tv Squawk on the Street CNBC July 21, 2015 9:00am-11:01am EDT
minus 16 gets you to 8 hours a day. >> if you do that eat a few times but not a lot. >> brian steel versus hugh jackman is not the same. >> not yet, but steele is on his way. ? another intuitive dancer. that's amazing. was it a dance thing? >> no. >> make sure you join us tomorrow. "squawk on the street" is next. ♪ >> good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. it is all about earnings today. quite a departure from the recent obsession with china and greece. premarkets a little soggy thanks to a string of revenue misses. ibm will take points off the dow. oil is up slightly but gold just $2 from 1100.
the road map begins with ibm, sales falling for the 13th straight quarter. >> ibm not the only stock we're reporting on this busy weeks this week. mixed quarters for vz and united technologies. >> and facebook the company overtaking overtaking general electric in market value. >> ibm, sales down. adjusted earnings did beat but the performance of the traditional and software dragging. earnings hurt by the strong dollar. and they expected a slightly stronger currency impact. the cfo is calling the results a reflection of where we see long-term value in i.t. this will take some time. >> i think one of the things that happened that was wrong were ibm was that the stock ran
in anticipation this would somehow be a breakout quarter. the cf so great. he made it clear it wasn't going to be a great quarter. i kept thinking what about what he said made him feel like this was the one. software was not as long as i'd like. backlog did grow. there were problems in brazil russia, india, china. i am not defending the stock. i am saying this is where the stock was ten days ago and he's probably right. >> it moved up that much? i hadn't realized that. they took a hit on the dollar. no surprise there but it is a big number. we're talking 9% points in terms of the revenue line. their argument is if you take out divested businesses and currency, then we really are only down let's call it 1%. >> but. >> which is true but still declining. >> it's an engineered decline.
again, am i defending it? i am saying this is a value tech that has not turned in a market where you mentioned that facebook just passed general electric in value. when you mention value tech to people right now what they say is sold to you. no one wants value. by the way, this could be oracle or intel. >> it's all the hewlett-packard, although they managed to have great returns in the stock market until this year and now the split is taking place. we'll see what the affects are when it occurs in november. >> so you found like you're interested here or you're going to get interested relatively soon. >> if the stock were to drop to the 150s, people might say their strategic businesses are good enough. there were a lot of negative things said about software. it was like if you go over the software, there was a negative call about software. a lot of guys are neutral. a lot of people are recognizing
it is buying back stock and has a good def dend. it was not a breakout quarter. and frankly, about the breakout quarter, sold given the fact that a lot of people thought it might be. >> is the track record of buybacks good for these guys? >> i've gone back and forth with them about how you fill the stadium. you have people already in the stadium, say, half full who want a buyback and want this dividend and in order to get the rest of the stadium full you have to get more growth. but they're doing exactly what warn warren buffett wants. i don't know if that's what you want. do you want a giant acquisition? do you want them to buy service now? do you want them to go in guns blazing and get to what microsoft wanted? i, personally, want that but that is not what the shareholder base wants. >> right, and they have tried to focus people on the so-called
strategic imperatives, we're talking mobile social cloud, all the catch words and they're growing quickly. but as we point out, and this is a fascinating transition to watch a large company try and attempt. a company with 450,000 or more employees. more than the population of cleveland. we have seen it before. they've done it before. that makes it more interesting. now it is completely that's a transition. and those catch words, that's what she's all about at this point. 4 billion in shifted investments to the growth areas. they identified earlier this year when we sat down for an interview. >> i think, david, you are so right. it is her company. she's made these bets. the catch words, they actually were good. they did well on all these. by the way, the backlog was up. this is the first time in a
while it was up. but the backlog here is so big. this thing is such a big company that, i was trying to go over with the company, and i was like wow, salesforce.com, is a bigger backlog backlog. their backlog is 12 times the size of revenues for other companies. it doesn't matter. in this market people are going to say i want google and i want facebook. >> i want amazon and i want netflix. >> and don't forget they -- apple tonight is a low multiple stock and apple is i think less vulnerable than ibm. this is the multiple in ibm, it's incredibly low but people say -- >> this is a market about global growth and multiple expansion. >> tonight is going to be bananas. apple, microsoft, go pro and chipotle after the bell? >> i know. i'm looking at tonight and i'm
taking out winners of ibm education, they are very smart. i apologize. with these numbers, i have to do my show live tonight. this is the most explosive after hours -- maybe yahoo says they can't get the tax break. maybe apple will say they're not doing the watch. chipotle itself is hard. >> i'm looking for seeing it. i'm counting the days. >> you're counting the days until the brightling comes back? >> yes, and more than a brief appearance. days and weeks again like it used to be right here. i used to covet that watch. >> it's a chick magnet. i can tell you that. as a 60-year-old, i put that on hello ladies. this tells me where i'm supposed to be. i have weather like it's no
tomorrow. >> we have some more earnings to get to tomorrow. verizon a mixed quarter beating on the bottom line. sales falling short of estimates and utx out with an earnings beat. lowering the full year profit forecast. stocks down almost 4 %. they quote a slowing china along with the currency head winds. verizon, revenue up 5.3. wire line revenue up 2.5. it's about wireless and the internet of things and everything else. >> here you'll see the stock down as much as 2 .5%. that's a big move for verizon. what seems to have caught people is average revenue per user is about $0.50 below what was anticipated. they're not saying it's necessarily because of price wars or because t mobile is so aggressive but i have to believe it's part of it. they are structurally lower. things are more competitive in
pricing in wireless. the sub metrics at verizon were fine. they took their guidance from a little more than 4 %. a little more than 3% now. turn was very good. it does seem to be the sales forecast and this average revenue per user but they seem to be saying on the call it's not really -- it's not pricing related, so to speak, but i think there's plenty of people who doubt that's the case and believe things are more competitive in wireless and verizon is taking it just like everybody else is. >> another stock that ran up. on what that john legere is -- that the magenta thing ain't working? >> it's working. >> it's working. i mean you can call he's like elijah, he's always there. spencer not recently because of the still low downgrade. >> there used to be a guy in
central park named mr. purple. he used to have a nice organic garden before those came into effect in the village. this is when i was a kid. >> i think the more important one is this united technologies. i found it very disappointing. this is a business i'm beginning to worry about that it's sitting on the bottom of the bay. >> really? >> 24 hours ago you were talking act how great commercial construction is in this country. >> nonresidential and they're not participating. this number, i was looking at it. the otis numbers for revenues and profits disappointing to me. people are beginning to think elevators are in secular decline. >> then you have a move -- i'm not sure what's the plan? >> when you sell a company, and your stock goes down and the other stock goes up it tends to tell the story.
and lock key martin houston, she is the most underappreciated ceo. never will do tv. i've begged her to go on tv. i'm begging her again. come on our show but this is not a good quarter for you. >> a long time when we talked china, last six or seven years, carrier, air conditioner, what's a better proxy than air conditioners? >> you're right. lenox was superb. there's something wrong with u tech. i still would like to know more about what happened to the previous ceo. >> the man who went off to his boat? >> yeah. that's okay if you're running carnival. >> one of the greatest retirement stories of all time. >> yes. where is he? >> he's sailing the world. >> good for him.
>> by the way what's wrong with that? >> well if you're not a shareholder, it's fine. i mean i have my 17 easton whealer. i'm fine. >> his was larger. >> it was? >> it was. he made a decision. he's off with the google cfo who's climbing mountains. >> that guy was worth 100 points on the stock. ruth porat is not going to ride away any time soon on even the 30-foot. the 30-foot boston whaler it looks great. and the wife is saying why don't we step up. i said the expense of the wedding. the greatest day ever. >> we're going to get to a lot more after the break including facebook, a heavy day for earnings, apple, gro pro tonight. and an exclusive with the cfo of
facebook is nearing $100 a share in the premarket. a market cap of $275 billion has now overtaken general electric. analysts raising it. and the it's the best performing sector in yet's session. tonight we'll get apple, microsoft, growo pro and yahoo. some saying video per user up and among some ad buyers instagram is 10% of the ad budget with facebook and we haven't even gotten to the political season where ad expenses are expected to jump.
>> when i talked to the ceo of dominos, i said i know you're putting money into social media. i said will it -- facebook, the return, the return on facebook? i was with someone last week who had a meeting with facebook sales people. and just the guy just said look, it's just really hard to try to beat them when it comes to strategy of how to get customers. and i think that facebook is uniquely perfect on the cell phone, and this is just their time. >> yeah. >> they mentioned the upcoming political season always being a fruitful time of owners of local television or the tech in a which i think also reported the recent spin from gannett but you can imagine if you're a sophisticated campaign nothing is more local than getting to a particular person if you have a sense as to their interests and
or where they may be going in terms of voting. it's so powerful. and we also talk about everybody is starved for global growth. >> i don't know. i think the earnings estimates might have been too low. but away from this i think facebook has tremendous momentum. i was thinking about 350 in 2017. maybe they can do it before this. i know it's funny you mention, instagram. there are a lot of people who say facebook isn't doing well. but there's a company called instagram. it's an fire. >> basically neck and neck with j&j in terms of market value. >> i think that heard that somewhere. >> what do you say about people who says what do they make? they don't make anything. everything they make is provided by the user unlike general
electric. >> i say what a great model. this is why people have such expectations for twitter. you provide all my content. i pay you nothing. they sit around why are we paying you? you should pay us. look at facebook. this is ridiculous. jim cramer you come out every day on "squawk on the street," you should be paying us a huge amount. this is facebook. not only that but my daughter yesterday was saying to me dad, we have to make money from facebook and i explained to her i said no facebook makes money from facebook. it's not that easy. he said can't we come up with something to make money from them? i said if you can, you'll do well but facebook is the way to make money from facebook. >> unbelievable. >> in the meantime the ceo of toshiba stepping down. you can see executives here bowing overnight in a dramatic news conference as they publicly
apologize. an independent investigation has found senior officers were aware of inflated earnings. toshiba said it's considering replacing half of the board of directors. it's been difficult for a lot of these large asian tech companies. sang samsung, toshiba and others. >> i don't know what to say. >> it's not the first time we've seen this in japan. and perhaps it won't be the last but interesting. >> what would happen if they were in china? what would they have done? have you looked at the numbers of white color executions? >> the transparency is far less than in skrajapan. but when it comes to the usa, rule of law, transpashrencytransparency, corporate governance many of these markets are much more
difficult. >> that's why i always find that when you're in the overseas markets, people act as if there were countries to market. no. i remember when people were excited about russia. that's fine. what is that what are they up to? >> i don't know. >> the mary joe white of russia yeah. when we come back cramer's mad dash, we'll count down to the opening bell and look at the premarket. "squawk on the street" is back in just a minute. ngry equals overshopping.
>> a lot of earnings for the market to digest this morning but we also keep an eye on research and we like tesla's name in terms of talking about it. it's an interesting story. >> and people love tesla. this has been another great growth stock. people are excited about it. ups breaks ranks today and they go hold to sell saying that the storage business may be overpriced. now, a lot of times when you read about tesla, they focus on 2020. no, they're saying it's overpriced for 2025. >> 2025? they're discounting back ten years? >> yeah. nobody talks about the near term sales. they don't matter. let's get a tesla. they're cool. at the end, i own tesla. tesla, that's where they go. it's like a parking lot. but 2025 they say could
disapoint. you and i have been around for a long time. you know when you start using 2025 valuations. boeing does it but because it takes ten years to make planes. this is the way people think about tesla. when you start talking about tesla and 2040 earnings that's when i'm focussed. this kind of research i find value wans. a 2025 short fall? i mean come on. you think ford -- we care about july 25th short fall when it comes to ford. this has a pass written on it. we give them a pass. tesla always has a pass. >> it goes both says. >> this will last for as long as we people, someone else comes out and says it turns out in 2030, it's not so bad. >> i know that's going to be a good year for you and me. >> i like that year.
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you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in about a minute as earnings season chugs along, we have about 80 of the s&p so far. about 10 of the dow po. ibm is the one worth watching today. it will shave about 60 points off the dow. we've talked about how hard to grow these new businesses as you're cutting legacy businesses even faster. >> this is why when people saying what do they have going that they can hit a new high. they don't have a new legacy. and legacy drops off so quickly. will warren buffett sell in he has to be happy this quarter.
it's what he was looking for. he ain't going to panic. >> between that traveler as we've not mentioned yet, this again, an revenue, although they saw it drop? >> yeah and i think travelers is a buyback. it's paying back less than they're taking in. it's a great buy. >> there's the opening bell and a look at the s&p at the bottom of the screen. at the big screen eagle growth and income opportunity fund celebrating the recent listing. over at the nasdaq the cyber security celebrating its recent launch. all of that and at the open plus dow components being travelers followed by apple today. >> what's interesting is sometimes there's just these stocks that are bull. yesterday i focussed on lenox being really great. united natural foods, people are going to start coming down and
they will go with albertsons. it's natural and organic. then there's takeover speculation of general mills. there's a lot of areas influx right now and they're all underneath a market that looks like netflix, amazon google. >> activism continues to be a very component to the overcall an us tri in corporate fans. and corporate america. you may remember the rej fund barry rosen seen they announced the position in qualcomm and they considered splitting the business and a pat tent portfolio. the journal reported they are expected to consider. but also saying they might not but you can see the stocks getting a bit of a move up here
on this news. we'll have to wait and see. if they do move to consider a split, nothing says they will do it. they considered a split in the past and have chosen not to follow through on that. >> bern stein comes out with a piece that says don't do it. this is a terrible stock as of late. there's been a big turn on cell phones. samsung is doing badly. now, remember that's mostly july business. when you thereon apple tonight, you have to look at the guidance that the cfo addresses what's happened since the quarter ended. they tend to not want to do that. it's not their style. >> they like to talk about the internet of things being a real -- bolster their business in the future and the new it
ration id -- iteration of phones. would it participant in an openly traded company. >> a lot of people love avago. people have not forgotten because all anyone cares about is slowing of cell phones. and it would help with apple said it's not a song in cell phone. i wish apple had not run up in the quarter. the companies that have done that with the exception of netflix have disappointed. >> a story on our website that buffett's losses on ibm today, about $700 million. you still think there's not a problem? >> i don't know. that may be an easy come easy go situation for the man. >> i think a lot of it is probably easy come easy two. not that he doesn't take things personally, but -- >> he wants a buyback and he
wants to see this turn. he's getting the turn. it's just taking some time. >> indeed. >> we haven't talked a lot about commodity prices. yesterday the feature of the day and a focus not just gold but so many others and oil, of course falling below 50. today i'm not seeing a lot of reaction. in fact exxon is up a bit. sef ron chevron is up a bit but some of them have been sha lacked. >> the fracking story, i will say it would be remarkable to me if oil -- there's pressure. good luck tomorrow. you're going to see everyone figures that iran is immediately ready to ship. i don't think they're ready to ship as many barrels as people think. i know day rates for carriers of oil have gone up dramatically. i know if there's been an increase of 500,000 barrels per
day in gasoline demand. more people are driving as demand goes down but the $50 level will be remarkable if it held. but many technicians say this is the line in the sand. if it takes out 50 it goes right to 40. >> some of the names you look at broadly speaking a mass limit of partnerships, the pipe lean line. chesapeake cuts dividends. >> i don't like chesapeake. natural gas, demand is up even if pricing is not up. that's an anomaly. it makes them want to pump more but we're looking at a group that is being lumped in with every other commodity, and the commodities, even though it's breaking up and in, over 1100 for china. a lot of people saying a liquidation for the hedge funds. there's a lot of chatter.
if you got it wrong, i won't reveal your name. >> we haven't done hog which beat by a nickel. revenue a slagt miss but they kept their shipment exact for the year despite some currency affects overseas. >> that makes me want to buy polaris. a very good competitor motorcycle model. >> there was a lowered expectation. polaris is run by a guy that is like a kevin flank of meaning i want to win, jim mcnerney. he'll be missed. i always thought he was -- he doesn't play it like that. those people are missed. we need more competitors. >> you don't like a mark parker, kevin plank?
>> you know i know people hate this. i don't care. mark parker is worth it. he is remarkable. i was watching the wife has me watch this thing called wimp. it was on tuesday design for have a reeb ball palsy but mark parker is so special. i think they're developing some shoes at nike the nfl is going to be using, that will be remarkable in terms of their dij anization of shoe her person. >> did you see the prior day under armour where spieth missed the put? >> that's like what happened in 2000. i don't want to see it. >> if it weren't for kevin plank, nike would be at 120. they're both great.
>> they are both very strong. and as you say, extraordinarily strong competitors. >> whato is kevin plank? inspiration. you know the answer. >> do i remember this? >> yes. >> what was it? >> his mom. >> that's right. >> you have to love that. >> good times. >> you always go with mom. >> right now utx might be the story of the day. down about 6 %. taking ge shares down to the extent it's any sort of reflection, but after the economy, after a solid earnings report from ge. >> utx had 3% organic growth. the otis line not that good. people are starting to think this company is a little wayward, and that is a big change for a great american company, the wayward challenge. >> wayward challenge? >> not way fair the furniture
company. >> dow is down about 120. about 100 points of ibm and utx. >> yes. and verizon, if you throw them all in. let's put them all up. carl is about right. 713, 15 it's about 100 points if you add them all together. important thing i want to focus on is united technology. the guidance is really poor overall and it was largely on arrow space. this is their profit. if you include the impact of the dollar they're down 25 to 75 million, but if include the impact of the stronger dollar, look at the difference when you include the affects of the dollar and this is just projections. this is a lot of money, my point. everybody keeps talking about we
need growth but we also need a weaker dollar. that would be a huge help to overall earnings for everybody here. i spent yesterday talking about the impact of the big four and the big five on the nazsdaqnasdaq, how they were moving things around because they had such a big move in the month of july. they're a little more muted today, and i'm throwing in microsoft as number five. july has been huge for anything with any kind of growth and put up the big five in july. look at them. apple and even microsoft was up here but these impacts have been huge and they've been moving around the nasdaq 100. look at the july returns. if you just have the big five in there they're up 14 .5%. if you take the big five out of the nasdaq it's only up fractionally. that's how big an impact these are having. a lot of people say market cap waited but biggest stocks move
the indices around. that is not always true. let me show you 2014. the five big in 2014 collectively were up 18% but if you took them out of the nasdaq it was up 23%. shawler times outperform the big names in 2014. it's not always true just because it's market cap rated, the stock influences the index. i think it's unhealthy that the big four is so influential in the nasdaq 100. regional banks, most of the numbers are in. the bottom line seems to be good enough for expectations. there was a little bit of a miss. it seems to be good enough. we have slightly lower net interest margin. if you look at the long growth quarter over quarter, it's 1%. it's been 1% for everybody. everybody seems perfectly happy. i find this a little bit mediocre and disappointing but nobody else thinks that way. if you look at the kre, you had
a predictable drop going into the quarter. they've rallied back. good enough seems to be okay. i think it's a big story. and you mentioned it. chesapeake eliminating the dividend. they had a 3.5 dividend yield. they're going to save $240 million a year. you see what that's going to chesapeake. a rare up day for the energy group today. an ipo pricing tonight. it's a little bit out of a normal range of products that we see. blue buffalo all natural pet foods. there is enormous interest in this. i mean the demand is tremendous is what i'm hearing. it's 29.5 million shares. i wouldn't be surprised if it is above the range. we should find out tomorrow morning. right now the dow down 114 points. >> thanks so much. let's check in with rick
santelli. good morning rick. >> reporter: good morning, carl. and, of course, a lot of people are paying attention to the two of year note as are all short maturities under the microscope to see if central banks are on the move. first of all it's 70 basis points. we've had higher yields in the two-year. even though the curve is flattening, there have been periods with more selling in twos. go to the other end to 30s. 312 now. even know in agate on an annual basis, the curve has steepened most of the near term activity continues to be focussed on the short end where the curve has done some flattening. let's look at the tens. one and two-day. the weakness in equities may be pushing them down the two-day charts clearly shows you want to pay attention to the high end of
the range and see if you get any momentum on the selling pushing rates up and a june 1st of tens shows you around 248. we're constantly in striking distance but it doesn't seem as though we're under a boiling point at this juncture. we look at the euro versus the dollar. it's reversed a little bit after touching some of the lowest levels and a couple of things in europe to keep in mind. little things. finland has a referendum to leave the eurozone. they need 50,000 significants to pay attention from a parliamentary standpoint. carl, back to you. >> we'll see you in a little bit. keeping our eye on oil which is trending above 50. jackie here. >> reporter: good morning. it looks like kmoitdscommodities are taking a breather. august trud trading at $50.60.
august is going to go off the board today. i want to mention that we have the oil services companies coming out with earnings yesterday and today. the numbers were a little bit better than very lowly revised expectations but what was interesting to me was that both companies very cautious on the second half of the year. i want to mention that the energy names are trading a little bit higher but has faber said before they have been sha lacked over the last few weeks and months as well. we are going to get api data that's going to set up us for the department of energy inventory report tomorrow. last week they shrugged the market off because we were dealing with the iran negotiations and that was taking center stage. maybe this week they'll look at it. it'll be interesting to see which way it turns. i want to mention the stronger dollar has been a head wind for crude. that could have been one of the reasons for a breather. the dollar is taking a break as well. >> thank you jackie.
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♪ >> nfl teams each earned $226 million from league wide revenue sharing. it was reported when the packers reported it. the league total split by 32 times surpassed 7.2 billion coming mostly from the league deals. nfl also announcing it will bring on demand games to apple tv for the first time with a revamped game pass service. thank goodness the packers are somewhat public.
we even get a glimpse at the numbers. the nfl is a juggernaut, and i think when i think about what's going to happen with the international rights and what happens when google decides that we're going to compete, you're going to think it's even worth more. the deals are incredible for these teams like the jaguars. >> jaguars, bills, what did ja ya yahoo? >> were one game preseason. and the cap going up dramatically due to tv rights. and one wonders where sports is an important part of the bundle. how long can this stick together? now you you say they may benefit from steaming. that's true but as people choose to not pay for sports because most of them are paying for it and don't care it will be fascinating to see how it balances out.
>> one thing you have to understand is the fan dual draft kicks. these are outfits where people watch the fourth quarter. you don't have any make good problems. you have a game that's a blow away game. people watch it because of fantasy, and i think that makes this a unique property football, that you watch it until the end even if the score doesn't matter. what a dream come true for advertisers? >> fan dual the latest unicorn? >> you know more about it than anyone. they're impressive smart, nice people. >> yes. we'll get to stop trading with jim in a moment. dow is still down 118. don't go away. if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer.
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trading. >> a quizzical cell. piper starts pay pal with a cell talking about competition from apple and google. i think pay pal is going to be the millennial way to be able to use a credit card. i do not want people to sell this. i think you can easily trade at 45. don't sell pay pal. i think it's a nice property to have. the momentum guys will love pay
pal. >> what's on mad tonight? >> everyone knows the fed is going to raise rates. what do you do? i got the answers. i am ranking the banks and i know all the bank ceos watch us. watch us. you're going to like what i have to say. >> it's a little different. the fed raising the capital requirements for the biggest banks. that's a lead story. and not expected of course. jpmorgan, going to have to raise about $12 billion between now and the next four years or so. >> fortress balance sheet, david. how could you not mention fortress when you mention jpmorgan? i'm talking about fort knox. >> understand. >> remember operation grand slam? >> i do. >> what happened in grand slam? >> well, it almost got e radiated but he stopped it all. >> yes. bond stopped the grand slam with seven seconds left. >> jim, we'll see you tonight,
mad money. sales sales yesterday and banks tonight. when we come back, a lot more on what to expect from apple's earnings. later on the co-founder of lift says most millennials will not own a car in five years. we'll z ask him about the face off in new york city the dow down 124. don't go away. ask him about the face off in new york city the dow down 124. don't go away. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep them all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberyy apple scones smell about done. ahh, you're good. i like to bake. with at&t get up to $400 dollars
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to get you the right gear. office depot officemax. gear up for school. gear up for great. good tuesday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, simon hobbs and david faber. a general trend toward revenue misses as the dow down about two-thirds of a percent. we'll watch oil as well holding above 50.
almost 51. >> ibm weighing on the. the company hurt by the strong dollar saying it expects an even greater currency impact in the second half. >> plus waiting on apple. find out what you should expect today and further down the line. >> and the first american ebola survivor tells us how his life has changed since beating the disease and why he and his family are returning to west africa. >> coming up later, the co-founder of lift john zimmer will join us live. he says in five years millennials will not own cars and we'll weigh in on uber and on hillary clinton's views on the sharing economy. >> ibm down sharply after a mixed quarterly report. dragging the dow down in today's session. the dow now down 114 points. john ford is live with all the details in this report. good morning, john. >> reporter: good morning, sara.
it's not like there wasn't any good news at all from ibm. services has been an area where they've been struggling. there were some silver linings there but let's start off with the growth markets the bricks, and as the viewers know that stands for growth markets. only india shows modest growth. brazil china and russia down double digits. that hurt ibm. they said if you take the bricks out, their growth markets would have been up about 5%. japan and germany did pretty well for them but that wasn't enough to stem the tide. the services were better than a couple of years. the backlog was at $122 billion. analysts were looking for $120 billion to be positive. on the bad news front, margins
are being hit by investments that ibm is making. they're trying to get to scale in cloud. that costs money and they're adding people on the key initiatives in particular, mobility. think about the partnership with apple, ibm saying they've added 2,000 people to beef up their mobility practice. these are skilled people that cost money and they've added about a thousand on the anl litdices front. again, said to expect worse in the second half. also, they divested a system x, a low-end server line and that affected their comps going forward also. another silver lining though in these growth initiatives, cloud, security and analytics, ibm saw growth. they said constant currency they're trying to focus on it it would have been up 30% but, again, you have all the other businesses and the so-called
growth markets not growing. that's not good for the top line. >> thanks very much fort on ibm. another mover impacting the well. of course, utx perhaps even more pronounced but verizon down this morning after the company reported earnings that were ahead on the earnings line itself. but its concern about average revenue per user and a slight reduction in the company's revenue forecast for the year that is pressuring the stock and you can see those shares down almost 3% this morning and you have a decent dividend to help support it. it does appear that verizon, falling out of favor amongst investors who seem to be favoring att right now butover all the competitive wireless market seems to have having an impact. the company saying a lot of things were a factor. not necessarily the fact that they were trying to come down to meet the likes a t mobile.
we know sprint as well in the marketplace marketplace. subscribers pretty good. 1.1 million. a lot of them were tablets. again, a good number. fios not as good. there was an expectation to add more subscribers. people are looking at unbundling and streaming, those internet subscribers also a bit lighter than expected. churn very good. nobody is going to quibble with that but it comes back to concerns about overall competitiveness in the market. they addressed some of that on the call and the decision to take revenue down from 4 % to 3%. verizon, utx, pressuring the dow not nearly as pressured down barely at all this morning. >> and the nasdaq higher as we've been seeing.
let's talk more about the market. with ibm weighing on the dow. joining us with more is the cio at merrill lynch. is it just a few names or bullish for tech? >> it's bullish for tech but we're in the digital era and not enough people are talking about that. the digital era for us under a transforming world is a major theme and there's many different components. no you still have some of the big old ugly tech names and some of the newer names whether you're in internet and things of that name. so tech for us is a ladies and gentlemen of the jury leading theme and we think this is a theme that can lead for the next three to five years and that's why you're seeing the nasdaq break out. the other component doing well within the nasdaq is biotechnology. there's a lot of innovation that's happening within biotechnology.
there's a lot of positives happening with a lot of the big names overall in the nasdaq. >> i guess is question is at what point do you have to look at the valuations? obviously we're in a growth-starved world and momentum names with the growth are getting all the love. at what point does that become too much? >> well when we look at earnings and we started off with a good earnings season but when you look at them year to year they're actually negative. we're having kind of a recession in earnings. that's when growth stocks outperform and when fund managers want to own the companies that are producing the earnings nature that's important. but really what's important and what we're not talking about and what you're not all talking about enough is that the nasdaq has cleared its all-time record high. the dow and the s&p did this two years so the nasdaq is just beginning to enter its new secular bull market which the dow and the s&p has been in. >> that lasts how long? >> on average, about 13 years.
the greatest secular bull market of our lifetime adds from 1982 to 20 07. we had an '87 crash in the last secular market. the trend for equities is bullish. when we compare valuations to bonds, it's an easy no brainer. stocks are cheeper than bonds. we're entering a period -- >> it's almost meaningless to compare them to bonds, isn't it? >> correct. >> but you point out growth outperforms. people take take that and say it's the sign of an aging bull market. why is that not true. >> transports have derailed and that's a little disturbing. if we can't get a recover in transports, that's disturbing. then we look at the breadth of the market. it hasn't recovered but it could lag for up to six months.
i think if there's something really wrong with the market it's going to be next year but certainly not everything is working the way it has been. >> what about the interest rate hikes? goldman said over -- as we await the fed move they say they've looked to the three previous initial rate hikes and the s&p 500 p/e contracts during the three months following each of the hikes by an average of 8% and then goes positive over the next 12 months but there is the contraction as they pull the trigger. >> now, what goldman sachs is not payings attention and i'm not picking on them. global fund managers are underway at the united states. from a contrarian standpoint and with the dollar getting stronger, i think money still comes to the united states. now, we like europe and what enough people are not talking act is the banks are reporting. the banks look good and the banks in europe are going up. >> can i ask you to talk about something and that's the fed
rate hike? are you suggesting no major reaction when that happens. >> >>i think the market is too sensitized at this point. maybe you get a day or two. i don't think you get a big reaction and the work we did at bank of america merrill lynch suggests that in normal conditions, when the fed begins to raise interest rates, it takes six months for the market to respond. why is that? the economy is normally booming and it takes a while for the interest rates to slow down the economy. if you're going to use history as a barometer, first the market goes up and then down. >> i'll ask about your charts with gold. >> it looks like oil. not enough people are paying attention to it. we're talking about things happening in china and greece but the dollar is also getting strong. how are commodities going to go up if the dollar is getting stronger but a lot of this is lerj to the slow down in china. unless china picks up we're not going to get a pick up in
commodities. >> i know gold levels are important. do you have any levels we should be watching out for? >> you had a major technical break down yesterday in gold. can i see it going down another 200 points from here from a technical perspective. >> bad for the gold bugs and miners. >> good for jewelry, though this. >> if you're buying it. >> i have my gold on. >> mary anbarn bar tell. >> apple reporting after the bell. how is the watch going to impact results. shares up 4% over the last three months but what about the next three months? we'll talk about that in just a moment. if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event,
down today but it has been a stunning month for gains within the tech sector. the surge in major tech stocks like google facebook and apple creating almost $170 billion of shareholder value. the rubber meets the road tonight with apple earnings with microsoft and yahoo reporting tonight. walter, welcome to the program. >> thanks. good to see you, simon. >> this big move we've seen in
big tech, what did it change? did you buy it? >> well, we run a tech fund, so we're enthusiastic about tech midwest of the time. i think what we're seeing is in a world that's starved for growth that tech is still contributing good growth. and i think investors are gravitating toward growth and tech again. >> so which stock do you think is most likely to follow through that could surge from here? i mean, as you look at apple coming through with earnings tonight, is thatonceivable? >> i think apple is still really inexpensive. we think that they're going to have a good quarter and we think they're going to be their usual conservative self-but prospects are also good for the next quarter. we think apple, maybe it doesn't go up 15% in a day but we think it could grind higher, yes.
>> what is your decision for holding microsoft where year to date has gone nowhere. launch of windows 10 also reporting this evening? >> well we think one of the reasons that microsoft hasn't been anywhere is because of windows 10 and the accounting associated wit. and people are worried that when they reserve for windows 10 that they'll have to take earnings estimates down but we think people and the company want people to focus on the underlying growth of their cloud business and their cash flow and if they can get investors to focus on cash flow then i think the stock will start moving. >> i was just going to ask you about how investors are turning about the turn around strategy in the stock hasn't been back to 50 where it was last fall. do you think the jury is still out or generally pleased with some of the announcements? >> we're generally pleased. we think hard decisions have been made in the phone business and he's continuing to refocus
the company on the cloud and everything we can see is that office 375 is getting good reception. we think he's doing a great job. zwri want to get an impression of where you're shifting money at the moment. what is working for you? what's not working for you? where the derivative is. where are you on go pro? what have you told recently? what are you adding to? >> we don't own go pro but i would say in general what we've done is we've shifted out of some of the hardware companies and their derivatives like many of the semi conductor companies and we've moved into the cloud-related companies. amazon and microsoft and we've maintained our position in companies like apple. so i think the big theme in technology is enterprises
adopting cloud, and, therefore, a lot of companies aren't buying hardware anymore, aren't refreshing their hardware and i think they're reluctant to renew some of their legacy licenses in software so some of the big hardware and software companies are struggling to grow in this environment and the cloud companies, we think are going to accelerate their growth. so we like amazon microsoft. >> and what about facebook as we approach $100 a share after that huge surge? >> well i think facebook is continuing to innovate. you know? these ads on instagram, their option of video, i think that's know, that's continuing to increase the engagement of users of facebook and continuing to track new users to instagram. we think the metrics for facebook are healthy right now. >> is it a core holding for you? >> yes, it's a core holder for
historical content on how apple trades. we took a look at the numbers of over the last five years to give you an idea of how the stock trades after the earnings report. you should know over the last five years, apple has beaten earnings and estimates over the last five years. just it's positive about 55% of the time. it's up or down almost a coin toss. you don't quite know exactly what you're going to get. it's all about the expectations. that's is short-term trade. let's take a look at the longer term. we'll wrap another layer of complexity into this. we have apple's first generation product launch ever since the iphone came out. we said the i phone release, it drives much of their sales and profits. we're only looking at a few different instances. the iphone release, the mac book
release and the ipad. on average we're talking about around 6 months after the products come out, apple has gained about 30% in the six months after these products were released released. it's been positive all three times. yes, it's a limited data set but that's what we have in terms of the products released. no younow, you compare that with the s&p 500 during the the times it's been releeszed, an average return of my nis 5% and no positive trades during that time. so despite the down trends apple managed to eke out gains in the three first generation product releases. but the market declined on average. an interesting context for you to maybe chew tammy asover as you talk about apple. >> everybody making guesses on phones and watches even though
rattles the san francisco bay overnight. the u.s. geological survey says the quake hit near treatment about 35 miles southeast of san francisco. the secretary of defense meeting with israeli prime minister benjamin netanyahu. the second day of the meetings with the israeli leadership on the heels of the iran nuclear agreement. the super pac affiliated with scott walker says its raised more than $20 million in the first quarter from nearly 300 donors. the money was raised before he declared the candidacy and was the third largest total for a super pac backing a republican candidate in that period. the toshiba checktive has stepped down. he repeatedly apologized to shareholders and customers
during a news conference in tokyo bowing in shame. that's our cnbc news update for this hour. back to you. >> the dow down sharply today while the s&p and the nasdaq hold steady. art is with us today. art, good morning to you. >> good morning. >> people always equate the dow with the market but in this case it's a highly specific set of circumstances. >> it is, and if you look at the nasdaq making record highs with a negative breath this is an interesting thing. the breadth was negative enough both friday and monday jason over at sentiment trader who has an extensive history of the market says the only two instances that he could find similar to that were back in the very late 90s when nasdaq was putting in that historic top. i think that gives you some mild
caution here. the way the market's leadership has been narrowing. we could be putting in a very minor small top. one of the things that would indicate that would be a down day today and down day again tomorrow. if we get that it might be there. >> in your note today you say fewer horses pulling the wagon. you reference the nifty 50? is that what we have? >> that would appear to be the case. you have a apple and google and facebook. that's been really leading the charge here. i remember back in the early 70s, they determined that there were the nifty 5. the only decision you had to make was buy home and hold them. some of them aren't around anymore. they didn't all work out as
planned. so having done this for over five decades, i get a little cautious when i see things that look somewhat similar again. >> we had a technician from merrill lynch here. she says breadth can lag for six months. >> she's extraordinarily good but it can also happen on a much shorter-term basis. you know, history dmifhistory gives you certain guidelines. do you look for certain -- i've seen markets change their mind rapidly. i don't know that it's necessarily a major top or a real problem but the other thing is that a little over option investor has noted that for the last five months between the 20th of the month and the 27th the market has tended to roll over, top out and roll over and close with a kind of negative month ending. and lastly this is the week
after an expiration and they have a historic negative bias. >> i wonder the earnings apple investment after the market. if it does have a good quarter, it could turn tech earnings as an s&p 500 group positive. >> it could well do that. and everyone is expecting that the phone will again will beneficial to them. the real question becomes the watch. can they find people writing new apps and enough things to keep it going? so i think -- i'm going to stay on the cautious side for this week and see where you go. obviously, ibm was disappointing. they disappointed on the revenue line. they are the poster boy for financial engineering. they have bought back more and more -- >> i just want to ask you about where we are with the feds in particular, and you have been of
the view for a long time that fischer was sending anybody out to talk out the possibility of an interest rate hike in september which you don't think is likely to happen. yesterday someone suggested that the probability of that happening now was above 50%. i wonder if people are beginning to migrate now that we've gone through greece and it's not a real upset, whether people are migrating to the view that september could be in the cards? >> i see people looking at it but if you look at the futures trading, they put something like a 25% risk of september and only a 58% risk in december and you see prices falling not commodity prices, not just gold, but industrial commodities and that might put a kind of extra deflationary pressure, and i think that a rate hike here is of enormous risk to the fed. not so much about what the economic consequences could be. the imf has suggested hay not -- >> my point is people may be
thinking that that it is possible. maybe it shouldn't happen but that may be why the market has this lid on it and to is and extent parts of market. >> i think a few more people are looking that way. i don't think it's a plurality quite yet. >> whatever you speak i don't recollect we lose a little ground, the viewers are giving us a hard time. >> the voice of caution comes back. >> you don't know your own power. thanks for joining us. >> up next he payment the first american ebola survivor. and he helped others fight the disease by donateing his blood. he's here to explain how it changed his life and why he and his family returned to south africa. understands the life behind it. those who have served our nation. have earned the very best service in return. ♪ usaa. we know what it means to serve.
dow is down about 158 points as we continue to watch a series of components performing relatively badly. >> reporter: not a dow component but shares of tesla pulling back. down by about 5% on a downgrade from ubs. the company is cutting it to a sell rate. it was 220. ubs expects storage and auto to disappoint. tesla a focus on today's trade. >> one year after the deadliest ebola outbrake to date. health care workers remain on alert. a hospital is currently evaluates a patient this morning. our next guest knows the deadly disease all too well. you may remember this scene, kent brantley arriving.
this was last august. 20 days later he was the first american ebola survivor. he joins us with his wife amber. they're out with a new book -- "called for life". good to see you both. ? this is a serious concern and that's part of your message. >> it is. the public is not always aware of what's happening in west africa but we're still seeing 20 to 30 new cases of the disease in sierra lee yoen and new guinea each week. >> can you just give us an update since you are a doctor and since you were treated for the very-- with the experimental
drug. >> there are trials for vac zones including the one i received. i think it's going to take time to get substantial data back on the trials but there are lots of different trials underway in west africa and even here in the united states. >> amber, we all remember when your husband became a household name in this country. i mean there was a time where americans, i would say panicked about ebola. take it back to that time what it was like for you when you saw the news, when you heard the news and when he came back to the united states. >> right. well, he's the one who broke the news to me himself, so i had a little more time to think about it before the news broke to everybody else but i was probably equally fearful as everybody else that -- in a different way. fearful of losing my husband and for my kids to lose their
father. and then when he came to atlanta, we were filled with so much hope that he could get the sustainable dharcare that he needed and that he could recover. we watched him come out of of that balance like everybody else. and we were filled with excitement and hope ha that he would make it and he did and i'm so thankful. >> doctor, i know you had a chance to meet president obama. what is the lasting impact of ebola for you? do you have any physical symptoms or side effects of the disease? >> physically i have fully recovered and i'm really thankful that i don't have any lingering problems. there are a lot of survivors who are dealing with this post ebola syndrome with various problems eye problems arthritis, muscle pain nerve pain but i have made a full recovery. i'm thankful to not have any of those problems going on.
>> amber, for many people, this would have tested their faith. you are both missionaries. that's what you were doing in west africa. what has this done about your faith and your belief in god? i see that you believe that your husband was saved by god from ebola. when people have been through that level of panic, i mean, it's almost unbelievable what you must have seen out there. why do you stick with god? >> i stick with god because he's stuck with me and we've done a lot of wrestling this year with why kent survived and so many others haven't. i think we'll be asking ourselves those questions for the rest of our lives, but we choose to remain faithful to him because he's been so faithful to us and i can't answer why kent and not others and even just this summer, a good friend of mine lost her husband in a terrible accident.
it could still happen to kent. it could happen to anybody, and i -- i wrestling. i really do wrestle with that but i choose to remain faithful. >> kent, a lot of people watching will be very interested in your view of the drug that you were given zmapp which was developed with the u.s. military in conjunction with a company. it's been written a lot about and what do you tell people about the role it played in your recovery and the availability of that drug? >> i say that my case is one anecdote. and when you're talking about scientific an ek date one isn't strong proof. i feel it was helpful to me though. >> and yet you were the guy who went out and gave blood to people. was that in the belief that zmapp may have given you
something or was it in the belief of something else? >> the idea behind my donating plasma for other ebola patients is that my immune system was able to conquer the virus and was able to defeat the virus so my anti-bodies might do for them what in theory dzmapp did for me and giving them time for their bodies to quick the virus. their doctors wanted to try that treatment so i was more than willing to help in that way. >> and amber, i understand your family returned to west africa? >> we did. in june we went back for a short visit to great people and to see our friends again and really get some closure to the events that happened there last summer. >> and a final word to kent on why you wrote the book and what you think is the most important take away as several countries in africa still deal with this. >> we wrote this book because we
wanted to share our story with people in a deeper way. we wanted our story to be able to challenge people to wrestle with hard questions and encourage them to break down stereo types. i think some of the hard questions are what can my role be in this global community and as we face the ongoing outbreak i think it's important to ask yourselves what we can do to help. >> thank you so much. we'll leave it on that note. it's great to see you both. their book, ="called for life" is available now. >> when we come back dow is down 162. techs need major data centers and there's a way you can profit from that. we'll talk about it after the break.
in the us, three in ten college students drop out. but how can you spot who's at risk? the one who lives far from campus? the one who works the night shift? the one with new responsibilities? one thing can't tell you, but the right combination can. universities are using ibm analytics to understand pressures in and out of the classroom- some expect to cut dropout rates by twenty-five percent. ibm analytics is working to make education smarter every day.
company he once worked for after selling the company he founded to the online company for $445 million. jet.com promises consumers prices 10 to 515 lower than anywhere else. they offer the lowest prices by maximizing efficiencies passing all the savings back to the consumer choosing products closer together waiving the right to return items and using debit instead of credit are all ways the final cart price gets lowered. >> we price products as you shop to reflect the marginal cost of getting that to you. if you shop for a third thing, the cost of getting that third product to you very dramatically based on what you're getting, if we can get it in the same box, the shipping costs are lower. >> jet holds its own consumable
inventories but also works with other inventories. it loses money currently. it will be about 14 to 15 jet.com shoppers. he aims to be there in five years. yesterday we placed an order on amazon and jet.com. it was $42 less overcall. we should get amazons in two days or less jet may take a bit longer. if jet takes hold it could push prices lower across retail further squeezing margin. and then there's jet anywhere. you can click on one of the affiliate retailer sites. one said they did it. he shopped on lululemon and got 30% back in jet cash to spend on jet.com. he just had to e-mail jet the receipt.
very interesting model. if this takes hold, it could change a lot of things but there's big promises in this one. >> funny to watch the student take on the teacher. we'll see how it turns out. thankshq. tech companies depend on data centers and cell phone towers to keep you happy. did you know how you can profit from that? diana olick is live in washington with more. >> most people think most of the data lives in the cloud and the cloud lives in the sky, right? wrong, it lives here in data centers in downtown buildings like this one and warehouses in the suburbs. as data booms, so does the value of the real estate and the reits that own it. >> we're structured as real estate investment trust. we're a real estate company and we're derivative with all the growth that's going on in the technology space. everything that you hear with google and netspace and rackspace and amazon and all the new technologies going on.
ultimately reside in a data center. >> cyrus is one of five data center reits, that targets fortune 500 companies and their data. two types of centers, one is a big power station for all the servers and the other is an internet hub where the tenants can exchange data. the last ones are more valuable because they're generally located in urban area downtown. data is growing at lightning speed, 90% of it created in the last two years, just five reits behind all that. cyrusone, coresite up 45%. digital realty, equinix rounds it out. analysts are bullish on these sites. they're hard to gauge demand so they're not as popular as your basic reits. sarah, back to you. >> a whole new real estate industry. thank you very much. let's go over to chicago now to the cme group, rick santelli
with the santelli exchange. >> thank you, sarah, i would like to welcome my special guest brian majewski. thank you for taking the time. the editor of "music trades" magazine, correct? >> yes, i am. it's a pleasure to be here. >> how big dollar-wise on an annual basis the music industry? >> it's about a $7 billion industry in the united states that includes musical instruments and certain types of recording and audio equipment that's used for capturing musical performances. >> do you want to give a warning to all meshamericans that they ought to be careful. there's dangerous guitar strings with lead that could alter their life or importing rosewood going to change the entire ecosystem in the entire planet wixt is the government attack the music industry? >> we have no idea. we've been covering the industry since 1890 and in the last six
or seven years, the assaults have been unprecedented. a banjo manufacturer they bringed in crushed oyster bits that they're going to inlay. they fail to file the proper declaration forms, and materials are all legal. at first they're threatened with jail time and the fish and wildlife service, after lengthy negotiations and $50,000 worth of legal fees, they relent and give them $110,000 fine. or the ftc has decided that piano teach remembers a dangerous monopoly. the nice ladies who give piano lessons out of their homes, collaborate and hold recitals together in their local community. >> we're normalizing relations with cuba after five decades. if this story was written from the perspective of you know cuba, greece they need to reform and these were just examples of how out there the regulatory totalitarian regime was, i would believe it but in the united states?
is this a canary in the coal mine? >> the federal government regulatory powers are out of control? >> we think they are out of control. we look at our little industry our slice of the gdp and i'm convinced that if the 30 or $40 million that they've extracted in fines and compliance costs had been left in the hands of the manufacturers and retailers who generated it we would have made a bigger contribution to the performance of gdp in terms of higher employment, better economic growth, more prosperity. i'm very disappointed. and our industry we view ourselves as good guys, we're supporting an exalted art form. we're bringing happiness, to be treated like criminals is very disheartening. it takes a financial and emotional toll. >> it's disheartening and it's disheartening, it's horrible that the music industry is finding this much scrutiny by the federal government when we have a variety of issues that i would say are a tad more important. you know how many crises in the past have they caught? but in the end, what bugs me
most about this story is is that these entities that regulate get budgets, thee going to spend their budgets, their budget most likely will get bigger and the problem will get worse. in the last 30 seconds, your thoughts on that aspect? >> my biggest complaint is not just the budget. but the fact that there's none of the protections afforded to the civil justice department. if you are, if you are accused, you're basically punished. you have no right to confront your accusers review the evidence against you and you're guilty until proven innocent. and it's just backwards. it's not what we think of as justice in this society. and so -- >> my final comment is i was lucky enough to meet mark cuban a while ago. he stood up against the s.e.c. because he has the balance sheet to do it. one of the big stories you is just brought suth little industries don't. this is a travesty. >> we do not. >> all americans should be upset by this. >> our industry is four days of sales at walmart.
a low-margin industry too. >> keep me up on any new developments. >> thank you very much. >> simon hobbs, if you play guitar you better be careful going through airports back to you. >> thank you very much. let's send it turnover to kayla tausche for more. >> the big news in the tech world is the parade of earnings we're going to get after the bell. microsoft, yahoo and of course apple. we will have all that you need to watch for. and we'll have discussions on those names. plus the co-founder of lyft john zimmer will talk to jon fortt about the cap of on-demand taxis in new york city and the exclusive interview with the new ceo of hulu. his first time speaking to media in years.
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possibilities of today. and stay ready for everything that is still to come. the consumer financial protection bureau is ordering citi to pay a total of $770 million, $700 million to consumers, $70 million to the government in fines, as a result of deceptive and illegal marketing for add-on and debt protection services. citi is responding saying it's fully cooperating. it has discontinued marketing
these products. and as a result the shares are higher because it has said that it does have this amount in its reserve. simon and sara back to you. >> courtney thanks very much. she was mentioning the shares up 20% over the last year. financials have been one of the star performers lately. >> let's send it over to "squawk alley" this tuesday morning. it's 11:00 a.m. inn on wall street and "squawk alley" is live. ♪ ♪