tv Worldwide Exchange CNBC September 19, 2019 5:00am-6:00am EDT
>> it is 5:00 a.m. at cnbc the fed divided. it is not just the fed the world awaiting another key rate call in the biggest financial markets. why new worries could spell trouble for the market and your money. t at&t making a dramatic move with direct tv and strong words for boeing as it prepares for first-hand look at the grounded 737 jet.
"worldwide exchange" begins right now. ♪ >> good morning, good afternoon, good evening from wherever in the world you are watching i am brian sullivan. thanks for watching. the dow has had a great run. up 10 of the past 11 sessions. up nearly 3% september historically the worst month of the year. not this year. the bond market has come up. we are seeing benchmark yield deals 1.78%. in japan, we saw another rise in the nikkei, hang seng down around 1%. we are seeing green across the
screen in european markets the federal reserve, cutting interest rates again by 25 basis points that means a quarter-point rate cut. the fed increasingly divided on what to do with rates. some members want to stop cutting rates, another wants deeper cuts. president trump writing, jay powell and the federal reserve fail again no guts, no sense, no vision a terrible communicator. jay powell says, quote, i don't. >> i don't i'm not going to change my practice here today of not responding to comments or addressing comments made by elected officials. i will just say i continue to believe the independence of the federal reserve from direct
political control has served the public well over time. i assure you my colleagues and i will continue to conduct policy without regard for politician positions. >> going to our guest today, the fed call that's in the past what do you see going forward? >> the fed is stuck between looking at the data today and seeing unemployment rate at 3.7% cti give or take around 0.7% going forward, they see the slowing and that is the cause for their concern. the question is, do rate cuts even matter? >> the market doesn't think so what will happen today, are you going to do something different today? >> no. because rate cuts are low.
if you are buying low, that has done little in stimulating purchases. >> you are making an excellent point. the fed is relevant but the reality is the bond market is done already that is kind of the viniet at the end of a movie they are trying to catch up and stephen the yield curve. >> why >> they think banks need that ste steepness in order to make returns. unfortunately, no one within the fed are questioning the need for these rate cuts. >> their mandate is inflation trying to maximize employment. >> right with 7.5 million open
jobs >> right and at an 11-year high not one person asked powell about that they keep looking at ecb, which is lower we'll see what happens with the act trade deal that could trade the dynamic here you won't get more rate cuts and you'll see a longer rise >> to change tides i'll come back to you. so sit tight, peter. the bank of japan voted to leave rates. later on, you'll hear from the bank of england. steve sedgwick joining us now with what we can expect. >> brian, i want to introduce you to a new concept called the rates smorgasbord. it means a big buffett of all
different kinds of things. that's what you are getting in europe let me show you what i've got in advance of that. the ecb last week cutting rates, giving tiering on deposits and the big qe program you've got the cut the swiss who are desperate not to cut their economy is fantastic they've got a 2.6 unemployment rate many thought they would mirror what we saw from the ecb the norwegians, they've been hiking rates today fourth time in the last 12 months because despite the fact that they are a huge part of continental europe, they are not dictated to by the ecb and they have some of the biggest oil reserves on the planet then dear old bank of england here mark karny, his hands are tied
we have the small matter of today's bank of england meeting before the small matter of brexit european markets are wondering how much bang for the buck are we getting there was this feeling that central banks around the world were all easing in order to galvanize the global economy has central bank policy in europe run its course. more and more are beginning to ask that question and the next question, will there be a fiscal response as opposed to central banks. this is the european smorgasborg. >> i knew you'd come up with some way to make central banking interesting and delicious. if you are the fed, now
you've got dissent these things have to factor in to your thinking >> steve made a good point they've been paralyzed for three years with brexit. they are sort of stuck also the other point is that central banks are sort of at the end of the road in terms of their stability. >> that is the problem, the ecb did ease but there is no response to the problem. the bank of japan would try to lower rates again. there will not be any response to the curve japan is immune to lower rates >> there is no self-reflection in terms of have we done enough. doing more will not help >> has powell lost the fed >> a lot mass been made to the
fla fact there is disagreement >> the limited visibility is reflected in the fed i think it is a healthy thing. >> good stuff. thank you very much. when we come back, will they won't they conflicting reports over at&t making a massive shift in tv strategy plus the top faa watch dog dialing up the pressure on boeing as he goes in for the white glove test himself and shares of u.s. steel are set for an ugly open this thursday that's allahead when "worldwid exchange" returns. stick around we'll inform them that liberty mutual customizes home insurance, so they'll only pay for what they need. your turn to keep watch, limu. wake me up if you see anything.
>> welcome back and good morning. 5:12 year. 4:12 in chicago. at&t is considering whether to pull the plug on one of its well-known businesses. one that has been bleeding its customers. >> at&t is reportedly considering parting ways from direct tv. the strategy to make the satellite business a major piece of the future. options include spinning off direct tv to a separate company or combining with rival dish
network. they say they are not in talks about a deal because of regulatory issues. they have been losing subscribers. at&t lost nearly 780,000 premium customers. the company expects those losses to continue. acting investor disclosed a stake and named businesses including direct tv as possible sale candidates. they are urging at&t to end its spree of acquisitions and an $85 billion deal at&t is up about 1% today and 30% for the year >> thank you another stock we are watching closely is boeing dow component. the faa leader is to meet today
for an up close briefing on the 737 max. he says he will not certify the airplane until he flies it for himself. >> only the final signoff authority in the u.s i'm not going to sign off on the aircraft until i would fly it myself or put my own family on it >> you will fly the max before you certify the plane? >> i will fly the max. >> he is a former pilot and former employee for airlines coming up next, the good, the bad, the ugly for what may be the world's hottest stocks apple is s itolaets py games but is it worth billions we'll find outcoming up.
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rebounding comcast said it would give internet only customers a free streaming device u.s. steel cutting out look saying the impact of falling steel prices even amid a trade war is going to hit earnings, u.s. steel down about 10%. still to come, why secretary of state michael pompeo is calling the saudi a takes, quote, an act of war itd later, vaping taking a h as advertising dollars go up in smoke. (pilot) we're going to be on the tarmac for another 45 minutes or so.
>> good morning and welcome back 5:20 on a thursday morning the dow was up 10 of the last 11 sessions we are expecting new details today on iran sanctions. as u.s. inspect of state pompeo dialing up >> saying u.s. sanctions are iran are significant president trump says he'll detail new sanctions on iran as
early as today as the u.s. blames iran for the attack on saudi oil fields >> we'll see, we are in a very powerful position. >> secretary of state pompeo called the attack an act of war. the saudis putting on full display what they claim is evidence iran is behind the attack what happens next is being debated. >> we need to find a dip la magnetic solution to this. we should not be going to war over the saudi oil fields. >> if they don't pay a price for bombing a neighbor's oil fields, all hell will break out in the middle east. >> the president slammed john bolton bolton was fired days ago and didn't wait long before slamming his former boss's strategy >> john was with not able to
work with anybody. >> traveling with the president, his choice for national saecurit advisy the president's fourth in the past three years >> we'll go to fiphillip for moe >> more in the cast of the american airlines mechanic accused of sabotaging a plane. they found an isis video on his phone showing people being killed he forwarded it saying he wishes allah would use powers charged with tampering with a flight sensor.
he told investigators he did it as part of a pay dispute rick singer has pleaded guilty to charges such as rack tiering, money londerring and could face up to 19 years in prison the washington monument will be open to the public today three years after being closed for repairs. the first lady will be on hand for a ribbon cutting >> when we come back, a fed divided. growing dissent really means if you hate the selfie culture, you are really going to hate whatpp ale is doing now. stick around ♪ and unrivaled network to work. the united states postal service makes more e-commerce deliveries to homes than anyone else in the country.
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that's where i feel normal. having an annuity tells me my retirement is protected. learn more at retire your risk dot org. a fed divided. jay powell ups the ante. trump slams the central bank yet again. could there be a trade truce ahead. meeting face-to-face as another round of tariff looms large. call it a 10 top safety regulators are saying about the tesla model 3 they are november ever said before. it is thursday, september 19 you are watching "worldwide exchange" here on cnbc ♪
i believe that song is called 10:00 a.m. automatic by the black keys it is not 10:00 a.m. it is 5:27 you get the point. good morning happy thursday i'm brian sullivan let's get going. we are just about half way through the 5:00 a.m. hour the s&p is up. the dow is having a great streak up about 3% on the dow september is historically the worst month for stocks not this time said september japanese market rising about .4 of 1%. a lot of green on the screen in europe all the major indices up higher. not a lot. to the federal reserve now cutting rates again amid some
growing division amid ranks and growing pressure from the president. steve will join us now after this move. a diving in that this is a fed divided. >> that's right. the fed is divided it didn't cut the rate that is the second declined brings the target rate up. we've reversed two of last year's four rate hikes >> the beginning of the year we were looking at further rate increases. we cut once and then again willing to move and i have no reason to think that will change >> the vote was 7-3. one official james bullard from st. louis wanted to cut rates by a half percentage point.
two others from kansas and from boston, they opposed the rate cut at all their forecast for the fund rate was seven for the end of the year five didn't want a cut at all. >> it is an unusual situation. the u.s. economy itself, the largest part of it, the consumer part is in strong shape. the difference here is we have significant, really, risks to that outlook to not just the geopolitical events be slowing global growth. we look at all of that financial market conditions and how they are affecting the outlook. >> powell changed his guidance, instead of suggesting the number of cuts, powell left future rate moves open ended saying it will
affect aggressively if the economy weakens. >> we'd like you to stick around here let's get more inside the fed decision now andrew is chief market strategist at met live market management your whole goal is the preservation of assets you are not trying to hit a home run. you are trying to make sure you have all you need for your clients out there. is that fair >> when you look at a bond yield of 7.7%, where do you go what do you do with that that is not a lot. >> you start looking at ways to get a yield safely you choose a list you are more comfortable with >> where is an area that accomplishes a goal now.
one area is private assets there is a reason for it you can pick up protections and additional yields. yutu reduce risks and there is a higher yield >> are you bothered by the risk. or do you say it is maybe good you all think the same way >> my guess is they'll do what powell wants them to do. going forward, we are anticipating one more rate cut this year. powell talks about being in line with the data. the data told them not to go past yesterday if he's going yesterday. the idea of being data dependent is some what wrong >> steve, what do you make of the, quote, divided fed? is it a situation where you say they all can't agree and maybe
trump's pressure is getting ahead or maybe, hey, they are all smart people and have a different view and that's okay >> i think this is an interesting time, brian. i usual liam pretty sure what the fed is going to do and why once it has decided on a case, i kind of get the case they make i think you could make a good case in either way right now when i look at some of the major indicators, they've become a surprise to the upside that includes inflation, that includes wages and production. consumer confidence snap back. the one thing down is business confidence and capital spending. year over year, it is down it is a little strange for the fed to be making a case based on a small part of the economy. given that, i see how you make the case
i think the divided fed makes sense to me. you don't know who is right, brian until what a year, two years from now >> does it bother you when you see this would you rather the fed be like a big happy family where greg, peter, marsha, they all get along? >> another argument they are making, is the future so we are going to cut now >> what do you make of this, is jay powell a bad communicator? >> i don't think he's a bad communicator but i think he's trying to articulate something that may not be an issue one of my favorite data points, if something is going wrong somewhere, someone will get fired. you'll see that and have a lot
of time to react to that initial firing instead, we see the number of claims is falling and falling. maybe you should save the rate cut for when those actually stop falling. >> drew, i could have taken either side of your argument so i'm going to take the other side what about this idea that you have the trade risk out there and ultimately, all the world is much lower than the federal reserve and ultimately, if you don't cut -- if you do cut, you have very little risk to the upside on inflation. >> there are two things i make about that first of all, all the data is telling us, they don't care about the trade war. bingo, that is my first argument against it second, you can create risk by those that don't come to
fruition they've given up two rate cuts when there is a down turn. they've given up ammunition. that means the next cycle might have morris beie risk, not less >> i did atwitter poll and said, if you changed your buying decisions based on tariffs, changes your shopping patterns 85% said no. do they admit the trade war is maybe not as dire as some thought? or are they really not worried about it >> i think the opposite is the case initial indications i saw were,
we are going to shake .1, .2 to the inflation numbers. it is not a big deal whachlt is unexpected from the trade war is the amount of uncertainty and the way it would affect ceos and others especially, brian, in the wake of the tax cuts the president provided for the areas it hit, it has hit them harder. it has not spread yet to the consumer and has not really affected the macroin that regard where it hit, it hit harder than expected >> it seems like a recession of the elites the average american is not feeling it cutting interest rates causes
consumers to boost savings rates. that will get you that recession. the more being saved, the less being consumed >> steve, are we going to talk ourselves into a recession >> i'm not going to be part of that i've been reasonably upbeat. i think the president did himself a disservice by promising 3% growth. he had a shot at 2.3, 2.5, i think his trade war would have shaved that down but in an economy where the potential growth rate is 2%, if you are delivering 2%, that's okay everybody expected a slow down a slow down happened i'm a little bit confused by people's inability to understand we had a major tax cut, a major
stimulus in 2018 that worn off. i don't know what is to be happy about. >> i like the optimism throwing that optimism in the plate at 5:40 in the morning thank you. >> a nice set of rolls and danishes >> could you send some this way. >> i'll put some in my pocket for you. >> ei might walk over and get some i need the steps we are going to have a mattis/sullivan summit because of the traffic coming up, call it the slofie. it wants to trademark the term what is it nothing but the end of humanity.
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released joining us now, patrick moorehead. patrick, guess what, apple has done a pretty good job over the past year to get us to spend $5 bucks here and there, $10 on i cloud. they've got a pretty good subscription business. >> pretty easy all you have to do is hit a button on your phone and you are in you look at the type of buyers apple has. opal owns the premium space. they are still making 90 to 95% of profits for most folks, $5 is nothing to them which is why i'm bullish on
apple tv and apple arcade. >> but it is not $5. you've got five here, five for news plus, $20 you do i cloud storage which is $99 a year pretty soon you are paying apple $40 to $50 a month without even thinking about it. it is. >> the point at least u.s. consumers start to think about it is around that $50 per month. the research we've done shows there has been a little fatigue among apple users. less among apple users we are reaching a danger point
were they need to think about it the all-in apple plan. you take all of those services, bundle them together put a dispoint on it apple is making more than any other manufacturer, clearly on iphones. we look at family plans as this great deal what that is about is locking the entire family into services and devices. >> if you've bought all these songs on am music. they are not playing anywhere else i am into that i cloud eco system probably the rest of my life not a bad one. it is high quality service
even if you wanted to switch, you probably can't >> it is that is the key here the smartphone market is limping along. it is declining. if we do flat this year, i think it will be fine for apple, it is really smart we are in between this massive growth and the future of august meanted reality. this is about apple bridging the gap with apple tv plus, they only have one hit. saying $5.99 that's what it cost per month to rent one movie we did a segment
about a year ago i thought because i played crossy road on my apple tv about a year and a half ago. this is the future now they are rolling out arcade. thank you. appreciate it. >> time for top spending before we get back to more stuff. iphone or android. >> iphone but older iphone >> have you ever tried switch? >> never >> why not >> i'm in the zone like you
said slofie, the name trademarked on the iphone 11. giving apple control of the term and preventing other companies from presenting slofie apps. >> instagram updating ad policy. saying this new policy is part of an effort to make the platform a more positive place for all. many media saying goodbye to e-cig ads. they will consider adding the ads back if research shows the vaping products show they are not harmful. >> what do you think about the instagram change
trying to keep kids away from these ads so many put out? you think it will work >> i think we'll look back at this time in history and wonder what happened. >> they are trying to make it safer. >> when every 11-year-old is walking around like this every parent knows it is an unwinnable battle you wonder what does it look like 11 years from now the slofie on deck. returning to capitol hill. why? we'll tell you later today, don't miss vice president mike pence here. he'll be speaking with joe kernen who is from cincinnati, ohio catch this at 11:00 a.m. eastern
>> time now for your executive recap. shares of microsoft up 1% now. announcing plans to buy back as much as $40 billion in stock boeing says faa administrator is set to meet with top executives and flight engineers today for a close briefing on the 737 max. dixon says he will not certified max until he flies the plane personally himself >> tesla's model 3 has earned a top safety rating. the first to win that designation. and mark zuckerberg is in washington to discuss ideas with
regulation he had dinner with leaders last night. >> u.s./chinese trade deputies are restarting talks today joining us now from our nation's capital. >> a delegation of officials, the two sides will begin revisit in hopes of calming the escalation the talks on currency. fentanyl which shipments beijing has begun to slow. and trump has sought big purchases to show up the farms
a follow on trip to nebraska and montana for early next week is in the works that is a positive sign beijing is looking to keep the peace and make good on some of these commitments. larry kudlow said he's optimistic too >> right now, i think there is a certain optimism in the wind i'm an optimism. china has removed some of its trade barriers on agriculture. we welcome that. the u.s. has postponed some of its actions as a good will response so there is a little music in the air. >> a little music in the air of course those comments were made to business officials here in washington who were attending an event on u.s./japan trade brian, this discussion with
china looming over every business conversation these days >> i guess the real question -- i'm confused i'm asking this for a friend and by that i mean myself. how far off is a deal at this point? >> this is a deputy level discussion at this point these are not officials that have agency to broker a deal they can make progress on some of the fine print smaller items happening. but really what is going to be happening is setting the table for the principals expected to meet and set up a meeting between president trump and xi when both leaders are expected to be in chile for the apec summit we are not expecting a big
announcement this week >> dow futures tick back higher over 1.79. on the 10-year, we go to our guest. global head fixed income strategy how do you have an investment strategy when much of the world's debt is yielding 0 or less than zero >> it is a large number of negative yielding income debt. you want to be a little more balanced the way you get paid is for taking risk. the risk you want to take in this market is a little bit lower. neutralize your neeld curve expose your.
mortgage back, reserves. we have a couple of percent. that's what you need to be happy these days 3% is the new 8% >> it is all relative. the idea of mortgage backs you can get mortgage backs yielding roughly 90% of corporates they look pretty attractive. why is that the case they've cleaned up their balance sheet a little bit they've backed up and underperformed that's the time you want to step in it feels like a shock risk
there has been a build up of credit i thought he made a good point that this would exacerbate the risk we don't necessarily think there will be a large spike in rates because we are in global economy right now the base case would be down from it i think you had a challenging designation in the risks and
push back the balance of messages and cut rates going forward he's taken some heat the rbi will be back tomorrow. the big change for "squawk box." it all begins right now. >> good morning. welcome to "squawk box." presented by cnbc. here to bring you the best from some of the biggest names in asset management this hour, fall out from the fed's decision the latest on the china trade talks and other stories that matter most. a special edition of "squawk box" begins right now.
>> good morning, everybody welcome to "squawk box" here on cnbc we are live from the ninth annual alpha summit in new york city i'm becky quick. joe kernen, andrew russ. >> news from the federal reserves you can see the dow futures are down by about 70 points. nasdaq off and s&p off as well in japan, the nikkei is up by about .3%. the hang seng down just over 1%. in europe, active tradin