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tv   Squawk on the Street  CNBC  September 15, 2014 9:00am-11:01am EDT

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pop-up replica of the neighborhood coffee shop is opening up in new york's soho district and serve free coffee from this wednesday through mid october. maybe we should all go. >> good name. central perk. >> join us tomorrow. "squawk on the street" begins right now. ♪ good monday morning. welcome to "squawk on the street." at the new york stock exchange, premarket is modestly positive as stocks did break that five-week winning streak. we're set for a blockbuster week. a fed meeting. a scottish referendum. an alibaba ipo. the launch of the iphone 6. we begin with the markets trying to reverse course from their first losing week in about two months with the fed meeting on tap this week. >> i'm going to have fresh and bubbling details on the ongoing
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consolidation of the beer industry or at least stories to that effect. apple reporting the biggest iphone pre-sales ever. supply problems raising concerns plus new insight into the company's cut of transactions with apple pay. and this friday alibaba now reportedly planning to boost the size of that already enormous public offering. all right. first up when david promises details, people listen. what do we have today? >> a great deal of talk over the weekend of beer consolidation. we had a story, of course, originally reported by bloomberg that sab approached heineken and said they're not interested in that approach but this morning another story in "the journal" quoting a source familiar or close to the situation that there is financing being put together by ab to purchase s.a.b. according to my sources, that is
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not true. there is no talks with banks at this point. by ab inbev trying to put together any financing for s.a.b. we're no stranger to this story. the first rumors of this kind of a financing were back in june. first reported by the ft. and so, the idea beer consolidation is out there for quite sometime and certainly many look at s.a.b. as a potential candidate for that, enormous deal it would be for ab inbev an entell you this morning there are no talks about any financing whatsoever nor any talks between s.a.b. miller and ab inbev. is there possible -- the possibility of an enormous consolidation, jim? perhaps. there are issues worth thinking about, but did want to put that out there this morning because the shares were up sharply.
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it may, in fact, even prompt the takeover panel in the uk saying, hey, you have to tell us something so you may hear from s.a.b. saying there's no talks and you will hear what i have just reported. >> i did not know that. i felt that bud is a natural buyer of s.a.b. an one of the reasons why i've liked coors so much. tap. moulson. i thought that the regulatory authorities would then sell them -- make it newer to go to moulson. >> correct. that's been a big play in all of this consolidation talk. >> tap is up way too much? >> right. >> way too much. that's totally the way that the consolation got corona and modello. they should fall back on the fundamentals. stop was the tenth best performer in the first half of the year. >> you get momentum behind the ideas and appears clear given the overwhich you ares to heineken not sblinterested in a
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deal and dealing with companies more or less controlled. ab inbev is controlled, also, 52% of the shares owned by the -- well, the inbev and the dutch and the brazilians. that man, wow. >> i mean -- >> $180 million market value at bud and controlling shareholders at s.a.b. >> altria is moving up. you don't want to buy it. >> if they don't want to sell, then you're not going to have a deal of any kind. by the way, also makes it complicated to try for tax reasons do it for stock and the rest purchased for cash. all of this is not to say there may not be consolidation. we know budweiser is aggressive. we know that its balance sheet capacity risen lately paying down debt and could take on more debt. and i can tell you despite all this talk autothere, there's
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nothing actually going on between those two companies. >> i want to be careful here. when you shoot down a deal. smith nephew up ten pointsing d because it didn't exist. it didn't exist. >> as you say, there's a rationale behind it. when you get all of this going, sometimes it creates momentum not there in the first time. >> i was a homicide reporter and i think there's a homicide. he goes, that's too good to check out. run with it. >> really? >> at the ap. >> great editor. great editor. >> if your mother says she loves you, check it out. >> he said do not bother to check it out. just run wit. >> we are getting a deal in the can and that is microsoft has officially announced agreed to acquire the stockholm based game developer. expects it to break even in fiscal '15 on a gap basis and
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close in late 2014. we know the creator of minecraft and where you said this might have something to do with xbox's future. >> i hope so. my trust offers microsoft. the stocks are hot. i don't like how much they paid. i like it if they decide to make xbox -- notice xbox branding, it's being branded. used to be microsoft's xbox. now split up. >> it's non-core. >> that's why i think -- >> you have a board with an activist shareholder. >> the cfo, how many times used the word bold. they have to be bold. xbox is not part of the cloud. i have sources at microsofter and concerned that xbox isn't getting the value. it's number one player for heaven's sake. and people go crazy for gaming. xbox is worth a lot more out than in. >> not to mention as we said, if it were to become a publicly
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traded company, it would have a currency. do deals. not just for cash. interestingly, this deal as microsoft's previous deal for skype is foreign company, doing it with foreign cash. >> love it. i love it. good point. makes me feel better about microsoft. the stock's been good and i don't like to see it come down. >> let's get to the markets this week. as we said, stocks looking to recover from the first weekly loss since august 1st. wall street looking ahead to the fed meeting. investors weighing weak data of china. not to mention alibaba, jim, pricing on thursday. we have a lot of land mines in the path. >> i saw a huge amount of high growth selling thursday and friday to get alibaba, the alibaba deal gains momentum. i can't believe they wait until friday to price the thing. that's dumb. price it wednesday night. they have the demand. don't stoke it further. run the possibilities of overheating and that makes it so nobody does well.
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they have to price wednesday night. it's got to. they ought to just -- putting out the story right now, don't get it ten times oversubscribed. they should price it. now, if you have wednesday night. talk about the market. if you have a wednesday night pricing or thursday pricing, you know, wednesday for thursday pricing, and you have the fed saying something that is like what steve liesman is saying and been saying it every day and getting rid of the word considerable, there's a joke. got rid of a word? did you see they got rid of the word considerable? this week is filled with mine fields. >> not minecraft? >> no. they might -- minefields. i don't like a market that doesn't have a lot of new money in. now, if the fed handles this thing right, there's money bet the wrong way. but the banks were going crazy in the last three days of trading. did you see the way a first horizon going up? >> you mentioned this on friday, yes. >> these banks were so -- market
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leaders. and what was coming down? the iyr. the real estate investment trust. when you see a health care, simon -- avalon bank killed, that's rates going higher. seeing the banks really levered to net interest margin, they go high, the rates are going higher. rates, watch it. 2.75 not ready. housing is not ready for it. nobody's ready for it. 10-year, 2.75. level of selling for most of the market. be careful. cranes, we don't -- the economy is not dead. i know the hedge funds in the world think the economy's incredibly strong. god love them. maybe they're so darn rich they don't know about the rest of us. >> i think if you looked at rolling ten days, last ten days the biggest spike in a year. >> this is a huge move. i wish people were talking about it more. the stocks were sure talking about it. you can't get -- i was watching wells and u.s. bank. both very good banks. they have not broken out.
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if the trend continues and 2.7, well wills go to -- go to 52-week high. at the same time, you're still going to concede the avalon and roll over and all the higher yield bond market stocks will roll over, too. be careful. stocks that were yielding 3.5% to 4% lost the support on friday. that group is not to be owned. >> interesting. apple, the other big story announcing that preorders for the iphone 6 and 6 plus topped 4 million in first 24 hours. biggest presale launch in history and major shipping delays for the 6 plus and apple will get a .51% cut for every transaction and first 24-hour figure, piper has a chart of the iphone launch and the first iphone took 74 days to get to 1 million and now talking 5 million in 24. it is amazing. >> i was judging the summit
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second annual rib and wing bake-off. you weren't there. >> i wasn't. >> it's the beginning of the school year. right? every kid plays sports. play sports. unfortunate if you don't. you're an outsider. no one talked about ribs or sports. all anyone talked about did you put your order in yet? you could see the ground swell. a verizon store. the apple store. this is a tsunami of orders. people are buying 4 and 5 because the deals that the phone companies -- david, your sprint interview, i got people switching to sprint. sprint is basically saying, here's a phone. i walked by the sprint store. no one there. they have to throw phones there, too. >> "usa today" has a piece about if you want -- not the plus. the plus is gone. not getting that for a month. if you want the 6, get in line at a retailer and people are advising go to a 24-hour walmart and don't stand in the rain. >> that's a sacrifice i got to tell you. i want the watch if it gets me
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to 6. >> yeah. >> you know how you're supposed to say i have to get the 6 to get the watch. i want to buy the watch and bump me up. >> i want to quickly add one more thing on the m & a front. i can confirm reports on reuters that germany's zf will buy -- >> it did happen? >> yeah, yeah. you may have seen the story where they closed out their bosh joint venture. >> right. >> and now that deal will be announced imminently. >> that's big. 52-week highs. there's something going on in that business. nice call. >> that deal will be announced shortly. >> that i's important. when we come back, tom lee is starting his own fund. he's going to join us live for a an exclusive interview to weigh in on the markets now. take a look at the pre-market on this monday. busy, busy week ahead.
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welcome back. breaking news. august industrial production capacity utilization, 78.8 on utilization rate. that's a miss. if we look at the industrial production down one tenth a. miss there. looking up for up two to three tenths and the utilization rate revised last month from 79.2 to
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79.1 and those numbers continue to be the best we have seen since '08 and the number at 78.8 takes us back a bit. that's the lowest level since february. and even though these rates are running at pretty high levels it is a bit of a miss after the empire index was so strong. carl, back to you. >> all right. thanks so much, rick santelli. news flow today. getting news out of carl icahn with a 6.63% stake in a 13d filing. you see this, david? >> that's not new. he exercised the call options. we knew about it previously. >> a great story. the split-up bringing value. they should focus on it. a lot of value there because they're really amazing web company. it's fantastic. >> the split-up, remember when he filed that "d." >> he wanted that and got it. >> got in saying to split it and they had done it. he's staying in which may be
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interesting in and of itself. >> meantime alibaba could be the biggest ipo in history. planning to increase the size because of overwhelming demand for the deal according to reuters and launched the roadshow last week and enough demand as you probably know to cover the deal in two days. jim, close it early and don't let it overheat? >> i don't like stories saying we're already oversold. you don't want the old days. waiting until ten times oversold. what you want is three times oversold is big fidelities of the world to get maybe 40% of the position and then come in in the aftermarket. 4% of the position and flip it. so you really want just to have everybody who's a big institutional fund to get a nice chunk and come in the after market and control the dee. don't lose control of the deal over retail. >> they're moving the price higher. >> 70's okay. >> that's okay. the range, right?
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>> yeah. not 66. you want it to be -- there's a number and the number is you don't want to exceed facebook because a lot of fundamentals look like facebook. i'm just saying that for the market needs this deal priced out of the way. it just needs it. this thing is a ticking time bomb. the higher it goes. because the people who will come on our air and say, a-ha, the top, i want them off the table but they will be here if this thing overheats because them it's talk isn't this the top? chinese ipo owned by people that we don't understand the seven family, some woman that's rich. >> i could say i have a company that controls 81% of the e-commerce market in china. that's right. the mine share of the country in many ways. by the way, this country still has massive growth ahead of it with consumers. >> i don't want a $300 billion deal. >> wouldn't you want a piece of that? >> yes.
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if you keep talking like, that it's $300 billion and the market cap because the prc in the end is not a place to -- i love the idea that, yes, they have a lot of the prc but it's communist. can we remember that? can we remember that? >> they seem to buy a lot of stuff. >> well -- >> communists buy, too. >> the back story continues the fill in. there's a meeting that ma had in '99 and cobbled together dollars to bring the company and said our brains are just as good as theirs and nothing to show for it at the time. >> amazing company. i urge people to go to the site. if you have anything you want made, it's like a worldwide sourcing site. by the way, in terms of looking for like slave labor, they indicate they have preferred -- you can't just go and have 300 chairs made. it's for some guy with a sweat shop in bangladesh.
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they care about this stuff. it's a way for world commerce to be able to take advantage of the inexpensive places to build things. it is a great site in addition to the advertising, in addition to the e-commerce of china. it is a real company but i don't want everyone selling every single share of every stock to buy a company at $350 billion because everyone thinks it's the greatest company on the earth. >> transparency is an issue here and there are some irssues. >> there was a deal that hurt retail so much, that was the facebook deal and anthony noto now at twitter understood that and did the twitter deal well. i hope they listen and do a twitter deal. >> all right. when we come back, a look at cramer's mad dash. the opening bell and one last look at the premarket on this monday. don't go away. this is a burrito made with chocolate, soybeans, and apricots.
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little less than seven minutes before the opening bell. a mad dash. >> if i were to tell you that cranes, just the actual cranes doing poorly, you would say, jim, don't you understand business is pretty good in this cub? trx has a miss. they have a lot of overseas business. this is important because this is -- this is construction. and construction's supposed to be what we need to keep the economy going.
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this would imply that things are weak. now, let's go contrast that with united rentals. added to the s&p. this is mike kneelan. taking it to the hertz rental business. it is a business that's just been fantastic. why? residential and nonresidential rentals. i think they'll sell and i want to caution. trx is not terrific. sell caterpillar before you sell united rentals. this is one of the best in the country and continues to buy companies and is taking market share so do not presume that trx is bad news for united. >> you mentioned caterpillar. mining is weak. >> mining in the -- david, if you asked me the weakest industry in the world, i would say it's mining a. lot of that is china. a lot of that is kind of a belief we don't need raw materials because the import numbers of china are not that
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great. i don't like the mining business. one of the reasons i had to leave joy. tell people not to buy joy. caterpillar is doubled down on the mining division and a mistake. been a good stock and i think it is done for now. >> we have a lot more to watch including, of course, caterpillar and trx. "squawk on the street" is coming back. [ male announcer ] automotive innovation starts... right here. with a control pad that can read your handwriting, a wide-screen multimedia center, and a head-up display for enhanced driver focus. all inside a newly redesigned cabin of unrivaled style and comfort. ♪ the all-new c-class. at the very touch point of performance and innovation. ♪
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new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. live from the financial capital of the world. we'll get the opening bell in about two minutes ahead of the very busy five days. we have indications of the iphone to launch on friday. microsoft with a $2.5 million acquisition of mojang and coming back to this, this notion of pulling back on the term of considerable time, considerable period. >> i think there's no need. the last monthly labor number wasn't so good. retail sales were good but there's a question to me about how well autos are doing. housing stocks broke down badly last week.
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getting this trx number, it is a wait a second. i think that's gasoline is going down and restaurants, some because the raw food stuffs come down rather dramatically. i don't feel the great compelling need for them to do anything other than the fact that the hedge funds keep it the way they have it. >> the good data might be an outlier. you questioned last week whether this will be peak gdp in q2. >> i think europe is a disaster. and europe's a big trading partner. i think china is slowing down. i saw that china number. like, wow. the world is slowing. i sure hope the fed doesn't recognize the role of the united states to play here. because europe -- we'll see buying of european bonds this week but i think europe is just slipping, every country is slipping into recession. ukraine, all they do is ratchet it up. enough already. enough already. >> yeah. not to mention we got to keep your eye on the scots and what they may do and have an affect
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on the dollar and geopolitics. >> hold, hold, hold strong! uk. don't want that. i want a uk. >> there's the opening bell. a look at the s&p at the top of the screen. at the big board, the recent listing of the fund. over at the nasdaq, globe specialty metals. producer of silicon based alloys. action in retail today. citi does initiate a few names. costco with a buy. target and wall part in with a neutral. they like costco mostly because it's exposed to a consumer doing better than wall administrator's. >> what i thought was interesting is target. i wonder about 58.59. cornell's with the new ceo of pepsico and people are whipped up in a frenzy that target is a comeback and watch kohl's.
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off 24. they're having a very good run here. and then look at the apparel stocks. the apparel stocks are very strong. ralph lauren. so i like retail. i would have recommended target. i really would have. i would say target can make a comebecome. >> worried about home depot? >> i don't like the way it acts. i think that reaches are -- have to be dealt with head on. i think that frank blake, he's transitioning out of the ceo job. i would like to see a forceful and big fan of blake. much more forceful disclosure of breaches because breaches are the type of thing that create trust. this is the chance to create trust. target destroyed trust. home depot can create trust here. not take advantage but this is one of those where you come out and say, listen, customers, we understand. we are going over everything. we are with you. it's a full court press. just do it. just do it. >> apple's up more than a percent. best buy is the third biggest
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gainer on the s&p. people looking forward to this friday. >> also this radioshack. the overlap of radioshack is big enough that best buy, what? deutsche said to buy it. i come back an say it was a good trade off of circuit city and bed, bath & beyond but it's a trades and best buy a long-term player? it is okay. i'm watching amazon going to come down. >> see the suntrust note today. five reasons why amazon should buy radioshack? >> yeah. i thought it was -- i love rob peck. i thought it was funny. funny. he's a bit of a jokester at times. an excellent analyst. >> has radioshack stock up. >> yeah. >> the shack. >> he's talking about local presence, improved distribution. >> talking with the executives, people are like, you know what?
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they're going to the stores. okay? but they're also going to the sites. they're going to the sites, checking it out and then buying. alta. don't laugh at me. it was the biggest gainer last week. they go to the site. and then they go buy. they try the perfume. hard to try it online. omnichannel is starting to cut in favor of bricks and mortars. peck is thoughtful. rob knows i love him. i'm playing around here but he's been the most thoughtful analyst in the sector. >> official announcement. i'm not saying this properly. in cash. this is around for a while, trw automotive. they had to try to get out of a joint venture they were in. bosh. immediately, they get the deal done. they go back to july 9th and say that is the undisturbed stock
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price and so this is about a 16% premium over roughly what they call that undisturbed stock price. back then. >> right. >> jim, some people -- >> might be a bit disappointed in terms of the number. 7 1/2 times let's call it adjusted ebita for 12 months. >> nothing wrong with that. the stock had a very big run and hearing 105. at a 98, made sense obviously. some people -- if you're disapointed, come on. this is one of the great performers of the era and, you know, get perspective. >> the sector is doing well. >> oh gosh. trust owns leer. leer is great. harmon is trying to goad me into another name like ulta and a company of advanced defense systems basically for the car and the name is -- >> mobilize. >> mobile eye. mobile eye is -- >> mobile eye is a public company for maybe a month. i don't know.
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three weeks. a what? >> going to laugh at me. the end the big blood basket on travolta and i'm right. there's no arm that reaches in from the grave. mobile eye goes higher. okay? they lost and people saying wait a minute. lost the toyota contract. harmon, mobile eye. they tier brains of a car. the brawn of the car is trw. takes brains and brawn to run a car. >> absolutely. although that balance is shifting over time. yahoo! is up to almost $44. >> holy cow. >> $33 stock in the middle of july. a couple of months now and gained 10 bucks as people looking forward to friday. >> get the numbers. >> jim, a question on this before you -- yahoo! was trading down when we thought it might be a $200 billion value and then started to come down from there a little bit. that being alibaba. why has it had an incredible rally of late?
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is it because people believe they'll do something positive with the cash? >> look. it's $70. gross proceeds for yahoo! 9.8 billion. post-tax and what you have taught me and to look at. it's 6.38. okay in they have 3.2. even if they -- >> 6.38 billion after taxes. >> right. >> from what they're selling. by the way, still own a good amount -- >> from china? >> alibaba. selling nine in the offering? >> here's what people are saying. enter prize value is worth zero and ridiculous. right? and then i'm putting together a list of companies that they could buy for 6 point -- grub hub. a home away. they could buy shutter stock. liberty venture. put them together. >> without financing? >> huh? >> that's just pure cash. >> without any financing. i have been saying over and over to buy yelp. doesn't appreciate saying that but grub hub did a big deal last
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week and stock underneath it. maybe that takes that off the table. you can reinvent this company with that money. >> you can. we could have said the absolute same thing eight points ago for yahoo!. said that -- >> surprising that people are so dumb about it. i'm pushing it for ages. >> yes, you have. >> geez. >> i mean, hello. >> could be that. could be people being dumb about it. >> look. people -- how much are they taking bud? bud's not -- i mean, people just -- not everybody watches the show, david. i won't hurt your feelings. moulson. >> almost everyone. >> up 4.9. they're people to say what did favre say? i like the realtime favre. >> i like him, too. >> prefer him. >> saying no deal. >> don't know who favre is. >>over what that is. >> makes pencils. >> i love that stock. >> the old days. >> finally, if you think the scottish referendum is a topic
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only reserved for europeans, look at john oliver on hbo last night. >> i will find enjoyment of bag pipe music. with your people. i believe this particular song is called -- and i love it. just like they -- it e's -- ♪ >> john oliver on hbo. the polls show -- we like to call it too close to call. everybody that you heard from the uk, every famous intellectual, every writer, actor, saying scotland shouldn't
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go. what you need to see are some -- someone who is pro-go switch sides. saying, listen, maybe it's a mistake here. i think right now this is a bad move for the -- rbs is a giant employer and will go. >> banks have said they'll go. >> ferguson and the great piece in "the new york times." >> on squawk. today. >> very smart guy. >> ma ary thompson on the floor frl us. good morning. >> good morning. seeing the markets extend the losses of last year. across the board. the market's preparing far big week. you have been talking about it all morning. mixed data. stronger than expected numbers on the empire state manufacturing index weaker than expected numbers on industrial production and capacity utilization. run through what we're watching this week. the fed's decision on wednesday. not so much the decision but says this the statement following that decision.
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that is what traders are focused on, whether or not they change the wording as to when we might see interest rates increase. scotland vote, of course, coming up, as well, and whether or not the questions it raises. indeed they vote to separate. the alibaba ipo on friday and the ecb unveiling the targeted long-term refinancing operation on wednesday and another thing on traders' radars this week. apple with record pre-orders of the iphone 6. the stock higher despite the weakness in the nasdaq. apple up on 71 cents. take a look at the companies suppliers for the iphone 5 seeing if they're lifted from this. i don't know whether their suppliers of iphone 6. all of them weaker with the rest of the nasdaq. the commodities area's one place to watch, as well. data received from china on factory output very weak and disappointing and put pressure
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on copper and on oil, as well, today. you can see, though, gold, precious metals moving higher and concerns with china data not only factory and retail sales and concern of the slow down in the economy and oddly enough maybe not so much china stocks at a 18-month high on expectations to see additional stimulus. the dow down 19 points. carl, back to you. >> thanks so much. >> thanks, carl. back to beer. we have moving parts. jim mentioned the top of the broadcast and given all the moves and all of the chatter and that really seems to be what it is. worth going over it yet again. what i can tell you at this point is, well, there is chatter out there, there is going on between ab inbev, budweiser and sabmiller. they're also at my sources tell me have been no talks between
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bud for that company and anheuser busch inbev about financing for sabmiller and bloomberg over the weekend said they made an approach to heineken and rebuffed and confirmed by heineken. you have takeover panel rules and requiring the company to say something and heineken saying we're not interested after they came after at us. the idea of consolidation in an industry that's consolidated enormous over the last -- over the last decade is nothing new and the thought that perhaps those leading that consolidation out of brazil, namely ab inbev is also not new. talking about a $180 billion market cap company. large as coca-cola in market cap with enormous cash flow. but that being said, it's tough here. it eels tough for a number of reasons. one is that you have got all the companies controlled.
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heineken controlled and say no thank you. sabmiller with a 27% shareholder. if they don't want to sell, well, it is hard to get them to. if you do a deal, it needs to be friendly and if you're doing a friendly deal, you don't need to be out in the marketplace to raising financing beforehand. by the way, nobody doubts that bud has the capacity to raise that money and do it fairly quickly. same time you have 52% ownership that is voting control and ownership by the brazilians, by the dutch in bud. how much of that are they going to want to give up? how much would they have to give up? here talking about deals of well over $100 billion. for sab. another part of this, jim, you mentioned i think is important because a number of investors playing it this way, this important joint venture of sabmiller and moulson, tap. would they have to transfer that
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because of anti-trust to moulson coors. >> absolutely. no way -- >> beneficiary. that's why that stock is up. >> look at it. >> up so sharply. >> top ten performer in the first half. >> there are gating issues to keep in mind. and just to go back to my reporting. nothing going on right now between bud and sab. that's not stopping the stocks from moving. by the way, heineken sab. makes sense. not that it's going to happen. africa and mexico certainly people will tell you a great fit for sab. but, jim, you continue to have the chatter and maybe gets the companies to think about things differently. send the sab stock up and then back down and never know what you're creating here through chatter and may not necessarily be informed by the fact. >> they make fortunes. giving up two bucks. >> let's head to the bond pits now for a different view of the world. rick santelli in chicago.
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rick? >> good morning, david. well, interest rates definitely movement today. remember, they have been going up but if you look at an intraday what's counter intuitive is the data at 9:00 eastern pretty good. empire, the 9:15 data soft. but clearly, even though interest rates popped a little bit, they were on the way down long before the weaker data hit. now, if you open the chart up to 26, 27th of may, on the far left of the chart is that bottom. at 244. there's another one over to the middle of the chart, once we settle above that, a week ago friday, off to the races. there's congestion between 262 and 265. right about where the market stopped but there's also other influences going on here. we know that the flattening yield curve is a green light for basically a rally pushing rates down. but look what happened since august 1st. tens to twos, major steepening and looking at something other than a two year, a fed week, not
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steepened as much but steepening. we core late with boon yields and still not moving the spread. look at the boon spread of 10s over there and there and here. why is that significant? controlling us. july on the euro, dollar is the best level since july of 2013. carl, back to you. >> thank you. alibaba could be the biggest ipo in history. we're going to talk to the former ceo of yahoo! in beijing with ma. we ole find out what he thinks about the deal when we come right back. don't go away.
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luxembourg this month. and how they're bracing and preparing to respond. >> what you don't want to see. this is exactly -- morgan stanley note negative. this is being sold with the idea to run up. trade is done. maybe the european competitors are vicious. sell this and go buy -- get one third of the alibaba from the broker and two thirds in the aftermarket and why it could be at 75 by the end of the week and just selling in order to raise money because alibaba's cheaper than all the companies are selling. even at 75. even at $75 a share. >> cheaper on what basis? >> earnings per share. earnings per share. not trying to do cash flow. not the -- david ebita faber. >> it is important. people think by 18 talking about 13 billion in ebita at alibaba. it is incredible. yeah. i mean, ten cent, priceline, facebook, google, where to look
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in terms of multiples. >> exactly. >> not to mention 14 billion in cash on the balance sheet. >> it's a model security. i get nervous when it has everything. except for if -- >> we'll get stock trading with yim in a moment. dow's down 22. 're custom made t. you can't get any better than that. siemens trains are not your grandparent's technology. they're something that's gonna change the cities we live in today. i find it so fascinating how many people ride this and go to work every single day. i'm one of the lucky guys. i get to play with trains. people say, "wow, we still build that in the united states?" and we say, "yeah, we do!" this guy could take down your entire company.h? stay with me. on thursday a hamster video goes online. on friday it goes viral - a network choking phenomenon.
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♪ time for cramer and stop trading. >> there's no bigger bull on the oil and gas renaissance in this country than i've been. but watch oil because if it does not hold the 90 level, people start talking about maybe drilling would be cut back. that's why offshore drilling market rolled over. and transocean hit a bottom. bp a lot of people feel that's the company with russia plus. everything's going wrong at bp. that's not true, by the way. i think bp is recovering well and this is the group that's rolling over for weeks now and those who are oblivious to it
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recognize this is the hiring machine in the country and unless they can export and start, you know, oil goes back up, the budgets are not going to go up as much for 2015 as people think for oil and gas. this level's got to hold. very important level. >> tying strong dollar and russian sanctions to weaker job growth in this country down the road? >> the oil and gas, the state that is have the big unemployment number that is are really terrific are oil and gas states. that's the leader, president doesn't talk about it. created in oil and gas and don't want to see it go below 90. you don't want to see natural gas back to 3-2. they'll pull back. if they do, then the states that have been booming and 13 states touched very closely by this. have been the job creators. you don't want to see that if you're the fed. it will actually make you blanch. you don't want to see oil go below 90. that's the level to hear sell
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drillers. they've been sold for weeks now betting this is going to happen. if it doesn't, you might gate snap back. but right now be careful in that group. it doesn't stop. >> all right. >> what's tonight? >> a couple of companies. franklin squares. so many of the viewers of "mad money" focused on yield. this is an 8% yield. how do you do that in this environment? take too much risk? find out. 8%, that sounds pretty darn good versus 2.5%, .6% in the market. >> colts and eagles. >> geez. you know, it should be a "w" for the colts. i hate to say that. >> luck is on their side. >> we have met luck. he was talking to me high energy physics. i was trying to talk about how the offense looks with wayne back. an engineer by trade. valedictorian. really smart. >> see you later.
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good luck sort to speak. >> good morning to you, carl. the latest on the pricing of alibaba. looks like jack ma leaves more on the table for investors than we thought late last night and the man who some years ago first pumped a billion dollars of yahoo! cash into alibaba in return for that 40% stake. dan rosenswieg and tom lee. he thinks you can get a 6% return on the markets to the end of the year. that and more in hour two of "squawk on the street." so what we're looking for is a way to "plus" our accounting firm's mobile plan. and "minus" our expenses. perfect timing. we're offering our best-ever pricing on mobile plans for business. run the numbers on that. well, unlimited talk and text, and ten gigs of data for the five of you would be...
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♪ welcome back. we begin with the arrival of alibaba. shares trade this week and the biggest u.s. ipo looks to get bigger. overwhelming demand for the deal. broader markets extend last week's losses after weak data of china, cutting global growth forecast. oil continues to slump. tom lee, former jp morgan chief strategist with news this morning and the view on the equity markets.
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heineken rejects a takeover bid with inbev in the wings. will the beer producer get swallowed up? >> first up is gearing up for the ipo later in the week. kayla is here with new reporting of alibaba and the pricing. >> hey, in the last week of any deal this is when you see some of the engineering of exactly where the price is going to fall. some of the details coming into place and my sources telling me later on today likely after the bell we'll get a filing in which alibaba will raise its price range for the ipo set to -- set a final price on thursday after the bell and start trading on friday. of course, that initial range $60 to $66. the new range above that but not above $70. that's an important distinction thinking about the fact that alibaba critics it could be a deal to overheat the market, stuffed too much equity in the
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hands of the skeptics getting cool on equities and the company and the underwriters want to be very careful not seemingly overprice this deal despite the fact that desire is overwhelming. it is conservative to see the company still setting that range below $70. that conflicts with some earlier reports of above $70. well, that's not the case. >> cramer in the 9:00 suggested pricing this early and not letting it get out of hand s. that a remote possibility? >> it is but you technically don't really like to have the price hanging out there and letting people weigh in for a full 24 hours before you start to trade. i mean, this is set to trade friday morning. alibaba employee vs a big party. they're going to be watching the opening trade from an auditorium at the headquarters in china. there's logistics around that friday date and i can't see a situation where you would want to price it early. >> i this is important to point out what's happening here and to lay it out. some people believe that alibaba
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is worth 40% more than what -- that original price range was. they're raising it by maybe two or three or $4 only. so they're still leaving a huge amount of money potentially on the table for those people that are able to get in on the road show before they close everything down. >> that is true, that's true. that's typically how you like to do it. some say that the company if they priced it higher getting more proceeds. >> jack ma is not selling in any large scale. >> the company is selling a good percentage of shares. i mean, the company is newly issuing over 120 million shares of stock. so the company alibaba would get more cash if they priced it higher. that's an important distinction. yahoo! would get more if they priced it higher and all parties look like they want it to be conservative and go well and quiet sketices saying this is already overvalued. >> thanks for that.
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with the roadshow under way in long congress, susan lee has more on ma and company on the road. >> homecoming of sorts for alibaba's management team as hong kong is the gateway to china and alibaba's main market. so it was a hot ticket item in the city of hong kong. 500-plus from the investment community clamored into the ritz carlton hotel for the lunchtime address from jack ma and jack ma and the executive team had to bring the charm offensive talking to a broken community, an investor community that felt they missed out on the monstrous alibaba ipo and they believe they knew they knew it better and where they listed the b2b site in 2007 and the ipo went to new york instead. charm is exactly what jack ma brought. he said that he still believes in hong kong. in fact, alibaba that was missing out on listing here in the city.
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and alibaba will continue to invest in hong kong, as well. now, jack ma using this opportunity and pointing to its overseas listing as a way to try to redefine the company. >> not a company from china. we are internet company happen to be in china. >> now, as for allocation of shares, not expecting much here in the pacific. a lot of investors have been putting in these billion-dollar orders hoping to get 1% of the allocation. those lucky enough to get one on one meeting with alibaba's management including the big hedge funds out here and the big fundies and hearing that sovereign wealth funds got a chance to speak face to face and now the roadshow goes on to singapore. the lion city. and also be able to get an audience with jack ma. from hong kong, susan lee for cn cnbc. the worldwide resources in
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operation there. more from portfolio manager and managing director of capital advisers. welcome to the program. >> hi, simon. >> thank you. >> let's return to the news of kayla breaking at the top of the hour to raise the price range tonight and not a seven in the fig figure. i see you think fair value is $90 a share and indicate to leave potentially $20 a share on the table for those very early investors. >> yeah, simon. we are very surprised. expected a number in the 70s. look, this is a very dominant franchise. if you look at the e-commerce and china, alibaba properties accounted for 84%. did 250 million in gross volume last year and did it with 231 million active users. 17% of the chinese population. we think this company grows early in the 30% range for a
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couple of years. looking at where projections are for next year, 7 billion. apply a 30 multiple to that. and you get to 220. that's about $90 a share. >> if you welcome at the growth projections over the next two or three years, the price earnings ratio drops dramatically. larry, will you get your hands on some of this stock? >> i doubt we'll do very much. our organization's largely a value investor and we don't like to participate in this kind of a frenzy. we do like to watch it and understand it. we have been very active in yahoo! and done very well with yahoo! and played ten cent in south africa and i'll just have to see how things go. i certainly agree wholeheartedly with channing. i think the question is not that what happens as he predicted happens. it's a question of how fast it happens. my own guess, simon srks the
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market frenzy is strong enough so that it may happen in a couple of hours or a couple of weeks. i think the first day's trading in this company will be well over $200 billion market cap valuation. >> channing, what about people sitting at home? obviously, i think it's now almost an objective statement of fact to say we get a bounce on this stock at the open. if people sitting outside of the process, what would your advice to them be? should they -- they attempt to trade it. do you think it will over the first 12 months do what facebook did or do you think those other concerns about the ownership structure could take hold further down the line? >> yeah. you know, i think you have to be patient and disciplined. that's what we're going to do when this thing comes out. anything under 90 is probably a buying opportunity. above 90, be patient and wait. i think the difference to remember here is when facebook came out, their business model wasn't proven. they didn't have a way to really going to make, you know, the earnings and revenues numbers.
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they developed that. looking at alibaba, they have a strong business model. that's established. i don't think you see the pullback of facebook. and so the opportunity probably isn't there to see a big drop in alibaba. although we think it's a volatile name. it's going to come out, trading, you know, very volatile the first day. be patient. if you don't get it below 90, wait, see what happens. we have to see earnings reports. there are regulatory issues and warts on this thing. be patient. >> okay. it is a big week for tech. most weeks seem to be big weeks for tech and in addition to alibaba trading here on this floor on friday, friday's when the iphone 6, both versions, larry, become available. we have had some figures overnight that apparently they have pre-orders over 4 million models in the first 24 hours of that appearing on the site. what do you make of the stock, larry? up 35%, 36% from tend of april. is that a value proposition for
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you? >> oh, absolutely. i think i look at an apple as a consumer product company. the products basically expand the echo system. the payment system i think is going to push them into a bigger more luke rative market and if the fingerprinting technology works, simon, i think the stock has 30%, 40% ahead of it. we'll have to see on that. but this company's priced a lot cheaper than mcdonald's and coca-cola. granted, it has some tech risk but given the demand for the iphone 6, the tech risk is probably pushed back for another two years so i just think this is a great situation that basically everyone should earn -- own and mountains of free cash flow here. it's not like alibaba. you have u.s. accounting here. you have u.s. governance. you don't have to worry that tim cook's going to buy a film company as jack ma did.
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>> or hive off the payment system. we are out of time. i want to double back. you said if the payment system or the fingerprinting technology worked, you could get 30% or 40% upside. can you briefly explain how you get there? >> i think what you're going to see is a multiple stretch, simon. all you have to do is move the multiple from 10 to 13 or 14 which would put it up with coca-cola, perhaps pepsico. top quality consumer product companies. you're going to see in the next couple of years probably 15%, 20% at a minimum growth in ebita. monstrously more than that in free cash flow. you should get vigorous dividend increases but the main thing on the payment system, hard to put the numbers on it. you don't know what's going to
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transpire. is i think there's so much fear by the consumer about systems being hacked and fingerprint system i think is way more secure than what we have. >> okay. >> the first guy to get it will walk to the bank. >> thank you for your time. larry joining us and channing. thank you both. >> thank you. good deal of speculation today involving consolidation in the worldwide beer industry. now much of it may not be based in fact but moving many of the large brewers' stocks higher this morning. one thing we do know over the weekend bloomberg story confirmed this story by heineken and said it was approached by sabmiller and rejected that approach. heineken putting a brief statement out saying it's informed sabmiller, the heineken family, of the intention to preserve the identity of heineken as an individual company and we have stories that
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indicated that ab inbev was interested in or was talking with banks about financing for a massive purchase of sabmiller itself. now, this rumor is around for quite sometime. it was back in june where there were other stories about potential financing for such an acquisition. i can tell you this morning there are no talks currently going on or underway of ab inbev and sanks for a deal and or any talks between ab inbev and sab. but all of this has gotten -- well, a good deal of foam if you will going in the sector itself. with shares of bud up over 3% or its adr. sabmiller this morning up as much as 10% to 12%. you also have moulson coors up sharply because of the idea that if there were ever to be a deal it would have to divest itself
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of the ownership in the joint venture of tap of moll son coors and sabmiller and coors would benefit taking over that jv. none is to say there won't be consolidation at some point but they're controlled companies at this point. sabmiller with ultri. the family at 14%. of course, for its own part, a b inbev is controlled. they're not going to sell. they're the biggest by far at 180 million in market value. you have a lot of difficulties getting deals done on an unfriendly basis and does not appear, does not appear that sab is interested in a deal happening given, of course, their overture and rejected by heineken. carl? an exclusive interview with tom lee of jp morgan and out
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with his own firm and a new market call, a lot of people want to know if tom is as bullish as he was when he left jp morgan. we'll find out in a minute. when change is in the air you see things in a whole new way. it's in this spirit that ing u.s. is becoming a new kind of company. ing u.s. is now voya. changing the way you think of retirement. whenwork with equity experts
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for over 60,000 extra curricular activities help provide a sense of identity and a path to success. joining the soccer team. getting help with math. going to prom. i want to learn to swim. it's hard to feel normal, when you can't do the normal things. to help, sleep train is collecting donations for the extra activities that, for most kids, are a normal part of growing up. not everyone can be a foster parent... but anyone can help a foster child. ♪ he was the former chief u.s. equity strategist for jpmorgan.
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many said he was too bullish w. the s&p where it currently sits, the call is accurate. today he has a new research firm. he joins us here on set this morning. tom, welcome back. great to see you. >> thank you, carl. >> where have you been? >> i had to spend time at the beach thinking about what i wanted to do and the firm to create and then the last couple of months extremely busy. real estate. put the team together. report. rebuild the databases and finally ready to serve dinner today. >> before getting the calls, what do you make of what the market's done after some of the calls you made while you were at jpmorgan? feel vindicated in any sense? >> yeah. yes and no. one of the things we thought would be interesting this year was that value would sort of be the regime shift. the market start to favor value and mega cap tech and taken place. i think that's one reason
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managers had a tough time. they didn't catch that shift. i do think a lot more people are bullish and less important these days and more story about how do you find outperformance. >> you have a year end target. >> yep. >> multi-year gains of pent-up demand and better household balance sheets and managers to play catch up in q4. >> that's right. >> what will they chase? >> well, historically, when you you have managers behind the bogey and this is one of the worst since '97, they try to chase beta. the market is worry about fed language and timing and all a head fake. getting sort of a signal of stabilization, the market will rally strongly just like last year and then see guys chase the tech. >> a signal of staeblization. what does that mean? >> i think what it is going to be is evidence that bad news like, in other words, a
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statement is already discounted and already going through the process now where the market's nervous. thinking about the negative implications of hawkish talk. i don't think the mrkt's going to correct in the fourth quarter. >> fascinating. so you believe just to paraphrase here to go through the end of qe, presumably starting to get clear signals of interest rates on the rise from the fed and will get towards the end of the year, and still through that the market can rally 6% which is the call? >> that's right. believe it or not, that's really kind of history. you know? the market is very classic. right? the bull market almost followed the playbook of past bull markets. fourth longest in history and history shows tightening only hurts stocks after the first hike. in other words, into the event as we worry about it, generally markets do pretty well and i think people are worried now and so this worry is what's going to allow us to re-rate and push markets higher. i know it's counter intuitive. >> the beta chase.
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you used that at jpmorgan. a good indicator i guess. i know you already talked about it. how big will the move be conceivably? >> last year the set-up was similar. more managers underperforming. only 10% beating the benchmark. 26% is normal this time of year. huge, huge underperformance. last year, fourth quarter, a 10% valley. i think 5% for better. and, again, it's investors are gloomy. they have a reason to be going to cash. that's a reason to start thinking about why to buy. >> what sectors? any in particular? >> the two groups that i think make sense to continue their strength into year end is technology and health care. tech is interesting. the industry's huge free cash yields, really good roes and
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value momentum stocks and the theme for year end. >> game it out beyond year end. driven by better positioned households. are you see indications that retail will be a new entrant into equities in '15, '16, '17, beyond? >> yes. i think the public starts to rethink stocks and maybe cash with potential for higher rates and the reality is stocks are still two standard deviations cheaper than bonds. >> hang on, hang on, hang on. that's not a fair comparison. it is but it's the bonds massively mispriced. not the stocks surely. >> that's exactly. but we have to remember where's the money? the money into fixed income. just a tiny reallocation, that's $400 billion. i mean, that could be 100 points in the s&p. we have got a real flow story
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that comes as investors rethink allocation. money into the stocks coming out of cash not fixed income. i think there's pent-up demand in businesses, as well. >> some might argue why would an aging population want to go into something riskier than bonds, right? >> yes. >> general evidence that even if discretionary income grows a touch, they're not spending it on retail. august numbers aside. >> yes. i mean, it is interesting. we have got massive accumulated wealth in the u.s., right? equity to gdp close to 300%. no other country in the world is richer than the u.s. dollars or percentage of gdp. in europe, where the population's older, allocation of hedge funds is higher than the u.s. so i think there's still a case to be said that the riskier asset is fixed income. stocks are less risky and under allocated. >> you haven't been bearish in a
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long time. >> that's right. but we do in the report outline four things that mark the peak of this bull market. you know? we looked at all long bull markets. we found four things that occur near the peak. in front of the peak, actually. the first is investment spending gets to 27% of gdp. only at 23% today. the second is profits usually peak 50% above the old high. we are at 24%. s&p earnings to get to 150, 160. the curve has always inverted in front of the top of the bull market. the long-term curve. the 1030. today it's 75 basis points. steep. and you kind of don't like that but relative stocks are more expensive than bonds. >> we're not -- close you'll probably learn -- >> four things to watch. yield curve we think the first. >> inflation spikes. >> correct. >> please come back often, tom. >> i will.
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thanks. glad to be back. >> tom lee joining us from fund strat. yahoo! executive that went to beijing with a billion dollars for jack ma for a 40% share of alibaba. he is back in 2005. take a look. >> everybody searches. and everybody's going to be buying on the internet. and china's got the biggest market in the future for the internet. >> that was predicting the dominance a decade ago. he is with us next on "squawk on the street." [ male announcer ] what if a small company
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welcome back to "squawk on the street." a couple of drug companies in the news. gilead will join a cheaper pill for hepatitis c for countries like india. the shares off by 2%. and then there's avanir surging after positive results of the treatment of agitation in patients with alzheimer's disease. at an eight-year high.
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the shares up by 64%, carl, in today's trade. back over to you. >> thanks so much. coming back, the former chief operating officer of yahoo! there he was in beijing with jack ma. on the week of ipo of alibaba, how they're reaping the rewards and what it means up after the break. ere was a credit card where the reward was that new car smell and the freedom of the open road? a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one. redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac - with no limits. so every time you use it, you're not just shopping for goods. you're shopping for something great. learn more at take and... aflac! and a gentle wavelike motion...
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this is what dan rosenswieg
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was doing in 2005, joining jack ma to announce a $1 billion cash injection from yahoo! in return for a 40% stake. today, dan joins here on set. the president and ceo of and former coo of yahoo!. >> i can't believe it. it was almost to the day. right? >> yeah. almost there. the times of a nice reconstruction of the days a couple of weekends ago. when was the first time you heard his name? >> first time was from south bank. we had been working in china. we had not had success. the government pretty much determined no u.s. company would be successful on their own in china and i kept asking around. what will they let you do? e-commerce, e-commerce, e-commerce. i met with ma and said what company do you like? i just invested in alibaba. at the time, if you go back and look at alibaba's home page, it was yahoo! except it said alibaba on it.
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so brought it to jerry. and then jerry said, look. build a competitor and then leverage and then go talk to him. that's how it all started and then jerry, toby, all the guys, you know? we had a great time leading the conversation. >> meg witman wanted to do a deal. you did and she didn't. what was the difference? she wanted more ownership. >> they bought a company. right? i think each -- >> at ebay. >> now. and now with hp doing a phenomenal job. the philosophy of u.s. companies at the time buy a company and then control the company if you were in asia. so yahoo! had done that in korea but we had learned from yahoo! japan you didn't have to that. the gaitway was an investment or a partnership and not taking control and jack was clear. they were never going to give up control. that was the difference in being able to make the deal was. >> 81% of the e-commerce market in china.
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seems impossible to be one company responsible for that. >> it is amazing. by the way, 81% of what it is today. the country barely begun to do e-commerce and just betting on china, alibaba is a great place. >> might be a good company. >> wish i thought of it myself. >> i'm sure you do. all that being said, what are your thoughts now, particularly when it relates to ma and leadership of the company. obviously, a number of people below him and seemingly wandering out the core of expertise buying, i don't know, movie -- what? movie companies. sports teams. things of that nature. >> yeah, look. there's questions about transparency and what i point back to is looking at the u.s. companies that everybody loves whether it's facebook or google or linkedin or even twitter, all of those have controlled ownership also. and what it allows people in the technology space to do is continue to make bigger, longer bets. so one of the reasons that we did the deal with alibaba is we
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launched a competitive auction site in china and jack announced not charging for ten years so it gives him the ability to think longer and look what he's done with it. the truth is whatever you want to say about what he might do that's an indication. >> the only complicating fact is a totalitarian government, as well. talking about a company behaving in a capitalist way in a country not necessarily comfortable with that or may not be comfortable in the future. >> right. >> the relationship with the communist party got to be great. it's a very, very complicated situation. longer term, could let people down. there's so many variables. >> it is a very fair question but i think that the difference between alibaba and most of the other companies is alibaba is not in media. and what the chinese government wants is commerce. alibaba bringing chinese companies to the rest of the sworld a huge advantage to alibaba and why we were at
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yahoo! and never buy any of the content companies because that's what the chinese government wants to control but the opportunity to create jobs, commerce, wealth, they're for it. and there's no downside for them having chinese companies -- >> what's the biggest argument for being leary of the stock? if you think there is one. >> i don't think there is one. frankly, you know, there were people leery of facebook. 100% of the users were on mobile, of course it was going to figure out mobile. alibaba, you know, the questions about how big does it need to be and other places in the world is a question that's an interesting question and unknown how successful they're going to be out of china. but the fact is with that currency, they can buy into any country they want because to your point, you know, the rest of the governments will let them. it's the chinese government that will not the american companies buy them. i talk to the same ones. back up the truck.
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all right? try to get as much as you can. >> everything depends on the ultimate number and s and or where the stock trades. you know that. >> i know that for sure and living proof that's a complicated situation. you have to keep fighting, work your way out of it. that was the same question of facebook and if anybody held facebook, they would be mighty happy to tunnel the money. >> love to get back to the old employer, seeing your bright, shining, young face back in 2005. >> yeah. >> what do you think yahoo! will do with the money? do you think it will be a proper steward with the capital receiving? there's a lot more behind that conceivably given -- still have a very large stake in alibaba. do you think they're going to do the right thing or is this move up in yahoo! unjustified? >> i think the move up in yahoo! unconnected. a smart way to play alibaba. the valuation says it's worthless and it isn't worthless.
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that's not right or fair. it's got billions of dollars of own revenue. profitable. i think this is just a smart way to play alibaba. the question is whether yahoo!'s a good bet on its own. look. it's got a floor in it. it's got the leftover alibaba shares and the yahoo! japan shares and has a floor and seems a smart bet to potentially play. as to what they do with it, i think people are waiting to see if they're bolder with the capital than they've been. they're accumulating talent and cash w. the high stock price, will you start to acquire operating businesses to ax accelerate the top line and what people are waiting to see. >> somebody the other day said if you buy alibaba, it's a bet of whether or not you trust jack ma. you have known him since 2005 if not before. do you trust him? >> he's one of the world's greatest capitalists. i trust him to want to make money. >> for himself or for his shareholders? after you left, he moved the
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payment out without permission of yahoo! and a bitter feud after you left. >> yeah. and, you know, i was not a fan of that move but i think as a public market i think he understands and appreciates the responsibilities. very smart man. very savvy man. joe is just as bright. they have a great management team. i would trust that he understands what his responsibilities are. i think, you know, the question is going to be, are you prepared to take some longer bets? alibaba isn't a company founded in 2005 when yahoo! did the deal. right? it was around longer. around since 1999. he's always playing the long card and that's really if you're going to trade it short term, you have to worry about those things. long term, it's like zuckerberg and hoffman. you know? who founded linkedin. they think big. >> a three-year plan. >> yeah. first time i met him, we would be in the magazine year for 300
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years. i asked him, do i have to stay all 300 years to be paid. a year later he sold all the print. >> they don't invest until the 250th year. >> exactly. think long term. >> thank you so much. >> thanks, guys. >> great insight and color. up next on the program, it is six years to the day since lehman employees were told to pack up the desks. lessons from the crisis and where we're headed, next.
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six years ago today wall street woke up to the fact that lehman brothers filed for bankruptcy. it was a defining moment for the financial crisis. the first major trimmer and the stock market to be spum elled for six months until hitting the lows the following march. joining us now is gary kaminsky. formerly cnbc's foreign capital markets.
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good morning to you, gary. if memory serves me correctly, not only did you get out three months before the collapse, you were one of the last to get money out of lehmans. correct? >> you are correct. i did retire officially june 30th of 2008. so yes, i did leave three months or so, little bit longer than three months, before the collapse. in fact, you are right. >> you have a got a long view here. what's main street need to know about how things have changed over the six years? >> well, everything's changed. i mean, when you read that intro, i was reflecting back. i remember that monday morning six years ago today. walking outside. i had to wake up my kids and the world changed. i remember talking to becky and joe and carl and it was something that nobody ever anticipated would happen. but it did happen. and as a result of that, the cultural change that is have taken place in the last six
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years are changes that will be within the financial services for the rest of my life an your life. >> hey, gary, it is david. everybody wants the look at the last crisis and think about or at least project that as a future crisis. i know you well know it's never what you're looking at but what's unexpected. i mean, anything worry you right now in the world? here we are not celebrating but commemorating sort of speak this anniversary. >> well, david, i should point out that it was also on your birthday that following march that the market bottomed and make sure our viewers know that. and, in fact, when you think about the leverage that was in all the banks and what could be worrisome, it's apples and oranges. the banks don't control the balance sheets they did then. as i pointed out, david, culturally, we speak about this all the time, i can only speak from my experience the last year and a half and morgan stanley,
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the way we operate as an institution with the client focus, whether on the institutional side or the wealth management side, the lessons going on every single day of james gorman and greg fleming which is about focusing on the client first, that type of a culture is very different than what took place six years ago and seven years ago when we both know that the institutions trading their capital, shareholder capital in a sense against clients many days and many weeks. >> good to hear from you, gary. thank you for joining us. >> you got it, guys. >> from morgan stanley wealth management. september 9th then david. >> what's that? >> march 9th. >> march 10th actually. >> david faber's birthday, march 10th. >> thank you. pirates move east. why it's no longer somalia we singapore to be watching.
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everyone is looking for ways while to cut expenses.s unique, and that's where pg&e's online business energy checkup tool can really help. you can use it to track your actual energy use. find rebates that make equipment upgrades more affordable. even develop a customized energy plan for your company. think of it as a way to take more control over your operating costs. and yet another energy saving opportunity from pg&e. find new ways to save energy and money with pg&e's business energy check-up. let's get over to the cme group for rick santelli. welcome back, rick. >> thanks, carl. great to be back. what a wonderful week to be back. everybody's talking about alibaba. 25 billion's a lot of dough so i'd like to welcome our guest, charles beaterman. nobody follows the money better
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than charles. charles, first question is, how much affect to see in equity prices before we get into alibaba? >> well, the question is, where's the 25 billion going to come from to pay for the alibab? the answer, people will have to sell existing holdings. that's why my guess is the nasdaq 100 will be particularly weak in the run up to the $25 billion. the day alibaba sells you will hear the sucking sound, $25 billion leaves the equity markets. >> would that be a good entry level for those keeping their powder dry in your opinion? >> probably. as long as flow continues ex-alibaba. if alibaba is not a prelude to billions of new offeringses pouring out of underwrite ers' computers, as long as that doesn't happen and we continue to see flow shrink it could be a good entry point. >> flows, that's a good segue into the next. listen it's about flow. when many are thinking of fed
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week and talking about fund mentals and what the central bank will do, in the era of everything is managed you need to follow the flows almost more than the fundamentals. your thoughts? >> money is believing the bond market. we are seeing more money as a percentage of assets leaving corporate bonds than treasuries. as price goss down, money leaves. money has been going into u.s. equity ets. that is scary from our point of view, a cautionary sign why we're bearish for the short term as well as the alibaba offering. >> as a watcher of flows, if i take you back in time three years, was insider buying a good indication? did it give you a head's up you're supposed to be long equities in your opinion? was it a good correlation with the performance of the indices? >> at times it is. and we are seeing a pick-up in insider buying. we're also seeing a pick-up in wage and salary growth. i think the pick-up in wage and salary growth is a function of
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the drop in oil prices, but nevertheless, wage and salary growth has been rising late summer. not sure why. i think it's oil prices. as it's going up we're seeing a pick-up in insider buying. >> it's very important in our last half a minute to go into this. because maybe it's just a correlation of chance with regard to energy prices. what about the skills pool? have wes just arrived at a point, forgetting how many people are out of work or underemployed, have we reached the theshhold where skills are in such shortage we are going to see wages get pulled up due to the dynamic? last answer? >> probably. you know, listen, we have such a horrible education system, you know how we know it's horrible? it's not producing the skilled people we need. >> now, i agree. and i think education is really at the epicenter but the problem is, you can't fix that over over night. everything in politics is about what they can do overnight which is basically nothing. charles, thank you for taking the time this morning.
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carl, all yours, buddy. >> all right. rick, see you soon. when we come back, record preorders, weeks of delays, comments from tim cook on amazon and new products unseen an unrumored. news on apple today and it's next on "squawk alley." it's monday. a brand new start. your chance to rise and shine. with centurylink as your trusted technology partner, you can do just that. with our visionary cloud infrastructure, global broadband network and custom communications solutions,
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. welcome back to "squawk on the street." this is moving higher after the former ceo said he intends to buy the company, take it private for about $3.8 billion. the price tag there, he just resigned as ceo in july and reported a 4.7% stake in september. now while higher the stock is below the $46 per share offer price they're looking at. their shares are $41.37. back over to you. >> thank you very much. the world's most pirated waters may not be where you think they are.'s ted kemp has more on that story. good morning, ted. >> how are you, simon? you're absolutely right. when people think about piracy they think about somalia, but piracy in the world today has moved to another part of the world, and the pirates there are much more sophisticated and it's about organized crime.
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the global center of maritime piracy has shifted from here the somalian coast in the gulf of aden to here, the area of western indonesia. these waters, including the malaka straits, singapore straits and southern end of the south china sea, are the busiest mer shall shipping lanes in the world. a full third of the world's commercial traffic passes through these waters. shippers and government authorities point out that any one vessel's chances of being attacked are minuscule but the threats and costs are very real. almost half of the world's pirate attacks happen here in the singapore strait or indonesia in 2013. about nine times as many attacks as toplace last year in the wats of somalia and the gulf of aden. to give you a perspective here, global piracy is costing the industry somewhere in the neighborhood of between 5 to
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$8.5 billion a year. that's spread across the whole industry. you don't have to be on a ship that's actually attacked to have to deal with those costs which come in the form of higher insurance, hazard duty pay for crews, cruising around in manners to try to escape these extremely densely pirated areas. just to cut down the chances of you being attacked. and so it's a problem for everybody. >> and yet, correct me if i'm wrong, in southeast asia or south asia where this is occurring, they're not taking hostages? as they did in somalia, that's the difference i guess. >> >> you nailed it there, simon. what's going on. the somalian business model, if you will, their business model was to come on board, be armed with ak-47s, take the crew hostage, pull them away out of international waters into probably somalian waters and wait out and eventually somebody would drop a millions of dollars for ransom.
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these new pirates, these pirates who are operating in the strait of singapore, the malakan strait and western indonesia, they're not interested in taking kidnapping people. what they do is they actually are going alongside in their own tankers, next to tankers, other tankers, victim tankers, and they are physically off loading entire cargos to their own ships and then going out in the black market and selling that. >> it's a good read. i enjoyed it. >> good. >> we have to leave it there, unfortunately. nice to sea you. thank you very much. do check out ted kemp's work on in the meantime from our hour of "squawk on the street" mine and sara eisen's hour, it's time for "squawk alley." >> thanks a lot. coming up on 8:00 p.m., benchmark capital headquarters in menlo park where a top capitalist is sounding the alarm. almost 11:00 a.m. on wall
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street. "squawk alley" is live. ♪ and welcome to "squawk alley" on a busy week for tech. breaking news on gm. phil lebeau who has more. hey, phil. >> ken feinberg's office has announced the first round of claims that have been submitted tied with the gm faulty ignition switches. he have received 445 claims, filed since august 1st. of those 125 related to


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