Skip to main content

tv   Squawk Box  CNBC  July 16, 2013 6:00am-9:01am EDT

6:00 am
cnbc. i'm pebecky quick with joe kern and andrew ross sorkin. the s&p is now in its strongest eight-day winning streak since november of 2004. that is hard to believe, but if you missed it, people think at this point you look back to what happened, wow, that was a quick correction and stocks are back at incredible levels. the nasdaq logged its best eight-day run since july of 2011. and the u.s. equity futures this morning, if you want to look, you'll see they are indicated slight lly higher. we have a number of earnings coming out today that could impact where trading is headed. some household names that will be getting before the bell include coca-cola, goldman sachs, and johnson and johnson. then after the close today, yahoo! and csx among the names set to report. as always, we'll bring you the numbers and instant analysis. among our newsmakers this morning, coke cfo joining us live at 7:50 eastern time. >> from earnings to the economy,
6:01 am
we also have a packed agenda today. 8:30 eastern time. june cpi. economists are looking for the headline number to rise by .4. among other reports to watch today, industrial production. that's up at 9:15 a.m. the nationality association of home builders survey at 10:00 a.m. our market newsmaker of the morning, squawk master mohamed el erian will join us. we have a lot to talk to him about. beyond the data, the other big economic story of the week, fed chairman ben bernanke heading to capitol hill. he'll testify before the house financial services committee. that's at 10:00 eastern tomorrow. then repeating that performance in front of the senate banking committee on thursday. a lot to chew on there. politicians are expected to grill him about the fed's bond buying program and plans for tapering and, of course, if widespread rumors that bernanke will step down in january true, this could be his last monetary policy report to congress. >> i bet he would miss that.
6:02 am
>> we should also note that tomorrow say huge day at cnbc. in addition to the testimony, we'll be holding our delivering alpha conference. you can catch it all day on tv and online. "squawk box" will be live at the event. we'll be starting at 6:00 a.m. eastern time tomorrow. among our guests, famed short seller jim chanos joining us. along with david mccormick, and then at 8:30 eastern time, treasury secretary jack lew. not a bad day. you're all coming across -- >> yes, we're coming to your home. >> is it safe? >> it is safe. >> should we -- >> you should come over after the -- >> you know how you jones to wear the jacket. want to do it tomorrow? i'll wear a jacket tomorrow. if you want me to wear a jacket with pierre and audience and all that stuff. if you want, you know, get it out of your system, we'll do it
6:03 am
tomorrow. >> i wonder what bernanke -- i don't know what he's been thinking lately because he hasn't said anything. i think tomorrow -- what are we on? she loves me, she loves me not, she loves me, she loves me not, she loves me, she loves me not. i'm doing all the reasons. tomorrow, i think he says he will taper. >> i think that's what he's on. back to that. >> yeah. he's done each side. i don't remember the last one, i'm sure it is back to tapering. corporate news today, investigators are probing whether a fire on that boeing dreamliner in lon been last week, oh, oh, no. oh, no. was caused by -- that's a different -- >> a battery. >> a different battery. the battery of an emergency locater transmitter. the part was built by honeywell. honeywell says it joined the investigation, but declined to discuss details. it said it had no previous experience of difficulties with
6:04 am
the transmitter. airlines continue to fly the boeing 787 as the investigation -- if it wasn't anywhere near the lithium batteries where the previous problems were, yeah, but the stock sold off at an all time high. >> the airline engineers are suggesting this honeywell battery, which has been indicated as a potential, may not be at either, but may have exacerbated the problem. may have been there was a fire and that that lithium ion battery potentially exploded later. a good story in the journal, the new york times and a great engineering website about all this stuff. >> what do we know about -- >> two things. brand-new plane, and it was being maintained at heathrow. so it is not exactly -- >> not ethiopian air per se. >> but the stock regained most of -- >> back to a high. yeah. regained almost everything they lost. the new york financial
6:05 am
regulators reportedly examining whether to overturn insure r f & a, usually like the hotel -- >> one this london. >> or in new york too. i would say it like that, just to sound more important. for the annuity business of britain's ariefia, the journal says this is part of the crackdown on private equity and insurance deals. the new york regulator said he's concerned that private equity firms insurance ventures could place annuity holders at risk. and preparing to vote tomorrow, thursday, on michael dell's buyout proposal, now adding uncertainty on one of the company's biggest investors. t rowe price says it continues to believe the propose bideout does not reflect the value of dell and we do not intend to
6:06 am
support the offer as put forward. we have been discussing carl icahn, new offer for dell. >> new day. >> one of the featured speakers tomorrow. t. rowe price doesn't like either deal. >> doesn't like either deal. >> bingo. >> talk about other technology news as well. a court has cited with yahoo! in a data collection case. this is victory for yahoo!. it could help the public learn more about the government's efforts to obtain data from internet users. the u.s. foreign intelligence surveillance court reviews government requests to spy on individuals. yesterday, it ruled that information should be made public about a 2008 case that ordered yahoo! to turn over customer data. the government sought the information under the national security agency's prism data governing program.
6:07 am
users must pay full price for their smartphones, people are very used to getting that completely subsidized by signing a long-term deal with the carrier. this change will let the carrier cut back on the cost of s subsidizing devices if you agree to stick around and have a long-term contract. another story for you, first data, will be suspending 401(k) contributions to employees and replacing cash bonuses you with stock. the announcement was made to all 24,000 employees of the company yesterday. this payover haul takes effect on january 1st and will save the company $60 million in cash next year. at this point, first data matches 3.5% of employee contributions to 401(k) plans. under the new arrangement, those contributions will be suspended and employees will get stock instead. the employees have to hold on to that stock until 3 to 6 months after they have an ipo and then they can cash it out.
6:08 am
the trial of fabrice tour is now under way in new york. on day one yesterday, his lawyers told the jury that he never misled anyone. an s.e.c. lawyer arguing that he deceived investors about toxic securities. >> tough to say. >> in a classic case of wall street greed. this is being cast as a financial crisis. >> the complaint has been this is the best the s.e.c. can do, you're not going to go after the high level guys, who actually walked off with lots and lots of money in their pockets that were -- >> this is it. you're going after a 20-year-old -- >> she's nice. toxic securities, not hard to say, but she helped you. you're very empathetic. he has no one when you're not -- >> you mean, you don't -- >> no. i go like this when he starts messing -- i even try to distract him. what a week.
6:09 am
we had billy bush and maria menounos sitting in. we had -- we almost brought in that guy that said fns on his first -- he was scheduled to come in. if you didn't show up today, we were -- >> billy bush and maria menounos. that would have been good. >> that's all you're thinking of? that's a joke. >> i was out for that. >> you focus on your hall pass and your infatuation. that will not happen unless you can produce matt lauer for pi r pilar. i'm at a support level. 185. i think i look -- i know what you're saying. a lot of saggy skin. i need to -- >> that's not what i'm saying. >> that's kind of what you're saying. >> you look like you should not lose any more weight. your face looks really thin too. >> there is a lot of extra skin.
6:10 am
>> that's not what i'm saying. it's paying off. >> if you weigh 140 pounds, you're in the shape of your life, but you're young. this will come to you. >> you're a handsome man. i'm just going to -- >> it is paying off. it is also the swimming and push-ups and everything else. >> it is easier in the summer. >> the jack lemon movie, he turned -- he can't handle getting older and he's like on a treadmill and crying and trying so hard and everything starts not working as well and taking longer and -- >> should take it as a compliment, the compliment that was offered. you look good. >> okay. thank you. >> you look tan, that's probably because of the white shirt too. >> i'm paddlingup stream as quickly as i can. >> it's working. >> cheating. anyway. enough about me. let's talk about me. enough of me talking about me. why don't you two talk about me? >> we were. we'll talk about washington for a moment. senate leaders -- >> you look good.
6:11 am
>> everybody is looking good today. i'm not, but you guys are. >> it's good. >> democrats plan to bring up seven executive branch nominations today. they say if republicans filibuster any of them, they'll change the rules so that 51 senators rather than 60 will be in charge. they can end the debate and proceed to a vote. and that would be a shift in washington. also, the senate banking committee released a draft bill aimed at bolstering the finances of the federal housing administration. the fha faced mounting losses from mortgage defaults. fannie and freddie helping the bottom line on the treasury. back to you, joe. >> okay. i don't know what i think about that. what do you think about it? >> i think it is a bad idea. i think there is a reason both sides should have to work together. if you're in favor of it this time, you'll be opposed to it when your party takes over. >> 18 held up. total prior to this was 20. more held up -- >> more reasons, right.
6:12 am
>> i wish they could find some way to -- >> they say republicans are threatening, if you do this, all the other -- we'll go even slower on the other stuff you want to do. i don't know how that's possible. >> if you take the nuclear option, that's a bad thing in washington. you won't find ways to compromise -- >> only on the appointments, mostly for the -- >> it is going to poison the well on everything that they're working on. >> the well is so thick with arsenic now there is no water left. >> doesn't mean add more arsenic. that's -- >> fun to watch, i guess, anyway, as we're not expecting anything ever good. at least watch the theatrics. let's check on the markets. what a run. becky, one thing i didn't mention to you, i made this point, you weren't around, all the people that said no, no, no, you got to wait until we get a little -- none of them said when we're down 6% they wanted 10%. no, no, no.
6:13 am
not yet. the train is leaving the station. they're not on board again. >> you may have seen the lowest level this year. >> none of them told us -- they just -- i don't know. some of them need to go find another line of work, i think. regular people can do as well, just acting on their own. the futures this morning, i think they're up about 11. yesterday, managed to eek out a small gain. but, you know, from some of the previous sessions, nice gains. the -- >> oil, that's what's surprising. i wasn't paying real close attention for a week. holy cow. >> we need to get down to 50. >> no. >> the ten-year, quieted down, we couldn't have made it -- couldn't have done this
6:14 am
eight-session streak or whatever it is. but if that hadn't happened. if we were at 290, it would mean a different arena. and then the dollar, which i keep saying that the european countries, by being so turbulent now to -- they have given the fed so much cover, because we have -- all this accommodation and our dollar stayed strong. we have been able to do all this, as the best house in a bad neighborhood and -- china is getting even worse. >> i think the biggest concern globally is china. >> and then gold has come back a little. back to 1286 or so. bounces along the bottom. nobody knows yet whether it starts -- goes back to 13 and tests that or 14 or whether it goes back down and head business low 1200. we'll see. time will tell. >> let's talk about global news. trains ground to a halt and hospitals worked with emergency staff. the strikers are protesting government plans to fire
6:15 am
thousands of public sector employees, so, yes, the chaos continues. and once again, you see the protests. also in india, the central bank raising short-term bore rogue costs, restricted funds, banks said that they could -- restricted funds that bafrmgs could access and it says it would drain cash from the market via $2 billion bond sale. india is to create demand for the rupee. trying to create demand for the rupee, which hit a record low last week. that move sent stock and bond prices tumbling today. you can see the rupee at that point at around 59. now time for the global markets report. ross westgate is standing by in london. good morning. >> good morning to you. we're getting back toward the best levels of the day. equities under water for most of the session in europe. advancers outpaced by decliners 3-2. a bit of data out today, which played into that slightly better inflation data than we might
6:16 am
expect out of the uk. mark carney, the governor, doesn't have to writer a letter to the chancellor. the annual rate came in at 2.9, a tick up in june from may. people think that will be the peak. boosted by a rise in petrol prices. ftse 100, we are outperforming, just up 3 points. helping is rio tinto, one of the world's second biggest copper miner, iron ore miner. had record iron ore output in first half of the second quarter, up 7%. rio tinto up 2.7%. contrast the impact of rio with the cac down a third, xetra dax down a quarter as well, with the sectors, basic miners, basic resources that are higher across the board. best performer, 1.2%. helping miners out, the australian prime minister saying he plans to scrap a carbon tax. controversial carbon tax introduced last year.
6:17 am
he will have to win the election before he does that. that's all pretty good news for miners despite the volatility in iron ore prices and copper prices, the production is up and it is working okay. media, travel and leisure. as we stand on equities, as far as the other data is concerned, disappointing investor sentiment survey data out of germany. it did just mean we got -- bounds got a kick earlier on. economic sentiment, 36.3. expected a tick up to 39.6 in june from may. basically some of the german data hasn't been quite as good. elsewhere, gilts lower yield because of the inflation data. we keep our eyes on spain as well. yields still elevated 4.7%. spanish prime minister getting a lot of heat about what he knew or didn't know surrounding his party's slush fund scandal. keep your eyes on that. it might blow up after the german elections in september. that's where we stand ahead of the u.s. open.
6:18 am
back to you guys. ahead of the u.s. open. i'm thinking british open. that's -- what's today, ross? tuesday. >> we kick off on thursday morning. >> have you seen a forecast? not over there -- it is always raining, right? >> no, the weather -- we are in a mini heat wave. we haven't had a heat wave like this since 1976 and it is even extended, believe it or not, up to the northern part of the country. scotland having really good weather. hopefully the course will be fairly fast running. hard and fast running, the way we like links golf. >> so fun, i know. you got to land it 20 yards in front of -- i can't even tell where the greens start over. there is no fringe -- >> it is original. original landscaping. they didn't make the courses with bulldozers. >> the bunkers look like a lot of them like you're in the middle of a construction site. they don't look planned, half of
6:19 am
them. is that really -- in -- >> i think on the old golf courses the bunkers were literally because it was links golf, it was sandy soil, they didn't have to -- they made a bunker by scraping away the top part of the earth and there was the sand at the bottom of it. they -- they were easy to create. >> a lot of things in england, they think because it is old, it is better. like their food, for example. there have been advances made in food technology too, ross. you don't are to eat that -- >> you know london is one of the culinary capitals of the world. we have moved up. >> you loved it when you were there. >> i do. i like the white tower. you have an amusement park basically that is real. built in the 12th century or something by william -- and it is like you're at like in -- over here, we built it like 15 years ago to make it look old.
6:20 am
but you go to the tower of london it was all -- and there is like on a thames there is this place where you can see some of the guys coming in bringingbring ing prisoners in, right, ross? >> they cleaned up all this stuff. the new resorts look so good, you think it looks like it has been built recently because of the -- modern resorts are so well done, replicas, that you think -- >> right. and it's neat. all of it is neat. i'm coming back. now i -- >> due a trip. >> we hung out. >> i know. >> we had dessert together, which is weird. not just us. not just -- family, the kids, all okay. see you later. coming up, one year ago, marissa mayer, do you like mayer or mayer? you said both. >> i say both. depending on my mood.
6:21 am
>> took over ceo of yahoo!. set to report results today. we'll talk about the future of the company next. up first, tonight is major league baseball's all-star game in new york. last night, i wish i followed baseball a little closer. i guess i don't know the oakland a's that well. this guy that you can see there, that andrew will pronounce after the break, be yoenis cepedes, left out of the all-star game to take home the crown. winning the home run derby, that will get you a cup of coffee. >> like winning the dunk contest and not being in the real thing. >> he beat bryce harper 9-8 in the final round. bp supports nearly 250,000 jobs here. through all of our energy operations, we invest more in the u.s. than any other place in the world.
6:22 am
in fact, we've invested over $55 billion here in the last five years - making bp america's largest energy investor. our commitment has never been stronger.
6:23 am
6:24 am
welcome back. national cancer institute scientists released the largest ever database of cancer related genetic variations. the move provides researchers with the most comprehensive way to date to figure out how to target treatments for the disease based on your own genotype. open access to the new database is expected to help researchers accelerate development of new drugs, better match patients with therapies, different side
6:25 am
effect profills, different efficacy, prime example is herceptin which works incredibly well depending if you have that one particular genetic anomaly. >> i read something today, a new study out that just suggested even mild exercise, if you can get one to two times a week, can help prevent even more than any of these drugs that they're bringing on. >> i would tell you that -- your immune system is -- i don't know if you call it an organ necessarily, but if you're in good shape and you pay attention, you -- the germs that you're always worried about that are everywhere, they ned to be -- if you haven't gotten sleep, or rundown, they get to take hold. >> under stress. >> but running and everything else, i don't -- >> exercise not only changes and helps get rid of the fat, it changes the way the fat you have acts and where it goes in your body. that's a big part of it too. they're saying, again, exercise
6:26 am
is the best -- >> mentally. >> sleep is something we all kind of -- >> the endorphin thing is huge too. keep your attitude positive. >> i think -- tim ferris suggested taking lieseen, given to cats, actually, to improve your immune system, to, you know, it is supposed to be -- if you feel colds coming on. i take that. it has garlic and -- >> it is an amino acid. one or 20 or -- with what you eat, if you eat a normal diet, you get plenty of lieseen. >> if you think a cold is coming on, you're supposed to take it. >> that's like a lot of the things we have seen. >> ever seen vitamin b -- >> i take one vitamin.
6:27 am
>> airborne. >> one multivitamin a day. you know what i saw the other day, ensure, it is like, look at this, like 25 grams of protein and you said, that's for -- >> i don't think you need it. same thing. >> it looked look a good drink. but it is for people that are 80. >> they're trying to market for people much younger. it does a little dance in the refrigerator with the other food, like, yea, you're the healthiest. >> i'm not quite there yet. >> no, you're not. let's get a check on the forecast from alex wallace. how are things shaping up today? >> hot. h-o-t. not just today. something we're dealing with for the next several. get ready and be prepared for it. d.c., baltimore, heat advisories. head toward phillie, excessive heat warning today.
6:28 am
we're talking about the heightened heat advisory there. parts of new england. hartford and new york city, heat advisories for folks here. all thanks to this big ridge of high pressure sitting over us in the northeast. it extends all the way back to the midwest. not just the northeast dealing with the heat. places like detroit, chicago, minneapolis will see the 90s. look at the widespread activity. these are the actual high temperatures, 97 in philly. you start talking about the humidity that makes it feel nasty out there. 97 plus the humidity, going to feel like it is up over 100 degrees out there. this carries na tomorrow as well. 93 in nyc with dc up to 96 degrees. really stay cool, ac, drink water, if you're out there. stay away from the strenuous activity. guys backing to you. >> thank you, thank you. it is hot. way too hot. yahoo! gearing up for a report,
6:29 am
quarterly report results after the bell. we'll see how hot they are. been a year since 38-year-old marissa mayer took over as ceo. joining us to talk about it, ron josie. what should we be looking for today? >> i think it will be an interesting quarter because yahoo! was active on the engagement front. launched a brand-new products, new home page, new search, new e-mail. we need to be looking for an increase in engagement, which in theory should turn into increase in display dollars. maybe not this quarter, but hopefully in the back half of the year. that's got to be key. >> that are we going to learn about this billion dollar tumblr deal today? >> i got to believe not much. probably will learn how they plan to monetize it more. they're not going to be integrating it within yahoo!'s core services too much. don't want to ruin the special
6:30 am
sauce within sum bletumblr. still relatively early. >> when you think of the total value of yahoo! so much of the total value is in alibaba and their stake there and whether you think there will be an ipo this fall or next spring. do you think we'll learn about that? what percentage of the total value of yahoo! do you ascribe to the alibaba piece? >> it is a very large percentage of the total. valuation range goes from 50 to 100 million with most people at 70. in our opinion, you know, i think this is a big part of the overall yahoo! story. it certainly is a big percentage of yahoo!'s total overall valuation. that's why when we think about operations and the way we think about yahoo! we're focused more
6:31 am
on operational turn around. ali a big focus. >> what is yahoo! going to become if it all works out? is it ever going to go back to the status and stature it used to have? >> that's a tough one. i think where the web is going, certainly search is probably the purest business model and they have a big business. the web is going more social. yahoo! is trying to do this with a bunch of acquisitions we have seen this year. to be in a traditional portal business is something that needs to sort of change a little bit. you see this with new ceo mayer focused on daily habits. more on mobile. that's something we need to see. not easy, clearly. we have seen that yahoo! is treading water for the past few years. >> how long does the honeymoon
6:32 am
last? this has been a year now. i could argue that the numbers are not necessarily there. there is a little bit of wait and see. >> it is a lot of wait and see. and frankly, you know, yahoo! needs to return to maybe its peak of 2005. in terms of the leash that ceo mayer has, i think you have a few more quarters here. as you said, andrew, nail on the head. >> if you had a dollar to invest, stocks at 27.50, would you invest in yahoo! google, apple, where would yahoo! be on your lineup in terms of great investments out there? >> sure. i would throw another one out there, ebay, which reports tomorrow. we like ebay quite a bit. we would put a dollar on ebay and google as well, probably
6:33 am
over yahoo! at this point. >> where would aol stand? >> we like aol too. we think aol is further down in the overall turn around cycle. there is a lot of question marks in terms of whether they can grow both top line and bottom line. we would put a dollar in aol before yahoo! at this point. >> thank you for your perspective this morning. >> thank you. >> yahoo! reporting this afternoon. if you want to play armchair critic or armchair analyst here, you can go see our poll, tell us whether it will meet, beat or miss, go to when we come back, quarterly results from goldman, coke and johnson and johnson. all on tap today. a key read on inflation, we have the stories likely to drive today's trading session. first, look at yesterday's winners and losers. (announcer) at scottrade, our clients trade and invest
6:34 am
6:35 am
6:36 am
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.
6:37 am
welcome back. another all time high for the dow and the s&p 500. now the markets deal with a flood of earnings and another round of fed speak from ben bernanke which kicks off tomorrow. joining us now is john stolfus. and cliff courso. cliff, we'll start things off with you this morning. what are you thinking at this point? we were commenting earlier.
6:38 am
if you were waiting for the pullback, you never got it. are you going to get your chance this year or have we seen the lows for the market already? >> i think the temper tantrum may be the wrong reaction. a little surprise. it shouldn't be to the market, caused the pullback. i wonder if it is now built in, like sequestration was built in. maybe we have done enough dispersement of what is about to happen by way of taper, that when the event actually happens, it is maybe a big yawn. >> if that's the case. perhaps we have seen the lows for the year. >> it is a possibility. if you take a step back what is going on is the economy is improving. we like to say good news is good news, particularly for the stock market. again, the economy is recovering. we see it in the consumer sector, the balance sheets are improving. jobs are still a little too slow, but growing. we're constructive on the stock market for sure. >> we'll come back to the bond
6:39 am
market for sure. let's get your thoughts on the bond market. >> i would have to say that when you look at the stock market, it is experiencing the beginning of i great migration back to equities. with the likelihood that bond yields are going to rise, but that will be a moderate rise. we think people are going to be looking for cyclical stocks, dividend exposure with that, total return story. and that's going to be very supportive going forward. what does a baby boomer need? income, income growth, potential for capital appreciation. and the environment appears good. looks like we blew out all the tension related to the tapering issue. i think ben bernanke learned perhaps next time it would be better if he tweeted the message than if he gave a lot of detail. overall we're very positive and
6:40 am
exposed. >> how do you think the market reacts tomorrow to bernanke. more of the same? have we become ready for anything he has to say at this point? >> that's the $25 trillion question, becky. it depends how mr. bere hannank feeling. the fed chair is a straightforward guy. when he checks out the latest beige book and read on the economy, he'll tell it like it is. and the market will respond in kind. but we have to say the overall trend here looks positive for the u.s. economy. as we lead the world out of the great recession. >> cliff, back to the bond market. i saw pimco actually added to treasuries, treasury holdings in the month of june. is that the right move? >> we think the right move is to underweight treasuries. overweight yield product because we think rates will continue to rise. we don't think it will be a
6:41 am
blowout, don't think it will be a massacre like 1994. the fed is not trying to slow the economy down. a big difference. they're trying to moon walk out perhaps of this amazing experiment. money supply growing by 350%. not trying to slow the economy down. the rates will continue to loft. but i view it in two regimes. the first regime, we just hit, here we go, tapering, but that's not the same as raising rates. if you look at what bernanke is pointing to, we're a ways away from the number. the actual rate rise probably doesn't happen until 2015. we as a market, given the lengths of time we look at investing, probably won't worry about that for six months. you'll have a six-month plus period of stability in the bond market, maybe a 2.5 to 3% ten year. there are things you can do.
6:42 am
>> okay. cliff, thank you very much for coming in. john, thank you for join is us. >> thank you. what happens when you combine reality, a tv star, a love for underwear, and a pitch for to kick starter? >> what? >> yeah. yeah. i wonder if we'll look at this underwear and see if it can compete. we'll have to try them out. maybe not today. tomorrow, "squawk box" is live from cnbc's delivering alpha confidence. we'll be joined by jim chanos and david mccormick. at 8:30 eastern, secretary jack lew, treasury secretary jack lew. don't miss it. -f-f-f-f-f. lac-lac-lac. he's an actor who's known for his voice. but his accident took that away. thankfully, he's got aflac. they're gonna give him cash to help pay his bills so he can just focus on getting better.
6:43 am
we're taking it one day at a time. one day at a time. [ male announcer ] see how the duck's lessons are going at ever ybody has different investment objectives, ever ideas, goals, appetite for risk. you can't say 'one size fits all'. it doesn't. that's crazy. we're all totally different. ishares core. etf building blocks for your personalized portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock.
6:44 am
call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.
6:45 am
6:46 am
how one man got so fed up with the poor quality of men's underwear in this country, he decided to make his own. and in the process, he created a high end garment company on track to being a multimillion dollar lifestyle brand. joining us is jake byronsteen, ceo of flint intinder. it looks like good stuff there. >> yeah, we -- >> but it is about being made here. >> it is. >> starts with manufacturing in america. >> it does. i've been walking through the underwear aisle, a multibillion dollar section of a department store -- >> the men's. you're not one of those -- >> just the men's. and what i in the enoticed is n single product was manufactured in this country. if you look at the unit economics of that space, it is a category actually created using american manufacturing decades ago.
6:47 am
so to slide in an american manufacturing base, you can do it at the same price point, you can deliver higher value, and create some american -- >> someone said to you, if you want to try to make underwear in the u.s., you have to go back to flind -- what is that, like the stone ages? is that what they meant? >> if you wanted to reignite american manufacturing, you need to use flint and tinder. i thought that was poor business advice but a great name. >> is it a boxer or a brief? >> like half and half. >> boxer briefs. >> you got both. >> the cost of doing this in the united states -- >> the cost itself is five times. so on that end, it is not competitive at all. >> how much do these boxer briefs that i'm holding -- >> they would retail for $21 on a shotore shelf. >> and cost you how much here.
6:48 am
>> the margins are slimmer. they're going to go dollar to thar against ralph lauren on the shelf, against calvin klein. >> china, where is it being made? >> china, thailand. >> is that licensed to somebody else. >> it is licensed. everything in the underwear aisle is owned by one of two companies. it makes it hard to push in. when we started online, which we did 12 months ago, pe put twe p project up and skied does anybody else care about this the way i do. my goal was to sell 3,000 pairs of underwear as a proof point to take to investors. >> like kick starter. >> we did 300 grand -- >> did you have anyone to make -- you had to scramble with someone to make all that. >> it is on par with anything elsewhere in the world, it is a
6:49 am
vertically integrated facility. we're now 11 facilities. we're on track to doing 2.5 million this year. we have done over a million dollars in a single sweatshirt already. and i really think it is on to something. i think we can build ralph lauren level brand using an american manufacturing base. >> do you have to rely on people agreeing to paying more for it or -- >> no, the end consumer doesn't pay a dollar more. as a company, we take a reduced margin, but we can make up for it through online sales. so -- >> okay, where margins are not going through. >> right. the underwear goes on shelves, which is great. dollar for dollar it compares to every other product on shelves. online we can offer other products, jeans, sweatshirts, t-shirts, this kind of stuff at what would appear to be a value, we're about to start selling jeans $160 in j. crew, $80 on line, and recover the rest of
6:50 am
the ecosystem. >> what sizes? what are those? >> these here are -- we call them our all summer board shorts. they look like shorts, they function like a bathing suit, so you can wear them all summer . >> do you have a nametag on the back there or what? . >> is this a baby suit you can wear? . >> you can wear one item all summer long. >> how much do these cost? . >> those retail for $358 on the website. i know for a fact if it doesn't come in a tube, he's not going to wear underwear. >> you don't wear those panties that come in a tube, honestly? you wear something out of a box? . >> yes. >> so even the box looks
6:51 am
different than everything else in the underwear aisle. it's not a guy with his shirt off. >> it comes in a tube. will you try this honestly? >> i know are you a tommy john guy. they're made in thailand, the male equivalent of spanx. will you you try an american product? . >> i will try that. i got them from a woman. >> lulu lemon? . >> she had to send me instructions there is no flap. you do need to pull down. >> you love flap, right? . >> can i tell you something? i don't think lulu lemon makes underwear. >> these were shorts that had underwear in them. >> no, no, i got, they do have the flaps. they have a thing. >> all right. >> i don't know what you are wearing. i'll be happy to talk to you
6:52 am
about it after we're done. >> some men don't like the ripped dude on it. it's really designed for -- >> i think that's sort of, right in. >> i think it's aspiration. >> it might know aspirational as we move from a float-sexual economy into something else. >> lulu lemon. >> are you implying -- >> i don't know what i'm implying. >> is that a fantasy of yours? . >> know your competitor. >> yeah, okay. >> lululemon, they really like being an apparel manufacturer who touch on underwear. they're not and underwear per se manufacturer. >> we will be delivering alpha. >> i like american made. thank you very much. >> we will do what we can. >> still to come on "squawk box" this morning. quarterly results from goldman
6:53 am
and squawk market master. stay tuned. "squawk box" will be right back. . >> i will be interviewing nelson peltz. you want to know the way he thinks about investment and activism and take joseph's. we will try to physical out where he's going next. >> peltz, lew, isaun, ferrara and more t. biggest event of the year. delivering alpha, exclusive coverage all day tomorrow on cnbc. .
6:54 am
6:55 am
6:56 am
6:57 am
. >> welcome back to "squawk". >> coca-cola, johnson & johnson all due in the next hour. we are back in just a moment.
6:58 am
6:59 am
7:00 am
. >> glorm, everybody. i'm becky quick.
7:01 am
let's take a look at the markets around the globe starting right here in the united states with wall street's record run. the dow and the s&p finishing at new highs for the third straight session. investors will now turn their attention to earnings news and congressional testimony. the futures this morning are indicated slightly higher after the dow and the s&p eeked out those gains yesterday. a gain of about 18 points yesterday for the dow. right now the dow futures indicated up by close to 10 points. goldman sachs is the next big financial firm to report earnings. they expect results to come in at $2.82 a share. navenlt, we expect those numbers in the next half hour. coke is expected to give her to shares for the second quarter. the dow component cfo will joins first at 7:50 eastern time to talk about those results. also, johnson & johnson will be out with near record highs.
7:02 am
j & j is expected to report $1.39 a share. overseas, the nikkei hitting a seven-woke high, finishing marginally higher. you can see the gains that came out for the nikkei was just over .6 of a percent. if you check in on europe this morning, you will see right now at least there are some modest decarolinas. a drop of a quarter percentage points for germany, dax and a drop of close to half a percent for the kak in france. >> it's more of a summer bull run. it's j & j, all the dow components, now you know why. on the phone, index analyst at s & p. howard unlike the late '90s the multiples for these nifty the multiple bar is extended as they were back then. does that mean that maybe we will fail in value, not overpriced in. >> no, definitely the multiples are more realistic.
7:03 am
which is reflecting that we done believe the futures as much as before t. cash flow numbers are a lot better than they were before. especially if we go back to 2006, 2007 with high multiples as well. the fundamental also of the index are very good, an balance eshoot and income statements. >> where do you as someone at s&p, where do you put the multiple right now on say the s&p 500 on this 84 or next year's earnings. >> they were at 14-and-a-half. i go into 2014, you will get a little low. not a lot of people believing those numbers yet. everything could have to be aligned for that to happen. the second quarter, now, even though we will complain about the number, especially the sales. it looks like it will hit an all time record. so it's hard to complain when you make a new record. the cash flow effect will be god as well. we haven't had a lot of major items pre-announced. >> so 14.5 historically is the
7:04 am
-- >> yeah. >> that's what brings our figure even at 18. you had rates that weren't at 0, too, right? >> yeah. we haven't had those going being. so we should be going into the 90s or going back even farther when we had a low pes in the '70s and things. >> how high could rates go? how high could the ten-84 go where you could still, you know, if you were confident it maybe had adjusted enough. people all think the ten year is the yoeld is lower than it should be without the fed. let's say it cuts back to -- >> however. >> you got a speaker or a receiver on the phone? . >> i have got a receiver. >> fine. >> here's my question. if we got back to normalized rate on the ten year, could you
7:05 am
expect 18 times earnings? . >> not at this point. you have to have a drag on the rates. what we need is a lot more confidence in the fall with numbers in the market to pay that multiple. the earnings are decent. the dividends are decent. the cash levels the balance sheets, they're all good numbers. however the competency going forward is not there yet. the cycle is only starting on the upside with consumers hopefully are spending a little more. maybe we can get more enterprise spending there. i.t. will be really difficult this quarter again because of the lack of corporate spendingch. >> okay. so, in this environment, are there different parts of the s&p that have more potential and are there parts that have more risk? . >> obviously, through the financials, which are the biggest contributor to earnings at this point, star on the rebound, especially if you look at the stock price, they're supposed to do the best. worry seeing that. you notice, we shaw the three big ones, we got bank of america tomorrow, i.t. is the big
7:06 am
concern, obviously. if you want to go back to rates, obviously, the utilities are a big difficulty. the debt in the index side of banks and utilities is pretty low. we have been running the numbers, those who have refinanced have. it will be more on the utilities and obviously the financials for the interest rates. >> okay. all right, howard, thank you. sorry, i guess we couldn't get a camera or something. are you in the studio, right? >> i'm here. >> do you look, do you not look good today or something? why didn't we put you on camera? . >> you can only work with what you got. you know, actually the studio guy just came in. i guess they would wait a couple of minute on here. there is a phone on here. >> they didn't look at you and say you have to do a photo? . >> no, do i have a face made for radio and a voice for movies, no
7:07 am
doubt about. i disagreement i disagree. a voice made for what? . >> the silent movies. >> oh. geeze. or something. all right. howard, we appreciate your time, thank thanks. >> in other news this morning, price will not support the boyout. brian rogers saying it doesn't properly reflect dell's value. investor. >> caller: acon has, of course, been pushing >> also the government has a case in which it ordered yahoo to turn over customer data.
7:08 am
yahoo has won a fight to have the details about that case unsealed. those details could shed more light. the government will have a chance to review the case documents and read back classified information. all of this was done under that proven program that has seen so much in the headlines. >> the 787 soap opera continues. investigators are probeing whether a dreamliner in london was caused by a battery of an emergency locator transmitter. that's the good news, because it was not the larger battery issued. but it affected those planes earlier. the part was built by honeywell him honeywell says it has joined now in the investigation but emphasizes it has no previous experience difficulties with this type of transmitter, which by the way is on many planes and, of course, 787 continuing to fly be many of the other airlines that has this.
7:09 am
>> i like when you do that here. >> anyway. you can see the shares there $105, $66 cents. >> pimco shares increase the holdings of treasury securities last month. according to data on pimco website, they fell in june, the worst month since the financial crisis in l.a. when it happened. investors powered 9.6 million in the fund. we will be talking with the co-ceo now. >> he's not co--ceo? that's a lot of responsibility. mohammed el-erian. he was named. >> you can see it on corners. >> he's got a good job. >> in this environment, given the bond market.
7:10 am
>> compared to the president of egypt. >> well, it's relative. i don't think it pays as well either. depending on what kind of president you are. some of them have done pretty well, actually. you got to be dishonest, which he isn't. >> it's probably not. the servers. they don't have that. >> they have been tweeting. unfortunatel unfortunately. >> there were some tweets. you are very interested in underwear. >> oh, let's talk about an at&t story we mentioned. at&t is introduce agnew plan where customers can get a new smart phone or tablet every 84. most of the time you end up having to say you will keep it for a couple of years t. phone companies have been subsidizing the costs for the smart phones for several years doing this. under this new device plan, at&t
7:11 am
next, customers don't have a downpayment, no upgrade fees. no activation fees. you can think of it as an installation plan. after 12 months of payments, people can trade in their device or keep it after 20 months of payment, then you own it. >> what happens if you have an iphone? how much does it cost that much more? you can get it for $300? $299 on at&t? . >> it costs double if you -- >> i don't know what the pricing plan works out. my guess is you are paying more on a monthly fee, can you swap it out after 12 months instead of 24. >> you want to hear some good news? . >> always good news. >> there was a theory t-rex. >> i tweeted this this morning. >> was a scavenger. they said the t-rex, is now they found a very unique fossil in south daekt where it was a 4 ton
7:12 am
plant eater and they found one of t-rex's teeth in this thing's pa past. >> it's out there, the tooth is embedded there, which manet the t-rex was chasing it. >> they had showed calcification around it. >> it started to heal. it got away from the t-recollection which was chasing it. then it regrouped. >> he was right. >> do you crave -- >> do you know what size bites the t-rex could take in meat? a 500 pound bite. >> and lived to tell about it. >> thank god he doesn't have a -- you saw that? we will take a short break. coming up next, the markets are enjoying the easy money policy. will bernanke signal the end to the punch bowl party? we will speak to lawmakers
7:13 am
tomorrow. coming up, one of wall street's biggest investment firms will be reporting the numbers and instant analysis you can only get here. wall street reaction just ahead. stick around. .
7:14 am
7:15 am
7:16 am
. >> so the latest read on the futures there, after a pretty good session yesterday, just in consolidateing some of the big gains we had over the past week so for. some numbers are coming. we're all waiting to see what ben says tomorrow. which could be his last testimony. you are sure it will be the last? . >> i'm not sure it will be the last. the question is, will he be here six months from now? . >> if he extends his term. >> i don't think the term. maybe he sticks around a little bit. are they allowed to do that? . >> i don't know. >> you are saying this is the end? . >> yeah. that's what we said earlier. >> we said possibly the end. >> the end unless he gets another term. >> unless he gets another term. when do you think they announce
7:17 am
another term? . >> they kind of did on charlie rose, didn't he? . >> who said that the other day? someone said long live the king and then in the next one. they say, whoever that might be, when we decide. you usually don't announce someone is gone. >> until they're gone. >> until someone new. >> let's talk more about that. joining us on set right now is nathan sheets. he is the global head of global economics at city and nathan, this has been something we have been kicking around this morning. do you think this will be his last testimony? . >> i think this is it. i think after this round of testimony, chairman bernanke is going to retire. it's been eight long grueling years. my feeling is since he will be kind to the stew wardship of the federal reserve. i think he is ready to move on and do other things. >> it depends on what happens over the next couple of years as they unwind this big policy
7:18 am
that's been put up. you think he's okay not being in part of the legacy? . >> i'm sure that that generates misgifgs and uncertainty, but eight years of battle, i think he's tired. >> i can understand. >> i think he is also confident of the risk of possible successors. all of them are capable and able of the federal reserve and really lickly to succeed in exiting from these policies when the time comes. >> he has done a lot to try and make the fed a place where there is a much easier game plan. it's less about who is in charge of things, more about the procedures that are followed by whoever is in place. would you agree with that? . >> i very much agree. i think that was his key objectives when he joined the federal reserve. first as a governor, then when he became the chairman. i think that's really what the communication is about is trying to help the markets and the public better understand what the federal reserve is doing.
7:19 am
and in terms since then, that he mystifies it and makes it less about a single individual and more about the institution, the process he used for monetary policy. >> the markets are very prone to react in a huge way to whatever he has to say or whatever he doesn't have to say. whatever it thinks the subcontext is there. some people have said you can't take the mystery out of it. you have to give away your changing stance. no matter what will rule the markets. >> inevitably the chairman is the voice in the face of the federal reserve and inevitably, the markets have responded to that. i think you can go a certain way to demistification. i think bernanke has gone about as far as anyone will going to be able to go. but the chaerm is the leader of the committee and his voice matters more. than the other members. the markets realize that,
7:20 am
respond accordingly. >> tomorrow, do you think the markets have been as much as they will be over the last few weeks? is there anything he could say or indicate that the markets would see as a huge surprise? . >> i believe bernanke is very pleased with the way the markets responded to his q & a last week. i think he's happy with the level of the ten-year treasury. i think he struck the right balance on the communication. on the one hand, the economy is doing better. if the economy does better. we will not be able to purchase at 85 a month forever. on the other hand, we are watching, we will monitor anything we do will depend on what the data say going forward. i think you strike the balance right. i think he's happy with what he's communicated twice. i think the testimony tomorrow and on thursday is largely going to be restating what he said last week. >> do you think what he said over the past few months has
7:21 am
changed at all? . >> honestly, i think what's changed is the economy appears and particularly the labor market. because the gdp data went a little flimsy on us right now t. labor market feels stronger. i think the fed is more confident and optimistic about the economy. i don't think the fed's so-called reaction function has shifted. but i think it's interpretation of what's going on in the economy has shifted. >> before he said we might go higher. >> he had said we're at 85. we may go up. we may go down. >> i know you ask that question all the time t. time before, he had said, we may still go up from 85. on may 22nd, he said, we're going down. >> yes. >> that was different. >> there was a time we had the very weak march payrolls. we got in early april and then the march data, they were coming out with were very weak.
7:22 am
>> the first week was 100. the march data were very -- >> it changed when he said it's data dependent. that's why we should have assumed it was data dependent. >> we can't be at 85 billion forever. >> that's what we have to keep in meevend when we think about federal reserve policy. is the staple. they had a team of hundreds and hundreds of economists. they are analyzing every data point from every conceivable perspective. and anything they do is going to be justified based on data. they are looking at what the economy is doing. and they're trying to respond to the economy performances as best they can. nothing is precooked. >> bernanke, you know you have to do that again tomorrow. >> don't rock the boat. for hours, he's got to talk about it again and say it in different ways but not say it
7:23 am
wrong, not say neng anything new. you wonder why he wants to leave. >> nathan, thank you very much. >> my pleasure. thank you. >> coming up, earnings from goldman sachs, johnson & johnson, the cfo will be joining us first here on cnbc to talk about the global economy and much, much more. "squawk box" returns right after this. .
7:24 am
7:25 am
7:26 am
. >> coming up next. we got goldman sachs, coke, johnson & johnson. we have the numbers. stick around, a lot more coming up
7:27 am
[ dog barks ] i want to treat more dogs. ♪ our business needs more cases. >>.
7:28 am
7:29 am
7:30 am
>> coal bam back to "squawk box" this morning. in the headlines, we are an hour away from consumer inflation, the consumer price index is expected to rise .4 following a .1 of an increase in may. we have earnings news. becky, joe. >> numbers. >> yeah. >> it's in line. >> it's in line with expectation, 1% global buy on growth in the quarter. >> if that's the case that, is
7:31 am
below the 2.3 is the estimate. >> currency was a 2% head wind on comp, operating revenue 12.75. 12.958 was the estimate. so that would be a little bit light on the revenue side as well. >> the street was looking for a gain. it looks like they have a drop. here comes the actual report, itself. according to some of the other number, latin america, they were looking for a gain of 5.3%. so the case volume in latin america was actually at 2%. >> you see this, they believe the performance will be better in the sec half of the year. >> coke at this point. >> 1% in pre-market. >> 43 is the high on coke. i think it finally did get back. it took forever.
7:32 am
it got back to where it was in the late 90s, i believe, finally after all those years. gives us a split at some point. >> someone told me goldman sachs was out. although, i don't have the numbers. do you see them? . >> i do not believe goldman is out yet. >> it will be. when we get those numbers, we will bring them to you. in the meantime, we come back to coke. we are about an hour away from consumer inflation t. june consumer price index expected to rejs stare rise of .4 of a percent. later this morning. the fed issueing its monthly report on industrial production is back to capacity utilization. we will be getting the monthly reading for the national association of home builders. also, we got a little of a deal this morning. china is buying smart phone apps 91 wireless. they operate two distribution
7:33 am
platforms that delivered more than 10 million apps. china's largest search engine. there it is the equivalent of google on steroids. joe, we see anything else? . >> let me tell you more about these numbers. currency was an issue. it was a 2% head wind and a 3% head wind on the comparable operating income for the quarter. some comments from the chairman and chief executive officer. he said our second quarter volume came in below our own expectation, reflecting a global challenge in the environment and unusually poor weather conditions in the quarter. he said they're not happy with the performance, but they did gain global volume and value share in total non-alcoholic ready to drink beforeages and in the quarter. the head winds, they're committed to improving results with current dynamics leading up to believe our performance will be better in the second half.
7:34 am
>> challenging global macroenvironment. >> the weather. it's actually poor weather. i don't know what that means. >> rain. >> euro-asia and africa was good. it matched expectations. that's why the zbroet. 9%. they acknowledge the rest of the volume the case volume around the world is below their own. >> it's interesting data. here it is, despite unseasonably cold and weather, cold and wet, people don't drink as much soda. >> what's amazing is we're hearing cold and we don't believe it because our own little world it's been hot. so where is the cold and wet, you know what i mean? . >> somewhere. maybe latin america. >> one of the coldest on record. you don't think that way. >> it's all local. >> it's all local. >> it's interesting. we were talking about the numbers where they saw stronger growth. thailand up 24%.
7:35 am
nigeria up 15%. russia up 11%. argentina up 7%. >> i think that coke might be number two. >> and pepsi sometime. >> i have been drink a little frese ka late -- fresca. it's a throwback. >> you know what i had last week, tab. i haven't seen that. i didn't know they still made it. >> it's a coke product. >> all right. now, we do have goldman. so i want to, before we go, we see the stock is immediately up 2 points on the results. so you would have to say they have a chart. you see it right there. >> revenue came in better than expected. $8.6 billion t. street was looking at $8.9. second quarter earnings per
7:36 am
share 3.70. well below what was expected. they talk about investment banking revenue of 1.55 billion and just starting to dig through the rest of it right now. >> you can find what you are looking for? . >> the inflation benefits loin? you actually really want to know? . >> it's not -- >> 27% higher than the second quarter of 2012. it's a significant increase in revenue. for the first half of 2013, with 43%. 44% in the first half of 2012. a total staff decrease 1% as dpard with the end of the first quarter of 2013. >> i that made comments talking about the firm's performance, it's solid, especially in the context of mixed economic sentiment in the quarter. he said there is improving sentiment in the u.s., that
7:37 am
drove the franchise level, blah, blah, blah, said the operating environment has shown noticeable science of improve him. >> does he still got a beard? . >> he still has a beard. >> did they mention and we didn't incur any royal expenses. they cut him loose. >> no, that's actually. >> they are paying. it's very interesting goldman sachs, a lot of banks and firms have ens to cover this. goldman sachs effectively self insures themselves. they are paying completely out of pocket. >> that's weird to self insure. i'm trying to physical out how that would even work. >> when i say self insured. >> they will take on insurance. >> they are taking on whatever the risk is involved in this. the question would become if he is convicted, whether they would then try to claw back the money. >> he doesn't look like it. did you see that picture of him? . >> he doesn't look like he will be convicted, does he?
7:38 am
. >> no. >> he looks like i'm kind of like a celebrity. >> you saw that story yesterday. >> did you see mary thompson? . >> there she is. obnoxiously sticking that mic in the guy's face. i don't know if you saw that story. she was off to rwanda, trying to do good. >> all right. let get some instant reaction and analysis to those goldman sachs results. joining us on the news line is marty mosby. these numbers are much better than the street had been expecting. what caught you by surprise? . >> it didn't catch us by surprise. what you are getting is that you are not experiencing the losses you could have had in the fixed income side because the looming voerk voelker rule out there, voelker's business is to be able to move out of the way and mavk making markets, not taking positions. could have been a head wind, we
7:39 am
didn't see it a citigroup or j.p. morgan, today we're not seeing it at goldman sachs. >> you are making it almost sound like this is something still to come, something that could hit them down the road. >> actually, no, what we're zee saying is because they're not taking positions, what you will see is when customer activities begin to pick up like we're seeing as the markets kind of falling out, getting people rotateing back into the market. customer activity is really kind of winning the day. you are not having the positions offsetting that as you kind of go through this. >> is it some of the mortgage concerns aernt here, either, right that were as well with j.p. morgan. >> they're not a mortgage originator. this is all about customer activity. what you see in investment banking, on the brokerage side as customer activity and flows continue. >> as the rates go up. they don't do better.
7:40 am
>> the balance sheet as much as a fee income and a brokerage investment. >> i thought they were a black box, i thought voelker made money by precluding the voelker roam. they're not doing that? that's the point. they're making it the old faxed way. it's not a black box like hedge fund. >> you are getting a customer as agent, not as principle. but to be able to move through the market. what you got to remember is there is a lot of squeezeout from the last time we went through recovery in the economy. a lot of those competitors aren't there anymore. so any increase in the overall activity, the participants left benefit from that more than they would have in the last seekle. >> the stock is up 1.5 morris, would you buy it here? . >> sure. we think there is momentum that will pick up. plus you get the operating leverage you were talking about in compensation lines. so there is a nice flow through
7:41 am
edge. you get a kick of activities that would push you towards higher stock price. we're looking at the returns that have been subdued around a 10% return on common equity, start moving significantly above their cost of equity. pushes that tangible book value to that 20 oto 30% premium vs. that 10 to 1515 initially. >> thank you for the quick analysis. appreciate it. still to come, earnings continue. johnson & johnson is due out. up next, though, a big day for cnbc. we get ready for the delivering alpha conference. squawk will be live 6:00 a.m. eastern time. up next, we have a preview from kit kelly. coke cfo will talk earnings and the consumer. "squawk box" is right back. fin. pwc is doing something about that. .
7:42 am
7:43 am
7:44 am
. >> welcome back, everybody. let's give you a quick recap. goldman sachs earned $3.70 a share for the second quarter. that was well above what the street was expecting. coca-cola, revenue and the case volume, those were below estimates. that's what people have been
7:45 am
focusing on this morning. that stock is down in the premarket activity. coke's cfo is going to be joining us in a few minutes to talk about the quarter. we have a lot of questions for him. i'll send it over to you. >> thank you, becky. we are now obviously a day away from the delivering alpha conference. "squawk box" is doing the show from new york city tomorrow starting at 6:00 a.m. live. you can check out some of the morning lineup. our guest host will be staying. george chanos will be joining us and at 8:00 a.m. david mccormick. the partner of brimwater associates. jack lew will kick off the conference starting on "squawk" at 8:20 a.m. eastern time. in the meantime, kate kelly will be there all day as well. she has more on one of the conference's key players. >> one of the players is a man that typically stun shuns the spotlight. everyone wopders what he is
7:46 am
thinking. this is u.s. attorney pree preet bharara. he has brought a string of cases against those including the bomber. and in albany, a queen's state senator who attempted to bribe his way to the new york city mayoral ballot. he is best known for his many insider trading cases. in 2011, one-time fund manager raj rajaratnam was convicted for insider trading. a tipster who is now appealing his own sentence of two years. the chemical foirnd steven cohen is under scrutiny for the same type of alleged crime. federal prosecutors have won convictions on a handsful of sec
7:47 am
employees. as a part of a pending case against sec analyst, some expect cohen, himself, might be indicted. he, of course, has said he has done nothing wrong, though. there has been talk, but for the moment, andrew, he's rounding out his fourth 84 in this role. rudy guiliani made a comparison. we will see what's next for him. you heard the same talk i have of him replaceing eric holder, about him going on to bigger and better things. at the moment, he's right in the middle of this cohen case. it's very much unresolved. we heard that there won't be an indictment this summer. but they have other fish to fry. >> hey, kelly. we will see you tomorrow. delivering alpha, as we said before, "squawk" will be delivering alpha ours. we will talk with our guest host jim chanos and secretary jack
7:48 am
lew at 8:20 eastern time. >> up next, not so bubbly earnings from giant coca-cola. we will talk the consumer trend, a global and currency head wind with the cfo of coke. we should know all about this. then at the top of the hour, more reaction to goldman sachs. we go inside the numbers and tell you what they mean for your portfolio. i know warren buffet is not happy at this number. [ male announcer ] it's time. time to have new experiences with a familiar keyboard. .
7:49 am
7:50 am
7:51 am
>> j & j is up a little bit. but the move could get better because these numbers are pretty good. the company is reporting, let's see, a buck 48 vs. 1.39. the guidance is 5.40 the estimate is 5.41. the revenue was up above 17.9 billion. they don't make soft drinks. i do operate globally. the currency head winds and the things, the numbers are above expectations. the stocks are going to trade. >> how much of j & j do you say has something to do with the global economy 134. >> i mean, multinational.
7:52 am
>> multinational consumer product. >> they got a lot of pharmaceuticals, too. and all the, you know, all the medical devices and supplies and all that stuff. it's definitely a diversified. johnny, any more of the p & g or any of those, right? . >> p & g, coke. that's a little different category. >> it's not like -- it's not coke. >> yes. >> i got to do this. >> second quarter results moments ago. the company top estimates. at this point there are soming a nojd a little bit of weakness in the case file. joining us now is first on cnbc from atlanta, the coca-cola cfo. i wouldn't call it a mea culpa. it's a tough operating environment in many parts of the world. weather didn't help either. maybe you can go into that.
7:53 am
>> thanks number one for letting me be on this morning. >> sure. >> yeah, it was a disappointing quarter in terms of our volume. we said along the road there would be a bump here or there. we didn't expect the world to have a bump and the whole industry slowed down. a lot is a macro-environment. a lot is weather. a lot of it was the weather. i think the most important point in the whole thing is we continued to take share. we took volume share. we took value share across the world both as in total non-alcoholic beverages. you do what you do. you xeechlt ours is a great industry. it's going to come back. we continue to invest in our brands. have strong brands, a strong system. we'll be back as well. we are confident in the second half of the year. >> gary, we know where your growth is. you get good results in africa and asia, places like that. but this country, north america,
7:54 am
still matters a lot and some people are pointing to, that's where the real weakness was in some of the case line, is weather in north america. >> in fact, if there was an article in one of the papers yesterday, if you go back and read it, without quoting my own resources, but you will see, it was cold and wet weather than it's been in decades. in fact, in atlanta here, if we don't get another drop of rain this year, we've already surpassed everything we got last year. so very unusual weather patterns and cold. >> and cold. >> and cold. >> do they not drink as much soda when that happens? . >> it's true. they don't. with rean industry that is susceptible to weather and i think the weather, we believe, is going to turn and, you know, there are some other countries like india, for example, where if you look at india, are you see our volume is only up one.
7:55 am
we took a lot of share in india. it was up one, the monsoons started a couple weeks earlier. they were late last year. one thing we do know, monsoons only come once a year. things turn around. >> that's funny. late last 84, early this year. so that's how weather seems to be variable a lot. then it's sort of right in the middle if you average it altogether. that's funny how that works. a lot of variability. the means stays kind of consistent. >> yeah. i think we will see a lot of volatility in the weather. i think that will continue. >> you say someone changes like the weather. you money they change a lot? >> so this has been happening a while. >> it has. >> i'll be darned. >> i looked outside, it was hot up here. i thought, man, this planet is warm. i saw it actually was cold. as far as, what would make things improve in terms of the global economy still being a head wind? not the weather, but the other part of the equation that you said the economy is not great.
7:56 am
>> well, obviously, europe is going to be a long-term recovery and i think that will continue and so that's one i think will be very slow recovery. china, now i would go second and their consumer spending has slowed, you know, consumer consumption has slowed across the board. so i think the chinese government is struggleing with what to do right now. but i think hopefully they'll get their act together and get china growth back up as well. will help a lot of the rest of the emerging markets across the world. so i think. and then the u.s. is a slow recovery as well. >> gary, with the fed possibly getting less accommodative, the prospects for a weaker dollar don't seem that great unless europe improves. so that will continue to be a head wind. hurts, coke, right? . >> it does. it does. i think we're in for a stronger
7:57 am
dollar, actually, for some time. i think that's inevitable. now, there are some offsetting commodities. you see commodities coming down as a result of the stronger dollar. >> all right. thanks for coming on an giving us some more insight into what happened. we appreciate it. >> right. thank you. >> when we come back on "squawk" mohammed el-erian. wreak. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better
7:58 am
and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. 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!
7:59 am
weekdays are for rising to the challenge. they're the days to take care of business. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next.
8:00 am
8:01 am
♪ here on cnbc, let's get a check on the markets, u.s. equity futures are now down. you know what, ko. check it out. the futures got ko'd. it's down a buck 50 j & j is up a bit. it's not helping the s&p:out of
8:02 am
the three reports we got, two are good. coke was disappointing you heard the cfo acknowledge that. there's the asian markets. japan was closed yesterday. marine day. >> i did not. >> for the oceans. the abundance of the oceans. in europe you got some green, i mean red down, not much happening in london, france and germany are down less than around a half a percent. >> also, goldman sachs, joe mentioned, they came out with numbers earlier this morning. the earnings and revenue came in a lot higher than the street expected. joining us is roger freeman with barclays bank. roger, these numbers were a bit of a surprise. what really happened that caught the spreet by surprise? . >> the upside was in their lending segment. it has a lot of their own balance sheet investments.
8:03 am
it was debt security. they had a good investing quarter outside of that. that probably accounted for, you know, that's the tax rate, it's lower, probably half of the roughly dollar beat to our number t. core businesses were a little bit better. it's just that some of the other banks were reporting. that was a real standout in investment lending. >> the other thing is they said they were number one on the streets, looking for the numbers again. again, is goldman tough to figure out the other banks, that i don't get as much guidance in. >> you know, i think it kind of depends on where you are trying to get at t. capital markets businesses are a little more vague to investors. you can't, there is not a lot of day to day or week to week reported. it's the distance attracts. it is transparent in that it's not, you know, it's not
8:04 am
obvuscated by other businesses that don't force them to talk about what's going on in the capital markets. so i think the core business is actually reasonably attractive. it things like the principal investments are tough. they have a lot of seasoned investments. so as they realize those, these aren't news-making events, so we don't know theld e them headed into quarter. so you get surprises because there is realized gains along the way. >> what do you think of the stocks? . >> we think the stock is fairly valued. it's trading 1.1 tames book. it work out probably around 10%. it puts it about fair value where it is. i think the kwhe is, is there a path to 15% or higher? it's worth a premium. i don't think we bought the the answer to that this quarter. >> when you have the investment banking business. one of the things that has not been there, broadly speaking, has been mna dole making. >> that's right. >> do you think that's a
8:05 am
cyclical situation? there was a report out a couple weeks ago that said this is cyclical and it's actually never going to come book? . >> i wouldn't read too much into those sorts of statements. i think that there is ail a lack of rick taking appetite. it's gotten better. you see it on the part of the investors, i think corporates are somewhat uncertain about some of the macro and overhang, so you got a lot of cash on balance sheets. it's probably it's coming. and i don't think that the traditional cycles necessarily have shifted. i don't see evidence of. that it hasn't happened yet. >> you know, the improving economic conditions have been a part of what really pushed things for the firm. is that something that you have been seeing broadly across the board in. >> yeah. there's a pretty high
8:06 am
correlation between global ged growth and the growth of the capital markets businesses over time. over a decade, it's two, two-and-a-half time. so there is no doubt that growing economies drives investment banking, chemical markets higher. and again we have been in a pretty slow growth mode and that's, this gradual recovery from the financial crisis means a very gradual recovery in these businesses. you have a lot of reg egg la tore things they owe owe regulatory things they are facing. goldman, of course, is not the only major report. dow components, coca-cola and johnson & johnson reporting earlier. coco kala was inline. revenues were below stills. the cfo spoke to us a few minutes ago. he says the cold, wet weather that was a big factor in the weak case volume. he noticed the company did
8:07 am
increase market share globally. also, j & j items came in $1.48. revenue also being street consensus on this number. joining with us more on this report, chief investment officer tom anderson. tom oversees $4.2 billion. tom, why don't we start out with johnson & johnson this morning. >> sure, becky, it does look like a good report. we were expecting them to report pretty well, pharma has been doing really well for them. i think our biggest concern was on the med tech side, medical devices side. we've seen some weak information last woke from into surgical, we were curious whether that would carry through. it looks like they did well on revenue. so this looks like a good, solid results for j & j. >> johnson & johnson, do you own them? . >> we do, actually. we manage money for high network
8:08 am
individuals as well as institutions. so most of our clients are really looking for us not only to grow their wealth but protect it. we love fwhams that pay a nice healthy dividend, with johnson & johnson, you are getting a 2.9% yooerld yield as well as it's outpaced the market this year. >> coca-cola was surprised. they came in line with earnings per share t. case line was something the company itself said was a bit of a disappointment. they blamed weather. they blamed some of the global economic conditions, deteriorating a bit. when you look atco ka cola, you walk away and say it will be a better second half? . >> coca-cola is another name we won't own, for similar reasons, the yield, it seems weaker expectations have been baked into the stock price. it has lagged a bit lately. the results today don't seem to be a surprise. i think the conversation about
8:09 am
the cooler weather and some of the overseas markets was pretty well baked into expectations. >> although, that stock is down more than 2.5% this morning. does that mean you'd buy more on this weakness? . >> yeah, our targets for coke is around 44. so, all you do is add 41 or so at the open. >> this morning you can get it below 40. 39.89 is the current priechlts you would buy more based on -- >> i think we certainly would. >> and, tom, when you look around, it's not just these two current companies, but these are global companies. it tells you a bit of how things are going for this earnings season. how does it make you feel about other holdings or things that you might be looking for. >> i think we always think earnings season is important. i think what's most important about this one is when you have this factor of fed tapering coming in september or later in the fall, i think a lot of what we're looking for, one of the
8:10 am
indications of economic strength, last quarter, two-third of the s&p 500 names boat earnings expectations. only half boat revenue expectations. so what we want to focus is on are the revenue numbers. the companies they look to beat on the top lean. and is that a good seen the economy is recovering as the fed seems to think it is. i think that's where we are most focused on. there is other names, a name will be reporting tomorrow that we like a lot. matel. again, fits that profile. we have been talking about a nice 3% dividend, consistent record of returning shareholder value to investors, increasing these those dividends consistently over time. we are positive on that name as well. >> tom, thank you for joining us today. >> thank you for your time. also on an earnings note, folks, we want you to play armchair analyst with us. yahoo reporting after the bell today. we are wondering, do you think the second quarter earnings will
8:11 am
meet, boat or miss wall street expectations of 30 cents a share. you can vote on the squawk facebook page. we'll get back to you tomorrow with the results. >> the other thing, ben bernanke is heading to capitol hill this week. he will be testifying at 10:00 eastern time tomorrow. then he gets to repeat that performance in front of the senate banking committee on thursday. politicians are expected to grim him about the plans for tapering and as we said earlier, widespread rumors bernanke will step down in january were actually true this could be his last monetary report to congress. in corporate news this morning, investigators probeing whether a fire on a boeing dreamliner in london last week. we talked about it cars, battery offage emergency locator transmitter. the part was built by honeywell. this is not low batteries we talked about in the last problem. honeywell says it is now joined in that investigation. so far the client declined
8:12 am
details. it said it had no difficulties with this type of transmitter on many airlines. airlines continue to fly the boeing 787 as the investigation continues. the aerospace giant boeing has regained most of what they lost on friday. you see it there 105.66. >> dell shareholders will vote on thursday on the boyout proposal and adding to the uncertainty, one of the biggest investors, t. roe price says in its word continues to believe the proposed buyout doesn't reflect the buyout of dell. they talked about carl acon icahn put together an offer for dell. delivering alpha tomorrow. he will be one of the speakers during alpha conference inside to nelson peltz and john paulson. we'll be live down there at 6:00 a.m. tomorrow morning. >> i can roll out of bed.
8:13 am
>> i know. >> next door. >> you roll right out of bed anyway. >> that's true. >> when you come in here. >> it's a close call. >> usually right around 5:49. >> you get here at 5:10. >> you get here at 5:58. >> a 10-minute gap. you don't need a lot of makeup, obviously. >> okay. we still got a busy morning ahead. up next, cheating in the banking industry. nearly a quarter of finance professionals said they would engage in insider trading and get away with it. 8:30 a.m. eastern, we will get the latest cpi. then squawk market master. mohammed el-erian will join us. stick around for him and a lot more. (announcer) at scottrade, our clients trade and invest
8:14 am
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. [ male announcer ] you wait all year for summer. ♪ this summer was definitely worth the wait. ♪ summer's best event from cadillac. let summer try and pass you by. lease this cadillac srx for around $369 per month or purchase for 0% apr
8:15 am
for 60 months. come in now for the best offers of the model year. i turn of the model year. ed 65 last week. the math of retirement is different today. money has to last longer. i don't want to pour over pie charts all day. i want to travel, and i want the income to do it. ishares incomes etfs. low cost and diversified. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.
8:16 am
8:17 am
. >> welcome back to "squawk box." right now, dow futures are down barely. we'll see what happens. as i spoke, never mind. we'll see what happens. coca-cola has been putting pressure on the dow jones industrial average. it's about $1.3 billion. shuffle is the company. the place is the 24% premium over yesterday's close. >> okay. also, a new survey found unethical behavior. according to study competitors
8:18 am
engaged in illegal-on-or unethical behavior. they said they would engage in insider trading if they could get away with it. >> good morning. >> here's the question. i wrote a column as well. 24 responded said they would engage in insider trading. the response i got wasex% online. how accurate do you think the respondents were in this. more importantly, duping it's true just on wall street? if this question was asked of
8:19 am
anybody in any industry and said i would give you 10 million, what do you suggest? . >> they suggest people underreport conduct associated with themselves and their organization, so it's probably true. 24%. as far as whether other industries would have such high numbers, i suggest that the numbers would be a little bit smaller. >> the other thing i found striking was when you broke it down by age and seniority in the business. we found the number of people were more incloind to do things that might otherwise be unethical, across the bird for the question around insider trading. it jumps. what does that say? is that people saying they want $10 million? how do you come to dprips with that? . >> i tell you, it was very
8:20 am
troubling throughout the survey, younger professionals said they would engage in this conduct or fear reporting this conduct and, you know, i have some theories on why this might be. one might be that people have short memories. so these folks haven't experienced the hardships. >> when you think why you would definitely not do this one of the things you would say, wow, it isn't a deterrent. part of that question is, you are not going to get caught at all. you are relying totally just on -- >> a moral question. when you are older, you seen the wall street, you seen the physical guy. you seen everybody go to jail. >> that's one of the things that came out of this survey is that financial services professionals had higher confidence in the se
8:21 am
c than they had. >> the deterrent is a thing. >> we haven't seen a lot of people in the financial crisis. >> or any of the politicians. >> you think that will be changeing. elaborate. >> sure. i have the benefit of being at the fcc and representing people two are reporting misconduct. they involve significant misconduct. i expect you will be hearing more about that in the coming years. >> modely, we focus on the ethics on wroet. >> do you think this says anything about the industry? >> i definitely think many in the industry have lost their moral compass. >> you don't think there are lessons learned from the crisis in that's a suggestion, by the
8:22 am
way, the result, of the survey. >> sure. one-third of the respondents said things weren't better. >> thighny of the lawyers, smaller percentage the insurance industry? just wall street? . >> you don't think it's human nature? . >> i do. >> some part of it in. >> more scum backs on wall street. >> joe, i would say people go to wall street more for advancement tan making the world a better place and different industries have less of that. >> is that true? as they go to competent america. if you want to go and make a good living, that means you are in for not helping other people? . >> of course, it was canned. sometimes do well, better to be a forgiver?
8:23 am
. >> no. >> who i'm saying is there were certain aspects of the business world that allow for broader benefits. there are some businesses where the ability to make a great deal of money for ones self is a primary driemplt if you ask professionals, they would say they would get in there. >> $450 million is there. >> you don't foley about that. what's going on. >> that's correct. people when they hear about us, more when the cases start coming. >> the profit taking incentive for entrepreneurs is what created all the jobs in the
8:24 am
country. it's almost the meaning of profit incentive. >> exactly. >> not having wall street. >> no. you are trying to enrich yourself. somehow you are doing things that just aren't. >> hot profit making is a good thing. >> yes. .
8:25 am
8:26 am
. >> this morning, we have the
8:27 am
latest inflation in june. right now we are ahead of a break. take a look at the u.s. equities futures. a lot of earnings out, dow futures up by about three and three-quarters points. "squawk box"ing will right back. we route your order to up to 75 market centers .
8:28 am
8:29 am
8:30 am
. >> welcome back to "squawk box," we are seconds away from ppi numbers. we do have green arose. doi jones is off or rather up four points. s&p 500. rick is here. the numbers for the week. >> a careful 1% on cpi. i heard the roll factor. i like when it's on cpi. up half 1%. food and energy up .2. head lean up 1.8. is .4 hotter than our last look than if we look at year over year, exfood and energyment it's as expected and actually .1 cooler than last look up 1.7.
8:31 am
maybe the biggest news of the day is the dollar is under a bit of pressure today. the dollar index that is. plus the news is let's watch europe, the equities. there is a lot of issues going on in europe we will see more attention than we know what's going on. i think that may be up for a change. yields are getting closer to 250 on the low years. as i look up on the board the treasury market is paying attention to the data. >> it must be a chain reported a. couple standouts, gasoline prices up 6.3% on the month. we may get more in the month of
8:32 am
july as well. a bigger bush el in medical care costs. you may remember it fell 0.1%. an unusual fall in the decline in prescription drugs. they've reversed themselves. 04 and 05 were the prescription drugs. transportation costs. looking elsewhere, commodities up 1%. airline fares standout and decline. those are up 2.2, may be declining. i don't think overall they are declining. overal overall. >> i just did at this time last time. i'm an idiot. i didn't realize. you don't actually boy a seat. right. you buy a rit to boy a seat.
8:33 am
>>. >> you go online, you get the tick, right? then it offers you a ticket. you have to pay for every seat. there is no seat at the price that you bought the ticket at. and you have to pay for the -- you know what i'm saying? . >> you go on. >> it's crazy. you have to go on for carry-on backs and your luggage. airline tickets are still cheap. >> how do you figure? . >> because i'm old, i remember when you tried to fly somewhere 25 years ago or 30 years ago. it was like $800. now, i can go to jacksonville for $350. >> i went when people's express. i used to go back and forth.
8:34 am
>>. >> somebody forwarded it to me. it was staggering. >> the figures were, i don't remember them. it was a $6 hi. the aflac trivia question was first it was introduced at $600. which is today's prices it was $2,700. then you factor in, so the intro mac or the base imac is $1,200. so it's more than half the cost of the introduction. >> it's five times. we want to talk about the federal reserve. i think that to me, i think the base case the burden of the economy is to prove to the feddies they should not taper in september. i think that's the guidance. i think it's almost but not quite poit policy. it's not clear to me that the recently weak economic numbers are enough to derail the appointed tapering in september. i don't know if we will get that from bernanke tomorrow.
8:35 am
but i want to hear where the burden lies tomorrow. are we headed towards tapering and what kind of economic data? i think the emphasis will be on tapering and tightching. i think the market is gradually getting. i think it's related to the job gains. how effective the program has been. i don't think he wants to be right on the amount of stimulus. i think he wants to reduce it 65 million. i think it will be progress and that's on the late side. >> the market is getting this gradually. i wonder what your thoughts are in terms of the idea being the economy will say we won't taper in september. i know the market has had justed to a lot of this. if you think there would still be an ad judgment to make on the market if it physicals out september is really it. >> traders on this floor, a sen cal bunch. they're not sure if you got in
8:36 am
the head of the bernanke, once youscope escape that, you come out smarter than you are right now in the unknown world of trading on these trading floors. i think that strong data is still going to push rates up. if you polled most traders on this floor. they don't think any central bank will have the rates taken away peacefully. >> they're a bunch of crooks and scumbacks trying to enrich themselves on the floor of the trading exchange. >> don't talk about the committee like that. there was a good conversation in the last 7:00 hour. you asked up with of the guests whether or not the market factored in. the tapering is the base case of the market.
8:37 am
so we have shaken out and require absolute qe. >> i got a poll here that says 25% of journalists would book guest based on anotherenty. >> 25%. >> 100%. >> 25% would unethically try to promote a dlum in the new york tiles. >>. >> i want to go on this show, based on trying to get people to this column. >> would that be enough 25% are ethical enough to do that? . >> we felt that it would be nice to have. >> 54% said that, right? . >> 52%.
8:38 am
>> i agree. we are getting next year. >> a change. what would it be like five, six, ten years ago? . >> the under wear guy, too. you love underwear. >> i did not. >> i have enough underwear. >> you are not wearing it today. that's weird. >> when we come back, our squawk market master. >> we were work out together. >> when mohammed el-erian comes, we will talk about the bonds and the market. stick around. peace of mind is important when you're running a successful business.
8:39 am
8:40 am
so we provide it services you can rely on. with centurylink as your trusted it partner, you'll experience reliable uptime for the network and services you depend on. multi-layered security solutions keep your information safe, and secure. and responsive dedicated support meets your needs, and eases your mind.
8:41 am
centurylink. your link to what's next. . >> welcome back to "squawk box." joining us now is mohammed el-erian.
8:42 am
we haven't spoke to you in a while if i were running a country, would you start with us? . >> i thought you would start by thafrging me for the mets beating the pirates on sunday and helping the cincinnati reds. >> that did help a little bit. you've seen the reds have been slumping, mohammed, you know, they were up well above $600. it's been a little frustrating. i feel like you. i know the frustration you have felt. we talked about earlier. i can go and stay in newport beach and make millions. i think you made the right choice. are you a guy that would go and would go if you thought you were asked. >> you want to get rid of me. i'm happy here, thank you. >> do you expect expect bernanke to enlighten us tomorrow or further confuse us? . >> let me tell you what i think
8:43 am
he will do. a high wire act without the excitement. he's just going to try to convey what you have talked about. he will try not to rock the boat. especially so given the economy the underlying economy is tracking about 1.2% growth. so he doesn't want to cues any excitement he doesn't want the economy excited. the markets are looking for somebody deaf net. is it the ben bernanke of may 22nd and july 19th or the ben bernanke of july 10th? right. the market wants to know which one it is. it will be interesting both tomorrow and thursday. >> mohammed, where do you think a ten year is headed? where should it be right now? all of the sort of panic is
8:44 am
already sort of come out of the market, hasn't it? . >> so short term, we think yields are more likely to come down for the ten year, prices go up from here. why? because we went over the territory. the technicals kicked in. we found a lot of technical activity that made it overshoot. short term, we see a ten-year yield coming down by going up. longer term, three to five years. we are in a rising environment, the market has to adjust to. >> do you think short term is one to three years? >> the next few months, we think an opportunity in terms of interest rate risks. >> are you seeing the reports, weakness, we talked about in terms of money out of pimco.
8:45 am
where is that does that stand? what do you see? . >> record inflows into our fuvendz and that is the end of april. phrase 2 are significant outflows. now, they have slowed down quite a bet. they are undifferenceated inflows to much more differenceated patterns. >> what do they look like? . >> we are seeing coal product, inglows in unconstrained bond funds. it's just like you are seeing in the markets. after the initial shock. >> what does it tell you? . >> i think it tells you they have slowly internalize that.
8:46 am
much of the outflows we saw virtually no appetite in the street you saw this crowd dpo doing automatic trades and our benchmark positioning coming back at the same time. that's what caused a major dislocation in may and particularly june. now the market is trying to normal looizize, it's only normalized because the fed has talked back what they said. so it's still a normal one soon. >> when people opened their statements, you are telling us you haven't seen that? . >> no, we have seen deceleration in the outflow. the reason why is the sell-off is what publicized. you know, it was publicized on tv, in the newspapers, so people didn't need to way for that, for
8:47 am
their statements. >> that's interesting. >> mohammed, whirlwind is back? . >> it is back. remember, the conventional wisdom is nothing would happen in the elections. there were many reasons for that. most important, the ecb had everything under control. what people did not factor in is social and political developments. you have issues in spain and social issues in other countries. yes, europe is back. fundamentally, europe will be with us until they find a way to promote economic growth. they're not there yet. >> are you seeing and hear, mohammed, the good reason for rates to be heading up? is the new normal getting a little better, more like the old normal? are we finally hearing, we are
8:48 am
five years in here? . >> so we continue to heal. we haven't got all the big issues, which are not enough aggregate demand, two fuel structure reforms. we still have a level economy t. leverage has been shifted from the private to the public sector. so we continue to happily as an economy. you see it in housing and other sectors. we still are looking at a growth rate of 2%. remember, we are tracking 1.2% in the second quarter, 80% of the data in. so we will have to beck up next quarter to get to 2%. i don't know where the fed gets their projection from. joe, the fed wants to taper for two reasons. one tie have a more optimistic view of the economy. that's good. two is they're worried about the costs and risks of the colossal damage consequences. so that two things they are
8:49 am
trying to fulfill. that's why the market becomes volatile. >> you have the boys starting the night, at least? . >> we have. isn't that amazing? . >> you want to watch? . >> it's on a little bit late. i love, i remember as a kid how much i loved the all star game, seeing my team. it is great. great for kids. >> thanks, you are right there with me. you started it. >> we're dumb. go ahead. >> one thing. we talked about. he knows the whole crew. >> we're for larry. i read the huffington post. i decided i love him. after seeing those two people. >> how will the markets internalize all this? . >> i think all four, yellen, somers -- >> how correct you are. >> are really qualified. i think the markets will react differently. i think yellen will assume a continuation of bernanke,
8:50 am
gooiter will continue that -- geithner. someers will want to put his imprint on the fed early on. ferguson is going to be more like is more like a geithner. >> you don't know who? well, you don't have the insight? some think that summers is coming up more and more. somebody is floating a balloon somewhere, mohamed? >> yes, i read the same articles that you do, joe, believe it or not. >> okay. she is a friend of the show. like i said. we like him. >> yeah, we would. >> connections at harvard. >> okay. >> oh, you got that, too, though? >> man! my daughter is set. my daughter and son. >> thank you sh, mohamed. >> thank you. >> coming up in the last few hours, we have quarterly reports in goldman sachs and the two dow components, and we will talk it all over with jim cramer when we return. tomorrow on "squawk box"
8:51 am
bank of america reports before the opening bell. we will bring you the numbers and instant analysis. live from cnbc's alpha conference in new york.
8:52 am
8:53 am
8:54 am
this morning. looking at the futures the dow opening five points higher, and the dow up about 4.75 and nasdaq up. and we can take on coca-cola and the weather and of course, j and j. >> well, j&j is the ceo who comes in to make a difference in the world, and he is turning around the basic stuff that you see in the drugstore. coca-cola is disap poipointmentd pepsico has a better model. i am disappointed. >> you are now saying that, hold on, you are getting behind on this one, and reversing the course a little bit? >> well, the all-time high, and the snack model is better. look, if coca k-cola is disappointed in themselves, who am i to say, don't worry about it, and goldman sachs we see the turmoil on the fixed income was
8:55 am
fabulous and goldman does incredibly well when there is a lot of crazy things happening, because they know how to trade in that environment. this was a super quarter, and i'm surprised that the stock is not up more, but it was yesterday. >> and what about j&j? i thought that the problems would be tough to fix, jim? what happened, jim? the quality stuff and the factories and what happened? >> well, it is controlling that well, but just the regular pharmaceutical business that line is absolutely terrific. i think that gorseky has energized it. and worldwide medicals and dying nos ticks has been underperformer and 4.9% gain, and gorsky is makeing a difference. i thought the ceo before was resting on the laurels, and gorski has come in and made a very good number. >> and even warren was disillusioned with j&j? >> well, they should have been
8:56 am
disillusioned with the ceo who was ballyhooed, and a terrific manager, but in tenhe end, he w not delivering like a procter & gamble, and so gorsky has come in and this is a red hot stock, and very few people have been believing in it for ten points, but the points are deserving and the stocks are higher. >> jim, is wall street by definition attracts low lives and scumbags, and did you hear that guy earlier? >> well, i think that wall street, and there a lot -- whenever there is this much money, it is tempting to take a short term and not a long term greedy approach, and you can make money, and we went back to what happened in the chaotic period. what we did was to see over and e over again, that there were people who made $10 million at the age of 27. and they quit. they didn't need to continue. >> and what about the ambulance chairses and the do s chasers and docker or thes with
8:57 am
unnecessary bypass, and give me the industry and i will identify the scumbags and it is human nature, and you are disparaging the whole profit industry. >> well, i'm for the industry. >> and it is so annoying the sanctimonious. >> well, it is a lot of money, and where the money is and people do things that they shouldn't, but do i think that they do things that they shouldn't in every business. >> thank you, jim. coming up, several candidates for the stock of the day, and there can only be one winner. every day we're working to be an even better company -
8:58 am
and to keep our commitments. and we've made a big commitment to america. bp supports nearly 250,000 jobs here. through all of our energy operations, we invest more in the u.s. than any other place in the world. in fact, we've invested over $55 billion here in the last five years - making bp america's largest energy investor. our commitment has never been stronger.
8:59 am
[ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪
9:00 am
stock of the day is coca-cola, and the dow and the matching revenues falling short and weaker case volume. thank you, andrew. be becky, welcome back. i will make sure that you join us tomorrow. and tomorrow from new york city life from alpha, and you were singing today, nice. sweet sound. join us tomorrow. "squawk on the street" is next. ♪ good tuesday morning, and welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. and stocks going up for nine straight sessions which is the longest in nearly a decade and the futures are buffeted by global slowing and at


info Stream Only

Uploaded by TV Archive on