tv Squawk Box CNBC August 8, 2019 6:00am-9:00am EDT
business never sleeps this is "squawk box. >> good morning, welcome to "squawk box. i'm melissa lee along with andrew ross sorkin joe and becky are off today. our guest host is tom farley joining us for the hour, lekovich yesterday the dow was down by 598 points at the lows we're looking at 63 points at the open s&p 500 down by 2% we tested monday's lows in yesterday's session, bounced off of that and added. overnight inasia, we did have green arrows across the board. japan's nikkei index up by 0.4%. hang seng up by a half percent shanghai up 0.9% we got good trade data out of china.
green arrows across the board in europe the dax is up by 0.3%. the cac adding 1%. the focus again today, because yesterday it was the fuel for that whipsaw action, treasury yields, 1.727, much firmer than what we saw yesterday. we saw a low of 1.595% we had record lows across the yield curve. that's worth noting. a lot of strategists saying we could test 1.35. beijing's central bank setting the official reference rate for theyuan to the weakes level in a decade. eunice yoon has more on the midpoint number that traders are watching they do it now at 9:00 p.m have to watch all the time
eunice >> it's worth it it's worth it to stay up that late the central bank set the midpoint fix weaker than 7, but it was actually stronger than what a lot of analysts were expecting. so because of that traders were taking that as yet another sign that the government here wants to pull the reins back on the chinese currency there was no official commentary today on the fix it was interesting to see what came out of the state media xinhua ran a headline that said renminbi rate against the dollar breaking 7, has the potential to stabilize in the future. also the communist party paper the global times had a piece that quoted a researcher who is very closely linked to the chinese commerce ministry. has researcher said further deprecate will not be very fast to the 7.1 or 7.2 level it will
not take a long time before the rate returns to below 7. in other words, expect the yuan to maintain strength separately the trade data was out for july it was a surprise to the upside. exports rose by more than 3% when expectations were for a fall imports shrank, but it was less than what people were expecting. the read has been that global demand still looks to be holding up even though the exports to the u.s. contracted. that just has been telling people that the tariffs that president trump has put on china are taking their toll. >> you had a look on your face do you have a question >> no. >> i have a question for eunice. there's a quote in a tom freedman piece -- did you see this piece about the u.s. and china he quoted a guy named jim mcgregor, he says the old
trade -- this is sort of how i was thinking about how we could get back on sides with china is there a way to get back he said the old trade regime was based on the idea that america was a rich company and china was a poor company, and china was entitled to certain advances and tolerances of misbehavior. the u.s. should say to the chinese, you are now our economic equal give them that dignity tell them we want to restart the negotiations on the basis of total reciprocity and that we should have the same rules of access to each other's economies. do you believe if we started the conversation there, that that would change the dynamic >> i love jim. he's a good friend of mine but it is good for the u.s. to be able to recognize and pay a lot of respect and face to the chinese. but what i think the chinese government would say, since we heard it a lot from, say, the premiere and as well as the
president, is that china is still a country that has a lot of poor people so that's why from the chinese perspective, they see that they are the second largest economy in the world they know that they're on this path to greatness. they want to keep on that trajectory they have a whole lot more people than a lot of other countries. they see that development goes in stages, they have to consider all of these different markets within markets all these people who they want to bring along from their perspective they still do believe they are a developing country you can say that it's convenient when they believe that but still it is something that they do have to think about. >> okay. eunice yoon, thank you >> maybe i lost the plot, but isn't that what this trade war is about we're resetting with china and saying you shouldn't be able to steal our i.p., force transfers
of our i.p., we should look at the trade surplus, you're an economic power, we're an economic power -- >> do you just do it and try to get to zero on everything? >> no. >> eunice, thank you i'm glad she didn't get blacked out yesterday. she put out a tweet yesterday that went viral. did it go viral in china did you hear from anybody? >> no, it didn't go viral in china. a couple people on twitter who have access to it, but no. not going viral here >> eunice yoon, thank you. let's tell you about the top corporate stories. we have lyft reporting a smaller loss than expected in the second quarter. revenue rose 72% lyft announced it was moving up its lock-up expiration date by a
month to august 19th the company raised the its outlook for the year saying it's gaining more riders and they're paying more per ride i have not been seeing the discount ads on my app >> i have 15 i can give you a ride. 25% off. >> they say they're trying to get rid of the discounts lyft's cfo said the increased revenue per rider was because of an easing of the price war with uber uber shares are up about 5%. >> uber reports after the bell today. the comparison is up 72% on revenues for lyft in the quarter. the expectation for uber is up about 20%. >> i don't see the discounts but i see a difference in pricing. when i land in certain airports, i look at my choice between uber and lyft, lyft has a general discount to uber in just when i say i'm going from the airport to my hotel. i usually see as much as a 20,
25% cheaper price. >> i look at which one is cheaper and i take it. >> on a long ride, of course >> it's a commodity. >> this is public shareholders forcing discipline on these companies. >> i think it's the market allowing discipline. the see is will uber say the same things when it comes to pricing and the rationality coming into the market or is lyft using this rationality. >> if they want to be a good -- >> do you do these membership things platinum this and that >> you're platinum >> yeah. >> so fancy. >> you can lock in certain prices >> you can say i want to leave the nasdaq at 9:00 and lock in a certain ride >> no. i have certain rides from here to the "new york times," you choose a couple, to your home or places where it can never surge.
i think they're going to get smart. lock into the thing and therefore you won't try to arbitrage. >> my trading desire to arbitrage keeps coming out >> i sometimes try to arbitrage between the uber and the taxi, and could i cancel fast enough before the taxi comes. >> only if the air conditioning is good in the taxi. netflix won a battle in the streaming wars the company outbid amazon and disney for multi-year film and tv deal with david benny novemb be bennihof and david weiss hollywood said the deal was worth 200 million. in a joint statement they said netflix built something astounding and unprecedented and we're honored they invited us to join them. this could be a major loss for
hbo. shares of iac are up this week the company's 23% stake in match group drove the price higher then late yesterday the ceo said in a letter to shareholders it's exploring a distribution of its stakes and match in angie home services angie home services was down on that news. iac posted a revenue beat for the quarter but earnings fell short of expectations. joey levin will join us later this hour to talk to us about this news. he will talk to us before he talks to shareholders and analysts >> you're a big iac fan. >> you were talking about the spinoffs of companies. here they are. >> there's a lot going on in this earnings for us to pick apart. >> the angie earnings. >> the spinoff >> the impact from google pushing listings down further. >> revenues looked good. earnings didn't look quite as good. coming up, a closer look at
the big market drivers let's look at u.s. equity futures at this hour it's a positive open dow looking to be up by 64 before we go to break, a look at the biggest winners and losers in the dow dear tech, let's talk. we have a pretty good relationship. you've done a lot of good for the world. but i feel like you have the potential to do so much more. can we build ai without bias? how do we bake security into everything we do? we need tech that helps people understand each other. that understands my business. we've got some work to do. and we need your help.
stocks staging an impress sieimpressive comeback here is jack lew yesterday on "closing bell. >> it's time for leaders on both sides to find a way to deescalate >> joining us now is kevin gettis and ryan payne. our guest host is still with us. gentlemen, morning to you. kevin, i'll start it with you. you said we'll test the prior low on the ten-year yield. there are all sorts of firms out
there, institutions, pimco saying zero. bank of mer aamerica and merril lynch saying zero percent. where do you see us ultimately going? >> somewhere in between there. i will tell you midmorning yesterday i had a vision of 2008 coming back to me when we were in basic free fall it was great to see that consolidation and a rebound in the afternoon even as a bond guy. this is one of those rare opportunities where we are waging the dog i do think the fed is behind the curve again and they will have to be aggressive in september if not before the fed could go in a premeeting ease if we saw another day like yesterday. if we see some stability i'm fine with where we are we probably will take out the 2016 low at 1.35 on tens, and the curve flattening would
indicate the fed needs to get moving soon. >> i don't want to be a fed defender or barber, but how do they get ahead of the curve when every central bank has either eased already or has telegraphed an ease to come in september >> that was the surprise of yesterday with india and new zealand. uncertainty is not your friend it wasn't yesterday. i think that set off the bond market if we could see stability, the fed is where they need to be where the race to the bottom is occurring and the fed is behind that the market is dictating the next terms that's something they can possibly wait until september. we need to see stability >> yesterday afternoon the free fall in treasury yields we were witnessing t felt like 2008 times. the equity markets followed, but ultimately we closed 5% off the july record highs on the s&p
500. so we're not far away from full valuations here. >> full valuations, 18 times forward earnings the thing that scares me is all that money jammed into bond funds. you have 255 billion god forbid something eases off with trade, global growth picks up the second half of the year, that means interest rates go up, the ten-year goes up and the bond funds will get hammered to me that's the risk. i think the equity markets are a bonafied deal here >> you think we'll see a spike in yields to a point where it will cause tumult in the markets? >> it only has to be a tiny one and the bond market i think will implode. >> you made the comment about if you had a weakening dollar, these massively levered private balance sheets could be in big trouble. >> you're right. this is where the currency is as important as what the fed does i think that liquidity could be tested especially in the fund
market if you remember back in '87, everyone runs for the exits, mutual funds don't have cash on hand to pay for those lick dagsdag liquidations we could see that again. i'm hoping calm reemerges. it would be a real liquidity test >> this sounds like scary stuff, tobias >> the world is not so bad if you look back at 2016, everybody was terrified of the energy sector. everybody was worried about this imploding, driving down yields we don't have that kind of environment today. we're not 2008 i lived through 2008, watched my company stock go from $56 to under a dollar i don't think the banking system is struggling the way it did before the private lending area is worrisome. i have great sympathy of all
this money going into bond funds. even if we saw a spike in yields, which i doubt, if it goes from 1.72 to 2%, that's probably still lower than where many of the bond fund investors came in. they were probably coming in at 2.5, not 2 i don't see the world coming apart, even china trade. i talked to two greek shipping magnets in the last two months and asked them -- >> as you would. >> only two? >> only two. through our private bank these are not friends. i asked one to adopt me, but beyond that -- i've asked them specifically what are they seeing on their china trade? what's going on with their ships? they say things are okay not great, not terrible, they're okay it's hard to see the bond market or the ten-year yield dropping back it might for technical reasons retest the lows of july 16th, but it's kind of hard to get
quite there. >> okay. in terms of fundamentals >> give us a setup i'm sure you looked at your screen we're about ten basis points higher this morning than we were about 24 hours ago when we were watching that freefall what do you think we do today? >> i throw out all my forecasts that i made prior to november of last year and the last two weeks of this year i'm not an alarmist, but there's a chance we get back -- 1.75 is where i was for the end of the year we could go back and test that 1.35, but i think we settle around 1.50. even if you don't have a trade deal by the end of the year. >> 1.50. >> great to have you both. a lot more on "squawk"
today. we have our stock big movers in a minute including a streaming player getting a big boost in early trading that is not netflix or amazon. but check this out it's up 275% year-to-date. that's our mystery chart you can take your bets, place your bets, we'll tell you the right answer after the break. and customer backlash at soul cycle and equinox because of a fund-raiser for president trump. politics and business colliding. that story after the break with all that usaa offers
time for the executive edge. the mystery chart we showed you before the break did you guess? it's roku. the company reporting a smaller than expected loss as they beat estimates. they topped 30 million users they expect two-thirds of its revenue to come from the ae a s shown on its streaming services. >> can i tell you how wrong i was on this one? i didn't understand. >> how a company selling hardware -- >> i thought of it as a hardware company. i thought it's a box how could the box and this piece of hardware. the margins --
>> it's the next gopro >> that's what i thought when this company was going public i thought how? they have blown away every expectation. kudos to you for making me feel stupid separately some customers of soul cycle and equinox gyms are protesting after stephen ross planned to host a fund-raiser in the hamptons the tickets are $250,000, and you get to meet the president. ross is also the owner of the miami dolphins some are saying they're canceling equinox memberships and billy eichner said money talks, especially with these monsters if it's too inconvenient for you to trade one luxury gym for another, you should be ashamed no disrespect to the many
wonderful employees at my local equinox. bye. chrissy teigen tweeting everyone who cancels their equinox and soul cycle memberships, meet me at the library and bring weights. equinox and soul cycle say they have nothing to do with the fund-raiser for president trump and they say mr. ross is a passive investor and is not involved with the management of the business stephen ross put out a statement saying while some prefer to sit outside and criticize, i have known donald trump for 40 years, while we agree on some issues, we strongly disagree on others i will be a champion for racial equality, ncligs, ainclusion, d
public education and environmental sustainability i have and will continue to support leaders on both sides of the aisle to address these challenges you saw andy cohen from bravo on instagram't know - he was going back and forth on whether he was going to the gym yesterday. he has an equinox membership you can see how these things can collide and what they can do to the brand. the question is can they push through this and change the dynamic. >> and should stephen ross bow to the pressure. >> everybody has the right to pursue their own politipolitics you can see how it can come back on the other end >> a couple years back kevin plank went on cnbc with scott wapner and he made a pro trump comment.
soul cycle is all about progressivity. two socially conscious progressive smart business people started it, and the entire culture of the business is based on that you go to one class you know that's the culture of that company. that's different from under armour in that kevin plank made one comment. this is a fund raise for donald trump. it will be tough for melanie, the ceo of soul cycle to get this back on track >> is this a risk to their performance as a publicly traded company eventually >> it's a risk immediately today they'll have fewer riders that will show up for soul cycle. the we now is how will they come back from it how will they address it these are smart people does this filter throughout the business community in a broader
way? think about all the big private equity firms that have so much ownership and interest across -- and do people look at how money flows and filters to specific people i'm thinking steven swartzman has been a long-time supporter of president trump i'm sure there's some business owned down the line -- >> we saw it in a way when it came to saudi arabian money after the killing of khashoggi so people were scrutinizing that and then that blew over. >> we saw this with chick-fil-a as well, people were upset about certain christian values this understood of will people look more deeply, the only caveat i put here other than saying this is another reason for me not to go to the gym, is the notion if we're going down these social justice warrior-type battles, i would like to see consistency.
they may be willing to look the other way on some things, then stuff about donald trump brings out their ire. if you're going to be consistent about it, your concerns on social consciousness, do it consistently >> the issue here is if you hold yourself out as a business to have certain values, you have a certain culture, you need to always act in alignment -- >> are people extrapolating the values of the founders to the rest of the business does soul cycle and equinox stand for those values or a way of fitness, a way of life, a lifestyle and then by extension those values >> are you a soul cycle customer >> no. >> if you go into a soul cycle class, it is who they are. it hits us in the face the things people talk about, the way they talk to each other. less so at equinox, which feels more like a gym or business. coming up, the price of crude on the move. let's look at how it's doing
we had been up 52 yesterday, and later the ceo of iac will join us to talk about its stakes in match group and angie home services as we go to break a look at the s&p 500 winners and losers through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from using feedback to innovate... to introducing products faster...
after what has been a wild week. dow looks to open up about 49 points higher. nasdaq looking to open up about 37 points higher the s&p looking to open about 7 points higher. we are about three hours before the market opens something interesting has been happening in the oil patch crude oil has fallen the last few months here and around the world. the american oil stocks have fallen a lot more. now there's a real concern about where the industry may be headed brian sullivan is joining us with more on where this part of the story is headed next >> it's been headed down and down in a big way. a lot of investor losses if you have not been paying attention to oil and gas stocks, here's some stats. half of oil and gas stocks lost more than 50% of their value or more in just the past year valuations, though, they have come down. in many cases they are lower than when oil was 30 or 35 a
barrel valuations are below there are new fears about oil well issues. disappointing results from some experimental fracked wells by concho that stock fell 21% on one day on that. these companies are built on debt drilling wells are expensive more than 2$200 billion globall in oil and gas debt around the world. the pain is everywhere but certain operating areas have been hit harder. the bakken, way up there in north dakota. some of the higher cost areas. average return of a stock operating in the bakken, oasis petroleum, others, down 59%. oklahoma lost 58%. the permian, not immune.
the best performing stocks, groups, offshore names when i say best, they lost only 46%. i mean that tongue and cheek energy stocks now at 4.7%. it's never been lower. the one-year chart of oil has been okay. oil prices are basically where they were. we're off december lows, but basically where we were a year ago but the stocks have decoupled from oil and gas names. the xop lost 71% over five years. investors cannot run away from oil and gas stocks fast enough >> okay. brian sullivan, thank you for that >> sure. >> it is interesting i looked at this yesterday oil prices year to date are -- spot prices are up 14% gold prices are up 17% the narrative on those two are
wildly different >> you mentioned the detd. debt. is there the fear -- >> it's the return on equity on these businesses have been poor. it's about how do you have capital discipline the industry knows it. we were hearing that at a conference recently, but they have to prove that to the street. coming up, a match made in heaven we will be joined by joey levin to talk about the company's earnings beat and a possible spinoff. and with a volatile week that the mkeart has had, where can you turn as a safe haven
list tom here has brought a special guest. >> joey levin, ceo of iac. >> tom >> why are you guys thinking about spinning off match and angie home services? >> we have always thought about spinning off our businesses. we spun off now nine businesses out of what was 15 ten years ago. in some sense it's not really news because we're always thinking about it. right now we've taken more serious steps. that means thinking about it more pointedly what happened is we looked at match, match is just doing phenomenally well. big business, standing on its own. and starting to really consume the entire iac story in a good way. but casting a shadow over the rest of iac. when we look at that we think now may be a good time to do that we thought about that in match, we thought if we do match do we
think about angie? as we developed those conversations we realized both of these are public companies, we're about to go out to earnings, now that we're thinking about this, it's probably appropriate we tell our shareholders in the spirit of transparency >> how far down the road are you? if this were a baseball game, what inning are we in? >> if we're perpetually in the top of the first, we're now in the bottom of the first. that's an advancement but early. >> by saying this and saying it publicly, raising your hand saying we're thinking about it, does this effectively invite and are you inviting potential suitors to call you on the phone saying hey, if you're thinking about spinning this off, we may be think being buying that from you? >> i suppose it's possible it's unlikely. it's not a tax efficient thing to do. we don't typically sell assets we typically give them to shareholders i suppose anything is possible
i would say not likely >> when you look at your businesses, is it a conglomerate discount and therefore by breaking these out more clearly and did you get a better valuation for the entire -- >> sure. s that that's in the consideration. iac has $27 billion of cash and liquid assets in terms of match stake, angie stake that's $27 billion. our market cap is $22 billion. that's a $5 billion discount. that's before you get to the other businesses in the iac. so that's a component. it's not the only component, but something that goes into the soup when we think about this. if i'm the shareholder i see prose and cons i like iac being involved in these businesses you have a proven ability to grow these businesses. i like you're the chairman of match and angie. conversely perhaps having its
own cost to capital, those business will do better apart. i don't know how to weigh that do shareholders come down on both sides >> i don't think -- that's why we spend time thinking about it. it's a -- it's why these things are difficult decisions. there are definitely benefits to both the one thing that does happen and has happened historically is when we spun off four businesses in 2008, we were -- the story on what was left in iac was not an exciting story it is what are all these businesses are they anything? can you turn them into anything? turns out we turned them from really almost nothing to match now a $25 billion business, angie a $7 billion business and putting that focus on smaller businesses had some value. match and angie are at different stages so we'll think about those two differently. >> in the consideration to spin these companies off you said it will be an investment period for you in terms of investing in the
various smaller businesses like dot dash and angie's international business i'm wondering if that at all changes how you think about the timing and the timeline for these spinoffs do you want to be doing those things consecutively overlapping or do you want to be -- do you want to spin off and invest as you said before, which would mirror the last time you spun a company off. >> i don't know yet. those are premature questions. i think valid questions for sure, we just haven't figured out the answer to that the most obvious candidate for a spin is match. match is much further along in its life, its development, in its size and scale relative to the rest of iac. angie is still developing some things >> so match might be at the top of the second, and angie in the bottom of the first? >> i wouldn't put them in different innings, but they have different consideration sets
that we're thinking about in that >> so my initial reaction when i heard you were contemplating this is today is your last day in your 30s. tomorrow is your 40th birthday, and this was your semi retirement plan to get off the chairmanship of match and angie. >> that has nothing to do with it what will you do with all your time in your 40s >> i don't know. hopefully i'll be busy maybe at some point try and get decent at golf >> we wish you luck. >> good luck >> thank you joey levin of iac. lyft with some strong results last night is now the time to get into the ri ridesharing stocks both lyft and ub r uterp ier ars morning. we'll dig into those numbers next eó2w
we are getting some shares of gain that it will allow insiders to sell stocks sooner than explained really it's sort of a technical reason in that lockup period it means a lot of shares coming to mark. >> exactly fundamentals look better than analysts were expecting. it's that technical reason in after hours. of course, the company's shares soared on earnings and they were moving up the lock expiration date to august 19th. it allows insiders to sell sheer shares, which could unleash more supplies and with little demand, that may put little pressure on the stock price. because of the hot ipo, an estimated $215 billion worth of stock will become available for trading thanks, to lock-up expirations during the 2019
according to analysis by cnbc. not all investors will sell, the potential for this russia supply has people nervous some analysts say the recent flow of ipos he wanted to support the stocks for the first half of the year once they unfold, the supply dynamic could change and could partly be why you are seeing new eipos. they change their timeline to september to beat that stock deals in the firsthalf of the year >> stay with us. i want to add a couple of voices what might come with uber later today, senior industry analyst at cfr, a research against bring ma joining -- prima joining us i'm going first. how much should investors be worried about the lock-up issue versus what is going on operationally? >> i think in terms of the lockoff issue, it was expected
nonetheless a little sooner than expected >> that being said i think it's definitely going to be a head wind towards the stock, something investors will monitor. the number last night from lyft is exactly what you wanted if you're an investor i think you need to string another two or three quarters like that together you get that you can see the sentiment turning -- >> what is the reaction worth? >> 12 months out, next summer. >> we have a target projectiles of $80 we think the best way is clearly looking at the longer-term picture of the company, because of the pre-cash flow potential in the out years rather than looking at the actual kind of cash burn that you will get over the next six, 12 months. >> dan, i know you, you will sit there and look at the list and see everybody who is trying to sell and what that means who is going to sell? >> well, and we will see if it goes the way it should go and lyft would expect it to go,
kind of those early stage venture capitalistles. when it comes to something like lyft, maybe the folks who invest if the first four years of its life, a lot of those will sell, they're not pa i'd to really hold public stock. in theirry, the unicorns raise money from hedge funds, the idea is those were long-term investor, if they sale, that's an issue. >> this places a bar on uber tonight, doesn't it? >> clearly the ride sharing business is 80% of the business. it's the uber eats, the uber freights businesses, that's where we expect the bookings growth to come from the terms of uber here over the next two or three day zps we compare those two companies and show the charts of both next to each other. arguably, they're almost two different companies given where the businesses are headed. if you could buy one or the other, which do you buy?
>> we have a bu recommendation on both. if i were forced to buy one today i think lyft is the better option i think it has better fundamental also, essentially secluded to the u.s. market, whereas we are talking a more broader basis if terms of uber i think there is less risk in the near term. >> how much of a breakdown are we expecting in terms of uber's moonshot businesses? >> in terms of earnings tonight, i think it will be pretty similar to what we saw in the ipo. they don't break out how much they are mark, each business per se every single quarter. so i don't think we le get as much insight into that we probably won't get anything like we saw with the lockup announcement in the aka yesterday with lyft. lyft has something simple and special. if they have their lock-up expiration date, typically we
see companies move it back zblsz 20 cents, because we saw the screen mr. ipo man. >> one of the reason i like direct listing, there is no lockuples. lockups are a blunt force unnatural instrument. >> only if the company doesn't need money you need money, you have bad ipo. >> you don't have to do both that's right now on the fcc. like the idea that you can't do a direct listing and have lockup, that's really because the fcc right now doesn't let you. someone can do that, someone will do that it has to get negotiated out. >> thank you, guys thanks, for hanging out. >> a pleasure. >> coming up, we will be joined by the rest of the show by guest host anthony scaramucci. he will give us our reaction to the volatility since the fed cut rates. don't miss investor carl ihnca live at 12:30 eastern time
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the second hour of "squawk box" begins right now ♪ >> announcer: live from the beating heart of business, new york this is "squawk box. >> good morning, welcome to "squawk box. right here on cnbc i'm andrew ross sorkin, mellissa and joe and becky are off. we have two great host, to him farley, chairman of far point and the former president of the stock exchange group then a guy sometimes very shy, antony scaramucci is here. we have to work hard, founder of sky bridge capital and white house communications director. it's great to have both of you here on a wild week in the markets. take a look at u.s. equities futures now. things are looking in the green, even in this program in major ways the dow will open 17 points higher s&p looking to open about 4
points higher, the nasdaq looking to open 27 points higher >> at this hour, treasury yields are moving higher after the benchmark touched the lowest level in nearly three years. the drop in yields was a market in the driver before stocks staged a late day rebound. security firm semantic is close to selling to broadcom remember broadcom previously attempted to buy all of semantic an effort unsuccessful because they couldn't agree on price tesla is saying the model 3 has the lowest probably of injury by the national highway traffic safety administration. they call it misleading. tesla says the claims are based on nitsa's own data.
china setting the yuan at the weakest point overnight. we have more from beijing. good morning. >> reporter: good morning, andrew, the mid-point is set at weaker than 7. it was stronger than analysts expected traders take that to mean it keeps the brakes on the chinese currency there was no official commentary on the fix but the st. media, especially the state news agency xinua has the potential to stabilize in the future and the global times newspaper ran a piece which quoted a researcher who has been close e closely linked to the chinese commerce ministry. >> that researcher said further depreciation will not be very fast to the 7.1 or 7.2 levels.
it will not take long before the rate returns to below 7. in other words, expect the yuan to maintain some strength. separately, the trade data was out. it surprised to the upsides, exports rose to 3% imports shrank, but less than expected it appears that global demand is still holding up even though exports to the united states weakened so, what we're seeing here is that president trump's tariffs are taking their toll. guy. >> eunice, thank you for that. here to talk trade, marks, so much more, a market global strategist at j.p. morgan funds, of course, anthony scaramucci is here, to him farley. steve liesman is on set. we can do a lot this morning. >> hey, guy, a big party at 7:00 a.m. from it is a party. i think of this in the context of leverage, leverage in the trade war. how has this changed the
dynamic? >> so i think back if july we were seeing early signs of stability in china we had seen them in june as well, some signs a lot of monetary and fiscal easing that china had put in place was finally having a positivesque. i think china is coming from a point where it's economy was stabilizing, it has a lot of tools, levers it can pull in the next stage of the trade fight. so that's what's getting us to the thinking that this is not going to go away for the next 18 months or so we're going to continue seeing the trade cloud with an escalation from both sides coming as neither have an incentive to cave at this point. >> you are in the goldman sachs camp, this is a 2020 project in the. >> yes, we do think so >> anthony scaramucci there is the election cycle in the middle of it. >> i don't know about that here's what i would say, preparation and planning are the hallmarks of wining a war, so when you look at what the chinese are doing in terms of their strategy, they're laying out a very long-term plan to win
the war. now you have to remember the united states is 22, 23% of the world's gdp. when we had 50% of the world's gdp, it was easier for the united states to provide leverage in a six like this the chinese now have 78% of the world to go to away from the united states. you can see that's what they will do over the next 12-to-24 months >> i don't know, what is their long-term gym point? they're so strategic about it. they're in a bit of a box. >> i'm not so sure, tom. here's what i would say to you they care less about the people on the ground than we would because they don't stand for election and so what they're going to do is they're going to push the belton road system they're going to start to do more trade in the eur-asia continent if you will that large land mass, the middle east and africa and the reason why they're devaluing right now has more to do with that than sending goods into the united states. >> i think because i'm thinking
the of the absurdity of the world we live in, where the measure of the success of our policy is that they are doing worse tan we are and i remember a world that was not too long ago with the specific aim of foreigners e foreign and economic policy was everybody would do well. we would do well when they did well, too. i believe that still to be true. and i'm looking at data this morning, rail freight data, u.s. intermodal, u.s. freight service, poor tonnage, everything, every single one of those transportation indices is either recessionary or pre recessionary and i don't think we have an idea ofwhere this is all going i would not let these snakes out of the bag here, because i don't know where they're going to end up >> okay. it sounds like steve is in my camp so without preparation and
planning, we're at war with china right now. it's a full blown trade war. the white house should really tell people what the plan is and what we're going to do by the way, because of the lack of the predictability on the tariffs you have slowed down capital investment go look at the first two data. the first will be worse than the first two. you know i'm right about this. >> in thecontext, of the biggest corporate tax cut of the history of whatever. >> you got the fed helping out cutting rates likely in september. here's the problem we don't know where things are going an u.s. corporations, ceos large and small. >> i think those are all concerns, but the equity markets are fought reflecting it should they be reflecting it more >> they were not expecting it. this scenario is not where have you multiple significantly above average. there is too much uncertainty where we go. what the impact is on the xi, on earnings that's a scenario where there is a hard feeling. >> can i understand a footnote
is it victory now we wake up in the morning and the post-important factor determining the u.s. stockmarket is the pegging of the yuan i would not call that victory. >> let me ask you a question are you suggesting the trump administration should relax some of the tariffs >> i didn't say that i understand the challenges that we have with china but i'm just talking about predictably for american ceos large and small. because here's the problem if you said, okay, we're at war with china, here are the grievances that we v. here's the imbalance in the trade situation. we're going to cut a deal to creates symmetry if there is no symmetry, then we will graduate tariffs. right now we don't know where the tariffs are going. we don't know if they're going on september 1st or not. if the white house said hey, listen, 2% a quarter for the next ten quarters. we will have a 201st tariff, everybody will be prepared for it, everybody will be able adjust their supply chain, there is levels of predictability. >> larry kudlow hates tariffs. all of us around the table i'm
sure hates tariffs. >> larry hates tariffs >> used to hate tariffs? he hates them? >> it's gotten in the way. >> anthony, how do you deal with the forced technology transfers issue? how do you deal with espionage steeling i.p., another level playing items? >> these are all legitimate issues i agree with the president and applaud the president's courage for going after these issues i'mtalking about planning and prep rated for war if we are in a combat, you have a logistics situation, supply cane you got to get food to the troops you need food metaphorically large and small. you need to explain to them, what we're dock, why question are doing it if he sat in the oval office, here are the tariffs 2% here, 2% there. >> i think the problem is a lot of american ceo rz on board in terms of stopping forced technology the long game of this trade war. that's not going to make them.
right, that's not going to let them spend money in september laying out their capital plans, that will not let them their comfortable about the environment right now, is it >> i would disagree slightly if you gave people guidance of what you are doing and there was levels of predictability when bill clinton raised taxes in '93, he said we're done now for four or eight years. >> that unleashed a tremendous amount of investment capital into the society we ended up running a budget spur plus by the end of his term all the president has to do is say we're at war here's the reasons why and we will create more predictability in this situation. >> has the administration ever tallied up what the i.p. problem is worth >> i don't think anybody has tallied it up. >> no, they did. kudlow yesterday. >> what was the fwlb >> he used the figure of $600 billion losses to u.s. companies
over eight years let's take him at his word for a minute i think your questions are good. but $600 billion over eight years. over that period of time, the united states and china did $7 trillion worth of trade between each other so what we're talking about sa loss problem of something around 8% of the total. i got a question for you if you got shop lifting in your store and it's equal to 8% of the toll revenue, do you shut down the store so what do you do, steve >> don't set the store on fire he's not just shutting down, throwing gasoline into the store. >> i put it into context. >> it's been going on 100 decades, we can ask nicely and that has not worked. >> i think that's a good number. >> we all agee there is tremendous risk, it's been going on decade to decade, what differently would you have done? >> it's probably worth a little bit more you would capitalize that and
put a discount on the company. be that as it may, i don't think i would shut down the store, which is sort of where we are right now. because i got an 8% problem. >> we have european cease-fire, which was declared last july if terms of the trade situation why not team up with the europeans. we have the same grievances. if we are at war, our last wars we want successfully were through strong alliances why not team up with the europeans, 650 million people in a collective bargaining action against the chinese, why are we doing that >> my question, we've litigated the philosophical and strategic here, the question is how to make it actionable on a morning like today, investors are waking up think kwlag the heck is going on, where is this going? >> so i think for our clients, we have clients all over the country, all over the world, with very different views of what's happening we tell them, look, let's focus on where we seem to be going, outside our personal control and
the impact it's having it's not just on the globe it's also on the u.s. economy, very concentrated in the industrial sector so what can we do about it? clearly the risks are tilted to the downside here. so we have been talking for a while about our clients about dimming down on a risk, being very disciplined, very neutral, stocks and bonds, added more defense, adding more protection. not because we think we should if going a certain way or not, because this is where we are we have to prepare for that. >> isn't it dipping on the s&p >> we have many different areas within j.p. morgan >> there are many houses. >> which is lovely we have great debate >> it's a community of homes and our particular home is if we imagine a hard ceiling on the multiple here at 16 times, we don't know what we should be putting on the earnings picture. what do we have? what is their impact we think there is not much more upside from here. >> it's confusing to hear one
strategist come on and say j.p. morgan's year end target is 100 and it's interesting to hear you say we're neutral. >> it's about the investment horizon, our clients within asset management are planning retirement, that's years, decades in the making. >> what did you make of yesterday's down drafts in yields was it an adjustment or was yesterday the aberation? >> it's hard to know, frankly. that's because there are so many heavy, heavy anchors here. >> he's asking that, what's the answer to that question? yields are going lower we have a spectre -- >> i don't know the answer >> but you sort of know the answer the yields are going lower one way to spectre deflation across the world because of the trade slowdown and the united states at 22% of the world's gdp will not be the last man standing for growth if the rest of the world stands for inflation. >> there are growth, inflation,
central bank policy and frankly for the u.s. a lot of foreign buying as well so heavy, heavy anchors across the entire yield curve makes adding - >> what happened very quickly is when you went down at 1 twoond quarters and subtract 2% inflation you now have a negative real yield on the ten year. >> we got to leave the conversation there gabriela, thank you. we are coming back to you. anthony and tom. >> am i allowed to stay? >> you are allowed to stay >> the stocks are on the move this morning plus, burger king is rolling out. it doesn't come without some controversy. wee t at'vgoth story next. "squawk box" will be right back. these folks don't have time to go to the post office
welcome back to "squawk box," viacom reporting 13 dollars a share. it's helped by a return to growth n in domestic ad sales. >> that stock not reacting too much on the back of this a couple other stocks on the move to tell you about we have service lyft reporting a smaller than adjusted loss in the second quarter
revenue rose 72% that was a beat if terms of the forecast, gaining more riders. they gained more per ride. the company also boosting its outlook for the year but then again there was a lockup and that's put pressure on it as well >> 157 million shares are eligible on august 19th to be traded. >> you will w5uatch to see ever single insideer. >> surprise, surprise, lyft and uber earnings going up now they have public market pressure on them as well shares of roku surging, revenue beat estimates roku topped 30 million users live on "squawk alley" at 11:15 a.m. eastern time. well, the countdown is on over at burger king, the fast food chain is launching the impossible whopper nationwide today following successful limited tests. you better commit if you want it to stick around. they say it will only be a
popular menu item if there is a top demand, it's meatless and they point out it's flame grilled in the same grill used for meat and chicken it seems like it might be a problem. although you would think the grill would burn all of the germs away. >> it's like salmonella. you don't want to have certain things on the grill. >> or if there are religious reasons. >> we have a lot more coming up on "squawk box." the trade war rages on gold prices pushing at highs not seen in six years. you want some gold you want some bitcoin? we will talk other safe hampbs volatility picks up after the break. "squawk" returns in just a moment >> announcer: time now for today's aflac trivia question --
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♪ a big week for gold and bitcoin. gold touching the highest level in years bitcoin up in the past week. why some investors are turning these assets into a safe haven is brian kelly of digital assets and a cnbc contributor >> bite coin lover >> of course >> somewhat biass aed. never -- biased. never ask a barber if you need a haircut. >> when you see it in the middle east, oil prices go up there is a premium to that price. are we seeing a bitcoin premium in the price right now because of what is going on in hong kong plus devaluations? >> yeah, to an extent we r. so for the first time, i have been on this network since 2013 talking about bitcoin, every
time somebody asked me whether or not bitcoin is treated as a macro-type asset until this year what we are seeing is macrofunds, traditional investors are treating it as a supplement to gold and using it as this kind of macrohedge. >> the correlation is sort of undeniable this is a step i pulled out yesterday. the bitcoin gold revelation has been .496. in the past three months, though, it's gone up to.827, applying a much tighter correlation between the two. you say it's too far to say bitcoin is a safe haven? >> i hate using the word safe haven with an asset five times as volatile as the s&p 500 people are, to the extent you are using it as digital gold, people are thinking of it as a safe haven. >> here's my question. all of this is happening with the backdrop of china.
there is this assumption a lot of this is money flowing out of china into bitcoin is it money flowing out of china, which by the way is hard to do. or is it just the assumption of investors in developed countries saying to themselves, money should be flowing out of china or this represents what this could look like in the future when money could flow out of china, therefore, i will push the price up that's what's really happening. >> i think that's what's more than what's happening. for what we are seeing, we are seeing a lot of activity from asia, not necessarily in bitcoin, in some of the other stable coins, something like a tether you are seeing that, you are right, it's difficult to get money out of china. >> how about a capital flight? it's a speculation the question is do we have a currency >> not in the moment like in the future >> there is some look at hong kong, you can get it into bitcoin relatively easy, so there is some capital flight coming into bitcoin. >> that is interesting, asia has been a hotbed for bitcoin in
crypto currencies in general now two a threat that china is potentially devaluing the yuan you got yuan blocked countries afraid tear currencies will go down if tandem so if you are in japan or south korea, for instance, already a hot bed for bitcoin, you might see a lot more activity. have we seen that in the volumes? >> we have seen a lot or activity coming from south korea. for a while they banned bitcoin and closed down trading. south korea, vietnam, most of southeast asia, that's where you are seeing the kind of capital flight coming from it's still, you know, asia between japan and southeast asia, you are talking more than 50, 60% of the daily comes from there. >> one it can be just like gold, not much utility it can build confidence. the other is we to have more than fake i would i'ds, drugs and elicit sex >> i have never done that with
bitcoin. >> which camp do you fall in >> so you know i look at it as a life cycle analysis f. 2009, bitcoin was a startup. it's kind of gone through this phase, where we are now is a commodity, much more like gold i eventually we will get to the currency stage i think it can still survive as digital gold it's a 200 million mark cap today. gold is a 10 million market cap. even if it took 10%, are you talking 5x from here so i think we will get there it's a life cycle. >> two questions you are the central banker for bitcoin. do you like the activity where it is now? you wish it was worth less or more okay, because of the need for it to become prevalent and then the second question is are you the central banker for the united states, what do you do to kill bitcoin? >> so i'll take the first, the first question you know, the in there int ig thing about bitcoin is the value
is whatever the market puts on it it's almost like working capital. how much working capital to you need to run the underlying business or the underlying economy. right now bharkt is tethe marke telling us you need 200 billion after capital. i would tell you as it grows, we need triple capital. i think we have much more to go in the short term. sure, we can drop the 6. in terms of killing it, it's very difficult it's like the internet the chiepd of choke points and at least where the amlkyc are the fiat an ramp. >> anti-money laundering, know your customer. >> where people are taking their u.s. dollars or japanese yen or r & b and hong kong dollar and putting it into bitcoin, those are the points governments come in and say listen if we want to support it, we want to make sure it's not used for all the things you mentioned and if we're not financial to support it. we choke it off there. >> good to see you brian kelly.
still to come, while retail investors are trying to navigate the market volatility. there is this one group sitting all of it out. they're faring well, mind you. we will tell you why after the break and take a look at u.s. equity features at this hour with retwo hours before the market opened. we got some green arrow ace cross the board. we are pack in just a moment right here on quk x""sawbo -- we are back in just a moment right here on "squawk box. kevin, meet your father.
welcome back to "squawk box," after a refuse few years of returns, hedge funds seem to be sitting out, leslie picker is here to explain. everybody goes to the beaches. they have a good first half of the year, i'm out. >> say that you the weather forecast low 80s and sunny and said hamptons, market volatility. i think i'll stick with the hamptons >> they are, they are sitting this one out the time the industry is up this year almost 10% excuse me after a few rough years, hedge fund managers don't want to do anything that might disrupt their gains. so they have been pulling back and not participating in the recent sell-off. they point to what they see as
untradeable macro risks. things like the trade war, brexit, rates, commodities, hong kong protests, now they say it's technical aspects surrounding funds nomura says they add this second wave could be worse than the one this week not ruling out a lehman-like shock. so the question for the average investor out there the squad smart money is not participating, should you be >> thank you, leslie we should get anthony's take on this, too. this is your life. >> well, it's my life and in some ways i want to personally thank the trump administration for creating renaissance in the hedge fund investment activity at the end of the day what's happening for skybridge and others is more rfps are being put out and more people are looking to allocate. you've got so much uncertainty
have you so many people that are trying to hit an act chu aerial target when you got rates where they are right now. i would have never predicted the influx of capital into hedge funds. you would play that etf, rates are going lower, stocks, bonds going higher you got so much turmoil right now that i predict there will be a huge fund. >> yesterday we just had a conversation how the legends, the legends, the icons, the icons, not just carl icahn but the icons of the hedge fund business are over. but that was the argument. >> well, they may or may not be over but for skybridge capital, we've got a group of what i would call exceptional managers that are not in that iconic space and i personally think there is a life psych to him that, too. if somebody is worth $30/$40 billion in terms of successful investing, i can understand why they're on the beach in the
hamptons, hedge fund managers are doing very well in the market. >> they don't have that big personality kinded of brand. >> none of us in the hedge fund industry have a big personality. it's all very. >> low key guys. >> on the beach. >> thanks, leslie. >> nice to see you still to come, if now is the time for buying opportunities, we will bring you investment ideas next here are the futures, dow looking at 26 points at the. s&p upside 5 treasury yields steady "squawk box" will be right back.
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welcome back to "squawk. i want to get to dom chu i want to look at some of the interest rates impacted. dom. >> andrew, instead of doing interest rate stocks, what i decided to look at is stocks moving from analyst calls tied to a number of different thing out there. they involve stocks, if you stocks on earnings reports, the greater u.s. china uncertainty we will start with shares of disney, higher around a half a percent. maybe 1%, roughly 20,000 shares pre market
this is the day after of course that earnings report that disappointed investors the media giant is outperforming analysts the twice goes from 150 bucks to 1030 they see more sentiment for upcoming movie releases and the opening of the "star wars" galaxy edge attract at disney world versus disz my land among other things we are -- disneyland among other things caterpillar is lower 4,000 shares pre-market. the construction heavy equipment maker is getting downgraded to neutral on a prior buy and they cited an expectation for decline in a key measure of profits by north america and coin, construction equipment markets, those shares off now we will end on a now dow component. shares of foot locker, they're up about a percent or so on
roughly 4,000 shares pre market. they are being helped along by analysts at morgan standly they keep the $40 price target on the stock it's a valuation call after a rough few months, they remain cautious over the long term. those shares moving 1% in the upside. >> dom chu, thank you. our next guest are shared over common sectors. they share one common thread jason, great to see you, from albion sector. >> good to see you >> what strikes me is on a monday's session which was a real tough session, target really held up what do you like about this stock? >> yes, target is an attractive valuation against a company that is improving their fundamental also so you will note that in 2017, they launched a three-year $7 billion turn around for their stores and eighth multi-faceted
six-point approach which really the end goal is to boost same store sales. they've done that we see 4-to-6% comps on same store sales. they are growing the dividend north of 12% per year. steady payout. almost 50 years of dividend payments uninterrupted with a 47-year streak of growth it continues to be a company we think is under valued. >> verizon has a tradition of payouts. i'm wondering why you prefer vshz over at&t and at the le com? >> well, verizon is the leader in the space if you look at 5g, they have grit brand value, in terms of quality, they continue to consistently win in terms of examiner satisfaction and their network. this is a company that continues to see subgrowth in 2018, they had about 2 million adds we think there is an upside around 12 times anyingles. it has a 4.5% dividend that has
been growing if you look at per household in data usage, we think there is a decent story and it continues to grow as well >> is the media portion of at&t now a distraction in your view >> i think to some degree it is. now, to be clear, we also tone e own at&t for clients as well, we think the business is doing fine but there have been more troubles with at&t and more distraction. verizon is a cleaner play for now. we prefer verizon a little bit over at&t. >> defense stocks have been stalwarts amid this market volatility what do you think the reason behind that is that's one of your picks >> well, i think there is a lot of recurring revenue, lockheed martin is a favorite this is a company that has a near monopoly in fighter jets and duopoly if you look at the advantages one has to have in order to continue to win these contracts from defense departments the like lockheed, there is a
recurring model we think is easy down the road that supports the dividend and the growth rate we have 15% earth zbroenings rate the f35 has had some problems to be sure. they only deliver one-sixth of the orders that will come through over the next 15 to 18 years. we think that's a nice growth driver to the stories. we continue to let the story lockheed provides. >> cisco is your last pick jason, we got to leave it there. >> coming up, when we return, a new warning from beijing to china. will the tactic to discredit the protest movement what is it going to mean we will debate that after the break, "squawk" returns right after this at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk...
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. welcome back to "squawk. beijing is sending a warning to hong kong it plans to intervene in the situation with mass protests if they deteriorate market investors are watching all of this closely, here to discuss is a group and founding partner and silver crest asset management chief strategist. patrick, i will go to you first on this. there is sort of a chicken andic situation here which is how bad does it get before china intervenes. if they do, what does that mean, therefore, for the markets >> it's something we are
watching mainly because of the threat of capital flight you know, people keep their money in hong kong because it has rule of lawsuit. because to some degree they're immune from beijing or insulated from them. and singapore right now is quietly courting people to say, maybe singapore is a safer place to keep your money in they're unlike china, unlike the mainland, there are no barriers to leaving all you have to to is click the enter and the money goes >> so politically, though, maybe you can speak to it, both the economics of it and the politics of it, first of all, how, if china does couch u jump into this situation, how quickly does money move and, therefore, what happens? >> i think a lot of money is probably moved around already. we got the trade numbers this morning. we're seeing a lot of regional rebalancing, where exports are going, where they're not going where imports are going, where they're not coming from. both if terms of trade and
finance money, we see people move in all summer here they have been doing it in anticipation of what is playing out in slow mo eggs in front of us i want to pint out one thing in hong kong most folks haven't looked at yet, it's relationship to the entire south coin economy. the pro river delta ecosystem as we have talked about it for check dazed is you know inextricably connected to hodge congress's role. if hong kong needs to go to the intensive care unit then that puts the prd as we say the pro river delta out of business a little bit as well so that's something to think about. >> the long their unrest goes on in hong kong, does that make china more willing to reach a deal with the united states or less flu is know, it's really on different channels right. this is now in the category of deeply profoundly political phenomena for china. from beijing's perspective, the kind of discord we are seeing on the streets of hong kong is
unacceptable, socially, mr. imly, business people world wide sort of move away from this sort of thing happening in the streets. so it's going to be treated differently than the trade dynamic. >> anthony, a question, this may sound perverse, you think that the white house wants these protests to continue >> i don't. >> you don't >> no, i don't. >> you don't think the protests gives them leverage? >> i think the protests, frankly, are distracting from the macro issue. notice at the end of the day, notice these position, they're not encouraging the protests they don't want a chinese spring what they want is a good li lateral relationship with the chinese. i think the protests are a distraction to a much bigger economic situation >> china's leaders right now, though, are having their big pow wow leadership summit. you know, the sense is that they're really in a defensive mode, that they're kind of on lock down. i think that does spread across
multiple issues. they feel on the defensive it makes it harder for them to take risks whether it's with economic reform, with a trade deal with the united states that involves some concessions >> this will harden them, make them less willing to compromise. >> all of the things i hear out of china are that they're kind of hunkering down and you can blame the trade strategy, you can blame what's going on in hong kong, but there is not an appetite for either political or economic risks right now. >> a quick question, curious has the western media overage rated the economic colossus of china? is it way more hollowed out than people think and the second question is, can they sustain themselves if they go full blown insulary and engage from the world? >> china is a xi that would be
slowing with or without the trade war tensions they've got a lot of issues with overinvestment, excessive diplomacy on credit and ee-- owe exive dependents on credit the trade war doesn't help but the question is what direction does trade pressure push them? does it push them towards the kind of reforms we want to see and open up to address those issues or does it push them back into the bunker? my sense is it's made them much more defensive >> we had a thought on that by the way the media played second fiddle if terms of pumping up the china we thought we knew going forward, tremendous amount of potential for decades to come it's all contingent on hard reform work that has to happen back home in china. >> exchange question for you so many companies wanted to go public in hong kong so long. is that now off the table, not just now, for the next, 24, 36
months if you were a ceo, irrespective if this all gets solved, would you say i'm out? >> not yet this entire segment, the eight shares were attracted because of rule of law. because of the fact that if i put capital in hong kong, i few that was protected free of interference from beijing. >> that will change very, very quickly. however, i want to add one other element. if this trade war intensifies, you could imagine one of the weapons of war would be saying, chinese companies cannot listi the u.s., which would be a terrible thing, there are unintended consequences. it's a box i don't want to open up the short answer is it could. >> another market related issue that i think it opened up this past week was the prospect of chinese devaluation or china's currency i get a sense right now the white house is kind of doing high 5s this morning saying,
well, they put it back below 7 so mission accomplished. we warmed them up. i think that would be a potentially tragic misreading of this situation china, there are a lot of costs and risks associated with china allowing it's currency to weaken it's been reluctant to do that but it did allow it to weaken by 5% last year in order to blunt the impact of tariffs. and there is a strong temptation for them to do the same if they face even higher tariffs. >> do you think they were doing high 5s at the white house >> i don't i think there is a lot of uncertainty at the white house honestly you can't figure out what will go on. i will tell you this culturally, i'm not a china expert i think losing faith for china leadership is a big deal the white house should figure out a way if they want to solve this trade issue come up with a way for the chinese not to lose face, otherwise it will be way longer, way more protracted. you you run putting thooem them into recession, your 2020
election prospects are dimmer. >> the yuan is down in the past three months, you made a point that it looked like the pboc was trying to distance itself from central banks saying it would not ease further, some expected a rate cut on the horizon. >> extraordinary, extraordinary thing on this topic. rodium put a word out what was fascinating was senate the move andremedy but the argument peoples bank put out around it saying essentially this is good for noble investment global capital should come into coin it showed their weak spot that while they can say they don't care that much about a deal with the u.s., they can't live without global capital. >> daniel, stephen, thank you. patrick, thank you, very, very much coming up, will bond yields force the feds to cut rates? jerome powell may consider
lowering rates jeffery harte is our next guest. stay tuned stay tuned >> we provide you with financing options for your customers. that way, you can help them buy the things they love instantly and pay over time.> and that turns them into serious fans. hang on, there's more. want customer insights? we've got those, too. we use data to show you what your shoppers have already bought so we can tell you what they might consider buying next. and you can offer them the peect products. that ceo gets it. from adding unique capabilities to your company's apps to bringing you loyalty programs, our financial and tech solutions are changing what's possible in all sorts of ways.
. >> green arrows across the world, the day after u.s.-china tensions halted global marks >> boy, that escalated quickly. >> we will get you ready for the opening bell on wall street. the feds roll and this week's mark indigestion >> in a glass cage of emotion. >> off the mark with the latest rate cut >> and advice how you can market from world market figure tremors from a man in the know. >> i don't know how to put this, but -- i'm kind of a big deal. >> legendary investor mark mobbious will be our final guest as the final hour of "squawk box" begins right now. mark mobius. >> announcer: live from the most powerful city in the world, new york this is "squawk box. >> good morning, welcome to "squawk box," right here on cnbc
we are live in time's square, andrew ross sorkin joe and becky are off. we have to him farley here and a former new york stock exchange group contributor to cnbc anthony scaramucci is here the former white house down into indications dire -- white house communications director it looks like things will be higher it's been this way most of the morning. the dow woke up 30 points higher nasdaq up about 25 points. s&p 500 looking to open about 4 points higher. let's show you treasury yields >> that has been the number to watch all week the ten-year note up 1.719 and oil up of course has been a toughy as we are sort of worried about what china will do and how that impacts everything else >> here are some of the stories investors will be talking about this morning china central bank set the reference rate for the yuan in a
decade at more than 7 yuan for a dollar slightly week weaker tan yesterday's dollar the yuan at a crisis, it makes exports more attractive. this week's moves prompted them to label beijing a currency manipulator. kraft heinz is up. and the company says it has significant work ahead of it to change the trajectory of its business it also took a $1.2 imparent charge related to various businesses we see a headline saying kraft heinz has filed a filing saying it will not be able to file a timely 10q we are seeing pressure on kraft heinz today. krarnl health is up eps per market and beating forecasts. about this time yesterday, bond yields were on the move to put it lightly
yields on the ten-year photoeventually fellow low 1.6%. we covered it nicely you see that 1.719 steve liesman joins me with what the federal reserve may or may not do next. >> yeah. it's pretty interesting discussion since the latest round of tariffs were announced by president trump, will the fed cut to the chase here? there is a bigger debate over what the feds should do in this situation among fed observers and others here's how the feds fund futures market is currently priced according to cme a 1 h.% of a rate cut comes september with some percentage chance in there. then you got 79% chance for a second cut then they're toying with even a third cut, which if you count correctly, would be the fourth cut this year. here are some of the arguments out there. feds should cut, the u.s. and global economy are both slowing,
global slowing more than the u.s. global rates are much lower. the fed ought to bring it down to be more in line where other countries are. it could weaken the dollar i say could, we're not sure what would happen in that situation it would meet market expectations there is a strong groups, people say the fed should hold the line here the tariff problem can be quickly resolved and all of a sudden the fed would be deeply into cuts here other central banks will just cut more which is what we saw earlier this week. and finally, maybe break this cycle of mark expectations the market ratchets up, something the fed will definitely factor. data out yesterday did show global air freight declined in june the eighth straight month, long beach container data and u.s. 48 on the annual registering either declines year over year in their growth rates would actually turn negative i have a note here from morgan
brennan who covers this part of the world for us she says the freight wonks have been sounding the alarm for quite some time now. >> recession can be on the horizon? >> jack kevin from reuters has a piece that argues the global is already in the session i haven't looked at it in that context. but certainly the freight data if that is a leading indicator as well as by the way global manufacturing, some of the new orders data suggests part of that economy with the question i have that i can't answer is whether or not the service sector and the u.s. consumer can hold it up >> okay. steve, stick around, joining us to talk more about rates here and around the world, the co-head of insome strategy david wesel, on fiscal and monetary policy at the brookings institution. mike santoli, cnbc contributor i will ask a question at the
risk of sounding keeky does it matter what the fed does in so much as we got people all over the streets saying we will test the tenure in a race to the bottom does the fed have control over this at all? >> they have a little bit of control. i think that's a good question do fed cuts at the end of the day make that much of a difference surely it would make a difference to markets in the short term n. long term both in growth here in the u.s. and potentially globally, i'm not sure you know 25, 50, 75 or 100 basis points of rate cuts here in the u.s. make that big a difference >> david, i want to ask you a philosophical question programs. >> that is, what does the world like lie if, if you know, let's even say that his prediction of 0% or sub zero negative yields in the u.s. is not absurd and banc of america says sub 1% on ten year is possible or j.p.
morgue than says what's going on around the world is basically quicksand for the entire fixed insome complex in the united states what does that mean for us here in >> it sounds like scary, scarier and scarier. i think a couple things are going on, with ton world economy clearly has slowed we saw some bad numbers out of germany. the world economy is behaving different than expected. inflation refuses to go sustainability to 2% and the trump administration is creating lot of trade friction and uncertainty that's clouding the outlook. so it's not surprising that global interest rates are falling and their pressure on the fed to ease. if we get to the situation that you described where you know long-term rates hit zero and stuff. i would say that's an endorsing of the larry summers stagnation hypothesis there will be calls for stimulus to bail out the world economy. i don't think we're there yet.
>> folks on the side line are sounding, i don't want to say the alarm, they're forecasting very, very low rates >> yes. >> the folks on the equity side of the picture are bullish on stock. >> that's right. >> what gives? >> it's not entirely in conflict obviously, there is a tension, we're in the extrapolation phase of figuring out what bonds are doing. you've accelerated lower if yield, everyone says i don't know what breaks this cycle. we said it in 2016, too. look at the charts the bond market doesn't always smoothly price in exactly what's going to happen. you see these jagged moves up if yield. right now at least on a short-term basis, tactically, bonds are overbought they're overloved, over believed, because people are ab so all the stuff >> that being said, the fed, if they don't ease and bond yields globally remain where they are they are saying we are ignoring a lot of these market signals. because short term u.s. yields are very much an outlier amongst everything else. >> analysts sort of locked in
place with these predictions, they can't get out of them meaning, you know, they come on here -- >> they're locked in. >> that actually the pullback right now is almost admitting defeat. >> well, perhaps but you are down 5% from an all time high. you've kind of been flat 18 months in the u.s. stockmarket, one of the inputs in how you value stocks is what is the risk-free rate i think the math gets you to a place where i will not yet abandon things by the way, leslie talked about how hedge funds are sitting this out. individual investors have gotten scared for now, if nothing systemic happens, if there is not a real break in the system. the credit market versus softened up. they're not sounding a loud alarm. i do think it's a very ambiguous period. >> david, i have a question of looking down the road. yesterday, there were i go es the back of my knees got sweaty the way they did in the
financial. >> oh my >> a lot of information. >> i got nervous yesterday and i started thinking about how central banks coordinated during the financial crisis and my question to you is this are central banks coordinating now? do they need to coordinate motor importantly could they coordinate in that the finance ministries are screaming at each other. there is mo pollity among the governments. i guess the question to david is, are we in -- do we have a currency war, a trade war and a central bank war going on all at the same time here >> no, i don't think so. but i think what's going on is and what you are picking up, the back of you're knees are picking up is, the risk of the really bad outcomes seems to have gone up and what we're all remembering is all these warning signs if august 2007 that preceded calamity that followed and we're
asking, are these the tremors that suggest the big financial earth quake is comeing and the short answer is we don't know i don't think the central banks really need to coordinate now. look, basically the european and japanese central banks are desperate to get their economies moving the dollar is strong because the u.s. economy is a little stronger, but there is a certain amount of i would say communications needed. but i don't think they're going to coordinate. i don't think they coordinate that often anyway. and then of course you add to this like you know what is going to happen in hong kong what is going to happen in the middle east? what will happen with brexit there are so many thing that could go really bad for the world economy. it's not surprising that people are getting a little nervous. >> the first part of your answer, david, suggested they should be coordinated. i just wonder, the fed cut on thursday, on wednesday, and you had three central banks cut more and is there some sort of spiral here where if the fed cut again with the other central banks cut
again? >> some of the central bank cuts don't patz that much. >> fair enough. >> what matters here is what is the ecb, what is the bank of japan and what does the bang of england do the bank of england seems to be holding firm the others have signalled for their own purposes for their own economies they will ease if the world economy is really bad having all the central banks ease whether coordinated or not seems like the right policy. the question is, is the xi that bad and can the central banks rescue it if it's the politicians creating all the problems >> what does this insome mean, the actual stocks of the big global banks we had the yield curve go inverted we got sink rates. we had a guest on yesterday his big buy ideas were the big level banks other than saying jamie dimon is a great manager, why would the viewers buy the securities of those companies? >> i mean, of course the struggle is the rates have come do you mean. quite frankly over the long
term, the intermediate term, while we might get a bit of a bounce, i do see rates continue to move lower and the yield curve inversion is also a big problems basically for what it foreshadows into the future. yeah, i think there are some concerns there there should be. >> i have to leave it there. thank you all for joining us, brian, david and mike. coming up, when we return, where to call the bottom in financials that's the question. the sector felt the most pain yesterday. how much of the bad news is already priced in? the question about investing jamie dimon, the awensr after the break. >> you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts
. welcome back to "squawk box," we look at kraft behind, they provided physician of the first 19 months, the figures for the second quarter will be delayed as they continue to wade through a number of accounting issues and will not be able to file figures for the; right away however the company did provide political fare results for the first half of 2019, showing nearly 5% decline in sales over last year. >> the hits keep coming, stocks
down by 2-third. if you log at kel logs and so forth. they have done fine. >> warren buffet said overpaid. >> amomongolease yee. >> he's been defensive around the operational side of kraft behind. >> i think he had already expressed a lot of questions this does call into question a little bit the entire 3g approach >> he's being very defensive of the 3g approach. >> he's softened quite a bit in fact, i think he's less the supporter of 3g at the moment. wayman a controlling hair shoulder is an amazing investor. he has said to me personally the one thing we haven't figured out over time is organic growth. we're good at officially running businesses and finding opportunity. it's playing out here. they're humble they will try to figure it out it's been a very tough ride. >> now let's try to answer the
question you were posing about the break about financials right now. they have been hit the hardest with banks helping to drag the sector down. joining us for a little in-depth look at where this is happening, principles at sandler o'neill, why would you want to own a bank right now, jeff? >> unfortunately macrojustification banks kind of provide the lubery indication for the economy the yield curve is inverted. hits torically, that's not been a good omen for how things will play out really, it's tough for financials in general. when you got a so-year yield, pretty much all the businesses are under pressure so it's been tough for financials, that tough environment could keep ticking on for a while here. so as i look at the group, it's tough to say, hey, this is a blanket buy, it's so far under performed, you need to buy banks if general right now i do think if you look, there are some attractive valuations
out there, there are some companies it is worth looking at in the financial space >> what do you like? >> i specifically like places where you can buy a good bank for a low valuation, the name that comes to mind is citigroup, it's at book valley 7.5 times the forward estimate that's the the three multiple distount count for the peer group i also like banks where you can have large buybacks or a high payout yield there is a lot of 3% plus dividend yields that are attractive you look at citigroup, i think they will buy back almost 15%. b of a is in the same boat him some of those big names you can look at and be adding to safely here. >> so you think this is going to be merger activity in the community banking sector or the smaller banks as a result of what's going on? >> yeah. i think the general long-term trend is we will seek consolidation, generally speaking we have too many small banks for the companies.
i think that trend will continue anything that makes the operating environment tougher it helps to be a catalyst. first we had the regulatory expenses it became tougher and spurred a bunch of mna i think the longer the revenue environment stays tough, the more accelerated we will see that mna in the community bank continue or pick up. >> j.p. morgan, tom was talk about jamie, he was on a bus tour, you want to own j.p. morgan given what's going on and is it priced for perfection? >> well, you know, looking at j.p. morgan or versus the bank stocks, i want to own it we have a hold on it, that's because companies i compare it to, it's more priced for perfection with it larger peers, relative to the universal banks, if you are looking at banks in general, jp morgue isn't probably the best man in, they have the cities they v. it's just they are gaining a premium
multiple. >> where do you place a goldman sacks on a week where the credit card is launching. they may not get any more margin out of it in the short term. the platform they can create could be material. it may take a couple of years. >> reporter: yeah, i think outside of the ability to grow low. remember, they got a lot of deposits they need to put to work to the extent they can grow loans is good for earnings, also the connections to consumers and the technology side of it gives them some advantages the thing with goodman is, we have a buy on it i do like it here. it's a little of a wait and see. we need to see what the settlement turns out to be get that behind us and kind of get a more granular update on the strategic priorities, which we are supposed to get next year especially if capital markets cooperate. i like goldman here, i think it's one you can kind of pick and choose your times to get into. >> what is the upside scenarios?
the stocks are down from january of '18, not down dramatically in a lousy environment. maybe the market is saying there is hope. what is the hope >> i think some of the sell-off we seen recently look at what the ten-year has done, that's wait on the banks the ten years move to 1.7% doesn't look like, it looks like panic buying it looks like the market is running and hiding to the extent that u.s., china, actually kind of come to an agreement on trade, we don't come into a recession, i think a lot of bad things are priced in right now. they're not going to clear up overnight. a lot of panic-type things are priced in. when gdp continues, the trade fierce fall off of it. brexit falls out reasonably, capital markets are good you could see a lot of upside the next year. >> okay. we're going to leave the conversation there jeff, thank you. we appreciate the time this morning especially on a wild one
when it comes to these banks. coming up, the morning's biggest stock futures, pointing to a higher open on wall street, this, of course, after the biggest comeback of the queer yesterday. and later this hour, a conversation with guru mark mobius, neither you or your portfolio can afford to miss unay ted you are watching "squawk box" on cnbc >>
. welcome back to "squawk box," it looks like we will add to yesterday's gains, futures are looking for a higher open. remember yesterday the dow wass down as much as 98 points. we bounced back in the biggest comeback of the year the s&p 500 looking to be up by 6. >> let's talk a little about ride lyft, revenue rising 72%. it beat forecasts, though, the stock rose on the upbeat numbers. that was the good news and gave back the gains announced, it was moving up the lockup expiration date everyone will watch, insiders say it will sell they are raising the i don't think saying it is gaining more riders, a little bit more news there they are paying more for
rides. the big issue here, of course is watching with that this afternoon after the markets. >> super >> the growth in users is tremendous, it was up fun% year on year. they are saying pricing is much more yashl >> coming up, we got break economic da that a fresh read, all straight ahead it will bring you the number of the morning and reaction from credit and equity markets. you don't want to go anywhere. stay tuned "squawk" returns literally in a minute folio events. all in one place. because when it's decision time... you need decision tech. only from fidelity.
well come back to "squawk box. we have some breaking news coming up. initial jobless claims expected to be up a little bit. well, it actually surprised. from 217 down to 209 down 8,000. so about 5, 6,000 below expectations and that 217 from last week was slightly revised on the continuing claims side, we move from a whisker under 1.7 to 1.684 million of course, we will continue to have wholesale trade numbers throughout the day but i will point out something huge that has occurred in the last 24 hours. wow, we've seen a move in the
long and all sovereigns, especially our 30-year bond coming within a whisker of all time record lows at least based on what its close was. that was, of course 210 from july of 2016, traded 211 interday and now we sit at 225 i can't express the viewers, listen, it might not be the biggest move i've ever seen, it was a move that took i up to the water line, didn't get your toes wet, had a good reversal i think sovereign rates are being buffeted by a lot of issues we can argue with breck the camels back. in the end, a race to implement policies that don't seem to have worked seem to be at the epicenter. back to you in ditto on the ten year 24 hours ago we are ten basis points below where we are now.
our steady and we got futures steady after these jobless claims numbers steve, i want to bring you if. >> yeah. >> the jobless claims numbers does not support the weakness that we've talked about. it would be a place you would see it first rick, should we take out a 22le there dollar 30-year marge should we say to people, you want some cake you eat all, take all of this, should we be turning out the debt here, risk? >> reporter: alls i know is with long-term rates where they are many government itself, including ours, would take more advantage of it. they don't seem to take into account some of the issues regarding the yield curve. >> are you saying we should issue 50-year -- >> if the market shows the appetite. >> until the cows come home. that's if the cows come home. >> the market wants this this is the only game in town at
this point. >> it is. >> like i said, if somebody shows an appetite for the cake, they should give them a bigger slice i think you know it's something to talk about i will say knowing all the people who have been the deputy under secretaries of the treasury for domestic finance over the years, thatly tell you it is the policy of the u.s. government not to take advantage of market gyrations and swings and for the pressurery to essentially play the curve, to maybe play the curve >> or it's amazing that that's where the red line gets drawn. you look at all the thing they've done that's the red line. it's like san francisco. banning ecigs but thinking of making mushrooms legal the world's gone crazy. >> that may be the analogy of the month right there. i just want to very quickly look at some what i call econrestrictions, should the fed hold, the fed cut? we'll see what's going on in the world. we have a long u.s. consumer but
the business da is is weak we have the u.s. manufacturing sector most of the data is weak there the service sector, by the way a much bigger chunk arc smaller part of volatility has been pretty strong. the final thing, there is the global economy is u.s. is growing at trend, you can see an argument looking at the left side of the screen for cutting rates. the right side holding right there. there the a lot of contradiction. >> well, the u.s. consumer, if you looked at our portfolio, everything in our portfolio is structured vis-a-vis the u.s. consumer we certainly don't like the high yield markets and if the president is going to win re-election, which i predict he will, it will be because of the power of the us consumer going into the 2020 election wages are up the bottom 10% of the country wage earners have experienced a 5.4% wage increase since the start of the presidency. >> you believe there will be a stall out in capital spending in the 12 months prior to
elections? >> historically, it's already happening. i think so corporations are hunkering down >> is that an election or is that related to everything >> it's a combination of the uncertainty that we discussed in the 7:00 hour about trade, no one knows where it's going we're doing tariff roulette. >> that would be my recommendation it's unreamed to the presidential cycle. >> the consumer is strong what 60% of the economy, two-thirds the of the economy >> yeah. the consumer could save the globe. the u.s. consumer could save the globe if he and her she, what ever the right way so say this these days were to keep purchasing i got to say, tom, you talk to the companies out there a lot i'm sure why do we have the decline in capex? but the other expression of confidence, which is hiring, no decline there. it's a little bit more modest than it was before but these claims numbers, they refuse to
rise. >> hiring is more flexible than building a factory no >> well that kind of supports my idea you see it before you did it well, i had a factory i'm going to reduce, i don't know it can go either way i go es. >> if the consumption data holds, the united states will not be in a recession next year. that's very good for an incumbent president. >> the only thing that argues against the gyrations in the stockmarket are pretty linked to confidence numbers. >> we both know most of those consumers really aren't -- >> that's true but that's where their confidence is. >> the same way the president is tied sooinl psychologically. >> i understand. i think that's the only poll number the president looks at is the s&p 3500 i get that, we want the market to go up and there to be high consumer confident, look at the balance sheet, it is unbelievably improved the savings rate has increased. >> it's huge. >> they are spending their money
that will bode well for 2020. >> i asked senator cotton if president trump's trade is on the s&p 500. he effectively said no he said, that's not what president trump will look at >> i just heard, no, no. >> i think he's missed a lot tom, i think he's missed a lot on trade he thinks there has been a 30, 40 year asymmetrical thing he is missile locked to advocate for symmetry and free trade. >> if we take it down, 10% >> i think he looks at the s&p around says that thing is trending up a as it has for my entire term. that's a good sign i will get re-elected if we have a correction, there is nobody at this table that will be surprised by that. i think that would cause white house concern. >> we're going to continue all of this in just a moment the big question what this week's intense world wide volatility means for emerging markets around the globe and the
opportunities you may be missing. we got legendary director mark mobius you have to hear what he will say about where these opportunities are. you are watcng "ua bhisqwkox" right here on cnbc >> re? can you feel calm in the eye of a storm? can you do more with less? can you raise the bar while reducing your footprint? for our 100 years we've been answering the questions of today to meet the energy needs of tomorrow. southern company
yesterday's 2% decline at the lows of the session. s&p 500 looking up by 8 points, nasdaq up 35, dow up 66 points it's worth noting we had stability in the treasury market with a ten year yield holding steady at about 1.71%. >> 40 minutes to the opening bell dom chu is looking at some of the action investors will be watching him dom. >> andrew, let's talk about what mellissa just mentioned with ra ready to where we came from with regard to rates and other parts of the macropicture. you can see ten year treasury note yields, we did push down well below that 1.6 level to rise higher. >> that stability brings us to where we are right now 1.73% for ten-year treasury notes. also looking for the macromark as well and certain key parts of the currency commodity complex gold prices see a spike higher almost a ven, 20, at one point
yesterday, they've come off and stabilize where we are, off by about almost 1%. 1507 in the last trade there one other place perceived as a fawn correlated asset class, bitcoins seen a slight rise, it's up 11,870 on the coin base exchange there the last one there oil price is a certain key focus for investors right now. they continue to show weakness over the course of the last few days, saudi arabia is weighing in they won't let the price slide continue it got us down to 50 bucks a barrel we are up now 2.5% $52.66 up 2.5% the last trade there. that's the macro picture back to you from while you were speaking a deal o ahead of the nfl sunday ticket up on tv
it will end volatility for both those companies. meantime, we are joined by a very special guest legendary guest mark mobius founding exam of mobius partners and co-author of "invest for good, a healthier world and a wealthier you. good morning to you, park. i want you to understand what's going on in the emerging markets rights now you opened the templetop office in hong kong back in the day there were okay protests right now i want to get your sense of what's happening in china, what it means to the region >> you know it's interesting all these moving parts are becoming so complicated. stake, for example, the hong kong demonstration i'm here in bangkok, thailand, i was talking to a hotel operator. he said, this is great for us. a lot of the convention business that would normally go to hong kong is coming here. so you have a real situation where lots of moving parts, now,
generally speaking, a decline in the chinese economy is not good for asia, generally. there is a lot of exports going from these countries in southeast asia to china. however, a lot of the manufacturing that would normally take place in china is now moving to vietnam, thailand and other countries, so thailand is benefiting from that. you know i had someone here in thailand, i asked why is the box so strong? they couldn't answer i think the answer is they are getting a lot of manufacturing here, that's the bottom line central banks had to lower interest rates to get this in line with the decline in carolina so they can compete with chinese so it's really interesting what's happening their lots of moving parts and this trade war between u.s. and china generally i think is not going to be a downer for the global xi. there will be winners and losers and a lot of the winners will be
these countries that are replacing china as the manufacturing base >> mark, you can share some of your thoughts on chinese leadership related to the trade war in terms of what they're thinking about long termism and where they're going to be between now and the 2020 election here in the united states and beyond. >> i think they have to be very, very strong and they want to show their public that they are strong, but at the same time, restrained they're not going to get involved in name calling and that sort of thing they want to take a long view. eventually, they think they can win by taking a long view, because there could be a clang in administration, even when we talk about in a few years, not very long. so i think they're going to be very, very cautious in the way they behave. and, of course, one of the reasons why they have the
program is because they want to expand their trading base away from the u.s. towards europe, towards affect, towards latin america. so, they're playing the long game but i think at the end of the day, the u.s. is winning out on this because the trade gap is so big that any reduction in that gap will be good for the u.s. and, of course, if you look at the technology side of thing i think it's good that the u.s. is cracking down on technology transfer and debt. >> mark, i wanted to fet your global take on the impact of low rates. i mean as yields go negative almost around the world here, a consequence of very low rates and what has been a consequence are asset bubbles. i'm wondering win take a look out at the various asset bubbles, do you see bubbles? i'm thinking the of the parts of the world where you invest in emerging markets, specifically emerging market debts which had been so attractive for investors
looking for yields >> that's a very, very good question because we really are not seeing any bubbles at least in the equity markets if you look at any of these countries if southeast asia, there is no people in markets. a lot of the markets are still down as you know the currencies took a big hit in the last few years, so the good news for these markets is that you are seeing lower rates and, of course, as the u.s. lowers rates, all these other countries have to follow for example, thailand just central bank of thailand just reduced the rates. you are seeing this around the world. it's sort of a race to the bottom bond markets, of course, those who were holding high yield bonds would be doing okay. but here in thailand, for example, the most risky loans are going for about 8%, which is not crazy and that good company
can get money at 3% or less. so this has got to be good for companies that have to raise money. and many of them are in that situation. because they've, many of them have extended a little bit too much but the markets are still a long way too go up. >> mark, moving back to coin, multi-nationals are moving their manufacturing out of china to thailand, vietnam, malaysia dow and hp have moved laptop production how big of a problem is this for china? is it localized to just a couple big players? or is china going to see a serious deterioration in the manufacturing base due to these tariff tariffs? >> there is, it's a problem. there is no question about it. because some of these companies have major manufacturing basis but the bottom line is, look, china is a 1 billion people market and you are not going to ignore
it so you've got to have manufacturing for the domestic market so, yes, a part of that manufacturing that is export oriented will move to thailand and other countries. but a lot of it will stay in china and will expand in china don't forget, we're at the beginnings of the chinese consumer revolution. they still got a long way to go no get to where the u.s. is, for example. and, of course, that's the goal. they want to get to where the u.s. is. so i think a lot of the multi-nationals definitely will not pull out completely out of china. they'll want to be there >> hey, mark, hong kong, go everyone that you did spend so much time there and these protests, do you think china intervenes, how much capital flight is at risk right now, how do you think that playing itself ou out? >> if there is intervention by the pla, people's liberation
army, that would be very, very bad. i think the chinese realize that i think if they're patient, it will play itself out you know the school year will begin again. students will go back to school. don't forget, the hong kong population is interested in making makes hong kong go. and they don't want that to be interfered for a long time so the feelings are very strong, but i think things will settle down in hong kong. >> what's the best opportunity to invest? where's the best opportunity at this point >> well, i'm finding a few bargains here in thailand. so that's one area we're excited about turkey that's a market and a currency that's been bombed out brazil, because the reform program going on there and here in india, in southeast asia, india is going to be very important going forward. despite the fact there's been a
little bit of slowdown in chinese tourism coming to southeast asia, the indian tourism is increasing at pretty good pace. and that's anindication of how the indian market and the indian consumer is getting richer and richer so india is a place we're looking at very, very closely. >> mark, i want to thank you for your time, for joining us this morning. it's always great to talk to you, especially in the midst of all of this news and how it's impacting emerging markets you're the one to talk to, so appreciate it. thank you. let's get down to the new york stock exchange, check in with jim cramer. jim, it is quite a turnaround. if you think about monday's low on the s&p 500 of 2822 and how far we have come, how are you feeling about this bounce? >> i think that we probably have to go back down a little because it was so rapid yesterday. i felt the last couple hours was not really even trading on bonds but a recognition that things are just not so bad here look, i think that what's
happened is there's a sense that every company that made a big bet on china, every industrial company is going to have numbers go down and p.e. slihrink. actual growth were 3m and emerson. and look at those two. they're the worst performers i think we're looking at who doesn't have china, who has china, who relied on china for growth take that one down a couple turns. who is doing well here the consumer is strong it's walmart it's amazon. it's target. it's costco and home depot they're doing fabulously it's a bifurcated market try to have as little china as possible try to have as much america as possible and don't necessarily bet like so many are, that the rest of the world can pull us down as steve said, we're a consumer economy. that does not mean we're going to react to what happens in thailand, and we're not going to react to what happens in new zealand. it's just not going to work like that >> jim, i got two stocks for you. i want to hear your take on lyft
and what we'll hear from uber later this afternoon >> i thought that lyft -- there really were no flies on that they're building an ecosystem. they're not just a cab company that's important they talked about a lot of initiatives that made sense. it's a good story. i think uber is going to tell an even better story. i think they're even more of an ecosystem. i know it's an overused term, but anything that makes it so they're not just a ride service makes it so you can justify paying these prices. >> are these guys more rational competitors now that they're public is that what we're seeing? >> i think that's what's happened -- always good to see you, tom i'm sorry. a duopoly is great i'm not saying they're sitting there price fixing obviously that's against the law. but there's a nice -- check charge more. how about that they remind me of what grubhub and door dash are going to do. i don't think uber eats is
nearly as much of a threat those companies are going to start making more money too. i know door dash is full of venture capital money. but you're seeing these duopo e duopolies. they're great for business >> the other one is kraft-heinz. i have it down 9%. >> unfathomable. are the financials even valid? the impairment charge, the actual shrinkage of the business they have the worst set of brands of any major company in the world. >> jim, just a quick question. are you worried about the market's liquidity when i look at these numbers and the gyration, down 14 1/2 into the end of the year, up 17, down 10% in five days is this concerning you that the market is moving with way too much gyration given the news >> well, it does remind me, a
couple years ago we had the 2015 summer where we had swings of a thousand points. there really was no liquidity at all. in retrospect, there's much more liquidity than there is now. there are not a lot of players if you came in and blasted $100 million with the s&p, you would say something is really wrong. i've not seen it like this it's all s&p players individual stocks have less and less we're almost to the point where these are corn, soybean. you know that's not the way it should be. >> jim, great to speak with you. and later, do not miss an exclusive interview with billionaire investor carl icahn on the halftime report that's 12:30 eastern time. stay tuned you're watching "squawk box" on cnbc this is the couple who wanted to get away
quite a while. it covers local cbs stations and cbs sports both companies issuing an apology for the inconvenience to their customers. this will take a little bit of the sting out of what's been taking place this has now happened before football season begins alwaysimportant. >> "big brother" is coming back. that's the only thing i was worried about. >> i've been waiting for the smithsonian channel. >> you're a dish guy >> no. directv. but i have cable vision too. you got to have a hedge when you're on long island. >> final check on the markets, why don't we >> quick final check on the markets. we're about a half hour before the market opens things are looking up. dow about 93 points higher nasdaq up about 35 points. s&p 500 looking to open about 9.5 points higher. let's also show you oil right now. we're at 52.54 all those mlps have been hit so hard a lot of people worried about whether iran is going to start
selling its oil to china, what's going to happen there. have you heard people talking about that ten-year note right now, let's show you what's going on with that as we flip that board around you're looking at 1.753. i want to thank our guest host this morning, anthony, who's been holding back the entire time tom has been with us for three days he's been fantastic. >> great three days. thanks, andrew thanks, melissa. >> join us tomorrow. "squawk on the street" starts right now. good morning and welcome to "squawk on the street. i'm david faber along with jim cramer we're live from the new york stock exchange carl quintanilla has the morning off. let's give you a look at futures. you can see we are looking for a higher opening on all the major averages, at least at this point. the ten-year note yield certainly one of the key stories. certainly has been for me and for you. look at that back t