Skip to main content

tv   Closing Bell  CNBC  August 12, 2015 3:00pm-5:01pm EDT

3:00 pm
but not lion's gate. we've got the vice chairman at 5:00, brian. >> that's a big interview. worth watching. will the dow be higher by the close or no? >> i don't know, brian, it's a coin flip at this point. >> i don't know either, but "closing bell" starts right now. welcome to the "closing bell," everybody, i'm kelly evans at the new york stock exchange. >> and i'm bill griffith. another momentous day. stocks staging quite a comeback at this hour. the dow down 277 points at noon on wall street. investors spooked once again after china intervened and the currency markets yet again overnight. we'll break down this tug of war developed by china's central bank and the global markets. >> and we've got blackrock's global investment strategist joining us live coming up. why he thinks we're seeing violent moves in this market
3:01 pm
lately. >> let's see, bearish on crude oil but bullish on some energy plays in the equity market. of jeff reeves of investor place will make his case on that coming up. >> and alibaba and macy's falling today and we've got the ceo of an e-commerce company whose stock is soaring while the names are down 4% to 5%, his is popping double digits. >> they have yet to make a profit. >> wait, are you suggesting that should matter to the stock price performance, bill? not in this market, everybody. >> we're back in the 1990s in some cases here. but anyway, let's start with china's second consecutive currency intervention. joining us to explain what this is about. >> and the difference, there was word that china stepped into the market to stop it from sliding too much. a signal this isn't necessarily a one-way bet. here's what you need to know. the chinese currency is down 3.4% in just 48 hours against the u.s. dollar.
3:02 pm
that's a huge move for any currency, especially this one. three reasons why it's spooking investors. number one, it's rippling to other currencies. they may need to devalue their currencies in order to do that. also, it is a policy u-turn for china after years of letting its currency strengthen. suddenly, it's reversing course. beijing says it's responding to market pressures and expectations. also shows they may be worried. china has cut interest rates four times, it's pumped liquidity into the markets, allowed banks to loan more, halted stocks and now it's devaluing the currency. add it up and there are concerns that they're pulling out all the stops here and may not have a grip on the market spiral and the economy slowdown. add it all up and this is a recipe for a global market selloff. depends on what happens next from beijing. and how the asian markets react
3:03 pm
to that just to see whether all of those fears are really justified. >> all right, that's for sure. thank you so much for now. let's get more here from ken brown, hong kong bureau chief for the "wall street journal." here with us at post-9:00. welcome back. >> thank you. you've got to be itching to get back there. >> yeah, i am. it's a big story, i feel like i'm missing it. >> you said, watch tonight, last night, 9:30 eastern time and they did repeg it again. >> yeah. >> now what? >> anyone's guess. what happened is they listened to the market last night and they lowered it again. then, the market went further and they blinked. right? they said, okay, we're not going to let it go further. there was an intervention 15 minutes before trading ended. >> they started buying. >> came back up. pboc, the central bank told the banks to start buying, went up again and back where we are waiting to see how it plays out. now, i think that the chinese central bank is worried about stability a little bit, and so you don't want your currency to
3:04 pm
fall too much. but the speculation is, it's going to let it continue to go down in a measured way over time. that's what yesterday's action looked like. >> you know, ken, when we were talking about you being here while haul this is happening, remind me eight years ago, financial crisis begins to rage. we have announcements that bnp shutting down hedge funds and different things and that was maybe 2007. so 2008, same phenomenon. people are coming back from vacations, all hands on deck trying to follow the story. this has a little bit of that feel of august desperation to it. how does that set us up for the fall potentially? >> yeah, it's a little scary. if you see a continued decline in the yuan, that raises questions, currency war, does it hurt u.s./china relations? it spins out -- what's interesting is this is really reverberated around the globe. the chinese economy is pretty closed. and it's the second biggest in the world. and when the stock market tanked, you know, it was dramatic but didn't affect the rest of the world. that's something to think about.
3:05 pm
>> there was -- a speculation that maybe they were doing this out of the chinese president's visit to the united states to try to placate our demands that they do something about letting their currency flow to the markets here. they would also like to become an elite reserve currency in the world. is this backfiring on them? or is this the kind of volatility you would imagine they're going to get and try and work with in the beginning stages here? >> yeah, you know, the chinese government doesn't like volatility. they want stability. this is something they're not going to like. you know, it's hard to say what was the trigger. i mean, if you do it now, you have a few weeks till the visit. and the closer you get, the worse it is. and you don't want to do it after the visit. maybe this was the moment the imf gave them advice last week and appear to be following it. they're allowing the currency to go down. >> been following this story suggesting that just a few weeks back, the official in charge of this sort of 4x decision
3:06 pm
indicated to people they weren't going to abandon the pay. it seems this was a response to market conditions and then does that suggest if they jumped in at the last minute to keep the currency from going lower, ken, we're going to be left with something like a more fixed as opposed to fully floating one? >> the great mysteries. i mean the -- no central bank will say we're going to move our currency, they never do it. no, we don't know what's going on inside the pboc. but there's a battle going on between stability, market forces and it's a really interesting look into the chinese government, which is at a crucial point right now. >> yeah. >> i don't know if we'll see you again before you leave. but it's been fun. >> happy to come back. >> thanks to ken brown of the "wall street journal." >> all right. let's get to our "closing bell" exchange now for this hump day. michael block sitting in the
3:07 pm
middle there between him and rick santelli in chicago. rick, what do you make of today's market action? and what if the chinese, you know, they've got a tiger by the tail, clearly, right now. >> you know, just imagine the castro brothers had a better diploma for better universities and there you have the chinese central planners. they're never going to figure it out, never going to do the right thing. but it is what it is. in terms of the debate as to whether this is about liberalization, timing is everything, there's no accidents on timing. if their stock market was up 150%, no market volatility, the gdp was 10%. i really don't think that they would have picked this time to liberalize their currency. even if there's threads of truth in that, it doesn't change the fact that there's issues. the roof needs to be fixed, they acknowledge that, but it's pouring rain and there's a lot of leaks. i don't know how it's going to
3:08 pm
turn out, but i know one thing for sure, it's going to continue to have a large outsize effect and not for the metrics that everybody wants to use. let's see. how many imports come in the u.s.? we are recalibrating global trade because we're recalibrating many of the currencies that the biggest partners in global trade use. and i think it's going to be very difficult to know the outcome. and today's an interesting day. the dollar's really weak today. okay. all commodities should go up, right? that's the way it works. check out the grains. our fundamentals transcend the effects. and i think that's an important point to bring up. >> a bumper crop report out today has sent the grains reeling lower. >> and would you down play what rick was just saying? or do you think that despite all of this people should still be in the market? >> i think rick is wrong. you know what, and i love rick, but i think he's absolutely wrong here. one of the things we have to pay attention to is the fact that
3:09 pm
this chinese leadership has been navigating this boom and bust cycle for the last decade and they've been doing it very well. and look, you know what, we would give anything for 3%, 4%, 5% growth right now. and all they're really doing is what they need to do. we've been complaining about their currency now for years and years. finally when they do something about it, we're surprised. we shouldn't be surprised. >> we're 1.5% off the all time highs. >> we need individuals to make decisions for -- >> no, come on, it's a communist country, rick. it's a communist country. remember that. keep that in mind. >> there's no way -- >> get it right. >> no, but the bottom line is that they are the second -- the second largest economy out there. and they're still growing. and we are still finding them as customers, and we are still their customers.
3:10 pm
>> a billion cheap workers. >> michael block, you want to step into the middle of this fray? >> oh, may i? yeah, sure. you know, the thing that occurs to me here is you have some different views on china. we don't know what china's going to do next. what i'm focused on here is what is the central bank going to do? people were out when it started saying it's a one off, one off, i wish i had a nickel for every time i heard that, i'd have quite a few nickels. what i could say is it's not a one off. they're going to keep doing this. look at the crazy move from the end of the night back to 638. they're back and forth, running around in circles but doing what they have to do. >> what are you going to do about it? how are you going to make money in this volatile period? uncertain volatile period? >> when everyone says it's one off and the yuan's not going to go down, i'm going to say, we don't know that, it can go down further. is it going from seven first or back to six? i think back to seven. it's hard to game. but the thing you want to do is keep counterpunching.
3:11 pm
you know, for me, that means when it's doom and gloom like this morning, i'm looking for buying opportunities and i was telling clients to go out and buy energy shares. everyone loved energy stocks back at $60. >> now we're hearing $43, everyone hates them. we're back. what do you think of that, rick? >> listen, i don't disagree. making money is different than kind of viewing how the leadership of china's end game is going to turn out. there's plenty of ways to make money. and i think many of the hedgies have turned a blind eye as to how many companies have manipulated and manipulated. at some point, when it goes haywire, there's going to be a lot more squawking. and i think the united states is in the best shape and we manipulate the least, but a whole lot more than we used to. >> it is what it is now. we have to learn how to roll with it. by the way, rick. >> sorry, there's some that say we'll never roll with it! ever! >> okay. >> you can talk about it and make a better world. let's make money.
3:12 pm
you don't make money by complaining about it. what it comes down to -- >> you have. trade the market you have. >> that's right. one of the biggest problems we have -- >> >> we're going to have to go in a second, rick, but as a gauge of sentiment, what's getting more talk on the floor where you're standing today? is it china or the chicago cubs? >> i'll tell you what, it's the chicago cubs. absolutely. >> go cubs. >> and once again, i guess central planning does have a couple of times it works well. >> thanks very much. good to see you. michael, thanks for playing the neutral player there. >> i was? thanks. love you guys. we're all shopping for furniture after this. >> there you go. see you later. >> 45 minutes to go, a little more than that into the close. check out this market. down 277 points at the lows of the session. the dow is down just 31.
3:13 pm
>> and the nasdaq's positive. next up, alibaba falling after e-commerce posted disappointing revenue showing the slowest growth. our kayla tausche will tell us what lies ahead for the company as china's economy hits its own speed bump. and wayfair shares surging in a sea of red. the home furnishings retailer beating on the top and bottom line. the ceo is going to talk earnings and the economy when we come right back. ♪ ♪ it took serena williams years to master the two handed backhand. but only one shot to master the chase mobile app. technology designed for you.
3:14 pm
so you can easily master the way you bank. i am here to offer sophisticated investing strategies. my technology can help you choose the right portfolio. monitor it. and automatically rebalance it. all without charging advisory fees, account service fees or commissions. that may be hard to compute. but i'm a computer. so trust me. it computes. say hello at intelligent.schwab.com no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts
3:15 pm
to get you the right gear. office depot officemax. gear up for school. gear up for great. and i am a certified arborist for pg&e.ughes i oversee the patrolling of trees near power lines and roots near pipes and underground infrastructure. at pg&e wherever we work,
3:16 pm
we work hard to protect the environment. getting the job done safely so we can keep the lights on for everybody. because i live here i have a deeper connection to the community. and i want to see the community grow and thrive. every year we work with cities and schools to plant trees in our communities. the environment is there for my kids and future generations. together, we're building a better california. macy's falling after posting disappointing earnings and cut the annual sales forecast, as well. macy's chairman and ceo terry lundgren tried to put a brave face this morning on "squawk box." >> it's a tough one. we definitely are seeing that the consumer didn't shop in our categories to the degree we thought the consumer would. >> mr. lundgren also said that macy's is seeing a slowdown in sales to foreign tourists due to
3:17 pm
the stronger dollar. meanwhile, alibaba shares hit a record low despite announcing a $4 billion stock buyback. the e-commerce giant posted the slowest growth in more than four years. telling cnbc he remains upbeat about the future. >> we closely monitor the chinese economy and the impact on our chinese consumers' behavior. but what we observed, that consumers still coming to our retail platforms to do the shopping because of the lifestyle change. so we are confident for our long-term growth. >> kayla tausche has been following the story for us all day. and for some time now we should say, covering the conference call with analysts this morning. and joining us now with the key take aways. the shares are still down almost 5%. >> well, i think it's safe to say that investors wanted much clearer reassurance that they could weather the macro head winds in china. and they were not satisfied with what they got this morning.
3:18 pm
as you mentioned, revenue grew the slowest in more than three years. they did see a popular lottery program end in the recent quarter. but that core china commerce segment also slowed, as well. that was not good news. second, alibaba didn't monetize the mobile user base as well as the street had hoped. executives called this so-called mobile take rate. they said it will outpace the pc at some point. though mostly using mobile to browse. they're hoping that shifts. and then to complicate things further, they announced the $4 billion stock buyback. that has totaled $2.5 billion since the ipos as you can see. the company feels the need to prop up the stock. that's never a good sign either. it does create quite a to do list for mike evans, a former hank paulson protege. he has joined alibaba as
3:19 pm
president with the primary role of building global operations in the long-term. and with growth slowing as well as facing a depreciating yuan. the bigger headache, perhaps, for yahoo, preparing to spin off the stake. close to $50 billion. at today's price, just about $28 billion. so that, of course, is a bigger issue for yahoo going forward. a alibaba's growth story seems to have holes to fill in. >> that's what i was going to ask with regard to yahoo. i'll flip back to alibaba and wonder, again, if this is a company -- maybe they're dealing with specific crackdowns in china. people are playing as if it is the chinese economy. prospects probably don't look that great until it's sorted out. >> i also think the chinese government has a visible hand in the chinese economy. and this is a company that is susceptible to that.
3:20 pm
first, you saw a crackdown on an online lottery program. and that had a noticeable effect in alibaba's revenues. now you have new rules on online payments. how could that affect the payment arm? ali pay, that could have an affect there. and you have the broader depreciating yuan, and they want to be an importer of global goods. and those will become more expensive but also wants to export chinese goods. it's unclear how all of these head winds and tail winds will benefit the stock. the company didn't do a good job of explaining itself today, though. >> an interesting contrast to terry lundgren who did come on -- and the shares were down about the same magnitude, after he spoke, they weren't down as much. thank you, kayla, so much for the context. appreciate it. >> but now the ceo who had good results. >> let's get to him.
3:21 pm
online home goods retailer wayfair up 27%. after reporting a narrower than expected loss in the quarter. longer term, the stock has been on fire, more than doubling since january 1, despite posting losses since the training debut last october. >> let's zero in on the numbers with the man in charge. w wayfair's ceo joins us exclusively. a great quarter. no doubt about it. relative to the expectations. but the scouting report is clearly your expenses went up. in essence, you were buying the sales at that time. are we at a point where companies still have to do that to get people to come in the door? >> the thing about our advertising. the thing that made it special, the run rate where our direct business grew and accelerated is while advertising actually fell. it fell almost 2 percentage points. and so, i think that's the leverage people are very excited about.
3:22 pm
they're seeing our customers come back more and more often. >> i'm taking note of how many of these customers are mobile customers. tell us what you're doing to get more than a third of people shopping on their devices. are these all apps? >> absolutely. we have apps for our key brands, but we also have mobile websites. what we're trying to do is make it convenient wherever she is. whether that's on her phone using an app, a browser, tablet in the evening, on the sofa or whether that's the website on a desk top or laptop. and by integrating the experiences and having the biggest selection and making it incredibly convenient, that combination of things, i think, has been driving growth. >> and the transition from brick and mortar to online. i mean, we're seeing that pick up pace here. where do you think that ends up? at what point -- what percentage rate do you expect online commerce to be in this country? >> yeah, what's interesting, in
3:23 pm
our category and home, it's probably only around 8% online, and that's why the growth rate has accelerated to most folks talk about a 15% growth rate. >> right. >> i think that 8% can easily get to 20, 30% penetration, even more overtime. i think there's quite a long runway. >> what strikes me also about your results is that it suggests online furniture delivery market is still up for grabs. you guys are cracking the code here and figuring out a way to get product in front of people and delivering quickly and a lot of repeat shoppers, does that put you in play for one of the bigger e-commerce giants who want to bolt you on to their portfolio? >> what i think is interesting. home is a very big category, but it's actually pretty unique. it's nonbranded goods, it's very visual. people want to own unique items. so i think we have this opportunity to be a category killer in what is a very big category. but to be honest, virtually all the other categories are commodity goods categories where we all want the same brands and
3:24 pm
i think that's an area where you get the amazons and the wal-marts and targets sort of owning that space. we have a huge runway to be quite large. but i don't think you're going to find lots of different scaly commerce players. and i think that's -- some nr investors find that exciting. >> let me dust off a question i used to ask a lot in the '90s of company ceos whose stock had doubled in a year. when do you plan to turn a profit? >> happy to answer that question and thanks for having me on today. but the question on the profits, we're actually heading there quicker than folks expected. all on the analyst models had us profitable by the end of 2016, and we feel comfortable with that. one of the things we surprised folks with this quarter was how much flow through there was partly because we haven't ramped investments at the rate that, you know, ideally we would. and so, to be honest, being profitable won't be that hard for us. we were profitable for the first nine years.
3:25 pm
only started losing money when we invested in launching the brand, which is only in the last three years. in 2013, we were free cash flow positive and free cash flow positive again this quarter. >> the co-chair and ceo at wayfair. thanks for joining us today. appreciate it. >> thanks a lot. >> thank you. thanks. >> flow through, bill. 35 minutes to go until the close here. look at this market. the dow was only 8 points away from turning positive. following the s&p which is now up a point. nasdaq up 9. and just for context here, we're talking about a market, if i can find it for you this morning, the dow at the lows of the session, down 277 points. the s&p was down 32, the nasdaq down 91. this is a turn around. >> our favorite indicator. here we go. the s&p 500 heat map, the -- i'm surprised it's that -- >> evenly split. >> green at this point. it's 50/50 looks like right now with the index up one and change at the moment. >> fighting it out here as we head into the close. >> we've got our bob pisani and
3:26 pm
bertha coombs coming up. and then after the bell, we've got cisco systems and news corp. we'll get you instant analysis from our pros. keep it right here, you're watching cnbc, first in business worldwide. >> flow through. music: etta james "at last" (plays throughout) ♪ sometimes, at last doesn't happen at first. ♪ ♪ your dad just kissed my mom. ♪ turning two worlds into one takes love. ♪ helping protect that world takes state farm.
3:27 pm
so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep them all digital.
3:28 pm
we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberyy apple scones smell about done. ahh, you're good. i like to bake. with at&t get up to $400 dollars in total savings on tools to manage your business. welcome back. there it goes. the dow is positive on the session today. and that makes it almost a
3:29 pm
300-point move from the lows down 277 when we knew that the chinese bill had let again, for the second day the currency fall. and then intervened. markets are whipping around trying to make sense of it. we are positive on the session. >> bob pisani covering the day's action at the big board. and so, what do you think? >> this is impressive. >> the open was horrible. we have huge volume. waves of sell orders came in, literally for the whole first hour. then, all of a sudden, close to 11:00, it stopped. everyone said, all right, we don't have anymore to sell, we're going to stop now. things started turning around. a lot of people felt europe closing had a lot to do with it. two things mattered other than that. energy and tech led the turn around. i want to concentrate on energy because the important thing is oil didn't do too much today. you can't say, oh, oil was up big, oil stocks go up. no, look, this is where a lot of the stocks trade. noble's up 4%. waves of sell orders up. conoco, big, big one up 3%.
3:30 pm
eog. let me show you, come here a second. they're letting me use the chart here for conocophillips. intraday, trying to rally, huge waves of sell order. red means moving down here. all of a sudden the volume goes away. don't have anymore to sell. once the selling stopped. these are momentum guys piling into conoco as it stopped going down. then you can see every time we have spikes here. you see the spikes in volume? guys saying, oh, this stock keeps moving up, we're going to buy more. then leveled off during the day and the volume kind of droops. and here, as we start hitting new highs on the day, the volume picks up. is this a bottom? i don't know, they're trying to buy it three months ago, it's 48. but it's certainly encouraging.
3:31 pm
on the day the oil not doing too much. there's obviously a lot of short covering going on here. twice normal volume and all the big oil names oen a bylaw day on oil. that's a good sign. there's short covering going on. very impressive day. >> all right. thank you, bob. bertha coombs keeping an eye on what drove that into positive territory. >> it's rare to see a nasdaq with a triple digit move. we are more than 100 points from the lows of the session on the nasdaq composite and a big reversal on apple is the reason why. we saw apple reverse course after hitting a low for 2015, below $110 a share. and we're seeing very big volume on apple. it's on pace for 100 million share day today. that helped lead the chip sector higher. among the standout in the chips, intel, which may have won ha share of the buzz on the iphone, which is set to debut next month. and we're also seeing some of the other big tech names like facebook and google turning
3:32 pm
positive as well. biotechs followed in the last hour, as well, after having being down well over 2% at one point this morning. and a very big pop for a biotech ipo, global blood therapeutics. more than doubling after pricing well above range at $20 a share. although, some people might say they left a lot of money on the table there, bill. >> indeed, bertha. thanks very much. time now for a cnbc news update with sue herrera. >> hi, bill, and an update on that breaking story. here's what's happening at this hour. two huge explosions rocked an industrial area in the northeastern city, chinese city today. according to chinese state television, at least 300 people were injured. the second explosion, which you'll hear in a moment triggered by the first. there it is. was very much more powerful. it was the equivalent of 21 tons of tnt. it was felt by residents several kilometers away.
3:33 pm
tianjin is the largest manmade port in china south of beijing. back home, the government ran a much larger budget deficit in july than a year ago. much of that reflects a calendar quirk that shifted billions of dollars in august benefit payments to july. and that caused the july deficit to rise to $149 billion from $94 billion a year ago. federal judge put the nfl on the defense over its four-game suspension of patriots' quarterback tom brady. judge richard berman demanding to know what evidence directly links brady. a pennsylvania beauty queen in trouble with the law after faking a struggle with cancer and taking thousands of dollars from people. brandy lee weaver gates recently crowned miss pennsylvania international was arrested and charged with theft by deception and receiving stolen property. and that is the cnbc news update at this hour. we'll have more next hour on that explosion south of beijing
3:34 pm
and tianjin. >> i'm wondering how someone can be a miss pennsylvania international. there's not a lot of other pennsylvanias to compete with. >> i don't know. >> 30 minutes to go in the session. the dow now up 13 points. rallies across the board. dollar, by the way, significantly weaker now as we continue to try to digest what's happening in the second biggest economy of china. >> what do china's currency moves say about what's happening with the economy. we have blackrock's global investment strategist here with a warning that you have to hear coming up. you focus on making great burgers, or building the best houses in town. or becoming the next highly-unlikely dotcom superstar. and us, we'll be right there with you, helping with the questions you need answered to get your brand new business started. we're legalzoom and we've already partnered with over a million new business owners to do just that. check us out today to see how you can become one of them. legalzoom.
3:35 pm
legal help is here. what if there were only one kind of dog? then it would be easy to know everything about that one breed. but in fact, there are over three hundred breeds of dogs. because no one can be an expert in every one... an app powered by ibm watson will help vets tap specialized knowledge in the cloud for every breed... and whatever else walks, flies or slithers through the door. ibm watson is working to make medicine smarter every day.
3:36 pm
3:37 pm
welcome back. and don't look now, but major averages have turned positive on the session. less than half an hour to go in the session. it was down 277, nearly 300-point swing we've seen today. similar moves to the s&p 500 and the nasdaq. and this after a string of red. we'll see what happens as we move closer to the bell here. >> yes, we will. thank you, kelly, we are in that critical last half hour. they've been turning it positive for the last hour or so. i can't wait to hear your response to today's action. very heavy selling on the open
3:38 pm
this morning and then a comeback. what do you think's going on? >> well, if if you were at the beach, there was a lot going on. one thing i'm looking at for tomorrow is what germany does. they've been down 6% for this week. if they can get a rally for what we saw today, you can see a big move over there and that can spur all of europe on. >> this felt like a climactic moment. >> it did, but it held. it held the narrow range, 2052, and 2130 on the upside. so it bounced off that. what this does is leads us to what the fed is going to do in september. that's slightly negative as far as what they're going to do as far as a raise goes. >> you think the devaluation changes fed policy? >> it was touch and go as it was and i think this pushes it back as something more they're going to have to look at. it wouldn't surprise me if they
3:39 pm
moved it back to october. >> stocks staging a big comeback today. does that mean the china worries are over? joining us with his perspective. welcome to you, russ. listen, you were on the network just recently saying you think the federal reserve raising rates could spark this 10% stock market correction. do you think after all that's happened, the fed's going to hike this year. >> well, i think the fed is still going to hike this year. look, the fed is going to look at this from the prism of the u.s. economy. and clearly, there are mechanisms by which this could affect the economy. if we see another strong leg up on the dollar, that will impact their thinking because a stronger dollar is a de facto monetary tightening. but the reality is, if we continue to see improvement in the labor market, if the u.s. economy continues to grow at about the 2.5% pace or better than we expect in the second half, yes, the fed will go this fall. >> that said, do you look at this market that's been weak and wonder if, in fact, we should ascribe that to the fed raising
3:40 pm
rates as opposed to concerns to what is happening in china? >> i think it's a combination of the two. not just china. here's what i think the problem is. investors are comfortable with the fed raising rates on the assumption that rate hike is occurring in the context of a strengthening economy. and history tells you if that happens, it's not the end of the world that the fed raises rates. what has worried investors is the notion that the fed may raise rates at a point where inflation is very low. and overall growth is still sluggish. and it's that combination of events that i think are keeping u.s. stocks from advancing this year. >> so what's somebody to do? if you want to make money here, do you play the defensive side? do you -- i can't imagine you're going to say you're going to go for growth. what are you doing here, russ? >> well, i think you do a couple of things. there's no silver bullet. and the reality as we know, six years into a bull market, there are very few unambiguously cheap.
3:41 pm
a portfolio-oriented approach. higher allocation into international developed markets despite all the events in china, europe, japan and europe have done very well to date. i think some of the recent weakness in high yield has created relative value in that space. that's another place for investors to be looking. and if you do believe the u.s. economy is going to be stronger in the back half of the year, then i think, no, you don't look at the defensives, some of the more cyclical parts of the market that are both cheaper and likely to be more resilient with a tightening fed. >> couple of contrarian ideas, russ, thanks for joining us with an update. appreciate it. >> all right. 19 minutes left in the trading session here after all is said and done, we're virtually neutral right now on the dow jones industrial average. and like matt said, if you'd been out all day and coming back, you're going to look at that and say, oh -- >> not much happened. you'd be wrong, crude oil and energy stocks have been taking their lumps of late. but this downturn created a big opportunity with investors and we'll share it with you next.
3:42 pm
3:43 pm
i take prilosec otc each morning for my frequent heartburn. because it gives me... zero heartburn! prilosec otc. the number 1 doctor-recommended frequent heartburn medicine for 9 straight years. one pill each morning. 24 hours. zero heartburn.
3:44 pm
welcome back. it's been a red-letter day for a lot of the equity markets. the dow down five points, was
3:45 pm
down 277. big comeback for that one, the s&p and the nasdaq. we would be remiss if we didn't highlight agricultural futures, which are down sharply today after a very, what we'll call a bearish agricultural department report. for a lot of these agricultural markets, reports sent shares of agricultural giant deere lower, as well today. last we saw, deere was down 4%, it's come off the lows, now down 2.76%. but we got -- as dennis gartman said earlier today, the u.s. is awash in grain right now. >> american farmers are good. what that means for the inflation outlook, a different story. the oil prices is taking a toll in the energy sector. and one group hit hard is master limited partnerships. they own energy infrastructure like pipelines and storage tanks. >> but our next guest says if you can stomach the short-term volatility, you might see long-term gains from mlps
3:46 pm
because they offer big tax benefits and, oh, by the way, those high yields, as well. jeffrey on the phone with us, executive editor of investorplace.com. good to hear from you again. >> yeah, thanks for having me. >> make the case for mlps, and why now, necessarily? >> well, you know, i don't want to dissuade anybody, i think there is. i think it's realistic for us to get in the low 30s, perhaps, just for a moment this year. i think we're going to float around $40, supplies, huge demand is low, the dollar strong, you know, but i think catching a bottom in some of these, like, large debt, small cap shale players, definitely are super risky play. but pipeline mlps are not in the same camp. these are kind of middle men. they're distributable cash flows and some of these companies approved, distributions have improved. that's because they're not exposed as much to the volatility in prices. upstream and downstream. they're a middle man with the
3:47 pm
pipelines and storage tanks in between. it's much more stable. i'm not going to act like it's super stable and there's no volatility, but i think it's better than some alternatives in energy. >> we've been hearing this argument all morning long. if we're going to have a production boom, we're going to want the pipelines. and we showed the index down. and it's clear the biggest ones are taking a hit. why would it be the case -- what if anything, the trading action has shown. they're one of the most vulnerable parts of this market. >> fair point. but i will agree with your boy jim cramer on this one. he actually just highlighted mlps for individual investors. i'm not going to talk about day traders or hedge funds that are going to make a lot of money. i think we talk to individual people if you're on the verge of retirement, capital preservation, thinking about income, i do think that mlps offer great long-term opportunity. again, it's about the distributable cash flow, great yield. there is going to be volatility in short-term.
3:48 pm
and i don't pretend there's not going to be. if you can weather that over the next six months, it's a huge income play for the long-term. if you're at or near retirement thinking about income, i think you don't necessarily have to catch the exact bottom. but i think the moment is pretty close to now in the stocks and if you're thinking about years or a decade, close is close enough for you. >> are all mlps created equally, jeff? >> no, that's a great point. i think it's very important. like i said, the phrase is distributable cash flow. you want to make sure they're actually passing through more cash in the forms of dividends or distributions as the jargen in mlps. energy transfer partners, magellan, i like that play myself. if you're looking at a company increasing the distributions. distributal cash flow is going up, that's a company i would feel comfortable owning for income over the long-term. >> got to leave it there, jeff.
3:49 pm
appreciate you coming on, making the case to us. executive editor of investorplace.com. i would just add, there are people bearish on oil and on energy who say the mlps, in order to meet this demand, generate all this cash have to keep stuff pumping. >> yeah. >> one of the reasons why we haven't seen production drop in this country. >> exactly, that is a good point. and art cashin, after all is said and done with all the volatility, the comeback. >> drum roll, please. >> the bias is we've got $150 million to sell going into the close. and it's negligible. but we are down eight points as we head toward the close right now. >> and the other averages are positive. the s&p higher by a point, the nasdaq down 92 point in times at the lows is up by eight. >> stocks clearly making a huge comeback. but our next guest says we're entering a period of what he calls above average risk. he'll offer details when we come back.
3:50 pm
it took joel silverman years to become a master dog trainer. but only a few commands to master depositing checks at chase atms. technology designed for you. so you can easily master the way you bank. i am here to offer sophisticated investing strategies. my technology can help you choose the right portfolio.
3:51 pm
monitor it. and automatically rebalance it. all without charging advisory fees, account service fees or commissions. that may be hard to compute. but i'm a computer. so trust me. it computes. say hello at intelligent.schwab.com wonderful, crazy mornings. we figure you probably don't have time to wait on hold. that's why at xfinity we're hard at work, building new apps like this one that lets you choose a time for us to call you. so instead of waiting on hold, we'll call you when things are just as wonderful... [phone rings] but a little less crazy. we're doing everything we can to give you the best experience possible.
3:52 pm
because we should fit into your life. not the other way around.
3:53 pm
3:54 pm
3:55 pm
3:56 pm
. . here at td ameritrade, they're always working.
3:57 pm
yup, we're constantly making thinkorswim better. like a custom screener on your desktop, that updates to all your devices. and you can share it with one click. wow. how do you find the time to do all this? easy. we combined every birthday and holiday into one celebration. (different holidays being shouted) back to work, guys! i love this times of year. for all the confidence you need. td ameritrade. you got this. so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep them all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberyy apple scones smell about done. ahh, you're good. i like to bake. with at&t get up to $400 dollars in total savings on tools to manage your business.
3:58 pm
all right. coming up on the last two minutes of trade. what a day. crazy day. here's that selloff we saw this morning. down 277 points at the low on heavy volume as bob pisani itemized earlier. bumped around until noontime. and then it was a different story. we started the comeback trail, actually turned positive. we're down seven points right now on the industrial average. but it's still an impressive comeback whether it was actual buying or short covering, whatever it may have been. the other big feature of the day, the agricultural commodities, the futures markets tumbling when this report came out at noon. that's interesting. that's when equities came back. >> the ekg. >> coming our way in the grains
3:59 pm
markets. so you see, corn, wheat and soybean, especially. look at soybeans down 6.33%. one more thing before i get to your point. earnings coming out tonight. they're watching for cisco. that'll be a big one and then news corp. up 1% right now. >> the amazing thing about today. i've been trying to figure out how many times it'd happened. there was a tweet out it only happened seven times in 1987 with the seven times it happened. here's what's amazing. heavy, heavy volume at the open. right here all the way for an hour and a half. they couldn't sell enough and then all of a sudden it just died. it just died. and markets started lifting. you can see this, that the panic sort of stopped while looking at the vix. look at the vix intraday. put buying here, and all of a sudden at this same time, the vix started collapsing. this means people stop going out buying protection. that's what it means, basically.
4:00 pm
we fell apart right where it was at the close. after spiking huge. this is panicked selling at the open. an amazing day. >> very, very interesting day. we'll see what happens. thanks, bob. very much. we go out virtually neutral on the dow. volatile day. earnings coming out. cisco's numbers should be instructive. that's coming up now on the second hour of "closing bell." see you tomorrow, kelly. welcome to the "closing bell," everybody. what a remarkable day we had here on wall street. you wouldn't have thought we'd be finishing here. but, in fact, it looks like we're going out with all three major indexes in the green ever so slightly, but still what a turn around we've had, the dow up by about one point. we'll see if it remains there as things settle out. 17,400 in change. the s&p adding two points and the nasdaq adding seven. and it was down 91 points at the session low today. we'll get into more of what's been driving this activity, and
4:01 pm
to what extent we need to watch other parts of this market shake out. we're also moments away from a big pair of earnings reports. mary thompson is all over cisco's results for us and julia boorstin is waiting for news corp. our thanks to both of you. let's get to today's panel. joining us now, cnbc contributor carol roth, jon fortt, and with us for more, we have tim seymour and christine short onset. welcome one and all. tim, let me just kick this out to you to begin with. what do you make of this turn around? >> well, i think you have a couple of things going on. should be positive for market. actually stayed there while the rest of the markets rallied. kind government the best for both worlds. to me an assessment, i think we had a major overreaction. i think china signaled this was coming two or three weeks ago and i think before that, on a
4:02 pm
policy uncertainty side, people are getting more uncomfortable. you also had a place where bond yields got too low and people started to step back in there and sell bonds. i think markets krektsed. they were oversold, and i think it's generally a positive response. >> okay. major overreaction, carol, you agree? >> i do not agree. and i don't agree if i look at china from a macro standpoint and what it means to us potentially politically. one of the things i haven't heard enough people talk about. if china is really slowing down, if they are having their own sort of credit issues over there. if this really does mean something else for china, what does it mean to us since china is our biggest lender? if china all of a sudden doesn't have an appetite for debt, japan doesn't have the capacity for debt, we like to run deficits. who is going to be financing those deficits going forward? >> yeah. perhaps because we've seen prices rally. you know, u.s. treasury yields are falling, you know, as they often do on this flight to safety as people try to make sense of it. but then, longer term, the
4:03 pm
question stands, any thoughts, tim? >> well, i think you're overcomplicating it. i think they had to devalue the currency. they were getting pulled up with the dollar's rise. we were wanting china to switch to a free market approach. to think they're going to stop buying treasuries at this point, i don't see the linkage there. i'm not worried china's about to blow up. i don't think this means the economy's worse than they thought. they had to do this not out of weakness, but because it was a natural market process. >> and i actually disagree with that. we've certainly seen data that suggests that china might be slowing more than many people had thought. >> let me ask, actually -- about the only explanation you could come up with is it must be china. concerns about growth there. would that suggest to us that this is real? for these? >> there's also hammering around
4:04 pm
the next iphone which comes around this time of year. how could the next one sell any better. often, it does, though, and i've been saying on squawk alley, the trends are lining up in that direction. seems like apple dropped like a rock out of the gate the first few minutes of trade. and then has been climbing ever since. and ended up higher. >> is there anything we can glean, christine, from the exposure that these companies have to china? if, indeed, it's slowing substantially? >> yeah, companies really rely on china. and we know a majority of that comes from china. if you look at the press releases from thisst last quar, some of the discretionary names like mcdonald's, yum, nike and big tech names like apple. so corporations are worried. the equity bubble bursting last month. now there is a little more of a
4:05 pm
concern going through the second half of the year. >> i would point out that cisco is doing terrible in china which bodes well for them and their results coming out after the bell. really because, it's not like they have -- >> the comps are better. >> tim, what about that? if you're saying this has been an overreaction to china's moves, does that mean all of the names which have been hit hard because of the exposure become buying opportunities? >> well, i think if they were sells over the last two days, they should have been sells two months ago. nothing has changed in the last couple of months. and look at the stock market which held at 200, trading one of the best stock markets in the last couple of weeks. the fact that we saw not only tiffany and nike and companies like that have been geared towards china in the last couple of years trade lower today, but you also saw a target in jc penney and companies that are not reliant upon china. this was a market sentiment move, people that were overpositioned. nothing happened with the china de-val coming in yesterday morning. it's any different for the china
4:06 pm
economy than we knew two months ago. to say the world changed overnight i think was an overreaction. the markets got comfortable with china communicating as best they can what they're doing and here we are. >> and i think it just depends on the company. a company like apple, i have a lot of belief in because i think the one thing a consumer, whether they're in the united states, europe, or china is going to spend money on is going to be their iphone, regardless of what's going on from a macro standpoint. i do think a company like tiffany, and yes, we have known this for a while, it not only potential slowdowns in china in general, but the fact they've had this corruption crackdown, the fact there's been extra volatility in the stock market. i certainly think that the luxury side of the market and their exposure to china has even a little bit more than we have known a couple of months ago. >> are we getting a word here on cisco? >> we are, you know, i see from the cisco release, and i'm sure mary thompson will fill us in more on this.
4:07 pm
revenues coming in at $12.8 billion above the expected. and also non-gaap earnings per share, 59 cents versus 56. >> and let's remind everybody. looks like top line beat with revenues coming in, a little bit heavier than expected, as well. after hours shares are trading up ever so slightly, about 1%. we'll get more for you on that here in just a bit. tim, which of these names are you playing? >> well, i'll tell you, in cisco's case, as john pointed out, the comps, in terms of fx, some of this is actually a tail wind for these guys. i'd be listening to hear more about enterprise weakness, what's really going on there. but for people playing cisco, it is one of the plays on kind of security, on wireless, on data center, and these are things that are going very well for this company. i don't think they're at an inflection point. and em's been very weak for these guys. a stock trading between 27 and 30, i think remains kind of range bound here.
4:08 pm
i think there are questions on the call, maybe divestitures. >> let's get out to mary thompson now with more on cisco's results. >> hey there, kelly, as you mentioned. earnings and revenue for the fiscal fourth quarter better than expected for cisco. also, the company giving guidance for the fiscal first quarter which was pretty much in line with expectations looking for earnings of 55 to 57 cents a share and analysts were expecting 56 cents a share. in his first, this will be his first quarter as ceo, the company's new ceo saying i'm particularly pleased with the strong growth of deferred revenue, which shows we are effectively driving our business to a more predictable software base business model. he also says he believes cisco's best years are ahead of them. the company will be hosting a call at 4:30 today. and we'll be back with headlines on that. but, again, the company beating on the top and bottom line, of course, thanks in part to strong revenue growth during the quarter. back to you. >> thank you, mary. john? >> deferred revenue up 21%.
4:09 pm
i'm doing a little quick math here. bear with me. the midpoint of the revenue guidance is 12.56 billion. the street looking for around 12. 12.6. 2% to 4% up, and the eps is in line. that's pretty solid. gross margin guidance looking pretty good, too. >> christine, put this into context for us. >> yeah, this beat our estimate, we were a cent higher than the street. only about 15% of companies have been able to achieve that this quarter. interesting to hear about their switching and routing business. we knew that was sluggish for a while. just starting to see the recover in the latest quarter. i'd like to see what the guidance is for the second half of the year. they've been investing in cloud computing. you know, earlier in the spring they were rumored to be looking at fire eye, cyber security has
4:10 pm
been on fire this quarter. so that would be a good area of growth for them and last quarter i believe that security sector grew about 14% for them. i'd like to see -- >> not too shabby. >> i wonder, though, you know, with these investments they're making and with the potential for growth in some of these areas does it justify, though, a higher valuation. >> a lot of the cyber securities come with quite high valuations. i think when the fundamentals are strong this quarter, we know this is a growth space at least for the rest of 2015 and 2016. i think the higher valuations are justified if they keep reporting numbers if they were a couple of names in the security space that didn't live up to our examinatio expectations for q-2. it's strong for all of those other names in the space. >> and just circling back to cisco. shares up a little more than 1%. and be sure to tune into "mad money" tonight. jim cramer's going to speak exclusively to chuck robbins
4:11 pm
coming up at 6:00 p.m. eastern. tim, let's back out for a second from these results and talk just more broadly. how are investors supposed to set up for tomorrow and the rest of the week? is it all going to come down to 9:30 every night now when we see how the chinese currency is going to be fixed? >> yeah, i think people are still focused on, but a little more comfortable. if we saw a 4% or 5% de-value, i think you'd be in a tough place. china's currency was probably 15% to 20% stronger over the last 3 to 4 years. what they're doing as i said before, not that big of a surprise. yeah, we have to tune in tonight. we're going to be watching the dollar and bond yields. markets are pricing deflationary impact. and i think that's something that people are starting to get to better terms on. i don't think the world is that bad of place. i think what china is doing is what it has to do. it's clumsy, awkward. but the -- it's been funny going on in every country except this one.
4:12 pm
that's what happens. and that's what they're doing. >> we'll leave it with this glass half full, tim. appreciate it. that's tim seymour. catch more of tim at 5:00. they'll be speaking to raoul pal. reminder, still waiting on earnings from news corp. and more on this dramatic market comeback. christine? our thanks to you, as well for joining us, we should've said. and whether all these concerns are overblown. up next, one wall street analyst tells us whether you should buy or sell the stocks. you're watching cnbc first in business worldwide. where the power will go out, within a few city blocks. working with ibm, they're combining micro weather forecasts with detailed data from local sensors. to predict where outages are likely to occur. and send crews exactly where they're needed, when they're needed. ibm analytics from the internet of things is making energy smarter every day.
4:13 pm
4:14 pm
everyone is looking for ways while to cut expenses.s unique, and that's where pg&e's online business energy checkup tool can really help. you can use it to track your actual energy use. find rebates that make equipment upgrades more affordable. even develop a customized energy plan for your company. think of it as a way to take more control over your operating costs. and yet another energy saving opportunity from pg&e. find new ways to save energy and money with pg&e's business energy check-up.
4:15 pm
stocks giving investors whiplash today. if you just saw where the dow settled, you would have missed it was down 277 points. and we should add now as things have fully settled, it does look like it just missed closing in the green, down about a third of one point. a big comeback in the last few trading hours. bob, what drove the turn around? >> well, look, it was amazing at the open. we had huge volume. they were selling and selling for the first hour and a half. and then around 11:00, the selling stopped. just ran out of things to sell. really, if they actually did that, they ran out of things to sell. a lot of people said, well, the europeans were selling.
4:16 pm
whatever. the bottom line is the selling sort of stopped, volume dried up a little bit. and then tech stocks started bouncing. apple was one of the ones that led. but also, microns, texas instruments, started bouncing. and then, more importantly, energy stocks started bouncing and led the leap. this is important because oil didn't really do that much. you can't say oil's up huge. we saw energy stocks moving on big volume once they bottomed around 11:00. so look, come here. some of the energy names. apache. very big volume. that's unusually heavy volume, almost 7 million shares up 3%. cabot oil and gas, very heavy volume, 6 million shares. even the biggest, guys, it's hard to move exxon mobile. and that's heavy volume at 16 million, up almost 2%. chevron also up fractionally, as well. if you could put up an intraday of where a lot of the money goes to trade are intraday. what happened there was, again, big selloff right at the open.
4:17 pm
and they tried to rally it. it sold off and then about 11:00, the volume just dried up. looks like the switch went off, the selling, started lifting throughout the day. this is the representatives of all of the exploration and production stocks like apache and eog. i think the fact you had twice normal volume and most of the big energy names is an indication of at least for today, there was some short covering. energy is among the most heavily shorted. you get twice normal volume, not a lot of news and energy, oil is not a big up and down factor on a daily basis. i think that's kind of significant. i don't know if it's a permanent bottom at all. but some people got a little nervous. >> we appreciate the detective work, bob, as always. our bob pisani on the exchange of this turn around wednesday. cisco just reporting the fourth quarter results. shares up 2%. the conference call will begin in less than 15 minutes at 4:30 eastern time. let's get more on these results now. for his reaction, we have eric
4:18 pm
joining us. >> well, thanks for having me, kelly. you know, i was encouraged with the results. but i really think the more critical aspect is the outlook. cisco's really in the midst of a major transition reorganization from the top down. and certainly, that's going to be where my focus and i think a lot of investors are going to be more interested going forward here. >> three things i want to run by you, erik, real quick. the deferred revenue was up, two, gross margin was down quarter to quarter, partly driven by pricing and mix. that pricing thing jumped out. wondering what you think there. and then, part of the drag on operating expenses is hiring. remember, they're in the midst of this layoff, they got the restructuring charges for. but hiring in security, cloud, and software. all of those hot areas. how do you feel about all of that? are you encouraged about the
4:19 pm
investment? are you concerned about the gross margin in pricing? how does it balance out? >> so, first off, i do think you have a significant structural change going on, organizational change. so the near term earnings that they had, the 59 cents, the upside there, that could certainly have been some of the head count transition that they got, and now they've got to bring on expenses. i think they're in a mode where they're probably investing from here. and that's probably why the outlook is pretty consistent with the consensus going forward. in terms of the deferred revenue, i do look at that positively. the company has traditionally been very much hardware centric and trying to migrate more to a software sale, subscription sale and an increased deferred balance is certainly indicative of some success on that front. so that was a good move. >> plus, you've got a new ceo and cfo. there's no way they're going to give guidance in the release, which they normally don't do that they're going to miss next
4:20 pm
quarter, right? >> it's carol roth. one of the things i'm seeing as chatter on the internet i found pretty interesting is the cash position of cisco. which if you look at their balance sheet looks kind of robust, like given the fact they have a nice dividend and doing a share repurchase. a lot of the cash is tied up overseas, as is the case with many tech companies. any concerns, the fact they can't repatriate some of this cash because of the tax implications. is there sort of a cash potential issue that cisco might face here? >> you know, i think if you look out quite a long ways, maybe at some point, but quite frankly, i think the company and i think there's a broader expectation at some point we are going to get tax changes that are going to enable some repatriation without the tax impact. for the most part, i feel and i think a lot of investors feel it's more of a timing issue just trying to get to the point where, you know, these things
4:21 pm
can be resolved in an economical manner including cisco. >> and we'll get more on the network in a couple of hours on jim cramer's program. for now, erik, thank you. >> thank you. well, you may not directly invest in china, but you almost definitely have exposure to that nation in your portfolio. the stocks most vulnerable to china's market collapse is next. plus, could the fallout from china force the fed to push back its rate hike plans? we'll talk about that. stick around, that's later on the "closing bell."
4:22 pm
4:23 pm
♪ no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.
4:24 pm
well, a few weeks ago, it was all about greece. now it is all about china. the market collapse today had equities here looking like a yo-yo. the concern well placed because some of the largest s&p 500 companies have major exposure to china. broken down the numbers to see which stocks get hit hardest by a selloff in china. hi, dierdre. >> you hear guests and analysts down play the effect on u.s. markets. but the stocks really tell a different story. we used analysis to crunch the numbers and found some major vulnerabilities in the u.s. markets when china is under pressure. we used the fxi, the largest u.s. listed chinese etf as a proxy and looked at instances where it has fallen 10 plus percent in one week. there's been 22 of those instances by the way since 2005. a decent pool to draw from. now, get this, before i get to individual stocks, more than 90% of the time, the s&p 500 trades
4:25 pm
negative, as well, during that week and loses more than 5% on average. in terms of who gets hit the hardest, that would be citibank. it has the most china exposure among the big bank peers and historically the worst s&p performer during the instances. other names, apple, yahoo, intel, big tech names, they get hit, too. historically, apple trades negative more than 70 percent of the time. the list goes on and on, vegas names, materials, energy plays, industrials, et cetera. i'll leave you with that for now. as always, i want to mention, with this kind of analysis, keep in mind that just because this is the way it's played out in the past, doesn't mean it'll do so in the future. and also, when china is sliding, it's common to see oil and other commodities fall, as well. there could be lots of reasons the markets are under pressure. but still, strong stats here and
4:26 pm
strong correlations to consider. back over to you. >> all right. an important disclaimer. thanks, deirdre. senior retail analyst joining our panel now. hello to you. and let me just start because investors asking, are there any companies that benefit? >> sure, thank you very for having me. absolutely. there are two factors on this devaluation. really one is on the demand side as, you know, some of the luxury names, european and u.s. names haven't pulled back in terms of the stock price over the last two days as there are fears that the chinese consumer is pulling back. there is another side to the story, that's on the supply side. we think there are some companies out there, really u.s. sportswear, footwear, apparel names that could benefit where they have no chinese consumer exposure, but they do source out of china. if we see it continue to
4:27 pm
devaluate, over the next year or so, some of the companies, nike, vf corp.s, they could benefit. >> so the flip side is we're showing now deckers, wolverine, columbia and fossil. what about prospects for these companies? >> yeah. those are some of the companies, as well, that should benefit. there are some analyses you can run in terms of their exposure to revenues, and their exposure to cogs. beyond those names we cover, there's a basket of names out there beyond footwear and apparel that have exposure in terms of sourcing. >> sure. >> from china but have no exposure from a revenue perspective. >> carol? >> this is carol roth. when you're looking at the currency situation, are you looking at it in isolation? or do you believe that's linked to a broader issue in china altogether? because i feel like that will impact what stocks end up having an impact from china. >> yeah.
4:28 pm
absolutely. really, i would look at the luxury side, probably the most important where you see the most pullback in this red tape the last two days. you're looking at the european names, those are down in high, single digits and that's the fear that the chinese consumer represent about a third of global consumption. really pulling back on consumption. so that is on the demand side, and unfortunately, that is the red tape we're seeing today. >> before we go. i've got to ask you about the rickey big mac index. what is it? and what is it telling us right now? >> sure. the rickey big mac index. we looked at pricing for the ralph lauren iconic bag and looked at it at different price points across the country, but because of the fluctuations of fx across different countries, you're seeing an arbitrage opportunity where the bag in china will cost upwards to $5,000 and then europe, it'll cost about $2,000.
4:29 pm
so really a $3,000 differential. pretty significant. and global companies really need to balance that equation in terms of the pricing architectu architecture. >> seems we might have a way to go if the currency wants to make a bag as cheap in china as it is in europe. thank you. >> thank you. >> have a good one. >> let's get out to sue herrera. >> hi, kelly, and here's what's happening at this hour. those two huge explosions rocked an industrial area in the northeastern chinese city of tianjin today according to the chinese state television. now at least 300 people were injured. police report at least seven people are dead. the second explosion triggered by the first was more powerful, as you can see, and in fact, it was the equivalent to 21 tons of tnt. it was felt by residents several miles away. tianjin is the largest made port in china and south of beijing.
4:30 pm
ohio governor john kasich bringing his presidential campaign to new hampshire. he placed third in a new hampshire primary poll released by the "boston herald." ford is bringing back production of the f-650 and the f-750 trucks to the united states. the production shift from mexico was negotiated as part of an agreement with the uaw in 2011. it will secure 1,000 hourly jobs in ohio and $168 million plant investment, as well. los angeles pouring 96 million black 4-inch plastic balls over the surface of the 175-acre reservoir. the first city to use shade balls to preserve water resources. those shade balls, which prevent evaporation can last about 10 years before being removed and then recycled. interesting way to do it. but they need all the help they can get out in california right now, kelly. that's the update. back to you. >> wow.
4:31 pm
pulling everything out of a hat here, sue. i hope it works. >> i hope so, too. >> new corp. earnings, are they out? do we have the numbers? they're not out. we're kidding. they will be out shortly, though. due any second. cisco's earnings are out. and that conference call about to begin. we're going to monitor it for you and bring you the details coming up. plus, are investors overreacting to the yuan's collapse? our next guest says they are and everyone should take a deep breath and relax. ♪ i built my business with passion. but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy for my studio. ♪ and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... that's huge for my bottom line. what's in your wallet?
4:32 pm
no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.
4:33 pm
4:34 pm
welcome back. coming out 277 points off the lows of the session. that's remarkable comeback. the s&p turned positive at the close. the nasdaq did, as well. 100-point swing of its own. we had cisco's numbers, let's check in with those numbers, now by 3% and the conference call just got underway. we'll keep an eye out. better than expected earnings in both the top and bottom line to the networking giant. and we have news corp. earnings now out, as well. let's get to those you. we have earnings per share of 7 cents, versus estimates of 5. revenues came in at $2.14
4:35 pm
billion versus estimates of $2.19. shares don't look like they're moving yet. we'll keep an eye on them for you. julia, top line miss ever so slightly here. >> that's right. revenues missed, but earnings coming in 2 cents better than expected. there are a couple of interesting headlines here in the earnings release. the company announcing it's initiated a strategic review of the education business segment. an area tough for news corp. it did report a loss this quarter as well as in prior quarters. another headline here, the board of directors has declared the first semiannual cash division of 10 cents per share. that's 10 cents every six months. i'm looking at the reasons why revenue came in a little lighter than expected that seems to be in the services business which is the biggest business for news corp. book publishing came in lighter than expected, as well. although the book division does have the new harper lee novel which is expected to boost that
4:36 pm
division's results in coming quarters. we'll continue to dig through this release here and let you know if there's anything else worth noting. kelly, back over to you. >> thanks. and before you go, we did get news, as well, this hour that nbc universal, our parent company is taking a stake in vox. there are rumors about this, i guess, for some time. what's the significance of this? >> well, this has been reported to be in the works for a while now. and what's happening here, nbc universal is investing about -- announced $200 million equity investment in vox. vox owns the verge, websites including eater and racked and curbed. and this puts the valuation north of $1 billion. and in addition to the investment, kelly. nbc universal's going to have a strategic partnership with vox involving content, advertising and technology. this allows nbc universal, which is, of course, cnbc's parent to have a stake in digital advertising, which is, of course, a fast-growing area. digital content. and then, meanwhile, this gives
4:37 pm
vox some cash so they can continue to fund their growth. and i'm sure doesn't hurt to also have nbc universal in its corner in terms of some of the strategic advantages. back over to you. >> sure. a lot of familiar names there, l actually, and the internet space. we'll let you get back to news corp. results. a second day of currency intervention in china. meantime, scaring investors, again. but stocks as you saw staged a major comeback. let's bring in cnbc contributor rebecca patterson. rebecca, it's good to see you, and break the tie for us. we have half the guests arguing this is an overreaction and half saying we don't fully appreciate how dramatic the slowdown is in china. >> i do think the next few days are critical. if we continue to see china letting its currency depreciate for the next few days, that could create fears this is a major devaluation and you could have a greater risk of a currency war of sorts breaking
4:38 pm
out. that to me would be a worst-case scenario. the fact that china intervened to support last night at the end of its trading day, to me, tells me, though, this might not be that bad-case scenario. our base case and i don't have a lot of conviction around this yet. this is going to be a very gradual move, largely discounted in the market. was just that, people taking chips off the table until they see what's going on. i think yesterday and earlier today was an overreaction and i thought it was an opportunity to add some equities at better levels. >> rebecca, are we kind of in this mode of looking for things to worry about? i mean, i understand china could be a concern. but as you said, we don't have the data yet. before we were looking to be worried about greece. and i guess now for whatever reason, we're not worried about it even though greece is not fixed. is that where we are? >> it definitely feels that way. and it's kind of hard to think this is still leftover scarring from 2008.
4:39 pm
but -- and i know this has become such a cliche, but it does feel that equities have continued to climb walls of worry. it's greece, it's the fed, it's isil, it's china, we're always finding something to prevent us from really embracing what is now a multi-year equity rally with some pretty impressive returns. i still am overweight equities for our clients. i still feel that's the right position to be in. and, to me in a way, this wall of worry is good news. it means the market hasn't gotten crowded, valuations have risen, they're not extreme by any measure. >> it's carol roth. i guess from my perspective, china is very different given the size of the scope of the economy and the relationship with the united states and how important it is to our economy. and i guess that from my perspective, having china intervene just to devalue the currency to begin with is a signal that there is probably something going on there that's more than we've expected. obviously, there's been a lot of uncertainty around china and
4:40 pm
concerns about an eventual hard landing. and i think that to dismiss it would probably be a mistake. >> last word, rebecca? >> totally agree we need to keep an eye on it. china's nominal gdp has been bigger than germany and china combined. i think china, though, can cut reserve requirements for banks. it can do more fiscal easing. it has tools to manage the slowdown in the next 12 to 18 months. so i'm not looking for a china implosion. i don't think that is something that should be anyone's base case. next five years, china has a lot of road ahead. this currency isn't economic only. it's political. trying to get into the currency basket, hopefully this year. the move they announce this week is political as much if not more than economic. >> and back in the political discussion here, as well. rebecca, thank you so much, appreciate it. rebecca patterson there. the latest on china. we've got breaking news on former president jimmy carter. sue has the story.
4:41 pm
>> indeed i do. thank you very much, kelly. and the former president jimmy carter is revealing he has cancer. he says in a statement that the recent liver surgery that he had, which was back in august on 3rd of august revealed he has cancer in other parts of his body. he says i will be rearranging my schedule as necessary to undergo treatment by physicians at emory health care. president carter, 90 years old now, 39th president of the united states from 1977 to 1981. received the nobel peace prize in the year 2002. the carter family, unfortunately, has a long history of various kinds of cancer. he lost both his mother and his father as well as both of his sisters and a brother of pancreatic cancer. he's been undergoing very regular and thorough exams on a yearly basis to make sure he does not develop that disease.
4:42 pm
and unfortunately at this point, he has. it apareparently started in his liver but now in other parts of his body. we wish him all the best as he undergoes treatment and await more statements from the carter family or foundation. back to you. >> thank you so much. our sue herera. apple shares crushed over the last month, the exposure to china isn't doing anything to alleviate concerns about the stock. whether these fears are justified or overblown. first we'll head live. we're back in two.
4:43 pm
4:44 pm
4:45 pm
the united states reestablishing diplomatic relations with cuba after 50 years. the thawing coming when the cuban government is under pressure to improve the economy. michelle caruso-cabrera joining us live from havana with more on the market reforms. are they underway, michelle? >> reporter: tiny, tiny ones, kelly. we want to introduce you to someone who couldn't exist for years. the cuban entrepreneur. his or her existence used to be illegal. but now, after some very, very tiny market reforms, yes, virginia, the cuban business owner does exist. ruben is one of them. and we have nicknamed him the swag bag man of cuba because he makes bags filled with gifts and trinkets for meetings. they put out a list of 200 different low-skilled
4:46 pm
occupations in which people could work for themselves instead of the government. so he and his wife left their government jobs and started doing this. and the impact on his life has been tremendous. before, he made $30 a month, her $20. now, they each draw a salary of $150 a month, and they have money left over for savings. they've bought a car, they're going to buy a house. and they've spread the wealth. they have 20 employees, some of whom are making as much as $100 a month. he's diversified, kelly. this is the traditional product line, a swag bag for one of the state owned companies palco, rentals of warehouses and things like that. he started making things like these little bags for a restaurant here called super burger. even when the tiny sectors have happened, reforms have happened. the impact has been so big.
4:47 pm
they think the economy here would improve dramatically. >> on that point, michelle, does the government here allow any old person to decide they're going to start and expand a business? what kind of take do they have of those proceeds. >> yeah, so it's only 200, roughly, different occupations. most of them are things like party clowns, seamstresses, refillers of lighters, people who cut palm trees, that kind of thing. but the point is, even those little things, you can't imagine that the impact that they have when people start to actually work for themselves. to your point, those people now have to pay income taxes. that's new for them. but considering they're making much more money than they did before, they're not unhappy about that. >> the swag bag man of cuba. michelle, thank you so much for introducing us to him. appreciate it. apple was the apple of investors' eyes for a long time. but fear about china's economy
4:48 pm
is one reason the stock has been selling off. we've got someone who says those fears are overblown next. and we'll get you much more on cisco's earnings tonight at 6:00 p.m. when our jim cramer speaks exclusively to new ceo chuck robbins. back in a moment.
4:49 pm
4:50 pm
4:51 pm
welcome back. apple shares staging a rebound today up 1 1/2%. but remember the stock was off 5% yesterday on fears the china slowdown would further hurt sales. paul hickey of bespoke investments says these china fears are overblown and he joins us to explain. welcome to you, paul. >> hey, kelly. >> apple sold off quite a bit here. what level do you think these shares will rebound to if you're right about these china concerns being overblown? >> well, i think if you look at the stock, i mean, as of this morning the stock was down 20% from its recent highs. so to say that concerns over china aren't being priced into the stock, i think you're missing something. the fact is if you look at china and apple there's not much of a correlation between the stock market of china and apple's stock if you look back over the last three years, and apple sales in china versus overall retail sales in china.
4:52 pm
so if you look back over the last few years, retail sales in china, in the last year apple sales in china really picked up year over year since the end of 2014, and while some have attributed that to the wealth effect of the chinese stock market, if that was really the case i think we would have seen overall retail sales in china also pick up, which we didn't see. actually the trend of growth slowed even as apple sales picked up. but i think it's more a function of the fact that the iphone 6 launch was just as well received in china as it was everywhere else in the world and it was a blockbuster. >> jon? >> kelly, a couple things that i think people are forgeting when they think that apple iphone sales in china are closely tied together. one is a data point that we got last week. our josh lipton talked to eddie cue. and eddie cue said not only are app store sales for apple in china up but the average sale, the average person is spending more on the app store in the month of july than they had been
4:53 pm
earlier. if the typical apple customer in china was feeling that much pain you might not see that. also you've got to remember iphone demand in china has led the chinese consumer to do things like come to the u.s. to buy iphones in the past or at least brokers have, go back and sell them in china at ridiculous mark-ups, and yet still apple's share in china has grown. apple is growing its own distribution in china, which will actually lead to probably more people buying iphones in china for less than they could in the past despite what's happening with the currency. and if you see apple do that kind of a launch in china of the iphone concurrently with the u.s. it could be very good for them. >> if jon's points are on and your argument is the shares have been oversold, what level do you think apple should be trading here? >> we've been actually cautious on apple for much of the years because we thought sentiment toward the apple watch was too optimistic and that it wouldn't live up to expectations. and so we've been looking for a level around -- a little under 110, which we got there today.
4:54 pm
we didn't step in and buy it yet and we saw a rebound today. but to jon's point, what we've seen in our surveys of chinese consumers we do for bespoke market intelligence, when you look at factors that go into their buying decisions of smartphones, it's quality, brand, screen size, and fourth on the list is price. so you see this deval in china in the last couple days. maybe it will make the iphone more expensive. but it's down the list of the qualities that chinese consumers are looking at when they intend to make a purchase and their intents to buy going forward in our most recent surveys show that market share of the iphone will eat into android's market share which currently dwarfs the iphone market share in china. >> i hate nothing more than agreeing with two guests on the show, but i'm going to completely agree. i think that apple has the kind of brand that transcends whatever is going on on a micro or macro basis anywhere, and i think that that is something that's going to continue to propel it whether it be here in
4:55 pm
the u.s., whether that be in the europe, whether that be in china. >> well, still the trading activity seems to confound everybody. but we'll see if you're right, guys. we'll leave it here. paul, thank you so much for joining us. paul hickey with bespoke investments. much more on today's sell-off. the comeback. and what may happen tomorrow. we're back in two. but it is not the device that is mobile, it is you. real madrid have about 450 million fans. we're trying to give them all the feeling of being at the stadium. the microsoft cloud gives us the scalability to communicate exactly the content that people want to see. it will help people connect to their passion of living real madrid.
4:56 pm
4:57 pm
4:58 pm
welcome back. stocks staging a dramatic comeback today. we've had some earnings after hours too. what should investors expect tomorrow? let's pick up with our earnings first. here's a look at cisco up almost 4% and news corp. up 4% as well. jon, what do you make? is there going to be a read-through from that that helps bolster confidence? >> on cisco's results in particular is there going to be a read-through on enterprise spending to other enterprise names the likes of ibm, hp? some of those have been beaten down quite a bit. also apple it rallied quite a bit today from a low point. will that have an influence on the nasdaq 100 tomorrow? >> carol, what are you watching? >> i think we have to be looking overseas. i know with keep getting people who say just missed china. i don't think we can. a couple hours from now we'll find out what happens. i think we need to keep an eye on this not just here in the short term but also the long term. >> what do you do with investments in the meantime? i know this isn't exactly in the wheelhouse, but broadly speaking
4:59 pm
we've had bond yields that have fallen,'s the dollar which -- people are looking for a total in this market and -- >> i think you keep your powder dry here. you've got a fed decision that's coming up in september. i don't see any reason why now all of a sudden you have to go jumping into the market. some of the people may argue that oh, now certain stocks are cheaper. if there's one in particular you've been watching you go for it. but from a macro strategy in something that we contend with our own personal portfolio i think it's time to keep powder dry and do nothing. >> fair point. jon? >> america's stroj, kelly. cisco, america's revenue up 7% while europe and asia were flat. you think about that and the place we've been in the past counting on the emerging markets for growth, koungtd on other things for growth. the dollar's too strong. there is a silver lining here. >> look at something like macy's. that's an american consumer story -- >> they're blaming that on chinese consumers. >> go have a shake shack and forget about it. >> thank you so much for joining me. people will continue to try to
5:00 pm
figure out what the whole global story is. but carol roth, jon fortt, that does it for us on "closing bell." "fast money" coming up in just a few moments. what are you guys watching? >> kyle bass the hedge fund manager is taking on one biotech in particular. we will name names in our weekly segment "stock therapy" with ms. meg tirrell. >> here we go again. over to you guys. >> thanks, kelly. "fast money" starts right now. live from the nasdaq marketsite overlooking new york city's times square i'm melissa lee. our traders on the desk are tim seymour, dan nathan, brian kelly, and guy adami. tonight on "fast" the man who called the dollar rally is back and this time he's got a much scarier prediction that could send stocks into freefall. we'll tell you what that is. alibaba hitting an all-time low and dragging yahoo! down with it. is there any reason left to own yahoo!? a top analyst with a bold call will be here. but first to the market reversal we saw today. the dow down a whopping 277 points at its low only toned the day in positive territory. beth the s&p and nasdaq staging key reversals as well. so tonight the question is simple. is the selling ov

85 Views

info Stream Only

Uploaded by TV Archive on