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tv   Squawk on the Street  CNBC  June 20, 2019 9:00am-11:00am EDT

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bankers and ceos looking to see whether it's a model >> what does success look like what does failure look like on this >> i think stability $26. if it goes under 26, there will be questions company had a $7 billion valuation a year ago today it's 15 plus billion >> andrew, thank you see everybody tomorrow right now for "squawk on the street." ♪ good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. s&p set to open just above a record high as the fed signals rate cuts. we'll watch more conflict out of iran this morning. slack's direct listing and more. ten-year yield did fall below twoov overnight our road map begins with the
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rate-fueled rally. stocks set to surge at the open as the fed hints at a rate cut s&p on the verge of a record high >> plus, slack is set to make its public debut in what's been a hot ipo market workplace messaging start-up optding for a direct listing it's pricing at a value of roughly $16 billion. >> and facebook's cryptocurrency scrutiny hearings are scheduled the fed chair says it's something we are looking at. first up, though, stocks are set for a strong open today after the fed left rates unchanged but hinted at future cuts. s&p now within 1% of a record intraday high, a 28-point jump would set a new milestone. jim, it's an important day >> we got the keyword that we want, which is monitoring. monitoring means, look, we have to take action we didn't want to spoil the party. we didn't want the 50 basis points we want the, listen, we're watching, we see the deceleration, which is true. that was great it was kind of a late reaction
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some people feared the president would attack last night. he's busy doing some other things and tweeting. the one thing i would say i don't like is that when i come in, almost all the good nasdaq stocks are up $2 to $3 i know the futures are strong, but when you see microsoft up two, three before anything happens. now, oracle did have a really good quarter there's just this cohort of revolving -- all these companies that just came public. then there's another cohort of the z scale or zen desk. >> you just tweeted, how many days can they go up in a row >> it's unnerving to me because these are parabolic moves now. and parabolic moves do not end well i don't want to be a bear. but i don't like this. i don't like markets where every day i come in and before anything happens, stocks are up big. at a certain point, it catches up i would like to see a settling
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down period. >> you sound a bit like lee cooperman this morning says a few more days like yesterday, my guess is you're into net euphoria. >> that's where he says you got to go. i've always respected lee from the early '80s he's been saying no euphoria then he used the word. i think when you see if amazon goes to 2,000 based on nothing and there's no news, if facebook seems to recover from whatever the heck people hated it for the other day -- >> i've had a few people say similar things to me >> really? >> it feels end of cycle >> are you serious really >> because of the performance of some of these ipos >> well, they're nuts. >> even things like refinancing for your mortgage rates, where the banks have been extremely competitive lately who knows. but the theme has crept in a little >> you get the nxp remember, that's up two, three micron is up
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nothing happened on trade, i know there's a line that we're saying mnuchin's talking. we got to stop that. we got to stop the idea that therefore the trade talks are going well there's been no correlation between mnuchin talking and what we do. i'm not saying he's not an important guy. i don't see anything that happened at salesforce to move that stock almost back up to where it was before it made its bid for tablet software. this is a market that is just very euphoric. and it's beyond me to figure it out. >> we've been having this conversation off and on for two years. how do you know? how do you know when -- if you get out, how do you know you're not too early? >> it's so hard. you look like such a chump if you get out early. i think one of the seminal things that's going to happen today is uber is back over 45. now we're getting even the
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redemption there are tech stocks where we knew they were knocked out by the huawei initiative by the president. now they're getting back to where they were before huawei. it's just a little positive. >> you mentioned a name like salesforce that you know extraordinarily well, which was up after the fed decision. up again this morning. >> what is that about? >> this is the kind of commentary i'm reading i like buying crm for a potential move up as some investors refuse to pay nosebleed 20 to 30 times over sales valuation but still desire growth and free cash flow and 5% to 7% sales. crm delivered a much better than feared quarter so on and so forth caught a strong bid. the trend is your friend >> there's some genuine analysis it's going up because it's going up that's called circular reasoning. this is where you're starting to pay up for the same piece of information, so-called multiple expansion.
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it has systemically never ban great way to make money. >> one of the things said about powell's play yesterday, people who saw the brilliance in it was that he now put the onus on the president to maintain this momentum at the g20. >> i thought that was brilliant. >> that's what we have >> and i think the president is ready to really shut xi down this time. he was so fooled he was panted by xi in buenos aires. he was pantsed he doesn't like that >> so you're looking for fisticuffs >> maybe they can find a golf game in japan. it's just that he was had. he got had >> so he's going to risk the entire u.s. economy to get revenge on someone who embarrassed him? what are you trying to say >> kind of, yeah it's his company right? >> it's his to do what he wants. >> he doesn't think elizabeth warren is going to get the ceo job, does he in the succession plan, she's not there. >> and the board of directors,
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the gop -- >> the board of directors likes him. >> what are you going to do, have a proxy you going to have a proxy against him? he's going for a third term. >> this is what we're doing. thank you. >> it's a different time, as lee said the president -- i mean, when truman was trying to fire the federal reserve chairman you do have these strange moments in a press conference that never would have happened before i intend to fill my term holy cow geez, were you thinking about not? i mean, wild and there's always some guy, look, what do you think about the fact that president trump makes fun of you every day and makes you look like a joke and a moron? i tend not to comment on that. what kind of -- i wonder how hard that is >> just to clarify, you don't expect any agreement out of osaka. and today you got the journal matching nikkei, saying apple is looking at suppliers, asking
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them to study moving final assembly out of china. >> i think when tim cook last met with the president, i think the president is willing to give tim cook an exemption from the next 10% if he can prove he's doing everything he can to get those jobs out of china. >> even if they don't come back to the united states >> he's wanting to have them out of china he's not asking they be built here because he knows that's not -- by the way, the president is very pro taiwan and korea lately just move to taiwan. you can move to taiwan, you can move to mexico, you can move to korea, you can move to vietnam these are all safe havens for the president. what you know i'm right first is to punish because he got had. remember, he hates to get had. he often goes on another network where it's very, very critical, not. and he says these things his company got beat by that
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company. that company is playing -- you know, they got a discredit police he can't have a secret police because it's still a democracy people couldn't see your hand on that i think they treat it like a company, and he wants to fire this underling, this cfo he has. look, he's got to -- remember, the guy who runs justice is supposed to report to the american people. whatever >> it is part of the executive branch >> there was a tv show at a time it was number one. it often got a ten in the ratings. he's got another tv show he's killing it. he's not going to give that slot up to warren or sleepy joe >> he's not, but -- >> why he says it crooked hillary, crying chuck. notice he doesn't give pelosi a nickname is that because the husband is involved in real estate why doesn't pelosi get a nickname >> you know what, i'm excited
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about slack. i don't know about you >> i was too i almost went to the stairs to say hello to andrew. i used to do my show there when i worked on abc. i was very familiar with up there. next time, i think i'll just go up there >> those stairs are very nice. >> it was the president. that first guy just like the queen. he was fantastic >> slack is going to debut here at the nyse. the reference price, as you now know, 26 gives it a valuation of 15.7 billion. earlier on "squawk," stewart butterfield explained why the company chose a direct listing >> a lot of investors who are used to a model where they get a small allocation and they wanted a big one in direct listing, at least they have the opportunity. one of the hopes for a company like us is that there's not too much volatility. we are hoping that this model, where there's many sellers, many buyers, supply and demand, we reach a market clearing price a lot earlier. >> all right so a lot to learn about this company. >> and the process
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always worth mentioning. capital raising function here, it's going to be a direct listing. similar to what we saw with spotify. not as well known a name as spotify, given that is a consumer company didn't trade that well day one they want to make this look a bit better at whatever they call them, their agents who are dealing with it. goldman sachs being the chief one. if you can get -- the key question is how much it's going to be sold today you don't know their hope is perhaps you get as much as 5% of the 600 million shares out there in terms of volume, and that will really lead to a very stable first day of trade >> well, yeah, and i think that's right it depends look, at 26, the so-called reference point, it sells at 34 times sales, 22 times net shares the only one that's higher than that of the companies that have come public lately is octa, which is a cybersecurity company. if it goes to 30, which a lot of people feel is not a problem, then it sells at 39 times sales.
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that's going to be, other than zoom, the highest. crowd strikes too. only zoom's not more mojo. >> it is a very high multiple. >> yes, it's growing well. >> it is growing quickly they'd love to be considered in the same universe eventually at workday. >> they want to be a cloud king. >> you know well >> i had them one. i pursued them endlessly >> it's an enterprise company. we're not talking about consumers. >> do you use it >> i don't >> the street uses slack i have to admit slack is better than email no offense to outlook. >> my wife's company uses it as well >> they do tell me. do they like it? >> i think so. how many vcs choose to sell not just today, really, but in the weeks ahead when they see what the close is will be another key question perhaps they're going to hold on in the hopes this does take the
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place of yet another one of those opportunities. >> remember, google had a direct listing. it came in 80 to 82 because no one could figure out what it does they didn't know what to do. remember it was botched. >> it was not well done. it was a bit different >> if they had done a road trip, it would have been great leslie pick we are a great analysis, if anyone wants to see, on the difference between direct and an ipo. very simple, very direct, very well done. >> these guys have a pretty big goal replace email within an organization >> well, it's better i think we all feel that email is just kind of a scattered universe here you get the whole -- if you get the whole pan plea of what you have, you can do artificial intelligence >> microsoft office 365, they have a bug in it that your junk now comes back to your inbox i spend my entire day getting rid of old junk emails >> i was trying to figure out what you do every day because you don't shop, you tend not to eat. >> i just sit there all day long >> we've gone 9:13 and haven't
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discussed beyond meat and kroger >> you know what slack stands for, right searchable log of all conversation and knowledge did you know that? >> do you know what shazam stands for >> no. >> how about specter special extortion terror -- i don't know >> okay. what floor was thrush located on the 13th floor of the empire state building i've been there. believe me, you can't get to it. >> we're going to watch slack today. we'll talk about facebook's crypto currency plans now under more washington scrutiny the fed chairman also weighing in take another look here at the premarket. as we said, we look to exceed the record high on the s&p by about a point at these levels. more "squawk on the street" from post nine in a moment. direct messages have evolved. so should the way you bank. virtual wallet from pnc bank.
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they're protected. helping keep outsiders from getting inside. and if someone tries, we'll let you know. so you can stream, surf and game all you want, with confidence you can get coverage where you need it most. that's xfi advantage. make your xfi even better. upgrade today. call, click or visit a store. facebook's plans for the cryptocurrency will be the subject of a capitol hill hearing. senate banking says it will explore the project and any issues also on the fed's radar. here's what powell said at yesterday's news conference. >> facebook, i believe, has made
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quite broad rounds around the world, really, with regulator supervisors and lots of people to discuss their plans and that certainly includes us and we're -- you know, it's something we're looking at there are potential benefits here there are also potential risks, particularly of a currency that could, you know, potentially have large application >> it's made a big splash for just being a white paper so far. >> yeah, it has. all of these regulators were always baffled by crypto they didn't know what to do with any of these so they don't know what to do with this either i think they just feel like because facebook is so in their face, it doesn't matter if it's good or bad. i continue to believe this is an issue you have to talk to marcus about, not sheryl sandberg and mark zuckerberg. >> david marcus. >> a real banker with real privacy concerns they did everything they could right on this thing. they're just viewed as a rogue
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company. it's very hard to get that changed. they're regarded as being a bit of a rogue operation >> you only have to wait a day or two for another example of it, typically. although, the focus the last few days has been on youtube >> facebook's taking a breath. >> in terms of how it markets to or distributes a product to children >> they're in trouble on this. there's just a lot of people who fill no free speech for racism, no free speech for child exploitation, versus, hey, listen, it's a greyhound bus whatever happens, happens. >> alphabet going as far to consider -- this is not my reporting -- but a kid service,
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not having -- >> automatic recommendations, yeah >> pop up at the end of a video. >> they got some work to do. facebook must be so happy. >> we don't know because they don't break it out >> no, and we don't know they've not defended it correctly. >> people access that thing every month. >> they threw a chicken to the wolves you go out there >> you were there. >> you throw the ceo out hey, let's just throw out the offensive lineman. no, come on. where's the vince lombardi in that outfit? wojcicki is a great person i think they just threw her to the lions. here's the coliseum, go to work. >> yeah, been a difficult week for youtube. that's for sure. we're going to get cramer's mad dash and countdown to the opening bell another look at the premark as we're looking to take aim at a record high. back in a moment
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♪ welcome back to "squawk on the street." time for our mad dash on this thursday morning about seven minutes until we get started with trading oracle reported after the bell >> good quarter. >> yeah. >> a lot of people were expecting a miss that was wrong initially talking about the buyback. they bought back almost 25% of the company in the last few years. that is -- 60% of that buyback was just in the last year, 100 million share, 6 billion they have new products selling
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very well. fusion selling very well they're talking about taking a lot from s.a.p mark herd delivered some very good commentary about how orders are up i felt this was the most engaged that larry ellison has been in a long time. so yeah, larry was really on his game congratulations. you know, sometimes i've been critical of them i can't be critical of them this quarter. they did too many things right the new products are kicking in. there's room for everybody very little -- no really an anant anti stuff really, they took some names >> broader takeaway for others in the sector? >> cloud cloud's good for everybody >> cloud adoption. >> cloud is still early. it's ridiculous that it can still be early, but there's a lot of companies -- like, we had crowd strike the other day people act like that's the greatest thing for cybersecurity because they're cloud based. cloud is still infancy it's just hard to believe.
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but it is. >> yeah, all right >> just amazing. >> shares of oracle going to be up perhaps as much as 6% i'll also have an update on those talks going on in washington between t-mobile and dish and the department of justice. don't want to miss that. a lot moresqwkn e "ua oth street," including that opening bell, after this -driverless cars... -all ground personnel...
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you're watching cnbc squa"sw on the street" live from the financial capital of the world futures indicate a record high for the s&p today. if we get one, the last s&p intraday record, may 1 jim, last closing record was april 30 >> that was still when we thought that we were going to be okay with china and maybe things would be good. they broke down. for what it's worth, the fundamentals of the companies that reported today are bad. carnival cruise, big miss. darden, terrible miss. kroger, i thought was okay but they missed on same-store sales.
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largest cruise company, largest restaurant company, noncasual, and largest supermarket all bad. which is really the real world >> not to mention philly fed, big disappointment in the wake of empire's record disappointment, jim. so the question will be for some whether or not this pivot is too late >> i don't know. kroger is saying that this quarter is going better. if you're the fed, you can say, look, let me tell you what the real world is. booking is not as good as we thought. carnival said it's macro europe and also cuba. darden, frankly, we don't really know kroger on the tape now it's not as bad as what that stock is indicating. why you worry the business -- those are all three very big consumer names >> let's take a look at the s&p cnbc realtime exchange and the opening of the big board
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slack, of course, celebrating its direct listing at the nasdaq operator of more than 300 grocery stores in six states not a bad day to go public >> no. i mean, of course they'll say, all right, that's the talk i don't buy that there are the companies that make it so you're better at the enterprise these are all enterprise improvement. and then there's things that are the consumer oddly enough, powell talked about how good the consumer is doing still, but that's still related to employment. if we saw -- these companies are not necessarily the real economy. i have caterpillar on tonight. that's real economy. let's see how they're doing. when you see these stocks -- i'll give you a good example apple. a very neutral note on apple today. i don't know if you read it.
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basically deutsche bank saying, we're really worried the stock is up on it. because it had -- in it, it talked about service revenue on another day, apple would be down people are interpreting everything as glass half full, which i don't like >> the bad news is good. the bad news is good dynamic >> it's dicey times. i keep thinking the president tweets, we could be in trouble >> there's a piece in the journal today about housing, on how private equity and large institutional investors, larger percentage of u.s. purchases of homes since the crisis, actually on record, twice the levels of pre '08. >> i have been approached by so many cities as part of consortium how about pittsburgh if you want to buy homes in pittsburgh i said, are they that liquid they're giving away the homes in pittsburgh it's amazing
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they speak of it as if it's treasuries >> we have 1.99 on the ten year. >> you should be buying on homes in poland in bulk. did you hear james grant say that bulgaria has negative interest rates under clinton, they had 7% rates. >> obviously there's the s&p all-time record high as we have surpassed 29.54. >> do we have hats do we need hats? hats signify a top >> we're moving up trend is your friend don't forget that. >> they just keep going up on the same information i would love new information historically, you absolutely do buy right here listen, when you go from a tightening cycle to an easing cycle, you got to throw money at the market i just get uncomfortable look, i'm the not -- just give me some -- you got the president as a wild card a lot of people feel that trade
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talks are going to go well i think you just have to be skeptical. be a little skeptical. right? >> history is a guide, yes >> we've not mentioned oil obviously a weaker dollar at play today but iran did shoot down this $20 million u.s. drone they claimed it was over iranian air space. it was actually over international waters but they called it an unpropovoe attack >> how much would the market be down three, four years ago some of this is we have so much inventory. we're pumping -- we could pump even another million >> but demand forecasts keep getting cut too. >> yeah, demand. look, it's a strange time. powell was yesterday acting as if it was a very rational time didn't ever -- did you catch any of powell's jokes? >> i didn't. >> he's not the youngman of the
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federal reserve. he's, wow -- in terms of wanting to put you to sleep, he may be grade "a" number one he's indica, for those of us knowledgeable in canopy growth >> he did say, by the way, we've not mentioned i have a four-year term, i intend to serve it >> yeah, how about that? was that a declaration or was that a declaration was that not right in trump's face i'm actually going to finish my term take that, mr. president >> do you think he will? >> yeah, i do. i think he likes the job >> you do? yesterday you had broached the idea that he might say no mas. >> he hasn't made a name yet for -- the president hasn't really done a true assault on powell, personal kind of assault. he's kind of held off on that. >> you mean coming up with a nickname >> yeah, you know. does he have a writer for the nicknames, or does he just come up with them does anyone know >> no, i'm sure that's been
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asked. but i don't know >> what would you nickname powell if you were the president? what would you nickname him? shorty no >> judicious who knows. >> judicious, prudent. >> silver fox. >> oh, my, i like that but it's not derogatory enough >> i'm not trying to be derogatory >> oh, okay. >> one last thing on the fed goldman, who just last week we talked to david solomon, saw no rate cuts for the year today they call -- they reversed that call. they see cuts in july and september. their words are, the hurdle appears very high to forego a cut in july. >> some value added, right they changed their mind. that first call, i guess it wasn't so good >> maybe not >> they changed their mind >> maybe not >> i think everyone has the right to change their mind when the facts change i don't know i want to see how the transports
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look transports have not been so great lately but they are over resistance still away from the high you got any information? some tradeable information >> in the spirit of other news organizations that seem to want to do stories that have no news, we could do that >> viacom? >> exactly >> i hear they're chatting >> you know sometimes things i'm thinking about yeah, they're chatting we got absolutely nothing out of that story the other day but let me do it cbs and viacom, they're talking right now. not about an exchange ratio. they haven't gotten to that. they're not yet exchanging price back and forth but they are talking a bit about these boards above companies the board, at least according to people familiar with the discussion, trying to get a sense as to what's bob going to do when he's the ceo of this combination. >> do you think it'll go to backish? you absolutely know that >> i've been saying that >> i know you have
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i was doing faux tension >> thank you >> geez. >> but beyond that, i don't expect to see an exchange ratio surface, at least not this week. but there is some conversation going on about manager structure, about how he would approach the combination as its chief executive officer. that's where things stand. we're going to get there listen, if you told me mid-june there would not be a deal between these two companies, i would have thought, wow, that's taking a long time and it has it's taken a while the cbs board has been very methodical about its approach to this potential transaction and continues to be. but that does not mean in any way that it has been put off or anything else. and the expectations are, on both sides, that you're going to have in the near term. so now i've shared something you already all knew because i told it to you before >> it's called an evergreen. we'll do that again next tuesday. >> going to have a little more on sprint and t-mobile, which is a little newer >> how about viacom selling at
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the lowest multiple of any entertainment product. that's because they were almost cut out. remember that hardball >> questions about some of the deals and how much they gave up in other ways that are hard to sort of measure. but they did get those deals on the cbs side, you could say, you have this huge potential overhang called the nfl. what's that going to cost you? and what is that going to mean >> that's what susan wojcicki should buy if you're going to make wojcicki the ceo for the bad, why don't you let her have the nfl i thought they can just go buy the nfl. then they wouldn't have to worry about whether it's on cbs or not. they have 100 billion in cash. of course, those owners all they they own -- >> why do you keep mentioning susan wojcicki by the way, the transcript from this interview she gave at code was making the rounds. >> ill advised >> poor. >> no, ill advised you don't say things like poor that's too negative. don't you know you say suboptimal don't you know the speak
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we got a president, he fires a lot of people. remember when he fired rex tillerson by a tweet that was classy. rex serving the country. called him, what, dumb as a rock >> dumb as a rock. >> these are serious people who have kids and parents, respect >> sure. >> they just get trashed >> you think it's a disincentive for others to join >> where i was going is i think it's hard to take a job with the president knowing that you could be fired by tweet. i've been fired, but -- >> you can take every road back to this president. >> yes take all sides like my great corporate finance professor who then became dean of harvard law said, jim, you got to be able to take every single side doesn't matter well, that's kind of -- okay i'll learn how to do that. >> all right
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let's get to bob posani, as we're up 228 morning, bob >> what an open. all the risk-on stuff was up here energy, nice turnaround there. big turnaround early in the morning. technology strong, industrial stocks are moving to the up side materials as well. consumer staples lagging, sort of defense lagging a lit bit here intraday high, i think carl mentioned that 2954 was the old hie that was back on may 1st we passed that we're looking to see whether we get a closing high for a lot of technicians, that's what matters it's 2945. that was back on april 30. sorry, may 1st was the intraday high the sector leaders here, we've been mentioning the defense. real estate, new high. utilities hit a new high essentially consumer staples under a new high let's not quibble about a tenth of a point technology, which is the one that really matters, also essentially right near a new high but there's been a number of laggards out there we have noted energy has been a
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terrible performer all throughout the year. that's a good 20% below the old highs. the russell is 10% the dow transports and even the mid caps lagging a little bit. we mentioned a few stocks had been really important in terms of getting us to the new highs these are the super cap names here like microsoft and apple and amazon and facebook. our friends at data trek noted the other day, those stocks, those four stocks right there, account for about 24% of the advance of the s&p 500 this year the other 496, that 76%. that tells you the importance of these megacap names in terms of moving a market cap weighted index. we all moving on here today, and right behind me we've got ipopalooza slack is going public here the important thing is it's not technically an ipo sort of treating it like one there was no underwriting. no one coming in saying we're going to buy up your shares and sell them to somebody. no road show going on. but it is going public that's what matters. so let's not quibble too much.
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the nyse this morning, late last night set a reference price of $26. how did they make that number up well, that's around the price that it's been trading in a fairly active private market for the last several months. we had a long history of this, fortunately, with spotify, and it worked fairly well, this direct listing methodology so there's a lot less anxiety about all this direct listing now that we've had a little history. the one thing i can tell you is don't expect to open too early spotify, we didn't even get a range until about 10:30 or so. and it didn't open until past 12:30. i don't know if that's going to happen this time but it's not going to be soon. we'll be back at the top of the hour, at 10:00, talking with some of the principals behind the scenes and showing you how they're actually going to set up the opening price. only here on cnbc do you get that finally, i want to know, everybody else in ipo land is happy because the numbers keep going up we had a number of pricings going on here after the close yesterday. grocery jo grocery outlet, they're setting
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up their numbers look at this $22, they're going to go public today at the nasdaq. 17 to 19 a couple days ago some biotechs doing better, they raised their prices. this sex trois extraordinary a lot of companies pricing at the high ends or above look at some of these recent ipos we've seen. we make a big thing about beyond meat zoom, crowd strike, chewy, pinterest, trade web up almost 60%. the one things these companies have in common is growth and even with losses, people are willing to pay up for growth until they don't of course, it always helps to have an all-time high in the stock market, folks. don't kid yourself that is the primary motivator of these companies going on the upside i'll be inside the booth in about 20 minutes or so talking to the principals behind slack and how it's going to open in just a few minutes guys, back to you. >> bob, thank you.
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didn't wa did want to get to sprint, t-mobile, and dish some important talks going on. sprint, t-mobile, dish, and the department of justice all partaking in trying to put together a divestiture plan that would meet the approval of the department of justice so that it would give its assent to that deal and allow it to move forward, at least to some extent we'll get to the objections in a moment what i'm hearing is it's highly likely not today, not tomorrow, but soon not this week, but very soon 90% chance is what people familiar with the situation are using now to sort of at least give odds to the chance that both you get a deal from t-mobile in which they do divest the boost prepaid business, spectrum there's a roaming deal as well dish steps up, pays a price for it, and goes on its way with conceivably, and this is of course the hope of the department of justice, would be
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the ability to really create a robust fourth competitor in a 5g world. they don't have any legacy services dish already owns an enormous amount of spectrum they'd be able to bundle with the dish service out of their stores, have the roaming agreement so that they really can represent not necessarily day one but fairly soon a true competitor to the likes of verizon, at&t, and the combination of sprint and t-mobile will it be enough? will they get through this last few key negotiating points we'll have to wait and see what i'm hearing in terms of color is t-mobile has been willing to give a lot to get it done but now is realizing, well, are there any ways we can try to get some protections here in terms of not creating too robust a competitor in the form of dish that stock, by the way, has been the biggest beneficiary. take a look at shares of dish. they have moved up on the prospect that charlie ergan would finally find the ability
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to start to go for that nationwide 5g competitor remember, he's owned all of spectrum some of it he's got to start to put into service as early as less than a year from now. others, a year after that and after that in terms of the licenses and what went along with it. but it's a key question and consideration here now, you've also got the states. remember, we've already said friday in new york, you're going to have a status hearing on where things stand there ten states are opposing. at some point, they may try to seek a temporary restraining order. the question is will the department of justice and what they're going to get here, if they get to the finish line, be enough for those states to say, okay, we agree with you. we think this actuallying le cod lead to a real fourth competitor and therefore we no longer have those concerns that we previously did that remains somewhat unclear, but certainly doj approval would be a big, important step forward for t-mobile and sprint and for dish, conceivably.
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i've said in the past, and i know this from having followed him for so many years, negotiating with charlie ergan is difficult in the best of times. so getting down to the very end, there may be some real optimism, but we have to wait and see. >> up 60% for the year if you remember when consolation brands got model and corona, it was the greatest thing it's interesting that an outfit like century link doesn't have the capital, i guess this is a brilliant move by a guy whose stock was terrible >> that would be a key consideration for him as he builds out a 5g network. the hope is it would force real capital into his business for investment he would have to he would have commitments to build out. again, you'd have that -- you'd have the roaming agreement for a while. you'd have the ability to bundle you'd have new spectrum, additional spectrum. >> what a win.
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that would be a huge win you're the only guy really talking about it that would be fabulous >> it would be a big win >> geez, i got to move on, but this is fabulous >> yeah, we got to move on let's do that, actually, and head to rick santelli, joining us from the cme group in chicago. that ten-year flirting with 2%, rick >> absolutely. we haven't floated in that body of water since the fall of 2016. let's start at the beginning let's look at philly fed's read today, up three-tenths, barely positive open that chart up to early '16. it's the second worst number going back to may of 2016. and the two numbers i'm referencing that comp to that, of course, are negative numbers. now, if we look at two-year note yields, one year separates them. they're now trading at the lowest levels since the fall, october to be specific, of 2017. and actually, tens to twos has steepened out. it's approaching 30 basis points it's a three month and the bills have inverted the curve. but is it a bad thing? forget the banks
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think about your neighbors, the average guy getting 2.14 for a three-month bill that's pretty nice i don't know and the rest of the curve is steep. almost sounds perfect to some. and if we look at the ten year, that's october of 2016, one year farther back, and that's the last time, as david referenced, we were toying with that 2%. finally, if we look at the ten year in a more microbasis over three days, it really has weathered a lot. it had to weather the comments of what's going on with mario draghi and his negative rates. maybe bringing back qe the hissy fits in europe are much bigger, the bank profits much smaller yesterday, many investors, even while we were making new all-time highs in stocks, pretty much convinced the fed is going to come back with more eases finally, after looking at the ten-year look at the dollar index, it's lost a lot of ground and be affected by the long-term objective of investors looking
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for more easing out of the central bank back to you. >> rick, thank you very much as you heard rick say, ten-year below two, vix below 14, s&p record high, and the dow having its best month in almost four years. october 2015 looks pretty good. back in a moment to a single defining moment... ...when a plan stops being a plan and gets set into motion. today's merrill can help you get there with the people, tools, and personalized advice to help turn your ambitions into action. what would you like the power to do?
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trading. >> one of my favorite companies, canadian company, and they are kind of a amazon web services for the smaller/midsize services they fund them they are fantastic they had an analyst day. they came up with an ecosystem that makes it so they compete even betterment i have to tell you i am blown way by these guys everybody wants to buy them. every major company in the
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valley wants to buy them they are not for sale. they are empowerment personified for the small and medium-sized businesses anyone who is a young person wants a store on shopify and get an influencer. >> caterpillar tonight >> yes it's not china anymore it's a service business. it's a consistent business they return capital. as of tonight, umpleby will get cred 12-minute interview, longest in a long time. >> that's the show see you tonight "mad money" 6:00 p.m. eastern time dow up 240 we are back after a short eabrk.
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welcome back to "squawk on the street." we are waiting our may read on leading economic indicators. don't see that it hit the wire yet. we are expecting a number up around 0.1 looks like the number is unchanged. unchanged for our may read on leading indicators it was expected up 0.1 keep in mind, unchange we customer into 2019 carl, we are still toying with a
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trade below 2% with respect to ten-year note yields of course, we all know why, whether it's a combination of easing by our central bank, easing by other central banks, or what is approaching 12 plus trillion this negative yields around the globe certainly makes sense. the problem is how the fed and j powell frame that into their strategy moving forward. back to you. >> thank you rick santelli. a good thursday morning everybody. welcome back to squawk "squawk e street." as rick said, #% 2% on the ten-year, a shade blow a record high on the s&p 500 which we gotten the open. >> the rate rally. stocks surging s&p 500 an all-time high at the open the fed signaling a rate cut might be on the horizon. we will discuss. slack making its public debut. opting for a direct listing priced at nearly a $16 million
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valuation. and shares of kroger are down this morning as the grosser looks to gain traction we are going to bring you rodney mcmullin's comments. higher across the board. s&p 500 surging 1%, hitting an all-time high at the open. investors are feeling good the federal reserve signals an interesting rate cut might be coming as early as july. joining us with reaction to the fed decision and what it means for the market, mike santelli and steve liesman. power lineup steve, virtually 100% odds now in the market of a july rate cut. does that seem right >> yeah. i'm not sure it's virtual. i think it's actual. it really is 100 that's the number as i read it from the thomson reuters machine there. i think you are up to 80 for september and 65 for a third cut by december. so there is a lot of rate
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cutting built into this economy and into this market, and i think the idea certainly for july is it's kind of like the economy's rate cut to lose i think the way i think about that is you have to have a lot of strength in the data, and you didn't get it this morning, by the way. you got some in claims, but not in the phillie fed missing by a tenth that goes into framework of we are missing by enough, there is not enough strength. i misspoke 90 for september that is virtual, sara. i guess in my book, i don't know how you count it anyway -- >> virtual certainty how about that >> right you have this road to the cut which is you have the xi and trump meeting. you have the june jobs report in july then you have gdp and other data leading up to that rate cut meeting, rate meeting at the end of july. >> so, mike, what do you make of the exuberant market reaction to
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something that was already priced into the market before powell >> i think it was largely priced in the form of hope. i think powell maybe came a little bit closer to the market than some people thought he might. the way i read it though is the one reason you would have been very, very nervous, and a lot of people were in equity land, very, very nervous about the markets coming into this meeting, was the extreme drop in treasury yields. if the fed is going to lower rates on the short end and you are no longer perhaps going to have that upside down yield curve, you become less worried about the fact that yields are where there are. stocks do better in a 2%, 2% world. somewhat close to 2% inflation if we are lucky. that's just fine and i think the reason it's just fine is because corporate bond spreads have remained relatively tight, so the cost of corporate borrowing is very low. back to july 2018 levels it's boring but the math says that supports why stocks are
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here i can't emphasize how defense and negative peoplewere. people didn't get happy about it going into this week. >> are we in the mode where bad news on the economy is good news for the markets? it furts the case of a rate cut? >> once you think you are getting the cut, i don't think you necessarily want to see the economy start to slide further that's the trick here. i don't know also how much slack there is, so to speak, in the line to get indexes higher on the strength of what we are getting from the fed and to burn off this negative sentiment simply because earnings look like they are kind of flat lining at the moment >> although expectations for the back half of the year are still good it's rare that you get a true cut cycle and earnings that recover from lower levels. >> without a doubt and that's why i'm viewing it now as there is lots of room for downward revision. for the second half, earnings estimates, i think that's going to be the crux at some point once we are past the macro stuff. >> it raises the question,
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steve. if there is good news out of g20 next week, if the economic data doesn't come in all that bad, does the fed still cut has it backed itself into a corner here? >> so, sara, i think your phrase "all that bad" is the one we have to think about. i think it has to be good for the fed not to cut i think it has to suggest that you have got, if you are back up on jobs 200,000, you know, by the way, when we think about the surprise factor for the market this morning, when you look at the factors that maybe are buoying the market, you had eight officials now forecasting a cut. seven of them wanted two cuts. plus, i don't know if you remember when i asked the chairman, is just china? if they do a deal? he says, no, it's really more than that. and i think that was something the market liked so they could do a deal with china and you could still get your rate cut. the thing i worry about, i worry about what mike is doing out
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there, is, you know, careful for what you wish for. if you get the weakening of the economy, there is the other surprises there. but if you get the weakening of the economy out there, i don't know how wonderful stocks are going to feel if some of these numbers start coming into the downside >> that's exactly right because you have revalued the market up towards the higher end of its range. it's not like you are priced for something like that. i really do think the market, and you look at this with the way that the 10 and 30-year yields have stayed relatively high, they are saying 50 basis points might do the trick and essentially inoculate the economy against a furtherslide but we don't know if it's going to work. steve, last point on a more political level. people are joking that powell's job is safe now and he didn't even have to cut is it? >> you never know, carl. mine, that's well outside my area of expertise to predict what the president is going to
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do, what he is thinking and his read of the federal reserve act as to whether or not he has the authority to even fire the chair. i think that it would -- here's the question you want to ask yourself, okay and i hope it's not too long an answer, but very quickly, the federal reserve act is silent as to the ability of the president to fire the chair. so peter conte brown from wharton says what protects the chair is politics and the markets. so ask yourself this question. actually, if president trump thinks the market will freak if he fires powell, then powell's protected, but only in that circumstance >> right if he thinks that? >> yes. >> maybe he thinks the market would rally? >> that's the protection -- >> he just tweeted s&p 500 record high.
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thanks as we watch slack, we are awaiting the direct listing this morning. bob pisani is inside their post with more. >> we are waiting for it to go public the question is when joe mckayden is the head of citadel securities it's going public, not an ipo. no underwriting. no road show all the action is behind us. explain how they are building a book without no underwriting happening. >> sure. this is a direct list thing, a little different than a traditional ipo. a year ago we were talking about spotify. they went through a similar process. that means the company is not selling shares so last night in a normal ipo there would have been a little auction for the ipo shares that doesn't happen in a direct listing. basically, yesterday spotify and slack were public. today they become public and the shares start trading what that means is there is more work for us to compile all that interest to figure out where it
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should open and determine the right price with which the shares should start trading. >> there was no price, but there was a reference price that the new york stock exchange said $26 was roughly around whered it been trading privately the last couple of months there is less anxiety now that we saw that spotify opened fairly well within range of expectations >> correct that reference price really just becomes a starting point it's not an actual price it doesn't relate to an actual transaction. it does, as you said, relate to where it was trading in the private markets. at this point, like you said, spotify went smoothly. we are anticipating this to go smoothly it takes a little while to compile all that interest. >> we will have an opening price. all buyers and sellers are going to go it you, morgan stanley, goldman, they are helping you out here, financial advisors, so we will have an opening price? >> yes what should happen, and it's hard to say when, but let's say in the next half an hour or so
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we will start putting up indications. that will start telling the public where the stock might open it will start wide it will narrow over time then as we get tighter and closer, we will have an opening price. what's different in a direct listing versus an ipo, that's the price everyone in the initial transaction gets it's not like an ipo where there is prices the night before and whenever it opens, it's the same price. >> half an hour or so we will get an indication? >> it's a very rough guess, but hard to say at this point. >> with spotify we didn't open until 12:30. >> yes. >> do you think it will take that long? >> i would say it's possible this one may be a little shorter, but it's hard to tell at this point. >> we will be here throughout the morning watching the process. as soon as we get any indications of where the trading might happen, we'll be right back with you. guys, back to you. >> bob, thank you very much. meantime, slack's stewart butterfield joined squawk this morning and explained why they
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chose direct listing as opposed to an ipo. >> there is a lot of investors who are used to a model where they get a small allocation. they wanted a big one in direct listing. at least they have the opportunity. a hope for a company like us is that there is not too much volatility, and we are hoping that this model where there is many sellers, many buyers, supply and demand, we reach a market price a lot earlier. >> former nasdaq chairman bob gry field joins us good to have you. >> glad to be here. >> it sounds like -- we've discussed whether or not direct listings is a direct trend you sound like it has legs >> yes when you think about the ipo process today, it's really conflating two functions one is providing a currency for old investors and new investors, and two is to establish price. with a direct listing, you have separated the functions. you let the market determine the price, not the ipo process, not the restricted road show price
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discovery process, but the whole market so i think that's a great separation i think you will see this as a trend line going forward >> how much of the calculus do you think pivots around the fewer fees and less of the own rouse road show process? >> i don't think it's that clearly, companies have a balance sheet today, they should be thinking about this the funn the fundamental problem you can solve is when you have an ipo go up 300%. clearly the company is not happy. if the ipo goes down 50%, the new investors are not happy. with a direct listing you have the possibility of discovering price in a more rational fashion. you bring the company public you let the market, not the road show, discover that price. i think that's a better way to handle it. more democratic certainly. >> so what would you say to people who have the fear that, yeah, maybe it's more market
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determined, but it also means no lock-up. so insiders can sell on the first day. it could be turbulent. you don't have the underwriters propping up the stock. some of the fears you would get around trading that you don't get in a traditional ipo. >> i certainly think that's a consideration, but that consideration is one of many and i think the greater good is you let the market determine the price. i certainly don't think many of the ceos and senior management will be selling into the direct listing, but that can happen again, if the public is allowed -- don't forget the road show you visit 30, 50, 100 different investors. here when you have price discovery happening through the exchange, you let all investors on a global basis come in. that's a better outcome. >> how much volume do you think you need to get a sense of price discovery day one? i know that has been a bit of an issue in terms of spotify and with these guys trying to get -- they don't know how many sellers
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they will get, but enough to aggregate a true price. >> yeah. well, i certainly think the opening of the stock is the most volatile and the most fraught with peril but you have to understand again that we have situations where ipos going up or going down a large amount i think you'll see over time -- we do not have enough data points now but i believe the data will reveal over time direct listings will give you a better opening day price than you'll have when you just do it through a traditional road show. >> bob, how is that not an indictment of the bankers and market makers whose to job it is to find that price discovery >> it's an indictment of the process. a road show, i have been on a few myself, they take a while. you are involved for two weeks you meet eight, nine, ten investors in a day one-on-one meetings. you have a group lunch and you work hard at it. but understand it's still a small number when you count up
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the number of investors you meet it's probably like 100 not thousands, right so it's not the investment bankers' issue it's just the fact that you are con traini constraining the number of people involved with that price discovery process. when you see a company like beyond meat go up 300% and 200% in a given day, obviously investors who wanted to pay more for that stock were not in that road show process, now have the ability to participate in it quite directly. >> but it's not a capital -- i mean, if you need to raise capital, what are you supposed to do? >> you do that second stage. that's exactly what i'm saying separate the two functions you do the public action, let the market determine the price, and then you, the company, management, the investors can see what that price is you don't have to guess at it. when you go public you sit there the night before wondering what the price will be the end of the first day. you don't have to worry about that you raise capital three, six, mine nine, 12 months afterwards
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when you know exactly what you are getting into i think you will see happier people not as happy as the person who had their stock go up 300% who was a new investor, but you have a fairer process when you basically separate the two functions. >> one of the narratives on some of these ipos has been, bob, just how long it's ytaken them t go public. in 1999th average time for for a tech company to go public was four years now that's 11 years. maybe we shouldn't go back to 1999 levels, but do you think this helps decrease that time period having in enticing option to go public in a different way? >> well one is my opinion, you want to go public when you have a fairly mature business model and great visibility when you go public you are facing an endless series of quarters where investors expect you to deliver the fact that you wait a little bit longer, develop the business
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model, have a clear strategic direction, i don't think that's a bad thing. i don't know if 11 years is right. i would say four years is probably too soon. so i'm not in the camp is that says, okay, we have to make sneeze companies come public sooner public investors, you know, always reward consistency of earnings and when you can do that or consistency of growth, that's a good thing the other larger point is the world is not going back to where it was in 2000 there is so much private capital available today. that's not going to change it's not going to decrease so we will definitely live in a world where companies stay private longer because they can. but it's important to recognize the end state for most companies will be a public market. and that is because in a public market with the exchange function you have the best possibility of discovering the proper price because you let all investors in when you start, you know, you start with friends and families, go through an a round, a b round, a c round and then when you are public,
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you have literally thousands of investors on a global basis having access to your company. so that's a natural end state. so year over year worry whether it's four, five, six, seven, ten years. the fact is companies will become public and we see that certainly this year. >> that is really a specific and valuable insight, bob. appreciate it very much. >> thank you. let's talk kroger. shares have completely reversed direction from the premarket they were up 3%. now trading down almost 1.5% here is the story. earnings topped expectations it also reaffirmed full-year guidance, but this is a firm that is struggling to gain traction the highlights of the quarter, same-store sales up 1.5% overall sales falling 7% bright spot digital sales up 4%. i talked to the ceo. he told me the first three weeks of this quarter we are in now
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are tracking better than q1 that they just reported sales highlights for the quarter he said included simple truth, double-digit increases that's the organic brand they make themselves. he said they are doing very well on cost control. something wall street wanted to see. they saw headwinds in the pharmacy business. that was across the industry that weighed on margins. and for the first time they are putting a number around this alternative business, alternative profit stream, which includes media and personal finance, how they are leveraging consumer insights. they say it will add $100 million in operating profit in 2019 so that's news so far i asked him a little bit about the macro environment. no impact on consumer confidence from some of the tariff drama we have seen. he said, for instance, you are seeing some of our loyal shoppers buying more premium products right now like cheese and wine this is a company in transition. they call it restock kroger. i asked him where we are he is a baseball fan
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in terms of the turnaround, he said fourth or fifth inning. many more to go. and clearly, guys, wall street sees issues. sales overall has slowed competition in grocery has only grown. when you are going up against walmart and amazon in the grocery business, two powerhouses investing behind their digital strategy and investing behind lower prices, it's going to be tough that was apparent in the numbers today. many analysts who like the stock feel they weren't as bad as they could have been. >> fascinating times in a business where we know margins are razor thin to begin with. >> that's why they are focusing on alternative revenue streams and digital services because people aren't optimistic about the overall grocery business in general. eggs right now, you just can't control. and, yes, overall, razor thin margins, which is why the pickup, the click and collect, those kinds of programs are so important for some of these stocks. when we come back, possible rate cut coming.
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the federal reserve signals it's on the horizon we will talk about the ceo of cowan. plus, watching a wave of companies going public slack 30 to 34 stacey cunningham is with us the president donald trump just twteabt eed ouiran we have oil up 250 we are back in a minute. like... a business borrowing solution to help get a little more space with a lot less mom. or home insight, to search for a new house within your budget. because, they really need their space. pnc - make today the day. the flexible class schedules d me tremendously. allowed me to go to work full time, run my catering business and be a mom and parent. when i reached this accomplishment, it was like, it's here, it's happening, it's now. we at southern new hampshire university are the ones who succeed. we are the ones who break through.
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mno kidding.rd. but moving your internet and tv? that's easy. easy?! easy? easy. because now xfinity lets you transfer your service online in just about a minute with a few simple steps. really? really. that was easy. yup. plus, with two-hour appointment windows, it's all on your schedule. awesome. now all you have to do is move...that thing. [ sigh ] introducing an easier way to move with xfinity. it's just another way we're working to make your life simple, easy, awesome. go to xfinity.com/moving to get started. getting news out of apple this morning for that we turn to josh. >> that's right.
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so apple filing a statement with the ustr on these plans for more china tariffs. let me bring that to you apple saying that that would, in fact, hit apple's u.s. economy contribution it also, the iphone maker, is saying would weigh on apple's global competitiveness it would tilt the playing field in favor of our global competitors, apple saying we urge you not to proceed with these tariffs. of course, this is a big question for investors certainly a question that analysts raised. is apple really going to be able to ultimately secure an exclusion from the final round of tariffs on u.s. imports from china. remember last year tim cook made his case will they be able to do so again? guys, back to you. >> okay. josh, thank you. josh lipton. joining us here with his thoughts on, well this market, on the ipo market as well, an important component of the business that his company does, the ceo of cowan, jeff solomon
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we will talk about sub-billion dollars ipos today we are talking about a direct listing not raising any money, is slack, but listing its shares bob griefeld says this is something he believes we should see more of. do you agree >> as long as you don't have to raise capital. this is actually pretty small. if you have brand recognition like slack or spotify, that's probably an option for you and you don't need to raise money. the vast majority of companies in this country are unknown until they actually hit the public markets i actually think the underwriter function, which we don't talk about that much, is an important function let me ask you a question. what would happen if theranos had tried to do a direct listing? that would have been a problem there is a moment in time in which that could have been a possibility. so i think we have to focus on the fact that the function of an underwriter is actually to validate and to understand what the company says, make sure that the framework for disclosure is right, and then establish the price. but that important function of
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determining actually what the company says is in fact the case is a critical part of being an underwriter. >> would have been worse if theranos came to the public markets with well known underwriters, was a possibility if they were fudging the numbers. you never know. >> interestingly enough, a lot of people i know who were in and around that took a look and said, right? >> right the technology - >> well, the whole story didn't hold together under the scrutiny of underwriters. interesting, right >> you say that the ipo process is an opportunity for smaller companies to get known i feel like a lot of smaller companies come public and we don't know about them. how difficult is it for companies to gain traction once they are public, once they are brought by a cowan and company that is a sub billion dollars that perhaps doesn't rise to people's attention. >> there is a function we perform as a sell side bank a around research. research has changed on wall
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street since almost 1,100 companies have come public since the jobs act in 2012, 75 to 80% of sub-$1 billion companies. there are 46 in the united states today 25% of the companies listed and traded today have been a relatively new listing, less than seven years old that's remarkable when you think about the decade before that we were shrinking listings there are stories to be told we talk about this all the time. particularly when you look at the growth in investing, the audience for public investing has gotten smaller who is dialoguing about what these companies do, how they should be valued, when they do well, when they don't do well? that's an important that i think is critical to economic growth. >> we want to continue the conversation hang on. we are getting news out of the white house right now. let's go to eamon javers in washington. >> the president is offering his first reaction to the shoot down of an american drone by the
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iranians last night. the president issuing a one-sentence tweet saying iran made a very big mistake. that coming just in the past couple of minutes. at the same time we are getting information that there is scheduled to be a meeting at the white house to gauge response to the iranian shootdown. the president's tweet, iran made a very big mistake, begging the question of what the white house and what the administration is prepared to do about it, if anything, any kind of response at all i spoke to sarah huckabee sanders, the white house press secretary, a few minutes ago she said the president was briefed last night and has been briefed again this morning on what the u.s. military knows about that shootdown no indication at this point of what any potential u.s. response would be but the president, i don't think you could call this saber rattling, maybe just a twitter rattle, but a one-sentence statement on twitter in reaction. >> crude oil is jumping on this news wti up 5%. 5564 thank you. >> you bet. >> let's get back to jeff
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solomon, cowan and company's ceo. you were making an important point and i don't want it to be lost er in a market that is dictated to a large extent bypass i have strategies the pool of available capital for these companies that you are talking about, sub billion dollars ipos that we might not talk about that often, has shrunk how many managers are actually paying attention to these people >> more than enough. obviously, they wouldn't have gotten it done if you look at the amount of money in active management, there is never been more money in active management because of the valuation in the market, the market value of active management even though 50% of the market is passive, the other 50% has increased remarkably these folks have to find growth opportunities to pass their brethren i would say the ipo is one of the greatest ways to generate positive alpha you know who doesn't participate in new issue at all? passive money. so we've done literally hundreds of ipos at cowan
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i have never seen an index fund or etf at the initial offering so when the ipo engine works, and this is really critical, you have to make sure that these companies actually perform then you get incremental alpha for the active managers, and that's at the end of the day the secret to get thing companies public. >> we got a green light from powell yesterday on rate cuts. we have a vibrant ipo market where you have so many names, up more than 100% what does the pipeline look like are the floodgates open? >> i don't know about the floodgates we had six weeks of no activity because we had negative markets performance. >> and the shutdown. >> and the shutdown happened earlier this year, for sure. so i think a lot of the pipeline is clearing. i will tell you from what we see, there is a lot of companies behind it. so i am not seeing a slowdown in backlog at all from our perspective. i think there is a lot of companies teed up to access the public markets, and the demand is there from investors as long as those companies are priced
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correctly. i feel pretty bullish about it. >> would you argue the most recent once have been priced corre correctly? we keep talking about money being left on tables. >> i think there is a bifurcation between big tech and everybody else i am not going to comment on big tech we are not that involved in price setting on those deals the companies we bring have by and large continued to perform positively that's kind of what we're all about. so there is a very healthy element to the public markets for most sub billion dollars companies that help you to, the private market to not get away from you the private market valuations are inflated the public market investors sometimes sit on their hands until it gets to a value they can invest in. i think it's a healthy dynamic that goes on. >> some of these companies still choose to get acquired as opposed to go public >> they do. >> and there as lot of conversation around the unicorns that will go that route as opposed to actually taking a
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chance in the public markets. >> it's a matter of whether or not you actually have to have capital to execute on your business plan. and so we always say if you are going to do an ipo and you are going to access capital, that new capital has to be put to something that actually helps the company to grow. but if you have reached a level which you don't think you can grow much more, selling the company and to another competitor that maybe can take it to a different level or bigger consolidator is an option and so when we're talking to companies, oftentimes we are talking about dual path. should you think about an exhibit? should you use a public market to drive your value in an exhibit? these are important conversations. i always say the best advice is holistic advice. famous for giving you the advice that i like to say is best for them i like to sort of talk to companies about how you actually can think about the range of outcomes sale of the company. financing the company. growth of the company. then really let the shareholders and board or management duke it out on what you think the best
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path is for them. >> finally, jeff, a market is at a record high this morning what are you seeing in terms of client activity, levels of bullishness and positioning around this vibrant market >> there is a lot of capital sitting around people are very defensive coming into this rally. certainly again we had six negative weeks of performance in equity markets to the end of april to the beginning of june there was volatilely, people were getting their heads around the geopolitical situation, the tariffs situation. people are digesting that. we have clear views from the fed that we didn't have before around maintaining the expansion. those were key words yesterday from chairman powell, right? maintain the expansion that's new we haven't heard that from the fed before if you are looking for a signal it safe to come outside and redeploy and you are sitting on a ton of cash, now is the time. >> we don't havelarity on trade. >> we don't. but we have a massive stimulus you have to link the two
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we did not need a tax point at this point in the cycle. if you look at the tax cut as an injection of growth prior to doing something restrictive like tariffs and you link the two together, the strategy makes sense. we have more than enough room to actually saber rattle on tariffs because we have injected growth into the economy ahead of time we have the fed adjust to go that new reality maybe we could have a slow down as a result of trade the fed says we have room to cut to make sure that the expansion continues. >> okay. jeff, thank you. jeff solomon, ceo of cowan. >> thanks for having me. let's get to sue herera for an update. >> good morning. here's what's happening. more on the situation between the u.s. and iran. iran's regular season regular season says it did shoot down a u.s. drone over iranian airspace the u.s. disputed that saying the downing happened over international airspace in the straits of mohormuz
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it called it an unprovoked attack the white house saying that iran, according to the president's tweet, made a big mistake. chinese president xi arriving this morning in pyongyang for a two-day visit to north korea. xi and his wife were greeted by north korean leader kim jong un and his wife it is the first visit by a chinese leader in 14 years. an american man kept behind bars in russia on spying charges appealing to president trump for help paul way lend was arrested in a hotel room in december and charged with espionage he appeared in a moscow court for an appeal hearing. >> this absurd political kidnapping continues i am innocent of the one and only charge against me, a crime that never occurred. my life has been threatened. my rights denied mr. president, we cannot keep america great unless we aggressively protect and defend american citizens wherever they are in the world. you are up to date
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i'll send it back downtown togus >> thank you. time for our etf spotlight a look at energy with oil prices jumping now to the highest level in about three weeks extending gains further this morning after president trump did tweet iran made a very big mistake in shooting down a u.s. military drone the xle getting a boost, up 6% since the end of may that's the energy stocks etf, all of the groups topped holdings moving higher, including exxonmobil and chevron energy, guys the best performing group in the s&p 500, up more than 2% still an underperformer for the year only second to only to health care up 9% so far. when we return the president of the exchange, stacey cunningham, is going to be with us and as we await that direct listing from slack indications still 30 to 34 dow session high, up 257 right now we are up 183.
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we are waiting slack's first trade here at the new york stock exchange with the reference price set at $26 per share, giving it a value of $15.7 billion. joining us to discuss slack and the overall ipo environment new york stock exchange president stacey cunningham. good morning. >> thank you it's an exciting morning. >> it's a little bit different than what we're used to. take us through the steps as we await this opening trade. >> i think the biggest trade, that price discovery is happening here on the trading floor unlike with an ipo where there are shares issued the night before that really creates a price that investors are use to go determine that the value of a company, that's happening right now. so that's what that crowd is doing over there, trying to figure out where supply neets demand and have stability in that opening price. >> they don't know how much is going to be sold, which is different than a typical ipo
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i talked to, what are they called rangers? not underwriters they don't know -- >> that's right. a direct listing doesn't work for everybody. one of the important things you have to have is a distributed shareholder base you want enough people that can sell into trading this morning that you have natural liquidity. dps that have very few shareholders are aren't candidates. >> we talked to bob gry feld, ex-ceo of nasdaq i mean, they are strongly opinionated this is the way to go direct listing versus traditional ipo. do you think one is better than the other? >> there are advantages to a direct listing if it fits your profile. like i said, you have to have shareholders you need liquidity day one if your company doesn't have that, you are probably not the right candidate. if you think about the reasons why companies go public, access to capital having branding and visibility of a public offering to attract customers and investors. then also to have a liquidity so
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their employees or early investors have money and can actually use their shares. fourth is the currency level having a currency so you can engage in m&a. so for that access to capital, if you don't need money right now, you can consider a direct listing as long as you have shareholders to provide liquidity. you can raise money down the road and have a better experience there because you are not leaving money on the table through the more traditional ipo process. >> for the specialists here, how is it different? how is today different than it would be on an ipo day >> the process and the mechanics are the same what's different is there wasn't a trade last night that really informs investors of what the current valuation is so we set at the ex clang a reference price to be used by the industry today one for their technology systems that need a price in there, and two, to give investors a sense of what was private market trading like but that's over a period of time it's not like an offering traded last night
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theres no transaction that's based op it's very different from a, you know, just level-setting perspective. that's why you see that range. now, they have published a range of 30-34 as the first indication that the stock might open in they want to give investors time to consume that. >> that w's why it takes longer >> yes, because you are not coming in with shares traded last night at this specific price. they want people to have time to react. >> they don't have a lock-up here >> yeah, there is no lock-up here. >> if three days from now this price is high, you may see a bunch of venture capitalists say i wasn't going to, i'm checking out now. >> you run the risk for more volatility because there aren't any lockups. you don't have the selling pressure when a lock-up period expires later. >> if i am an investor at home looking to get into the next hot ipo, does it matter whether i buy into a direct listing or a traditional ipo? >> no, with the exception it
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could be more volatile, understand the market risks in general. they are no different. investors have access. a direct listing offers more transparent access to everybody at the same time that's one of the advantages. >> you think spotify opened people's eyes to some degree >> i do. i think spotify had a unique idea that accomplished what they were trying to achieve at that time they didn't need to raise money then and there it's important to recognize one of the benefits of being public is they have access to capital whenever they want and whenever they need it it's not just secondary offers, but bond offerings there are other things they can do. >> when new issues come to market, what percentage are going to be direct listings? >> i don't think it's going to become the norm. like i said, you have to have a broad shareholder base. >> 10% >> i think there are at least a handful that may follow suit. >> people mention airbnb, which i know you probably won't comment on. >> i am not going to comment on a specific company one of the things i am excited
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about when i look at slack today is now because they are public, other investors, the everyday investor can share in their success as a company i talked about the reasons why companies go public. i argue there should be a fifth one, they allow everyday investors to share in their success. when companies are private, especially until they are very large companies, we are leaving that out and i think it contributes to a wealth divide. >> some of the performances of the iposs is incredible. beyond meat for man 500% zoom, crowdstrike, pagerduty, they are up more than 100% this is healthy enthusiasm to you? >> yeah, investors are excited about having access to these companies and the plans they have for the future. so when there is a clear path to how they are going to be profitable or if they already are profitable and investors have that opportunity, they are excited about the adjustable market they still have left to go out and attack, they are excited. i think it makes sense. >> stacey cunningham, thank you very much. president of the new york stock exchange
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>> as we go to break, we are going to keep an eye on post five with the indication on slack is 30 to 34. watch oracle up almost 9% beats on the top and bottom lines, benefiting from strength in the on premise i.t. offerings. sentiment not good abogoinin at, but he they hit it out of the park don't go anywhere. the rhythm of the world. park don't go anywhere. it's the pac. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.
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stocks nearing records, but one sector has been left out in the cold find out why it could be ultimate cchp ayat-upl on "trading nation. nor "squawk on the street" coming u m "squawk on the street up o "squawk on the street" comin up re "squawk on the street" coming u
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♪ as your life grows, so do your needs. ♪ and with bank of america and merrill, the benefits you get can grow, too. as a preferred rewards member, you can enjoy priority service and exclusive discounts... so your growing life can be more rewarding, too. ♪ what would you like the power to do? ♪ . still awaiting slack's direct listing bob pisani is inside the post. you warned us to be patient? >> yeah, and the issue, of course, is that and joe mccain is here, the head of execution for citadel securities, the issue is there is no underwriting going on here
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you are building a book. you are trying to find buyers and sellers literally, not quite out of nothing, but that's what everybody is doing right now. >> that's right. since we last spoke we put an indication up. it's 30 to 34 is the indication that's out now we are trying to, over the next hourhour, hopefully narrow that down and figure out where we can pare more shares off. there's about 10 million shares that pare off at the higher end of that range. so we're looking for that to continue building and then we'll narrow the price range and if the demand pushes it up, we'll re-indicate it if the supply pushes it down, we'll re-indicate it >> and of course, a lot of these anxieties about spotify nefver materialized there was a lot of concern, we'll push all of these shares available, there's no lockup and things could go all over the place and go crazy that really didn't happen with spotify. the reference price on spotify is 132, it opened at 165, and closed at 149. 12 or 13%. so it's fairly orderly but still, we don't know how much is actually going to be for sale today we just don't know
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>> there was a certain amount of shares registered and converted that are eligible to sell, but one of the things with a direct listing is there's no restriction on people being able to sell those shares, there's no requirement for people to sell those shares so it's really at people's discretion in terms of what they want to do >> right now it looks like it's going to open above the reference price. kbrou you were involved in a number of ipos this year, the chewy one recently, another one above. is it amazing that we have so many ipos and the demand is so high it's remarkable how many are pricing at or above the range. and the early thinking in february was, there's too much coming on the market, they're going to have to drop the prices maybe they drop the prices, but the demand has been there. >> it's a good vote of confidence for company's business models, companies like slack who have proven themselves with investors investor demand continues to be strong and obviously that's why you continue to see these kind of companies continue to come to market >> spotify didn't come until
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12:45. we now have a process that's a little more experienced. will it happen before 12:45? >> i would say that's probably the outer band hopefully a little earlier, but i wouldn't be surprised if it takes us that long to get there. but we're trying to move it along as quickly as possible >> we've heard this hedging before from him. sarah, we'll be here all afternoon. back to you. >> bob, anthk. dow is up 205 points "squawk on the street" will be right back don't go anywhere. johnson & johnson is a baby company.
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but we're also a cancer fighting, hiv controlling, joint replacing, and depression relieving company. from the day you're born we never stop taking care of you.
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welcome back to "squawk on the street." i'm dominic chu. stocks moving higher on the heels of that fed interest rate decision yesterday all the sectors moving at least positively utilities lagging a bit right now, but the s&p right near the highs of the session technology helping to lead the way higher, the second best-performing sector out there in trading today one key industry group within technology to watch, software. oracle shares, microsoft, adobe, and cadence systems, cadence design all at historic highs in trading today. oracle driven by earnings. keep an eye on all of those software stocks. real movers in today's trade now i will, guys, send it back downtown to you guys at the new york stock exchange. >> sounded reluctant to do that, dom. >> i always want to do that. >> dom chu back at hq.
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all right, we've got sarah here now. she'll be leaving soon, but she's back, 3:00 don't miss it. a lot of stocks to watch >> most important hour of the trading day. >> most important. but currencies, the ten-year, below 2% >> it's some wild action we're seeing and we'll be all over it. the record rally, does it hold into the final hour of trade plus, we'll be speaking with house financial services chair maxine waters for her call on a call of facebook's cryptocurrency libra why she's asking facebook to pause that development until congress has a chance to hear more she's already fiery, guys. and i'm sure we'll be talking about a lot of other issues related to house financial services how about powell and whether the president has the authority to fire him >> do you think maxine waters would -- no? >> i think she'd have an opinion. >> she would >> don't tell me how to run this committee. isn't that her famous quote to mnuchin? >> would you gravel this >> he came back, though. i wonder if they're on better terms. >> yes we'll see you this afternoon speaking of facebook, as we said, maxine waters not the only one calling for strict overnight
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of the enough cryptocurrency sherrod brown will join us next on "squawk alley," so don't go away xcellent. they really appreciate the military family and it really shows. with all that usaa offers why go with anybody else? we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. it was funny because when we would call another insurance company, hey would say "oh we can't beat usaa" we're the webber family. we're the tenney's we're the hayles, and we're usaa members for life. ♪ get your usaa auto insurance quote today.
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♪ good thursday morning. welcome to "squawk alley." i'm carl quintanilla what a pleasure to have kayla tausche back at post nine this morning. >> someone spent way too long on that animation >> morgan and john have the morning off. obviously, a big day following that fed meeting yesterday we're going to watch slack here as well, set to make its debut at the nyse. our bob pisani is inside post five with all the latest good morning, bob. >> we have a new range here, 33 to 36. joe mccain, head of execution at citadel securities are we

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