tv Squawk on the Street CNBC July 11, 2013 9:00am-12:01pm EDT
by the time we get into the early part of next year the economic environment especially around the world will look better than it does right now. >> we'll talk more -- today we really need to get out on time because you will just be so upset. >> you'll be taking more of my time. >> exactly. >> make sure you join us tomorrow. "squawk on the street" is next . >> the dow is set to open its all-time closing high as the chairman speaks real slow and soothes fears about monetary policy. welcome, welcome to "squawk on the street" and i'm carl quintanilla with jim cramer and nice to have jim back from vacation and the timing could not be better. as you know, on squawk, he'll join us from hq in a moment and take a look at futures. bernanke has managed to make stock bulls happy, gold bulls happy and the ten-year settling back to 2.57 earlier this morning and gold back to almost at 1300 and its highest since
june 24th and then there's oil, wow, up 16% in two weeks and we'll talk about why you should expect sticker shock at the gas station in a few moments. first up, as we said, the dow closed yesterday's session up 118 points and that's back from may 28. futures indicate we are likely to open above that level and charge toward the intraday high of 15.542. this coming on the latest message of monetary policy delivered late yesterday. >> the dual mandate is to pursue maximum employment and price stability. currently, zee an unemployment rate of 7.6% which i think if anything, overstates the health of our labor markets. on price stability, inflation is 9% which is below our 2% objective and so both sides of our mandate, and both the employment side and the inflation side are saying that we need to be more
accommodative. >> all right, jim. let's kick this off here. a, let's just talk -- welcome back. >> oh, thank you. >> we're going to talk about your vacation a little bit later. our faces going to get ripped off today? >> it does feel like that. there was another one in chicago, rick santelli who didn't and the reason why that's important is bonds are traded out there, and i think a lot of people were ready for interest rates in the ten-year to go to three and they're being pulled back. so suddenly the bond equivalent trade is back on. we sold that yesterday and the drug stocks started doing better and meanwhile, we can start saying wait a second, mortgage rates and maybe there was a spike and maybe the applications will come back and i think if you get something for everybody, then what happens is people that are short who went the wrong way. >> you in general don't like big, up opens. >> no. and we are facing some that look
at the dow inflation adjusted and looking at key resistance levels and that kind of thing. >> i don't like the fact that the big bank earnings are tomorrow. >> speaking of which, one of the most powerful business leaders is coming to "squawk on the street" tomorrow on our program. cramer will have a live interview with j.p. morgan's jamie dimon live at the new york stock exchange. of course, after the banking giant releases its earnings report in the morning and that's tomorrow at 10:00 a.m. eastern time. that's big, jim. >> it took two and a half years to make half and in another two and a half years maybe he'll it will be on every corner. it's a long time coming and i am very excited about it, and i think we're going to deliver. >> can't wait for that tomorrow. >> thank you. >> let's get to john ford and we have numbers back at hq. >> carl, that's right. microsoft right now rolling out the news of its reorganization. here's how they're doing it. the idea is for microsoft to be more one microsoft, less
organized around business units and flattening out the organization. you can read this as steve ballmer taking a more direct hand in trying to move this company more quickly in mobile and cloud. here's how it breaks down. three -- four engineering groups now that this is organized around, one in operating systems, windows, windows phone, xbox and terry meyerson will lead that group. the cloud and enterprise group will be led by satya nadala that existed under the previous structure and it includes data center management and that had been part of online services and key lieu was previously over online and he now gets office, as well, that huge business that was part of the business division. also, there's devices in studio, surface xbox, et cetera, mice, keyboards, all of the hardware
and that's going to be an engineering group also. now pulled out in this, no longer part of these engineering groups functions like marketing. that will be tammy reller leading that across the entire company. evangelism and business development and the outward facing product of microsoft and working with customers and tony bates who had been leading skype financed across the whole company will be led by amy hood. there won't be any changes to things like legal and hr. this can be seen as the meat on the bones of this devices and services approach that steve ballmer had been talking about. so much for the past few months and this is how microsoft intends to present itself to the developers and folks that it's trying to coax away from the apples and googles of the world to have taken such a stronger hand in computing, carl. >> interesting. the early take on this, jim.
john, stick around is that they're trying to smooth out what has been a very political organization, and a very siloed organization. >> and there's something interesting here and in a piece by karen swisher and one microsoft, ballmer wrote this, where do we hear that term? one ford, who did ballmer meet just ten days ago, two weeks ago? allen mulally from ford, where did ballmer's dad -- i think balmer is taking a page from ford, and i think it works. >> interesting. john, it comes on a day when pc shipments around the world, down five quarters and that's never happened. pc world, the bible of the industry losing the print element. it's happening at a tough time. so much has changed. >> a lot of water to carry. >> so much change, carl. when i talk to ceos particularly around silicon valley, they talk about how you have to reorganize your company based on the time.
sometimes when you're kind of on top of the world you've won the latest battles and it makes sense to organize into business units and let those products like windows and office have a lot more autonomy, but in a time when there's change when you need it retool your strategy it makes sense to flatten out. you can argue microsoft should have done this a couple of years ago, but given what microsoft is facing a lot of people would say this makes sense. >> favors back at hq. >> all of that said for those who have taken a fly or the stock below 30, they're feeling good about it now. >> i am so glad you mentioned that, carl, because those have been the keys that we've been following. it it may have been april and i was at an activist convince and they took a significant stake and a very small percentage of microsoft's market cap and a $2 billion position, roughly and that stock has never looked back and you can see that move from april of this year, significant
accretion of market cap. apart from all of this people should keep in mind that you do have the activists in the shares and you have the meetings back in august and what pressure, if any, has been applied if any because the position of ownership by mr. gates and mr. ballmer not nearly as large as it once and was you do wonder if there's been a dialogue and this is another example of where they're trying to do things to either forestall potential criticism in the future or respond to it. >> something else i want to mention that folks like us will pay attention to and certainly a lot of investors. i do expect that at some point this will affect the way microsoft reports its numbers. they have been, of course, reporting things by business unit. microsoft will be required to report numbers based on wait the ceo looks at the company. ballmer's looking at the company differently now. i'm not clear yet on how that
might change microsoft reports, the intelligence i'm getting is we won't get microsoft earnings at some point, any changes in the way microsoft reports its numbers, we will get those defames. >> one of the thing zees to watch been. >> heather bellini downgraded the stock. people were positioned and the stock was at 27. which of these people has to change their mind at 35 and get onboard and uses one microsoft as the reason? >> that's interesting. because when the rubber meets the road, the bulls argument is there will be changes to capital allocation to shareholders, right? much more aggressive on dividends and buybacks. >> with the new cfo in place that's the argument, right? >> yes. also remember the entertainment
division which i think is chronically underrated. they have almost twice the number of people on netflix. the entertainment division could be unlocked here. look at amd upgraded today. why? because of the huge xbox splurge. this company is undervalued and i am a believer in ballmer and wait a second, jim. he was your buddy at college and totally true, and he has a legacy to preserve here and david and i have gone back and forth, but i do believe his legacy is at stake and i wonder what they're saying at hp, and you do have to change the conversation if you're microsoft and do you have to if you're hp or dell, and lenovo. they take margin out of the business with every single pc they sell, carl. that's kind of where that's going and microsoft certainly moving in a different direction. many have already pointed to enterprises being the key here and certainly being perhaps
undervalued and the perception of investors perhaps with this change that will no longer be the case. >> it was like being in my 30s. it's hypnotic, and you can't look away. the producers did a good job including the cinema thing they were doing that made it look like everybody was right back. i love that show, and i love that show, and i miss you here. >> i'm sorry i'm not there with you guys. i was mesmerized by kern in's hair from the '90s. like flintstone. it comes out this far. >> i think we need a new tweter, like avatar and it was kind of like a before and after or whatever. >> by the way, guys this marks
the two-year anniversary of "squawk on the street" as we know it. david, you used to join us down there, and now you join us down here as we prefer it. >> i love working with you guys and this has been a fantastic run. >> by the way. as we mentioned tomorrow on this program, cramer, a live interview with j.p. morgan's jamie dimon right here at the nyse, 10:00 a.m. eastern time after their earnings come out and don't forget that. goldman's chief equity strategist in the u.s., david kostin doubling down on his target and we'll talk about what he's expecting from earnings season and what that does for your money. take one more look at the futures and the potential 150 to the upside above the record close from may 28. a lot more "squawk on the street" live from post 9 in just a moment.
wi drive a ford fusion. who is healthier, you or your car? i would say my car. probably the car. cause as you get older you start breaking down. i love my car. i want to take care of it. i have a bad wheel - i must say. my car is running quite well. keep your car healthy with the works. $29.95 or less after $10 mail-in rebate at your participating ford dealer. so you gotta take care of yourself? yes you do. you gotta take care of your baby? oh yeah! the last thing i want is to feel like someone is giving me a sales pitch, especially when it comes to my investments. you want a broker you can trust. a lot of guys at the other firms seemed more focused on selling than their clients. that's why i stopped working at my old brokerage and became a financial consultant with charles schwab. avo: what kind of financial consultant are you looking for? talk to us today.
bernanke's words yesterday leading to a rally yesterday. we look to open up 151 and keep in mind the dow 15,409 is the record close from may 28th. meantime, julia boorstin in sun valley catching up with a name we know very well on this show, john malone, talking some consolidation. good morning, julia.
>> reporter: that's right. we just spoke to john malone and he's push for example major consolidation in the cable business. >> in the u.s. cable business we're making the observation that it would be nice to see other than comcast. comcast is large enough to, i think, do okay. the rest of the industry needs more consolidation, in our view, in order to get more skilled economics and that's kind of what i've been saying. >> malone who owns 27% of charter says it it can be done via mergers and joint ventures to help cable companies get things done. malone says time warner cable should be done, and they're the other obvious names at play here and he could be looking at smaller, regional assets. malone says he's focused on cable because of a growing demand for high-speed broadband and he says the cable industry is the primary deliverer of that connectivity and that's the
value. david? >> at least if liberty owning 27% of charter and they want charter to be a consolidator and it is unclear how they can get the shareholder base of time warner cable to agree with them, but they'll keep talking about it and he does believe in the power of broadband having spoken to him, i think it was back in april for quite some time. interesting. you should watch out for malone meeting with gordy crawford and i don't know if he's meeting with capri, and they're large shareholders? time warner cable and that's got to be the key connection. >> can malone tell the shareholder base, that yes, the charter can issue enormous amounts of stock and they should let us do it. >> and david, time warner cable has tried to rebuff him, but it it sounds like he is still pursuing time warner cable and if that doesn't work out it
looks like he'll look elsewhere to cox or cablevision. >> when they look at cablevision and are they ready to sell? >> julia, thank you. interesting story that we'll keep watching. >> absolutely. thanks, julia. >> i don't know if you saw this op ed, charles schwab, founder of the brokerage firm baring his name has an op ed in the journal about why they believe individual investors are leaving stocks. high frequency traders gaming the system and glitches and errors like the flash crash and policy uncertainty are giving investors cold feet. their solution? make it easier for employers to offer savings plans to employees and encourage market-based innovation and educate america's workers on how to maximize retirement plans and fascinating piece from a man, who may be no better source on why retail america is afraid. >> couldn't agree more. why individual investors are fleeing stocks. why? because this man is not afraid of the industry. this is a ground breaking piece
because what he's saying is listen, you have to pair back the high frequencies. >> you and i have talked about this and david talked about it, but the industry does not. this man broke the whole mold when he started. i remember my first account when i remember doing business with schwab. he is coming back and he is saying, stop it. listen, sec, stop it! you've got to get in and solve things. he's a brave man and always has been and he's a pioneer and always has been. >> he goes into why high frequency traders locate their computers closer to the exchange to shave off that extra, and just that extra time between their computers and the exchanges. flash crash, facebook, sandy. the twitter ap hack. he names it all. >> there should be better iras. and eamon javers is worthy of pulitzer reporting. this is why javers is writing
these pieces because there are some people that get an edge. i know this is con ro veshl and i'm not kidding, but i have to tell you, charles schwab. he's about you. he's about the individual industry. >> because he always has been, jim and let's not forget where he's coming from. do you remember when schwab's market cap was larger than that of merrill lynch for a brief time? >> i remember when goldman debated buying schwab. >> those days are long gone. >> david, you have to hand it to the fact that there is someone in the industriy that actually is willing to speak up on this stuff. everyone, once the high frequency business. you're right. he wants the individual business back, but at the same time, everyone else seems to be cowed by the hftc guys. >> it's an important read in the journal today. cramer, as you can see, back in the starting blocks, he's got money-making advice for you next in his mad dash. one more look at futures in less than ten minutes. squawk on the street from the nyse straight ahead.
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♪ ♪ ♪ ♪ amd ahead of this upgrade today. you want to do that first? >> sure. when you get the wholesale switches, bank of america going from a sell to a buy on amd, that will catch a lot of people going the wrong way. this is all about gaming, consoles. amd is expanding beyond pcs and we know pcs are challenged down 10%, 11%. this stock will go higher and the $6 price objective for merrill, i think it works. >> how do you know who is best leveraged to the migration of
the chipsets into different places and elements? >> great call. i think the answer is when you look at this entirely, when you look at ps4 and microsoft xbox 1 those are not intel machines and that's why this one works. those are just other machines that are wildly popular. people forget -- younger people still play games on consoles. >> yeah. it's a huge point. what's the celgene news today? >> oh, my! it looks like celgene will go back. they have good data on multiple myeloma which is a cause you know well. bob came on "mad money," the stock had to pull their application. the stock went down 11%. he came on "mad money" and said we will be back. the stock has not only doubled, but i think his application will be accepted in europe for frontline. maybe it doesn't go in a straight line, but it does go. >> do you think to the degree it ever witness away the celgene trades and the trades are as
high as they have been. >> it start at 51 and goes on 55 on no real news, but it's just terrific. regeneron, one of my absolute favorites. this group is back on fire and a terrific group to buy when interest rates go down. >> yeah. interestingly, but we have a couple of extra seconds. for instance, yesterday we had best buy getting taken to the wood shed. it's been doing great all year. does that happen to all of the names that have outperformed at some point? >> i think the analysts and everybody is so used to getting beat around the head. they love declaring victory, but you know what? this market doesn't want a declaration of victory yet so they're on the wrong side. the armistice is being declared too early. >> we'll watch all of those names a few minutes before the bell. >> cramer's mad dash and when we come back, fasten your seat belts. the opening bell is just minutes away.
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foreseeable future is what's needed in the u.s. economy. ben bernanke, yesterday afternoon. >> i will say this, people want to criticize him, how's europe doing? they're not accommodative enough. how's latin america doing? they're not accommodative at all. how's china doing? they're anti-accommodative and we have one economy lifting the world, and it's the bernanke economy and he's doing the right thing. >> some say he's playing on another level and some say he didn't say anything new at all and he just pounded the message home one more time. >> i think he said something new. i think he said, listen, without buying a bond back he has moved interest rates 2.6, 2.7 back to under 2.5, and he didn't buy a single bond. this man is the most powerful financial figure in the world. he did it right. >> what do you tell traders who are frustrated that their strategies are being controlled by what some call a centrally planned on on. >> i say, hey, listen, go make
some money. stop belly aching. he's letting you make money. i've never been against making money. i've always felt it's a plus. >> with that, let's get the opening bell and get things started on this day where it looks like we'll open above the all-time closing high for the dow. there's a look at the s&p, and over here at the big board, volunteers of america of greater new york collecting backpacks and school supplies for children in new york city shelters. at the nasdaq, tumblr, a media network, you might have heard of them celebrating the recent acquisition by yahoo! , and tumblr yahoo and ceo david carp doing the honors over there as we continue to watch with sun valley going on, jim, just what kind of m & a might be soon. >> it is probably the only m & a going on and david faber, you've been going. the dearth of deals versus ipos is interesting and not exactly what you thought would happen at this stage of the cycle. >> we are now past the half way
mark of the year. this year will not be a good one for them, i have to say, jim. as you say, one area that we started to see is these broadcast stations and the tv stations. a lot of those deals and the consolidation there, and there's hope for consolidation and cable and we'll see whether john malone's hopes are ever realized and then you've got all of these splits, jim. yesterday it was tribune and we'll get another pure pay publishing company and soon we'll have time out there and not to mention news corp. and i don't know if you want to take a shot on any of these things. the journal says if the tribune move goes well it might spur shareholders to say maybe you spin that off. >> and it is another name, too. >> you want to know which one's the best in terms of percentage basis, "the new york times." look at that stock! holy cow! you talk about a stock going
from 8 to 12, they could be doing a lot. the boston globe gets sold, david it looks like what they're doing is they're making up for their since, this industry. they're giving us something to own. >> listen, at some point they're going to get digital right. i have no idea when that will come or what the margins will look like in that future that is almost here, jim and that's got to be the key question. investors will have a lot more to choose from. i don't know if that hurts the new york times as a potential destination for those that want to play the digital transformation. when mayor bloomberg buys it, i'm sorry, that's just conjecture. this stock has been way too strong for him. >> that's an interesting point, jim upon. the salzburgers, would they ever sell and give up control? maybe it's possible, and i think you're right, if that were to happen, bloomberg's buying that thing. >> the dow is at 15,440. if the dow were to close right here it would be the highest close in the history of the dow
and we still have more to go before we get to the intraday and that's 15,542 and the breadth is uniformly positive, yum refusing to put a green print up after sales in china down 20% and it did beat by 2 cents. >> right. i have faith in david novak, and i would be a buyer of yum and not a seller and i have to do more work because of the conference call. you know what's so interesting? oil. remember when we used to sell anything and oil was up? we have a situation where now people think oil's going up because of demand. watch the met willals, too. without china getting better, the metals complex is going up. is it just playing catch-up or has something happened in worldwide demand that we have to notice? >> here's a question. does consumer discretionary is up 11 sessions. 7%, that has to end, right, if crude is really at 105.25. the animal spears and people looking the wrong way. david, i've got to tell you and
this is one of those moments where i'm so glad i saw you down there doing the retro squawk, because this is what it used to be like, do you remember? and we had the key to this market. there were the keys to the market, celgene, netflix and this is a key to the market moment. >> i like to hear that, jim. those were good days and good days in a lot of ways and certainly for the equity market which is we've been having lately. oil is confounding, i have to admit. you do wonder there, jim, what that's trying to tell us and i'm glad you're trying to figure it out. >> a lot of traders saying because the wholesale inventories are collapsing and look out for sticker shock as soon as this weekend. it could be. look, we are pumping oil back at the level of 1992. eagleford and balkin are bigger than prudhoe bay in the 1960s, but we are exporting more refined product than ever in part because it's hard to get to the markets and it's a jones act issue, a very complicated issue,
but we can't get it by boat to where it needs. if everyone knew how much we are exports in gasoline they'd be furious. >> go ahead. >> not an under the radar story. what we talk about on set is pc sales and hpq is up. dell is a special situation. amd got upgraded today and intel's up and microsoft, you've got a reorganization and jim, we've never seen anything like the falloff in pc sales. >> no. maybe you want to argue that tablet should be pcs and i would argue that it's over. when you say it's over at minus, 10, 11, you just extrapolate and everyone's got one in front of the desk, but the tablet and the cell phone and everybody feels, i think that the group is never going to get -- it's done. in whatever device you're going to have and you certainly don't need a desktop and your laptops are fun, but it's going away and the industry is going away.
>> never thought i would see it. we have retail sales and estimate is 2-4 and the first negative comp for victoria secret since 2009 although only down 1%. maybe it's a sign that sexism is out. >> after some of the comments at wimbledon not too long ago. >> costco, 6% beat estimates which was 5-4. home goods and apparel, 10% plus. >> you tell me, is this not carl, once again a model that seems to work because you've got both the fees from the cards and then you have exciting merchandise. >> some people this morning saying that the transition from jim senegal to the current ceo almost seamless, almost like it never happened. >> i would argue maybe the samples are are better and not only do you have to skip breakfast before y breakfast before you go and i
would say skip dinner the night before. the samples are bountiful. >> the guy in charge of social networks and blackberry messenger has left according to the journal and the man in charge of calendars and contacts. >> yesterday we had a discussion on whether they needed to be split up or not. >> we used to think there was some possibility of a take over when people, this does have the sinking ship feel to it or the ma poll onic feel. two engines go down and we've got two. one engine left and that's fine. we should do well. how long can this be before everybody realizes it's going down. >> that's also where nokia will launch their new phone which is the lumia 1020. >> i like nokia. >> you do?
>> we haven't heard the last of ballmer and nokia. ballmer wants to do bold things. i think nokia is a speculative buy. not unlike amd when it was at 34. >> all right. with all of that, let's get to bob pisani and see what else is moving. >> a little crowd here. we're waiting for time warner to open at 115 to 177.50 or the indications is 113. look at this reaction. who would have thought this comment from mr. bernanke that the accommodative policy needed for the foreseeable future would have elicited this kind ref action. there are frankly, pissed off traders who were aggressively short the bond market. that's been a favorite of the street for a while now. we have -- i talked to one trader who lost $6,000 while watching mr. bernanke. would have waited another 20 seconds and he would have lost $25,000. a lot of people out there are
unhappy making comments in the after hours when it's more difficult to cover their positions and one lost so much money he lost his phone and his friend said he was so upset about the whole thing. he'll have his semiannual testimony in front of the congress. what a nice rally. commodity stocks are finally rallying. we're starting to see nice moves up and the whole group has been doing well and that has not been a good one. another group doing well, emerging markets. when was the last time you saw emerging market countries. look at what happened in some of the big emerging market countries like peru, turkey, thailand, philippines and these are etfs you can buy. they're up today, but this is the first reversal that we've seen in quite a while here. two banks raised their overnitrates overseas. brazil raised to 8.5 from 8 and indonesia rates it to 6.5 to 6 and all of it to stem the influx of money and that's obviously what's going on.
let me mo move on. you were talking about retail sales. that's the best numbers we've seen since january. overall, looked good and you mentioned costco and some of the discounters and france, stein mart and 4.1, very good number and you know what that means? good sign going into the back to school season. back to school starts in three weeks, believe it or not. i've started seeing ads around. retail's holding up very well. finally, nothing like historic highs and we are sitting 16, 69 is the old, historic high on the s&p. nothing like that to get out bullishness and did you see the aaii numbers and 48% of the respondents are bull sxesh that's the highest levels since january and those who are bearish, lowest levels since january. again, guys, weir sitting at historic highs on the s&p. back to you. >> thank you, bob. the transports do not confirm and that's what they have to
lean on. you lean on the transports and that's how you get this down. >> let's shift to the bonds and the dollar. rick santelli who has been fired up about bernanke in chicago. go ahead, rick. >> i'm surprised you're not fired up, jim. i heard what you saidas long as people make money. just throw out all of the rule books and the constitution. throw out anything and just make it so certain groups can profit and certain ones don't and bob's friend loses 25 grand and the guy in the s&p pit doesn't. i don't know, it's a strange new world. look at a two-day chart of fives. basically they go from 155 to 138 and they're hovering around 141. look at a two-day of tens and it falls out rather dramatically and here we cover around 158, but i have to tell you, i know it's a lot of volatility and i know from high to low which is what i was referencing and you look at that chart starting to
may 1st and even though i promise that the punch bowl is never going to leave no matter what the democratic debate in the fomc committee group is, we are still hovering at fairly lofty levels in terms of yields. now if you really want to see some volatility, i guess look at gold. the big complaint has been, oh, you guys have been crazy about inflation, and to wit, look at the chart, 84.70, gee, a wonder why gold is up $36. if you open that chart up to may 1st it looks like a commodity chart. not a currency, not a reserve currency. carl, back to you. >> that is a very good point. >> look at the dollar index. if someone didn't tell you it was the dollar index you wouldn't think it was a currency, jim. >> rick and i can go back and
forth. what do i stand for? i want people at home to make money and you can say, listen, i'm doing it, i'm recommending a fraudulent strategy based on them, but people lost a lot of money in the stock market and i want them to like the stock market and investing as charles schwab said is an important part of america and i welcome people back even if it's done through helicopter, with the dow back above the all-time closing high. we'll talk about what's next for the rally and why he likes the number 1750 on the s&p. also ahead, former morgan stanley asia executive stephen roach. does he think you should be worried about an economic slowdown in china or not? as we go to break, let's take a look at the early movers. the dow is up 146 points.
>> tomorrow an exclusive interview with j.p. morgan and ceo jamie dimon. you won't want to miss it. tomorrow on "squawk on the street." (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine.
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take a look at the dow 30, mcdonald's the only component in the red being led by what bernanke said yesterday. caterpillar, a laggard for the year, but up 2% today. >> interesting discussion yesterday on judge wapner's show about prospects of caterpillar being run poorly, but just is a great play on worldwide growth. they didn't like it on the show, and i just want to point out that that's been a terrible stock. >> yes. your argument is that it's going to be a long day as the bears try to lean on the transports with oil up. >> there are too many ways that people can confound the bulls. they can find chinks and they can say, wait a second, with oil up here, the consumer will be hurt and with oil up here the transports will be hurt.
just wait. if you're not in yet, just wait. the bears will give you a shot. they'll give you a chance here. >> you've been gone a few days and we miss youed greatly. >> yes. >> while you were away, you were hanging out with your father 91 years yong. >> yeah. >> at geno's getting a cheese steak wit. >> and one of the great things with geno's there's pop. there's our -- i'm doing cheesesteak and his doctor says he has to cut back on cheese, so he put the hot sauce on, but that is not a cheese, just meat with the wit. they let us be in the inner sanctum. i don't even know if frank sinatra got into the inner sanctum and we had a great birthday party with my sister and her husband back on friday. when you're 91 you can't have enough parties. >> what a joy to watch. that is an incredible shot and i laughed out loud when i saw it. >> thank you. >> want to get your reaction to
a magazine cover that's out today. businessweek talking about hedge funds and the myth of hedge funds outperforming, forgive the freudian imagery and they call it the hedge fund width and this is not the publicity they were looking for. >> holy cow, new and improved hedge funds? what do you do with hedge funds? this is a very telling cover. i did not see it until now and i think the hedge funds will bring in more money because they're very good at saying why they're good. >> jim, are they actually any good, i think? >> i've always maintained you have to pick your hedge funds as the same way you would pick stocks and managers are good in certain period, but not very, very few of them are good over a long period of time. >> i totally agree. it's not a cohort. individual managers at times get hot. if you're a growth stock manager you're doing very well and there
were other periods when managers have given it all back. this is not an asset class and these are individual managers who play it different ways and we have not moved out of the sector and they're well back above $2 trillion and everybody is at two and 20 and fat and happy, i guess. >> colgate, procter & gamble and hedge funds. hey, you what? how about a hedge fund super bowl ad, david? >> i like it. i like it. >> don't joke. don't joke. >> the clydesdales pulling the hedge fund. >> who would that be for? there's paulson waving behind the clydesdales. hey! >> there was a great trend on twitter. yesterday hedge fund slogans and my favorite is i'm a tepper and you're a tepper and all of the would-be jingles that they'll come up with over the next couple of months. >> let's get don draper out there and come out with the strategies. and winston tastes good. >> here's what'sing come up next on "squawk on the street."
nice to have 6 in 60 back with jim. let's start with sprint. >> here's a stock that's unchanged and he goes buy to hold. may the best person win. >> goldman hold the trend. >> this is about spending for telco, ad trends integral when you want to upgrade your system. t-mobile and sprint had to spend more money. >> j.p. morgan says don't worry about the lone ranger. >> i know the numbers were a dud, but there are a lot of irons in the fire. >> cummins is the opposite of caterpillar. they keep making the number, and don't forget they have the truck engine that will be the engine of the future. >> they can't find a reason not to like it and this is an analyst who says i'm done
fighting. i'm switching. >> finally, jpm on hess. maybe this time it will really be for real. >> your broader point about today is be wary, right? >> it's just a long day and a lot of way for the bears to say there's no confirmation and you'll get a better entry point because tomorrow's bank earnings and when we've run up into bank earnings we tesell off and we'r running up. >> we'll mention many times over the next 24 hour, jamie dimon with you at 10:00. what will be the focus? what will we want to know? >> first we'll look very hard at the quarter and then this macro issue. do the regulators want them not to lend? when you raise capital, what it says is don't len. in the meantime, the pressure to lend from the government. how do you be a banker in this world? how do you do it? the quarter will illuminate us on housing and the credit card.
how do you have to get rid of a lot of the people you liked and the whale were behind the control issues and are they behind them and how did it ripple into the system? every day i see a regulator that says we have to reign in the banks and the pressure from congress is would you please stop lending and i want to hear how the line is. >> we've heard the regionals go on such a tear. is that done for now, do you think? >> are they really able to get better rates? maybe they can make money and although the transition will be difficult and that's why again, be careful. most of them have been 20% up and i think that's a dangerous thing, and i wish they were down in the quarter and i don't like when they're up into the quarter. >> finally, tonight on "mad." sometimes, i mention a company and say i like it, i don't like it and when they come down i say wait a second, we have the antibiotic of the future.
remember, a lot of people, it doesn't work and that's the antibiotic of choice, and i want to make sure they have it better than pharma. i love these small bioteches that have money because boy, they can double and look at the celgene, and it did double over the course of the last year. >> the dollar store. what a store. >> not too much one, but oh, yeah. my dad's two favorites will be on target. >> we'll see you tonight. >> thank you, buddy. great to be back. >> great to have you back. >> simon is here with what's coming up at 10:00. >> good morning, carl. in the next hour of the program we'll find out where the smart money is going now. we have an exclusive interview with david kostin, the man in charge of equity strategy of goldman sachs. we'll dig deep into the announcements and we'll see how high gas prices can go this summer as oil begins to flow from the imiddle of the country. i'm a careful investor.
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(ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies." trust your instincts to make the call. to treat my low testosterone, my doctor and i went with axiron, the only underarm low t treatment. axiron can restore t levels to normal in about 2 weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these symptoms to your doctor. tell your doctor about all medical conditions and medications.
serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. ask your doctor about the only underarm low t treatment, axiron. >> welcome back to "squawk to the street." our road map begins with the markets and a record-breaking day on wall street and we have just the right man to break it all down. goldman sachs chief u.s. equity
strategist david kostin live at post nine with his take on the rally and how we should all be plague the market action. >> also ahead, microsoft announcing big restructuring plans and is steve ballmer doing the right thing now for the tech giant? billionaire businessman bob johnson will join us live from sun valley to tell us why big corporations can learn a thing or two from the nfl. >> and oil touching its highest intraday level in more than one year. we'll discuss why consumers should be on the lookout for now. a major spike in gas prices over the summer. >> first up, though, looking to be another record day on wall street as the dow shoots for an intraday record high as bernanke's comments and more fed stimulus driving the markets higher and here with his second half half playbook is david kostin from goldman sachs and joins us at post nine. nice to have you back. >> nice to see you. how are you doing? >> can you explain how the what changed in your mind through the rest of the year?
it is likely to be a story of improving economic activity. we're basically having the economy gain strength over the course of this year. you'll probably be close it a million starts in term of new housing starts and jobs increasing in new creation and that's a baying drop for improving earnings growth in the second half of the year for corporate america and that's a key driver why they'll be moving higher and probably high single digits and the following year, as well. the important message for portfolio managers is to look for the trajectory of economic activity now and in 2014 and 2015 and that's all positive in terms of the developments. the market is sort of a reasonable valuation and the starting point is important perspective and i think the number one trade remains to sell bonds and to buy stocks. that is a story of generally
rising long-term rates and it's good for economics -- not good for economics, and it's a reflection of a better economy. >> did any of the tapering discussion of the last few weeks cloud your model at all? it did not from a valuation perspective, because as the equity market went lower, the earnings yield increased and as though rates were rising the relationship between bonds and stocks remained in that same conclusion that equities were much more attractively valued and that remained a theme. >> the trouble is we're seeing this big rebound in oil prices now and we know that's going to do some damage especially the speed and the size of it. >> we digested a $100 a barrel oil and the economy handled that better than it did ten years ago? what about now? what about that hedge fund? >> the general thrust in commodities markets is a moderation in prices and that's a positive for the input cost for many corporations and you think about the important drivers of corporate sales, of
margin, it's real leet u.s. economic growth. it's world economic growth. it's inflation. it's interest rates and oil, and what does it mean for the u.s. consumer ultimately? it's interesting to see the discretionary stocks have been the best performer lately and the clear message from them is no. it seems extraordinary that if you see prices at the pump go up 50 cents it will not do damage. >> it's looking forward and asking what is the likelihood of the environment? more job creation. so yes, you have perhaps somewhat higher energy prices and generally speaking it's a better economic environment and that's benefited some of the consumer discretionary companies and some financials do better in a steeper yield curve environment and we have industrial companies and those are likely to be beneficiaries of a stronger economy. on the other hand, you have consumer staples and health care which are highly valued as in
highly valued. >> i really hope that you're right. i really hope there are 6% gains. >> i hope i'm right. >> and you're saying two things that are arguably contradictory. you just lectured her that markets are a discounting mechanism and yet if you argue that the equity market will rise from here it's because growth will recover. isn't the equity market at the level it is at now because it believes that growth will recover and it may indeed be disappointed as we ratchet down certain elements? >> well, the idea of an improving economy and improving earnings is yes, the market is a reasonable valuation today and which means it should be rising in general in line with corporate profits. over time earnings will have stocks and taken 50 at the end of this year, and 1900 and 2100 and we do not have a recession.
>> it does not have a being forecast of recession. so that's important, so from a valuation perspective, the market is a reasonable value to starting point and you're growing earnings and they obviously believe that the world will be a better place and let me ask you whether the fed has stolen the effect from gains of future years to the present and there's an article in today's financial times that talks about bonds and stocks being expensive and there's one guy here saying that over the next ten years on the typical stocks and bonds portfolio the return will be an average of 2.6% and that is the lowest level of return projected for over 100 years as -- has the fed stolen the gains that has pushed it down the 18 months? i think the starting premise is incorrect. i think the idea of the market is fairly valued and that's the conclusion i would draw, looking
at dividend discount model and look at the relationship between earnings yield and the ten-year treasury yields and look at corporate bond yields and look at tips and look at a variety of interest rate measures and e quites are much more attractive and so we look at the return profile and the prospect of returns looking forward looking much better than bonds at this juncture. >> and i don't know how stock specific you want to get. >> you do go into some parameters and hedge fund ownership and dividend yield and dividend growth. >> you mentioned ebay, pfizer. >> speak to your point. the idea of risk-adjusted returns within the equity market and the best risk-adjusted return and that's strategy in this environment is a particularly appropriate one and the idea of thinking about what's your risk profile and we know the risk likely to take place some time as early as the fall and the later half of this year and that does introduce the element of risk and it's
appropriate and that strategy has beat the s&p 500, 71% of the time over six-month periods going back to 1999 and what does that involve and that involves looking at the price target for stocks and dividing that by a six-month implied volatility and we look over the next six months from now until the end of the year, what are some of the stocks that have the best risk-adjusted returns and you see ebay, qualcomm, and all-state and wyndham hotels and you have a variety of companies in different sectors that have attractive return strategies. another is dividends in an environment where bond yields are riding and therefore the rick of the principal is there. the idea of dividend paying and dividend increasing stocks in the equity market are likely to do very well in this environment and that would be a way for the portfolio manager inside the equity market to invest. >> you don't want exposure to emerging markets, correct? >> so the profile in terms of the uncertainy is more uncertain
at this juncture than in previous years. u.s. companies that sell domestically and the u.s. economy is improving and closer to 3% in the next couple of years and we think that transition is good for u.s. equities and you have a rising multiple, as well. >> finally, biggest rick to your thesis is -- >> the biggest risk is on the fiscal side and on the monetary side and it's pretty clear they've done a good job in terms of giving some from some forward guidance. i think the risk-adjusted returns are looking forward. >> i think we got our money's worth. >> thanks david kostin, from goldman sachs. is one microsoft the answer investors are looking for? find out how you should be playing the stock on this important news when we come back. plus -- tomorrow, an exclusive
interview with j.p. morgan chairman and ceo jaemy dimon. we'll discuss earnings, the economy and everything else. you won't want to miss it. tomorrow on "squawk on the street." with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. ♪ honey, is he too into this car thing? [ mumbling ] definitely the quattro. ♪ honey? huh? a5. what?
what microsoft is trying to do, what steve ballmer is trying to do is sort of break this history microsoft has had of being this siloed place, this place where people have the fiefdomes and it keeps great product froms coming out and keeps them from coming out and things like tablets early. the idea here is by string out things like engineering, marketing and finance, not having them in a single unit, but having them in different layers, that will make the company work better. a couple of executives get big upgrades here. terry meyerson now in charge of all os engineering. he was mainly in charge of windows phone and now he gets all of windows as well and kqi u now gets office, too, which is huge. that's arguably microsoft's most
profitable product. there are some questions here. okay, this flattens out microsoft's structure, but was the siloing really the problem or as some investors would say, was the problem really steve ballmer's vision? now we'll get to see all of these divisions now report up to ballmer. ballmer will have to make the right decision and make them quickly. also the question is microsoft trying to do too many things and remember, they're serving both consumers and enterprise at the same time and something a lot of companies don't do well and they're continuing to kind of make devices that compete with the devices that their customers are making. so they're making, for instance, the surface tablets at the same time as they're selling windows 8 to other people who are making tablets. microsoft's got to make all of that work under this new structure. >> a couple of excellent points and and on microsoft's restructuring and senior
associate dean and dennis berman, and marketplace editor with the wall street journal. good morning. >> kelly, how many shows are you going to be doing today? from dusk to dawn. >> look. it's july, a lot of people are out and we're all working overtime here. steve ballmer is working overtime. >> we have tumbleweeds blowing down the halls. >> strangely, viewers aren't complaining. >> i'm sick of me at this point. jeff, is this a structuring problem like john was just saying there or is it fair to say maybe this is a steve ballmer problem and this is a person that's been at the helm of the company for a decade. >> maybe dennis will challenge me on this, but i don't think it's a problem at all and i think ballmer is hitting a new stride here and obviously, he's done very well and if you look at the ten years he's been rung the place. the profits have practically tripled and revenues have tripled and the stock price is
up 30% this year. things are looking pretty good, but we had a strategy of repositioning, of course and this is getting into devices and services is a huge change from the software business they were and they've been moving that way, but sometimes strategy gets ahead of structure and that often happens and they're now just bringing in alignment with key people. there's no revolution here. i think it's an evolution. >> i think i agree with jeff on one point that sometimes strategy gets ahead of structure and i will disagree, jeff, on the assessment of microsoft's performance to date. over the last ten years, yes, microsoft's stock is up 32% and keep in mind the nasdaq has been up over 110% over the same ten-year period and the main reason to own microsoft's stock is the bond yield when bond yields are still quite low. if you being look, and i encourage you, jeff, to go and i'm sure you're on many airplanes or many trains how many people you've seen the
surface pro tablet. i'll tell you how many i've seen. the number is zero. >> dennis? >> yes? >> you pointed to the shares this year and they have a good yield. jeff just described this not as a revolution, but as an evolution, does the company need to be more aggressive at this juncture? >> look what's happening across its key pc mark. pc sales, quarter to quarter down 11% after down 12% to 13% the quarter below. the key thing and the key thing about what microsoft does is shrinking and reaching out to the cloud, i should say. microsoft's doing ago and getting more things out to the cloud. and i'll make a prediction and we will see microsoft out into distinct companies. >> i don't see that happening and i do see an effort to integrate across these brands and of course, surface xbox and things are coming together, but when you look at the new businesses that ballmer has
created and they're not an inherited legacy. >> jeff, hang on a minute. hang on. hang on. >> it's a $20 million business a lobe and that's pretty good. the vicissitudes of the stock market, and this is a problem that has to do with our general system, you know? he complained that the demise of capitalism and the great early 20th century economist it was on its own demise that we created these edifices that doesn't innovate. this is where he's wrong. places like ibm and dell and hp repositioned themselves and ups and it goes on and on and on. thompson, reuters -- >> please, sir, i have a question. please, sir. please, please, i have a question. let me ask you a question. okay. so he's moved outside into new areas. the financial times column today points out that actually the bulk of the money, 80% of the operating profit still come from the operating system and business software divisions that are selling to the pc business
that is in decline. jeff, does bowman need to have a moment where she realized she underinvested in coke and that coke and soft drinks were so much a mainstay of the business and say this is what we do. this is the core of our business and this is what we need to protect and this is how we need to identify how we're going to protect it moving forward? isn't that what people need? >> simon, that, of course, was not in the moment, but just to provoke you, of course, she would be in favor of not investing a nickel in coke. she would invest it in pepsi. >> fair point. >> she's investing in a multi-headed way is investing in businesses of the future with a sustainability and better nutrition issues and a better world. it hasn't been removing anything and it's been addaing some focus back on the home front. with ballmer, that's not the issue though, is this is an issue where the company, i don't see them heaving off major pieces and this is not time
warner and letting off of the cable business and repositioning and this is now, as they're moving forward, when you see half of their revenues coming from these new businesses and. >> $40 billion out of $75 billion that's pretty darn good and not to mention the stock pop that caught up with them. sometimes in the short term, society e it's hard to see these things catch up and we showed the mba as they were graduating in the new yorker where the campus recruiter was saying where do you see the career going in the next ten minutes? sometimes in the larger businesses you go through a pretty profound reinvestment and reawakening. this is one of the most exciting times. >> jeff, we moved from that to fritos. i'll make one simple point. the fact that he had to spend 3300 words to describe the company's strategy says it all. he should be able to say it in 300 words. >> services and devices. he says it in two. there's no hurry for him to go anywhere.
this is not summer redstone at 09. >> we'll watch and see what happens. >> see you 2016. >> 2016. dennis, eat your fritos. >> thank you both this morning. >> i love those guys. the media moguls and tech titans keep moving in sun valley and we'll talk to some of those moguls and bob johnson will join us live and find out why he thinks companies should be more like the nfl. we're back after a quick break. ♪ [ male announcer ] some things are designed to draw crowds. ♪ ♪ others are designed to leave them behind. ♪ the all-new 2014 lexus is. it's your move.
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>> welcome back to "squawk on the street." i'm josh lipton, dr. bernanke speaks and the mark react. highly accommodative market policy, it is here for the foreseeable future and check out the gold miners. neumont mining and rand gold resources all heading higher. carl, back to you. ? we'll see if we can hold some of these levels here. as cramer said, josh, it will be a long day. thank. media moguls and tech titans are meeting this week in sun valley. we are joined by one of those billionaire titan, robert l. johnson, founder and chairman of the rlj companies and cnbc contributor and the gorgeous
live shot in sun valley. good to have you back. good morning. >> hey, carl. good morning to you, too. >> we were just teasing your interview before the break talking about why you think american companies need to be more like the nfl and you are citing what you call the rooney rule. you want to explain? >> very simple. art rooney, owner of the pittsburgh steelers looked at the nfl and said, gee, we have 80% african-american ballplayers. we have almost no general managers and coaches. so he said we have to do something about this disparity and he decided to pass, have the nfl enact the rooney rule which said before a team could hire a new coach or a gm that team must, under penalty of fine, interview an african-american candidate who would be qualified for gm or coach. before that they found coaches, proving that there was a lot of
talent being wasted on the side lines and i'm saying that's the same position that corporate america ought to take and i've been proposing the rlj rule, aimed at companies to say you've got a lot of talented african-americans that are underemployed and unemployed and why don't you give them a shot by saying before you hire a decision of director above or senior manager and above, interview a minority candidate and the same with minority businesses and before you have a vendor higher and interview a vendor that can fulfill that task. it simply mean weise put the best people on the field at all times like the nfl does and we're more competitive. >> yeah. how does that argument ring in the boardroom. you must have a sense as to whether or not we live in a meritocracy that is in our beliefs and so many battles with affirmative action with the
supreme court. do people respond to this argument? >>, well, carl, nothing i said is not based onmeritocracy. i'm not saying someone is unqualified. you know how the system works. i'm out here in sun valley, if you know the right people you can get four phone calls returned. if you don't know the right people you won't be in line to get the senior vp position, the director position or get the procurement job. all i'm saying is, corporate america which believes in diversity and most companies have diversity board committees and the like and this is simply enhanced best practices and it's not regulation and it's not legislation and it's simply enhanced best practices to make sure that the hiring system which tends to be a little bit of oh, boy, who i know and how i know them has opened up to give more diversity to minorities as minorities become the largest
population in the country and therefore, the largest number of both employees and ultimately consumers and you can't consume unless you have a job. >> mr. johnson, can -- i know you're not talking about affirmative action specifically, but can i ask you about that and the move away from race-based affirmative action to socioeconomic issues which was at the heart of the supreme court ruling which i think carl mentioned that universities and colleges can only resort to race-based affirmative action when other ways of ines krooing diversity have failed. what do you think of that move towards socioeconomic, rather than race? >> simon, you know, affirmative action was always based on the fact that african-americans had endured savory during their history in the united states. so to move it to socioeconomic rather than race simply ends up pitting african-americans who
have achieved a certain level of say, middle-class status against african-americans who are of a lower socioeconomic class. so as a result of that, some people who might be considered best and brightest who are african-american, but still do not have the wealth necessary to pay for a college education would be pitted against those who are poor. to me the issue ought to be based on focusing on past discrimination and i would argue that every african-american should be subject to a level of past discrimination and what companies ought to be doing is focusing on who is the best qualified to do the job or take the opportunity. that's why when i go back to the relj rule, is simply saying give everyone a job. whether they're inner city, or unurban african-american and we end up with more competitive personnel and we end up with the
meritocracy system based on giving people an opportunity. >> bob, it's a good argument and we're just glad to get you on our air and get your viewpoint from out there in sun valley. so much else to cover, but we'll do it another time. please come back soon. >> carl, thank you guys. appreciate it. >> robert l. johnson, cnbc contributor. bertha coombs keeping an eye on that. >> kelly, the expectation was for an injection of 82 billion cubic feet and it is exactly that on the nose. that's about what we've seen over the last few weeks and we had natural gas just slightly positive ahead of the number. right now we are going back into negative territory. we are seeing some bit of moderation in terms of the hot weather in some parts of the country although it's still fairly hot most everywhere, but overall the demand is not seen there and we are also continuing to see with these injections some of that deficit from years
past in terms of invent tors starting to shrink. >> thanks so much, bertha. we have breaking news out of washington. hampton pearson? >> elizabeth duke is resigning as board of governors. the resignation is effective august 31st. she's been a member of the board since august 2008. in the announcement from the federal reserve, this quote from chairman ben bernanke about elizabeth duke, quote, she brought fresh ideas grounded in her deep knowledge of the banking industry and the real world dynamic between borrowers and lenders and in her resignation letter submitted to president obama, essentially miss duke returns the favor saying of fed chairman ben bernanke, i believe history will judge that the federal reserve under the resolute leadership met every it test in a thoughtful and innovative way.
elizabeth duke stepping down in the end of august and this fall will have one less board of governor member. back to you. >> we'll have analysis throughout date here on cnbc. >> oil prices spiking more than 10% in the next two weeks. you have to prepare for a big sticker shock driving through this summer season. >> don't forget, tomorrow at 10:00 a.m. eastern, and j.p. morgan ceo, never have any celebrities and never have so many women at the nyse been so excited as they are at the prospect of that. [ male announcer ] frequent heartburn? the choice is yours.
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vooud crude oil hits the highest intraday level and it's been 10% over the last few weeks and a lot of talk about how gasoline prices will rise at the pump. david greenberg is president and founder of greenberg capital. >> good morning, how are you? we've waited a long time for this to be released and it can be exported so it can go through
the pipes and the trains and the market has woken up with that and are you surprised by the speed of the move? >> well, the speed of the move used to surprise me, but with electronic trading and all of these funds now trading in the market you're getting tidal waves of money on either side of the position. what ended up happening is the draw came out larger than expected and when we were trading on the floor and even now, if the draw comes out as expected and the market would move. it's the differential and what's expected what actually happens caught everybody by surprise and you had an enormous, enormous short squeeze and that's what rallied the markets. >> the trade had been to sell the contracts in the united states and buy those and is that trade over now. >> i don't think the trade is over. i think people are stepping back from it and what happened was when the egypt news came out. we've seen this movie before and we know how this ends. a lot of people sold into that move expecting it to have a
little pop and things would come down and come off. >> once the numbers came out and they just yanked it right up. >> so what will be the retail impact? >> people are saying, could it be as early as this weekend? >> it's funny how it always goes up faster than it comes down. >> you guys once saw that they were changing it midday. >> so i think you are going to see it by this weekend and into next week and it will be weeks before we see that come off. >> here's the thing that's frustrating maybe to me and a lot of people is we know a lot of these things are behavioral when it comes to oil prices and it doesn't mean they're fair. >> there are people that say why shouldn't gas prices at the pump fall more quickly now that we know what's going on. >> how much of a premium is it build into oil prices because whether it's high-speed train or financial speculation and there's a long-standing debate about the financialization of oil will be diverging from fundamentals. what's your view on all of that.
once we went to electronic trading and there was a direct spike in prices because the amount of speculators that can enter the market. in 2008, washington came out that we were going after speculators and they keep making these hollow statements and i've spoken to the cftc. >> how do you define a speculator as opposed to someone taking the position? >> that almost say speculator itself and they looked at each exchange and how much is delivered at the end of the month and for the amount that's traded, the trillions of dollars that's traded compared to what's actually delivered would shock most people. >> can we talk some levels? >> people are talking about 10, 20 cents on gas over the last couple of weeks and up to $4 in the great lakes. does that sound right to you? >> you saw a nine-cent move which is unprecedented and unwarranted and whether or not these guys buy it or take delivery in that price, have you made money now as an investor?
personally, i would love to be short the market and however, i'm skired to be short the market with the news coming out. i would buy puts in the market and you would have a $2 or $3 sell-off and if there's no new news it would be great to be further. >> thank you very much. >> u.s. and chinese officials are meeting in washington for the second day, this time speaking with american and chinese ceos about business and economic issues and eamon, we can assume that there are no more hostages, hostage ceos in china at this point. >> that's right, kelly. >> there are some ceos here though, and they began this morning with the ceo round table and there are heavy hitters from both the u.s. side and the chinese side and take a look at this list of who all is here starting with larry fink of black rock and pattish rischa words. ellen coleman of dupont on the chinese side. we have zhang, and lee of baidu,
and li and the break out star of this session seems to be the new vice premiere of china wang yang who was comfortable enough to troy to engage in a little bit of humor, diplomatic humor. was he funny? you be the judge. take a listen. >> translator: the china-u.s. economic dialogue will be by a pair of new people. in china where we say a pair of new people would mean a newlywed couple, yet though u.s. law does permit marriage between two men, i don't think this is what jacob or i actually want. for all of the differences we may have, we must increase mutual understanding and trust
so as to build the foundation for a life together. we cannot have a divorce the way wendy and rupert murdoch just had. that would be too big a price to pay. >> u.s. officials in a conference call yesterday said they were pleased that wang yang had try some humor at the at the diplomatic event. oftentimes humor doesn't translate linguistically or culturally, and it was a good side that he felt comfortable enough with his american cohorts to try to make some jokes there, so nothing like getting off of a diplomatic session with a gay marriage and rupert murdoch joke. >> that's a real knee-slapper, eamon, between that and biden's comments it's better than "the tonight show" over there. unbelieve believable. >> absolutely. >> eamon jafers in washington for us, thanks. >> before the break, take a look at the markets pulling up a little bit and we're still up triple digits and we were up at 150 at the height of the session and don't forget, the delivering
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the sec has moved to lift a decades old ban concerning how hedge fund, private equity, venture capital and start-ups go about raising funds. it could change how start-ups and companies do business going forward, particularly in a tech industry. john frankel is a partner at ff venture capital and he joins us at post 9. welcome. >> thank you for having me. >> what's the biggest implication that we can call the jobs act for venture capital in
particular. >> it's a lot. >> we have raised capital as an industry on a one to one basis. the same way that in the late 1600s ships were financed in lloyd's coffeehouse. >> what do you mean one to one? >> it means that if you want to invest in my fund, how did you find out about it? i can't advertise. i can't let people know other than telling friends. friends of friends and small groups. >> but that's to protect people ultimately from seeing something that's being -- >> we know how clever and gimmicky advertising can be. so if something like venture capital and ship financing is extremely risky and it should only be for sophisticated investors. >> the rules have been extended to allow only accredited investors who the fcc defines as being sophisticated and if you look at the 8 million accredited in this country and 3% in start-ups and venture capital firms and that is out of whack. >> whether venture capital gives a return on investment period
over a period of years is something that is still up for debate. >> totally. medium vc return, a plus or minus single digits and let's look at next year. 48% of the capital went to the ten largest firms and yet coughman reports that no firm above $1 billion in size generated more than two times the return. all of the returns were in the smaller firms that no one knows about because they can't let people. so the industry is based on brand and not based on return generation. some of the small firms are generating very strong double-digit returns year in and year out. no one knows about it. >> what does your media plan look like at this stage? have you been thinking about it for years on the hopes that this day would come? >> we haven't been thinking about it for years, but we definitely think that what the sec has done is incredibly positive for capital formation rolling back certain sections of the sec act from 1933, 80 years
ago and it applied then, now in the world of social media and in the world of people being more educated and we feel there's an opportunity to educate people. so our plans are to look at it, but we think we want to come out of this, educating people generally. we want to come out of this letting people know what we're about, letting people know about the returns that we've seen in this space and that we actually feel this is a lower space because it's a highly correlated and everything that you see behind it. >> john, if they are sophisticated investors, how do they find you anyway? >> 3% are, but -- >> 3% have chosen to invest. they haven't been able to find you. >> i have never had someone knock on the door and no one has told me in the small vc world that people say hey, i hear you generate double-digit returns. can you tell me more about that? it's always an outreach and it's not just for us. it's also for companies, as
well. it's to use the term an old boys' network. it's a who you know kind of network. >> right. >> in this day and age, that should change. the sec has recognized that. congress has recognized that and this is a positive move. i wish it had happened 18 months ago. >> just briefly. our advertisements for each of these companies and each of these firms going make it clear, by the way, don't just invest with us, diversify, and investors will need to know that and not think i can go ahead and say i'm into this one or the other. >> the answer is diversification is improving and the guys at google made their money not by having their diversified portfolio and the investors in google made enormous amounts of money cause of the capital they had in that one particular company, but yes, venture capital firms offer a low-risk approach because of resources they bring to bear.
>> john frankel, partner at venture capital, and a point that we will look back is a sea change in the way funds are raised. >> thanks very much. >> we're up 21 points on the dou. they can argue he said nothing apparently because of what ben bernanke said yesterday. although you can r you could argue he said nothing new. here is another look at the markets before we head to break. we will be right back. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
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busy morning on wael wall veet and in chicago. hi, rick. >> hi, carl. today we're going to talk about the great caper. what's up, doc bernanke? i really want to know. i want to know what's up. it's so hard for me to get my arms around this. i remember when all the boys on the trading floor were poring over companies' charts and all the fundamental metrics. but -- is it your birthday? >> yeah. >> happy birthday. but i am going to steal a flower. it's like to taper, not to
taper. to taper, not to taper. or if you're a saver, he hates me, he really hates me, he hates me, he really hates me. or if you're a stock trader, oh, he loves me, he loves me more today. he's going to love me more at the end of the year. he's going to love me for years. i don't know, it seems a little bit ridiculous to me. yesterday, we ran it twice today. ben bernanke had a quote. and i'm going to read it. we're not going to show it on the screen. currently, we have an unemployment rate of 7.6%, which i think is anything understates the health of the labor market. let me get this straight. it overstate tess health of the labor market. how many times have you heard ben bernanke say i have to do all this because the guys in washington are horrible. okay. then i think of this. i think of november elections. where was ben bernanke with that comment? i will tell you wa, many of my friends voted because the economy was getting better and the unemployment rate was going
down. but it really wasn't real. what did we get from ben? absolute and utter sigh leps. i think that's a bit disengymus personally. all right. now, let's look at this. when we all talk about the taper, it's all about interest rates to some extent and many say, well, listen, stocks are doing great. it really isn't about interest rates. all right. so i'll take the interest rate and i'll concede that. let's say interest rates make no difference to this equation at all. so what are we left with? we're left with corporate profits. .even though this is a hand drawn chart, look it up, it looks pretty good. corporate profits are huge. they're huge. the interest rate things he's doing really doesn't matter. well, if this is a good indicator of the economy, why is he still hanging around with these programs? all right. he wants to target the unemployment rate. now, let me get this straight. corporate profits are going through the roof and he's targeting unemployment, which if you look at the employment for
population is at a 30-year low. gee, where is the correlation there? or maybe the interest rates are benefiting the treasury, who has boat loads of debt. maybe this is something the eyeball should pay more attention to. back to you. >> i think i see next week's cover of business week. rick santelli from chicago, thank you very much, sir. straight ahead, find out how you can get in our our interview with jpmorgan ceo jamie dimon tomorrow. we'll be right back. ♪ norfolk southern what's your function? ♪
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one of the most powerful business leaders is coming to "squawk on the street" tomorrow. cramer will have a live interview with chairman and ceo jamie dimon live from the floor of the new york stock exchange after the banking giant releases its quarterly report. question is, what do you want to know? tweet us your questions. it all begins tomorrow. i can't remember the last time he's come down to the exchange for a live interview post earnings. >> no. that's a big deal. >> i think it will be interesting to know how the portfolios have been hit by the
fall in evaluations. that will be fascinating. they try to do deleverage for that. >> right. a lot of banks are moving short of durations, trying to get ahead of it. questions, as well, about his role and people always want to know what he sees with the macro economy. can't we just do ask swrammy, though? >> i was trying to know, is there another jamie? not too many of them. in the meantime if you're just joining us, here is what you missed. >> welcome to "squawk on the street." here is what's happened so far. >> he said i was rugged now. >> you are rugged. >> i looked up rugged. it says wrinkly. like rugged land. i was an english major and i like to use words appropriately. >> steve palmer has been able to increase the market value for shareholders at microsoft by $55 billion. big things about to happen at microsoft. >> this company is undervalued.
you could say, well, wait a second, he was your buddy at college. totally true. but he has a legacy to preserve here, and i think he can do it. david and i have gone back and forth, but i do believe his legacy is at stake and he's going to win ear. >> conquest is large. the rest of the industry needs more consolidation, in our view, in order to get more scale economics. >> looks like we're going to open above the all-time closing high for the dow. >> the dow is at 15440. if the dow were to close right here, it would be the highest close in the history of the dow. >> uncertainty in terms of policy, whether that's on the fl fiscal side, whether it's on the monetary side. it's pretty clear they've done a good job from the central banks in terms of giving some guidance. i think the risk adjusted returns is pretty high for the market looking forward.
>> good thursday morning. we're live here at post 9 at the new york stock exchange. the dow is at its all-time closing high. looking to see if that's going to fade. a pretty big gap open this morning. s&p is up some 7 points, 1669 and the nasdaq at 3561. another 12-year high today. watch gold. almost got 1, 300 today for the first time since late june. cellgene taking part in the rally after they set a late stage trial of its cancer drug improving survival in cancer patients. did amd up this morning after bofa upgrades the chipmaker after hold to buy. let's get to the road map this hour. bulls are out on full force here on wall street.
comments made by ben bernanke sending stocks into rally mode. find out if more record highs are coming your way. and a major shake-up for the microsoft executive team. >> the remere of china repeating his call to stay away from any new stimulus. we've got someone who says china's economy won't be making a crash landing anytime soon. >> all right. happening right now, nokia is getting ready to unveil its newest phone, the lumia 1020. we are watching for it and will show you more as soon as it is unveiled. we are watching so much discussion over the past wum of days about blackberry, nokia. cramer likes nokia. we'll get set to see whether there are partnerships that are developed further. >> they've been called the de facto piece of the microsoft exit strategy. >> at the same time, google is investing in the motorola phone. when that phone is made available for us to see, we'll show it to you. >> call it the bernanke bounce,
stocks are rallying hard today. >> how do you accommodate a monetary policy for the foreseeable future is what's needed in the u.s. economy. >> john porchelli, good morning. >> good morning. hi. >> were you caught off guard, as well, by the fact that bernanke addressed recent policy moves at all and appeared to try and have it both ways saying tapering is not a tightening and that the markets bought it? >> yeah. i think it was poor form by the chairman to go into that particularly after 5:00 p.m. markets were already closed. it's nothing we expected. but i know the take away was that bernanke was dovish. we completely disagree with that as an idea. he did say they will remain highly accommodative. but context is key. you have to realize that he was talking about it in terms of the two key policy mechanism that's they have. one is asset purchases and the
other is fed funds rate. did fed funds rate will remain very low for a period of time. that's an idea he's been talking about for weeks at this point. he's trying to make a distinction between applying less pressure to the gad pedal and actually hitting the brakes. i think that was key. >> why are you saying this is poor form? the markets were closed. is it because he was speaking, you know, on behalf of the fomc when this wasn't really supposed to be that kind of event? >> no. well, yeah. look, he always speaks on behalf of the fomc. we think it was a time issue. it was well after the markets were closed. it was hard for the market to digest it. at that hour, it was thin liquidity so the market was able to get pushed around a little bit, particularly after a couple of comments he made. >> you think what happened was an exaggerated response but today we have follow through. >> yeah. here is what i would say. at that hour, 1 hunl% i think
that there was an exaggerated move. today there was a misinterpretation of wa he said. i can go through the list of reasons why he said that. he did say accommodative policy. but, again, context is very important in that regard. we think there's a misinterpretation of what he said. >> we're all parsing. that game is nothing new, trying to figure out what he means by highly accommodative. this notion ma that 6 fe.5 on t unemployment rate, is that number now lower? is that now 6 because of the additional slack we think is in the labor market? >> no. i think it's probably still 6 1/2 percent. but the way i would think about it is forget about using one single number as a guide post. and, again, bernanke has been very clear about this. there is a laundry list of other indicators that he's going to want to take a look at. he's mention dollars them. in fact, in total, there are about eight different labor
market indicators that he'll be watching. and the one thing he's been very clear about, and we would agree with this, is just get dog 6.5% in and of itself does not mean that they will do x to policy. they need to see all of these other indicators tell a coherent story. if they all tell a coherent story, they will start to proliferate. it's about all of these indicators combined. >> is it leaving us with september starting to tapering, tom? >> yeah. look, i know that's where the market is. we've been saying october. whether it's september/october, i think we're splitting hairs. more compelling for us than when it starts is actually when it finishes. there, we have sort of another modestly useful guide post and that's an unemployment rate that's touching nearly 7%. again, what the chairman today, in combination with these other elements. they've all improved in combination. we think that's when tapering actually ends. >> okay. a misinterpretation, as you say, we'll watch how markets trade for the rest of the session. tom porcelli at rbc, thank you,
sir. there's a major shake-up at microsoft today and what the ceo is calling a far reaching realignment of the country. hi, john. >> hey, carl. microsoft is trying to untangle itself here. let's get beyond the details of how microsoft is now structured, who is up, who is down. bo palmer says i'm going to take responsibility for making sure the most important things get done. we're going to have nimble new teams with leaders who report directly to me. they're going to make these warring factions inside microsoft work together. this is microsoft moving to a more apple-like structure. microsoft is into this complicated beast. windows and office alone are each $20 billion, $25 billion a year businesses. in the past, microsoft gave the big division heads incentives to protect their turf. why should they disrupt themselves? i think the iphone is probably
the best example. seven or eight years ago, microsoft should have been building an iphone. why would the head of the windows group do that? he's making a ton of money selling software into a pc market that looked like it was going to grow forever. why break the system by selling your own product which costs more than any other smartphone on the market? it could have been crazy, but it would have been exactly the right thing to do. so the test is going to be whether microsoft can break the china, disrupt itself. what i don't have yesterday is who is going to emerge as the maestro, the designer engineering visionary who pulls everybody together. ballmer has a lot of strength. is it terry mierson, qi lu, whoever emerges might well be the next ceo. also, i have to mention know dee nokia on stage right now. i've got the only business broadcast with him later today. i'll bring you that on cnbc later. but they're unveiling this phone.
this is important for micro sso. they have to want this to deed, guys. >> you are but say busy today, jon. my. we're watching two fires burn. appreciate that very much. jon fortt working at headquarters today. news alert, air travel alerts for the month of may coming out. this should be interesting after all the sequester related delays in april. phil lebeau has more. welcome home. >> definitely an improvement in terms of on-time performance. four out of five flights arriving on time in the month of may. the top three, as usual, hawaiian coming in number one at 92.4% on time all the time followed by alaska and delta. who was dragging down the airlines? american eagle was the worst at just under 70%. there you see frontier and mesa. the average, 79.4%. that is down compared to may of
2012. but an improvement over april when we saw the sequester impact. two other data points, first of all, mishandled bags, an increase there. 2.96 mishandled bags for every 1,000 pass peengerspassengers. there were five flights in the united states with tarmac delays of great er than three hours. that's a look at where we were with the airlines in the month of may. an improvement over april but, you know, certainly we're still seeing some lingering effects at the beginning of that month. guys, back to you. >> phil lebeau in chicago, thanks. we told you a couple of minutes ago, microsoft chief steve ballmer with a restructuring. plus, make sure you watch tomorrow because you don't want to miss this. jpmorg morgan chase chairman ano jamie dimon will be here live at 10:00 a.m. with jim kraker on "squawk on the street." first, rick santelli, you're myth busting for us this morning and i hope they've moved the
flowers away from you, rick. >> no. she wasn't happy about that. i'll buy her some new ones. we have jim bianca. i'll continue the conversation. corporate america has learned these programs don't need to hurt. they don't need to hire. they're making a lot of money. and we'll talk about myths about fund flows and are the public really taking on interest rate risks? we'll do some myth busting in about 8:30. this is greta. she works in quality control.
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as we mentioned, the long awaited restructuring plans for microsoft announced this morning. steve ballmer using the words microsoft and a far reaching realignment. wa does that mean for your investments, though? i want to bring in print phil and ed. guys, good morning to you both. >> good morning. >> ed, i can't figure out if this is real change or a bunch of corporate speak. >> well, from the first look of it, there have been a lot of pieces that haven't worked together in the past. so from the initial take here, there are a number of changes that look to realign a lot of the products much more closely to how customers and enterprises really look at the business. so at first look, if they can pull it off, looks to be a real positive development. >> brent, is it the kind of realignment that steve, the method of innovation that they're going to have to compete over the next couple of years?
>> it's too early. there's no operational cost savings or revenue synergy in the near term. we spoke to the cfo microsoft this morning on this. i don't believe it's going to have a dramatic impact in the near term. but it's a needed realignment. they have to shake the tree. we wrote earlier in the year that they have to shake things up. it's been a long time coming. and they've got to get it realignment around the cloud and mobility. we think this is a step in the right direction. it's going to take time. >> koreyeah. brent, if all this is crew, why hasn't the stock done as well as it has over the last couple of months? >> number one, ed and our other competitors have caved on us. the buy said gave up. the multiple got so low, that people complain about tinter price business. stocks are trading at a low level multiple to the market. i think the consumer business is
still not where they need it to be. he know you also have shareholder activism. there's funds realizing there's a lot of recurring revenue inside microsoft. so we've stuck to the buy. we have a $40 target. we think the stock is going higher if they can continue to execute on this enterprise strategy. >> ed, this morning, saber was saying, you know, some talk about ballmer is a pine tree, nothing can grow beneath him. is some of that criticism warranted? there a problem at the top? >> there's no question that that's been one of the big overhangs on the stock. until you have kind of a clear succession plan and a clear idea when ballmer is going to be part, that's going to be an overhang. but at least this realignment may give the company a chance to foster some new talent and let a
new leader reemerge. >> was your view on the shares here, ed? >> we like the shares. similar to brent, all is like the enterprise business himself, that the concerns over the pc really over-shadowed the strength in the caps generation and growth. so the realignment is going to take a little bit of time here, but we think there's good payoff to $38. >> brent, you know, people keep making fun of them in terms of their partnerships, the quality of their partners. we're seeing nokia launch a new phone today. a company about which opinions are truly split. but i wonder if they are really getting the best dance partners they can get. >> i think that it's tough in technology. carl bacarol barts, mentioned a
lot of these partnerships are barney partnerships. i love you, you love me, nothing is happening. it has to come down to the core of microsoft. clearly, on the mobility side, microsoft has a lot of wood to chop. they've got some big challenges on mobility. their enterprise cloud business is doing a lot better. so i think you're going to see more organic innovation coming from microsoft and they're going to have to take control of this in their own hands rather than relying on their pc fumble change. look at the pc bill versus the mac book air from apple. it's a completely different experience. >> brutal been although 3516, nothing to sneeze at. guys, great story. thanks for your time. >> thank you. the head of china repeating his call to steer clooi clear of stimulus despite concerns about an economic slowdown. how worried should investors be about china? the answer when "squawk on the street" returns. >> announcer: tomorrow, an exclusive interview with jpmorgan chairman and ceo jamie
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up 136 points on the dow, back over 2.6. let's get back the out to rick santelli this chicago. >> thanks, kelly. jim, we have to move fast. i want to cover a lot of ground. the piece i just did, in case anybody watched it and completely didn't buy in, with corporate profits so strong and these programs lingering, what we are training corporate newark to do is keep doing what they're doing, which is not hiring. and then having dr. ben bernanke target unemployment when we have structural issues that have arrived long before the crisis
arrives. if we're at 30-year lows on the percentage of the label that's employed, what if it's 40 years? do this for another ten? it doesn't seem like it's working. your thoughts? >> let me cut through all this. nobody understands what the fed is doing. that's why you have movements in the markets up and can down. depending on whether they say they were going to taper or not start to taper. you had an economist on ten minutes ago that had a third version. this is the confusion, what you just laid out. what's their plan? >> the thing that they need is that the taper really isn't an interest rate lowering issue. we're not going to raise rates. let me get this straight. what can the fed directly control in terms of rates? >> they can't control much other than short-term rates. >> okay. so quantitative easing gives them control over what? it he supposedly gives them control over long-term rates. >> so it really is a long-term discussion, isn't it, really? >> absolutely it is. it has always been a rate discussion. the idea was to force rates down to push people out in the
stocks. >> so now let's go to the myth busting. most every guest we talk about -- and there's a huge amount of truth in it. you see it a little different. that stock funds have been avoided. your research, give me your myth busting aspect toes that method. >> three things about what's going on in bond funds. number one, where is the money going that comes from bond funds? a trillion dollars went out of money market funds, a trillion dollars into bond funds. where is that going? mainly credit funds. most of it, two-thirds of it is going into short-term funds. what is the public doing? exactly what bernanke wanted them to do. take more risks. they move from a money market fund to a short-term bond fund. they went from a zero yield to 1% yield. wa you're seeing now is a lot of short-term timing. the public is not -- >> let's take this to the next question i would have, then. so the generalized notion that
the public for getting institutions or hedge funds, that the public has a huge interest rate exposure. do you agree or disagree? >> i don't think the public's interest rate exposure is as big as everybody makes it out to be. but they are taking more interest rates risks than they used to. they moved from money market funds to bond funds. it's not about stock funds. >> and they're on the shorter term maturity on the yield curve. if you were in the -- if you look at the structural issues of unemployment, how would you trade these markets considering what you've heard from dr. ben bernanke in the last eight hours? >> i have to agree with mr. cramer earlier. everything has to be about front running the fed and front running the manipulation of the markets because that's the way it works right now. if you're a trader in the market. so ben says the taper is off or at least that's the way the market anticipates it. so the taper is off until he changes his mind. >> back to you. >> thank you very much, rick santelli and to jim. one of the biggest names in business, by the way, joining us live on "squawk on the street" tomorrow. he might have some taught the b
this topic. jamie dimon will be here at post nine with jim cramer on the floor of the new york stocks change. wa do you want to know, though? tweet us your suggestions for questions. use the #askjamiedimon. now the bells are about to sound across europe. just a few minutes to go to the continent's trading day. it's, in fact, back here on our shores when we come back. ♪ norfolk southern what's your function? ♪ hooking up the country helping business run ♪ ♪ trains! they haul everything, safely and on time. ♪ tracks! they connect the factories built along the lines. and that means jobs, lots of people,
the dow is adding to its gains as we approach the close to europe. simon is here to count us down. >> what you're looking at here is is slightly disappointing for many people. we're off our highs. still 75% of major stocks are higher. and there are two major areas of weakness. >> bells are closing now. >> on portugal, greece, you have unemployment rising to 26.9%. that is a record at a time when municipal workers are still in the streets of greece protesting in advance of next week's key votes. i come back to portugal, a bigger loss down there on the bottom left tlt moment. let's talk about the scale of the rally and wa is going on today. it is the miners that have led today under owned. a lot of those big miners that a lot of people were shorting have made gains during the session. and those appreciatus metals, much smaller generally.
day two of less as you can see. let's talk about portugal and the reason why we're down there. the risk in portugal is rising. the president of portugal, rather than staying to the center right, yes, you can keep your coalition together is suggesting there can be some order of deal across the political spectrum for austerity so that they can exit their bailout next year and have a general election. that is seen as really stirring the pot, if you like, and you can see that these big banks in portugal are lower as a result. politics dragging them into negative territory as the bond market sags and that's sending the yields higher. in fact, we're at a seven-month high of the portuguese ten year. arguably, our bigger concern are those huge economies of spain and italy. are those bond markets holding up? well, they're sagging a little bit and, therefore, you can see those yields, too, are beginning to spike higher. but the warning here or the explanation is that there's been a huge amount of paper. huge amount of supply.
those two countries, italy and spain, has been selling a lot of paper to raise funds over the course of the last couple of weeks. and that is partly, also, why those yields are higher. guys, back to you. >> thank you very much, simon hobbs. i want to get a check on energy. got to talk about oil today and commodities, versus the nymex. hey, bertha. >> hey, carl. we've got the weak dollar today. a mixed picture. pti nymex we're seeing some profit taking there. the international energy agency says the goals who have run up the pricer here should be leery in 2014 you'll see supply coming on a lot faster than demand. we're also seeing a paring back when it comes to brent, as well. nat gas down after inventories were in line and not terribly bullish. but it's a different picture here in the metals pits. and i'm joined by mahi den gi a of gra fight capitgraphite capi.
this is a bernanke push today. >> absolutely. i think yesterday in the minutes they talked about how they would keep the tapering program, how some of the fed members thought that it was still a good idea. but, really, at 4:25 when he spoke and the question and answer, his statement saying they're going to keep rates low, zero interest coupon rate at close to zero percent for -- until 2015 is a strong statement. they're looking at data. they're going to keep qe on the table inspect they can see that the data looks better, very strong for gold and silver right now. >> did that dovishness feel like he was talking the market back off the ledge here? >> i think it's the fact that they've been looking at rates, that's a main concern. they're looking at the data. this is a tapering program, not a curtailment. and the fact that they're tapering right now and they're going to keep -- beginning in september and they don't know when it's going to end because the data doesn't look as good as they want it to, it means that you have a lot of shorts in the
market. they cover. everybody is looking at that 1300 gold number. >> and that is what we're going to have to test. >> absolutely. >> thanks so much. appreciate you joining us. carl, back over to you. >> bertha, good tough. thanks so much. let's bring in bob pisani with a look at what's moving on the floor here. we tooed seem to be near session highs. >> there's not really any signs of selling off. we close here near historic highs. important thing is, a lot of beaten up groups are doing great. it's not just six to one advancing declining stocks. it's the kind of stocks moving to the up side. the declining stocks, when was the last time you saw aluminum stocks moving up. they've been miserable performers in the second quarter. housing related stocks which has dropped about a month ago on a move sideways. we've had a few amazing days. look at this, 7% across the board on all of the home building names. emerging markets? i've been noting day after day after day, there's thailand,
philippines, peru, turkey, up 2% to 6%. but the damage has been done. folks, this is just a horrible quarter. put up the merging markets for the second quarter. turkey is now 20%. pure rue, 18%. thailand, b a lot of people had money in these and got hurt rather badly. banks are down. why are banks down? sell into the earnings season. they start dropping the day of or the day before. this san old, old story. i want to talk about mortgages because people keep telling me they're going to have a big problem with the housing rates. i'm not so sure about that. we're at 4.5% for a 3046 year mortgage right now. that would be about $1,500 a month. on 3.5%, 1347. that's not chicken feed.
you go down to about $1,600 a year, what it's going to cost you. if you make $75,000, that's what you're going to get if you get a 3 left lane,000 mortgage. that's only about 2% of your income. i don't think that's insignificant, but i don't think it's a lot to deter people. you don't have to get a 30-year fixed rate mortgage. let me just show you one. there's a 1530 balloon mortgage that's very popular. at the end of 15 years, it goes into full payment. the rate right now, you have to pay it off, 3.5%. a full percentage point lower. there's going to be people out there going to these mortgages to save on it. there's another one, 10-1 adjustable rate mortgages where you have a fixed rate mortgage ten years for the first, then it goes to 4.1125%. there is a whole industry that is out there that will gear up to try to offer people cheaper
alternatives if, in fact, they need it. i'm not sure how much at 4.5% the housing industry is going to have a tremendous impact by this. if we get higher, i'm getting a little more concerned. right now, i think it's fairly manageable. >> a ten to one arm, this is fascinating. so it sticks for the first ten years and then it starts to reset? right. >> higher. >> it's a 30-year mortgage for ten years. and instead of 4.5%, it's 4.125%. then after that, it goes to one year adjustable. most people only stay in their homes eight years. so most of these mortgages -- you never have a problem with most of these. and if you do, you refinance. >> remember mind you of the discussion we had a few months ago about whether or not the deductible, whether or not that could go away and the policy could change. >> that, too. >> they will remove deductibility on second homes. the main one, if they do, they will taper it for many, many years. >> i still say lock in that
rate, people, come on. >> i agree. let's get to mary thompson. >> hey, carl. we're looking at shares of amazon, a new high of the day. it would be a new record high close for amazon. the reason we have channel adviser, which is an e-commerce company talking about strong sales for amazon clients during the month of june. they were up over 30%. that follows a strong may when sales were up 25%. again, amazon's dominance in that internet retail space continuing with strong sales numbers for the month of june. back to you, kelly. >> amazing. mary thompson, thank you very much. treasury secretary jack lew is meeting for a second day in washington. today they're meeting with a panel of ceos including that of blackrock and baidu. steven roche is joining us with some perspective.
steven, great to see you this morning. welcome. >> great to see you, kelly. >> so you've been saying for quite some time here that china is a story you have to believe in, that the growth is there, that they're not going to stumble. does any of the recent data, what's happened with the interbank lending, any of the financial stress give you pause? >> sure. i mean, the economy has slowed down and we'll get a second quarter gdp figure next week. it will probably show continued sluggishness, maybe even a little weaker. but i think you have to look beneath the surface of the aggregate gdp, kelly, and try to pick apart the pieces that are doing well and compare them with the ones that are not. and the parts that are starting to do better are retail sales, consumption, and especially the services economy which grew about half a point faster than the manufacturing and construction economy in the first quarter.
so china is changing its stripes. it's rebalancing a way from a model that's probably not the most sustainable model for the long haul to one that is better balanced. and i think that's a very important development and one that should be talked about in this strategic and economic dialogue today in washington. >> steven, is their economy, though, losing more momentum than you would have expected? while this important and necessary transition happens. because there are people talking about 4% growth right now. >> well, there have been people talking about china disasters for the last ten years. and they haven't happened. i mean, you know, gordon chang wrote a book on the coming collapse of china about 11 dwreers ago and the last time i checked, gordon is still talking the same talk. the export numbers were very weak as they were released yesterday and the important numbers were also down. industrial output is slowing. these are all a little bit
weaker than expected. but, you know, the growth rate i think is still in a 7% to 7.5% channel. and most economies in the world would die for a number like that. the problem is, we're addicted to 10% growth in the united states and in europe because we -- and china is mainly the only source of growth in the gloeg global economy. and the chinese are telling you, don't count on that any more. we're not going to deliver year after year of 10% unbalanced growth. and their senior leaders, they have a lot of firepower to stimulate the economy. the fact that they're not using it right now is a very important development. they don't want hyper growth to continue add infinitum in china. >> would you argue the cost of labor and how it's increased is a positive or negative for china? >> actually, i think it's a positive. they're consciously trying to boost wage income, carl,
personal income to drive consumer push chasing power and consumer demand. this has been an effort of the chinese for the last five years. if you look at their overall wage level, it's still about 4% to 5% of that in the united states for manufacturing wages. so, you know, chinese wages are hardly pricing themselves out of the market right now. >> steven, briefly, i know you're not a strategist, but do you see chinese equities here, which have been a real source of concern in terms of trust among the public? able, finally, to rebalance, to break out here? >> well, kelly, that's a tough call. it's been the worst major market in the world for the last six years. but to the extent that i've got this rebalancing story right, part of that will be improved corporate governance for transparency, better accounting standards for chinese companies. and i think slowly the markets will begin to price in a more constructive environment for
corporate china. but that's a -- an uphill battle right now. >> all right. steven roach again with some context and perspective on the data out of china. stocks trading in a narrow range here. not really budging from that 130 to 150 point gain level. still at 15,429. in a moment, we'll talk more about that. plus, one of the biggest conferences in the year from sun valley. plus one of the most powerful business leaders in the country will join us tomorrow. jamie dimon of jpmorgan will be here live at the new york stock exchange. 10 on o'clock a.m. with cramer. don't miss it. [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room.
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> coming up next, the man everyone wants to hear from today, john hilldebrath. stephanie over the debate where yumm brand goes from here. is the gold back into play? all that and more coming up. got a lot to talk about today, scott. that's for sure. thanks. day two of the annual media company in idaho, julia boorstin is following it all and joins us live in sun valley. hey, julia.
>> hi carl. liberty's john malone is here. he seas comcast is big enough to be okay, but time warner cable should snap up smaller players to get the necessary scale to drive down costs. what does his focus on consolidation mean for hulu? he says he does not think time warner cable should buy it flat out, but it could be a strategic investment. >> at the cable industry, we're investing together in the u.s. or even globely. that would make sense. because now you're starting to talk about scale that allows you to do things that you can't do if you're geographical limited. >> hulu is in the spotlight and fox's rupert murdoch refusing to comment on negotiations. they tell me they don't have any
updates. today's agenda is more packed. this morning, there was a panel on cyber insecurity and right now, mark zuckerberg, mayor bloomberg and mr. kent are on stage discussing growth. later today, there is a session with the mexican president who arrived with a huge motorcade last night. but the attendees here are enjoying their free time. yesterday, jack dorsey went hiking and skeet shooting. we'll be back on power lunch with a first on cnbc interview with venture capital investor marc andreessen. >> we're looking forward to it. there's been huge action in stocks today. the dow is up 141 points. let's talk to art cashin. that's exactly what we'll do when we come back after a short break. [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves...
got a lot of movement in the market today. dow opened up to about these levels and has hung there, hasn't budged either way. we've seen gap opens like this before. is this one any different? >> it certainly feels different. first of all let's look back at what's happened every day this week when we've had a rally. we had a 10:00 pullback. we haven't had a 10:00 pullback. second airily, while you cannot guarantee that short covering is taking place, this looks like, smells like and feels like huge short covering. i think there is enough blood in
hedge fund alley to cater dracula daughter's wedding. it's very painful. and the fact that the short covering has not allowed for a pullback yet is very interesting. because usually they cover and they pull back to see if they can get something cheaper. they keep the bid right under it. so the positions must be huge and must be very, very painful, be it in stocks, gold, and even short the bonds. >> it's a fascinating point. david seeburg at cowen was saying everybody was caught flat-footed. hedge funds were on the short side. now if they've been caught wrong footed not just for the day but for the rest of the summer? >> that's why i think they're keeping the bid under. usually you cover just enough to reduce the pain. if you have a huge position, obviously you can't cover the
whole thing. but if they're bidding intently here, i think they have that concern, that this could be a multi-day problem for them. now, next week we've got the equivalent of what used tonight humphrey hawkins testimony. so we can get a lot of volatility again. it's interesting. one of the key things in the takeaway. bernanke, one of the things that he said when he frightened the market was that they were considering the feds' own forecast. he walked away from that last night. i think that's one of the things that the market picked up on. he pretty much said we're going to be data driven but it's going to be real data. it's not going to be what we think the data is. we're going to look at the hard numbers. i think that was one difference. >> to put a period on it, 1670 looks like pretty legitimate resistance. >> it should be. but again, it's tough to tell. i can't think of something, another shoe to drop that would panic the shorts again. but resistance will fade if there is another short panic.
for now, you have to wait and see when do they finally relent and allow them to come in a little bit and get a sense of how big those short positions were. but this is -- i'm telling you there's a lot of pain out there in hedge fund land. >> we hear from them from time to time. art, thanks. coming up carl icahn and what he calls a no-brainer. he'll be delivering at the conference all starting on july 17th. "squawk on the street" will be right back. in the lead. ♪ load! we keep moving to deliver what you need. and that means growth, lots of cargo going all around the globe. cars and parts, fuel and steel, peas and rice, hey that's nice! ♪ norfolk southern what's your function? ♪ ♪ helping this big country move ahead as one ♪ ♪ norfolk southern how's that function? ♪
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quick promo here. one of the biggest names in all of business joining us live on "squawk on the street" tomorrow. jamie dimon chairman and ceo of jp morgan. question is, what do you want to know? tweet us your suggestions. use the #askjamiedimon at 10:00 a.m. eastern time. i think it's probably the first
one-on-one dimon has done since consolidating that chairmanship and holding both offices. he hasn't done a lot of press since then. >> it will be down here on the floor. we'll be asking a ton of questions. as we said send in yours as well. we'll see what he has to say about his personal role about the bank and the economy generally. >> interest rates, the effect on lending, standards, credit quality, delinquencies, credit card business, not to mention the quality of their hedges, where he sees the macro going, where he sees china and europe going. probably nothing you could throw at him he hasn't thought of before or spends most of the day thinking about tomorrow at 10:00. eastern time. carl i can urging shareholders to seek an appraisal of their shares calling his proposal a "no-brainer." to defeat michael dell in his competing bid to take the pc private. talks about how when he first
started icahn and co in 1968 says on rare occasions in investing one comes across situations that are no-brainers, obviously trying to convey to dell shareholders he thinks his offer for the company is one of them. >> he says "it's a no-brainer at dell. it's because if you own dell and opt for appraisal rights, you have the rare opportunity to make a profit without taking risk." so the stakes get higher and higher with each chapter here. but clearly, carl has to be feeling pretty good about the position he's in. barring, however, people may take that recommendation from iss. >> meanwhile as art cashen just said, a lot of pain around the hedge fund community today. probably caught wrong footed perhaps by what happened with ben bernanke's comments yesterday. the dow adding almost 150 points and the 10-year has moved as well. those caught on the short side of the bond market ouch. >> home builders. amd gets my attention today. that's a 10% pop for amd on the
back of a couple of upgrades for the year. 82%. i mean, there was a time where they were really the david intel's goliath. as chip sets migrate not necessarily the case anymore. we'll see what happen this afternoon. let's get back to headquarters. scott wapner and "the halftime." carl, thanks. welcome to the halftime show. four hours to go until the close. there's the big day on the street right on the wall. the dow is good for just about 1%. s & p, nasdaq higher as well today. on the half gold game changer after being left for dead. is the precious metal about to shine? yum or yuk? what happened when two traders are on opposite side of a stock debate. first our top story, federal reverse. the dow reaching a new record today after ben bernanke tells