Skip to main content

tv   Power Lunch  CNBC  August 6, 2019 2:00pm-3:00pm EDT

2:00 pm
because i don't think the chinese are going to give them -- give him an opening from their side in terms of their own concessions. >> fred, thank you really appreciate it fred kemp joining me today that does it for the exchange. i'll go join tyler for "power lunch," which begins right now >> it sure does, kelly thank you very much. we will see you in a moment. welcome, everybody i'm tyler mathisen here's what's new at 2:00 on power for a tuesday. stocks bouncing back after the worst day of the year yesterday. the dow up nearly 200 points right now. 188. but how do you know when it is safe to get back into this market or is it already >> plus, the trade turmoil showing no signs really of slowing down as tensions between the u.s. and china continue to rise we'll tell you just how frisky it could get and later, disney soaring this year, as it gets ready to launch its highly anticipated streaming service. we will tell you what to watch as the media giant gets ready to
2:01 pm
report its profits after the bell "power lunch" starts right now >> well, it is no longer monday. thank goodness it is tuesday. and right now, let's take a look at where the dow stands. off the highs, but up about two thirds of a percent. the nasdaq, which led the market lower yesterday, is the leader it is up about 1% fully. up 75 points check out some big winners nike, cisco, apple, and disney we'll have more on those moves later. kelly. >> thanks. with stocks now down 6% from their record highs, a move by the way, that happened in just the last week, we have full team coverage of everything impacting your money bob pisani keeping a close eye on the market where we're also watching bonds eamon javers on trade tensions steve liesman monitoring the
2:02 pm
latest from the federal reserve, and bob, let's start with you. >> yesterday's action was extraordinary. the s&p futures moved in a nearly 5% range from the high to the low. that does not happen very often. the main index ended down 3% that's a move that happened only about 1.3% of all days, according to data track. the realization that the trade war may expand from tariff wars to currency wars, a lot more complicated. it's causing some consternation among analysts and strategists who are increasingly confused and uncertain on how to determine what 2019 and 2020's earning estimates might be citigroup said the overhang of a sluggish economy and the trade war threats and potential currency devaluations all around was enough to make them lower their earnings estimates for the s&p 500 for 2019 and 2020. both by a little more than 2%. elsewhere, goldman sachs, they lowered their numbers 2019 to 2020 last week
2:03 pm
they were ahead of everybody, citing lower economic growth, lower oil prices, weaker margins all partly caused by trade and tariff wars saying we expect negative revisions through consensus 2020 earnings estimates in the second half of 2019 in other words, they expect more, and they did keep their price target i think that's very interesting. finally, i would note it's not just energy stocks that are not participating today. bank stocks not doing anything as well. the bank index, the regional bank index, is essentially where it was in 2019 that's one group that had a lot of problems on the lower eights. back to you. >> thank you very much, robert, and the administration trying to soothe the market's trade fears. let's go to eamon javers for the word from the white house. >> administration officials continue to point ahead to these negotiations that are expected between the u.s. and chinese sides in early september remember, the president set september 1st as the deadline for increasing tariffs on $300 billion worth of chinese goods to 10% so that timeframe is the
2:04 pm
timeframe that the administration is now focusing on for some kind of resolution or at least additional information on where we stand. larry kudlow was on cnbc this morning, and he emphasized the idea that this is all still very much a live negotiation. here's what's he said. >> he would like to continue negotiations he would like to make a deal has to be the right deal for the united states. but no, we would much prefer a commercial transaction >> the president for his part also emphasizing the idea that the united states is in the driver's seat here he's been hammering away at this team, continue to do that in a tweet again today. saying massive amounts of money from china and other parts of the world pouring into the united states for reasons of safety, investment, and interest rates. we're in a strong position companies are also coming to the u.s. in big numbers. a beautiful thing to watch the president, of course, in the position here of cheering for foreign capital to come into the united states. at the same time he's pushing for interest rates to be lower, which you think would be a
2:05 pm
detriment for foreign capital to come into the united states, but none the less, he's making the point he believes the u.s. has the upper hand in the negotiation. we'll see if that's borne out in the early september timeframe. >> will the trade war hurt the economy enough to get the fed to cut the rates again? >> i hope i get a cold so i can take cough syrup markets are now more aggressive in pricing in rate cuts this year from the federal reserve. here are the probabilities sment, 74% for 25. october, by the way, also getting in on the action a little bit after goldman call this morning but the biggest part of the market is for the next 25 to come in december with the 73% probability. the third cut, they're toying with that now for january at 48%. these are recent developments. got to ask the question, is that too aggressive fed president james bullard made
2:06 pm
the first comments since this all blew up. he says rates are in the neighborhood of where they ought to be. he expects maybe one more cut this year, 25-basis points it's a losing game for the fed to respond to market news, and it cannot react to the day to day give and take of a trade war. interesting enough right there well, markets, more than certain on where the fed is, want to hear the fed saying the fed is not going to react to every tariff move, and it did risk management the last time around. we need to see an impact of the tariffs on the real economy. this gets back to the question, is this a midcycle adjustment? remember that, or the start of a longer easing cycle? the fed may come around to that view, but i'm not sure it's quite there yet. >> and yet the market shrugged that off today this afternoon >> let's be clear, the market has had to adjust a little bit from its aggressiveness. we were pricing in 50 basis points for july. came back off that, then the chairman said this is not an easy cycle midcycle adjustment, market had
2:07 pm
to adjust off that there's a history of market getting ahead of its skis and the fed reigning it in >> as trade tensions escalate, how bad could things get from here jake parker is senior vice president of the u.s. china business council, and andy rothman is investment strategist with matthews asia, also the former head of the domestic policy at the u.s. embassy in beijing. andy, let me begin with you. there's some things china can do, obviously, letting the currency float down is one of them they can put tariffs on u.s. imports, but there aren't as many u.s. imports for them to tariff how do you think they might retaliate with what the u.s. has done by way of tariffs and for example, if those tariffs go from 10% all the way to 25% on that extra $300 billion? >> hi, tyler well, i don't think retaliation is at the top of their list right now. they have already done a lot, which has had more of a political impact in the united
2:08 pm
states than economic in terms of what's happened to farmers i think they're just going to wait it out because i think they believe, and i believe, and i think larry kudlow seems to believe, listening to the quote that you just played, that president trump understands that a deal is better for his re-election prospects than no deal because of the impact on american consumers and farmers and also on markets as you have been talking about i think they're looking to get president trump to agree to things that are not too disadvantageous to comiena so they can reach a deal later this year >> do you think they'll really give in on some of the things the president seems insistent upon to make the deal, as larry said, good for america >> well, i think as long as it's good for both sides, which is pretty much the fundamental nature of a trade negotiation between two countries, then yes, i think the chinese want to do a deal if the u.s. is asking for reasonable things. for example, better market access for american companies,
2:09 pm
china understands that since they joined the wto, better market access for foreign companies has been good for the chinese economy and strengthened their own companies. better protection for intellectual property rights for american companies is really good for chinese companies now that the services and consumer part of the company and the tech part is bigger as long as the requests by the u.s. side are reasonable, yeah, i think china does still want to do a deal. >> jake, a lot of people are talking about how we're heading to a world that's more balkanized than the one we have experienced for the last 15 or 20 years if that's true, are groups like the u.s. china business council facing an existential threat >> not at all. groups like the u.s. china council as as important as ever. there are challenges for the operations in china and the united states. they expect groups like ours to stand up and talk about the challenges tariffs bring about for their operations and the
2:10 pm
harm they cause to the u.s. economy and u.s. business and u.s. consumers and farmers >> in other words, there's a lot of individual companies that don't really want to have to put their names and reputations in the middle of this, right? so give us a sense for what they're telling you. how bad are things looking for them >> so, when we talk to our member companies on the ground in chine oz, they indicate the chinese government has taken a proactive stance to see what their challenges are in the global market. they want to resolve their issues there's a big concern in china that u.s. companies may consider shifting their supply chains to southeast asia or mexico or europe and the chinese government is responding to that i agree with what andy said earlier. the chinese government is going to be reluctant to respond by impacting negatively the u.s. market unfortunately, u.s. companies will miss out on that because of the retaliatory tariffs china has imposed on the united states >> do you think, as andy seems to think, that a deal -- that
2:11 pm
china wants a deal more than it wants to retaliate >> i think china wants a deal because it helps resolve some of the economic pressures that lair rr feeling domestically at home. certainly resolves some of the political issues they're experiencing as well i think that as long as there is a reasonable deal on the table, that's something they would like to do. one thing i would disagree with andy on is the outstanding issues in the bilateral trade industry, subsidies, are ones that go to the core of china's economic system and will not be easily resolved and perhaps are not issues china even wants to resolve, particularly with the huawei pronouncement, i hear more today the idea of being more self-reliant. so i'm a little concerned on some of the structural issueatize will be more difficult to resolve today than it would have been in the past >> i want togive you the last word on that it does seem what we do hear a lot is that there are areas
2:12 pm
where agreement would be easier to achieve, maybe on intellectual property and access to markets, but in terms of structural reforms of the way china does business and conducts its own economy, that that's going to be hard for the u.s. to achieve. >> sure, what country wants another country to tell it how to structure its economy >> you bet >> but, but, if we focus on the issues that are most important to american companies, for example, market access and protection of intellectual property rights, that the chinese want to do for their own good if we're starting to talk about state-owned enterprise soe subsidies, why is that important to the united states if they want to waste chinese taxpayer money subsidizing mone losing chinese companies in china, why should we worry about that take steel, for example. they're upset about the subsidies for the steel. but they only export less than half of their steel export let's focus on the things that
2:13 pm
will have a positive impact on our economy. >> thank you markets bouncing back a bit today after falling more than 700 points yesterday in the worst session of the year. is this a sign to buy the dip or is more pain ahead we'll talk about what to do thwi your money right now next on "power lunch." everyone uses their phone differently.
2:14 pm
that's why xfinity mobile let's you design your own data. now you can share it between lines. mix with unlimited, and switch it up at anytime so you only pay for what you need. it's a different kind of wireless network designed to save you money. click, call or visit a store today. here, hello! starts with -hi!mple... how can i help? a data plan for everyone. everyone? everyone.
2:15 pm
let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?! 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. welcome back stocks are rebounding after
2:16 pm
having their worst day of the year yesterday we're close to session highs with the dow up 218 points and the nasdaq up 1.2% that would snap a six-day losing streak can you trust the bounce or is there more pain ahead? let's bring in michael arona with more than $2 trillion in assets also, david speaka, and bruce kazman is the chief economist at jpmorgan chase great to have you all along here michael, so what's the advice? i mean, i assume that portfolio has a lot of fixed income exposure are you worried? do you look at increasing your allocation of stocks here or no? >> i think it's to react to short-term rise in trade would be an overreaction so positioning portfolios for a u.s. recession or a long-term trade war in the face of what's going to be very easy monetary policy is not a winning
2:17 pm
investment formula so investors still have little choice but to remain invested in cyclical stocks with good growth characteristics from that standpoint >> are you paring down your fixed income exposure at all giving how incredibly low global bond yields are? >> no, i think one interesting idea here for investors is u.s. real estate investment trust and the reason i say that, kelly, is that about 88% of their revenue comes domestically so they're insulated a little bit from the u.s./china trade kind of rise in tensions from that perspective the other thing, as we know, a yield around 3.5%, so much greater than traditional long-term fixed income right now, and both revenue growth and earnings growth are higher than the market right now so all three of those characteristics favor an allocation to u.s. reits in my opinion. >> that is 50% higher than what the 30-year bond gives you right now. david, what about you? are you guys concerned about a recession? michael says he's not. >> we're concerned about
2:18 pm
volatility a recession is another story, but we don't need a recession to see higher volatility. what we're concerned about is earnings growth. it continues to be weak, continued uncertainty has impacted the corporate spending. if unemployment levels start to rise and if we start to see significant cuts in 2020 earnings estimates, we're going to start to be worry ied. >> so bruce, let me turn to you and get your thoughts on what happened yesterday with the chinese currency and whether we in the media and others overstated it we were very quick to call this potentially the first shot in a currency war do you see it that way or was this just a very pointed message sent in the u.s.'s direction? >> well, i think there's two things here. first of all, the dollar was going up broadly, and each time we had a tariff announcement, the dollar has gone up and the yuan has gone down part of this, which is anormal response but i don't think that's all
2:19 pm
i think with the chinese willingness to break through seven, i think with the response of the u.s. administration, i think we are seeing a deterioration. it's a signal by the chinese a signal, and more broadly in terms of what we're seeing, that trade conflict is intensifying and there's a lot more risks around what might happen next as a result of that >> is it also a message that xi is willing to use his currency as a weapon? >> i don't think that's preferred. i think it's a signal that there is that as a possibility and i think there will be less willingness to keep it stable. remember, they have been keeping it stronger as negotiations have gone on here i don't think it's their preferred device to have the currency go down sharply here. >> let me get your reaction to labeling china as a currency manipulator. and how come we wouldn't have labeled them a currency manipulator when they were fighting to keep it higher >> well, i think in the current environment for them to be
2:20 pm
called a manipulator is probably incorrect. they're not trying to weaken their currency they're not actively moving in one direction in the market. i think in the past, in the long past, there were circumstances where that was appropriate i think the action the u.s. took here was symbolic, but it's important, and it's symbolism that the u.s. is getting more aggressive and could move on broader fronts here. >> michael, given all of this, i know you mentioned reits might be one way to kind of find an attractive space in this market. anything else jump out to you that looks mispriced here? >> i don't know about mispriced. i think financials are interesting in the fact that they traded a significant discount to the market in terms of operating margins, they have the third best of the 11 economic sectors. despite the fact that the yield curve has flattened, banks and other financial institutions have done a good job maintaining their margins. they trade at a discount and
2:21 pm
theircharacteristics are on par with the market low rates and the flattening yield curve have been a headwind for their earnings if we can get some relief there, financials provide kind of an interesting opportunity for investors. but that's a big catalyst that they're going to need to do better >> i was going to say, that's also a big if. people are talking about two, three, multiple rate cuts now, michael. are you willing to kind of fight the market on that call? >> right, socally, you were asking what's interesting. i think lots of folks are loaded up on cyclicals like industrials, technology, so i think something that's a little bit out of favor that trades as a discount with compelling growth characteristics, that could see a near term catalyst in terms of the fed is doing everything it can to steepen that yield curve and i think if they're able to do that, you could see some relief there for financials. and as they trade at more than 50% discount to the market >> wow >> in a market where there's not a lot that's inexpensive, financials is the one sector that comes to mind that trades
2:22 pm
at a heavy discount. >> david, would you buying alongside, or is there elsewhere you see opportunity? >> financials are one of the things i would put in a portfolio where you have a barbell approach, you have some defense and more cyclical exposure, but i would be weary of cyclicals you have to be defensive today it's not going to offset economic weakness and lowering earnings growth. it's not going to do everything we need to do in the face of the trade wars and the uncertainty around it. >> thank you all michael, david, and bruce, appreciate it. and coming up on "power lunch," what the wealthy are doing with their money right now. we will check in with the head of an investing club for the very, very rich. >> and if you've got the nerve, is now a good time to buy tech stocks on e p?thdi two traders will debate that next
2:23 pm
2:24 pm
2:25 pm
welcome back, everyone i'm sue herera here's your cnbc news update at this hour. the trump campaign and republican party have sued california over a new law requiring presidential candidates to release their tax returns. they argue the law is unconstitutional the law was signed last week by governor gavin newsom, and it requires all candidates to release five years of returns in
2:26 pm
order to appear on the state's primary ballot >> the boy scouts of america facing more sexual abuse allegations. the latest comes from a group of lawyers who allege that the abuse would not have been possible had it not been for the negligence of the boy scouts >> this is a human rights movement we're talking about today. a civil rights movement for children against one of the biggest offenders in the world the boy scouts of america. >> apple's new credit card begins rolling out today some select iphone users will get the first opportunity to sign up through the wallet app it's unclear how many have been invited to be among the first to apply. the credit card is backed by goldman sachs. that's the news update this hour, kelly, i'll send it back to you >> thank you very much >> ahead on "power lunch," how the ultra rich are navigating the recent market volatility and why many are growing concerned >> plus, america's biggest opioid distributors are offering
2:27 pm
billions of dollars to settle claims they helped fuel the country's drug epidemic, but the stocks are paying the price. >> and culting the cord. a new report that should raise arm bells for the media industry all this when "power lunch" returns. here, it all starts with a simple...
2:28 pm
hello! -hi!
2:29 pm
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?! 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.
2:30 pm
welcome back to "power lunch. i'm mike santoli at the new york stock exchange tech leading the market rebound today, a day after its worst loss in seven months is it safe to get back into the tech waters? todd gordon of and aaron gibbs of gibbs wealth management are your trading team today. tech's leadership in the market and where would you look to look for a chance to pick some up at a discount >> absolutely, so important in these markets, thin and volatile, to set emotion aside what we know so far is that percent decline we saw back earlier this year, which was about 12%, 14%, is nowhere near where we have now at 9%. we're still above the 200-day moving average further, what i have done is removed the volume and put a moving average of volume we need to average 15 to 17
2:31 pm
million shares a day in the xlk to really trigger some concern everything we see here, emotions aside, i kept my portfolio exactly the same way it was aside from short' term hedging in the options market. microsoft is a name that's held up extremely well. if you do your best straight line analysis here, you'll see we held the 50-day, we held an uptrend moving average here. i hold microsoft a little more confirmation today. i'm going to look to add some msft, back to the portfolio. >> all right, yeah, the biggest and perhaps most important stock again these days is microsoft. erin, you could define tech pretty broadly the s&p does what about you would you like to try to say okay, fine, i'm going to buy this dip >> so i think it's a little early to just call it a dip and then it's over we still have concerns when you look at the xlk, one of the companies is mastercard. i know it's not your typical tech stock, but this is one company that isn't exposed to
2:32 pm
tariffs. it has a lot of its assets in the u.s. we still look at stableness, and you know, one of the things about mastercard, it could easily go up another 16% even if we face a global slowdown, people are still going to use credit cards to purchase even if the prices are higher. this is a little more insulated from some of the head line risks we may face. >> it's a digital network. we'll grant it tech stock status for more trading nation, head to our website or follow us on twitter. tyler, back over to you. >> thank you very much let's look at the markets now, and stocks are soaring to the highs of the session just this hour, the dow now up 282 points, if i saw that number correctly. yes, it is, 282 points the s&p up 36. better than 1% the gains are accelerating, folks. nasdaq higher by about 1.5%. energy sitting out today's rally, and get this, right now, there are only four stocks in
2:33 pm
the energy sector not in a correction what are they? they're the ones you see there, i guess. kinder morgan, chevron, one oak, and anadarko petroleum sticking with energy, the oil market is closing for the day. and let's go to dominic chu at the commodity desk >> chicken or egg, which one is going to lead. oil prices rebounding with the rest of the market a day after selling off on the u.s./china headlines, but that green was modest and now you can see here, oil prices have turned decidedly red. west texas intermediate off by 1.5% brent crude off by about 1%. $59.17 sentiment is still being driven and dampened by the prospects for even more trade tensions and there haven't been anything substantive to change that story. the s&p 500 energy sector is one of the worst performers in markets. if you look at oil prices.
2:34 pm
they will likely be at the mercy of macro market sentiment. speaking of supply, weekly oil inventory from the american petroleum institute is out 4:30 p.m. eastern time today, and the energy department weekly data is out tomorrow morning, 10:30 a.m. eastern time guys, back over to you >> thank you investors today thinking about how to reposition their portfolios stocks having their worst day of the year yesterday, but look at this the dow is up more than 307 points the high end may have been a step ahead of this tiger 21 is an investment group for the ultra wealthy, and their members revealed they decreased their equity allocation to 21% that's the lowest level in a decade michael sonnenfeld is founder and chair of tiger 21. he's with us now you think they saw the selloff coming >> they had rising concerns. when our members get together in groups every month, they say what are the black clouds that are coming up. china has been number one,
2:35 pm
russia, the new european trade issues and the trillion dollar deficit looms large. with the trillion dollar deficit, all the rest of the items lever into bigger problems >> why do you think equity exposure is at its lowest level in a decade? >> markets have been priced to perfection they're more volatile, but our members are entrepreneurs who built their money, their priweld in the private markets we have bigger exposures 28% to real estate in total, about 73%, 74% that's a healthy allocation to the long term. just the public markets are probably a little overpriced now. >> the moves at the end of the second quarter were like a percentage point or two up or down in case of equity investments. but that masks a longer term trend? >> yeah, private equity has grown over the last decade from 10 to 24%. that's the biggest shift in our
2:36 pm
history. another big shift -- >> and public equity >> down from 25% to 21%. fixed income down from 15% to 9% over a decade. our members aren't buying the rates are rising they still have low fixed income exposure and of course, real estate is king some of it is because of its income producing potential in industrial and workforce housing. we have a lot of expertise among our members that they learn from one another in the groups, but some members who have expertise see an empty building. for them, that's an opportunity, not a disaster >> what are they saying about bonds in general even in the second quarter, we had a lot of bonds globally trading at negative yields we already had the ten-year yield sinking. and this week, with those moves, they have gotten pretty extreme. >> compare that to six months ago when people thought we were in a rising interest rate market >> absolutely. >> our members didn't buy it they said there's not enough underlying strength implicitly,
2:37 pm
they weren't buying it they didn't buy bonds, and they have actually lowered their exposure >> yet real estate, they think, continues to be an area of focus. now, is this one place that being able to do one-off deals is a much better situation or would they be buying things in the public markets like reit snz. >> there's many different industries you can express publicly or privately. in our members' case, because they created their wealth in private real estate, that's where they allocate to they use reits and so forth, but when they can roll up their shirt sleeves, visit a property, see what the income producing potential is, and learn from another member in a group what they're doing and what they like, that gives our members a real edge in that area >> where do you meet, in some secret undisclosed location? you have 700 members i assume it's nationwide >> globally, we're now in five countries. we have 60 different groups that meet in 30 markets when you join a group, you join one group of 12 to 15 people
2:38 pm
you're welcome at any other group, but every month, you spend a full day with the 12 to 15 members of your group >> a full day. >> a full day. >> 12 to 15 members of the group. >> do you trust people to self-report their wealth or is there policing >> you have to qualify to be a member but every year, each member does something called portfolio defense, where they have an opportunity to defend their portfolio. they have never done it at any other forum like they're doing it here. and they have 12 people who are there with no agenda but to help each other they're not selling each other anything they're not buying anything from each other when you have 12 peers who can help you understand your portfolio, you see things you can't see on your own. >> how many of the 700 members respond to the survey that we're referencing here >> so every group at the end of the group, every member fills out a form that has a few key questions. so i would say 70% to 80% of our members. i don't have the exact number. >> the sample is pretty high
2:39 pm
>> every group is reporting and most of the members of every group are reporting. >> as you saw there, buying a lot of the big name tech stocks. looking to add those to their list michael, thank you appreciate it very much. giving us a window into those conversations. >> we have a market flash on dupont for that, we go to dominic chu >> what we have are shares of dupont, which you can see, did spike and are off the highs. they were up almost 5% at one point. the reason why is because we're getting headlines out of bloomberg saying dupont is said to be weighing the possible sale of its nutrition and biosciences unit, a unit that some folks will know as a unit that makes everything from antimicrobials to cellulose products. this dupont unit probably has a hand in doing. the sale could be worth at least $20 billion for this division. those are the headlines from bloomberg, so that's the reason why those shares are up big. we'll continue to monitor and bring you more as we know more here >> thank you very much coming up, 3 big drug
2:40 pm
distributors reportedly trying to settle opioid lawsuits against them the stocks all down sharply. we have the details straight ahead. >> plus, the ten-year yield at 1.74%. lowest since 2016. and a major drop since last week's fed meeting we're going to go out to rick santelli in the bond pits when "power lunch" returns. >> and now, the latest from and a word from our sponsor. >> there's a classic investment thesis called the dow theory it says that transportation stocks can either confirm or deny a broader market trend. but it's important to remember that transports can be sensitive to changes in oil prices and other market influences. so don't rely exclusively on this theory when making an investment decision. i'm randy fredicerk, and schwab is the better place for traders.
2:41 pm
(vo) that's why verizon lets everyone mix and match different unlimited plans. sebastian's the gamer. sebastian. this is my office. (vo) and now with more plans, everyone gets what they need without paying for things they don't. new plans start at just $35. the plan is so reasonable, they could stay on for the rest of their lives. aww, did you get that on camera? thanks, dad! (vo) the network more people rely on gives you more.
2:42 pm
2:43 pm
so far, it's been an ugly start to august for the markets and investors have been running for cover. rick santelli tracks the action at the bond pits at the cme. >> we had another key that tells us fixed income markets are pretty crazy we had an option of 38 billion
2:44 pm
three-year notes 1.562 was the result i gave the auction a d-plus. yields go down, markets rally. who's going to buy this big of a rally? maybe at the top not many did second worst bid to cover all the way back to '09. let's look at a chart of three-year note yields because just like the dutch auction today, they haven't been at these yields since september of 2017. tyler was right when he talked about the markets. you know, we traded 2.06, 2.07 look at a two-day chart now. certainly stabilized, but 1.74 area, not much of a bounce finally, a two-day of the dollar index, it looks about the same, like the ten-year chart. the big difference is it certainly didn't have a big fall the last several sessions. kelly, back to you >> thank you, rick opioid distributors reportedly are proposing a $10 billion settlement to all the state lawsuits against them. the stocks have been moving on this meg tirrell is here with the details. >> this is just state lawsuits
2:45 pm
the three largest retailers reportedly have offered to settle litigation about their involvement in the nation's opioid crisis with state attorneys general for $10 billion. the state a.g.s have countered with $45 billion, according to bloomberg news this is driving shares of the company lower as even the $10 billion the company is reportedly started with is more than investors were expecting. shares of drug makers involved in opioid litigation also took a hit. teva, mallincrock in particular there are also more 2,000 cities, counties, and municipalities seeking damages on the report today, the attorneys general group declined to comment while mckesson said it has made no settlement offers and the other distributors also declined to comment. >> the heart of the suit is what that these sellers of drugs or distributors of drugs or manufacturers of drugs did what?
2:46 pm
>> so it's different for each -- >> that cost the states what >> so for the distributors, which are at the heart of the story today, they should have been monitoring the orders better suspicious orders that flooded into oftentimes very small u.s. cities and counties. they should have said something is going on and we're distributing all these opioids we should have flagged these things to the de ark for the drug companies, it's the marketing they did, pushing the opioids, allegedly, to doctors and for the generics companies, just the sheer number of pills they distributed into the system so it's different, but what people are talking about today from this $10 billion number is can you extrapolate what everybody in the system in any potential settlement might have to pay >> willfully pushed or knowingly turned a blind eye to something they should have known was an alarm of overuse and overprescribing. >> yes, exactly. what the municipalities say is it's costing them a lot of money to deal with the opioid crisis in their cities and states and towns. and that they need industry to
2:47 pm
help pay to fix all those problems >> all right, meg, thank you thank you very much. in a little bit more than an hour, disney will report its quarterly numbers. coming up, we'll look at all the issues facing the company including cord cutting will the new streaming app soften the blow? as it selos cable subscribers. stay with us and we'll talk disney and more.
2:48 pm
2:49 pm
2:50 pm
the cord cutting trend is picking upstream as streaming services like netflix and hulu invest billions in original content. at least 25% of households will ditch traditional tv, cable, that is, by 2022 and a staggering 19% of households have already cut the cord just this year. all this comes before disney's earnings after the bell with the media giant preparing to launch its own streaming service by november, a move that has sent shares soaring joining us is the vice president and analyst at media securities and julia boorstin
2:51 pm
will disney benefit from the cord-cutting trend have they insulated themselves sufficiently >> tyler, disney has already suffered from the cord-cutting trending if we look at the impact of cord cutting at its media networks division, which includes espn. the question to ask now is whether disney is the best positioned of the media giants to benefit from shifting consumer habits. that means that will disney's direct-to-consumer streaming services be the best positioned of all of these different services entering the market because disney does have this direct relationship with consumers and does have these franchises that are so compelling, dominating the box office if disney can get just a percentage of the people who go out to see its movies to subscribe to its streaming service, it will definitely be well positioned for this next phase. >> how has their over the top espn thing done? >> it's still early days and we hope to hear more about espn plus when the company reports after the bell this afternoon. but i think the hard thing that
2:52 pm
espn plus, it's not the same content on regular espn on tv. the thing that's different and distinct about disney plus is that's exactly the same kind of content that you'd both find on a premium channel on television and also some of the same content you'd expect to see in a movie theater, like with their "star wars" live action series which is going to be high quality, big production value. so i think it is a different situation. but the early results for espn plus are strong. >> what, bernie, are the potential land mines to look out for this afternoon >> yeah, this afternoon i think it's espn subscriber declines. the company reported a sequential acceleration of subscriber losses last quarter you've seen media networks report that this quarter with amc and so we're expecting them to accelerate just under 2% to
2:53 pm
just over 2% in this june quarter. >> how will this affect profitability? >> increased subscriber losses hurt that's why we prefer to own media companies who can make the pivot away from the traditional mvp bundle and towards other services, so like disney and disney plus. we think that disney is positioned to really do it because of their strong brands and as julia pointed out probably best in class to be able to do so. >> does espn -- for a long, long time the whole story with disney was espn is 40% of the operating profit what does that look like over time are they reducing its reliance on espn, period, or shifting the content? >> 100%, especially as sports rights continue to accelerate. we have a huge increase coming with monday night football coming, the nba a year after that as cord cutting picks up and sports rights keep on increasing, that's going to hurt profitability, which is why you
2:54 pm
need to make that shift. >> is it likely with specific reference to the sports rights, that you will not have just a few dominant players but you'll have a lot of players with some sports rights? in other words, amazon, yahoo! netflix may get in and buy some package of nba games >> i don't think we'll see netflix go there, but certainly with amazon, twitter, facebook, they have all looked at it roger goodell at the nfl -- >> apple could >> apple could as well roger goodell has been very clear that he wants to keep a portion of the rights on broadcast, he likes the reach there. digital increases your reach even further instead of reaching 120 million tv households, you can reach 140 million households across the u.s. so that helps. but again, it's just so expensive. with the traditional media companies you have 95 million subscribers paying you per
2:55 pm
month. that's a lot of revenues to go against those costs. >> what's your price target for disney >> $175. >> it's at 140 this afternoon. bernie, thanks very much julia, thanks as well. farmers are caught in the middle of the trade war. we'll have their reaction from the latest trade blow next acd until you see how one man reteto his son's first major league home run. stay with us it never questions the tasks at hand. but this year, there's a more thrilling path to follow. (father) kids... ...change of plans! (vo) defy the laws of human nature... the summer of audi sales event get exceptional offers now!
2:56 pm
so, every day, we put our latest technology and unrivaled network to work. the united states postal service makes more e-commerce deliveries to homes than anyone else in the country.
2:57 pm
- [student] my degree from snhu has helped me tremendously. (lively music) the flexible class schedules allow me to run my catering business and be a mom and parent. breakthrough at china retaliating against the u.s. by cutting back on its
2:58 pm
purchase of u.s. agricultural products farmers once again are caught in the middle of this trade war aditi roy has the latest for us. >> reporter: for many u.s. farmers, china's announcement is just the latest setback in a protracted trade battle. the american farm bureau federation calls the announcement a body blow to thousands of farmers an ranchers who are already struggling to get by the group's economists estimate exports to china were down $1.3 billion during the first half of 2019 compared to the same period last year. the organization also notes u.s. farmers stand to lose all of the nearly $9 billion market in 2018 if trade tensions continue the farm bureau estimates grain farmers are hurt the most with exports to china down 647 million, followed by cotton farmers, dairy and livestock round out the top five the president today promising farmers more trade-related aid if necessary, but many say while the subsidies help, they don't
2:59 pm
make them whole. an analyst tells me one bright spot has been corn it saw a smaller crop due to bad weather this year pushing up prices. >> aditi, thank you very much. we're going to show you some video here esan dias of the miami marlins made his major league debut last night. the local television broadcast is interviewing his parents who were at the game live when this happens. watch. >> it's an emotional day for you. >> very, very emotional. >> oh! oh oh >> he just homered that's cy young. we just homered in his major league debut that is unreal. >> major league debut, hits a
3:00 pm
home run off the raeigning cy young neighbor. >> i don't think it was as loud as my neighbor last week. >> or when mathison yelled for his son who hit a two-run double last week. >> thanks for watching "power lunch. good afternoon, welcome to "the closing bell. i'm wilfred frost. the site yesterday of severe selling but a healthy little bounce-back today, off about a percent on the s&p which is the session high but of course as we know anything can happen in this, the final hour of trade. things looking a lot calmer out there today. i'm sara eisen welcome, everyone. let's look at what is driving the action the dow is up 240 points china does step back from the brink stabilizing its currency after the trump administration's latest salvo fed expectations


info Stream Only

Uploaded by TV Archive on