tv Closing Bell CNBC June 26, 2019 3:00pm-5:00pm EDT
candidates, but he. >> soed broad, mott -- >> greenwich greenwich? >> you'll heal more tonight. >> robert, thanks. and thanks for watching "power lunch." >> "closing bell" is right now >> and i'm wilfred frost good afternoon let's get to what is moving the action, and treasury secretary telling that it's a path to a trade deal let's economic in on the market action we essential flat with just one hour left to trade, but quite a
big divergence energy and tech not gore man 1%. health care down more than 1%. joins us for the full hour jay jacobs good afternoon to you. thanks for joining us. what's your takes on the diversity of trade today micron kind of a bellwether? >> yeah, what we are seeing in the semispace is a comeback from noo. what's the best way to play that there have been some hopes >> what we like the most are pipeline companies they don't get paid on the pril of oil, but how much oil is transported through the system it's becoming one of the biggest oil producers in the world
>> let's get to all of the stories. bob pisani is here, jon fortt is covering micron's big jump saryers has earnings from generl mills. bob? >> it's about oil and interest rates. we had a strong drawdown in crude inventories, one of the best we have seen in many years. that's driving oil prices up, energy stocks, including all the biggs production names are up. all the big refiners like marathon and valero also to the up side. the other big story is interest rates. stabilization, ten-years stabilizing. that's moving some of the interest rate-sensitive stocks for example, banks which have done nothing are rallies other groups that have had great rather and reits are trading to the down side.
jon fortt spoke with the company's ceo earlier, and joins us with more. >> yes, you can see it's up nearly 13% i talked to the ceo earlier this morning about a couple things that they mentioned on the call that probably got the stock moving one was a reduction in the expectation of capital expenditures, cap ex for fiscal to 20. another was huawei apparently a couple weeks ago they figured out how to start selling against into huawei while still keeping with the regulatory rules that the administration has put in place. i specifically asked him whether he feels confident he is adhering to the letter of the regulation here's what he said. >> in this particular case, with respect to huawei, we have absolutely studied the regulation and have begun shipments. i think it's very important that the two countries, u.s. and
china, are able to resolve their differences. >> i did try to press him on exactly how much of the usual volume of business he would be doing. he is at more than half? is it less than half he wouldn't give a specific. huawei is their largest customer, but the hopes that there could be some way around some of these restrictions sending not just micron, but other semis higher guys, back to you. >> jon, thank you very much. huge moves let's get to mike santoli. some upbeat subtitles today. >> we'll get to a few of these numbers. semi-charmed life, and micron, only happy when it rains earnings forecast not looking great, but is that bad news all away come away with me? maybe the prospect for investing outside of u.s. is picking up a bit, and then jump then fall,
and then can it continue look at the that is right of micron i wanted to put today's move in a bit of context also point out, first of all, it's well below its highs, the stock was back in the mid 50s a year ago it was even higher than that what i wanted to point out with march, this little move up that was the last earnings report the stock rallied heart. obviously that didn't quite hold so you see something similar relative to the s&p 500 over the last year, they took different pathing, but have basically landed in virtually the same spot you see this massive outperformance that build up
into the spring. you can't really call it a leadership sector, but definitely on watch for being a beneficiary of any rotation into more cyclical aggressive type names, guys. >> it feels like a binary event. >> semis are absolutely a bit of a light switch when it comes to any progress or any lack thereof with china talks. >> mike, thank you very much another earnings mills sarah? >> the story is wilfred are spending on pet food, not so much on snack fools. specifically organic revenues negative 1%, for the key north american segment, down 2% on flat volumes the company did blame snacks for the big miss, especially fiber one bars, the nature valley bars and fiber one will be a focus executives say they can fix through innovation and marketing. cereal what a bright spot.
using up improved, but neither particularly hot, what is hot is pet food blue buffalo growing 38% in terms of sales, continuing to be a driving here the story is indicative of the fact that these consumer food companies in particular are city having a hard time keeping up with consumer tastes and habits. they're not eating cereal and granola bars anymore, so they have to follow the consumer trend. >> it's a scary space. do we need a 20th variety of cheer i don'ts i don't think so they need to think about what to millennial consumers want that's different from what's been stocked on the shelves for decades? some companies are good at adapting we've seen it with general mills and kraft heinz
let's get to today's closing bell data tracker. durable goods fell in may, versus estimate of a drop of 0.3% overall mortgage application was up 40% versus last year, driven by a big up tick, lower interest rates ben is a global strategist, ben, how is the quarter tracking in terms of growth with all of these mixed messages >> in terms of the hard data, it's tracking reasonably well. we got 3% in usgdp it's tracking near 2%, so i think it wouldn't be unreasonable given that we think the trend is more like 1.5 to 2% for that to come down in the back half of the year.
we would expect some deceleration from here, but in terms of what you're seeing, it's actually quite good markets having tooled back and forth. i guess the point is you could have positive news on at least one of those, probably two of them, but probably not all three of them, because the interrelations between -- of those three things, that's ma economists like to call a tri-lemma. so the guardrails puts you in the middle of the distribution looking for things that perform well in that space sources of carey, thinking about -- where it used to be we like the u.s., we dislike europe now it's we like the u.s., but we dislike a broad array of
economying tries to reduce the beta exposure, witness the u.s., the data weakness has he fallen, industry production. have earnings come down? >> earnings expectations for the second quarter are not that high so there is an argument to be made that a lot of that has been made into expectations is. it's not a high bar. it's a beat. i guess the thing we're watching is the spillovers from industrial activity into the services areas of the economy. last week a fairly week services pmi. that tends to bounce around for month to month looking through, that does tells you something about the u.s. gdp trajectory i would be looking for that to stabilize. >> jay, what's the take from you on g-20? is it just a case of not seeing
things worsen from here? as opposed to significant improvement? >> i think there's definitely a possibility for up side. if there's a deal that comes out of the g-20 you could see a broad rally, but barring a landmark agreement, there's very little hope going forward. if there's no trade deal on the horizon, i don't really know how people justify continues to buy into this market. >> we're back in the earnings recession phase? >> yeah. >> with markets at a record high is that in the price >> not really. if you see where the markets are and look at valuations, you expect not only earnings to come down the next couple quarters, but there's not a lot of bright spots, it tarts to look more expensive. >> u.s. treasurys attractive >> it's hard to make the case you should by backing up the truck to buy treasuries. at the same time you have several powerful demonstrations that this is your late cycle
growth stock hedge, whereas 2% on the ten-year treasury is probably near the low end of where we would expect growth to end up this years, however, you're kind of stuck in neutral. ben, thanks for joining us. after the break here on "closing bell", mike nell will join us, and he'll tell us one name he's calling his tom pick. later a interview with senator mark warner. he the dow is up 34 potsin, until 50 minutes until the close.
decades. there was no stress test the first two. this stress test is still stressful. they assume unemployment goats to 10% another one half decline in stock prices, so after this hypothetical stress test, the fed determined that the banks had enough capital to withstand a global financial crisis. by the way, exceed the minimum ratios by even more than last year >> so that was last week, and the results weren't positive this we -- were positive this week -- how big are the capital return plans will be and will they all get approved >> we think they will go ahead approved but in the scheme of things, we have cap returns
calendar year to calendar year next year up over 10% to $130 billion of capital return. that $130 billion relative to the market market is 1$1.3 trillion that's dividends adjusted for buybacks. that's a 10% yield that's off the charts, the highest level in history relative to the ten-year bond. >> who is going to be the most generous >> we, citigroup assistants out on so many measures. they're still recovers from the financial crisis, returning a lot of capital, but when you're returns as much as they're returning, and you're trading close to tangible book value, it makes a different. >> going back to the whole sector, if you do get a 10% cash-back yield, the bank's management and the regulators
are saying they have enough scope to give that much capital back to shareholders so what are investors missing if they're pricing them such it's possible to have a 10% cash-back yield? >> this is almost the opposite before the financial crisis. i was negative for 17 years on u.s. banks. >> so you got there a little early. i would say. but during that time frame, the banks went down by a quarter a few years before that, people didn't care if things were growing too quickly. this is the opposite banks are resill yercht, returning capital, it's a cash flow machine, yet investors are ignoring the banks utilities trade at much higher valuationses so what they are missing is the resiliency of the capital return, and they still have last century's lens
that will change as capital continues to grow higher on the bank's balance sheets. this is record territory for cap returning. >> it feels like when you get this big dip lower, that takes down the banks, yet, when you get hopes of fed stimulus, sometimes that takes up the banks, so which is it? >> this is one big group think i've been doing this for 30 years, people say the flatter yield curve, and what you also hear is we'll buy the banks after the next recession give me a break. what investors are missing, in a couple years, the industry should have the best efficiency in its history when it comes to credit quality, it's stronger for longer once again, the capital return story is off the charts. they are focus the on the short
term going to the second quarter, capital markets has been weak relative to expectations, so what they're missing is they can't -- investors aren't looking at the forest through the trees. they say short term, it might not be great for every fed cut, when you have 50% up side in your top picks over three years, and you care about one or 2% downside earnings, investors are missing the forest through the trees. >> mike, great to see you, as also. much more on the state of the banks tomorrow when i speak with james gorman tomorrow at 10:30 a.m. on "squawk on the street", and also at 3:00 p.m. on "closing bell." two parts of that interview. a news alert on bank of america. eric has the details. >> a source saying bank of america is ending its
relationship with private prison companies, coming to that decision after -- the decision has been in the works for months they were a small client group worth noting bank of america's decision coming after wells fargo and jpmorgan announced plans in he march to halt loans. the kreismt off the group saying, the company has never managed facilities that house minors cnbc has also reached out to co co corecivic, but has not heard back. >> the dow is sitting higher here, up 42 points we were negative at one point in the session, but also a lot higher earlier as well nasdaq still the star, led by this big move up in semis, led by micron. still ahead, former presidential
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we h wedbush saying trade talks could remove a major overhang for the stock. could add between $20 to $25 a share for apple's stocks apple is having a good day, rallies along with some semis and other china-related stock. >> there's no change to the price target or no china, just a generic comment that it's affected by china trade and do therefore get a booth if the g-20 goes well a slightly odd reason to put out a note the firm says there's multiple ways for investors to win. and initiated coverage of slack with an outperform rating citing strong growth, ease of use and global reach of the plast
platform one thing that stood out for me is the fremontian model, is a binary take, and it's steep. pretty aggressive. >> yeah, i think thinks reminiscent of the beginning of the social media he revenue. this is a new way of communicating, but on the growth story, they have only penetrated about 1.5% of the addressable market unlike uber who said all the growth has already been hid, with slack it's still early in the adoption curve, which is maybe people he excited. >> what about abby a terrible reaction, do you think wall street will eventually embrace this? >> people hated this deal. i think it's a big company looking for another big company,
because they have run out of other options they have a patent cliff in 2023. it's not organic it's not -- this is just a buying spree and we have to be careful about buying sprees at the end of a late cycle. >> to that point, leerink says it's he confident, and catch flows without disrupting the effectiveness of the big unit. >> and abbvie is now on a 6.5, so an attractive valuation we have just over 33 minutes of trade the dow is up by 48 points after the break, a number of tech firms reportedly side-stepping the huawei ban and finding ways to redoom shipments. a top analyst will weigh in. that's coming up
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treasury secretary mnuchin telling cnbc there is a path to a trade deal. courtney reagan has the news update. chuck schumer took to the senate floor with a graphic and disturbing poster, showing a picture of a father and daughter who died trying to cross the rio grande river. >> the president's actions are a whirlwind of incompetent leading to pictures like this we've got to change our policies, so president trump, if you want to know the real reason there's kites on at the border, look in the mirror a michigan judge will stand trial on three felony charges. teresa brennan is accused of giving false testimony about a cell phone during her own divorce hearing. he sways suspended with pay back in february. attorney general william barr surprised attendees at the
u.s. attorneys he national contention by performing "scotland the brave" on the bagpines he was joined on stage by the nypd emerald society it turns out barr is a longtime bagpiper. >> respect respect. >> who institute >> pretty cool not easy, i'm told under 30 minutes to go back to mike santoli. >> i'm calling this one only happy when it rains. it's certainly raining on corporate earnings it shows earnings revision ratios, basically the number of upwardly revised earnings photograph, compared to the s&p 500 itself so when it's red, it means earnings forecast are being slashed. here you have some big bear markets in recessions. that's the deep red periods.
also during this bull market we've had other periods with lots of negative revisions the market did struggle here also first quarter of this year, revisions were lower, and we did manage to bounce off that. it isn't necessarily the case that the market follows these early revisions down we have the room for pleasant surprise that's what we have to see right now. our expectations now, or will they be low enough by the time we get the reports can the market get a bit of a lift here? i guess the one cautionary tony is the markets are at a high that's probably the area you would look, some pleasant surprise >> mike, thank you speaking of earnings, nike is gearing up for results tomorrow after the bell, but making headlines this week over a controversy surrounding a product launch in china.
the company reportedly pulled a line of limited edition shoes from china played by undercover, according for "the financial times" this comes after the designer shared an instagram post the post has since been deleted. it shows the sensitivity around doing business in china. june takahashi is the designer i actually have the shoes. it was a limited edition release, but you've got to be careful. >> you're saying we don't support the protesters who are protesting the right to democracy in hong kong it's a controversial issue for the chinese. >> they have at least suggested they're siding with china on this debate. >> i think they don't want to offend chinese consumers already calling for boycotts of the
designer. >> i get that. >> i will say it's different when they launchesed the colin kaepernick ad. >> if this wasn't nike, i would say they're dodging around the edges, but they have taken political positions and action on this. there's a lot of people protesting for democracy in hong kong, who chef slightly at least slapped in the face a bit. >> i think they did not want to take a position on that issue. >> they kind of he have, and china is as much as an important market. >> i get it, but they have made a decision no dollars, not politics -- but again it was the designer's opinion. >> i get that, but they still pulled the shoe. anyway earnings preview coming up. chip stocks surging today led by micron.
he here's the ceo earlier. >> of course the situation does remain fluid with respect to huawei certainly it has an element of uncertainty. we will always comply with the rules and regulations of the u.s. government, as well as, for that matter, rules and regulations of governments in all the regions where we operate. let's bring in senior analyst at bernstein what is your tame on this on how easy it will be to get around this ban and whether it's a temporary loophole that would get closed or something the government will have to allow to continue >> i actually think loophole is the wrong word there are a couple different mechanism toss allow shipment. >> one there's a temporary general exports license that has
been grarchlted already. >> you can't ship to new projects, but things already in place, they can do that. we'll see if that gets renewed or not the other is for protects made outside the u.s. stuff made outside the u.s. mand oy may not be banned it if the controlled portion is less -- there may be summer mechani mechanisms >> it's confusing. broadcom indicate out, cut its
outlook, saying the trade war is creating uncertainty, customers basically pulling back, and then the positive signal from micron. what is the rest of the group going to look like? i also think broadcom in general has been more conservative in general the entire ban, it's not fun, but it's manageable we know how much he is of these businesses you can quantify it, account for it we'll seen other companies, for example, added to the list these are the things i wore
about more they're harder to want fit >> jay, what's your take more broadly? do you think it's a signal that it's overdone? >> no, i think they're fighting for survival they have a lot of business with huawei they need to figure out how to keep this going but whether we look at the semispace in general, there's a lot of challenges there we think it's a lot of risk. we like the cloud computing space more >> stacy, one name you want to be in. >> look, i don't want to have to bet on that, either.
what i'm looking for are names that have ease yurt expectations so in my coverage of think nxp fits all those categories. it's trading at something like ten thyme earnings whereas by every metric, it is a far better company, and trading cheaper than it ever has that's one i would be looking at. >> stacy, thank you very much for joining us. >> thank you. we're going to have much more on tech and trade, especially this huawei issue when we he speak to senator warninger a bit later. higher on the he dow
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the stage is set one of the top issues is -- let's bring in analyst from raymond james. chris t. does center around what are democrats going to do? what should we be listening for? what should investors be watching for tonight. >> that's a great question, sarah. what we see is whether or not joe biden is going to continue to have his commanding lead when we debates tomorrow night, and with elizabeth warren use the fact that she is the proust high-profile candidate on the stage tonight, to advocate for her progressive positions. so if you wering to a medicare for all, start to really take
the lead in the democrat primary, it would be a rocky road for some of the managed care names as well as hospitals. >> i need you to clear something up for me. when you say medicare for all, the sanders/warren plans you're talking about eliminating private health insurers. it seems like everybody else is on board, but they have plans to keep it. clear it up what it means for these big companies. >> what's fascinating is medicare for all seems to be viewed as in the eye of the beholder everybody has a different view what i've seen is what does bent write sander actually put in writing for me care for all. that means that basically medicare's offered for everyone. private insurance is completely banned, can't have anything unless there's something that medicare doesn't cover like electricive cot mountainic surgery. cigna no longer exists
humana no longer exists, all these big players, market caps basically go to nothing if this were to pass, which is exactly why i don't believe it's going to happen any time soon, at least not in the next three to five years, even if a bernie sanders or elizabeth warren were to win remember i have 24 democratic senators who are in office right now, who have said they do not support eliminating private insurance in the health care system as we speak. >> but chris, even if we do get the most progressive of possible health care plans enacted by the next democratic president, were they to win, are there stocks that benefit you just listed the once that were suffer. are there anything that would in fact benefit >> we did a subject sector analysis across the entire health care sector the only folks that maybe could benefit would be the home health providers. that's because they tend to get reimbursed a bit better.
so the home health space is one area you would be, but like i want what we have seen so fewer this year, is managed care names were going up 12%, and medicare became a topic and they ended up dropping 20, and they've clawed their way back to be flat. we think they're going to continue to accelerate, as they become increasingly comfortable with the fact that medicare for all doesn't have a political path forward in the next three years. >> chris, thanks for joining us. >> thanks much we have just 13 minutes left to trade we're higher on the dow, fractionally higher on the s&p we'll see if it -- oh, it's in the red, just changed. i was wrong. we have the nasdaq -- >> that's what it does >> particular in the last hour of trade. last-chance trade, we're on earnings watch after the bell. find out what to we come right back [leaf blower]
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that would be down 30 and 15% respectively it comes after better than expected results from len noor, but len noor's stock took a hit when it talked about the headwinds from tariffs would elbe listening for the q.t" word. kb stock also feld stocks we are downgraded last week by raymond james analyst buck horn. he said on cnbc yesterday, it was an awfully sluggish starred to this year's spring season back to you guys. >> thank you, diana. the dow trying to close higher up next all the angles of the market. >> and as we head to break, the winners and loser in the dow as we speak we'll be back in a couple minutes.
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initial lip. i'll be watching how some of the more cyclicals do tomorrow going into the weekend we do have the g-20 out of the weekend, and i think we're going to want to hear some progress on the trade front. >> what do you make of the size of the move in micron? >> i think it was interesting, maybe selling got a little overdone on the down side, but one thing for micron if you look at where it was trading, it was trading at the bottom of the well-defined range we had seen lately i don't think it was going to take much to get investors who want to get back in there. but it's worth noting that it's still wet off its highs. nike earnings out tomorrow, how much of a bellwether will it be >> i think it will be important for the consumers, one we saw a softening in china that was a major growth area in the last report. they were already starting to show weakness in north america we had a bit of a drop in consumer sentiment, so it will be interesting to see what they
do right where they're trading is a well-define support left i don't see a significant price level. if they do start selling off until we get towards 78. right now the options market are tell us the range to be about $3.90 in either direction post earnings. >> shawn cruz, thanks for joining us to mike santoli. hey, mike. >> yeah, we're calling it come away with me that's maybe sending your money away from u.s. markets that's been the trend very recently this is the s&p 500, compared to equity markets in the rest of the world. the all-country world index, except for the u.s when this line is going up, the s&p is outperforming when it's going down, obviously it's the reverse, so tremendous outperformance right here starting in 2018, trade war, a lot of things going on here. you had a gut check basically toward the latter part of last year, but an up trend again. this is what i'm highlighting,
that little comeback compared to the rest of the world. the dollar is down, so i think what you could say is there's room for this to continue for a little while in fact it's happening today, this week, without changing the overall picture, which is leadership, if you look at a trend line of the u.s. you could still have the rest of the world outperform and still have the s&p be the leadership this is the de namic as people figure out whether to rebalance or not let's get details from bertha. >> the leadership definitely coming from micron that's helping a lot of memory players, and also the china exposed players, when he talks about finding a workaround for potential tariffs. the fact that there are some positive comments from secretary mnuchin has lifted the chinese tech names as well, which have suffered pretty badly over the last few week, down 26% year to date also some of the lag guards
today include cam byian. that is one of the networks coming public today, priced below the range, and also looks to close lower on the day. let's head on over to bob pisani. >> hello, bertha, drifting lower, the big story of the day, nice rally in crude oil, in gasoline, inventory drawdowns helping. we're seeing a rare rally in some of the oil stocks, including some of the refiners, the exploration and production companies like eog, marathon and apaches. defensive sectors, consumer staples are having a very rare down day this has generally not been the trend for a long time. they're down, of course on concerns that general mills was a bit weaker, driving some of the food stocks. on top of that, we have seen stabilization in interest rates. the ten-year is essential stabilizing just above 2%. that as provide someday port
today for bank stocks. finally we are seeing a bit of a down draft in utilities and reits, which have both hit historic highs recently. there's the historic bell. dow jones industrial average is essential closing flat on the day. it was earlier higher. s&p also down by about three points. the snazz dak rose for the first time in four sessions. micron leading the charge there after good earnings. s&p 500 did close the day flat, which masks some strength we saw in groups like energy. the dow was higher for most of the day. it does just close about nine
points it was up 111. we lost some of the china optimism pretty quickly. it also masked some weakness two sectors up real estate and utilities down more than 2%, so a lot of divergence today, despite markets ultimately ending flat as you said, energy topped oil prices higher, apple also sort of stands up 2.4%, not really clear why, almost as if rallying on those comments from secretary mnuchin, as if they were more positive about trade than they seem to be, but a lot of focus certainly on the trade issue >> just in general, i think the semiconductors are in the eye of the storm here they are still off more than 10% from the 52-week highs on the trade news, they have a glimmer of hope, micron saying they can actually get around the huawei rules and start shipping
some of the packages to them don't call it a loop did up hole, but they can comply with the law and do that. we'll hear from senator mark warren, and later, we'll hear from carly fiorina first up, though, carrie firestone is with us from r.e.s. asset management binet from ubs also joins, mike, any song titles? that was such a good theme. >> you're going to put me on the spot, but i'll get to that it seems like the market is in a breather.
he i don't think you would necessarily say it's overly negative or positive for the next move, but the fact it's been able to wait and live with treasury yields down near these lows is probably, you know, a benign sit ways. >> we've been underwhat et for a coming years, it's been a miserable group to be invested in for the last two years anyway there's no reason that investors who have not been participating shoot just buy some energy stocks or semis, because they have underperformed if there's going to be a deal and global growth is going to pick up, that's the sort of way that one might want to play it. on the other hand, you have to worry about whether there is a
deal, then the fed has to decide whether they should raise -- should lower rates one of the reasons they're going to lower is because, you know, tariffs were going to put such pressure on the economy. >> we've already started toss some pressure. is it enough for the fed to cut rates? >> maybe they have to do 25 basis points, but the idea of more than that if there's no more battle, if we're going to see an improvement, i think it's something that he has already talked about might ease the need to lower and get back on track where they're fine where they are, and we can just be in a holding period until we see if the economy micks up on its own or not. >> i see you're overweight long dated u.s. treasuries. why are you positioned like that it's a natural defensive offset.
for should reasons were underweight industrials. we like to, you know, keep a position like this, which is well diversified it has worked well over the last few months, and i think it demonstrates some obvious points first that there's value in equities to start with, or we would not be here. second, you know, you can't lose sight of valuation metrics in the noise of news flow, and third, as i said, you know maintains a diversified portfolio is usually a good thing to do. >> mike, the semitrade, you say it's not all clear >> there have been head fakes before i don't think that -- i think it makes sense that you're going to have these exaggerated moves in an areas that's at the whip end of this is global growth fears it's a net positive when they start to perform better, ought these groups with decent appetites, transports were up a
bit. banks outperformed slightly, i think a bit of a reversal, and then energy i just think is washington out >> mike, either way, whether it's micron today, apple, which is also up today, but i'm really refer to tim cook's comments about whether he expects them to be hit bydemand, are we see u.s. tech companies a little more nimble, more flexible than the likes of huawei? >> for sure. if that's the standard, absolutely with apple, i mean, i had some people telling me today apple just bounced off the 50-day averaged, and it's a tactical move, a leadership stock, as money flowed back into some of the big tech stocks, but yes i think there's more resilience, although the chinese etfs were up today, too. i think there was a general relaxation, whether it was merrilled or not >> do you make any specific moves tied to g-20 before or after? >> not really. i think it's going to play this
at all, it would be toward the cyclicals. if there's going to be anything out of this, which is positive on trade or in terms of feeling better about the global economy, then you'll own semis, or you'll own deere, which has been one of the best stocks, auto parts, you looked at the ways the semis acted. they're very cyclical. that seems to be where the market wants to go we have seen consumer staples, as oh, everybody is moving toward defense that's when everybody is feeling that the threat of the tweets are negative, but on days where we're positive about the globe and economics, you've got to own the cyclicals. >> bine teismt, what is your top overweight sector? >> we have some exposure in foreign markets that have underperformed severely the last year or so, like where
>>. >> japan, for example. >> in the u.s., what sectors are you overweight >> the rest of the market. >> okay. >> that's a lot. >> what about small caps, what's with the underperformance? june >> at this stage of the cycle, you know, small caps get pressured. they are the first to see margins begin to drop. i think we're seeing that. usually that happens much later for the s&p company which is internationally diverse fitted they should benefit from the dollar being weaker. certainly from the fed helps i want to ask you what you this i about private market valuations you've been looking at some recent moves potentially from van guard. >> well, it's an interesting statement they made the other day about how they are looking at private equity as sort of the next big market in which to
participate. what's striking about that is vanguard has been an enormous factor, an elephant in the room when it comes to liquid markets that are passive, where they can create a lot of pricing pressure downward, and have millions and millions of participants private equity is inefficient, it's illiquid, had has very high fee structures, and you wonder how they're going to change that market can they price it down can they create an exchange? you know, it feels as if the vanguard either believes that the public markets are shrinking and they have to participate in the bigger market, which may be the private equity markets are taking so much of the capital available, that's the only way to really be a big player in the future, or perhaps they're a bit scared they're scared to not participate, and they feel, you know, if we're going to be in it, we have to do this, even though it's against everything
we've stood for in the past. >> 5.5 trillion isn't enough >> it's a nonprofit. >> exactly thank you both for joining us. >> thank you. >> thank you. still ahead, we're waiting earnings from kb homes, plus instant reaction. >> plus a first on cnbc interview with senator mark warner he that's after the break.
welcome back to our closing market roundup. we have a look at the big movers bertha coombs is any nasdaq. bob? >> interest rates, a about big rally? energy, big drawndown in crude oil. as well as some of the refiners, consumer staples, a very rare down day, primarily this is because of the -- a lot of the food stocks like hershey's and kellogg, they were also on the
down side. banking up, utilities and reits down guy, back to you. >> a check on the biggest movers over at the nasdaq, whichever the big winner bertha coombs has that for us. the theme was a hope for a resolution on the tariff issue micron a big winner with regard to that, strong earnings, but even with today's big move, that stock is down since the trade war focus began in early play. we did see a number of other players like apple today that helped boost the nasdaq, providing the impact, and a lot of its supplier, which have more than 50 percent exposure, all moving higher on hopes for the g-20 meeting between president trump and xi tomorrow. back to you. okay bertha, thank for you that meantime, results are out. diana has those for us. >> a nice beat for kb.
down 9% from a year ago, but compares to that with expectations, revenue of 1.02 billion. the guidance was between 900 and 950. average closing price, $368,000 above the estimate of 378. the ceo said demand was strong, keeping pace with the exceptional absorption rate we generated in last years's second quarter. he said we were well positioned with the ongoing expansion of our community count, increase in that order nothing in release about a slower spring season of course we have the conference call later this evening. back to you guys. >> diana, so price is down, obviously rates are down would we be expecting a big pickup in volumes the rest of the year we would think so, but we got the new home sales numbers out
yesterday for may. it was a huge drop we saw mortgage rates from 4.25 to below 4%. in may you would have thought that would have brought out buyers, especially for new homes, but it didn't the builders are still bullish think if they have the lower rates, but it's affordable bottom line, and they're still not building enough of those entry-level homes that we are looking for. >> diana, thank you. ken leon from cfra research joins us to break down the numbers. the stock is reacting accordingly. ken, we had a similar reaction with len nonar, the conference l is coming on at 5:00, but i think what is different is they beat the numbers because they had a 17% increase in total communities, so that means you've got a lot more opportunity to have positive order growth, positive in terms
of home deliveries mean while pricing is going down, and really we're at the very end of the spring selling season, which is 40, 45% of the industry sales so it's a good quarter, but if we did a same apples comparison with last year, it would have been down. good for kb homes, very nimble, lennar is so big, they missed. >> do you have a sell on kb then >> i do. >> are you going to clang that perspective? >> so kb homes has a higher concentration of geography in the west coast that's an area that's been difficult. also kb homes still doesn't have most of their communities in entry-level homes. a name we like is, the ticker is mth, they're furthest along in the small, mid-sized home of getting where the demand is, as
mentioned before. >> they've been all over the place. we've seen it in a bit in the refinancing and mortgage application data aics somed bag, though. >> it's takened edge off the affordable problem i do think the volumes, land costs, all the stuff that are not really directly under the control of interest rates are not necessarily helping out. ken, i wonder, you know, there's a lot of attention on how rent is becoming unaffordable in a lot of areas and there's so many land use restrictions, maybe some political moves to loosen that up in some regions. is that the big-picture stuff you have to look to as housing being a leadership part of the economy? >> the rental market is still outstanding, and we are seeing excellent demand, but bringing it back to home builders,
they're actually looking to do their first community with a partner to build a community for single-family rentals, kind of like what blackstone did after the financial crisis it's telling you something about the outlook for buying new homes, as we look ahead for 12 months residential rreits are doing outstanding. we think they're doing well in the coastal markets. i would think rent is still winning out. >> what about this tariff issue that diana mentioned that was a negative on the call what's the exposure for the group? >> the exposure comes down to really what impact it has on gross margen lennar yesterday they mentioneding there pressure in terms of skilled or any labor. lumber actually has been a positive, and that's related to
trade with canada. overall, the big issue for cost is always land at 60, 65% of total costs, and to the earlier point, land is getting more expensive, which means you've got to increase prices for homes. >> ken leon, thanks for joining us up next, a pop, then a drop? mike santoli back at the telestrator with a look at the relationship request equity rallies and yields. >> and the crypto comeback, making a steady climb over the onst mth can the bounce actually last we'll discuss, coming up
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voya. helping you to and through retirement. ♪ if it's taylor swift, it must mean mike santoli's dashboard of the day >> that is part of the soundtrack of "my home." every time you smile, i smile is a lyric. that's another reason. >> very good thank god for teenage daughters. it's show youing the relationship of prices and actually there's no rule of exactly how they have to interact with one another. a bit confusing, but the ten-year treasury yield is in orange you see it going up and down that's the right-hand scale.
and the dotted lines here for the s&p are when stocks are going up, bond yields are going down you see multiple periods when that has been the case stocks have also gone up when there's a solid line that was here, that was about 2017 so it's not unusual or less legitimate that stock prices could be going up when yields are going down so you don't have to necessarily feel that one market is telling a particular story with what the other market is say. one other thing i was going to point out is 2016 was another period when we saw this, right that was right after the big global shock, yields stayed low, and stock prices went up so this is where we are right now d. it mean if bond yields go up right now, that stocks have to go down will it start to change? i think it depends on what kind of stocks work or don't work.
>> for all of the times the dotted lines, as you said, where stocks have gone up, it's been because the bond yields have fallen because of an increased dovish stone from the central banks as opposed to outright recession fears. we had a bit of both over the last six months, but. >> though 2016, you bullet up a lot of recession fears, and you had a dovish pivot, but it was one rate hike, and the fed went on hold, but the rest of the central bank certainly became very dovitious. >> and the age-old question, where it stands out, as we get into the latest stages of this expansion, and with rates already very low, can that stimulus, that dovish tilt from the central banks actually deliver? >> does it run out or do we basically become
inyurted to it we just don't know. the senate approved legislation providing 4.6 billion to care for thousands of migrants at the border it resembled a package democrats pushed think the house, with more constraints they hope to send a compromise measure before the july 4th recess. hundreds of wayfair employees staged a walkout to protest the company's decision to sell furniture to a detention center it was held in boston and employees are upset over a $200,000 order from a charity that manages a texas detention facility representative jerry nadler, spoke about robert mueller's upcoming testimony and the potential impact it could have on the american people >> just if he says what was in the record and says it to the american people so they hear it, that would be very, very important, because they have
been subjected to months of deception, as to what was in the record by the attorney general and by the president. >> of course, mueller did have a news conference where he said what was in the report that's a cnbc news update. back to you, sara. >> contessa, thank you. still ahead, gearing up for nighter, all the key themes that you need to look out for, straight ahead. plus former presidential candidate carly fiorina will join us to talk about the trade war, the impact on the tech war, the impact on the tech sector, and much more.idelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... only from fidelity.
what is interesting ever since facebook announced libra, bitcoin has been up every single day. overnight ledger x getting approval to give retail investors a mechanism. these contracts have already been available to institutional traders since 2017, but it's worth noting that bitcoin is still a highly concentrated asset s getting more instruments approved could possibly expand the pile wilfred and sarah, back to you. >> we were talking yesterday about whether both of these asset classes are linked in terms of an alternative, but what do you feel when you talk to the cryptoexperts >> we spoke to the global strat kist at invest ko the question
is whether this is in fact a good place to store your value that's something we're trying to figure out, given the big moves we have seen. >> seema, thank you. mike, gold, bitcoin? >> real yields at zero although, as impressive as this comeback is, if you really looked at, say, a five-year chart of bitcoin, you can't tell whether this is an echo bubble that will fall short and take out those highs
still ahead -- >> i'm going to talk about that with james gorman tomorrow. >> libra particularly i want to know if the banks were even approached why are there no banks involved in the 28-company list of partners is it because the bank said nor or facebook said no? >> do they need the banks? still ahead an interview with he former presidential candidate carly fiorina. we're coming back in a couple minutes.
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regulation i share that concern i think facebook and google have amassesed enormous power i think there's a complete lack of transpatterns really in terms of how these companies deal with the information that they have honestly, i don't quite understand facebook's move into bitcoin, because i think it is going to attract even more scrutiny and regulation. if you're dealing with everyone's private information and money at the same time, that's going to draw a lot of attention. >> carly, is this a simple size and scale issue, or more specific like privacy or responsibility for the accuracy of the content >> i think there's a whole range of policy ideas. one is size and scale, let's just break them up i tend to favor regulation that's focused on creating a floor below which a company's
behavior cannot fall so personally i would favor far more transparency around what they actually do and how they do it, and policies that require consumers to opt in, as opposed to the way it works now where consumers, if they understand it well enough, can opt out, but most consumers really don't understand what either google or facebook are doing i think that whole range of options is now on the table. i don't think we're going to return to a time where regulation of tech is off the table, as it has been for a long time with our without trump, i think google and facebook are heading into a different kind of scenario in washington, d.c. just as they are in europe. >> carly, there's also been this idea if you treat photophotoand google like publishers and hold them to the standards of the rest of media, this whole range
of options, get if you're ceo, you have to either be contesting or being proactive about or preparing to defend against. >> yes, i think that's right this may not be the perfect analogy, but i recall working at at&t a longtime ago, but when divestiture was first being discussed. what you saw was a company, at&t, that fought against being broken up or additional regulation for a long time, but never really prepared for an alternative they could live with so, towards the end they were stuck with very unpalatable choices. so my advice, for what it's worth, would be to start thinking about what policy prescriptions you think would serve you, your shareholders and your consumers best. don't stick your head in the sand and pretend it's not going
to happen. don't fight against everything and say trust us, we're doing better, our motives have pure. both have tried that, it's not very effective, so i hope they're spending time and energy about thinking what would work from a policy point of view that they could live with. >> it seems like they're doing that increasingly, saying regulate us, we want to help be part of the solution i don't know, looking at gdpr in upas an example, that that didn't do too much damage? >> well, you know regulate us, we want to be part of the solution is actually smart at this phase in this stage, the worst part of all for them is uncertainty. that's certainly what investors. >> this is sort of the wild, wild west.
he i find it very odd, because i think it is going to draw even more attention, even more scrutiny, and it will not build trust, in my view. >> what's your take on the trade war and the ability for u.s. tech companies to weather the storm relative to chinese tech companies? >> well, what worries me is not that i diagnose agree you that china should not be paying consequences i was one of the executives that lobbied heart for china's entry into the wto, and they made specific commitments to the business xhurcht and other trading partners they have manifestly not lived up to those commitment, and it's true as a ceo, there's no question that chinese companies are stealing american
intellectual property. on the other hand, this will not get resolved unless somewhere in here there is a win for china. this is what troubles me about trump's negotiating policy it seems to be threaten, threaten, threaten, threaten, and an attitude of we're going to win and you're going to lose. that's not going to work there has to be a win in this somewhere for china. so i hope somebody somewhere is thinking about what we want certainty, but what the chinese are going to have to get to stop the war and get to a solution. >> i wanted to ask you about the democrat debate tonight and given your experience on that stage. >> the honest truth, i'm not going to be watching tonight, now because i have a moral objection, but i had a dinner engagement that frankly is more important to me. there would be a lot of debates,
but there's no question that ten people on a debate stage is kind of a scrum it would be interesting to watch who breaks out of that scrum i think for those people who are hanging on the edge, this is a particularly important night for those who will be around a long time, i think it's less an important night unless they blow it in some way >> carly, thanks for joining us. much appreciate it >> thank you still to come, virginia senator mark warner will weigh in on the trade fight with china and why he wants big tech companies to put a price on your data we're back in a couple minutes
nor warner introduced a bill this week, and he joins us with a "first on cnbc" interview. thanks for joining us. >> thanks for having me. you sea people's data has a value, but you're stopping short of saying facebook has to pay users for that data. >> this piece of legislation is one in a series of bills that i'm laying out that all build off the white paper i put out last year with about 20 different ideas on how to pull guardrails my background was in the telecom space and the wireless spa is when people said you could never put a value on spectrum. i'm saying that same kind of idea we need to bring to social media companies.
i think individuals need to know what data is being collected, first of all so there's data transparency, and along with that, what ha data value is, at first it will be somewhat of a rough cut, but i believe the market will help refine that, and if these companies have to report that on a quarterly basis, they will be one tool that frankly may bring more competitive. if people know your data is worth -- and mine's worth $8 a month, sara's is worth six, some company may mediate to provide you some levels of protection. this is one bill another bill i put forward is about dark patterns to maybe sure some of the manipulative processes you see on a website, where you see seven arrows flashing, i agree, and you can never find unsubscribe, social media companies spend millions on way it is to manipulate consumers. i've got another piece of
legislation, for example, on that, i'll be happy to go through the others as well, but we're here to start at least with data valuation. >> my question on this, is why is my data worth less than wilfr wilfred, but this is already -- facebook already puts it out revenue per user versus the amount and vowel of data collected on us. what that data is worth facebook does not promote that at all, does not put it out at all frankly based on how much information is collected on each of us, that number will be different. i think this is a valuable tool. >> i think it ought to be closed i think consumers have a right to know, and the other part of the legislation is actually have the platform companies indicate what data points have been collected about you. one of the things i find remarkable is some people are, you know, understandably afraid,
well, what if the spy agency or law enforcement know about me as an american. if you're a heavy facebook or google user, chances are those platforms know an awful lot more about you than the united states government does. i frankly think as consumers, at least vis-a-vis these companies we have a right to know. so you want users to delete all data that's been collected is that ever or just once the bill has come? i think that would be on a retrospective basis. that's similar to one of the provisions in the european privacy bill the california privacy bill. frankly this is again one of the areas where i think united states' failure to step up and set national standards that become de facto international standards is frankly a mistake
for us as policymakers, and candidly for the social media companies, they have changed their tune a bit in that they recognize there's going to be a need to have privacy rules, and there's going a need for more transparency i think they actually want a federal standard, the challenge will be will they want a federal standard that's really got some teeth and provides consumers some protections and some transparency. >> senator, you mentioned that this data evaluation tool, this standard would perhaps increase competition in social media, and i suppose that's the idea that other competitors would therefore feel like they had a worthwhile target to go in and try and utilize some of these data and compete in that respect. do you think this would serve as enough of a check on the power of these platforms that no other regulatory remedies might be needed i mean, obviously you have people talking about fines and breakups and the rest of it. >> i think the data valuation
bill is necessary but not sufficient, so it's great that we know what data is being collected and what its value is but if i don't then have the ability to be portable with that data, if i'm tired of the way i'm treated on platform a, make it easy for me to move my data to platform b and still have the ability to communicate back so data p data portability if we don't have the ability to restrict some of these manipulatetive practice -- manipulative practices, we had a major setting on that bill yesterday and i have another republican partner on that, senator fisher from nebraska we're going to need that component part as well we're trying to break this out in component parts because it goes into an overall umbrella
around both privacy and transparency, that i think consumers want and demand and my appeal to the social media companies is, you know, one f, f we don't do this, you're going to have other countries doing it they have started move on content like the uk and australia. i think the advocates for breaking up are actually going to gain more traction. >> senator warner, this morning, president trump said on the antitrust front, i assume, talking about the eu's tough regulations against our tech firms, we should be suing google and facebook and all of that, which perhaps we will. would you be on board with the president over that course of action >> i would rather start with, i think, the sensible regulations because i'm concerned that these are all global firms and i am concerned particularly, carly fiorina's comments earlier around china, i don't want to replace facebook, google, and
twitter with alibaba, and ten cent i think there may be smarter ways to get at this. part of this is around transparency, some of this goes to questions around identity validation on the internet but i do think we're going to need some of these guard rails or i think candidly, the answer that simply says break up may be the answer, if we do break up and we don't provide any consumer protections, i'm not sure we're going to be in a better off position, but i'm still open to some of those arguments, but i want to at least start with seeing if we can move the ball in these other spheres >> senator mark warner, keep us posted, please on your progress. >> more to come. thank you. i will pick the keys up here up next, your wall street look ahead. sarah and wolford have the key things every investor needs to have on the radar as we head into the trading day closing bell sounds exciting, mike.
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since i added futures, i have access to the oil markets. and gold markets. ok. i'm plugged into equities. trade confirmed. and i have global access 24/7. meaning, i can do what i need to do. then i can focus on what i want to do. visit your online broker today, to learn more. time for our wall street look ahead, nike sent for results, and results of c car, after the bell tomorrow, let's start with a preview of nike. >> sarah first, mike.
>> you have the anchor position. >> nike has been in growth mode, we know that and on an innovation tear with vapor max, three things to watch tomorrow, tariffs. nike has not been hurt so far, but if the u.s. china fight does escalate from here and those threatened $300 billion in chinese imports get put on trump's tariff list, that doesn't include sneakers and apparel. nike will have to address how exposed they are and how they're going to deal with that rising cost china, this has been the growth engine for nike, 20% plus sales every quarter, but since china has taken a more nationalistic tone, will consumers start to take it out on american brands in the region. can it keep up that growth, and then there's north america, sales have rebounded in nike's home market in a slump retail sales have been mixed foot locker has a rough quarter. it stock got hammered. investors are eager to see the
momentum will continue as well nike shares have faltered a little bit. >> they have underperformed the broader market this year zoom out and they're doing better. >> they kwqualify as the quilt >> willford has a preview of ccar. the fed will release the comprehensive analysis, whether or not the fed has approved each bank's capital return plans for the year ahead most will announce overnight exactly how much they're returning to shareholders, and the split between buy backs and dividends. and golden sacs received a conditional nonobjection, meaning that capital distribution squ distribution somewhat. that was in part due to the tax reform there should be no issues for anyone tomorrow. as we discussed last week, analysts expect around 10% cash
back yield for the big banks on average, which was very high by historical standards, and speaking of the banks, don't miss tomorrow, ceo james foreman, 10:30 a.m. eastern time, and then also more with a 3:00 p.m. exclusive on closing bell. >> speaking of not just the capital positions at the banks, but the stockshave not responded very much. i saw some work about the credit spreads of banks of financial issuers at their lows. the bond market has never been more comfortable with the capital position of these firms. it's as if they are kind of being run for the benefit of bondholders right now. they're so safe. >> some of the big banks as well are trading about 50% of the average p of the s&p 500 as well, which highlights everything you need to know but if we do start to get to fears of recession, of course they don't tend to farewell and that amazingly has been the question mark for well over a year now.
>> for your preview tomorrow, what are we watching in the market in terms of this sector rotation in the market internals to tell us what the next move is >> i think it's still going to be yields will lead, whether the cyclicals can continue to bounce you have to have more than one day's little bounce to say there's a rotation going on. >> i think, mike, you should do the good-bye you're the anchor. >> who's preview was better. >> yes we're out of time. "fast money" begins right now. "fast money" starts right now, overlooking times square, i'm scott. tim seymour, brian kelly, guy adami. one top strategist says there's too many bears on wall street, but that could be a good thing she'll explain. plus, the man who called the semisurge is back, and he says a number of beaten down dow stocks could be the next to break out we start with the semishocker, the chip maker