Transcripts For CNBC Squawk On The Street 20160816

Feds speak is bouncing us all around the block. Well get to that. Our road man begins with hails celestial, delaying 30 , citing an accounting review, reporting it does not expect to reach its anticipated sales in profit levels. Cramers off but hes going to call in on this one. Its also a huge week for retail. In the spotlight, home depot, we dig into the company and the positive out like. Well take a look at where we may go from here. Hails celestial announces it will delay its Earnings Report due to accounting issues. And simon is on mad money back in may when, he talked about hiring outside counsel, take a listen. Our business got a lot more complicated. What i decided to do is call some outside help. A little unlike to you do that. People thought maybe he need some help personally or whatever. All right. And with that i brought in some outside help and to come back and look at hain all of these Big Companies hire 0based budgeting. So what i decided to do was take a look, how do we get to 5 billion. Our own jim cramer joins us on the phone. Good to talk to you, first of all, thank you. Good to talk to you. Good to have you back from rio, carl. We cant wait to all be here at the same time. Walk us through this. The words ing timing of revenues, associated with contributors. That means that you had to get goods you had off to somebody else because you had too much inventory. Some people call this and i dont know in this particular channel stuffing, mean you get the stuff off your books and can show sales that maybe shouldnt be recorded at sales. It tends to mean that youre not doing as well as people think and of course also, dodged with the fact they basically announced a worse than expected quarter. The stock is off 26 here in the premarket. The analyst downgrades are piling up this morning. What would you tell investor to do before today a stock that had risen 30 or so, in hopes of a deal like wait wave . I think people thought its going to go back to what it was. You think that makes sense. You dont know what its going to earn. I would say one thing thats important, this is very high quality. You have Goldman Sachs covering research, and ray kelly, from law enforcement, and a very good attorney, long time. You look at the whole time, andrew hire, the Committee Chair for audit, hes a very, very strong Audit Committee there, and on the executive committee, board of trustees of the University University university of pennsylvania. Theyre going to get to the bottom of this. Its very dangerous because you know this is a group thats been under a lot of pressure. White wave wanted to get out before the price cutting began. Jim, you can go back a decade and find people sniping at hain saying it was just a rollup, raising questions about the quality of the accounting. The companys done very well since then. It remains a little bit of a crowded short. How do you get your hands around what the core earning power of the company and the quality of the brands right now . Thats a really great question, about why i say mid30s, because without a takeover, what youre suddenly wondering, its time to realize you cant own the healthcare brand in every single aisle. And youre right, there was some organic growth that kept it there, but this makes me question how much organic growth was there ive had irwin on. Its been a huge win for mad money and a huge win again. You heard what he said when he was on the show, bringing the outside help. Maybe outside help showed that perhaps the way he handled target, or whole foods, or the way he handles distributors isnt right. So get to the bottom of this. The board is a nononsense board, theres going to be no free pass, but the stock will go back to where it was on its own earning tower, when white wave was in the mid30s. And kiellog or campbells, now were certainly worried about where the sales are. Jim were going to try to take the temperature of the analyst later on today theyre all panicking, bob. Theyre panicking and i dont blame them. Its too expensive. My question is, weve got a couple that cut it to neutral, but bernstein suspension coverage, can any analyst have a cut right now . Its impossible. You dont know what theyre really saying, the demand is dried up, you dont know whether someone else has taken amazon has come in and done some sort of deal where everybody else has just got too much inventory because amazon comes underneath, or tree house, which is set aggressively on mad money. They will private label for walmart. You have so many different pressures, you just dont know at what point did hain have to do something, or at least not certainly of its too much inventory. I back irwin. I think hes done a good job, but accounting regularities tell me you cant own the stock not until this thing is sorted out, but that board will set it out, and if erwin did something bad that board will not stand for it. Theyre too independent, theyre too tough. Jim, enjoy camp. Hurry back, okay . Ive gotta go can my tomatoes. Its great to talk to you. Organic of course. All right. On a day we got hd earnings. Jim, thanks, jim cramer on the phone. Meanwhile, home depot reporting. Courtney reagan going to break all that down for us. Its a rare day to see an in line quarter for home depot. Earnings match consensus exactly, 1. 97 on in line revenues. Comp sales solidly positive, that trend continues 5. 4 up in the u. S. , but as analysts expected, in that full year guidan guidance, its a raise to six dolla 6. 21, so home depot, before the bell, very flat here, very different from the stock pop we see on a home depot earnings morning. There could be further commentary thatll continue to move this stock so well watch that going forward. However, a much smaller Dicks Sporting Goods retailer beat the street by 13 cents on better than expected revenues. Comparable sales up almost 3 when both the retailer and the street expected negative samestore sales. The guidance range, nicely above analyst estimates. Golf galaxy remains a weak point. Golf industry is down, and Dicks Sporting Goods owns. Dmo capitalist, wayne hood tells investors, the liquidation from sports authority, is clearing faster than the market accepted and is further helping Dicks Sporting Goods and ed stack is focused on displaced market share going forward. Off price remains a growing sector, tjx, thats ross. Tjx beating on earnings, a slight beat on revenues, comp sales up 4 , betters estimates. The retailer did raise its full year guidance but that is below analysts numbers, and off to a solid start in shares there are a little bit higher this morning in premarket trade. The retail round up, courtney reagan, thank you very much. And stock futures are lower coming off the record closes, another trifect a record closing yesterday, and that is the chart of the morning. That is the dollar yen, earlier trading just whether the 100 level, its a stronger yen and weve got a bunch of data this morning. Housing starts coming in stronger, permits weaker and of course Industrial Production coming later this hour. Joining us now on the markets and the data a gina martin adams, head of strategies, and post nine, s p 500 dow jones indices, lets start with the dollar yen. When you see strength like that breaking a key level is that a warning sign for overall markets . The yen and dollar havent been particularly relevant over the recent period. It was a warning sign in the spring maybe we were getting topheavy, the yen had soared so much, what the market was perceiving Monetary Policy to be doing. Im not as worried about that now as i am the volatility in the commodity complex. Weve seen oil prices short of shoot lower and bounce back really quickly and the commodity complex is trading on a lot of volatility. I couldnt focus on commodities. Is that what weve seen a big reason behind the ral me . Part of it. Oil prices fell in the last week or so. It certainly is part of it. Energy stocks did pretty well with the rally in oil prices. I mean, we cant detach oil and stocks. I mean, i think one of the risks to the market right now is over the last few months we got really comfortable with oil prices have bottomed and theyre going to rally and we cant completely detach. Weve got to be careful in picking our spots in the commodity area. Howard, one of the big stories i think in the markets is just exactly how gentle this rise has been in the s p 500 to another index, as well. What does this tell you, this lack of volatility, with a slight upward bias right now . Definitely an upward bias. Even for august this is a slowmotion market but it is slanting up. It does indicate when we do get back to september and we not to mention the october earnings, were going to need something substantial to support the levels, especially those multiples. They are high historically. Q2 earnings helped but not that much. Theres going to be a lot riding when we get back to business in september. Howard, how are the estimates for this quarter, q3, and next quarter, and do you expect them to come down for Revenue Growth and Earnings Growth . Q2 did its job so thats good want. It was better than q1, otherwise we would have been going down a lot quicker. Q3, and 4, most of them show basically were going to beat our record. Do a lot of people believe its going to be a record . No we need to show support were continuing to go up. Sales did tick up this quarter, which was nice. Margin still remain decent, about 9. 1 , only because energy was still negative six quarters in a row. Thats an area everyone expected to turn positive as far as the earnings go. It didnt. Going forward, the projections are for positive numbers. It is still expected to be a big growth area and healthcare of course, as well. Gina, weve seen reports today looking at short interests as a percentage of market cap, is it three year lows, fund manager survey at b of a, cash balances have come down. Yeah. Allocation to u. S. Equitieeq highest since 15. Is the chase on here or not . I think a lot of constitutional buyers are getting dragged into the market sort of kicking and screaming notably, but theyre getting dragged in. One completely missing component of this picture is the Retail Investor. So youre not sensing theres an extraordinary level of optimism. Investor sentiment is fairly moderate because the investor is sitting out. Net negative equity markets exceed net negative inflows for all of 2015. So we really took a dive and we havent seen that Retail Investor put that money back to work. Thats probably where you need to see that umph to drive to you record high levels. And youre at 2,200 . Weve got a fair estimate value of 2,200 and were getting close to there. Gina martin adams, thank you. My pleasure. And howard silverblack joining us. Highlights from a busy day in rio, not so good for the u. S. One of the crazyist race finishes you will probably see. Andrew ross will join us live. Take another look at the premarket. A lot to get to as squawk on the street continues from post 9 in a moment. Breaking Economic Data right now, lets go to Rick Santelli in chicago with Industrial Production. Rick, how does it look . Yes, the yell reajuly read. Weve had exceptional data. Up 0. 7 on the protection number. Last month we did lose 0. 4, and 75 onute station, thats the best going back to october of 2015 and that 0. 7, the best month over month of november of 2014, so even though were not going back precrisis, these are good numbers considering how many believe some of these areas of manufacturing of course were moving into recessionary numbers. Yields continue to tick up a bit, but ticking up is back into the mid150s for a tenyear note yield. Rick santelli, good to have you back. Meanwhile, a crazy finish at the womens 100 meter. And having already demonstrated his tabletennis skills, hey, andrew. Reporter well show you that in just a second. For the first time in the olympics, the u. S. Did not win a medal, but the u. S. Team did reach the medal stand. Sam kendricks receiving bronze, and allyson felix, barely missed the medal, and in the womens 400 meter race, quite extraordinary, and then theres simone biles, taking home bronze on the balance beam. She had a little slip that kept her from gold, while Lori Hernandez placed second. Simones going to continue her quest for gold today on the floor exercise. And then later today, we should tell you the semifinals in Beach Volleyball where the u. S. Women are going to take on brazil. Its going to be a crowded event this afternoon and in mens basketball tonight, team usa is going to be facing off against argentina in the quarterfinals. And then later in the hour, guys, im going to show you where some athletes and their families go for a little rest, relaxation, and a few drinks, thats whats coming up here on squawk on the street. Guys . Back to you. Andrew, well look forward to that. Thank you for the update. Was crazy to watch simone biles almost slip. And when we come back, well county down to the opening bell. Have a look at u. S. Equity futures coming off those record closes. A minor selloff in dow futures down 5, and nasdaq down 9. More squawk on the street, straight from the nyse straight ahead. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov [text message alert rings] [texting keystrokes] just about eight minutes until the opening bell on this tuesday. Let get to ash carbon, director of operations at post nine, welcome, art. Good morning. We havent touched on this dudley, bullard, williams back and forth about where the Interest Rate in and how primed we are for a rate hike. What are you thinking . Im thinking it demonstrates very clearly how confused they are and these are the people making the decision. Many people found the comments by williams of the San Francisco fed a little bit dressinistresd saying they may have to tolerate, as much as you said, helping push the dollar down. The dollar is down against virtually every currency, and i think thats got some confusion reigning here. I am intrigued to see that Oil Continues to maintain a decent bid. That should help stocks a little bit. I dont believe for a minute theyre going to get the kind of opec cooperation theyre talking about. I think the saudis have made a decision. They see electric cars coming, they see solar power coming. Its not worth anything while its in the ground. Theyve got to get it out and theyve got to sell it regardless of what price, and i think they may make cooing noises all over the place but theyre not going to cut back very much. One ritort is its ringing shorts. How long will that last . Its a repeated fact. Weve done it again, and again, and again. Well have to wait until that kind of slows down. Yesterday, i suggested that there was a resistance band that 2191 to 2194 into the s p, we churned and rallied through that ban through virtually the whole day by informal trader folklore. It becomes 2195. Well see if any rally takes us up there. How do you read the dash to records on low volume . Is that a sign of conviction . Is that a concern . Well, its very rare to make new hires in august, to begin with, and when youve done that in an election year, whoever won took 30 or more states. So thatll lead to the idea that however this comes out, it might be a landslide. The general wisdom is that trump still has until the debate to right the ship if he can come across as credible in the debates and move from there, everybody expects some kind of email leak in october, so games not over yet but its interesting to say that new hires in august have presaged pretty much a landslide by some. Other a, thank you. Opening bell is five minutes away. Youre here to buy a car. What would h weand sustainability goals asool one of our top priorities. Mental i definitely rely on pg e to be an energy advisor. Anything from rebates, to how can we be more efficient . Pg e has a number of programs, to help schools save on energy. When i see a program that fits them, then i bring it to them. 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. An ordinary experience into an extraordinary one. Get great offers at the lexus golden opportunity sales event. Lease the 2016 es 350 for 329 a month for 36 months and well make your first months payment. See your lexus dealer. Youre watching cnbcs squawk on the street live from the Financial Capital of the world, opening bell in just under two minutes. A lot to get to. Weve talked about some of this fed dollar controversy. My favorite stat is on home depot, hoeme depot has gapped down on earnings four times in seven years. It does not happen very much. Usually we get a bounce out of hd on earnings. Today it looks like it might be a little bit more mild, as revenues meet, but they raise just shy of consensus. You might finally have had everybody in on that story essentially, not just a great sector but great operator, also home depot, a massive buyer of its own shares. Over the last several years it has tremendously soaked up shares so it has the Financial Engineering piece, but great comp stores. Theres been so many reasons to own it and when you get an ontarget, new increment reason to buy more. What are they buying at home depot . It confuses me but i go back to what the ceo of macys said last week during the macys recor report. He said theyre spending on apparel, and we also got the cpi, after flat months of improvement. Its not an economy on fire and that was mostly due to gasoline, also lower grocery prices which is a theme weve been talking about. Higher prices at restaurants, lower prices in the grocery store. People eating at home. Really, the out lijlier is health expenses. Core cpi, 2. 2 yearoveryear. Theres the opening bell and a look at the s p in the bottom of your screen. Its colgate, and the United States bank, head quartered in singapore, officed in 19 countries. And aetna will pull back from Public Health exchanges, joining what the likes of humana has done. Theyre going from 15 states down to four and cover almost a million americans. Theres county in arizona that stands the chance of not having a Single Exchange provider p provide insurance is how the mechanics basically work. That would be a very much larger political story. Exactly. These companies have kind of to varying degrees, tried to commit to this marketplace and then one by one, have either reduced their commitment or pulled out all together. Obviously, i think theres probably broad consensus there are tweaks to be made to the reimbursements and incentives. Private companies are not going to wait around for the fix. A pretty ugly open for hain ticker symbol, hain and the company after hours put out a reli lease theyre going to delay their earnings because of some accounting questions how they recognize revenue and theyre doing an internal review and they say they will be missing their full year guidance, a slew of downgrades on this stock from the likes of sun trust, piper, barclays, web bush, bernstein suspending coverage. The visit libility or lack of, everybody is wondering how far back this will state them on reinstating earnings and when theyre going to actually put out this release and what exactly it is about. So clearly, the stock is getting killed right now. Its lost more than a quart of its value, more than 1 billion. One interesting call was jpmorgan, ken gold man says hes lowering his estimates but the longterm story of healthy and organic foods, which are the brands that hain celestial is in, there are certainly many more questions than answers. S as people have noted, the stock was cut in half last year so there was some kind of deceleration in the fundamental business. Competition. Exactly. And once you get to a point where youre formally reviewing these accounting practices, usually it means youve kind of pushed and tried to keep it the way it was for a little bit while. Its not just a onequarter issue. We have to go back. With that being said, it doesnt necessarily impair the value of the brands. Sure. And doesnt necessarily mean there was genuinely something rot in at the very essence of the business. It means were too aggressive at booking sales. And there was a high premium valued than other Food Companies because there was an expectation there would be a takeover especially after whitewave got bought out by denone, and was trading around 26 earnings, around the higher multiples for the packaged Food Companies so it comes at a time with that prenumb, as well. And Green Mountain coffee was always dogged by accounting issues, and people thought the business was less than meets the eye, and crashed after it had some stumbles and had that position in the market somebody else wanted. Youre always going to like it at a cheaper price. The question is you can apply it without such major questions like accounting. Sure. Well see when that 10 k eventually arrives. You mentioned that call at jpmorgan is a call on jpmorgan out of bernstein. The only two big banks that bernstein has is outperformed b of a and citi. Youre waiting for this macro catalyst to come out of the fed, and valuation will argue against some of these higherperforming banks in the near term. They say winter is coming back that were six years into the credit cycle, so eventually it will weaken. On the opposite side, these are financials that have under performed this market all year long, i think theyre flat for the year and are at low, historical valuations and its hard to find a group like that in this market. Thats absolutely true. If you say jpmorgan trades at 1. 3 times tangible book, cita trade at 70 , and bank of america, at 80 . Also ive noticed some technical analysts, jpmorgan stock has out performed with yields dipping. Yp morgan was getting essentially more credit than that of yield curve. And fed fund futures imply a 51 chance of a december hike. 51. On monday, it was 42. I was going to say, it went up past 50 , notable. Dudleys. Even though we saw no inflation in the core cpi numbers. Core has been on target. Its been a running of 2 . Its not the feds key inflation member, but i think the feeling is out there that dudley wanted to, again, kind of knock the market on its heels to say dont get over confident we are sidelined indefinitely. And oil, wti just did a onemonth high, but Energy Stocks are among the days worst performe performers. Well watch oil of course as it toys around with the 50day moving average. Mro gets an upgrade at b of a, one of the more highly levered caps. And 43 up sight, so watch that but oil is definitely one of the things thats clicking as some other things dont. As the speculation builds around this upcoming building and whether opec producers especially saudi arabia, the biggest of all will make any adjustments to protection to stabilize the market, and sort of goes back and forth daybyday, but the run up has been on hopes they will. Also wanted to point out some of the retailers. Courtney mentioned tsh, it jx, now at the bottom of the s p 500. If you dig through this report, mike, you see the strength in the offprice retailer. Their comps at 4 , better than expected. They raised their guidance, but perhaps a little bit less than the market was expecting. The comments in the release this is the owner of tj maxx and home goods, robust sales, home goods, all speaking to the off Surprise Retail model, which is working, but for now in todays session, the stock is off a little bit more than 3 . Similar to home depot, to be honest. The stocks up at 50 . Everyone knows its in the right part of retail and just how much more are you going to pay for it right now and people say, they sandbag guidance and theyre not necessarily going to be missing the street estimates the way their guidance implies but for now it takes them off the table. Walmarts at the bottom of the dow ahead of earnings. Advanced auto parts down about 3 . The ceo calling the quarter not acceptable, as comps come down 41. Act vision blizzard is down about 2 as bobby corro, odick some shares. Hes been a good trade of that stock. People have a lot of faith in him, as an owneroperation of activision, and has been a buyer at times, i believe. Dow is down 71, about the level it was up this time yesterday, 76 lets get to bob pisani. 21 declining to advancing stocks so Energy Stocks not doing much even though oil is fracturely on the upside. Material is the only sector thats open. Lets start overseas with some news out of china. The hong kong stock net may in fact be a go now, and you see mixed markets over there. What would happen is Foreign Investors would be able to access the shenzhenshanghi. Shenzhen is like a new nasdaq, companies that are private and generally dont have much government affiliation. A lot of the old trumps trade on the shanghai owned by the government. So shenzhen only 40 are affiliated with government or have government share interest in them. Shanghai is 75 . Essentially youre buying into the new china, thats why people are interested in this. This should happen potentially by november, well give you more as we get closer. Lets move on and talk about the earnings situation. Do you wanton how tou to know ho be bhp . The average price of the oil they were selling, very big in the shale business down 43 . The average priece of coal, dow 17 . It causes very big problems because they just had a big, big loss, 6 billion, largely on impairment charges. They wrote down nearly 5 billion, so a lot of these Oil Companies are coming out and saying these assets were never going to really realize the investment and theyre aggressively taking losses. And of course remember they had that terrible disaster with the brazilian dam bursting, thats 7. 1 billion. Take a look at the stock. You would think the stock would be in trouble, but the stock is up because they were relatively positive. The cash flow is improving, an upbeat outlook overall. The question is where in the bott bottom is the commodity cycle and a lot of people are starting to bet again the first and Second Quarter were the bottoms in the commodity cycle. Home depot, you want to know how a maidi amazing home depot is . Were talking about 26 billion in sales. Take a look at their sales metrics, up 6. 6 . This is almost entirely a u. S. Company so its not a lot of overseas business here. Sales up 6. 6 , and u. S. Comp sales up 5. 4 , 26 billion in sales to move the dial on that kind of number is Pretty Amazing and online was up 19 overall. They raised their fullyear earnings guidance, and maintained revenue guidance so dont expect too much. The company is trading 21 times forward earnings, a big play improvement on the Housing Market and they continue to knock the ball out of the park. Finally want to note on tjx, they had excel lenielent number overall. Comp sales up 4 , the company said theyre getting traffic, mall traffic is doing well for them overall. Ernie herman says were extremely pleased our comp sales growth was almost entirely driven by customer traffic, in other words all of the issues about all of the other Department Stores losing traffic, theyre continuing to do very well, thats the main story for tjx and the rest of the offprice retailers. The dow down 70 s, back to you. All right, bob pisani, back to you. And lets head over to the bond pit, Rick Santelli at the cme group. Hi, rick. Reporter hi. The data Office Better than expect exclude explains this chart, two day of tens, yields creeping up a bit. Were just creeping back into a range thats well worn and as far as fed speak, new york fed bill dudley talking about the market not as aggressive as he thinks they should be. How many times have they cried the sky is falling . Of course it isnt. If you want the market to pay attention, mr. Dudley, just raise rates instead of playing this childish Public Relations game that has never worked. If we look at Foreign Exchange, and Foreign Exchange is where the whole game is, the Interest Rate markets are almost held hostage to these huge historic gyrations going on. Look at the dollar yen. The dollars at the lower level, the yens at the best level since november of 2013, so now lets swap out the dollar for the euro versus the yen. Best levels for the yen since december of 2012, swap in the pound versus the yen, best levels of the yen against the pound since november of 2012. So you could see, when Central Banks play games, the markets kind of smart, lines up fairly well chronological with regard to comps and if we look at the pound in an isolated manner versus the dollar, these are levels unseen since the mid80s and our charts arent going to go back more than 20 years, but the reason its important of course is its on the move. Maybe part of that was the catalyst of mr. Carney, but no matter how you slice it, it probably helps the export economy at least until rates figure out where they need to go, carl back to you. Rich, thank you very much. Rick santelli, keep your eye on the Energy Complex today, birth bertha cooms. Reporter were seeing a five week high on continued hopes opec producer when is they meet next month, might decide on some sort of production freeze. Theres an off lot of skepticism. Weve seen this movie before. They talked about a protection freeze in april, and didnt realize some, a number of those data points like saudi arabia and russia are producing all out, and iran certainly is not looking to cut back just as they are coming back on to the world market. Here at home were going to be watching the inventory numbers this afternoon, well be getting numbers from the api, but today were getting a nice tail wind in terms of an upside move in the Energy Complex from that weak dollar, thats when we saw a turnaround today. We had seen a little bit of profit taking ahead of the open outcry session here but now were a little bit higher, the same story goes for the metals complex as gold and silver edge higher, as well, thanks to that weak dollar. Back to you. All right, bettrtha, thank y. Fords driverless bet, the auto maker doubling down on selfdriving cars find out how next on squawk on the street with the dow down 75 points. Ford expanding its bet on selfdriving cars. Fill lebeau talked about it live in chicago, morning, phil. Good morning, sara. This is an investment in the silico silicone valley and into the future of automobiles that ford believes is the right time to make in terms of what its doing in palo alto. We marked with mark fields, doubling its staff, at its r and d facility in palo alto, and in addition, announcing new partnerships with a new of suppliers and Tech Companies. The company will be investing 75 million in a lidar firm, the key to the selfdriving vehicles, allowing to survey the surrounds and the traffic on the road so theyre able to go down the street without hitting other vehicles and objects, and mark fields is adamant despite the company taking its time and being very methodical, it is ready for the future with selfdriving cars. We view the next decade is really being defined by the automation of the vehicle, so our view is Autonomous Vehicles could have a big effect on stoke like 100 years ago. What do investors think about the quote unquote Tech Companies and i know tesla gets a lot of attention saying its all tesla all the time, thats all investors care about. Not necessarily true. You see tesla to a certain extent, outperforming ford and gm, but are moving in tandem over the last year, obviously tesla has muchbigger swings into the upside and the downside. Guys,ing this something. The selfdriving car is coming. Will we have it by 2018, 2019, 2020 . It remains to be seen. This technology is coming. Phil lebeau on fords latest move. And making a big bet on Morgan Stanley, for what that means on the rest of the Banking Sector in just a moment. The s p 500 off less than a half , be right back. Whats happening here . This is my new alert system for whenever anything happens in the market. But thinkorswim already lets you create custom alerts for all the things that are important to you. I guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at Td Ameritrade. 1. 1 billion take, about 2 point of the company, down about 20 over the last 12 months. Valuact chairman wrote, quote we believe theres dispurportionet amount of time in trading and lending business and training about the fed oversight. It feels like missing the forest for the trees. Interesting take here of an activist investor by representation and mission, but not really taking a hard edge activist stance right now, basically saying its an under appreciated business story. Hard to necessarily know what an activist would have Morgan Stanley do to unlock that value. Also what he said separately is theres this capital trapped in the fixedincome business, and other firms and that gets liberated over time by perhaps of the rest of the industry exiting and maybe you get better returning. It seems like theres a lot of moving parts. The retail business, the ceo of james stanley, is more stable in theory, because theyre not earning anything on those cash balances. Morgan stanley up 1. 6 today, really not a forceful move, but universally, you can send it cheap for a reason. I wonder if it could mean other targets in the Banking Sector, which has been underperforming now for a while as we referenced earlier, and i wonder if its a catalyst for these stocks to sort of wake up . I guess the question would be exactly what would that catalyst comprise. So in other words, if youre looking at bank of america, a vastly bigger business, three times as big as Morgan Stanley, you could say, break off the old Merrill Lynch or do something radical. I dont really see people dont see that as a likely possibility. These guys are regulatory beasts right now being forced into becoming utilities and really Big Questions as to whether they would do anything drastic. The notion theyre not seeking changes is true until its no longer without a doubt. Theres a little winkwink there. Youre automatically on notice if they dont like the direction things are going, management decisions or changes, its worth noting. I also did and this is just kind of a qt side note but all the investment clients will advise them on activist defense, so you being investment banker, Morgan Stanley did hire a highpowered lawyer so maybe hes working for the house. I know youve before watching that all morning long. Aetna is pulling out of the Affordable Care act, what that means for shareholders and c consum consumers in those states and well talk about the huge move in hain celestiacelestial, afte disclosure surprises, downs down 56, were back 96. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Romantic moments can happen spontaneously, so why pause to take a pill . Or stop to find a bathroom . 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Contact your health plan for the latest information. Good Tuesday Morning welcome to squawk on the street, im Carl Quintanilla with sara eisen, mark santoli from the stock exchange. Dow is down about 50 points off the low, but oil remains constructive just below 46. Our roadmap with the hour begins with the chart of the day, that would be the dollar falling sharply dipping below 100 against the yen, weighing on stocks this morning. Hails celestial getting hammered after its delayed report after accounting issues. Well talk to an analyst who downgraded the stock. And fueling the first offshore wind farm, about to get all fired up this fall, well take to you block island, but we begin with retail earnings as home depot beats estimates, helping boost Second Quarter sales and profit as people become more willing to spend on Home Improvement targets. Well get walmart and target this week. Is the trend likely to continue for Big Retail Stores and what do you do with the stocks . Joining us is the committee of Development President and ceo, and the storformer staples ceo. I just learned mike santoli goes to home depot to buy lumber. Clearly people are spending on improving their homes and the question, steve, is, how much longer do you see that lasting with the Housing Market that continues to recover . We got those strong starts this morning. It looks like people are putting money into their houses and buying automobiles but virtually Everything Else in retail is dead. If you look at the numbers last month, they were flat, first of the previous month up 2. 3 yearoveryear, which doesnt bode well for economic growth, although if youre a fed watcher, it says the fed probably should kick the rate increases down the road a little bit. I think the big story is bricks and mortar in general are getting killed by amazon. Amazon has about half of all online and if you look at online sales last month, they grew by about 14 yearoveryear, and i think that was driven in huge part by the amazon prime day where they had the largest single day sales record ever, and people estimate between half a billion and 1 billion on amazon in one day. So i think the Online Retail is just killing bricks and mortar right now. Not everything is dead, steve. Weve got tjx earnings this morning. They show they can post sales growth sthar abothat are above l industry, so off price showing signs of strength and its not like retailers are sitting still. Were seeing walmart buy scing jet. Com, and macys closing stores. Are they moving in the right direction . Theyre paying a lot for these Online Properties and thats a really smart move. If you look at apparel, Department Stores have lost 30 billion in sales over the past decade and online picked up 28 billion. A few years ago you said you cant sell Apparel Online because people like to touch it and try it on. That hasnt been the case. Youre seeing some people fighting back and some having some success but if you look at the long haul, all bricks and mortar retailers are scared to death about online and about amazon in particular even though every brick and mortar retailer has put up great online sites and is investing heavily, still amazon has half of that business. Hey, steve, im looking at some of the things coming out of the quarter, 42 of online orders are picked up at the store, and im just thinking, i mean, stuff that home depot is heavy. Is there a Natural Immunity from amazon . Rick santelli is the case in point here. Its really hard to get the lumber delivered on line so there are some things that are really better off being picked up in the store but people dont like to shop and its a time thing. This whole phenomenon thing of ordering ahead andic approximating up suggest the time pressures are real and i think home depot has done a great job in that online to store pick up. But theyre different than a lot of types of players where you can order it online and have it delivered the next day and everythings fine with it. I think theres no story here that covers everybody perfectly expect generally, i think youve got to be worried about the shift to online. Steve, you know, i guess theres an argument to be made that traditional retailers have been not only dealing with the amazon threat, the online threat, but also dealing with price deflation for years now. None of this is really new. Is there a way that perhaps a lot of these bigger retailers can have kind of a managed retreat, and essentially go through this transition without it necessarily becoming a crisis . Thats an excellent question because you know, everywhere you see these declines youve got retailers ripping costs up but still you have inflationary pressures on wages as people expect their salaries to go up every year and theres some natural inflation in real estate and so forth. So there are these natural pushes and when the comps come down, the delevering is really tough to manage through. And so what you see here is some extraordinary actions and i think you see a lot of cash being held on Balance Sheets, leverage going down, people getting out of longterm leases, all of these adjustments which is really, really important. But the if youre in the mall business, youve got to really question, you know, the future of all of those huge, huge investments in real estate around the country. And just as we get ready for the walmart earnings on thursday, you know, walmart is shining this year, up 19 . Year to date, after underperforming for a long time, do you share investors enthusiasm about the turnaround efforts Doug Mcmillon is trying to make for the short and longterm . I think doug has done a wonderful job at walmart. Do you remember what they did in the stores is cleaned out all the stores. They had way too much inventory in the stores. They had the aisles clogged with all the secondary displays and they went to a different philosophy and took it on the chin for at least a year as they moved all that excess inventory out. This other online to store pick up cleared space in the back rooms of inventory in order to make room for this store pick up thing. Now theyre cycling all that and the numbers are starting to look better and i think theyre better positioned. Its interesting to see this jet. Com investment. I think it was a smart it was a dear price, but a smart investment because they simply werent getting it done on their own. And before we let you go, steve, wanted to ask about your current role at the committee of economic development, youve been following the election issues complaining we havent gotten to the economic substance. We have started that now so im just wondering whos you think is wondering the growth, age and jobs argument on the campaign trail . Its unfortunate that so much of the campaign on both sides has had focused on small issues and you know, personal attacks and those kinds of things. I think most Business People would really like to see a discussion of true economic policy. What are we going to do with corporate taxes that are the highest rates in the world and riddled full of these exceptions . What are we going to do to stimulate growth in the economy . Weve been sliding sideways for many years. What are we going to do about regulations choking job creation . And these are the kind of discussions that havent happened yet and really do need to help in order for businesses to invest again. Trump started to lay it out and got distractinged widistrac issues. Do you like the plan of lowering the tax rate to 15 and getting some regulations . I think most economists would tell you the nominal took rate it is are too high, but theres too many loopholes and tax preferences and exceed tpenditud we need to flatten all of that out, and most corporations would agree. The question is whether we can get this dine in tone in the highlycharged environment in washington. Business people are holding back waiting for the reforms to happen. Thank you for speaking up as always, steve good to see you. Great to see you. Committee of economic development, former ceo of staples. Lets get a broader check on the markets, dow down about 25 points. We did get earnings from mining giant bhp billton overnight, the largest loss in the companys history. Andrew mckenzie talked to cnbc europe a few moments ago. Prices have been falling quicker than weve been able to cut our costs but now were finding our costs are coming out quicker and prices are more stable. Its hard to know whether theyll stay that way, but we expect that theyll trade pretty much within the range theyve traded over the last six months, and you know and as markets start to come more back into balance than were seeing some signs of that, then theyll trade closer to the higher part of that range than the lower part of the range. With the strength of our Balance Sheet and the continuation of our productivity momentum, we can wage something that might turnout something a little bit worse than that. They clearly are not calling if per a huge relief in Commodity Prices or demand, but believe the costcutting, making a bet on some Deepwater Petroleum measures can improve cash blow in the coming year. The general sense weve sort of made it to the other side, not that its back to boom times, but weve preserved what capital we could and the stock kind of says that, the upper end of the annual range. And you look at the emerging markets, kind of cover the story of having to worry too intensely. Brazil is a good example. The number one export there. And veil, as well. As we take a break, take a look at haines celestial. Well talk with an analyst downgrading the stock and ask how in the world youre even coming up with pay rating right now. Plus, richard turnil will join us, a lot more still ahead. Dont go away. Experience more confidence regardless of the conditions. Get great offers at the lexus golden opportunity sales event. Get up to 5,000 customer cash on select 2016 models. Ends september 5th. See your lexus dealer. Welcome back. Lets get over to sema flash. Early talks about a possible merger, it is a deal that could be valued at 60 billion, and also follows a wave of consolidation weve seen in this industry partly due to the drop in Energy Prices but given the dominance of these two players, this is a deal that could likely face push back from regulators in todays trade were looking at praxair up about 5. 7 , and linde, up 10 , and currently the only positive sector in todays trade, carl. Thank you very much. Another exciting night at the olympics, our Andrew Ross Sorkin joins us from rio. It wasnt the best day for team usa, right, andrew . It was a tough day because we didnt win gold in 29 days. Not bad all around. We are still made some medals. It aint over yet. And of course were still at the top of the title. In the meantime we want to talk about the business of the olympics because sponsor ship isnt just about apparel, many big brands along with countries have set up hospitality houses, something of an olympic tradition. The heinikin is flowing at the rio de jeneiro, where thousands of visitors pour in to soak up the sun and the suds. Its almost part of the olympic culture. Also known as the heinikin house, it was a pioneer in the olympic houses started back in 1992. Since then the number of them has grown, as of the size of them. At the swiss house you can climb into a giant snow globe, at the japan house you can catch a glimpse of what the 2020 games may feel like and at the usa house, Hershey Company throws parties for athletes, their families and vips. They come here, and can feel a bit at home. Were providing hershey smores. A lot of these athletes have been training so hard, its a great way to unfind. They can also unwind at nike house, or png family house where athletes can get their nails done or have a hot shave. Its all a way to promote tourism and companies to promote products and even before the flame goes out in rio, plans are already in the works for the next olympic games. Weve already been to to kyo four years from now. You need to for a great house you need to do a lot of preparations. Reporter there are over 30 of these houses set up around rio, many open to the public, while others are a bit more exclusive. Usa house is having a party. I still want a hot shave at the png house. And get your nails or your toes done as we saw yesterday. My toes done, yes. Im going back to your column this morning, in rio on this business question of whether it pays to host an olympic game. I know carl was looking into this question, as well. I did not know that Christine Laguard suggested that olympics should permanently be in greece . Yep. She suggested she was at the ideas festival earlier this summer and came out of a question from the audience and she said that she endorsed the idea of it being permanently in greece, of course the birthplace of the olympics. The idea keep the costs low. I should also tell you we had casey wasz Casey Wasserman on, and one of the things we talked about off camera was this idea that maybe, rather than have, you know, all the rentals, all the temporary stuff you see around here, if the ioc were to actually do that, and buy all of this stuff and ship it around the world, you could really take the cost down by hundreds of millions of dollars. I do think by the next couple years we may see a rethink how some of the economics play around around not just the host cities themselves but the behind the scenes logistics of all of this. That is something to consider. Andrew thank you for now. See you in a bit. Thanks. Reporting from rio all day. Hain celestial will delay its Earnings Report due to accounting reviews, the food maker down almost 30 , and hain saying it does not expect to reach anticipated sales and profit levels it brought out. Lets bring in bale chapel, robinson humphry. Bill is one of the numerous analysts to downgrade the stock this morning from by to neutral. Were trading just below 40. How did you come to that level . How do you put a price target on a stock that we dont know what the earnings restatement will be and how long it stretches back. Hi, good morning. Its not a perfect answer or a byrated stock. You had to look at it what they said to certain distributors in the u. S. And accounting on that revenue for certain periods. From my experience that tells you something shifted. It hasnt disappeared revenue, disappearing earnings so if you go back to fiscal 15 numbers and on a trailing basis, its trading at about 12, 13 times that, that seems fair, but cant give you a whole loll of certainty. Does this take the m and a story off the table . Might say it becomes a more attractive targ wetet with a chr price, but the serious question what its going to look like and when might dissuade a potential inquirer. And its important to understand whats happening today is partly about the earnings and the accounting and a big part about the m and a speculation, the air coming out of that bubble. It started a few months ago with white wave being taken out. It added when hain canceled a conference two months ago and grew greater when they hadnt put out a press release. Up to the last week there was a lot of speculation being pushed into this stock that all came out with the press release yesterday. In terms of does that mean m and a is gone forever . No this is the type of situation that does attract activists, and no large Majority Shareholder of the name, and it is the last one standing in terms of over 100 million in sales in the healthy space thats publiclytraded. Its the only one left if other Companies Want to get into this category, and postpones until they clean up the accounting issues. I imagine for an analyst this has to be like going across the dark side of the mood, right . For the time being you sort of have no navigation from the company. How do you how does your model work in that case . Its a best guess. No, thats a great question. Youre just going on historicals understanding that the numbers are at least stable, and not that customers or profits went away. But like you said, its kind of a black hole until any time accounting and irregularities come up we have to downgrade because you dont have enough information to say heres where you would buy the stock because on a Valuation Base sis im notw you get there. A general concern about hain and its accounting, i wonder if you say maybe its a time shift, for how long might they be pulling forward sales if thats, in fact, what was going on and does that change exactly what the earning power of the company could be longterm . Correct. The issue with rain was stock option pricing, not necessarily with recognition, so thats continued to haunt them ever since because people throw that into the accounting bucket. But it doesnt appear at least from the verbiage they put out, it looks like it was certainly distributors in this past 12 months and they filed the 10 k with the sec last year and the year before and that was audited. The only thing we can go off is what they said, its a nearterm issued they discovered as they were going for this 10k audit it doesnt affect all prior years. Until we get some further findings which is probably october, november, i cant give you 100 answer. I made the point earlier on squawk box, bill that it comes at a time where the sales growth, that 25 Revenue Growth that we saw i think in fiscal 15 has slowed down a bit. They got tcompetition from some of the bigger, well capitalized Food Companies that have bought a lot of the rahain competitors. I wonder if this changes the narrative from the nastgrowing food target to a much lower valuation and that was short of coming and short sellers are looking for an excuse for that already . No, i think its right. Part of me wants to say that if they were playing with the numbers they didnt do that great of a job. But in all seriousness, you look at it, makes it more of attractive of a takeout candidate. One of the things hain says is their products are only 10 household penetration or only 50 of the u. S. Grocery players. If youre a Bigger Company you could acquire hain. I think thats seen as an opportunity they can get them across the finish line to expand both households penetration and distribution. It makes them more attractive with the stock where it is, than when its trading at an all time high and people might not think they have to pay up for that. Thanks for talking through the downgrade today, bill. Good to see you. Bill chapel from sun trust and the stock, carl, already trading below his lowered target below 40. Lets get over to jack aie deangelo. Reporter behind me a 300 million wind warm offshore, its the first one in the United States. Were going to discuss if its worth the investment, stay with us on squawk on the street. Energy is a complex challenge. People want power. And power plants account for more than a third of energyrelated carbon emissions. The challenge is to capture the emissions before theyre released into the atmosphere. Exxonmobil is a leader in carbon capture. Our team is working to make this technology better, more affordable so it can reduce emissions around the world. Thats what were working on right now. Energy lives here. Man youre beautiful [click] im coming back to you [click] farm fresh ingredients, stepbystep recipes, delivered to your door for less than 9 a meal. Get 30 off your first delivery blueapron. Com cook. eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. The county robber countryse wind farm off the south of block island in rhode island. Were joined by some of the economics behind that move, hey, jackie. Reporter good morning to you, carl. Thats right, this is historic in some ways, its the first u. S. Offshore wind farm, south of block island here just about three miles and in some ways its a large step and a small step forward in terms of alternative energy. Its a small step forward because its only pouring about 30 megawatts of power. Thats about 17,000 homes, its a little bit larger than block island but its a large step because its the first one. Now deepwater wind, thats the Company Behind the construction of this five turbien, 300 million product. It is going to receive a government subsidy in terms of a tax credit when operational. Now that blueprint has been creat created, deep water is planning an offshore win farm between block island and marthas vineyard, and would generate about 1,000 megawatts of power. In the next decade well see several gigawatts of offshore wind. We have an enormous amount of offshore wind across the east coast. Reporter the department of energy offer some perspective on the size of this market, and says nearly 16,000 megawatts of offshore wind projects are in various stages of development. Analyst think growth will be high in the coming five years, but these projects, they have their critics. Some unhappy homeowners say offshore wind farms are going to hurt Property Values and many say these projects lock homeowners into energy rates that are higher than what theyre already paying. Now think about this, 300 million, its a lot of investment to make and the question is, if its worth it, darl. Fascinating discussion, and its sort of the classic alternative energy social externity, you may have cost savings or environmental benefits but youre going to have more social discussion than you would otherwise. Reporter absolutely and its raised a large social discussion here on block island. I mentioned some of those homeowners are unhappy and you have other people saying this is a great step forward for alternati alternative energy. We think its somewhat beautiful were a part of this revolution and the first ones to be doing this. So multiple views on it and of course there are the economic angles, too. Jackie, thanks, and in terms of the eye sore thing, electrical polls and telephone lines were considered to be beautiful when they came around either, or oil derricks for that matter. So well see if that argument holds the day. Reporter exactly. As we head to break lets take a look at the market, a little bit of downside across the board. The nasdaq has been the slight underperformer and the dow, right across the board after two days at record lows. Well break it down with our chief investment strategist, richard turnhill, when squawk on the street returns. Youre here to buy a car. Good morning, im sue herera. Heres your cnbc news update. Russia says its longrange bombers based in iran struck a number of targets inside syria, carried out against isis in aleppo and other provinces. And an arrest has been made in the fire of clayton fires. Damian pashlik is charged with several counts of arson, as well as several fires in the past year. The sec announcing charges against eatenon r capital management, and is accused of paying investments on behalf of the hedge fund and invoke a survivors option. And the left eye conic rivera hospital was the first high rise on the vegas strip and for years it was one of the citys most famous casino. Look at that. It was closed last year. Thats the news update, carl, ill send it back downtown, time marchs on. Youve got that, thank you, sue. Stocks are in the red, 42 points on the dow after the record finish yesterday. The dollar of course stumbling to this new postbrexit lows as investors remain cautious, and more on the markets, richard turnill, over at black rock, good to see you again. Good to see you. Maybe you can walk us through some of the conflicting insight were getting from various fed officials, whether its williams or dudley. What should investors be thinking about their collective intention right now . Selecticollectively, theres relatively clear message is that is that med is going to move very cautiously, and potentially, willing to let the economy run somewhat hotter, and inflation to run somewhat higher than investors were expecting only a few weeks ago. So compared to perhaps some of the stronger data into the u. S. , investors could be encouraged investors would be on the sidelines, at most well see one interest hike this year. Is the market prepared for one interest hike this year . That may be the question. By bill dudley, to try the put the markets maybe they want to price that in. So look i think theres three key things driving feds decisionmaking right now. One is whats happening in the domestic economy, theres clearly been better data coming out of the us for sometime. Its still patchy we so all that with the retail sales figures that came out on friday. Secondly, the international economy, and in broader statements, the international risks to the u. S. Remain very much at the forefront of the feds thinking, and i think the tone has really changed where the fed has signaled its prepared to err on the side of caution, on the back of some comments we saw from Governor Carney in the bank of england, as well, suggesting central bacbank is willing to be a little bit more on the conservative side. Many investors worry the fed was going to raise rates, perhaps make a mistake in raising rates too early. Collectively, we had a strong signal from the fed theyre going to raise only gradually. I think whether its one hike this year or none is less the issue. I think the overall issue is theyre going to be cautious, and let the economy run and shouldnt be worried about a fed rate hike and what that does for your portfolio in the shortterm. Why not . A lot of people are looking at last december, which was very gradual, and tiny in terms of an interest hike and the stock market got off to its worst start, yes, the chinese currency became an issue, but e patrollipatro merging markets sold off, why should they not have that sort of deja vu if the feds move this coming december . Part of that i think the feds have learned from the last december and doesnt want to see a repeat and the message is very deliberately aimed at trying to avoid a repeat of that. Secondly, the international environment, we saw going into january of this year, a lot of weakness coming out particularly in the chinese economy, downward pressure chinese rmb. The economy is slowing and the data has been getting in Financial Markets over recent weeks, weve seen stabilization of their nmb and stabilization in terms of foreign reform flows in china. A very different kpiermt, is and also a ve environment in terms of the dollar. A lot of things have changed and directively, it means less risk of some of that turbulence when the fed last raised Interest Rates. We heard from bhps ceo a couple moments ago talking about their forecast, and that led to a discussion how much the e merging economies have priced in. We referenced brazil specifically. Has that played out about as much as it will for now . Were still very optistmisti in emerging markets in general. Both equity and debt, almost 4 billion, just in the last two weeks across the market. But we are still think thats further to go. The reasons we think thats further to go is were getting stable stabilization activity, where growth is good enough and some evidence that earnings in emerging markets are starting to stabilize at the same time. Both the fundamentals and the glob at environment for em remain very supportive. If we look at valuations these assets have done very well year to date, but they started the year very depressed levels. You had extreme valuations in parts of the elk widquity markee see further scope for those valuations to rise. What about the u. S. Equity market here . Small moves to record highs, what do you think the next big catalyst will be for a big move and which way will it be . So we think its going to be chopper from here until the end of the year. Obviously the market will be focusing on the election in the next few weeks historically weve seen volatility rise into u. S. Elections given that were starting with the s p already at a record high. Were starting with a vicks close to record lows, very low levels of volatility, we think thats on a path of rising volatility, election is likely to be followed again. Beyond that its going to be a lot of focus on whether the fed does or doesnt raise Interest Rates this year but most importantly will be what happens to the earnings cycle. Weve seen six consecutive quarters of negative earnings. To get the markets higher in the reminder of the year we need to get stocks move positively, but we think it will be gradual. Richard turnil well, from back rock. And our birertha cooms has story from us shes been following. And they cannot susdaned losses they have been seeing on the Obamacare Exchanges and essentially saying theyre going to slash participation in 2017, by 70 . Theyll now participate in just four states, delaware, iowa, nebraska, and virginia. Thats down from 15 this year. And remember, going into this year, aetna had said it was going to expand its coverage in 2017, but in the Second Quarter they booked about 230 million in pretax losses on those plans because the customers continued to be more expensive, and reimbursement offers and the programs from the government have not been enough to offset those losses. Now, officials at hhs say that they regret aetnas departure, but there will still be competition on the exchanges. The ceo of the exchange, saying the Obamacare Exchanges are here to say and they will continue on beyond next year, even with aetnas departure. Hhs also says theres still going to be plenty of competition, in georgia, even with aetnas departure, there will be five players there. But in some counties where both aetna and United Health pulled out this year, for example, in arizona, theres one county which right now perspectively, has no insurers offering plans. For aetna, it will mean they will be able to stem losses next year, and analysts say thats something good, but chris rig over at susquill hannah says it calls into question the sustainability of the Affordable Care act market. Robert lachefski pointsu out its not these Major Public Companies but the blue across blue shield plans, the nonprofits, that have a commitment to offer local insurance in the global markets, many of them are losing money, as well, so you have to wonder how much longer they will retain a commit to thement to these maf theres not some substantial change. And in his comments last night and the Statement Issued said he still remains committed to the exchanges and remains committed to working with the government to try to make some changes thatll make it more variable for insurers to stay on these marketplaces. But for now, in 2017, hundreds of thousands of people could find themselves with fewer choices, certainly no plans from aetna and no plans from United Health in a number of states. Back to you. Weve got you working two beats today, bertha cooms. And a 2. 2 billion deal, the biggest gainer in the s p 500. Dows down 36 points a lot more squawk on the street is still ahead. 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Lower blood pressure, more energy, higher productivity and better concentration. Voiceover and for a limited time, get Free Shipping and remember, every inmovement desk comes with a 30day moneyback guarantee, so you can try it riskfree voiceover call or visit inmovement. Com and use promo code freeship. Thats inmovement. Com. Many text stocks have done well lately, but our two sort of older cap stocks finally ready to break out in a big way. Go to tradeth nation. Cnbc. Com, with more squawk on the street coming up. Some breaking news here out of the hedge fund world, lets get to kate kill we more. Reporter steve cohen, the money manager based in stanford, connecticut, has settled charges from the cftc, the commodity futures trading commission, but essentially parallel sec charges made year ago he failed to supertize matthew martomer, a Portfolio Manager who focused on pharmaceutical stocks and was convicted of Insider Trading is serving a sentence for that. Cohen, settling the charges that mimic the sec charges without admitting or denying any wrongdoing, however hes barred from supervising a registered party, that would essentially be a hedge fund or an employee of a hedge fund that accepts public money from now until the end of 2017. Again, a very similar settlement to what he entered into with the sec. So essentially, hes still barred from accepting public money or supervising somebody who trades under cftc regulations until early 2018, but at that point, we could see him reaccepting public monif ey he chooses to go that route. This seems to resolve the legal matters against cohen, but another development in his long time hedge you understand. Kate, thank you. And point 72, the name of his current privately held fund says were pleased to resolve this matter. Got it, thank you, kelly, kate kelly. After 15 years the World Trade Center Shopping Center is reopening under the west field name. Courtney reagan made it over to the new space and she joins us with a special guest, courtney . Reporter good morning to you. Thats right. Here i am in the westfield World Trade Center, and im joined the ceo. Its a very big day. Its been a long time in the making. The lease was signed in july of 2001 and the world changed. So how significant is this day for you . Its hugely significant. First of all, yeah, were very respectful for what took place on this site. It will be forever remembered. But whats really important is also the resurrection of the site. This is now a place of culture, community, and commerce. For westfield, its particularly significant because were opening what we believe is now a global flag ship setting a new Global Benchmark with Global Consumers and how they interact in one of the most magnificent buildings on the planet in the Financial Capital of the world. Were particularly conscious of what went on here and were very suspectf respectful of all of that. And you have a lot of activities for the families, so a little bit less celebratory in all of mall openings. Theres a lot of concern about whats going on with many retailers closing stores, much more so than they have in the past. Is that concerning as a small operator, especially opening a big, beautiful project like this . I think westfield recognizes trends some years ago and has transformed itself into a business that essentially owns flagship assets in major iconic cities and this is the example of a future of retailing, not the past and if you look around this mall you would see the most cutting edge retail on the planet. Apple just opened a one of their global flag ship stores. In the 2001 they only had one store and today theyre the most productive store on the planet. Food is a very important aspect of the mall business today, and italy has opened a second store in new york and actually theyre opening with us their first store in los angeles in the redeveloped century city. So the focus on technology and the focus on food is really important, and its making up, and the focus on entertainment and interactive concepts. We have some real 50s. We have some partnerships that have been created with jpmorgan chase, with ford, opening an interactive innovative hub, with pepsi co, and analyheuserbusch. Because this is such a special building with 300,000 kmooucomp a working day, and 15 Million International and domestic incredibly excited. Just a quick final question. You mentioned the tourists. Tourism is very important for you p is that a problem lately, tourism . Tourism is not a problem. Its an exciting opportunity. This place is not based on touchism. Lower manhattan has been transformed dramatically since september 11th. Its not a place to live and raise families, not just a place to come and work. Its a thriving Lifestyle Community that has taken place, but the fact you also have tourists and thats such an important side and its a big plus. New york city is a very special city. Thank you so much for being here being here from australia. Congratulations on the big day ahead. A pleasure. Steve lowy, coceo. Opening near lit 15 years after september 11th. Thank you for bringing us that interview. As we head to break, lets look at where we are on the markets. A miniselloff on the major averages, dow is down 47 points. Home depot is outperforming after earnings this morning, the nasdaq lagging all three, down about a half person, though all ten are lower. Welcome back. Hi, rick. Antirothman is my china guy, thank you for taking the time this Tuesday Morning, andy. Good morning, rick. Well, reading all the things you write and the notes you send, i understand that investors seem to be looking past the greater than 2 debt to gdp. They seem to be looking past the notion that theres lots of to me its more Global Investors, theyre pretty much ignoring all bad news globally. Your comment . I think with xhin, its important to make a distinction between the fact that klein faces a lot of challenges, some of which you just mentioned, but unlikely to result in the instead theyre likely to continue to contribute to gradually slower growth, but remember, rick, china accounts for about a third of global growth. As an investor, how can you not be paying attention to that . I understand japan accounts for a great deal of global trade as well. Theyve been lieding for the best part of 2 1 2 decades. Theres a long timeline. Your comment on the recent devaluations . Well, i think that its become clearer to investors that the pace of devaluation or appreciation between the chinese currency and the dollar is under control of the Chinese Government. So Global Investors really freaked out about a year ago, last august when the government overnight devalued by almost 2 . Hartley anybody that is paid attention that its about down 2. 5 against the dollar, because people seem to believe the process is under control form the real problem was just terrible communication, and i think theyre learning from that. Boy, yeah, there is a lot among the being banks. My final question. Mid october we get money market rems. It is the short story here is that government paper will be king, all nongovernment king will not be. That may have even bigger effect on the dollar because of the correlation with which is currently at the highest level since may of 09, whereas the shibor is almost the best value final comment. I think the Chinese Government has been doing a good job of keeping the shibor steady, but the chinese are pressured to move in the opposite direction where the dollar goes, but i think they still have the ability to make sure plus or minus basis its not going to move on 5 in any one year. Its great to have corrals around marngts, isnt it . 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