tv Squawk Alley CNBC July 3, 2018 11:00am-12:01pm EDT
♪ stechlt welcome to "squawk alley." i'm john fortt carl and morgan are off today. got a lot of subjects to get to today. tech leading the way in first half of the year, but can the sector's recent streak continue into the second half t. rowe price tech fund manager ken allen as well as our own mike santolli. good morning, guys. >> good morning. >> i want to get to you first about the strength tech has shown not only over the last couple of days, but really roughly this year, especially big names like amazon. can that kind of momentum continue into the back half of the year why or why not >> so, jon, i think the biggest thing driving tech stocks so far this year is that earnings largely across most areas of this space came through very strongly you mentioned amazon a lot of the biggest companies we talk about a lot, amazon,
facebook, google, microsoft, apple, have generally been putting up extraordinary growth, and that's driven by -- other than the exception perhaps of apple, by still having relatively low penetration of the opportunities that they will ultimately address and i think ultimately participate very strongly in. so when you have the biggest companies all doing very well, that tends to lift the sector overall. now, what i would say relative to looking to the second half is it is very much a stock picker's market we are at valuation levels where it is not so much a layup now on whether the sector broadly can more than grow into those levels. >> mike, we were already supposed to be in a stock picker's market. that was the line at the beginning of 2018. >> yeah. >> it turns out you just had to pick the same big stocks from 2017. >> it is true. although if you design a stock picker's market as one where you have lots of stocks that win and lots of stocks that lose and you had the opportunity to outperform the broad indexes by picking the right ones, we have been exactly that. i think the big question is will
the ones that worked in the first half be the same ones. it really is a momentum trade right now. you know, it is true that they do have the most gaudy earnings growth if you look at netflix sales growth, all of the rest, amazon and facebook, it is unusual for some of the five biggest companies in the market to have some of the best growth. that's where we're at. i do wonder though if they've been kind of holding the market together, people sort of hiding there until we wait out some of the macro stuff, some of the trade stuff, and maybe until we get to earnings season where you might have a broader selection of stocks with fundamental growth drivers. >> ken, looks like facebook is under one of your top holdings under pressure today "the washington post" report that even more federal regulators are looking into cambridge analytic and and the way facebook communicated, including the sec. does it spook you? >> it is something we are looking through, especially in the last several months, looking to get our arms around what is fully happening with the various
investigations what we think facebook can do to do a better job as they need to do, certainly as a platform, and what the kbriimplications for is business and growth going forward. our conclusion, and we saw an opportunity a couple of months ago we were ail to take advantage of, we think facebook by having a massive base of users and extraordinary usage level from the user base across facebook, instagram, whats app we think they have more than enough resources to power through the issues going on right now. we hope and think they will be better >> do you worry at all about margin erosion as a result of having to hire more people to deal with all of these things? >> i think that's largely reflected in the stock and reflected in earnings estimates. i think ultimately what will carry the day is revenue growth is likely to stay so rapid when you think about the market they're going after, it is not just kind of a narrowly-defined advertising market
they're creating a lot of new opportunity, a lot of marketing services opportunity is something that they're unlocking with a lot of their apps i think that facebook, when i look at the overall market they're addressing, is probably only about 5% penetrated i know it sounds like a low number, that truly speaks to the enormous size of their tan and points to the runway for growth ahead. >> mike, there have been some smaller stocks, recently ipo doing pretty well over the past few months. >> yeah. >> we talk a lot about the bigger stocks, but when you look at tech in various other trenches, what do you see that's interesting, kind of below the f fang arena we talk about >> i call it the jv and it is a lot of stocks playing the exact same huge themes, right. so you have clusters of stocks that are all about, you know, enterprise cloud, or it is all about an ai play or a consumer app. i think if you look at the companies that are smaller but have been public a longer time like the yelps, like a lot of
the somewhat smaller sub scale internet plays, they've been amazingly strong they created this umbrella effect for a lot of other companies out there. i think it shows you that growth investors, you know, definitely have a craving for this. the growth style has worked really well and they have the money to put to work for new ideas, because it is hard i'm sure to look at the top five tech companies, biggest stocks in the market worth $3 trillion and feel you have an edge. knob nobody is going to come bu any of those. >> what turns the trend, mike? is it higher interest rates, economic rate, search for value? >> i think the broad market, you could have tech decelerate on a basis and have the other sectors cyclically work better i think you saw signs of that in 2016, but i don't -- i think it will take a broad market event to actually undercut the momentum in tech because it is also fundamental momentum and not something based on this gdp print that's coming up with the fed meeting.
>> did you like some names in semi conductors including micron, lam, research and marvel some would look and think they're the same names that could be in danger from the tariff issues. how do you feel about those stocks given the global environment right now? >> i think one thing worth highlighting is that tech is very much an amalgamation of a lot of different industries, sectors and companies with numerous drivers, merits for companies across the spectrum. i look for companies that i think are significantly undervalued, that are participating in key industry trends going forward, and currently i'm seeing some opportunity as you mentioned in some of the semi conductor-related companies. for instance, micron, the d ram and nan flash memory maker, you look at a stock market that's been very strong over the last many years including tech especially, and then you look at micron trading about five times free cash flow, generating over
11 billion in the market with 65 billion. that to me looks like an undervalued opportunity, even though it is highly cyclical stock. lam research leverages some of the similar trends, leveraged to the memory that goes into artificial intelligence and internet of things, and you think about that stock trading less than ten times free cash flow and has potential to grow double digits free cash flow next few years those are opportunities that go together with some of the ones in internet and software that i typically have as bigger positions to make what i think is a portfolio i believe in. >> well, maybe taking advantage of some of those same overlooked trends michael dell was telling us about yet thank you. >> thank you. >> when we come back, federal fireworks for facebook as we mention. why the fbi and fcc are getting involved in the justice department investigation it is actually technology biggest loser in the s&p more "squawk alley" right after this ♪
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facebook and data and the sort of mess that they got into for a while now. it hasn't hurt the stock that much it dipped about 2% this morning, but what's the lesson for other companies out in silicon valley that are a part of this data search >> yeah, it is a great question. ultimately i think this is an old story where any time a technology company launches a platform, be it microsoft with os or facebook with its data platform, there will be people who end up abusing it. in the '90s for microsoft it was people that built computer virus. today with facebook it is firms like cambridge analytica that take advantage of the data to use it for purposes people didn't anticipate it being used for. i think ultimately every tech company has to focus on having the right policy and procedures in place to catch these things early, act on them and to circumvent people who will act badly. that's going to happen irrespective of the platform in the era. >> it seems like every day we have a story about facebook
mishandling user data and investigators getting on top of it how does it all end, in just a series of fines or something potentially more serious >> i think as eli references, there will be a seismic change among companies. everyone will feel they want ahead of it, they don't want to end up in the more as of paperwork. the challenge for facebook is every time they try to get ahead of the story they end up raising more questions than answered they submitted 700 pages of answers to the energy committee and the headline wasn't -- i mean part of the headline was what they disclosed but everyone went to here is what they didn't answer, here are the questions that were raised by their disclosures. i think the challenge for a company like facebook is, you know, this is going to come out in dribs and drabs they're going to respond and each response will raise more questions. if you are another technology company out there you are watching closely to figure out how to get ahead of the story, how you can be proactive and how
you can see pro-consumer. >> statemenat the same time, st, it seems alphabet has been under similar scrutiny over its practices, especially in the eu. they had this sort of rope-a-dope legal strategy where, yeah, they sort of go along with some of this. they might get hit with a fine they're not being aggressive against governments the way microsoft was. they haven't fallen into the microsoft trap might facebook follow a similar trajectory and sort of duck this and continue to grow >> i think that anything is possible facebook has some of the best lawyers in the world working with them. i'm sure they're looking at the various companies' playbooks microsoft is taking a very different strategy, and i think it is probably not the right parallel for facebook. i think google, alphabet seems like the right parallel. >> i mean we talk a lot about facebook but, yes, google is part of the discussion as well a lot. you used to work there there's a story today out of the "wall street journal" that google has reportedly been
letting outside act developers scan gmail despite promises to not let it happen anymore, especially as it relates to advertising. how big of a mess is this going to be for alphabet >> you know, i think time will tell i think to your point this story has just come out, and so it is very much in wait-and-see mode ultimately google had to deal with some of the data policies in the past for the perspective provided earlier fundamentally i think we should wait and see how it all evolves. >> moving on to talk resurgence of ipos, so far 2018 marks the highest volume for the market in over four years. it is on track to be the fourth busiest year for ipos. elad, a few years ago the talk was it is too tough to go public in the u.s all of these regulations are hurting. we've got this constant stream of chinese ipos here at the new york stock exchange, now this stack. how does it really look from silicon valley where you are looking at potential exits when
you see these kinds of numbers we're putting up in 2018 >> yeah, i think we're going to see a lot more exits over the next 12 to 24 months companies like uber have already said they will be going public in 2019. i also think there's a little bit of a -- not quite heard mentality, but friend network of founders who all grew up in the same era and seeing companies going public that are run by peers as founders are causing companies to think about going out and doing an ipo i think the performance of companies that went company in a prior way like square where they performed quite well, square is now a $25 million plus company and we're going to see more go in that direction. >> what are you watching, stephanie? >> i think airbnb, uber, all of
these uber unicorns are the ones i think everyone has their eyes on in terms of when they go public, how they go public, really how i think they talk to investors. it was interesting when daniel enact his ipo of spotify i think the roadshow featured a four-hour presentation to investors as if to justify what was anticipated to be a high valuation. companies like we work and airbnb, these companies have super high valuations. i think the public investor will want to understand exactly what is under the hood to figure out whether these private valuations are justified. >> yeah. spotify itself, of course, was a listing. they didn't actually raise any capital. these all would be capital raising. we work has been interesting to me, stephanie. i don't know if you have done any work on it, but is that just a real estate company or what is the actual added value there >> i mean on the -- on the surface it looks like a real estate company to me i think there is a desire to try to talk about we work in the
context of, you know, really transforming the nature of work and transforming the way companies work they have a really interesting enterprise strategy which doesn't get talked about as much people often think about it as a place where the knowledge worker goes to squat, but if you look at the companies they're working with, they really do seem to have a strong connection to a lot of big companies that are turning to them almost as a consult answe consult yancy to figure out what is the future of work, how to retain workers and how do they create a better environment for the worker. >> you are an investor in one of the companies stephanie is watching, airbnb any insight into how they feel about going public >> there's nothing i can share i think ultimately there are a number of companies that are part of the yc community, which is the incubator that drop box, airbnb and others came out i think drop box going public was a seminal moment for the
community and basically signalled to a lot of other founders it is a path you could pursue over time. >> was it kind of a counter point to blue apron, because a lot of people got troubles after blue apron. >> yeah, i think blue apron is fundamentally a different type of business in terms of his churn rate and focus on subscriber acquisition you see companies with massive network or data affects and fundamentally their margin structure are different. so i think there will be a wave of companies looking at companies like drop box and spotify and viewing them as peers and saying, this is something that i can do as well as a founder/ceo and as somebody who built a similar type of company. >> finally, let's talk predictions. tech-heavy nasdaq out performing the other indices in the first half of the year, but how are all of the headlines including potential trade wars, tech policy changes, going to affect the second half?
stephanie, your predictions on what the big take theiaway in t last half of 2018 will be for tech >> i think the big takeaway is we will continue to see this sort of die purchabifurcated ma you will see a large number of sort of smaller tech companies go public. one of the things we didn't talk about in the last segment is the impact of soft bank, an investor in we work as an example. >> the vision fund is unbelievable. >> vision fund i would say if there's one thing i would bet money on at the end of 2018 is that soft bank will continue to be a force in the private tech markets >> i would assume they're first call at this point that's kind of part of the point of it, i guess. >> they're the first call and, you know, it is a -- it is a badge much honor now for a startup to be part of that soft bank vision ecosystem. >> are they squeezing out other people elad at the vision fund given the huge war chest they
have, so to speak? >> i think one of the interesting things about vision fund is given they have over $90 billion of capital, when people compare them to other venture capitalist raising mega funds, general catalyst raised a billion dollar plus fund, sequoia is rumored to raise 6 to 8 billion, these pale in comparison to size of soft bank. soft bank is a $91 billion fund, so just the amount of capital they can bring to bear is impressive. >> any plans to raise more of them he has a vision fund two already he is thinking about. >> yeah, they said to me they see everything like literally everything. i mean talk about deal flow. like, yeah, when you got that amount of money, it is crazy. >> and that's a huge advantage because think about all of the intellectual property they're capitalizing on, even the companies they don't invest in they see everything, as you say, and so it really helps them form an investment thesis as well. >> thanks. stephanie and elad, thanks for
joining us. >> thanks for having us. >> when we come back, take a look at the major. nasdaq went into negative territory again. tech has been underperforming all morning. dow gain slipping away as well financials are also in the red veteran floor trader art cashan will join us inside his second half playbook. "squawk alley" will be right back ♪ alerts -- wouldn't you like one from the market when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts
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♪ good morning once again, everybody. i'm sue herera here is your update at this hour rescue efforts continuing in thailand after divers located a youth soccer team and their coach more than a week after they went missing in a cave. they are stuck more than a mile underground. a us air force captain at the scene says finding them alive was a miracle. >> all courses of action when you think about it, you know, they've been isolated, dark, no food. there's not only like
physiological conditions, but probably psychological considers. >> a large water main break in downtown philadelphia sending water gushing through the streets and on to the sidewalks. crews were able to stop the flow of water, but it was three hours after the pipe broke and it snarled the morning commute and rerouted some city buses 2,000 people without power the white house flag flying at half staff this morning to honor the five people murdered at a maryland newspaper. president trump ordering the honor until sunset, his proclamation covering all federal properties along with embassies abroad you're up to date. that's the news update this hour back downtown to you, sarah. >> sue herera. thank you. i'll send it back to hq with a look at what to expect from technology in the second half of the year dom. >> sarah, our playbook continues this time around with a look at what will happen with technology sector overall
we showed some of the overall stats last year, but look at this technology in the s&p 500 is one of the better performers in second half of the year, going all the way back to 1990 it is up about 5%. it is a positive trade, nearly three-quarters at the time as we look at those particular sectors, what about the stocks within it that could be ones to watch out for? take a look at some of these on average going back to 1990 apple shares are up about 4% on average during that span, in the second half of the year. positive trade 68% of the time intel shares up about almost 3.5%, positive 64% of the time ibm, big blue up nearly 3% on average for the final six months of the year going back to 1990, positive two-thirds of the time as well. one other thing to watch is where the games have come from so far this year howard silverblat notes for the first six months of the year amazon, though technically not a tech stock, contributed 35% of
the s&p 500's game so far this year microsoft, 18% apple 18% as well. as you look at these guys, they may be the ones that if the momentum continues drive a lot of the second half performance technology, specifically apple and microsoft, but amazon as a retail company one of the ones to watch as well back to you, jon. >> thanks, dom it seems like zero percent of the time we had two years like 2017 and 2018 back to back how much does that throw noise into trying to predict what the second half might be like? >> well, speaking of the noise, i mean the idea that we've had a more volatile first half of the year than anything we've seen over the last two years throws a monkey wrench there. a lot of experts we talked to say the volatility continues forrest of thor use. you have to add the other dynamics this is not taking into account the fundamental things in play with trade, tariffs, everything else geo politically speaking. of course, we have midterm elections coming up as well. that throws another interesting
dynamic into the second half of the year playbook as women it doesn't bode well for the third quarter on average historically speaking but, jon, it bodes well for the fourth quarter. we will see if it starts to balance out in the final six months of the year. >> yeah, there will be no shortage of news to be sure. dom, thanks. >> you got it. when we return, are carmakers bracing for the worse as the white house weighs pos?sing tariffs on global auto at it means for your wallet next stay with us ♪ are you done yet?
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all right. let's get to the european close. seema. >> here is the story is europe stocks rebounding after the trade war fears fuelled yesterday's decline. markets getting a lift from political news out of germany, chancellor angela merkel hammered out an agreement with her allies on immigration, ending a dispute that threatened to break up her coalition government they reached a compromise with germany's interior ministry. he had threatened to resign unless borders -- border controls were tightened. german up nearly 1%. another factor in today's rally, european oil majors rising despite a reversal in the price of brand we're looking at bp, france's totality and spain's all in the gain up 1% a different store for glen core, the mining firm down sharply
after receiving a subpoena from the u.s. justice department requesting documents related to compliance with money laundering laws the scrutiny centers around their operation in congo, venezuela. that's knocked down 8% pivot to the turk jury lira, sliding against the dollar after a report showing inflation in turkey hitting a 14-year high. this all puts pressure on the country's central bank to raise interest rates again turkish lira weaker today. guys. >> he said he's buying it. said the slide was too intense yesterday. thank you. automakers are feeling the pressure as the industry gauges threats of global auto tariffs from the white house how is president trump's tariff talk impacting demand? our phil lebeau is in chicago with new numbers. >> it is not scaring people in terms of going into the showroom, at least from numbers released today from automakers june will turn out to be a solid
month. the largest automakers reporting positive sales for the month not huge gains here. remember, we're comparing june of this year looking at the numbers to june of last year when you see fiat chrysler up 8% or toyota up 3.6% or ford up 1.2%, keep in mind these are comparisons year over year generally speaking the sales rate will be close to 17 million vehicles what is selling right now? same stuff that's been selling for some time. trucks, suv, jeep having its best june ever, sales up 19% yeah, gas prices might be moving higher, that is not stopping people from buying bigger automobiles. average trans action price also up in the month of june. gm and ford say the average price people pay at the dealership, $35,500. speaking of general motors, it released its second quarter sales today. up 4.6%. the chevy bolt, its sales were down 22%, but keep in mind this is a vehicle that gm is selling fwloeblly and the company says
globally the demand, especially when you factor in south korea and canada, globally the demand is increasing. so the company says today it will increase chevy bolt production in the fourth quarter. guys, back to you. >> great setup, phil please stick around for the conversation we want to bring in carl broward, auto trader and kelly blue book executive publisher to discuss the june numbers along with his take on the threat of global auto tariff welcome, carl. how do you read today's number as phil outlined looked pretty good. >> looked great. even as car sales have collapsed, truck and suv sales more than made up for it the overall impact is still growth, and truthfully growth in higher profit vehicles so it is still great news for the automakers today. >> phil, did you hear bob lutz he came on, a veteran of the industry, very supportive of what president trump is doing to lower the barriers and address
concerns like europe charging tariffs on american cars that go in at the same time you have all of the major automakers, as you have been reporting like gm -- >> right. >> -- warning against this move from president trump how is the industry looking at this >> the industry is worried primarily because of, one, there's no certainty and when there's uncertainty in any business, but especially the auto industry, they're concerned given the fact they have global supply chains. two, i've heard a lot of people who have said, well, look, they're only talking about tariffs for some vehicles going over to china or a little bit with europe. there's also the discussion of reworking nafta. if you don't think that scares gm and fiat chrysler given how many plants they have both in canada and in mexico, and really all of the automakers, that's why they're worried. they're worried it is just the beginning of what's going to be a nasty reworking of auto tariffs that could ultimately impact both sales as well as their production schedules >> so, karl, did we see the high
water market in terms of the june numbers, the high water mark >> i think we have already been surprised how well the market has done first half of the year, so i think we could still see solid numbers throughout the second half, but it is very contingent on what phil just said if we start to see tariffs come into play, cars are already over $35,000 as an average transaction price. a lot of people think we have hit a tipping point in affordability. they go up another 4,000, 5,000, $6,000 in tariffs, it will put the brakes on car sales big time. >> phil, there's talk about toward the end of the year in november we could see the gas prices surge. >> yes. >> there are concerns about auto tariffs as well. how many anxiety is that causing among automakers right now >> i think the automakers are more concerned with tariffs than they are with gasoline prices. where the gap is right now, and i have not looked at the recent numbers nationally, yes, it is up year over year, but you would have to see gas prices
substantially move higher. i'm talking around $4.50, close to $5 before you see people say i'm not buying, i'm staying out of the showroom or i'm moving to a smaller vehicle, which i don't think that's going the happen any time soon. i think the automakers look at gas prices and they say, okay, they're going to go higher, but they're not going to spike to the point it is going to spook sales. tariffs on the other hand, that could spook sales. >> karl, if you are trying to play this as an investor or at least be safe, is there an area you think is going to be safer than others? perhaps the car buyer who's paying in cash is going to buy a certain kind of car and isn't as price sensitive, are there segments of the market that are a little bit more stable when you are looking at the potential tariff impact? >> i don't know. i think it would be a pretty broad-ranging impact if we saw tariffs. honestly, i think you would be better off thinking about
technology and suppliers for longer-term thinking, you know, like nvidia or somebody who supplies future smart-driving, self-driving autonomous vehicles. >> phil, we are throwing a lot of stories at you, but i guess under the umbrella of better june sales and whether it the continue did you see the story that lyft is buying the company that makes city bikes and operates the biggest fleet of bike sharing? >> yeah. >> i'm wondering, with the growth of lyft and uber and the next frontier they're competing in, bike sharing, what all of this means for the auto industry ultimately, whether it is a big headwind we will be driving fewer cars in the future >> i think the expectation is somewhere town the line, sarah, we will see a drop in demand for people to buy a new vehicle, but that's not happening any time soon when i say somewhere down the line, we're talking at least 12, 15, 20 years down the road, because we are a long ways from seeing robo taxis and completely
autonomous-driven vehicles coming into the market on such a mass scale we say, you know what, instead of buying a car i'll just use a robo taxi to get around there will be isolated markets where you start to see it over the next couple of years, but very, very pinpointed and very small. >> great perspective as always on all of the hot stories. a lot going on in the world about us, guys thank you. karl bauer and our own phil lebeau coming off session lows on what is a shortened trading session, the dow on pace for what would be the first four-day win streak since early june. let's bring in art cashin. what are you following today what sort of caught your attention? >> as you say, it is an abbreviated session and we're not having an awful lot of volume here. i do think that we'll go with the seasonal trading patterns the day before independence day as an upward bias, not as strong as it was yesterday. so we'll see if we can hold on
to these gains they would like to put together several plus days in a row, giving it a good look i think the minds of many traders are not just past independence day, they're thinking into next week. while, you know, i expect there will be a crowd here of some size on thursday and friday, most people are beginning to contemplate what is going to happen next week, what is going to begin to motivate things. >> although we do get a jobs report on friday. >> jobs report on friday will be very big i'm hearing people talking about you may get a great spurt around the jobs report, and then outcome the train schedules and everybody heads for kind of a lo long weekend, particularly if the hot weather keeps up so, yeah, no, i think the payroll data will be quite, quite helpful, but i think they're going to begin to worry about other things if you listen to the president
the other day, he started talking about nafta may not be renegotiated and ready until the midterm election that's dragging things outtaful out awfully long that's longer than the market was looking for. they thought they would be able to wrap it up, and that will be complicated by the recent election down in mexico. because whatever you might be able to get done in canada, and i'm sure they're working behind the scenes, it is pretty much a complete rethinking in mexico now. so these are two very portrayedi important trading treaties, and we have to get after them soon i think the markets were a little disappointed when the president indicated it would stretch out longer than we thought. >> we are marching into q2 earnings here and expecting another solid quarter. bank of america says 22% earnings growth. what's reflected in the stock market about the season? >> well, i think they are hopeful, but they are distract
by these trade talk, tariff talk kinds of things. yeah, underneath it, the u.s. economy looks basically solid. you know, the president's kind of counting on that, and the outlook for the earnings is good but when you get -- you know, as phil lebeau said, people terribly distracted by what could happen if -- by accident, and they think it will be by accident they think the president wants to walk right up to the edge of putting a tariff in and then back off and have everybody go with the kind of equalized backdrop so that's going to keep everybody obsessed in the meantime, we're assuming the economy here will continue to work well the concern is the european economy doesn't look like it is working as well as this one is. >> we've got tariffs, midterms,
concerns about global economy, how much potential volatility are we looking at compared the what we have seen in recent years? >> actually, it felt somewhat volatile, but if you look at the number of 1% moves, they've been smaller. things are relatively quiet. but i think that could begin to build up, you know they're looking at the strong base of earnings and the economy being okay, but geopolitics can get back into the game, too, but most importantly the possibility of an accidental trade war happens. you get accidental wars. world war i was an accidental war. both sides marched at each other, believing that the other guy would never step up, and they went right at it. >> they got arch duke ferdinand on the second time around. it was all accidental. >> they had six assassins and five missed. >> yes, and came around again on the same roof. >> yes, because they turned the
wrong way. >> exactly they went the wrong direction. >> let's hope the economy doesn't end the wrong way. >> reading a little about the first world war. finally, oil take. we were talking about it earlier. it eclipsed 75, first time since november of 2014 now it is down on the day. >> yeah, i think some of that is -- is the confusion, what's going to happen with the iranian sanctions, how deeply will they bite in. a lot of talk about, you know, the president saying that he has spoken to the king of saudi arabia and he will be helpful. until we get passed the tweeting on all of this stuff, the market is going to want to look at another set of inventories next week, where things are inventories have been coming in smaller than expected, and that has helped get oil back up to where it is here you're going to need drops in inventories to keep these levels. >> art cashin, student of history and the markets occasionally, too. thank you, art. >> all right coming up, more on what to expect from stocks in the second
half of the year people are going to have to eat. how will it affect restaurant stocks first rick santelli, what are you watching today >> i'm watching the markets but most specifically the dollar i will give you a riddle what does james harden, the basketball player, have in common with the u.s. dlaolr? i'll tell you after the break.
exchange." looking forward to this one. >> yes james harden if you are a basketball fan, mvp for 2018 season why did he become and why did he get this accolade? was it because people liked him? maybe they like him, but that's not why. is it because everybody gets together and just decides, hmm, let's be kind today and let's just bestow this on him? no, they gave it to him for one reason because he's the best. he deserved it you know, many people wonder why the dollar is the reserve currency of the globe, and it is for the same reason. this wasn't bestowed on us this isn't a gift. it isn't that countries can take it away. it is because we've earned it. it is strength and necessity, not necessarily choice, and this is huge, because right now, let's be honest here, we have about half the country that thinks a certain way, we have another half of the country that thinks exactly the opposite. when it comes to the global perspective, there's the same dynamic. we are really at a point in time
where there's not a lot of issues that are agreed upon. so this comes up frequently, especially considering the administration and some of the interactions and how we're getting along with some of our allies it comes up because our allies are being pressured pressured a that i think chaing. to move outside their come r fort zone and renegotiate long stanning contracts i get it but it's about our dominance economic dominance, military and the way the world was put together after things like wars. it isn't that other countries can't try to take it back. as a matter of fact, you look around okay right now, we have major competitors in the word. whether it's china or europe you think back in time when it wasn't so much we have allowed certain things like china to come into the wto fs this was much b about foreign policy as economics. to get the world to allow a
country with that many people to feed the people better to have some appreciation. to create a structure in the economy. but things change. now, we're not light years ahead. we're not that runner that's a half a mile down the track and next closest runner is way back. we're all kind of neck and neck, which means whether it's global disruption or just general competition, we have to earn this every day and i'm not sure if we can hold on to it forever. one thing i know fsure, if countries could take it away, they would have have and i look up at 10:00 eastern the numbers were so so look at nonseasonally adjusted it was unbelievable how strong these numbers were factory orders on nonseasonally adjusted basis r were up x transportation, 4.7. durable goods was worth more than 3%. this is something we need to pay attention to especially those of you holooki
the second half of the year. >> here are three predictions from analysts for this second half of 2018 one, mobile ordering and delivery continue to dominate. mobile order and pay is still the name of the game and delivery will play an important role you can expect more integration bringing delivery rather into their mobile app leader this summer and no, ma'am.com knows a louing kus mers to choose hot spots like sports arenas, beaches, parks and more. number two, value wars continue. from fast food to coffee mcdonald's is continuing its one, two, three dollar promotion which helped boost earnings earlier in the year and other names are seeing you c ining su. dunkin' donuts and starbucks offering discounts in the afternoon as a way to combat slowing foot traffic during that part of the day and three, innovation is key. it will matter in two areas.
marketing and menu we've seen campaigns from ihop changing its name to debut a burger those menu changes really matter we've seen it from mcdonald's with their fresh beef quarter pounders and duncan donuts brought in donut fries back to you. >> got it. thank you. and snp sectors doing well today. food retail, number two. only one doing better is motorcycle man fufacturers a they can czech on where we stand in the approveuated session. dow is is up six points, so we've lost all of the gains we saw. market was up triple digits. nasdaq going deeper into the red. tech's been underper fforming a morning. "squawk alley" will be right back
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holiday. >> our two geisses were bullish on prices going higher >> a couple of others doing well especially when it comes to taxes. >> nike is underperforming because of the monster run >> toss it over to michelle caruso-cabrera and mike. happy fourth >> time for the closing bell facebook falling the probe is is widening we've got a big investor >> i'm diana oleic in washington new numbers are pointing to a surge in demand. >> your prescriptions may get more pricey as pfizer raises prices on dozens of drugs. what's behind the move and the drugs impacted a