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tv   Squawk Alley  CNBC  June 21, 2017 11:00am-12:01pm EDT

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green. we have early trading today. the health care etf is being marketed at a new all-time high looking for the fifth straight week of gains. performance driven by incyte, regeneration and that will do it for us good morning, it's 11:00 a.m. on wall street. and "squawk alley" is live
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♪ good wednesday morning i'm carl quintanilla what a morning markets are not moving much. travis kalanick is stepping down as ceo from the company he founded back in 2009 in a statement he said, this is a bold decision and a sign of his devotion and love for uber kalanick will remain on the board. joining me is executive editor kara swisher who famously profiled travis in "vanity fair." not long ago, we'll walk through what our discussion entailed. >> he was the ceo of a mess they are cleaning up now. that's pretty basic. they are resistant to remove a ceo in the founder of technology, but a number of
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things have been going wrong from the sexual harassment allegations, the retaliatory behavior, to the gray balling, it just adds up to a really situation there where they understripped some of the responsibilities from him. and they decided to act because they were worried about their investment interest, i think. >> kara, from a fund-raiser standpoint can we be that specific yet? >> from the ipo standpoint, they couldn't take this company public, come on. there's just too much. it's just too much that wall street could chew on and i think more importantly they need to raise money again they are going to need, according to a lot of people i've talked to, and you have to wonder how they are going to get that you know, the investors, let's be clear here, the investors tolerated this behavior for a long time as it was going up but i think the public pressure, the media pressure, all the results of the holder report
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that was leased last week just wasn't enough. it put him on a leave of absence. but by no means is uber ready for a brave move by anybody. all this stuff just continues. and i think bill gurley who is a benchmark investor, he was on the board, he didn't get his way last week but got it this week. >> kara, is this just one incident, or are they going to rethink the decade-long founder-control move it worked for facebook and google you can argue whether it worked for snap but it did not work for uber are we going to see investors push back on founders of pop start-ups wanting control? or is this just an uber thing? >> well, john, they want to make more money there's not enough money in the
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world for these people that's fine, that's capitalism like that. but sometimes it works like mark zuckerberg is a good man and he, you know, he had a lot of good executives around him. in the case of uber, there wasn't enough control or training for kalanick. he is much older than zuckerberg and they never put into place the systems that were necessary that led to the sexual harassment of retaliatory behavior of the sketchy moves to stop regulators from checking what they were doing and so, you know, i think it's been an unusual case just taken so far down the road you can see it happening with a lot of other people. it's worked well for google. it's worked well for facebook. it's worked well for a lot of companies. >> kara, what happens to the board? >> i think they need a lot of new people and i wouldn't be surprised if there's a shake-up on this there are a lot of independent directors if they need to go public but they have a lot of different voices to counter the founder.
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so we'll see i think they will probably bring in, you know, i have heard names like meg whitman coming onto the board. or people that don't necessarily have money interest in it. or an employment interest. so, you know, there are all kinds of people you can bring in allen mulali, there are a lot of people that would be a very good stuard steward of a company uber is a remarkable project that has changed transportation. so you have to focus on that, i think, with putting great people in place it takes a brand and a product further. >> kara, you have walked us through the company's story for so long. we know you will continue to do so we didn't have much time with you today, but thank you very much >> thank you so much joining us from one market in san francisco, steve is from foundation capital that invested in uber. steve, it's good to see you this morning. >> hi, john, good to see you >> if you were on the board,
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what would your vote have been >> i for sure would have supported this transition. i think it is long overdue as kara just outlined there's a strong gafational pull in the valley to support founders as long as you possibly can. but the one thing you just cannot overcome is when you have lost the team. and i think it was clear that travis had lost the team and recruiting here is hard. and if you have a culture that basically doesn't attract half of the population of talent, it's very, very hard to overcome >> but steve, we just had linkedn on a couple weeks ago. and their data showed despite all the negative headlines around uber, people are still collaborating to work there. what is the lesson we are going to take away from this kara said this is an isolated incident they are still going to back founders by and large. is this just a better process as you grow >> i think it's deeper than
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that i think you establish your culture very, very early on. and the companies need to start thinking about inclusion from day zero it is very hard to bolt on it will be the challenge for uber it's going to have to start at the board. it's going to have to start very quickly with a new management team so i think this is going to be jacking up the house and replacing the foundation this is a hard way to do it. the right way is to start at the beginning and really build those things in from the earliest days >> just to push back a little bit, steve, because so many of our guests, investors and management professionals on our air today have said that this is the right move i don't want to defend kalanick's behavior at all, but i think it was widely telegraphed he was a fighter and disrupter and fought with the regulators and fought with reporters and competitors. and that's what helped lead him to the amazing success and
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evaluation uber got. and i just wonder without him there, without that sort of disruptive force, it may be for better given where uber is and some of the recent rell ovati rs but is that going to be a problem for uber >> it goes back to my first point, why when we look at companies as investors, if you can figure out a way to support the founder who is have the deep sense, who have the fighting instinct who aren't going to rest until their vision of the future comes to pass, we love that in our management teams and our founders sort of carry that tore ch. and so i think that doesn't change here in silicon valley. and i think it's for sure a challenge for uber to figure out how to maintain that his involvement, i think, on the board will matter in this regard but i do think we're also entering a different phase of the company's history. so if you think about the first seven years, it's been about wild growth. and that growth, by the way, was intoxicating it was intoxicating for the investors, for the board members and hit a lot of sins.
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this next phase, in my opinion, is all about profitable growth for this company to go public in the next two to three years, they have to demonstrate they can grow in a rational way across many geographies and really establish a long term business so that is the next chapter. it's not always the troops that storm the beaches that are the right ones to set up the government and i think that's the case here >> stay with us. we'll go to aditi roy in san francisco. aditi? >> reporter: hi, there we managed to talk to a couple of people that didn't want to be on camera, but one of them told us there's been a lot of confusion in the company for the last several months as they deal with the challenges. and they said it was probably the right decision for travis kalanick to step down. they said that investors are very critical to the company so he believes this is the right step forward in the company trying to move past some of these challenges another employee told us,
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though, that he doesn't work directly with travis that he does believe that travis should have been given a second chance and he says he's noticed a lot of positive changes in the company the last several months as they have been grappling with the issues of harassment and culture. we did talk to a number of uber users, people who simply work or live in san francisco here and the vast majority of them said this was the right move, that they believe that it was the right thing for travis to step down for the company to move forward and sending a message to silicon valley about not tolerating some of these challenges that they have been dealing with guys, back to you. >> aditi roy in san francisco, aditi, thank you very much for that steve, your op-ed, meanwhile, on a different topic would have been huge if not for the uber news, but we do want to chat about it. you talk about why apple should buy netflix, vertical integration, international expansion and then i love the way you put it, one more thing, to quote the man with the black
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turtleneck >> yep yeah, for sure i mean, i think apple is sort of plotting along right now we talked about this a couple weeks ago out of the wwdc event. taking out whole foods, we saw apple's approach to sony pictures executives. and my point of view is they need more than two executives. because i think apple fundamentally is about emotion and the emotional connection with consumers and the content in entertainment so it's time for a bigger move here >> steve, it's john ford i love that you stuck your neck out here and wrotethis i completely disagree that apple should buy netflix and because of this, netflix's strength it seems to me is everywhere apple's strength, when it does service this right, is vertical integration. in order for them to make netflix worthwhile, they have to make it work better on ios, pull it back from other places, and
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that would ruin netflix. plus, apple's already -- some of the advice was hosted if you think about true integration and look upstream to content production and downstream to distribution, the ultimate vertical integration is to buy netflix and become the first global tv network that the content business, whether it is music or digital media and entertainment, this is one of our truly international assets and i think if you look at half of netflix subscribers are international. youtube has 80% of their users internationally. this would be an opportunity for apple and netflix together to become a true international
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monopoly in this >> if that happens, we'll bring up this piece of tape. thank you, steve author of the new book "the way to design. when we come back, cigna's first inve investment option and we'll talk to the ceo and jack ma on fintech and star wars has a director shakeup. we'll talk about the hollywood news when we come back [vo] when it comes to investing, looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country.
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[ mhow was work?g ] well, actually... you're fired! [ screaming ] lucy and i were invited to not work at the a.v.l. anymore. no! minions! we're going back to villainy. [ cheering ] so, you're villains now? oh no! no. no. no. no. no. [ laughing ]
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[ evil chuckles ] yow! yes. despicable me 3. rated pg. after weeks of secrecy, senate republicans are expected to reveal their health care reform bill tomorrow we'll check in with kayla tauche for more >> reporter: the senate vote will likely happen next week the substance has been left out for them, and that has peaked frustration, even more members in the senate's very closely held working group like senator mike lee of utah who took to his facebook page to respond to his constituents who had been calling about the bill >> it's not being written by us. it's apparently being written by
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a small handful of staffers for members of the republican leadership in the senate so if you are frustrated by the lack of transparency in this process, i share your frustration. >> add to the frustration of senator lee, senator bill cassidy who just this morning on tv said on msnbc, he's going to need time to read it senator bob corker, senator ted cruz and senator john mccain who last night made some snarky comments about the private process to reporters there are two questions now that remain, though one is whether the senate majority leader mitch mcconnell actually wants to shepherd a bill that will pass or rather he's simply trying to meet a deadline they had previously talked about this morning on "squawk box" the house majority leader was asked specifically what happens if the senate passes a bill that comes back to them and there are some provisions like some medicaid expansion changes that the house might not like here's what house majority leader kevin mccarthy said to that >> you can't continue down the current path of where we are because of that, i know we'll
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come to an agreement together to solve this problem to actually lower premiums, give people greater choice and selection of where their health care goes one thing i say is to let the senate do our work, we'll do our work, at the end of the day, we'll come together with a final package that actually -- repeals the obamacare. >> reporter: as for the white house's involvement, the president got a full briefing yesterday from the legislative team though it's unclear whether he's seen the bill text just yet. carl >> thank you very much, kayla tausche. cigma is holding the first investor meeting this morning in new york we are joined by the ceo now, david, thank you for being with us. >> good to be with you, thanks. >> if we see this tomorrow, what could happen next week if there's a vote >> well, we are at our investor day and walked through the
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ability to walk through the ability to go forward. that has been a successful recipe to grow at 11% over the last eight years as it relates to the bill, the bill is going after a portion of the market, specifically the medicaid and the individual marketplace. we don't really participate in the medicaid market. we participate at a small level in the individual market and we have been able to prove that when you engage with health care professionals with individuals, some positive things happen. so we're trying to help legislators understand there are bright spots in the market that they can look at as they evolve their legislation. >> all right so then help investors understand the relationship between whatever resolution we get on the hill and the guidance that you will give today and will give in the future. >> sure. the important part, so we're a global health service company. we operate a u.s. commercial business, a u.s. senior business and a u.s. global business we put forth an update in the
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guidance this year that was raised 15% to 22% as a range we put out a long-term eps goal five years from now with $16 per share, which is about a 15% compound annual growth rate. and it underscores that it will grow successfully in the commercial business. u.s. seniors business and very much so in our global business outside the u.s. so regardless of what happens relative to the next phase of u.s. health care reform, we're positioned to be able to engage our customers, work with employers, deliver for seniors as well as grow outside the united states. and that is what our investors are seeing from us, which is a pretty exciting position >> david, you said almost regardless, but put a finer point on it, if you will does it matter to you how much heart this version out of the senate ends up having? >> well, in stepping back societally, me as a person have engaged actively in the health care legislation that's an important part of our
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responsibility our company's position, though, where we have very small amount of our revenue in growth trajectory pinned against the so-called individual exchange business, think of 3% to 4% of the revenue. and next to none of the revenue pinned against the medicaid business we are not dependent on one sector of the overall portfolio to be able to win. stepping back, though, it's clear the legislation needs to evolve and what we have been able to prove is that if you can engage individuals into health care, and very importantly, connect them with health care physicians and professionals and better quality and health care, then good things happen that's what we are helping regulators to understand as well. >> i want to tap you on the use of cash. it looks like you gave investors a lot of what they wanted in terms of the additional share buy-backs. what does that mean for prospects around m&a in light of the failures at humana and anthem cigna
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is there another shot at this and a more deal-friendly trump administration, would you be interested, for instance, in humana >> so what we did is we framed very clearly for our investors what our position is and stepped into 2017 with between $17 and $14 billion capital, depending on the buy-back in share dividend or equivocally. additionally, we will purchase $2 billion of the stock back this year. and this morning we indicated that we have been active in the market relative to the role-back in purchase of the stock lastly, i walked through five key years where we are interested in from the m&a standpoint furthering the portfolio, furthering senior abilities, further the pharmacy capabilities and broadening retail in government risks and capabilities lastly, if you look back over the last seven years, we spent our capital in essence 50/50 50 on share buy-back and 50 on
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m&a. that could be a good indication of the future that we are balanced the exciting news for shareholders is there's a lot of evaluation creation for the shareholders than we have started on the first phase, which is share buy-back. >> david, good to see you, as always stock at a record high today and that would be a 27% gain for the year so far. david, we'll see you next time thank you so much. >> thank, good to be with you today. thanks for your time as we go to break, a binge alert. chris mill er will no longer be the only director for the new "star wars" film out in 2017 the new director will be ron howard >> there's a new and expanding market movies aren't going away it's an important industry and however people see it, there's still a tremendous appetite for a story that begins and ends in a couple of hours.
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whether they see it on and airplane or their phone or home on their nice tv or are willing to rush out to the movie theater and, you now, catch it in the first few weekends world ugly and messy. they are the natural born enemy of the way things are. yes, ideas are scary, and messy and fragile. but under the proper care, they become something beautiful.
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welcome back to "squawk allie. we've go live to david faber live at the alibaba event happening in detroit hi, david. >> reporter: thanks, sara. jack ma is one of the best known businessmen in china and he's working to make his presence known in the united states having addressed the 3,000 small business owners not long ago but that may not always be the best thing to be in china. for example, anbang insurance, the chairman's whereabouts are
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unknown. so i asked jack ma is one of the most high profile if not the single highest profile businessman in china, if he ever worries about running afoul of the government >> well, i think as a business people, i do everything to make sure that my customer is happy, the society is good, it's healthy. social responsibility is the key. whatever we do, we try to make sure that the society is good. so i don't know what is better than the others. >> you don't it's a small community of you giants in chinese business you don't have any idea what happened to chairman wu? >> i have known chairman wu for years, but we don't talk about what they think about. sometimes when i look at the business people doing things, i say, wow i'm not going to do anything like that. >> and it doesn't concern you when you see them doubt any idea
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of why they have been disappearing >> i talk to people and say, hey, guys, if i were you, i would focus on customers i would focus on not making money. i would focus on making values a lot of people are so keen on making money when they are keen about making money, so i believe the three things you should not touch, power, money and the glory >> well, speaking of money, one area we haven't really touched on yet is jack ma's ownership controlling stake in ant financial. that's a company if you recall a few years back, they pulled out of alibaba and it has grown into its own financial services giant in the country as the largest money market fund, for example a lot of people talk about its potential as an initial public offering in the not-too-distant future but ma talks about one day
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overtaking alibaba. >> yeah, some day. it will be known as alibaba, probably, much more famous than alibaba. >> more famous why? >> because i think the tech thing that we are doing, we are enabling small business and young people to be able to reach financial support. the think tank is to empower the financial institute to be more powerful we think that we should make the ali into financing, that's something we want to do. how we can build up a system to meet the need of the 21 first century. and the second thing is how to make the financial process inclusive. we are in india, a lot of developing companies are using that some day we'll be up here.
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not because we are going to raise money, because we want that -- we want more people to know about that. >> that's what you said about alibaba, too >> today china is becoming a cashless society. >> you believe china will be a cashless society >> of course next five years, we are already counterfeit. in five years, we'll make most of the cities cashless in society. hong kong is almost cashless, almost >> we chat mobile is taking market share from ali pay, isn't it >> well, when you do business, don't worry about competition. there's nowhere in this world, there's no competition you have to get used to it so it's not about -- this tech thing, it's just the beginning >> but as for us, that's the
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end, at least of our excerpts from the interview with jack ma. if you want to catch the entire interview, log on to i'll tweet it out if i remember to do that as well, sara back to you. >> we'll do it for you, david. good stuff david faber in detroit for us with jack ma europe closed two minutes ago. let's go to seema moody. >> the european markets are showing lows on the session. the stocks stabilized due to oil sliding into bear market territory. miners among the groups rebounding, anglo american and glencore are leading the pack. the bank of england chief economist said he would likely vote for a rate hike later this year citing a stronger global economy and resiliency in the wake of brexit now sticking with the u.k., earlier today the queen's speech outlined legislative priorities of the prime minister's conservative party, they include eight bills aimed at implementing the uk's withdrawal
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from the european union. one of the bills will focus on the uk to trade freely with the rest of the world. there was no mention of a uk visit from president trump in the speech reports actually say such a visit has been put on hold in the wake of huge protests in the united kingdom finally, one stock to keep on the radar, tesco to close the call center in wales putting 1100 jobs at risk. this went down sharply on friday when whole foods announced that deal back to you. >> a lot of people are wondering if the all blue outfit was a nod to europe. probably not but still, thank you we'll send it back out to hq now and contessa brewer for an update at this hour. >> sarah, here's what is happening right now. officials say the airport in flint, michigan, has been evacuated after a police officer was injured. one witness said he saw the officer bleeding from the neck and a man detained by police with a knife nearby on the ground at a news conference in washington, the fbi says james
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hodgkinson acted alone he had no ties to terrorism when he shot and up wounded a top house republican and four other people on a northern virginia baseball field >> acting alone, the shooter aimed his weapon in the vicinity of where members of congress and staffers were standing immediately adjacent to the field were two united states capital police special agents who were detailed to a member of congress and who engaged the shooter. >> jared kushner arriving in jerusalem for a day-long visit aimed to restart isra israeli/palestinian talks. that is the cnbc news update for this hour. we'll go back to "squawk alley" and john thank you, contessa. when we come back, the latest on travis kalanick's resignation d e tu of the uber
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giant. "squawk alley" will be right back twith a clear advantage. fidelity, where smarter investors will always be. welcome to holiday inn! ♪ ♪ whether for big meetings or little getaways, there are always smiles ahead at holiday inn.
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i realize that i can come off as somewhat a fierce advocate for uber. people have said that. i also realize that some have used a different a-word to describe me. well, i'll be the first to admit that i'm not perfect and neither is this company. like everyone else, we make mistakes but at uber we are passionate about learning from them
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>> that was travis kalanick talking to employees at a five-year anniversary event in june 2015. now he's stepping down as the company's ceo after almost ten years at the helm. joining us now here is "time" executive editor who co-authored this week's cover story on uber. matt, thank you for being with us so what is the legty ttacy of period boing going to be? coworkers are not listening to drivers as being one of the big problems they need to fix. >> uber is really the defining success story of this era of technology they are introducing the economy to lots and lots of consumers and also for raising so much money and becoming have to valuable so quickly. and it's a little bit of a different model for silicon
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valley because unlike facebook or google, which was kind of flying under the radar for a long time and ran into trouble with regulators, google was born into conflict and has been fighting since day one so in terms of legacy, that story is still being written and a lot of the fights are going to continue even with travis gone. >> duds it matter who takes over the ceo position and how much leeway they get any thoughts on who the leader might be >> this sequence of events where he was going to step back last week and now is going to be gone is interesting and i think it gives you insight into what the board is looking for. i think people felt that it was going to be hard to recruit a crucial position like coo with an unquantified travis kind of out there not sure when he was going to be coming back. so his stepping down really
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allows them to look for candidates without the company that are going to be in control. and they will take over control over a company that still has billions in the bank and is operating in 76 companies and, you know, still has a huge footprint. >> i love your line about being born into conflict because unlike facebook where you roll into the media world, you just sort of -- newspapers aren't there to create a barrier to entry, you do what you do uber had to bust up the institutional legal walls, cartels in cities where things like this just were not allowed. >> i don't know if aaron sorkin or someone is banging out a script right now, but it would make a pretty good movie uber's chief advantage over the last eight years has been this kind of brawler, willing to get into it with mayors, willing to fight with regulators attitude and that's the same thing that's now undone as ceo. >> you also end your piece with
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an interesting comment on, the idea of responsible disruption and whether this is going to usher in some type of new era. or whether it's uber specific. >> i mean, it's interesting, the companies that have been born in the last ten years and the one that is will be born in the next few are going to be so much more powerful and impactful than even the googles and facebook that could potentially affect the lives of millions. and all of those companies like uber are moving faster than any government or legislator or investors can keep up with them. so their ethics really matter. it's not just the matter of do we sound good when we talk or can we attract employees? i mean, there's a lot on the line here. and pandora is not going back in this box. >> you're saying there's a difference in the way of
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searching for something online and creating a robot that can alter the course of humanity is what you're saying, right? >> certainly and even the facebooks and google of the world are grappling with the responsibility you think about an issue like fake news or some of the free speech stuff that google is trying to grapple with >> this would be a good step >> certainly the board meeting to announce the results of the investigation into sexual harassment, this unbelievable exchange where one of the board members made a frankly sexist comment, it's, you know, it's a deep, deep problem. and i think you saw that in the way this played out. >> what does this mean for air bnb? air bnb has clashes with its regulators does it need to come out looking relatively squeaky clean at this
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point? >> i think uber's reputation for confrontation is exaggerated they do and have worked with a government official and legislators all around the world. they wouldn't have grown so quickly if they hadn't airbnb has done the same thing, they have just taken more of the conciliatory approach about the way they talk about what they are doing and their mission and that kind of thing so i'm not sure it's the approach issue and more of the sort of internal organization and messaging. >> right well, matt, thanks >> the cover story is great, thank you. when we come back, nike is getting a nice pump here we'll talk about what amazon has to do with that. plus, we're watching shares of twitter best day since late april or so with a 6% gain earlier in the session on some head volume. ensqwkll" wbout the reasonshy wh "ua aeycontinues. whoooo.
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i'm scott walker coming up on "the halftime report," we'll find out what stocks you need to own and we'll talk about a part of the market that you need to focus on and a big debate on a tech stock that no one is paying attention to "halftime report" starts at noon eastern time sarah, see you in a bit. nike is getting a big bump this morning goldman sachs says the dow component is considering to sell
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products directly through they do not directly sell through nike they are available through third-party dealers. goldman has a buyout on nike in a $62 price target this would certainly open the market to more millenials, get nike more preferential and priority treatment on search results, et cetera and this particular analyst looked at under armour, which does have a direct store on amazon yesterday retailers were down on nike today nike -- or on amazon they were down. >> people get excited just as long as amazon is in it. this probably makes sense for nike to do i would think everybody needs to back up and take a deep breath and not expect amazon to absolutely dominate everything every time >> why >> they're really good -- >> why not >> they are really good but not perfect. it's like the iphone
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people hyper ventilate and then went from it's amazing to not doing anything right. >> the directional trend is why footlocker is down 10% >> remember when amazon killed best buy >> that didn't happen. but can i tell you what, john? consumer staples companies have caught on to this idea and, in fact, this is a very important source of growth in a retail world, which has been lackluster p&g, for instance, saying it's growing the ecommerce business sales 30% this fiscal quarter, in a time where p&g's growth is nonexistent. and the reason why and they always talk about this on the conference calls is they have the tide page on amazon. the first result when you look at detergent is tide >> for every best buy there's a macy's or sears. we'll see if shoes, what category they fall in.
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amazonable or not. isn't it a theory there are deep buckets of value and deep buckets of luxury and value that amazon will have trouble reaching into. >> off-price retail is one cited, outlet retail, home depot, another home improvement store and others we'll see where amazon goes next john is not convinced. as usual speaking of media and retail, martha stewart did weigh in on a bun up of things, including the uber kalanick saga. >> i think it's a service that is a very brilliant service. the idea of it is brilliant. he's brilliant he just has to take some time to rethink. >> rick santelli, meanwhile, what are you watching today? well, i'll tell you, i'm watching the bond market in general, but specifically i'm looking at negative yields not only in sovereign paper in europe, but in some corporate purchases. we're going to talk about that
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with peter bookfarm after the break. ke all tifference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock. they are the natural borns enemy of the way things are. yes, ideas are scary, and messy and fragile. but under the proper care, they become something beautiful.
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so, how are things carthey-ise? you're fired! [ screaming ] it's time to get back on top. we're going back to villainy. ♪ so bad ♪ so good that i'm so bad... [ maniacal laugh ] ♪ don't try to fight the feeling ♪ ♪ of somethin' that's so organic. ♪ [ pop ] despicable me 3. rated pg. let's get over to the cme group. rick santelli and the santelli exchange rick >> thanks, carl. i would like to welcome my special guest today, peter boockvar thanks for taking the time >> thanks for having me, rick. >> listen, you know, i think it's great and i'm really optimistic that our fed is trying to reverse some of the policy, especially this grand experiment but we need to reach a tipping
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point for it to really make a difference what i mean by that is, no matter what we're doing, if the ecb bank of glaengland, bank of japan, or the bank of china somehow don't stop purchasing, it really gets lost. we still see yields go down and curves flatten are they close getting to the point where their activity along with our fed will tip us so we actually see some normalcy or maybe a steeper curve or interest rates that send better signals? your thoughts? >> well, we're certainly creeping in that direction and as you mention ed, the othe central banks. even the bank of japan, instead of buying 80 trillion yen a year, they're on track to buy a little less than 60 trillion they're already going through a subtle, quiet, tapering, so to speak. the ecb are going to announce some more of that the later part of the year. the bank of england, bank of canada, people's bank of china, people's bank of china is already trimming liquidity and the other banks are going to be raising interest rates they're going to test the waters and wait to see what the maerrk
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reaction is goinggotcha. now, let's dig deeper. some news came out today it's been a bit murky with regard to ecb purchases of corporate securities there's a whole lot more transparency when it comes to southern sovereigns, although still not as good as the u.s. when they were buying. my question to you is, the news there's 100 billion euros out there in purchases and 12% of those are negative yielding. what do you think of that? >> well, it reflects the lack of inventory, essentially, of paper that they're trying to buy because if there was plenty of positive-yielding paper, they would have bought that the ecb is running into logistical issues, and furthering their qe program. and that's why they're going to almost have no choice, but to announce a taper in september of some sort. and basically unwind this completely, some time untin 201.
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>> now, that's what i want to get to specifically, how are negative yields, both sovereigns and the corporates we're discussing now, how are those securities going to fare, going to be handled in the exit strategy, whatever that turns out to be, your final thoughts, sir? >> well, i think the european bond market, to focus just on that, is a bubble of epic proportion so it's going to end really badly. in just a matter of when that is but the ecb -- >> let's make it easier, hough peter. let's say i'm holding a german company's corporate security, negatively yielding, like the ecb is nobody's going to buy that from them >> right exactly. because the only way you make money is to sell it to somebody else at a deeper negative interest rate. so -- >> and when the word "exit" happens, there's going to be -- the buyers are going to scatter like the light's going on in an infected room. >> right investors have locked in trillions of dollars of losses,
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just by nature of buying a negative yielding piece of paper. that is not an asset you're buying a liability. >> gotcha. all right. it's going to be interesting when all these exits become more clear. but one thing is clear to me i can't imagine it's going to go smooth as silk i hope it does >> zero chance >> thank you, peter boockvar carl, back to you. >> good stf,uf guys. thanks "squawk alley" continues after this
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john said a moment ago, really, amazon is the only source of volatility as whatever news they have moves certain stocks the indexes themselves moving a whole lot, despite some movement in nike, as we were talking about the possibility of nike selling directly through amazon we're watching the uber news bill gurley, of course, one of the hallmark investors of that company tweeted today, there will be many pages the in the history books devoted to travis k. very few entrepreneurs have had such a lasting impact on the world. and as we enter this chapter of mobility, maybe he's right >> oh, certainly he's right. and travis isn't done. it's not like he's ridden off into the sunset. he's going to go start pixar he's still on the board of this company. he still has huge influence. i expect after he takes some time away, we will see see
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travis 2.0 >> i like what travis wisher wrote. you kill someone far later than you should have and then praise them in silicon valley, which sort of sums it up >> julius cesar, echoes of that. >> busy session. we'll see if we can get more volatility in the afternoon. for now, let's get over to scott wapner and the half. >> and welcome to the "halftime report." i'm scott wapner our top trade this hour, biotrade breakout. the sector on pace this hour for the best week of the year. why that space is suddenly surging and the stocks you need to own right now with us for the hour today, steven weiss, josh brown, john na najarian let's begin with the ibb and xbi, the two exchange-traded funds that track biotechs making an impressive run. one that you areour own josh brw coming >> we have


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