tv Squawk on the Street CNBC August 30, 2018 9:00am-11:00am EDT
>> you promise >> and i'll sing that song >> "happy birthday." >> mr. warren buffett. >> i'll tell you where we're going. you wait mike, thank you for being here today. great seeing you this week join us tomorrow "squawk on the street" is next ♪ good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with sarah eisner we continue to watch u.s./canada trade talks. buffett will join us in two hours. europe south of the flat line. personal income and spending are roughly in line. our road map is going to go like this stock poised to end a four-day rally. major averages remain near
historic highs the president promising more go good news for investors. plus campbell soup is planning to sell its international and fresh food businesses says it remains open to a sale >> and google finds the company denying claims of bias refuting twitter accusations from president trump. coming up later on "squawk alley," an interview with berkshire hathaway ceo warren buffett. he'll sit down with our becky quick at 11:00 a.m. eastern time futures are pointing to a lower open to wall street spelling a potential end to the current four-day win streak. the nasdaq has its best august since 2000 the president did weigh in on the markets today. he tweeted the news from the financial markets is better than anticipated. for yuall of you that have made fort nun the markets or seen
your 401(k) rise beyond your expectations, more good news is coming went on to slam once again big tech as he has the last couple of days and broadcast media as well, including nbc and cnn. >> some decent news on the consumer personal spending up in july that's solid and suggests the momentum we've seen in the first half of the year from consumer spending will continue we also saw personal incomes were up 0.3% americans are spending all of their wage gains that they're seeing and a little inflation out there. higher prices means that they'll have to shell out more for their purchases. but in general, pretty decent numbers. as long as the u.s. can continue to be immune from a market and economic perspective from what's happening in the emerging markets world, the money flow is here but is there pain out there in the emerging markets world the argentine peso lost more than 7% yesterday.
after its already 30% fall had to ask the imf to speed up its bailout. some of these currencies are in crisis and originates in the united states with the fed raising rates and the dollar strengthening, it makes it hard for some of these local companies to borrow in dollars, which they had been. they've been bingeing on dollar loans and now it's very expensive. >> half, roughly half of the world's cross-border loans have been priced in dollars that's up 40% from ten years ago. so we talk about the demand for dollar denominated debt and it's coming home to roost the lira down 12% for the week once again >> it's partly, they're not inspiring much confidence over there between their central bank and their government and all of these countries have their own problems they just get exposed with the dollar strengthening and the fed raising rates because of that statistic you just mentioned so world of hurt out there
now you're seeing it spread to indonesia. the indian rupee at a record low. we're watching it. people are talking about it. will it infect the u.s. markets? so far it doesn't appear that way with the s&p hitting a new record high yesterday. >> amazon set to open above 2k for the first time we'll watch that at the opening bell david? >> the accretion of market cap has been extraordinary the president talks about your 401(k) to the extent that you're broadly exposed to averages or to indexes like the s&p or the nasdaq, you are a beneficiary of amazon's incredible move up, even though the president is not a particular fan of amazon but its performance is certainly helped underwrite some of those gains he's talking about in people's 401(k)s >> meantime, shares of campbell's soup falling. the soup and snackmaker announcing it's selling his international and fresh food businesses in hopes of remaining its financial footing. campbell reporting earnings that beat by a penny.
revenue fell short campbell announced it was conducting a review of operations and holdings after it disclosed unacceptable earnings and the departure of its ceo you two have been tag-teaming this story in a big way. it's a big story today >> i want to hear what you're finding is next here >> you have a much better focus on the overall business and what's been going on in terms of the theme and the conference calls going on, they start at 8:30. fourth quarter earnings and, of course, this strategic announcement as well the numbers were not good. but the theme that they're going with here is, listen, we're maintaining optionality but we'll go into this next year, year and a half by selling this international unit that generates about $250 million in ebitda we'll be able to sell it at a higher multiple than we currently trade at therefore, somewhere accretive if you want to think about it that way and we're selling fresh where they have had a lot of missteps that sara has talked about any number of times when they've
missed in part because of their missteps during a particular quarter. it's going to allow us to focus. we'll be too -- just too focused segments and we're going to come out of '19 with different targets in terms of organic growth rate and expected growth rate for ebit and for earnings and then we still might sell the company, but we can do it off of what we expect will be a much healthier looking company. and, therefore, will be able to command a far higher number than we currently could if we moved to a sale. but the question is, are shareholders, beleaguered shareholders going to believe it, particularly given the continued underperformance of soup >> 14% decline in the quarter. how healthy does that business look so their core businesses now are going to be the soups and beverages and the meals under the campbell's brand and the snacks which they -- everyone on wall street said overpaid for that snyder's acquisition which other companies looked at and
said distribution was not that great. that's what's left of the company. >> soup is a global category they say showing growth over the last 52 weeks. clearly they're losing share as well and the questions here are going to be about execution. you're telling us you can do all these things, but it's possible if you were to sell the company, another buyer could just as easily sell off the international assets, as you can. and perhaps they can execute better you know, that will be a key question here under this interim management still >> no ceo. >> no ceo. denise morrison was boosted last year after seven years on the job. and some of the failed acquisitions couldn't figure out how to get fresh carrots. and that was to be the growth. that's where the growth in the grocery store was having >> $140 million ebitda business to $40 million it barely makes any money at this point they're going to get rid of it to the point of streamlining the company to this idea of having two segments where you can focus on getting the cost-cutting, focus on delivering the
synergies you've already underwritten but now say that you're really going to -- 50% of this company will be snacks. >> right which, in general, in the food business is kind of a growth area but they've got a lot of debt on their balance sheet as a result of that snyder's/lands purchase they are leaving the door open to that. isn't every public company theoretically should be open to a sale and what's left of the core business here if you're going to talk about declining soup sales and a tough to manage snacks business with some distribution problems >> how much do we have to look at the reaction to all of this >> you want to sit back for a moment, gather your thoughts, listen to the conference call, talk to people, see what the reaction is but let's quickly go over that. mr. lobe, along with one member of the durant's family owns about 8.4% of the overall
shares and it's interesting in terms of timing because the nominating window for directors is happening right now. it opened a couple weeks ago closes a couple of weeks from now. they could have made this more difficult for him by delaying the announcement the full board is up for re-election. nominating window. you need 50.1% to replace the director not so easy when you've got mary alice and bennett on the board, both of whom combined control over 37% of the stock just the two of them. but not impossible given how many people have shown up in the past to vote but that would be tough. if you did want to actually sell the company, you need two-thirds virtually impossible if you don't get mary alice and bennett to agree to a potential sale doesn't mean that loeb does not have, as i would expect, a full slate prepared should he decide to come and challenge for every one of those board seats doesn't mean they've already undertaken as they do in these kinds of things p.i.s, private
investigators who look into various things and can make life difficult for some people. there's crystal freeland she's not talking about campbell's soup but a canadian -- >> you never know. >> a dairy component in campbell let's listen to freeland [ speaking foreign language >> we'll wait until she starts to speak english again >> we'll wait and see if she switches back to english we're a day before that deadline before canada gets locked out of nafta talks. we're a week away from the $200 billion tariff deadline with chinese goods. dollar is bouncing off support coming off four consecutive record closes. so you can understand why the bears might feel a little defensive today. >> we didn't get any hard news out of the canada talks yesterday, but no news on the trade front appears to be good news, especially as we heard
from minister freeland yesterday at this time optimistic let's listen >> thank you >> well, maybe later maybe later. maybe she'll have something to say about soup, too. >> you know they put tariffs on -- >> they did, didn't they >> american food, like soups, coming over the border campbell's does have its canada business it's keeping. just to button all that up, david, there are two big uncertainties here number one is the family going to be willing to sell on the board position and number two, is this company going to find a suitor for some really damaged and declining brands >> right >> maybe kraft heinz it will be very interesting because becky quick is talking to warren buffett today. would be interesting >> and conceivably, i think
byron may be involved, advising the family he is known as warren buffett's personal banker. a lot of potential connections you can draw in terms of kraft heinz if they were interested. it's a tough business. kraft heinz, and you know this well, they came into this year expecting $9 billion in ebitda now $7.55 billion in ebitda in terms of estimates for the year. it's been brutal for them. >> the entire industry for packaged foods is suffering. kraft heinz and campbell are two of the worst in terms of numbers. organic growth down 2% their forecast is for that to barely grow. that's the kind of industry we're in right now >> that said, they trade at a multiple that's the lowest other than perhaps post and one other company out there. >> smuckers not doing too hot. >> meantime, the president ramping up his attacks on google again today. social media companies and the media at large
eamon javers joins us. >> take a look at this video the president released on twitter to millions of followers yesterday. it accuses google of being biased against him because the video says that the president -- the google folks teased ahead to president obama's state of the union addresses but did not tease ahead to president trump's state of the union addresses the problem for the president is that google did, in fact, tease ahead to president trump's state of the union address look at this screen grab in fact, they did tease live coverage of the president's state of the union address in 2018 google released a statement saying on january 30th, 2018, we highlighted the live stream of president trump's state of the union on the google.com home page we have historically not promoted the first address to congress by a new president which is technically not a state of the union address as a result, we didn't include a promotion on google.com for this address in either 2009 or 2017
so it would appear the president is accusing google of something that google did not do i've asked the white house for comment on that. no comment northcoming so far this morning and the president continues to press his attack here on other independent sources of information, including television and books here's the president's tweet from this morning. the president tweeth oing out, i just cannot state strongly enough how dishonest much of the media is this includes fake books that come out about me, always anonymous sources and are pure fiction. "enemy of the people" says the president of the united states, about the free press this morning. so the president clearly frustrated with his coverage and will work to get some answers from the white house about this dispute with google in which the white house suggested that google did not tease ahead to the president's state of the union address this year and google says the archive.org record shows that google, in
fact, did do that, guys. >> eamon, we'll watch that closely. quite a morning of commentary from the president, way beyond what he said about amazon, for example. when we come back, a big interview you do not want to miss the ceo of berkshire hathaway warren buffet is with us going to sit down with becky quick at 11:00 a.m. eastern time four days of record closing highs but weak futures on this thursday more "squawk on the street." back after a break ♪ adults are just kids with much, much better toys. introducing the 2018 c-class sedan, coupe and cabriolet. the thrills keep getting better. lease the c300 sedan for $399 a month at your local mercedes-benz dealer.
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after four straight positive sessions, futures point to a softer open today. but the s&p still on track for its best august since 2014 where exactly we are in this bull run with us, a u.s. investment strategist at allianz. tony, a portfolio manager. good to see both of you. we've been watching this hand rail outside the ustr's office for a couple of days now do you think the overall conversation about tariffs, trade deals falling apart are not as overplayed? >> it has tended to be overplayed in the financial markets. when we think about the size of tariffs. let's say there's another round of tariffs put on chinese goods. it's said to be around $200 billion of products. if the total size of the tariffs might be in the $300 billion or so range, what's the size of the global economy
$100 trillion. and this is a one-time hit on prices so over a few years, instead of $100 trillion of economic activity u.s. economy, 150 million people employed 85% of them are in the service sector we speak to tariffs, we speak into the idea of the goods sector being influenced. a smaller portion of the economy. to that extent it's been overplayed, overhyped and not affecting the markets or even the u.s. bond market on a whole. >> how nervous, if at all, should a u.s. equity investor be about what's happening in argentina or turkey or now indonesia? >> you know, generally speaking what we've seen is the u.s. dollar strengthening has caused some grief for that region of the world. what we're looking at is those economies with higher current account deficits are the ones most at risk here. and we do see as the relative economic strength as a relative interest rate strength and
potentially inflationary strength continues, the dollar may have legs going into the second half of the year. so we continue to monitor those economies and watch that strengthening dollar >> do you stay away from the industrial conglomerates or the consumer giants that have a lot of business abroad because their earnings get hit with the strong dollar or is this a broader warning signal for the overall market now at record highs >> generally speaking we continue to see strength in the u.s. economy the global sector even in the u.s. continues to do well. there are pockets of weakness in em and even there you have to be selective. there are economies that may continue to do well, depending on their current account deficits, exposure to oil, et cetera similarly in the u.s., global sectors that continue to do well what we see playing out is the u.s. economy remains robust. versus the global economy there's a little divergence there. >> a six-year high
we had this discussion about whether you see a 2019 pause in the fed. reuters has a piece about a more aggressive fed as they try to ramp in expectations where are you? >> well, markets will take about 6 to 12 months to sort that out. very interesting the markets are in a way they were from 2004 to 2006 the last tightening cycle. for about 18 months markets decided the fed will go into the low four so let's keep the u.s. ten-year in the low fours. and then it changed it to a 5.25 rate then peaked at 5.3 so it's a same decision point coming in the next year by next summer the market will have to decide is the 2.75 rate priced in enough you'll see a big move higher in rates, something we're likely to see because the u.s. economy is strong enough to let that happen >> for you is that the overriding narrative right now >> i think definitely the fed rate hikes are the tail risk on the horizon. and i think what we've seen from
the -- they're pricing in two more this year and one more in 2020 the market has not priced any of that in, especially the 2019 or 2020 rate hikes. so that would be a surprise or a bit of a shock to the marketplace. i do think the marketplace is going to see they'll take a pause and see what's happening with the yield curve and then we go from there. >> it's going to be interesting. take another look at the premarket as we get ready for another day of trade and buffett at 11:00 a.m. eastern. don't go away.
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it's an interview you'll not want to miss 11:00 a.m. eastern here. "squawk alley" is the program. warren buffett is the guest. he took that apple stake done pretty well, even though it would have appeared at the time came a little late to the game no, not so an opening bell coming up for you ve mut fm w.fiinesrono stay with us
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we've had six times in the last six months, s&p 500 has had a four-day run it's been down the following day each time. so to see a pause here today would nobt a complete surprise >> end of august and record highs not just for the s&p, but the russell 2000 index of small caps and for the nasdaq. and yesterday's action was really driven by amazon and google parent company alphabet and apple which did very well. morgan stanley double upgrade, or at least rising price targets for amazon and google. helped rise the stocks despite the political pressure they're under from president trump and bernie sanders >> it bears mentioning again, the s&p up about 9% for the year it's a market cap weighted index. the biggest market cap companies that you just mentioned moving up substantially, that's going to have a significant impact >> i think there are other factors at work. the ten-year treasury yield
really has not broken above 3% sort of stood in the way of the rally a little bit back in may haven't gotten up there yet. >> there's the opening bell. the s&p at the bottom of the screen at the big board it's black hills corporation, natural gas and electric utility based in south dakota electra mechanic vehicles, a designer and manufacturer of electric vehicles. amazon did suggest an open over 2000 at the open not quite there. 19 1997.91. i don't know if you noticed the big contract aaron rodgers got yesterday. the total deal, according to our friend on twitter, the total deal of rodgers' contract is 3% of what bezos was up yesterday on his amazon stake alone. >> really? >> just yesterday. >> well over $80 million bucks
immediately, wasn't it >> he's the richest man in the world for a reason the numbers are so staggering. and, of course, bezos has yet to go down the gates road in terms of, i've got the big foundation. i'm going to be giving away. and the numbers, where is he what is it he's 21% -- right. his ownership is 20% i've got to check, of amazon we can figure it out almost $200 billion. >> the trillion-dollar chase, by the way, you have to get in the 2050 range as i recall i don't know the latest share count but still a little off from that. we haven't touched on the slew of retail names we got today >> i'll hit signet jewelers. that's going to be a big winner today. all the numbers were better than expected including raising of the guidance comp store sales up. analysts were looking for that to fall 4%
so analysts haven't been on board with this turn around story. they've been wrong the ceo has now shown that some of the turn around plans she put in place over the last few quarters are bearing fruit and if you look at numbers like zale's comps up 7% jared up 1%. pearson pagoda up. this was a stock that got hit on the back of the better tiffany's results, but is actually doing quite nicely on its own. a three-part strategy she talks about. customer focus and that means new merchandise she said solitaire diamonds are back in when it comes to engagement remember last time i told you it was all about following meghan markle it's fancy cut diamonds. they're using big data analytics to get close to the consumer and figure out the trends. also the disney line, they have a disney line where they do sort of princess rings, millennials are aging along with princesses
and they're buying some of the rings like the pocahontas ring which has a little -- >> millennials are aging along with princesses? you just said that >> so this fashion jewelry items are doing well >> so they haven't moved past their princess phase is what you're saying? >> princesses forever. in a way >> well, we know some of those >> right thanks beyond the big data, they're focussing on e-commerce and revamping the app and sign it with facebook and google to make appointments this is all sort of coming together and she has a conservative outlook on the holiday season which is the most important from a profitability standpoint and the idea is there will be a lot more brand-new initiatives rolled in. >> you did an interview with the ceo awhile back. the stock is up since then >> she had a story she had a plan in place. wall street hadn't caught up the stock was down 13% over the last year.
it's up 13% today. they're finally seeing that this plan is working. cfo stepping down, but that was the cfo from the prior regime. she's going to stay on board until they find a new one. >> worth mentioning, taking a look at shares of electronic arts what it was is they are moving the launch of battlefield five out by four weeks to do what they say is enable them to deliver the best possible experience for gamers. but that's going to push some net bookings out of fiscal year '19 into fiscal year 2020. they've also revised expectations for their mobile business and foreign exchange rates have moved significantly since ea initially gave its fiscal year 2019 guidance. all of which is they are updating that guidance for net bookings from $555 billion to $5.2 billion so it goes down, about $115 million of the change also driven by foreign exchange rates. but its stock has taken a
significant percentage decline today based on these new numbers and that move out of "battlefield 5." >> halted briefly premarket. interesting. i think salesforce had some 4x mentions as well ea talking about rates moving. oracle a few weeks ago was one of the first to hint the strong dollar was going to start having an impact on guidance. >> this was one of the biggest concerns from analysts, questions and comments from management even more so than trade. and tariffs. because this has an immediate effect on business as they operate overseas one business that's doing very well overseas that i should mention is pbh the retailer behind calvin klein and tommy hilfiger reporting earnings last night. 29% earnings growth. 13% revenue growth this one continues to be a strong execution story jan niffin, a contributor for us here on retail, says it's one of his favorite brand managers. manny churico the ceo.
being open about a small percentage of sales made in china if we see the tariffs ramp up between the two countries i asked him about -- so tommy hilfiger has had this big brand resurgence i often attribute this to the influencer that's on board they've had gigi hadid who has been the front woman for this brand that's helped it soar. totally changed the brand image overseas she's no longer with the company. churico told me in a month they'll be announcing a new brand ambassador that will be very important. also the kardashians doing underwear ads for calvin klein that brand is on fire. another good quarter even though the stock is down. maybe it had been a big winner up more than 20% or so over the last year. maybe a little bit disappointment around the guidance but overall, analysts are raising their price targets this morning piper jaffray up to 177. >> worth coming back to campbell's soup. stock only down 1.7% i've seen it just ticking up in the last few minutes here from
lows down 3% company announcing, not particularly great fourth quarter numbers, but more importantly, this plan to sell its international assets along with its fresh business. that had been bought -- they bought it awhile ago, i guess. hasn't done well at all. they're going to sell both two segments of the business soup and snacks is basically what you'll be dealing with when you talk about campbell. 19 is seen as a reset year where they will go through these divestitures, refocus on delivering the synergies from the snyder's/lands transaction cost cutting they've added $150 million to their expected cost savings. and cutting. and then emerge from that, they say, with what will be a, what, a 1% grower organically. 1% to 2% adjusted ebit grower and an eps grower of 7% to 9% after '19 all of which, sara, they believe
will position them to be in a better place if they should want to maintain that optionality of selling overall. let's actually listen to the ceo, interim ceo keith mcloughlin earlier who talked about the lack of focus on the conference call. >> we lost focus we lost focus strategically. we had too many initiatives that made the company unnecessarily complex. we were in a food business and the ag business. we had growth businesses and cash businesses. we were focused on start-up businesses and venture capital investing. we aggressively pursued the important consumer megatrend of health and well-being without having clarity on our source of uniqueness or whether we brought a competitive advantage to the space. and we depended too much on m&a to shaper business strategy. >> as you pointed out, soup is
still a problem. >> so i'm going back to july 9, 2012, when campbell at that time did its biggest deal to buy bold house farms for $1.55 billion. and the story line there was they've got to expand into fresh. they've got to do these big transformative acquisitions because their main business, condensed soup, was hurting. that hasn't turned around. in fact, the boldhouse acquisition was a basit of a disaster could never figure out the carrots. and delivery was complex and soup sales declined 14%. that's the company they're left with and snacks which is, that's the gem, right, the snacks business. overall foods, snyder's, land's. but they were seen as overpaying and it's a complicated distribution system as well. so will a suitor emerge to take on those domestic declining businesses >> right and/or are you going to see a fight here for the board and that's a near-term question.
as we pointed out, the nominating window for board seats is open right now. and dan loeb owns 8.4% they've also been joined by one family member of the durant's family and the question is, will he nominate for the board will he go for a full slate? i think he's actually identified people to potentially do that if he chooses to. and that will be quite a fight because it's no -- not an insignificant number of -- a mountain he's got to climb here to get 50.1% of the votes when you have 37% of the votes against you right away from the two members of the board who are on the -- part of the family so we'll see what mr. loeb chooses to do. he's going to make a decision pretty soon. >> the other question is what kind of price would they get they said they're open to a sale now. >> if somebody comes along, you
said this point. any company is going to say that they clearly chose to say we're not moving ahead with the sale process which is okay. doesn't mean somebody can't come in and make an offer and make this even more difficult for them or put the question to both shareholders and the durant family right now as to whether it's better to take the money now, let another company perhaps sell the international division and move on with what they would hope would be better execution somehow. >> and better margins. still room to run on the margins which is a big story behind a lot of the consolidation especially a 3g run company like kraft heinz. >> retail continues to be very tough sector today abercrombie, pbh, dollar general, dollar tree, michael's stores are all in the red. even though in some of these cases comps did exceed estimates. dollar tree estimates are comps up 3.7, almost double the estimate amazon got to 2008, but then settled back by the way, guys, the $2,000 mark today, the first ever -- first hit $1,000 in may of last year so it's up $1,000 in a year and
change pretty amazing just amazing strength in that name >> that would be the momentum. just wanted to check in on bonds because they've been such an influence. yesterday financials actually closed lower because that much heralded yield curve continued to flatten we're going to watch that today in the wake of what we've got which was higher inflation numbers which is going to be the big debate on wall street and whether that's going to -- we're seeing lower yields across the board. 2.86 on the ten-year and that's a big part of the story. what's the bond market seeing. is the yield curve sending an ominous message. every fed president has a different opinion on this. the treasury secretary doesn't seem particularly wrd about llt it, but it is spooking bank shares >> which have had a difficult run. have not been a leadership group, have the financials >> let's get to bob pisani on the floor. >> it's a simple story today we have that strong dollar, weak
emerging market currencies, and that's at the margins impacting our stock market and having some effect on the global markets let's take a look at the sectors we have. you have that strong dollar, things move up you get emerging markets week, the eem, metals and mining stocks week. the xme. the second one china internet stocks, generally underperforming. banks when the rates are a little lower, banks had been going up but the rates stopped going up so they've been underperforming as well. sectors outside here if you look at emerging markets, where we are in some of the global markets here, china was down indonesia was down thailand was down. all the usual suspects when you get currency pressures that are going on here. these problems with the dollar started really earlier in the year emerging market vs have had a problem. there's the dollar index beginning late march, april, the dollar started rising and that's
when these emerging markets started having problem this is not a new issue. it's been going on for a while what happened? why is the dollar so strong? there's a number of very clear reasons why this has been happening. the fed has been raising rates and they've ended their monetary policy other central banks meanwhile have generally still been accommodatives particularly the european central bank where the euro has been weak and then the simple fact that the u.s. economy has been strong. much more demand for dollars foreigners come in they want to buy u.s. stocks buy u.s. bonds commodities are priced in the dollars. supply/demand gets out of skew and the dollar just gets stronger and creates all kinds of problems. emerging markets these are the stock markets of these countries. shanghai, argentina, philippines, indonesia this is year to date these problems started back in really february and march but particularly got worse beginning in april when the dollar started
moving up. people asked me about india. why is it india? india is up 12% or 13% it's a special case because they are rather isolated from much of the world's supply chain and almost operate largely independently. so india has been doing very well as for the stock market right now, folks, we're very overbought and i used very simple indicators the rsi measures how overbought or sold sectors of the market are. usually about two, three weeks if you're above 70 that's an overbought indicator historically traders have been buying these rather aggressively when you're over 90, just put that back. when you're over 90 that's like you've got to be kidding me territory. so health care and technology are dramatically overbought right now. and certain numbers there you see in the 90s that's a very rare number to see that the nasdaq 100, 100 stocks over -- close to 80. this indicates overbought conditions there you see some of the other ones like amd and apple and cisco all overbought territory
it's no surprise historically the market would pull back in certain sectors, particularly health care and tech when you're in this kind of level of move in the last couple of weeks right now the dow is down 22 points >> thank you, bob pisani on stocks now to bonds and rick santelli at the cme group in chicago. >> morning, david. as i look up at the board, 266 and the two-year is unchanged. everything beyond that on the curve out to 30-year basically down a basis point very close to unchanged. a one-week chart of tens really shows you, we jumped up a couple of sessions and we've stayed up. maybe the most interesting fact about that, and there's many markets that carry the same setup. if you go back to february in 10s, we're just revisiting kind of the range mentality the pre-august volatility. we spent lots of time sideways in the 2.80s, then 2.90s
what we've had very few sufficient that 3% closing yield. if you look at bunds, down about 3 or 4 basis points. when you're in the mid-30s it is look at a one week of italian tens we know that they've become the new squeaky wheel of the european group and indeed a ten-year auction in italy today did not go particularly well. we're hovering at 3.21 3.24 was the ints ra draday high n finally, the dollar index, a bit of an up day up a quarter of a cent once again, if you look at this chart starting around june 20th of this year, it really jumps out at you that we are going back to kind of a range. and it had been in a very tight range. foreign exchange gets a lot of conversation and it can go guns hot as it did in august. but one of the big symptoms of
whether it's the fixed income or the dollar index market for 2018, long stretches of trading in tight closing areas carl, back to you. >> all right, rick, thank you. rick santelli. still to come, you do not want to miss this interview. warren buffett is sitting down with becky quick at 11:00 a.m. eastern time so much to talk to the oracle of omaha about. take a look at the top performing names on the s&p. perrigo, pg&e. put your data to work on the cloud that drives business. the ibm cloud. the cloud for smarter business.
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thing to do, to put quotas in place to get more female members on board they're underrepresented it's a problem we have talked about for a while. the quota issue is controversy you don't want women to feel stigma and men not to be promoted if they're deserving to do so. on the other hand, a lot of european countries have had quotas in place. norway since 2003 and there's not much evidence to show that corporate governance has weakened as a result so it might be time to do something like this. i think we have to dig into the case studies. >> strange to mandate governance the pensions, cal spurs have been at the forefront of the governance issues. it's a way to encourage them to have a more diverse board. >> it's not working. california has fewer women per board than the overall national
average in some of its - >> because while the silicon valley guys who just, you know -- don't like to hire women i guess. >> percentage of all male boards in the valley amazingly high this is a big topic at the code conference earlier in the summer boards -- the first thing is they get the message they know they're under pressure but the other is you have to have a wide pool of women who have been in leadership positions aside from board seats and that's -- we're still working on that part. >> yeah. it is not enough clearly for companies to say we are working on it and the countries the make pledges at groups like g20 which happens all the time because it's not happening fast enough and why i think the quota issue is gathering steam you may look for other states to implement it average females per board in this country, 1.75 not even two california's 1.65 which is less than the average. >> california has the -- many of the major companies in our country so - >> yeah.
but they're also -- companies like skechers without a single female on the board. i don't know most of the consumers are females. >> doesn't make any sense. >> exactly. >> i know. >> see what the governor has to say about that we'll take a quick break here. you don't want to miss the interview with warren buffett this morning the ceo at 11:00 a.m just over an hour away on "squawk alley." dow's down 2an3 d "squawk on the street" continues in a moment.
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♪ return of the mack ♪ come on ♪ return of the mack ♪ oh my god ♪ ♪ here i am good thursday morning. i'm carl quintanilla with david faber and sarah eisen. >> starts with those historic highs. president trump praising the market rally, promising more good news to come. as stocks set to end a four-day rally. >> will there be a proxy fight for campbell's soup? quote, we lost focus.
plus it, it's an interview you won't want to miss becky quick is sitting down with warren buffett probably the greatest single investor in the american stock market's long history. i think that's saying enough there. >> markets are lower this morning on track to break a four-day rally nasdaq on pace for the best august in about 18 years president praises the historic run today. he tweet it is news from the financial markets is better than anticipated. for all of you that made a fortune in the markets or seen your 401(k)s rise, more good news is coming let's bring in phil campreli and mark puey. guys, good morning good to see you. you have to feel good about what at least corporate profits are doing. >> why. >> in comparison, is this trade thing going on in d.c. worth anything or not? >> not really. tightening in the market and excitement because football's about to start reminds me of a favorite quote
of bill parcells you are what your record says you are. what's the record in the u.s.? q2 and q3, you have an earnings story that as you mentioned has done so well, it's outpaced prices so pe, valuations, have gotten more attractive this year and what's the fed's reaction function we're normalizing things but we are not going to be restrictive. i think that was the takeaway of jackson hole and what's really good about the growth, carl? consumers and businesses as evidenced by durable goods last friday. so this is a really nice story in the near term. >> you got a tight, red hot labor market. >> yep. >> inflation at six-year highs what makes you think the fed doesn't want to at least make a stand and say we are on the case >> yeah. so 2% is their target, carl. right? so i think in order for them to become restrictive, instead of three or four times a year, go six to eight times a year. they have to see a sustained
inflation expectation that is so much further than what they think. they're on it. a lot of people saying they shouldn't be going with the target of 2% but they're on the pace to normalize things because they started at zero they have to get to normal. >> mark, some people are looking at what generally happens with the s&p in the last four months of the year. i think each of the last nine years you've at least seen a 1% gain and in some cases a double digit gain in the last four months coyou would this year be a repeat >> yeah. look i think we've had -- this is the fifth straight month of positive returns so the market's been moving in the right direction. a lot of investors on vacation and missed the run-up. if we're looking at what ends the bull market, everything i'm looking at's telling me that this market is more room to run. if i look at the fundamentals you touched on it earlier, they're stellar. everyone thought q1 would be peak in earnings we have accelerated past this and seen healthy top line growth and positive comments out of the management teams, an explosion
of capital spending expenditures telling me that they're confident in the outlook an the fundamentals are stellar we are nowhere near euphoria because of concerns around trade, and for now, they've only been concerns and because of that it's helped that sentiment stay quite subdued and fund managers have above level cash levels on the sidelines while the market continues to run. we have a healthy backdrop for the back half of the year mere but i think at this point in the cycle to move up the quality spectrum, focus on larger cap companies with good clean balance sheets and higher quality companies and one point to make, though, is there's been a lot of concern of trade tensions, set cetera but this year is the best performing factors is company seeing the
earnings revisions moving up aggressively doing the homework is paying off for investors so i think it's a great environment for looking at single stocks and doing your homework. >> so, phil, then what do you make of the groups that are not at record highs and have just not participated as much in this rally? automakers, casino stocks, home builders do you buy them on the recent weakness or flashing a concern >> it is not a warning signal. i think it has to do with the interest rate move and the pro-cyclical sectors tech is a sector we like why? because companies are starting to spend and jpmorgan did a survey and said that are you going to expend the i.t. budget given the backdrop you know how many said yes 67%. 12 said no that's a near term tail end. may not be sustainable just like earnings may be not -- >> you say invest in the
companies investing on the businesses >> yes. >> is that a theme that you like, mark and if so, where do you see the opportunities? >> well, i think if you look at the first half of the year, tech was responsible for 98% of the performance. you're starting to see a broadening out of sector performance. and i think there's a lot of attractive sectors at this point. if you look at health care, for example. still trading at a discount to the market and yet continuing to deliver the goods quarter after quarter. seeing great earnings out of health care, industrials we pointed to to cap x and tech spending and seeing some brick and mortar pickups and shovel pickup you are seeing energy cap x pick up that benefits industrials and everyone thinks of industrials as a cyclical sector but one of the highest quality sectors, seeing earnings stability within industrials broadly. >> on the list of worries, phil, em. >> yp. >> obviously you mentioned housing. some argues we had a breadth
problem until this week. bbb rated companies and rating agencies taking a harder look. what's most important? >> emerging markets. u.s. dollar. i think the emerging market underperforms in year close to 15%. a lot is priced in for the trade concern. and the dollar you can't have a persistently strong dollar. em would have been under pressure without the trade headlines because the dollar is rallying fed three or four times a year so of aural of those, carl, we would may em is the one to keep an eye on. if you make up seeing a tweet, u.s., china that's a massive short covering on em side. >> is that what you think happens? do you see resolution on china, for example, this year >> hard to imagine a near term solution there and there's great momentum around nafta. no headline u.s. pulls out of nafta without another deal. >> what's the line for markets
to be a problem for u.s. stocks? >> yeah. i agree with your guest. something to keep an eye on but at this point what i'm doing is following the fundamentals the u.s. is seeing more analysts revising the estimates up than down and i think playing a role into why we see the u.s. decoupling from the rest of the world. we would like to see the dollar stabilize a little bit we have seen the dollar down from the recent peak which is helping emerging markets, as well maybe more easing coming out of china to help stabilize that, as well clearly there's weaker links within em an seeing that play out. overall, if you look at global growth, it's still relatively healthy at this point in time. >> mark, phil, we are in an interesting time here. as we -- everybody will get back to work next week let's hope thanks so much good to see you. >> thank you. >> thanks. when we come back, with a friday deadline looming, canada and the u.s. are back at the
negotiating table today. looking to salvage the three-nation nafta pact. just where would that leave other trading partners in the eu, for example, or asia plus, a big interview this morning. becky quick sitting down with warren buffett, 11:00 a.m. also, he's a birthday boy. 88 years old amazing. "squawk on the street" back right after this this wi-fi is fast.
i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops. oh boy. wi-fi fast enough for the whole family is simple, easy, awesome. in many cultures, young men would stay with their families until their 40's.
ka natdian foreign minister freeland negotiating a trade deal with the u.s. counter parts in washington as we speak. this even as canadian prime minister saying, quote, no nafta deal is better than the bad nafta deal how much leverage was canada have and are the president trump trade tactics working? nice the see you we usually talk to you about china. what is the take on the nafta negotiations are progressing is president trump doing a good job bringing everyone to the table? >> look, sara. i think it's encouraging we're going to have a long overdue update of a 24-year-old agreement. and, you know, canada and mexico are our largest export markets and in large part that's good news although the details at this point still remain quite sketchy. >> based on what you have heard so far, looks like they're going
to, you know, talk through this whole dispute/resolution as it relates to trade is there anything in there that makes you rethink the economics of the trade relationship between the u.s. and mexico and canada and how those supply chains would work? >> well, the word supply chain is really important. that's what this is all about. there's been a real integration of north american production since nafta was signed in 1994 and that's a big plus for the efficiency by which goods are delivered to american markets. but the supply chain negotiations that are going on are very different than the issues that we have with china which are more strategic, they focus on innovation and intellectual property, the allegations of technology transfer, industrial policy, core issues that define china's approach to economic growth and
development over the next 30 years. these are going to be much tougher to negotiate so i don't think we can extrapolate a break through on nafta into a break through on china. >> i was just wondering how you think the chinese given all of your decades of experience working with the leadership in that country are viewing when's happening here in north america. >> well, they certainly see that the trump administration is willing to negotiate but the question is, what are the issues that are going to be negotiated and if the trump administration is attempting to get china to back down on its basic strategy for economic growth innovation and development over the next 30 years i think the chinese are going to continue to be very reluctant to negotiate on those principles, made in china 2025 industrial policy, the artificial intelligence 2030
campaign these are issues that the chinese feel very, very strongly about and i don't think are going to back down on. >> steven, politico has a piece today quoting the eu trade chief saying that they're willing to scrap all tariffs on industrial goods including cars if the u.s. does the same. that's a long way from getting it done but once they start to happen, if we get canada on a trilateral deal, do these agreements start happening like dominos? >> well, carl, i mean, you know, i think there is momentum on negotiations and i think the possibility that tariffs start to fall sharply in other areas certainly can't be ruled out i mean, the president said - >> hey, stephen? >> tariffs are great and then take them to zero. it's not clear exactly how he gets tariffs to zero by raising tariffs on other countries. >> hang on one second because we
have breaking news we need do get to let's go to wilford frost at headquarters for that. will >> bank of america is reversing a self-imposed ban on commission based trading in the retirement accounts they had imposed the ban in anticipation of the labor department's fiduciary rule of about $150 billion of assets under management in that division a third switched to pay feeing accounts the bank lost a small amount of assets overall the rule was thrown out in march. bank of america decided to review the ban and announcing it's reversing that ban. commission based trading will be permitted again on retirement accounts by october 1st. this does represent the bank reversing a rule aimed to protect retirement savers from conflicting advice but bank of america was ahead of rivals in
imposing the ban and the move brings them back in stock. guys >> is this a big change, wilford, for their business? >> they didn't lose assets in the first place. the type of accounts that retirees held changed and they started to pay fees instead of commission based opposed to a drastic change in the earnings when they announced the review in june, it attracted press attention. if they were going to change a rule that had been put in place to protect clients but the debate here is whether they should be commission based trading at all and that clearly exists across all banks for all clients and bank of america just well ahead of the curve in placing this rule and now reversing it. >> got it. thank you. we're breaking in with the news on bank of america let's get back to stephen roach, yale university, former head
morgan stanley trade china there's pain in some of the currencies steep falls. questions about whether we're going to see defaults because of the dollar borrowing that the local companies done over the years. do you think this disproportionately hurts china in a way and could actually increase the u.s. leverage in those trade negotiations since china is an open trading economy with the emerging markets? >> well, i think you have to sort of benchmark what's going on right now relative to what happened during this earlier chi sis in '97, '98 and the conditions now are very different with respect to the reservoir of foreign exchange and didn't have a backstop and now over $3 trillion to protect its currency and protect its markets. and the chinese currency as well
as most currencies in asia have moved away from fixed peg so there's more flexibility for maneuver but having said that, i mean, there's a lot of contagion going on from turkey to overnight in argentina there's evoked a massive interest rate damaging to those regions but no, i don't think it brings china to the negotiating table with a strategy of capitulation i think they're more than prepared to withstand these pressures. their equity market's been hit but i think they remain a pretty steadfast in the approach at this point in time. >> all right we'll see. certainly we -- there's been a lot of discussion of where else to source things like soybeans the journal has a story about how made in japan is a big selling point in china and argue
that chinese consumers reading the label to see if it's made in jap japan as opposed to the united states. >> yeah. well, the world has change ways of coming around to concepts like made in china, made in japan. i remember as a kid made in japan is considered a negative on the product and now a high quality product an same of products made in china, carl. >> finally, i want your thoughts on what we're seeing out of the u.s. spending numbers today are pretty strong. the u.s. consumer is in good shape. the best ever according to brian cornell of target recently in an interview with us. so you had i think some questions about the overall strength in the equity market and the u.s. economy going into the year are you surprised by what you are seeing and do you think it can continue into the second half >> well, you know, the equity market by my yale colleague bob shiller is still at the upper
end of the valuation by the long term it's only been higher once since 1929 and that was in 2000 so i'm not as comfortable on valuation as most of the guests that you have on your show. having said that, you know, the consumer's been going through a long, long healing process after the crisis of '08 and '09 and debt is being paid down. savings balances have increased somewhat so, benefiting from the tax cut late last year which is a temporary impetus, consumers are spending again and i think that's an encouraging development for the economy. the question is one of sustainability and i'm not a momentum guy coming that and i still have my doubts in terms of how long this can last. >> stephen roach, thank you for your thoughts as always. >> thank you, sara. >> from yale university this morning. as we go to break, get ready
to start watching amazon's market cap nearing trillion dollars. stock closes 2,000 for the first time today, new all-time high going back to the ipo of 1997. billionaire investor obviously market legend ceo warren buffett to join us in about an hour, less than that, sitting down with becky quick in an interview you do not want to miss. there's a look at the berkshire shares today with the dow down 61 we've been helping you prepare and invest for retirement since day one. why would we leave now? because i'm retired now. so? we're voya. we stay with you to and through retirement... with solutions to help provide income throughout. so you'll still be here to help me make smart choices? well, with your finances that is. we had nothing to do with that, uh, tie. or the suit. or the shirt. voya. helping you to and through retirement.
now for our etf spotlight. taking a closer look at the emerging market eem. sharply lower today, year to date the etf down more than 8% tracking for its worst year since 2014 argentina's on going economic woes driving the action today. the peso falling yet again after the central bank of the country raised interest rates from 45% to 60% 60% interest rates investors increasingly concerned.
latin america's third largest economy could default. peso pared some of the losses. imf will step in earlier after the president urged the fund to speed up the release of a $50 billion bailout. imf said in a statement yesterday to look to, quote, revise the government's economic plan with a focus on better insulating argentina of shifts in global financial markets. since the start of the year, the dollar up 90% against that currency and while you're not seeing it quite as bad across emerging markets there is a bit of a contagion factor where political and economic problems in places like south africa, indonesia, turkey, front and center get punished it's the bond vigilants but this time it's the currency traders. >> indeed. 60% rates in argentina amazing. the president, meantime, going after google yet again
tweeting a video last night accusing the search engine of showing political bias the company said it promoted the state of the union just like years prior. evidence of which you can see right here it does set up a political showdown ahead of next week's congressional testimony. julia boorstin is covering this and been argued today this is becoming a wedge issue in the elections. kind of like immigration for years. >> yes i mean, this is really a fascinating debate here and it's really interesting to watch president trump continue his attack on google, especially ahead of these hearings because what he is attacking is the algorithm and this comes at a time that google along with facebook an twitter have been investing more in people, in creation to help prevent the algorithms of being manipulated by fake news, a risk not only for consumers but the advertisers, but also,
preventing the algorithms of being manipulated for election interference as we saw in the case of russian election interference the 2016 elections. so just as google and facebook hiring the people to keep a check, trump is attacking the algorithms themselves. >> it's -- we have had a llt ot discussions how the social media is getting on the left for election meddling, and privacy, and now getting it on the right for would be political bias and it's going to be -- i don't know, fascinating the see how dorsey and sandberg navigate questioning at least on the congressional level. >> yes, absolutely and then the issue of man versus machine,trump right now attacking the google machine and the algorithms employed saying they're biassed an enthen also seeing an attack on the human side at facebook, google an twitter saying that those
companies are biassed. you know, there was a story coming out earlier this week about a small group of facebook employees who accuse the sort of overall tone of the company for being biassed against conservatives so we're starting to see more of that come out, as well but it seems like these tech companies just can't win one thing i have to point out, though, is that google has come under attack for not sending a c-suite level executive to the hearings next year you don't have an executive from google and seen senators attack google because of that so you have to wonder if trump is feeling that maybe google isn't fully respecting the sort of process and sending someone senior enough to the hearings. >> julia, who is making -- i mean, who's likethe front person for this industry and for these companies in defending themselves and arguing it feels like sometimes we get blog posts or responses to
politics backed up by facts but if they don't send the ceos to testify and publicly defend the practices, who's the spokesperson in what's happening inside the communications departments an the media rooms or the general counsels? i have to imagine they're ramping up the d.c. presence >> they're taking it sere slain i have to say it seems like facebook at the forefront of showing that it's taking this seriously. we, of course, saw mark zuckerberg testify at capitol hill an now cheryl sandberg, almost as high profile as he is. jack dorsey attending a senate and house hearing on wednesday google is surprisingly sort of less throughout in front of this but they were very direct in addressing the attacks of the president and the president on the attack for a couple of days and there was a back and forth on tuesday with google
google sent a response of they're unbiassed and no political agenda and then the president on the attack on television this is now sort of heating up to be a real battle specifically between the president and google and it will be interesting to see how google responds and if they choose to send someone more high profile or get in front of the issue to sort of show or demonstrate how unbiassed they want to be in their search, search business. >> yeah. interesting. facebook which really hasn't played in the rally for a few days, timely getting traction up 2% one of the best performers on the s&p or nasdaq 100. julia boorstin joining us on social media names dow down almost 80 let's get a news update. good morning, sue. >> good morning, carl. good morning, everyone here's what's happening at this hour a memorial service to be held in arizona today for senator john mccain his casket will depart the state capitol where thousands have
paid their respects. former vice president joe biden among the speakers scheduled to pay tribute to the late senator at north phoenix baptist church. the detroit school district is shutting off drinking water to all of the schools after test results found elevated levels of lead or copper in 16 out of 24 locations. students will be given bottled water to drink. brace yourself for a spike in gas prices this holiday weekend. aaa says this will be the most expensive labor day in the past four years national average is expected to hit $2.84 a gallon, 48 crepts higher than last year. happening at this hour, the justice department says harvard university puts asian american applicants in the admission process in a bias. in a new filing the justice department siding with plaintiffs who sued harvard back in 2014 for allegedly limiting the number of asian american students it admits and holding them to a higher standard than
students of other races. and basically, carl, and everybody, lawyers for the justice department now saying there's one component of this admissions process that the applicants object to it's called a personal rating and the justice department says that reflects racial stereotypes that asian american applicants are less, quote/unquote likable an it hurts the chances of admission despite their higher academic ratings so we're watching this story. we have watched it all along since 2014 i'll send it back downtown t you guys. >> quite a controversy, sue. thank you very much. when we come back, campbell's soup back to basics refocusing the brand, selling some assets. call is just now wrapping up we'll talk to two analysts who were on the call and get their take on the news today "squawk on the street" continues in a moment.
welcome back i'm sara here with carl and david. coming up, legendary investor warren buffett will be live first on cnbc right here sitting down with our becky quick. we are an hour into the trading session. market action right now. nasdaq just turned positive. technology also going green. a little more defensive tone to today's trade. utilities and health care are stronger keep in mind s&p and nasdaq are in record high territory the dow's only off about .2% 53 points. coming off of a stellar run in the markets. we're watching shares of campbell's soup today. stock's down a little bit after reporting an earnings beat this morning. but the big news -- the company announcing a sale of the international and fresh food businesses
this is all in an effort to regain its financial footing with a long awaited strategic review and joining us now, ken goldman, john baumgardner. did you hear anything on the stock or get anything in the announcement to make you change your mind? >> nothing to make me change my mind i feel there's positives to come out of the call. i think what they're doing, simplifying, getting rid of divisions not core focused, paying down debt, we reiterated the underweight rating and feel good about that. >> you asked two fairly pointed questions on the call, one about whether they're open to selling themselves and the other sort of pointing to the board saying you're selling things you approved the purchase of and for a lot less than you bought them for. were you satisfied with the answers? >> i don't think i'm ever
satisfied with any poianswer but the point is this is not just the point of the previous ceo. the board made some mistakes, too. i wanted to bring up the fact regardless of the answer somebody on the board, you know, the feet held to the fire, as well, for the mistakes over the years. >> john, is the company for sale or not >> we don't think so we think at this point in time you see package food valuations compressed relative to the market campbell is a real turnaround story imbedded in a bid they would receive and after cost savings, the amount of synergy isn't all that great so we think to sell the company you are not maximizing the value and we think it's better off to repair the ship internally. >> they seem to agree with you, john just basically two key segments
and sell off what they hope is a better '19 john, my question and many investors' questions is, can they pull it off and execute given the track record >> well, we think what we learned this morning in terms of an increased willingness to sell back the company, you are correcting what went wrong as they push for short term margins over longer term revenue growth so we think it's a step in the right direction. the integration of snider's lance is a good decision and we would have liked to see a two or three-year time frame rather than one-year recovery for the business and we think they have given themselves a limited cushion to operate. >> ken, sounds like you don't agree. can they fundamentally ton around the company soup sales declining 14% over the quarter. >> well, to the company's point, they're lapping very difficult periods last year where they lost big promotions atwal mart
so there's nothing like easy comps to get the numbers in the right direction. we believe that their long term outlook they reinforced some lines and raised in other lines today is too aggressive. we were surprised they didn't take the outlook down a little bit. hard pressed to reach 1% to 2% organic long term. >> the nominating window is open dan loeb may come with a slate to replace the directors if he does given the math and the fact that the family, two members of the board own about 37% of the stock, do you think he still can gain traction with the shareholder base >> i have a great deal of third point and dan loeb in particular if they make the investment worth it, they figure out that way. along the lines of the question, though, i think that there's a little bit of a difficulty in what they can do or in this case just because of the fact that
the dorrance family control a third of it. they need two thirds of the stock to make any major changes like a sale. it's challenging in this case. but maybe third point sees something we don't necessarily see. >> john, how likely is kraft heinz a suitor here? >> low probability in terms of kraft heinz, they're looking to build more international distribution i think the last thing to do is deepen the exposure to the u.s. food business, soups, slow growing category so you would think kraft heinz is much more inclined to focus on getting their own ship back to float. >> well, we'll wait to hear from mr. buffett on that, as well thank you very much for weighing in on the big campbell's news today. >> thank you. >> thank you. well, on the other side of this break, we are moments away from that big interview. of course, we have been talking about it for days now.
sitting on the edge of our seats. warren buffett going to sit down with becky quick don't want to miss what he has to say, of course. given his views of the market, ownership position and including apple. becky will have it all after this break to the powerful new samsung galaxy note9... ...the perfect device for entertainment & productivity. so, it's essentially the ed helms of devices? how so? well he's both very entertaining and very productive. you think? yeah, i do. and that's my completely unbiased opinion. buy a galaxy note9 and get one free. more for your thing. that's our thing.
dow down 72. let's get to the cme group in chicago for rick santelli. hi, rick. >> hi, sara. when you talk to many on this trading floor, or i talk to my sources, or i go to investor conferences, there's a lot of upbeat things going on right now. that doesn't mean that there aren't areas of concern.
if you chfuture areas of concer. there's never a white flag, domestically or globally, all clear, not a problem on the horizon. sometimes you get pretty close a fly in the ointment seems to be that the strength in the dollar is going to cause some issues, those issues mostly global effects think emerging markets think multi-nationals and part of the valuation of where equities trade that too strong is not good and the dollar kind of strong. now, maybe the perception of that is there but let's go to the whiteboard, shall we here's year to date of the dollar index hovering around 94.75. and at its best level we're just shy of 97 in august. but basically, august is gone. we had it. roller coaster took us up, down.
got on here and basically got off here point is as we sit we are up on the year 2.9%. now, that's not bad. but i don't know that that's big enough worry bead to make this a fly in the ointment. the high trade was just shy of 21 the low trade was 2001 summer of 2001 in the spring of 2008, we hit the 20-year closing low. all closes prices composed this chart. 71.32. you know the average here? just a bit under 96. which is at red line the interesting part is that it seems as though on the big picture this is gravitating actually towards a mean and very
important. when i look that the chart, i don't necessarily see this kind of volatility again. what i see is a market that's trying to actually calm down carl, back to you. >> i will take it. mr. santelli, thank you. always like when he get it is charts out. >> especially on the dollar. heading to break, there's another guy we know pretty well on the left there. 88-year-old warren buffett going to be interviewed by our own becky quick. ats mi uafr is break. our new, hot, fresh breakfast will get you the readiest. (buzzer sound) holiday inn express. be the readiest.
it is the big interview of the morning. becky quick sitting down with warren buffett in midtown manhattan. good morning, beck >> carl, thank you very much we're smith at smith and wolenski where the lunch for the annual glide foundation lunch the charitable auction mr. buffett does is taking place thank you for being with us today. we appreciate it >> i'm delighted to be here. >> the winner for the glide foundation auction paying $3.3 million to have lunch with you today. what are you going to say to them to make it worth their while? >> we'll talk about whatever they want to talk about and as long as they want to talk. any subject they want to get into, except what i'm buying
currently. i love to talk about what they want to talk about >> is it common to be asked for stock picks in these lunches >> no, actually it isn't i can't recall ever being asked. we talk about family actually, the couple that bought it this year bringing along two small children and we talk about the children, raising kids, a lot of things. it's not all stock or business or finance at all. >> well, let me be the skunk at the garden party and start asking about some of the things. you are joining us on a day we have watched the stock market continue to set new highs, the s&p, the russell and the nasdaq. the dow is not far off the question we always ask you is do stocks look expensive? >> definitely. if you had your choice between buying and holding a 30-year bond for 30 years or holding a basket of american stocks,
there's just no question, you're going to do better owning stocks it's more attractive than, considerably more attractive than fixed income securities that doesn't mean they're going to go up or down tomorrow, next week or next year, but over time, a bunch of businessestha are earning high returns on capital are going to beat a bond that's fixed at roughly 3% for 30 years, and it's not my field of specialty, but actually they look, stocks generally which are, they're american businesses, $30 trillion worth of them and they look cheaper than generally real estate >> is that the only thing that makes stocks look attractive right now is the comparison with fixed income >> well, that's what you have to do in investing. i mean, you're sitting with some cash in your pocket. you've had savings, and the question is what do you do with it you can buy a duplex next door and rent it out to people and do
fine over time or buy a small piece of farmland or something of the sort or you can put it into something fixed income, bonds or bank deposits or whatever it may be, and stocks if you look at american equities, american businesses earning a lot of money relative to the capital footing, and the reason stocks are worth a whole lot more than they were 20 years ago or 50 years ago or 100 years ago is companies have plowed back part of the earnings. with a bond you get it all out in interest, you get your 3% or whatever it is and that's what you have with stocks maybe a 3% dividend but they're plowing money back or repurchasing shares or doing something, and over time, that just makes a huge difference >> the reason i ask about stocks setting at these new highs and whether you think the market is expensive is because there are retail investors sitting at home and when nightly news talks about how the markets are at new highs some of the retail investors who have been sitting on the sidelines think my gosh, i missed my opportunity again.
the last time we talked to you, you said you were still buying stocks are you still right now? >> we're buying stocks this morning, and i'd rather buy them cheaper, but i've been buying stocks since march 11th, 1942, and i really, i bought them under every president, seven republicans, seven democrats i've bought them quarter after quarter. some of the buys were terrific, some of them weren't at such good times and i don't know when to buy stocks, but i know whether to buy stocks, and assuming you're going to hold them, wouldn't you rather own an interest in a variety of great businesses than have a piece of paper that's going to pay you 3% in 30 years or short term deposit that pays you 2% of the sort >> no argument your concentration in the stocks you own has gotten a little more concentrated recently, there was a finding that showed berkshire ha hathaway was continuing to buy shares of apple. that stock is also a new all-time high last night >> yes >> it's now you own 5% of the
shares outstanding of apple. it's the biggest holding for berkshire hathaway at $56 billion. have you continued to buy even since that filing? >> we bought just a little, about 6 million of the shares are attributable to another fellow in the office that's owned it for a considerable period of time the rest are my portfolio, but i bought just a little bit -- i like to buy them cheaper it's difficult we started buying or i started buying when the stock was maybe 100, i was buying it kind of as fast as i could, and i ended up buying some as high, a whole lot higher, i don't want to name the exact price but a whole lot higher i'd rather have it go down for one thing, if it goes down apple is going to buy a lot of stock back, already buying stock back if it goes down 10% it means they get to buy 10% more shares and my interest will go up 10% more for spending that money i am benefited by going down if i were to talk my book, i
would talk it down >> i spoke with an analyst today, gene munster and he pointed out the interesting thing for apple for a long time it was a volatile stock, it traded in the boom and bust cycle. every time they had a new phone that came out it would push the stock higher and if it didn't have a new release it would s p drop 65% of the business, but he looks at it differently. is this a boom and bust cycle or something different? >> not in the least. i like to see the new release do well or you know, but i do not focus on the sales in the next quarter or the next year i focus on, they won't tell you exactly how many but hundreds and hundreds and millions of people who practically live their lives by it, and if you look at that little piece of whatever it is, that is some of the most valuable real estate in the world. fifth avenue will never come close to that.
you've got hundreds and hundreds of millions of people with loads of buying power, and able to do business or learn information or whatever it may be and if part of their habitable living, they spend hours a day and it does all kinds of things for them so that real estate is worth a fortune, and it's nice to have it added to, as they sell new phones and of course a lot of them are replacement phones but they're adding to hundreds and hundreds of millions of consumers that are never going to get to fifth avenue, they're never -- and you are an indispensable part of their lives. it's an extraordinary product. >> you don't look at it like a tech analyst would or a tech company, for that matter >> i look at ipad. you mean -- >> in terms of how you value the stock and its products >> they've got to keep having the product that this huge
clientele regards as indispensable. it's got to be the best thing that they can tell us when airplanes will arrive or whatever it may be, what the weather will be what stocks are doing, millions, play games, whatever it may be, and that's important that their replacement products are looked at as super desirable, but one of the things that i understand is we have a very large retailing operation and if people went in to buy the latest iphone or whatever it might be, if for some reason we didn't have it, you couldn't sell them anything else. they either went next door or they came back i mean, it wasn't an alternative, and when you have a product that is that personal, that valuable, and they talked
about i've owned thousands, i have a plane that cost me a lot, a million dollars a year or something of the sort. if i used the iphone, i use an ipad a lot, if i use the iphone like all my friends do, i would rather give up the plane, which is a million or million and a half a year for something that costs a thousand bucks the iphone is enormously underpriced. now it's got competition so you can't push the price, but in terms of its utility to people, and what they get for a thousand dollars someplace else, you know, you can have a dinner party that would cost that, and here this is, and what it does for you, it's incredible >> you mentioned airplanes, and airlines, and i just wonder, are the airline stocks that you also still find attractive? have you been adding to your positions there? >> we can't add, technically w