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tv   Squawk on the Street  CNBC  July 1, 2013 9:00am-12:01pm EDT

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gallies. 20% growth. eav, absolutely. how about priceline? priceline is the floebl leader in on-line travel. they've been posting 20% plus growth in a pretty lousy global economic environment. rising consumer confidence. go priceline. >> howard, thank you. steve liesman, thank you. we'll see you back here tomorrow. right now it's time for "squawk on the street." >> welcome to stock on the street and the sejd half of 2013. at the new york stock exchange. dow does start the morning with some green after the best first half since 1999. oklahoma was 14% so far. that ten-year yield has become our touch stone, of course, and the two and a half line sitting just above that this morning. europe has some buyers after the pmi's over there rose in spain
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and in france, although china's was down. a big week for data here in the states. got our jobs number coming up friday in this holiday shortened week. our rollback again with the first day of the second half of the year. u.s. looking to open up ahead of the up side. optimism in europe. japan tempered by some signs of slowing in china. >> surprising optimism. a whirl wind of upgrades for pandora, nokia, best buy, and apple. could there be more going on here than meets the eye? >> and onyx pharmaceuticals rejecting a $10 billion a share -- >> a lot of arguments about who leaked it, but more importantly, it is for sale. >> yes. we'll start with the markets. the stocks set to start the second half of the year in the green as data from japan trumps some concerns out of china. nikkei hit a one month high after data showed the corporate sentiment there turning positive for the first time in two years. however, data from china shows that industrial activity
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continues to decline amid concerns over weaker demand. really today is a real hodge podge. >> yes. >> there are goods and bads. >> you know, sometimes you have to say when the worst start coming back -- and i'm referring europe here to start -- you should get a little more positive, so, for instance, spanish pmi rose from 48.1% to 50%. italian manufacturing pmi rose from 47.3% to 49.1%. these were horrendous economies. i think that plus the report in japan, we typically don't like to start with jurp or japan, but they're giving it a little lift, and there was a nice lift all morning, and it seems to be holding. >> yeah. >> china, as we said, slowing a bit. south korean exports weren't all that hot. if europe is doing better, does asia matter less? >> i think if europe does better, then china starts doing better. i know that china sent a lot of goods to europe. china has been trying to stimulate its internal economy.
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that's been very important. it was nice to see, by the way, nike snap back. on friday people were saying that china is everything. we need to see china deemphasized as a force in our thinking because it's not making us any money. >> it's not making us money, but it's the second largest economy in the world. they're still growing far faster than our own. therefore, it is going to be larger and larger as a percentage. we're still six times bigger in the u.s. just to put that in perspective. it's still important. we still watch its markets now in more ways. it comes to ownership of our bonds, it's extremely important. >> right. let's say europe makes a little snapback here. i think that trumps worries about china given the notion that china is the cart and europe is the horse. i feel more sang win when i see italy and spain coming back. were where we were two years ago with these countries? i mean, we really felt these countries couldn't refinance. the bonds were terrible. new guy in england, let's not forget this new guy in england. he is a fresh face.
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they kind of -- it's a tenure that roughly on the same. he is talking about maybe doing more stimulus. i like this guy. we have to watch him. he is canadian. he kind of feels like the star of the 39 steps to me. i got to meet him. when we were palling around at the white house correspondents dinner. there's brad cooper, all right? he is the guy who wanted to talk to me. then there was carney that sought me out. actually, i sought brad cooper out. carney was -- you know, he is a bright light. he is very north american. you know shlgs he is not stuffy at all. he is from a banking background. look for that man to make a difference. >> we mentioned the first day of the second half of the year, and along with that, jim, some interesting upgrades today. pandora, for instance, getting bumped overweight over at morgan stanley. nokia over at jp morgan. best buy at credit suisse says the stock is their best near term idea, and apple over at raymond james. the question is what's going on with the sell side? why start the second half with
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all these controversial names? >> you're so right. i mean, best buy and credit suisse, that's a reinitiation. this stock has been unstoppable the whole year. it's been one of the best performers. pandora was supposed to be killed by apple. well, it looks like that has nine lives. apple, you can make a judgment that it's finally come down enough that you might want to upgrade it. all these seem to be reactive to stock prices, and i got to tell you, i look at that best buy, and i have decided if you have been following game stop, you start realizing that we decide that certain companies are going to make it. >> yeah. >> and that -- >> part of the argument is that people feel they've missed the run on best buy, and the note argues there will be other management changes that have led to 10x games. ulta, pier one, home depot. is that dangerous? >> alex smith comes into pier one. the stock is trading at pennies. he has reinvented the company and now he is redoing the website. we like to make a joke about ulta and tractor supply because in the old days when i would come home, david, probably in
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the 1970s, when was that -- >> 1975, 1976. >> 1870s? >> the rails were just getting started. >> yeah. >> now it's jp morgan. >> we had great interviews with him, remember? >> yes, we did. he told the story like it was. we used to joke about yahoo and pfizer. ulta and tractor supply represent this super juice retail a lot of people want to always have. there's always growth guys. they're willing to overlook any change in management, any sort of structure. when i talk to herbal life -- herb of green mountain, i always do that, i am struck that he says ulta is going to get $150 and then to $10. yes, these reinvention names have been a place that are on fire. >> i would want to and i would think you might if you were running your hedge fund go the other way when you see a guy finally relent on this best buy. >> to be fair, he does say that
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this call -- that best buy is one of the macrodrivers as some of the other names. >> that would be a fair point to make, i think. >> all is frechb. nokia. >> i'll take the other side. >> we'll see. good. >> will it go to 40 or -- >> you're on the other side of that train, but that new mets picture this weekend. i think you're going to be 0 for 2. nokia, here's a -- sorry -- hold the buy jp morgan. they did this acquisition, siemens. the chatter is maybe nokia is doing better or maybe microsoft comes back. steve balmer and legacy feet to the fire from activist investors. >> reports that he would choose today to announce some changes which so far are nowhere on the horizon, but we'll see. >> see, i think the big changes, i remember when steve had hair, and had no glasses, his dad worked on the ford motor
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assembly line. absolutely nothing. >> except that you were with alan mulally on friday. i don't want people to think that he was with steve ballmer's father on friday. >> i was with steve. this is a legacy moment, and microsoft has done very well this period -- this first half. >> very well. >> remember -- >> what about nokia, though, however? >> i think nokia -- >> just never dies. it's the walking dead. >> they're buying back the siemens -- they're buying out of the joint venture. buying the rest of it, to make clear. siemens is being bought. >> it's a solution to walking dead. you know, i think you got to shoot nokia in the head. how is that? someone shot blackberry in the head, clearly. >> at least three downgrades today. >> that's very helpful. very, very helpful. >> they were on the call along with all of us. >> they lost world war z on that one. >> keen sense of the obvious. that's what's always helped me in my success. >> do you think of these calls aside people are going to look at the markets differently in
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the sort of now that halftime is over and we're getting into the crucial part of the game. >> i'm glad you raised that. my old hedge fund, i remember that when july comes in, that's when they suddenly start with the 2014 estimates. i ask you, david, has there ever been a 2014 estimate that was below 2013? >> no. i'm not sure that that's happened. >> opt for alcoa. >> close italian smelter this weekend. clinefeld there. not bridal registry. >> or corvettes to keep it in the k's. >> klaus kleinfeld will help us kick off earnings season in eight or nine days. >> that wise and canny former east german. >> what's he going to do about where things stand for commodities, particularly looming? >> i, unfortunately, am not in klaus's position. that's a tough one. remember, the chinese, they keep
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belching out aluminum. it's one of these commodities where it's just -- it's like water. i mean, it's like you -- it's like sea water. it's just too much of it, and they recycle the darn stuff. it never dies. again, we can allude to this walking dead repeatedly, but, unfortunately, it's on another network. >> maybe it will get us ratings too. you never know. maybe they'll do a show about our show talking about the 5.0. >> 5.0. really. >> hey, listen, i love the show. >> i know you do. >> i just think the show has shakespearean overtones. >> we keep talking about a business sense or stock sense, i don't know if that's good or bad. >> not quite clear. we talk about executive pay this morning, and i'm conscious that a lot of these companies that have just had these big runs, their ceos are getting overpaid, but to give you money. number one, larry ellison, that make sense to you? >> he is the founder.
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>> oh, i get it. >> that's right. oh, you're going to like what i -- what larry ellison is dressed in. i guarantee it. another guy who felt it was a private company. >> however, mr. ellison is still running the company. as whereas, the man who founded men's warehouse. >> he is the ceo. he has created value for himself and for shareholders. >> it's past tense now. >> he does pay himself a great deal. >> i think the viewers are outraged when they read that story in the "new york times" about how much people are making. they're not making that at home. >> no. overall executive comp i think 16%, whereas household income growth is nill, essentially. >> i draw a distinction between the likes of larry ellison, founded the company, created and took the ceo's job and had it for seven years and got the golden pair hut and didn't do much of anything, but managed to hang around. he was less talented than the guy, and the guy replace him will be less talented for him
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because god forbid you should ever be challenged. >> the passion of rich people that don't deserve it. >> speaking of which, we'll talk more about executive comp and who is deserve and who is not of some of these new pay packages. first, up, though, big news in the pharma world. breaking down onyx and amgen. take a look at futures as we kick off the third quarter. "squawk on the street" back in a minute. the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors
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>> today a conversation takes place between onyx and amgen. amgen two weeks earlier had sent a nonbinding proposal saying, hey, we would love to talk to you and love to think about buying you for about $120 a share. on friday the two ceos, i believe, and perhaps their advisors had a conversation, and onyx basically said thanks for your interest, $120, not enough, and then a couple of hours later the story ends up in the financial post in canada, and
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everybody is saying why did that happen? who leaked it? what really matters here is that onyx then decides to put itself up for sale, so to speak, saying based upon expressing of interest not just by amgen, but from other third parties and a recent proposal from amgen. it authorizes the financial advisor to contact potential acquirers. the stock is up well above $120. analysts weighing in saying it would be worth $140, $150. we'll see the key here is its drug for multiple myoloma, caprolis is the naem of it. it is just started. it's wholly owned, except in japan, where they have a sharing agreement. it is a growth story. many thinking it could become a $2 billion drug here's the story at this point. we have xwlet to hear from amgen, which has chosen not to
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comment at all, and onyx, again, with that press release that came out yesterday in response. a lot bigger than that, if, in fact, it gets sold. no shortage of potential suitor whz you ring a bell in this sector. kelly, there seem to be plenty of people willing to show up for what are rogue stories from the likes of onyx with this key drug that is just at the beginning of a long patent life and a long road in terms of sales. >> it feels like every time we've had a merger monday we've been talking about health care. that's one reason why we're looking at this sector as a catalyst for what's happening in the s&p 500 for the rally we've seen. it actually is driving out performance this cycle relative to past cycles. working with the guys over at cowan, just to put this in bruder context for people wondering about this performance, it is unusual. not that health care isn't doing well. it's performed quite well since
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1990, but it's making the biggest incremental contribution to the s&p 500 relative to the last cycle, and surprisingly enough, health care has actually done better for you than tech since 1990. it's returned about 668%. it's a couple of percentage points better than tech, and it's better than the 300 plus range for the index generally. moving on, again, kind of taking a look at what's happening here, biotech in particular, this is not only going to be a space to watch today because anyone with any kind of oncology exposure is going to be ripping, as one just put it to me, but also biotech driving gains -- again, illustrating what's happening here. we're seeing investors coming into this space. this latest rally is based not on -- which usually drives health care, but this sector is offering growth, and other sectors simply are not. parts of the sector still cheap. biotech more expensive. the point being if you are now getting a different class of peel coming into this market, if it's behaving differently, maybe it justifies and can even expand
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upon that moment. >> if you are a buyer and you are looking at onyx or something that's in oncology, which we know pharma loves to think about. you are looking at young and growing products, and you derisk it. you know that the product is already going to potentially be a success. >> numbers have been great here. amgen needs the growth. paul, you're involved in fighting this horrible disease. this is a much bigger market than people realize. >> oh, yeah. mmr, honor rather board member of the multiple myolomo research foundation. onyx has been a pioneer in that space, but as you were saying with joe earlier in the tease with "squawk" you need a more global player to get some presence around the world on these things. >> the bernstein analyst who put the $180 figure on this company, gave a 62 valuation for that drug alone. >> $62 a share. some say as much as $2.5 billion a year. >> that's why you look at $134
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where onyx is trading today. you can kind of understand it. there's a lot built into that expectation right now. >> they said no to $120. we'll see what comes from here. the point we've made many times is the multiple on these biotech companies is lower than their peers and good old-fashioned pharma. >> we've been recommending since this drug was discovered. actually before that. that was the kidney cancer drug. this company is teaming with growth. multiple shots on goal. always surprised it wasn't picked off before. >> as what heed into earnings seasons, there are industry sectors like health care that have some of the better growth prospects right now. >> see you in a few. >> thanks. >> thanks for coming by. sfwlirchlg a new quarter means new money-making chances. cramer will show us on his mad dash. that's the slowest since october. we'll see if it means anything for the ism coming up at the top of the hour. back in a minute.
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>> all right. six minutes before the opening bell. time for a mad dash on this monday. where are we headed? >> are you ready for this? today is also not just a new quarter, but the initiation of news corp. and 21st century fox. >> that's right. >> foxa. a little keener for growth. >> it's got growth. >> it's got growth. now, wells likes the news corp. news corp. is the publishing arm. remember, they did fund it well. this 21st century fox deutsche says by web bush, credit suisse, remember, they're also very excited about the fox sports network. >> starting up in august. not starting up, but they're really becoming nationwide, aren't they? >> yes. >> they see themselves as a viable competitor to espn. >> i think espn has so much momentum right now that they --
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this may not be as exciting as people think, but it's incredibly well run. these companies spew a lot of cash. i would never bet against murdock, and he has always been a sucker bet, and i have been sued by murdock, and i don't want to bet against him. i'll tell you that much. it worked out okay. i do believe very strongly that this is the one. i think this works. >> you think -- >> i think even though i think espn is going to be triumphant. you'll get a lot of money into this. >> as for no growth company, it is the publishing asset. it also has $2.6 billion in cash. if you recall, when we learned that, that was an important moment when we found out how much debt or actually how much cash was going to be put on the balance sheet on new news, if you will. what will it be used for? well, we can expect perhaps acquisitions. >> right. >> given the changes, you do want to have a nice acquisition on a balance sheet of a company like this. >> bingo, with tv. now i don't know whether 21st century would allow this, but -- >> listen, it's just -- you know, it's two separate boards.
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it's one controlling shareholder. so is cbs and viacom. >> remember people didn't think cbs would be any good, and everybody wanted viacom. cbs worked wonder. don't rule them out. >> we'll keep an eye on both of those shares. a lot of other stocks. the second half of the trading year. it's going to be underway in just a minute. we'll be watching every tick after this. who is healthier, you or your car?
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and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. >> bay minute away from the first opening bell of the third quarter and the second half. of course, coming after best first half of the dow since 1999, jim. >> hey. >> best for the s&p since 1998. >> that recovery at the end was really incredible. you know, if you had told me that interest rates that the ten year could go from a very low price to 2.6 virtually in a couple of weeks, i would have said, you know what, we're going to give up 1,000 points because that had always been the worry. lots of people have been assured betting that when they start to unwind, it's going to be horrendous. it turned out opposite. >> it's horrendous for the bond market.
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>> no real snap back there. >> no. >> which is the conversation we're going to be having over the next six months about what to do with the money you are losing, making holding, whatever the case may be. there's the opening bell, and the s&p 500 at the top of your screen. here is the big point. pharmaceuticals celebrating its spinoff from health care company. they will join us in a few moments. over at the nasdaq the organization continues. an organization helping veterans transition from the military to leadership roles. very important thing that we should all be worried about, concerned about. >> some companies have done a great job. u.s. bank corp. >> you have to give them props. hiring veterans for sure. we'll look at what moves here at the open. a big downgrade for 3m by morgan stanley. >> this is one where they talked about. you tweeted it early on. you got this essence of it. the multiple expansion phase is now over. we need to see upside. i don't know.
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i do like that company and management. he is so good. >> they do see moderate risks to the next quarter's earnings. some tough comp on margin. it has had a nice run. 18%. its peers. >> they missed the last quarter, and it still went higher, and that is a testament to the broad nature. this is a great play on world economy coming back. you won't do much better than 3m. really fabulous company. >> small deal. steinway getting boughtdy colbur. >> $138 million -- $438 million is the price tag. that is interesting. $35 a share in cash. 33% premium based on the average closing price during the 90-day period. >> steinway as a pianist, steinway still the best brand? >> i don't have one, but i would hope to have one before i leave
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this earth. beautiful, beautiful machine. >> not the yamaha that i have for my kids. >> right. talk about what else is moving. morgan stanley ups pandora to overweight. the price target at 24. they say, a, their leadership has never -- they have traffic second only to facebook and google. >> isn't that incredible? >> that as we start getting more distribution points in various things other than your house, that that -- their shares will gain. >> i find this shocking. i mean, i felt that they didn't have that proprietary market. i didn't -- i like the management very much. i'm a songsa guy. >> good new york company. >> yeah. terrific. i like classical. >> we should mention shares are up sharply, as you might have anticipated, given its rejection of under the circumstances unwillingness to even entertain $120 offer that it received.
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it's not like they had a specific formal bid, but they did make the proposal in writing. they came back and had a conversation. they said no thanks. weeks later they say, hey, we're going to put ourselves up for sale. no shortage for rumors over the last year. that's a nice bid to sell biogen. amgen itself up 2%. the whole group. >> i think people feel that amgen is going to come back in. they're not going to be taken over. what i like about this we saw this with conagra. terrific ceo. these are companies that say, you know what, we have to buy some. we don't have any growth. let's go get many growth, and i think that the investment bankers, i may have to take over their jobs because what are they thinking? what are they thinking? why don't they pitch more deals like this? amgen goes higher? they don't even get it, and it goes higher. >> i can assure you they pitch
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and pitch and pitch. it's like the mof people and the staff of the new york mets or phillies. >> we don't pitch at all. sdoo let me think about that. there's a lot of whiffs. in fact, not -- like matt harvey they are miss aing lot of the hits. the companies are not willing to stand up at the plate and actually take a shot. >> well, they ought to, because the companies that are doing the best are the companies that have made these acquisitions because we are in an era where growth is so hard to come by. amgen trying to keep up with the joness which means the gilleads who paid so much, and it was a good idea for the -- versus the biogen. it's a remarkable franchise, and it has a bunch of other franchises that are really kicking butt. >> man, i went a long way with that baseball analogy to finally get somewhere. thank you. >> you know, jim, we talk about old saws on wall street selling and going away. another is don't be that guy,
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sell in july. some of those who don't believe in this rebound say we continue to reject the 50 day on the s&p around 16 -- >> it's so palpable, and you can see the transports going. i know we have the freight. the bulls have the freight going. i know that there is a sense at all times that our market is the best, so, you know what, maybe we blow through resistance. i was going through the charts this weekend when i wasn't at the wedding that we attended. i found that there's a lot of charts where there was -- where the damage was repaired after that horrible selloff, and i'm looking for these industrials really to lead us out here, and i think that let's just say that the oil seemed cheap versus where the oil price is. there's some an onlilies that drug stocks came down hard on friday. they can snap back. i kind of like it here. i don't like it. >> interesting. >> it sounds like you're mentioning cisco, for instance,
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which today it's taken to 28. >> my job just -- this is really in the vast waste land that a lot of tech is not doing that well. this company has prevailed. i notice broadcom downgraded. we had a brchlg of downgrades for tech. tech has to go up. it's a huge part of the estimate. >> i want to note once again back to -- that these stocks continue to move hire. today it's cable activision up 4%. time warner cable, nothing has changed since i told you a little over two weeks ago. it is kind of a teddy bear hug. >> charter doesn't have any weapons here. liberty doesn't want to go hostile, and they are applying as much pressure as they can in the sense of a quiet but public campaign among shareholders, analysts to get people talking about it with me and everybody else with the idea being that you can change the shareholder base, and forced take notice.
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maybe we should try and figure something out if it's possible with charter. charter, let's not forget. it's so small compared to time warner cable. you would have to ler up time warner's balance sheet and to get a deal done. a lot of the benefit, therefore, for shareholders to see. there's multiple disparity. there's so many different reasons why this deal will not get done. stock keeps moving up. every time i mention it and say all the reasons why to make that happen, it goes up even more. >> people just feel like -- >> they feel like consolidation is fine, and it will come, and perhaps it will. especially when john malone gets it done. >> the month we just finished. 16 and 20 triple digit moves. either way on the dow. tied for the second most of any month in the dow's history. that's how much talk there's been. >> i have to tell you, i think
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it will turn people off, but there was some money coming out of stocks. the opportunities are there. i think people went home saying get me the next onyx. the gains are too big to ignore here. huge win. >> when you see fcx, hey, it's july 1st. >> that was a nice move. gold seems to be bouncing. don't forget, regeneron. >> what about them? >> that's another one. >> you know, that's got a great franchise. potential cancer -- they've got a cholesterol drug that may be a block-out drug. that's one that i urge people to keep focus because i think it's very under valued even though it's had quite a bit. >> all right. let's get to josh lipton and see what's moving on the floor, josh? >> carl, new week, new quarter. generally positive vibe. let's take a quick trip around the world, and china, remember last week at this time, all those fears?
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now we lirn that manufacturing there slows. shanghai index, though, did finish higher. inter-bank rates continue to moderate. sentiment of big manufacturers moves higher. first time it was positive since 2011. nikkei responds. hits a one-month high. in europe manufacturing pmi's, they clocked in better than preliminary reports first indicated. some strategists say, listen, don't expect the ecb to shift their monetary policy positions until their meetings on thursday. in a half hour you'll get the ism manufacturing consensus. looking for a rebound from 49 to 50.5. finally, let's talk techals. i was on the phone on the spx, katie says a short-term loan has been established. she is looking for positive follow-through, she says, in this holiday shortened week. guys, back to you. >> all right. thanks very much, josh lipton. talking about deals this morning. we did get one. it's tribune, and it continues
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an important trend that we've been highlighting here, which is some of the larger players in terms of station ownership getting even bigger, and benefitting as a result. actually, hadn't even had an opportunity to take a look attribute union's stock price. i want to do that right now as we start out. you can see this morning they announce a 2.75 billion stock acquisition. what is a local tv, which is essentially 19 television stations. 16 markets. coupled with the recent tribune's current 23 television stations, and its super station. you're talking about an awful lot of territory that will be covered by this company. they're saying, hey, we're going to have 100 million dollar run rate. that number, by the way, the 7 times 11 and 12 on average, that does include what they say would take into account the estimate of run rate synergies. they are bringing that multiple down as a result. otherwise, it would be a lot higher.
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the trend is unmistakable. remember gwinnett steel? >> that was a fabulous deal. it never came back. >> that share price went up almost as much as the company it was acquiring. by the way, it still trades above the deal price because there were so many synergies at gwinnett. you're talking about retransmission, the ability to then take the local stations into your bigger family and get more money in terms of your retrends. you're talking about new advertising opportunities. you're talking about what they're saying is at least delivering a lot more ability to distribute a lot more in terms of news and entertainment and, of course, original content for tribune specifically in this case. they have something called a tribune studio, digital offerings, but a lot of this comes back to retrends. a lot of this comes back, in fact, also to this belief that the spectrum would be a great value if they were to ever move
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to sell that spectrum as well. remember we gave them the public airwaves because they were supposed to be doing public good, as in news and information programming, but apparently they may actually be in a position to sell it instead of just give it back to us. there's some form. you have that and sinclair has been extraordinarily active on this front as well. tribune. sinclair, tribune, and gwinnett all getting much larger when it comes to this huge consolidation that's taking place in local tv. >> i think this is all amazing that this is happening. the stocks go hire, and this is cable, tv. kind of a renaissance of deals. one sector only. >> yep. >> one sector only. let's shift to bonds and the dollar. >> well, thanks, jim. i was looking at the pmi's, the euro aggregate. we're still spongy. split decisions on the pmi in china.
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hsbc under 50. the other pmi that they have just hovering just above. even though it seems that we have better news, a little granule ar inspection goes a long way. look at the chart of two-day for tens. we kind of double topped at least on the two-day at $255. maybe the most important issue continues to be despite all the talking about fed officials and bond traders, we see that we're still up 250. open the chart up for the entire quarter. you can clearly see it's been an up quarter. now, if we look at 16-month high and yield. in the zone covering just under 1.3/4. looking at the jgb ten-year. japanese security. approaching 90 again. foreign exchange, we have one-month highs on the dollar versus the euro. one-month highs for $1 yen in favor of the dollar, and if you look at the dollar index, gee, what a surprise. roughly one-month highs. we're benchmarking against a lot of new currencies in general.
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even with some of the improvements in the japanese sector and, of course, if we continue to monitor the fourth of july, we're closed, but two central banks will be meeting. ecb and bank of england reporting to be a big day. you'll be watching your screens. back to you, carl. >> okay. thanks a lot, rick. rick santelli. a list of the highest paid ceos is out. we'll tell you who is on top and who is sliding in the ranks. first, pharmaceuticals returns to wall street. mark trudeau will visit us with his prescription for the growing spinoff. we'll be right back. [ female announcer ] doctors trust calcium plus vitamin d
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this down, mmk. we are talking first straight from the opening bell with ceo mark trudeau. he will talk about the future of the pharma business too. congratulations. >> thank you. >> you've got a remarkable business in injectable products that are used for various diagnostic imageing applications. they favor more diagnostics and it's a sweet spot for medicare. it's going to grow. >> well, this is truly a historic day. it's in our business. we're going to focus on what we know well. we're going to try to grow the company. imageing is very important part of that, but real growth will come from our pharmaceutical side of our business. >> do you think especially pharmaceuticals will be able to develop painkillers that we just do not have right now? >> we do. that's actually part of the strength. we're good at reformulation, and in particular as it applies to pain medications with technology, that's really where we're heading. >> what else do you have late stage? there are a couple of things this you saw.
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osteoarthritis possibility. >> we actually have three mea's in development, two of which are combination products for pain, for acute, moderate pain, and we also have a topical product for osteoarthritis as well. again, these three products are going to be the real growth side of our business going forward. >> you have referred to the company as an uncut jewel. what needs to be done to make sure it's a polished gem at this stage? >> we think that that's exactly the way to characterize our business. in fact, we think there's so much potential here that we can unlock as a result of focussing on what we do well. for instance, there are distinctive parts of the marketplace, and we have some capabilities that are hard to replicate. we think by driving our specialty pharmaceutical business, we can really drive a lot of value in the marketplace and also provide benefit for patients as well. >> you know, i'm interested in the -- a lot of people -- we got a lot of baby boomers, okay? we also watch basketball. everybody has -- you are offering not possibility perhaps
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that we will have something that makes it so that our athletes get better? >> not necessarily better, but if you have pain as a result of ost osteoarthritis -- >> i got it. >> the products that we're developing can help that pain. >> i might jog again? you never know. this is pretty exciting. i know that you do also -- you have very little patent problems, right? you are in pretty good shape there? >> our business has been around for over 145 years. a good chunk of or business is really what we call core, and it will be pretty stable over time. the real opportunity is to grow in the specialty farm suit dal side. we will experience some transition in our branded portfolio. we think the products that we're developing that will bring to the market are actually very attractive and -- >> we've had him on "mad money". sensational. what did they not do that makes it so you can -- or is it totally bogus? >> it's actually a very good company, and, in fact, our aeblt to spin has been helped by the
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fact that they had done that previously. pharmaceuticals has never been a focus of the cavidean business, and we can now focus on driving the things that are going to drive growth in our own business that they were not able to focus on previously. >> i also wanted to ask you, adhd drugs? >> so adhd, attention deficit hyperactivity disorder, we actually participate in that space. we're very good at handling controlled substances. we were first to file a generic formulation of a leading adhd drug, and that's part of the portfolio going forward. now they're diagnosing people that hadn't been previously diagnosed. >> well, certainly adhd is a common diagnosis. it tends to be driven by neurologists and psychiatrists. we're just very please thad we're able to offer an alternative into the marketplace that's good for patients. >> great to have you.
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congratulations. mnk. >> mnk. >> we're going to get ism in about eight minutes or so. here's what's coming up next on "squawk in the street." >> coming up, there are some things you should never rush into, like a wedding. that's what we're giving cramer to discuss six stocks when "squawk on the street" returns. part about this country t is that we get to create our future. you get to take ownership of the choices you make. the person you become. i've been around long enough to recognize the people who are out there owning it. the ones getting involved and staying engaged. they're not sitting by as their life unfolds.
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>> let's get six in 60. we'll begin with tesla. >> all right. this one overroad the price target. there you using 70 and now 130. >> upgrade for tik co. >> they spun off a lot of companies. now very undervalued. goes higher. >> vvba. >> very worried about this. the spanish bank situation, do they have to raze capital? who does? who doesn't? this is the cheapest in the group. >> manny -- >> you know accident manny has
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done a remark aljob. the stock has been marking time since he brew out the numbers. i think this deal makes a lot of sense. >> more bad news for barrick. >> at some point when i look at these gold stocks, i mean, are they all going to go out of business? i don't think so. >> downgrade there. finally, jeffrey on eog. >> eog has got a saudi arabian -- i believe this stock is indeed worth their $174 price target. remember, oil never came in. all the commodities came in except for oil. it's rather remarkable because really it should have slowed down. >> yeah. today a gallon of gasoline is cheaper today than it has been since january. >> united states is producing a lot of oil. there's actually a article satisfying we're going to start getting refining product moving from the gulf to other parts of the united states. it's been shipped mostly to mexico. refining 72 million barrels of refined product overseas. it would be incredible to be able to take advantage of what
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we have in this country if you only had refineries. >>. >> what happens in the second half in the fist half? >> 86% of the time. >> look, it's different stocks this time. it will be the 40% at its industrial cyclical. when we come back, get ready for the breaking news double-header. ism and construction spending a few moments away. ure looking at live pictures of cairo. hundreds of thousands of protesters gathering there. we're going to get a live report and an incredible weekend there. g faster than ever, creating new opportunities for those who stand ready to seize them. in a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your business inside and out today.
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faster than ever. ♪ it's time to do everything better than before. the new blackberry q10. it's time. street. that's 1.5 for may construction spending. very close to the expectations. if we look at the important number, june ism. a bit better than expected. last month's look at 49.0 is
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still exactly a four-year low. we haven't been down there since june of 2009. it dipped below 50. 48.7. if we look at new orders, it did the exact opposite. it moved for 48.8 up to 51.9. so it's as clear as mud if you really want to get granulear on this data, and it underscores the importance of wednesday. adp, friday, bls, and maybe even thursday. yes, thursday. the bank of england and the ecb. >> rick santelli, thank you for that. 50.9 on ism, but as you mentioned, the employment index sub50. first time since 2009. steve liesman, stocks like that, and we all know why. >> yeah, but i'm a little
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shocked that they don't take off on thursday. what's up with that, carl? >> i would think they would take it off. let me give you some details here from this report. what we find is i think they were right. they were very unclear. you had that backing up above 50. i didn't think the dip below was that big of a deal. it was right around that 50 area. also the backlog of orders ticking down. private spending unchanged. that's been another drag on the economy. you saw what happened to structures in the account when it was revised last week. lodging up. commercial down.
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public spending, however, was up, and i think that's for the first time certainly in the last month that we haven't had that. i'm calling this neutral, carl. i wouldn't say this helps the sense that we are -- recovery is gathering steam or that it's really losing steam right now. 50.9 right in the middle. construction spending, we would sure like to see the private sector come back and start adding there, but the public sector being back i think may be somewhat helpful. back to you, guys. >> stay right there. we want to broaden out the discussion a little bit, and importantly, ask how much momentum the economy is carrying into the second half of the year. on that note, u.s. secretary jack lew commented on signs of the economic recovery. take a listen. >> i think there are a lot of signs that there is a real recovery underway. you see it in virtually every sector. some numbers go up and down. you can't look for everything to
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move in a perfect harmony every month, but the gdp growth, unemployment rate, job growth, not moving as fast as we would like, but directionally for 40 years moving in the right direction. >> are we still moving in the right direction? let's bring him into the discussion now. he is head of economics research with b of a merrill lynch. good morning. >> good morning. >> i guess you flagged the point that this is a housing and labor market driven recovery, that we haven't seen, for example, the industrial side participate that much, but frankly, the stock market up to this point has been ignoring that and going with the signs of the parts of the economy that does cost them momentum. >> i think the secretary gave a pretty positive spin on the date wra. we just got the data for the ism number that's about 50. that's not a rapidly improving economy. gdp growth so far this year is running at below 2%. both in the first quarter, the second quarter.
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yeah, we're moving in the right direction, but not very fast. i think the stock market, though, can look through the weakness and continue to look through the weakness, because the stocks know the fed is behind them. that they knew they were going to get good growth, and the fed is going it taper, or we're going to get weak growth and they'll continue to supply liquidity. the stock market can do okay even in the slow growth environment. >> ethan, now that we're four plus years into this recovery, at least until the recession officially ended in june 2009, are you worried that this recovery is patchier than what we've seen in the past? that we have, for example, a housing market. a lot of people are talking about and they've been on this program talking about bubble type activity with regard to some areas of that market. is that because we're getting ris distracted, or are there real concerns that we're not seeing broad-based sustainable growth? >> i think if you step back and this is a very disappointing recovery, but on the other hand, you didn't expect a strong recovery. you have big banking and real
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estate issues we've had to work our way through. you've had a very patchy recovery. it's going on right now. the private sector is improving, and i think the housing recovery is for real, but let's not forget we have the sequester and the fiscal cuts. that's what's giving us this mediocre first half. >> i think there was a bit of a head thing there. i think a lot of people expected the sequester to hurt. the initial data showed it didn't, and then they're rethinking that. i think you are seeing some drag from the sequester on the economy. i think there's going to be a debate about just how big it is. i think maybe he is exactly right that the market is looking to the sequester because just pneumonia airically that stuff starts to wipe out. >> ethan, i'm just curious because you were saying that you actually see signs of better growth heading into next year, so just how strong are you tag
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about? are you getting 3%. either in the second half of this year, which we're just beginning today from the early part of next year. >> i think it's too early to talk about stronger growth now. i think that the fed is jumping the gun a bit in their talks, but give it some time. allow the sequester to play out, and that means probably another soft quarter in q3. a sub2% number as well. then we go to next year, and the underlying private sector economy is in better shape. the healing and all the balance -- housing markets getting past the foreclosure problem. next year 3%, 3.5% growth forecast, and the fed has a reasonable forecast. >> you have written about the fed in the past. your book about bernanke in particular. i wonder are we going to look back on this year as the year that the fed moved too quickly or didn't move soon enough to get out of the market? >> no, i think when you are looking at it it's a pretty small communication by the fed.
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i think that if i was in bernanke's shoes, i would be slower to introduce this very detailed plan they put out for tapering and wait for the actual data, which has happened. this is a small wiggle. >> steve, briefly is that the consensus that you hear that bernanke deserves an a here. >> depends who you talk to. i think the economists heard bernanke may 22nd. they got it, and it was the better investment play over time to think about it, but at the end of the day the traders heard something different. i think the traders would give him a c or a d. then the question becomes was there a way to communicate what they did to traders in a way
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that did not cause this particular volatility we had, and i'm not sure there was. i think if you were going to lay this out, other than taking ethan's prescription, which is to wait, if are you iffing to do it now, the community felt the need to communicate what they were thinking at the time, then i'm not sure there was a better way to do it. >> stocks today seem to be looking through the problem. in any case, steve, thank you very much. ethan harris, appreciate your time as well. >> speaking of markets, dow is now up 164. we got at least an extra 40 points or so as we got even admittedly weak employment of the ism. obviously a signal to some that the fed is here for longer than you might expect. >> up 1359%. >> volume up --
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>> usually you see it here. >> there's a lot more to come this week. don't forget, nail the number ahead of friday's job number. we'll give out a -- signed by the whole gang. to win send us your nonpharma payroll -- use the _#nail the number. nice job signing that. i think that's me. it's a nice bag. compared to what we've given out in the past few months. >> that's you in the blue dress. >> we had a guest for -- >> yes. >> oh, i thought you said a guest. we've got a couple of those. i don't like to guess, but, i mean, gut instinct, this feels like one of those months where we're moderate. we've been almost adding 200,000 a month. it feels like we moderate. that hes what everybody is saying. you have to take an outside view. >> leak a crap shoot. want to look at big movers in the meantime. pandora up more than 8% after getting bumped to overweight
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over at morgan stanley. nokia upgraded over at jp morgan to overweight as well. stocks up more than almost 4%. best buy spiking. credit suisse resumes coverage. calls it their best near-term idea. >> amazing. >> apple upgrade to strong buy over. that stock having a pretty good session up 2.25%. the next phase of the smartphone war will not be about -- but getting smartphone chips into cars and appliances and televisions. in other words, a new battle. >> 50 billion connective devices. that was the mantra you heard. don't need us involved. more troubling data out of china, meanwhile, for the second month in a row. in fact, country's manufacturing index fell to a low 50 signalling contraction to the world's second largest economy. we'll tell you what that means for investors and protests are intensifying in egypt as pressure mounts for islamist president mohammed morsy who
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>> millions of egyptian protesters have taken to the street again. we knew over the weekend that there would be, you know, this particular focus on getting people out in the streets on that one-year anniversary. is it a surprise that it's continuing with such force into today? >> well, the size and the scope essential has surprised many
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people. you knowing leading into it for the past couple of months organizers have been putting together a petition calling on president morsi to step down. they got more than 22 million signatures. i don't think they expected that they would have been able to get the numbers that turned out yesterday. by some estimates all across the country tens of millions of people showed up, and that's really dealt a little bit of a blow to the confidence of president mohammed morsi, more so today that four ministers in his administration have resigned, although it's not clear yet whether the prime minister will accept that, and it does undermine the growing lack of confidence that is happening here on the streets, and as can you probably hear behind me, protests are continuing. they are giving president morsi until tuesday, 5:00 local time, to meet the demands of the protesters and step down from power and call early elections. otherwise, they will continue more acts of civil disobedience. it is a concern among many people here that this political stalemate with the street being so unsettled could further cause
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some of the violence that we saw yesterday in which 16 people were killed. the majority of them outside the headquarters of the muslim brotherhood. carl, back to you. >> all right. thank you for that. amman joijs in cairo. turning our focus to china this morning, chinese manufacturing data continues to paint a worrying picture for the chinese economy. joining us on the phone is jim oberweiss. it's good to have you. welcome back. snoo thanks so much. >> you make the point that you think there is a floor of acceptable growth to the leaders over there. i wonder where you think that is right now. >> i think the numbers are in the neighborhood of 7%. i think there is a lot of different types of tools that the leadership has and the growth and exchange for more sustainable path, i think that comes with a limit. the limit probably kicks in around the time that it saysure worried about maintaining power.
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i think it's probably the 6% to 7% range. we're not that par. i do think that the chatter right now coming with a little bit of an insurance policy, albeit certainly wasn't what it used to be. >> right. certainly this 50.1 on their pmi isn't reassuring by any means. >> it's not. i also think that you can't look at china as broadly as one used to. i mean, historically it was banks and exports and i think i have a great deal of concern right now. actually it's areas i think are very much on the minds of leadership towards advancing and developing are doing well. consumer discretion, ecommerce companies have care. they're very well positioned for growth, and many of those stocks have also gotten along with dur es. in fact, i think this is going
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to be a valuation game. >> they're out of favor. >> you say -- you just said it now. stocks are cheap, and watching the shanghai has been stomach-turning over the last couple of weeks. are these liquidity concerns, though, although they might be new? are they going to turn into something truly lehman-like for lack of another word? >> the balance sheet doesn't stop it. contrast to the u.s., where you have a much larger congress scrambling to get something done. it's very concentrated. they can act as need be, and they have the tongues make it happen. i do think it's going to weigh on growth though, and i think you'll see that continue through the next couple of quarters. the price to book ratio under one. another extraordinary number. talking about valuation the entire round. 2008, wooin and financial
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crisis. historically these have been great times to buy even though it's an upturn. >> still hanging below that 2,000 mark on the shanghai composite. major restructuring plans will reportedly be announced today over at microsoft. the question is what this means to the company's future and its outspoken ceo steve ballmer. also in 2012 ceo list and the highest paid ceos in 2012. his biggest rival landed in the top ten. who is that? stay tuned. out there owning it. the ones getting involved and staying engaged. they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people.
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>> welcome back. july is the month that we'll get the shareholder vote that will decide the future of dell computer, and i did have something to share this morning on that. of course, we're talking about july 18th. that is when shareholders, not including michael dell, to see whether they accepted the offer from mr. dell and his private equity partner or prefer the planned foot forward by carl icon and southeastern asset management to have a leverage
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recap of the company. this morning i can tell you mr. icon has successfully secured $5.3 billion in financing led by jeffries to aid that recapitalization plan which, by the way, the special committee of dell claims has a major funding gap in it that will result in the large a dividend payment to shareholders who do tender under that plan. nonetheless, as we've said many times, what may prove extraordinarily important here is the view of iss, shareholder services, proxy advisory firm that will advise shareholders on how to vote here. meetings took place last week. having spoken to a number of people who are aware of those meetings, attended them or certainly familiar with what went on, they say that the audience was not particularly well received, that is, or dell and silverlake were not particularly well received by iss. we shall see in fact which way iss chooses to go.
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that could be the fate of this transaction. as for mr. icon, he does have $5.3 billion to put towards that recapitalization plan. he has proposed it being far superior and the value to shareholders. will dell and silverlake feel the need to raise? that becomes the key question. it's a large financing. jeffries part of lukadia. they've done a lot of work with icon in the past, and at least have given him confident letters and those things, but an important financing that will make a lot of money from if, in fact, it is drawn. >> thinking again back to their weak quarter for trading as well, and whether that plays into consideration. >> well, it would certainly help this quarter. whenever quarter it would be that it would be drawn, and the fees. fees always help. >> story has turned out to be more interesting than we thought. >> going to get more i have a feeling. really do. yeah. >> all right. well, thanks, david. microsoft expected to announce some major restructuring changes today on the heels of recent success with microsoft surface ads and the he xbox. the announcement could include
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some reshuffling of senior execs. perry mccracken is editor at large of time magazine and our john forbes joins us as well. good morning. >> good morning. >> all things did suggest that july 1 would be a day of import. do we still believe that's going to happen? >> well, we'll see. it certainly would not be surprising if microsoft does do something major because steve ballmer has been describing the company as a devices and services company, and it's still really run more like a software company, which is what it was during the days when it was totally dominant and it's trying to reinvent itself in the days of apple and google and a time in which it's very important not just to mix software for other people's devices but to build the whole stack of service software and the hardware it runs on. >> john, i still remember ballmer showing you the surface for the very first time on our air. what is your gut telling you?
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>> my gut tells me there is some sort of reorg coming possibly today. look, the last team microsoft had major reorganization was about 11 years ago. it got to be a less flat organization, more run by business units, windows, and office, the two primary drivers. that's back when the pc was growing gang busters. broadband stagt to take off. on friday, as a matter of fact, talking with intel's new ceo, he was telling me and a small group of reporters about how he just flattened out their organization trying to get into the loop faster in the age of all the divisions that have no longer reporting into the intel group. it makes sense. here's the other half of the wintel sort of dynamic duo.
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why not go ahead and buy nokia, effectively working with them so closely together as they have. >> bob runs the xbox division, which is probably the closest thing we have to a preview of what the rest of microsoft might look like because it makes hardware and publishes the games, and it runs the services and it's extremely successful, and windows is not like that. it's still small potatoes. microsoft really does want to be a devices company, i think you'll see something big, whether it's buying nokia or something else. it really has divided itself from being a company that's been providing software for our companies, to being a significant player in hardware, and that's a very long road to travel, and they might want to do it more quickly by buying somebody else's hardware business. >> okay. we'll see if that happens. want to thank you again if you are joining us this morning as
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well. >> after the first half since 1999. what lot rest of the year bring. that's next. >> dow stocks last quarter topped, in fact, by microsoft. 20%. we'll be right back.
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>> the best performance since
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1998 wrfsh where do we go from here? art, good morning. >> good morning. >> july 1st. the second half begins here. what indicators point towards performance being able to match at all that first half? >> well, history is a little bit in your favor when have you a good first half, the second half tends to show some follow-through. this might be a difficult year to figure out. we're going to have the lag affect of sequestration. everybody trying to figure out where the fed is going and this is going to be a very volatile week. we've already seen it with the isn. that came out with a just right goldilocks number. just a little soft to keep the fed where they were. move the yield on the ten-year back below 2.5, so we got a nice spike. tomorrow we get back on the speakers platform to see if there's any change, and then, of course, friday the nonpharm payroll. >> fireworks. >> real fireworks.
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long after july 4th is over. >> the broader -- we've been through this whole fed upset, if you wanted to call it that. weave kind of come out the other side. is that going to be significant in the second half of the year? >> i think it will be a recurring theme. there's a feeling that bernanke wanted to get started talking about tapering because he knows he has to shape his legacy, and that might have been a misstep. there's a lot of people that they're beginning to see the whole qe program not being terribly effective, and the money is getting put in the warehouse, and it's staying right at the fed rather than going into the system. then you are going to see what residual effects of sequestration begin to preponderance out here, and will that change how the economy is left? it's a pleasant outlook historically, but it looks like
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it might be a little uphill this year. >> we're talking about had earlier. how important and how strong is this sector, and is it a good sign for the rest of the marking, or is it a sign that there's nowhere else to go right now? >> it's certainly helpful. whenever you get mergers and money changes hands, that money goes someplace else, so you think that's going to be a benefit to the market, but i think it is a kind of stand-alone with health care and pharmaceuticals in particular. i'm not sure it's indicative of what's going on in the economy. let's see where some of the regional feds and regional ism's come up. >> i think this seems to be a weird line at the 2.5 of the ten-year. if it's above stocks are weak, and if it's below, stocks are okay. do you think that will uphold? >> it could well. as a matter of fact, i see some people in the credit area talking about maybe that's a target for the fed that they're
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going to be happy with. numbers that look at 2.25. so far today the ism came out just right. we dipped below the 2.5, and it helped spike us up to the battle of the 50 day moving average. 16.24, 16.26. >> it seems to have fallen by the wayside in terms of a real concern, but i wonder if it does rear its head, how do you see it doing so and in what way? will it be some of the gdp growth, or will we start to see it in earnings? where do you see it actually coming back? >> i think overall probably up in gdp growth is where most of the people on the floor see it. the recurring theme that i think is that the american management has been absolutely brilliant putting itself back together. that's why the highest profit margins many history. the question remains, can you keep getting more from less? sec quest rags is going to kind
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of squeeze in some of the money that the government was spending on everything from military to services, and i think to feel that pinch, and it will begin to pinch on earnings. they'll be looking at the bdp aspect of it. the affect on earnings -- >> no fireworks at camp lejeune or fort bragg this week. in part because of the variation. >> that's only a simple and small sign. you're going to see if you were -- they would not be happy, right? >> art cashin, great to see you this morning. >> let's get for a quick market flash here. up 156. >> hey, carl. i'm in the back drop of the financials. most of them hitting 52-week highs. there's one break-out performer, ask that's visa. visa hitting an all-time high at 136.38. that all-time high is -- once it hit 185 where it had previously seen resistance, it was going to break out. it's up just about 2% intraday.
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visa is the one to watch. carl. >> all right. thanks so much. starting today, student loan rates are doubling because the senate could not reach an agreement before taking recess. according to some estimates at the white house, 7 million students are expected to take out these loans in the coming academic year. they co-sponsored a bill at 3.4%. they say this issue will be the senate's first order of business after the recess. he joins us this morning. senator, good to have you back. good morning. >> good to be with you. >> how disappointed are you this is going to get done before the break? >> very disappointed. look, we have a whole generation of young people who are struggling to make it to the middle class. they can't afford to go to college in many cases. hundreds of thousands of young people are unable to go to college at a time when we desperately need their help. people graduating college on average $27,000 in debt. huge impact on their lives. unable to buy homes.
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unable to buy cars. really struggling. now what we say to the entire generation is we're going to double your interest rates. i think that is probably absurd for the middle class of this country and for our entire economy. >> you want to freeze it at 3.4 for a year. do you want to tie it to some other variables regarding government spending or costs? >> well, i think the first thing we have to understand is that it must be a priority that we do our best to see this generation get the best education they could. again, that's not only important for the young people, but it's important for the economy of this country. the idea of allowing interest rates to float up to 7%, 8% is preposterous. as you well know, all over the world countries do a far better job than we do in subsidyizing higher education because quite sensibly they want the best educated work force that they can get. this is a tough global economy. to say to our kids, sorry, you aren't going to be able to
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afford to go to college or you are going to come out really deeply in debt makes no sense. at the very least we should stabilize rates for the next several years at 3.4% while we come up with a longer-term plan. >> senator, we get a lot of viewer feedback on this issue. more than we do most stories. a big argument is why is the senate -- why is congress at all trying to treat the symptom and not the disease? what will it take for colleges to understand that they need to control costs. otherwise, we're all in big trouble. >> i think that's a fair point. the cost of college education has soared, and as i nation we have got to do something about that. our colleges are far more expensive than colleges all over the world. governments all over the world have made the important point that they are going to make sure that their kids get an education and they heavily subsidyize education. i think we have to approach the issue from both perspectives. one thing we must try to tell
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young people of this country and their families that they're going to be paying 6.8% or in some cases according to some ideas 7%, 8% interest rates in order to go to college. we have told the young people that if you want to make it to the middle class, have you to get a college education, and now we're making it almost impossible to for many families to go to college. >> there are no easy options here, senator. you still feel like senator bloomen that will last week, and he was upset about the government profiting from these rates. either there's going to be a profit, or there's going to be a loss. it doesn't seem to be any situation here whereby both parties can benefit. both the students who we would like to see able to borrow at rates that, say, banks can, but also taxpayers who don't want to be stuck subsidizing the costs of the loans, especially as rates start to normalize. >> no one knows what interest rates are going to be tomorrow, let alone ten years from now.
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if you cap interest rates at 3.4% for the next ten years, the government will make over $100 billion in profit. that's not fair. >> okay. the point, though, is we can't know for certain. i mean, interest rates the last couple of months here is that there's a move around. >> that's -- >> i know that. i'm suggesting to you a cbo projection. >> the point is -- i mean, i think we have to get our priorities right. one out of four major corporations in this country and pay zero in tacks. the idea of forcing working families to pay these interest rates to send they are kids to college seems to be togethersly progressive and a bad idea for the economy. >> what would you say the odds are of a retroactive fix that leaves rates at 3.4% right now. >> i think the odds are pretty good. as you know, the senate back in early june passed that
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legislation. we got very little -- i think no republican support for it. the republicans in the house passed something else which over a period of years would drive interest rates much higher. if i were a betting guy and i knew that families all over this country were paying attention to this issue and wanted to see interest rates stay low, i suspect we'll be able to keep it at 3.4%. >> okay. >> senator, thanks so much for your time. have a great fourth. see you after the break. >> thank you. take care. 1.85 million. that's how much the highest paid ceo got paid last year per week. we will reveal who that is in just a moment. i want to make things more secure. [ whirring ] [ dog barks ] i want to treat more dogs.
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meantime, the average u.s. worker may be struggling in a stagnant wage environment, but those received double digit bumps many pay last year. mary thompson has more on the staggering figures. >> an updated study for the "new york times" by the compensation researcher equalar shows that on average ceos of big companies earned 15% more in 2012 than 2011. the highest paid ceo, oracle's larry ellison, and his position unchanged from the earlier and smaller survey done in april. 96.2 million he received 24% more than in 2011. ranks include the 200 highest paid ceos of firms with more than $1 billion in revenue by may 31st. $64.9 million at the number two spot. he has an increase helped by a massive $55.5 million stock offering.
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>> made 12% less than the prior year, and discovery's david who is $49.9 million was 5% less than in 2011. fifth level three communications, james at $40.7 million. now, on average the 200 ceos earned 17.8 million last year. an increase of 15%. median pay rose 16% to $15.1 million, and on average the company's net income rose 63%, an average return shareholder return rose 24%. greg of gmi ratings not surprised by the increase given so much of ceo pay is in stock and the markets performance last year was so strong. now, other notables on the list, yahoo ceo ceo marissa myer, the only woman to crack the top ten at number nine with $36.6 million. that was her paycheck. she is also one of 13 women on the list. missing from the ranks, bank of america's brian moynihan and morgan stanley's james gorman.
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the median tech dominated the upper end of the list. financials were a more muted presence. ken is the highest paid financial ceo in 2012. he pulled down $28 million. carl, back to you. >> interesting. does sort of -- i mean, anecdotally i guess, mary, david, sort of tracks with stocks performance over the last 12 months. >> it's a long way from lloyd blankfein paying himself in terms of the financials. the media guys always amazing. you know, you are talking oracle founder, ellison always paid himself enormously, but za sdmr and moonves. summer has paid his people very well. malone and mcfey also makes a fortune at liberty. >> speaking of performance, if you look at oracle going from roughly $26 to $36 a share last year. this year they're down sharply, down to 30. the question will be come what happens to their comp, and if they were to include mark and some of the other deputies on this list, by the way, they would have outranked a myer.
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they would have been the top paid on this list. >> what's interesting about oracle is again because larry ellison is the founder, his pay really doesn't always reflect the company's performance. total shareholder return for oracle was down 24% last year, and every year the board grants him another $7 million block of stock. essentially it doesn't matter how the company performs. they're still going to give him all that money, and then, of course, that is leading to him having a 24% holding of the company. anyone who wants to disagree with him on pay basically is likely to be voted down in large part because he holds such a big chunk of that company. >> 24%. >> incredible. >> wow. >> mary thompson, thank you very much. now, rick santelli will be joining us next to dissect all of today's data. coming up later, also, more proof that the job market is tough out there. even for the e-trade babies. oh, yeah. we'll explain when we come back. >> give you the tools and research to take control. rise up.
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the cme and rick santelli with the santelli exchange. >> good morning, carl. i like art caspian. he said goldie locks numbers, not too hot, not too cold. the market loves it. check out where the dow futures, cash, s&p futures, nasdaq, all having a pretty robust day. when you look at the ism numbers on a three month average it is a couple tenths above 50. the employment numbers dip below 50, below 49 on a week that will show us two data points in the of course bureau labor statistics and adp. it is all about jobs. it is also about in general most analysts and economists definitely tried to spin weak into strong. there is no doubt about it. the cost benefit analysis concept seems to get lost. when you check out the fed, and you check it out versus inputs
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and outputs, what tends to happen is we have all of these programs and we see what the data is, and it is no surprise, i think, that we try to spin these mediocre middle goldie locks numbers to keep the fed in the game and it really isn't about inputs and outputs. it is a very -- there is very little cost benefit analysis where we cause and effect, the amount of time, issues heal themselves versus these huge programs that are on going. it doesn't stop there. there was a great piece on china and just about every publication, "wall street journal," op-ed today and in many publications about the same types of issues, and with that maybe more specifically and tied to the fed as well is the deposit rate and lending rate and how they keep the deposit rate low so they can create all of this lending that seems to be in reversal and now they're talking about, hey, we can't figure out why consumption is so weak. it is the same here. everybody for sakes the savers.
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safers are big consumers. inputs and outputs, current issues where we can see how this works. education is one. is it really about the dollars or is it about the output? measurable output. dollars, dollars, dollars. immigration. i want to get political on the immigration front, but it certainly seems to me that just because you're designating spending billions on border security, it isn't about the input. it is about the output. we need a trigger that is measurable. anybody that doesn't think immigration both sides of the aisle is about boat loads, it is. even in the horrible aspects of that with regard to politics, maybe great things can emerge. i tell you what, if you do a good immigration bill, have good measurable outputs. inputs, for get about it. never works and always ultra political. back to you. >> rick santelli from the cme this morning. thank you, rick. the etrade baby may be out of a job. that's right.
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we're going to wake the world up. and watch, with eyes wide, as it gets to work. cisco. tomorrow starts here. it could be the end of an era for an icon, the etrade baby, these are two but the one on the left, you know the one, his fate is up in the air after his ad agency that created the concept dropped the client, the talking baby, which debuted during the 2008 super bowl as one of the most spokes babies in advertising history, i am told. big story in "u.s.a. today" about what the future is for this poor kid. >> do you know why i like this story? it is not about the baby but
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what the ads tell you about market psychology. they introduced this in 2008 to sort of soften up the image. it was during the crisis. it sort of everyone is going, oh, when the stocks are plunging in value and question about the future of the american economy. what i really to want know is not where the baby is going but what they replace him with. >> apparently the company etrade owns the rights to the baby, not the ad agency, so they can take it to another firm and develop it from scratch. >> a new concept for the baby. >> or time for a new message. viewers, what would your ad campaign be. >> good tweet question for the future or maybe should have been today. >> a close eye on the action, light volume during the session. >> picking up, though, looking better now. >> if you are going to pick a day to lead the pack, best buy, up 144% so far this year. >> what? >> and adding another i think 7% last check this morning. >> and now they're being added to a conviction list?
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>> reinstating coverage. >> jim cramer point out although it is an interesting timing point for the stock. can't help to think they were trying to take the company private in '16 and does make an argument for dell why are we bothering. >> why he. >> not that they're anything alike. >> if you are just joining us here is what you missed earlier on. >> welcome to "squawk on the street." here is what's happened so far. >> 0% interest rates breeds speculation. when the if he had is so transparent says we will do this for the next umpteenth months or years, everyone goes to one side of the boat. >> i think we have a real jobs problem and are forming the tax code making us more globally competitive so we're a better place to work and also the corporate tax code and going to something like a territorial system. >> it was nice to see by the way
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nike snap back and people didn't in the end on friday say that china is everything. we need to see china deemphasized as a force in our thinking. it is not making us money. >> there is the opening bell. >> we think by driving our specialty pharmaceutical business we can really drive a lot of value in the marketplace and also provide benefit for patients as well. >> ben bernanke deserves an a as fed chairman. his communication recently gets a b minus, but this is a pretty small wiggle in an otherwise very good career. >> this is a tough global economy. to say too our kids, sorry, you're not going to be able to afford to go to college, but you're going to come out really deeply in debt makes no sense to me. >> live at the new york stock exchange. get a check on the markets, dow and s&p having their best day
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since june and nasdaq the best day since april. we got the ism number, pretty solid, the employment subindex below 50 for the first time since 2009 leading some to believe the fed will be more accommodating for longer that be some might expect. wells fargo trading around the highest level since 2008 and gaap running up to the highest level since april of 2000, up to 42.67. >> and a road map for this hour, all three major indexes above the 50-day moving averaging. we'll find out if that is a sign of smoother sailing in the second half of the trading year, plus we have one phone manager that says down 20,000 is on the horizon. your average big name ceo taking home 15% more in pay this year, but did chief executives really earn it? our boss of all segments will break down the numbers. california's big gas tax kicking in. if you thought it was painful for drivers, wait until you hear from a station owner that has to deal with the fallout and angry customers.
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first, markets, a new month and a start to the second half of the year in fact and the dow to date is up about 15%. what our next guest says down 20,000 may not be far off. let's bring him in. chad morgan lander is portfolio manager with stifle and the chief investment officer with hennessy funds and, neil, you're out there talking about dow 20,000 s this a long-term pie in the sky thing or a real price target for you? >> i think it is a price -- most people think i am crazy in real life. when it comes to the financial markets and if you look at what's happening out there, you are only talking 7.5% a year. you have the dow jones now yielding 2.5%. if you took 20,000, it is not that far off. it is not hard to get there, especially when you look at corporate profits and what corporations are doing and there is no other game in town to invest in. >> certainly i for get who it was last year or last week i think saying there is nothing stock market bulls like better
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than see the bond guys get routed, so i imagine, neil, you're not too worried about what we saw in the bond markets last couple of weeks. >> i mean, you talk about the ten year bond yielding 2.5%. interest rates will go up. we all know that in the future. we all know this in the future bernanke will stop buying at some point in time. this isn't anything new. to use common sense and logic and look at what's happened in the corporate america, they're doing extremely well in a slow economy. it is only going to get that much better, especially what bernanke was trying to say is if he is going to cut back bond buying, what's going to happen? it means the economy can sustain itself and continue to grow in the future which means corporations are going to make that much more money which means they're going to pass it out to shareholders either in dividends or buybacks. >> what's wrong with this argument? >> the argument that he is making is very good one over a long extended period of time,
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maybe 5 to 10 years 20,000 may not target. right now currently we're not in a self sustaining loefr and in fact the second half you have expectations exceedingly high. for example, the earnings that we're going to go into this quarter, expectations are perhaps 5% year-over-year earnings growth and that is supposed to be ramped up to around 12% earnings growth in q4. we think that perhaps the market is ahead of itself where you have valuations here and the market here and rather evaluations should be here so sticking with like a 15.75 price target on the s&p for the end of the year and we think this inflection point you have to have a hand off between this liquidity rally courtesy of the global central banks to march economics and earnings driven. >> you any it will be what the
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dollar has done. some of the multinationals will have to admit to four ex headwinds. >> they came against those 4 x headwinds, so we think expectation this quarter for revenue growth around 3% on the s&p and that perhaps is more like a 1% kind of revenue number. in order to have earnings vibrancy in the next 12 months, you really need to see the top line grow and when you have u.s. corporations and the dollar rallying, that's really an anchor of not only revenues but also earnings. >> neil, we are seeing corporate profit margins flatten out, earnings flatten out as chad is discussing, and so do you disagree that that's going to happen or do you just say it doesn't matter right now? >> i think what chad said is acquisitions. that's one of the things that companies are doing to grow their top line. in the slow economy, you're not going to be able to grow the top line to make investors that much happier. at the same time if you are
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making acquisitions, you grow that top line, that bodes well for the stock market. you have to separate out the economy, washington politics, and then corporate profits and corporations are leaning doing everything correct and raising their dividends and making acquisitions and stock buybacks. that's really good for the stock market. it is not great for the unemployment number. that's for sure. >> right. that's ultimately -- go ahead. >> i think where we differ here is that we're now going into q3 of this year. you still have a deceleration of global growth, as well the the united states gdp expectations, 1.7% kind of earning gdp number, so we're not in this self sustaining recovery. acquisitions like neil is mentioning do bode well for the markets in general. you really need to see the global economy start to get on its own footing, and that's perhaps one of the reasons why
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today you have the trade up on the markets because you had some numbers from the united states that were somewhat better, europe somewhat better, but again you really are going to need to see a reacceleration of global growth and we think that will allude us in the second half of this year. >> certainly. how china goes will have a lot to do with that. that's chad morgan lander and neil hennessy this morning. >> let's send it over to a market flash, i don't know, maybe david faber on set. >> i am right here for you. karl, it is not often we see stock up over 50%. that in fact is the case with on nicks pharmaceuticals. shares of which up 51%. look at the price increase. we're talking about a significant increase, 72 million shares up, kelly, i know you're quick with math. over $3 billion i guess. >> not too shabby. >> in market value in one day. why? yesterday if you were enjoying a day on the beach and you may have seen the press release from
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onyx saying they had a proposal to buy and they are given amgen's interest and other third parties we have heard from in the last year going to put ourselves up for sale and see what's out there. 120 is not the number. perhaps there is a far higher number that will be of interest to us and to our board of directors, so that is where they stand. a little background here, onyx focused on oncology, therapy, wholly-owned by the company. you tonight typically see that with smallers. that is a key drug here. nex var 50/50 and stivaga and i won't try the last one. >> palbock. >> it looks like it is spelled backwards. >> karl could manage that. >> i am actually on that drug right now. >> we hope not. >> we hope not. >> in fact, it is the drug that
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at least investors are enjoying one in which they're getting wealthier today. we'll see who comes for this company. will amgen continue to have interest? one would expect that will be the case. real quickly, happened very fast on friday, after two weeks having sent them a proposal, there was a conversation between both companies on friday in which it was made clear to amgen we're not interested in 120. then the story leaked. purposes of which not quite sure who leaked it. both sides are blaming each other. it leaked. that led us to what is essentially an option for a well positioned company given oncology, given the key drug that could be as much as a $2.5 billion, some analysts say, annual drug in terms of sales. >> and as much as onyx shares are popping today, amgen still rallying that would indicate that investors still see value if they were to try to acquire it at these levels. >> and applauding the potential for a deal. we have seen it oftentimes in m&a this year. what we haven't seen is a great deal of m&a despite what has
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typically been a very positive reception from the acquirers or potential acquirers, shareholders. >> although that deal stands out. >> that was crazy. tribune doing a similar deal today. why not? if you can get that kind of reception. >> wow. >> thanks, david. let's head over to kayla. >> not up 51% but we're seeing vertex and alexion in the same space as onyx trading on sympathy for that news and onyx said we are for sale and exploring the combinations. not the case for alexion and vertex. they're off rumored acquisition targets, alexion treats blood disorders and vertex treats hepatitis c so they are still in the sort of rare disorders biopharmaceutical space and both up just shy of 5% on the news. >> thanks very much. turning our attention to europe, i am sorry, to egypt where hundreds of thousands of
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protesters remain in the streets of cairo demanding the increase ignition of mohamed morsi. youssef is in cairo. it is good to see you. can you give us context for the statement we just got from the military. are they threatening something? >> absolutely, kelly. a dramatic development over the last two hours or so with this statement from the armed forces, the military, saying they have given the political powers one week to sort out their differences and they have failed to quote, unquote, meet the demands of the people. now the military is saying they will extend that by 48 hours. if that doesn't work, they will put forward a road map. short of clarifying what that really meant. this of course really brings in a completely different variable into this equation of pro and anti-morsi supporters which behind me now those that opposed president mohamed morsi are
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celebrating the announcement from the military. this is an endorsement that the demands are legitimate and also shows the military is running out of patience. that was one factor we were watching very, very closely. so finally intervened and we are not sure yet what exactly what form or shape that will take but we keep a close eye on it and so far the clash cost the lives of 16 people and injured more than 700. from tahir square for now, back to you. >> thank you very much for that again. reuters transmitting bart of the egyptian army statement where they say it will be incumbent upon the armed forces to announce a road map for the future if the demands of the people are not realized. we'll watch on you this plays out. ceo pay, the new numbers you will have to hear to believe. we'll tell you who made what next. rick santelli, you're talking yield, correct? >> yes. yes. we're talking a bit of yield curves. you know, if you look at tens and twos and subtract, it is
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about 213 basis points. last week 220 on a closing basis and that was the widest since august of 2011. what does it mean? do banks benefit? we'll talk all sides and we'll get to the top of the yield curve at the bottom of the hour. in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution,
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we ton see record-breaking heat in the western parts of this country. jane wells is out in las vegas with more on that. good morning, jane. >> karl, this says it is about 102 degrees right now at 8:15 in the morning. it is supposed to get 113 here today, the sort of temperatures we don't see until august or september have come early and all over the place. very unusual. dry lightning may not cause of a fire near prescott, arizona, which took the lives of 19 fire
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fighters, all of them part of an elite team overwhelmed by uncontrollable flames and the governor calling it as dark a day as she can remember. one dead from the heat and 58 sent to the hospital. highs are not expected to dip below 110 until friday. i have to tell you, the town is busy. they are at the gaming tables where it is cool. the real strain here has been on the utility companies, the grid, about 1,200 people lost power and may have been worse. nv energy being acquired has spent 4$400 million on special peakers that can shoot extra electricity in the system to power 370,000 homes. in northern california the i they're warning people to reduce power usage and how hot is it? i asked people to tweet pictures. here are a few. damian white in phoenix sent me a shot of his car thermometer.
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on in scottsdale, the butter was only in the shade a few minutes and frank said it was 117 in his office at mccarron airport in las vegas. add another 5 degrees from the fumes, and he showed how hot it was on the tug he drives to get the baggage carts, hot enough to friday an egg on and not as hot, though, as the dashboard inside grant williams car in palm springs where he chronicled the experience of cooking a prime rib. he said this is not fake. this is true. giving new meaning to drive-thru. back here you can see we have an elvis impersonator, not wearing his normal white suit, he says, but his summertime aloha elvis gear trying to make a little money from the tourists and getting pictures taken brave enough to get their pictures taken while it is still early. >> aloha elvis. i can't believe it. prime rib in the car? would you try that? >> no. no.
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i would like to hear the elvis impersonator, though. >> jane wells, thank you, jane. >> gold is selling off over the past few days to multi-year lows and how is to blame for the collapse? we'll explain. squawk on the street will be back. mine was earned in djibouti, africa. 2004. vietnam in 1972. [ all ] fort benning, georgia in 1999. [ male announcer ] usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection
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top 200 ceos of the biggest u.s. companies got a big raise last year according to the latest data from the "new york times." the median 2012 pay package came in at 15.1 million. a leap of 16% from 2011. joining us now for what we like to call the boss of all segments, and the professor of management practice at the yale school of management and the professor of business administration at harvard business school joins us as well. good morning to both of you.
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great to have you. >> great to be here. >> jeff, i don't need to tell you about the outrage that surrounds this list every year. clearly boards do not see this as a problem, at least not yet. >> you know, i don't see the reason to bring out the pitch forks and have a great populous revolt over these numbers. it is a lot better than past years. there is the "wall street journal's" early analysis of a quarter of this list had compensation of about 6.5%. this one is looking a little more like 16%. the stocks of these companies, the market value is up roughly 20%. i think if there is outrage here it is in some of the individual case examples rather than the overall pattern. there are some people here and, larry ellison is one you spoke about in the last hour, ceo of oracle, it is extraordinary to have this top of the chart with $90 million of compensation here with 24% decline and acme with
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680% jump in compensation and a 12% decline in total value and this goes on with occidental petroleum and chesapeake energy, finally changed the ceo there. >> rose, you are renowned expert in management and leadership. what do you make of this issue at large, the way it is being both playing out and perceived? >> first of all, these are very high numbers, and the fact that compensation didn't rise as much as the stock price, well, that is short-term. who gets credit for the rise in the stock price? it was a rising market. we often in good times credit ceos as though they were geniuses even though they may not have had that much to do with it and they may be bankrupting the long-term in order to get those short-term
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rises. i think the fact we don't have a populous revolt is more to do with american culture because with high unemployment, unemployment not rising as much as ceo pay rose, with still needing job creation desperately, i wish some of that pay had gone into investing in start ups that create jobs. i think the whole picture doesn't look good for america. on the other hand, it is unstoppable because once you have these high numbers, everybody wants them. >> jeff, is there a cultural aspect here? because being in london you see in europe and certainly with financials in the u.k. as well, a lot more clawbacks now and they're getting quite significant to the extent it really is fear of potentially getting that claw back holding executives away from positions there. is that kind of change going to come to our shores, do you think?
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>> i think a number of issues have just been tossed out on the table. the clawbacks as we have many of us have celebrated them coming out in sarbanes-oxley are exercised rarely and under utilized. in terms of ceos making high salaries, if the performance is very high, especially if they have he can it i at risk and not the outrage that we have seen in some of these recent numbers, is that you take a look at the returns say that marissa mayer brought into yahoo! one of the top ten here, i think it is wonderful she has broken into the ranks. to have a woman that has contributed not by the rise in the stock market, her presence and her performance, the stock jumped up 30%. i think it is fantastic. the things she has done in the midst of laying off very painfully about 1,000 people and without a mean macho she is learning and taught us how to be persuasive without being cruel and making it tough without being abusive and she is the
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tumbler acquisition has been very successful. flicker since they brought it in is up 40%. the website usage is up dramatically, 25%. she redesigned the website. she deserves the rewards for that as the dan loeb on the board and others having the wisdom to bring her in. it is very performance based. >> i totally agree that turn around ceos that actually take actions and raise performance deserve it. there are an awful lot of people on that list who are not doing turn arounds, who have had trouble keeping the company share price let alone performance up. >> that's why i agree with you. let's go after the bad examples. >> it isn't only she is being rewarded for performance, she came in at a high level because to hire a new ceo, exception packages go up, and with ceo turnover higher than ever before, in history, that only bids up the prices. i am not so concerned about
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relative performance, but it is absolute pay. >> it is the exceptions. last week the headlines were about mckesson's ceo getting $150 million pension and on top of $150 million of comp last year and 50 million every year and it is a company an annuity business feeding off the government. you're right. the exceptions are where we have to see the policing and the boards have been way too lax in those examples. over all, say on pay has nothing to do with many of these problems. many of the problems they would never comment are on the hiring arrangements, the contracts, which could never be public, what did we agree to bringing him on. >> it is better than the harr yard-yale game i have to tell you tackling this subject. so great to have you on. important story. thank you so much. there are just a few minutes left to go in europe's trading days. better pmi data. we'll have the details on the close and the impact across the usa when we come back. (announcer) at scottrade, our clients trade and invest
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. markets just closed in the u.k. and across continental europe. shares pushing higher after an upbeat start. the ftse more than 1% higher and the unemployment lower than expected in may after hitting a previous record high of 12.1%. estimates from prior months were revised downward. still there was focus on germany
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pmi coming in lower than expected. that caused the german d to fal briefly before it did regain some ground. the situation there has been getting more focus lately and today a bit of relief. >> a couple more definitely more references to greece and cyprus in the past couple weeks than we've had through most of the spring. >> and not just because of beach vacations. >> no. let's bring in josh lipton and see what else is moving as we continue to hover above the 50-day moving average. >> new week, new core, and we're kicking it off well in the green. positive data from overseas, china inner bank rates continue to moderate in europe and pmi clocking better than reports and ism manufacturing better than expected and sub components were mixed as i know you have been talking about. still, blue chips up 154. the s&p, what's working today,
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the materials sector, a sector that faced challenges given the collapse in commodities. today it is the best performer. sealed air is the biggest gainer. and also health care stocks, sectors up 20% and unh and ci hitting new all time highs and we'll end on the financials dominating that list today of new multi-year highs, wells fargo, capital one, m&t and keycorp some of the names. >> key up 3%. thanks for that. just as we are talking about lower gasoline prices at the pump, oil is back on the rebound. over to sharon edwards live at the nymex. >> we are looking at oil prices higher, gold as well. gold is really getting a significant bounce here. in fact, it is at the high of the session right around 12.60 an ounce after the worst quarter on record for gold prices we saw. keep in mind as we look at gold
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prices up about $35 or so in the session, many traders are saying it is short covering after we saw the three month low last friday of 11.70 an ounce. we're also watching of course the writing in egypt and some say gold is getting a bit of safe haven demand as well. there is still many firms out there that are getting more bearish on gold. barclays the latest to cut the price forecast on gold and hedge funds have been lowering their bets on a gold rally over the last week or so. we're also watching copper prices because copper is actually the best performing commodity we're seeing in the session, up more than 3%, and the data from the eurozone this morning on manufacturing was better than expected and some say perhaps show signs of turn around there in the eurozone. that is one of the reasons why copper is benefitting, but as you mentioned, we are seeing oil prices rising as well. egypt a major factor there as a lot of traders are watching the protests and also concerned about what is happening in
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syria. right now it appears that global political risk and geopolitical risk is driving oil prices at this point even though we're seeing lackluster demand out of china and the latest data underscoring that factor. we're continuing to watch to see whether or not wti prices, u.s. oil prices in particular will continue the climb towards $100 a barrel. back to you. >> sharon, thank you very much for that. getting some headlines in the bottom of the screen as you can see. putin says that russia will never hand over edward snowden to the united states. that's via nbc news. interesting because ecuador is sort of pushed back a little bit on the idea that he would be given asylum in that country, but a lot of discussion this morning about whether or not his best move might have been to stay in hong kong now that he is essentially a prisoner of the moscow airport. >> so much focus on the talk shows over the weekend as well, president obama's handling of the situation, what it means for the relationships with russia and china and interesting comments in light of that.
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>> meanwhile, gold as sharon was saying is selling off over the past week hitting new lows and briefly trading below $1200 an ounce but who or what is to blame? seema is back at headquarters with details on that. >> with india being the largest buyer of gold in the world the country's consumption of gold is vital to keeping prices stable. not only is the shiny yellow metal used in every indian festival and wedding, it is seen as a trading currency and safe haven investment among indians that have become disillusioned by the volatility in the rupee. given india's obsession with gold, every time the price plummeted they saw a rash of buyers in india boost demand. the managing director says this time around three factors could weigh on demand. first, the gold import tax to lower the current account deficit, the did epreciation ine yen and wedding season is over.
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regardless of challenges, the professor of economics at columbia university says india has seen gold prices rise and fall over the past 100 years and the appetite for gold remained constant. even if india loses some of its affinity for gold which morgan stanley's head of emerging markets says it will, it might actually bode well for india's growth. they say the money taken out of gold will likely be invested back into india's economy. that's what india, which is dealing with slowing growth needs right now. regardless of what happens this time around, commodity analysts say they will continue to keep a close eye on india's complex relationship with gold. >> it is ai great point. thanks very much. from the demand for gold to the demand for bonds, over to rick santelli in chicago with more on the markets, rick. >> thanks, kelly. a little background. at this the ten year yield and subtract it from the two year yield and it is roughly 214 basis points. last week at the highest close
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meaning the widest it has been at 220 and that goes back to august of 2011. there is the table. and it is set. now rob will tell us what the table setting means for traders. >> it will be interesting. i wanted to go back and think about the past a little bit and in 1994 obviously a different time, '94 the fund was 3% and at the beginning of the year the ten year note yield close to 6%. over the next six months the ten year rate rose 142 basis points to 734. during that period of time the japanese institutional accounts sold massive amounts of u.s. treasuries to repatriate money to cover losses of 25% in the previous three years in the nikkei stocks and also at that time as the curve steepened, orange county had a tremendous municipal default because of the floaters they told and the economy picked up at the same time. >> the conventional wisdom after i hear everything you're saying is potentially look for more
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widening in the curve. how does it affect banks? >> well, obviously on one hand when the bank rates rise a lot, that's good for them. they get a better profit margin. the problem is they're already very large holders of the securities, and the markdown will have definitely a negative impact on earnings. >> and i like talking about the yin and yang of that steeper yield curve because of long rates moving higher. indeed we have seen collateral meaning treasuries, boons, oats, every type of sovereign security under amazing demand because everybody needs to hold high quality collateral, but isn't this potentially the doomsday hindenburg effect here? if this stuff starts to price lower the banks aren't going to hang on forever. >> i think you make a good point. the worst performing bond market in the world was the high yield, the high yield emerging markets bo understands and they've been
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just crushed and you can see people leaving the markets in general. that was like the favorite place to be and now you are seeing people withdraw money from mutual funds and just ici data shows they reduce their holdings. >> and mutual funds are a biggie. that's an institutional trade where they hold boat loads of treasuries and redemptions are redemptions. it is not like a big decision here. >> 29 billion in three weeks and in fact this central bank themselves reduced holdings by 32 billion last year. >> just look at the direct bidding in some options. the seven year was good. we had a string of 14 options in a row where it wasn't. i want to hit on another issue. you are talking '94, i know why, because of the tightening that greenspan did. look what happened to our yield curve just on the notion of less accommodation. we haven't even gotten to the point of raising rates. there is a lot of chapters to come yet. >> absolutely. >> real quick, i know we're out of time. i see the straddles in ten years for friday's employment data are
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really wide. what that means, boy, they're really over pricing potential move. quick last thought. >> i don't know if they're over pricing it, but they're predicting that your break even is 15 basis points up or down to make any money, and they're saying that the risk of volatility is very high. >> wow. the price of poker has gone up. back to you. >> thanks so much, rick. rick santelli in chicago. shares of winnebago more than doubling over the last year. no slowdown in sight. we'll find out how much upside may be left for this high flyer and if you drive winnebago, may want to stay out of california. the gas tax is the highest in the country. we'll talk to a gas station owner about what that means for prices, drivers, and his bottom line when question come back in a moment. hey linda!
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and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before. with fidelity's options platform, 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. wi drive a ford fusion. who is healthier, you or your car? i would say my car. probably the car. cause as you get older you start breaking down. i love my car. i want to take care of it. i have a bad wheel - i must say. my car is running quite well. keep your car healthy with the works. $29.95 or less
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after $10 mail-in rebate at your participating ford dealer. so you gotta take care of yourself? yes you do. you gotta take care of your baby? oh yeah! coming up next second half surge or swoon. what's next for the markets and what it means for your money. the talk of the street, apple up graded and raymond james here to defend the bullish call and after doubling in the first half is pandora's hot streak just getting started? one big debate. see you in about 15. looking forward to it. in the meantime winnebago stock is soaring. what is driving this rv boom? phil lebeau is live at camping world in island like, illinois. we have jane sweating it out in vegas with the hawaiian elvis and you are there in illinois this morning ? >> i am not sweating it out.
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you know, it is interesting. we have seen a few people come in to pick up rvs, going on a vacation or picking one up they bought over the weekend and they're seeing explosive business here at camping world. this is what we are seeing this summer. when you look across the board, growth will come in about 38% higher this year, at least that is the projection at this point. we've had a chance to look at a number of dealerships around the country and those people at the dealerships say two things are driving this. you have pent-up demand, people not able to buy as they went through the recession over the last three or four years and also people who want the creature comforts as they get out on the road, and that is being reflected when you go to the winnebago industry's plant in forest city, iowa, where they are running red hot and in fact they are doing over time to the point where they have very little room to keep up with the demand and where is the demand greatest? with the entry level models. they're seeing a lot of sales in that area.
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>> we're seeing more of the new buyers as a corporation because we have come up with some entry level products that are appealing to buyers that we just didn't have before. >> take a look at shares of winnebago. you mentioned at the gaming this stock is on a tear in the last year in part because of county is exceeding expectations when it comes to sales and deliveries and in fact last week when they record quarterly earnings they made a note of the fact that they are doing better than expected in terms of deliveries and that's why the stock got a nice pop last week. we're back live and this is the top of the level winnebago model they have here at camping world. it is not like the campers we used to have. look at this. have you the countertops and large screen tvs and there are three in this model. you have appliances, same as you would have at home, the stainless steel. remember the old days you get an rv and you had a small ice box, those days are gone.
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these are totally wired and ready for the person who is willing to spend a fair amount of money to be out on the road in comfort. guys, back to you. >> wow. >> we're debating who gets to drive first. >> i actually looked up one time if you can live in an rv. you have to a lot of places make it move around enough to avoid people parking and staying? beautiful. gorgeous inside. we'll come back to you for a lot more later on. phil lebeau talking winnebago. over to kayla tausche and a quick market flash on the best performing dell component today. >> today it is disney up just about 2.1% hitting a new high just below $65. you can see the chart there. the main reason, monsters university was the top grossing movie at the box office for the second weekend in a row beating out the heat, of course, the sandra bullock comedy by about $6 million and monsters university bringing in $46 million and another reason, barron's listed disney one of
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the most respected companies, second only to warren buffet's berkshire hathaway. that certainly helps. >> reputation matters. kayla, thanks very much for that. california's new gas tax hike may be painful for drivers. what about the station owners who have to deal with swelling consumer grumbles? we'll talk to one. you see him there when we come back. could save you fifteen percent or more on car insurance. yep, everybody knows that. well, did you know some owls aren't that wise?
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stocking rallying to mark the first trading day of the third quarter, the dow up about
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150 points, the nasdaq up nearly 1.5%. just off session highs. big upgrades from the sales side helping to boost a number of name this is morning. pandora upgraded to overweight to equal weight by morgan stanley. noe kae aupgraded and best buy spiking after being resumed out performed at credit suisse which says the stock is its best near term idea. also apple getting an upgrade to strong by from out perform at raymond james. you have to love the voe cab. >> ray james. definitely an insider. starting today california has the highest gas tax in the country. the total tax is now 39.5 cents and up to individual retailers, though, as to how much of the burden they will absorb or pass onto customers. the owner of four gas stations in southern california joins us to talk more about this. andre, great to have you. you are no stranger to this game. you've had these for 20 years.
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the tax as i understand it is really the result of a very small board of state officials. how did it come about? >> the state board of equalization, there is five members of, it was a 3-2 vote, the vote for 3.5 cent increase and that was about six months ago. >> obviously you believe it is uncalled for. you say that nobody wants to deal with it. the question is how much of it are you going to take a hit on yourself or pass onto motorists? have you made that decision yet? >> well, no, and i think you're going to find that you're not going to see the impact for the next -- until about the next two or three days. basically in the state of california right now, and especially in the city of los angeles, when you look at the $4 a gasoline price, 20% of that is taxes. >> who is this board of equalization? the l.a. times did a piece saying they're rarely in the news but for people with a low
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profile they sure wield a fair amount of power. >> i would say. in the state of california we voted down a sales tax increase because it takes a theirs majority of the voters. they're three members voted yes and next thing you know it slips in there and don't for get the 3.5 cents on top of that sales tax also. now you're up to almost 3.7 cents a gallon. >> just increase. >> how expensive are prices where you are standing and how much of a difference is this going to make this week? >> right now the average price in southern california is about $4.05 a gallon. the market was moving down until this recent increase, but you could expect probably 4.07, maybe 4.09 going into the july 4th price. >> and i imagine that's at the high end of what you ever really had there.
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what's the reaction from motorists? >> i don't think the motorists really have seen it or heard it until the press has picked it up and i am glad you did. this has been on the books for about the last six months, and it received very little publicity. i wish i could vote myself a net increase of almost 3.7 cents. >> yeah. >> some of those winnebagos my way also. >> yes, yes. we all know sort of the position this puts you in as a retailer, but also it is going to affect probably not for the better the business that you do that is non-gasoline related, right? >> everything. everything that relates to how much gasoline you sell and to keep it in perspective, that 3.5 cents on a margin that i average let's say 13, 14 cents, if i don't go up that 3.5 cents, i will be down to 10 cents a gallon. you can't operate a business that way.
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>> i appreciate your time. >> thank you very much. >> thanks to you. >> sticker shock when people hit the road. >> straight ahead find out how you get your hands on this beach tote signed by all of us at "squawk on the street." something to do with the jobs number on friday. back in a minute. ♪ [ male announcer ] some things are designed to draw crowds. ♪ ♪ others are designed to leave them behind. ♪ the all-new 2014 lexus is. it's your move. bjorn earns unlimited rewards for his small business. take these bags to room 12 please. [ garth ] bjorn's small business earns double miles on every purchase every day. produce delivery. [ bjorn ] just put it on my spark card. [ garth ] why settle for less? ahh, oh!
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it is that time again, of course, don't for get to nail the number ahead of friday's jobs report. we'll give out a beach tote this month signed by the whole gang. send us your non-farm payroll guesses with the hashtag nail the number. i don't know what consensus is for the report. >> roughly 150. i haven't seen the official. we know it will move around for much of the week especially after wednesday. >> a lot of information between now and then. in the meantime dow hanging in there, up 160. one stock i am keeping my eye on, caterpillar, ai proxy for growth not only in china but here. interday has managed to go into the green, a couple dollars above what a lot call support. if things break down you may see it happen with cat first. >> i was surprised it was under performing to that extent given how we're looking today and a
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quick look if we can show it at the bonds trading in egypt as we keep an eye on geo politics as well. that's one to watch. the military out there saying it will layout a road map if it needs to. 14.3% actually not popping today. that may be helping as well. >> the big story. let's get back to headquarters and the halftime. thanks. welcome to the halftime show. four hours to go until close. it is a good start to the week. the dow is up 161. s&p and nasdaq better than 1%. hooer is what we're following on the half. apple of his eye, the ray jay analyst that made the biggest call on the street is here live to defend the move. the netflix of radio, what one firm calls pandora as it ups the stock and stat wick the traders squaring off in one big debate. swoon or surge? what exactly will the s


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