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tv   Worldwide Exchange  CNBC  May 30, 2018 5:00am-6:00am EDT

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it's 5:00 a.m. at cnbc here are the five most important things for you to know stocks are calmer this morn. the world's financial attention on italy. china firing back as the u.s. ups the ante in a trade war. roseanne barr issuing a new statement and blaming a sleep drug after abc pulled the plug on her show. at tesla vehicle on autopilot crashed, this time into a police car. and browder has just been
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arrested in spain on a russian warra warrant. it's wednesday, may 30, 2018 "worldwide exchange" begins now. hello. good morning welcome from where in the world you are watching that bill browder news just happening. this all coming to his twitter feed we are watching it closely we're hoping to hear from bill soon bill, if you're out there, let us know how you're doing things are decidingly calmer than this time yesterday the dow futures indicates a rise at the open. as stocks have wavered the last couple of sessions, buyers have come back into bonds ten-year yields are not moving a whole lot this morning, but two
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tien tenths back below 3% a few years ago the big market story internationally was greece today it's italy political turmoil there sparking a global selloff yesterday big bank stocks everywhere tumbling. today, as you can see, it's calmer the situation is far from resolved bond yields also holding steady. breaking within the past hour we're getting word of the lega is calling for another new election as soon as possible andrea cabrini has the latest. >> reporter: good morning from milan. here the market is taking a break on italy the spread is shrinking. the bond market is stabilizing. bonds are bouncing back a bit, but it's still too early to call an end on the strong pressure on the country.
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in rome, everything is still possible cottarelli who mattarella has given a mandate to create a government is working on a full list for creating a technical cabinet. at the same point there is pressure to dissolve the parliament and go to presh electiele -- fresh elections as early as late july at the same time lega and five star movement are starting to say there's a majority in the parliament, we cannot dissolve the parliament and creating the condition for a political government this is the big concern for the market on one hand the political campaign which might argue the position of italy inside europe. on the other hand, a political movement made by the two populist parties that may probably make some promises too costly for the italian public debt in a few hours we'll have the result of today's option of five
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years and ten years, that will be a test for the market andrea cabrini in milan, thank you very much. let's get more on this joining us is david owen, chief european economist at jeffries welcome. no doubt many viewers in the united states are wondering in the last couple sessions, we understand italy is an important economy to the eurozone, they're trying harder to understand what's happening there politically seems to be impacting stocks here and in the uk what's your answer to that question >> obviously italy is a different economy. systemically and in size to greece the concern is contagion inside the eurozone will continue to mount. we're not looking for the yirz to brea eurozone to break appoint, it's
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how bad do things get. moreover the other thing i would highlight in this is the banking sectors of the economies like italy, but also spain and portugal within the eurozone have become much more intertwined. in the first four months of the year, italian banks brought another 21.5 billion of government debt. that's exposing them to the selloffs we're seeing in the bond markets, particularly at the shorter end of the curve this is a much bigger issue than greece >> david, i'm sorry, did you say much bigger? >> it's a much bigger issue than greece >> the economy is bigger, but is the potential contagion bigger than greece? greece was an issue that dominated headlines globally for years. >> well, it did. the reason that greece was like that is the exposure of the german banking sector, french
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banks to greece. greece, in a sense, wasn't systemically as important as italy, which is so much larger and obviously in terms of the global economy is so much more important. the other thing is i don't think we're looking at a crisis. we're looking at spreads being very sol tivolatile, spreads wig out and realizing the banking sectors of some countries are intertwined with italy the prospect of further elections in italy on the 29th of july. and the ecb on the 26th of july has a key meeting where it's supposed to be telling the market what it would do in terms of tapering later this year. so elections later in july would throw more uncertainty into this mix. >> is italy the same kind of potential contagion economically as greece was? greece as you noted was tied to the german banks people didn't worry about
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greece, they worried about the solvency of the banks that had debt from greece on the books. is italy a similar story >> no, no, it's much worse in a sense. if you had an italian exit from the eurozone, that would be worse than greece. obviously the greek issue came in 2000 just off the financial crisis the concern then was that the ecb wasn't acting as a backstop. the market does know at the moment that the central bank is buying italy, can continue buying italy so there's a reinvestment point, which is important needless to say i don't want to worry viewers out there in the u.s. unduly. but at the end of the day we are in uncertain times at the end of the day there will be further backstop by policymakers but this election risk at the end of july, the timing of the
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ecb is in the great. they have a meeting just before when the italians could well be going to the polls again >> the last couple of days, italian bonds have fallen the most since italy joined the eurozone as a combined monetary union what are you advising clients to do now with their money given everything that you have just told us? >> luckily i don't advise clients about what to do with their money. i focus on the macro trends. at the moment we would expect ongoing volatility and there could be further spread widening the banking sector is intwined in this. so i would expect the next few weeks to remain volatile as i say, we're not looking for a eurozone break up story. that's not what we're looking at we are just going through volatile patches italy was always known as having issues, political risk was always there what we have also seen is
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substantial buying of italian paper over the last 12 months. at the moment that's now, i'm sure, going into reverse at the end of the day the eurozone is still recovering some pretty robust german labor market stats today ecb still wants to stop buying the bonds altogether the problem is whether it can. >> david, appreciate your insight and views. thank you. >> pleasure. from europe to asia. switching gears to trade, china firing back after the u.s. said it is moving forward with tariffs on some imported chinese products eunice yoon is live in beijing with more. >> thanks so much. president trump's decision on tariffs is not going down well here in china. soon after the white house issued a statement, the commerce ministry came out with a response saying we're surprised by the strategic statement released by the white house. at the same time it is half
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expected just moments ago the foreign ministry also responded saying an international relationships, every time you change and break a promise the country's credibility is damaged officially both ministries have been pushing the idea that china wants the u.s. to meet it halfway in the spirit of the joint statement. however i did speak to one official who is familiar with the trade talks. he said the most important thing right now that needs to be established between the u.s. and china is building mutual trust he said that this latest white house decision is not really doing a lot to help in that manner as you guys know, the commerce secretary, wilbur ross, is going to be coming this weekend, advanced teams from the united states are here this week to work out some details. this official on the chinese side said they see this as a pressure tactic by the trump administration so i asked him again does this
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mean china would retaliate he wouldn't comment on that even though the foreign ministry eluded to it or made suggestions saying china doesn't want a trade war, we won't hide from one. if the u.s. insists on being capricious china will take actions to safeguard its legitimate interests over to you. >> eunice yoon, thank you very much. we have some breaking news on one of vladimir putin's most vocal critics and a familiar face to viewers. bill browder says he has been arrested in spain. he sent out a tweet reading urgent was just arrested by spanish police in madrid on a russian interpol arrest warrant. going to the police station now. he then tweeted a picture of himself in the back of what looked like police car spanish police responding saying browder has not been arrested and the russian warrant has expired, but then bill browder tweeting out a picture of what he says is the arrest warrant.
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we continue to follow this developing story and hope to get in touch with bill we are also getting new details on another crash involving a tesla, reportedly in autopilot mode kate rogers has more on this >> good morning. a tesla sedan in autopilot mode crashed into a parked police cruiser yesterday in laguna beach, california. the officer was not in the cruiser at the time of the accident but police say the vehicle was totaled. the tesla driver suffered minor injuries there was another collision in the same area a year ago involving a tesla running into a semi truck the autopilot feature has come under scrutiny following a number of recent accidents earlier this month a driver in utah crashed while using autopilot but admitted she was looking at her phone this was also a fatal crash in california in march. tesla has repeatedly warned drivers to keep their hands on the wheel and be alert while
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using autopilot. of all things to hit, a police cruiser. >> that's going to get more attention. i'm sure elon musk won't have anything to say about that >> yep >> see you soon. investors should be happy today with this one. second quarter results topping forecasts. it's raising its outlook in an interview last night, marc benioff credits the good economy. >> we can really see what's happening in the market today is a huge investment by our customers. the economy is really ripping. and you can see that customers are going through this massive digital transformation every digital transformation starts and ends with the customer >> benioff says there has been phenomenal growth among salesforce's largest customers like citigroup and adidas. also today watch hewlett-packard. hp inc.'s second quarter revenue
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topping forecast and raising its guidance rising demand for laptops actually the reason. and wellwecare buying meridn for 2$2.5 billion in cash this deal will make wellcare the biggest medicaid provider in michigan and illinois. we are just getting started on a busy wednesday on "wex. still ahead, with all the news around italy, is now the perfect time to buy european banks a contrarian view coming up. and roseanne responds blaming a sleep aid for tweets wel ll y'lteou what she said coming up. across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need.
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welcome back if you were hoping for a rebound in italian bank stocks today, sorry, can't help you with that one. despite fractioning gai inal gaf they are gains, it's a may to forget for italy's biggest banks. this is just the returns this month. da bank banco generali, down 16% intesa sanpaolo, down 22%. mediobanca down 24%. unicredit down 22%
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all in the month of may. how is that done comparatively to the other big european banks? one thing to look at is that, the eufn, the ishares european bank etf it had a lousy month, down 10% compared to what's behind us on the wall, you can see by comparison it's been a month to forget for european banks but in some cases doubly bad for the big banks in italy at least one guest says this downturn could ab buyibe a buyi opportunity. joining us is the editor of the bear traps report, and larry knows bad banks. i mean that with love and affection. yesterday you put out everything is terrible, maybe now is the time to buy. what are you recommending? >> you have to remember, we have an index of our 21 systemic risk
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indicators we built the index in 2010 they're rising at the fastest level in seven years the stress has been building deutsche bank has been in extreme stress for months now. so the ecb has some high awareness as to what is going on so the probability of some action out of the ecb, if you think about it, think about the stress in italy, think about this the t bills, the 180 t bills for the country sold at 1.21%. that's annualizing up 7.8% they still have to sell in italy this year. they still have to sell to finance their debt about 120 billion. draghi has some gas in the tank. he will fire something here in the near-term that will give a substantial relief bounce. this is the first einning of a multi inning trade
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>> i hear everything you're saying, i guess i don't understand if there is this european central bank backstop, why are the biggest banks in italy losing a quarter or a fifth of their value in 20 trading days >> i completely agree. the backstop is limited. he has some fire power here. but think about it italy has 2.2 thririllion of de. germany has 800 billion. at some point when lega and five star actually get control of the wheel, right now there's an interim government when they run the elections in july or august, at some point then lega and five star will take the wheel away from the really establishment of europe that's now controlling the government at that point they might put harder controls on draghi, and then threaten a dual currency.
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that's the longer term scenario. in the short-term draghi will pull out the fire house and put out this fire and calm things down for the near-term then we have problems in the seco second, third an fourth quarter of this year >> let's bring it back to the states now this is the eufn, an et if you have been talking about versus the ten-year bond yield in the u.s. so u.s. treasuries against the european bank etf. the point is this, how much -- that's not it. how much is what's happening over there impacting our bond market here? >> it's dramatic u.s. treasuries rallied 23, 24 basis points in a short period of time. not to mention the fact that we were extremely historically short treasuries
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in other words, in the market positioning -- when i say we, the market was viciously short in positioning of u.s. treasuries over the last month i've been saying on this program one move like this, any type of outside the box move in the markets would trigger a vicious short covering rally that's what's happened it's a flight to quality that's triggering the u.s. treasury rally >> the chart is up if you're listening on the radio, the european bank etf and ten-year yields are going down at the same time the chart looks like they're correlated it appears they are. if european banks continue to have problems, would you then anticipate that the yield on the ten-year bond, and maybe things like mortgage rates will also continue to come down? everybody screaming for 3.5% yields on the ten-year will be wrong by the end of the year >> if this comes to a head in a very powerful way, there will be
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that flight to quality again the u.s. is financing 1.2, 1$1.3 trillion deficits. globally the credit quality is much worse than it was five years ago. we still have commodity prices at multi-year highs. commodity indexes are breaking up we still have a lot of powerful forces pushing up yields, this would be one powerful force on the other side >> what we love about you, larry, you take a complex issue like italian politics and european banking make it easily understandable that's why we have you on and appreciate it. >> thank you. still to come on "worldwide exchange," what snapchat's ceo said about facebook that is getting buzz this morning. and hawaii remains on high alert. fast-moving lav have from the kilauea volcano shutting down a major highway. an update on this developing
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welcome back 5:26 on the east coast good morning let's check the headlines outside of the world of money and business frances rivera has more. good morning vintage donald trump appeared on stage in tennessee last night speaking to a raucous crowd at a political rally. he hammered away at democrats,
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the russian probe and blasted senator john mccain for his obamacare repeal vote. it's a dramatic fall for grace for eric fwshgreitins aftr allegations of misconduct surfaced the legislature began impeachment proceedings against him and an investigation was launched after the governor carried on an affair with his former hairdresser. and in hawaii that fast moving lav have is spreading volcanic smog is brereaching gu. residents are being warned ash could start falling on neighborhoods. the national guard is going door to door warning people to leave. thank you very much.
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welcome back your money is trying to bounce back after italy's driven
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selloff. bill browder who fled russia with his life a few years ago has been arrested in spain, but spain says he has not been arrested browder, though, tweeted out pictures of the arrest warrant. and roseanne responds. why she's blaming sleeping pills for her racist tweet it's wednesday, may 30, you're watching "worldwide exchange" on cnbc all right. welcome back thank you for being with us on cnbc i'm brian sullivan we have breaking news on one of vladimir putin's most vocal critics and a familiar face to our audience bill browder says he has been arrested in spain. about an hour ago he sent out this tweet reading urgent. was just arrested by spanish police in madrid on a russian interpol warrant going to the station now he then tweeted himself in the back of a police car
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spanish police responding saying browder has been released and the russian warrant had been expired. we'll continue to follow this developing story and hopefully get in touch with bill at some point today on cnbc. here's how your money and investments look now on a busy wednesday as we are halfway through the 5:00 a.m. hour stock futures are up about 100 points, that's cold comfort to what happened yesterday when we lost a couple hundred points on the dow jones. a bigger story now is the bond market. yields which ticked above 3% are back down. at 2.84% the chaos overseas is bringing buyers back into bonds which are bringing interest rates done markedly here in the united states global markets rebounding somewhat after yesterday's italy fueled selloff the question is this, why does it matter to your money here and what comes next? downing us is dan veruth
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welcome. you're mostly known as a domestically focused smaller cap guy. my question to you is simple are viewers this morning waking up and wondering why all this stuff in italy and europe is going to matter to a $10 billion market cap stock that they own in georgia can you tie them together in any way? >> not really. overseeing with the selloff basically no downward move in the russell 2000 the measure of small cap stocks. we noticed since the first selloffquity markets i february, the leadership is changing that's a result of tax policy changes, less regulation all those things are still happening here, brian. that's what's ultimately going to keep the equity markets in the united states vibrant. i do think these issue it's inially will resolve themselves. it will take time, there will be hand wringing. as we learned from greece, that turned out to be great buying
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opportunities. >> longer term but it caused us to sweat for a couple years. >> it did. we were much further in the recovery of the financial crisis here we're into the reinforcement cycle of the economy. we have better policies. we have better -- things creating the economy, a multiplier effect occurring. now is the time to stay focused. stay in the u.s. also look at other asset classes like convertible securities. >> convertible bonds are interesting. they can seem complex and scary. like italian politics. we have to dig in. why are convertible bonds interesting to our viewers now >> a convertible bond is exactly as it sounds it's the combination of a fixed income security and an equity security it's the only bond asset class that you can actually profit in a rising interest rate environment. despite the last couple of days where rates have pulled in a bit, the economy in the u.s. is getting better that's going to be putting
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upward pressure on rates i think investors are way overexposed to bonds the 60/40 is now 60 in bonds and 40 in stocks >> even the last couple of days we've seen buyers come into bonds. yields are back below 3% you believe that's likely a short-term dislocation >> that's correct. we can't know what rates are going to be. that's not the game you want to play that's why you want to have convertible securities within a diversified portfolio. >> you think any reaction then in the domestically focused smaller cap companies, maybe big caps doing a lot of business in europe, they're more exposed if we see a move down in small cap stocks here, that's a mistake and potentially a buying opportunity. >> that's a mistake. that does not change the outlook for the u.s. nor does it change
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our tax policy 100% bonus depreciation, the biggest beneficiary are u.s. domestic companies those are companies where you're starting to see profits. that's why you're seeing this leadership change where the s&p is underperforming to the russell 2000 >> i want your response to a twitter poll we put out. we say normally on cnbc we talk about reasons to buy stocks. i wanted to flip it and said if you had to sell, what's the biggest reason to sell there was earnings peaked, bond yields up, europe, deutsche bank and italy, and other the number one thing people said if they had to find a reason to sell is that earnings peaked 44% of respondents felt that would be the biggest reason to sell if they needed one. would you disagree >> yeah. i agree with that. i don't think earnings have peaked >> you do not. >> not at all. i think we're early in an upward earnings cycle we're just starting to see 3%
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type of gdp growth, perhaps higher than that over time it's going to take time for things like changes in tax policy to affect the entirety of the economy, for companies to feel it, for capex spending to go up. we're starting to see the early signs of that. i don't see anything in italy that will change that. >> a bit of optimism and chaotic. i don't know the italian word for chaos. dan, thank you very much >> thank you time for the top trending stories. the great kate rogers is back with those. roseanne barr apologizing for a racist tweet that got her sitcom canceled by abc the star tweeting don't feel story for me, i want to apologize to the hundreds of people and wonderful writer the all liberal and talented actors who lost their jobs on my show due to my stupid tweet the star blaming the tweet on the late hour, 2:00 in the morning and the sleep aid
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ambien. if you ever wished to spend a full day on an airplane, you're in luck singapore will relaunch the world's longest flight between singapore and newark airport flight time nearly 19 hours. i don't fall into that category. i like a two-hour flight and i'm like get me out of here. >> i did that flight when it existed in 2012. we went over there to interview the co-founder of facebook and do a conference in singapore i think it was 19 1/2 hours. i slept twice. singapore air, for our viewers and listeners, it's a spectacular airline. >> i would imagine it has to be nice if you're on there for 19 hours. >> you have to do something, do some stretching. it's interesting >> i'll leave it to you. >> okay. i'm not saying i would do it again, having done it, it was cool see you in a bit big technology ceos from around the world gathering on stage at the code conference
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today. last night snapchat ceo evan spiegel weighing in on the hot topic of regulation. >> foolishly some big companies want that, they believe they're best equip ed ped to deal with regulation, and there are times in history when regulation entrenched big companies i think that's a huge mistake. i think that that would inhibit innovation but i do think there's some really great legal frameworks developing like gdpr that is thought out, gives the user control and choice and that will make a difference. i think there's going to be a balance. i think there will be some regulation, but at the same time technology companies need to incorporate the spirit of protecting user privacy. >> speakal also ta he also call ahead of sheryl sandberg's big code speech. >> we would appreciate it if they copied our data protection
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practices also >> i was waiting for that. >> sandberg did not address that comment from spiegel in her speech, but she did give her own take on facebook's regulation policies >> it's not a question of people say should facebook be regulated, should other companies be regulated we are regulated regulation often entrenches big companies. so gdpr, i think we've done a very good job complying with we put up expensive to build systems and tools. we're supportive of the right regulation that supports innovation that is based on an understanding of the technology and that is good for people. >> sandberg also added that facebook is working towards being more transparent in the wake of its privacy issues still ahead on "worldwide exchange," we will continue to connect the dots between italy's political crisis and your money. plus an incredible italian political stat on your morning
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rbi. you have to hear this one to believe it
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welcome back an update on one of the breaking news stories on this wednesday, having to do with one of vladimir putin's most vocal critics and a familiar face. bill browder now confirming he has been released from spanish police custody he just retweeted good news,
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spanish national police just released me after interpol general secretary lyon advised them not to honor the new russian interpol red notice. this is the sixth time that russia abused interpol in my case earlier browder saying he was arrested, tweeted himself in the back of a police car spanish police said he had not been arrested. a lot of back and forth. either way, bill browder out now and a bit rattled, as you may imagine. a lot of questions in that story. italian political turmoil weighing on u.s. treasuries. the yield on the ten-year note breaking below 2.8%. slightly above that now, but keep in mind it was at 3.13% earlier this month doesn't sound like a lot, but 30 basis points is a sizable move let's tie this, bank stocks and
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banking outlook together with chris whalen welcome. nothing going on today, right? >> you know. >> we've seen this move in the bond everybody feels like bond yields will go nowhere but up are you surprised what's happened with bonds and banks? >> no. when you have problems that roil a bond market, the next thing that happens is you get selloffs banks are big. they're liquid it's easy to put on short trades either with cash or derivatives. they're the natural go-to city they have the highest volatility of any u.s. bank it's big you can trade it what's happened here is italy was not really on the front page if you look at the ft versus the "wall street journal" on tuesday, we were barely paying attention to italy and the united states. now we're forced to. the country is insolvent
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the banks are in terrible trouble. they've been ignoring it the europeans cannot make decisions when it comes to deutsche bank or the italian institutions they have a list of problems that they can't face now because of the political downside. >> i guess this would be the longer-term question for bank investors. has the recent move down in the big bank stocks like city, jp, the banks here, not in europe, the banks here, has that move down been a short-term reaction to this change in interest rates, or "b," a valid longer term reaction to potential european problems disrupting their global business? >> there is some of that there's certainly a credit concern that spreads to all global banks jpmorgan, for example. morgan is still up 30% over the last year. that's okay. you know, we should all calm down a bit u.s. banks are in a funny position because the fed gave them the benefit of suppressing
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the cost of funds back in 2009 the narrative that's engrained in us says rising interest rates are good for banks spreads widen. that has not happened yet. we're not seeing loans reprice or the asset side of the balance sheet reprice. expenses, interest expenses are going up 50% year over year. so that's -- the gift from the fed is slowly ebbing what investors have to realize is there's not a lot of growth in large banks mid caps and small caps didn't move yesterday all the selling pressure there italy worries were focused on large caps if you're really looking for growth, no right now jp is at 1.6 times book that's a fair valuation. >> is it fair? it's not cheap it's not expensive, just fair. you know as well as i do when you hear the term no brainer,
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you have to start thinking about it people have come out and said you buy banks, it's a no-brainer because interest rates will rise and their net interest margins will go up, you'll make money. >> net interest margins were preserved by the fed over the last five years. they saved the banks, now they'll get kol compressed there's no natural demand out there pulling rates up the fed is forcing rates up. every time you have an event like italy you have a rally in the bond the bond would like to rally some more. if you talk to big institutional investors, they would be like this, buying it with both hands. i'm saying deflationary tendency in the market is still there no matter what the fed does, no matter what mario draghi does at the ecb or the bank of japan, they have accumulated all these securities they have essentially capped returns. if you're a bank and the fed is pushing up -- >> how about this.
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i know you're not a stock equity guy. i think the big gains have been made for investors in the big banks? >> absolutely. bank of america, 45% my god zombies don't run that fast normally when they do you should be running. the point is these are great stocks they're dividend plays that's why you buy them. wells fargo, cheepeapest of thep four that bank trades 15 abo% above. bank of the ozarks, 2.5% >> bank of the ozarks getting a shout out on "worldwide exchange." an interesting view and different view on the banks and net interest margins chris whalen, thanks >> any time you want me at 5:30. >> this is why we like him the "squawk" team has had their coffee or tea, whatever it is whatever they drink.
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becky quick, have you had your tea? >> not a single thing to drink very parched any time you want me, i'm here at 5:49 for you. >> i'll be there at 7:01 for you. >> that was going to be the end of my tease. wait we have a lot of things coming up including more talk about what's happening with the markets one thing confounding me, the ten-year yield went up, everybody thought this is horrible for stocks. it's going up too quickly. now that you have the ten-year plummeting back to 2.7 or just above that people are saying this is awful for stocks bad news, bad news have we gone from a goldilocks scenario to a bad news bad news scenario for stocks. also, big day on the shareholder meeting front for two big retailers. walmart and amazon holding shareholder meetings today so many people talked about how it's these two big companies duking it out. we have courtney reagan joining us live from arkansas at the
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walmart shareholders meeting and we'll be talking to bill simon he used to run the walmart stores in the united states from 2010 to 2014 he's come out swinging when it comes to amazon, says congress should look into breaking up amazon for its anti-competitive practices. those are the same sort of charges that used to be levied against walmart. we'll talk to him about those things we'll be joined by the chairman and ceo of c.a. technologies he'll ring the opening bell today. and a special host with us today. you. that's starting at 7:00. >> or my better looking twin >> it's the light, right >> i look better in sunlight we'll see you soon i'll literally see you soon. coming up on wall street, why one guy remains optimistic on the u.s. equity markets stick around
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welcome back we're up about 100 points on the dow jones. maybe 137. gaining some steam throughout the morning. joining us is a man who remains optimistic longer term, craig johnson from piper jaffray are you sticking by your target, 6% upside from the s&p here for the rest of the year >> thanks, brian thanks for having me on. any time you want me on from minneapolis, happy to get up and do that. >> look at that. love you >> we are sticking with our 2850, but we talked about a hop, a drop, and a pop for 2018 i think we're in the drop phase at this point in time if we come back and connect the dots to what's happening around the globe, bring that back here to the u.s., we have to make a couple observations. first, let's talk about the bond
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market we have fallen 30 basis points really in the last two weeks what does this come down to? safety buying by european investors and frankly global investors coming back and buying king dollar and the best debt in the world, the u.s. bond market. that's a bit of a safety trade coming into play the second thing to point out is the u.s. dollar. we've seen a good rally in here up to 95 this is the safe haven trade playing out. where there's smoke there's fire investors are getting nervous about what's happening in the eurozone and italy you're seeing that safe haven trade coming on. last week, we saw utilities. we saw real estate as some of the best performing sectors in the market investors are skittish, defensive and you'll see this market continue to consolidate
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between 2575 and 2800 and ultimately we can get a clear path towards 2850 as we get into the third and fourth quarters. >> okay. optimistic there any read on the bond yield you noted 30 basis point drop in a couple days, that changed a lot of peoples thinking or seems to have regarding the financials >> absolutely. two great points there the first thing is your next support comes in around 271. that's where you get a short-term support area. this is defensive buying when you look at a long-term chart of ten-year bond yields, we reversed a 36-year down trend, moved up, retesting this before we make the next leg higher on the financials, i'll say it quickly, for any market to work globally the financial sector has to be engaged. the one worrisome thing that myself and my team saw this weekend is the relative strength in financials has been waning
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relative to every other sector we saw that in 2007. >> we are watching that very closely. craig, thanks for getting supo early. thank you all for watching "squawk box" is next happy anniversary dinner, darlin'. can this much love be cleaned by a little bit of dawn ultra? oh yeah one bottle has the grease cleaning power of three bottles of this other liquid. a drop of dawn and grease is gone.
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we have a global markets alert. asian stocks dropping sharply overnight but in europe it's a bit of a mix and u.s. equity markets are pointing to a bounce back. and italian political drama, how worried should investors be. >> and roseanne barr apologizing for that racist tweet after abc canceled her show. it's wednesday, may 30, 2018, "squawk box" begins now. ♪ live from new york where business never sleeps, this is
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"squawk box. good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin joe is out today our guest host for this hour is the chief economist of the americas at netixis, joe thanks for being here have a lot to talk about u.s. equity futures are looking like they would open up about 145 points for the dow s&p indicated up by 14 nasdaq up by 37, this comes after a big down day yesterday for the markets. dow was down almost 400 points at the end of the day. that was off the worst levels of the day. dow was down by as much as 505 points, decline of 2% at the lowest levels of the day s&p closed down 1.1% the nasdaq was off a half


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