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tv   Squawk on the Street  CNBC  May 9, 2016 9:00am-11:01am EDT

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this comes after the drugmaker filed its delayed report in late april. the june 10th date is well in advance of the july 31st deadline mandated in its agreement with creditors. and valeant's new ceo will be on "mad money" with jim cramer at 6:00 p.m. eastern tonight. that does it for us today. make sure you join us tomorrow. right now it's time for "squawk on the street." ♪ good monday morning. welcome to "squawk on the street." kacarl quintanilla with jim crar and david faber. the earnings pace slows way down with retailers like disney on the calendar. german factory orders the best since june has europe in the green. oil remains a big story as the saudi oil chief is ousted and those alberta fires continue to rage. our road map begins with oil prices jumping on the outages from wildfires in canada as the market turns its attention to saudi arabia, where major
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changes are taking applauplace. we'll go there live in a few minutes. the ceo of the lending club is out and the stock is falling very hard in the premarket. we will give you the latest. and donald trump saying the rich will probably pay more taxes if he's president. will support shift now that he's backing earlier proposals to reduce taxes on all americans? futures are off the highs of the morning following a down week for the markets, one which saw the nasdaq dip briefly into correction territory. growth in the mix, a bigger than expected drop in chinese imports and exports last month. overnight, shanghai fell by almost 2.8%. imports down 10.9%, was a bad miss. then we had these ongoing concerns about them pulling back on some accommodations. >> yeah. look, china and oil both negative today. this china situation looks like there wasn't a lot of speculation, obviously, buying these commodities. now, i still believe that the domestic market's better than people think, but was it a blip
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up? it is very hard to try to come one a reason why there was so much buying of commodities. i know that infrastructure's strong. we're seeing some comments about infrastructure that are positive, but wow. china is back is a problem, okay? its back is a problem. it looks like they're getting hurt by tariffs. i think they're getting hurt by us. i think we hurt them in steel. >> you do? >> i really do. >> as a result of the tariffs that -- >> yep. i think they're flooding us with steel and they have no place to put it. the "wall street journal," a good piece -- >> yeah, there's a good piece in the "journal" about the fact that they keep subsidizing much of this production, despite what they're saying that they won't. >> looks like the communist party failed in trying to rein in these economies. i'm hearing from these articles that there was basically an attempt to try to close these places and they have it, but there's no place to put their stuff. and they imported so much of the
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wrong goods that you need to make steel. it is amazing with that economy -- there are two economies there. there is the domestic economy where there is spending, and then there's the economy that just puts out steel endlessly when there's no place to put it. steel is for building materials. we make it and they make it, and australia, everybody, korea makes it, japan makes it. nobody needs it. meanwhile, we've got the dow and s&p down two weeks. nasdaq down three weeks. >> yeah. >> we're going to get some big names reporting, the disneys, as we mentioned, macy's and some other big retailers. >> i think disney has a compelling story in movies. obviously "captain america's" not included in the quarter, but -- >> no, but fifth biggest domestic opening ever. >> they have quarter after quarter after quarter after quarter they've got something. so, maybe the narrative changes? the bspn has any bounce at all, then you're going to be paying much more for this. i don't know. i don't think anybody knows. but that's the story of the week. i think macy's -- i think the mall's really in trouble, guys. i really do.
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i know that simon properties did s say, this reports in the death of the mall totally exaggerated -- >> yeah, i wasn't at -- i was there, but i must have missed that specifically. there's so much going on. >> but it doesn't matter, they don't relate to each other, okay? they do not relate to each other. >> well, people do wonder, because they'll look at simon properties group and they'll look at the stock of macy's and say, well, which one is wrong? >> i think that the wrong one is that -- simon's right because there's such a scarce -- they're not building any new malls. so, there's people -- >> so, you can't expect them to correlate at some point. you can't expect simon is fine means macy's is fine. >> yeah. i mean, look, you've got these reits. if you look at the makeup of them -- look, sports authority closing places. a&p closed places. doesn't matter. these are long-term leases that these guys are thrilled, they're thrilled to be able to break the leases, throw some in money and then bingo. so, no when i look at macy's, i just think that, okay, bf corps
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wasn't that bad, sell a lot of macy's, so macy's won't be a disaster. and the stock has come down big. jcpenneys has come down big. they've come down enough to make a positive story. >> how about the german buying krispy kreme? they'll have caribou, peeps, einstein and now krispy kreme. >> greatest place in the world for a coffee and bagel. doughnuts? >> they own keurig as well. >> they own -- they're trying to corner the coffee market. >> it does seem that they're busy. >> right? >> krispy kreme, i remember when it went bankrupt, and of course, it came out and now is being sold at a nice premium to friday's close, about $1.35 billion overall price. >> krispy kreme big international business. >> 70% of the store base is international. >> people forget that. as they opened, nobody seemed to care for a long time, but i've got to tell you -- what is it, private family office? >> in a sense.
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i mean, kind of. not really . but bart beckett -- peter harf and this guy, bart becht, he runs jab. >> they dodged a bullet there, huh? >> it's private. >> boy, they did. avon should have hit that bid all day long. >> oh, my that was something, wasn't it? >> sometimes there are deals you should take. yahoo! should have taken the microsoft deal at whatever that was, 31 cash and stock. p per goat should have taken the milan deal. >> i thought keurig was suspect, but the core business is good. einstein bagels, so, you get bagels, you get doughnuts, you get some really good coffee. stump town -- >> are you worried if you're howard schultz? >> yeah, he's one of the few people i don't have to worry about. and i think that starbucks -- my charitable trust is in starbucks. are they trying to put together
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a powerhouse? krispy kreme has had a great brand and caribou, peeps, yeah, they've put together all of the competitors of starbucks, but i think there's room. i think there's room for dunkin' donuts, too. it's interesting, i think dunkin' donuts one day will be stuck with these styrofoam cups as something that the millennials don't like. international paper told me that. >> you mean serving in styrofoam cups they won't be able to do forever -- >> yeah, because the world is changing. >> it creates waste, enormous waste. >> yes. >> can't be recycled. >> no. in the event of nuclear war, roaches can drink out of those cups. >> and it ends up in the oceans, basically. all this stuff ends up in the oceans. >> velveeta. look at what survives in the event of nuclear war, velveeta, styrofoam cups. put the velveeta there on easter island and -- [ everyone talking at once ] >> the state of texas? >> speaking of -- >> terrible. >> speaking of things that come out of the earth or don't go away, oil's being impacted by the continuing canadian
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wildfire. that's cut more than a million barrels a day from production. then we had this sweeping government shake-up in saudi arabia. our hadley gamble is live in riyadh with the latest on that. good morning, hadley. >> reporter: good morning. basically what we know right now is there is a new oil minister here in saudi arabia, khaled al faleh. he is a 30-year veteran of aramco, taking the place of ali al naimi, who yesterday said good-bye and thank you to his colleagues at aramco. he's thanked them for helping him make all of those tough decisions, and he essentially is going now to become an adviser to the royal court. so, a lot of hoopla in the press, whether they'd be in the west or saudi arabia, about whether or not he was ousted or fired. but the bigger question going forward is how khaled al faleh will ease the way for aramco. that's part of the debate in
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saudi arabia about where this company is going to list its 5% stake of aramco. it will be the biggest ipo perhaps in history. an article in "the telegraph" newspaper suggested it would be a tri listing in new york, hong kong as well as london, but the ceo of the saudi exchange telling me last week it would be listing in riyadh. another big question is whether or not big oil majors like exxon and bp and sinopec will be able to take strategic stakes in the company. so a lot of questions surrounding this big reshuffle. and the question, of course, here for many people is is this going to impact saudi policy? what i'm being told is that's not going to happen, at least in the near term, but it speaks to the broader reshuffling and realignment of power behind the royal court. and of course, that's something that mohammed bin salman, the crown prince, and king salman, have been very keen to do. guys? >> hadley gamble in riyadh with major news over the weekend. hadley, thanks. net-net, bearish to you, jim? >> no. i actually keep thinking about that underwriting, the saudi
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aramco underwriting and whether they're positioning that deal in a way that they could turn the spigot off, put -- you know, they're doing $10.5 million. by the way, there's additional 500,000 being from opec coming to us since the beginning of the year. >> coming into this country. >> coming into this country. >> saudi's doing 10.5 million barrels a day. we're doing about nine, right? >> but we've come down. >> from ten. >> yeah, we're going down to 8 1/2. it's all coming together for oil, so i don't want -- minute to minute, it looks like we're down today because i think the people got a little too exuberant about how long canada would be offline, a million barrels a day. >> very interesting changes there in saudi arabia. of course, we talked a number of times over the course of the last 12 months about how they've hit the international debt markets, how they can finance their war going on in yemen and other places at the same time that they can keep social unrest at bay within the country itself, all the time dealing with what are much far lower oil prices than have been the case for the last few years.
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>> remember, the shale -- a lot of these companies had hedges put on for 2016. the hedges are coming off in our country. so you're going to see another step function down in our country in terms of production. i think we're down a million -- another 500,000 barrels by year end. and it's all being picked up by opec, which i didn't think. i thought there would be other countries that could make good, but mexico not -- we're hugely exporting natural gas to mexico, even though there's a surplus of natural gas like never before. inventory's the highest it's ever been. that thing can't go up to six. despi despite that shaaneer's sending -- >> yes, the trains have opened up -- >> your point is that 50 doesn't necessarily bring about a response in production? >> i think that the longer we are in this country, the longer these marginal companies have to go before we get to 50, the more likely that credit's being cut off. and we're seeing credit being cut off in a lot of different places. it's a significant amount that's
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coming off. and that's why i'm not nearly as fearful of iran as others. but oil day to day has controlled our market and it's gotten a little ridiculous. when you see some stocks that were up really nicely an hour ago that are now down because of oil trading down, it is a little insane. >> oil definitely driving the bus today. higher earlier this morning but now off those highs. when we come back, lending club tumbling after its ceo steps down. and then donald trump sending a message on taxes that's not good news for the wealthiest americans. take another look at the premarket as we kick off this week. as we said, the dow and the s&p down two straight weeks. more "squawk on the street" from post nine in just a minute.
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lending club has accepted the resignation of renaud laplanche as its chairman and ceo. the board determined laplanche violated the company's business practices following a review of sales of near prime loans. lending club says president scott sanborn will take on acting ceo duties with board director hans morris serving as executive chairman. you can see this news pressuring the stock significantly. this does appear to go back to actually something that began with the review of a smaller group of loans, $3 million of
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loans that appeared to have had the dates in terms of the application dates changed. this got the attention internally of some people who then instituted a review that was expanded. and they found that $22 million in loans that were going to be bought by a certain institution, which i believe is jefferies, the documentation from those loans, you can document things one way or another way. and apparently, the buyer in question liked certain documentation done one way and these were done another way. this is not a huge issue, it would seem, but in the internal review they found this to be the case. and what really seemed to have happened here, guys, is that once the board started to sort of look into this and asked mr. laplanche questions about it, what i am told is he was not as forthcoming as the board would
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have liked in terms of simply answering questions, even though these really did not appear to be major issues. we're not talking about -- at least it appears at this point -- loans in some way that are in any way fraudulent. it simply had to do with some relatively minor issues potentially. but we're talking about a board that includes john mack, of course, former ceo of morgan stanley, lawrence summers, former treasury secretary of the united states, mary meeker, well known, of course, former analyst who moved to venture capital. you've got a lot of strong people on that board who my sense would be, said hey, we're not going to allow our reputations to be besmirched in any way. if there's a trust issue with our ceo, he's out. and i can't give you more specifics than in terms of what those conversations were like. the company is saying that to the best of its knowledge, there is nothing more here than what they have disclosed, though they will be delayed in reporting
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their first quarter numbers. they asked for a request to extend the first quarter on or prior to may 16th, 2016. so, we'll see. >> wow, okay. i mean, i just know when i had been very critical of the company, i had mr. laplanche on, he was talking about, you know, the transparency that comes to the marketplace, it's very important to hold us accountable. i mean, it's not our money, it's our investors' money, meaning we have as much skin in the game as anyone who has investors they respond to. in other words, transparency was the key here. >> well, if that's what you're selling and then your ceo is not being as forthcoming as the board would like when they're looking into certain issues having to do with what borrowers -- excuse me, what buyers requested and what they were getting, you could see why they might say we've got to move on. >> so they were not jamming an account. >> it doesn't appear that's the case. they did take the $22 million in
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loans back, and it's $150,000 write-off, i think is what they're talking about of that. but that wasn't really the issue, jim, not the quality of the underlying loans, but the documentation associated with them that was not what the buyer was requesting, all coming out of a review that began with something that does appear to have been more serious, perhaps, which is a change in application dates for $3 million of that $22 million loan package. >> that's very -- i mean, high-powered board. obviously, the chicanery seems minor, but it does matter. rough statement. >> have you been critical of the model overall? >> yeah. i mean, like i've been saying, what's the deal here? do you use the same -- are you really going to have the underwriting standards of major banks, and they were saying absolutely, we're going to definitely have the highest underwriting standards. i do think that there's also a toughness to this market. now, they did have good growth in loans. but remember square last week where they talked about how in
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tl were some issues involving the strength of the market? >> you mean credit conditions. >> yeah. >> yeah. >> i don't know about this model. >> it's a new -- >> challenge. >> -- relatively new model. >> well, i mean -- >> somewhat untested, and this doesn't help, even though this does not appear to go, jim, to the crux of people's concerns -- >> no, it doesn't at all. >> -- to the extent that you have them. >> i know this will sound silly with the stock down. i'm actually more -- less concerned about lending club. i had thought this was a tip of the iceberg. doesn't sound like it at all. >> you never want to say that completely, but i would agree, at least based on what we know so far and what i've been able to learn. >> lack of any quarterly or annual guidance. >> right. >> leaving some people wanting today. >> yes. >> i just think that this -- look, there's a lot of competition among loans, and i don't know if you need. by the way, sometimes when guys are lending money you don't think they're lending -- i didn't think square was in the
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lending business. >> right. >> i don't know if they thought they were in it. when we come back, we'll get cramer's "mad dash" and count down to the opening bell. one more look at the premarket on this monday morning. "squawk on the street" continues after a break. this just got interesting. so why pause to take a pill? and why stop to find a bathroom? cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction,
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it takesbut stealing itd work to eaonly took a few days. female announcer: protect your money. find out if you're dealing with a registered investment professional at before you invest, ♪ all right, we've got a "mad dash" to start the week on this monday. we're about six minutes or so before we get started with trading, jim. where are we headed today? >> so many food companies just okay top line, really humongous bottom line. a lot of that's from buybacks.
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david, tyson foods. do you remember the hill shire deal? >> i do. >> don't you think they paid too much? >> they paid a big price. they had to overcome the brazilians, i believe it was, who were there. there were a number of potential buyers. >> well, it worked, because they guided up huge. i was looking, 385, 395 for the year. they go to $420, $430. it's both top and bottom line. hilshire foods has been incredible. david, the decline in feed costs, $200 million for chicken, $300 million for prepared foods. look at this. this was a commodity company. trust me. it's a commodity company and now it's a proprietary company. and it turned out to be -- >> why are feed costs down so much? >> i think there's such a corn, a big ag problem. >> right. >> there's just way too much of everything and they're the big winner. and what's amazing, david, is you can go from commodity to proprietary, and that's what they've become. they paid up for hilshire in order to become a company we
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regarded right in the pantheon of hormel. hormel was the model for this. hormel was a commodity kind of company. now these companies -- this is becoming the darling. >> they can grow a chicken in like 40 days now. >> yeah. is that true? >> yeah. huge, too. >> 40 days. >> huge, huge. can't walk -- >> right here, how fast were we growing chickens? >> slower. it keeps -- the chicken -- >> well, you know who keeps chickens healthy? zoetis! zts! and not only that, but companion animals very, very strong. >> got it. >> companion animals. they have stuff -- do you have dogs? >> not yet. >> okay. i can tell you that dogs itch, but with zoetis, they've got a new formformula, they don't itc. >> i'll keep that in mind. >> big, big. >> we're in the market. all right, what have we got, about four minutes or so before an opening bell for trading on this monday. stay with us on "squawk on the street." we're right back.
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you're watching cnbc's "squawk on the street" live from
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the financial capital of the world. the opening bell in just over main's time as we start another week. we've talked about lending club's ceo ousted. the saudi oil minister ousted. kkd being taken private. facebook winning this rare intellectual property dispute, trademark victory in china. >> i think that was really rather amazing, because they managed to wrench the name facebook back from the zhang shong dream factory who didn't even have the patent on facebook. by the way, apple, they're ruling this week that the iphone belongs not to apple. so, one seems to be slapped by china. another one -- maybe this is mark zuckerberg's knowledge of chinese trying to win them over. but it is interesting that the court there -- it's not like the u.s. supreme court. >> no, not exactly. >> it's nothing like that. kind of controlled by the party.
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the court. the arguments. >> and people wonder why tim cook is reportedly going to china. here's the opening bell. and a look at the s&p at the bottom of your screen. at the big board this morning, zoedis and the american humane associate. at the nasdaq, robin hood, an organization fighting poverty in new york city. and what good work those two organizations do. >> robin hood, the amazing amount of money they've been able to raise and give, just fabulous. >> yeah. started that many years ago. the key with robin hood is the board pays all the costs for the organization. >> it's really kind of the model, what you want. congratulations. unbelievable in his own quiet way, because he doesn't toot his own horn. you have to toot it for him and i'm doing it right now. remarkable man. >> we're going to get a lot of fed speak this week. dudley's in the "times" saying
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he thinks the fed's on the right track. evans favors a wait-and-see scenario. >> i find when i look at these hikes and look at the bank stocks, the bank stocks are saying one hike to no hike. bank stocks have been horrendous here, just horrendous. kind of going down dribs and drabs and no real bottom. >> i know. well, listen, earnings season didn't give anybody great things to hang on to. it was a poor earnings season. >> it was a bad earnings season. i'm with you there. >> there were a couple at large, but generally, when you're talking -- and so, that's got to be part of it, right, jim? but they haven't seen an up taye in a long time, it would seem, since earnings. they kind of came one after another. we knew what to expect. and actually, the expectations may have even been a bit lower than what we got, but it didn't seem to help. >> well, i just think that we didn't get the benefit of these -- they couldn't change the forecast to the dollar within because the dollar's
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decline did not really take into -- you know, most of the quarter the dollar was not strong. oil was kind of buoying the market. oil's come in. yeah, i'm going to agree that the early season wasn't that great. there were some outliers, but it was defined by, to me, not apple, but microsoft. because microsoft was the one that we all felt was going to be the beacon because they had moved into cloud. and cloud adoption so fast last quarter that the enterprise, the traditional enterprise market was very soft. so, each -- and then the generics had been the star of the drugs, all of those, they just crushed them. cardinal. wow, they just -- the health care complex got hurt very badly. >> sure. >> the only thing that really stood out was the real estate investment trust. they were driven. bhar you looking at? >> you mentioned health care and then i thought of enda, which was the story from friday. so, i took a quick look at endo. it's down to $15.63.
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it's now down 82% from its 12-month high. >> geez! >> which when you look at valeant, which also was down rather sharply and is up today, it's coming close. valeant's down 86% from its 12-month high. so, those two companies, both inversions, of course -- or actually, valeant was never an inversion. valeant just has a low tax rate as a result of being -- >> canadian. >> yeah. >> canadian/ -- these were where the hedge funds were, and i just find biotech's been terrible. regular old pharma not so hot. >> speaking of valeant, you're going to have an interesting guest on "mad" tonight. >> i know joe for a long time from perigo. we've got to find out what happened to perigo and what's the story for vealeant. people are excited this morning that they're going to file their quarter. >> yes. >> that's a low bar, isn't it? wow, they're going to file? great. anyway, we'll see what joe says.
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frying pan fire? out of the frying pan into the fire? >> yeah. we were doing the math earlier on the mylan deal and what it's worth. >> $167. kind of regret that. avon-like. >> yeah. given its $90 or something like that. >> and you can say who's really running valeant? is that ackman? i don't know. papa? nice pay package. but there's a lot to ask. >> yeah. all right, we're getting some traffic numbers out of southwest. april's up 4.7. record low factor 83.4. delta's getting a little more love today on a percentage basis. >> they just crushed this group. no volume to these things. and i have to tell you, i had gone long gary kelly and wherever they are, they're a price-cutter. wherever they go, they're cutting price. and i think this group, the multiples are obviously shrinking by the day.
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it was another group that i had counted on to do well for the quarter, and some of them did well, but some of them were awful. and continental was hideous. >> yes. >> and that really took the whole group down. i think that there's a lot of people who feel this price war's coming and there's price wars in houston, which does matter. and that group's just been another group that we lost. we lost a group. >> disney back to $106. this is the highest level on disney since, actually, for the year. >> well, media was one of the stars of this quarter. and i think that there's a great story to be told at disney if bob iger wants to tell it, which is that they've managed to do something that no one's ever been able to do, which is issue a blockbuster every quarter. so you suddenly have to start thinking, okay, what's that blockbuster going to be? the fact that this "captain america's" maybe as much as $100 million more than people are looking for? >> two times the prior "captain america" film. >> isn't that incredible? >> double the box office. >> was the weather bad? >> "jungle book" was theirs,
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too, right? i mean, that did fairly well. i just saw "the jungle book" this weekend. >> powerhouses, and i think it's a pretty compelling story that they don't -- this is not episodic, is what i'm saying. you have to just build it in, and that's something that iger did. >> of course, the key question will be succession. that is going to be something we hear more and more about with mr. stags having left the company, who had been the heir apparent number two -- >> is that what we have to focus on? >> you know, listen, it's over two years away. >> yeah. >> but there is a sense that internally, are there candidates who really will replace mr. iger? at some point, if there are, do you promote somebody who's clearly then in that number two position? because this is a job that does take some seasoning, one would think. or do you have to look outside to go to a number two? >> i always find that -- this is a clean quarter and frankly i do not care. >> you don't care. >> i don't care. i mean, i don't care. if espn does okay like time warner did with its cable,
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discovery last week? some of these cable companies did quite well. cable, you know, channels. >> yes, yes. >> and i just think that espn -- i mean, i was talking last week about how much i liked the app. i'm not talking about the one where you watch tv on your cell phone, but that's i think could be good. they should talk about that more. it is such a great app, and they do make money. >> you see the piece in the "times" today about fox sports making a run at "sportscenter," at least, if not all of espn. >> good luck. >> well, many people at various times have tried. remember when "sports illustrated" was powerful? >> i do. i do. >> remember when the writing in "sports illustrated" -- >> in my youth, i remember. i had my subscription. i loved "sports illustrated." >> espn, the great john walsh, john skipper? stlz a lot of people there. john walsh now retired. amazing. gave me one of my -- when he knew i was down and out, he gave me little articles to write. kind of, here.
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you know, i was begging. i was going around town begging, you know, "rolling stone," begging them. i wrote a piece about kellen winslow, you know? >> oh, yeah. >> i didn't even care. he ka giving me civillies. remember those? this article is awful, here's a kilfy. i always think john walsh for letting me stay in this business. but i think espn could be not bad. >> we mentioned krispy kreme earlier, as we expected, the stock is up almost trading right near the $21 cash deal that they have with jab. earlier, by the way, to correct the record, it was cody that came after avon. >> oh. >> i don't know, there's so many companies involved. but we were talking coffee earlier. remember the among lees deal that j.a.b. did? the huge deal -- that was the biggest coffee deal they've done. it is the largest of all their coffee properties at j.a.b. this is about doughnuts, not coffee. but another private company along the likes of 3g. >> right. >> j.a.b., very equiztive.
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>> and when i had kkd on, they would have something to talk about and then it's a treat. a doughnut's a treat. it's a treat i can't allow myself at this age, but you know, when you were younger, you could run it off. you could have a doughnut. now it's like, okay, that's 0.2 pounds. >> maybe you're not going to eat doughnuts. >> i haven't had a doughnut in like five years. geez, doughnut? what are you kidding me? >> no. >> doughnuts -- >> you pass a certain age and doughnuts, they're death. >> we were faced last night, the wife and i. okay, there you go. with mcdonald's versus pizza. bhawd you do? >> pizza. >> that's what we did, too. we did that, too. i was going for all-day breakfast mcdojdz. she said, look, we're going to have a big mac. it's going to be 1,200 calories. i don't know what the calories is -- >> i think the sodium is less in pizza than in mcdonald's. >> we had buffalo chicken pizza and i had a hero, which --
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>> that sounds low fat. >> now that you've gotten up to date on our diets, let's get to bob pisani. dow's up 16. >> i'm holding steady on mine, so i'm a happy camper. let's look at what happened overseas. china hit a two-month low. comments about what the economy is really doing. this is shanghai at a two-month low. in terms of what happened, well, exports are quoted in dollars. exports were a little weaker than expected. imports also were down about 10% there. but there was an interview with what was billed as an authoritative source of "the people's daily," saying china's economic trends will be l-shaped. put up the next full screen? that kind of got people talking about what kind of recovery was going on in china at this point, rather than u-shaped. so, again, the question about slow growth in china rearing its head today. over in europe, fairly stable day, despite all of the issues about greece and potentially greece's debt issues again potentially rearing its head. you see the greece stock market up fractionally today. i think what's interesting today
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is very defensive tilt to the market here. so in the u.s., we have consumer staples, health care and utilities are on the up side. energy and materials are down. oil has been moving down all throughout the morning. some of this may be in reaction to the idea that the fires in canada may not be as damaging as thought to the oil industry there. and remember also the dollar strength recently has been a major issue. we'll get to that in a minute, but you see materials to the down side. i want to show the dollar here. i don't normally show the dollar index, but traders talked about it again over the weekend. five days in a row the dollar index has rallied. the "journal" had an article about the benefits of the weaker dollar here overall, and of course, i think that's putting some pressure on our commodities right now. if you look at what's going on, since the dollar started rallying in the beginning of the month, the sectors that would benefit from a weak dollar, meaning energy stocks, materials and industrials, all had been the downside leader. so, there appears to be some kind of effect each on the markets just in the last five or
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six days from the stronger dollar move we've been seeing. carl mentioned the dow down two straight weeks. besides the stronger dollar starting to become an issue, we have a number of other market issues. of course, we talked about weak global growth and stretched valuatio valuations. the market is certainly fairly valued at best and stressed according to a number of other people. and as you mentioned earlier, the q-2 guidance has been fair but not great. i want to show you what the earnings have looked like in the prior several quarters. we have talked about four consecutive quarters of downward earnings growth, and here it is simply laid out for you. q-2, q-3, q-4 and q-1. and the hope was q-2 might turn positive. that is not happening. it's better than it was. now the argument is maybe q-1, the one we are now finishing up, might be trough earnings. but the hope had been we would break four quarters, and in q-2 go positive. that probably is not going to happen. the hope was this would change the whole dialogue a little bit. that's not happening.
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and now we're into q-3 for potentially going positive. finally, i do want to highlight what mr. dudley, the head of the new york fed, said over the weekend in that "the new york times" article, because i was surprised how, well, basically optimistic he was. he said there was a reasonable exec thasipectation that the fe raise twice this year. that's his phrase, a reasonable expectation. and he called the risk of recession quite low here, talking about how the consumer was in good shape with rising payroll and unemployment looking a whole lot better. so, mr. dudley sounding quite optimistic about the potential for two rate hikes. obviously, that is not in the market right now. the dow up 24 points. carl, back to you. >> thank you very much, bob pisani. everyone's trying to take stock of these supply disruptions in canada. jackie deangelis is at the nymex for us today. jackie? >> reporter: hi, good morning, carl. oil prices actually turning negative, a session low $44.02 today. and the reason is the market is mulling two things right now. as you mentioned, the wildfires in canada and also the ouster of the oil minister in saudi arabia. beginning with the wildfires,
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right now we're looking at about a million barrels a day coming offline, but the market is seeing this as a short-term disruption. a lot of work is being done to contain those fires and the weather is cooperating as well. so this doesn't appear like it's going to be a long-term risk to prices. meantime, let's switch gears and talk about the saudi ouster of al naimi. you know, this was expected for quite some time when there was a regime change, there was an expected cabinet reshuffle. people have been talking about it. he's aging in years. so this is part of the new regime's vision of setting a stage for a new future. and also, the new oil minister probably will be on board with the same kinds of policies and in better condition to be able to take on this aramco ipo. as the market is mulling that news, it's not a fierce story out of saudi arabia at this point and that's why the prices are coming off, guys. back to you. >> jackie very much. jackie deangelis. amc movie ceo adam aron when we come back. gearing up for the new season after the blockbuster debut for
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"captain america." new gains for the start of the week. dow's up almost 40 points. . executive from dbs bank. i am keeping busy assisting your relationship managers. how so? i can read over a thousand research reports every day, to help you keep abreast of market movements and to help your relationship managers give better advice. that's great. today's fast moving markets make it hard to keep up. but together we can stay one step ahead. we make a great team, watson.
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- a dollar sign looks like an s. when you send financial info through a website, look for a url beginning with "https." the s is the difference between an encrypted site and one that's not. s equals secure. [light instrumental music] ♪
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a trial centered on sumner redstone's mental competence could end as early as today. and just hours from now, a california judge is expected to announce whether he will throw out a lawsuit filed by the media mogul's former girlfriend, manuela herser, after the judge viewed videotaped testimony from redstone in which the billionaire made it clear he does not want ms. herser in his life. i don't know if you had time to read the deposition on thursday. it made the rounds. >> is it something we can read here? >> we can't, because it's full of expletives. mr. redstone has trouble speaking now. it's something i've reported on and others do. he has trouble communicating. he had an interpreter. there were some issues. but the things he did say, and i tweeted this on friday, were certainly reminiscent to me the way sumner redstone spoke off camera. he does not want her in his life, it is fair to say. and the judge, after hearing the
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deposition, which was taped. redstone was not in the -- the testimony was taped. he said, you know, i'm sort of moved right now to just say let's throw this whole thing out, but i'll wait for the weekend. give me, you know, some more arguments and i'll make a decision. but he did seem to be likely to say i'm going to toss this out. the guy seems pretty clear in what he wants and what he doesn't want. >> okay. definitive statements about her? >> yes, quite definitive, involving the "f" word and the "b" word, together. >> facebook. >> there you go. >> no, that was not -- that's not what he said. >> try again. >> fb, i think facebook. i'm not going to try again. i'll get in trouble with my wife and i'm not going to go there. >> what a story. >> and of course, this is important because if he were to be deemed mentally -- no longer mentally competent, a trust of seven trustees would take over
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the stake in national amusements, which controls the stakes, controlling stakes in cbs and viacom. but again, that does not appear likely based on what we heard from the judge. >> no. all right. meanwhile, donald trump continues to talk about his comments from last week regarding the debt. on "meet the press" yesterday, also talked about tax policy, saying he sees the wealthy paying more to uncle sam. take a listen. >> i think nobody knows more about taxes and income than i do. but i'll explain how it works. i don't come up with -- i came up with the biggest tax cut by far of any candidate, anybody, and i put it in, but that doesn't mean that's what we're going to get. we have to negotiate. the thing i'm going to do is make sure the middle class gets good tax breaks, because they have been absolutely shunned. the other thing i'm going to fight very hard for business. for the wealthy, i think, frankly, it's going to go up. and you know what, it really should go up. >> now, that combined with the way he's warmed to a rising minimum wage, he's putting
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together a policy patchwork that -- >> i know. >> -- few people -- >> this is -- >> his plan, though, right now is 0, 10, 20 and 25 being the top. so i don't know -- i mean, 25 is still well below where we are right now. >> 25's -- >> and a 20% cap gains. but most importantly, also, 15% business tax, which he says is a key for him in terms of what he would be going for. but fully admitted on that interview that happened live, that listen, it's all a negotiation, which you'll hear mr. trump say very often. >> but these are traditionally democratic party issues. and he's so clearly broken with the party. wow. >> this morning on cnn talking about buying back debt at a discount, said people who said i wanted to default are crazy. "first of all, you never have to default because you print the money." so, he's definitely pushing the envelope of what politicians have said in the past. >> i remember talking to bob ruben about refinancing debt. the idea was -- >> refinancing, not negotiating
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with the creditors and saying hey, i'll give you 80 cents on the dollar. >> i think he meant refinancing. >> well, he said that separately. >> yeah, well -- >> he didn't say -- he talked about how we should be refinancing, but he also talked about -- >> i know. the refinancing side i thought made sense, then the paul krugman side not so much. krugman somewhat critical about him. >> and we're just at the beginning of the campaign, really. >> we have months to clarify these positions, and he will. >> yes. months of clarifications to come. when we come back, we'll get stop trading with jim. dow's up 11 points. don't go anywhere. we were born 100 years ago into a new american century. born with a hunger to fly and a passion to build something better. and what an amazing time it's been, decade after decade of innovation, inspiration and wonder. so, we say thank you america for a century of trust, for the privilege of flying higher and higher, together.
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time for cramer's stop trading. >> the minerals and mining stocks are very weak, and a lot of that is because china is not importing as much. but freeport sells its interest in its giant congo mine to china. we know china wants to be in africa. this is just huge. and they got more than $2 billion for it, $2.6 billion, and they're going to pay down debt and nobody cares, because we're now in that over the hump, no one seems to want these minerals and mining stocks that a lot of it is iron ore's in
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free fall. copper, by the way, is back down, a month low. so, be careful those who have been buying these stocks over and over again, whether it be cliffs, whether it be freeport, whether it be, you know, geez, ballet? it's like, here's the keys to my car, partner. park it. >> got it, with a "t." >> park it. yeah. maybe i'll flip you something. >> thank you. >> like 5 bucks. i'm just saying. how much you're going to flip, i'll flip you -- >> you're a good tipper. >> i am a big tipper. >> i know. >> i like to be a sport. my late father said, "you're such a sport, jim," which meant you're an idiot. but i've run a restaurant and you see people stiff people all the time and it's really revolting. just revolting. >> we know what's on "mad" tonight, pap kra. >> joe papa from valeant. and perrigo and valeant on. and the wireless has been a strong theme. so we're going to really have some fun tonight. and i welcome any questions from
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our viewers. tweet it, about joe papa and valeant. i know bill ackman follows us. no, i don't know that, but maybe he's got some statements. >> he definitely watches, we know that. >> see if scott wapner -- >> it's going to be a good one, man. >> is it? i'd better deliver. pressure. when we come back, amc's entertainment chief adam aron on the busy summer season. dow's up 20 points. this clean was like, pow!
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it added this other level of clean to it. it just kinda like wiped everything clean. my teeth are glowing. they are so white. i actually really like the two steps. everytime i use this together it felt like leaving the dentist's office. crest hd, 6x cleaning, 6x whitening. i would switch to crest hd over what i was using before.
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good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, simon hobbs, david faber at the new york stock exchange. market's up about 33 points, but commodities, and specifically oil, are acting as an anchor around their ankles. crude giving up gains from earlier this morning. >> a lot happening in the oil market. crude near session lows, as carl mentioned. the wildfire raging on and there's a shake-up in saudi arabia. also on markets, it's a big week for retail earnings. jcpenney, macy's, nordstrom all
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set to report. also ahead, shares of lending club plunging today. the company announcing the resignation of its ceo. the drama inside the company board, of course, that includes john mack and larry summers. and donald trump changing his tune on taxing the wealthy. so, will his supporters be backing his new views on tax policy? and coming up within the next 20 minutes, "captain america" was a big, big win at the box office this weekend. how to play the superhero game from the ceo of amc entertainment. adam aron will join us for his first on cnbc interview. first up, stocks are slightly higher as oil prices fall and the nasdaq continues to climb out of correction territory. for more on where investors should be focusing their attention, mike santoli joins us, cnbc's senior market commentator, and burns mckinney with aligns global investors. happy monday to both of you. >> thank you. >> we've been talking to cramer the last couple of days, whether or not we've gone from a caterpillar market straight back to a clorox market. >> that's the way it started to
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look in the last five, ten days. bond yields on the ten-year treasury peaked above 1.9% at very end of april, and now back toward 1.7%. right there, the bond proxy trade took off again. the s&p low-volatility etf is one we look at. the food stocks are the momentum stocks right now, which is kind of upside down. i think that the theme really is rotation has been very violent. it's been very hard to keep up with the kind of near-term catalyst. as we consolidate in terms of the broad market, it doesn't look that dramatic. within it's been very dramatic. >> as we're trying to put a period on earnings season overall, does this reflect that it was a net disappointment? >> well, looking at the earnings season, earnings look like we're down about 7% for the first quarter, which was probably not quite as bad as was expected. but although they are slightly disappointing, i think what investors should focus on is the fact that they should probably be down 4% or 5% in the second quarter as well. but looking back at the back half of the year, two major headwinds are probably expected to dissipate, one of which is
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you saw last year it was a very strong dollar year with the dollar weakness, the dollar pulling back a bit. that should remove one headwind for the earnings of multinationals. and the other is energy prices rebounding. looking at that, for the full year, we expect earnings to be up about 3% to 5%, which should probably, given that we probably don't expect a whole lot of multiple expansion from here would probably be what we would expect to see stocks go up by over the next 20612 months. >> some of that, mike, was reflected in the guidance -- >> yes. >> -- if not for the results of q-1, right? >> management guidance i think was the best since 2010 in terms of the number of increasing guidance versus cutting guidance. so that shows you that maybe the second quarter looks like you have a shot at being about break even for earnings. >> just wanted to show you our favorite stock market indicator right now, which is hormel, for instance, a food company which goes up no matter what. look two years back at the price of hormel, a company that is not showing much revenue growth. and that really tells you all you need to know, to your point about the market. >> you had this minor pullback,
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where as carl mentioned you had that caterpillar market kick in. then it just bounced again. it really is the stability of earnings and dividends is what people really are putting a premium on. and the dividends in particular -- even though it's not a very high yield stock, people are looking at the idea that let's say 2017 s&p dividends will be something like $50 per share. close to a 2.5% yield. people think in this world that's why you buy stock. >> burns, about the earnings season, i'm looking at a note out of deutsche bank which says if you strip out, significantly -- i mean, this is a significant strip-out -- energy and financials, you actually get earnings up 3.4% year on year, you get sales up 2.4%. i accept that those two sectors are very, very important to the market, but i wonder if we're missing a trick about what is happening for the rest of business in this country. and of course, most companies are not quoted on the stock market to begin with. >> well, and those are two areas that they are, i think, you know, probably two of the other major headwinds to earnings. you strip those out and earnings
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are probably a bit more muted. but what investors should really focus on in this type of market is -- and we've seen investors go for the bond proxy type dividend payers. some of those have gotten a little bit pricey, things like utilities and consumer staples. but if you look at dividend payers across the board, across all the sectors in places where there actually is room to grow dividends like the technology sector, then we do think that there's some places that you can actually exceed those expectations. >> deutsch has a big report, mike, today on peak margin. >> yes. >> and looking at margin, if you include energy and banks, we're way off the highs from q-3. >> exactly. >> does that mean we're looking at additional cost-cutting measures, layoffs as we get into the summer? >> i do think so, although the peak margin story was the bear story a year, two years ago, and you have come in off that pretty significantly. i think some of the work says, for example, you're going to have a little bit of the anniversarying of the dollar rally, going to help margins a little bit. i don't think that will be the big marketwide tell in terms of where we go from here. but it shows you, look, this is late-cycle stuff.
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we squeezed a lot of what we could for business. but simon, to your point, ex-energy, not even excluding financials, i believe revenues are at an all-time high. >> can i just make one more point, burns? regardless of what you think about donald trump, we keep having central bankers, notably from the fed, say we need more from politicians to stimulate this economy. it's clear that trump is no enemy of debt. we could debate in detail what he's proposing as far as we're aware of it, but were he to massively increase the deficit in this country, or substantially increase the deficit, presumably in an economic sense, that's good for the stock market, is it? that's good for earnings moving forward in a classic keynesian left-wing sense. >> well, that could be a positive insofar as i think what the market probably does need or really what the economy needs is a little federal spending type stimulus. but at the same time, as soon as you go about and sort of reduce that sanctity of u.s. debt and, you know, i think make some of
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our creditors aware that there is some risk there, that if you do see a spike in interest rates, i think that could probably do just the opposite. that would, you know, rein in both corporate earnings as well as market multiples, which would probably be a bit bearish for the market, to be frankly honest. >> so, mike, you said margins won't be the tell. what will be the tell over the next couple months? >> first of all, i think we have to sort of stress test this rally for maybe a pullback in oil and the idea that maybe the dollar decline is going to take a break for a while. so i think all these things that drove us here to this rally have seemed as if they were sort of temporary phenomenon. so we have to test if that comes back. and obviously, we don't really have a great catalyst ahead of really the june meeting for the fed, which seems like it's going to be a non event. you had the vix plunge below 15 because i think the market's saying we really don't know what's going to get things moving any time soon in the next few weeks. >> yeah. june's going to be interesting, between us and the uk. a lot going on. burns, thank you so much. mike santoli here at post nine. >> thank you so much.
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we have breaking news right now in north carolina. let's send it over to mary thompson back at headquarters. mary? >> reporter: sarah, north carolina's swinging back at the federal government' 'cusing the department of justice of vastly overreaching. of course, this has to do with the transgender line, whether or not they have access to public bathrooms. according to the filing, the suit says the government is misreading federal law, says the law cited the federal government in the letter last week does not declare transgenders protected status under the federal civil rights law. again, all of this coming from nbc's pete williams on the air. again, accusing the doj of overreaching here. the lawsuit was filed in the governor's name, mccrory versus the u.s. we will, of course, have any updates on this. but as we know, the business community has been fairly outspoken in support of the federal government in this issue. back to you, simon. >> and just to clarify, today's the day that the doj challenges them in court. that's where that's coming from. that's a defense against the doj, saying what you're doing is
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illegal. mary, thank you very much. >> reporter: thur, thank you. ahead, presumptive republican nominee donald trump changing his tune on tax hikes for the wealthy, but will the move resonate with the gop? we have lang chan and jared bernstein on the other side of the break. and we are following the flames in canada, causing the evacuation of 80,000 people. we will go live to alberta for the very latest.
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as the campaign shifts from a primary strategy to the general election, an apparent change in tune on taxes from the presumptive republican nominee, donald trump, over the weekend. have a listen. >> the thing i'm going to do is make sure the middle class gets good tax breaks, because they have been absolutely shunned. the other thing i'm going to fight very hard for business. for the wealthy, i think, frankly, it's going to go up. and you know what, it really should go up. >> taxes weren't the only issue. on minimum wage, after opposing upping wages throughout the primaries, trump had this to say on the sunday shows this weekend. >> i have seen what's going on, and i don't know how people make it on $7.25 an hour. now, with that being said, i would like to see an increase of some magnitude. i haven't decided in terms of numbers, but i think people have to get more. >> for more on this discussion, we're joined by former economic adviser to vice president joe biden and cnbc contributor jared
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bernstein, and also former rubio and romney campaign adviser lonnie chen. lonnie, raising the minimum wage, taxing the wealthy? is trump a republican? >> you know, it doesn't look that way. i think this has always been the challenge with donald trump, is that he doesn't present a coherent world view. and certainly here what we're also seeing is his flexibility. the issue is, this is something that would normally destroy a candidate, these kinds of massive shifts in policy, but donald trump seems to be immune from it, and this may be the first election where we don't really see a huge contrast between the republican and the democrat on major economic policy issues. >> or maybe, jared, he's turning the republican party to a more realistic, more progressive, maybe a little farther to the left place in terms of their economic thinking, and it could be a positive. >> well, i actually think that's a reasonable way to look at it. i guess i would put air quotes around lahnee's flexibility,
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because it sounds more like a really deep kind of flipping. i mean, this is not a negotiation that says i was originally going to cut taxes on the top 1% by 35%, which, in fact, was his and is his tax plan, to going the other way, now i want to increase taxes on the wealthy. i do think, as you suggest, he's trying to appeal to his working-class base. it was always kind of a head-scratcher to me why donald trump had this orthodoxy supply side massive tax cut at the top tax plan, which you've seen from republicans dating back to reagan, including every candidate that he was competing with. so, he does seem to be kind of flipping towards his base in a way that could help him. >> yeah. >> but it certainly exposes him as well. >> yeah. i mean, the original plan would tax the top 0.1% $1.3 million. he said it was just a starting point for negotiation, but lahnee, the question is, what does it do when it comes to
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appealing to his own party? i mean, paul ryan is a longtime tax-cutter. >> well, there is this division clearly in the republican party between those who leave in a traditional economic policy, a tradition market-based economic policy, and perhaps those who believe that the republican party needs to change that point of view. and i think that division is very real. i think the challenge for trump, though, is that he already came into this -- i think a lot of conservatives were already skeptical of him. and this is going to make them even more skeptical of him. and you know, it's not just on social issues now. it's also on these core economic issues. so you know, we'll have to see what happens. but this is really quite staggering, that he'd be willing to stand up and say we're going to have a negotiation, but by the way, i'm going to give you my ending bid. >> also -- >> just hang on a minute. >> go ahead. >> i think we may be missing a point here. i mean, the guy presents himself as a dealmaker. he may not be like a central banker or a norm politician who
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signals exactly what is going to happen going through a series of events. he thinks he's going to go do a deal. i'm correct in saying he's meeting the gop this week. he also refused to rule out the idea that he wouldn't let paul ryan actually rule over the convention. so you have all these things that would irritate the gop for him to go into a discussion in which he needs to get $1 billion of backing, jared, moving forward? >> yeah -- >> maybe this is part of a deal-making process. >> i absolutely think that he comes into this thinking i'm a businessman, i know how to negotiate, i've negotiated in the past. you even see that in his discussion talking about refinancing, rejiggering, perhaps even sort of hinting at defaulting, although he walked that back. the thing is that negotiations in government are not the same as negotiations in business. it's actually a very, very odd negotiation -- it's not flexible. it's flip-flopping to say i want to cut -- i want to just keep the minimum wage where it is one day and then next week to say i want to increase the minimum wage. i want to cut taxes on the
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wealthy, i want to increase taxes on the wealthy. that goes way beyond the kind of negotiation that government typically works on. now, trump is an exceptional candidate in lots of ways, but it is really hard for people like me and probably lanhee to process these kinds of flips. >> i'll put that question to you then, mr. chen. do you ever think we'll get specifics? because to sarah's point, right now when you go to his website, it's a 25% tax. that's the highest rate, i should say. and 20% capital gains. but given what he just said, are we ever going to in this campaign, assuming it begins against hillary clinton, and it almost has, going to get specifics from trump, or will he just keep doing this? >> no, i think he's probably going to continue doing this because he doesn't pay a penalty for not having specifics. you know, most traditional campaigns, specifics are very important. back in 2012, when i helped governor romney, that was the constant refrain was, you know, when are you going to have more specifics? what are you going to do? so, the reality is that this is a different kind of candidate, different kind of campaign. i don't think he's going to pay a price for not having
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specifics. so in that kind of universe, why would you? i mean, i just continue saying whatever comes top of mind, and that's clearly what he's doing. >> i just wonder, jared, if it ends up hurting hillary clinton for him to make these kind of remarks that appeal to her voters and her base, where she is very unpopular as well. >> well, i don't think that's the problem because i really do think that she is going to cast him as completely untrustworthy. and frankly, given all the flipping, he's got a point. i think the danger for hillary clinton is if she decides to go after kind of middle of the road conservatives by trying to signal to them that she's got policies that they'll like as well. she risks alienating kind of the bernie voters that she also needs. so i do think there's kind of a crossover there that she has to be wary of. >> very interesting. thank you for joining us on this discussion of taxes and wages. finally down to the economics. jared bernstein and lanheechen. >> thank you. when we come back, "captain america" topping this weekend's
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box office, becoming the fifth best domestic opening weekend of all time. what other movies are in the pipeline that could boost the theater chain stocks? we'll talk to the head of amc. and sumner redstone's competency trial begins. the trial getting ugly. what is at stake for viacom and cbs, when we come back. [ soft music ]
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e.t. phone home. when you find something you love,
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you can never get enough of it. change the way you experience tv with xfinity x1. apple is coming off a new 52-week low on friday as investors worry about the growth of the giant. tim cook heading to china soon to calm investor worries. dan morgan is senior portfolio manag manager. what have you been doing with your holding in apple? >> at anoint, we've been holding it -- as i've said in the past, we've owned the stock since 2004. we have a cost basis of roughly about $5. so we've got huge profits in apple stock. i realize it's down, 52-week low, but we haven't made any changes in terms of reducing our positions at this point. >> so, what marks you out from everybody else? i mean, we've lost $20 on the
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stock within three weeks. it's been brutal. why -- when you look at other people moving and selling like carl icahn, or at least saying he's sold in the past, what do you make of that? how do you react to that? >> well, i understand a lot of people are getting out of stock. i don't know if they've been in it as long as we have. i mean, we're hopeful that things that apple is doing with the iphone 7 rollout, which will be coming down the pike at the end of the year, stock has traded up in anticipation, roughly between 31% to 38% on the proceeding releases of iphone 5 and iphone 6. so we still have some optimism that things aren't as bad as everybody thinks that it is. >> right. >> so that's why we're still holding shares. >> i mean, so, what judgment -- in a sense i know the answer to this question, i guess, from what you've just said. but the call from icahn is actually, china is the most important market and the chinese government can make it quite difficult for tim cook and the team to operate there moving forward, or at least to grow. and then you see, of course,
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according to reuters, that he's heading off there to meet with senior political leaders. how do you weight china in what's going on and the possibility of things getting worse, which is what i believe icahn is effectively saying? >> china is definitely an icy path for apple, but they have 13% market share u.s., they have 40% market share. they have a tremendous amount of room to grow. they are coming out with lower priced phones, as you know, with the new 4-inch and other offerings in emerging markets. so you know, there's no doubt china is the growth for them and they have hurdles to get through. but if they can go from 13% to 20% market share, that would be huge. >> right. >> so, we're still optimistic and hopeful that china will be a positive for them going forward and they'll be able to overcome these hurdles that you just mentioned. >> how do you counter some of the more existential, bearish narratives out there that the best innovation days for apple are over and that they don't have a new product coming out and it's really just an iphone
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company in a pretty saturated market that's started to look more saturated even globally? >> yeah, global smartphone sales this year are expected to be about 7%. you know, sarah, i think the key for them going forward is going to be how can some of these other categories start to be a bigger part of their business mix. on the last quarter, for example, services was up 20%. well, that's apple pay and itunes. we have other was up 30%. well, that's apple tv and iwatch. so, can these other categories, which only accounted for 15% of total revenues, where the growth was, can they become a larger piece of the business mix instead of, as you say, the smartphone business for apple is 65% of revenues. can that become a little bit less and some of these other categories become a little bit more? kind of like the transition with ibm 15, 20 years ago when they became a service company instead of a hardware company. so, there's a billion iphone users, so we'll see if they can leverage that. >> i just want to double back as to where we started this
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interview. did you say to me at the top of the interview you hadn't sold any apple stock? and if that is the case, why not? why don't you lighten up and move into amazon or some of the other holdings like facebook, where you clearly do have growth? >> yeah, well, simon, we own those, too. those are sizable holdings for us, facebook, google, amazon, apple is, too. we also look at apple as a stock trading at 10 1/2 times earnings with a dividend yield of about 2%. so you know, the ten-year's at 1.8%. so, you're kind of getting paid to kind of wait for something to grow down the road. so we own other stocks, and we're bullish on those, but we're willing to give apple a bye and see if they can grow on some of the things we talked about today. >> thank you, dan morgan joining us from synovus trust. it is sumner redstone's trial day two, and in a surprising twist, the trial could be ending today after friday's fiery deposition. our julia boorstin joins us with
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more on that. hey, julia. >> reporter: hey, good morning to you, carl. that's right, judge david cowen indicated friday afternoon that he's leaning towards ending this trial about sumner redstone's mental health. what seems to be driving his decision is redstone's testimony which is played to a closed court. a transcript released to the press revealing redstone calling manuela herzer derogatory expletives, saying he hates her and doesn't want her in his life. the judge told herzer's attorney that it would be tough to convince him that redstone's wishes shouldn't be granted. when one of redstone's attorneys requested that the case be dismissed, the judge said he would evaluate briefs from both sides over the weekend and announce his decision, if the trial ends now, when court begins this morning. herzer's attorneys saying in a filing over the weekend that the court cannot accept at face value redstone's testimony and is bound to determine whether redstone is of sound mind and whether he came under undue influence, saying that herzer's
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influence will show why sherry redstone is unfit to serve as redstone's health care agent in part because she has different views about end-of-life decisions and she spied on her father. redstone's attorneys' latest brief says redstoneme meant it when he said "i want manuela out of my life" and that it is not in his best interests to have a full trial about ending his relationship with herzer. the court reconvenes at 11:30 eastern/8:30 a.m. pacific. sarah, back to you. >> all right. we'll check back with you then. thank you, julia. the wildfires in alberta province, canada, continue. operations are at a near standstill. we will go live to get the latest after the break. the heirloom tomato.
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e.t. phone home. when you find something you love, you can never get enough of it. change the way you experience tv with xfinity x1. good monday morning, everybody. i'm sue herera, and here is your "cnbc news update."
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north korea's ruling party congress announcing a new lead title for leader kim jong-un, party chairman, as he consolidates his party. the state-run tv showing party delegates on saturday gathering in a massive hall and scribbling notes as kim delivered his speech. chinese officials say ten bodies have been recovered, but 31 people are still missing following a landslide at the site of a heighydropower projec china. thousands of troops marching in moscow in the victory day parade in a display of military might. the celebration marks the 71st anniversary of russia's victory over nazi germany in world war ii. and mercury has begun a relatively rare move across the sun. it was visible just after 7:00 a.m. on the east coast with the small planet appearing as a tiny black dot on the face of the sun. the transit, which happens 13 or 14 times a century, is expected to last seven hours.
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watch it on a computer screen. don't look directly at the sun. that's our "cnbc news update" this hour. carl, back down you. >> thanks for the tip, sue. one hour into trading, dow's negative, s&p hanging on to mild gains. malin kroot, allergan. on the laggards, freeport is the biggest loser along with newmont mining, alcoa and marathon. disney's third "captain america" movie delivering a spectacular kickoff to the summer season. "civil war" collecting $181 million, pitching actor chris evans against robert downey jr. as iron man. with us now, adam aron, ceo of amc entertainment, which operates more than 5,000 screens in almost 400 locations. welcome to the program. nice to see you again. >> thank you, simon. always wonderful to be with you. >> this is i think the fifth best domestic opening weekend. how did you do? >> we did great. this is the fifth highest grossing movie ever to open.
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by the way, three of those five were marvel movies. of course, along with "star wars" and "jurassic world." and boy, we were just huge. we showed the "captain america: civil war" almost 9,000 times opening weekend. and imax just blew it away. imax screens are 3% of our total screens. almost 19% of our total box office throughout the amc system was in imax auditoriums. there was some proprietary scenes shot on imax cameras. so it was a big opening. >> you've only been on the job since january and you told analysts on the conference call a couple of weeks ago very proudly that you've already been to see your partners in hollywood six times. and i think you own a share of spotlight. why do you think this film or this movie works in the way that it does at this scale? and do you now become one of those suits, those accountants that argues for more of the same? >> well, why did it work?
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it worked because hollywood is in tune with today's audience, they're making movies that movie-goers want to see. it's just in the last six months where i've been around and paying attention, it's been one pool after another. deadpool was the largest february opening of all time, meaning superman was the largest march opening of all time. now we've got "captain america," the fifth largest opening of all time. and as to whether i'm a suit, well, i'm wearing one today, but i'm a movie buff more than anything else. and i like hollywood to make all kinds of movies. and actually, if we look ahead to what's coming over the next few months, they are making movies for everybody. >> right. a stock charts of what's happened at the company since you took over is interesting. you joined on the fourth of january, were up over 20%. obviously, your biggest shareholder is in china. you've also announced that you're going to take over
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carmichael for $1.1 billion. what is there for shareholders in the future? is it acquisition or is it the ability to work the business more, whether that's putting alcohol in some of the theaters or select seating through the app? i mean, what is the future shape of this business? what difference do you make, adam? >> well, you know, i've said for 20 years that the share price of the ceo's report card, and on my 12th day on the job we were creating in the 19s, and we closed on friday over 29. so we're actually up 48% in the last four months, which makes me very proud. in terms of why? i think the answer is all of the above to your question. amc is committed to creating the best theatrical experiences we possibly can for our guests. so, plus reclining chairs, alcoholic bars in the lobby, investments in the best sight and sound technology, more large-screen formats, more adobe
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cinema. we've already announced we're going to be introducing our own proprietary private label house brand large screen. and then of course, we're going through acquisition as well. take it together, that's a good recipe for success. >> adam, i just wonder, i mine, you're so dependent, and it's a good thing to see all of these studios put out great films with big attendance. how do you prevent a netflix or an amazon down the road from negotiating that deal and from talking to the studios and making that deal to get released on one of their properties? they're growing. they're spending more money on content. i mean, so far, they seem to be targeting the more art house kind of films, but what's to stop them from going after a big blockbuster? >> well, i look at studios and movie theaters as being a partnership with each other. the north american box office last year was $11 billion in gross revenues. that's not something the studios are going to toy with lightly. i also think there's an
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opportunity to invest in some of the technologies that will allow movies to go to home. so i think we can as a company, we can participate in revenue streams in our theaters and participate in revenue streams at home. but i'm not at all worried. there are more than 30,000 theaters in the united states. i expect they're going to be busy and busy for years and decades to come. >> hey, adam, there was an outcry on social media a few weeks ago about whether or not amc would allow texting. what lessons did you learn from that, if anything? >> well, actually, i don't know what you're talking about. amc has not allowed texting now and amc is not going to allow texting in the future. you know i'm joking. for 36 hours we floated a trial balloon of allowing texting in a very limited number of auditoriums. we heard right away from our customers they hated that idea. you know, it's amazing, social media lets you interact with and
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talk to and listen to your customers right away. >> right. >> we heard them loud and clear. that idea's on the cutting room floor. >> have you floated the alcohol question, just out of interest, whether there should be alcohol served? >> well, we floated it by installing bars in a third of our theaters. >> okay. >> and alcohol sales are through the roof. so consumers are voting with their pocketbooks and their mouths. they want to have a beer, they want to have a wine, they want to have a drink or also a coca-cola when they go to the movies. >> adam, i want to ask you one final question. you are, as you said on the show before, a dealmaker. that's the nature of what you do. when you were at starwood before you took this job, you did a deal. you sold starwood to marriott and after you were gone, the chinese came along and it was backwards and forwards. i'd love to get your view, now that that discuss has settled, as to what that episode meant. and now, because you've now worked for the chinese, do you
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think ainge bang and the collapse of the offer disecredited more bids from china? >> well, you know, the process that we set in motion when we did the marriott deal allowed for an envision someone to come over the top, and that's exactly what happened. i actually have profound respect for an bang, and marriott must, too, because they had to sweeten their offer, as you know. to answer your question specifically, no, i don't think that the chinese offer is discredited in any way. i think anbang gave marriott a run for its money and vice versa. i think those were two very credit suitors for starwood. i'm pleased for marriott that it got the prize that it sought. i think starwood is in very good hands. >> right. >> but if anything, i think this puts more people on the path of looking to china for capital. in the case of am, the wanda
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group, which owns 75% of amc, wouldn't like to be called a chinese/american venture because 25% of our owners are u.s. institutions in the stock exchange. one has been a dream shareholder for amc. it's allowed us to reinvest, it's allowed us to acquire, it's allowed us to growth. the wanda group and china has been a fabulous source of capital -- >> sure. on legendary pictures as well. adam, good to see you. thank you for spending the time. adam aron joining us, ceo of amc entertainment. wti is below $44 a barrel right now. there's still massive wildfires, though, in canada threatening oil supply. our deirdre bosa is live in alberta for us with the latest. deirdre. >> reporter: hey, sarah. well, there was a bit of optimism over the weekend from fire officials, but as you say, it's still massive, it is raging, and it is still highly unpredictable. here in alberta it is referred to simply as "the beast." nearly 100,000 people now have
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been evacuated, many of them oil sands workers and their families. gas in ft. mcmurray has been turned off. the power grid is damaged and the water is undrinkable. remember, ft. mack, as it's called, is the gateway to the oil sands. so, even though oil facilities have not been damaged in any major way, operations have been shut down. a million barrels a day capacity is estimated to be offline, and that's about a third of canada's daily production. it could stay shut for weeks as well or even months if the buyer changes direction again and does pass through major oil operations. remember, it's very unpredictable. the major producer in the region has a capacity for 350,000 barrels a day. smoke reached one of syncrude's sites over the weekend and they gave us this statement -- "syncrude has successfully suspended operations at both aurora and mildred lake sites. both facilities will remain in safe park mode until the wildfire and smoke no longer pose a risk to workers or infrastructure.
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syncrude will resume operations when it is safe to do so and there is no risk to personnel or facilities." later today, government officials will be going into ft. mcmurray to assess the damage and there are a lot of folks around here who are eager to find out what's happened to their homes and businesses. tomorrow, alberta's premier is going to be meeting with oil industry executives to discuss the state of their operations and a timeline to restart them. so, we're here on the ground and we'll continue to find out more as the day goes on. >> deirdre bosa covering obviously a very tough story in alberta. thanks. when we come back, retailers seeing weakness ahead of a big earnings week. jcpenney, macy's, nordstroms all reporting in the coming days. how do you play that sector? that's coming up. hey, jesse. who are you? i'm vern, the orange money retirement rabbit from voya. vern from voya? yep, vern from voya. why are you orange? that's a little weird.
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check out shares of lending club, down over 25%, the worst day ever since the company went public after its founder and ceo, renaud laplanche, was ousted by his board of directors over issues of, well, trust, essentially. in a lack of full disclosure during a review that took place of a number of the company's loans, loans that it makes and then are sold to accredited investors. apparently it was discovered during an investigation that one senior manager at lending club made a change in the application dates from about 3 million of these loans, and then they also found that of a pool of 22 million of these loans that were being sold to one investor, certainly accreditations that were made or not correct and should have been changed because of the preference of the
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investor. and when they investigated, apparently, the board of directors simply decided that it didn't feel as though mr. laplanche was completely forthcoming. this is a pretty high-class board. john mack, of course, managed to run morgan stanley for many years, lawrence summers, the former treasury secretary of the united states, mary meeker of kleiner perkins. one might imagine they didn't want their reputation besmirched and might have gone further than any other board might have in saying to mr. laplanche that his services were no longer required. the company's president has taken over in the interim as ceo of lending club. that is certainly not stemming the decline there, though it does appear to be not about the loans themselves, and therefore, sarah, perhaps not going to the business model of the company itself. but you can see a quarter of the value being eviscerated, nonetheless. >> yeah, doubling the losses for the year.
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meantime, retail earnings take center stage this week with macy's, nordstrom, jcpenney reporting quarterly results. goldman sachs today lowered its price target for both nordstrom and jcpenney ahead of earnings. so, should investors be bracing for more lackluster performances across retail? let's bring in jan niffin and stacy widlif. good to esee you both. coming off of what was a tough holiday season, just broadly, how did retailers begin the year? >> poorly. and that's continued. i mean, if you look to what happened, they came into the season with too much inventory. they were hoping for better weather. they had already been told that wasn't going to happen. they were going to have a cold spring. so i was saying all along this is not going to go well. they did not get the inventory cleared as much as they would have liked to have. they came in with fresh goods behind that and they got cooler weather. and so, they're all backed up right now. they haven't taken their
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markdowns. this is dangerous for the second quarter. and they haven't gotten the sales. it's dangerous for the first quarter. i'm still optimistic about the back half, actually. i think we'll see more people working, more earnings. we'll see companies doing better in sales. but right now it's going to be a very tough first half of the year. >> okay. with that cheerful backdrop, this week, macy's, nordstrom, kohl's, jcpenney all have their own problems, but all broadly facing the kinds of problems jan laid out. where will you be looking for surprises? >> well, you know, i think all through the companies you mentioned are looking for comps flat to up around 2% this year. so i think you potentially see some guidedowns for the year, which is the best thing we could hope for. because last year, all of these retailers went into q-1 and q-2 with guidance that was not achievable. so you know, we've started off the year very poorly, as jan said. i would prefer that these companies just wipe the slate clean. and i think particularly for the department store space, it's
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going to be even more challenging in the back half as you're going to see a lot of brands pull out of the department store space or try to take back ownership of their product because they don't want to be at the whims of the promotional promotional environment and wholesale. >> one thing that stood out was the strong job growth in retail we had in first quarter. a third of all jobs in this country created came from retail. then last month slammed to a halt. it was slightly negative. what does that say, was that within apparel? >> people got to the point of saying things may be getting better, looked at data for the consumer, should be getting stronger. we have great energy numbers, great employment numbers, rising wages. and suddenly they realized it wasn't happening. in retailing you can slam on the brakes fast. cut back way on expenses to save this quarter. in retail, you see them do that. they'll come back with strong job growth in the fall, if in
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fact what i said happens and sales materialize. i agree with stacy, you'll see guide downs. >> kate spade reported comps up 19%. if you take out online, 8%. there has to be some retailers winning like that. >> there are. and again, there are signs of some that are doing well, and certainly look at the mall track that continues to be down mid singles, there are things we can do to pull people off line, back into stores. that's one of the biggest challenges. for all of the retailers, even if their traffic in stores is flat this year, people continue to move online. that's a lower margin proposition for retailers. it will be a lot about cost cutting. but you don't get premium multiple for cost cutting. >> one of your picks is jcpenney. >> it is because they're turning around, i think we see a decent
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2017. i agree, kate is a good story, coach, sally beauty, from a low base. and ulta. but most of the mall are not good because the internet is eating their lunch. >> fasten your seat belts. we will have you back on ahead of retail results. thanks for being here. sotheby's seeing pressure after decline in auction sales after the first quarter. is this a sign the art bubble is bursting once and for all? more on that after the break. olay total effects
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sot be's reporting earnings, reporting some weakness in the art market. robert frank has more details. >> good morning. this is one of the biggest two weeks for the art market. all signs point to a market in contraction. sotheby's reporting loss of 25 million. revenues down more than a third due to weaker auction sales. the ceo saying he is reasonably optimistic about the rest of the year, pointing to strong online group, more disciplined
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consignments. a lot depends on big sales this week. auctions total 2.7 billion this year last year. 8 pieces sold over 50 million. sot be's top lot is "untitled." and kristy's was at the high end. the top seller was a sculpture of hitler praying went for 17 million. jeff kuntz had a basketball. and top work is expected to get 40 million. 40 is the new 100 million in the auction world. back over to you. >> very quick question. could it could it could it
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could it be they're not as active, christie's sits alone. >> sot bees has -- >> thank you very much. more from jon fortt what's coming up. >> hey, simon, good monday morning. uber and lift are out of austin after they struck back against regulations that would have forced them to do things like allow drivers to be fingerprinted. is this the new future for those ride services. and tracking apple, two year lows, seeing pressure on that stock. we have new recode editor dan farmer joining us on a lot of issues, including the media landscape. all of that and more coming up.
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