tv Closing Bell CNBC July 1, 2013 3:00pm-4:01pm EDT
>> reporter: really. >> unbelievable. okay. well, happy trucking. phil lebeau, thank you very much. thanks to all of you for watching "street signs." "closing bell" is up next. we'll also check in on how jane wells' eggs are cookin', as well. hi, everybody. happy monday. welcome to the "closing bell." i'm maria bartiromo, and rally mode once again. >> beginning the second half on a positive note here. i'm bill griffeth. we are kicking off with green arrows. the dow was up 174 points at the high today. and it's come off that high right now. i should point out we've been mindful of what's going on in egypt where hundreds of thousands of protesters are still gathered -- >> wow, look at that show. >> -- in cairo, in tirir square. a little while ago, the egyptian
military called on morsi to find a settlement or they threatened a military coup. we did see a pullback in our markets when that announcement was made. so obviously, our market is watching what's happening overseas. >> massive uprising there. we'll continue to take you back live to cairo to get the latest developments there. meanwhile, just call carl icahn the $5 billion man. he reportedly secured $5.25 billion in financing for his dell bid. he will be here exclusively to talk about that and what happens next. join us. >> that's an unfolding story. gold bouncing back big today after last week's carnage. meet someone who says gold will actually make you more money than the stock market, between now and the end of the year. does that mean that gold will soar, or that stocks are going to fall? we'll figure that out coming up in a little bit. let's look at where we stand as we approach the final stretch for a monday. the first day of the second half of the year. the first day of the third quarter for the wall street.
the dow kicking off the first day in a strong mode, even though we are off the best levels of the session. up, as you can see, 124 points on the dow. nasdaq composite also coming off its lows now, and reaching back up 41 points, 3,444 on the nasdaq. and the s&p 500 with a similar chart pattern, showing gains here, up 14 points. in today's "closing bell exchange," we have david, jeremy -- >> hi, maria. >> hello there. great to see everybody. sam, i want to kick it off with you. beginning the second half of the year. what are your expectations for the second quarter and the guidance for the third quarter? >> well, i think from an earnings perspective, we're starting off much better for the second quarter than we did the beginning of the first quarter, meaning we're looking to see earnings increases of 3%. you might say, well, gee, that's nothing. >> yeah, it is nothing, right? >> actually, last quarter we started at one-half of 1%. and s&p capital i.q. has done a
study and found that the actual number ends up being anywhere from 4% to 5% higher than where we started at the beginning of the quarter. so the implication being, obviously, no guarantee. maybe we end up with a number in the upper single digits rather than the lower single digits. >> stevie, i know you traders are watching the averages and the 50-day moving averages very carefully. if we close above those today, is the correction officially over? >> no, i don't think you can say that, bill. remember, this is a holiday-shortened week. a lot of people, you know, the old adage, never short a dull tape. i hope sam's right. now once we kick off earnings season again, they better be good, because the market's not going to be as forgiving. so i think you'll see more pressure in the next couple of weeks. >> does that mean the market will trade more on fundamentals than it has in the past, where it's been focused so much on the fed in. >> it's going to try to. remember, we topped off around 1,687 in the s&p cash. and we came off of that, because that was just inflated. that was bloated off the fed.
but now, the fed are trying to be a little more clear, actually confused more than it's helped. >> i guess the question is, going into the third quarter, we know that there's a possibility that the federal reserve begins to unwind the stimulus. we know that we're coming off of a quarter that's probably going to be 3% growth, as sam just told us, in terms of profits. david sauerby, what's priced into the market at this point? do you want to step aside going into this next quarter, or actually put money to work in stocks? >> i think when you get sell-offs in stocks, and we'll still get one, at best we had a 7% sell-off in stocks from the high to the lows, in the second quarter. i think we're going to get that again. yet stocks will, i believe, still finish the year in calendar 2013 at higher levels than exists today. so when you get this inevitable 7%, even bigger pullback and what could happen in this quarter, use it as a buying opportunity, because over the longer term, the mistrust of
stocks, i still believe firmly, is one of the best things that the market has going for it for the next year plus. >> jerry webman, how much higher could treasury yields go? we had a pretty good rally -- yeah, a pretty good sell-off, depending on what your point of view is in the second quarter. >> well, we sure did. you know, some things are self-correcting in the interest rates. as we get up in these kinds of levels, it's not enough to crush, for example, the housing market or shut off corporate borrowing, but much higher than this, that will happen. there will be slowness and self-correcting. we're at a level now that i think the market can live with and the real economy can live with. so this 2.25% to 2.50% range, i think we're going to live with that for a while. >> so live with that in terms of this market, this economy bumping along the bottom. what happens with the market in that scenario? >> well, i think the market in that scenario goes to what everybody has been saying. we stop trading on, you know, the fed, and we begin trading on
fundamentals. we look for -- we're looking for great companies. right now, i'm looking for the company that can make the audio in remote television a little more understandable to me. if i can find that company, i want to invest in it. that's the kind of thing that we're going -- the market will be more selective. it will look for real revenue growth. it will look for sustainable earnings. we're at a kind of interest rate level where the real economy keeps going, housing stays strong, consumer stays okay, and that means if you have the right companies, you're okay. >> jerry, i have a humble suggestion, jerry, put it on cnbc and put it there. you don't have to worry about the fundamental -- >> well if i could hear it better, i'd be delighted. >> yeah. who was going to say something? steve? >> i was. to his point, that's why you see people loading up on the tech stocks again. because that's where you're going to see the perceived growth going forward. so you want to take the fed out of the mix, go for where the growth is. the growth is obviously in the tech names. that's why regardless of the sell-off, you'll probably see the money floating back in there. >> the same result, we've had the financials being strong, the housing stocks being strong --
hang on, david. >> sure. >> -- and one other group i was going to mention. >> healthcare? >> and healthcare was very strong today, as well. is that what's going to lead us through the third quarter? what are you looking at? >> the third quarter is one of the tricky quarters. basically, the gain is less than 1% on average since 1970. >> the gain in stocks or gain in profits? >> gain in stocks. >> okay. >> so stock prices up about .8%, which includes dividends. yet the volatility in the third quarter is 25% higher than in any of the other quarters. so in a sense, all you really end up doing is mapping out the design on charlie brown's shirt. you know, up, down, up, down, and you end up where you are. if you look to history again, if we have a strong first half as we did, that increases the average return in the second half and elevates the frequency of the market rise from two out of every three years to three out of every four years. >> huh. >> so momentum is on your side. >> steve grasso, what does the market look like to you now? we were up as much as 174.
how does it look for you going into the close and the next couple of weeks? >> you know, for this week, don't get in the way of it. it was pretty odd the way we stalled with a little bit of a retracement around 1,625 in the cash. i would stay out of it. if you're looking to place a short bet, i would stay out of the way. if you're looking to try to, you know, clip a little bit of a rally, i would take that. because i would see as soon as the earnings start up, the markets should sell off and be squishy for the next couple of weeks. >> the last word to you david sower, i know you're still buying five stocks that you still like. >> that's true. the five stocks i gave to you and maria at the beginning of the year of outperformed by a full percentage point. and very quickly, the longer-term secular plays in auto, housing, and energy infrastructure. i think we're in baseball terms bottom of the fourth inning in all three of those industries. and there are companies that sell at discounts to the market,
above-average earnings, generating ample free-cash flow, and to me, bill, those are always the right ingredients that get it done in the long term. >> the bottom of the fourth. you just have to hope we don't get a rain delay in the meantime. thank you, gentlemen. >> thanks. >> my pleasure. >> appreciate your thoughts. so what's driving the market as we kick off the second half of the year? josh lipton is back on the floor of the new york stock exchange. what are the traders telling you, josh? >> reporter: bill, you can see we're in the green, but well off session highs. we had been up about 173. now up 126. the spx, up about 20. now up 14. some traders really noting the failure of the spx to punch through its 50-day moving average, 1,624, 1,626. so proving resistance before it proved support. in the dow, the blue chips, the gain today, utx, ibm, a kbchlt p, and trv, pacing the gains in the dow. and the spx, it's industrials that are working today. tyco, massco and also materials, a sector that's also faced some
challenges giving the collapse in commodities, but materials are working. iff, emm, and the utilities the worst-performing sector. fe, te, peg leading the lower session. >> and gold is regaining a bit of a shine. sharon epperson has that story. over to you, sharon. >> reporter: gold bulls may have been pretty happy with today's move in gold, up nearly $30 above the $1,200 an ounce level. some said there was fresh buying after we saw friday's move to a nearly three-year low, below the $1,200 mark. keep in mind, gold did have its worst quarter on record in the second quarter, down some 23%, and a number of hedge funds are still slashing their bets that the gold is going to rally any time soon. in fact, many investment firms, including barclays today, lowering the price forecast for
the metal. what will be key is what happens at the end of the week with the bank of england and the ecb meetings on thursday and the jobs report coming out on friday. back to you. >> big week, actually, for meetings and data, even though it is a holiday-shortened one. sharon, thank you. we're in the final stretch of trading, about 50 minutes before the closing bell sounds on this first day of the second half of the year. the dow kicking off, up 121 points right now. s&p 500 also stronger. coming up on "closing bell," is ben bernanke and the fed giving the consumer too much credit? somebody here is warning just that, and it could have disastrous consequences. the debate coming. also, groupon. you know, you love the deal that comes in your e-mail. but should the stock be the target of your affection, as well? we'll look at that. plus, just when you thought the duel was done, carl icahn is back again, this time with $5 billion in hand. he'll explain his latest move coming up to maria exclusively. >> yeah, we want to take you live to egypt, get you the latest on the protesting going on. they're demanding the ouster of the country's president.
take a look at the people there live right now in cairo. you're watching the "closing bell" on cnbc, first in business worldwide. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine. wi drive a ford fusion. who is healthier, you or your car? i would say my car. probably the car. cause as you get older you start breaking down. i love my car. i want to take care of it. i have a bad wheel - i must say. my car is running quite well. keep your car healthy with the works. $29.95 or less 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?
but dean baker of the center for economic and policy research, is questioning whether ben bernanke is overestimating the strength of the u.s. consumer. he says probably. >> yeah. dean baker joins us now, along with andrew wilkinson and our own rick santelli to weigh in, as well. dean, you feel like that the strength of the consumer has been misunderstood. very briefly, how so? >> well, i think people look at -- one of the things i was looking at recently is the consumer expectations index. that's very erratic. people look at that and go, it's been very strong lately. that's almost entirely based on the futures expectations index many people who follow this closely know it's incredibly erratic and tells you nothing about consumer behavior. if you look at current conditions, it's better than it was, but it's not especially strong. the idea we'll see some huge idea in the consumption, there's no basis -- >> you sound like the consumer -- the consumer we've seen to this point is largely fuelled by, for example, the dividend increases we saw from
corporate america late last year. is that right? >> that's right. well, that was part of the first quarter, so you had a lot of big payouts in the fourth quarter. hardly a secret. we saw the capital gains tax going up, so a lot of companies made their payouts in the fourth quarter, showed up in the national accounts. that helped spur consumption in the first quarter, which was somewhat stronger than it would have been had we not had that, given particularly that we had the ending of the payroll tax cut. otherwise, we would have seen weaker consumption. >> andrew, that makes a lot of sense, right? the stock market going up, makes people feel richer, getting dividends make people feel richer. you have the outside elements coming in that perhaps may make things look a lot better than they are. is it appropriate for the fed to start stepping away? >> no, well, i -- well, i think the fed will step back towards the end of this year. you know, as they told us last week, and (unintelligible) other fed speakers and governors, it will be data-dependent. i think the retail consumer is
doing very well indeed. i do not think the strength is necessarily limited. >> and so, where are you seeing that? where is the evidence of that? >> well, if you look at manufacturing, for example, which is about 8% of total employment, and if you look at another 8%, which is the food-services industry, you've seen consecutive -- or rather, consistent gains for food services in the order of about 20,000 additional payroll increases every month since march 2011. now, why is that? it's because there's a broadbased recovery going on. people are earning more. people are spending more. and this is a nationwide phenomenon. you know, food outlets are opening up. more bars are selling more food and drink. it makes no sense to me to say this is just to cater to a minority of the wealthy. if you look at the auto sector -- >> well, you mentioned manufacturing a moment ago. manufacturing is going nowhere. that's been virtually flat for the last three, four months. in the case of food services, that's a very mixed picture. these tend to be the worst-paying jobs. what i always say, the
economy's -- >> it doesn't matter. >> -- in a good economy, people don't take them. >> that doesn't matter. manufacturing -- manufacturers can lever up their -- they're capital intensive. if you need to go to a bar and buy a drink, buy food, it's a labor-intensive thing. you capital open a bar without hiring more people, and you can't hire more people unless there's greater demand in the property. >> rick, you'll have to break the tie. do you see genuine growth in the consumer now, or not? >> i think that the consumer's going to be behind the curve, but not necessarily for reasons that either of our guests have given. i just think it's the ineptitude of those running the country. consider this. on the federal reserve bank of new york's website, for the last quarter data available, in order for us to understand consumer spending, let's look at total aggregate debt on the consumer side. and at the end of q1, it was about 11.2 trillion. that was down 1%, down about $110 billion. and it comes off of the peak
right at the beginning of the crisis, in the fall of '08, when it was around 12.7 trillion. so that doesn't sound bad. here's the problem. if you're not one of the affluent or one of the major banks or the hedge funds or that crowd, access to credit. and why is access to credit so hard for the average guy? well, consider the government is basically taking over all of the areas for him to get credit. and even though they say they're trying to make it better for main street, the human behavior aspects -- which both of our guests are debating -- that's the worst category for anybody at the federal reserve. you think they wanted all of the money to just end up as excess reserves on the banks' balance sheets? so whether it's the consumer protection group, whether it's housing, whether it's sallie mae and loans, the current stories of the day, the transmission and the management of how the consumer gets credit isn't working in his favor, and that's going to be a problem. >> i disagree. >> people have been refinancing a massive amount. we've seen a huge amount of
refinancing the last three years, which was one of the main points. i assume that's what the fed expected. people were able to refinance mortgages at 4%, 3.5%, even 3.25%. that put money in their pockets. i don't know what rick was expecting -- >> single family creation, the historical wealth barometer of joe sixpack has big lagging. >> -- the car sale, rick. the highest nominal amount on record, and the strongest since 2008. people are going out and spending. people do have access to credit. the federal reserve, if you read the beige book, go back, the last three reports, they talked specifically about how auto lenders have been fighting over making loans to people -- >> what about that? that's a very important point. the auto sector, the housing sector, these two are, in fact, evidence that they are spending money. so, dean, what's your answer to that, the auto sector? and, also, if you think the
consumer's not as strong as the fed thinks, do you question the fed beginning the stimulus drawdown in september? >> well, look, i think we've d had, in fact, surprisingly strong consumption. again, i think a big part of that story is the dividend payouts in the fourth quarter. we have savings rates around 3%. that's historically a very low rate. that's high compared to where we were at the peak of the bubble in 2005, '06, and '07. but a 3% savings rate is a very low savings rate. people are spending. now, in terms of going forward, does the fed have to worry about inflation? i think that's close to crazy. we're way below anyone's measure of the economy's potential, full employment. we're looking at a growth rate of less than 2%. the economy's potential growth rate is somewhere between 2.2% and 2.5%. we're failing to make up ground. >> -- the economy, why are the numbers about so poor? your case doesn't -- if we're in a consumption economy, the kind china wishes they had, the kind japan wishes they had, and we
have it, even though the president wants to transform it to an export economy, why are the growth rates so light? >> well, simply, we have a trade deficit. look at the data. >> absolutely. the retail sales are at an all-time high. what more do you want? >> what's at all-time highs? >> retail sales. >> retail sales. 421 billion. >> why isn't gdp at 3.5%? >> trade deficit. >> -- contribution to gdp on a quarterly basis, rick. >> this is what i love about economics. you can get three very -- >> -- a great argument for the fed to stop everything. >> you get three very smart people in the room, and they can't agree on the same thing right here. i love that. gentlemen, thank you all. >> thank you, guys. >> appreciate it. we want to get over to jackie deangelis who has a "market flash." >> watching shares of apple, up 3.67%. if they close at the levels today, it's poised for its best day since february 5th. two tidbits of news, upgraded to a strong buy at raymond james
and also apple applying to register i watch, the trademark in japan. since its all-time high last september, shares down roughly 40%. we'll be watching closely. back to you. >> all right. thank you. we're in the final stretch of trading for monday, the first day of the second half of the year. this market has seen its games cut in half at this point, with just about 35 minutes to go. the dow jones industrials up 97 points. >> i saw art lurking a moment ago. he'll be wandering around and let us know what the bias is. >> it feels like it's to the sell side. >> it does. shares of groupon up nearly 50% since andrew mason was fired in february. somebody here says the daily deals website is still a bargain. we'll look at the charts next. also, the s&p 500 up 14% through the first half of the year, while gold is down 25%. which is the better bet in the second half of the year? that's coming up on "closing bell." stay with us. ♪ the world is changing faster than ever,
creating new opportunities for those who stand ready to seize them. in a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, our flexible, collaborative approach helps forward-looking companies not only run better, but run different... to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because now more than ever, the future belongs to those who challenge the present.
♪ honey, is he too into this car thing? [ mumbling ] definitely the quattro. ♪ honey? huh? a5. what? [ sighs ] did you say something? ♪ vietnam in 1972. [ all ] fort benning, georgia in 1999. [ male announcer ] usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection and because usaa's commitment to serve military members, veterans, and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve.
welcome back. we want to show you a live picture of the protesters in egypt. they are taking off today, as you can see, pushing for the removal of that country's president. that's live in cairo. how many people are there? >> hundreds of thousands is the number that's being quoted. look at this. they've got fireworks going during a protest, when they're calling for the removal of the president of the country. >> yeah. >> has this become a celebration suddenly? is there something we haven't heard yet? >> pretty extraordinary.
we'll take you live there. we have a live shot from cairo where the protesters -- >> and just last year, a year ago, right now -- >> yes. >> -- there was a similar number of people in tahrir square, and they were in support of president morsy. >> celebrating the incoming president. >> unbelievable. one year. so we'll keep you updated, as you said. all right. groupon has built its reputation, of course, on bargains for the masses. but now, the daily deals company is expapding its aim for people who really don't need a bargain. in other words, high-end consumers. our wealth editor robert frank is here with the details. >> reporter: thanks, bill. everybody likes a bargain, and groupon says affluent consumers represent a fast-growing market and they're winning them over with good food. groupon announcing today it's launching groupon reserve, a service that allows high-end diners to make reservations and along with a table that gets discounts up to 40%. groupon working with 600 restaurants, including lecert and capital grill in new york
and miami. the list does not include the really exclusive restaurants like the four seasons or babo. but ben mckean says the users may be able to get through the velvet ropes with an extra charge, or what they call a premium experience. the company is also looking to expand into other luxury services like spas and salons. the discounts for restaurants are all built into the check, guys, so you don't have to be embarrassed when you go to lecert and present a coupon to the waiter. >> all right. thank you very much. are groupon shares a deal? let's look at the technical side of the story, chief market technician at oppenheimer, and mark is the associate director at the oxford club. mark, are you a buyer here? tell us about the fundamentals. >> i don't think it moves the needle very much, maria. it's tough enough to get a reservation these days at mediocre restaurants. i'm kind of skeptical. i think it will be very
difficult for the average groupon user to get a discount on a regular basis. regardless of the new reserve product, the numbers are not very impressive. gross billings were up only 4% in the first quarter year over year. revenue growth was up less than 8%. you know, that's not -- that's not a good number for a company like groupon. if this were a mature company paying a nice dividend yield, maybe the numbers would cut it. but for a young, technology, growth company, those numbers are not acceptable. especially when you look at the valuation. it trades at 30 times 2014 projected earnings, 30 times cash flow. so i would not be paying that kind of valuation for the kind of performance groupon has been putting in. >> so are you a seller? >> i'm not sure if i'm a seller right here. i'm kind of ambivalent. i just wouldn't touch it right here. >> carter, what does the chart look like to you? >> the chart looks like it has the bear's traps. look at it. here's the thing that comes out,
ipo at 30. the first day is your best day, plunges, and not good. what's been happening is we've been basically steadily moving higher. the stock at 8.65 now and has the hall mashes of a bearish-to-bullish reversal. it was abandoned and now is steadily climbing. the best part, as the s&p sold off 7.5% the last month, the stock is going up, meaning people had margin calls, but they didn't sell this one. the risk managers are pulling back, but they didn't sell this one. the stock has momentum. we like it here. we think it has 10 bucks written all over it. >> looking at the ipo, going at 30, going all the way down to 2 -- >> disaster, sure. >> -- yeah, disaster. you think the performance -- [ overlapping speakers ] >> -- and does their new thing work? it's sort of irrelevant. again, of all things that have been tested, the biggest core models, relative strength, how is it a stock doesn't go down when everything is going down? that's buying pressure. >> yeah, that's a good point,
actually. so that's buying power. so what about that? when you look at that mark in terms of catalyst, is there anything out there on the horizon that possibly could turn you positive about this company? >> i mean, i'd have to see some momentum as far as their earnings growth, their revenue growth, the cash flow growth. i get what carter is saying, and i would not be opposed to renting the stock for a few weeks. but like you said, i want to see some catalysts. and the market, at least, has not taken this new reserve news as a catalyst. the stock is not doing a whole lot today. it's kind of right in line with the markets. so i think you want to see some actual performance from the company before owning this stock. >> all right. we'll leave it there. gentlemen, thank you very much. see you soon. we appreciate it. >> thank you. all right. heading toward the close, losing ground. the buyers, slightly to the downside, even though healthcare was leading to the upside here today. but we may get this kind of action this week. we were just talking about that during the commercial break. it's a big vacation week here. >> the market closes at 1:00 on wednesday, closed on thursday for the july 4th holiday.
this is a big vacation week. volume on the downside. so how are these for plot elements? spying, germany, france, all of the ingredients for a classic thriller, right? instead, it is the formula for a political horror show. the nsa spy scandal is hitting europe, and europe is threatening to hit back. and ceo of pay packages surged by 16% last year. coming up, we'll hear from somebody who says that's great news for the entire labor force. not just the top executives who got the pay increase. >> really? >> but somehow, i think not everybody agrees with that, right? we'll have that debate coming up. tdd#: 1-800-345-2550 opportunities are waiting to be found in faraway places. tdd#: 1-800-345-2550 markets on the rise. tdd#: 1-800-345-2550 companies breaking through.
tdd#: 1-800-345-2550 endless possibilities. tdd#: 1-800-345-2550 with schwab, i search the globe for the big movers. tdd#: 1-800-345-2550 i can trade in 30 different markets tdd#: 1-800-345-2550 to help me seize opportunities, tdd#: 1-800-345-2550 potentially better returns and new ways to diversify. tdd#: 1-800-345-2550 to get an edge, i use schwab's global research. tdd#: 1-800-345-2550 they give me equity ratings on foreign stocks tdd#: 1-800-345-2550 based on things like fundamentals, tdd#: 1-800-345-2550 momentum and risk. tdd#: 1-800-345-2550 i also have access to independent firms tdd#: 1-800-345-2550 like ned davis research and economist intelligence unit. tdd#: 1-800-345-2550 and with my schwab global account, tdd#: 1-800-345-2550 i can trade directly online in top markets tdd#: 1-800-345-2550 in their local currencies-- when the markets are open. tdd#: 1-800-345-2550 plus, their global specialists are on call around the clock. tdd#: 1-800-345-2550 there's a world of winners out there. tdd#: 1-800-345-2550 and now i have a better shot at finding them. tdd#: 1-800-345-2550 now get our best global offer! tdd#: 1-800-345-2550 trade commission-free online through september 2013 tdd#: 1-800-345-2550 when you open a schwab global account. tdd#: 1-800-345-2550 call 1-800-308-8414. ♪ unh ♪ ♪ hey! ♪ ♪ let's go! ♪
it has been a busy monday in the edwards snowden/nsa spying saga. now, key alies of the united states are upset. president obama has been forced to respond. and russian president vladimir putin is maybe trying to cut a deal with snowden as he remains in limbo at a russian airport. i mean, this has all of the
elements of a novel. we have the details. >> reporter: another embarrassment for the united states of america, as you say. president barack obama is in the middle of an african tour. he was forced to take questions about this. now, the immediate -- the thing he was responding to here was this question about an article over the weekend which alleged the united states has been actually bugging eu offices and has hacked into eu communications systems to figure out what eu officials have been communicating among themselves in terms of trade negotiations. the president said he's going to look into the specifics of that and get back to those countries with the details. but meanwhile, he sort of offered a blanket defense of spying in general. take a listen. >> i guarantee you that in european capitals, there are people who are interested if not what i had for breakfast, at least what my talking points might be should i end up meeting with their leaders. that's how intelligence services
operate. >> reporter: meanwhile, in russia, president vladimir putin said he's not going to extradite edward snowden, who apparently still remains in that moscow airport. but he said he has one condition for snowden. take a look at this comment from putin now, just coming out today. he said, if he wants to stay here, there is one condition. he must stop his work aimed at harming our american partners. as strange as that sounds coming from my lips. so apparently, some u.s. pressure working on putin there. putin then, in turn, putting the pressure on snowden to stop harming american interests. but putin said that he didn't have much confidence that snowden would stop harming u.s. interests, because that seems to be what snowden is bent on doing. but putin added that, in fact, snowden is not an agent of the russians. so it's taken very strange and twisting turns here. but the saga of edward snowden is clearly not over yet. >> amazing. thank you very much, eamon. with the new trade agreement
hanging in the balance, what should the u.s. do now? >> let's talk about it with noted nsa expert james banfred, written several books on the topic including "the shadow factory." heather connolly's also with us, the director of the europe program at the center for strategic and international studies. i welcome you both. james, how damaging is this potentially to our relationship with our key european allies? >> well, i don't think it'll last very long, but it's very embarrassing. there've been allegations look this before. what is worse about this one is the fact that snowden actually leaked the documents, the proof. so it's basically like lighting a fire under the european allies and telling them that, for example, in germany, we've been monitoring 500 million calls and e-mails a month. so i think the public in germany
and across europe want their leaders to take a bit of a hardline towards the united states. >> so, heather, do you agree with that? how might the u.s. approach repairing any damage that was done? and, also, love your take on the putin part of this. >> yeah, james is absolutely right. this is extremely serious. it comes on top of the nsa prism allegations, and now this. european leaders are going to take measures if they don't think the obama administration is taking this seriously. and secretary kerry's comments in brunei and the president's comments in tanzania is saying, look, we all do it, don't worry about it. that's not going to stand. europe is going to take measures. they are very, very upset by this. >> what kind of measures? what do -- >> what are the implication, real implications? what kind of measures are you referring to? >> i think you're going to see where the european parliament, as it works to update its
privacy directive, is going to be very tough. i think you'll see where the ttip, transatlantic trade partnership, may slow down until there's clarification from washington about these programs. european leaders are responding to public demand. they want some answers, and washington just can't say, "don't worry about this." >> james, what about the question that maria asked about vladimir putin? our relationship with him has been tenuous at best. what does this do? what's the end game on this one, do you think? >> well, i think going -- a really good novelist could come with a good ending for this. it seems like putin's playing this for all it's worth. the problem is that there is no travel documents for snowden. the ecuadorian government seems to be delaying or not wishing to come up at all with the travel documents, which makes snowden really the ultimate
international hot potato. he can't go anywhere. and so, he's there in russia and putin, i think, is making the best of it. in terms of what the president said today, i think that's pouring gasoline on the fire by sort of pooh-poohing it, because the europeans know that everybody spies, but we spy with the equivalent of an eving dropping nuclear weapon, when all they have a army howitzer to spy with. there's no equivalence in terms of spying. >> yeah. all right. we'll leave it there. we'll keep following this. really an extraordinary story. we want to point out that the market is losing it quickly. we were high -- we were as high as up 174 earlier. we have seen this market deteriorate going into the close, with just 15 minutes to go. >> yeah, taking profits here as we head toward the close. when we come back, what is going on at microsoft? wall street is awaiting big moves there. so far, nothing yet. and our herb greenberg is wondering if there needs to be a new person in the big corner office there.
herb is next. after the bell, carl icahn will talk to us exclusively about his effort to acquire dell. he reportedly lined up $5.2 billion in financing to acquire the company. it's an interview you'll see only here on "closing bell." stay with us. back in a moment. it's just her way. but your erectile dysfunction - that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess with cialis. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, seek immediate medical help for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat,
or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a 30-tablet free trial. we're headed the same way, right? yeah. ♪ [ panting ] uh... after you. ♪ [ sighs ] [ male announcer ] it's all in how you get there. the srx, from cadillac. awarded best interior design of any luxury brand. lease this 2013 cadillac srx for around $399 per month, with premium care maintenance included. could save you fifteen percent or more on car insurance. mmmhmmm...everybody knows that. well, did you know that old macdonald was a really bad speller? your word is...cow.
welcome back. the stocks kicking off the second half of the year with gains. jackie deangelis is breaking down the big dow movers. jackie, we should point out the market was up 174 earlier, and now is holding onto a gain of just 62. we're losing it. >> that's right. paring back a little bit, but the financials still one of the biggest performers today. american express a top dow performer. bank of america also not far behind. but jpmorgan now reversing course and in red territory. meantime, disney advancing by more than 1% today. monsters university remaining number one at the box office, and barron's rating disney second only to berkshire hathaway as the most respected company in the united states. now, not much red on the dow. still a little bit more than we had earlier this morning. intel a big lagger. piper jaffrays saying tsm's deal to supply chips to apple limits growth opportunity in mobile for intel. meantime, we are awaiting headlines on microsoft. the company is due to announce a
massive restructuring. several reports indicating and suggesting that the restructures bying an effort by the ceo to rebuild his legacy at the company. maria? >> all right, thank you so much. if microsoft makes changes, what should those changes be? >> let's ask one of the biggest critics of the company's ceo. look at him. there he is. herb greenberg. you'll remember mr. balmer made herb's worst ceo list from last year. so what do you think they should be doing here? >> they should be doing something. look, when he made that list, we were going back to december. it was a cumulative call. the stock was around 27. it had been bouncing around. since then, there have been a bunch of calls by activists to have something happen. so now what you're seeing is some people say by july 1st, today, we would start seeing news from microsoft. we haven't seen any news yet. what we have seen is rumors that the guy who runs the xbox division is going to head over to zynga, so you have to start thinking, boy, are the changes occurring? whatever they do, it has to be
something that gives shareholders something better than a 2.7% dividend, and makes them feel something is going on. and i want to add something here. in the end, what you need to see is something from steve ballmer, whether he goes or doesn't go, ultimately, an he's not going to go today, it creates his legacy and it sets in motion the next wave of microsoft. >> yeah. i mean, the stock is up 25% in six months. but that is largely on an anticipation we'll see some kind of reorganization, right? >> yeah. you know what? he wouldn't have made that list. if we were starting to see things happen now, i wouldn't have put him on the list. look, you have microsoft date, which was anything but setting the world afire, and now they're coming back, trying to make it better. the world has changed for them. yeah, the stock is up. but again, that is after the activists came in and said, you gotta do something. i don't know if before they were sort of living in a little ivory tower thinking no one would pay attention, they had a bunch of cash. you know, think about how many
years people have been talking about the hoards of cash on microsoft's balance sheet. and nothing happened. >> yeah. >> so now you see, i think, the movement that -- we think we see. we'll see if something happens after the close today. >> all right. we'll be watching. thank you, herb. we're following two major stories today. we told you about the upset happening in cairo. we have a market up in the double digits. appearing to throw its weight behind the protesters, demanding the ouster of president morsy. today in egypt. the egyptian military telling the country's leaders that they have 48 hours to meet the demands of the people. the protesting has gone on all night and continues as we speak there. meantime, the dow coming off the highs. it was up 174. now a gain of just 62 points. and despite that, one of the market's biggest bulls, well, guess what? he's even more bullish. when we come back, brian bellski explains why he's raising his year-end price target. and tomorrow, don't miss the
interview with prince alwaleed, telling me where he's putting his money for the second half of the year, and his ongoing dispute with "forbes" about his net worth. me? with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. wi drive a ford fusion. who is healthier, you or your car? i would say my car. probably the car. cause as you get older you start breaking down. i love my car. i want to take care of it. i have a bad wheel - i must say. my car is running quite well. keep your car healthy with the works. $29.95 or less 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! [ male announcer ] this is betsy. her long day of pick ups and drop offs begins with arthritis pain... and a choice. take up to 6 tylenol in a day or just 2 aleve for all day relief. all aboard. ♪ all aboard.
all right. breaking news from mary thompson. something completely different here, mary. >> yeah. a left turn. >> a left turn, that's right. i have an update on the bail hearing for the quote/unquote mom. she was denied bail. she was arrested and accused in may of running a multimillion-dollar pot-growing operation. the judge saying the four guarantors of the bail package she presented he didn't feel comfortable with them. if she does present the bail that has been cosigned by her parents in virginia and the grandmother of one of her children, he will grant bail. if it's granted, he will have to stay in the place in manhattan where she'll stay with one of her daughters and have a home-monitoring device. the judge saying he was very confused about ms. sander lynn's finances, saying here's a woman who don't have any assets we can speak of, and yet lives in a
5,000-square-foot mansion in scarsdale, new york, and drives a mercedes. the judge confused about her finances, but asking for others to sign off on her bail before he grants it. back to you. >> a real-life version of "weeds." i thought it had ended already. >> yeah. this market, bill. we have given up much of the gains that we started the day with. >> still going down. >> starting off the second half of the year with a good performance, but it's getting worse and worse. as we approach the close, we understand there's about $77 million of stocks to -- >> so very small. >> very small. and yet this market has gone from up 174 to up 50 points. >> breaking it down is brian and chris. mr. bellski, you've been amongst the most bullish analysts to join us. and now you're even more bullish. what happened? >> well, we had a 1,575 target, bill, for most of this year. and when the market hit 1,5 60
earlier last week, we wanted to see how stocks would react to investors' notion of tapering. quite frankly, we believe we're in the beginning stages on an investment basis where stocks are transitioning away from the need and want for monetary policy and toward fundamentals, because at the end of the day, earnings growths improving, the macro backdrop is improving, and that spells to us that the fundamental investing will reign supreme. as such, we lowered our assumptions on our targets. we are much more comfortable with a 15 multiple on $110 of earnings, and that gets us to a 1,650 target. that's what our new target is. >> chris, you heard brian getting even more bullish. i'm looking at an e-mail here that says record selling of bond funds in the month of june, through june 27th. we knew it was bad. these numbers are even worse. $80 billion have been pulled from bond, mutual fund, and bond
etfs. is that a reason to go into stocks? what are your high-end clients telling you, and what are you advising them to do? >> well, you would think it would be, when you see the large outflow out of fixed income. generally, it goes into a parking lot. now, it's going back into cash because of the fears of what we call fed cleansing. i would completely agree with what brian said. you're starting to get into an inflection point in the market now where it's fed cleansing versus improving economic fundamentals. and you're about to see the manufacturing pmi readings all around the world get better in the second half, and that means owning the cyclical side of the equity markets. right now, repositioning portfolios. and if market participants, maria, will give us an opportunity to come in and reposition portfolios and trade off 6% from their highs, we're going to do it. >> so, brian, do you go with those growth stocks, or do you stay with the defensive issues here? >> no, if you take a look at portfolio construction, bill, we
would use financials for domestic cyclical growth. industrials for diversified global growth. and technology for growth at a reasonable price. those are the three sectors we want to be overweight. we do not want to have excess positions in things like telecom and utilities. we would stay away from those areas, especially given the fact that the economy's improving and interest rates are heading higher. we think that many of those sectors have really been driv driven -- i mean, many investors have been driving the sectors based on yield, and that's not the right place to be right now. >> all right. we've got to jump. thank you, guys. >> thanks. >> "closing bell" next. >> we'll get to the countdown. and after the bell, carl icahn upping his ante in the bid for dell, reportedly securing more than $5 billion in financing for the offer. he'll be here exclusively to tell maria about it later on "closing bell." you're watching cnbc, first in business worldwide. take these bags to room 12 please. [ garth ] bjorn's small business earns double miles on every purchase every day.
produce delivery. [ bjorn ] just put it on my spark card. [ garth ] why settle for less? ahh, oh! [ garth ] great businesses deserve unlimited rewards. here's your wake up call. [ male announcer ] get the spark business card from capital one and earn unlimited rewards. choose double miles or 2% cash back on every purchase every day. what's in your wallet? [ crows ] now where's the snooze button? ♪ ♪ ♪ [ male announcer ] the all-new 2014 lexus is. this is your move. vietnam in 1972. [ all ] fort benning, georgia in 1999.
[ male announcer ] usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection and because usaa's commitment to serve military members, veterans, and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve. just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before. ♪ [ indistinct shouting ] [ male announcer ] time and sales data.
split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ welcome back. peter, what's the headline today? the dow was up 174. we're going out with a gain of about 70. >> right. >> is it a strong day, or not, to start the second half? >> i would say that -- i'm going to look at it as a strong day. i think the tailend of the day is just the waning, maybe possibly the news out of egypt. we started off strongly, very good numbers this morning. that's the way i'm going to take this day. that's what i'm walking away with. >> you're inclined to want to buy going into the second half? >> absolutely. i would love to buy.
i think we'll have opportunities again to buy. there will be dips in the market where we can buy. by the end of the year, we'll be very happy. >> all right. thank you very much. that is the first hour of the "closing bell" with the dow up 60 points. stay tuned, carl icahn will be here exclusively to talk about his bid for dell and more with maria bartiromo. i'll see you tomorrow. and it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to the "closing bell." i'm maria bartiromo on the floor of the new york stock exchange. the market kicking off the second half of the year in the green, but closing well off the highs of the session. look at how we're settling out on the street with the dow at its highs, up 174 points, but closing up just about 64 points at 14,973. the market did spend much of the day above 15,000 on the dow. but gave that up by the close. s&p 500 also giving up much of an earlier rally. finishing up 8.62,