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tv   Squawk on the Street  CNBC  July 14, 2016 9:00am-11:01am EDT

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exclusively around noon. there's valeant today about 2.3%. we had broken the news of that large stock sale by the former ceo. they are out with a statement that says, this is mr. pearson, i continue to believe in valeant. we will have much more at noon. >> for now "squawk on the street" is coming up. ♪ biggest tech ipo of the year about to take place today. good morning, welcome to "squawk on the street," i'm carl kint in a with jim cramer and david faber. a fifth day of kwans is taking shape, futures much higher, looking past the bank of england aez surprise decision not to cut rates. german dax back above 10 k. bpi up .5, the highest since may of last year. our roadmap begins with the market set to open at those new highs, the bank of england
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keeping things unchanged. >> strong showing for jpmorgan, second quarter revenue beating estimates. >> and awaiting the biggest po of the year. first lads for line. stock set to open at record highs. the bank of england leaves rates unchanged but says stimulus is likely to come next month. black rock's larry fink talked about the market rally this morning on "squawk box" sounding fairly skeptical. take a listen. >> here we are we're seeing investors worldwide pausing, we have seen quite a large sum of money being pulled out of equities over the last year and yet we are at record highs. this rally in my mind is not -- i don't think we have enough evidence to justify these levels in the equity market at this moment. >> he does go on to say, jim, that if earnings come in above the minus 5 that everybody is expecting maybe some of these could be justified. >> look, i spent all morning on
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this jpmorgan. why? because jpmorgan the largest bank, you have to stay focused on it. if jpmorgan is any precursor as was alcoa earlier this week as was csx in terms of not being worse than expected as was yum! being better than expected, that's not a vast pab a plea but does cover cinch areas. larry may be correct that it can be justified if earnings come through. this jp quarter on trading, it's been a while since we've seen trading be as good as it was. what you forget, these banks have ways to make money, we often talk about how they can't make money like they used to, but jpmorgan fixed income, plus 35%. i mean, that says to me that maybe larry is right, remember, i want to -- you know, right that we could see upward revisions. quite frankly it was a good quarter. >> it was a good quarter from jpm. also expense reductions were pretty significant there. when you look at overall the net
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revenue up 3%, net interest income 11.7 billion but they took down noninterest expense by 6%, lower legal expenses of course a key part of that because we remember so many quarters they have had significant legal expenses. >> right. >> but also just expense reduction, jim. so, i mean, you know, a company earns $6.2 billion in a quarter that's -- >> that's a lot of money. >> a lot of money. >> people are pointing out that they took a higher reserve on oil and gas. that's not true. okay? in truth they -- because oil went up you didn't have to criticize more loans. they had one big downgrade. i have spent the whole morning on who this downgrade could be and do you know who -- the way that you have to do loans and judge them in your balance sheet, judge them in your reserves, was was someone downgrad downgraded. the only big downgrade this quarter was exxon going from aaa to aa plus. >> you've got to increase the
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reserve to exxon? no. >> well, you would theoretically. i mean, chesapeake was downgraded but it was the previous quarter. in other words, what i'm saying is that i -- those who are focused on this one credit, i have -- i really don't feel that this credit is at risk is what i'm saying. now, exxon, maybe that's too extreme, chesapeake, but chesapeake was done in february. all i'm saying is that oil was good this quarter. >> you said it was terrible. you said earlier in the week we're losing the bear case on the banks and chesapeake -- fcx was going to be your test. >> look, exxon, i mean, i'm just saying that the big material down grades which is what you would have to do in a rating agency downgrade, you might have to take a look at a loan, i'm saying there is no bankruptcy risk to what that loan is and if that's the case we are in good shape. >> double digit loan growth, deposits up 10, credit card sales up 8, right -- >> these are really good.
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>> deposits up 10%. we're talking about -- to me that number -- >> where are they getting that? is that people from overseas deciding they want to keep their money in xyz bank. i said this is one of your worst scenarios that could happen is this is an amazing quarter and nobody else can equal it. net interest margin kind of okay, right? but the fact is the banks are pricing in -- jpmorgan was substantially higher at one point, went down to 53. i don't want to be too granular other than to say i thought it was interesting the bank of england says no, futures go down a little bit. then jpmorgan says yes, i know that because i was stuck in the holland tunnel behind a truck and it broke down, i'm sitting there what do i do? watch the futures, jpmorgan. >> why not? >> bingo, jpmorgan takes the futures up while the features were going down on bank of england. >> we did see a little fade in the futures on that surprise move. 8 to 1, not to cut rates for the
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first time since '09. they did say that august -- >> august. >> -- they will update their inflation and there is a good chance it could come then, but in the meantime the overall resilience of the uk financial system has dampened not elevated the impact of that referendum result. >> yeah, you know, i have to say something that's going to get me -- you know, maybe the uk isn't -- don't take this wrong because they are our allies, special relationship -- maybe they are not as important as we think. i mean, even jamie dimon is not talking about, listen, this is a wholesale change because this happened. >> but it's still a fairly large economy in the world. >> it is large. i'm just saying that -- and that's why i say i don't want to -- i don't -- all i'm saying is that there was -- i'm watching which wiilford this mo and the changing of the guard. and i'm saying, all right, they
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finished this. barclays trading up -- >> how about ppi, .5 core, .4. you have to go back to last summer claims at 254. >> we're switching over here to where if the economy is good -- i'm going back to fink's comments. if the companies are doing better, well, then, maybe we should be willing to pay a little bit for those earnings. do you remember the old days when earnings would go higher and we would pay for that. >> but we had this conversation yesterday and a lot of people seem to be starting that theme we're willing to pay more than 17, maybe we will get to 18, 19, jpmorgan not bad today we will see what follows thee, 1.5% yield on the ten year. i get it. >> yum! we have to wait for the conference call but china was better. you can say, jim, that's a couple chicken wings that were eaten. i'm not going there. china is better. china is better. i'm not worried if the colonel had a decent quarter. >> by the way, into i buddy
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charlie bolello most upside progress the market has made post crisis with no qe in way. >> this is the most overbought we've been since 2009 but it's actually been positive a month later. look, i am struggling like everyone else, larry fink, i happen to like larry, i just love him because he just kind of knows what he's talking about. is it justified? sometimes it isn't justified until three months from now when we realize it should have been justified. sometimes we look back and we say, do you know what, things got better. the gloom that people -- look, it's never going to get better. how many of you have never going to get better? hey, do you know what, in 1942 it was never going to look -- never going to get better. we were losing at every single theater. we won. >> we turned it around. >> we turned it around. >> that's the way it should be. >> why? because we were great and we knew how to make things. >> okay. are we still great?
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>> are we still great? yes, we know how to make things. look, line is coming public today. >> that has nothing to do with us making things. >> we make intellectual property. >> we do. >> it's a valuable thing. we don't know what to do with people who -- the third guy who puts that hamburger bun on the wendy's burger because they now have a machine that does that, i totally get and i'm worried about the psychological aspects but that's none of our business. i'm trying to figure out what i should pay for the earnings at bristol meyers and i saw bristol meyers getting an upgrade today and am saying maybe i would pay a little more. i saw the proctor up. did you see it? they're talking about possible 3, 4% organic growth. i'm talking hair care. >> we did see jpm cutting wynn. >> that was a mistake. that was a mistake. look, i forgive you, i can forgive you for being wrong already. it's all right. >> we do have a couple other names.
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delta tops estimates, revenue comes in lower than expected. yum! did top expectations, misses on revenue. china flat, which is actually seen as a pretty good number. >> it's a win. geez, you know, come on, that's been massively bad. csx, okay, only two businesses good, the light vehicles remain strong and minerals, construction and auto, let's go for that. construction, auto, a big part of the economy. yes, everything else coal, but coal -- hey, we are not suddenly finding new use for coal. >> no, coal is hated. >> in your stocking maybe and even that's request he believe. >> say that again. >> that's questionable, the coal stocking at your house. >> coal volume there down 30%. >> there is a certain point where you just say, listen, that is not going to be our fuel of choice and there's too many -- if you look at the quarter that alcoa had on gas turbines you know that that's just gone away. i had a guy from an outfit that does wind power, wind power is coming on. >> there is a lot.
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i drove through an area of california recently i have never seen too many -- >> palm springs. >> no, up north, the northwest part of the state. >> really? >> unbelievable. by the way, those are enormous turbines, those -- >> do you think they are ugly and hurt birds? you didn't go there? >> i didn't think they're ugly. in a way there's a certain beauty to them. >> interesting. >> yeah. >> anyway, strong dollar did hurt usx for some of these lines, but all i'm saying is if you have a stabilization of bad, that's the next thing toward an inflection point and i'm saying that maybe we're getting an inflection point. you know, europe, a little stronger, china a little stronger. you play that game? >> i'm trying to think through it, jim, that's all. >> you're not doing this? >> don't you feel like there's some complacency, too, and that should be worry some?
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>> the bulls love that. >> no, i mean, you come on and al listen land greenspan came on recently he was not that bullish. >> he was not talking about the equity market -- >> no. >> lectured by rick santelli. i don't want to be lectured. i just want to say that it's possible as a guy who does bottoms up that the earnings could be better. that's not -- i'm not a bond guy, i'm not a trump guy, i'm not a hillary guy, i'm an earnings guy and i'm looking at the earnings, hey, revenue -- look at general mills. did you listen to ken powell yesterday? >> i did. i didn't understand some of what he said but i listened. >> he took the artificial colors out of trix and the numbers went higher. you could say, come on, general mills. every single company that i've -- >> that chart says don't just say, come on, jim, general mills. >> thank you. when you are a food company, a restaurant chain, the biggest minerals maker in aluminum, the number one bank and they are all saying good things and a railroad that says things are
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probably done going down and delta having an okay number and united continental the worst of the worst so to speak having a better number. if i supposed to, therefore, say, do you know what, things are really bad because the fed doesn't know what it's doing and we are all bad and this is bad. >> you're getting yourself going, man. >> i'm stuck with this positive nonsense. and there was a pokemon 300 meters from my house yesterday and i could not find it. >> we're going to talk about pokemon, cowan saying it could be the answer to the american mall among other things. >> this was at a church, right near the church. 300 meters and i couldn't find it. what was i doing? >> i don't know what you're doing. >> i'm on the blue team, you know. what team are you on? >> i'm not on any team. >> you're not? >> no. you will never see me play that game. >> you better get with the program, my friend. the blue team is smashing it. >> when we come back this morning wlau need to know about the biggest tech ipo of the year, a closer look at jap neon
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messaging company line, sometimes called japan's facebook. we will take another look at futures, they're way up. get to other names, consumer reports say tesla should pull autopilot and a lot more after a break. and can you explain to my you recommend synthetic over cedar? "super food"? is that a real thing? it's a great school, but is it the right the one for her? is this really any better than the one you got last year? if we consolidate suppliers what's the savings there? so should we go with the 467 horsepower? or is a 423 enough? good question. you ask a lot of good questions... i think we should move you into our new fund. ok. sure. but are you asking enough about how your wealth is managed? wealth management, at charles schwab.
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biggest tech ipo of the year line is set to debut on the big board and tokyo. the messenger app raised over a billion dollars with 22 million shares in new york, 13 million in tokyo, values the company at almost $7 billion. only by naver and shares in tokyo will begin trading tonight. jeffrey's calls it japan's facebook because even though they face competition from the anyone tend dose of the world it's advertising that is now the focus of their strength. >> it's the only justification for it. when i look at head to head comparison with snap chat you would never buy this thing. you just wouldn't. i'm looking at all sorts of -- thank you, aiden one of my assessment cyst ans, monthly pay users, monthly active users are not good numbers at all. >> compared to. >> facebook. >> even the growth you're talking about. >> if this thing is x you would pay 2 x for fb. >> my understanding is they priced it at 11 times 2017
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ebitda which is not -- >> it's not crazy. >> -- bad. i mean, that's -- like twillio. >> remember, it is the actual way to monetize what's app. what's app does well, as uber does well, as airbnb does well twillio does well. >> also because they did a good job pricing it and making it a value. >> yes, those guys are winners. they're biggers, twillio, but i don't want to get too sidetracked. this thing better do well on advertising or otherwise it will be another overheated asian equity. >> like facebook they're -- >> facebook. >> -- seeing big growth in mobile, the mobile app market. >> yes, definitely. look, are these companies excited -- there's a scarcity of companies in this world that do these things and i could show you total operating revenues are terrific, fiscal year 406
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million, 2013, 817, then 997, some people could say, listen, that's slowing, but it is attracting interest. i just caution that if -- that this snap chat, i wish that thing would come public, that thing is just a horse. >> interesting path, they tried to do this in 2014, then they backed out. they had a range pre brexit and then waited and then actually raised it to a higher level than it was pre brexit. >> interesting. >> yeah. >> yeah. >> along time coming. >> let's stay focused on the fact that there's -- there's -- this is going to -- i'm trying -- there's excitement with this and what that may mean s again, remember if you're looking at blacks ton when is the ipo market going to open? twillio priced that, it's getting a little interesting considering this is july and, you know, most people are supposed to be on vacation.
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>> they are. they are. but you never know. allibaba came in late august. >> i caution that if you like line you should love facebook. love it. >> we should talk more about that maybe a little bit later. >> i think facebook is -- >> you're going on those 2018 earnings like i am and seeing how inexpensive it is. >> 5 bucks a share in '17 people are saying. >> 2018 number that i could use that makes it seem like it's three times cheaper than clorox. >> 1.6 billion users. >> this is an advertisement for facebook. line is an advertisement for facebook. >> we will get cramer's mad dash and count down to the opening bell. back in just a minute.
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all right. things getting crowded here of course on the floor as we await that opening for line. what are where he headed on the mad dash? >> one of my favorite stocks is lulu memen. they had supply chain issues, merchandising strategy, they are all being resolved. chip wilson has been critical of them over and over again. but wells fargo is raising price target. i think this is justified. lulu has the momentum, this is where people are in terms of yoga apparel and i have to tell you that as much as nike, some people are tepid on, bf corp., under armour which i kind of like, this is the star. they have what people want. i've been positive on these guys, not on a takeover basis
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but earnings basis. this could fly. >> really? >> it could still fly from here. they have what people want because they haven't been able to develop what really creates earnings which is how to get the merchandise in the store. they have the right merchandise, you figure out how to make the merchandise correctly, the real guy, the new -- the ceo who has actually not been under criticism by chip wilson who was the founder, he has been critical of the director from the early days. >> right. >> that he has been very critical of. i do have to tell you that this makes sense. i know it seems overextended but it makes sense to me. it's going to go higher. >> that's one of the many names we will be watching. we are waiting for that first trade and that ipo for line or the open of that japanese company. although really its roots are in south korea. >> south korea, yeah. david, there you go. every time we see something that
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resembles like a doll or whatever. >> yes. >> it's always been an inspiration to say, wait a second. >> i know. >> do you remember when the -- >> when i was a little kid that would have freaked me out. >> in your closet, man. >> big head. >> moving around. >> i would run away and cry. we have the opening bell coming up right after this.
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you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in just under two minutes as we await the ipo of line, the biggest tech ipo of the year along with jpmorgan earnings, pretty good, bank of england holding steady, the list of rnc convention speakers is out. vp tomorrow at 11:00 a.m. >> and yum! brands still flying high. i'm telling you this greg crete is doing the right thing. i do believe you are seeing the possibility of an amazing breakup and people should focus on it. up 5. >> recurring speculation that somebody would step up to try to
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buy the china business but that doesn't seem to be happening. >> don't need that. >> i love this airline, move, second day in a row. these companies are building a lot of cash. wasn't as big the cash as delta, but the balance sheets of these things used to be terrible. you have to remember that balance sheets are getting better for the airlines. >> yeah. >> we are at that period where we always do this earnings season, we look at jpm, delta, csx, yum! alcoa. >> jpmorgan is an exceptional bank and the standards there i don't know, the mobile by the way was just amazing. the mobile was incredible and that was a really terrific piece of news. >> with all of that getting ready for this opening bell. by the way, not only are the dow and s&p up four days in a row with multiple new highs in that time, they are on pace for a
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third week of gains which we have not done in about four months. just to give you a sense of how we put the last 10 or 12 trading sessions together. there's the opening bell and the s&p at the bottom of your screen japan based messaging app line celebrating it's opening today. over at the nasdaq delmar pharmaceuticals focused on new cancer their piece. >> what can i say? you just pointed out that litany of earnings that were better and that is inspiring people as is the idea that maybe the ipo market has a little life to it. >> yeah. >> you know? there is a sense overall sense that maybe a level of gloom that had been over our market is lifting. i don't know. i mean, that's not substance, but those earnings are substantive. go back to what alcoa said, trucks in china up 25%, autos
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really fabulous in europe, they talked about construction being really good and a look that's -- it's an important take away. important take away. plus these tech stocks, like you look at microsoft, creeps up a little bit every single day. this matters. the only ones that have not been great, netflix has been bad, alphabet. >> google alphabet hasn't done much of anything. >> this has been a consumer staples market. >> exactly right. that's a very good point and that's not a good enough leader, we need the airlines, you see the rails have been up, the rails were some of the best performers yesterday. i don't think norfolk southern can make their numbers. does it matter? maybe they can in the end. i'm just pointing out that the airlines where your principal course of weakness, they were down 26, 27, 28% in the first half and they are your strongest group in half. the second weakest group was the disc drive stocks an they are some of the best performers this
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quarter already because of sea gate. you are meeting the objections when i used to do selling at goldman, you meet the objections. the objections were the airlines. the objections were the disc drives, the objections were consumer product stocks be so high and they are be rebutted. >> yeah. one objection today regards tesla. consumer reports is out which by the way has given the company great reviews in the past. >> okay. >> they argue that autopilot should be disabled or at least renamed and they criticize the company for basically doing bay at that testing with consumers. too much too soon is what they call this level of automation. >> does anything stop the stock? >> it's unstoppable, i suppose. >> do you think so? >> no, i don't. >> it's very hard to borrow which is the word. for people who don't understand that -- >> i'm still waiting for the master secret plan number two, trying to understand where the solar city deal will happen.
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>> yeah, because that deal is not a great deal, i think, but, look, they did a huge equity offering at 215 and you've made money if you were in that. does that not matter? >> despite all the head winds we could argue in terms of the -- >> cyprus semi, have you been hearing that. >> a little bit. >> since t.j. rogers retired from ceo. >> it's been generally a tone that's said we will see semiconsolidation, but i don't have times. i don't want to share names. i don't know. it's been around for months and we haven't seen evidence it yet. >> that's important because i expect this weekend i'm going to wake up, come in on monday and dave is going to be leading the show. >> i hope so when i've got something good, yeah, i'm looking forward to that. >> come in on monday and it will be all about -- >> nail it. >> i just feel it. >> whether it's monday alias stood, viacom, cabela's.
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>> i will go over a couple of those. >> is there a faber report? >> we will do it here because there's some incremental news on all the names. viacom starting off with that, wanda reported by reuters and then the journal as the potential chinese borrower of that 49% stake which we have been talking a lot about. you may recall a few weeks ago i reported on that people close to viacom said they thought the price was so compelling that anybody would agree to it if they were brought the deal, including of course sumner redstone and his daughter sherry. the change in bylaws at viacom requires that the entire board sign off on any deal involving paramount. of course this is one of the many things they are in court trying to deal with in both massachusetts and more importantly in delaware is viacom. but -- and the numbers -- they had come out and said 10 bucks a share is what he thinks. you can back into a 9 billion
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number mare more on the paramount studio which has been a poor performer to say the least. but does have some decent licensing revenues that come in every year rain or shine and hopes to have a better slate every year as it comes along but it's sort of focused on trying to minimize the risk but they haven't been maximizing the reward at all. we will see what happens because we have no idea whether sumner and sherry have any interest in approving a deal regardless of whether wanda is interested in pursuing that 49% stake. >> would that make it less likely that a less invested cbs would be interested? >> that is the next step once we get resolve whether or not mr. damon and the other four board members are forced off the board of directors and placed with the day of the accidenters that have been announce. >> okay. >> then you get the change in ceo and we will see what happens in terms of a potential anything with cbs. >> got a picture to show you. treasury secretary jaboc lew on
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his way to 10 downing to meet tyler mathisen. big cabinet reshuffle in the united kingdom. >> the jpmorgan call has been going on, jamie dimon has a hoarse voice so it's difficult to hear him but he was asked specifically about brexit. take a listen. >> the most important thing is that we will continue in every single country to serve our clients day in and day out. if it has extra costs so be it. i'm not really worried about it. it would be nice if it doesn't create, you know, huge turmoil. so i'm hoping the eu, you know, is sensible, but we are going to be prepared as marion mentioned, you know, there are a range of outcomes and anyone in our shoes will try to beat each one of them but we are not going to pull back on serving people in italy, germany, france, uk or spain. >> echoed that line a couple times, we are not going to pull
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back in the uk and eu. >> that's good. i mean, look, i hope jamie is okay. it sounds to me, again, that this was a quarter that was supposed to be a bust and it wasn't. >> no. >> and that's what you've got to look for from bank of america next week or citi. >> far from a bust. speaking of busts, though, quickly we should mention valeant has been up and down. >> right. >> mike pierson 4.4 million shares were sold exercised options, another 411,000 shares, he has 3.5 million shares left and that he remains committed to the company's turn around at least in watching it and the progress that they make. >> and bill ackman will be on halftime report. >> yes. >> most likely -- >> defending. >> very good spokesman for valeant obviously. td water house no doubt about
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the pipeline, i'm not making a statement, you know, yesterday i was reporting on andrew lap saying negative things calling it titanic and zero. >> while we've been talking we're getting our first indication on how ln may open. bob pisani is at post 8. >> early indications are that it's going to open up here. we had an indication put up of 40 to 43. this is a little complicated because the initial prices they were talking about was $32.84. so it looks like it's pricing up here. let's review where we're at here. of course this is the big ipo for the year right now, a dual listing in tokyo and new york, it's going to start trading very shortly. they had 35 million shares at 3300 yen. this is a japanese ipo and we're playing by japanese rules so it's pricing in yen. this is a little bit complicated by the fact that we now have a three-day delay in the whole trading operation. so it priced at 3300 yen on
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monday, but in those three days not only is the yen depreciated but the japanese stock market has appreciated. 3300 yen with 5% depreciation in the yen creates a little bit of a different trading mechanism here. the question is how much is that impacting? the overall right now i can tell you is it's definitely on the up side looking about 25% above where it was earlier on monday here. it is the biggest u.s. tech ipo since alibaba and it's the first of my knowledge -- i've been calling around, the first dual listing with japan certainly in anybody's memory, japan is a developed market, we very rarely get ipos from japan. we do get dual listings, hong kong, there are a number of stocks that are dual listings, but this is the first dual
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listing with japan. it is not trading in tokyo until tomorrow at 3300. this will hopefully open the floodgates for ipos. we have another which one tomorrow, pierre food. next week patheon will be coming public, the biggest contract drug manufacturer in the world. and some of the other ones like tall long will be coming as well. right now 40 to 43 and it doesn't look like we are quite close right now. i would say we're probably -- it's not clear, they are still taking orders, it 15, 20, 25 minutes, but certainly a very good sign with the depreciation of the yen still looking indicated 40 to 43 after the monday price of $32.84. i will be here and we will be inside the post talking with tom farley the head of the new york stock exchange right about
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10:00. guys, back to you. >> thanks very much, bob. >> i just want to mention on this jpmorgan. >> jpmorgan, sure. >> people so worried about this oil and gas business. i want to point out again i'm not worried about the credit the company that they say the one company. just not to me a credible thing that you have to worry about in terms of a bankruptcy or anything like that. again, oil and gas being a star, all right? star versus where we were. >> right and the concerns early in the year that there would be massive write downs on the loan book involving oil and gas. >> i feel very confident that people who are worried about the one credit -- i just don't think you have to worry about it. >> it's interesting, citi group is doing better than jpmorgan off of jpmorgan's warnings. >> wells fargo cut back the firepower, didn't announce a buy back, that's going to come up. i think that -- i feel good about this group. i just feel good about it. because it was so low.
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core bat i think will different a decent number. there was a piece about how to make money in china. i just saw one of those line dolls. holy could you. >> carl mentioned monday lease and hershey. we will fit this and monsanto. on hershey we've been waiting to see whether monday alias will come back with a higher number. all of it comes back to the hershey trust where there has been a great deal of focus by others and there has been some changes in who sits on that trust. still a lot of people doubt whether or not you would actually be able to get to a deal first having to get through the board with an appropriate price, 107 certainly was not that, half cash and half stock as we reported. but, you know, in trying to understand the dynamic going on here, people familiar with the situation indicate there had been certainly many talks
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between hershey and mondelez and the management may have believed now was a good time to see whether there might be an opportunity to sell and or because they thought that they could get the approval of the trust. that remains very much unclear. >> that's very contrary to what we know, david. >> that's very much unclear. now mondelez minds itself in the position after having been rebuffed so strongly by the board of directors at hershey in some way hoping that the trust might weigh in and say will you change your mind if they come with a higher bid, that may be fanciful thinking on the part of mondelez. it is fair to say they have not and we haven't heard anything from the company but people close to the situation indicate there is a possibility they will try one more time at least to raise the offer, see if they can get there. as we reported on that day when it first became public they had already made those other offers to the trust to try to get that approval. moving the chocolate business headquarters to hershey, pennsylvania, guaranteeing jobs in the state and changing the
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name of the company to hershey. we'll see. that one is not over. >> neither is monsanto, jim. some reporting by others on the basf, i think it was bloomberg, and resumption of talks about asset swaps or what might happen there. the only thing i would point out here is you are getting a shareholder base that is fully aware that the window to replace directors opens in october and when you have the likes of, you know, whether it's lobe or middle easter or larry robins i'm guessing some of the names are icahn. you go through those names as potentially in there they are not aware and neither is monsanto if they don't get something done with that window coming there are will be shareholders galvanized at trying to replace directors. they haven't going scorched earth, they are trying to get leverage. they haven't gotten higher
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prices my understanding but the talks continue there and clearly as they said in the press release during their earnings there are other alternative transactions continually being considered, including this thing with basf but it would also potentially require a shareholder vote. >> my take away is that you should be buy calls on monday santo and hershey on both of those. that i can e. that's my take away on that reporting that you are so humble to downplay. that's not what i knew before going into today's show. great scoop on both. >> thanks, jim. >> how is line doing? >> i don't know. >> 40.43. >> geez. facebook is 120. >> let's head to the bond pits and check in with rick santelli who joins us from chicago. >> good morning, david. we had higher than expected inflation on the wholesale side and the market in some way did take notice, if you look at intraday of tens you could see the yields have been moving up but really one week chart
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reveals post brexit and all the wrong headedness about the outcome the markets are readjusting back to a world that wasn't predicted. listen to jamie dimon today on what is reported on the call, you know, before brexit he was saying it's terrible, we are going to leave the uk, of course, i'm paraphrasing but that's never the case. you stay where the money it is and the money so far seems to be much less affected post brexit. all the different trade agreements, countries are stepping up to start negotiations. the process seems to be moving along pretty quick in my opinion and the curve did steepen a bit, twos are unchanged, tens and 30s are a bit higher. maybe not the normal course for a hotter than expected inflation number but the short end didn't budge. does anybody think the fed will tighten anytime soon? let's look at one month of two year rates in the german two year. there's definitely been a bit of reversal, worse close around
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minus 70 base points, hovering around minus 65. you can see a similar dynamic, maybe a bit more exaggerated. one year the crb and 20 year. why? everybody is talking about a nice bounce. when you look at a 20 year charter it puts it in perspective. we have a long way to go and the final charter month to date of the dollar index, for all the talk about what's going on in the world they couldn't get that close above 97 of 5, 96.60 that's critical if you are a technical trader. >> thank you so much, rick santelli. we are keeping our eye on post 8 and the biggest tech ipo of the year, japanese messaging app company line gearing up for its first trade. you see the indication right there. we will stick around to see how it opens. today on halftime, as jim said, bill ackman noon eastern. we will talk herbal life and valeant and more. s&p hit 21.66, dow is up 110. we're back in a minute.
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awaiting the opening trade
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for line this morning. let's get back to bob pisani at post 8. >> still indications 40 to 43, carl. remember, earlier in the week it was set, the price was set on monday, at 3300 yen, that was roughly $33, $32.84. the yen was since depreciationed so it's a little less than that. it looks like it will open up here 40 to 43. a number tail winds, pricing at the high end of the range, also retail interests in japan, they are the dominant msnbc injury app service, it was trading higher in the last couple days in a gray market overseas. also the nikkei has traded up this week. so this period where we are not trading for three days, the market going up, bit of a tailwind for it. >> we will come back in a little bit. dow is up 116. right back after a break.
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trading. >> i just think it's important enough to go over again. ackman coming on halftime, this tb securities note is about valeant's pipeline, you never hear about that and the idea that it maybe it sells at a ridiculously low multiple. citron saying it's the titanic. i continue to believe that this kral yent crossfire is very important in terms of what people will concerned about because of the debt. because of the criticized credits oil and gas. jpmorgan, feel so much better about that. this is the $32 billion question. i don't know if the td number is right of what they can earn then people will have to cover their short. believe me i think ackman is going to hit it hard today on halftime. so you've got to watch scott because i really think that this is the crux of what i'm most concerned about. when i see a $32 billion indebted company i feel they have to be able to pay this off. have to. that's what i'm staying close
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to. >> what do you have on mad tonight? >> there's nothing hotter than real estate investment trust, how is it possible that a shopping center -- you this thing has been a horse, don wood a great executive. i'm not believe the strength of the real estate investment trust. people want income and don is the best. let's find out why they can still make money despite amazon and they're killing in. >> that's amazing. >> isn't it? >> as i said always one of the best performing sectors, almost always. >> just amazing and don is as good as it gets. we will find out what is going on. >> jim, see you tonight. when we come back still awaiting the biggest tech ipo of 2016 japanese messaging app line getting ready for its first trade. along with the interview of the company's ceo. discover how a lexus master craftsman turns an ordinary experience into an extraordinary one.
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faber. quick check on the markets which are setting new highs once again. we got to 2166 on the s&p and the dow up 134. transports helping out a lot. >> our roadmap begins with the biggest tech ipo of the year, line. the japanese messaging app will begin trading any minute now after raising a billion dollars. we will speak with the company's co-founder. >> plus the market continuing its record breaking rally, the s&p and dow both opening at new highs. how high will it go? how long will it last? >> donald trump set to announce his vp pick. we will break down the possibilities ahead of that announcement. >> we're awaiting that line ipo over at post 8. set to make its debut at the new york stock exchange and in tokyo by the way. biggest tech ipo of the year. later on we will be joined by the co-founder and chief global officer of line when that opening trade happens. our own bob pisani has been watching the indications over at post 8 and he has a special guest. >> tom farley the head of the
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new york stock exchange joining us now. we are inside the post like we were with twitter and alibaba showing you how things work. nobody else shows you this signs of inside information. how are we doing on the ipos? >> looks good. the ipo priced on sunday night around about $33 a share and right now it's indicated to open 25, 30% up on fairly large volume, the first trade is indicated to be 15% of the total offering size which is a nice healthy size trade. at this point it looks good, bob. >> by any stretch a successful ipo so far. we're waiting for it to open. how long before we can see the first trade? >> i don't know. that's one of our features for our model of opening ipos, we take our time and make sure that you will at institutional investors, retail investors that want to place and remove orders they have the opportunity to do that. we like the price discovery process to happen so when the stock opens it can open in a very smooth manner. >> i have been standing here for almost 20 years explains ipos, but this is a good opportunity
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to show people because we are inside. tom, explain exactly what's going on over there. we see patty, of course, which is designated market maker, they're trying to build a book. what does it mean to build a book? explain what's happening? front of us. >> it's a combination of sophisticated technology with good old human judgment and oversight, the open outcry model. on the outside you have the brokers, they are on the phone, head sets, speaking to institutional investors, you have the designated market maker here gts working with the upstairs investment bank in this case morgan stanley the stabilizing agent and collectively all of those parties are finding the right price to open the stock. >> and of course the book runner morgan stanley, the lead book runner is sitting on their desk, they're getting orders in to buy and sell as well and it's a collaborative process is what i'm saying between the designated market maker and morgan stanley lead book runner. >> absolutely. and it works well. it works well. whether it was alibaba which was the largest first trade of or
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today with line. get that right price with the company so they begin their life in a smooth fashion. >> there are executives from the company running around, harry ruben steen which controls this particular post. we are all wondering is this going to be finally the start of the ipo business opening up? the stock market which is the most important factor in the health of the ipo business is at a historic high, at least in the united states right now, that's certainly got to be a good indicator. you sit on meetings with ipos coming out in the future, what can you tell us? is the ipo market opening up? >> let's face it, the ipo market for the last year has been very, very slow, however, the machine is creaking back to life. we had a day in may where there were four ipos including u.s. today's which was over a billion, we had an exciting tech ipo two weeks ago twilio their stock is now three times the midpoint of their range and today we have line. absolutely things are loosening up, we're expecting another ipo tomorrow, the number of technology companies we are talking to is increasing fairly
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significantly. so people have been looking to the market and they've been noticing that these ipos are better received. so i have more optimism now than at any point over the last year. >> we do have advanced pierre holdings one of the big prepared food companies in the united states tomorrow. next week it's interesting we have got pantheon, they work with all the big biotech companies. is there any team you are starting to see? >> no, it's actually fairly broad based. the one thing is larger ipos, all 23 of the $700 million ipos over the last two years but frankly not a lot over the last six months. there are a lot of companies lining up that are in that larger ipo range. >> i am hearing some early indications -- patty, are we close, patty? >> about a minute or two away. >> i am going told one one minute away from opening right
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now. indications i think remain 40 to 43 so observe we're going to open somewhere right near there. >> 42 indicated to open around about 42 bucks. 42 bucks a share and 3.5 million shares. a very healthy size open in terms of the number of shares and 42 bucks would be up around about north of 25% from where it priced on sunday night. >> here in the u.s. they're trading 22 million shares, two-thir two-thirds, 35 million was the total offering, one-third of that will be in tokyo, two-thirds will be in the united states. 22 million shares, they're going to open somewhere around 3.5 to 4 i think i just heard million shares, that's a very healthy open. anytime you get 10 to 20% of total float at the open that's going to be certainly very healthy and carl, we're getting very close because they are both moving and looking at each other right now. i would give it another minute or so, we will see if we can get this thing open here. patty, are we anywhere close? >> a minute or so.
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>> part of the problem with this is that it's a dynamic process. as they say we're getting close they go to the book runners, morgan stanley, and say, we're ready to close this, are you ready to close it and, carl, some people will come out and i just heard some people out on the floor put in new bids saying we want to add more to that and that will change the dynamic and of course that's why this is a static process, you can't just immediately stop the whole process. >> it's great that we have people in close proximity because that may have been a large order to sell perhaps and so they are able to say, hey, don't open this ipo yet, i have a large order to sell, it's coming in, and that way we don't open the stock at one price, have a large sell order come in and have the stock jumping all around once it's been opened. it's really -- you know, this is where this open outcry element of the model really gets to shine. >> and of course, guys, you will hear this often on the desk, you might have a buyer who wants to buy 10,000 shares at $40, but if it goes up people will call and
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say we want more and then they will say i want 25,000 and will pay up to $40.50. it's a very dynamic process that occurs and that's why you get these delays, that's why you can say we are a minute away and suddenly we are another minute away. people keep changing the bids depending upon the interest. >> the alibaba ipo took i want to say two hours and 20 minutes to open because we had to get it right. if you remember it opened at 92.70 was the number and traded right around there the entire day and closed at 93 bucks a share. that's how you want to begin your life as a public company. that's the goal with line as well. >> with line looking somewhere around tom mentioned around $42 let's sit here and we will talk to patty and toss it back to you guys, as soon as we get over and get close we will get back to you. >> we are not afraid of you going anywhere, bob, you're basically stuck which is just how we like it. >> it's a little early for that. >> meanwhile, you can see the executives getting into position for what is a classic photo
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generally when one goes public, we're surrounded by japanese characters as people get familiar with a platform that is dominant in japan, loved in china and obviously has very powerful competitors around the world. >> and it's going to be a big indication for not just this big deal, which is the biggest tech deal since alibaba, but also as bob mentioned one of the first and biggest ipos of the year. will we see a thawing of that market as tom natural lee indicated. also gives a good test of the public valuation of these messaging apps companies. it's obviously not a pure play, they also get revenue from gains and stickers and advertising as well, about 30%, but clearly it's sort of in a category of its own when it comes to valuation. >> let me just point out priced at $6.6 billion effectively last night, we're look atten aen open above $8 billion. two-thirds of the stock are being offered now, the others
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third will trade tomorrow morning on the tokyo exchange. where are we, bob? take it away. >> hi, guys. line has opened right here 3.3 million shares at $42. line the biggest ipo of the year. the biggest tech ipo since alibaba opening just a moment ago. remember, the early price indications on monday night where it's down around 30 and change right now. patty, we did open at -- >> 42. >> nice open overall. about a 25% increase in the early price indicated on monday. remember, this will be trading tomorrow in tokyo as well. certainly by any stretch of the imagination a successful ipo. guys, back to you. >> meanwhile although shares of facebook are not up by as much, not too far from its own high look at 10 cent today, another name that has benefited from the
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rally as we look at -- and take stock of what messaging means to people around the world. on the one hand they are competing platforms but all into he had that same desire which is to talk with one another but not by voice. >> also in this case of course they're adding a taxi service, they're selling animated emojis and creating characters for revenue which is why you see so many of those characters around here. that's an important revenue stream for them. it's a more complicated business model and there is a number of questions as to why they're ipoing now and what the future will hold for them. an explicit warning on revenue morning forward. as we look to extend that business. >> carl, you mentioned competition and that really is a risk factor if you go through the prospectus as well. line has 218 million monthly average users as has been said on the network before which was grown, but that growth has stalled out a little bit and it's also not even close to m soft monthly average users from
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the competition. i mean, fob has 1.65 million. what's app has a billion monthly average users and facebook messenger which is a more direct competitor here has about 900 million monthly active users, even less actually than twitter, but the hope is that it creates revenue from other, david, streams than just the messaging platform. >> to your point i think one of the key considerations of investors and the one reason why it was priced at 11 times 2017 estimated eebitda is because its growth has been slowing, particularly in terms of how it's been able to add users on a monthly basis and that's been a concern. >> we will take a short break here as we got the opening trade. we will talk to co-founder and chief global officer jungho shin on the other side of this and get you up to speed on jpmorgan's quarter as we are at session highs, s&p 2167.
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markets, dow is up almost a full percent to 18522. remember when it was a story just to get above 18 k. s&p 21 of 7 is the fourth consecutive inter day high. watches shares of line, opening right around -- trading now at $43.36. seventh biggest messaging ann in
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the world dominant in japan but obviously has its sights on a lot of other countries around the world. hampton pierson has breaking news this morning in washington, d.c. >> carl, supreme court justice ruth bader ginsberg has issued an apology to presumptive republican nominee donald trump for her comments in recent days critical of his campaign. this according to a spokesperson for the supreme court just a one line headline out saying that the justice apologies for comments criticizing republican donald trump. of course, this is a story that's been out there over the last two or three days starting with her initial comments to the "new york times," then there were editorials in the last few days critical of those comments. of course, donald trump himself spoke that he was surprised and disappointed putting it mildly, about those comments, but we now do have according to a
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spokesperson at the supreme court an apology to donald trump from supreme court justice ruth bader ginsberg. back to you. >> thank you very much. here at the new york stock exchange we have another record breaking rally. bank earnings front and center, financials leading that rally. jpmorgan reporting that it's beaten on both the bottom and top line today. our kayla tausche joins us with those details having listened to at least one conference call this morning. >> yes, and the reason why we watch the banks is because they are bell weathers for economic activity. from john mccain we got a pleasant surprise for those who feared the worst amid a global slow down, a lot of uncertainty and volatility across the world but jpmorgan's consumer business is resilient. core loan growth 23%, deposits up 10%, credit card spending up 8% and that helps shares of visa, many of whose cards chase issues. the ceo told reporters that as the loan volumes go up, though, both on credit cards and auto loans they will be setting aside
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more in provisions for potential loan losses. on the corporate side, though, the oil and gas sector has, quote, somewhat stabilized, the $235 million set aside for losses there is due to one name the company said and lake said that these losses will continue to be idiosyncratic but more broadly investment banking suffering from that global uncertainty, revenue down 15% in investment banking, companies are borrowing less, doing fewer mergers and doing fewer ipos, equity underwriting suffering the worst which is somewhat ironic given we have the biggest tech ipo of the year happening today. we did see a small bump for the company at the end of the month from brexit, trading around that presentationity vote which helped fixed income specifically, revenues in a unit that's been troubling for wall street up 35%. the full brexit outcome remains to be seen. that word uncertainty was again front and center and here is
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jamie diamond the ceo and chairman speaking to analyst this is morning. >> i think the most important thing is that we will continue in every single country to serve our clients day in and day out. if it has extra costs so be it. we are not really worried about it. it would be nice if it doesn't create huge turmoil. i'm hoping the eu is sensible, but we are going to be prepared as marion mentioned, you know, the range of outcomes and anyone in our shoes will try to be prepared for each one much them but we are not going to like pull back on serving people in italy, germany, france, uk or spain. >> a spokesman for the bank saying dimon had been suffering from a cold throughout the week. the bank saying that its preference is to keep its european headquarters in london. they will have to keep addressing the brexit after shocks over the next few quarters but dimon saying he hopes european leaders will be
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sensible on the way they negotiate this. >> interesting at the put it on the european. >> everyone involved. >> 4,000 jobs was the thick of it he said they might cut. >> between 1,000 and 4,000, up to 4,000. >> let's bring in some analysis here, particularly on the bank earnings side of thing. eric wasser storm joins us now from guggenheim securities. as far as the underlying position of the business had tapered expectations they knew there would be a lower income and sure they have they've delivered that. is the upbeat nature of what they're saying enough to raise estimates for next year? how transformative is it now? >> thanks, simon. that's a great question. i mean, if you look at what drove the beat it was primarily thick trading revenues which were better than what had been very significantly redugsed expectations from around the middle of the quarter and i think the cfo indicated there has already been some temperament of that -- of that volume. so it won't necessarily be run
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rating at that level, but net net if you look at all the other dynamics, particularly the loan growth it does suggest some moderate upside to consensus earnings which currently are $5.60 for a year. >> all the bank cos are praying for interest rate rises elsewhere around the world. you see it's obviously followed through as we await the other big names to report over the next couple of days. >> what you saw at jpmorgan, for example, was their net interest margin compressed by about 5 basis points. our expect tapgs was a compression of 4, the consensus expectation was a compression of one. so a bit worse on that front. they still were able to drive net interest income higher by virtue of the balance sheet expansion and i think that's probably the formula that other banks are going to need to rely on, too, to grow loans in excess of the compression in their margin to generate top line growth. >> eric, we did see a small but positive bump in the trading unit which you mentioned on the back of that ex brity trade.
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tons of volatility in the days during and that followed that vote, but jpmorgan was one of the only banks that was fully open for business around that event. a lot of other banks had limited trading activity to try to stem voluntarily timt. do you think we will see a follow through from that across wall street or do you think that that's a jpmorgan-specific phenomenon? >> i think we will probably see that from all of the money center banks, certainly any lajer pick liquidity provider and market maker globally was fully open for buness, maybe some of the more secondary and tertiary trading partners were less so. so i certainly think this is probably a positive read through in this period for names like goldman sachs or for names like -- like citi group who have large international thick businesses. >> i mean, that trading highlight that you mentioned on fik was that the big foreign exchange move on brexit seasoned
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is that income sustainable here? the currency markets are moving more volatile lately than they have been but nothing like we saw after the brexit results. >> the biggest driver of the european union was from rate products but currency products certainly contributed. i think we can say that the macro complex was definitely a big driver of the year over year fik improvements. no, i don't think that that's necessarily sustainable because you probably don't see that -- that flurry of volume as you saw right at the end of the quarter but it does suggest that the run rate of fic may be a big better than what were clearly very significantly reduced expectations coming particularly out of the incredibly soft first quarter which is typically the strongest. >> let me come back to what happens in the wake of the brexit vote. the comments today made on the jpmorgan conference call are in the context of a front page article on the ft market section today that says there is a great deal of dust frags in london from the treasury and other bankers that they are going so
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press mystic or being negative about the situation. the argument comes back that's not their job to cheer lead. what will happen with jobs moving forward if the banks can't passport what they offer to the rest of the european union? clearly there will be job losses in london, will they recreate those job loss toss serve clients elsewhere or could there be a trimming back in answer environment where they want to cut costs anyway? >> well, to the extent that there's job losses i don't think that that would necessarily have much to do with brexit. i mean, generally speaking as you point out, simon, many of these institutions are, in fact, reducing head count more secularly because of cost pressures. as it relates to the brexit issue in particular i interpreted jamie dimon's comments to mean that they intend to provide all the services to their clients in continental europe than they do currently. if that's reducing more personal
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to hire personnel in other european capitals i suspect that's what they will pursue. >> thanks for the analysis. we're keeping a close eye on the biggest tech ipo of the year it has just begun trading at the nyse. going strong line up 31%. we sit down with the co-founder and chief global officer for his first cnbc interview when "squawk on the street" comes back. the dow is up 154.
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the biggest tech ipo of the year line is now open for trade here at the new york stock exchange. joining us is the company's founder and chief global officer jungho shin. congratulations. >> thank you very much. >> i've got to say between the market setting new highs and pokemon madness your timing is unbelievable. >> yeah. >> can you believe it? >> perfect timing and unbelievable, yeah. >> investors are still getting up to speed on what line is here in the states. >> yeah. >> how do you describe it and how do you describe how it's seen in japan?
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>> so line is a messenger service about five years ago so -- but nowadays every japan users and taiwan and thailand users enjoy every day line service. if you see anyone, i mean, in tokyo who has a smartphone they are touching our line service. we try to evolve our service into a kind of content service and auto service and a one stop service. >> is the mission to go deeper on the advertising model there or expand geographically into other countries maybe here? >> in short term view we try to focus on expanding the domain not the geographic expansion. i mean, the country is our main focusing point. >> why has the growth in the user base slowed over the last
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year? >> we changed our strategy to focusing on the country so we aim to be -- expand our domain. >> my other question was on the macro economy. i mean, we have seen wild swings lately when it comes to the japanese stock market and japanese yen. how much of a risk is that that you get judged on abanomics and the volatile factors of the market? >> basically our service is kind of a custom-based service. we don't have a great affect from the macro view economics. >> i'm interested that the idea is to deepen the service and i think you said rather than to expand to other countries. so there's going to be music and video streaming, mobile payments, taxi hailing, a low cost mobile carrier in japan. >> yeah. exactly. >> what happens if one of the other big messaging operations takes your messaging away from you, takes the people away from you and leaves you with a much
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more costly structure that hasn't penetrated any other countries, isn't that a danger? i appreciate that you are in indonesia and other associated regional countries but it seems a risk in that strategy. what would you say to that concern? >> we have a kind of trend and evolution. we start from messenger domain, but every smartphone user needs another game service. this is a one stop service. there are so much applications to find and searching so if the users can serve their needs on the one stop service i think we can satisfy users. >> we see these cartoon characters here. this is very important to the business model. >> yeah. >> you're selling these for people to send. >> yes. >> at up to $6 a pop. can you explain to us how that works and what the long-term value is in that? >> so i think one of our key
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features our services as you mentioned the stickers, cartoon stickers. so everyone enjoys -- tries to communicate and enhance their relationship with their friend, especially the family so the sticker is a very useful tool especially initiate the communication. that is why our users, i mean, are willing to pay for this kind of sticker. if you use our sticker you can enjoy. >> is that something unique to the japanese market or do you think that that culturally will translate into other markets as well? >> basically i think the smartphone user is similar across the country, but in case of japan and other asian countries, the environment in terms of smartphone and their user behavior is more advanced compared to other countries. we believe our module is the
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best and bolder and we can adapt it in other countries. >> you think there will be willingness on the part of people to spend stickers in other countries as well. >> exactly the same. >> we've seen other ipos come and go that were character driven. >> yeah. >> and it was a fad, right? >> yeah. >> the cost of renewing those characters or the games was expensive. are you worried about that? >> as you mentioned, i mean, the -- let's give an example. pokemon go, it's another example of the trends and power of intellectual property. so i think they are keeping -- even though the users is purchasing the pokemon go is ten years or 20 or they just -- i mean -- it's in their childhood. >> you don't think pokemon go is a fad, the new game? you think it's here to stay? >> yeah. the important thing is the
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characters. >> are you working on an augmented reality game with your characters? >> actually, we are not considering yet, but i think the important point is augment -- the other thing is important, but the more important point the casual game so every one users in case of casual game everyone enjoys that. in terms of day to day users pokemon go already, i mean, yeah -- >> can i just ask you finally what the future of the company is. your own buy the korea -- it's a korean ownership from the internet giant mava. they will still own 83% of you today. why are you ipoed today? just to get a valuation? why are you done this tonight? >> our parent country, the companies, they don't need any of our shares, but i think the
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parent country wants to realign and jump up another next step. i think this kind of ipo can accelerate ourgrowth. yeah. >> we appreciate your time. we're going to be watching tokyo tonight. >> yeah. >> jungho shin, thank you so much. >> thank you so much. >> co-founder and chief global officer of line. certainly a strong day for the markets to ipo. as we head to a break let's show you the action here. the dow is doing the best of the major averages up 153, s&p 500, though, also on track for setting another record high. we're going four days in a row for gains for the dow and s&p. the nas back up three quarters of a percent as well. you're watching cnbc with the dow up 152.
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is your cnbc news update. treasury secretary jack lew arriving at 10 downing street to
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meet with phillip hammond to discuss britain's decision to leave the european union. lou has said the process must be transparent, pragmatic and in a smooth manner. francois hollande says france will not extend the state of emergency put in place after the november 2015 terrorist attacks. it will end on july 27th. he says it makes no sense to extend the imagine definitely. bernie sanders is now an author. he signed a deal with thomas dunn books to write a book which is set to come out on november 15th, a week after election day. it will include both his policy ideas for the future and a look at his strong run in the democratic party. and today is national hotdog day. declared each year by the national hotdog and sausage council, it's celebrated on the day the council hosts the annual hotdog luncheon on capitol hill. the council estimates baseball fans will consume nearly 20 million hotdogs during the baseball season.
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and that's our cnbc news update for this hour. back to you. thank you. let's get back to the markets now. we are looking at the bullish momentum continuing. the s&p and the dow continuing their record setting pace on track for their fifth straight day of gains as investors shrug off that surprise decision by the bank of england deciding to leave rates inn changed. joining us is neil dwayne at equity europe and global stat jis at allians global investors and joe quinn listen at bank of america's global wealth and investment management. neil, does this bullish momentum and the fact that we haven't taken a pause in the last few sessions catch you by surprise even when we get a major central bank surprise like this morning. >> i would say yes. the underlying narrative is the markets are expecting more fiscal stimulus from the uk and japan, i think they are optimistic of infrastructure
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spending next year from whichever presidential candidate wins, but i think what you're seeing particularly in the u.s. in the bond and equity markets is the flight to safety out of oou europe. the accomplish have moved toward economic and trade unsermt. the political uncertainty is in europe and will stay there and i think the u.s. is a save haven. if you get good earnings i think the markets look okay. >> joe, if you dive into this market you see that financials are doing the best, jpmorgan earnings were good, potentially the bank of england holding off is also good news for the banks, industrials and technologies. some of the laggards are coming up on top. how important is that rotation right now? >> well, it's important, because it shows a cyclical rebound. they are doing better on the expectation when neil talked about better growth next year, i'm not surprised the cyclicals are pulling ahead, i think that
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will be the story for the summer. >> is that what you're recommending, neil? >> certainly from a european perspective we think the financials look very difficult. i think the u.s. they look stronger in terms of their capital perspective, but i look at the jpmorgan numbers i see flat earnings, they will be flat for the foreseeable future. >> joe, the market action is really quite extraordinary, if you look at where we've traded over just the last week, for example, on the s&p, financials are now up 5% over the past week. we're bumping up against these year-end targets. i wonder if everybody might be positioned wrong or thinking wrong about where this could be and it surprises to the upside and therefore those that are maybe too cautious or reading too much missed that opportunity and whether this is an inflection point people haven't expected. >> well, simon, i think the inflection point was the brexit and then we saw the market swoon then we saw the bounce back. the inflection point was i think the expectations in the market a
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more global if i say wall reflation coming out of the response to what we're seeing in europe and if a pan and the united states. i think we have more upside. >> what about the employment report, though, importantly on friday that this economy still seems very strong, that ee lace a lot of concerns doesn't it for an engine for growth? >> it does, simon. as you know it was one month, the previous month wasn't that strong but i do think companies are hiring, the employment numbers look good, the consumer is leading the way, we need more capital investment but i think we're still in that 2.5% growth rate. if we can bust above 3% growth in the united states we have more upside in this market, financials, industrials really across the board. >> neil, there has been this bearish narrative that has been pervasive throughout and still continues. i wonder how much of it is big name investors, we were talking about yesterday like carl icahn and bill gross and jeffrey
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gunlock. it does field like the bond and credit guys are more bearish than the he can withity. >> i think that's always true. but the bid to treasuries is the save haven purchasing from japan and europe. what i would say is we are in year seven of an economic expansion, this is not a strong recovery, this is the weakest recovery on record relative to everywhere else in the world u.s. has looked very stretched on valuation. >> is it a flight to safety or is it simply a desire to try to get a yield somewhere in answer environment -- i hate to come back to this again with the central banks and remove the yield everywhere else. does that represent a flight to safety and fear about the economy here or is it a technical overlay from what other people are doing in other countries? >> i'm not so sure about the comic-con sequences. there is a lot of money that wants a return on its money. when i meet your clients here in the u.s. all i hear is the s&p has gone nowhere for 60 months. they can buy a 5% utility, it's
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yielding 4%. it's made a huge boost to the s&p. >> we're trying to figure out if that's changed over the last few days, yum! csx, alcoa, jpmorgan are all getting positive responses so what were better quarts. >> we are expecting the whole session to be down 6%. i think it's not as bad as people are fearing, we haven't had many profits warnings coming into this one. you can't construct a hugely economic positive but can construct more of the same. if you have a eld. a bit of earnings growth, emerging markets are doing well because the sovereign debt markets in asia field 8 or 9%, your u.s. high yield market yields 6. i think there's yield out there you are not not going to make 30% on your money in seconds as some of the ipos are doing. >> got to be in at the start on the ipos. >> like today's. gentlemen, it was a good debate. thank you. later today on the half noon eastern bill ackman talking
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herbal life, valeant and a lot more and there is a lot to talk about today. bill ackman on the half at noon eastern. as we go to break get a quick check online at 43, way above the pricing and we will see how it opens in tokyo tonight. back in a minute. ♪ (music pla the first stock index was created over 100 years ago as a benchmark for average. yet many people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? it's time to bench the benchmarks.
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with the stock market getting back on its feet and hitting record highs will investors lose their taste for gold? we will talk about just that at "trading nation" more "squawk on the street" coming up.
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down at the stock exchange we're bouncing below those fresh record highs today. let's send it over to chicago and rick santelli for this morning's exchange. >> thank you, simon. good morning and good morning to my guests today, peter bookfarth. thanks for taking the time. >> good morning. >> let's go through the chronology of data this morning. give me your thoughts both on carney not doing anything, which you and i both happen to think is by far the right thing, and
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of course on the wholesale inflation front with the higher than expected ppi. >> i applauded carney for not doing anything. the pound is down dramatically since the vote, yields with down dramatically. there was no rush for him to do something and i think he did the right thing by at least saying let's see how these things play out. he did likely say we're likely to cut in august. with benchmark rates at 50 basis points it's not like he has much room. he sees what's going on in the japanese and european banking system. to say he's playing with fire by trying to cut interest rates further from here. with ppi it certainly ran hotter and it's commodity prices that are beginning to show up in the numbers. you have sticky inflation, a rise in commodity prices. people don't pay attention to the journal of commerce index but yesterday it closed at near a one-year high and that is almost 20 industrial prices, everything from burlap to rubber to crude oil to aluminum to
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ethylene. and this whole deflationary type story we're getting told about and seeing in bond yields, it's not certainly evident in that particular index and i think that's why bond yields are trending a little higher today. >> and finally, peter, the reason i think i like you so much is that you really call it the way you see it and that's very rare nowadays, and to that end, you know, i think that the central bankers are the systemic risk. let's play a game. in mario draghi says, listen, gang, world, that's t we're done with the stimulus even though it isn't stimulus, we haven't going to do it anymore. would the world end, peter? would that be a good or bad thing? market turmoil is to be avoided at any cost but the long-term price is absorb tant. >> it has to happen and it would be a good thing. why he, we would have a short term tantrum just as any kid would have when they're told they can't have any more candy
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but over time we need to vul can a rise monetary policy. we need to reverse what i consider insane policy. with mario draghi interest rates has done then he has to reverse this which would be painful in the short-term but it's desperately needed for anyone that has a long-term time horizon. >> and finally pier pressure. we both grew up at some point and there's a lot of peer pressure that one normally wouldn't do. is the peer pressure too much for them to do the obvious right thing. yellen said that, is it possible. or am i thinking of a dynamic that never will occur. just bernake flies to japan and everything we have done over all
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of these years and everything the japanese have done and let's continue to do even more of it. so bernanke's trip there tells you how these central bankers have learned absolutely nothing. >> writing for economics in the new york times and maybe that's the next job. thank you very much. sarah back to you. >> that's a new one. thank you, rick. >> donald trump getting ready to announce his pick for vice president. we'll break down the possibilities for you next. stay with us. you're watching squawk on the street on cnbc.
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>> donald trump posting on twitter that he will announce his vice president pick at 11:00 a.m. tomorrow morning. john joins us with the latest. who do you think it will be? >> my money is on mike pence. we'll have to wait and see and now donald trump, rick was talking a moment ago about peer pressure. donald trump has peer pressure and time pressure to make this pick. let's run through the front runners. first of all there's mike pence. governor of indiana. solid social conservative. younger among the potential
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choices and somebody that would be solid and favored by some of the campaign strategists with donald trump. then you have newt gingrich, former house speaker, he is the candidate of jared kushner, donald trump's son-in-law. and also a hot candidate and and then finally got chris christie who has a temper mental affinity. he was the first former 2016 candidate to come out and back donald trump. interesting pairing potentially there. now we have also gotten in the last few hours the convention speakers for donald trump. pretty expected line-up of speakers. people like tom cotton a raising star from arkansas, scott walker, ted cruz, some of donald trump's family members, his children are going to speak. you also have some business
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people. harold ham the oil and gas exec you tiff who is going to be speaking. dana white, a wrestling executive. you have tom brock who is the investor from california. the venture capitalist that's been in the news a lot lately. all of these people are going to try to give trump some entree into the business community. he needs that heading into the fall. >> what is the primary focus at this stage? is it to appeal to the swing states or the country at large? >> donald trump needs to appeal to both. he is trailing hillary clinton. it's a relatively close race but he needs to get his republican numbers up and he needs to get his independent numbers up. >> see what happens tomorrow. john, thank you. john harang getswood in washington with the latest. now over to john forte with a look at what's coming up next on squawk alley. >> good morning. we'll continue to track this live ipo now up some 30% from
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where it was supposed to open and then we have emmy nominations that are going to be out and how that's going to effect streaming services and their prospects going forward and finally we have the comedian extraordinary and brexit opponent. all that and more coming up on squawk alley. when it comes to healthcare, seconds can mean the difference between life and death. for partners in health, time is life. we have 18,000 people around the world. the microsoft cloud helps our entire staff stay connected and work together in real time to help those that need it. the ability to collaborate changes how we work. what we do together changes how we live.
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good morning it is 8:00 a.m. at netflix headquaters out west and 11:00 a.m. on wall street and squawk alley is live. ♪ ♪ >> good thursday morning welcome back to squawk alley. john forte and kayla at post 9. joining us is the business insider and ceo, top story this morning, japanese messaging app


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