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tv   Worldwide Exchange  CNBC  June 17, 2021 5:00am-6:00am EDT

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yeah, you are. (shaq) the epson ecotank printer. no more cartridges. it comes with an incredible amount of ink that can save you a lot of trips to the store. get ready for the dean's list. who's dean? the epson ecotank. just fill and chill. it is 5:00 a.m. in new york city here is your top five at 5:00. moving on up sort of. jay powell and the fed shifting the timeline for the rate hikes. they're still talking 2023 dennis lockhart is here about the move. and stock futures are in the red. and president biden sitting down with president putin. will the cyber attacks on american companies really stop positive sign fs for the
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president's domestic agenda as they get moving on a infrastructure bill. and iiran's impact on oil we will tell you what to expect. we are "worldwide exchange." today is thursday, june 17th good morning, good afternoon or good evening. welcome from wherever in the world you may be watching. i'm brian sullivan thanks for joining us on this thursday let's get to it and get a check on your money post fed day stock futures are actually slightly lower this after stocks fell a bit on the fed news the dow closing down about 265 points we are seeing dow futures off 137. nasdaq down 31 nasdaq with yesterday's
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declines, still up about 2% in the month of june. jay powell revealing the central bank now sexpects to raise rates but not until 2023 that is not next year, but a year and a half. that is sooner than projected. powell also giving no indication when the fed will begin to scale back the aggressive government bond buying program. that is the so-called taper you hear so much about remember, the fed has already begun to taper its corporate bond buying program. there is a taper under way it is the government bonds that matter to the market speaking of bonds? after a spike in yields yesterday, yields are back down again. benchmark 10-year was higher than a couple days ago still under 1.6% really it hasn't moved in four months let's get a check on the
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overseas stock markets following the fed meeting, a mixed picture in asia. nikkei down under 1% the european markets are open. they are down, but very, very frac frac fractionally in their trading. and your money and the markets. that is not all that is happening this morning new optimism around the possibility of a bipartisan infrastructure bill. here with that and other headlines this morning is bertha coombs good morning >> reporter: good morning, brian. support for that bipartisan senate infrastructure package is growing with 11 republican senators getting on board. senators including richard burr, lindsey graham and todd young and tom tillis joining colleagues who crafted that $1.2 trillion plan. the development comes after the
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house republicans told the democrats to get ready to go alone on the infrastructure talks after bipartisan talks well through the budget process. meantime, chinese regulators started anti-trust probe into didi just as the company was gearing up for the largest ipo this year. according to reuters, officials are looking at if the company used competitive practices that squeezed out rivals unfairly the report adds that regulators are looking if the pricing mechanism used by didi's core ride share business is transparent enough and satya nadella is tapped as the microsoft chairman. nadella will replace director john thompson. shares of microsoft under
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nadella risen 600% as they focu on cloud computing and linkedin. brian. >> big promotion there we normally see companies going the other way. splitting the role. nadella has done a spectacular job. bertha, see you in a few minutes. thank you. back to your markets and more post fed. jay powell says markets should not ready for a rate hike. downplaying a bit on the projections. listen >> rate increases are not at all the focus of the committee the focus of the committee is the state of the economy in focus of tools, it is asset mana management >> the fed reserve raised economic output and boost to 7% for the full year.
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it begs the question what witdo we do with this we have liz young with sofi joining us liz, what do we do about all this >> first, you have to look at what actually happened and jay powell's message was the markets shouldn't react to the idea of higher rates, but they already did. the futures are already reacting to that as well today. i never met a market that liked the idea of higher rates or rate moves sooner than expected what the market obviously is going to do is look out in the future and say rates may move before we thought. here is the real message when we expect rates not to move up until the end of 2023 or maybe 2024, i think that was a little naive the economy is not in an emergency situation anymore. as we move through 2021, rates likely stay a zero we get to 2022 and we have
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organic growth and inflation that finally lifted off the ground we have a job market if we meet the fed projections is healthy i think rates have to go up and before projected this is not bad news >> well, the bond market could do the work forr the fed as they have bond vigilantes, liz we know a jump in yields from february to march. that was a pre-market move by the fed. do you think the bond market is going to wait around for another 18 months? 24 months? >> i hope it doesn't what we want is investors and markets to make sense with the economic data. we already saw a big move in the 10-year as a reflection of the idea that rates may go up and the economy is doing better. i think the rally in the 10-year yield over last month or so has
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been something that doesn't really add up. i like to see the 10-year drift upwards. the key word is drift. spikes in yields are something that confuse markets and send equity markets into a tizzy. that would be positive for rate sectors like financials which make more money as the curve steepens there are a lot of investors expecting the curve to steepen over the next 6 to 12 months, i think rates go up. i hope they do it in a controlled fashion >> do you think there is a chance -- we have been conditioned, liz, over the last decade, lower rates good, higher rates bad. that is not always the case. there is a chance the fed may have to reverse course because they project something that doesn't mean it will happen i project i have more hair next year than this year? that probably won't happen they could do more damage to the
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goal of maximizing employment or controlling prices than good for the ultra low rate for longer po policy >> that is the line that jay powell and the committee has to dance around there is a risk of being too slow to react and a risk of doing it too quickly they don't want to cause an overreaction in the market because the move was made too soon i think this fed will err on the side of being too late than too early. we heard the same message yesterday. don't expect a rate increase any time soon. the tapers message is con consistent we were expected to get more information about the taper yesterday. we will still likely get it in fall the fed will be patient here we have to keep in mind that they keep talking about the average target if we assume and this is me
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assuming for simplification that it is a two-year average, core pce is still running at 1.59 to 1.6% on a trailing two-year average. there is nothing in the data screaming at the fed to act any time soon. >> because if you look at a trailing two-year average like they do, of course the numbers will be skewed that is the problem. the data from last year is so out of whack we started normal. absolute lockdown in many states the economy tanked and economy came back. can we look backward and get any guidance at all? that's my problem, liz we should look at 2019 numbers don't look at 2020 almost look at 2019 and 2021 not just from the economy, but from earnings or is that just 5:00 crazy talk? >> i absolutely agree with that as far as the earning
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perspective. inflation was still low in 2019 as well. these numbers earnings and inflation and a lot of economic numbers we see are going to look top heavy or look hot. everything will look like a peak when we compare to a trough the numbers will look skewed in the late spring and early summer timeframe something that came out of the meeting yesterday, if the expectation runs hotter than 2% and the fed is okay with it, some of the votes on the plot looked like they would move rates when inflation got slightly above 2%. i think the buffer we had in mind changed as well that is what the market is trying to digest >> can we leave it on what really matters, liz? what really matters is 15 hours from now, your milwaukee bucks do not lose to the brooklyn nets
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and take it to a game seven. your bucks have to get it done >> i hope they get it done fear the deer. >> there you go. milwaukee's own liz young. frozen custard one of the best. >> yeah. >> a big game tonight. go milwaukee when we come back, more on the fed and if the ultra low rate policy to actually hurt the job market dennis lockhar it is lockhart is here. and we have big money moves with the mystery chart and what will have an impact on the global oil markets. helima croft is here to talk about iran a busy hour here on "worldwide exchange."
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we're going to go back to low inflation post all this. it is very clear that clients are worried. the bond market agrees with that clearly at the moment. clients are worried if the inflation is transitory. economists are confident as they see afterwards >> the supply issues are incorporated now in where we see the inflation going. overall, we don't expect
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inflation to stay and we think it is more short-term effect we see some of the rates and we expect rates to stay low and you see that with our clients and investment opportunity and searching for yield because base rates are low. >> the ceos of man group and ubs speaking with cnbc yesterday part of the evolve global summit on two key issues of concern from the markets and fed and inflation and rates. all of the great summit content on demand at for details. time for the big money movers stock stories. lennar a tight supply of homes for sale means higher prices. it is not all good news. lennar is dealing with higher t
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actually workers to build the homes. stock number two honest company reporting results for the first time shares trading lower despite better than expected numbers rough ride, honestly stock down 25% since the may ipo. and stock three is curevac the covid vaccine is 47% effective. look at that disaster du jour stock down 39% today and a bonus group of stocks today to watch why not? i'm off tomorrow the chinese chipmakers shares surging on a report that xi jinping tapped the vice president hu to push chipmaking and $1 trillion set aside for that initiative. and a new warning from general motors on how inflation and the semiconductor shortage
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can hit the bottom line. >> announcer: today's big number 75%. that's the share of people in the u.s. and canada who said they had high daily stress according to a new gallup poll that is 43% above the world average.
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welcome back let's talk oil
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there is a lot happening in the oil world. not only has the price soared this year in demand and owepec control, but issues around iran. elections this year could determine a lot with the normalizing relations with the u.s. let's welcome in helima croft to talk about all of this never take a sip of coffee when you come back from commercial break. that's your lesson he helima, welcome. it is looking like the hardliners have the edge they may expand their power. what do you expect in iran and what do you expect the impact and the u.s. response ultimately play be? >> it looked like it set up for a hard line victory. iran threw a bunch of moderate
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candidates with the conservative head i think the question is going to be do you have the u.s. and iran to come to terms quickly post election and do a narrow nuclear deal to get 1 million barrels back on the market the issue is do you have street protests like in 2009 that put pressure on the biden administration if there is a crackdown. the voters in iran is to be sub-50%. we will have a hard line government and narrow nuclear deal and no real improvement in u.s. and iranian relations >> does that damage iran to come back to the world oil stage? they are putting all of their oil on ships off the coast and not legally allowed to sell in certain parts of the world if the united states has something
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to say about that. does that push back their return to the global market, if you will >> the supreme leader looks like he is the ultimate arbitor the question is will iran agree to make the nuclear restrictions per permanent or extend the shelf life it looks like the supreme leader wants sanctions relief it is not like 2013 where the president of iran is talking about the opening to the west and reintegration of iran and the system it will potentially be oil barrel only. no major reset in the relationship with iran and the west potentially getting tougher with the hard line regime >> and we'll know in about a day and a half what happens with the iranian elections. let's talk about the other side and that is supply because salman has done a
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masterful job of bringing opec together and pushed up the meeting timelines. i still wish they were in person he got to the cheaters and iraqs of the world on board and we have seen the price of oil firm up you spoke with him on a panel a couple of days ago he had been critical of the ia projections. any clue as to what he is thinking right now from the conversation on wednesday? >> again, he keynoted and some remarks were speaking to the press. what we know about his royal highness is he remains cautious. he has proven this is to be correct. adding barrels on the market and they would do so in a gradual way. you have other producers within opec plus. russian officials are eager to put more barrels on the north.
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they say we are in a deficit situation. the market needs 1 million more barrels from opec. some officials say we should add 500,000 additional barrels every month going forward. i think iiran becomes important if iran doesn't come back, how does this factor into negotiations they have to try to calculate how many barrels they bring back he wants to be cautious, but the market needs these barrels >> have you driven lately helima you think we can absorb the 1 million extra barrels a day. >> exactly >> if youi-95, i think we can
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helima, thank you. by the way, goldman sachs said they would not be surprised if oil hit $100 a barrel. wow. still ahead, s.e.c. once again punting on a decision on a highly anticipated bitcoin etf reminder if you are back on the road and can't watch, but listen, follow our podcast with all of the podcasting fatrmplfos. the dow is down 117. we're back right after this. sh) the world is going hybrid. so, why not your cloud? a hybrid cloud with ibm helps bring all your clouds together. that means you can access all your data, modernize without rebuilding, and help keep things both open and secure. that's why businesses from retail to banking are going hybrid with the technology and expertise of ibm. what if you could have the perspective to see more?
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low rates for years? the fed still saying no rate hikes even next year would that setoff an infl inflationary spiral? dennis lockhart is here. and the fair value money as the economy grows, will higher prices take the toll? futures are down 126 get ready. one day early. we have the insider buying segment today. one little talked about stock getting a huge insider buy it is thursday, june 17th. this is "worldwide exchange. welcome or welcome back. it is just about 5:30 on the east coast good thursday morning.
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here is how your money is shaping up on the heels of the fed policy decision. not too well futures in the red down 125 on the dow. stocks does fall yesterday dow closing down 265 yesterday hold up. we have seen a good month so far. with the down move yesterday not including today. i can't see in the future. nasdaq markets up 2% in the month of june. we are still higher for many of the major averages just less higher than before yesterday. let's get a check on the bond market yields spiked a little higher after the fed news we are still below 1.6%. bond yields at that level at 1.57 we have been stuck in the range of bond yields going back to march after the spike in october to november and march.
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the bond market was sitting still not believing the fed or already moved a couple months ago. we will talk about that in a minute we will get more on all of it in a moment let's get a check of the other headlines. bertha coombs is back with those. >> brian, microsoft shareholder is calling on the company to conduct a report on co-founder bill gates and sexual harassment in the workplace it has introduced a resolution on the matter citing allegations that gates sought to have inappropriate relationships with employers and other sexual harassment the group pressed large companies on issues including general and issue pay gaps meanwhile, the gm ceo says the ongoing semiconductor shortage and rising inflation will like ly increase expenses b
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up to $3 billion the company says much if not all of the costs could be offset of gm's performance by the first half of the year increasing the earnings forecast ahead of the year to between $8.5 billion and $9.5 billion. that is up from the previous forecast of $5.5 billion and the s.e.c. has once again delayed its decision on whether to approve a bitcoin etf. if the regulatory filing, officials say they will seek more public comment on the matter this marks the second time the s.e.c. has delayed a decision on etf provider proposed bitcoin since april. crypto falling on that decision, but rebounding this morning. just shy of $40,000, brian i'm not sure how it works. the buying they do can increase the price itself
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with crypto already so volatile, that may be one of the issues. >> i did a panel a year and a half ago with hester purse who has been in favor of adjusting crypto and etfs. some say the problem is that bitcoin never stops trading. there's no close and open. so it might be hard to do a constant pricing of a non-crypto type product who knows? i'm sure we will get there at some point bertha, thank you. that's weird it is hard to know if it is up or down. it never stops trading. anyway, investors continue to digest the latest jay powell comments after the meeting the central bank now signaling an earlier timeline for raising rates, but not early at all. earlier. 13of 18 officials expecting a rate hike by 2023.
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not 2024 that is up from seven back in march. not everybody in the fed is looking that far out others see a rate hike as early as next year the fed sharply raising inflation forecast now seeing it running close to 3.4% about a full percent more than the previous target. they don't see the prices lasting long they kept the transitory language the economic word of the year if you will they talked taper with no clear indication when the massive government bond holdings will start to be sold off >> the next meeting, we will begin meeting by meeting to assess that progress and talk about what we think we're seeing and do all of the things you do to clarify your thinking around the process of deciding whether and how to adjust the pace of composition of asset purchases.
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>> joining us now is former atlanta fed president dennis lockhart great to have you on if you were sitting in that room, would you vote on no rate hikes until 2023 >> yes, i think i would. there are a couple of things on their minds, obviously the employment situation which jay powell talked about quite a bit. at the same time, i took away the emphasis on inflation expectation and changing inflation expectations takes time to ensure they really anchor 2023 for liftoff seems, to me, realistic. the other interesting question is tapering of the bond purchases and he did signal they begun to discuss that. >> yeah. a lot to unpack there dennis let's start with the second part first and talk about the taper by the way, we already started a
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taper. just on the corporate bond side. much smaller government bonds is what they care about >> those were emergency actions. they are unrelated to the monetary policy. >> yes they did hold them now they are unwinding them. a lot of acronyms like in 2008 trying to make sure our audience understands all of the different stuff. we had to learn enough ten years ago, dennis. when we talk about a taper, is there a reason we are looking at 2023 to taper a balance sheet of that size will take a long time could it take a year or more and we can't raise rates because that process is just going to be a long, slow-moving train? >> first, i think they will taper before liftoff i think that sequence is
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logical. the first action to remove an accommodation is the tapering. how they will actually conduct that remains to be seen. judging from history from the last time we went through this, in all likelihood, they will slow purchases they wouln't go cold turkey and stop purchases yes, it could take some time it could take arguably a matter of a few years to get back to something that looks like the balance sheet pre-covid. >> yeah. that's what is interesting, too. let me ask you this, job market, dennis i know we have been conditioned of low rates good, high rates bad. if that is sparking inflation and you can't get workers and if you can, you have to pay them so much and you have to raise
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prices is there any chance the low rate policy could damage the fed's mandate of maximizing employment or will that have no impact whatsoever >> isimplistically you stated it logically. low rates on balance are better for stimulating the economy to get people back to work than higher rates to me, it's about that simple. >> because we want to maximize employment we want to do that by stimulating economic growth. we had an artificial drop and rapid-fire return. i guess the question is if you are in the room, what do you think jay powell is thinking about when he looks at a job market that is still coming back strong, but 7 million or 8 million open jobs in america right now?
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>> i think they have very much front of mind the whole committee. the conditions pre-covid if you think about that, we had participation that was in the 63 to 64 range. today is in the high 61 range. a gap in terms of participation. then secondly, 3.5% unemployment with that level of participation. today, there is, as he said, a long way to go to return to that world. i think that's what they're thinking they're thinking we want to restore the very good conditions in the labor markets and employment markets that we had pre-covid. >> what do you think the next big change is going to be and where might it come from is it going to be the jackson hill symposium in august the beautiful heating in wyoming
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where we get new fed news or do you think it will be later than that when the other big shift, fed style, of course, may happen >> the big shift, of course, is around tapering. it will be concrete information about tapering so the markets will understand how it will be carried out and what the mix of assets would be. it could be mortgage backs to start or it could be balance between mortgage backs and st treasuries since they began the discussion at the meeting yesterday, i think the jackson hole conference would be an occasion for jay powell to layout a plan and to really flesh out the thinking for the public. that might be a little early, but the timeline that i kind of believe will take place is
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either jackson hole or september, we will get a lot more new information as to how you it will be done and a few months before they begin to implement the tapering itself. >> dennis lockhart, former atlanta fed president. pleasure to have you on "worldwide exchange. a long conversation, tv style, on this topic. dennis, a pleasure thank you. take care. >> thank you, brian. >> you're very welcome great insight. on deck, what exactly to make of yesterday's biden/putin summit will it stop any attacks on american cpaesomni we talk with eamon javers live in geneva next
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welcome back president biden is back in washington this morning. by the way, a beautiful shot of the us white house as the sun rises. eamon javers was in geneva with the takeaways from the summit with vladimir putin. >> reporter: this is not a bromance with president biden and putin. we saw this back in 1985 with reagan and putin
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we saw none of that yesterday with biden and putin it was all business until biden suggested finding common areas of interest. not building a personal relationship here is what he said >> we should cooperate where it is in our mutual interest. where we have differences, i want president putin to understand why i say what i say and why i do what i do >> reporter: for his part, vladimir putin denied that russia was the biggest source of cyber insecurity in the world. he said the largest perpetrator in the world is the united states, not russia he denied a lot of the allegations on the scene and made allegations back against the united states case on case on human rights and a number of other issues he said the negotiations had been positive. >> translator: talks were quite
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constructive as with cybersecurity, we reached an agreement to start negotiations on that. i think that is extremely important. >> reporter: so many of the accomplishments here, brian, were agree to continue talking variety. they will continue to talk about cybersecurity and continue talking about nuclear weapons with the idea of having some agreement some point in the future no specific date on that they did agree to exchange ambassadors again. that is one positive take away are from the summit, brian >> eamon, russia sanctioned or m hackers shutdown the most important pipeline in the united states and putin's response is you are the biggest cyber threat in the world also, a moment during president biden's pressor and tempers
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flared >> reporter: it was an interesting moment kaitlyn collins of cnn asked about putin changes his ways in this president biden said i'm not sure and not confident of anything of this he said we will wait and see he snapped back aggressively at kaitlyn and was mean to her. when he got to the airport on the way out, he actually apologized and said he shouldn't have been so tough on her. that was an interesting moment, i think, because what it showed is biden is sensitive about this idea that he might have been snowed under by vladimir putin that he may be naive that putin will change his ways he doesn't want the expectation that putin will change his ways. i think that tells you what he
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is thinking about here >> what you know, eamon, our cybersecurity guy, you know if the cyber attacks stop, it worked if they don't stop, it may not have worked. we know all information has to go through central government russia routers and servers we will see if that proof is in the so-called pudding. eamon, great stuff go get some pudding or whatever in switzerland eamon, thank you all right. on deck. your weekly look on the biggest insider buys by the insider whose know the companies you need to watch and a little talked about company with a big insider buy a gentle nudge follow your podcast.
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welcome back i'm off tomorrow we will do our weekly insider buying segment right now because we know you don't want to go a week without it. shows these are the most company executives buying this week the ones in the know these stocks are out performing the market for the last year now. fifth most buying? rev group. insider buying at the group of ambulance and school bus maker totaling 4$491,000 and the second is at $645,000 and the third is roper technology the biggest ever buy at $906,000 now the more than $1 million
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club the second most insider buy is a huge roaring '20s play opentable. director buying $1.98 million worth. after buying $2 million last month. so doubling down on the restaurant reservation company that big buy would be the biggest insider buy of the week, but not this week. this week, $3.2 million buy at corcept. board member making a big buy on weakness in the stock. that is the name to watch. the top five rev group, and roper and opentable and corcept. and let's bring in phil palumbo. p phil, good to have you back on
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one thing we don't talk about enough are buy backs those are on pace to top $1 trillion this year do you think the reduction in available stock to buy with a huge surge in cash available, does that mean the path to least resistance is higher >> it may mean when i look at markets with valuation and i have been saying this for the past three or four months we are overvalued. the problem is that is the problem. the best house and worst blog. on the equality side, there are in the market with the high beta names. executives are seeing that and that is why you are seeing the insider buying you talked about. >> also big-time buy backs on the other side, we're dealing a lot with post fed, phil, with
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inflation. we half joked this is the year of digging stuff out of the ground commodities are up oil, gold. anything you have to put a bulldozer new hain or drill bit you have to buy in are you still a major buyer of commodities? >> yes, i am my thought pros cess is the playbook shows you need to use logic. everybody is talking about transitory or non transitory our issue is which part is transitory and the supply chain disruption is a base effect and reopen effect. it is all transitory it will stabilize in the fourth quarter or first quarter or second quarter next year the price increases that we are seeing which we believe will be businesses will not voluntarily
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reduce the prices. that is not transitory the bigger problem is, longer term which relates to inflation, the money put into the system in the past 14 months, the fed that wants full employment and that will be his focus and massive deficit we have seen which has to be finance which will debase the dollar and increase the cost of imports which is passed on to the consumer when you put all that together, inflation is here to stay. we don't believe it is like the '70s style >> do we buy gold and let it ride >> inflation is higher going forward than historically. asset classes are going well during the inflationary time gold has as well with. you have to be careful because of the negative correlation wit rates rising
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gold has performed well. >> are there any stocks out there that you like? we normally have opportunity picks on friday. i'm off tomorrow i'll not let you go, phil, without a stock pick or two from you. you don't like all of them i know you like some of them. >> think of where we are we believe the peak in earnings and rate changes you will not have a situation with quality stocks which continue to out perform as we move forward and triple end is a great business if you have a business that produces most of the revenue or more oversea, that can increase. we like triple m >> there you go. 3m inflation environment.
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like the commodities trade and gold trade phil palumbo, thank you. have a great day and good weekend. >> thank you, brian. all right. that does it for us here on "worldwide exchange. i'm off for the next couple of trading days we have you fully covered at 5:00 a.m right now, "squawk" and the gang will pick up coverage. w is down. inflation talk is on the way see you soon turkey hill chocolate peanut butter cup ice cream with real cocoa. well, that's the way the sandcastle crumbles. you can't beat turkey hill memories. wanna help kids get their homework done? well, an internet connection's a good start.
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good morning the fed shifting the timeline for interest rate hikes. we have the key take aways and a look at how investors should prepare. a group of bipartisan senators are whipping up support for the infrastructure plan. at least 11 republicans are on board. some progressive democrats are
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balking at the terms. big vote of confidence the microsoft. satya nadella named chairman today is thursday, june 17th, 2021 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc i'm becky quick with andrew ross sorkin with mike santolli. this is the day after the fed decision if you check out the u.s. equities, you see significant pressure pretty significant in terms of what we have seen lately it has not been a lot of activity when you see triple digit moves, we pay


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