tv Closing Bell CNBC June 3, 2015 3:00pm-5:01pm EDT
mail. >> please don't. melissa, what do you have on "fast "tonight? >> the unstoppable gopro rally. it is up more than 50% since just march. how much more can it go? 5:00 p.m. tonight. >> look forward to that. a little gopro action on "fast money." thank you for watching "power lunch," everybody, the "closing bell," one of these cameras is right, starts right now. hi and welcome to the "closing bell," everybody. i'm kelly evans here at the new york stock exchange. >> and i'm bill griffeth here at cnbc headquarters. that means i must be doing a nightly business report tonight on pbs. and yes, i am. by the way, a busy market day, kelly. we had the adp jobs number was encouraging, a decent number. mortgage applications were disappointing. the beige book was a bit encouraging as well and stocks and bonds have responded, haven't they? >> bonds especially. and we'll get to all of that in just a moment. >> meanwhile facebook shares popping today. the social network says it's
going to start putting more ads in your instagram feed. uh-oh! but good that turn away insta instagram users? >> and google's shareholder meeting today. investors want to know, what is google doing with all of its cash? many publicly traded companies are announcing new buybacks but google has been putting a good chunk of change into lobbying. is that the best use of the firm's money? we'll debate it? >> yes, we'll tell google how to spend its cash today. friendly advice. in the market markets are positive, stocks are positive, but much higher earlier in the session. big rally on the open this morning. the dow is up 88 the s&p up 6.5, and the best performer percentage wise is the nasdaq a gain of 25 points back above 5,100. >> and that's really impressive, because it's really the bond market that's been taking center stage today. take a look at the ten-year yield, hitting its highest level since november colonel at about 2.366%.
sounding off about rates earlier with our rick santelli earlier today. >> one chart that looks absolutely is the boon and that direction is the yield is going higher. it's going to be hard for u.s. rates to settle down although we don't expect much higher rates in the u.s. we still think they're going higher. >> let's bring in our own bond king, rick santelli for more on that move. by my back of the envelope calculation, rick the ten-year yield is up 25 26 basis points in just three days here. how much of that is what's going on with europe and the boon as well? >> i think -- well first of all, you nailed it. we settled at 212 friday. 25 basis points right to the tick. but get this bill we exactly or darn close to doubled where boon yields were. they settled at 88 came within a whisper of 90 basis points. i definitely think i totally agree with jeff. that the catalyst for this move in large part especially the
final moves of the last several days, without a doubt, we had the ecb meeting today. and it isn't what they said. just the comfort factor of what they didn't say, didn't reassure investors that yields were going to do anything but continue doing what they've done. maybe the most interesting thing to think about is you know when you think about the eurozone, a developed economy with a bunch of smaller economies, but to think that a, their rate was down to 7 basis points, their historic low, on april 20th and to where it is today, and how much of it happened in three days it's a bit scary. but i have to tell you, bill that my favorite answer of everything i discussed with jim and jeffrey was, do you think this experiment will end well will central planners and central bankers be able to pull it off and write a final chapter we can all live with? no hesitation on either of their parts. their answers were no. >> rick let me ask you about the ten-year. you know, all year you've been saying, we'll be in this range, and that's where we've been.
does today represent the breakout to the upside? >> absolutely. really, in my opinion, the breakout occurred in two levels. when we started to trade aggressively back over 217, where we settled last year and as we started to climb above that 229, which had been the high-yield close and it all happened so quickly. but where we sit right now, i think that the easiest way to gauge if this continues is if the five-year closes above where it settled last year which is 166. right now, it's a horse -- oh, 169. so we are looking to do that. there's only been one day this year where all three years, 5s, 10s, and 30s closed above where they settled last year. that was on march 6th. didn't last long. this is very significant. >> how much higher could the ten-year go then? if we're going to see a breakout here, do you think? >> well i could give you a lot of small levels. i think there's a pretty important area right here around 239. next level psychologically, is 2 1/2. but i think the big level
looming around the market is around 260 to 262. >> that's another 30-basis point move. very significant, rick thank you. >> let's bring in keith fitzgerald. we've got jack from index financial partners and jeff reeves from investorplace.com. keith, if yields are going to rise this much and we're going to see this breakout what does that do to stocks here? do they suffer or what do you think happens? >> you know that's the question of the hour of course bill. i have a hard time sorting this out right now. the magnitude of the move has been so quick, i got to believe that the money is going to go somewhere. there's logically, still going to be opportunity in stocks. i think it's going to be 5 to 8% to the upside by the end of the year, but not a smooth line by any stretch of the imagination. >> jack are you surprised the stock market's holding up so well, given these moves in the bond market today? >> no kelly, i'm not. in fact it's something i've been talking about. i've been waiting for this rotation to start taking place.
if you remember, rick and i were talking about it a few weeks ago, when he asked me what do you think would happen if we went up 75 basis points. and i said we would probably see a rally in stocks. i see equity actually as the alternative to fixed income. but something that jeremy eagle said yesterday, and i want to point it out, which was so very important on "squawk box." he said, the anticipation of raising rates is much worse for the market than the actual act of raising rates. and we're seeing that play out in the fixed income market. all of that has really got to be digested by the market place. the one thing you want to notice is they are going in opposite directions. what i mean by that stocks and bods are now doing what they should be doing. and that's exactly the sign of a healthier economy. >> jeff reeves where are you putting money to work right now? where are you going to make money in this environment? >> i think it's a bit premature to think that number one, bonds and stocks can't go -- rates and stocks can't go -- >> okay so that's not just my hearing that went.
we are having an audio problem here. >> nor mine, bill. >> keith fitzgerald, same question to you. where are you going to make money -- if yields will continue to rise and present some competition to stocks. >> i'm going to look more on the opportunistic side of things. i'm looking at single use medical device companies. and believe it or not, i'm still looking at energy because i think, particularly, the high-dividend companies are consolidating, a lot of power being generated there, pardon the pun, and that's got upside to me. >> jack what about you? where do you think people will get money to work here? >> kelly, i've got a feeling there's money to be made all across. one thing to keep in mind is that this market has traded in a counterintuitive fashion for the last five or six years. when they started easing money, everybody told us reducing runaway inflation. that didn't materialize. and qe1 and 2 came around and that didn't materialize. so when they start to raise rates, it will probably be good
for every sector of the market. >> i'm told we worked out our audios with jeff reeves. >> i'll give you a quick rundown. i like health care. definitely like health care, because the demographic push that's behind it. we've seen a lot of acquisitions with smaller companies or medium-sized biotechs. the xbi is pretty attractive. a good way to play this trend with diversification. i'm not worried about a bubble in biotech. i think a lot of these orphan drugs are the real deal. i think you can rely on this whether or not rates go up or down in the short-term i think this is a long-term trend that people can believe in. >> jeff let me follow up with the transports, which have commended a lot of attention recently. we haven't made a new high since december of last year. as we're seeing breakouts in other areas, bond yields move higher the nasdaq today flirting with all-time intraday highs, when or do you think the transports will get back to their high water mark? >> i wouldn't venture a guess. some of these stocks we've seen that have kind of lacked we didn't see a great first quarter
for a lot of companies. so, it's just the natural order of things the market's going to get a little more selective, and frankly, i think it should. there's a lot of stuff out there that says a lot of asset classes are overvalued and overbought. i wouldn't necessarily think that the laggards need to catch up or necessarily that they should. i think it's important for people to look holistically about where things are headed instead of just june throw a dart board and buy whatever it lands on. which has worked the last couple of years. >> very quickly, keith? >> i was going to say, that points out something, kelly, a question about where are the transports going to go? the transports are 100-year-old measure of an economy that no longer exists. i would question whether they are going to catch up by their very definition i think there's a change waiting there. >> all right. good to see y'all. thank you, guys. appreciate it very much. >> thanks. >> we have more details now on that beige book from the fed that was released just over an hour ago. >> lots of great nuggets in that one. steve liesman joins us now with the details. hey, steve. >> the fed's book showing an economy bouncing back modestly
but still struggling with things like the challenges from the stronger dollar and lower gas prices. in fact, it was interesting to see the one place where economists expect to see the benefits of lower gas prices consumer spending not uniformly obvious. spending was up and some said lower gas prices were a help but others said any effect yet to materialize. they did see a negative effect of lower energy prices in manufacturing growth drilling declined in five districts. here's some other comments on manufacturing. steady to weaker in dallas where you might expect it because of energy as well as in kansas city where manufacturing declined sharply. only slight growth in philly moderate growth in four districts, and flat in five districts. the effects of lower nnlg prices ton manufacturers were evident all the way to boston. on the plus side the commercial and real estate and residential real estate sectors improved. home prices continue to rise. beige book also upbeat on jobs. here are some of the details. unemployment levels up across districts. labor shortage in eight districts. demand for staffing services
sometimes a leader indicator, generally grew and there was only slight growth in wages in most districts. now, we get a read on the jobs market for real on friday but it's going to apparently take more time to see if economic momentum gathers new strength from that lousy first quarter for the fed to act. kelly? >> steve win love as well the little anecdote there about how if you're an accountant in the philadelphia feds area you're in pretty good shape. a lot of demand for that labor. >> also for bill griffeth truck drivers. >> yeah. >> they need them in new york and cleveland, bill. >> that's very good to know. >> i could see you behind a big semi. >> me? are you -- absolutely. >> i always kind of wanted to do that. >> what is that route 90 interstate 90 that goes straight across there? >> that would be 80. >> 90's up to buffalo, right. >> the open road west towards cleveland. i would love to do that. >> window down country music on the radio station. >> breaker, breaker, steve. thanks so much. >> ten-four guys. >> steve liesman. 50 minutes to go into the close here. >> no idea what that was about.
>> the dow's up 87 points on the session, just below 18,100 today. it's up half of 1%. buoyed by jpmorgan among others. and look at the nasdaq. look at it going for its second record close in a week bill. the level to beat 5106 and change. we're just about four points shy of that level. meanwhile, google spending tons of its cash on lobbying. but is there a better use of its money than to pay for lobbyists? we have a lobbyist who does not represent google by the way, and an investor who does own shares in google with their thoughts on that coming up. >> and one of twitter's largest investors, chris sacca is here to tell us why he's calling for pretty big changes ahead of that board meeting tomorrow.
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at least one trader or one participant said today, it's still a coin toss as to whether or not they decide with crude prices settling sort of hovering around the $65 a barrel range lately, whether or not they will decide to cut production on friday in vienna. >> the countdown here continues. meantime today, stock rebounds driven parking lot by a wave of fresh buybacks. dominic chu is here to size them up for us. >> they're smaller in terms of the overall size versus some of the s&p 500 ones we've seen. but take a look at what happened with wendy's today. they had about $1.4 billion share buyback option. also groupon adding $200 million to its share buyback program. now, for the most part howard silverballot talks about this recent wave and just maybe the q1 preliminary stats here. he says that for five straight quarters, we've seen significant share count reduction by s&p 500 companies. that means one out of five
companies reduce their share count by 4% or more. the flip side is earnings per share gets a boost by about that same amount of money. if you're looking for that boost in earnings per share, share buybacks have been helping on that front. if you look at the overall picture for the biggest purchasers of their own stock, according to silverblat apple spent about $7 billion on its own shares in that first quarter, followed up by pfizer $6 billion, microsoft spent about $5 billion. it makes sense, those guys have a lot of cash and they're the biggest companies in the s&p. a lot of observer like to look at the size of buybacks also wondering whether fundamental on the profit side support the earnings per share story, or whether or not some people say companies are merely gaming or financial engineering their earnings per share guys. back over you. >> great stuff, dom, thank you very much, for now. >> i'm shocked. >> bill. should google be considering a buyback? the tech unite has about $65
billion in cash. it spent close to $60 million of that on lobbying since 2012 which tracks money in u.s. politics and the impact on public policy. >> more ton that and whether this is the best use of google's money. we bring in a veteran lobbyist paul kelly, first vice president of the government relation of professionals, which by the way, does not lobby for google but also with us is a google shareholder, robert luna from surevest wealth management. good to see you both. so mr. lobbyist is that a -- what do you think of the amount of money they spent in the last three years, that kelly was just citing there. is that a common amount, or more than you would expect from a company the size of google? >> i don't know whether it's the right amount or too much or too little, but one thing i can tell you is google certainly has a right on behalf of its employees and customers and shareholders to petition the government for a redress of grievances. that's enshrined right there in the first amendment to the constitution. and that's a protection that everybody enjoys in this
country, and it's something that they have a right to do and they should do it. >> robert some of the criticism of this is google just doesn't disclose what the money is being spent on. would you, as a shareholder, like to see more detail? >> well look kelly, in terms of disclosure i don't think there's any shareholder that's going to battle back against disclosure, but i think at the heart of the issue, really the amount of money they're spending that's called $8 million, $10 million a year is an infinitesimal figure when you think about the $9 to $10 billion a year in r&d they're spending. if someone was to move into your neighborhood kelly, and paint their house pink next-door to you, you're going to lobby against that. they have a vested interest to do the lobbying they're doing and i think they owe that to shareholders. >> robert, they've had a testy relationship, as have had many companies in silicon valley with the government as the government pursues information about users of the various companies that are involved in social media in various kinds. do you -- so you're not upset by the amount they're spending.
you think that's money well spent, in terms of it's lobbying budget? >> yeah, no i agree. and i think, outside of anti-trust, bill like you might have a microsoft that spends similar figures because of anti-trust issues. you have google in everything from home automation search to driverless cars. there's a lot of different issues they're trying to protect their interests in. so, again, i don't see it as an issue. the bigger issue is you know, this $65 billion, $75 billion in cash they're sitting on. the fact that the stock is stuck in the mud. what are they going to do with that cash to reward shareholders with an appreciating price. >> we'll come back to that in a moment, paul. but do you think, and i know you've worked across a variety of industries here to what extent should we be able to have more knowledge about where corporate cash is going, in terms of where it's being spent in washington? >> well i think contrary to general public opinion, there's an awful lot of disclosure in the lobbying field. so lobbyists have to file quarterly reports with the secretary, the senate and the clerk at the house. that includes information on who
your client is what issues you're working on even how much you're getting paid. so that applies to companies as well. so, there's a lot of disclosure. now, the group that i represent the association of government relations professionals, we think there ought to be more disclosure. and we think there ought to be mandatory ethics training for lobbyists. there's an awful lot of disclosure already, but i think google is also subject to the public pressures that you're hearing from shareholder groups and they're going to have to make up their own mind about whether those are the kinds of issues that they want to respond to. >> robert can i sneak in one final question before we let you go. it will be relevant for discussion later. do you think google buying twitter would be a good use of its cash? >> i think it would be a tremendous use. their big cash cow is search and the only legitimate threat i see out there right now to their search is twitter, believe it or not. real-time search if you're looking for something in realtime, twitter's a great place to go. and i think a possibly $40 and $42 billion buyout figure i think it makes a lot of sense,
when you're sitting on $65 billion in cash for them. >> we'll leave it there, robert. thank you so much. paul kelly, good to hear from you as well. >> we'll all be tweeting out your answer on that one, robert. >> thanks a lot. >> 19 minutes left in the trading session here. we're watching the stock market move higher today and the one we're watching most closely is the nasdaq although we're pulling back from that record-closing high, up 19 points at 5,096. the old closing high is 5106. >> and speaking of social media, get ready for more ads on instagram, which is owned by facebook. we'll discuss it more and will it help or hurt the photo sharing app's bottom line. >> and jpmorgan is expected to save a nice chunk of change. we have details, coming up.
at jpmorgan. let's send it to kayla tausche for that time of the signs story, kala. >> it is indeed. jpmorgan is pulling the plug on voice mail for a large portion of the employee base of its consumer bank led by gordon smith. he mentioned the move to an interviewer yesterday at deutsche bank's financial services conference. >> it's about ten bucks a month for voice message -- to have voice mail. and we realized that hardly anyone uses voice mail anymore, because it's so easy to contact -- you know we're all carrying something in our pockets that's going to get texts or e-mail or you know, or a phone call to so we started to cut those office. >> of course not everyone of the 136,000 employees in that unit has access to voice mail but a spokesperson says about two-thirds of the employees that did elected to have it canceled. and the bank expects to save $3.2 million in annualized costs because of it.
but, that's small change compared to the $2 billion in costs smith is looking to eliminate in the unit after cutting $2.2 billion in costs and nearly 12,000 jobs last year. but it is a move that other companies have started considering, with costs high, but habits changing and new technology is allowing voice mail for instance over your e-mail. citigroup, according to one person familiar with the matter is undergoing a review of its voice mail for employees in certain roles, and coca-cola, in december made voice mail optional and reportedly only 6% of employees at its atlanta headquarters opted to keep it. perhaps, guys even when presented with a choice, employees say, they don't need it. >> yeah, i mean for me the cost is a secondary part of the story. for me the fascination is the sociological part of it. we just don't use that technology narm.anymore. we look up suddenly and decide, we don't use it. >> it's true and there's a sense
if it's truly urgent that person will text you, send you an e-mail find another way to get in touch with you. it's not the voice mail that has the most urgent information. >> we tend to gravitate towards what's most productive. time now for a cnbc news update with our sue herrera. >> here's what's happening at this hour. the pentagon says that 51 labs in 17 states and 3 foreign countries have received suspected live samples of anthrax. that is a larger number than previously disclosed. and that number could rise as the investigation continues. the faa says it will place a higher priority on integrating drones into the national air space by appointing a senior adviser to coordinate relations with industry and other outside stakeholders. the agency says the new position would deal with a crush of outside interests from the private sector. amazon has launched free shipping on small and light items that are less than 8 ounces and cost less than 10 bucks. no minimum order is required and
customers do not need to be enrolled in amazon prime. and rafael nadal's 39 match french open winning streak has ended. the nine-time champ was beat by novak djokovic in straight sets in a surprisingly lopsided quarter final. it was only the second defeat for nadal in 72 matches at the french open. finals this weekend, guys. >> such a shame! >> the king of the clay court has fallen. >> has fallen. he's had kind of a rough season though. >> he's injury prone these days. >> and he said he wasn't really surprised, given how he has been playing, recently. >> that's too bad. >> thanks sue. that's our sue herrera with the latest, bill. >> it would have been his tenth french open to win, nadal. that's all right. >> a big fan of rafa. go rafa. >> exactly. 30 minutes to go into the close. the dow's up 72 points. a little bit off the highs. art cashin indicating about 85% of the interest is to the sell side, so we're seeing that perhaps take a little bit out of
these indexes. the s&p is up four points and the nasdaq trying to close a report, up about 20. there's the level we're watching for, 5106. that's the high water mark. we are still just less than ten point shis of that. >> we haven't even started the last half hour of the trading day, the most important part. >> that's right. >> up next the head of the european insurance giant tells us if he thinks a greek exit could ruin the markets. >> remember when dick koslo defended his strategy last week. >> i asked myself the question are we doing what we're going to do next because it's the right long-term thing for the business, or are we in a reaction as a team or a company to some short-term incremental demands? >> now one of twitter's largest shareholders is calling for changes and that should also include showing ceo dick koslo the door. we'll ask him about that. chris sacca, joining us later on the "closing bell." for the first time american kids are slated to live a shorter life span
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from bill gross, who i was actually just kind of talking about. he said, the german boom has been the short of a lifetime. an update though it's happening and up next china's shinzen index, just not yet. are people talking about that bubble popping? >> certainly they are. i don't know if that's the case. they still have a lot of room to ease monetary policy where the other central banks really don't. so in the case of china, maybe bill gross wants to get out ahead of this but i'll set that out, thank you. >> fine. what are you sitting in then? what's going to the floors? >> since about a week or two ago, the transports have really started to move. they've been beaten up for quite some time now, underperforming the indices, but for this five or seven trading sessions they've started to outperform as much as 2% over the s&p 500. on the other side you've got the utilities, which have been destroyed in this bond bloodbath over the last two days. >> how extraordinary has it been to watch yields move the way they have? and are you surprised that stocks are holding in there
today? >> i'm a little surprised the stocks are holding in, but not so much. i mean we're kind of the -- we're kind of the tail at this point. we're not the dog anymore. all right, you've got the dollar, you got those bonds in germany and here in the u.s. they're really what's exciting right now. that's what's making money. we're trying to make money on the instruments that rely on those instruments to move. >> and in the meantime yesterday, we had some rebalancing going on. anything today that should affect the close we need to know about? >> you know, i'm watching the 21 level on the s&p 500. if we test that level again, i think it will be a real negative if we can't hold it but on the other hand, i think it's a real positive if we can hold it. >> sarge, we'll leave it right there. we'll let you get back to it. bill? >> thanks, kelly. send my regards to sarge there. the euro posting its best gain against the dollar in more than 2w0 months. it seems to be in part to reaction statements this morning from mario draghi the head of
the european central bank and also on hopes, hopes that there is progress and talks between greece and international creditors to avert a debt default. our chief international correspondent, michelle caruso-cabrera back again with the latest developments on those negotiations. michelle? >> the drip drip drip as we call it. greek prime minister alexis tsipras is in brussels where they were going to present him with a suggested reform plan. a plan grease must comply with in order for them to keep paying their bills. they need to borrow more money to make payments on the money they have already borrowed. the suggested reform package is designed to be tough, however, to also let the greek prime minister say that he has won some significant concessions. things that he promised greek voters when he was elected in skbran january. earlier today, mario draghi was repeatedly asked if they don't
make a key imf payment due this friday? are you going to do anything? he basically would say only this. >> the growing council at the ecb wants greece to stay in the euro, but there should be a strong agreement, and a stongrong agreement is one that produces growth, that has social fairness, but that is also fiscally sustainable. >> of course, right now, there is no agreement. guys, back to you. >> michelle thank you so much. what impact could a greek exit have on businesses with major operations in europe? well joining us now is mario greco, ceo of generale with the majority of its operators in western europe. welcome to post nine. >> thank you very much for joining us. citigroup we had the biggest two-day move in german boons since 1998. what do you think about that move and what you heard from mario draghi this morning, are you reassured about conditions across the eurozone? >> i think euro zone is getting better, for sure. however, the greek risks are
steep there and they will have to market fluctuate for long. i think the markets all expect greek solution at that point in time, and they have been waiting for a long time for that. and we think that this uncertainty will continue for, unfortunately, some more weeks. >> more weeks, not months. i mean there are people who think this could drag on for years. are you expecting a more clear outcome one way or the other, and do you have a preference about whether greek stays or goes? >> we do have a preference. that would be for a clear solution. i think they will come with a solution in the next days or weeks. likely that this solution will be further compromise and will postpone the issues until later on and this will buy further time. and that is something that it's to the not very helpful. at the end of the day, there are structural issues there which
need to be resolved. and the compromise is not very helpful. >> mr. greco, back here in the u.s. for a number of years, banks and other financial oriented companies have had to put up with these historically low rates, which does not help their business and they're having to bide their time while they wait for the fed to start to raise rates again. what are you doing while you have to endure similarly low rates, even as your own european central bank begins the process of liquefying the markets to try and wait for the economy to grow again? >> bill, i think the only solution which is to form the business interest quickly, and adapt the business to leave and make high profits in the low-interest rate environment, which we expect will remain such in europe before the next at least two to three years. zl what does that mean? what do you have to do to transform to be more profitable in a low interest rate environment? >> you need to first of all, the easy part is you need to
reduce the cost basis, which you need to do anyway but it becomes urgent. then you need to transform the product portfolio, and customer products, which are, you know, the right one in a low-yield environment. so these are typically fee-based products. not this spread business which insurance companies run for years. it is doable. we have been growing our profits quarter by quarter last year and we started off very strongly in q1 this year. but it's a business transformation. >> and mario, we know we have to get back to business but we appreciate seeing you here giving us some context around the events we hear so much about. mario greco there, the ceo of generale. 20 minutes left in the trading session here. coming back a little bit. the nasdaq is the one we're watching, because it's close to an all-time high up 24 points right now, at 5,100. needs to get back about 5106 to get to its second closing high
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welcome back. here's a look at the nasdaq 100 today. a lot of names in the green as the index up about a quarter of 1%. we're looking at the 100, not the broader index flirting at all-time highs. some of the outperformers include some of those social media names. facebook up 2.5%. groupon up nearly 3. linkedin having a 4.5% session, bill, and even twitter popping by almost 2 on that news. by the way facebook shares are higher on news it's going to start putting more ads on instagram. the photo sharing app already has sponsored posts from select companies on its feed. now it wants to open that option to all advertisers. >> we're hearing this trend more and more now. plus, it's now planning to add the so-called action-oriented buttons, including shop now, sign up and install now, below those sponsored photos. that's something shareholders might be happy about, because of the revenue stream but will it turn users away? joining us is ronald josie from j.p. securities, who has a buy rating on facebook. what do you think? i mean is it inevitable that
they have to be more interactive in this fashion and try and garner more revenue in that way? or can they avoid this strategy that might turn users away? >> yeah sure. it's one of the things we always think about, the value between users and monetization. but frankly, anything from facebook in the past several years is that they're very careful in terms of not overloading their users' fees with ads. so i'm assuming they would do the exact same thing on instagram. they've certainly taking their time on testing what is the right approach to instagram, thus far. and i would expect that from an analyst perspective, we would like to see monetization ramp here at instagram. we would like to see it's around the corner here based on the announcements yesterday and today. and from a user perspective, one thing we've learned is that social networks are awfully sticky. once you take time to build your network and build your friends, it's difficult to actually move on to another one. in the case of instagram, there really isn't another one. >> ron, all of these social
networks had to come from somewhere, had to disrupt someone, you know going back ten years to platforms that we don't even talk about anymore, that once were popular. you know as an instagram user myself, i can tell you, i follow a lot of my close friends, i see their babies, i see their families, and when i see advertising suddenly on there with people i don't know it's -- it's just so dissident. i don't enjoy it. am i going to be the exception here if i use instagram less? >> well we would hope so but if we look at facebook as an example, what's wild about facebook, you know when they went public there was a question about their mobile advertising business and a year after that, they sort of proved that they knew how to do that. and user engagement is still growing on facebook today. so extrapolate that lesson learned from facebook on to instagram, and you know ads are never -- you always look at ads with an air of caution, but sometimes they're awfully helpful in building a brand and even purchasing something. so i'm not convinced that you would look at instagram less.
in fact, you might even do more on instagram if all of a sudden you decide to follow a brand that you liked and they provided you an ad that you decide to buy. those levi jeans or something along those lines. >> you know we talk about how competition might keep them there doing that, because they have an alternative. if you don't like what's happening on instagram, you can go to snap chat or something else. but if everybody starts doing it you have something going. so do you expect everybody to be doing this eventually? >> i think monetization is a key part of all of these up and coming companies that are out there, particularly the internet sector. i mean advertising isn't bad, right? we all watch tv. advertising, print, radio, and everywhere. it's a matter of how you integrate it and how you do it here online and on these new sites within social. and frankly, there's so much opportunity, whether it's social commerce, whether it's the buy button, as you said or just building a brand. and i would imagine you're right. i mean we saw yesterday with pinterest, we'll hear more on snap chat as time goes on i'm sure. >> ron does this change your price target on facebook at all?
is this going to be a significant source of revenue in the near term? >> well it's something that could be significant. we need to look into it a little bit more to see what it can be and what it can do to the model. but to the extent it's incremental to our model, i would imagine that certainly helps the model and certainly helps our valuation, for sure. >> ron, thanks a lot. ron josie from jmp securities. >> that's the difference between you and me. you're watching pictures of your friends' babies. i'm watching pictures of my friends' grandkids. that's just how it goes these days. >> you're on instagram, though, bill, that makes you pretty cool. >> i didn't say i was on instagram. i'm looking at them on facebook. 12 minutes left in the trading session. the dow is up 75 right now, and the nasdaq will it finish at an all-time high for the second time in a week? up 22 points about seven points away from that record level. "shark tank" investor kevin o'leary is coming up. mr. wonderful will join me for the entire next hour of the show. we'll talk trains drones and movie theaters. when "closing bell" continues.
street journal" report saying that liberty's john malone sees the company as a potential deal for content. checking shares of lionsgate right now, they're up about 1.5%. >> morgan thank you very much. with the markets, we've got about nine minutes left in the trading session. stocks holding on to gains, bonds down sharply, pushing yields to levels we haven't seen since last fall. joining us with their thoughts on the markets, tina lindstrom from blue shift capital and robert frost, from frost and frost wealth management. good to see you both. robert, what do you make of what's going on right now? it would seem that we're getting better economic data and the bond market seems to be reacting to that right now? >> it is kind of counterintuitive, isn't it? i think the bond market is reacting to a lot of things that are happening in europe. i think that, really, the fundamentals of the economy continue to get stronger, so i don't think that forward looking, that's necessarily an indication that we're set for a pullback in the market.
i think we've just seen you know, beyond yields sort of trade in a tight range for a while and now they've jumped a bit, but i don't expect them to stay where they are. >> meantime we've had oil jumping around and people are trying to figure out which way it's headed next. what's your insight here? >> well i think that oil's -- there's a very low chance that opec will cut production. as we saw during thanksgiving, they're no longer to serve as a floor for oil prices. i think today is positioning ahead of the opec meeting. >> they haven't had to cut production tina. price has gone up without them having to do that. >> exactly, that's exactly what opec wants to accomplish. >> dupg that prices stay where they are? we seem to be getting pretty comfortable for brent at around $65. does it go much higher from here or not? >> i think that there's a lot of jump risk right now, with isis and, you know, that obviously, our land's refusal to come in
but i think that oil prices are rangebound right now. there's a fight between the bulls and the bears right now, and i think we're range bound between $55 and $65. >> what about bond yields which don't look like they'll be range bound, if we take today's action and what's happening in europe are you expecting more of a move higher from year? >> look at what happened last year. i was thinking, it kind of feels like groundhog day, doesn't it? last year the winter was tough, we had negative gdp, we had the same thing starting over again. this year 2013 we had the ten-year treasury go all the way up to 3% and then it dropped all the way back down unexpectedly. i wouldn't be surprised if it goes up further from here. but, again, i don't think it necessarily says anything about a weakening economy. i think it's just more of a matter of that bond yields float, they don't stay where they are. it is just what it is. and so i don't necessarily think that it's forward looking on a weakening economy.
>> all right, folks. thank you all for joining us today. robert frost and tina lindstrom. by the way tina will be attending an event called fight for education tonight. it is a charity boxing event, to raise money for the happy hearts fund founded by petrov nimkova. >> some kickboxing i love it. >> look at you. >> not me. >> are you in the umc? >> no i'm impressed with the people who can do it. >> you could do that. >> i could try. i'll stick with regular boxing and even that i can't quite handle. coming up, the closing countdown. stay with us, and after the bell it's billionaire start-up investor chris sacca sounding off on twitter. he's one of the company's largest shareholders and he has a long list of things he says twitter needs to fix to get to the next level. you're watching cnnbccnbc, the first in business worldwide. financial noise
for the millions of americans suffering from ringing in their ears, there's no such thing as quiet time. but you can quiet the ringing with lipo-flavonoid, the number-one doctor-recommended brand. relieve the ringing with lipo-flavonoid. inside the two-minute park. a quick look at the market as we head toward the close. the dow was up 156 points. now up 60. art cashin just now saying about $400 million to sell going into the close, although it's 90 seconds left here. the ten-year yield, really the feature today, up in the last three days of about 25 basis points. look at it 237. that's the highest yield we've seen this year. and i think we can go back to november to see a higher yield. oil also going the other direction today, inventory
levels were a little lower, but they're waiting for that opec meeting on friday. and then the retail index in the s&p is up a little bit today, a gain of 0.88%. courtney reagan has been on the floor of the new york stock exchange for us today. and courtney that beige book said, basically, the consumer is buying cars but not a lot else. we're still waiting for that consumer to pick up pace, aren't we? >> very much so. we've talked about it a lot, the bears repeating all that boost we thought we might see because of the lower gas prices never really played out. and i'm sort of one in the very logical camp that never really thought we would expect see it. consumers need to feel better all the way around not just an extra 20 bucks or so in their pocket at the end of every week to really put their money to work there in those key sort of apparel and home goods markets. and again, it's one of these stock pickers market when we look at retail. you've got names like ja necessaryco doing really poorly, and names like g-3 apparel doing very well. you better be pretty careful when you jump into those waters.
>> and there's nothing wrong with saving money, too. >> thanks court. >> thanks. >> that'll do it for the first hour of the "closing bell." stay tuned. what is wrong with twitter? what changes need to be made? influential investor chris sacca will join kelly among the other panelists, coming up on the second hour of the "closing bell." i'll see you tomorrow. thank you, bill. and welcome to the "closing bell," everybody. i'm kelly evans. let's see if the nasdaq went out with a new record high. we were watching. looks like we almost got there, but not quite. adding 22 point, 5,099 is the level there, about seven points shy of its closing high. still up half a percent for the strongest performance of the major indexes. the dow adding 66 points for its part. and the s&p up about 4.5, or a little less than a quarter of one percentage point. let's bring in the panel, "shark tank's" kevin o'leary in the house and our very own sarah
eisen. and also with us charlie from aeriel investments and "fast money" trader, guy adami. welcome to both of you as well. charlie, let me begin with you here. what do you make of these markets? bond yields are popping, but equities are still rallying? what looks attractive to you? >> well stronger balance sheet companies. strong balance sheet companies have had a wind in their face for 30 years as interest rates have kept coming down. that helps leverage companies, and we're finally starting to see a turn. interest rates are at levels they haven't been at since world war ii and we're finally starting to see a reversal of that, and that's going to mean stronger balance sheet companies are going to do better. >> can you give us any examples? >> well you know the classic names like exxon and even apple, jpmorgan with a very strong balance sheet. the people that have cash who earn nothing has been a real headwind. the people who have made acquisitions, financed with floating rank debt are going to have problems. so look at people who have made big announcements and big acquisitions. they're going to have a headwind
here. >> that's a great point. and if we can show the dow, for example, today, jpmorgan was one of the outperformers. kevin, you buying the financials here? you still thinking about interest rates and these moves we've seen? >> i think financials do very well kelly, when rates start to move. we've been waiting a long time for the ten-year to almost break out, and we're getting close. anybody that's gone short duration on debt is now being rewarded. this debt is moving, or these rates are moving because of a perception of enhanced economic activity. it's the best thing that could happen. when rates go up and stocks also go up this is nirvana for guys like me. >> it's a great point, but sarah, here's what's so fascinating about this. mario draghi today kind of had the opportunity to talk bond yields back down. he didn't really take it. >> and the euro. >> so if they're rallying for the right reason should we be encouraged? >> there are so many different event risks going into today, but investors took it all optimistically. the u.s. economic data has been good, nothing super strong, but when you look at auto sales, the
fed beige back had some pretty positive comments. so on the u.s. economy, good but not great. and on photo ops from greece that makes them optimistic that a deal is going to to happen. that was the reaction. in bond yields mario draghi didn't really do anything to upset the apple cart. so you've got this massive rise in yields. the ten-year yield did break out. we saw the highest yields since back in november. >> but we'll see if it really moves out -- i call a breakout 20% since the past trading range. we're not there yet. we could get there, but it's moving for the right reasons. it's moving for reasons of perception of enhanced economic activity in q2 and q4. by the way charlie's comments regarding dividends and companies that are levered, you want to now start buying companies that are increasing dividends, you want to stay away from utilities with flat dividends or reits. now it's time to pull away and look for dividend growers. >> you want stuff that rises with -- >> absolutely! >> guy adami, listen you know
you've been in the longer camp for a while on interest rates. has anything about the activity we're seeing or the discussion we're having change your mundind on that? >> you can't be dogmatic in your views. it's been right for a long time but we traded down in terms of yield to 185 and bounds off that very quickly, extraordinarily swiftly. 225 in the ten-year has been resistance on the upside but to sarah's point just now, and to kevin's points we just blew through it very quickly. so, now, what was resistance becomes support. you'll find it in the way of 225. again, i don't think bond rates are moving higher for the right reasons, but it doesn't matter. you need to re-evaluate. i will tell you who will do well in this environment, something we've been saying for a while on the show. goldman sachs, with all the volatility in the markets, just go back to the last quarter they reported. their fixed income currency commodity group had what i thought was a record quarter. it's come back with a vengeance. i think that pushes up to their
'07 high which i think was 240. >> that's a good point. we'll get more on volatility in just a moment. charlie, homing in on the financials for a moment do you need to see this higher interest rate environment persist for these to do well? i mean is there any chance that the financial could reemerge as a market leader even taking us through this next leg? >> i think this is a place where the conventional wisdom is right. the investment banks do very well in a steep yield curve, where they're borrowing short, and owning securities with a positive carry. and we have not had that kind of carry trade for a number of years here now. so i do think the investment banks are particularly well positioned in a rising rate environment. >> all right. we got to let you go but exxon, really? >> yes! >> even with all the stuff -- all right. >> the strongest balance sheet of any of the big oil producers, by far. >> and it has held in pretty well. charlie, thanks for your views this afternoon. another big story we were talking about in the markets lately, the action in the volatility pits. investors betting big on volatility this year with nearly $2 billion floating into volatility etfs, they're looking
for a way to play potential market moves, as the fed gets ready to raise rates. the question is whether it's a good idea. joining us now is jeff killberg. welcome! >> hey, kelly, how are you? >> great, thank you. what does it say to you -- let me just put it more bluntly. is it a good idea to buy volatility etfs? is it a good investment? >> well great question kelly. here in chicago, we're fired up about two things. one, about the blackhawks but second, volatility cominge inging back into the markets. some of these passively managed volatility strategies like these etfs and etns, they are a big headwind for folks to hold long-term. if you can time it right and you know when that volatility is going to happen, yes, some of these etfs work, was i think from a volatility perspective, we're seeing open interest in the june options here in the pit behind me explode to the upside. people are expecting this but
look for actively managed volatility. we talk about that in our fund that we manage. we have to actively manage that fund kelly. >> guy, i raised the question because i think a lot of people see etfs and they think that the vex looks like -- they're not all the same. do you think investing in volatility as a retail investor is a good idea? >> no unless you have something like killer on your side the short answer to that question is no. i don't think they're investment vehicles i think they're absolutely trading vehicles. if you want to take it one step further, in the old days it was two times odds then five times odds now ten times odds. and we have these etfs that are short etfs. kevin can speak to this i'm sure. they're not for the investing public they're for intraday trade vehicles to offset some individual stocks. but you don't invest in these, no. >> i've never met anybody that can explain to me how the vix works.
so you know if i can't read a two-line paragraph on why and how, i don't touch it. i don't touch the vix. >> come to chicago, mr. wonderful. come to chicago. >> i'm curious, jeff if there's any way to protect against volatility in the bond market. you're not really seeing it in stocks. you're seeing it in bonds and foreign exchange. in fact, mario draghi of the ecb said today, get used to volatility in the bond market. >> absolutely, great point. and volatility cannot be contained into an asset class. but to guy's point, some of these etfs are not long-term change. you have to be tactical, but you have to think about the vix, which is not investable. it's a calculation. play in the futures or the options market. the vix is a mean reverting product. what does that mean? historical average, which is 19 once we see the fed lift off the throttle a little bit, we will see volatility come back and markets will normalize. but the key component to the volatility is watching the treasury market. >> and sarah, to your point, a
note yesterday entitled, move over vix move being the acronym on the treasury markets. so guy, if they wanted to wade into that trade, if you really really want to make that trade on the ten-year volatility i guess move is the way to do it. >> volatility in the ten-year will come in the form of rates, in my opinion, going higher. if they ratchet back lower, it's going to be a grind. so the volatility will occur if rates spike higher. you can play that with the offset of the tlt, which is the tbt. if you want to be in it that's the way i would do it. but to try to trade vol in the bond market, they're professionals that have a very difficult time doing that. it's not for the home game players. >> the widow maker trades. we'll give you a quick last word to defend it before we let everybody go here. >> i think volatility is an asset class, unique portfolio protection. and you always buy insurance for your house, why not buy insurance for your portfolio, right, mr. wonderful? >> tracking error, tracking error. that's what i worry about on
these etfs. >> and don't get kevin started on housing either. thanks a lot jeff and guy, really appreciate it this hour. >> bye-bye! >> stick around to catch more of guy adami coming up at 5:00. analyst rich greenfield is getting called out by a prominent ceo and you'll find out why when he joins "fast money" all coming up at 5:00. coming up we've got an earnings alert with our morgan brennan. >> hi kelly. five below, the teen and pre-teen retailer put out earnings that were better than expected, a one-cent beat 8 cents adjusted per share, versus the 7 cents expected by analysts. also a beat on the top line $154 million in revenue versus $151 million estimates. strong q2 and full-year revenue guidance as well. that was better than expectations on both of those fronts. so we're seeing shares of five below up about 8, almost 9% in after-hours trading. back over to you. >> another nice pop. all right, morgan thank you. one of twitter's largest shareholders isn't too happy. up next chris sacca joins us in
a first on cnbc interview to explain why he thinks the company needs to make some major changes and fast. and jpmorgan's ceo, jamie dimon, is now reportedly a billionaire. that's good news for him. the bad news he joins two other banking execs turned billionaires that he might not want to be associated with. we've got those details coming up. you're watch cnbc, first in business worldwide.
welcome back. a major twitter shareholder calling for some big changes to the social network today. lower case capital's chris sacca said a conversation he had earlier with jim cramer inspired him to put the note out. cramer's been a vocal critic of ceo dick costolo. >> i believe that twitter remains a gold mine and while i thought they had figured out a way to mine it i was wrong. to mine the goal twitter has to figure out how to make it more accessible. and while it is cool well cool's not translating into numbers. how can this decree be reversed if it keeps failing, someone else will take care of twitter. i don't think most investors are going to be that patient. hence, again, more pain. >> well chris sacca joins me now, in a first on cnbc
interview, along with our very own julia boorstin. welcome to you both. so chris jim suggested prayer. your suggestions have more to do with live channels and a save but the non what do you think twitter really needs to do here to increase the use of this product? >> i think twitter just needs to go out and court the next few hundred million users. incremental changes to the existing product aren't going to do it. but there are people out there looking for an easier way to see tweets an easier way to participate in the network, and they want to feel like they're there, engaged, having fun. they're appreciate there had. and i think there are clear steps to get the product in that direction. >> you were positive about their acquisition of periscope for live video. one of the things you want to do is an app called nuzzle which has a way of taking content and making it more readable like a newspaper, from twitter. is this something they'll have to do by acquisitions or is this something that if dick costolo woke up tomorrow and decided he wanted these additional features, these buttons that you mentioned, he could and should do it?
>> there is an easy path to go and acquire some of these companies, but they could do this stuff organically, but they haven't done it for years. these are conversations we've been having for a long time inside and around the company, so as a shareholder, i want to see them execute on this stuff. i think it can be so much easier to see the great news that's happening there, see the great photos and videos follow live events follow a topic or sport if that's all you're interested. i think these are obvious paths the company can go down and they'll court the next few hundred million users very quickly and very easily. >> hi chris, julia here. you did not comment specifically on ceo dick costolo and whether or not you think he's the right person to be running the company. what do you think? >> if they execute on the kind of ideas that i put out there, which aren't my ideas alone, but the ideas of many people who cared about this company for years, no one will be asking those questions about dick in the months ahead. if this is not the stuff they're working on and they can't get this stuff done i think the board will act in the interest of the shareholders. but i, as i note in the memo am
optimistic about the direction they're moving in with a few of their recent product launches and i hope they go farther and faster with that stuff. >> now, you say you're not an activist shareholder, but you just wrote this 8,500-word missive about what you think twitter needs to do. the implication is that you're going to sell shares if you don't see these changes. >> i'm not out there selling shares. there's no punitive result if twitter doesn't do this kind of stuff. it's just i was literally one of the first investors in the company, an adviser of the company since its early days. i have 1.5 million followers on twitter, i use it every day, it's influenced every aspect of my life. i'm obsessed with the company, and men you're obsessed for something like this for nine years, it turns out you probably have a lot to say about it. when you care that deeply about something, you want to see it reach its full potential, and that's what i would like to see with twitter at this point. and i think it's not actually that hard. >> and yet, chris, you seem to be at odds with other twitter investors like fred wilson who replied to your indication that you would have some suggestions
about the company this week by saying, i own a lot of twitter and i'm a big fan of the company and of dick. what more do you have to say to fred at this point? do you think hays wrong about the company's prospects? >> no, i think fred was jumping into a conversation and critiquing me before he actually saw what i had to write. as you saw on the post it wasn't a hit on any member of the management team at all. and i think fred was out of line actually preempting that in any way. and he questioned my loyalty to the company and i pointed out, you know he sold me a ton of stock well before the ipo. not traditionally the hallmark of someone who's loyal to one of their start-ups. >> ouch. understood. chris, how much of an investment do you have in twitter at this point? >> i don't disclose it. i own a bunch personally and a bunch through other funds. it's enough that i care enough to spend a long time writing 8,500 words about a company. >> i mean chris, you say you're not selling shares rate now, but the question is now that you've laid out your vision for the company, the changes you want them to make and there's a great urgency to a lot of these recommendations, what's going to influence your decision about how many shares you might sell
and when? >> look i don't think about this as a sell. i -- you know my basis in this stock is probably south of a dollar a share. this is all upside for me. this is something i hold personally in trust for my kids. this is a very very long-term hold. and i know this company is going to be massively more valuable than it is today. the urgency comes from frustration that these ideas that i wish had been executed upon years ago, could easily be done now. i want to see the company moving in this direction. if this team is doing that then i'm psyched. there's no selling on the horizon. if the team isn't doing that i'm confident this board is going to act in the interest of shareholders and they'll look for other alternatives for the company. but i don't see the stock going anywhere lower than it is today. this company means too much to the online ecosystem. it has too much potential for advertising. microsoft, facebook google would all want to own this economy. so i see, we're at a floor right now. what i'm more interested in is the prospect for this stock being two, three times more valuable. >> and it seems like many of
your recommendations are advocating for a pretty fundamental change in what twitter is. you're saying there needs to be more human cureation. you're advocating it be broken into a number of different apps more like a portfolio of apps. do you think twitter could make all of these changes as quickly as you'd like without it alienating at of users? isn't that a big risk? >> yeah if you read what i've wrote, nothing has to actually change the core feed. i believe the raw feeded is a beautiful, beautiful thing and it's amazing to see the impact it's had on the world. but there are hundreds of millions of users, actually close to $1 billion who have come to the site and not found what they're looking for and abandon it. and those people are looking for something easier, less intimidating. so these are paths by which twitter could do go down toic ma it much more approachable engaging and fun. if twitter bought nuzzle tomorrow and labeled it twitter news, they could instantly have access to all of the best linux that are all happening on twitter, arranged in a really easy-to-digest way for any user
whether they're logged in or logged out. it's just not that hard to go ahead and try some of these experiments. >> meantime, chris, you have mentioned a couple of potential suitors for twitter. how good of a fit would this company be for google? we asked a google shareholder last hour and he thought it would be a great use of google's cash? >> i think it's a fantastic use of google's cash. it's up to this board to figure out if that's something they want to pursue. i don't think there's any religion on this board about remaining an independent company forever. that said, right now, i think a lot of the board members see these types of recommendations, see this kind of potential for the company, and realize, there is a lot of value in keeping it independent for now. i think if they ever achieve any doubt or start doubting those prospects, they'll look for those other options. but from the google side it's an instant fit. this is the thing that google has never had. they've never understood social have never understood those personal interactions. this bolts right in cleanly. >> you do think for the time being that twitter would be better off as a to stand loon company, or is there something
that google coming to the table with its resources or just impetus for change could affect here better for the company in the long-term? >> if the company just is working on the stuff that i'm talking about, then it's much better for this to be an independent company, because there's so much more value to be unlocked there if they're not, then google should come in and buy this thing, facebook should buy it, microsoft should make a bid. but if this stuff is actually happening and the company is listening to these types of recommendations, then will will undoubtedly be hundreds of millions of new users, happy users, engaged users, seeing more ads, buying more stock, and increasing the value of the shares. >> we'll leave it there, chris. thanks so much for joining us this afternoon. >> thank you guys. >> chris sacca, our julia boorstin, as well. julia, thank you so much. more details now on the fifa scandal. eamon javers has the story. >> we're learning a lot more now about the depth and breadth of this fifa investigation. the courts have just made public now a fascinating and long-secret document. this is the transcript of the moment in which chuck blazer
pled guilty and agreed to cooperate with the united states government in their investigation. this happened back in 2013. the document has been under court seal since then. now we're getting our first look at it. remembering quickly who chuck blazer is. he's the american official who was a high-ranking executive within the fifa power structure. he's been active since the early 1990s, and awarding a number of world cups and gold cups, a lower level soccer tournament. a couple of points i want to bring you, according to this document just released by the courts. he said he helped to facilitate the acceptance of a bride, in conjunction with the acceptance of the host nation for the 1998 world cup. he also says i and others agreed to accept bribes and kickbacks in conjunction with the broadcast and other rights to the 1996 '98, 2000 2002 and 2003 gold cups. he also admits in the document i and others on the fifa executive committee agreed to accept bribes in conjunction with the selection of south africa as the host nation for
the 2010 world cup. so we're getting a lot more detail here about what it was that chuck blazer agreed to plead guilty to. and then the next question kelly, in all of this is going to be, what exactly did his cooperation entail? what did he turn over? what wiretaps documents, et cetera, are there that we still don't know about? >> eamon javers, thank you so much. most billionaires made their money either starting a company or inheriting one, a fortune, that is. but jpmorgan's ceo jamie dimon just did it in a highly unusual way, by being a professional manager. and you may be surprised who else has managed that feat. that's coming up next. and the first rule of drone fight club is do not talk about drone fight club. we're not just talking about it. we're going to introduce you to one company that's trying to turn drone fights into the next big sport. hoping i can say it right, that's coming up. ah! aflac? aflac! i thought you said this guy was the best?
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to move your company from what it is now... to what it needs to become. welcome back. a pretty strong session today for the financials. jpmorgan leading the dow up about 1%. or bank of america up 1.5. wells up 1.3. citi up 1.6, and a host of reasons why. jamie dimon joining another elite group. the jpmorgan ceo is the latest financial executive to have a net worth of more than $1 billion. is it a club he nearly wants to be a part of though? cnbc's robert frank is here to explain. hey, robert. >> i wouldn't mind being a part of that club kelly. generally speaking ceos who didn't start their own companies rarely become billionaires but jamie dimon is now one of them.
bloomberg saying today that the ceo and chairman of jpmorgan chase is now worth over $1 billion, thanks in large part to his jpmorgan shares. his shares valued at just around $500 million. he has real estate worth over $30 million, and the rest comes from his compensation and investing the proceeds from his previous stint at citi group. dimon has, to be sure created a lot of shareholder wealth since becoming ceo. $110 billion, to be exact. the share is up more than 70% since he took over in 2004. dimon is not the first professional manager to become a billionaire. that title belongs to roberto goizueto. and jimmy cayne was a billionaire before that company nearly collapsed and was sold off to jpmorgan. and dick fuld the ceo and chairman of lehman group, he became a billionaire in 2007 a year before lehman became the biggest bankruptcy in history. now, jpmorgan clearly hoping this time will be different. guys, back over to you. >> robert stay right there.
we've got to get thoughts from the panel on this. kevin, what do you think? >> it's remarkable, because if you look at the tenure of cfos and ceos in today's s&p 500, very few last more than ten years. the turnover is extreme, because the market wants performance. if anybody can become a billionaire because of a long tenure period, you know in the case of jamie dimon, he actually delivered that value to all his shareholders and himself. i'm cool with that. >> some of the wealth goes back to citigroup as well. >> but you only get about 36 months now. if you're put into a troubled situation and you can't turn around and the stock doesn't reflect value, you're taken behind the barn and you're shot. >> i find that interesting. the last time we heard from jamie dimon was actually criticizing proxy firms like iss who went against his pay packages and actually criticizing the shareholders -- >> and criticizing the firms to some extent as well. >> but half his worth is in the stock. he is right there beside his shareholders. he is tying in with them.
>> what you're sort of saying is incentive-based stock comp is as much as a problem as a -- >> i never said that. i believe you align yourselves with your shareholders. my point is if you're brought into a company, particularly one that's a turnaround situation, as a f foghcfo, or even a cio, there's a lot of volatility in those positions if you don't show performance. if you're a cfo or ceo, it's the stock price. >> robert you know who you should get for comment on this story is mark mayo the analyst. didn't jamie dimon say one time i'm richer than you, one time when responding to a question. >> americans are of two minds when it comes to wealth. we're fine with billionaires becoming billionaires, but that's because most of them created their own companies, taking huge risks, you know mortgages, dropping out of college, in the case of zuckerberg and bill gates, and fine with that. but the idea that the quote paid help, and they are very paid highly paid individuals, and high executives that the managers that are professional
managers of long-standing existing companies can become that wealthy -- that i think, got a lot of cross-currency at least the time that dick fuld and jimmy cayne got there. i'm not hearing it as much this time. but i think that's the issue. >> and robert we've got to wrap it, but listen it is interesting that this is happening again in the financial sector. maybe it's because of some of the rapid rebounds that we've had in these share prices. but, the comp when you look at some of the media industries and tech to some extent. if we're not minting the next billionaires managers those companies, i would be shocked. >> absolutely. and it's purely a function of shareholder value. i mean, jamie dimon is 0.5% of the total shareholder value that he's created. by that metric it's relatively normal. but to a lot of people a ceo who didn't start a company becoming a billionaire, that's rare on the forbes liz. >> thanks robert appreciate it. time now for a cnbc news update. hi, sue herrera. >> here's what's happening at this hour.
the fbi has released its complaint against david wright accusing him of conspiring to randomly kill police officers in massachusetts. the knife-wielding raheem was shot to death by anti-terrorism task force officers that had him under surveillance in boston yesterday. the senate beginning debate on a $612 billion defense bill despite democratic opposition and a white house veto threat. john mccain, the chairman of the senate armed services committee, says he expects at least 100 to 200 amendments to be introduced. by an 13-1 vote the l.a. city council tentatively approved a minimum wage hike to $15 an hour by the year 2020 for hundreds of thousands of workers. because the vote was not unanimous, the ordinance will return for a final vote next wednesday. and taco bell says it will serve beer wine and mixed alcohol freezes at a new location set to open in chicago this year. yum brands the owner of the chain, says that concept has
already been launched in south korea, japan, and the united kingdom. that's your cnbc news update. cheers kelly, back to you. >> i'm still getting used to seeing a lot more alcoholic beverages in a lot of the fast casual chains. it's a whole new world. >> it's a whole new world. indeed, it is. three major corporations conspiring to crush the competition. sounds like it could be the plot of a summer blockbuster, but the justice department wants to know whether that's exactly what the big movie theater chains are doing to the expect ones. details on this film drama are next. and moving people by rail well it's a pretty unprofitable business in measuring. so why does one european company think it can make money where so many others failed? we'll hear from the company's ceo, coming up on the "closing bell."
now with the xfinity tv go app, you can watch live tv anytime. it's never been easier with so many networks all in one place. get live tv whenever you want. the xfinity tv go app. now with live tv on the go. enjoy over wifi or on verizon wireless 4g lte. plus enjoy special savings when you purchase any new verizon wireless smartphone or tablet from comcast. visit comcast.com/wireless to learn more. welcome back. it was pretty much a green session today for the media stocks. viacom leading the way there, in terms of the one we're showing up 3%. but comcast, our parent company, news corp., cbs, all turning in a decent bmpbsperformance as well. this as regulators are closing in on hollywood, both here and abroad. the u.s. justice department is continuing its probe into the
largest theater chains amc and sin cinemark. ramifications could impact ticket prices and profits. joining us right now with his reaction to all of this is hollywood veteran, mike metevoi, ceo of phoenix pictures. mike, welcome to the program. >> thank you. i like the veteran part of it. >> well listen we're looking at some of the movies you guys have produced talking about "black swan," "shutter island" and "holes." these are major pictures. have you ever had any trouble getting these pictures distributed to independent theaters? >> i mean you have two separate issues here, right? you have the issue about the theaters in their relationship to the studios in what they can release and what sort of difficulties people have in terms of getting them into the theaters. and then you have the issue of the european union deciding on whether to have, you know, a
single market. >> right. >> when in effect, they're really 28 -- you know there are 28 different countries, every single one of them with different rules. >> and we'll get to that piece of it in just a moment. but especially for people here right to figure out what's happening in their local theater, is there an issue with the majority chains not allowing local independent rivals to show big films like yours? >> well they've been -- you know, my films have been released by majors so i don't have that problem. i go through them you know? but, you know, this problem has existed forever. i mean i remember it when i was at united artists, you know we had certain customers that we played, other studios had other customers that they played. you know that has changed over the years, but very little. the truth of the matter is that there are a few, you know, major cinemas, you know, cinema companies, that you know, that kind of control the landscape,
and this has been in the court for years. so, how it breaks down i have no idea but i'm sure you know, i think i noticed there was some small or smaller, you know, sin mas in texas or somewhere else that you know, had a problem, because they wanted certain pictures and were blocked out. >> exactly. >> kevin? >> that -- you know that does? >> let me ask you a question about this whole concern. why do i care when i know in the next five years, the way to make money off a picture, including the one you're going to make so to deliver it to me digitally, directly to my home. who gives a damn about what happens in the theater. i don't want to sit beside some snot-nosed kid. i'll pay you -- does this really matter in the long run? this is like talking about dvds or cd roms. who cares? we know it's all going to go digital direct. why bother.
>> mike? >> well i mean you know the theater experience is always different, you know, than the one you get by looking at your ipad, or even at your computer. i mean -- or your telephone, and i guess, eventually you can see it on your watch. that's a different experience. and the idea is that moves will get made for one experience or another. i mean you know, there are theaters of course that today, have you know, restaurants, actually, you can go to a theater, spend your $20, and get a meal. so you know, i don't think that experience is going to change. i mean the question is you know, i think -- and i have been thinking this for a while. is that, you know, hollywood is only making those kind of big movies and waiting until october, november december for the academy pictures to come out to see if they can grab one that plays to a larger audience. and i think it basically dictates the kind of movies that get made. and that i think, is a problem.
>> one of many it sounds like mike, in a fast-changing industry. appreciate your perspective on it this afternoon. >> you're welcome. >> that's mike metevoi, the ceo of phoenix pictures. we have a news alert on fireeye, meantime. >> so fireaye and visa are partnering up on a joint project that will combat cyberattacks. it's going to be called community threat intelligence, to allow merchants and issuers to quickly detect and respond to attacks against their i.t. and payment infrastructure. checking shares of fireeye on this announcement within they're up about 1.5%. back over to you. >> all right, morgan thank you. it's a common belief that passenger trains just can't be profitable here in the u.s. but my next guest is trying to prove that belief wrong, by bringing euro-style trains to america. the ceo of leo express is here straight ahead. and two drones enter, one drone leaves.
that's the rule of a brand-new drone-fighting competition. we'll hear from the inventor of this brand-new sport ahead ton "closing bell." it can quickly become the only thing you think about. that's where at&t can help. with innovative solutions that connect machines and people... to keep your internet of things in-sync, in real-time. leaving you free to focus on what matters most.
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the public lighting authority had a hard time of finding a bank. citi did not run away from the table like some other bankers did. citi had the strength to help us go to the credit markets and raise the money. it's a brighter day in detroit. people can see better when they're out doing their tasks, young people are moving back in town the kids are feeling safer while they walk to school. and folks are making investments and the community is moving forward. 40% of the lights were out, but they're not out for long.they're coming back. welcome back. it was a down session for crude today, giving up about 2.7% closing at least there below $60 a barrel as we await that opec meeting later this week. there's a look at the dow transports, by the way, up not surprisingly, in conjunction with that but man, they've had a tough time trying to break out
to new highs after closing back in december of last year at a high water mark they have yet to surpass, up to 1.2% today. and if you've travelled in europe, you know the railways are fast efficient, and cost-effective way to get around. but here problems with infrastructure have made the experience quite different. now leo express is working to bring its euro-style trains here. and for more on the challenges ahead, let's bring in leo express ceo, leo sevatny. >> thanks for having me. >> what do you want for america's railways? >> we want to do what we've done in europe. that's where i have to disagree with your opening statement a little bit, that european railways are not efficient, i don't think. we're looking at european railways still running at about three times higher costs than we have, as a private company. so we're looking at replicating the same model here in the united states. >> at the same time, american private companies haven't really
champed at the bit when they've gotten the opportunity to take parts of amtrak private or expand passenger rail elsewhere in this country. what is it about your approach that you think can make it different this time? >> first, there's a lot of car bias in this country and a lot of highway, lobby to construct more highways car makers producing and selling cars and we -- we're looking at it from a whole different perspective. we're looking at delivering a full door-to-door solution whereby we get you at your house, bring you to the train, take the train, then you can take the next leg with our buses, for example. >> so uber for the railways it sounds like? >> we work with uber we do. and what we're interested in looking at is how can we bring, you know eco-friendly clean tech sustainable for-profit business on to something which has inherently been lost making
and inefficient, because it's run by the state. >> when i ting of infrastructure spending and railways i think of government i subsidies, but your model doesn't rely on that at all. >> i don't. what is it exactly? >> we buy our own trains. we rent public infrastructure. that's the same thing we can do here in this country. and we basically operate on rented infrastructure. we don't need to build new tracks. we just use whatever is there. >> isn't building new tracks what this country needs? >> no not at all. >> really? >> this country does not need new infrastructure. >> isn't this a huge geography problem? in europe i was just there last week you used the tsb between geneva and paris for efficiently than aircraft. it's the same time. i can only think of one market in america where that's relevant, new york and boston everything else sucks because the tracks are too slow. they don't support 120-mile-an-hour train. i don't want to sit in a train for eight hours to get to chicago. that's not interesting. a last word leos? >> you don't have to have
high-speed rail infrastructure. you don't need to fly before you run and walk. i'm saying we can bring modern trains complimentary wi-fi catering, and all of that to your seat and bring that in two years on existing infrastructure, which we can rent from public agencies or freight rail roads. >> i know you can't get specific, but we'll be keeping an eye on this area to see if your trains start popping up. thank you so much, leos novotny from leo express. we have two ceos walking into a bar, and not starting a joke, it's our weekly raising the bar series. we'll hear from ceos on hiring practices and how they're keeping innovation alive. and there's a new extreme sport in town and it's done cage matches. we'll head live to a drone fight club in silicon valley, "closing bell" is back in two.
one of my favorite is keep pet odd weird. for us weird is about embracing diversity of thought. we want as diverse as possible if the way they think, backgrounds. so i wouldn't say by any means we hire for a definition of cool, we hire for people who have a really strong point of passion and a diverse set of skills. >> i learned that later, i totally agree with you but in the beginning i was hiring people very much like me. i didn't hire mba's in the beginning because i didn't have an mba and i -- whether i was intimidated by them or -- i did have kind of an issue before but terrible move bad decision. so you can't have everyone the same. so i learned that. >> yeah. >> another challenge mistake that i made early on. >> for more on what bare minerals leslie had to say with eric head to cnbc.com. they are not out fighting -- they are not out beyond the wall fighting white walkers,
these drones are fighting each other. clearly i'm pissing a reference here. josh, what's going on in silicon valley? >> well, kelly, forget flying drones just for fun or capturing cool video. now it is all about full scale drone combat. that story coming up for you next on "closing bell." m only in my 60's. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call now and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans it helps pick up some of what medicare doesn't pay. and could save you in out-of-pocket medical costs. to me, relationships matter.
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the drone market. china's largest smartphone maker is now gearing up to make affordable commercial drones looking to take some of drone maker dgi's market share. they have met yet to make the announcement official. they have already constructed their first drone test flight. drone competition in silicon valley is getting -- fight clubs. josh has the story. hi josh. >> what you're seeing right behind me here is full scale drone combat. and here is how this game works. you can see two drones compete and the first one to hit the floor is the loser. now, the company behind this is called game of drones they put on competitions about once a month here in san francisco, about 100 people show up to compete and game of drones also sells a range of drones ranging
in twice from $650 to $140. the drones you're seeing are designed for these cage matches, you but the company's founder says this is just the beginning of what he thinks is going to be a global sport. >> if you look at say, x games or the rise of skateboarding and those sports we see drone sports having the potential to eclipse the size of those activities simply because we are crossing electronics and video games and sports. you get to get outside and play you are not struck behind a console and a tv. now, consumer interest in drones we know is red hot, projected to be a $1.7 billion by the end of this this year. this company is also capitalizing on that competitive video game space or e sports which is itself a $600 million market. game of drones says it's going to introduce its next drone next year and that's going to come out with its own camera capable
of capturing all that flight video. kelly, back to you. >> josh thank you so much. josh can i just ask have you tried to fly one of these drones yourself yet? had >> reporter: i have not actually tried to it fly one of these drones kelly. i have tried to fly them in the past. believe me these guys are doing incredible work it's a lot harder than it looks. >> josh lipton thank you so much. it does a person have to be involved for it to be a sport? anybody? >> i don't know. i just want to know about the safety of it. i can't get the image of enrique eeg lace i can't say getting injured. >> he needed hand reconstructive surgery. >> the blades are going incredibly fast they're sharp. i've tried to fly three of them it's not easy. >> no it's not. >> it's not. it's not easy. i think they really have to make it a lot for consumer friendly before they realize that billion 1/2billion
and a half market. >> it's nothing to can dismiss out of hand that's for sure. >> next wave of consumer products. you should know the white walkers on game of thrones an epic episode. >> i had no idea what that's referring to. >> you should catch up. >> quickly recapping the markets, the nasdaq almost going out at a record high. kech, are you buying stocks? >> yeah. i look at my assumption now we have a decline in the price of oil again, we may get a real lift q 3, q 4, costco down consumer have more dollars, i'm bearish on energy and i love what i'm seeing on the ten year. that tells me -- it's kind of perverse but tells me good things are going to happenen o earrings. >> 225 expected on jobs we saw good adp today. we will see if the unemployment rate stays at 5.4%. >> "fast money" gives in a knew seconds.
melissa lee, drone wars what did you think about that? >> i think that's cool personally. one of these guys on the desk here kelly, been hacked. we don't know which one, the ceo of a cybersecurity it company will will tell us how he hacked one of these traders and we will trade cybersecurity space into i've got to see this one. >> "fast money" starts right now. live from the nasdaq market site overlooking new york's time square. i'm melissa lee. tonight on fast facebook just it did something remarkable and very troubling for google investors. we'll tell you what that something is how to profit from it. >> plus bill gross out with his, quote/unquote, short of a lifetime. we will tell you what it is and if it could make you money later on. >> but first the story that shocked the market bonds krarks the dollar tumbling and oil tanking. are stocks the next to fall? brian kelly, it is rare that you see this degree of volatility across different