tv Squawk on the Street CNBC August 16, 2013 9:00am-12:01pm EDT
today. if you have a quick final word about the market, one, what would it be? >> use volatility. find ideas in u.s. and some ent find b international. >> buy on weakness. >> okay. that does it for us today. >> okay. thank you, judge. make sure you are here on monday. "squawk on the street" begins right now. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber at the new york stock exchange. cramer is off. with us at post nine mike, senior editor at yahoo! finance. we are coming off the worst day for stocks in about two months. only the third time this year we've had back-to-back triple digit declines. futures are steady this morning but keep your eye on the ten-year yield. we did hit 2.82 yesterday before settling back at 2.78. keep an eye on gold as one to
watch. jpmorgan today says buy the bounce. we'll talk a lot more about that later this morning. our rolled map begins with the markets trying to hold their ground after one of the worst days for equities. like we said, in eight weeks. >> dell's profit falls 72% as the company looks further out to that potential future under private ownership. >> and described as an unusually stylish geek. yahoo!'s ceo marissa meyer is in vogue, literally. first up, more signs of wait for prompter here. seemingly weak economy, housing starts up at zoom but below consensus. mike, how much damage was done yesterday with dow below 50-day moving average, the stocks, financials, the transports, all the same? >> the market ak acted ragged but yesterday it hit it. to me it's not just the fear of the fed taper. it's a fear of the fed taper at the same time that everything else doesn't look unequivocally great. i also find it's interesting how the market doesn't like when
labor market data is better than other economic data because they feel like the fed is fixating on that. we had all these years when the labor market lagged gdp. to me it's more of the market coming to tearrms that i win tails, you lose market. >> what happens when we get the taper, i do wonder. it's almost the fall. you know, is our stocks going to actually react negatively yet again? is the bond market going to reverse itself? >> so where is the ten-year yield at the time when we actually get the confirmation that it's here and is that short term? does the bond market yield it in already and who knows? >> dan greenhouse points out, we've been through this before. there was a juniper idea where we bottomed out. since that time the ten-year is actually about 25 basis points higher but s&p is about 6% higher. >> yeah. >> so can that argument continue where people, whether they realize it or not, are in an environment where higher rates
can coincide, albeit with the normal adjustment turbulence, he says. >> that's what i think has to happen. the stock market kind of makes its peace with why the yield is going high per. it can't happen in a very violent way, too. i think the other thing that we don't know exactly is, you're see that people not liking when the yen rallies. so you have all of there's correlation trades that seem to be on out there that are related to, you know, developed market yields staying very suppressed and that's no longer the case. >> i mean, to be fair, this is august, of course. and these are extraordinarily low volume days. we've seen the prevalence of etfs and the like have a real impact where we are. but also to be fair, it wasn't -- et cetera not been a great earnings season. >> no. >> this week walmart, macy's, starting to concern -- be concerned a bit about the consumer although they're doing very well when it comes to housing starts. not bad on housing. >> although still today, echoing the ones set earlier in the
week. >> there does seem to be a convergence. >> with the backdrop of 3% nominal gdp growth. the pie is not getting that much bigger just in terms of total output and spending. >> although jpmorgan, tom lee has been bullish all year long. their slide deck today talks about europe coming out of recessi recession. global gdp rebounding a bit. earnings per share on s&p. some of the figures are startling. but that is the bull argument. >> the bull argument is that you keep finding something else that kicks in just when one thing has been expended. >> here to give us his economic outlook, s&p's chief global economist paul sheer joins us this morning at post nine. how do you reconcile, for instance, what the isms are saying versus what the regionals have been saying. ism versus industrial production. are we in an environment where gdp will look better in the second half? >> we we think so. we think the economy is poised
to shift up a notch. the fed and the discussion about tapering and i think people are moving toward a call of september on that. that doesn't look likely to us. we have a fed here that really wants to underwrite this recovery. the gdp numbers, the fed launched into so-called ge-3, average of 1%. that is set to come up. i think the fed is going to want to see a run of stronger data. it's got inflation on its side here because there's no threat of inflation at the moment before it starts to taper off quantitative easing. >> would that mean in october, in december? >> we think it's probably -- i think probably. we're calling for december at the moment. but again, i think the thing to understand here is we're all getting wound up about tapering. it is really just the beginning of a slowdown in the incremental quantitative easing that the fed is applying. it's not monetary tightening but it's starting to's off on the accelerator a little bit. but it's all results dependent. the fed wants to see a strong
recovery. and i don't think it's going to make any big mistakes here in terms of tightening too soon. >> isn't that actually the reason i think the market gets anxious, because they worry that the fed is intent on beginning tapering sooner than later even when it doesn't have that economic motivation to do that. >> i think that's misreading the fed actually. they're not really intent. the fed is not going to come into a meeting and blind side the market and do some taper. i think the june statement from chairman bernanke is all about just starting to communicate a little bit more in a more grandular fashion to the markets about their thinking. let's face it, that element of forward guidance around the asset purchases was very, very vague relative to the forward guidance. i think they're trying to give a little bit more clarity. discuss it in september but that's a big difference between actually making the decision. >> when you look at the ten-year now and you look at what starts today making up for last month, which is pretty not good. are rates having an effect on
the housing market or not? >> well, they do have an effect, i think. of course, monetary policy has an effect on those rates. and there's a bit of a conundrum here for the fed as well. the fed tries to use the yield curve and long-term interest rates to get that recovery. but it gets the recovery, long rates are going to go up and yields are going to steepen. there's a balancing act here. and you know, if the markets get ahead of themselves, the fed will start to rein them? >> do you think we hit three any time soon? >> i'm not really advanced strategist. i'll leave that to people more qualified to make that call. >> before we let you go, tell me where you think the health of the consumer is. we've gotten reports from major rel tailors who indicate not so great. >> i think it's in good shape, better shape. there's a healing process going on here. coming up to the fifth anniversary of the great financial crisis. and economists, dave, will tell you typically it takes ten years to work your way out of major financial crises. so you know, demand, consumer
demands building subdued at this point is not something to be too surprised about. but it is healing. it's getting stronger. that's the basis for the sustainable recovery. >> paul, thanks for coming in. >> thank you. dell has reported a 72% drop in second quarter profits amid falling pc sales. the company on going battle will continue today, in fact, in court in delaware. but looks very likely to happen. results for the period still did manage to beat wall street estimates. going to look at what the numbers were, of course. dell is running about about $2.4 billion operating income number for the year. that is if you take the first half and just assume that you're going to do roughly the same number in the second half. doesn't mean you're going to at all. continues to fight in the low end of the pc market. pressures margins. of course, one of the key reasons why michael dell and silver lake has said this company needs to be a private company for us to actually do what needs to be done in order to retool it for the new age, so to speak.
we'll see. it does look highly likely. it's been nice to have a week or so off not talking about dell after talking eight every day for what seemed like months. but we are going to see some court action today in delaware. vice chancellor is going to be weighing in on carl icahn and his contention that, hey, you should not be holding the meeting, that is the annual meeting, so far after you hold the vote. they should be con current. that is the we vote on this deal, november 12th. 1388. also get the eight-cent dividend and the voting standard has changed. everybody knows that. the real question is, what's the business going to look like for them, private or public, given the incredible loss that they've seen in both market share and profitability. >> to me that whole line that you always hear about how if you go private you can operate outside the glare of wall street. that's code for, you can shrink a business that needs to be shrunk. you can't with a public company
and not pretend you have a growth story. maybe they wican right side the story. >> is the story cutting prices to steal a share? they put pricing pressures on servers, on pcs, things not selling well but they need to move. >> you had the opposite reaction to the numbers which says does dell have motivation to put up a good quarter or not. i don't even know how the game theory works. >> right. and, of course, icahn will tell you they're simply look making it look as bad as they possibly can. for their part, dell management says we want to maintain these customer relationships and we're not going to be beaten on price at this point because we need to move everybody up the value chain but we want to continue to have those relationships in place and not lose them. we'll see. again, they're still not going to close this thing until october, i think, because they've still got to get chinese antitrust and so we are still going to have a couple of months to talk about dell and look at
the business before it does. highly likely become a private company unless we get a very unexpected ruling today in delaware. >> we thought the last 13 q was going to be the last. and it turns out it wasn't. >> it was not. >> we'll see. meantime, marissa meyer is going vogue literally. this ceo of yahoo! profiled in "vogue" magazine and a photo spread. not only described in the article of a ceo of the moment but also an unusually stylish geek. in the article she hints at her vision of the future. quote, e-mail, maps, weather, news, stock quotes, share photos, group communications, sports scores, games. you're listening to what people do on their mobile phones. it sounds like a list of what yahoo! does. by the way, the actual book itself, you could workout to this magazine. it is that heavy. i don't know how many ad pages it is. but it's very thick. and there's the spread toward the back. i think it's a 3,000 word profile, if i'm not mistaken.
hefty look at some say is this the new standard for pr? among the modern ceo. >> you know, i can't -- i cannot speak to my company's pr strategy but honestly i actually think that most of the attention is incoming. i think it's thrust out there. people are interested in somebody her age going from google and taking over, you know, this company that really had been kind of set aside for a while. >> don't begrudge somebody in their mid 30s enjoying the spotlight. she's been working hard. you do have to watch carefully and make sure the pr thing doesn't get too out of land. kind of like when hedge fund managers starts buying sports teams. you want to open an eye on those things. i'm not quite sure what that was about but paulson will tell you, hey, the economics will justify it and they'll make money on the steinway purchase. but the turn around is still going on. it's not as though it's done. i know -- i don't want to put you in a tough position as somebody who works for the
company. >> interesting though. people, when she came in people thought of her as a product person, not necessarily the showman that she's turned out to be. offsetting some of that geek quality that she came into the job with. interesting piece and worth reading. when we come back, is the recent bullishness regarding apple justified? we'll talk to the company's former ceo john sculley. and the morning after yesterday's blood letting. and supporters of president morse si calling for more protests today as the death toll passing 700. jackie: there are plenty of things i prefer to do on my own.
but when it comes to investing, i just think it's better to work with someone. someone you feel you can really partner with. unfortunately, i've found that some brokerage firms don't always encourage that kind of relationship. that's why i stopped working at the old brokerage, and started working for charles schwab. avo: what kind of financial consultant are you looking for? talk to us today.
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muslim brotherhood calling for a nationwide march of millions today in response to a security crack down on islamists in which hundreds have been killed. cnbc is in cairo with the latest. youss youssef, good morning. >> good morning, carl. the clash is under way just not in cairo but across the country now. just about a mile or less away from here is one of the key bridges where gunfire broke out just a little while ago between what our belief to be supporters of the ousted president mohammed morsi and some supporters of the muslim brotherhood exchanging fire. we're not sure with whom. it could be security forces. it could be those who are against the muslim brotherhood
and mohammed morsi. not clear of the picture yet but military choppers have been hovering over the area. right below our position, carl, soldiers have taken up their stance in formation, clearly expecting further escalation. what's interesting to point out is that various pockets across the capital, make no mistake, it's not just here, not just in other town or cities in this country, but also in other pockets of the capital. if you go and a. mile or less away from here to the other side, there are clashes ongoing there as well. in fact, the whole area has been enshrouded in smoke. not clear whether there is fire or a mixture of fire and tear gas. but the situation has escalated just shortly a while ago. and again, a chopper right over there. state tv made it clear that security forces would use all means necessary to defend public institutions. and remember, the country is in a state of emergency. protests are banned. and that, of course, when, you know, the escalation that we saw
came as a result of these gatherings and the military trying to live up to its word, if you will. there is the prospect of an escalation of violence that will, of course, not worry a lot of people within egypt but a lot of important actors around the world including the united states which just delivered the strongly worded message about 36 hours ago. now the situation appears to be deteriorating even further. but for the moment, carl, when it comes to the suez canal, no impact on the shipping at least. according to reports, getting a very secure zone. thus far this has not been a track record of any of those zones being breached. the situation is very difficult, very fluid, and very, very tense. >> a lot of good information there, yousef. thank you very much. when we come back, we'll find out what wall street veteran art cashin has to say about the markets after two days of triple digit losses. and later on, legendary bond
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for what is a reaction after yesterday's sell-off. in fact, two days. and i think this may cloud it a little bit. i think viewers are probably better served waiting to see the action between 10:00 and noon. obviously what happens in cairo will be important. last night going out i heard a lot of people saying they didn't want to take on extra risk, knowing that friday prayers would swell the crowds and -- >> so there really is concern about what's going on, specific, i guess, to the canal and to oil prices and then that impact? >> primarily the canal and what it may do to global transit of shipping. it's an important area. and this has turned a little rougher than people remember. >> you know, art, you mentioned your piece today that moving in the precious metals yesterday and we're looking at some -- there cues like what's happening in the currency markets almost as if it's some kind of array of related trades. is there anything you think is
driving equities in that front? >> well, what happened yesterday was interesting. a lot of people, in fact, we're trying to make a connective trade. about a 20-minute gap between them. but if you step back and think about what happened, you had the dollar drop sharply. you had not only the precious metals but basically all commodities go up. if you were in a classroom, the first reaction might be, that's inflationary, yet there's no sign of inflation anywhere around. and then you worry about the consumers on the witness protection program and we have something to worry about there. >> yeah. how do you square what the retailers have said with what retail sales have said? >> well, i think that this new, if you would, downbeat or this new concern might be a little fresher. i heard you guys earlier talking about how do you compare with home sales and auto sales, et cetera. and i think some of the walmart
data and other data might be relatively recent to that. and i think that's why they're reacting. >> what should we be watching of all the things you like to keep an eye on? >> obviously you're going to keep an eye on the yield on the ten-year. and keep the streets of cairo in view because i think that will be an influence. if nothing more than backdrop. >> art, thanks for coming in. speaking of which, after two rough days for stocks can markets end the week on a positive note? i think we're four points away from the worst week on the year.
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below it on the dow. below it on the stocks, only financials, on the transports. how much do you need to see a bounce notwithstanding what cashin was talking about. >> i don't know about needing it at this point at this junction in the indexes necessarily. before too long, you don't want to see it accelerate to the downside. it's interesting because the talk turns from this market refuses to go down. elevate sod far above the 200 day. we never have any triple digit losses to you get a couple of them in a row and all of a sudden it seems like the bottom is giving way. i would pull back and say 3% below an all-time high and if somebody came to you say what are you doing going into labor d day? congress has done nothing. growth is not good. you probably wouldn't have signed up for it. >> interesting. some of the flows that you saw yesterday, money market taking in almost 6 billion on the weekend on wednesday. are people literally taking it off the table, liquidating and saying put me into cash? >> i do think there's a
confusion trade going on. nobody feels comfortable buying the market because it was at the high or seems like we have these very identifiable events in the next month or two. >> like what, jackson hole? >> like jackson hole, like obviously the expectations for the next fed meeting, like congress coming back and maybe a debt ceiling fight and maybe a new fed chairman and maybe a confirmation battle surrounding it. i don't think all that stuff should make anybody scared but good excuses not to do much of anything. >> we hit 2.82 on the ten-year this week. that's not insignificant. it's not that long ago it was june and we watched a great deal of volatility in the equity markets. we talk about the domestic markets but the damage done to emerging markets which many people have not anticipate valentine's day benefited from the low rates worldwide. it hasn't been undone. >> it's out performed s&p by 40 percentage points. tremendous. >> interesting. interesting call on gold today.
jpmorgan says buy the bounce. if you have a four to five-week time horizon. convention in september. we'll watch gold as well. this morning at 13.70. opening bell. look at the s&p at the top of your screen. somewhat a treat here at the big board. former crew members of the uss intrepid celebrating the ship's 70th anniversary. if you've never been to the "intrepid" here in manhattan, it's an amazing site. the ship has amazing shuttles on it. the concorde, not to mention the history that the boat alone has had after working a world war ii, vietnam. decommissioned in '74. over at the nasdaq, 21st century fox and foxsports celebrating the launch of the foxsports channel. if you missed regis, he is back. >> that's not an unimportant effort for fox as they try to, of course, start to see if they can take in anything like those
espns. >> absolutely. stock-specific story, pandora here this morning. goldman does up it to a buy talking about accelerating mobile ad. concerns about competition in their words are overblown. argues that it's trading in line with the peer group even though its growth rate is 2x. other favored names in the space, ebay, price line, trulia and groupon which have all had sizable moves of their own. >> everybody wants to be called a social media stock. the sector has people believing that there's something big going on here and you have the individual product category leaders that people want to own it. i keep mentioning it's not that big a market cap sector. if you are a growth fund manager and you have to own a lot of this to distinguish yourself from an index, you're going to be paying up. and i think it's an interesting element of this market in general. anything with a definable, believable growth story is an expensive stock. everything else is pretty much
mid. >> leading the list of losers. nordstrom's down 3%. beat by five cents but they are cutting again their fiscal year earnings and revenue outlook. the tape says surprising no one because of what macy's said and kohl's said and walmart said earlier in the week. >> and weak sales. sometimes if they miss it's on higher expenses. this time it's on weaking sales. first time in a while we've seen that. on monday, i had as my guest david berman, retail, hedge fund manage whole focuses on retail. he made this point. the consumer is not weak but retail going to be very bad. and he's been right. and his point was not that consumers are not spenting money but they're t not spending it on the soft goods you would typically find in a macy's or nordstrom or any of the names that we've seen this week that have come up unexpectedly poor numbers. >> i keep coming back to something you said last week and that is we just didn't -- especially when it comes to teen retailing, we just didn't take
enough of these guys out during the recession. you do have overlapping product lines and bloated inventory. >> square footage in the retail industry really didn't shrink and you had too many stores to begin with. car sales is great. tremendous pent up demand. in terms of basic shopping, it's hard to find anybody who is killing it. >> i'm not sure if it's also saying something about mall traffic overall that is a change in people's willingness to go to the mall or do it over amazon and buy certain things. that's a trend. general mills, jeffries cuts to underperform a hold. this was back when the market was in a nice sweet spot and all the defensives were doing well. what a ride gsi had. concerned about volume growth but they also say the valuation got stretched out by, a, the difference between their dividend and treasuries, also the heinz 3g deal which made more people believe there would be more consolidation in the
space. both are fading even with the div hike what treasury has done and lack of big deals in the food space. >> i think when rates started to lift people recognized exactly how trivial the yield advantages really were in the dividend stocks. 3% dividend yield six months ago is considered to be a gift and now it's not that big a margin. >> and don't forget high multiple stock. jim cramer would sit here with us multiple times saying general mills is strong. 18, 19 times numbers when you can look at biotech stocks of companies that are growing at much more rapid rates that have similar if not lower multiples. >> yeah. >> i notice a couple of housing names. pulte is getting a bit of a bounce here. lenar norton getting a bounce. >> reversely yesterday, i think, too. people saying can we lead on this short anymore? the group has been terrible even though housing has a recovery story continues to animate all of the other parts of the
market, right? i think they had their run, you know, that basically said they're off life support coming into this year. >> i did want to mention a big trade this morning in the lawn. it's a play, perrigo is buy this company largely it seems because they will have a generous tax rate. that being said, i think it was 45 million shares traded this morning. i think it may have been invesco. i did want to point that out. not a typical for the large shareholders who have been there in fundamental reasons to sale and put it in the hands of the ones who play these takeovers. big trade at 15 bucks. alcoa going to see red arrows today. b of a cutting to underperform based on aluminum price forecast toward the low end of the street. to quote the report, controlling what it can may prove insufficient and their price target, i think, if i'm not mistaken, goes to eight. also dks, keep an eye on dick's.
jpmorgan taking it off the focus list. cutting estimates. basically they see what's going on in the retail. cut their forecast for same-store sales in the quarter. go from 3-9 to 1 in terms of forecast for same-store sales although price target doesn't move too much. they go from 61 to 60. it does give you a flavor for what people just feel about the retail experience. >> right. this one is a favorite, too. coming into this year, really done well. people thought that sporting goods in general was taking shares from other things. let's get to bob pisani, see what's else is going on. >> good morning. it's slightly to the downside. we did drift lower after the housing starts were a little bit lower than anticipated overall. global indices, fairly weak on the week. look at where we are. s&p is down 1.8% for the week. and bottom line here is brazil doing better. china is doing better. emerging markets are better. even japan did better. europe better as well. see how we end up for the day.
look at -- i do want to point out something. the overall liquidity levels have been weak. we just had an expiration this morning. normally on a good expiration morning it's the open that gets the price here. would do 200 million. we did 100 million. even the options markets are a little white for the month of august. for the retailers, you were mentioning nordstrom this morning, a rough week for the e retail retailers. overall, macy's, north strom, target, all of them to the downside this week essentially. upside is kohl's overall. it's interesting that a number of the analysts came out this morning and tried to sort of explain away what was going on. and they sort of adopted the david berman theme. steve had a note out this morning. tim call of what's going on. the consumer has deemphasized apparel consumption. that's what they said. de-emphasize apparel consumpt n consumption. renewed interest in big tickets like cars and homes.
david berman, mean that the retail -- consumer hasn't gone away. they just shifted their spending towards different kinds of ticket items. finally, the big thing down here is everybody is trying to figure out what fair value is for the ten-year. and you know there are big problems when stock traders are trying to figure out fair value for the ten-year because normally they don't know, they haven't a clue, and they rely on what bond analysts have to say. most people believe that growth is going to be low this year. 1 1/2 to 2%. inflation is going to be low as mentioned by the fed, below 2%. there's no reason for bond yields to go to 4% or 5 hrs. a lot of analysts have 3% roughly. right now, of course, some of it may be a bit overvalued. some of the yield may be too high given what the overall growth assumptions. one thing is very clear, the only thing the bulls have to hang on right now if growth assumption stay where we are and yield stays this low, there's a disconnect. yield has to come down a little bit. let's get uptown and check
in with bertha "boom boom" cooms. >> now that's going to spread. thank you, al roker, for spread that. nasdaq on pace for more than 1 1/2%. and chips have really been one of the areas that have been a big drag but not today. chips looking to buck the trend and applied materials despite the fact that it did miss and on both the top and bottom line. is looking better. in fact, leading chips higher this morning. nasdaq as well. get to the upgrade at d.a. davidson. analysts encouraged by the smooth succession. as you can see, chips and chip equipment kind of mixed but moving to the upside. meantime, dell in focus. and it's not so much about the earnings. earnings more or less in line. continuing to see that weakness in pc. they're kuth prices to retain market share. but it's really the high noon move today. carl icahn import at delaware
chancery court to try to block the sell to michael dell and silver lake. another stock to watch in terms of deals. banks declinindeclining. their discounting didn't work to bring in customers. of course, beacon light capital there really wants to see movement and this is likely to give those after this investors a bit more ammunition. david? >> thanks very much, bertha. let's shift to the bonds and dollar. rick santelli is at the cma group in chicago. rick, take it away. >> well, i see 277 on the board. that's where we settle it out yesterday. see it on the intraday chart around midnight around around 8:00 eastern. we had an train day double top at 280. open the chart up to a two-day. yesterday's top was 282. it's like pac-man, starting to bite the dots at 280. many believe while we remain hot, hot meaning we're in a mode on any given trade here to extend the run on yield standing
at a little over two years. you see it on the two-year chart. let's switch gears a bit. the dollar/yen. we constantly look towards abenomics and what's going on in gentleman -- japan. you see that the dollar/yen is interesting. of late, we've seen some bounce back in the dollar. as this one-month chart shows the momentum is still for a higher yen and that certainly isn't going to help their export market as their economy tries to stretch and wake up a bit. if you look the dollar index which the fed, it really hasn't done month. one-month chart shows you basically unchanged from yesterday. basically unchanged from last week. and it's trying to get its sea legs back. it has stabilized but many technicians think it may still be under a bit of pressure. this is going to be a key close for the week. remember, prioritize your closes. daily close important. weekly close more important. monthly, quarterly, you get it.
fridays are always key day it is you're a technician. david faber, back to you. >> mr. santelli, thank you very much. let's check out the action in commodities. now we go to sharon epperson at the nymex. sharon? >> we saw that big spike in gold price, david, in the session before and we are looking at gold that is still stable here right around 13.60 an ounce. it got above that earlier in the session and traders are continuing to watch the physical demand for gold and saying that that is a supportive factor. also saying looking at jpmorgan's report that now might be the time for short-term buyers to get long gold over the next four to five weeks. they see more upside potential in gold and lot of traders looking at the 1300 level for the next level for gold prices. silver at a three-month high. silver prices continue to rally. actually strongest component in the metals sector in the session ahead, session before, and now looking at strength continuing in silver.
we're also looking at a stable market and upside in oil. traders are watching the situation in egypt. watching the demonstrations and what is happening in terms of the unrest there and continuing to watch what's going to happen here going into the weekend. they say keep your eye on oil staying around that 110 level for brent. back to you. >> sharon, thank you so much for that. straight from the opening bell i'm joined by mike ha hallihan, former crew member of the "uss intrepid," served in world war ii, vietnam, and one of nasa's primary recovery vessels. mike, it's good to have you. you were ams third class u.s. navy. >> yes. >> on the boat '58-'59? >> yes. >> do you remember your fist day on the boat? >> yes, i remember the first day. i came aboard. i thought i was walking into a building. i didn't realize it was a ship. it was quite impressive. >> what was your tour like? >> well, we were the peace time sailors. and because of us, there were no
wars. right? that's the way we look at that. kind of like uneventful, except for the francis kerry powers crashing into russia at the time. that we thought we were going to end up in a conflict but it didn't materialize. >> when you go back on the boat now, are you flooded with memories? >> oh, i have a lot of memories. >> here's where this happened and here's where that happened. >> exactly, correct. >> for those who have never been on it how do you describe it to people who have never made their way either to new york or to the museum itself? >> just athat you're looking at a piece of history. the ship is 850 feet long. and it was right out there, the main defenses of this country both in the pacific and the atlantic. and there's a lot of memorabilia. of course, a museum now. and we have some of the aircraft that flew off there, actual aircraft that flew off there. so it's, you know, please come.
contact with former crew members? >> pretty much. being the former president of the association, i had a lot of contact. we have about 1500 members. that's not really a lot because over 50,000 men served on that ship. >> 50,000 men? >> over the -- of the 33 years that she was a naval service, from 1943 to 1974. so we're pretty much in contact with a lot of these people left. some passed on. yeah, we keep in touch with them. >> again, our thanks to you, mike. congratulations on the great anniversary. again, the 70th anniversary of the "uss intrepid." taking a toll on the chain store stocks. up next, will this trend
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nordstrom is the latest retailer to post weaker than expected sales and lower fum full-year guidance. we want to bring in a senior research analyst at piper jaffr jaffray. good morning. good to have you. >> good morning. >> not a lot of people were thrown by this news given what a other retailers have said during this week. >> i think what's important about nordstrom and why we're recommending investors to add to positions on this pullback this morning is you can shop four different ways in the house of nordstrom and that is unusual. you can do your daily deal shopping, you can do your discount shopping through their rack division, you can actually
do your diva shopping through their full line and digital, of course, has been a major area of focus. we think they are market share gainer going forward. we say buy nordstrom shares. >> to what degree does that sentiment lead to other names in the space? >> i think a lot of other retailers have definitely been dealing with overall underperformance because of tax burden, cold spring, all of that existed for north strom as well. by the time the quarter shook out their sales looked better than peers so we think they're able to capture more of that from their existing customer base. >> does this all portend a gloom from back to school and by extension, the holidays. even though it seems far away, we know it's not. >> it's not. it's right around the corner. we'll be back on again to talk about holiday in not too short of a time. one thing we would keep mentioning to our investors out there is, number one, a lot of retailers talked about august trends already starting to pick
back up again. while we completely agree, this has been a horrible summer and there's been more losers than winners on the scorecard. things are picking up. >> the standard line that the higher end consumer is doing t better and therefore should be a tail wind here. did that not fematerialize? >> we agree with the conventional wisdom. durables and nondurables. durables have been outpacing. people are happy with their stock portfolios overall. so the con ffidence is there. it is in the big ticket. we think the small ticket took a small hiatus in the first half of the year. >> neely, thank you for your time. retailers are not the only way we're gauging the mood of the consumer. we've got breaking news on sentiment data in a few moments. later on, the pittsburgh pirates appear to be playoff bound for the first time since 1992. can they become world champs like the we are family pirates
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♪ welcome back to "squawk on the street." we are moments away from a university of michigan sentiment survey. preliminary read will compare it to finals. 80? my man nick, my number spotters says 80. so 80.08. and that is not the 85 plus we were looking for. and if you want to put this in context consider this. our last read on the final, 85-1. best since july of '07. there's a cluster of january/february all in the 90s. this backtracks us a bit. we haven't been at the 80 level or i should say close to the 80 level since april when we were at 76.4.
>> there's a bit of a miss. it affects the market momentarily in short term. lots of research doesn't show a lasting effect and is effected by stock prices. back to you. >> thank you so much, rick santelli in chicago. people might sort of pondered whether or not this number might be weak. there's been a little more worries about housing, about the affordable care act and maybe that would bleed into sentiment. >> you know, it's hovering below the long-term historical average. even after 4 1/2 years of nominal expansion the consumers are not in an exuberant mood. even somewhat healing i don't think we're going to see this run away. >> as we end this week, guys, interesting to note that apple has yet again crossed above that $500 mark for whatever reason you want to were it, psychological perhaps. it has been a key story this week. tweet heard around the world by carl icahn. i follow activism. this is 140 characters or less
and you can move the stock 7 1/2%. >> i calculated, 150 million per character on a day of the tweet. and it's interesting because it doesn't rally fall into the activist definition here it. >> does not at all. >> small position. it's t get long and get loud. >> yeah. >> the old story. >> mr. icahn will be loud yet again today in a real activist situation, that, of course, being dell. amazing what you can do with one trade, one tweet. hit the sell button next. >> one trade and a reputation. >> without a doubt. >> you're not going to go away, mike. we're going to come back and talk more about the markets on an interesting day. pimco market strategist on what he calls the potency of the fed's monetary elixir and what it means for your money and former apple ceo john sculley on everything from the iphone maker bouncing back to the new movie about steve jobs. [ male announcer ] come to the golden opportunity sales event
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losses. the dow yesterday of course falling below its 50-day moving average. and having potentially the worst week of the year. tony is the executive vice president of market strategist with pimco. good morning. >> good morning. >> is this a start of a bigger correction? >> in a bond market, there has been a big move already. and we've been saying at pimco to avoid longer dated maturities for more than a year. the longest bond future, in fact, last year was at 177. today at 140. 20% price drop. so one of the important things for investors to do while the fed is reflate iing a deflated economy. wouldn't expect a meaningful rise in rates from here. >> i think the assumption had been that there would be a big rotation. as the bond market sold off people would go into equities. that hasn't happened this week. is there going to be a further correction in equities? >> the equity market -- you have to think about individualing and
the age of population and globally. 44 million americans aged 65 and older. 35 million americans aged 65 to 64. there's where a lot of wealth is zn concentrated. after the bubble burst in 2,000, individuals were scared away from this stock market. the evidence being that households were half of the stock market's capitalization in 2000, 1999. dropped to 37%. stayed there even through 2007 even though the stock market was looking good like today. they weren't joined back in because demographically older. looking to protect the savings, hard earned wealth. and so now after a second shock, how could we expect wealthy older americans to jump back in to more volatile assets and equities are more volatile asset class over time. no question. we wouldn't expect meaningful rotation from older americans and even the globe, dealing with tremendous uncertainty what what we would call a stable
equilibri equilibrium. underneath the surface is this this makes people nervous. they want to be higher in capital structure in assets that don't move a lot. bonds while down this year, down 2%, bonds in their long run, after a year or so you're back to even, picking up the pennies. piggy bank breaks and pennies fall out. >> living on a fixed income and trying to eke things out for the last five years, you've just been getting crushed. and then you go through long duration and sitting in june and you're crushed again in yourd bond fund. let's just start with qe and what's that done to rates and anybody who is older on a fixed income trying to get by. >> most of the indexes that people follow are down about 2%. remember though, while you're in the first place. it's for stability. you go back and look at charts at normal stability and n. bonds, it's volatility is very low. >> it is. it is. i know. the total return, had a rough go of it there. >> every single day because bonds are income producing,
you're picking up the pennies. that's whun way you get back to even and refill that piggy bank. as rates rise you're reinvesting your interest and principle at higher rates. that allows you to get back toechb before you know it. >> sounds like you work for a large bond fund company. >> pimco. >> that's right. >> if you're down 2% today and in fact the aggregates are yielding over 2%, back to even and have a positive return a year from now. that's a fact. >> these are international markets and the system around the world, people are saving around the world at all ages. that's a huge amount of free cash flow that is thrown up for professionals to invest regardless of what the retailer investor is doing every single week, where people are putting more money in. that could still propel the market higher. >> yes. >> this is not a strategic movement. >> no. quite possible the equity market continues to do well. maybe not as good as it has
historically. what we mean is over market cycles. not over a one or two or three but five to ten-year periods. the u.s. economy is healing. there has been good news. car sales are uning are on is a 1/2 million last year. 14.4 million. housing is fairing well. state and local governments are fairing better. people are cutting up credit cards and reduce their debt and household payment obligations are at a 30-year low. what do you get? 2% economy. so we've had car sales move from $9 million to $15.5 million. throughout, just a 2% economy. even the optimist has to admit when you add it all up you still don't have the type of growth that in the end will give you the top line growth in equities, in revenue. ultimately would be profit growth and has the prices. ultimately profit growth cash flow is the name of the game. it is slowing. profit levels are very high. that's clear in the bea data from the government. but the profit growth has slowed. what's important, what's necessary is for the fed's
forecast to come true next year, reduction, fiscal drag, to mean a stronger economy. the fed is forecasting 3%, 3 1/2%. we'll say show me when the new fiscal year begins in october to see if the economy does pick up when the fiscal drag oh. >> bottom line. as a strategist, what are you telling people to do? >> we think, stick with bonds. don't believe that rates will move up much more from here. very long-term relationship between the federal funds rate and the ten-year note. and, in fact, wouldn't expect the fed to move the funds rate for at least two years, probably until 2016. it's the key anchor to interest rates. so is inflation which reached a 50-year low recently at 1.1% from year over year for the inflation. >> coming back up towards the fed's target? >> what's that? >> inflation coming back up towards the fed's target? >> the last three years averaged 1 1/2% below the fed's 2% target. probably be around there the next two years. the fed, two years from now when the unemployment rate reaches 2 1/2. we want it at 2.
in fact rg we'll tolerate 2 1/2. that's why they'll probably say when 6 1/2% is reached for the unemployment rate, let's wait a little. that buys the fed and market 6 to 9 additional months which means a rate hike in 2016. with anchor bonds tend to stay in place. >> interesting interview. different but interesting. >> thank you. let's get to one of the big movers of the day, nordstrom. the high-end retailer in the red after disappointing second quarter sales numbers. lower guidance for the rest of the year. courtney reagan is back at hq with details on that. >> good morning. macy's and nordstrom, two of the strong points this season but now both have disappointed. nordstrom topped wall street's expectation but the top line came up short. as did same-store sales. nordstrom posted the strongest same-store sales growth. this time around that's not saying to much. the bigger concern for kinnest havers is guidance.
pecki nordstrom notes a disappointing anniversary sale and expects the first half of this year's lackluster sales space to continue through year end. it's unclear even the higher income consumer spending less on apparel categories. an analyst believes it's unclear what's actually causing that slowdown to happen. piper jaffray says it's still due to digital and constantly updating merchandise. citi and ubs is lowering it. ubs did lower the price target, analysts say sentiment among high-income consumers is improving with rising equities and home equities. oftentimes you see that correlation with nordstrom's and saks sales. we'll see what happens from here. >> interesting session setting up. thank you. apple making quite the comeback over the last couple of months. rising more than 16%.
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art imitating life or artistic license as the steve jobs movie opens in theaters to critical reviews, who better to speak to than the man who was there himself. john sculley is the former ceo of apple. john, it's good to have you back. good morning. >> thank you, carl. nice to be here. >> i want to talk about the movie in a minute but more important is the stock price. back above 500 today. obviously people looking forward to this announcement in september. does this feel familiar? we went through a long period where this looked like nothing was in the pipe but now it appears there is something. how encouraged should shareholders be? >> i think apple has been given a bad rap for quite a while. i've commented on it over the last few months that i thought it was a stock that was undervalued. so i think it's a stock that is, you know, ready to show some growth, if tim cook is able to deliver on the products which he
has set expectations for. and i'm pretty optimistic. >> of course, we had the big news this week about carl icahn. the company, of course, acknowledge that tim cook and carl spoke. what do you think that conversation was like? what is -- what goes through the ceo's mind when the phone rings and the caller id says icahn enterprises? >> well, carl icahn is a very smart, very successful activist. he makes his money by really the art of going in and putting a lot of money to work. and looking for some news to give the stock some pop. and i think when you have a large stock like apple, lots of liquidity, where you can even put a billion dollars to work and know that you can get back out, i think carl icahn will probably make some money but i doubt if he's making his investment because he wants to be a long-term investment in terms of apple's product road
map. i think he's there because he sees an undervalued stock. >> would steve jobs have taken carl icahn's call and what would you make if you were ceo of basically calls to financially rel engineered to company? it's not about technological innovation or new product categories. it's a very different approach from where tim cook is naturally focused. >> yes. you're absolutely right. and i thought if steve jobs would have taken carl icahn's call or anyone else who was, you know, an activist. i think it's a lot about financial engineering. often the activists want to see, you know, a big stock buyback. there's little evidence that stock buybacks have much positive effect long term for many companies. i think that the bigger story for apple is always going to be growth and it's going to be about creative leaps in products. it's been dark for a while without any, you know, big creative leap. i think there's a lot of expectation that apple has some
big things coming. >> at the same time, john, everybody else, the competitors are upping their game. the report is now that samsung two weeks on monday is going to unveil its own wristwatch. does it matter if the competitors are now launching into new product categories before apple has a chance to? >> probably not. think about the ipod. the ipod was not the first mp3 player by any means. but apple had a better way of doing it. saw it as an end system and launched itunes. nothing like itunes existed previously. the kind of thing i hope apple will do and i have no information but let's take wearables. samsung will probably come out with something that is reminiscent of what they do so well, which is hardware. apple, on the other hand, has a software called passbook. 550 million credit cards are in their database. and if they were to put that into a wearables and enable
people to be able to do purchases very easily with a wearable product, highly secured, with fingerprint recognition, that would be a game change for apple. not the kind of product that samsung could easily follow with. >> asked you about the movie, obviously. i'm reading a review here who said he saw the movie. thought the acting was good. i was attemptive and entertained but not greatly enough to recommend the movie. have you seen it? what do you think about it? and to what degree will it perpetuate some myths that you had to fight back on overtime, namely, that you were not good for apple, that you fired steve. those kinds of things. >> yeah. well, i did go see the movie last night. ashton kutcher did a good job of looking like early steve. he sort of channeled steve in terms of the look and feel of the way steve was. the movie was very loose on the
facts. it was really not a very fair portrayal of steve wasniak. he was a genius engineer. that didn't come through at all. the role i had was pretty much a cameo. i guess it did clear up one misunderstood fact where i was accuse of firing steve. the movie shows that i never actually did. i think it's going to be entertainment. it's a low-budget film. looks like it's made for tved. and i think they'll probably make a lot of money with it. >> matthew, you give them an "a," or not? >> well, i spent a better part of a weekend with matthew modine. terrific guy. and much better looking than me so i feel lucky that someone like matthew was chosen to play me. i thought he did a nice job. but he's, you know, not in control of the script. he has to do pretty much what the screenwriters and the director asked him to do. but he's a great actor.
>> yeah. got to be tough to play someone who is alive and whom you've met. that's got to be a very difficult challenge for an actor. love your guidance on the stock. a lot of people loving what's going on this month and this fall. talk to you soon. >> great. thanks a lot. >> john sculley. market flash with dominik chu. >> pandora is on the rise. that's after goldman sachs analyst upgraded the stock to a buy from a neutral and attached a $27 price target to those shares. he says that he's more optimistic given pandora's three strict quarters of accelerating growth and it's awareness of the competitive landscape. this is a stock rocking out getting back above that $16 ipo price from back in june of 2011. david, back over to you. >> thanks very much. i do want to take a look at -- >> dominic chu. >> my apologies. this is the problem you're into
when you're busy looking at your computer reading headlines on southeastern asset management and dell. my apologies. >> no problem, david. let's move ahead with dell and talk a bit about that stock this morning. of course, it is not doing much of anything which is what you would anticipate for a company that is about to be acquired and n. a take-private transaction by silver lake and dell. $13.88. you will get the eight-cent dividend as well. not expected to close until october. today an important day at the chancery court in delaware. chancellor strine not expected to do anything rash, let's call it, which would be, hey, throwing a lot of things out and saying, yeah, you've got to healed your annual meeting at the same time you hold your vote, giving new life perhaps to carl icahn's hopes to takes a proxy fight and win it to take control of the board and put in place the recapped plan he's been championing there. much more likely the judge goes along. you get that current deal, the change in the voting standard
that has taken place. and carl, well, he's happy to take what will be a small profit here. about equal to what he made in one day on apple earlier this week with. we shall see. the numbers themselves were not good although a bit better than the analysts who follow dell anticipated. you're looking at 2.4 billion total. not bringing it for the year. significant slide in pc sales. there you see enterprise solutions as well. and end user computing. software, other key parts of the company. but southeastern asset for its part this morning still a shareholder although remember, they sold half their portion to carl. still unclear why they did that. they come out this morning and say once again we're encouraged by the strong performance that enter surprise solutions software and services business. the free cash flow was generated far greater than the dividend funded off of dell's balance
sheet. that is the case although michael dell is also fund that 13 cents by rolling in an even lower price than his partner silver lake. south eastern continues to say it supports the believe that this quarter supports its belief that miit drastically undervalu the business. they can talk all they want but at this point doesn't mean much. it's going to have a tough road ahead, some say they're making it look a lot tougher than they otherwise need to in part to make sure they t get that deal done. >> yeah. anyrivals right now? has meg commented on pricing and whether it's going to start to hurt? >> i think there was an expectation perhaps this would distract some customers. that still continues to be a concern. but they -- reports i've gotten throughout this process where they were doing everything they could to make sure they hang on to those customers including
coming down to lower price points than might have been the case in the past. and that of course can hurt margins. >> market, 21.6 a year ago. 18.5 this quarter. that's a dent to operating margin. whether you're trying to put on an act or not. >> very good point. when we come back, more violence in egypt today as the muslim brotherhood cools for nationwide marches and a day of rage. live on the ground in cairo with the very latest after this break. we're cracking down on medicare fraud.
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the violence continues in egypt as the muslim brotherhood calls for a day of rage following more than 6 pun deaths now just in this week alone. cnbc's yousef is live in cairo with the latest. yousef, over to you. >> simon, you can hear in the background the military chopper passing. there are quite a few of these over the capital city of cairo. supporters of ousted president mohammed morsi and the muslim brotherhood have taken to the streets around the country. clashes are ongoing as we speak and are particularly fierce in the ramsi street area. probably a mile or so out from here. not too far away where we
understand people have died as well. the egyptian ministry of interior saying 12 people have been killed. although the accounts of the death toll vary as we have seen throughout the week. now, the military is still stationed right below us and there continue to be clashes in other cities like alexandria and in the suez. remember, the military and security forces have made it clear that since adopting the state of emergency, they have a zero tolerance policy when it comes to protest gatherings. the call from the muslim brotherhood to congregate basically, that, of course, jep ta pard d pardiz pardized the situation. tahrir square has been blocked off completely. that includes barbed wire and other items used. how do you bring this situation back under control? that is a very difficult to question to answer at the moment. it's not clear who is firing.
some of the weaponry used has been very heavy weaponry, heavy caliber weapons. that, of course, raises concerns about where this is all going because at the end of the day, the political recon sill yags process is as far away as ever. international condemnation from germany and france is already trickling in as well. united states just sent out a message 36 hours ago, the egyptian government, egyptian presidency responded by saying, well, those kind of messages just help fuel armed insurgencies in this country. a very response. things are high in the country where the polarization is as high as ever. the egyptian government is struggling to keep the supported early on the muslim brotherhood vows to fight on. they say they will arise again. you can see from the different pockets of clashes across the capital that this is indeed happening. >> not to mention all that aid
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♪ if only futures are joining us, an hour into trade. the stories we're squawking about at 7:30 on the west coast, 10:30 here on wall street. the university of michigan consumer sentiment index for mid august coming in at 80 even. that's down more than five points from last month's reading which was a sick-year high. alcoa is the biggest downer on the dow, down 2%. jpmorgan downgrading it from underperform to neutral. applied material is among the top gainer on s&p 500, up 3.5% despite missing the quarterly results. certainly outlook disappointed. they say the company's president gary dickerson will succeed mick yell splinter as ceo effective september 1. splinter will stay on as its executive chairman. stocking holding ground here barely. basically hugging the flat line after worst day in stocks in two
months. third time this year we've seen back-to-back triple digit declines. is it the start of a bigger correction? jackie has more than that. >> that is the question. waez watch this market lose a little bit of steam it's interesting to take a pause for a second and see what kinds of trends are emerging, what groups are moving the most. first, note that all ten s&p large-cap sectors are now negative for the month. then take a look at the worse performers. we've got the industrials, the materials, the financials. the best performer sector at the moment is consumer discretionary, health care and consumer staples not far behind but still negative all ten sectors. they've been calling for a market correction for some time. and many haven't really been able to get that timing quite right as the fed has been able to kind of keep this market momentum moving a bit. what's happening now is a little bit different. especially as the yield on the ten-year rising, hovering around 10.8%. if the fed backs off qe and yields continue to rise it could
have a more significant effect on the market especially on some of the defensive sectors that are more sensitive to interest rate fluctuations. >> rates push higher and given the fact there's been some increasing concern around us, a bunch of variety of technical indicators in the s&p at the break of what happened very solid support at the 16, 71, 74 area, deaf t it inially is the push higher in interest rates is leading to an increasing anxiety in equity and obviously forcing up the correct a bit to the down glide that leaves a lot of people asking, is this it? is this the big correction? how big could we see the leg down from here? last year we had mark fiber on who told us we could see a 20% drop in the s&p by the end of the year. pretty significant, guys. >> indeed, it is. jackie, thank you very much for that. so it was yesterday's pullback the start of a prolonged bear market or should investors be now buying the dip? that is the big question.
stewart freeman is strategist at wells fargo. paul is joining us, president of heritage capital. paul, is this the beginning of a bigger correction? >> good morning. first, simon, it's certainly not the beginning of the bear market. so if you wanted to find correction as 10% or more price decline, i think this is your routine normal, healthy, pullback in a bull market that should stop at or just short o. short of 10%. i think we have a higher highs ahead. i do think a 10% to 20% correction is coming. i just don't think it's here. i think we're going to decline, reload the vote again and have another rally first. >> you see, i think what will worry people is that it's not the same as it was, say, two months ago. big things are changing. market interest rates, ten-year rates are rising substantially. the fed could begin to taper. so do you believe that this is the beginning of a bigger correction? >> well, you know what, what's
changing is we're starting to continue to get positive data, you know, initial claims numbers or best in six years, unemployment's best in four years, confidence is, you know, as good as it's been in 2005. yet we're a month away from when the fed meets in september. so it's getting investors the jitters. it's been a strong market with a lot of breath. it's makes sense we have had correction at this point. our expectation was we're going to have a good first half after a lot of uncertainty at the end of last year and then see some volatility here during the next few months. we actually think it might only be a couple of months of volatility and late in the year we will be moving ahead as we see some better fundamentals still and looking into next year. so i think we have a fullback here but it's a viable one. i think we want to bye cyclicals during the pullback. >> see, paul, the big question for many people as you take away the support from the fed is the economy and earnings strong
enough to support the market at these levels? front and center now, almost from left field, has come the retailers. macy's, walmart, nordstrom, all disappointing. can you explain what you think is going on there with those retailers and what that means for the economy in the market more broadly? >> there's a lot there. >> sorry, paul. paul first. >> first of all, the whole fed taper talk. i think markets are fine if they know something is coming over longer period of time. when oil spoiked in '08 it went straight up. markets couldn't really digest it. with rates spiking roughly 80% from low to high yield, the markets are having a tougher time to that. if rates incrementally go up, the market will do better. i will argue that i think you are seeing a low in rates, low 50 on the ten-year and the high for this move may be 3%ish, plus or minus. what the market needs is for rates to stay in range bound. maybe 2 or 2.25 and 3 and bounce around.
let the economy and the markets digest it and accept it. so the retailers, what you're seeing in the home building stocks, consumers are just starting to pull back a little bit as perhaps their mortgage -- their mortgage re-fi rates are higher. perhaps some loans they have in the short term are a little bit higher. but again, if you don't have spikes from here, if the fed's taper isn't as bad as everyone expects. then i think the markets and the economy will digest longer term. i absolutely do not think, do not think that the economy can stay where it is without the fed's help. >> i just wonder, earlier in the year when the markets were on a tear, we hear from traders or trading desks who would say we feel a little uneasy abohow far we've come but the portfolio managers say we've got too much cash, clients saying get me out of cash, get me participating. is that dynamics still going on or do they feel like their cash
levels are now appropriate? >> i think what we saw at the beginning of the year really was a tremendous ceiling over stocks last year as economy moves ahead. we're going to the collectielec fiscal cliff. as we pass through that some uncertainty passed behind us and investors felt more comfortable buying stock. the first half of the year the move was stolen from last year where it probably should have occurred because of uncertainties. now we're in a position where investors, i think, are portfolio managers are better invested, however, there is a lot of cash on the sidelines in individual portfolios. it's not all been good to work. we're starting to see a little bit of movement out of bonds and into stocks but we think there's a lot more in this soikcycle an next year see more growth of the economy and hitting higher highs by the end of the next year.
we've got a 18.50 to 1900 preliminary target for the end of next year for the s&p. >> wow. >> in the peen timeantime, guys the middle of washington. have a great weekend. >> have a great weed. >> thank you. still ahead, the man behind netflix' hit "house of cards" will tell us how netflix got their hands on the series. plus, the pittsburgh pirates are in a running for the playoff spot with one of the best records in the league. the team's owner joins us live in a few minutes to tell us how they have done that. and we'll talk newspaper business, as well. [ male announcer ] come to the lexus golden opportunity sales event and choose from one of five lexus hybrids that's right for you, including the lexus es and ct hybrids. ♪ this is the pursuit of perfection. ♪ this man is about to be the millionth customer. would you mind if i go ahead of you? instead we had someone go ahead of him
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falwell short of analyst estima estimates. it estimates sales for the quarter would be 4re67b% lower than the same time last year. ceo attributed some of the weakness to customers not responding as well to certain promotional campaigns but that the company is focused on improving those sales trends. simon, back over to you. >> don't they offer like three suits for the price of one or something and people aren't even going for that? >> buy one, get five free, i think is the last thing i heard, simon. i'm not sure. >> dominik, thank you. let's get over to chicago and rick santelli for the friday exchange. hi, rick. >> hi, simon. it is friday. i never met a friday i didn't like. let's consider the following. that if we take the taper talk and move it aside, if only we could, a couple of issues i think are big in true importance if you're trying to handicap any type of investing in the future and that one of those is china, without a doubt. let's look at the big stories of
the past. warehousing every commodity on the planet, copper, warehousing copper to an extent they were using it as collateral on loans. that time has come and gone. now the growth estimates are with a seven handle instead of with a ten or 11 handle in terms of percent of gdp growth. they're slowing. we're not sure exactly how much but we think we have an idea. and right when you think you have it all figured out, all the ducks are in a row, there's a new service out there that i think is top foch. know what it is? cnbc.com. a great, i mean great story. it's called dodgy data may add one trillion to chinese economy. it was written by r.j. carpell, specialist from cnbc.com from asia. christopher balding, he is an associated professor at peking university. he says the research from 2000
to 2011, extensive research, primarily in inflation numbers. where have i heard this before? and he doesn't just think that these are errors. he almost -- as a matter of fact, he does. he moves into territory where he's talking manipulation. now, whether that's true or not, i'm just quoting what the research he did says. he says for that period that inflation distorted, spending but most of all distorted gdp. how much? well, you heard in the tease. to the tune of about a trillion dollars. that means inflated by, what, 8% to 12% considering the size of their economy. further, it's not only in the rearview mirror. looking at current trends that now have a 7% handle on gdp. he says it's really more like 6%. now, hopefully this will get a discourse of research going because if these numbers are accurate it has to figure in, just like higher interest rates have to figure in the housing, we can try to sweep all of this under the rug. nobody's statistics are perfect. but in this case, this is
something you really need to pay attention to because exactly how big is big in china? that is under review. back to you, carl. >> i got to imagine it's pretty big. talk to you in a few minutes. rick santelli. pittsburgh pirates have one of the lowest payrolls in baseball but you wouldn't know that by looking at the standings approximately pitt pirates owner and businessman join us live after the t. break. i've been doing a few things for a while that i really love-- tdd#: 1-800-345-2550 playing this and trading. tdd#: 1-800-345-2550 and the better i am at them, the more i enjoy them. tdd#: 1-800-345-2550 so i'm always looking to take them up a notch or two. tdd#: 1-800-345-2550 and schwab really helps me step up my trading. tdd#: 1-800-345-2550 they've now put their most powerful platform, tdd#: 1-800-345-2550 streetsmart edge, in the cloud. tdd#: 1-800-345-2550 so i can use it on the web, where i trade from tdd#: 1-800-345-2550 most of the time. tdd#: 1-800-345-2550 which means i get schwab's most advanced tools tdd#: 1-800-345-2550 on whatever computer i'm on. tdd#: 1-800-345-2550 it's really taken my trading to the next level. tdd#: 1-800-345-2550 i've also got a dedicated team of schwab trading specialists. tdd#: 1-800-345-2550
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♪ if you consider yourself a major league baseball fan there's a good chance you may not be able to name too many players on the pittsburgh pirates. at 71-49 the pirates sit atop the nl central and have one of the best records in the majors with a payroll roughly $70 million less than half of the dodgers or the yankees. robert nutting is the chairman and majority owner of the birg pirates. he joins us this morning from steel city. robert, it's great to have you. welcome. >> it's nice to be here. thanks so much for having me on.
>> i don't to jinx anything, obviously. but you did sort of call this in february when you said you would contend, and history clearly didn't necessarily back you up at the time, how nervous were you make that call and what pushed you to make that call? >> >> well, it's been an incredibly exciting year so far this year and we're very pleased with the way the team performs but to put it in context we've had the exact same goal every year since i took control of the club about five years ago, and since that time we've been working to build the organization, build talent, create a stronger team, and you're beginning to see a bit last year and certainly this year the impact on the major league level, and watching this team perform the way it has has been incredibly exciting. >> we mention the payroll. the first reaction anybody has upon hearing that is money ball. is there anything different
you've done in terms of allocating resources that resulted in this better record. >> we'll all have certain limitations and made it very clear from the beginning that we would never use that as an excuse. so trying to find the most efficient ways to work within the system, so in the first few years we really devoted dollars, energy, and time into building talent into this organization. did that through international signings, did it through amateur draft, building talent at every level, and, again, it takes time for that to develop and work its way into the major league level. but that's the way, i believe, we can compete effectively and, frankly, year after year in the -- given the economics of baseball today. >> you know, talking about those economics, mr. nutting, i'm curious, the likes of an andrew mccutchen or jason grilli, do you have them signed to long-term deals and what happens when these star players go out to the free market, so to speak,
and you're competing against the likes of the dodgers or the yankees? >> well, again, you named two incredibly talented players and both good people, good baseball players, tremendous for the community and for the organization. so whether it's jason or andrew, love having those guys with the club. you know, in the reality, nobody keeps every player. the yankees don't, the red sox don't, and the pirates don't, but what we need to do is be very strategic and make sure we have the right players, sign them when we can to long-term deals, and recognize that we're going to have to have a continued flow of talent coming up through our system. just as you have seen this year, whether it's injuries, whether it's signings, whether it's free agency, we need to have backup, we need to have strength inside the organization. >> i know you may not want to comment specifically on a-rod, but the whole point is to get people to sit in the stadium, and i wonder if any of the recent suspensions or would-be suspensions creates concern
among owners about people suddenly turning their backs on the sport. >> well, it's certainly an issue and i wouldn't want to speak about a specific player. what i can say is that i think the commissioner's office has done a tremendous job leading this sport, making sure we're finding people who are cheating, making sure that we have tough suspensions, making sure that the game is clean. are you going to have people who try to break rules? perhaps. we need to be in a position where we catch them, where we get them out of the game, and we move forward. i think commissioner selig has handled this situation very well, and i think that's a testament to the strength of the game today. the players don't want to have cheating. the owners don't want to have the cheating. and i believe we're taking continued steps in that direction. >> mr. nutting, before we let you go with your hat on as chairman of the newspaper association of america, can i ask you about that industry? obviously the billionaires are advancing on individual titles.
you see bezos with "the washington post." the koch brothers may be coming in. warren buffett has been advancing into newspapers. what's the future of the industry in the country. i know you've done studies of how revenue streams ever changing. will it be as strong as it is in two decades? >> it's tremendous you're getting the interest in the investment from very savvy, very smart people from multiple backgrounds. the entire media landscape absolutely is transitioning. digital is changing the way all of us interact with media. i believe that newspapers are uniquely well positioned to take advantage of that transformation. we have unique content whether it's an opportunity newspaper who is covering an event, a sports event, city council that no one else covers, or a national or global brand like "the washington post," like "the new york times." the amount of unique, original
content generated by newspapers surpasses any other media and whether it's delivered in print, in digital, online, i think we can learn to use those channels effectively, but the core content is what provides the value behind the brands. >> well, if you become the new mr. october, you got to come back, robert. do you promise? >> i would love to do that, and i'd love to be in a position to do that. we have a lot of baseball left to play. we're going to stay humble, we're going to work hard every game, every pitch. that's what's put us in this position. we're going it keep that focus as we play out the rest of the season. >> robert nutting, pittsburgh pirates. thanks so much. >> thank you very much for having me. enjoyed it. described as an unusually stylish geek, yahoo!'s ceo marissa mayer is in vogue quite literally this month. we'll have the details after the break. you make a great team.
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marissa mayer is going vogue literally. she's profiled in the september edition of "vogue" including a photo spread. not only is she described in the article as the ceo of the moment but also as an unusually stylish geek. in the article she also talks about beginning at stanford, being among the rarer group of
women coders and engineers. quote, i really had just been very blind to gender, and i still am. which may help her in her current job. >> i have never seen a senior ceo lying upside down on a plastic chair before. i don't know whether that would make it more difficult to command respect in an organization for whether i'm just completely out of date. >> it's not her first time in "vogue." >> i thought you were going to say her first -- >> this is the first time in which she has been on a chair like that, yes. >> right. >> certainly, look, the image, david, probably has added to the allure even with the alibaba would be ipo, as a massive tailwind to the stock and the corporate story. >> yeah. she's got a large public persona at this point. it will be interesting to see what develops from here. let's not forget, dan loeb is now gone more or less off the board. some want to call it green mal. whatever happened there. he got out at a great price, but
the price is also she doesn't have to deal with him anymore. the al bibaibaba ipo is very important. >> turnaround on the rump of the company is still in question. that's still to be proven. in other words, this could be the front cover of "time" in the story if you know what i mean. >> i think i do. >> it's a very pretty blue dress. >> fashion magazines love tech. there's another piece in there boo google glass. maybe it's just part and parcel with that. big talker today. see you guys later. enjoy. david, see you soon. if you're just joining us, here is what you missed earlier on. welcome to "squawk on the street." here is what's happened so far. >> i would be seeing this as opportunities to put more money to work because i still think that the other alternatives aren't particularly attractive. >> for u.s. equities, yesterday's sell-off pwas a
buying opportunity. any investor was a lot of new money coming in should be using yesterday as an opportunity to get into the market. >> the market doesn't like when labor market data is better than other economic data because they feel like the fed is fixating on that, and we had all these years when the labor market lagged gdp. >> it's starting to ease off on the accelerator a little bit, but it's all results dependent. the fed wants to see a strong recovery, and i don't think it's doing to make any big mix stakes in terms of tightening too soon. >> there's the opening bell. >> what's necessary is for the fed's forecast to come true next year, which is for the reduction in fiscal drag, to mean a stronger economy and the fed is forecasting 3% to 3.5%. seems a little optimistic. we'll say show me. >> bigger story for ap sl always going to be growth and it's about creative leaps in products. it's been dark for a while and i think there's a lot of expectation that apple has some big things coming.
good friday morning. we're live here at post 9 at the new york stock exchange. let's get a check on the markets. the dow, of course, after that 225-point blood letting yesterday managing to get back almost 14 points of it. a lot more still to go. the s&p is hanging in there at 1662 and the nasdaq is up 13 to 3619. shares of pandora are rallying. goldman upgrades the stock to a buy. they're citing accelerating subscription ad revenue. at these levels, they are the highest since the day of its ipo in 2011. shares of nordstrom slipping this morning. the retailer's earnings beat estimates about you they cut their full year earnings and revenue outlook after same-store sales continued to slide. another bloody day in egypt. at least 17 people killed as protesters vow a friday of anger. plus, rising bond yields
pushing stocks to their worst day in almost two months yesterday. we'll tell you what you need to know. netflix, with shows like "house of cards" and "orange is the new black," it's changing the way television is made. we'll talk to a producer to find out what it's like to make a show for netflix. first up, a couple special guests joining me for the entire hour. it worked so good the other day we decided to have you back. on a day like today, mike, you say the rally is tired, but what does today's action tell you? >> obviously the selling intensity kind of calmed down. you don't have the yields going any higher. the consumer sentiment data seems to have taken it off the boil and it's a summer friday. so after the expiration kind of flurry in the morning, not much is going on. you know, i still do think it makes a lot more sense -- the
market seems like it's back on its heels a little bit right now. one of the problems i think is there's not a lot of objective value. all stocks have doubled in the last four years, and without that sort of the market reduces to go down feather in your happen, then i think you have to question whether we need to do a little more backing up here. >> over the next few weeks we'll talk more and more about the -- the minutes next week and also jackson hole and to what degree who is going to go, what's on the agenda. i mean, what do you see coming in the next three to four weeks? >> quite honestly i think jackson hole will be a little bit of a snoozer this year. you really should go more for the hiking than for questioning central bankers. obviously ben bernanke is not going to be there. janet yellen will be there, but she won't be speaking. she'll just be moderating a panel. it's not really drawing quite the star power that it has in years past. but one thing i think will be really important going forward is looking at sort of how the fed tries to balance this backup in yields we've seen with sort
of saying, okay, we're going to need to start to taper soon, but we don't want the markets to freak out when we do it. so how are they going to navigate that compromise is really going to be an important thing. >> all the headlines yesterday sort of tied the spike in the yield to claims. did you see claims as somehow, i don't know, extraordinarily impressive? >> well, it was the lowest point in six years, but i think what's so frustrating about the point we're in now is we're in this reverse psychology mode where bad news is bad news, but good news is also bad news. and we have to remember that when the taper comes, it's supposed to be a sign of an improving economy. improving economy is a good thing. we have to remember that. basic things. >> want to get some more insight on some of the rising yields and what it means for markets. dan fuss is the portfolio manager of the loomis sales bond fund. good morning. >> good to be here. >> what did you think when we hit 2.82% yesterday?
is this a straight shot to 3% or not? >> oh, i don't know. the thing you have this week is that the market is very, very, very thin. the normal summer slowdown and now you're into the vacation period, and on top of that, you don't have the degree of depth in the market, more on a structural basis. so any move gets rather accentuated. it's sharp either way. >> so can -- so what do we take to the bank in terms of lessons this week? is it all about directional flow? are you ignoring levels outright this week? >> oh, no. no, no. you know, our basic thesis is that we are in a rising pattern of interest rates, and you get it in spurts. and you get increased volatility in this period of time. so if you're trying to sell, this is obviously not when you
sell. and if you're trying to buy, this is a good time to bring a bid to the market. the trick with that is that if you're looking to buy in size, you can't do that either when the market is down as much as it is, you'd think you could, but you can't. it's just a very thin market. people are very unwilling to short bonds to you in this type of market, and they are also very unwilling to bid for you. so it nearly becomes an agency market. >> dan, back in may and june when we had that first little flurry of anxiety through the fixed income markets, a lot of folks said you look at the corporate high yield, kind of created a little more value there as prices went down. how do you see the values right now in investment grade and high yield debt? >> relative to treasuries, the values are there.
looking forward, then you'd have to say, well, okay, now we do have unusual money coming into the long end of the investment grade corporate market as yields go up. you get a lot of liability matching. so that provides a base of buying that you didn't have at lower trf ratinterest rates. the high yield market is very, very, very dependent on the flows in and out of the mutual funds and more importantly these days the etfs. but the basic thing in here, carl, is that with a market this thin, you just have to widen your spread as a buyer between bid and ask, and you wait for the bonds to come to you on the buy side, and on the sell side what you do is you just wait until you get one of these unusual periods of demand, which reappear at different levels on
the investment grade side. on the high yield side it depends a lot on the flows into or out of the etfs. >> your point about the thin markets, dan, certainly is felt over here with the dow up 15 amid a fair amount of news flow i should add but we know what you're trying to say. thanks so much. good to talk to you again, dan fuss, advice chairman of loomis sales. congress set for yet another battle over the debt ceiling when members return from the august recess, but this time around the chances for a deal are higher than you might think. our john harwood is in washington with more on that. hey, john. >> you know, washington is still on vacation, the president is on martha's vineyard. what news focus we have from the administration has been largely about the crisis in egypt, but we only got a couple more weeks left of this recess, and then we're going to be right back in the budget mess. there are three big issues that have to be resolved. i just want to run through potential elements of the end game.
one is what to do about government spending. the fiscal year runs out at the end of september. they're going to have to at least do a temporary spending bill to keep that going while they negotiate. second is the fate of the sequester. it's about $90 billion a year, these cuts, both defense and discretionary spending. a lot of complaints about that there have been from democrats for a long time but republicans couldn't pass their own transportation bill last month before they went on break, so there's more talk about replacing those cuts with other ones, some out of entitlement programs, perhaps not medicare or social security, perhaps things like farm subsidies, maybe some fees being raised as o opposed to broad-based tax increases. and the debt limit increase, that was the crisis we had that led to the downgrade in 2011. republican leaders do not want to go through that again. even though they have pledged there will be dollar for dollar spending reductions to offset any debt limit increase that's
passed, we don't expect that to happen, and when you talk to republican members of congress, they don't think that's going to happen. perhaps you could see the congress wave off enforcement of the debt limit, which is what they did early this year when they didn't want this fight. there's another possibility of linking it to tax reform, which is something republicans have been pressing for, and you have tax chairman in both chambers, house and senate, trying to push for that. but the controlling thing, carl, i think, and the one thing we should keep our eye on is the republican party knows that they've had a difficult time with their reputation for being obstinate as opposed to president obama. their reputation suffered in the 2011 debt crisis. they don't want to go through that again. so that's probably why we will avoid either a government shutdown or a debt default. >> we're back to reading some tea leaves definitely, john, ahead of those midterms. not too far away. thanks so much. our john harwood in washington. interesting point because it relates perfectly to the markets, to the economy, and to
what the chairman says every time he's on the hill. >> he often blames congress and the fiscal drag for limiting growth right now in the economy, and what actually happens with the debt ceiling, what actually happens with the continuing resolution, we didn't think it would happen last time. you know, republicans, again, as john harwood just said, they don't want to go through it again, but it is still a significant risk to the economy and it's something the fed is considering as they decide when exactly to begin to pull back their stimulus. they don't want to have a situation where they pull back, the bottom falls out, we have another debt ceiling fight, and they have to reverse course. >> just mark the two-year anniversary since our downgrade. that was not a fun day. >> exactly. in 2011 people were complacent it would happen, in 2012 people were freaked out about the fiscal cliff. >> fall is going to be interesting. when we come back, jobs, the movie about the live of apple founder steve jobs, hits theaters across the country
today. and so far the reviews, they're not great. let's just say they're not great. "the new york times" says after a while, you don't care. and usa today says a blandly superficial treatment of a deeply complex man. we'll talk to the head film critic at "entertainment weekly" and get his thoughts in a moment. first though, rick santelli, who always gets good reviews talking markets and housing a little bit later. >> we're going to talk to matt malee about all the hot topics about the day, what's going on with rates, how far can they go, things like commitment of traders and maybe we'll dive into housing. many say housing won't be affected very much. i don't know if i agree. bottom of the hour. [ male announcer ] come to the golden opportunity sales event to experience the precision handling of the lexus performance vehicles, including the gs and all-new is. ♪ this is the pursuit of pection. clients are always learning more
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apple. >> excuse me? >> apple. >> apple like the fruit? >> the fruit of creation. apple. it's simple but sophisticated. >> that is so much better than phaser beam computers. >> reviews of the steve jobs biopic are in and after months of hype and a first ever released instagram movie trailer, the results have not been all that favorable. could we still be in for a big box office weekend? owen is a film critic with "entertainment weekly" and dan lyons is the author of "the secret diary of steve jobs." owen, people are not expecting a
true history lesson, but you seem to have net net come down on the side of the film. >> well, carl, i think it's a very watchable movie with some severe limitations to it. i mean, look, when steve jobs died two years ago, there was such an outpouring of commentary about him that i think a lot of us got caught up in the two sort of essential things about him. i mean, one, that he was this kind of insane perfectionist but who was really driven to bring a sense of beauty to computer culture, to kind of meld form and function so that these products would almost fuse with the people who used them. and at the same time that he was so driven to do that, that he was an incredible control freak, kind 6 a dictator in many ways, not a very good guy who did not really treat people very well a lot of the time. and no matter how much you read about jobs, i think there is a desire to kind of see this stuff played out. that's why biopics exist, and i found that "jobs" as a movie did
let you see a lot of that in a fairly accurate way. i thought ashton kutcher kind of put the two sides of jobs together, and the aspect of the movie that surprised me is that they did not soft pedal what a jerk steve jobs could be in pursuit of his mission. that said, i think that the movie kind of starts to run out of gas in the second half. it has story problems because -- it becomes a business story where they didn't really figure out how to make the human drama powerful the way it was in the social network. >> yeah. interesting. it's a tough narrative to create, especially if you're not ensconced in business news all the time. >> an entire movie about building computers, that's not inherently a dramatic thing to watch. >> dan, you make the point that -- i mean, it's amazing we're still talking about him years after his death. you think the company clearly is not as innovative as it was when he was running it. >> and i felt at the time two years ago that you can't have
someone who is as big a figure as steve jobs who has contributed as much as he has and then just take him out of the picture and imagine things are all going to be fine afterwards. i think apple is a well-run company with great products, but it can only be less without steve jobs in charge. >> dan, does this movie teach us anything and there's a sort of idolization of steve jobs. does it teach us anything about the role ceos play in corporate culture and corporate mythology. is there a danger in idolizing ceos and putting them on a pedestal? >> that was all the risk with apple. the saying was apple is steve and steve is apple and they're entwined you can't separate them. larry ellison who was steve's best friend said we already saw what apple looked like without steve in the ten years they threw him out. we've already seen that movie.
so i think, yeah, there is a danger to myth ologizing a ceo. >> you save some of your highest praise for josh gad. his character's role in the creation of the company was just as large as steve's? >> possibly. i think he becomes the most relatable character in the move whi -- movie. it captures the way steve jobs turned that company into almost a cult. one of the problems -- the limitations i think of seeing a move like this now is that all of us in media are so caught up in the cult of steve jobs that we sort of helped create. my own feeling about him is he
was a genius but that his achievements in some ways have been overstated. he was a visionary of computer culture but was he thomas edison or men ri forhenry ford? no. was he just a brilliant businessman or this inventeder for the ages. i think it's too soon after his death to make a movie that really has perspective on that question. >> that's not a bad point. good to talk to you guys. appreciate it very much. >> thank you. let's get back to headquarters. some breaking news from kayla tausche. >> carl, there are only three institutions with outstanding bailouts. ally is taking a big step toward that payback. they're planning to sell $1 billion in common stock. that could happen early next week, possibly as soon as this afternoon. the proceeds will help boost their capital levels after missing the fed's mark on this year's stress test. may even use some of that capital to start paying back
treasury for a massive $5.9 billion convertible preferred stake taken during the financial crisis. cerberus capital will participate as well as other internal and institutional money managers in this stock sale. in march ally posted a 1.5% tier one common equity ratio in a severely stressed scenario. the stock sale next week my sources say would add roughly 100 basis point to make the figure 2.5%. the rest of the position will be shored up by a $2.1 billion settlement in may with the subprime unit. the losses associated with them have been estimated in washington to be far higher and had been dragging capital levels down. the new test must be resubmitted to the fed by the end of september and it must pass in order to fully exit from government control. but sources say if that happens
in september, ally could go public, carl, as soon as this winter or early next year. >> wow. interesting to watch that separation process continue. kayla, thank you so much. it's another bloody day for egypt. multiple people killed as protesters are calling for a day of anger. we'll get the latest on the ground in cairo when we come right back. jackie: there are plenty of things i prefer to do on my own. but when it comes to investing, i just think it's better to work with someone. someone you feel you can really partner with. unfortunately, i've found that some brokerage firms don't always encourage that kind of relationship. that's why i stopped working at the old brokerage, and started working for charles schwab. avo: what kind of financial consultant are you looking for? talk to us today. ♪
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fresh violence in egypt today. supporters of the muslim brotherhood taking to the streets a day after hundreds were killed during clash was security forces. yousef is in cairo with the latest on that. good morning again. >> reporter: these clashes continue sporadically, not just close to our vantage point, especially on that bridge. now it's gone a bit quiet but clashes are still under way in a
square that was a key point for protesters to make their point. tear gas has been tired and other weaponry as well. the egyptian ministry of interior is speaking of at least 12 people who have been killed in the violence, not just in the capital city, but across the country in suez and elsewhere. now, what's interesting to point out and what our viewers should know is that the saudi king abdullah has released a statement that was read out on state television, and not aligning itself in a clear way with the united states, carl. the world's largest oil exporter, the king of that country, making it clear that t they stand with egypt against, quote, terrorism, and it would stand against attempts to destabilize egypt. so the saudi king and the country taking a clear position
here, unlike the united states which basically only went as far as to say that they would cancel biannual military exercises stopping short of canceling financial assistance to the egyptian military to the tune of $1.3 billion which is an important contribution to the military budget, but it will be interesting to see how this plays out now that the saudis have taken a different stance than the united states, which is still evaluating a lot of what is happening here on the ground. we'll have to see where it goes from here, but that's the update for now. >> yousef, thank you so much for that. on a much smaller scale back home, although still some dramatic pictures, there appears to be what some reports are now saying is a big rig on fire on manhattan's queensboro bridge. both a fire and an explosion. wish that camera could pull out just a bit to give you a sense of how dramatic the smoke is relative to the size of the bridge. our local affiliate wnbc is
reporting it is a truck on fire on the lower level eastbound lanes heading from manhattan into queens. on the one hand, it is a friday in august. traffic patterns may be a little bit lighter than usual, but people are going eastbound, and whether it's to the airport or no long island, you have to imagine certainly not the time for something like this and not to mention the danger to any life. you see the flames are still erupting. >> kind of surprising you still have the manhattan bound traffic still flowing. maybe they feel like it's not going to spread from there, but 100-year-old bridge you have to start wondering about that. >> whether or not that will stand. not an expert on the construction of the bridge, but we'll keep a close eye on it. there's a look at our camera from 30 rock. you can see it. obviously, this is a fire you can see from miles and miles around. the building where that camera sits is probably at least a mile or two away from the bridge.
so we'll keep an eye on it and see if it gets any worse, but clearly something to watch. i know it's a very local story if you're not living in manhattan, but something we thought we'd keep you up to date on as we got the pictures in. meantime, dell is reporting a 72% drop in profit after the bell. coming up, we'll tell what you this means as the company tries to take itself private. plus, the bells are about to sound across europe. a few minutes left in their trading day. we'll get their close and the details and how it impacts us this afternoon. actually it is 11:30, so they are just closing. we're back in a minute. y sales t and experience the connectivity of the available lexus enform, including the es and rx. ♪ this is the pursuit of perfection. see, i knew testosterone could affect sex drive, but not energy or even my mood. that's when i talked with my doctor. he gave me some blood tests... showed it was low t. that's it. it was a number. [ male announcer ] today, men with low t
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the european markets are closing now. >> and with that, simon hobbs heres a the european close. >> i think this is a very important thing to notice, the divergence that continues between european and u.s. markets and the opportunity for viewers to make money for europe where they might not be able to make it here in the united states. that's a question, not a statement of fact. you will see that the markets are higher in europe today when we are down here in the united states. today just for the record, some of the mining stocks are coming through higher as you get the rebound in metals. you can see these guys are all doing reasonably well. some of the uk house builders are higher today after weakness that showed up in yesterday's session. but this is the point i'm trying to make. let me show you a chart for the week. this is the week, of course, that we proved with gdp figure that is certainly france and germany are pulling the eurozone out of recession for the first time in a long time.
so european equities are flat for the week overall, whereas you can see we have fallen in the united states. you might consider investing in europe or diversifying into it. what's interesting as you get growth appearing in europe, or at least flat lining on economic growth, and there are huge problems in europe, debt, politics, you name it, there's a long way to go, what's interesting is the different reaction in the bond market. you see core europe, the uk and germany, you see those bond yields rising. those bond markets selling off as growth appears. the ecb isn't going to cut rates probably, but it's going to be a long time before they go fed-like in withdrawing stimulus. but at the periphery of europe where the problem is, there you see increased growth, increased confidence pushing the bond markets higher, and, therefore, the yields are moving in the other direction. so a very split reaction on fixed income, and that, of course, cuts to all the things that we've been talking about with the pigs, remember them,
over the last three years. carl, have a great weekend. >> same to you. let's bring in bob pisani with the dow almost perfectly flat. >> very narrow trading range. i think this is good news. interest rates largely on the flat side. wasn't a lot of volume. even the options people aren't seeing a lot of volume today. i think they'll take that calm and quiet. one thing that's not so calm and quiet is the beating that interest rates sensitive sectors have taken this week. once again today the utilities are down again. i think the utility index, that's the xlu, that's down 4% to 5% so far this week. of course, we have seen some of the problems home building stocks have had. there's been a lot of concern over the pace of the housing recovery. i think a little relief today on the july single family numbers that we had that were down slightly but multifamily was big, and so far nobody is saying the housing recovery has been detailed. you can see the home builders up
for a second day in a row. we're going to get home improvement people coming next week. there's a lot of chatter about lowe's and home depot right now. these stocks have had big run-ups on the housing recovery. since 2012 home depot is up 80%, lowe's is up 75%. the bet so far has been right. rising home prices have driven home improvement demand. what they're expect something very big numbers on big ticket items next week. i'm talking about appliances and cabinets and things like that. here is the thing that worries me. the same store expectations are very high on the street. lowe's guidance says 3.5% for same-store sales. the street has 5.1%. i have seen people at 6%. there's some kind of disconnect here and the valuations are stretched. we have some 21 times forward earnings i think on both of these stocks. that's near multiyear highs. that's a little bit of an issue. then this relatively high levels of bullishness. this is what i was able to find on lowe's. nine buys and 11 holds and i didn't find a single sell. maybe there is. i'm not saying i have everybody
there, but, guys, i think you get my point. there's a three-year chart. straight up on home depot. take a look at lowe's. it's the same chart essentially. practically a mirror image here. very high expectations and you can't disappoint in the least with stocks that have moved up that much here. let's hope this recovery keeps continuing in home improvement. >> thanks so much. let's hop over to rick santelli in chicago. hey, rick. >> hi, what's going on, carl? good friday to you. i'd like to welcome a special guest, matt malee. thanks for being here today. >> great to be here, rick. >> all right. you know, let's hit the topic right at the bull's-eye. i'm on a trading floor where fixed income markets have been hot, hot, hot. your thoughts as to who is in control of interest rates? when i look up there and i see a 2.79%, 2.80% in tens, is the fed in control of short rates and
losing control of long rates? who is the proactive character here, and do you believe that it's going to make a difference as to the ultimate heights that these interest rates gain? >> well, you know, the fed tends to follow. the markets are always in the lead or at least almost always in the lead, and the biggest problem we have right now is that there are still massive amounts of leverage in the credit markets, and as those -- if rates continue to go higher, those things are going to have -- those positions are going to have to be unwound. but the biggest thing is that people have been setting themselves up with big positions for a situation where the fed was going to have the pedal to the metal through 2015. they have changed their policy. people are trying to say it's not a big deal. a policy change has been made. that's going to take rates higher -- >> let me stop you right there, matt. because this is the debate i have every hour now.
okay. so if i look at like a genie in a bottle analogy, can the fed put the genie back in the bottle meaning once the market is awake and it's flexing its muscles a bit, is this a condition that now has a life of its own and it's just going to continue, or can the fed stuff it back down in the bottle? >> well, they can certainly try, and let's face it, the bond market is oversold. we do have some data, c.o.t. data. we could get a bounce back that lasts several weeks or even several months but i think the genie is out of the bottle and that would be short-lived and it would provide a good opportunity for bond market investors to sell. >> all right. one last question, yes or no, do you think if you watch everything going on at jackson hole, the 22nd through the 24th, it's going to help get you better trading profits as an investor? >> follow the markets. i don't listen to what they have to say.
they talk a lot. they're constantly trying to use jaw boning to move the markets. >> i'm taking that as a no. that was a long answer and i know you're not a politician. have a great weekend, matt. carl, back to you. >> thank you so much. pc maker dell reported a 72% drop in profit after the bell but the quarterly results still managed to top analysts' admittedly low expectations. we'll tell you what that means for the future of this company when we return. t ] you know what's impressive? a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪
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coming up next, is this a start of a bigger correction or a buying opportunity? our traders will weigh in. plus, jeremy see gal, is he backing down from his big bullish dow call? and it will be a hot debate, herb greenberg goes up against one of our traders on green mountain's next move. carl, we'll see you in a few. >> all right. give herb our best, scott. we'll talk to you soon. >> you bet. dell, meantime, reporting a 72% drop in profits as pc sales continue to drag down the blooirn. brian marshall is an analyst with isi. his latest note is, citing the steve miller band, take the money and run. i guess you could have called it the joker, but that would have been a different company. it's good to have you. >> thank you. >> is this an attempt to grab as much share as they can before things change? >> definitely. i think they're jeopardizing
profitability in an attempt to gain share so when they go private, they'll maintain that investor -- that customer base and be able to migrate them to more of a solutions based approach and lead to higher margins. i think it's probably the right thing to do, although it's jeopardizing near-term profitability. >> and what are the implications then for dell competitors if that's what the they're up to? >> well, if they want to compete and maintain some of these wins against dell, they're going to have to lower prices as well or offer superior technical solutions. i think it's basically a function of the fact the tech injury is a mature industry, it's relatively competitive. i think that's just a function of the industry at this point. >> brian, you know, none of us thought we'd still be talking about this at this stage of the year. do you see any surprises coming on september 12th? >> well, not really. i think we're probably going to hear some headlines and things like that, but tet eat the end e
day we think the investor community has finally spoken and this deal is going to get done. and we think investors should take their money and run. we don't expect any changes to the really tight spread we see now. >> and then once they undergo that old invisible cloak from star trek wrath of khan where you're invisible you can do what you would like as you're private, how would you describe the key to reinventing this company? what's it going to involve? >> i think the important part is it's going to be private from the equity community. there's probably going to be some debt obviously that's public and they'll have to give us some financial updates now and then, but i think ultimately they're going to transition this company to be much more of a solutions center and basically more focused on enterprise systems. we think that they should de-emphasize the consumer markets and really focus on the public sector and some portions
of the large enterprise. they do extremely well in the health care vertical. i think it's more networking, more storage, more software, and less servers and less pcs and laptops. >> interesting report no matter how you slice it looking at some of the gross margins. it's clear that they are trying to at least keep, maintain, or maybe get some new customer relationships as you point out. brian, thank you so much. >> great. thank you. >> brian marshall with isi. have you seen "house of cards" yet? it's been a huge hit helping to change the way television is watched and made. we're going to talk to a top producer of "house of cards" to give you an inside look of what it takes to make a netflix original. [ male announcer ] at optionsxpress, our clients really appreciate our powerful, easy-to-use platform. no, thank you. we know you're always looking for the best fill price. and walk limit automatically tries to find it for you.
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this is the memo i have drafted on our middle east policy. i want to borrow from reagan. i'd like to coin the phrase trickle down diplomacy. i'm going to stop you there. we're not nominating you for secretary of state. i know he made you a promise, but circumstances have changed. >> the nature of promises, lynn , is they remain immune from changing circumstances. >> that's a scene in "house of cards." it was nominated for 14 emmys.
is netflix disrupting how television is being produced. dana brunetti joins us here at post 9. it's a treat for me because this show is a personal obsession of mine. it's good to have you, dana. >> thanks for having at the. >> how much did the emmy's change the game? >> it made history. it's the first time a show like that has ever been nominated for an emmy. when we set it up at netflix, we sort of assumed we wouldn't be eligible, but the industry came around as we went into production. it's a big game changer as far as being nominated and recognized by the industry as that's a viable means for quality content to get to an audience. >> can you talk about the original pitch meetings? because netflix hadn't done anything like this before and even they said what a massive bet this was for them. there were worries about the distribution models, worries about letting all the episodes float at once, losing that sort of weight, that drip, drip, drip
that dramas have lived off for decades. >> as far as releasing them ought al once, we've seen a lot of the drips. a lot of people are still discovering the show and bingeing through it. where if we released every 13 weeks, that kind of comes and lasts for that 13 weeks and then sort of fades off. we've had actually the opposite effect where a lot of people are just getting into it and really discovering it so the buzz has continued on. >> how does the format and the way people are watching the show affect the way that you think about how you create the content and how you create the production of the show? >> well, rather than doing a pilot episode, they bought all 13 episodes, actually two seasons, 26 episodes. so approaching that rather than just doing a pilot and not knowing if we were going to continue on, we were able to work out the characters and build the story arcs and the way we shot it was more of a 13-hour movie as opposed to an hour tv
show. >> it almost seems like netflix made it seem too easy. you can kind of just get into this business and all of a sudden have this success. but about the supply chain in general. >> this is where it's all going to go. and for content creator and a producer like myself it's fantastic for a lot of places. a, more places to sell to, but also a lot more control and a lot more flexibility in how we do things. as we release 13 episodes all at once and it was all done through ip. that's where it's all going to go. the next new networks, amazon is doing it now, hulu is sort of doing it, but i think, you know, places like twitter and facebook, i think those are big digital met yoosnetworks that j haven't been tapped yet. they have a huge audience. >> kevin spacey, the star, was on stephen colbert and they had this debate about what is television when something isn't on television, can it still be called a tv show.
take a listen. >> nominated for nine emmys this show. >> yes. >> nine emmys. wow. i got a beef about this though, kev. >> the emmys or the show? >> no, it's not a tv show. it's an internet show. i have a tv show. >> yeah. >> okay? you are admittedly the jackie robinson of the internet. >> boom! >> it's not exactly true because i tried to watch it, had wi-fi problems, but he streams online. >> touche. do you think people are going to come home in ten years and say i wonder what's on? >> i think that will always be there having something droning in the background, but appointment viewing is dead. thed vr destroyed that. that's where everybody is going. i have always said the music industry, they didn't really
learn and sort of got destroyed, and the tv and film industry is starting to understand it now that you have to give the audience what they want, how they want it, and when they want it. if you do that and do it at a reasonable price, they won't steal it. and kids now, they watch on their ipads. they watch on the iphones. you have to give it to them how they want it otherwise they will tune into something else or steal it if they can get it that way. >> during the break i asked you if you owned any netflix. you said you sold at $240. but you wrote it, right? >> oh, i rode it from about $60 up. as the saying goes, pigs get fat, hogs get slaughtered. i have had a few. the market has been doing well lately. jik tell you on twitter, you're an active watcher and participant. it's great to have you here. >> thanks for having me. >> dana brunetti with "house of cards." luxury car brand ferrari is good business. >> some wonder whether the
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more than $300 million worth of vintage cars are expected to be sold this weekend on pebble beach where prices for vintage ferraris are not just rising, they're become an entirely separate class of selectable. rock robert, i can tell you had a good time. what is that behind you? >> this is a ferrari. we'll tell you about it in a second. but ferrari prices up over 50% in the last two years. to find out why these cars are fetching such crazy prices i took a ride in a 1967 california spider yesterday with david gooding, the ceo of gooding and company. let's take a look. you have the ocean. we have our convertible ferrari, california. this was really the california, wasn't it? >> this is everything you think of when you think of california. >> whoo! holy cow! ma wha ma-- what made ferrari engines so good?
>> they were race proven engines and ferrari was always dedicated to racing and was passionate about racing. >> and this is a 1967 car, so it's 46 years old. >> this car does not have a middle-aged crisis going on, i can tell you that. the power, it's just got so much power. >> yeah. and i'm not even really fulling on it. >> wow. so how many of these are left in the world? probably less than 100, right? >> i believe there are 12 or 13 left. >> just 12 or 13 left? >> yeah, in the world. >> please don't hit anything. >> yeah. >> these are endangered species. >> this is rarified air here. >> all right, guys. in the two cars that are expected to fetch the highest price this is weekend are both ferraris. a 1967 expected to fetch more than $17 million, maybe up to $20 million.
and this car is a 1957 and could fetch between $9 million and $11 million. back to you, carl. >> that unbelievably gorgeous. my gosh. thank you so much, robert frank. we thank you for coming in on an interesting friday afternoon. as we get back to headquarters, scott wapner and "the halftime." >> thanks so much. welcome to "the halftime show." four hours to go until the close. let's look at where we stand on this friday. green, not so much though. trying to rebound from yesterday's big sell-off. here is what we're following on the half. gold play. with the appreciaprecious metal in on a two on month high, is it time to get in. a green mountain's move a sign that more gains are ahead? a highly caffeinated brawl is so coming up. sta