Now. S. Lets check on the groebl markets this morning. Show you the action after stocks fell yesterday in the u. S. For the second day in three sessions. Looks like dow futures under a bit of pressure. Not a whole lot of action. S p futures down two as well. Nasdaq futures down five. Weve got a boat load of earnings, including several key dow components including mcdonalds and apple coming your way later. Fed kick off a twoday meeting. Weve got the 10year treasury note yield a bit lower this morning. 1. 54 so some buying off of a selloff particularly in japan overnight. Those stock mashlgts we just saw in the u. S. , yes weve seen them sell off a bit yesterday, but the dow and s p over 3 month to date. Nasdaq over 5 . Similar kind of moves in europe and asia so far this month so we have seen a bit of profit taking over the last couple of days. The ftse and cac are up 3 . The dax is up over 5 month to date. The fact were seeing a little bit of selling across the screens. Most part, holding the gains. Exactly right. However we did see a bit more of a pronounced selloff today in japan. That driven by the yen, which went higher. The nikkei went lower to the tune of 1. 4 . Rest of asia holding up pretty well despite that move. As for the Broader Market picture right now t dollar maz been creeping higher over recent weeks. Taking a pause. V at least today. The euro stronger at 1. 1013. The japanese yen is stronger on diminished expectations for fiscal and monetary stimulus passage. Gets your attention this morning. The pound at a twoweek low. More expectations of easing. Different opinions on when and how that should happen. We have more data out of the uk today. Uk business lending falling for the first time this year. That data for june predominantly saying the leadup is coming. Both on services and manufacturing. Yes, thats what really cemented peoples expectations to the easing we didnt see in july. We will see at the next meeting coming up. Lets look at oil. Oil is down 4 in the last few sessions. We just broke the low on wti. The selling continues. The momentum continues to the downside this morning. Down. 3 . Brent 44. 54. Energy and gas playners europe are the worst performers right now. Bp profit outlook missed expectations and the pain is continuing. Month to date wti is down 10 . Makes the gains weve seen all the more impressive particularly when the dollar has gained as well. Those two factors, weak dollar and stronger oil. They dont apply anymore and u. S. Stocks all be it small declines yesterday, are holding on. Resilience in the face of the oil decline. You wonder how long that could continue. The slump in oil could have to do with the stronger dollar. You still have cause out there that the global glut is there. Theres just too much oil. Well see if we can stabilize in the 40 a barrel region. Quickly lets show you gold. Gold has had a pretty strong year. Higher again. Little more than 3. Want to tell you act a developing story out of japan this morning. 19 People Killed, 25 injured in an attack by an knife wielding man at a facility for the disabled. It happened about 25 miles southwest of tokyo. Japanese media reporting a 26yearold former employee at the facility has now been arrested. Police are investigating possible motives. It was a lively night in philadelphia. Democratic National Convention as the party looked to show unit, former rival Bernie Sanders endorsing Hillary Clinton for president. Despite that email leak showing the dnc worked to undermine his campaign. Any objective observer will conclude that based on her ideas and her leadership, Hillary Clinton must become the next president of the united states. Also speaking in prime time, mitchel obama. In this election and every election is about who will have the power to shape our children for the next or eight years of lives. There is only one person who i trust with that responsibility, only one person who i believe is truly qualified to be president of the united states. And that is our friend, Hillary Clinton. Much more from john harwood at the dnc in philadelphia in just a few minutes. The big question there is did those progressive notably sanders and warn manage to quell the peace of the party that has broken out. The sanders sparked revolution. Hes had trouble now convincing to get behind Hillary Clinton. A few rallies yesterday where they booed him when he asked them to back here. We knew the Republican Convention was going to be divided and volatile, but i suppose given that Bernie Sanders pulled out a while ago and suggested he would back Hillary Clinton, we didnt expect to it be quite as divided. So many no tpp signs. Did you see that. The Transpacific Trade Partnership erupting as a hot butt issue in this election. I think it was because sanders was against it. Didnt get it into the Democratic Party platform. The one person who everyone use versely adored was the first lady. She could be a huge asset. More on my must read later this morning, but first lets tell you about wall streets agenda today. The s p price out at 9 00 a. M. Followed by new home sales is at 10 00 a. M. Both expected to confirm the steady momentum building in the housing market. The fed kick off a twoday policy meeting today. That decision out tomorrow 2 00 p. M. Eastern time. Here are the earnings to watch. 3 m, caterpillar, due ponte, mcdonalds, United Technologies and verizon all reporting before the opening bell and after the close, the two bigs to watch will be apple and twitter. I would say low expectations for both. Apple as well yesterday the big move on s p downgraded it was down 1. 4 yesterday. Had a bit lowered expectations before. Have to wait and see. On that note, of course, apples earnings coming out after the bell, three things to watch. The street is looking for apple to report earnings of 1. 39 a share on revenue of 42 billion, but beyond the numbers here are three things to watch. First, the sales. Apple posted first quarterly revenue decline in 13 years. A lag in hardware continues to be an issue for apple as iphone sell haves slowed. The stock shares of apple are down 22 in the past year. The sales decline has been factored into the stock price. The stock recovers after any summer selloff in the lead off no a new iphone launch. The iphone 7 is expected to be released in september, but fewer customers will likely upgrade to the knew device and apple will continue to suffer from a slowing smartphone market. Cut the rating on apple to sell and lowered price target to 85 from 110. Thats why that forecast for guidance in the next quarter is going to be so key. Landen, thank you very much. Gilead lowers guidance. Sharings are down 4 premarket. Las vegas stands disappointing on the bottom and top line. Earnings falling 30 in declines. Makau declines still the stock bounced. Shares is of cell gene taking a hit. A late stage study of the drug disappointed. Weak refining markets. Missed profit expectations and cuts in 2016 bijt investment. Shares disappointing to the tune of 2 in london trade. Express scripts narrowed annual guidance on a dip in prescriptions. It is up. 5 this morning. Also getting a lot of attention, nike ceo nearly tripling to 46 million for fiscal year 2016. This according to a regulatory filing. The increase can be acontribute r tributed to a giant increase in stock awards. Since becoming ceo back in 2006, parker has helped the company take in more than 32 billion in sales. More than double the level when he took over. Vowed to increase nikes earnings to 50 billion by 2020. Also i would point out comes on a year where phil night, the founder has stepped down as chairman recommending that parker take over that role. This is a play for mark parker to stay on board. Gave unone exclusive intervi. He was very comfortable. Right. Amazon saying its entered into a partnership with British Government to explore drone deliveries. Working with britains aviation regulator. The tests are an important sign in confidence in britain after the vote to leave the jureurope union. The fed is preparing action against Goldman Sachs and a former employee. Confidential regulatory material was leaked to Goldman Sachs employee by one of his former colleagues. That action expected to bring a penalty of little less than 50 million. Still to come on world Wide Exchange, japanese stocks sells off. But first as we head to break, heres a look at this day back in history. 1775, the office that would later become the u. S. Postal system was created by the second continental congress, Benjamin Franklin was appointed the First Post Office general. How about that. Good. So took 200 years to become a government agent. World Wide Exchange will be right back. Coach gilman d his cash rewards credit card from bank of america to earn 1 cash back everywhere, every time. At places like the batting cages. [ crowd cheers ] 2 back at Grocery Stores and now at wholesale clubs. And 3 back on gas. Which helped him give his players something extra. The cash rewards credit card from bank of america. More cash back for the things you buy most. The cash rewards credit card from bank of america. New luminous lightshows andhydrating lotiont . Pearloptics science fades the look of dark spots evens tone and hydrates skin for instant illumination. Olay luminous ageless. We are basically flat as you can see. Slight declines. Decline in apple stock. They report after the bell today. Yesterday there was a downgrade from one leading analyst, thats why it moved lower. Lets look at europe. Weve bounced back a little bit in the last hour or so. Germany and the ftse 100 up, france still down a bit. We found some momentum off lows earlier in the todays trade and europe and u. S. Showing decedent gains. We do see little bits of red on the screen like this, we are up 3 to 5 over the last month. Oil prices down sharply. Extending losses below the 43 level today. The nikkei japanese stock Market Selling off overnight. We need to know the yen and nintendo. Good morning. Yes, thats exactly it. You mailed in it. I know youll like this. Its really down to the japanese yen which has been appreciating against the u. S. Dollar. What that tells me is the markets, currency markets are trying to brace for some disappointment associated with fiscal policy or monetary policy. Bank of japan does meet this week and expectations really are all over the place. Hsbc really mailed in it when they said bank of japan will deliver a little bit of everything, but not the big baa zoo ka that some may be hoping for. That disappoint is expressing itself through the prism of stronger currency Broader Market gets hit as well. Down 1. 4 . Twoweek low for japanese equities. Thank you very much for that update from singapore, and, of course, the nikkei has been a big far terrctor for all of asi the rest of asia stllugging tha off today. If you look, you were mentioning some of the month to date stats on stocks, japan has been stronger in terms of rebound in taupes of fiscal and monetary passage there. Also that crazy move to nintendo. I know results are coming up later this beak. Pokemon is everywhere and every thing. Its paired some gains and up sharply. Bank of japan and also on friday on the European Bank stress test results. Might have cal jordan gets political. Why the basketball legend cant stay silent. Good morning, sara and wilfred. What a day yesterday for the start of the convention in p philadelphia. We saw over an inch natural of rainfall. That was a record. We also had a high of 97 degrees. A stifling day across the northeast. Flooding rain in pennsylvania even across new jersey. We had all kind of airport delays. Today looks better. Its still going to be hot though. Well see chance firefighter scattered thunder storms throughout the ohio valley. Stretching all the way back to oklahoma. Where some storms could turn severe the organized area is going to be with this system across the northern and central planes otherwise a good looking day for you. Inland from there, very hot for the fire fight that does continue. Thats a look at your national forecast. Ind a new way to keep up with the data from over 30 billion connected devices. Just 30 billion . So, a bold group of researchers and computer scientists in Silicon Valley had a breakthrough they called. The machine. The machine. It changed the basic architecture of computing. Putting a massive pool of memory at the center of everything. And by doing so. It changed the world. Its been a part of every new technology for the last 250 years. Everything . Everything this year, Hewlett Packard enterprise will preview the machine. And the future of technology will begin. See star trek beyond. Now in theatres. Welcome back and good morning. Lets get you uptodate. S p futures down one. Nasdaq down 3 awaiting many earnings and even some Economic Data points including home prices and new home sales at 10 00 a. M. Lets just show you a dow board. We are expecting some key members to report. Just before the opening bell well get word from 3 m. Caterpill caterpillar, mcdonalds will be key and after the bell, the fun doesnt end because twitter results and apple are coming later. Sara, the fun never ends, but youre right. Apple will be a big one. Right, switching focus, Michael Jordan is speaking out from the growing racial unrest in the united states. In a post on espn on the undefeated website says i can no longer stay silent condemning violence against africanamerican and Police Officers. Hes making a 2 million donation to the defense fund and the institute for Community Police relations. The nba hall of famer and owner of the Charlotte Hornets has long been scrutinized for avoiding public statements on politics and civil rights. He has been cautious to weigh in on these kind of issues so it is notable that will he is doing so. An that shall is clearly near and deer to him, his father was a victim of this brutality, but also i think, in a very sort of politically correct way, hes giving money to each side and the statement if you read it, its strong and i wonder if its going be the beginning of more were going to see from him out front on this issue. This issue doesnt have a phase that it can relate to. He commended Police Officers more widely for protecting for risking their lives to protect people every day. Lets hope it gets significant traction. Absolutely. Switching gears to players on the field we have a great catch to show you from last night. A game between the cubs and the white sox. Sending a drive deep to left field. White sox outfielder tracks the ball tall way to the wall. Times his jump, leaps and steels a home run away. Has a little rest afterwards. Very appreciative of his catch. Go onto beat cross town rivals five to four. Reminiscent of my cricket day. Steve thats is nothing like cricket. But you have to catch. Its the closest sport. Are you a cricket player. I used to play. Not very well, but i tried. I would love to see some video of that. Everything must go at the one time power lunchbox for the new york elite. Up for auction today. Shut doors earlier this month. It had been in business since 1959. Items being sold includes pots and pans copies of which are in the museum of collection. Also up for election famous barcelona chairs and tulip chairs in the ladies lounge. Its a great restaurant, ive been lucky enough to go a few times, but i would not be interested in buying from a restaurant. I agree with you. When we come back, this mornings top stories including a lineup of earnings reports. Plus well head to the dnc where bill clinton is getting ready to address delegates today. Good morning. Here comes the earnings parade. Seven dow components set to post Quarterly Results today. Your money, your vote. Michelle obama and Bernie Sanders light up the crowd at the dnc, but the party isnt without problems. A live report from philadelphia straight ahead. Plus, check this out, an historic similar flight travels around the world. Details on the epic journey, coming up. Its tuesday, july 2016, youre watching world Wide Exchange on cnbc. Good morning and welcome back to world Wide Exchange on cnbc. Good morning to you from me as well. Lets check in on the markets this morning. Futures are basically flat. In the premarket right now. As you can see the dow. Fractionally doing very little which essentially concludes they are flat. Correct. We got that. Thank you for pointing that out making sure every viewer picked up on my mistake. At least there are no zeros in there. There we go. Futures markets little bit of a decline yesterday. We are flat. Lets look at the 10year as well. Marginal bond buying. 1. 55 the yield on the 10year treasury note. Europe has been lower. It is more mixed now. Higher for the dax and ftse, but only slightly. Germany and france is down a little bit. Those markets really seeing a bit of profit taking and treading water following decedent gains month to date and earnings flicking through in europe as well. Asia as we look at things rights now, surprisingly most markets holding on to gains despite the big decline for the nikkei you can see. Japan down 1. 4 . Just one note here a group to watch in the s p today would be consumer discretion narl was the only group managed to close higher in the trade. Under armour which reports today. Really starting to get bid into results so well see if that continues. As for the Broader Markets. Energy was the biggest loser in the market yesterday and continues to be under pressure. Wti breaking below 43 a barrel. We have moved south here in the last few weeks. Brent down half a percent at 44. 50. Gnat gas under pressure as well. Part of that has been a strengthening u. S. Dollar. That taking a pause today. Currency board very quickly as well. The british pound continues to be under pressure down to a twoweek low there. 1. 3127. The japanese yen is strong that has certainly weighed on japanese stocks and the you are even getting a bit of a bid today above 1. 10 against the u. S. Dollar. A bit of selling pressure. It is a little bit higher this morning. Up about 2 bucks. Right. Switching focus. A developing story out of japan this morning. 19 People Killed and 25 injured in an attack by a knife wielding man at a facility for the disabled. It happened about 25 miles southwest of tokyo. Japanese media report a 26yearold former employee at the facility has been arrested. Police are investigating possible motives. Lets switch gears now toll u. S. Politics. Today democratic delegates will officially vote to in a moment Hillary Clinton as their president ial nominee. John harwood joins us from philadelphia and the question is will the entire party Bernie Sanders fanatics included be on board with that. Reporter well, no. Some of them clearly wont be on board with that although they are going to have a roll call. Theyll be able to express their dissent as they did yesterday. Theres clearry discourt here. Bulz the Democratic National chair was forced out of her job. There was some disruption and booing in the morning session. In the evening yesterday democrats deployed the biggest tools they had to tamp it down. First was elizabeth warn who tried to make the case against donald trump. Trump thinks he can win votes by fanning the flames of fear and hatred. By turning neighbor against neighbor, but persuading you the real problem in america is your fellow americans. People who dont look like you or dont talk like you or dont worship like you. Reporter Bernie Sanders who was the cleanup speaker for the evening made the argument to his supporters that ultimately it comes down to a choice thats very clear. Any objective observerological conclude tham based on her ideas and her leadership, Hillary Clinton must become the next president of the united states. But the Emotional Center of the evening was the speech by Michelle Obama which led off the 10 00 p. M. Hour. Nonpartisan figure as first lady. She delivered an extremely effective political speech. Didnt mention Donald Trumps name, but sketched the contrast democrats wanted to hear. In this election and every election, is about who will have the power to shape our children for the next four or eight years of their lives. There is only one person who i trust with that responsibility. Only one person who i believe is truly qualified to be president of the united states. And that is our friend, Hillary Clinton. Now, tonight bill clinton will address the crowd. Of course bill clinton has been coming to democratic conventions for 30 years. We will see whether he can top that Michelle Obama speech with very quickly was being rated as one of the better speeches of any democratic convention, guys. Amazing set of speakers last night. Michelle obama getting the best reaction to her as a managing unite a message that she delivered, but of course with Bernie Sanders there was even booing of him when he was suggesting that people should back Hillary Clinton. How rare is it that we still havent seen that unity in the party this late on in the game and to allow the democratic candidate to tack to the right a little bit and do we think Hillary Clinton will be able to do that at some point. Yes, i think. It depends how you define tack to the right. There is dissent within the party. You have loud voices. If you look at the numbers, youve got Hillary Clinton getting support in the mid 80s from democrats. Thats not exactly where she wants to be. She wants to be higher than that. Its close to where she wants to be. I think with the active encouragement of Bernie Sanders and elizabeth warn, theyll do as well they can do. Clearly there are going to be People Holding out who are just like the people who voted for ralph nader in 2000, people who are not going to get on board. Will that make the difference in the election . Well find out. Who, john, at this point is more ununified, disunified, the republicans or the democrats. Its not even close. The republicans. Look, heres the contrast, you have democrats with every leading figure in their Party Working together to try to tamp down dissent and minimize dissent with a few vocal holdouts. Where the republicans you have a split right down the middle of the party. Every former president of the republican matter didnt show up, the last two republican nominees dnts show up at the convention. You had ted cruz coming on the floor doing the opposite of what Bernie Sanders did. Bernie sanders trying to you night, ted cruz was planting his flag and saying vote your conscious. His people were cheering him dp the trump people were booing ted cruz. That is a different thing than we saw on the floor. I guess the question bottom line is whether the voters care. Whether it comes down to the voters and whether they need this sort of Traditional Party structure to elect the next president. They do. Look, to win the president ial election in our particularized system, you have to have near unanimous support within your party. So it will be a contest of the two parties as we watch the campaign unfold to see who is going to do better, forget the luring people from the other party. Thats a very small number of people who cross over, but when you look at how well you can do among your own paertd and independents usually align with their party, thats the test. John, thank you very much. Great stuff from the democratic convention. Looking forward to a president. Yes, it was almost difficult for us in our early bedtimes to go to bed because these skon vengss have been so action packed. What happens on the floor and the parttime time speeches. No sleep for us. None for mr. Harwood who is doing a great job. On the wall street agenda today, followed by new home sales at 10. Both expected to show momentum building in the housing market. The fed kicks off a twoday policy meeting with the decision tomorrow 2 00 eastern time. In earnings we have lots of names. Do ponte, mcdonalds, verizon before the bell. After the well hear from apple and twitter. Apple is the biggest. Expected to post earnings of 1. 39 a trade. Shares dropping yesterday on a drown grade calling the stock o to sell. Got a lot of attention with an 85 price target. The other tech name likely to get attention this afternoon is twitter. Landon joins us tw three things to watch in twitters earnings. Twitter is expect ds to report revenue. Beyond the numbers here are things to watch. First user growth. Its been a year since ceo came back to turn around twitter and those users numbers are very much in focus. Analyst expect monthly users to take up to 312 medical, just 2 medical more than the first quarter. Second the stock has dragged down dwirt shares over the past year. The stock is about 47 over that period although it has rebounded in the past month. The third thing to watch updates twitter has made multiple attempts at product updates. Such as Live Streaming partnerships in hopes of boosting user growth numbers. Hasnt really wowed anyone. Which is why those user numbers are still going to be in focus. Thank you. Some stocks to watch today. Ab inbev. Inbev will now pay 45 pounds per share. Valuing the share at 104 billion. San mina reporting results. Due to lower demand for imbedded computing and storage products. Shares of Texas Instruments rallying after results. The firm also offering a strong outlook on increase. More stocks to watch, moodys is changesing outlook on microsoft. Moodys says the change reflects the nature of the deal even though the transaction could be beneficial to microsoft cloud business. No move in stock price this morning. Lux cot ka is cutti inting outlook. Reportedi inin inin ining a dro caterpillar says Global Retail machinery fell 12 in the quarter. Slow down in construction and mining. Caterpillar reports full Second Quarter results before the opening bell today. Down about half a percent. Doug onner held man will be on squawk box. Time for top trending to ini stories. A devoted sanders supporters, spoke alongside clinton supporters, senator all franken to tried to build the unity. After announcing her support fwr clinton, dnc crowd booed her then she had a strong message for the bernie or bust crowd. Unity. Unity. Can i just say to the bebernie t people, youre being ridiculous. Its a strong message. Strong message. Given she was such a big bernie supporters. Amazing to still see the booing. Good to see how much more united the democrats are tlan the republicans. So the democrats really bring out the celebrities. Traditionally always hollywood backs them and the dmeed yen co the first around the world similar powered flight taking more than a year to complete and spanning over 25,000 miles. Boy, what an accomplishment. The pilot tweeting its a first in the history of energy, social impulse is only the beginning. Our feature is clean. Congratulations to them. Great achievement. Coming up todays must reads. First as we head to break, check out read t out trading in europe. T youre watching cnbc first in business worldwide. Cathys gotten used to the smell of lingering garbage. In her kitchen yup, shes gone noseblind. She thinks it smells fine, but her guests smell this. Ding, flies, meow febreze air effects heavy duty has up to. Two times the odoreliminating power to. Remove odors youve done noseblind to [inhales] mmm. Use febreze air effects, till its fresh and try febreze small spaces. To continuously eliminate up to two times the odors. For 30 days febreze small spaces and air effects, two more ways. [inhale exhale mnemonic] to breathe happy. French police have neutralized two men with blades. One hostage was killed with a blade. Included a priest, none, and two worshippe worshippers. Attackers cut the throat of the police. French president holland is on the way to the sight of the attack now. Well keep you posted as we learn more. Must read stories. It is Michelle Obamas speech last night at the dnc that has really stood out to the reviewers. Have a listen. This november when we go to the polls, that is what were deciding. Not democratic or republican, not left or right. No in this election and every election is about who will have the power to shape our children for the next four or eight years of their lives. And she continued with the children theme the entire speech. I mean really talked about her girls growing up in the white house and sort of who would make the best future for them, talked about the historical significance of potentially having a first female president in this country. Its worth a read if you didnt stay up for it of the transcript this morning. Shes an impressive speaker. I wonder how big an asset she could be to clinton during the campaign because you know we discussed this often. In fact not that many women like Hillary Clinton and maybe the first lady can bring them altogether. True. Anyway my pick is from the wall street journal titled mr. Clinton versus Hillary Clinton. He would sign the north American Free trade agreement and in his 1996 state of the union address, he would declare the heir of Big Government as over. Hillary clinton has chucked all this over board embracing a plethora of new spending. Opposes the tpp, the heir of Big Government is back. It is an interesting article. The nuances where its not so stark trk differences, but how Hillary Clinton is very different with her agenda. I wonder if its the sanders affect. She hasnt been able to tack to the center because mr. Sanders still has a huge chunk of support out there. Which we saw last night. We are approaching the top of the hour. The team is getting ready for squawk box. Joe kernen in new york with a look at whats coming up. Between Elizabeth Warren and Bernie Sanders, its all your favorite people. Very big week. Looking forward to the drama. Im talking about the pga out after ball tus. Fourth major of the year, last one. Weve had some great drama already. So it has been a big week. I understand yeah i guess there is Something Else happening also. I was thinking about what my children what i want them to think about for the next four or eight years because in the last eight years, it actually watched socialism become a viable alternative to capitalism. So it is important, the kind of people that we elect to office to where a mainstream party, a mainstream u. S. Party is now grappling and pining for the socialist candidate. At least half of the people at the convention pining for the socialist candidate to be the guy thats elected because were not sure anymore. Even any kids, is it capitalism, socialism, which works better. It does matter to our children who we elect. I worry about oil. Because it hasnt been brexit we shook off no problem, but suddenlily the market seems to take pause when we go back below. If we get another three handle, thats not just a supply issue and people start questioning Global Growth again. I think thats part of what we saw yesterday. Compared to the losses going to the close, but were down again. I think were 42 and change. That seems to be which is amazing the market would have more anxiety about crude than brexit. Were in the middle of earnings. With the backdrop of the convention. I love to see comedians. Seems appropriate for this convention, actually. Back to you. Thanks very much. We look forward to squawk box in ten minutes time. Still to come on world Wide Exchange, center banks on center stage. Policy from the fed and boj in the coming days. Stay tuned. E for the first time. Gilman go get it, marcus. Go get it. Coach gilman used his cash rewards credit card from bank of america to earn 1 cash back everywhere, every time. At places like the batting cages. [ crowd cheers ] 2 back at Grocery Stores and now at wholesale clubs. And 3 back on gas. Which helped him give his players something extra. The cash rewards credit card from bank of america. More cash back for the things you buy most. And grease in just a minute d on dirt and grimeerica. Mr. Clean will clean your whole house and every room thats in it. Floors, doors, walls, halls hes so tough, he cleansem all grimy tubs and tiles hell do so your bathroom looks clean as new mr. Clean gets tough on stuckon stuff cleans kitchens in a minute. Mr. Clean will clean your whole house and every room thats in it. Mr. Clean, mr. Clean, mr. Clean welcome back to world Wide Exchange. The Federal Reserve begins a twoday policy meeting today. Well get the decision out tomorrow. Joining us joe from Deutsche Bank, cnbc contributor. Good to see you. Good to see you. Since the fed last met, we did see britain vote surprisingly to leave the eu, but we also saw markets around the world remain remarkably resilient in the face of that. How cautious does the fed need to be. Everything broke faifrl bli for the fed. The brexit vote cost really very Little Market dislocation at least until this point. Markets, equities, credit spreads performed admirably and the data has been better as well. Retail sales, all those things improved to the upside. I believe its temporary, but for the fed, theyre going to take a real deep sigh of relief. And i dont think theyre going to foreshadow a september rate hike at this meeting, but they will certainly leave the door open to such a move and my guess is in three weeks when they get the minutes from this weeks meeting, theyll talk more about the possibility of a september hike. The dollar has been strong in the last month or so more because of safe haven trades than anything else. Will it continue to be strong for the rest of the year, but because of the fed expectations. Its possible. Weve seen the futures market really elevate its expectations of fed hikes to where it was a month ago. Part of it might be if the market things the fed can move again. Other Central Banks its possible the dollar rallies more strongly or rerallies and that might be a reason Oil Prices Weaken further. It seems to me the fed is in a box. The economy were talking about is okay. Recession risks seems to have moderated, but hardly a situation where growth is really good. If it was, i dont think both candidates in the u. S. Election would be getting any sort of traction. If things actually were really on the cusp of a breakout. You said earlier in the interview that you dont expect the good news on the economy to last. Why not and what changes things . The reason sara were in the eighth year of the business cycle. Thats old in terms of years, but more importantly when we look at corporate fundamentals, profit growth, profit margins, those series have been weakening and theyve always been excellent leading indicators of the economy. The same thing with the yield curve. Seeing that global yield curve flatten in a bullish fashion. Historically these are signs that suggest growth is waning. We might get a pop in Second Quarter growth. I would argue if you look at the trends in the size of the academy as measured by gdp, weve just seen a lot of these series top out. You mooigt get a bounce and stabilize temporarily, but its hard to see growth accelerating so late. Joe, if we look at sector perspectives, tech has been on a good run. Financial still suffering. Where are your strongest c convicti convictions. Look at the Financial Service sector, its hard to have a healthy economy if credit and lend reasonable degree nare not on the corporate Side Companies have spent a tremendous amount of time and effort buying back stock and doing mna. Thats partly a function of hoe rates which have hurt growth. In terms of sector, housing has some room to run. Thats probably the best area, but overall the Capital Spending outlook has not been robust in this cycle. Joe, thank you. We have to leave it there. Chief economist at Deutsche Bank with eye on oil. Lots of opening coming up before the bell. Oil prices down a bit and down sharply this month. Thats it for world Wide Exchange. Squawk box is coming next. May the force be with toy sells. How the star warz saga is saving that industry. Its july 26, 2016 and squawk box begins right now. Good morning. Welcome to squawk box. Joe kern than. Becky is off. We have a big morning of earnings report. The fed twoday meeting kicking off today as well. Lets take a look at the Market Action before we equity things kicked off here. U. S. Equity futures at this hour looking down. Dough looking off about points and the nasdaq down about 7 in well 7. 5 points. Overnight in asia looking at a mixed picture. Down almost a percentage and a half. We fly over quick to europe, youre going to be seeing again mostly down arrows there where the exception of whats taking place in the england today and finally a quick look at crude. Wti now down to. 8
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