in eastern parts of that country. according to officials of the four people killed, two were police officers. no names being released at this time. gaza's health ministry says 30 palestinians were wounded in clashes near the gaza/israel border earlier today protesters burned tires along the border and israeli soldiers responded with live fire and tear gas the protest comes during a recent flare-up of violence between israel and hamas. former "apprentice" contestant omarosa newman has new allegations against president trump in her upcoming book titled "unhinged. the former white house aide says the president was caught on a
microphone saying the n-word multiple times during the pli filming of "the apprentice." the highly anticipated debut of giants running back saquon barkley went off just as new york fans had hoped. the second overall pick in the draft entered the game against the browns and quickly made a 39-yard statement run on his very first carry he finished the night with 43 yards and four carries you're up to date -- >> yes, but they still lost to the browns. >> details, details, details >> wasn't that like their first win in four years or something >> they won all four preseason games last year. preseason. >> this first preseason win, i hear they're having a parade today to commemorate that. >> oh, stop! >> there was a football game >> yes, barkley did do well. but we lost. >> he did so well. >> see you later, bill. >> thanks, sue gosh, football season is here. i'm excited.
we've got to shift gears to the currency market and the turkish lira plunging following comments from president erdogan and new tariffs from president trump. here to break it all down, the managing director of fx strategy and a cnbc contributor so you may have woke up this morning and thought do i actually care about the turkish lira but you should because of the ripple effects it has through emerging markets but also what it does to the dollar. can you walk us through where if you are a u.s. investor or investor in any of these other countries why this matters to you and what's most important? >> first of all, erdogan is discovering that the one market in the world you cannot bully around is the currency market. a lot of guests have already said this is very similar to the latin america crisis or asian crisis of '98. what's different here is that it's a self-inflicted wound. turkey's economy is actually growing at 2%, but because of all of these political stand-offs between the trump administration, it's really created a huge capital flight.
now, the key thing of why this could be so important for the rest of the world is the following. it's having a ripple effect first and foremost in all the emerging market nation currencies so the ruble is weaker the one thing that your prior guest just mentioned is if the price of oil goes much higher, let's say we have further sanctions against iran and we exacerbate our relationship against iran and that causes oil prices to go to 70, 75, oil is priced in dollars. all of these emerging nation markets are buying oil as a matter of fact, turkey has a huge appetite for buying oil therefore, they're going to be very constrained to do anything else because their energy needs are going to take a lot of their hard currency reserves so you could have pressure across all the emerging market nations which could spill over the euro is very, very vulnerable because european banks are exposed to turkish debt but also because of export
issues they simply -- europe is a very export-dependent region. if all those emerging market nations contract, it's going to cause a pall, global growth pall across the world. >> you mentioned the euro. if you were the ecb and you're going through this monetary policy unwinding of qe, what do you do here? when do you act? what are you thinking about today? >> you're thinking about the fact i have to stop this whole normalization process because i don't know exactly how bad the balance sheets are going to be the rumor in the currency market today was that at 7 or higher, the whole turkish banking system pretty much issin solve in saus. we don't know if that's true but currency markets will always push it to the extreme i'm very confident they're going to try to push it to 7 to see how strong they can do it because erdogan has done nothing to fight it. they need to pretty much institute capital controls and they're not willing to do that,
so you're going to see the crisis just exacerbate as we go forward. i think it's not over yet. >> i was goings to very quickly, neither president trump or prime minister erdogan are likely to blink. that's not their style. >> no. >> what do you think is going to happen next? >> i think the crisis will get worse and i think it could reach some sort of a serious point where the issues could be much more than simply local in other words, it could have a contagious effect. we could see the euro go lower this can -- the u.s. people don't understand how bad this could hurt the u.s the whole trump administration stronger is that it wants to increase our exports this is the worst possible thing for our exports and i think you'll see that in the second half of the year. >> got it. thank you so much for breaking it down for us we'll talk to you again real soon. president trump adding turkey to the list of countries targeted with tariffs. we'll talk to the head of a company who makes leather bags in america who says his business is picking up because of tariffs on similar goods from in
and on almost every one of those calls pg&e is responding to that call as well. and so when we show up to a fire and pg&e shows up with us it makes a tremendous team during a moment of crisis. i rely on them, the firefighters in this department rely on them, and so we have to practice safety everyday. utilizing pg&e's talent and expertise in that area trains our firefighters on the gas or electric aspect of a fire and when we have an emergency situation we are going to be much more skilled and prepared to mitigate that emergency for all concerned. the things we do every single day that puts ourselves in harm's way, and to have a partner that is so skilled at what they do is indispensable, and i couldn't ask for a better partner. let's get a check on the sell-off at this hour. the dow is down more than 200 points turkey's crisis, currency crisis specifically worrying investors
and stocks having their worst day of the month we are at least off session lows the dow was down about 245 points earlier, down 204 now today's losses still wiping out the dow's gains for the week and the month. the nasdaq also breaking its eight-day winning streak down half a percent the actions in the currency and bond market in particular today, turkey's lira falling 15% against the dollar yields on the ten-year hitting their highest level since 2010 bill >> yes, yields on the u.s. treasuries also on the move. rick santelli tracking the action from the cme. boy, if they didn't like the yields at the treasury auctions earlier this week, they really wouldn't like them today, would they >> yeah, but on the other hand if you bought into the auctions, you are one happy camper as the prices move dramatically higher. look at a 2-year note on the day, it's down 5, on the week
it's down 4. that's since july. that's the weakest close since the 20th of july look at a 10-year also from july minus 6 on the day, minus 8 on the week that means we've had a lot of flattening on the week we're back to 26 basis points, 10s minus 2s, the close would be the lowest since july 19th look at the dollar index just flying into that period and it really makes you question, there's a lot going on besides interest rates it's a flight to safety issue. dollar hovering at 13-month highs. let's look at the dollar/yuan basically the highest yield since 2017 and this is a biggie, really gets to the heart of what's going on and how the lira and turkish relationships with many european institutions is a big deal look at the euro versus the dollar it has broken through that may 29th low we were paying close attention to should it close it would be the lowest close against the green back since june of 2017.
contessa, back to you. >> thanks, rick. from new tariffs on turkey to the impact the trade war with china has on businesses at home. today we want to bring it back to the president of duluth pack, a minnesota company that's been around more than 130 years they make handcrafted hunting, shooting and outdoor gear and a lot of the products are made from leather now, president trump has targeted leather as part of his fight with china joining us from minneapolis is duluth pack's president. >> great to be here. >> among the list of $200 billion worth of chinese distinguigoods to be targeted, you've got tanning and drying extracts, raw hides and leather. does any of that affect you and your business? >> that's not going to affect us because we purchase all of our hides right here in america. all of our cow hide comes out of oklahoma and nebraska and then is tanned in milwaukee and our
buffalo hide or bison hide is raised in north dakota and tanned in milwaukee as well so that's where we purchase all of it and we're able to track it back so we're buying american raw materials. >> in that case, what has the trade war and the tariffs on leather goods from china done for your business? >> right now we haven't seen any impact whatsoever. we haven't seen an increase in our leather costs and so it's steady as it goes for us we're not -- definitely not going to knee jerk to anything that's going on. if there's some price increases, we will look at those as they come along so far we haven't -- >> are you seeing an advantage in the marketplace in terms of competition? does this give you a leg up against chinese companies sending their goods here >> you know, it's not as much as a leg up as if people are looking at buying american quality. and that's what our company is about. so it's really the quality statement that is really the core of who we are
people around the globe liking to buy quality products that are made in america and then we can employ more americans making it. so the tariffs are not going to impact us maybe as much as they might some other industries, but we're definitely not going to knee jerk react to any of them over 136 years of being in business right here in minnesota, we've been through a lot and we've been able to sustain a lot. >> i can imagine i'm not surprised that you're not seeing a higher cost for the leather at this point. it's a little early in the process, but if this goes on long enough, don't you think your suppliers will start to raise their prices if they do, what do you anticipate your decision will be will you eat the costs so you can keep the prices low for your customers or are you going to pass that on to them >> it depends where you are with it so the first thing is that in our manufactured products, about 80% of everything we do is the labor component, the people that make our product so you're really talking about
20% of it. so we will make a decision on whether we can eat that in our margins or whether that would need to be passed on when we get to that point. as i mentioned earlier, we're not going to knee jerk to any of those changes that come along. we've been through a lot we were through the economy of ten years ago and we were able to withstand that, in fact grow our company through it because we really stick to our story of made in america, american employees and american quality and that's helped us sustain through many, many years. >> a lot of things get associated with made in america, american quality is higher cost. you said that 80% of your cost is the labor how much are your products compared to competitors? meaning if there is some issue down the road with tariffs and you have to pass along that cost, is your consumer going to notice a difference? are your products that much higher in price at the retail level than, say, a competing product that comes from china? >> we are. so actually when it comes to a
competing product from china or some of those countries, we're really not a direct competitor, even though we might both make a duffel bag we're really not targeting the same customer, because we're targeting a customer that really cares about made in america, cares about a premium bag that has a lifetime guarantee and has an american flag in it and is quality. so really the actual customer is a little bit different even as we export even to asia and we're growing in asia, wee targeting the customer who cares about those values that we have, and those are really our core values if we need to pass it on, we definitely will pass it on if needed but again, we're not going to react until we see what comes down the pipe on it. >> okay, tom sayiega, thank your joining us. >> thank you for having me again. nike getting out of the golf equipment business in 2016 now nike golfers are dominating the tour's biggest events.
tiger woods used to use the nike ball now he drives with bridgestone how big of a boon has that been to briesnedgto golf? we'll finding out, coming up on "power lunch." your brain changes as you get older. but prevagen helps your brain with an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. healthier brain. better life.
nike got out of the golf equipment business two years ago but still makes golf apparel maybe when you look good, you play good. golfers wearing swooshes have won the first three majors this year jackie deangelis is joining us with more on that. >> i'm definitely of the belief if you look good, you play good. yes, nike ditched its golf equipment golf business in 2016 because sales were underperforming but it stayed with the apparel and footwear businesses and its sponsored athletes are winning they are set to sweep the majors if one of their golfers wins the pga championship in st. louis this weekend the masters, it was patrick reed the u.s. open, brooks koepka the british open, molinari and maybe losing the
underperforming equipment business and focusing elsewhere was actually helpful to win to nike a simpler, well priced focused assortment has driven positive comp sales at the pga superstore men's division up 22%, women's division up 8%, footwear up 38%. even without tiger woods winning anything, the company can make history and will garner more attention on a business front if a swoosh-wearing player can drive it home. looking at the most recent leaderboard, gary woodland and kevin kisner, they're in the lead the top nike athlete, that's brooks koepka, finished his round today in third tiger is tied for 62nd he tees off any second now. >> did you ever think you would say that also, the grammar golfer wants me to say if you look good, you play well. >> it's called dressing par and shooting 100 >> i ran into justin rose in the
green room at "squawk box" and i asked him about apparel and he said, you know what, it's actually an important part of my game how you look, how you feel when you're out there, it does make a difference so you dress for the conditions as well. >> i like it, good advice. >> we're going to move on because dan murphy is really agitated that we're talking about nike so much here. when they got out of the game for equipment, golf equipment sales are up 8% reaching $2.5 billion according to the npd group. bridgestone golf is one of those companies getting a major boost, and they have tiger woods now to thank for that, with tiger now playing a jam-packed schedule after recovering from his latest back surgery bridgestone is seeing off-the-charts increases in web traffic, social engagement and, most importantly, in sales joining us, the aforementioned dan murphy, who's the new ceo of bridgestone golf, even though you've been there on and off for a while. but signing tiger, it would seem
to be a no-brainer but there was some risk in there that he wasn't going to come back at all, right >> we didn't really know the whole golf world has benefited so much from his return and we're so fortunate that when he came back or when he left nike, he had freedom to choose whatever he wanted to choose he wanted to play his very, very best we just happened to make the very best product in the market and he chose us so we're thrilled with that. >> did you pay tiger money, early tiger money or are you paying late tiger money for him? >> we're paying tiger some money, a very appropriate amount of money the effect of tiger is just fantastic. like you said, our sales are up, engagement is up. >> can you be more specific about your return on investment? >> probably five or sixfold i would say so far relative to the amount that we're paying him, which we can't disclose. appreciate the question on that. but, no, it's been a wonderful relationship with him. i saw him last week.
not only does he returnin, he returns with a whole new attitude. >> he's a different guy. he's more relaxed, more open to the golfing public just kind of a nicer guy. >> well, he's thankful, right. he didn't think that he would have this second chance to make another run at the -- at jack's major record and here he is chasing a major down today so he is very thankful. >> how has technology changed your company technology in golf specifically and the products you offer and sfleel bridgestone has always been the technology leader all the way back from bellerive, 1992 nick price won a bridgestone product called ev extra span, a solid golf ball when everything was wound golf balls, an example of our technologically advance. and we have carried that to the modern day all the products with technologically advanced >> as you well know jack nicklaus saying the golf ball is
tao juiced and needs to be dialed back. because players are hitting it too far right now. >> there is this organization called the usga. and we have a very close relationship with them and we kind of leave it to them to figure that out they make the rules we follow them. >> would you be willing for there to be a ball for pros and ball for hackers. >> one of the things that makes golf unique is we play the same courses, same equipment and so we wouldn't think that would be positive for golf. >> also it's about knowing your own strength you know, like if you need to whack the ball whack it. if you a gentler touch choose a different club. >> and customizization is big idea we promote. not all golf balls are the same for all folks. we have a big competitor with a one size fits all concept. we talk about how different golf balls fit different folks. a softer core for somebody swinging slower and harder core.
>> what about the remote control if you start to slice. >> a drone golf ball. >> the voice activated one get out of there. >> that's coming i'd love to hear what jackic nicklaus thought of that thank you. >> i got a gift for you. >> these are nice. these will pass these around the three us play golf only one of the three as has a hole in one in the career. >> you have a hole in one. >> you don't need the extra. >> i lose a lot. >> thank you so much troubling signs for the housing market why the rest of the year could be rough and speaking of issues las vegas casinos reporting weakness how serious are the problems can vegas ermeovco the odds? coming up on "power lunch. ♪ ey greeted me as they always do. sergeant baker, how are you? they took care of everything a to z. having insurance is something everyone needs,
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you'll only pay $4.95. are you ready to take your then you need xfinity xfi.? a more powerful way to stay connected. it gives you super fast speeds for all your devices, provides the most wifi coverage for your home, and lets you control your network with the xfi app. it's the ultimate wifi experience. xfinity xfi, simple, easy, awesome. two new reports out this week showing the second half of the year could be rough for the housing market diana olick joins with us the story. hi, diana. >> hi, contessa. home sales slowing for month and now we get real data as to why first and foremost affordable fell to the weakest in a decade that according to the national
association of home builders thanks to higher home prices and mortgage rates just 57% of the homes sold in the quarter from affordable to americans in the median income that's down from 62% in the first quarter. that's nationwide but in some markets the situation is worse most of the least affordable markets are of course in california but in boston, seattle, miami, portland, oregon and reno less than 40% of the residents making median income can afraid the median priced home afford ability is likely behind a drop in-housing sentiment among consumers. a new report from fanny mae showed few americans think it's time to buy or sell a home fewer said they felt sure about keeping jobs if the future none of this bodes well for housing in the second half especially if mortgage rates move higher and that would weaken affordable further. >> bringing the good news on friday thank you so much diane aire appreciate aire.
i'm bill griffeth here is the men u this hour. turkish as crashing currency rippling through the markets here and abroad. could this be the spark that unsettling the wall street waters plus down on the farm, president trump's escalating trade war has taken a toll on the mid-west but we talk to a soybean farmer who doesn't want the aid he wants the trade and the big retailers are on the clock now. the last big group to report earnings is the consumer still shopping and spend sng the second hour of power starts right now welcome to power lunch i'm courtney reagan. the financial turmoil if turkey going taking a toll. hitting session lows atsz hour the dow jones industrials down
by 250 ponts good for about a% and nasdaq composite down about.75 of a% snapping the winning strategic slamming the emerging markets too. you have turkey under russia russia, argentina, china all in bear market territory falling lower here today but the biggest moves in the currency and bond market yields on the turkey two-year note soaring to the highest level since the 2008 crisis and the currency sinking double digits against the dollar. >> let's begin with turmoil in turkey in the markets. first breaking news from steve leastant what do you have. >> the u.s. budget deficit for july, 77 billion just about on track with estimates that compares with this time last year, july 2017, shh 43 billion. it's almost doubled. nearly doubled receipts down at 225 billion outlays up a whapg 10% at 203
backup it seems like the 10-year is more concerned with global contagion than the supply or deficit of the united states right now. as they say deficits don't matter until the bond market says. >> let's go back to what's really rattling the markets globally today michelle caruso cabrera and mike santelli live at the new york stock exchange. >> the president kicking turkey when it's down by doubling the steel and lum in number tariffs take it away. >> he announced that via tweet he saw it and did as you saw weekness in the lira he is mad at the leader of turkey president erdogan because president trump wants a evangelical pastor andrew bransen accused of spying. the president doesn't believe it and wants him out. erdogan refused to do so what's interesting him about him
doubling the tariffs against turkey he might recall steve bannon told uts at the delivering avila conference that president trump actually admires people like erdogan. >> i think he likes putin. it appears to me he likes put zbloon he graph tats to personalities that are strong personalitities. he like president xi he likes erdogan who i think is the most dangerous guy in the world. >> that's an intriguing comment as well. one of the reasons mike why the markets are so concerned is this one data point, borrowing in dollars, emerging market companies -- so companies that are in emerging market countries have borrowed $3.7 trillion. that's double the level since 2010 we have a full screen built for this they borrow in dollars but they don't earn in dollars their ability to pay back. that's why people get frightened >> when the value of the dollar
goes up it yates increasing escalation of the stress that's really the script that you would have put out there to say okay what really does cause the markets to get very upset? and it would be this it would be stress in emerging markets causing a big dollar rally creates a little bit of a solvency problem with companies and governments borrowing in dollars. obviously right now that's several steps down the line. >> right. >> and it's not financially speck speaking emerging markets aren't as restricty as years ago bau they are not borrowing as much as. european financials are down 3 percent. u.s. financials down 1.2%. there is this spectrum of pain that is seems like it makes sense how the market is it applying this. right now our markets -- it retina done anything to change the trends right we are back to are wrp about a week ago in the s&p 500. the volatility is up
the it's an ill liquid summer friday but all of this is in the back of the mind as the potential negative that could feed on itself for a while. >> a 3% sell off in bank is a lot but it's not the end of the world. it's more a concern about earnings >> not a panic. >> back to you. >> all right, michelle, mike thank you. we'll see you later. let's put turkey's financial turmoil in context with a man uniquely qualified to do that. former undersecretary of state for energy growth and the environment under president obama and long time former vice chair of goldman sachs international. >> thanks for having me. >> you've been through this many times before what's interesting about this particular crisis this time at this stage of it is both leaders have -- if you see this in terms of u.s. versus turkey. both lierds are piling on first. they are not trying to contain this yet, are they. >> no, in factthey are raising
the stakes erdogan is taking a very tough position and trump is -- it's been reported -- istaking a tough position on escalating the tariffs on steel and aluminum for turkey which exports both of those particularly steel so this does create more problems and i think that's what troubles the market so much. it's not just what's happened. it's the fact gnat two leaders are not trying to work out something to dampen down the problem. they're in fact taking measures to exacerbate it. >> does it fet worse before it gets better. >> yes. >> do you think somebody is going to blink how does it play out. >> we are seeing it around the world, in terms of the confrontation between the united states and china on trade where everyone seems to escalate the process. and this seems to be the case as well and this presents a problem. also a lesson, i think, in maintaining the independence of central banks. one of the problems for turkey
and see erdogan has expressed his distaste, anger at central bank rate increases which in a normal situation for another country experiencing a collapse in currency and high inflation would be the instrument of choice, raising rates. erdogan wants them not to do this the management of the situation along with the existing economic problems of turkish -- heavy turkish fence on foreign kpabl and probability they won't get as much in the future may see some exodus has raise the the problem for now and the future. >> that's what we've been trying to figure out the contagion factor and the spillover effect. we know there is some. but is the issue with turkey and particularly the effect on the turkish lira more of a geopolitical instability problem than a risk to the financial markets. >> it's a great question i mean, i think it just exacerbates a problem that has been playing the market, that is
as the dollar rises and you've been pointing this out on the show -- countries and companies that have large amounts of dollar debt find it more difficult to repay that dollar debt, to service that dollar debt and that is true with many emerging markets they're very leveraged in dollars and this makes it worse because it pushes the dollar up. pushed not only the lira down but pushed down the euro as well so this broadens and deepens the problem that many emerging countries have and that presents a problem particularly not only for the companies owing the dollar debt but the banks that lent them that money and a lot of european banks are exposed. that creates not only problems for banks but growing counterparty risk. so this does create a problem. the geopolitical issue is that turkey is the gateway for syrian and other refugees if their economy weakens you see more refugees that have been staying in turkey going to other parts
of europe if they can and turks going there creating more fodder for populists trying to destabilize governments. >> there is a lot of ripple effects both geopolitical and financial. former undersecretary of state appreciate you for being here today. >> thanks for having me. >> stocks hitting lows this hour we have angles covered for you on stocks first. mike alisyn and director of strategy on bonds. head of fixed income at alliance bernstein. i want to start with you gershon. we have talked about the bond market but focused on the quiet market it's a summer friday but seeing a sell off based on everything we learned about turkey or the last several days what does that mean for bond investors when you are in a generally -- a rate of generally increase being rates what do you do what is your strategy how did the developments change that if at all. >> i think this is a hiccup. we will see increased volatility
due to turkey. but it's important to remember -- i listened to the question you asked from a little different perspective. certainly it's in the short-term there is volatility. but if we low back at history we make way too much of these things as it relates to the global economy or what general markets are doing. think back to breck are brexit we obsessed it thought it was the bigds deal in the world. and the uk is about 3 percents of world gp. turkey is 1% of world gdp sfl if i'm investing in a turkic i'm worried. >> or the european bank. >> but were expect to bond markets this is likely a blip. >> i'm pushing back a little bit. when a hurricane is approaching people will evacuate even if it doesn't hit make landfall or it's a tropical depression by the time it gets here. we have wrung our hands repeatedly over financial cries
cries in the pastor. that's not to say this won't play out the way we fear, right. >> i don't think we are disagreeing. anything could happen in the next dumb woks we might see a lot of instability in the interconnected world you see connections you didn't think about. you think back for the financial kriez. whether did the uk bank have to do with people defaulting in texas. but we live in the interconnected world there is fallout about you if we low back back a year or two from now, and the returns of the broad markets it's unlikely to have a big impact. >> mike, to you, when we look at how this shakes out we also see a strengthening dollar, how much attention should investors in equities be paying to the currency markets right now >> well, i think part of the -- part of the answer is what has been the source of this turmoil, how much it's been driven by fed policy and recent hikes and then the expectation of further hikes. what does that do for the
interest rate back drop and that flows through to what investors are willing to pay for equities. the other part of that answer is what -- what is the earnings back drop for the rest of this year and going into next year? and does that impact, you know, financial earnings of our us banks as well as global banks and as your previous guest mentioned, the interconnectivity of the global financial system those are the things we are thinking about, first valuation as well as the earning back drop and the drivers of the. >> well president trump wants to improve conditions for the multiple national companies, trade wise this isn't doing that. >> if you watch the president so far he focuses very much on deals. and he thinks of these as sort of discreet agreements with in country and that country and he is pointing a pretty powerful weapon at the global
economy. he has to think about how far he wants to take the gamesmanship and the end goal, my speculation process pb is trying to achieve lower tariffs across the globe yes for multinational companies. but cross the globe. and ultimately that lends to stronger global growth over the next couple years if he is able to achieve that. >> there is more to dissect and we could talk about in hours and hours but we have to let it go thank you for joining us >> thank you very much. >> coming up weak earnings, weak guidance from some of the big vegas casinos, sparking fears about a vegas slowdown are those overblown. we will talk to a gaming guru and big changes at wynn resorts. one soybean farmer says a $12 billion aid package is a red flag that the president's policy is not working he joins us liver to explain
and the last to report big earnings retail. it's iorntmpta we have courtney right there. >> yes, be ready. >> just a few minutes. had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum- just to help you improve your skills. boom! mad skills. education to take your trading to the next level. only with td ameritrade.
are you ready to take your then you need xfinity xfi.? a more powerful way to stay connected. it gives you super fast speeds for all your devices, provides the most wifi coverage for your home, and lets you control your network with the xfi app. it's the ultimate wifi experience. xfinity xfi, simple, easy, awesome. shares of. wirn resorts down more than 10% since the start of the month despite settlesing a longstanding feud with its shareholder elaine wirn adding a gaming executive to the beard and finally adding to the ceo to the board and wrapping up an investigation.
the massachusetts gaming commission is watching all the moves as it reevaluate wynn's gaming license. >> that has always been a critical priority for us as we assess what we are doing in response we have always said that the investigation of the board by the board, i mean, and how senior management and the board deals with this is a very high priority to us >> howard stetz has covered wynn resorts in las vegas for years he is the executive editor of gaming reports good to see. >> you thanks for having me on. >> what do these moves say about the future of wynn resorts. >> a bunch of the moves they did this week, really, wynn is sending a message to the investment community and more importantly for the regulators that they put a cover on this fire that has brewed over the company since february, since steve wirn's ouster. and the big event this week were two really, the bringing on of phil satry he will be the chairman of the board after the
first of the year. he is well respected spent 25 years with heraas and the chairman of ite. he adds credibility to the company. he is well-respected and at the same time they have this lock down agreement with elaine wynn where she will -- she will be a silent partner in a sense until 2020 she will vote her 10% or so shares of the company along with what the board wants td. she is not making changes. she is not disrupting things opinion and actually fill tatry was the person she wanted and the brody has changed. six new members since april. >> and yet the stock is not reacting to this sort of security moves that are company and it's not the only casino i'm looking at mgm off 8%. caesars off 13% month to date. the ceos of all companies had
guidance for the third quarter that blamed lack of scheduled events in las vegas. they are up against comps with a big fight hard to compete with that but what's going on in las vegas? is there a problem >> no, i mean you mentioned the big fight. a year ago what we were talking about was floyd may weather versus connor mcgregor huge fight brought tons to this town we are not sighing that. and las vegas summer months are always a challenge and, you know, it's hot. >> it is a dry heat though. >> huh >> it's a dry heat. >> yeah, people are thinking about the vacations. they're not thinking about business meetings and conventions. >> right. >> and what it does is it's always been a challenge. this year especially there wasn't a lot of big events you know, now moving forward we will see year in and year out there is always big events maybe what they have done is
lowered expectations for the third quarter numbers when we see the numbers in october, november, everybody will be pleasantly surprised we'll see what happens. >> quickly before we let you go howard, this morning buffalo wild wings said they are looking to allow customers to make sports bets while dining and drink. i mean they're having to get approval from various states and pair one a gaming company. but, you know, this yet again dilutes the gaming power and allure of las vegas, which mab the mecca for so long. isn't this another brick they have to add to the worry wall there? >> not really. i'll tell you, the the short answer is no but i'll tell you why, that in all the states where sports betting has started mississippi, new jersey, delaware the big companies mgm caesar's are operating the sports books at the same time in las vegas, the big events, march madness, the super bowl, people plan to come out here for those type of
events. >> and they do -- because they can't otherwise bet elsewhere which is going to happen down the road, don't you think. >> not really because it's more than just sports betting in las vegas. people come out here for the four days of march madness, go to shows eat out do all the different things we have the same thing happen when california legalized indian gaming and river boat casinos started popping up everywhere. all it did was it enhanced las vegas. i mean, las vegas still attracts 40, 42 million people a year. >> right. >> we'll see and then again sports bet something not a big revenue driver for the casinos it's an amenity. >> howard great together you on the camera thanks for joining us today. >> any time thanks for having me on. >> well the turmoil in turkey is send something a big etf that track the tub irk mark down 15%. on the worst day ever. good time bl toaior buy on the dip? debate coming up why did i want a crest 3d white smile?
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for men. notice that my hips are off the ground. [ engine revving ] and then, i'm gonna pike my hips back into downward dog. [ rhythmic tapping ] hey, the rain stopped. -a bad day on the road still beats a good one off it. -tell me about that dental procedure again! -i can still taste it in my mouth! -progressive helps keep you out there. time for trading nation. let's check on the biggest story of the day turkey, the tur turkey etf seeing the where is the day ever plunging to the lowest level in nine years as the lira hits all
time low gena sanchez with global mark with you give us your tech take and technical basis is there any relief in sight as you look at historical precedent what's it telling. >> you the situation is dire it's been in free fall the last few months cut in half since january. right now, though, i think it has ha limited downside, nearing the lows that we see back in 2008, 2009 this made a weekly bottom right near 1965. literally within 8% of that right now. and given the extent its fallen. i can make a techically bullish case on a short-term base. today trading over 10 million shares over 20 times average volume and trading up from where it opened. a short-term trading perspective you could say capitulation type low potentially at hand. but really i wouldn't touch with
a ten foot low for anything more than three to five days. if it bounces sell out near 25 do 27. if anything longer time bottom is going going to take some time for those aggressive look to enter. for intermediate term investors thedown trend is well established. and you want more stabilization before you get involved. >> be careful if you are looking at three to five days and watch the levels carefully gina what do you think is there anything to like most folks say no. >> from a fundamental perspective it's hard to find things to like it's been breaking down for years. it surprises me it hasn't made news yet if you look at the borrow on the etf it's so high that clearly a lot have been shorting to it last couple months you can see that investors sentiment is negative and for a reason and you look at sort of what's exacerbating that and the fact that erdogan is not exactly known for being a particularly shy. he is not a -- he is not going
to take this lying down. and trump is not known for being particularly easy to anticipate. right? so we have one guy who is fudge to be probably un -- who will do things unanticipated and another one who will react largely i don't think that's a setup for a good outcome right now you need to steer clear. >> make sense. bob who are mewes was on the show earlier saying this was bubbling up for years he is surprised we haven't gotten here yet. thanks for the takes technical and fundamental. for trading nation head to the website or follow us on twitter at trading nation. still ahead soybean prices tumbling today front and center in the trade war. president trump offered aid. one soybean farmer says thanks but no thanks. he is live on power lunch to explain why.
welcome back to power lunch, everybody. i'm sue herera here is the cnbc news update. police in canada say there is no further threat to the public after four people were killed in a shooting in the eastern province of new brunswick. a lockdown is over but no motive for the incident was given earlier today, federation police said that two of the those killed were police officers. days of heavy rain caused flooding and landslide in southwest china. more than 90 people evacuated from that region no reports of any deaths or injuries a group of female former nike employees are suing the company over claims that it discriminated against women and fostered a hostile workplace environment. the lawsuit was filed yesterday in the u.s. district court in portland and seeking class action status. and on a lighter note. elvis week kicks off in memphis,
tennessee, bringing 40,000 to 50,000 people to the city to celebrate the king his daughter will be a peshl guest. this year's festivities take place at graceland through august 18th. mark your calendars. you're up to date court back to you. that would be a guide time to go no memphis i've never been. 90 months from the closing bell let's check on the sell off. stock stenting losses sitting at session lows, the dow down to more than a% 273 points s&p 500 off a% that's good for 26 points lower. the nasdaq snapping the winning streak down.8% we have a bit left until the closing bell sounds for the week. >> thanks. the oil market closing for the day. let's get to jackie at the commodity desk. >> it is indeed and crude bounced on the back of several days of losses but not close to the $70 mark the session high was still under
$68 a barrel roughly where we close here the bump came ob on the back of the iea report iea said all eyes are on iran and the november 2nd right now of sanctions that's when they're put in place. and the markets has been calm so far. it's probably going to be until then still for the week crude seeing a loss of a little bit more 1% for the month almost 9% guys. >> thanks. president trump putting maximum pressure on turkey doubling steel and lumy number tariffs. what's the fallout for u.s. businesses here. >> they're trying to figure it out the breakdown in u.s. turkey relations roilg markets. and it's sending show shock waves through metal m-with companies importing steel and aluminum from turkey unsure what price they will pay. president trump hiking the levies by tweet but the white house notes the document are being prepared
frank burgren makes re-bar making steel used sourced outside of the united states and he spoke to us in july. >> i would buy all my steel from domestic mills if i had the option the reality is that the capacity isn't in place. >> because he can't get all the steel from the u.s. he gets it from other places. he says he has cargo from turkey on the water headed to houston right now. and some more steel being unloaded his trurkish supplier he says in an array of panic at the moment with neither side sure what happens when the cargo arrives a shipment he got in may carried a $1.6 million charge from the tariffs doubling enemy of course would make it more expensive guys >> all right kayla thank you. see you later. so turkey's currency crisis put major pressure on emerging markets. they are getting crushed turkey, russia, argentina, china, all in bear market territory, down 20% more from
the recent is. likes the greece, italy, south korea are in correction territory down 10% from recent highs. so how do you trade this right now? let's bring in em specialist, tim see more at see mother are you ready to catch falling knife yet. >> this is exacerbated or certainly one of the manifestations is the stronger dollar fresh 13 month highs dollar index is a key level to watch this is the break outlevel we went to over 100 onthe inde in 2015. cpi lechls here what does that mean back to the markets bottom line here is turkey's problems while i think most are their own doing are also compounding the dynamic of where they sit in europe and ultimately that exposure to the european banks that have a lot of investmentsor have jb's, partnership was the turkish banks. to me this story while very fluid isn't getting better
i think the reality and the sad part of in is turkey -- i've spent a lot of time there, i've invested there there is some of the best industrial companies in europe, the banking system is solid i had. i think they are going to weather the storm. but erdogan has done everything wrong in terms of how to position this economy and this market for em it's another battle zone. and i think it's it's not been a good time. >> well you mentioned he has done everything wrong. we just saw a big pro erdogan rally in istanbul today. us thats of people packing the square and his version of dealing with the crisis is to tell the people who own say, gold or dollars to go and transfer all of that into lira and prop up his currency. is there any indication that the central bank or his son-in-law might do something right is to. >> no and contessa, the structure of one point turkish as a independent central bank qb
a large efficient, liquid market that let oaf international investors know but, no, at this point i would say that those are first of all protests that could be staged. you wonder whether he has positioning of himself in hard dollar currency and don't care about the underlying local currency but for now i don't think this is a time dpiet the fact that turkey is a an ally. it's an incredibly important country in the region in the world and to us. i think right now you have a major ego battle and erdogan -- this is not happening overnight this is over the last three years you see that in the currency it's a currency that had been under massive pressure. >> tim, let's talk about the impact on other foreign markets. we see a lot in bear market territory. not the least of which is italy. there is a direct impact and if you are an investor in some other countries how do you position yourself going forward when we have so many unknowns. >> look, the italian economy
also has a fair amount of exposure to what's going on in russia it's a major trading partner certainly a lot of multinational cooperation. when i look at italy i feel better than where we were in 2011 or 2013 i think the kpee is somewhere just south of 19.8% gdp. i do think that their budget can withstand some of this i think the -- you know the capital markets there are also very strong. i think the reality is, however, we're going into a difficult period where the ecb needs to take liquidity out of the market and really i don't know how they tie their hands. the best thing that kwo happen to european banks is rates go higher in europe and right now if anything they are going lower with the exception of in the pigs economies where you see italys rates getting back to y's satisfy we saw in summer i think the market will test italy. this doesn't get easier overnight we have to watch this one. >> as always tim thanks. >> thank you. >> see you later tim see more droing us
>> coming up he don't want the aid just the trade we'll speak to a soybean farmer who says the president's trade policy is not working. soybean prices tanking as it were we watch stocks taking a leg lower. the do you down about 1% 270 points adtel caterpillar, goldman leing the declines stay with us
welcome back to "power lunch. it's a red theme today on the summer friday. look at where we are trading dow jones industrial average down about a%s just a hair off session lows but if you look at the sectors, the weakest links today materials and financials down almost 1.5%. 1.4% for financials. within the financials metlife and principle plong the stocks hitting lows energy is the least worst of all of these almost flat. wti is just about higher there today. >> courtney soybeans, futureses plunging nearly 5% on track for the worst day since july of 2017 raising the outlook for the soybean harvest for the 2018-19
crop year. and projecting exports hit a record high despite the ongoing tension was christopher gibbs. he and his family own and operate 500 acres of soybeans. does in take into account the retaliatory tariffs on u.s. soybeans >> well, what it shows is a couple of different things we've got a big crop out there and the market knows that. but over time we have traded with china and i'm not sure the market is taking that into account at this time. >> i was on a north dakota soybean farm a couple weeks ago. we and talked about the fact that if you are working actively working to open new markets in china and aufltds you've got the tariffs, it's not just the fact that the tariffs raise the prices for chinese consumers there is political pressure on these guys, the importers not to
look at america. who are the top competitors for your soybeans to export them overseas >> well we can export to the eu as well. but china has been our number one market for soybeans. 30% of our soybeans go to china. and the effect of the trade war has been devastating oncy bean farmers here we have taken a 20% drop in price. and what we see with market action today only exacerbates the fact that we have lost our number one customer. because of the trade wars. and i'll tell you why. back in 1985 when we were awash in crops, the agriculture community got busy and they traveled around the world and made market relationships with multiple different countries and china was the number one hit where we wanted to make sure we took care of that emerging market because we saw where the potential was. >> okay. >> and now -- >> go ahead. >> well, no, no -- and those
markets take time to build is it just going to be gone overnight? >> well, that's the fear and that's one fear. see we have seen this movie before back in 1980 when jimmy carter put the embargo on the u.s.s.r. because of their invading afghanistan. the u.s. became an unreliable supplier in the eyes of the nation -- or eyes of the world so other world suppliers and other world markets started to look around for a different supplier and you can draw a direct link from brazil now being the number one producer of soybeans in the world over the united states -- you can draw a direct link all the way back to that embargo and the u.s. becoming an unreliable supplier this is the fear we have in agriculture country that we are
going to be -- become an unreliable supplier. >> the president authorized $12 billion of aid to help you out while this goes on how much do you think you're going to get of that and is it enough >> yeah, i have no idea. we don't have any idea because that has not been announced from usda certainly that shh 12 billion a portion will come directorly to farm zbleers how much would you need? >> gee whizz to make up $2 on my farm about $25,000. >> you think you would get that much >> i have no idea. i have no idea the rules haven't been announced. so i think they're coming out september 1st with a sign-up but i can't see that the taxpayers would fund -- fund us in that amount, particularly on -- with a policy where this is a self-inflicted pain by our own government and which drew retaliation from the chinese and then lowered our prices. >> why do you think there hasn't been more political outcry from,
you know, these regions that supported trump when he was running for election >> well, listen, i voted for president trump. our county voted for president trump and certainly for most of agriculture voted for president trump because he was a can-do guy. he acted like he could get some things done. and that's true. what we didn't realize was that we were going to be put on the front lines of this trade war and that we were going to demonize our number one customer now, to be fair wsh certainly china has been a bad actor in a a number of different areas, whether manufacturing, doll all of that. as patriots we are farmers, we get it but one agriculture writer i think put it just right. he said this agriculture is willing to take a black eye for this but they're not willing to take a broken arm. right now, i've got a cracked peflis just from getting my butt
kicked based on the prices >> really sorry to hear that and i hope it turns around for you personally thanks for sharing your perspective. >> thanks chris. >> thanks for being here. >> a frightening moment at a georgia airport after a piece of luggage started spewing smoke. the tsa released this individual at the savannah international airport. a passenger noticed the smoking luggage. and the lead tsa officer grabbed the bag and carried it away to safety the tsa says the moek came from a malfunctioning batter, are you ready on that on a vape pen. >> can we go back to the sentence, a passenger noticed the smoke. >> somebody had to first person. >> but then the tsa picks it up doesn't know the source of the smoke i'm glad it happened there not on the plane in the cabin. >> don't vape. >> scarey stuff. still ahead a big week of retail earnings next week mays home depot and the biggest,
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but the key one for many investors is wal-mart. i know we talk about amazon a lot. but the stock is down compared to competitors like target and amazon here to discuss, we want to start with wal-mart of course because even though it's later in the week a really big one of course we're watching key things like same store sales particularly in the u.s. beyond that we get a lot of commentary from executives on that prerecorded conference call. what are you looking at with how competitive is with pricing, which is really key for that wal-mart shopper >> we've been writing expensive that it -- what they decide to do with pricing kind of dictates the entire market. we'll be definitely looking for
clues on that conference call or recorded call with their pricing. wal-mart has been very aggressive on pricing. our own propriety research suggests wal-mart continues to press further. >> what would it take for you to move your recommendation to a buy for wal-mart what would you need to see >> honestly, stopping the madness, and what i mean by that is the u.s. business is fantastic, run by greg forun and our biggest concern is they literally will take the feet from the jaws of victory and what i mean is their u.s. business is so darn strong jet
they're spending so much money to try to compete with amazon. so will that hurt the u.s. business will the call come in, hey, greg, we need some more money out of the u.s.? that's what got the company into trouble back five, ten years ago and we're really worried it's going to get them into trouble again. >> yes, they're playing the amazon game with their online strategy, but so far it's been very impressive with the growth. is that going to continue? when all is said and done what role will online play for wal-mart strategy? >> i think it's going to play a part when you look at their online business you can't forget that includes their click and collect, that's the grocery pick up in store. they've been adding a lot of click and collect locations. they're going to go from 1,000 to 2,000, and all goes to that ecommerce number
wal-mart's best assets are the super center assets. all our data shows consumers still like them, they have a unique position in their communities, and i see them chasing amazon overseas. this is wal-mart and it doesn't make a lot of sense to me. it reminds me of something my dad used to say, it's always going to be bigger, stronger i think they should play their game i think they should put their focus on the u.s. and the americas and really focus on those super center assets. you know, clearly ecommerce will have a place there, but we think strategically as the challenge, you asked what would take me to upgrade it, i think a change in strategy to really focus on the u.s. and americas, that would do it >> if i could ask you really quickly, scott, i believe that's in your coverage and they're also reporting next eek. if you could give us the headlines what investors need to look for in that report.
>> what's happening with home depot everyone is concerned about housing. a lot of numbers on housing haven't been that great. i think people are thinking the quarter is going to be fine, but really all the discussion with investors now as we look to 2019 is are we going to see housing slow we also i would point out go over the hurricane comps from last year, and so really there's not a lot of concern about the quarter, it's about the future >> always about the future and anybody would kill for a 7% comp we'll see if the market gets disappointed if that actually comes in to be true. thank you so much. >> is it time for check please already? >> time flies when you're having fun. >> after this. let's begin. yes or no? do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts?
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don't hook it kid. and if that's still not enough, we'll help your kid's kid prepare for the future. looks like he hooked it. we'll do anything... takes after his grandad. seriously anything, to help you invest for the future. ally. do it right. round 2 of the pga is under way. quick look at the leader board here a couple of golfers have shot 63s today. >> all right, thank you for the golf update. the love ranch has been shot down in southern nevada. he's running for state assembly, but it also turns out he didn't pay his fees on time or apply
for renewal. he says it's costing him $3,000 a day to say nothing of the works who work there last year they won all four preseason games and then lost all 16 games of the regular season so brother johnny don't get too excited by what we saw yesterday if history repeats itself. >> "closing bell" is right now it's friday afternoon. it's time for "the closing bell." i'm wilfred frost at the new york stock exchange. market plummet as trade fears reached a boiling point. china's trade retaliation, and turkey's demise in response to a presidential tweet all coming up in for kelly evans, and we have an all-star line-up of pem to help break down today's global flash front plus experts on china, russia and the markets to