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tv   Squawk Alley  CNBC  May 22, 2017 11:00am-12:01pm EDT

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industrials one of the top performing sectors in the s&p today. aerospace and defense stocks are leading the charge on the heels of a $110 billion deal with saudi arabia. lock heed martin is up 2%. boeing l-3, general dynamics among the biggest gainers. also the plane and auto parts supplier struck a deal ahead of its first shareholder meeting later this week and is up 1%. with that, back downtown for the start of "squawk alley." guys? >> morgan, thank you. good morning. it is 11:00 a.m. at ford headquarters in michigan, 11:00 a.m. on wall street. "squawk alley" is live.
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good monday morning. welcome to "squawk alley." jon fortt, sara eisen and myself at post nine. the markets up 63. joining us today, re/code executive editor cara swisher. first we want to get to phil lebeau for more on this ceo shakeup over at ford. phil, good morning once again. >> thank you very much. we will be talking with bill ford jr., or actually bill ford, the executive chairman of the ford motor company, coming to us from the company's headquarters discussing this decision in terms of dropping mark fields as ceo. he's being replaced by jim hackette. jim hackette, formerly the ceo of steelcase, board member at ford for a number of years and then took over the smart mobility business about a year, maybe a year and two months ago, and he now will be at the headquarters and we heard from him just within the last hour,
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saying look, we need to move faster, we need to make our decisions more unified as a company and as part of that, we are going to be talking with bill ford about what happens next for ford and about this decision, how quickly they decided the ford board decided because there's already reporting out there they have been mulling this over for some time as far as making a change. >> phil, we just heard from robert frank about the ford family and obvious frustrations over the stock price. is the read this morning that this move is to patch up that stock, or to truly graduate the company into a new era of mobility? >> the read is that it's a combination of factors. there's no doubt that the lagging stock price played a role and that's a key factor here. we are going to be talking with bill ford about that. the other issue here is ford's lacking the type of vision and communication with wall street that's needed to make investors
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excited about the future. a good example is they had a meeting with investors and analysts i want to say a week and a half, two weeks ago and a number of analysts afterwards came away saying a lot of talk about vision for the future and products coming down five, six, seven years from now but nothing tangible. that's what ford needs. ford needs something tangible. >> i wonder how much, phil, tesla is an elephant in the room here, surpassing the market value of ford and gm just this year. >> huge factor. huge factor. on top of that, when you look at where tesla is in terms of future technologies, you will hear this argument from ford and from others in detroit, we're working on technology that's as good as what tesla has and you will be seeing it in our products soon. well, look what tesla is doing. they have these products that are out there with auto pilot, the model s and model x, and while some people will snicker at them and say look, they haven't been tested all the way and they were rolled out before they should have been rolled out, the investor looks at that and says these guys are going in
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the future with the technology that's going to work. where's ford? where's gm? where's fiat chrysler, the other auto makers of the world? they are all working on it but we see most of the proof, if you will, from tesla. >> phil, thank you for that. busy morning for you. what a story. phil lebeau in chicago. see you in a little bit. let's bring in cara swisher. once again, we are back to this conversation about whether the new era of mobility's going to come from detroit or silicon valley. >> right. absolutely. it's been the ongoing debate. it's interesting because a couple years ago, you recall we had -- two years ago, we had mark fields at code and he didn't do very well. one of the reasons was everybody didn't think he had an articulate vision of autonomous car driving. it was a tough interview for him. >> i wonder if you see any parallels here between the ousting of mark fields, bear with me here, and the ousting of terry simmell at yahoo!. part of the hit on him was that
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he was too much about himself and yahoo! wasn't google. is this about ford not being tesla more than it's about ford's actual results? >> well, i think it's the question of what do they have to show for it, just as the previous person said. there is kind of a weird market valuation situation with tesla being bigger than ford because ford has much bigger revenues. like all these companies, entertainment companies, it doesn't matter what you are, are you part of the future, where it's clearly going. are you doing what netflix would do. everybody made fun of netflix, now they don't make fun of netflix. everybody does what netflix does. the question is are you really committed to where it's going. it's really going into autonomous vehicles. whether it's in a testing phase or you will have to eat a lot of revenue to get there, you have to have something to show for it. ford never made that google deal. they had talked to google. there was some back and forth, it wasn't pleasant between them. they never made it a big deal
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with a company. they just set up an autonomous vehicle unit here in silicon valley but it felt more like show than actual and what attracted the engineers, this is a race for the engineers of which there are a limited amount to create these cars, so i think it felt like they probably weren't far enough long and at the very same time, they weren't selling enough trucks which of course is their business. if you can't do either of them, you are in kind of trouble. i don't think you can just do the autonomous part because that is for the future, but you definitely have to show some sort of progress there. >> there's also electric vehicles, ride sharing companies, all these sort of disruptive forces coming together. you mentioned google. how threatened should detroit be by google and apple and some of these other big tech companies with now a lot of scale and a lot of capital infringing on their business? >> you know, everything is not like unicorns and rainbows there. they are having trouble. i talked to google and their
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engineers, uber especially is having a lot of trouble in this self-driving effort. a lot of political problems, a lot of experimental problems, all kinds of things. but they are doing it. they are creating the mass to create whoever's going to do this. obviously tesla is way ahead because they have stuff on the road, they have had accidents and issues and everything else. at the same time, they are moving towards these vehicles. same with mercedes. i have driven in several mercedes cars and it's a question of who commercializes it, gets it on the road. but you have to do these experiments before that. the question is, has ford, ford has been the least aggressive. gm has been making deals although obviously something has gone awry with its relationship, google just entered the picture there. you have to be really knee-deep in this right now at this point if you have any hope of being part of the future. that's the question.
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i wouldn't want to be an automaker ceo because you have to live in the present and also live in the future. kind of like tesla. jim hackett is an interesting choice. we love his chairs, by the way. but you know, he's an interesting choice. he certainly does yurunderstand where technology is going for sure. >> i wonder when you think about the technology tesla has today, but the logistics and operational structure and manufacturing underlying core business that ford has, you think musk would trade places with in this case hackett today? >> oh, i don't -- i think he likes just where he is. i suspect he likes just where he is. what an interesting life he has, right? he's on the cutting edge of things. the problem they have is getting these cars out there and working properly. >> hey, kara, i'm sorry, we have to interrupt you.
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we want to take our audience to where president trump is now talking to prime minister benjamin netanyahu. >> no matter where we go, we see the signs of iran in the middle east. no matter where we go, whether it's syria, where we were forced to shoot the 59 missiles a few weeks ago, no matter what area we're in, we see yemen, iraq. no matter where we are, we see the signs, every sign, whether it's soldiers, whether it's money and guns, it's iran. instead of saying thank you to the united states, they now feel emboldened. maybe they figure they were so good, they could do it. they can't do it, believe me. it was a terrible thing for the united states to enter that deal and believe me, iran will never
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have a nuclear weapon, that i can tell you. >> the intelligence cooperation is terrific. >> thank you. >> just so you understand, i never mentioned the word or the name israel. never mentioned it during that conversation. they were all saying i did. so you had the story wrong. never mentioned the word israel. >> thank you.
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>> let's go. >> everybody out, please. >> there's the president, first foreign trip. obviously the second leg having visited saudi arabia now to israel as netanyahu himself tweeted this morning, first time a president has made israel part of the first foreign trip and again, the president turns to comments about iran, saying they could never be allowed to have a nuclear weapon, echoing things he said the past couple days. >> little bit of a press frenzy in that room between the american media and some of the israeli media shouting. couldn't quite make out what they said. clearly, it's an important symbolic moment for prime minister netanyahu and his highly touted friendship with president trump, and the united states. i did not realize that, that this was the first time israel was part of the first official
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foreign visit by a u.s. president. that in itself is symbolic >> we will see the president in the next hour, of course, to the degree we get pictures we will take that live. back to phil lebeau, who is now with ford's executive chairman, bill ford. >> thank you, carl. let's bring in bill ford from the ford motor company headquarters in deerborn, michigan. thanks for joining us on a very busy day. let's start first off with the decision to fire mark fields. why now, and for how long had you and the other board members been discussing the need to replace him and bring in a new ceo? >> well, first of all, i didn't fire mark. he chose to resign after a discussion he and i had on friday. i think that's very important. but you know, we only decided on friday that i would go and talk to mark, so i did and we reached this conclusion and then we moved forward with jim hackett. >> susquehanna capital is out with a note today, raising the
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question that so many people are raising today and really, you are the person who should answer this being the person who speaks most for the ford family. how much of this decision is driven by the low stock price and the ford family saying enough, we need this company to do better? >> well, you don't make a decision like this based on those kinds of things. frankly, this was a board of directors decision, not a ford family decision. but there's no question that all of us were acutely aware that the stock has been languishing. and but also, that this is a time of great opportunity and great change for us. and we need to be quicker in our decision making. we need to have clarity in our messaging and in our communication, and that's something -- we also need a leader who has transformed a company before. you know, just as when i brought in elmalaly, he was the right man for that time.
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i believe if you look at jim hackett's track record, you will see that the transformational leadership, you know, when he ran steelcase, they weren't the number one manufacturer and they defined themselves as a furniture manufacturer. he said no, let's reimagine how the work space of the future's going to be. he did that, grew the revenues and took them to the number one spot in the industry. so we really need that kind of leadership in this time of great change. >> you talk about moving faster. two-part question here. first of all, did you convey your frustration or the board convey its frustration to mark and the other executives at the company that you weren't moving fast enough, and second of all, when you talk about moving faster, does that mean hey, we need to be quicker about deciding certain parts of the business are just not worth being in anymore, and we need to either sell them or shut them down? >> well, to the first part of the question, i really will never comment on any board discussions.
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it's just not something i will do. but i will tell you that yes, we are taking a very hard look at all the parts of our business that create value and those that don't create value. and those that don't create value, we can't continue to invest in them. >> we just had on kara swisher, who i know you are familiar with. >> sure. >> she made a point that out in the silicon valley, ford is viewed as being quote unquote, one of the companies that's really not doing a whole lot despite how heavily you guys are investing out there. given that, given the fact that jim hackett was in charge of the smart mobility business, do you redouble your efforts there, or do you sit there and say we only give it x amount of time before we have to make some hard decisions about how much further we invest in things like autonomous drive vehicles, electric vehicles, et cetera? >> well, no, no, no. i would argue that there was a report out last month that said ford was the leader in autonomous vehicles. a group that had studied the whole av front and came out and
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said we were furthest ahead. look, we have been working on avs for ten years. we farmed -- formed argo ai, a key player from google and from uber, and they have now ramped up and -- but we are just not talking publicly as much as some companies. partly we don't want to tip our hand and partly, we want to make sure when we do, our messaging is very crisp. i feel actually very good about what we're doing. if you look at ford smart mobility didn't exist just over a year ago. jim hackett came in, started it. we bought chariot, there were six people. now we are rolling it out around the world. it's growing tremendously. we are building other services that we haven't gone public with which we will at some point in the near future. so i'm actually very pleased with the progress we're making. but you know, there's always more to do and speed is important. >> so will we be hearing more in terms of more benchmark targets
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in terms of saying this is what we have and when at we will produce? >> we will. we also want to make sure that we are ready to talk about it. it's easy to -- a lot of companies throw out these big statements and then years later when they don't come to pass, they kind of shrug and i think credibility is very important in this. so we want to signal what we're doing. we want to put specificity out there. we also don't want to necessarily tip our hand competitively on all the things we're doing, either. >> last question, bill. jim hackett was talking during the town hall just a few minutes ago about a better vision for the company, almost a second version of one ford, not one ford being rebranded, but streamlining the company, if you will. do you expect that you will be a leaner company under jim hackett? >> i really think that our entire company needs to really
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look at -- it's interesting, phil. if you look at kind of the old model was ford's smart mobility would be the innovation engine of the company but the entire company needs innovation. if you look at artificial intelligence, 3-d printing, robotics, deep learning, all these things that are either here or coming at us, you know, they can profoundly help change all parts of our business. that's why you are not going to hear us talking anymore about the emerging and the core. it's really all one ford motor company and it's one ford motor company that needs to embrace change. >> bill ford, executive chairman of the ford motor company, joining us from the company's headquarters in deerborn, michigan. first on cnbc. guys, you heard it from bill himself saying they need to move faster, this is a company that to a certain extent needs to reinvent itself. let's see what kind of results we see from ford on that front and what it moons eans to the s
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price over the next couple quarters. >> important interview on an important day. stock hanging on to a 1.5% gain. phil lebeau in chicago. when we come back, a quick check on the markets. dow up 80 points hanging on to its gains. when we come back, they have been called the google of genetic testing. we talk to the ceo after this. finding time to get things done isn't easy.
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but we've got the digital tools to help. now with xfinity's my account, you can figure things out easily, so you won't even have to call us. change your wifi password to something you can actually remember, instantly. add that premium channel, and watch the show everyone's talking about, tonight. and the bill you need to pay? do it in seconds. because we should fit into your life, not the other way around. go to illumina is the biggest maker of genome sequencing equipment and has been called
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the google of genetics testing. shares are up tlep37% for the y. joining us is francis desouza, the ceo of i lumina along with meg terrell. >> thanks for being here. >> good morning. thank you for having me. >> in january you announced your new sequencing machine. tell us about what growth this machine will bring to illumina, what this does that's different from previous models. >> it was a hugely exciting launch because it represents the most powerful genetic sequencer ever launched. at the same time as it's the most powerful, we also released it at a price lower than our previous machine. that we have done is give access to this huge power of genomic testing to a vast majority of labs out there. we believe that will drive a whole set of new genomics research going into the future. we have lots of labs that are interested in learning more about how genomices impacts human health and complex
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diseases like schizophrenia, autism. we expect to unleash a whole new set of research that will fundamentally improve our understanding of how health and disease works and then ultimately, improve our effectiveness in the clinic. >> how is it going with the new machine, with existing clients replacing older models and new clients coming on? >> as you start from q1 results we have been pleasantly surprised by the strength of the demand. we always knew it would ignite an upgrade cycle from customers that had our older machines and that demand has been strong. we also saw demand from customers that had our previous high end machines, the x. we were expecting those customers to have a little longer to look at the machine. there has been good dmaened fem them. we are also seeing customers that understand what it could do for their business. some customers are new to see kw sequencing all together. >> -- driving growth in your
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business? is it the 23 and mes, individuals for the first time getting a sense they can really delve into their genetics and what's likely to keep that moving? >> there are a number of things driving growth. the first is, the core research markets. we have a lot of medical researcher th eers that underst genomics is a core driver of lots and lots of diseases like parkinson's and alzheimer's. they want to do more and more research to understand the genomic drivers of those disease. as we lower the price points it takes to do sequencing you see researchers driving bigger and bigger experiments to understand that. the core research market continues to be a growth driver. some are in the clinical space where we have non-invasive prenatal tests, it's had tremendous growth over the last couple years. people are realizing you can replace more dangerous tests with safer blood tests. so we have a big uptick in the
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clinic in areas like reproductive health and oncology. then we have other applied markets, the consumer market with customers like ancestry or 23 and me that are targeting consumers who are interested in understanding the genomic data behind their ancestry or predisposition to certain conditions. we are also seeing growth in the agriculture space. we have those applied markets, clinical markets, research markets. >> you mentioned research as a key driver. president trump is assist to unveil his budget this week. are you worried about cuts to the national institutes of health? >> we have seen that there is strong bipartisan support for actually increasing the nih budget. that's how i think it will play out. the reason for that is what the nih does, works. it improves human health, lowers health costs and creates growth. if you look at the impact of the nih over the last two decades, you will see that over the last 40 years, we have actually lowered deaths associated with heart attacks and strokes in
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part driven by research the nih has funded. we have also seen a drop in deaths from cancer over the last couple decades. we know that for every 1% cancer deaths drop, that saves the economy $500 billion. we are also seeing when you invest in health research, you actually create jobs. research studies have shown that for every dollar invested by the nih it's creating $2.21 of growth. one of the biggest projects they have done, studies have shown the return was 178 to 1. as we look to the future, there are big challenges in front of us the nih can help address. if you look at type ii diabetes, we have 29 million people in the u.s. that live with that condition. it costs it about $300 billion a year. funding from the nih can help that. it's a trifecta. it improves health outcomes, lowers health costs and creates jobs for the future. >> sequencing going to be something kids do when they are going through immunization when
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they are a couple years old? >> or are born. shlgts ye >> yeah, and will insurance cover that? >> i believe in the future more and more kids will be see kwnsed in the future. there are 15 million people in the united states today with a genetic disorder. a lot of them aren't diagnosed. we believe even in the coming years, you will see most of those conditions diagnosed within the first few days of birth. instead of having those kids go on a multi-year diagnostic odyssey where they do many, many tests to figure out what's wrong, you could sequence them at birth and diagnose the condition. more and more you will see more sequencing done early to diagnose genet ifgenetic disord. >> you have this chart up showing sequencing costs. it's really an incredible comparison showing how much the cost of sequencing has come down. the holy grail used to be $1,000. you guys are talking about $100 to sequence a human genome.
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how close are you to that mark? >> when we announced nova seek in january, one of the things i said is this is the architecture that will get us from a $1,000 to $100. that's still a few years out. but we have it in our sights. we know technology improvements we can make to get us there. we wanted to ignite the imagination of the researchers to say what could you do if you could have a $100 genome because that worked really well previously where, when everybody was shooting for $1,000, you had lots of researchers saying if i had that, i could do this research. so when we launched the high seek x in 2014, that allowed the $1,000 genome it released all this terrific research. what we want to do is set our sights on that $100 genome and point everybody in that direction, say that's coming, what could we do. the reason we can do this and drop the costs is we hear from our customers that there's this almost insatiable demand because we are at the very beginning of
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understanding how genomics impact health. >> thanks for joining us. >> thank you very much. >> thank you both. coming up, we take you live to jerusalem and bring you the latest from the president's first foreign trip. stay with us.
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the euro is up another half a percent. stocks there just closing for the day. let's get to seema mody with the close. >> good morning. a mixed start for the week for european stocks. oil majors remain a bright spot on the anticipation opec will agree to an even larger production cut in vienna. that meeting comes up on thursday. meantime, currencies continue to be a hot topic after the dollar witnessed its worst week of the year. last week the euro climbing above 112. hours ago, angela merkel calling the euro zone currency too weak, saying it's one of the catalysts behind germany's ballooning trade surplus. the euro holding on to 1.12
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against the dollar. dutch insuror ajon up sharply on news it will sell its two largest u.s. life insurance businesses. clarion also rising, the specialty chemicals provider agreeing to merge with huntsman of the zushgs creau.s., creatin worth about $14 billion. but take a look, ucb is getting hammered. the company is partnered with amgen on a drug both companies don't believe will win approval this year after a trial which showed a higher rate of heart problems. shares down 18%. lastly, the drama in amsterdam continuing. a dutch court hearing, a complaint today after activist investor elliott management sought to force a shareholder meeting and oust the paint maker's chairman. elliott and other institutional investors angered by the rejection of that takeover offer by ppg. we will see if they will be successful. shares are up 27% year to date.
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higher fractionally on the day. now to sue herera for a news update. >> here's what's happening appear this hour. north korea says it's ready to deploy and start mass producing a medium range missile capable of reaching that jajapan. the north said the missile is quote, the answer to president trump's policies, end quote. turkey summoned the u.s. ambassador to protest the treatment of turkish security officials in the u.s. during a street brawl that erupted between protesters and turkish security outside the turkish embassy in washington last week. the u.s. expressed its strongest possible concern over that incident. the maker of nathan's and curtis hot dogs issued a recall following complaints of metal in the packaging. it involves 14 ounce sealed film packages with use-by dates of august 19th and june 15th, 2017.
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ringling brothers barnum and bailey circus held its last show at nassau county coliseum in new york. many performers are second, third and even fourth generation. you are up to date. that's the update this hour. jon, back downtown to you. >> thank you, sue. as we head to break, take a look at shares of apple, up fractionally. rbc upping the price target. detailing the path to a $1 trillion market cap. meta appetite control...
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welcome back. netflix priced itsz ipo 15 year ago today. it's been 20 years since the company launched. how much has it changed and what's ahead? we have a look. >> well, since its ipo, netflix transformed into a global entertainment power house with original content. it's not the only thing that's changed. take a look at how far the ceo has come from the days of red envelope. at its ipo netflix had 600,000 subscribers. only in the u.s., paying $20 a month for jorma durdvds by mail 11,000 titles. now it has 100 million subscribers in over 190 countries who pay about $10 a month for streaming. the number of titles vary from country to country. netflix says it streams more than 125 million hours daily. the next leg of netflix growth
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will come from continued global expansion and more exclusive content. it's seen more than 1,000 hours of originals this year, spending more than $6 billion on content. it has no plans to move into live news or sports. mkm forecasts netflix will be in 185 million homes in five years, saying quote, this will still be early in the global story. for netflix, it all depends on how well it executes as it transitions into making more of its own content. back to you. >> julia, thank you very much. get this. if you had invested $1,000 in netflix shares at the $15 ipo price, today you would have $146,552. for more we are joined by one of the company's earliest investors, mike schue. mike, good to have you. good morning. >> jon, i'm thrilled to be here. >> i don't think it's an overstatement to say that the way the company was founded, the
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opportunities others had to invest and passed, the way they overcame mistakes is legendary. if you were to try to crystallize the management lessons in netflix's history, what would you say? >> well, first, i think it's safe to say that early netflix was not an up and to the right story. i have been incredibly fortunate to observe reed hastings and the netflix team overcome incredible challenges and build a company that customers love and has changed their lives. so the big challenges include almost running out of money for any ceo and any company, that's a big one. the price competition with blockbuster that could have destroyed us. and then there's sort of smaller challenges around marketing and packaging and some of the details that are probably, would never be obvious to customers or casual observers. >> what did you think you were
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investing in all those years ago? looking back at the s1, netflix describes itself as the world's largest online entertainment subscription service providing more than half a million subscribers access to et cetera, et cetera. doesn't sound far off from what they are doing now but what they were doing then was way different. did you have any idea? >> reed's a visionary. i mean, that's a terrific segue. at foundation capital, we were essentially early stage information technology investors, and we think that if you are going to add value as a board member, you had better have seen some of these movies before or you can't be a good adviser to the ceo. so some simple criteria that we use to make investment decisions, size of the market, the special sauce, what is the product and how unique is it, the competitive landscape, the business model and does it scale, the quality of the team at the point in time in which wie make the investment and a likely return on a dollar
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invested. in the netflix case, our total available market in late 1998 was one million households. it was the intersection between people who were online and own dvd players. there were one million dvd players sold in the u.s. not a particularly large market. the value proposition was you go online, you order a movie, it arrives by mail, you watch it for as long as you want and mail it back. although it seems fairly straightforward today, it made people shake their heads. so this wasn't -- one of the flaws in having operating executives with a lot of experience look at early stage companies is it's too easy to find the flaws. at some point in your investing experience, you have to accept the fact that with the right team, these issues can be dealt with. so reed is an incredibly gracious and humble guy. so he's probably going to cringe when i say this, but he is
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wicked smart. i don't mean in the "i'm the smartest guy in the room" sense. i mean someone who is capable of thinking of first principles and also yet at the visionary level. he has -- so there are plenty of smart people but he has two other characteristics that were invaluable. one is an intellectual curiosity that allows him to continue to take in new information. i think in the case of many adults, you hit an age at which that's really not possible anymore. then he is the most intellectually honest individual i know. if you are going to build an early stage -- yeah. [ speaking simultaneously ] >> -- or another area like netflix was able to hit those many years ago? >> i think first you find the other reed and he or she will point you to the next major market. a simple way to think about how
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to build an early stage -- go ahead. sorry. >> sorry, go ahead. last comment? >> i was going to say, a simple way to think about building an early stage company where there's no one to follow is to figure out what's working and do more of it and to figure out what isn't working and stop it immediately. many good ceos are effective at the former, very few at the latter. reed in his two stints as both private and public company ceo has been remarkable at being able to see what isn't working and have the courage to talk to his executive staff and make a change and then the board. it's awfully hard as the ceo to tell the board you know, i recommended this a few months ago but it really is not working the way we thought so we should stop. >> indeed. >> i can tell you things to stop if you a're interested. >> i would agree, the ability of
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reed to put past, just to change direction and not look back is truly amazing. mike, we hope to have you back sometime soon. it's always good to have you and paul. mike schuh joining us. thank you very much. more "squawk alley" after this. i'm only in my 60's. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare,
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and there's so much more to see. so we found a plan that can travel with us. anywhere in the country. [ male announcer ] join the millions of people who have already enrolled in the only medicare supplement insurance plans endorsed by aarp, an organization serving the needs of people 50 and over for generations. remember, all medicare supplement insurance plans help cover what medicare doesn't pay. and could save you in out-of-pocket medical costs. call now to request your free decision guide. and learn more about the kinds of plans that will be here for you now - and down the road. i have a lifetime of experience. so i know how important that is. scott wapner coming up on "the halftime report." if stocks are so close to new highs, why do some investors not trust the rally? we investigate what it might
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mean for where we go from here. it's been 15 years since netflix went public. so which recent ipo should you bet on for the next 15? how do you know it's time to throw in the towel on a sinking stock that you absolutely love? "halftime report" starts in ten minutes or so. see you then. let's get to the cme group and rick santelli. hey, rick. >> good morning, carl. you know, walking around trading floors, you really get to hear some interesting conversations. one of the most interesting conversations as of late has been about the weak dollar. let's think about the weak dollar in very very different terms, quite simple terms, actually. if you are looking to go buy something, and it's on sale, you may end up buying it more aggressively, buying more of them. if paper towels are on sale you get three for the price of one, you are probably going to buy six. when the dollar's on sale, we can view on sale as it's getting cheaper. there's a lot of things you can buy with your dollars.
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you can buy high yield junk bonds. you can buy treasuries. you can buy crude oil. it's especially important to realize that all those are denominated in dollars. their price is a real reflection, when the price goes down, the price of gold or crude oil isn't going to go down, it's going to go up to make up for that. there's an inverse relationship there. now, keep that in mind while we look at the following charts. spreads are kind of like foot races. when you have one product spread against another, how that spread is determined if it gets narrower, one of those on the spread is running faster than the other. in this case as you look at three, five and 20 year charts of barclay spreads, you will see that junk is getting narrower, meaning the difference between a junk yield and a treasury yield is getting smaller. so in a way, the junk side of this race is running faster. that is quite unusual and it really occurs during periods where there's usually good things going on in equities. so here's the final chart i want to leave you some food for
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thought on. let's take the hygetf instead of the spreads and overlay that with what's going on in another area. let's overlay that, for example, with what's going on in ten year rates and rates. and let's look a it in foreign exchange. if you look at these chart, you'll find they're correlated. junk they be one of those as well. carl, back to you. >> rick, thank you. when we come back, the ceo of the company testing cancer. dow is up 64 points. don't go away. goin' up the country. love mom and dad' i'm takin' a nap. dude, you just woke up! ♪ ♪ i'm goin' up the country, baby don't you wanna go? ♪
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dna testing company color gemomics is announcing a partnership. insurance from partners will now cover cancer risks from genetic testing. the ceo joins us now to discuss u. tell us about what today's development will allow you to do as it relates to testing women for breast cancer and the technology you've created. >> thank you for having me. we're very excited about today's announcement because when color launched about two years ago, we started off by being only direct pay. in a space where all these tests were normally costing $4,000 and
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above. and we launched a product that was at $250 that made it very access bable to most people, but since then, we've been getting requests for people to process tests through insurance. that's what we're announcing today, where we're going to be covered by insurance companies for over 100 million people in the united states. >> tell us about a technology you've created. we all know someone affected by breast cancer. what are you testing for and how much of a game changer is it? >> yeah, so, we test for a set of genes that cover the major hereditary cancers. it's not just for women. it's men and women. breast cancer, ovarian, colon, prostate, pancreatic and several others. what's the game changer is that historically, these tests were only access bable to a small
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proportion of the population because of the cost. what has happened in the last couple of years and thanks to color's impact on access, is that there's a much broader population now that has ak says to this information and can work with their doctors on the prevention side, where it's much easier to prevent and early detect cancer as popposed to wat until it happens and treat it late. >> talk about what needs to happen on the policy end for what you do to be more effective. my understanding is health insurers can't discriminate based on genetics as a preexisting conditions, but life insurance can and people need to realize that before they get these tests. what needs to change? >> that's accurate. there's a lot called geno, which protects people against discrimination based on gentlemen anytimics. i think the thing that needs to happen is where genetics used to be something that was extremely
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expensive and used as a last resort as a way to explain why something bad happened, to be something used on the preventative side, to make it people to make it b possible to prevent and early detect disease. one of the examples, so, today, only 3% of our health care spend is in prevention and the other 97% is in actual treatment. where as by far, the highest return we can get is in preventing and early detecting cancer instead of waiting until later to treat it. >> we will keep an eye on you. thank you for joining us with that update. dow's up 71 points. don't go away. listen up, heart disease.) you too, unnecessary er visits. and hey, unmanaged depression, don't get too comfortable.
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we're talking to you, cost inefficiencies and data without insights. and fragmented care- stop getting in the way of patient recovery and pay attention. every single one of you is on our list. for those who won't rest until the world is healthier, neither will we. optum. how well gets done.
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dow's up 75. about is 100 points below the s off last week. the dollar got to 96 and change. so, a lot of cross kusht currents and the week's barely gotten started. >> we'll continue to watch for president trump and prime minister netanyahu to speak. this is deal maker in chief and
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this is going to be the ultimate test if whether his deal making skills can translate. east there talking about a very ambitious peace deal, already criticize iing the last deal on iran. >> a couple of lesser loved tech stocks having a nice morning. go pro up 6%. blackberry, up 4. >> over to the judge and the half. a top trade this hour, where's the love? why even with stocks hovering near new highs, the evidence says investors still don't trust this rally. what does it mean? with us today -- let's begin with stocks. higher this hour. the s&p is now higher. for the month of may. a pretty good picture to tell today. yet, when you had a blip of fear in the market last week, people


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