mike mayo, thank you again for being here big day for the dow. up 281 that does it for us. "power lunch" starts now >>> i'm sarah eisen. well, that didn't last long, the pan over italy's political and debt crisis subsiding. was the fear overblown the trillion dollar race, microsoft hitting a new all-time high that stock up 15% this year, overtaking alphabet in terms of market cap for the first time in three years. what is fuelling the forgotten name. >>> and president trump weighing in on the controversial debate over experimental drugs. also tweeting about roseanne getting the ax for the first time, firing back at disney ceo bob iger all the details straight ahead "power lunch" starts now >>> welcome back to punch. >> i'm melissa lee your money making a comeback from yesterday's big losses. the dow and s&p 500 up for the first time in four days. all three major afternoons on track for their best monthly gain since january take a check on small cap stocks this rallying. russel 2000 hitting a new intraday high. banks boci back. all up about 1% right now. oil rebounding from

mike mayo, thank you again for being here big day for the dow. up 281 that does it for us. "power lunch" starts now >>> i'm sarah eisen. well, that didn't last long, the pan over italy's political and debt crisis subsiding. was the fear overblown the trillion dollar race, microsoft hitting a new all-time high that stock up 15% this year, overtaking alphabet in terms of market cap for the first time in three years. what is fuelling the forgotten name. >>> and president trump weighing in on the controversial debate over experimental drugs. also tweeting about roseanne getting the ax for the first time, firing back at disney ceo bob iger all the details straight ahead "power lunch" starts

mike mayo, thank you very much. >> by the way actually we're just getting this headline. the uk government is set to put the sale of rbs lloyd stakes on hold. this according to roeuters. that's the headline right now. mike, what's your reaction? does that change anything at all? >> my reaction to that is the relative strength of the u.s. banks versus the european banks is even stronger. that's something to look out for over the next several years. >> we're not going to let you go just yet. a lot of raw nerves, mike, in britain following that brexit vote. we caught this exchange on the banks -- these are not the same banks, the banks of the river tem -- [ bleep ]. >> hey, come on. [ bleep ]. >> tinfoil on your head. tinfoil on your head. [ bleep ]. >> just say on the forms -- >> it doesn't say it on the voting forms. it says it in the polls. it says it on the polls. >> great for england, america out next -- >> america out next what? america's not in the european union. [ bleep ] disgusting man. >> he's gone. >> i didn't really understand much of what they said. they were s

mike mayo will join us in the next hour. he opposes the dual role. >> apple wants to begin the service next year and has held preliminary talks with hollywood executives. it would put apple in competition with other streaming services such as netflix and amazon. in other news, the company is teaming up to improve the performance of its iphone and ipad devices on the corporate network. tim cook is making the announcement. >> we want to transform the way people work and we know that we can't do that alone. we can't do that alone. if you think about what's key in the enterprise space, the device is very important, the apps are very important. the network is very important but in reality none of those -- each of those can be great by itself or each can be great in total but it's do they work together seem lesliamlessly and what this is about. i couldn't be more excited about it. i really believe this is going to have a profound effect on the way people work. >> apple is expanding it's foothold in the enterprise. it was loaded wi

the stock slipping after analyst mike mayo warned about possible consequences of a yes vote that would combine the chairman and ceo roles for brian moynihan. such a vote would be what he calls a reputational risk for the industry especially at a time bank of america already has poor oversight practices. mayo will make the case tomorrow morning at 7:30 a.m. eastern time. it will be interesting to see the contrast between what he is saying, what the bank is saying was just simply something that they thought was the right thing to do. in retrospect they have decided to give this vote to shareholders. we'll see, carl, what he has to say. >> when mayo wants to be heard, he generally gets heard. 7 1/2 minutes to the european close. >> it is negative as the session has been here so far today. one of the big themes is the verbal intervention and talk about the possibility of extending qe or increasing the pace today. by the way, closed today for the public holiday. today we got inflation figures for the eurozone up 0.2% at the headline level and the main reason for that is because energy price

mike mayo of clsa sounding off on banc of america. in a new note, bac he noted should separate the chairman and ceo roles. mayo says a yuck vote coming in late september would consolidate board power but increase the industry's reptational rafk taking the poor oversight and making it worse in a hurried vote and at a time of increased political sensitivities, in short, it could have the effect of putting a larger regulatory target on the industry's back. we are now seeing some thoughts for shareholders and analysts coming out ahead of this vote, which takes place in late september as i mentioned, for some background on this, in october, 2014, b of a amended the bylaws to lallow the shareholders to put this to a vote. it has become a very vocal issue. the labor group put out a note saying that it viewed this consolidation of power as a shocking sign of lack of self awareness on behalf of b of a. so we could see moves proxy advisory firms, show, more shareholders coming out with their views. >> didn't they separate it? and put it back to

let's bring in mike mayo with clsa. mike, you look at lot of the names, they're soaring, the small and mid cap ones. everyone's rushing to that side of the boat as the rates are expected to rise. is it a bad move or a smart one? >> i think it's a smart move to own bank stocks. as simple as abc and the a is for asset quality, which remains very strong the b is for balance sheets which is stronger than they've been in a couple of decades. and the c is for consistency. banks are to have much more consistency, and their earnings results. but i will add to the a, b, c, the letter "v" for volatility. there will be volatility ahead, especially with earnings greece capital markets and regulations. it's not a straight move higher but we do think there is a structural change that's being underappreciated by the markets. and we'd be buyers of citigroup and morgan stanley into their post crisis highs. >> citigroup and morgan stanley are your favorite picks, mike. are these banks, and you talked about the "b," the balance sheets and

i like mike mayo's acronym acb. mine is levi la liquidity, earnings, valuation, interest rates, and sentiment. what is driving china at the moment is liquidity, interest rates and sentiment. liquidity is coming from a boom in margin financing coming from a huge domestic pool of savings looking for a home. interest rates are falling. and sentiment is sky high. it's feeding on itself. it's being egged on by the chinese government. and i would say in the short run, as well, sentiment is getting a huge boom within china from the talk about the inclusion of chinese shares in the msci index potentially next week. what clihina doesn't have is the earnings and valuation. as i said before earnings are simply not coming through for the listed companies which is why we're look at a stock market which in many cases trading many times earnings. the market is discounting earnings recovery that i simply don't see there. so this is a very difficult time to be a fundamental investor in china. >> are you just closing your eyes and bu

. >> if mike mayo finds out about this. he's already on the war path. >> this is where they make bets and the public and, you know elizabeth warren mantra. >>> check out shares of container store after earnings in revenue missed the mark. retailers blaming the stronger dollar and lower customer traffic exacerbated by winter storms during a key annual sale. >>> when we return a west coast wakeup call with jim cramer at the new york stock exchange. he's still out there in that beautiful, join us from our san francisco bureau. a look at futures. sometimes the present looked bright. sometimes romantic. there were tears in my eyes. and tears in my eyes. and so many little things that we learned were really the biggest things. through it all, we saved and had a retirement plan. and someone who listened and helped us along the way. because we always knew that someday the future would be the present. every someday needs a plan. talk with us about your retirement today. >>> it's a busy morning in the auto sector. ford and honda both

top analyst mike mayo on earnings and whether the sector is about to surge. we begin with a loo a

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bank analyst mike mayo talks morgan stanley, bank of america and which banks are best positioned for low interest rates and a bear case for stocks, the manager of the active bear etf. we're going to debate top short picks. that and much more. noon eastern in about 15, 20 minutes, kayla see you then. >>> back at the markets now near session highs. up currently 278. the nasdaq sharply into the green as well. and we're seeing just a broad based rallycross the boa across. driven by housing and better than expected consumer sentiment earlier this morning. >> tech stocks up more than 3% this morning. workday, adobe, palo alto networks. even king candy crush a nice literally. >> i feel like your home page is king. i know you watch them closely. meanwhile here's rick santelli, where he is focused on the good part of the market. a lot to work with today, rick. >> i'm not necessarily thinking about the bottoms in stocks. being on a trading floor whether stocks go up or stocks go down it isn't really one is good or one's bad. it depends on the position that makes it good or bad. i know the publ

mike mayo of clsa has lowered his rating on goldman to buy from outperform saying even if his estimates and target price aren't enough to justify the upside needed for a boy rating, down about 1.7%. sue, back to you. >> david, would you get against goldman sachs at this point? >> i wouldn't. >> i think they like the financial sector in the united states and don't see the valuations of banks being particularly expensive, and we think they will have the opportunity to raise dividends and do increased buybacks over time. >> david, things a million. good to see you again. see you again next month. >> you bet. >> michelle, down to you. >> almost five years on from the financial crisis, be a the culture of greed on wall street still persists. i'm ed shock. alarming new data you need to see. plus, mexican police capturing an alleged major drug lord. what it means for america's war on drugs? former u.s. drug czar barry mccaffrey joins us next. at a dry cleaner, we replaced people with a machine. what? customers didn't like it. so why do banks do it? hello? hello?! if your bank doesn't let you t

. >> sounds like mike mayo is having a bit of a field day with that one, too. mary, thanks. >> i'm sure he is. >> mary thompson. let's get to josh lipton for a market flash. >> check out the health care providers this morning. tga n-- hga forecasting better than expected earnings. >>> tenet health care, community health, and lifepoint hospitals also higher. >> some of the biggest names in business speaking exclusively at cnbc's delivering alpha conference tomorrow. we'll hear from pete bharara, jack lew, and more. paulson, the hedge fund billionaire is getting bullish on a new sector. we'll tell you which one after the break. we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. >> some of the

pass the mayo. mike mayo gets bullish on morgan stanley. and after the bell tonight,

mayo. mary? >> hi there, david. the meeting just completed and just to give our viewers an idea of what happened, all of the directors were re-elected and the proposals put forth by the company were passed, as well. during the meeting mr. gorman did take questions. he promised to get it to 10% by 2014 and he also talked about the fixed income commodities and currencies business which has struggled lately calling it a work in progress and one that is undergoing what he classified as a long-term turnaround. >> as you mentioned, david, i'm joined by mike mayo. thanks for joining us. you had the chance to add the lead director bob kidder about how they were approaching return on equity. did you hear what you wanted to hear from him? >> first, i was very encouraged and this was the first annual meeting that i know of among the banks where you had not only the chairman and ceo talk, but you also had the lead director bob kidder speak and the head of the governance and management committee erskine

we'll ask mike mayo in just a moment. for many, nexium helps relieve heartburn symptoms caused by acid reflux disease. osteoposis-related bone fractur and w magnesium levels have bn seenith nexium. possible side effects include headache, diarrhea, and abdominal pain. other serious stomach conditions may still exist. talk to your doctor about nexium. >>> financials are among the leading sectors on the s&p. mike mayor is a bank analyst for clsa and an affiliate of agricoal and just named most powerful people in finance and the only analyst to have made it on that list. good to have you on post 9. >> thanks. >> sounds like a large part of your argument is it's been long enough to have these laws not tied down, and not pinned down and not written, write? that's the problem. >> i say no more excuses. let's get on with it. it's been two years for dodd-frank and if you're regulators and let's get the laws written and eliminate some of the uncertainy and if you're the banks no more excuses also. at some point you have to play the

mike mayo, bank analyst. he's also the author of "exile on wall street." our friend rob cox, the america's editor at reuters breaking views. michael, what do you make of the breathtaking events over the last 24 hours? >> i think the ceo transition is ludicrous. to have the ceo and c.o.o. step down at the same time with zero transition and to have this change one day after they report earnings. just yesterday i was asking vikram pandit questions. we were all asking him questions about the long-term strategy. one day later, he's out the door. something's not right. i think this poor transition of the ceo is a microcosm of the poor corporate governance at citigroup under the vikram pandit reign. >> mike, i want to ask you what you think is going on here, but let me get anton in first. you're a shareholder of citi? >> i am, indeed. >> what's your next move? how do you see it? >> i'm going continue to hold. i think michael o'neil has a long history of creating valued companies he's been with. i think the transition here is important. michael corbat is very well

. >> i think of mike mayo or something and how he set out -- he was closed out of citigroup meetings. at least he gets push back from certain banking institutions that he would write negatively about. so he can be great, but probably wouldn't be in the top three. >> well, he can still do well. he wouldn't necessarily do well in terms of providing corporate access. corporate access is just one of many things that investors are looking for from their analysts. >> i guess investors aren't necessarily taking the, i don't know, the -- >> they're make their own decisions. >> in their systems like one, two, three, i remember there were like four things that they would measure near term, long term, whether it outperforms the segment, how safe the dividend was, all that. you don't look back to see if they're dead wrong on everything. >> no, for what we do, we're in the doing that at all, we're not analyzing the quality of the stock opinions. >> so it means nothing? >> it does mean something. it means analysts, their industry knowledge, their expert tease, the relationship they have with compan

the ceo of jersey mike's is here to talk jobs and expansion. hold the mayo or at least make it low fat as the second hour of "squawk box" starts right now. >> good morning. welcome to "squawk box" here on cnbc. i'm andrew ross sorkin along with joe kernen. becky's on vacation. >> i don't know the name of that band. >> japan roid. >> you're like so much coomer than you look when it comes to music. >> i'm what? cooler than i look? >> when if comes to music. if i saw you on the street, i would not think that you knew all these -- go ahead and read. you've hurt me. so i'm old is that what you're saying? >> just read the futures, sorkin. >> i love you. i just want you to know. >> i've got a walkman on my walker. >> take a look at the futures this morning. we should get a squawker moment as we're doing this. the dow looks like it would open down about 27 points, the s&p would be off, as would the nasdaq. on the headlines this morning, a dispute between new york state and federal regulators over money laundering. officials are upset with the state's d

mike emanuel, thank you. jenna: fox business alert on a hot issue concerning china. a lot is made of china owning debt in our country, but now there's a big debate over whether china mayo thousands of american investors trillions of dollars. joining us now, fox business network's peter barnes. peter, you're not one of those investors, are you? >> reporter: no, i'm not, jenna, but i've been digging deep into this very interesting story. china issued government bonds before world war ii, but it defaulted on them after japan invaded china in 1937. now with america's debt to china topping a trillion dollars, a group of american investors is demanding china pay up claiming its holdings are worth billions today, maybe even trillions too. >> come to the table. negotiate an amicable resolve of this issue. pay your bills, pay your debts just as we, the american people and the u.s. government, pay ours. >> reporter: it's a very complex legal and foreign policy controversy that's been dragging on for decades. when china issued the bonds, it said they'd be honored by successor g

still to come, mike mayo. we'll talk to him in a few moms. and in the next half hour, a former >>> jamie dimon set to testify today on his firm's $2 billion plus trading lost. it will take place at 10:00 a.m. eastern time on capitol hill. our guest host is make mayo, banking analyst and author of "exile wall street." my question is every bad business model or every bad risk taken by a company bank or otherwise, is that congress's problem? >> well, to put this in con tech, $2 billion lost is not a big number at jpmorgan when you have $2 trillion in assets. if you want to talk about proprietary risk in the banking industry, you know what that number is? $13 trillion. >> congress could get really busy if they started monitoring all 13 trillion of every move that a bank makes, right? >> and you know how much money jpmorgan has lost over the last three years per each quarter, $5 billion. you know how they lost that? the old fashioned way by making loans. $2 billion or $5 billion, that's not significant to me. what is significant two others more th

among our special guests, mike mayo will be with us. sally krawcheck and richard shelby that will be an interesting program. >>> in other corporate news, general motors is holding its annual meeting. the company's ceo says gm only succeeded in changing its culture 20%, 25% from before the bankruptcy. dan ackerson will tell phil l libeau more about that at 8:30. >>> and berkshire hathaway offering to buy rescap's mortgage unit and a portfolio of loans put up for auction. >>> a few stocks question watch, texas instruments is narrowing its forecast for second quarter earnin earnings. demand for chips held up despite global economic uncertainties. >>> vehicle navigation systemsmaker tomtom striking a deal to license its maps to apple. the company looking to tap into demand for cheap or free navigation software for smartphones and tablets. shares in the dutch firm rising sharply in early morning trading. >> can i talk about that story? >> the apple story or the tomtom? >> i don't know if you saw all the mapping guys got killed yesterday in t

. >> do they know there's a guy by the name of mike mayo? >> i wonder. >> he has lost his mind, bloomberg. the soda thing is -- >> i saw his comments yesterday. the point me that was a good one is people thought he was crazy when he was leading the way on cigarettes. and the ban on smoking. which now there's no way people would touch that. >> god help us. i liked some of the commentary from the right of center pundits that when you know you're going to pay for everything eventually, then this is when you'll start doing all this and the idea that you eventually have to eat broccoli, that's what scalia said about the mandate, that that's not that far off. >> even democrats aren't getting behind bloomberg on this. they're saying -- >> it's crazy. but before i did the big slurpee, the big gulp, you would not be allowed to smoke anywhere in manhattan. wouldn't you just outlaw cigarettes before you outlawed a large size drink? >> it still seems like a strange way to do it. why not just tax it and at that time tax money and put it back in. >> and i

it's our wellness for life program, with online access to mayo clinic. see the difference at avivausa.com. i've been crisscrossing the gulf i can tell you, down here,. people measure commitment by what's getting done. i'm mike utsler, and it's my job to make sure we keep making progress in the gulf. the twenty billion dollars bp committed has helped fund economic and environmental recovery. another fourteen billion dollars has been spent on response and cleanup. long-term, bp's made a five hundred million dollar commitment to the gulf of mexico research initiative... to support ten years of independent scientific research on the environment. results will continue to be shared with the public. and we're making sure people know that the gulf is open for business - the beaches are beautiful, the seafood is delicious. last year, many areas even reported record tourism seasons. the progress continues, but that doesn't mean our job is done. bp's still here, and we're still committed to seeing this through. >> alisyn: five of the nation's largest banks paying o

mike mayo, what would you tell jamie dimon to say here? he won't exactly be among friends. >> or not say. >> well, i would say that the issue here is a crack in the business model. i mean, if you have this crack, what other cracks are there? the whole premise behind these big banks, behind the financial conglomerate model is you have a strong infrastructure that centralized and integrated. in the case of what just happened, that's not the case so fully at jpmorgan. the regulators probably missed this too. i can't imagine that this loss was any stress test done by the fed. >> well, you know, he needs to, perhaps as you did put things in perspective. the size of the loss relative to the size of their balance sheet, and let's face it, it's not illegal to lose money. when you place bets such as they did with these. head banks do it all the time and they lose money all the time. just not to the size they do here. bob pisani? >> a very good point. he has to hoe a very fine line. he has to look contrite. he has been doing a good job of doing that

listen to a question from mike mayo last night. >> would this be a jp morgan specific issue? >> i don't know. just because we're stupid doesn't mean everybody else was. i have no other what other people are doing. >> dimon's assembled people, one he called an agregous mistake. on last night's call, dimon would pity single out one person. but losses were purely excootsed and badly monitored trades. jp morgan says a trader nicknamed the whale for his outsider trades and his boss, ina drew who runs the chief investment office are still with the firm. or does the company's chief financial officer, doug bronstein bare some blame. >> we're very confidentble with our exposures and feel very good about the operations of that business. >> comfortable, maybe. but people close to the back in lieu of losses on the trade. now this morning, foe cussing on the analysts and how it might impact overall profits as the bank overhauls its risk management structure. but the bank increases rivals. big bank crithices who say the firm should be paired back or shut down, likely to become more vocal i

an exclusive interview with mike mayo. good to see you. >> how you doing. >> you can't real the whole report but give us some quick reasons you why downgraded j.p. morgan, which nearly every analyst that comes on says it is best in class. if there is one safe place, it is j.p. morgan. you are doubling, two notches, from outperform to underperform. why? >> count me as one of those analysts. i was one of those last year that said buy j.p. morgan. but i'm negative on the banking industry. i think the first quarter is as good as it gets. economic growth is decelerating. i just think they are more expensive than some other banks out there. >> sounds like that is true of the entire banking sector, not just j.p. morgan. >> to some degree it is true about the entire banking sector but it is also especially true about j.p. morgan. market activity not as strong as the first quarter. you have the mortgage business that's not likely to hold on for too many more quarters the way it was in the first quarter and you had this halo effect

also, addressing mike mayo's call, a note that was out the other day about breaking up the bank to unlock value, he said he doesn't think breaking it up at this point wouldn't make it more valuable. lastly, when addressing the stock price, he said he doesn't mind where it is right now, in large part because again, he wants to buy back some of the stock. >> we'll be watching that. mary thompson, thank you very much. mary thompson at jpmorgan today. gold prices climbing to three-month highs as the euro and the stock market gained ground today. stoked by an upcoming european bank move to offer cheap money to companies starved of investment capital. we'll likely see the ltro program announced tomorrow. gold prices settling up at $1,787 an ounce. still talking about $106 a barrel oil. experts say it could lead to demand instruction which led some investors to take money off the table. get ready for another round of ipad mania. ipad expected to unveil the next generation in san francisco next week. word on the streets, the new ipad will have a quad core processor. wall street certainly welcomed

mike mayo joins us from clsa's annual asia/usa event in san francisco. and importantly so i understand you had dinner with mr. volcker last night. >> well, on that, the clsa conference here in san francisco we have 1,000 people, 100 companies, and we have paul volcker speaking in a couple hours to the audience here but i did have dinner with paul volcker last night. one point was clear from paul volcker and his view is that the volcker rule is anything but dead and he feels it's gaining momentum. >> really. that's not necessarily the implication that you get from the politicians. what's your analysis, mike, of what next ceos should prepare themselves for in practice? >> well, paul volcker's view last night when i talked with him was that the proposal or the idea behind it is gaining momentum, perhaps in switzerland, france, or parts of europe. if that momentum gains additional traction then that could have a spillover effect to the u.s. my view is that regulation is the new brick. and bankruptcy, something needs to be done to allow the big firms to fail.

mike mayo of calyon securities, well-known analyst. also auto nation's mike jackson, our guest host, takes us to the car lot for a unique sell on the u.s. economy. what he thinks the best and worst cars are -- were of the decade. and also the trader' edge as well. first beck's got the headlines. >>> we've been keeping an eye on the futures and they have picked up. right now you're talking about futures up by about 30 points above fair value when you're watching the dow futures. >>> meantime, google is threatening to pull out of the chinese market in a dispute over censorship. google says that it's considering shutting down its chinese language site because of cyber attacks on dissidents by way of its gmail service. now, we heard from an analyst this morning that this is really more about protecting the company's source code which is getting ripped off there, too. google shares down by close to 2%. bidu up better by $60. >>> also thousands are feared dead in haiti in the worst quake there in more than 200 years. the tremors being felt i

one more report which is mike mayo, a well-regarded analyst, he's got a $3 share price target on citi. not quite -- >> $3.18 now. >> they're low on the street. he took off the buy at $48. he says this is one more mishap for citi in a decade of underperformance. he says there is blame to be shared by management and regulators. >> you forgot the other finger-pointer, citi blaming treasury and also blaming wells fath fargo. >> i asked citi about it. they go, hey, wasn't two days too much? is two days too much? remember, we were here monday morning, which seems like a week ago. i don't know about you, but it was monday morning citi annou e announced this deal with treasury. citi by the way point the finger back at treasury on that and says, they could have approved our deal a week earlier. so that's also part of the finger-pointing going on. >> well, it's $3.18 to $3.19. i think we theed to cut them a break. hopefully it stays above the $3.15. i mean be raise the money -- i mean, i think it gives confidence to the financial markets if a bank like citigroup, which a year ago was called dea