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tv   Closing Bell  CNBC  July 3, 2017 12:00pm-2:01pm EDT

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this is typically a week where some companies take some time off around the holiday, but good conversations to be had as people reflect, carl >> yeah, well, everybody, enjoy the fourth let's all take gratitude that we live in the best country in the world. let's get over to the "closing bell," which starts now. ♪ baby, you're a firework ♪ come on, show 'em what you're worth ♪ make 'em go, oh, oh, oh ♪ >> we had to >> you have to understand, i listen to tunes. i don't listen to words. so of course, i recognize that song >> this is katy perry singing "firework. happy fourth of july, everybody. well, a day early. don't adjust your televisions. this is the "closing bell" at noon on this monday. because we are going to close in an hour here at the new york stock exchange >> i'm bill griffeth see, this is what it would be like if we anchored "closing bell" on the west coast, right we're three hours earlier. pay attention here, stay with me
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>> yes, this is the last hour of trading on this shortened market day and there are fireworks in the stock market a pretty good start to the second half of the year, right >> extraordinary we are up 200 points just a second ago all-time intraday high for the dow and all-time intraday high for the transports look at financials and energy leading the way, some of the laggards for this year and tom mcclellan will tell us later why he thinks the bull run is forar from over a new report this morning says president trump's chief strategist, steve bannon, is pushing for a tax hike for the upper income bracket we'll get you those details. >> you're on a roll. do you want me to pick this up >> tesla, yes, it's true the model 3 is on its way and the stock market was higher earlier. it's given up many of the gains here ford and general motors are powering higher after their auto sales numbers came out we'll tell you what's behind all these moves, coming up in fact, tesla says it looks like it wants to turn positive once again
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>> i'm trying to stay focused here >> yeah. failed >> let's start with the markets. why not? big rallies hear the dow hitting those all-time highs. transports doing the same. first time we've seen the transports hit all-time highs since early march. joining our "closing bell" exchange, this early monday, kevin karone is with us, steve grasso from stuart frankel is on the floor, as well or are you at the post i can't tell >> on the floor. >> on the floor. >> he can't hear what i'm saying, anyway >> i'm on the floor. >> rick santelli is at the cme in chicago steve, what about this rally it could not be any clearer. you've got the financials moving higher you've got energy moving higher and technology moving lower today. what's going on here >> it's exactly the case and you know, we've talked about how bearish i was on oil and then oil, that long-term level of support, which is $42, it bounced right around that level, bill and then it gave people the
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ability to rotate into those underperforming assets, financials, energy, sell the tech, sell the large-cap tech. think about it this way. if large cap tech is up 14% year-to-date, xle is down 13% or thereabouts year-to-date where do you think that performance is going to come from in the back half of the year where's the next 10% additive to your ortfolio? the risk/reward is xle and xlf, better bang for your buck. >> kevin, meantime, i thought you had some interesting comments about wealth in this country. we talk a lot about the stock market, but we're talking about so some big, round numbers that the american household is approaching. what does that tell you? >> yeah, you're going to probably get to a level pretty soon where household assets are going to get real close to $100 trillion so this is a high water mark it's three times the level of net worth that we saw just 30 years ago. so wealth is factoring back into this it's helping households improve their balance sheet. and when you combine that with a
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better job market, then overall, the economy feels good so you get the pmi number you got today, and this is helping the psychology of the investor as we move into the summer >> rick, we continue higher with those yields i want to put you on the spot. have we seen the lows the for the year, do you think >> yes, i think we have. >> okay. >> but i would also almost equally say that the 260 high of the year is going to be difficult. it's going to be difficult to challenge that level let's put a face on what bill's talking about. you know, boon yields today traded higher than their highest 27-yield close but they backed off, just a bit. their high-yield close of the year is 48 basis points and change they came wan whisker of 50 basis points should they ascertain 50 and i'm pretty sure they will, pretty soon. that would be the highest yields we've seen since the beginning of 2016. the other thing going on is, is that all global rates seem to be hinging on much of what's going on in europe i call it the year of mario.
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and i think it's going to be the year of mario. because the real issue is, is there really a taper in the works? this is a huge question. you know, we pointed out last week, that we saw a bit of a scare. bo bund yields popped up over 20 basis points for the week and everybody marched in lockstep. but what that turned out to be is, every monday, as ira pointed out, how much the ecb buys is out there. well, they used all of their bullets early, didn't have much left, that's what traders were focusing on. but now it's caused a series of events that could open the horizon to many of the issues that investors worry most about, higher rates but it isn't necessarily bad you see what the equities are doing, bill? i think that continues we could all argue, for how long mario draghi is going to get away with this, but my guess is, a lot locknger than most of us think. >> it has to do with the leadership in the equity market, too. the first half of the share was technology leading the way now at least for this day, it's the financials and the energy stocks by the way, alert "time"
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magazine, we have already decided, it's the year of mario. there you are. >> i was going to ask steve about what we're seeing in those manufacturing numbers this morning. rick kind of mentioned this, steve. but i saw some economists saying, wow, maybe the manufacturing sector is maybe at an inflection point here, have been so how do you -- does that make the industrials or materials attractive or is that reading too much out of a strong report >> it is probably reading a little bit -- it is a little bit of a knee-jerk reaction, kelly, but i think it's more goingto hinge on the dollar and the dollar starts to rally, i think a lot of different areas and sectors could see a lot of knee-jerks, as well. if you look at the back half of the year, though, if we don't need tech to just dive off a cliff for financials and energy to rally, we need tech to hold and if tech holds, then those two, energy, financials, will take us over the goal line, and that's what will push this market to 25.50 in t50 in the s.
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look at what it's done in the year of draghi look for that to have further gains. >> you know, kevin, a halt, what about technology here? a hallmark of this bull market since 2009 has been the ability to rotate from sector to sector to sector, even as the whole market that major averages continued higher is that what you think we'll be seeing here for at least the foreseeable future as the previous leadership technology is faltering and now we have new leadership in the equity market here >> i think so. i don't make much of it. it's a lot of churn. you had a big pop in technology. maybe it got a little ahead of itself and valuations got a little stretched but you're now seeing the revival of this, what you see the reflation trade last year. you're seeing it in financials and a steeper yield curve and in energy but the underlying message is that most of the data is strong. and ultimately, as the economy grows, technology has got to be a part of that so if you're a longer term investor, technology will be a part of your portfolio
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but for the time being, perhaps it just takes a little bit of a breather, as the reflation trade, part ii, gets a little bit more life in it. >> you know, we don't give health care a lot of, you know, time, steve, but look at humana, that's one of the names near all-time highs today it's not as exciting as technology, but it sounds like it's not being derailed yet by all the turmoil in washington over the future of -- >> well, it's actually outperformed so xlv, if you look at the health care index, has outperformed the xlk but recently, kelly, we've seen regulation come off -- or we shouldn't -- i shouldn't say it's come off. nothing's been done. but when you look at what the initiatives and what the focus are, it seems that the trump administration is going to be a lot less onerous than we once had thought, and that's why you've seen biotech run and health care run. so i don't necessarily think that thaey do have to do anything, fortunately, for them. >> gentleman, thank you. steve gets the award for the
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cutest kid on the familiar of the new york stock exchange. thank you, all happy fourth of july >> you, too. >> auto sales slowing in june, even as tesla is getting ready to launch the first of its model 3 vehicles let's get to phil lebeau for all the latest phil >> kelly, the headline numbers for june sales, not terribly impressive for the four largest automakers in the u.s. let's take a look at them. and when you look at these sales, keep in mind, this is in comparison with june of last year three of the four were up relative to estimates, that's toyota, that's also ford and fiat chrysler, doing just a little bit better than expectations but underneath these headline numbers, the sales really were not terrible you've got to look at the retail sales. and in that area, pickups and suvs remain strong average transaction price, that's what we pay when we're at the dealership, it was up slightly compared to last year, at almost $34,500. and then the june sales pace estimate this always gets a lot of attention. we'll find out the final number a little later on today. supposed to come in at 16.6,
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$16.7 million. put all of this together and that's one reason why you have the auto stocks moving pretty -- a nice pop today, especially general motors and ford. keep in mind, these guys have been beaten down they have not been rallying with the rest of the market over the last six months, so this is welcome to ford investors and to general motors investors now to the tesla story and a series of tweets that came out late last night from ceo elon musk. the one that got a lot of attention is when he said, hey, folks, july 28th, that's when the first deliveries will take place for the new model 3. hand over party for the first model 3 customers on the 28th. production grows exponentially, so in august there should be 100 cars september, above 1,500 and then what happens after that, well, eventually, by the end of december, the production rate, at least according to elon musk, will be 20,000 vehicles for december again, that's the production rate that doesn't mean they're actually going to have 20,000 vehicles rolling off the line in
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december shares of tesla were higher earlier this morning, but they've given back most of that and now have moved slightly negative guys, we've talked about this for some time. july begins a very busy second half of the year for tesla, not only in terms of the autos, but also when you talk about the solar shingles and the possibility for a production plant in china a lot of things on the plate for tesla. >> phil, stay there. let's talk about this, look other things john mcilroy from autoline td is with us, as well let's start broadly. where do you see the cycle for auto sales right now are we starting to bottom here or what do you think >> there's no question that sales are tailing off. we've seen that all year long. in fact, if you add it all up, we're probably short about 200,000 buyers compared to this point last year. and we may end up about 300,000 buyers short i think a lot of it has to do with interest rates going up, pushes some people out to the margins.
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the big lenders are being a lot more careful now as to who they write loans for, not all subprime but there's the other thing, too, that we don't have a full handle on just yet what's the impact of all of this ride sharing and car sharing that's going on. there's anecdotal evidence that this is having an impact, but we don't have any hard numbers on it >> well, john, how about the impact of tesla. as this thing really starts to hit the masses, how do you think that's going to change the auto industry >> up until now, electric cars have been bought largely by enthusiasts, ev ebb thnthusiast early adopters of the technology the ev3 could be the first model that really opens up electric cars to the masses, to the mass market the reason i say that is tesla has gotten hundreds of thousands of deposits on this car. the likes of which, numbers that is, we've never seen happen with electric cars. it could be a tipping point, not just for tesla, but for the automotive industry. >> phil, you know, john brings up an interesting point.
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i was just sitting here thinking about millennials that i know who have been reluctant drivers. >> no, i love driving. but i -- but i don't do much of it lately. >> you're not the only one there are others that i know of, as well. and that demographic play, that's big for the auto industry, going forward, isn't it >> it is and john talks about the impact of ride sharing, car sharing, how much of that going to curtail auto sales in the future look, we're not going to see sales drop off down to 10 million or 9.5 million like we saw when we had the recession. that's not happening you will see a gradual slowdown, almost everybody agrees the forecast called for a slowdown, perhaps as low as maybe the m - mid-15 million range, somewhere around there, in a couple of years. but overall, you're still looking at strong profits for the automakers, relatively speaking, and sales that are relatively robust. the issue is, they are going to
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have to curtail certain models and that's going to be the tricky part for the automakers they have a terrible track record when it comes to being profitable, as the market moves down we'll see if they can manage it this time around >> yeah, that's what makes tesla's entry as this is all happening so interesting but john, maybe we should take a step back and acknowledge they're trying to do something unique here. that tesla is trying to ramp up production in a way even a seasoned car company can't meet. they're taking a risk by skipping these tryouts, which many suppliers do. you know,so, have they proved yet that maybe they can do it differently here >> well, tesla has had a lot of quality problems with its model s and x, but it hasn't turned away buyers. they're willing to forgive this car any problems it has because they're so in love with it but that's been ev enthusiasts early adopters of this technology as you get to the mass market, where this car is going to be
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maybe the primary car for whoever bias uys it, unlike the model s or model x, those people have additional cars in their household. so if they have any quality problems with this, it could be a real black eye for the company. and you're right, they're skipping what in the industry they call tryouts of automated equipment. so when you build assembly equipment at the supplier plant, you want to assemble it within that supplier facility, cycle it, make sure ervverything's running right. and then you ship that equipment to the automaker tesla's skipping all of that in a race to get this car out faster, it's a risk. obviously, they've decided, it's a calculated risk. >> all right phil, good to see you. john, thanks for joining us today. happy fourth of july >> thank you, both >> just a reminder, yes, this is closing be"closing bell" if you tuning in and looking at your
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watch, this is the final hour of trade because the markets opened for a half day today because of the fourth of july holiday and what a first trading day of the second half of the year it has been the dow was up 200 points, the s&p was up, and the nasdaq continues lower. technology continues to struggle here >> it's fascinating to see the disparity there. president trump's chief strategist, steve bannon, reportedly wants to raise taxes on the rich in order to cut taxes on the middle class. and the airport is pushing new airport security guidelines. a new spirit airlines ceo tells us how that could impact the industry overall, coming up. thank you so much. thank you! so we're a go? yes! we got a yes! what does that mean for purchasing? purchase. let's do this. got it. book the flights! hai! si! si! ya! ya! ya! what does that mean for us? we can get stuff. what's it mean for shipping? ship the goods. you're a go! you got the green light. that means go! oh, yeah.
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start saying yes to your company's best ideas. we're gonna hit our launch date! (scream) thank you! goodbye! let us help with money and know-how, so you can get business done. american express open.
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welcome back what a strong day we're having for the dow, the s&p, and the russell. the nasdaq is sitting it out with a drop of more than 0.25% but 156 point gain on the dow to put it over 20,500 today we hit an intraday high earlier. bank rate is among the big winners after the personal finance website was acquired by red venture. 14 bucks a share is the price. that's nearly $1.25 billion. it's about a 9% premium to bank rate's closing price on friday and shares trading just below that takeout level >> i had no idea that bankrate was publicly traded. >> i didn't quite realize that, either >> and not only that, it goes for that price, $1.25 billion. good for you guys! i hope you get a good rate on the financing. >> i hope they compared offers before accepting one >> exactly president trump has been promising major tax cuts, you know, but now his chaief
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strategist reportedly wants to raise taxes for the wealthiest americans. >> you can't completely rule out that the white house will at least consider this proposal that comes from steve bannon if only because the plan is still in flux and we also know this administration can be unpredictable. the white house declined to excellent on the speculation, but back in april, officials say they would streamline individual rates to just three. 10, 25, and 35%. and that's pretty close to what president trump had proposed on the campaign trail, as well as the numbers in the house blueprint for tax reform now, raising the top rate would fly against what republican leadership on capitol hill has been toiling over for months the ways and means chairman, kevin brady, has talked about the importance of lowering taxes for all incomes, and remember, it is up to congress to negotiate and pass tax reform, not the white house. gop leadership and the administration have taken great pains to show that they are all on the same page, meeting
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regularly on kmcapitol hill so, guys, this would be a very public split in policy back over to you >> and ylan, when we saw the reporter on a short time ago, he tried to emphasize, look, the white house would say, we put this issue to rest a couple of mance washingt months ago, but his report suggests that steve bannon keeps bringing it up i suppose he can raise the issue as much as he likes, it's about whether it will gain any broader traction >> that's right. not cutting taxes on the wealthy is something that is obviously going to be politically popular. however, it could cause problems for the republican party you found that over 200 republican members of the house and something like 46 republican members of the senate had signed on to this tax pledge for americans for tax reform not to raise any taxes. so even though amongst the base it could be a really good selling point, you know, when it comes to republican establishment and republican orthodoxy and principle, this is something that is just a
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nonstarter >> all right thanks a lot meanwhile, the u.s. making a push for foreign airports to install explosive scanners in order to ease the proposed laptop ban the department of homeland security has mandated 280 airports which send flights to the u.s. have 21 days to install these scanners >> that's a tight deadline there. in a related move, by the way, the u.s. has exempted abu dhabi's air waves -- how do you say that etihad airports from the laptop ban. they had enhanced security measures already let's bring in ben baldanza, who is the former ceo of spirit airlines welcome, ben thanks for joining us today. >> welcome great to be with you and happy fourth of july >> do you share the sense of urgency out there about securing foreign airports that send flights to the united states >> well, it makes sense to me. if the department of homeland
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security has identifiied a thret from these kind of devices, then the sooner we can get them scanned, the better. and giving them 21 days suggests to me that they already have the ki equipment to do is just a matter of setting up the equipment to do it. >> so that takes care of the issue in terms of the threat that these devices pose? >> you never know for sure security is an evolving thing. we didn't used to have to take our shoes off or use plastic bags for liquids and things like that but as we learned new threats, we did thing it's the next step i would never say it's the last step in security however, this one looks like it's real and looks like airports should be able to handle it pretty well. >> how do you assess the security level at airports these days i remember early in the days of tsa that there would be journalists go through and they would inevitably get something through that shouldn't have gone through. haven't heard much about that lately is security getting better at
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airports, do you believe >> security is good at airports. and the reality is, is you know, we're good at detecting things, and we're good at detecting risks in terms of things we're not so great yet in terms of detecting risks in terms of people and that's obviously a very touchy subject but security at airports is good and strong and tsa does a generally good job, although sometimes we would all like the lines to be a little shorter, wouldn't we? >> i don't even want to get into that blood pressure levels. what's with this 3-d skrani insg push that might become more common >> it's going to become a little more common? today laptops are taken out, but things like tablets aren't we'll be taking the tablets out now. every time there's a change in security procedures, it causes a little bit of delay at the airport as both the airports and the customers get used to it but then it becomes the norm my guess is that the same thing will happen here we might see a little, you know, some friction over the next couple of months, as airports and customers get used to it but it will just become the norm
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and six months from now, we'll just say, that's the way it always was >> just to be clear, is the 3-d scanner the same thing we're talking about for these international flights, or is this a different protocol that even u.s.-only travelers will experience >> well, it's a -- it will be security for the international arrival flights. i'm not sure the exact technology they're going to use to scan the laptops. and i'm sure that they are not making that well known, obviously. because if you know how it works, you can offset it, too. but it will be for those 280 airports and like abu dhabi's already stepped up, they've set up a really good model for other airports to use, just to make sure that the devices themselves don't actually get banned. >> by the way, before we let you go, i was reading some of the notes that you sent us about what somebody, a customer should and should not take on a flight. you were saying, pack half the clothing, but twice the money. because you can buy clothes when you get there. and extra snacks i mean, you make it sound like
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we're going backpacking, not an airline flight >> well, that travel information, take half the clothes and twice the money is something i learned long time ago. it's always worked when you travel every hotel needs laundry, you never need as many clothes as you take, but you always run out of money so pack a little bit lighter, carry everything onboard, you don't have to worry about losing a bag. >> but that's starting to be an expensive prospect >> just buy clothes there and pack them and send them home ben, thanks very much. >> thank you, have a great fourth of july >> you, too. >> 35 minutes to go. dow has moderated a little bit it's up 159 right now. we were up over 200 points closer to the beginning of the session. the s&p is still up 8. it's about a third of 1% the russell is up 8 as well. the nasdaq is down 25. >> and you see us sitting here, that means we're in the last hour of trading. s&p 500 rallying 8% first half of this year, thanks largely to
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technology when we come back, we'll talk about which sectors and stocks are set to outperform the second half of the year >> but first, disney shares are on the rise today on a report the media giant could be a takeover target. we'll have the latest details on the future of disney whewe meack.n and the wolf huffed and puffed...
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rally day to begin the second half of the year, at least for a few of the major averages, all but the nasdaq, as technology continues to stumble.
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today, down 23 points while everybody is partying. shares of eqt corporation have been higher after jana partners took a 5% stake in that energy company. jana wants eqt to call off its proposed $6.7 billion acquisition of rice energy and instead, separate its pipeline business to become a pure energy exploration company. stock up 2.7% right now. >> and how about this one. shares of walt disney are rallying today they're among the best performers on the dow. and a "new york post" report, perhaps, that verizon could be considering a deal for the media giant. an acquisition of disney would help verizon beef up its content offerings and better compete with rival at&t which is in the process of acquiring time warner a caveat being, we've had rumored disney deals time and again. and you know, we want this to be, you know, considered in that conte context. but, because of the way it's framed, with regard to at&t, it
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does make a certain amount of sense that verizon does decide, it should do something more splashily. disney has a market cap of $138 billion. so big business for an acquisition and versus itself is a $183 market cap. >> but they might have a lot of debt i don't know what kind of capacity that leaves them. >> but strategically, it might make sense, but financially, i don't know if they can pull it off. >> if the deal goes through, which still, we have to see if that happens, but that does put them, you would think, a step ahead and more in the realm of a content type >> shares of disney up 1.3%. verizon up nearly 1% telec telecom, the worst performer in the first half of the year time for a cnbc news update with sue herrera. >> here's what's happening at this hour. german police say they have recovered the remains of all bodies onboard the wreckage of a charred tour bus the coach was carrying senior citizens on vacation when it crashed into a truck, burst into
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flames, making that rescue very difficult. in all, 18 people were killed. holiday travelers to denver got to see some fireworks, just not the kind of they were expecting. an engine on a united express flight caught fire shortly after landing, forcing an evacuation but luckily, all 59 passengers and crew made it out safely. playing football may not affect an athlete's mental health quite as much as expected university of pennsylvania researchers compared the rate of depression and cognition between 4,000 men who played football in the 1950s to those who did not and they found few differences and beer drinkers in search of a craft brew can now look for a new seal, as big-name beer looks to take a piece of the popular craft market a trade group representing small brewers says the seal will help consumers pick an independent brew the image will be free to companies who do meet the association's requirements that's the news update this hour back downtown to you, bill >> sue, thank you very much.
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we have a little less than 30 minutes left in the trading session. yes, this is a half trading day. fun fact, only two half-days this year. this one and the day after thanksgiving is the other one christmas falls on a monday this year >> so a nice long weekend. but patriotism running wild today. and as it usually does -- >> what do you make of this? a pretty good rally to begin the second half. >> i think that's part of it it's a new month this day generally, we are historically higher. i think it's patriotism, but also the beginning of a new month. >> tell that to the tech stocks. >> they've had a nice turn for the worse. we're starting to see an uptick in oil and oil services and that's taking the market higher. we have two new groups, one is risk/reward in the oil services and the other is financial, which is benefitting from what's going on here and in europe. >> and those yields we've been watching move higher as well
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you wonder how much higher they're going to do and what fed thinks about that. >> the fed has been pretty confusing about what we expect from the second half of the year so the financials didn't benefit as much as they could have in the first half of the year so we're seeing the back half of that we're also seeing a certain amount of optimism in the financial as a focus so, you know, it's all pretty good right now and i think the grind goes higher that's why this market has been turning. we have these new leadership groups establishing. this is a continuation >> i'm thinking there may be some bullish traders who wish we could go a whole day here. >> no, no. >> i'm with you. happy fourth >> patriot's rally thank you, guys. 25 minutes to go now some of the chip names are why the nasdaq is sitting this one out. meantime, the dow is up 159 points illinois, not the only state to be in a state of pain. new jersey and maine also shutting down government
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services over major budget issues up next, we'll look at what's behind these problems and how they can be fixed. plus, gas prices haven't been this cheap for the fourth of july, get this, in 12 years! coming up, we'll look at why they're so low and whether they can fall even further. stay with us
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welcome back here are some names weighing on the nasdaq nvidia is down about 4%. >> that was the leader >> this stock has been an incredible stock western digital, microron down about 3. rine resorts down about three. it looked like the macau gaming numbers were strong, but they were below expectations. mattel also weaker nasdaq sitting it out, down half a percent. everyone else is higher. dow touching some record intraday highs >> we told you friday about illinois's state budget problems new jersey now is having some problems of its own. i'm confused this morning ton instagram, i sa a photo of kate rogers drinking wine in napa valley.
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but now she's suddenly at liberty state park in new jersey with this story for us i don't know how you do it, kate >> reporter: bill, thanks for outing me on the air that was this weekend and there's no wine here but, listen, if you guys are looking the to hit a state beach or state park this weekend in new jersey, you are out of luck. that's because more than 50 state beaches, state parks, historical sites and recreational areas including liberty state park where we are right here in new jersey, they're all currently closed to the public this is because the new jersey state government shut down at midnight on friday after republican governor chris christie and the democratic-led new jersey state assembly failed to strike a budget deal. but, given those state beaches were closed, governor chris christie did find himself on the beach over the weekend he was at island state park. it's closed to the public, but because he's governor, he does have access to a residence there. now, despite parks being closed, agencies, including new jersey state police, hospitals, new jersey transit, the lotteries, casinos and racetracks are all
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remain open during this shutdown we caught up with some new jersey residents this morning and they were none too pleased about the state parks and beaches being closed down for the holiday. here's what they had to say. >> outrageous. i mean, anybody knew this was coming anybody knew it was the july 4th weekend, where people want to go to the parks that's where they're there for and not to have that available, there's just no excuse for it. >> i'm stunned that the legislature coupled with our governor can't figure it out and that he can go to the beach and the rest of us can't >> reporter: so, we have to see how all of this is going to impact new jersey's standing in cnbc's top states for business scott cohn will have that big reveal on tuesday, july 11th last year, new jersey was number 34 illinois was actually higher ranked than new jersey it was number 24 last year it's crazy to see how all these budget woes really weigh on the states and rank in our annual study. we'll have to wait and see for that >> that picture of him on the
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beach while everyone else can't get access, that pretty much sums it up >> it does kate, thank you. >> something else. thank you. >> meanwhile, other states including illinois, as she mentioned a moment ago, and maine facing their own budget issues illinois inching closer to becoming the first state to be branded with junk bond rating. the state approved a major tax increase yesterday meanwhile in maine, all non-emergency government functions are shut down until further notice unlike new jersey, state parks there will be remain open. let's bring in john hicks from the national association of state budget officers. seems like the proper association to be speaking with here thank you for joining us, john look, i almost don't even know where to begin we've had issues in the past where states are trying to, you know, resolve these issues and one party government, one party legislature sort of the other just can't come to terms are we seeing more of this than usual? this because of pension -- why
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does it seem like it's really coming to a head here? >> i think the number of states that are in this situation is higher than we normally see, that's for sure. we're in a strange situation in the states tax revenues are coming in lower than budgeted estimates. they're performing less than the economy is and so states are being hit with a tight fiscal situation thereby providing difficult choices and trade-offs among governors and legislatures in terms of putting a budget together fixed costs like pensions, as you mentioned, are growing greater than revenues as well as health care costs. so we're in an eighth year of an economic recovery, we're in tight fiscal times, as far as state governments go and that is the common thread around the number of states that are ending the year without a budget there are a number of states still without budgets, but they've passed continuing efforts in order to maintain services but connecticut and other states maintaining an emergency executive order until they come
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to an agreement. >> i mean, we all know -- i mean, it's clear that many state governments, as is usual, have passed on making the difficult decisions and pass it on to the successive governor or state legislature, or whatever but now they are having to make these difficult choices, because of these low interest rates and the economic environment they find themselves in here, right >> that's certainly part of the environment. but we're having this strange nexus of tight fiscal times. this is as much about the current situation with state finances than it was these long issues of mentions there are plenty of states out there who are doing fines in terms of pensions, short of their investment returns, but we've had april income tax receipts come in less than last year so states have been hit are recent bad news and that's affecting their decision to make new decisions. massachusetts is a good example,
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where their may receipts were down $400 million. so this is as much about the current situation as it is about long-standing past situations. >> why is that have you guys identified why there's such a shortfall in those receipts >> in personal income taxes, there are those who speculate a number of higher income taxpayers were perhaps deferring income, awaiting a federal government reduction in marginal income tax rates that's one reason being given by certain economists if that's the case, maybe next april will be a good surprise for states also, state sales taxes are coming in under estimates. there's a disconnect between the amount of purchasing that's happening and the types of products that states are able to tax. states have been slow in expanding their base to services, which are a higher trend manin purchasing. and also, online sales taxes are a gap if state revenues. those taxes are owed, but states are unable to collect them
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>> very quickly, john, before we let you go, yillinois, as we know, raised income and corporate taxes yesterday. that's going to be popular do you see other states having to do the psalm thing right now? >> there are a handful o of states delaware has a small proposed tax increase, washington has some revenue raisings in their last-minute budget agreements. states are finding themselves in a deep enough hole to where cuts alone aren't the sole answer >> and now we have "taps" here to wrap things up. john, thank you so much. really knowledgeable stuff >> let's take a break, shall we? ♪ >> wow ♪
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♪ >> there you are happy fourth of july, everybody. >> that was fantastic. whoo >> well done >> all right let's take a break, shall we >> that's a good idea. >> with the dow up 156 much more on "closing be" rit teth ghafr isll (baby crying) (slow jazz music) ♪ fly me to the moon ♪ and let me play
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(bell ring)
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biotech outperformed the broader market the first half of this year. and here to tell us what could be the big catalyst for the second half of the year, our own meg terrell. meg? >> hey, bill lots to watch in the second half for biotech. and acceptabilisentiment really out of the first half, accelerating through june, as a few things happened to make feel better about the sector. there has been some sector rotation you can see that big spike through the end of june. a lot of folks saying in addition to the sector rotation
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type, things generally driving biotech are a lessening of fears of drug pricing, and clinical data and the clinical data are the catalysts we're looking for in the second hot area of harnessing the immune system we're expecting key data in combination for lung therapy and bristol myers potentially and merc and that huge race there. and the personalized cell therapy, we're watching an fda-advisory committee meeting to be scheduled to be held on july 12th, but it'll hold clues for how the regulator is looking at the sector for smaller companies as well. then finally, we're looking at sage of course working in cystic fibrosis over the years, expand their therapies to more and more patients we're going to look for a trickle combination set of studies later this year to tell us how well those drugs work
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trying to expand their drug treatment options for more and more patients with cf and finally for sage, big events coming in epilepsy and post partum depression. lots of catalyst to watch from here guys, back over to you. >> investors clearly excited, clearly the performer in the first half >> thank you, meg. joining us now with other names investors could see rally in the other half of the year and david nelson here with us from bell point asset management all right. david, let's just start with you here elsewhere do you think people should be looking for strong picks in the back half >> sometimes it's a zero sum gain and you have to play out in june where the money from tech went into financials, and, you know, this is, it's got two prongs here first on the short end, janet yellen and company, then mr. whatever it takes, mario lifting up the long end in germany that helps relieve the pressure on our long end, that's great for net interest margins
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i like key corp. in here, investors can move from the big cabinet names and move that into key port >> and net of, david deeds, you like goldman sachs, is that the financial stock you like or you like the whole sector? >> you like the whole sector as the other guests pointed out you're hard pressed to come up with a better aligning of the stars for financials i would also add valuations are still much below what they've historically been, and although we're all frustrated at the pace of regulatory reform, at the min pulmo, you have to give us a very friendly presidential and government environment for financials right now, goldman sachs, like ibm, no one got hired for hiring goldman sachs as parents wants them to work there in investment banking. it's just about book value cheapest stock on the dow. please buy goldman sachs >> and meantime, david, your other big pick is oracle, is that because the order got your
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attention? >> yeah, and i usually don't like to mention a name that's had a breakout quarter like oracle they made the transition to cloud. and it's been a frustrating name for a long time. it's obvious that there's no love lost between larry ellison and the ceo, his former employee in here. they have 1.6 billion in cloud billings that was about 15% of total revenue. that number's likely to push higher, it's a name we like and it's a name that's playing out, we're moving to lower multiples, and you're looking that growth rate to match the multiple and a lot of doesn't offer that, oracle does. >> david deeds, you like kroger here, nobody's supposed to like any of their grocers now that amazon's buying whole foods and they're going to gobble up that whole industry, why do you like kroger here? >> we love to have a lonely trade here this stock is about half of what it once was, it's the nation's
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largest independent grocer, we've owned it for years, and through the years, people have told us, oh, we can't compete against a non-unionized walmart. we can't compete against the healthy offerings from trader joys and whole foods think about why whole foods ultimately sold out to amazon, kroger figured out how to do it. now of course no one wants kroger, but how about in the worst case for kroger, a kroger alibaba, kroger fedex, there's a lot of tricks up kroger's sleeve, they play that win, it's a high quality company at a reasonable price, about 11 times earnings >> he makes a great point here, amazon's purchase of whole foods points out that maybe brick and mortar isn't there completely. you have to have a presence somewhere in the community >> somewhere, exactly. david and david, two smart guys, interesting stock picks. thank you both for joining us. happy fourth we have five and a half minutes left in the trading session as we head to the close. >> we'll have the closing
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countdown to the bell next plus afterwards, tesla driving full speed ahead into the mass market. we'lhal ve details on the model three. stay with us ♪
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coming up on the last two minutes of trade for this monday and the stock market, boy, out of the gate, in a hurry for the beginning of the second half of this year, tantalizing us here with an impossible all-time high for the dow. doesn't look like we're going to get that looks like an all-time high for the transports at the end of the day. people have been watching long enough know that you get an all-time for the dow and the transports at roughly the same time that would be the dow theorists bye signal we're not getting the centrals to play along for us right now still 140-point gain to start the second half okay nasdaq, going the other direction, tech stocks continue to falter from highs that we saw back in march. the industrial and nasdaq now down 26 points as we head toward
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the close. yields continue higher the ten year yield now, 234, now 236 earlier and the price of oil, bob, showing a gain for an eighth consecutive day, we're now at $46.77 on wti, ian though gasoline prices now are at the lowest on fourth of july, we haven't seen prices this low since 2005 >> and that reinflammation trade still working. oil up in the last week, copper is moving up, ten year yields are moving up label the. maybe too early to call a trend, but five or six days worked well banks are on fire. citigroup hit a new high telecom stocks retail stocks. oil and gas stocks these are all the laggards in 2017, all strong today big leaders in 2018 basically
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flat to the downside that's what we call rotation, folks. keep an eye on these banks here. when you see four or five of the new highs, i think that's going to drive the conversation. >> so some fireworks to begin the second half of the year on this monday, july 3rd, macy's is, of course, the big response of the fireworks here in new york city. they're giving us a preview as we get ready for the second hour of the closing bell. but let's get to how we're finishing up the day on wall street dow was up more than 200 points at one time. we close hider by 127 putting the dow just below 21,500. s&p 500 up a good five points, the russell 2000 is at a record close here 9639 are the respective levels
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there. and the nasdaq sitting this one out. half one percent decline weighed down by some of the names we mentioned. dow touching record highs intraday at least, has turned bullish, finding out why he's positive on the second half of the year in the minutes. and the driving season is now upon us. marking the busiest day of the summer why drivers are cheering gas prices this year as they hit the road joining me is jason ware, he's chief investment down. mr. peter costa is with us. >> and mr. bill too just for good measure welcome everybody, and peter, just real quickly been what are your thoughts on the action on today's market >> i have to tell you, i was surprised the way we were open this morning it's quite a trading day any time, you can make or lose
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money -- >> yeah, and then you know what, i mean, really the volume is 438 million shares so are the volatility increases, but, you know, the thing i was looking at more was about the nasdaq selling off and this rotational thing, i mean, people like to talk about that, and they can't really, you know, they'll pinpoint is, but i have to tell you, i think you are seeing that rotation into the financials >> because sandra, what do you make of -- it's one day? but it is an interesting -- we're starting to see certain trends emerge here as long yields start to rise label the, oil is coming back, financials are going higher, technology going lower, do you see that trend continuing, and what do you make of it >> absolutely. i mean, i agree with what peter just said. i definitely think you are starting to see a transition into the banking sector, and there's money, obviously, good profits have been made in a lot of these tech names in the first half of the year so nothing wrong with taking
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some profits and going into a sector like banking, which clearly rates rise is going to have a positive impact, not to mention, you know, they just all passed their test with flying colors, and you see dechbd increases last week, none has have played into the stocks yet. there's quite a bit higher for the sector >> there's the regional banks, one-half percent today, goldman, meantime the decliner is a flip side of this western digital down nearly 4%, semantic down 3%, even tesla finished lower 2.5% despite opening higher where are you looking to invest here >> well, you know, we're still over weight tech despite the fact that it's been soft the last little bit. some give back is natural. this was a crowded trade, great run-up into the first five
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years. we've seen strong gains. sowe still like technology, we still like some of the names in technology that were talked about on this program and many others google and facebook and microsoft and apple, these are all secular growth stories within the space outside of technology, you know, we like the banks and financials as well. they're starting to work and the oriole guest mentioned, to which i agree, money's coming out of technology after a greet run and going into other spaces like financials and nrgets and that are picking up we have the yield curve steepening by 12, 13 basis points every time we see money go back into the financials. we like health care as well. that's something that's not talked about much. everyone wants to talk about tech, health care has had a good year as well there are great names within the group that investors can certainly look to. >> pooertd, i know you probably tired of talking about it, but you're not the only person sitting on the sidelines, there are a lot of people waiting for a correction and now here we go
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again with new leadership. and let me point out with a famous trader. >> reporter: this is pain. >> famous trader just e-mailed me and said, you know, this is the kind of market action where some famous traders of the past would be bailing out right now they think they're painting the tame here as he put it with some of the stocks that are going higher right now you're sticking to your guns here >> i'm going to stick to my guns i feel when you look at the way we opened this morning with the strength, if you take the shortened, abbreviated session, if that was a wednesday or thursday of this week or next week, any kind of move, i'm thinking you are starting to see people chase names they want to be in that they miss that move and that's when i get nervous and that's when i really feel and we are getting to that point, there's going to be that inflection point where people are chasing after names and paying premium prices for something that may not necessarily be worth what it's trading at
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that's what my fear is and that's been my fear for the last couple of months. that's why perhaps it was reassuring to see the manufacturing number coming quite strong this is one of the leading indicators that we always talk about, it's billweather of the economy. 57.8 for the manufacturing mpi, that's the best since august of 2014 we've seen the economic indicators come down lately, maybe now they can stabilize or even turn up >> yeah, i think that was a positive and does give some support to why make the market has some more room to go higher, but, again, i agree with peter that there is something i think to this as being topee we are going to the middle of summer there's gio political risks that i think at some point are going to start affecting the tape and they haven't so far this year, but i think -- >> but let me -- cassandra, let
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me ask you about u.s. steel, it's that a top holding here, does a reading like the manufacturing index, does that make you pound the table or unrelated? >> that's certainly one reason, but u.s. steel in particular is a beat-up name in the steel sector they got themselves into some trouble with how they delivered first quarter earnings, and they have a credibility issue right now. they're kind of in the penalty box and had to make some management changes so there are a lot of reason why is we think now's the time to get into it on top of some other, you know, macro policy issues that obviously president trump is talking about with china and imposing, you know, and being concerned that if we are ever in wartime that we manufacture more u.s. steel. and so there are sort of mac coreasons to be involved in this happens to be the name that we
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think makes the most sense i also think it could be a takeover target at some point. >> aha and she buried the lead there. jason, i haven't forgotten about you, peter, i'm curious -- sandra mentioned geopolitical concerns what do you think -- what are some the of the triggers that could cause the kind of move that you're expecting to happen here you know the usual suspects, whether it's monetary policy, fiscal policy. the failure of the u.s. government to come up with some of the tax cuts they were hoping for. all of these usuals, what do you think is happening here? >> it's tax cuts i think a lot of a rise in this trump rally was predicated on that the assumption that it would billion passed sooner rather than later as far as the worldwide global things you'd be watching i think what could happen in the g20 -- right >> yeah, g20
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to me -- >> this is the bigger party. >> this is the infinity. but no, it is -- i think that, you know, we have a president that can be shoed from the hip i think meeting with putin could be, you know, let's hope it's not, but there could be a lot of different things normally nothing comes out of these things other than everybody's kissing each other on the cheeks. i think there's a potential that there could be some interesting -- >> with trump you feel something else could always happen >> it could, it could. i'm not saying it will there's a potential of it happening. you always worry about the break after you leave something like that and a lot of people are flustered, does that mean anything going forward >> let me just ask you, when crude was up eight straight sessions, the u.s. dollars down # % this year. are those just flip sides of a coin here? or what would you make of that >> it's a great question, kelly. i think that's a great way to describe it as being the
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flipside one other thing to think about with regards to the hour, and this is contrary, the dollar isn't going to strengthen just because the federal reserve is starting to really get into normalizing monetary policy. when you look over psych ms, it starts to weaken as the fed raises interest rates. there's a number of reasons for that we're seeing that play out again. part of the backside is that soil moving up in kind then i also think to some degree, oil went into a bear market some time in mid to late june, and i don't think the fundamental support sliding lower. and if traders pick up long contracts, et cetera, as we get down to those levels a natural move higher makes sense. then you look at the economical sensitive sectors within the market, those are also confirming that things are doing okay and going back to, you know, looking at the isms and manufacturing. japan had a pretty bullish take on what's happening in their country. euro zone had a manufacturing index, and here in the u.s. --
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>> china >> exactly those are all supportive to that kind of move in our view >> all right folks, thank you all jason, cassandra, peter, have a good holiday thank you for joining us today >> happy fourth. >> you bet and now let's bring in tom mcclellanen, he's become bullish on the stock market in the short, medium, and long-term, tom, after calling for a correction earlier this year what do you see going on here? >> hi kelly. we got the bottom in june that i had been expecting, but it really only showed up in the tech stocks, or the new york deposit, it's really hard to see it there was a big tell last week, a big confirming notion that there was this emotional washout on thursday when the trade-in was wild and we saw it spike up from the 10s to the 15. when you have a big range day, it's a huge tell that there's just this emotional washout, and we look at the average daily
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range, being at the high minus to low as a function of the closing price, and it was 47% on thursday that's the highest since the day after the election which we saw stock goes screaming higher after that. i'm expecting the same this time, and thinking that the positive seasonality of july is going to be a big factor in that also >> i have to say, it gets my attention when tom mcclellanen says something like this i'm intrigued it's not just short term, you're looking longer term here, how do you fine longer term for the rally >> i think we have about a year to go. i'm looking at mid2018, i don't have a day yet to focus innen to a little bit closer as time goes by, but we're still on enough trend. we're still seeing numbers that are really strong which is a sign that liquidity is strong. if it is strong, the market can get through the other problems
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well late 2018 is going to start ugliness that's going to last in 2019 and remind everybody of 2008 we're not there yet. don't worry about that yet we have a year to go, we are seeing that the signs that the market's going to crack. one of the signs i'm seeing that's a warning of a big problem is the spread between the ten year treasury and the german federal bond market with yield that's been high lately. which is the highest in 30 years, and that's finally started to go down that usually peeks as much as a year or more ahead of the stock market peeking and so we're now apparently have seen that peek and we're starting to go down. we're starting to build the dwer jens that's going to mean a final stop not today, not yet we have more to go >> i'm wondering for people who are following along here, are they going to, you know, take your calls and say okay -- are they going to pile into names?
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is there a sense of what do you think people are going to do ifful this leek now they have to chase this market high kper. >> i hope everybody dismisses what i'm saying and doesn't believe it and thinks whatever i practice is a bunch of fewy so it works well. fortunately i don't have that big of a following that i'm moving the markets yet >> but, i mean, to kelly's question, for example, of the leadership of this market to this point had been technology and we're clearly seeing that falter right now and new leadership emerging. so with your call, what do you think will be the leadership taking us to those levels that you're kpoopting >> i think the selling in tech is a little bit overdone selling tech came to the new fashion in june. and we got a little bit more of that today partly because the end of june rebalancing is really hard to get done if you're a big portfolio manager and you have a bunch of rebalancing trades to do at the end of june, ahead of a four day weekend especially this year, i'm counting today as part of
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that four day weekend. you saw a bunch on thursday, friday was just dead quiet so the trading desk that's got this big slug of an order to move from one side other the other, they can't get the trade done on friday so i think a little bit that got upheld until monday, so that got help today, and it's a little bit of bleedover we're going to get passed the holiday. happy indprens day it's great to celebrate the fourth of our country. we'll have a better market going up >> all right >> that's it tom, always good to see you, thank you very much. >> thank you, bill >> tom mcclellin today the long awaited details should get under wayth end of this week when it rolls free off the lines on friday we're told look at the expectations and what it all means for tesla
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stock which by the way got hit during today's trading rally and president trump boasted about his good relationship with ping tensions appear on the rise. a look at recent developments and why they could stir fear among insts.veor you're watching cnbc first in business worldwide michael, can we get this data to...? look at me...look at me... look at me... you used to be the "yes" guy. what happened to that guy? legacy technology can handcuff any company. but "yes" is here. so, you're saying we can cut delivery time? yeah. with help from hpe, we can finally work the way we want to. with the right mix of hybrid it, everything computes.
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tesla shares, down 2.5% despite that tweet from elon musk about the highly anticipated model three is about to hit the road. our colleague phil beau has more on that story from chicago, hey phil >> bill, the focus is at the end of this week when the first one is built and then the end of the month when the first of those model threes are delivered saying late last night, there'll be 30 model threes handed over to the initial owners, that's coming on july 28th, they usually have these basically launch parties if you will where they get a lot of tesla fans and owners into a venue there in the silicon valley and theyhand over the keys. and that'll get a lot of attention on july 28th, and again, production on the very first of those, that'll be delivered, that starts on friday a lot of focus on what tesla's doing as it ramps up production from now all the way through
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december and 2018. keep in mind, the estimate is that their june production and they don't reduce monthly production it's roughly about 9,000 vehicles a month, last month, they're going to get up to 20,000 per month in december and then if they make a half million as is the target for 2018, that would be 42,000 vehicles roughly speaking per month, that is how quickly they're ramping production over the next year and a half shares did move lower today, but this is a heck of a run over the last three months, particularly in june. now it'll be interesting to see, guys, if you see this stock reacting very quickly, more than usual when the first model three's come out because you know there is going to be a report of a model three that might have a problem and, this will have people saying hay ha, it's out too quickly. so this will be the interesting next couple of month theers see how much the type of press reports ib fluns what happens
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with the stock >> stay there, we're bringing in ben. he was a top pick for the year for you. top pick for the back half up 72% this year what more are you looking at here >> well, we did a blue sky valuation over the year where we got over $500 a share. a year long, so can they make the car and make money on the car? so we'll know more about that. like phil said over the next few months >> that's the blue sky valuation, what are the clouds that could get in the way there? >> so, the biggest thing that we look at is the infrastructure needed, you know, to service the cars, to sell the cars and charge the cars as you go from a couple hundred thousand on the road to a million or two million on the road over the next two to three years, but that's a good problem to have as they build out their fleet. >> ben, what, you mentioned can
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they make money on the car is it the expectation that the model three will be profitable >> so we do have that profitable on a gross margin over the first four quarters. their expectation is they can get their faster than the model s and x. and i think that there's still a loss kept, that's why we like the stock around whether they can get to gross margin positive in the next few quarters >> phil, this is a pretty aggressive expectation for the number of cars that they will be producing by the end of the year people have doubted elon musk in the past, haven't they >> right, and that's what he has going in his favor, and it continues to move higher over the last three or four years, as i've been covering this company, and going back even further, every time elon musk said we're going to do this, you would get bombarded on twitter, social media, saying this guy is a con artist, phony
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been fraud, then when he would meet those expectations, those people kind of shrinked off. and then they would come back and say, he's still a con artist, still a fraud, they would bring up something new so, i'm not surprised that there are going to be people out there who are completely skeptical they'll be able to make a half million vehicles next year but you -- you said it best, they have met expectations, and kbrae, there have been delays and there have been glitches and nothing has been perfect, but, they have generally speaking, met expectations that they have set. >> ben, are you -- tesla of course is all about the cars, it's also about now they have solar city, they have the energy business, do you still think there's a lot of good opportunity right away for tesla energy >> right away is probably too quick a work when you're selling to utilities and corporate customers probably over the next 12 months we'll see that business roll out and get value on it from investors where right now, people undervaluate it and don't appreciate it.
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we think going forward it'll be a headline as they start selling more and more batteries. >> what specifically are they going to do? tesla is going to offer what kind of products to the corporation? >> sure. the biggest thing is a utility scale battery where you can put a batfully and there's several different use cases throughout, in a california, toe renewables or for back-up power for walmart or a target, and this is something that people think that business is not worth anything and we highlighted it when we said tesla was the best pick for the year, we highlighted that business and that will become more apparent as we move on. right now it's all about the model three. like phil said, hitting that 500 per week in december right now >> ben, at what point do you worry about elon musk being diverted to other parts of his businesses and away from tesla? you know, the space x, ready to have that launch over the weekend. he has that tunnel he's building, yeah, in los angeles i mean, he's got a lot on his
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plate right now, obviously >> yeah. you know, i think key man risk is probably the biggest risk out there. i mean, a lot of investors are investing elon and his vision for tesla and ride sharing and energy storage and solar and so, that's something to always consider there, and i think that as a model three rolls out, he'll start think abouting what he does next, but that's probably two to three year type time frame before he take answer active chairman type role like he said in the past when the model three gets on the road >> by the way, i'm mindful of the urban legend that says never buy a car made on friday. >> that's an urban -- >> model three is coming out that day phil, ben, thank you both. happy fourth of july >> happy fourth. >> you too meantime, the great consolidation from music streaming may just be over the horizon on the heels comes word the sound cloud could be in play up next, a fast take on where streaming is heading >> we can all learn something. and for the first time in
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gas buddies 17-year history of tracking fuel prices, the national average of gasoline price is expected to be lower on july 4th than it was new year's day. >> wow >> it's a eat grcountry, isn't it break down of the numbers coming up
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welcome back, and it's time for today's fast take. >> i'm ready >> we begin with a big wave that could be coming big coin's way, shooe a baa says bitcoin could drop before hitting a record high writing it's still in a corrective fourth wave drop 24% then surge to 39 -- >> now el owe the wave on this >> it's the only way to analyze it >> i guess >> you know what worries me? now you have goldman sachs, it was on the cover of barrons. i worry about the average person out who keep hearing about that currency and seeing the gains and gee, i want to get in on that >> or the other initial coin
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offerings that don't have anything there >> this is as risky as it gets and i just get very uncomfortable with a lot of people talking about it right now. >> heed this man goldman sacks -- >> except on the day before a holiday. >> good one, pops. >> goldman is also reviewing it's commodities business. it's the dominant trader on wall street, but, believing the downturn of profits is cyclical and will eventually reverse. others have cut back or exited trading because of falling revenue. and i wonder where, you know, this is now them -- sort of their initial with the final saying maybe we're done. >> it's older than equity trading. and it was the original trading mechanism as farmers would hedge their price of their crops and things i think we might see this as a contrary indicator that a lot of these banks are getting out of the business you could see this become an inflationary situation as commodities start to go up in
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price again here >> '09 was a commodity business's best year we remember what happened, then oil was over 100 bucks a barrel. and you know, even as we were kind of heading into dealing with the crisis, now more than three billion that year, less than a billion last year not going to have a lot of choices. >> keep an eye on that one >> and the story bill was most passionate about today the music industry has it's eyes on sound cloud the streaming service has 175 million users, it's up for grabs for maybe up to. $00 million, companies like apple, spotify, google, and other private entities are all said to be discussing bids the most interested right now. >> i will tell you, i am not burdened with a great deal of information about that or soundcloud, but speaking broadly about that industry, it's maturing now it is time for some consolidation as this industry grows and takes on -- you know, you're going to have an overlap in users now >> oh yeah >> you're going to have
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consolidation to achieve more efficiencies there. >> spotify may be trying to do a direct ipo listing it's trying to build the business title, we were kind of talking about kanye west walking away from them perhaps, all of these are -- you're exactly right. they're all going to have to shake out to what we see in another sector >> we only started producing television shows that's still to come >> yes, finally these numbers are pretty shocking. u.s. resale foot traffic is down dramatically down nearly 9% last week from the prior year >> 9%. >> year to date, down 12% from two years ago. >> this is brick and mortar. the beginning of the year, we discussed at length about this being water shed year and we're
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watching this unfold right now >> thus ends today's fast take time now for cnbc news update with sue herrara >> hi guys here's what's happening. maria maine knew knows was diagnosed with a benign brain tumor. the tv and radio host tells people magazine she underwent surgery last month she is stepping down the e news to recover hot air balloon carrying 17 people crashed today in orange county police. the bloochbs descending towards the landing strip which is right next to that pond when there was an issue with the wind no passengers luckily were hurt. further south in florida, officers found a lot more than a broken taillight during a traffic stop three endangered key deer were
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tied up with twine in the trunk of the car the two men were arrested and charged. and on a lighter note, when it comes to the holiday cookout, hamburger or hot dog which is america's favorite? well, walmart tracked it's sales over the last four weeks in each state to see which people prefer and based on it's numbers, burgers prevailed in most states over hot dogs. that is the news update this hour have a safe and happy holiday guys, back to you. >> you too, sue. >> team hot dog. >> you're a hot dog? >> yeah. the burgers are so good now at the restaurants, i feel like i have them enough, i like to shake it up. >> nothing better than a grilled burger >> i need one of yours >> there's nothing special about my grilled hamburger you grill a hamburger, it's delicious, and hot dog, what is there to do -- >> sauerkraut. >> i'll give you this. >> i like all the stuff. anyway crude falling more than 13% so far this year if you think we've seen the fwhomt oil, you might want to
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think again. we'll have the results of the oil survey with a look at what the pros are saying about opec, the current supply, and the president's energy strategy. speaking of the president, he's taking to his twitter feed again, this time, plotting a course for his g20 meeting later this week. just as tensions are rising with china. coming up, we'llooat teiaimcto e rket lk you always pay your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect.
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welcome back, here's a look at the day on wall street. nasdaq down 100%, up 129 points, s&p up 5, russell 2000 up 11 some of the high flier tech names of the past were certainly weighing on that market. >> i love how i just made you say huh. >> but it is >> you won't know why. energy meantime getting a boost today. it was the worst performing sector in the first half of the year cnbc's jackie deangelis is here with the oil survey on what to expect for the back half, jackie >> crude surprised everyone. logging near 15% decline after it touched territory if the second half declines the same way that we saw, oil could see it's third down year out of the last four.
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so where do we go from here? cnbc's oil survey pulled analysts traders hedge funds to get their take survey respondents agreed about the price ahead. there's more downside, 40% said they're not comfortable calling this a low 40s area, the bottom. crude prices could still end higher between 40 and 49 that implies volatility. when asked about opec job owning the market, they will flex it's muscles to try for short term price swinging opec has lost control. supply still is the most important factor influencing prices and 80% said that will continue going forward with respect to demand, about half said it's trending stronger, not strong enough as we know to absorb the excess product. finally 60% said that president trump's pro energy policies were not having a direct impact on prices that the time overall guys, label the more of
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a bearish view on crude. >> all right >> we know what that means >> he's rooting for those lower prices at the pump >> thank you, jackie good news for those of you hitting the road tomorrow, if you haven't already, gas prices are expected to decline to the lowest independence day levels since 2005, that according to it is projecting and average price of $2.21 per gallon for the busiest driving holiday of the summer, and that is well under the ten-year average of $3.14. let's bring in dan mcteague, senior analyst at you know, i get the supply part. we're just pumping too much. but the demand -- that's what i don't understand, demand has come down at the same time, and that's what bringing prices down as well. why is demand down >> good morning, bill and kelly. the fact is we're seeing a lot of change in the way which we have anticipated prices on the
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demand side. yes, we've seen three years in a row where u.s. drivers have taken to the roads and exceeded year after year, records that go back to 2007 but this here looks like it's a little different, refineries are doing fairly well. there isn't the usual upsets we have seen. utilization rates, output for most refineries are between 90 and 95%. we haven't seen this configuration in a long time demand, vehicle efficiency, perhaps some bad weather or perhaps just people holding off a little bit as you saw earlier from your retail commentary about, you know, things down perhaps, people are taking a bit of a look and see. we had a survey about a month ago that pointed out of the followers who -- follower app, well over 7% compared to last year we're intending to take not one, but two vacations taking to the roads. and of course you spending less money getting there. >> let me ask you, we mentioned last week that there are gas taxes going up and i think nine
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states as of saturday. when you're taking the average price, that's an all in price, how much lower would it be if it weren't for the tax hikes? >> they're starting to take effect we're doing it on a weekly basis, we're paying 5.5 cents less last week than this week. >> yeah. >> what do you make of that? >> well, except for the pacific
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northwest and the west coast where we have had a little bit of volatility, it's been quiet on all central and eastern front rs it's been very quiet and that has allowed both for predictability and i think to some extent, to reducing our, you know, our followers angst at pumps. people are now, you know, rather adjusted to stable prices. of course, we've seen nine days of consecutive increases in the price of oil, wti, now pushing and testing near $47 a barrel. we haven't seen nine consecutive days of increases in any form going back to 2012 so, it is cause for concern, little early, i know that analysts are on both sides of this ting does mean that we may have bottomed out for the time being and we may in fact start to see prices moving back up. so, you know, just be for the fourth, take advantage of the great prices >> oh great. even more traffic. get on the road now. say no >> and don't forget to use the app. it's always free >> there you go.
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you're welcome, dan. >> thanks, bill, thanks kelly. >> happy fourth. >> dan mcteague from 2017 is a big year for space so far and successfully reuse rockets from elon musk, even a new kid on the private space travel block. how the second half of 2017 is shaping up is coming up. but first, tensions heating up between the u.s. and china as president trump and chinese president ping spoke on north korea this morning by telephone. what the changing relationship could mean for u.s. businesses coming up. you're watching cnbc firstn bune wldde sissorwi i thank you is what we say. but we mean so much more. we mean how can we help? we mean what can we do? we mean it's our turn. to do our part. to serve you,
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39.95. and now shipping is free! call 1-800-953-0616 or go online now! tensions between president trump and ping are rising ahead of this week's g20 meeting in germany. we are joined with some of the latest on america's relationship with china >> hi bill, that relationship seemed like it got off to a good start earlier in the year when we saw president ping go into mar-a-lago and visit with donald trump. donald trump holding off on some of the campaign rhetoric that was anti-chinese in nature now though that's changed. here'sen excerpt about the conversation say they posed a
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growing threat between the missile programs both had a korean peninsula. that sounds good, the reports are that president xi said the relationship between the u.s. and china had grown -- shown some progress, but was also affected by negative factors president trump remember earlier this year tweeting, while i greatly appreciate the efforts of president xi in china to help out with north korea, it has not worked out at least i know china tried. so where are we now, well beijing has been warning the yiegts in the wake of the u.s. navy vessel sailing near some disputed islands, and also we saw the united states last week imposing sanctions on a chinese bank and chinese individuals the tensions definitely ramped up the meeting with ping later this week is one to watch a lot of attention on the vladimir putin meeting this week, guys but also that ping meeting is going to be so important and of course we will be there in hammburg to cover all of it later this week.
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>> thank you how will it impact business? let's bring in tom manning based in honk coop he's now a lecturer in law thank you, sir, for being here >> thank you >> it's clear that businesses are competing with everstronging kpooinz companies. they have gained some advantage by vir which you of their government backing i think over time additional backing from the chooinsz government for their strongest companies in order to make those true global champions.
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obviously if the political side of the house degenerates further, tensions escalate, we could see a sharp increase in naturalism which would not be good for selling in china. >> we've had the sanctions against the bank those two alone now the sailing into these waters near -- in the south china sea, but those are the things that we're doing to china, what could they do to us? what kind of retaliation could we expect if anything from them? >> well certainly bill, the idea of chinese consumers buying chinese-produced products rather than american products would be one such retaliatory measure -- >> that would be a trend that wouldn't be the government doing something. i mean, are there things that president xi could threaten president trump at the g20 summit do you think? >> fair point on the notion of
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companies and yet, we seen very sharp reactions occasionally occur with japan and even south korea where chinese consumers have been mobilized to reject or react to a certain political situation. in terms of the g20 meeting, however this week, there certainly could be some effort on the part of the chinese to try establish a new platform or a new basis for exchange, possibly even suggesting on the sidelines coming back to the table with north korea or even if north korea were not to participate in a reinstituted six-party talk concept of the past, perhaps bringing some of the parties back, excludeing north korea in order to at least get the ball rolling on such negotiations the chinese are much more likely to put an incentive together rather than a threat and i think that's the difference in negotiating style that we need to pay attention to here. >> yeah, and the north korea issue is obviously a well known
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one, if a challenging one, but in hong kong, it's really struck by the speech that the chinese president gave there over the weekend where he talked about a red line and said, basically, you know, decent or threats wouldn't be tolerated. a program of one china two systems when it was signed in 1948, it was acknowledged that hong kong would be operating under the china. and i think it's taken probably the full part of the last two decades since the handover for the government and people to
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realize what that really means it certainly does not mean they are an independent country -- >> but what is that -- >> they're relying on china and would be going forward >> i guess my point is now that that's become obvious, what should the response of american businesses be? simply to keep their head down i guess the same way you wouldn't behave in china proper? is there a way they should be t trying to and to promote more of a market-based economy, or is that simply not the role >> i personally think most ceos believe it is not the proper role to interfere in politics either in hong kong or in china. most multi-nationals steer clear, essentially taking more of a neutral stance in order to preserve their participants in the chinese economy. i think the same will probably apply in the hong kong situation. certainly most people would like to see the hong kong chinese
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achieve a one person, one vote equilibrium. that's just not happening as of yet. and it's probably beyond the abilities of american multinationals to affect that change >> all right tom, thank you for joining us. >> you're welcome, kelly, thank you. from back to backspace x launches, you have president trump providing the space council aid last week, 20171 shaping up as a banter year for space. what's shaping up for the second half coming up. name the song. ♪ ♪
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welcome back space x cold off it's launch just seconds before blastoff yesterday due to a glitch in the rocket's navigation system it's scheduled to be attempted again tonight and despite that, it has been a big year so far for space. morgan brennan has a look at what's in store for the second half, morgan. >> it has been a busy year, but the biggest milestones are yet to come, and especially for space x. the falcon heavy, this is space x's long awaited next jen rocket should make it's maiden launch in the coming months before launching for paying customers next year. that will usher in an era of bigger, more powerful rockets with new vehicles that are under development at boeing, etk, and jeff basos' blue oregon. now one big contract to watch, who united launch alliance, this
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is the joint venture between lockheed and boeing picks to supply the engines for it's own new rocket engines that will replace the russian ones that currently uses on it's rocket blue origin is front runner for that though recent setbacks could make rocket dimes new offering more viable. on the satellite side, brace for an eruption, start up one web, just started to be used for broad band access. this is the first in megaconstellation pros posed by boeing, and space x that could put thousands of new satellites into orbit lastly, keep an eye on the white house which is finally beginning to map out a space strategy. on friday, president trump signed an executive order reviving the national space council which last met in 1993 to coordinate america's activities beyond earth, but keep in mind, he still needs to make some hires, including administrator of nasa, but vice president pence who is the chair for this newly revived a vise ri panel will be visiting kennedy
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space center later this week expect for space headlines to come >> you're the space guy. >> i am. and i'm a little puzzled by that and maybe you can explain this, morgan the trend has been toward the private sector to get the government out of the space business, now we have the space council. what's the strategy there? >> well, i think what's going to go on with the space council is sort of reviewing all of the operations that are under way. both on the government, civil, defense side, but also on the commercial side, in effect, the fact that you have the increasing innovation and activity from the commercial side there's a lot of regulations that aren't there or maybe need to be there. especially as we start to get into things likes a steroid minoring there's a number of start-ups backed by tech people that are moving towards this. it's less than a decade away, according to some of these start-ups. there's a lot of new terrain for lack of a better woshd out in space, a lot of unclaimed potential economic development in the final frontier that needs to be looked at. >> all right
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>> i think -- i mean look, the more -- whether it's federal dollars or private sector, combination of both is probably good here, right >> i guess >> longer term investment -- >> imagine if they find gold on an asteroid though >> which is the belief that is the theory, you have nasa working toward this as well as a lot of these commercial start-ups. the outer space treaty is 50 years old this year. a lot has changed since then. >> that's for sure >> thanks, morgan. see you later. >> you can see the plot of the next movie -- >> star trek >> yeah. >> gold prices by the way have seen a flip lately flip side of the weaker dollar i can do that with a straight face and some key things to look out for this weekend perhaps. >> we've got the fomc minutes coming out i can say quickly -- growth is around 2%, inflation's around 2%, unemployment is a record -- near record lows, mortgage rates near record low, and stock markets at record highs.
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>> gas prices are near record lows >> yeah. enjoy it, everybody. it's a great country, and we should celebrate it. what do you say we do that tomorrow >> that sounds wonderful let's do it with katy perry. for sticking around. >> always my pleur to do my job. >> that does for "closing bell," guess what, "shark tank" is up next ar a great idea, theyar a great idea, vest their own money or fight each other for a deal. this is "shark tank." ♪ tank are jeff stafford and dusty holloway with a product they believe is going to explode in the fishing market. hello, sharks. my name is jeff stafford, and this my longtime hunting and fishing buddy dusty holloway. our product is the shell bobber. we are seeking $80,000 in exchange for 20% equity --


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