Transcripts For CNBC Squawk Box 20170919 : vimarsana.com

CNBC Squawk Box September 19, 2017

Percentage point dax is slightly weaker, relatively flat as is the cac. Crude oil prices, crude Oil Yesterday was flat ended up by two cents this morning another 44 cents 55. 35 so wti above 50 a barrel. Back to the markets in a moment first the latest developments on Hurricane Maria. The hurricane making landfall on the island of dominica as a category 5 storm it is now weakened slightly within the past few hours to a category 4 thats the good news forecasters warn that maria could reach strength as it nears the Virgin Islands, puerto rico also in marias cross hairs. You know, when these hurricanes come, they come. This come in waves we are also following developing stories out of Southern California overnight a magnitude 3. 6 earthquake shook parts of los angeles it happened at 11 20 p. M. Local time dren residents as far away as costa mesa felt the rumble joseph, why never heard of costa mesa i called it so ed ied it cos, im mesa. Im a messa in the morning. Look at my script its this big. Among the top corporate stories. Youre a pro. You can do it. You can see, i would never be intimidated. Costa mesa. Americas largest toy store filing for bankruptcy protection toys r us announcing chapter 11 filing late last night. Its one of the largest ever by a specialty retailer the move comes as toys r us looks to relive its 4. 9 billion debt load to reduce that the company says operations will continue as usual at its 1600 toys r us and Babies R Us Stores around the world. More bad news for equifax. Its weird finding out about another this one takes the cake before the other one. They didnt say anything. The Credit Reporting Agency saying they faced a Second Security incident earlier this year actually its first before the one we know about. This is separate from the breach announced last week that exposed the personal data of 143 million u. S. Consumers the attacks involved the same intruders, but in a statement the company says the two incidents are not related. And that it has, in its words, complied fully with all consumer notification requirements related to the march incident. Once again, we did everything we had to do we didnt tell you about this but we complied with all the requirements, tone deaf in terms of the response. I think the guy may have made cramers hall of shame he should yeah. Shares have fallen 19 in the last week. Lucky some of the executives were able to get out of stock prior to this. Lucky Federal Reserve policy lucky until the s. E. C. And others start calling depends on your perspective might get lucky. Policymakers will kick off twoday meeting in washington. Look for august Housing Starts and Building Permits at 8 30 a. M. Eastern, along with import prices and Second Quarter current account figures. As for earnings, auto zone reports before the opening bell adobe, fedex and Bed Bath Beyond are out after the close andrew, if i seem a little different today yeah . I dont believe in these. I dont believe in them. It says its good that i have strong opinions about certain issues, but dont expect others to agree with you. Okay. You wont change your outlook no matter how hard you push it dont waste your time trying agree to disagree. Leave it at that just as we go through the show today, you know, youre ready to i wont engage, maverick i wont engage it will be pointless for you to try to get me going or for me to try to get you going. Im not its not going to happen okay we will have a much shorter t show today viewers might enjoy this. I know. I know heat. Heat and light light and heat they just said squawk box starts right now the u. S. Senate passed its version of a 7 700 billion defense policy bill backing President Trumps call for a bigger, stronger military. The house already passed its version of a bill at a similar spending level the two versions have to be reconciled, it could spark a fight over spending. Senate democrats vowed to block big increases in funds for the military if spending caps on nondefense programs are not eased. This morning President Trump set to address World Leaders at his first u. N. General assembly. Michelle carusocabrera has more on that. Reporter were here at the u. N. General assemblys annual meeting. This is when every member of the u. N. Is invited to send their president or foreign minister. Brazil always goes first United States second expect President Trumps speech 10 00ish its a highly anticipated speech theres enough leaks to know we expect it to be nationalist in tone topic also include north korea, iran, also venezuela north korea and iran have been obvious on the list, but the u. S. Administration has gone to great pains to say that they will be active on the issue of venezuela while here at u. N. In fact, last night the president held a dinner with the president of brazil, the president of colombia, the president of panama, the Vice President of argentina and Vice President pence was there as well the policy portfolio has been very active on the issue of venezuela. President trump spoke about the country last night and about the pervasive effects of the socialist price controls venezuelan people are starving, their country is collapsing it was one of the wealthiest countries in the world for a long period of time. Now the people are starving and the country is collapsing. Who would think thats possible . Reporter notable omissions this year, Vladimir Putin of russia will not be here. Xi jinping of china will not be here Nicolas Maduro of venezuela will not be here, nor will Enrique Pineda of mexico. The fed kicking off much an tess pa anticipated policy meeting today. Joining us is eric knudson a multi asset chief Investment Officer from new burger, who has 2 267 billion under management. Ian, i want to start with you. This has been swirling around the set, mark grants comments about the liquidity, global liquidity and how its still flush. Barely starting to stop the slow down the additions over in europe, while were very slowly supposedly unwinding some of this stuff so thats positive and i understand that the japanese stock market hit a twoyear high today. Yeah. You know why . Because theyre reelect this guy, who is mr. Abenomics, also mr. Easy money is it this simple whats happening now . I think so. Were taking away a teeny sliver of the gigantic wave of liquidity. Asset prices are hugely overinflated everywhere, including the bond market in the u. S. Whats going to happen this week will be an announcement of a teeny move, janet yellen says it will be like watching paint dry. It will be so small and so boring and trif wrvial, and intt rates are rising slowly in the u. S. And not anywhere else were at the start of a process. Whats happened before boosted growth, asset prices, but also distorted asset markets in a way thats not been helpful. Its removed asset prices from where the real economy would have put them otherwise. At the same time, i was reading this morning a zero hedge piece on a Deutsche Bank guy, one of their head guys, global assets have never been more overvalued than now in history. I think thats right. I think emergency policy globally has been in place for long after the emergency was passed so i think Central Banks did the right thing. Overvalued doesnt mean theyll be fairly valued at any time soon. No, markets can be irrational they can be irrational for things to catch up we had a guy yesterday, i dont know what hell he was saying, he was saying stay long, everything great, but the market may go down 40 a typical sell side if things go up, we should buy. If things go down, we shouldnt. Do you think were set up for major are they that much overvalued i wouldnt say the most overvalued ever. There are segments of the global marketplace hugely overvalued, but also areas where we say theres interesting opportunities. Our view right now is this is not a great time to take market risk i wouldnt pile everything into equities and let it ride not at these levels of valuations, particularly in large cap stocks, not at this level of volatility. Would you raise cash . There are people fully invested. Were fully invested, but neutral on the stock bond mix but finding interesting relative value opportunities. The spread between u. S. Large cap Growth Stocks and u. S. Small cap value stocks, 20 difference thats an extraordinary difference in performance. That creates opportunities in areas like small cap values, some bank stocks, et cetera. If we see rates rise we dont think inflation is priced in tenyear tips break evens at 1. 8 . Peek qe, theyre starting to pull out the stimulus. By 2019, there needs to be a trillion dollar of treasury bounds bought by somebody other than the fed and chinese theyre creating interesting relative value opportunities now. What was i going to say . I dont know ill move on to Something Else so, as we slowly try to hire, there are some things that you wrote about that could derail this right . The biggest worry. I remember what i was going to say. Kovosicich and one of his buddies, wrote a piece, the fed needs not to fear low inflation. You just said youre worried about the tips not showing inflation. Were saying those represent value. Is there no Inflation Inflation has been squeezed out over the last few months theres a mini raging debate about how long that will last. I think thats beginning to unwind already we have seen numbers bouncing back to Something Like normal. Im worried the next six months or so we see a shock in Inflation Expectations a shock a shock theyve been beaten down so far no one expects inflation all we need to see is an increase for people to say hang on, i wasnt waiting for this. With oil, copper, some other things, that seems to be caterpillar at a new high. Some Global Growth would pore tend inflation theres a ton of Global Growth thats weird then the key thing for the u. S. Is what happens in the labor market i think before the hurricanes distorted everything, it was looking strong it will get stronger it will come back. Well see chaos for a while, but then it will come back there that will give a different picture of where inflation is going to thats what the fed responds to. The market says one hike and youre done. I dont buy that there may be, andrew, some fiscal stuff coming that people they wont be blindsided, did you see theyre supposedly one vote away from the latest repeal. Right well know about it tomorrow. Mccain is on, which he was the guy last time. He is supposedly the Arizona Governor saying im going with this its Lindsey Grahams deal. Thats mccains best buddy supposedly this might happen this week. Did you see a trillion and a half in tax cuts i saw that. So theres things could still happen. Things you may need to Start Talking about washington when is the last time you talked about washington other than the fed . Its been a while i always assumed tax cuts, but not 1. 5 trillion, especially in a economy that needs zero tax cuts now the accent is coming out. Youre returning to your socialist roots. We wont have your Healthcare System here. I think hes talking about the stimulative perspective. Doesnt need it we always need tax cuts. Unemployment is 44. 25 . So you think a tax cut could lead the fed to raise rates quicker. Will make them more determined wouldnt it be nice to get up to 3 , 4 in rates it would. Make up your mind is it a bad thing they go up i wanted them to raise rates i want normalization do you need the tax cuts and the healthcare and all that to get there . I dont think rates raising rates will trash the economy. It will teach people were normalizing, and they can behave in a normal way rather than being scared and not taking risk theres some opportunities where things are not priced in yet. If you get pro growth legislative action, very little is priced in now if anything was, you would have seen better performance from the cyclicals, companies geared towards the u. S. Economy, will you see a rotation within the equity markets u. S. Overseas thatsfunds were positioned towards value names theres interesting opportunities, if you get some positive outcomes out of washington positive for some obviously. Not everyone would call either one of these things positive pro growth. Preaching to the choir. Thank you. Norwegian . Knudson . My version is danish. Danish. I think who is the other guy . Yan the bald guy, with the big glasses. Looks like trum etruman capote. Tknippon. Thats english. They dont pronounce the k i would have it its a waste of ink and paper. Why do we use silent eshgs. Thats different. Thats a vowel when we come back, tax reform negotiations. We have a special report on a 2 trillion tax break that Companies May be willing to give up that story next. And a programming note, the founder of the worlds Biggest Hedge Fund will join us at 8 00 a. M. Eastern bridgewaters ray dalio is here first on cnbc. What . Thats awesome nice work, andrew. Is that you . We know some people squawk box will be right back taylor swift. This is for joe this morning you made me do that the senate is holding a hearing on the Corporate Tax code today the next big fight in tax reform is taking shape and focusing on a proposal known as full expes i expensing. Ylan mui has more. Reporter this is a 2 trillion tax break, but some Companies Say theyre willing to leave it on the table. Full expensing is a key plank in the house gop blueprint on tax reform the idea is that companies could write off the entire cost of their capital i investments rig right away rather than drawing it out over several years. That sounds great, but there are always tradeoffs, Big Companies are worried theyll have to give up rockbottom rates if they move to full expensing at t, boeing, fedex, pord, wafo theyre part of the rate coalition, and their motto is rate matters most. On the other side of this, steel companies, oil and gas industry. They have their own lobbying group, the crane coalition capitalintensive businesses that would benefit the most from moving to the system on capitol hill, republicans are split on this the House Freedom caucus is against it, so is the powerful Koch Brothers group senator ted cruz is calling it a top goal in tax reform you have a divided gop, a Company Versus a company this fight could be as big as the one with the border adjustment tax complicated stuff theres a reason why people want this when you try to build coalitions, you can see how things tend to get bogged down ylan, thank you very much. Coming up, when we return, an update on the Insurance Business the ceo of Mass Mutual Financial Group will join us next. Plus quick programming note. Senator Elizabeth Warren will join jim cramer on mad money tonight. Thats a mustsee interview. That starts at 6 00 p. M. 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We did see the markets close higher yesterday this morning we see green arrows for the dow and s p 500 futures. Nasdaq down about three. S p 500 futures up by 8. 5 points above fair value stocks to watch, the activist investing fighting claria clariants merger with huntsman has a stake in clariant. White tail was created by a hedge fund one of sinas biggest shareholders has launched a proxy fight. Aret

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