tv Closing Bell CNBC October 14, 2014 3:00pm-5:01pm EDT
>> doesn't count. >> losing our gains. see that the dow is flat lining at this stage. we have the see whether or not it goes in negative territory by the end of trade today. >> i'm sure they'll cover it in "the closing bell" starting in a couple of seconds. thank you for watching. >> see you same time tomorrow. welcome to "the closing bell" on this tuesday. i'm kelly evans. scott, how should we describe the direction of the market? >> oil clearly the big story. down 4%. with it, the market starting to decline a little bit harder. even though it's still holding on to positive territory. the russell 2000 is holding up quite well in the face of selling otherwise. i would suggest to you that the dow number which is now plus 44 probably is least representative of the overall tone of the market today. look at the s&p. look at the russell. look at the stocks within the
dow having a pretty good day. it's the big industrial names that would be more impacted by an economic slowdown of any sort of magnitude. intel is holding up today ahead of the earnings. chips killed lately. those are the next best performers out of the dow today. i would suggest that's much more important than a chevron which is towards the low end sliding on oil. united health is a big hedge fund trade and maybe selling there. coca-cola, staple. home depot is a bad performer today and downgraded. jpmorgan off the earnings. >> you raise the point and one the need talk about with the group coming up here but to what extent is pressure on the hedge funds writ large responsible for some of the market declines we have been seeing? >> i looked this morning and you saw even in the face of an up market that a lot of the most popular hedge fund names were down and suggested they were selling the name and when the
overall market bounced they got a bounce, too. >> remember yesterday things looked decent at this time, too. the russell was green and closed to the negative and considerably so for the dow and watching to see if any similar pattern holds today. art cashin telling us there's talk of sell orders on the close. >> stocks rebounded a bit after yesterday's wild finish. for now. we want to know if you think the worst is over for the markets go. to cnbc.com/vote now and let us know what you think. >> joining the exchange now, rob morgan, meg green, ken moray and very own rick santelli. rick, we start with you. bond traders got back to work this morning and hammered rates. how much of a tell is that still for the broader market? >> you know, i continue to think that the rate game is far from over. and we could debate the exact bottom but i think a better debate is i don't see any big
sustainable selloffs in the future and coming to what's going on around the globe, much of what's moving the u.s. markets are global affects. many of the global affects in europe of how effective mario draghi is, we don't know the answer the at this point and with regard to the u.s. economy, we'll get more clues tomorrow with retail sales and empire but i would look for all the dynamics to continue and on energy down here, they keep it simple. listen. the u.s. is just barrelling along in terms of the independence of the potential production. it diminishes anybody else that we need from an import perspective and demand around the globe and every arena is down so it shouldn't be so shocking. i think the treasury complex is lockstep of the energy complex. >> what do you think of jeff gunlock told me, the 220 should be the low-end rate?
>> i think there's a bit of a bounce but i don't think in the grand scheme of things in three, four months looking back, 220 is going to be the low yield of this move. >> why not? >> i just think that the dynamics haven't changed. we are now starting to see markets that can get pushled around like equities and the fundamentals of the globe are having a bigger presence in that push and i don't see them diminishing. i see them picking up. >> gundlach say there is's no reason for rates at 220 now. >> they should be 180, lower! there's no reason, boon yields won't approach japanese government bond yields. what if draghi and the speculation that he promises with regard to what he can do in a qe-type environment doesn't pan out and the germans don't sign the checks? there's a lot of unknowns here. listen. who am i to go against mr. g?
i don't think it's that easy to handicap. >> proven that right over the last 12 months, that's for darn sure. >> rob morgan, what about you and against the backdrop, the comments of john williams today of the federal reserve indicating here for the first time that disinflationary conditions persist, the fed, yes, may begin another round of asset purchases? >> well, sure. i think it's wise for the fed to be on the lookout for that but i think right now the expectation is that we will get qe out of europe and at some point next year our fed will start raising rates and been saying all along. the dollar continues to go up. this is going to continue to hurt commodities and i have had an underweight on energy and materials for quite a while but at the same time the u.s. economy is healing. people say that the rising dollar going to hit the gdp and trade and will a little bit. keep in mind, the expansion of the '80s when we saw the economy as well as the stock market go
up so dramatically, the dollar tripled. i still like stocks here. i think this is a buying opportunity. i do not like the energy space, though. >> rob, why do you think oil is getting hammered to the magnitude that it is? down 4%. i mean, relatively speaking, that's as if the dow went down 600 points. >> scott, i think actually it's a combination of a few factors. you talked about the fact that hedge funds camping in the energy trade. i think the stocks were overbought to begin with. i think there was a lot of ignoring of the fact that the u.s. is awash in oil. and also, too, there's a realization that, okay, europe is going to do qe next year and the dollar's probably going to be strong. all three of those factors kind of combined all at once to just really hammer crude. >> meg green, give us your take here as people are voting live right now, same question. is the worst over for the stock market here? >> you know, i don't know what
the worst is but i know that volatility is here. every time when they stopped, you know, buying bonds when qe stopped last year when they were threatening the market volatility was horrendous. so now we know they're ending this month and i hope they do. europe needs to start giving us a little juice over there. that's the problem. and oil, you don't have opec agreeing. they're all just floundering out the oil they can. russia is producing. so, you know, everybody's on the same path. that makes lower prices. it's supply and demand and there's tons of supply around. but the markets, you know, i like small caps here. are they in dangerous territory? you know, we're going to have a bounce back with small caps. we'll have a bounce back with the market. we don't know how soon and what kind of a ride it will be in between. but yeah. i like the market. it's an opportunity to get in right now. >> ken, i want to quickly get you in here before we move on.
can you address whether you think small caps are in buy territory? >> you know, i think that we have to always be careful about what the bond market is saying and not ignore it. it's -- doesn't seem to make sense if the economy is doing so well, the stock market is rising because of that, but yet, interest rates are going down. they should be going up if the economy is better, shouldn't they? i think the bond market is telling us there's trouble ahead. it is reminiscent to me a little bit of late 2007. my belief system is to always build defensive strategies into the investment portfolio. it is like if you have a tornado warning, bad clouds and doesn't mean the tornado will hit you and does mean you should take precautions and right now the market is very reminiscent to me of late 2007 when we told our clients to sell and we said to stay out for all of 2008 and the bear market came. this is -- >> are you saying, so you think we're heading into a bear
market? do you think as we did then that it's a recession? >> no. >> it's artificially low interest rates, a mountain of debt and i don't know how whether it's a facade or not. >> do you think we're heading into a recession? bull markets generally end in a recession. >> no. >> there's a possibility we are and especially if europe takes us down with it. i'm not suggesting that we are ready to sell or that there's a bear market coming. what i'm saying is that a prudent investor needs to protect from that because the signs are there it's a high possibility right now. >> let's get a take right now and stay there from jim bianco joining us with his take. if you could start on the move of the bond mrkt. >> the bond market move i think is somewhat understandable. if you look around the globe and domestically, i don't know why yields should go up.
the economy is lackluster for years. i think it's more of the same this year. earnings are not that great. they're going to be low single digit growth rates of 4%, 5%, that's nothing to write home about when the long-term average is 10 and inflation is low. yields are microscopic in europe. and there should be a capital flow into the u.s. there's only one reason that yields should go up right now. that would be a return of inflation which we don't have and if we ever did get a return of inflation, the yields go up, it would hammer the stock market. the bonds have been the best return, the best investment in 2014 which no one has had. the 30-year bond returning 23% this year. probably continue that way as everybody continues to diss the bond market because the fundamentals are still there. >> the dollar is so strong. >> jim, you don't think the economy is getting better? >> we have one of the worst quarters ever in the first quaerlt. the economy -- >> yeah, right. we know about that. because of a largely due to the weather. >> that's old news.
>> after 64 months, we put together four good months or five good months of the economy. we have not bounced back from the weather yet. we wind up with a bad year and this is the repeat of the story that we have had year after year. 2011 we said exactly the same thing. we had a bad winter then. we'll bounce back from that. we never did. 2012, 2013, same thing. i don't see the economy as getting ready to go to another level. everybody's been calling for it. since basically 2009. it's just more of the same. kind of a lackluster, if you want to grade on it, a c-minus kind of economy. not a recession and very constructive for the bond mrkt. >> meg, we have to go. we have several guest s shaking their heads. meg? >> well, there's trillions of dollars on the sidelines. companies are hiring. lower oil is good for the consumer. we may have a santa claus rally. i happen to think jeremy siegel is right on the dow 18,000. i don't know when but for people who are looking at this and
getting scared and saying, hey, it is a bear market, no. there's going to be volatility. >> wait. i want to say that at the beginning of this year and on this show i said the dow at 18,000 to year. i haven't backed away from that but nobody has a crystal ball or certainty. >> no, of course not. >> i'm saying it is better, a better strategy to plan for the worst and hope for the best. i think this is a correction. i don't think it's going to create a bear market. but all the signs are there. the build-up into the y2k bear market was a -- >> i thought you were saying it's a bear market just like 2007 and talking about a u.s. recession. >> i'm saying that -- >> guidance are there? >> i'm saying that -- >> my goodness. >> the possibility right now is as high as it's been since the bear market started. we have a 200% rise since the low in the market in march of '09. that's twice the rise that led into the bear market of y2k, the bear market of '08. we average a bear market every
three years. this is five, almost six years since the last bear market ended. i think it is better to plan for the worst and hope for the best than just to hope everything's going to turn out. >> rob, let's ask you. as we're fading here as we have been. as we're, you know, getting further along into the last hour of the trade, how important is it for the stock market today to close positive after you had really nice bounce earlier in the day, pretty good earnings from the banks and johnson & johnson, pretty good commentary out of some of the financial ceos? how important is it to close positive today to confirm some kind of a higher move? >> i mean, scott, we have had some bad technical damage here regardless of where the dow closes today or the s&p. but just let me respond a little bit. we had six straight months of 200,000 job growth and then basically a little blip that didn't meet that. that's the best we have had since the 1990s and then as far
as the job openings, best in ten years. you have two presidents of banks today, dimon and wells fargo, saying the economy is improving. i just don't get it how anybody can say that this is just a lackluster economy. this is a healing economy. stocks are nowhere near as expensive as 2007. >> look at income. if you want to answer that, look at middle class income. look at the biggest swath of americans. >> that's been a 30-year trend, rick. >> doesn't matter if it's 100-year trend. we have to deal with it today. just like entitlements. not the president's fault that it is. it needs to be dealt with. >> we haven't had a 30-year recession. >> rick, look. just spoke to rick and jim and respectfully, the data which would certainly suggest the u.s. economy is better than you both and others give it credit for. i'm not suggesting -- >> better than it was and not
like it used to be. >> not saying a robust economy. >> that's what jim's saying. >> not as dire as one of you suggest. >> no. >> the economy -- >> why's the fed have 100-basis point overnight rate. >> the economy is always best right before the party ends. i mean -- >> jim, sir, a last word of response here. >> talking about small cap stocks 9% for the year. disastrous year. interest rates falling through the floor. great year for the bond market. commodities are collapsing. that's a recipe for a very weak economy. the data, the markets are reading the data and consistently from the currency markets to interest rate markets, the stock market, they're all trading as if the data is rather weak and lackluster. you have stocks down. you have got yields down. commodities down. >> this is last six weeks. we were hitting record highs. >> before this correction
started. whatever. we'll debate it some other time. >> thank you, everybody, for being here this afternoon. and by the way, the poll for those following along, the worst ever, yes. it was neck and neck the entire discussion and now about 45 minutes to go until the close. the dow up 18. the s&p trying to stay positive. the russell, scott, watching closely still up 1%. much more ahead on the markets and the selloff especially in oil. what it means to you and the economy. speaking with oil traders. plus wells fargo slipping on higher expenses. the chief financial officer is here. it is a first on cnbc interview. we'll find out how the mortgage business is going. plus, asking him about an e-mail, one an employee sent to the ceo asking for a raise. oh, and copied the entire company, too. >> yes, he did. also coming up, csx making a deal? we'll ask michael ward joining
all right. welcome back. there's a look at the major averages. yeah, we're fading as we have been in the last several days, especially yesterday was one of the wild days where once we started to go down, we started to go down really fast. not saying that's going to happen this time but the point is over these next 40 minutes things can get quite volatile. we don't know. >> we don't. but dominic chu is covering the big movers for us today. >> i certainly am. we have stories to talk about. let's start with netflix on the rebound. analysts upgrading the stock here site overseas expansion plans and shares up in the trade so far. also skyworks solutions, apple supplier raising the forecast. shares trading up by nearly 8% and darden restaurants, naming jeff smith, jeffrey smith, as its chairman and company's coo
jean lee as the interim ceo. darden up by about 2.5%. flip side, signet jewelers losing ground after the ceo barnes resigned and replaced by president and coo mark lite. see the shares down 3.5% and end with one of the major bank earnings for the season. wells for fargo matching for estimates. the shares you can see there down by 3.5%. a bigger decliner on the overall session. back over to you. >> thank you for now. let's dig deep sbeer the numbers. >> joining us now is john shusberry. >> nice to be here. >> interesting quarter. you matched, obviously. margins clearly seem to be the
biggest issue. i'm just wondering sort of what visibility you have in this economy, what interest rates is telling us and affecting your business. >> sure. well, first of all, with respect to the quarter, it was a great quarter with profit, loans were higher across all categories and deposits higher, as well. so we feel great about that and set up nicely i think for the coming period. interest rates and the bond market have come down sharply. seems like every time we get towards 2.5% on the 10-year, we get a retrenchment and yields go lower. we are equipped for that. our business model works such that we have something for each point in the cycle, equity market dependent, mortgage business, certainly. >> right. but -- >> we like the way we're positioned. >> clearly, the way that rates have moved so dramatically within this quarter alone, that has to directly impact your loan
business, net interest margins, the key metric of profitability that a lot of people look at for the banks. there's a dramatic effect by these -- the rates and the way they're falling and what it means. i'm not -- i'm just i guess a little surprised that would haven't a more dramatic impact going forward if the pattern holds. >> if yields stay low like they have for sometime, the business performs very well. sometimes the mortgage business does better when yields are lower. bond portfolio performs better with lower yields. less likely to deploy liquid markets but if things stay this way the business model produces, performs fine. it's a very diversified set of outcomes that perform well in the cycle and whether or not rates go higher isn't the most immediate concern. we are set up well if rates go higher and that's true of most
banks these days with asset sensitive balance sheets. >> you know, john, we remember a couple of quarters ago and jamie dimon said you were out-mortgaging him in the business and fighting back now and going to quote an industry publication here saying that while the originations healthy, they were roughly flat and jpm up 26%. do you think they out-mortgaged you? >> well, i don't know. $48 billion worth of mortgage production is a good number, and the profit generated from that business actually did very well in the quarter. our business, it's more of a purchase market and set up with that on the mortgage side. we like where we are and how they perform or how all other competitors perform quarter to quarter isn't our concern. we're the number one player in the mortgage market and we like that. >> understood. we were just having a debate, john, here as markets turned negative again at the end of the session.
there's concerns of the u.s. economy, about wage growth or the lack thereof. that really seems to be the missing ingredient and so we wonder if you guys can maybe set the example for the rest of the country and give tyrel oats a raise. is that going to happen? >> well, it is hard for me to comment on an individual team member. i don't think that's fair to him but i can tell you we survey to find out whether the wage that is we pay are competitive. across the board we have 260,000 team members. we attract and retain the best people in the business. and we think that our total compensation, cash, benefits, training opportunity, job and growth opportunity is very competitive and couldn't perform at the level we do if that's not true. >> can you comment? i guess, just what the reaction was in the c-suites when this e-mail was sent by one of your own e-mails to the ceo copied to everybody asking more a raise? >> i can't really comment. again, it's a team member matter
an it is not fair to him if i start discussing him and his employment on television. >> what about the general idea that he at least put forward? >> well, you know, we survey our team members every year, 90% of the team members, 260,000, respond to the surveys and level of engagement is through the roof. it compares very favorably with ever other industry. those surveys also substantiate the attractiveness of the proposition of working for wells fargo. >> that sounds like a long-winded no to tyrel oats. we'll i imagine people following it. john, thank you so much for being here on a day reporting earnings and watching the market closely. >> thanks. >> to see how prospects are here for the u.s. economy. appreciate it. >> i was looking at the market, as well. half hour to go in the trade. the dow negative as we said by 27 points. the nasdaq is holding up.
although it's sliding, as well. up only 8 points right now. take a look at the s&p 500 fractionally negative and russell 2000 when we began up by better than 1% and outperforming on the day and something a lot of investors watching closely what's happening with the small caps stocks to get some sort of gauge of when the correction will end. they want to see outperformance from the small caps to confirm that stocks move higher and then there's this on the screen. >> exactly. russell up 1%. crude down 4.5%. below $85 a barrel today. collapsing. as it approaches the $80 a barrel mark, we'll talk about which way might be next for crude and whether this is good or bad news for the economy. that's straight ahead. she's still the one for you.
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welcome back. at least one of the indexes negative, did dow. watching the russell. confirmation more or less of turning negative. reports of sell orders on the close. the big story today is the collapse in oil prices. dominic chu, what is happening out there in the energy markets? >> absolutely, kelly. so we're all watching oil prices. they're plummeting on increasing supply and signs of weakening demand. prices falling nearly 5% today, the biggest percentage drop since november of 2012 and the lowest settlement price for crude oil west texas
intermediate since june of that year. you can see there at $82 right now. the u.s. energy information administration predicting that shale basins increasing from the same time a month earlier. oil down about 10% over the last 2 years. here's how the oil companies are flowing through the trade. exxon, chevron, conoco, down here on the day. the fall helping the dow jones transportation index. after getting hammered yesterday in the trade, leading the way higher for transports, airline stocks led by jetblue, united, delta, american. so again, oil prices certainly, kelly and scott, the big story of the day. >> dom, thank you very much. for now, what should we expect from oil prices in tod tomorrow's trading session. >> let's bring in brian amadio
and bob iochino. welcome. bob, why did oil go down so much today? >> well, you know, it's interesting i'm much less concerned of the price level than the velocity of the drop and feels like catch up. i said last time on the show and probably three, six months ago, the world is awash in oil. we had tensions keeping the prices up somewhat artificially and now flowing through. combined with the weakness in the global economy and it's interesting because we have complaints of speculation in oil and the prices is rising and not when it's falling. we have some of the best physical traders on the planet in our shop. look in the physical world and nothing's changed to cause this sort of a move. >> peter, this is an interesting point, to what degree does this price action to the downside also tell us about perhaps the bubble in commodity prices we lived through for a period of
several years? >> it's funny. the way he talked about it was the velocity and came off. why does it come off like that? who's selling it? it's people that have to. what it really comes down to is risk and in the beginning of the day you had the saudis say that they thought brent crude oil worth $80. qulapd? fell $3 after that. now why would they turn around and say something like that? i think they're looking at it like if we have lower oil prices and cost them less money to produce than it does for north american shale and get some of the competition out of the market. >> hmm. >> bob, do you have -- i mean, i don't know what's your best guess to how low oil goes? what's the key level of support now that we have broken through some already important support levels? >> well, i think when you're looking at it, look at wti specifically and look at it fundame fundamental. saudi arabia' coming to the party saying there's so much
supply globally we can't prop the price up artificially. short of a global event, the prices come down and might as well drop it. you have to look at wti and that magic number is somewhere around $68 to $70 a barrel seeing significant supplies come off the market in terms of landlocked crude oil and start to worry of energy independence and all the infrastructure that's been put in place in the u.s. to get this stuff out of the ground and to get it down to the gulf. that's where you're starting to have problems. >> peter, $68 to $70 resting here? >> i think the only thing that can save it is that expensive production coming off the market and with there being les production. if you go to an old dog like me around for 25 years, i've seen $9 crude. but also remember the dollar hit in 2008, we had $140 crude oil. where did we correct back to when the dollar came back? $33. so you have to be very careful in thinking that $82 is a cheap
price for oil. >> well, and again, it would be great if this happens for encouraging reasons and not so great the other way around. thank you for now as traders try to sort through the reasons why crude has been dropping here as stocks dropping. volatility is higher. at the moment, the dow off 28 points thereabouts. the s&p now ever so slightly negative, as well. all right. up next, a new poll show it is majority of mutual fund investors are not so bullish about the global economy over the next year. two mutual fund pros tell us what's wtopping their worry lis.
a new survey saying fund managers more bearish now than in a couple of years. >> yeah. let's ask two managers how they feel. david katz, charles brabrinski. david, you tell me how you feel about the market. >> we think that everybody is focused on the negatives or exclusively on the negatives. we think the money managers in the poll looking at what's happened in the most recent times and assuming that continues. we think the economy is okay. stocks about 15 times next year's earnings. that's a reasonable price. we think earnings are coming in so we would use this pullback as a buying opportunity. you might look dumb and probably will look dumb in a week or a month but think three months from now, six months from now you look smartd and wish you had bought. we think the market is set up for a very strong november and december so we're feeling pretty good. >> okay. some of the names, david has as
picks, eaton corp., schwab. charles, over to you then. how do you feel about the market at this juncture? are you getting out the shopping list? >> yeah. there aren't a lot of absolute rules in the stock market but one is be fearful when others are greedy and greedy when others are fearful. that is clear positive. the biggest negative in the market earlier in the year people were so overwhelmingly bullish. so, you've got to differentiate between the absolute number on the economy, the growth rate and the second derivative which is a change in the growth rate and right now we clearly have a positive growth in the u.s. economy. frankly, we think it's actually going to be accelerating with 3.5% growth in the future. we think right now people have gotten excessively fearful. >> david, clearly you both sound more positive than others on the network in the last day or so. what about china? there's some real worrisome data
points out of china. people i talk to -- let me finish. people i talk to, big investors worried about draghi not delivering to the magnitude that the market ultimately needs him to do. what happens if china falls out of bed, if draghi doesn't deliver? how in the world can we mitigate or how can we keep from feeling the negative effects of that? >> well, that's what we have been feeling for a month. we think that the reality is everything is not going to be bad. europe was on the mend before the ukraine/russia popped up and the sanctions really slowed down the european economy. we think europe will be okay and china while it's slowed from 7% to 5% is still going to be okay and bottom line is u.s. companies are doing very well. you are about to start earnings season. jpmorgan and wells fargo said the economy is in pretty good shape. all is not lost and the time to
be buying when stocks are pricing in the negatives you referred to. if things are half as bad as that, we think stocks can be a batch higher. >> what names do you like here? >> well, we would be -- we think housing will come back. we have been disappointed in the housing recovery. one area that's not come back the way we would like it to. we think 1.5 million starts a year, housing starts, black & decker, it's a great name in this space. >> all right. i like it when people put their necks out like that. david so much. >> thanks a lot. >> with some names to look at amid the selloff and the dow is positive. >> 15 minutes or so to go. but has been negative just a couple of minutes ago. you have to watch the last 20 minutes to find out what happens on the street today because you know anything can truly happen in these final minutes of trading. we'll take you to the close. keep it right here. intel and csx posting
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welcome back. 15 minutes to go. we're holding up. we did see the dow and s&p dip into the red a little bit ago. now looks like -- looking like a 13-point gain for the dow and s&p up about 5 points, nasdaq up 21. scott, as you mentioned, the russell people are watching for some signs of a broader turn up 1%. >> bob, it was this time yesterday losing points fast in the market. how important do you think it is to close positive today? also looking at the russell today, the outperformance of the russell versus the s&p is something i know a lot of big investors keeping an eye on to try to get a grip on when the correction will come to an end. >> bio tech, all bouncing. look at the s&p. scott's right. disturbing parallels to yesterday. up until 15 minutes and turned
around a little bit on the s&p and bottomed out so that's certainly very good news and concentrate on the energy sector. hedge funds had pain in energy. remember how they're positioned. long the u.s. market and growth names including the exwe ration. production stocks. shale names here. down 20% on the xpo. imagine in a month. the pain of those invested in the shale plays have had recently. better today but still on the downside. oil's down 4.5%. still a lousy day but a little bit better on a relative performance basis against oil. we are also seeing a lot of weakness in some of the name that is are in the space that the oil services so a lot of small companies that provide oil services like phillips 66, there you see, for example, a master limited partnership, that's been weak, as well. that provides pipelines around the united states. that's a very big company.
that one is down 15% or 16% so far in the last month and a lot of small service companies out there, i mentioned c & j energy, they're having a tough time and companies have equipment and if they don't get a money to, they don't have income next year. that's a major, major problem overall a. lot of pain in hedge fund land where they're positioned and imagine how frustrated it must be. i'm long, doing the right thing. long in the growth names. and yet, they're not working out for me right now. very, very tough time. >> no, they are not. thank you for now. as we enter the final couple of minutes of the trade, keeping an eye on the dow up 15 points. green arrows across the board. we'll have to see with art cashin. crude oil as you know slumping again today. dropping below 83 bucks a barrel for the first time since july of 2012. the pros are going to tell us
how low it could go and what it means for your wallet. coming up, by the way, art cashin just walked by. a hand signal and then pointed down. >> 500 million to sell on the close. more than how things settled out yesterday. 12 minutes to go. we'll be right back. guys! you're not gonna believe this! >>watch this. sam always gives you the good news in person, en the bad news on email. good news-fedex has flat rate shipping. it's called fedex one rate ®. and it's affordable. >>sounds great. (cell phone typing)
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welcome back. there's the market picture. little less than ten minutes to go and the dow in positive territory by about 24 points. a lot of focus, of course, on the s&p 500 holding positive by .3%. maybe money coming into the stocks here. russell 2000 continues to be the outperformer on the day. up by 1.25%. the dow hovering near break even. oil is obviously a big story. we're on the floor with erin gibbs and terry dolan. guys, good to see you. erin, a broad thought on what you think about where the market is and might go from here. >> right now for us it's looking more and more attractive from a valuation standpoint and trading at 15.1 forward times earnings for next 12 months earnings. going into q-3 we are looking
pretty good, looking at 3.5% revenue growth. not amazing but ending and next 12 months looking at 10% earnings growth. anything with double-digit earnings growth i feel comfortable for u.s. >> terry, if that holds up in the face of a slowing global picture, maybe outside the u.s., whether it's china and europe. is this correction that we're in nearing an end? do you have a feel where you think it's going? >> well, actually, scott, i didn't think it would go as far as it's gone technically. i think technically we've done so much damage right now and doesn't matter to rally in the close today or up tomorrow or t not. we need to look at a base here to go forward. i agree with the valuation and not changed our outlook for the year end, very positive and we're looking at a positive conclusion to this matter and right now how do we get -- the
sticky start the base we're on, the foundation is weak. relative to the technicals at the moment. >> what firms it up? what specifically are you looking for? >> well -- >> i mean people at home watching, look. i don't know if the market's going up. i don't know if the market's going down. i want do hear from these folks on what i should be looking for to try to make my decisions. >> i think right in here is like an accumulation stage and buying the stocks. you wouldn't go head in with all of your money but start accumulating down here and watch the market build a base and hopefully it builds confidence with the base and we fwheed to have some work down here at the lower levels. where the b-bottoms and have the dip and the rally next day is not healthy. that's what i'm referring to of building a bis. >> quickly, you guys, actually, we'll come back with you. they will be back with you. we'll be right back and then after the bell more earnings, csx, intel and speaking with the top executives, as well, on how
they could effect tomorrow's market action. plus, csx making a deal with canadian pacific? don't touch that remote. you are watching cnbc, first in business worldwide. twhat do i do?. you need to catch the 4:10 huh? the equipment tracking system will get you to the loading dock. ♪ there should be a truck leaving now. i got it. now jump off the bridge. what? in 3...2...1... are you kidding me?
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big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern. all right. welcome back. we are on the floor new york stock exchange once again. the major averages, see the dow back in the negative territory. s&p holding positive. the question today becomes this.
do you have put more credence in that and that, dow negative or that, russell 2000 positive by better than 1%. small caps getting a bit of a rebound here. that's the story we watch into the close here again. the dow negative by about 5 points. bring back in terry dolan and erin gibbs. how about the fact, erin, the russell small caps are bouncing? how significant if at all is that? >> personally i don't view it as significant. they were massively oversold going into this and hit hard. this is more of a consolidation phase. longer term, small caps tend to underperform in the inflation environments. >> we don't have rising inflation. >> not quite. not quite. but i would say longer term next year expecting this to happen, i would say over a next year, put your money more in the large caps versus small. >> terry, what are you watching closest today? >> s&p very closely. there's been a big disconnect of
the dow relationship and the s&p. you can see the dow hasn't plummeted as much as the s&p 500 and looking for it to stabilize and build a little bit of a base and technical side of it, it doesn't look like it has help on the index. >> how about the move in rates? excuse me for interrupting. i don't know if we can throw back up here what the 10-year has done. rates moved lower very fast. velocity scared a lot of people. jeffrey gundlach said that he thought that 220 would hold and then that stocks would bounce. how closely are the stock guys watching what the bond guys are saying? >> very us, very closely. we think that the bonds are massively overbought. >> terry? >> i'd say that it's extremely closed watched, as well. you see a combination of a flight to safety with a big
short interest stock there. i'm keyed in to seeing what's happening as equities stabilize and move up. >> the dow fighting the flat line. maybe a fractional loss. s&p looked like it may be able to hold positive and noz dak outperforming today and the russell. second hour begins now. welcome to "the closing bell." i'm kelly evans. looks like the dow not finishing in positive territory. down by a couple of points here. not the same, though, for the other indexes which after yesterday's ugly close today able to hold on into the green. s&p up by about 3. the nasdaq up by 13 and perhaps importantly that russell adding 1% closing at 1061 and this after one of the ugliest days in the oil market. joining me now around set we
have larry mcdonald, larry kudlow, so two larrys, sharon epperson, welcome, and fast trader tim seymour. sharon, what is going on in the energy space? >> well, you start with the international energy agency and everyone looks to as the watchdog group as the developing world of when's going on with oil prices saying that demand is likely down and we could see lower prices and then self fulfilling prophesy, we see lower prices but in europe, seeing in terms of german data, in terms of some countries in the middle east saying, okay, we're okay with lower prices and contributing and the technical selloff, as well, dropping below the $83 mark was a sizable drop and then level folks say is $80 and maybe $77. >> larry mcdonald, our guest last hour saying maybe why they're signaling they're okay is to put the screws on the u.s. 0 deucers. >> that's a thing. but remember, when we have a
trade here, i think that equities will start to outperform at some point oil so if you look at the gold miners toward year end, we were talking about this in december, the gold miners started to outperform the metal. >> okay. >> i think that's what happens this time around. we are seeing tremendous capitulation. >> hold that thought. we're waiting for earnings this afternoon. intel the first to now hit with the quarterly results and josh lipton with the numbers. >> reporter: yeah. the chip giant just reporting. intel reporting 66 cents on 14.6 billion. the street was looking for 65 cents on 14.5 billion. a beat on the bottom and the top. through the business lines, the pc client group, revenue 9.2 billion, better than expected. data center, 3.7 billion, about in line. as for intel's closely watched gross margin, 65%, just missing what the street was looking for,
spinning ahead, looking for 14.7 billion, that's better than what the street was looking for. intel, the best performing dow stock this year moving higher in the afterhours. back to you. >> josh, you know how much is going to rest on what intel has to say about the outlook for the chip space. thank you for now. we'll talk to stacy smith in a bit, larry kudlow. >> the story is not what saudi arabia does. >> back to oil sni right. a huge factor and hugely positive. the story is the u.s. energy revolution. by the way, the breakeven price could be as low as $60 or lower. the saudis aren't in the driver's seat. we are in the driver's seat. okay? get that right. and the fact that oil prices are coming down, the fact that gasoline prices are coming down, bullish for the american economy and in my humble opinion is already in decent shape.
so i think this is a -- energy, energy, energy. we should get a keystone pipeline built right away and help the story. >> speaking of pipelines and moving crude along, now csx out with the earnings results and morgan brennan has the story. morgan? >> hi, kelly. that's right. we have a beat on top and bottom line for csx. 51 cents x items per share beating 48 cents that consensus estimates were calling for. and that's on revenues of $3.22 billion. again, better than the $3.15 billion that analysts had expected. got volume increases of 7% and modest earnings growth is expected for full year 2014 but what the company says is double-digit earnings growth and a margin expansion is expected for 2015. that's pushing shares of csx up about 1% right now in the afterhours. back to you. >> all right. morgan, thank you. i believe that call isn't until tomorrow morning and the ceo
here exclusively in just a few moments to give us some further detail on those results. very much looking forward to that. also joining news this conversation is kevin o'leary for his take on the market. kevin, what are you doing here with all the craziness in the energy space? buying? sell it? >> well, i want everybody to be reminded by when's happening with oil is the thing of commodities with no yield associated with it is when it's going up in this huge demand it feels warm and fuzzy but when a commodity corrects it doesn't touch the sides on the way and it can do so much damage to portfolio. i don't think we're finished. i think it continues to go south. by the way, you know, when larry talks about $60 on any kind of fracking or shale play, the irrs are terrible on that. if you invest in the sectors, too, you're really unhappy with that outcome. same with the oil sand projects. starting to hurt those.
avoid energy for now. let it correct because it's going down, baby. going down. >> i'm just saying that the -- the point of oil fracking, first of all, total liquid oil fuels are now surpassing 12 million barrels a day. we are numero uno. i think the breakevens are $60 at the low end. $80 at the high end. i think there's a consensus about that. in effect what's happening, demand curve is coming in a little bit and the supply curve is moving out a little bit and not going to stop for quite sometime. this is an extremely healthy thing for the american economy. even though it will hurt the producers a little bit. >> and production companies as we have seen. one of the worst sectors of the year. >> oh yeah. >> this month for sure. so it's definitely going to hurt the energy companies but to larry's point and the economy, think about the cost of companies and consumers feeling
the lower gas prices and that's going to help. >> let me just -- hang on, everybody. poor tim seymour, i'm going to get you into the conversation, too, here. >> okay. >> to the point oil and gas names, chesapeake down 40% from june 20th. >> talk about a couple of things mentioned already and larry hit on something which is starting to see some capitulation and activity in the oil service names and stocks and we'll do this last night and show some charts of gettingdy v divergenc. huge volumes. to extent starting to see certain things die verge from the oil price, look at halliburton and if you think oil is in the low 80s, own halliburton. if you think mid upper 80s, shlumberger will be there. >> larry, this sounds like what you were talking about.
>> i love larry. >> larry mcdonald, what are -- how are people setting up here? >> from a trading perspective, after a great bull market run, that first leg down, the rally that you get off of that can be spectacular so you could have -- >> like we saw in the miners. >> like we saw in apple in 2011. my point is we have a seven-factor model that measures capitulation and it's a mathematical formula saying reaching capitulation fatigue. >> there's another factor. one more factor. oil exports. we are going to see, we have already seen some regulatory shifts. we are going to see new legislation that will open the door to oil exports around the world. to asia, but most especially to europe. this also puts the screws to putin. not only the low price but the fact exporting to europe.
exports will be a big part of this oil story. >> kevin, you want an answer to all that? >> sure. stay on the sector for a second. the reason it's not capitulation time yet and not buying the names is you haven't given a chance for eanalysts to lower te estimates yet. stand back. and let this elevator go down. it's lingerie on floor one to the mezzanine. >> why wait for analysts upgrading the stocks a month and a half ago before going down 25%? it is obvious fundamentals will take over. they're priced at low 80s oil. you may think it goes down to 75 but the long-term average is 80 bucks. a lot of guys waiting for and we closed there today and bounced small. >> yeah. you know, at the end of the day, i'd say, kelly, this may not be the bottom in the oil service names and the oil names, but you
could easily get a 12% rally in a bear market and then retest these lows. i'm not going to pass that up. >> for the economy, for the economy, one more point, watch industrial commodity indexes. you can't use oil right now. you can't because of the supply and demand factors and all that's said. >> but to kevin's point, long-term investors who can't look at the mathematical calculations, now's the time to stay on the side lines in terms of oil commodities. you don't know how much oil prices go and now's not the time to jump in to the xle in the mathematical equation. >> i don't think it's the bottom. i totally agree with you. i like the theory it helps the manufacturing tech or the and the economy and maybe the better focus is broader sectors and ask yourself does this change earnings outcome for q1 or q2 next year. >> terrific! nobel prize right there.
nobel prize right there. >> before you go -- >> every other sector is helped. >> but here's where it becomes so interesting and why people are focused so much on this. it's either a case of oil is telling a different story also in excess supply story or what i would going to raise here and we have to go. we have seen the 10-year dropping consistently. inflation expectations dropping. not just oil. others are hammered. europe taking down the growth outlook. china is slowing. you can paint a picture where the oil is part of the story. >> never paint by the numbers. you have to do it creativitcrea. you will get economic numbers on industrial production and retail stores and chain stores and housing. i think the american economy is picking up from 2% to 2.5% to 3% and not a bad thing. >> a good thing. >> we'll have to leave it there. kevin, thank you, sir. tim, thank you. he's coming up at 5:00 p.m. talking to palo alto ceo
mclaughlin and justin glover. here's railroad giant csx speeding towards a merge? up next, the chief michael ward is here to address the reports and break down his company's latest earnings. and will intel's results turn around what's been a chip-wreck for the sector? stacy smith also here in a first on cnbc interview and watching cnbc, first in business worldwide. ls, our experience. your shoppers, our technology. your data, our insights. introducing synchrony financial, bringing new meaning to the word partnership. banking. loyalty. analytics. synchrony financial. engage with us.
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welcome back. earnings season high gear today. dominic chu with the big movers. hi, dom. >> kelly, we have a lot of them. let's recap what happened this morning. start with johnson & johnson which fell despite the results boosted by sales of the hepatitis c drug and those are sales are expected to decline now that rival gilead science s received approval for their drug. jpmorgan missed expectations by two cents and citi beat forecast finishing regular season in a mixed group here. citi up decentury on the day. after hours intel reporting that
beat wall street forecasts by a penny. revenue also higher than expectations. shares you can see there up we'll call it marginally here in the after hours and csx with better than expected third quarter results and shares are up. back over to you. >> a good performance. thank you. plenty to talk about regarding csx so here in the cnbc exclusive is michael ward, the ceo of csx. michael, welcome back. >> thank you, kelly. good afternoon. >> it's good to see you. and really interesting to talk right now about what kind of trends you're seeing in terms of u.s. oil and shale production and how much of that you're moving on the rails. >> well, kelly, really seeing great robustness in the energy related markets and report it in the chemical sector up 20% in volume this quarter. moving about three trains of crude oil a day, as well moving frack sand into the shale plays
and pipe and robust market. >> that's why i ask today amid the big drop in oil price and i'm sure you saw, down 4.5%. a move we haven't seen in a couple of years. what does the move in price like that do to potentially affect your business in the current quarter and next several ones? >> i don't think it has real short-term impacts because, obviously, the rigs are up and running. stairing at low prices far while, obviously some of the rigs will slow down or close down but i think the longer term view is we expect that market to continue to grow, in this next quarter and for the year, next year. >> well, your business in the area is a reason why canadian railroad has approached you about a potential merger here. at what price, michael, would you be interested in a cross-border deal? >> well, kelly, i know why you have to ask that question. i hope you can understand why i can't answer that question. we have a long-standing policy
at csx that we don't speculate and comment on market speculation and rumors. however, i'd love to talk about the terrific third quarter that was delivered by the dedicated employees. we have third quarter records for revenue, for operating income and eps this quarter. >> understood. and i know that this is the case. these are boardroom discussions. but it is true, is it not, that the u.s. surface transportation board has to approve any kinds of mergers like this and they have to demonstrate not only to crimp competition and also enhance competition on the rails. how high a standard is that? how difficult does that make further consolidation in the railroad space today? >> kelly, you're right. they changed the rules. but i think to really understand what would be required, i think better source to ask the surface transportation board and commissioners because they
interpret that clause. >> but that's not nearly as much fun as you asking you while we have you. understood you can't say much more of canadian pacific and a potential tie-up there. the question, as well, go back to the oil price then. 70% of your rev noous, that's what one of the analysts estimated derived from this, the shale boom in this country. houston and interior looking at the gains of jobs and wages and wondering if all of this, michael, in your view is in danger of being snuffed out. >> kelly, i don't know if i agree with that interpretation of 70% from the oil. we saw growth against all of the markets, ag shipments up 13% this quarter due to the great crop that came in last year. automotive was up 8%. even the coal business was up 7% so we saw broad gains across most markets and oil is one of
them but we have many markets we serve. we have a diverse portfolio. >> fair point. i should have said 70% of the increase year on year. autos, that's a controversial one right now. we had fiat listing here at the new york stock exchange. there's plenty of talk of how much further the cycle can go in this country with peak production in car buying by some standards. what is your view on that? do you see any slowdown materializing? >> no. actually last year was 16.2% in north america last year and interestingly the average age of a car on the fleet is 11.5 years. so the fleet's the oldest it's ever been and we think there's legs on the market for years to come. >> understood. final question. it goes back to safety and some of the incidents you have had, as well, on this front. what further steps are you making sure that the cars you're moving on the rails are safe from incidents related to oil or
gas leakages? >> kelly, we have taken a number of steps. we slow our trains down to 40 miles per hour in high threat urban areas, increased track inspections, done even a broader outreach to the emergency responders with the csx safety train and let them have hands on experience with looking at the tank cars so we're very focused on making a safe industry even safer. >> michael ward, thank you for being here this afternoon. really appreciate it. michael ward, ceo of csx, shares up about 4% after hours on those earnings. also moving higher are shares of intel. up fractionally after those earnings results. trading higher about .6%. up next, cfo stacy smith tells us what it says about the important key sector of the economy and consumers love the falling oil prices but is it really good news for the broader economy? we'll explain straight ahead and whether or not you think oil
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the all new, head turning cadillac ats coupe. it's irresistible. ♪ welcome back. so the one waiting for, that's intel, reporting earnings, seeing shares respobd positively after after hours. now back to josh lipton to see why. hi, josh. >> kelly, the stock losing steam here in the after hours. intel reporting beating on the top and the bottom. provided q4 revenue guidance.
the pc client group revenue up 6% to $9.2 billion, better than expected. the story for gel this year. pc sales not as bad as some feared. data centers, up. that was about loo n line. remember, though, too, intel making a push into mobile and offering subsidies to companies that uses their technology. they're that mobile unit of $1 million. expect a lot of ques of analysts about that on the conference call. it kicks off at 5:00 p.m. eastern. isle be on the call and bring you headlines as they cross. back the you. >> looking forward to it. thank you. intel's earnings in the midst of worries about the fact of the semiconductor sector broadly. for a look at the sector, in a first on cnbc interview, we are joined by intel cfo stacy smith. welcome back. good to see you. >> great to be back. >> is the chip cycle turning, stacy? >> well, i think you can see in
our results that we're not seeing that. we had our first quarter ever of more than 100 million units of microprocessors shipped and record ever revenue and grew operating profit by 30% and saw a better quarter were expected. >> were you surprised microchip so stark in the warning that this was happening of a slowdown at play? >> you know, they play in different segments than we play an i'll let them comment on what they see. we watch inventory levels and work with the customers. what we are seeing i think partially is strategy at work. we're reinventing the pc market, new devices. we're benefitting from that, maybe more than the market's growinging. >> understood. that day, microchip reported or talked about this weakness. your shares were down 5% so there were people kind of drawing a beat of what they said to you guys and the sector more broadly. one more time and then moving
on. what is it specifically about your business that guarantees even if there is a slowdown in some segments of the chip space you're able to keep strumming along here? >> oh, yeah. there's no guarantees in business. but i think we're benefitting from a couple of things here. we've got great technology coming into the pc segment with growth at the high end and lower priced units bringing back pc users and and then our data center business benefitting from the growth of the clients computing and connecting to the internet. from an in-market standpoint, we continue to see mixed signals out there. the mature markets are relatively strong. the emerging markets still are somewhat weak. enterprise segment strong. consumer has question marks behind it. it depends on the segment you play in. >> geographically, when's the strongest part of the world economy for you right now?
>> well, i'd say the u.s. economy seems to be improving at a pace ahead of the rest of the world. and we're seeing that in our overall mature market results. and then at the end of the speck truck, china and latin america is lagging behind. >> i think you were leading the witness. >> no! certainly the right answer, mr. smith. you had to say it. it's your business, not mine. >> may i flip around and ask what part of the world you have most concern about, stacy? is it china? >> well, you know, we're starting to see some stabilization within the emerging markets, but yeah, we're three, four quarters into a cycle seeing relatively strong growth in the mature markets with the emerging markets behind. and by the way, that's not an unusual cycle for us. we'll often see certain markets strengthening ahead of others and then a three or four-quarter lag before the rest of the world follows. >> it's sharon epperson here. investors love intel for the
dividends and wondering if you give us guidance on the when the payments may increase? >> yeah. for don't talk about that on a prospectus basis. the dividend program is flagship in terms of how we return cash and generate return for the shareholders. i think we have one of the leading dividend programs over the years and put energy behind it. currently paying out 40% of the free cash flow in the dividend. that's a pretty comfortable place for me to be and that depends on how do the cash flows of the company grow. >> mr. smith, larry mcdonald, thank you for joining us. we have the collapse in oil. the impact of solar and poly silicone. how does that impact intel going forward? >> yeah. the -- as you play through the oil markets in terms of the input cost of the raw materials we buy, it will have a tiny
impact on our overall cost structure. >> just a tiny one, stacy? i know that you aren't the best example and commodities across the board to come down. what would make the biggest difference for you guys going forward? >> thinking about the cost structure, builting a factory, they're among the most advanced facilities that are built on the planet, to put the equipment and a new factory, you are talking, you know, $5 billion or more of capital investment for a factory. and so, for us it's that capital intensity and then the best utilization out of the technology we can and the game of a competitive standpoint to build the factories two years ahead of what the rest of the world can do and then bring the best products to the market. >> fascinating stuff. thank you for joining us. intel cfo stacy smith with perhaps reassuring talk of the important semiconductor space.
now washington and john harwood and breaking news. >> president obama just addressed the crisis with ebola during a meeting in andrews air force with foreign military leaders and sought to reassure americans that the odds of an outbreak in the united states remain low and referred to the case in dallas, said a case is too many. the same time he called on other countries to do more than they have done so far to try to contain this outbreak. >> oh, john. thank you. do we have sound from the president? there we go. >> the world is not doing enough. there are a number of countries that have capacity that have not yet stepped up. those that have stepped up, all of us are going to have to do more because unless we contain this at the source this is going to continue to pose a threat to individual countries. >> and of course, the reason the president said it poses that threat, all countries one or two plane flights away from the center of the outbreak in west
africa. that's the concern of the united states and the president's trying to make americans feel a little more secure and rally the rest of the world. >> john, did he mention about u.s. hospitalization and expertise? that's a big issue in the last couple of days. >> he said that the united states military had made significant progress on the goal that they adopted and dispatched to west africa to try to construct temporary hospital facilities and treatment facilities to try to expand the capacity of liberia and sierra leone and other countries in west africa where it's a problem and said that they're moving ahead. >> john, thank you for now with those comments from president obama. oil prices collapsing today, falling nearly 5%. may be good news for consumers but is it bad news for the economy? that's next. even with gasoline prices plunging, a survey finds two thirds of americans holding back
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and apparently russell brand on the steps of federal hall and anybody around here knows across the street pretty much from the new york stock exchange. he was speaking to the crowd earlier. looks like now it's mostly posing for pictures. this on a day, larry, in which we found thanks to robert frank global wealth surged 20% above the peak in 2007. jumping $20 trillion and attention afresh spurred by the russell brands of the world, perhaps, of capitalism not working. >> the far left is always taken this point of view and this guy brand is doing that. look. it's good thing, not a bad thing, wealth creation. wealth creation provides the seed corn for investments, productivity. and let me make this point. wealth creation and corporate expansion helps the wage-earning worker. that's what the research shows. more than the shareholder. you cut the corporate tax.
wage earner is the winner. >> that's the question to have asked. >> a wealthy comedian or if you are a wealthy comedian. why are you -- i think a lot of people are just, you know, if he's representing people feeling pain, they're feeling pain because they're not making the incomes that they had. they've lost their jobs, concerned about how they're going to be able to continue to spend and talk more about this later and an interesting icon to have represent the kind of issue when it's someone who's a wealthy entertainer. >> taxing rich people does not help the non-rich people. can i say that? >> can i make you stop there so -- >> it is a fair point. >> we need to discuss it more fully. >> no dope probably has no economic training whatsoever. >> he might argue that's a qualification. listen. we have to leave it there for now. see if anything happens outside and keep you posted. inequality the hot topic and oil
prices plunging again. falling below $82 a barrel. drivers have noticed a lot of extra cash in the pockets filling up lately but can the prices can falling and do we want them to? first what you think. voice your opinion as cnbc.com/vote as to whether oil prices go lower from here. the latest on this crude collapse now from dom chu. dom? >> so, kaelly, first of all, put it in perspective. this is west texas intermediate crude oil and prices on june 20th, recent high above $107 per barrel. on that, you can kind of see since june 20th, the collapse of prices on the steady down trend and then accelerate and much more so down to here of $82.15. biggest percentage drop we have had for crude came today since november of 2012. lowest settlement since june 28th of 2012. biggest since november of 2012
and lowest settlement price. at 82 bucks a barrel, june of 2012. so quite a bit of time has moved since then. so to put things in perspective here, as we look for what the oil prices have done, they're in bear market territory, taken the parts of the market down with it, namely energy stocks and stocks related to oil and gas business taking a huge hit and many in bear market territory, as well. oil prices a focus in the overnight sessions and then if it finds a bottom in tomorrow's trade. back over to you. >> dom, that's absolutely the question. thank you. we want to bring in analyst john killdove as to whether, john, you think prices have another leg low tore go here. >> i do. we are at a critical point here, kelly. if they can't hold this 81 and change level, we have another $10 to the downside so that this is at a crux here. that's what i'm waiting to see. looks like heavy margin-related liquidation to me at the close that dom was referencing.
heavy selling at the all bell and so that's what i'm watching here right now. >> sorry, john. this is sharon. traders telling me there's a lot of put option activity, as well, created margin pressure and causing some collapse in wti an also that the u.s. oil price wti market is what's more affected because there are more traders long that market and short brent and when you get data out today like we got from the international energy agency to see a global demand slowdown, they won't hit brent as high as wti. what do you think about that? >> that's all right. the skew in the options market favoring the put options for about the past ten days or so, so it was building, been building, sharon. you are absolutely right and the other side of that equation at our own iae talked about surge
coming in the united states and between them and the pipeline folks, three cheers to them for breaking the back potentially here of once and for all of opec and global energy prices. >> john, loi f that. look. to me, with the explosion of fracking, oil fracking and gas fracking, this was an event waiting to happen. i'm surprised it didn't happen sooner. you mentioned ten bucks. when's the break-even price? use oil for fracking. when's the break-even price and influence where the trading settles? >> well, larry, i mean, actually the numbers for that are all over the board but for me i work off of about a 60 to 80 price band. i think here if we break 80, go down another $10 like i think is in the cards, you will see these projects be pulled back. you will see some of the activity at least slowed. but a lot of these guys are sort of on a take or pay sort of contract basis. so they're going to keep at it for sometime and hope that
prices can at least stabilize in the 70s and if they do, they will keep going and it's an even bigger problem then for saudi arabia and really the rest of opec going forward. like you, it was slow coming, larry. i was waiting for the breaking point to come. we have hit it. >> yep. >> larry mcdonald? >> john, north dakota, south dakota, unemployment in the 2.5% range. that's the fastest growing part of the labor number it is last 6 months. has been in this energy shale regions in texas, north dakota, south dakota. could you put, like, at the price today, what percentage, you know, is it 20% of the shale exploration, what percentage is shelved overall? how much of that growth that's driving the u.s. economy is being taken off the table right now? >> i think if you get the $10 i'm talking about, you probably see the growth curbed by about 10% to 20% at least.
like i said, stalled capacity might stick around and i expect the numbers to come down about 20% to 25%. it will hurt, show up. we'll notice it. so that's what we have to be careful here we don't end up, you know, getting too much of a good thing in terms of these prices falling too precipitously. >> we have to leave it there, john. thank you. we'll look how quickly to go down ten bucks. almost a perfect two out of three say yes in the unscientific and still interesting survey. thank you very much. believe it or not, only 70 shopping days until christmas. speaking of purchasing power. forecasters are saying stagnant excitement. why? next. yields on the 10-year u.s. treasury will hold and stocks will bounce. it's drawing plenty of clicks today, maybe enough to crack the
welcome back. we just talked about falling oil prices which acts like a gigantic tax break for most americans and bank rate saying two thirds of americans holding back on spending, citing stag innocent income and the need to save. sharon has the details and the why. sharon, as to why this is happening. >> it is insufficient income and
when we asked just people on twitter to respond to us about are they cutting back. they found that millennials are cutting back and those that are most between 30 and 49 and people that a lot of retailers and others expect to have greater spending power and spend more are not doing it at this time and the wages are main reasons why they're cutting back. >> look. i agree. i mean, absolutely agree. look, the participation rate very low. employment to population rate is very low. >> demographics? >> people dropped -- >> right? to some extent? >> no. cyclical. a good part is seeing some of the prime age working group suffer the same decline in participation rate. i don't want to get too bearish. yes, oil's going to help.
it is a tax cut. we'll do the calculations but let's say it's $90 billion to $100 billion tax cut. look at disposable income after tax. it is growing at 2.6% year on year through august. getting a new number the end of this month. not the worst thing in the world and i think where the economy is. >> are you just saying -- >> people are not feeling that. there's another report out today saying that 85% of property owners are raising the rents and people say they have a hard time qualifying or finding a home to purchase and refinancing the mortgage and rents are going up and on top of the fact that the income basically flat or gone down or nonxis ent if your lost your job and why people saying they're not spending right now going into the holidays. >> totally out of the picture yet. >> hourly wages rising only 2% year on year but there are salaries out there and there's a middle class that's working. all's i'm saying is i wrote this
on cnbc.com. i don't want to be pessimistic. >> i didn't think you were at all. i thought optimistic about the economy. >> look. it's moving up to 2.5%. perhaps 3%. it ought to be growing at 4% to 5%. but as i said on the article, i take mr. buffett's view and buying the dips in the stock market and i think the economy is improving slightly around the margins. >> i think all of us should -- let's never use the word participation rate again because it's such an evil thing in the sense that these are people. lehman in 2007, 2008, 78 million people left the labor force. now 92 million people. 92 million people. right? think of that. those are lives, people that have left -- >> people who have gone from being age 45 to 55 to 65. >> our data shows that the younger people, as well, are exponentially like two standard deviations above the previous
20-year rate and leaving 22 -- >> leaving or not able to get the jobs? think of the recent graduates not able to find work or not able to get work based on the amount of money spent on the education. that's another factor that's causing them to cut back on cau. >> on a long term trend basis, if you look at past recoveries, we're about 8 million jobs short. 8 million jobs is a very big number and there is a lot of income bound up in that. so we have to sffigure out to gw the economy. that's another segment. a whole lot of regulatory -- >> some people said they're waiting until after the election. >> well, that will happen before the holidays, so there may be hope yet. oil market is taking a major spill this afternoon. a story driving cnbc.com today. we'll see if it rose to the top of the hot list. we'll be rite back. . right when change is in the air you see things in a whole new way.
the site's managing editor joins me. >> that oil plunge toward the afternoon, over 100,000 people dived into our oil write on the website. along with that, a little analysis looking at how it was 234ruing equities. 15 s&p 500 stocks hitting 52 week lows. that was a big one. we also wrote up an interview with a value investor from fast money halftime. he talked about some stocks getting too beaten up and people should hold on to them. and finally, also a feature saying ten signs that may maybe bottom's been hit. it's been hot. . >> alan, thank you for now. love getting the headlines.>> a. love getting the headlines. up next, can the market rebound can bounce into a second day. tune in tomorrow.
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we'd be remiss not to talk about what was actually the biggest story of the day. dr drum roll, please. >> governor williams and mr. fisher from the fed, so two fed governors have opened up the door just creeked it open for qe 4. s >> john williams saying -- >> if the global economy continues s ts to deteriorate, on the table. so that is an extremely bullish factor for equities. why this time around -- >> is it, though, the fact we're back at this old game again? >> that's true. but opening up that it is bull learn f bullish for equities. >> no qe 4? >> no qe 4. just because they don't want to be in that business again. on the other hand, i think what larry is hinting at is any interest rate increases may be delayed. but let's look at the data.
you have a lot of numbers coming out. my suspicion is those numbers will be pretty decent. >> the gold sector, miner, acted really well the last couple days. i think this speaks really well for the gold miners for the next two weeks. >> they had a long way to come back up. so this will be interesting to see if it actually happens. >> and what is happening in the ten year, the 30 year interest rates. are these the kind of signals that tell you about a strengthening economy? >> no. these are recession signals. nutty itty in my opinion. epg t the stock market reaction is nutty. it's a creatioorrection. the bond market is way too far. >> bonds are telling us the u.s. is 25% of global gd. . in the '80s, 55%. that's telling us the global economy is driving the bus.
u.s. isn't driving the economic bus anymore. >> and i'm sure u.s. policymakers would happily look to their counter parts for do something about it. we have to leave it there. that does it for us here on "closing bell". "fast money" begins right now. live from the nasdaq market site in new york city's times square, this is "fast money". i'm melissa lee. intel conference call starting right now. shares are higher after the company beat earnings and revenue estimates. we'll break down what it means for the chip makers. but tonight's big story, crude down nearly 5%, biggest loss in merely t nearly into years.