Transcripts For CNBC Closing Bell 20160901 : vimarsana.com

CNBC Closing Bell September 1, 2016

Average. We had the big rally comeback rally and its been going sideways now. Its going to be 39 days today trading days when we have failed to see the dow move 1 up or down. Its happened again today. So as we kick off the month of september, kelly, after the postbrexit rally, we wonder if we get any volatility the month, right . Automakers are probably happy august is ending. Sales coming in weak. Well look at how long this downturn could last. Oil is hit today down more than 8 over the last week. But if you think its a buying opportunity, think again. We have somebody who says things are just going to get worse for the energy patch. Well, heres worse for you. Samsungs new phones are on fire. But not in a good way. We told you last week sales were much stronger than expected but issues are arising this week with reports of the batteries catching fire. Delays now in getting the phones in peoples hands. We have pictures and the impact coming up. Horrible, horrible timing with the iphone 7 comes out next wednesday. But lets start with the auto sales. Apparently cooling off in august. We have phil lebeau with more on the story for us right now. Phil . Bill, we knew that august would be slower compared to august last year. They also had labor day included in august of last year and when you take a look at the four largest automakers in the u. S. , all of them reported not all of them. Three of the four with negative sales for the month of august and most of the time they were in line with expectations. The one exception here being fiat chrysler. Should be an up and not a down arrow. Up 3 last month. What everybodys waiting on is the Monthly Sales rate for august. And the expectation right now is that were likely going to see a sales rate of 16. 9 million vehicles if thats the kate, coming in around 16. 9, 17 million, it below where we have seen the sales pace most of the year and tough to think that were going to hit 17. 5 million for annual sales. By the way, that was the record set last year. Quickly want to talk about tesla because shares of tesla under pressure for most of the day. Look at the move down today. A lot of focus on the cash crunch outlined by us and others over the last 24 hours. Once the s4 filing came yesterday. They ended the Second Quarter with 3. 25 billion in cash. Throw in the expenses that they have either taken care of will be taking care of in the second half, thats the planned cap ex pend churs there ramping up production and cash cushion is 4 million. Thats the expectation as of right now and why tesla yesterday in that s4 filing said it needs to do a Capital Raise either in the equity or the debt markets or a combination of both. And now you see investors looking at that saying, how much is our shares going to be dilluted . Thats why shares are under pressure today. Phil, stay there. Lets bring in rebecca lindlan. I guess theres whats happened broadly with auto sales and tesla. What about the stepback in august more broadly here . Well, i think one thing to remember is that even though were looking at the 16. 9 million to 17 million unit range as phil mentioned, thats a fantastic range when you consider where we were just a couple of years ago. So i do think that we need to think about this in perspective. You know, not even Michael Phelps sets a world record every time hes in the pool. And so, i think that we need to be pretty happy about this 16. 9 million to 17 million but it was below expectations as well. Lets focus on tesla. Is there a reason to believe they wont have a successful Capital Raise they badly need right now . Well, i mean, you talk about bad timing with the spacex explosion. Right. I mean, you know, in a day when elon really could have used some good news instead he got some really bad news, fortunately nobody was hurt. But their Balance Sheet kind of exploded again, as well. So i think that, you know, and i use this example before, with alan malaly in ford, he raised capital. Because its a you know, building automobiles is a capital intensive undertaking. And when you look at all of the different areas that elon is involved in, theyre all very, very capital intensive. I think it depends on investor tolerance, really. Thats the key issue, phil. Up until now, tesla investors continue to fund this company. Right. You know, at what point do they start to sour on the prospe prospects . Its too hard to predict. Any time we see a sales report or an Earnings Report of tesla, if they have disappointed or if they have reset their goals or brought down expectations, weve always heard people say, especially the bears say, aha, this is it, this is when everybody gets out of tesla and yet, what was the low this year . 180 . Still slightly above 200 at this point. It seems as if as jim cramer says, this is a cold stock and takes something before finally people say i dont want to be a part of tesla. I wish i could predict and say its going to take them doing x, y and z but we have seen time and again to restate expectations or if they disappoint, there may be a slight hit to the stock and then chemos coming back. Thats the thing. You know, youre investing in elon musk coming down to it. Correct. Includes solarcity and spacex. There may be problems for tesla to raise the capital because of what happened to spacex but theyre two Different Companies right now. Right . They are. And when you see what happened with the model 3, and i have full disclosure, 1,000 deposit on a model 3. Probably 355,000 or something. You know, when people had the opportunity to buy into the dream, they did it. They came in droves. And so, i think that we are still seeing people believing in what elon musk is saying. And giving up those dreams is what people dont want to let go. And thats why we see the stock continuing to have this kind of resiliency. More like the lyrics to a popular song than a story about investing in cash flows. Just want to hang on. Are you going to sing that song for us, now, kelly . No. Might be inventing it on the spot. But they all sound like that. Thank you both. Ill handle the tune. You handle the lyrics. Thanks, folks. Lets get to the Closing Bell Exchange for this thursday. We have contributor heather hughes, steven garfoyle and Rick Santelli from chicago, as well. Sarge, my friend, it is like waiting for gadeau. What gets the market to move one way or the other and which way will it be . We need certainty and wont get certainty. What you saw today with the ism manufacturing number is a huge disappointment. We have strong july Industrial Production and now this throws august into doubt. We see weak auto sales for the month which is going to probably force at least a weak headline retail numbers for august and the second in a row. An theyre going to get that number before the fmoc decision on the 21st. So, yeah. Tomorrow is important but its not the endall. Not the end of the game. I think a 200,000 individual print in the morning certainly forces the issue somewhat. But if theyre in somewhere between 150 and 180, the consensus, 150 being the whispers, i dont think that forces the issue. I think that the uncertainty will go on. Now, im not going to go in debt fear because there are other guests. Make a bet. Lets do it other Central Banks are players and involved in markets. Heather, what are you looking senate. Yeah. I think that september, were about to we may embark on more volatility as bill was saying at the top of the hour there so buckle up. Not just the jobs data tomorrow but the first president ial campaign debate, opec has a meeting at the end of the month, as well. Almost every day some of the Central Banks around the world come out and discuss the rate moves one way or the other. But september is usually a very volatile month and historically one of the negative months of the year since going back to 1928. But i would mention this is obviously one of the most unloved bull markets of all time and not to say markets cant pull back 10 or 15 from here and then rally going forward. But cash levels at alltime highs and portfolio sheets Balance Sheets and they end in euphor euphoria. We are not seeing that stock market bubble where, you know, uber driver is giving you stock tips right now. You, too . Yes. Not yet. Rick, you know, sarge brought up the point of the ism report this morning. It was aufl. One of the most important readings, even though its a small part, it slips into contraction for the u. S. What are we supposed to make of that . Well, it is not that the market is as heather referred to is unloved but mistrusted and for very good reason. You know, today, after that weak ism, it was kind of a reversal of fundamentals occurred and this movie didnt star jeremy irons. Bad is bads half life moved from plutonium back to a fly. Why do you think the Interest Rate complex reversed . The dollar reversed. Maybe more importantly, im looking up at the stock market. Down a bit and down a whole lot more. Were back to the same old dynamic. You know, ism could be the pick they need no matter what happens tomorrow. Theyll always find something because an economy 1. 5 to 2 is going to have some fits an enstarts and thats exactly what were seeing. Once again, ism tells us that the inventory builds look spectacular and when customers dont buy them, its not as spectacular. Sub50. New orders were not good. Sarge is right. Look at the july Industrial Production capacity utilization. This is the economy we have. It really i think fits what the fed needs at any given time. They dont have confidence in the marketplace. But theyll have plenty of numbers to find so as when they dont want to forge ahead and i think thats why the markets are trading the way they are. It seems like this bull verse bear tug of war debate goes on. They have the data weak today to point fingers at and the dual mandate system is fulfilled and i think thats the argument for in the case to increase rates. You know, sure, mildly interested in the excuse theyll come up with but i think the only excuse is strong dollar. Yeah. Well, they can get neumann dates the way we change shirts. Thats the problem. Sarge, where are you seeing opportunity right now . Im long the tech space and staying long the tech space. Been good for a quarter and i dont see any reason it wouldnt work. The financial space is interesting. All right . Ex the reits. Take a measured shot here in case they move on Interest Rates. Maybe Something Like a call bull spread to play. Something where you have limited downside and limited upside and you can capture something of an upward move in the space without exposing yourself too much. Financials have already had a move off the lows. 15 i believe in the past month or so and in terms of valuation, hes right that financials may appear undervalued here, you know, real 2i6 lative to the re the market. If you believe that the fed hikes and even if it doesnt happen in september, it still makes sense, a play on the financials if it occurred in december. Good to see you all, as always. Thank you for your thoughts. Well see you later. Welcome back, bill thank you, rick. We have little more than 45 minutes to go here in markets. Still are lower for the dow and the s p. Dow down 27. S p nearly 6 and the nasdaq is marginally in positive territory. And we just make big news of all of that. Because its been like that for almost 40 days. Samsungs phones may be too hot to handle with reports surfacing of exploding batteries. Well discuss the plight into the face of apples new phone due out next week, as well. After the break. Also ahead, donald trump humming slightly different tunes of last night in arizona and yesterday afternoon in mexico. Dont miss our trump versus trump breakdown and plus reaction of a former u. S. Ambassador to mexico, youre watching cnbc. Ok, so you launched your banks app. Now what . How will you keep up with the w mands of todays Digital Economy . The fact is some believe they wont need a traditiol bank wn the road, so acognizan were lping banking d nanciaserves be untditionalgital, anreimagine what theank of the future can be. 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With the help of pg e weve been able to save a tremendous amount of energy and a tremendous amount of money. Were able to take those savings and invest it right back into the classroom. Together, were building a better california. Welcome back. Shares of walmart pacing the dow. Theyre up nearly 2 and this reportedly on news that the retail giant is planning to cut 7,000 back office jobs around the country over the coming months. Most of them reportedly in accounting and invoicing positions. Walmart says it will use cash recycler machines to count money. They also are starting the christmas layaway plan tomorrow. Two weeks early. Merry christmas, kelly. Thank you. Still too early. Way too early. A new announcement of the zika virus. Whens the story there, john . Reporter bill, i just got out of a briefing here at hhs with secretary burrwell and gave the latest numbers on zika. More than 2,700 confirmed in the continental united states, more than 14,000 in u. S. Territories, the vast majority of those in puerto rico. They include 624 pregnant women in the continental united states. 971 pregnant women in u. S. Territories. Those are the population of greatest concern. Now, this is part of the administrations effort to press congress to pass more than a billion and a half dollars in zika funding which congress has not acted on. Important to point out that the zika money, the failure of congress to act, has so far not slowed down the research on the vaccine because hhs has been able to shift money from other accounts but secretary burwell said thats going to become much more difficult on the limited Budget Authority they will have when the fiscal year runs out if congress didnt pass a budget. All right. John harwood in washington outside hhs, thank you. See you later. Samsung has stopped shipments of the latest smartphone, galaxy note 7. The move reportedly brought on over safety concerns. Civil videos and images of charred phones like that one have been surfacing online. This one by the way posted on youtube by Ariel Gonzalez shows the reported aftermath where the battery started burning after he charged it. Using a samsung charger, by the way. This is coming at a time when apple about a week away from launching the latest version of the iphone. Joining us with the take on this matter, dan ackerman and brian white here at post 9 from drexel home ill on the. Brian, we were saying the buzz around the phone was great and for apple, quieter. Not going to be maybe dazzling us until next time around. Does this change the narrative now . Well, definitely provides good fodder next week at the iphone 7 event and i think it will help on the iphone 7 plus because the note is a higher end product, for sure. Dan, what do you make of it . Youre a fan of the note 7 . A lot of people, great reviews, how much of a black eye will this be with the battery problem . Its one phone everyone is buzzing about this year. I have one right here. The screen goes right to the edge. Forward looking design. You couldnt write this better. Samsung has a phone that everyone is very excited about. Comes out about two weeks before apple has a phone that people are not that excited about because we know the features already. And then as soon as it seems like everyones going, i guess ill get the note 7 instead, they start catching on fire. You could not have a worst possible timing. Just like reporting on tesla catches fire and you say theres a lot of automobiles catching fire. We dont report on it. You tend to overreport on ones that are more high profile. Is that happening here, brian, as well . Definitely happening. I think one of the issues that samsung has, theres always been a knock on quality. And i think this kind of feeds into that narrative. What does apple say . Our norstar is making high quality, great products and feeds into what apple does. Same time, apple just got involved a lawsuit this week and people complaining of screen defects on the 6s plus phone and antennagate, a phone not designed well and with the samsung fires, it is visual. People take a picture, on youtube, a video. That spreads virally very quickly. A couple of cases can have a huge impact. Dan, let me bring up kellys question of before. Are we overdoing this by overmagnifying a few incidents when you consider the number of phoneless out there right now . Id say considering the phone just shipped two weeks ago and already at least five or six cases of people talking about fires and samsung said theyre not stopping shipments in south korea and may spread throughout the world, i dont think were making too much of it because clearly the company is reacting to it very quickly saying we wont ship them until we see what happens. A lot depends on how quickly to move the production process along. Meantime, ahead of the event next week, you are still positive and bullish on apple. Yeah. Look at apple here. The jason bourne of the tech world. China government shut down the itunes movies and books. Eu going after them on taxes. Short seller chasing them all year and similar to 2013. I think this is a bottoming process. You have iphone bottomed in the march quarter. Sales and profit in the june quarter. A stock at less than nine times xcash. Heres the question. We have to go here. I spent the week on the beach with a bunch of friends and one of them is dying to get a replace his apple phone and he is wondering, do i buy this one next week that we know whats in there like dan was saying or do i wait for the big one next year, the tenth anniversary . Isnt that what people worry about right now . Brian . Theres a lot of people that upgr

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