Stocks At Record Highs Amid Strong Earnings And Trade Hopes; Iconic U.S. jeweler, Tiffany Has Become A Takeover Target.
GIOKOS: Welcome back. You`re watching QUEST MEANS BUSINESS. I`m Eleni Giokos. The U.S. markets continue to surge, and that`s thanks to strong corporate earnings and high hopes for a U.S.-China trade deal. Take a look at this. You`ve got the S&P 500 and NASDAQ both sitting at record highs. The Dow is around a percent away from new records, but it`s incredible to see how these stock markets have been performing over the past while. So investors are looking at the massive number of earnings due this week and look at this. It`s incredible. I mean, 150 companies are out with earnings this week, I`m told, so it`s pretty incredible. You`ve got a lot of the FAANG stocks that are going to be releasing and some of the more sort of traditional stocks. You`ve got GM, ExxonMobil as well as Chevron up with some numbers to look at as well.</s>GIOKOS: Alphabet is going to be an interesting one, and of course, Starbucks. Those are the numbers that we`re going to be focusing on later on this week. And with me, we`ve got Art Hogan, joining us, and he is ready to give us some details in what kind of numbers we can expect. He`s the Chief Market Strategist at National Holdings. Thank you, sir, for joining us. Good to have you with us.</s>ART HOGAN, CHIEF MARKET STRATEGIST, NATIONAL HOLDINGS: Thank you very much for having me.</s>GIOKOS: Fantastic. Okay, so 150 companies, you need to look out for what, what is going to be really important? I mean, the bellwether companies, the barometers, in terms of the health of the U.S. economy, what are you looking for?</s>HOGAN: That`s such a great question. And typically you look at the things that are most popular first, right? So you think about the FAANGs and you brought that up in the last piece. I think it`s more important to look at the companies that we`ve forgotten about that haven`t done as well. So the most interesting thing to me in a takeaway from the earnings that we`ve heard from so far as the banks are doing better. The Bank Index has caught up in the S&P 500, they diverged a lot in the month of August. I think the industrials are actually doing much better than we thought and that`s part of the economy that I am most worried about and then some of the consumer facing names that are actually doing much better. So, you know, away from those sexy sort of household names in the FAANG group, I think it`s more important to look at the companies that have been under invested this year, because that`s where the opportunities are.</s>GIOKOS: I mean, are earnings shooting the lights out? Because we know that when you take out the energy stocks, the markets would have performed a lot better and actually earnings would have looked a lot better. We`ve got, you know, Chevron and Exxon up with numbers this week. Are we just like now moving and pivoting more towards like the sexier kind of move techy stocks that are going to be offering growth for instance?</s>HOGAN: Yes, that`s a really good point. So not just taking energy out. But when you think of what our anticipation was coming into this earnings season, we thought the S&P 500 will probably lose somewhere between three and five percent on a year-over-year basis, and we`re actually making about three percent. So the difference there is significant and the difference is coming from the financials and certainly coming from technology. It`s coming from healthcare and the biotech which are doing very well. It`s not going to come from energy, I think we know that. This is another one of those quarters where just like energy investing is very difficult in this environment.</s>GIOKOS: Are you going to be buying into cool new stocks like Virgin Galactic. Is that something you`d be interested?</s>HOGAN: Well, that`s such an exciting story. There`s so many exciting stories out there where we love the product, but don`t love the stock and this is one of them.</s>GIOKOS: Are you going to wait until they make some money. Right?</s>HOGAN: Really?</s>GIOKOS: That`s the whole thing.</s>HOGAN: You know, I think in this day and age, I think it has been proven, this is the year that we wait until companies make money.</s>GIOKOS: Yes, absolutely. Look at the markets are looking expensive for you. What are you doing right now? What are you investing in? Are you holding out? Are you going to be cashing out anytime soon? Because even the general economic matrix are looking really strong. I mean, you know that even the PMI numbers are well above 50, which of course is very hurtful.</s>HOGAN: Right, and I think not just the U.S. PMI`s, I think we`re going to see a bottoming in the global PMI`s and I think a lot of that has to do with the tone around U.S.-China trade. You touched on that in the beginning. I think that`s a massive improvement of what we are looking at in the month of August. And I think with that improvement, you might see a release of some economic energy globally, and I think if we can see the global PMI`s improve at least bottom and not get worse. I think that`s very --</s>GIOKOS: Are you guys pricing in a good news scenario in terms of the China-U.S. trade war?</s>HOGAN: We are.</s>GIOKOS: I mean, bad news has been priced in this --</s>HOGAN: Bad news has been priced in and what the market does very effectively is compartmentalizes this when it`s not escalating and right now, if we`re going to have a Phase 1 deal that means we`re not going to be escalating and that`s really important.</s>GIOKOS: FOMC meeting, Wednesday? What are you pricing in?</s>HOGAN: We are pricing in, like 95 percent of the rest of the Street, we`re pricing the fact that we cut rates one more time, but we`re going to hear a relatively neutral command in the statement. I think he`s going to take a positive after this and say, hey, now we`re data dependent.</s>GIOKOS: Markets all-time high, economic data is looking good. Let`s cut rates.</s>HOGAN: I know.</s>GIOKOS: It is mind boggling to think. Thank you so much, sir, for joining us. Great to have you in studio. Much appreciated. All right, so iconic U.S. jeweler, Tiffany has become a takeover target. LVMH, the French company that owns Louis Vuitton is making all cash offer for the firm known for its little blue boxes. Tiffany shares are up more than 30 percent on the proposal. The deal would value Tiffany at $14.5 billion. We`ve got Anna Stewart with us from London taking a very close look at the deal. Is it shiny enough for Tiffany, do you think?</s>ANNA STEWART, CNN REPORTER: Well, it seems pretty sparkly, but possibly not sparkly enough. Tiffany`s Board are considering this offer, but we`ve had no result from that yet and the general consensus is they`re likely to want a higher price. Now, why does LVMH want to buy Tiffany? Because this is a stock that`s actually performed quite badly over the past year. It has had a bit of a sales slump. Jewelry is still one of the most attractive categories in luxury. It`s doing quite well for LVMH. They bought Bulgari in 2011. This actually broadens out the consumer because it`s a lower price point, it is a little bit more affordable, all of that silver jewelry. And it also would really increase LVMH`s U.S. exposure because overall, LVMH has a huge presence in America. But when it comes to watches and jewelry, actual sales is just nine percent North America. Tiffany, 44 percent in America, so that would really give them geographical exposure -- Eleni.</s>GIOKOS: Yes. Okay. So look, we know that you know, there`s a lot of things going around to the markets and I mean, when I`m looking at the share price now, it`s up around 30 percent. That`s pretty incredible. But we are hearing that perhaps Tiffany is not going to be, you know, the shareholders are not going to be as excited about this down the line.</s>GIOKOS: Could they be a takeover target by another company? I mean, do they want to be sold at the right price?</s>STEWART: I think this could be it and we`re seeing as you see up 30 percent. There could be a rival bid. People are pointing at Reshma as a potential. Also some analysts simply saying this does not value it quite right. $120.00 per share is a 20 percent premium on their share price closing on Friday. One analyst from Cohen says it could go all the way up to $160.00. That would actually be a 60 percent premium. It sounds crazy, but that`s the exact premium that LVMH bought Bulgari for in 2011, so it is not unheard of. Now although Tiffany has been in trouble, we`ve had a big sales slump, particularly wealthy tourists not buying as much. There are some good spots and bright spots and sparkly spots, particularly Mainland China and I think there could be a lot of synergy and growth here. So I think LVMH will likely come back with another offer if this one is rejected -- Eleni.</s>GIOKOS: Thank you so very much, Anna. Great to have you on the show. Much appreciated. The European markets closed higher today. Let`s take a look after hitting the highest levels since January 2018. Stocks were buoyed by the latest Brexit extension and optimism over a trade deal between the U.S. and China. Shares of HSBC, Europe`s largest bank fell more than three and a half percent as protests in Lebanon drag on. In the meantime, the head of the Central Bank warns financial collapse maybe just days away and he is speaking exclusively with CNN. Stay with us.