Transcripts For CNBC Squawk Alley 20170517 : comparemela.com

Getting hit the hardest, financials. The explanation there is the tenyear yield drops to lows. The low we are watching now is 217. Thats the low point of the year. We last hit it in april. There is clearly a flight to safety and out of some of the groups that have been winning the most, technology. Apple is one of the worst performers in the dow. In the dow. I am interested in how badly semi conductors are doing. Amd down some 8 . They didnt get more details on Gross Margins out of a company meeting. Invidia down 4. 3. Applied materials down 3 plus. These are significant moves in those stocks. I dont know if there is something bigger than the negative we have going on. Amd is up 209 in a year. A lot of people may look at their gains and said, im good. Ive got to go. I think the question people are going to have to ask is does the noise become so serious it ultimately impacts earnings and the economy, which is what this market has been moving on and what has propelled it to record highs as early as this week. All part of the discussion. It is a busy morning in washington. The president reportedly asking then fbi director, james comey, to shut down the investigation into former National Security adviser, michael flynn. We have it all covered. Eamon javers. I asked the white house about this selloff. They have had no comment. They have embraced it in the past and view it as a real time barometer of their performance. No comment here on this move today. A lot of moving pieces here in the various scandals that are engulfing this white house right now, including the offer of Vladmir Putin to release a transcript of the meeting in the oval office in which the president passed on sensitive intelligence information to the russian government. Vladmir putin saying he has a transcript of that. Andrea mitchell of nbc news asked the secretary of state about all that a few moments ago. Here is how that exchange went. Mr. Secretary, Vladmir Putin is offering congress a transcript of that lavrov meeting. Do you think the russians were bugging the oval office . There is no way to know that. Rex tillerson says, i have no way of knowing that. White house officials i have talked to hearsay they simply dont know whether or not the russians were able to record or keep a transcript of that conversation. Here is what president putin had to say. His specific offer. He said, we are ready to submit a transcript of lavrovs talk with trump to the u. S. Senate and congress, if, of course, the u. S. Would want this. I can tell you they would not want that. They dont want to say they are depending on Vladmir Putin for political cover in a domestic scandal. This is a typical day. The president is in connecticut. He is going to give a graduation speech and we will see if he addresses any of that at all. Typical and yet extraordinary, our eamon javers is at the white house. Ylan mui has more. Reporter House Speaker, paul ryan, said this morning he wants to hear from comey himself. He also is backing an effort by representative Jason Chaffetz to get any and all documents related to that conversation between comey and president trump. We are not going to be trying to play to the crowd or try to meet timelines. We are going to do it the right way and follow the facts wherever they may lead. Ryan was measured in his tone during that press conference. When he was asked off camera if he still has full confidence in the president , he said, i do. The fallout here on capitol hill is just beginning. Virginia representative, barbara come sta comstock, says she thinks lawmakers should have a classified briefing on what happened. They think comey should testify publicly and senator john mccain is comparing the scandal to watergate in its size and scale. He is just waiting for another shoe to drop. Democratic congressman, al green, is expected to call for the impeachment of the president on the house floor. A lot to follow out of capitol hill. A jittery wall street response in response to the white house turmoil. Joining us to talk about the markets, sean and mary ann joining us. The selloff picking up steam here. As we mentioned, the markets could have been ripe for some sort of correction. What was it about todays news that led to that . The vix index has been very low. We have been looking at sentiment indicators that have been saying that having some volatility within the market would be normal and, of course, we are in the month of sell in may and go away. Whats really amazing is that the fundamental drivers of the market earnings and the trends, the technical trends in the market remain really strong. Any news headline really could have wobbled the markets. What i love about it, there is no major fundamental change thats occurred that is causing the selloff from what i can see. Change in what . Earnings, really bad Economic Data. We have kind of had some mixed Economic Data but not disastrous. There is a model we use at the firm thats called the global wave. Just looking at global data for the 12th straight month, it continues to rise. It is not just strength here in the u. S. But we continue to see strength overseas and earnings and Economic Data. It is one of the first times in a long time that we have a synchronized global recovery. Five years of a recession are recovering. Many of our investors have been looking for a pullback. Well, i think you are getting the opportunity but pullbacks never happen with positive headlines. I think the question, sean, people are asking, has anything fundamentally chapged wi fundamentally changed with the future of our president or the future of his pro growth agenda which, as mary ann said, might not be the primary driver but got a lot of investors excited. At barclays, we have been talking about this a lot. It is a very crowded domestic policy agenda. You have to then tackle tax reform. If you begin to introduce other issues like this russia investigation with comey, it basically takes a lot of time away. The reality is, until the First Quarter of next year, thats your whole schedule. People are going to be very focused on the midterm elections. Are we going to have to wait an extra couple of weeks for some of this stuff . The drumbeat, specially over the last two weeks of just wild headlines out of washington that seem sure to derail any meaningful work getting done. We are not talking about whats going to happen before august recess. Whats the impact there . Here is my observation. We have had headlines out of washington for the past couple years and the markets real sently hit alltime highs. At the end of the day, as long as we were getting headlines, maybe the markets may respond here and there. It is really the fundamentals that are drying it. I know you are a big tech person. What i love about the markets, the nasdaqs have cleared their 2000 highs. When we look at the s p 500 and look at the tech component, small cap has already cleared its alltime high. Isnt nathat a reason worry. Amazon is at about 1,000 a share. Is that a sign there is nothing to worry about . I know you are trying to get a negative comment out of me. Its not going to happen. I am concerned we might be whistling past the graveyard. We havent been reacting. Is finally a shoe going to drop. Sir John Templeton had one of the best sayings. Markets bottom on pessimism. I would say they rise on skepticism. They continue to climb on optimism but they dont go into a bear market until you have euphoria. With all the questions that you are asking me, i know we are not eforic. I wouldnt even say we are optimistic. I want you to continue to ask me these negative comments or questions, because i think we are too pessimistic. I see a lot of life in this market. I am very excited. Whats happening in technology with innovation, with big data, with cloud computing. Amazon is a big player in. Whats happening in artificial intelligence, robotics, whats happening in the innovation and biotechnology in terms of genetics and nano technology. I cant get more excited. A trader said yesterday, no matter what happens, we north going back to rotary phones and video is not going back to fave. There are banks and you have expectations for june coming down in the low 60s. Do we worry about the fed waffling in the next meeting. I think our team has come out, talking about two rate hikes going into the rest of the year. We are fairly consensus. I dont think what happens out of the white house would change issues in terms of the fed. Would the president talk about what who he wants to nominate for the fed. I dont see that coming up any time soon. I dont think we will see any issues. How many more hikes do you have in the year . I believe we have two more. Not favoring on that . I dont think so. We have two more. Should the markets continue to have extreme volatility, the fed has shown us, they might pause. If you dont have extreme volatility, we are still forecasting that they are going to hike. They pause when the market probability of fed hikes goes down. Which republicans do we need to be watching, House Speaker ryan said we are going to pursue the facts. We are not going to go with speculation and innuendo. Key leadership in the house and senate. You have 52 republicans in the senate right now. Folks like john mccain and others begin to talk about special prosecutors and expanding the investigation, i think this will have some legs. We need to see what kind of testimony is put forward by comey and others if they are asked to publicly testify. I think things will move very fast. People should take a break and relax a little in that it is moving fast right now in the last week, last couple days. The news has been going quickly. It is not like we are going to have an impeachment trial within a week or a month. The articles of impeachment, to get to that, are quite a high bar. Everyone calm down. It is the matching magenta. Mary ann bar tells and john good to see you as well. Dow close to session lows, not quite though. Down 263. Can we push the offer online . Brian, i just had a quick question. Brian . Brian. Legacy technology can handcuff any company. But yes is here. Youre saying the new app will go live monday . yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. Looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. It now stands at 12. 7 million dollars. Should we worry about another financial crisis . It is substantially different. Here is some of the things out. The mortgage auto Student Loan Debt rised. Debt for cap ta is we low the peak and default remains low. It has fallen by 5 compared with 08. Auto loans are up. Student loans are up 6 . More student and auto loan debt. Less mortgage debt. While the percent of debt 90 days delinquent did rise it is below 08. Those with Credit Scores of 760 or greater, got 36 of all loans in 08. Now, it is 61 . Less credit worthy borrowers are having trouble getting loans. Student loans remain high. Down a bit but they bear watching after a steady rise since 201 12. We are above the peak of 08. It does not look as troubling as it once did. Steve, do you read this as a good or bad sign for the economy . Debt is a dirty word. If consumers are taking on more, does that mean they are more confidence . A sense they can handle that debt and handle the debt service. You dont want to see people stretch wg de stretching with debt to meet every day needs. You want to be a little bit careful with debt levels here, Interest Rates are low. As they go up as expected by the fed, that debt burden could go up for people. Right, right. Specially watching those 2008 levels as you mentioned. Thank you, steve. When you come back, stocks having their worst day of the year on their heels of more d. C. Turmoil. We are keeping our eye off the selloff. The dow down some 243 points. The nasdaq, down 1. 5 . Well be right back. Your Insurance Company wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong Insurance Company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. Switch and you could save 509 on auto insurance. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. 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. Welcome back to squawk alley. Im julia boar stiff. Lyft passed uber. Ubers challenges had an investigation where the department of justice could add both riders and drivers for lyft. They doubled their passenger miles from a year earlier. Lyfts director tells us its strategy of partnerships will give its networks an edge over uber. We believe in bringing Autonomous Technology to our passengers. We have worked with them for a number of years. What that does is allows us to work with these Technology Providers to bring Autonomous Technology to our group. Lyft says the new Technology Wont eliminate drivers because it will be a while before cars are totally autonomous. We introduce Autonomous Technology. We will see the number of drivers we need grow. You are actually going to see more people adopt transportation as a service and viable means to get around. I took a drive with ride share expert, Harry Campbell to get a drivers perspective on autonomo Autonomous Cars as well as uber lyft rivalry. How are you . Whoo have you found is the most important thing for drivers . In 2017, we actually surveyed over 1100 drivers. Overwhelming responses that we saw were drivers care most about their pay and their flexibility. Lyft drivers reported earning about 2 more per hour than uber drivers. I think a lot of that stems from the fact that lyft has an inapp tipping option. What was the impact of that video that was leaked of the ceo of uber not being very nice to an uber driver . I think there are a lot of drivers. It wasnt a surprise, because there has always been that feeling that driving for uber, you sort of feel like sometimes you are a disposable commodity. They are constantly looking for new drivers. How worried are you about driverless car sns. In a place like the United States where there are going to be so many regulatory issues and so Many Political issues with selfdriving cars coming and taking peoples jobs, i think it is not a huge issue until much further down the road. Tlanghanks, harry, thanks foe ride. As for whether lyft is missing out on big opportunities overseas, he says the Company Still has plenty of room to grow within what he says is a 2 trillion u. S. Transportation market. Well see where they rank on next years list. Squawk alley will be back right after the break. Some build walls to keep people out. But these are walls that welcome you in. Within these walls, californias educators create safe places for every student to learn and grow. Where teachers open minds to history. Unleash creativity. And show our kids the future. Some build walls to divide us. But the California Teachers Association knows these are walls that bring us together. Because quality Public Schools build a better california for all of us. Good morning, im sue herera. Private Chelsea Manning was released from a kansas military prison earlier this morning. These transgender soldiers served 7 years of a 35year sentence for providing classified government information for weeikileaks. She posted a photo on her twitter page, first steps of freedom. Vladmir putin criticizing u. S. Politicians for whipping up antirussian sentiment calling them either stupid or dangerous. He was speaking with the visiting Prime Minister of italy. He offered to turn over to u. S. Congress records of president trumps meeting with russian diplomats. New orleans removing one of two remaining confederate monuments. Crews removing the equestrian statue of Pierre Beauregard that led td attack on fort sumpter in south carolina. Ever wonder what it is like to ride out a tornado in a car . This is a crew when a fastmoving tornado moved right in front of their vehicle. Other than some frayed nerves and a broken windshield, the crew was okay and probably not anxious to do that any time soon. Thats the news update this hour. Back downtown to squawk alley. Sarah, back to you. Those videos are always so scary. They are. A broad selloff is underway. The dow is down 240, off the session los. Lets get to bob pisani. The important thing is, we are seeing europe clothes. Lets look at the s p, you can see it is a bit slow now. Take a look at the sectors here. A number of other parts of the market are affecting us. You notice banks are notably weak. The tenyear yield below 2. 3. Thats the lowest at 227 since april 24th. Thats been a problem for banks. Tech, a high beta group week. Some support for utilities, like gold. The dollar is at a new low, generally, since the election. Thats helping commodities like gold and oil. It is not helping commodity stocks interestingly. Market risk, it is important to review exactly what the risks are. The reason we have been holding up so well, Earnings Guidance has been improving. GeoGross Margins<\/a> out of a company meeting. Invidia down 4. 3. Applied materials down 3 plus. These are significant moves in those stocks. I dont know if there is something bigger than the negative we have going on. Amd is up 209 in a year. A lot of people may look at their gains and said, im good. Ive got to go. I think the question people are going to have to ask is does the noise become so serious it ultimately impacts earnings and the economy, which is what this market has been moving on and what has propelled it to record highs as early as this week. All part of the discussion. It is a busy morning in washington. The president reportedly asking then fbi director, james comey, to shut down the investigation into former National Security<\/a> adviser, michael flynn. We have it all covered. Eamon javers. I asked the white house about this selloff. They have had no comment. They have embraced it in the past and view it as a real time barometer of their performance. No comment here on this move today. A lot of moving pieces here in the various scandals that are engulfing this white house right now, including the offer of Vladmir Putin<\/a> to release a transcript of the meeting in the oval office in which the president passed on sensitive intelligence information to the russian government. Vladmir putin saying he has a transcript of that. Andrea mitchell of nbc news asked the secretary of state about all that a few moments ago. Here is how that exchange went. Mr. Secretary, Vladmir Putin<\/a> is offering congress a transcript of that lavrov meeting. Do you think the russians were bugging the oval office . There is no way to know that. Rex tillerson says, i have no way of knowing that. White house officials i have talked to hearsay they simply dont know whether or not the russians were able to record or keep a transcript of that conversation. Here is what president putin had to say. His specific offer. He said, we are ready to submit a transcript of lavrovs talk with trump to the u. S. Senate and congress, if, of course, the u. S. Would want this. I can tell you they would not want that. They dont want to say they are depending on Vladmir Putin<\/a> for political cover in a domestic scandal. This is a typical day. The president is in connecticut. He is going to give a graduation speech and we will see if he addresses any of that at all. Typical and yet extraordinary, our eamon javers is at the white house. Ylan mui has more. Reporter House Speaker<\/a>, paul ryan, said this morning he wants to hear from comey himself. He also is backing an effort by representative Jason Chaffetz<\/a> to get any and all documents related to that conversation between comey and president trump. We are not going to be trying to play to the crowd or try to meet timelines. We are going to do it the right way and follow the facts wherever they may lead. Ryan was measured in his tone during that press conference. When he was asked off camera if he still has full confidence in the president , he said, i do. The fallout here on capitol hill is just beginning. Virginia representative, barbara come sta comstock, says she thinks lawmakers should have a classified briefing on what happened. They think comey should testify publicly and senator john mccain is comparing the scandal to watergate in its size and scale. He is just waiting for another shoe to drop. Democratic congressman, al green, is expected to call for the impeachment of the president on the house floor. A lot to follow out of capitol hill. A jittery wall street response in response to the white house turmoil. Joining us to talk about the markets, sean and mary ann joining us. The selloff picking up steam here. As we mentioned, the markets could have been ripe for some sort of correction. What was it about todays news that led to that . The vix index has been very low. We have been looking at sentiment indicators that have been saying that having some volatility within the market would be normal and, of course, we are in the month of sell in may and go away. Whats really amazing is that the fundamental drivers of the market earnings and the trends, the technical trends in the market remain really strong. Any news headline really could have wobbled the markets. What i love about it, there is no major fundamental change thats occurred that is causing the selloff from what i can see. Change in what . Earnings, really bad Economic Data<\/a>. We have kind of had some mixed Economic Data<\/a> but not disastrous. There is a model we use at the firm thats called the global wave. Just looking at global data for the 12th straight month, it continues to rise. It is not just strength here in the u. S. But we continue to see strength overseas and earnings and Economic Data<\/a>. It is one of the first times in a long time that we have a synchronized global recovery. Five years of a recession are recovering. Many of our investors have been looking for a pullback. Well, i think you are getting the opportunity but pullbacks never happen with positive headlines. I think the question, sean, people are asking, has anything fundamentally chapged wi fundamentally changed with the future of our president or the future of his pro growth agenda which, as mary ann said, might not be the primary driver but got a lot of investors excited. At barclays, we have been talking about this a lot. It is a very crowded domestic policy agenda. You have to then tackle tax reform. If you begin to introduce other issues like this russia investigation with comey, it basically takes a lot of time away. The reality is, until the First Quarter<\/a> of next year, thats your whole schedule. People are going to be very focused on the midterm elections. Are we going to have to wait an extra couple of weeks for some of this stuff . The drumbeat, specially over the last two weeks of just wild headlines out of washington that seem sure to derail any meaningful work getting done. We are not talking about whats going to happen before august recess. Whats the impact there . Here is my observation. We have had headlines out of washington for the past couple years and the markets real sently hit alltime highs. At the end of the day, as long as we were getting headlines, maybe the markets may respond here and there. It is really the fundamentals that are drying it. I know you are a big tech person. What i love about the markets, the nasdaqs have cleared their 2000 highs. When we look at the s p 500 and look at the tech component, small cap has already cleared its alltime high. Isnt nathat a reason worry. Amazon is at about 1,000 a share. Is that a sign there is nothing to worry about . I know you are trying to get a negative comment out of me. Its not going to happen. I am concerned we might be whistling past the graveyard. We havent been reacting. Is finally a shoe going to drop. Sir John Templeton<\/a> had one of the best sayings. Markets bottom on pessimism. I would say they rise on skepticism. They continue to climb on optimism but they dont go into a bear market until you have euphoria. With all the questions that you are asking me, i know we are not eforic. I wouldnt even say we are optimistic. I want you to continue to ask me these negative comments or questions, because i think we are too pessimistic. I see a lot of life in this market. I am very excited. Whats happening in technology with innovation, with big data, with cloud computing. Amazon is a big player in. Whats happening in artificial intelligence, robotics, whats happening in the innovation and biotechnology in terms of genetics and nano technology. I cant get more excited. A trader said yesterday, no matter what happens, we north going back to rotary phones and video is not going back to fave. There are banks and you have expectations for june coming down in the low 60s. Do we worry about the fed waffling in the next meeting. I think our team has come out, talking about two rate hikes going into the rest of the year. We are fairly consensus. I dont think what happens out of the white house would change issues in terms of the fed. Would the president talk about what who he wants to nominate for the fed. I dont see that coming up any time soon. I dont think we will see any issues. How many more hikes do you have in the year . I believe we have two more. Not favoring on that . I dont think so. We have two more. Should the markets continue to have extreme volatility, the fed has shown us, they might pause. If you dont have extreme volatility, we are still forecasting that they are going to hike. They pause when the market probability of fed hikes goes down. Which republicans do we need to be watching, House Speaker<\/a> ryan said we are going to pursue the facts. We are not going to go with speculation and innuendo. Key leadership in the house and senate. You have 52 republicans in the senate right now. Folks like john mccain and others begin to talk about special prosecutors and expanding the investigation, i think this will have some legs. We need to see what kind of testimony is put forward by comey and others if they are asked to publicly testify. I think things will move very fast. People should take a break and relax a little in that it is moving fast right now in the last week, last couple days. The news has been going quickly. It is not like we are going to have an impeachment trial within a week or a month. The articles of impeachment, to get to that, are quite a high bar. Everyone calm down. It is the matching magenta. Mary ann bar tells and john good to see you as well. Dow close to session lows, not quite though. Down 263. Can we push the offer online . Brian, i just had a quick question. Brian . Brian. Legacy technology can handcuff any company. But yes is here. Youre saying the new app will go live monday . yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. Looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management<\/a> firms in the country. Discover how we can help find your unlock. It now stands at 12. 7 million dollars. Should we worry about another financial crisis . It is substantially different. Here is some of the things out. The mortgage auto Student Loan Debt<\/a> rised. Debt for cap ta is we low the peak and default remains low. It has fallen by 5 compared with 08. Auto loans are up. Student loans are up 6 . More student and auto loan debt. Less mortgage debt. While the percent of debt 90 days delinquent did rise it is below 08. Those with Credit Scores<\/a> of 760 or greater, got 36 of all loans in 08. Now, it is 61 . Less credit worthy borrowers are having trouble getting loans. Student loans remain high. Down a bit but they bear watching after a steady rise since 201 12. We are above the peak of 08. It does not look as troubling as it once did. Steve, do you read this as a good or bad sign for the economy . Debt is a dirty word. If consumers are taking on more, does that mean they are more confidence . A sense they can handle that debt and handle the debt service. You dont want to see people stretch wg de stretching with debt to meet every day needs. You want to be a little bit careful with debt levels here, Interest Rates<\/a> are low. As they go up as expected by the fed, that debt burden could go up for people. Right, right. Specially watching those 2008 levels as you mentioned. Thank you, steve. When you come back, stocks having their worst day of the year on their heels of more d. C. Turmoil. We are keeping our eye off the selloff. The dow down some 243 points. The nasdaq, down 1. 5 . Well be right back. Your Insurance Company<\/a> wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong Insurance Company<\/a>. With Liberty Mutual<\/a> new car replacement\u2122, you wont have to worry about replacing your car because youll get the full value back including depreciation. Switch and you could save 509 on auto insurance. Call for a free quote today. Liberty stands with you\u2122. Liberty mutual insurance. 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. Welcome back to squawk alley. Im julia boar stiff. Lyft passed uber. Ubers challenges had an investigation where the department of justice could add both riders and drivers for lyft. They doubled their passenger miles from a year earlier. Lyfts director tells us its strategy of partnerships will give its networks an edge over uber. We believe in bringing Autonomous Technology<\/a> to our passengers. We have worked with them for a number of years. What that does is allows us to work with these Technology Providers<\/a> to bring Autonomous Technology<\/a> to our group. Lyft says the new Technology Wont<\/a> eliminate drivers because it will be a while before cars are totally autonomous. We introduce Autonomous Technology<\/a>. We will see the number of drivers we need grow. You are actually going to see more people adopt transportation as a service and viable means to get around. I took a drive with ride share expert, Harry Campbell<\/a> to get a drivers perspective on autonomo Autonomous Cars<\/a> as well as uber lyft rivalry. How are you . Whoo have you found is the most important thing for drivers . In 2017, we actually surveyed over 1100 drivers. Overwhelming responses that we saw were drivers care most about their pay and their flexibility. Lyft drivers reported earning about 2 more per hour than uber drivers. I think a lot of that stems from the fact that lyft has an inapp tipping option. What was the impact of that video that was leaked of the ceo of uber not being very nice to an uber driver . I think there are a lot of drivers. It wasnt a surprise, because there has always been that feeling that driving for uber, you sort of feel like sometimes you are a disposable commodity. They are constantly looking for new drivers. How worried are you about driverless car sns. In a place like the United States<\/a> where there are going to be so many regulatory issues and so Many Political<\/a> issues with selfdriving cars coming and taking peoples jobs, i think it is not a huge issue until much further down the road. Tlanghanks, harry, thanks foe ride. As for whether lyft is missing out on big opportunities overseas, he says the Company Still<\/a> has plenty of room to grow within what he says is a 2 trillion u. S. Transportation market. Well see where they rank on next years list. Squawk alley will be back right after the break. Some build walls to keep people out. But these are walls that welcome you in. Within these walls, californias educators create safe places for every student to learn and grow. Where teachers open minds to history. Unleash creativity. And show our kids the future. Some build walls to divide us. But the California Teachers Association<\/a> knows these are walls that bring us together. Because quality Public Schools<\/a> build a better california for all of us. Good morning, im sue herera. Private Chelsea Manning<\/a> was released from a kansas military prison earlier this morning. These transgender soldiers served 7 years of a 35year sentence for providing classified government information for weeikileaks. She posted a photo on her twitter page, first steps of freedom. Vladmir putin criticizing u. S. Politicians for whipping up antirussian sentiment calling them either stupid or dangerous. He was speaking with the visiting Prime Minister<\/a> of italy. He offered to turn over to u. S. Congress records of president trumps meeting with russian diplomats. New orleans removing one of two remaining confederate monuments. Crews removing the equestrian statue of Pierre Beauregard<\/a> that led td attack on fort sumpter in south carolina. Ever wonder what it is like to ride out a tornado in a car . This is a crew when a fastmoving tornado moved right in front of their vehicle. Other than some frayed nerves and a broken windshield, the crew was okay and probably not anxious to do that any time soon. Thats the news update this hour. Back downtown to squawk alley. Sarah, back to you. Those videos are always so scary. They are. A broad selloff is underway. The dow is down 240, off the session los. Lets get to bob pisani. The important thing is, we are seeing europe clothes. Lets look at the s p, you can see it is a bit slow now. Take a look at the sectors here. A number of other parts of the market are affecting us. You notice banks are notably weak. The tenyear yield below 2. 3. Thats the lowest at 227 since april 24th. Thats been a problem for banks. Tech, a high beta group week. Some support for utilities, like gold. The dollar is at a new low, generally, since the election. Thats helping commodities like gold and oil. It is not helping commodity stocks interestingly. Market risk, it is important to review exactly what the risks are. The reason we have been holding up so well, Earnings Guidance<\/a> has been improving. GeoPolitical Risk<\/a> outside the United States<\/a> has been perceived to be lower. Whats changed today is u. S. Political risk is perceived to be higher. Markets can withstand some of the trump Political Drama<\/a> but talk of obstruction of justice or an impeachment fight, higher Political Risk<\/a> in the u. S. Finally, not a lot of new lows or dramatic technical detection. I wouldnt know g. E. Since its earnings reports. It has had a tough time. A new 52week low. Down about 5 since the earnings at the end of april. You mentioned europe was about to close. Lets get to sima moda. Europes post their biggest oneday loss in almost eight months. Market in france on track for their worst session since june of last year. Investors are seeking safety. Just take a look at bonds. Money going in, the german, french and protuguese tenyear yields falling. Portugal, lows not seen since late october of last year. Taking a look at european currencies amid weakness, the euro at 111. Up about 5 against their green back in 2017. The pound rebounding as well at 1. 29 in todays trade. In terms of stocks, lloyds is one of the bright spots announcing the British Government<\/a> is no longer a shareholder after sharing its remaining stake. The government bought a 43 stake in lloyds as part of a bailout. Lloyds claims u. K. Tax payers have made a profit of almost 900 Million Pounds<\/a> from the sale of their shares. Stock up, 2 . Carl, back over to you. Amazon ramping up efforts to break into the pharmacy market. Sources close to cnbc tell us although it is not a certainty, they are trying to come up with a strategy. Lets bring in Nyu Scott Galloway<\/a> and jeremy phillips. Both of them at post nine. It is good to see you guys. Thanks, carl. Good to see you. We have been having this discussion on different categories for years, more specifically the recent months. What could they do at will and how damaging would it be. Any time they roll in, you take it pretty seriously. They are running a test in phrma. In japan. Why wouldnt they . For me, it is a matter not of if but of when. One reason would be they have their hands full. Is that nod a good enout a good reason. I was surprised he they werent already doing this. I have forgotten this wasnt a product they already offered. Why arent they . They do subscribe and save a lot of the companies that do offer pharmacy services. They are big on sending them on a schedule every couple of weeks, every month. Amazon would seem to be in a great position to do that. Are there dangers here we might not see . That was the correct question. Why arent they . Complexity and regulation typically benefits the people who have figured out the incumbent players. This will be bad for the manufacturers brands of pharmaceuticals if they get into this business. Something the brands benefit from here is a lack of transparency. When amazon comes into a category, you see universal margin pressure across the entire echo system. I cant imagine they wont be in this 300 billion sector. Good for amazon and shareholders and consumers and everyone else bad in the system. Isnt there a regulatory and safety aspect that we are not thinking about. You cant just ship drugs all over the place. Dont you have to show your i. D. S and be registered in terms of your insurance and there is this big debate about drug prices. That affects the actual Drug Companies<\/a> a lot more. There are regulatory risks here. Sure, the question is, can amazon address those risks as confidently as cvs or walgreens. In japan, you have to go into a pharmacy and show your i. D. And a registered pharmacist makes sure you are getting the right drug. Amazon is good at figuring out a complicated problem, growing their share price and have everyone else take a beating. I am trying to think about what the investment required would be. You are not dealing with products that are hard to ship or bulky or heavy. It can feed right into their logistics plan. They have been in this business before. They had a partnership with drugstore. Com back in the day, a decade ago. I dont see why they shouldnt be able to deal with this. It requires shortterm logistics. Not all of it is suited to getting there within three days. Some needs to be there within an hour. The last Mile Logistics<\/a> is still a challenge. Would you imagine investors would have the patience to say, we are going to tackle a brand new area. Investors have always given amazon a very long leash. Indeed. There was this idea that industry should be very scared when amazon was entering their turf. We see that in the share prices at cvs and walgreens. Whats the verdict on that. I get it with retail, the bookstores, groceries. They havent really made a dent there. No one has figured out groceries. You have to trust amazon probably will. Everyone is focused on amazon versus walmart. Who is really getting hurt is manufacturers brand. Amazon has algo richlies that goes out and looks for the lowest price per ounce regardless of the packaging and then demands of their brands that they offer that same price or better per ounce in any package or within a nano second, they will kick you off. You have to maintain probability. They are inspired with 500 million consumers, fanatical investors that fund this to declare war on brands and all the margins to give it back to the consumer. Classic play in that regard. A new chapter in the legal battle between qualcomm an apple. Qualcomm filing a complaint against apples iphones saying it was not paid proper royalties for use of the technology. John, i know you are watching the space. It is getting more fiery. Qualcomm has been very generous with their time talking about this side of the story. Apple doesnt want to pay qualcomm licensing fees for its technology making the argument the fees are too high. It is a percentage of the cost of iphones and ipads. Apple tends to price those high. I am wondering, do you see an argument for apple to completely stop payment and say, we have paid you enough already. We are going to handle this in court. For now, do with nothing. Regarding any legitimate argument, no. Will they get away with it, yes. They have decided not to let the federal government into their iphone. If ford said, you can no longer get into a trunk. You see someone thrown in the trunk but you cant get in. That is where we are with the idol t id idolatry of apple. Do you see any legitimate argument on apples side . I wonder if this move is an effort to pressure the manufacturers. They are going to somehow say you cant make any phones for somebody if you are not going to pay us. Could that work if they do it through the manufacturers, not apple . My understanding is apple has lawyers and big boys that sign this contract. It basically said we dont like the contract. So we are just going to stop paying. Other than that, i dont see the argument here. I dont have any special view other than a sophisticated company. The lawyers have given them some reason to take this point of view. It is fascinating, though. The scale of these feuds, whether it is google or apple qualcomm, it is like the pepsi and coke of tech battles. They have the sharpest elbows in the world and can kind of dictate the terms of almost any partnership. Law of public opinion, thats all sort of second order affect here. A lot of people put qualcomm in that camp as well. They have been known to get their way. Broad cam and others have come after them for years, largely unsuccessfully. It is all very well to say that i agree with what scott said, these companies are used to dominating particular markets. When we talk about four or five of them, that arcmegument becoma lot weaker. They are converging on a lot of markets. They are keeping each other. Thats our protection. I think the headline was that they are not so scary. They are at competition with each other. What point were you trying to prove . People get consumed, because they say you cant go a day without using one of these five company products. Which one of us goes a day without using one of the mobile carriers. They are incredibly competitive and offering us more data and lower prices. If you look at google, apple, facebook, microsoft, they are all converging. It is not because music is this incredibly high margin product. They feel like it is necessary to be in consumers everyday life. I think they are overdone. They are keeping each other on us. Thats a lot healthier than having regulators keep their eye on them. Jeremy, scott, good to see you guys. As we go to break, we are tracking the selloff this morning. The dow is down 245. Some of the morning selling was driven. Rick santelli, what are you watching . I continue to watch the dollar index. When the reserve currency of the world seems to break away from normal correlations, there was a message being sent by that trade. It is that message we are going to discuss after the break. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management<\/a> firms in the country. Discover how we can help find your unlock. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Coming up, a debate over whether this is a turning point over how the markets view the trump presidency. Is volatility about to come back . Apple is suffering the worst day of the year. Is their your big chance to buy . The health care names you should buy ahead of next weeks big cancer conference. We start noon eastern. Well see you in a few. Lets get to the cme group in chicago and get to the santelli exchange. Good morning, rick. Good morning, carl. There has been an alignment of global pieces and we could count volatility. Low volatility, pretty much Global Markets<\/a> dont trade at the same price but for the most part, they have the same moves. The size of the moves may vary. When our tenyear started to get hit in terms of yield and rally and terms of price. We saw the same dynamic with, boom, it didnt measure out the same. We outdissfanstanced them. That makes sense when you are multiples of what their yields are. The dollar index, the reserve currency of the world. We could argue between whats going on with the president , whats going on with the administration, whats going on with the media, is there smoke, fire, is it real . It is not for me to say. For me to say, eventually, when i was young, we used to say, knock it off. If somebody wanted to knock that block off, they will have a confrontation with you. Lets duke it out. That block has been sitting there and this administration is the block. It is off. The markets are on the loose. Today, you have heard many guests say the pressure is building. Whats going on is finally affecting the markets. I think the dollar index has been after if he canned by some dynamics for a while. Lets look at whats going on. The last significant bottom is 9706. Current dollar index is 9768. We have talked for days. Most likely, we are going to be looking at a 95, 96, 98. These are going to be the areas that the dollar index will find support. When things get pretty hot and you get some pretty big moves in the dollar index, they tend to be selffeeding, so to speak. This move, in my opinion, if you want to take a step back. We want is to see how it acts when it gets here. See if it pauses or slows down. There is very little doubt that ultimately, right around 96. It might come past. Thats where you are going to find support. The reason i think that is significant is because i think the tenyear note like the way the tens and the boons trade, this isnt going to correlate direct with the dollar index. They both feed off the same feeding areas. They are joined at the hip, so to speak. Its the calibration thats an issue. If you look at the most thinly traded zones, we have talked about it before, it is basically 180220, a big area. Insofar as specially that occurred right around election. This all seems to have at some point a political denominator. Simple assessment. When the dollar index hits that 96 level, my guess is that where you are going to be with tenyear notes is right around the middle zone of its thin value line. Right around 2 . If it happens to correlate that you see 96 with the dollar note and 2 with tens, it might be something you want to Pay Attention<\/a> to. They failed unchanged on the year at 244. They have a double tap at 263 and a Double Bottom<\/a> at 145. You have to get your nobodies righ knobs right. Maybe there is something to be said for that, yes, sarah. Straight ahead, we are keeping you prized of this market selloff watching technology under heavy selling pressure. Technology is the second worst performing group in the s p. The nasdaq is down the worst of the remaining averages. Customer traffic . Ast anale can we push the offer online . Brian, i just had a quick question. Brian . Brian. Legacy technology can handcuff any company. But yes is here. Youre saying the new app will go live monday . yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. With all the things youll never learn from a book. Expedia. Everything in one place, so you can travel the world better. Usaa gives me the and the security just like the marines did. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children. Were the williams family, and were usaa members for life. Markets having their worst days since september, 2016. Joining us, Paul Christopher<\/a> and our mike santoli is here on post nine. Things are ticking along as far as Economic Growth<\/a> is concerned. You think Consumer Spending<\/a> is going to continue to be decent. It sounds like you are saying, dont worry too much about headlines that are coming out that might spook the markets one day or two. Thats right. We dont know, as rick we dont know how long this noise lasts, but what we see frequently this year so far when we get noise out of august, paem begin to suspect the administration will get less done and that tends to bring valuations down. We thought they were a little bit stretched. The good news is we think economy is still solid so youve got buying opportunities here, just going to have to rebalance a little bit. My valuations though are still rich in many peoples judgment. Could this be a case of people trying to call downturn so many times and it doesnt happen that now, nobody wants to call a downturn . Certainly nobody wants to call a downturn. I think the backdrop of not just the fact that valuations are stretched, but that theres broad acknowledgment. If you look at the Merrill Lynch<\/a> fund manager survey this weerk you have people say iing the mu is overrate. Basically, you have to go back to the year 2000. It means that frofsal investor psychology, were sticking in this for that last bit. Whether were going to get policy help, i dont think its a big driver, but its something or this final bull market flo flourish we often get. Makes people say i wasnt digging in here for five years of growth and great economic times. The survey also talked about cash level, not suggesting youre at a top. Looking for 10 Earnings Growth<\/a> over the next 12 months. I think that the biggest committee fundamentally is the back half of this year, the earnings forecast have held up very well. Is there anything in those forecasts significantly linked to policy . I would say probably not. I think basically, people are kind of extrapolate iing just t Global Growth<\/a> trend and the question is is, does that trend persist or are we in another soft patch . Can you take the other side of that urk paul . Ceo confidence has been high since the election. Theyve had a voice in this administration. If we start to see change s in washington, the wall street journal has loose lips sync presidencies. Has that changed over the last 48 hours . I think thats more of a question for 2018, for 2017, id agree theres not much priced in that was going to happen this year. Weve just come off a weak First Quarter<\/a> in the economy. As the economy gets ready to ramp up for a 3 probably rate this quarter and into the coming quarter, we think theres plenty still to discount this year, we like the earnings estimates. We just think that you know, people who have been waiting to take some profit, waiting to rebalance for a good opportunity, this might be the time theyre finding finally. On tax reform, mike, or tax cuts. Its been suggests theres a strong underlying bid, sell, if you have to sell, wait until december 31st because if they do pass that thing in the First Quarter<\/a> of next year, make it retroactive, 17, give them the most leash you can give. Sure, i dont know what slug of the market that really can account for. In other words, how many people are basically modifying their behavior based on that. Its unclear to me. Look, theres a big tax cut embedded in the Health Care Reform<\/a> bill. That would be kind of in theory, a highend tax cut that got a con summit boost. Does the noise get so overwhelm, do you have this political fog that it impacts business and Consumer Confidence<\/a> and behavior. Too early to say. Paul, quickly, one piece of advice for investors at home that they should be doing in market that as you mentioned, is valued this highly. Some people taking some profits. Its time to stop waiting if for the opportunity to rebalance. Look to take profits here, look to put the money back to work in areas where youve been underweight. Sound advice. Paul, mike, thank you. Thank you. On that point, stocks are having their worst day of the year. At least for the s p and the dow. Goldman, j prpm, dupont, apple,e biggest laggards. The biggest are apple, intel and boeing. Back in a minute. Welcome to holiday inn whether for big meetings or little getaways, there are always smiles ahead at holiday inn. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Google is kicking off its conference today. Josh lipton is live at the conference with a preview of what to expect. When he takes the stage here to deliver the keynote at 1 00 p. M. Eastern, the expectation is that hes going to talk a lot about google assistance, its answer to apple, siri and ama n amazons alexa and we could get updates on googles hardware. For example, google home, the Smart Speaker<\/a> that answers questions and plays music. There could be additional pressure on google to offer updates today because we know it is playing catch up with amazon, which dominates 70 of the market versus just 24 for google. Amazon benefits from first mover advantage and continues within this space. But tech analysts say dont count out google either which continues to add new features to its Smart Speaker<\/a>, too. Like recognizing multiple users. Garrner says spending on these devices will top 2 billion by 2020. Other hardware, reports that google is also going to unveil its new vr headset. Coming up later on closing bell, ill be chatting with clay bavor. Guy, back to you. Thank you, they got some updates to do on daydream as well. They promised us these phones that would work with vr and they havent showed up, guys. In another universe, we might have led with google io conference today. Not the day for it though. Zpl we can look at the slide of technology stock, which are some of the biggest losers as they have been. The biggest winners of the year and that potentially explains why nasdaq is is down 1. 5 . This liquidation of some of the losers. The dollar was a tell. Continue to watch that, i would say, going forward. Its pretty much broken down over the last two days. Indeed. Longest losing streak for the dollar in about two months. The earnings parade is going to roll on. We are going to get earnings from cisco, after the ransom worm over the weekend. Maybe this is the one tech Earnings Call<\/a> well have where people arent talking about competition with amazon. Thats where the market 2017 for me, amazon, amazon, amazon and gook l io, apple, retail, everywhere. Over to headquarter, scott wapner and the half. Our top trade, d. C. Drama. Whether the turmoil around the trump p presidency has reached a Tipping Point<\/a> for stocks and how to protect yourself if it has. With us today and kevin oleary is here. Also with us from the white house today is cnbcs eamon javers and from new york, cnbc cr contributor, ron inaans. Vix","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia804707.us.archive.org\/5\/items\/CNBC_20170517_150000_Squawk_Alley\/CNBC_20170517_150000_Squawk_Alley.thumbs\/CNBC_20170517_150000_Squawk_Alley_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240628T12:35:10+00:00"}