Skip to main content

tv   Squawk on the Street  CNBC  August 14, 2019 9:00am-11:00am EDT

9:00 am
we're giving back 300, not quite all of yesterday's gains >> we're off the lows of the morning. >> we are. >> important to know. >> the yield curve is inverted bring that up at the cook packtl party. see eyes glaze over. >> that's a way to make friends. >> thank you, again. be back tomorrow andrew will be back tomorrow join us. "squawk on the street" is next good wednesday morning withing to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange dow features down almost 300 as the 210 yield curve inverts for first time since '07, that with disappointing china data. europe is red. 30 year yield hits a record low of nearly 201. so, a lot has been said already about the curve what it means for the timing of a recession and we should point out, doesn't necessarily mean stocks are
9:01 am
going down. >> look, i have the -- i have a list in my hands, like senator mccarthy of 54 known stocks in the s&p and how they would do inverted the top 20 i've been working on. three are hurt 17 that win. if everybody decides that they're going to pay less for every stock because of this, all lose the algorithms are set to make sure all these use our economy is not as uniquely sensitive. these are not exporters that need to have a dollar weaker dollar is just getting stronger. extraordinary rally in the dollar don't want to see it i struggle to reach a conclusion that this is all bad given the fact that germany had rates for some time and the market is not doing that badly, even though they have an export economy and their dax, real terms, is up
9:02 am
even though they're exporting right to china in and those sales are weak as we see the numbers from china it is not the end of the world or the german market would be down. >> no one is asking if it is the end of the world if it is the end of the cycle, right? >> i know. i think it relies on what diana olick talked about, this burst of mortgage refinance, the end of the cycle, boeing, we don't talk enough about it. >> wilbur ross brought it up a few moments ago. >> i am concerned. i just don't know how they get that thing -- they got to fix that and if they did, we have a reacceleration of the economy. three now insiders, that's been hurt by it i don't want to be too scatter shot you look at our s&p, you have to wonder, should we sell merck should we sell merck on this should we sell j&j
9:03 am
is this the time to sell google, alphabet, $130 billion in cash number six is one you might want to sell. i would never do it. berkshire hathaway filled with financials that should do badly in this environment. jpmorgan, number nine, maybe numbers have to come down. after you take everything down, you then have to look and see what was taken down correctly and not. if macy's were in the top ten, the answer would be absolutely but how much is that execution that's bad execution. >> we'll talk about macy's earnings in a moment it sounds like you don't necessarily disagree with the notion that we get a seasonal low this fall and that that the chance to buy might be coming later in the year. >> i think that, yes, i think that's a good summary of things. i believe that the volatility is going to be here for a while i don't like the action. look, yesterday, we went up, okay then we plateaued. and we did nothing we did nothing
9:04 am
and the vix didn't go down enough to make me feel that things that were kind of out of the woods, had a good presentation last night. then i sit back and say, okay, the realreal that was a good quarter, it is not macy's, tilray, not that good day to day basis, i still see reasons to like some things. but not as many. >> you mentioned sort of the whippy action. for august, below the average since 2010 and the fear is that people have less ammo to withstand some of these crazy swings. >> well, let's take what is about to happen, i do end want to get out of order, but wework is coming. you just wish the bankers, which they will never do, will say, wow, this is a bad market, let's put newman off, but they're not going to if you had to look, if you had
9:05 am
the crystal ball, you could say, then what happened is wework came and it was botched, it was a little bit like maybe it was worse than lyft, and then the market fell because of it, and that's what happened in august there. i just wrote it. >> people are joking this morning about the timing of the s1 on the day the curve inverts. >> did anyone read that. the s1 it is a tome, it is filled with things that are just awful. when you look at it, you're just struck, holy cow, are they losing -- they know how to lose money really well. what do they do? they lose money. and, by the way, there is that page which shows you the relateds, the relateds of what they did and awful, but think about it like this, newman, not what you want, sub optimal situation. revenues, 2018, 1.8, we got to get upset about that the total expenses of 3.5, and those expenses have grown four
9:06 am
times and the revenues are grown roughly 2 1/2 times. guess what i'm saying is this company found a way to bible to sell they're making it up in volume, not -- >> we're going to get more into the details of what wework gave us, a lot there. >> so long. >> as jim mentioned, macy's, the other big story of the morning, down in the premarket, earnings miss, lower, the guidance for the year company says it is evaluating the impact of new tariffs. revenues in line gannett says rising inventory levels became a challenge for macy's in q2 the customer has no appetite for price increase right now >> mr. gannett missed the quarter and missed the quarter and also talked about missing fashion, rising e ining invento levels i think that this is brick and mortar and brick and mortar is particularly bad i think that this is just a continual theme. i think that jeff is -- jeff
9:07 am
gennette, we have positive comparable store growth. that is the kind of thing you say to yourself, if you had done better in women's sports wear, and private label, wouldn't you -- think about it like this, they're up against jcpenney, that's a pitiful company to go up against execution plus they talk about the tourist, i'm tired of hearing about the tourists who doesn't come here. yes, i absolutely know the dollar is strong and i know that the beautiful herald square store is not up to the numbers, but i still come back to the executioner seems sloppy seems sloppy we'll get bad numbers from a bunch of brick and mortars, this is really -- there is something wrong here. >> yeah. >> something wrong is your point they should be taking more share from the likes of penney's? >> yes, i think penney is very bad shape. but they're in the mall. if you look at the real estate investment trust in the mall, an also the ones that are off
9:08 am
price, wow there is just people aren't shopping there people are shopping in walmart, in amazon, in target, in costco, and in home depot. there is some notes saying home depot will not make the quarter. home depot had challenged weather at the end they made it up at the end of the quarter. this is the time when big -- you're either online and macy's has double digit online. or off price and macy's is not off price. it is known as full price, not low price. every day low price is working if you have big offline, big off price, you're making money. >> watch is more in tech. >> watch is king watch is king. macy's, watch this, macy's has a lot of inventory watch tjx. watch. watch a burlington burlington is off price and has said over and over again, we have no problem, we can have the right prices remember gennette says there is no appetite for rising prices.
9:09 am
people are going to burlington where the prices are falling because they're taking the merchandise that macy's can't handle they admit the inventory is too high and sell it to you at lower prices i'm not saying they're in trouble. the first thing gennette did was pay down a huge amount of debt i think they can cover the dividend. >> that's where we are cover the dividend >> that's the question that's the question. >> all right that's a different universe than talking about getting comps up >> yeah. look at the dividend don't get those yields unless people think they can cover it >> poised to open at the lowest for macy's since 2010. they did bring their full year, the full year guide down is big. 205. >> that's that still presumes they can pay the dividend. no one -- i feel very alone in that you have -- you have a stock
9:10 am
that is yielding, like, 8%, there is not a lot of 8% yield, particularly in the environment where the 30 year -- more times, the 30 year. if they have the right women's fashion, maybe you've done something. they have to close more bad stores i don't know jeff gennette has a real challenge ahead. he has a challenge at the beginning. he was paying back debt that was good now we wanted to see some sort of fashion grip. and i don't think there is -- there is a problem at macy's now. he has a terrific area in herald square, the boutique, the young, the millennial, it is not enough they have to do it in every store. i don't know if the concept scales >> department stores in general. >> so challenged >> back to school really interesting. >> pvh vf corp. can do okay i'm not worried about them the macy's thing made me blanch. i saw it and said, wow, that's a really bad number. >> jim mentioned wework.
9:11 am
we did get the ipo filing. company says it will have three classes of stock and list under the ticker we, though they do not specify a listing venue. the three classes, class b and c, 20 times the votes, we have been down this road before. >> right yeah i read that. i just thought that was awful. i know they have great membership growth. q1 93. three classes of the stock, are they kidding me? right in our faces they're just throwing it >> giving us a little more honey? >> oh, yeah. guys, why don't you just blow it up and the related party stuff, i happen to like newman. i think that he's unique funny. soulful. gripping zeitgeist, got it. but this deal is precisely what
9:12 am
i don't want right now versus realreal. small scale. doing some kind of a boutique business that luxury -- luxury secondhand kind of cool realreal is working. when you look at wework, you say to yourself, couldn't the bankers rein them in at all? they lost control of this deal and we will look back and say, wow, they lost control. >> interesting lead, goldman, b of a, jpmorgan, in the six months that just ended, june, they lost an additional 90 cents for every incremental dollar of revenue that they earned to your point, not to mention, almost $40 billion in contractual obligations, not counting the leases that haven't started. >> i've been looking into this business, there are a lot of competitors. this is not the only company that does this and, by the way, in many different venues, they're not
9:13 am
the cheapest in some they're the most expensive. we always heard how cheap they are are. this is not the model with -- they don't have the model i want, don't have the share structure i want don't have the lower costs and they have what i regard as a conflicted i by buildings and lease them to you, which maybe newman can change, newman has to be -- has to have a press conference. >> a press conference. >> a press conference. >> for -- so we can ask questions? >> why are you screwing every single shareholder i'm not. i'm not. >> what about the -- they're in the 111 cities they say they can launch in almost 170 more. total addressable market of half a quarter billion people do you buy that? >> no. no someone was saying to me today, if there is a recession, do they do well? i said, well, there are a lot of businesses that won't do well, maybe they need to go to wework, but not going to to be as much business creation. that's what you need to see.
9:14 am
small business crease, small businesses is -- they do get filled up very quickly right now. because our economy is not that bad. what i'm upset about is they are becoming public, not unlike what happened with uber just not a good time it is just, to me, they're losing too much money. they're losing too much money. and i don't like that. particularly when we have all these stories about recession, i don't want to be in a company that islevered to new formatio of business with the huge amount of debt that has conflicted deals with the ceo that has three classes of stock if you had to create -- let's say we were doing a play, let's say we were creating -- the producers, the producers. >> springtime for hitler. >> springtime for newman, that would be -- he doesn't like, i'm sure that would be a bad -- but, yes, let's create something. carl, let's create a company we know is not going to make it and
9:15 am
we'll take a lot of money from everybody. and we'll just not make it that's okay. right? what class do they have? fourth class >> we'll kick wework around a lot today. we'll get cramer's mad dash and count down to the opening bell futures look weak. the yield curve briefly inverts for the first time in 12 years and with that, futures not far from session lows, dow looks open down 340. our 18-year-old was in an accident. when i called usaa, it was that voice asking me, "is your daughter ok?" that's where i felt relief. we're the rivera family and we plan to be with usaa for life. see how much you can save with usaa insurance.
9:16 am
...or trips to mars. $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade.
9:17 am
9:18 am
some officials from the united states coast guard making their way into the new york stock exchange ringing the bell in a few moments. let's get cramer's mad dash, watching some tilray. >> melissa last night, talked a lot about it, with the ceo my problem is that while they had great revenues, and that was applauded on the conference call, once the conference call was ended, the analysts start to talk about how, wow, they're just not doing that well in terms of earnings. also some problems with how much they're making in canada the prices crashed there i do think that tilray has not distinguished itself i was hoping they do medical overseas there is an article about cannabis in the papers and the new york times about the claims. i have to tell you, my dog
9:19 am
nvidia, who reports tomorrow, reacts, reacts to the cannabis on his -- i guess -- >> cbd treats. >> cbd treats. >> re acting in a good way >> yes, he's having trouble jumping on top of the bed. we give him the cbd and he just leaps. a little anecdotal this is a company that i think is not as well run as kronus kronus had an amazing quarter. no one is talking enough about that altria gave them money here is this lord jones, the brand, he's been able to really -- a lot of guys say they have brands. lord jones is the brand that people use and i think that this is the one that goes down for tilray, you buy it. >> they did say they would be having some supply deals announced in the coming months is that something you can pin your -- >> i know there are a lot of people who think that some of the more consumer packaged goods companies have to do something
9:20 am
we can't touch this until we know that it is legal everywhere they just keep referring to that that means they're not going to do it. look, i have to tell you, the thing driving sales in this kind of illicit market is spiked seltzer. everybody wants to know who has spiked seltzer not as many people talking about spiked cannabis drinks don't know if anybody had them on the roadside. >> why did constellation get out in front so much >> they believe it is going to be legal they're not as oriented toward the hemp market. when it is legal it is going to displace -- $250 billion worth of consumer products with canopy, which reports, was hurt that bruce linton -- an when canopy reports, a new ceo, we'll see what happens tilray doesn't -- they don't
9:21 am
have the mojo. to use that very technical term, they don't have the mojo >> obviously -- >> it is not j&j, if you're thinking ofconfuse iing j&j. >> don't go away (vo) the ant mindlessly marches on. carrying up to 50 times its body weight. 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! we all feel, we all love, we all cry. it's part of being human. sonoma county declared a homeless emergency in 2018.
9:22 am
you have to know the individuals you're serving to understand their needs. working with ibm watson we can bring together data spread across dozens of departments. that gives us a fuller view of the people we serve. dear tech, dear tech, we need to look after everyone in our community. and we want to help our fellow human beings. ♪ ♪
9:23 am
the average daily move on the dow so far this month is 473 points and futures indicate we won't be too far off of that at the open. we'll get that opening bell in about six minutes.
9:24 am
9:25 am
we're pretty different. somos muy diferentes. muy diferentes. (vo) everyone in your family is different. that's why verizon now offers more plans to mix and match so everyone gets what they need without paying for things they don't. new plans start at just $35. the network more people rely on gives you more.
9:26 am
you're watching cnbc's "squawk on the street. live from the financial cap tell of t of the world
9:27 am
a busy morning futures are red. meantime, cbs and viacom moving lower a day after announcing they agreed to merge bob bakish will be the ceo of the combined company to be called viacom cbs. this is what he told our andrew ross sorkin about the deal and about content scale earlier this morning. >> you look at content, we clearly have scale and content between the studios that we operate, paramount television, cbs television studios, nickelodeon, viacom international studios, a library of 140,000 television episodes, 3600 films, we have 750 series ordered to or in production. there is true content scale here >> obviously on a moment like this, got to bring in david on the phone, david faber joins us to talk about the deal and the mixed reception to the notion that cbs might have a big
9:28 am
dtc offer. >> i think that's a key point, guys by the way, the show is really good i just want to say that, watching from my hotel room, i realize why it is so popular you don't even need me that said, sorry wasn't there to deal with what we have been waiting for, for years, the third time did prove a charm in listening to bakish speak to andrew sorkin, they are going to make a lot of their dtc offering which we know is ad supported on demand service, which was early out of the box either one of them when combined, the ecosystem he was describing in any way is of the likes of a netflix or a disney plus or even a hulu at this point. and so, you know it will be a question as to what kind of scale you really can get there that's -- scale doesn't always mean a lot and i certainly have seen the last 25 years every deal announced when it is thought about scale, doesn't always work in this case, in terms of direct
9:29 am
to consumer and the changes going on overall in terms of cord cutting, we know scale is important. you need to be global, have a platform, continually increase the subscriber count is this enough i don't know i don't know if it is. >> on friday, last week, bob bakish reported viacom really strong number. talked about advertising being up first time in very long time. they obviously have good news on the movie slate. do you think the stock would be higher if it weren't involved with cbs >> it might be a bit higher. i think there was a little bit of surprise that the ratio came in where it did. it was lower than it was last time at the same time, i think the market, given all the reporting that has been done, primarily right now by us, i think the market was waiting for it.
9:30 am
and was already sort of -- getting itself ready so the ratio was on the -- remember, of course, last time viacom -- i think 3% of the combined company, this time -- this time they -- as opposed to last time with cbs. >> david, you are missed please come back in a hurry. david faber, interrupting some daytime off to join us on the phone on the viacom cbs. there is the opening bell and the s&p 500 pretty negative. united states coast guard, and in celebration of 229 years of public service at the nasdaq, investment firm wahed investment, in celebration of its etf bernstein downgraded cbs we don't believe their version would have meaningful consumer appeal, the investment would
9:31 am
wipe out the synergies and then some think that's fair? >> too bearish i think that the combination is good it is like the -- pick the wrong day to stop sniffing glue. it is not fair to judge it i think people are judging it and bakish is uniquely unable to pull this off. i think they can absolutely pull it off i think it has a lot of good things going for it. and people are just way too negative i feel they're way too negative about it they haven't followed what bakish has done. bakish made major changes, not just standing there, doing absolutely nothing and i do think it is just a shame that it is today i think that viacom will be a very thoughtful piece by nathan son about some of the good news here people are not even paying any attention to how fabulous that viacom was last week. >> bad day for merger close or merger agreement and bad day for
9:32 am
s1. >> those etfs that do well when the market goes down look, let's just rewind the clock here yesterday at this time, the government, the president trump gave a big reprieve to apple today, there is an inversion is apple really worth -- was it worth being up eight yesterday, worth down four? let's average it out come on. come on. let's stop being completely slaves to the algorithms tomorrow, let's say the 30 year is at 1.75 what people are trying to get out ahead of we just replay this. we're headed to where the rest of the world is. should we? we're stronger than the rest of the world. there is a tremendous pull the rest of the world, the flows of funds are so easy we went to burger king, came back and soviet union was overthrown i lost 2% while i was having it your way it was hard, i didn't close the trade correctly. really hard to transfer money
9:33 am
into gilders gilders don't exist anymore. everything i'm talking about say wire transfer. and it is, like, what do you do with negative yields there, positive yields here, stronger dollar there is money, by the way in other countries. we tend to think that, well, there is no money in germany i do think we don't talk enough about brexit and the fear that's so -- >> good reason why it was a mess yesterday. >> i thought so. look we kind of had this summarize it, this viacom cbs sign way, get it over with, we're like that with brexit, just get it over with. and we'll deal with it for a quarter and maybe things will shake out correctly. brexit is paralyzing europe. just paralyzing it and whatever it is not is china and they're selling -- i went to the lamborghini factory, those things are not headed to portugal not at $450,000. they're headed to china. they like yellow cars there. here they look like cabs >> that's true dow is down 405.
9:34 am
to jim's larger point about global trade, we did have the commerce secretary on earlier today, he said that they delayed the tariffs to avoid disrupting christmas. they didn't really get any concessions in return for delaying those tariffs and there is no date set for the september trade talks. he also talked about the prospect of a u.s. recession, take a listen to that. >> eventually there will be a recession. so the idea that 1,000th of 1% inversion, what i saw on your screen a little before is going to be the end of the economy strikes me as a little aggressive >> all right so what do we do with that >> i like his view always been very thoughtful. you're taking your cue from the inverted and you -- everyone decided that that trumps everything and that there isn't anything to do because it is inverted other than sell, there will be more inverted tomorrow to me that is just like paying
9:35 am
more for stock today and paying more for it tomorrow look, i totally get the fact of what is happening in inversion again, if germany had been inverted for this long, why isn't that market down like 25% or 10% the answer is that at a certain point -- there say lot of companies that will do very well and we forget that yesterday apple was going to do very well, today, less well when i go over the s&p, look, i just go over this s&p 500 list and i'm saying, you know what, maybe want to come in and buy disney when the smoke clears maybe it is better than we think. do you want to sell mastercard after a gigantic insider buy by a guy who used to run u.s. bancorp? i don't. it is fin tech i understand why you would want to sell bank of america. they may not make as much money. but then you look at citi, 62, now talking about it being $5 below a clean scrub tangible book, and there is one buyer mike corbat.
9:36 am
does mike corbat know more about the ceo than we do. >> we better hope that buybacks pick up. they're decreasing from last year's pace. >> the banks are pretty much steady they got a lot of money. vix is up 20 to 20 look, let it settle in let europe close i'm not going to sit here and tell you that the world is any -- everyone else is doing that they're looking at this one thing, how the algorithms are set versus the 30 year and i'm looking at warren buffett and i think he's saying, all right, this too shall pass >> all right so are we going to be getting another op-ed saying buy american >> probably. >> at some point that's in the offer. >> buy american, not wework. we don't want wework there is a lot of equity offerings that have come that are not necessarily what i want. but let's talk about procter & gamble i'm sitting down with david taylor, and with nelson peltz, who is having a very good year
9:37 am
about how this company has changed. big beneficiary of commodity deflation, they don't do well with the strong dollar but they're having a really good year and they're doing much better than we thought let procter come down. and then buy it. how about james quincy james kwuns quincy had remarkab numbers. coca-cola. how about we buy coca-cola never mind, it's up. the market is smarter than i am. >> your shopping list remains coke, procter -- >> it is the shopping list that you use in the third week of april of 2000. when the s&p began to divorce itself from the nasdaq and that's a small list, but being included, great companies like coca-cola, like merck i just don't want to get too negative because everyone else is taking care of that for me. i don't think that's wrong. >> your point is well made retailers leading the charge lower. macy's, kohl's, nordstrom, lb,
9:38 am
all the names on fire yesterday. >> macy's is -- they're execution is bad bad, bad, bad. mall kohl's is strip mall versus enclosed mall. macy's is not where you want to be kohl's has an amazon deal, return your amazon products, that matters may not matter enough. michelle goss doing a good job, but not good enough. and fighting head winds of not wanting to go to the mall because this say watch moment. i'm only pointing out the watch, because they have the scale. i'll go further. this is walmart's time i think walmart is not going to have -- they will not have a -- they'll have a good holiday season doug mcmillan is doing terrifically they have an amazing quarter, really good online proposal. remember how good online was people hate the stock. and that's -- they hate it today. that's wrong ryan cornell reinvented target
9:39 am
i've been to a bunch of targets in the last month, including one up in 1500 flat bush avenue. they're gorgeous stores. gorgeous and they're doing quite well he will not have a problem with the tariffs now. three and a quarter percent yield. that's not an analogous to macy's it is doing much better. i want to buy target here and buy some more -- >> these are cheap enough in your view. >> i think the target at 13 times earnings is too cheap. >> on the similar note, we talk about money losing startups, uber hits 3535 that's going to be the lowest price since the ipo. >> that's a cab company. that's the problem cap company. >> yeah. >> speaking of yellow cars >> ecosystem ecosystem. they lose money on delivering food and they don't do -- they are literally -- that's another one of these companies, not kidding, they're paying 10 bubs to tbucks to the drivers to make
9:40 am
eight bucks. they need autonomous driving, for lyft, won't be for a long time, and they need to get into a room and do something with lyft it is a race to the bottom there. i think dara say fantast taffan. let's say amazon goes into the food delivery business because they do everything else. there is too much competition and they're not able to make as much money per driver. >> yeah. if what you're saying is true at scale, then a lot of these large companies highly levered, ambitious, addressable markets, are certain to -- the head winds are getting harder. >> yes, it is. i do think that, look, i just don't want to -- i don't want to own that stock when i have a lot of stocks that have accidentally high yield, high dividends here is -- when you look at a company, i'll use this, i don't want to buy -- i don't want to buy, don't want to buy, i don't want to buy it international paper yields 5%,
9:41 am
at this point in the cycle, stock at 38, the textbook says you must sell. you have to sell it. their business is going to really roll over i look at it and say, i anticipate all that, can it go to 6 i guess so that's where a lot of the companies i'm looking at they can still go down another 5% but at that point, i think we have to just take a breath and say is it really that bad? we don't want to just sit there and buy nothing but niko eagle and barrack. >> or any of the other utilities. >> i like those guys i look at southern southern is not well run utility. and it is doing okay dominion, dominion is the lowest cost producers of electricity. it is where alphabet puts its servers and yields 5 tom farrell is terrific. they have a great natural gas lng export i want to buy it
9:42 am
there. take that, mr. inverted yield curve. whoever you are. how is newman doing? >> for the time being, we lost 26k. let's get to bob pisani. >> i agree with jim, this is not about the inverted yield curve this is about slower global growth that's why the market is down. you see the sectors, of course, always moving on global growth are weaker, the banks, semiconductors, energy, industrials, new low for the year and energy stocks. a lot of ten year lows in that particular sector. i know everybody is concerned about the inverted yield curve the inverted yield curve is in effect, not a cause, the cause of this is slower global growth. we see the numbers today, look at the big international numbers we have been seeing. china industrial output, 4.8%. supposed to be up 6% this is the lowest we have seen in 17 years for china. german gdp is negative, down 0.1%, was up 0.4% in the prior quarter. weaker global growth is the problems we are seeing now overall.
9:43 am
autos all down today, all sitting at new lows, daimler and volkswagen and bmw they see the chinese numbers as well as we do here that's a multiyear low, by the way, for daimler semiconductors, another proxy for global growth. on the weak side today. don't have to pick them out, they're all down group oil, we have been talking about occidental, $40 billion market cap on the oil stocks here halliburton, ten year low here these are weak here. not ten year lows, but all, again, global growth stories we talked all morning about macy's and the effect of what is going on in the department stores get the retail effect as well. put it altogether, we have seen a shift to defensive stocks. what about the freakout on the inverted yield curve we had this since 1980s. we have seen that. what we have seen is six months, the last time three times, we saw utilities are up, no
9:44 am
surprise there consumer staples up six months later. the s&p is also up 3.5%. we're in imminent danger here of the market turning south history the last several times this happened doesn't necessarily support that what do you buy? you know what tends to do well is the dividend yield in stocks. the utilities. whole bunch of etfs. vig, put that out, this has been outperforming dow jones industrial average for a while now. up 10% in the last year versus 3% they tend to own stocks of companies increasing dividend, not the highest yield, don't make that mistake, increase in the dividend is the key. procter & gamble, all sorts of stocks in midrange in that particular group johnson & johnson, even owns microsoft. look at the etfs engaged in dividend and that's when getting a very good volume recently. guys bark s guys, back to you. >> rates a big story today to rick in the bond pits in
9:45 am
chicago. good morning, rick. >> good morning, carl. bob said a lot of important things, cause and effect many will say that global slowing is the cause and the effect may be the inverted curve. but why is europe in much of the world slowing? partially to trade partially to negative rates, look at the financial sector this is unbelievable we have policy, the big gorilla in the room and everybody seems to forget how it got there it is policy and as far as the inversion of the curve being meaningful, it almost doesn't matter. i contend if the data was better today, we would still be down. it is and a knee jerk reaction, the computers can't help themselves let's look at a three day chart of 10s minus 2s, like taking a walk from midlevel of the house down to the basement just staircasing straight down it is slow intraday today. darn close to minus 2 basis points it hasn't closed negative since june 5th of 2007
9:46 am
maybe even a bigger story today is continuing our rates and their historic presence. look at ten-year, new cycle lows going back to september of 2016 and the story of the day, 30-year bond yields, intraday getting very close to 201. they're all time forever and a day yield close is 210 looks like we have a good chance to make some 30 year bond yield history today. and if we look at other spots along the globe, let's look at intrai did intraday of bunds. i'm sure that didn't contribute to the fact that germany had down .1% for the recent gdp read today. to the uk, it is not as though they have any other issues to contend with, brexit, they are trading under 50 basis points, also as you see on this 20-year chart, the lowest yields everybody in gilts as well carl and jim, back to you.
9:47 am
>> all right, rick, thank you very much. it appears alibaba's joe tsai is about to make some business history in sports sources telling the new york post that tsai will buy the 51% of the brooklyn nets he doesn't already own from russian billionaire. the price tag, $2.35 billion that would mark the highest price ever paid for a sports franchise. surpassing the 2.2 for the panthers there is inflation in franchises, that's for sure. >>s very. >> that's very exciting. that's going to be fantastic going back to being a season ticket holder after taking a couple year break. >> really? >> yes, i'm going back a fabulous place to watch a game >> that is true. >> just so much fun. and atkinson is a joy -- there is a lot of good spirit in that team not unlike the warriors, good spirit. >> also your neighborhood team. >> it is -- few blocks from me
9:48 am
i just really appreciate that tsai, good owner, like balmer. fired up guy. >> loves the game. that counts. dow down 438 here. we're back to 2879 on the s&p. going to be a long day, so rest up let's get some more market n'gowaerhibrk.ea dot ay.
9:49 am
9:50 am
9:51 am
obviously, negative. s&p down 1.6%. utilities the only sector in the green this morning, and just barely dow's down 400 stock trading with jim after a break.
9:52 am
9:53 am
9:54 am
we can go. everyone was going crazy stock price at 34. back to where it was did things change? the inverted yield curve, is it going to crush them? is it a company with too much debt no, but could be finance this is an example of what i don don't like about this market but
9:55 am
i like the opportunity she is doing a fantastic job buy it. >> around here >> by half, and then tomorrow when nvidia is supposed to not do a great number, they will have good things to say. and that's amd's sweetspot they did just benefit from what happened yesterday it's all much better than a week ago. >> later in the day, we started to parse more about what is going to be delayed and what won't. it depends on what kind of chip, what application your device is in, right? >> yeah. but laptops, i mean, they are uniquely in exactly where you should be. micron was up, too micron is there. i just think that we can all panic or we can think about what's down a lot with a good yield that's starting to do well i have been waiting for coca-cola to come in since they reported that quarter. it has not come it i am waiting for it to come in
9:56 am
i'm waiting for the world to get in so i can get in it. the one to watch is roku you hate the vie some deal go buy -- look, roku is up too much that's the short squeeze name. of course, cord cutting and the other things that matters, beyond meat. i tire, carl, i tire. >> yes, you do even you get tired of some stocks ifrm stocks. >> i do. a guy next to me when a good cheese burger. it was 100% certified prime beef that could be a big mistake. it doesn't have additives, doesn't have a lot of salt it has a clean label well, that's days of past. >> tonight cisco to play with? >> yes now, what's important tonight, i have a company -- i have garden, carl i grow tomatoes. bell peppers. >> large, large tomatoes. >> yes well, i have the company that does the same thing, village farms. what they have done in their
9:57 am
greenhouse, they have added cannabis carl, i have not taken that radical step because this is not oregon. >> if you do, you will let me know >> yes and the name is going to be leaves of grass. >> "mad money" 6:00 p.m. slightly off of session close. don't go anywhere.
9:58 am
9:59 am
10:00 am
good wednesday morning welcome back to "squawk on the street." i'm carl quintanilla with leslie picker sara eisen and david faber have the morning off. obviously, some selling in progress dow's down 380 we watch the yield curve inversion, china data, official gdp officially in contraction. the hong kong airport situation also on our radar. the activity is swinging around. dow's basically where it was about lunchtime this time last week. >> seems like it's been swinging around every single day. you had a stat earlier about the moves that were the average move that we have had over, you know, the last week or couple of
10:01 am
weeks. >> average dow ranged this month 470-ish points january to july, about half of that so we've added the volatility in recent weeks. >> august is known for light liquidity. you do tend to see some major selloffs in august as a result of that. the question is, what does that portend for the rest of the year is this something we could see a continuation in the next few months or is it more of an august blip. >> stocks are selling off. the treasury market sending a possible recession warning steve liesman with more. steve, it doesn't always mean a recession is coming, but you don't get a recession without an inverted yield curve, and therein lies the worry. >> that's pretty much right. we are back on the positive side we will be talking about -- let's explain what it is short-term bonds yield more than long-term bonds. why is that bad and weird? investors want higher interest rates to lend for longer periods
10:02 am
of time. makes sense. the two-year and ten-year bonds flipped this morning for the first time since 2007. it's a tried and true recession warning. take a look here three inversions 1985 it's curtain raised recession from 13 to 17 months the sample is small. every time it happened, we haven't circled this yet let's look at the history of inversions when it goes negative, it tends to stay negative for a while 1978-1980 was off the charts the curve was diverted by 2.4 percentage points. 2000 minus 52 basis points you can see the length that we were inverted. we go negative, we tend to stay negative look at what's expected from the fed. they are kind of expected to respond here by cutting interest rates. 100% chance of a september rate cut.
10:03 am
73% chance of another one. folks, this adds up to 75 basis points of cuts where the federal reserve would cut the short-term rate that could possibly uninvert the curve. some caveats a capital "c." no one knows if inversion means the same today as a decade ago yields are so low right now, the yield curve is inverted when the two-year rose. plus, as you know, $15 trillion of negative yielding bonds around the world so that could play a factor in whether or not it means the same thing this time as it did the past three times >> all right steve, thank you steve liesman at our headquarters joining us now head of political analysis terry haines and pimco managing director and portfolio manager erin brown erin, is it time to batten down the hatches? >> we have been defensive throughout the whole year.
10:04 am
i think now we are coming into an environment where you are starting to see the data come out that's continuing to deteriorate, particularly across the globe. we think now is the right time to be defensive in portfolios. doesn't mean you have to be completely out of equities, but it does mean that you have to be really diligent about picking your spots within the equity market being up in quality, moving out of cyclicals into more defensive stocks we think that these are the stocks, the bellwethers that will perform well. you are seeing it play out in markets. look at small caps versus large caps large caps continue to outperform we think this will continue to dominate. >> the administration has this thought you could wage a trade war with china and keep the stock market up at the same time does something have to give at this point is reality setting in? >> well, you know, the reality for the white house, i think, is that when the president was elected the stock market was at
10:05 am
18 now it is where it is. and they continue to say, as they have in past volatility patches, that they are prepared for this i think they still are bottom line is you are going to have an awful lot of uncertainty, negative news out of washington, throughout the rest of the year, not just on trade where you are not going to get a deal before 2020 even with the move yesterday but you are going to have more partial government shutdowns you are going to have drug pricing legislation moving you are going to have all kinds of things happening in washington you combine that with brexit and the general softness of the chinese and german numbers, you know, you will have an awful lot of negative news coming out of government channels anyway. >> right i guess maybe why, erin, you are defensive. but, look, the stock market can go up with an inverted yield curve and oftentimes it does it's not until way later on, monday months if not a year or
10:06 am
longer that you have a stock market actually reacting to that. >> yeah, that's absolutely right. if you look at the data, even prior to 1980, typically you see the equity market go up will 4% in the 12 months post the yield curve inversion. that said, what you do see under the surface is a rotation out of the cyclicals and into the more defensive stocks and remember yield curve inversion first is a sizable signal, needs to be inverted for about three months after that three-month inversion, you typically see within one to two years the economy turn and go into a recession. it doesn't necessarily mean a recession is imminent. you could have length of economic expansion we still see the economic expansion in the u.s. continuing, albeit it's growing but still slowing. and where you are seeing the pressure is outside of the u.s. and particularly from manufacturing economies that are
10:07 am
heavy outside of the u.s so again i think that all really plays into this narrative, which doesn't mean you have to be kpletly selling stocks outright, but picking your spots is important, along some of the more insulated domesticing sectors doing really right now and being out of the real manufacturing cyclical exposures that have or rely heavily on international trade. >> erin, are you concerned some of those secular growers and duration-oriented stocks are more of a crowded trade rye now? is that a concern to you if the market does shift? >> they absolutely are crowded certainly you have seen inflows into the stocks and valuations stay rich. they can stay rich and grow, become even more crowded, particularly as this theme plays out. typically, valuation doesn't necessarily mean the end of outp performance. it typically is a shift in risk
10:08 am
factors and factors overlying the market and we are not seeing sort of the conditions in place right now for that to shift. typically, late cycle you will see those duration-heavy, more secular growers, grow more and more and more expensive until the start of the recession we still see particularly in the u.s. a recession, you know, one year out or more. so we're not calling sort of the imminent end of this sort of secular growth stories and growers that will continue to outperform. >> terry, bank of america today says the trade war is going to last indefinitely and they expect an escalation in the currency fight how do you see it? do you agree with them >> well, i have been calling no trade deal for calendar year 2019 all year. so i'm going to modestly say i have been ahead of the curve on this i see no end to this the thing to look for, the
10:09 am
sweetspot, is if china is willing to accept an enforceable deal without that, the united states is not going to yield on this. number one so i don't see an end to the trade war. and i continue to see potential escalation in currency china makes the move it made last week, that's not the only time they will try to pull that particular lever, and i think that's a reminder that they are not without tools. fundamentally, i think it is in the interest of the united states and china to pretend to continue to talk and pretend to make progress for a while because that helps calm markets a little bit but i don't see any breakthroughs here for quite a while. >> we will talk to you guys again soon thanks for your time today terry, erin, appreciate it. >> meantime, we continue to watch hong kong and the airport there resuming operations. protests afternoon the city do persist. our brian sullivan has made his way to the hong kong airport and
10:10 am
will give us a picture of what's happening as we look at some live pictures here good evening to you, brian. >> reporter: hey, good evening here is the news number one, hong kong airport is open we got in, us and our crew, landing 90 minutes ago with slight declarlays from the new k area when you get here, you are still greeted by protests and protesters in fact, look at the floor what's happened, guys, this is the part of the airport yesterday. we saw the pictures. thousands of protesters. you had to jostle through. there were some injuries in fact, one reporter for the state media global times was handcuffed by some protesters apparently that's what the government was saying that's why they issued the injunction in other words, what they said is, okay, you can protest. but this is going to be a safe protest zone you can see there is a couple hundred protesters still here. many are sleeping. they have got their documents. they have got their papers, their posters with some of the things we can't show you, some of the pictures are fairly gory. that said, there is a protest
10:11 am
zone here. now, what we are understanding moments ago is that there is a separate protest happening right now in cal une on the mainland across the bay from hong kong. reuters is reporting that tear gas there has been fired very peaceful here at the airport, although this is what greets you when you come in. here is the question, guys the government has issued the injunction, said okay, you can protest, but don't disrupt operations of the eighth largest airport in the world and the fifth largest stock market in world. the reason we are here, the question becomes this. where does this go from here hong kong really just two to three percent of gdp for china it punches above its weight, as you well know. it is sort of the keyhole, if you will, keen the east and the west as a financial center, and where do these protests go what about the financial conditions going forward you also got to remember, if you are the ceo of a major bank, you have two things on your mind right now. number one is brexit
10:12 am
what happens to london and now maybe you are thinking about hong kong. do you have to move, guys, two centers of operations? we will be here for the next couple of days talking about the financial impact, showing you real-world on-the-ground impact here at the hong kong airport. >> brian, in the protests moving to cal une, a lot of big global banks are based there. is that kind of the goal for these protesters is to be at the center of finance because they know that is how they get the world to watch >> reporter: i think the goal right now is twofold number one, they have a number of demands independent one is they would like carrie lam, the ceo of the sar, special administrative region, that is hong kong to resign number two, remember when the transfer occurred in '97 they were given a 50-year extension of certain rights and privileges that were different than mainland chinese law we still have 28 years to go the main concern is making sure
10:13 am
they get those rights and extensions and they want a permanent kill of that ext extradition bill that was the main imp tis for these prefrts. i think from an understanding point of few -- we will have to chat with some people the next couple of days hong kong is one of the major financial centers of the world fifth largest stock market $340 billion in gross domestic product on the small island and parts of coalhoun it punches above its way globally, from the chinese government an international finance perspective t there is any indication that could slow down or shut down like the airport did, i think we will have to see some reaction from beijing and the other chinese authorities because that market needs to stay open globally in their mind we have many more days here. we just got here i will say this anecdotally, guys the airplane was the emptyist
10:14 am
flight i have flown on internationally. half the plane was empty the cabin steward told us half the people bailed on their tickets. i would imagine that's happening a lot. >> brian, no surprise there. certainly adding to sort of the gloom around the globe today we are glad you are there for us brian sullivan will be in hong kong reporting, as he said, for the next couple of days. brian at the airport brian, thanks. deuce down 480 ndx down a full 2% when we come back, macy's with a big earnings miss. the stock tanking down nearly 20%. we will dig through the numbers as it hits the lowest level since the beginning of the decade as we go to break, a look at the worst performing stocks on the dow. walgreens, goldman leading stocks lower back in a moment but we're also a company that controls hiv, fights cancer, repairs shattered bones,
10:15 am
relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. from the day you're born we never stop taking care of you. we believe in education frombuilt for all people., we will dig through the numbers - [man] without snhu, i wouldn't be the leader i am today. - [woman] i graduated high school 19 years ago. i still finished. - [man] in the military, you feel that sense of accomplishment. that's what snhu is. - you will march from this arena and say to the world.. i did it. - [woman] you did it. i love you. - [graduate] i love you too.
10:16 am
10:17 am
welcome back shares of macy's plummeting on the big earnings miss. courtney reagan with more on the numbers. >> hi there. macy's ceos jeff gwinnett said they started slow and finished below expectations earnings miss being i a wide march. earnings took a hit because they discounted merchandise to entice buyers to b shoppers to buy it th so international tourism has been a weak point for a year for macy's sales were down 9% for that
10:18 am
group in the quarter compared to down 3% the prior quarter. and typically international tourists by full-price merchandise with few to know returns. those are high-quality sales they are missing i spoke to the ceos who said we took our medicine, we took almost a full point of margin with additional markdowns to address the inventory issues now, department store is lowering its annual earnings guidance range to reflect this quarter's miss the forecast doesn't actually include the new tariffs because macy's is still, frankly, evaluating the details of that gwinnett is also changing his thoughts on higher prices as a result of tariffs. he told me they learned from list three tariffs going from 10% to 25% in may that the customer has no appetite for price increases and right now we are expecting there wasn't be price increases with tranche four at 10%. if it goes to 25%, we have more
10:19 am
work to do macy's $5.5 billion in revenue was in line with estimates along with the 0.3% comp sales growth. that marks seven quarters without that key metric declining. gwinnett also says store sales are healthier and that macy's logged its 40th quarter of double-digit online growth. >> joining us now with more chief executive officer of j. rogers kniffen welcome. so courtney was talking a lot about some of the secular issues facing department stores as well as the confluence of recent events such as the tariffs that are providing headwinds for their business model macy's earnings today dragging down other department stores with it. if they can't succeed in this environment, can they ever >> that's a really good point. macy's is doing all the right things and the numbers still weren't good, right?
10:20 am
they are closing unproductive stores, adding in lease department, putting off price. they are growing online. their mobile is growing phenomenally so, yes, they are doing all the right things the bad news is, they are in the mall the malls are doing poorly and they pay a great dividend and they buy back stock. everything is what they should be doing, and yet the number still wasn't good. even the top line, you know, it was good compared to what people thought. it was right in line but the number on the bottom line was poor because they really had to take a big hit on the margin line. they did the right thing there, too. they said we have a problem, we are going to get rid of it, we will go into the fall clean. the real question is, if a company like macy's does all the right things in the best environment in the last 51 years and the numbers are still tough, like you said, can it ever get better do i think he will be the winner in their space they will be the only department store left in the moderate
10:21 am
middle space, yes, i believe that it's going to be a very tough environment to make return on investment. >> is there anything that macy's can be doing that they are not currently doing in order to protect their business >> i absolutely don't think so i think jeff is going all the right things just like i think walmart is doing all the right things just like i think target is doing all the right things. i think he has a much tougher road because we know mall traffic is deteriorating every quarter every year for about ten years now, and there is no sign of it letting up so it's really a hard place to fight the battle and then as it moves online, we know the returns online for everybody are lower than the return on investment in sales made out of the store. that's a hard fight as well. but you have to go there or you lose market share. so i think he is doing all the right things i don't think there is something macy's could be doing different than what they are doing i just think the environment as
10:22 am
a mall-based retailer is really tough and not going to get easier. >> the timing on the delay of some of these tariffs, is it early enough did it happen soon enough for importers to be able to commit to the holiday season? >> if you looked at my notes, you know, nothing has really happened yet importers have brought in stuff early. they will continue to bring stuff in early this delay is certainly helpful. but as jeff said and i have been saying, we are not passing this on to the consumer they are not going to accept it on apparel and accessories we have a worldwide oversupply overproduction of the product. we have seen deflation for ten years in a row tariffs aren't going to change that it is going to get absorbed in the change and value of the dollar and the chinese currency. it's going to get absorbed at the factory that doesn't want to see you leave the country, produce someplace else it will be absorbed in the supply chain and by the
10:23 am
retailer but it ain't gonna get absorbed by the consumer because they will buy something else inside they have plenty of substitution opportunities. they don't have to buy clothes if they never buy another stitch of clothes, they won't go naked. they may have to buy shoes, but they don't have to buy lots of pairs of shoes they will resist and we will not see price increases coming in those categories except for a very few very strong brands. >> thank you, jim, for joining us. >> thank you. when we come back, cbs and viacom the former ceo tom rogers and what that means for the overall landscape. a look at the dow. off the worst levels, not by much though. dow is still down almost 440 resqin mo "uawk on the street" when we return.
10:24 am
10:25 am
10:26 am
if you look at content, we clearly have scale and content between the studios that we operate, paramount television,
10:27 am
cbs television studios, paramount pictures, nickelodeon animation, viacom international studios. again, a library of 140,000 television episodes, 3,600 films. we have 750 series ordered to or in production. there is true content scale here. >> that was bob backish. shares of both companies lower today. joining us with a look at how this might impact the media landscape tom roger, executive chairman of win view good to have you back. good morning. >> good morning. good to be here. >> i love to know what you think of this. sounds like you think it's a better team for viacom shareholders than those who own cbs? >> i think that's fair but i got to ask you guys a question am i the only one who doesn't get a consumer brand media
10:28 am
merger being put together with any number of consumer media brands that bob bakish just ticked off and they are using a corporate name that has no consumer identity as the name of the company? viacom/cbs in a world of netflix and disney, that would be like taking the discovery scripps merger that was recently done, where discovery acquired hgtv and food network and calling them combined scripps discovery. in a world where everybody is talking about direct to consumer, how do you label it with a corporate name that has no consumer sniff can ins? they lost me on that one >> when bernstein downgraded cbs last night, one of the points was we goent believe their consumer offering will have broad consumer appeal. is that what you are getting at? >> the first issue you've got to lock at is how big a hole did
10:29 am
cbs take on in terms of the headwinds of the traditional television trend you have this situation where viacom was clearly the most vulnerable of the big media companies to what's going on in the traditional tv world nickelodeon, the kids networks, have lost two-thirds of their audience over the last six years. viacom is the only major media company that has negative growth rates among its affiliates that it gets from cable operators and satellite players. it's been holding up ad revenue by stuffing more and more spots into its television channels, which is causing younger audiences to flee even more. mtv last quarter was down 20% year over year in ratings. nickelodeon's been down 25% year over year for a long time. that's a lot of baggage to take on in the midst of what is already a very difficult
10:30 am
situation for traditional television companies >> yeah, tom, we played the sound from bakish on the way into the segment he says we clearly have scale. i know you have been thinking about that do they have enough? >> they certainly developed some scale here the issue from a cbs point of view is, is it scale for scale's sake, or is there meaningful scale here that's going to allow them to transform the company? against all the potential for decline that i mentioned, the real issue is does the combined cash flows of the company provide a way to invest in digital streaming that's going to create growth that exceeds what the new downdraft on the linear side is going is to be. there is a tough situation there. they are going to have to keep a lot of money just to keep
10:31 am
showtime competitive with the entertainment channels there disney with a bundle now with $13 with disney plus, espn plus, and hulu you have netflix out there at a similar price. the combined price of cbs all access and showtime is about 15 bucks, which is just not sustainable if you are going to compete as a major bundler of the kind of content that bob mentioned. so they are going to have to bring that price way down to be competitive against the backdrop where cbs all access and showtime haven't actually been, you know, burning up the rubber on the digital side. they got about 8 million subs between them, and when you think of the fact that the real contribution viacom makes is with younger audiences, and you have netflix is number one with kids right now, youtube number two with kids right now, disney plus about to enter with a huge push on kids, the question is, how much money are they going to have is to invest against that
10:32 am
kind of massive existing kids audience that is captured by others to really be a meaningful player that can move the dial for them in the streaming media world. i think that's a very big question. >> tom, if the basis of their strategy here is scale, do they need to continue making additional acquisitions from here if so, what do you think those acquisitions should look like that could compliment the current combined cbs/viacom company. >> it's not so obvious to me that the players out there that are studio interest or other linear channel interests really deal with the linear decline issues that this combination is going to face. so the question is, is there something they can do among their assets today to drive revenues that they haven't you have fox, new fox, just having been created as a broadcast network, that isn't
10:33 am
going around saying we have to have more scale to compete with the nfl to buy the nfl, to bid on the nfl, but clearly cbs is worried about being able to be a contender for those rights i'd very much focus on how their sports package as a broadcaster could drive further revenues sports gaming revenues, bringing game to go the television world, an area i'm involved in is one that i think they could exploit a massive amount of underdeveloped revenue for the broadcast and cable industries i'm recommend they pursue organic strategies like that that are lower cues than thinking about another massive acquisition in the studio or linear channel space that doesn't have an answer for their digital transformation. >> to bring it full circle, you must have been thinking about the name what would you have called it if you didn't like what they did? >> i'd call it cbs
10:34 am
i mean, you know, that's a name that is recognized if you want to put some youth in the name, you know, maybe come up with one of the underlying brands of nickelodeon to put up there. i think the idea of a corporate label on this in the midst of everybody focused on direct to consumer, a name that means nothing, you know, aol time warner was a terrible name, but at least it was two consumer brands if that's indicative of a kind of compromised thinking they are going to make as they try to struggle with the linear decline and transforming digital at the same time, i don't think that's a particularly auspicious start. >> few people know media branding like you, tom good to get your insight on day one. we will talk about it in the future i'm sure. tom rogers. >> thanks for having me. now a cnbc update. >> good morning, everybody here's what's happening at this hour a swedish court has found
10:35 am
american rapper asap rocky and his two bodyguards guilty of assault for their role in a street brawl in stockholm back in june. the three avoided prison sentences though and were ordered to pay a total of $1,300 in compensation to the victim. satellite photos show what appear to be chinese military vehicles parked in a sports complex in the city of shenzhen in what some have intercepted as a threat from beijing to use increased force against pro-democracy protesters in hong kong chinese state media says military drills had been planned beforehand and they are not directly related to the unrest in hong kong pakistan's prime minister has warned india against any attack on pakistan add marred kashmir. back here at home, powerful winds toppled semi trailers on interstate 70 in kansas. winds approaching 80 miles per
10:36 am
hour pushed numerous trailers on to their sides while others were pushed off the road completely it forced authorities to close off a portion of that interstate you are up to date that's the news update this hour scott, back downtown to you. >> all right sue, thanks very much. when we come back, wework filing for the long awaited ipo. the details next and we monitor the situation in hong kong adds new protesters are heating up we will go live there for the very latest. a check on the markets as well right now the dow is down 438. s&p is off 50. more "squawk on the street" right after this
10:37 am
10:38 am
welcome back to "squawk on the street." big moves in energy this morning. dom chu taking a look at that. >> energy the worst performing in the s&p 500 today, tumbling 3% at this stage among the worst performing stocks, apache, baker hughes, halliburton, national oil down
10:39 am
around 6% at this stage. and by the way, check out what's happening with the oil and gas etf that tracks exploration and production companies xop down 5%, a new record low, on pace for the fifth straight negative week. exxon, chevron, conoco all down 2.5% energy a big focus today back to you. >> thanks. dow's down 455 joining us with his take on the selloff and the global economy is brian gardner, director of washington research at kbw good morning to you. >> good morning, carl. >> as we sort of process the delay in the tariffs, the rally it gave us yesterday and being stolen away today, do you believe that represents a substantial shift in the dispute between the u.s. and china >> carl, i think anytime you talk about the u.s./china trade relationship you almost have to go in with a warning, a medical warning, that following this can induce whiplash and proceed at
10:40 am
your own risk. we have been back and forth. the way i'm looking at it, yeah, it's a bit of an inflection, but i think when you look at the longer term, we are in a trading range, if i could use the markets analogy. i think he wiwe will be in a tr ra range for an extended period of time i think it may have been a bounce off the bottom that have range from what we saw going back from the president's threats of a couple weeks ago, but i think we are going to bounce back and forth in range for an extended period of time while the two countries try to figure out what the ultimate outcome is. >> interesting some argue it may demonstrate the extent to which the united states is willing to deal with tariff pain. even listening to the commerce secretary for the president, for that matter, basically admit that the tariffs do have some impact on the american consumer. >> i thought that was the inflection i mean, for months going back to the early part of 2018 when the
10:41 am
administration really started pushing its tariff agenda, we would hear this repeated narrative from the administration that tariffs are small, they're not going to be felt, they are not paid by the consumer, the consumer is going to be okay, and today with your interview, with ecb cnbc's better view with secretary ross, there is a step back his interview really confirmed that administration is increasingly worried about the impact of the consumer. >> what does to tell you that, if you want to use the word blinked, if that's in fact what you believe the administration did yesterday based on what secretary ross confirmed today, what do you make from that whole move about where we may be in the trade war? >> i think it's a problem with the administration's strategy. it tends to be very impulsive. it's driven by the president himself. there doesn't seem to be a strategy, a longer-determine strategy
10:42 am
he brags about going with his gut. at times his gut serves him well, about you there are other times when his gut instinct hasn't thought out the implications, the second, the third, the fourth derivative of his actions. and so he has been getting push back we go back to his announcement of the tariffs, the threat of the tariffs a few weeks ago. it was reported that he was meeting with his advisors and went against them. so i'm not sure that -- i like the idea of the word blink or term blink, about you in the context of the president's decision-making process, which i don't think always serves him well, he has boxed himself into a corner on this one i think he was forced to make this decision. >> have we crossed the point of no return now where you can't wage the kind of trade war we're doing and manage the economy and the stock market up at the same time >> i think the challenge for the administration is that it looks weak right now
10:43 am
the president politically does not want to be there obviously, going into a re-election page in 20 y 20 some democratic candidates who are going to hammer him if he looks weak on china. my worry is, eastbound thouven have blinked right now, i think he will revisit this issue down the road when we get past the christmas season, i can't tell you exactly what the timing is going to be, but depending where we are with negotiations and the status trade talks, i wouldn't be surprised if this gets raised again. are people going to take it seriously next time? probably not but i think it's a weapon he thinks he can go back to and probably will go back to. >> something investors have to be aware of if they are going to play in this new market environment. brian, appreciate that insight talk to you we works this mornit
10:44 am
losses shy of $1 billion on $1.5 billion in revenue. raking in $6 billion in new credit facility provided by its underwriters which will be concurrent with the ipo. so, guys, i think it's important on a day like today where we're seeing the inverted yield curve, we are seeing the dow now down about 450 points, to ask this question about "worldwide exchange" we work. what does it look like in a foengs downturn? and they address this in the prospectus they talk about it from two different perspective. they say, number one, this is a risk factor for us we have never been through a downturn in the economic cycle we don't essentially know that we will be able to survive it. they say in a different part of the prospectus that we think we could benefit because larger enterprise companies will be looking to cut costs
10:45 am
what better way to cut costs is on real estate >> do you agree with some of the characterizations today that it's very strange, very different. this section on third-party contracts s it really that unique >> i want to say the section on related party transactions is 12 pages. usually that's a blush you rerb over they have that but they go on to talk about adam newman's relationship with the company and his arc holdings, which is another investor that invests in real estate so, yes, it's a very, very, very complicated company, and it's not something that you necessarily have a direct comparable in the public markets. so investors will have to certainly study this one up. >> i have always wondered more than anything else, you know, you are in this late stage of the cycle. they are levered to the health of the real estate market. i want to believe that they are despite they say they can do well in any environment.
10:46 am
i i'm not so sure. i wonder what would happen if there is some sort of major downturn in the real estate market softening to some extent. >> we'll find out. as we go to break, a look at shares of luckin coffee. sliding on the first quarterly report since the ipo wider-than-expected losses shares down almost 15% we are down 470 on the dow me" asquawk on the streetin mont [beep] you should be mad your neighbor always wants to hang out. ecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. 'their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today.
10:47 am
10:48 am
'. relief in the trade war sending stocks soaring and two mecod auy find out which on more "squawk on the street" coming up.
10:49 am
now let's get to the cme group in chicago with rick santelli. >> thank you i'd like to welcome my guest from national alliance securities, andy brenner we have to mention briefly today
10:50 am
the yield curve tens to twos inverted right now it's not inverted twos are down nine tens and 30s are down 11 basis points what do you see? >> rick, what we saw overnight is the german economy came out with a negative gdp print. with negative gdp print the global economies continue to be in turmoil and continue to be weakening. it wasn't a surprise to me that twos, tens got inverted overnight and they're back to about two basis points now i don't see a recession on the horizon for the u.s., but nonetheless that's where we're going, and we think rates are going to go lower from here. >> we have kind of a high poe kond ree yak global economy and all this talk of recession is back training into investors' psyches. another strange phenomenon while interest rates are plummeting and everybody's talking recession, the dollar index is up 1/5 of a cent and half a cent away from cycle
10:51 am
highs. why is the dollar strong >> rick, people that invest in currencies look at the -- look how a particular country's doing, and while the u.s. may be slowing, it still is the least dirty shirt in the laundry, and compared to europe, compared to asia even, compared to china, the u.s. looks like a great place to invest. i don't think they're looking at interest rate differentials, i don't think they're ever looking at interest rate differentials, they're looking at the health of the economy, and the u.s. economy, even though it is slowing is still pretty healthy, especially compared to europe. >> now let's add in another factor we see issues of venezuela we see issues in argentina, emerging markets in general, and we all know that if your currency is depreciating and your stock market's jittery and your economy is teetering but your debt is denominated in dollars, you still have to come up with those dollars, don't you
10:52 am
andy >> absolutely, rick, and that's -- i think this is shortage of dollars going on within the world we see it in a lot of different areas, and i think as the fed continues to not do quantitative easing, i think there's going to be a shortage of dollars throughout the world, and as long as there's a shortage of dollars, emerging markets are going to continue to deteriorate. so i'm not very bullish on them at the moment, not at all. >> i couldn't agree with you more, and i think what central bank policy implied by market pricing and i'm not saying all emerging markets that's denominated in dollars but the appetite is huge thank you for your thoughts today, we're going to continue to monitor all that as yield curve and global economics thank you for joining us scott wapner, back to you. thanks so much that's rick santelli stocks now at session allolows w pushing a loss of nearly 500
10:53 am
points apparently concerns over the inversion of the key part of the yield curve since the first time since 2007 leading to many concerns about a recession on the horizon. let me send it over to jon fortt with a look at what's coming up on "squawk alley" and know we're going to be talking about markets and a lot more, jon. >> yes indeed. the dow did touch that 500 point while rick was talking also going to talk about wework, its parent we company filing that prospectus unlike anything we've seen out of tech in a while, what it mhteafoig mn r the overall market on "squawk alley" coming up but we're also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life.
10:54 am
from the day you're born we never stop taking care of you.
10:55 am
10:56 am
you'll notice here we're not far from session lows. dow's up 480 -- down 480, the ten-year now below 16. we're getting used to new levels, when they cross those levels you see the eyebrows go up. >> bank stocks leading the declines today you've got bank of america, citi, jpmorgan all dropping significantly on this news about the inverted yield curve that makes their profitability shrink, at least in the near-term. it's not good news for the
10:57 am
banks. >> yesterday feels like a distant memory at this point on the headline of the delayed tariffs. you just wonder whether the wheels are going too fast now on some of these other stories that, you know, these incremental trade developments, if it's enough that's assuming they're positive, if it's enough to really reverse what appears to be a narrative that's grown, you know, much more negative >> certainly yield curve has gotten everybody's attention today. thanks, guys, good to see you. we'll see scott in a little bit. when we come back, a lot more on the selloff and athewh t afternoon may bring. "squawk alley" starts in three minutes. ♪♪ ♪♪ ♪♪
10:58 am
quadrupled their money by 2012? and even now many experts predict the next gold rush is just beginning. so don't wait another day. physical coins are easy to buy and sell and one of the best ways to protect your life savings from the next financial meltdown. - [narrator] today, the u.s. money reserve announces the immediate release of u.s. government-issued solid gold coins for the incredible price on your screen. these gold american eagles are official gold coins of the united states and are being sold for the price on your screen. - pick up the phone and call america's gold authority, u.s. money reserve. with nearly two decades in business, over a billion dollars in transactions, and more than a half a million clients worldwide, u.s. money reserve is one of the most dependable gold distributors in america.
10:59 am
- [narrator] today the u.s. money reserve is releasing official gold american eagle coins at cost for the incredible price on your screen. these government-issued gold coins are official u.s. legal tender made from solid gold mined here in america and fully backed by the united states government for their gold weight, purity, and content. do not delay, call now to purchase your gold american eagles for the amazing price on your screen. gold is now on sale at prices unseen in years and this year could be one of the greatest gold-buying opportunities of all time! call now while vault inventory remains. as one of the largest u.s. gold coin distributors in the country, the u.s. money reserve has proudly served hundreds of thousands of clients worldwide. don't wait another minute, call now to purchase your american eagle coins at cost for the amazing price on your screen.
11:00 am
good morning, it is 11:00 a.m. at wework headquarters in new york city. it's 11:00 a.m. on wall street, and "squawk alley" is live ♪ we are family ♪ we are family, get up everybody and sing ♪ ♪ we are family, i got all my sisters with me ♪ ♪ we are family


info Stream Only

Uploaded by TV Archive on