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tv   Closing Bell  CNBC  June 12, 2018 3:00pm-4:59pm EDT

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there to cover the fed meeting >> this is a big one, expecting an interest rate increase, and what do they say about the outlook? financials at session lows, jpmori gag, gold man sachs, so watch that thanks for watching "power lunch," and "closing bell" starts right now welcome to the "closing bell" everybody, that's very jazzy music. we have a lot coming up today. i'm kelly evans. >> i'm wilfred frost, alsot the new york stock exchange. a big show counting down to the closing bell and much anticipated at&t-time warner decision, 59 minutes and 35 seconds. >> this is the big one so here's how it's going to go down the news is expected to come out at 4:00 p.m., but we won't know about it right then. we'll learn the ruling, and
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people are standing by to put it in context the judge reads it in chambers, and only when he's done and leaves the courtroom people can report on it >> so many implications. telcoms the best performing sector today and yesterday last minute nerves which way that decision might go as it's slipping today >> in is the first major antitrust case from the trump administration, and there's deals -- all types of sectors waiting to see about this. more on this to come, but, again, that comes down next hour >> meantime, dow swung more than 100 points in the session in particular, in the last half, so we have sold off down 68 points on the dow or a third or so of 1%. the s&p's the same, and nasdaq holding on to gains, but it was up around half a percent earlier, so that slipped as well in the last half hour. meantime, billionaire hedge fund manager who had called the 1987 crash is now predicting a stock market rally into the year end paul tudor jones sat down with
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andrew, and this is what he had to say >> if you were running the fed right now, what would you do >> i think rates would be 150 basis points higher right now. it's where they should be. we got 3.8% unemployme and negative real rates, and we have a 5% on the way to a 7% budget defic deficit. the last time that we had unemployment rate where it is now was 2000 we were running a budget surplus at that time 2.5%. you're talking about bond scarcity at that time, and now we've the exact opposite we got fiscal policy that literally came from another gal laxy, and we have monetary laxity, and that brew got the stock market so jacked up. >> and what do you think it's going to happen in the third or fourth quarter, though >> i think we'll see rates move
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significantly higher beginning some time late third quarter, early fourth quarter, and i think it'll be interesting because i think the stock market also has the ability to go a lot higher at the end of the year. if you go look at what's shot off the stock market historically, it's been real rates on the fro o something the neighborhood of 200, 250 basis points. we're negative right now, so when you've got a lot of tech companies growing at 20% per year who cares about 100 basis points who cares, right so i think you'll see rates go up and stocks go up in tandem at the end of the year. i can see things getting crazy, particularly at year end after the midterm elections, getting crazy to the upside. >> crazy to the upside joining our closing bell exchange to react, rob morgan, and cnbc contributor, peter costa, and our own rick santelli peter, i mean, do you take what
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he says at face value, and how do you -- the market today, we still have the dow down 53 points now, and most of the weakness came recently >> right well, he's -- you have to remember something, he's one of the smartest guys that's been in the hedge fund industry. i respect everything he says i do think we're going to have a softer summer and fall, and i think going into the midterms you're going to see rates go up, which i think happens, and market rallies through the end of the year. it's not higher from where we are, and not the softness summer usually third quarter earnings come out in september, october, and after we get through that period of time, the market is -- i don't think we're going to do as well as he thinks we're going to do, but i think we'll have a rally at the end of th >> rick, he also said we need to see rate hikes because at the
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moment there's distortions pointing to the fact that companies are incentivized to borrow money and do buybacks and rates going up stop that i guess you're going to agree on that point and suggest there's all sorts of other distortions that need to be put to bed >> you know, it's hard to disagree with anything he said maybe oue of one area. you know, i just don't put full faith in the 3.8 unemployment rate i think it's closer to the u6 rate, seasonally adjusted, last look at 7.6, non-seasonally adjusted at 7.2. that's the reality there everything else he said, especially rates being higher, it's true, but it does n matter that ship already sailed they should havestarted raisin earlier, and they could have easily been at the levels he's talking about, but you can't hurry up when you start late, and that's the problem, and that's why mario draghi and the ecb, the bank of japan are going to have much tougher issues than
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the u.s., but he's right on the 100 basis points, who cares, see there calibration issue. i understand in the grand scheme of things, especially where rates are and where real rates are, i get the gist of what he's saying, but when you look the t capital environment we have, sometimes those hundred basis points reeks havoc in emerging markets with all sorts of transmissions, european banks, there's a lot of issues there. we're not in an isolated environment, but for the most part, what he says is true fed should have had a whole lot more insurance, but i'm thankful they grabbed some at least, and had is the 7th rate hike tomorrow, way ahead of the competition when it comes to getting ready for, at some point, recession or downturn >> rob, i know you said 3,000 for the s&p a 500 by year en anything else that came from the north korea summit overnight
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that says to you it's more than achievable or less so now? >> well, kelly, everything at least expectation-wise coming out from the g7 and also with the north korean summit is everything's certainly on track there, and feel comfortable about the s&p 3,000 by the end of the year, but the north korean summit process is a multiyear thing, and any way along the journey, you know, things get out of kilter that's a risk. right now, things look smooth sailing there. one comment on the interview with paul tudor. >> yeah? >> i had a chance to read the transcript, and i agree with peter and rick, i agree with everything that they said that higher rates, obviously, higher stock market, and he did make a comment, though, that he did not like the tax cut i found that unusual i think the tax cut is the reason, one of the primary reasons why earnings growth is strong throughout the rest of
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the year and why stocks will be boosted up >> yeah. rob, so you agree that you think q3, q4 markets could rally for crazy reasons. i guess that particular point, he did not back it up with solid foundation, but just momentum optimism point, is it? >> yeah. he did not really say why he thought that q3 and q4 would be my -- i would say, though, that the big reason is the tax cuts, and, also, too, when he mentioned and dissed the tax cut, there was no rationale there either, so in general, i agree broadly with what he was saying >> we'll have more, especially when he talked about capitalism. we'll talk more about that in a few minutes time but leaving it there, guys, thank you all, rob, peter, and rick turning now to the story makingeadlines around the world today. president trump and north korean leader meeting for the first time in a historic summit in
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singapore, and michelle caruso-cabrera is there for us with more. president trump's controversial decision to end u.s. military exercises in south korea as part of that deal michelle over to you. >> reporter: the minute he announced that, wilfred, numerous critics said he shouldn't be that, too big a concession to make for the agreement or the quality of the agreement that he signed with north korea, that they have not given enough u.s. military exercises happen with south korea every year purposely as symbolic deterrent to north korea to suggest that the u.s. military has the back of south korea we listened to everything president trump said during his news conference about that decision, and it's not clear he thought it was much of a concession in fact, he seemed to be far more moe kfocused on how much t military exercises cost. >> we ll be stopping the war games, which will save us a
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tremendous amount of money we've done exercises for a long period of time, working with south korea, and we call them "war games," i call them "war games," and they are tremendously expensive the amount of money we spend one we fly in bombers from gauam. why did they come from guam? nearby oh, great, nearby, where is nearby six and a half hours six and a half hours that's a long time for the big massive planes to be flying to south korea to practice, and then drop bombs all over the place, and then go back to guam. i know a lot about airplanes it's very expensive. >> reporter: and breaking news, in just the last few minutes, the decision may not be final. nbc news did an interview where he says the ce president told him that the gop military exercises will continue, actually, over in south korea,
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so maybe this is not the final decision yet it was certainly controversial, guys >> michelle, that's one decision that needs further a but her side of the bargain in terms of potentially eventually lifti ining sanctions on north a given we had the testy and confrontational g7 summit, is that something president trump needs to get buy-in from other major nations, or is it simple based on him and relationship with china >> reporter: so, it depends. there are seven executive orders he's in charge of those, and then there's ten u.n. security counsel sanctions. those -- he will need help on some of those, but quite frankly, where the bigger issue is going to be is if china, for example, decides that they are going to allow more items to cross the border, for example. he needs china's help with compliance more than anything. the actual resolutions from the u.n., those are li to stay
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in place until they, too, see a verification they are dismantling the -- that north korea is dismantling nuclear weapo, frustrated by previous agreements that have gone awry. >> thank you, great stuff, ext coverage throughout, michelle caruso-cabrera for us with little detail on the summit agreement, next steps are a question joining us to diuss what could be next for u.s. involvement there is william cohen, former secretary of defense, and ambassador chris hill, former u.s. assistant secretary of state for east asian and pacific affairs and former ambassador to iraq thank you,, for joining us minutes ago, microphone mcconnell said if trump reaches an agreement witnorth korea, he hopes it's as a treaty. is that necessary? >> i thi, ultimately, if we're to have a peace on the korean peninsula or a cessation of
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hostilities, then there has to be an agreement, and i would say that's very far down the line. we have not began begun yet to figure out how many weapons, on sites, missile systems, et cetera, that have to be counted and verified to begin with, so i think talking about a treaty is a long way away. >> and, ambassador, clearly, there's a long way to go beforw successful yetting for president trump, but regardless of what happens from here, is it already a successful meeting for kim jong up? >> no question it's very successful for kim jong un this is amazing stuff for him to be sitting in equal terms with the president of the united states the north korean flag interspersed with the american flags. this is huge for him in addition, of course, of the president's announcement, which is a long korean issue to
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suspend or do away with the annual exercises, which the president dubbed "war gaming exercises," so these are huge wins for the north korean president, and then when one looks at that joint statement, which, frankly, looked cartoonish compared toast efforts in this regard, they -- it really pits north korea under no new obligations, no clarityoh korea, and, frankly, even the issue of restarting the search for remains of the victims of the korean war this was something stopped by donald rumsfeld because he thought it too expensive so this is really something where i think the lack of preparation, the president's own failure to really crack the briefing book cost the united states dearly.
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>> secretary cohen, what do you think the significance of suspending exercises would be if it happens >> first, let me comment on the costs involved >> yeah. >> yes, it's expensive to continue to train to be ready to fight the wars you cannot deter, but how expensive is it to lose a war? how expensive is it to lose people in battle we lost thousands in battle in the korean conflict because we were ill-prepared not well-ted or well-equipped. so this is a situation the president, oh, very expensive to fly bombers. yes, it's very expensive to be in shape to be ready to defend our country and our allies in the region >> yeah. >> but to point out how expensive it is misses the point of what what deterrence is and how it protects u.s. interest as well as those of south korea >> if that expense should not be the issue in making this judgment, then, on the
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importance of continuing these exercises, what is the importance or the rationale for continuingersus ending them at this point >> the rationale is that we are just in the beginning of a process. we may ultimately find that the north koreans are going to, in fact, commit to what they are prepared to do i have not seen any evidence to date that they are taking any steps to do that, and it'll be a long process this is not something that's going to take a month or two months or a couple years it may take a decade or more so to start breaking open the champagne baottles now is a big mistake. the notion we're ceasing the so-called war games, which is really exercises in training to be ready and readiness is key to any military campaign, the next thg, the other issue he said we're going to eventually pull our troops out that, also, a big mistake to do at this particular time. if i were japan and other nations in the region, i would
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be very worried that the president is so eager to have u.s. bring its troops back home. actually, it costs more to bring them back home than to keep them in south korea, and costs half as much to keep them in south korea opposed to back home aside from the costs, the signals we send to china, russia, japan, all the asean countries is that we're coming home and pulling out we cancelled the tpp, the transpacific partnership we're pulling our troops out of south korea, eventually. the signal is sent that you're on your own. that's something that japan, the japanese people will ultimately take into account as to whether they can count on the united states once our troops are out of there as well, can they count on the united states to protect their interest as well as their own. >> ambassador, just quickly, we talked about implications for south korea, china, and japan a lot, but as mentioned there, russia is a neighbor with a small boundary -- what's the
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word very smalloundary with north korea itself, is that big implications for themselves as well or not really border >> they were full apartmepartics in the six party talks, had eventual economic thoughts that maybe they could tie up railroads and pipelines in the south korea, and south korea is very sophisticated and to the pacific ocean that they have through there, so i think they are very interested. the problem with the russians, of course, is you get them into multilateral negotiations. you see your interests you think you understand their interests. then they just go south on you it's kind of tough these days to work with the russians on anything whether it's a mother's day resolution or peace in the korean peninsula >> all right gentlemen, thank you, both, william cohen, ambassador chris
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hill boundary worked just fine. >> i know, i shot myself in the foot weeks before the 2016 election, then candidate trump had strong words about the at&t-time warner dea >> a trkt&t is buying time warn not approve in my administration because it's too much concentration of power in the hands of too few >> and just a few minutes, we'll find out if that deal will be knocked or move forward. what other media companies are impacted by that decision. watching another key decision as well the federal reserve kicking off the two-day policyting, and we'll say what wall restet expects and how it could impact your money when we come back
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welcome back it's been almost two years, 598 days to be precise, since at&t put out a little press release announcing big intentions to buy time warner worth $85 billion. so why has it taken so long for a decision to come down, and how
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did the two companies get to this point julia has a walk-through from los angeles. >> the very day at&t announced its plan to acquire time warner, that was october 22, 2016, andtp said he would not approve the deal >> at and t is buying time warner and thus cnn, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few >> two days after announcing th merger, randall stevenson outlined the case for the deal on cnbc. >> it's a big merger, but it's a vertical integration think of the areas contentious in the industries, they are horizontal mergers where the government was concerned about a competitor being taken from the marketplace. this has none of that. >> in january, two weeks before president trump's inauguration,
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stephenson had a meeting in trump tower, and february 15th, they approved the deal at the time the company's expected the transaction to close before the end of 2017 then on november 20th, the department of justice sued to block the merger the trial begins march 19th, running for six weeks. just this morning, the antitrust chief attacked the deal as bad for consumers. >> career staff put together a straightforward consumer welfare analysis showing the merger would unlawfully raise prices for cable tv subscribers and harm online innovation >> whatever the ruling this afternoon, it is sure to have a ripple effect in the media industry and beyond. back to you. >> real quickly, say that name one more time. >> macon like macon, georgia. >> we'll say that a lot in the next hour. thank you.
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>> got it. meantitoday's ruling, of course, closely watched by investors and executives across the media landscape, and's alex sherman has what it could mean for other media giants alex, let's start with verizon >> reporter: it might be the most obvious one here in that they are the direct competitor to at&t, largest u.s. wireless provider if at&t can buy time warner, theoretically they can buy a content company if they want to. the question is, do they want to mixed opinions about that. there's been some speculn they may have had talks to buy cbs or maybe a combined cbs viacom, that the two companies come together at some point, but they announced a new ceo, and he's the cto, which indicates verizon may be more focused on improving the wireless network for next generation wireless,
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5g, rather than buying a content company. >> what about with charter, alex >> reporter: yeah, so, charter is in a similar boat in the sense that if the deal approved, theoretically they can buy content companies. john malone owns a portion of charter andstake in other content companies lion's gate, stars, discovery he's been a a big proponent, called the cable cowboy, proponent of putting together thassets having a giant company theoretically that could offer content and distribution that's all, of course, hypothetical at this point, but if the deal is approved, chapterer cchapte -- charter can go down that route, and if not, they are a takeover target potentially from verizon or even combined sprint, t-mobile of course, they'd need to merge first, but they could go to a cable company if they cannot buy a content company. >> and another one, alex, what about discovery?
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seeing more consolidation around them >> reporter: yeah, so, in the words of pete campbell from "madman," not great, bob, if this is approved for discovery or viacomm or cbs. really, the entire media landscape, it's the smaller content companies that need the deal to go through why is that? because if the deal does not go through, you probably take out a lot of those potential buyers. verizon, charter, comcast, at&t, and now there is a possibility depending on the language of this that maybe the reason at&t can't go forward with the time warner deal because they own directv, a national provider of content rather than the regional players of, let's say comcast or charter or even verizon that owns verizon fios, not a distributor like directv if that's the reason why the deal does not go through, then the players theoretically could
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buy a content company. we'll watch the exact language of this, but in neral, i would say it would be bad news, in fact, maybe the worst news for the smaller content providers that are desperate to be taken out or at least gain scale they probably have to merge with each other if the bigger distribution companies can't buy them >> okay. alex, great stuff. looking forward to more coverage as when we get that result, alex sherman there from >> that's just in the media space. >> right >> outside of media -- it's the first time they blocked a vertical merger in 50 years. don't look now, but shares of twitter gained 80% this year, and if a firm is correct, there could be more up to come hard to believe, but we'll break hard to believe, but we'll break it down after this still a chance here.
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♪ >> welcome back to the "closing bell," i was enjoying that last song >> i don't know that everybody in the audience sees that. we were showing the telemundo p promotion. >> let get back to the
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markets. we are just lower on the dow, which sol off a bit in the last hour we were 0.2% higher earlier in the session, s&p above the flat line, and nasdaq is the leader today up 0.4%. let's check in on individual market movers. twitter trading at levels not seen since 2015. jpmorgan raised the target from $59 from $79, saying the 2018 fifa cup, there we go, back again, benefit twitter as a result of realtime highlights. big article in the s&p about this >> of course >> the millennials want things, that direct access on their phones opposed to traditionally consuming -- >> it is true, by the way, all the kids in the neighborhood who play baseball, they are not going to watch a baseball game, but all sorts of highlights on the phone, so i get it what about shares of rh soaring today. the earnings last night up 20%, now up 32% interestingly enough, best day since november they beat the top line after the bell, huge beat on the bottom
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line, and really strong guidance in terms of its current quarter forecast the margins, animalysts had a lt of good stuff to point to, and mike said as well, a lot of signs of a short squeeze here. e stocbeen up significantly after being pummelled in the past. >> amazing that gain today is only the best since november >> yeah. >> indeed. big jump today nonetheless time for a cnbc news update with courtney reagan. >> canadian prime minister said trump's efforts to denuclearize efforts in north korea and declined to respond to the recent criticism of him. >> obviously, we support continuing efforts by the president on north korea we look forward to looking into the details of the agreement those comments, as i said, i'm going to stay focused on jobs for canadians. ahead of the world health
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organization, good progress has been made in the e.bola outbreak in the democratic congressic of. they vaccinated 1,000 people in two weeks in all areas of the outbre for the first time in world cup so history, ballthrowerst t are female the 14 girls play soccer in russia it kicks off thursday when russia plays saudi arabia. that's your update at this time. back over to you two >> what are ball throwers? >> i was going to ask the same, collect the ball when it goes out? >> like a ball girl or ball boy? >> yes, exactly. >> need a a gendje gender neutrm >> that was not the story you looked for >> sorry >> it was still good >> he wanted the football, i mean, soccer >> three mentions of the world cup, so i will - >> did our best for you. >> resting my case for the day, thank you very much as ever.
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wishing our long time colleague, larry kudlow, a speedy recovery. he suffered a mild heart attack last night but is in good condition at walter reid medical center the doctors expect a full recovery thoughts and prayers with larry and the family at this t we are shocked and scared by the news, and really sounds liket was relatively mild. we hope to s larry back in action quickly >> here, here, wishing larry best still down with the s&p 500 at ilevel highs, david harris says the under the radar value names he's betting on right now >> countdown is on for the ruling that promises to have wide-ranging implications for all types of deals for years to come if at&t-time warner, we break the decision down as soon as it comes as well as reaction om former at&t ceo and former universal chair dave wright all in the next hour stay with us
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welcome back, watching tesla today, huge volume trading more than double the 30 day average, stock up 7% earlier. it slipped a little bit.
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it's up 3.5% still this after it announced it's cutting 9% of the work force elon musk said it will not affect production targets, but aiming at demonstrating the company can be sustainably profitable european stocks finished under pressure suggesting the news from the summit and the u.s. and north korea, although, the session was not too bad, just slightly low forget german dax as you can see the next guest is a the chief investment officer of international research at harris associates, joining us now, david harrow, good afternoon to you, david, thank you for joining us first, a macro question interm of the news out of north korea this morning as to whether it would affect your country allocation in the region, if we do, indeed, see lifti ining of sanctions on north korea and successful denuclearization deal does that alter where you invest in the asian region? >> despite the fact that that is a positive, i think a notable
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positive, if, in fact, north korea denuclearizes, it doesn't really have too much impact because we really focus on company-specific fundamentals, bottom-up stock pickers, and so only to the degree you thought there was a high probabi of destructive war would it have kept us out of the korean stock market, and we even though north korea possesses nuclear weapons, we never really ascend a high probability they be used however, having this behind us or a process that eventually hopefully results in this behind us is overall a good thing for investors in the korean peninsula. >> and then, david, one more question before we get to your stock picks, this time, a macro question on europe is the latest news out of italy specifically the finance
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minister of this new relatively popular government dialing back rhetoric leaving the euro. does that put aside big political risks across the eurozone and eu for the next 12 months or so>> clearly, this, ta positive the rhetoric during the election campaign and during the period in which the government was trying to be formed, which, by the way, would be ages in terms how long it took to form this government the rhetoric surrounding even the euro, and we don't like the euro, it makes good headlines, but it would have been quite detrimental for italy specifically i mean, italy is a country with a large amount of sovereign debt, and if they had to go back to their currency, interest rates, and monetary policy, interest rates would spike dramatically this would be harmful for thali. i think it was w thinking. they are trapped in the euro
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whether they like it or not. >> i'm sure they're liking it less, that's part of the problem, but, david, i want to ask about daimler, i don't know where the president stands on tariffs from cars from europe, a big challenge for mercedes, wouldn't it? >> it would be a challenge for merced mercedes, but look at the big picture, daimler, besides mercedes in the united states, it is a global brand, in fact, they probably earn more profits in china than they do in the united stas and earn a lot of profits in europe, but cars, daimler is the biggest truck maker in the world, and we're just starting to get in the sweet spot of thuck cycle, and then besides the nasty headlines, you have to look at the price yore paying for daimler as a business. you're paying just under six times earnings for a company that's yielding almost 6%, and
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that's with barely a 50% payout ratio so 20 billion net cash bill on balance sheets, earning good profits, and yes, again, headlines are scary, but when you look at the big picture, we think, actually, daimler is sellinain basement prices at six times normal earnings yielding almost 6% >> david, great stuff. leaving it there thank you very much for joining us, david herro from herro associates why one says capitalism may nid. to be moderze those comments are next and much more here on "closing bell," don't go anywhere. welcome bw
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just lower, s&p higher, nasdaq up 0.4%. time for the quote of the day, hedge fund manager paul tudor jones on "squawk box" this morning, rare d exclusive interview. >> what he talked about with capitalism >> youo back to 1970, milton friedman famously said the social responsibility of a company is to improve its profits. when milton friedman said that, tax rates came from 91% to 70%,
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and social inequality or income inequality was one fifth what it is today in 1985, 90% of the wealth in the country was owned by the -- excuse me -- 35% of the wealth in the country was own by the bottom 90% today, 23% of the wealth in the country is owned by the bottom 90%, and difference has gone to the top one tenth of 1%, so capitalism may need to modernizing. >> interesting thing about this. this comes as jones and goldman are launching an etf ticker, which is focusing on social impact he said they looked at the factors on worketreatment, environment, products, a bunch of things, and found the companies who scored well on those did well overall to which i say that proves the point that actually the structures of capitalism work in
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conjunction with those goals, so oftentimes, there's a company, if it has a good corporate culture, no accident it's typically a good performer as well >> etf will t rectify the situation we're in >> i argue it may not need rectified. >> the opportunity to anyone born in a capitalist society is less than it was in the period immediately after the war, huge dis- >> i don't know that i would say that >> the u.s., u.k., or lots - >> i'd roather be born toda america in a capitalist country than anywhere else >> there was times it was more fair in the wealth gap i think there's a case for significant wealth tax, not in its own right rg, but if you rae the wealth tax, lower income tax -- >> that'll never happen. >> but, t not arbitrarily wealth tax, but if you do that and offset with a lower income
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tax, the inacceptability icenti people to work hard for every dollar earned today, it makes so much sense, arbitrary people spend in the u.k., particularly older generation of shouldering when they hear "wealth tax," but offset income tax, it changes things it just increases threshold to -- >> state tax or income tax >> inheritance tax is a wealth tax. >> you could add one, but they will not get rid of any of the current ones that exist. >> i still think that the wealth tax in today's kind of world, this disparity could be a good idea, if, in particular, you lower income tax >> if you live in new york city for a long time, you may be able to live out that experiment. like i said, wealth tax. >> there is a bit of a wealth tax here because of property taxes.
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>> yes >> you don't have in the u.k inheritance tax is 300,000, and here's it's 11 million to 22 million. i don't know the justification for that >> to be continued we expect a decision to come ten minute's time.tually, just of course, the decision will come at 4:00, but we'll not hear it until the judge is done reading it to the courtroom. >> raised that debate and alongside i did not do that against you and "squawk box," i would have lost that >> anyway, two all-star panels react to it. react to it. keep it right here my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment object risk charges and expenses. go to for a prospectus containing this information. read it carefully.
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welcome back, tomorrow, the fed will issue its stocks where it's expected to raise rates, and steve has more what to expect from the meeting. should have kept that guitar going for steve. >> don't tempt me, guys, i have real work to do here i want to talk about the meet ing and the next meetings in the future here. first, look at the results of the cnbc fed survey, 100% look for the hike tomorrow, 81% say e next one itember, and it becomes a bit of a debate about december and 2019. .5 says half of the 38
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respondents who include economists and strategists, look for rate hikes, the other look for four, we may get a change in the outlook of the federal reserve itself whether they are expected by the average fed responded, 2.6 said rate hikes in 2019. when the fed is done hiking, where does it stop 62%, that's two-thirds of the respondents, say the fed stops above neutral. that means it gets to a point where it's actually raised rates to slow the economy above the neutral rate of interest how high look at the next chart exactly how high 3.3%, and that's a big change. if we come all the way over here to the outlook for the terminal rate where the fed stops in august 2016, they thought 2.3. we added a point why, because of higher growth, higher inflation, and other statements, guys, the fed no longer saying it thinks it will be below the neutral rate over
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time, and the word "accommodate ive" could be headed to the trash bin, guys. >> cue music >> yeah, next time, we'll have you put that song on steve, great stuff, thank you very much, steve, of course, will be on cnbc all day tomorrow in and around the fed. so much news this week >> i know, and the world cup >> oh, yeah. starts >> thursday. >> trehe we go up next, we come back with the closing countdown. (baby crying)
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(slow jazz music) ♪ fly me to the moon ♪ and let me play (bell ring)
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welcome back, we just got a kwouple minutes left of -- couple minutes lt of trade we start with the intraday chart because there was red on the screen approaching the start of the closing bell, but rallied into the close so we are back to at on the day, .2% higher on the s&p, and nasdaq leads the way at 0.4%. rate hikes tomorrow, what are you focused on >> not a lot like the summit today, a lot of expectations with little results as far as market impact. >> encouraged by the markets >> it's quiet. i think we are setting up for the s&p rebalance and russell rebalance in the next two weeks, huge liquidity events as far as trading goes >> thank you very much, matt 60 seconds left in the close, and sector performance today,
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quite interesting, energy's near the bottom, and telco suffered today. that in a second utilities rebound, and tech having a good day as we saw, and bringing you the telco performance over the last week or so because strong last week, strong yesterday, and a little bit weak today ahead of the at&t decision fascina fascinating. don't turn us off ahead of that. bob, main stories today? >> undertneath the surface, gret day, twitter and tesla had good days, and retailers, ten days in a row, hittingweek highs, kohl's, for example with good moves up, and we're still essentially at historic highs in the sectors like consumer discretionary, historic high, russell 2,000 high, and the mid cap index historic high. it's fairly flat overall, but still modest rotations
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>> and, bob, as the week goes on, at&t and central banks close the market >> tomorrow we expect an interesting day. very, very moderate. >> there's the bell ringing here, at fair poacquisition at nyse. dow just lower and nasdaq is higher at the close. >> congrats. it is fun to see him ringing the bell after being president of the exchange for so long wishing him well i'm kelly evans. dow almost went green on the bell here. kind of the flipside of yesterday with the drop into the close, but today, climbedalmos all the way back, codn't do it we'll watcthat as things shake out. the blue chips shed under two points, and s&p up about five on
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the close now to 2786. nasdaq up more than half a percent to 7703 today. that's close -- that looks like it's a closing high. new closing high for the nasdaq composite today. the russell 2,000 adding about half a percent, 7.5 points to 1682, a closing high, so for the small cap russell 2,000 and nasdaq, benchmarks hit today this is live shot of the federal courthouse in washington, d.c. where the ruling of the at&t merger is expected any moment, in fact, it's probably happening as we speak. there's a full team of reporters and experts standing by. eamon javers, alex sherman outside the white house, julia, and david dorman here with us, and craig moffit all standing by we thank you, guys, very much, especially for the patience as the case may be, the judge reads this to the courtroom. once he's fully done, leaves, everybody will be able to leave,
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and then come tell us and the world what happened and what ruling he did make i don't know how long it'll take joining me now, michael santoli, paul, and courteney gibson, cnbc contributor from luke capital. everybody's on set welcome to all of yo ke, two quick thoughts on the market >> market today is definite of wait and s fed tomorrow we have this ruling due, and i think the markets -- geopolitical stage craft did not capture attention. it's fine. it's in the background we are up 8% in the s&p in ten weeks, lofty place to pause. >> that's the backdrop a federal judge could approve or reject the decision any moment now. eamon is outside the courthouse in washington with what the ruling could look like, and julia has how we got to this point. julia, we start with you >> since at&t announced the $85 billion acquisition in october of 2016, president trump opposed
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it here's what he said when he was on the campaign trail. >> at&t is buying time warner, an cnn, a de we will not approve iny administration because it's too much concentration of power in the hands of too few >> at&t's ceo met with the president-elect at the time two weeks before inauguration, and last february, shareholders approved the deal. at the time, they expected the transaction to close by year end, but november 20, the department of justice sued to blmerger they defd it as necessarto take on the tech giants. >> the biggest districter of content out there is vertically integrated this is netflix, but they create original content, aggregate content, and distribute original content.
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they have 100 million subscribers. >> antitrust chief criticizing the doj saying it's bad for consumers. since the deal announced, at&t shares lost 11% and time warner shares are up 15%. now, we're watching to see what happens after the verdict comes out, kelly >> that's for sure, thank you. eamon is inside the courthouse with what the decision could look lik including possibly condit for approval, eamon, we hope does not happen. would be the most complicated way to resolve this. a clear answer one way or another would be a better outcome. anyway, what do you think is likely >> reporter: yes, certainly better, kelly, to decipher this on live television we expect a 200 page decision from the federal judge in this case that could be any minute now we expect he's already begun revealing the decision in the room the room is lock down. no communications devices, no televisions, no smoksignals, no communications of any kind from the room right now. we have a crack team in there.
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we'll bring you the decision as soon as it comes what could it look like? well, three broad buckets. one is if the deal is overtly approved and judge lets at&t buy time warner. in this case, at&t will mo close the deal within days, perhaps. a number of companies waiting in the wings waiting for that green light signal to make moves of n. cod be a wave of deal making roved in the next half hour if denied, companies expect to have time now to be able to file appeals if the judge denies this if denied here, it might not be the end of the legal wrangling it depends on the terms and whether there's a legal leg to stand on for an appeal, and the outcome you talked about, approved, but with conditions. what's that mean sell off assets? could the conditions be so onerous in the view of the companies they make the deal not
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worth pursuing at all. stephenson said selling cnn would be a nonstarter as a condition. there's some termins here in tem of conditions that the principles of the deal will not take the way it works, y, for the rest of the hour, half hour, is when the judge is finished reading his ruling and describing to the people in the room and locked downright now, what his decision is, they will open the doors once the doors open, our producers up on the 6th floor here of the building will be able to, then, communicate that decision to us we'll bring it to yo you might see wire flashes at the same time because all the wire reporters in the room will be doing the same thing simultaneously there's a bit of a mad rush, trying to manage that and get that decision to you as coherently and quickly as we can, kelly >> to be honest, i want to see the scrum. it's going to be a little
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interesting. >> i agree with the ceo of at&t. >> as an invester? >> as an investor, as a consumer, i mean, it's not as though we are not seeing vertical integration right now,% and if you are telling me this is up for debate is because pof cnn, like, come on it is good across the board, for investors, and could be and would be good for consumer for ease of use. i'm a customer of both, and would love to have ease of use between at&t and time warner >> paul? >> i think this is one of the most important antitrust decisions that we've seen in decades. the trump justice department has taken a very, very aggressive stance on these vertical integrations when, you know, they are not competitors >> pause on that for a sec as i understand it, it's the first time in several decades, maybe in 50 years, that the
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justice department has sued to stop a vertical merger usually they look at horizontal mergers, amassing power. the argument here is the companies are in different industries but amassing too much power? stice department, i was th watching this suit, the justice department made those claim, and at&t just decimated the lawyers, decimated them, saying look at 4: amazon and comcast, big competitors, and we have massive competition. you can't say that this is, but, you know, this has been colored by politics because of president trump, and they are taking a very unique stand. they are -- there's $814 billion worth of vertical mermg gers announced this year, and this decision plays a big impact. >> not just about the media space, mike. >> but how it fits in with mobile internet everywhere
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at&t, 160 million subscribers, does that give them mark power to serve up their own preferred content networks, but also to, and this was a big subject of the testimony, to deprive other distributors of getting similar access to those networks now, at&t i thought demonstrated well it's not remotely in the interest to do that. >> absolutely not. >> however, th, you know, under skrut ncrutiny right now. >> you agree >> most definitely they thought through the process. the at&t legal team did a great job making the case. if you are making a case to rational human beings issue and i hope that our department of justice consists of folks that are rational >> and the judge in this case. >> most definitely >> and he has tough questions of the justice department when they presented their suit that did not, you know, we try to read between the lines of supreme court questions, what do they rule if you did that here, it sounds like he was not totally convinced by the justice
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department, but taimat the same time, they have the burden of proof here >> there's a precedent in the area, the comcast, universal, your parent company, there were 100 restrictions basically dealing with these anticompetitive -- >> within a couple months time >> exactly do not be surprised if the judge puts the same restrictions that we saw in the comcast deal >> makes the justice department a regulator, and so it's a difficult thing -- so as much as they say, oh, this is a way to resolve it, then they are in a difficult situation themselves >> that's the question does it make the justice department the regulator or the court the regulator. >> right >> the justice department does not want to be the regulator in these things, so they prefer you get rid of assets, but the courts have in the past, you know, they make sure that these things are implemented, so it's an interesting - >> oh, yeah. >> if the doj actually does not
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want to be a regulator, then what they need to do, and we all know that the judge could rule that this mermger is okay and acceptable, and if they do, there shouldn't be appeals, right? i think there's buzz out there, an, look at the stock prices now, time warner trading at 7.5% discount >> temperature days -- ten days left before it expires, and up likely the losing side appeals we'll come back to this. the fed decision comes tomorrow there's -- look this morning what paul tudor jones said on "squawk box," his take on interest rates in the stock market listen >> if you go look at what is shut off the stock market historically, it's been real rates on the front end of something in the neirhood of 250 basis points we're negative right now, so when you've got a lot of tech companies growing at 20% per year, who cares about 100 basis
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points who cares, right so i think you'll see rates go up and stocks go up. >> back to the strength of the tech trade we'ven talking about all year and whether he says, look, higher interest rate pose no threats to that. >> whoes if you're a tech company self-financing, not reliant on debt, not nip and tuck, yes, all of that make sense, showing you really, an explanation why the market behaves as it is lately. i think folks like paul tudor jones who got started trading in the '70s, the rate of the levels do not look like and gut says they need to be higher whether that's true in today's economy -- >> that's the trillion dollar question >> it is >> mike, you made that point, and it's spot on is a different time, this is a different market, and not to say where they are getting their information is not valid by any means, but just to say it does not feel right is not necessarily the right answer >> i also wonder, though,
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approaches this from -- saying, i look at the financial markets, signs of imbalances, talking about how we have budget deficits, we have, you know, not the surplus situation weid last time, looking at the stock market, you know, if that's your dash board, does that signal to you, hey, we can handle this, versus if you loo t at inflation rates, for example, and i don't know if you're coming from a financial markets point of view, that's different from what the economists are looking at if you look at the earnings yield, the earnings yield for stocks of the s&p 500 is so much higher than whatev 3%, 4% that we might eventually get out with fed raises who in the world's going to leave the stock market when the earnings yield is higher than what you're going to get on a bond yield >> i know, but people -- >> the earnings yield. >> makes me nervous. >> it's how much risk you take while you hope those things come into line. >> always the issue. guys, stay there
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we're going to await full details on the at&t ruling, expected to come down the pipe who knows, could be tenutes, thirty minutes time. we'll look at the outcomes, how it cou impact stocks involved, and your money, and reaction to the decision from former at&t former ceo david dorman, and bob wright here on "closing bell," we'll be right back.
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a judge's decision whether to aat&t merger could happen it's happening now, but we'll learn as soon as everyone leaves the courtroom and tells us what he's said. bob pisani what it means for the shareholders involved, bob >> investors appear to want this deal to go through, and with some good reason there's a consolidation story here there's a cost savings story here that's attractive when you have an industry with low multiples they are taking the bait in the past several weeks, media stocks
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handlely handled the markets, improving the market for more media mergers, cost savings, a value add for the investors, however, skepticins says it adds to at&t's cash fw, does not address the core problem for the cable side and competitors are willing to pay money for content offering a consumer-friendly experience with little or no ads. traders believe approval improves sentiment for m&a in general, certainly for deals like this. even if the judge rules in favor of the deal, the doj may seek to appeal the case through the d.c. circuit court. they close june 18th, the judge would need to issue a stay before that to halt the deal from closing if they paid injunction preventing them from closing the deal, the agreement expires. remember, that's june 21st the agreement expires, and at&t needs time warner's consent to extend the merger agreement.
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this would complicate matters. back tyo >> it would. thank you. for more, we have craig moffit, welcome to you, both craig, what do you think is going to happen first of all >> i think the market seems to be somewhere around 80/20 that at&t wins. i'm actually not as convinced. i think the theory of harm is actually an easier argument to make than some seem to suggest -- >> the consumer? >> that's right, and while i think it's fair to say that judge leon was not persuaded by the quantify, he does not care here's the theory, they get a
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distributor, reach a price for the e quikwiequal, and say it's charter cable, it's felt by losing subscribers to other distributors, the pain to the programmer is felt by lost affiliate fees in advertising. if you can make the argument that any nonzero number of customers that leave that distributor go to directv and, therefore, the cost of the blackout to at&t is lower, then the price, by definition, is a higher number. >> my head hurts a little. so you're saying that -- so is it because directv is national -- >> no, because if -- >> because at&t owns it, and although there's small market share, they get some of the value. >> they get some of the value, and therefore -- >> that moves that price a little bit >> that's right. >> a little bit.
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>> so you can argue that it's very difficult to quantify it, but if the judge agrees, i don't really care about the theory of the quantilifica that self-theory is correct, and there's some issue of consumer pain persuasive. this is a judge, in the case of comcast, same judge, nbcu, there was a prepackaged settlement between the department of justice and comcast, handed it back saying it was not sufficient to protect consumers, do it again. >> all right >> so he clearly has some sensitivity to the arguments of consumer pain here >> andy, where's that leave you when this comes down >> sensible enough to know that my opinion does not make a difference >> but you have one nevertheless, i'm sure >> well, yeah, it's our job, right. i agree with what craig is saying in terms of there is an
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incentive in the play, but logically it drives a price increase over time whether or not the address -- this addresses behaviorable measures is another question that's one of the things we are sort of determining here >> paul, last word here. if the judge blocks this, then what >> well, i do not believe if the judge -- the judge is probably not going to block this, but he's going to do kind of what craig said using the comcast model. there's going to be restrictions, and those restrictions have worked it stops the doj from becoming a regulatory entity. that's why i do not believe that if at&t wins, i do not think the justice department's beginning to appeal this ruling. >> really? >> they don't want to be in that business the appty trust regulators have said so.
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>> okay. andy, thank you very much, craig, see you later this hour >> okay. >> as it continues tplay out much more of the ruling to come here shares of at&t and time warner, extended hours now, at&t up a half percent, time warner unchanged, and david dorman and ig ges nbc universal chair bob wrhtiv takes on the decision and what it means for media going forward. stay with us
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welcome back, we are awaiting the at&t time warner ruling which is happening right now, but we won't find out until it's finished in the courtroom and the judge lets everyone leave. let's bring in former at&t ceo, david dorman, thank you for joining us, a moment to reflect on the long journey at&t has been on and transformation of the company, you know, what do you think is most -- if they win, what is the future of at&t look like? >> well, at&t's betting on the media business being a complimentary business they understand offering products to customers is not as exciting as offering applications on that type, and i think that randa lrgsll and the made a big bet and one that makes a lot of sense to me
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>> back to the conference weeks ago, stephenson was there being questioned, and he said, i don't get the rationale for the deal explain why you want to do this? why do you so badly want time warner the answer was basically about advertising, trying to scale up that business to compete with the tech giants. will this accomplish this if it goes through >> well, loo what's happened since this merger was announced 18 months ago. facebook, amazon, netflix, and google's market caps have expanded by something like 1.2 trillion it's true that advertising is the strongest business they have it's not necessarily the case with netflix they are a subscriber business, but my understanding is they spend $8 billion on new content, original content, so when randalll lo randall looks at those businesses, but also the ability to reach subscribers with advertising, that makes sense to me it's hard to argue with the way the market sees it >> right
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well, i'm also wondering about the implications beyond media and advertising. david, chair of cbs, correct >> yes cbs, cbs >> yes, that's one example of a deal that everyone's looking to the resolution of this one for direction k rig direction, right implications what's said about vertical mergers is wide ranging, won't they? >> well, you know, i think that each of the cases are unique, obviously, health care and media are far apart businesses to what the commonality here is that the justice department is reviewing both deals, and it's taken the measure in the case of at&t and time warner to sue to block it, and so i think we're all anxious to see how the judge interprets this because i think even in the last week, the justice department has, you know, said things like, no, not all
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vertical mergers necessarily harm consumerers or something to that effect, or we won't treat them all the same, don't use this as an example, which we took some consolation in, even though, you know, we're in the review process we have a different set of facts, which i think has to be considered in each of the cases, to why it goes before a judge and why a judge has to rule. >> consider it not a template, but people will anyway >> fills a risk assessment of a deal there's a chance you have to be, you know, aware of >> wha you think of the advertg angle here what is stephenson trying to achieve? the kind of thing, i access information distributed over one of the properties that i'm getting a lot more targeted advertising than i am now. >> you have the data, ability to be smarter about advertising, ability to better utilize th network. i mean, that really is, at&t is a network, and it always has been it's just a different way to kind oeater return off
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the network, the transmission of data, than just being a commodity provider that's the logic there there's a cynical side, too, look, they are grabbing a huge pile of cash flow, bolster ability to maintain the dividend over time, a transition as well. >> this is goingo change the image of at&t, i believe, for all investors. it's a value company right now >> are you an owner of at&t? >> i am. there's a 10 pe. it has a 55.8 dividend yield it's a value stock it's no longer going to be mobel today if they win, but it's considered a telecom company, and now it's going to become a content media company, and he was right, it's going to start being valued like the netflix, amazons -- >> what they hope. >> that is what they hope, but that probably will happen. >> with stability and profitability. >> yeah, exactly
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>> those are big, big distinguishing factors once it becomes that content play, theoretically, you are now putting a jolt of life back into the company. i'm not saying it was dead or sleepy, but you can put at&t in the back pocket. >> clearly, it was seen that way. >> investors look back, i believe, in five years from now and say, my god, we could have bought at&t at a 10 pe with a 5.8% dividend yield, and now, it -- its pe goes up after this. >> all right david, we have to go, but if they don't win, it's the opposite of everything we're saying, right? >> well, i do believe they are going to win, and someone else noted, it will be appealed in any case i'm not sure does the government appeal it, and if so, point also, do they get the injunction to stay through execution. that's going to be played out, you knower the next few days, actually
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i think that, you know, at&t bought directv to give them a place to aggregate content, not because they were looking for an ageing satellite network for distribution they were looking forward. i think as 5g rolls out, we'll all realize how much power this new network technology will have, and how many new uses it'll be, not just for media content distributions, but a lot of other things. by the, remember, there's three other network players in the u.s. alone with sprint, t-mobile, and verizon. there are a lot of other big media companies includin comcast. the notion of integrating distribution content is not new. john malone started doing that 30 years ago >> yeah. here we are now, just sort of the 2.0 version. appreciate it. >> you bet >> former ceo of at&t, and both
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shares are drifting higher after hours. we're awaiting word from the courtroom. this is how we finished the day on wall street dow did not turn positive on the bell, almost made it nasdaq up 43, russell up 7, and nasdaq and russell closed at record highs time for a news update courtney reagan? >> here's what's happening at this time. capitol hill, ary azar told a senate committee wants pharmaceutical companies to post drug prices on their commercials. he asked congress for its help >> we do believe we have the authority to require list price disclosure in fda tv ads but welcome congress acting there to ensure the statutory authority is shored up as big pharma could challenge us in that work. ceo of uber said there should be a fee on rides to help taxi owners struggling with debt he's saying the surcharge should be put into a fund to help taxi owners who bought their
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medallions at sky high prices, and did nosay, though, how much the fee should be more than 40 years release of saturday night fever, john travola trk travolta was honored outside the restaurants the iconic suit wor the character. that's your cnbc news update back over to you >> courtney, thank you courtney reagan in headquarters. waiting for the ruling on at&t, and, in fact, what's torture is it's happening right now. we just can't gape access to the information until the judge finishes delivering the ruling, leaves the courtroom, and then everyone runs out to get the information across the wires as soon as possible, which is why i'm watching like a hawk here. >> maybe just tweet it >> first person to the phone >> first person getting to the phone that's on at&t is whwins the battle
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>> alleged traffic tweet >> oh, that's interesting. >> how life used to be had to wait for things >> right >> realtime was not the rules. >> the facts of the earnings reports. joining us now, advisory partner, the firm advising at&t walter, and craig moffit is back so, walter, we'll start with you. i mean, man, what a journey, and, yeah, it's just -- it's interesting to see in this case a lot of people think the judge will allow this deal to go forward. what happens then? >> well, one of the things that if it goes forward, we really entered into the age of collecting data because one of the things that this merger is about, just like facebook, just like what amazon's about, whatever, is collecting as much data as you can about the consumer if you are at&t with a lot of the media brands, it helps you build up that data base. i've been through having worked
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at time warner, through the period in which, you know, you had vertical integration with the people in the pipes,e time warner, cable, ownering things like warner brothers, been through the breakup of that, through people putting it back together, and i do think it will allow vertical sbrintegrat, there's going to be amazing consolidation in the industry, and people are going to try to own both distribution channel, information about the customer, and the content. >> yeah. walter, do you think the point, the ceo said, look, look at net flick, they originate, aggregate, and distribute content with 100 million subscribers, clearly national. is the point valid, what's different between them and us? >> well, and it's true, we had consolidation including comcast universal owns the pipes and contempt the question is not only as you discussed on the show, but the question of whether or not it
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affects consumer prices, but also whether it can tamp down competition in the future. you may not have had netflix be able to emerge if there was not a more open pipelinesystem so the question is, if you allow a lot of vertical integration, will it stop the future netflixs from being able to emerge? that's the question. >> craig, you want to hit that angle? >> look, that's exactly right. one of the concerns here, and it was dealt with in the comcast-nbcu case in conditions assuring they made content available. one of the concerns here is that you've got this happening at the same time that net neutrality is expiring, and you've got it at the same time comcast conditions in the nbcu case expire in september, so you can argue that while we have not seen consumer harms in the nbcu case, it's
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because we have not waited long enough for the conditions to show up. those are the arguments that are sort of out there. none of this has really been proven >> yeah. >> the theories for all the differenways that you could manipulate the system, though, are reasonably telling and easy to understand. >> let's show the stocks walter >> craig makes a good point. it's a perfect storm here happening at the same time as net neutrality is undermine. >> all right watching to see if that's people coming out, they are now u better than 1% walter, thank you, craig, thank you, and we're going to take a quick break. when we return, former nbc universal chairman, bob wright, tells us what he thinks of the ruling and what it could mean, and cramer sits down with mark e ocdo 3 thstk wn0% we're back in two.
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well, it's earnings season once again. >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all.
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well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade.
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denial huge news. eamon has more >> reporter: kelly, that's right, at&t won. apparently, there's no conditions we are awaiting now to hear from the team that was in the courthouse listening to the judge deliver that rather lengthy verdict. they closed the doors at 4:00 p.m. we are told now that the deal has been approved, and there are no conditions.
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we are going to wait and see what the details are around the judge's decision because he obviously read a rather lengthy statement to the members of the media in the room now coming down from the sixth floor to the camera position here for more details, but information we have now is that the at&t deal to buy time warner has been approved and there's no conditions, kelly. >> wow we got julia standing by we are showing the stocks if we can. this was two years in the making this deal was first proposed two years ago nearly, finally, the judge's ruling comes down, and at&t shares selling off neermary 2% >> people are enter arbitrage, you have to short at&t and buy time warner to capture that. >> would have got 7.5% today which is huge. huge >> if it was blocked, shares might not have gone down >> the deal finalized in ten days was the deadline. >> next couple days.
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>> 4.5%, and we knew if this was approved, we show comcast as well, we have reported that comcast would then be next to actually make a bid for fox assets, the ones that disney is selling. comcast shares down 2% as it happens when people think -- >> they think it's a bidding war for a huge asset >> and they are paying up. hampton pierson was in the courtroom. hampton, what can you tell us? >> reporter: a packed courtroom, listening in stunned silence as judge richard leon basically caseined opinion in the bottom line, a stunning victory for at&t and time warner across the board. no conditions attached to the merger he issued an opinion rather than an order, but that opinion essentially was a scathing review of the government's case, especially its three theories of harm to consumers as proposed by the government first and foremost, the notion that a merged at&t time warner
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would have increased leverage to take on competition, and he said he concluded that the government basically failed to meet that hurdle, and they did not do it through their witness testimony, through exhibits, et cetera, and even their lead economic expert put forward an economic model that did not back up that key claim. he moved on to the idea of that an emerged at&t-time warner would be harmful to new competitors from more or less the internet side of things. again, same thing, that in his view, the evidence prese just did not prove that the kind of breakneck competition we' all seeing in the market place going forward would be harm by this merger going forward. finally, the government or, excuse me, the judge leon in the strongest words, urged the government not to seek a stay, and the reason that's important is because here we are june 12th each side with six days to
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decide no. 1 whether or not to appeal, yes, that's fair game, but to seek a stay in the order going forward. june 21st is the latest deadline for the merger being done, and the judge used very, very strong language to urge the government not to seek a stay as far as a decision on an appeal going forward. that is fair game. that impacts among other things the timing of the deal going forward. you'll actually be able to see the 170 page plus opinion online with about the next 15 or 20 minutes, but, again, packed, stunned courtroom listening in silence as the judge weighed in in this case after the lengthy six week plus trial that we were all going through. back to you. >> hampton, thank you very much. ury fox up 5% on this., 21 time warner also up about 5% at&t down 3% walt disney down nearly 2% on
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this paul, quickly here, reaction as i know now a very happy at&t share holder >> exactly it was a defeat for the trump administration and justice department the newly political tactics of overturng decades of antitrust regulatory precedent is -- this is a real viy for the free market against the overreach of regulations of the doj's antitrust division >> on that note, eamon has more on what it means for the justice department, eamon? >> reporter: kelly, a good question this is a huge defeat for the department of justice. they would have wanted this to go very much the other way, at least to get some conditions imposed if this deal was going to be passed they got none of that. there's going to be a political dynamic to this going forward. remember the president made an issue of this merger back in the campaign trail all the way back
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in 2016, suggesting that he thought this would be too much power in the hands of too few, particularly focused, the president was, on the sale of cnn, a network he had political battles with over the last several years, and the president said were fake news. now the deal is allowed, a blow to the president of the united states he's currently in the air on the way back from a refuelling stop guam where they were on the ground hours ago, we'll wait and see whether the president issues any tweets here in the wake of the decision because he'll have realtime communications on air force withdrawn and will know exactly what's been decided here and blow this represents to his case that this was simply too much power in the hands of too few, kelly >> thank you >> the president tweeted in the last few minutes about the meeting with kim jong un, but not yet about the ruling we'll watch and see if he does that, but courtney, you didn't think there was basis it harms
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the consumer >> no, i don't think so, and, clearly, the judge agreed. at the end of the day, it's an opportunity for the companies to compete, and i actually think completely in the reverse and in the opposi, and they did not make their case. fist of all, i want to say hats off to those involved, they looked at all sides of it, and they won this is a tremendous opportunity to, like i said before, inject growth into the company, and into one that's been valued before >> now it feels like game on, mike >> oh, gosh. >> game on >> very unusual situation to have a ruling like this and fully competitors are fully loaded with deals and proposals ready to go. that's one thing i also think a reality check makes sense. we're all embracing the logic of this ruling and what the first extension of thais, it's not going to be easy for at&t. there's no magic to the combination. it's really hard otherwise you
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have power over the consumer people didn't think there was anything about this particular combination that was world beating. time warner is bought half the market cap of netflix right now. >> that's fair julia has more there's a lot of ramifications, a lot of deals following on this, julia. >> absolutely. there's a real reason that we see fox shares up dramatically, and fox shares up nearly 5%. it's because now the media m&a flood gates have opened. what's most notable about what hampton just reported is the fact that the judge urged the department of justice to not request a stay so the doj is less likely to try to put a hold on the deal. there was always the risk that the deal was -- that his verdict ruled in the favor of at&t, but he also had restrictions, and the kinds of things that could really slow down the deal and also challenge the commitment of at&t and time warner to the deal the fact the deal came with no restrictions and, also, the
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encouragement not to put a stay on the deal means it's likely to close very soon, and in the next couple days, we are likely to see comcast put in its offic offer for the fox entertainment assets so we really ing to n of m&a folthis it's worth noting that some of the companies that some of the companies in the media and cable statement are unhappy. fox, sorry, i got a statement from cox saying they participated in the review process, expressed concerns about exclusive content, and how it could tilt the playing field. we hope the government will keep a cle eye on theerged company's activity interesting activity there from cox. we are likely to hear from other company that's participated in the opposition to this deal going through. >> and some were witnesses for the government in this case.
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now let's bring craig moffitt back in. this is -- there is no ifs, ands, or buts about this one >> the biggest surprise is them not trying to contest this ruling that is a very real rebuke of the d.o.j. here. absolutely hats off to randaller getting this done. i would echo what michael said that this is not an easy win here remember at&t is so large that this transaction will only increase at&t -- it will only count to 15 % to 20% of their revenues >> at&t is by far the bigger company. >> yes, it is so large here is the big concern.
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we said to our clients throughout that getting time warner would be good for their income statement, but bad for their balance sheet. it doesn't really add that much cash because of the dividend obligation that comes with the shares and the interest, it adds about a ball and a half to free cash flow, but they will have $249 billion in debt that is including leases that will start counting as debt next year under new accounting rules. the most indebted company in the history of the world, with real leverage calculated at almost four times so you have a business with negative revenue growth, and enormous leverage, and that is very risky >> paul's head is about to explode. you think they will trade like
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netflix now? >> it may take a litele while, but you look at at&t stock and it has beenrelatively flat they were in aning business, knew what they would do with their cash, now they will change and they're no longer telecom, they're media. >> you don't care they're the most indebted company in the history of the world >> they're still producing a lot of cash. i think you will see verizon go after cbs after this they're now going from a growth value company to a growth company. that will make the difference. it will be hard, but you change the perception of the investing public and that is what happened with amazon and netflix and everyone else. >> let's bring in andrew, this has been a long day for you.
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man, and now this ruling, and no -- he is telling the government -- what do you make of it all? >> first, i just got off of the phone, every lawyer in new york right now is going throughhe document, talking to kleins, writing memos to talk about the implications and they are huge clearly they are huge for the media business, but i think there is a larger sense that we will see consolidation each and every way now. in particular it may suggest that by putting the doj on it's back, and president trump on his back, but to the extent that you believe this was a politically motivated case, and i think that still exists to some degree, can amaz amazon, that has been in the cross hairs of the president, now pursue some kind of larger deal than it might otherwise
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can health care companies that would not have pursued a deal now try in a way they might not before is the president and the doj willing to take on c they may lose in the future considering this stinging loss that is the question to ask today. analysts on wall street is looking through their industry saying what type of consolidation could not happen yesterday, and what kind of consolidation can now happen as of minutes ago i think you will start seeing lists far beyond the media >> i would love to see some of that consolidation that we're talking about. and i 100% agree i would love to see amazon lk at lions gate. >> if you're good at what you
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said >> i thought amazon should buy lions gate how and where will the mergers happen, what's the implications, we could look at financial services company, we're finally getting m and a back into the market i think tr let's be careful with the ego it's out a doj loss, he could slow down a lot of other transactions just by the doj filing suit. this slowed it down two years, let's not pretend that the power does not still sit there, it is just a delay, right? he can delay things going forward. and we don't want that to happen in this market >> trump is tweeting about robert de niro >> he may be watching a good movie online right now >> yeah, this is the first reaction coming from assistant
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attorney general saying we're disappointed with the court's decision today we continue to believe the paid tv market will be less innovative we will closely review the courts opinion, and consider next steps in light of our commitment to preserving competition for the benefit of american consumers, so meghan, at least in this initial statement not ruling out the idea of appealing this and fighting here. considering next steps leaving a lot of possibilities on the table we will wait to see what the reaction is from the judge's specific wording to them mae the government will reconsider that, but not ruling out the idea continuing to fight and appeal >> and we have cameras, a large group of press following him we can't see miguel, he is in
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the middle of all of this fray what are you thinking right now? >> i think it is a very good outcome. we have seen this coming, a merger between content and tech. content has been under valued. tech over valued, probably, but at&t, this is a 5g decision of theirs, they think it is a tremendous home run. it may well be i think the issue of putting these together, the old vertical and horizontal will have to go away, itself, the horizontal one. i think that should be approved. those things -- >> which piece should be approved >> they don't have, people say it is easier for disney, it is
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about the same thing the assets that fox has, they both have some of that, too. >> disney is not distribution. >> yeah, so you think if we get word that they put a bid together, and say we're going to make a cash offer, it is fair game and now it is up to him to say does he want the cash or the shares >> he said he wants the shares it's a tax deal, it makes a big difference >> huge difference >> and the stock is very good. disney stock is a very good asset. i think there is not a piece of cake forcast, but the reality is that it should go through, and maybe they will be hung up a little bit you made a comment about don't laugh too hard because the next person will get hit over the
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head i never thought there was any basis. >> what do you mean the next one will be hit over the head? >> it will be pushed around a lot. >> andrew was suggesting that they may back off if they think they can't lose two. >> i don't think they look on a score board basis. people people down the line don't make that call but it is exciting i think it will make sure that content will have a lot of suitors, and that is a good thing, and you just can't stlit and let them do whatever they want facebook and googl and some of them have been in this and some have not >> if you're just joining us expecting to see fast money right now, we're


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