Skip to main content

tv   Squawk on the Street  CNBC  June 6, 2018 9:00am-11:00am EDT

9:00 am
lie they open up by about 130 points s&p futures up by 6.5 and nasdaq up by 11 it's a little bit lighter when we came in this morning nasdaq was up by 20 nasdaq set a record in the last two sessions we'll watch that right now it's time for "squawk on the street." good wednesday morning futures are strong after four days up for the s&p and nasdaq aztec continues to reassert its dominance. volatility falling to old familiar levels. europe is mixed. q1 productivity disappoints. labor costs up 12.9 -- 2.9 apple, amazon, microsoft,
9:01 am
netflix netflix at historic highs. facebook's data confirming the shared user data with chinese technology companies including one flagged as a national security threat and tesla shares are climbing premarket elon musk said the automaker will likely be building 5,000 model 3 per week by the end of the month. futures point to a strong open this morning. all though we're getting a hold today. jonathan bush is out. >> yeah. so disturbing. some stories came out yesterday about some behavior that seemed ill advised. the company appears to be explore strategic alternatives people may recall elliot large shareholder $160 share all-cash offer to acquire athena. we got these revelations,
9:02 am
potentially, many years ago, though it's unclear what the impact would be and don't forget who the chairman is. chairman of the board of athena health. >> the predecessor to john flannery. >> correct he's been busy but no shortage of things for them to try to figure out over there as they deal, as well, with the desire for a shareholder to buy the company and whether or not there are other buyers out there. >> and that's not -- they have more -- they have more companies. i know the research. they are capable certainly of buying this. they're not short turn arounds. >> he's been appointed executive chair. mark levine a cfo will assume greater day-to-day board
9:03 am
activities. >> this is shocking. let's say it it's shocking. this is his company. >> it is. >> it's his company. >> not your company. >> not anymore doesn't have the votes got to have the votes. >> what do you mean the votes? >> say again. >> what do you mean? >> he didn't have the voting control. >> do you agree with me it was his company if. >> yes. >> did you read his book >> no, i did not >> i agreed he was the driving force behind this company, yes. >> yes. >> but that doesn't mean that you're going to stay on. starbucks was howard schultz's company but he's going to -- >> jonathan bush who is related previous president what's that about? >> no. i was saying founders sometimes move on. whether in a -- >> by choice. >> yes. >> this is not by choice. >> but the behavior was beyond the statute of bad behavior
9:04 am
limitations. >> right. >> it's true as i recall something he admitted to and said there was some degree of reconciliation among the parties. >> yeah. suboptimal behavior, clearly. >> they reaffirm 2018 outlook. they want to thank johnathan for building an incredible team. >> but he never took advantage of the big data possibilities. i thought made him a weaker ceo >>well, they said -- so many things the company couldn't do but weren't necessarily executing on. >> but the reason to get fired not because -- >> i agree. >> he should have got fired because of performance not behavior. >> it depends on the behavior. >> no one is saying move on in my ear that's unusual. >> i feel like we should anyway. >> yeah. >> maybe. >> yeah. futures, as we were saying
9:05 am
earlier point to a strong open the s&p and nasdaq aiming for a fourth day of gains. nasdaq coming off a record day of closing high aztec soars leaving the s&p and dow in the dust nasdaq up nearly 11% for the year dow about 3% or .3% s&p about 3% world bank issues a warning saying a ramp up in the pace and scope of tariffs could set the world back to 2008 crisis levels couple that with bridgewater's comments that 2019 is chaping up as a dangerous year and they're bearish on all financial assets. >> it's always possible. there's someone that made a ton of money who doesn't want other people to make money sorry to be so -- and i think bridgewater is very good the idea you can be bearish. i'm a warren buffett guy if you want -- can say any given period will shape up to be bad
9:06 am
i like what warren buffett tells becky quick. let's not judge it every day let's see what happens when we get there. i'll talk about the idea that this incredible part of this rally is about companies that are where there's bad news there's good news. there's no doubt today about amazon all right. and the note is that amazon has to spend a lot of money in indian to stay positive to stay ahead of walmart it's regarded as positive they said that. i'm not kidding. it's regarded as positive. i'll give you another one i think is incredible. we have a story in the front page of the "new york times. again, this time it's about facebook sharing your information with chinese device makers. >> right. >> the stock will be down for a few minutes and people will say i hope so. the idea of facebook is to suspend yourself you can be in china when you
9:07 am
post an instagram picture. what >> no, nothing. >> i'm saying the "new york times" is making it sound bad will there will be an analyst saying facebook is able to expand in china and they haven't been to. what is negative is being switched to be positive in order to justify the mad ramp of every company to get to $1 trillion. $1 trillion >>well, john thune and mark warner don't see it as bullish they're upset. howard dean will delete his facebook page. >> how many shares do they have? >> so i'm -- i take it you think facebook is an opportunity from an investment standpoint. >> the "new york times" -- between the "new york times" and facebook and president trump and amazon, where has he been on amazon and the u.s. postal service. >> last i looked, faang is leading the market. >> you're leaving out an "a.
9:08 am
>> and the semiconductors. and everything else. >> you have to have some followers. we have retail going nuts and that's because the short positions in retail are incredible have you seen the scene lately also known as dress barn maurice. some people call me maurice's. there's a little bit of nature working. yesterday we lost some of the semiconductors. >> what does it say for the broader market the limited nature. >> it's negative. >> it seems to be a momentum gain at this point these are big, obviously, growth companies. >> completely. let's see interest rates are up a little today see if we can't ignite the banks. you know what happens after the stress test come out and they're positive buy back, buy back dividend boost 20% of the s&p will do well in about let's see it's my new apple watch. it doesn't really tell the day in a couple of weeks
9:09 am
what >> that was funny. >> you like that >> yeah. it doesn't tell time but does a lot of other things. >> look at your phone for the time. >> yes i put my phone away because i'm afraid my wife is going to call because she doesn't know i have a show yesterday she sent a dog video in the middle of the show. >> you see the banks coming around they are down the 9% from the january highs. copper is breaking out four days of 1% gains. >> stefanie recommended free port yesterday we don't want copper to break down this is the worst meter. what we want to see breaking out are the drugs and the financials and they're not. how great is retail at this point? sigma reported fabulous numbers. this is the turn in sigma. she is fantastic >> and just come back around to facebook here. >> what? >> a company that added a million new users in north america, i believe, for the last
9:10 am
quarter, and lost 700,000. you think they're not going to have any issues with all this press in terms of -- >> no. i mean, there's always someone -- remember a lot of these politicians who are dropping off of facebook they are making a protest they're going to instagram. >> yeah. dean specifically mentioned twitter but that's a good point. >> yeah. twitter did -- what did they do? they do it. >> yeah. >> that's brilliant. >> yeah. jack dorsey is the ceo of the year you see square >> i have looked at square. >> have you looked at it >> i have. >> what do you think >> i think it's been strong. if you own it, you're probably pleased. >> i havutsce de adding dau trendingstocks up 20% since wed. >> i said something positive and i was slammed on twitter that i waffled. what do you do if the numbers are bad and turned good. i said bad things and stick with
9:11 am
it snap may be making a come back they had the fall off and so many problems with android. >> really? >> snap come back. >> yeah. >> where is anthony? sofy. >> yeah. he was on the other day, i think, with julia. >> yeah. >> very busy we got tesla toying with 300 once again a rare and exclusive interview with jay clayton what he has to say about protecting investors and sandler has the exchange in brokerage today. another look at the premarket. 74th anniversary of d-day. we're keeping those veterans, of course, in mind. and athena health halt order ed wshajoth bh out going on at schwab. oh really? thank you clients? well jd power did just rank them highest in investor satisfaction with full service brokerage firms...again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible.
9:12 am
it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management. so i'm not happyhanic in the corps, unless my hands are dirty. between running a business and four kids, we're busy. knowing that usaa will always have my back... that's just one less thing you have to worry about. we are the cochran family, and we'll be usaa members for life.
9:13 am
9:14 am
elon musk winning a vote yesterday. shareholders striking down a proposal to remove three board members. company reveals it will build the first factory outside the united states in shanghai. and musk comments on the company's production of its model threes. >> we did a big set of operates and we're rolling out the production lines again i think it's quite likely that
9:15 am
we will achieve a 5,000-car a week by the end of this month. >> it's the most excruciating hellish months we've ever had. stock toying with 300 and change today. >> fabulous note in terms of tesla from bear. the second one this time talking about the idea that achieve positive gap net income, q3 and q4 alleviate the capital. this will have the bear in the stock today. now typically what happens is that they regroup and the next day they have a case against him. but, jeez, it was quite stirring last night he makes you feel like he's henry ford without the kind of negative connotations religious. >> he mentioned only two automakers have not filed for bankruptcy and that's ford and tesla. >> he's got the gift
9:16 am
he's got the gift of gab amazing. >> he's got a lot of gifts. >> yes. >> there are many who believe the company will be forced to raise more capital in some form. but if he does 5,000 you know he is. >> yeah. >> and this piece talks about where we're not this bear piece. a significant opportunity may be underappreciated of course, in the energy storage deployment now i mentioned this every bear is going to just go on to twitter right now and say i'm the lightweight. i'm a moron. an idiot a chowder head what else are they going to call me i'm reading the report and the report reads like elon music musk is back and bigger than ever. >> where was he? >> i think he was dealing with the pressure of the moment remember he attacked that analyst. >> i remember. it wasn't that bad. >> no. he's got so much go on he's sleeping on the factory floor.
9:17 am
maybe he got sleep. >> he retweeted me the other day i said who was getting first to mars he's sticking by himself. >> really? >> yeah. he's the first to mars. >> boeing has an issue with that, i think. >> yeah. boeing is a big company. so i think it's he loves that kind of, you know, goliath/david thing. like you, david. >> yes. >> yeah. >> yes, that is my name. it's biblical in origin. >> you slingshot user, you hp expects up to 5,000 employees to leave by the end of fiscal '19 as part of the ongoing restructuring plan that's more than previously forecast hp is forecasting $700 million related to the layoffs. >> that was incredible to me the cash flow is extraordinary i mean, really cathy is retiring, by the way. >> yeah. remarkable. >> remarkable job. this company is on fire. they're taking share the new products i have one of the new products it's pure joy. you know, it does this stuff,
9:18 am
david. and, you know, can yours do that >> wow. >> can yours do that look what it can do. how do i get that back anybody know and, by the way, you can scroll up-and-down. this is something they showed me it's fantastic it allows -- i have a whole column on the eagles, by the way, it's not that controversial. because they are world champs. this product is exciting and that's what the ceo is saying. it's really fabulous. >> that's right. >> oh, my god. the sound! i watched netflix on this. >> falda a good show on netflix. >> are you surprised more layoffs to come. >> yes. >> they came up from a split up of hewlett-packard there was some rounds. so much of the reason that went through the splits and then the addition soluti-- dissolution o
9:19 am
entire company and they're doing it. >> what is incredible 400,000 people about seven years ago. >> this is not supposed to be the part you want. they've done in the face of rising d-ramp costs. huge one of the things they've done is taken it to every other company in this business and it's because of innovation and what i saw when i was out there, there are 3-d manufacturing capabilities they're going to reposition. they're going to take people out of pc and move them to 3-d their 3-d stuff is electric and big and real you can make bottles, david. you wouldn't believe it. you wouldn't believe it. >> bottles >> yeah 3-d bottles, you know, say -- >> olive oil. >> olive oil or mezcal they made heart valves when i was out there. heart valves right there! right there at headquarters. right there! >> i believe it.
9:20 am
right there. did they put one in? >> no. >> got it. >> a little for show. >> you don't want to see that. >> no. >> but, yes. >> open-heart surgery. >> yeah. >> this is a company that should be the shares should be up this is different from tesla, just so you know. >> got it. >> we'll see what happens. when the opening bell rings in a few minutes. we'll get cramer's mad dash before that. we'll count down to the bells with futures strong here "squawk on the street" back in a moment this is no ordinary coffee. it's single-origin kenyan coffee from the nyeri highlands, 6,000 feet above sea level. but how do you really know that the beans journeyed to the port of mombasa and across the pacific? that you can trust they're 100% authentic? ibm blockchain. a smart way to track every step, ensuring this coffee did indeed come from 6,000 feet above sea level. and not a foot lower.
9:21 am
♪ ♪
9:22 am
now you can, with shipsticks.com! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. shipsticks.com saves you time and money. make it simple. make it ship sticks.
9:23 am
all right. we got about seven minutes before we get started with the opening bell here is a name we used to spend a lot of time talking about, and not in a positive way. >> right. >> for the mad dash. but that's changed the narrative around valeant has changed. >> now joe poppa, i regard, a fabulous guy and a philadelph philadelphian. sellersville he comes 234 and said here is what we have to do we have to fix the balance sheet and get rid of any sort of let's say taint from investigations and we have to start getting our new compounds in and he's doing all three. and i've had joe on a couple of times. i was tough on him when he first got there. >> yes, you were appropriately so. >> thank you he's delivered, delivered, delivered. and barclays upgrades it to overweight today and talks about how it's undervalued assets. talked about dermatitis and they're ahead of things.
9:24 am
>> they'll change the name. >> yeah. >> and i just think that this is one of the great turns yes, i think fix the balance sheet. what they've done -- >> a lot of debt. >> they got rid of the near-term problems no near-term issues in terms of debt i congratulate joe for the turn. he's a tough guy he doesnidn't fold he didn't quit. >> remember when akman sold off the stock. that was the low. >> yes. >> too far, right? >> yeah. there's the unfortunate herbalife stance otherwise he's brilliant. >> yeah. >> you need to focus on his brilliance. >> not all the times when he was less than that. >> there's a horse that could win the triple crown that explains how i feel about him. >> justified. >> yeah. you can justify it we got an opening bell
9:25 am
coming up. oh, yeah bob baffert. >> you can justify it. lmt is wg up talking about the beontheekend opening bell a few minutes away. and i am a senior public safety my namspecialist for pg&e.
9:26 am
my job is to help educate our first responders on how to deal with natural gas and electric emergencies. everyday when we go to work we want everyone to work safely and come home safely. i live right here in auburn, i absolutely love this community. once i moved here i didn't want to live anywhere else. i love that people in this community are willing to come together to make a difference for other people's lives. together, we're building a better california. the line between work and life hasn't just blurred.
9:27 am
it's gone. that's why you need someone behind you. not just a card. an entire support system. whether visiting the airport lounge to catch up on what's really important. or even using those hard-earned points to squeeze in a little family time. no one has your back like american express. so no matter where you're going... we're right there with you. the powerful backing of american express. don't do business without it. don't live life without it. jeff and market volatility into retirement. isn't top of mind. that's because they have a shield annuity from brighthouse financial, which allows them to take advantage of growth opportunities in up markets, while maintaining a level of protection in down markets. so they're less concerned with market volatility and can focus more on the things they're passionate about. talk with your advisor about shield annuities from brighthouse financial- established by metlife.
9:28 am
you're watching cnbc "squawk on the street" live from the financial capital in the world the opening bell in two minutes on this wednesday morning. futures look pretty good here. dow managing to catch up with the nasdaq has been able to do for four days. aztec semis. there's a report out, jim, from the semiconductor association 20% growth year on year for 13 consecutive months. >> it's incredible it's the great secular growth story. it's one reasons why i have a hard time dealing with, say, the recent downgrade of micr tel percolates multiple isn't that high tech is good i expect a good quarter. and whatever set back halved. >> expect a good quarter, why? >> why
9:29 am
>> yeah. >> the demand for it worldwide products that are not just cell phone. and can i say i didn't mean to overdignify it but invidia is not going to rush anything before it's time i know the story is percolating. i can't squash it like a bug on a windshield if you're a big seller of nvidia you remember orrson wells. no good wine before it's time. no good chips before it's time sell nvidia. go ahead and sell. bring it on. hit me [ applause ] >> let's get to the s&p at the bottom of your screen and the big boards the opening bell the new york racing association
9:30 am
celebrating the 150th running of the belmont stakes saturday on nbc. we'll talk to trainer bob baffert. [ opening bell fuel prices up 50% year on year and up 12 since the beginning the quarter. >> it's incredible and i believe it's hurting the cruise ships because they use a lot of bunker fuel those stocks have been telegraphing this. you think after being down, down, down that somehow people would not find that shocking but whenever you have that kind of shortfall you're going to see it even though all the others are
9:31 am
digesting it southwest air fit to be glow i think that oil, by the way, acts really badly. it's an interesting time. >> yeah. southwest had some other issues. they blamed some of the booking weakness on the engine failure but american on monday warned if oil stays high, get ready. the fare hikes will come. >> yeah. if they put the fare hikes through, i think people will buy the stock. i think it's too late to sell the stocks people continue to do so. >> worth coming back to athena at the top of the hour, the company putting a press release out saying jonathan bush, the man who founded the company, i think it was in his garage when he was a teenager. one of those stories, is out as the company's ceo. in having quick conversations during advertising breaks does it appear he, you know, as heartbreaking as it is for him,
9:32 am
you would imagine he didn't want to become the focus any longer they have a millennial employee base that doesn't take kindly to behavior they think is adverse so the company is now initiated a search for a new ceo jeff took over as chairman as executive chairman but, obviously, not stepping into the ceo role that will be filled by a candidate yet to be identified but at the same time, this is a company, of course, being sought by elliot. >> right. >> remember the letter was back on may 24th where they continued to reiterate their desirto own the company at160 a share in cash and we're looking for an audience looking for an opportunity to really talk to them at length and do some due diligence. the company is going to open up a process, initiate a process to
9:33 am
explore strategic amount -- alternatives it's not committed to selling itself unless it feels it can get the right price. citi comes out with a note this morning, prior to this news, i should say they said they believe the most likely outcome of athena is by a financial sponsor. they're say their internal analysis supports a price range up to $170 that's citi this morning in a note it came out about mr. bush stepping down as the company's ceo. >> it's a timely note. >> it certainly was. >> again, david, i have to ask you. kind of like claus klinefield. they never formally commented on what happened with claus. >> yeah. saying once again they're in great shape.
9:34 am
>> okay. >> those guys play hard. >> yeah. >> you think it's coincidence? >> yes, i do. >> i don't know whether it is or not. i'm sure -- i don't know i haven't asked the question so i don't know the answer. >> i just was surprised. look, things come out. this is not an era why i should say i'm ever surprised but i would point out, again, he built a great company. he didn't get to the next leg of what should be done. anybody that buys that company and any company that buys it is going to steal it. insignia has a positive note out. >> what is the halted news pending. >> yeah. the goldman note on sigma was interesting and sigma throw it out there and they can get express grips and make pbm to end all pbm, to speak. i think athena would be a natural for one of these
9:35 am
they know what is a hip replacement in omaha versus one in boston. i felt they should do that they said there were privacy issues what a great piece of data to have the government, of course, government can't buy it. >> yeah. government needs it. >> a presumption of trade when that happens meanwhile, jim, you talked about the 300 level on tesla being somewhat of a demarcation line. >> yes and i think that what tesla is so hard. anybody who is a serious practitioner of balance sheet analysis knows that this is not a great situation. but at the same time those who love the car like jay leno said want to own the stock. i think jay leno knows cars very well he kpautalked about what an achievement this is. and i think jay leno is pretty
9:36 am
strong in the auto industry. >> what do you think is driving it the most. the shanghai plant the third line the 5,000 a week number? >> i think that 5,000 a week number says they don't need capital. and the 5,000, of course, is far better than people thought it's scarce. anyone who is short it because what it says is wow no capital raise and cash talking about cash flow being positive at this stage of the game for this man is something that a bear, you know, cringes at i think a lot of people are hoping the president will get rid of whatever incentives there the president will say, you know, this is the stuff. but he makes his cars here now he's going to make some in china. he actually plays everything you know, he's not turned off the white house at all it's interesting he's not alienated president trump, david >>well, he's attacked the press to a certain extent. >> yeah. >> i think that's endeared him.
9:37 am
>> i think the president -- he's attacked twitter somewhat like the president. maybe they should do a joint thing. right. [ laughter ] the real elon musk and real donald trump. >> doesn't he want to do that? >> yeah. he wants to rate journalists president trump would like to do that, too. maybe they get together on that issue. >> all right i think the same organizations that don't like trump don't like mufb musk. >> you do? >> i don't know, man there's a lot of teslas in coastal elite towns. >> this is true. >> a lot of globalists own teslas. >> did you see the resignation -- >> mr. baker why are you bringing that up >> press pro trump. >> yeah. matt murray who was in my class as internals at the journal in the early '90s is the editor in chief. >> is he not -- >> how does that make you feel >> i know, right [ laughter ] >> i have a ceo younger than me
9:38 am
retires. that's it. >> yeah, that's a problem isn't when you walk into the ceo meetings and you're the oldest guy in the room. >> yeah. you always say listen you're too young. are you kidding me i'm 63 i say i'm not 63 >> you're not retiring i'll say it. not ever. >> i'm neither shy nor retired. >> glad to hear it. >> vix near 12 has made people wonder if we're back to what we had earlier in the year. >> it would be great if we had every sector going up. >> yeah. >> we do not have that now i think that -- and we have a huge number of bulls in the bull/bear survey this is not an optimal moment to we need something else other than to tech go up we don't have it without it, i'm afraid i'm not afraid that's the wrong word. i'm a little more cautious.
9:39 am
>> i understand. it's only the second time since january that we fell below 12 on the vix. hasn't happened a lot. >> one thing that is happening, there's a possibility we'll get health care back and the stock that i watch sometimes, david, asks me what is the key to the market the stock i watch is j & j. >> okay. >> j & j is the class of the field. this stock has not done well it has a great yield it has a aaa balance sheet, and it's finally starting to creep up finally starting to creep up everyone to focus on j & j if you want to see a stock that can break out. jpmorgan is the one you want to watch in finance and, by the way, can i say that goldman sachs hasn't gone up had a couple of day it's gone up. >> it's not performing particularly well. >> that's a nice understatement. >> i know. down 9.6%. no worse than citi you've been a champion of for some time.
9:40 am
>> yeah. citi trades like it's sleeping [ laughter ] >> yeah. >> got it. never sleeps i remember that. >> yeah, of course. >> leaves me out there. >> leaves me hanging i don't want to leave you hanging. athena one final time. listen to this. >> you're going to talk about what the goddess beauty mars. >> nike. is nike the goddess of zeus? there's a quote like this and it took me a minute to get to it because we rushed through these. jonathan bush, this is what he said i believe for working for something larger than yourself is greatest thing a human can do these things give shape and purpose to an otherwise mechanical and brief human existence. it's a near once in a lifetime
9:41 am
example of such a thing. it's easy for me to see the things that made me useful to the company and caused these past 21 years are now exactly the things that are in the way. >> that's about as external i've ever heard. >> they don't cite a particular reason for the departure. >> no. those things that are in the way. >> >> we don't usually read quotes like that. >> no. those are highly polished. >> what is it about jewelers, especially this one, they can't move in increments of less than 10%. >> virginia has cleaned that company up she's turned to a jewelry store. not a lending company. she's doing it on the fly with integrity and she's from proctor and gamble old fashioned from the beauty division i have to applaud her. the balance sheet was good they raised the dividend recently she has the comp stores, even
9:42 am
though it's comparisons back i can't say enough good. i can't say enough good. she gave a keynote speech last week that was about into the ground -- integrity. this is zales, jared, kiss begins with kay. it's back but it's back in the right way. not by charging interest to people it's back by offering good jewelry and good prices. i rest my case. >> as you should. >> dow at 131. let's get to seema mody on the floor. >> reporter: strong open for the stocks the dow up 126 points some economic data that investors are chewing on the u.s. trade deficit falling to a 7 month low in response, the u.s. dollar has weakened, but these trade headlines having an impact on the emerging market currencies like the peso which is at the lowest level of the year
9:43 am
stocks overlooking this trade uncertainty. the currency market is not take a look at what is working for stocks today technology continues its run higher as does financials. energy higher by .07 we're lower on the day take a look how the s&p tech sector has performed in comparison to financials over the past one month a strong outperformance up 7% lead by those faang stocks facebook, amazon, apple, netflix up in the past four weeks. a tremendous run there pivot to earnings where retail continues to perform well. vera bradley higher on an -- lower now. it did report improved margin outlook. five below will report after the bell markets gearing up for next week the u.s.-north korea summit. fed, ecb, bank of japan meeting next week.
9:44 am
can stocks continue to propel higher as rates take higher closer to 3% that, of course, will be a key question for the market. >> thank you very much the bond pits, as well, and check in with rick santelli. good morning, rick. >> good morning, carl. another very, verynteresting day in the fixed income and fx space. look at one week of tens you can see we have moved back into a zone. that's pretty good resistance. and today, in particular, what was most interesting is the data wasn't good today and rates are up and yesterday the data was solid and rates weren't. granted we did see that easing of the trade balance, but truly something else is going on and maybe what is going on is looking at two day of bunds. they're up seven basis points. when bunds are up, you would think that things going on in the rest of southern europe like italy would see their rates moving in a particular
9:45 am
direction. most likely the downside that is not the case as a matter of fact, what we're seeing is rates are moving up in italy. now bunds are up 7 look at the italian two-year it shot up look a longer chart of the italian 10-year. it starts around the third week in may the reason i picked it, it gives you a nice graphic view of how much volatility there is in that market now, granted, it's moved back into the zone and you could argue consolidating but consolidating toward higher yields what ais going on? the next chart will give you a clue to that look at the two day of the euro. yesterday we had the one pop that was when the ecb let us know their next meeting is going to be an active discussion of axing out qe we know they've made a move in this direction and promised more, but much of the volatility in europe and the notion of all the other issues like negative
9:46 am
rates was going to be a big impediment to the mario an drajy would find a way to back out of the promise. it looks like it's going to happen or at least be discussed and the euro popped and there isn't that transmission. now from the italian markets into the higher quality german market, which is the euro curve. and if you open the chart up towards september, on the euro versus dollar last year. we did it on the exchange yesterday. whether you're looking at the dollar or the flip side in terms of the euro, it hit solid support. solid resistance about week ago we were trading under 116. now we're making a b-line and getting close to 118 don't under estimate how much horsepower this trade can get in front of the ecb meeting or how much disappointment that trade may get after wards. carl, jim, david, back to you. >> thank you so much rick santelli in chicago when we come back, bigtech
9:47 am
under fire facebook and google being sued we'll talk to washington state attorney general a lot more ahead with the dow up 118. don't go away. hi, kids! i'm carl and i'm a broker. do you offer $4.95 online equity trades? great question. see, for a full service brokerage like ours, that's tough to do. schwab does it. next question. do you offer a satisfaction guarantee? a what now? a satisfaction guarantee. like schwab does. man: (scoffing) what are you teaching these kids? ask your broker if they offer award-winning full service and low costs, backed by a satisfaction guarantee. if you don't like their answer, ask again at schwab. yourbut as you get older,thing. it naturally begins to change, causing a lack of sharpness, or even trouble with recall.
9:48 am
thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember. mom anit's not theirs.car... it's mine. mine. mine. and it always will be, forever and forever. the new rx 350l with three rows for seven passengers. experience amazing at your lexus dealer.
9:49 am
find thenah.ote yet? honey look, your old portable cd player. my high school rethainer. oh don't... it's early 90s sitcom star dave coulier... cut...it...out! [laughing] what year is it? as long as stuff gets lost in the couch, you can count on geico saving folks money. fifteen minutes could save you fifteen percent or more on car insurance.
9:50 am
keep your eye on tesla after the shareholder meeting last night. 305 the high of the early session. elon musk talks about the plant in shanghai potentially 5,000 cars a week. dow up 98. back in a minute
9:51 am
♪ that's confident. but it's not kayak confident. kayak searches hundreds of travel and airline sites to find the best flight for me. so i'm more than confident. how's your family? kayak. search one and done.
9:52 am
9:53 am
resumption of athenahealth on trading, up 5%. almost a 2 1/2-year high, guys >> trading near the 160 offer, cash offer from elliott. not far from there we said this morning citi says maybe 170. the company says it's exploring strategic alternatives and quite an emotional memo from ceo and founder jonathan bush who is exiting as of today the last day he says and he goes on to say while sad for him, it's also a joy for realization for me because it signifies that after all our dear goddess really was larger than me all this time.
9:54 am
and athenahealth will launch beyond me. healing itself whatever wounds my own weaknesses have inflicted. >> it's shakespearean analysis i don't know what else to say. >> sudden storms are brief >> this is, frankly, i have to say it, full of sound and fury signifying -- >> really? >> because it wasn't about -- it was about performance. i enjoyed his book but there is a richard iii here. >> for a horse or -- >> it's all about -- >> trying to remember those opening lines. >> viewers are trying to keep up, too. >> they ought to google it
9:55 am
son of -- what is it >> no, richard iii >> my king and four horsemen >> i know that, but -- >> my king and -- >> let's get to cramer and stop trading. >> alas. >> right now united health is a company that gets no respect. it's one of the great dow stocks a 100 million share buyback. boosted dividend from 75 to 90 cents. people don't care. they're too busy buying. health is one of the stronge ee stocks in the dow. every time it goes down, you have to buy it >> viewer gave us a hard time about whether or not the market has seen a broad-based rally, right? the russell at record highs. >> i said last night on "mad money," which is a show i have, you think with the russell at all-time highs you'd start getting the financials up. that you'd get the health cares up, but you're not
9:56 am
that person has a problem with close reading. >> that was the winner of our discontent -- >> found a skull recently. the whole thing was true >> now is the winter of our discontent by the way, stephen king will be knowns on our dickens. >> without a doubt >> i have to read more of him. >> scary as all get out. >> we have marcus lemonis. he's going to talk about camping world. this is response to a viewer who questioned it on lightning round and the man of the hour steve mollenkopf >> unbelievable. just unbelievable. >> what. >> what you do you know what you do you know >> i justify what i do >> you know. >> steve is -- >> those are both great guests >> whether it be -- >> apple >> yes, exactly. and pulitzer prize winning writer jim stewart said it in an interview with jim i'm going to bring up some of
9:57 am
those questions about what's right? what's right and he supports all those things in san diego is that right? >> viewers are sending us a lot of shakespeare i'll tell you that >> are they? >> brush up on your shakespeare. >> the tempest is underrated >> brush up on shakespeare and the women. >> kiss me kate. that's a reference to the fifth, not the fourth >> jim, see you tonight. dow up 100 when we come back, a rare and exclusive interview with jay clayton.
9:58 am
9:59 am
directv now gives you more for your thing. get all the good stuff about tv without all the bad stuff. yes! you can still stream your favorite shows. yes! with no annual contract. wait, what? it's live tv. yes! with no satellites. what? and no bulky hardware. no bulky hardware! isn't that great news? yes! nooooo! nooooooooooo! try directv now for $10 a month for 3 months. more for your thing. that's our thing. visit directvnow.com
10:00 am
♪ good wednesday morning i'm carl quintanilla with sara eisen and david faber at the now, stock exchange. dow up almost 100. 92 just off the initial highs of the session. a lot going on whether it's facebook or twitter or delta warning on q2 earnings >> our road map for the hour starts with trade tension chrs escalating mexico hitting the u.s. with retaliatory tariffs on pork, steel, cheese and other goods. >> the s.e.c. focussing on
10:01 am
cybersecurity as cyberthreats on consumers and financial institutions increase. the chairman of the s.e.c. will join us live plus, jobs, jobs, jobs for the first time in 18 years, u.s. job openings now outnumber the jobless. >> let's start with the markets. another rally this morning mixed. the dow is up 85 points. nasdaq is pretty much flat this comes after the nasdaq hit another record high. the world bank issuing a warning saying an escalation of tariffs up to legally allowed bound rates could translate into a decline in global trade flows amounting to 9%. that's similar to a drop seen during the global financial crisis in 2008-09. >> jonathan, 9% slide in global trade. certainly hits global economic growth is that reflected anywhere in the markets? >> it's not reb flected in the mark ects because the market
10:02 am
doesn't believe it's going to happen there's a difference between a warning and something that looks impending. if you look at "the wall street journal" headline today that china is offering some concessions to trump, i think what you'll find is that people are going to throw him a bone to move beyond this and that the u.s. comes out ahead even though the mark set very concerned. >> you think canada and the eu and mexico are just going to get over this and calmer heads will prevail? >> i don't think they'll get over it. i think ultimately we've seen this over and over that trum bargaining position and steps back and steps back and takes a smaller victory. ultimately that's probably the way this is going to play out. >> one of the complaints about the way they've gone after trade policy is we don't know whether the priority is to reduce the trade deficit, to change their industrial policy, to increase market access so they can buy $70 billion more in goods, but is that what we wanted
10:03 am
is that the answer >> i'm not saying i would have gone down this path but do i think we'll see a trade war that's going to erase 9% from noobal trade i don't think we will. the biggest issues are things like intellectual property rights that's not what the headline or discussion is which doesn't make a lot of sense to me do we see this horrible tail event? probably not >> thomas, how do you expect it to play out in the markets, and what do you make of the strength we're seeing in the nasdaq, technology stocks, small and micro caps with some of the other major groups lagging >> first, i agree with jonathan. there's a self-correcting mechanism in capitalism itself trump can throw out these initial proposals but sees how the market reacts and he can adjust when you look at the overall market, we have pockets of strength what's happened in technology is a revolution and as an investor, you have to be focused on where the puck is
10:04 am
going to be five years from now. and i think what's being developed are creating opportunities but also challenges especially for value investors whose traditional -- one of the traditional ways of making money was -- that can be a dangerous game to play right now >> are you saying stick with technology and when you say revolution, what exactly do you mean >> oh, what i mean by revolution think is about how we buy things the big box retailers, they've been under threat for years now, whether it's going to amazon disintermediation of traditional retailers. there's continued opportunity there. but there's also opportunity as you have demand for memory and the cloud grows. i think you'll see big winners in that space but then there's also threats on some of the traditional economic areas >> also this idea that technology, big cap tech is a safe haven investment right now. that these stocks are facing
10:05 am
such, to thomas' point, structural tailwinds that they can weather any kind of dip in the overall global economy >> yeah if you look at large cap tech, it's trading at the same -- on a free cash flow basis, trading at the same multiple as the overall market for substantially faster growth. they're disrupting everything around them. not only retail but consumer staples and the brands we've become accustomed to are under siege from these issues. and i don't see why in six months or a year or two years that we're not going to see this trend still playing through a fair bit of upside even on online advertising it's still a small portion of the potential market there's a lot of up side >> this bridgewater memo they are arguing about 2019 being dangerous. centers around fiscal stimulus wearing off and the impact of fed tightening starting to bite. what's wrong with that argument?
10:06 am
>> i think that, first of all, it's a matter of degrees will we see the economy be slower in '19 than '18 it's impossible for it to be better than this it's unbelievably great and the earnings we're expecting 20% eps growth next year will be more like an average year if that's a concern that deceleration is a problem, then you'll be disappointed if you are looking for something sustainable long term and nonrecessionary, you'll see that a year from now as well. >> what about financials, thomas what do you make of the weakness we've seen in those stocks and if they are cyclical, what does that say about the economic environment investors are looking for? >> well, i don't think they are weak on the economic environment. i think the weak i'm worried about bond spreads just as we raised the short-term rate and the ten-year still stays down at 3% people worried about -- >> you don't think that says anything about the economic environment? the flatter yield curve? >> i think the flatter yield curve says something about the
10:07 am
global economic environment, if you could argue that the ten-year should be trading at 350 or 375 based on the economic environment, but if it went there we'd have such a flood of money from around the world immediately relative to the bond rates elsewhere on the globe if anything, it's an opportunity for investors. low interest rates are a positive and i think when you look out at 2019, one of the things that's going to help and continue to drive things will be the capex that's taking place this year. so we do have a boost this year. i think the rate of change will be slower next year but i still expect the trend to be positive. >> i agree with this point that the yield curve, i think the flattening of the curve is giving us a head fake. the short end is an indication of our strength. the long end is being held down by europe and japan which is a signal of how much weaker they are than us. and the result is that the curve flattens but if you look at loan
10:08 am
performance and credit spreads, that really gives you a sense of how healthy the economic environment is. >> that's an optimistic take you're still 3,000 for the s&p at the end of the year >> has to be what? >> 9% more >> jonathan, thank you and thomas, nice to see you as well thanks for joining us. >> thank you athenathenahealth's ceo is stepping down today amid a scandal. let's goet to bertha coombs with more >> it follows recent revelations of athena's co-founder having physically assaulted his wife more than a decade ago, events he's acknowledged but bush and the board have been under pressure to sell the company from elliott management with major stakeholders henderson and clear bridge also pushing for it bush acknowledged what they've
10:09 am
said saying he believes working for something greater than yourself is the best thing you can do and athena health has been that for him. but he now sees the very thing that made him useful to the company over the last 23 years are the exact things that are in the way of the firm's potential to transform health care it's been a month since elliott offered $160 per share the board now says it will explore possible sale. an analyst puts the odds at 60% that it will probably be taken private by elliott, though, of course, david and carl, you guys could talk about some potential other companies maybe in a vert callaway that may be interested in acquiring athena. >> they'll have the opportunity now to step up if they are interested somebody close to the situation said to me they're not committed to selling the company not to necessarily think if they don't get the price they're looking for that the board doesn't feel as adequate they aren't willing to move on and
10:10 am
they have initiated a search for his successor, right >> and also the fact that the price is now up more than 20%, pretty much right near where the offer was from elliott you'd be hard pressed to find something you might want to offer that much more, especially given that some of the potential players are themselves already involved in acquisitions >> yeah. aetna and cvs. going for the triple crown justify is looking to be lucky 13 at the belmont stakes saturday, something only 12 other horses have ever done. we're going to talk to legendary horse trainer bob baffert about the race and the impact of legalized sports betting and a special interview with the chairman of the s.e.c., jay clayton. a quick look also at tesla here. shares up 4% after elon musk's bullish outlook for the model 3 and the dow is up 82 "squawk on the street" is back in a moment.
10:11 am
so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today. welcome to holiday inn! thank you! ♪ ♪ wait, i have something for you! every stay is a special stay at holiday inn. save up to 15% when you book early at hollidayinn.com
10:12 am
10:13 am
big bets on horse racing this week. new york states hosts the 150th belmont stakes on saturday this time there's a triple crown on the line. justify is gunning to become the on -- only the 13th horse in history to do this only 12 horses have done it in the past join us from post 9, horse stify, bob baffert and theah and president and ceo the new york racing association, chris thanks for joining us. how do you prepare both your
10:14 am
horse and yourself for this. it's not that it's a new thing for you, but how do you prepare to do it again >> there's a lot of -- it's like pressure i think it's like any football coach would prepare his team main thing is that i have to keep them healthy, happy, and they can't talk to us, but their body language is so important. as long as he's feeling happy and has bounce in his step, we know we're doing the right thing. >> the lebron of horses? is that overstating it on justify? >> maybe, maybe not. this is the best trainer you'll ever find in your table. he brought american pharoah here in 2015, won the triple crown and has a great horse again. >> what makes a great trainer then >> i think it's actually -- bob probably should answer it more than i i've seen great discipline, ability to relate well to their staff as well as to their owners >> what does it do for ratings and attendance, the fact that you're now competing for the second triple crown in the last
10:15 am
four years >> you will not believe, what i went through in 2015, the electricity in the air when american pharoah crossed the wire, it was so loud everybody -- nobody wanted to leave. it was like -- i've been to sporting events like when kirk gibson hit the home run. it was that kind of electricity in the air where you're so glad you were there and part of it. that's why everybody goes out there. that's why it will be packed because you want to feel that excitement >> that's a crazy stat when a triple crown is on the line, ratings are triple, at least. >> it's so difficult because, you know, there's only 12 of them and there's been great horses that have come up short. this is the fifth time i've gone through this so i'm 1 for 4 i'm not, you know, but i'm trying to help that average. >> yes >> let's talk about sports
10:16 am
betting. there's a piece in the journal about delaware starting to get things under way one of the bets was $1,000 on the yankees to win the world series does that take anything away from horse racing? >> we hope not obviously there's been gambling on horse racing for many, many years. recently the united states supreme court had a statute from new jersey which permitted gambling at race tracks and casinos. we hope the day will come when we can have the same service to our customers at our racetracks. >> what do you think it's going to do? it is interesting that sort of loses that singular advantage, that horse racing has now that you can bet on all sorts of other sports >> i think what it's going to do is it's going to keep the money in america the money always goes offshore or wherever. they're just bringing it back in where it should be >> what about technology, chris? 're going innovation from horse rinand gambling
10:17 am
on mobile and on have to actually go to the events? >> we have a great mobile app so you can wager at nyra bets and nyra at the track. it gives you every piece of information you could possibly want i believe mobile and technology in general are going to be very important to attract new generations of fans to our sport. >> on saturday, physically, where do you like to be during the race >> i'm in a box outside near the wire right before they break. and i'm the guy that looks nervous as hell. >> no cocktail >> all you hope for is the horse breaks cleanly and gets out there. you don't want him to break poorly and be behind he needs to get out there, get in the race early. that's his style he wants to take command and hopefully that happens >> we can't wait best of luck >> i can't wait. >> best of luck to you, bob.
10:18 am
bob baffert, chris kay with the racing association appreciate it very much. belmont stakes saturday, 2:00 p.m. on nbc and nbc sports don't miss it. all right. let's get back to the market now. and those records being set by technology stocks. mike santoli is on the floor looking at the recent rally outside of the usual faang names. >> software and other internet companies. they basically have been a little undernoticed because faang dominates. here are a handful of etfs giving faang a run for the money. faang is mostly so strong because of amazon and netflix. here's strength elgs where the invesco dynamics fund. this is a quantitative model for selecting software stocks. it's up some 25% year to date just behind the collective faang
10:19 am
returns. biggest names here, adobe, sales force, intuit. those together, 25% of this. so you see that real acceleration toward the right of the chart shows you the momentum there. also other internet outside of faang. the spdr internet is equal weighted this tells you it's not just those very dominant big tech platforms driving it this is an equal-weighted portfolio. mule soft has been -- that's being acquired by sales force. about 40% is software and services also owns box, etsy and the like small caps have not been able to keep up in the technology area but look at s&p 600 technology sector fund. it's 30% semis, 26% software it's up roughly about what the nasdaq 100 is. so that technology, people have been grasping for everything technology fdn, dow jones internet etf
10:20 am
index. i use this as a faang proxy. this is basically people talking about with this group, 26% year to date returns, and, obviously, it still is the pace setter but strength elsewhere, especially software platfms a the like. >> thanks, mike santoli. let's goet to contessa brewer >> chub, aig, allstate, travelers all dipped on news news coming out from the information that amazon is considering getting into the home insurance business. they'd do so in connection with their ai products like robots that could check for fire or broken windows or things like that and then offer some sort of package deal to customers. again, once we saw that coming out from the information, we saw these other home insurance companies taking a bit of a dip. but everybody but travelers has rebounded somewhat on that
10:21 am
carl >> amazon strikes again. contessa, thank you. coming up -- financial institutions have faced a growing number of cyberthreats, and the s.e.c. is ramping up efforts to tighten security. we'll be joined by s.e.c. chairman jay clayton "squawk on thetr seet" will be right back after this with the dow up 93 points
10:22 am
10:23 am
10:24 am
taking a look at stocks. dow and s&p are higher nasdaq around the flat line still trading near a record high groups like financials that are leading the charge today interest rates, ten-year yields are higher the dow up 105 let's get to bob pisani with a special guest for us bob? >> thank you, sara at the sandler o'neill global exchange, the head of all the exchanges talking about what's going on special guest right now, jay clayton, the chairman of the s.e.c. exclusively on cnbc. just want to get that little plug in. you had a very interesting discussion with all the members here talked about a sense of
10:25 am
responsibility to protect investors. are there areas of investing that you are concerned about now where you feel investors are being taken advantage of some areas you feel the s.e.c. needs to act on? >> thanks for being here we are always concerned there are areas where investors are being exploited, paying too much, being defrauded. that's our job and we are looking for that everywhere whether it's old frauds, pump and dump in the penny stock area or some of the frauds in today's ico market every woman and man at the s.e.c. comes to work every day thinking about our main street investors and how to protect them >> you brought up icos let me go to this area interest in bitcoin is off the charts by our viewers. not since the 2000 area have i seen such interest tell us a little bit more about
10:26 am
what you are planning to do with bitcoin, crypto currencies and you brought up icos. i talk to my ico friends, and they say we're stymied we don't know what the s.e.c. is planning to do can you tellis whether icos are definitely securities or are you going to carve out some exceptions and when are you going to make a clear ruling and decision on this >> there's a lot in that area. let me start with the technol y technology incredible progress. it can drive in the financial markets but in a lot of markets. fine two areas in the financial markets were distributor ledger technology has come to the floor, crypto currencies these are replacements for sovereign currencies replace the dollar, yen, euro with bitcoin that type of currency is not a security let me turn to what's a security a token, a digital asset, where i give you my money and you go
10:27 am
off and make a venture you have some company you want to start and in return for me giving you my money, you say i'm going to give you a return or you can get a return in the secondary market by selling your token to somebody that is a security and we regulate that. we regute the offering of that security and the trading of that security and that's our job and we've been doing it for a long time. >> so you're saying the classic definition of security, you invest in a common enterprise. you saying the way you look at most icos, they are securities >> correct >> are you planning to make a clear statement on that because there seems to be a lot of confusion about whether anybody is going to get approved or not. >> bob, i hope i just did. if it's a security, we're regulating it. we've been doing this for a long time and we built a $19 trillion economy. a securities market that's the envy of the world following these rules.
10:28 am
if you have an ico or a stock and you want to sell it in private placement, follow the private placement rules. no secondary trading you have to do that. if you want to do an ipo with a token, come see us file financial statements, file disclose purp take the responsibility our laws require and we're happy to help you do that public offering >> you seem to be saying the s.e.c. is not going to be changing the definition of a security just to suit the ico community. is that right? >> i'm certainly not going to support that >> let me move on. what about alt coins there are other alt coins out there. there's ether, ripple. is ether a security? >> i'm not going to comment on specific crypto assets and whether they are a security or are not a security but you captured the definition very well. am i giving you my money for you to go off in a venture or i'm
10:29 am
relying on the -- >> there are lawsuits over ripple about whether it is or is not a security that's partly one of the issues here and, obviously, how ths.e.c.is . >> we are not going to do any violence to the traditional definition of a security, which has worked well for a long time, and i believe will continue to work well. >> is it possible the s.e.c. might say these were securities at one time and no longer are because they're not centrally controlled, for example? >> that's a question that is out there and, you know, will be answered in specific facts and circumstances. but we've been doing this a long time and there's no need to change our fundamental approach. >> i covered etfs for a long time a lot of issuers are waiting what criteria do you need to start a bitcoin etf.
10:30 am
we have a fairly well developed futures bitcoin market that's been out six months now. are you pleased with how that is going? is the development of that market sufficient to allow bitcoin etfs or are there other criteria >> our division of investment management has put out and been very clear with the industry about the types of things we're going to need in any asset class. if we're going to approve a product. and one of those is, is the pricing something people can rely on. also asset verification. our communication to the market place on this has been very clear. i'm very pleased with my colleagues at the s.e.c. because i think we're very open about what we need for you to satisfy our viewers. >> you sent a long letter out that was widely quoted in the industry that contained a lot of question marks implying you have a hot -- very high hurdle to overcome. you who wanted bitcoin etfs to
10:31 am
satisfy us at the s.e.c. expand on that >> those hurdles are the hurdles we think a main street investor expects if they'll invest in a product. i understand there's a great deal of discussion about these cryptoassets but we're not going to relax our rules based on the level of discussion we need to know the pricing is there, the assets are there and it's going to function as our retail investors would expect those to function. >> you recently appointed a crypto czar. that's what she's going to be called from now on is that a sign you're taking this very seriously and you are looking for ways to advance the block chain/bitcoin medium and that you're not going to be obstructionists and interested in basically shutting it down? that's what my bitcoin friends ask me >> do not take my comments as
10:32 am
comments that we're not paying attention. we're spending a great deal of time in this area. i think block chain technology has tremendous opportunity the cost of verification in the securities industry, incredibly high if we can make that more efficient, terrific. in terms of val, she has a very important job. we have an enforcement division, an investment demand -- management division, a trading division and corporation finance. her job was to make sure we're coordinated on this new asset class across all those divisions. and i thank her for taking it on >> let me move on. volatility hit the roof in february several exchange traded products in the volatility space essentially blew up. are you satisfied that levererage in inverse etfs don't constitute any systemic risk to the system
10:33 am
>> so let me speak generally i am always on the lookout for risks we don't recognize or risks we've misassessed. whether it's in a product space or another space not going to comment on specific products but i come to work every day asking our staff, are there pockets of risk that we're not recognizing when we look at them, we're way underestimating? and leverage, as you and i both know, leverage that you don't see or leverage that's excessive has been a hallmark of problems for a long time. >> one of the areas that we spend a lot of time on is ipos i've been been covering them for 20 years it's depressing to see the ipo market go down it's 50% low are than it was 20 years ago. 3400 companies in the wilshire 5000 that's a disgraceful number.
10:34 am
>> that's a violation. >> you have been very passionate about how to change that give us some insight into what we can do to get more companies to go public >> so i am passionate about it because if this is our total equity investment space, the private part of it used to be this size. it's probably now this size. so half of our kweeequity invesn space is now private which means it's away from our main street investors. i don't like that as just a result as a general policy matter because we're shrinking the opportunities for our main street investors there are a lot of drivers of it who loorking at those drivers. some point to regulation some point to the availability of private capital some point to secondary trading. it's probably all of those but, like you, i would like to see the suite of opportunities for our main street investors be
10:35 am
very broad >> let me move on. i'm going to hit you with several questions on different topics now cybersecurity. you have been increasing efforts recently to monitor cybercrimes. can you tell us what you're doing to stay on top of this >> so cybercrimes come in many forms. some of them are old frauds that we know about. just cyber enabled some of them are new we formed a cyber group in our enforcement division these people have expertise in the dark web expertise in understanding hacking. hacking, taking information, using it to trade on this is an area we're focused on i don't want to give away too many of our investigative secrets but we have people -- >> are you beefing up the department that handles this >> yes >> obviously, this is a major issue. we had issues about how timely companies need to be in reporting cyber violations for example. are you going to give more
10:36 am
careful guidance on when companies are required to tell us about when they've had breaches >> so in the area of disclosure, we did come out recently with guidance for public companies on how to look at a cyber incident and assess whether disclosure should be made i've said germly since i started in this job that the level of disclosure in the market as a general matter about cyberrisk and of specific incidents is not where i would like to see it i think it's been improving. thk the public has a better sense of how cyber dependent we are and, therefore, the level of cyber risk but i'd like to see more >> let me talk about the bond market there was an equity market committee to look into the equity structure, market structure of the stock market that was under your predecessor. you have a new committee to look into the bond market structure one thing that's amazing to me watching this for so many years is while stocks have essentially
10:37 am
moved to an electronic trading model, the bond market has not there are efforts to do so it's very slow but you know most of this is done over the counter. what would you like to see change in the way bonds are traded and how it might impact investors? >> well, let me say this i don't think it's for me to decide what i would like to see. but what we are seeing is increas increased electronification. make sure it's transparent and our markets are resilient. we formed the fixed income market strategy because as this is coming to the fixed income market we want to make sure our regulations are keeping up with it and we're getting those results. and we did this in the equity market today's equity market is much more efficient than the equity market of 20 years ago is there room for improvement?
10:38 am
there always is and we're looking at it. but i want to make sure the same thing happens in the bond market >> let me go to the stock market this is an issue we debate at cnbc all the time. the fragmentation of the markets. about 40% of the trading in stocks today are done in dark pools where, as you know, there are restrictions they're not clearly available. some people have railed against this saying the market has become too fragmented, too difficult to operate in. what's your viewpoint on that? >> so my viewpoint on the kweets market is we have to take a stand that there's a lot of aspects of the kweets market the larmg cap stocks trade much differently from the mid cap and small cap stocks so a conclusion like that one about where trading takes place and whether it's efficient may be difference for a large cap versus a medium cap or small ca stock. we're looking at those issues and assessing whether our rules, including our rules for
10:39 am
alternative trading systems accommodate both large cap and small cap stocks >> i'll let you go, but before i do, are you convinced that investor -- the average investor buying stocks on a regular basis today are getting a better deal, a more transparent deal than they were getting 40 years ago >> yes, i'm convinced of that but it's our job to see if we can get them a better deal >> okay. jay clayton, chairman of the s.e.c., thanks for joining us. first time on live television. jay clayton, head of the s.e.c he'll be here all day at the sandler o'neill conference >>thanks for bringing us that. obviously, our reflections are largely about the degree to which that interview was about crypto, right? says a lot about the era we're in >> they are looking into this about whether it's a security. clearly a crypto czar as bob was pushing him on but it's tbd on how they'll proceed with regulation
10:40 am
>> watching that, dow is within 100 points of 25k. if we get there, it will be the first time since may 22nd. so we'll watch that. meantime, let's get to courtney reagan with a news update. >> good morning. here's your news update at this hour president trump's lawyer rudy giuliani says robert mueller's team is trying to frame the president. he was speaking at a conference in tel aviv. >> there are a group of 13 highly partisan democrats that make up the mueller team, excluding him, trying very, very hard to frame him. to get him in trouble when he hasn't done anything wrong >> spanish officials say three migrants were hospitalized after hundreds tried to jump the fences separating morocco from a spanish territory in north africa it was the first mass attempt to jump the fence in at least seven months the international space station could soon be sold nasa says it's talking to several international companies
10:41 am
about forming a consortium that would take over operation of the spacecraft and run it as a commercial space lab it costs the u.s. between $3 billion and $4 billion a year to operate the station. that's your cnbc news update for this hour. let's go to jackie deangelis for breaking eia data. >> the data was out about ten minutes ago. this is really important you can see accelerated losses in crude oil a surprise build of 2.1 million barrels in crude a surprise build of 4.6 million barrels in gasoline. this is the time of year you expect to see draws in crude producing more gasoline as drivers hit the road for summer driving season that doesn't seem to be happening here which indicates that potentially the market is still churning through excess inventory. 10.8 million barrels a day, that's on the rise and there are concerns that in two weeks when opec meets we'll see more barrels come online there as well that is why crude is trading under $65 a barrel and brent under $75.
10:42 am
i'm going to send it back to you at post 9. >> all right thank you very much, jackie deangelis. interesting how the inventory number was off by such a large degree versus estimates. 200% >> we'd already seen the airline stocks weak this morning one area to keep an eye on with those fuel prices potentially. >> delta remains in the red as they warned on q2 numbers cae beusof fuel prices dow hanging on to a 108-point gain back in a moment welcome to holiday inn! thank you! ♪ ♪ wait, i have something for you! every stay is a special stay at holiday inn. save up to 15% when you book early at hollidayinn.com save up to 15% when you book early
10:43 am
while it's design was meant to be seen.. experience the 2018 lexus nx and the nx hybrid. experience amazing at your lexus dealer. at fidelity, our online u.s. equity trades are just $4.95. so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today.
10:44 am
another retail comeback to tell you about check out sairs of signet jewelers soaring after the biggest diamond jewelry retailer reported a big beat up 16% now in profits comp store sales were flat but that was a lot better than what analysts were looking for. they expected down 4 and while margins were lower, the results mark a big improvement. i talked this morning to the new ceo who we've interviewed here on "squawk on the street."
10:45 am
she made it clear this is month two of a three-year transformation of this company it's coming off of a very rough period and she is saying e-commerce is a big driver where you can now go online and book appointments to see your diamonds or your engagement rings in the store. they're also experimenting with innovation in the product. something we saw in the tiffany quarter which was very strong. and the repositioning some of the brands and looking at remarketing them ahead of the holiday season remember, this is a company that owns kay jewelers, zales, jared. an unloved stock for a while low expectations going in. stock down 20% for the year before this report and short interest, guys, as so many retailers have seen was elevated is continuing to be elevated what you're seeing is a short squeeze on better results, better expectations. and here's a tidbit for you. three-stone rings are very hot right now. three-stone -- >> i know why. >> why
10:46 am
>> meghan markle >> yeah, meghan markle the royal impact >> along with yellow diamonds? >> yellow diamonds are very hot right now. celebrities are still going with the solitaire, but once the royal gets into multiple diamonds, there's a trend. >> ever since blue nile, remember where people said this sector would not be amazonable because who is going to order a diamond ring through the male? g mail? got to go see it first >> that's partly true. that's where they have interesting experiments with omni channel see online and go in store jewelry is still a hot category. when we come back, a tight labor market and business could face a series of challenges, namely, a slowing economy. joining us next for insights on the u.s. and global economy, former imf chief economist ken rogoff
10:47 am
10:48 am
wall street's biggest bull
10:49 am
tony dwyer says stocks can really 16% from current levels find out what has them pounding the tae.bl tradingnation.cnbc.com more "squawk on the street" in just a moment. at crowne plaza, we know business travel isn't just business. there's this. a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly. captured lightning in a bottle. over 260 years later as the nation's leader in energy storage
10:50 am
we're ensuring americans have the energy they need, whenever they need it nextera energy. chicago. rick santelli with the santelli exchange and a special guest rick >> yes, that's correct, sara professor, doctor, ken rowgoff, welcome. >> thank you >> listen, we have productivity in the states today. be replaced a preliminary number of 0.7 with 0.4, that's our first quarter final read for 2015 and 2016, globally, doctor, we had a 1.4% productivity rate and if you strip out the 1998 asian crisis and the 2009 credit crisis lowest number, record low in 25 years. what's going on with productivity
10:51 am
>> well, i got to tell you, rick, nobody knows for sure, some of it has got to be measurement error. we live in a service economy less producing things which are easier to measure. some of it is the financial crisis people think some of it is monopoly nobody is quite sure, nobody is sure how long it's going to last i'm on the optimistic side. >> now, with respect to things that were supposed to aid our low productivity globe, it was new tech, new tech was going to swoop in and raise and elevate productivity levels. we're still waiting. it certainly made sense that technology should do that, doctor, is there anything you can see technology that isn't allowing that transmission to occur? >> i don't think there's any doubt not in the tech sector but across the economy monopolies increased. i think they have trouble trying to figure out how to apply
10:52 am
anti-trust to the new age firms and i don't think they've tried hard that would help a lot, that helped 100 years ago and would help today. >> now, there's another area and this is more disturbing account of low productivity. if we just look at the world that we live in for the last ten years, where productivity levels have fallen, what has occurred we have artificially low managed interest rates, we've seen debt around the globe explode, and to some extent, it varies from country to country, but generically weak wage growth when you combine all that, what we've allowed to happen is firms with very low productivity, some even call them would-be zombies have been allowed to exist longer than they would have normally can we attribute at least in part the low productivity to that set of dynamics >> >> well, i think it's hard to know, again, a lot of people moved into these higher
10:53 am
productivity firms in the economy. i'm not sure that churning is really so much worse when people dig into it. hard to know i don't think the low interest rates are the cause. i think they're an effect and investment has been very low, as we've discussed, rick, some of it is still tailwinds from the financial crisis, i think we will come out of it, productivity will pick up, better anti-trust policy will help but it will go up anyway. that's at least i'm on optimist. >> now, for the most shocking bit of data i've seen in a long time and i spent a lot of time on it yesterday, when we look at job openings yesterday, around 6.7 million, another record number in the jolt series, and then you connect the dots as the journal did, that that number is bigger than the total amount of unemployed based on our last report which i believe was 6.3 million, that's a real head scratcher. last half minute we have, can you comment on that relationship
10:54 am
>> well, i think there's no question that, you know, the kind of jobs people are looking for are scarcer to find, whether it's globalization, whether it's technology, and some sectors it's gotten harder to get the wages and jobs people are used to we need to reeducate and invest in infrastructure. things we can do it's going to take time. i think that will happen that's a big concern no question about that that's a big challenge for policy >> now, we also learned today that when it comes to certain entitlements whether social security or medicaid the timeline has a finite point at the end. obviously we are not at a time considering our debt in the u.s. alone, how much it's grown recently with the tax reform, is there anything that we should be doing that politicians seem not to want to do, to try to make a difference now versus waiting until the red flags go up?
10:55 am
>> well, i think a simple thing would be to extend the maturity of the debt. right now the duration of u.s. debt is short and if interest rates ever did turn and they could if they go up significantly we would be in trouble. we should do more to lock in the low interest rates and prepare for these higher pensions. we're running really big deficits makes us inflexible if there's a recession, anything really bad happens >> excellent it's always a pleasure thank you for joining me today david, back to you. >> thank you >> i'll take it rick, thank you. rick santelli. back to headquarters, courtney regan joins us with a sector check on utilities >> carl, stocks were trading a bit after a strong open on wall street and utilities are among the worst performers in early trading. stocks down more than 1% adding to its losses over the past week and among the names leading the sectors to the downside, edison international, duke energy and dominion, all down sharply
10:56 am
remember, this is a sector that is usually among the most vulnerable to rising rates today we're seeing a notable move higher in the 10-year treasury yield back downtown to you guys. >> courtney, thank you coming up on "power lunch," president trump's top economic adviser larry kudlow will be holding a briefing at the white house to talk about the upcoming g7 meeting in canada clearly trade will be front and center there that begins at 1:00 p.m. eastern. we will carry it live for you. don't miss it. >> meantime jon fortt, what's coming up on "squawk alley"? >>ea well before we get to that stuff, on-line political ads, a hot button issue theseays, especially as people begin to look forward to midterms we will have the attorney general of washington state who is putting a focus on facebook and google, but just how closely can all these ads be regulated we'll find out coming up on "squawk alley.
10:57 am
10:58 am
10:59 am
good morning 8:00 a.m. at facebook
11:00 am
headquarters and 11:00 a.m. on wall street and "squawk alley" is live. ♪ ♪ >> good wednesday morning. welcome to "squawk alley." i'm carl, jon fortt, and julia boorstin with us at post nine for the hour a lot going on joining us on set elevation partners co-founder and early facebook investor roger mcnamee. a lot to get to with roger today. we will begin with facebook the social network under fire again after disclosing data sharing partnerships with at least four chinese firms including huawei a chinese mobile phone com

98 Views

info Stream Only

Uploaded by TV Archive on