Transcripts For CNBC Closing Bell 20160713 : vimarsana.com

CNBC Closing Bell July 13, 2016

Just getting worse by the day. And line. Biggest tech ipo of the year scheduled to trade right here at the New York Stock Exchange tomorrow. We will tell you what to expect. It is going to be the biggest of the year. A frenzy down here. And ghostbusters reboot is out this weekend. The films director who will ring the closing bell today at the Stock Exchange will join us onset. A tremendous amount of buzz on that one particular movie. Its unbelievable. And striking back at times against some of the haters on that one. But we will talk with him in a while about that. Dominik choo, talking about sectors, dom . A lot of people didnt like the stocks. We have another record high on the s p 500 and we are trying to get back and stay in that positiveter tore ary. At these historic levels, it is worth pointing out it hasnt been fun and games for every part of the stock market here. If you look at sectors and stocks left behind, the most recent leg of this massive post financial crisis bull run it may not be all that surprising. Since a record closing high may 21st last year. Three worst sectors in the overall s p financials down by about 6 in that time span. Materials down by about that same amount. And the worst performing sector, no surprise energy with oil prices much lower than a year ago. Down almost 12 from then until now. As for stocks left behind, 10 current s p 500 members have lost at least half of their value between last closing high and now among the most recognizable names, you goot computer memory chip maker like micron which lost half of its value in that time and Chesapeake Energy lost about 7 and biggest lagger is Specialty Pharma Company Endo International which lost almost 80 of value since its last record highs. Those charts not indicative. We showed you just what happened this last year and many of of the stocks still have a long ways to go before they get back it that rare era we are in the overall stock market, guys. Back to you. Thank you very much. We have an unscheduled earnings report. Csx wasnt supposed to report until after the bell. But the results are out . What happened . For the Second Quarter earnings, 47 cents versus estimate of 44 cents. So threecent beat on the bottom line for csx. Revenue for the quarter declining 12 from a year ago. Csx continues to expect 2016 fullyear earnings share to decline and also saying it continues to drive Strong Customer service and Network Efficiency in a challenging mark chet is expected to persist throughout the year. We look at stock of moving here up about 3 in the last hour of trade. Guys, back to you. All right, seema, thank you very much. Now to the closing bell exchange. Where am i . Closing bell opening exchange. I guess. We have peter costa sitting right next to me at post 9 and Rick Santelli joins us from chicago. Mark, i dont know if you follow the rails that closely but youre getting a positive report here from csx. At least for the Second Quarter. Do you like the rails . Do you like the transportation sector right now . Yeah. Weve been relatively neutral on transportation and underline managers but we will take good earnings anywhere we can get it. If this market in the u. S. Is going to continue to move up. And i thought dominiks remarks were right on. We need broad earnings to take the market it a higher level. So just seeing any company beating earnings and having a positive reaction in after hours, well take it at this point. Now, csx, you know, adds up to so far so good. So far so good. And i felt this would be a quarter we would see earnings improvement. And i think that what we will see in the Third Quarter is continued improvement. That has a lot to do with, i mean, it may not seem like the correlation may not be that sim but employment is getting better. You know, wages are rising. There are underlying factors why the economy is still where it is and where it potentially could get better. So earnings will get bet are along with it. Im still positive. Speaking of which, rick, the beige book out last hour, we just continue to bump along here. They alternate between modest and moderate in terms of their description of the growth rate and certainly thats reflected a lot in the yield curve these days, right . Youre spot on, bill. As a matter of fact, it wasnt scientific. But i pulled a few. Pulled from 2011, 2012, 2013. The beige books rhyme and rhyme big time. Whether it is modest growth, certain areas can find skill workers. Listen, we have the most durable 1 1 2 to 2 economy on the planet. There is good and bad news. Bad news, is they arent fimable by Central Banks. And things that are fixable, i think they will address it if we could only get them to address it. I think the latter is optimistic. What is fascinating today, 2s are down 3. 5s, 10s and 30s down roughly 4 basis points. After we opened, we hardly moved at all. You could have painted those prices with permanent market. It was a good auction. I guess what i walk away with is there is still nervousness about the Interest Rate complex on the sovereign side and investors are a bit nervous that negative rates will pull it down. It is not happening. Stock surge took away some of that interest but not many tempted it try to sell it which probably means the next move may be higher yields and lower prices. Stay right there, everybody. U. S. Stocks have been hitting record highs, some emerging markets have had self raleighs themselves. We have more on that one. Seema . With so much uncertainty attached to europe and japan, seen as relatively attractive since the brexit, check this out. Indian stock market up about 5 . China up almost 6 and despite weak export data we got overnight and remember china dtp due tomorrow night. Russia higher by 7 . Brazil fairing the best up almost 10 . With the brexit related concerns and fed dialling down expectations of a rate hike, is the increase pap tight for yield according to experts, and europe and japan moving deeper into negative territory is helping emerging market stocks and bonds move higher. Interestingly enough, if you look at sovereign bonds in indonesia, bonds are yielding more than 7 . Compare that with a german tenyear with a negative yield. Fidelity international has about 272 billion in assets under management. Thats one of the reasons they are seeing such Strong Demand for investments in asian and emerging markets sovereign debt. Thank you very much. Mark, you know, it turns out the brexit selloff turned out to be one of the great bear traps of all time. Name a market that hasnt snapped back in a big way here. But how much longer can this continue, do you think . Yeah, it is interesting you mention that. Japan and emerging markets sold off immediately and they didnt cast one vote. So there is Good Opportunity to make money there. Interesting on the emerging markets report. We have been waiting emerging markets a long time. We like india and russia as well. Areas like the emerging markets, nonu. S. Debt, emerging market debt, there is still opportunities there as well outside of the u. S. But youre right, everything has been moving up. We still think there is more than other places than maybe the u. S. Moving forward from here. Russia, peter . Come on. Its been in the dump for how long . I mean, any of the great emerging markets, at some point, they are going to rally back. There is one thing to point out, if you look at the fix, i dont normally look at technical levels, but if you look at the vix when it is below 14, we are doing well and will hit a new high today. But i think in the next couple of days you will see a fairly significant it starts to top out. Tops out right around here. We will see a little bit of the selloff. And you know im a gambler so i think there is a good time to get short this market. Theres a reason youve been on the floor this long. And lasted this long. For the first time germany issued a negative Interest Rate and you know, were just going to have to this is the new normal here, isnt it . This is what we are living with for a while. Im not sure what how long for a while is but i really do think the clock is ticking and i dont know what will reverse it. But i know that creepy issues of negative rates and how it affects profits and Financial Institutions is a real dangerous game Central Banks are playing. I dont think it Something Like natural gas to get used to or managed markets we have gotten used to. I think something will change the tie on negative rates. It is a dumb idea and i dont think we will or should get used to it. Mark, what about you before we go . Yeah, i would agree, thats why you diversify your portfolio. You need things that will work whether your central scenario plays out or not. As we have seen, there is so much wsh whether negative rates in currencies, so many sharp moves. If you put all your eggs in one basket and get it wrong, you would not recuperate. There are signs such as what rick mentioned to keep your eye on. Thats you why diversify to try to get through it. And is far, balanced portfolios, they look good if you have a broad asset of basket assets. Thank you for joining us today. 49 minutes left in the trading session. Again, any positive close for the dow and s p will be another new alltime high. Wall street is gearing up for the biggest Public Offering of the year. Meanwhile, in tech, details on the line. How analyst are expecting the japanbased messaging app to debut tomorrow. Also coming up, live to london we go for a closer look at britains new Prime Minister and the impact leadership could have on global markets. Youre watching cnbc first in business worldwide. Generally higher markets, though now we see the s p lose ground. Dow is up 15 in record territory. S p down a quarter point. Nasdaq down 11. Tesla is trading down lower, under 1 . The auto maker introducing a less expensive version of its model x Sport Utility vehicle to the roster called the 60d. Listing at 74,000. Thats 9,000 less than the 75d which goes for 83,000. As he looks to turn a page from the crisis headlines theyve been dealing with lately. Yeah. Now britains new Prime Minister teresa may becomes the Prime Minister today. Second woman after margaret thatcher. Seems shes already made a couple of appointments, wilfred. Of course the headline is that the bounce back kid Boris Johnson has got a significant role just two weeks ago his career in dire straits and yet he just secured one of the major roles of state here in the uk. Foreign secretary when not even a significant role at all was expected for him. Extraordinary stuff once again here in british politics. Now of course he is a colorful character as we know and already the u. S. State department made a mention of him saying they are looking forward to working with him. Now the other big role of course is that of chance chancellor, g phillip hammond. He was touted to get the role and he has got it. The outgoing chancellor George Osbourne had been expected to secure a significant role but no role at all for him. So a big surprise is Boris Johnson as foreign secretary, perhaps boldest move by the new Prime Minister is no role at all for George Osbourne. That will please the back benchers and brexit eers. The other thing that will please the brexiteers, is two former positions, they will together head up brexit negotiations, exact titles of those roles not quite confirmed yet but they will be in those positions. The other little surprise is that we are expecting a lot of women in this cap net. But so far only one role, thats for amber rut as home secretary. We watch developments as ministers come and good behind me at downing street. And wasting no time at all it appoint the positions, big headline Boris Johnson as foreign secretary. Im not going to ask you about larry the cat, wil. I assume would you have brought it up if there was any news this morning. What about Boris Johnson, can we expect, if he is foreign secretary, to see much more of it with regard to negotiations . Well, i dont know if you said u. S. Or europe negotiations there, but there is a role specifically for eu negotiati s negotiations. While one would assume foreign secretary would cut off relations with europe that maybe he will be kept slightly apart or at least will be headlining it. Boris will cover all of the other countries and relations as foreign secretary in the u. S. State department as we have said. He is a colorful charismatic figure. I think at times the level of his politics is exaggerated because of that color fullness. And his politics are relatively mainstream. Quite similar with outgoing Prime Minister david cameron. This states the obvious, but could you have written this script any better where you have an antibrexit politician who end up running the government to begin the negotiations to take the uk out of the eu . It is unbelievable, the turn of event in all this, right . Completely unbelievable p. I could not agree more. Anybody could have written any stage of this script. So many ups and downs over the last three weeks from the result of the vote in the first place about crazy leadership battle ups and downs and now to the appointments of who is in the cabinet. But teresa may has been true to one thing. Balance between brexit eers and going to Boris Johnson and chancellor and seems like when is balancing it quite evenly. But certainly, one wouldnt think the story end here because british politics, weve learned to expect the unexpected. That is just crazy. Will, thank you. See you later, cheers. About 40 minutes to go here. Dow is up with a gain of about 15 point. Right now the s p turned lower. Transports are one of the best performers. We mentioned csx with earnings already out. That is helping that sector which is up 6 5 point. Nasdaq is down 12. When we come back, stealth military takeover underway in venezuela and if it can breath new life into the struggling economy there. And young brands expected to post earnings after the bell. Owns kfc, pizza hut, taco bell. We will bring you their numbers as soon as they hit the take. Coming up. Welcome back. Checking on crude this hour. This morning we knew there was some downward pressure after the data yesterday afternoon, down about 1 . Now down more than 4 for both wti and crude. Wti is below 45 there and brent just above 46. Something to keep an eye on. We are looking at the pressure into the close. 45 something of a pivot now for wti at this point. A stealth military takeover may be underway in venezuela. Michelle carusocabrera has more. Michelle . In the number two position in the government, by the countrys current leader, the move raising questions about whether or not the military slowly but surely trying to take over control of the south american country. Defense minister general Vladimir Lopez has been elevated to above the mostly civilian cabinet. According to a new decree the military will be in charge of the distribution of food and medicine and as of last night theyve taken over all the port in the country. Reuters reports he went on television yesterday and said he did not like having the military intervene in nonmilitary affairs but that there is a need for discipline and order. His words as a result of the chaos driven by shortages. The economic kiss os forcing out International Companies day after day this week and last we heard from citibank and Kimberly Clark and pepsi cosaying they are simply getting out and i spoke with political analyst from ihs and we discuss the possibility about whether or not there may be some kind of stealth coup going on. That is a question tossed around in venezuela. He thinks that word is too strong. Yes, this is the elevation of military rule over civilian rule. Venezuelan government was already in many ways highly militarized and he thinks at this point he is just trying to harbor logistical capacity because it is so desperately needed to distribute resources. What happens when that doesnt work, michelle, inevitably . Good point, kelly, right . He thinks he is a lack of Logistical Support when it is mostly price con trels and not letting price clear the market. If it cost you 1,000 to import a refrigerator but the government can tell you you can only sell it for 500, guess what . You dont bother, right . And write that across every sector of the economy and that explains why you see a thousand people in line for chickens and things like that. You itemize the companies that have either gotten out all together or reduce exposure, do we know of other companies who may still do the same thing . What weve seen with a lot of major s p 500s is they write it off quarter by quarter. They take a couple cents at a time. So they dont necessarily do it overnight and they are trying to get foreign currency out and slowly but surely if they are able to do that they do. So it is hard to know. But anything with any kind of consumer exposure, if youre a Big International company that sells to consumers all over the world, you probably had issues in venezuela. Speaking of moving cents at a time, what about the price of the oil . He is geared toward the sustainability of any kind of economy down there . Right. So when the price of oil moved from 25 to 45, there were big improvement in venezuela bonds, right . Remember wall street has exposure to the oil company and to the government through the bonds. And a lot of folks that they are still bullish on the bonds. When the price of oil goes up, however we just got data today that shows a more dramatic decline in production. All of the shortage when it comes to food and toilet paper et cetera, that happens with oil, et cetera. Tragic. It really, really is. Almost dont want to see how this ends. Michelle, t

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