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tv   Worldwide Exchange  CNBC  July 30, 2021 5:00am-6:00am EDT

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reminds me of gymnastics with the flipping really exciting. >> carly patterson, thanks for your time. you at home, just tuning in for beach volleyball they're coming hope you'll be with us for the news on cnbc at 7:00 eastern but right now, let the games begin. it is 5:00 a.m. at cnbc global headquarters. here is the top five at 5:00 red arrows on wall street. stocks look to close the month on a sour note shares of amazon are sinking after the latest report. with tell tdelta on the ris, president biden is looking to stem the spread. and disney firing back at "black widow" star scarlett
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johansson over the disney plus debut. it is friday, july 30th, 2021 you are watching "worldwide exchange" on cnbc. good morning i'm dominic chu in for brian sullivan this friday morning u.s. futures are looking in the red. right now, the dow is implied opening just about 87 points on the down side. s&p down lower 28 points nasdaq down 167. the dow and s&p are coming off fresh intraday all-time highs. all three indexes are looking to close the month with gains now around the world, another rough session in asia as hong
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kong sinks 2% on continued weakness in big tech companies over in that market. we're talking alibaba, tencent and meituan. all down sharply with trading there. the stock of the morning has to be amazon. sinking in the pre-market after the first relavenue miss in thr years. online store sales hitting $53.1 billion compared with estimates calling for $57.2 billion. another segment firing on all cylinders. we'll have more on the amazon trade. shares off 6% and a big driving force behind why the nasdaq looks to under perform at the opening bell first, breaking news from the european union we head to julianna tatelbaum standing by in the london newsroom good morning, julianna
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>> good morning, dom crossing the wires now are fresh numbers from the eurozone. the preliminary flash q 2. 2% growth versus q 1 13.7% year on year versus 13.2%. stronger than forecasts on both the quarterly and yearly basis earlier this morning, we got a little bit of country level insight. germany returning to growth into the quarter. it wasn't germany that surprised the upside spain grew faster than expected. one key itssue plaguing the economy is germany shortage of growth materials eurozone growing 2% quarter on quarter. i want to take you to european equity and see how we are
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trading on the final day earnings are a big focus for inn ve investors in europe. the main benchmark hit an all-time high yesterday. we are trading on the back foot. a couple of stocks in focus. unicredit with a profit topping 1 billion euro after the lender was able to halve its loan writedowns it stands at 15.5% renault is in focus this morning. posting 354 million euro in net profit due to rising car sales in the first half of the year. renault shares trading lower 1.2% dom, back to you. >> thank you, julianna tatelbaum. to covid-19 concerns new concerns over the delta
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variant from top officials from the cnbc bertha coombs is here with that and your other top morning sto stories. bertha, good morning good morning, dom. the delta variant appears to cause more severe illness than earlier variants of the virus and spreads as easily as the chicken pox. documents reviewed by "the washington post. vaccinated individuals infected with delta may transmit the virus as easily as those unvaccinated a higher risk of hospitalization and death among older people regardless of vaccination status nbc news has reached out to the cdc for comment. to disney. the company firing back at scarlett johansson saying there is no merit to her lawsuit alleging the studio breached its contract with her when it
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offered "black widow" on streaming at the same time in theaters disney says there is no morerit whatsoever the lawsuit said the due release strategy reduced her rights. and jon moeller will become the new ceo of p&g moeller worked on the consumer goods company since 1988 when hired as a cost analyst for the food products division david taylor has been ceo since 2015 and marred with a proxy battle taylor was victorious from, but
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lost a board seat. he has been at p&g since 1988. his entire career. >> i remember my father worked for decades at the same company. there is more portability. it is good for workers >> i have been here 19 years in november i can't believe time has flown >> bertha, you won't know it by looking at you have a great morning see you later on. president biden is laying out strict guidelines for federal workers as the delta variant is laying havoc on the unvaccinated we have tracie potts with more >> reporter: dom, the president is saying use your covid money to get the shot. he is suggesting $100 as incentive to get the shots in
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arms he laid out the plan for federal workers and contractors. we're talking as many as 10 million people that they would have to attest that they have had the vaccine or they can't travel for work. they have to social distance and wear masks and test up to twice a week overnight, the military released a statement saying they're doing the same and looking into whether to require the vaccine, not just recommend, and not just testing, but require the vaccine for active duty members. more on that as they consult with the white house meanwhile, protests around the country from health care workers. 1 in 4 have not had the shot the justice department said the mandates for vaccines are legal. we also have seen that affirmed in federal court and pfizer is now saying that its vaccine efficacy tends to wane a bit
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after six months suggesting a booster. the cdc and fda, dom, have not said if a booster is necessary still look ing at the data. >> tracie, is there a sense for how much pushback there could be at the government level at the federal level if you are going to tell people you are going to require them to get the vaccine? has there ever been a time when the government needs to go through this in a messaging standpoint with people more so than right now >> reporter: you know, bertha was talking about the post report of the internal cdc memo. it addresses the messaging and that now needs to change and be upgraded to try to get more people voluntarily to get the shots. that's one thing and the requirement, they watered it down a bit. this is not a hard requirement there is an option if you don't want to get the shot there are disincentives to do
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so you can't travel depending on your job that may be significant to the work you do and you have that hassle of guetting tested twice week giving disincentives the $100 that president biden is trying to encourage people to get the shot the legalities as you note, the justice department said it is legal to mandate the vaccine we are starting to see private employers doing that we have seen that upheld by the federal court. >> tracie potts with the latest on the vaccination front thank you very much. let's get back to the markets. futures indicating a lower open after the disappointing amazon earnings report threatening to dampen an otherwise strong month on the final day of trading today. joining me now is erin gibbs erin, it is evident right now. yes, the dow is downmarginally
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at the open. s&p is down as well. amazon is weighing the most sentiment wise on the nasdaq trade overall. >> right absolutely amazon really always has to beat, not just do numbers, but six numbers. we are looking at the three major businesses if you don't nail it on all six fronts, the top and bottom line of the three units, you will hurt amazon is priced for production and top growth sdp >> if that is the case, does that indicate, perhaps, that the road ahead is going to be tougher for the entire market trade overall? the fact this idea that amazon is going to mark this notion that we're at peak near term for the results we'll get? the comps seem to be tougher ahead? >> i think amazon and some of the big mega cap technology
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companies, we've already seen that even if you beat your top and bottom line of your major business units, but there's, you know, a margin that came down or something that people are looking for any reason to push these stocks down. i really think that comes back to what are the type of estimates we're looking at that these companies need to beat i think companies that beat top and bottom line and beat across the board even on different business units, they are still getting hard, particularly the mega caps. we are looking at a quarter now where 90090% of companies beat eps earnings that is a record we have never seen anything like that we're only halfway through even out of the past four quarters, we had four quarters where we had deep rates over
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80%, averaging 883 i think it is not just about beating estimates. it is about having a surprise that it is much higher and much greater across the board including guidance and different business units and so on >> it seems like you're right, right? we have a market right now that hit record highs in just yesterday's trade in the session. you mentioned this 90% beat rate halfway through the earnings season it appears the market is justifying what is happening with the earnings season what exactly then takes down this market if everything is going on all cylinders >> so, i think the one thing we might see for taking down the market would be really val valuations becoming too high
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when you take a look at these new valuations of the s&p 500, we are looking at 22 times more earnings that seems insane. we have never seen those numbers before you look at earnings which means forward valuations against your earnings estimates considering everybody is putting in these really low numbers of companies beating up left, right and center mostly at 100%. that says when we look at forward valuations, we should make the p in the pe low numbers. we could have the market go higher although trading at 22 times versus previous high of 19 in the prior years, 19 which is peak and 18 was your high top of the range, but if you look at
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how much lower the estimates become, it could be a 17% premium. >> valuations a concern. erin gibbs, thank you. we appreciate it. when we come back on the show, robinhood ceo vlad tenev talks about the stock price with the lack luster debut. and costs out of control and this stock sinking in pre-market. and from bad to worse. shares of pinteerest sinking thi the worst month in years find out why after this break.
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welcome back to worldwide exchange." time for the big money movers. three stock stories of the morning. first up, robinhood. up fractionally after debuting yesterday. robinhood priced ipo at $38 a share. now recseven ipos this year rai $2 billion in capital and all ended the first day under water. robinhood's ceo vlad tenev on "mad money" saying he's used to being doubted. >> we're building a long-term
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business you have to ignore the short-term fluctufluctuations some days the stock is up and down look back on what the company has been able to do over the past six years we delivered a lot of great products and value to customers and value you to shareholders. >> up next, texas road house better than expected second quarter results. falling after the company warns of higher food costs this year shares down 5% in the pre-market trade. finally, pinterest second quarter earnings beat forecast as revenues more than dou doubled. shares are dropping as a drop in u.s. users people are spending less time at home and citing continued uncertainty of the covid pandemic pinterest is on track for the worst month since 2019 shares are down 18% in
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pre-market trade. still on deck, robinhood with a shaky debut, but got confidence by one closely followed name on wall street we dig into the story when afwi ehae"etnsur ter this break if your money is working toward the same goals, why keep it in different places? sofi is a one-stop shop for your finances designed to work better together. spend with sofi and get cash back rewards that automatically go toward your goals. like investing in stocks, etfs, and crypto. that's better together. or pay down your sofi debt sooner. that's better together. and that's how sofi is helping millions get their money right.
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client needs and get the data they need to quickly design coverage for each one. businesses that want personalization and speed are going with a smarter hybrid cloud using the technology and expertise of ibm. nice bumping into you. ♪ can't take it back once it's been set in motion. ♪ ♪ ♪ power can't be tempered, ♪ ♪ silenced or caged. ♪ bad things. ♪ ♪ ♪ it can only be set free. ♪ ♪ ♪ i want to make you yell. ♪ welcome back sonic automotive is the fourth largest auto retailer in america. record profits for the second quarter. profits, by the way, for used
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cars up 63% compared to last year it was up compared to 2019 levels this comes as the market for used cars has grown red hot with prices for used vehicles going for thousands more right now than in the past let's now bring in jeff, president of sonic automotive. can you tell us whether or not there is an end in sight to used car prices >> sure, there is, dominic the new car inventories will get better as we get to the end of the year as that happens, it alleviates the inventory that is pre-owned side is experiencing with that, prices will begin to come down. prices moving from the beginning of july, and same car a month later is down $2,000 a car that will continue to alleviate as we move to the end of the year. >> can you take us through the
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dynamic between the used car and new car markets? you know, we heard anecdotes in many cases used car prices are in some ways more expensive than new car prices dynamic that cannot last we heard stories about dealerships offering huge incentives for you to trade in your car for a new one if there is a supply constraint for new cars, how yis it people can get new cars trading their used ones? >> you can't that is pushing up the price on pre-owned inventory. we are down at sonic auto. we have an eight or nine day supply right now bmw right now and by the time we get to october, we will have a 30-day supply. that will regenerate pre-owned inconvventory and that helps alleviate the pricing. it is an odd situation in my 25--year career where we have never seen this before
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wh wholesale prices are higher than retail prices. that is coming to an end relief is on the way businesses should be good between now and the end of the year prices will come down. they will settle from the beginning of july to now you will see more of that toward the end of the year. >> jeff, are customers who need to buy a vehicle right now at the mercy of inconvventoryinveny i went to a car dealership and l l looked for a specific kind of car. do people still have a choice or are they buying what they can? >> certainly the choices are limited with the supplies we have out across the brands the choices are limited. if you have to have a car right now, you have a lot of that going on both on the new car side and pre-owned side either way inconvventory levels on the pre-owned side are really good we are growing like wildfire
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we will cover 25% of the country with our brand by the end of the year 90% of the country with our brand by 2025. they are more expensive today than last year at this time or the first quarter. again, like i said, that will alleviate toward the end of the year on the new car side, you are seeing that. the supplies are tight the chip issue will alleviate in the coming months. it will get better as we move toward the end of the year and better in 2022. >> jeff, before we let you go, we talk about auto manufacturers selling suvs any sense of the best selling used car right now >> i answered this question yesterday. all models are selling well. toyota and honda camry and ford
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it is amazing how well a lot of the models are doing versus traditionally with a tighter set. we are selling cars just because supplies are lower. >> jeff dyke at sonic automotive good luck with the inventory issues. >> thanks. let's get a check of the headlines with phillip mena in new york good morning the afghans who helped the american troops in afghanistan arrived in the u.s. early this morning. many are translators and families 2,500 will receive housing in ft. lee, virginia. president biden thanked them for standing with the united states. first lady dr. jill biden end through a medical procedure at walter reed thursday night. flushed out debris from a puncture wound after the first lady stepped on an object on the beach in hawaii.
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the president was with her during the procedure. and elation in st. paul. family of suni lee took home th gold in the all-around lee delivered on every corner of the mat. dom, once simone biles dropped out, suni lee stepped up >> talk about an unbelievable run for the women's gymnastics team five straight olympics where the u.s. team has won an overall gold unbelievable. >> dominant. >> absolutely. thank you, phillip mena. ahead on the show, investors are punishing amazon despite a third straight $100 billion plus quarter in revenue gene munster is here when
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nothing prime here amazon's bread and butter retail business drops the ball and investors drop the stock those results not doing anything to help the market in the opening bell down triple digits on the final trading day of the month. laying out the bull case for big oil ahead of the quarterly
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results. it is friday, july 30th, 2021. you are watching "worldwide exc exchange" here on cnbc welcome back to the show i'm dominic chu in for brian sullivan on friday morning here is how you stock stocks ar halfway through the 5:00 a.m. hour down 100 points on the dow s&p implied 30 points. nasdaq implied olower 170 points at opening bell. amazon weakness has a lot to do with that story. more on that coming up. look at this week in sectors. if you look at what is leading market higher is energy and material stocks. two economically sensitive sectors. meanwhile, an economically
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sensitive sector of its own. technology in the s&p 500. the worst performing so far. the two key areas in the market for cues on the direction of the overall market semi conductive. hovering near record highs the orange line which is the transportation etf continues to trend lower. it is a dynamic traders are paying attention to see if there is something coming for the overall market now to the corporate stories. bertha coombs is back with those. >> good morning, dom uber postponing the return to office plans until the end of october. starting monday, the company says all workers who do come in to the office must be vaccinated cathie wood making a bet on
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robinhood. her flagship ark etf bought 1.3 million shares of the stock yesterday based on the closing price. that gives arc a $45 million stake. and microsoft is reportedly in sttalks to take a stake in oo softbank owns a 46% stake. airbnb has been a backer there that company expected to go public at some point >> talk about diversification. bertha, thank you. to the top stock story amazon shares reporting first revenue miss in three years for the second quarter the company also projecting weaker than expected results for the current quarter despite the third straight $100 billion plus quarter in terms of overall
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sales. advertising cloud firing on all cylinders. joining me now is gene munster.r >> i have to make a difference between the stock and the business this company has become more of the fabric of our lives. grew retail at 13% off the difficult comp everything is firing on all cylinders. the question is if the margins can be better for a different minute there i think from the stock perspective, this is essentially begging the question around amazon for a long time what is the true growth rate what we are seeing here, of course, is the topic for most tech companies the true growth rate will
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moderate to 15% for next year. look at the midpoint of the guidance the guidance was correct the last quarter analysts went ahead of it. from 45% to 18% to 18% next year that is a question what that means, dom, in my mind, investors take a step back and do a re-rating of the multiple you are seeing that today. >> we've spoken at length in the past with you and others covering amazon about the notion where you emphasize the news coming from the company. it used to be years ago and to a certain extent today about the online platform and retail platform and that came in disappointing. is there a tilt in your mind where the news flow is is it about web services and cloud computing than online marketplace for selling items?
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>> i think the answer is yes the retail is the dominant part of the business. aws is over 10% of the business. advertising business which grew at 87% is just about 5%. collectively, those two meet 15% threshold for ininvestors. those are a pigger part. you still need to recognize this is a retail business these other things are getting attention. retail matters it is like apple with the iphone they can have services do great, but unless the iphone is doing great, investorsare not satisfied. we circle back to the secondary topic which comes in and out of favor. the question of profitability. i want to highlight that amazon is a tech company, no doubt. the margins they have are not tech like. operating margins of 6% to 8%.
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facebook at 42%. google at 30%. the stock, the next move higher in the stock, needs to come around margins they are not going high anytime soon the cfo said they will continue to be in investment mode if i was in jassy's role, i would focus and make the atopic around automation. 1.2 million employees. added 55,000 in the recent quarter. they had a huge opportunity to take automation and robotics to reduce costs human costs were the biggest x factor because of the tight labor market s they have an opportunity to move higher that is the new topic for amazon in the future. >> with that as the a-topic, you have to look at the competitive landscape. online retail side of things, they are the top of the heap everybody is gunning for their
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market share many other companies have made incremental gains since the pandemic started amazon is a winner, no doubt the margin story has to be driven by competitive advantages from web services or online advertise ing if it can make inroads general facebook or alphabet >> i see their competitive advantage as really around infrastructure i remember covering amazon 12 years ago and they're making investments and infrastructure and investors wonder why a tech company would do that. that is the infrastructure and fulfillment centers and trucks and ability to get your packages to you quickly that becomes the competitive advantage. now put it in this context if someone would give you and i
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$100 billion and say start a e commerce company we would return the capital back to the investors to compete with amazon on the infrastructure side is difficult. that, to me, is the opportunity. take the advantages they have around infrastructure that does not have a cost advantage, but add efficiencies and automation to improve marginmargins. >> i see more amazon trucks in my neighborhood than fedex thanks, gene >> thank you coming up on the show. energy has been the year's top for performing sector up 33%, but not without problems we talk to the street's top analyst with the reports from exxon and chevron this morning. before we head to break, other top stories. texas governor greg abbott threatening to fine against vaccine requirements he says the path forward relies
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on personal responsibility rather than government mandates. grooming start up manscape is looking to go public through a spac deal. the entity said to hold a value of $1.4 billion for the manscape ecosystem. tesla agreeing to settle a class action lawsuit over battery throttling it would pay owners $625 a piece. stay tuned you are watching "worldwide exchange" here on cnbc ♪ ♪ i had the nightmare again maxine. the world was out of wonka bars... relax. you just need digital workflows. they help keep everyone supplied and happy, proactively. let's workflow it. then you can stop having those nightmares. no, i would miss them too much.
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mmm, birthday cake. pure protein. find our coupons in sunday's paper. welcome back to "worldwide exchange." chevron and exxon reporting second quarter results before opening bell this morning. interes there's good news here it may not be smooth sailing for big oil these days investors will not only look at the usual top and bottom line numbers, but three teams for the sector div dividend payouts and climate risk gets talk to phil at jpmorgan chase. phil, so many things oil companies have to navigate how complicated a picture is it for ceo of exxonmobil and
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rec chevron as they push forward in the coming years >> that's a great question thanks for having me, dom. the way it is set up is constructive here. oil is back to $75 now the valuations on the stocks are favorable. you saw good results yesterday turning stock back to share shareholders i think there are positives to think about here >> aside from the oil as gas price surge, we know last year during the spring and early summer with negative oil prices at one point it is an easy comp these days against what happened last year. my issue is with these oil companies now, is it we -- do we only look at them on oil and gas prices or what else has to go into the valuation model for what you say exxon is worth these days or what chevron is worth these days >> that's a great question
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if you look at it right now, $70 oil, these stocks are trading at 10% free cash flow yields. balance sheets, surprisingly, fixed with cash flow generation and pay downs. as you note, there are other dynamics at play with early transition and esg it seems investors do not want to give these stocks full credit for the prices futures prices are closer to $60. the sucurve is not steep valuation is not in line with the stock price. people are looking out three-to-five years. >> if you look at the u.s. oil majors two of them. exxonmobil and chevron versus the european players you mentioned here is there a sense which is the better value trade and option? do you stick with the u.s. producers or go with bp or royal
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dutch or others like that? >> right i cover u.s. majors. we do a lot of work together and i think i would acknowledge the european majors are cheaper than the u.s. majors. they have under performed and shown signs of returning shares to shareholders. there is room for both if you look at exxon and chevron, they not expensive. the european majors have cheaper than the u.s. majors that is market differentials. >> phil, the dividend story has been key through the last few decades for oil and gas companies. is the dividend story and growth story in tact for exxon and chevron? i know they are both considered dividend aristocrats
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can u.s. investors count on increasing dividend payments from both companies? >> right chevron has continued to increase the dividend. exxon went on a pause last year. there was a concern when oil was at the low and exxon would have to cut the dividend. i think that is in the rearview. the company is more disciplined on the capital spending. i think dividend stability is key and it is going to happen. for chevron, i think today you might actually see a share buyback. the balance she'd et is in bett shape than exxon you have to think about doing share buyback. i think dividends are safe for the companies. they can cover their dividends around 50 or less.
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>> and just before we let you go, phil how quickly will it be to catch up to the european majors with the esg push the clean energy push s >> a great push. rewind one year. it is night and day in terms of exxon and chevron talking about energy chevron yesterday announced an appointment of energy transition which they never had in the past we are starting to see the tone change rapidly i do not see the u.s. majors get into solar and wind and things that the european majors are doing. you will see the u.s. companies aggressively talk about bio-fuels and hydrogen and carbon capture they need more policy support and better economics they are all working on these things in pilot mode and it will ramp up in the next three-to-five years. >> phil, thank you very much for that we appreciate it
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phil with jpmorgan chase don't miss brian sullivan's interview you with chevron's ceo with mike wirth today at 1:00 p.m. a must watch coming up on the show, the bulls charging toward august with stocks near all-time highs. we'll talk about the biggest drivers and some of the worrisome risks coming up next. if you haven't done so, follow our podcast if you missed "worldwide exchange" check us out on podcast apps we'll be right back. >> announcer: today's big number $30.8 billion. that's how much was raised by fintech companies in the second quarter of 2021 according to cb insights qit w2 was the largest funding quarter on record led by south
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welcome back we reached the last trading day of july. s&p on pace for the sixth positive month in a row. that would be the best streak in nearly three years russell about to snap a nine-month winning streak. pointing to opening losses at the opening bell we have wells fargo portfolio manager with us. daryl, do you feel like you want to belong in the market? >> absolutely, dom, good morning. where propertiefits where they , you have to be although they have been out of favor the last 30 to 60 days, there is a second half of the trade on the cyclical side industrial and materials and
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financials which has been out of favor at the expense of technology shorter duration good cash flow good return back to shareholders dividends helps protect higher multiples in the higher inflationary environment. >> darrell, you mentioned the sensitive or cyclical sectors there. some would argue out there that since the pandemic lows last year, it has been energy and materials and industrial stocks which have done severe out performance in many cases over the technology and communication services counterparts there. isn't that trade already over? has it already run its course or used up a little bit >> i think that's the narrative on the street. i agree, dom a lot of people are challenging that people want to swing back to the winner of the last economic cycle and decade which was
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technology it is not you should be away from technology, but be away from defensive be away from staples and be away from utilities those are areas that will continue to under perform. we think the cyclicals still play nicely. it is interesting because if you look at the latest earnings report of q2, cyclicals are pounding traditional growth on earnings growth quarter over quarter and year oever year that still plays out your prior guest atalked about energy not rewarded for a decade industrials not rewarded for a decade there is good value there versus the higher sectors you mentioned. >> it wasn't that long ago that we were talking about the notion that the technology or growth trade on wall street was being taken down by rising interest rates. it was just about, you know, six or nine months, that was the
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narrative in the marketplace we have yields coming back 10-year is 1.24% isn't that now supportive of the growth trade of technology and cloud computing and semiconductors >> it is you are right. that is the narrative for the second half of the year. if you believe that interest rates are going to go higher than the yield curve resumes a s st st steepening effect, you will believe that if you believe the 1.24 10-year and the yield will flatten, absolutely growth is the place to be. technology is the place to be. communications services is the place to be. the trade over the last decade we think you get steepening in the last half.
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we are up 75 basis points a year ago from the 10-year still down 50 basis points from the april highs. >> complicated darrell, thank you you very much have a nice weekend. that does it for us on "worldwide exchae.ng "squawk box" picks up coverage next have a nice weekend. the number one brand to support beautiful hair, glowing skin, and healthy nails. and introducing jelly beans with two times more biotin. i'm evie's best camper badge. but even i'm not as memorable as eating turkey hill chocolate chip cookie dough creamy premium ice cream and chasing fireflies. don't worry about me. i'm fine. you can't beat turkey hill memories.
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good morning amazon shares are under pressure after the company misses wall street revenue estimates for the first time in three years. and robinhood-winked came up with that myself, sorkin not good day dropping the first day of trading. we'll take you inside what happened i don't know we're looking at scams a little
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bit during the show yesterday. and hollywood versus one of the big stars. disney blasting scarlett johansson after the actress filed a lawsuit for releasing "black widow" on its streaming service. it's friday, july 30th, 2021 one more day then it is august "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc i'm andrew ross sorkin with joe kernen becky is off today a big day. futures here lots of earnings reports and the news on the delta variant coming in impacting where

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