Skip to main content

tv   Squawk on the Street  CNBC  July 15, 2022 9:00am-11:00am EDT

9:00 am
i will say that blackrock says inflows were better than they thought. people are still putting money in. how cool would it be, dustin johnson is in the lead at the british open. right now. rory mcelroy is creeping. what happens if they are in the same group >> pulling for dustin. >> i just tweeted you the photo. make sure you join us. good friday morning. features look to get back more this losing week as retail sales come in solid. shares of city will open up.
9:01 am
we begin with futures popping. big banks continuing to report results. china recording its lowest growth since the beginning of 2020. we will take you live to beijing. we start with the markets and the better than expected sales data. furniture is positive. really only department stores where the wrinkle. >> definite relief. you see firmness in the spending trend. i don't think people were expecting it to fall apart. but there was a preoccupation with the potential for a huge slowdown recession. empire state manufacturing, some of the internal inflation leading indicators were benign as well. all that, i think a market has
9:02 am
managed to find some traction most days, even when it has opened lower. people came into this quarter without caring a lot of equity exposure and that maybe a showing itself. the toggle will be 75 and that seem to matter yesterday and in short term treasury yields. the big picture is, if that is the feds mission and they are mostly paying attention to things like inflation and things like the university of michigan expectation, you better have a better economy. we are no longer saying i don't think retail sales beats and therefore it clinches a bigger rate hike. >> today's retail number we go into the blackout window now >> the market is giving an opening for a full percentage
9:03 am
point hike. what matters most is how that is characterized. you go on a break until september, in terms of policy meetings. that means if it seems like it is a frontload, fine. i still think the market took some comfort yesterday. i'm not sure he wanted to have 100 be the prevailing expectation. >> you made your point. you are down two and you get back most for a couple days. there has been a lot thrown at the market. hot cpi. drama in italy. is it about that or we are just feel down on the week?>> i don't think anything has been really decided. the trend is what the trend is. if anything, people would say the balance off the lows mid june was really pretty mechanical and not impressive
9:04 am
in terms of showing a full return to equity risk appetite. it is great to say that people are sold out and exposures a low. everything you look at says that is the case. hedge fund positioning and all that. but that does not necessarily mean you go up. it just means nobody has to cell as much. we are early in earnings season and we don't know what is priced in. you could make the case that a lot is. yesterday apple was up 2%. if that was not up, and because how people treat that stock has something to grab onto, maybe were not talking about resilience. it is 7% of the s&p. >> the calendar will get crowded next week. we get some interesting calls this morning about what microsoft and netflix and amazon may say in the coming days. we get to that later. we want to get more to the banks . citi and wells.
9:05 am
let's bring in leslie to talk about citi. and beating on revenue by more than $1 billion. >> which is definitely a differentiator relative to other banking peers. until now we have not releasing a top and bottom line beat this quarter. wells fargo missed on the top line. it be on the bottom line when excluding certain factors related to a revaluation in the venture capital private equity portfolio. currently there is a meeting underway, the ceo is saying he expects a benefit from rising rates in the future. but partially offset his concerns by his concerns about inflation and the prospect of a recession. you can see citigroup up almost 5% this morning. obviously, helping bring up some of the other big banks with the exception being wells fargo. which is down about .7% currently on what i described
9:06 am
to be a miss. a big decline for wells fargo by about almost 50% on net income during the quarter thanks in part to a big drop off in the home lending business. mortgage. they have been impacted by the raising mortgage rate environment. they guide up the interest income which is supported by rising interest rates. they said that will be 20% growth this year up from the teens where it was before. that is helping offset some of the disappointment. that stock has about 0.7% this morning. >> up 31. interesting. people are going back on gpm and saying return equity was up and car spending was up, the buyback suspension discovers the overall mood >> it really is emblematic of
9:07 am
how we are viewing the overall economy and markets. last three months were okay. you are performing well and it seems as if there is not visible the stress in consumers with corporate credit but we are worried about what is to come. the buyback was an element where you feel like you could lean on that as part of the bullish case. but say it was not as cheap as early 2016 when we had a mega low but the other ones, citi has been below book value forever. it seems like things are going in the right direction as far as returns. it really is about, tell me if there will be a recession or not. tell me if corporate credit will fall apart. >> quantitatively, on the call . so far this week, they said things will get worse
9:08 am
economically and people are still talking about what was said in terms of complication. it is complicated but not overly complicated >> i think that was summed up well. that pretty much every banking executive we have heard from this week is feeling good about the state of the consumer and the business environment right now. but they are very concerned about the plethora of geopolitical risks and rising interest rates and inflation. we heard that from mark mason where he was talking about, cfo of citigroup. he said things are looking fin , he said the uncertainty into the future is what it is. jamie dimon said, looking at the results of all these uncertainties by january or february of next year. basically saying, buckle up. we have another six or seven months left of uncertainty and then we should get a sense of
9:09 am
what the trajectory is for rates. hopefully things will stabilize. you heard that on the wells fargo media call. calling for a few quarters of uncertainty in regards to rates and mortgage business and hopefully things will stabilize. >> leslie, it is kind of remarkable the extent to which some of these uncertainties are really about market signals that these guys are picking up. or seeing what financial markets have done. baked in the markets. what are the ceos doing in terms of their own business? risk-taking or cost-cutting. the mortgage business has been headcount reduction but that could determine what the economic outlook looks like, if banks will stay the course or entrench. >> that is a good point. interestingly you are hearing the concerns from the bank ceos but when you look at the expense side, it is all things
9:10 am
go. green light, go. there was a question on jp morgan's call yesterday about how you reconcile the idea there is an economic hurricane coming but keeping your $77 billion spending guide in light of all of that. we saw expenses pick up at citi as well. they were up about 8% during the quarter. just as banks continue to invest in light of what they are seeing. we are not seeing any slowdown in terms of actual expenses. but we are seeing, bigger reserve, in anticipation and what we saw with jp morgan as well as citi in terms of pausing the buybacks. >> i think it was wells yesterday who said, gpm's miss would have been more palatable if it i come from higher reserves or less bad expense guidance. we will get more of this on
9:11 am
monday and tuesday of next week. thank you. china posting weaker than expected gdp. the slowest growth in more than two years. we are in beijing this morning with details >> reporter: the economy contracted in the second quarter from the previous quarter. that ekes out expansion from 0.4% but there is widespread skepticism that the condensate manage that. the main cause is the covid lockdown in cities like shanghai. but there is another concern on the horizon, the property sector. the debt problems, the real estate giant, ever grand, never went away. this is reflected in the numbers. there was a rare decline in june, straining growth and the financial sector. local media have been reporting something described as a
9:12 am
mortgage strike movement and that is people are refusing to pay their mortgages for unfinished projects. so far about 100 across the country. regulator say they will work with local authorities to make sure the homes are delivered. banks have said the financial risks are controllable. however, homeowner problems are showing up in what china would consider to be very bad employment figures. the government said june employment improved but youth unemployment is heading toward 20%. banks such as goldman are cutting estimates for growth for the year. well below the government target of around 5.5%. >> amazing numbers still to come. unh with upbeat. take a look at
9:13 am
the premarket. we have empire and retail. before that, industrial production, after the break. r je . visit this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.
9:14 am
9:15 am
welcome back. we have more live, breaking news on friday. we are breaking out the best utilization for the month of june. reduction down 2/10 of 1%.
9:16 am
we were expecting a positive number. but we have not had this particular number negative, negative since the end of last year when it was an equal down. you have to go all the way back to february of last year to find a bigger negative number. not good. on the utilization side, expecting a number close to 81%, but we get 80% on utilization rates and that follows a revised 79 point, revised to 80.3. these numbers are disappointing and we continue to see interest rates are down for the day and they are down rather subsntllfothwe. year note yields approaching down 18 basis points since last friday's close. we will return after a short break.
9:17 am
welcome to your world. your why. what drives you? what do you want to leave behind? what do you want to give back? what do you want to be remembered for? that's your why. it's your purpose, and we will work with you every step of the way to achieve it. at pnc private bank, we'll help you take care of the how. so tell us - what's your why? ♪♪
9:18 am
9:19 am
welcome back to 'squak on the street'. equities on track for another big weekly pull back. joining us this morning, to talk about the markets. more specifically, the fed and the likelihood you think they may undershoot expectations on rates.>> to me the biggest deal is the fed has to go where it is currently priced in the market. we think they will stay where they are right now because you are starting to see despite hot inflation, you are seeing forward-looking indicators that inflation comes down. spot commodities are up 21%.
9:20 am
that will have a chilling impact on inflation. in the coming months >> it seems like everybody in the market is looking at the signals and trying to be forward-looking and anticipate a change in policy to accommodate that. but the fed seems to be operating by a different standard which is multiple months of declining inflation evidence in the data. it seems to me that is the frontier of the tension that exists in these markets. the market wants to get on with the next phase and the fed says, we are not going to showing inclination to ease until the numbers tell us to. >> the fed is trying to keep the inflation credibility. that is why the increase the pace because they sought the university of michigan of, and
9:21 am
it was revised. but the fed will not show their hand. they want people to believe that they have credibility. i don't think they are near that. and if you think about that the fed can do this fast. this has been nimble. we used to have a fed that televised and did what they said they would. now the fed is reacting to the data. it is creating the volatility and it could be just as fast on the opposite side if you see concrete signs showing up in the data. the cpi data distorted things. it shows inflation is subsiding. >> does that mean that you believe, it is obvious the fed is more flexible. november of last year we were talking about one hike this year. early this year bank of america said seven hikes and people thought that was nuts and we are there. on the other hand you think the market can absorb what is already anticipated. you said the big risk is people think the fed has to go father
9:22 am
and what is priced in. what is priced in? what is palatable? >> i think you have seen the market stabilize. we are in the same range we have been for the past couple months. that is largely do to the fact that they had come back and stabilized. as long as you see that continuing, i don't think were going to up, up and away. i think you will see a grind back and forth as we await each every inflation data point. the good news economically, we could have a recession but i think of it as a buyer strike. not a deep recession like we had in 2007 and 2009. any recession would be mild and the market has made his bottom and will push higher into the year and. but not up, up into the right.
9:23 am
>> we speak about a more nimble fed, do we have a more nimble corporate? do you expect earnings season and aggregate to reflect some of the relief we have seen in pricing? >> i do. certainly earnings expectations will likely come down. they have a bit. there is still some support and room and certain asset classes. i point to the s&p 600. certainly that will come down but if you look at prior troughs in the industry it was around 17 times. historical averages around 20. there is room for that area of the market to absorb price declines and unease declines >> that will be small-cap. small-cap 600 you were referring to.
9:24 am
that is probably the biggest valuation adjustment. what about other parts of large- cap? what that imply that cyclical stocks seem like where there is the opportunity. >> i would focus on the value factor. things that are cheaper have room to run. we have been recommending that for over a year. we thought parts of the market were expensive. when people hear that they think it is the whole market. i don't think it is the whole market. reports that contain value in that is where investors should focus. valuation still matters and we have learned that over the past six months. growth stocks with high expectations are passed. right now are focusing on the parts of the market that are t. you don't have to be in value sectors but you could be in value stocks and other parts of the market.>> well said. on a week where growth is showing a little bit a strength. have a great weekend we have futures close to session highs on the yield. some of the macro data and earnings today.
9:25 am
the opening bell is coming up.
9:26 am
what if you were a gigantic snack food maker? and you had to wrestle a massively complex supply chain to satisfy cravings from tokyo to toledo? so you partner with ibm consulting to bring together data and workflows so that every driver and merchandiser can serve up jalapeño, sesame, and chocolate-covered goodness with real-time, data-driven precision. let's create supply chains that have an appetite for performance. ibm. let's create. (vo) hi. we're visible. a different kind of wireless company... ...running on a big impressive wireless network. how are we different? we exist only on your phone.
9:27 am
which means you sign up, get help, and pay all right here. so you get a single-line unlimited plan for as low as $25/mo. switch today at visible dot com.
9:28 am
crude oil recouping losses. the president heads to saudi arabia as part of his middle east trip. expected to meet with the saudi crown prince. some stories saying there will not be a commitment to produce production. the average gallon is down. >> wholesale prices are sliding. there is a way of plotting out gasoline price trajectory against equities this year and explains a lot of it. in terms of where gasoline peak and stocks have hit the lows. more to the story than that, but there is a comfort level with this idea that we are trading 20% off the highs intrude. we will see. that is a lot of unwind of momentum and futures positioning and people trying to build in a slower economy as opposed to the here and now, change in supply demand
9:29 am
dynamics. the real big question is what moves the stocks? on the way up, everyone said the oil stocks meant money at 80. does not mean you have to have it go back to the highs. we will see if that proves to be an opportunity.>> this is a look at some of the majors. gasoline demand, normally in the summer time you see it. driving a vacation, has trended lower in three of the last four weeks. that does not happen a lot. it is raising the debate about whether there is true demand destruction going on. >> or the hyper awareness that gasoline got to $5 a gallon nationally. i could sit here and say, in 2014 it was higher on a relative to income basis and we have been in a were spot before in terms of the burden. but it is the awareness of it and the ability to not commute as much and all the rest
9:30 am
>> next week we will know whether not stream one is shut or will reopen after maintenance. with your vendor in extreme heat wave in the next week or so, is going to be all eyes on your. at the opening bell. to the big barn. it is up 6 1/2%. we can talk about what the overall set up was for the bank sector and they have underperformed recently. it did not help yesterday for jp morgan. citi has been the cheapest and
9:31 am
maybe the most suspect of the group. it seems like even with a suspension of the buyback, able to get a top line beat is significant in this environment. >> blackrock today not just a mess on revenue, but inflows extremely light. >> this is a stock you can basically trade based on what the markets themselves are doing. you can run it through but you don't always know the flows in real time. flows are slightly positive but it is obviously not an offset. you could say stock is looking cheaper but there is momentum going the wrong way when you have asset markets going like this. the market recovers and it will be the first out of the hole because it has the franchise and leverage to hire
9:32 am
asset values. not really working. >> leslie brought us up to speed on wells. it is now up 2. the net interest income guidance, the reserves, $580 million >> you have a little bit of a sense that the market has essentially absorbed a fair bit this past week or so. the two year note yield was all the story you needed yesterday. it shot up after the cpi to about 3 1/4. that has been the barometer of exactly how aggressive the fed has together. you are sitting below that right now. it seems like that is a macro side. the pull and guidance guide downs.
9:33 am
the stocks have figured some of that out. the banks always do this. they react in one direction in the first batch reports and everyone over correct expectations a little bit on things like trading and then you get good things the next day. >> i was fascinated by your tweet yesterday. your mystery broker. his point or her point was, you cannot do that in a slowdown. >> articulation of the prevailing idea that there is frustration with the fed being full speed ahead and trying to essentially chase the viking inflation data in the cpi. it is unacceptably high. that is what we have to remember. it is not a moment to be particularly nuanced about defining inflation and slicing
9:34 am
and dicing. until then changes, we will have to deal with the idea of the 75 or 100 type debate. the other piece is, i have been saying, if the market gives the impression that the recession is the tool as opposed to the side effect, if it is the medicine, that is not great for stocks. but i'm not convinced that's true. i think we are due to get lucky on some of this stuff. >> he has said repeatedly it would be good to get lucky. i think it was jp morgan yesterday referencing jobless claims and they are noncommittal but they say the magnitude of the latest drive in claims is consistent with the rise that is sometimes associated with recession. we think the labor market is losing momentum. is not obvious how concerned we should be. 244 is raising eyebrows. >> they are seizing on the rate of change from the lows. we
9:35 am
were at an exceptionally low level. that is what you see on long term charts. the rolling bottom in claims and trends higher. but often it trends higher with one your lead time. it is not just an immediate trigger for recession. think we have to apply a little bit of, is this the same as the other cycles scrutiny. i don't mean to say things will be better now. we have the miss on industrial production. the most bearish stuff you will see in terms of the market to adjust is the i sm. that is the manufacturing purchasing managers. it has fallen hard and everybody can do the line charts and say earnings go down here and stocks go down here. if that does not apply or that is the worst part of the economy and you have offsets, that creates a possibility of support before you get to the
9:36 am
lows. >> it is interesting, earlier we had downgrades of american express on worries about high income spending. it will lead the dow along with unh and visa. that brings us to amazon. a lot of notes about prime day and estimates of 19% growth. year on year. which is better than a lot of analysts expected.>> it is better. this is a stock where people will grasp for reasons to say things are turning for the better. if there is a stubborn mega, bullish consensus, it seems as if people have written off the e-commerce side is a growth engine. that could help on that level. you are up almost 3% today on amazon. it has done nothing but hurt the whole nasdaq complex. it is 40% off its high. maybe some relief on that side
9:37 am
of things. in terms of the other piece of the business the value in cloud, you are seeing some distant starts of traction in those valuations. but it is too early to say. >> we think there is a decent chance barclays prince a better than feared q3 guide. interesting piece in the journal about getting out of private libel. hard to say if that is about regulatory relief or just week sales on the amazon label.>> they characterized it as a way to inoculate themselves from regulatory pressure. you and i think they would make a move like that if it was a huge bottom line issue. the marketplace is what it is. you don't have to have the complication of competing against your customers in a way that has the appearance of bias. >> e-commerce, up 16. the journal says elliott 9%
9:38 am
stake will make it his largest investor. discussions with the company. and discussion about the pressure they have been under. whether macro or apple privacy >> it seems like all those things. there was absolutely a nesting pandemic boom of fest in pintrest. it is bite-size now in the scheme of things. big question, what might they want to see happen. a sale would be in the range of possibilities they could potentially want to see. who is amenable in a regulatory sense to do that? they have alliances with things like shop a five. knitting it into the e-commerce web is the way you can monetize better. advertising at this point, the
9:39 am
question is, what is digital advertising looking like. this got people antenna up >> they look that warner bros. discovery, macro pressure yes but the upfront pressure was strong. she cuts the target. there will be eyes on what the ad market is doing right now. we have been talking about the dollar this week and the relationship to rates and expectations. yesterday was be of a. trimming numbers on ibm. constant currency will be hard to ignore. >> it has to run through the numbers. it has never been clear to me that the market itself, seizes on four acts as a real input to
9:40 am
valuation in the long term. is willing to forgive it on the upside and it is a headwind. i don't think it will be the story. if it continues to scream higher , that is a recipe in general for financial conditions tightening for a little bit of the entire world hunkering down. it is the formula for creating stresses in the system that leads to some kind of accident >> there is a school of though , can we have the fed hike almost 4% in a year and credit spreads wide and people worry about a recession. and the dollar go to 20 years the highs. and crypto collapse and create a huge deleveraging and not have some accidents. >> beyond emerging markets? >> something that is another rupture.
9:41 am
we are not seeing it. one of the reasons the banks are struggling is they are over capitalized and they seem pressured to get more safe. i don't say that is a prediction but that is something. my partner at the of a is in the scam. we are turning up the dials too far for it to be this god pass to a gentle conclusion on all this. >> some suggest maybe the blowup was crypto. 1 trillion taken off. if we could limited to that some people would take it >> it very well could be. just because subprime was not contained does not mean other things cannot be contained. there is a wealth effect attacked to that. i don't think we have a sense of how big that was and whether it matters. for the broader economy. >> related to what crypto may promise eventually, twitter. we got an announcement on a first
9:42 am
hearing. tuesday, 11:00 a.m. we will be all over that. even this week we got different takes arguing, mostly that twitter has a strong case others arguing that because it was not elon musk agreed to buy it, it was entities controlled by him. the journal opinion page arguing that entities don't have souls to be imprisoned. so to speak. >> in terms of the ultimate mechanism and there is speculation that the court itself would be hesitant to force the close of the transaction, almost 4 fear it would not be complied with. it sends a backward way of rain yet but it is one of those things. it seems like such a dramatic thing to do to say you have to pay the $44 billion and assume the financing. >> reuters has a piece about the judge overseeing the lawsuit.
9:43 am
a no-nonsense jurist. and has the distinction of being one of the few ever who has ordered a reluctant buyer to close a corporate merger. >> if you remember, mays might not remember. that was right after the covid crash. the allegation was in the court found that the buyer itself tried to torpedo the financing. they said they could not get it done. the judge said, sorry, no. >> netflix. the report next week. ubs says, the q2 guidance we think they are right. and the stranger things reference, they trimmed. they were at 355 and they go to 198.>> it is part of the pattern of trying to kind of mark your price targets to market to some
9:44 am
degree and try to back fit what it means for the fundamentals and land at a higher price target. we are at 177 right now. the big question is whether we will see, wouldn't that be an easy thing to tighten the belt for consumers. let me see what my subscription outlay is and try. this does not mean you have to shrink a lot. i don't know what is in the valuation now for netflix. 16 times earnings. if they get some spending discipline. who knows? >> you saw the note yesterday suggesting the reason they went with microsoft is because. >> microsoft is in a tough spot trying to get activision done. will be probably difficult. but down the road, let's get her hand in.
9:45 am
>> microsoft used to have stakes in facebook >> they do that. they sprinkle things around and look for opportunities.>> 50 points shy of going breakeven for the week. let's get to bob >> we are trying to reverse four days of declines and it is good start. 8 to 1 advancing to the blind spot. we have not seen that in a while. that is good news. we are off the high. the problem is there is not a lot of buying enthusiasm. for the moment, self pressure might be exhausted but nobody is enthusiastically buying. let's look at of the sectors. what you can see as a small group of people that are trying to buy the growth sectors. this small group of bulls arguing the bottom will be august, september. and you want to buy growth in the fourth quarter. the key picking at tech stocks. some consumer discretionary stocks. those are the ones that are
9:46 am
eliciting interest. it is a long ways be here between here and the fourth quarter. when was the last time you saw citigroup lead the s&p 500? it is. of about 5%. bank stocks are up. yesterday, pnc saw a new low. yesterday all the money center banks and all the super regionals were at 52 we close. nice to see a bounce. yesterday, everything was at new lows in the banking sector. how about earnings? this is early and we have not gotten any big industrials that highlight. preliminary, it seems obvious there is not as many companies that are beating estimates. they are not beating them as rates as wide as we have seen in the last couple of years. the commentary seems much more cautious. in preliminary i see signs of
9:47 am
finally the second half estimates are coming down. let me show you some early numbers. very early. 35 companies reporting. i am including companies that have a may ending quarter. a little larger group. 71% are beating the numbers. last quarter 77 were beating the numbers. 77%. the average beat rate is 4.3%. that is a small beat rate compared to what we used to have in the last few years when it was more. last quarter it was a .9%. fewer companies are beating and the percentage they are beating by is smaller. i anticipate we will see second half estimates come down. we have seen it in the last two weeks some numbers for the third quarter come down. as far as earnings today, blackrock. there is a lot of chatter that somehow this is immensely disappointing. i will push back. it is true the headline numbers, profits down 22%. assets under management down 6%.
9:48 am
assets under management consists of how much you got and what the prices are. with prices down 20% and 10% in the bond market, it is not a surprise that is down. you want to look at long-term inflows of $69 billion. slightly below. institutional inflows strong. and the i shares platform is raking in money. the asset managers are down big. everybody knows this. and the problem is, the prices are down and the fees they can charge are generally to the downside. blackrock, vanguard, they are raking in enormous amounts of money. >> as we get to break let's look at the bond report and see how treasuries are doing. it has been the market driver for a while. 10 year note. if the fed plays
9:49 am
their cards right. municipal bonds don't usually get the media coverage the stock market does. in fact, most people don't find them all that exciting. but, if you're looking for the potential for consistent income that's federally tax-free, now is an excellent time to consider municipal bonds from hennion & walsh.
9:50 am
if you have at least 10,000 dollars to invest, call and talk with one of our bond specialists at 1-800-376-4376. we'll send you our exclusive bond guide, free. with details about how bonds can be an important part of your portfolio. hennion & walsh has specialized in fixed income and growth solutions for 30 years, and offers high-quality municipal bonds from across the country. they provide the potential for regular income...are federally tax-free... and have historically low risk. call today to request your free bond guide. 1-800-376-4376. that's 1-800-376-4376
9:51 am
9:52 am
we still are seeing the effects of the pandemic, and then in addition, all the supply chain challenges we've had what we're seeing and, you know, we watch it very closely, we're still seeing very strong demand for our products in fact, our inventory is very low and doesn't help when we have to build shy but we'll be working out of that this next quarter. we still plan on, you know, july 1st, we reinforced our guidance for the year is still intact >> gm's mary barra with cramer on "mad money," expressing optimism about demand. she was jim's last guest on the set as it kicks on of a new era. it will begin broadcasting from this floor at the nyse with a brand-new set, new look. make sure to tune in monday, 6:00 p.m. eastern time it's going to be an event. >> absolutely. be right back.
9:53 am
turboxflex frames are engineered with a 360 degree hinge disguised in the design. for maximum comfort, flexibility, and performance that stands the test of time. now, strength meets style. invest in the best, turboflex. find your retailer at
9:54 am
9:55 am
dow it off the opening high 306. you have bullard on the tape before we go to the blackout window the general take, again, is 75 is a pretty healthy hike
9:56 am
and there's no reason to think that a growth recession where things slow below trend that you don't go negative isn't plausible. >> that's right. definitely doesn't end the suspense of the magnitude of the next hike. i do think it's a small, probably bullish input that bullard points to the stronger dollar as being disinflationary for the u.s. so, trying to point out areas where things can break in the fed's direction without really saying anything different than, we have to be -- get the rate much higher sooner but bostic not going 100, not trying to endorse a super size you imagine they wouldn't want to go the second meeting in a row being blindsided by a number and having to quickly reset market expectations through a journalistic channel as happened last time. >> yes it's been -- it's a dicey game by the way, i tweeted earlier this morning a photo that was taken in times square 20 years ago today.
9:57 am
me and mike with the dow futures at 8,000. >> yeah. >> we were talking about pfizer pharmacia. >> at the time, maybe the biggest merger at that point, which is lost in the midst of history at this point. you know, in terms of the reactions to it, everyone is saying, wow, dow, 8,600. now it's 3,600 it's a 6.5% annualized rate of gain that's what the market does with dividends, it's like 9%. i think it's great gives people a mental accounting. >> the other reaction is how much you and i have aged or not aged. >> i think not >> 20 years. dow's up 325 we're back in a minute
9:58 am
do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. we thought we had planned carefully for our retirement. but we quickly realized we needed a way to supplement our income. if you have $100,000 or more of life insurance, you may qualify to sell your policy. don't cancel or let your policy lapse without finding out what it's worth. visit to find out if your policy qualifies. or call the number on your screen. coventry direct, redefining insurance.
9:59 am
10:00 am
with my hectic life, you'd think retirement would be the last thing on my mind. thankfully, voya provides comprehensive solutions, and shows me how to get the most out of my workplace benefits. voya helps me feel like i got it all under control. voya. well planned. well invested. well protected. welcome back to "squawk on the street." rick santelli with the last batch of breaking news for this week of course, i'm at the cme hq in chicago. 51.1, university of chicago sentiment. i will take a breath here because the fact we are not at 50, last look, our final read last month was the lowest in
10:01 am
record keeping in 1978 at exactly 50 current conditions, 57.1, 53.8 in the rearview mirror that was also the lowest current condition since 1978 and on expectations, 47.3. 47.3 and that isn't bad news because we have to still go back to 1980, 1980 on 47.5 or less, so 47.3, we'll, we're comping on the worst levels there for four decades on inflation finally, let's get to business inventory, shall we. business inventories up 1.4%, exactly, exactly as expected the inflation numbers coming in now. one-year inflation at 5.2% on university of michigan, down from 5.3 5.3 was noteworthy because that was the highest level, basically -- no, excuse me i'm sorry. 5.4 was the highest level going back to 1981
10:02 am
we have obviously lifted above that to some extent. and we have 2.8%, 2.8% on the five to ten-year inflation the high-water mark there was 3.8% "squawk on the street" -- no, we're not tossing it to break. we're tossing it to carl quintanilla. have a great weekend. >> you too, rick thanks for an amazing week of work so much handed our way. good friday morning. welcome to another hour of "squawk on the street," david is on and morgan on maternity leave. dow is up 460 as those inflation expectations, and, rick told you, lowest in a year. >> note yield cracking on those numbers. we're 30 minutes into the trading session. we have three big movers we are watching, starting with netflix. ubs slashing price target from 355 to 198 ahead of next week.
10:03 am
netflix the biggest laggard. plus, edward jones upgrading qualcomm to buy from hold. calling it an attractive buying opportunity for the chipmaker. that stock up double digits since the start of july, adding 2% this morning. united health shares also rising, beating earnings and revenue forecast the company raising its full-year outlook, up almost 4%. we'll dig deeper into the quarter with the ceo joining us later this hour. banks are a big piece of the puzzle let's get to the earnings from citi and wells and some since before that. >> what a difference a day makes. wells fargo analyst call kicking off a moment ago, with citi. you can see wells fargo up 5.7%. citi up more than 8% this morning. let's tackle that one first. as an evercore isi analyst put it in a note this morning, the firm has a business mix better aligned for the current environment.
10:04 am
strength in its u.s. cards business and fixed income helped blunt decline. investment banking and slowdown in wealth management fees from the recent market volatility however, net income did decline 27% thanks, in part, to a jump in expenses and a net build in the allowance for credit losses. the firm was able to notch a decent beat on top and bottom lines, regardless of all of that wells fargo missed on the top and only beat on the impairment with a revaluation to venture and he can quit portfolio. investors seem to be focusing on net guidance, higher profitability from loan-making benefits from higher interest rates. wells is targeting full-year nii growth up from 15%, the previous guidance to 20%. so far, commentary from all the c-suites we've heard so far this week has indicated consumers and
10:05 am
businesses are in current decent footing while noting they don't expect that to remain true as such, citi told reporters today it was pausing buybacks. that mirrors what we saw with jpmorgan yesterday wells fargo ceo saying in today's earnings release that the firm does expect credit losses to increase from, quote, incredibly low levels. but have yet to see meaningful deterioration in either its consumer or commercial portfolios guys >> leslie, you mentioned citi saying it was well pause share buybacks jpmorgan doing something similar, plaming the new credit standards saying they want to hustle and meet them with citi, did the bank characterize the decision in the same way or is it just about building a cushion >> yeah, it's a good question, mike as you mentioned, that was specifically asked of jamie dimon yesterday, whether the decision to pause buybacks was a
10:06 am
rye flexion of his feeling about the economy or simply in response to the fed's newer calculation with regard to how much capital they need to be holding. he said it was the latter and provided a criticism of that less so with citi, although they did mention that, of course, they did need to pause buybacks as a result of the so-called stress capital buffer that the fed set for these banks, given the level of difficulty of the fed's stress test this year. however, they also mentioned that they want to do this, they believe it's prudent to be more conservative and ensure their clients' capital levels are also protected. >> well said thanks for that. leslie picker. for more on the banks, let's bring in raymond james' david long it's great to have you with us i'll throw the same question to you. is the suspension in citi's case and jpm going to take outsized importance or how meaningful is it >> yeah, capital return is part of the story for the banks right now. and even wells fargo their
10:07 am
buyback in the second quarter, with capital levels, uncertain at this point given it hits to accumulated other comprehensive income as to the aoci side banks are a little more conservative and the economic back drop is causing some uncertainty. but i do think coming out of the stress test we just received the results on at the end of june, banks do remain very well capitalized and i think you'll see them return to the markets and returning capital to shareholders via buyback in the not so distant future. >> how do you think what we learned the last two days sets the table for goldman and b of a next week? >> we are seeing trading revenues inconsistent across the board. you know, fixed income and equity trading volumes have been pretty volatile. so, it's going to be very specific to those banks and their specialties. you know, banks like wells
10:08 am
fargo, u.s. bank, of course, don't have the same trading operations so, it's hard to garner too much insight from their report into those guys for next week >> david, when it comes to something like wells fargo, what are the relevant things to be watching for the remainder of the year it seems like this little basket of goldilocks has gotten a bid but aside from the macro and consumer and housing, what matters for wells fargo in terms of the investment case >> sure. with wells fargo there are a few things to focus on first, loan growth remember, the bank had to play defense for several years. now that charlie sharp has his lieutenants in place, it shows in excellent loan growth for wells fargo.
10:09 am
wells fargo has an active cap. they've had to sufficiently manage their balance sheet more than anything else because they have not been able to grow as a result, it made them one of the most active sensitive banks so they have the most upside of all of their peers to each rate hike we are seeing finally, operating expenses. wage inflation is hitting the banks. you have spending on i.t. and digital services that is hitting the banks. wells, foon the other hand, was not able to cut expenses for several years. they do have the upper hand here in managing expenses going forward. expect them to be able to reduce operating expenses at a time when many of its peers are seeing inflation and some of these other factors impact them. as a result, i'm looking for wells to be an earnings per share growth leader amongst its peers the remainder of the year into 2023. >> does that make wells your favorite big play at this point? >> absolutely. when you look out for the next couple of years, it's got more
10:10 am
upside, i think, than any of its larger bank peers. you consider the asset cap all of its peers have grown its balance sheet by 20%, 25% over the last few years they have not. i'm not telling you that's going to be removed next week, next month or next quarter, but when that does get removed, there's upside to the earnings of about 15% a year just by leveraging that balance sheet that's not in any of the earnings right now. >> it's been a story that has been slow in developing, but certainly one that the bulls continue to hang their hats on regarding wells. david, thanks, appreciate that very much. david long of raymond james. >> thanks for having me on the show turning to the broader markets, we have a pretty decent rally. s&p 500 upabout 1.25%. you've got some pretty friendly economic data, stronger retail sales, empire state manufacturing as well as university of michigan sentiment survey showing a downtick in sentiment, which has us rallying
10:11 am
higher joining us to talk more about the markets, jpmorgan's asset management david jackson and jay mcdonald good morning to you both jordan, start with you and the broad setup. obviously, market has been sort of saturated with this anticipation of recession at the same time the fed seems intent on continuing to tighten pretty aggressively do we get any relief on either of those fronts, do you think, with some of the numbers today and where does that set the markets up >> i think in a certain extent on balance, it does suggest a recession, if it were to materialize, may be a bit softer than initially anticipated the consumer, judging by the retail sales report this morning, continues to be in a good position. the labor market, we continue to add jobs month over month, while we are expecting a bit of a deceleration there, signs still signal the consumer is in a pretty decent spot with all that being said, inflation still continues to run
10:12 am
high obviously looking at the cpi print earlier this week, ppi also continues to suggest that inflation is broadening. the fed's trend inflation metric reached 6.9%, a signal that inflationary pressures are continuing to broaden out. i think you put all this together, the fed is going to continue to tighten. i think they actually go 100 basis points at the end of the month here the market has certainly opened up the door for that to occur. my biggest concern is how far the fed is willing to go yes, they're going to get to neutral expeditiously as jerome powell has stated, but are they going to continue to bow past 4% into the 5% territory? i think that that certainly suggests the recession could be a little deeper if they're not willing to pause >> jim, we can pick it up right there. i mean, it's sort of puzzling in a sense that we're scrutinizing the expectations and university of michigan sentiment survey of
10:13 am
a few hundred people, let's be honest, because last time fed chair jay powell essentially anointed it and said that gave fed impetus to go three-quarters of a hike. where do you think this ends up with the market anticipation, the beacon inflation and the fed saying, not so fast? >> i think the consumer readings are really important drops in consumer confidence have historically been a precursor to recession i like to look at the break-even markets and see what's happening from a daily pricing and fixed income about what investors expect inflation prints to actually be. and the two-year break-even has fallen from 4.4% six weeks ago to under 3% today. and if you look at the five-year, five-year, that's year six through ten, you're getting to inflation rate near 2% we're at a very unusual point right now where the real-time economic data actually looks pretty constructive, as we talked about earlier but some of the financial market
10:14 am
indicators, like the shape of the yield curve, high-yield spreads, the consumer confidence i mentioned, all are worrisome i think we'll be in a volatile environment for the next couple of quarters until we have that transparency about the fed we think they probably go a little less in the market cap priced in, but right now it's hard to have a great deal of confidence in that >> jordan, one of the interesting headlines, as bullard is talking a lot today, was this notion that the yield curve inversion as a signal, he takes seriously, but this time somehow it's different i wonder if you think there's mechanical things going on that inflated as a recessionary signal >> well, sure. you know, the fed owns 25% of the treasury market. we've long recognized that the back end of the curve is particularly heavily manipulated. in the past they've leaned on the near-term forward spread, which is still positive, suggesting that the economy can still handle a bit more tightening coming from the fed
10:15 am
so, you know, i sort of take it as, yes, prior to every recession, the yield curve has inverted, but after every yield curve inversion, there necessarily hasn't been a recession. there have been some false/positives. i think the yield curve is signaling -- recognizing that the slowdown in growth, more than anything else, sort of the comedown expected inflation due to tighter monetary policy, maybe appreciate a softish or modest recession not necessarily a very deep one. and i think that's sort of what the yield curve is signaling today. >> jim, just with the premise, as you said, that you expect things to be pretty volatile as we sort these big issues out, what in the market today is presenting itself as a relative opportunity as we've obviously seen a very rough start for both stocks and bonds, credit, treasuries, everything >> so, a couple of our current views related to that
10:16 am
surprisingly cash looks attractive relative to investment grade fixed income. the yield curve is really flat here you're not getting paid to take a lot of duration risk we also think high-yield bond with the worst of over 8.5% look attractive they will outperform equities if we do have a recession but they've also got a great level of current income. lastly, we recently reduced our natural resources exposure with concerns about global growth, we think that a lot of the beneficial outcome to natural resources has been priced in >> all right yeah, markets certainly reckoning with that possibility for weeks now. jim, jordan, thanks very much. appreciate it. >> thanks for having me. as we head to a quick break, here's a look at our road map for the rest of the hour, including china's economy, recording its slowest growth in more than two years. we'll take you live to beijing with the latest. pinterest shares are soaring. we have new details.
10:17 am
and the biggest gainer on the dow. do not miss our exclusive with the ceo of unh on the heels of their latest earnings beat a lot more continues with the dow up 522 the pursuit is on. the pursuit of outperformance at pgim. with deep expertise to outthink across multiple asset classes, actively managing investments in the world's public and private markets. outscale, with the resources to serve 1,500 clients in 52 countries. and outlast, with long-term conviction
10:18 am
that looks beyond today's volatility. join the pursuit of outperformance at pgim. the investment management business of prudential. as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network with no line activation fees or term contracts... saving you up to $500 a year.
10:19 am
and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. china's economy definitely missed growth expectations as the country failed to shake off the covid impacts. eunis joins us
10:20 am
>> reporter: china posted its weakest growth since the wuhan lockdown they managed to eke out expansion of 0.4% from last year, though, there is widespread skepticism that the economy actually managed that. the main cause is the covid lockdowns in cities such as shanghai but another big worry is what's happening in the property sector the problems -- the debt problems we saw with the real estate developer evergrande are still having a ripple affect on the property market -- the property investment. for june clocked a rare decline, straining growth as well as financial sector local media have been reporting that what's being described as a mortgage strike movement forming. that is that people have started to decide that they're going to refuse to pay their mortgages on unfinished projects. so far there are about more than 100 developments across the country being affected
10:21 am
regulators say they'll work with local authorities to make sure those homes are delivered and banks have stated that the financial risks are, quote, controllable now, problems for the homeowners are starting to show up in the job market figures, which are pretty bad for china the government says that the june employment has improved, but youth unemployment is heading towards 20%. so, banks such as goldman have been cutting their forecast for growth for the year. still way below the government official target of around 5.5% back to you guys. >> you know, we've discussed this before, especially when china prints eco data, but is there a political price to be paid for this kind of slow growth, especially in a pivotal year like this one for xi? >> reporter: yeah, there is a price to be paid, in theory, but president xi has made it clear
10:22 am
that he believes the government should be able to prioritize the people's -- what he believes are people's lives and the zero covid policy as opposed to the economy. he thinks that the economy is going to get hit a bit but that's still going to be okay. at this point, it's unclear as to whether or not this is going to -- the economic numbers we saw today would really derail the expectation that president xi is going to get in an unprecedented third term at the end of the year. most people still think it's going to happen. the chatter the past couple of days has been that president xi is going to get a new title called the people's leader, and that already the portriature of president xi is being constructed for that event >> fascinating it's kind of real-world experiment we'll see if it changes after that moment as well later in the
10:23 am
year, eunice check out the top gainers on the s&p 500 for this week. southwest airlines, qualcomm, moson coors, boeing, and nxp semis. we'll be right back. stay with us at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect.
10:24 am
10:25 am
10:26 am
welcome back let's get a check on the first trust dow jones internet fdn it is down 40% as high-growth stocks continue to fall against the back drop of rising rates. one of the fund's holdings is pinterest, those up double digits as elliott management has accumulated a stake of more than 9% in the company. it's not the first time elliott is involved with an online ad company, social media name in 2020 it snagged a position in twitter and pushed for the depap tour of then ceo jack dorsey ben silverman of pinterest stepped down as ceo in june and replaced by google's head of commerce meantime, we'll talk some oil prices this morning as wti
10:27 am
does rebound a bit here. still on pace for the fourth negative week in five. and the president prepares to touch down in saudi arabia by the way, gas prices now down 31 days straight, says gas buddy. one of the largest monthly declines on record dow's up 550 this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.
10:28 am
10:29 am
good morning here's you're cnbc news update at this hour the house is scheduled to vote on two bills to protection abortion rights in the wake of the supreme court's roe versus wade ruling. lawmakers will vote on the women's action rights act and ensuring access to abortion act, which would ban states from punishing those who travel out of state for reproductive health
10:30 am
care the trial of wnba start brittney griner is adjourned for 11 days after her defense team asked amos cow court for more time to prepare. she pled guilty last week to drug charges stemming from a february arrest at amos cow airport after russian authorities said they found vape canisters with cannabis oil in her luggage. she faces up to ten years in prison if convicted. and about 25 million children worldwide have missed out on routine immunizations against common diseases largely because the coronavirus pandemic disrupted regular health services or triggered misinformation about vaccines. unicef's executive director saying, quote, we are witnessing the largest sustained drop in childhood immunization in a generation mike, back over to you >> thank you very much we're about an hour into trading. let's get a check on the markets. they're at the highs for the morning. s&p 500 up 1.7%, cutting into the losses for the week. still down more than 1% for the
10:31 am
week the high earlier this week was about 3880 financials leading on some better than feared earnings. meantime, oil is higher this morning but it is heading for its fourth weekly loss in the last five weeks. the average gas price in america has come down from the record high, but consumers, obviously, still feeling a lot of pain at the pump the president heading to saudi arabia in the hopes of urging the world's largest oil exporter to boost production. joining us this morning to capital's john kildu if. f. how much spare capacity is there, if the saudis were to agree? >> there's not a lot if you go by the opec numbers, they're at about 10.5 million barrels of production since june, an increase of 150,000 barrels for the month. their stated capacity, they're cagey with this number, but it's around 12, let's call it, maybe
10:32 am
a little over that and it's hard to sustain that. so, no, there's not a lot there, but they had been inching up their output, which has helped a little bit in this overall situation. i mean, crude oil prices are in a decided downtrend off the highs from march on the initial invasion of ukraine by russia. >> and you -- mike and i were having a discussion earlier this morning about arguments, the debate about demand destruction, at least in gasoline demand this summer you think there are some clues there? >> i tell you, carl, you know, we get the weekly inventory report every wednesday morning the implied demand figure for last week, when it came out on wednesday, 8 million barrels a day. it was a stunner usually it's 9.2 for this time of year. 9.4, let's call it so, to see an 8.0 number was stunning so, that was one week. it's an implied number so, we have to sort of figure out if there were things going
10:33 am
on around the fourth of july holiday stopping tertiary inventory. if it stays that low, the economy is potentially flashing a big warning sign from the lack of gasoline demand >> how are you processing the incredibly wide range of targets on crude, we've talked to citi it's at 65, goldman at 140 i think jpmorgan still has a $6 gas number slated for august i just wonder, you know, the range of possible scenarios you really can drive a truck through. >> yeah. these times roll around like these, carl, i'm happy to say i'm happy with 65 and 140 as a range. we can maneuver there. but all kidding aside, i think what those estimates highlight is this, we are in a tightly supplied situation right now but we're slowly digging our way out of it. and we all have to be bond traders these days because what
10:34 am
the fed is potentially unleashing on the financial markets is going to feed into demand destruction for oil there's no two ways around that and reduce recession and also spiking the dollar higher, which is making crude oil even more expensive for all the non-dollar countries around the world so, it's sort of a one-two punch for oil, which is why you can get to that $65 case but we are so vulnerable if we were to lose a meaningful amount of russian oil, if we lose more oil from, say, libya stays offline or we have other problems, or even if we get a series of gulf of mexico hurricanes, then you get to these higher ranges. it's really a tenuous, nervous market right now and very emotional, highly reactive to all the various headlines. it's a really macro play right now, carl. you can't just go by the tightness in the market. you have to look at everything these days >> john, to that point, in terms of trying to slice what the oil futures are trying to tell us, you know, if you go out several
10:35 am
months, you know, part of the bull case has been tight supplies are evident in the fact that the near-term price is well above the out months there's short-term shortage or scarcity and that's being reflected. that's still the case. we're 8 bucks in with. ti ahead of october or november crude. but, you know, does that still hold when you're seeing the absolute price level so far off the highs and so many expressions of future demand issues because of an economic slowdown >> well, just some traditional commodity analysis that backwardation is a bullish signal for the market, is what it's referred to, and the steepest i've seen in some time. as we start to climb out of this hole, that curve could easily flatten. the problem with the curve being so steep right now, though, mike, is that it's not only -- it's discouraging putting more supply into storage, because on
10:36 am
the basis of the curve, you're assured a loss on the barrels going to storage today but that's sort of a technical aspect again, that's why we have this vulnerability to the upside. even as we work our way out of the supply hole deficit we're in right now. the saudis keep adding supply. u.s. producers keep adding supply the exxonmobil project in guana is, brazil and other places. there's a cogent case to be made for lower prices still regardless of the backwardation. we could have that maintain itself or come in a bit and still go down. >> john, finally, how much is riding on the reopening of nord stream 1 and if putin were to play that card now, what kind of knockoff effects do you think there would be across the complex? >> it's going to be most damaging for europe, obviously prices going up, just because of
10:37 am
the btu sort of equivalent trade. but, you know, we're siloed here you can't move massive amounts of natural gas from the united states to europe yet because we just don't have the plants built. so, we're okay for now it's europe that's going to have the hellish winter if putin weaponizes natural gas, which you can't put anything past this guy. i would almost expect it but we're going to be called upon here to step up as much as we can to help bail europe out this winter for sure, so get ready for that again, a bias to the upside for natural gas prices. >> yeah, it's got to be a good neighbor, i guess, although we'll see how easy that is to be right now. john, thanks. still to come this morning, don't miss our exclusive with the ceo of unh stocks up 5% after an earnings beat today take a look at the top gainers on the s&p session highs, dow 620 100 more points and dow can break even for the week. we're ckn reba ithe.
10:38 am
- in the last two years, we quadrupled our team and the pace we're growing, i couldn't keep up without ziprecruiter. they do the legwork and they get my job posting in front of the right candidates. i love invite to apply. i instantly see great candidates and i can invite them to apply. we have hired across all departments, engineering, marketing, hardware, field techs. you can basically tell ziprecruiter who you need, when you need it, and they deliver. - [narrator] ziprecruiter. rated the number one hiring site. try it for free at try it for free at
10:39 am
10:40 am
hey businesses! try it for free at you all deservem something epic! so we're giving every business, our best deals on every iphone - including the iphone 13 pro with 5g. that's the one with the amazing camera? yep! every business deserves it... like one's that re-opened! hi, we have an appointment. and every new business that just opened! like aromatherapy rugs! i'll take one in blue please! it's not complicated. at&t is giving new and existing business customers our best deals on every iphone. ♪ ♪
10:41 am
welcome back to "squawk on the street." we are seeing some strong gains right now in trading we are near session highs with the s&p looking to snap a five-day losing streak pretty much every sector is in the green, except utilities. that consumer discretionary sector is in focus given today's data on retail sales that came in better than economists' suggestions. still, though, the consumer is stronger on a relative basis for now. among the bigger outperformers, as you can see in that consumer discretionary sector, you have bath and body works, ebay and automakers like ford and general motors watch the travel and leisure stocks like ed peed yeah, penn national gaming, hilton and marriott showing some signs of life, trying to find a way to turn things around after near to
10:42 am
medium term stock weakness mike, we're watching travel but it's been a tough road for those guys over the past several of weeks. >> it has. a little relief on a friday. after the break, we have an exclusive with the ceo of unitedhealth don't go anywhere. your shipping manager left to “find themself.”
10:43 am
leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit to adapt in a fast changing world, matchin you could hire aption. professional pit crew. go, go, go. sorry. nope. okay. fresh donuts - hot coffee! they deliver real time data and business forecasts when you need it. i think it was fine how it was. (air tool sound) to help you stay ahead of the curve... or you could use workday. the finance, hr and planning system that helps cfos make better decisions faster. on the other hand, we had a great fourth quarter. for a accelerate your decision-making world. workday. for a changing world. i had no idea investing regularly could add up this much! ♪♪ go to today to learn about compound interest and other valuable investment information. before you invest,
10:44 am
10:45 am
shares of unh popping on earnings after the company beat and raised its profit outlook for the year our bertha coombs joining us this morning with the company ceo. hi, bertha >> hi, carl. thanks very much i'm joined by andrew witty, ceo of unitedhealth group. thank you for hosting us here at unitedhealth headquarters. you had an amazing quarter one of the things that i noted, and a lot of analysts were asking about, the fact that you had lower health costs can you talk about what's happening with covid trends and how that fed into what you saw >> yeah, no, listen, first of all, bertha, great to see you here
10:46 am
thanks for coming. very happy with the performance of all of our businesses during the second quarter strong double digit revenue growth across all three businesses you're right, as you look at the quarter, we saw little less care utilization than we might have originally anticipated i wouldn't characterize that as very significant, really if you look over the six-month period, look at q1 as well as q2, over the first half things are reasonably stable. what we're seeing generally, to your question on covid, is a pretty long gap between the last real spike and the next. the question is, is the next just beginning to start? we are just beginning to see a rise in covid hospitalizations, literally, in the last week or two. where we stand, and we have been really all the way through this period, we've been pretty conservative around our expectations of care utilization because we know that as covid comes in, that has all sorts of effects, not just obviously on covid care, but also has an
10:47 am
effect on non-covid care it's a little -- a time where we still need to be respectful about what we don't know, and be cautious and conservative, which is exactly how we positioned ourselves for the rest of this year and we're happy with the way this quarter played out. >> nonetheless, you did raise your earnings guidance one of the things that a lot of folks watch is the optimum growth you're seeing, which grows so much faster than the unitedhealth care insurance side optimum to unitedhealth in the way aws, for example, is to amazon this is the real services side and you've done a number of deals in that area why are you continuing to do deals? you can't grow organically >> they had another great quarter, up 18% in revenue during the quarter what's interesting is our external growth, our growth to
10:48 am
non-uhc businesses, non-united businesses was at -- more or less the same as our internal growth or partner growth rate. that's really important. what that shows you is all sorts of unitedhealth care competitors are choosing to work with optum. that growth is coming because of the buildout we've been under for a decade optum is focused on health care, first and foremost how can we build services that allows the system to look after people more effectively, get in front of disease, prevent disease, understand patients, get them better care at lower overall cost that's what's really attracting people in to utilize our services to do that, we have to keep adding capabilities. as you think about the complex needs that individuals require, you really have to keep adding what we're able to do. you see that so, during the last quarter alone, we added new health care -- new clinic capabilities. we added new consumer digital
10:49 am
capabilities to our portfolios we've previously announced a move into home health because we know that's a big area so, the acquisition strategy for the company is super clear we're fortunate to have a very strong capital position in our growth, we believe, going forward will continue to be supplemented by those adds what we know we can do is bring those service lines, those products, those businesses, those teams of people alongside the core optum organization and we can really add value to that. >> one of the things you talk about is value-based cares one of the initiatives that you launched today is zero co-pay for insulin, for albuterol inhalers for asthma, and toe reverse opioids and epipens. talk about how you're doing that in your fully insured programs and whether people will see that in other programs, whether it's in medicare or in individual
10:50 am
plans on exchanges. >> yeah. no, i'm glad you saw that today. we're announcing what we call the life-saving drugs, things like insulin, inhaled albuterol. these are the emergency drugs. if you don't have it when you need it, it could get difficult. you could end uproom we're moving to a zero copay and detuckable, this is zero out of pocket for those patients for the united health care, this affects about 800,000 people we think that's an important thing for us to move forward on, both from care, making sure the folks have the prescription they need when they need it. we also want to recognize this is a tough environment for people if we can help we want to lean forward and help as you think about broader groups, that group should start to see the benefit of this announcement as early as january 2023 for other groups we'll work with, whether they be federal or state decision makers and all
10:51 am
those companies that utilize united healthcare to see if they want to do it as well. we're talking millions of americans being beneficialaires of this. we think it's an important step forward making sure people have the right access to the medicines they need. i hope others in the supply chain of medicines leap forward to look for ways they can help we have an obligation to work hard to make access easier for people who need these things. >> i noticed on the earnings call, you mentioned inflation a lot. is that coming up as you talk to employers about rates for next year, this is the time of year that employers are finishing up plans for 2023 how is that impacting your business, your ability to recruit and retain more employers? >> great question. it comes up more from a point of
10:52 am
view of how can we make sure our product and service design responds to the cost of living pressures that consumers fear. i would say that comes up the most as we think about how we price our policies, like premiums to employees. we priced to a substantial fraction of what would happen for 2023 we already a record year on our books for 2023, we spoke about that in the call this morning. we're doubling down on acting on on behalf of our clients to get the best deal possible we're using all of our capabilities, whether it's in procurement through our pharmacy purchasing, whether that's through moving to better sites of service rather than expensive locations for service, or virtual and digital. there's lots of ways in terms of the notion of inflationary pressure with
10:53 am
regard to our employer, clients, our response has to be innovation that's what we're doing. that's why optum is a great partner for united health care because optum can drive-in novation on on behalf of united healthcare and drive it across the marketplace. >> carl, back to you >> bertha, thanks so much. you are looking at a live shot this morning, the president about to touchdown in saudi arabia we'll take you live when that happens. ba up 98 squawk on the street is back after this voya provides guidance for the right investments. they make me feel like i've got it all under control. [crowd cheers] voya. be confident to and through retirement.
10:54 am
esg is responsible investing. who's responsible for building esg into your investments? at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions. as asset managers and fiduciaries, to outserve, with our commitment to better esg outcomes. join the pursuit of outperformance at pgim. the investment management business of prudential. (ted) after talking and texting for years, we got married... for the family plan. (jane) and then we really expanded our family... for the wireless savings. (ted) it seemed like the responsible thing to do. (jane) and then, just yesterday, my sister told me about visible. (sister) yeah, get unlimited data for as low as $25 a month. no family needed. (vo) family plan savings without the family.
10:55 am
get visible. single-line wireless with unlimited data for as low as $25 a month. [zoom call] ...pivot... work bye. vacation hi! book with priceline. 'cause when you save more, you can “no way!” more. no wayyyy. no waaayyy! no way! [phone ringing] hm. no way! no way! priceline. every trip is a big deal. (heartbeats) introducing icy hot pro. no way! ice works fast... to freeze your pain and your doubt.
10:56 am
heat makes it last. so you'll never sit this one out. new icy hot pro with 2 max-strength pain relievers. did you see a ufo in that cloud? nope. run! ♪ ♪ [ droning sound ] housing market where supply is finally rising and taking some of the competition out of the game what that may mean for home prices >> reporter: the number of active listings for home is growing at a double digit annual pace the latest read showed supply up 28% from a year ago. that's the buyers trying to get in on the hottest market and the
10:57 am
homes are sitting on the market longer the additional supply is what's putting an end to the bidding wars we saw over the last two years and sellers are having to come to earth again as in dropping their asking prices some of the hottest work from anywhere markets of the pandemic are seeing the most sellers cut. topping the list, boise, idaho followed by denver and salt lake city rounding out the list of top ten formerly red hot markets like seattle, portland and tampa, where prices went through the roof boise up 60% from pre-pandemic, nationwide up 40% from march of 2020 sellers are getting the message that the sky is no longer the limit, especially with mortgage rates now double what they were at the start of the year that and overall inflation in everything else consumers have to buy is hitting housiing
10:58 am
affo affordability very hard. the president en route to saudi arabia kayla tausche is at the white house. >> reporter: president biden just touching down just a few mari minutes ago. the president is set to announce a deal over flight rights where travelers will be able to travel from israel from saudi arabia and something that the white house and national security council and the state department has had in the works for some time but the backdrop to the trip is the uncertainly around the global energy complex that national security adviser jake sullivan made no question about the success of the engagement in saudi will be determined by the oil price the next several
10:59 am
weeks. next the president has a meeting with king salem. followed by a meeting with prince mohammed ben salman president biden on the campaign trail said saudi arabia was a pyorrhea, said it should pay a price for its role in the dismemberment of jamal khashoggi. since then the state department has banned visas for saudi fac officials said to be involved in that killing but the secretary of state saying it's bigger than one person that is primarily because the u.s. wants to ensure that energy prices stay low but the president is sure to bring up human rights and other issues in those meetings as well. >> is there anything in particular we're expecting in a
11:00 am
way of announcement or waiting to see if an oil price response curs. >> reporter: we know the white house has been optimistic that opec did announce a small increase to production last month. the president is going to be meeting with leaders of many nations asking them all to increase production but it's unclear if there will be any firm commitments rather than just a pledge to do more. that does it for squawk on the street this morning, tech check starts now >> happy friday i'm jon fortt with deirdre and carl quintanilla. today data beat expectations calming fears of a recess, but not yet enough to save the nasdaq from another week in the red. analysts have seen enough cutting price targets across


info Stream Only

Uploaded by TV Archive on