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tv   Squawk on the Street  CNBC  August 31, 2015 9:00am-11:01am EDT

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miley cyrus and her dead pets. shares of down. there are some self-absorbed individuals in the music business, aren't there? is he me? >> just a couple. >> all right. make sure you join us tomorrow. "squawk on the street" is next. ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange. david faber is off today. we put the month of august to p bed. busy week ahead including the jobs number on friday. oil is giving back some of the massive gains from friday. in our road map, twitter gets an upgrade from sun tres bob peck. warn buffett takes a
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$4.5 billion stake in phillips 66. we'll get to all of it and a lot more. futures are falling as we ring the last opening bell to the month. the bells are saying good rid kans to august. the nasdaq down -- it's the worst month since may of 2012. we'll see whether or not we finally get the weeks we're used to having in august which are not nearly as exciting as last week. >> the market is very thin. people making a lot of big moves in a market that is not that stable, but i would point out that we have to get used to this. last night the futures were down 25. there was nothing going on. china wasn't that bad. stanley fischer, i felt was consistent with friday. it was a speech about inflation. and what i really want to point out is that we are down a lot on a lot of stocks. if you revisit last tuesday, almost everything is down. we have to start recognizing the market is pricing in whatever the fed does even though you may
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hear that only 40% say the fed is going to hike. there's way too many stocks down big. i think we have to start realizing that is this a bull market? it's not clear to me. >> example. you talked about disney being a pivot point. it is the worst component of the month for the dow. >> but it's up 8%. it's one of the better ones. i was going through mid cap. 24 ha 240 stocks are in bear market territory. that's a lot of stocks. i think we all kind of look at certain stocks and say they're okay. dow jones industrial average, at 2.5 yield. the carnage has been incredible, and we keep acting as if -- wait until you see what happens. i take a look at the charts and think, i cannot believe what has happened. particularly if you go back to tuesday's low where you just have wiped out months and months -- years of gains.
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we have so tart recognizing we're in a very bad narcotimark. let's stop talking about who knows what will happen. a lot has happened in august to wreck a lot of stocks? . >> as far as fisher go, his line is he most likely need to proceed cautiously in monetary policy. he wants to do this. he wants -- even if it's a one and done. do you agree? >> i took a break from my tomatoes this weekend to read the speech. he's trying to be pragmatic. there are a lot of people who look at what he says and think he wants to tighten. i think he said unless things do crazy, we have to go back to normal. and things might go crazy. that means, i pick up the financial times. i left on friday saying they're not going to prop stocks up. then i psi see china did. they're nutty, and can china spill over? everybody knows it can. in november of 2011, italy,
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spain, portugal, ireland and greece were all going to default, and we went down 19%. if you look at last tuesday, we were down almost that much when most of the stocks fell. oil had a remarkable recovery which kept those stocks from all being down 40% or 50%. peek the trough. if you want to see real, you have a lot of stocks down peak to trough. particularly oil stocks. it doesn't make me happy. it does say be careful when you see who knows what can happen. a lot has happened. >> your point is we've already chopped a lot of wood? >> yes. exactly. but we keep acting as if, look out what will happen. have you seen what's happened? look at steel stock and industrial stock. anything having to do is oil is not a bear market.
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that is the worst market i've seen in any stocks that i can recall. biotechs. there are a couple up good, but there's biotech corners like you couldn't believe. some medicines company has early stage medicine. it will take down even the remaining stock doing well in that group. the destruction has been just defying all comment of a bull market. >> i hear you saying this in a bullish light. >> exactly. if we see tuesday again, after monday, not talking about monday's open. that was a flash crash. if we see tuesday's decline again, there will be people who come out of the wood work to buy stocks because they recognize tuesday's decline represented the fed hiking. you can't keep fearing the fed hiking when you saw what happens when you're pretty convinced they're going to hike. of course, the market rallied
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off of dudley being pragmatic. a lot -- when i looked at the charts, i saw netflix. >> that's a good example. how about twitter in being upgraded at sun trust. the risk reward value appears compelling given the slide in the stock. a series of catalysts coming soon, including clarification surrounding the management. he moved this name a lot the last time we went to a buy. >> look at this. stocks down from 7. this is what i mean. i'm not a big fan of twitter, but i am a big fan of peck. stock is down to the low twenties, 21. at 21, you know there's companies that want to look at this thing. the report itself is typical bob
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peck. it's perfect. it talks about valuation, financial growth, monetization. i like it. i've been very negative on twitter. if the market gets clobbered again, look at it. only because you have an analyst who's been right at every turn. very rare you have someone that good. >> he did forecast an announcement last week which did not come to pass. >> well, okay. he's better than most. >> yes. >> he's like sam brad ford, he's like a good quarterback. what i'm looking at when i read is piece which is thorough is okay, look. this is the microkoz m of what i see in the stock market. all hope is gone. when it's gone, you get a guy saying there's hope. i thought it was very good research. 70 down to 21, he gets interested. he had been saying if it got to the low 20s, people will be
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interested. i love bob. i've always been saying i think it's a value, but i don't know where. i think he's saying it's a value right here. he's using a target of 38. i'm when he downgraded it. i saw him come on the show and say wow, it's bad, and it was bad. this is an example of what i'm talking about. it got really bad. now you come in and say the risk is derisked. i saw an intel upgrade today. i looked and said wow, it's down 20, a huge amount for the year. and it's got a good yield. is that risky? but you hear people come on there. people this morning, they're like, we're headed into a very dangerous time. look at this twitter piece. we've been through danger. this is like when they come out of the forest of the yellow brick road. not going in. >> 27 is a far cry from 75. that's for sure. >> people have to look at the reports rather than say peck likes it on a takeover basis. there's monetization.
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it is a better site. when you go to twitter, it's more exciting. when they do more cure rating, it will be more exciting. >> then there's buffett, a $4.5 million stake in phillips 66. they shed nearly two-thirds of their share in february of last year as part of a deal to buy a chemicals business. what does this say? >> there's two stream of fuel in this country, natural gas and oil. and then oil is everywhere and plenty to refine. when you see the discounts you're getting on balken and eagle ford, the junk that comes from canada, you call it that yourself, you realize the refining margins have held up better than expected. but this is very funny. remember, this was split off. all these oil companies, many of them split off the refining. and one of the reasons why exxon
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hangs in is it has refining and chemicals. he owns a lot of pipelines. he's levered to the industry. i think this is a cheap stock given the fact that we're going to be lower longer. that's the real phrase. lower longer. >> even after friday. did the move to 45 surprise you? >> i think a lot of people are caught short. it's been a great bet to be short and stay short. there was nothing -- those of us looking for something to happen over the weekend with the saudis to justify the move did not get it. now we come back to earth. i think oil, we may have seen some sort of price that buyers will come in again tuesday, like tuesday's low, but at the same time, i mean, there's absolutely nothing encouraging fundamentally about oils. that's why you would buy phillips. they get to buy from wherever they want. they can take saudi oil or balken oil. you see the posted price of oil. no one is getting that in the
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major oil field, especially if you have to ship by train. >> we'll watch that one closely and keep our eye on crude today just above 4 4. when you feel like crying, it's time to start buying. that's one one analyst is saying about two stocks. we'll take a look at the premarket as we said, we're on pace. august will be the worst month since may of 2012. s&p down 6.7% from the intraday high. more "squawk on the street" in a minute.
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futures are down ahead of a very big week. three big events this week. china pmis, tomorrow, the ecb press conference tomorrow and jobs numbers on friday. a bunch of interesting economics used to see q 3. >> there will be a discussion about what fischer, dudley, lockhart said. that's what people do now. i have data point sifted through on whether to normalize policy.
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china, right now i don't know the number. >> their gdp? >> yeah. it's worse than expected. what bothers me about the people who make the forecasts, why not take it down to where it is before 5. who keeps forecasting so high. it's remarkable to constantly e predict that a team is going to win and they don't. china down 7%. no buying of stocks. i gave you tomorrow's paper. go have fun with it. >> imf sees high 6s. >> when why is christine lagarde saying we shouldn't tighten. there's inconsistencies every there. stanley fischer says move. he's very close to the imf, but i'm saying in every -- the labor department report i think is going to be better than expected unless the oil layoffs were really big. i don't think so. china, every number is worse
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than expected. when you come in hang dog -- i'm going to do it. wow, carl, that was a bad number in china. market is down 8% and we're almost at 2200. there. can you imagine? that's priceless. you can act accordingly. i did it. there. >> you did. morgan stanley going from hold to buy. after falling 15% in the pullback. when you feel like cry, it's time to start buying. people are trying to figure out if we get a hike and that's it and the curve goes flat, how much do banks outperform, if at all? >> not at all. look, i think my travel trust owns morgan stanley. i'm more inclined to buy some down 12%. goldman is down 3%. these are inexpensive franchi
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franchises. morgan stanley is a good example. they're in their own personal bear market. glen short, i've known him for years. the stock is down big. morgan stanley has a traditional brokerage business. no exposure to things i'm concerned about, and the stock is in a bear makt. could it go to 31? perhaps. is it expensive. doesn't have any regulatory issues. morgan stanley encapsulates the market. it's down peak to trough, down double digit for the year and it's beat the number. that's all it's done. so if the fed tightens and the yield curve goes bad, then this stock is going to go to 33. it could go down. i just got the china numbers. it's going to be down. i'm tired to the game. like at morgan stanley and twitter and bob peck. these are seasoned good
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analysts. they're saying guys, wake up. these stocks have crashed. we don't use the term crashed because it's ugly. >> i don't hear you saying it's time to buy them. >> i was going over from my travel trust with morgan stanley should be bought. i'm gun shy. that's not down and out. i'm saying i'm tempering my enthusiasm. i think one day we get a tuesday. >> you do? >> i do. i say that because there's no reason why our futures are down really. why are we down worse than herb else? at one point we were down more than china and europe. stanley fischer gave a speech that was interpreted as being negative. i come back and say no kidding. the market is bad. even the stocks that had big moves, best buy, fabulous quarter. stock is not up. there was a jcpenny upgrade nature that makes sense.
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their quarter was excellent. ulta is on my show tonight. great double digit growth, and the stock still goes down, that's bear market. a couple of bull markets going on. very small. some in housing. that's showing a lot of chase. some in what i regard as being amid cure illness biotechs and then i come back to netflix. netflix. >> that's how you're going to end every segment today. >> netflix is not in china. those numbers last night -- i'm sorry. it's monday. >> we're get cramer's mad dash and take a look at the futures which, as jim said, are down sharply after jackson hole. more "squawk on the street" straight ahead. you are looking at two airplane fuel gauges.
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the volatility clearly continuing into the new week, and into the month of september. we're down triple digits on the dow futures after friday's incredible gains. now about 8 minutes before the opening bell, let's get cramer's mad dash. we have upgrades and downgrades today. >> yes. i think this is emblemmatic of where we are. the price target was cut on united tech. this stock right here is reflecting a lot of positives. right here, this stock was in the mid 80s last week. i guess they must think it's going to go down there again. they have a big business in china. but is this stock down enough to start making people feel it's interesting on a breakup or it's
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interesting on a buyback. the answer is probably in the mid 80s. downgrade it to hold. i hope you can upgrade it to buy at 83 or 84. you want to buy that stock and put it away. maybe not for the next since months but you don't know when the bottom is going to come. you want to look at this stock in the low 80s. >> barclays takes it from wait to buy. >> i think at a certain point it's great american industrials. they're going down. there's not a lot to it. >> and then research on planet fitness. >> this is a cash machine. all the analysts love it. we haven't had a lot of ipos. and planet fitness, you have a great american company that no one wants, but they love a gym. lifetime fitness was a company that got bought high. this is more expensive than that. they have good cash flow.
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is this the kind of blue chip i think people should buy? no. it's neither blew chip or worth buying into. but time marchs on. >> why haven't we seen more pulled ipos in this environment? >> not a lot of deals. the gluten is palpable. i don't know a person who feels like we are even near anything. we're in no man's land. a lot of stocks have traveled through no man's land, and if you took a warren buffett approach, he buys psx, what he's doing is he's saying oil lower longer, kind of interesting. do you buy delta down 10% knowing people have not stopped traveling? i don't know. the airlines have been crushed. the truckers have been crushed. the average railroad i follow is down 26%. that's not a top down 25/26.
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>> you're watching "squawk on the street" live from the financial capital of the world. we'll getting the opening bell in a couple of minutes. we'll say good-bye to august and move onto september. on a busy week, we mentioned the jobs number on friday, august sales, ism, people are looking at the futures. people are looking at the vix futures and arcing that they refuse to sell off which means we've either got more to go on the downside or we're going to sell volatility. >> a lot of people came with vix analysis. we did a piece on it. it was off the charts and negative, and then the market had one of the greatest rallies
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ever. the break down on monday where you go over the charts. it shows you the fragility of the situation. using anything other than the short-term oscillator from the s&p, which is as low as the 2011 period. none of the indicators are working well. the market broke. a lot of firms, there were five firms frozen. monday is, because of the general malaise, people accept the fact that the machines broke on monday. it's like okay, they broke, and that's all part and parcel of big bear market behavior. a classic bear market. people think everything is bad. >> last week we talked about the tv cameras outside the exchange. this morning it's the new yorker cover which is a giant stock chart with a mouse hanging from the line that's going down. >> it's a bear market. we had a couple stocks that hold
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in there but even the ones that are holding in are all in down trends. i'm just saying be careful about getting too negative. they got there for you. >> there's the opening bell and a look at the s&p at the bottom of your screen. the big board is deutsche celebrating the golf championship, and at the nasdaq, citi year. a national education group and microsoft ringing the opening bell over there. >> microsoft down 5% of of interest in no. intel down 25%. of interest? no. it's what happens at the beaches. wow, i'm thinking about speinte no. i'm not saying go buy. i'm saying if you're just now thinking i can't take it anymore, i want to unload stocks. others have had that idea ahead of you. >> you're either saying we're overshooting on sentiment to the downside, or we're reaching --
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catching up to the stocks have caught up to the cause now. >> these are accurate. the stocks are catching up to the news but people are more gloomy than the news. it's almost like people presume the moment that the fed hikes, every currency falls apart and we're back in the soup and stocks are going to go to 13 times earnings and the yield curve is going to collapse. there's a lot of stocks that reflect that. carl icahn is buying free port, it was like the stock was in the 40s not that long ago. it's a ten. we can come in and fix it up. probably, i don't want to buy it because i am bearish on materials and commodities. when i see so many stocks down, and people say this market is about to get dangerous, i say please look at the stocks that are down before you jump to that
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conclusion. there's a lot of negativity, and i don't think things are, if you go back to tuesday, i think you saw the future, the ghost of labor day future, and it was bad, and we can visit it again, but when we got there, it was so swift that you had to buy at that ugly moment. remember how much it was up the next day and then it held. most of the fed governors and presidents are pragmatic, but the ones who have intended to come on tv are not pragmatic. that's why dudley was so shocking in his clarity of hey, listen, if it's bad, we're not going to do something. if it's good, we will. to me that's horse sense. i like it. it makes sense. >> whpeople are looking at the x going from 14 to 27. pull retail sentiment indicators, those are classic shopping list moments. you're not here preaching bmi
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today. >> they're down badly. and i'm looking at bristol meyers and thinking what did they do. the answer is nothing. beat on the bottom and top line. doesn't have a great yield. is far from its low, but i just think that's kind of interesting. bristol meyers is interesting. >> merck fell to 53 at one point. a gm situation developing. j&j hit 90 at one point. that's down. that's classic bear market behavior. would it go to 83? it went there. i find a lot of stocks are getting interesting from the point of view if we got the tuesday low again, you know what, if you're going to stay negative after the tuesday low, you must know something that's far worse than stocks. >> yes. pay pal is up today, jim. not a lot. there's a few stocks at 1% move.
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trust owns that. it's been not good. >> phillips 66 the leader today. >> warren buffett taking the view that something positive can happen on the earnings. the retine finery stocks have sd falling. i think they're falling as part of the malaise. it is a malaise. there are people who think i want to get out of everything and then get in in september when things look bad. i'm saying stay the course. i'm saying there are a lot of stocks down and pick your spots. hope for tuesday and then get ready. >> we mentioned the ever core on some of the investment banks. bank of america, warning about combining the chairman and ceo roles. is your take any different? >> bank of america is inexpensive. it's still not back to where it was in 2011. i saw that. i care about earnings.
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the earnings there are -- i care about distributions. i think the company is no longer in the cross hairs of the government. obviously with the yield curve for better and rates were at 3% on the ten, they'd be doing better. but my trust owns bank of america because it's inexpensive. owning something because it's inexpensive has been a sucker play. schlumberger jumps up to 70s -- it's been a terrible reason to buy. one day it will be a good reason. year over year we'll start doing better. if the dollar stays here, you won't have to cut numbers. all the major financials are down with the exception of the mastercard, visa, equifax, and these little stocks around the edges that do processing, global payments, but a lot of stocks are down in that area, and no one wants to touch them. you know, i think there's probably some buys there.
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jpmorgan is not that expensive. if they catch a break, you'll want to buy it down 10%. i know i'm not alone. >> that flash crash took it to 50. an outlier anomaly. >> that ruined a lot of the charts. a lot of the charts are no longer coherent. we say so much for those. i think there are some real trouble spots around the global. brazil is a real trouble spot. brazil is china at large. the whole country was built on the proposition that they will have a market to sell their goods. but i think brazil and china is not equal to the pigs, portugal, ireland, italy, greece, spain is bigger. their bond markets are bigger. brazil -- when i got in the business in the 80s, brazil rolled over. you had to do a treasure secretary intervention to save
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big banks. there are a lot of things run with brazil. i don't think they can take us down. but i think the possibilities every day i come in are worse. and take down latin america and there's a lot of cars sold. that's one of the reasons the auto stocks are in a bear market. the auto parts stocks, not the auto where you go on riley and amazons but the companies with parts. they're all down 20%. down 20% means don't start thinking holy cow, what happens to these in it happened. it can go down another 5%. >> one pick point on the jobs number friday. we mentioned deutsche ringing the bell. they saw august tends to miss more often than other months so they're sticking with 170. what happens if we do get a miss on friday? >> well, then i think that the pragmatic part of the fed would say we can wait. probably get a rally. i think if we get over 250,000, i think we take fisher's
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comments and lock them in with others and you want the market to be downgoing into the number. it's already down a lot. i'm using tuesday. i keep looking at stocks on tuesday and say that may d discount china. we're not brazil, and our banks are strong. i remember when bank of boston -- ages and ages. when bank of boston, which i thought was a small regional bank, had brazilian exposure. you're not going to find that citi has brazilian exposure. our banks which are the fundament of our credit system are not going to freeze on brazil. people want to find things in the closet. that's one of the reasons why united technology is down so low. it's one of the reasons why when i look at the dow -- a lot of people say it's down. look at the s&p.
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2.1 dividend. can it go to 15 times? it can. get ready. if it doesn't happen, well, okay. >> you mention utx, that is the worst performing dow component. we're down 127. let's get to bob on the floor. >>. >> reporter: very week open. 4 to 1 advancing to declining stocks. stanley fischer's comments on the weekend, fairly or not are being perceived as hawkish. japan's industrial production was weaker than expected. china's manufacturing pmi number is out tonight. there is some concern it could be weaker than expected. and crude oil was down as much as 2 % before the open. it's rallied a little bit but still on the downside nature that's weighing on the markets. let's look at shanghai and shenzhen at the downside. the government, there are reports the government says they're not intervening in the
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markets. we'll see about that. obviously a lot of skepticism. euro is weak. inflation came in slightly above expectation. most of europe is down about 1%. here in the united states, we're being led down by energy stocks but materials and technology are also on the weak side, big tril industrials also generally down about 1% as well. there were plenty of bears out there. i have my e-mail clogged with them all throughout the weekend. the main argument of the bear, this is the dow for the last week, is that you do not get v-shaped rallies like we saw here often. usually you get retests of the lows. the low was back early last week. most people feel there will be a retest. a lot of shorts covered after thursday's huge 2% move in the s&p 500. blew a lot of shorts out of the water. there's less buying power in the
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street. the other big problem is the earnings situation. it's dismal. the first half was dismal. we were down a little bit and we were supposed to improve in the request q 3 and 4. that's not happening. the numbers were down 4 .1%. instead of improving, it's getting worst. there's a couple of reasons why we're getting worse. we're continuing to see the stunning decline in energy. we're expecting a 61% decline in energy earnings for q 3. that's worse than it was in q 2. there's nothing happening there that's good in any way. industrials are also slipping because the big global industrial names that we talk about all the times, the general electrics of the world, the utxs of the world continue to have trouble on the slower growth profile. the numbers on financials are high. analysts have it pegged that rising interest rates are l make
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it easier to make money for the banks. that scenario is not playing out. these financial estimates are a bit on the high side and are going to have to come down in the coming weeks. the one area we thought would be spectacular, financials, they're not taking the numbers down yet but they're probably under pressure. thursday s&p, down 5.8%. this is the worst showing since the end of 2011. fairly quiet open in terms of volume. dow down 150 points. >> thank you, bob. let's get to rick santelli. >> reporter: hi, carl. i'll tell you what. it's a fascinating day on a number of levels. look at a two-day chart of tens. we're trading around the 216 area. that happens to be unchanged. if you look at a year to date chart, we've done work above, below that level. there's a lot of work.
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we're spending time on change. look at a year to date of tens minus twos. hovering around 143. there's another unique aspect. last year we settled two years at 266. we settled tens at 216. the spread sun changed at 150. there's a lot of flattening going on today with the ten-year down about 4 basis points, virtually unchanged on 2s. you get the point. we have the extremes. tens and twos unchanged. fives and 30s are a different animal but that spread probably is your best way to handicap about everything. everything should be unchanged according to fixed income markets. the bubd yields, most of the volatility held. hovering in the low 70s. not a super volatile trade right now. and maybe the most important thing to watch as we get into nonfarm and the final numbers before we ultimately get into
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the september meeting which is only a couple weeks ago. the dollar index. i was looking at this chart also starting on may first. it doesn't look too hot or too cold. the dollar argument doesn't seem to be giving you a big heads up which makes sense. probably the fed hasn't made up their mind yet. back to you. >> rick, thank you very much. we're watching oil down more than a dollar today. jackie is with us. >> reporter: good morning. that's right. oil prices are taking a breather after a more than 24 % rally last week which was toward the end of the week. we're seeing wti trade around the $44 market. session low was $43.88, and brent under $50. the general consensus is we're seeing the futures expiration for the products, the r bob gasoline this afternoon. that probably caused the short selling. right now everybody is just taking a break, trying to digest
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everything. a bank holiday in london. that's probably taking volume off the table. at this point we probably are going lower, that $37.75 level we tested was probably a test. likely to go back to the 3 handle. back to you. >> thank you very much. we're getting breaking news on midwest manufacturing. back to santelli for that. rick. >> reporter: oh, my goodness. you talk about being spot on. you know that little red dot? that's where the number was. 5 4.5 is what we were looking for. 54.4 is what we ended up with. being august, this is the eighth chicago of the year, and four out of eight are below 50. how does the 54.4 stack up in the high for the year was january at 54.4. the low followed in february at 45.8. four out of eight are above. four out of eight are below.
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green. we made our way through the pmi, we'll get auto sales tomorrow. the people who want to be bullish argue the u.s. data would be supportive to their case through the course of the week. >> yeah. look, i think things are not that bad. it's funny. europe is down a little bit less than what we're down. but the main thing that matters for europe today is that the
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dollar is weaker and the euro is stronger. h they added a stronger inflation number. the set up is better for us than them. that's one of the signs in a bull market along with the combining anthems and humanas w the fact that it's the only stock up which is point that i'm trying to get across. we have bull markets in housing. nothing has changed. bull markets in the auto repair stores. a bull market netflix, wand we have bear markets everywhere else. seeing a lot of people saying this is when you really have to worry about a general electric, and i come back and say why? why? why do i want right now to get worried about general electric in something happen? yes, things are levered to oil
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in china, and that's why i think the stock has come down. to me, you say i hope general electric goes to 22 so i can buy it and just bet that things will get better. and if it doesn't, it will go to 20 and i'll buy more. that is not what people talk about. that's not buying the dip. i'm saying buy the correction, not the dip. the dip is not working. a lot of people are buying the dip. what has that done for you in the oils or the airlines or the techs? nothing. so the buy the dip is off the table. >> people were conditioned to believe it worked. five down, time to buy. 90% down, time to buy. >> we're not done yet, but can we stop thinking it's about to begin. stanley fischer, total panic. he said things are pretty good but if things are crazy we won't. that makes sense to me. that's like a coach who says their defense is good so maybe we ought to go a little more run
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than pass. what, are they crazy? no. and by the way, i saw a preview of china on thursday. it's worse than i thought. >> we'll get to stop trading with jim in a moment.
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some video of the new england patriot's quarterback, tom brady arriving a few moments ago at a courthouse for a deflate gate hearing today. we'll monitor that and bring you any headlines, the district judge requiring them both to be present in this one. this is the third time that brady has had to miss a practice in order to attend. >> this is never ending. people are focusing on the game against the cowboys. jcpenny, deutsche bank goes hold to buy. it was a good conference call. macy's is only up 10. kohl's is down ten. walmart, i got a pair for walmart to be down big. it's down 25%. but jcpenny was a good story. it was ignored because everyone is gloomy.
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tj max is back. the gloom is palpable. it's almost as many gasoline is up. it's the opposite. lowes is down for the year. they're doing so well. my theme this week, today, is that last week we saw on tuesday what was really a horrendous bear market, and we could revisit that level, but understand we had a three-day bear market that was just as bad as any bear market i've ever seen. if we retest there, you'd better have stocks that you like, because as bad as you think it is and brazil and malaysia and china and korea, it's not the united states, and it's not our banks. it's not a credit event. it's not systemic risk to us. when we get to where we were tuesday, which everyone thinks we are, buy them. boy, did you make a lot of money. >> in a matter of hours. what's tonight? >> ulta tonight, the single best
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retail number i saw, and then charie, souki. l&g. and he was a visionary and said oil was going to go down dramatically but natural gas would retain its strength. that's what's happened. he has a good handle on what's going on. he's been clear-headed and right. >> i'm glad you're here this week. >> glad you're with me. everyone has a right to be as gloomy as possible, but in the end, i was making my tomato sauce. it felt good. i wasn't thinking about walmart. just focussed on making it so it has good meat sauce. >> we'll see you tonight. when we come back, phillip 66 a winner in buffett's stake. do we follow his lead? ♪ no student's ever been the king of the campus on day one.
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>> good monday morning. welcome to "squawk on the street" "squawk on the street." i'm carl quintanilla with sara eisen and simon hobbs. volatility continues as we say good-bye to august and head into september tomorrow with some big events on tap for the week including china pmis. buckle up. >> let's get to the road map. warren buffett taking a stake in phillips 66. should you be following the lead? >> another big move in oil today. down more than 2%. we'll try to get a read on where it goes from here. >> and consumer discretion nar. >> the market is in the red today. the dow on pace for the worst month since may of 2010. joining us now for mar on the markets is jeff, a ceo.
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we retrace half of the losses on the six-day plunge and then we head back down today. what do you think? >> once you start with the volatilities, it's not going to end overnight. we can go through a period of time, when macrois events are more prevalent in terms of market swings. we can continue to see the market swings through september. >> i guess a lot of people reading jackson hole over the weekend, particularly fischer, would assume that they need to be persuaded out of a market rate hike. is that market negative? >> let's talk about what the fed should do versus -- i think they're not going to raise. i think they have a lot of reasons not to raise. we're in a very significant global deflation move. and there's no reason for them to move today. right now they've got a lot of
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cover from what's happening in china. they have a lot of cover in what's happening with europe -- >> they sound as if their credibility is on the line. >> i think what they've said consistently is it's going to happen this year. if they don't do it in september -- >> it's data dependent with a calendar? >> right. if, one, if they don't do it in september, you know it's happening in december. we're going to know for sure, i think, i think we'll know for sure before the end of the year exactly how things are going to shake out. they've been saying it's not the first move. it's the trajectory and where they're going to stop. i mean we're in a longer term lower rate environment than anybody is used to. >> your head trader last week on this show said the market would rally when they raise the interest rates because it would lift the uncertainty. >> i think that's what they should do. i think they should raise rates and get it out of the way. there's a fear index.
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people fear what they amendment, and once it happens it's over. if i were sitting in a room c i would say the u.s. economy is doing okay. the basis points are not significant relative to the overall impact in the economy. global economy, you could get away with 25 bay si ssis points. having said that, i still think the volatility here is going to weigh in. >> what about the dynamic of the afternoon trade. yesterday at certain points it was horrific on the high volume moves down we had. what is your reading on that. is that etf redemptions? what is happening and what might the response be today to people over the weekend who may have assessed there's a september rate hike back on the cards. would you expect a softer close today? >> it's hard to say about a given day. i will say the market dynamic is such that almost 50% of all u.s.
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investors come in. they watch what happens all day. they might be selling etfs, and at the end of the day they have to do market on close orders to rebalance as well as other products. you get a massive crush of people needing to do one side of the trade right at the end of the day. i actually feel like that doesn't tell us anything other than there's people who have to rebalance at the end of the day. i think as a result, i would caution people to take a longer-term view. the fact that stocks ended up higher last week is net of positive. >> what if you're in an etf? how much is the little guy getting hurt in this problem in the structure? >> i think people forget they are derivative and structured products. they've been a great innovation for the markets but they're still structured products. when you see the big moves and you see investors reacting quickly, the underlying stocks may not necessarily be moving as quickly. so market makers, people
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creating and redeeming etfs, have to take into account that risk at that moment. they're back bidding sellers in. that's how you can have a dow down 10 1,000 on the ohm last week. >> do you begrudge carl icahn for trying to save? >> i'm a big believer in active management. i've been saying all along we need to do things to help active managers. i think this year is the year in which you will see there will be active managers who outperformance indices. there will be investors who were smart about picking stocks who are going to outperform. that's exactly what needs to happen. we need to get back to the balance of picking individual stocks. >> i read you were selling out of some of your own stock at the beginning of the month. i don't know if that sells us anything at all about what you think the direction of the market will be.
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what do you think? >> when i sell stock, it's generally because i have a window and i'm doing tax planning. >> and you have a lot. >> i could always use more of it. >> but where do you think we'll be by the end of the year? >> i think we'll trade here for a while. i don't see a catalyst to be higher or lower. i think we can trade around in a range. i think it can be volatile for the next couple of months but what i'm seeing from investors is on individual stock pullbacks, people have their shopping lists out and they're buying the names that will benefit from longer term moves in the u.s. economy. >> are we still in a bull market? >> that's a tough one. i think we have a long way to go in terms of u.s. growth. if you're looking out, i know you don't like me to do that, but if you look at the next five years and say where should i put my money? u.s. growth. it's the most consistent market in terms of globally. so people are looking at china.
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we don't even know what's going on in china. there's so much unknown there if you're an investor. why are you spending your time there? even though it's the world's second largest economy. i look at oil, natural gas, all great for the u.s. economy. so why is consumer discretionary up? it's good for the u.s. economy. i'm trying to figure out how to bring investments to the u.s. >> good to see you. have a great week. >> thank you. >> when we come back, warren buffett taking a $4.5 billion stake in phillips 66. is he bargain hunts and should you follow his lead? you can't always see them. but it's our job to find them. the answers. the solutions. the innovations. all waiting to help us build something better. something more amazing. a safer, cleaner, brighter future.
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warren buffett's berkshire hathaway bargain hunting and should you? let's welcome jeff matthews. he's written a number of books on warren buffett. also was a shareholder and is no longer. thanks for calling in. >> hi, sara. >> is this a way to play the cheaper oil prices or consistent with him increasing his exposure to the u.s. energy boom. >> he lowered his exposure a
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while ago. i'm not sure what this means except he's moving money around and he thinks the refining side of the business is probably a better bet because there's going to be a lot of oil around for a long time. >> refining has been a better bet with low oil prices. some of the competitors, some of the others are up significantly more than phillips 6 6. berkshire and buffett have a history with this company, correct? >> they do. they've been involved for a while. they did an asset swap. he's very familiar with it, and he's adding to his position. does this mean people should run in and buy? i don't think so. he just sold a couple other positions in the old field, and should you have run out and sold those when he was selling? i don't know. i don't think this is terribly meaningful. >> why did you recently sell your berkshire shares? >> actually. it was the precision cast parts
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deal. i think the berkshire hathaway story changed from a business that bought companies cheap or at great prices to a company that's buying public companies at high premiums at the peak of the market, and i don't know where the added value is of that, so it started to make me nervous. i hadn't been nervous with berkshire hathaway since i owned it, so i ztszed decided to part. >> you mentioned he sold out of kpan and coca-cola. none of them have seen seller returns. >> he didn't sell out of coca-cola. >> but it hasn't been a big boom in terms of shares. >> you're right. there are some cracks in the motes. he likes to buy businesses with motes. ibm has lost their mote. that's a big problem for berkshire. it's public.
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he defends it every time he's on cnbc, but in reality, that's a real clunker, in my view, and walmart is under attack from amazon and doesn't seem to have any good answers. and coca-cola is on the wrong side of this whole trend toward organic, natural, noncarbonated type of drinks that the millennials want. there's some leaking motes there. >> yeah. back to the point about energy for a moment. i know one of your books focuses on a warren buffett successor. warren buffett turned 85 years old this weekend. obviously this is always on the mind of investors. the head of berkshire hathaway is one of the prospects. it is interesting to see buffett add to his energy holdings. >> although greg probably wasn't involved in this, but he does
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run the utility business, which is a big and growing business, and buffett loves it because he can put a lot of capital to work and earn a very consistent regulated return so long as they keep up to snuff with the regulators. greg is an important guy. i don't think he is the guy. i think aje jane is the guy who would take over if warren were hit by a bus tomorrow. he has the risk management capabilities that i think is the heart of berkshire hathaway. >> jeff, thanks for talking to us today on this new stake that was disclosed in phillip 66 by berkshire hathaway. >> august the worst for the stocks. with the major indices down in august, should you be preparing for more pain in september? we'll talk about play books after the break. t.
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>> seeing some selling in west texas crude. down about 3% today. jackie is watching that. >> reporter: good morning. that's exactly right. the session low was $43.60 now we're under $44 at the moment. after the rally we saw on thursday and friday, very aggressive shore covering and also new entrance into the narcoti market, traders say it isn't unnormal to see a pause. you have a bank holiday in london so some people aren't in the office. crude has been trading in lock step with the products. we have r bob expiration, the futures expire at the end of the day. that's probably dragging crude prices down as well. the lows we saw, $37.75 traders tell me we usually test the lows and go back to them. they're expecting more pressure. we're keeping our eyes on geo
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political issues involving vb, but that appears to be on the back burner. >> joining us this morning, dug terreson. >> good morning. >> let's talk short term. there's some discussion today about the buffett stake being a signal that oil could be lower for longer. >> you're right. it's all about oil and energy. in the near term, the oil market held hostage to global headlines. because these concerns involve oil demand, this is problematic. opec will not lower output. markets have been sloppy. they're probably remain that way, but the intermediate looks better to us.
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>> we can going to be hostage to that until december when the opec meeting happens? >> just remember that opec's policy is working. meaning lower prices led to positive ro visions of oil. we have to have it continue with the decline in supply being as me thod dal as it has been. it will continue to be. we think brent will exceed $60 a barrel. but we could get there. the market is rebalancing. it's happening slowly. >> you mentioned a major wave of consolidation in e and p. why hasn't it happened and when does it really start? >> it's too early. you're right. the bigger picture besides lower oil prices is that there's been a convergence of competitive advantages involving capital and technology. this has led to lower returns
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for big oils in the recent years. this is not the first time the super majors have faced challenging competitive conditions. we expect internal and expersonal actions to be protective. we mean mergers and acquisitions and the next six months will contain judgment days for some of the u.s. companies undercapitali undercapitalized. we do think a major wave of consolidations ahead. so similar to the 1990s. this is important for the oil market too, because as we learned last decade, consolidation leads to a transfer of capital and resources to fewer more disciplined players and more growth in u.s. and nonopec supply. >> so as you look at the industry, and i know you're not necessarily a stock market guy but in an environment where you see warren buffett with his
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purchase today and you're talking about the aoil majors ad then the fracking guy. where do you think the value is moving forward within the landscape. >> we think you should read something into the announcement that warren buffett has a position in phillip 66. valuation in the energy sector, are near decade lows and sentiments as well. for those investors, you're not going to get sentiment and valuation much better than you're getting it today. it's not surprising that some of the deeper value longer-term investors like warren buffett are participating here. >> triple a has the national average gas price at $2.47 heading into labor day weekend. are we going to break below $2? >> i don't know about below $2 but we are headed lower. after labor day demand will
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decline, and in the middle of the month, companies will change their summer grade gasoline out for winter grade. margins have been strong. refiners have done very well this year. we think $2.47 is headed lower. >> doug, appreciate your time. going to be an interesting fall to say the least. >> straight ahead on the program, stocks in the red on the last day of trading of august. we're back after this quick break. pubut to get from theand yoold way to the new,d. you'll need the right it infrastructure.
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here is your news update at this hour. deflate gate continues. roger goodell and tom brady arriving for a status case. a lead into austria was jammed for 12 miles this morning as autaw austrian authorities tightened reigns. zblsh blue bell ice cream is returning to stores. the first delivery truck left from texas. the ice cream will be rolled out in phases. and brian harmon made two holes
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in one in the final round of the barclays champion championship. you see him acing the 14th hole, and then he aced the third hole earlier in the day. it's only the third time a golfer has done it in a single round. he finished the day at 2 under par. what a great story. i was watching that. and that's your cnbc news update this hour. back to "squawk on the street." welcome back to "squawk on the street." let's take a check on markets here. one hour into the trading and the dow is down. s&p down not a full percent. all the big industry groups in the red. energy and utilities getting hid the hardest. here to discuss the crazy market swings, global market strategist and chairman of holland and company.
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you have seen a number of corrections in your history of being an investor. how does this one feel to you? >> every one is different. one reason it's so much fun to be in this business and over the years getting prepared for anything. the surprises are omni present. in june a year ago, things started changing. bernanke put away that yellen was suspect. right now what we have is last week was a black monday. today is a gray monday. >> the message this morning is get used to the wild swings and the pressure. how do you advise clients to do that. to get used to it? >> i think the first thing the clients need to do is recognize the environment we've been in over the past five years has not been normal. i think that what we're doing is
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encouraging clients to focus on single digit returns, double digit volatility and a backdrop of diversification they can use to protect themselves. >> surely you're looking for bargains, mike. >> there are, and there are bargains around the world, and there are risky places to be. in the u.s., look at stocks like exxon mobile has not yielded 4% in 20 years. last monday it yielded -- it's at almost 4 %. google less than 20 times earnings. you saw the re knvenue earnings. you have good stuff going on. >> still like j.p. morgue snn. >> absolutely. best run financial company in the u.s., maybe in the world, and once again, trading at big fat yield in a low multiple. >> you can't talk individual stocks but you can talk about industry groups and sectors. where are you telling people to buy now? >> i would echo what mike said.
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we're focussed on the growth areas. we're looking for the companies that have shown the ability to grow their earnings despite a lackluster environment. a lot of the names are trading at a discount. thinking about things like technology, consumer discretionary, those more cyclical sectors but focusing on the individual companies that have shown the ability to grow top and bottom line. >> if the projection is for single digit returns and double digit volatility, are there in the clients of yours that you might say the stock market isn't worthwhile being in as things stand at the moment? there are other asset classes that might be safer in this environment? i'm echoing what others said. what is your broader view? >> i think the first consideration that needs to be taken into account is the investor's time. if it's five years, you may want to reconsider putting on a position in equityings. that being said, we're trading
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at the long term average valuation for the s&p 500. stocks look cheap relative to bands and the return will be better than the majority of returns coming from debt markets. >> forgive me for challenging the idea that stocks look cheap relative to bonds. isn't that because bonds have been completely manipulated by central banks. it's not a real comparison, is it? >> i would agree. there is some interest rate manipulation going on, but one of the things we identified was that there is a wide discrepancy between valuations and the high yield and valuations in the equity market. a couple of weeks ago i would have agreed and said stocks are looking expensive but when we compare it to their higher corporate bonds, we think they are attractive. i would agree that in the government space you're seeing some significant mispricing from the g 4 banks and now the people's bank of china, but
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generally speaking we view stocks as more attractive than bonds. >> people say market will rally on a rate hike. >> i think it's a great country, both. i think fischer, of all the few grown ups left in washington, he's one i listen to. for him to say he thinks inflation is beginning to see the whites of the eyes of inflation and say the underlying economy is okay, i think i'm listening to him more than any of the other talking heads. we've had this federal open mouth committee for the last several quarters. it's done something. he's someone to pay attention to. if they do september 17th, some people are going to be really rattled by that and you'll probably have another color of a monday. on the other hand, i think if they do it, it will be because, the reasons for it are solid, and people should feel good about it.
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>> i just want to underline what you're saying here. this idea that the market can rally when the fed raises interest rates, just seems contrary to everything that we've experienced over the last however long. that seems -- that would be extraordinary if that happened, almost impossible. a lot of people would look at what happened recently and say china was the headline but the reason it fell out of bed had to do with preparing for rate hikes and then they walk it back and the market rose. >> the market is totally spooked by this initial rise in interest rates which is 25 basis points that they said the going to happen only once, and after that, it's steady as she goes forever, but in history, we've never had this as we talk about which is a single raise or maybe a double rise. and then nothing after that. normally it's been a -- >> it's never been at zero at so
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long. >> you're right. it's average emergency level and we're not at an emergency. i'm listening to him. your comments are correct given the old history but the history right now, 25 basis points can be digested. >> you've been a bull on china for a long time. is shanghai composite is down 12.5 % on the month. are you getting hurt by that taking losses in china and are you buying on that? >> you started out the segment by talking about my markets. i've been through unbelievable corrections in the chinese market, and over the years having lost a lot of money, made more money than i lost. it's a nice way to be. >> in china? >> well, both, actually. but in china right now, once again, it's so simon's 25 basis points, a 4 % devaluation, please. are you kidding me? that's the reason? the reason the market went down the shanghai market went down because it was up 100% from
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november through june. so now it's down 36%. so people have still made money there. the hong kong, by the way, during the same period of time is not so expensive. didn't move so much money. but can still lose money and make money at the same time. >> that's your trade? >> yes. >> and david, thanks for joining us from jpmorgan. >> coming up, three of the biggest banks seeing significant losses in august. one analyst says there's now a huge buying opportunity. "squawk on the street" will be right back. 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.
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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.
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gear up for great. one long time oil bear says the bottom might be in. what made him change his mind? you can catch our live segment in power lunch.
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in the us, three in ten college students drop out. but how can you spot who's at risk? the one who lives far from campus? the one who works the night shift? the one with new responsibilities? one thing can't tell you, but the right combination can. universities are using ibm analytics to understand pressures in and out of the classroom- some expect to cut dropout rates by twenty-five percent. ibm analytics is working to make education smarter every day. >> goldman sachs and morgan stanley getting an upgrade to
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buy to hold this morning. and a separate note on bank of america and the leadership. kayla joins us onset with the details. >> the reason pullback, today it happens to be glen shore of ever core upping. he notes the bullback of act 15% last week during the recent selloff. says they're both trading pretty close to book value. he says goldman will prove to be a key provider. morgan stanley he says will be rewarded for their patience during a multiyear transformation. shareholders will be rewarded with stab earnings. it's not just them getting analyst love. jpmorgan and sun trust last week were upgraded. today it's in the news for
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corporate governance issues. warning shareholders against a yes vote that would consolidate power for the ceo as chairman of the board as well. he received the title last year after a quiet amendment to the company's bylaws. he writes that awarding both titles would be a fousty em bargain. it will make it worse in a hurried vote at a time of increased political sensitivi sensitivities in our view. it could have the effect of putting a larger regulatory target on the industry's back. he then goes onto note the return of equity and return of stock. he highlights the low vote totals, the board's existing board received this spring. one shareholder, ctw which is in the past challenged board
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composition has made public the plan to vote against the proposal. the vote takes place in north carolina. we reached out for comment. they directed us to the proxy proposal that is currently on file. >> the expectation must be that it gets through? i know the big shareholders have pushed for it, but it would be extraordinary if they rejected it? >> i think it's symbolic. a lot of the measures pass, but to have some of your vocal and largest shareholders coming out and talking about the fact that this decision was made without consulting them first when it was shareholders back in 2009 that voted to separate the titled. it is the symbolism of the returns of the fact that they'll have to resubmit the stress test submission f. it's more of a qualitative question than quantitatively what the vote turns out to be.
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>> let's go to chicago to rick santelli. >> reporter: good morning. hey. we had august read on chicago pmi. that means it's the eighth month and it's a split decision. four above 50, and four below 50. and alice is always at 100 in my book. >> what we're seeing this month is really just what we saw last month. we saw a little bit of expansion in the barometer. it's down a little bit. and let's talk about new orders. they're expanding at a nice clip. a little bit slower than last month. we expected that. same thing on production. down a little bit but expanding at a nice clip. >> close to 60. it gets fascinating. >> the production is moving along because of the big inventory build. >> let's go out of order. back order, inventory. inventory into the 60s. those two together make this one-year-old. order back log, seven in a row
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under 50. >> this is your gauge of future demand. seven months in a row below 50. that means there's nothing in the pike. these big orders are missing. i'm hearing from purchasers on the new orders, we're trying to produce as much as we can and get it out the door. but what you really want are the big orders and they're lacking. because of that -- >> it's friday. jobs friday. >> that's right. >> we'll be looking at employment. what do you see? >> again, employment in contraction. this is the fifth time this year we're in contraction. this is no good. this is a direct reflection of not having anything in the pike to line lean on. we had a special question. >> tell our audience. >> it was do you plan on expanding your work force in the next three months. >> survey said? >> 63% said no. the remaining 37.3%, 15.3% said
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yes. permanent and temporary hires. 10.2 said we plan to hire permanent workers. and 11.8% said temp rare workers. when you ask them to expand, we hear we're planning on hiring 6 to 10 permanent hires. that doesn't cut it. >> we don't see pressure but we see a big monster inventory build. we've been talking about these big spikes in inventory but we don't see big constant steady demand. we see demand and inventory doing spiking. is this the way the future is going to always look? are we going to flatten this out? >> i think we're going to continue to see these spikes. we have seen these for the last five years. we see the big upticks in the barometer and new orders. >> fits and starts.
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>> the good news is this isn't the purchaser's first rodeo. they know how to produce more with less workers. so this might be the trend. >> produce more with less workers. i think she ought to get an oscar for that line. it summarizes the u.s. economy. back to you. >> that's good. maybe she should get a vma music award. we'll talk about that next. apple executives finalizing the changes of the am music. it will have a starting price of $149 or $199. both higher than the current model. it's on track to become available in october. as i mentioned, apple also debuting two new apple music adds during the vmas, and there was a cameo by john tra voel a. take a look. >> i'm driving but where are we going? ♪ >> you okay? ♪
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>> yeah. >> great song but interesting choice in a celebrity to portray a cool new -- >> it's a dream. you don't know if he's really the driver or not. is he imagining it? a lot of people are saying perhaps he's not cool enough. i think it depend on how old you are. i remember saturday night live and greece. >> classic. >> i remember grease. >> not the picture of cool, necessarily, but he's recognizable. the big key is how many people are converting into apple music fans from the rest and ios users in general. there was a survey that said only 21% of the people aren't continuing. the survey said 41%. we'll see what happens. >> consumer discretionary is one of the only two sectors holding onto gains for the year. where are the opportunitys? we'll go stocking with some of the rides after this break. zppo?
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we'll go stocking with some of the rides after this break. ppor? we'll go stocking with some of the rides after this break. ieswl go stocking with some of the rides after this break.
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the dow is down 100 points. we are closing out what was a rough month for stocks and specifically media names took a
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bad hit. a look at some of the damage. dom? >> reporter: the sum earp has been a blood bath for many of these media names. it's only come recently in the last month or so. if you want to take a look at the worst performers so far for the month of august, some are the media stocks that hit at least multiyear if not record highs during the course of the past month or two. viacom of the big media content type providers down 29% during just the month of august alone so far. we haven't closed things out yet. 21st century fox down 20%. time warner down 18%. disney down 15% from the record highs we see the beginning of august, august 4th, if i do recall. now here is the interesting part. we want to take a look at the media names in the context of the broader moves, we asked our data partners to take a look at some of the big media and cable stomach performance during the course of the next month, september, going back to the last decade. on average you're going to say
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time warner has shown a relatively flat response, up about six out of the last ten years. walt disney marginal, fractional gains, up a fifth of a percent. up only six out of the last ten years in the month of september. comcast we threw in there, of course the parent company of nbc universal and this network, is up about 1% on average for the month, but it's a coin toss whether it's a positive or negative one. they own nbc universal in addition to the distribution on the cable television side. still, simon, an interesting look perhaps into the blood bath that was media stocks and whether or not some investors are looking for a playable balance given the losses we've seen. back over to you. >> maybe september will be okay this year given what happened in august. dom, thank you very much. meantime, consumer discretionary is one of only two sectors still positive for the year just up over 4% led by under armour, hasbro, expedia.
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six flags up on the year and for the controversial seaworld maybe a gain of 60%. the analyst for credit suisse joins us here. theme parks look strong for you. this is where people should be in your view? >> yeah, we think they're going to benefit from the continued low growth. we think they're in a position to benefit the consumer recovery, lower gas prices. this is a great price value option for consumers to choose and so far, you know, they've responded. we have seen solid attendance growth for the operator, particularly six flags. >> you can spend your summer doing this. you go to six flags. you walk around with management. why pick them out? >> i hope you have kids. >> i do have a kid, and he's been to a few theme parks. you know, this is a great way to get out there and kick the tires and i really believe in that
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strongly. there are few ways to get significant data. the best way is to pound the pavement and get out there. we've toured roughly 12 theme parks this summer, particularly the management teams, and you get the sense as the consumer the tone is strong. >> and what do you see as somebody who is arguing for the investors that perhaps the general attendee may not see? >> in a period of volatility you're seeing strong attendance. six flags attendance up 9%. the ancillary revenues and you have good visibility. this business model has really transitioned toward season passes over the last couple of years, so these folks really lock in the consumer early in the season, and they really help mitigate some of the weather impact. >> you also have access, of course, which other people don't. are you still meeting seaworld's management on thursday? >> we're going down there. we have a strong group of clients with tremendous interest. this is a turnaround story. >> it's a very controversial story. people are emotive about
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seaworld. >> can the brand be rehabilitated? and, secondly, you look at their margin structure, it's 1,000 points lower than their competitor. some is structural. they have animals to feed. there's a lot of low-hanging fruit from a cost perspective we think a new management team can address. >> dom was showing us the carnage in the media stocks. disney obviously is one of them and has the big theme park presence. there's a lot of excitement around some of parks like star wars. will that hurt some of the others? >> it could. right now you're seeing in that orlando market, universal and disney go head-to-head. we think that seaworld really benefits from some of that incremental growth. for them they have to align their price value offering the consumer and remind people they don't have to spend their entire time at disney universal, come to seaworld for a day or two. >> top picks? >> six flags followed by the theme spark space. it's a 5.5% field.
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cedar fair. both are passioned well. >> okay. good to see you, joel. joel simpkins from credit suisse. a look at tech stocks that took a beating and where analysts think they'll go next. is it a buying opportunity? that's on squawk alley coming right up. 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.
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stocks starting off the new week in the red. it is the final day of trading for august, and it has been a rough one for the bulls for august. let's just show you where we are right now. the dow down 104 points. we've cut our losses in half. the dow was down 199. s&p 500 down more than half a percent and the nasdaq down half a percent. not the kind of moves we were seeing last week though a lot are telling us to expect the swings to continue. and just to give you perspective on this month, the dow on pace for its biggest monthly drop since may 2010. s&p and nasdaq since may 2012. the nasdaq is the only one still positive on the year. >> enough said. let's hand it over to "squawk alley." hand it away.
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♪ ♪ good monday morning. welcome to "squawk alley." joining us is jon steinberg. good morning, jon. jon fortt out today. kayla tausche working double duty today. doesn't look tired whatsoever. >> makeup ladies do a good job. >> markets down 133. stocks down across the board but well off this morning's lows. you can see the dow at 16,526. it had been a busy session this morning, a wild month for the markets. the dow is 10% corrected intraday from the all-time high. meantime we have more to worry about with china, more with va


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