tv Squawk on the Street CNBC September 10, 2012 9:00am-12:00pm EDT
big margins on those. >> other big stories, the nonprofit sector has been a big part of it. >> dinakar, thank you for coming. will you come back? >> look forward to it. >> make sure you join us tomorrow. "squawk on the street" is next. welcome to "squawk on the street." i'm melissa lee with jim cramer and david faber live from the new york stock exchange. carl quintanilla has the day off. let's take a look at how we're getting you started. edging off the multi-year highs hitting friday, dow looking to give up 30 points at the open. s&p giving up 2.50. we have red arrows across the board except for the ftse. this monday roadmap starts off with the multi-year highs we saw in stocks, pushed higher by multi-year highs on the likes of
apple, google, procter & gamble and wells fargo. >> concerns about china grow deeper. imports and factory output were disappointing. could it mean more stimulus is on the way? >> the u.s. treasury slashing its stake in aig, becoming a minority shareholder for the first time since the financial crisis again. what it means for you, the taxpayer, in just a moment. we have to start with the markets, coming off a week in which the s&p 500 settled at its highest level since january 2008, the s&p and nasdaq posting their best weekly gains in three months. and the dow logging its best week since july 27th. friday's weaker than expected jobs report. >> you have to have the federal
reserve say, we'll have your back. it may be announcing something that i think has eluded us so far. i've not heard anything new and interesting. we have rates pretty low in this country. and then the german supreme court, this is a complete black box. who knows? >> i wonder how much people are going to choose to focus here, the institutions, the hedge fund managers, it's conference season, we're back to work. i wonder if that kind of stuff becomes so murky and difficult to analyze, maybe you just push it off as we seem to with europe overall. draghi saying good things. >> so you push off potentially the meeting out of the german constitutional court because it's too much of a black box perhaps? maybe you go back to focusing on those individuals. what was startling about last week's action, we saw enormous gains.
best performers of the week, jpmorgan up sizable amounts as well. and this week, we have the barclays financial services giving their presentations today and over the next few days. maybe it's the time to turn back to fundamentals. >> i always struggle over the idea of what is the genesis of a particular bank rally? we didn't get anything that i felt was just so eye-opening last week that you had to own the stocks. regional downgrades today. bank of america, i think, has back the stock to watch. the two i'm focused on, bank of america for the banks and alcoa, both of these had a great week. these are obviously red hot stocks for the dow jones average. these are two worth focusing on. they've been down on their luck. >> aren't both of these stimulus stocks? >> very much so. >> stocks that have seen gains born on the back of a central bank put. >> you need alcoa because china
is overproducing dramatically. why? they're worried about a revolution. they're making 5 million tons too much, literally keeping their smelters open just to keep people employed. and bank of america, i struggle about why it should turn other than the fact that it's just very low. >> but that's not really a reason to own it. a reason to trade it, i guess. >> might be in the context of a procter & gamble hitting an all-time high on friday. those are the ones people wanted to own for safety. maybe that trade is done. and you have to go somewhere where there's more upside. >> i think that a lot of the chatter about procter & gamble is that mr. mcdonald has been able to engineer a turn. talked about affirmation of erngz last week. >> you haven't gone after him in least a few weeks.
>> maybe engineering a turnaround. >> is he going to declare victory and leave those shares. >> there's signs on the wall. as unilever goes down -- don't forget, this is a quintessential weak dollar stock, too. but i'm getting a sense that procter is -- >> you mentioned signs on the wall. he is still on the wall. >> of shame. >> it's subject to improvement in fundamentals. >> very fair of you. >> barclays is having its financial services conference. jessica reeves cohen has been an analyst for a long time. from merrill lynch. they're out in l.a., a lot of people still going. you'll be hearing a lot. maybe running in anticipation of this. but the media stocks, time warner, viacom, disney. >> disney is just firing on all cylinders, including fantasy.
not that fantasy can move the needle. >> talking about eight multiples on ebitda, but 15 to 17 times earnings is not cheap. but they have a strong cash yield. talking about the likes of a time warner. and everyone's talking about affiliate revenues being up sharply, as much as 7%, 8%. we'll keep an eye on those names this week as we enter conference system. >> data points, data points, data points. people get very excited right now about stocks. start looking at 2013. one of the things i find amazing is these are the conferences we say, next year's going to be incredible. a lot of companies guided for 1.23 on the fxe and the euro. and we're well above that. numbers may not come down this point. >> the slowdown in china in the spotlight, new data showing chinese imports fell unexpectedly in august by 2.6%. exports grew less than expected.
the shanghai composite went higher overnight. some companies are talking about the impact of the stimulus announced last week, specifically the infrastructure stimulus. caterpillar's president was talking to dow jones and said it could really help them compete against the smaller chinese equipment makers. >> copper doing a tad better. the iron ore stocks, total battlegrounds. the stocks have held in. baltic freight, very big negative. the import numbers, not so great. here's the way i look at china. i've seen it periodically happen in america. guys who make your estimates in china, will you take them down? the idea that every number is disappointing is ludicrous. your work is ludicrous, it's shoddy. these chinese numbers are insane that the estimates come out.
take them down to the magic 7% -- disappointing, disappointing, disappointing. i think the rigor of the estimates is at stake. >> maybe it's incredibly difficult to figure anything out in china. when i try and report on it from here, it's virtually impossible. people i know have spend decades in that country and still can't quite figure out how it all works in the sense of the culture and the mindset of the people. i don't know. to me, china is just unknowable to a certain extent. >> more so than the german supreme court? >> it makes it quite difficult. >> it's difficult, but these guys are wrong every time. what's so difficult, it's going to 7%. it was at 9%. all the numbers point to 7%. take your numbers to the equivalent of 7%. >> "the new york times" has a
big story about chengdu and the fact that some cranes are oer s operating at night -- >> the crane at night metric. i haven't brought that one out since we used the chinese square footage cost versus manhattan. >> that worked out. if you knew -- >> it did work out. >> as a contrary indicator for -- i don't know. maybe cranes at night is the way to go. >> it doesn't -- doesn't it not matter at the end -- if we continue to get disappointing data points out of china, it's going to continue to stoke the expectations of stimulus and the stock market there will go higher. what's bad there is good just as much as what was bad here at one point was good because it was seen that the central bank would step in. >> after a while i get tired of the -- people disquoted. at a certain point, you have to
say, maybe i'm misjudging here. i think china's exports are directly related to how bad europe is because china likes to dump -- oh, excuse me, china likes to trade a lot with europe. >> there may be sanctions coming from the eu -- i don't know. what's bad for china may also be bad for all of us and the rest of the world. >> that's true. >> you're not using a counterintuitive bad/good analysis. >> if it's 5% or 6% gdp growth. it is the second largest economy in the world and we can keep hoping on stimulus just like we are here in this country. but if you went into the year expecting 9% or 10% gdp, you end up with close to half of that. that can't be good. >> no. but remember what's at stake there. it's execution per share. you miss the numbers, people have been executed. executed per share versus
earnings per share is a very interesting ratio. tends to focus the mind -- >> let's move on to aig. the treasury announcing it's selling more shares than aig in a move that will make the government a minority shareholder on the insurer for the first time since the bailout began four years ago. treasury will sell $18 billion worth of shares. aig will buy back about $5 billion of that amount. we started talking about this last week when we learned that aig was selling $2 billion worth of its stake in aia, its asian -- the asian company that it used to control, instead of the full amount which might have been $7.6 billion. so aig announced a $5 billion buyback. we thought perhaps the government would come in with maybe $10 billion in stock for the market s. half sold to aig, half into investors. they came with a much bigger number.
when you add the green shoe, it's over $21 billion in stock. even taking out the aig buyback, they've got to find a home for a lot of stock. but they probably will. >> benmosche has often intimated to me he's not in contact with the government about these deals. >> do you buy that? the treasury is going to swoop in and announce a sale without consulting or letting bob benmosche know? >> a classmate of mind and old friend from law school has also said they don't talk. and these are guys -- these are high-level guys who know that everything they say will eventually come up in some sort of e-mail. so i believe it. but at the same time, the government has been very shrewd about aig. maybe not gm. but they've been very shrewd. >> they're going to make money.
$32 billion is the number i'm hearing. >> not higher? >> you're talking about a lot of stock. maybe it will be higher. they are taking it down from 53% government ownership to if they do succeed in selling all of it, 15%. it fades as a concern for investors, the overhang that they've been living with for years kind of goes away. 15% holder is not that enormous. clearly. >> i think this is a very big transaction in terms of the whole notion of how the financials are going to do. we want to see travelers up. have you noticed metlife? a lot of these insurance companies doing quite well. in the context of this financial ra rally, the stealth rally that's fooled people because this has been a red hot group and no one's getting behind it. >> is there a shift of funds from the other insurers out there doing so well into an aig now that the overhang of the
government's sale is pretty much dissipated? >> i think there's a chance. aig's always been a peculiar animal. people used to thing it was a derivative play. it's a blockling and tackling insurance company now. and they've been doing it very aggressively and very well. i keep thinking that sale of the aia was so small because the company is doing so well. >> maybe the market was expecting a bigger sale, they wanted to perhaps wait it out. perhaps when the government comes with the last 15%, they can step up and buy a lot of it back at aig. >> it is going to determine today's action, i think. >> you do? >> i do. if you follow aig and that deal goes to a premium, we are going to have a game-on on the financial rally again. >> the timing is interesting. >> i was going to raise that issue. >> perhaps one of the last of the bright spots. there are a lot of them in terms of profitability for the government.
gm were under water at this point, alleli financial and the fannie and freddie which no one seems to talk about and what we're going to do. >> the republicans come in, i think they shut them down. >> well, paulson was the one who did it in the first place. came in on the conservatorship. a lot has gotten better in terms of those investments. not necessarily fannie and freddie. >> right. but this is something that the administration will be able to point to and say, we made money for you, the taxpayer, etch though they had -- it was a black eye for some -- remember in '09, when there were all those bonuses being paid and people were really saying, how could these executives bring home big bonuses when this is a bailout. we own this company as a taxpayer. >> i think behind the scenes, obama has been very reluctant to take any credit on this. what it identifies with is first
you have to say, we did a bailout and then you say the bailout worked. and the bailout means that executives made a lot of money. i have pounded the administration to talk about this as being something that come on "mad money" and say, this has been a good deal. and behind the scenes what they're saying is, look, what you want to do is exactly the opposite of what president obama wants to do, which is say, hey, listen, this was great news for the taxpayer. and romney gets so say, how good was it -- g gives romney the chance to wash the bankers. >> four years ago f you had told me aig which was on the way to receiving $182 billion in u.s. government aid would ever, ever see this day, i would have -- there's no way. no way. >> that's a great point. we keep forgetting what it looked like in the darkest hours. and this just seemed like we're writing a check to -- a black hole check. >> $182 billion and you're going to see your money?
>> and everybody got off, too. one of the things that's infuriated the american people is no one's paid for what happened here. there were executives at aig who literally got a pass, meaning the government actually announced, we're not going after you. anybody who knows the defense prosecution game always says the government leaves it open, except for aig where they said they would not go after aig. what a free pass, huh? coming up, a live interview with the president of the america's mark fields. what it all means for the automaker's future and let's take another look at the futures as we head to this, the first session of the trading week. looking to lose about three on the s&p 500. stay tuned. much more "squawk on the street" straight ahead. are we there yet? are we there yet? are we there yet? [ male announcer ] it's the age-old question of travel. the same one we ask ourselves every day. is it the strongest, the most efficient?
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we'll hair your responses throughout the morning. these are haircuts for children, not for adults. and simon hobbs makes a very good point, now jcpenney becomes the last place on the planet he'd want to be on a sunday. >> ron johnson continues to try to throw out things. i was at pvh last week. i think it's, throw the spaghetti against the wall, whatever sticks. >> i said to bill ackmann, the stock's been up ever since. >> any uptick will drive it higher. i continue to be -- call me skeptical. retail turnarounds have been one of the most difficult things to hold. >> and once we see the market share gains, not decline but grow less, so get bigger by less at the likes of a jcpenney and a
macy's and so on, we're still hearing they are still gaining share. once we see that slowdown, maybe there are signs that jcpenney is able to hold on to their base and start growing. >> stabilizing, yeah. >> well, when you get a situation where you're down 18% in same-store sales, you get a chain reaction throughout the company. your staff is too high. the people are going to start -- get inventory back up so you get pushback from apparel companies because you're basically saying, i can't take all this merchandise. it's not as simple as having a personality living in san francisco, i believe, that hasn't moved to plano, the headquarters. this is a problematic situation. and the stock is making it looking better than it is. coming up, making money on monday with cramer. get ready for his mad dash. and once again, a look at futures as we head to this open. much more "squawk on the street" straight ahead. i have a cold, and i took nyquil,
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a little less than five minutes before the opening bell. time for cramer's mad dash ahead of the market open. last week, shares of kraft took it on the chin a bit. a lot of news coming out about the anticipated split into two companies. >> and every major firm is saying, stick by this. jeffries targets raised, citigroup says selloff overdone. i agree with these. there wasn't anything that bad. i think the ceo is setting up expectations low.
people don't necessarily like to play the upod game, underpromised and overdelivered. but these break-ups and spin-offs have been terrific for stocks. >> they have been helpful. you've seen a lot of investors, particularly activists focus on some of these names. kraft in part may have been thinking about it previous to mr. peltz getting involved. that was one there. i wonder how many more we may see as this year gets -- >> i think many. remember, this is the heir to altria. it's almost doubled. it is just a remarkable achievement. it's financial engineering to some degree. but that company turned out to be worth a heck of a lot more. i like the split here mostly because people like a fast
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there we go. the bell rings to open the session on this monday morning. here at the ballgame board, it's columbia day. i think that a big area to watch in today's sessions and sessions this week are the financials. we had -- you mentioned the regional switch up on the conviction buy list. >> my charitable trust owns wells fargo. it has lagged this period. i think that wells fargo -- i'm not a chartist. but it's got one of the most beautiful charts i've ever seen. and i would not sell wells fargo. i think they're going to have the best earnings portfolio. when you see a stock like regions financials upgraded, this is a back from the dead $7
play that's going to attract will have interest. remember, i think there's this big schism between the regionals which are basic plays on housing and the international banks which are plays on the euro, ecb. i like the housing plays. i think they remain strong. notice also that a lot of the actual -- housing undercurrent is working for this market. >> right. we should remember, by the way, that we are expected to hear, i believe today, on the valuation dispute between citigroup and morgan stanley about morgan stanley smith barney. morgan stanley is going to buy another 14% of it. but the two sides point to perella's firm, perella weinberg, to determine the value of what it actually is worth. >> is it what they have to pay? >> citi had it marked at a much different value. if it gets marked at that far
lower value, will it be $11 billion or $13 billion, may force a writedown for city to some extent. and it's only 14% that morgan stanley is buying of whatever that valuation is. then they have to go through this potentially all over again when they want to exercise their next option. they hope they can get it all over with -- >> when we talk about morgan stanley, we think global investment bank. but people forget that wealth management, such an important part of that company. >> and a stable business. >> right. >> aig is down by 1.8%, perhaps less than what one might think on hearing of the announcement of a massive share sell by the u.s. treasury. $18 billion worth of stock potentially. >> i had some expectations it might be around $32 billion. perhaps a bit higher. we'll see. >> right now f they get this price, it's extraordinary. just shows you there's
tremendous demand. and it brings focus on the book value. we've all laughed at the tangible book value of the financials. but you only laugh because they're not bringing it out. >> when you feel like in aig's case, i think it's around $63, is something you at least should not ignore as opposed to perhaps morgan stanley's or citi's or many of the other financials. >> this was owned by the government. i think that they overreserved it. i don't think this is one of those things where the government didn't scrub it. the other guys weren't scrubbed by the government. this was by the government. they owned it. i don't think the tangible book is right. >> speaking of shares hitting the markets, michael kors announcing that some shareholders will sell about 20 million shares in the company's stock, about 10% of the shares outstanding. this transpired friday afternoon after the close. we are seeing the reaction today. what a run. down 4.4% is a drop in the
bucket when you consider the run it's had since it ipo'd here on the new york stock exchange. >> you interviewed michael kors. he's still involved in designing? >> he is. what's so unique about him is he worked on the floor of retail. he worked the floor. he knows what sales. he has a real handle on what the margins are on any product he designs. from the drawing board, you know what the margins are likely going to be. >> tommy hilfiger still intimately involved in the design. >> has a good sense for what will sell and what won't. >> 14% same-store sales. >> j. crew has had a very sharp increase in sales. >> titan machinery is an interesting one. it is down by 16.5%, a smaller market cap, $500 million in market cap. but they missed when they cut their full-year estimates and they say that the drought's hurt
margins. it was a competitive environment when it comes to selling machinery. and they saw margin pressure, especially in the larger u.s. metro areas for construction. >> i'm not quite sure how well run they are. no one ever wanted to dacast dispersions. but deere, holding up pretty well. caterpillar holding up really well. titan could be one off. at the same time, we have neglected a group of stocks that are just very, very exciting. this is the amazon versus google versus apple. and here's google up, apple up. google going just -- blowing through $700. people say, what's going on there? google popping up everywhere. we have the iphone -- apple and google, wow. >> they would be the keys -- they could be the keys to the market going into the close of the year. if you take a look at the dow versus the s&p 500, the gap between their performance is enormous over 12 of the past 13
weeks, specifically because of the outperformance of apple and google and them not being in the dow jones industrial average. that really highlighted the divergence there. >> one's a price-weighted index -- can you imagine if you add apple and google with their $710 and $682 prices respectively. >> your friends who run funds, if they don't own apple, they're not beating the market. you can't beat the market without earning apple. >> and $640 billion market value , it becomes an important part. >> in the past 25 weeks, it's up. over the past 13 weeks, apple is up 19%. >> incredible. >> it's an incredible run that's powered the s&p higher. those two stocks could be the ones to watch when it comes to s&p performance going into the end of the year. >> and they are key competitors.
i finished steve jobs' books. the vitriol with which he held google about android was incredible. and they continue to fight it out. and we're watching apple withdraw certain things from its system in terms of google wlshgs it be maps, for example, and things of that nature. >> i love google maps. there's a full-page ad for samsung and their phone. what happened to that decision? wasn't there a court ruling against them? wasn't it a slide? >> now it's a push. >> it's worth focusing on the fact that amazon was supposed to be wrecking the margins for the ipad. but that was like last week's fish wrap on the -- look at this thing. it's incredible how hard it is to hold back these stocks. >> google, a fresh high in today's session. let's check in with bob pisani.
he's got more on what's moving. >> good morning. we are to the downside. the only sector that's up right now is telecom. but don't let that fool you. all over the weekend, the big talk is about de-risking being back on. all last week, we were out of the dividend payers or sort of boring but stable financial stocks. into the banks, into the builders, into the insurers. on friday, the huge moves up. when you get morgan stanley and goldman sachs up more than 10% on the week, bank of america essentially up 10% on the week, a lot of people were not in those stocks. so last week, i put this up several times. we saw huge demand for financial etfs. the xlf, when people couldn't get that, they started buying the options in that. the market lifted and a lot of people once again caught surprised. once again, underinvested in certain key groups and underperforming the overall markets. that's what's got people talking today. one of the things along with this aig story you guys were
just talking about, would this be a good leading indicator of demand for financials? i called around and said, what kind of price are we talking about for aig? a lot of people felt if they could get $32 or above, and it goads at $33.90. anything above $32 would indicate fairly decent demand. financials are hot right now, including insurers of this particular type and people want in on that. china still lousy. the numbers were terrible on the trade data. imports were down. people had imports up notably. and the exports were rather weak as well. so jpmorgan came out and revised this q3 forecast on china. a little bit lower on the 2012. the bottom line is this, we are looking at well below 8% growth for 2012. and some people are also looking at fairly weak numbers for 2013. they're at 8%, 8.5%. these numbers keep coming down for china.
did you see what's going on over in greece? greece is the only big market over in europe that's on the upside. up over 4%. it's not up because the troika is there trying to renegotiate. but mizz merkel gave an interview to der spiegel saying, we really want them to stay in the euro. that's moving greece today. we saw some of the big moves last week in anticipation of what's happening this wednesday. the german constitutional court ruling on the esm, the finance minister has said he thinks it's going to happen. they're going to approve it. and he'd have some insight into that. and we have the dutch elections, likely a left coalition is coming in. socialists and heavy liberals could come in and support heavy bond buying. that will isolate the germans even more. the european commission is supposed to do a report on the bank union. that's the other leg, not just a
fiscal union, but a bank union, heavy bank regulation is coming over in europe. that's something that people are talking about. we'll hear about that wednesday morning as well. back to you. >> thank you, bob. bob is out there saying, listen, the estimates can't be. cliffs natural downgraded by goldman, the stock is up. people keep thinking stimulus. let's shift to bonds and the dollars. rick santelli is at the cme group in chicago. rick? >> thanks, jim. of course with the fed meeting this week in supply, $66 billion, threes, tens, 30s, let's see how the interest rate markets look both here and overseas. mai 1st start, that's a good one. i'll tell you why. it encapsulated this quasi-range that we've moved into. on the 24th, low yield close at 1.38. mr. draghi pulled out the verbal bazooka on the 26th. if you look at the bund, its
historic low closing yield was on the 20th of july, right around 1.17. so they're 37 basis points above that. patterns looks fairly similar. bund yields are a little bit more to the upside, downside in price. how have currencies been affected? the dollar index at the lowest level since about the second week in may. this is very important. the dollar's had more damage as we get into this q.e. mode than the euro currency. euro currencies at the lowest level since about the third week in may. but the premise is the same. even though on a dollar for euro basis, we should see more of a quantitative easing move on the euro, seems as though the world's reserve currency, gold, to what ben and company may do on wednesday and thursday. >> i watched gold so closely. that $1,700 mark. pretty good. let's check out the latest moves in energy and metals. over to sharon epperson at the
nymex. >> wednesday and thursday are going to be key days. but right now, traders are interpreting the data we got over the weekend that shows maybe slow growth. right now, we're looking at slow growth coming out of china with the industrial production numbers released over the weekend as well as slow growth in japan with its economic data coming out. italy and this of course all on the heels of what we got from the u.s. labor department in terms of our own jobs data. there's a slow growth environment that may be pressuring prices somewhat. in terms of oil prices, there's more chatter coming out of saudi arabia with the oil minister there reiterating his position that at the current levels, oil prices are too high based on market fundamentals. that may also be pressuring crude somewhat. in terms of the commodities that are actually rallying today, look at copper and palladium. copper extending its rally after the deal announced last week, the infrastructure deal worth $150 billion. that's certainly helped copper
over the last several days. up about 5% since that deal was announced. then we also have some car sales data helping the palladium market. those two commodities are up. but overall, looking at weakness here. >> thank you, sharon epperson. speaking of car sale, coming up, ford's road ahead. the automaker's president of the americas mark fields on the next generation mustang and 2013 fusion and the michigan plant being retooled to build them. take a look at this morning's early movers on wall street. apple hitting a new all-time high so far in today's session.
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billions in the economy. at chevron, if we can't do it right, we won't do it at all. we've got to think long term. we've got to think long term. ♪ take a look at this chart of apple. as we mentioned before the break, apple hitting an intraday high in today's session. now trading at $681 and change. up about .1%. but this is a very big week for apple as we anticipate the launch of the iphone 5 on the 12th. we'll see what we get. supposedly it's going to be an lte phone. but it's not necessarily the best if you're traveling abroad
because the lte network is a little bit spotty. >> right. look, the iphone -- this is tough even for people my age, for people in their 40s. this is -- and 50s. this is a very loved device. i'm trying to call out some of my colleagues. >> he looked at david and then added -- >> of course you did. >> this apple iphone has a resonance because of the eco system. this book -- the steve jobs book would have given you 200 points. you would have realized that this guy thought about the eco system and it's a winner. >> it's closed but it has been a winner. that's been one of the main criticisms and that's been one of the big historical arguments. microsoft, apple, open, closed. google, apple, open, closed. apple, though, controls everything. and people like to be a part of
it. >> but the product launches were steve jobs', one of his seminal things to do. i think he obviously taught people how to do it. i'm looking for pizzazz. you need to see apple blow people away with this announcement. >> this is what we have typically seen ahead of a stock launch. the stock will run up. the stock sells off then. we'll see how it plays out. apple, right now at $680. ford today is reopening a michigan plant with a next generation mustang and a ford fusion will be built. phil lebeau has a very special guest. >> i'm joined by mark fields, the vice president of ford, head of ford of the americas. joining us from the flat rock assembly plant you guys are reopening today. this is adding 1,200 jobs, a second shift for production of the 2013 fusion. do you have enough capacity now
here in north america because its sales have grown so much and you've had fairly tight capacity? how do you feel right now? >> we feel pretty good. we're here at flat rock assembly plant to celebrate a new era. this used to be a plant that was shared with mazda. we're now going to be producing only ford vehicles here. to your point about capacity, we're in the process right now of launching our new fusion, which is produced down in hermisillo, mexico. we're going to continue with our strategy, matching capacity demand. the good news is more and more customers are wanting our vehicles. >> when you take a look at your sales last month, stronger than expected, up 15%. what really stood out to me was the retail sales, the component of the overall sales that were done by people going into showrooms, 82%. compare that with the beginning of the year where it was 77%. clearly more people are going into the showrooms.
what's your outlook for demand on the sales for the rest of this year? >> well, our current call is the industry anywhere between 14.5 million to 15 million units. right now, our call is on the low end of that. but to your point, the encouraging thing is quarter after quarter, month after month, we've seen that retail segment of the industry grow every month. it's grown moderately. personal incomes are growing. but there's a lot of old vehicles out there. the average age of a car or truck is almost 11 years old. when they see the great fuel efficiency coming from our vehicles and the design, it's driving folks to the industry and growing the ford business. >> what about within the truck market? you need to see the housing market really start to churn and pick up before you see the pick-up sales improve. we're starting to see that over the last couple of months.
is it too soon to say the housing market is driving pick-up sales? >> there's a high correlation. to your point, the last couple of months, we have seen the pick-up segment pick up, no pun intended, which is good. building permits are starting to increase. and gradually we're seeing that segment starting to build. the great news is for ford, as you mentioned, last month, our "f" series sales were up 19%. the highest all year long and have grown year over year for 13 months now. >> mark, jim cramer, i bought an f-350 not that long ago. >> yes. thank you, jim. >> you offer the option of the natural gas trucks. we saw rick santelli do a terrific piece on conversion. is there genuine interest? if there is, would you build more of these? >> i think there is genuine interest. as a manufacturer, we offer more compressed natural gas upfits
than any other manufacturers. the key component is the infrastructure. but if there's demand, we'll build to it. as i said, we have a large offering now and we'll continue to watch it and work with our partners. >> mark fields, the head of ford of the americas joining us from the flat rock assembly plant which the company reopens today after bringing it down for a couple of months to retool it. melissa, as we send it back to you, he said 14.5 million to 15 million is the sales rate for the rest of this year. i'm hearing more and more analysts on wall street say, we think we can get up to that 14.8 million, 14.9 million mark by the end of this year. >> phil lebeau, thanks so much. "six in 60" with cramer is up next. tdd#: 1-800-345-2550 when i'm trading, i'm so into it, tdd#: 1-800-345-2550 hours can go by before i realize tdd#: 1-800-345-2550 that i haven't even looked away from my screen. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 that kind of focus... tdd#: 1-800-345-2550 that's what i have when i trade. tdd#: 1-800-345-2550
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>> added to the focus list at bank of america. polaris. >> we have a rich country. >> celgene downgraded from neutral to buy. >> that's been a mistake. >> sprint upgrade over at nomura. cost savings from conversion -- >> look at that. >> cabot oil and gas. >> natural gas, people trying to call a bottom. >> and finally, owens corning. >> it's a housing story. everything housing related keeps going higher. i don't want to get in the way of that story. the no-negligents in the stock. >> it's had a nice move. >> the last quarter wasn't even any good. that's just a belief. it's all a hope. >> many people think housing has finally bottomed. how quickly it grows from that
bottom is another story. >> it's a real -- it's been a great place to be. i think what a lot of people don't understand at home is how could it be that the housing number starts are so low. people think next year is going to be a big year of build. >> what's coming up on "mad money" tonight? >> the merger i'm going to find out -- i never play arbitrage for our viewers. i always say ring the register. this may be the exception. >> "mad money" tonight, 6:00 and 11:00. see you tomorrow morning. we have a lot more "squawk on the street" coming up, including a look at apple's record run. can it keep going? nt to improve our schools... ...what should we invest in? maybe new buildings? what about updated equipment? they can help, but recent research shows... ...nothing transforms schools like investing in advanced teacher education. let's build a strong foundation.
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♪ just another manic monday ♪ wish it were a sunday good monday morning. welcome to "squawk on the street." let's get to the roadmap for this next hour of the program. apple shares hitting another all-time high as investors across the board anxiously await wednesday's big iphone event. talking all things apple next. broadly the market's seen big demand for the big banks. the financial etf, the xlf, surging over 3.5% last week alone.
is there still more room to run with the banks or is the rally now unwarranted? >> and another dose of weak data out of china signaling red flags over the global economic slowdown. is another round of stimulus on staff? >> and the fomc hosting its policy meeting later this week. just how high are the stakes if bernanke actually disappoints? let's talk about apple coming off the all-time high, intraday high set this morning, days before the big iphone event on wednesday. shares now down by a little bit more than the dollar. two analysts join us. good to have you with us. will, i'll start off with you. apple has had a monster run, up by about 20% in just the past 13 weeks or so. is this the typical trading pattern we've seen going into every product launch where the stock runs up sharply and sells
off? and will that be a buying opportunity for investors? >> well, i think you probably hit the nail on the head. typically the stock runs up in advance of a product announcement. to the degree it sells off, like it has in the past, that probably presents an even better buying opportunity. we'd like it on any potential weakness if that were to occur. >> rob, would you wait on buying apple? if you didn't have a position at this point, you want to put fresh money to work, would you wait? is this not your opportunity or do you risk missing out on what could be a strong holiday season given the new product launches? >> i wouldn't try and wait. i think apple is inexpensive and is definitely worth owning today into the announcement. if it sold off a little bit on sort of selling the news type thing, i think that's a reason to buy more. i think the iphone 5 is going to be a really big deal. i think the supply will be tight for several months. it will be hard to keep up with demand. but that's a good thing for apple stock. >> but your call, your price target of $800 is 17%, 18%
higher than we are now. that is a huge further move. what would trigger that move? what would the market dynamic be? the possible news flow that could drive us there. >> well, what's been driving the stock has simply been huge revenue and earnings growth. so i think it's going to be numbers continuing to move higher that's going to drive the stock higher. >> there are a lot of expectations about an ipad mini. do you think that actually be the catalyst for the stock going into the holiday season? will the iphone 5 be a revolution nay product or an evolutionary product and what should we look to see the biggest bump off of an announcement? >> i think the iphone 5 does have the opportunity to be another revolutionary product for apple. i think that's one of our bets. the key to apple's stock is to continue to innovate. it's been an innovation engine for many years. that's going to be critical to making the shares continue to work higher. i think ipad mini is a real opportunity.
we put out a survey a week or so ago suggesting strong demand for that advice. it opens up a whole new market segment for them. as they continue to innovate, i think the shares will continue to work higher. >> at the same time, everybody else is innovating around them. last week, we got an important breakthrough when we god new kindles out. the business models other people are using are changing. two seven-inch tablets priced below where apple could sell them. i know the iphone is 70% of sales. but the world around apple is also innovating, sit not, faster and faster? >> well, there's no question about that. we've seen that with android for some time. windows phone 8 is trying to make a go at it. i'm september call on that front.
blackberry 10 early next year. as we look at our own survey, it suggests that consumers willing to spend $250 for an apple ipad mini, they could make a good margin at that price. that's not far above the amazon kindle price. we think there's a large market opportunity for apple. consumer electronics competition is going to continue. >> rob, i'm curious. you're clearly on apple bull with an $800 price target on the stock. at the same time, are you concerned about the -- >> i don't think the stock's without risk. but the stock's been driven by its own revenue and earnings growth. it hasn't been multiple expansion. the multiple has contracted over the years. to me the risk with apple is they have to continue to
innovate and come out with what's considered to be the best products in really otherwise commodity markets, whether it's smartphones, pcs, tablets. as long as they keep doing that, there's no reason to think the stock can't keep going higher. >> if they announce a pandora-style innovation where the internet radio will be embedded in the hardware, what does that mean? is it just another function, another bit of functionality or do you think it might be an indication that there is an acceleration into how they leverage different parts of the eco system, if you see what i mean? arguably in the same way as amazon might do. >> well, i think you're on to something there, simon. they're trying to great more stickiness around the product. that's something that apple's been very good at over the years. the iphone 5, same thing for ipad, a lot more than just in hardware. it's about the features and the functionality. adding some sort of streaming music service would be a very natural add-on for them.
i think that's really the genesis of it. >> will and rob, we're going to leave it there. thanks for your time. >> thanks. the announcement is out on wednesday. let's get a market flash. brian shactman's back at h.q. >> good morning. take a look at shares of geron. they're halting experimentation on a breast cancer treatment. it's losing half of its value. these are high volatility stocks in the biopharma sector. 52% to the downside. back to you. >> that is ugly. the treasury is getting send to sell. in fact in the midst of selling $18 billion worth of shares in aig. the insurer had bailed out four years ago. the sale will make the treasury a significant minority shareholder in the company for the first time since the bailout. cnbc's mary thompson has the story. mary? >> the treasury's fourth sale of aig's stock is certainly its most significant. it could also cut its stake in
the insurer from the current 53.4% to as low as 20%. the final number depends on where shares are sold at. assuming the government sells $20.7 billion worth of stock at friday's closing price of $33.99 with aig's $5 billion buyback, it would cut the government's stake to just about 20%. this sale, the largest by the treasury, cutting its stake in the insurance giant in may of last year. this after a $182 billion rescue from the government in september of 2008 left treasury with a 92% stake in the insurer. jim millstein isn't surprised by the size of the current offering and says at some point you'd expect to see one this large when the investor base is diversified enough. bob benmosche says one of his goals is to see the government become a minority shareholder or even better, sell all of its
holdings in the insurance giant. a company now much smaller and simpler than it was in 2008. global property and casualty business and a domestic life insurance business is what it's left with. it was nearly four years ago to the day the government rescued aig. now with the stock at its best levels in just about 18 months, the question is, will investors buy in? it's rate add buy and says the size of the offer is a concern and notes the firm's fundamentals have been improving and both of its main businesses are profitable. we'll have to see. back to you. >> thanks very much, mary thompson. the stocks of the big banks have been on its hair, at least over the last couple of weeks. you see the financial etf. xlf up over 20% this year. but is the recent raul unwarranted? we'll talk financials next. [ male announcer ] if you believe the mayan calendar,
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want to take a closer look at financials. they've been rallying of late. losing steam perhaps this morning. the s&p, though, that financial index gained 3.5% last week. it was the best-performing sector. can the rally continue? and if it does or if it doesn't, how do you play it if you want to? david katz is chief investment officer at matrix asset vooifrz advisers, and eric ojha joins us as well.
what was behind that news last week? q.e. 3 is in the possibility of that helped. but bank of america up 10% alone last week. >> a lot of it is because of the ecb announcement last week. and bank of america on price to earnings is pretty inexpensive, despite the fact that it has a lot of legacy issues that we remain concerned about. >> that kind of keeps you on the sidelines on that stock? >> yeah. we prefer jpmorgan and citigroup. we think they're much further ahead in dealing with their issues stemming from the housing crisis. >> david, i know you've been very positive on financials, certainly they've had a very nice move this year. i would assume that's helped you. but their business model is still to a certain extent shifting dramatic. return on equity is never going to look like many would say what it once did. not nearly as levered as institutions. compensation has to keep coming down. aren't there a lot of challenges out there to give you pause? >> tremendous amount of challenges but you want to look at that relative to their valuation.
let's take a morgan stanley, for example. morgan stanley has a $26, $27 book value. there used to be 20%. we're looking for it to come down to the 10%, 12% on a normalized basis. even though they have a much impaired business model, the stock should be 50% to 100% higher over the next three to five years. >> david, what about the fact that they rallied as they did last week? what are we timing to here? what does it teach us about when you should buy stocks? >> that's a great point. it teaches us that you can't try to time the market. if you like a stock on a long-term basis, you want to buy into the weakness rather than chasing the rally. many of the financials. >> reporter: crushed on fears that europe would melt down. when the ecb took the meltdown off the table last week, they went from being really depressed to just a little bit depressed. if you like the group, we
wouldn't chase the rally but we would be buyers into any weakness. they should be better in three months and 12 months. >> eric, why don't you take a leaf out of david's book and get more aggressive on the recommendations? >> we have buy recommendations on jpmorgan chase, pnc financial services and citigroup. the only ones we're cautious on are bank of america because we think there's a lot more legacy issues there. and wells fargo on valuation. we special like pnc financial services group because we think that the revenue stream is much more diversified away from mortgage banking. they have many, many different business lines. and we think that they'll grow revenues faster than most u.s. banks in the next 12 months. >> david, i'm curious, as i understand and as i recall, you've been an owner ofleas morgan stanley and jpmorgan for quite some time. when you say that you would buy on weakness, what price would that be for you? a lot of people out there may not have owned these shares for quite as long as you and are
looking to understand what an entry point could be. >> any sort of a 3% pullback or 4% or 5% pullback, which for these stocks is a bad day, we would be adding into a position. we think jpmorgan is worth 30% more. we think morgan stanley is worth a heck of a lot more. two that didn't rally last week or rally nearly as much would be bank of new york and state street. we think they are beneficiary by europe stabilizing and that's not in their numbers. we think those stocks are play a little bit of catch-up as well. those, you don't have to wait for the pullback because they didn't run along with the group last week. >> eric, to david's point, we hear a lot about valuation. everything's trading below tangible book. but should we even believe that at this point? are we silly to be citing things like tangible book value in this day and age for these banks? >> the only major u.s. banks that i cover that are below tangible book value are citigroup and bank of america. jpmorgan and wells fargo are above tangible book value. and as far as your point,
tangible book value means a lot less three years after the crisis. it meant a lot more in 2008, 2009, when these banks were fighting for survival. so we focus more on price to earnings. >> david, final thought to you. what would change your mind? what conceivably could happen that you'd say, i have to get out of these stocks? >> we think the last three or four years has been a massive stress test for the group. most with problems have wiped the problems off the books. housing we think is going to turn as a positive. while there are always things that could derail our thinking on it, at this point, we do think you have the wind at the back. business has been better for the last 12 to 18 months. we don't think the stocks have reacted to that. >> so there's nothing you can think of that would change your mind? >> there are a dozen things i could think of to change my mind in a heartbeat. but for the short term, the banks have a little bit of the wind at their bank. >> david and eric, thanks to you
both. still to come on the program, we'll talk about richard gere's new movie "arbitrage," in which one person around the table has a starring role. >> it's not me. >> disappointing data from china providing investors with a lot of thoughts overnight. is stimulus on the way at a critical time politically for the communist regime? that's next on cnbc. take care of legal matters. wouldn't it be nice if there was an easier, less-expensive option than using a traditional lawyer? well, legalzoom came up with a better way. we took the best of the old and combined it with modern technology. together you get quality services on your terms, with total customer support. legalzoom documents have been accepted in all 50 states, and they're backed by a 100% satisfaction guarantee. so go to legalzoom.com today and see for yourself. it's law that just makes sense.
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♪ . welcome back to "squawk on the street." brian shactman here at the market desk. hewlett-packard in a filing and not a lot of attention paid to this. turns out they're going to lay off over the next two years, 2,000, more than expected. that's 29,000 over the next two years. and restructuring costs going from $3.5 billion to $3.7 billion as they try to turn around this company. of course, the stock down 32%-plus, year to date. about 22.5% in the last year. but today getting a pop on that.
up 2.6%. from tech to china, china's industrial output data signaling red flags for the world's second largest economy. the shanghai rallied on the possibility of more stimulus along the way. adrian mowat joins us on the newsline. what are the chances of another round of stimulus from the chinese government? >> good morning, melissa. we're hearing a lot of projects being approved in china. but the problem is where is the money going to come from? we had the mdrc announcing projects equivalent to 2% of gdp. if you look at the projects, they were approved a while ago. so it isn't a new, new story. and then we had lots of projects being announced by local government. but they're looking for private
capital to help with these projects. the image that we're getting of china now is one in which there might actually be a shortage of cash. you can see that to some extent in the decline of industrial profits, state and enterprise profits down more than 16% year to date. and revenue is still growing but at a slower pace. so i think the issue with stimulus in china is simply, where's the money for the stimulus? >> so, adrian, let me get this right. the government can announce all the stimulus it wants. but you have questions as to where it's going to get the funding for that stimulus. of the stimulus that has been announced, including last week's infrastructure build stimulus, on which so many stocks around the world rallied, what has the money and what does not have the money at this point? how much of a gap is there in funding, in your view? >> at the moment, there's absolutely no detail on which of these projects have funding. they've essentially got approval
to go ahead without the project size being sorted out. this isn't unusual in china. what we saw in the 2008-2009 stimulus was it wasn't really a typical stimulus. it was more of a monetary stimulus with the banks providing the capital. the problem this time around is that the banks provide a lot of capital in 2008 and '09 and they're rolling over that debt at the moment. and they're somewhat reluctant to add to local government funding desks and other infrastructure projects. it's not clear where the money is coming from. >> but, adrian, this is a very important time, as you know better than i, because you're in hong kong, for china, when you have this once in a decade change in leadership over the next year and a stock market crushed with huge social change under way. so they have to get this right. can want they just print money like anybody else or alternatively can't they use
those trillions of dollars of foreign exchange -- we don't associate china with being sort of money. >> you can print money, but, remember, there are inflationary implications of printing money. china is an economy that is expanding. it doesn't have a huge output gap, unlike the developed economies that are in processes of quantitative easing. so when you've still got inflation concerns, you can't get away with printing money or you just compound your inflation issues. i think with regards to leadership change, it is important to highlight some of the good data points that we had over the last 72 hours. the retail sales are still around 13% over a year earlier. and we've had auto sales expanding at 8%. so the consumption data is okay. the problem is the 47% of gdp, capital formation. that's where we're seeing the slowdown. that's where we're forecasting
absolutely no growth in steel production. it's likely there will be no growth -- perhaps it's more indicative of what's happening in heavy industry while the consumer is still okay. and i suppose from the perspective of beijing, if the consumer is okay, the population is feeling okay, they're not too worried. >> so, adrian, let's bottom-line this for our viewers here. i think there's a sort of belief in the marketplace by investors that things get bad enough for china and the government will step in. and now that notion you're turning on its head. when you see stocks in shanghai hit the highest level in almost a month or so and you see iron ore stocks, you see machinery stocks in the united states and other parts of the world rally off the back of this notion of china stimulus, are all those things built on false expectations? >> we need to look at those charts. and most of those charts have fallen very sharply in the last
two months. so what we experience through our trading book on friday with short coverings, we didn't see long-only investors coming in and buying stocks this morning. what i do think is different and you've highlighted that asia has recovered -- talking about a recovery -- the local investors do seem to be more excited by this new story than we've seen for some period of time. particularly noting that cement stocks rallied quite hard today in shanghai. so that is interesting that the local investors are somewhat more enthused about this story than we've seen for months. >> okay. adrian, thank you so much for phoning in. we appreciate it. adrian mowat of jpmorgan. it's interesting this morning that stocks are essentially hanging on to the sharp gains that they made last week. clearly hopes are high that the fed will announce further
about one hour into the trading day, here are the stories we're squawking about. amazon and apple hitting new all-time highs earlier in today's session. apple now moving to the downside and amazon is struggling to hold on to its gains. the s&p 500 consumer discretionary sector trading at a new record high for a third consecutive session. and copper rising to four-month highs on hopes both the fed and china's central bank will implement additional stimulus measures. this morning's "the wall street journal" has an assessment of where we are in the markets, that investors are behaving as if more economic stimulus from the central bank is a done deal come thursday. is that true? and if it's not true, what will the implications be for the market? joining us here on set is jeff saut, dan greenhouse joins us from btig, and drew mattus joins
us. drew, are we set up for a disappointment here? >> i don't think so. i think every time the markets push the fed, the fed delivers. market's clearly pushing the fed this time. i expect the fed will deliver. that being said, we'll be disappointed with what actually the fed can do, i think. they'll go ahead and try and do another q.e. program and i think it will have a very limited effect on the u.s. economy. >> jeff, you're shaking your head there. >> yeah, i agree with that. i thought they were going to change their buy statement at the last meeting f. they do it here, i thought it was too close to the elections. might appear to be too political. >> when you say change the bias, you mean say, we guarantee you these extra low interest rates into 2015 or something? >> yes. >> but if they come out with that, dan f that's what they deliver this week, that's a huge disappointment. most people around here think there's going to be asset purchases. >> i certainly agree with drew. there is a tangential argument about what the fed can do with
asset prices. with respect to what jeff had to say, i disagree. i don't understand why the political implications are something we worry about at all. but to your question, yes. if all they do is change your interest rate guidance from 2015 to 2014, that will be a disappointment, without a doubt. >> drew, in terms of market reaction to whatever the fed announces, it's going to matter how big any sort of program could be. what's your estimate? >> we're putting the minimum size at $500 billion. we think there are huge issues with how much treasuries they could possibly buy. and there's a big problem with how many mortgage-backed securities they could buy. we actually don't view q.e. as necessarily a positive. it could have some positive impact on asset prices. but for the most part, we're more worried about market functioning with regard to t
the -- >> drew, what do you think when you see the fomc minutes say they're exactly not concerned about that which you just brought up? >> i think they're wrong. >> okay. >> why do you think they're wrong? >> because every day i sit next to my traders. i know what's going on with supply. i know what's going on with liquidity in terms of the entire treasury curve. and i don't know who the fed's talking to. but i would suggest that if they put a bunch of ph.d.s in a room to figure out they're not going to have a problem market functioning, they will be wrong. >> but surely the fed has a view and you don't fight the fed. >> our forecast is based on what we think the fed will do, not what we think the fed should do. >> but you don't think it's going to have that great an impact on the economy, correct? >> no. i don't think it's going to have much impact on the economy at all. i'm worried it could have a negative effect if it does impair the functioning of the treasury market. >> is this a sell the news kind of event at this point? >> yeah, i think it is. the s&p is following the typical
election year pattern, it called for a peak at the beginning of april, a slide into may and a zigzag rally until about now. then you get a pre-election pullback that sinks the footings for the year-end rally. >> but that's a cycle that you identify to do with the election. it could be any event that you would sell on. not necessarily the fed -- >> no, i think you're making a short-to-medium-term top here. >> you note the performance anxiety that hedge funds have at the moment. does that change things? >> sure. you could have a blow-off spike here on some kind of news out of the federal reserve and out of the german court that's meeting this week as well. net long positions and hedge funds are still around 45%, 46%. they were betting on a decline, not a rally. >> dan, you've been banging the drum of negativity for some time. just on that subject of the constitutional court, if you've been talking about for a long time in germany, do you think americans are worrying too much about it?
there was a reuters survey that came out last week of legal experts that said, all legal experts expect it to go there and even the finance minister of germany over the weekend suggested on radio he thought the constitutional court would get it go through. >> yeah, to your latter point, when i tell clients that -- i'm certainly not a german legal scholar. that there's no shot this gets voted down, they all seem to sort of question why everybody's making a big fuss about this. but i want to note, i haven't really been banging the drum of negativity. our view has been that the market will appreciate it. it will be that september was poor and certainly that hasn't been the case as of yet. but if the fed disappoints on thursday, that view will end up being right. >> forgive me. where will we end at the end of the year? >> i have to be honest with you. i'm as confused at this moment as i've been at any point over the last several years. you have a number of crosscurrents, the fiscal cliff being one of the largest. potential action from the fed.
and while the ecb has announced its intention to do a lot of things, it hasn't implemented any of those. and then you have the election. so we thought this rally would get up to 1,425, 1,458 and september would be poor, correcting some of those gains. it hasn't happened yet. until i see something out of the federal reserve, i'm getting out of the way because i don't know what's going on right now. >> the s&p 500 hit a new year high for the third consecutive session intradie, 1,438.74 is the level. with that said, jeff, you believe we're going to see a pullback. where should you steer clear of? what should you be in on that pullback? do you say, for instance, that rally we saw in financials over the past couple of weeks, that was a fool's rally? >> no. i think the banks are in better shape -- i avoided banks for 12 years. we only recently started buying bank shares again. they're well-positioned. >> drew, we haven't talked about the ten-year. given your thoughts about the market, the ineffectiveness of this round of q.e. 3, do we move
at all or stay in this range? >> you're a little bit range-bound with a bias towards them moving lower. people will respond to the fed if they're going to be in buying. there's probably a bias for it to go down at least in the shore short term. >> if the fed gets what it wants, the ten-year will be higher -- i agree with drew. but if the fed gets what it wants, an increase in inflation and growth expectations, the ten-year will be higher. >> yes, over a medium term, absolutely. >> we'll leave it there. jeff, dan and drushgs thank you all for your time. a market flash. let's go back to headquarters, brian shactman. >> thanks, david. take a look at coal stocks. a whole basket of these sharply to the upside on the china stimulus, maybe the trade data, further signal that is more will be on the way. either way, they're all strongly to the upside. cliffs natural had a downgrade from goldman sachs with a price target below what it's trading now. it was negative in the premarket and now it's up 5%.
so this infrastructure play, this stimulus play in china seems to have some followthrough. >> quite a move there. thanks for that. it is an all-star guest list. silicon valley titans set to appear at this year's tech crunch conference. what does zuckerberg have to say to get investors back in his corner? our management panel joins us next. with more? then don't get nickle and dimed by high cost investments and annoying account fees. at e-trade, our free easy-to-use online tools and experienced retirement specialists can help you build a personalized plan. and with our no annual fee iras and a wide range of low cost investments, you can execute the plan you want at a low cost. so meet with us, or go to etrade.com for a great retirement plan with low cost investments. ♪
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great to have you both. robert, i have to start with you and ask you, does he have to say anything? is he obligated in some way because the stock is halved to actually address that issue? >> i wouldn't dwell on the stock, if i were him. i think what the market wants to see him do now is look forward. how is he going to build the company? what's his vision for the company? is he going to build -- how is he going to build his team, make sure they have a culture of innovation? is he a leader? i think the market is funny. they don't like what happened in the ipo. but the market is forward-looking and people -- buyers sell the stock right now depending on whether they think they can make money from here. >> i would agree on that. but also push back and say on all those points you mentioned, i think people don't doubt the innovation at the company and some of the other features you mentioned. i think what they doubt is the ability of the company to actually make money.
and he has been deafeningly silent on that front leaning on his cfo to make those points. should he come forward and take on that role and address that because that is what investors want to hear about? >> just to be clear, when i say should articulate the vision for the company, that is hand in hand with how they're going to make money. and the fact is, they are growing ad sales. they do have a model for -- although their engagement is down a little bit, their ad sales are up. and he needs to talk about what the future is of the company. but the market also knows that -- they want to see that he's running a public company, that he's sensitive to shareholders and the way to do that is talk about the future and how to build this company. and i think that's what the market wants to see him do. >> gordon, you've headed a company that has seen difficult times in the past. i'm wondering, if you were to give mark zuckerberg a to-do list for his interview that's coming up, what would be on that list?
>> i think he's right. he needs to articulate a clear direction for the company. he's going into a forum, though, that probably is not that objective. and i'm not sure -- he'll learn as a public company ceo to pick your spot. this is going to be a rough sledding day for him. everybody's looking to hear what he's got to say. >> gordon, how important should the stock price be for any ceo but certainly in this case? company's been public three months. certainly it's a report card to a certain extent. but how much does it affect the typical ceo or in your opinion a guy like zuckerberg if at all? >> well, he's got to be effective. and i think he's doing the right things. he announced a year moratorium on his own sales. he's got confidence. he needs to instill that confidence in the investment community which meeans he's got to show his projections justify that ipo price. >> he's got to make that clear. >> you hinted at the speed at
which financial markets and 24-hour news coverage operates at may not be the speed at which a ceo would choose to operate at or needs to. they can for some time ignore it. i don't want to put words in your mouth. but i think that's what you were saying a few moments ago. you pick your spots. >> well, and mark's going to learn. that's all of us have scar tissue when we've been on the hot seat. he's on the hot seat today. i think he's a very capable man. he needs to make sure people believe he's capable in order to get that stock trend reversed. >> professor kaplan, people might look at facebook and say, i wish facebook was a bit more like google. what are the main differences, do you think, between those two companies -- google is up 10% over the past month. what are the main differences in the way that those founders have chosen to run that company? is it about eric schmidt or is it fundamentally a different business? google is a commercial business model. facebook is not.
>> and you probably know, i do a lot of work with google. and here's what google has done. they started off as -- like facebook with a terrific platform. but they move very quickly to think about how to build the company, how to attract great people, how to innovate. they actually realize that if you build a great team and you have a clear vision and priorities, you're going to figure out ways to monetize it and how to make money and build the revenue model. but google is an example of going from a great platform to a great company. and i think facebook needs to do the same thing. >> and, professor kaplan, just quickly, i see that you actually personally own facebook stock. are you disappointed -- if you could ask mark zuckerberg a question, what would that be? >> i bought the stock recently. so i bought it after it went down. and the main thing i'm interested in, actually, i've looked at all the revenue numbers and any shareholder who wants to look at different forecasts on the revenue model, they can do it.
what i want to see is that he's -- and i agree with gordon that he agreed to the moratorium for a year. i want to see that he's focused on building a great core team, has a clear vision on how they want to build that company, beyond the current platform, and so the questions i'd ask him, what are you doing to build a team and a culture and making sure that this is a sustainable company and strengthening the company? i want him to think about that. >> all right. thank you both for your time. we appreciate it. >> thanks. >> thank you. thousands of teachers walking off the job today in chicago. the first time they've done that in over 25 years. this comes after union leaders announced that months-long negotiations had failed to resolve a contract dispute with school district officials by what was a deadline of midnight last night. nbc news correspondent kevin tibbles has the latest for us. kevin? >> reporter: david, we're outside a very boisterous pict line taking place outside ray elementary school here in
chicago. they did hit the bricks first thing this morning and they claim they're going to stay out until they get a substantial or city, including mayor rahm emanuel. this really is the first test of mayor rahm emanuel's tenure here as the mayor of chicago. and obviously he would have preferred to have the labor vote on his side going into the november elections. but this is obviously bad optics for both the mayor emanuel and the man he's representing, president obama. the two sides have said on several occasions that they are very close. but obviously they were not close enough last night to avoid the midnight walkout. that's what's taking place at schools across this city. some 400,000 students are not in class today as a result of this labor action. >> kevin, is there one particular issue that divides the two sides at this point? >> reporter: the mayor says it's not money.
what the teachers really, what really seems to be under the teachers' skin is the teacher evaluation process. they say that they are being blamed for lower test scores of kids in chicago. kids in chicago do seem to be lagging behind the rest of the country. the teachers say that they should not be the ones to bear the brunt of real big issues like safety, violence and poverty on the streets of chicago. >> all right. kevin, thanks very much. kevin tibbles reporting for us from chicago. >> 400,000 students. wow. still to come on the program, what effect did those political conventions have on voters? we'll have some brand spanking new polling numbers. that's in just a few minutes. also, rick santelli will be here with the third hour of "squawk on the street." morning, rick. >> good morning, simon. absolutely. we're going to talk about politicians versus the people that keep politicians in pow r. think germany. some of the weekend newspapers. we're also going to talk a bit about crisis management and how -- whether it's spending levels at the federal reserve,
maybe they need to turn off the crisis mode switch. last but not least, chicago's school system. if you look at the pension liabilities underfunded in illinois, they're probably close to 50% of $90 billion underfunded. meaning these teachers, they have about $44 billion in benefits. where's this money going to come from? raising taxes? there goes all the families out of illinois. that's not going to help. all at the top of the hour. [ male announcer ] when this hotel added aflac
a significant event ahead today for rescue workers and residents who lived near the world trade center at the time of the 9/11 terrorist attacks in 2001. the government is expected to announce it will officially recognize cancer amongst the illnesses that resulted from the dust emanating from the destroyed buildings. that means that victims and families will be entitled to financial compensation. up until now a law that compensated 9/11-related illnesses did not cover cancer because of an alleged lack of scientific evidence. so a turning point there for many. 11 years tomorrow, in fact. who would have thought? >> amazing. tweet time. after giving more than 1 million free air cuts to kids last month, jc penney has decided to
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let's fwget to it. time to squawk on the tweet. jc penney has decided to make a promotional event a permanent offer every sunday beginning november 4th. what should be the slogan for the retailer's free haircut offer. reused to cut our coupons, now we'll cut your hair. chop n shop. john tweets, we're really good at haircuts. just ask our shareholders. >> 1.6 million free haircuts a month. how many is that a weekend? >> 4,000 a weekend. that's a lot of haircuts. what does it cost? how many people are they employing? >> there are as many haircuts each weekend as there are children without schools today
in chicago. >> what's the relationship between the free haircut and how much that family spends at jc penney. if they said to me we give a free haircut but they spend $30, that might be worth it. >> they feel obligated to come in. what's coming up on fast. >> barbara corcoran. we're counting down to zuckerberg. we talked about the interview with tech crunch. what does he have to do to get traders like the ones on fast money. >> another hour of what? >> this fine program, simon. >> stay where you are. i'm the one who leaves. you stay. david, see you tomorrow. let's get to it. here's what you might have missed if you're just tuning? >> a lot of old vehicles out there. the average age of a car or truck is 11 years old. when they see the great fuel efficiency particularly coming from our vehicles and the design it's driving folks not only to the industry but helping grow the ford business. >> the iphone 5 is obviously going to be a really big deal. i think the supply will be tight
for several months. it will be hard to keep up with demand. that's a good thing actually for apple stock typically. >> good morn ing. live at post nine at the new york stock exchange. let's get a check on the markets on this monday morning. pretty much a plat line. undercurrents are interesting in terms of individual movers. dow 13,306. s&p down by a point. nasdaq down 15. we did see fresh highs in both apple as well as google. we are seeing strength in some of the financials with the likes of citi and jpmorgan in the green. meantime, hewlett-packard, one of the dow's biggest gainers after announcing the company's plans to play off about 2,000 more workers than previously expected bringing the total plant reduction count to around 29,000 jobs over the next two years. plains exploration down sharply on news the company plans to buy gulf of mexico oil fields from bp. >> the road back for the next hour. rumors of qe-3 looming large
over wall street. we'll explain why qe-3 would be a major policy error. from mark zuckerberg to marissa myer, the biggest names in tech are gathering in san francisco. live at the conference. days after the democratic convention wraps up, the latest poll numbers are showing a huge shift in the race for president. we've got all the latest numbers on what could have been a game changing weekend. it's the event investors and tech gurus alike are waiting for in addition this week. apple's iphone 5 announcement on wednesday. will it push the stock to new highs or leave investors wanting more? we'll talk about that and much more in the next hour of "squawk on the street." we kick off -- >> sorry, simon. go ahead. >> our capital markets editor gary kaminsky. good morning gary. >> good morning, simon. hope you had a lovely weekend. a lot of folks over the weekend, about this discussion we had
last week many times about relative performance. the relative underperformance historical in terms of those that get paid to actively managed money. but, again, there's been a lot of things to be concerned about this year. whether it be the problems in europe, whether it be what's going to happen with the elections or whether it's china or we could go through a whole list of things including the 2013 estimates that are too high. in weekend reading, i came across a chart. let's go over here. take a look at this chart. i'm going to step out so you can look at this, simon. it's an amazing thing. this goes back and takes a look at equity yields. that being the dividend yields of the s&p 500 and bond yields being the u.s. 10-year bond. back to 1871. take a look here. if you look at that green line, you see that for 80 years, from 1870 to 1950 the dividend yield on the s&p 500 was greater than that of the 10-year. beginning in 1950 which also, by the way, was a great period for much of the time in terms of looking at equity returns, look what happened with the dividend yield on the s&p 500 versus the
bond yield. you inverse the relationship. bond yields were greater than that of the s&p 500. to where we are, look where we are right now. before i tell you what this means i've got to point out this is the type of thinking people that get paid professionally decide what to do with equities do. the source of this is a guy named fido. that's his nickname. he was asked when looking at this and thinking about what do i do in terms of investing the rst of the year, here's the bottom line. here's what you need to know. either the world is over or stocks are going higher. why do i say that? it's very simple. as you continue to deal with the relative underperformance and you look at a chart like that and you know that it's highly unlikely, almost definite and probable that the yield on the 10-year is going to go up anything meaningful so you're going to inverse that chart right now, there is the type of thinking that goes into deciding do i put money into bonds, do i put money into stocks?
what do i do the rest of the year? what it basically says to me as i said last week, every dip the rest of the year is going to be bought on relative performance chap up. this chart right now only confirms it. >> gary, thanks for that. see you later on in the show. >> stay here. at the bottom of the hour i'm going to also have another check in with somebody. when everybody was saying sell the -- >> see you later. weaker than expected august jobs report fueling talks of qe-3. would that be the best policy decision? what does it mean for your stocks? cee of principal global investors has nearly $260 billion in assets under management. further fed easing, jim, you say will do no good. will it do harm? >> it could do harm. the basic problem for the federal reserve is they're being expected to wave a magic wand and improve the economy. the fed can do things to increase liquidity. it can't do anything about the fiscal problems which is what
really are holding the economy back. businesses don't know what taxes they'll be paying in the new year. they don't know what public spending will look like in the new year. that high degree of uncertainty is holding back business planning and holing back the job numbers. the dismal job numbers on friday were really a function of the fiscal uncertainty. now, if you look at the fed, there's really a number of things they can do to improve liquidity. but a sharp fall of liquidity is not the problem of the u.s. economy. so they really won't do any good by doing it. furth furthermore, if they come out with full-on qe-3, bond buying, what they will do is inject so much liquidity in the economy it will most likely increase commodity prices. those increased commodity prices further down the road will hurt jobs. so there will be a perverse impact here if they do further qe-3 this week. >> even if the asset purchases are focused on mortgage-backed securities, jim, it would still inflate commodity prices in your view? >> yes, i think so. because what they will do is --
what they would do by those asset purchases is push up the prices. allow investors that hold too many of them to get out. that liquidity will find its way into a number of areas. it would probably be short-term good for the equity market. it would almost certainly push commodity prices up further. gasoline at the pumps would in october and november be higher than it otherwise would have been. that will hurt jobs and hurt small and mid-sized businesses, who are the real generator of jobs in this economy. >> jim, put it into context for us. because in addition to easing from the fed, we could also get some form of easing from the ecb, some form of easing from the pboc and the list goes on. i'm curious. when you're investing along with these central bankers, are you essentially -- say you like commodities. would you be long commodity stocks and miners? how do we express this view in your portfolio in equities? >> yeah. well, firstly, i do think that long commodity stocks is a
dangerous view to be backing on anything other than the very short term. the structural supply position, for example, on metals and on oil is actually quite benign. as a result of the easing we've already seen in the plentiful liquidity conditions, i would argue that those prices are perhaps a bit higher than they would be justified to be on fundamentals. so i wouldn't do that in terms of equity portfolios. but going back to the fed, the things i hope they will do is variations on operation twist. so trying to keep the yield curve flat. and something they really should have done at previous meetings, which is cut the rate they pay on excess deposits from the banks. still 25 basis points. the banks can basically fund for free. there's absolutely no defense for the fed in paying deposits on paying interest on excess deposits. so there are some things the fed could do that would be
constructive. i'd give the further full on qe about a 50/50 chance this week. i'll be disappointed for the longer term if they do it for the reasons outlined. >> shorter term for those that are in the market and may have bought the market on expectation, the commentary that qe was coming. do you think they may be disappointed? what are the chances here that the fed actually isn't as resolved as many of the people that you read are suggesting? >> yeah. simon, it's an interesting point. if what happens is the fed does the variations on operation twist and, as i hope, the reduction of interest rates on excess deposits from the banking system, if the fed does only that and not qe, near term the equity market will be disappointed. but my view remains that the outlook for u.s. business would actually be slightly better in that circumstance than it would be with qe. i think profit numbers for the third and fourth quarters will still be quite good.
i would actually stay in equities. if anybody's short of them, by on a setback if that's what happens. >> all right. jim, we're going to leave it there. thanks for your time. >> thank you very much. all right. to the c mme group, rick santel is there with the santelli exchange. rick? >> thanks, melissa lee. of course, we all were reading translations of german newspapers and of course some of the european papers in english as to some of the anxieties the conservative tranche in germany are feeling. they're feeling bad vibes with some of the bailouts angela merkel seems to be in agreements with. this is simple. politicians can make all the promises and create the best plans. ultimately they need the sponsorship of their voters. this certainly is going to be the big second chapter. we'll get an opening taste when dutch go to the polls on the 12th. crisis, post crisis, do we need more fed programs? i can't get out of my mind how
senator chuck schumer basically pointed his finger when ben bernanke was on the hill a cup of visits ago and said get to work. meaning politicians aren't going to do anything. they're in campaign mode. but the biggest story being a chicagoan today is broken promises. and this really is not just a chicago issue. it's not just an illinois issue. it's a national issue. it gets played out on tv before the nation. we have a huge underfunded liability vote from the teachers' standpoint. when you include firemen and policemen as well. you know, there's a whole litany of other ways to proceed. whether it's charter schools, some of the religious or catholic schools. i knew it was going to be dicy. back in june our mayor, rahm emanuel, who is now going to have to go against his base as many democratic governors have done because the unions are at the epicenter of trying to get some of these deals done. here's what he said in june. okay? he said to anyone who doubts it, every school and every neighborhood can achieve
excellence. i want them to see what i saw this weekend at kris the king jesuit prep in austin. in a neighborhood where less than half the kids finish high school and even fewer go off to college, 100% of kris king's seniors are graduating. 100% of them are going to college. i'm not just picking and choosing. what i'm saying here is the kids have to be the main reason that we improve education. the correlation of violence, which is now going across the nation, chicago is not having a good time. lots of young people are in violent neighborhoods. that seems to correlate with poor and underperforming schools. how many times have you heard me cry jobs, jobs, jobs? but there isn't going to be a job if there isn't an education. and education isn't created on the union side. it's created by teachers. evaluations, pensions, these are all important. but at the end of the day, please, let's not lose sight of what's going on here with all these kids out of school. it's about them. we need to get this thing going. i'd like some day to be able to
stand in front of this camera and tell you that chicago is forming a model for the entire nation on how to improve public education. back to you. >> okay. let's get a market flash now with brian shactman at hq. >> taking a look at shares of intel, intc, weakest performer in the dow today. "wall street journal" heard on the street column basically says the underpinning foundation of the company for so long has been emerging markets. it may not be the case anymore. they intimate that the numbers and guidance could come down even further than it did in the recent past. stock down 2.75%. back to you. coming up next, it is a question that plagues so many internet and tech companies. can mobile ads really make money? some of the biggest names in the business address that question right after this. at optionsxpress we're all about options trading.
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time for squawk on the beat. the tech crunch conference is in full swing now in san francisco. one of the biggest questions for nearly every company in attendance, whether it's a tech start-up or a giant, is can ads on the mobile operation actually make money in the future. jon fortt is live in san francisco with more on that. good morning, jon.
>> reporter: good morning, simon. not quite in full swing. things get started in 45 minutes. still setting up, people showing up. it's interesting, for sure. the underlying context to much of what's going to happen here this week is mobile. we saw amazon last week come out with new tablets. we expect to see the iphone 5 from apple in a couple of days. huge number of units coming out there. and they're going to be looking to build services on top of that. that's what a lot of the start-ups here and the entrepreneurs here will be talking about. the question is how do you monetize that? in a way it reminds me of watching newspapers and magazines try to migrate to the web more than a decade ago. they talked about getting pennies on the dollar advertisingwise. we're seeing that effect in mobile now. folks like mary meeker expecting the money will come because the attention is there. look at facebook. they're trying to figure out how to monetize on mobile ad phone ads. google. android strategy very much about creating demand there. ebay both on the marketplace side and on the payment side very much relying on mobile to
drive that growth. linked in chairman reid hoffman is going to be one of the speakers here today. he's giving a keynote. linkedin, of course, one of the main success stories in this latest wave of social media and online ipos over the past year or two. but there are some others who are also going to be taking the stage. it'll be interesting. ben horowitz, one of the top vc firms backing a lot of the hot companies now. bill campbell, sort of the ceo whisperer, i call him, adviser to many including steve jobs over the years. dave moran, formerly of facebook, now of path. >> for investors how useful do you think mark zuckerberg's appearance will be tomorrow? >> reporter: i doubt it'll be that useful, actually. we'll certainly be monitoring it. i know julia boorstin is coming up and will be paying attention to that. but he's going to focus about
ta product. facebook seems to be very much avoiding addressing investors directly, trying to focus on product in their public comments. >> it would be interesting to see who does the interview at tech crunch and whether or not -- >> the founder is doing it, isn't he? >> the founder? okay. >> the one who bought -- >> wlorhether or not the questi were agreed to in advance. >> can you help us on that, jon? >> i'm sure it'll come up somewhat. zuckerberg has gotten pretty good. i've interviewed him a couple times over the past year and a half or so. he's gotten pretty good about squashing questions he doesn't want to answer. he's probably going to face a friendly crowd and pretty gentle hand from the interviewer. i wouldn't expect too much to get squeezed out of him here, guys. >> jon, thanks for that. see you later. coming up, more on the teachers' strike in chicago. what it means for mayor rahm emanuel. and we are counting you down to the close in europe. about ten minutes to go in the session overseas.
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to rick santelli in chicago with a look at how the u.s. transports oil and petroleum. rick? >> absolutely. my guest reminded me of this story he saw last week. bring everybody up to speed. what did you find fascinating regarding an airline. >> a year ago spring delta air lines brought a refinery in pennsylvania to help them cut costs. they figured round about they'd save about $300 million by owning their own refinery. last week they went one step further. after improoucvements they're o going to buy their oil from balkan shale. it has to come up by rail car,
largely owned by burlington northern. or one-third at at least minimum shipped out. it costs per barrel to ship on a rail car about 15 bucks to get it to philadelphia. pipeline is $5 a barrel. there's going to be pressures there to build more pipelines and improve them from the 1930s design. because they had five districts didn't want to have anything interconnected in case tojo or hitler bombed us. still got to worry about that. the twist is, as delta improves, they're going to save 5 bucks just on buying balkan. where the cost pressure comes in and starts saving them as longer term pressures come to -- >> which would be the pipeline aspect of this. which was turned down by who? >> some politician. i can't remember the name of just lately. >> on pennsylvania avenue. >> yeah. >> here's the real issue. there's almost an accountability issue here. in other words, warren buffett's going to enjoy that spread for a while.
ultimately the more and more oil that gets to its destination is going to underscore the benefits of doing it right, which would be the pipeline. accountability is a big word in chicago, period. let's talk about the accountability of the public school system. you were talking about some issues. you know, evaluations. it just seems to me to be a no-brainer. i know this is going to be a tough one via the unions. what's the total compensation disparity right now on this deal? >> what they're looking for the in the open negotiation, last i read, probably have it wrong. but the last i saw was about 19.9% hike over the last contract. >> that includes benefits, salary and everything. >> the whole thing. >> right now evaluations are the sticking point. i think we have breaking news. melissa lee? >> yes. got to get to diana olick with news on fannie mae. >> that's right, melissa. we have the first winning bidder in the government's reo, forclosure bulk deal sale program from fannie mae. pacific company based in san diego, california, a privately
held real estate investment manager has won that first deal for 699 foreclosures in florida that it bought for $81.5 million. what's really interesting about this first deal, it's part of the big pilot program, they paid 95.8% of the recent value of these properties. so the fhfa, conservator of fannie and freddie, the government got a pretty good deal selling these properties to pacif pacifico. this bulk launch program was launched in february to sell 2,500 foreclosures on their books to investors. a very long process. bidding very difficult. a lot of investors we've spoken to and reported on have said it was a very difficult process. finally got the first winner and first closing on 699 florida properties. 2,500 in the pilot program. we'll see who gets them next. really interesting for the market to see they got that much of the value. 95.8% of the most recent appraised value on these homes. back to you guys. >> diana, thanks for that.
the bells are about to sound across europe. we've got the close on the other side of the break. stay tuned. oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
seconds left of the european session. simon hobbs to close. >> interesting. 30 seconds to trade now. a big week in europe, not least with the german constitutional court due to rule on wednesday about whether or not the esm, the new bailout mechanism, is constitutional and whether the new fiscal compact is
constitutional. and, ok, goldman sachs jim o'neill suggesting on cnbc he does believe, actually, germany will go to a referendum ultimately on that issue. >> the european markets are closing now. >> having said that, most people in europe think that we will get through that constitutional ruling. therefore, the markets will stay along without any great difficulty. interesting more americans seem to worry about it than arguably they do on the ground there. today is an interesting day. as we await the constitutional move, the big question for many is whether, indeed, italy or spain will come forward now that draghi laid out the plan and request a bailout that could lead to the ecb intervening in their bond markets. maria bartiromo importantly has an interview with the italian prime minister that she recorded in italy in late -- on the edge of late promo. he told her because we appealed to europe to set up new mechanisms that could help
countries in difficulty doesn't mean to say italy will necessarily apply. take a listen. >> under the current -- i believe what italy is doing in terms of domestic policies, both budgetary -- i mean fiscal discipline and structural reforms should be enough to reassure the markets. >> and you can see that interview tonight on "closing bell" with maria. in the meantime, italian yields moved substantially today. obviously down in the wake of all the action we had from mario draghi at the end of last week. more of a move ultimately on the spanish. here we go. 5.18 is where we are on the italian. spanish 10-year yield today we continue to have the market rallies there. we, of course, fell below 6% on friday. today another big move down, 32 bips as you can see. a look at where we are. equity markets relatively flat in europe overall. still some of the banks have rallied. commerce bank, deutsche bank, of course, tomorrow is going --
where the two co-ceos lay out strategy. that's important for people in new york disgruntled that the libor scandal hit there. an important one to watch tomorrow. we've spoken a lot about china on the program today. see some of those mining stocks rising in london. they are off earlier highs. greece is getting very interesting. troika arrived in athens over the weekend and rejected the $12 billion -- 12 billion euros of cuts on the ground there from the coalition party. the negotiations appear quite tense there. what is interesting, and this may have to do with the sort of comments we had out of the germans again over the weekend suggesting that a greek exit from the eurozone is not palatable, not what berlin wants. it's the degree to which some of the greek stocks again today have rallied. again, off our highs. the national bank of greece has done well. a lot of the banks in greece are
doing well as people get more optimistic about the stability of the country within the eurozone. if you have a look at where we've traded on the greek stock market recently, i keep showing you how european equities have rallied strongly on the wake of draghi. the top 50 blue chips in europe over the last month up 4.5%. look what the greek market has done. up 17%, melissa, as people place their bets as to whether greece will exit or not. back to you. >> what a run. simon, thanks for that. a check on energy and commodities. sharon epperson is at the nymex. >> hey, melissa. let's start with oil prices which really seem to be caught in a catch- .22 here. traders looking at the fact that the saudi oil minister talked once again about market fundamentals not supporting oil prices at the current high prices. also getting soft data coming out of china, out of japan, out of italy. of course the u.s. jobs data very soft as well. will this mean that we'll see some type of stimulus action taken by central bankers? well, that's what puts oil in a
catch-.22. slow growth versus possible qe. we have oil prices fluctuating in and out of positive territory. gold and silver relatively steady here. we are waiting for the fomc meeting and decision on thursday. that's going to be key to the markets as well, of course, as that german constitutional court decision that will come on wednesday. palladium seems to be the standout in the commodities sector. we have car sales, chinese car sales helping that. it's been a six-day run in positive territory here for palladium. getting a lot of good etf action as well. back to you. >> that's for sure. all right. >> let's link in with bob pisani and this market doesn't seem to be going anywhere particularly today, bob, after last week's big gains. >> we started -- they tried to take them down very early on. they really weren't successful. i think the fact that we're just holding in there after the gains of last week is really important. let's look at what's -- can the rally continue? that's all anybody wanted to talk about in my e-mail over the weekend. might as well address it. the two issues. what's the two issues that are sort of weighing on the marketing with holding things
back? the first is the euro breakup worries and higher funding costs for them. second is a weaker macro environment. obviously the market believes there's some kind of progress being made on the first issue in europe. the second one, i don't think so. europe is till week. numbers out of china over the weekend are pretty poor. import and export numbers. one of these two has been addressed. the important thing is a lot of the market seems to be paying catchup. risk on of some sort is definitely back here. take a look at some things. look at the s&p 500. i was getting to the point that simon was making. they tried to take them down. normally if you're successful you stay down here for a while. immediately the market kind of came back here. that's the important thing. they're not successfully holding stocks down. that's because a lot of stuff is still churning below the surface. let me show you a couple things getting vom yum today. metals and mining etf. people are desperate to get into basic materials after underperformance for a while. this is one month. you can buy these. all the metal and miners in the last few day.
look at that. they're up again today as you can see 1%. take a look at some stocks that are in this. cliffs natural resources. iron ore makers. iron ore pel let makers. nobody wanted this. 18 analysts, six of them lowered the price target in the last month. stock was at a multi-year low. look what happened in the last few days. the volume, you can't see a volume chart here, but the volume went through the roof. all the analysts kept downgra downgrading the stock. suddenly everybody wanted to own it last week and everybody got caught and had to start buying in on the stock. up another 3% today. nothing really happening there. but people want in. this is what i mean about people playing catchup. take a look at the russell 1,000 value intex. fancy words for stocks underperforming for a while. on the growth side. look at this in the last couple of days. the biggest thing here, financials and materials. people were desperate to try to get into the market and owning stocks that are sort of lower growth names or undergrowth names. the value sector.
those are financials and material stocks very big in here. also energy stocks, also very big. you can see volume is heavy here in these group. even on a day like today. >> bob, thank you. time for another check with capital markets editor gary kaminsky. gary? >> playing catchup. melissa, did you watch the jet game yesterday? fisher and i were talking about how great the jets looked. >> you know i didn't. >> congrats to the jets. if carl was here i'd say congrats to the broncos. denver broncos looked good yesterday. speaking of denver, a little to the west of denver, you know that mystery trader out of aspen who has given us great insight into the s&p. a number of you asked me last week what his current thoughts on the market are. obviously very bullish in may when many people were telling you sell in may and go away. there was a communique this weekend which started out with i'm keeping it simple these days because i'm not that smart. i put it into the prompter because i wanted to read verbatim. he thinks stocks are extended now. in a three to four year period the s&p 500 is going to double
as investors who sold below 1,000 on the s&p get sucked back into this rally. today's bearishness is the mirror image of 2007's euphoria. there was so many downside risks then and so many upside risks now. virtually no one can see them. instead global investors hide in t-bills with negative yields. he expects eventual bond market losses will make the '08 stock wipeout look trivial. how will these losses harm the economy? that's tomorrow's problem. besides, as he says, as you know, i'm not that smart. i have no idea. the point here is very simple. i showed you at the top of the hour there was this. bob pisani just focused on this as well. there's a real feeling out there, melissa, the rest of the year every dip, you saw it earlier today, is going to find buying. i don't know if the s&p is going to double in the next three to four years. but i'll tell you, betting against this guy really since i knew him in junior high school has been a mistake. i just want people who wanted to know what he's thinking now,
that's what he's thinking. >> yet, gary, there are a lot of people -- basically he's -- it's a discussion about whether the equity culture is dead. there are a lot of very powerful people who fear that it might be. >> again, you know, a lot of those people, simon, and i pointed this out a number of times, they have somewhat of an agenda giving big macro statements like that. equity is dead. remember, go back to that chart. maybe we'll put that chart that i posted earlier in the hour, maybe we'll put it on the website so people can go back and look at the difference between equity def dend yields and bond yields. go back to 1871. pretty compelling story as to what might happen as the lines are crossing now. >> thank you very much. we'll catch up with you later. market flash now from brian at hq. >> we're taking a look at transocean, rig. riggers is reporting they're discussing with the government a $1.5 billion settlement over the gulf oil spill. one headline. second headline, they're selling about 38 of shallow water rigs for $1 billion. street seems to be a little bit
disappointed with that price tag. stock off its lows but still down 1.75%. back to you. >> thank you, brian zbrnchts straight ahead on the program, why this weekend may prove to be a game changer in the race for the white house. we have the brand-new polling numbers and you might be surprised. so anyway, i've been to a lot of places. you know, i've helped a lot of people save a lot of money. but today...( sfx: loud noise of large metal object hitting the ground) things have been a little strange.
♪ coming up in just a bit on halftime, stocks at multiyear highs and on edge ahead of the fed. the play as this big week gets under way. hedge funds raising stakes on commodities. should you follow the trend? is china setting up for a fourth quarter rebound? one of the most respected strategists on the street says the slowdown is coming to an end. see you in about 15 or so. look forward to it. both political convention are over now as you know. latest poll numbers show that if the election were held today president obama would actually come out on top. chief washington correspondent john harwood joins us with the details of these latest numbers. john? >> reporter: melissa, there are a couple bits of good news for president obama this morning. one is in the money race. we saw numbers for august. both obama and romney and their parties raised more than $100 million. but for the first time in a few months, obama actually raised a little bit more than mitt
romney. just a few million. it's not going to be all that important. money is not likely to decide this race. the more important thing is to look at the bounce from the conventions. if you look at a couple of polls, they're all going in the same direction which is a good news for president obama in a race that hasn't moved very much. take a look at the gallup numbers. monday, august 27th, the day the republicans began their convention, although it was washed out by hurricane isaac, mitt romney was leading 47% to 46%. now the gallup poll shows 49%, 44% for obama. that's a movement of six percentage points. that was as of sunday. we haven't gotten their numbers from today. look at the rasmussen poll. a robocall poll done with a different methodology that tends to lean a little more republican. they had on monday, august 27th, a three-point lead for obama. now they show a five-point lead. the most important thing is that they're moving in the same direction. this bounce could fade. we're going to find out.
we're going to have an nbc/"wall street journal" poll next week. but the indication now, guys, is that president obama has actually succeeded in those conventions at opening up a margin and we know from history that it's difficult for challengers to erase margins that open up in september. the debates are an opportunity for mitt romney to do that. that may be his last big opportunity, guys. >> why do we think that's happened, john? >> reporter: i think the reason it happened was republicans had some setbacks at their convention. clint eastwood. that sort of thing. secondly, the fact that the democrats had their convention immediately after the republicans let them step on romney's bounce. he did get an initial bounce of a couple of points. then you have the democratic convention. spectacular performances by michelle obama and bill clinton. president obama got less stellar reviews, but still a solid speech. the totality of that message, when you had romney, his goal was to make people like him
better. obama was to try to address the sense of disappointment many people have. from these initial numbers, they could fade back, it looks like he's done that. at least a little bit. >> john, both of these polls were done after the jobs report on friday? >> reporter: the gallup poll, melissa, is a seven-day tracking poll. so it had results from s days. only friday and saturday in that poll was after the jobs report. the rasmussen poll is a three-day tracking poll. so it's numbers included sunday, saturday and friday. so, yes, the rasmussen poll included the jobs report numbers. >> that is the one that showed obama in the lead. all right, john. thank you very much for that. appreciate it. teachers in chicago are on strike today in the city's first school shutdown in 25 years. mayor rahm emanuel saying he will push to end the strike quickly and get the 400,000 kids back to class. but it could be a tricky challenge. cnbc's phil lebeau is live in
chicago with more on that. phil, it's a big day for ewe you guys. >> a huge day here. a lot of people in chicago are watching the next couple of days to see if mayor emanuel can thread the needle here. because they're close in terms of resolving the issue in terms of pay. they're looking at somewhere between a 16% and 19% increase in pay and benefits for the teachers. that's not the sticking point. both sides say they're pretty close there. the issue, simon and melissa, comes down to whether or not you hold the teachers accountable in terms of testing for students. as well as giving principals more authority to remove those teachers who are low performers or who are not making the grade. the teachers union comes back as it has in the past and is doing again, saying, listen, that's not fair to hold the teachers accountable when many of the students are facing issues dealing with poverty, dealing with hunger. for mayor emanuel he's trying to hold tough against the teachers union and saying, listen, you need to be held accountable. yet at the same time, he wants to get these students back in school as quickly as possible. guys, as you know, we've been reporting for some time. it's been a rough summer here in
chicago. a lot of violence. murder rate has soared this summer. and if you don't have these kids in school, the concern is you are setting yourself up for some real problems here in the city. that's what mayor emanuel's hoping to do at least in the next couple of days. i'm not real optimistic based on the history here in the city. >> wow. all right. what a situation. phil lebeau, thanks for the update. coming up next, from facebook to apple. this week is a huge one in the tech world. will mark zuckerberg be able to convince investors facebook is worth their money? can apple hit $700 a share? we'll discuss that and much more right after this. [ male announcer ] at scottrade, you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby,
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one thing's for sure. it's already been a busy month for tech with announcements on new product launches from nokia, amazon, motorola, even toys r us. anticipation is now building, of course, for wednesday's expected apple iphone 5 launch. here to sort through it all with us is dennis berman, marketplace editor at "the wall street journal." dan ackerman also joins us. senior editor at seen it. let's talk about zuckerberg, first of all, guys. in particular i'm wondering, dennis, if now might be the time to cover shorts on facebook. given that he's going to talk to tomorrow.
because your colleague shchandy rice had an article out a couple weeks ago told staff the market didn't understand the sort of product launches they had up their sleeve that would justify the lofty valuations that facebook had previously been put at. do you think that maybe tomorrow is the forum in which he unveils what those might be? >> that's a really good point, simon. as you like to say you don't like to make predictions on where stocks are going. facebook has to show something, some progress, particularly on the mobile side of things. right now we're seeing such a behavioral shift. you see it every day. people talk about it on cnbc. that behavioral shift from the pc to the mobile device. the problem is across facebook, even across twitter, monetizing those possibilities. it's just proven quite difficult. i think you can expect a bump when facebook really announces a full mobile suite, a full mobile product. but as of right now, we really haven't seen that. he's only appearing for, i
think, 25 minutes at the facebook -- i'm sorry. at the tech crunch disrupt conference. not really the venue for a real product launch. i probably wouldn't expect it coming tomorrow. >> it wouldn't take him long to say i've got a new button and it does this. what do you think, dan? >> i'm a product guy. i love when companies make cool products. as long as i can remember we've been urging companies to take a long-term strategic view rather than short term. i feel like this is what facebook and mark zuckerberg are doing but now everyone's getting on their case for it. they could do better in mobile. they did spend $1 billion buying instragram. if they can integrate that properly they've got the hottest mobile thing going. they have to brand it into something facebook branlded. >> dan, i can understand why you want to take a long-term view. to suggest that people are on their case, isn't that inevitable when you've lost $50 billion of value? to get on their case? >> that's true. but the company, they sold their stock at i guess what the market high is for it. i think they did a pretty good job. >> well, simon, i think you make
a really good point. facebook has to show results. it has not shown real results. we've seen the growth rate in the u.s., even domestically really slow down. this was a growth story. until we see real movement on the mobile product, i think facebook stays where it is. dan, you really think it's any different than that? >> no. i agree we kind of hit what the natural point is for that now. facebook used to be the very young, very hip thing. now it's institutionalized in a way. they have to make a bold move to recapture the energy. >> simon, to your point of is this going to be the venue where he launches it, i would think generally not for the reasons i said. hey, you know, he likes to do things a bit unconventionally. i think it will be interesting to see his attitude and approach to the people asking him questions. is he going to wear a hoodie, is he going to show the respect and so. that to me is more interesting from a soak sociological point
view. >> when you said you believe facebook has turned more institutional, in which time frame did that happen? did it happen during the road show? when did that transition happen? i'm just trying to understand. >> i think in terms of the audience. when it went from college kids only to people who were older. those kids graduated from college, went into the work force. >> when your grandma had an account? >> once that starts happening it's not the same company anymore. still very ubiquitous and very useful. they've crossed the threshold where it's more trouble to get off facebook than stay on it. it's used for messages, photos, events, sharing. they have that built-in hook into people. >> dennis, if that is the case, if facebook is no longer seen as cool and has all these problems, it seems like it's got so many headwinds. the one thing facebook seemed to have going for it was that everybody wanted to be on it. and the perception was that that was where you had to be. now it's according to dan, it's passe. it's so last year. >> you have to be careful about
understanding how the company is growing and what the stock expects -- what the stock market kpmts of it and what the company itself has become. the number of users on facebook is an undeniable force. should facebook get it right, i think there's great opportunity for the company. but it has not. actually, i'd say the company that's actually i think getting it right more so than facebook is twitter right now. if you look at how they're doing on mobile ads. they're really doing a nice job of monetizing things. >> i'm not sure that a bunch of people in their late 30s are able to make these judgments as to what is cool or not. >> speak for yourself. >> guilty. >> i will say, looking at a twitter, how they have really kind of pushed things on their developer community, done things that are unpopular, when i look forward in terms of successful business model, simon, i actually put twitter ahead of facebook in terms of efficiency and ease of use. >> you wouldn't be on your own, dennis. dennis berman, dan ackerman,
thank you for joining us. up next on the program, we put the spotlight on president obama's iphone fumble. oh, yes. on cnbc. in communities across the country. whether it's supporting a delaware nonprofit that's providing training and employment opportunities, investing in the revitalization of a neighborhood in the bronx, or providing the financing to help a beloved san diego bakery expand, what's important to communities across the country is important to us. and we're proud to work with all of those who are creating a stronger future for everyone. trading tools for all. like our all-in-one trade ticket. we put strategies, chains and positions all on one screen.
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