tv Squawk on the Street CNBC August 12, 2019 9:00am-11:00am EDT
we are off triple digits now, dow looking to open lower, 126 points lower nasdaq looking to open about 39 points lower s&p 500 off about 13 points, want to thank kayla and wilf for hanging out this morning want to wish a happy birthday to peter. >> happy birthday, peter >> thank you for hanging out with us. join us tomorrow "squawk on the street" begins right now. ♪ ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jame cramer at the new york stock exchange david faber has the morning off. dow futures red to start the week down about 120 here as we watch protests in hong kong, goldman cutting its gdp forecast europe is mostly red ten year yielding 1.68 today road map begins with futures falling. hong kong protests intensify, airport canceling all remaining
flights today. goldman sachs lowering its growth forecast and reports that wework could file as soon as this week. we're going to start today with the markets. jim, not a repeat of last week, but we're going to -- it is going to be busy, cpi, retail sales and more. >> retail sales is on front burner it is hard to believe that given that unemployment rates are so low. people keep waiting for the inflation story in retail. i dealt with a number of retailers, and almost every retailer says, listen, very small margin hit to the september 1 tariffs. but as soon as you hear small, you say, big, big, big really good piece about dollar tree, not a lot of exposure to china and does well when the economy weakens. i want to watch that to see if we don't get the situation where we start trading down in terms of tocks macy's, 7.7% yield that's the paradigm of what people are avoiding.
i think the macro does trickle down to the micro. i'm concerned. i'm really concerned about this hong kong situation too. >> you mentioned that as the most important story of the day because of the impact on the chinese economy or the way it makes trade talks more complicated. >> i think that we often talk about how the chinese are losing face because the way the president tweets at them what is a bigger loss of face than have a colony, so to speak, be allowed to do whatever the heck it wants. when you're a country with colonies like hong kong, hong kong is the other kind of china, they have to -- if they're asked by the ceo, and always love the irony of the ceo -- >> carrie lam, the chief executive. >> the ceo over there. if you're asked, don't you come in and the airport is very visible, visible way of demonstrating protesters demonstrating to china, look, we're in charge of
the country. it is almost like that will take over the radio station it really is >> it is one of the busiest airports in the world. >> oh, my. it is the way of commerce, it is the flashpoint, it is where commerce interacts with capitalism and i just think that these -- i'm not saying the protesters are playing with fire. i think the protesters want fire i don't know why you bring this on they haven't been able to quell the weekend protests this airport needs to be open for me to feel better about what's going on. >> so if -- that looks like an american airport in the storm, it is not. this is very serious stuff that picture does not do justice to what happened. >> when you're canceling 100 plus flights. >> any violence there was one incident, but any violence is terrible we can't get the pictures. they don't show how bad this is
in terms of the face the chinese must feel. >> if the authorities crack down on these pro democracy protesters, whose side do we pick what happens to bipartisan support for a trade deal >> i think that if i'm merkel, don't i have to come out against the chinese? there is really -- you really defended your trade with china, but this transcends trade. this is a bit of a civil war if it breaks out. there could be real -- lives lost you have to -- this has to be -- this has to be dialed back i don't know how to dial it back, because no one knows who to contact with the protesters then the american flags, that's what i wanted to really see, because this is something that if it is perceived as any sort of thing that we're involved in at all, well, that would just be disastrous for trade >> is this something that brings the market lower or just keeps it more difficult to break higher >> great point i think it is the latter i think what it says it we have
a lot of companies that are doing quite well, but it is hard to get them up when -- i was up when this happened and i saw it it was about -- i think about 4:35, they -- the protests shut down the airport, and the futures just plummeted looked like another ordinary day. you laugh at the pajama traders. but if there is human lives at stake here, which it seems like there are, i do think we can't rally without some resolution. this is more serious than the trade talks, for heaven's sake what happens if they bring in their military what if they bring in the military and the protesters -- it feels like during vietnam in our country, where you just -- they burn the military and it is like -- >> isn't it interesting that you think people have an idea of where these things would -- six months ago, nobody was counting on hong kong being a complicating factor in trade right? >> i remember this was -- i don't know how many weeks we had protests over the weekend, but
they turned into something i don't think people felt at the beginning. this is a peaceful country it is peaceful relations and it is -- it really has taken a turn for the worse we haven't heard the government or the pla come out. i urge people to realize they should at least think of this as a parallel trap to the problems we have with trade and it can't be ignored but it is something that we-- if you want to know what could tip you into a worldwide recession, it is a shutdown of hong kong because i think people really will be scared they'll be scared that something bad is going to happen. >> really? odd thing to tip the scales, right? >> i think it would cause a big pause. that's if there is violence. this is peaceful and you want to hope for everyone wants a peaceful resolution. >> you add to the mix argentina today, bonds in free fall. >> they collapsed. >> primary loss. >> do you know 100 years ago,
argentina was one of the top ten countries in terms of wealth per capita in the nation that's a well destruction story for a century. >> with the imf coming in repeatedly to help out. >> why don't we talk about grease greece so much and not argentina. argentina is falling apart there are countries in -- there are companies that do business in argentina that are gravely mistaken to do so after this weekend. i don't want to -- what i'm saying is i'm not ignoring international -- i was never ignoring it, it wasn't a front burner for me. you see arjnl argentina collaps see hong kong being so dangerous and potentially so violent, somebody has to come out in hong kong and say we got to cool this i don't know who but what i fear is that the other way, i think ceo lam is going to say, we need your help, pla. and that's not good. >> that would not be good. would not be good. we keep our eye today on crude, by the way wti and brent have been in the
red for much of the morning. brent is well off the lows wti went positive a few moments ago. both benchmarks down last week brent down more than 5 west texas down about 2. major player in the space also feeling the impact is saudi aramco, $47 billion. results down 12 from a year ago. reviving its plans, the journal says, for the ipo. >> that ipo is about trying to get them away from -- i don't blame them, we're going to be -- we had 12 million barrels last week, per day. we could be 13 million barrels by the end of the year there is no room for that. that's 3 million barrels more than anybody thought, three years ago. i do believe that people have to recognize that not only are we the swing producer, but flooding the market and we haven't built the pipe infrastructure if you go over to the last big project in the country other than the plastic factory and some lng plants, you'll see that
everything is about getting that -- you look at the dallas fed, they're bringing pipe the more pipe they bring, the more they can take natural gas off. the reason why they're not drilling more is because you have to get rid of the natural gas to drill there is no place to put it. can't have -- even with the cpa, not allowed to flare even with the cpa. i was surprised the president doesn't say it is time to start flaring. if he likes coal, he's got to love flare. >> where do you think the saudis or opec start defending serio seriously the price of oil >> they -- i think that they do the ipo, maybe they don't need the money. i think it is russia that is the problem. russia seems to pump at all costs. it is -- you know what this is it is the texas/china civil war. because china needs to -- china is not taking up they're not buying more oil. like everyone thought it is fine because china needs it but china seems to be full up. so what do you do?
where do you put it? russia is flooding the world texas versus russia. when i say texas, there are a lot of the other oil places cannot make money. balkan is struggling we have -- >> it is all about the permian is what you're saying? >> it is all about the permian with the new drilling technologies, you can cut back on -- >> even though rig count has come in? >> you can produce more oil can current rigs, big technology >> people watch rig counts we'll get more numbers today in fact. >> schlumberger keep saying if we keep going at this pace and countries do not replenish, we'll eventually make it so that oil has to go up in price. but i think that schlumberger is not enough involved in texas if you go over halliburton's quarter, they will tell you how the drilling there is -- you can make a lot more with an oil rig than you used to be able to.
chevron told me they think there is 10,000 wells they could have drilled if they brought in anadarko occidental has to be watched really negative peace about occidental came out today and it was so -- it was so negative that basically just says this was -- evercore, the value destruction of the anadarko buy is region. occidental, that's the one to watch. they got a lot of debt there is too much oil coming out of the permian people just completely overlooked this chorizo deal they sold itself, a billion dollar company we're pumping too much oil and when we get rid of the natural gas and gone soon, to mexico and the lng plant, selling 5 million bcf, they'll do 10 million bcf export, still not enough to deal with the nat gas. >> from one commodity to another, gold today, barrett
gold, high end of the range. >> they think they're going to be able to integrate barrick with randgold. they kept the symbol, it is bristow in charge. he's a magician. they'll be able to merge those two. there is a dispute between the two on a particular part of land and that will be resolved. i think gold can go up substantially. you have negative yields, there is no competition. >> who is we the journal today actually puts it on the front page, the prospect of negative yields coming to this country. >> yeah, if you think that, then you want to buy at nico eagle, the growth gold, and this one, rand, barrick, the value gold. i think that gold -- i said gold should be 10% of your -- >> 10 is usually your bet. >> i tend to take it to 15 if you just -- well, cash is king, but, i had niko eagle on, what an amazing story, they had lowered the production cost
dramatically a lot of $500 production think about it, how much do you make with gold so high they have been -- shawn voight, the ceo of niko, he's been weighting for this moment. you can -- he can flood the whole gold market with gold. it doesn't really -- it will be absorbed. >> exactly there is demand now. >> remember, gold does well when you have low interest rates. how about had you have negative interest rates >> real rates close to zero now on the 10. >> got to buy niko eagle, they're coining money and now with bristow really in charge, bristow is a genius. bristow did call me a sissy at one point. >> a sissy >> a sissy i said gold is very dangerous in african countries. he said, if you're a sissy, they're dangerous. the implication was clear. we never really resolved that dispute as much as i like that guy. being called a sissy, i remember in eighth grade someone called me a sissy, i was able to deck him. this guy was by remote
>> "mad money" live from south africa one of these days >> i'm ready to go. >> when we come back, cramer's mad dash, count down to the opening bell, a lot of movers to dig through today. ipo on the horizon reports that wework could unveil its filing as soon as this week. we're coming off two weekly losses and eight straight sessions of a 1% move or more. that's the longest streak since january. back in a moment 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.
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coming up to the opening bell, cramer's mad dash ahead of the market open. watching png today. >> can't wait, delivering alpha, i'll have taylor and peltz, peltz joining the board, the reason i want to focus on this, morgan stanley has an incredibly well argued piece about the confidence in the year, the confidence in the long-term switch and how well they're doing. robust, above consensus growth margin, inflexion, it is by daria, the biggest critic. why is this important? doesn't do well on a strong dollar it is the place to go when you think the economy is going to go bad or it is -- it is i think as
david would ask me what is the key to the market, david, of course, absent, but i would say this stock, because it had the best quarter of the cpg, consumer package goods, and daria did this remarkable -- this is the right daria, the one making all the numbers, the other daria i love, but, oh, boy, a tough call when you were away, let's watch this if this gets hit, that's where the money is going to go i think because it is such a strong story. >> yeah. when you think about the fact that there is still khc out there, is this a macro story or an execution story. >> great question. it is both the execution is spot on but the -- we always try to find amacro story a macro default, like clorox used to be, clorox had a not great quarter. the only one in the food group, kellogg had a good quarter, campbell's had a good quarter. i would say this was the best of this and second would be colgate. these companies used to -- their stocks used it fly when we get
recession talk and they're flying again >> do we know how they're doing the dollar, how they're getting through this >> they had a primer about 2 1/2 years ago, a primer on how bad -- what it means for dollar weakness they do well in country and the translation is bad, they used argentina, i would love to see a redo of that piece, they talked about argentina. i'm concerned about the globe. but these guys were doing -- they have been taking a lot of share from unilever. could take share, make more money and the dollar -- they can offset the dollar but they tell met piece was great. they talk about, you keep saying we can hedge you don't know how expensive it is to go hedge so they're kind of just out there unhedged but doing so well. i really like them. >> the piece today, what is their target, do you know? >> they're saying that -- i thought that was the one problem with it, using 129 i think -- i would have liked it if you did much higher but, look, 129 would be a god send the other thing i was going to
do was roku, it is going up. roku is a tiny company had them on last week. this is the company to watch and it is a buy. mcdonald's if someone -- that stock had an amazing move without a single push by the sell side. not a single push. a couple of these -- look at this thing this was here last week. these are the stocks people are defaulting to. mcdonald's, roku and procter roku >> we'll talk about a bunch more names when we get the opening bell in a few minutes. futures here more "squawk on the street" from the nyse straight ahead.
the opening bell in four minutes. time to talk about certain levels, the august low a week ago today, 2822. people trying to figure out where support, where is resistance now. >> it feels like there is a -- it has to test there is the situations that are -- that were involved with are very ethereal. will the president tweet about something about hong kong. i had the president's twitter file in front of me at all times. i know he likes to talk about different tv stations, he's got to get that clicker fixed, but
without a doubt -- >> watching shows bymistake. >> by mistake. >> if he gets involved in tweets he likes the protests, oh, man, that would be terrible then it would be a loss of face. i'm monitoring that. and i'm monitoring what i regard as the inability of most people to grasp how negative yields could affect our stocks. i did a piece this morning for real money for the street talking about how if you look at it, i was looking at darden this weekend, and i was looking at the piece about dollar tree today, and i'm trying to relate to trade dollar tree is very little exposure, darden, olive garden and long horn, no exposure i say i don't know how to -- i don't know racking my brain, how do i intersect that and negative yields the answer is it doesn't answer. the s&p goes down. there so much money, about 60% of the money is indexed now. that could force these companies to have lower multiples than
they do. it may be darden goes to 17 from 20 and maybe dollar tree goes from 17 to 15. there is nothing that is going to impact those stocks from what we're talking about. >> why doesn't lower rates or even negative rates reinforce the school there is no alternative to e equities. >> darden has a good yield and will get better. i'm not saying that darden's credit is better or worse than u.s. government. though some people say, well, judging by who runs darden, yeah but i do -- again, i don't want to say i'm confused. i'm trying contextually to put in the fact that something that everyone is fearful of helps us. that is very hard to grasp but that's because germany did a gigantic bond offering why don't they take advantage of it they got -- they want to get their economy moving, do a gigantic bond -- i would like
our president to think about -- he talks about make america great, how about make america great, gary cohn said he would think about it, but $500 billion make america great 30 year that the government would just do so -- >> you've been calling for this for at least two years. >> i'll go to navarro, navarro is running things. >> definitely has the pole position now. >> navarro does a lot of tv. a lot of it is -- i think there was a journal piece last week that said navarro will cause a recession. i thought it was -- >> navarro kicked back. >> somewhat simplistic navarro is one of many people in trade, he does have the president's ear, but he keeps noting unemployment is strong, trade not so bad, earnings not so bad so you find yourself thinking, all right, so cisco disappoints. the stock is up 2 bucks, it doesn't have any international exposure what am i supposed to do, sell cisco, because of argentina, because of hong kong the confusion is how do we
interrelate cisco, food delivery company, nothing happened. that does well, nelson peltz there, with what is happening in -- >> that's going to be the key question, whether or not -- manufacturing can bleed into the domestic consuming economy >> we are -- we often say we're two-thirds domestic. i think that's wrong i think we're about three-quarters domestic, consumer and i just have a hard time saying, okay, look, the consumer is going to slow down because of negative yield they won't the consumer does better as short-term rates go down, it is good for -- >> they are human beings with fears and uncertainties and that's a big part of goldman's call. >> well yeah it is kind of a merchant -- that -- i find it really -- other than utilities and real estate, everything seems to be weaker real estate, best performer and i was going over some positions
this morning that i like to look at from my trust and i so struggled to figure out the negative theory on fin tech. that somehow pay pal passes them i just -- i am struggling. i want to be -- joking with david, i want to be negative about so many stocks i want to be negative about amd. but lisa sue, dr. sue, came up with a better mouse trap i want to be negative on microsoft. but azure is doing really well negative on mcdonald's, but a terrific quarter so we are struggling with the only game in town, i love the fact that we're now -- that's an acronym i didn't -- >> which one >> tina. >> i feel awful about it i i' i'm working on turner i'll do simply the best. i go to figure out turner, trade, uber -- >> by the way, jim, today rang in the opening bell at the big
board, life insurance company globe life, life insurance, corporate name change, new brand strategy at the nasdaq cilos therapeutics >> carl, i have more people -- i cannot believe this story, beyond meat, uber, momentarily took beyond meat off and you grill it we all grill this is kingsford territory. i hope clorox is having a better kingsford quarter. as soon as you start grilling, it comes up again and again. beyond meat. are you offering a beyond meat burger you get -- i have millennials over the contempt i have for even the people, anyway, i have millennials over, they all want beyond meat. no, i'm sorry, i'm going to give you some usda prime. how did that become the enemy? methane? don't want plant -- if i wanted plant-based, i'll eat cheerios
beyond meat will not take you out that level or they will the secondary. the shorts are begging for that stock to go down but it won't meanwhile, while you were away, uber had an awful quarter. >> i saw rough. you had dara on. >> i had dara, look, they needed to be more than a car company, they needed to be an ecosystem they needed -- you know what they really need autonomous vehicles. they need driverless vehicles. and that's really out there. going to take a long time. but they need to -- they can't get in a room with lyft and fix prices they go to jail for ten years, but prices -- they got to find a way to be able to -- >> take the driver out of the car? >> yes they are paying the equivalent of $10 an hour in order to make $8 an hour and you can't make that up in volume. so a discouraging quarter. we're stuck here knowing that dara is -- may be one of the great executives of all time
>> think about where the company was one year ago uber freight i don't know. >> speaking of issues, this report about weworks filing potentially close. has the window closed for some something like that? >> i think we will have a lot of people talking about the top because of weworks if there was ever a deal we don't want or don't need now, but the bankers don't care when you're in the meetings, it is like, wow, we got to make the quarter, let's jam that -- the syndicate in the world who says, uh-huh, this might be the wrong time, what they're saying is what price do you want we think it should be this so there is going to be a lot of wework that hits the market. >> when we had the flurry of ip os, the worry was it would take air out of the room.
>> we have enough stock stories that are good. they have been able to absorb a lot of capital and there is a lot of companies that yield -- have a good yield that people are puttinging their c capital in i don't know i have to watch wework they can say top and then disappear and i got to call the top goldman back within a few dollars of 200. >> mike sherlock >> and bank of america today getting slapped a little bit. >> i shouldn't say -- mike sherlock and the fellow who went to alibaba, you're talking about -- these are -- mike sherlock doesn't work at goldman anymore, but he's -- he's at one point the most powerful banker i don't know what malaysia is going to do goldman is well
reserved but indictments even -- even in a kangaroo court, you don't want indictments. and i think beyond the ones where these guys -- remember, they have guys who have already said we're guilty. so are they going to -- do they have testimony i think goldman is a great buy under $200 i think malaysia is a legitimate side show. you should not base anything when you're buying -- on malaysia it is prurient to see the names who are involved it is r. epstein >> by the way, broader than malaysia, the ft does say the job cut number, investment banks, is around 30,000 now. mostly european obviously. but that's a lot of bankers. >> i'm asked -- some cuts last week you're talking about a major
dislocation on wall street we have a great unemployment problem in this country. it is not at that level. 3en th wall street is focused on the wrong things what went on with malaysia, what went on with epstein but it is because the track -- i don't know the loss of life they're not talking about the ranks. and citi, like, corbat taking down the ranks bank of america, they have been taking down the ranks the whole time and have done a great job the banks are the biggest worry in the market because jpmorgan will yield 3% before the end of the day. i think that's a buy other people say we have to wait until 4% ipchlt mjpmorgan is doing incredibly well.
no one seems to care those are -- those are the achilles heel of the market. they have to stop going down. >> because of global growth, the curve -- >> global growth they look like they are -- their earnings have to come down they have so much fee-based revenue. citi has great fee-based revenue. i'll take the other sides of the bank stocks at a certain point they had great earnings. right now they're perceived as being more -- even more worrisome than the giant machinery companies. i think that's a mistake i like the banks i can't pound the table because the sellers are just hitting them and hitting them. now they're starting to hit right into the buyback i don't like to sell the gigantic buybacks, suckers game. >> goldman gives us an opportunity to talk about the apple card which has got someone reviews out this weekend we'll talk to kara swisher about her own thoughts >> i signed up for it, took five minutes, i use it this weekend i don't know used to be flyers. i was a senior at college, get a
flyer, get a credit card i got an -- you look at my american express card -- >> now i think what they're trying to do is get it so you're a member since -- for apple. it is -- i thought the piece was right, the wall street journal piece, it is apple pay that's what i use it for i got 2% back. 3% on anything in the app store. that's pretty good but these -- people are used to credit cards buying them trips to san francisco you're not getting that. >> of the partnership between goldman, mastercard, apple, does apple get the biggest return on this >> apple has that kind of risk free interest with no cost of acquisition. that's a dream come true capital one would like to have their -- they have no cost of acquisition. their numbers would explode. so, yeah, apple is a big winner in this. the fact is that more companies will take apple pay. we take apple pay at my restaurants because we're afraid we lose a sale but you can -- apple pay is going to be the winner here.
>> i think we have gotten to the point if someone doesn't take apple pay, you're annoyed. i don't know about you >> we took apple pay because people kept asking for apple pay. we didn't want to do it because it is complicated if you're trying to save money on a point of sale. we're worried about caviar going to door dash we just negotiated a contract with caviar to save money. that's out the door. >> interesting. >> i think that you -- i think apple is a winner in this. apple is obviously at the crux of the many trade discussions. and peter navarro i think speaks loudly about this on tv. apple is not a good actor. i have to disagree i think apple is doing everything it can in america to create jobs. and including a fund to create jobs they have a fund, they create as many jobs as a lot of governments. so i think that's misplaced. i support the trade policy, but apple should be cut a break here and they're not getting a break. >> interesting one last thing, jim, some media
names make something moves, we might know more about cbs and what may happen tomorrow morning or this week >> we know there say deal. we absolutely know there say deal because dave is not here. didn't get it done in time viacom had a great quarter i think that people should focus on the fundamentals there, because they look like to be the acquirer and there is talk of small -- david hates it. david hates all the stories that talk about the things that you know you can't access. but i don't know why that deal wasn't done. viacom reported a terrific quarter. and it is actually being kept down by the cbs talk mr. bakish, please stand up. the ceo of viacom. viacom stock will be higher if it didn't have all the trade talk the complicated merger. >> dow down 208 here to bob pisani and let's see what else is moving. >> happy monday, carl. it is a weak open. we tend to follow bond yields these days so 173 on the ten year on
friday, 1.68 today guess what is leading on the downside, bank stocks. kbe, lowest level since late may for the bank index retail, industrial, energies, all trade related to the downside materials also down. utilities, naturally, are on the upside if you look at what is really going on, it is not a good third quarter, but it is never a good third quarter. this is just the problem with the third quarter. we say this all the time, august and september just really rough times for the market so we were up 13% in the first quarter, 4% in the second quarter, up quarters are not -- this is a lot, but up quarters are common typical for the third quarter to be down, we're down 1% so far. nothing unusual going on here. imagine if we didn't have the tariff issue, we would be bucking the trend. the third quarter is difficult my old buddy sam skoval was out over the week, this is the weakest average price gains.
if you get any at all, that's what we're seeing. nothing unusual. we didn't have the tariffs, we would be bucking the historical trends and likely be on the upside what worries me is the earnings picture. trader talk on this, this morning, you see trader talk, but if you look at what's going on with the big sectors, the numbers are coming down fast i described 2019 as flattish that means up maybe 1, 2 points, something like that. look at this, july 1st, for energy, up -- down 13% this is a few weeks later, down 21%. that's a lot that's a significant deceleration that we're seeing same thing with some of the industrial names here. we were supposed to be up 6%, this is the third quarter numbers, estimates, less than 2% that's a lot to come down. most of this is just in the last few weeks. similar situation, technology has been coming down too, all the big global trade related stuff has been coming down here is another sector that worries me, the retailers.
i don't mean the department stores looking at gap, foot locker or l brands, a lot of the apparelmakers, july 1st up 8.7% on -- for the third quarter estimates, now we're negative. this, again, is off -- mostly related to china and trade issues look at some of the typical names here, this is for the quarter, these names prices here coming down. l brands,gap, chico's this is that whole sector. we all know about what the department stores are doing, what a disaster they are, now we're starting to see the specialty apparel stores hit rather badly my point is that i've gone from things that are going to be flattish and let's not worry so much in 2019 to the numbers that just started coming down in the sectors you want to watch. in the industrial space, in the energy space, big retail space, these are signs that the bottom is up analysts are not as confident in the second half of the year as they used to be. that's a sign the tariffs are
starting to warm their way into the psyche of the people who actually guess where the earnings numbers are going to go that's what really moves the stock market carl, back to you. >> bob, see you in a bit bond pits, check in with rick santel santelli >> when it comes to stock market, we all know when the vix goes up and the vix primarily goes up when stocks go down. in treasuries, rates up, rates down i've seen historically lots of big rises of volatility, this is one of the glaring examples of rates moving lower with hypervolatility, the move or whether it is ty vix as you look at intraday of ten, you see there is some downward pressure but nowhere are traders concentrating more than the longest, the 30 year bond. 30 year bonds low all time yield closes a whisker under 210 we'll call it 210. if you look at the chart going back to august 7th, we had an
intraday move that was down within a basis point of that right around 211 but then it bounced. well, the bounce seems to have been on limited time for sure. if you look at the next chart, this is july of 2016, that is the bottom i was referencing many traders look towards the massive steepening over the last six, seven months of 30s minus 10s. and that really has given rise to this being such a critical level. many believe the double bottom, the second of which was july of '16 like the 30-year bonds single bottom was 135 to 136 traders are looking for the first area and that case you probably see ten year notes escalate in that spread move rather dramatically. finally, a lot of things going on in currency dollar versus yen, see on this chart, going back to august 16 right now we're at the levels we haven't closed at since march of '18, not in favor of the dollar. really close to november of 2016
levels finally the dollar versus the chinese currency, on shore, offshore, this is on shore, this is going back to may of this year, 2019 you can see all the trade issues escalated. so has the price of the dollar against that currency on north side of 7. and we are hovering at levels unseen since the spring of 2008. carl, jim, back to you. >> all right, rick >> 2008, remember that's when we thought the center would not hold. >> that's true meantime, amazon's digging deeper into brick and mortar this time going after liquor applying to the san francisco board of supervisors for a license. the company planning to open a 200 square foot retail location that would sell wine, beer and spirits. got that, jim, along with the journal today, inbev making a run at seltzer you've been watching. >> yeah. sam, that's boston beer, constellation. i had some of it this weekend, didn't like the lime, terrible but why every single 22 to
30-year-old we deal with comes into my refrigerator, opens it and says where is the spiked seltzer? i just learned an ipa. give me a chance here. i can't keep up with what those people want. spiked seltzer you have to have. constellation, several times in the quarter, modello, corona, it is a very big deal so obviously is cannabis drinks. thc drinks where they can't seem to get the right amount. i went to the amazon self-service store and i didn't really understand it because there was still some people at the end who said you have to wave it. i was uncomfortable. i like a checker but here we go, again, millennials, so thrilled they don't have to talk, they can text anything but open their mouths i think that -- i once saw david blaine do a trick, he sewed his mouth up, he had the king of spades but do millennials -- it has
come to that i'm a millennial they text you. what is your cell? they text you. >> you don't call your daughters? >> i haven't spoken to them -- >> by voice, nobody does that. >> one of my daughters, she finds out she was in grand tetons on instagram. >> that's how we find out these things >> i thought she was in ocean grove. wow! you try to keep up -- you got to keep up on instagram that's -- you never know where they text from that's the problem they text from all over the place. >> could be anywhere. >> i hear from my daughter by text constantly but i don't know where it's from. >> when we return, can there be a winner in the trade war? markets right now hovering with the dow down about three quarters of a percent. plus, we want to mention, we are now a podcast. you can listen to the opening bell hour anywhere you listen to your podcast, "squawk on the street." >> they can't see my faces. >> is back after this. don't go away.
news out of tyson. 38 workers at a kansas meat processing plant will be out of work following a friday night fire that caused significant damage, although the company says it will provide the workers with some guaranteed pay stocks down about a percent. dow's down 202 stock trading with jim in a minute
all right. let's get to jim. >> amgen won a major lawsuit em brill the stock keeps shooting up. this was the big negative if they lost to em brill. >> all right tonight? >> all right so tonight i have take two, blowout quarter. the alternative to botox and first time keurig, dr. pepper a fantastic ceo. very excited about that interview. i mean, keurig is oin one out o every five houses.
♪ ♪ good monday morning. welcome back to "squawk on the street." >> i'm carl quintanilla with melissa lee at post 9 of the new york stock exchange. dow's down about 180 points as we start a busy walk chock-full of data. watching the hong kong protests of course and a bearish call out of goldman today. >> meantime, our roadmap starts with stocks selling off. fwee o geopolitical ununcertainty. >> and aramco getting hit. >> and a buying opportunity in retail how to play those names getting hit hardest by potential chinese tariffs. >> first up this morning, u.s. stocks resume a decline following a two-week losing
streak jpmorgan asset global marshall strategist good morning, guys good to see you both. >> good morning. >> kenny, i know you have been looking at levels over the past week here. is your argument today that any move higher is a chance it sell? >> i think that's exact exactly right. we had such a reaction last week and the technicals got broken, the snap back is going to provide an opportunity on any strength for people to take money off the table and put it aside and wait i think we will see lower prices late august and september. typically volatile months and certainly that's the way it's setting up already this morning we are once again below psychologically 2,900. but a level that i think the s&p has to test before this is over. >> david, we have had people seeming to get a little bit more pessimistic on the fixed income
side people are throwing in the towel on the ten-year yield. people don't expect a china trade deal before the presidential elections should we be more than 3.5% off record highs at this point >> i think the stock market is pricing in a deal with china down the road. so i think at some point i think that it will be in both countries' best interest to come to the bargaining table. the question is when globally, in terms of manufacturing activity, corporate profits, we share that view you probably want to play a little more defense than you have to this point we don't think the economy is headed into recession in the next 12 months and so cutting too much equity exposure we think is a potential risk we are in the camp of wanting to be balanced. >> to you mean fully allocated within equities or reallocation - >> i think both of those
being balancing from a portfolio standpoint in terms of equity allocation and within equities looki looking at higher quality sectors, higher income producing sectors. i am not sure we want to dive head first into utilities and staples. the interesting from a shareholder yield standpoint as well. >> global rates obviously in focus. do you think negative rates are coming to this country if so, is it a net positive or negative for stocks? >> i don't think the united states is going to see negative rates. do i think we will be close to zero i think we will. i don't see negative rates in this country like we see in other parts of the world like germany and japan that have negative rates i just don't see it here i'm not that concerned about it. but to david's point, i think you have to be more defensive in your total portfolio so balance in defensive. names that are unnecessarily beaten up will provide that opportunity and value.
some of the names that get unnecessarily beaten up is where investors are going to find some great opportunity in the months ahead. >> there is a lot of damage though that could be done to the u.s. he can it i markets even in terms of psychology. if we are close to zero, even if the u.s. doesn't go to negative or near zero, right? how do you balance that? >> well, so i think, you know, that's as we'll cross that bridge as we goat to it because i think it's going to be an ongoing dynamic conversation, not something that will happen between monday and tuesday it will be evolving. investors will have time to kind of reallocate or figure out where they need to gput their money. low rates will put a floor under u.s. equities and global equities atom point. therefore, there will be an opportunity like i said in names that have created where the market action created real value. i am not saying it's going to be pretty or easy to navigate
i think it's very dynamic. it's not just cookie cutter recipe, just invest it and leave it there it's a dynamic process that people have to be very, very attuned to >> david, geopolitics. >> yes. >> we have been dealing with brexit for years now dealing with iran to a large-degree is hong kong, is argentina, do they add to the mix? does it add to risk over all or not. >> i think it does add to risk the question i ask myself, in isolation, no one of these events really has the potential to cripple the global economy. but what is the straw that finally breaks the camel's back? slower smik growth is a reality. the tax cuts worked through the system fiscal stimulus has gone by the wayside. when growth isn't as robust and earnings are looking soft, geopolitical events pose a larger risk to the downside. in the veain of being more
defensive, we need to accept this is the hand we are being dealt and figure out what levers we can pull in portfolios to make the ride smoother. >> what could hong kong become >> worst-case scenario, i think if the chinese army showed up in hong kong, that would obviously be a significant development i am not sure that's in anybody's best interest. when we think about geopolitics, part of what gives us pause is these things are going to continue i don't see trade going away before the election nokeser nex >> it also means a stronger u.s. dollar i mean, it is still the safe haven of the world when you have a slowing u.s. economy, all these political hot spots around the world plus a strengthening dollar, what does that do for eps? >> it tightens things. it's the biggest risk to earnings 50% of s&p 500 revenues come from outside of the u.s., and
it's sectors like tech, discretionary, communication services which get hit hardest by a strengthening dollar. home bias, more focus on income, we think -- >> are we in for another wave of revisions when it comes to eps and the s&p 500? >> absolutely. 10, 11% for 2020 is too high. >> what is it more like? >> we are getting numbers in the low single digits, three to five percent for next year based on the top down model as we ratchet up the trade assumptions we can get that to zero easily. >> kenny, you mentioned 2790 on the upside can we get past 2930 >> i think at 2930 is where you hit some resistance. i think that will be a place where investors start to -- if we start so rally again, you will see money come off the table. i think that's going to be the starting point where the resistance is going to get stronger, right, because i think as we move through august and into september when we have
these ongoing concerns still there that people will want to raise some cash and just leave it for the rainy day i think that rainy day is going to come. >> yeah. i mean, we still have some targets out there that are 32, 34. >> jpmorgan's target is 3,200, in fact. >> yeah. that's the sell side. >> yeah. >> a little bit different. >> but i think -- >> kenny >> right but i think the end of the year we rally more towards back to highs. i don't think 3,200. i am guessing between 3025 and 3050 which were the previous highs in july, the end of the year highs i think next couple of months we churn and thrash a little lower. by year end we end up around the 3,000 level. i am not nearly as aggressive as the guys as jpmorgan, but they're a lot smarter than i am. >> it's about the multiple that the market is willing to put on the earnings if the earnings estimates are too high, that will be lower i am not sure we will see
expectations for easier fed policy to deal with china on trade and moderate economic growth the back half of this year maybe two of these throw staee s align. >> david at post 9 kenny, whose ton keeps getting better and better in florida see you soon. >> all right. meantime, when we come back the world's most poftable company under pressure plus, oil is rebounding a touch from today's lows after what was a brutal week for brent and wti. as we go to break, take a look at worst performing names on the dow. goldman and pfizer lower i see jpmorgan adding to the list "squawk on the street" is back in a moment.
despite a little bump today crude's slide hits the energy sector joining us this morning managing director and global head of commodity strategy, helima croft. describe for us the picture you see in the weeks ahead given the news out of saudi aramco and sort of the bludgeoning we took last week. >> i think crude is going to continue to struggle the fears of a trade war, the fears of demand destruction weighing on crude prices i think the key thing to watch for investors is what happens the week of september 9th. that is when you have the world energy congress meeting in abe
daub by. we could get signals about what could saudi arabia, opec do in the face of real demand concerns saudi arabia came out last week and announced their production for september was going to be 700,000 barrels a day lower than august levels. the question is will they do more you tie in the issue of aramco, we have reports that the saudi leadership is looking once again to do an ipo of aramco in late 2020 or early 2021 they are going to need prices higher in order to pull that off. i think a lot of pressure is going to be on saudi arabia in terms of how they respond to the softening demand picture. >> there is a long way to go to 2020 or 2021 at the asame time can we read into this and say, you know, maybe saudi aramco wants to try to get this out the door as soon as possible before things get even worse >> i mean, i got that sense at the opec meeting that just took place in june that they were
moving to try to speed up the ipo process. i think crown prince mohammed bin salman this is one of his signature initiatives. he has been very clear he wants to float 5% of aramco, put that money in his public investment fund and make more investments in the tech sector he is looking to build a sovereign fund on the same lines as audi. i think they look at the bond issuance in april, it was very successful, oversubscribed, and i think they have confidence they can do this again the price environment i e challenging for them it will be important what happens in september what is saudi arabia going to do in terms of production policy? the last time we had a demand-driven price crash in 2008, opec collectively over the course of 12 months took four million barrels off the market are they going to do something similar? i think that's going to be key in terms of what is the response
mechanism going to be from sadid arabia from opec. >> once an ipo is done, if and when they get it done, what happens to their urgency to defend any price >> that is the key question. for mohammed bin salman, it's not like he is really looking to continue to cut production i think he is hoping to get to a point that they can use production policy as a bridge price and then he potentially won't have to worry about it quite as much. but saudi arabia remains, you know, whetted to a prosperity to loyalty bargain. they have high social spending they have cut back on that somewhat you have a saudi pop tlags has expectations about social benefits i don't think they will say we don't care about price at all, about you the need to get an ipo off the ground will not be there once they pull this off, if they pull this off. >> i thought it was interesting that you mentioned the sovereign wealth fund's desire to d
diversify investments into technology if you think about the dollars chasing after tech investments these days, especially with a second softbank fund, it's fierce right now the time probably of the essence to have the dollars free and to be able to invest the money. so you are thinking as this more broadly. it's not just about oil prices it's a much broader sort of play for you? >> this is mohammed bin salman's full vision, is that they could not continue to depend on oil revenue indefinitely they look out for the future of oil and say we must have, you know, a safety net we must have a way of diversifying our income stream to keep the whole sort of saudi enterprise going so i think they see the diversification imperative and they are trying to move this thing along faster than people had thought six months ago six months ago we thought that the ipo had been shelved now it's really back on the table and i think it's being driven by a crown prince that very much believes that they are
on a burning platform, that they have to diversify this economy they have a young population 75% of the population is under the age of 30. they are committed to finding a way to meet the aspirations of that population. >> finally, we talked about supply just now. on the demand side, how does china fit with global demand what's happening on that front and if they are not the most marginal buyer, who is >> this is the key story at this point. i mean, china has been the engine of all commodity demand growth hence, we really see oil and other commodities responding fiercely to trade war concerns so we are looking very, very closely to what happens with china. china went on a buying spree in the first half of this year. we think in part because they were concerned about iran's sanctions, what was happening in venezuela. there taking so many barrels they built up very big inventory. right now they can take a pause in terms of their buying because of their inventory cushion that was really the key pillar that was kind of holding this
market up was strong chinese buying with the softening china picture, that is tough for the oil market right now >> that's an important dynamic to understand. what a week. we will see what this week brings good to see you. talk to you soon. >> thank you so much sticking with oil, the price is under pressure. hadley gamble with more live from bahrain where the u.s. navy's fifth fleet is based. >> well t you're right the fifth fleet is keeping the tanker traffic in the persian gulf in the strait of hormuz very much in focus we have the chance to spend 48 hours with the fifth fleet on aircraft carriers, mine sweepers, patrol craft as well take a listen. with crude oil prices in a slump that even a geopolitical crisis in the persian gulf failed to shake, the u.s. is struggling to form a global coalition to protect international maritime trade, including the 21 million
barrels of oil in transit each day. >> in this particular case where 20% of the world's oil comes through the strait of hormuz, that's not just a united states issue. that's a global issue. >> reporter: operating today out of the north arabian sea at the southern tip of the strait of hormuz, the uss abraham lincoln is one of two u.s. aircraft carriers in the region tasked with deterring tehran. >> this is 4.5 acres of sovereign u.s. territory that i can park anywhere in the world we are the 911 force if something happens. we can move the ship quickly the beauty of a navy aircraft carrier is our speed and agility. one of the fastest ships the navy has so we are able to reposition very quickly. >> reporter: with six attacks on tankers since president trump's decision to double down on security in the gulf in may, many question whether a sizable force is really enough. >> the aircraft carrier is a great symbol of american presence we show up
we're ready to act and what that does is when we try to add stability to the region we have seen there is an understanding from iran. our goal is not to go to war with iran. >> reporter: in june, president trump tweeted as much saying, china gets 91% of its oil from the strait japan 62%. and many other countries likewise so why are we protecting the shipping lanes for other countries for zero compensation? while the u.s. already partners with 33 nations to protect shipping lanes, gulf oil exporters may find getting their crude to market in future could come at a cost. >> it's more critical for them that freedom of navigation is maintained through the strait of hormuz probably than it is for us so i think that they see us as a reassuring presence here in the region. >> so a major focus of the trump administration is finding a way to cobble together this
20-member coalition, operation sentinel they have had a real lack of response, at least so far here many european nations saying privately and openly they don't want to antagonize tehran. a lot of questions about whether the united states should ensure the freedom of navigation not just for commercial investigation but the tankers as well going to asian markets and who should be footing the bill a lot of questions surrounding this interesting to note in our neck of the woods in the persian gulf surrounded as we are by countries like saudi arabia uae, kuwait, not much response as whether they would be willing to commit militarily or pony up in terms of cash. guys. >> thank you hadley gamble in bahrain th. when we return, a buying opportunity for some of these names. and quick check on the markets here we are seeing pressure across the board. concerns about the trade war as well as geopolitical tensions. the dow down 0.7%. s&p off by 17 points or 0.6%
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the threat of chinese tariffs. investors starting to pick out some potential names worth buying courtney reagan has that story. >> good morning. so the trade war of course has hit retail stocks pretty hard. knee jerk selloffs haven't kept valuations depressed for all names. there is a realization that not all retailers will be hit equally hard by tariffs. in fact, for some stocks the worst may be behind us in early may the etf, xrt, took a leg down after trade talks between the u.s. and china broke down and that third list of tariffs entriesed from 10% to 25%. the xrt started to rebound in early june only to fall again a week ago when president trump said a 10% tariff would be implemented on the final $300 billion worth of chinese-made goods on september 1st. the xrt is down more than 12% since that may 3rd high when trade talks started to fall apart. but a number of retailers are higher than that previous high
point. perhaps suggesting a near-term floor for some so costs go up more than 12% before may 3rd ross stores and dollar general up 9%. target up 7% ebay and walmart up 5% above that may 3rd high. could change in retailers report this week and next ceo jeff gennett said if the tariffs are levied on the remaining $300 billion worth of goods, he said it would impact our categories when you do the math it's hard to find a aparthepath through t wouldn't impact customers. back to you. >> not to notice the names you mentioned have minimal foreign exposure, right? >> exactly that's part of the point, right. when you get big tariff headlines, you see the whole group selloff. you see a lot of fast, quick,
deep movements then things calm down and traders and investors are doing their homework and they start realizing, wait a minute, it doesn't make sense to sell off walmart as much as selling off a steve madden the exposure to the tariff risk is very different for those two names. >> all right we will watch it interesting that they are still above some of the key levels in may. when we come back, how the recent ipos are being hit by the market volatility. will that impact those still in the pipeline some names we are going to away much more "squawk on the street" when we come back don't go away.
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this after thousands of pro-democracy protesters holding signs crowded the main terminal forcing a shutdown of one of the world's busiest airports. still no official cause of death in the apparent suicide of jeffery epstein. the new york city medical examiner's office which completed the autopsy of the financier and accused sex trafficker yesterday said it needs more information before making the determination police in houston are searching for a suspect who set hundreds fleeing from a mall yesterday. according to witnesses a man wearing a red mask entered the food court, began screaming we was going to kill himself and threw an unknown device on the floor. and senate minority leader chuck schumer proposing new legislation that would require the fbi to sign off on sales of body armor similar to that worn by the gunman in this month's mass shooting in dayton, ohio. schumer plans to introduce that bill upcoming in september. you are up to date that's the news update this
hour melissa, back downtown to you. >> sue thank you. u.s./china trade tensions causing nervousness among investors. the administration not backing off. here is what peter navarro told closing bell on friday. >> since the tariffs were announced last year, the chinese yuan has fallen by about 12% so we put on tariffs around 10% on $200 billion of their exports, and they devalue by over 10% basically, to offset that. in a deal with the rest of the tariffs, they are cutting their prices and they are doing that so that's what we see. so clearly they are manipulating their currency from a trade point of view because they are taking actions to neutralize >> so who wins in this currency war? our next guest says no one in his op-ed, the former head of
imf's china division thanks for being here. a big question right now is are we in fact in a currency war do you see china's allowance of the weakening of the yuan, do you think this is just the beginning of that, that there is an actual concerted effort to further weaken the yuan? >> hefor a long time, over a decade and a half, the u.s. and the rest of the world community has been telling china to let its currencies value, be determined by market forces. now that the chinese are doing it, it works to their favor, now they are being blamed by the trump administration for doing that, which is letting markets push down the value of the currency what's happening is basically that the chinese economy is comi cooling off. there are concerns that the tariffs will hurt the chinese growth and all of that is putting downward pressure on until a week ar so go, the chinese central bank had been resisting this downward pressure
because they feared this sort of reaction from the trump administration so this is largely market driven depreciation pressures, but the people's bank of china, the chinese central bank is clearly willing to let this happen it is evoking a very strong response from the trump administration, which could certainly turn this into a more open currency war. >> they are allowing this to happen,ish war, the pboc in a statement last week it made it sound like they wanted to diverge in its path from other central banks around the world in terms of easing monetary policy it almost sounded like they were ruling out any sort of a rate cut to help the chinese economy, which would further put pressure on the yuan i would imagine. do you really think that there is -- i mean, do you think there is a floor there they seem to be tall graphing they don't want to be like the other banks in the world which are allowing their currencies to weaken. >> two things. first of all if that's what the
chinese are counting on to resist the tariff measures imposed by the trump administration, we saw in 2014, 2015, and even in 2016 this cycle of currency depreciation of capital outflows that became very difficult for the central bank to manage so they don't want that to happen so i think they are sending a signal they are willing to allow some market driven depreciation, but not very substantial devaluation. in terms of monetary policy, china has a lot of room. in fact, in two growth numbers that came in just about a day ago show that it's growing 8%, which is less than normal gdp growth in fa kt, if they want to ease up on monetary policy through rate cuts or more credit expansion, they have a lot of room they are holding it in reserve >> i wonder, we know the administration wants the dollar weaker do you think they are overestimating the degree to which the dollar reacts solely to rates
>> the dollar certainly reacts very significantly to rates, but remember the dollar still remains the world's dominant safe haven currency. all the talk about currency wars and the volatility in foreign exchange markets and capital flows tends to make investors a little nervous, especially about some emerging markets that are very exposed in terms of foreign currency that if the trump administration follows through on its move with tariff threats against not just china, but against other major trading partners, including canada and mexico, japan, europe and so on, this creates a lot of uncertainty and at times of uncertainty investors look for safety typically, the place they come to for safety is the u.s. dollar so you could have the paradoxical effect of the trump administration threatening to undertake its own steps in the currency wars actually ending up firming up the dollar rather than letting to weaken.
>> can you extrapolate the impact of a potential currency war on other countries around the world for us we think about a u.s./china currency war b but the ripple effects are going to hit yuan bloc countries, those countries that do a lot of trading with china, for instance, which will be effectively force today devalue their currency as well >> that's true like india and thailand that have taken defensive actions in order to cut rates more than had been expected by markets in order to protect their economies from this collateral damage of currency wars. among emerging markets, there are some countries with large deficits and a lot of foreign currency debt that are worried about letting the currencies depreciate certainly there are many emerging market economies and also many advanced economies around the world, including europe, japan, that are counting on currency depreciation in order to boost their economies
when they e-- the problem is tht everybody can depreciate at the same time. so what might happen as a result of so many central banks trying to cheapen their currencies is a lot more volatility and ultimately, if you think about what that effect could be on the u.s. dollar, it could be strengthening the u.s. dollar because every other currency might end up weakening somewhat against the dollar >> and that's basically what's happening now? >> indeed. we are seeing signs of that already. so the trump administration's attempt to talk down the dollar, especially with aggressive talk and aggressive measures to get the fed to cut rates may actually backfire on it by causing the dollar to strengthen that's not going to help the u.s. trade deficit either with china or with the rest of the world. so this is hardly going to help u.s. growth in any way >> thank you for your time we appreciate it. >> thank you. meantime, we work could
unveil a ipo plan this week. according to its most recent private funding round in january, it's valued at $47 billion. we had a conversation with cramer this morning about whether or not the market can handle it. at this point having already digested a bunch of big names. >> if they are going to unveil the ipo this week, they probably want to get it out the door before the other lock-up ex perations happen i think that could dampen wall street t >> all right meantime, we guess about the impact that a u.s. recession would have on a company like wework, right? >> it's never seen a crisis. it's never been around when times are tough and the job market softens. meantime, off the lows here. session low is down 234. we are down 162 on the dow speaking of ipos, this volatility causing pain for big-name companies that recently went public. leslie picker with more on that
this morning. >> hey, remember all of those large day one pops for ipos in the first half of the year most of those companies have already shaved off their debut gains thanks to some of the recent market volatility take a look at the realreal. that stock plummeted 23% friday on no real news. it's up slightly today, however. six weeks ago when the online consignment retailer went public the stock surged 45% now investors that bought in at the ipo and held it are in negative territory, down more than 11% or so it's a similar story with the african e-commerce retailer which jumped 76% in the april d debut. last week it fell below issuance price and is trading 15% below their ipo. fiver, they are trading just 7% above its ipo price. now the vast majority of ipos have actually traded down from their day one performance,
nearly two-thirds have performed worse since their debuts according to a cnbc analysis but some have actually improved. avedro traded down, but thanks to last week's acquisition announcement, they are now more than 60% higher than the ipo price. a stock-specific story, guys. >> leslie, what do you make of that report that we just shared with viewers that we work is rushing out the door >> if they disclosed their prospectus this week, we could see them launch a road show after labor day. given the timeline and what the s.e.c. requires in terms of public disclosure, their filing would have to be disclosed for 15 before they actively market it to investors. it would make sense that we see something this week if they are aiming to get it out as quickly as possible once the investors come back from the hamptons from their august vacations guys. >> thank you leslie picker at headquarters.
>> i think it's the appropriate pick for the current circumstances. tommy the pinball wizard, number one, wouldn't be overly sensitive to markets, commentators and politicians number two, he wouldn't give me speeches that contradict themselves over time and number three, control of the pinball is probably as good a way as forecasting the global economy as the back room models fed officials currently use. >> there is no tilt. i wish we could stilt the game and put another quarter in and start off. i don't believe the fed has influence on the fed directly, but i do think it does on the markets as we discussed. why don't you tell me your version of this interaction that's going on, that's inserting so much volatility in
fx and global interest rates >> beneficials go out of their way not to be influenced by politics they are sensitive to criticism, obviously. but what they are really sensitive to is market and market pricing if the president and his tweets can influence market pricing, therefore it's going to influence what the fed does. so the issue isn't the fed listening to the president it's the fed listening to financial markets that spend an inordinate amount of time listening to the president. >> you know, vincent, let's be honest here. it could be one month. it could be one year it could be eight years before we get to the next recession but the issue is we're going through global slowing and central banks are trigger happy, and it seems like our fed had a large role in making them trigger happy to get in front of the world's most powerful fed, and that dynamic is sending bad fe feedback loops in the equities
do you agree with that feedback loop >> well, i don't agree with current pricing, but i think it has two parts. we are pretty close to a manufacturing recession. the trade uncertainty has been tough for global trade it came to a grinding standstill no change over the last 12 months in the first part of this year that's effective manufacturing we are through a bit of an inventory cycle. but you know what? trade is not that important to the u.s. we're a service economy, and services are still plowing ever upward so i think the recession risks are overstated the second part of it is most economies of the world, policymakers have a fear of floating they don't like to see their exchange rate appreciate because an ex change rate appreciation is you giving some of your growth to your trading partners, and no one likes to do that. what happened is now, is the
currency to which they all are afraid of floating relative to the dollar also is afraid of floating i think jay powell -- >> you know, vincent, doesn't the fed have a large responsibility here though, even though the dollar falls under the treasury, this dynamic they have of easing at a time where some are questioning whether there is a valid reason to ease, can't that be viewed by other major central banks as a de facto currency issue >> for sure. i think jay powell looked at the financial landscape and saw that u.s. interest rates was the nail that was sticking highest out and he is hammering it down because that was attracting capital flows to us and that was tending to appreciate our currency i assume the fed's explanation right now is what john conley said in the '70s our dollar, your problem
>> well, listen, we are going to have to leave it there, vincent, in terms of time i certainly do believe that the less fed speak we have and the less contradictory speeches and less influence the market ultimately has on their psyche, the better off we are. back to you. >> we have gotten the white house's reaction to the situation in hong kong eamon javers has the details. >> senior administration official offering a statement saying the united states is monitoring the situation in hong kong this morning. the statement saying as the president has said, this is between hong kong and china with the understanding they are looking for democracy. i think most people want democracy. the statement continuing, societies are best served when diverse political views are respected and can be freely and peacefully expressed the united states urges all sides to refrain from violence i think the key part of the statement the people will focus on this morning is the president
suggesting that this is between hong kong and china. that is the president himself really eager here not to weigh in one way or the other on this other than to suggest that he doesn't want to see violence in hong kong. this is a president who is negotiating a very a president negotiating a very high-stakes trade deal with the beijing government right now so the politics of the trade deal and the politics of the protests in hong kong may be intertwining >> there's a little space between that statement and what mcconnell just said, that said any violent crackdown on protests would be, quote, completely unacceptable. >> reporter: right that's the question. the president here is suggest g ing -- or the senior administration official on behalf of the president suggesting that the united states doesn't want to see any violence the harsh reality for the u.s. is there's not all that much they can do about it, other than the rhetoric and sort of calibrating their rhetorical dial, hard options in hong kong
are slim-to-none for the united states the question is ultimately, how would the united states respond to any crackdown by china in hong kong or overnight and we don't know the answer to that, but hopefully from the white house's perspective, we don't see any violence over the next few hours >> eamon, thanks let's send it over to jon fortt with a look at what's coming up on "squawk alley." jon? >> well, with trade tensions, fears after global slowdown, what does the rest of the second half hold for tech we'll dig in when it comes to internet chips and more, coming up on "squawk alley. moving is hard.
your service online in just about a minute with a few simple steps. really? really. that was easy. yup. plus, with two-hour appointment windows, it's all on your schedule. awesome. now all you have to do is move...that thing. [ sigh ] introducing an easier way to move with xfinity. it's just another way we're working to make your life simple, easy, awesome. go to xfinity.com/moving to get started. a record high percentage of small business owners saying that changes in the trade policy will have a negative effect on them our kate rogers joins us now with the details kate >> hi, melissa, that's right well, trade policy certainly on the minds of main street our cnbc and survey monkey small business confidence index is out today and as you said, a record high of about one third of small business owners say that changes
in trade policy overall will have a negative effect on their business in the next 12 months that is up from about one quarter in q2. 16% say that it will have a negative effect and about half said it will have no impact. now, when asked specifically about china trade in particular, about a quarter said u.s. trade policy toward china has hurt their business in the past 12 months, while the majority reported no impact, 9% says their business has been helped by u.s. trade policy towards china. it is important to note, though, the survey was conducted prior to president trump's most recent escalation and prior to the treasury department declaring that china is a currency manipulator. those trade tensions are a big reason for the overall drop in the confidence number this quarter to 57, down two points, also tied with the all-time low from q2 before tax cuts were first passed >> all right, kate fascinating. always good to get a sense of what main street is thinking our kate rogers. when we come back, we're going to hear from recode's kara swisher on apple's new credit
card, as we are riding right at 2900, key psychological level. "squawk alley" starts in a few minutes. 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. ♪ ♪
brennan and jon fortt at post 9 of the new york stock exchange stocks are down again. f.a.a.n.g. names getting hit especially hard. facebook, amazon, and alphabet all in the red joining us to talk about is mark mchaney as well as krish sancar of keown mark, we've had you on coming out of the earnings season talking about this reacceleration in revenue on some of the big names. if trade really starts to take a larger part of the conversation, what's the likelihood that that re-acceleration was a one-off? >> i think with some of these companies, there probably was a one-offish element to it some of them had easing comps. and with google, the issue -- the surprise wasn't the q2 re-acceleration, it's the question of what caused the ad growth to decelerate so quickly in q1. the q2 results were back to norm if trade becomes a bigger issue, the question is, which of these companies has material exposure to china and for long-term bad, but near-term