tv Squawk on the Street CNBC July 15, 2013 9:00am-12:01pm EDT
>> randall stevens, have a great day. >> that's right. the whole texting. >> no, no. >> thank you. for being hoo for two hours. still -- >> can i end with a camp packing list? >> rain gear, don't forget your flashlights. >> for the markets. >> bring protection from the sun. go ahead. >> always -- >> read. >> make sure you join us tomorrow. "squawk on the street" begins right now. >> good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber. coming off the second best week of the year, 78 points from a new intraday high on the dow. citi beatsing pecktations this morning. a big week of earnings. futures are mixed after retail sales dismiss and the china gdp number 7.5. gas prices the story to watch this week, up 10 cents since
thursday. more on that in a while. one of the biggest banks in the country, citi sha rising in the premarket after beating analy analysts' estimates on the top and bottom line. all of the next moves from the financial giant. >> china's economic growth slows, as expected but the industrial production numbers came short of expectations. >> strong auto sales helping boost retail sales last month. as prices rise, what happens to consumer and the retail stocks. >> leap wireless up 100% after at&t inks a deal to buy the wireless provider. >> banking giant reports second quarter earnings of $1.25, that was ahead. citi says results capital market revenue and demand from emerging markets. trading up 18%. equity trading up 68%. not bad. >> no.
superb, actually. a lot of people getting against the quarter. charles peabody. quite a bit of brouhaha thought up to $5 billion to $7 billion of losses. the foreign exchange losses, off by 1.3 billion. how do you stay short? the breakdown, north america, latin america, asia, europe, middle east, terrific. michael corbat. >> yeah. they are the most global of all banks. headwinds and emerging markets give you pause? >> should have happened already. i even this emerging markets, revenue's terrific. you know, maybe they're becoming more of a defact toe place to go to. they trim where they weren't making money. they're no longer the state department. they're more of a bank. >> he did say, of course, in the second paragraph of the release or third, emerging markets,
growth is being challenged. >> right, right. >> that's it. beyond that reference, you're not going to see that many signs that the business suffered as much, certainly, as the markets seemed. >> no. >> i like the citi holdings coming down, the possibility, by the way, that one day we will not have legal, b is big, is important. >> reserve wasn't as large. >> no. but the credit, the bad credit is down. i think what's interesting, wells fargo wasn't supposed to be so great on friday. it was magnificent. expenses were down, jamie dimon, fantastic fixed income trading, right? here, citi really good emerging growth, very strong u.s. we now have three banks that are reported all better than expected. this group was the group we were most worried about, second biggest up going into the quarter. >> yes. >> it's verifying the run. >> citi's up 28% so far this year. it's ahead of the kbw index. do any of the things we've learned over the past couple of
days, that is from jpmorgan, from wells, from citi, lead you to buy a capital one from here? lead you to guy goldman ahead of tomorrow. >> tempted to guy goldman, do well in a turmoil market, they're good, foreign currency. when those are up and down, they're good. know how to trade the yield curve. i did work there. great source of income, the trading. capital one a big move, they've done a lot of good things with credit card. they're making a ton on credit cards. it had been one that people -- the two people are betting against, citi and capital one. they turned out to be horrendous shorts. very good longs. >> north american consumer banking at citi, though, was not particularly strong. >> no. >> a lot of that go back to mortgages. they're not a huge player. they're not a wells, certainly, or even a jpmorgan. but, but, you know, we did see weakness there, at least, versus a year ago. >> yes. >> as you might expect,
servicing revenue also down. cards not great either. >> reits down 4, surprising. i didn't care for the retail banking number. it's not an american bank, the a global bank. where a lot of people thought they were going to disappoint, foreign exchange and overseas, turned out to be a positive surprise. another story people will like as a way to play emerging markets. if the papers are right, people want to go back to emerging markets, citi goes to. the tangible book number, tangible book is scrub because the government had a big position. tangible books right here. >> $53.10. >> right here. stock had to trade above tangible book. >> more broad today. pay attention to citi today. a big week for earnings, bank of america tomorrow, ibm intel later on, ge on friday, unh, verizon. >> good. >> we are -- if we get near or part the may highs, jim, of 1687, do the bears have to reassess? >> i think what they have to do
say, before money comes out of the bond mark, out of the bond funds, there's a lot of earnings momentum but one-off things that are working. people bet against boeing friday. how do they feel today? might have been a fire unrelated to the electric battery. okay -- oh skeptics new -- >> can we replay that eye roll? >> i'm not even -- it may not have something do with the battery but it still was a fire, again, in a dreamliner. >> fire, bad. fire, bad. >> fire, bad. not that many flames in service. >> it's not a campfire ala summer camp. don't want to see it, electric battery initially thought of. i go back if you want to know where we are seeing surprise in the s&p, your world, four guys this morn having to go from sell to hold leap wireless. another eye roll? >> no, i'm not give you an eye roll. >> i'm going to take you to on
ophthalmologist. >> they're all upgraded because it got a huge takeover. >> i made a short list. the past few weeks, kroger, bilo, gannett, leap, yahoo! tumbler, dell, heinz. beginning to feel, david, like we're back in the narrative? >> the great white whatever they used to make fun of. how about the lobla deal? >> i know it's $12.4 billion deal. the largest deal of the day in the canada, cash and stock, not to -- there is a pace of deal making but i would still argue it is not anywhere near what we might have anticipated early in the year. >> no one's saying that. >> but there is -- there is something going on. there's a pulse. i'll give you that. >> can i tell you about a little one i like? $50 million bid in the rental car business by avis, buying the -- literally buying the six largest company in rental cars. do you know mouch it costs when
you go to about a rental car? when you rent one? >> it's like a million dollars. you don't check off -- i have a 79 day rental car in florida that cost me $260. and it's just going to get even did. >> that's taxes and state charges? a lot of stuff. >> yeah. but you know what i see these deals, avis buys payless for -- consolidation, how about wireless spectrum? people saying at&t has to buy dish. >> in fashion the leap deal may make that less likely, there are some analysts saying. but, yes, spectrum, without a doubt, is -- it's land. and land is extremely valuable. you haven't built on it yet. it's in a very good neighborhood. >> yes. >> always a need for that. by the way, charlie ergen has a lot of spectrum. lightsquared, bankruptcy, reorganization plan, that's something, again, that deals
with spectrum. and so, yeah. >> how about the fact that everyone says, t mobile could be involved with leap wireless. you're probably on that more later. i mean the consolidation here is rather extraordinary. and i also think, by the way, the buying power against apple could be incredible given the huge backload. >> talking leap, i mean there's a thought, jim, at&t moved on leap to prevent tchblh-mo, it bt pcs, there is a belief that perhaps they did that, it's quite a multiple. >> right. >> and the value of the spectrum as well, given the price, is quite high lp looking at notes this morning from the analysts that karl referenced coming out saying no longer sells, they do believe, as you might expect 100% premium that this was valued fairly well. >> t-mobile up in premarket. by the way, a lot -- in the last -- i want to ask, the
amount of option activity in the last 15 minutes friday for leap, boy, people really -- isn't that amazing? guys kind of just putting pen to paper and saying, i'm going to buy leap. >> you can't see an hour into the future? >> i think that you know if you pay a certain organization a little bit more you get the high -- that is one of the -- >> eamon javers? >> the coming up announced merger wire, no, no. >> how do those people know? people getting lucky like you couldn't believe. >> odd to announce a deal at 5:00, 5:15 on friday in july, not sure about that announcement and i get not monday morning, but come on, guys. >> and the alexion deal. >> reported by bloomberg, also reuters, confirming, very interesting, though people say, wow, what a multiple that would have to be. roche does not pay those numbers in terms of multiples to earnings and revenues.
>> for an orphan. >> orphan drug you're paying $400,000 a year for, gets into other political -- >> right. it's not meant for that. >> -- battles. >> the not meant to make $1.5 billion. >> you know what? me hearing myself talk about m&a, i'm with you. there is a little bit going on. >> are you rolling your eyes on yourself? you've got mother/sister, mother/sister. >> chinatown. news from around the world. china gdp did slow to 7.5% on q2, down from 7.7 in q1. the figure for q2 was in line, matches chinese government's growth target for the year. and as i was saying to kelly, she was saying to me, goldiloc goldilocks, not too strong, enough to get policy. >> when we first got bottom in europe it was ho-hum.
europe hasn't taken off. but you did get a bottom. i felt the number was like, wow, that's terrible. no, the aussie dollar went up around early morning. i think that it did get it back. i do believe that this is the beginning of the numbers where people say eh as opposed to look out, look out, the sky is falling! the great wall will be there. >> there is a transition under way in the way the economy operates that they are trying to encourage, thanning more of a consumer-driven economy. they've failed to do that over the last few year but was trying much harder now. >> right. >> that will change the nature of what they are doing in china, what you're selling to them in china. not commodities as much as products. >> finished goods. bmw, happy 50th ach anniversary >> getting used to certain degrees of quote, bad news, bernanke gives hawkins in the middle of week, a, are we in limbo ahead of that and, is the market sort of like we said
getting comfortable with a 2.5, 2.6 ten-year. >> it's getting comfortable the fact that utilities had a big run last year. the real estate investment trusts haven't come back. we went up but the bank earnings are okay, they're saying that things will be weaker, bank stocks didn't go down. i also like if you're bernanke, you can say, hey, wait a second. retail sales weren't goo that good. why we do have to end that tapering? rick santelli quoted, very positive? >> but you run into the situation where the fed's got a lot of cover to say we don't need to end. >> with that in mind, we'll talk more about the disappointing retail sales number and gas prices, up ten cents since thursday, as we said. we'll talk about what that means for your money. a big delight for fans of twinkies. today marks the official relaunch of the legendary snack. even walmart got ahead of
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♪ retail sales in june up .4%, helped by increase in auto and gasoline sales. economists hoping for .8. the recent lundberg survey, the average price of u.s. gasoline fell to 3.59 compared with three weeks ago. lundberg says prices expected to spike once retailers pass on the higher cost of wholesale gasoline to consumers. we know what happened to wholesale gas, ten days. >> i know obviously it's a variable number, we've been there before. it maybes it more paladino latable. it's a tax on the consumer. the number's high. i think that maybe we're at the high. i'd like -- i don't believe that oil's going to trade much more above 105.
that's a political risk that i think's dying down. supplies are plentiful. a strong number, inventory number wednesday, a higher inventory, gasoline will have peaked. >> that's a theory by a few, the gulf oil ceo talking about 50 a barrel. and this sort of the last push, the last mile push by traders to get all they can. >> technical breakout. people using oil as a way as a financial hedge for inflation because none of the other commodities are working. i don't think oil goes higher. >> a couple of calls on retail names. gap cut by piper to a hold. >> i don't get that at all. a lot of people do valuations, valuation downgrades. gap's got tremendous momentum. >> stevele ups tiffny. something you were talking about a year ago, wealth effect. >> gatsby. tiffany's a rare gem, we
don't -- until david yermen goes public we don't have a jewelry play. we don't have high-end -- restoration harbor, an interesting article. >> private equity has done well with secondaried taken place. >> interesting numbers. >> but they've done a great job, restoration hardware. >> they have. 40% comps. nordstr nordstrom, bounced back, well above where it reported. the high end is -- we don't have enough plays, let's take them up if neiman-marcus were to go public today it would be a hot deal. i think so. i think so. >> not a big week for retail earning, more industrial, big peck tech, banks, right? >> yes. >> picture on the consumer per se is not going to get fleshed out in the next five sessions. >> unless we see -- by the way, the consumer's very liquid. we don't see the defaults. every time a new number comes out they're paying off the debt.
>> talk retail i can't help but think about best buy at $30 a share now, just to mention. my god. turns out people just when they sold it down must have thought there was liquidity event. watch radioshack. >> radioshack another one. but it gives us a previous chance to say nice job with jamie dimon friday, talking about liquidification of the consumer. i great sit-down. >> covered a lot of ground. >> thank you. he's not going to be the federal reserve chairman because he wouldn't be good enough. you know what? these are the offcamera, what do you say to yourself? listen, i gave him everything i got and he is just very adept at answering things because the bank, as people like to call it on wall street, is very good. and the whale i think is behind it. interesting there was a momentary ground swell elizabeth warren and glass-steagall back and in the ether.
>> it's goldman's turn to be in the spotlight, we'll talk more about in a minute. cramer's put you ahead of the curve as we go into a new week. we'll get the mad dash next. futures tepid. moderate green arrows on the dow. we see what happens when the opening bell kicks off. are you sure we should take this billboard down? people find out state farm does car loans as well as they do insurance, our bank is through. good point. grab an edge. look there's two guys on the state farm borrow better banking sign. nope for real there's two dudes on the state farm borrow better banking sign. [ reporter ] breaking news from the state farm borrow better banking sign... we're seeing two men that have climbed the borrow better banking sign gentlemen please get down from the state farm borrow better banking sign. phil get the hose. okay he's getting the hose. alright, let's go. [ male announcer ] talk to a state farm agent about car loans that can save you hundreds. that's borrowing better. 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.
bennett liberty media. >> bennett used to run liberty media, reporting to john malone. >> and jim skinner, first time we've heard from him in a while from mcdonald's this feels look a board in turmoil is going to be a supportive board of meg whitman. this stock remains a hot stock versus last year. >> a board that's 9 going to 12. adding three members. not replace anybody, they're getting bigger. they may get bigger from here. maybe 12 to 15. sounds like too many in the boardroom. the bore has always had so many leaks, i'm not sure how many board members you want to have. >> anything that indicates she's getting her own people -- these are not house people. you do not put these people on and get a vote from her. >> you want a strong board. we should mention, wit worth is the interim, interim claire.
looking for a full time chairman there. >> all of the news about hewlett-packard this year is good. down 44% last year. all of the news on delicates to me the industry's not that good but that could be michael dell talking it down. but another letter from karl icahn, he likes to send letters. >> likes to send letters. we're in the end game here. vote is thursday. it's very, very close, as i've said, many times and continues to be. hard to get a complete read because not everybody's put in their votes. pull them back until last minute. fuls, though -- fundamental. >> levered deal versus unlevered hewlett-packard. high think this is hewlett-packard's time. i think it's their time. >> you do? >> like best buy. though i don't think you like best bias much as the market indicates. >> i wonder whether the trends have changed that significantly for best buy that you can view it as a look long term holding. >> hewlett and best buy, two
given up for dead stocks, leap, given up. leap! these are all situations where we felt that they were on life support. leap, best buy, hewlett-packard, it turns out that there was real value underneath though it was very hard to see. >> real life. keeping an eye on all of the shares and whether or not the dow and s&p can break nor records when we come back with the opening bell after this. ssfl business.
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...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ you're watching cnbc's "squawk on the street." opening bell in less than a minute's time on a monday. a lot of news ahead of earning later in the week, bernanke on the hill doing humphrey hawkins. big front page story in financial times about apple. >> i saw that. >> the iwatch is something for which they are hiring aggressively. they say it's moved beyond the explorer to stage. but on the flip side, may not be ready until late next year. interesting for those pinning hopes on something this fall. >> yeah. i wish the news flow for the people who own apple were better. i think it's interesting that we
got a downgrade of another favorite qualcomm because of the smaller form factors like the watch. you don't hear about apple very much. >> interesting story for the front page. interesting editorial. there's the bell. we take off on monday. top of the screen. organovo. celebrating its recent listing. and over at the nasdaq, major league baseball and robinson cano celebrating the chevrolet home run derby at citi field tonight. >> i love the all-star game. >> the best. >> it's really fun. two phillies, by the way. >> david's not smiling. >> happy, citi field hometown field. david wright starting at third. matt harvey getting the start? don't know. >> interesting time in baseball. >> is it, wow. no-hitter this weekend. >> testing positive over the weekend. a lot to watch in sports.
we mentioned -- you mentioned technology, we talked about apple. microsoft. the journal with a story of blackberry cutting the price of z-10 as much as 75%. >> the bill for the blackberry's going to be half what they thought. that stock still not the place to be. still too early to buy blackberry apparently. i just come back to hardware doesn't do well. semiconductor equipment stocks continue to do, semis. it's kind of this where sand disc screaming up a disconnect between the end markets, which seem to be glutted and the partmakers, western digital, that keep doing well. >> yeah. >> people are short those stocks. >> watch citi, obviously the number one gainer on the dow right now. close runner-up, boeing, room to make up after friday. record volume for boeing. that says something. >> remember, they have a 20-year plan.
and no cancellations. you can't get a dreamliner until 2019. so, i know that, yes, terrible accident, fortunately nobody on board. but boeing did just have a tremendous decline on friday. and it's bouncing right back. this is a teflon stock. >> headline in the "times" today, doubts linger. news about the fire, doubts linger. i wonder if you think the story's truly done. we have no way of knowing. >> always hesitate that. i like the fact that mcnerney said, battery was fixable. i like -- always been some things, when you have a new iteration, ethiopian air, who knows? maybe a stove left on, obviously you hate to see this material seems to heat up quickly. but i think -- i said on friday that don't bet against bowing and i reiterate, don't bet against boeing. >> something to keep in mind.
dell, thursday the big day, david. yes? >> yes. thursday should be the big day. as we get closer, of course. we reference this both sides. hearing from the special committee over and over, perhaps they protest too much, enough already with andy -- do you realize if you turn this down you're going to have a company -- >> is that inimitation of carl icahn? >> no, the special committee puts releases out every day. icahn follows with his, saying why he believes it's better off for shareholders to vote the deal down and go with the recapitalization of dell. we'll see. >> the real question simply is, if it's going to be extraordinarily close, does michael dell choose to try to raid his bid to get the vote or does he not want to? >> broke the story he wasn't. at least last time.
i know carl icahn, delivering alpha, judge wapner's interview him. adds a second -- adds a call option. the guy's just not -- he's dogging. >> he's doing everything he can do try to keep as much pressure on as he possibly can, whether or not it's just to get a bump or because he wants to follow through with the recap plan, which he would not tender his shares and throw a percentage of the company -- we'll have a lot to talk about as we close in on thursday. we'll leave it at that there i can't believe anybody wants a company that has pcs. one of the things we're seeing, talk about -- you know, look, apple's got too many. verizon has too many phone. too many pcs in the channel. there's an old feeling here. >> yeah. >> tablet that's no longer growing. >> we mentions the surface. microsoft after the announcement of the reorganization last week, stock's up a half percent, a little less.
>> i think the quarter's going to be good, for what it's worth. one microsoft campaign, ballmer's back, bigger than ever. >> back from what? when he was -- >> a lot of people slagging the guy. >> back from 13 years of nothing going on from the share price until recently? >> a little excitement there. but it's coming from the entertainment division. >> okay. >> don't rule out nokia doing a good quarter this week. >> tiffany, mentioned the upgrade, 3% pop. compared to another name mentionmentio mentioned with well-to-do consumers, hog, slapped around today. >> i visited my cousin's shop, liberty vintage in philadelphia, discovery channel, friday night. there's a sense that hog from a motorcycle expert, adam cramer, my cousin said, hog is not as in favor as these other brands all of a sudden. >> interesting.
>> he remade from the '60s. there's a sense that hog may not have excitement -- this is from an expert -- that some other brands have. >> we have had him on the show, brought their bike. that's the market they're going after. >> yes. a very hot bike. >> finally, we mentioned, u.p.s. last week, but several downgrades. raymond james takes it to buy from strong buy. >> yeah. better late than never. u.p.s., i think, at 85, i -- here i probably want to buy the stock. enough is enough. do a reorganization, a great american company. a lot of negatives in it now. maybe not a lot of positives in it. i like that. >> still worry about the one line, slowing of the industrial economy. >> that was not -- yeah, that was -- it's really hard to figure out what to do right now. they gave bernanke a little ammo. >> maybe they did. maybe they did. >> but the -- but retail sales,
but then empire. this is a very schizophrenic mark, no offense,s that a horrible disease, but i'm saying there is something for. >> and maybe that's why in the end you can have a good market. there's just enough good from every side, transports go up, boeing recovers. i think u.p.s. will be in rec recovery mode two days from now. we have bank of america, goldman sachs. big cap names. commitment in the market. >> bob pisani, see what is moving on the floor. >> guys, happy monday. fairly nice start to the day. overall financials, industrials, discretionary move, citi up 2.3%. three good numbers. wells fargo, jpmorgan, now citi group, those selling into the numbers so far and that's typical. so we're bucking trnd with financials holding up well her . story, the chinese stock market up 1% overnight.
gdp came in, goldilocks, 7.5%. the official estimate for the target for gdp this year. remember, the hullabaloo on friday, chinese finance minister came out and said, or implied, perhaps the growth would be 7% this year. over the weekend, that was corrected by the news agency, apparently, some misunderstanding. he meant 7. 5%. a lot of people wonder exactly whether he was sent out to float a trial balloon and people didn't like what they were hearing, go back to numbers. those are theories. official, 7.5% for the second quarter overall. that's very good news. that's what the chinese authorities wanted. what was not good news, june retail sales. remember the theory about the second quarter. numbers were lousy in the second quarter. but the theory, april, may lousy. june numbers were better. well, yes, except until we got the june retail sales report up
0.4%, half of the expectations. ex-auto and gas declined in june. that doesn't play along with the narrative of the numbers slowly getting better after a crummy start to the second quarter. so, right now you've got a real problem trying to figure out what's going on. the consumer appears to be slower. the stock mark is reflecting slower global growth. for example, material stocks lousy underperformers and the question is, should you go after now for the second half of the year the underperforming groups like materials, for example, even though global growth is slow? i think the sense of a lot of people and a lot of traders is, you've got to play the growth card. you've got to play the perspective things will get better in the second half of the year. listen to what the head of alcoa said. i was surprised how bullish he said about aluminum sales. there's the growth card that you want to play right now. that's the only way to go. finally, make a note here about what's trading. down here at new york stock exchange, oracle now trading at new york stock exchange, moving
over from the nasdaq today. guys standing around, watching it trade. one of the big ones. in fact, this is the biggest move of all time of any stock from any exchange. oracle, one of the most heavily traded stock at nasdaq now trading at new york stock exchange. >> thanks very much, bob. orcl, watching that one. wanted to hit a couple of things on m&a we didn't get to. the largest deal of the way, by the way, not the rumor, enormous were that to happen, not leap. it's a very large retail deal in canada, neighbor to the north, after all, not very far away from us, loblaw, a well-known name canada, one of the big retailers, supermarket drugstores chain, buy shoppers drug mart for $11.9 billion. 56% stock. nice significant premium as well. 29.4% to the 20-day volume
weighted average price. and we're talking about a company here that's going to have $42 billion in pro forma revenues, $3 billion of ebida. interestingly george weston limited, will vote in faber of the transaction. also buy more of the stock as well. so i wanted to mention that one. >> right. >> don't have the stocks for you. sorry, all trade -- >> some banker fees coming. >> absolutely banker fee there's. let move to activism. a smaller company, jim, but you hear a lot about "mad money." waging all out proxy fight to get nine, replacing the board of directors of vivus. i don't have a great deal of time. obesity drug, a lot of hope for it, a lot of questions why they haven't been more effective in terms of the rollout of the drug. i should point out the news this
morning, supposed to have the vote today. they pushed it off and vivusi saying misleading statements reported to the commission, the s.e.c., for its part, first manhattan says, by the way, delayed, frdisappointed by the delaying tactic. it's a pretense to buy time to improperly influence the election. there had been an offer of vivus, three for first manhattan. expectation you would get a deal and vivus would announce a deal on new three, four. it's been pushed off. the new vote late in the week. it's a nasty fight. >> high-end firm. this company, obesity drug, i mean you think would with the epidemic of obesity you could have a situation where this, should have been much higher. but you know there's questions
about why they didn't market it better. i don't know. i think that they obviously could -- this stock should have been higher. i think they're correct. >> we shall see. that's a nasty fight. again, first man hat. sam colin, well-known, successful portfolio manager focused on the area. take a look at leap shares, we did mention it a lot. not often you see a stock up over 100% this morning. that deal includes, you may want to wait $15 a share. there is a it's called contingent value based on spectrum they own and the sale of that. you have to -- that figures into a part of this. that may be worth as much as 250. i've seen different estimates on what that is worth. that's why you're adding in another $2.15. it may still be trading tight to the price. there is some talk, though, well, is it possible t-mo could try to play here?
very high -- i mean, walt for his part call multiple to ebida grotesque. >> how could many people have a sell signaling this is going dramatically lower and clearly be a worth to it. >> consolidation, of course, the key deal being t-mo and pcs. but always a thought that pcs and leap might get together. the thought leap's left out. they've got a low-end. cricket prepaid service which at&t keeping. but what's the real value? i think the thought they're not going to participate in the consolidatio consolidation. at&t decides to play here. >> amazing. >> we'll see where else at&t decides to play down the road. >> i think people who had a sell on it i'm calling minions, ala despicable me ii. >> number one for the second week if a row.
>> loved it. >> the two-week global take $472 million. >> two weeks. >> trying to get brian roberts to say thank you, carl. >> best movie ever made. >> that's absolutely true. let's shift to the bonds and the dollar. rick santelli at the cme group in chicago. go ahead. >> well, you know, as i look up at 5 and 10 years, 5 under 1.40. retail sales disappointing. shot up to 146-ish. slipping back three basis point on the weaker retail sales. same dynamic with stocks. the ten year up the 2.63 now dabbling with 2.56. 18 basis points below the high yield close which was the fifth of july at 2.74. open the chart up to june 1st of this year you get a good glimpse of that ten-year.
indeed it off its high levels but that certainly doesn't look like a sideways pattern developing yet. still seems to be momentum to the higher yields, lower price. let's contrast that with the ten-year bund overseas. we've had s&p, moody's, fitch, all taking away aaa ratings of france. nobody seems to care. soft numbers in europe though there's debate to the outlook. all taking a bigger tool on the bund which is more developed to its retracements on lower yielded. look at hyg, good barometer etf for the risk trade. you can see since june 1st, that's making a comeback. don't know how much investors are willing to abcome dating to the accommodating strategy of risk. we have to pay attention. last chart, euro currency. open the chart up to the last quarter of 2012, 127.5 to 128, good support, bounced off it
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welcome back to "squawk on the street." covering citi group earnings. stock jumping out of gate on a clean and clear beat on the top and bottom line. we just got off a call with reporters, a lot of questions talking about what exactly contributed to the blockbuster quarter. among those things, improving credit picture. the company's credit losses decrease by a quarter and the assets in its bad bank decrease by a third. that was because in the last quarter investors were searching for yield and able to sell more risky assets out of the portfolio. questions concern the capital ratios, not unlike questions to jamie dimon of jpmorgan on friday. the difference, citi group near or above a lot of the ratios. of the supplementary rash yoeshg the bank at 4.9%, it needs 5%
and the banking subsidiary at 6% level that it is expected to need to make. asked about whether these companies should be holding 5% capital against cash and government-backed securities he didn't believe that that needed to happen, that those assets were expected to be secure. citi gets the bulk of the revenues from abroad. the big question was, will these regulations make banks like citi group noncompetitive against some of their global peers? he expects the playing field will eventually start to level where regulation is concerned. we'll have the story on emerging markets, which is a big focal pint of citi's earnings at the. of the hour. >> thank you. interesting headlines including one about the cost saves post-december restructuring being on track. >> yeah. they do have a lot of costs to take out because they had maybe too beg a branch networking in the world. they've got citi holdings continues to go down. one of the things that i liked
about the citi quarter is that this is a company that, remember we left this one for dead too. talk about left for dead stocks. turns out they have a -- much more earnings power than i thought. and take a look. jpmorgan said that mortgages aren't going to be as good. wells fargo said mortgages aren't going to bed agoose, stocks up. the market seems to say we accept that we're buying you anyway. >> rich peterson tells me, shares up 20% since the reverse 1 for 10. >> a stock that has institutional ability to be member stock, institutions don't like to buy stock below five, it looks bad. corbat's doing a good job. he's doing a good job. >> dow's up three points. jim's 6 in 60 after the break. clients are always learning more to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars.
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yes. what i call a price target bump but valuation downgrade. yelp is -- it's part of the firmament now. i don't know if you want to sell. >> citi's defending allergen. >> worried about the restasis drug. >> what's the news on tracker supply? >> boy, suntrust raising price target. i joke with david faber the key to the mark, tracker supply was jammed last week. jammed. >> finally, optco on alexium. >> piper says 148, 208. where you get these, i don't know? i don't know. >> yeah. >> i put them out there. i don't say they're going to happen. >> what's up on "mad" tonight? >> the ag trade not so great. this is ag co, light deere, i want to ask about food stamps, too.
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welcome back to "squawk on the street." mayed by inventories rise .1%. many looking for unchanged. remember, this is the second quarter number. it doesn't show the precipitous post sale inventories did as analysts downgraded there. coming up end of the month, first look at second quarter gdp but the number doesn't revert that in any big way. we continue to monitor all second quarter data in anticipation of a very big gdp number. back to you. >> that's right. rick santelli, thank you. in fact, retail sales report moving the needle more on gdp. more insight on today's data. steve liesman here with more. >> i need to correct my good friend and colleague, rick santelli, who said a very big gdp number. i'm sure he meant the news importance of it or the investment importance, not the size of it. that number's coming down, as you know, kelly.
and we'll talk about that in a second. take a look at the details of the retail report. we'll show you why. retail up 0.4, less than expected. autos did their part up 2.1%, furniture doing well. department stores did poorly. food and drink establishments down 1.2%. there was some discretionary gains there, sporting goods and hobbies. but overall, here was the commentary from bmo which i thousands with ap. americans took a hit with sequestrati sequestration. that's the number that feeds into gdp. you can see how weak that is for the month of june and not terrific in the month of may either. here what happens bmo said. americans took a hit from sequestration and tack increases in the first half of the year but continued job growth and the housing recovery continues to provide support in the second half. a lot of people are looking for a 3% growth rate, 2.8, 2.5 in
the third quarter. look what we have to get to first. rick is right. a big number but it's not going to be large in size. morgan stanley 0.3%, down from 0.5. barclays 0.5. jeffries 1%. cbs 0.5, people marking it down a slight markup after the inventory number but not a big one, i imagine. could be a washout with the revisions in may. ultimately, what we're talking about here is the decline in you could see a negative number, guys, if the retail sales don't do well again in june. some numbers yet to be reported. but we're looking for strength in the economy. a little bit in the empire state. but that doesn't track well with the national stuff. we have to look through, at the market is a weak second quarter number. >> steve, what's fascinating, too if you look how weak the gdp numbers now look, and yet at the same time we're getting the
strong payroll data. we've been consistently 195,000 for several months now. so, do you think is there some disconnect? is this the mathematics of the second quarter that make it look especially weak? >> that's a huge inconsistency economyists are puzzling over. as you know, these things are revised, down the road as much as two, three years later. it could be that the jobs numbers are revised downward or the gdp numbers are revised up. it's something we'll be watching for. but it is one of the things that makes people optimistic or economists optimistic about the third and the fourth quarter. if you do have job growth, you could have income growth, and then spending can come back as the sequester and the tax cuts work their way out of the recent past. >> right. all of this as markets are at new highs, 10-year rerated by a full percentage point. >> if that's not enough, news out of citi, stronger than expected rise in profit as rising home prices reduce losses
on mortgages. kayla, good morning again. >> good morning. this is a company waiting for its day in the sun. two quarters in, investors are have a lot to be pleased with. ceo michael corbat has just about 3/4 under his belt. the upside isn't over yet. not only beat, losses for credit down sharply. that's reducing the drag on earnings. assets in the bad bank are shrinking the most in three years. still working through cost cuts. more upside for investors to come. in a call this morning, john gerspach said the company's at the capital levels for 2015. it doesn't need to use its cash position to contribute to the liquidity. that's what killed jpmorgan friday. the important story for citi, what's happening in the emerging markets. this is a company that gets hal of the revenues outside the was gerspach said it's seeing a tale of come consumers.
revenues in global consumer unit strong in latin america, relatively strong in asia but he did say emerging markets will continue to grow but they'll be slower than expected. he said mexico will slow to roughly 4% next year. will be within 2% this year. he said china, as we have seen today, will continue to slow. a lot of questions, guys, considered citi's foreign exchange popgsition. citi could take a multibillion dollar hit in hedges in the yen, places in asia. he said that's not the case. it was the mexican peso, th thennian rupe. >> the bigger one gets so much of the attention. as well about the point of margins is an interesting one. the read through, is it a citi-specific issue or something for the banks more broadly to deal with? >> he said that they saw a ton
of yield compression in the quarter but that he thinks the worst is probably over. and i think a lot of the banks think the worst is over. jpmorgan had the worst in class for their margins, 2.2%, a record low, because of regulatory capital. the cfo said we had to meet some of the levels so we had to set aside cash to do it. what investors like about citi, they are already there, they don't have to phase it in until 2015. no matter how it comes out, they're already there. >> we'll continue to watch citi shares, higher this morning. see if they hang on to the gains. >> the s.e.c.'s case against fabrice tourre is kick off. mary thompson live outside the courthouse in lower manhattan. over to you. good morning. >> good morning. opening arguments on jury selection which has been delayed today because there are a number of trials opening today. but it is expected to happen later this morning. the s.e.c. accusing the
34-year-old tourre of securities fraud, aiming to convince a jury the then-28-year-old goldman sachs vice president deliberately held income from investors betting on the housing market in 2007. a bet that cost them $1 billion. arriving in court with his lawyers about 50 minutes before the trial began this morning. wearing a dark suit and orange tie. cameras and reporters surrounded the frenchman, the candidate at the university of chicago declining to answer questions saying he'd like to get into the courthouse. and in the courthouse, judge forest laying down the ground rules as we speak. want both sides to keep it simple for the mere mortals who will be on the jury. who may not be familiar with terms like long and short, securitization, and intermediation. this is what the s.e.c. will try to move. that he deliberately misled vinnesters by declining to correct one long investor's assumption that john paulson
took a long and short position in abacus and failing to tell another investor paulson's hedge fund was short and involved in selecting the subprime mortgages get on by that synthetic cdo called abacus. you need a long and short for both. again, the trial opening arguments will happen later today. we expect once the jury selection has been completed, we'll be back with any details. back to you. >> mary thompson with the fab fab. a fabulous weekend for markets, we'll see. earnings set to hit the tape, but federal reserve chairman ben bernanke. brian westberry, chief economist with first trust advisers. >> hi, kelly. >> michael, first, to you we've heard so much from the chairman lately. it seems inevitable between the statement and question and
answer, we going to hear much more. i this going to trump earnings again? >> i i think they're both important. the fed talking around in circles. but what they have done is candidate the market to the inevitable you know tapering when they're occurs and the fed's disinvolvement going forward, whenever that is. i don't think it's anytime soon because you've got the dual mandate of monetary supply and unemployment. unemployment continues to remain around 7.5%. corporate earnings in the middle of the second quarter earning season now. it's too early to gauge what's going on there. i suspect earnings growth is going to be slow and consistent with overall lack of economic growth in the second quarter and that could put pressure going forward on stock prices. >> do you think it's strange that we're talking so much the fed's talk so much in particular about taper when we have gotten the retail sales second quarter
out of three where gdp is below 1%? >> speaks to the unusual situation we're in. everybody's talking about strong growth and the economy's off to the races and et cetera. we've never bought into that. i don't see it. and so, you know, some point the stock market's up mid teens so far this year. economic growth is 1%, 2%, maybe coming down. there's a disconnect. and i would view that as a fed monetary premium. so what bernanke says is very important right now. we saw it in the last month. >> it should also, though, brian, michael, be very important for everybody else. let me bring in you, brian. you're the economist. how worried should we be, despite all of the happy clappy comment tri about the figures coming through? if they're just retail sales. look at warning from u.p.s. friday, talking about a slowing of the u.s. industrial economy. jpmorgan and wells fargo, cautious in some of the commentary that they came through with on friday. brian, are we totally aware of
how soft the economy is? >> well, simon, i don't think the economy is any softer than it has been over the past four years. we've had what we call here at first trust the plow/horse economy. it's not a racehorse. it's a plow horse. that means it hits stumps, it hits clay, it hits rocks. it has its little stumbles but it's not going to fall over. we don't expect anywhere near a recession. in fact, i still have over 2% real growth pencilled in for the second quarter even with this retail sales number today. i'm not worried about the economy. if i could and a dollar for every time u.p.s. warned about the future and we got worried about the economy, i'd be a rich man. i wouldn't be on tv with you. i'd be retired. >> you still would be on tv, we'd be talking about how wretch you are. interesting, one of the more
stubborn bears on the street in terms of strategists upping her target year-end from 1600 to 1750. citing diminished tail risk, positive surprises in the economy, continued decline in earnings volatility. i just wonder if we hang at some of the levels long enough if the bears are going to seed some ground. >> maybe. the retail sales number today was perfect in a sense that it doesn't give the fed any food for getting out of the economy, anytime soon. but it's also not strong. it's that middle muddling growth that brian mentioned. and with that environment, it keeps the fed involved. it keeps some float under stock prices it's a reasonable forecast. and you could get some benefit from a growing economy in the second half, some people believe that's going to happen. i haven't quite seen it yet. but we hope for the best. >> trying to wrap my head around all of it. thank you very much. i just say that because, again, we're in a situation where record highs on -- you mentioned
raising the price target of 17.50. >> that's consist ent. if the economy's bad, the fed will keep pumping. >> i don't know. nice we move past this. >> i thought so, too. by the way, it is the seventh anniversary of twitter being launched to the public. twitter as you know has changed way we interact with one another. it's changed how people get their news. it's changed politics. it's changed nature of celebrity. even change how we watch it. the squawk on the tweet, how will twitter have changed the world seven years from now? tweet us at squawkstreet. trying to get simon on. it's a struggle. >> i have a handle, whatever that is. to tear steer me. >> twinkie lovers rejoice after near extinction. back in stores everywhere today. talk to the man responsible for saving that iconic brand as well as others in a few minutes.
bonds are back. at least according to bill gross who wrote, twinkies are back on monday and bonds are, too. with a longer shelf life last last apriling stock five to ten-year maturities in your pantry. in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
it's hard starting over. to help, sleep train is collecting school supplies for local foster children. bring your gift to any sleep train, and help a foster child start the school year right. not everyone can be a foster parent, but anyone can help a foster child. welcome back to "squawk on the street." i'm josh lipton. watching google edging lower.
a new all-time high this morning at 9:26:47. up 30% this year. analysts covering google busy raising price targets. web bush to 900 from 800, credit suisse 1,000 from 982. >> after a near eight-month hiatus, twinkies are officially back on store shelves. hostess billing the return as the sweetest comeback in the history of ever. joinings one of the investors who led the charge to keep the brand aleive. dean metropoulos, to buy hostess snack brands earlier this year. not new ground for dean, instrumental in reinvigorating brands like papst brewing. >> good morning, carl. >> this is a big roll-out that we're talking about today. how are you feeling on day one, and did walmart sort of cut if line and break the embargo, so to speak?
>> no, i think we feel great, first of all. and we're very preebtiappreciat the return of the twinkie. walmart did not jump the embargo. everyone was treated equally in the allocation of the product. demand overwhelming but everyone treated absolutely equally in the sale of the product and the shipping of the product. >> dean, in the last eight months the twinkies have been off the shelf, there have been a lot of imitations from little debbies, even from weight watchers. how sure are you that the american consumer will gravitate back to your product now that it's on the shelves again? >> well i think the american consumer is speaking every day, shelves are empty today. i know many have expressed the, to me and to our staff, have expressed the idea that the imposter products are not nearly as good and in fact they have been no more than imposters. we're focused on the twinkie and
happy it's back. >> dean, we mentioned some other brands you brought a second act to. and i'm curious, how do you know, how do you though when a brand is truly met its final days and when it hasn't? how do you -- i mean what is it about a given brand, look agent few of them now, hostesses, pinnacles, what gives you assurance they can have another day to live? >> well, these brands are wonderful brands, particularly twinkie and hostess. they have a long heritage with consumers. generally what's gotten brands in trouble, one, folks have not invested behind them. they haven't innovated them to evolve them with the consumer taste. great brands like duncan heinz, over 100 of them, they've had wonderful opportunities to come back when you treat them with a little tender loving care, invest behind them, innovate them, bring them back to evolving consumer tastes. >> dean, speaking of other
brands you didn't just buy the twinkie you bought a whole portfolio. twinkie, makes up a tiny fraction of the revenues of the portfolio that you bought. what do you expect to be the big of the seller in that portfolio? >> oh, there's a number of new products, as you say. a lot of them will be coming into production over the next several weeks. but certainly the twinkie, the donettes, hostess cupcakes, the coffee cake, unique flavor profiles and wonderful quality. i'm confident they will be a balanced portfolio when it all come back over the next two months. so i love them all. >> finally, dean, you mentioned innovation. there was a lot of chatter on the web about the shelf life of twinkies, now 45 days. previously, i think 26. people want to know what you did to them or if it's even your doing. >> well, first of all the company had already modified the
product back before we bought it and before it closed in the fall. they already had achieved 45-day shelf life. it's a matter of balancing ingredients. there's no, to my understand, several ph.d.s the past year working on this, little change in the ingredients, if anything an upgrade. it's about the balance of the form lark the cooking temperatures, moisture levels, et cetera. so it's been minor changes, not the dramatic ones. >> if you need people to test them for free, kayla and i are available. >> we don't are ph.d.s but we do have a good pallet there i thought we sent you some. thank you, carl, very much. kayla, thank you. >> dean metropoulos. straig great story. >> gas prices continuing to rise, up ten cents last week. why we could be looking at another 20 cent increase. all of the details right after the break. by the way, check out our
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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! with big move in oil prices driver as cross the country are facing another big jump in gas prices over the next few days. jane wells is live in burbank, california, with more on that. i imagine you're looking at $4 a gallon, jane? >> reporter: oh, i wish i could get it for $4 a gallon. here at shell station, the
cheapest gas shy of $4.30. whoever here was last got under ten gallons almost $50. 12 gallons. 12 gallons doesn't get you far unless you have a hybrid. we don't notice when the prices go down but we do when they go up prices are down a penny in three weeks but in one week up 14 cents a gallon according to aaa which has them pegged at 3.61. analysts say they're going 10 to 20 cents higher why? instability in egypt, higher than normal demand even for the summer driving season. >> right now prices have traditionally in years past been level before rising in the month of august. what we're seeing right now, certainly is not the norm for the summer driving season but then again, recent years there hasn't been much of a norm when it comes to prices in the summer. they've been all over the place. >> reporter: according to
lundberg, cheapest gas in north carolina 3.22. highest, chicago 4.04. great swings around the great lakes. people tweet immediate pics of gas. more expensive in tyler, texas, texas, california, just under four bucks north of san diego. my own picture, everything over that. there's the aloha state, gas is never cheap. this pic from honolulu, p. here's the good news, later this month the u.s. should start producing more than 50% of its own oil. the bad news, we're not producing all of it. >> that's going to leave prices uncomfortably high. you've been retweeting the pics. jane wells, thanks very much. china's economy slowing for the second straight quarter. what that could mean for markets
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highs, five wall street firms raised their price targets on the bank. it's up 27% so far this year. and data from the commerce department show business inventories rose 0.1% in may. that is a touch better than expected. forecasts called for a flat rating. meantime, china's economy slowing for the second straight quarter. gdp coming in at 7.5%, still in line with expectations. joining us to talk about that, david reitle, president and founder of the reitle research group. >> good morning. >> interesting number. the knack it came in right in line and the words goldilocks tossed around a lot today strikes some as too clever by half. maybe too convenient. do you trust the number? >> you know we've seen a lot of truth coming out of chinese numbers. the export numbers in may and june have were cleaned up with ex-traini extraneous transactions boosting it. there is a creping grain of
truth. posted 7.5% number when two of months we no have weak export numbers. indicates maybe not goldilocks but things are going pretty well for china now. >> does it mean more accommodation for those who like that kind of thing? >> i tonight dodon't think they. $3 trillion of foreign reserves, resources and control of the economy. they can stimulate and be accommodative when they want to. i just don't think they need to right now. >> i'm not sure how well things are going now. the journal makes an important point, look at cconsumption, it falling as a share of gdp. it's down to 45% in the first half, over 50% last year and bourbon disposable income is slowing. a story talking about how the migration world's urban is being forced how energy bills for the people amount to 110 u.s. dollars a month and it's
un-fordable. china is in a quandary. if figure the economy's growing is the only thing to point to and be encouraged about there. >> they have the war chest of $3 trillion of foreign reserves they intend to relocate 250 million from the rural areas to urban areas, of course some forced or encouraged. if they need to pick up the electricity utility tabs for a certain amount of time, so be it, they can afford. it's a rocky path but they are going to pursue the urbanization, continued growth and do whatever they can to manage the multiyear transition from being export or yned economy to consumer oriented. doing it from a position of strength, a great place do it from. >> fascinating to see the growing faith in the figures today. there's a chorus of people who just simply don't believe -- it's not just the gdp figures. industrial production, fixed asset investments, retail sales
hitting the numbers. there's a suggestion that perhaps the local leaders when they report back figures take the bigs that they report back from the plan that they are supposed to be executing upon. a huge a of cynicism. >> absolutely. many years of tra tra decision of chinese reporting up the chain inflated. take a look at export numbers. they cleaned up that part of their data set. and you saw it, negative export growth in june. they weren't making that up. so i think there's a growing grain of truth. as i mentioned, growing grain of truth in chinese numbers. spending time on the ground, things are still growing and moving ahead. and they do it from a great position of strength. >> obviously the economy's changing as kelly just referred to. who are the winners now from outside china trying to do business with them in would you agree, for example, with the australian prime minister who on thursday night said that the china resource boom was over?
>> oh, no, not at all. i there's as 250 million people are relocated into urban areas that's going to take up a lot of existing capacity as well as demand other capacity, infrastructure, thing likes that. there's a creation of virtually the population of the united states moved into urban china in the next 12 years, impressive move. i disagree about the resource move. australia overbet on that. there's a lot of demand for things. >> i -- finally, it wasn't too long ago talking about the word shibor, front pages in "the new york times" about debt ininstruments risky, sold to the wealthy but based on incomes of the poor. are those concerns not well founded? >> new york those concerns are well-founded. there's a problem in shadow banking and other issues. but remember, they have a reserve requirement, 20% in the chinese banking system and they
do have even a couple percentage points above that of reserves. so there's a lost money on the sidelined in china to deal with bad debt problems. they are very real. the banking system in china is not a private enterprise. it's an extension of government. so it's not hard for them to deal with those problems when and if they come up. >> interesting. a lot going on over there. try to cover it as well as we can. thank you for your insight. apple reportedly on an iwatch hiring spree ahead of the possible launch of the smart watch. the report who are broke the tory how the giant plans to tackle the launch of its first new product since the death of steve jobs. imax anountsing plan to add 30 new movie screens. [ female announcer ] it's simple physics... a body at rest tends to stay at rest... while a body in motion tends to stay in motion.
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welcome back to "squawk on the street." i'm josh lipton. at&t agreeing to buy leap wireless, investors looking for what names could get acquired next. analysts at citi saying the deal means u.s. cellular is the largest remaining wire's provider. usm and its parent up strongly today, as is ntls a regional provide of digital wireless communications. analysts at wells fargo saying more consolidation in the secondary market. >> apple reported i on an iwatch hiring spree according to an article in the "financial times" which says the company is looking for fresh eyes to solve engineering difficulties that in-house technicians have not been able to overcome. joining us tim bradshaw who wrote that article for the financial times.
good morning. thanks for joining us on cnbc. >> good morning. >> looking externally for people, then? >> yes. that's what we're told. several different sources told us they've been hiring up in recent weeks. since the story's first emerged about the iwatch project this year it's a serious endeavor now. apple looking to put more talent behind it. hiring up which it is something they it did when developing the ipod and previous products. what's interesting, this is a step change. you can draw a bit of a lane between the ipod, iphone, ipad, wearable computing is a completely different ball game. and companies such have struggled with it had to do rerecalls. it's a different skill set. >> for many investors and commentators the bigger takeaway from the article -- and you write it, this is obvious -- the launch of a iwatch won't be
until the end of next year. >> yeah, that's the inference. and these things can always change. it's a competitive market. expecting samsung to come out with something along these lines soon. google working on one. so, but it just sounds from the state of development of the project it's recently gone from being explorer to to something that's a definite go, apple pulled the plugging things before. it doesn't sound like something people will be getting for christmas this year. >> do you get a sense they're highing from a place of confidence or concern about the important product, and do you get -- i wonder, going to recruit people, if they're having a harder time than apple might have had say, three, five years in doing so in. >> i think the talent question is very different from three, four years ago for apple. the stock price, if nothing else, is meaning that there's kind of less of an incentive,
they're not jumping on that rocket ship anymore. although if there was a big. product it could change. they're having difficulty retaining talent among the range and file. they've got the executive team still there. i think they are obviously talented people that work at apple, inl not trying to say that they, you know, are messing the product up. but they are -- they are trying to look outside to get extra inpi inspiration, it's such a high stakes product but it's the first new category that they've moved into under tim cook's leadership. the ipad mini notwithstanding on any new iphone we might be expecting this year. >> you mentioned the executive they brought in, any clarity on to what degree he's involved? is he -- any of this going to be his brainchild? what do we know? >> i don't know to what extent
paul's involved in this. two schools of thought, one his experience in fashion and jewelry could lend some expertise to a watch, it could be in the branding realm where apple had a couple of missteps, ad campaigns not going down quite as well as others. i'm sure that expertise will come in handy and it's part of the broader team to bring in fresh eyes. >> we'll leave it there, tim. tim bradshaw from the financial times in san francisco. have you seen the report from. le insider? it will boast a full length display conform to the body through a slap bracelet mechanism. aha, somebody did this to me at a part. >> handcuffs. >> they weren't. you get -- you get -- all relevant information real-time on a flexible display that can wrap fully around a user's wrist
while the device itself can conform to any appendage, a suitable location says apple insider would be the user's wrist. >> thank you for clarifying that for us. >> i read what they send me. >> i don't see what the excitement is over. i'm appreciative of innovation and new technology and a flexible screen as anyone. but is this a real game changer? apple's done it before but i think it's extremely difficult to do it again. >> i argue the bar's higher now. i argue that's true. >> with regard to it being a watch. would you get one of the watches? >> yes, because i'm foolish and i buy anything like that. >> you're fooling. >> so would teenagers. your kids are too young. kids buy it. >> we'll see how much it costs, price point is key. when jay-z had trouble with his own app, he called it not cool. we tracked down a company that might have been able to fix all
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let's get to rick santelli in chicago. joined by congressman kevin brady. rick? >> yes, joined by kevin brady, congressman for the eighth district of texas, republican, welcome to chicago. >> thank you. this is terrific. >> thanks for taking the time. i will give you a tour of the floor after we get done here. my first question to you is simple. after reading some of the pieces about jobs, looking at u-6, employment over 14%, our last look, maybe we're creating jobs, but certainly seems like we're creating a lot of jobs where the money isn't up to snuff, mostly part-time, and i think they're distarting the data the fed uses. your thoughts on the program, the employment, and the economy >> i think they're trying to do too much. truth is businesses aren't investing. we already have a long time low
interest rates and lots of liquidity. that's not the problem. it is the assurance that they invest in new buildings, equipment, software, new jobs, and that they will be able to sustain it, and until i think we remove some of those fiscal roadblocks, i don't think the fed frankly, the recipe thief got isn't going to cure this problem. >> 100 year birthday for the federal reserve, hr-1174, looks like you're not a big believer in the two pillars of the federal reserve. your thoughts on that bill. >> i think we ought to focus back on preserving the purchasing power of the dollar over time. you do that, our economy will grow. right now we've got it has been about 30 years, congress gave the fed two mandates and that actually don't work well with each other because the fed can't control employment. at least in the short-term and so i would like them to focus back on that purchasing power because i think that really is what drives, gives us a big long-term. >> and what is the name of that
bill specifically. >> the sound dollar act that focuses on that one single mandate that would drive the economy the greatest. >> big programs, let's look at the big programs. we have immigration reform, we have health care. the affordable care act, obama care, and of course we have tax reform. let's take the first two. any thoughts in terms of what passed in the senate and what now resides in the house regarding immigration? >> immigration reform is difficult but doable this year. it is going to be a different approach. it is going to be more bite sized improvements rather than the senate bill, but i think that's the right way to do it. security first, we have to get that right, and just to make sure we don't repeat the problem later on. the workforce part of the senate bill really is not good. it won't give us that 20% workforce that we need. >> i like this bite size notion. just look at students that come here to get educated from other countries. we should retain some of that talent. seems like very low hanging fruit here and i have to take
issue whether it is republicans or democrats, the reagan era or current ear a seems to me that dollars and plans to protect the borders just aren't working, haven't worked, probably won't work. why can't we look at the output side and come up with thresholds where here is how many we want to come over the border and monitor it and let the way we do it not be embodied page after page that probably wouldn't be implemented. >> you are exactly right. that's where they focus on the results and on the measurements and not the inputs. >> and do that for education as well. >> on everything. >> how much money flows in? it is the test scores that are flowing out. okay. the one i disagree with bite size pieces is tax reform. >> yeah. >> we know the committee house ways and means has been doing this from the ground up. can you give us hints? >> you know, we are making huge progress. if we're not doing tax reform, no one told dave camp. he is relentless in this effort. we're seeing a lot more. we'll be ready this fall with a
reagan style rates for families and better than reagan style rates for businesses, the senate starting to see movement so we're putting the ball in the field and moving it towards the goal line and i think you will see some action. >> in the time we have left, one mandate stands. one mandate doesn't. business verses individual. looking at this program, listening to the way it was sold, promises made, this is unbelievable f they can't even get it off the ground, how will they run it properly meaning they, you guys, government. >> that's the thing. if obama care is not ready for business, is it ready for your family, for your child, for someone who is ill? the answer is no. both of those, out of fairness alone and the way it works together, the individual mandate needs to be postponed as well. >> thank you for taking the time. karl, back to you. >> thank you so much, rick santelli. if china is slowing down, don't tell imax. the ceo will join us to tell us why he is expanding in china and
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it is the seventh anniversary of twitter being launched to the public. it already changed the way people interact and get their news and functions as a second screen while watching tv and how will twitter have changed the world seven years from now? what will be the next act? >> bought by facebook, bought by apple and you will hear about it on your iwatch and probably pop-up ads for hashtag and dollar sign and any link -- we'll move forward. ronald writes probably pop up ads for hashtag and any clinic you click. in seven years tweeting that twinkies will still have a stable shelf life. >> you guys think this iwatch thing can work. >> i do. >> yes. >> yes. >> i think the object is to get you to check this as many times as day as you possibly can, and
a watch will simply increase th that. >> you can run with it. as you say, check your facebook. >> you can put it on the pillow next to you at night and cozy up. >> i already do that. i have a twinkie. speaking of twitter's next act, we're working on a documentary for a couple of months called twitter revolution and premieres on cnbc on august 7th. a few weeks away. >> coming up. >> i am very excited. you do a good doc. >> i don't do it alone. an army of producers as well. in the meantime dow hugging a tight range. this has to be historically over the past few months one of the heightest ranges we have seen. >> a lot of people that can volatility and we started to see a couple of weeks ago.
>> all bets are off. >> until then, almost in limbo. >> and a double dose. >> double dose. >> in the meantime if you're just joining us here is what you missed earlier on. >> welcome to "squawk on the street." here is what happened so far. >> my view is you want a little corner of your portfolio in gold if you understand. >> a corner is 2% or 5%. >> closer to 2 for most people hoping that it doesn't do well because if it doesn't probably everything else is doing just fine, thank you. >> citigroup, $1.25 versus expectations of $1.17. >> we now have three banks reported all better than expected. this group was the group we were most worried about, the second biggest up going into the quarter. it is verifying the run. i just felt the numbers. everyone was, wow, it is terrible. no. the aussie dollar even went up
around early morning. i do believe this is the beginning of the numbers when people say nah as opposed to look out, the sky is falling. >> i suspect earnings growth will be slow and consistent with overall lack of economic growth in the second quarter. and that could put some pressure going forward on stock prices. >> great brands like duncan hines and the ones you mentioned over the years have had wonderful opportunities to come back and innovate them and bring them back to the consumer tastes. good monday morning. live here at post night of the new york stock exchange. let's get a check on the markets. a tight rope here especially with bernanke in the middle of the week. hard to imagine a lot of big bets will be video in advance of
that. we'll see. s&p is up two-thirds and shares of boeing rallying this morning, stock down nearly 5% on friday and is recovering after an investigation shows a fire on a dream liner plane in london had nothing to do with the plane's batteries and an investigation is still going on and the fact the batteries were not at fault is helping shares of boeing and shares of yelp slipping this morning downgraded to neutral and despite the downgrade ubs calls it one of the best businesses in the coverage universe. >> that takes us to the road map for this hour. after a long drought treasury yields inching up. they will tell us if bonds are still a good bet. imax is getting bigger. the company that is, not the screens. the ceo will tell us how many theaters he is planning to add and where in the world they're going. then it is the most expensive car sold at an auction in history. we'll give you the inside look and tell you how much it went.
>> welcome. >> thank you. >> this range we have seen, can you give us context because it seems as though the spike has been one of the sharpest moves in history. >> certainly especially when you look relative to the low field yields weigh came off and in terms of percentage one of the porsche performances in fixed income markets for may and june period. the key question of course is can that persist and the answer is we don't think so. you need a much stronger economy to justify this continuation of the pace and increase in interest rates. we don't think it is likely for the second half of the year. >> this is an important point. a lot of people and we made this point before, those opening their statements will see what happened to their bond funds over the last couple months and your advice to them is not to jump ship but to sit tight. >> it is a couple of things. first, we have been talking for a very long time about the risks
in fixed income, that interest rate risk was a bigger risk than people were appreciating and they'll see that in the july statements. we don't want to panic people and we don't want people to jump ship. it is the time to rethink how you invest in fixed income and a lot of areas significantly under perform. there are newer areas in fixed income, mainly what an area that the market now calls flexible fixed income which is a different way of managing fixed income, gives the manager much greater flexibility to manage duration risk in this environment and you will see the types of performance and much better than traditional fixed income. >> you are arguing it would have protected you in the sell off. >> greater duration flexibility was critical in performing better in may and june. traditional fixed income relatively. >> if you look, some of the actively managed funds, some of the biggest names out there did horrible, under performed the index and the benchmarks.
it can't not case across the board. >> absolutely. what is key here is the difference between traditional fixed income categories which are benchmarked against barclays aggregate indices and even though the managers may have active ability, traditionally that's plus or minus 20% of what is a five-year duration benchmark. even if they were under weight, they may have been four-year duration. still, much too much duration in the may and june time period. flexible fund managers can have a much wider range of duration and as a result of that, not everybody but in general the asset class performed better during that time. >> is your general expectation that we're going to see 3% soon in the next six months, 12 months? >> we have to be careful in talking about what is the terminal rate of interest rates versus what rates could we hit on a short-term spike. we hit 275 last friday, and we touched it and bernanke said last week that that was a financial condition that was too tight and he had to push back against that. what we got was lower interest
rates. it doesn't mean you couldn't spike to 3%, but we think right now what we see in the economy, terminal interest rates for the end of the year, our forecast is 2.5%, roughly where we are today. >> do you look at 2.75 or 3% as a buying opportunity or if rates are moving higher here and there maybe something from bernanke tuesday, wednesday, or wednesday/thursday and again that's the time when people should be thinking about increasing their allocation. >> tactically, yes. it depends on what is the source of that increase. if we have a big acceleration in the economy today, retail sales, getting the opposite, but if we had a big acceleration then all bets are off. you could be to a more permanent level of higher interest rates. a short-term spike, you can see that as a it can tactical buying option. >> do you believe the economy sustained any damage. >> that's the big uncertainty. i think the economy is very vulnerable but the damage was mitigated because the key issue
for the economy is the performance of the stock market. the stock market did okay. this stock market didn't get hit too bad relative to the bond market. i think the damage is mitigated. another 100 basis points increase in mortgage rates and interest rates from here, probably harder to see. that's why bernanke pushed back last week. >> or a weakness in stocks. thanks very much for coming by. that's the chief investment strategist. >> meantime, opening weekend for imax is coming this time in a whole new market. the ceo will tell us where he is expanding. i think you can probably make a guess. we have that in just a moment. in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution,
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rich is the ceo of imax. he joins us here. welcome. good to have you. >> good to be back. >> did i get the name. >> you did. you did. don't say is three times fast. >> obviously all talking about macro data in china that is not what some people want. it is clearly not an issue for you. >> the consumer still seem to want to go to the movies and willing to pay for a premium experience. we just did man of steel and imax about 100 screens and hopes on about 5,000 and we did 12, 13% of the whole country's box office, so for a premium priced experience, especially, an affordable luxury, the consumers still seem to want to go. >> are we talking the traditional markets, the major cities, capitals or more western
and second tier cities. >> surprisingly it is a no brain inner beijing and shanghais that you do that but it has been somewhat surprising that in the second and third tier markets of course you have less penetration of imax theaters, but seems to be holding up well there, too. >> how big are you ultimately going to get and where to next? >> the market we said about 450. if you add the theaters, we put in, we announced today those opened in backlog that gets us to around 275, 280, something like that. we're about two-thirds through. however, as the demographic and the income levels keeps going up, i expect that will go up. other markets that we have been going to that have been doing very well recently is western europe we were a little late to the game and the reason was because it had an established infrastructure and now we're building that out nicely. i think we're starting to see -- >> building out in western europe now. >> yeah. i think the old movie
infrastructure was such it was hard to put in imax theaters in the markets and now with so limited growth in europe, i think the idea of taking an existing theater and turning it into an imax and generating more revenue from existing markets. >> where is the consumer in western europe able to spend more now on a movie outing than they might have in the past? >> good question. last year in the u.k. we were up 70% on a same-store sales basis like for like. i think the top end of the scale perhaps we keep coming back to the words affordable luxury. i think certainly they're not going to a high end luxury auto dealer but a to a movie maybe this environment helps them. >> stocks getting a nice bump today. is the real estate play in china you buy the property, leasing from an existing owner, how does that work?
>> we partner with chinese operators, chinese movie operators, so wanda has been the biggest partner in china, c.j., stellar, all of the big operators, so they own the real estate and we essentially license our technology and get a percentage of the box office, so that is not the business we're in. >> how about south korea? how would you describe the quality of their market right now. >> i think it is good. part of this deal is this and the second best per screen opening in imax, 65,000 a screen, very strong, and they are driving them to expand in korea and china. >> are there movies relative duds over here we should read frankly as plays for the global if not asian specific audience and keep that success or failure of the u.s. box office in mind in that regard. >> great question. i think because two-thirds of the box office is now coming
from international markets and one third domestically. i think a lot of investors missed things by looking at only the domestic box office. i think like even this weekend pacific rim had a pretty decent start and not as big as everything hoped for and the international results were extremely strong. places like russia and taiwan and korea were very good. i think you have to back up now and look at the movie industry a little differently than a few years ago. >> finally, spielberg was on air a few weeks ago and talked about dynamic pricing where in a few years you may pay $25 to see "iron man 3" but only $7 to see "lincoln." how high do you think the range can go? >> in some markets they're sh charging over $20 and especially if you do limit releases and stagger windows, there is room to go up. >> i think the problem is when
you charge lower, you might signal to the consumer that it is not as good a movie as one you charge higher for, and i think that's been one of the problems in the industry, and i think frankly that's one reason that's propelled imax's growth because i think for a blockbuster movie you're willing to pay the higher price and you're not signaling that another movie may not be as good. >> it is a good point. watching closely, rich. thanks for coming in >> thank you, karl. >> joining us from imax. >> speaking of apps crashing on the phone, our next guest is doing his best to fix that. >> it has really changed the world including everything from delivering news to functioning as a second screen while people watch tv. that brings us to today's squawk on the tweet. how will twitter change the world seven years from now? tweet us your responses at squawk street. we'll air the best ones later in the program. announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office.
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gross margin to get a lift from falling precious metal costs. that stock up today nearly 40%. so far this year. karl, back to you. >> thanks so much. most of us now have smartphones loaded with apps in our pockets. today squawk break through let's app creators understand how and why their apps crash and why they might be able to do something to fix it. this technology also helps companies understand how app glitches are affecting business. andrew levee is the cjoins us t morning. >> talk about a plague for developers around the world.
walk us through how it works and keeps an eye on these things. >> smartphones and tablets are great but i am sure we used a app that was freezing and crashing and maybe you tried to purchase an item and it just didn't work. so our software let's those companies know what problems are occurring and helps them fix the issues. >> we use jay-z as an example. his new album was supposed to be available on july 4 free of charge and samsung users, it ended up not have procuring your services helped them avoid that. >> listen, a lot of apps, you know, rely on external services and there is over 800 carriers in the world and there is tens of thousands of devices out there. it is impossible to test every possible use case. our software gives you a sense of what the end-user experience is like and would have helped them pinpoint that right away and there is big dollars at stake. of course in the case of jay-z
it is the brand. and ebay, if they even experience 1% down time, they process over 20 billion in transactions, 1% would be 200 million in potential loss transaction value. >> time is money, absolutely. big clients, netflix, the depots, have you serious and plenty of capital. you're not optimizing for profit yet. where are you in that narrative? >> we're still in land grab mode. it is mobile is theaste growing market in history. it is the next platform. i think they look at consumer facing apps and really the latest trend we're seeing is a huge growth in the employee facing app side of the market so being use the everything from point-of-sale devices to logistics and inventory management, and even on an oil rig. i would argue even the cost of failure in that type of
environment is huge. >> absolutely. and i am curious when it comes to debugging these things, software issue, is it a device issue, in other words, as we see things we have been talking all morning about the iwatch. as we see things migrate to mobile or new kinds of mobile or google glass, is it the devices that will present a host of new challenges or fundamentally come down to kind of back off server issues? >> well, it is a combination of both. i mean, you know, apps are very complex and embedded software that can use a variety of different hard wear capabilities and as a company, you know, facing that challenge, it is a global market. and a carrier in south africa, for instance. companies aren't prepared to handle something like that. >> is it often a case where it is the carriers that are the problem, andrew as opposed to
the companies themselves? >> it is a whole mix of different issues. you know, there is the carrier, the device, the operating system, user behavior that you didn't expect, and you may rely on third party cloud services like external billing providers or different services to run your storage systems off of, so it is a whole mix of different problems. >> finally, one question we would like to throw out to the break through guests. you have been around for two and a half years. the mobile trend was out there. what did you see that convinced you that your model was going to have a lifespan of more than a couple quarters. >> we had a few apps. we figure there had to be a better way of going around and fixing these problems and if you fast forward to today, our software now lives on over 500 million devices and part of that was this gold rush, this rush to build and rush to monetize and
let's get a check on energy and commodities. berta at the nymex today. >> oil has come off of lows, well off the lows, almost even on the day after we got that data from china that was a bit disappointing on the gdp and retail sales. we're also hearing about some production outages in the north sea that may have production outages for a while and opec starting to talk a little bit about cushing its production, not withstanding the fact there were production outages in libya last month. opec starting to put out the idea that maybe they will cut production by as much as 500,000 barrels a day because of the big oil boom here in the u.s. a lot of folks are looking at gasoline continuing to extend gains and certainly producing pain at the pump nationally we're paying 12 cents more than a week ago.
take a look at some of the eye-popping sticker shock increases that we have seen in just one week. the midwest is where they are feeling the pain most. hancock, indiana, just east of indianapolis, saw a 53 cent increase in one week. they are now paying 3.70, well above the national average and you are seeing the same pattern particularly in the illinois, ohio, indiana area where they're now paying much higher prices at those refineries for ale. >> indeed they are. thank you very much. record highs for the u.s. markets. germany in record territory. see how we kick off today. >> gains throughout the session in europe today and even portugal is higher. watching that clearly. it is interesting. very little follow through from fitch being the last of the major ratings agencies to strip france of its aaa rating on friday night and the french market has moved slightly and it
is interesting. the bapgs are really moving as high in europe overall. good gains on commerce bank in germany and a suggestion there that the german government could tell 25% to the swiss. ubs. the housing data is looking very strong in the u.k. and coming through with a good let of results and a lot of them are lower and keeping an eye on the political situation there. there you go. you see how they have moved to the upside as well as we have had the general move higher throughout the session and the portuguese bond market is rallied slightly today and the yields are still elevated 7.26% as you can see. meantime, the business of the baby continues in london as we await the birth of william and kate's daughter or son. the souvenirs are already ready. apparently a lot of women are now doing the routine exercise well. we may have footage of that at the moment. interestingly, david beckham was
asked what they should call the child and he said david. i think it is a bit -- as he burdened his own children with naming them after cartoon characters or places where they were conreceived like brooklyn, i would have thought david was vanilla you would say. >> i think simon is a winner. >> karl. i would go with karl. what are the exercises kate has been doing? >> the women of britain, i don't know, tom dunnfee who did the beautiful pictures said we would have footage of women doing the kate exercises and they didn't make it to television. >> i don't want to know. >> get yourself together. >> that is a whole other level. any moment now. >> i don't think she is yet in the hospital. i think she spent last night with her mother and he was playing polo and i don't know. it is a process. having an heir to the thrown. doesn't just happen like that. >> so difficult. thank you, simon, very much for
that. let's bring in bob with a look at what's moving down here at the big board. doesn't seem like much. >> although i would say 3-2 declining advancing stocks and cyclical leading over defensive names. not by much. take a look at the major indices. dow utility up 1.25%. why? we're in the middle of a heat wave. have you walked outside? we're going to approach 100 degrees in new york and the utilities are up on that. the midwest also has quite a heat wave. look at the utility stocks. con-ed said they're prepared for power outages in new york city. they're all up 1 to 2% today. economically sensitive, they're all doing well and very impressed with the bank earnings so far, three in a row right now. wells fargo and citigroup better than expected and not, not selling on the earnings news as they often have done when the
quarters began when bank earnings began in prior quarters, so a little different this team. these stocks are near new highs. for example, wells fargo, that's sitting at a new high as well. china gdp was exactly what they said it was going to be. isn't that something? 7.5%, and that's exactly where it came in. no problems with that at all. emerging market stocks doing well today. this has been a disaster in the second quarter. they have stabilized a little bit and that's the reason they're up is because of the 7.5% exactly in line with expectations. bond funds bouncing back a little, the bottom line, we're not really seeing a rally. we're seeing stabilization in bond funds but not really a rally to bring rates down and until we see that, i think a lot of people will still be very suspicious of that. finally, i want to note, retail sales were a real disappoint. this is a problem because a lot of the bulls argued highly the first two months, april and may, of the second quarter were kind of crummy, the third month, june, was better. this is not true in retail sales
and we're seeing some people who are moving their gdp estimates to the downside, deutsche bank dropped theirs. barclays 0.5 and citi closer to 0.5%. if we're below, we're below 1%, i think this is two out of three quarters we could potentially be below 1% in gdp. not a good number we want to see. back to you. >> thanks very much. over to the cme group and rick santelli with the santelli exchange. rick. >> thanks, kelly. indeed today the data points couldn't be more opposite. we look at empire, 9.46. that's july read. pretty strong. it isn't reflect active of the entire country. retail sales especially ex autos and gas being down 1/10 is and the control group number as steve liesman pointed out that gets used in various
calculations, up 1/10, not nearly enough. wednesday, july 31st, a big day, and it will be a big day for big number but not a big number in terms of girth. we get the advance release, first look at second quarter gdp. you heard bob talking about it, various analysts and investment banks and research groups all try to nail the number. it seems as though most of the approximations are kind of co-ago lating between up 0.4 and essential below 1%. let's get this under the context of ben bernanke now. corporate profits lofty. employment, lots of part-time work. the unemployment rate, doesn't really reflect as good of news as the headline number, per fed chairman ben bernanke and while all of this is going on, retail sales pretty much flat, gdp will
most likely be under 1%. certainly seems my interview with a congressman from texas really nailed it that in the end it is about the quality of jobs, in the end many in congress believe a single pillar may be better than two because i think if ben bernanke is teaching anything to business right now, it is that you can have record corporate profits without hiring another single individual. >> well said. rick santelli in chicago. meantime, shares leap wireless surging. leap is way up as you can see, up 110% today. john paulson may have the most to gain. kay kelly is here with more on that. >> leap is only the leadest winning telecom stop for this hedge fund manager.
the cash component last month at the behest of paulson, a major sprint holder. in a separate deal paulson initially opposed metro pcs planned merger with deutsche tell comes t-mobile unit and got on board after the terms improved. it appears as though such interventions won't be needed with leap which is being offered a huge premium to where it was trading only about a month ago or even friday and i mentioned a month ago because it is when deal talks are said to have begun in earnest. paulson and company official tells me it is a perfect fit for at&t and that at&t will get, quote, valuable spectrum and 5 million customers as a result of this proposed $1.2 billion cash take over. no specific word on whether paulson will vote in favor although it sounds that way from the commentary you just heard. leap says it secured the votes of management which owns 30% of stocks, so it is well on its way
to approval already. the deal still must get the approval of course of the justice department and the fcc, karl, and that's never a guarantee. after the bruising failure to win t mobile for itself you probably assume they put significant time into its own regulatory review and thinks it picked a winner here. >> i tell you what, for a manager taken his knocks on his gold performance, kate, it will be interesting if he can sort of revamp his image to the things like m&a which is sort of what he made his bones on early on. i am glad you made that point. i know you will talk to him wednesday. hopefully he will give us more insight on the strategy here.
>> a strong quarter for citigroup, rallying today after they beat analyst expectations. up next, a couple analysts just off the earnings call to see if they're still buying and the stock is off the highs of the session. back in two. 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
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coming up on the half, another bank, another beat. mike mayo weighs in on city earn's earning and the other big financials. how high can they go and which ones should you own? is coca-cola losing its fiz? a big trader debate is just ahead. the whole crew joins us at noon. see you in about 15. >> check out fell 5% on friday after the report of the fire in london.
today in the green the top performer having a positive 20 point impact on the dow. boeing up nearly 40%, so far this year. kelly, back to you. >> and if that keeps happening, people will keep buying. thank you very much, josh. citigroup reporting better than expected earnings due to stronger home prices and lower losses on mortgages. let's bring in the managing director and senior equity analyst at barclays. a $54 price target and joining us is banking analyst at raymond james. strong buy rating on citi and $56 price target. good morning. >> good morning. >> jason, first, just off the call. >> we thought it was a solid quarter. progress on a lot of key metrics in addition to the company being top and bottom line results and you saw continued release loan loss reserves at the north american mortgage book and utilizing the dta and saw it control expenses down 1% and
link quarter and continuing to build capital ratios getting to the 10% basel iii objective. all key indicators moving in the right directions and making progress and shares traded at discount to tangible book and we believe a premium is warranted. >> any change in view on the stock or price target as a result, jason. >> it is a name we are attracted to at the start of the year and one of our top picks and we continue to have that view. >> and anthony, what about you? . >> we continue to be bullish on citi. we've had a strong buy for about two years now and we think it is a $75 stock within two years. >> the interesting thing is citi is a company is way more exposed in terms of revenues than some of its rivals to the international picture. so a number of people up here telling us for the past couple of weeks when you invest in the u.s. right now you want to get domestic. you want to protect yourself against the slowing and developed and emerging markets and yet citigroup with oversized
exposure here is still really well liked by the street, positive piece over the weekend, so why is it that this company isn't seeing more headwinds or people aren't more concerned about what the impact of slower growth overseas will be? >> for the next two years the emerging markets revenue stream will probably be flattish. the citi story is not a revenue growth story over the next couple years. it is an expensive story, a return of excess capital story and a credit quality improvement story. >> that's interesting. ultimately you would like to see, right, a transition to higher revenue. is that not the point to get from here to there? >> for sure. the company is downsizing. we have city holdings declined about 6% quarter over quarter. and the company is still in shrinkage mode as far as some of the north american mortgage revenue streams. at the end of the day we want to see revenue go up.
the good news is citi doesn't need a big increase in revenue in the next couple years to get to those dramatic earnings levels of $7 or more. >> interesting. i am wondering, the things that are going right for this bank right now, are they the result of tactical things that they're doing right or strategic things that he is reintroduced post pandit. >> probably a little bit of both. clear they think focused on expenses and increase the emphasis on core businesses. you saw expenses decline in the second quarter which is certainly good thing. and you start to see it kind of getting out of some of the regions where there wasn't scale advantages and refocusing the efforts elsewhere and also able to build capital at a faster rate than some of the spheres in a pretty well positioned in the last few weeks >> this is a core bet effect so to speak, not that they're
benefitting from some circumstance of timing, vick could not have done this. >> it is a little both. the improvement in home prices helped and increased volumes of volatility in the capital markets which helped and the actions taken in the back half of last year are showing benefits today. >> all right. jason and anthony, thanks. an important point that citi is a company that can still do well if that overall pie isn't growing right now which by all signs is not about to any time soon. >> absolutely. >> check it out. this car became the most expensive ever sold in auction in history. a thing of beauty. we'll tell you how much in a moment. "squawk on the street" back in two.
talk about an expensive ride, a 1954 mercedes formula 1 racer just became the most expensive car sold ever. robert frank has more on that at hq. >> this was a huge surprise in terms of price. it shows just how much money is pouring into collectible cars right now. on friday this 1954 mercedes formula 1 racer sold for $29.6 million t made it the most expensive ever sold at auction. it was sold at festival in the
u.k. it was expected to sell around 15 million. bidding from four continents drove it to twice that amount. i know it doesn't look like much but this mercedes 196-r carried the famous race car driver juan fangio to two victories in 1954 so the acing history and rarity key to this price. the record was held by this star that sold for 16 million in 2011. now, prices for collectible cars have just gone off the charts in recent months with the wealthy looking for safe and fun places to put their money. you can see the hagerty blue chip index of top collectible cars up 50% over the past couple years and the big event, the car world, the concord in pebble beach in august. we'll be there to cover it and see if the record is broken yet again in a month. back to you. >> robert frank, thank you very much. that was a good looking car.
>> a gorgeous car. you have been mentioning the increasing costs of some of these cars. this has to be a top. you are saying more to go? >> what's interesting is this car was expected to sell for 15, and it is not a ferrari. the ferraris are the ones, the gto racers, the ones commanding a top price and people being offered $50 million for the ferrari gtos of the same period. people have turned them down. everyone looking at ferrari to be the record holder and here comes a mercedes and the ferraris are up for sale next month. we could see huge prices. >> $50 million, is that what you just said? >> $53 million for a 50-year-old car. what people love about these cars and why they're getting such high value is the racing history. it is no longer just about beauty and oldness. people love getting behind the wheel and imagining their fagio racing in a formula 1 and still like to race these cars. it is the enjoyment and the ability to still race them today. these cars can still go very
fast. >> i can understand it, but again $50 million? wow. >> look, if you're a billionaire and you really want that car, 50 million is nothing. >> yep. >> i will take your word for it. thank you very much, sir. today is the seventh anniversary of twitter being launched to the public. the company changed the way people get their news and functions like a second screen while watching tv. brings us to squawk on the tweet, how will twitter change the world seven years from now? tweet us your thoughts and we'll air your answers when we're back. pursuit of a better tomorrow is something we all share. but who can help you find your own path? who can build you a plan, not just a pie chart? who can help keep your investments on course, whatever lies ahead? that someone is a morgan stanley financial advisor. and we're ready to work for you.
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believe it or not, it is the seventh anniversary of twitter being launched to the public. we already know twitter changed the world for sure. we're asking you how will twitter change the world seven years from now? what will be twitter's next act? tweet in your own voice as in audible tweets, that would be interesting. rick writes twitter will partner with vanna white to introduce a new line of boutique vouls and jeanie writes i remember that,
that thing was big before jibber jabber. i have no idea what he is talking about. >> me neither. >> it will be interesting to see. working on this documentary, and it is sports, the way, athletes interact with their audience and celebrities, politicians, certainly activists around the world for democracy in the middle east and law enforcement, incredible. >> we're just talking about what happens when you can or can't use twitter in the movie theater as well and how it is changing the industry. one of my favorite stories by the way this morning, j.k. rowelling using an invisibility cloak of her own in a new novel, the author of the harry potter series was outed this weekend as a author of a relatively new book. she wrote the book under the pseudonym, and i love this, gal brave and now that the secret is out sales are soaring. on amazon, over 500,000% after she admitted to being the author
and apparently they're emptied from store shelves. >> i saw a headline that said she was a little sad, not to be anonymous or so-called anonymous. >> she enjoyed being robert gal brait and i believe it was the telegraph that revealed that it was actually j.k. rowelling. this book did get good reviews, it is just that no one at the time necessarily thought it was actually j.k. rowelling >> imagine the pressure to deliver something if you are already her. >> casual. >> and being able to write as somebody else must be liberating. >> absolutely. i am amazed she was able to do that while doing the casual vacancy book that didn't come out with great reviews and at the same time people were questioning what project she would follow up on and she was out doing something totally different that was critically successful. >> fascinating. dow not doing a whole lot, up 10 points. i think tiffany o a day where retail sales were a disappointment and upgrade and the argument, the wealth effect people in the upper income brackets will move comps, not just for q2 but q3 and q4.
>> i am watching the lower end closely, watching the dollar stores and the walmarts because especially with the jump in gas prices i worry about the bifurcation there. >> unbelievable. the record i think is 411 back from 2008. >> july 17, 2008. >> let's get over to headquarters. scott wapner and the halftime. >> welcome to halftime show. four hours ago until the close. take a look at the wall and find out where we stand. we're trying to get gains. dow up 13, s&p nasdaq positive as well. here is what we're following. money in the bank, another financial beats the street and top analysts on which stocks are the ones to own right now. a coke and a smile. why one of the worst performing stock this is year is primed for a rebound or is it? we'll debate it just ahead. first our top story, trading the momentum, the s&p looking for its eighth straight day of gains in what is shaping up to be a huge week for the
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