Skip to main content

tv   Squawk on the Street  CNBC  August 8, 2019 9:00am-11:00am EDT

9:00 am
selling its oil to china, what's going to happen there. have you heard people talking about that ten-year note right now, let's show you what's going on with that as we flip that board around you're looking at 1.753. i want to thank our guest host this morning, anthony, who's been holding back the entire time tom has been with us for three days he's been fantastic. >> great three days. thanks, andrew thanks, melissa. >> join us tomorrow. "squawk on the street" starts right now. good morning and welcome to "squawk on the street. i'm david faber along with jim cramer we're live from the new york stock exchange carl quintanilla has the morning off. let's give you a look at futures. you can see we are looking for a higher opening on all the major averages, at least at this point. the ten-year note yield certainly one of the key stories. certainly has been for me and for you. look at that back to 1.755. this is something that hit 1.6
9:01 am
yesterday. >> big seller, big buyer, big seller, big buyer. really kind of crazy >> but there we are more or less back to where we were a couple days ago before some of the recent volatility, of course we'll get to why things have calmed down a bit. let's get to our road map. it starts with that pause in volatility stocks pointing to a higher open you've seen of course the bond yields are stabilizing a key downgrade this morning shares of kcaterpillar lower wih concerns about the trade war with china and some earnings bright spots lyft and roku both surging ahead of the bell. we'll also get to other names as well let's begin with the markets futures, as you saw, pointing to a higher opening on wall street, this following the s&p's biggest intraday come back of the year global bond yields are stabilizing. investors digesting better than expected trade data that came out of china in terms of exports there. an escalation in trade tensions between the u.s. and china has
9:02 am
accentuated fears in recent days former treasury secretary jack lew weighed in on the trade war yesterday on "the closing bell." >> we're at a dangerous moment right now where a trade war is escalating into currency responses, and it's time for leaders on both sides to find a way to de-escalate >> jim, it has been nothing short of an extraordinary couple days of course, yesterday we sat here with bond yields collapsing. you did caution calm you said let's wait on the market of course, we rebounded very quickly yesterday. things calming down within an hour as the day wore on, of course, the major averages moving higher in particular, technology. we'd said, well, how does this affect the price of verizon? >> right there's two schools of thought there's the macro school, which is that interest rates are going, you know, just going down bond prices soaring, sell
9:03 am
everything because we're going into recession then there's the micro, which is what the company is reporting, augmented, by the way, by the job data what's missing in all the macro recession -- there was someone on our air this morning talking about recession, how it's inevitable it's inevitable. i found what was driving my thinking yesterday was we've got great unemployment, great consumer spend we are not an industrial economy. they took that away from us. most countries in the world are export related and try to sell things to us so i'm more sanguine than most >> our multinationals are amongst our largest corporations there is perhaps less confidence >> oh, that is without a doubt >> we both talked to the number of people who run these company, and you can tell they are not as confident.
9:04 am
they are somewhat frustrated, i would almost say >> yes i got ahold of jpmorgan yesterday, jamie dimon doing his bus tour they're saying the consumer spend is actually accelerated. and that's really -- >> nobody is arguing about the strength of the consumer >> remember, if we were two-thirds industrial corporate and one-third consumer, we would have negative yields the fact is that we have -- there's good credit creation much stronger credit creation. it's almost as if the strong dollar hurts some international companies, but the decline in interest is extraordinary. yesterday there were some really good numbers in mortgages for the first time it's starting to dawn on people. if you go in the way back machine and you had this unemployment in the '90s and these bonds, you would say the market has got to up go to --
9:05 am
what what's navarro using navarro was being some sort of -- he's a puppet master >> yes, the journal had an editorial. >> that was so vicious almost as if he's kind of a cold warrior. >> maybe he is maybe he is. but certainly seems to have the president's ear. the news itself this morning >> all these other guys talk to the press. the press should just be a little more skeptical about who's in charge here >> well, that goes to the volatility and the concern that we continue to have, which is we never know what's coming next, what's coming next from the president and/or his advisers, or frankly what's coming from the chinese. what if, for example, something were to happen with hong kong, where there's continued unrest and the chinese decided to become more aggressive there that would be a very bad day, one would expect >> sure. don't you think they're a
9:06 am
puppet lam gives up and says, listen, i need you to come in here then they're coming in they can say, she asked us to come in. >> that's, again, a risk that at least some are pointing to you don't know if and when perhaps not. >> but sentiment, i think, is very negative. i think that we're dealing with situations like roku every time i get too granular, but i want to talk about roku for a second you're on the roku conference call you realize there's these tremendous secular changes in the economy and how people take delivery of entertainment. david, i was astonished how good -- one in five households, 30 million actives, highest growth rate, 24% year over year. david, cord cut. 3.5 hours, cord cut, cord cut. so you sit there and say, how early are we they're saying, by the way, very level headed, not a promoter, when he says early innings, i
9:07 am
think it is. >> it's true mr. wood is going to join us, i believe, on the 11 today >> that's where he was i booked him last time i've had enough of that. >> there are some questions on roku we'll ask mr. wood about that. for example, how would china tariffs hurt them? think of how many televisions come from there, particularly the cheap ones was it fully addressed >> he's still punting on it. >> he didn't answer the question >> no, it was like a time-out. do you see how they dodged it? they addressed it by not addressing it. >> google and amazon are not exactly shrinking violets here, getting their systems embedded >> wood did say the lead is growing against his competitors. >> listen, you pointed out the stock many times in terms of a growth play or a play on cord cutting and millennials and everything else. >> i got two cord cutting kids my daughter showed me how to disable our show >> all right we mentioned the caterpillar
9:08 am
downgrade by goldman that's another name we'll take a look at. >> i think the cat was fatuous it's nothing that wasn't said on the conference call. it's a late call below where it is now. why? because frankly, don't you buy things out of favor periodically, as long as it's not oil? >> may not have much of an impact, but it was -- the call itself was -- >> look, it's the emerson call it could be the 3m call. anybody that gets growth in china. remember, oil is more important than china now i think the fact that oil is going down is a threat to cat. >> you do? >> i do because they're so big in the permian the chevrons aren't pulling back the exxons aren't pulling back one of the things we haven't talked about, the worst quarter
9:09 am
of the year was concho drilling rigs are down "x. concho stock is down the same amount what the market wants is to continue drilling but also capital discipline it's almost like these companies can't do it. you got something for me >> just when you mention bad quarters, and actually we don't have the full quarter because they're not going to file yet. >> i did something bad whamp >> what did you do >> i realized kraft-heinz came out today, so it bumps concho as worst quarter. >> yes we'll take another look at it when it opens, but look at shares of kraft-heinz. the company did report what are preliminary financial results for the first half of '19. they talk about reflecting lower net sales despite what they say are improving consumer takeaway friends in k trends in key markets. the fact is the first half of the year was nothing short of
9:10 am
disappointing for this company shares down yet again, more than had been anticipated by the analysts that follow them. one has to wonder at what point -- well, certainly warren buffett is a significant owner here i pointed out about tensions he's denied it i continue to hear it in terms of buffett and 3g and where the relationship stands. take a look at that stock, jim it's down 14%. >> suboptimal situation developing there it's very interesting the ceo has said something on the conference call that i really like talking directly about the idea that they're going to develop a strategic agenda >> oh, good. >> what were they doing before we're going to sell a lot of cheese whiz. honestly it's a collection of brands that millennials actually would like to take baseball bats to >> sometimes it feels like it would be so easy you have been talking about those brands sarah eisen has for a long time, how unwelcomer th they are in millennial households.
9:11 am
this stock has done nothing but go down. >> if they madean acquisition of spam, it would really complete their incredible set of brands >> a negative 3.3 percentage impact from currency they're getting hurt there excluding that impact, the reduction in adjusted, lower organic net sales, higher supply chain costs, spending behind those strategic initiatives, adjusted eps down 23.8% to 1.44. it's good now they have a strategy, you say. >> yeah, going for a strategy. also the maxwell house sale. this is a house. i thought it was a house of brands it's a house of cards. one of our best documentaries. >> i agree it was probably one of my best i miss doing those >> the bid, remember the bid >> yes >> unilever. >> that's when it all started. >> you killed that bid >> you point so often to that,
9:12 am
the failure to acquire -- the inability to effectively communicate back and forth and the inability to get that deal done since then to not have done a deal at all -- of course, this is a company that needed to continually do deals that was part of the strategy. do them, cut costs the myth making that went on, the myth making as i've said i've even made references to other companies where there were myths created around management that ended up not being true >> are you talking about al dunlop >> no, i'm not saying in any way -- i'm talking jim teacher just because i remember it so well not that there's any fraud here or anything like that. of course not. but that myth making that wall street loves to do, loves to take part in >> david, i think that i remember when you broke the story that they weren't going to get unilever
9:13 am
you talked about putting pickets on the lawn of warren buffett. that was truly the bridge too far. unilever probably very well ran the company, but it revealed how desperate they were. >> well, we knew it was a bad moment for kraft-heinz if they were unable to actually complete a deal at this point with a 30 something billion dollar market value, if they're lucky, that kind of thing is off the table >> heinz used to be a good company. a lot of people felt it was buyback, not a lot of sales growth >> right everybody did zero base budgeting. >> oh, god remember that? >> all right we got a lot more to deal with i want to weigh in on the broadcom/symantec transaction we'll likely to see. >> and lisa sue. >> what about her? >> that new chip one of the things i don't like in general there are people who do things
9:14 am
that change a company. lisa sue put out a chip that's much better than intel >> all right we'll talk about that in a little bit >> it's not macro. it's micro. >> i know, but we're looking at the futures. you're talking about a chip. >> trying to make people money >> i'm trying to wrap things up. we got to take a commercial break. then we'll be right back you can talk about lisa sue and her chip >> i promise not to do anymore homework and be a macro guy. yep, td ameritrade's got that. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪
9:15 am
9:16 am
9:17 am
welcome back did want to update our viewers on broadcom and symantec this was a deal in the works some time back but then fell apart. late yesterday, the journal and a couple others reporting a story we can now confirm as well the two companies did get back together in terms of talking in fact, broadcom is now poised to acquire the enterpris business of symantec sources close to the situation say that deal expected to be announced later today, after the close. symantec is releasing earnings after the close as well. we'll await it the price tag, a bit over $10 billion i'm told, jim. it will be interesting from symantec's point of view the proceeds, unclear in terms of the tax basis there and how much they'll actually get. a big number broadcom seems happy about it. from what i've understood, this is the business they wanted all
9:18 am
along, but originally they were under the understanding they couldn't buy it separately as i'd reported previously, 27 was originally thought to be a price. then it was no longer. the deal talks fell apart. so what do they do with the proceeds what happens to the remainder of symantec's consumer business does it become fodder for p.e., for example? >> no. >> and where do they go from here, i guess? one final thing. broadcom, at least the people familiar with the situation, tell me could see as much as a billion dollars in synergies from this particular deal. >> i agree with that i think it's a great deal for both rick hill is the interim ceo i've known rick for many, many years. he came in and said, holy cow, the more valuable division is the b to c being lifelock. lifelock has really just exploded in sales while the rest of the businesses have been on the decline. i don't want to put words in rick's mouth. >> i got to get lifelock, by the way. >> i don't want to put words in rick's mouth, but he thinks
9:19 am
lifelock is an unbelievable gem. would he think it would be the size of the whole company? it's a great cybersecurity individual stock >> and the stock is going to be up sharply, as you see, back to over 23. >> you just said, i got to get lifelock you know what rick said to me? everybody's got to get lifelock. >> the information you give up on a regular basis, not to pension what mention what's stolen. a few weeks ago, we were applying for fishing licenses. we went fishing in utah. they wanted everything everything >> you need lifelock >> some third-party consultant for the state of utah now has all this information that will of course get stolen >> of course >> so i got to get lifelock. >> rick was in shock at how great it was when he came in >> who competes with them? >> lifelock? >> yeah. >> he would tell you that nobody does >> he'll tell me but who does >> rick has been right to me all along. i'll give you the why. because he told me, listen, very
9:20 am
powerful competitor against the b to b but lifelock, nothing. remember, everyone came for symantec's lunch during this period when -- i don't want to say they fell apart. they've always had good technology but z scaler is an amazing company. they're brilliant. >> all right >> we didn't talk cronas caterpillar is up, by the way. who has more power >> as well as the opening bell, ten minutes from now one more look at futures as we get you ready for the open here at the new york stock exchange woman: my reputation was trashed online.
9:21 am
i felt completely helpless. my entire career and business were in jeopardy. i called reputation defender. they were able to restore my good name. if you are under attack, i recommend calling reputation defender. vo: there's more negativity online than ever. reputation defender ensures that when people check you out, they'll find more of the truth, not trash. if you have search results that are wrong or unfair,
9:22 am
visit reputationdefender.com or call 1-877-866-8555. we all feel, we all love, we all cry. it's part of being human. sonoma county declared a homeless emergency in 2018. you have to know the individuals you're serving to understand their needs. working with ibm watson we can bring together data spread across dozens of departments. that gives us a fuller view of the people we serve. dear tech, dear tech, we need to look after everyone in our community. and we want to help our fellow human beings. ♪ ♪
9:23 am
♪ we're counting you down. seven minutes before we get started with trading time for a mad dash. you threw in something about lisa sue at the end of our first block of programming while we were going to an ad. i don't know what you were talking about. >> i was going to talk about the new zealand central bank cutting rates, what that means for our viewers. >> actually, the philippines >> okay, look, i'm not going to make too much fun because it matters. lisa sue, she went back and forth with it this morning they have a new chip, epic it's got microsoft working on it, that's azure hpe, dell. they just won twitter and most importantly google david, this is -- >> what does it do >> it's a faster, better chip than anything intel has. andy grove, wherever he is, is rolling over >> not happy
9:24 am
he's not happy about this? >> late, great scientist >> is it somehow -- >> so what i'm saying is we can match the macro against innovation look, this is -- lisa sue, i've told you over and over again -- by the way, someone rated the stock by starting a rumor she was going to leave she was like, what the hell? just put it this way i think the stock goes back over the high because of the wins, particularly google. we've got to get google cloud people they are gathering momentum. but this is just really -- >> they actually gave us targets that were significantly higher than when we'd last heard. still trails by a lot. >> but this is an example of ingenuity and innovation making it so that you actually want to buy a stock. i want to congratulate her because remember, they had nothing. the stock was at two bucks and
9:25 am
the balance sheet was awful. she fixes the balance sheet, hires engineers, and decides we're going to take on intel i had dinner with her. i said, you can't take on intel, stop it. then you're going to go after nvidia stop it. she goes, no, i'm going to take them all on. confident, scrappy >> that's what happens when you grow up in queens. >> many references to queens at dinner there were many references to queens >> yes >> and she and my wife get along. it's really fun. i'm sorry. i know it's not about friends. >> no, it's not. it's about 7.5% of the stock price. >> i think she's the biggest turnaround artist in our lifetime >> you had to go there and just say something with such hyperbole. >> yeah. >> we're back after this johnson & johnson is a baby company.
9:26 am
9:27 am
but we're also a cancer fighting, hiv controlling, joint replacing, and depression relieving company. from the day you're born we never stop taking care of you. your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech.
9:28 am
only from fidelity. you're watching cnbc "squawk on the street. we're live from the financial capital of the world we got an opening bell going to ring on this thursday. it is thursday yeah, it's thursday. wow. this week is going by. >> you missed hump day >> i didn't miss hump day. we were in the middle of hump day. we had the yields going crazy. we were talking a great deal about, of course, negative
9:29 am
interest rates $15 trillion worth of sovereign debt >> i'm going to apologize for being calm and suggesting people pick stocks yesterday. i violated every macro dictum. >> so what do you do today there, my friend >> you can scale out of some stuff. >> you scale out already if you're a trader, right. >> i look at caterpillar and say the build goldman downgrade, vicious, horrible. cat is a has been. maybe a wannabe, a poser look at the stock. >> all right that's one day you never know they might be right over a longer period of time. it's not as though the concerns about china trade have gone away, jim. they haven't gone away at all. >> less than 10% of cat is china. how did i discover that? i interviewed rather than look at the macro >> right the stock is already, of course, reacting to a certain extent to that as well here's the applause building what else? what's the key to the market
9:30 am
today? >> key to this market right now, right here >> yes, yes. >> okay. i am going to pronounce disney as the key to this market. >> i like it >> why because disney moved down credit credit suisse declined to raise the price. i think they're right. they're right. i think bob iger, they were out for him. it was the night of the long knives now that's over. >> it is over, and disney opens up 2%. we'll see how it settles out of course, the entire market opening up rather strongly as you see right there on the realtime exchange back at our headquarters >> r we'll talk about viacom that stock is up also. resideo, a provider of critical comfort and security solutions in more than 150 million homes at the nasdaq, northern trust. that's a wealth management provider, asset management of course, banking you know northern trust. you mentioned viacom
9:31 am
might as well get right to it. decent quarter they came in above -- looking for my notes here, sorry i'm like you they beat on advertising, better than had been anticipated, up three. film did a bit better. they had solid advertising growth, operating income was ahead of consensus at $757 million. overall, viacom responding positively as i said yesterday, it's getting really close i swear it really is viacom and cbs most likely early next week. >> going back and forth with backish this morning, the ceo. reminds me pluto tv, which they bought -- >> yes, he was very excited. >> yes now up to around 18 million monthly average users. that's up 50% since they announced the acquisition just in january >> advertising supported streaming service. >> we can talk about roku too. such a big winner. i think viacom has been flat lined for ages maybe it's done. >> it may be
9:32 am
but the most important thing coming forward is the merger with cbs and the two sides hammering out an exchange ratio. this certainly helps, having a decent quarter >> what are you telling them the ratio should be? >> higher. fr there you go higher >> jackie wilson ratio >> higher. >> how is that kraft-heinz doing? once they open, we tend out in to talk about them >> well, we need to talk about them because it's important to do so. we talked a lot about kraft-heinz. kraft-heinz is down 49 -- what do we got now for the year down 55% over the last 12 months it is, i think, amongst mr. buffett's holds, by far, the worst performer, as you might expect >> you had to bring that up. >> you just wonder what's next for this company in terms of sort of trying to turn it around >> $30 billion in debt maybe that plays a role.
9:33 am
>> you had joe on the show last night. >> i think joe is real good. >> you do? >> did you know he used to play ice hockey with one of our best producers? ice hockey joe papa is a very nice guy. he happens to be a very humble man. he's undoing what valiant did. and kraft has to get an undoer to come in and really just some different brands >> kraft does have a new ceo to recap, by the way, on kraft because we have spent a good amount of time talking about it. first half organic revenues down
9:34 am
1.5% volume mix was flat. reduction in retail inventory levels the fiscal year '19 guidance commentary not issuing formal guidance but from a financial perspective, this is a quote, we expect many of the top and bottom line factors that held back the first half to fade in the second half. but they're not going to provide or update specific point estimate financial guidance. they are setting short-term guidance targets publicly. and they want to spend more time evaluating, but they don't want to rush. >> funny, this is a food stock >> this is that new generation >> can we go back on kraft-heinz? let's go back a couple years just to put in perspective the size of this company, the way it had been mythologized
9:35 am
there it is. you're talking about a stock that was close to 100 bucks and is now 26.80 >> that's interesting. the companies that are inventing and reinventing themselves in food are actually -- general mills starting to do better. kellogg had a decent quarter for the first time in a long time. >> even campbell's soup, after activist and new management has come in, sort of stabilized things >> there's actually a tailwind to this group, with the exception of the tornado facing kraft-heinz. but it is -- the group is out of the dog house, so to speak smucker now does dog food. not that great there's reason to believe that they didn't have -- that you could have done a much, much better job other companies have really turned it around >> yes, they have. speaking of turning around, our market continues to trade higher the s&p is up one half of a percent. nasdaq as well and as you might expect, all the major players, apple, facebook, google, all up nothing extraordinary at this
9:36 am
point. >> no, but symantec and advanced -- man, trip adviser. knocking the stock down. i'm urging you not to listen to the booking holdings call. >> to what >> the booking holdings call they call out strength in europe >> okay. >> they have double-digit growth in rooms people are traveling more than anyone thought is that worldwide recession? doing a lot of work on boeing. >> and where is that work on boeing leading you >> it's interesting. a lot of people feel that they had -- they were a step above safety over airbus there may have been some complacency because of that. i'm doing a lot of work on how much redundancy there was, whether there was enough that apparently was a big issue, particularly with the military, where they do much more
9:37 am
redundancy than in consumer. i'm just working on what the heck is happening. i think the news flow, they haven't gotten control of it >> do you think that at some point when this all -- you've got to fire the ceo? i'll just ask the question somebody's got to pay for this somebody has to go, right? >> typically in america, that's the case so i don't know. i think that we lack info. we still lack info and there are a lot of people who talk about how this is going to hurt the gdp if they stop production i think they're further along. i think that the issue is the rest of the faas around the world. i don't know if it goes their way. but there are real issues that have not been, i believe, acknowledged real engineering issues. and that's what i've been working on i don't have a comfort feel about that i just don't this is boeing, which is the safest company
9:38 am
so it's a little disconcerting >> here's a name i don't think i've mentioned in years, liberty global, up about 2.6%. it's kind of interesting john malone says, you know -- well, liberty global is separate may tender for as much as 10%. that's helping that stock. they have that vodafone deal they recently completed as well. shares trading a bit higher. don't often see that it's been a while, i should say, since we have seen a liberty company with tender. >> is entertainment doing better as a concept >> entertainment what do you mean by that >> viacom ad numbers were up that was not the weakness in disney when you look at parent company, entertainment doing quite well i'm wondering if there's some secular rebirth here some people say it's cyclical. entertainment seems to have gotten more experiential >> what i would argue, what is interesting, and steve burke, our boss or our boss' boss,
9:39 am
pointed this out of course, the man who runs nbc universal. during the conference call, he said the most interesting part in the biggest category of advertising in the up front at nbc and the cable networks is from companies that are digital native companies the f.a.n.g. companies facebook, amazon, netflix, google also, peloton, companies like that streaming businesses, businesses that basically exist on the internet ironically, those are the businesses that are putting pressure on our ratings, but interestingly, those businesses find television advertising very, very effective because they're so data oriented, they can measure the impact so well over a billion this year came from digital native companies that literally didn't advertise five years ago, jim. >> this is incredible. i keep hearing that, that that's how they're bringing in customers. by the way, scatter market disney, very, very strong. called out by iger but yeah, when you hear the tv campaigns -- >> and that was, by the way, from a couple weeks ago. july 25th, somewhere in there. >> grubhub has gotten tremendous
9:40 am
reach because of its ad campaign >> so they still use these good old-fashioned linear television to advertise >> you know who's going to have to do a digital? zillow >> let's get to a couple stocks we haven't mentioned yet, jim. you're right, zi willlow >> that was a horrible conference call. >> zillow down a lot >> i'm sorry i know the guy was trying to be creative talking about the moon launch and the washington monument, 555 feet versus zillow it's like an obelisk lyft was good, david >> waited, hold on zillow is down 16.5% >> they're doing this big initiative buying homes. >> can we show that? >> algorithmic bidding for homes. they do it for you instantly other metrics not that great, by the way. the street is skeptical because the street believes that they're going to be long a lot of homes.
9:41 am
they're trying to do algo for housing. some people feel it's not necessarily going to work. they're growing the division very fast, maybe too fast for their own good i do believe that there is a way to make that work, but boy, zillow peaked. >> well, spencer's gone. >> yeah, spencer's gone. it's a guy named rich barton i would advise rich you don't be creative and funny at the beginning of a call when you miss the numbers you be very matter of fact i don't know the gentleman, but he needed to be more matter of fact >> i mentioned lyft. let's get to it quickly. the stock is up almost 5%. this is the second quarter i think it's reported as a public company. and they're losing a lot of money, but the metrics people care about, riders, number of riders, revenues, all better than had been anticipated. >> and the goal is to not be a cab company. they have a lot of initiatives to not be a cab company. meantime, they're not losing as much money as people thought
9:42 am
i found it eye opening how many things lyft is doing to be a vast transportation company. when you hear -- i really just hope that z-- you know who reports tonight. and if they talk about uber freight, did you know they have actually lowered the price of taking something from here to there with uber freight? may be the unsung division >> productivity increases efficiency that's why we've got no inflation. these kinds of things, right >> david, i complete my agree. gary cohn first posited that >> where is he these days? >> he's making money >> making money somewhere. >> of course he's making money >> guys like that always figure out a way to make money. by the way, the lock-up on lyft always scares some people. it should. >> look at that premature lock-up at beyond meat, which is
9:43 am
now starting to pay the price. >> finally, jim, before we get to bob to cover more here, roku is up over 18% >> an unbelievable conference call i took down so many notes in the roku conference call i'm listening to a conference call that may be one of the greatest versus what amazon was supposed to do to them and you have to point out, you have anthony on. >> yes, the 11:00 a.m. show here called "squawk alley" has mr. wood >> try to get longer answers from him >> okay. thank you for that tip >> when we come back >> i appreciate the tip. i'm new to this. bob has more on what's moving this morning >> good morning, david nice little bounce here. all the right sectors are bouncing your global cyclicals moving on the upside take a look here we have sectors, semiconductors, energy doing a little better overall. bank stocks up a little bit here materials up finally, a little bit of a downside on utilities.
9:44 am
something about that in a minute two big market theemgmes, therea lot of hope that there might be some kind of second truce on china evolving more stability now, but what's the probability of a recession whether you think the stock market is going to be stable depends on what you think about a recession probability. so everybody is out with recession probabilities. jpmorgan had a noted saying the probability of recession was less than 50% right now. you can see that and there are other people who think the probability is higher than 50% there's jpmorgan here, still below 50%. so a lot of debate on what that is exactly going to mean industrials today are the big topic of discussion. i agree with jim's point, goldman's downgrade of caterpillar a little late. down 12% this quarter. nonetheless, they have got a point here caterpillar is up, emerson, deere. but don't kid yourself these are all up this month. something is going on here
9:45 am
we saw some freight numbers a little bit weaker than expect texpected recently barclays talking about an industrial recession in the companies they cover there is something going on here the numbers for the second half of the year, the industrials having coming down rather dramatically yes, it's a late call, but you get the point. they're finally catching up. here's something that bothers me a little bit everybody is talking about, oh, the defensive names are doing really well. everyone loves utilities and consumer staples they're all doing better so far. generally, it's big cyclical names that are out there your energy, your industrials, and technology stocks, they're all underperforming. that's great it's nice to hear it i like utilities the problem i have is they don't move the dial much so yes, it's nice that they're doing well this year, but they're pricey they're up 15% year to date, about in line with the s&p 500 the multiple is high 18 times forward earnings the bottom line here is they're just rather expensive right now.
9:46 am
the final thing i have for utilities is they're 3% of the s&p 500. technology is 21%. the top four is 60% of the s&p 500. utilities just don't move the dial that much even though i think it's terrific, you better worry more about how the industrials and technology and about how bank stocks are doing if you really want to move the market. guys, back to you. >> thank you, bob. let's go to the bond pits. things pretty busy there rick santelli join us from the cme group in chicago good morning, rick >> good morning, david hard to imagine that yesterday this was kind of like the crime scene, so to speak all the volatility in the interest rate, sovereign debt complex, spread movements, volatility, ty, vix, all really started to flash yellow. inzee indeed, they should. we have a lot of lingering
9:47 am
issues but it certainly has settled down let's look at a one-week chart of twos. you can see how we had the big drift. now we're stabilizing. you could see it in ten years. what's really fascinating is you look at that ten-year chart, we had a 1.59 intraday low yesterday. here we sit right now at, what, 1.76 so how do you make 1.76 look like a high yield? you start at 1.59 because on the 31st of july, we're still above 2% let's not say it all just disappeared. if you look at a 30-year, same scenario intraday, 2.11 currently at 2.28. on july 31st, it was above 2.5%. so you get the idea. we certainly did have a big move, but i think the 30-year bond continues to be at least, for many, including me, the canary in the coal mine, along with the dollar valuations if you look at july 2016, we just held the all-time low closing yield like right to the tick an amazing technical feat. finally intraday in bunds.
9:48 am
german government talking about issuing dead with the express purpose of addressing some of their climate issue programs the bund yield spiked a bit on that david and jim, back to you >> rick, thank you rick santelli with the bond report >> you see that kraft-heinz says soy is a major opportunity for them >> i'm sorry, kraft-heinz says what >> that soy is a major opportunity. >> major opportunity >> yeah. >> what does that mean >> well, i'm just pointing it out. take it where you can get it like soy sauce in china as a growth opportunity who knew >> who knew. there it is. down 13% changing topics a bit here, samsung has a long history of trolling apple in its commercials. >> you still use these headphones >> yeah, but you'll need an adapter. as most people like to call it, a dongle >> a what? >> a dongle. it comes in the box. >> what if i just need to charge at the same time >> then you'll need another type of dongle.
9:49 am
>> like a double dongle? >> yeah, i zbesguess. >> that sounds explicit. >> now samsung is cloning one of the iphone featuring it once mocked and has quietly deleted records of the ads samsung is unveiling its new note 10 last night it doesn't come with a headphone jack >> well, let's remember that the president's tariff gives samsung a huge advantage over apple. huge when you mention that to the administration just say, well, listen, why doesn't tim cook get everything here? >> why doesn't he move his production to south korea? i mean, is that really what it's going to come down to? >> to the united states. >> by the way, the trade deficit has not changed. the administration can talk all it wants about moving manufacturing back here. larry comes on i'm not quite sure what they cite as the statistic to prove that, jim, but the trade deficit is not changing. supply chains are moving away from china to other places >> you need to get that port but david, the journal did say there's been more than 60 billion coming in to treasury.
9:50 am
>> tariffs, yeah >> the journal did that, not the president. 100 billion, they said president promised 100 billion >> we're collecting the tariffs. it's because it's a tax. >> bear sentiment, 48 from 4 that's going 24. that's going to keep the market from plummeting. >> coming up, roku's anthony wood he will be talking about a strong quarter for that company. you can see the stock responding and don't miss a minute of "squawk on the street. you can now listen to us wherever you are yes, we have like every other person a podcast. >> wherever we are, wherever we go. >> it's called "opening bell hour." we'll be right back. so ...how are you feeling? on a scale of one to five? one to five? it's more like five million. there's everything from happy to extremely happy.
9:51 am
there's also angry. i'm really angry clive! actually, really angry. thank you. but what if your business could understand what your customers are feeling... and then do something about it. turn problems into opportunities. thanks drone. customers into fanatics change the whole experience. alright who wants to go again? i do! i do! i have a really good feeling about this.
9:52 am
that's what happens in golf nothiand in life.ily. i'm very fortunate i can lean on people, and that for me is what teamwork is all about. you can't do everything yourself.
9:53 am
you need someone to guide you and help you make those tough decisions, that's morgan stanley. they're industry leaders, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose. we are morgan stanley. you say adidas, i say adidas some people say adidas. >> guidance was not great. sara eisen spoke to the ceo. we will have that. first, stock trading with jim. >> okay.
9:54 am
cvs -- >> no, not yet. >> oh, come on rossing harsh ter. or breaking new ground? this is the time to get an exceptional offer on the mercedes of your midsummer dreams at the mercedes-benz summer event, going on now. lease the gla 250 suv for just $329 a month at the mercedes-benz summer event. mercedes-benz. the best or nothing.
9:55 am
9:56 am
all right. we only have time for asking you what's on "mad money" this evening. >> eight times earnings. spoke to him yesterday that's humanization. you know i love that
9:57 am
five 9 which is an automated call center. look, we have been following every single aspect of the niche tech stocks, cloud stocks. we're back. >> okay. >> we never went anywhere. >> you learn a lot when you watch "mad," by the way. you learn a lot. >> chronos. >> huawei. david, nobody cares what i have to say. >> nobody cares. sqwkn e re" micong right back after this. hopelessln their cage. content on their endless quest, to nowhere. but perhaps this year, a more exhilarating endeavor awaits. defy the laws of human nature,at the summer of audi sales event. get exceptional offers now.
9:58 am
quadrupled their money by 2012? and even now many experts predict the next gold rush is just beginning. so don't wait another day. physical coins are easy to buy and sell and one of the best ways to protect your life savings from the next financial meltdown. - [narrator] today, the u.s. money reserve announces the immediate release of u.s. government-issued solid gold coins for the incredible price on your screen. these gold american eagles are official gold coins of the united states and are being sold for the price on your screen. - pick up the phone and call america's gold authority, u.s. money reserve. with nearly two decades in business, over a billion dollars in transactions, and more than a half a million clients worldwide, u.s. money reserve is one of the most dependable gold distributors in america. - [narrator] today the u.s. money reserve
9:59 am
is releasing official gold american eagle coins at cost for the incredible price on your screen. these government-issued gold coins are official u.s. legal tender made from solid gold mined here in america and fully backed by the united states government for their gold weight, purity, and content. do not delay, call now to purchase your gold american eagles for the amazing price on your screen. gold is now on sale at prices unseen in years and this year could be one of the greatest gold-buying opportunities of all time! call now while vault inventory remains. as one of the largest u.s. gold coin distributors in the country, the u.s. money reserve has proudly served hundreds of thousands of clients worldwide. don't wait another minute, call now to purchase your american eagle coins at cost for the amazing price on your screen.
10:00 am
. trade around the clock in one of the biggest markets of the world. a 360 experience only on futures now on cnbc.com. welcome back to "squawk on the street." our last bit of breaking news today. our june read on wholesale sales and inventories on the sales side down 0.3. that really is a bit of a surprise, actually and last month originally released down 0.4 is revised, down 0.6 that's a biggie. if we move to the inventory side, this is interesting because we have a mid-inventory read the mid-inventory read up 0.2. that is gone and replaced with unchanged. so the inventories move from up two to unchanged and sales move lower after being revised lowner
10:01 am
the previous month that obviously isn't a goscenaro on the wholesale side. it will not contribute to higher gdp figures. we want to pay close attention, although treasury yields are in the highs the last couple of days, and we have a 30-year bond auction at 1:00 eastern. sara, back to you. >> all right rick, thank you very much. good morning everyone and welcome back to "squawk on the street." i'm sara eisen here with david faber. live as always from post 9 at the new york stock exchange. carl quintanilla has the morning off. taking a look at the markets, the steady recovery continues here, near session highs a half an hour into trading s&p 500 up 0.75% dollar bounces as rick said, treasury yields come off the less in the 170s. our roadmap for the hour starts with stocks rallying as wall street's wild week continues how investors should play their portfolios against the volatility. >> kraft heinz in a pickle shares are down sharply on weaker earnings. we are going to dig through the
10:02 am
numbers. >> and currency fears for adidas we will hear from the ceo on how china tensions are impacting his company's results. starting off with stocks recovering this morning as global bond yields stabilize investors reacting to better than expected trade data out of china, specifically the export numbers. how the trade war is turning into a currency war. >> we are in a dangerous moment right now where trade war is escalating into currency responses and it's time for leaders on both sides to find a way to de-escalate. >> he basically came on, david, to make the point that they are not manipulating their currency. his work with the chinese, he thought importantly helped push china towards a more market-based regime. he says it's clear that they are following that, including the last treasury report under secretary mnuchin a few months
10:03 am
ago that said they are not manipulating. >> right, and the fact that the currency might get a little bit weaker given the economy is not surprising, right? >> correct joining us to talk about what to do with this volatility market seth carpenter and jpmorgan chief global strategist david kelly. good morning to both of you. so, seth, a little bit of relief here in the markets. has the backdrop changed though pointing towards more recessionary signals in the last few days >> i think the change in the outlook is this escalation in trade tensions we have been take over a year people really need to take trade wars seriously, that it couhavea substantial hit to the economy we are worried not only with the increase in tariffs that went into effect in may, but the new wave of announcements september 1 we could see a material slowing in the economy. >> driven by the u.s. consumer >> by the u.s. consumer partly this last wave of tariffs are
10:04 am
going to hit primarily consumer goods and that's going to matter. >> it's $30 billion on a multi-trillion dollar economy. why should it matter >> that's the standard calculus people have done, including the fed. if you look at tariffs, the imports of those intermediate goods to production under tariff from carolina plummeted. if people are not importing the intermediate goods that are being turned into output, there is no way they could be making the out put. >> a multiplier effect >> exactly you can't take the dollar value of the imports and percent of tariffs, multiply them together and get the effect on the economy. >> david, so given the escalation in trade tensions and now currencies, does your outlook for stocks and earnings for the second half change >> well, it does hurt earnings a bit, and i think earnings growth is going to be slower than the analysts have forecast analysts are talking about
10:05 am
double-digit growth next year. i think there is no way that's going to happen. investors need to heold their nerve here trade wars are so destructive, that they tend to burn out i believe this trade war will likely last into, you know, next year and possibly all the way up to the next election but beyond that, there may be peace. and i think if you are a long-term investor, you have to look through softening in the u.s. economy, softening in the global economy i think the global economy will bounce back a little bit quicker than the u.s. economy here but a year and a half maybe of slowness maybe touching negative gdp at some stage. in the long run there will be a trade war settlement tariffs will come down again, i think, and that will reward long-term investors. long-term bond yields are just too low here. >> do the tariffs actually help stoke inflation which may not be the worst thing? >> so not in the long run. i thought vice-chair of the fed board had the best phrase about
10:06 am
this he said tariffs raise prices, they don't raise inflation the monthly prints for a little while, that's just as prices adjust up to the new taxes once that has worked its way through, it doesn't do anything over time to inflation. >> david, which groups are most vulnerable going into this new round of tariffs and the sort of reduced earnings you're talking about as a result of trade >> well, i think consumer discretionary sales. it's going to be tough i think they will get hit by this obviously, there is the tax effects have faded here. now you put tariff increases on, i think you will see a slower growth in consumer spending the second half of the year and going into next year particularly consumer discretionary spending is vulnerable here. plus, we are on exporter of capital goods. the problem is other countries are weaker because of this they don't want to buy our
10:07 am
investment goods so i think capital goods exporters are also pretty vulnerable to what's going on right now. >> david, i know you have done a little bit of work on immigration or the lack of it, both legal and illegal, i suppose, and the impact on grow growth share some of that with our viewers and how it's impacting your long-term view. >> i think one of the big negatives, such a focus on illegal immigration that we are missing out on the fact that because of the retirement of the baby boomers, we desperately need qualified legal immigrants. this year the growth of the working age population is going to be 0.2 of 1% and all of this is coming from people not born in this country. when i look at the monthly visa data coming out of the department of state, or the state department, we are seeing declines in both non-immigrant and immigrant visas for the third year in a row. we are see fewer legal immigrants and that will be an
10:08 am
absolute drag of growth. that re-cements us in at less than 2% unless we come to some agreement to increase legal immigration while the baby boomers are retiring. >> an interesting question about how much is going on in the backdrop of the economy is secular and demographic based. pimco talked about u.s. negative rates, the fact that more people are aging and saving and technology and these sort of big picture trends we don't talk about on a daily basis that have to do with the markets. >> there is this long-run trend. we caution people how much of it is this secular trend, people getting older, the labor force participation rate falling if you look within the prime age workers, team p workers people between 25 and 54, you see that labor force participation rate rising the last several years you have a cyclical component within the structural component.
10:09 am
we thought the labor market can continue to grow for a while the fed's fear of an overtiegt labor market for has been overdone there is a cyclical component that got masked by the structural component. >> guys, good discussion thank you. >> thanks, guys. central banks around the world at odds during this market volatility steve liesman joins us now on if they all can come together despite what are certainly some political differences. steve. >> yeah, differences on the political side recent movements by central banks are mostly in the same direction. the question is, are they coordinated and should they be policy coordination a really important part of the response to the financial crisis. of course, that's not where the global economy is right now. not hard to think with today's global situation you could have countries racing to the bottom with their currencies and interest rates, which is to say that the if the fed cuts more as the market kpnts, will other countries cut even more stay a
10:10 am
step ahead >> if the world economy is really bad, having all the central banks ease whether coordinated or not seems like the right policy the question is, is the economy that bad can the central banks rescue it if it's the politicians creating all the problems >> so this is the reasons why the fed should cut most offered by most people u.s. and the global economy slowing. the fed needs to come down to that area. it could weaken the dollar, which is what the president wants. and meet market expectations on the other hand, the reason why the fed should hold, well, cuts don't address tariff problems the fed would caught and the chinese and the u.s. come to an agreement. other central banks, the u.s. consumer remains strong. while there is debate about what the fed should do, how it should do it in coordination or not, kes considerable certainty what the fed would do futures market a 100% chance of a cut in september and an 80% of a probability of one in october.
10:11 am
as you know, they are toying back and forth on the 50% line with a third cut in december >> i think it depends how you define -- clearly, the fed has a mandate from congress. a lot of people, including janet yellen, recently suggested that the u.s. and the fed is not an island the fed is the most powerful central bank it has the ability to ease financial conditions around the globe. >> you know, sara, you are talking about ancient history. wasn't that a week ago that yellen talked? who knows what she would think now. she was on board with the last quarter point. now the market is dialing in another three. and i think, as you pointed out, the surprises yesterday from those three central banks, look, they are not the biggest and most important in the world but they raise the question if they are going to go further than we go and can we ever get ahead of it. >> it does steve, thank you. >> pleasure. meantime, take a look at
10:12 am
shares of kraft heinz getting crushed today, down 13%. the company delaying its quarterly filing earlier this morning, disslowing write downs $1.2 billion the ceo saying, quote, we have significant work ahead of us to stet our strategic priorities and change the trajectory of our business they also did include some financials the all important u.s. division reported a nearly 2% sales decline for the first half the eastboubitda numbers were lr the organic revenue growth down 1.5% a lot worse than expected. i mean, this is an unmitigated disaster the biggest one in the consumer staple space the best way to look at it is morgan stanley upgraded mondelez that used to be joined with kraft. they split it was snacks. kraft was food, doems. yes, they have a portfolio nobody wants, boxed mac and
10:13 am
cheese and kraft dressings the management of this country, you somewhere have to wonder whg on. >> you do. the mythology that grew up around 3g and their ability to operate is exposed as just that. it worked for a while. the ability to cut costs, the ability to do transactions, do large deals, take the acquired company, cut costs, put up numbers that investors seemed to be happy to reward for a while but when the music stopped as in the unilever deal and their inability to complete that because of a, well, a complete screw up in communication and understanding what really was going on, it's been downhill ever since and the inability to do a deal and now you are talking about a company that has a $30 billion or so market value, sara everybody has adopted zero-based budgeting. hurting your marketing of products of course, as you mentioned so many times the last few years,
10:14 am
it's a tough group of products they have right now given consumer tastes. >> they have kraft dressings, maxwell house and coffee they have jello and planter's snacks, the peanuts and jello. oscar mayo osc oscar mayer, frozen potatoes they are in a tough category, no question if you cut to the bone, as you say, and do zero-based budgeting all the way down, you are not investing in innovation, not investing in people, mergers and acquisitions that helped a lot of these other companies turn it around coke, pepsi, mondelez, even campbell soup is spinning off the assets that aren't working for them and focusing how to grow internally. so we showed a chart of consumer staples versus kraft they are having a pretty good run this year. they are in demand people want yield. they are starting to grow again. kraft is such a notable exception. >> a rare black eye for
10:15 am
berkshire hathaway, who is a significant holder in this company. >> how long does he hold on? >> that's a great question i reported in the past that there is tension between berkshire. mr. buffett said i am not hapy n with 3g. when we return, shares of adidas under pressure this morning with trade tensions weighing on earnings we will hear from ceo kasper rorsted on his company's quarter when "squawk on the street" returns. dow's up 150 points almost here. the biggest we have on the tariffs, it is a trade war, a currency war between america and china. we have a 25% of our business in china. of course, it would have a significant impact for us. we have a 25% of our business in - at southern new hampshire university,
10:16 am
we believe in education built for all people. - [woman] snhu was the best experience of my life. - [man] without snhu, i wouldn't be the leader i am today. - [woman] i graduated high school 19 years ago. i still finished. - [man] in the military, you feel that sense of accomplishment. that's what snhu is. - you will march from this arena and say to the world.. i did it. - [woman] you did it. i love you. - [graduate] i love you too.
10:17 am
here, hello! starts with -hi!mple... how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?!
10:18 am
a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. adidas out with earnings this morning, mostly better. europe was a weak spot in that report with flat results, but both the u.s. and china continue to shine the company also reiterating its outlook, but it did warn that a brewing currency war is more dangerous than tariffs and the stock had run up almost 40% into this report so far this year i sat down with the ceo kasper rorsted this morning i asked about whether he sees any sign of a slowdown in china. >> i want overestimate that. we're seeing china as a very attractive market. we believe that will be the case
10:19 am
for the future. of course, in any quarter you might have variation, but we are not seeing a substantial change to the market. great opportunity for us. >> what about the currency it has weak awened, passed a significant level. how do you estimate the impact of that weaker yuan on your business going forward >> actually, if you look at the biggest worry are not tariffs. as a currency war between america and china. 25% of our business is in china. of course, a variation of the chinese currency would have a significant impact for us. it's been stable for the past three months that's one we believe nobody can win. there is not a lot of mitigation we can do. we hope a certain amount of abnormality comes in and the chinese r&b remains stable for the month and quarters to come. >> what about the new round of tariffs that are announced on the remaining u.s. imports from china? how much will that affect what
10:20 am
americans pay for adidas sneakers >> not at all because we do 25% of our business in china, 20% of our manufacturing capacity is in china, so for the u.s. consumer, the u.s. consumer will not see any impact of the current plan of tariffs so we are happy to say you can continue to buy our products at the right price in the u.s. even after the second set of tariffs on the chinese products. >> where is most of the product, the apparel and sneakers that we buy in this country, actually made >> a big part is made in vietnam, indonesia, cambodia so most of the -- the biggest part is made in those countries and will continue to be made in our countries. we changed the manufacturing landscape in the past four years. most of the stuff manufactured in china is for china. that's why we're less exposed to this however, of course, the u.s. consumer that buys shoes in whichever store in the u.s. will be impacted because a lot of
10:21 am
shoes are still being manufactured in china. >> talk to me about u.s. market share. feels like adidas and nike are both at the top of their game on innovation, taking shelf space at the expense of under armour tell me how you characterize the competitive environment right now and how you see your positioning. >> i was in the u.s. last week, milwaukee, chicago, boston we continue to see a competitive market in the u.s. there are two winners right now in the u.s., nike and us, and while the competitive environment remains tense, there is no doubt there has been a consolidation the last three to four years around adidas and our other competitor we hope by bringing in new innovations, collaborations with kanye or beyonce or pharrell williams, we will continue to make it attractive in the u.s. market >> and kylie jenner, david, their latest celebrity endorser. big takeaways for me, the u.s. consumer is not going to feel
10:22 am
any impact when buying adidas apparel and sneakers from china on this latest ouround of tarifs it's made in vietnam and cambodia also, kind of a backhanded jab -- i don't know if you heard -- at under armour and some of the others it's consolidated that way the last few years that's where the fight for shelf space is and that's whose growing market share in the environment. part of adidas' strategy is on the celebrities. beyonce's line coming out the end of the year. we talked about kanye and yeezy. he has to be the number one most valuable seller right now in terms of sneakers. >> what do they pay kanye, do you know >> we don't know it's rumored he has $1 billion contract but i have never been able to confirm. last week they had this crazy yeezy day where they re-released
10:23 am
all the old styles every hour or so there was a lot of heartbreak on the internet hard to get. >> you know this as well. >> if you have a sneaker collector in the family, that was a big day. >> it's not her. when we return, oil is rebounding after hitting the lowest level we had seen since january. we will discuss a bit of a bounce in energy more "squawk on the street" is coming right back. let's do it. [ sniffing ] come on. this summer, add a new member to the family. hurry into the mercedes-benz summer event today for exceptional offers. lease the glc 300 suv for just $419 a month at the mercedes-benz summer event. going on now.
10:24 am
10:25 am
10:26 am
time now for our etf spotlight. brian sullivan taking a look at the big news in oil stocks, the worst performing group in the market, falling more than the price of oil itself. >> that's the story. it's been brutal lately and a bit odd as well because the price of oil itself has held up reasonably well. if you go back, crude oil is flat this year global demand, yeah, likely to slow you talk about that all the time opec cutting output as well. it's balanced it out that does not help the oil and gas stocks they have been crushed and completely separated from oil itself this is the price of oil against
10:27 am
the xop, one of the leading oil and gas exploration etfs you can see over five years they usually kind of run together imagine a chart where they are running together but there we go. but in the last few months, the orange line, the stocks, have fallen off a cliff investors have simply given up on the group and they have fallen far more than oil in fact, they are trading below where oil was when oil was at $30 per barrel think about that the pain is everywhere but companies operating in certain areas have been hit hardest, higher cost areas like the bacon areas in the north dakota down 59% in the year oklahoma not far behind texas. e ironically, the best performing group has only lost 46% on the year, and that is offshore it's been a wide ranging selloff. here is a stat to make you go
10:28 am
hmm. half of all oil and gas stocks have lost more than half their value in the past year, and the market waiting, guys, under 5% for the first time in almost 20 years. it's been a bludgeoning. thank you. >> david quickly, they are trading below they were when oil was $20 a barrel. >> why, brian? what is it >> i think a few things. >> people are saying, if they are broken, the busy model is broken, there is no future. >> no return on invested capital. investors have given up. for ten years we have given you our money, we have got almost nothing back the stocks have gone nowhere there is a lot of environmental pressure on the big institutions it's a big dumping you can't find a name -- unless
10:29 am
anadarko, it got bought. >> exxon and chevron have held up, obviously, the major majors. >> they have dividends. >> right. >> yeah. and a low yield world. thank you. >> sure. when we come back, stocks surgesing. down less than half -- excuse me, a full percent on the s&p 500 so far we will talk about how investors should play this market. carl icahn today on the "halftime report," 12:30 p.m. eastern on that oil story. "squawk on the street" will be right back
10:30 am
10:31 am
welcome back everyone. i'm sue herera here is your cnbc update
10:32 am
a u.n. panel on climate change is warning a warmerclimate means more deserts and potentially less food. in a report released today it said land is already under pressure globally with about 70% of the world's land affected by human activity >> the way we produce food and what we eat contributes to the loss of nature ecosystems and declining bio zie versety. when land is degraded it reduces the soil stability to take up carbon and this exacerbates climate change. >> police have arrested a man who stabbed, slashed, and robbed his way across two southern california wounding two others wednesday. a united launch alliance altas 5 rocket lifted off from cape canaveral this morning to place a lockheed martin-built satellite into orbit it's a joint venture between lockheed martin space systems and boeing's defense space and security systems.
10:33 am
you are up to date that's the news update this hour sara, back downtown to you. >> thank you. four high-profile projects seeking to expand and update their facilities by tapping the muni debt market this week. >> an interesting story. changes in the tax code in 2017, falling interest rates have been a boon for the municipal bond market the average yield for high investment grade munmy bonds 2 to it 2.5% and already a record $52 billion has gone into muni bond debt from january to mid-july of this year so who is buying well, goldman sachs asset management ben barber says the longer term funds and individual investors in high-tax states like new york looking for tax exempt income after an overhaul to the tax code limited deductions in 2017 one of goldman's muni bond mutual funds it up about 5% so far this year.
10:34 am
as you can see right here. all right. so there are pure muni offers in august one actually just priced, san francisco bank of ameriy area bs 1% on a six-year bond right here thr the pennsylvania ticonderoga, hospital common spirit health and dallas/fort worth airport. financial advisors caution municipal bonds carry a share of risks, especially when looking at the lower credit rating that is certainly something to keep in mind as we look at muni bonds. back to you. >> very interesting. of course, as you say, salt changes really creating a lot of demand in certain states. global negative yields the debt at question, $15 trillion worth who better to talk to than legendary bond investor dan fuss he joins us from boston. nice to have you with us
10:35 am
you talked in the past about sort of trying to at least give people a sense as to the emerging power in china and the u.s. are things following along the lines you have perhaps anticipated when you first started talking about this >> i think, to be frank, they are going a little bit faster and not quite the way -- i mean, this is impossible to judge. but the pressure is growing faster i think nobody would have thought a while back that our reaction would be exactly what it is and the implications of that and the pressure that china is putting on taiwan right now via hong kong is, you know, has been coming quicker it's been coming quicker and trying to find things where we mutually agree so that we can
10:36 am
push the trap aside and deal with the climate thing has been tough. so that's discouraging, but understandable >> all right what does that lead you as a manager of a large bond portfolio to do in terms way you are allocating capital right now? >> you have to be more conservative than normal still the basics are item selection, et cetera, but you do need a liquidity reserve and you need flexibility you have to -- if this is solved -- let me be very positive for one minute here if this is solved, there is an enormous investment opportunity spread across asia so you can look to this and you can be hopeful now, if it's not solved, then that opportunity isn't there and there is some other things that
10:37 am
aren't so good so you have to stay on top of it and have the flexibility, have the liquidity to find the opportunities, if they start to emerge in the meantime, you deal with what you have in your hands right now, which is the fed and the markets and the volatility inside some of the markets and the economic impact on the corporate earnings that sort of thing so it is business as usual, but you might say the environment that we're running money in is different than previous times and requires more flexibility. >> so where do you think the ten-year is going to end the year >> where do i think what's's going to end the year? >> the ten-year yield. >> oh, the ten-year.
10:38 am
let's see. right now you are around 175, 170. my guess is it's going to be more like 150, possibly lower. let's daface it. the fed is trapped by the current environment. they really can't -- i know there is a division of opinion here and if the u.s. or north america were the only part that we were concerned with, then the fed probably would not be reducing rates. if anything, they might be slightly increasing them or at least on hold until they see how big of an economic impact we have from the trade wars but we do have the trade wars. we do have the world outside of us and not only our own central bank is trapped by this, but
10:39 am
other major central banks. the money central banks are trapped. the about to be money center currency central banks are also trapped. that includes china. so it's the environment that's dictating which way the government yield curves is going not only in the u.s., but in other major markets around the world. >> you mentioned other major markets, dan 15 trillion in net has a negative yield, sovereign debt never seen anything like that, of course. how do you get an economy and how do you sort of get out of negative interest rates once you are sort of there? >> well, if i could give you an answer to that, we would both -- we could both make a ton of
10:40 am
money. i don't know the situation that the european central bank has on its hand is just hard to resolve and we have to remember they are also caught in a worldwide situation. not as directory as the u.s. is, but they do have a lot of the changes in the world you know, the climatologists talk about this, that, and the other thing. well, the people are moving away from the areas where the climate change has destroyed the crops you can't hang around a place where you can't eat. and that's having a heavy impact on europe, to say nothing of other parts of africa. so then you have a very
10:41 am
orderly -- well, not as recaord as a few years ago, but you have a very orderly political situation within europe, within the euro structure but with also a lot of tension between the individual parts of the government but nobody is shooting nobody is shooting at each other. and the low rate, or i'd say the ample liquidity environment, has definitely been a help in that now, where do you go from here i mean, who wants to put their money in a bank or a bond where you have to pay to have it there? >> i don't know. >> what are you going do pile up euro bills in the basement you know, essentially what you do is you go towards other assets so the threat they have is the loss of the integrity of the monetary unit, and that's the risk they are taking >> dan, so many other topics to
10:42 am
discuss. for now we are out of time certainly appreciate you sharing some time with us and your insights thank you. >> you're welcome. thank you. president trump tweeting about the topic in a way going after the strong dollar again. just tweeting as your president one would think that i would be thrilled with our very strong dollar i am not the fed's high interest rate level in comparison to other countries is keeping the dollar high making difficult for for our great manufacturers to compete on a even playing field. it will make it impossible for companies to win against the competition. we have the greatest companies in the world there is nobody even close the federal reserve called it wrong every step of the way and we are still winning can you imagine what would happen if they actually called it right many thoughts, dave. remember when larry kudlow came on two weeks and -
10:43 am
>> he was on with us - >> not that time the time before that he argued with me saying that i misunderstood that the president wants a weaker dollar. >> yes, i remember. >> he said the president wants a strong dollar. >> that's not true. >> no. he is clearing that up for us. >> he wants a weaker dollar. it's almost every day -- there was one yesterday that he tweets something where he has a strong criticism of fed policy. pretty much every day. >> every day and this idea that the fed hasn't been as aggressive cutting rates and that's one of the reasons the dollar is so strong, it's not wrong it's because we have a better performing economy that we can be very proud of, an almost record low unemployment rate stock market record highs. that's why the fed hasn't cut as much as everybody else we launched a trade war that strengthened our dollars against everyone else who gets hurt more, including china. his trade policies strengthen the dollar. >> i said this to you yesterday.
10:44 am
you answered me, obviously, with the answer, which is, you know, a 3.7% unemployment rate, gdp at least 2%, a number of other economic indicators. you would not anticipate interest rates where they are, except for the fact that they are negative in so much of the world and the money is coming here and what that's doing, sara if you are the fed, how do you navigate this guy - >> earmuffs. don't go on twitter. don't pay attention. it's hard to imagine it wouldn't factor in. clearly, a lot of political pressure eamon joins us with more of the there was an interesting "wall street journal" editorial board piece out today, eamon, calling it navarro's recession in the piece they made the point that it's the president's trade actions that are helping to strengthen the dollar which he is now complaining about and bashing the fed again. what's your take >> that was a blistering piece in "the wall street journal" this morning as you point out making the case that they say
10:45 am
the president simply doesn't understand his own trade policies and what the impact is there in that because of the trade war that we are having with china, that causes investors to rush to the dollar and then strengthens the dollar. if the president wants a lower dollar, that's not the right way to go about things i have been trying to figure out internally what the impact of that op-ed calling it a potential peter navarro recession is internally at the white house. i don't have any intelligence just yet it's a blistering criticism of peter navarro in "the wall street journal" today. today you see this tweet the president calling for a lower dollar in effect that's not something typically you have seen presidents do in the past maybe presidents have wanted a lower dollar, have taken steps to get a lower dollar, but the policy out of the treasury for years covering that building is that the united states wants a strong dollar and treasury secretaries have never said anything other than that even if
10:46 am
they didn't necessarily feel that way the dollar is the reserve currency around the world. so administrations typically have been loathe to do anything to appear that they are angling to move it one way or the other. now this president has a different approach. >> the confidence in the world reserve currency. >> that's right. it's a hugely important point. right. it gives the united states huge advantages internationally and allows us to run massive deficits we have been running for decades for now having the reserve currency is that going to be the case in the future and where does this administration sort of come down on that? clearly, this is a president who wants results that he wants and he wants them right now. he is not playing a long game here he is playing a short-term game in terms of getting the economy to where he thinks it should be in the immediate short-term and also getting this china deal tht way he wants it to be, hopefully in his view before the election in 2020. >> the question investors have been asking and will continue to
10:47 am
ask after tweets like this is what can the president do it try to step in unilaterally to the currency market, intervene to weaken the dollar it might not work because -- >> you know a lot more about the currency markets than i do does the administration have enough ammunition to move that enormous currency market >> they have an exchange fund. they could instruct the treasury to instruct the new york fed to intervene. >> it's like 100 million against -- >> the market could fight it in a second interventions have worked when they are multilateral like the plaza accord, when we bring our friends and allies and all the banks are fighting the currency market together. it's hard to see that happening here. >> this is a unilateral presidency. >> currency manipulators like china, go after europe, go after vietnam. there is no teeth there. that brings the imf to say, hey, they are not manipulating their currency or he could continue to jawbone
10:48 am
it, which is having less and less impact. or replace the fed chairman which is a big question mark that i think everyone has. >> that's the question the president has insisted he has the authority to do that jay powell said if the president tries to fire him, he'll say no simply and not go anywhere and that gets you into a real interesting area because it's sort of a gray area, right the law says the president can fire the fed chair for cause, and the question has always been what is for cause? does it mean not lowering interesting rates enough or failing to show up for work every day? it's never been explored because no president wanted to rtle the fed chair this much this publicly an push it to the limit. other presidents have been frustrated with fed chairs no question. this president wants to do it publicly will he take that next step? that's a real unknown because of the consequences. >> eamon, let me ask you convqul
10:49 am
here, you are a tweet tea leaf reader, so to speak. it's every day now it's almost every day this criticism. it's certainly the momentum -- the momentum is certainly increasing >> yeah. look, the pattern is these things tend to nag at this president. they get under his skin. it bothers him he tweets, he tweets, he tweets. in the past we have seen a president ho gets increasingly agitated about something and then the dam bursts and he takes action the comey firing was an example of that. it hasn't always worked toer out for him and for his administration the question is will he temper that based on his experience there? we don't know. >> well, one thing that could be working for him is the market expects to cut rates a bunch more times this year so if this happens, unclear whether that will weaken the dollar or not -- >> maybe the job owning is working, right maybe he is getting what he
10:50 am
wants by jaw bow boning app. >> i don't know if i would make a direct link. eamon, thank you. >> you bet. as we go to break, take a look at some of today's earnings movers roku leading the way that stock on fire, up more tha anthony wood in the next hour on "squawk alley. "squawk on the street" will be right back dow is up not too far from session highs, 160
10:51 am
your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity.
10:52 am
banks getting burned this month, but one top analyst sees a phenomenal opportunihety aad find out more on tradingnation.cnbc.com more "squawk on the street" coming up.
10:53 am
do you have concerns about mild memory loss related to aging? prevagen is the number one pharmacist-recommended memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life. welcome back to "squawk on the street." rick santelli is here live on the floor of the cme group i would like to welcome my guest, johnnie fine. goldman sachs head of investment grade syndicate. johnny, thanks for joining me. let's get right into it. lots of volatility, whether it's treasuries, global sovereigns,
10:54 am
even all the different spreads, high yield, investment grade your forte, investment grade how much was it affected and does it change your outlook? >> so the reality is, rick, that our market has been affected in a very limited manner. we're actually seeing supply come to market this week we're running at above average pace execution is going well. investors are loaded they're ready to invest. and i think that the technical imbalance of demand over supply is going to continue to be a factor for some time to come >> you know, when i look at the last several auctions, especially yesterday's ten-year, it was definitely on the soft side, johnny and there's this general notion that with the budget deal behind us, obviously, a bunch of signatures yet need to be done there's going to be a boatload of short-term and coupon supply. will that affect or infringe upon the demand in investment grade? >> not in the slightest. i think this has been a story that's played out for a number of months. there's been expectation of significant treasury supply to fund the deficit i think there's been scare stories that have been going
10:55 am
around the market for the entirety of year, yet we're sitting very close to the lows we've seen all year. i think that there's close to insatiable demand for fixed income right now i'm not worried about there being a supply-side shock that derails the current tone of the fixed income assets more broadly. >> you know, johnny, many saying, including myself, i must admit, that market signals in many ways are broken, whether it's monetary policy or just flight to credit during uncertain times. global rates are just too low. much of that manipulated do you believe that the signals are mass that this debt and the growing debt that underlies some of this supply we're ignoring out of treasury and many treasury around the world is something to be concerned about in the big picture >> so, look, insofar as credit markets are concerned, there's no doubt that companies have used what's been a very favorable financing market for a number of years now to lever up their balance sheets and i think we're running at cycle highs. i think the good news is that the affordability of that increased debt load is not at cycle highs.
10:56 am
and that simply because of the cost of the financing that many of these companies have incurred has been significantly lower than in previous cycles. and i expect that to continue. >> johnny fine, excellent first -- folks, this is the first time johnny has been with me as a guest. hopefully we'll see him much more in the future david faber, back to you >> thanks, rick. >> talking about all the issues that are of great importance, not just fixed income overall, sarah, but the impact it's having >> we'll find out later on the "closing bell. is that what you're going to ask? >> well, yes i want to pay close attention to what it is you're going to be discussing on the "closing bell". >> we've got a good show our 3:00 p.m. guest host today is citigroup tobias lekovich first analyst i've seen that has lowered earnings estimates as a result of this new flare-up in the trade slash currency war so it will be really good to get his take on what the numbers look like now as well as where the pain will be and we've got terry duffy on the
10:57 am
wild action in the bond market he's been through a lot of these cycles and periods of volatility so we'll see how this one looks to him they do really well when actually there's this scramble of activity around bonds and fed funds and that sort of thing and then after the bell, earnings results from uber, cbs, activision, and more so a lot of good specific company stories. >> uber already benefiting, as you can see, from lyft's better than expected report this morning. >> we'll see if that translates internationally. that's the key difference there. in the meantime, "squawk alley" is up next exclusive interview with the ceo of roku on his company's blowout results and that stock'sig rgth mning b
10:58 am
people know aflac. aflac! but not when to use it. do i use aflac when the kids get slime in the plumbing? no. that's home owner's insurance. slime in my motorcycle. no. that's motorcycle insurance. slime everywhere? ughhh nooo, there's no insurance for that. do they help when i have bills health insurance doesn't cover? yeah! that's it! aflac! gross guys. get help with expenses health insurance doesn't cover. get to know us at aflac.com tell him we're flexible. don't worry. my dutch is ok. just ok? (in dutch) tell him we need this merger. (in dutch) it's happening..! just ok is not ok. especially when it comes to your network. at&t is america's best wireless network and now, get the option of spotify premium on us,
10:59 am
with your unlimited plan. more for your thing. that's our thing. but we're also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. from the day you're born we never stop taking care of you.
11:00 am
good friday morning! it is -- it's thursday morning it's thursday morning. it's 8:00 a.m. at roku headquarters in los gatos, california it's 11:00 a.m. here on wall street and "squawk alley" is live ♪

62 Views

info Stream Only

Uploaded by TV Archive on