Morning. Where oil prices could be headed next, in a moment. Shares of hewlettpackard enterprises rallying on a report this afternoon that private equity firms may be targeting it for a buyout. Well hear from the reporter that broke that story in a few minutes. Lets start with earnings trouble in the oil patch. Bob pisani, big misses for chevron, as well. Yeah. Enormous write down. The stock prices right to the actual numbers here. Exxon and chevron both reported much bigger missing than anticipated. In the case of chevron, reported an enormous write down. 2. 8 billion for projects just not economically viable at the current price of oil an apparently they dont think viable for a listening time to come if ever here. You see price reactions fairly modest. Let me explain the pickle a lot of Big Oil Companies are. And use exxon as an example. Cash flow 4. 5 billion. Care enough. The Capital Spending 5. 2 billion and the Capital Spending is more than the cash flow theyre getting. They have to pay the big dividend. Thats a biggest on the street. You add it all up. The dividend and the Capital Spending, over 8 billion and a funding gap of 3. 8 billion they need to cover the spending, overall spending. Where do they get the 3. 8 billion . They borrow it and cutting spending and they hope they pray oil prices go up. By the way, are you worried about the dividend . Dont be. Only one of the good pieces in the overall report. The company said, exxon, were resolute in a commitment to pay reliable and growing dividend. Its safe. Chevron said the same thing. Its the first priority. And they said they may consider increasing it if the cash flow increases. If it increases overall. The big issue is oil. Folks, going down. Very simple. Theyre going to have to do one of two things. They will have to, number one, merge or do merge somewhere down the road if oil stays at these low levels a year from now and certainly have to, analysts will have to lower earnings expectations for Oil Companies in the second half of the year and remember these Oil Companies, guys, major part of the idea that the s p could turn positive on earnings in the second half of the year. Oil could be a big fly in the ointment for earnings. Back to you. Thank you, bob. You have to wonder what theyre sacrificing at the altar of the almighty dividend to get it going. The number to watch about 41. 33. Just above that level. Lets discuss where it goes next with matt smith, director of commodity research. We broke below 40 briefly or 41 i think earlier. What do you think will happen next year . Next year is a very long way away. I think what we are going to see go. Ahead. Sorry. The next couple of months will really dictate what prices do next year. Weve really been on the wild ride for two years here we are getting the w kind of playout in prices and i think dependent upon whether we dip lower Going Forward here and then we start to see that market rebalancing coming through next year we should see prices coming through with some support as we see ongoing production on a global basis starting to really come off lines from the likes of mexico to china, et cetera. But for now, it seems that we are going to be under downward pressure. Well, one of two things has to happen for this glut to disappear. Either production has to be cut or demand has to go up. What do you think is most likely . Especially if its a production cut, whos likely to do that . As i mentioned, we are likely to see sort of incremental production cuts coming across the board really from the likes of, say, as i mentioned mexico to china. As some in the north sea, as well. Im sorry. I heard that part. But what i didnt hear was the big guys, the saudi arabias, the u. S. , the russias. The big players in all of this. Thats where its not going to be coming from. Thats why im not mentioning it. Were likely to see saudi arabia continuing to pump. Theyre at 10. 2, 10. 3 Million Barrels a day here. They keep on pumping strongly. The u. S. Likely to bottom out next month according to expectations and gradually rise through the rest of the year as we see production coming online from the gulf of mexico. And so, were also seeing production continuing to increase from the likes of iraq and iran from opec and so its not going to be the big players that are making the cuts. Even russia is potentially going to hold up around that sort of 11 million barrel a day level and so the production cuts are coming from the smaller guys and increment al incrementally. Oil prices, likely to retest the lows we saw earlier this year . What do you think . I think we are unlikely to get down to 26 again but never say never. I think what we have got here now is support around the 40 level on a technical basis an enshould we break that, as we see slowing imports into china, demand dropping off from them as their stockpiles are filled up to the brim then i think we should likely dip into the 30s. All right. Well see what impact that has across the markets. Thank you, matt. Thats matt smith. Thank you. Barclays shares dropping today ahead of European Bank stress test results due in about an hour from now. Will fred frost has the latest. In line revenue and stronger than expected earnings mainly due to lower costs and the core uk business did better than expected. Sharyls up sharply today. Despite earnings falling one third highlighting how low expectations were following poor European Bank results elsewhere this week and barclays shares down sharply year to date. Now the results of the stress tests. Spotlights will be on deutsch bank and italian banks where theres political pressure on renzi, the Prime Minister of antieu parties, to save the banks. Italian bank shares have rallied today after it was confirmed of a bailout, a private bailout for the embattled bmps. Here, barclays ceo talking earlier about the wider health of European Banks. The European Banking sector is challenged. If you look at the top 12 banks across europe, on average theyre trading at about a 50 discount to book value. Thats not healthy for the financial system. Thats not healthy for the european economy. Overall European Bank stocks getting some welcome reprieve today but year to date the stock 600 bank index down nearly 30 . Stress test results out at 4 00 p. M. , guys. Whats at stake for the stress tests . How similar are they to the u. S. And seemed more like people waiting to get capital out of the banks and in this case, how much capital right need to go in them . Exactly right. Thats where the European Banks are a few years behind the ugs banks and still a question of whos going to need to raise capital. The difference, though, to the european stress test two years ago, theres no immediate pass or fail. Not quantitative. Its qualitative. We have to dive into the numbers deeply and focused on the cet one ratio, the common ratio is of the banks and italian banks really in the eye of the storm. Political contagion possible there and in terms of big banks, boich bank, the focus. If they had to raise capital, the price to book very low and hard to do so. Why are they waiting until 4 00 here in the u. S. In thats late on a friday night. Trying to bury it in europe or what . We can draw conclusions from that. Waiting until all equity markets have closed for the week and no immediate overreaction and i suppose they hope that if people have the weekend to dive into the numbers then they can make sure theres no exaggerated response in the market immediately. All right. Well, well all wait for those numbers. Thanks. See you later. Catch his exclusive interview of Ceo Jamie Dimon monday at 1 00 p. M. Eastern time right here on cnbc. Dont miss that. Lets get to the Closing Bell Exchange for a friday. Today, joining us, doug gordon, Kenny Polcari and our own Rick Santelli joining us from the chicago mercantile exchange. I had the numbers, kenny. For the month, the dow up almost 3 . The s p up more than 3 . The nasdaq up 6 . With oil down 14 . I mean, clearly the correlation between those is dead. But not a bad month for the stock market. No. Not a bad month and it does feel toppy. The end of july here. August will start next week. Can be a tough month as we know. But listen. We have traded for 12 or 13 days now in a very, very, very tight range and i think 2165 to 2175. Yep. We are trading at 2175 once again. Tapping our head. But the market feels tired, exhausted. I think august could set up to be more of a volatile month. I suspect to see the market back off a little bit. I expect the oil is going to 35 really where the Technical Support is and 40 is a psychological number and the is real support in the mid30s and i suspect that oil will test it. Doug, explain the Central Bank Moves here for us. Bank of japan maybe not delivering what was hoped. Here the fed, now the markets pricing out a rate hike to early next year. Yeah. I think thats right. Its a case of the number disappointed an enyou get the argument why the market responded first negatively and then came back and thinking that the inventory buildout is pushed forward. But the most important thing to that is wheres the strength been thus far, right . Its been the consumer. Thats where the watch point is going to be. The question is starting level we started today at even with that weak gdp number where we should be . I think all the points that kenny made and earlier that, you know, we have oil price, you have the election, you have certainly got weak earnings thus far in europe this year and weaker than anticipated the start of the year and get us to be relatively protective around a diversified multiasset market. Rick, we are remiss not mentioning the dollar and what it has done today. Big decline against the major currency. Yeah. No. Its a huge decline. I think a lot of that tied up with trades trying to handicap the economy in the u. S. In particular and what it means for the fed. And they had it right. Fx traders had it right but theres another dimension. Its going to be interesting to see how bad the tests show up out of the ecb stress test. 51 points. I think this is a big issue and a big issue for all investors because the banks, other than the smoke and mirrors, deteriorating like ice in the sun for years. Now, probably theyll find a way to reignite the frog and get the legs to move. Consider if you look at every sovereign piece of paper throughout europe they have been pushing the yields down, not only week but especially today in lieu of the stress tests and all the fixes that may go along or cash ups that may go an i long with it. We are closing in a dozen basis points down on the week on 10s. Ten basis points on the week on 30s. When you consider the alltime low yields, this is pretty incredible. 135 is alltime low yield for a 10. We are ten basis points away. 209 for 30s. Nine basis points away. What happens at 5 00 eastern less than an hour from now could really make it quite exciting to those alltime low yields and trading much closer to them sunday night and monday. I wonder, kenny, what extent that gdp number and the revision low tore the First Quarter to overshadow the data of next week and jobs number friday. Im not sure it will. The gdp numbers out. I think rake made the point. Tonight when these European Bank stress tests come out it causes over the weekend chatter. The focus will be much more on what we see in those results as well as the data next week. The nonfarm payroll next week. Its clearly off the table. The feds not going anywhere. Forget september and december. We are well into 2017 in terms of a rate hike thats coming. Doug, we are more than halfway through the earnings season now. Numbers have been pretty decent. What . 70 of the companies have beaten the estimates here. What do you make of it and where do you see opportunities for investors right now . Yeah. Thats a little bit of a low bar, right . Estimates pulled down a little bit and then they could clear them and an element of where they were set at in terms of beating estimates and revenue paints a different picture. With respect to Going Forward, it puts a premium on diversification right now given that we think things are stressed at the levels of right now. I think its a case where i agree that the nonfarm payrolls very important and tonight, look, the Global Financial crisis purged the banks in the United States. Thats not happened in the european union. And theyre now doing it with equity prices far higher than we were back then. A lot at stake in those results. Due out in a couple of hours. Thank you for joining us on this friday. Close out the month of friday. Doug, kenny and rick. 45 minutes to go in the session. Dow down 35. S p trading at an alltime high today. Intraday high. The nasdaq up 3. All right. Well come back and talk with a Carnegie Mellon professor saying if apple wants to increase the fortunes it is time to share. And hell explain coming up. And with the rio olympics kicking off one week from today, theres a report in the progress against the zika virus coming up. Youre watching cnbc, first in business worldwide. When it comes to healthcare, seconds can mean the difference between life and death. For partners in health, time is life. We have 18,000 people around the world. The microsoft cloud helps our entire staff stay connected and Work Together in real time to help those that need it. The ability to collaborate changes how we work. What we do together changes how we live. But the best place to start is in the forest. Kubo i spy something beginning with. S beetle snow. Kubo no. Beetle snow covered trees. Monkey nothing to do with snow. Narrator head outside to discover incredible animals and beautiful plants that come together to create an unforgettable adventure. Kubo wow narrator so grab your loved ones monkey dont even. Narrator and explore a world of possibilities. Kubo come on, this way. Narrator visit discovertheforest. Org to find the closest forest or park to you. Check out the nasdaq 100 heat map today. Pretty nicely split. I thought it would be a little more green on the list there. We do have google parent alphabet among the leaders today. In there somewhere. You heard it here late yesterday. They beat on the top and bottom lines thanks to increases in googles mobile ad business. A story that reminiscent of what facebook has to say the day before, as a matter of fact. Google shares up about 3. 5 . Apple stocks picked up steam better than expected. The stock up over 5 for the week and still concern that the innovation engine stalled and needs something world changing. One of those searched is Carnegie Mellon universes professor. He has a solution and your solution is to share. I mean, you want them to be more open with their technology. Is that the idea . Exactly. If you look at the results, facebook and google are both, you know, conquering the market because theyre going after hundreds of millions and now in the billions of users. Apple has a limit market and the market share is shrinking and focusing on hardware. The beauty of what they have is their software and if they open sourced ios and made it available on samsung, htc, show me the phones, they would be adding hundreds of millions of users and apple revenue, bright spot this week is subscription and services revenue. App store, music. Soon offer tv stations. They could own a decent chunk of a large market rather than having 100 of a tiny market. Sure. But what are the issues here . I imagine one has to be security, right . No. All of the issues are surmountable. They have to work with the vendors and make their operating system work as well on their hardware as it does on the apple hardware. Its the same. Samsung hardware is better than apple right now and they could figure this out. Its not a big deal. All right. So we have established theres a lack of a revolutionary product coming our way. So in the meantime, wouldnt you agree that their future is in the services business, socalled ecosystem to offer because if you play the game in hardware, you are becoming too come mod tized, right . Exactly the point i would make. Money is in software. Apple has no chance of being a pokemon. Look at pokemon. It went viral and hundreds of millions of people using it. That cant happen with hardware because every time they sell a device they have to manufacture it and takes months to get there. The beauty of software and subscriptions is viral. It is the market that apple is missing out on trying to keep everything closed. They went almost bankrupt in the 1980s because of this thinking. Is there a reason why people satisfied of the operating device and the apps and the preferences for existing services, you know, i guess these things are sticky, that classic term, right . Exactly. Lets share them and put them on different platforms. Ill bet you many, you know, at least half of the Android Users would download ios with the option and then a beautiful new interface on the same device that they had before. This is technically possible. What about these new markets that tim cook points to . India being one of them that they feel could be a game changer for their hardware business down the road. Youre not buying that . No. Im not because their phones cost about 400 in india. You can buy a smartphone as low as 50 in india right now. If youre an average middle class indian why would you spend 400 on something you dont care about . Theyre used to android. The vast majority of phones run android. Thats what theyre brought up on. Why bother to spend ten times as much on an apple phone when you can get a beautiful device for one tenth as much as what the apple phones cost . Apple is going to lose india because its overpriced there. Going back to your suggestion about then licensing the ios software, would they charge a lot for it . If this is a significant revenue stream for them, does it make them out of reach . Well, they could price it at zero like microsoft is doing with the windows operating system and making it available for practically nothing. The money is in the subscript n subscriptions. Look at apple growing at 19 last quarter because thats where the money is. If apple brought the tv <