Transcripts For CNBC Squawk 20240703 : vimarsana.com

CNBC Squawk July 3, 2024

Yields have picked up. Tenyear yield above 5 . That is a significant level. We touched briefly above that for a nanosecond last week. Since then, you have to go back to 2007 when you have seen yields at these levels. 5. 012 for the tenyear yield. By the way, check out energy prices. You will see wti which is off 33 cents. 87. 76. We have merger monday as joe mentioned. Look at what is happening here. Chevron buying hess in the deal of 53 billion. 171 a share. That is a low premium over the Closing Price for hess on friday. Hess shares are up 2. 25 . Chevron down 2. 9 . This deal comes just weeks after exxonmobil made its move to buy pioneer natural resources. Both stocks on the move. Hess ceo john hess will join chevrons board. I just got off the phone with mike wirth. Very low primemium on this. This goes back long before the rumors came out about exxonmobil and pioneer. That deal went through last week. A lot of people thought after the deal, that chevron would look for Something Else in the Permian Basin. You saw the stocks which have moved since. He said it would not make sense for them because he pointed out they have more acres in the Permian Basin than exxonmobil. They have 2. 2 million acres in the permian. After the exxon deal, they have 1. 6 million acres. It wont make sense. Ghana is a unique as well. John hess has come on many times. I asked why are you doing this with stock instead of cash. The deal last week was half cash. This is a situation where he said they dont like to do deals in cash because Oil Prices Move so much when you are dealing with a commodity which is 90 now. If it goes to 60, you look like you paid for it. This is overpriced. I asked this has to be a tax issue for hess. Between the trust at 8 , it is a more tax advantageous deal for stock for Something Like that. It is like one share. Share for share. 1. 025. It is no way a merger equal 53. The market is not saying whoa. It is merger activity. This is not helping sentiment. Here is a question. The price of oil is out of the hands of these companies in large part. Power, do regulators decide to look at this given the size of the companies . This goes back to the exxon deal which was a different situation because of the retail piece or lack of retail piece. This has both. I wonder with the gas station. Especially with the regulator like lina khan. Big is bad. They throw everything at the wall. Is that right or wrong . Wrong. There have been deals that have been wrong. Clearly, there is overlap in this context. Yeah. A couple of things for shareholders. They are holding a Conference Call at 7 30 a. M. Eastern time this morning. They are planning on taking all of the cash they are not using on the deal and giving back to shareholders. They will increase the Share Buybacks by 2. 5 billion to 20 billion a year. Come january, they will talking creasing Dividend Per Share by8 to 1. 63 a share. That is what they are doing with the increased cash. The Company Points out and mike wirth says the free cash will double by 2027 with this deal. They are looking at this positively. This has been going for more than six months. 8. 6 yield. Mike said they have increased their Dividend Per Share by 6 annually year over year. That is double competitors in the market. Thats what they are doing with the cash they are not using on this deal with theall stock deal. Was there discussion of a chevron truck for christmas . Instead of the hess truck. I didnt know. The hess trucks we had forever. Will they keep it . Hess airplanes and helicopters . It is a gift we had every year from john hess. Will they keep the brand at the gas stations . I would. You wont. Chevron . Chevron has a brand. The trucks. Why spend the money to market both brands . They are probably not calling it chevronhess. They will knockout every marketing expense. Why have two marketing departments and two advertising departments . You are asking. Ill find out. Well have more details. Well have more details throughout the morning. Big deal on monday morning. Huge. Mike wirths legacy deal for not that hes old. Mike wirth says we are still working on the plans for the trucks. They are important to john hess. What you say here comes out there. Good. Keep your phone on. House republicans will consider more candidates, good, for the speaker race. Nine republicans are now campaigning for the job after jim jordan failed to get enough votes to replace Kevin Mccarthy. The one that might have the lead is tom emmer of minnesota. The early frontrunner. Republicans are expected to reconvene at 6 30 p. M. Eastern time. We will have more on the speakers race and what it means for aid to israel and ukraine coming up in the next half hour. Israel ramping up attacks on the gaza strip over the weekend as the fighting enters the third week and aid deliveries are moving into the gaza strip. Nbcs jay gray is in tel aviv with more on the latest this morning. Good morning. Reporter lets start with the military action. We have seen a stepped up air pace faster and more strikes than we have seen since the start of the war. Idf telling us they hit 320 military targets in the last 24 hours, including tunnels and Operational Command centers which clears the way for the next step in the maneuvers. For the first time in the long time, they are using language of moving in on the ground. That is a change of what they are saying publicly. The troops and equipment on the border has been repositioned. We know strike teams have made their way across the border. Idf is searching for hosstages and clearing the area of gunmen. One idf soldier was killed during a raid and three others injured. When speaking about the pace of these air strikes, one commander says this and i want to make sure i get it right here. He says they want to leave hamas weakened and tired and dislocated in preparation for our next stage of military operations. Clearly, they are working toward something and it is quite likely the tanks rolling across the gaza border. On the other end of the strip, the aid you talked about. 17 trucks in yesterday. We had 20 more go across the border today. They are carrying water, food and medicine which is desperately needed with medical supplies. What you wont see is fuel. We have Israeli Forces investigating and searching the trucks before they cross the border. The u. N. Says there is two days of fuel left for the hospitals to carry out lifesaving missions. We know some of the doctors in the operating rooms are using cell phone lights to conduct surgeries. Jay, its an unbelievable situation that has been taking place, not just over the weekend, but the past two weeks. We hope you remain safe. We appreciate your reporting. We will talk to you throughout the next week and more. Thanks. Coming up, back here, we are watching the tenyear yield at the 5 level. What should investors expect next . Well have that right after the break. The futures right now thats better than they were. Were still down 200 points in the premarket on the dow. Squawk box is coming right back. Announcer this cnbc program is sponsored by truist securities. Experience. Expe expertise. Execution. Are needed most. Drawing on deep expertise across the worlds public and private markets in pursuit of longterm returns. Pgim. Our investments shape tomorrow today. That first time you take a step back. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy, with a partner that puts you first. Godaddy. Big week for the markets. The busiest week of earnings season with 30 of the s p 500 reporting. Four of the mega cap tech giants. Amazon and microsoft among them. Gm and ford on the list. Investors are looking for guidance related to the strike with the uaw. Jpmorgan chase estimates the strike costs for ford 145 million and 191 million for gm. Losses expected to balloon in the fourth quarter. On the economic front, growth in focus this week because on thursday, the markets get the first report on Third Quarter gdp. We have will see what the number is and maybe have a debate about it. With the tenyear treasury above 5 for the first time in 16 years, lets bring in Komal Srikumar from srikumar strategies. Sri, i know you watch and we have been talking about terms like untethered and unmoored. I think thats what you want to focus on. There could be some, i guess, somewhat discturbing outcomes i the fed has lost control of its ability to set long rates. We never believed they could set long rates, but for a while, it looked orderly. They have not raised rates in a wh while. We have 70point increases in the tenyear yield. That is troubling. Absolutely. I put out a report on saturday, joe, saying precisely that. For the first time, you have chairman powell doing what he did. With expectations of Interest Rates and finally to say in the Economic Club of new york talk in the q a session that he did not know what is causing the higher bond essentially, the fed chairman says i dont know what it is. When he said that, i said we are in completely unchartered territory. Things will get worse next week because of the fact the fed is out of control and they dont know what to do next. You are absolutely correct. I think unintended consequences will happen. I have been saying that on your show for some time. Whether it be a huge bank failure or whether it should be Pension Funds losing a lot of money or commercial real estate suddenly worsening or a clo, commercial loan market with difficulty and somewhere things will break and rather than expe expecting threetosix months, ill say within the next four or five weeks. Sri, individuals are sympathetic to chairman powells plight have actually said that this was totally chair powells doing and exactly what he wanted. When he said higher for longer in recent appearances, he said it better or said it he actually stimulated yields to go higher and was exactly what he wanted and he kept saying higher for longer. He orchestrated deliberately this move up to 5 . I dont know. Weve been saying higher for longer for seven or eight months. We are almost not inverted because of what has happened on the long end, sri. There are two points in response to the issues you raised, joe. They are very relevant. First of all, yes, he wanted the Interest Rate it to be higher and yield to be higher. I dont think he wanted it to go well over 5 . In that rapid fashion as he has done it. As he is looking for yields to stay that high and to go up that rapidly, that was his intention. He also must be intending to create a train wreck. Meaning he will cause something to crash. If you tell me that is part of his intentions, he is right doing what he wanted to do. Im sure thats not what the chairman wants. What he wants is a mild increase in unemployment rate. He wants a job opening rate to come down. He wants the inflation rate closer to the target, but otherwise, the economy is moving smoothly. That is not what he will get. There is nowhere between success and crashing if you follow a policy of this kind with the bond yields which are not controlled by the fed. That is true. Today, he has totally lost control of them and not able to influence them. That is a lot more serious. I dont know what breaks and we could do a David Letterman top ten list. I guess he was at one point a late night host the a show. I we are that. Now he hasnt shaved. It could be a Real Estate Firm or a bank. For whatever it is, theres no guarantee you will be right on this. You could be. You think that shifts the fed to easing quicker than anyone anticipating at this point . When do you expect that . Within six months we could be back on an easing path or rate cutting path, sri, within six months . Joe, just look at last march to give yourself an indication. We had three small regional banks which failed. Immediately qt ended and qe was put in place. We took the fed assets back in november of 2022. We set it back by five months. What im saying is if that incident could do that, anything like a bigger crash taking place in the next two to three months will reverse Monetary Policy in Interest Rates and quantitative tightening. Within the time period you mentioned, it is clearly when i think it will happen. 2024 will be a year of lower Interest Rates and clearly a much more easier fed than we have seen so far. I dont know whether that is good or bad. We have had, you know, the specter where if you look at the chart, we have higher rates in the cards from what we are seeing. At least in this case, it sounds like turbulence on the way. It could keep us from getting up to 7 or 8 or 9 . Exactly. That wont happen in the next five years . That is exactly what im saying. Yes, you may want higher yields to resdtrain the economy, but yu cannot do it that without breaking something within the system. People got too used to it. Theres people 30 or 40 years old who have no idea that rates can go above 5 . Sri, thanks. Thank you very much, joe. Youre welcome. Still to come this morning, potential warning sign for the economy and the health of the consumer. Its a merger monday. Chevron acquiring hess in the 53 billion all stock deal. Here is a look at both companys stocks reacting to the news. Chevron down 3. 25 and hess up 1. 25 . Well have more on this coming up. With comcast business. It is. Is it possible to help keep our Online Platform safe from cyberthreats . Absolutely. Can we provide health care virtually anywhere . We can help with that. Is it possible to use predictive monitoring to address operations issues . We can help with that, too. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Ai has the power to automate, but if its using untrusted data can you trust the results . Your business doesnt just need ai, it needs the right ai for your business. Introducing watsonx a platform designed to multiply output by tailoring ai to your needs. When you watsonx your business, you can train, tune and deploy ai, all with your trusted data. 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The hollywood strike saga goes on and on. Actors and studios heading back to the bargaining table. Some alisters are getting more involved. Well have an update in the next half hour. As we head to break, check out the biggest premarket l losers in the dow. Chevron stock down 3. 5 . Announcer executive edge is sponsored by at t business. Next level moments need the next level network. Move to the cloud. So, the question is. Cyber attack as cyber criminals expand their toolkit, we must expand as well. We need to rethink. Next level moments, need the next level network. [speaker continues in the background] the network with 24 7 builtin security. Chip . At t business. Im so glad we did this. Im so glad we did this. Im so glad we did this. Im so glad we did this. Im so. Glad we did this. [kid plays drums] life is for living. Lets partner for all of it. Im so glad we did this. Edward jones hows the chicken . The prawns are delicious. Oh, i have a shellfish allergy. One prawn. Very good. Did i say chicken wrong . Tired of people not listening to what you want . Its truffle season ah thats okay. Never enough truffles. How much are they . Its a lot. Oh okay im good, that its like a priceless piece of art. Enjoy. Or when they sell you what they want . Yeah. The more we understand you, the better we can help you. Thats what u. S. Bank is for. Huge relief. Yeah. Good morning. Welcome back to squawk box live from the Nasdaq Market site in times square. Checking the futures after the rough session on friday. Dow indicated down 200208 point. Chevron is down. It is a stock deal. This is what you normally see in a stock deal which we will talk about in april second. T you see the nasdaq down triple digits as well. Most of this is from the tenyear yield over 5 now. It feels comfortable there at this point. Is there anything good . Not much of an inversion between the twoyear yield and tenyear yield. That is usually how it fixes itself as the recession finally happens. The numbers on thursday for the Third Quarter gdp. 4. 5 with estimates as high as 5 . The recession we have been talking about and talking about and waiting for and how do you do that with the gdp of 4. 5 . That and the fed. A nightmare for them. Who knows how long it will l last what was i going to say . I dont know. Check out bitcoin

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