tv Squawk on the Street CNBC July 22, 2019 9:00am-11:00am EDT
quick final check on the markets. the dow looks like it will open up higher. nasdaq looks to open about 23.5 points higher, s&p 500 looking to open 6 points higher. mike santoli, thank you for hanging out. "squawk on the street" starts right now. good monday morning, welcome to "squawk on the street." buckle up for earnings a third of the s&p reports this week, including amazon, facebook, cat, boeing, tesla and more we'll watch that china trade, this guessing game that is the fed right now. europe is green, oil obviously is key with the detention of those uk tankers in iran our roll back begins with the busiest week of earnings as the
president once again targets the fed. huawei restrictions relief tech executives expected to make their case to the white house today. and equifax to pay as much as $700 million for that 2017 data breach we'll start with futures, though, set for a higher open. the dow, s&p and nasdaq all lower in three of the past four trading days big week for earnings. we'll hear from phobia, amazon, alphabet we're a week away from the fed's decision on rates. and then the president today is tweeting it's far more costly for the fed to cut deeper if the economy actually does in the future turn down very inexpensive in fact productive to move now the fed raised and tightened far too much and too fast. in other words, they missed it big. don't miss it again. of course now the fed blackout window is in place so we won't get a response to that, jim, before the meeting. >> look, the president is -- he wants that last hike repealed. i think that we have to -- he's obviously a lightning rod beyond
belief, but it's perfectly reasonable for him to say that if only because it was wrong let's look at the substance of what he's saying our rates are much higher than everybody else that's absolutely true there is a definitive slowdown in the u.s. economy, absolutely true should our rates be this high? no so jay powell should have just said, listen, we're going to cut or cut now but he would have looked like he was panicking and had to wait a few months the president is right, as nutty as he is maybe fox news said he was -- >> you're raising a really interesting point. is this the u.s. fed or the global fed, because our retail sales ex, gas, building materials growing at 6.1 annualized but powell says we've got to pay attention to what's happening around the world. >> there are two economies brian moynihan said so much on "mad money."
there's not even any -- you go over union pacific, they manage to make the quarter despite the slowdown csx could not make the quarter the slowdown is definitive everywhere, in big cap. >> manufacturing is not the economy. it's not the u.s. economy. >> it's not the u.s. economy, but the world economy does matter to us if we're just in -- there are real issues. if you're new corps which is a great american company, you needs rates a little lower you don't want to be uncompetitive. >> will 25 be a disappointment >> no. >> that's a big question today, though. >> the media is paying attention. some of the industrials are paying attention yeah, we get 25 and then that gets us so we can still talk about another 25 but look, it is hard when you have all the major banks saying that the consumer is very
strong but there's consumer -- there was construction lending and it wasn't that good all of corporate lending was not that good. so jay powell needs something to hang his hat on. >> i expected you to say baltic dry is surging, jobs market rebound, you can build the case that we're coming out of a second quarter slump. >> yes, but the narrative on every single bank was rates are too high there was a slow -- if the fed's job is just to get back to where we were in september, they have to cut i mean if you take a look at where oil was in september, it was $20 higher oil being a really good barometer for demand we need to do this britain is in disarray brexit has been talked about and it's actually starting to concern more than will frost china is definitely decelerating we have business, we do some
industrial in this country there are these big trains and trucks and they have got stuff in it. look, i do think there is a component of the industrial economy that we need to do better the chinese are slowing their investment how about all those stories. it's not that much investment in there, but yet we need an industrial economy to accelerate we can't be everybody going to walmart and buying and amazon and buying. >> of course the last voice we got out of the fed friday afternoon. here's what he said. >> the economy is actually quite reasonable at this stage so if that were to change, i'd be happy to ease at that point, but i don't want to ease if the economy is doing perfectly well without that easing. >> he should have hit the beach. cape cod has got -- >> wait, so williams and clareda can speak but he can't >> honestly, look, we all know
that they're date a dependent n. the data is not as strong. there wasn't anybody -- last week the best quarter that was reported was honeywell and they just acknowledged, listen, if it weren't for aerospace, there's a slowdown everywhere. aerospace is bailing everybody out except for boeing because of the max. but there's really a definitive belief among housing executives, among retail executives, bankers, that that last quarter point should be retracted. they have got to do that the president hurts his own case can't he just focus on mueller and fake news? does he have to intrude? he's such a broken record. >> he's paying attention >> but he's going to get -- he used to love getting a 10 on "the pprentice." this is like an 8. not even winning the night with that you've got to win the night, president trump. >> energy has been july's worst sector, but could move up today
in the rankings on this jump in crude oil prices following the ramped-up tensions in the middle east over the weekend as you know iran released some video over that british ship seized by the revolutionary guard. the government is expected to announce its next steps in a speech to parliament today, jim. we've sort of covered this you think there's a lot of leash given our domestic production? >> russia and saudi arabia agreed to cut. it doesn't matter. we're going from 12 million barrels -- we were 5.5 million barrels in 2005. we're going to be 17 million rather quickly i'm getting this from scott sheffield. we're just producing -- if it weren't for natural gas being so low, we would produce even more. we are definitely a swimming ngn country. oil is down $20 from where it was. the british thing is like -- they ought to go watch the movie "sink the bismarck." they sunk the bismarck but can't
seem to sink these twin engines. honestly, i've got guys out in the hamptons that have much bigger speed boats carl, those guys -- there were two speed boats. >> do you want to see that do you really want to see that the president said we took pains to disarm drones rather than even risk a human casualty. >> i don't know, the british could send dunkirk they have dunkirk, they have sink the bismarck and then you've got this british flag comes back with an iranian flag. the british government is somewhat like the italian government there's no real government. >> they also know that potential negotiations with us is on the line as well. >> we're different i don't think we would allow this i don't think president trump would allow an american flag -- of course we don't have any because of the jones act an american flag tanker to have an iranian flag tanker it doesn't seem like president trump would be into that the british doesn't seem to
mind it's amazing to me that british has totally abdicated but they claim we can't protect all shipping come on, it's a 24-mile gap there. they can protect it. so i think the market went down very seriously in the last four hours and that was in part because everybody was at the hamptons already and the guys left were bears. i think the market can go back to where it was at 11:00 before the speed boats seized a 2-million ton tanker -- 2-million barrel tanker. >> meanwhile, a lot of reports on how china is taking in every drop of iranian crude that they can, given -- >> well, i think that they are simply -- they can do that we've got all the crude. they want some crude if natural gas weren't below a dollar, we could really start pumping. the u.s. is producing a million barrels -- can you imagine what they can do? we're down in rig count and producing a million more barrels than last year there's plenty of oil.
the chinese wanted to make a deal, instead of soybeans, they should buy our oil >> chinese state media says lighthizer and mnuchin could go to beijing next week the first face-to-face meeting since g-20. >> who wants to short a market remember morgan stanley? how long ago did they tell you to short the market. if we get that meeting, holy cow. they need to buy some soy and some oil they also need to allow americans -- pretty good quarter, by the way. >> should we be willing to loosen the huawei leash and remove all tariffs before we get that deal? >> no, we're not removing any tariffs. >> that's what state media says they want. >> state media, good luck with that huawei is interesting because i think you could make -- huawei is regarded as a criminal enterprise by half the white house. the president has to go with team a or team b
someone is going to go down the elevator, we don't know yet. i don't think the president knows yet. he has to ask his daughter and his son -- who are the judges right now? carl, we've got to know who the judges are because i've got to tell you, you've got two camps one camp wants to jam them with micron semis and the other camp regards this thing as something that is like genco >> we're going to talk more about this meeting between tech executives and kudlow on this very topic. finally, new york city mayor bill de blasio cancelled ozziefest over the weekend it was set to feature live interviews, including our own jim crame. are. organizers say everyone who purchased a ticket will get a refunding. you were going to do a-rod >> a-rod and mark lasry. i am willing to go out on a limb, unlike my wife, and say
this was not fyrefest 2. there were no cheese sandwiches but as far as i can tell and as organized as this has been at one point i thought i was going to interview some stars. there were no fema tents in central park, none and that may be -- and there was no credit card ordebit card. and that may be the difference i don't want ozziefest ever lumped in with fyrefest. they are very different, carl, because there were no cheese sandwiches, none >> we'll see if we get it rescheduled. >> boy, i've got to bear down on that. as we said, tech executives at the white house will tell you what they're meeting about and then disney closing out a record-breaking box office weekend. "lion king" not their only film topping the charts all three indices down three or four out of four days. we're back in a minute how
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u.s. officials including u.s. treasury secretary mnuchin and larry kudlow are hosting a meeting to discuss the ban on huawei according to sources, companies invited include micron, qualcomm, broadcom microsoft was also invited jim, you talked about the two camps in the administration. >> there are who genuinely
believe within the white house that you can separate huawei, the infrastructure company, from huawei, the handset company. huawei would certainly disagree with that. but if you could somehow not sell them infra which is regarded as military but only sell them handset, that would be a win for the hard-liners. the soft-liners say, look, we will review everything that's sold and that will be fine huawei is a $100 billion a year company. but you have to listen to qualcomm that could be handset, that could be infra broadcom, mostly hand set. these are two opposite camps and i know that the hard-liners are insistent that huawei need to be delayed because huawei is well ahead in 5g versus ericsson, nokia and samsung. there's a big move by samsung, not talked about anywhere, to leapfrog and to take all the
parts that were destined from huawei samsung wants them the government is not as granular i think hopefully they'll learn today. i'm not kidding, i wish they did know our homework indicates otherwise. that samsung could leap ahead of huawei if they delay huawei another six months. >> you mentioned the goldman call, they go to buy on micron and say inventories are moving faster than we think. >> that was an unbelievable call a lot of people felt when micron reported last, it was disappointing and they pushed back when pricing could turn almost immediately because of some production problems almost immediately it started turning and hitting inflection when everyone was most negative on 4g, it was 32 please don't buy western digital because their balance sheet is not as good as micron. micron's buyback is about to kick in and it's going to be furious. >> goldman goes to buy a mat target goes to 56. >> there's so many shorts in these names, i feel bad.
maybe the shorts are on vacation, but wow. this is a very big call, particularly on a sleepy monday. >> "the washington post" meantime this morning gets some leaked documents providing some visibility between huawei and north korea's attempt to build 3g and whether or not that's a violation of restrictions on u.s. exports. >> that was obviously -- look, there are people who want this huawei just knocked down and they are people who worry and feel like if the chinese are ahead of us in 5g, we can't stop them so they'll throw anything at huawei, some of these people. huawei doesn't help its cause. huawei should be saying, look, we play with an open hand and tell you exactly where this stuff goes we need to see these trade talks be more than just about huawei, but the chinese better show some good faith they have really been -- the president to some degree was betrayed in the earlier talks that happened last year in argentina. >> by the chinese.
>> yes and i know he's feeling like he may be betrayed now. the chinese are one tweet away from blowing up. they better buy something is the way the president is thinking. the president views this very black and white. the chinese have not followed up. >> r.j. o'brien had a note saying we think it's possible the president moves on the $300 billion this woeek. >> absolutely. i think it's very possible i think the chinese are really playing with fire. i think the president very much -- he loves the tariffs very much wants to have the tariffs, okay, and then take them down. it's easier to have them up and take them down than it is to slap them on that has been a continual theme in the white house listen, let's just get the tariffs up so i cannot believe the chinese are not showing good faith right here and buying. >> i think they're watching the clock here. >> they're so-called playing the long game. give me a break. i think maybe they're looking at who are they thinking, senator warren they're trying to play that
game they better stop playing politics and better start ordering, because most of the industrial companies that i talk to are ready for the big increase maybe within the next two weeks. that's what they're talking about offline. we're about to get tariffs of $300 billion any day now >> that's something to watch. >> i'm glad you brought that up. i don't think people realize the president is hungry for tariffs, he really is. >> and not afraid to slap them on. >> not at all. >> that's obvious by now. >> he loves it nothing like a good tariff for that guy. >> we'll get the mad dash and the opening bell in less than ten minutes on this monday morning ahead of a slew of earnings that really start tomorrow more about that, after a break every day, visionaries are creating the future. so, every day, we put our latest technology and unrivaled network to work. the united states postal service makes more e-commerce deliveries to homes than anyone else in the country. ♪
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seven minutes to the opening bell let's get cramer's mad dash. watching apple today. >> i've never seen a more stark battle between two analysts. tony, always on air, very dry, love him bernstein. he's saying basically that the setup for apple going into the quarter is not good. katie huberty is saying it's an attractive setup in earnings tony is saying look out, the valley may be too deep to 5g i think the numbers for the next quarter are going to be bad. katie is saying the next quarter could be good, you can hold on
finally, tony is talking about a deceleration in service revenue. katie is talking about an acceleration in service revenue. >> the first since the march quarter of last year. >> these are make or break, these two analysts, they really are. it's a death match two analysts and only one will live. >> katie's other point is the market starts to build in expectations about the new phone about nine months prior and we're getting into that window now. >> right but she's still saying that china is going to be good. some people are seeing -- she's also saying the price cuts are going to be good i have to tell you, carl, my head is on a swivel with these >> i thought you would have sided with katie. >> i would love to, but the stock has had such a move. >> what is she talking, 247 from 231. >> i wish she hadn't done it there was no reason to stick your head in this lion's den the stock was up 28. we had the preannouncement
tony is going to be out there blasting it before the print comes out. she will be on the defensive, i think, because there hasn't been a lot of new service -- what are the new service streams? there was no real health care. there's nothing really out of china. she is -- her neck is out further than his neck. >> sure, sure. also because she's talking about it being a top pick well past -- >> i know. i think this was maybe a call too far is what i'm saying you know i'm a big katie fan, so does she and i've chided tony. >> yes, you have, from time to time that's going to be key to watch today. urnd hf nuthe opening bell in fo a aalmites. don't go anywhere. ♪
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comparisons. it might be the stock to buy if the market comes down. i think there is a compelling technology story i've been following what james quincy has been doing with coca-cola. pepsico reported a good number i think coca-cola could be interesting. look, in the end it's going to be about amazon and heightened expectations alphabet i think is the most vulnerable if only because alphabet refuses to tell its own story and we don't understand the deceleration about what happened last quarter. why is alphabet not making more money? we can't figure it out double click is the most important source of money going into the web for advertisement and i just don't understand it no one understands it. so maybe they take some time and explain it but i think that alphabet -- google is getting more and more web dollars. now, google web services is not doing as well as amazon and possibly better than azure but
they have some explaining to do. they need to tell a better story. if they don't, that's the most vulnerable of the week. >> we would love some clarity about whether or not they have a settlement with the ftc. another friday night story with numbers we can't really judge. >> no, we can't. and there's some new regulations that are coming out in the u.s. that are like europe that would be really favorable to alphabet. but alphabet has been unable to say why things decelerated youtube is now the largest watched source of entertainment. why aren't they making more money? that's what we want to know. >> watch the s&p fill in there, populate on the cnbc realtime exchange standard motor products, distributor of automotive parts, celebrating 100 years. at the nasdaq, karuna therapeutics focused on the treatment of neuropsychiatric conditions we mentioned boeing in there, jim, but we're now looking at a
loss if you include the charge, and we'll see what they say about max orders and production schedules going forward. >> there's really nothing -- they have a very good service stream there's an interesting note out that bashes ge he hasn't had one in three or four hours -- i mean days, sorry. in it he talks about how the service stream is good i think boeing -- if i were boeing, i would talk up space, i would talk up defense, i would talk up service stream and then give the mic to mike smith, the cfo, who's on the max totally and have him lay out max but talk about how, yes, it is tragic there's no spin here, but this is a good time to talk about how good the service revenue stream is the honeywell service revenue stream, they got a good revenue stream and obviously apple but service revenue is boeing's bread and butter if i were them, i'd put out
molenberg to talk about service revenue and smith to talk about the problems with the max. that's how i'd split the call. i think it would end up being a good call if they do that. >> interesting of course boeing is still up for the year, as of 90% of dow components green for the year versus less than half in 2018. >> there's just a magnet of money coming in here earnings just turned out to be not as bad there's a benefit of the doubt that goes on on the honeywell quarter there was a division that did really, really poorly. no one really cared, it was fine there is a forgiveness mode here that's encredible. apple should be unchanged. you've got saginagy who will be on saying bad things and authenticate then katie wil,
this is the glass half full issue. microsoft reported the same day as the boston whaler took down the 2 million barrel thing microsoft was the best quarter so far this year, that's a plain and simple buy right here. buy microsoft. best quarter so far, period. >> i don't think many people would disagree >> it was really quite extraordinary. there's a lot of money shorting these stocks they weren't supposed to turn around until the first quarter no one expected that deram prices would bottom. there was some manufacturing issues involved driving up d-rams >> tech is in tomorrow, right? >> i think they'll tell a decent story. i think they will. remember, some of these companies huawei was the trough that fed huawei is, unfortunately, hanging over everything. we need huawei solved.
we haven't even talked fin tech yet. >> no, not really. >> visa tomorrow visa will have to tell a horrible story to keep that stock down that's how much fintech is loved. it's almost valued higher than every other area i keep waiting when will the bank stocks begin to take money from financial technology maybe tomorrow visa says something so we break the spell of buying. >> this is why the parlor game of whoever runs wells next should be a fin tech guy, person, as opposed to a banker. >> that would be genius. you'd spot wells five points on a fin tech guy it doesn't really matter who it is it could be a guy who just created like trade web or something. you pick the number seven guy at goldman who does fin tech. you've got to change everything that isn't fin tech does not do as well. i think that -- i struggled for
the wells quarter. i went over the wells quarter and they need a ceo. i think it's imperative that they have one. you can you can't have a headless horseman they need to reach down into the bowels of -- john rainey, the cfo of paypal. >> also reporting this week. >> i would call him today. say after the quarter i will pay you $100 million to go tol wells. john rainey is a fabulous guy. can you imagine if he took over wells? actually it could be like -- it could be like jack he could run wells and be the cfo. that's some reference to jack dorsey honestly no ceo versus a part-time ceo. i can't believe i haven't thought of it before. >> interesting i like how you do m & a consulting and now headhunting on air. >> rainey is so great. what a great cfo i would tell dan, sorry. and wells fargo is at 52 >> one last thing on banks the three-month 10-year curve is
nearly out of negative territory. >> right that's a good reason to buy jpmorgan right here right now. >> and odds of 50 basis points next week, under 25. >> keep expectations low we've got to keep expectations low. that just ruins the entire story line we need 25 we need jay powell to say, you know what, why we're doing this -- this is what i would do if i were jay. i've got everybody covered jay has to say, look, if it weren't for tariffs, i would keep it steady right in the president's face, you know >> interesting. >> that way he keeps a very high level, doesn't mention any names. look, it's because of tariffs. wow, jay, i'm giving you the whole -- jay will do it, believe me he did the other thing when i told him what to say about the rates being too far. he'll do this too. he'll say, listen, the problem is the tariffs and the $320 billion and we have to do this in order to protect the domestic economy from continual ratcheting up and then jay is out of the woods
the president is neutralized i mean it's great. >> that could happen his rhetoric has evolved over time. >> the president is sophisticated, but jay has got a rap. he can so easily -- wow, that's good jay, look, i already want credit i'm not asking for credit. i'm just keep doing my show. >> jim, disney as "lion king" number two, "spider-man" next and "toy story 4." not to mention "avengers end game" at highest grossing film of all time. >> disney is just an annuity stream i hated "lion king" and i didn't see it i just feel like we have to really -- there is a belief that you do have the 38-week -- this is the new theory. they own 38 weeks out of 52, and that is about as noncyclical and
secular growth as you can get. if disney plus, espn plus, any one of those shows good news, disney stock will continue to go up but bob iger, who by the way has been very quiet of late. i wonder if he doesn't have something up his sleeve about disney plus and who's making movies for them. i do have to marvel that -- not marvel, i like that. >> no pun intended. >> that i saw a good review of "lion king" and it just didn't matter what an incredible thing to have really no critics and people just go anyway well, it was hot i remember there was a time we used to go because it was air cooled at a movie. and the heat wave did, i think, help things. >> yes. >> but this movie -- this movie machine is extraordinary >> it's true i'm looking at percentage of buy ratings, i think 68% buys. >> everybody likes it. >> coming out of that investor meeting. >> it's as liked as johnson &
johnson is hated. >> yeah, which is dragging the dow today. >> johnson & johnson, they chose not to settle on opiates they're going in talc. they talk about a roll the dice strategy but they're going to be in the bunker soon. they have to win something that's the dow stock -- >> that may be the best balance sheet. >> the best balance sheet in america. but they can't catch a headline break. they need a win. now, i know the counsel who's involved with talc i think they're very, very smart. it's a highly emotional stock. media doesn't like them, juries don't like them, but they're trying to get judges to cool things down. j & j is the achilles heel of the dow. i thought i'd never say that, it's such a great company. but wow. i mean they just can't catch a break. look at that stock. >> well, they're not the laggard for the year that goes to 3m and wag,
walgreens. >> walgreens attacked by amazon in the front of the store and attacked by everybody in the back of the store, that's prescriptions. i don't know, 3m has got a groundwater issue. >> again, with litigation risk. >> i think that's going to be the whole -- i think that's going to be a very big part of the story line on 3m's quarter once again you have steve tusa much more of a quiet basher, not as out there but you'll have other people say that you can't build a model because of groundwater litigation to come so i think people have to recognize that 3m could have a perfectly good quarter, and groundwater will dominate in terms of the q & a look at j & j, what's dominating there is litigation. if 3m is dominated by litigation, you cannot buy that stock ahead of the quarter. >> so of the headliners this week, you said google sounds like has the most risk.
>> the cfo has got to explain why there's deceleration given the money going into online advertising. >> of the other all-stars this week, which do you have the most confidence in? >> the most confidence i'm going -- >> chipotle. >> chipotle is going to be amazingly good because -- >> you said mcdonald's. >> mcdonald's is the most consistent chipotle will have a fantastic rap to talk about. the one that will surprise caterpillar. caterpillar is no longer episodic he's buying back stock, has a good dividend, the yield is good here i think that one will shock people in terms of being, i think, much more even. but mcdonald's is the one you can sleep at night i really think you can sleep at night with mcdonald's. not that you necessarily want to sleep. i'm doing a beyond meat taste test tonight with a real chef. >> on the show >> yes, for tomorrow, but we're going to pick beyond meat. faux meat versus real meat i think it will be interesting
>> yes, it will. >> and remember there are no gmos in beyond meat. and there's apparently taste. >> yep. >> that's the rumor. >> those are all calculations these qsrs are having to make. >> i'm worried about faang netflix was disappointing. i think facebook will be the best of faang. how do you like that >> interesting. >> remember where we were last year this week >> yes. >> i was at the 92nd rodeo and won the white fish competition i was in -- >> i remember. >> i was off of drilling rig 98 when facebook fell apart one year later, facebook is the star of the show. >> and you're not worried about amazon. >> it's a spend quarter. i don't know why people think there will be a breakout when they do a spend quarter they don't really care they don't care. you know, i know that's hard to believe that they don't care, but they don't care. they're back in that mode. netflix, i'm still reeling my wife binged on "stranger
things" without telling me i said let's sit down and watch "stranger things" this weekend that was a conversation. look, one-eighth of america had that conversation. >> let's get to bob pisani with the dow up 16. good morning, bob. >> good morning, guys. mixed open but given some of the issues last week with the fed, that's not a bad opening at all. take a look at sectors you always want to see semis leading, that's a good sign. energy up and bouncing around recently with oil down recently. transports up, that's another good sign. banks down a little bit, but again it is not unusual for bank stocks to be flat to down in the week after the first earnings reports come out from those, so that's pretty much in line with expectations where are we right now if you take a look here, the comments at the ending of last week from the fed were very interesting. a lot of people feel 50 basis points is unlikely china trade, there's reports maybe there will be face-to-face meetings scheduled fairly soon
but that's i think giving some support to the market as well. we have tensions rising in the mideast and earnings are better than feared. i know you've heard reports about earnings recessions. the numbers we have indicate there is no earnings recession q1 up, q2 is looking on the upside, q3 is down fractionally. but the general move is that's going to trend to the upside right now this 6.2% for the fourth quarter will likely trend slightly to the downside the overall numbers that we're going to see indicate the market should be up 1% to 2% earnings that's not great compared to the 20% or more we saw in 2018 but it's not an earnings recession i think that's the most important fact we can take away. in terms of what's important this week, obviously the big three will be reporting. apple, alphabet and facebook i have pointed out time and time again, many other firms have been pointing out time and time again how big these companies have become.
data trek and others are on top of this. alphabet is almost 3%, facebook is almost 2% you put them together and that's 9% of the s&p 500. three of them are 9% that means what happens to them happens to the s&p 500, which is why these numbers that they're going to report is so important overall. i just want to show compared to the other sectors in the s&p 500. if you look at the bottom, utilities are 3%, real estate and materials, those three stocks are bigger than these three sectors that have dozens of stocks in them. that's a comparative way to look at this. you can see consumer staples is almost 7%. it's bigger than consumer staples. all of them put together, those three stocks energy is only 4%. it's twice as big as energy. you get an idea the scale of these companies, the biggest companies just keep getting bigger and so they tend to dominate these companies, these groups overall finally, over than facebook and amazon and google, the most important stock this week, i think, is going to be 3m i know caterpillar will be real
important and be on the 24th but remember what happened here. was it april 25th, as i recall, this absolutely disastrous commentary where they dramatically lowered virtually every metric you could think of, but principally earnings for the full year citing notable slowdowns in china, notable slowdowns in the global automotive industry. which was the canary in the coal mine for that big drop this we saw in may they were the first one to kind of give everybody notice remember, we went from 220 here all the way down to, i think it was 160 was the bottom for that. we're talking about a 27% decline in a major stock in about a month. and that is what caused a lot of the problems that we saw in may. again, that guidance for them, we'll see what we've got here. the important thing is it's going to come on thursday. guys, back to you. >> thank you, bob pisani. looks like we're getting awfully close to a deal on the budget and debt ceiling. let's get to ylan mui. >> reporter: i'm told that the white house and democrats have reached a near final agreement to raise the debt ceiling and
also lift the caps on federal spending under the terms of that deal, the debt ceiling would be raised through july 31st, 2021. in addition, the caps on federal spending would be increased evenly for both defense and nondefense spending, but there would be no significant spending cuts as part of this instead, there are roughly $75 billion in spending offsets that critics are sure to call accounting gimmicks. now, in addition, we are expecting this deal to permanently end the sequester, those mandatory spending cuts, that have roiled congress and forced this type of deadline negotiating. but for right now, a near final agreement to raise the debt ceiling. i am told that the treasury secretary has been keeping both the president and house republicans apprised of the situation and we'll bring you more as we have it, guys. >> from huawei to this, working double today thank you very much. ylan mui in d.c. it would be nice to have that off the desk. >> especially if it's from a
year it's a faux issue and we just have to get it off the table i think the president should just say, okay, that's great and move on. get back to bashing powell. >> let's get to the bond pits. rick santelli at the cme good monday morning, rick. >> good monday morning, carl many are watching that deal and looking to see exactly how much spending is agreed upon. the sequester might have been messy but it certainly did keep a lid on certain aspects of spending by government look at a two-year note yield. keep in mind we are holding some of the bounces we had after the nervousness regarding fed president of new york williams' comments last week, but even at 1.70, we're at 1.80. look at a two-day of 10s and it's dripping on the right as well and its cycle low close is 1.95 hovering at 2.03. so there isn't much cushion. other than three days in july where we settled below 2%, we
are awfully close to maybe looking at that again as we saw on this november 2016 chart. finally, we're all in it together, i can't stress this enough all the policies of these central banks, the promises of more stimulus, the lackluster performance many of the economy is doing so, but those fixed income patterns, sovereign patterns are almost identical as you look at the european bund yields finally, one market holding up remarkably well, especially considering the notion of what's coming around the pike with regard to easing and potentially an easing sequence that may be beginning, the dollar index certainly holding quite firm as this chart reveals carl, jim, back to you. >> rick santelli in chicago. when we return, mcdonald's hovering near all-time highs as it gets ready to report results on friday. former mcdonald's chief ed rensie will be with us meantime the dow is up 44.
day one of this week where earnings kick off. halliburton a good example, up nearly 8%. they point to some upbeat international growth and discuss the north american market, too. >> yeah. remember they don't doas well in north america they did guide a high ceiling. >> stock trading with jim is next really appreciate the military family and it really shows. with all that usaa offers why go with anybody else? we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. it was funny because when we would call another insurance company, hey would say "oh we can't beat usaa" we're the webber family. we're the tenney's we're the hayles, and we're usaa members for life. ♪ get your usaa auto insurance quote today.
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jim, what's on mad tonight carol tome is retiring at hoed cfo. she is a genius. we will sit down and find out the future and also swan song of the past she is great this is it for her. >> one of the greats, absolutely see you tonight. "mad money" 6:00 p.m when we come back, more "squawk on the street. dow's up 70.
starts right there the busiest week of earnings facebook, amazon, alphabet, boeing, caterpillar among those set to report. what investors should be looking for next. >> plus, eqiufax's data breach settlement the news conference kicks off in a few moments. >> and former mcdonald's ceo ed renzi on his thoughts on food stocks. >> the markets investors get ready for the biggest week of earnings mike is looking how some of them may be overpaying for so-called certainty this quarter >> yeah, carl, it seems like the right time to be asking that question, whether investors collectively are putting a little bit too much of their bets in terms of perceived certainty. i would put it that way. nothing, of course, is certain within the stock market here the s&p low volatility, etf, this is basically a subset of the s&p 500 with the stocks that exhibited the lowest volatility, it tracked the momentum s&p 500 etf. so essentially the slow boring
stocks are the high momentum stocks it's tracked very well most recently, the low vol pulled back a little bit the bond market, massive inflows into fixed income funds out of equity funds and whether you look between sectors or across or within sectors, it shes you that the markets is privileging ser received steady earnings growth. something that doesn't need the economy growth do well against cyclical the mega cap growth. this is a year to date chart a persistent story for years wide performance spread, that's about 11 percentage points high stakes when it comes to faang earnings and whether in fact they can continue to work those stocks and keep the growth stocks moving ahead. also, i would point out within health care you are seeing only those stocks that are perceived to be secular growers working, the rest not the question is if the fed cuts rates we get a cyclical uptick in growth, does that mean the market is caught offsides with
this stuff or is the market correct in saying, hey, it's an uncertain world, growth is not that great, we have to stay with what we think is working. >> thanks for the setup. joining us at post 9 today guys, happy monday, good to see you. you took your target to 3k you say the melt-up is your most likely scenario. >> right. >> why not above 3k? >> the scenario is 250 and the main reason for that is with the fed easing as it is doing now and our base view is it's a soft batch. if you look at history, in those circumstances equities have gone up 10 to 15% the problem is that 65% probability for that there is a 20% probability you could have a true recession. so that would lead to a 20% drop sort of on a probability
weighted basis we end up at 3,000. >> for the time being the base case is that soft patch one cut does the trick and we move on? no i think you need to have multiple cuts. >> okay. for how many basis points total do you think >> we think something between 50 and 75 this year. >> all right jeff, is that in line with your thinking at this moment? >> well, look, i think we just have to listen to what the fed is talking about doing it's hard to get inside the head of the fed we are not fighting an environment of tight financial conditions i think the market is seeing too many superhero movies lately and thinks the fed is the guardians of the economy and they have superpowers. the fed has one superpower, and that is to loosen financial conditions we are not battling that right now. financial conditions aren't tight. the global slough down and pmi in auto sales and profits isn't tied to that i think the market has misplaced trust in rate cuts whether it's 25 or 50 at the of
the month, i don't think that's addressing the core of the issue causing the global economic slowdown. >> you are still defending the cautious stance, jeff? i mean, you guys - >> i am. >> you have been cautious for a few months now and missed the run-up to records. >> well, we haven't taken back equity exposure yet. we are telling investors be broadly diversified. we are waiting for a better opportunity to pull back on stocks keep this in mind. whenever we see an inversion of the yield curve it's meant a reversal those areas of the market that performed the best the prior years suffered the most in that resetting of expectations. i think investors have allowed their portfolios to be overweight tech, overweight the u.s., are vulnerable to that next pullback which could look like the fourth quarter when we saw a sharp pull back here and abroad being more broadly diversified right now is more important r right now. >> speaking of that tech trade right now, it's really going strong, up more than 1%.
where are investors in terms of positions around tech? >> i think broadly speaking we have seen that there has been, as you saw the chart earlier, people are feeling growth right now. if you look back last 60 years, they are five times when the fed has ended up easing into a soft batch. during those times growth stocks have outperformed. valuations are obviously a concern. what we see is during the soft batch easings, valuations for s&p go up two terms. valuation could keep expanding it's a valuation expansion i agree that tech valuations are a concern, but i think you could see upside from there. >> do you see a migration in sentiment away fromtech to any other sectner the back half or first half of next year? >> there could be migration. the key thing is what's happening outside the u.s. that's really impacting stocks with high international sales
exposure industrial and so forth. if you start to see sort of accelerations in the china growth that we sort of -- a bit of a rebound happening if that continues, then those sectors would start playing up right now tech is more of a secular -- >> jeff, that's where you have been focused, right, outside the u.s. in part what's happening with growth outside the u.s. how do you play equities in various foreign markets? >> growth doesn't look much better outside the u.s in fact, in some areas it's worse. i will say that valuations are quite a bit lower space statiexs are lower. europe is an example in the u.s. as the fed begins to cut interest rates that will weigh on financials, the biggest sector for profits in europe the emphasis may be on q2 that may help the financials profits. very different environment going forward for the earnings per share growth in u.s. versus the
europe double-digit for european stocks, including financials that could be a big differentiating in the second half of the year. >> all right we will find out more in the coming days. appreciate it very much. >> thanks. president trump going after
the fed again this morning tweeting, quote, it is far more costly for the federal reserve to cut deeper if the economy actually does in the future turn down very inexpensive in fact, productive to move now. the fed raised and tightened too far, too much, too fast. in other words, they missed it big. don't miss it again. i spoke with boston fed president friday afternoon he doesn't necessarily agree with the president that now is the time to be cutting >> the economy is actually quite reasonable at this stage so if that were to change, i'd be happy to ease at that point i don't want to ease if the economy is doing perfectly well without that easing. we don't interest rates to be so
low we push asset prices temporarily up only to be disappointed as time goes on and have more of a reaction on the negative side when the economy does slow. right now it's on the upside, but i think as long as the economy is doing well, if that continues, we don't need accommodation. >> he is a voting member of the fed. they are in their quiet period right now. carl, my takeaway from him was not every member is on board with the fed rate cut. it's not an obvious case right now. he said the economy is fine. he is expecting the gdp number to show 2% growth, a step down from 3% in the first quarter, but no desperate need to ease policy right now and he said, in fact, there are costs to easing when it's not time look at the stock market look at creating inflation and asset bubbles. he is worried about that sort of thing, which is very different from the testimony we have heard lately from jay powell and his number two on the wires. >> right although as bullard said last
week, these decisions don't have to be unanimous. >> they don't. there could be key dissents. ahead of next week's meeting, steve liesman, fed watcher steve, the fed on the same page here >> not exactly, and your discussion about dissent is a perfect segue. fed chairman jay powell has the votes to cut rates as you found out friday, he has opposition let's look which fed members are where when it comes to making the cut. those who might oppose to it esther george, eric rosen gram, bostic from atlanta, on the fence barken and daily from san francisco. for the rate cut on the right, kashkari, a good collection of folks. you can see the small v is the voters those people on the bottom, kaplan, brainerd, quarles, those are voters with powell
let's argue the fed case for the cut. only the president talking about that act forcefully when near zero take out insurance against the trade war, brexit along with declining capital spending and a potential debt ceiling problem adjust inflation expectations. convince the market you are serious about the 2% goal. and you expect a weaker economy. the job market is strong unemployment is low. we saw data showing the consumer is doing quite well. growth at trend for the second quarter estimated. you are actually above trend corinne flakes less than a half point below the target at panther yawn thy on, we pant market decided it will be 25
the july futures at trade with a 76% probability of 25 basis point cut and a 25% probability of a 50 basis point cut. sara, think one of the questions here is whether the fed is really being data dependent, headline dependent, or politically dependent. >> or market dependent, steve. i mean, whether it's being bullied by the bond market i'd push back against rosengren against manufacturing, capital spending has slowed, uncertainti uncertainties from abroad. things jay powell used when he talks about the case for cutting interest rates he said, lack, manufacturing is a small part of our economy. we don't make policy from manufacturing. capital spending has been week we will watch it we don't see any major uncertainties if you look at the credit market. he had an answer for that which tells me it's going to be a heated exchange. >> going along with that, sara, the idea that nobody really is
complaining about access to capital or the price of capital or the price of debt right now, as a reason why they can't expand in fact, the complaints are kind of from the economy is too tight part of the equation, which is access to labor and finding the right workers. i thought the beige book last week was very curious way to cut rates, saying there is a widespread problem of finding workers. yara time when the fed was cutting into a labor market like. >> there are some traders to out there who look what the journal did on friday trying to push us back to 25, saying it's all a ploy to give you seahawk ahock e when we get 50 do you buy that? >> i don't think that the powell fed wants to surprise the market here i think he is trying to reestablish some credibility after a couple of missteps here. i think going in with a 25 guided and delivering a 25 is probably what jay powell wants to do to reestablish remember he had -- he has been
on this campaign of act as appropriate. he said that in his speech he came back and said that in his testimony. it ended up in the statement so i think this idea of act as appropriate and trying to reestablish some credibility with the markets and delivering what the market expects is probably where they are going. >> very quickly on that note, if we get a 25 basis point cut, does the market act disappointed >> it's hard to know everybody is definitely on one side of the trade here, which is that a rate cut is coming. but if there is one, you know, or a lot of the marginal invested capital is on the side betting for a 50, you could imagine that the market could be disappointed but if the fed delivers 25, we will be delivering what it told the market it's going to deliver and what the market expected from the federal reserve you don't know how the markets is going to react because you don't know where the marginal player is in this. >> it's going to be exciting steve liesman, thanks. when we come back, taxing the
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proposals to raise capital gains taxes. >> good morning. joe biden, bernie sanders, cory booker, beto o'rourke, and amy klobuchar are all saying that the capital gains tax should be higher biden last week saying his $750 billion a year health care plan away be paid for in part with an increase in capital gains tax. what would a higher capital gains rate do to the economy, to reasons in the storevenues the stock market the top income rate at 37% many of the candidates want those rates to be equal, saying work should not be taxed more than wealth. the lower capital gains rate cost the government about $120 billion a year. last time the two rates were the same, and there was a time, was back in 1987 both at 28%. at that time revenues for capital gains doubled in 1986 as investors rushed to sell right before that higher tax took effect and then revenues fell by
about 50% in 1987. now, what happened to the stock market well, it was flat the first year, and then up about 25% in the three years after. most studies show no strong connection between capital gains rates and the economy and the stock market but a study from the tax foundation found that if the rate was increased, revenues could fall by $122 billion a year gdp could fall slightly, and employment would fall by about 1 million jobs the reason democrats love this tax is that 70% of all capital gains go to the top 1% so, sara, when you look at the possible taxes out there, wealth tax, estate tax, income tax, the capital gains rate is the most progressive. you would really target the 1% and even the 0.1% with a capital gains increase. >> interesting, robert you have it on the left hand on the right hand the administration continuing to
toss out the idea of indexing to inflation. >> right that has been an idea that has been out there for a couple of decades. really the argument being that, look, if a lot of -- or a part of a capital gain increase is due to inflation, you should take that piece out because that's not really a material gain to the investor of course, those on left saying, well, then you are talking about another tax cut for the wealthy. that has been an argument and there is some basis in fact by saying, look, when you have a capital gain, a portion of that is due to inflation. >> but the white house would argue, and we have heard this from some of the white house's favorite economists like stephen moore that would be a significant boost into the economy into 2020. what would that mean if the democrats go the other way >> the argument for a capital gains rate being lower than ordinary income is that you need to incentivize capital, incentivize people to invest with a lower rate. there is so much capital in the world right now that that is a
harder argument to make. again, it is tough for mes people to say, wait a minute, i get taxed higher for working than i do just making money off money. and that's an argument that's working well on the campaign trail and will be tough in the next election as well to defend. >> we will discuss this one, robert thank you. robert frank at hq. oil prices are up on tensions out of iran. later on, equifax's settlement the details behind the company's $700 million fine ensqwk t see comes back. dow's gone red (soft music) - when i see obstacles, i create opportunities. - when i see adversity, i find a way.
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. time for our etf spotlight looking into oil this morning as it heads for the biggest gain in more than a week that's after futures spiked on friday following the news that iran had seized this british oil tanker joining us this morning is john, founding partner at agil capital. the point has been made a couple of times, mostly by cramer, that given domestic production, you
have to go a long way before you get a supply shock is that true in this case? >> you really do i have been saying that the u.s. production is acting as a firewall against what otherwise would have been geopolitical hiccups for the market also, the saudis have a ton of spare capacity because of their efforts to try to bring down global inventories they are pumping way below their capacity that's another factor there. i mean, obviously, their oil would have to transit the strait it's not as sad as it might otherwise be, but it's still there. >> so that all aside, how serious is this? and why are some people saying that the u.k. and the u.s. responses have been so measured? >> i think because they are not necessarily ready to go full bore on this yet i think they see the sanctions working extremely well, which is the case iran's economy is struggling mightily inflation is picking up in a big way there. they are on the ropes
economically so it's worth waiting. also, too, we are not necessarily positioned yet with the sufficient u.s. assets to be able to, if they are going to do the job, do it the way the army and the armed forces have done the job over the past several times where this is overwhelming use of force over the weekend the u.s. military has taken up a presence again in the prince sultan air base, military base in saudi arabia that is a significant development to me. to the extent they ramp up operations there, that's when this market will get more nervous, carl, and factor in i think more appreciably a security potential u.s./iran war risk. >> that was my question, john, which is it's hard to predict what kind of iran tensions actually cause a spike up in oil. you said yourself it's more sub it dude now because the u.s. is pumping. what is the fear scenario for the markets and how do we know day to day which tensions cause that anxiety that you are
talking about? >> right there is also the opportunity for a diplomatic breakthrough any i am, an off-ramp, including negotiations with iran between the them and the u.s but i think iran has looked pretty weak throughout this episode over these past weeks, and i think they have to do something. it would take an actual closure, an actual sinking of a tanker, sara, rather than a seizure of one. that would be a huge escalation. that would immediately affect and impact transit of other ships. if they could get insurance, for example. if the straight were to get shut down because it's too dangerous or sensed to be too dangerous, then that's when this market will go parabolic to the upside. it will take that measure though. >> what do we think the brits are going to say today in this speech in parliament
what's the likelihood pompeo puts together a group to police these straits the way he suggested last week? >> i think there is a willingness to do that some of the europeans were slow to come on board with that, which is why i think they got that finger wag from pompeo this morning. india, for example, offered to send what limited resources to the gulf to ensure navigability. and i think after this episode it's going to be a top priority among all the western countries, including japan, who has also offered assets now that will come together. that will help i think stabilize prices as well as far as what the brits say, i mean, they are as caught as the iranians were when the iranian ship got taken by the u.k. what do you do do you go to war over this no, you don't. pretty much the conclusion in the market is we don't see a war breakout because of this yet, which is why the price reaction has been so tempered. >> tempered, but above 60.
it makes you look at the energy stock performance. it's flat today in the s&p it's down for the month. down for the last three months it's certainly down for the last 12 months, john. why aren't energy stocks catching a bit off these higher prices. >> i'm trying to disassociate myself from the energy stocks, they have done so poorly seriously, because the prospects aren't good in terms of demand the demand situation is a really big question mark and the demand estimates keep gettin' taken down for this year and next year by just about everybody, especially the international energy agency who almost in an unprecedented fashion after releasing their monthly report came out, cut again, are indicating they are going to cut their demand outlook further for 2020 because of the increased amounts of production that continue to come out of the u.s. and brazil and gulf of mexico, not just the shale plays, that continue to oversupply this market in the face of the key demand center, asia, getting hit
heart by the u.s./china trade war. i heard you talking about the fed should do in terms of cutting or not cutting there is every justification for 25 or 50 basis points if you look at all the economic measures that keep coming out of there. chip trade down. gdp falling. exports falling in korea, china, japan. the numbers are terrible. >> yeah, we are going to see if that changes but the direction, you're right, is obviously that way. john, we'll kwawatch it closely talk to you in a bit. dow's down 11 points over to sue herera for a cnbc news update. >> good morning everyone iran says it arrested 17 iranian nationals allegedly recruited by the cia. the spy on that country's nuclear and military sites some have already been sentenced to death the arrests took place over the
last months. they said nothing succeeded in their spying mission. equifax will pay $700 million to settle with the u.s. and states over a 2017 data breach that exposed the social security numbers and other private information of nearby 150 million people that was one of the largest breaches of its kind. a car bomb planted by islamic extremists killed 15 people it was parked near an airport and detonated by remote control. al shabaab claimed responsibility. india launching an unmanned spacecraft to far side of the moon the craft is designed to land on the lunar south pole in september and send a rover to explore water deposits confirmed by a previous mission. you are up to date that's the news update this hour back downtown to you sara. >> all right sue, thanks. when we return, the former
ceo of mcdonald's ed reynoldszy discusses the surge in food stocks recently. n early gains have been wiped t.ou the dow has gone negative here down five. we'll be right back. is where people first gathered to form the stock exchangeee, which brought people together to invest in all the things that move us forward. every day, invesco combines ideas with technology, data with inspiration, investors with solutions. because the possibilities of life and investing are greater when we come together. ♪
mcdonald's, starbucks all trading all-time highs on friday signaling strong recent performance in food stocks can the momentum continue into earnings season? joining us to discuss, andrew charles, and former mcdonald's usa ceo and chairman of that brand's ed renzi gentlemen, good morning. ed, how do you see the performance of food stocks versus the fundamentals right now of what's going on in terms of retail sales at restaurants right now? >> i meet a lot of
restaurateurs. they are very excited. i'm bullish on the outlook of restaurants. some of the big countries like dunkin's has rebranded this he could compete with starbucks. we have to see them grow yet i like ihop. they are moving not burger segment. i am always going to love mcdonald's because it is truly a global company they have great numbers. their adoption of technology to move the inbusiness forward, th contract with third-party delivery systems, i think there is a lot to be said for these restaurant companies. >> not to mention you were an executive there. andrew, what do you see as the primary driver for the stock price performance? is it the fundamentals ed is talking about or something about the environment with the fed moving to an easier policy stance >> good morning. i think there is a little bit of both obviously i think with mcdonald's and starbucks, names like these, i
mean, the correlations, it's about a 0.8 for mcdonald's and 0.9 for starbucks between their forward same store estimates as well as forward multiples. if we see better than expected sales, the stocks are going to fall regardless of the valuation. there is something in the water though certainly, this is more of a domestic industry. it's 2003 that benefits from low interests rates. there is a little bit more to it than the absolute performance. these are both very favorable dynamics for the restaurant sector. >> ed, we paid a lot of attention to the doordash deal last week. if things like that, the focus on delivery, is an acknowledgment that getting traffic up, getting across the board industry traffic up is going to be too challenging in the near term? >> i think convenience for the consumer is the overall driving issue here i think there is another matter.
people like the companies are going to be successful going forward because the labor content is very high into these restaurants. i think these ghost kitchens where you have multiple brands in low-cost space doing nothing but delivery is going to favor those companies that have multiple brands under their umbrella where they can put four, five kitchens in one spot at low cost and deliver. so i think there is a lot of changes coming in the restaurant industry >> because of the savings on labor? you think that's all tied to minimum wage, or is it a bigger picture than that? >> it's a bigger picture it is tied to the minimum wage to some extent the bigger issue is a flat-out labor shortage i know people offering 15 to $20 an hour to get sue chefs and cooks, service people, waitresses they can't get one application out of ads they have been placing for three, four months in a row
the economy is so robust, it's hard to find people now. >> andrew, tell us how that's going to play in earnings the next few weeks, the higher labor cost, impact on margins and what other themes we could be looking for in the numbers. >> certainly with the stocks at all-time highs it's embedded that sales are going to be good. to your point, flow through is more important with high labor throughout the industry continuing to purveyed food costs seem like a bigger focus as well with african swine fever, something to be on the lookout for in terms of the back half of the year on 2020 on the protein prices as ed mentioned, delivery is a larger percent of the industry 6% of industry sales, we have visibility to high single digits over the next five years that's certainly expensive there is going to be commissions associated with it as well so i think to the point we were making earlier that along with better sales, we are also
looking for the flow through with that. the franchise models have a benefit. those costs are born by the franchisees instead of by the franchisor. >> you are never shy with your political opinions i think you tended to lean right many times on our air. th the house passed this $15 minimum wage what is that going to do if that becomes law? >> there is no question it's going to be a big problem. frankly, these campaigns that i see are very hypocritical because they have young people working on their campaigns, paying them less than $15 an hour they say, yeah, but they need the internship, they need the experience, they need to grow and learn. that doesn't count in the restaurant industry, evidently these entry-level jobs are super important to train people basic job skills if they are in those jobs longer than a year, there is something wrong. they should be not career positions. it ought to be a stepping stone, start as a dishwasher, become the ceo of the company in 35 years. >> finally, andrew, beyond meat
is up almost 8%. back to 190 after a period of where we weren't sure where it was headed do we think there is going to be a big qsr deal by the end of the year frm you know, obviously, we have seen that burger king is looking to do the impossible sandwich, something i think you will see replicated throughout the 2003 wendy's, mcdonald's is looking at this as well, it's a matter of time in my view in terms of when they are going to be launching these rather than, you know, if it's a question of whether. so still a lot more to come on that i think as long as it economiche operations, the economics makes sense, and continued consumer demand continues as we've seen with multiple restaurants indicating they have sold out of these products in a matter of days if not hours. i think it's a matter of time until we see the other players jump into this. >> andrew, give us your top pick in earnings season among these stocks which are at record highs. >> we like mcdonald's in the setup there. i think that within -- we are
modeling a 5% comp i think you will see positive sales revisions in the back part of the year as the street is not forecasting the amount of remodel activity and that will contribute to same-store sales in the back part then this dynamic yield. acquisition as well. i think that's going to be really interesting in terms of the numbers. this mid cap side, this brand so well positioned in the industry. i think that will continue to prove legs for them with better than expected sales in our view. >> i think ed renzi would agree with that. thank you both for joining us. ed and andrew. >> thank you. shares of boeing on the move phil lebeau in chicago is this about fitch? >> yeah. fitch out with a note today reaffirming its credit rating for boeing, but lowering its rating outlook from stable to negative it basically comes down to three things all resolving around the 737 max. first of all, they are concerned about the regulatory uncertainty regarding the timing and sequencing of returning the max
to service remember boeing has said they are expecting that, assuming that will happen in the fourth quarter. fitch is also worried about the growing logistical challenge of returning the parked planes. and finally bringing up the risk of higher concessions to airlines, especially if the max grounding extends to the year end holiday season all of those are factors behind shares of boeing moving a little bit lower. guys, back to you. >> all right thanks, phil we'll watch that phil lebeau. take a look at the market. dow has been going back and forth between the red and green. flat right now shares of cbs and at&t, the two unable to come to a new distribution agreement cbs stations go dark saturday morning on at&t services like directv and u-verse. we will talk about that when "squawk on the street" comes back woman: my reputation was trashed online.
vo: there's more negativity online than ever. reputation defender ensures that when people check you out, they'll find more of the truth, not trash. if you have search results that are wrong or unfair, visit reputationdefender.com or call 1-877-866-8555. welcome back let's get to the group in chicago. rick santelli with the santelli exchange good morning, rick.
>> good morning. i'd like to welcome my first guest, andy brenner, national alliance securities. thanks for joining me this morning, andy. >> rick, always a pleasure. >> let's get right into it you know, the big take back with regard to new york fed president williams' comments didn't settle well with traders. they believe it was a balloon and this deaded easing the end of july may be the beginning of something large. your thoughts? >> rick, williams is way too smart to have made that kind of rhie mistake so he was trying to tell us something. i think that something is that the fed is going to be a lot more aggressive, maybe that a few of us that think the fed might be going just a little bit too slow, i think they are going to start speeding it up. i think they will be a lot more aggressive because they are now, the central bank of the globe, not the central bank of the
united states. and that's how they are viewing it. >> you know, boy, that is -- there is a lot of issues there pilar issues, you know stable prices. maximum employment you know, when you start going global, it's understandable because there are communications both ways on policy. ripples go both directions transmission in both directions. what about the ecb this week do you this i they are going to go thursday? >> yeah, i think draghi has a couple more meetings left. you know, he is either going to take the easy way, which is announce that they are going to lower rates in september and maybe talk about quantitative easying. the reality is, rick, if you look at the barbuda baund bank h german economy in a recession, the eurozone is in a lot of trouble. i think draghi is going to actually lower rates on thursday and i think he is also to maybe announce the beginning of qe 2, whether it starts october 1st or when lagarde's term starts on
november 1st, they are going to start buying assets. no question about it. >> with regard to christine lagarde, obviously a lot of politics involved in her pick because she is quite political in hthis instance, you it's viewed as a good thing they can't seem to get it gun with monetary policy what do you think they are going to -- how are they going to use christine lagarde to bring in all the large economies, maybe address some structural issues and do you think it could be successful >> rick, we have already seen it if you look at some of the reports out of the imf in the last week or two, they are trying to pressure germany to start opening up their wallet and do fiscal stimulus i think it's only going to be more pressure from her once she takes the role over. there is no question fiscal stimulus is the next wave that the eu is going to try to do because the ecb has come to the conclusion that monetary policy can't do everything. fiscal tim l
fiscal stimulus is coming. will she be successful i think with merkel near the end of they are political life and macron behind it and of course the italians are always good for fiscal stimulus, i think she might be somewhat successful there is going to be a lot of hard-liners that are going to fight it tooth and nail. we will see how she does. >> >> andy, thank you. >> sara, back to to you. >> let's send it to jon fortt with a look at what's up next for "squawk alley." >> airbus and one web satellites getting together to try to clang the game whether it comes to mass production of advanced satellites we are going to talk about the new facility they've got in florida and what it's going to do for global connectivity that's coming up on "squawk alley.
disney hitting another box office record with "the lion king" roaring to a strong start over the weekend our julia boorstin joins us with the latest, which includes a lot more than just "lion king," julia. >> reporter: that's right, carl. disney, king of the box office once again "lion king," this digital "lion king" remake bringing in $185
million in domestic ticket sales. that is a july record. the second largest opening of the year the seventh largest opening of all time and if you consider this an animated film, it's the largest animated opening ever. now, these records are all the more impressive, considering the film's kind of negative reviews. it scored a mere 54% critics' rating on rotten tomatoes. and disney did hit a second record this weekend. "avengers: end game" topped avatar with $2.79 billion in ticket sales this just builds's box office dominance with 35% of the year's domestic ticket sales dwarfing warner brothers and universal in second and third place and disney has three other films that are expected to be huge this year. "maleficen "maleficent," "frozen" 2, and
stwa "star wars" in december. universal's "fast & furious" presents hobbs and shaw opening the following friday now, theater chains, amc and cinemark, both of those shares moving higher this morning, though they have given up some of those gains but this really does help close the gap with last year's record box office performance and disney is poised to dominate the box office for years to come at comic-con this past weekend, it unveiled five marvel movies debuting in the next two years and of course, we'll have to see how disney uses all of this content to help drive drive subscribers to its new streaming service launching in november. guys, back over to you >> julia, thank you. julia boorstin u.s. officials including treasury secretary mnuchin and white house economic adviser larry kudlow hosting a meeting at the white house of semiconductor and software executives today to discuss the u.s. ban on huawei according to sources, companies
that were invited to this meeting include intel, micron, qualcomm, and broadcom microsoft also invited reuters reporting that google was invited, too semiconductors are actually a strong performer right now in the market up 1.7%. i imagine there's a lot to discuss between the sort of scarce details on what business they can actually do with huawei first, they were sort of banned. they figured out ways to get around it. and then president trump said at g-20, they can sell to huawei. but it's unclear what that means, because other administration officials say there are still security concerns to be aware of. >> yeah, there's obviously a theory that kudlow and mnuchin are a little more dovish on huawei than some other players in the administration. but you have upgrades today, goldman goes to buy micron and amat with some pretty nice targets and good commentary about inventories coming down, maybe faster than we thought >> the stocks have had a good run. they're up 35% from their 52-week lows still, underperformers over the
last 12 months they get hit on trade and that double whammy on huawei, only up 4% if you're looking over that one-year period. we'll wait to see any headlines from that as we move into the afternoon. but semiconductors really on top this morning >> yeah, doing pretty well you know, phil brought us the boeing news a moment ago, as fitch lowers their outlook on the company from negative to stable referencing the 737 max. that's why dow fell a quick 60 points we were hanging on there and apple was responsible for much of the gain that we got coming out of the opening bell >> yeah, s&p remaining higher pretty much throughout, though it has lost its leg, of course, coming off of first weekly decline for all three major averages in the last three still not too far, though, from record highs >> so, tonight, it's like a taste of what's to come later in the week, earnings wise? >> oh, yeah, earnings, earnings, earnings we're also going to hit the story of the day, which is equifax. the ceo is coming up on are "closing bell" to talk about this settlement with the ftc
over the 2017 data breach. it exposed social security numbers and other private information of nearly 150 million people that is a do-not-miss interview coming at 3:00 what's changed at this company remember, he's the new ceo he had to come in. the company has faced hearings and questions about security breaches and protocol. so we'll talk to them about where they are >> where does that money go? to what aim? >> and how much goes to consumers when it comes to protecting their credit and their monitoring, which is getting much more expensive z p >> oh, my gosh incredible meantime, "squawk alley" starts in a few minutes. don't go anywhere. (vo) the hamsters, run hopelessly in their cage. content on their endless quest, to nowhere. but perhaps this year, a more exhilarating endeavor awaits.
♪ good monday morning. welcome to "squawk alley." i'm carl quintanilla with jon fortt and deirdre bosa here at post nine of the new york stock exchange morgan brennan has the morning off. we're going to start with this rally in tech stocks ahead of some big earnings later on in the week obviously, we'll get facebook, alphabet, amazon, intel, and twitter all before friday afternoon. bob pisani and mike santoli here at post nine on what to look for and which print do you think we have the most confidence in going in that was a question for cramer today. >> which print we're going to hear from this week? >> he thought maybe google had more liability >> well, google's in the penalty box of those four, so i think probably does have the most to have prove also, perceived to be the company that cares about making the number least i don't know if that works for them or against them in terms of setting expectations but this time i think what