tv Squawk on the Street CNBC May 31, 2017 9:00am-11:01am EDT
futures have been a little bit higher yesterday after the markets closed down, slightly yesterday. dow futures looking at the highest levels since show started. up 30 points. s&p futures up by four. the nasdaq up by 20. >> got five seconds. just enough time to say make sure you join us tomorrow. "squawk on the street" is next. ♪ good morning, welcome to "squawk on the street." i'm dave faber, with sara eisen and mike santoli. cramer on assignment and carl you ask, well, he's in -- yes, in the -- in rancho palos verdes for the codes conference. he'll talk to the silicon valley heavyweights and we'll talk to netflix ceo reed hastings. of course you don't want to miss
that. another look at the futures, you heard becky talk about them. we're looking up this morning. of course, european markets you ask, well, we answer. with a generally positive -- in fact entirely positive, thanks for italy and spain, guys. appreciate that as always. ten year note yield hanging in around the 2, 2.22 -- a lot of twos this morning. you see crude oilwell below the $50 a barrel. there are reports that the president will pull out of the paris climate agreement. what it means for business and geopolitics. >> and trying to clear up what america first means saying we're asking at will of our partners. we'll take a look at the message from the administration. >> and it's the last trading day of may. should investors expect a june swoon? june has been a rocky month for the markets. we'll break down the winners and
losers. first though, president trump apparently planning to pull the united states out of the paris climate agreement. this is according to a number of reports this morning. putting him at odds with american allies and a lot of major u.s. corporations who have been imploring him to stay in over recent days. of course the decision has not been made official. but we have a number of reports that indicate it has been made and will soon be communicated. a lot of division within the cabinet itself. as we know. rex tillerson the former ceo of exxon mobil was in favor of staying as are gary cohn for example. but a number of others fighting back including the epa head gary pruitt and steve bannon, close adviser to the president who said we should pull out. implications from it, unclear. although again, corporate america did seem largely united in saying let's stay in. given the opportunities there for them to a certain extent and
what may be on the other side of it. >> it is kind of fascinating because it's normally a gesture that is directed at helping u.s. based business, but really it's one of the other areas where a lot of the kind of trump priorities don't necessarily fit very tightly with multinational ceo priorities. multinational ceos are globalists. they generally like the global approach to big issues like the environment. it's also kind of a rules of the road thing, right? if you operate around the world, you kind of want to know if there's unanimity approach to climate. >> i think it's about leadership. i think this continues what was started on the european leg of president trump's first foreign visit. a lot of people saw angela merkel's comments over the weekend that europe has to go at it alone without relying on key allies as a direct response to this idea. that that president trump would take the u.s. out of the paris climate accord.
i think it's interesting that companies like exxon, chevron, companies with skin in the game with energy wanted the u.s. to stay in the paris climate accord. i think if you read some of the statements and the public letters and they were pretty public about this issue, it all comes down to leadership. they want the u.s. to be involved in any potential deals and to help negotiate what some of the changes are going to look like, like less reliance on the global emissions. >> the clean energy business so to speak is not an insignificant one in this country. if you want to include solar panels and the likes of tesla in the overall equation you certainly can. the president seems focused on coal, on oil and gas. but from a different perspective to sara's point. big oil and gas companies have been supportive of staying in and yet he seems to be determined to go in another direction. >> just a general skepticism on
multinational agreements. pulling out of tpp just because it's a statement that says we're not governed by the kind of world councils. on the other hand, look at the general electric, that isn't principally in energy the idea of looking for green solutions as a business process, basically as a cost measure, as a sustainability issue, it's not really necessarily about, you know, checking off the box and saying that, you know, we're adhering to the environmental standards. it's been integrated with the whole big company approach. >> the chinese premier li is visiting this week and mody was hosted by merkel in berlin. the world can move forward without the united states. i think that's a scenario that increasingly wall street's strategists and economists are looking at. it's big picture idea and --
>> those who crafted the paris act korpds believe when the -- accords believe when the second largest carbon emitter pulls out, it is less likely that others will feel as -- quite as committed to the agreement. >> sure. >> yes. looking at the paris climate but i'm thinking overall. just economic relationships could be in for a change. high friendsy saying that china -- frequency saying that china is the largest on earth, growing three to four times the growth rate of the united states. that's an appealing prospect for european markets. >> without a doubt. mike, back to the markets themselves, we spent a lot of time talking about the geopolitics and things of this nature do not seem to be getting in the way of a continued rally. one would expect that's the continued case this morning. >> sure, it seems as if nobody really has gotten scared out of the market because of the lack of, you know, policy progress or really a lot of momentum in that direction. but, what have you done? you have kind of shovelled money
into businesses that are independent of it. so this huge run in the big nasdaq stocks, the other growth stocks underperformance of small caps which are domestically focused and the market is staying supported in the absence of that. the market is not in the business of pricing in kind of d.c. noise and static and dysfunction frankly if that's what you want to call it. >> yeah. well, speaking of the nasdaq comp, let's get out to carl in the code conference. talking to the big performers out there, including reed hastings a bit later in the show. >> one of the reasons that the market is not bothered by the policy dynamic because so much 06 the growth is coming from ai, cord cutting that code has been delivering on for years. got off to the big start last night with marc andreessen of andreessen horowitz. he covered the first being that
tech is not revolutionizing the economy in equal areas all across the economy. so he's investing in areas where it's behind. take a listen. >> the sectors like retail, transportation, media in which technology has had a huge impact. the other part of the economy is what you might call the slow change part of the economy which is all the sectors in which the opposite of that is happening. so these are sectors like health care, construction, education, elder care, child care, and also by the way government. those are the sectors of the economy that the technology is having no impact on. software is playing a small role at best. they are the sectors that have no productivity growth and those sectors are basically going to eat the economy. >> that's marc andreessen with reid hoffman and karen swisher last year. one of the bigger mention he made, all the talk about robots taking our jobs away is being
overdone. even joked about taxing robots. take a listen to that. >> we should definitely tax robots right after we get done taxing pcs which took away the secretary's jobs. one of the big things is so-called ai. machine learners and sensors, a whole category of things that didn't work at one point all of a sudden work. i think at this point that's a feeding frenzy in the tech industry in the valley to try to experiment with every single permutation, what can be done with robots and every shape, size and description. i think it's spectacular. one of the biggest booms/kind of exploratory, let's try all the ideas i have ever seen. >> fascinating stuff on the opening night. it's going to be a big day, guys. on the list here, mary meeker at 12:01. she'll unveil her annual presentation of internet trends.
go goes through a hundred charts in 25 minutes. hillary clinton, evan mcmullin, sherry red stone tonight. so we'll talk all about that all day long. later on this hour, we'll hear what ballmer said about whether microsoft was too slow in hard ware, investing in twitter and the puzzle he says that is putting together the modern nba team. guys, back to you. >> you know, carl, speaking of reads, there was another read on the state. we're speaking to reid hoffman who sold linkedin to microsoft. did he weigh in at all into that discussion in terms of robotics or ai or have a different viewpoint? he's interesting to listen to too. >> yeah. the focus last night, almost asymmetrically was from andreessen. definitely there's some -- there's some mea culpas in the past 18 hours about what microsoft did wrong in say the last decade and a half and how that's playing out big time
today. >> i wonder if there's any mea culpas on politics. you know, this was a group that was in favor of hillary clinton. she'll be there and you'll get a lot of political discussion out from the valley and i'm curious to hear where they are right now on president trump, on some of his policies. we just talked about the fact he's planning on pulling out of the paris climate agreement. what are you expecting? >> you know what, obviously there's -- i'm sure there's a political veneer to what she said. she's already made a couple of big high profile appearances and if it's cara doing the interview, she has been ahead of the curve in interviewing president obama at the time and now other political figures about the role of data and cyber security and how that's changing all of our political lives. it wouldn't surprise me if maybe the focus of clinton's appearance is how that's changed
elections and governments around the world and what can be done about data manipulation and influence. >> all right, carl, we will be checking in with you very often this morning of course a lot of great stuff coming up from that code conference. by the way back to our lead story this morning. the president tweeting in terms of the paris climate accords he will be announcing a decision on the paris accord over the next few days. then he ends with make america great again. >> campaigning stuff. >> i'm not sure we can read much into that. i won't even try. >> he's following the news this morning. i think it's fair to say. >> without a doubt. >> and he's tweeting full words that are actually words and sentences. >> as opposed to last evening. at midnight. >> it was on when we started -- >> covffefes. >> we'll take you to the code
conference. we'll have an exclusive with reed hastings. here's a look at the futures. we are headed higher. more from "squawk on the street," more from post 9 at the nyse. the power of 100 of the world's top companies. the power of a proven 15-year track record. the power of an etf. the power of qqq. the thinking we put in, clients get out. power your client's portfolio at powershares.com/qqq. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc. containing this information. read it carefully. at crowne plaza we know business travel isn't just business. there's this. 'a bit of this. why not? your hotel should make it easy to do all the things you do.
michael kors down sharply in the premarket. the luxury goods maker beating on ref fly, but the comp store sales were down more than 14%. kors also issuing guidance below consensus and guys, the company also announced that it's going to be closing 100 to 125 stores. that's out of total of about 827 stores and 300 of which were just opened in the last two years. so back tracking on the strategy as they deal with falling sales, down double digits. >> it wasn't that long ago this company was not going to cover off the ball it feels like. >> i think it peaked as a $100 stock a few years ago and it was a $60 stock a little over a year ago. it's as if whole chunks of traditional retail, the market
is liquidating and there's one designated survivor. so you have coach on the rebound. of course it will be acquiring kate spade. whereas kors is seen on the outs. go down the list of electronics and the market is saying, lots of losers. maybe one winner in each area. >> j jill reported earnings. this is a recently ipo'd women's retailer. they focused on middle age women and they had store sales of 9.9%. they know their audience. we talk to the ceo. just a few months ago when the company ipo'd, and this is from a profit or a sales perspective that's going completely the other way and shares are being rewarded. look at the premarket. >> i think a pretty decent direct sales capacity. >> yeah. fairly strong. i can remember when we interviewed the ceo at the time they went public. that was one of the pointing to
and -- she was pointing to and also jim cramer highlighted it as well. anything to the overall theme in the decline of the mall? >> i think it's individual now, because kors you look at coach, but coach going the other way. really started to rebound. they have nailed the fashion trend. they have got a new designer which is very good and not just accessories but apparel. i think the read through is that accessories as a category are still pretty weak and kors overexpanded and highly leveraged to that. that's a problem when you're dealing with big problems like traffic, and otherwise retail weakness with the growth of online. >> it's amazing because the game now is where are people spending their money. wages and salaries are growing faster than inflation. you had the big "wall street journal" story, nobody is going out to lunch or restaurants. >> nobody is going out to lunch c
. >> nobody is going out to lunch. >> breakfast is the growth category. >> talking about going out and sitting down for lunch. >> nobody has time. although you take a long lunch. >> i get all my work done. you go to chopped? >> no, i like sweet greens over chopped. >> well, we'll see what to expect from our market actions as we wrap up the month. we count down to today's opening bell. one more look at the futures. more "squawk on the street" right after this. this is a story about mail and packages. and it's also a story about people. people who rely on us every day to deliver their dreams they're handing us more than mail they're handing us their business and while we make more e-commerce deliveries to homes than anyone else in the country, we never forget... that your business is our business the united states postal service. priority: you ♪
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does look like we'll get a higher start to a positive month of may on the last trading day. you're watching oil down though, down 3%. >> well, i think if oil manages -- if wti breaks below $48 it will be a factor yet again. even though oil didn't get badly beaten up yesterday, the energy stocks were -- what led to the downside. that could be a problem. the other thing is that traders are getting itchy. they think things have been too quiet in washington for five days in a row. we're not used to that. >> congress is on recess. >> you mentioned energy stocks looking -- really struggling. also banks. they have been kind of two weights on the market and on the other hand, we talk about the growth and the tech stocks that have been managing to kind of keep the markets supported here. is it sustainable? do you think that's just going
to be the way we -- the way we are for a while until we see the acceleration or something? >> i mean, the tech stocks have diverged from the rest of the market. you got a break from the telecoms, but the story has been the f.a.n.g. stories who have provide the vast majority of the gains we have seen. so that makes me a little bit wary. >> why? >> because that leadership all alone usually can't last forever. after a while, you know, you get so much money put into it. and everything else is kind of lagging behind. traditionally when you get the kind of action that we have seen here, as i have said in the past usually the market begins to stall or slow down and we have not -- the two to three weeks after this kind of action has not -- does not usually produce
a big rally. the market confounded us old fogies last week, it should have stalled in the middle of last week and they continued into the holiday weekend. but history tells me it's going to be a little bit more difficult to make big gains here. >> i know you watch the overseas news and figure out if it has an impact. chinese manufacturing came out overnight, better than feared, above 51 for pmi. the pound is half a percent weaker though on the polls narrowing into next thursday's election for prime minister theresa may. any surprise there shake global markets? >> well, the china data, the pmi was beneficial. yet, iron other went down after that came out which you wouldn't expect normally. you would think they'd come up. the interesting thing is as our mutual friend points out, when the brexit vote came in the pound went down sharply.
and now that it looks like there's an outside chance that the tories might actually lose the majority in parliament, what does that mean for brexit and still the pound is going down. so -- >> ftse 100 is at a record. >> yeah. i think it means that they'll have a difficult time arranging for comfortable brexit if you will. it's probably going to be harder and a little more difficult than -- we'll see what happens with the london stock market after that. >> something to watch. thank you, art. the opening bell, just moments away.
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overall market and the narrowing of the market. art cashin was pointing to oil as a key for perhaps today. what are you focused on? >> i would take a look at the yield curve. it's been narrowing. it's got a little bit of relief and that's pressuring the banks. yesterday, goldman sachs was discarded for another -- trading at a level it actually was trading at about 23 months ago. so forget about any perceived benefits from fed rate hikes and policy. so i think that's an area where if those guys can't cycle into rank and rotate to position, the market might remain stalled. >> very little on the economic data. we'll get the beige book which is a good, colorful read, despite the name. but maybe it will be the jobs report on friday. 175,000 jobs are expected to be added, which will be a solid number but we'll see.
>> at the nyc we count you down. you can see the realtime exchange back at hq. given what we have seen -- a built more green than red on that board. engineering company aecom celebrating its tenth anniversary of its listing. we'll talk to the ceo, mr. burke will join us again. over at the nasdaq, seriousfun children's network, a camp for children with serious diseases. as you see, we are headed higher. mike, that leadership we continue to see from the nasdaq comp which has doubled the gains of the broader averages not sure where that's going to take us today. but it's all the same names you might have expected. yesterday we spent a lot of time on amazon as it crossed at least briefly that 1,000 point threshold. >> it's been stealing all the attention. i think for good reason. if you look at the forward p/e of the nasdaq 100 it's up to 21
from 18. really the beginning of the year. i mean, it's basically pricing in a lot of good stuff there. i think it would be a little more concerning if the rest of the market was truly in trouble or sitting it out or down. but the equal weighted version of the s&p is up solidly this year. maybe 6%. so it's saying that the gains have definitely been loaded on to the big tech stocks but it's not the exclusion of everything else. i think that's what you have to watch. if those big guys get more stretched out, it becomes a more unstable market. >> to your point yesterday there is some demand for big cap tech along with other defensive groups and dividend paying groups. the best performing dow member is mcdonald's along with apple. and technology, utilities and staples, these are places you buy -- either stocks you buy on the rate sensitivity. the fact that we have lower treasury yields. a weaker dollar. it's not necessarily this
cyclical buy that we saw after the election. because it's the change in leadership here as we look at the seventh month of gains for the nasdaq as it reaches a natural high. >> stuff that doesn't need the help of improving upside surprises for numbers and that's the way that the market has kind of waited for the fundamentals to get better. they kind of hide in the defensives. it worked. this was a case of a year ago too. it's a question of will the news come into sort of rescue some of the cyclical groups as we have been waiting for and value managers waiting for that as well. >> we're on $1,000 share watch. it's apple bet or google which hit $999. amazon hit the $1,000 mark. google probably might not to be outdone. trying to get to that level which is just a level, but also i guess a trophy. and a signal of just how strong these tech stocks have been and how much they have driven the market. >> the alphabet folks say we have a $150 billion advantage in market cap. >> they co.
>> have your $1,000. >> $676 billion. many of the investors in alphabet make the argument that this stock is still cheap. we're not talking about a multiple growth stock, you can say that about facebook as well. we talk about the leaders but not akin to what we say in the late '90s in terms of the multiples. >> certainly not with alphabet. with facebook. any of those. it's a question of how much do you want to pay -- at high teens or 20% a year. not when will they see the earnings. at some point, you know, it gets stretched. gets too overloved. we had that report from merrill lynch that professional fund managers are steeply overweighting technology once again. you know, again, you'd want to see a little more diversity. >> i wonder if amazon is an exception of that, trading at 150 times next year's earnings.
yesterday, we interviewed lee coop cooperman of omega, amazon may be hard to justify the valuation. we'll watch it. it continues to go up. >> it's been hard to justify the valuation. >> yet -- >> every single day. yet, we know the 20 year performance of that stock. if you owned it, luckily even off ipo. speaking of valuation, tesla shares up another percent after a decent day yesterday. >> it was. yeah, kind of, you know, broken out above what was kind of the top of its range. and of course if you're going to try to make the bold case for tesla the first thing out of your mouth is probably amazon. they thought it was only books back then, it was way overvalued but not endorsing that view of course. one of the differences is that tesla needs capital constantly. it burns a lot of capital and basically needs to raise equity and debt.
i believe after the ipo they were one secondary and for 20 years it's self-financing. big differences but i think that's the conversation around tesla right now if it can be, if it overtakes huge chunks of the economy. >> art was watching the oil into trade. it's getting hit. that opec agreement to extend production cuts hasn't been well received by the market as crude oil dips below $49 a barrel. energy the worst performing sector in the s&p in month of may. it did not participate in the rally that we saw, guys. what's interesting to art's point about whether it was bring down the overall market or not, people are watching the high yield market which tends to correspond. even with yesterday's big decline in oil prices. not really having an impact so much on high yield. that's going to be one place to watch it. the etf, hyg at the highest level in 11 months so that could support the overall market there. watch the correlation with oil. >> i mean, that was kind of an
early 2016 story that energy was really dragging down the -- the credit market has been completely hard to shake. it's been as strong as you can imagine. >> i did want to come back to the story i have been reporting on frankly for weeks which is nxpi, qualcomm. the possibility of holders of nxpi who have been arguing since the deal was signed frankly, at $110 share cash it undervalued the nxpi. that's more vociferous since they put up a strong quarter and the peer group of which it is a part has started to trade at far higher multiples and so you have a shareholder base that is faced with a qualcomm deal at 110 in which they would have to tender. qualcomm would need 80% to close the tender. and the rising possibility that perhaps you would have some sort of effort made to not tender.
take a look for example, if you want to compare forward p/es. you can see nxpi coming in at a low number in terms of the multiple. i have spoken to one large holder this morning. who indicates a few things. first, they were called as many people seemed to be in recent days by elliott. the large sometimes activist hedge fund that i have said in the past might want to take a leading role here. might need to be the kind of a firm that would lead shareholders to that nontender position. they have been calling around out of london, checking with if large holders to see what their appetite is for doing that. this is something to keep a closer eye on. when you speak to the large holders as i have, listen, i'd rather see the deal break because i think nxpi will trade at a higher price than 110, you get the sense that this may be
something that is going to take qualcomm's attention away from its current lawsuit with apple and force it to deal with perhaps paying a higher price to get this deal done. it is interesting to see how the multiples are higher. >> and combined with the perception, all of these things work together to suggest that the gaming out of how this goes is -- >> and you're -- >> pointing in the recollection. >> gaming, that ends up being. who will tender, who won't. having a leader potentially in the form of elliott can certainly coalesce other shareholders around that idea. so a continuing story. that tender is not taking place for some time. not closing for some time as regulatory approvals come in. one that we have been paying attention to, there are some other coverage of it yesterday. speaking of other coverage in your world, i did want to weigh in on the pepsi potential deal. >> yep. >> reuters had it over the weekend. >> yes. my understanding is they're talking. talking vita --
>> vita cocoa. >> i'm told it could be as much as a month away. so they're not quite at near announcement yet. there's one other significant player competing for -- you talked about this. $400 million in sales. the company was begun in 2004. it's not just about coconut water, but about coconut milk and coconut oil and all things coconut. >> do you use coconut oil? >> i do not use any of the aforementioned products. >> it's so hard to find a growth category in beverages right now. one question is is this question going for $1 billion or not? i wonder if the other players, dr pepper and snapple they have the distribution of vita coco. coconut water growing 20% globally. it's actually slowed down a little bit in the u.s. but vita coco it does nominate this market.
number two is coca-cola's -- >> yeah, they're going after orange juice. pepsi does own tropicana. >> correct. they're trying to move the portfolio into healthier beverages away from carbonated beverages. we know this is a key mission of ingenuity and bolt on acquisitions instead of anything transformational like buying whitewave. pepsi is up 0.25. let's get more from bertha coom coombs. >> one of the contributors today is the an lag devices which hits a -- analog devices which hits a new 17 year growth. top and bottom line beats. this is an apple supplier and the results include the -- sort of the linear technology acquisition which is actually closed during the quarter. chips overall have really been what has been powering the big move up in tech and where we
have seen a lot of those active fund managers move in to big cap tech. about 9.5% for the month. the best performance we have seen for chips since last july. chips have only been down three times in the last year. so that's where people have been chasing growth. we get another all-time high today for nvidia right along with a 17 year high for the chip index. mylan is seeing some pressure these days from pension grounds. they are recommending six board members not be re-elected over high pay, including the chairman who collected some $100 million will year. has not impacted the stock of late of mylan. no stranger to controversy. we have biotech on the other hand, has been where people have been selling. perhaps a source of funds down over 4%. back to you guys. >> bertha, thank you. let's head out to the bond pits right now.
rick santelli at the cme group in chicago. good morning. >> good morning, sara. well, yields have crept down to lows we haven't seen basically since the third week in april. they have done it in a very unexciting sort of way. but nonetheless, we're basically a few basis points shy of making new low yield closes. you see the april starts for tens. for bundzs the yields are much lower. there are lots of trades linking them together. one of the more popular ones is long tens, short bunds. you heard sara talk about high yields. like the vision of fixed income. the hyge here it's telling us there's not a lot of nervousness out in fixed incomeville or the
relationship with equities. both of the statements appear to be true. at least based on current trade. let's look at foreign exchange. let's hold everything in the context of the euro currency. let's look at a euro/yen chart starting in april of '15. i picked it because that's the last time that the yen was this weak against the euro. if you look at the euro/dollar with the same time frame, you can see not nearly as aggressive as a trade. with many looking at of course the election coming up for may and the conservatives in the uk, if you look at the pound versus the dollar, there's not a whole lot of action. you look at the ten year there isn't a whole lot of action. but it's interesting because the euro versus the pound shows the same dynamic as the other two currencies. that euro is in favor right now, as are many investments in europe. the only problem is that there's many that believe that mario draghi is the big training week of that investment. only time will tell. david, back to you. >> thank you mr. santelli. some eye opening comments
welcome back to the code conference. last night, kicking off the event, steve ballmer talked about how microsoft allowed other players to encroach on microsoft's dominance. he said in large part it came down to hardware. hardware is really the new expression software in his words we should have build that capability earlier than we ever did. suggesting perhaps that the nokia deal was too little, too late. as many have said. he talked about his life as investor post microsoft and how twitter has cured him of being a more activist investor. take a listen. >> in retirement, you say, what am i going to be now? investor phase. i'm out of that phase for those of you who might be looking for money. i'm not in that phase at all anymore.
but when i was in investor phase, i took -- i said, look, i owned 4%. i made a point of that. i'm silent on what i own of microsoft, twitter or anything else other than eclipse at this stage. i still have a lot of money into the concept that says there is an opportunity to make it into the real business. >> he did talk about he's not going to update us on the stake in twitter. he used to do management calls with jack dorsey, not so much anymore. jack needs to choose one company to run and that microsoft never looked at twitter as an investment. also showed off a pretty interesting interactive clippers app that will allow sports fans and viewers later on to assemble an nba game after the fact in ways perhaps that we're not used to. that's one of the projects he's working on. along with another project to open up transparency on where your tax dollars go and as many guests said, no interest in running for public office. a lot of views forward and
backward after ballmer's career in microsoft. in our next hour we'll talk to bob peck and others about valuations which is of course another big dynamic at this conference. not just the technology, not just the trends. but the amount of money that is pouring in to some of these stocks. guys? >> i'm just looking at shares of microsoft, carl. after those comments, you mentioned, you know, the stock has been on this amazing run, participating in the fantastic five f.a.n.g. tech rally, up 33% over the last 12 months. thinking about that, that sort of regret about the move into hardware, the nokia acquisition. et cetera. it's a good time to be having these conversations given what's going on in this market. >> yeah. there were nice things said about nadella last night by reid hoffman. maybe another illustration of how the cloud is so powerful it's allowed microsoft which to
a large disagree had been forgotten to sort of play catch-up at least on the valuation standpoint and express some new dominance in the area of technology. see if that gets more discussion today. but ballmer's comments along with andreessen's really resonating this morning. >> yeah. carl, you know, you mentioned a lot of eyes on valuations. it's kind of interesting in that context, you look at the $3 trillion or so that are in the big five of the nasdaq. they have been kind of going to the sky all year. i wonder if the market is saying, look, all the value is taken by the winner take most companies and who knows what's left for. you know, tomorrow's start-ups. that's the crowd that would have an opinion on that, perhaps. >> that's a good way of looking at it. i think sort of the evolution of this conference, mike, a few years ago, it really was about finding the next big thing. the next seed round. right, the next most promising upstart. but last couple of years and walt mossberg has been early on
the trend. the roll-up of the tech giant and to a large degree the conference is now a discussion about how these giants are all battling each other in the sort of gladiator dome. not so much the tinier companies with the advancing technologies because they're being built from within these titans. >> carl, great stuff. we'll see you in a few minutes at the top of the hour. for now, thank you. up next, comments from starbucks ceo howard schultz made about president trump and what starbucks is saying about them. we'll have that story when "squawk on the street" comes right back. say carl, we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $4.95 per trade? uhhh. and i was wondering if your brokerage offers some sort of guarantee?
guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab. who's the new guy? they call him the whisperer. the whisperer? why do they call him the whisperer? he talks to planes. he talks to planes. watch this. hey watson, what's avionics telling you? maintenance records and performance data suggest replacing capacitor c4. not bad. what's with the coffee maker? sorry. we are not on speaking terms.
[ suspenseful music ] who are you? she's unlike anything we've ever faced. the mummy. rated pg-13. experience it in imax. starbucks chairman howard schultz giving employees a clear message about president trump's impact on business and the consumer. in a video obtained by business insider, schultz is seen saying as quote, we have a president that's creating episodic chaos every single day and that is no doubt affecting consumer behavior. he said that the coffee chain can provide, quote, an antidote by providing a sense of community to its customers. starbucks did tell cnbc quote it's important to note the timing of the comments as they were made over three months ago and we're -- were centered around the sensitivity required for success in the retail business during that period of time.
also important to understand if full context as howard also said, we have an antidote, we always have, that's the sense of community, the third place and the community we put around family. >> after he came on reporting that quarter, calendar wise i'm not sure which calendar, he did cite the sense of unease. >> yeah. >> which i've had a hard time understanding how that translates into people not going to starbucks. >> we know that february was weak for a lot of things. it's hard to pin it on the mood of the country. you had tax refund checks that didn't come through. those and weather and all the rest of it. in the immediate aftermath of the election, you had people writing messages on their cups and stuff. >> this not the first time we heard a political message from howard schultz. >> he does not shy away --
>> planning to hire refugees. >> or the conversation on race, that he is fully engaged on a number of different issues. in contrast to a number of -- well, he's no longer chief executive but to a number of top managers. >> i think this fuels the question of whether he'll run for president. like all business leaders now that have some political comment or statement about how they can do better. >> yeah. >> he says no. >> reports that he was thinking about it last time around. i have heard that as well. we'll see. all right, coming up, more from the code conference, including an exclusive with the ceo of netflix, reed hastings. it's all yours. wow! record time. ♪ at cognizant, we're helping today's leading life sciences companies go beyond developing prescriptions to offering subscriptions with personalized, real-time advice for life-long, healthy living.
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stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and. ♪ good morning. welcome back to "squawk on the street." i'm sara eisen along with david faber live here at post 9 at the new york stock exchange. carl quintanilla is with us from the code conference in southern california. we played the song for him. he'll be joining us shortly with
two huge interviews. he'll be joined by vox media chairman and ceo jim ben kof and then an exclusive with reed hastings. final trading day for the month of may, which is set to be a positive one. for all three of the major indices. looks like things have gone a little soft here half hour into the trading session. the banks are really weighing down, the dow and the s&p 500, worst performing group right now. wti crude is down almost 3%. david, that's certainly not helping. >> yeah. those financials as you say, a story again today. let's get to the road map this morning. it does start with the paris climate accord. president trump will withdraw the u.s. from the 195 nation agreement. we'll get a live report from d.c. plus, trade in focus, the u.s. getting ready to ink new deals with vietnam worth up to $17 billion. we have the details.
jetblue is testing a new way for passengers to boarding the aircrafts and it involves your face. but first, 10:00 a.m. in the east coast. we have some economic data. let's get to diana olick. >> the pending home sales are down 1.3% and march's number was revised down, down 3.3% year over year. remember, pending home sales represents signed contracts in april, not closings. but we had a very disappointing closings number in april as well. and this is a bigger drop than the street was looking for. what's the problem? not enough supply. a lot more listings did come on the market in april. but they were still down 9% compared to april of 2016 and the realtors say until we get nor listings you will not see more sales. across the nation, the sales were down everywhere but in the west. they're still 4.2% year over year. but you see the builders being a
lot more active in communities out west. but again, this is a disappoint on home sales. another weak reading for spring housing down 1.3%. back to you. >> okay, thank you, diana olick. reports out this morning that president trump is planning on pulling the u.s. out of the paris climate change agreement. our john harwood joins us from washington to fill us in on the story. >> well, david, we saw last week or actually before last week when the president was making his overseas trip he sent out a tweet, saying i'll make my decision on the paris climate change agreement next week. then of course he went to europe, was meeting with members of nato and g7. all the rest of whom are united behind the paris accord. the reports this morning are that he may pull out of the accord. we do not have that definitively. the question is what are the consequences of that going to be? i think they'll be somewhat less
for a couple of reasons. first of all, the rest of the world is moving forward on this agreement. second of all, the u.s. businesses have made investment decisions because it's a globalized economy. knowing which way the future is going. the renewables, wind and solar are increasingly competitive. natural gas is taking out coal. it's not just environmental concerns, although those play a factor. the biggest consequence may be to give additional economic clout to china because china is investing heavily in renewables. and if that happens, the u.s. could be left behind. so still waiting for the official word from president trump. but the consequences may be less than it appears on the surface, guys. >> still, john, what a headline. the decision would put the united states in lead with syria
and anythinicaragua into the nonparties pants in the paris accords. any sense of why he wants out? >> well, the nationalist element of his staff and people influencing him have made the case that american international commitments are restraining the economic power of the united states and are bad for average workers. there's not much evidence that that's correct. but there is a lot of belief in that direction. even people who are not part of identified with the nationalist wing of the trump sphere, steve bannon is the most conspicuous part of that, but hr mcmaster and gary cohn, former goldman sachs and hr mcmaster of course is national security adviser, wrote an op-ed today that said that the united states recognized that we're not a global community. there's a world stage in which every country and
nongovernmental organization is fighting for advantage and we're the strongest kid on the block. that is the way of thinking that is coming from the president that's producing this decision. and, you know, many traditional foreign policy thinkers have thought that the united states is stronger when it works in concert with other nations. but the president has a different view and we may see that reflected in this decision. >> yeah. interesting to point out as well, john, there are certain states that are going to move forward regardless. california is committed to following the agenda that's more stringent i believe than what's outlined in the paris accords. >> just on that point, governor jerry brown who we know is the former two-time presidential candidate may in fact be the de facto leader of the parts of the united states that are pursuing this path. and that's not inconsequence
shall, eighth largest economy in the world. >> see if the private sector follows suit as well. they have been on board, a lot of companies. john harwood, thank you. as we await for official word on the paris climate deal. now back out to carl at the code conference. >> hey, sara. whether it's policy out of washington, or tech valuations the code conference could not be kicking off at a better time. we are so glad to have bob peck with us, head of the global international banking for credit suisse. he's joining us at rancho palo verdes. you're talking about the paris accord. we had andreessen discussing the big broad dynamics. what are the big narratives going to be this year? >> one of the themes is how tech disrupts jobs but when the car was invented, people were worried about the car buggy and whips and manufacturers. and over cars enabled new work
opportunities, paving roads, distant stores you could drive to. then the autonomous cars will enable new types of jobs. while older jobs will fade away, new jobs will be create and he's excited about the future. >> a big part of the electorate doesn't see that way forward. that's leading to sort of this difficult political dynamic. this sort of revolutionary discord in the electorate. >> that's why he thought the power of the platforms right now, like a facebook, like a twitter, like a snapchat, those types of platforms are so important right now to have the communications so both sides can understand either side and hopefully work together going forward. >> we're talking about valuations every day you. the down market notwithstanding. does the secular change the companies are bringing deserve the valuation that's being given right now? >> what's so amazing when you look at the changing of technology it's accelerating.
if you look back three or four years ago the number of iot enabled devices was not there and now it's 50 billion. now person to company like an amazon where it starts to get exciting is when it goes machine to machine. that's going to accelerate opportunities. going to accelerate profits. it's going to be a pretty interesting future. >> give me an example. >> imagine your refrigerator is out of orange juice and it orders directly to fresh express and it's delivered the next day. >> the sort of ambient technology, even though we're not directly affecting it. >> walt's post was dead on. you saw andy ruben who rolled out his new ios, called ambient as well. that's where we're headed. the humans are getting pulled out of the equation. >> so do traditional valuation metrics work still and will they continue to work? >> i think they do. i think the key here is you have to have it relative to growth.
particularly top line growth. so when you look at multiples you don't want to look at one year out. you want to look out three, five, seven years. look at aws. that didn't exist five, six years ago. now it's round numbers. $250 billion company. so these companies can be rapidly growing very quickly. >> we're -- wall street laughs at 2020 cash flow projections. >> yeah. >> some of them are still going to be specious, i assume. >> well, marc talked about it last night, a lot of the companies will cling on to the growth curves and those who will succeed will have the profit and value centralized around them. you want to be there for those. >> we heard john's report on the paris accord, hillary clinton speaking today. how strong is the connection between some of these tech valuations and what needs to happen out of washington? are they reliant on it? >> i don't know if they're reliant on it. there's a lot of talk about immigration, getting the right workers that you want.
there's a lot of talk about repatriation of cash, being able to utilize that cash to further growth. >> but is that gravy or is that like a must have given the current valuations? >> i think it's gravy. i think it's gravy. the tech changes that are occurring right now will drive the next layer of growth. will drive into the valuations but the other things are great to have and should further the acceleration. >> you're going to china in a little while. >> that's right. >> how would you characterize their innovation versus ours? >> tremendous. you see the top vcs talk about because they have less regulatory barriers they can move faster on the drones and the bots. mark cuban said that we need to remove the red tape to keep up. a big race to watch. >> are you expecting more cross border m&a. them coming here or us going through? >> i think it's a bright future for m&a like in europe and south
africa. it's a global landscape we are looking at. if you're looking domestically, you're missing out. >> i have made a list of the trends that code has been covering for years that are really coming home for the market. >> yeah. >> cloud, data. mobility. ai machine learning. cord cutting. of all of those that i mentioned is there one that stands far and away ahead? >> the biggest one for us is ai. is ai. the reason you heard sundar from google say they're no longer a mobile first company, ai drives amazon and drives the pricing mechanisms for priceline and netflix. ai and what ai can do is going to provide that basis for the acceleration. >> bob, it's so great to have you here to help us out. bob peck joining us hered a code. a quick programming note, coming up later on today we'll hear from the chairman and ceo of vox, jim bankoff. don't miss that.
we'll sit down exclusively with netflix ceo, reed hastings. sara, over to you. >> the nasdaq comes off a -- hitting a record high earlier in morning, down half a percent. carl, see you in a few minutes. is it full steam ahead for the trump agenda? we'll discuss that and more with a ceo of a global infrastructure firm. look at shares of mcdonald's, apple and coca-cola. those are the dow leaders for the month of may. much more ahead on "squawk on the street." we are told the pyramids were built to be tombs.
geopolitics is weighing on the markets after president trump's first foreign trip. that does it mean though for the markets? and the economic outlook? joining us right now is richard -- pimco's strategic adviser. >> it's great to be here. >> it's hard to figure out what the market implications of this are. president trump's first trip, some of the splits we're seeing. with germany and then potentially pulling out of the paris climate dealey axios will come out from the trump administration. how do you see it? >> well, you have the fed raising rates, lowering the balance sheet. you've got trump administration, what are they doing, trade policy. fiscal policy, exchange rates. you see what china is doing with the currency and geopolitics and
even though the markets are solid, the macro data is pretty solid, longer term, three to five years, some caution is warranted. >> you mentioned the fed is raising rates. yesterday, the ten year yield hit 2.20. continues to make new lows, banks are getting slammed. how does that make sense into the fed rate hike? >> well, that is a good point. because obviously, at the beginning of the year, rates were a lot higher. many thought were headed north. people have scaled back a little bit of a view of what the trump stimulus is going to look like. but it's true, sara, that we have had some disappointing prints on inflation. if the fed does hike in june, it will be an interesting press conference as janet yellen attempts to justify that hike with soft inflation. >> will it be a mistake? >> i think it's too soon to tell. policy is still accommodative. the policy rates are below inflation. i think however as we go through
the year, the additional room for rate hikes are really contended on the data we see. i think they get the hike in june. >> when you say caution is warranted when you look out over the next three to five years what does that translate to in terms of the fixed income investor? >> that's a good question. first, valuations in fixed income are fair and in some cases frothy. we're holding more liquidity than we do to take advantage of opportunities that we see. we think it's an environment that investors need a global opportunity set. if you look at emerging markets for example, valuations are less frothy there than in other sectors of the market. we still think three to five years we don't want to bet against the fed's ability to get to 2% inflation. target, we think that the markets are too relaxed about low inflation over the next three to five years. >> what if gary cohn is leaving
the fed? his friends say that he's got his eye on that prize. janet yellen's term is up next february. what happens if we see an extrader like cohn leave the fed? >> it would be an interesting thing, it's not required to have an academic background around he's done a good job at goldman sachs. i guess my sense is that since his background is more in markets than monetary policy that i think initially he would be very, very interested and working closely with the fed staff. i think sara and david it's important that yellen if she indeed is not reappointed it's important that yellen have the balance sheet wind down, basically worked out. so the new federal chair whoever he or she is is not finding out that difficult process. i think we'll learn more in june. >> what are your expectations in europe in terms of draghi and what we'll see there? you see the emerging marketing
being attractive, but is over yields over in europe are still negative to a large extent. >> you know, david, you read our mind on that. europe has really benefited from the tail wind. the data has been strong. they grew faster in the u.s. in the first quarter. as we look again at three to five years we basically see trend growth in europe at 1.25, 1.5. italy has some important political events. potentially elections that could be as soon as this fall. half of the voters want to leave the euro. of course we had a situation in france which turned out differently. but longer term you're right. the whole euro project is so dependent on a very proactive ecb. under draghi. remember his term is up in november of 2019. so there's some key man risk as well. >> put all your risk factors together and everything. is the bottom line that you think that, rich, that the stock market at a record high is going to catch up with the message of the bond market at some point soon? >> we're actually constructive
on equities as we look out over the next year. the u.s. corporations have had a nice stretch here. there's potential benefit in terms of lower corporate tax rate. if we ever get a tax package out of washington. so we would not fade that in terms of the near term. we think that valuation is key. we would keep an eye on that. >> rich, nice to check in with you. strategic adviser to pimco. when we come back, we'll have the ceo of global infrastructure firm joining us with his take on the current state of progress on the trump agenda and the implications for the global economy. plus, it's the last trading day of the month. cisco, disney and ge, they are the laggards for may. all falling over 5%. "squawk on the street" will be right back.
he's pushing hard on health care, infrastructure is a priority of his. so the president's legislative agenda is in full swing. >> well, as you heard there, the white house saying it is full steam ahead for the trump agenda. but with controversies continuing to swirl around the administration, how should business plan? joining us first after ringing the opening bell is mike burke, the ceo of the global infrastructure firm aecom. nice to have you. usually you're joining us through the magic of television, but today you're right here. congrats on ten years. >> thank you. >> you seem optimistic in reading the notes and having spoken to you over the last few months but i don't know why. are you optimist that we'll get some infrastructure and a bill that will result in actual progress on the ground? >> i'm more optimistic about infrastructure than anything else. if there's anything that has a
bright -- broad bipartisan support it's infrastructure right now. we have both sides of the aisleal talking about the infrastructure. the american taxpayers are begging for better infrastructure. it will be done in a different way than anticipated. >> what is that way then? >> a combination of an infrastructure bill and a lightened version of tax reform. i don't think we'll see a major tax reform bill like the reagan re -- era tax reform. i think coupled with infrastructure can get through the policymakers in washington. >> the budget that was submitted last week i think it was, was what, about $200 billion over ten years. obviously that's supposed to lever a lot more private spending that will get the number up to the trillion dollar number we have heard so much about. how does that fit in then in terms of the budget and the tax reform? >> i think that's one component of it. clearly the levering concept is
something that has been talked about in washington. i think it's the right approach. live -- levering state dollars and there are large pools of private capital that are begging to get into the long data infrastructure assets in today's near zero interest rate environment. clearly the leverage is a good concept. i think there are other arrows that need to be drawn, such as the gas tax. we have heard that talked about quite a bit. that needs to be done. we haven't had a gas tax increase since 1993. it's time for that. >> what are you hearing as to the specifics on which projects the administration is looking to target and what priorities they want to do in this spending? >> so in december of last year, aecom did a study for the treasury department of the top 40 projects that we think will have the biggest economic impact, to reduce the friction on our economy due to poor infrastructure and create the most jobs and those 40 projects that we estimate will have a three to four times multiplier impact on the economy. so that's been put forth and the
administration has looked at those and i think those are the priority projects that will go forward. >> roads, bridges? >> roads, bridges, air traffic control systems. water treatment systems to avoid the problems we have had in flint, michigan, and other places. >> technology infrastructure, is that included in this deal? >> we had talked about rural broadband. i would think that's lower on the list frankly. >> are they going to privatize the faa? >> i don't think you'll hear that word privatization. but you'll see something that will allow the private sector to play in the air traffic control system. much like we have seen in canada. i think the canadian system is a good model that would work here in the u.s. but i don't think you'll hear the word privatization since that's been frowned upon. >> even the numbers you're talking about don't seem to be up to the task that we really have. scott rec her joined me recently, vice chairman of the
port authority here, he was in talks with the trump administration at one point about joining their infrastructure task force. the numbers are in far of $1 trillion just to keep up, aren't they? >> they are. the american society of civil engineers estimates we have a $3.6 trillion infrastructure gap here in the united states. just to get up to -- us up to acceptable standards so when you talk about the administration bill of $1 trillion that doesn't nearly close the gap. that's only one arrow in the quiver. there's still many pools of capital from states and municipalities what you're seeing in cities like los angeles that reechbtly in -- recently increased their sales tax to create a wholly dedicated transportation fund. >> on the gas tax, do you think that can fly? the trump administration will introduce a gas tax? >> well, we have to solve the infrastructure problem and the money has to come from somewhere. if it was increased from
inflation alone, 18% excise tax to the 35 cents that's about $1.5 billion per penny increase in the sale -- in the excise tax. so that will produce a $27 billion annual fund for infrastructure. >> and you mentioned this could get done in conjunction where a tax cut. what's your time frame? >> i think it will happen later this year. it's in the fall of the session. >> so you think the -- they're going to get health care done, figure out the tax cuts and infrastructure all this year? >> oh, i don't want to bet on health care just yet but health care is an important component of it, because that's where the pay fors are coming from for some of the programs. >> finally, ten years as a listed company. i think only 40% appreciation over that point. any investors any disappointed with that kind of performance. what do you tell them?
>> listen, the infrastructure environment has been charged around the world. we are very happy with the growth of the company. we have three times as many employees, we have 400% increase in our revenue over the period of time. i think we're at a point of time that it's about to accelerate. we are as well poised as anyone to take advantage of that infrastructure boom that's right in front of us. >> we keep talking about it. we know you'll be joining us along the way. thank you. congrats on ten years. >> thank you for having us. >> mike burke. ceo of aecom. >> now let's send it over to sue herera for a cnbc update. >> here's what's happening at this hour, everybody. a massive explosion rocked a highly secure diplomatic area in the afghan capital, killing at least 80 people, injuring about 350 more. the suicide car bombing happened during rush hour in a neighborhood considered one of kabul's safest. the "uss ronald reagan"
filmed as it headed to the sea of japan. it will be part of the u.s./japanese military exercises in the near future. the russian military says its warships in the mediterranean sea have fired four cruise missiles at isis positions in syria. no information on when those missiles were launched. they say the handbag makes the outfit. well, this is quite an outfit. the bag was made in 2014, it what has 18 karat gold buckles and encrusted with 205 diamonds. the intense bidding went on for 15 minutes. the buyer was not identified. that's the news update. i don't know if i'd carry that thing around. but whatever. >> there is no justification for spending that much on a hand bag. >> i totally agree with you. >> not even that one. which i'm not even a fan of. sue, thank you.
i do want to point out stocks which have turned lower after a higher open at the last trading day in the month of may. we're looking at a 0.2 of a percentage point on the s&p. the dow is double that. it's groups like technology, financials and energy that are weighing on stocks. oil prices down almost 3%. the ten year yield falls to 2.20. that certainly hurts the banks. over to you, carl at code. >> welcome back to the code
conference in rancho palo verdes. vox media announced yesterday a deal with bill simmons formally of espn. joining us here this morning, jim bankoff is the chairman and ceo of vox media. congratulations. >> great to be back. thank you, carl. >> partnership with the ringer and i guess it just speaks to if power of sports and more specifically the power of sports personalities, right? >> vox media is a talent platform. we have klein and many others who build strong bands, go deeper with audiences and bill simmons and the ringer fall in there. i'm excited he'll be speaking in a couple of hours. we're excited to have him on the vox media platform. >> when you talk about simmons as an innovator, what did he do right? how much was his timing a big part of that? >> two things. voice and talent. we call our company vox because we believe particularly on the internet voice matters. substance matters. we go deeper with our
personalities. he's certainly one of them. then secondly he understood the power of digital to go deeply to audiences and to build a loyal following. we think our audiences are going to love him. we think we'll grow the ringer with him and we think we'll attract some great grand marketers that want to attach themselves to quality and personality. >> you have sports, you have real estate, tech. that's why we're all here. >> yeah, with recode and the verge. >> is one of those the engine that supports the other? >> i love them all equally. now, honestly though they all hit consumer passion points. and one of us might be interested in sports. one of us might be interested in tech. we are all passionate about something and it's our goal to expand the vox moedia, to grow. we are growing like everybody else but we're growing by going deeper, not by spreading ourselves out. a lot of media companies you see
dilute themselves. if it strays from what the original premise was. we can grow while being more authoritative or authentic. >> in the food business they call it kitchen complexity. you want to keep it under control. >> right. you see a lot of portals or other companies adding a new section, adding a new section. it doesn't mean anything to the audience. we want to make sure -- or for the advertisers. so we want to make sure that we have that meaning. >> you're interested in doing original shows for facebook. have you come out and said so? >> no, we haven't said anything. i saw the same rumors but it's clear that the platforms, whether it's snapchat or facebook or twitter where we did announce something with twitter around the verge, they're looking to license programming. and in addition to that making it advertising supportive. it's like a mobile itt if you will. we're excited to play there. we create content and brand that
resonates with audiences and we'll work with the platforms. >> what do you think will work best for you? scripted, unscripted, short form, longer form? >> our company is focused on telling great stories like the nonfiction reality based stories. first and foremost, we key off the news. we key off events. we talk to people who are interested. whether it's in food or tech or news or sports or whatever. whether it's short form or long form we're experimenting with both. one other thing with digital you don't have to constrain yourself to the 22 minute format. if it deserves 30 seconds that's what we'll give you. if it deserves three hours we'll give you that too. >> i have to get your take on the broadcast upfront and whether that demonstrated that broadcast is slipping, continuing to slip or finding some legs as cord cutting is becoming more prevalent? >> here's what i think is happening in answer to that question.
quality is finding legs. and broadcast and cable represent quality, we're on a quality network right now. we go deeper. can't say about the internet and i think the marketers are still scared about brand safety when it comes to online. that helps broadcast and cable. of course all the attention, all the consumer attention is going to digital. and so what we're hoping to do and what we are finding that we can do is create scale that the marketers need. but do it in digital. create a brand building environment and they're excellent at doing that. but it can't just be that. it has to be a medium mix and a medium mix of quality as opposed to the undifferentiated sea that networks are offering. >> do you think it's harder for quality to break through? because there's so much political noise. look at kathy griffin yesterday, this dominated the conversation. to the extent of other legitimate news stories, how much of that is a worry? >> i think that brand is going to be more important than ever
because of that struggle for consumer attention. when you're scrolling through a feed, when you're finding search engine results when someone is sharing something with you, because of the literacy that we're developing in this cacophony of noise and there is a lot of it, i think there's an opportunity for brands to stand out. over time you'll want to not waste your time as a consumer. you'll look to great brands whether it's cnbc or others, you'll look to that as a signal. i think that consolidation if you will is going to happen around premiere brands. >> you think the trend of a loud train wreck, right, which has drawn eyeballs in the past, that evens out over time? >> i do. i think it needs -- i think consumers need -- it's in the platforms best interest, because it's in the consumer's best interest to focus our interest. new brands will emerge. i think we're an example of that. certain traditional brands are
becoming relevant. >> how is the ad market real quick? >> i think it's a tale of two ad markets. two low cost stuff, retargeting and answered when you're done buying search, you turn to the big sea of commoditized inventory. that's one market. we don't play there. the second market which is around top of the funnel brand building. that's really starting to grow online as the dollars shift over. and that's where we're focused and that's where the flight to quality is happening and we're encouraged by what we're seeing there. i know for vox media it's going very well and for other big players with scale as well. >> finally, we can't let you go without a word for walt vosberg. >> you're making me sad talking about it. >> we'll talk to him in the next hour. >> i tweeted something when he announced the retirement. i have known him for over 20
years and one of the first experiences was as a product manager at aol. i was so nervous. >> basically pitching to him? >> i wasn't so nervous because he had the pulmonapit of "the w street journal," but because he was so accurate. he told the truth and that's the hallmark of the best kind of journalist. we will miss walt on the team. >> we'll talk to him later. thank you. quick programming note at 11:00 a.m. on "squawk alley" don't miss our exclusive with the ceo of netflix, reed hastings. a lot to ask him about later on this morning. sara? >> i think we'll see you with walt after that nice contribute -- tribute, thank you carl. coming up, jetblue is testing a new way to let the passengers on the aircraft. it involves their face. and the last trading day of
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those lower treasury yields certainly a farther of the story today. ten year 2.20. let's get out to the cme group and rick santelli. >> good morning, thank you, sara. i'd like to welcome andy brenner. thank you for tank the time this morning. >> good to see you, buddy. >> all right. we're at 2.20, the low yield close of the year is 2.17. we have two jobs reporting coming out. adp and the may employment
report both looking for 180,000. your thoughts on where treasuries sit and how they may be impacted if at all with jobs reports coming? >> we have been the same yields for about 11 days in a row. you know w the 2.20 right now to the 2.28 high. it's the 15% retracement from the move we've had and we'll go there. whether it's the adp tomorrow or the unemployment number. i don't think the unemployment number is really going to affect what the fed is going to do. the fed is going to raise rates in june, then they'll do the tapering in september. then they're going to take passes as to who the next fed chair will be. i'm not sure we'll go to 2%. i don't think we'll go back up to 2.40 any time soon. >> you know, today in "the wall street journal" andy, there was an article by a named tom furless. it seems a law professor in
germany thinks he has standing to challenge mario draghi buying bonds for germany. do you think this will get any legs with the german constitutional court? it's a novel idea and on one hand. "b," i want to know what you think about it in principle in general. >> well, as far as i'm not a lawyer, thank goodness for that. but what i think you won't have standing by the time that anything gets determined. the ecb will be tapering. it will be a different role. to answer your second question no question in my mind that the germans are frustrated with the low and negative rates. you have seen it from merkel, weedman. they don't work. look at who it's supposed to be helping, italy. the italian banks are a basket case. $360 billion of nonperforming loans and they can can't write off win. they can't nationalize their
bank. they need higher rates in order to make money. no one can make money in a negative rate environment or at least not enough to survive. this is ridiculous. with 23% increase in company earnings year over year, you don't need negative rates in europe anymore. not even close. >> you know, the problem i see, andy, we don't have much time left, if you forget balance sheet and just look at the landscape of markets trading, you know, it's a c-plus. it is getting better on the global economy. but these exits are going to be very difficult to navigate. your final answer, is the u.s. stock market and treasury market going to be able to withstand what most likely will be reverberations when draghi really does start to pass the reins of monetary policy to something more normal? >> rick, ten years ago today, today, the unemployment rate was 4.4%. you know how equities performed over the next two years. so you know what, i think he's going to have a lot of trouble. i think the world's going to
have is a lot of trouble. even though i don't think we'll be -- do what we did in '08 and '09 i do think we'll be in for a world of hurt and you have to take some risk off the table. >> excellent. thank you, andy. if we only knew what the time line was. david faber, back to you. we on timeline was. david faber, back to you. >> let's send it over now to john fortt with a look at what's coming up on "squawk alley." john? >> well, from here, conference host, walt mossberg and karen switch are going to join us and reed hastings, ceo of netflix will join us and steve balmer, got to talk to him about a number of topics, including sports, microsoft and what he would be doing now if he were just getting started. listen. i think getting into the energy business broadly, which would include tesla, i think there is going to be as many opportunities to make a difference there as anything we
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aircraft and it involves faces. how does this work? >> it is similar to when you have global entry through the customs team. basically, you are standing in front of a camera. it will take a picture of you, facial recognition is matched up with your passport and jetblue is going to be trying this out starting next month in boston. it is only going to be on a select number of flights. these are flights that are going down to aruba, because, obviously, you will need a passport to board that flight. they can test the service and match up the photo you take and the one on your passport. keep in mind, this facial recognition technology, we are going to be seeing this from more airlines in more and different ways. a good exam. delta starting next month with a pilot program using facial recognition to test people dropping off bags, picking up bags, in minneapolis. the idea, similar to what we are seeing with jetblue instead of having to worry about whether or not you have a piece of paper or a particular tag.
you can then go to the machine. it will instantly coordinate your picture with your passport. therefore, you will be able to pick up your bags. as you take a look at delta, the airlines, all of them right now, investing heavily in this type of technology. this is just beginning. we are going to see more of this. you will see the targeted tests and jetblue and delta being two examples. >> anything to make life easier in an airport. we want to direct our viewers attention to the financials. they are the weakest groups. the banking stocks in particular down a little over 2%, 2.5%. a variety of reasons being cited. there are a couple of conferences in which management teams seem to be talking down the idea of net interest income. as people know, the expectation of rates rising increases the
hope that net interest will increase and net income will follow. apparently, some conversation or commentary says, not so much. at least not at this point. still in the positive but curve-flattening nyi qualitative guide to turn more cautious. >> that coupled with the ten-year, down to 220. gordon and j.p. more began are shaving almost 50 points off the dow putting their entire gains in jeopardy. s&p and nasdaq more hopefully in the green. >> yes, they are. that does it for us on "squawk on the street." coming up on "squawk alley," we are going to go live and have an exclusive interview with the ceo of netflix, reed hastings. that's not an interview you are going to want to miss. stay with us.
leaders this month including video, auto, electronic arts, posting double digit gains and these are also leading stocks in the s&p this month. out west for the start of "squawk alley." thank you, very much, susan. good morning. it is 8:00 a.m. here at the code conference in palo verdes. "squawk alley" is live. it is 11:00 a.m. on wall street. ♪ good morning, welcome to "squawk alley." we are out of the code conference in