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tv   Closing Bell  CNBC  May 14, 2018 3:00pm-5:00pm EDT

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>> and i am skeptical it's going to produce nearly as much money -- >> that's what we drove at - >> right >> 2% of the totally gambling take in las vegas. i thought it interesting that i tilman said, hey, this brings people in for special events like the super bowl or ncaa final four and benefit from extra spending >> tbd thank you for watching "power," and "closing bell" starts now. i'm wilfred frost, dow looking to stretch the win streak to eight sessions as they prepare for another round of earnings from the retail sector. i'll give you an in-depth look at the charts behind the market's best start for may in nearly a decade. >> we're at cnbc headquarters, historic ruling that could change sports and sports gambling forever >> i'm david faber in new york, cbs goes to war with the shareholders, redstone, filing a
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lawsuit to reduce her voting control in the company that marks a new low between redstone and cbs plus, two new voices and where they stand on the state of the rally as "the closing bell" starts right now ♪ >> we have a headline from david faber, i told you the bar before was high, but now, wilf -- >> higher and higher every day, every week >> higher. happy monday, everyone we got those stories in a moment, but first we check the markets. earlier major averages hit the highest levels in two months, dow on quite the tear, up 153 points at the highs, cut in half to 80 right now. >> watching as the market movings into the close, of course, mike santoli is analyzing if we can trust the rally, but bob charts the session. bob?
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>> may make it eight straight days for the upside for the dow, but we are starting to run out of the steam this is the s&p 500. 100 points on the s&p is a lot and how much we traveled since the jobs report just a couple weeks ago, and you see the moves to the upside, but we started to flatten out a little bit here, and that's a little bit of a concern for the overall markets r a , and you see the problem with the russell 2,000, set to go, historic high on the russell 2,000, and that was at -- here, we take a look here, right there, with essentially, the historic high, and we failed that's the sign. there's a lot of resistance to get new highs for the markets right now, but it's been a great may. normally, remember the sell in may story here no we're up 4% almost on the s&p 500, 3.4% or so on the s&p, and the important thing is, normally, this is not nearly as good as it typically is. this is the best may we had. end at 3% since 2009, we were up 4.1%, and three sectors have made the difference. number one, it's technology,
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but, particularly, semiconductor stocks that were a major factor earlier on in the year, and it fell apart, really, in april, good part of may, and, of course, we broke that down trend we talked about, seeing the move to the upside. that's been a major market leader, second is the bank stocks teches and financials, 40% of the s&p 500, the kbe, also broke that clear down trend that we had, and that also has been helping the markets. timely, i wanted to know what's going on with the energy this is what i call the third rail of the whole thing because we had a very big move this is 16% move in a few weeks in the xle, the big energy stocks although they are a smaller part of the s&p, it's 6% in terms of the waiting. you move 16% in a few weeks, that makes a contribution, the dow as well, guys? >> bob, thank you. checking back in shortly for more on to trust the rally, we bring in michael santoli, what do you think, mike? >> more trustworthy than the prior two attempts we had in the correction period of getting
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above 2500 in the s&p. it's easier to trust maybe the low end of the range is going to hold than it is that we're going to raise to new highs. things to consider here, first of all, the markets' vital signs, so to speak, are more stable in thenormal range in the starting point of the rally, and volatility index well below 15, others above the 15 level, credit spreads, things like that look like the market is in a more normal condition. that's probably all to the good. also, just the fact we've been in this stretch for so long. three and a half months or so, this correction, time to work the magic, first of all, allowing earnings to grow, make the valuations look less excessive, but i think to get sentiment and investor positioning back to a more defensive stance so that basically it is more of a base the big question, though, in terms of trusting whether this carries on higher from here in the short term, guys, is are investors going to tolerate this level of valuations with this level of bond yields we have not really quite stress tested it for ten year above 3%,
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but also corporate bond yields now if you look at corporate bonds at 4.4%. >> valuation is what now >> 16 and a half times forward earnings >> from back in january? >> january was 18.6. >> yeah. >> that's compressed a lot look at versus bond yields, it's not that dramatic a difference >> bond yield is a stronger dollar how much more a rising dollar do you think valuations can support? >> that's another thing, i guess, we have to be tested for. the dollar index has softened up just in recent days, so maybe that's allowed the market to make headway interesting, the macro positioning -- the macro conditions really stayed steady through the whole stock market period, right? the dollar did not do an awful lot. credit markets and all the rest. >> okay, mike, great stuff, thank you very much, mike santoli santoli coming back later in the show. right now, our strategist, dave, good afternoon to you. thank you for joining us what's your take from the last
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two discussions we had are the bulls back in charge now in the equity market space sm. >> well, i think very temporarily. i'm still looking at this more as a technically based rally, third bounce at the 100-day moving average sell in may is a less powerful move in many respects, breath or volume, than we had previously, and we'll see how far it goes. we've gone back above the 50-day moving average i don't see anything fundamental happening here there's no net new news except maybe we've not broke above 3% of the ten-year note, and tensions stabilized, but my guess is - >> you're sounding like a technical analyst here on the stock market >> what's the fundamentals - >> that's what i was going to ask you. put your economist hat on, mike
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mentioned there's not too much of a landscape change, what do you think? >> i just think it's a roller coaster ride of a market, and i don't think that the volatility, which moves it back,inated here. it's a period where, you know, the big catalysts was we didn't have a hawkish fed statement, and other central banks around the world have retraced some of the hawkishness. the bank of england is a classic example, and so we're not seeing a lot of the liquidity drainage that i think the markets were fearing. the latest inflation numbers were unusually calm. i mean, i'm a long term disinflationist, but i know we're having late cycle inflation pressures and seem to dodge a bullet in the latest ppi and cpi numbers. when you go look at the survey data, whatever it is, these price measures you see right now are really blowing through the roof so the question's going to be, look, i know right now we are just living in the moment, but in the next, one, two, three,
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four months, if we sprint back again .3s on the ppi, cpi numbers, we're back to where we were in february and march, mori volatility to the downside as people price in the fed. that's what the key is right now. >> david, you mentioned the sort of stepping back in hawkishness at the likes of carney how bad is the data in europe and is that the reason of the muscle show we've seen the dollar rise, more because of weakness in other currencies than strength in the dollar? >> that's absolutely the case. a lot of analysts scaled back expectations on what the ecb will do. six weeks ago, market priced 80% of the chance they would go, they are not going to go, and fed will raise interest rates, but according to the last meeting, unbelievably, the futures market was priced 30% of the way for fed to raise rates, and they stuck in the word "symmetric" in terms of inflation targets, which i think
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surprised people that they are not going to overreact, but, again, you know, we're living in the moment right now my sense is that, you know, the 10-year note yield, above 3%, except faster for a couple days, so we already had rationing up we had the initial inflation scare, if you remember when this started in late january, early february we've not moved beyond that. the question for the bulls is, have we been seeing company reach their guidance that's interesting companies are not reaching guidance very much the analysts, despite the fact that first quarter earnings are great, nobody raises second quarter numbers. >> true. >> i look at that interestingly. i think that's a lot of the things we go back to alcoa. they are the bell weather. >> alcoa >> well, at the beginning of the earnings season, they said that -- -- caterpillar, sorry, hitting the high water mark of the year >> yeah. >> it's a possible theory, it's
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the company with the high water mark of the year, but, again, this is largely secularly driven, not fundamentals >> even caterpillar tried to clear that up, it's something to watch. we'll ask the questions as well. thank you very joining us, david rosenberg. >> more than an economist these days, company earnings and charts >> ask him about the market -- >> i loved it. >> put on the technical hat. two big interviews in the show in a half hour, we talk with el-erian and stick around to hear from them both. from betting on the market to the courts, supreme court has a major ruling this morning changing sports gambling and many businesses, many sports leagues, college sports nationwide anyway, eric is at headquarters with more. >> that's right. a win for new jersey the supreme court sided with them, and said any other state that wants to legalize sports
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betting. up to each state to do it. a dozen states already passed authorized betting waiting for this decision. for weeks, nba and major league baseball focus on integrity, and that integrity fee they are waiting for. contrast with the nfl, they are cautious about this, not as in love with sports betting as the other leagues. watch that casino stocks are mixed, depending on the footprint in the country. the technology providers that are generally up, they are just out with a statement over the last few minutes praising the decision and they said they will announce a specific approach later, and that's because if you are a vegas casino, the rest of the country now can get in on your turf, and if you're a casino in a place like pennsylvania or new jersey, that's a good thing. it's going to depend on how each state sets up the rules and which stock you invest in and like the footprint of the casino and others across the country. back to you, kelly >> eric, i guess what's
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interesting to me this afternoon was reading how big the underground illegal sports betting market is estimated to be for some states, it's easy decision process to try to legalize this and take all that kind of to the legal side and grab tax revenue >> that's the thing. an estimate says there's $150 billion in illegal gambling, that's the total amount of betting. if that comes into the united states, generally, a sports bet is a 5% margin business. so if you only make 5% of the number, that's a lot smaller if all these states add in taxes and leagues want to get their royal royalties out of it, if it's not competitive, people still go to the black market where they might get a tax-free unregulated better rate. that's going to be the big game. state by state, that's where the lobbyists come in and try to get these rules underway that every stake holder could theoretically benefit to get the money off the black market >> will we look like the u.k.
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where there's a four betting shop on every corner, william hill, you know them, william hill over here, and that's all they go, that's all it is. >> we have pubs and shops too. >> that's all there is >> depends each state could say it's only brick and mortar casino with the license, only they can offer it, but other states could say, anyone with an online app in the state, you want to bet, go ahead. depends what they allow. >> you're right, there's fish and chips. >> there's a few other things. they have actually -- far fewer than when you were in london >> oh, no. >> it's good not on every street corner >> the fish and chips shops? >> no, no, the betting oh, that's better. >> will it be here in time for the world cup, i wonder? >> that's in july, isn't it? it's going to be, like, this week yeah, no, they'll move quickly >> there you go, favor to
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brazil, 4:1. 50 minutes before the close. at the moment, dow up by 96 points s&p and nasdaq briefly negative at around t2:00 p.m., but gaine back momentum up a quarter of the percent on the nasdaq. we're just getting started stay right there straight ahead, when entertainment executives attack, redstone battle for control of cbs. just switch to a more heated channel. plus, two big voices on the state of stocks. el-erian and howard marks. that's when we return live from the new york stock exchange back in tw minutes. or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives.
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. welcome back, we a news alert on tesla, leslie picker has the details, leslie? >> kelly, elon musk on twitter today in defense of tesla in response to a story in the "wall street journal" this morning, which looked at potential safeguards that were discussed at the company ahead of the fatal crash of the tesla car in march. the article goes on to say citing people familiar with the matter that they discussed
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additional sensors for eye tracking and steering wheel to help the auto pilot system and potentially prevent crashes, but they were rejected on costs. musk on twitter said, quote, this is false eyetracking rejected for being ineffective, not for costs. wsj fails to mention tesla is the safest on the road, approximately four times better than average back to you. >> this, after he put out a note flattening the organizational structure. i wonder because that is because all the executives left. >> exactly more critical if he announced it beforehand >> understandably, there's a lot of trepidation there about getting the technology right lesl leslie, thank you. >> we heard from rob this morning on "squawk box," still very bullish, a big long term holder we'll hear from another shareholder as well. >> there we go >> i imagine rob has more shares >> i don't know.
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we'll ask. >> we'll see meantime, let's look at shares of cbs and viacom moving in opposite directions today. cbs filed a lawsuit accusing redstone of violating a duty to shareholders in pursuing a merger of the two companies. cnbc's david faber is joining us following an excellently delivered headline at the top of the show good afternoon >> good afternoon to you an eventful morning, in fact, hours ago, around let's call it 9:25 when much to the consternation and bewilderment of viacom special committee and national amusements of redstone, this was filed by cbs and the special committee of its directors that's evaluating and negotiating with viacom. the lawsuit, as you mentioned, made a lot of different points and came along with a temporary restraining order that i'll get to in a moment it included claims that redstone undermined the management team,
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spoke to potential ceo replacements, and threatened to change the board it was for these reasons that those behind the scenes said they had no choice but to file the complaint and perhaps more importantly file a temporary restraining order with the effect of preventing her from changing that board. of course, national amusement owns 8% of the voting shares, and at any point in time, redstone could choose to change the composition of the board, and remove leslie as ceo this after what's been months of negotiations between the two companies, over a deal under which cbs would acquire viacom it was not the economics of the deal that were in the way of it getting done, but, in fact, a difference of opinion to put it politely between redstone and leslie in combining the company. redstone favored, and viacom in the number two slot, but came back saying cbs is on the board,
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and mr. leslie nowhere near the company in any way, shape, or form, i want to run it as i see fit, i want number two, and they never came to any sort of an agreement. however, we can give you a piece of news at this point that's not been out there, which is they had come to an agreement on economics. in fact, on the viacom side, it's their belief the timing of the lawsuit, well, it was no coincidence given weeks ago by people particular with the situation, they reached a deal under which cbs would exchange .6135 of its shares per share of viacom. you recall in previous reporting, viacom said they want .68, and cbs said we want.55, and they went to actually .51, and they got a deal at .3615, but it's not a
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deal because they never knew how the company would look like, and redstone or leslie, hard to imagine they agree on anything let's share the statement from nai, national amusements, of course, which we got later in the afternoon around 12:30 they are outraged by the action taken by cbs, strongly refutes characterizations, and ai had no intention of replacing the cbs board, not supporting a deal not supported by both companies, and looks like the commitment to a well-governed process and cbs's action was precipitated as well, more interestingly, raising specific concerns about incidents of bullying and intimidation in relation to one cbs director dating back to 2016 they made every effort to deal with the matter privately and confidentially, but now they can't allow this conduct to stand. annual meeting is friday it was expected they would
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remove the director. we don't know who it is. it's not it's sexual misconduct. we don't know the bullying and intimidation this is the reason they chose to move down at cbs with the lawsuit, tro, and most importantly, they say they are right under the charter to issue a dividend with the effect of substantially deluding nai's vote from the current 80% to 17%ing and that, of course, was given a lot less power here. the directors in question, i've been told, are absolutely willing to step down afterwards. they say they have nothing to gain by headaches and believe they are acting in the best interest of shareholders others, however, say, what do you mean you are acting in the best interest of shareholders? your duty doesn't stop with the public shareholders or the nonvoting shareholders, but extends to all, and now you're in breach of that duty a judge decides wednesday about
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the tro. we'll see about the complaints expectations, though, however, if redstone wanted to, she could very soon file a lawsuit charging the board and these directors with a breach of loyalty, and, by the way, a breach of loyalty carries with it personal liability. guys, that's bound to get their attention into what's become -- already extraordinary, but now it's just all out war, and, frankly, few people have seen anything quite like this back to you. >> does it all go back to why, you know, mark zuckerberg shouldn't have full control of a company? david, is this just, you know, an unfortunate outcome, or is it to tell us something about corporate governance that people need to take away from it? >> people have to be, kelly, aware when you're in a controlled company this is a unique situation in part because you're having a deal, not necessarily forced by your controlling shareholder, but, certainly, heard by the controlling shareholder, and that's key here, one company to
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the next, i would like you to do this, and people need to know they are involved in these things, and controlling shareholders say no if there's a bid made by a third party by one of the companies and they don't want to sell you know that getting in, involved in the first place, and you should know that whether it's a facebook or any other you are dealing with controlled companies of the in this case, though, what's extraordinary is there's a company suing its controlling shareholder trying to gain that control, essentially, revoked >> i wonder if it works. >> yeah. >> who decides, david, real quick, you know -- >> you know, we're in delaware court, and, by the way, if they do this and agree with them, the precedent it sets would be extraordinary, kelly, is they will think long and hard about this in the court. i don't -- too early to give opinions from lawyers, but it's a tough case for cbs to prove. >> presumably hard to prove you're not acting in shareholder interest anyway because people of difference of opinions what's
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best for shareholders. >> that's true the things they claim is, well, she didn't do anything, just said she might do something, thought she might do something, but she didn't do it or remove directors as of yet or anything else, so it's going to be fascinating to watch >> dave, great stuff, outstanding reporting as always. viacom share price jumped a percent and a half in that piece. maybe that was based on pricing revealed >> just a pie there, holy cow. 6.6135 - >> exactly >> every little decimal counts >> that's true >> very much squeezed here in the bottom of the screen anyway, david faber there. tune in tomorrow 10:00 a.m. with lowell mcadam, don't miss that one. >> are you going to be here? >> at 10:00 a.m. - >> no, you're going to the wedding, aren't you? >> i'm not -- not yet. the wedding -- >> do you think you're going >> i'm not going as a guest.
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i'm going as a reporter, which -- >> well, that's what i assumed actually, all right. wednesday? friday >> i'll be here -- >> wednesday >> tuesday and wednesday's show. >> and them you're out >> yeah. >> okay. >> popping up on friday's show from windsor >> in lego land? >> no, they are not marrying there. >> we'll work on it. 35 minutes to go e dow holding on to a gain, and, of course, we're extendsing a nice run, many sessions in a row now, eight we're talking about, and s&p up four, but russell is lower. a man who gained big short fame for producing the 2008 financial crisis has a warning for investors. >> and mohamed el-erian discusses the state of the u.s. global economies for your heart...
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>> reporter: welcome back to "closing bell," we're at the white house where earlier this afternoon white house deputy press secretary sought to clarify the president's comments about chinese telecom company, zte, over the weekend where the president suggested the u.s. commerce department should rescue zte from recent enforcement actions. earlier this afternoon, shaw described the president's motivation saying that china and the u.s. have a complex relationship dealing with national security and economic issues and said the zte issue was raised at various levels in
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discussions between the two countries. as to what specific concessions the u.s. would potentially be receiving in response for any relaxation of treatment of zte, shaw did not comment he did say that if commerce did reevaluate the actions that it had taken against zte, they do so consistent with applicable laws and regulations, of course, commerce has taken a handful of actions against zte. each time they have, they do so after months of investigation into the issue we know the vice premier of china will arrive in washington this week. there's hopes for a compromise on trade unclear if this is an issue that will be worked out in days >> thank you very much, kayla, fascinating story over the weekend, in washington time for a cnbc news update, sue? >> wilf, thank you so much this is what's happening at this hour, everyone the white house says that first lady melania trump was hospitalized this morning for a procedure to treat a benign
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kidney condition the procedure was successful, and there were no complications and remains at walter reed hospital for the rest of the week china announced special envoy will arrive in washington tomorrow for trade talks with the trump administration he is visiting at the request of the u.s. government. the world health organization wants countries around the globe to cut transfats in foods, known to clog arteries and greatly increase the risk for heart disease. transfats have been reduced significantly here in the u.s. food supply but prevalent in low and middle income countries. and a pablo picasso painting titled "the sailor" suffering unspecified damage during preparations for a weekend exhibit for an auction in new york city. the piece was reportedly worth $70 million. it was pulled from auction after it was accidently damaged friday they are working at fixing the
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damage i can't believe that that's the news update >> sometimes with picasso, you can't tell >> depends on the angle, but he's damaged, so there you go. >> oh, sue, thank you very much. sue herera in hq time for the quote of the day from steve eisman. >> legendary money manager predicted the housing crisis a decade ago he gave a take on crypto currencies he doesn't see the purpose of it, what value does it add no one has been able to answer that question for me >> the arguments for and against bitcoin have not developed in six months or so, it's pulled back a lot the bears have got some short term victories, but, you know, credit to the bulls on this relative to a year or two ago, it's settled at a recent level >> i understand the point that in a way, tell me -- what's the value it's adding? you know, sure, you can speculate on the price, and, obviously, crypto is the thing
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that remakes the innards of the financial system more than betting on any one company to do that profitably. >> that argument, i think, has been made over six months, and it's not adding to the detriments now, but settled. the big swing factor i say - >> you get upset when people bash bitcoin, but there's no new reason for it. how were you upset the other day? >> no new reason, like, that's a new point, now i need to sell more the big swing factor, still is central banks, either endorsing or putting it to bed they could develop something new, but otherwise we heard the arguments late last year >> well, yeah. i think you know it's going to disrupt the banking industry, and they are all upset about it. >> oh, anyway, as you can see, bitco bitcoin up a little bit today. other stocks to watch? >> up first, shares of the optics maker up, oclaro, after
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president trump suggested they would help zte it's up 3.5% right now counting on zte for a fifth of the revenue, and this afternoon, word that perhaps what the success might be getting in exchange for softening the stance on zte is some lightening of agriculture tariffs on the chinese side, which would be a big deal >> other stock is sears. the retail giant up sharply today, 6%, and the company formed a committee to review a bid from hedge fund esl investments for sear's kenmore brand. it's run by sear's own brand, part of the business on amazon, development with sears licensing products and sales on that, so all in all, a nice little jump for the share prices over the last month or so, down 50% in the last year. >> 25 minutes to go. dow hanging on to a gain of 61 points here. next up, el-erian talks policy s.comyft ts.and outlook for the
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u. eno aerhi
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the next guest says why despite the winning streak the dow's barely in the black this year >> mohamed el-erian is here,
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thank you very much for joining us >> thank you >> so markets, i guess, reading some of your recent articles, you argue decoupled, when we had that recent pullback because the fundamentals still seem strong in the u.s. economy at least why do you think we saw that decoupling >> i think we have been paying back for last year last year markets far outpaced improvement in fundamentals and improvement in corporates. this year's been the other way around we had solid global growth we've had solid earnings we had record buybacks, and yet, look at the s&p and if you look at the dow, we have not gone anywhere now, actually, that's not bad news, wilfred, because we are seeing a healthy pause in terms of embracing more normal volatility conditions in markets. >> i wonder if the decoupling, mohamed, was not so much in january in the rapid upward
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march for markets, and now we're more normal, and now, i don't know, how serious do you think it is we're goabout six months t from the midterms and markets are pricing that in. is that a big factor >> i think it will be, but markets have understood that this economy is robust that it did power through different political cycles it would help a great deal, both the economy and the markets if we were to have movement on other pro-growth policies. infrastructure, in particular, but i don't think that's priced in by markets right now. >> what about the rest of the world, mohamed strong equity growth in the u.s. and not just globel lglobally, s the surprise to the world, and how much is that a detriment to u.s. equities? >> it's not happening to the same degree or surprising markets. in fact, look at indexes that are surprising, they turned negative, and i think markets got fooled by certain things
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certainly, we had a pickup in global growth, but for different reasons. in the u.s., it was policy-led in europe, it was a natural healing process. in certain emerging markets, you bounced back from a shock, demontization in india, commodities in russia, politics in brazil. we should not confuse a car related pickup in growth with something that spins on itself don't confuse or expect this momentum to build or continue unless we seeserious policies being taken, especially in europe >> what do you think is going on with the u.s. labor market it's extraordinarily strong. we finally got under 4% on the unemployment rate, granted, there's still large portion of the people outside of the work force. what happens next? >> look, we are doing great in terms of job creation. we are doing well in terms of unemployment with one important qualification. the labor participation rate is
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still too low. we have not moved back enough on where we have fallen to, and wages are lagging. so my own feeling is we are going to continue with solid employment creation. wages are going to pick up the big question mark is can we pull more people back into the labor force? that's absolutely critical there's an element of retraining and retooling. >> mohamed, geopolitics, risks underprice the markets at the moment >> certainly not in oil. look at the oil market i think we priced in the sharpness in venezuela, the iran sanctions, and if you look at the oil market, it's not, but for the rest of markets, they learned, wilfred, they learned now to take this stuff seriously until it actually disrupts something, and, so far, it's not disrupted very much. critical thing in oil, look at alternative supplies coming in i think that's going to be the story of the next six months >> and what do you mean by that, mohamed?
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>> i think you're going to see a reaction of shale that's much more pronounced. they have not reacted like in the past because they have been burned so many times by the roller coaster of oil prices, but i think now you will get a reaction of shale, and then -- >> oh, i - >> we'll see what they do. >> investors are blue in the face telling companies, we want profits, we don't want production, and, granted, maybe they can have it both ways right now, but it seems like the companies have started to listen >> correct, kelly, but they can have it both ways right now. you're exactly right, and it's a matter of time until they respond to that. >> all right well, be certainly some relief at the pump, maybe, i don't know, but then if it goes -- comes down and they are supposed to stop, i don't know. mi mohamed, thank you for joining us >> he knows how expensive gas is in california, by the way. >> thank you >> he spends time in europe too and knows it's more expensive. >> mohamed, when was the last time you filled up in a car?
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>> yesterday and it was $4.12 per gallon. >> wow, i thought you had fleets to take care of that for you >> no, no, no, kelly >> cash or card? >> card. >> oh, all right, well, a little cheaper on the cash, but anyway, mohamed, thank you so much >> still about half price compared to europe, so, anyway, mohamed el-erian, great to see him as always. 15 minutes until the close we started the day positively, sold up briefly, going negative for the s&p and nasdaq at 2:00 p.m., but back positive now. still to come, oak tree capital howard marks talks markets and risks. we're right back
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welcome back to "the closing bell," and joining the exchange to talk markets, the s&p went
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negative, in fact, oliver p porsc porsche, and rick santelli is at the cme in chicago what do you think about markets overall? we are losing altitude >> look back where we came from, right, you all watched the markets every day, your my optic on markets and moves and 5% move in the 11 days in the overall market, down a couple handles in the s&p, and everybody says, what happened? >> what's the problem? >> it's an of thing. we shook off the iranian scare news we shook off trade jitters with china, and now we look towards where are we at the end of earnings season? we are getting into that as traders call, never short a dull market it's pretty hard to sell this market short after everything we've seen it overcome recently and longer term, right >> yeah. >> so that's what i think we are doing, digesting where the next move in the market place is, but these are lofty levels for the last five to ten days.
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>> rick, the other move we've seen today is yields tick up again. the ten-year looking at things just shy of 3% again, 2.99. what's driving that today? lots of data coming this week, what are you most focused on >> i think we shot over 3% if not for europe today, europe's rates were higher, and i think that there's a lot of activity in the spread. buying u.s. treasuries looking for lower yields, selling european sovereigns, looking for higher yields. we saw bunds to tens from last decade high in the high 230s there was a hail mary in the end of the session avoiding a fourth down session turning into a light positive news is half dozen basis points higher, pretty much every long maturity in europe, whether it was italy, spain, france, or the german curve, the euro benchmark, up half dozen basis points why? the ecb continues to try to tell
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investors in europe, listen, we mean it, things are going to get snugger, and i think the notion of unintended disruption of monetary and to some extent consider italy and the league in the five star getting together, just a real deal of forces with negative consequences, and investors see that, and that's, indeed, one of the reasons it helped out the greenback today >> good point. that italy 10-year, still, crazy. art just walked by said there's 1.1 billion to sell on the bell. that may be why we see some of the big pressure come on the market after our 5% move >> right >> oliver, do you think, what do you think overall here what do you think the best opportunity is for investors >> we are bullish long term. equities are going to be higher by year end, here in the u.s. and europe we see great opportunities we don't believe sell in may walk away. just because it rhymes does not
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mean it's true, although fun to say. we don't believe in rotation there are seasonal factors impacting consumer behavior that will impact the economy, and so we're shifting into higher quality dividend paying stocks away from the growth names that have gone up so much i mean, some of the tech stocks and other growth names are up 30% plus year to date in a market that's essentially flat >> you like that >> we want chips off the table there because you'll run into earnings trouble >> got it. >> earnings up 25% in the first quarter year over year, and the expectation fortunate rest of the year while still strong is to come down from there, growth stocks are likely to under perform. >> all right gentlemen, thank you we didn't talk tesla, saving that next time >> steve - >> got that to look forward. >> steve, oliver, and rick, thank. s&p turned negative. we'll be right back here with the closing countdown. maybe after the break? in two minutes stay with us (baby crying)
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welcome back, i'm mike santoil at post eight. xerox weaker, was lower, close to 10% down earlier. a lot of plot points in this drama right here fuji film was about to buy majority stake in xerox, but management backed out under pressure from carl icahn and others who want to see a higher price for xerox. nobody knows the process there's a new ceo. the stock is going down in the loss of the fuji bid, but the prospect of private equity down the road is probably supporting it right here, guys. >> mike, thank you very much for that mike santoli on set in five minutes time l. brands move higher, upgrade from citi upgrade from neutral, overweight at jpmorgan citing stable revenue growth for the rating stock there up 3%. we're back here in just a couple
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minutes with the closing countdown. ♪ i just want you close, ♪ where you can stay forever. ♪ you can be sure ♪ that it will only get better ♪ you and me together ♪ through the days and nights. ♪ i don't worry 'cause ♪ everything's gonna be all right. ♪ ♪ no one, no one, no one ♪ can get in the way of what i'm feeling. ♪ ♪ no one, no one, no one ♪ can get in the way of what i feel for you. ♪ ♪ you, you
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s&p intraday, about in the red as we approach the close, briefly in the red at 2:00 p.m., opening nicely at the start of the day, lost a little bit, but hovering flat the last half hour or so. if we broaden out and look at the s&p year to date, as we discussed through the show, yeah, it's a bit of a shame we've gone down into flat for the day today giving up gains, but owe can see the great rally over 11 sessions or so, up 5% for the s&p 500 before today let's just broaden out now looking at the sector performance today. last week, sector performance, energy, big winner, up 4%, utilities the loser, down 2.3% that's essentially playing out today with a little bit less conviction than before half a percent or so up or down for the best sectors opposed to anything more pronounced, and why are we seeing those moves? let's have a look at some asset classes. oil up .60%.
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hurting interest rate sensitive sectors, near 3%, and dollar is stronger against the yen, nothing pronounced bob? >> we lost it. russell 2,000 at 10:00 a.m., we failed at the historic high, 1615, modest disappointment on the day. >> modest the keyword, loads of the guests said throughout the show, there's the bell, up 65 points on the dow, fractionally higher on the s&p, and ringing the bell here was the -- where are the names, national conference of public retirement, and nasdaq was unum. kelly's got the second hour. >> unum. thank you. welcome, everyone. we are finishing up monday with a string of gains behind it. dow kept it alive with a 72 point gain it's the best performer on wall street, about a third of a percent higher to above 24,900 meanwhile, s&p and nasdaq added
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a tenth percent today, closing at 2730, 2411 respectively, and russell led higher in the near an all time high dropped .4% to close at 1600 on the nose in the markets today. moves in interest rates, dollar as well to get to. joining me now, cnbc senior market commentator, michael santoli and dennis berman, and john blank from investment research welcome, everybody topping the dow is united health and johnson and johnson trailed, and symantec rebounded after concerns in earnings and accounting mattel lagged down 4.5%. mike, what do you think of the sort of streak that we're building, and how close are we now to being back at all-time highs? >> i think the market came into the week winded. you know, there was a rally attempt in the morning there was not a lot of buying enthusiasm behind it up 4% in less than two weeks in
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the s&p 500, still in the range of 5% below all-time highs from late january this is the third time we made a run, taking back more than half the total losses of its correction today, kind of gave a clue as to whether we'll hold these levels and build on them or not, but i think it shows you there is price sensitivity out there among investors after this kind of period of choppiness we had >> sure. oil prices moved higher, and brent closed around a three year high at $78 a barrel, and wti crude at 71. dennis, you are focused on the supreme court decision this morning about sports betting >> look what happened in the gaming stocks. >> yeah. >> can i call them gambling stocks >> the bjk is the etf, up 2% >> really a signal event for the companies, and the country as a whole. if states legalize sports gambling as they see fit will have a bunch of follow-up effects. new jersey and nevada the prone states given rates for revenue across
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every state -- >> absolutely. >> it's hard to think they don't want that tax revenue at all >> yeah. >> a big day >> up 2% differentiation in the names, themselves, las vegas names did not do as well as the ones that are regional where they think there's a lot more, you know, territory there. >> pent up demand. >> exactly placing bets after the show? >> i'm not placing bets. >> cavaliers versus the celtics? that sort of thing. >> go celtics, but i'm not a betting man, no. >> john blank, if you bet on earnings from here, what are your thoughts? >> kelly, the thing that that you want to think about is the first quarter of 2016, we had $24 a share in s&p 500 earnings. in 2018, the first quarter, we had $36 a share. 50% growth in earnings in two years. so you got to be bullish going into the earnings season we're looking at, and you got to be bullish russell and bullish tech because it's the growth stocks that are showing up here, and i believe that story myself.
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>> all right well, also bullish is the move in interest rates we've seen with the 10-year crawling back up to 3% now you got goldman predicting more of the jump, and jeff cox has the details, jeff? >> thanks, kelly follow- funny things happening in the economy and could mean significantly higher interest rates. we're talking a rise in the budget deficit amid a drop in the unemployment rate, which has never happened in peacetime since world war ii according to goldman sachs. the trend is a product of the tax cuts and spending coming occupant of washington as the economy, of course, is expanding and jobless rate is at 3.9% what's it mean the government's going to have to borrow heavily to pay up for the runup in debt driving interest rates higher for a number of reasons. particularly, as the fed stepped away from the role as a bond buyer. goldman projects the 10-year yield is bond for 3.6% by 2019 do the math, it's a 20% increase
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from current levels. now, kelly, there's a lot of moving parts happening with the decision to enact stimulus in a midterm recovery, and rising borrowing costs for the government appears to be one of the most important impacts kelly? >> jeff, thank be sure to check out more on 3.6%, granted it's just a number out there. >> get there in a hurry, it's destale id destabilizing and an issue goldman looked for 3% long before we were close to 3% they always overshot in terms of how fast treasury yields go up, but if you're at 3.6% in the 10-year treasury, you are talking 5%, even if the credit markets remain calm on corporate investment >> you said earlier, what does that mean for equity values and stocks we are at 18.5 the multiple in january, and now 16.5. >> here's the thing, if we operate by the rules and range
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of the post-crisis period this cycle, we are stretched and really expensive in stocks versus bonds go back to the rules that prevailed in the '90s or mi mid-2000s, there's more upside for valuations it's not clear you're going to see that adjustment in risk appetite this time that we have. >> maybe, do you have a grand unifying theory, dennis? >> i do. >> share it. >> we've seen some incredible figures in terms of refinancing, so, at least in the initial get-go, there could be a lower impact from higher interest rates. >> true. >> here's my theory. it actually cuts to taxes. interest rates, marijuana stocks -- >> marijuana stocks? >> marijuana stocks -- >> what? huge deal in the canadian stock market today >> put together two of the largest canadian cannabis company. we'll see listings of cannabis companies on the nasdaq and nyse before the year is up. >> connects to gaming? >> what's happening? states need to raise revenue what's creating that impact?
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the federal tax perspective. >> take everything that's outlawed because it's supposed to be bad behavior and say, it's a pension crisis, legalize it all. >> absolutely. if the borrowing costs rise for the federal government, the impact is a burden on the state government gets higher that's why you will see ever-more games stocks and marijuana stocks >> by the way, it's not remotely enough to go around. >> of what >> by taxing - >> no. >> by taxes this activity. >> they'll try >> yes >> your point, mike, this is not big enough to fill the budget hole >> the take of sports betting, even if all legal above board, for all the states that might get involved, it's not going to plug the gap it's not that big of a number. >> except do you think that much shifts into the legal space? >> no. i'm not even sure that's the case how many states are going to - >> if the-- >> it's an after thought in vegas. it's legal there it's not a big slice of the pie there. >> not point, if rates continue
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to rise, we have to do a lot of confronting, whether the state legislature perspective or corporate level, eventually, over time, and so those are going to be some of the interesting side effects >> yeah. there's a few things left to legalize i can think of. >> not that many they are going to get there. >> interesting path. >> you watch we're going to get there >> i don't know. here's the interest rates, 10-year below 3% we mentioned ronny's call on tesla. we check in on that stock, which is actually still down 6% this year the company under investor pressure on growing concerns about model 3 production and, lately, on more executive departures, down 3% today on the back of all of that. on "squawk box" this morning, still bullish on tesla's future. >> i think tesla makes 20 times their money. >> because >> because the opportunity is so enormous issue and people are saying, gee, they spend a lot of cash of course, they are building factories. capital he's going to need to produce vehicles is much less
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than other companies are going to be spending and using less labor, less capital, and producing a better quality product. >> if he does come back and ask for more capital, you'd be understanding as an investor or upset? >> whatever he thinks is the right thing to do, he's a bigger shareholder than i am, whatever he thinks is the right thing to do is what should be done. >> john blank, what do you think about that 20x on tesla, trading 292 a share right now. >> right, kelly. look at this general motor stock, market capitalization, $51 billion. ford stock, market capitalization, $40 billion. tesla stock today, kelly, the same market cap as gm at $51 billion. do i think tesla is the equivalent to gm that's stretching it i don't see how ron baron gets there. i think tesla's already priced up if i were tesla, i would be selling tesla to ford or gm and let them do the scaling from
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here >> investors raise money, still, at these levels, guys, which is hanging over the stock, as he figuring out whether they raise capital that way or another. >> right i think as far as i can ascerta ascertain, baron is in the stock of $200 per share. if it's 20x for him, it gets to 4,000, not from today's price. who knows. he's not precise about this. he's in the great name theory of investing. >> 20x on the size of the company, if it's $50 billion, we're talking, you know, unless they do a huge buyback or something. >> no. it's very hard to get there, those numbers. >> you said, to him, it's about e elon musk. >> he invests very long term, stocks you own forever because it's a massive secular growth opportunity, whether it's charles schwab back in the day the way it was you believe in the grand vision, or you think that essentially they are just consuming capital without a payoff >> do you think, dennis, they
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should sell themselves to the highest bidder who thinks, okay, this is my play on driverless cars or whatever >> you know, i got to great answer to that, but the thing that has got me thinking is the california requirement of solar panels on homes, and so -- >> yes >> there's a a bigger question out here, bigger than cars issue and that is the utility industry it's not a question in the next two, three years, but 5 to 20 years, is it adequate to produce much of your power at your home, particularly if they are mandating this in states >> the actual big picture gold case for tesla is not just autonomous, but the fact that because they've had -- they have all the data on every mile driven with a tesla, right, so if the future is having all that data to create autonomous vehicles in a fleet of them, therefore, displaces uber and therefore the market is that much bigger, that's where you start thinking about, just to say it's going to be up multiple times from here.
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>> john blank, sounds like uber better go public in a hurry then >> absolutely. >> 2019, i think >> i would be selling. if i was musk, i would be focusing on spacex, getting out of his thing, ford and gm would love to scale the business let them do it get out. the time is now to get out, kelly. >> all right well, we'll let you get out. guys, thank you very much, john, dennis, thank you for talking markets today. more still ahead on "closing bell." next up, the state of the rally, what the widely followed market voice that made several big and correct calls before major market events. oak tree's howard marks. plus, how one big name is getting into the home flipping market should you follow? and one social media stock's big comeback do you want to buy in? the "closing bell" with kelly evans live from the new york nuchgeetnsn o itw mites. ou?
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exclusive, howard marks, co-founder and co-chairman of oak tree capital thank you for joining us at post nine >> my pleasure, kelly. >> good to see you you are cautious in the past, especially back in january when the market just went on an absolute tear. what do you think now that we reset here >> ell, i think that the nice -- the good news is that earnings have moved up to somewhat justify the prices. stocks are not cheap, but they are not overvalued like they were a year or two ago so that is the good news they are still not cheap they still -- you know, a lot of good news, bad news in these markets. >> you said, look, the tax cut means, you know, earnings up 25%, but you said, if the market goes up 30%, it's priced in. how do you characterize that today, sort of the what the market is pricing in relative to what you think earnings can do >> as they say, i think that a year or two ago, the pe ratio was high, earnings had a lot of
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potential, especially if they got a tax cut. they got the tax cut, earnings and expectations are now significantly increased, as your previous guests said, i think, it was mike, but all they've done is justify the pe ratio stocks were ahead of themselves, and now i think they are not >> when we are at this point, howard, it seems the big question and the big debate developed is just exactly how much longer we can expect this cycle to go, as you know, whether the economic cycle, the risk taking cycle -- >> sure. >> and financial markets, i know there's no way to pinpoint these things, but do you think that there's a chance that, you know, this thing gets extended for a while, or is it pretty close >> well, you know, back in '07 and '08, people got in the habit of asking me what inning are we in now on the upcycle they are asking, what cycle are we in
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answer is, 8th inning. unlike baseball, we don't know how many innings are >> like in baseball, you don't know how long the innings are either >> if we're in the 8th inning, does it go 9 innings, 11, or 14? now, this is the third longest recovery in recent history if it goes another year, it's the longest. when you are working on the 11th year of a recovery and there's never been one more than ten, you can't say you have the odds in your favor. >> so you do the dan loeb thing? he said there's parts of the market he's shorting, this has gone on too long, and an investor the other day said, music's playing, you got to dance. we remember that refrain from the last go-around from the peak of the last cycle, but as an investor, are you in, or are you out? >> well, i'm neither i don't think anybody can ever be sure enough to either be all
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in or all out. you know, i think you have to calibrate your position. you have to calibrate the risks you want to take relative to your normal risk posture relative to where we stand in the environment. >> can you give us an example? >> well, i mean, look, i think the easy money has been made in the stock market we are in the 10th year of a recovery the markets have basically been up -- this is the 10th year, if this is an up year, and the s&p has queadrupled from the last year in income you say the easy money's been made if the easy money's been made, you want less risk exposure than two years ago or five years ago. unlike dan loeb, i'm not a stock market investor, so i don't have positions like that to talk about, but i'm talking about is what should one's risk posture be today should you be, you know, an investor - >> at oaktree, what's it look
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like for example >> we're in the credit markets, which are different. credit markets are close to their all-time highs, and, and, you know, rising interest rates are flying in our face so our approach is something we call move ahead, but with caution. and we are investing we are endeavoring to be fully invested, but with caution, and since we're a cautious firm, that means more caution than usual. investors every day face two risks. the obvious one is the risk of losing money, and the less obvious one is the risk of missing opportunity. which one, we should ask ourselves every day, do you worry about more today i think you have to worry somewhat more about losing money. >> are you moving -- so sometimes when people come on and tell us they think the u.s. looks kind of as you've described, they say, so, that's why we invest more in europe, or we're investing more in, you
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know, you name it, international market, is that true for you guys or no >> well, our clients hire us they say, here's $50 million for the u.s. high yield bond market, here's $25 million for the european senior loan market. these are not decisions that we make interestingly, if for a credit inves invester, europe is more expensive because base rates are negative our base rate is now positive, so if you do li brybor and 400 , it's a respectable return. if it's eurobor, you're barely talking about a meaningful number >> a lot of investors look at the market for signals to see if things are out of hand or take comfort in the fact, well, if these careful credit market investors price risk in a way that seems like the fundamentals
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are okay, stocks should be fine. >> you know, i think that credit investors gave up their green eye shades a long time ago >> did that? okay >> and, you know, credit is a much more adventurous area than it used to be. i was asked four40 years ago th month to start citibank's high yield fund, and we were the green eye shade risk averse types, and now that's not as true anymore >> do you think all the adults are in the stock market, then? >> no. i think it's kind of similar i don't think it's -- i don't think that investors should take a lot of comfort from the fact people are investing in credit i mean, there's people who want income, and they don't like the income you can get from treasuries or from high grades or money markets, so they are pushing out into high yields and senior loans, and into direct lending and other forms of private credit, and they are knowingly taking risk.
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i don't think it can be argued that they are in a risk averse way. they are bidding, competing in the auction to buy investments and provide financing, and the auction, when it's heated as it is today, takes prices up, yields down, structure down, risk up. and that is why we're cautious today. >> do you consider crypto and bitcoin an asset class >> it's a speculation, and anything -- by the way, diamonds, paintings, oil, anything that doesn't produce cash flowis just a bet on direction. there's no way to rationalize an investment why do bitcoin investors buy it? because they think somebody will pay them more for it we used to call that the greater fool theory. you know, you can't stay that
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it's, you know, it's at 9,000 and worth 18,000 there's no way to find that 18 number you can rarely say i think it's going up, and people tell me that it's going to be in increasing use as a medium of exchange, but why does that mean it should go up? i mean, sometimes people use the dollar more, sometimes the euro more, but that in itself does not make - >> i don't hold the dollar going up tomorrow. >> right >> finally, then, what do you think is the right place for investors to be right now? >> well, i think that they should be cautious you know i mean, look, in credit, which is what we do, credit is stretched, at least as much as the stock market the good news about investing in debt is that if you buy a bond or a loan or a note and if the issuer is credit worthy and pays, at least you'll get
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interest in your money back, and that's very reassuring, i think, and that's not a bad place to be >> howard, thank you for your time >> my pleasure >> always good to talk with you, howard marks of oaktree capital. twitter took off today, up 40% this year m co how fast money traders play the stock, and later, details of a wall street bank making a big bet on the risky, but lucrative house flipping markets speaking of the cycle. wel rhtac'lbeig bk. why many es rely on their own personal property, like their car or home computer, to help them do their work. but they might not know that those items may need special insurance to protect against costly damage, theft, or liability on the job. trusted choice independent insurance agents represent multiple insurance companies and customize coverage so business owners can focus on business. announcer: to find an agent, visit
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. welcome back, eighth straight rally, 68 point gain, quarter percent hike best of any major average today. s&p and nasdaq up a tenth of 1%, and russell negative after leading the charge in the latest run higher, down .4% time now for the cnbc news update with sue. >> hello, everyone, this is what's happening at this time. the white house says first lady melania trump was hospitalized this morning for a procedure to treat a benign kidney condition, the procedure successful, and no complications and remaining in the hospital for the remainder of the week. in albany, new york senator minority leader schumer giving the decision on president trump's decision to move the u.s. embassy to jerusalem. >> i believe every nation should have the right to choose its capital. i sponsored legislation to do this two decades ago when bill clinton was president, and i was
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a house member and i applaud president trump for finally moving the embassy an airlines flight made an emergency landing in southwest china after a wind shield on the jet's cockpit broke off. there were no serious injuries in the incident. the plane was an airbus a 319. scary moments, i think you're up to date. >> yikes >> kelly, back to you. >> thank you so much, sue, herera games stocks mixed after the supreme court ruled new jersey can legalize sports betting. contessa brewer has the latest >> reporter: okay. so here's las vegas strip, the place for decades, if you wanted to make a sports bet, you had to come because it was not legal anywhere else. the supreme court decision changes all of that, and it could be analysts think, as much as a $5 billion impact in the gaming revenue they are standing ready to serve as a model and really share
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their experience in helping other jurisdictions get legal sports betting underway. now, who is the winner today looking at the stocks, scientific games, a provider btb provider of technology for casino companies up 11% on the day, international game tech up 3% on the day. companies that own casinos, nationwide, who can stand to use new sports books like boyd and penn national gaming could benefit here, they were up today more than 3% caesar's up 5.5% think of this. not only does it have to operate casinos around the nation, but it also has a well-established lucrative sports book and can take the model and duplicate it, and then take a look at mgm. jim has been a big proponent of sport s gaming, thought it would be a mover for the industry this year, and hi talked about the impact on mgm on "power lunch" today. >> caller: you see significant
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foot fall into our casinos, having a revenue and taximpact to the states. secondly, because we are an internet based company as well you'll see a significant online presence, and, thirdly, you get the cross marketing to las vegas where we dominate in that market, so all told, if you were to add that together, it's hundreds of millions of dollars of profit to the company >> reporter: all right so now who is the big loser today? wynn shares plummeted today, and when they were responding to sports gaming, they said that they are focused on wynn boston harbor project, and there, whether sports gambling is legal, will be up to the massachusetts gaming commission, and they are looking forward to working with that commission, guys >> i also wondered, contessa, changing the board, wynn is, does that have anything to do with the selloff >> reporter: it's big news, just got it in from the legacy director, who is the subject of
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so much controversy in this activist fight between elaine wynn and wynn resorts has now withdrawn the candidacy to stand for re-election, and robert jay miller resigned from the board we also just got a note here from the controllers office in new york city urging shareholders not only to withhold votes from john, but also from papatricia, only woman on the board, and she was heading up the company's investigation into the sexual harassment allegations against steve wynn this is big news we'll get impact and fallout from that coming up. >> if i see a third iphone in the mix, two iphone stories are crazy enough - >> wait, did you see that? wait how many -- wait, you know, when you have a lot of news, and this one is still attached to my producer >> that is the third >> i shoud give thld give that t
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this point >> thank you very much, following it all there in las vegas. shares of twitter closing up 2% today, rallying 17% in the last week, by the way, and should investors give the stock a follow joining us now are "fast money" traders, pete and guy. in the stance. oh, what do you think, guy, about the twitter? i feel like every time -- this name is so much more up and down than now the major four platform guys it just tends to move a lot. i don't know like we're talking about it on a crazy tear, but what's the latest with twitter? >> more up than down, though >> yes >> last quarter, april 26th, ad engagements up 69% revenue line was better. i think twitter made a mistake i said it number of times. it's not about monthly average users, google does not use it, twitter should not use it. ad engagements are up huge people discounted the company for quite some time. i'm not suggesting it's facebook in any way, but the early days
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of facebook, everybody hated it, and then they got on solid footing. it's taking twitter a lot longer, but twitter is basically where facebook was in terms of people figuring out the story. >> but not in terms of the size it grew to >> no, no, no. >> not close >> no, i'm not suggesting that, but listen, they are doing a better job of monetizing, last quarter was good, and people bet against it because it doubled in six months, that's a mistake >> right yeah >> what do you think, pete >> well, i agree with guy. it's about engagement and video. they have really transformed where they were, even just 15 few quarters ago into the twitter that we see today, and i agree with you it shouldn't be about daily active users or the monthlies, but about the engagement process, and monetizing that, and that was the biggest kris schism we've had for a long time about this stock they were not monetizing properly now it feels like they are beginning, and that, i think, is just the very beginning. i think this is going to accelerate going forward >> mike, how do you think about twitter?
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>> i think of it in terms of potential strategic value. right? they proved there's a real business here, there is a place for it as a service in the world, and there's still not really picking up of really large percentage of all of these digital ad dollars yes, they are going, butin a more grinding way than google and facebook, and so it's really a matter of down the road, is it worth something to somebody? >> from that point of view, then, now it sounds like the shorter howard marks guy said you own it because you think someone else pays for more it, but it's a legitimate exit strategy in this case. >> well, i mean, if you talk greatest fools theory, that's something -- listen, i think there's a chance that somebody makes a bid for twitter. i don't think that's why you own twitter. we talked about this a year and a half ago when this was a $16 stock. we said, the worst thing that could happen for twitter is for somebody to bid $24 and get the stock because you know what, they figure it out, and it's going to be a lot higher in a year, and that's how it played out. >> all right you're hanging on to it. >> you noticed, by the way,
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again, we just want you to see the bob pisani sideways. >> beautiful thing >> slimming. >> get that full shot. >> always wearing, like, the same outfits, the two of you, i mean >> twins >> "dancing with the stars" matching thing going on. >> we can dance out of here if you want see you later! >> see you, kelly. >> they just did that at the exact same time. oh, my gosh, pete and guy, not better than that 20 minutes time for all "fast money" action at 5:00 p.m. > stn. >>kkr risking the market that's all when we come right back that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.
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hello. give me an hour in tanning room 3. cheers! that's confident. but it's not kayak confident. kayak searches hundreds of travel sites to help me plan the best trip. so i'm more than confident. forgot me goggles.
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kayak. search one and done. wall street's getting into the house flipping game. if that's familiar, well, we'll see how familiar it is private equity firm kkr announced iannounce ed it's investing $250 million in turac capital partners, a firm that buys loans made to home flippers. the ceo is here with us in a cnbc exclusive thank you so much for your time. >> thank you for having me here. >> congrats, by the way. >> thank you $75 million of equity investment back in late 2016, just now increased that to a quarter billion dollars. >> what do you guys actually do?
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you know, headline is wall street's getting into house flipping, like, we know what happened last time, but what you are doing right now is taking pools of money from all different types of investors and giving it to people to renovate houses and sell them, is that right? >> basically, that's right what we do is partner on a national basis with high quality local lenders who make these types of loans, and some loans are made for developers who are buying, renovating houses and ultimately sell them, and some of the loans are made for people who want to hold houses long term, it's a combination of the two, but the other day, we set our credit standards and credit criter criteria, and we buy loans on a daily and weekly basis and originators are all over the country, and people in california, new york, florida, texas, and arizona, every other market in between, we are buying loans on a regular basis >> wow >> obvious question, why the opportunity? larger banks have a big balance sheet and footprint are not interested >> typically banks shy away from
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lo loans with a construction element. it's treated poorly from a capital perspective for banks, and they have growth capital treatment for lopes like this, and so it's an opportunity for private investors and private companies like us to come in, and set up a clear set of credit criteria and standards and require loans and flows on a long term basis. >> i imagine it take as lot of people and man hours to go through one by one i'm a hgtv addict, so i'm thinking of my favorite shows in my head, the fix it up and flip it shows, and i'm thinking, how do you know, a, which kind of teams of renovators to bet on, and, b, the quality of each one of these houses, which is so idiosyncratic. >> hgtv is not how it works in the real world >> what? >> you're not surprised to hear that, but what we do is experience is a fico of the business so when you are making loans, the key is understanding your customer have they done deals in that neighborhood, in that local market do they understand local housing market conditions?
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do they understand how much it takes to rehab a house or multifamily building for that matter, and ultimately sell it do they understand what people want in that area. you know where you live, there's a place in this area of town, they want this house, and this area of town, they want something different. you have to know that. >> there's a shortage of housing in the country the new builds are not happening, and so there's a great need for actually this to happen is that something that differentiates it from the last cycle and what happens in that moment when prices stop rising, does the music of all of this stop >> there's a lot that differentiates starting with the most important things, first of all, we use our own money. i think the key of the last cycle in a lot of ways was people were taking loans, makin them, and selling them to someone else it was a musical chairs game when someone else held the music behind it. >> you retain the risk >> we hold all the risk. we don't sell loans. that's the primary difference. prior to purchase of every loan,
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we have our own credit criteria covering loan to value to fico score to experience to what areas of town are better areas of town to be in, and we review every loan to our credit criteria prior to purchase and review appraisals in detail and review the loan documents and notes. everything there is about that loan before we buy it so we make sure the loans meet our credit criteria >> all right i want to know what kind of return you can give me i'm coming to you, fine, i want to invest, i'm going to give you -- you know, what can you give me, what returns are you talking about? >> well, loans in the market range anywhere from 7% to, you know, 10% or 12% in the high end. that's the range there's variation within that. >> one-year type periods or -- >> average loan is a one-year loan, so typical life of a loan is probably nine months. average term of a loan is a year from a credit standpoint, like a 30 year loan or home loan, you don't think about what's
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happening in five years, but what happens in nine months to a year that's obviously a lot easier to do than sort of procrastinating what happens in tennessee in ten years. so we spend a lot of time with a lot of data understanding every market in the country, what are the trends that matter in that local area how long does it take you to sell a house what are home price trends in the area is that house a normal house or unusual house in that particular market >> we have to go, but if everyone crowds into the space, do you feel you can do okay, or is it harder for you guys to make money finding the right kind of housing? >> credit is the most important thing for us we are not changing our discipline, but we have large opportunities to partner with small lenders and buy the loans. >> fascinating, congrats, thank you for talking to us about it following with great interest. >> great, thank you so much. we have an earnings alert now on vipshop >> for chinese brands, that
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company reported earnings today after the close, and as you can see, the stock's down almost 19% on these earnings. now, on the bottom line, that was a miss, about 1.05 per share adjusted basis versus about $1.11 estimated, but on the revenue side, it was a beat. reporting 19.9 billion versus $19.53 estimated by the street they also reported weak q2 revenue guidance, lower than what the street expected i want to point attention to switch, a technology infrastructure company they basically make data centers. stock is down more than 8% after reporting earnings of their own where they missed slightly on the top line, 97.7 million versus 98.7 million the street expected the company went public in october and oftentimes they do so with a small float.
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earnings like this, even just a slight miss, that close to an ipo can be problematic for shares as you see there. back to you. >> thank you, leslie ai is not just limited to silicon valley wall street's biggest banks jump into the game. that's next. bitcoin part two, wall street trader arthur hesay joins us with bitmex
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banks are racing to incorporate artificial intelligence. jpmorgan, morgan stanley this month naming its professor of the first ahead of a.i. research.
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joining me now is laura baird. she heads 50,000 technologist. >> what do they all do >> when we think about the bank it's really a lot of technology that underpins our businesses, how we interact with our customers, how we create our products and services. >> everyone wants to know how many of them are work to go make sure you guys don't get hacked that has to be the number one concern as a bank. now that sanctions on iran might be reimposed look for the first thing they do to look for cyberattacks and they did this a couple years back with our dams and that sort of thing. how do you make sure you're protected? >> we spend a significant amount in cybersecurity and that's focused on identifying threats, proactively mitigating threats and we have multiple layers of defense and so we do that not only with inside jpmorgan, we partner with the industry and
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regulators as well. we spend a lot of advancements advancing our cybersecurity capabilities. >> is there anything you can say about the intensity of the defense that's are needed right now? are there flare-ups? anything like that >> the threat landscape continues to evolve and as we see the threat landscape evolve what we've been focused on is the detection. while wee always see threats every day we see new threats whether it's a vulnerability in software or others, we continuously are able to keep up with those threats by active detection, mitigation, quick identification and remediation of those threats. >> how many times a day is someone trying to hack the bank? >> multiple times a day. >> i'm sure. is it state actors does it feel like homegrown -- are there serious and professional type of attacks or -- >> i think you see a variety of folks that are trying to -- the important thing for us is making sure strategically we're looking
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at the multiple layers of defense and working across the industry as well as with the government around protecting ourselves. >> do you think that someplace you can differentiate yourself is it very different than what you get further down the chain >> we spend over 700 million alone in cyber investments and so when you look at that, we really try to bring for our clients leading edge fraud detection capabilities, so it's not only about keeping the bank safe, it's about keeping consumers and clients safe as well. >> when you said earlier about if you think about a bank it's all about technology. basically it's an information exchange business, right is the money in the account? can i put over here, over there? that being the case, what now is the next step in terms of we talked about artificial intelligence i will say the premises of a lot of financial technology investments is that old banks, the core systems are antiquated
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and we can beat them >> in terms of artificial intelligence and we're really excited while we're seeing great advances in artificial intelligence we need to make sure we can take it and scale it. scale it to the size that we need to scale and also make sure we understand how to explain it. really connect it to that ecosystem of research is important for us. the models are support financial services as well. when we think about applying artificial intelligence and machine learning inside a bank, it's focused on how can we improve the client experience. we know consumers, for example, talk to alexa. they use google home of the they want to interact with us in different ways. we actually just launched an alexa scale on jpmorgan. it's really -- you're seeing these trends in the consumer side translate into the wholesale side. how we can service our customers, those rich engaged experiences but how we drive operational efficiency.
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how can we enable our workforce? our employees, so a trader with information in realtime to ultimately incites to, you know, serve our clients even better. >> 50,000 technologists and counting. we'll let you go. you have your hands for. good to talk with you. >> thank you. stocks just posted their ate straight day of gains. after-hours movers right after this.
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♪ welcome back. here's a quick check on the headlines making news. shares of chinese ecommerce vipshop plunging. data center operators switch also sharply lower after its full year guidance was inline with wall street's investments. that down more than 7%. ad ulent technologies also loaf lower -- not a lot of good news here. >> i don't think it necessarily is about the turnover.
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agilent is part of this group that's pretty strong. >> the market was not up for bad news on that front. >> also down 7.5%. the earning season is overall -- the verdict season -- >> let's figure out what the next catalyst is. >> that does it for the "closing bell" everybody. "fast money" starts now. "fast money" starts right now. livefrom the nasdaq overlookin new york city's time quare. i'm melissa lee. your traders on the desk are pete najarian, guy adami. we've got every crypto angle covered in just a few moments, arthur hayes goes crypto who runs one of the largest cryptocurrency changes by volume will be here. he says something very bullish happened today. place your bets. the supreme court paving away for legalized sports gambling and there


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