tv Squawk on the Street CNBC April 16, 2014 9:00am-12:01pm EDT
through the chinese irs. >> i'm sorry shi. >> i have no personal knowledge of that. >> okay. we're going to live it there. >> thank you. >> thank you andrew or drew or andrew. >> andy. >> as you know i respond to lots of things. >> ross. >> there you have it. join us tomorrow, "squawk on the street" begins right now. >> good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. the news is jam packed today. earnings, china economic data, janet yellen speaks in new york around lunch time. futures are up after that impressive bounce on the nasdaq yesterday. ten-year art cashin calls it the orchestra conductor to the market, the true fear gauge. today it is back up to almost 2.65. europe solidly in the green except for the uk for the most part. our road map with the markets,
stocks set to open higher this morning after another wild day of trading. the nasdaq was down almost 2% at one point before turning green near the end of the day. what can you do to protect yourself in a volatile market like this? we have answers. >> shares of bank of america down in the premarket after reporting a first quarter hit by well a massive one-time loss, $6 billion, related to mortgage settlements. it wasn't all bad news for the bank in the latest quarter and we'll tell you why. >> yahoo! soaring after beating estimates in the latest quarter and a lot of that is due to the chinese e-commerce giant alibaba. outside is the core business still strong. we'll talk about that. first up markets set to open higher on a busy day for earnings and data after the roller coaster of a session on tuesday. nasdaq making its largest rebound in five years. china gdp came in a little better than expected. helping futures too. although it was the slowest gdp in about 18 months. but that bounce yesterday, jim. >> okay. so let's analyze the bounce at
12:58 the btk bounced. right there. the pivot move. led by gilead. okay. at 1:01 the tlt peaked. interest rates bottomed. 1:03 the s&p bottomed. that can be a huge program that was put on by a margin clerk. i always try to margin people out by 1:00 p.m. when i was at goldman. you had until 2:00. now only until 1:00. at that moment at 1:10, twitter, a tweet, announced by graph, saying that he's going to move from google to -- from -- where he was a big originator of google maps to twitter product development. >> yes. >> these things occurred. twitter goes from 41.30 up to 45. but in those four minutes, this market pivoted and you either try to figure out whether that's because interest rates peaked or the margin call. why do i say that? 12:was 58 was the bottom in the bioteches. my take is the margin call was
done, peaked -- margin call goes two minutes later, bonds peak, and then two minutes later s&p and nasdaq and that's how you get a bottom. that's how you get a 2% rally. >> is it a tradeable bottom? >> no. that guy could come right back again today. as soon as he sees the futures up. whoever that is, you want to argue the guy got done. he wouldn't get done if it was by the margin clerkp. that guy meaning -- three part, a big seller, al go rhythms, try to figure out what he's going to sell and the hft guys who run ahead legally of course. i don't think that process can necessarily be done given the fact it was finished at the time the margin clerks finished it and we don't know who else is behind it. that pivot was totally related to margin and only secondary related to bonds because the btk did bottom ahead of the tlt. >> so you believe that we still are at risk of -- >> yes. >> cutting through that 200 day. >> yes. >> getting closer to that 10% on the nasdaq and so forth?
>> i think that whoever is selling allows the bids to bill between 9:30 and 9:45 and 9:50 and whacks the bids and everyone runs ahead they figure it's a big margin selling program, usually is, and that bottom between 1:00 and 3:00 and this one yesterday was directly related to a margin call. i'm done. >> that was great insight. all of it may amount to nothing. >> absolutely. >> i was happy to hear it. >> if the guy comes back. if the guy doesn't come back we're off to the races. it's the mechanics of the market. there was nothing that happened, i scanned news headlines between 12:55 and 1:05, nothing. nothing. nothing at all to cause that pivot. >> interesting. a good take. you've been consistent on this. that selling or that buying into these dips is a fools error. >> it wasn't yelp. >> bank of america today, of course, in the red in the premarket after swinging to a first quarter loss thanks mostly to some legal expenses related to the financial crisis.
the bank says its litigation expenses increased to $6 billion in the first quarter. excludeing that one-time item the bank's earnings did top estimates vixs down two. >> $450 million charge last year hit mbia. analyze it it's down 15%. the down is an e-louisry number. i like the investment banking up $1.5 million, global wealth management weaker than i thought. i like the fact they continue to take charges. they have not settled with the justice department, $13 billion for jpmorgan. so that's still out there. they are reserving -- good solid quarter. >> that interest margin 2.29. >> you know. >> quite low. >> down three bipartis ps. they keep getting assets. retail was up a very nice number. you know really better than i thought, 15%. this compares favorably to jpmorgan, unfavorly to wells
fargo, wells doesn't have the fixed income. >> a jump off the citi numbers, bac got a bit of a jump too, that might not have been justified. >> stock up 44 cents, i think the stock will give back what it was over -- what it over got, so to speak. it's a good quarter. blowout quarter? no. again a consistent quarter from a company that was hobbled. stock the best of all the major banks. it doesn't rally on this. >> still got morgan stanley and goldman sachs to hear from in terms of some of the investment banks. another investment bank going public, molar company, far smaller than morgan stanley or goldman sachs. >> grub hub and other companies we've seen where people are dressed in characters like king, is moelis going to come in a carrot, you know, maybe a wrap? >> exactly. having this morning, having this morning seen his wallet has a twitter account now, i think he should come as a wallet. with money like the geico guy on
the motorcycle money should just be falling out of it. >> i like that. that's a lot better than carrots and chicken caesar wraps. >> do you have your wallet on you, by the way? has america seen that? >> it's almost like a -- >> america seen that thing? >> erin burnett tells me, take it out. here's the prescriptions by the way. >> it's not that bad total. >> usually a costanza wallet. >> i'm getting rid of it. i always wear it in the front it hurts your back if you wear it in the back. >> talk about that in your back pocket. >> one day it's going to go -- >> like moelis' wallet. >> although did price below the range of 25, $1.2 billion overall evaluation. we'll be speaking to ken moelis when that opens up. >> you have him here. >> he's definitely going to be here. i haven't laid eyes on him yet. >> you broke the story. >> but we certainly will have him around 10:15 this morning. yahoo! it spiked in the premarket after posting earnings and sales that were slightly ahead of expectations. ceo marisa myers believes the
company's core business is in the midst of stable to modest growth, but really, what was important here is ali baba, reported accelerated revenue growth in 2014. i talked a lot about this yesterday being the key to yahoo!'s quarter. that company is expected to file its ipo, alibaba, within the next couple weeks, most likely by the end of april could bleed into early may, some other reports have it as early as possibly as early as monday. you will see the filing which is an f1, not an s 1, but you will see it soon and then the review process, when will we actually get the ipo of alibaba, they're still talking, i'm hearing august. i'm like guys, august? come public in august? >> strike when the iron is hot, august. >> or wait until september. >> we'll see. >> why wait when you have 66% growth. i was looking for 55. a lot of people looking for 51. i like marisa meyer what she had
to say. i no he a lot of people say the revenues weren't that great. it's got to start somewhere. i agree, we're seeing early signs of growth. that's a nice way to put it. >> display pricing down 5. losing share on surge to bing. i love usa today, always a good populous prism. ali baba didn't beat around the bush, rescues yaho s yahoo! >> going on a long time. not like something that started yesterday. we've spoken about whether there is a turnaround despite a strong performance of the stock, you could argue much is due to the increasing value of alibaba this morning bernstein research goes to a $245 billion value. estimated value. >> that's crazy. >> what this has done, taken the trajectory of everybody's numbers higher even though sales growth will, of course, start going lower, those numbers are still higher. so they're now looking for 46% revenue growth in '14, 33% in 2015, that's higher than they
had been you get to higher numbers, higher profits. >> well. >> higher value. >> you know one of the key lines in the conference call, goldman said, good stewards of the cash. >> what are they going to do? take $10 billion in, $12 billion. who knows what the number will be, sell 12% or half their stake or less. >> how many shares they bought this quarter. they keep buying. >> should they buy yelp? >> you know i think they should but yelpp has come down 40 points, still expensive. >> nice upgrade at citi. >> one of the things that people remember google will bid for 500 -- pay $500 million, it's going to cost more to buy that. it's the same reason i wish zillow would buy trul yo. too many stocks in the sector. yahoo! needs growth. tum blar being great. sumly. i like redit by the way. >> readit. >> the younger people like redit. >> the agreemergument she at les
enough to say it's working. >> mobile social native video, they're not a big part of the company but going in the right direction. keeps saying increasing signs of growth emerging in search and display. those numbers you gave me would indicate that's not true. i think it's fine. i think that yahoo! goes to 43, 45 when ali baba comes on. >> really sfw. >> >> i do. >> others suggest more resilience in the 30s. >> if i'm a growth manager i would sell every stock and buy alibaba. i cannot believe that acceleration. this is china we're talking about. china. >> it's quite an acceleration. at some point there will be competition. something called jb com coming public. >> military allow competition there? >> i think they do. occasionally. depends. maybe not for waway. that's a story for another day. >> indeed. >> in the meantime focus on today. toyota unveiling a new version of one of its most popular cars. we're going to bring you the first look out of new york.
also ahead, well-known wall street deal maker ken moelis. what's the twitter account of his wallet? >> kenny's wallet. >> better than cramer's shirt and hair. >> he started today but it was clever. very clever. >> investment bank goes public, ticker mc. talk about that at the big board. one more look at futures trying to build on the bounce yesterday. more "squawk on the street" from post nine in a moment. nine in .
welcome back to "squawk on the street." we are seconds away from a march look at industrial production, industrial production rises, 0.7 of 1%. besting expectations. in our last look doubling up 0.6 to 1.2. utilization leaped to 79.2. it's the best read on utilization going back to june of 2008. june of 2008. so we are seeing a bit of a pop on the production side and, of course, this is a good thing and much might be the renaissance in energy that we have been seeing. also, a little bit of weather, have to be fair, didn't see it in housing, but getting maybe a
potential kick as we get into the post cold weather area with regard to the calendar. david faber, back to you. >> all right. thanks very much, rick santelli. intel apparently beating the street this morning. the company's first-quarter profit exceeding wall street estimates. still dealing with slow demand for pcs. the ceo says the company's goal to take out market share in tablets is on track. we shall see. i don't -- intel, microsoft, question is, how do you deal with both i think? and the continued overhang of the decline in the pc, are they running away from it fast enough? >> i like the quarter. i think that there's people who didn't like it. i don't know. you go overs the line by line, the ceo starts off saying pc client platform did okay. company spending less money. that's important. expenses are going down. you're going to spend less money on capital equipment too. i think it's finally happening. i have always liked stacy smith the cfo talking about the second half being terrific. gross margins, get the magic
number of 63. 60 this quarter. >> a lot of the discussion is, all right, the thinking was, you transition to tablets, margins take a hit. their view on margins for the year does not back that up. >> they said they're not afraid of the $200 pc, continue to see strength in the enterprise, internet of things. people are still thinking it's a pc play. saying the pc market has stabilized. if the stock handent run it would do much better like the bank of america situation. you could get a dividend boost down the line. the op ex dropping materially is very important. i liked the quarter. we don't fear the low end of the market, my favorite quote. >> i liked it. >> again, a point we've made many times, 3.36% dividend yield. which may be one reason why we've watched these stocks as we watch all the high multiple stocks get crushed, the dividend payers have benefitted. >> john fortt will have brikrzah
on this afternoon. >> spend like a drunken sailor. >> okay. something. >> it's entirepyly possible the previous guy spent enough. the last few conference calls have been about when are you guys going to stop spending and he stopped spending. that's why i would not own lamb, i would not own ahmad. >> when you say stopped spending he's in a technology business. you can't stop spending. >> many different fabs have been built for many different kinds of products and remember, they got eviscerated by -- they got eviscerated by the british on this thing and, you know, i think that may be over. it may be over. >> when we come back we'll get cramer's mad dash. >> i like that. >> i like the quarter. i have a great coca-cola now. >> take one more look at futures.
welcome back to "squawk on the street." i'm phil lebeau live at the new york auto show. this is the all new toyota camry unveiled within the last minute. might be saying all new, didn't they come up with a new one a couple years ago? because it's facing pressure from more competition, they have stripped it down and rebuilt it. it is slightly longer, a little bit wider, and a much more aggressive stance. whether or not that's enough to keep camry on top as being the best-selling car in the u.s. remains to be scene. that's what's happening right
now here at the new york auto show. david, back to you. >> we were talking autos yesterday here with kyle bass as we get to our mad dash for this morning. specifically, gm. we had a conversation right here about that stock. >> let's talk about that. now my travel trust owns gm. i've been dead wrong about it. one of the things i've been dead wrong about i felt that frankly the liability here for these deaths could be huge. now it's very difficult to talk about this. obviously money and death don't go together. but no one could stop buzzing about kyle bass' analysis of the fatalities. and it was kind of like a huge wake-up call and the stock, i believe, i know this is a frightening concept, it bottomed at 3.6, 3.7% yield off your interview. your interview told the truth. it wasn't the -- the kind of headline risk that we've been hearing about. it was the actual what gm could present when they're being sued. i thought it was an amazing
interview. >> interesting you thought that. >> it was amazing. >> kyle admits he's been dead wrong, dead wrong. >> but he did admit it. >> you've owned this for a while. he bought this thing, straight down, didn't sell, has bought more to the detriment of his fund holders but he's a believer at what he calls two times ebitda. two years worth ebitda what the market cap equals. >> the ten-year he thought would go to three and the pension obligation would go down. his analysis of what happened here, is better than barra's analysis. what does that say about what a poor spokeswoman she is. >> i don't know. he may be willing to say things they are simply at gm, when especially when up in front of congress just going to take the blows, not going to fight back. >> many ways to tell things. he told the truth. my travel trust is long and has been horrible. let's talk twitter for a second. >> let's do it. the reason i like this, the move in twitter yesterday, once you got the good piece of news and the good piece of news is frankly that tweet again that daniel graph gave he's going
there, people don't usually leave google to go to twitter. if you look at what it means when these guys said they weren't going to sell. evan williams owns 9.4%, he's not selling, jack dorsey 4%, benchmark, 5.4%, do you know that 40% of the flow is short here betting obviously there would be a huge secondary and everybody could cover. if there is no huge secondary you have the possibility with a better quarter. >> but the key is better quarter. >> right. >> you have to show significant revenue growth, some way overcoming this concern about user growth. and the so-called scaffolding around the business they've talked it about makes it difficult for people to want to adopt it. they have to show that, those who hold their shares -- >> it had been a free fire zone short. it was like rolling operation rolling thunder against this darn thing. >> because it went to 70 on air. >> individuals who love the product. those people have all been blown out.
if the numbers are good, this stock is going to go dramatically higher because of the short interest, 40%. not enough float. >> we're going to be watching twitter. a lot of technology names that did have at least a bit of a turnaround. the opening bell just a few minutes away. "squawk on the street" is right back. back. female announcer: get on board for better sleep. it's sleep train's interest free for 3 event. get three years interest-free financing on beautyrest black, stearns & foster, serta icomfort; even tempur-pedic. plus, get free delivery, and sleep train's 100-day low price guarantee.
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you're watching cnbc "squawk on the street." live from the financial capital of the world. the opening bell in a couple minutes on this wednesday. busy day, a lot of fed speak. got four fed speakers today including yellen in new york, earnings from some of the biggest companies in the country, and, of course, that big bounce on some of the tech names yesterday. >> right. >> did you know, jim, the last three second halves of april, meaning from the 16th to the end of the month, have been positive for the s&p by an average of 2%. a lot of calendar guys, a lot of charters are looking at the latter half of april as a bullish period going into may. >> once tax selling is over we bounce. that could make sense. i like the fact that interest rates are headed down here. copper up, industrial production. get to utilization of 80% no way interest rates will stay down.
we are in this bizarre moment when interest rates go down people freak out. look again yesterday at 1:00 when the tlt paekds, being the proxy for the 20-year, i don't know, i mean, the data continues to be good. every major company that's reported that i follow, the only weak one was jpmorgan. i don't think that csx is nearly as weak as what people are doing to the stock right now. >> talking about it during the break and stephanie link your associate said the first two weeks of the new quarter, car loads up 11. >> yeah. you have to remember, all rail is week by week. it's actually week by week car load. that's how have you to measure it. it's clear the weather hurt their business and it's come back a little. they're too dependent on the wrong kind of coal the export coal people don't like. i saw a lot to like in the quarter and the stock is down about a buck, i would be there. i would be there. >> keep an eye on soda, these reports that they're in talkis o
sell 10 to 15% at 52. >> too convenient, little outfit in israel comes out and rumor dr. pepper, pepsico denied they're interested. starbucks. howard schultz can do better than they can. i discount this. >> there's the opening bell. a look at s&p at the top of your screen. down at the big board, franklin square, capital partners and the opening bell. looks like honda over at the nasdaq. >> why do they open it like this? that's going to bring out the sellers again. makes it tough. >> yes. yes. >> they just hit them. there's sams. remember those. >> sure. 1973 war. >> twitter opens down a little bit, jim, but not much. up 10% yesterday. >> on nothing. i'm sorry. i don't believe that it's because some guy is leaving google and going -- >> i'm just -- >> i know. >> the tweet appeared, you to
like -- people love that. the tweet appeared at 1:10 and people saying the twitter rally. >> they're not selling stock. i said that was out 24 hours ago that don't want to short it. somebody saying hold it. that guy wouldn't be leaving unless the quarter was okay and they made that acquisition. once again for analytics, sit there and analyze. this is like a company, how are we doing, spend $100 million, how are we doing. i'm trying -- i always wear an undershirt so -- i learned that at goldman sachs. always preserve the shirt. wear an undershirt. >> cramer's shirt. >> cramer's shirt. >> being sued because he's made some comments. >> yahoo! up almost 9%, jim. >> what can i say? i mean, look, there was enough that was not horrible about yahoo! that it didn't detract from alibaba. david you e-mailed me when alibaba came out. >> i did. >> and you are rarely -- i mean david is cool and calm, somewhat different from me. and you recognized that 66% number as being about as good as
it gets. >> that was a big number. they came off 5 2% year over year. we knew the singles day they did $5.7 billion in sales in one day. >> we got to have singles day. what is single -- >> something they invented. >> i participated. >> alibaba invented it. they sell more stuff on that day than any day in the history of the planet. >> i mean hallmark created mother's day and father's day. >> secretary's day of course. >> grandparents day. >> why can't american greetings. >> amazon would love to create some sort of -- >> remember blue mountain. >> this thing called christmas day that's been effective at getting people -- >> that goes back years. way back. >> secular as buyer whatever day. singles day. >> singles day. >> that's not a secular -- that's a secular holiday rit large in china. does the government -- >> apparently a lot of single men. that's the whole -- you know what, they waive the one child thing. >> that's going to take a while.
>> singles and doubles day. >> still nine months. they haven't actually. >> so google a few different news points. one they have a job listing for someone to handle fiber in new york city. people wonder if google fiber is coming to new york. >> i love that. >> i tell you what, i want to go long jack hammers if that's the truth. >> go long ear plugs. >> how many billions of dollars that would take. >> oh, my god. >> the other google glass sold out in the one day sail sale and may extend the sale beyond yesterday. >> entirely possible earnings could affect the stock too. >> after the bell we get them. it's funny because this has not been -- >> they made it too hard. >> we know retail was terrible. e-commerce may have benefited, important engine for google. >> right. >> credit card spent was up 8%. maybe we get a decent number out of google. >> i think google is in the driver's seat. always going to be someone who
squawks wait a second they paid too much, the prices go down for some of their -- give me a break. this company is going to go to 70% of this market. you didn't hear anything from yahoo! that told you that google is faltered. maybe that's another way to look at it. >> right. i wouldn't be too sanguine ahead -- are you expecting a blowout number? >> i am not expecting a blowout. i expect a blowout for facebook. >> you do? >> yes, i do. >> talk about a growth rate, that's still pretty darn impressive. >> blowout for facebook. i think that stock -- my travel trust owns. i tell you which one, i think facebook is doing many things right, okay. if they do a no pledge sell, they do that, sandberg -- >> sandberg said she's staying. >> if nominated she will not run, that stock takes out 60. >> what's that $2 billion -- >> 25 cent move. >> yeah. >> takes down 65. >> some concern about how he's throwing money and stock all over the place at huge numbers.
i've had people tell me this virtual reality company is a life-changing technology. >> are you serious? >> yes. i was with some people who used it. >> people on mars? >> people who used it. put them on, it's like you're in europe. >> i don't want to be in egypt. >> the pyramids from like a long time ago. >> egypt. that's pretty dangerous. >> don't want to be in tahrir square. >> new zealand. >> the hob bit. >> zuckerberg saw it and said i'm buying it. over and done. thank you. >> you can do that. >> we know -- >> our kindle uses what's app because they didn't want us to see their phone bills. what's app the drones from one guy what's app from the other and you have pinky in the brain situation. >> which is always a good thing. >> what are we going to do today? >> i don't know. >> take over the world. >> for those who think the market is you buy trip adviser which is up or utilities, do you have to make that choice? >> that is so great. value versus growth. trip adviser down huge.
one of the things the problem with trip adviser, $11 billion company, not like kayak where priceline will buy them for $1.5 billion. can you buy them both? no. that has not worked. you have to choose between value and growth other than last wednesday. and i have to tell you, that the utilities have had a big move but i would -- i would not buy the utilities here. today could be a growth day but we need to get out of this ten to 12 margin period. if we do not see these heat seeking missiles come then you're going to want trip adviser over coned and i like con-ed. >> getting through lunch has been a challenge. with yellen in today speaking at the economic krclub. >> right. >> people will look at what she says at the labor market, inflation, cpi, yesterday you had a headline on bank capital and the rules need to be even stronger. >> please. bank of america has put up so much capital. here's a little counterintuitive
to what the hard right guys say. if yellen were to say i'm going to sell a trillion dollars of our bond hold, the market would go higher not lower. shortage of bonds and all worried bonds are signal there's a recession coming. if she wants to break that log jam sells a trillion in bonds. >> the chances of that happening are --? >> phillys could win the world series. >> there you go. >> mets could win the world series. put it in that category. >> 7 and 7 baby. >> omar quintanilla. >> omar quintanilla. >> if omar quintanilla is next to me, then they're going to sell a trillen. >> omar quintanilla, winning hit in the world series. >> dow is up 103, back to 1853 on the s&p and i think bear stear stearnsin' -- bob pisani is over by post five into here we are, we are getting a reprising in the ipo business. this is a good thing. five of the five ipos this week have priced below their range. all five.
batting 100% on that. every single ipo deal this week pricing below the range including three pricing last night. seven of the ten ipos that priced last week are trading below their initial ipo price before the open. i'll check on that and see if that's still accurate. here's moelis, 26 to 28, but remember, 6.5 million shares at $25. the price talk there was 26 to 28, $29 range. right now the indication of 26 to 28, they lowered it. it's working. they're getting slightly higher indications here. over on the nasdaq hasn't opened but opus bank a california commercial bank, looking at $30. that was below the 31 to $34 price talk. and try vascular technologies, a stent developer, $12. the price talk there 13 to $15. see what's going on here. this is a healthy development. the markets have fluttered. the number one determinant. ipo pricing is readjusting
itself. here's the problem, we have six, six, whoever did the ipo calendar is out of their mind this week pricing including well known names, put up the full screen, two have already reprised lower, quotient and o biotherapeut biotherapeutics. they'll come out a little lower here. a couple well-known names, saber, the biggest from tpg in silver lake, seeking to raise 44.7 million shares, 18 to $20. that's $850 million far and away the biggest deal. weibo. the twitter of china going to try to raise 20 million shares at 17 to 19. leju holdings in china, also out there and sportsmans warehouse looking to price 12.5 million shares at 11 to $13. earnings front, bank of america trading down. they did beat the cost of resolving their mortgage issues hurt their earnings this
quarter. the regionals trading up. pnc beat on the bottom line, little light on the revenues. expenses were lower. they hiked their dividend 9%. u.s. bank corp based in minnesota had long growth of 6%, i thought that was very impressive. huntington based shares in ohio, they beat. market leaders the internet stocks and biotech stocks once again. dow up now. 94 points. 26 to 28. the indications on moelis. back to you. >> we'll be talking to ken moelis about 35 minutes from now or so. thanks very much, bob pisani. did want to come back to one of the more interesting stories, of course, of the morning and something we'll be talking about, we don't know if alibaba will list at the nyse, although we should know in the future. the company will file its f1 perhaps as soon as next week, but in the next couple weeks. all the bankers over to hong kong and coming back, at least six big underwriters there in addition to what probably will be many more.
we got to look at alibaba's numbers through yahoo! last night. we're taking another look. the size of this company and how quickly it's growing is trul ailey stonnishing. we say it's like ebay and amazon. it's not really. two businesses there, it's the marketplace, talking about over 5 million active sellers. smaller companies. they don't pay a commission. the way they make -- alibaba makes money from them they advertise. and so they can pay for on-line advertising services to promote their products. and their storefronts. then you have t-mall which includes a lot more of the bigger names that you know. there it's a platform where they charge a commission. and so that's the key. you saw the numbers there, of course. revenue up 66%. gross profits 73%. income from operations 105%. of course, it is far smaller than amazon in terms of revenues, but the numbers they're talking about, when you look at the bernstein report from this morning in terms of
profit, given 54% operating margins are astronomical. a chart we put together that came from the bernstein report that estimates alibaba could be worth $245 billion. the green line coming down is the revenue growth rate starting at 66 or wherever we are right now and going down. yes. the overall, the last blue big blue bar is about $19 billion in revenues. get this, on $19 billion in revenues, they have them at 16 or at least he estimates in '16 they will do $9.5 billion in net income. hello. put a multiple on that and smoke it. >> holy cow. >> we'll see. >> again, you know, it will be very interesting. as for what it all means for yahoo! which we've been talking ability all morning which is up sharply, one of the keys that i've been talking about here for probably over a year is whether they can tax efficiently. tax efficiently, sell part of that stake in alibaba that they will retain or either sell or use in some way.
asked about it a number of times on their conference call. here's what cfo ken goldman said when asked about the tax efficiencies of selling the alibaba stake. >> we are still looking at it. we are working on it. and we -- we'll continue to -- i guess the overwriting we will continue to think about how to maximize the overall use of the proceeds and how best to use that relative structure of our business. there are theories we continue to work on and at such time we're in a position to disclose more we will disclose more. >> did they do the nightly news after they finished the conference call, marisa and ken, now tonight in the valley. >> marisa, ken and brian. >> brian by far the funniest but with the most gravitas and the best. >> jerry on weather. >> saturday, i know it would be you or -- well --
>> and here's joe with our report from hong kong. >> i mean i assume you prefer transparency to the alternative. >> oh, yeah. look, again, i mean people just want to slide the basic underlying company. i know that they have real issues, but so did aol before arm strong figured things out. people thought aol was a disaster and aol was doing things right. had a buyback. you know, if you buy enough shares back and you get a little thing, you have real leverage. >> it's true. >> a lot of companies have benefitted from that. let's talk bonds. head to the bonds. santelli joins us from the cme group in chicago. rick? >> thanks, david. today was an important day for a number of reasons. there's been a lot of talk about how much ukraine, geopolitical forces are affecting treasuries. and i think from a psychological standpoint, there's a lot of discussion on the floor. because the market may not totally focus on it doesn't mean it's unimportant. with the data points today and the bounce in equities, it seems
pretty clear to me that these half a dozen basis points swings point to the fact that it's really more about stocks in the relationship to risk that is truly driving interest rates or interest rates driving that. it's a debate. a one day and two day of tens. you can see what i'm talking about. we have very disappointi ining on the housing side. we had spectacular data when it came to industrial production and capacity utilization. that's around the time we made the highest yields of the day. open the chart up to year to date. it shows yesterday's subtle breach of 260 wasn't the proactive trade. it has to get below the february 3rd closing yields around 2.58. want to look at the yield curve, year to date is fine, see the right side of the 5s to 30s, it is playing around making a base, open the chart up see 4.5 years in terms of when we've been this flat. dollar/yen, two day, hey we're coming out of the chute. the dollar coming out of the chute, that makes sense. look at the dollar versus the
yuan, dollar at 14-year highs, underscores the weak gdp, the weak industrial production out of china, but it still doesn't mean china will completely rollover. david and carl, back to you. >> see you in a little bit. rick santelli. we are still waiting for moelis and company to make its trade at post five. after that happens ken moelis will join us to talk about his firm's wall street debut. a look at the indication. also ahead, how things are shaping up in the world of 3d printing. a live interview with the ceo of maker bot. dow is up 108. [ bagpipes play ]
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here guys. >> look at that. >> up 7%. >> he knows how to price a deal, thank heavens. take a look at what he's doing. >> priced below the range. >> yes. >> but that's kind of what you want. price below the range, get it out there and get a pop as opposed to the opposite. >> a real banker knows how to leave points on the table, long-term greedy, short-term fine. >> let's get to bob pisani for some color over at post five. >> congratulations. a lot of people shaking hands here. there's mr. moelis over there talking about business and he'll be coming right over in just a minute. the deal got done. they had to cut the price, the range was 26 to 29, that was the price talk. they priced it at $25. and this stock opened at $27. up, you know, a good 8%. five out of the five ipos this week have priced below the range, seven of the ten before the open of last week's ipo trading below their ipo price. there's a sale on in the ipo market right now. why? because the stock market has
been fluttering and it's a huge flood of ipos out there. they've done what the capital markets ought to do, cut the prices to get the deals done. and by any strength of imagination, $27 opening at with a price cut of $1, to $25, is successful. here's some of the executives, you can see standing by over here. ceo of the new york stock exchange shaking hands with mr. moelis and the executives here including lovely ladies here with us as well. congratulations all of you. >> thank you. >> everybody. congratulations. >> thank you. >> bob. >> hope you get over there. we're waiting for you over there. >> he's coming over, carl. >> he's coming right over. >> not with me. you're going on the set and talk to the guys on the floor over there. guys, back to you. >> show him the way. we'll see him in a minute. >> stop trading with jim as well in a moment. dow is off the highs up 78. >> when do you want to do this? i've always kept my eye on her...
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the ones that have been flying and they've been impervious to the sell programs. they have not traded with bio, with tech. it's eog the leader, obviously eagle finding oil everywhere. pioneer is per men and nbl, noble, right outside can denver. the two drillers to watch in the oil services, slumberguy, it enables you to find more gas and oil. eog pioneer, noble, core labs, schlumberger, the intersection of strength if you think oil does well at 1030, those are the names people take. >> you wanted to mention the citi upgrade of yelp. >> i'm queasy about it. they have a bunch of reasons why -- i'm sorry four reasons. the main number four, where they say there is strategic value, $4.5 billion, saying who could buy that. google could buy it, app, they
don't seem inclined to buy anybody that size. facebook could buy it. remember, google tried to buy this company for -- yes, google tried to buy it for $500 million. you suddenly will have to pay $6 billion. does have a total addressable market, the worldwide yellow pages. you own yelp because it may show good profitability in 016. >> speaking of someone who knows the company pretty well. >> yelp i checked my reviews, 17 reviewses. there was a guy last night, going to put up a good relaw. >> lock and change between now and 2016. >> the door would stay shut -- yelp itself absolutely. >> tonight on mad? >> a company called jet support services. every minute i try to get a line on boeing. boeing the best acting stock in the dow. this company could tell me if boeing is doing well or not. damon john yesterday telling you huge amount of truth to shark tank on the show. people say i put him on to
promote. i had him develop an index in 2010 he's killing the market. what does he like here? he believes in wells fargo, and netflix which he says is not done. still said apple is not cool at all. under armor up 500% since he recommended it, cooler than ever. >> see you tonight, jim. >> thank you. >> on "mad money." 6:00 eastern time. when we come back ford's coo mark fields from the auto show. you want to see the company's 50th anniversary mustang and ken moelis on his wall street debut of sorts. keep it right here. re. (vo) you are a business pro. maestro of project management. baron of the build-out. you need a permit... to be this awesome.
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see who's buying into the bitcoin uprising on cnbc investigates. welcome back our road map begins with volatility in the market. signal to sell or buying opportunities? results from alibaba, yahoo! intel and bank of america. >> a hot ipo market, moelis company goes public today in a difficult environment. the founder ken moelis with us. >> ford's mustang turns 50 with a limited edition model and a limited edition interview with coo mark fields. >> and far from detroit the manufacturing ren na sans is on
your terrific. makerbot ceo will join us to tell us why 3d printing is going mainstream. >> our story 30 minutes into trading, markets higher, u.s. stocks look to make three straight days of gains. the dow shy of the triple digit gain, s&p up 8, the nasdaq up 18. we want to bring in charlie, the vice chairman and portfolio manager at aerial investments and david katz with asset advisers. >> thanks for having us. >> david, start with you, the markets have seemed to trade in spite of whatever strength or weakness we have in the data of the day and i'm wondering today we had mixed picture, weak housing starts, better industrial production. where do you think the trade is today and the strength is coming from? >> i think the market has demonstrated over the last week or two it really is impossible to try to time this market. it's impossible on a day-to-day basis to figure out what's going on. and we would definitely try to focus on a longer term view, at
least six to 12 months, set that time frame, not chase up days like today and do your buying on the days it looks like everything is coming to an end in the market selling off a lot. >> it does seem, though, david, like we have some stimulus talk in the market. you have inflation data in the eurozone looking like the ecb may be pressured to act and headlines yesterday on the nikkei about the japan economy being weaker and maybe the japanese need to do more stimulus. do you think the buying is on more money coming into the market from central banks? >> again, difficult to look at. we think the market sold off last week on geopolitical fears. even though the geopolitical news has not been good it's r ralira raling in spite of that. we don't know how much psychology is getting better after last week's sell-off. >> now three data points from the banking sector, loan growth weak, the consumer isn't borrowing a whole lot and corporate activity is lack luster as well, but when you
look at bank of america you see a strong investment bank and i'm wondering if you think that there are signs of life in the investment banking market? >> actually absolutely. here in chicago we had two multibillion deals, novene got sold, zebra buying motorola's business for $3.5 billion. we think m and a activity will pick up, ipo activity is excellent. we have a lot of companies thinking about stock issuance, the investment banking part of the business is great and why we like goldman sachs and morgan stanley and lazard. >> one of those boutique banks went public today, moelis, up strongly in its debut, even though it priced below the range. would you be a buyer of moelis in today's market? >> it is a great name. i do have to say when ken moelis is selling i don't like to be a buyer because he is a very good timer of sales. so we like morgan stanley, lazard and goldman a little better at this level. >> we'll put that question to ken when we talk to him in a few minutes. interesting.
there is some selling behind that. especially from the founders and from some of the managing directors there. david, when you look at the nasdaq today, right now, i'm looking at the nasdaq up nearly 20 points. it barely skirted a correction yesterday and we saw blockbuster earnings from yahoo! and invest tell. do you think the tech reverse right here? >> well, again, very tough on a day-to-day basis. momentum investors blowing out of the nasdaq in the last few weeks. we think you can buy selectively within the nasdaq. we would not chase the momentum stocks of the day. the stocks that are selling off, the facebooks of the world we would shy away from. a lot of technology companies where you can make money but the old technology companies. >> so beyond facebook the one you mentioned, what else would you be buying in the technology sector. >> again sort of the dull companies like cisco or microsoft, we think are well positioned to do nicely and you're buying them at 12 times earnings. >> all right. charlie, what are you buying
today? >> >> the investment banks. we think people are too negative on fixed income trading, still an important part of the business, but it's not as important as it used to be. so again, lazard, goldman sachs, morgan stanley's asset management business doing well here. schwab showed that. we think those stocks are key. right around book value. >> schwab you mentioned reported earnings as well, they had 550,000 average trades a day. that's the highest in the company's history. when the retail investor starts to move back into the market at that level of strength, charlie, smart money in the market, does that make you take pause and take some money off the table or do you keep buying? >> absolutely it's a big positive in going forward. because the retail investor has not participated. the retail investor has been on the sidelines, been in cash and bonds. we've been predicting a rotation in the stocks frankly hasn't happened, but we think it is going to happen. so that's a big tailwind not a
couple months in duration, it's going to be years. >> charlie, as a long only fund manager what do you do when you see the market in whiplash fashion as it has the last couples day. >> >> buy what others are selling. sell what others are buying. and that is this is exactly that time. the hedge funds are trying to figure out which way they want to position themselves. hedge funds had a bad year, bad five years. so they are repositionings themselves moving around and we're trying to sell what they're buying, and buy what they're selling. >> we'll leave it there and certainly continue to watch today's tape. charlie, david, thanks for joining us. >> thanks a lot. >> thanks for having us. >> important tech earnings, intel and yahoo! both beat estimates. john fortt on the west coast to speak to intel's ceo a little later on. many sense it's a homecoming for you. >> i'm back at my old desk. i feel so far away from you, simon. >> yes, well, carry on as you were. >> well taking a look at the earnings, it's interesting. you've got yahoo! coming in pretty much in line on revenue.
bottom line looks better than expected. common things across yahoo! and intel. the consumer is generally pretty weak. now yahoo! managed to have really good performance out of alibaba. that's 66% year over year growth into q4 better than the 60% than the bulls were looking for. that certainly helps them out. yahoo! kind of pointing to a back-end loaded year. you know, the guidance for the coming quarter not what some people were looking for. then when we get to intel, we see enterprise pcs really holding up pretty nicely all things considered. but at the same time, intel's continuing to make these investments in mobile in particular. they're subsidizing baytrail, that chip set going into tablets. they're spending a lot of money there. they've got some 2 g, 3g sales coming down from the wireless business but saying that's a really important business for us to get a foothold in because of the developers that are there. because in the future, the
wearables business is going to be built on top of that. we're going to continue to invest. so you didn't see short revenues, which i think some people would have been worried about here. but we have these companies more looking at costs, dealing with those as being the way to power through. i'm not sure how that sets up earnings season. we'll get some more numbers tonight and as the season goes on. >> okay. john, thank you very much. don't miss john's interview with the ceo of intel at 12:30 eastern. thanks, john. >> when we come back moelis and company trading higher in its nyse debut. ken will join us live to talk about taking the company public the future of m and a and a lot more when "squawk on the street" continues. continues. [ hypnotist ] you are feeling satisfied without standard leather. you are feeling exhilarated with front-wheel drive. you are feeling powerful with a 4-cylinder engine.
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welcome back to "squawk on the street." i'm seema moody. check out asml holdings, largest supplier of equipment, computer chipmaker, the company said its net profit for the first quarter doubled as it sold more systems, but it trimmed its guidance for the second quarter, reflecting lower demand from some of its clients. that's why the stock is trading lower, better than 5%. david faber, over to you. >> thank you very much. independent investment bank moelis and company has begin trading on the big board. the company priced $25 a share, below the planned range, but perhaps a good price to make
sure that it traded higher as you see right there, up over 5%. has been up as much as 8% this morning in its early trade. joining me now on a first-time cnbc interview, ken moelis, the founder, ceo and chairman of moelis and company. frequent guest here on "squawk on the street." welcome. congrats. >> thank you, david. >> all right. you are now in the business of attracting investors which you've been doing on your road show. tell me when some would say why do i want to own moelis company versus evercore or lazard, firms similar in nature to you, why moelis versus them? >> i think what stood out mosts was our culture, our one firm mentality, client centric approach. as you can look around half my firm is down here on the floor right now, and it really is one firm that tries to deliver all of its expertise to the client and it is client centric and i think people like that. >> well, i would assume that evercore or green hill or lazard would say the same thing. what differentiates again?
>> i can't speak forefor them. we deliver the entire firm to the client, multiple people, multiple areas of expertise, multiple regions around the world, and look, i just think our growth will tell you it's working. >> do you believe the growth? you are trading at a multiple below that of greenhill where the underwriters chose to price the stock based on $70 million in pre-tax income you had last year in 2013. but in terms of that growth, what has been the story that you've been telling people on the road show? >> we think it's still has a long way to go. the regulatory, the political pressure on the large financial institutions is unbelievable. as i said i've been around 33 years in the business and i don't think i've ever seen it this regulatorily pressure on the big financials. i think the talent will come out. i think clients will want the more flexibility of an independent, unconflicted adviser and i think the growth has a long way to go.
>> the unconflicted adviser has been something i've heard from many firms i mentioned, those who prats more as smaller independent companies. but the big guys will come back and say you know what, ken, you are more dependent on one feed than we ever are. you're more dependent on saying yes to a deal perhaps when you should say no because it actually could make a difference to your bottom line. how do you answer that kind of criticism? >> we have relationships and relationships and we value those relationships. we treat our clients like they're long-term family members so we tell them what's the right thing to do and we stay out of all the businesses that are commodity oriented, scale oriented, and we focus on a relationship. by the way, david, there's nothing more valuable on wall street than a relationship. so a time to say no, believe me, we make sure our bankers say no. >> there are times, though, when the relationships and the banker's compensation is not in the interest necessarily of the shareholders and we see that quite often at the moment.
you're going to control the company. i believe you're going to opt for certain corporate governance misses if you like. how do share holdrs know you will act in their interest and not those of yourself and clients. >> look around the trading floor. 67% of the shareholder interests are on this floor, they're the employees. they've all signed on to the company now for up to six years. so they want the same culture. they want to be able to say no to a client without having an activist criticize us on a missed quarter because we did the right thing for a client. >> what about people that are not part of the club, not already in it and looking at buying your shares now. >> they're aligned with us. they're aligned with the most important -- we don't have a lot of factories. i can't show you a big factory, but i can show you a 90 managing directors, 400 employees, that have committed to the firm and they want the culture. they want this culture and our clients like it. the continuity of the culture. >> the relationship that the bankers have with the client that ultimately generate the
income for a firm like moelis. they bring the deals in-house. there is a couple lines about growth about doubling or nearly doubling the revenue per manager. and a lot of firms have that higher. how can you get your people to generate more deals and more fees for you? >> first of all we're at about five and it's interesting when you count the number of mds people have, that's about what they do. there's some people who tend to segment and -- segment their md noose two classes. our culture wouldn't allow that. we don't have two classes of md. everybody has the same title. one of the things that's hurt wall street is this title creep. you're a partner, you're a partner. that's the way we look at it. we've said our target is to get that up to 6 to 9 million over a period of time. we're only seven years in business. when we pull everybody together and put the system together it's a powerful, powerful force and we've only been doing it seven years. >> there are a lot of younger
bankers at some of these tradition traditional, very now heavily regulated wall street banks who look at a company like a moelis and say i want to work at an institution that's less incumbered than one of these wall street banks. what sort of promise do you of offer them in terms of compensation and mobile throughout the company to actually get them to have a better experience than at one of these institutions? >> one of the great things is we're going to -- we are targeting more than 50% of our promotes to md to come from inside the firm. we want to train them, we want them to understand our ethics and our culture and we want them to become part of the family for life. and we do offer them a big ownership position which is different than a big bonus pool position. our clients benefit from us having owners, long-term, oriented partners. >> we just did an interview with the trader and asked him about the market. he said i don't want to be buying when ken moelis is selling. the comparison to blackstone and for tress in '07.
do you bristol at today being a chapter for the broad market is. >> i wish people could be out on the road. we visited 50 institutions, great people, smart questions. i want them to make money. look, we priced this transaction purposely, i hope, to make them money. they are our new partners. they are a new part of the family. that's why i wrist l at that comment. actually, i think i want anybody who's done something with me or the firm to come out ahead. >> you set the price ahead of the road show, 26 to $29. what did you learn about investor demand for your company throughout the course of that time that led you last flight to say we should go a dollar below that. it's been good for the stock today but why did your underwriters give you the adstris do that? >> i learned that the demand was high. i was proud of the demand. we had unbelievably top shareholders interested. i don't know if you noticed bus the nasdaq and specifically our comparable set of companies
traded off 10%. the volatility in the last five days has been enormous. and we chose to take the price there. we asked where are investors going to make money today, i can't guarantee the stock for a long period of time, but i can guarantee i've priced it to make the people who felt comfortable giving us $160 million a fair shot today and we did. >> and obviously it's five, six years ago you started this thing. an important day for you. has been pointed out, ken, you have a structure here where you own 97% of the votes. when you give advice to other companies, and i know you're not in the capital markets business but you will be offering that advice i'm sure to some companies, would you advise them and the founders to pursue a dual class structure the way you have. >> depends what the situation is. we asked all our employees to sign lockups. they can't leave the company for up to six years. so i thought i owed it to them
they didn't have to just work for anybody, any person who tried to take over the board. that didn't seem a faye fair trade. i think it's very important that we control the culture and by the way our clients are forming real long-term relationships with us. and i think they want continuity and stability in the people giving them advice. >> you made sure there's no activist that will be able to come after moelis and company, a company that represents, for example, herbal life defending against an activist. >> i don't have it permanently, i can't pass it on to my heirs. it will go away. for right now it protects the shareholder. it protects the people i ask to invest from a change of culture that wouldn't be in their best interest. i believe i am protecting the investors. i just ask they put their money in the deal. >> your family, your heirs, three, there's more, but three are here. >> they just learned they can't have the votes. >> you know that ahead of time? >> dad, you never mentioned that. no votes.
ken, as always, appreciate your coming on. congrats on i know what is a big day for you. >> thank you. >> ken moelis, founder and ceo. >> coming up on the program, the manufacturing renaissance might be happening on your desk. the cutting edge of our 3d printing future, makerbot ceo will join us live. and an interview with ford motor's chief operating officer mark fields, a man widely considered to be the top choice to be the next ceo of ford. that's coming up. mine was earned in korea in 1953. afghanistan, in 2009. orbiting the moon in 1971. [ male announcer ] once it's earned, usaa auto insurance
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a piece of this market as does a host of recent campaigns on kick starter. a significant piece of the 3d printing pie belongs to makerbot which estimates in 2012 it had a quarter of the market. this year makerbot has kicked its educational initiatives into high gear launching innovation centers in college campuses and on a mission to put a desk top 3d printer in every school in america. delighted to welcome to the program in a first on cnbc interview bre pettis the ceo of makerbot. good morning. >> it's great to be here. >> so you're going to put one of these replicators in every school, that's the aim. i think that the current thing you're offering for free is the great pyramid of giza. >> two things, the great pyramid of giza when you pop it over you can see all the labyrinth of stuff in there and we released a 3d printed dissectible frog. >> nice. >> we expect to save frog lives too. >> you're on the fifth generation of the replicator at the moment priced just below
$3,000. >> that's right. >> did you use it to make the this you've brought here and talk us through what we've got. >> i've got a classic home, an architects get makerbot and eat them up for breakfast. makes their work easier. show clients physical models instead of 2 d drawings. it's great. they run them like crazy. >> a turbine here. that looks intricate. >> this is jet tur pine. >> how long did that take to print? >> a couple hours. moving partses so it comes in, squeezes it and shoots it out. this is a great model for showing people how it works. and engineers just love using a makerbot. when you have a makerbot you can innovate faster, build more versions of your product so you can make things and fail faster and get a better product out. >> the challenge critics come back to is not only the simplicity of the objects but the time. we were talking about how this is sort of like making a candle and dipping it in the wax over and over again. how quickly do you think the technology can advance to where you don't have to wait two hours
for something like that? >> the cool thing is, is before 3d printing it would take months to make a prototype. even before makerbot it took weeks to send out for prototype to a service agency. when an engineer -- you could prototype like multiple times a year. when you have a makerbot you can prototype multiple times a day. changes the game in terms of how much you can get done. >> people love last year for long time. what does the future hold when you see meg whitman say hang on a minute this what is we may be getting into, big announcement in june, how do you position yourself to take on that potential competition? what can you own that hewlett-packard or staples can't? >> we've got a great community and we've got an obsessive community, passive community and working on building a great business that's sustainable for the long run. make great reliable 3d printers that make a lot happy. >> a lot of shareholders will be drawn. goldman sachs saying this is a
buy, 146 price target, 50% return from here potentially. on the other hand you have whitney tealson saying when somebody is able to enter the market with a $200 option, that really pulls the rug under your collective feet? >> innovation is hard and we are an innovation company that empowers people to innovate. we're focused on making high quality, affordable 3d printing for everyone. that's our -- >> when you go on shareholder road shows and talk to them behind the scenes it's great to have that, but how do you take it to the next level in terms of building a multinational business? >> well the great thing is, fully owned subsidiary of stratty sus, global company and when we do this, it's not just for amateurs, hobbyists. some of our biggest companies are lockheed martin and jet propulsion laboratories. this is a powerful tool even though affordable scales wonderfully in a business. >> you're still quite a small
company, $4 billion market cap. a very ingenuous company but of a small in terms of market cap and that's the parent company i'm talking of. do you think you'll be bought by, for example, hewlett-packard? could you sit comfortably within hp? would that be something you would entertain or something that would go against perhaps some of your principles? >> you know, no one can predict the future. but there is a bright future for 3d printing. >> you know i can't really comment on that or even explore that possibility. i'm -- nose to the stone focused on empowering people. >> thank you for coming in. >> it's a pleasure to be here. >> bre pettis, makerbot ceo. >> let's get a market flash. toss it over to seema moody. >> hey, carl. check out king digital the stock moving higher today as chinese tech giant launches a chinese version of candy crush saga in
china. it's trading up about 2.8% on the day. that's king digital. it was priced at $22.50 when it opened last month. it's down nearly 20% since going public. back to you, carl. >> all right. thanks so much. just about 10:30 on the east coast. over to the nymex for breaking news on crude. hey, jackie. >> hi. good morning, carl. crude prices remaining supported this morning, and that's what traders are talking about in the pits despite a very bearish inventory number coming out right now. we're seeing a build in inventories for last week of 10 million barrels according to the department of energy. that is more than the 7 million barrels the a pi reported last night. we are seeing prices come down a little bit, about 20 cents right now, still well over $104 a barrel. couple of reasons these prices are probably going to stay reported, elevated that is, geopolitical tensions one, but also we see a reduction of growth in china that investors are going to see stimulus there
and that's why the prices are staying high. want to mention with respect to these inventory numbers, the glut right now is in the gulf coast. people are worried about what's happening in curbing and that is something to watch down the line. this is a very bearish number right now, not impacting the price at all. the expectation about 2.5 million barrels. back to you. >> all right. thanks so much for that, jackie. >> when we examine back the mustang is turning 50 this week and to celebrate ford plans on taking the muscle car to the next level. just what does it have planned? ford's coo with all the details after this short break. stay with us. stay with us. at your ford dealer think? they think about tires. and what they've been through lately. polar vortexes,
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this will make you feel old. what maerss at the new york auto show this year. for one the ford mustang turns 50. phil lebeau is at the show with ford motor's chief operating officer, mark fields. take it away. >> thank you, simon. here with mark fields and behind us the backside but eventually see the front side of the 50th edition, 50th anniversary edition of the mustang. this is spectacular. spectacular unveil you have tonight, right? >> well, this is all about we're celebrating 50 years of mustang and this car represents the heart and soul of our company and ford at its best.
and we've used this opportunity at the show to introduce the 50 year limited edition which celebrates 1964 when we introduced it. only 1964 will be produced. great event on top of the empire state building where we have this building. >> only five hours to put it together? >> really cool story. the observation deck closes at 2:00 a.m. always people there. so we had about five hours to bring the crate -- bring the vehicle up in the elevators and the team had five hours to put it back together again. they had to deal with the rain, the sleet, the wind. and 7:00 a.m. this morning, looked terrific. >> we'll see it tonight on top of the empire state building. want to shift gears because as important as the mustang has been to your history, the f series is just as important. you have a revolutionary transition coming up with the all -- not all aluminum but largely aluminum based f series. it's still on track for a launch late this year? >> absolutely. this is going to be the smartest, toughest most capable
f series we've produced. some ground-breaking technologies in it, like the use of aluminum. and we're now changing over in the process of changing over our deerborn truck plant. on track for our manufacturing launch in the fourth quarter of this year and vehicles -- >> eventually change over kansas city as well where it's going to be built. >> absolutely. >> there have been these questions about aluminum and you've heard them from the gypping as you unveiled this week. are you confident based on the testing you've seen the aluminum f series will be holding up in terms of durability? >> absolutely. before we made the decisions we wanted to make sure it would meet all of our built ford tough requirements for our customers and it absolutely has. and it has not only great capability, towing and payload and the most capable f series we've had but the most fuel efficient. customers get both things. >> you're running the weekly product review meeting. the ceo still ceo but we know e he's transitioning out.
has that been a smooth transition as you're taking over more day-to-day duties and he is taking the bigger picture responsibilities. >> it's a credit to our team. we're running the business as we have over the last six, seven years. i now take over some of the, you know, the bpr meetings and running of the daily operations of the company but we're working as one team. and staying very focused on this record number of launches that we have this year, growing the business, both here and in international markets, so we're not missing a beat. we're staying very focused and doing our jobs. >> mark field, coo of the ford motor company, i can't wait to be on top of the empire state building today in the rain, in the wind, hopefully will be good weather for the 50th anniversary mustang up there. back to you. >> all right. thanks, phil. it will be cold but a lot of new york city residents will be hopping by to see that as well. >> can i ask a question, phil, how do you put a mustang on top of the empire state building? >> simon, they took it apart in pieces, brought it through the freight elevators and had five
hours to put it together. they're not going to drive this off the top. not like they have to make it operational. they have to make it look spectacular. very quick operation and a her cue leen task. >> something to watch out for tonight. >> it is parked. it is not suspended, not dangling in case anyone was wondering. appreciate it. >> it's affixed. you bet. >> phil lebeau at the new york auto show. twitter surging 11% tuesday before declining today. acquisition, new hire, upgrade, what is the word on the bird coming up in our squawk feed. ♪
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that's when expertise happens. mfs. because there is no expertise without collaboration. welcome back. industrial stocks have been under performing so far this year, but one notable standout in the group has been airlines, dominic chu has more on that over at headquarters. >> airlines yes, they are a bright spot for the industrial sector the second worst performing one in the s&p 500 so far this year.
those airline stocks like you said up a whopping 18% so far year to date, which means that the airline industry group with industrials is the single best performing industry group in the entire s&p 500 during that time frame. investors are flying friendly skies when it comes to the stocks. a caveat about the performance. all right. there are only two passenger air carriers in the entire group that's delta airlines and southwest airlines. you can see delta shares up about 16% so far year to date, and that's despite a 13% correction from its recent highs back on april 2nd. southwest is up an even more impressive 22% over the past -- at least for the past year to date so far. even though it's 6% from its record highs from that same date august or april 2nd here. now investing in the s&p 500 at least for the airline stocks means a very concentrated bet on just a couple different names. so what about the other major airlines? well if you look at united airlines it's up a respectable 11% so far this year.
all right. and then the newly merged american airlines group has 34% return over the course of that time frame as well. here's how wall street analysts think each of these four stocks will perform in the coming months. on average according to fact set analysts have about a $25 price target on shares of southwest. that implies about a 9% upside. they've got about a $53.25 target on united continental, big too and applies to 27% gain. american airlines this is impressive about a $44 price target which implies a 30% gain and delta airlines leading the way higher, analysts think on average they will have a $42 coming year, that implies a 32% possible gain. so at least when it comes to the airline stocks, wall street expects them to keep flying high. they are certainly, carl, a big standout in those industrial stocks. back over it to you. >> what a year they've had too. thanks so much. when we come back musician chris daughtry will join us live at
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i'm seema moody at the market flash desk. check out interactive brokers after the brokerage reported its first-quarter profits surging nearly three fold to a better than expected 34 cents a share. revenues rising 61% to a better than expected $369 million. this on trading gains and excuse fees. -- execution fees. >> thank you so much. mcdonald's has recruited multiplatinum recording artist chris dauty to join the company as a judge and mentor for a singing competition for its employees. representing 63 countries have been narrowed down to 16 semifinalists who will compete in mcdonald's global convention in orlando this month. chris daughtry joins us now at
post nine. welcome. >> thanks for having me. >> you haven't helped screen the semis so you're coming new to this. >> coming in new. i get to basically go down to florida and coach them, mentor them, judge them so to speak, and hopefully give them something useful to help them further their, you know, their journey. >> yes. >> where they want to be. >> you've got some experience on this season five "idol" we remember that. how do you mentor like truly instruct them and not crush their dreams? >> see, i was just talking about this yesterday. that coming from an artist's standpoint, someone who's actually performing on stage all the time as opposed to having just a music exec critiquing when they've never actually been on the stage and performed, i think it's a -- you come at it from a little more of an empathetic point of view and you're not there to crush their
dreams. you're actually trying to give them useful advice on how to better their performance. because you have been in their shoes. i've actually really been in their shoes because i used to work at mcdonald's. >> i know. you were 15, 16? >> 15, yeah. >> good job? thumb's up? >> i did. you know, it was -- i've always worked for everything i have. my parents never gave me anything. so it was like go get a job. and i enjoyed working there. it was a great experience. and so i wish they had this kind of competition when i was there. >> this is a wonderful thing for a corporation to do in terms of uniting staff. >> never know -- >> people around the world, i mean you've got -- you've got people from different continents, latin america, north america, asia pacific, all competing together. i don't think i've seen a company do that before. is it big budget? look like it looks on the television? >> i haven't seen it yet. we haven't gotten to the actual -- the main competition
that takes place at the end of the month, so that's going to be in orlando. >> the cross boarder aspect of it will be interesting because we've never seen a competition like that and you will have to mentor these people. do you worry about language barriers or cultural barriers with about language barriers or culture barriers? >> had you not thought of -- >> i haven't really gotten that far. the good news is i've travelled all over the world. hopefully, i can kind of figure out how to speak to each one. it will be a lot of fun. i can't wait to do it. there's a lot of talent, for sure. >> let's pretend one of them just shoots to stardom the way you once did. how -- what's your best advice on how to handle that, when it comes at you in a hurry? >> be prepared for hard work. it definitely isn't -- nothing falls in your lap. you have to -- you have to keep plowing ahead, because the second you stop, somebody else is going to come in and do it for you. >> you're still waiting, "superman" climbing the charts, touring all summer long.
>> absolutely. going out with the goo goo dolls starting the first week of june. and it's nonstop. i love it. >> first time at the nyse, too, chris, it's great to have you. >> yeah, a lot of numbers flying around. >> yeah, and you're allowed to wear jeans on the floor, just for next time. >> they didn't tell me that. >> chris daughtry here at post nine. thanks. >> thanks for having me. still ahead, yahoo! is having its best day in nearly a year, thanks to massive growth in, yes, alley bab ba. -- ali baba. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market.
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get an auto insurance quote. usaa. we know what it means to serve. welcome back to "squawk on the street." i'd like to welcome my special guest from s&p ratings direct, gabe patek. thank you for taking the time today, gabe. >> good morning. thanks for having me. >> being in chicago and specifically in a state like illinois -- illinois and california have a lot in common, and most of it isn't really good. you had a report out that i found fascinating. contrasting some of the better things happening on a kind of federal scale versus what's going on state and local. maybe you can explain. zfr well, that's right.
in the big picture, the economy is gaining some momentum. our recent forecast shows the economy growing at 2.8% in 2014, which is up a little bit from our earlier forecast. but as you say, i mean, it really varies with regional specifics. >> all right. when it comes to illinois, big issues, as we go into governors' races, is that illinois had temporary tax hikes because they, like many state, don't contribute enough to underfunded pension liabilities. >> mm-hmm. >> so the temporary tax hikes have turned into permanent tax hikes and you have companies like walgreen, based in deerfield, illinois, saying they need to move, maybe to europe, for better tax treatment. does your group take into account the notion that this isn't static, that these numbers have consequences for the tax base of a state or locality? >> well, let me say this. we watch this closely. we researched that question a lot. the problem is most of the
evidence that we're finding so far is more or less anecdotal. and when you mention illinois and california, you're talking about two of the three states that we have in the "a" category. that's at the lower end of our rating spectrum for the states. all three of those states seem to be moving in somewhat different directions. illinois is the one that we -- we see could go further down, or it could stabilize and even move up. so it's an open question at this point, rick. >> okay, let's take the exact opposite vantage point. do you give kudos to certain states like wisconsin that have dealt with these issues in a more powerful way, and are trying to cater to bringing in new revenue bases? in other words, there has to be some time of proactive marking, because we see by census statistics that some of the cities that are in trouble are really losing tax bases, even though they are still in good standing. you know be chicago is a vibrant city. >> right.
well, wisconsin has done a good job, and wisconsin is now in a favorable budget situation. we have a aa rating on wisconsin, but what you're really talking about is using fiscal policy to help the state economy. we think states are actually somewhat ill-suited to conduct fiscal policy to effect the economy the way a federal government might be able to. because states have to operate under balanced budget requirements. and so, even in the case of wisconsin, one concern we have is that they're recently enacting some large tax cuts that although could benefit the economy in the way you're suggesting, could also go the other way and compromise their structural budget balance down the road. >> i gotcha. well, listen, gabe, thank you. it's always an interesting topic. i don't believe in static outlooks when it comes to taxes and revenues, and what i call happy feet. thanks for taking the time today. back to the "squawk on the street" gang. >> all right, rick, thank you so much. rick santelli over in chicago. we're entering sort of the
midmorni midmorning, early lunchtime, kayla, where we've seen market weakness. >> and it's anyone's guess what happens afternoon, and what could move the market in whatever opposite direction -- >> just about 90 minutes from janet yellen speaking at the economic club in new york. interesting to see what she has to say. >> and the 10-year treasury has been the leading indicator in this market recently. the last several weeks. right now, prices are falling, yields are up to 2.65. that's going to be the chart that people are watching when yellen takes the stage. >> yahoo! one of the stars of the day, opened up about 8.5% at the opening bell. that was on pace for its best day since july of 2013. we'll keep our eye on that and see if it holds, but still up almost 6%. interesting, a lot of cross currency, and you've covered bank of america today, upward, downward, sideways, you name it. >> a lot of analysts on the call that just ended moments ago, cfo bruce thompson, they were not really allayed by the way they
were talking about growth in the second half, and some of the guidance figures they were giving out really didn't do a whole lot to pacify the market, because you can see now it's down closer to 3%. and that is much worse than it was doing when it first opened. >> with all that in mind, keeping stock in the market, if you're just joining us today, here's what you missed earlier on. >> announcer: welcome to "squawk on the street." here's what's happened so far. >> look, it's a good quarter. is it a blowout quarter? no. it's a consistent quarter from a company that was very hobbled, stock has been the best of all the major banks, so it doesn't rally on this. >> do you have your wallet on you, by the way? >> here's the prescriptions, by the way. >> it's not that bad. >> one day, it will just go -- poof! >> there's the opening bell the. >> why would i want to own it versus evercore or greenhill or lazard? >> we deliver the entire firm to the client. multiple people, multiple areas of expertise.
multiple regions around the world. and our growth will tell you that it's working. >> we're all working as one team and staying very focused on this record number of launches that we have this year. good wednesday morning. 11:00 a.m. on the east coast, 8:00 a.m. out west. here's what we're watching for you. yahoo! having one of its best days since last summer, thanks to massive growth at alibaba. find out what you need to know ahead of the biggest ipo of 2014. google fiber could be expanding to a major city near you. we'll tell you where fiber might be headed in a moment. samsung used to be afraid of running ads directly attacking apple, but one major event changed the company's mind. we've got some insight into what the company's state of mind was. and what will become of that famed bitcoin exchange? a definitive answer is out today. we'll bring it to you. first up, peter kofka along
with jon fortt in san jose, guys, good morning to both of you. we'll start with yahoo! today. the stock soaring this morning after the company posted better-than-expected results in the fourth quarter, largely thanks to ecommerce giant alibaba, gapped up about 8.5%. revenue, gross profit, income from operations, net income, all the way up at alibaba year over year. alibaba, of course, expected to file for that ipo very soon. it could be the biggest since facebook back in 2012. peter, good to get your take on all of this. were you impressed with 66%? >> everyone is, right? it's great. you buy yahoo! you're buying alibaba, and yahoo! is the option for free. everyone is trading on yahoo! now, and trading on alibaba. it will be interesting to see what happens when you can buy alibaba in the next few weeks. >> is it giving marissa mayer too long of a leash, too much time to turn around like display pricing -- >> i think wall street is saying, we don't care. >> we don't care.
>> and basically, things didn't get worse in the year. and she took a mulligan for the last year. listen, the guy that was hired i had to pay him to leave. nothing good happened in the last year. and they said, look, we're flat. >> jon, when you think about that leash, do you think that that extends into the beginning of 2015, at least until alibaba goes public? how long is it? >> it's hard to say. you look at yahoo!'s core business. it's holding up decently well, display looked better in terms of internally how the metrics look. search is a little bit of a risky area, because microsoft's guaranteed payments look like they're going away. i mean, you have to give marissa mayer some more leash, because these turnarounds do take time. when you consider how long it took apple to really hit its stride with the ipod and beyond that, even after the imac, they had rough goes, so you can't expect them to turn it around immediately. you have to think after alibaba's ipo, people will say, well, what is the value of
yahoo! really? we want to see some momentum, at least in metrics, even if not on the top line. >> jon, you did mention yesterday that the alibaba metrics are a bit of a lagging indicator, right? >> yeah. that's right. so we've seen the q4 numbers, which we expected to be strong based on some holidays they have, that tend to drive sales. but they were even stronger than expected. in another quarter, we'll get q1. and if it falls off again, well, maybe q4 was so strong that people say, oh, well, q3 was a little weaker than expected. q4 was much stronger than expected. you know, if q1 is off a bit, people might wait to see what's with q2. i think q4 is perhaps strong enough that people will give -- continue to give yahoo! the benefit of the doubt, but we'll see. >> that seems to be the takeaway, because analyst has expected revenues to grow, only 40%. even if the fourth quarter, peter, is weak or strong, and the first quarter will be strong, by any mark, it looks like alibaba can beat those hurdles. >> right. again, this is a big, exciting chinese internet company, people
want to play with it. and i think they'll give marissa mayer quite sometime. if i'm here, i say, look at aol, it's starting to work there. no one has turned around a giant consumer internet company in the u.s., so give me some time. >> john steinberg said, who wants to be compared to aol? who wants to be valued lower? and it turns out that yahoo! is with the stock gain today, like it's valued on par with aol. >> it's not bad. >> -- peter, michael wolff, david carr of "the times" they want to play with the big boys in show business, it will be risky? >> there are a lot of questions, especially from media, competitors media, partner, what the strategy is, trying to get different video stuff, maybe taking on youtube. there's a lot of what's going on, hiring bobby brown to do the editorial, also advertisers. a lot of head scratching. if you're wall street, all right, we'll let this stuff settle out. she's going to have a big presentation next week where she shows the stuff off to
advertisers, so we'll wait and see. >> verizon and time warner cable might have competition in the big apple. google fiber, google's high-speed internet service is available in kansas city, austin, provo, utah, and now it may be coming to new york city. this job posting popped up on google's website calling for a google fiber regional sales manager in new york. the position will, quote, manage multiple teams that evangelize google fiber services to apartments and condos. jon, we had big discussions today about whether this is even physically possible. >> well, google has a way of making some things seem possible that didn't seem possible before. but as we've seen with tesla, there are some special regulatory hurdles, it seems, the closer you get to new york and to -- entrenched interests. it will be interesting to see how this plays out. if you are a google investor, is this going to move the needle for you in any significant way? well, i'm not sure. this will certainly light a fire under the current broadband providers, maybe even give them
some incentive to point to google and say, hey, look, they're moving in to compete with us in major markets. look at the competition we have. >> right, but there are also significant physical hurdles, too. we saw how hard of a time verizon had, building out the phi owes in new york. >> verizon said, we're done, it's too expensive, not enough gain. we're done trying to compete with the existing cable guys. if i'm an investor and really do think google will lay fiber or expand across the country into every major metropolitan area, that might freak me out. as someone who lives in new york and would like faster broadband and actual competition, i would love it if they came here. >> maybe the plan is, jon, take the drones from titan and the balloons from project balloon, and put it in manhattan. >> yeah, drones over manhattan. i'm sure that would go over -- no, the thing with google is they don't have to do that much right off the bat, right? if verizon slow-rolls fiber out into new york, they'll get criticism, why aren't you
faster? if google does a building or two, they're seen as a big savior. but then, at the same time, if i'm a broadband provider, in some ways i might welcome this, because again, if you're comcast, which, of course, owns us, you get to say, hey, look at the big players moving to compete with us in broadband. you ought to let us do all the mergers we want. >> let's not jump to any conclusions, because the job description says evangelize. >> -- google did try to pour water on this last night, saying, look, there are no plans. and by the way, they've announced other cities they might enter. so far, smaller cities like austin and kansas city. >> have you had a chance to try -- >> no, i just watch on the internet. i would love it. >> it must be quite a ride. finally, look at this chart of twitter. slipping to the downside this morning after jumping 11% during trading yesterday. it started rallying after buying social data provider ganip for an undisclosed amount. it was upgraded to neutral by stern, a $43 target. the general take is the lockups
aren't an issue, peter, and that with the new vp, they're start to assemble tweets in a way they can truly monetize. >> it's confusing to make that -- i don't understand how they reached that conclusion. they had to hire a product guy. they hired one. a lot of people in silicon valley weren't impressed with the hire. they acquired ganip. it won't have a revenue impact for a very long time. >> you don't see causation in yesterday's action? >> very hard to see the stock move because of that. >> the description of the company is interesting, because it's described as one of the only companies that has access to the full library of twitter, tweets, and i'm wondering as a twitter observer, how does any other company besides twitter have access to that? >> twitter licenses it out. at one point, it was an important piece of revenue. now, it's not really material at all. there are a couple of companies that have it. they might say the stuff retracted.
>> why not pull all of it back? >> you might see that. twitter wants the stuff out there, but they just want more control of it. >> jon, the stern upgrade references studies that say -- i couldn't believe the statistic -- 44% of twitter accounts have never tweeted. that's gotta change. >> well, i'm not sure it does have to change. i think twitter's got to figure out what its -- what its pitch is really. is it more of a lean-back medium where you get value out of it, even if you're not participating that much? certainly, they can make lots of advertising dollars if they make that experience engaging and compelling enough. so not everybody has to tweet. but i think right now we're not so clear on what their roadmap is, exactly what kind of pitch longer term they're going to be making to advertisers. right now, that number looks bad, because compared to facebook, well, on facebook, people tend to be a bit more engaged. >> all right. guys, thanks very much. peter. great to you have. >> thank you. >> jon, we'll hear more from you later with brian, of course.
we want to check out shares of intel. after earnings, trading slightly to the downside. bounced up big in the aftermarket yesterday, but now losing a quarter of 1%. the profit fell by almost 5% in the first quarter. if you go behind the numbers, plenty of news for the chip maker. we'll tell you what that is in a moment. plus, samsung used to be worried about running ads that directly attacked apple, but one event changed the company's mind. we'll tell you what that was coming up. i've always had to keep my eye on her... but i didn't always watch out for myself. with so much noise about health care, i tuned it all out. with unitedhealthcare, i get information that matters... my individual health profile, not random statistics. they even reward me for addressing my health risks.
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take a look at energy sector today, one of the many womeners on the s&p, and seema has more on this at hq. >> that's right. the energy is one of the top performing sector this is morning. the s&p energy index is at its highest level in at least 20 years. among individual stock winners, schlumberger, halliburton, all at 52-week high, quite a run. kayla? >> all right, thank you so much, seema. in the tech sector, while it may have taken a hit recently, chipmaker intel beat the street on earnings, and with announcements coming down for many companies, what does intel exactly have up its sleeve? jon fortt back in silicon valley ahead with more on what we expect to hear from intel's ceo. jon? >> well, it's an interesting time for intel, kayla, thanks. you take a look at last night's report. revenues were pretty much
inline. they did well on margins and where they project those will go, partly because 14 nanometer, the manufacturing process they're bringing up to speed now, they've already dealt with a lot of the costs of that. so they're getting margin improvement from that going forward. the enterprise pc market is holding up well, but brian and stacy smith, the cfo, said consumers are generally looking weak across the board, across the globe. and they're making a lot of investments in mobile. they've stated this goal of wanting 40 million tablets being 40 million tablets by the end of this year. they said they shipped into 5 million tablets so far this year, so they're on track. a lot of these are lower-end tablet, and the chips intel has now are sort of overbuilt for the lower-end tablets where they see the opportunities. so they're really giving discounts to the tablet makers to put their chips inside those. they think they'll be able to do
stop doing that sometime. the next year, the year after, bring the subsidies down. they're trying to get the product right cost-wise, performance-wise, get into tablets because they view that as strategically important. and meanwhile, the enterprise pc market is holding up for them. the main question underlying all of that is where's the real growth going to come from? is it from smartphones and tablets? because it doesn't seem necessarily like it's there. is there a vision for wearables that maybe is reflected in the purchase of basis just a few weeks ago? we'll touch on all of that with brian coming up shortly. >> those are key questions, jon. i'm looking at a cell report right now titled inline q2, concerns persist on tablet, mobile success, and margin dilution. no matter where the market is, will it transition from pcs? >> well, i think in the near trend, there are going to be some margin issues. they pointed to that. we know 14 nanometer will take a while to ramp up. we know they have a foundry business that really isn't going to be at scale for another two, three years.
and stacy smith and brian on the call said, hey, we've got a lot to learn about actually making chips for other people. intel's real history and legacy is making its own chips and keeping everybody else at arm's length. but as far as mobile is concerned, it's kind of a tough road. they talked a long time how they would break into smartphone, and haven't been able to do that. they talked about how to break into tablets. and now targeting the lower end, having to subsidize the current product to get in there. maybe it's wearables, maybe it's something that hasn't shown up yet. we want to hear what the vision is for that is. >> jon, stacy smith said yesterday he believes some of the growth could come from the internet of things, that eventually for intel that could be a $2 billion business. from what you've seen in the technology and how they've been able to roll out even at a very nascent stage, do you think it will be that big, and do you think that's a long way away? >> internet of things has a lot of potential. intel has tended to be cautious moving into markets like this, looking for the right partner.
i think the question is, do they have to take a risk and actually develop the killer product themselves? they've been hesitant to do that, but there's a risk that somebody else, an apple or somebody else, cisco, wants in on the space, so many other, they make a more aggressive move when intel should do it. >> meantime, samsung used to be very hesitant to directly attack apple in its commercials. what changed? well, according to documents from apple and samsung's patent trial, it was the death of steve jobs. e-mails from the trial showed samsung's vp of u.s. sales describing the death of jobs as, quote, the best opportunity to run anti-apple ads, because consumers might be worried about apple's future after his death. not long after samsung started running the next big thing ad campaign, man, jon, this is one more reason not to get caught in litigation, because the dirt will come out. >> yeah, i mean, i have to wonder if consumers are really going to key in on this. it's kind of cynical, isn't it?
they see steve jobs has passed away. they know people will question apple's ability to innovate. they say, this is our time to strike marketing-wise. apple had its own way. steve jobs had his own way of being cynical. you know, i don't know. samsung is so tactical. they're so dangerous. you've got to admire kind of the blood in the mouth sort of bare-knuckle way they go at things marketing-wise. but at the same time, two very different companies. and it continues to be fascinating to see how they go at each other. >> all right, yeah. unbelievable story. you could argue, make a very strong case, that it actually was strategically the right move. you forget where samsung was back when jobs was still running apple. jon, we'll talk to you -- >> remember the deference that google gave steve jobs on things like hiring. samsung clearly not doing that. >> right. maybe it's a cultural thing. we'll talk to you in a bit, jon fortt out west, to interview intel's ceo in a moment. we're watching the markets. stocks in the green after a wild ride during trading yesterday.
right now, the dow up 95. the s&p 10. and the nasdaq 21. so what is the best way to play all the volatility in the markets? we'll bring you a few ideas in just a moment. first, rick santelli, what are you watching? >> yield curves -- steep, flat, inverting. what do they mean? what do they tell us? are they a good indicator? are they the same indicator they used to be? i'm not so sure, because the next topic after the break is going to be central banks. they've moved from nudgers to full-grown disrupters, and i'm not so sure that's a good thing. all bottom of the hour. ♪
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surging on news it is in early talks to sell up to a 16% stake, that according to an israeli financial news daily. the website identified pepsico, dr. pepper, snapple, or starbucks as potential investors in the israel-based company. everyone involved declined to comment. you can see shares of sodastream up better than 8.7%. carl? >> pretty nice move. thank you so much, seema. alternative investment fund manager franklin square listing the flagship fund under the ticker fsic on the exchange this morning. they're not selling any new shares, but existing holders of $2.7 billion worth of private shares are now free to sell into the public market. michael foreman is the chairman and ceo, and he joins us at post nine after ringing the opening bell this morning. congratulations. >> thank you. >> we were talking off camera, given the volatility of the past week, action relatively stable and good volume, too? >> yes, a lot of volume. we've had a lot of investors that have done very well over a long period of time. we launched in 2009.
and some of our early investors have doubled their money. so there'll be some excited sellers, and then we think we'll build a base from there. a lot of institutional support coming, we expect. >> for viewers new to sort of business-development companies, what does this mean in the narrative of that? as a vehicle, how do you describe it? >> well, we're a little different than some of the other business-development companies, or bdcs in the market. we come with $4.6 billion of uam. 2.7 billion of equity. 159 positions within our portfolio. so we've got scale. we've got a large shareholder base. and we'll have liquidity for the institutional investors. we invest in noninvestment grade credit. our partner, gso blackstone, gso is the credit platform for the blackstone group. they manage 65 billion. so we think we're coming with real size and scale. we'll be the third largest of the bdcs, a very interesting and unique story. >> critics would compare bdcs to
what we used to call blank-check companies, where you raise a lot of money and invest in companies. or in different investments as you see fit, without really any rhyme or reason. you pick and choose opportunities as you find them. how do you find your opportunities? how do you pacify any concerns of investors that you can't spend the money or you're investing in the wrong things? >> well, kayla, this is a different kind of vehicle. we come to market. we've already invested our capital. so we're not doing a primary offering. so there's no capital to invest here. we're providing liquidity to our existing shareholders. on the investment side, we're really a middle-market lender, so in a time when there's some pressure in the banking community because of the regulatory changes, we're providing loans to american companies, middle-market american companies, providing growth, providing jobs. we have 159 different positions in companies. so we're a little different than the normal vehicle. >> and you've originated $3.1 billion in loans to some of your portfolio companies. why couldn't those companies get
traditional funding? and why do they need to go to an alternative source like yourselves? >> and i think that's a great question. it really goes to the core of what we do. at franklin square, we're probably the largest middle-market lenders in the marketplace. we manage $10.2 billion of capital. so we've developed relationships with a number of private equity sponsors through our partnership with gso blackstone. many of the companies are a little bit too small to access the high-yield market. and not quite investment-grade quality to get the interest of the banks. so that middle market is really underserved. that 50 million to $250 million loan. and that's really kind of our bread and butter. >> finally, any color on loan demand and how you see that for the remainder of the year? >> it's a tight market right now. with interest rates as low as they are, people are seeking yield, so there's a lot of folks looking to invest in bdcs and other yield entities. we're at floating rates, and
also a hedge against rising interest rates and inflation. we're seeing volatility, markets pulling back. we'd rather see pullback in the markets than volatility. we have a robust pipeline and a lot of opportunities out there. >> congratulations on the bell today. >> thank you. >> michael foreman, franklin square chairman and ceo. >> we'll talk more about loan growth when we talk about bank of america on the other side of this break. check out shares, down 2.5%, slipping after posting a loss in the first quarter. largely, thanks to legal costs related to the financial crisis. is this an opportunity to buy in on the stock? more on that in a moment. plus, bells are about to sound across the pond. a few minutes left in europe's trading day. we'll have the close and details on the impact on our markets here. that's all right after this break. without standard leather. you are feeling exhilarated with front-wheel drive. you are feeling powerful with a 4-cylinder engine. [ male announcer ] open your eyes...
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european markets closing just moments ago. we want to bring in simon hobbs to tell you what's moving the markets over there. >> check out europe. this is a very, very strong day, as europe moves back towards the six-year highs. look at the detail on the map. look at the gains in spain and italy. just for the record the unemployment rate in the united kingdom fell below the point at which the bank of england used to say it would raise interest rates. but be that as it may, we have -- ooh, wow. flying over europe. here we go. so you see strong gains across europe overall. the data is really quite important. this is the broadbased rally. the data for the euro zone is very important today. you have inflation falling to
0.5%, a half of one percent. jpmorgan says that's due to vegetable prices, packaged holidays, clothing, shoe prices, because of the weather and timing of easter. for european central bank, already on deflation alerts, that clearly is very, very important. we now wait for the april figure, the flash april figure that will come through towards the end of the month. in the meantime, what is happening is a very strong rally again on bull markets in europe. this is where we are on the -- i mean, this is breathtaking, at the end, the degree to which the market is rallies and yields are falling. you see it in spain and portugal. in italy, the european central bank is a feature here. but also something else is happening, whereby the flight to quality -- into quality assets, now appears to include peripheral euros and debt, because the ecb may have driven the fear out of the instruments and people are prepared to pick up italian paper at 3.1%. who holds a lot of sovereign
debt? italian sovereign debt? the italian banks. they've got real winners on their hands with the asset classes. so it's a broad-based rally across europe. but the banks are very much at the helm of that as you can see. one other bank to mention, credit suisse over in zurich today, the ceo, brady dugan, having to defend effectively the investment bank. you have for exchange commodities, fixed income results, all coming through below expectations at a time when costs arguably are rising at the investment bank, and people are saying, really, should you have such a big franchise? is the cycle going to come back? this is brady dugan's answer -- >> equities, the investment banking business is quite good. overall, our investment banking business, the strategic part of it, made a 21% return on capital. so that's actually a very strong return in the first quarter. you know, we had actually some good performances. >> the coo of credit suisse talking to cnbc's team in zurich. back to you guys. >> all right, simon hobbs, thank you so much. enjoy your vacation.
>> i will. thank you for remembering. let's get to the cme group in chicago. rick santelli with the "santelli exchange." hey, rick. >> thanks, carl. i tell you what, i'm a lucky guy, because i get to be very fluid. i'd like to respond to some of the issues that were very succinctly brought up by simon hobbs. it goes right along with what i'm talking about. central bankers, used to be a time they were nudgers, but truly disrupters now. as simon adequately points out, 5 and 10-year yields in spain, in italy are getting very -- the 10-year getting very close to 3%. but it isn't like in the u.s. where rates are moving down necessarily for not a dazzling economy or for a variety of other reasons and programs that may have outlived their usefulness. over there, it really is a distortion. and, yes, the banks of countries own their own paper. it's used as collateral. it gets recycled through the ecb. it might not be u.s.-style quantitative easing, but look at the ecb balance sheet. you almost end up in the same
place. but the distortion is that is there really value in the paper of italy and spain when their banks hold it? it's down because of some of the manipulative issues, and ultimately it plays havoc with the high-quality spreads. whether it's booms against that paper or ten-years against boones, and that's why i say it will be difficult for u.s. yields to rise in that environment. now, let's say what the yield curve really is telling us. you know, in the old days, steve liesman, my hat's off, you did great charts today about the predictability of yield curves regarding recessions and the economy. it's simple why it works. when you have a yield curve that's pretty steep, what happens is the economy's buzzing along, rates are most likely, you know, let's say the short end here on a steep curve, let's say fed funds at 2%. let's say a 10-year is at 3.5%, 150 basis point, the pot is steepening. as the economy starts to slow,
the long end senses rates are coming down, and what it's augering for eventually, it start to invert, is the fed needs -- if we were at 1.25rks what that would do to the current yield curve. if you're looking for flat or inversion to give you the true recession signal, the distortions make that almost impossible. and with regard to china, look at a chart real quickly of the gdp. at 7.4 or a quarter over quarter 1.4. it was a disappointment, but the economy is bigger, so it pushes out more sausage to be fair. but ultimately, the gall of anybody in this country, or any other central bank, saying they're manipulators, that's really rich. back to you, carl. >> a good explainer, rick. rick santelli at the "santelli exchange." let's get over to seema mody who's been watching gold today.
not more action, but yesterday was a killer. >> it really was, carl. gold is trying to rebound from yesterday's sell-off, this as investors weighed the rising tensions in ukraine against decreased demand from china. gold currently trading up by around .1%. now, there is a multibillion-dollar deal to report. yamana gold to buy osisco. the offer is about 11% higher than gold corp.'s hostile bid. can you see how shares are trading today. bank of america in the red this morning after the nation's second biggest lender reported a first quarter loss. the result of $6 billion in legal costs tied to mortgage disputes. excluding that one-time item, the bank's earnings did top estimates. with us is gerard cassidy, managing director and analyst with rbc capital.
welcome. >> thank you. >> i'm looking at headlines that say loan growth is really questionable, and that cfo bruce thompson doesn't know when it will come back. when does that make you think about the banking sector overall and bank of america as an investment specifically? >> i would say that the loan growth picture is actually picking up many bangs, even bank of america opponented to an improve the -- improvement in loan activity in the month of march. we know the first quarter was affected by weather, which we hate to use as an excuse. but clearly, the weekly h8 data shows loan growth accelerating in march and april from commercial lending. so commercial real estate, commercial loans, that's where bank of america and the other banks have identified as the growth area. the consumer lending is way down for everyone, including bank of america, from the residential mortgage business, which has been weaker due to the refi slowdown that we're seeing. >> we're seeing origination numbers for bank of america at an all-time low. the pipeline does look to be up
23% for the coming quarter. the quarter that we're in right now. do you believe that that will be able to at least start to chip away at some of those losses in the mortgage department? >> i think you put -- that's a good point you're making, because the spring is, as we all know, the stronger selling season for housing. and many of the banks from wells fargo to jpmorgan chase to bank of america, talked about stronger pipelines in the residential mortgage area. so we do expect for the industry, including bank of america, to report better residential numbers in the second quarter, which will offset the negative -- partially offset the negative numbers in the first quarter. >> gerard, how long of a tail do these legal charges have? and when's the first truly clean quarter? >> that is the $64,000 question, and obviously, as the company's pointed out, these charges are lumpy. they're making progress by the number of settlements they've announced in the last six
months, and you'd like to say, obviously, the tail is shorter today than it was two years ago. but we don't know. there's some issues that have to be resolved. you would hope by the end of '15, the industry can look back and say, okay, all of the problems from '08-'09 are finally behind us. but we just really don't know. but we're closer to it, obviously, today than we were 6 to 12 months ago. >> that's the hope, gerard. but you can't blame bank of america investors being frustrated. $2.3 billion more being socked away and unidentified $2.4 billion going into reserves this quarter. do you have any level of confidence that this will start to taper off, the level of money they have to keep putting away for these charges? >> i think it does. in fact, if you look at their 10k, they cited the unreserved amount of litigation was anywhere from zero to $6 billion. they'll put that number in their 10q, and i think we'll probably see that number come down a bit, because of the actions they took this quarter.
but you're right. these are lumpy expenses and, you know, clearly they're still way too high and investors, of course, have to keep that in mind when they look at bank of america. >> gerard, finally, a number deep within the is up plemt that struck a lot of us by surprise, and that's the type of securities held available for sale by banks for clients and for other partner banks. u.s. treasury and agency securities tripled this quarter to $29 billion for treasury and agency securities. is that a safety trade? what does that tell us about where these banks see the economy going? >> i think it has more to do with what we call the liquidity coverage ratio. as you may be aware of, the regulators are forcing the banks to be a lot more conservative than they've been in the past. and the liquidity coverage ratio, all the banks are being required to raise those types of investments to meet the new ratio which has not been finalized. so it has nothing to do with what they think about the economy, and it has entirely
everything to do with the regulators telling them to do for the liquidity coverage ratio. >> increasing that by $20 billion in one quarter. that's not pocket change. >> oh, no, it's not. and it's for the industry, it's going to be interesting to see how this does play out when the economy gets stronger. the banks are going to have to keep this liquidity on their book, which could affect their ability to meet all the loan demand should we ever get into a three-plus-percent real gdp-type growth in the future. >> gerard, we have to go. you have an outperform rating on bac. do you change that after today's numbers? >> no, we don't. we'd be a buyer on weakness. >> all right. gerard cassidy at rbc capital markets. thank you for being with us this morning. >> you're welcome. when we come back today, there's big money in mining, bitcoin mining. we'll bring you the story of one man in indiana who's grossing hundreds of thousands of dollars a year just by mining bitcoin at home. that's coming up next.
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roller-coaster ride and we're looking at the names with the biggest swings. are they too hot to handle? we'll hear from a fund manager who says be brave. it's the pullback you've been waiting for. and are the markets gellin' with janet yellen. the fed chair speaks during "the half." and the ceo of intel sits down for an interview, his first since taking the reins almost a year ago. >> all right, scott, thanks. this could be a blow for bitcoin. mount gox used to process 70% of trades, and likely to be liquidated. mount gox filed for bankruptcy protection from creditors in japan in late february saying it had lost some 850,000 bitcoins due to hacking into its computer system. it later said it found 200,000 of the bitcoins, but, carl, not before hundreds of millions of dollars in virtual value had been lost. >> unbelievable. speaking of bitcoin, for some
people, mining for bitcoin can mean big money. cnbc's new digital documentary, "the bitcoin uprising," our own mary thompson found someone grossing hundreds of thousands of dollars a year just from mining the digital currency. she's back at hq with the details. >> it is. mining for bitcoin proving to be a profitable hobby for one family man in valparaiso, indiana. he's known as one of the miners who wield computers, not picks and shovels, in the race to mine digital gold. when the lights go on in this household, it's time to rise and shine. >> some more eggs? >> and mine for bitcoin. is there a reason it's better in the basement as opposed to up on the main floors? >> it's less of a nuisance to the family, because it's very loud. >> 31-year-old steve first heard of bitcoin two years ago. >> a friend of mine said, this is crazy, and i'm all in.
and that was my introduction to bitcoin. two computers running everything. >> now, he runs a mini-mining operation he set up in his basement for him and his partner. >> what's the electricity bill now? he provides the power -- >> close to $500, and that's when we had most of the black ones online, not quite all of them. it's going to be continuing to climb -- >> his partner provides most of the computers. they cost between $1,500 to $5,000, and will likely become obsolete in when two years. how much does he pay you for this space, do you mind me asking? >> when it was just the black boxes, it was 1,000 a month. and then i charge $250 for each of these other big ones. >> now, he is a minority shareholder in this venture. it produces about 1.2 bitcoins a day. if it was trading about $600. given the volatility in the price, and figuring in the cost of the computers and the power
to run them, which can run you a lot of money. the full documentary is now online on investigationsinc.com. >> i know i'll be watching this documentary, but is he deterred by the recent volatility since he's been in it for two years, or is he still going? >> no, he's still going. nice going. as he said, it's a hobby for him. it's a hobby for him. >> an expensive one given the electricity bhil. >> he's still making money. i spoke to him the other day, and even though the price of bitcoin is down since i interviewed him, which was about a month, month and a half ago, he's still in the black. >> mary, good stuff. i know we'll all be heading there to watch the documentary. mary thompson with bitcoin uprising. this morning's stocks in the green so far. but over the past few weeks when we've seen big moves in the market, a few stocks in particular have been leading the way. we'll tell you which ones this time when "squawk on the street" comes back. bulldog: [yawning] it's finally morning!
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sheila? >> kayla, there is green on the screen. let's not forget the nasdaq is down 7%, 8% from the recent march highs, so very close to the 10% decline which is considered a market correction. so our data team went through the last two times the nasdaq had an official correction, both in 2012, and found out which stocks led the way down. now, in autumn 2012, that was the first correction we saw, here were the top five losers. in the spring of 2012, the other nasdaq correction, it was green mountain coffee, netflix, san disk, netapp, and when you combine the two lists, the top 20 losers are the same names. netflix, tesla, vertex pharmaceuticals, some of the biggest losers in both corrections. surprise, surprise, these are some of the very same names traders are looking at this time around as the nasdaq continues to lose ground. look, traders tell me these are your classic momentum name, names that move regardless of
what news is out there, or what be having fun mentally with the company. they move in one direction consistently. they're a good leading indicator. so when you see the momentum switch as we are seeing now, when you see the technicals start to break down, it could be a sign of what lies ahead. here's what's interesting. if you look at the five names and what they've been doing the past couple of months, each of the names are down in double digits, nearly 20% since the recent highs. that's considered a bear market correction, which is at 20% decline. so very interesting about what could be lying ahead in tech world. >> yeah, especially after yesterday's close brush with the 200-day moving averages. sheila, thank you very much. stay with the markets. no pullback so far. stocks have been fairly firm all day. dow is up 106 opponepoints. has the volatility subsided? art cashin has some answers in a moment.
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this hour, at least, art, good to see you. >> thank you. >> a couple of days of nice bullish reversals. ten year's behaving today. all clear? >> probably. as i wrote in my comments this morning, the reversal yesterday was significant. and it was the coming together of several parts. the biotech sector. it dropped approximately 25% from its high. that fulfilled a major correction, kind of routine. simultaneously, nasdaq almost was down 10%. they started to turn. that encouraged both the dow and the s&p. and they turned without taking out their lows of earlier in the week. so i know that sounds like inside baseball mumbo jumbo to some of the people out there, but those are the kinds of vital sign checks that we here on the floor give. so i wrote this morning that chances are the momentum sell-off was over, and we'll
move on to other things. we have a very unusual thursday expiration tomorrow because of good friday holiday. so we'll be under that influence. so unless real shooting breaks out in ukraine, or unless janet yellen or richard fisher from the dallas fed, both of whom speak shortly, say something big, i think we might be relatively safe. >> since the nasdaq narrowly escaped that correction, does that tell you that the market has some resistance to actually go into a real downturn? or do you think this rally has legs from here? is that what you're saying? >> well, i think we've changed -- the focus was in the momentum of biotech stocks. and even the other rallies that we saw previously in this week and the week before faded because they fell apart. they're clearly back in favor this morning. i think that tells me we certainly get into next week without anything big happening, and as i said, with all due respect to the risk in the ukraine, the market is taking a kind of jaundiced eye and saying
it's all talking and posturing. the hostilities are almost like show hostilities so far. if they turn real and serious, and god forbid people's lives are lost, that will be a different story. but for now, we'll let his mother worry about it. >> i've heard that the latter half of april historically pretty good, at least the last few years. is that true? >> it is. a little bit of a spotty record, depending on which section of years you pick. but when you get past tax day, you lose some of the pressure and go. we are going to be getting very close to sell in may and go away. >> which is actually true. >> and it is true. and if you look at the historical pattern in the second year of a presidential term, it has greater record of effectiveness, so it may be becoming a fact. >> you know everything. >> well, that's what i tell my children. >> art. thank you, art cashin, walking us through what has been a volatile couple of days, and we
do have the afternoon to get through. >> it's a busy earnings week, so you look at the specific companies and wonder if they hang in. >> a busy night tonight with google and all the rest after the bell. >> ibm. >> scott wapner will walk us through the next hour and get us to yellen. >> a big market event, carl. we'll see if yesterday's reversal, as art was talking about with you guys, today's gain is something to build on. >> yeah, he was rather definitive, i thought. we'll see what happens. >> yeah, i thought so, too. welcome to the "halftime" show. here is what we are following today on "the half." i am surrounded by traders, and we have a good market to talk about here. braveheart. is it time to start buying be beaten-down stocks? one guy says yes. gellin' with yellen. will the markets like what they hear? intel's big cheeief. we hear from the ceo in his first interview on